U.S. seeks to stamp out deceptive "green" advertising

* FTC says some literally true claims can be misleading

* FTC says terms "green" and "eco-friendly" problematic

* Critics say word "natural" is also deceptive

* Guidelines were last updated in 1998

By Diane Bartz

WASHINGTON, Oct 1 (Reuters) - Advertisers who try to entice customers with promises that their products are "green" or "eco-friendly" could quickly get in hot water with regulators if they cannot prove it, the Federal Trade Commission said on Monday.

Environmental and consumer groups have long been frustrated by advertising that touts products as good for the environment when, in fact, they often are not.

The commission, which enforces rules against deceptive advertising, warned companies that they should make environmental claims - such as "compostable" - for their products only if they can prove that they are true and if they are significant.

The FTC in particular urged advertisers to stay away from terms including "green" or "eco-friendly" on the grounds that broad claims are extremely difficult to prove.

FTC Chairman Jon Leibowitz said the guidelines, which were last revised in 1998, will bring a significant change to the marketplace.

"Most marketers are honest. They're not in the business of lying to consumers," he said.

But, critics said, the FTC framework left advertisers a huge hole by declining to take up the claim that a shampoo or soap is

"natural" on the grounds that the Food and Drug Administration regulates personal care products.

"We just think that is so deceptive and misleading. Those kinds of claims are very pervasive on the market," said Urvashi Rangan of the Consumers Union. "We asked them to address it and they didn't."

In the guidelines, the FTC said it could go after companies whose claims are literally correct but misleading - for example a company that says it has doubled the recycled content of a product when that content has gone from 1 percent to 2 percent.

"The guides advise marketers not to imply that any specific benefit is significant if it is, in fact, negligible," the FTC said in its notice of adoption of its revised Guides for the Use of Environmental Marketing Claims.

The FTC has had several enforcement actions related to environmental claims over the past three years. It went after window makers who made exaggerated claims about the insulating qualities of their products and companies that touted a fabric as being made from bamboo, implying it was green when processing bamboo into rayon uses harsh, polluting chemicals.

William MacLeod, a partner in the advertising practice of the law firm Kelley, Drye and Warren LLP, praised the revised guidelines as having "a great deal of new and useful advice."

"If more marketers read these, the FTC won't have so many cases," he said.

(Reporting By Diane Bartz; Editing by Maureen Bavdek)

((Diane.Bartz@thomsonreuters.com)(1 202 898 8313))