As consumer demand for sustainable products skyrockets, a deceptive form of marketing known as greenwashing has similarly grown, leading to increased scrutiny by global regulators. With the European Union tightening its policies through the Green Claims Directive and Italy recently fining Shein €1 million for misleading environmental claims, the question arises: Is greenwashing illegal? In the U.S., the answer is clear—yes, when it involves false, misleading, or unsubstantiated environmental claims, it can violate consumer protection laws.

The Federal Trade Commission Act in the U.S. disallows unfair or deceptive marketing practices, placing misleading environmental claims squarely in violation. The FTC's Green Guides serve as a rulebook, though not law themselves, they outline what constitutes deceptive claims, allowing the FTC to take enforcement actions against violators.

The framework requires that all environmental claims, either direct or implied, be supported by competent and reliable evidence. This standard of substantiation is echoed globally, with entities like Canada’s Competition Bureau enforcing similar guidelines to ensure that environmental claims are not only truthful but also verifiable.

The FTC warns against vague terms like 'eco-friendly' or 'green' as they are nearly impossible to substantiate. Companies that opt for specific, measurable, and evidence-backed claims face lower legal risks and can more effectively communicate their environmental benefits without falling foul of the law.

When companies are caught greenwashing, the consequences are significant. They may face FTC investigations, cease-and-desist orders, and hefty fines. For instance, the FTC’s recent actions include a substantial $18.5 million settlement with Publishers Clearing House over deceptive marketing practices. Additionally, scrutiny is not just limited to product-level claims but also extends to corporate governance, examining how businesses might mislead the public and investors with their environmental initiatives.

For businesses, the move towards transparency is not just ethical but a legal necessity in 2025. Companies like Rhythm Energy in the energy sector provide a model of how businesses can operate within strict regulatory frameworks. By offering clear, substantiated, and verifiable claims about their renewable energy sources, they set a standard for legal compliance and consumer trust.

In conclusion, greenwashing is unequivocally considered a form of false advertising, subjected to legal actions and significant penalties. The ongoing regulatory focus ensures that businesses must prioritize substantiated proof over vague buzzwords, a trend that is not only legally binding but critical for maintaining consumer trust and market integrity.