FTC Puts Heat On Energy Scams

The Federal Trade Commission has sent warning letters to more than 50 companies it claims are deceptively selling products over the Internet that purport to save energy.

by Roy Mark of www.internetnews.com [April 19, 2002]

The Federal Trade Commission has sent warning letters to more than 50 companies it claims is deceptively selling products over the Internet that purport to save energy. While most of the warnings were targeted at marketers of automotive gadgets and additives, additional warnings addressed Internet marketers of purported energy-saving products for the home.

The letters reminded the advertisers that they need scientific substantiation for their energy-saving claims and provided them with additional advertising guidance. The FTC advised the recipients that they may be subject to law enforcement action if they make deceptive claims in the future.

"Our message to industry is that false or inflated energy-saving claims will not be tolerated. Our message to consumers is that they should be skeptical of dramatic fuel-savings claims for automotive and other products," said J. Howard Beales, III, director of the FTC's Bureau of Consumer Protection.

The Internet warning letters are part of the FTC's continuing law enforcement efforts to combat deceptive energy-saving claims. Late last month, the Commission approved a consent order with Kryton Coatings International and Procraft, Inc., which claimed that their "liquid siding" provides insulation equivalent to seven inches of fiberglass batting and R-20, and reduces utility bills up to 40 percent. In November 2001, the Commission obtained a consent decree resolving charges that Esrim Ve Sheva Holding Corp. (Gadget Universe) and its chief executive officer made false and unsubstantiated claims for Super FuelMAX, an automotive fuel-line magnet (e.g., "A certified EPA laboratory reports an amazing 27 percent in increased mileage and 42 percent reduction in harmful pollutants").

The current warning letters involved the following types of products:

• Fuel-Saving Automotive Devices and Additives. Numerous websites make implausible claims for various aftermarket automotive devices (fuel-line magnets, air bleed devices, and other retrofit gadgets) and additives that supposedly increase gas mileage (and sometimes reduce emissions) for automobiles. For example, the FTC staff found claims such as "saves thousands of dollars on gas!" or "increased mileage up to 300 percent." The staff's experience with these products suggests that many of these claims are either false or grossly exaggerated.

  In addition, the Environmental Protection Agency (EPA) has evaluated or tested more than 100 purported gas-saving devices and additives, and has not found any product that significantly improves gas mileage.

• Instantaneous Water Heaters and Home Water Purification (or Softening) Systems. Some distributors are making exaggerated claims about the performance and the energy savings associated with instantaneous ("tankless") water heaters and home water purification or softening systems ("save 50 percent on hot water costs"). The Commission previously challenged similar claims for water purification systems.

• Transient Voltage Surge Suppressors. Although these products can protect equipment from power surges, in the past the Commission and the states have challenged claims that these products provide significant savings for consumers' energy bills.

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