FTC Settles Charges on Deceptive Energy-Efficiency, Cost-Savings Claims
In a move that should caution green builders and remodelers as they market their products and services, the Federal Trade Commission (FTC) in May approved final orders settling charges that five companies that make and sell replacement windows made deceptive energy efficient and cost savings claims.
The consent orders settle alleged violations of federal law prohibiting unfair or deceptive acts or practices or unfair methods of competition in violation of Section 5(a) of the FTC Act.
The FTC’s complaints alleged that Long Fence & Home, LLLP; Gorell Enterprises, Inc.; Serious Energy, Inc; THV Holdings LLC; and Winchester Industries made exaggerated and unsupported claims regarding their windows’ efficiency and how much money consumers could save on their heating and cooling bills by having them installed.
According to the FTC’s complaint against Long Fence, the company’s ads represented either expressly or by implication that consumers who replace their windows with Long Windows’ Quantum2 replacement windows with SuperPak Glass are likely to save 50% on residential heating and cooling costs. The complaint alleged that the company did not possess and rely upon a reasonable basis substantiating these representations when it made them.
The FTC noted that, many factors determine the savings homemowners can realize by replacing their windows, including the home’s location, size, insulation package and existing windows.
The FTC further noted that consumers who replace single or double-paned wood or vinylframed windows – common residential window types in the United States – with LongWindows replacement windows are not likely to achieve a 50% energy savings.
The order contains provisions designed to prevent the company from engaging in similar acts and practices in the future.
Unless the company can make a marketing claim that is non-misleading and based upon competent and reliable scientific evidence in its possession, it is prohibited from making any representation that:
Consumers who replace their windows with the company’s windows achieve up to or a specified amount or percentage of energy savings or reduction in heating and cooling costs; or
The company guarantees or pledges that consumers who replace their windows with the company’s windows will achieve up to or a specified amount or percentage of energy savings or reduction in heating and cooling costs; or
Any specific number or percentage of consumers who replace their windows with respondent’s windows achieve energy savings or reduction in heating and cooling costs.
The company is further prohibited from making claims concerning any of its products or services about energy consumption, energy savings, energy costs, heating and cooling costs, U-factor, solar heat gain coefficient, R-value, K-value, insulating properties, thermal performance or energy-related efficacy – unless the representation is non-misleading and substantiated by competent and reliable scientific evidence.
If the company elects to represent, guarantee, or pledge that consumers achieve such energy savings or heating and cooling cost reductions under specified circumstances, it must: disclose those circumstances clearly and prominently in close proximity to such representation, guarantee, or pledge; and substantiate that all or almost all consumers are likely to receive the maximum represented, guaranteed, or pledged savings or reduction under those circumstances (e.g., when replacing a window of a specific composition in a building having a specific level of insulation in a specific region).
Note that environmental marketing claims that violate the FTC regulations may also serve as the basis for an unfair and deceptive trade practices act violation at the state level.
