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FTC Targets False Energy Performance Claims

By Sheila Millar & Jean-Cyril Walker on August 13, 2020
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Marketing products as environmentally friendly can induce customers to pay higher prices than they would for other goods. But when promises of lower emissions or higher insultation ratings prove false, that hurts consumers, and the Federal Trade Commission (FTC) steps in. The FTC recently concluded its four-year long false advertising case against Volkswagen and Porsche – the biggest in FTC history – for making deceptive claims about the air emissions levels of their vehicles when they were, in fact, fitting them with illegal devices designed to cover up the real level of emissions. The FTC’s Final Status Report, filed with the U.S. District Court for the Northern District of California on July 27, 2020, stated that, under FTC orders, Volkswagen and Porsche paid out some $9.5 billion to compensate affected customers.

Two days later, on July 29, the FTC filed complaints against Superior Products International II, Inc., SPM Thermo-Shield, Inc., F & G International Group Holdings, LLC and FG International, LLC, and SuperTherm, Inc. in federal court for making unsubstantiated and/or deceptive claims about their paint coatings’ R-values. Because the companies referred to R-values, the complaints referred to the FTC Trade Regulation Rule Concerning the Labeling and Advertising of Home Insulation (commonly referred to as the R-value Rule). The R-value Rule sets out detailed standards and test methods for calculating a product’s R-value and lays out requirements for making energy savings claims. The greater the R-value, the greater the potential energy bill savings to consumers – assuming the stated R-value is real.

In each complaint, the FTC alleges the companies made claims that their coating products had high R-values they could not substantiate. Superior Products and principal Joseph E. Pritchett made statements dating back at least to 2008 in their brochure as well as on their website, in ads, and in a patent application to the U.S. government that the company’s coatings would save consumers “between 40% and 70% on their energy bills,” when the products actually had an R-value considerably lower than advertised. Similarly, SPM Thermo-Shield, Inc., and its principals Peter J. Spiska, and George P. Spiska, marketed Thermo-Shield Roof Coat, Thermo-Shield Exterior Wall Coating, and Thermo-Shield Interior Wall Coating with false R-values, claiming their coating products offered significant energy savings for consumers when the actual R-value was less than one. F & G International Group Holdings, LLC, FG International, LLC, and their principal J. Glenn Davis, also claimed that their FGI-4440 Insulation Coating had a high R-value when, again, the true R-value number was less than one.

The FTC is seeking a permanent injunction against the paint companies to prevent future violations, plus other equitable relief as the court sees fit. This is a far less punitive approach from the Commission’s settlement orders in the Volkswagen-Porsche case, which required the companies to pay consumers the full retail value of their cars plus all other losses they suffered due to the companies’ deceptive advertising, and likely reflects the scale of the deception and number of consumers affected.

Photo of Sheila Millar Sheila Millar

Sheila A. Millar is a partner at Keller and Heckman LLP, where she represents businesses and trade associations on a variety of public policy and regulatory issues, including privacy, data security, cybersecurity and advertising matters, as well as product safety issues. She has…

Sheila A. Millar is a partner at Keller and Heckman LLP, where she represents businesses and trade associations on a variety of public policy and regulatory issues, including privacy, data security, cybersecurity and advertising matters, as well as product safety issues. She has been involved in a variety of audit and compliance projects, including, among other issues, privacy and data security audits, and is experienced in providing crisis management legal support to a variety of national and international companies and associations.

Ms. Millar is a frequent speaker on regulatory and public policy matters, and has authored many articles. Ms. Millar is one of the vice chairs of the International Chamber of Commerce (ICC) Marketing and Advertising Commission, and chair of its Working Group on Sustainability, where she spearheaded the development of the ICC Framework Guides on Environmental Marketing Claims.

Ms. Millar is AV® PreeminentTM Rated by Martindale-Hubbell and for the eigth consecutive year was selected by her peers for inclusion in The Best Lawyers in America® 2018 for her work in practicing Advertising Law. She has also received the distinguished honor of Advertising Law “Lawyer of the Year” 2014 in Washington, DC by Best Lawyers®, and was awarded Advertising and Marketing Lawyer of the Year USA by Finance Monthly for their Finance Monthly Global Awards 2017.

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Photo of Jean-Cyril Walker Jean-Cyril Walker

JC Walker practices environmental, product safety and energy efficiency law.

Mr. Walker’s environmental practice focuses on a wide range of matters, including compliance with U.S. requirements governing the safe management and disposal of chemical and hazardous substances under the Resource Conservation and Recovery…

JC Walker practices environmental, product safety and energy efficiency law.

Mr. Walker’s environmental practice focuses on a wide range of matters, including compliance with U.S. requirements governing the safe management and disposal of chemical and hazardous substances under the Resource Conservation and Recovery Act and state analogues. Mr. Walker regularly advises industry and trade association clients on regulations of hazardous air pollutants under the federal Clean Air Act (CAA) and state and local air pollution statutes, as well as emissions of volatile organic compounds (VOCs) in adhesives, paints, and other industrial and consumer products.

Mr. Walker also regularly advises clients on product safety issues. This includes assessing compliance with the Federal Hazardous Substances Act (FHSA), other Consumer Product Safety Commission (CPSC) requirements, and state consumer product requirements.

Additionally, Mr. Walker counsels a broad range of industries on compliance with the U.S. Energy Policy and Conservation Act and California’s energy efficiency regulations. Representative clients include manufacturers and distributors of: consumer appliances; commercial refrigeration equipment; heating, ventilation and air conditioning equipment; and computers and consumer electronic devices.

In addition to compliance advice, Mr. Walker regularly represents clients in actions brought by the U.S. Environmental Protection Agency, the Department of Energy, the Federal Trade Commission (FTC), and other Federal and state agencies.

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  • Posted in:
    Environmental and Climate
  • Blog:
    Consumer Protection Connection
  • Organization:
    Keller Heckman
  • Article: View Original Source

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