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Volume X, Number 269

September 25, 2020

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September 23, 2020

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FTC Targets False Energy Performance Claims

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 prodaucts 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.

© 2020 Keller and Heckman LLPNational Law Review, Volume X, Number 226

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About this Author

Sheila Millar, Keller Heckman, advertising lawyer, privacy attorney
Partner

Sheila A. Millar counsels corporate and association clients on advertising, privacy, product safety, and other public policy and regulatory compliance issues.

Ms. Millar advises clients on an array of advertising and marketing issues.  She represents clients in legislative, rulemaking and self-regulatory actions, advises on claims, and assists in developing and evaluating substantiation for claims. She also has extensive experience in privacy, data security and cybersecurity matters.  She helps clients develop website and app privacy policies,...

202-434-4646
Jean-Cyril Walker, Keller Heckman, Environmental Compliance Lawyer, Renewable Fuel Standards Attorney
Partner

Jean-Cyril Walker joined Keller and Heckman in 2000. He advises clients on a wide range of environmental matters, including compliance with U.S. requirements governing the safe management and disposal of chemical and hazardous substances. Mr. Walker counsels fuel industry clients on federal and state requirements governing the development and distribution of fuels and fuel additives, including the renewable fuel standards (RFS and RFS2), and matters involving renewable fuel identification number (RIN) transactions. Mr. Walker regularly advises industry and trade association clients on matters concerning the regulation of hazardous air pollutants under the federal Clean Air Act (CAA) and state and local air pollution statutes. In this regard, Mr. Walker has advised clients on compliance with numerous MACT standards, including those governing pharmaceutical production, chemical manufacturing, can and other surface coatings, and other industrial operations. Mr. Walker has extensive experience with CARB regulations, and in particular, on complying with regulations governing emission of volatile organic compounds (VOCs) in adhesives, paints, and other industrial and consumer products. 

202-434-4181