Window Companies Settle with FTC Over Deceptive Energy Efficiency and Cost ClaimsFebruary 22nd, 2012 | Category: Industry News
Five companies that sell replacement windows in numerous states will have to stop making exaggerated and unsupported claims about the energy efficiency of their windows, and how much money consumers could save on their heating and cooling bills by having them installed, under settlements with the Federal Trade Commission (FTC), according to an announcement released today. The settlements prohibit the companies from making these types of deceptive claims.
“Energy efficiency and cost savings are major factors for many consumers buying replacement windows,” says David Vladeck, director of the FTC’s Bureau of Consumer Protection. “The FTC is committed to making sure that the information consumers get is accurate and that marketers can back up the claims they make.”
The cases are part of a broad FTC effort to ensure that environmental marketing is truthful and based on solid scientific evidence. The agency also issued a new consumer education publication called “Shopping for New Windows,” which provides information on factors that affect the energy savings replacement windows are likely to provide; things to consider when shopping for new windows, such as cost, material, style, and installation; and how an energy performance rating label can help consumers choose the windows that are best for their specific needs, says the announcement.
The FTC’s complaints allege the five companies engaged in deceptive practices by making unsupported energy-efficiency and money-savings claims – in some cases, that consumers could cut their energy bills in half by using replacement windows alone. The companies named in the settlements are: Gorell Enterprises Inc.; Long Fence & Home, LLLP; Serious Energy Inc.; THV Holdings LLC and Winchester Industries.
According to the FTC, Gorell Enterprises Inc., which was recently purchased by Soft-Lite, and also operates under the names Gorell Windows & Doors and American Conservatory Systems, manufactures windows with the “Thermal Master III” glass system and other lines.
The FTC announcement notes that the company’s “40% Energy Savings Pledge” promised consumers savings of at least 40 percent of home fuel consumption for both heating and cooling in the first year after their windows were installed, or they would repay them the difference, up to $500. According to the FTC’s complaint, Gorell lacked a reasonable basis for claiming that consumers who replace their windows with Thermal Master III windows were likely to achieve residential energy savings of 40 percent or save 40 percent on home heating and cooling costs.
Based in Maryland, Long Fence & Home does business under a number of names, including Long Windows. It distributes and installs Serious Energy’s Quantum 2 windows with SuperPak glass, among other lines, says the FTC announcement. Long’s advertisements in various media have included claims such as “50% Energy Savings Guaranteed,” and “save 50% on Energy Bills – or LONG PAYS YOU!” Long also pledged 50 percent savings on heating and cooling energy usage. Long’s website included a “savings calculator” that invited users to enter their average monthly energy bills and click a button to “CALCULATE SAVINGS.” According to the FTC, Long’s savings claims for the advertised windows were unsubstantiated.
“There is a tremendous span of new technology in high-performance windows,” John DePaola, president of Long Fence and Home, told DWM magazine today. “The better products lend themselves to better energy efficiencies. Unfortunately, the modeling that takes everything into account doesn’t yet exist to properly project energy savings for every home or building. While replacement windows are a major part of the energy envelope, a home’s insulation level and structure amongst other factors also add to the equation. Consumers should look to the labels of any building product to note features and benefits comparisons.”
He adds that he appreciates the efforts of the FTC in “assuring consumers get the most accurate and up to date information.”
“Because of their work, the entire industry will be in a better position to communicate cost-saving benefits to consumers that can be validated,” he says.
Based in California, Serious Energy provides its dealers with marketing materials, including brochures and other information on its website. According to the FTC, these materials have included claims such as, “Guaranteed to reduce your heating and cooling use by up to 49%.”
Serious Energy also offered heating and cooling reduction pledges, varying by dealer, and promised consumers would be paid up to $500 if they did not realize these savings within one year of when the windows were installed, says the announcement. The FTC alleged that Serious Energy’s savings claims for the advertised windows were unsubstantiated.
Valerie Jenkins, vice president of marketing at Serious Energy, told DWM magazine that the company collaborated closely with the FTC throughout the process and provided the agency with extensive data and documentation regarding its window products.
“We are strong supporters of processes and systems that promote the dissemination of accurate information to consumers and hold companies accountable for their marketing claims,” says Jenkins. “We believe it is our responsibility to help educate consumers and empower them with helpful and accurate information that they need to make the best purchasing decisions. Consumers are best served when markets are credible, fair, competitive and open. Industry self-regulation and FTC regulation both raise the bar on advertising best practices, and that benefits both the public and the industry as a whole. We, as an industry, best serve our customers by delivering high-quality products and by becoming a trusted resource that helps consumers make informed, smart purchasing decisions. We continue our commitment to these values, and we hope other window manufacturers do the same.”
Based in Kentucky, THV’s telemarketing sales scripts, according to the FTC, represented that its replacement windows will “cut energy bills in half”; that homeowners will typically see a 35- to 55-percent reduction in monthly energy bills; that “our homeowners have noticed that our windows saved them 35% to 55% off their energy bills,” and pledged that its windows systems “will pay for themselves in energy savings alone in 8 years or we will pay the difference . . . our windows are free!!” The FTC charged that THV disseminated the claims in sales scripts for the company’s THV Compozit windows with Alter-Lite triple pane glass. The FTC also charged that THV lacked a reasonable basis for its savings claims.
Based in Pennsylvania, Winchester manufactures Bristol and WinterLock Super Triple-E, A-Plus with Alpha-10 windows. In its promotional materials, Winchester claimed that consumers would “reduce energy costs by 47%” and that “the triple-paned design of some replacement windows, such as Bristol windows, can also produce energy savings of up to 50% a year,” says the announcement. Winchester’s consumer testimonials claimed similar results, and the company pledged a heating and cooling reduction of at least 47 percent. The FTC charged that Winchester lacked a reasonable basis for making its energy savings claims for its windows.
According to the FTC, the proposed orders settling the charges against the five companies are designed to prevent the companies from engaging in similar deceptive marketing practices in the future.
According to the FTC, part I of the proposed settlements prohibits each company from claiming:
• That consumers who replace their current windows with those of the company will achieve up to, or a specified amount or percentage of energy savings, or a reduction in their heating or cooling costs; or
• That the company guarantees or pledges that consumers who replace their windows with the company’s windows will achieve such energy savings
unless the claim is non-misleading and when the company makes the claim, it has competent and reliable scientific evidence to substantiate that all or almost all consumers are likely to achieve the maximum savings claimed.
In addition, if the company claims or guarantees that consumers will achieve specific energy savings or reduced heating or cooling costs under certain circumstances, it must clearly and prominently disclose those circumstances near where the claim or guarantee is made, says the announcement, adding that the company also must be able to substantiate that all or almost all consumers are likely to see the maximum savings claimed under those circumstances.
Part II of the proposed settlements prohibits each company from making claims:
• That a specific number or percentage of consumers who replace their windows with the company’s will achieve energy savings or reduced heating or cooling costs; or
• About energy consumption, energy costs, heating and cooling costs, or other insulating properties or energy-related efficacy
unless the representation is non-misleading and is substantiated by reliable scientific evidence.
According to the FTC, the proposed orders require each company to substantiate savings claims that include the words “up to” – for example, if they claim consumers will save “up to” a certain amount of money, or achieve energy savings “up to” a certain amount, it must have competent and reliable scientific evidence to substantiate that all or almost all consumers are likely to achieve the maximum savings claimed.
Likewise, the announcement adds that the proposed orders with Serious Energy, Gorell, THV and Winchester include an additional provision designed to make sure they do not give misleading information to their distributors that could be passed on to consumers. The proposed order with THV also requires it to conduct a training program to help principals, officers, managers, employees, and representatives avoid misleading claims. The other four firms are required to broadly distribute copies of the order within each company to help ensure their employees’ compliance.
According to the announcement, the vote to issue the administrative complaints and accept the consent agreement packages containing the proposed consent orders for public comment was 3-0, with Commissioner J. Thomas Rosch abstaining, in each case. The FTC will publish a description of the consent agreement packages in the Federal Register shortly. The agreements will be subject to public comment for 30 days, beginning today and continuing through March 23, 2012, after which the Commission will decide whether to make the proposed consent orders final.
THV and Gorell did not return DWM’s request for comment at press time and Winchester declined to comment.