A Federal Trade Commission Administrative Law Judge has found that advertisements that claimed an add-on braking system performed as effectively as factory-installed ABS brakes are false, and has barred the marketers from using the term ABS in marketing their brakes. Judge Lewis F. Parker also has prohibited Brake Guard Products, Inc. and Ed F. Jones, its director, from misrepresenting the performance characteristics of the brakes, the availability of insurance discounts resulting from installation of the brakes and their compliance with certain government standards. The Judge also ordered the respondents to take steps to notify all distributors and purchasers that the FTC has found that the ad claims and promotional material that stated that Brake Guard was an anti-locking braking system with the safety and economy advantages of factory installed ABS brakes are false and misleading.
Judge Parker’s decision and order follows FTC charges against Spokane, Washington- based Brake Guard and Jones. In its 1995 complaint, the FTC alleged that Brake Guard made false and unsubstantiated advertising claims that its Brake Guard Safety System, also known as Advanced Braking System or Brake Guard ABS, is an antilock braking system as effective as manufacturer-installed ABS brakes; complies with a performance standard established by the Society for Automotive Engineers; and will qualify a vehicle for automobile insurance discounts in a significant proportion of cases. Brake Guard sold the systems to dealers who charged consumers between $283 and $349 and the respondents sold between 400,000 and 500,000 of the systems between 1990 and 1996, earning revenue of $10.4 million during that time, according to evidence presented at trial.
The FTC announced similar charges against two other firms at the time it issued its complaint against Brake Guard. Judge Parker issued a default judgment in October 1996 in the FTC’s case against BST Enterprises Inc., based in Garland, Texas, and maker of ABS BrakeSafe equipment, and company president Michael Woodruff. In March 1997 Judge Parker found that the "ABS/Trax" braking system marketed by Automotive Breakthrough Sciences, Inc., its CEO, Richard Schops and ABS Tech Sciences, Inc., deceptively represented that their brakes performed like factory-installed antilock brakes and would qualify owners for auto insurance discounts. His order bars them from using the term ABS in conjunction with their brake system, from misrepresenting the characteristics and capabilities of the braking system and from misrepresenting the availability of insurance benefits for system owners.
According to Judge Parker’s decision, "The Brake Guard device does not have the components necessary to operate as an ABS system, as that term is defined by the National Highway Transportation Safety Administration, understood by experts in the field, used in the industry, and understood by consumers. . . .Through nine separate deceptive claims, respondents have misrepresented the fundamental purpose and every relevant aspect of their product," he said.
Judge Parker’s order would bar defendants from representing that the current Brake Guard product:
- is an antilock braking system;
- prevents or substantially reduces wheel lock-up, skidding, or loss of steering control in emergency stopping situations;
- will qualify a vehicle for an automobile insurance discount in a significant proportion of cases;
- complies with a performance standard pertaining to antilock braking systems set forth by the National Highway Traffic Safety Administration;
- reduces stopping distances by 20 to 30%;
- provides anitlock braking system benefits that are at least equivalent to factory- installed ABS systems; or
- will stop a vehicle in a shorter distance than a vehicle that is not equipped with the product, in emergency stopping situations.
The order also requires the respondents to have substantiation for any claims of enhanced safety from the use of their products; claims of insurance discounts as a result of installation of the brakes; and bars misrepresentations of endorsements.
Finally, the order requires that Jones send a letter to all Brake Guard distributors notifying them that the FTC has determined that the ad claims for Brake Guard are false and misleading and instructing them to stop using the promotional material. In addition, Jones must follow up by sending consumers notification of the FTC findings.
Judge Parker’s order is subject to review by the full Commission either on the Commission’s own motion or appeal by the respondents. If not appealed within 30 days, it becomes the Commission’s decision and order and will become effective 60 days after it is served on the respondents.
Copies of the initial decision, as well as other documents associated with the Brake Guard case, as well as the companion cases, are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov and also from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(Docket No. 9277)
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