"RUST EVADER" DOES NOT LIVE UP TO NAME, FTC ALLEGES:

Asks Law Judge to Prohibit Use of Brand Name

The Federal Trade Commission has charged RustEvader Corporation, the marketer of a purported electronic corrosion-control product for automobiles that is sold under the names "Rust Evader," "Rust Buster," "Electro-Image," and "Eco-Guard," with making false claims about the product, as well as about a demonstration and studies regarding its efficacy. The FTC also alleged that RustEvader illegally included in its warranty a provision that requires consumers to pay for a bi-annual inspection at an authorized RustEvader dealer to keep their warranty in force.

The FTC is seeking an administrative order that, among other things, would prohibit RustEvader and its president, David F. McCready, from using the names Rust Evader or Rust Buster for this or substantially similar products, making deceptive claims regarding automotive products, and conditioning warranty coverage on a consumer's purchase of a name brand service.

RustEvader Corporation, based in Altoona, Pennsylvania, also manufactures and sells other automotive products. The product at issue purports to "impress an electron bath on the vehicle's surface that interferes with oxygen's ability to couple with ferrous metals," according to an advertisement cited in the FTC's complaint detailing the charges in this case.

According to the FTC complaint, RustEvader and McCready have falsely represented through their ads and promotional materials that the product substantially reduces motor vehicle body corrosion. The FTC also alleged that the respondents have represented that a salt-water tank demonstration of the product's efficacy accurately reflects how it protects motor vehicle bodies from corrosion. The respondents have provided materials so that dealers could perform the demonstration themselves, and also have disseminated depictions of the demonstration, the complaint alleges. But the demonstration utilizes a process called impressed current cathodic protection, which is much more effective under water than under the conditions a motor vehicle normally encounters, the complaint states. Thus, this representation also is false, the FTC charged.

The FTC also charged RustEvader and McCready with falsely representing to motor vehicle dealers, both orally and in materials distributed to them, that reports of laboratory and other tests performed on the Rust Evader constitute scientific proof that it substantially reduces motor vehicle body corrosion. In providing dealers with the ads and promotional materials making these false representations, the FTC charged, RustEvader and McCready have given them the means and instrumentalities to make the same false representations to consumers.

Finally, the FTC complaint alleges that a provision in the RustEvader warranty, which conditions coverage on the consumer paying the labor costs of having the vehicle inspected every 24 months by an authorized Rust Evader dealer, violates federal warranty law. The Magnuson-Moss Warranty - FTC Improvements Act prohibits conditioning warranty coverage for products costing more than $5 on consumers paying for a service identified by brand, trade or corporate name.

If the FTC charges are upheld following trial by an administrative law judge, the FTC has proposed that the judge issue an order prohibiting the respondents from using the names "Rust Evader" or "Rust Buster" for the product at issue, or for any substantially similar electronic corrosion-control device. In addition, the proposed order would prohibit RustEvader and McCready from representing that Rust Evader prevents or substantially reduces motor vehicle body corrosion, and require them to have substantiation for any claim they make in the future about the performance, efficacy, or attributes of any motor vehicle product. The order also would prohibit the respondents from misrepresenting the existence, validity or conclusions of any test or study in connection with the sale of any motor vehicle product, or that any demonstration or test confirms any material quality or feature of such a product.

Another provision in the proposed order would prohibit the respondents from including a conditional-coverage provision similar to the one challenged in the case in a warranty for any product they sell in the future. Moreover, it would require RustEvader and McCready to notify all dealers and distributors of the product and all consumers who purchased it of the Commission's order and the fact that the conditional coverage provision in the warranty is null and void. The letter would have to be sent within 60 days, and also would notify recipients that a consumer's warranty will not be voided simply because the consumer failed to pay for the required inspections.

The FTC also gave notice that, if RustEvader and McCready become subject to a cease and desist order with regard to the FTC allegations, the Commission may seek redress in federal district court for consumers who purchased the product.

Finally, the proposed order contains various reporting provisions that would assist the FTC in monitoring the respondents' compliance.

The Commission vote to issue the complaint and notice order was 5-0.

NOTE: The Commission issues a complaint when it has þreason to believeþ that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondent has violated the law. The complaint marks the beginning of a proceeding in which the allegations will be ruled upon after a formal hearing.

Copies of the complaint and proposed notice order are available 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 FTC news as it is announced, call the NewsPhone at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at http://www.ftc.gov

(FTC File No. 942 3015)