General Signal Power Systems, Inc., has agreed to settle Federal Trade Commission charges that claims in advertisements about the effectiveness of its "Uninterruptible Power Supplies" (UPS) -- devices that protect computers or other consumer appliances from damage resulting from power outages -- were false and misleading. Further, the FTC charged that the company misrepresented the results of a "power quality study," widely touted in ads for its UPSs. The proposed settlement would prohibit the company from making any representations regarding the ability of its UPS, or any similar product, to reduce computer or network downtime, or regarding the extent to which any such product reduces the number of calls for service, without competent and reliable evidence to support the claims.
General Signal Power Systems, Inc. (GSPS), is based in Necedah, Wisconsin. Through its Best Power division, the company manufacturers, advertises and sells computer products, including the "Patriot" and "Fortress" UPS. According to the FTC's complaint detailing the charges, advertisements for the "Patriot" and "Fortress" UPS contained claims such as:
"80% of your downtime isn't hardware or software related. It just looks that way."
"It's actually power problems masquerading as hardware or software problems. ...."
"Best Power products are your answer. If you have a blackout, they give you enough power to shutdown everything correctly. They also clean up dirty power before it reaches your equipment, which can reduce your computer problems by up to 80%.*"
"*A five-year power quality study conducted by Best Power's National Power Laboratory showed that the number of calls for computer service dropped 82% after installation of a UPS."
The FTC's complaint charges however, that a five-year power quality study by Best Power's National Power Laboratory did not show that the number of calls for computer service dropped 82 percent after installation of a UPS. According to the complaint, the 82 percent figure cited in the ads actually was taken from a one-time customer survey. In addition, the complaint charges that competent and reliable surveys do not show that the number of calls for computer service dropped 82 percent after installation of a UPS. Instead, according to the complaint, the consumer survey from which the 82 percent figure was taken only considered purchasers of UPSs that feature a "ferroresonant transformer" which provides a much higher degree of protection from power disturbances than do the Fortress or Patriot model featured in the advertisements. The complaint alleges that GSPS did not possess and rely upon a reasonable basis to substantiate the claims and that they were false and misleading.
The proposed settlement to the charges, announced today for public comment, would prohibit GSPS from making any representations for UPSs, or any substantially similar product, regarding their ability to reduce computer or network downtime, or the extent to which any such product reduces the number of calls for computer service, unless the company possesses and relies upon competent and reliable scientific evidence to substantiate the claims. In addition, the proposed settlement would prohibit GSPS from misrepresenting the existence, results, validity or contents of any test, study or research of any product. Further, the proposed settlement would require the company to possess and rely upon competent and reliable evidence to substantiate any claims about the performance, benefits, or efficacy of any computer-related product.
The proposed settlement also contains a number of recordkeeping and reporting requirements designed to assist the FTC with monitoring compliance with the terms of the order.
An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Commission vote to accept the proposed settlement for comment was 4-0.
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.
Copies of the complaint, the proposed settlement, and an analysis of the agreement to assist in public comment, are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No.: 972 3063)