FOR RELEASE: JANUARY 28, 1993
CHANNEL HOME CENTERS WILL SETTLE CHARGES
IT FAILED TO GIVE CONSUMERS REQUIRED DATA ABOUT
INSULATING ABILITY OF HOME-INSULATION PRODUCTS
Channel Home Centers, Inc. of Whippany, New Jersey, a
retailer of home-improvement products, has agreed to settle
Federal Trade Commission charges that it failed to make certain
disclosures in its advertising for home-insulation products as
required by the FTC's R-Value Rule. A proposed consent decree
settling these charges would prohibit Channel from violating the
rule in the future and require the firm to pay a civil penalty.
The FTC's R-Value Rule requires that the R-value (a measure
of resistance to heat flow) and other relevant information for
home-insulation products be disclosed in ads when certain claims
are made. The rule also requires R-value disclosures at the
point of sale, and on product labels, to ensure consumers have
necessary information to make cost-effective choices among
competing products. Further, the rule requires that a fact sheet
containing additional information be made available to consumers
before they make their purchases.
According to the Commission's complaint, Channel had violat-
ed the rule by advertising:
-- an R-value, but failing to disclose: the type of
insulation, the thickness needed to get that R-value, and/or
the statement explaining R-values that is set forth in the
rule;
-- a price, but failing to disclose: the R-value at a
specific thickness, the statement explaining R-values set
forth in the rule, and/or the coverage area for that
thickness; and
-- an insulation thickness, but failing to disclose the R-
value at that thickness and/or the statement explaining R-
values set forth in the rule.
- more -
Channel Home Centers--01/28/93)
The FTC charged also that Channel's ads stated or implied
that insulation can cut fuel bills or fuel use but failed to
include the rule's required statement that savings vary and that
the consumer should see the seller's fact sheet for further
information about energy savings. In addition, Channel allegedly
failed to make fact sheets available to consumers as required by
the rule.
The Commission originally accepted a proposed consent decree
that would have required the company to pay a civil penalty of
$40,000. The actual civil penalty to be paid, however, will be
approximately $3,500, as a result of a bankruptcy court ruling.
After Channel agreed to the terms of the proposed consent decree,
but before the complaint and consent were filed in U.S. District
Court, Channel filed for reorganization under the bankruptcy laws
in the U.S. Bankruptcy Court for the District of New Jersey.
Under the reorganization plan approved by that court, and if the
district court approves the settlement, Channel will pay $3,504
in settlement of the civil penalty claim. The bankruptcy court
action does not otherwise affect the allegations in the complaint
or the terms of the proposed settlement.
The complaint and proposed consent decree were filed in the
U.S. District Court for the Eastern District of Virginia by the
Department of Justice, on behalf of the FTC, on Jan. 26. The
consent decree is subject to court approval.
The Commission vote to refer the complaint and proposed
settlement to the Department of Justice for filing was 4-0, with
Commissioner Dennis A. Yao not participating.
NOTE: A consent decree is for settlement purposes only and does
not constitute admission of a law violation. Consent decrees
have the force of law when signed by the judge.
Copies of the complaint and proposed consent decree will be
available shortly from the FTC's Public Reference Branch, Room.
130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C.
20580; 202-326-2222; TTY 1-866-653-4261.
# # #
MEDIA CONTACT: Howard Shapiro, Office of Public Affairs,
202-326-2176
STAFF CONTACT: Kent C. Howerton, Bureau of Consumer
Protection, 202-326-3013
or
Elaine D. Kolish, Bureau of Consumer
Protection, 202-326-3042
(Civil Action No. 93-91-A) (FTC File No. 902 3000)
(Channel)