FOR RELEASE: OCTOBER 26, 1993
FTC CHARGES TEXAS GAS RETAILER WITH OVERSTATING OCTANE RATINGS; FUEL DISTRIBUTOR TO PAY $90,000 CIVIL PENALTY TO SETTLE RELATED CHARGES
Rocket Gas and Car Wash, Inc., a gasoline retail chain operating in the areas of Houston and Galveston, Texas, and its principal officer, Mansoorali Virani, have been charged by the Federal Trade Commission with overstating the octane rating of gasoline they sold to consumers, in violation of the FTC's Octane Rule. A second firm, Moffitt Oil, Company, Inc., a fuel distributor based in Cypress, Texas, and three of its officials, have agreed to pay a $90,000 civil penalty to settle related FTC charges. The FTC alleged that, among other things, Moffitt knowingly assisted Rocket Gas in the alleged deception by pumping gasoline into underground storage tanks connected to gas pumps that Rocket allegedly mislabeled. The FTC's complaint detailing the charges against the Moffitt defendants alleges that they knowingly dumped low-octane gasoline, purchased by Rocket, into tanks with higher octane- rating stickers. The FTC complaint against Rocket alleges that it then sold the low-octane gas to consumers and intentionally misrepresented it to be gasoline of a higher octane-rating. The complaints also allege that the Moffitt and Rocket defendants failed to properly certify or post octane ratings and failed to maintain the proper delivery or certification records required by the FTC's Octane Rule.
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The FTC's complaint against Moffitt Oil also names its three top officials: Jo Ann Moffitt, president and secretary; Roy Moffitt, the vice-president and general manager and Donald Moffitt Jr., another vice-president.
An octane rating is a measure of a gasoline's ability to resist automotive engine "knock" or "ping" resulting from an uneven burning of the compressed fuel-air mixture. The Octane Rule requires retailers to disclose the octane rating of their gasoline by posting the now-familiar bright yellow sticker on each pump. (Effective Oct. 25, the Octane Rule will be renamed "the Fuel Rating Rule" to include alternative liquid automotive fuels including, among others, methanol and ethanol.) Under the rule, gasoline refiners and importers determine the octane rating. After that point, each entity in the distribution chain must certify the octane rating to the next recipient, based either on its own determination or the certification it received. The disclosure requirements of the Octane Rule are intended to help consumers choose the gasolines which are properly suited to their vehicles.
The General Accounting Office has reported that octane misrepresentations or cheating is a problem in some states, particularly in states without routine octane testing programs. In a 1990 report, the GAO found that octane misrepresentation tends to occur more frequently in premium-grade gasolines. Price differences between regular unleaded and premium unleaded gasoline mean that even a small percentage of octane misrepresentation results in consumers paying a significant amount for octane they do not receive, according to the report.
Under the proposed consent decree to settle the charges against the Moffitt defendants, Moffitt and its officers would pay a $90,000 civil penalty and would be prohibited from future violations of the Octane Rule and from assisting others in making the type of misrepresentations alleged in the complaint.
In its complaint against the Rocket defendants, the FTC asks the court to prohibit them from further violating the Octane Rule, and to order them to pay civil penalties and provide for redress to consumers who have been injured by the alleged conduct.
The complaint against the Rocket defendants and the complaint and proposed consent decree with Moffitt were filed today in U.S. District Court for the Southern District of Texas, in Houston, by the Department of Justice on behalf of the FTC.
The Commission vote to authorize the filing of the complaints and settlement was 5-0. The FTC's Dallas Regional Office handled the investigation of this matter.
NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The Rocket complaint is not a finding or ruling that the defendant has actually violated the law. That case will be decided by the court. A consent decree, on the other hand, is for settlement purposes only and does not constitute an admission by the company that it violated the law. Consent decrees have the force of law when signed by the judge.
Copies of the complaints and proposed consent decree will be available shortly from the FTC's Public Reference Branch, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for hearing impaired 1-866-653-4261. The FTC also has a consumer brochure titled "Octane Ratings" which explains the Octane Rule and how consumers can choose the best gasoline for their automobiles. It is available free from the above address.
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MEDIA CONTACT: John Leslie III, Office of Public Affairs 202-326-2178
STAFF CONTACT: Tom Carter or James R. Golder Dallas Regional Office 100 N. Central Expressway, Suite 500 Dallas, Texas 75201 214-767-5503
(FTC File. No. 922 3055)
(Civil Action Nos. Rocket: H-93-3390; Moffitt: H-93-3391)