Analysis of Proposed
The Federal Trade Commission has accepted an agreement, subject to final approval, to a proposed consent order from General Signal Power Systems, Inc., a Wisconsin corporation.
The proposed consent order has been placed on the public record for sixty (60) days for reception of comments by interested persons. Comments received during this period will become part of the public record. After sixty (60) days, the Commission will again review the agreement and the comments received and will decide whether it should withdraw from the agreement or make final the agreement's proposed order.
General Signal Power Systems, Inc. ("GSPS"), through its division, Best Power, manufactures and markets computer-related products, including the "Patriot" and "Fortress" uninterruptible power systems ("UPS"). Uninterruptible power systems are devices that protect consumer appliances, such as personal computers, from damage resulting from power disturbances or power failures.
The Commission's complaint charges that GSPS's advertising contained false and unsubstantiated claims regarding the extent to which these devices can reduce a consumer's computer problems. Specifically, the complaint alleges that GSPS made unsubstantiated claims that: 1) Best Power products can reduce computer problems, such as crashed networks, crashed hard drives, faulty data transmissions, read/write errors, premature failure of components, system lockups, corrupted or lost data, by up to 80%; 2) Best Power products can reduce computer and network downtime up to 80%; 3) 80% of a typical computer's downtime is due to power problems, rather than to hardware or software problems; and 4) a Patriot or Fortress UPS can reduce the number of calls for computer service by 82%.
The Commission's complaint also alleges that GSPS made a false claim that a five-year power quality study showed that the number of calls for computer service dropped 82% after installation of a UPS. In fact, the complaint states that the 82% figure cited in the advertisements was taken from a one-time customer survey. Moreover, the complaint alleges that the underlying consumer survey offered to support the claim that consumers experienced an 82% reduction in computer problems after the installation of a Patriot or Fortress UPS was not competent and reliable. As an example, the complaint alleges that this consumer survey only considered the experience of purchasers of UPSs which feature a "ferroresonant transformer." UPSs which include this feature provide a higher degree of protection from power disturbances than do the Patriot or Fortress models shown in the advertisements at issue.
The proposed consent order contains provisions designed to remedy the violations charged and to prevent the respondent from engaging in similar acts and practices in the future. Part I of the proposed order would prevent GSPS from making any representations regarding UPSs, or any substantially similar product, about: 1) The ability of any such product to reduce computer and network downtime; or 2) The extent to which any such product reduces the number of calls for computer service, unless it possesses and relies upon competent and reliable scientific evidence that substantiates the representations.
To remedy GSPS's misrepresentations regarding the consumer survey, Part II of the proposed order prohibits GSPS from misrepresenting, in any manner, expressly or by implication, the existence, contents, validity, results, conclusions or interpretations of any test, study, or research regarding any product. As fencing-in relief, Part III of the proposed order would require the company to possess and rely upon competent and reliable evidence to substantiate any claim regarding the benefits, performance, or efficacy of any computer-related product.
Finally, the proposed order requires the respondent to maintain materials relied upon to substantiate claims covered by the order; to provide copies of the order to certain personnel of the respondent; to notify the Commission of any changes in corporate structure that might affect compliance with the order; and to file one or more reports detailing compliance with the order.
The purpose of this analysis is to facilitate public comment on the proposed order. It is not intended to constitute an official interpretation of the agreement and proposed order or to modify in any way their terms.