FTC Sues Promoters of Bogus Fuel Efficiency Device

At the request of the Federal Trade Commission, a federal court has temporarily halted the deceptive advertising campaign and frozen the assets of an operation claiming its device can boost automobile gas mileage by at least 50 percent and “turn any vehicle into a hybrid.” The Commission is seeking a permanent ban on the ads and a further order providing reimbursement to customers who purchased the device.

The FTC filed a complaint against the promoters of the Hydro-Assist Fuel Cell (HAFC), which placed advertisements in Newsweek, Popular Science and Smithsonian magazines. The ads made phony claims that the device, priced at over $1,000, uses “longstanding, proven technologies” to drastically improve fuel efficiency, the complaint alleges.

The FTC’s complaint was filed in U.S. District Court for the District of New Jersey against Dutchman Enterprises, LLC and United Community Services of America Inc. (UCSA). It also names as a defendant Dennis Lee, chief operating officer of Dutchman Enterprises and president of UCSA. Lee is a convicted felon who has been prosecuted in at least eight states in the past for violating consumer protection laws.

In papers filed with the court, the FTC states that since at least February 2008, Dutchman and UCSA have used magazine and Internet advertisements to mislead potential customers into buying an HAFC kit, based on the false claim that it would increase auto fuel efficiency by 50 percent or more, and has been scientifically proven to do so.

According to the FTC, the advertising campaign has claimed that the HAFC kit offers “Incredible Savings,” fostering “Less Dependence on Foreign Oil.” One magazine advertisement claimed that the HAFC kit increased a 2007 Honda Civic’s gas mileage from 35 miles per gallon to 85 miles per gallon, and had increased mileage from 33 mpg to 121 mpg on a 2006 Mazda. Another ad claimed that the device would “double mileage, even with SUVs.” On a Web site registered to the HAFC promoters, they claimed to have “scientific data on over two hundred vehicles right now that have gotten over 50% increase in fuel economy and there are a dozen of the smaller four cylinder cars that have gotten over 100 miles per gallon.”

Lee made similar claims in video infomercials posted on the Internet, according to the FTC. The companies also promote the device through representatives, whom they referred to as “dealers.”

The FTC asserts the defendants’ advertising campaign has used pseudo-scientific explanations to describe how their device purportedly works. For example, according to the papers the FTC filed, the promoters of the HAFC have claimed that the device uses electricity to turn plain water into “water gas” that has five times the potential energy of gasoline, and that it uses powerful magnets to ionize gasoline so that it burns more completely.

However, in papers filed with the court, the FTC states that these and other claims defy well-established physical principles and contain “gross errors and misrepresentations of fact.” According to an expert hired by the FTC, the device does not even meet the scientific definition of a “fuel cell,” and several of the processes touted by the companies either are impossible or would lead to a net loss of energy. The promoters “are marketing a product that cannot exist and function as claimed,” the FTC stated in the court papers.

The Commission vote authorizing the staff to file the complaint was 4-0.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has or is being violated, and it appears to the Commission that a proceeding is in the public interest. A complaint is not a finding or ruling that the defendant has actually violated the law.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. 082-3203)
(Dutchman.wpd)