Appliance Manufacturer Fined $10,000 for Violating the FTC Appliance Labeling Rule
Enerjet Corporation ("Enerjet") has agreed to settle Federal Trade Commission charges that its brochures overstated the energy efficiency of certain boilers, in violation of the Energy Policy Conservation Act ("EPCA"), and that it failed to label certain boilers properly, as required by the FTC's Appliance Labeling Rule ("Rule"). Through a consent agreement reached with the Commission, Enerjet agreed to pay a $10,000 civil penalty for violating the Rule, which requires the disclosure of energy efficiency information through EnergyGuide labels on household appliances, as well as disclosures in catalogs and Web sites that sell covered appliances. EPCA prohibits manufacturers from misrepresenting the energy use or efficiency of covered appliances, or the cost of energy consumed by their products, in advertising and promotional materials. This is the first time the FTC has fined an appliance manufacturer for violating the Rule and the first case in which the Commission has enforced EPCA.
Companies can be fined up to $110 for each violation of the Rule, with each instance of mislabeling counting as a separate violation. The action taken against Enerjet represents the second brought by the Commission to date regarding the Rule. In 1989 an appliance store chain was assessed $45,000 for allegedly removing EnergyGuide labels from its products.
"Companies will find themselves in hot water if they don't label their products accurately," said Jodie Bernstein, Director of the Commission's Bureau of Consumer Protection. "Consumers factor energy efficiency into their decisions to buy boilers and other big-ticket household appliances. It's just good business for manufacturers to label their products with the information consumers need and the law requires."
The Commission's Complaint
According to the Commission's complaint, Enerjet, which is based in Bay Shore, New York, failed to affix Rule-required EnergyGuide labels to its "OA series" oil boilers. In particular, the complaint alleges, the labels Enerjet used did not display the name of the manufacturer, the annual fuel utilization efficiency ("AFUE") rating of the boiler, the range of AFUE ratings for comparable products, an indication of where the labeled product falls within this range, and certain prescribed generic statements.
Second, the complaint alleges that during 1997, Enerjet failed to supply fact sheets to distributors and retailers with information about the energy efficiency and operating cost of its covered boilers (or, alternatively, to supply such information in an approved industry directory), as required by the Rule. Third, the complaint alleges that Enerjet failed to submit a required 1997 annual report concerning its boilers to the Commission.
Finally, the complaint alleges that Enerjet violated EPCA by distributing brochures that did not accurately disclose the AFUE ratings of its boilers according to prescribed test procedures. The complaint alleges that the company's brochures overstated the energy efficiency of the boilers.
Terms of the Proposed Order
Under the proposed order, Enerjet would be required to pay a $10,000 penalty for its Rule violations and would be prohibited from making any future misrepresentations regarding the energy use or efficiency of its products, or the cost of energy consumed by its products. The settlement also contains certain record keeping and related provisions to allow the Commission to monitor compliance.
The Commission vote to place the complaint and proposed settlement on the public record was 5-0. An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. It will be subject to public comment for 30 days, until April 6, 2001, 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.
NOTE: The consent agreement referenced in this release 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. More information about the FTC's Appliance Labeling Rule is available online from the FTC's website at www.ftc.gov/appliances and in print. Call the FTC's Consumer Response Center toll-free, 1-877-FTC-HELP (382-4357) (TDD: 1-866-653-4261).
Copies of the complaint, proposed consent agreement and analysis to aid 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, DC 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the online complaint form. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
(FTC File No. 992-3192)
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