FTC Law Judge Upholds Charges AGainst "Rust Evader;" Prohibits Use of Brand Name

A Federal Trade Commission administrative law judge has prohibited RustEvader Corporation from using the names “Rust Evader” or “Rust Buster” for a purported electronic corrosion control device for automobiles that the judge said is not effective in substantially reducing corrosion, despite the company’s advertising campaign to the contrary. Judge James P. Timony’s order follows FTC charges that RustEvader made false claims about its Rust Evader product and about a demonstration and studies regarding its efficacy. Timony upheld the charges in a default judgment he issued following RustEvader’s general failure to respond to requests for information during the discovery period before trial on the case.

RustEvader Corporation, also known as Rust Evader Corporation, is based in Altoona, Pennsylvania. RustEvader also does business as REC Technologies.

The FTC issued a complaint detailing its charges against RustEvader and company president, David F. McCready, in August 1995. Both answered the FTC complaint in October, denying the charges. In April, however, the charges against McCready were withdrawn from litigation so that the FTC could consider a proposed settlement agreement. According to Timony’s opinion, RustEvader repeatedly failed to respond to FTC discovery requests. Therefore, Timony struck RustEvader’s answer to the FTC complaint and issued today’s order, finding the facts in the case to be as the FTC alleged.

According to Timony’s findings, RustEvader falsely represented that:

• Rust Evader is effective in substantially reducing corrosion in motor vehicle bodies, and that the company had evidence to back up this claim;
• a salt-water tank demonstration of the product’s efficacy accurately reflected how Rust Evader protects motor vehicle bodies from corrosion when, in truth, the process used in the demonstration is much more effective under water than under conditions that a motor vehicle normally encounters; and
• reports of laboratory and other tests performed on the Rust Evader that the firm provided to dealers constituted scientific proof that the product substantially reduces motor vehicle body corrosion.

In addition, according to the default judgment, a provision in the RustEvader warranty, which conditions warranty coverage on the consumer paying the labor costs of having the vehicle inspected every 24 months by an authorized Rust Evader dealer, violated federal warranty law. The Magnuson-Moss Warranty-FTC Improvements Act prohibits conditioning warranty coverage for products costing more than $5 on consumers paying for a service identified by brand, trade or corporate name.

Judge Timony has ordered RustEvader Corporation to stop using the terms Rust Evader or Rust Buster and to stop making the challenged claims for the Rust Evader product. The order also requires RustEvader to have appropriate competent and reliable evidence to back up claims about the performance, efficacy or attributes of any product for use in motor vehicles. In addition, the order prohibits RustEvader from misrepresenting the existence or results of any test or study, or that any demonstration or picture proves any material feature or quality of any product for use in motor vehicles.

RustEvader also is prohibited from conditioning warranty coverage on the purchase of a certain brand-named or trade-named product or service, and to notify Rust Evader dealers and distributors of the FTC action and the fact that the old warranty provision is void. The dealer notification letter also must state that RustEvader will terminate dealers who continue to use the advertising and promotion materials containing the challenged claims.

Judge Timony’s order is subject to review by the full Commission either on the Commission’s own motion or appeal by RustEvader. If not appealed within 30 days, it would become the Commission’s decision and the order would be effective 60 days after it is served on RustEvader Corporation.

Copies of the initial decision and order, as well as the complaint and other documents associated with this case, are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(FTC Docket No. 9274)

(rust-id)