The Heat is On: Settlement Bars Firm and its President from Exaggerating the Properties of Their Insulation Additive

The manufacturer of a home insulation chemical additive and the firm’s president have agreed to stop exaggerating the capabilities of their product as part of a settlement with the Federal Trade Commission, the latest action the FTC has taken to make sure consumers get accurate information to help them save energy and lower their utility bills.

The FTC’s settlement with Working Chemical Solutions and its president, Robert C. Smith, bars them from misrepresenting the capabilities of their cellulose insulation additive or any insulation to which it has been applied. This case marks the fourth complaint, and third settlement, the FTC has filed in the past 15 months against sellers who have allegedly inflated claims about their products’ insulating capabilities. One case remains in litigation. The FTC continues to monitor the market for companies who are exaggerating their R-value claims, in violation of the FTC’s R-value Rule and the FTC Act.

The R-value Rule rates the effectiveness of home insulation products according to their R-value – a measure of insulation’s resistance to heat flow. The higher the R-value, the greater a product’s insulating power. Home insulation manufacturers must provide R-value information based on the results of standard tests. Using the required R-value information, consumers can improve the energy efficiency of their homes by buying the appropriate amount of insulation for their needs. Misleading advertising about R-values hurts consumers’ ability to make informed purchasing decisions.

The FTC’s complaint alleges that Working Chemical Solutions and Smith violated the FTC Act because of the way they promoted both PolyCell Chemical Additive, a product that supposedly increased the effectiveness of insulation, and the insulation product to which it was added. The complaint also alleges that they violated the agency’s R-value Rule because they did not possess test results to back up the claims they made.

Specifically, according to the FTC’s complaint, Working Chemical Solutions made, distributed, and sold PolyCell Chemical Additive by claiming it would double the R-value of cellulose insulation – the home insulation with which most people are familiar – to at least R-7.1 per inch, and up to R-8 per inch. Standard cellulose insulation has an R-value of approximately R-4 per inch. The company allegedly overstated the effectiveness of PolyCell Chemical Additive and the insulation to which it was subsequently added and sold by another company. The FTC settled similar charges against that company, called Enviromate – as well as another company – in 2009 (see press release at: http://www.ftc.gov/opa/2009/03/rvalue.shtm).

The settlement order with Working Chemical Solutions and its owner Robert C. Smith prohibits them from making claims about insulation’s resistance to heat flow – or any other claims related to energy efficiency – for insulation products and components unless they are true and backed by scientific evidence. It also bars the defendants from helping anyone else make false or misleading claims related to a product’s energy efficiency, and from violating the FTC’s R-value Rule in the future.

The Commission vote approving the complaint and settlement order was 5-0. The complaint was filed on May 12, 2010, in the U.S. District Court for the Western District of Arkansas. The agreed-upon court order settles the FTC’s charges against Working Chemical Solutions, Inc., and its president, Robert C. Smith, and was entered by the court on June 1, 2010.

NOTE: The Commission issues 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 issuance of a complaint is not a finding or ruling that the defendants have violated the law. Stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the complaint and final order are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer 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, click: http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.