FTC Stops Marketers From Selling Phony Fuel Economy Devices

The Federal Trade Commission reached a settlement putting a stop to the phony claims of marketers who told consumers their fuel economy device could boost automobile gas mileage by at least 50 percent and "turn any vehicle into a hybrid." The settlement bans marketers of the so-called "Hydro-Assist Fuel Cell" from selling fuel economy products.

According to the FTC's complaint (filed in 2009), Dennis Lee, Dutchman Enterprises LLC, and United Community Services of America Inc., doing business as UCSA Dealers Group LLC, falsely claimed their Hydro-Assist Fuel Cell (HAFC) turns water into "water gas" with five times the potential energy of gasoline. The court subsequently halted the allegedly illegal practices and froze some of the defendants' assets pending further litigation.

The settlement order bans the defendants from selling energy generation or conservation products, and allows them to sell or transfer HAFC kits or parts only if they don't misrepresent energy or fuel efficiency capability and don't permit others who buy them to do so. They can sell the kit's liquid fuel additive component only if they disclose, up-front, that it contains petroleum distillates, and only if they provide buyers with a copy of the Material Safety Data Sheet for the additive dated February 3, 2008. If the defendants sell or transfer any kits or parts, they must tell the FTC each buyer's name and address and describe any prior business relationship they may have had with the buyer.

The order also prohibits the defendants from misrepresenting any good or service, and from selling or otherwise benefitting from customers' personal information, and requires them to properly dispose of customers' personal information within 30 days. In addition, the order imposes a judgment of more than $2.7 million against the defendants, all but $230,356 of which will be suspended when they have surrendered frozen assets. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

The Commission vote approving the proposed consent order was 3-0-1, with Commissioner J. Thomas Rosch abstaining. The FTC filed the proposed consent order in the U.S. District Court for the District of New Jersey. The order was entered by the court on December 7, 2011.

NOTE: This consent order is for settlement purposes only and does not constitute an admission by the defendants that the law has been violated. Consent orders have the force of law when approved and signed by the District Court judge.

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 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC's website provides free information on a variety of consumer topics. Like the FTC on Facebook and follow us on Twitter.