Courts Bar Firms from Making Deceptive Claims for Home Insulation Products

The Federal Trade Commission today announced three federal court actions – two settled with agreed-upon final orders and the third in continuing litigation – against sellers that allegedly made deceptive claims for a variety of home insulation products.

The three FTC complaints charge that the defendants made deceptive and unsubstantiated claims about their products’ insulation capabilities, in violation of the FTC Act and the agency’s R-value Rule. The two settlement orders bar the defendants from making false and misleading claims about their products’ performance and ability to save consumers money. They also require the defendants to have evidence to substantiate any insulation performance and energy-related claims they make. One order requires the defendants to pay a $155,000 civil penalty. The U.S. Department of Justice filed the three court actions at the FTC’s request.

“Many people care about saving energy and money these days, and better insulated homes can help them do both,” said Eileen Harrington, Acting Director of the FTC’s Bureau of Consumer Protection. “The FTC polices deceptive R-value claims to make sure that companies advertise truthfully and that people can buy insulation with confidence.”

A product’s R-value is a measure of its resistance to heat flow: the higher the R-value, the greater the insulating power. The FTC’s R-value Rule requires home insulation sellers – including manufacturers, professional installers, new home sellers, and retailers – to 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 purchasing the right amount of insulation to meet their needs.

The FTC today announced three R-value Rule enforcement actions – a stipulated final order settling charges against Enviromate, LLC, and its principal, Phillip A. Geddes; and a second order against Meyer Enterprises, LLC, Insulated Solutions, LLC, and Donald L. Meyer; as well as a federal district court complaint against Edward Sumpolec, doing business as Thermalkool, Thermalcool, and Energy Conservation Specialists. Each case is described briefly below.

Enviromate. The FTC’s complaint against the Enviromate defendants alleges that from September 2007 to February 2008, the company sold PolyCell Insulation, a cellulose insulation product that had been treated with a chemical additive that supposedly increased its insulating capacity. The Commission charged that PolyCell’s actual R-value was less than half of what the defendants claimed in their advertising, and that the false and unsubstantiated claims violated the FTC Act and the R-value Rule.

Specifically, the FTC charges that the defendants’ claims were not supported by tests required by the Rule, that the R-value of the insulation sold was more than 10 percent below the R-value claimed on the product’s label, that the defendants did not indicate the actual thickness of the insulation required to obtain the R-value claimed, and that they made per-inch R-value claims but did not have the testing required to make such claims.

The final court order settling the Commission’s charges requires that any R-value claims the defendants make – as well as any other energy-efficiency claims – are true and substantiated. It also bars them from violating the Rule and includes standard reporting and record-keeping provisions to ensure their compliance with its terms.

Meyer Enterprises. According to the FTC, these defendants sold an insulation product called Insul-Tarp between June 2007 and October 2008. The product, a thin blanket to be installed under concrete slab floors, was marketed with print and online materials that made deceptive claims about its supposed R-value. For example, the defendants claimed Insul-Tarp’s R-value is 7.54, but in reality Insul-Tarp’s R-value could not be more than 2. The FTC’s complaint charges the defendants with violating the FTC Act and the R-value Rule by failing to base their product’s R-value claims on required testing procedures, failing to provide consumers with the required R-value disclosures, and failing correctly to pair statements about the purported R-value and thickness of their product needed to achieve the claimed R-value.

The court order settling the charges prohibits the defendants from making any energy-related efficacy claims unless they are true and substantiated. It also prohibits violations of the R-value Rule, contains standard monitoring and record-keeping terms to ensure the defendants’ compliance, and imposes a civil penalty of $155,000.

Sumpolec. According to the FTC’s complaint, since at least 2007, Edward Sumpolec has sold two types of insulation products – liquid coatings and foil radiant barriers – under the brand or trade names Thermalkool, Thermalcool, and Energy Conservation Specialists. Through Internet-based stores, including a store on eBay, the defendant has advertised that his products slow down heat flow, making claims such as “4 layered coating system . . . equals R-100 insulating value,” “This . . . reflective coating will reduce wall and roof temperatures by 50-95 degrees . . .” and “Saves 40 to 60% on your energy bills.”

The FTC’s complaint states that the defendant did not have a reasonable basis for making the cost-saving claims, that he did not make savings-claims disclosures and did not retain records of such claims for three years, as required by the Rule, and that he sold home insulation to consumers without making informative fact sheets available. Finally, the complaint states that the defendant sold insulation to consumers without disclosing information about the insulation type, thickness, R-value significance, and insulation coverage area. In filing its complaint, the Commission seeks civil penalties for the alleged violations and asks the court to bar the deceptive conduct to ensure that Sumpolec does not violate the Rule in the future.

The Commission vote authorizing the filing of the three complaints and two stipulated final orders in consent of the court actions was 4-0. The DOJ filed the complaints and final orders on behalf of the FTC in the following federal courts: 1) Enviromate – U.S. District Court for the District of Alabama; filed on February 26, 2009 and entered on March 2, 2009; 2) Meyer Enterprises – U.S. District Court for the Central District of Illinois; filed on February 26, 2009 and entered on March 2, 2009; and 3) Sumpolec – U.S. District Court for the Middle District of Florida; filed on February 26, 2009.

The actions announced today settle the FTC’s complaints against the Enviromate and Meyer Enterprises defendants. The case against Sumpolec begins litigation without settlement.

NOTE: The Commission issues or files 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 complaint is not a finding or ruling that the named parties have violated the law. These stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated final orders require approval by the court and have the force of law when signed by the judge.

Copies of the complaints and stipulated final orders 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 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.

(R-Value.wpd)
(FTC File Nos. 082-3125, Enviromate; 082-3062, Meyer Enterprises; and 072-3238, Sumpolec;
Civ. Nos. CV-09-S-0386-NE, 1:09-cv-01074-MMM-JAG, and 6:09-CV-378-ORL-35 KRS.)