FTC Reaches Settlement with Five Window Sellers

February 24, 2012
Companies

Five companies that sell replacement windows will have "to stop making exaggerated and unsupported claims about the energy efficiency of their windows and how much money consumers could save on their heating and cooling bills," under settlements reached with the Federal Trade Commission.  The cases are part of a broad FTC effort to ensure that environmental marketing is truthful and based on solid scientific evidence, government officials state.

 
 The FTC's Shopping for New Windows web page.

The FTC reached agreements with Gorell Enterprises, Long Fence & Home, Serious Energy, THV Holdings and Winchester Industries. The agency alleges that these companies engaged in deceptive practices, by making claims such as consumers could cut their energy bills in half by using replacement windows alone.

"Energy efficiency and cost savings are major factors for many consumers buying replacement windows," says David Vladeck, director of the FTC's Bureau of Consumer Protection. "The FTC is committed to making sure that the information consumers get is accurate and that marketers can back up the claims they make." 

In conjunction with the settlement announcement, the FTC also introduced a Shopping for New Windows guide for consumers. The web page is designed to provide information on factors that affect the energy savings replacement windows are likely to provide, as well as things to consider when shopping for new windows, such as cost, material, style, and installation.  It also shows how an energy performance rating label can help consumers choose the windows that are best for their specific needs.

Reviewing the individual cases, the FTC points to Gorell Windows & Doors' "40% Energy Savings Pledge," which promised consumers savings of at least 40 percent of home fuel consumption for both heating and cooling in the first year after their windows were installed, or they would repay them the difference, up to $500. According to the FTC's complaint, the Indiana, Pa.-based vinyl window manufacturer, which recently went into receivership with the assets purchased by Soft-Lite LLC, lacked a reasonable basis for claiming that consumers who replace their windows with its Thermal Master III windows were likely to achieve residential energy savings of 40 percent or save 40 percent on home heating and cooling costs.

Long Fence & Home, a Maryland company that also does business under the Long Windows name, is a distributor and installer Serious Energy's Quantum 2 windows. According to the FTC, Long's advertisements in various media have included claims such as "50% Energy Savings Guaranteed," and "save 50% on Energy Bills – or Long Pays You!"  The company also offered a savings calculator on its website.

Serious Energy's brochures and online materials have included claims such as, "Guaranteed to reduce your heating and cooling use by up to 49%." The FTC also notes that Serious Energy, which manufactures residential windows at plants in Pennsylvania and also offered heating and cooling reduction pledges, varying by dealer, and promised consumers would be paid up to $500 if they did not realize these savings within one year of when the windows were installed.

THV used telemarketing sales scripts that said its replacement windows would "cut energy bills in half," with homeowners will typically seeing "a 35 to 55 percent reduction in monthly energy bills," the FTC states. The Kentucky-based company is also said to have claimed that its windows "will pay for themselves in energy savings alone in 8 years or we will pay the difference . . . our windows are free!!"

Based in Pennsylvania, Winchester manufactures Bristol Windows. In its promotional materials, the company claimed that consumers would "reduce energy costs by 47%" and that "the triple-paned design of some replacement windows, such as Bristol windows, can also produce energy savings of up to 50% a year," the government says.

In all five cases, the FTC charges that energy savings claims were unsubstantiated or the companies lacked a reasonable basis for making such claims.  The proposed orders settling the FTC's charges against the five companies are designed to prevent the companies from engaging in similar deceptive marketing practices in the future, the government states.

Responses
One of the companies, Serious Energy, has posted a statement online in response to the FTC settlements. "Serious Energy openly worked with the FTC throughout the process and provided the agency with extensive data and documentation regarding our window products," says Valerie Jenkins, senior marketing officer.

"We are strong supporters of processes and systems that promote the dissemination of accurate information to consumers and hold companies accountable for their marketing claims," the statement continues. "We believe it is our responsibility to help educate consumers and empower them with helpful and accurate information that they need to make the best purchasing decisions. Consumers are best served when markets are credible, fair, competitive, and open. Industry self-regulation and FTC regulation both raise the bar on advertising best practices, and that benefits both the public and the industry as a whole. We, as an industry, best serve our customers by delivering high-quality products and by becoming a trusted resource that helps consumers make informed, smart purchasing decisions. We continue our commitment to these values, and we hope other window manufacturers do the same." 

“These settlements will have a broad impact on the replacement window business. Aware of government concerns about unsubstantiated energy savings claims, many window and door dealers and manufacturers have already become more cautious in recent years,” says David Walker, VP of the Window & Door Dealers Alliance. “The FTC action is likely to make everyone in the industry take a close look at what they say in their marketing.”

The marketing and advertising strategies cited in the FTC announcement have been under investigation at the state and federal levels for years, says Paul Gary of the Gary Group, a law firm that frequently represents window and door companies. "The government's position is that there are so many variables that affect overall home energy performance that there is no reasonable scientific basis to make a specific percentage pledge for energy savings related to an upgrade in window materials," he states.

"In addition, the agencies look past the often used wiggle words such as save 'up to” 40%,' because they feel the message is that, 'it is a fact the consumer will in fact save in the area of 30-40%,'"  Gary continues. "I understand their point."

The legal questions raised by energy savings promises were addressed at the last WDDA forum, Walker notes, and the group plans to play a strong role in educating the industry about what’s allowable in marketing and what’s not moving forward.

“These agreements should not lead anyone to doubt the energy saving potential of windows and doors,” Walker points out as well. “Even with the FTC concerns about the accuracy of specific claims, it’s worth noting that the federal government also operates programs which promote the use of high-performance products.”

Gary also points Department of Energy efforts to promote energy efficient windows and doors, noting that it had developed and published its own “energy savings calculator” which included an effect derived from installing upgraded windows. Some companies linked to the DOE calculator, he notes.  "Of course, the DOE calculator included an extensive disclaimer," Gary adds. "It is more than interesting that the DOE calculators no longer include windows as a building component upon which an estimate of energy savings can be based." 

The FTC settlements are subject to public comment for 30 days, after which the FTC will decide whether to make the proposed consent orders final. In making the announcement, the FTC has acknowledged the assistance of the Washington State Attorney General's Office in its investigation.