FOR IMMEDIATE RELEASE: August 29, 1990 FTC AND ATTORNEYS GENERAL WARN CONSUMERS OF POSSIBLE ENERGY-RELATED SCAMS The Federal Trade Commission and the National Association of Attorneys General today warned consumers to be on the lookout for scams and rip-offs that take advantage of consumers' concerns about supplies of petroleum following Iraq's invasion of Kuwait. These fraudulent schemes may range from phony gas-saving devices or other energy-saving devices that don't work as advertised, to oil and gas investment frauds. "Consumers should be especially cautious at this time about products sold as energy-savers or good investment opportunities," said Janet D. Steiger, Chairman of the FTC. "Unfortunately, unscrupulous individuals often attempt to exploit situations like the present one by taking advantage of consumers." Virginia Attorney General Mary Sue Terry, President of the National Association of Attorneys General, said, "With the Labor Day Weekend ahead, and many Americans on the road, consumers should stay away from devices which claim to significantly increase fuel mileage. They simply have not been found to be effective. Your best bet is a well-tuned car. Invest dollars where the results are proven." The FTC said that one very important thing that consumers can do in times of gas concerns like this is to make sure that they're not using more octane than their cars need, and should consult their car owners' manuals to see if the manufacturer recommends a low octane gasoline rather than a high octane gasoline. Using a lower octane gasoline can save consumers a lot of money. If you have been victimized, or have a complaint, please con- tact the FTC or your Attorney General. Write to the FTC at: Federal Trade Commission, Washington, D.C. 20580; or to your Attorney General. # # # MEDIA CONTACT: Office of Public Affairs, FTC, 202-326-2180 TIPS FOR CONSUMERS ON ENERGY-RELATED SCAMS Issued by the Federal Trade Commission and State Attorneys General The FTC and State Attorneys General have issued the following tips to help consumers recognize and avoid the many energy-related scams that are reportedly occurring across the country during the current Middle East situation. PRODUCTS AND SERVICES Home Energy Savings Devices Marketers may claim that electric power savers, or "surge sup- pressors," will save consumers a lot of money and conserve elec- tricity used by household appliances and electric home heating and air conditioning systems. Others have marketed "duty cyclers" that regularly turn furnaces off and on to try to save energy. These devices, which may be costly, have not been proven effective. Solar Energy Products Know the people you are dealing with. Some marketers may try to sell solar energy systems designed for industrial uses to unsuspecting home-owners, ultimately raising their utility bills instead of lowering them. Or they may try to sell products that simply can't save as much money as claimed. This field contains a double whammy -- you should watch out not only for suspicious products, but also look out for business opportunity ventures or investments related to the sale, distribution and installation of solar products. Home Improvement There are a great many products on the market that will help conserve energy, reduce your fuel bills, and are economical pur- chases. These range in cost from very little -- like caulking and weatherstripping -- to very expensive -- installing attic and wall insulation, buying storm windows, or purchasing a new and more efficient furnace. The energy savings you might obtain, however, are highly variable. It depends on the climate in your part of the country, how well your house is already insulated, how it is heated or cooled, and what your individual comfort level may be. In the past, marketers have made exaggerated energy savings claims for insulation products, storm windows, room heaters, resi- dential siding, and solar heating systems. Be careful in assessing advertising claims so that you understand the basis for such claims, and how they may apply to your specific situation. If the savings claims appear unrealistic, they probably are. And remember, if you add insulation or take other energy con- servation measures in your home, your total monthly utility bill may not go down if the price of fuel is rising. But it still may cost you less than you would have paid, because you've made your home more efficient. "Gasoline Savings" Devices If gas prices rise, consumers may want to improve their fuel mileage. Marketers have offered all sorts of automotive gadgets, devices, and magnets, as well as oil and gasoline additives, intended to enhance fuel mileage. Unfortunately, none of these products has been found to significantly increase fuel economy. To get better mileage, you may want to check your tire pressure, remove excess weight from your car's trunk, and get a tune-up. Investment Schemes When oil prices rise, oil and gold investment scams appear. When Wall Street is jittery, all kinds of investment scams appear. Look out for oil and gas partnerships, gold and silver mining schemes, phony investments in oil drilling or bogus pipelines, or any investment scam that promises a significantly higher rate of return than you might expect from more traditional investments. And always be cautious about investing sight unseen in some- thing you're unfamiliar with -- rare coins, fine art, or gemstones, for example. Woodburning Stoves Again, sellers may make misleading or exaggerated energy per- formance claims. More important, they may not give you safety and installation information. Some woodburning stoves can pollute the environment, and the use of woodburning stoves has been severely curtailed by some local governments. MARKETING TECHNIQUES One difference consumers might see now from past energy crises is that new marketing techniques are being used, such as telemark- eting, "infomercials," and 900 numbers. These techniques in them- selves are not deceptive -- indeed, many reputable companies use them -- but in the hands of unscrupulous individuals, they can hurt consumers. Telemarketing Telemarketers are those people who call you at home, offering to sell you goods and services over the phone, or send you post- cards telling you to call them right away. Beware of those who offer you "great bargains" out of the blue. Unscrupulous tele- marketers find it easy to offer whatever product or service is "hot" at any given moment. If they are offering water purifiers today, they can easily switch to gas-saving devices tomorrow. You can protect yourself by: -- Never giving your credit card number over the phone, if you didn't initiate the call. -- Asking questions. Get it in writing. -- Being suspicious. Why would someone you don't know offer you an investment opportunity that they claim could triple your money? -- Finding out all costs involved before making a commit- ment. -- Being cautious of high-pressure tactics. Do you really believe that this is a limited-time offer? -- Just hanging up the phone if in doubt! "Infomercials" Infomercials are commercials that look like TV shows. They are usually about 30 minutes long, and resemble a talk show, like Oprah or Donohue, or an investigative show, like 60 Minutes. Many infomercials are upfront about being an ad -- they say so, fre- quently. But, unfortunately, many don't do that. Be suspicious if one product is the only topic of discussion on the "show" and also the only item advertised, especially if they offer a number to call to place an order. "900" Numbers Unlike toll-free "800" numbers, the consumer is billed for "900" numbers at rates much higher than regular long distance rates. The seller sets the price of these calls, which can run from $2 to $45 a minute -- or higher! If you are calling a "900" number, find out first how much the call will cost, and remember to add that to the cost of the product. It might be a lot more expensive than you think. Some companies also use "976" numbers. These are local calls, but they carry the same charges as "900" numbers. It might be cheaper to look in the telephone book and see if they have a regu- lar number. PROTECTIONS Consumers should be their own first line of defense -- remember, if it sounds too good to be true, it probably is! But the federal and state governments also offer legal protections. Here are a few specific ones. Appliance Labeling Rule If you need to buy a new major home appliance, and also want to save energy, look for the bright yellow label, called an "EnergyGuide," on appliances in stores. The FTC's Appliance Label- ing rule requires that these labels disclose the energy costs or operating efficiency for each appliance. Again, remember to factor the long-term energy costs into your purchasing decision. Gasoline Octane Rule All gasoline pumps must disclose the octane content of the gas. A good way to save money with rising gas prices is to buy only the octane level gas you really need. Check your car's owner's manual to see what the manufacturer recommends. But indi- vidual cars may vary. If your engine is "pinging" or "knocking," you might need either a higher octane or a tune-up. Remember, the higher the octane, the higher the price. So don't use a higher octane than you need -- it will cost more and it won't help your car at all. R-Value Rule Adding insulation to your home can help lower your energy use. The FTC's R-value Rule can help you shop for insulation effective- ly. Under this Rule, all home insulation labels must disclose the product's R-value. "R" stands for resistance to heat flow, so the higher the R-value, the higher the insulating power of the product. But, you may not need the highest R-value you can find. How much you need depends on where you live, how much insulation you already have, and other factors. There might also be cheaper ways of reducing energy use than buying more insulation. Ask to see the insulation fact sheet about R-values for more information. Cooling-Off Rule If someone knocks on your door and offers to sell you storm windows, energy-saving siding, or other products or services costing more than $25, you have certain rights under the Cooling- Off Rule. If you want the product or service, be sure the seller provides you with a notice of cancellation along with the contract. Under the Rule, the seller must give you three business days to change your mind, cancel the contract, and get your money back. And Saturday counts as a business day. Energy Fraud Clearinghouse The FTC and the Attorneys General are reactivating the Energy Fraud Clearinghouse that was created in 1983, which is a way of sharing information on possible fraudulent energy-related products and advertising. It helps state, local and federal law enforcement officials to keep on top of emerging problems related to the grow- ing number of energy-related products and services on the market. If you have been the victim of an energy-related scam, please contact your Attorney General so that your experience may be put into the data base. These are only a few of the specific protections consumers have. The FTC has wide-ranging jurisdiction over consumer protection laws, ranging from advertising to credit to marketing practices, and the states have similar mandates to protect their citizens. The FTC and the Attorneys General very much want to help consumers. Contact: Federal Trade Commission Washington, D.C. 20580 or Your State Attorney General Office of Consumer Protection Your State Capitol (Most Attorneys General have toll-free consumer hotlines -- check with your local directory assistance)