General Signal Power Systems, Inc.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 9723063]

General Signal Power Systems, Inc.; Analysis To Aid Public

Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged

violations of federal law prohibiting unfair or

[[Page 71479]]

deceptive acts or practices of unfair methods of competition. The

attached Analysis to Aid Public Comment describes both the allegations

in the draft complaint that accompanies the consent agreement--that

would settle these allegations.

DATES: Comments must be received on or before February 26, 1999.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 600 Pa. Ave., NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Matthew D. Gold or Linda K. Badger,

San Francisco Regional Office, Federal Trade Commission, 901 Market

Street, Suite 570, San Francisco, California 94103, (415) 356-5270.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), notice is hereby

given that the above-captioned consent agreement containing a consent

order to cease and desist, having been filed with and accepted, subject

to final approval, by the Commission, has been placed on the public

record for a period of sixty (60) days. The following Analysis to Aid

Public Comment describes the terms of the consent agreement, and the

allegations in the complaint. An electronic copy of the full text of

the consent agreement package can be obtained from the FTC Home Page

(for December 21, 1998), on the World Wide Web, at ``http://

www.ftc.gov/os/actions97.htm.'' A paper copy can be obtained from the

FTC Public Reference Room, Room H-130, 600 Pennsylvania, NW,

Washington, DC 20580, either in person or by calling (202) 326-3627.

Public comment is invited. Such comments or reviews will be considered

by the Commission and will be available for inspection and copying at

its principal office in accordance with Section 4.9(b)(6)(ii) of the

Commission's Rules of Practice (16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement, subject to

final approval, to a proposed consent order from General Signal Power

Systems, Inc., a Wisconsin corporation.

The proposed consent order has been placed on the public record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and the comments received and will decide whether it should

withdraw from the agreement or make final the agreement's proposed

order.

General Signal Power Systems, Inc. (``GSPS''), through its

division, Best Power, manufactures and markets computer-related

products, including the ``Patriot'' and ``Fortress'' uninterruptible

power systems (``UPS''). Uninterruptible power systems are devices that

protect consumer appliances, such as personal computers, from damage

resulting from power disturbances or power failures.

The Commission's complaint charges the GSPS's advertising contained

false and unsubstantiated claims regarding the extent to which these

devices can reduce a consumer's computer problems. Specifically, the

complaint alleges that GSPS made unsubstantiated claims that: (1) Best

Power products can reduce computer problems, such as crashed networks,

crashed hard drives, faulty data transmissions, read/write errors,

premature failure of components, system lockups, corrupted or lost

data, by up to 80%; (2) Best Power products can reduce computer and

network downtime up to 80%; (3) 80% of a typical computer's downtime is

due to power problems, rather than to hardware or software problems;

and (4) a Patriot or Fortress UPS can reduce the number of calls for

computer service by 82%.

The Commission's complaint also alleges that GSPS made a false

claim that a five-year power quality study showed that the number of

calls for computer service dropped 82% after installation of a UPS. In

fact, the complaint states that the 82% figure cited in the

advertisements was taken from a one-time customer survey. Moreover, the

complaint alleges that the underlying consumer survey offered to

support the claim that consumers experienced an 82% reduction in

computer problems after the installation of a Patriot or Fortress UPS

was not competent and reliable. As an example, the complaint alleges

that this consumer survey only considered the experience of purchasers

of UPSs which feature a ``ferroresonant transformer.'' UPSs which

include this feature provide a higher degree of protection from power

disturbances than do the Patriot or Fortress models shown in the

advertisements at issue.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent the respondent from engaging in

similar acts and practices in the future. Part I of the proposed order

would prevent GSPS from making any representations regarding UPSs, or

any substantially similar product, about: (1) The ability of any such

product to reduce computer and network downtime; or (2) The extent to

which any such product reduces the number of calls for computer

service, unless it possesses and relies upon competent and reliable

scientific evidence that substantiates the representations.

To remedy GSPS's misrepresentations regarding the consumer survey,

part II of the proposed order prohibits GSPS from misrepresenting, in

any manner, expressly or by implication, the existence, contents,

validity, results, conclusions or interpretations of any test, study,

or research regarding any product. As fencing-in relief, Part III of

the proposed order would require the company to possess and rely upon

competent and reliable evidence to substantiate any claim regarding the

benefits, performance, or efficacy of any computer-related product.

Finally, the proposed order requires the respondent to maintain

materials relied upon to substantiate claims covered by the order; to

provide copies of the order to certain personnel of the respondent; to

notify the Commission of any changes in corporate structure that might

affect compliance with the order; and to file one or more reports

detailing compliance with the order.

The purpose of this analysis is to facilitate public comment on the

proposed order. It is not intended to constitute an official

interpretation of the agreement and proposed order or to modify in any

way their terms.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 98-34226 Filed 12-24-98; 8:45 am]

BILLING CODE 6750-01-M