NCPA - National Center for Policy Analysis

Federal Trade Commission Cracks Down on Energy-Efficiency Ads

October 5, 2012

The Federal Trade Commission (FTC) has recently been cracking down on deceptive advertising by energy-efficient window manufacturers. Lauded by the Obama administration as a means of saving on energy costs, many of these manufacturers have received money from the federal government as a means of becoming cost-competitive, says McClatchy.

  • The 2009 stimulus gave the industry millions in tax credits.
  • Furthermore, taxpayers were awarded credits of up to $1,500 for the cost of installing energy-efficient windows and other "green" improvements.
  • The Department of Energy has made 15,000 awards to more than 5,000 recipients as part of the stimulus.

Because the barriers to entry are relatively low, there has been an increase in competitors. As a result, there has been a race to the bottom as many companies have made bold claims about their windows without any evidence to back it up.

The example of Serious Energy, a manufacturer of energy-efficient windows, illustrates the failure of energy-efficient window.

  • Paul Holland, a member of Serious Energy's board of directors, and his wife gave over $75,000 to Democratic candidates between 2007 and 2010.
  • As a result, they were rewarded with a $548,100 tax credit by the Obama administration in 2010.
  • But just two years later, the company shut down two of its factories.
  • Moreover, the company was hit with an FTC lawsuit for false and misleading advertising of reducing heating and cooling use by 49 percent.

The measurable savings of energy-efficient windows for consumers is negligible. Considering it takes between $7,000 and $20,000 to outfit an average home with these windows, consumers won't see a return on their investment for 20 or more years.

Source: Lindsay Wise, "FTC Cracks Down on Energy-Efficiency Ads, Including Some by Firms Obama Touted," McClatchy, October 2, 2012.


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