Window and Door May 2012 : Page 45
➤ THE PERFORMANCE ISSUE ;I86Xi^dc T he Federal Trade Commission fired a warning shot in February, when five replacement window companies were cited for making unsubstantiated energy sav-ings claims to homeowners about their products. Some executives welcomed the FTC actions, but it’s clear many manufacturers and dealers are now re-examining of the parameters of acceptable marketing and making adjust-ments in their advertising and sales efforts to avoid future run-ins with the government agency. “To make a random statement to all homeowners that they are going to save a speciﬁc amount of money by replacing their windows is a practice that has no place in our industry,” says Gary Delman, president of Sunrise Windows. Still, the industry shouldn’t overreact in the wake of the settlements, he adds. “Are we all going to hunker down and never make a statement about the beneﬁts, including the energy—and money—saving beneﬁts of replacement windows? I hope not. We shouldn’t overreact. We should get smarter.” Ultimately, many executives believe that the FTC inves-tigation and settlements is a L^aa>beVXiL^cYdlBVg`Zi^c\ BVcnXdbeVc^Zhl^aacZZYidWZbdgZXVji^djh^ci]Z^gZcZg\nhVk^c\hXaV^bh 7n8]g^hi^cVAZlZaaZc situation that will have positive ripples throughout the industry. “Generally speaking, I do not like government regulation and/or interference, but in this case, I see no reason for the pushback,” wrote Abe Gaskins, president of MGM Industries, in his response to a recent WDweekly poll question on this topic. “Ninety-nine percent of the industry does not need the FTC in their lives. I put our company in that group. However, the 1 percent or so of the bad apples need to be in check.” Bob Maynes, marketing director, of Mathews Brothers, a Maine manufacturer, agrees. “I’ve been following this story with more than just passing interest, and for once, I am thankful for the Federal government’s intervention in our business.” REACHING SETTLEMENT Five companies that sell replacement windows—Gorell Enterprises, Long Fence & Home, Serious Energy, THV Holdings and Winchester Industries—agreed to meet the FTC’s demands that they “stop making exaggerated and unsupported claims about the energy efﬁciency of their windows and how The ad, left, from Serious much money con-sumers could save Energy and Gorell’s “Energy Savings Pledge” on their heating were exhibits in the FTC and cooling bills.” complaints against each In reaching settle-ments with the company. FTC, the compa-nies did not admit to any wrongdoing and will not pay any monetary penalties. The window-speciﬁc cases centered on claims and pledges that energy efﬁcient windows could save homeowners anywhere www.WindowandDoor.com 45
FTC Action Will Impact Window Marketing
By Christina Lewellen
Many companies will need to be more cautious in their energy savings Claims
The Federal Trade Commission fired a warning shot in February, when five replacement window companies were cited for making unsubstantiated energy savings claims to homeowners about their products. Some executives welcomed the FTC actions, but it's clear many manufacturers and dealers are now re-examining of the parameters of acceptable marketing and making adjustments in their advertising and sales efforts to avoid future run-ins with the government agency.
"To make a random statement to all homeowners that they are going to save a specific amount of money by replacing their windows is a practice that has no place in our industry," says Gary Delman, president of Sunrise Windows.
Still, the industry shouldn't overreact in the wake of the settlements, he adds. "Are we all going to hunker down and never make a statement about the benefits, including the energy–and money–saving benefits of replacement windows? I hope not. We shouldn't overreact. We should get smarter."
Ultimately, many executives believe that the FTC investigation and settlements is a situation that will have positive ripples throughout the industry. "Generally speaking, I do not like government regulation and/or interference, but in this case, I see no reason for the pushback," wrote Abe Gaskins, president of MGM Industries, in his response to a recent WDweekly poll question on this topic. "Ninety-nine percent of the industry does not need the FTC in their lives. I put our company in that group. However, the 1 percent or so of the bad apples need to be in check."
Bob Maynes, marketing director, of Mathews Brothers, a Maine manufacturer, agrees. "I've been following this story with more than just passing interest, and for once, I am thankful for the Federal government's intervention in our business."
Five companies that sell replacement windows–Gorell Enterprises, Long Fence & Home, Serious Energy, THV Holdings and Winchester Industries–agreed to meet the FTC's demands that they "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." In reaching settlements with the FTC, the companies did not admit to any wrongdoing and will not pay any monetary penalties.
The window-specific cases centered on claims and pledges that energy efficient windows could save homeowners anywhere from 30 percent to 50 percent on their heating and cooling bills. The complaints are part of a larger FTC initiative to ensure that environmental marketing is based on scientific evidence and is not misleading for consumers. "The FTC is committed to making sure that the information consumers get I accurate and that marketers can back up the claims they make," said David Vladeck, director of the FTC's Bureau of Consumer Protection, at the time of the settlement.
The settlements were years in the making, as the marketing claims were under FTC investigation at the state and federal levels for several years. In fact, one of the companies involved with the settlement, Winchester Industries, discontinued its standardized pledges several years before the FTC ruling while the investigation was taking place, even though company officials were confident in the performance of their energy efficient products. "In 2010, when Winchester determined such standardized pledges could not always take into account individual home characteristics, it unilaterally and voluntarily discontinued offering such pledges," said Michael Segrue, vice president, in a company-issued statement.
The FTC settlement reaches far beyond the companies that were directly involved. A recent WDweekly survey of readers showed that nearly 60 percent of respondents were confident that their companies' marketing and advertising claims related to energy savings would escape FTC scrutiny. But that leaves about 40 percent of industry participants who expressed the need to take some claims under consideration and perhaps make changes in order to be more transparent and clear.
Many industry executives believe the ruling will make most manufacturers and dealers think twice before promising consumers specific energy savings as a result of window replacement. "It is nearly impossible for a window company to know what type of energy savings can be calculated for any given home," says Greg Irving of Soft-Lite Windows. "The existing conditions vary from structure to structure."
Given that, window companies may have to step lightly about how they characterize energy savings promises. "I believe that dealers have learned a lesson and, moving forward, will mention that high-performance windows will help tremendously with home energy savings, but will also add that their experience will be specific to their home," Irving adds.
Rick Jones, president of Stanek Windows, notes that claims must be explained as well–making comparisons as transparent as possible. "Many advertisers were overstating energy savings or comparing their products to single-glazed windows," he says. "Customers are replacing first-generation insulated glass windows in newer homes, many built since 1980, so energy savings as a percentage is not as great."
"These settlements will have a broad impact on the replacement window business," says David Walker, VP of the Window & Door Dealer Alliance. "Aware of government concerns about unsubstantiated energy savings claims, many window and door dealers and manufacturers have already become more cautious in recent years. The FTC action is likely to make everyone in the industry take a close look at what they say in their marketing."
IMPACT ON SALES
While the FTC investigation has caused some companies evaluate their public claims, many industry dealers doubt that the government's actions will have a far-reaching impact on sales of high-performance products. "Naturally, when people are going to invest in window replacement, the new windows and doors are going to be much more energy efficient than what is currently in the home" regardless of the extent to which marketing claims push the envelope, points out John Wilding, president and COO of FAS Windows & Doors, an Orlando-based dealer. "I don't think the FTC [ruling] will hurt the sale of high-performance products."
Troy Jenkins, president of Walker Windows, a California- based dealer, agrees that tempered language about energy savings won't necessarily impact sales. "I believe the performance of the product speaks for itself," he says.
And though the FTC has sent a clear message to the window industry with its settlement, there will continue to be companies that refuse to heed the warning and salespeople in the field that make aggressive claims about the energy savings that windows deliver. "Unfortunately … I believe companies and salespeople will always try to oversell whatever products they are selling to try and convince the consumer to purchase," says Walker Windows' Jenkins. "I believe this tactic is in many industries and will always be used. The key I having organizations like the FTC controlling it the best they can to discourage dishonesty."
Sunrise's Delman notes that the FTC ruling will only affect sales if the industry lets it. "What we are doing in manufacturing some of this country's most energy-efficient, energy saving products should be cheered," he says. "We all just need to get a little smarter as to how we accumulate specific data like this and professionally present information like this to homeowners."
As a result of the FTC investigation, many window companies should take a close look at their marketing messages, if they haven't already, to ensure that they toe the line, legal experts advise. David Toney, a lawyer who represents window and door companies, notes that taking the effort to scrutinize marketing claims proactively could save significant legal issues down the road.
"It's clear that 'guarantees' and unsubstantiated claims of some vague, ambiguous amount or percentage savings are on the FTC's radar," Toney points out. "The agency is certainly very sensitive to energy efficiency and cost savings claims, so companies that want to advertise in this manner must provide meaningful comparisons within their literature, and be able to substantiate or back up those claims."
So what can companies do to steer clear of legal challenges? What is considered "safe territory" when it comes to cost-saving claims in marketing? In addition to making claims that can be substantiated and being transparent about comparisons, Toney suggests that using an industry-recognized set of guidelines may give window companies a road map for making these types of decisions. "At an absolute minimum, I would recommend that all companies become well acquainted with [FTC's] Green Guides (officially known as the Guides for the Use of Environmental Marketing Claims), as it provides specific examples of what not to do and guidance related to environmental marketing claims," he says. "And, companies should stay tuned and continue to stay abreast as new Green Guides should be out soon that will provide specific details and pointers on green marketing."
"Many window and door dealers and manufacturers have already become more cautious in recent years."