General Signal Power Systems, Inc

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IN THE MATTER OF GENERAL SIGNAL POWER SYSTEMS, INC.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3~60. Complaint, March 11, 1999--Decision, March 11, 1999 This consent order, among other things, prohibits the Wisconsin-based company that manufactures, advertises and sells Uninterruptible Power Supplies ("UPS"), devices that protect computers or other appliances from damage resulting from power outages, from makirig any representations regarding the ability ·of its UPS, or similar products, to reduce computer or network downtime, or regarding the extent to which any such product reduces the number of calls for service, unless the company possesses and relies upon competent and reliable evidence to substantiate the claims.

Participants For the Commission: Matthew Gold, Linda Badger, and Jeffrey Klurfeld.

For the respondent: Donald Mulvihill; Cahill, Gordon & Reindel, Washington, D.C.

COMPLAINT The Federal Trade Commission, having reason·to believe that General Signal Power Systems, Inc., a corj)oration ("respondent"), has violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, alleges:

1. Respondent General Signal Power Systems, Inc., is a Wisconsin corporation with its principal office or place of business at N. 9246 Highway 80, Necedah, Wisconsin.

2. Respondent, through its division, Best Power, has manufactured, advertised, labeled, offered for sale,. sold, and distributed computer products to the public, including the ·"Patriot" and "Fortress" uninterruptible power systems. Uninterruptible power systems are devices that protect consutner appliances, such as personal computers, from damage resulting from power disturbances or power failures.

Complaint 127 F.T.C. 3. The acts and practices of respondent alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act. 4. Respondent has disseminated or has caused to be disseminated advertisements for Patriot uninterruptible power systems and Fortress uninterruptible power systems, including but not necessarily limited to the attached Exhibits A through D. These advertisements contain the following statements and depictions: A. "T¥his is#n't a mod+.em prq.:oooblem. This is a power problem. The results are crashed networks and hard drives, faulty data transmissions, read/write errors, premature failure of components, system lockups, corrupted or lost data and more.

Best Power products are the answer. They clean up dirty power before it reaches your equipment. This can reduce your computer problems up to 80%. * *A five-year power quality study conducted by Best Power's National Power Laboratory showed that the number of calls for computer service dropped 82% after installation of a UPS.

Don't tolerate power problems. Call Best Power for your power protection answers."

(Exhibit A, print advertisement) · B. "80% ·of your downtime isn't hardware or software related. It just looks that way. It's actually power problems masquerading as hardware or software problems.

Best Power products are your answer. Ifyou have a blackout, they give you enough power to shutdown everything correctly. They also clean up dirty power before it reaches your equipment, which can reduce your.computerproblems by up to 80%. * *A five-year power quality study conducted by Best Power's National Power Laboratory showed that the number of calls for computer service dropped 82% after installation of a UPS.

Don't let power-related downtime affect your bottom line. Call Best :rower for your power protection answers."

(Exhibit B, print advertisement) C. "Today, millions ofpeople will experience their worst nightmare. They will lose prysentations and reports to a computer crash. They will blame their software or hardware when a power problem is really responsible.

Power problems can also cause network and hard drive crashes, read/write errors, corruption or loss of data, faulty data transmissions, system lockups, premature failure of components and much more.

GENERAL SIGNAL POWER SYSTEMS, INC. 393 391 Complaint Best Power products are your answer. They clean up dirty power, which can reduce your computer problems up to 80%. * *A five-year power quality study conducted by Best Power's National Power Laboratory showed that the number of calls for computer service dropped 82% after installation of a UPS.

Don't take unnecessary risks. Call Best Power for your power protection answers." ,. (Exhibit C, print advertisement) D. "6 days ago you had important data. 3 days ago ymrhad a power spike. Now you have a problem.

Bad power can corrupt all the files on a UNIX system. And that's not all. Power problems can also cause network and hard drive crashes, read/write errors, ,. corruption or loss of data, faulty data transmissions, system lockups, premature failure of components and much more.

Best Power products are your answer. They clean up dirty power before it reaches your equipment, which can reduce your computer and network downtime up to 80%.* *A five-year power quality study conducted by Best Power's National Power Laboratory showed that the number of calls for computer service dropped 82% after installation of a UPS."

.(Exhibit D, print advertisement) · 5. Through the means described in paragraph four, respondent has represented, expressly or by implication, that: A. 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%.

B. Best Power products can reduce computer and network downtime up to 80%.

C. 80% of a typical computer's downtime is due to power problems, rather than to hardware or software problems. D. A Patriot or Fortress UPS can reduce the number of calls for computer service by 82%.

6. Through the means described in paragraph four, respondent has represented, expressly or by implication, that it possessed and _ relied upon a reasonable basis that substantiated the representations set forth in paragraph five, at the time the representations were made. 7. In truth and in fact, respondent did not possess and rely upon a reasonable basis that substantiated the representations set forth in paragraph five, at the time the representations were made. Therefore, ~=---~--------- 3 94 FEDERAL TRADE COMMISSION DECISIONS Complaint 127 F.T.C. the representation set forth in paragraph six was, and is, false or misleading.

8. Through the means described in paragraph four, respondent has represented, expressly or by implication, that a fi~e-year power quality study conducted by Best Power's National Power Laboratory ·showed that the number of calls for computer service dropped 82% after installation of a UPS.

9. In truth and in fact, a five-year power quality study conducted by Best Power's National Power Laboratory did not show that the number of calls for computer service dropped 82% after installation of a UPS. Rather, the 82% figure cited in the advertisements was taken from a one-time customer survey. Therefore, the representation set forth in paragraph eight was, and is, false or misleading. 10. Through the means described in paragraph four, respondent has represented, expressly or by implication, that competent and reliabre studies or surveys show that the number of calls for computer service dropped 82% after installation of an uninterruptible power source.

11. In truth and in fact, competent and reliable studies or surveys do not show that the number of calls for computer service dropped 82% after ·installation of an uninterruptible power source. For ·example, the consumer survey from which the 82% figure was taken only considered purchasers of UPSs that feature a ferroresonant transformer, which provides a much higher degree of protection from power disturbances than do the Patriot or Fortress model featured in the advertisements. Therefore, the representation set forth in paragraph ten was, and is, false or misleading. 12. The acts artd practices of respondent as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section S(a) of the Federal Trade Commission Act.

,- GENERAL SIGNAL POWER SYSTEMS, INC. 395 391 Complaint EXHIBIT A 15 a p·ower problem. This It's easy to solve Best Power products are Don't tolerate power problems. the a~swer. They elton up Call Best Power for your a problem once dirty powu before it reaches power protection answers. you know what your equipment. This can reduce your computer prob- l-800-469-4842 the problem is. Ask for open tor )65 lems up to 80'f;,_ • They also The averoge computer provide backup power during e·m•il: in([email protected] ~ ite suffers 289 disruptive outages. allowing you to shut fnu:mec hnp:J/www.B e..~I.Power.t.vm or destructive"power distur· down properly. 24-hour FAX inform:.lion line ut 1-800-487-61113. . banccs a year. The results And now, all Best Powrr are l."rashed networks and • " .;.._. ,c_.~.....,.., Single-Ph~ UPSs hard drives. faulty data ( ............... ~'~-~·.,.,.,,,,~ ......,_.,.....,.,._.,.... come ........... ..~~-..... ,.... ....., ,..... ._,., .......,....,_t..,, \Its cran :oimissions. read/write with free software, pro- .... crrurs. premaiUre i"failure of viding power monitoring cnmp<1nenc~. system lockups. and automatic unattended corruph::d or lost dau and more. shutdown for your system. .,.WIO'I"' UIWII'tt•Wti61t 'tort1Sr\llill BBest fi.W:Iolo!Uh" $otlft1CI -Power ....... . ,,, . • ••, ... of ' ...... . .. ,;.....:'"' ,,~........ 17 l ll,\1\ f / lll ( ',•ll t'f ,.,,,,,., u, .. , CONF IOENTI AL EXHIBIT A BEST POWER OOI RI! Complaint 127 F.T.C. EXHIBIT B It just looks that way.

It's actually power Best Power products arc your Don't let power-related answer. If you have a blackout, downtime affect your bottom problems masquer- they give you enough power to line. Call Best Power for your ading as hardware shutdown everything correctly. power protection answers. or software problems. They also cledn up dirty power before it reaches your equipmen~ 1-800-469-4842 Sure, you can blame your pro- which can reduce your computer Ail: for openuor 381 gram or equipment when your problems by up to 80%. • E-ma.il: info®beslpower.com computer locks up. But it's Interne<: http:llwww.be>tpowct'.com probably bad power. And most And now, all Best Power 24-hour FAX information line: at power problems ate undetect· Single-Pha.se UPSs come I· 81J0.487 -6813. •Ati.,..,._.,..........,.....,~bJ bundled rree sonware with ·able, even though the average ~,.._... .......... . ............. ..--.,~~off:llllo( ... _...._...._ program CD-ROM to computer site is hit by 289 a on ~dWiou&.oil of•las. ........... ... year. They can cause crashes, . automatic shutdown In the corrupt or lost data. faulty data event of a power failure. transmissions and lots more.

BBest Visit us at COMDEX/Fall. Booth #53570 -Power. 01996 9.c:A Powa. AU Richl.s l.ucrvod. Th~ A.II.Sil't'r iu Puwt:r Pmteclioll \\'( f'.ii)O WS SOURCES • W\\"W.WSOl.iRCt:::S.C0,\1 I IH:CE.\t:61-:R l'l\16 211 CIACLE t 18 ON AE~EA SERVICE CARO EXHIBIT B GENERAL SIGNAL POWER SYSTEMS, INC. 397 391 Complaint EXHIBIT C They will lose presentations and reports to a computer (:rash! They will blame their Best Power products are your Don't take unnecessary risks. ans;.,er. They cl~an up dirry Call Best Power (or your software or hardware pow<r, which can reduce your power protection answers. when a power problem computer problems by up to .~-j: 1-800-469-4842 .. ;;;.~;: is really responsible. 8Q%. • They also provide Ask for opcntor 380 backup power to shutdown Power problems can. also gracefully i~ a blackout. E-mail: inco®bestpOwer.~m = cause network and hard drive huemet: http://www.bestpower.com :r crashes, read/write errors. cor· And now, all Best Power 14-hour FAX information'line at ruption or loss of data, faulty Single-Phase UPSs come t-800-487-68t3. . bundled with free software, data transmissions. system • ____ .., .--....-raMt Atioc<JCW,_.,,.._,.,._~ providing power monitoring ........ .... lockups. premature failure of omt-.c otc.ah/OII....,..W ...... ~ and automatic unattended ~.~ . un. components and much more. hl:rim*f'M~'-~""'- ............. shutdown for your system. (lftcflxtHftwSotfwvtl Visit us at COMDEXJFall, Booth #S3570 01996 8C1ol Po•n-. AU RitiUs Ruc1VH. . • Tltl' An.twc-r in l'm\'t'r Pl'ulf'<'timt WINDOWS SOURCE(S • WWW.\VSOURCES.COM I OECE ... BER 1'96 209 Circle 1 t TON R€AOEI\ SEAV1CE CARO EXHIBIT C Complaint 127 F.T.C. EXHIBIT D Now you have a problem.

Bad power can equipment, which can reduce So call Best Power for your corrupt all the files your computer and network power protection answers. downtime up to 80%. • And on a UNlX system. . if you have a blackout, ihey 1-800-469-4842 Ask for opera10r 298 provide backup po.wer to shut And that's not all Power down your system co!Tectly. E-mail; [email protected] problems can also cause netlnlemec; http://www.bestpower.com work and hard drive crashes. And now, every Best Power 24-hour FAX infocmalion line ac read/write errors, conuption Single-Phase UPS comes (.800-487-6813. or loss of data, faulty data with rree software, protransmissions, system lock- vlding'power monitoring ac.;,..,....,tf~AIM·I"'P--,...tior"...-..~""..~,_~~ ups, premature failure of and unattended shutdown NN--.r.tCIII•...,_ n" 11w ..uM.-f•-.-true4et •lM. components and much more. ror your entire computing environment.

Best Power product~ are your answer. They c/~an up dirty powu before it reaches your Visit us at COMDEX/Fall, Booth #53570 DIY% fksl Powtf'. AJI Ri(hts R(:fott¥(6, Circle 13'2 on lnquity Card (RES ELLERS: 133). EXHIBIT 0 GENERAL SIGNAL POWER SYSTEMS, INC. 399 391 Decision and Order DECISION AND ORDER The Federal Trade Commission having initiated an investigation . I of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a. copy of a draft of complaint whi~h the San Francisco Regional Office ' proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act; and The respondent, its attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an ! · admission by respondent that the law has been violated as alleged in such complaint, or that the facts as alleged in such complaint, other than jurisdictional facts, are true and waivers and other provisions as required by the Commission's Rules; and . ' . The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondent has violated the said Act, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed ,. ' consent agreement and placed such agreement on the public record for a period of sixty ( 60) days, now in further conformity with the ,;' ! procedure prescribed in Section 2.34 of its Rules, the Commission t, hereby issues its complaint, makes the following jurisdictional. : 1 fmdings and enters the following order:

I ·! 1. Respondent General Signal Power Systems~ Inc., is a corporation organized, existing, and doing business under and by virtue of ', the laws of the State ofWisconsin, with its office and principal place of business .located at N. 9246 Highway 80, Necedah, Wisconsin. . 2. The Federal Trade Commission has jurisdiction ofthe subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER DEFINITIONS For the Puff<?Ses ofthis order, the following definitions shall apply: 1 ------=-·- Decision and Order 127 F.T.C. 1. "Competent and reliable scientific evidence" shall mean tests, analyses, research, studies, or ot~er evidence based on the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.

2. Unless otherwise specified, "respondent" shall mean General Signal Power Systems, Inc., a corporation, its succes-sors and assigns, and its officers, agents, representatives and employees. 3. "Commerce" shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C . .44.

I.

It is ordered, That respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of the Patriot or Fortress uninterruptible power systems, or any substantially similar product, in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, about:

A. The ability of any such product to reduce computer and network downtime; or B. The ·extent to which any such product reduces the number of calls for computer service, unless, at the time it is made, respondent possesses and relies upon competent and reliable scientific evidence that substantiates· the representation.

For purposes of this Part, "substantially similar product" shall mean any uninterruptible power supply.

II.

It is further ordered, That respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any product in or affecting commerce, shall not misrepresent, in any manner, expressly or by implication, the existence, contents, validity, results, conclusions or interpretations of any test, study, or research. · GENERAL SIGNAL POWER SYSTEMS, INC. 401 391 Decision and Order III.

It is further ordered, That respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any computer-related product, in or affecting commerce, shcill not make any representation, in any manner, expressly or by implication, about the benefits, performance, _Dr efficacy of such product, unless, at the time the representation is made, respondent possesses and relies upon competent and reliable ' evidence, which when appropriate must be competent and reliable scientific evidence, that substantiates the representation. IV.

It is further ordered, That respondent, and its successors and ·assigns shali, for five ( 5) years after the last date of dissemination of any representation covered by this order, maintain and upon request make available to the Federal Trade Commission for inspection and copying: A. All advertisements and promotional materials containing the representation;

B. All materials that were relied upon in disseminating the . 'I -representation; and C. All tests, reports, studies, surveys, demonstrations, or other evidence in their possession or control that contradict, qualify, or call into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations. V.

It is further ordered, That respondent, and its successors and assigns, shall deliver a copy of this order to all current and future principals, officers, directors, and managers, and to all current and future employees, agents, and representatives having responsibilities with respect to the subject matter of this order, and shall secure from each such person a signed and dated statement acknowledging receipt of the order. Respondent shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities.

Decision and Order 127 F.T.C. VI.

It is further ordered, That respondent, and its successors and ""assigns, shall notify the Commission at least thirty (30) days prior to any change in the corporation that may affect compliance obligations arising under this order, including but not limited to a dissolution, assignment, sale, merger, or other acti<?n that would result in th~ emergence of a successor corporation; the creation or dissolution of a subsidiary, parent or affiliate that engages in any acts or practices subject to this order; the proposed filing of a bankruptcy petition; or a change in the corporate name or address. Provided, however, that, with respect to any proposed change in the corporation about which respondent learns less than thirty (30) days prior to the date such action is to take place, respondent shall notify the Commission as soon as is practicable after obtaining such knowledge. All notices required by this Part shall be sent by certified mail to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C.

VII.

It is further ordered, That respondent, and its successors and assigns, shall, within sixty (60) days after the date of service of this order, and at such other times as the Federal Trade Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order. VIII.

This order will terminate on March 11, 2019, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of:

A. Any Part in this order that terminates in less than twenty (20) years;

B. This order's application to any respondent that is not named as a-defendant in such complaint; and C. This order if such complaint is filed after the order has terminated pursuant to this Part.

GENERAL SIGNAL POWER SYSTEMS, INC. 403 391 Decision and Order Provided further, that if such complaint is dismissed or a federal court rules that the respondent did not violate any provision of the order, and the dismissal or ruling is either not appealed or upheld ·on appeal, then the order will terminate according to this Part as though the complaint had never been filed, except that the order will not terminate between the date such complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date such dismissal or ruling is upheld on appeal.

Complaint 127 F.T.C.