Kryton Coatings International, Inc

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF KRYTON COATINGS INTERNATIONAL, INC.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATIONS OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-4052; File No. 0123060 Complaint, June 14, 2002--Decision, June 14, 2002 This consent order addresses advertising representations made about “Multi- Gard” – a residential coating product also known as Liquid Siding, Liquid Vinyl, or Multi-Gard R-20 – by Respondents Kryton Coatings International, Inc. and Procraft, Inc. The order, among other things, prohibits the respondents from making any representation about the benefits, performance or efficacy of any liquid siding or coating product – including (1) that such product reduces energy loss, energy costs, energy consumption, or utility bills; (2) any R-value associated with such product; or (3) such product’s insulation qualities as compared to any other materials, including insulation materials – unless, at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation. The order also requires the respondents to notify Multi-Gard distributors and wholesalers about this action, and to send them a copy of the order. Participants For the Commission: Hampton Newsome, Robert M. Frisby, Joni Lupovitz, Elaine D. Kolish and Janis K. Pappalardo. For the Respondent: Edward A. Geltman, Squire, Sanders & Dempsey, L.L.P.

COMPLAINT The Federal Trade Commission, having reason to believe that Procraft, Inc. and Kryton Coatings International, Inc., corporations, ("respondents") have violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges: VOLUME 133 Complaint 1a.Respondent Kryton Coatings International, Inc. is a Tennessee corporation with its principal office or place of business at 1701 Louisville Drive, Suite C, Knoxville, Tennessee 37921. 1b. Respondent Procraft, Inc. is a Tennessee corporation with its principal office or place of business at 1701 Louisville Drive, Suite C, Knoxville, Tennessee 37921.

2. Respondents cooperated and acted together in carrying out acts and practices hereinafter set forth.

3. Respondents have advertised, offered for sale, sold, and distributed a residential coating product known as Multi-Gard to the public under the trade names Liquid Siding, Liquid Vinyl, and Multi-Gard R-20 (“Multi-Gard”).

4. The acts and practices of respondents alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act. 5. Respondents have disseminated or have caused to be disseminated advertisements for Multi-Gard, including but not necessarily limited to the attached Exhibits A through E. These advertisements contain the following statements: a. This specialized, permanent coating employs a thin layer of super insulating ceramic microspheres, which dry to the thickness of a credit card and provide insulation equal to seven inches of fiberglass batting (R-20). [Exhibit A (Procraft and Kryton print ad)] b. Liquid Siding is guaranteed to cut utility bills up to 40 percent.

[Exhibit A] c. The space shuttle uses this same ultra-thin ceramic technology in protecting its vulnerable under-belly from the 200-degrees-below-zero cold of outer space to the more VOLUME 133 Complaint than 2,000-degree heat of re-entry into the Earth’s atmosphere.

[Exhibit A] d. It Cuts Energy Loss by up to 40% Using space-age NASA technology, Multi-Gard R-20® employs a thin layer of super insulating “Ceramic Microspheres” which dry to the thickness of a credit card, providing insulation equal to 7 inches of fiber glass batting. [Exhibit B (Kryton Internet ad)] e. The space shuttle uses similiar [sic] ultra-thin ceramic technology in protecting it’s [sic] vulnerable under belly from the 200 degrees below zero COLD of outer space to the more than 2000 degrees HEAT of re-entry into Earth’s atmosphere. MultiGard R-20® is as effective a solution on Earth as it is in space.

[Exhibit B] f. It adds R-20 to the exterior wall reducing energy costs up to 40%! [Exhibit C (Procraft brochure)] g. NASA Technology at work for you Today!! [Exhibit C] h. Microscopic in size, Ceramic Microspheres [graphic of tightly packed layers of spheres] .. allign [sic] to form an impenetrable Thermal-barrier.

[Exhibit C] i. Customer 2: I want to reduce my utilities up to 40% with liquid siding.. Where do I find it? PB: You gotta call Pro craft!

Intercom: Yes, you can save up to 40% on your utilities .... [Exhibit D (Procraft television ad script)] VOLUME 133 Complaint j. It cuts utility bills up to 40% .... [Exhibit E (Procraft radio ad script)] 6. Through the means described in Paragraph 5, respondents have represented, expressly or by implication, that Multi-Gard: a. provides insulation equivalent to seven inches of fiberglass batting;

b. provides an insulation value of R-20; c. reduces energy loss, energy costs or utility bills by up to 40%; and d. performs the same insulation function as the ultra-thin ceramic technology on the space shuttle. 7. Through the means described in Paragraph 5, respondents have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraph 6, at the time the representations were made.

8. In truth and in fact, although the use of Multi-Gard and caulking may seal air leaks and cracks in buildings and, as a result, may reduce energy costs in some cases, respondents did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 6, at the time the representations were made. Therefore, the representation set forth in Paragraph 7 was, and is, false or misleading. 9. The acts and practices of respondents as alleged in this complaint constitute unfair or deceptive acts or practices, in or affecting commerce, in violation of Section 5(a) of the Federal Trade Commission Act.

THEREFORE, the Federal Trade Commission this fourteenth day of June, 2002, has issued this complaint against respondents. Liquid Siding® is perfect for wood, clapboard, asbesios, stucco, masonry. brick, block and aluminum siding, And is the permanent solution to a maintenance free cedar home People have come to our booths at Home Shows Nationwide and said, “We' ve been looking all over for your product!" The product to which they refer is Liquid Siding, an energy-efficient exterior coating manufactured by Kryton yale, International. Liguid Siding is an evoluti ive to p ig or vinyl siding. This specialized, permanent coating employs a thin layer of super insulating ceramic microspheres, which dry to the thickness of a credit card and provide insulation equal to seven inches of fibergiass batting (R-20). Today, more than 2000 homes have been improved with this product. Liquid Siding is guaranteed to cut utility bills up to 40 percent. Liquid Siding is designed for people who have to paint their home or for those considering viny) siding, it adheres to all surfaces except vinyl and glass, Unlike paint, Liquid Siding won't mold or mildew, fade, split, crack, peel, blister or chip. The product was invented in Canada approximately 35 years ago, using spaceage NASA technology. The > space shuttle uses this same ultra-thin i ing its vulnerable under-belly from the 200-degrees-below : zero cold of outer space to the more than 2,000-degree heat of re-entry into the Earth's $ atmosphere. Liquid Siding was originally developed as an for coastal lighthouses. A test site at Point Atkinson i in West Vancouver, Canada, is used to measure the product's performance. As a result of the products superior durability on the test site, the warranty has been increased from it’s original guarantee of 10 EXHIBIT A years. The product now carries a non-prorated, 25year warranty. Liquid Siding performed particularly well for Mobile Army Surgical Hospitals in Algeria. That MASH unit reported the need for six generators to maintain a temperature of 65 degrees prior to installation of the product and only two generators afterward, Kryton is currently i UD investing $1.5 million into a new manufacturing plant in Knoxville Tennessee, which projects it will employ approximately $0 people.

The product is installed by local contractors, with a 100-percent customer satis. Permaneat Exterter Coatiog® faction guarantee. Liquid Siding comes in hundreds of colors, and it’s more affordable than premium siding. Liquid Siding looks ° like paint and works like magic. For more information, call the number below. Those who mention this article will receive a 15% discount.

Cail Toll Free For more information about Liquid Siding visit the manu- Sacturer's web site at www.kryton.net PRO 9000022 Kryton Coatings International--Multi-Gard R-20, Liquid Vinyl http:/www.kryton.net/siding.htn EXHIBIT B “pr * Ligecd Vinyl--NMiuit:-Gard R-206 What is Multi-Gard R-20®? This is a highly unique, specialized permanent exterior coating designed to beautify, insulate and protect your home. Multi-Gard R-20® was originally developed as an exterior coating for coastal lighthouses. For over 25 years, single applications of Multi-Gard R-20® have been withstanding the harshest elements; crashing ocean waves, driving rains, hurricane force winds, dry desert heat, arctic cold, Before pounding hail and tropic humidity; all without chipping, cracking, blistering, or peeling. Yes, Multi-Gard R-20® is the most durable, energy saving and maintenance free protection available for any home or commercial building.

It Cuts Energy Loss by up to 40% Using space-age NASA technology, Multi-Gard R-20® employs a thin layer of super insulating Ceramics 1 10 1 4 2 548 2026 294 46 76.427124 Microspheres”5 1 10 1 4 3 857 2026 118 36 96.600281 which5 1 10 1 4 4 989 2027 64 45 96.600281 dry5 1 10 1 4 5 1065 2032 37 30 96.998817 to5 1 10 1 4 6 1117 2027 57 35 96.907272 thes 1 10 1 4 7 1682 2052 42 21 17.466354 a5 1 10 1 4 8 1777 2059 2 2 44.722042 84 1 10 1 5 0 300 2082 1585 46 -1 5 1 10 1 5 1 300 2082 182 36 96.754822 thickness5 1 10 1 5 2 496 2082 47 36 96.619850 of5 1 10 1 5 3 550 2094 22 24 96.619850 a5 1 10 1 5 4 585 2082 114 36 96.818176 credits 1 10 1 5 5 713 2082 97 43 96.933205 card,5 1 10 1 5 6 825 2082 190 46 96.094223 providing5 1 10 1 5 7 1029 2082 193 36 96.573174 insulation5 1 10 1 5 8 1773 2091 112 35 96.291252 After4 1 10 1 6 0 378 2138 765 47 -1 5 1 10 1 6 1 378 2139 102 46 96.954163 equals 1 10 1 6 2 495 2144 37 31 96.225502 to5 1 10 1 6 3 547 2140 22 34 96.225502 75 1 10 1 6 4 585 2139 128 36 96.324203 inches5 1 10 1 6 5 727 2139 47 36 96.726349 of5 1 10 1 6 6 783 2138 93 37 96.411667 fibers 1 10 1 6 7 889 2139 96 46 95.683846 glass5 1 10 1 6 8 997 2139 146 46 96.234352 batting.2 1 11 0 0 0 401 1898 726 6 -1 3 1 11 1 0 0 401 1898 726 6 -1 4 1 11 1 1 0 401 1898 726 6 -1 5 1 11 1 1 1 401 1898 726 6 95.000000 2 1 12 0 0 0 1438 1576 788 502 -1 3 1 12 1 0 0 1438 1576 788 502 -1 4 1 12 1 1 0 1438 1576 788 502 -1 5 1 12 1 1 1 1438 1576 788 502 95.000000 2 1 13 0 0 0 1554 2299 823 446 -1 3 1 13 1 0 0 1562 2299 807 160 -1 4 1 13 1 1 0 1562 2299 807 46 -1 5 1 13 1 1 1 1562 2300 75 35 96.862587 Thes 1 13 1 1 2 1651 2311 107 34 96.506065 spaces 1 13 1 1 3 1773 2299 131 36 96.511894 shuttles 1 13 1 1 4 1918 2311 86 25 96.286591 uses5 1 13 1 1 5 2020 2300 152 36 95.091339 similiar5 1 13 1 1 6 2183 2301 186 36 96.135811 ultra-thin4 1 13 1 2 0 1603 2355 722 48 -1 5 1 13 1 2 1 1603 2355 153 37 96.426735 ceramics 1 13 1 2 2 1771 2356 222 46 96.403076 technology5 1 13 1 2 3 2006 2356 38 37 96.604401 in5 1 13 1 2 4 2057 2357 200 46 96.851852 protecting5 1 13 1 2 5 2271 2356 54 37 96.730957 it's4 1 13 1 3 0 1607 2412 715 47 -1 5 1 13 1 3 1 1607 2412 206 36 96.319374 vulnerable5 1 13 1 3 2 1827 2413 114 36 96.764229 under5 1 13 1 3 3 1953 2413 103 46 96.557800 belly5 1 13 1 3 4 2069 2414 93 35 96.557800 from5 1 13 1 3 5 2176 2414 59 35 96.727707 thes 1 13 1 3 6 2249 2415 73 35 96.434250 2003 1 13 2 0 0 1554 2469 823 48 -1 4 1 13 2 1 0 1554 2469 823 48 -1 5 1 13 2 1 1 1554 2470 147 45 95.785095 degrees5 1 13 2 1 2 1716 2469 119 36 95.969055 below5 1 13 2 1 3 1849 2481 85 24 96.083405 zero5 1 13 2 1 4 1949 2470 135 36 95.947456 COLDS 1 13 2 1 5 2099 2470 46 36 96.271347 of5 1 13 2 1 6 2152 2476 101 30 95.998322 outer5 1 13 2 1 7 2267 2482 110 35 96.319145 space3 1 13 3 0 0 1564 2526 808 219 -1 4 1 13 3 1 0 1564 2526 808 47 -1 5 1 13 3 1 1 1564 2532 37 30 96.777435 to5 1 13 3 1 2 1615 2526 60 36 96.876373 thes 1 13 3 1 3 1687 2537 101 25 96.352196 more5 1 13 3 1 4 1802 2527 85 35 95.827576 than5 1 13 3 1 5 1901 2527 100 35 95.827576 20005 1 13 3 1 6 2016 2527 149 46 96.719269 degrees5 1 13 3 1 7 2179 2528 131 35 96.829544 HEAT5 1 13 3 1 8 2325 2528 47 35 96.799263 of4 1 13 3 2 0 1628 2583 645 48 -1 5 1 13 3 2 1 1628 2589 154 40 96.833435 re-entry5 1 13 3 2 2 1795 2583 74 37 96.231842 into5 1 13 3 2 3 1886 2584 137 36 94.738853 Earth's5 1 13 3 2 4 2038 2585 235 46 96.718727 atmosphere.4 1 13 3 3 0 1616 2640 698 38 -1 5 1 13 3 3 1 1616 2640 222 37 91.820358 Multi-Gard5 1 13 3 3 2 1854 2642 138 36 91.616577 R-20®5 1 13 3 3 3 2008 2641 32 36 96.489410 is5 1 13 3 3 4 2055 2653 39 24 96.713631 as5 1 13 3 3 5 2109 2641 169 37 96.019608 effective5 1 13 3 3 6 2293 2654 21 23 96.895203 a4 1 13 3 4 0 1630 2697 667 48 -1 5 1 13 3 4 1 1630 2697 157 37 96.624374 solutions 1 13 3 4 2 1802 2709 47 24 96.489120 on5 1 13 3 4 3 1864 2698 109 36 96.886070 Earth5 1 13 3 4 4 1988 2710 40 24 96.650742 as5 1 13 3 4 5 2043 2698 27 37 96.650742 it5 1 13 3 4 6 2084 2698 31 37 95.315041 is5 1 13 3 4 7 2126 2698 39 42 95.315041 in5 1 13 3 4 8 2180 2710 117 35 96.676659 space.2 1 14 0 0 0 346 2258 1078 575 -1 3 1 14 1 0 0 346 2258 1078 575 -1 4 1 14 1 1 0 346 2258 1078 575 -1 5 1 14 1 1 1 346 2258 1078 575 95.000000 % Xryton Coatings International--Multi-Gard R-20, Liquid Vinyl Proven to Protect, Beautifully Warranted for 25 years, not to chip, crack, blister or peel, Multi-Gard R-20® has been tested to stretch up to 645% bridging new settlement cracks as they occur.

Multi-Gard R-20's ® anti-static formula is proven to resist clinging dirt, giving your home or building the superior custom look of always having been painted, day after day, season after season.

hitp://www.kryton nev siding htm After Click here to view our online presentation for Multi-Gard R-20®@ WHEN YOU ONLY WANT TO DO IT ONCE! For more information please contact us at: 1-888-8Kryton © 1998 Kryton Coatings International. All rights reserved. DPIIN/IAHAT O- TF ANF EXHIBIT C WIULTI-GARD R-20 9m Permanent Exterior Coating Rar, Sprays on Like _ a Paint! P Lasts longer than Vinyl! Has More Benefits than Both with None of the Problems.

Tomorrow's siding solution is here Today...Liquid Siding Transferable 25 [ rad | The look, color year Warranty! 2 Pj | and feel of fresh paint! It adds R-20 to the exterior wall reducing energy costs up to 40%! VISIT OUR WEBSITE @ WWW.KRYTON.NET Used in over 40 countries world wide! iitoo13 Vapor Permeable « Non-Toxic * Environmentally Friendly one masonry, block, stucco, & metal! It’s your Permanent Solution! Moisture Attacks! All construction materials are porous and retain water. Swelling produces cracks, dry rot causes your homes frame to weaken, moisture breeds hazardous bacteria. Rather than masking exterior problems with paint or vinyl siding, MULTItGARD R-20 is the oniy solution allowing your home breath. Our exclusive Dura-Plas resin. combined with Titanium Dioxide, repels water, yet allows trapped moisture to escape. MULTI-GARD R-20's high level or waterpros: protection and vapor permeability will add years of life and safety ‘= your home. All this with added bonus of always giving your name the ‘instant curb appeal of having just been painted. VISIT OUR WEBSITE @ WWW.KRYTON.NET en Proven to Protect, Beautifully :

The World's leading test laboratories have proven MULTI-GARD R- 20's ability to withstand ail climates. Warranted for 25 years, not to chip, crack, blister or peel, MULTI-GARD R-20 has been tested to stretch up to 645% bridging new settlement cracks as they occur. MULTI-CGARD R-20's anti-static formula is proven to resist clinging dirt, giving your home the superior custom !ook of always having just been painted, day after day, season after season. As the ult'mate bonus in beauty and protection, MULTI-GARD R-20 comes in 100's of UV radiation resistant colors to match any décor. Unlike “covering” your home with paint or vinyl siding, MULTLGARD R-20 becomes a Beautiful and Durable “skin” for your home. with MUL™- GARD R-20, beauty and durability truly is “skin-deep’. CALCOAST ANALY} ICAL~C7L “trewwtele Ceemintry tach Lig htlag Sis . Peo 9000015 ton’s Choice Contractor Y Call NOW for a special disco Toll Free “ Professionally applied s y d r y 6 4 7 4 x Licensed, bonded and tnisuee. : | “ Fully transferable warrans “ 100% financing availadie ‘ant » Fade Resistant « Enerav Efficient * Warranted for a Full 25 Yeor: bt pope . . IZ6LE NUL ‘a[Axouy LAN" NO.LAUHW MMM ® ALISGAM uno LISIA MANUFACTURER’S DISCOUNT COUPON Kryton Coatings International will provide a free-estimate for customers interested in knowing more about Multi-Gard R-20™, LEA A Certified Coating Specialist will meet with all homeowners to a4 ON, explain the coating process, evaluate the application for your © eas | KRYTON home, and provide you with a complete coating cost. While 4% ON . introducing the product, Kryton Coatings International will also ou a? er 10% discount off the tota a offer a 10% discount off the total cost of the job. 10% Deducted From the Total Price of Your Job Present this coupon for a 10% discount on the Multi-Gard R-20™ system. Discount valid only during the first inspection visit. PRO goo0016 EXHIBIT D king A Difference...

Througt Quality Programs Client: Pro Craft Date: 10/8/97 Title: | Paint Boy Stock Audio Customer: Where do I find Liquid Siding? PB: Bert..Where’s the Liquid Siding? Voice: It’s not available in stores.

Cali Pro Craft to have it professionally installed.

Customer 2: I want to reduce my utilities up to 40% with Liquid Siding.. Where Do I find it? PB: You gotta call Pro Craft! Customer 3: I want that Liquid Siding..you know it lasts for 20 years. I’1] never have to paint my house again.

Intercom: Attention Shoppers, you can’t get liquid siding in stores! Yes, you can save up to 40% on your utilities and yes it !asts for 20 years...Call Pro Craft now!! Video Paint Boy Stocking Shelf Customer approaches.

Paint Boy calls stock room on walkie talkie.

Voice off Camera 800 Number appears Paint Boy stocking shelf Paint Boy and Customer look up and listen to intercom like the voice of God is speaking.

‘Pro Craft Logo with 800 number 2589 Hobbs Road - Louisville, Tennessee + 37777 » 423-982-1590 (2d 0000050 EXHIBIT E If you’ve thought about putting vinyl siding on your home, stop and listen to me. Hi folks, this is Ed Brantley for Liquid Siding. That’s right, Liquid Siding. Now you can get the same look & results as vinyl siding by painting on Liquid Siding distributed by Procraft. You get the look, the color and the feel of fresh paint. But it’s stronger than vinyl. It lasts longer than vinyl. It has more benefits than both do and none of the problems. This is the absolute best product that you could put on your house. I’ve seen it. It’s remarkable. It cuts utility bills up to 40% and it saves time cause you don’t have to paint anymore. And during this special cffer we'll offer Liquid Siding for your home at a cost too low to mention on the air. It’s fire resistant, mildew resistant, fade resistant and energy efficient. It’s got a 25-year warranty. It’s used worldwide & we’ll give you a free in home estimate. Call toll free 1-877Procraft. That’s 1-877Procraft. Call right now for Liquid Siding.

Ro 0000053 VOLUME 133 Decision and Order DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of the complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents, their attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the draft complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents 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 respondents have 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 thirty (30) days for the receipt and consideration of public comments, and having duly considered the comment filed thereafter by interested parties pursuant to Section 2.34 of the Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order: 1a. Respondent Kryton Coatings International, Inc. is a Tennessee corporation with its principal office or place of business at 1701 Louisville Drive, Suite C, Knoxville, Tennessee 37921.

VOLUME 133 Decision and Order 1b. Respondent Procraft, Inc. is a Tennessee corporation with its principal office or place of business at 1701 Louisville Drive, Suite C, Knoxville, Tennessee 37921.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER DEFINITIONS For purposes of this order, the following definitions shall apply:

1. “Competent and reliable scientific evidence” shall mean tests, analyses, research, studies, or other 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, “respondents” shall mean Procraft, Inc. and Kryton Coatings International, Inc., corporations, and their successors and assigns.

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 respondents, and their officers, agents, representatives, and employees, 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 Liquid Siding, Multi-Gard, Multi- Gard R-20, Liquid Vinyl, or any other liquid siding or coating product, in or affecting commerce, shall not make any representation, in any manner, expressly or by implication: VOLUME 133 Decision and Order A. that such product reduces energy loss, energy costs, energy consumption, or utility bills;

B. about any R-value associated with such product; C. about such product’s insulation qualities as compared to any other materials, including insulation materials; or D. about the benefits, performance, or efficacy of such product, unless, at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation. II.

IT IS FURTHER ORDERED that respondents shall, 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 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. III.

IT IS FURTHER ORDERED that respondents shall deliver a copy of this order to all current and future principals, officers, directors, managers, and to all current and future employees, and VOLUME 133 Decision and Order outside advertising agencies or consultants 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. Respondents 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. Respondents shall retain the signed, dated statements acknowledging receipt of the order for a period of five (5) years and upon request make them available to the Federal Trade Commission for inspection and copying. IV.

IT IS FURTHER ORDERED that respondents shall, within thirty (30) days after the date of service of this order, send by first class certified mail, return receipt requested, to each purchaser for resale of Liquid Siding, Multi-Gard, Multi-Gard R-20, Liquid Vinyl, or any other liquid siding or coating product with which respondents have done business since January 1, 1999, the form attached as Attachment A and a copy of this order. The mailing shall not include any other documents. V.

IT IS FURTHER ORDERED that respondents shall notify the Commission at least thirty (30) days prior to any change in the corporations that may affect compliance obligations arising under this order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the 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 respondents learn less than thirty (30) days prior to the date such action is to take place, respondents shall notify the Commission as soon as is practicable after obtaining such knowledge. All notices required by this Part shall be sent by VOLUME 133 Decision and Order certified mail to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C. 20580.

VI.

IT IS FURTHER ORDERED that respondents 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 they have complied with this order. VII.

This order will terminate on June 14, 2022, 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.

Provided, further, that if such complaint is dismissed or a federal court rules that the respondents 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 VOLUME 133 Decision and Order 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. By the Commission.

VOLUME 133 Decision and Order ATTACHMENT A [To be printed on respondents’ letterhead] BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED [date] Dear [purchaser for resale]:

This letter is to inform you that Kryton Coatings International, Inc., and Procraft, Inc. have settled a civil dispute with the Federal Trade Commission ("FTC") regarding advertising claims for the Multi-Gard residential coating product, also known as Liquid Siding, Liquid Vinyl, and Multi-Gard R-20 (collectively referred to hereinafter as “Multi-Gard”).

As part of that settlement, the FTC issued a consent order to cease and desist, which prohibits certain claims for Multi-Gard unless, at the time such claims are made, we possess and rely upon competent reliable scientific evidence. A copy of the order is attached. We consented to the issuance of the order for settlement purposes only and without admitting any of the FTC’s allegations. The order requires us to request that our distributors and wholesalers stop using or distributing advertisements or promotional materials containing claims challenged by the FTC, unless we have competent reliable scientific evidence to support these claims. As one of our distributors or wholesalers, we are required to send you this letter as part of this settlement. Specifically, the FTC order prohibits us from making any claims about Multi-Gard related to:

1. its ability to reduce energy loss, energy costs, energy consumption, or utility bills;

2. any R-value associated with the product; VOLUME 133 Decision and Order 3. its insulation qualities as compared to any other materials, including insulation materials; or 4. the benefits, performance, or efficacy of Multi-Gard unless we have competent and reliable scientific evidence. We request your assistance by asking you to discontinue using, distributing, or relying on any advertising or promotional material for Multi-Gard previously received from us. Please also notify any of your customers who resell these products and who may have such materials to discontinue using those promotional materials.

We shall be modifying our advertising and promotional material to comply with this order. New suggested advertising and promotional materials will be sent under separate cover. Thank you very much for your assistance. Sincerely, Nat Campbell, Jr.

President Kryton Coatings International, Inc.

Christopher Scheevel President Procraft, Inc.

Enclosure as stated VOLUME 133 Analysis Analysis of Proposed Consent Order to Aid Public Comment The Federal Trade Commission has accepted, subject to final approval, an agreement for entry of a proposed consent order from Kryton Coatings International, Inc. and Procraft, Inc. (“respondents”). The agreement would settle a proposed complaint by the Federal Trade Commission that respondents engaged in unfair or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act. The proposed consent order has been placed on the public record for thirty (30) days for reception of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) 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.

This matter concerns advertising representations made about “Multi-Gard” (also known as Liquid Siding, Liquid Vinyl, or Multi-Gard R-20), a residential coating product. The proposed administrative complaint alleges that respondents violated the FTC Act by disseminating ads that made unsubstantiated performance claims about Multi-Gard. The proposed complaint further alleges that respondents represented that Multi-Gard: 1) provides insulation equivalent to seven inches of fiberglass batting; 2) provides an insulation value of R-20; 3) reduces energy loss, energy costs or utility bills by up to 40%; and 4) performs the same insulation function as the ultra-thin ceramic technology on the space shuttle. The proposed complaint alleges that respondents represented that they had a reasonable basis for these claims. The proposed complaint further alleges that, although the use of Multi-Gard and caulking (which is provided as part of the application service for Multi-Gard) may seal air leaks and cracks in buildings and, as a result, may reduce energy costs in some cases, respondents did not possess and rely upon a reasonable basis that substantiated their claims. VOLUME 133 Analysis The proposed consent order contains provisions designed to prevent respondents from engaging in similar acts and practices in the future. Part I of the order prohibits respondents from making any representation about the benefits, performance or efficacy of any Liquid Siding, Multi-Gard, Multi-Gard R-20, Liquid Vinyl, or any other liquid siding or coating product, including: that such product reduces energy loss, energy costs, energy consumption, or utility bills; any R-value associated with such product; or such product’s insulation qualities as compared to any other materials, including insulation materials, unless, at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation. Part IV requires respondents to notify Multi-Gard distributors and wholesalers about this action and send them a copy of the consent order. The form of the notice is provided in Attachment A to the order. The remainder of the proposed order contains provisions regarding record-keeping, distribution of the order, notification of changes in corporate status, the filing of a compliance report, and termination of the order. The purpose of this analysis is to facilitate public comment on the proposed order, and it is not intended to constitute an official interpretation of the agreement and the proposed order or to modify their terms in any way.

VOLUME 133 Complaint