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Topic:  STP

STP Corporation, and its Parent Corporation, First Brands Corporation, Pay $888,000 Civil Penalty to Settle FTC Charges

Agency: Federal Trade Commission Date: 1 December 1995

STP Corporation, and its parent corporation, First Brands Corporation, have agreed to settle Federal Trade Commission charges that they violated a 1976 FTC order under which they are prohibited from making false and unsubstantiated claims for motor oil additives. According to the FTC, the defendants made numerous false claims in advertisements regarding the engine protective qualities of their oil additive -- "STP Engine Treatment with XEP2." Under the proposed settlement, the defendants would pay an $888,000 civil penalty for the order violation. (This is the third largest sum ever obtained by the FTC for a consumer protection order violation).

First Brands and STP Corporation are located in Danbury, Connecticut. The product at issue has sold from about $10.00 to $16.00 per quart. It is intended to be substituted for one quart of motor oil during a regularly scheduled oil change and is supposed to last for 25,000 miles.

"The vast majority of automobiles do not wear out due to excessive engine wear, including start-up wear," said FTC Bureau of Consumer Protection Director Jodie Z. Bernstein in announcing the case. "The relatively few automobiles that are scrapped due to excessive engine wear tend to have either

1. unusually high mileage or
2. a history of operation under atypical driving conditions or without appropriate oil changes.

Consult your owner's manual for the oil changes you need for the way you drive your car."

The 1976 FTC order at issue in this case prohibits STP and its successors from making certain misrepresentations regarding motor oil additives and it requires them to have scientific substantiation for other claims about such products.

The challenged advertising campaign appeared on television and radio, in newspapers and magazines, in displays, handouts and videos available at retail outlets, and on the product packaging. According to the FTC filing detailing the charges in today's case, the defendants falsely represented that motor oil does not adequately protect most engines from wear at start-up; and that STP Engine Treatment with XEP2 is required to protect against wear at start-up in most engines. The filing also alleges the defendants falsely represented that STP Engine Treatment with XEP2 provides protection from engine wear and, in particular, engine wear at start-up, which extends the life of most engines, and that tests prove these claims. All of these claims violate the 1976 order, the FTC charges.

(This is the second FTC action involving alleged violations of the 1976 order. In 1978, STP Corporation, under prior owner- ship, settled FTC allegations over claims regarding "STP Oil Treatment" and "STP Double Oil Filter." The 1978 court settlement required STP to pay a $500,000 civil penalty, and to spend $200,000 to place an ad in magazines and newspapers notifying readers of the FTC action.)

The proposed settlement of the current charges would require STP to pay the $888,000 civil penalty within 10 days of the date the court approves the settlement. The settlement also would prohibit future violations of the Commission's 1976 order. The settlement would allow First Brands to sell its existing inven- tory of the STP Engine Treatment with XEP2 product with its existing packaging.

The Commission vote to authorize the filing of the settlement was 5-0. The papers were filed on Dec. 1 in the U.S. District Court for the Southern District of New York, in Manhattan, by the Department of Justice on behalf of the FTC, and require the judge's approval to become binding.

Copies of the settlement, as well as other documents associated with this case, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov

(Civil Action No. 78 Civ. 559 (CBM)
(FTC Docket No. C-2777)