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Topics: Automotive Breakthrough Sciences, ABS Tech Sciences, Richard Schops
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| Agency: Federal Trade Commission
Date: 11 March 1997 |
Judge Parker’s decision and order follows FTC charges against Automotive Breakthrough Sciences; its CEO, Richard Schops; and ABS Tech Sciences (collectively below, Automotive Breakthrough). The companies share an address in Wheatley Heights, New York, and Schops resides in Melville, New York. The FTC alleged in its 1995 complaint (see Oct. 2, 1995 news release) that Automotive Breakthrough made false and unsubstantiated advertising claims that the ABS/Trax system is an ABS system that protects against wheel lock-up, skidding and loss of steering control in emergency stopping situations; that installation of the brake system will qualify vehicle owners for an automobile insurance discount; and that the system complies with the ABS standards of the National Highway Traffic Safety Administration (NHTSA) and the Society for Automotive Engineers. The system sold for $459 to $499, and the respondents sold 7,422 of the systems, for revenues of nearly $1.6 million, according to evidence presented at trial.
The FTC announced similar charges against two other firms at the time it issued its complaint against Automotive Breakthrough. Judge Parker issued a default judgment in October 1996 in the FTC’s case against BST Enterprises, Inc., based in Garland, Texas, and maker of ABS BrakeSafe equipment, and company president Michael Woodruff. A decision in the other case, against Brake Guard Products, of Spokane, Washington, which sold the Brake Guard Safety System, and company official Ed F. Jones, is pending.
Judge Parker also issued two summary decisions during the pretrial phase in the Auto motive Breakthrough case: in the first he found that the respondents’ had, in fact, made the claims alleged by the FTC; and in the second, he found the claim that purchasers would qualify for automobile insurance discounts to be false and unsubstantiated. Trial in the case was held between Oct. 21, 1996 and Dec. 4, 1996.
According to Judge Parker’s decision, the ABS/Trax device "is a simple hydraulic accumulator, meaning that during heavy brake pedal application, the resilient membrane can expand to accept some brake fluid. When the pedal is released, the brake fluid is returned to the brake lines." He added: "Accumulators are not themselves ABS, because accumulators alone do not have the capacity to measure wheel speeds, make error determinations, and issue control signals to adjust the brake torques and braking response to actively and automatically control the degree of rotation of wheel slip of one or more of the wheels during the braking maneuver."
In addition, according to the decision, NHTSA tests on the ABS/Trax device demon strated that it does not prevent lock-up in situations where a vehicle without antilock brakes would experience lock-up, resulting in a loss of control. In fact, according to Judge Parker, "the test vehicle performed no better with the devices turned on than it did when they were turned off . . . ." Other independent tests showed similar results; those submitted by the respondents that showed differing results were conducted using unreliable methods, the Judge stated.
Thus, Judge Parker found, the defendants’ claims were false or unsubstantiated or both. The order he has issued specifically prohibits the defendants from using the initials or term ABS in conjunction with, or as part of the name of, the add-on braking system at issue or any substan tially similar product. In addition, the order bars all three defendants from representing that this or any substantially similar product:
The order also requires the respondents to have substantiation for future claims that any braking system they offer will cause a vehicle to stop in a shorter distance in emergency stopping situations or make a vehicle safer to operate, than a vehicle not equipped with the system; as well as for claims about the absolute or comparative attributes, efficacy, performance, safety or bene fits of such a system. Further, in connection with the marketing of any type of product, the res pondents are prohibited from misrepresenting the results of contents of any study or test; whether the product complies with any standard, definition or regulation, public or private; and the availability of insurance benefits or discounts arising from the use of the product.
Finally, the order contains provisions requiring the respondents to send a letter to all ABS/Trax distributors seeking their assistance in locating all purchasers, and stating that they are to stop using the respondents’ promotional materials. The respondents must follow up by send ing all known purchasers a letter stating that the FTC has found the challenged claims false and misleading and that the respondents have been prohibited from making them.
Judge Parker’s order is subject to review by the full Commission either on the Commission’s own motion or appeal by the respondents. If not appealed within 30 days, it becomes the Commission’s decision and order and will be effective 60 days after it is served on the respondents.
Copies of the initial decision, as well as other documents associated with the Automotive Breakthrough case and the companion cases, are available from the FTC’s web site at http://www.ftc.gov and also 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 news as it is announced, call the FTC NewsPhone recording at 202-326-2710.