Executive Summary: Lights Of America

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When it comes to slapping a claim on your product to differentiate it amongst your competitors, I will give you this simple warning: “DO NOT LIE.” To reiterate my point, I would like to point out the case of Lights of America. Starting in 2007, Lights of America (LOA) started marketing light bulbs that uses LED. As you know, LEDS present an array of advantages over incandescent lightbulbs including lower energy consumption with equal energy output, longer lifetime of the bulb, and smaller sizes. In LOA’s LED lamp packaging and displays, they made certain claims including: comparisons to regular incandescent watt bulbs, the lumen output of its LED lamp, the number of hours the bulb would last, and the bulb’s efficiency. Now, if LOA was an ethical…show more content…
At this point, the LOA had the chance to send warnings or provide stickers to retailers to cover up the “replaces __ watts” claims. But, I bet you can guess that did not happen. By this point the FTC began their investigation on claims made by LOA. The FTC sent several different models of the LED bulbs to third party laboratories for testing. These laboratories discovered that none of the LED bulbs that had the “replaces __ watts” claim surpassed the energy output of a regular 45 watt incandescent light bulb. To give you a frame of reference, a typical 40-45 watt incandescent bulb puts out about 520-870 lumens. An LOA LED bulb, 122-416 lumens. Not even…show more content…
Starting in August 2009, LOA had 20,000-30,000 hour life claims on most of their packaging for LED. As the FTC began disproving their claims, LOA began to change its mind on claims. By the end of August, the claims dropped to 20,000 hours. By September 2010, 12,000-15,000 hours. Once again, the LOA engineers knew that these claims would not be able to be substantiated because the longevity of a bulb will depend on the amount of current used and the temperature. In some tests, it was shown that the LED bulbs lost over 80% of its light output after 1,000 hours. The kicker here is that LOA went off of their LED supplier’s “claim” that the LEDs would last 30,000 hours. That would be like me telling you that the more dry martinis you drank, the more sexual prowess and charisma you would have just like James Bond. Of course you wouldn’t believe me. So why then did LOA accept their supplier’s claim? By this point, the FTC disproved the majority, if not all of LOA’s unsubstantiated claims. Like a rabid animal, the FTC, in a 5-0 vote, tore LOA apart. The FTC found LOA in violation of section 5a of the FTC Act. This basically says that your company made deceptive/untrue claims against a reasonable set of consumers. As a punishment, the FTC forced LOA to pay over $21 million in damages to the defendants of this case. Needless to say that was an exceedingly large check that the LOA had a hard time
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