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The Honolulu Advertiser
Posted on: Saturday, March 27, 2010

Energy Star fails GAO's fraud test

By Frederic J. Frommer
Associated Press

Hawaii news photo - The Honolulu Advertiser

The Energy Star label is advertised as at this store in Mountain View, Calif. as certifying a superior product in energy efficiency. But the program is vulnerable to fraud.

Associated Press file photo

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Hawaii news photo - The Honolulu Advertiser

This "air room cleaner" a fake product the GAO made by attaching a feather duster to a space heater got federal Energy Star approval.

Government Accountability Office via AP

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WASHINGTON Fifteen phony products including a gasoline-powered alarm clock won a label from the government certifying them as energy efficient in a test of the federal Energy Star program.

Investigators concluded the program is "vulnerable to fraud and abuse."

A report released yesterday said government investigators tried to pass off 20 fake products as energy efficient, and only two were rejected. Three others didn't get a response.

The program run by the Energy Department and Environmental Protection Agency is supposed to identify energy-efficient products to help consumers. Tax credits and rebates serve as incentives to buy Energy Star products.

But the General Accountability Office, Congress' investigative arm, said Energy Star doesn't verify claims made by manufacturers which might explain the gasoline-powered alarm clock, not to mention a product billed as an air room cleaner that was actually a space heater with a feather duster and fly strips attached, and a computer monitor that won approval within 30 minutes of submission.

The alarm clock's size 1 1/4 feet high and 15 inches wide and model name Black Gold should have raised alarms with Energy Star, but the automated review system didn't catch on to the deception.

"EPA officials confirmed that because the energy- efficiency information was plausible, it was likely that no one read the product description information," GAO said.

In addition, the four phony GAO companies were able to become Energy Star partners, giving them access to the program's logos and other promotional resources. Energy Star didn't call any of the companies or visit the addresses, and sent only four of the 20 products to be verified by a third party, GAO said.

Sen. Susan Collins of Maine, the top Republican on the Senate Homeland Security and Governmental Affairs Committee, who requested the study, said that "taxpayers are shortchanged twice" when Energy Star products are not thoroughly vetted when consumers are willing to pay more for the products, and when taxpayer dollars are spent encouraging the purchases.

The GAO findings were first reported by the New York Times.

According to the GAO, the EPA and Energy Department told investigators in briefings that although the program is based on manufacturers certifying that their products meet efficiency standards, that efficiency is ensured through after-market tests and self-policing. The GAO did not look at those efforts.

The GAO did note that the two agencies said they are shifting to a more rigorous upfront screening process. In a news release last week, they announced additional testing of products and a verification program.

In a joint statement yesterday, the agencies said consumers can have confidence in the Energy Star label, but acknowledged the report raised important issues.

"That's why we have started an enhanced testing program and have already taken enforcement actions against companies that have violated the rules," the agencies' statement said.