California resident Heather Peters recently made waves with her $9,857.19 small claims court victory against Honda for allegedly overstating the Civic Hybrid's fuel economy. Claims that the car could achieve up to 50 miles per gallon were false, she alleged. Honda, which plans to appeal the ruling, disagreed with the judge's finding that advertising EPA fuel economy estimates is misleading without some disclosure about the effect of driving the way most hybrid owners do – e.g., over the speed limit, running the air conditioner, braking sharply, with a trunk full of organic produce from the local farmers market.
Unrelated to the Honda suit, Hyundai recently announced that it was dropping from a pricey Superbowl spot a similar "40 mile per gallon" claim regarding its Elantra. Although EPA-certified tests conducted by Hyundai reported fuel economy of 40 MPG in highway driving and 33 MPG in combined city and highway driving, a consumer watchdog group reported that independent testing achieved only 29 MPG in combined driving, 12% lower than reported. (For the record, Hyundai denied that it was dropping the claim based on the consumer watchdog's findings.)
So what's a green car buyer to believe? As car makers tout the ever increasing distances that can be driven on a single gallon of gas ("up to" 40, 50, or even 60 MPG), how achievable are the results that are claimed? On the other hand, if it is possible to drive up to 50 MPG on a single tank, shouldn't a car maker be able to make the claim – even if the spartan driving habits required to achieve those results are not typical? So long as at least one driver is able to achieve the result, it is not false, right?
Not so fast! In the world of advertising, even truthful statements can be misleading. Truthful claims that a consumer can achieve "up to" a specified result are often found to be misleading. The Federal Trade Commission has held that savings claims involving the phrase "up to" require that "the maximum level of performance claimed can be achieved by an appreciable number of consumers under circumstances normally and expectably encountered by consumers." What's an "appreciable number of consumers"? Ten percent is a good rule-of-thumb. The National Advertising Division, a self-regulatory association administered by the Better Business Bureau, borrowed the FTC's rule in a dispute between Priceline.com and Expedia over the latter's claim that consumers could save "up to 50% off hotels." The FTC ruled that Expedia's claims were not misleading because it offered 50% savings on at least 10% of its inventory. Although the FTC's rule relates to claims about savings ("save up to 40% off everyday prices"), the analysis is a good fit for fuel efficiency claims."
But should the 10% rule be necessary at all if car makers' claims are based on EPA estimates? As noted in a NAD decision regarding fuel efficiency claims by the "Tornado Fuel Saver," the EPA readily admits that fuel economy is not a fixed number; "it varies significantly based upon where you drive, how you drive, and other factors. Thus it is impossible for one set of estimates to predict fuel economy precisely for all drivers in all environments." Isn't this inherently communicated in fuel efficiency "estimates", particularly dual estimates that show sometimes marked differences between city and highway driving?
Not surprisingly, Honda is standing behind its claims. Not only were the ads substantiated by EPA estimates, but they noted that actual mileage would vary. While it is possible that NAD or the FTC might require more detailed disclosures in the future, it seems unlikely that advertisers would be prohibited from making claims based on EPA estimates, even in the absence of studies showing that those estimates apply to an "appreciable number of consumers."
So, what's a green car buyer to do? First, take those EPA estimates with a grain of salt. Then slow down, open the windows, ease into stops, and buy less at the farmer's market.
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