Michelin: A meaningless claim

Michelin's television commercials for its A/S "Energy Saver" tires say that putting the tires on your car can save you up to 109 gallons of fuel. By itself, this number doesn't mean anything. Is it 109 gallons per year, or over the life of the tires? If the latter, how long is the life of the tires? What kind of car and tires do you have to have now in order for that number to be correct?

The fine print says you'd need to drive 55,000 miles on the Michelin tires to realize the fuel savings, which are estimated versus a specific Bridgestone tire, the Turanza. So, if you buy the A/S instead of the Turanza, you might save about $300 over five years of regular driving. Here's the kicker: a quick check on Google shows that the Turanza sells for about $100 less per tire than the A/S, or $400 less per set - more than the supposed fuel savings. Moreover, by buying the Turanza you'd pay $400 less up front, instead of waiting five years to save $300 on gas with the A/S. It's not such a great deal after all.

Putting the potential savings aside, is this good advertising? If you don't read the fine print, the ad's spoken claim is so vague that it's impossible to evaluate. Moreover, the Michelin web page that cites the same 109-gallon figure doesn't even have any fine print - truly advertising at its worst.

First Liberty Financial: Lessons not learned

First Liberty Financial is running ads on television that take the form of fake news briefs. The top story? According to the ad, the federal government has pushed down interest rates on home loans insured by the Federal Housing Administration to all-time lows. This is untrue in both fact and concept. The federal government does not directly control long-term interest rates like those on home loans. The Federal Reserve controls short-term rates, and the Congress controls spending and debt levels; both may affect long-term interest rates, but so can a million other factors. But regardless of what you think about why long-term interest rates move up and down, one thing is true: today, interest rates on home loans are not at their all-time lows. As this graph shows, rates for 30-year mortgages are about half a point above their recent lows. It's a shame, but the cheap mortgage industry seems just as deceptive as ever.

By the way, the Federal Housing Administration, a New Deal program in operation since 1934, only insures about 5 million mortgages in the United States. Though it does set limits on the size of the loans it will insure and the ability of the borrower to pay, it does not set any limits on interest rates.

Cash4Gold: How much is more?

American television is filled with commercials for companies that will turn your old gold jewelry into cash. You just send it in, and they send you a check, with no obligation to accept the deal.  It sounds straightforward enough, but the ads are a little misleading.  At the moment, Cash4Gold says it's offering a 25 percent bonus over its usual rates, presumably to entice consumers to try and grab that extra cash.  Yet in general, such claims are too vague to mean anything; you have to ask, "25 percent more than what?"  Cash4Gold never says what its regular rates are, nor do it say how often its regular rates change.  This is an important issue, since the price of gold has risen by 37 percent in the last year.  If consumers are getting 25 percent more than they did this time last year, Cash4Gold is pocketing the other 12 percent... but there's no way to know from the ads.

AT&T versus Verizon: Apples and oranges?

Verizon has been slamming AT&T in its television commercials with claims that AT&T's third-generation wireless network offers far less coverage than Verizon's.  The Verizon coverage map for the United States certainly looks a lot more comprehensive than AT&T's.  But now, AT&T is responding with ads showing another, much more flattering map of its coverage (and the actor Luke Wilson running down a long list of the cities that the map includes).  The AT&T commercials, however, do not specify that the coverage is on a third-generation network; it looks as though AT&T's claims may rest on its garden-variety mobile phone network.  Is AT&T really countering Verizon's ads in such a disingenuous way?  Wait for the next round to find out.

Local 1549: A little context would help

On the New York City subway, union Local 1549 has been running an ad complaining that the city is wastefully transferring police officers to desk jobs instead of putting them on the street. The ad states that a cop earns about $74,000, much more than the $37,000 that would be paid to a clerical worker to do the same job.

The union, which represents New York City clerical and administrative workers, is appealing to subway riders' sense of logic: wouldn't it be cheaper (and safer) to leave the cops on the street, and have civilians doing the desk jobs? Maybe not. If the city is trying to save money, it might be under pressure to cut payrolls. It doesn't want to let any cops go - that's politically controversial - so it hires fewer civilians and offers the desk jobs to cops. For the cops, a desk job is still probably better than no job, and the city does save money. But the clerical workers end up out in the cold... hence the ad.  Now, the union might be right when it suggests that the city is less safe with fewer cops on the street. Even if that's true, however, hiring more clerical workers might not be the most cost-effective solution.

Honda: Be careful with those superlatives

In Honda's television commercial for its Pilot sport-utility vehicle, the company calls itself "The Greenest Automaker in America."  Obviously, the word "greenest" is open to many interpretations.  Some years ago, you might have thought that it meant Honda manufactured the most cars that were painted green.  But these days, the word conveys a different meaning: ecological, friendly to the environment, using less energy or built for alternative fuels.

Now, I couldn't read the fine print on my television - it was too small, and, even if the commercial was in high definition, I don't have it yet.  Yet the claim of "greenest" doesn't pass the fresh-cut grass smell test.  Is Honda aware, for example, of an American automaker called Tesla Motors?  All its cars are completely electric and can outperform most models in the Honda line-up.  They cost more, but they charge up quickly and have a range of over 200 miles.  Meanwhile, even the most efficient Pilot (the two-wheel-drive model) gets an average of only 19 miles per gallon.  That's not bad for a 3.5-liter behemoth, but, given the selection of hybrid SUVs on the market, it's not exactly green, either.

Chrysler: Isn't word choice wonderful?

A television commercial for Chrysler's 2010 Town and Country minivan currently advertises "unsurpassed fuel economy in its class."  Well, it's easy enough to go to www.fueleconomy.gov and see just how efficient the Town and Country really is.  Turns out its most efficient engine gets 17 miles per gallon in the city (town?) and 25 on the highway (country?), for an average of 20.  But guess what: the Honda Odyssey and the Volkswagen Routan have exactly the same fuel economy ratings.  That's why the Chrysler is "unsurpassed" and not "uniquely the best."  Watch out for Honda and Volkswagen commercials advertising the same thing....