Incompetence, carelessness, and misinformation -- Congressional investigators found all of those things when investigating the EnergyStar program over the course of the last year.

Congressional auditors posing as companies secured EnergyStar credentials for 12 bogus products since last June, illustrating deep problems with the green certification program.

EnergyStar is a "green" certification process for energy efficient products.  It was created by the Clinton administration 18 years ago, and has since been adopted by several nations worldwide.  EnergyStar products are signified by special stickers and may earn buyers federal tax credits (not all EnergyStar products qualify for tax credits).

Among the bogus products that received the supposedly prestigious distinction were a "gasoline-powered alarm clock" and an "air purifier", which really was an electric space heater with a feather duster glued to the top.

The Congressional panel took conventional products like dehumidifiers and heat pump model and created fictitious "products" in these categories that used 20 percent less energy than their standard brethren.  They then submitted this information -- and in most cases were awarded EnergyStar certification with few questions.  Auditors say that the study shows how vulnerable the program is to fraud.

Maria Vargas, an official with the Environmental Protection Agency, which runs the program with the Energy Department, defends the program saying that there was "no fraud" as the bogus products weren't real and that she doubts that any of the 40,000 other EnergyStar-certified products are mislabeled.  However, the Energy Department has promised to improve the program in two statements.

The problems run far beyond mere submissions, though, Congress found.  Companies with approved EnergyStar products could freely download the logo and paste it on any of their products -- even those which had not been certified.

According to members of Congress EPA officials admitted, though, that some submissions are analyzed by an automated system without review by a single human eye.  This was reportedly the case in the "gasoline-powered alarm clock" submission.  EPA spokespeople say this is a lie.  They say that the automated system is only a preliminary "screen" and that human review is always used.

Senator Susan Collins, R-ME, doubts the veracity of these statements, though.  Sen. Collins, who launched the investigation, comments, "I don’t think I’d admit that."

She says that if humans did review the products, which came with comical pictures, "and red flags didn’t get raised, that’s a really troubling commentary."  She concludes that the retailers can easily sell consumers products that don't really save them energy.  She comments, "This program is extraordinarily easy to defraud."

Many manufacturers with legitimate energy saving products never apply for the logo and miss taxpayer funding.  According to the EPA, 80 percent of monitors without the logo last year were energy efficient enough to receive one.  In fact, some of these unlabeled products consumed less energy that labeled EnergyStar products.

There have already been a couple high profile scandals of EnergyStar products.  In October 2008, Consumer Reports magazine reported that South Korean-made LG refrigerators didn't meet their efficiency claims.  LG has since reimbursed consumers and modified the machines. 

That's okay, said EPA officials.  They say they warned companies that intentionally inaccurate submissions are a crime under Title 18 of the United States Code.  However, the auditors never received the warning, and further the crime is found under Title 19, not 18.

In the end, these problems may result in consumers being double billed -- first in additional taxes to finance the program, and then on energy costs of fraudulent products.

Update: Mar. 26, 2010 5:00 p.m. EST:

A spokesperson from the DOE sent us a joint statement from the DOE and EPA about EnergyStar, which they wanted us to share with you.  As it was somewhat long, it has been posted in a separate update piece, which can be found here.