Proper labeling of rebuilt fuses

No. 84. Proper labeling of rebuilt fuses. The Federal Trade Commission today made public an advisory opinion conceming the propel' labeling of rebuilt fuses to be used by public utilities and commercial consumers of electricity. , .

ADVISORY OPINION DIGEST 1867

The requesting company inquired as to whether it wi1 be necessary to label a fuse as "rebuilt" or "remanufactured" if it is broken down to its smallest components and all parts that are used are inspected to meet new parts standards. Advising that the eoncem s "rebuilt fuses would have to be labeled as such " the Commission cited its frequent holding, in connection with a variety of products, that in the absence of an adequate disclosure to the contrary, merehandise which resembles and has the appearanee of merchandise composed of new materials but which is, in fact, composed of reclaimed materials, wi1 be regarded by purchasers as being entirely new and that a substantia1 segment of the consuming public has a preference for merchandise which is composed of new and unused materials. This has been held to be so without regard to the comparative quality of the new and rebuilt products, for in such matters the public is entitled to get what it chooses no matter what dictates the choice.

Answering other questions posed by the company, the Commission stated: All " advertising material promoting the sale of these fuses should also contain a disclosure of their used or rebuilt nature fbutJ it is not necessary, once this disclosure is clearly and conspicuously made, to repeat the word over and over again even where technical instructions are heing given. Technical instructions for the use of these fuses are not ordinarily part of the advertising designed to induce customers to buy and, if not there would be no requirement for disclosure in the instructions as distinguished from advertising, Generally speaking, '" . the disclosure must be on the cartons, invoices and in advertising lite ature, as well as on the fuses themselves. However, the disclosure need not be placed on the fuses themselves if you can establish that the disclosure on the bags, boxes or other containers is such that the ultimate purchasers , at the point of sale, are informed that they are rebuilt fuses. The question of informing the ultimate purchasers here becomes important in the event any of your customers also resell the fuses to others under circumstances where those ultimate purchasers are not informed as to their rebuilt nature. " (File No. 6,,3 7028, released Aug. 19, 1966.

Xo. 85. Reference service for members of trade association. A national trade association has been advised by the Fedora1 Trade Commission that its proposed reference service for rnembers concerning problems encountered by them would not unlawful "so long as the program embraces only an interehange of information and experience among members of the Association, and is not used as a device for a concerted boycott of particular se1lers.

The Association stated the purpose of the program is to assist its members to communicate with each other so that there may be a greater availability of the knowledge and experience acquired by them on materials used in the industry. Especia1ly of interest is the experience of members with materials that have been newly developed and the properties and suitabiJity of which are not yet widely known. Under the reference service members would be invited to write thc Association advising it of any special experience or knowledge they have had with materials either favorable or unfavorable. (File No. 653 7030 , released Aug. 26, 1966.

='0. 86. Sales promotion plan involving a lottery rejected. In an advisory opinion which it recently issued , the Federal Trade Commission informed a retailer that his proposed sales promotion is i1egal because it involves the sale of merchandise by means of a lottery and therefore is an unfair method competition and an unfair practice.

The retailer planned to Jist certain selected items with the local bank. After the customer makes his regular purchase at the retail store, he checks with the bank , and if that particular item is listed with the bank. the customer is entitled to keep the merchandise without charge. On the other hand, if the item is not listed at the hank, the purchaser must pay the regular price for it.

In reaching its conclusion that the plan was i1egal , the Commission reasoned that " the mere fact that a purchaser receives a thing of value for his contribution does not negate the existence of a lottery. " (File No. 663 7059, released Aug. 26, 1966.