Guides Against Bait Advertising, The following guides were adopted by the Federal Trade Commission on November 24, 1959, for the use of its staff

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PART 238— GUIDES AGAINST BAIT ADVERTISING The following guides were adopted by the Federal Trade Commission on No­ vember 24, 1959, for the use of its staff in the evaluation of bait advertising1 and related switch practices. While the guides do not purport to be all inclusive, they enumerate the major indications of bait and switch schemes. They were re­ leased to the public in the interest of con­ sumer education and to obtain voluntary, simultaneous, and prompt cooperation by those whose practices are subject to the jurisdiction of the Federal Trade Commission.

Adversary actions against those who [F.R. Doc. 67-13199; Filed, Nov. 7, 1967; engage in bait advertising and whose practices are subject to Commission jurisdiction, are brougnt under the Fed­ eral Trade Commission Act (15 U.S.C. secs. 41-58). Section 5 of the Act de­ clares unlawful, “unfair methods of com­ petition in commerce, and unfair or de­ ceptive acts or practices in commerce.” Sec.

238.0 Bait advertising defined. 238.1 Bait advertisement. 238.2 Initial offer.

238.3 Discouragement of purchase of ad­ vertised merchandise.

238.4 Switch after sale.

Authority : The provisions of this Part 238 issued under Secs. 5, 6, 38 Stat. 719, as amended, 721; 15 U.S.C. 45, 46. § 238.0 Bait advertising defined.1 Bait advertising is an alluring but in­ sincere offer to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the ad- * vertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser. The primary aim of a bait ad­ vertisement is to obtain leads as to per­ sons interested in buying merchandise of the type so advertised.

§ 2 3 8 .1 Bait advertisement.

No advertisement containing an of­ fer to sell a product should be published when the offer is not a bona fide effort to sell the advertised product. (Guide 1.) 1 For the purpose of this part “advertising” includes any form of public notice however disseminated or utilized. § 238.2 Initial offer.

(a) No statement or illustration should be used in any advertisement which creates a false impression of the grade, quality, make, value, currency of model, size, color, usability, or origin of the product offered, or which may other­ wise misrepresent the product in such a manner that later, on disclosure of the true facts, the purchaser may be switched from the advertised product to another.

(b) Even though the true facts are subsequently made known to the buyer the law is violated if the first contact or interview is secured by deception. (Guide 2 .) § 238.3 Discouragem ent o f purchase of advertised m erchandise.

No act or practice shbuld be engaged in by an advertiser to discourage the purchase of the advertised merchandise as part of a bait' scheme to sell other merchandise. Among acts or practices which will be considered in determining if an advertisement is a bona fide offer are:

(a) The refusal to show, demonstrate, or sell the product offered in accordance with the terms of the offer, (b) The disparagement by acts or words of the advertised product or the disparagement of the guarantee, credit terms, availability of service, repairs or parts, or in any other respect, in con­ nection with it, (c) The failure to have available at all outlets listed in the advertisement a suf­ ficient quantity of the advertised product to meet reasonably anticipated demands, unless the advertisement clearly and ade­ quately discloses that supply is limited and/or the merchandise is available only at designated outlets, (d) The refusal to take orders for the advertised merchandise to be delivered within a reasonable period of time, (e) The showing or demonstrating of a product which is defective, unusable or impractical for the purpose represented or implied in the advertisement, (f) Use of a sales plan or method of compensation for salesmen or penalizing salesmen, designed to prevent or dis­ courage them from selling the advertised product. (Guide 3.) § 238.4 Switch after sale.

No practice should be pursued by an advertiser, in the event of sale of the ad­ vertised product, of “unselling” with the intent and purpose of selling other mer­ chandise in its stead. Among acts or prac­ tices which will be considered in deter­ mining if the initial sale was in good faith, and not a strategem to sell other merchandise, are:

(a) Accepting a deposit for the ad­ vertised product, then switching the pur­ chaser to a higher-priced product, •' (b) Failure to make delivery of the advertised product within a reasonable time or to make a refund, .

(c) Disparagement by acts or words of the advertised product, or the disparage­ ment of the guarantee, credit terms, availability of service, repairs, or in aw other respect, in connection with it, FEDERAL REGISTER, VOL. 32, NO. 217— WEDNESDAY, NOVEMBER 8, 1967

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RULES AND REGULATIONS 15541 (d) The delivery of the advertised product which is defective, unusable or impractical for the purpose represented or implied in the advertisement. (Guide 4.) Note: Sales of advertised merchandise. I gales 0f the advertised merchandise do not [ preciude the existence of a bait and switch I-scheme. It has been determined that, on ! occasions, this is a mere incidental byproduct l of the fundamental plan and is intended to : provide an aura of legitimacy to the overall • operation.

Nothing contained in these Guides re- : lieves any party subject to a Commission : cease and desist order or stipulation from ¡complying with the provisions of such ; order or stipulation. The Guides do not constitute a finding in and will not affect • the disposition of any formal or informal ! matter before the Commission. Adopted: November 24,1959. By direction of the Commission. | [seal] J oseph W. Shea, Secretary.

[F.R. Doc. 67-13199; Piled, Nov. 7, 1967; 8:47 a.m.]