Watch Cash Industry

16 CFR Part 174 · Trade practice rules · in the Code of Federal Regulations 1968-1968 (1 annual editions)

Scanned CFR pages, OCR text may contain errors; the linked Library of Congress PDF is the authority. Not legal advice; not affiliated with the FTC. These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.

Latest edition: Library of Congress, 1968 CFR · Earliest edition: 1968 CFR

Text (1968 edition, OCR)

Title 16—Chapter |

is not the fact, is an unfair trade prac-
tice.

§ 173.15 Discriminatory returns.

It is an unfair trade practice for any
member of the industry engaged in com-
merce to discriminate in favor of one
customer-purchaser against another
customer-purchaser of dolls or stuffed
toys, bought from such member for re-
sale, by contracting to furnish, or fur-
nishing in connection therewith, upon
terms not accorded to all customer-pur-
chasers on proportionally equal terms,
the service of facility whereby such fa-
vored purchaser is accorded the privilege
of returning products so purchased and
receiving therefor credit or refund of
purchase price.

However, nothing in §§ 173.1 to 173.16
shall be construed as prohibiting the re-
turn of merchandise by purchasers for
credit or refund of purchase price be-
cause such merchandise is defective in
material, workmanship, or in any other
respect, contrary to guarantee, warranty,
or purchase contract.

§ 173.16 False invoicing.

Withholding from or inserting in an
invoice, billing, or statement any mate-
rial information by reason of which omis-
sion or insertion a false record is made,
wholly or in part, of the transaction
which such invoice, billing, or statement
purports to represent, with the effect of
thereby misleading or deceiving pur-
chasers, prospective purchasers, or the
consuming public, is an unfair trade
practice.

Group IT

§ 173.101 Unwarranted return of mer-
chandise.

The practice, by members of the in-
dustry, of selling any doll or stuffed toy
and later permitting the purchaser to
return it for credit or refund of purchase
price, without just cause, creates waste
and loss, increases the cost of doing busi-
ness to the detriment of both the in-
dustry and the public, and is condemned
by the industry, subject, however, to the
requirements and limitations set forth
in the provisions of §§ 173.3 and 173.15.

§ 173.102 Arbitration.

The industry approves the practice of
handling business disputes between
members of the industry and their cus-
tomers in a fair and reasonable manner,
coupled with a spirit of moderation and

§ 174.1

good will, and every effort should be made
by the disputants themselves to compose
their differences. If unable to do so they
should, if possible, submit these disputes
to arbitration.

PART 174—WATCH CASE INDUSTRY

Group I

Sec,

174.1 Definitions.

174.2 Disclosure and marking of metal
composition.

174.3. Disclosure of manufacturer’s iden-
tity and prevention of confusion
and deception in respect thereto.

174.4 Deceptive selling of used, rebuilt, or
second-hand products.

174.5 Misuse of significant terms.

174.6 False invoicing.

174.7 Fictitious prices.

174.8 Deception as to origin.

1749 Misrepresentation as to character of
business,

174.10 Imitation of trade-marks or trade
names,

174.11 Guarantees, warranties, etc.

174.12 Misuse of the word “free,” etc,

174.13 Other forms of false advertising or
deception.

174.14 Use of lottery schemes.

174.15 Commerctal bribery.

174.16 Coercing purchase of one product as
@ prerequisite to purchase of other
products,

174.17 Prohibited discrimination.

174.13 Aiding or abetting use of unfair trade
practices.

Group IT

174.101 Unwarranted return of merchandise.

AUTHORITY: The provisions of this Part 174
issued under secs. 6(g), 5, 88 Stat. 722, 719;
15 U.S.C. 46(g), 45, unless otherwise noted.

Source: The provisions of this Part 174 ap-
pear at 13 F.R. 414, Jan. 30, 1948, unless
otherwise noted.

Group I
§ 174.1 Definitions.

For the purpose of the rules in this
part, the following definitions shall apply-

(a) The term “watch case” or “case”
as herein used shali include any metal
case, covering, or housing of any quality
or description for a watch or for a time-
keeping device to be worn on or about
the person, and shall include the back,
center, lugs, bezel, pendant, crown, bow,
cap, and other parts of the case: and
unless otherwise specifically stated, the
term “watch case” or “case” as used in
these rules shall also be applicable to the
case when marketed as part of a watch
or when containing the movement or

105


§ 174.2

“works,” as well as when the case is
marketed separately or without the
movement or “works”.

(b) The term “accessories” as used in
the rules in this part means products af-
fixed to or sold in combination with
watch cases or watches, such as, for ex-
ample, bracelets, pins, pendants,
brooches, or ornaments which are affixed
to or accompany the watch or watch case
when sold or marketed.

(c) The term “plate” or “plated”, as
herein used, shall have reference to a
case having a sheet or shell of metal
affixed by soldering, brazing, welding, or
other mechanical means, to the outer
surfaces of foundation metal stock.

(d) The term “electroplate” or “elec-
troplated,” as herein used, shall have ref-
erence to a watch case having a coating
of metal affixed by the electrolytic
method to the outer surfaces of founda-
tion metal stock.

§ 174.2 Disclosure and marking of metal
composition.

(a) Disclosure. To the end that mis-
representation, confusion, and deception
may be effectively prevented and unfair
competitive practices eliminated in the
marketing of watch cases through the
channels of trade and to the purchasing
or consuming public, proper disclosure of
the true metal composition of such watch
cases should be made by stamp, mark, or
label as hereinafter provided. It is an
unfair trade practice to conceal such
true metal composition of watch cases,
or to introduce into the channels of
trade, or offer for sale, sell, or promote
the marketing of, watch cases which are
not properly marked and as to which dis-
closure is not properly made of the metal
composition thereof, such concealment
and nondisclosure having the capacity
and tendency or effect of misleading or
deceiving the purchasing or consuming
public, and of aiding the use of deceptive
selling practices in the trade.

(b) Proper marking of watch cases
and affixed products. Proper method of
marking watch cases under this section
and for making the disclosure of metal
composition above specified is as follows:

(1) Truthful stamping of the case it-
self. The disclosure of true metal com-
position shall be set forth nondeceptively
in clearly legible form and as perma-
nently as the nature of the article will
permit, and except where otherwise
specifically provided in this section such
disclosure shall be made by mark legibly

Title 16—-Chapter |

stamped, embossed, or engraved into the
metal on the outside of the case: Pro-
vided, however, In respect of pocket
watch cases of at least three-piece con-
struction in which the back may be
opened by the layman and the inside
thereof is easily and readily accessible,
the marking of metal content may be
placed in clearly legible form on the in-
side of such back permanently stamped
in the metal. (See also subparagraph
(16) of this paragraph respecting sup-
plemental tagging.) Words in the
specified marking set forth in this
part are not to be abbreviated except
that “G’ may be used for the word
“gold”, “K” for the word “karat,” and
“ster.” for the word “sterling.” “Chr.”
may be used for the word “chromium”
when followed by the name of a metal
in a phrase such as “chr. plated steel.”
No mark specified in the rules in this
part shall be deceptively minimized or
obscured, or set forth in misleadingly
disproportionate form.’

(2) Cases made throughout of an alloy
of gold or of other precious metal. In
respect of watch cases made throughout
of gold, or of an alloy of gold of not less
than 10 karat fineness, or made through-
out of other precious metal, or of an alloy
of other precious metal of sufficient fine-
ness or quantity to meet requirements of
recognized quality standards therefor,
the mark and disclosure of metal com-
position shall show the respective kind
of precious metal and the quality or fine-
ness thereof, as for example:

14K [for gold throughout of such fineness]
or
14K Gold

or
Sterling Silver

(3) “Rolled gold plate’. In respect of
watch cases which are plated with gold

1In determining the precicus metal con-
tent of a watch case the following parts,
where necessarily required to be made of steel
or base metal, may be excluded, namely,
springs, hinge pins for jointed cases, spring
pins for wrist-watch straps or bands, and
the separate inside movement holding ring.
The core of the crown (i. e., crown core) may
also be excluded where such is necessarily
required to be made of steel or base metal:
Provided, however, That the crown itself con-
tains the full amount of gold of the thickness
and quality specified for the case, and which,
in respect of cases made throughout of gold
or gold alloy of nct less than 10K fineness, is
of at least 5/1000’ thickness and of at least
the specified fineness of gold or gold alloy
in the case.

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Title 16—-Chapter |

or an alloy of gold of not less than 10
karat fineness and of a thickness of not
less than 1142/1000 of an inch throughout
after completion of all finishing opera-
tions, the mark shail show that the case
is plated and shall also show the kind of
metal in the plating and the fineness and
thickness thereof, as for example:

14K Rolled Gold Plate

(i) Electroplated to 1¥2/1000’’ mini-
mum thickness. If the case has been
electroplated with gold, or with gold alloy
of not less than 10 karat fineness, to a
minimum thickness of 1144/1000 of an
inch throughout after completion of all
finishing operations, the mark shall show
that such case is electroplated and shall
also show the kind of precious metal in
the coating so applied, and the thickness
thereof, as for example:

Gold Electroplated .0015”
or
Gold Electropiate 1124/1000’

(4) “Gold filled” cases. In respect of
watch cases plated with gold, or with
gold alloy of not less than 10 karat fine-
ness, and of a thickness of not less than
3/1000 of an inch throughout after com-
pletion of all finishing operations, the
mark shall show that such case is plated
and shall also show the kind of precious
metal in the plating and the fineness and
thickness thereof, as for example:

14K Gold Filled

(i) Electroplated to 3/1000'’ minimum
thickness. If the case has been electro-
plated with gold, or with gold alloy of
not less than 10 karat fineness, to a
minimum thickness of 3/1000 of an inch
throughout after completion of all
finishing operations, said mark shall
show that such case is electroplated and
shall also show the kind of precious
metal in the coating so applied and the
thickness thereof, as for example:

Gold Electroplate 3/1000”
or
Gold Electroplate .003’’

(5) Tolerance allowed in respect of
“rolled gold plate” and “gold filled” cases.
The minimum thickness specified for the
plating of gold or gold alloy on the watch
cases covered in subparagraphs (3) and
(4) of this paragraph shall mean that
the plate of precious metal affixed to the
surface of the metal stock shall be
throughout the surface and at the thin-

86-034—68-8

§ 174.2

nest point not less than the thickness
specified after the completion of all
finishing operations, including polishing,
except, however, for such deviations
therefrom, not exceeding 20 percent
(minus) of the stated thickness, as may
be proved by the manufacturer to have
resulted from unavoidabie variations in
manufacturing processes and despite
the exercise of due care, which deviation
so proved shall be allowed if and when
the quantity of such precious metal re-
maining plated on the outside of the case
is sufficient to equal the quantity neces-
sary to provide the specified minimum
thickness at all points on such watch
case including the thinnest point.

Note: In the exercise of due care to avold
or prevent deficiencies in the thickness of
the plating at sharp bends, angles, or other
places on the watch case, manufacturers
should provide reasonable safeguards against
the development of thinness or deficiencies
in the piating by using in the beginning of
the process a plate of more than the mini-
mum thickness from which their cases are
struck (namely, a starting thickness of at
least 314 /1000’’ and 2/1000’’ in the stock for
making “gold filled” and “rolled gold plate”
cases, respectively); also, by exercising other
reasonable precautions in respect of the con-
dition of tools, dies, and the processing and
finishing or polishing operations.

(6) Inside of plated or electroplated
cases. The so-called “rolled gold plate’
and “gold filled” or electroplated cases as
referred to in subparagraphs (3) and (4)
of this paragraph shall not be required to
have a plate of gold or gold alloy of the
specified thickness on the inside of cases
of two-piece construction; Provided,
Such inner surface is of a noncorrosive
metal or is treated or coated to render
such inner surface noncorrosive and no
deception is practiced in respect thereto;
And provided further, In respect of cases
of more than two-piece construction, or
hunting cases, that the inner surface is
plated with gold, or gold alloy of the
stated fineness in the outer surface, to a
minimum thickness of 1/1000 of an inch
throughout and after completion of all
finishing operations.

(7) Platings or coatings of precious
metals other than gold or alloy contain-
ing gold. In respect of watch cases
which are plated or coated with a pre-
cious metal other than gold or alloy con-
taining gold, such as silver or palladium,
the mark shall nondeceptively reveal tne
quality and thickness of the plate and
be otherwise adequate to correctly in-
form purchasers and prevent confusion

107


§ 174.2

and deception. Platings or coatings re-
ferred to in this subparagraph are such
as are of the substantial and recognized
thickness (comparable to that specified
above in respect of “gold filled” and
“rolled gold plate’ cases) and not of the
type which are to be avoided under the
provisions of subparagraph (11) of this
paragraph.

(8) Disclosure of kind and quality of
metal in stock of plated or coated cases.
Nothing in the rules in this part shall be
deemed to prohibit such additional truth-
ful and nondeceptive disclosure as will
show the kind and quality of the metal
to which the plating or coating Is affixed,
whether such stock be base metal or
precious metal, as for example:

14K Rolied Gold Plate on Sterling Silver
or
14K Rolled Gold Plate on Stainless Steel

(9) Flashed or deficiently plated
cases. In respect of watch cases com-
posed of a stock of base metal plated or
coated with precious metal of a thickness
of less than 1124/1000 of an inch over all
exposed surfaces after completion of all
finishing operations, the mark shall show
unambiguously and nondeceptively that
such case is base metal or that it is base
metal which has been flashed or coated
with a very thin and unsubstantial coat-
ing, and such further disclosure shall be
made and action taken as may be neces-
sary to prevent deception, misunder-
standing, and unfair competition arising
from the deceptive appearance of such
an article, the non-serviceable or unsub-
stantial character of the plating or coat-
ing, or from any other pertinent factor.
If the plating or coating of any such
fiashed or deficiently plated case is over
a stock of precious metal, the mark shall
also disclose the kind and quality of the
metal in the stock.

(10) Base metal coating, simulating
precious metals. In respect of watch
cases composed of a stock of base metal
plated or coated with another kind of
base metal, and either simulating pre-
cious metal or having the deceptive ap-
pearance of being composed throughout
of the type and kind of material appear-
ing in the surface coating, the mark shall
nondeceptively show the fact that such
case is base metal, or, as the fact may
be, that the case is plated or coated with
a designated kind of metal of which such

Title 16—Chapter |

plate or coating is composed, as for ex-
ample:
Chromium Plated Steel
or
Nickel} Plated Steel
or
Base Metal

(11) Types of coatings to be avoided.
Use of coatings of either base metal or
precious metals which are not of suffi-
cient thickness and substantiality as to
render lasting and effective service are
to be avoided because of the deceptive,
misleading, and competitively harmful
character of such a practice in the con-
duct of the business of the industry.

(12) Base metal cases simulating
precious metal. In respect of watch
cases composed wholly of base metal
manufactured or otherwise processed to
simulate or have the appearance of pre-
cious metal, and cases composed of an
alloy containing gold of less than 10
karat fineness, the mark shall show that
said case is base metal, as for example:

Base Metal

or
Stainless Steel
or
Nickel

or
Nickel Plated
or
Chromium

or
Chr. Plated Steel
or
Brass

(13) Cases having a combination of
different metals. In respect of watch
cases having a back and bezel composed,
respectively, of a different kind or quality
of metal, the disclosure for marking pro-
vided for in the foregoing provisions of
this section shall be made in the manner
indicated therein with respect to each
such respective parts, as for example:

Base Metal Back 14K Gold Filled Bezel [To

be shown together or at one place on the
case}.
When two or more parts of the case do
not have the appearance of being made
of the same quality or kind of metal,
as for eXample, when the bezel of such
a case is of gold filled quality and the
back is stainless steel, the marking used
under this subparagraph may be sepa-
rated as illustrated in the following:

Stainless Steel [Placed on the back].

14K Gold Filled [Placed on the bezel].

108


Title 16——Chapter |

In the separation of marks here specified
such sufficient care must be exercised as
will avoid possibilities of deception or
confusion.

(14) Marking of minimum quality in
lieu of multiple stamping. In respect of
watch cases in which the case itself has
parts composed of gold alloy of different
fineness or quality, or has parts which
are plated or coated with different thick-
ness of plating or electroplating as
specified in subparagraphs (2), (3),
and (4) of this paragraph, such watch
case may be marked with the quality
and fineness of the lowest grade as an
optional method in Heu of marking each
such different piece or part, as for ex-
ample, the mark of “12K Rolled Gold
Plate” for a case which is composed en-
tirely of such 12 karat rolled gold plate
with the exception of the bezel which is of
a higher quality, such as “14K Gold
Filled.” In no instance, however, shall
this optional form of marking he utilized
in such manner or under such conditions
as may be deceptive or misleading to the
public.

(In the application of this section plat-
ings or electroplatings which are of less
than 1344/1000 of an inch thickness on
base metai shall be deemed base metal. If
such plating or electroplating is of an
alloy containing less than the equivalent
of 10 Karats of gold, the part of the case
so constructed shall also be deemed base
metal. If either such plating or electro-
plating is on a stock of precious metal, as
for example, “sterling silver,” the part
of the case so constructed shall be known
by the name of the metal in the stock,
such as in the example given, “sterling
silver.”’)

(15) Watch and bracelet or similar
combinations. In respect of a watch case
to which there is affixed or attached,
either permanently or so as not to be sep-
arable in use, a bracelet, pin, pendant,
metal article of adornment, or other ac-
cessory containing or having the appear-
ance of containing precious metal, the
respective metal content shall be marked
on both the case and the bracelet, pin,
pendant, metal article of adornment, or
accessory, in accordance with the fore-
going provisions of this section. In re-
spect of any accessory sold with or ac-
companying the watch case or cased
watch when marketed but which is not
permanently or inseparably affixed to the

§ 174.2

case or watch, such accessory shall be
marked truthfully and nondeceptively as
to metal content, which marking may be
that specified in applicable provisions
of jewelry marking as specified in U. S.
Commercial Standard CS47-34 entitled,
“Marking of Gold Filled and Roiled Gold
Plate Articles Other Than Watchcases.”
Failure to properly mark the case and the
bracelet, pin, pendant, or metal article
of adornment, or the marking of one and
not the other, or the marking thereof in
a manner which is confusing or mislead-
ing, is an unfair trade practice.

(16) Use of supplemental tag and in-
side marking. In respect of watch cases
of such small and unusual type as to
render it impossible to set forth the
mark required by subparagraph (1) of
this paragraph on the outside of the
case, then said mark may be stamped,
embossed, or engraved in an accessible
place on the inside of the case provided
the case or the watch of which the case
is a part, when placed on the market and
when sold in the channels of trade and
to the ultimate purchaser, has affixed
thereto a durable tag or label of prac-
ticable permanency adequate to carry
through the channels of trade and to the
purchasing public and showing unam-
biguously and conspicuously the full and
true disclosure of the metal composition
of such case in accordance with the re-
quirements hereinbefore set forth.

(c) Removal, obliteration, or deface-
ment of mark. The removal, oblitera-
tion, or defacement of any mark required
by the rules in this part or of any tag
or label attached pursuant to the provi-
sions thereof, and the sale, resale, or
distribution of any watch case, part or
accessory, without any stamp, mark, tag,
or label as hereinbefore provided for,
with the capacity and tendency or effect
of deceptively concealing the metal com-
position of such watch cases and prod-
ucts or of otherwise causing the same
to be offered for sale, sold, or purchased
under false, misleading, or deceptive rep-
resentations or unfair methods, is an
unfair trade practice.

(ad) Misrepresentation of meaning of
designations. In using the terms “rolled
gold plate,” “gold filled,” “gold electro-
plated,” or “gold electroplate,” or other
designation, no representation shall be
made, directly, or by implication, in any
manner whatsoever which has the ca-

109


§ 174.3

pacity and tendency or effect of mislead-
ing or deceiving purchasers or prospec-
tive purchasers into the erroneous belief
(1) that the watch case or product con-
tains more gold than in fact it does; or
(2) that such case is composed through-
out of a gold alloy of the stated quality
or other quality when such is not true
or when the gold contained therein is not
of at least 10 karat fineness; or (3) that
the case or product does not contain base
metal or does not have a base metal
stock, when such is untrue; or (4) into
any other erroneous belief. Use of any
such inhibited representation is an un-
fair trade practice.

§ 174.3 Disclosure of manufacturer’s
identity and prevention of confusion
and deception in respect thereto.

In order to avoid and prevent decep-
tion as to the identity of manufacturers
of watch cases and to aid in fixing re-
sponsibility for misrepresentation and
deceptive concealment of the true facts
concerning such watch cases, every
manufacturer should indelibly and leg-
ibly stamp in an accessible place on the
inside of the case, or elsewhere thereon,
the name or mark of identification of
such manufacturer.

It is an unfair trade practice to omit
or to obliterate such name or mark of
identification, or to use a misleading or
deceptive name or mark, the capacity
and tendency or effect thereof being to
cause or promote confusion and decep-
tion in the marketing of the product or
of otherwise bringing about, directly or
indirectly, deceptive or unfair practices.

§ 174.4 Deceptive selling of used, re-
built, or secondhand products.

In respect of watch cases, accessories,
or cases containing watch movements,
which in whole or in part are used, sec-
ondhand, rebuilt, or repaired and refin-
ished after use, or which contain parts
that are used, secondhand, rebuilt, or
repaired and refinished after use.

(a) It is an unfair trade practice to
sell, offer for sale, or distribute any such
product under representations, circum-
stances, or conditions which have the
capacity and tendency or effect of mis-
leading or deceiving the purchasing or
consuming public into the erroneous be-
lief that such products are new or that
all or certain of the parts of which the
respective article is composed are new,
when such is not true in fact; and

Title 16—Chapter I

(b) It is an unfair trade practice to
conceal or fail or refuse to fully and
nondeceptively disclose by effective
means of identification, such as by tag,
label, stamp, or mark firmly affixed to
the product, or the immediate container
thereof in which sold and delivered to
the consumer, the fact that such product
is, or that all or certain parts contained
therein are, not new as the case may be,
or are used, secondhand, rebuilt, or re-
paired and refinished after use, when
such concealment and nondisclosure is
practiced with the capacity and tendency
or effect of misleading the purchasing or
consuming public.

§ 174.5 Misuse of significant terms.

In marking, describing, or represent-
ing watch cases, accessories, or parts
thereof, it is an unfair trade practice to
use, contrary to the respective condi-
tions specified, any of the following
terms, designations, or representations:

(a) “Rolled gold plate,” “gold plated,”
“plate,” “plated,” “gold filled,” “gold
electroplated,” ‘‘gold electroplate,” shali
not be used contrary to the provisions
and specifications of § 174.2, nor shall
these designations be used under any
other circumstances or conditions which
are false, misleading, or deceptive.

(b) The representations “gold,” “karat
gold,” “karat,” “carat,” or the abbrevia-
tion “K’’, or any other abbreviation or
representation of similar meaning, shall
not be used when the case, accessory, or
part to which it is applied is not pure gold
or is not an alloy of gold of at least 10
karat fineness and the karat fineness is

not clearly and truthfully disclosed in

immediate conjunction with the repre-
sentation: or when the representation
alone or in combination with other
words, terms, or representations is other-
wise false, misleading, or deceptive:
Provided, however, That the word “gold”
may but need not be accompanied by the
statement or disclosure of karat fine-
ness when used in respect of pure gold,
that is, gold of 24 karat fineness: And
provided further, That nothing in this
section shall be construed as prohibit-
ing use under and in full conformity
with the provisions of § 174.2 of the
words “gold,” “karat,’ or the abbre-
viation “K”.

Nore: The term “carat’’ or the abbrevia-
tion “C” is regarded as inappropriate as a
designation of karat fineness or quality of the
goid in watch cases or parts thereof.

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Title 16—Chapter |

(c) “Sterling,” “sterling silver,” “sil-
ver,” “solid silver,” “sterline,” or desig-
nations or representations of similar im-
port or indicativeness of silver, shall not
‘be used when the case, accessory, or part
referred to is not in fact sterling silver,
that is, silver of at least 0.925 purity (sub-
Ject to statutory tolerance), nor shall
such designations or representations as
“silvered,” “silver finish,” “silver effect,”
“silverline,” or “silveroid” be used as de-
Scriptive of any case, accessory, or part
thereof, not composed wholly of silver,
such designations or representations
‘having the capacity and tendency or ef-
fect of being deceptive or misleading in
the manner or condition of their use or
application.

(a) “Coin silver,” “coin,” or mark or
‘descriptlon of similar import, shall not
‘be used when the case, accessory, or part
‘is not in fact composed of silver of the
Standard of purity of the silver coin of
the United States dollar, or when the
mark, designation, or representation is
otherwise deceptive or misleading in the
‘manner or conditions of its use or appli-
-cation.

(e) “Duragold,” “dirigold,” ‘“noble-
gold,” “goldine,” “gold-appearing,” “gold
effect,” “miragold,” or any term or des-
ignation of similar import, or any phrase
or representation indicating the sub-
stance, charm, quality, or beauty of gold
or of natural gold, shall not be used when
the watch case, accessory, or part thereof
‘so described, ls not composed through-
out of gold, or of a goid alloy of at least
10 karat fineness, or when, although
‘composed of such an alloy, the karat
fineness thereof is not clearly and con-
spicuously shown in immediate conjunc-
tion with the term or representation, or
when such term or representation is
otherwise misleading or deceptive in the
manner of its use or application.

(f) “Precious metal,” or designation or
representation of similar import, shall
not be used when the watch case, acces-
sory, or part thereof so described, is not
in fact composed of precious metal of
recognized standard of purity, grade,
and quality, namely, gold of at least 10
karat fineness; silver of 0.925 purity (sub-
ject to statutory tolerance), or of the
purity of the United States silver dollar
when so qualified, or when designated as
coin silver; or platinum, palladium, and
related precious metals of the platinum
group of the recognized standard of qual-
ity and purity.

§ 174.11

§ 174.6 False invoicing.

Withholding from or inserting in in-
voices or billing any statment or infor-
mation by reason of which omission or
insertion a false record is made, wholly
or in part, of the transaction which such
invoices or billing purport to represent,
with the effect of thereby misleading
or deceiving the purchasing or consum-
ing public, is an unfair trade practice.

§ 174.7 Fictitious prices.

It is an unfair trade practice to offer
for sale or sell watch cases, accessories,
parts, or cased watches, at prices pur-
ported to be reduced from what are in
fact fictitious prices, or to sell or offer
for sale such products at a purported
reduction in price when such purported
reduction is in fact fictitious or is other-
wise misleading or deceptive.

§ 174.8 Deception as to origin.

In the sale, offering for sale, or dis-
tribution of watch cases, cased watches,
or accessories, it is an unfair trade prac-
tice to use any marking, labeling, adver-
tising, or other representation which is
false or deceptive to the purchasing or
consuming public as to country of origin
of said watch or product, or which is
false or deceptive in any other respect.

§ 174.9 Misrepresentation as to charac-
ter of business.

It is an unfair trade practice for
any concern, whether that of a person,
firm, or corporation, to represent,
directly or indirectly, that it is a
manufacturer of a watch case, cased
watch, or accessory, or that it owns or
controls a factory engaged in the man-
ufacture of such products, when such is
not the fact; or in any other manner to
misrepresent the character, extent, or
type of its business.

§ 174.10 Imitation of trade-marks or
trade names.

The use of false or deceptive trade
or corporate names or marks, or the
imitation or simulation of the trade-
Marks or trade names of competitors,
with the capacity and tendency or
effect of thereby misleading or deceiv-
ing the purchasing or consuming public,
is an unfair trade practice.

§ 174.11 Guarautees, warranties, etc.

’ It is an unfair trade practice to use any
time guarantee, or to use or cause to be

111


§ 174.12

used any other guarantee or warranty,
which is false, misleading, deceptive, or
unfair to the purchasing or consuming
public, whether in respect of the kind,
quality, composition, serviceability, value,
wearing qualities, method of manufac-
ture, or in any other respect, or whether
deceptive or misleading by reason of
being incompletely or confusingly stated,
impracticable of fulfillment, or through
failure of guarantor scrupulously to ful-
fill terms.

§ 174.12 Misuse of the word “free,” etc.

It is an unfair trade practice for any
member of the industry to use the
term “free,” or any other term or repre-
sentation of similar import or meaning,
to describe, designate, or refer to any
industry product which is not given to
the recipient thereof without cost and
unconditionally.

§ 174.13 Other forms of false advertis-
ing or deception.

It is an unfair trade practice to use
any other _ representations, selling
practices, or trade promotional] methods
which have the capacity and tend-
ency or effect of misleading or deceiv-
ing the purchasing or consuming pub-
lic in any respect. Such inhibitions in
this and other sections in this part
against deceptive or misleading represen-
tations, practices, or methods shall apply
regardless of the media or means by
which published or _ disseminated,
whether label, tags or brands, by news-
paper, magazine or other advertisement,
by trade promotional literature, by radio,
correspondence or other written or oral
communication, or whether by words,
statements, depiction, or other form of
representation.

§ 174.14 Use of lottery schemes.

The offering or giving of prizes, pre-
miums, or gifts in connection with the
sale of industry products, or as an
inducement thereto, by any scheme
which involves lottery or scheme of
chance, is an unfair trade practice.

§ 174.15 Commercial bribery.

It is an unfair trade practice for any
member of the industry to give, or offer
to give, or permit or cause to be given,
directly or indirectly, money or anything
of value to employees or agents of cus-
tomers or prospective customers, without
the knowledge of their employers or
principals, as an inducement to influence

Title 16—Chapter |

or cause their employers or principals to
purchase or contract to purchase the
products of such industry member, or to
refrain from purchasing products from
competitors of such member.

§ 174.16 Coercing purchase of one prod-
uct as a prerequisite to purchase of
other products.

The practice of coercing the pur-
chase of one or more products as a
prerequisite to the purchase of one or
more other products, where the effect
may be to substantially lessen competi-
tion or tend to create a monopoly or to
unreasonably restrain trade, is an unfair
trade practice.

§ 174.17 Prohihited discrimination.

(a) Prohibited discriminatory prices,
or rebates, refunds, discounts, credits,
etc., which effect unlawful price discrim-
ination. In the marketing in commerce
of products of the industry of like grade
and quality for use, consumption, or re-
sale within the jurisdiction of the United
States, and subject to subparagraph (1)
di), Gi), and (iii) of this paragraph, it is
an unfair trade practice for any member
of the industry engaged therein to dis-
criminate in price between different pur-
chasers where the effect thereof may be
substantially to lessen competition or
tend to create a monopoly in any line of
commerce, or to injure, destroy, or pre-
vent competition with such industry
member or with any person who know-
ingly receives the benefit of such dis-
crimination or with their customers.

(1) The inhibitions against such dis-
crimination in price shall be applicable
irrespective of whether the discrimina-
tion in the price itself is effected in the
form, or through the means, of rebates,
refunds, discounts, credits, allowances,
or other form of price differential.

(i) Nothing however, contained in this
section shall prevent differentials which
make only due allowance for differences
in the cost of manufacture, sale, or de-
livery resulting from the _ differing
methods or quantities in which the prod-
ucts are sold or delivered to said pur-
chasers.

Gi) Nor shall anything contained in
this section prevent persons engaged in
selling products in commerce from
selecting their own customers in bona
fide transactions and not in restraint of
trade.

(iii) Nor shall anything contained in
this section prevent price changes from

112


Title 16—Chapter I

time to time where made in response to
changing conditions affecting either (a)
the market for the products concerned,
or (0) the marketability of the products
such as, but not limited to, actual or
imminent deterioration of perishable
goods, obsolescence of seasonal goods,
distress sales under court process, or sales
in good faith in discontinuance or busi-
ness in the products concerned.

(b) Prohibited brokerage or commis-
sions. In the selling of industry prod-
ucts in commerce, it is an unfair trade
practice for any member of the industry
engaged therein to pay or grant, or to
receive or accept, any commission, brok-
erage, or other compensation, or any al-
lowance or discount in lieu thereof, ex-
cept for services rendered in connection
with the sale or purchase of such prod-
ucts, either to the other party to such
transaction or to an agent, representa-
tive, or other intermediary therein, where
such intermediary is acting in fact for
or in behalf, or is subject to the direct
or indirect control, of any party to such
transaction other than the person by
whom such compensation is so granted
or paid.

(c) Prohibited advertising or promo-
tional allowances, etc. In the selling of
industry products in commerce by any
member of the industry, and in the
course thereof, it is an unfair trade prac-
tice for such member to pay or contract
for the payment of anything of value
to or for the benefit of his customer as
compensation or in consideration for cer-
tain services or facilities furnished by or
through such customer, unless such pay-
ment or consideration is available on
Proportionally equal terms to all other
customers of such member competing in
the distribution of such products.

(1) As uSed in this paragraph, the
certain services or facilities referred to
are such as are furnished by or through
the customer in connection with the
processing, handling, sale, or offering for
sale, of such industry member’s products.

(a) Prohibited discrimination in serv-
ices or facilities. In the sale of industry
products bought for resale, with or with-
out processing, it is an unfair trade
practice for any member of the industry
to discriminate in favor of one purchaser
against another purchaser by furnishing
certain services or facilities upon terms
not accorded to all purchasers on pro-
Portionately equal terms.

(1) Said services or facilities referred
to in this paragraph are such as are

§ 174.101

connected with the processing, handling,
sale, or offering for sale, of the products
purchased, and the term “furnishing” as
used in this paragraph shall be con-
strued as including contracting to fur-.
nish, and contributing to the furnishing
of, the services or facilities.

(e) Inducing or receiving an illegal
discrimination in price. It is an unfair
trade practice for any member of the in-
dustry, in the course of commerce in
which he is engaged, knowlingly to in-
duce or receive a discrimination in price
which is prohibited by the foregoing pro-
visions in this section.

(f) Exemptions. ‘The inhibitions of
this section shall not apply to purchases
of their supplies for their own use by
schools, colleges, universities, public
libraries, churches, hospitals, and chari-
table institutions not operated for profit.
(Sec. 2, 38 Stat. 730, as amended, secs. 2, 3, 4,
49 Stat. 1527, 1528, ch. 283, 52 Stat. 446;
15 U. S. C. 18, 13a, 13b, 18c, 21a)

§ 174.18 Aiding or abetting use of un-
fair trade practices.

It is an unfair trade practice for any
person, firm, corporation, or organization
to use or to aid, abet, coerce, or induce
another, directly or indirectly, to use, or
promote the use of, any unfair trade
practice specified in the rules in this part,
or of any other unfair method of com-
petition or unfair or deceptive act or
practice.

Group II

§ 174.101 Unwarranted return of mer-
chandise.

The practice of selling merchandise
and later permitting the purchaser to
return it for credit or refund of purchase
price, without just cause, creates waste
and loss, increases the cost of doing
business to the detriment of both the
industry and the public, and is deemed
inconsistent with sound industry prac-
tice: Provided, however, That nothing
in this section shall be construed as
preventing the return of merchandise
by the purchaser, for credit or refund of
purchase price, when and because such
merchandise has not been properly
stamped, labeled, or marked in respect
to disclosure of metal content, identity
of manufacturer, or used or second-hand
nature of product, or otherwise, as spec-
ified in this part, or when and be-
cause the product has been falsely or
deceptively marked, labeled, or repre-
sented, or when and because such mer-
chandise is defective in material, work-

113


$ 175.0

manship, or in any other respect contrary
to warranty or purchase contract. The
application of this section is also subject
to the general limitation that members
of the industry shall not, in relation
thereto or otherwise, engage in any com-
bination or conspiracy in restraint of
trade or use any other illegal methods in
the regulation, control, or prevention of
the return of merchandise.

PART 175—-OFFICE MACHINE
MARKETING INDUSTRY

Group I

Sec.

175.0 Definitions.

175.1 Deception (general).

175.2 Deceptive concealment of fact that
machine ts not new.

176.3 Misuse of the terms “new,” “demon-
strator,” “factory rebuilt,” “re-
built,” “remanufactured,” ‘“recon-
ditioned,” and “overhauled” as ap-
plied to office machines.

175.4 Typewriters; deception as to being
“new.”

175.5 Typewriters; misuse of the terms
“demonstrator,” “factory rebuilt,”
“rebuilt,” “remanufactured,” “re-
conditioned,” and “overhauled” as
appHed to typewriters.

175.6 Alteration or removal of serial
numbers.

175.7 Deception as to “discontinued” or
“obsolete” models.

175.8  Misrepresentation as to character of
business.

176.9 Mtsrepresenting products as con-
forming to standard.

175.10 Substitution of products.

175.11 Guarantees, warranties, etc.

175.12 Misrepresentation as to installment
sales contracts, their terms, condi-
tions, etc.

175.18 False invoicing.

175.14 Misuse of the terms “special,” “bar-
gain,” “close-outs,” ‘discontinued
lines,” etc.

175.15 Fictitious prices.

175.16 False and misleading price quota-
tions.

175.17 Inducing breach of contract.

175.18 Enticing away employees.

175.19 Defamation of competitors or dis-
paragement of their products.

175.20 Commercial bribery.

175.21 Procurement of competitors’ confi-
dential information by unfair

; means and wrongful use thereof.

175.22 Unfair threats of infringement suits.

175.23 Coercing purchase of one product as
a prerequisite to the purchase of
One or more other products.

175.24 Exclusive or preemptive deals to
eliminate or suppress competition.

175.25 Prohibited discrimination.

Title 16—Chapter I

Sec.
175.26 Aiding or abetting use of unfair trade
practices.
Group IT

175.101 Record keeping.
COMMITTEE ON TRADE PRACTICES
175.201 Industry committee.

AuTHoRIry: The provisions of this Part
175 issued under secs. 6(g), 5, 38 Stat. 722,
719; 15 U.S.C. 46(g), 45, unless otherwise
noted.

Source: The provisions of this Part 175
appear at 18 F.R. 856, Feb. 26, 1948, unless
otherwise noted.

Group I
§ 175.0 Definitions.

“Office machines”: As used in this part
the term ‘office machines” shall include
all machines and mechanical devices
which have for their principal function
the performance, or aiding in the per-
formance, of office work, or the training
or schooling for office work; also, parts
and accessories for such machines and
devices. The term ‘office machines”
shall embrace both power-driven and
manually-operated machines and devices
of the character inentioned, whether new
or not new, and without exception shall
include, but not be limited to, typewrit-
ers, stenotype machines, bookkeeping
machines, adding machines, addressing
machines, calculating machines, dupli-
cating machines, autograph registers,
and dictating machines, of all kinds,
wherever used and whether stationary,
portable, or other type.

Products of the industry embrace all
such office machines as above defined, in-
cluding parts and accessories therefor.

§ 175.1 Deception (general).

It is an unfair trade practice to make
or cause to be made, directly or indi-
rectly, verbally or through advertising,
pictorial representation, invoice, tag,
label, mark, or writing upon the product
itself, or otherwise, any false, misleading,
or deceptive statement or representation
concerning the construction, composi-
tion, utility, performance, condition, age,
name, serial number, inodel, durability,
life expectancy, speed, ease of operation,
manufacture, distribution, price, or
terms or condition of sale, lease, or
rental, of any office machine: or con-
cerning any service or training offered
in connection with the sale, lease, or
rental of any such machine; or concern-

114