Tire Advertising And Labeling Guides

16 CFR Part 228 · Guides · in the Code of Federal Regulations 1968-1995 (27 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1995 CFR · Earliest edition: 1968 CFR

Text (1995 edition, OCR)

SUBCHAPTER B—GUIDES AND TRADE PRACTICE RULES—
(Continued)

PARTS 150—227 (RESERVED)

PART 228—TIRE ADVERTISING AND
LABELING GUIDES

Sec.

228.0 ‘Industry Product’
Member’’ defined.

228.0-1 Use of guide principles.

228.1 Tire description.

228.2 Designations of grade, line, level, or
quality.

228.3 Deceptive designations.

228.4 Original equipment.

228.5 Comparative quality and performance
claims.

228.6 Ply count, plies, ply rating.

228.7 Cord materials.

228.8 ‘‘Change-Overs,”
Offs,’’ etc.

228.9 Retreaded and used tires.

228.10 Disclosure that products are obsolete
or discontinued models.

228.11 Blemished, imperfect, defective, etc.,
products.

228.12 Pictorial misrepresentations.

228.13 Racing claims.

228.14 Bait advertising.

228.15 Deceptive pricing.

228.16 Guarantees.

228.17 Safety or performance features.

228.18 Other claims and representations.

228.19 Snow tire advertising.

AUTHORITY: Secs. 5, 6, 38 Stat. 719, as
amended, 721; 15 U.S.C. 45, 46.

SOURCE: 32 FR 15525, Nov. 8, 1967, unless
otherwise noted.

§228.0 “Industry Product”
try Member” defined.

As used in this part, the terms ‘‘In-
dustry Product” or ‘Product’’ shall
mean pneumatic tires for use on pas-
senger automobiles, station wagons,
and similar vehicles, or the materials
used therein. The term ‘‘Industry Mem-
ber’? shall mean: All persons or firms
who are engaged in the manufacture,
sale or distribution of industry prod-
ucts as above defined whether under
the manufacturer’s or a private brand;
and the manufacturers of passenger
automobiles, station wagons, and simi-
lar vehicles for which industry prod-
ucts are provided as original equip-
ment.

and “Industry

“New Car Take

and “Indus-

§228.0-1 Use of guide principles,

The following general principies will
be used in determining whether termi-
nology and other direct or indirect rep-
resentations subject to the Commis-
sion’s jurisdiction regarding industry
products conform to laws administered
by the Commission.

$228.1 Tire description.

(a) The purchase of tires for a motor
vehicle is an extremely important mat-
ter to the consumer. Not only are sub-
stantial economic factors involved, but
in most instances the purchaser will
entrust the safety of himself and oth-
ers to the performance of the product.

(b) To avoid being deceived, the
consumer must have certain basic in-
formation. Certain of this information
should be provided before the purchaser
makes his choice but other is essential
throughout the life of the tire.

(1) Disclosure before the sale. The fol-
lowing information should be disclosed
in point of sale material which is
prominently displayed and of easy ac-
cess, on the premises where the pur-
chase is to be made in order to appraise
the consumer:

(i) Load-carrying capacity of the tire.
This information is essential to assure
the purchaser that the tires he selects
are capable of safely carrying the in-
tended load. This informatior should
consist of the maximum load-carrying
capacity as related to various rec-
ommended air pressures and may in-
clude data which indicates the effect
such varying pressures will have on the
operation of the automobile. All such
information shall be based on actual
tests utilizing adequate and _ tech-
nically sound procedures. The test pro-
cedures and results shall be in writing
and available for inspection.

(ii) Generic name of cord material. Dif-
ferent cord materials can have per-
formance characteristics that will af-
fect the consumer’s selection of tires.
These various characteristics are wide-
ly advertised, and the consumer is
aware of the distinctions. Without a
disclosure of the generic name of the


§ 228.2

cord material, the consumer is unable
to consider this factor in his purchase.

(iii) Actual number of plies. Consumers
have preference for industry products
of a stated type of construction (e.g., 2
ply v. 4 ply). Without adequate disclo-
sure the consumer is denied the basis
for considering this factor in his selec-
tion. .

NOTE: Where the tire is of radial construc-
tion the ply count disclosure will be satisfied
by the statement ‘radial ply.”

(2) Disclosure on the tire. The follow-
ing information should be clearly dis-
closed in a permanent manner on the
outside wall of the tire:

(i) Size. Size is extremely important
not only to insure that the tire will fit
the vehicle wheel, but because it also is
a determining factor as to the load-car-
rying capacity of the vehicle.

(ii) Whether tire is tubeless or tube type.

(ili) Actual number of plies.

NOTE: Where the tire is of radial construc-
tion the ply count disclosure will be satisfied
by the statement “radial ply.”

(3) Other disclosures—(i) Generic name
of cord material used in ply. A disclosure
of the generic name of the cord mate-
rial] used in the ply of the tire should
be made on a label or tag prominently
displayed on the tire itself, and affixed
in such a fashion that it cannot be eas-
ily removed prior to sale.

(ii) Load-carrying capacity and infla-
tion pressure. One of the most impor-
tant factors in obtaining tire perform-
ance is proper care and use. Included in
such care is inflating the tire to the re-
quired level as related to load-carrying
capacity and use. To insure that such
pressures are maintained by the user
and the tire is not overloaded beyond
its safe capacity, a table or chart
should be provided for retention by the
purchaser. This will apprise the pur-
chaser of the load-carrying capacity of
the tires as related to the range of rec-
ommended air pressures and use. It
may also supply data which indicate
the effect such varying pressures will
have on the operation of the auto-
mobile.

NOTE: Automobile manufacturers who pro-
vide tires as original equipment with new
automobiles should incorporate such infor-
mation in the owner’s manual given to new
car purchasers.

16 CFR Ch. | (1-1-95 Edition)

(Guide 1]

(82 FR 15525, Nov. 8, 1967, as amended at 33
FR 982, Jan. 26, 1968]

§228.2 Des tions of de.
level, caignatiee eras
(a) There exists today no industry-
wide, government or other accepted
system of quality standards or grading
of industry products. Within the indus-
try, however, a variety of trade termi-
nology has developed which, when used
in conjunction with consumer trans-
actions, has the tendency to suggest
that a system of quality standards or
grading does in fact exist. Typical of
such terminology are the expressions
“line,”’ “‘level,’’ and ‘‘premium.’’ The
exact meaning of such terminology
may vary from one industry member to
another. Therefore, the ‘‘lst line’ or
£100 level’? or ‘“‘premium”’ tire of one
industry member may be grossly infe-
rior to the ‘lst line’’ or ‘‘100 level’’ or
“premium” tire of another member
since in the absence of an accepted sys-
tem of grading or quality standards,
each member can determine what
“line,”’ ‘level,’ or ‘“‘premium’’ classi-
fication to attach to a tire.

(b) The consumer does not under-
stand the significance of the absence of
accepted grading or quality standards
and is likely to assume that the expres-
sions “line,” “level,’’ and ‘“premium”’’
connote valid criteria. Since the
consumer is likely to misinterpret the
meaning of such terminology, he may
be deceived into purchasing an inferior
product because it has been given such
designation.

(c) In the absence of an accepted sys-
tem of grading or quality standards for
industry products, it is improper to
represent, either through the use of
such expressions as “‘line,’’ ‘‘level,’’
“premium” or in any other manner,
that such a system exists, unless the
representation is accompanied by a
clear and conspicuous disclosure:

(1) That no industrywide or other ac-
cepted system of quality standards or
grading of industry products currently
exists, and

(2) That representations as to grade,
line, level, or quality, relate only to
the private standard of the marketer of
the tire so described (e.g., “XYZ first
line’’).

line,


Federal Trade Commission

(d) Additionally, products should not
be described as being ‘‘first line’ unless
the products so described are the best
products, exclusive of premium quality
products embodying special features, of
the manufacturer or brand name dis-
tributor applying such designation.
(Guide 2]

§228.3 Deceptive designations.

In the advertising or labeling of prod-
ucts, industry members should not use
designations for grades of products
they offer to the public:

(a) Which have the capacity to de-
ceive purchasers into. believing that
such products are equal or superior to
a better grade or grades of their prod-
ucts when such conclusion would be
contrary to fact (for example, if the
“first line’ tire of a manufacturer is
designated as ‘Standard,’ ‘‘High
Standard,” or “Deluxe High Standard,”
the tires of that manufacturer which
are of lesser quality should not be des-
ignated or described as ‘‘Super Stand-
ard,” “Supreme High Standard,”’
“Super Deluxe High Standard,’ or
“Premium’’), or

(b) Which are otherwise false or mis-
leading.

NOTE: When a manufacturer applies a des-
ignation to a product which falsely rep-
resents or implies the product is equal or su-
perior in quality to its better grade or grades
of products, it is responsible for any result-
ing deception whether it is a direct result of
the designation or a result of the placing in
the hands of others a means and instrumen-
tality for the creation by them of a false and
deceptive impression with respect to the
comparative quality of products made by
that manufacturer.

(Guide 3]

$228.4 Original equipment.

Original equipment tires are under-
stood to mean the same brand and
quality tires used generally as original
equipment on new current models of
vehicles of domestic manufacture. A
tire which was formerly but is not cur-
rently used as “Original Equipment,”’
should not be described as “Original
Equipment” without clear and con-
spicuous disclosure in close conjunc-
tion with the term, of the latest actual
year such tire was used as ‘Original
Equipment.” (Guide 4)

§ 228.6

§228.5 Comparative quality and
formance claims. v per
Representations and claims made by

industry members that their products

are superior in quality or performance
to other products should not be made
unless:

(a) The representation or claim is
based on an actual test utilizing ade-
quate and technically sound procedures
of the performance of the advertised
product and of the product with which
it is compared; the test procedure, re-
sults of which are in writing and avail-
able for inspection; and

(b) The basis of the comparison is
clearly stated and the comparison is
based on identical conditions of use.
Dangling comparatives should not be
used.

(c) Claims or representations that
one tire is comparable or identical to
another should not be used unless the
advertiser is able to establish that such
tires are comparable not only as re-
spects the molds in which the tires are
made, but also as respects all signifi-
cant materials used in their construc-
tion. [Guide 5)

$228.6 Ply count, plies, ply rating.

A ply is a layer of rubberized fabric
contained in the body of the tire and
extending from one bead of the tire to
the other bead of the tire. The
consumer is interested in, and is enti-
tled to know, certain information in
regard to plies in tires. However, a
great deal of terminology connected
with plies which is utilized in advertis-
ing has the tendency to confuse and de-
ceive the public and is accordingly in-
appropriate.

(a) It is improper to utilize any state-
ment or depiction which denotes or im-
plies that tires possess more plies than
they in fact actually possess. Phrases
such as “Super 6’ or “Deluxe 8” as de-
scriptive of tires of less than 6 or 8
plies, respectively, should not be used.

(b) The actual number of plies in a
tire is not necessarily determinative of
the ultimate strength, performance or
quality of the product. Variations in
the amount and type of fabric utilized
in the ply and other construction fea-
tures of the tire will determine the ul-
timate strength, performance or qual-
ity of the product. Through variations


§ 228.7

in these construction aspects, a tire of
a stated number of plies may be infe-
rior in strength, quality, and perform-
ance to another tire of lesser actual ply
count. Accordingly, it is improper to
represent in advertising, or otherwise,
that solely because a product has more
plies than another, it is superior.

(c)(1) The expression ‘“‘ply rating’ as
used in the trade is an index of tire
strength. Each manufacturer, however,
has his own system of computing ‘“‘ply
rating.’’ Thus, a product of one indus-
try member of a stated “ply rating’ is
not necessarily of the same strength as
the product of another member with
the identical rating. While the expres-
sion “ply rating’? may have signifi-
cance to industry members, in the ab-
sence of a publicized system of stand-
ardized ratings, the use of such expres-
sions in connection with sales to the
general public may be deceptive.

(2) To avoid deception, the expression
“ply rated’ or “ply rating’? or any
similar language should not be used
unless said claim is based on actual
tests utilizing adequate and _ tech-
nically sound procedures, the results of
which are in writing and available for
inspection. Further, certain disclosures
must be made when such expressions
are used in connection with consumer
transactions.

(3) When ply rating is stated on the
tire itself, it must be accompanied in
immediate conjunction therewith, and
in identical size letters, the disclosure
of the actual ply count. In addition,
there must be a tag or label attached
to the tire or its packaging, of such
permanency that it cannot easily be re-
moved prior to sale to the consumer,
which tag or label contains a clear and
conspicuous disclosure:

(i) That there is no industrywide defi-
nition of ply rating; and

(ii) Of the basis of comparison of the
claimed rating. (For example, ‘‘2-ply
tire, 4-ply rating means this 2-ply tire
is equivalent to our current or most re-
cent 4-ply nylon cord tire.’’)

(4) When ply rating is used in adver-
tising or in other sales or promotional
materials, in addition to the disclosure
of actual ply count as indicated, it
must be accompanied by the disclosure:

(i) That there is no industrywide defi-
nition of ply rating; and

10

16 CFR Ch. | (1-1-95 Edition)

(ii) Of the basis of comparison of the
claimed rating. (For example, ‘2-ply
tire, 4-ply rating means this 2-ply tire
is equivalent to our current or most re-
cent 4-ply nylon cord tire.’’) [Guide 6)

$228.7 Cord materials.

(a) The fabric that is utilized in the
ply is known as the cord material. The
use of a particular type of cord mate-
rial may be determined by the use to
which the tire will be placed. One type
of cord material may provide one de-
sired characteristic, but not be used be-
cause of other characteristics which
may be unfavorable.

(b) The type of cord material utilized
in a tire is not necessarily determina-
tive of its ultimate quality, perform-
ance or strength. Through variations
in the denier of the material, the
amount to be used and other construc-
tion aspects of the tire, the ultimate
quality, performance, and strength is
determined.

(c) It is improper to represent in ad-
vertising, or otherwise, that solely be-
cause a particular type of cord mate-
rial is utilized in the construction of a
tire, it is superior to tires constructed
with other types of cord materia]. Such
advertising is deceptive for it creates
that impression in the consumer’s
mind whereas in fact it does not take
into consideration the other variable
aspects of tire construction.

(d) When the type of cord material is
referred to in advertising, it must be
made clear that it is only the cord that
is of the particular material and not
the entire tire. For example, it would
be improper to refer to a product as
“Nylon Tire.’’ The proper description is
‘Nylon Cord Tire.’’ Similarly, when
the manufacturer of the cord material
is mentioned, it should be made clear
that he did not manufacture the tire.
For example, a tire should be described
as “Brand X Nylon Cord Material’’ and
not ‘Brand X Nylon Tire.”

(e) Cord material should be identified
by its generic name when referred to in
advertising. [Guide 7]

$228.8 “Change-Overs,” “New
Take Offs,” etc.
Industry products should not be rep-
resented as ‘“‘Change-Overs’’ or ‘“‘New
Car Take Offs” unless the products so

Car


Federal Trade Commission

described have been subjected to but
insignificant use necessary in moving
new vehicles prior to delivery of such
vehicles to franchised distributor or re-
tailer. ‘‘Change-Overs’”’ or ‘“‘New Car
Take Offs’’ should not be described as
new. Advertisements of such products
should include a clear and conspicuous
disclosure that ‘Change-Overs’’ or
“New Car Take Offs” have been sub-
jected to previous use. [Guide 8]

$2289 Retreaded and used tires.

Advertisements. of used or retreaded
products should clearly and conspicu-
ously disclose that same are not new
products. Unexplained terms, such as
“New Tread,’’ ‘““Nu-Tread’’ and “Snow
Tread’’ as descriptive of such tires do
not constitute adequate disclosure that
tires so described are not new. Any
terms disclosing that tires are not new
also shall not misrepresent the per-
formance, the type of manufacture, or
any other attribute of such tires. See
§ 228.18. [Guide 9]

[32 FR 15525, Nov. 8, 1967, as amended at 58
FR 64882, Dec. 10, 1993)

$228.10 Disclosure that products are
obsolete or discontinued models.

Advertisements should clearly and
conspicuously disclose that the prod-
ucts offered are discontinued models or
designs or are obsolete when such is
the fact.

Nore: The words ‘“‘model’’ and ‘‘design”
used in connection with tires include width,
depth, and pattern of the tread as well as
other aspects of their construction.

[Guide 10)

$228.11 Blemished, imperfect, defec-
tive, etc., prod:

Advertisements or products which
are blemished, imperfect, or which for
any reason are defective, should con-
tain conspicuous disclosure of that
fact. In addition, such products should
have permanently stamped or molded
thereon or affixed thereto and to the
wrappings in which they are encased a
plain and conspicuous legend or state-
ment to the effect that such products
are blemished, imperfect, or defective.
Such markings by a legend such as
“XX” or by a color marking or by any
other code designation which is not

11

§ 228.14

generally understood by the public are
not considered to be an adequate dis-
closure. (Guide 11)

$228.12 Pictorial misrepresentations.

(a) It is improper to utilize in adver-
tising, any picture or depiction of an
industry product other than the prod-
uct offered for sale. Where price is fea-
tured in advertising, any picture or de-
piction utilized in connection there-
with should be the exact tire offered
for sale at the advertised price.

(b) For example, it would be improper
to depict a white side wall tire with a
designated price when the price is ap-
plicable to black wall tires. Such prac-
tice would be improper even if a disclo-
sure is made elsewhere in the adver-
tisement that the featured price is not
for the depicted whitewalls. [Guide 12]

$228.13 Racing claims.

(a) Advertising in connection with
racing, speed records, or similar events
should clearly and conspicuously dis-
close that the tires on the vehicle are
not generally available all purpose
tires, unless such is the fact.

(b) The requirement of this section is
applicable also to special purpose rac-
ing tires, which although available for
such special purpose, are not the adver- .
tiser’s general purpose product.

(c) Similarly, designations should not
be utilized in conjunction with any in-
dustry product which falsely suggest,
directly or indirectly, that such prod-
uct is the identical one utilized in rac-
ing events or in a particular event.
(Guide 13)

$228.14 Bait advertising.

(a) Bait advertising is an alluring but
insincere offer to sell a product which
the advertiser in truth does not intend
or want to sell. Its purpose is to obtain
leads as to persons interested in buying
industry products and to induce them
to visit the member’s premises. After
the person visits the premises, the pri-
mary effort is to switch him from buy-
ing the advertised product in order to
sell something else, usually at a higher
price.

(b) No advertisement containing an
offer to sell a product should be pub-
lished when the offer is not a bona fide
effort to sell the advertised product.


§ 228.15

Among the acts and practices which
will be considered in determining if an
advertisement is bona fide are:

(1) The advertising of a product at a
price applicable only to unusual or off
size tires or for special purpose tires;

(2) The refusal to show or sell the
product offered in accordance with the
terms of the offer;

(8) The failure to have available at
all outlets listed in the advertisement
a sufficient quantity of the advertised
product to meet reasonably anticipated
demands, unless the advertisement
clearly and adequately discloses that
the supply is limited and/or the mer-
chandise is available only at des-
ignated outlets;

(4) The disparagement by acts or
words of the advertised product or the
disparagement of the guarantee, credit
terms, or in any other respect in con-
nection with it;

(5) Use of a sales plan or method of
compensation for salesmen or penaliz-
ing salesmen, designed to prevent or
discourage them from selling the ad-
vertised product. (Guide 14)

§228.15 Deceptive pricing.

(a) Former price comparisons. One form
of advertising in the replacement mar-
ket is the offering of reductions or sav-
ings from the advertiser’s former price.
This type of advertising may take
many forms, of which the following are
examples:

Formerly $———-— Reduced to $———-.
50% Off—Sale Priced at $———_.

Such advertising is valid where the
basis of comparison, that is, the price
on which the represented savings are
based, is the actual bona fide price at
which the advertiser recently and regu-
larly sold the advertised tire to the
public for a reasonably substantial pe-
riod of time prior to the advertised
sale. However, where the basis of com-
parison (1) is not the advertiser’s ac-
tual selling price, (2) is a price which
was not used in the recent past but at
some remote period in the past, or (3)
is a price which has been used for only
a short period of time and a reduction
is claimed therefrom, the claimed sav-
ings or reduction is fictitious and the
purchaser deceived. Following are ex-

12

16 CFR Ch. | (1-1-95 Edition)

amples illustrating the application of
this provision:

Ezample 1. Dealer A advertises a tire as fol-
lows: ‘‘Memorial Day Sale—Regular price of
tire, $15.95—Reduced to $13.95." During the
preceding 6 months Dealer A has conducted
numerous “sales’’ at which the tire was sold
in large quantities at the $13.95 price. The
tire was sold at $15.95 only during periods be-
tween the so-called “sales.” In these cir-
cumstances, the advertised reduction from a
“regular” price of $15.95 would be improper,
since that was not the price at which the tire
was recently and regularly sold to the public
for a reasonably substantial period of time
prior to the advertised sale. .

Ezample 2. Dealer B engaged in sale adver-
tising weekly on the last 3 days of the week.
It was his practice during the selling week to
offer a particular line of tires at $24.95 on
Monday, Tuesday, and Wednesday, and ad-
vertise the same line as “Sale Priced $19.95”
on the final 3 days of the selling week. Use
of the price for only 3 days prior to the re-
duction, even though the higher price is re-
sumed after 3 days of ‘‘sale” advertising
would not constitute a basis for claiming a
price reduction. The higher price was not the
regular selling price for a reasonably sub-
stantial period of time. Furthermore, when
the higher price is used only for the first 3
days of the week and another price is used
for the final 3 days, the higher price has not
been established as a regular price, espe-
clally when most sales are made at the lower
price during the final 3-day period.

(b) Trade area price comparisons. (1)
Another recognized form of bargain ad-
vertising is to offer tires at prices
lower than those being charged by oth-
ers for the same tires in the area where
the advertiser is doing business. Exam-
ples of this type of advertising where
used in connection with the advertis-
er’s own price are:

Sold Elsewhere at $————.
Retail Value $————.

(2) The tire market, because of its na-
ture, requires that special care and pre-
caution be exercised before this type of
advertising is used. Trade area price
comparisons are understood by pur-
chasers to mean that the represented
bargain is a reduction or saving from
the price being charged by representa-
tive retail outlets for the same tires at
the time of the advertisement.

(3) If a tire manufacturer decides to
conduct a promotion of a particular
tire, reduces the price in his wholly
owned stores and independent dealers


Federal Trade Commission

follow the promotion price, the ‘‘sale’’
price has become the retail price in the
area and it would be deceptive to rep-
resent that this ‘‘sale” price is reduced
from that charged by others. In most
circumstances where a promotion is
sponsored by the manufacturer and is
followed by the wholly owned stores
and most of the independent dealers in
the area, such trade area price com-
parisons would be improper.

(4) A trade area price comparison
would be valid where an individual
dealer, acting on his own, decides to
lower the price of a tire significantly
below that being charged by others in
his area. In this situation, he would be
honestly offering a genuine reduction
from the price charged by others in his
area,

(5) When using a retail price compari-
son great care should be exercised to
make the advertising clear that the
basis of the reduction or saving is the
price being charged by others and not
the advertiser’s own former selling
price.

(c) Substantiality of reduction or sav-
ings. In order for an advertiser to rep-
resent that a price is reduced or offers
savings to purchasers without specify-
ing the extent thereof, it is necessary
that the represented reduction or sav-
ings be significant. When the amount
of the reduction or savings is not stat-
ed in advertising and is not substantial
enough to attract and influence pro-
spective purchasers if they knew the
true facts, the representation is decep-
tive.

Example. Dealer C advertises a Fourth of
July sale featuring X brand tires at a
claimed reduction in price. The sale price in
the advertisement is stated as $14.75 per tire.
The advertisement does not state the former
price of the tire. The tire previously had
been sold at $14.95. Under the circumstances,
the advertisement would be deceptive. The
2-cent reduction in price is insignificant
when compared with the actual selling price
of the tire. Purchasers generally, if they
knew the amount of the reduction, would not
be influenced sufficiently thereby to cause
them to purchase the tire at the reduced
price.

(d) Representations of specific price re-
ductions and savings. (1) Advertisements
which offer a specified amount or per-
centage of price reduction or savings
should not be used where there is no

13

§ 228.15

determinable regular selling price,
whether it be the advertiser’s former
price or the retail price in the area.

(2) The lack of a determinable actual
selling price does not preclude all
“gale” advertising. For example, if a
dealer desires to offer a tire at a price
which represents a significant reduc-
tion from the lowest price in the range
of prices at which he has actually sold
the tire in the recent regular course of
his business, it would not be deceptive
to advertise the tire with such rep-
resentations as ‘‘Sale Priced,’’ ‘‘Re-
duced” or ‘‘Save.”

(3) However, an advertiser is not pre-
cluded from offering specific savings
from the lowest price at which he has
actually sold tires, provided that the
advertising clearly states that the of-
fered savings are a reduction from the
lowest previous selling price and not
from the advertiser’s regular selling
price.

(e) No trade-in prices. (1) The most
common device used in advertising is
to offer a purported reduction or sav-
ings from a so-called ‘‘no trade-in’”’
price. Prospective purchasers are enti-
tled to believe this to mean that they
would realize a savings from the price
they would have had to pay for the tire
prior to the ‘‘Sale,”’ either in cash or in
cash plus the fair value of a traded-in
tire. If this is not true, purchasers are
deceived. Where a significant number
of sales in relation to a seller’s total
sales is not made at the so-called ‘“‘no
trade-in’ price and such price appre-
ciably exceeds the price purchasers
would normally pay the seller (includ-
ing the fair value of any trade-in), use
of the price as a basis for claiming a re-
duction or savings would be deceptive
and contrary to this part.

(2) Representations of high trade-in
allowances are sometimes used in com-
bination with fictitious ‘‘no trade-in”
prices to deceive purchasers. These
may take the form of direct represen-
tations that a specified amount (usu-
ally significantly higher than the value
of the tire carcass) will be allowed for
a@ trade-in tire, or, representations of
specific savings in the purchase of a
new tire when a tire is traded in during
@ ‘sale.’ In either case, the purchaser
is given the illusion of a bargain in the
guise of a high trade-in allowance


§ 228.15

which he does not in fact receive if the
amount of the allowance is deducted
from a fictitiously high ‘‘no trade-in’’
price.

Ezample 1. An advertisement offers a 25
percent reduction during a May tire sale.
The body of the advertisement sets forth a
“no trade-in’? price as the price from which
the represented 25 percent reduction is made.
However, such price represents the price at
which only 15 percent of the advertiser’s
total sales were made and which was appre-
ciably higher than the price at which the
tire usually sold with a trade-in even with
the addition of an amount representing a
reasonable, bona fide trade-in allowance. Use
of the “no trade-in’ price in the advertise-
ment is deceptive.

Example 2. Dealer D advertises, ‘‘Now Get
$4 to $10 Per Tire Trade-In Allowance” in
connection with the sale of a certain tire.
Deaier D has regularly sold the tire for $12 to
customers having a good recappable tire to
offer in trade. During the regular course of
Dealer D’s business he has granted allow-
ances ranging from 50 cents to $3, depending
upon the condition of the tire taken in trade.
During the advertised sale, however, Dealer
D sells all of the tires at the manufacturer’s
suggested “‘no trade-in’ price of $22 and de-
ducts from that price the inflated trade-in
allowances. Under the circumstances, the ad-
vertisement would be deceptive. Dealer D
has not granted the allowances in connection
with his regular selling price but has used in-
stead the fictitious “no trade-in” price as a
basis for offering the inflated allowances.
The consumer has been led to believe that
his old tire is worth far more than its actual
value and Dealer D receives what has been
his regular selling price or, in some in-
stances, an amount in excess of the regular
price, depending upon the allowance granted.

(f) Combination offers. (1) Frequent
use is made in the tire market of pur-
ported bargain advertising which offers
‘free’? or at a represented reduced
price a tire, some other article of mer-
chandise or a service, with the pur-
chase of one or more tires at a specified
price. The following are typical] exam-
ples of this type of offer:

Buy 3, get four at no additional cost.

Buy one tire at $—, get second tire at 50%
off.

Get a wheel free with purchase of each snow
tire. .

Free wheel alignment with purchase of two
new tires.

Such advertising is understood by pur-
chasers to mean that the price charged
by the advertiser for the initial tire or

14

16 CFR Ch. | (1-1-95 Edition)

tires to be purchased is the price at
which they have been regularly sold by
the advertiser for a reasonably sub-
stantial period of time prior to the
sale, and that the amount of the pur-
ported reduction or the value of the so-
called ‘“‘free’’ article or service rep-
resents actual savings. If the price of
the tires to be purchased is not the ad-
vertiser’s regular selling price, pur-
chasers are deceived.

Ezample. Dealer E advertises “2nd Tire %
Off When You Buy First Tire At Price Listed
Below—No Trade-In Needed!” In the body of
the advertisement the first tire is listed as
costing $25.15 and the second tire $12.57. The
figure listed as the price for the first tire is
not Dealer E’s regular selling price, but the
manufacturer’s suggested ‘no trade-in”
price. E’s regular selling price prior to the
so-called sale had been $18.85 per tire. Under
the circumstances, the ‘“% Off’ offer would
be deceptive. The basis for the advertised
offer is not the advertiser's actual selling
price for the tire. While consumers are led to
believe that they are being afforded substan-
tial savings by purchasing a second tire, in
fact they are paying Dealer E’s regular sell-
ing price for two tires.

(g) Federal Excise Tar. Since the Fed-
eral Excise Tax on tires is assesséd on
the manufacturer and is based on the
weight of the materials used and not
the retail selling price, the tax should
be included in the price quoted for a
particular tire, or the amount of the
tax set out in immediate conjunction
with the tire price. For example, as-
suming the tax on a particular tire to
be $1 and the advertised selling price
$9.95, the price should be stated as
**$10.95”’ or ‘‘$9.95 plus $1 Federal Excise
Tax” and not ‘‘$9.95 plus Federal Excise
Tax.”

(h) Advertising furnished by tire manu-
facturers. It is the practice of some tire
manufacturers to supply advertising to
independent as well as to wholly owned
retail outlets in local trade areas. A
tire manufacturer providing advertis-
ing material to be used in local trade
areas by either wholly owned or inde-
pendent outlets is responsible for the
representations made in such advertis-
ing and should base price and savings
claims on conditions actually existing
in the particular areas. In view of price
fluctuations at the local level, the gen-
eral dissemination (i.e., in more than
one trade area) to independent retail


Federal Trade Commission

outlets of advertising material con-
taining stated prices or reduction
claims results in deception? and is, ac-
cordingly, contrary to this part. [Guide
15)

§228.16 Guarantees.

(a) In general, any advertising con-
taining a guarantee representation
shall clearly and conspicuously dis-
close:

(1) The nature and ertent of the guar-
antee. (i) The general nature of the
guarantee should be disclosed. If the
guarantee is, for example, against de-
fects in material or workmanship, this
should be clearly revealed.

(ii) Disclosure should be made of any
material conditions or limitations in
the guarantee. This would include any
limitation as to the duration of a guar-
antee, whether stated in terms of
treadwear, time, mileage, or otherwise.
Exclusion of tire punctures also would
constitute a material limitation. If the
guarantor’s performance is conditioned
on the return of the tire to the dealer
who made the original sale, this fact
should be revealed.

(iii) When a tire is represented as
‘guaranteed for life’ or as having a
“lifetime guarantee,” the meaning of
the term “‘life’’ or ‘“‘lifetime”’ should be
explained.

(iv) Guarantees which under normal
conditions are impractical of fulfill-
ment or for such a period of time or
number of miles as to mislead pur-
chasers into the belief the tires so
guaranteed have a greater degree of
serviceability or durability than is true
in fact, should not be used.

(2) The manner in which the guarantor
will perform. This consists generally of
a statement of what the guarantor un-
dertakes to do under the guarantee.
Types of performance would be repair
of the tire, refund of purchase price or
replacement of the tire. If the guaran-
tor has an option as to the manner of
the performance, this should be ex-
pressly stated.

1This part does not deal with the question
of whether such practice may be improper as
contributing to unlawful restraints of trade
connected with the enforcement of the Anti-
trust Laws and the Federal Trade Commis-
sion Act.

15

§ 228.16

(3) The identity of the guarantor. The
identity of the guarantor should be
clearly revealed in all advertising, as
well as in any documents evidencing
the guarantee. Confusion of purchasers
often occurs when it is not clear
whether the manufacturer or the re-
tailer is the guarantor.

(4) Pro rata adjustment of guarantees—
(i) Disclosure in advertising. Many guar-
antees provide that in the event of tire
failure during the guarantee period a
credit will be allowed on the purchase
price of a replacement tire, the amount
of the credit being in proportion to the
treadwear or time remaining under the
guarantee. All advertising of the guar-
antee should clearly disclose the pro
rata nature of the guarantee and the
price basis upon which adjustments
will be made.

(ii) Price basis for adjustments. Usually
under this type of guarantee the same
predetermined amount is used as a
basis for the prorated credit and the
purchase price of the replacement tire.
If this so-called “adjustment” price is
not the actual selling price but is an
artificial, inflated price the purchaser
does not receive the full value of his
guarantee. This is illustrated by the
following example:

“A” purchases a tire which is represented
as being guaranteed for the life of the tread.
After 75 percent of the tread is worn, the tire
fails. The dealer from whom “A” seeks an
adjustment under his guarantee is currently
selling the tire for $15 but the “adjustment”
price of the tire is $20. ‘‘A’’ receives a credit
of 25 percent or $5 toward the price of the re-
placement tire. This credit is applied not on
the actual selling price but on the artificial
“adjustment” price of $20. Thus, ‘“‘A’”’ pays
$15 for the new tire which is the current se)l-
ing price of the tire.

Under the facts described in this illus-
tration the guarantee was worthless as
the purchaser could have purchased a
new tire at the same price without a
guarantee. If 50 percent of the tread re-
mained when the adjustment was
made, the purchaser would have re-
ceived a credit of $10 toward the $20 re-
placement price. He must still pay $10
for a replacement tire. Had the adjust-
ment been made on the basis of the ac-
tual selling price he would have ob-
tained a new tire for $7.50. Thus, while
deriving some value from his guarantee


§ 228.17

he did not receive the value he had rea-
son to expect under the guarantee.

(b) Accordingly, to avoid deception of
purchasers as to the value of guaran-
tees, adjustments should be made on
the basis of a price which realistically
reflects the actual selling price of the
tire. The following would be considered
appropriate price bases for making
guarantee adjustments:

(1) The original purchase price of the
guaranteed tire; or

(2) The adjusting dealer’s actual cur-
rent selling price at the time of adjust-
ment; or

(83) A predetermined price which fair-
ly represents the actual selling price of
the tire.

Whenever an advertisement for tires
includes reference to a guarantee, the
advertisement should also disclose,
clearly and conspicuously, the price
basis on which adjustments will be
made. Such disclosure of the price
basis for adjustments should be in
terms of actual purchase or selling
price, e.g., original purchase price, ad-
justing dealer’s current selling price,
etc. A mere reference to a guarantor’s
“adjustment price,” for example, would
not satisfy this disclosure requirement.
In addition, written material disclosing
the basis for adjustments should be
made available to prospective pur-
chasers at the point of sale, and if the
third method of adjustment is chosen,
such written material should include
the actual price on which guarantee
adjustments will be made. [Guide 16]

§228.17 Safety or performance fea-
tures.

Absolute terms such as ‘“‘skidproof,”
“blowout proof,” “blow proof,” ‘‘punc-
ture proof’ should not be unqualifiedly
used unless the product so described af-
fords complete and absolute protection
from skidding, blowouts, or punctures,
as the case may be, under any and all
driving conditions. (Guide 17]

§228.18 Other claims and representa-
tions.

(a) No claim or representation should
be made concerning an industry prod-
uct which directly, by implication, or
by failure to adequately disclose addi-
tional relevant information, has the
capacity or tendency or effect of de-

16

16 CFR Ch. 1 (1-1-95 Edition)

ceiving purchasers or prospective pur-
chasers in any material respect. This
prohibition includes, but is not limited
to, representations or claims relating
to the construction, durability, safety,
strength, condition or life expectancy
of such products.

(b) Also included among the prohibi-
tions of this section are claims or rep-
resentations by members of this indus-
try or by distributors of any compo-
nent parts of materials used in the
manufacture of industry products, con-
cerning the merits or comparative
merits (as to strength, safety, cooler
running, wear, or resistance to shock,
heat, moisture, etc.) of such products,
components or materials, which are
not true in fact or which are otherwise
false or misleading. [Guide 18]

§228.19 Snow tire advertising.

Many manufacturers are now offering
winter tread tires with metal spikes.
Certain States, or other jurisdictions,
however, prohibit the use of such tires
because of possible road damage. Ac-
cordingly, in the advertising of such
products, a clear and conspicuous
statement should be made that the use
of such tires is illegal in certain States
or jurisdictions. Further, when such
tires are locally advertised in areas
where their use is prohibited, a clear
and conspicuous statement to this ef-
fect must be included. [Guide 19)

PART 231—GUIDES FOR SHOE
CONTENT LABELING AND AD-
VERTISING

Subpart A—Labeling

Sec.

Labeling in general.

Simulated or imitation leather.
Concealed innersoles.

Split leather.

Embossed or processed leather.
Ground or shredded leather.

Subpart B—Advertising

231.7 Disclosures in advertising.

AUTHORITY: Secs. 5, 6, 38 Stat. 719, as
amended, 721; 15 U.S.C. 45, 46.

SOURCE: 32 FR 15532, Nov. 8, 1967, unless
otherwise noted.

231.2
231.3
231.4
231.5
231.6