Guides For Advertising Shell Homes
16 CFR Part 230 · Guides · in the Code of Federal Regulations 1968-1994 (24 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1994 CFR · Earliest edition: 1968 CFR
Text (1994 edition, OCR)
§ 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 (3) 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 CEFR Ch. I (1-1-94 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 230—GUIDES FOR ADVERTISING SHELL HOMES 2 8 DOI & & & tH: Extent of completion. Size or dimensions. Pictorial representations. Savings. Financial terms. Bait advertising. Guarantees. Mode) homes. Delivery and installation. AUTHORITY: Secs. 5, 6, 38 Stat. 719, as amended, 721; 15 U.S.C. 45, 46. SOURCE: 32 FR 15531, Nov. 8, 1967, unless otherwise noted. $280.1 Extent of completion. (a) Since the typical shell home does not include such features as wiring, plumbing, heating, interior trim and SSSEESEBE Federal Trade Commission finish, or other requisite components, an advertiser may not represent that the home is finished or completed to any degree inconsistent with the facts. (b) For example, an advertiser may not claim that the home in its unfin- ished state is habitable, or that it has appliances, fixtures, equipment, mate- rial or services which are not actually included at the time it is accepted by the purchaser. (c) In every case the advertiser must clearly and conspicuously disclose it is a shell home. (Guide 1} $280.2 Size or dimensions. (a) An advertiser shall not misrepre- sent, pictorially or through any other means, the overall size or dimension of the home or the rooms or space there- in. (b) This section prohibits misrepre- sentation through the use of picturizations, as well as the publica- tion of figures which exaggerate the size or dimension. [Guide 2] $230.3 Pictorial representations. (a) All construction items featured in a pictorial representation, such as a porch, carport, chimney, steps, etc., must be included in the price quoted in the advertisement. (b) An advertisement shall not fea- ture the picture of a higher-priced home in conjunction with the price of a lower-priced home, thus leading pro- spective purchasers to believe the high- er-priced home can be purchased at the lower price. (c) If the price of any home other than the one pictured in the advertise- ment is quoted, the price of the pic- tured home must be disclosed and quoted with equal size and conspicu- ousness. [Guide 3] §280.4 Savings. (a) If savings claims are made (1) the basis for the comparison must be clear- ly disclosed, (2) the savings must be factually true, and (3) the advertising must clearly disclose: (i) That the buyer must furnish the remaining ma- terial and (ii) that the saving, if any, is based upon the buyer completing the remainder of the work. (b) For example, if the advertiser has a factually true savings claim to make 17 § 230.5 in comparison either with a project type or custom-built home, he must disclose the type of home with which the comparison is being made. (c) In determining whether the sav- ings claim is factually true, the com- parison must be based upon a home of like quality, material, size, design and workmanship in the same general lo- cality where the shell home is to be built. (d) If savings claims other than those outlined in paragraphs (a), (b), and (c) of this section, are utilized, the claim must meet the applicable provisions of the Commission’s Guides Against De- ceptive Pricing. [Guide 4] $280.5 Financial terms. (a) Installment purchase plans shall not be misrepresented in any manner. This section prohibits claims to the ef- fect that loans are available from any particular lending institution or through a particular lending program, or that loans are federaliy insured, or that the seller will finance the pur- chaser’s indebtedness, unless such is the fact. (b) Down payments shall not be quoted in such a manner as to imply that the down payment constitutes the entire price. (c) Claims such as ‘‘No Money Down”’ shall not be used unless factually true. Moreover, where such claims are predi- cated on the existence of other mate- rial conditions, such as the possession of a lot free and clear of encumbrances equal in value to 5 percent of the cost of the shell home, such condition or conditions must be clearly and con- spicuously disclosed in the advertising. (d) If a home is advertised at a quoted price under an installment plan which requires additionally the pay- ment of interest, carrying charges, down payment, or premiums for credit life insurance, the fact that such costs are to be added to the advertised price must be clearly disclosed. If monthly payments are quoted, the duration of the payments must be disclosed. Addi- tionally, if terminal payments signifi- cantly larger than the advertised monthly payments are required, this fact must also be clearly disclosed as well as the amount thereof. § 230.6 (e) A seller shall not procure the sig- nature of purchasers on negotiable promissory notes without revealing to such purchasers they are signing a ne- gotiable promissory note which may be discounted and also revealing the amount, terms, and conditions of such instrument. (f) If an interest rate is quoted in ad- vertising, it must be simple interest per annum calculated on the basis of the unpaid balance due as reduced after crediting installments as paid. [Guide 5] §230.6 Bait advertising. (a) An advertiser shall not offer a home for sale unless such offer is made in good faith for the purpose of selling the advertised home. Insincere offers to sell, made for the purpose of contacting prospective purchasers and switching them to a home other than the home advertised, shall not be used. (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 de- ception. NOTE: The Guides Against Bait Advertising furnish specific guidance in regard to bait practices and are to be considered as supplementing this section. [Guide 6] § 230.7 Guarantees. In general, any guarantee in adver- tising shall clearly and conspicuously disclose: (a) The nature and extent of the guarantee. This includes disclosure of: (1) What product or part of the prod- uct is guaranteed, (2) What characteristics or properties of the designated product or part there- of are covered by, or excluded from, the guarantee, (3) What is the duration of the guar- antee, (4) What, if anything, any one claim- ing under the guarantee must do before the guarantor will fulfill his obligation under the guarantee, such as return of the product and payment of service or labor charges; and (b) The manner in which the guaran- tor will perform. This consists pri- marily of a statement of exactly what the guarantor undertakes to do under 18 16 CFR Ch. I (1-1-94 Edition) the guarantee. Examples of this would be repair, replacement or refund. If the guarantor or the person receiving the guarantee has an option as to what may satisfy the guarantee this should be set out; and (c) 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 build- er is the guarantor. NOTE: The Guides Against Deceptive Ad- vertising of Guarantees furnish guidance re- specting other guarantee representations and are to be considered as supplementing this section. [Guide 7) $230.8 Model homes. An advertiser shall not claim that a prospective buyer has been ‘“‘selected”’ or that his home will be used as a “model” or “demonstration,” or that the owner thereof will receive any amount of money, a reduction in price or other thing of value conditioned upon the sale of similar homes to oth- ers, unless such representation is fac- tually true. [Guide 8) § 230.9 Delivery and installation. (a) Advertised or quoted prices shall include all charges for delivery and in- stallation of the home, unless the ad- vertisement clearly and conspicuously discloses that delivery or installation charges are not included. (b) Representations that a home will be delivered or installed within a speci- fied period of time shall not be used un- less factually true. (Guide 9] PART 231—GUIDES FOR SHOE CONTENT LABELING AND AD- VERTISING Subpart A—Labeling Sec. 231.1 231.2 231.3 231.4 231.5 231.6 Labeling in general. Simulated or imitation leather. Concealed innersoles. Split leather. Embossed or processed leather. Ground or shredded leather. Subpart B—Advertising