Guides For Advertising Smell Homes
16 CFR Part 230 · Guides · in the Code of Federal Regulations 1974-1974 (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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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, 1974 CFR · Earliest edition: 1974 CFR
Text (1974 edition, OCR)
Chapter I—Federal Trade Commission PART 230-—GUIDES FOR ADVERTIS- ING SHELL HOMES Extent of completion, Size or dimensions. Pictorial representations. Savings. Financial terms. Bait advertising. Guarantees. 230.8 Model homes. 230.9 Delivery and installation. AuTHor!ITyY: The provisions of this Part 230 issued under secs. 5, 6, 38 Stat. 719, as amended, 721; 15 U.S.C, 45, 46, unless other- wise noted. Source: The provisions of this Part 230 appear at $2 F.R. 15531, Nov. 8, 1967, unless otherwise noted. § 230.1 Extent of completion. (a) Since the typical shell home does not include such features as wiring, plumbing, heating, interior trim and fin- ish, 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 unfinished state is habitable, or that it has appli- ances, fixtures, equipment, material or services which are not actually included at the time it is accepted by the pur- chaser. (c) In every case the advertiser must clearly and conspicuously disclose it is a shell home. [Guide 1] § 230.2 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 therein. (b) This section prohibits misrepre- sentation through the use of picturiza- tions, as well as the publication 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 prospective purchasers to believe the higher-priced home can be purchased at the lower price. Sec. 230.1 230.2 230.3 230.4 230.5 230.6 230.7 § 230.5 (ec) If the price of any home other than the one pictured in the advertise- ment is quoted, the price of the pictured home must be disclosed and quoted with equal size and conspicuousness. [Guide 3) § 230.4 Savings. (a) If savings claims are made (1) the basis for the comparison must be clearly disclosed, (2) the savings must be factually true, and (3) the advertis- ing must clearly disclose: (i) That the buyer must furnish the remaining mate- rial and (ii) that the saving, if any, 1s based upon the buyer completing the remainder of the work. (b) For example, if the advertiser has a factually true savings claim to make in comparison either with a project type or custom-built home, he must disclose the type of home with which the com- parison is being made. (c) In determining whether the sav- ings claim is factually true, the compari- son must be based upon a home of like quality, materia}, size, design and work- manship in the same general locality where the shell home 1s 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 Decep- tive Pricing. [Guide 4] § 230.5 Financial terins. (a) Instaliment purchase plans shall not be misrepresented in any manner. This section prohibits claims to the effect that loans are available from any par- ticular lending institution or through a particular lending program, or that loans are federally insured, or that the seller will finance the purchaser’s indebted- ness, 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 pred- icated on the existence of other material 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 conspicuously dis- closed in the advertising. 351 § 230.6 (d) Ifa home tis advertised at a quoted price under an installment plan which requires additionally the payment of in- terest, 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 dis- closed. If monthly payments are quoted, the duration of the payments must be disclosed. Additionally, if terminal pay- ments significantly larger than the ad- vertised monthly payments are required, this fact must also be clearly disclosed as well as the amount thereof. (e) A seHer shall not procure the signature of purchasers on negotiable promissory notes without revealing to such purchasers they are signing a nego- tiable 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. [Gulde 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 con- tacting 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 deception. Nore: The Guides Against Bait Advertis- ing 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 conspicuousiy 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 thereof 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 Title 16—Commercial Practices 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 guar- antor will perform. This consists pri- marily of a statement of exactly what the guarantor undertakes to do under 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 guar- antee. Confusion of purchasers often occurs when it is not clear whether the manufacturer or the builder is the guar- antor. Notre: The Guides Against Deceptive Ad- vertising of Guarantees furnish guidance respecting 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 others, unless such rep- resentation is factually true. [Guide 8] § 230.9 Delivery and installation. (a) Advertised or quoted prices shal! include all charges for delivery and in- stallation of the home, unless the adver- tisement clearly and conspicuously dis- closes that delivery or installation charges are not included. (b) Representations that a home wil} 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 CON- TENT. LABELING AND ADVERTISING 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 feather. Embossed or processed leather, Ground or shredded leather. 352