Guides For The Advertising Of Warranties And Guarantees
16 CFR Part 239 · Guides · in the Code of Federal Regulations 1986-1995 (10 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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: 1986 CFR
Text (1995 edition, OCR)
§ 238.4 ing salesmen, designed to prevent or discourage them from selling the ad- vertised product. (Guide 3] $238.4 Switch after sale. No practice should be pursued by an advertiser, in the event of sale of the advertised product, of ‘‘unselling”’ with the intent and purpose of selling other merchandise in its stead. Among acts or practices which wil] be considered in determining if the initial sale was in good faith, and not a strategem to sell other merchandise, are: (a) Accepting a deposit for the adver- tised product, then switching the pur- chaser to a higher-priced product, (b) Failure to make delivery of the advertised product within a reasonable time or to make a refund, (c) Disparagement by acts or words of the advertised product, or the dispar- agement of the guarantee, credit terms, availability of service, repairs, or in any other respect, in connection with it, (d) The delivery of the advertised product which is defective, unusable or impractical for the purpose represented or implied in the advertisement. [Guide 4) NOTE: Sales of advertised merchandise. Sales of the advertised merchandise do not pre- clude the existence of a bait and switch scheme. It has been determined that, on oc- casions, this is a mere incidental byproduct of the fundamental plan and is intended to provide an aura of legitimacy to the overall operation. PART 239—GUIDES FOR THE AD- VERTISING OF WARRANTIES AND GUARANTEES Sec. 239.1 Purpose and scope of the guides. 239.2 Disclosures in warranty or guarantee advertising. 239.3 “Satisfaction Guarantees” and similar representations in advertising; disclosure in advertising that mentions ‘satisfac- tion guarantees” or similar representa- tions. 239.4 “Lifetime” tions. 239.5 Performance of warranties or guaran- * tees. AUTHORITY: Secs. 5, 6, 38 Stat. 719 as amended, 721; 15 U.S.C. 45, 46. and similar representa- 32 16 CFR Ch. I (1-1-95 Edition) SouRcE: 50 FR 18470, May 1, 1985, unless otherwise noted. §239.1 Purpose and scope of the guides. The Guides for the Advertising of Warranties and Guarantees are in- tended to help advertisers avoid unfair or deceptive practices in the advertis- ing of warranties or guarantees. The Guides are based upon Commission cases, and reflect changes in cir- cumstances brought about by the Mag- nuson-Moss Warranty Act (15 U.S.C. 2301 et seg.) and the FTC Rules promul- gated pursuant to the Act (16 CFR Parts 701 and 702). The Guides do not purport to anticipate all possible un- fair or deceptive acts or practices in the advertising of warranties or guar- antees and the Guides should not be in- terpreted to limit the Commission’s authority to proceed against such acts or practices under section 5 of the Fed- eral Trade Commission Act. The Com- mission may bring an action under sec- tion 5 against any advertiser who mis- represents the product or service of- fered, who misrepresents the terms or conditions of the warranty offered, or who employs other deceptive or unfair means. Section 239.2 of the Guides applies only to advertisements for written warranties on consumer products, as “written warranty” and ‘consumer product”’ are defined in the Magnuson- Moss Warranty Act, 15 U.S.C. 2301, that are covered by the Rule on Pre-Sale Availability or Written Warranty Terms, 16 CFR Part 702. The other sec- tions of the Guides apply to the adver- tising of any warranty or guarantee. : (50 FR 18470, May 1, 1985; 50 FR 20899, May 21, 1985] §239.2 Disclosures in warranty or guarantee advertising. (a) If an advertisement mentions a warranty or guarantee that is offered on the advertised product, the adver- tisement should disclose, with such clarity and prominence as will be no- ticed and understood by prospective purchasers, that prior to sale, at the place where the product is sold, pro- spective purchasers can see the written Federal Trade Commission warranty or guarantee for complete de- tails of the warranty coverage.! Examples: The following are examples of disclosures sufficient to convey to prospec- tive purchasers that, prior to sale, at the place where the product 1s sold, they can see the written warranty or guarantee for com- plete details of the warranty coverage. These examples are for both print and broadcast advertising. These examples are illustrative, not exhaustive. In each example, the portion of the advertisement that mentions the war- ranty or guarantee is in regular type and the disclosure is in italics. A. “The XYZ washing machine is backed by our limited 1 year warranty. For complete details, see our warranty at a dealer near you.” B. “The XYZ bicycle is warranted for 5 years. Some restrictions may apply. See a copy of our warranty wherever XYZ products are sold.” C. ‘‘We offer the best guarantee in the busi- ness. Read the details and compare wherever our fine products are sold.”’ D. ‘See our full 2 year warranty ai the store nearest you.’” E. “Don’t take our word—take our war- ranty. See our limited 2 year warranty where you shop.” (b) If an advertisement in any cata- logue, or in any other solicitation? for mail order sales or for telephone order sales mentions a warranty or guaran- tee that is offered on the advertised product, the advertisement should dis- close, with such clarity and promi- nence as will be noticed and understood by prospective purchasers, that pro- spective purchasers can obtain com- plete details of the written warranty or guarantee free from the seller upon specific written request or from the catalogue or other solicitation (which- ever is applicable). Eramples: The following are examples of disclosures sufficient to convey to consumers how they can obtain complete details of the written warranty or guarantee prior to plac- ing a mail or telephone order. These exam- ples are illustrative, not exhaustive. In each example, the portion of the advertisement ‘In television advertising, the Commission will regard any disclosure of the pre-sale availability of warranties as complying with this Guide if the advertisement makes the necessary disclosure simultaneously with or immediately following the warranty claim and the disclosure is made in the audio por- tion, or, if in the video portion, it remains on the screen for at least five seconds. 2 See note 1. 33 § 239.4 that mentions the warranty or guarantee is in regular typeface and the disclosure is in italics. A. “ABC quality cutlery is backed by our 10 year warranty. Write to us for a free copy at: (address).”’ B. “ABC power tools are guaranteed. Read about our limited 90 day warranty in this cata- logue.” C. “Write to us for a free copy of our full war- ranty. You'll be impressed how we stand be- hind our product.” [50 FR 20899, May 21, 1985) $239.3 “Satisfaction Guarantees” and similar representations in advertis- ing; disclosure in advertising that mentions “satisfaction guarantees” or similar representations. (a) A seller or manufacturer should use the terms “Satisfaction Guaran- tee,’ ‘‘Money Back Guarantee,”’ ‘“‘Free Trial Offer,’’ or similar representations in advertising only if the seller or man- ufacturer, as the case may be, refunds the full purchase price of the adver- tised product at the purchaser’s re- quest. (b) An advertisement that mentions a “Satisfaction Guarantee”’ or a similar representation should disclose, with such clarity and prominence as will be noticed and understood by prospective purchasers, any material limitations or conditions that apply to the “‘Satisfac- tion Guarantee”’ or similar representa- tion. Ezamples: These examples are for both print and broadcast advertising. These exam- ples are illustrative, not exhaustive. Example A: (In an advertisement mention- ing a satisfaction guarantee that is condi- tioned upon return of the unused portion within 30 days) ‘‘We guarantee your satisfac- tion. If not completely satisfied with Acme Spot Remover, return the unused portion within 30 days for a full refund.” Ezample B: (In an advertisement mention- ing a money back guarantee that is condi- tioned upon return of the product in its original packaging) ‘‘Money Back Guaran- tee! Just return the ABC watch in its origi- nal package and ABC will fully refund your money.” §239.4 “Lifetime” resentations. If an advertisement uses ‘‘lifetime,’’ “life,” or similar representations to de- scribe the duration of a warranty or guarantee, then the advertisement should disclose, with such clarity and and similar rep- §239.5 prominence as will be noticed and un- derstood by prospective purchasers, the life to which the representation refers. Examples: These examples are for both print and broadcast advertising. These exam- ples are illustrative, not exhaustive. Ezample A: (In an advertisement mention- ing a lifetime guarantee on an automobile muffler where the duration of the guarantee is measured by the life of the car in which it is installed) ‘‘Our lifetime guarantee on the Whisper Muffler protects you for as long as your car runs—even if you sell it, trade it, or give it away!” Example B: (In an advertisement mention- ing a lifetime guarantee on a battery where the duration of the warranty is for as long as the original purchaser owns the car in which it was installed) “Our battery is backed by our lifetime guarantee. Good for as long as you own the car!’’ §239.5 Performance of warranties or guarantees. A seller or manufacturer should ad- vertise that a product is warranted or guaranteed only if the seller or manu- facturer, as the case may be, promptly and fully performs its obligations under the warranty or guarantee. PART 240—GUIDES FOR ADVERTIS- ING ALLOWANCES AND OTHER MERCHANDISING PAYMENTS AND SERVICES Sec. 240.1 240.2 240.3 240.4 Purpose of the Guides. Applicability of the law. Definition of seller. Definition of customer. Definition of competing customers. Interstate commerce. Services or facilities. Need for a plan. Proportionally equal terms. 240. 10 Availability to all competing cus- tomers. 240.11 Wholesaler or third party perform- ance of seller’s obligations. 240.12 Checking cusomter’s use of pay- ments. 240.13 Customer’s and third party liability. 240.14 Meeting competition. 240.15 Cost justification. | AUTHORITY: Secs. 5, 6, 38 Stat. 719, as amended, 721; 15 U.S.C. 45, 46; 49 Stat. 1526; 15 U.S.C. 13, as amended. ‘SOURCE: 55 FR 33663, Aug. 17, 1990, unless otherwise noted. 16 CFR Ch. | (1-1-95 Edition) §240.1 Purpose of the Guides. The purpose of these Guides is to pro- vide assistance to businesses seeking to comply with sections 2 (d) and (e) of the Robinson-Patman Act (the ‘‘Act’’). The guides are based on the language of the statute, the legislative history, administrative and court decisions, and the purposes of the Act. Although the Guides are consistent with the case law, the Commission has sought to pro- vide guidance in some areas where no definitive guidance is provided by the case law. The Guides are what their name implies—guidelines for compli- ance with the law. They do not have the force of law. §240.2 Applicability of the law. (a) The substantive provisions of sec- tion 2 (d) and (e) apply only under cer- tain circumstances. Section 2(d) ap- plies only to: (1) A seller of products (2) Engaged in interstate commerce (3) That either directly or through an intermediary (4) Pays a customer for promotional services or facilities provided by the customer (5) In connection with the resale (not the initial sale between the seller and the customer) of the seller’s products (6) Where the customer is in competi- tion with one or more of the seller’s other customers also engaged in the re- sale of the seller’s products of like grade and quality. (b) Section 2(e) applies only to: (1) A seller of products (2) Engaged in interstate commerce (3) That either directly or through an intermediary (4) Furnishes promotional services or facilities to a customer ; (5) In connection with the resale (not the initial sale between the seller and the customer) of the seller’s products (6) Where the customer is in competi- ’ tion with one or more of the seller’s 34 other customers also engaged in the re- sale of the seller’s products of like grade and quality. (c) Additionally, section 5 of the FTC Act may apply to buyers of products for resale or to third parties. See § 240.13 of these Guides.