Consumer Law Library

Guides For The Ladies' Handbag Industry

16 CFR Part 247 · Guides · in the Code of Federal Regulations 1970-1995 (25 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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: 1970 CFR

Text (1995 edition, OCR)

Federal Trade Commission

c. Five minutes after the last shock, the
daily rate of the watch in each of the three
positions described in a. above should be de-
termined by observing it for 2 minutes in
each position. The differences in daily rate
before and after the shock should be deter-
mined for each position. The residual effect
of the shocks will be equal to the greatest of
these differences.

A watch will be considered to have passed
the foregoing test, if after application of the
shocks, it does not stop; the residual effect
does not exceed 60 seconds per day; and an
examination of the watch does not disclose
any physical damage which would affect its
operation or appearance, e.g., hands bent or
out of position, cracked crystal, or auto-
matic or calendar devices inoperable or out
of alignment.

4. Test for water resistance. A watch should
be tested for water resistance by immersing
it completely for at least 5 minutes in water
under atmospheric pressure of 15 pounds per
square inch and for at least another 5 min-
utes in water under an additional pressure of
at least 35 pounds per square inch (total
pressure of 50 pounds per square inch). If the
watch does not admit any water or moisture
it will be considered to have passed the test.

5. Test for antimagnetic qualities. A watch
should be tested for its resistance to mag-
netism by placing it in a demagnetized con-
dition in an electrical field of not less than
60 Gauss for at least 5 seconds in a vertical
position and for at least 5 seconds in a hori-
zontal position. If the daily rate of the watch
has not been changed by more than 15 sec-
onds as a result of the foregoing exposure, it
shall be considered to have passed the test.

PART 247—GUIDES FOR THE LADIES’
HANDBAG INDUSTRY

Sec.

247.0 Definitions.

247.1 Misrepresentation (general).

247.2 Misrepresentation and deception as to
material composition.

247.8 Form of disclosure as to material com-
position.

247.4 Misrepresentation as to aniline finish,
graining, embossing, and processing.

247.5 Misuse of terms such as ‘“Scuffproof,”’
“Scratchproof,’’ “Scuff Resistant,’’ and
“Scratch Resistant.”

247.6 Deceptive pricing.

247.7 Discriminatory prices, rebates,
counts, etc.

247.8 Advertising or promotional allow-
ances, or services or facilities.

247.9 Inducing or receiving illegal discrimi-
nation in price, advertising or pro-
motional allowances, or services or fa-
cilities.

dis-

€1

§ 247.2

AUTHORITY: Secs. 5, 6, 38 Stat. 719, as
amended, 15 U.S.C. 45, 46; 49 Stat. 1526; 15
U.S.C. 13, as amended.

SouRcE: 4 FR 9924, June 27, 1969, unless
otherwise noted.

$247.0 Definitions.

For purposes of this part the follow-
ing definitions apply:

(a) Industry member means any per-
son, firm, corporation, or organization
engaged in the manufacture, sale, or
distribution of any industry products
as defined below.

(bo) Industry product means all kinds
and types of ladies’ handbags, shoulder
bags, purses, pocketbooks, and similar
articles, of any composition.

$247.1 Misrepresentation (general).

No representation should be made in
advertising, labeling, or any other
manner, which is likely to mislead or
deceive any purchaser concerning the
material composition, quality, finish,
durability, price, origin, construction,
ease of cleaning, or any other feature,
of an industry product. (Guide 1)

§247.2 Misrepresentation and decep-
tion as to material composition.

(a) The material composition of an
industry product should not be mis-
represented in any manner. Included
in, but not limited to, representations
which should not be made concerning
material composition are the follow-
ing:

(1) Any representation that an indus-
try product or part thereof is made of
top grain leather, split leather, leather
from the skin or hide of a certain ani-
mal, vinyl, plastic, brass or other
metal, or any other material, when
such is not the fact.

(2) Any representation that an indus-
try product is made wholly or substan-
tially of a particular material when
such is not the fact.

(3) Any trade name, coined name,
trademark or other word, term or rep-
resentation which has the capacity and
tendency to convey the impression
that an industry product is made in
whole or in part from the skin or hide
of an animal, or that material in the
product is leather, split leather, vinyl,
plastic, or other material, when such is
not the fact. Also any stamping, tag,


§ 247.2

label, or other device, in the shape of
an animal silhouette, used in connec-
tion with an industry product having
the appearance of leather but which is
not wholly or substantially made from
the skin or hide of such an animal
should not be used.

(4) Any trade name, coined name,
trademark or other word, term or rep-
resentation that has the capacity and
tendency to convey the impression
that an industry product is made in’
whole or in part from the skin or hide
of an animal which in fact is nonexist-
ent.

(b) In some instances the failure to
disclose certain pertinent facts con-
cerning the material composition of an
industry product may have the capac-
ity and tendency to mislead or deceive
purchasers. Generally such instances
involve split leather which has the ap-
pearance of being top grain leather, or
nonleather material which has the ap-
pearance of being leather, or leather
which has been processed to simulate a
different kind of leather. Included in,
but not limited to, disclosures which
should be made concerning material
composition are the following:

(1) Disclosure should be made of the
split leather content of an industry
product or part thereof if the split
leather is visible or if any representa-
tion is made as to composition thereof.

NOTE: Split leather should be considered as
that leather which results from the splitting
of hides or skins into two or more
thicknesses, other than the grain or hair
side.

(2) Disclosure should be made con-
cerning the material composition of an
industry product or part thereof which
is made of a nonleather material hav-
ing the appearance of leather. Such dis-
closure may either state that the ma-
terial is not leather or describe the
general nature of the material in a
manner that would clearly show that it
is not leather. Thus, some examples of
the manner in which such material
may be described are:

Nonleather
Imitation Leather
Simulated Leather
Vinyl

Vinyl Coated Fabric
Plastic

62

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

NOTE: Nonleather materials which have
the appearance of leather and which pri-
marily contain ground, pulverized or shred-
ded leather, are subject to paragraph (b)(2) of
this section. Such materials may be de-
scribed as “Nonleather’, “Imitation Leath-
er” or “Simulated Leather’ or as “Ground
Leather’, ‘“‘Pulverized Leather’ or ‘‘Shred-
ded Leather’, as the case may be.

When nonleather material has been
processed to simulate a particular kind
of leather, such as alligator leather,
any representation as may be made
concerning the simulated appearance
of the product should be immediately
accompanied by the disclosure relating
to the nonleather composition of the
product. Some examples of the manner
in which such material may be de-
scribed are:

“Not Leather Simulated Alligator Grain”
“Plastic with Imitation Alligator Grain”

(3) Disclosure should be made of the
kind of leather of which an industry
product or part thereof is made when
the leather has been embossed, dyed, or
otherwise processed to simulate the ap-
pearance of a different kind of leather.
Thus, a product made wholly of top
grain cowhide which has been proc-
essed to simulate alligator may be de-
scribed as:

“Top Grain Cowhide”’

Any additional representation as may
be made concerning the simulated ap-
pearance of the product should be im-
mediately accompanied by the disclo-
sure relating to the actual kind of
leather in the product. An example of
the manner in which such a product
may be described is:

“Top Grain Cowhide Simulated Alli-
gator Grain”

(4) Disclosure should be made that
any material in an industry product is
backed with another kind of material
when the backing is not apparent upon
casual inspection of the product, or
when representations are made which
in the absence of such disclosure would
be deceptive as to composition of the
product. Some examples of the manner
in which such material may be rep-
resented are:

“Top Grain Cowhide Backed with Split
Cowhide”


Federal Trade Commission

“Split Cowhide Backed with Simulated
Leather”
“Vinyl Backed with Other Material”

If the backing material is visible and is
split leather, nonleather material hav-
ing the appearance of leather, or leath-
er processed to simulate a different
kind of leather, disclosure should be
made consistent with paragraphs (b)
(1), (2), and (3) of this section.

(5) Disclosure as to the composition
of an industry product, composed of
more than one kind of leather or com-
posed of leather and nonleather mate-
rial having the appearance of leather,
should clearly indicate the part to
which the representation is applicable.
Thus, some examples of the manner in
which products composed of top grain
cowhide except for the handles have
the appearance of leather may be de-
scribed are:

“Top Grain Cowhide with Handle of
Simulated Leather”

“Top Grain Cowhide with Plastic Han-
dle”’

“Top Grain Cowhide with Split Leather
Handle”

[Guide 2]

§247.3 Form of disclosure as to mate-
composition.

All disclosures under §247.2 of this
part should appear in the form of a
stamping on the product, or on a tag,
label, or card attached thereto, and be
affixed with such degree of permanence
as to remain on or attached to the
product until it is received by the
consumer purchaser. All such disclo-
sures on industry products shall also
appear in all advertising of the prod-
ucts irrespective of the media used
whenever statements, representations
or depictions appear in such advertis-
ing which in the absence of such disclo-
sures would have the capacity and
tendency to create a false impression
that the products, or parts thereof, are
of a certain kind of composition. The
disclosures affixed to products and
made in advertising should be of such
conspicuousness and clarity as to be
noted by purchasers and prospective
purchasers casually inspecting the
products or casually reading, or listen-
ing to, such advertising. A disclosure
made in connection with any such
statement, representation or depiction

63

§ 247.6

should be in close conjunction there-
with. [Guide 3]

§247.4 Misrepresentation as to aniline
finish, graining, embossing, and
processing.

A representation should not be made
that an industry product has been:

(a) Colored, finished, or dyed with an-
iline dye when such is not the fact; or

(b) Dyed, embossed, grained, proc-
essed, finished, or stitched in a certain
manner when such is not the fact.

(Guide 4]

§247.5 Misuse of terms such as
roof’, “Scratchproof”’, “Scuff
Resistant”, and “Scratch Resistant”.

(a) An industry product should not be
represented as “Scuffproof’,
“Scratchproof’, or as not subject to
wear in any other respect, unless the
outer surface of the product is immune
to scuffing, scratches, or is in fact not
subject to wear as represented.

(b) An industry product should not be
represented as “Scuff Resistant’’,
“Scratch Resistant’, or as resistant to
wear in any other respect, unless the
surface of the product is in fact mean-
ingfully and significantly resistant to
scuffing, scratches, or to wear as rep-
resented. [Guide 5]

$247.6 Deceptive pricing.

Members of the industry should not
represent directly or indirectly in ad-
vertising or otherwise that an industry
product may be purchased for a speci-
fied price, or at a saving, or at a re-
duced price, when such is not the fact;
or otherwise deceive purchasers or pro-
spective purchasers with respect to the
price of any product offered for sale; or
furnish any means of instrumentality
by which others engaged in the sale of
industry products may make any such
representation.

NOTE: The Commission’s Guides Against
Deceptive Pricing furnish additional gutid-
ance respecting price savings representa-
tions and are to be considered as
supplementing this section. See Part 233 of
this chapter for the Guides Against Decep-
tive Pricing.

(Guide 6]


§ 247.7

§247.7 Discriminatory prices, rebates,
discounts, etc.

NOTE: § 247.7 is interpretive of sections 2 (a)
and (b) of the amended Clayton Act.

(a) Industry members, engaged in
commerce, in the course of such com-
merce, should not grant or allow, se-
cretly or openly, directly or indirectly,
any rebate, refund, discount, credit, or
other form of price differential, where
such rebate, refund, discount, credit, or
other form of price differential effects
a discrimination in price between dif-
ferent purchasers of goods of like grade
and quality, where either or any of the
purchases involved therein are in com-
merce, and where the effect thereof
may be substantially to lessen com-

_ petition or tend to create a monopoly
in any line of commerce, or injure, de-
stroy, or prevent competition with any
person who either grants or knowingly
receives the benefit of such discrimina-
tion, or with customers of either of
them: Provided, however,

(1) That the goods involved in any
such transaction are sold for use, con-
sumption, or resale within any place
under the jurisdiction of the United
States, and are not purchased by the
U.S. Government, State and local gov-
ernment entities, schools, colleges,
universities, public libraries, churches,
hospitals, and charitable institutions
not operated for profit, as supplies for
their own use;

(2) That nothing contained in this
section shall prevent differentials
which make only due allowance for dif-
ferences in the cost of manufacture,
sale, or delivery resulting from the dif-
fering methods or quantities in which
industry products are sold or delivered
to different purchasers;

NOTE: Cost justification under the above
proviso (2) depends upon savings in cost
based on all facts relevant to the trans-
actions under the terms of such proviso. For
example, if a seller regularly grants a dis-
count based upon the purchase of a specified
quantity by a single order for a single deliv-
ery, and this discount is justified by cost dif-
ferences, it does not follow that the same
discount can be cost justified if granted to a
purchaser of the same quantity by multiple
orders or for multiple deliveries.

(3) That nothing contained in this
section shall prevent persons engaged
in selling goods, wares, or merchandise

64

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

in commerce from selecting their own
customers in bona fide transactions
and not in restraint of trade;

(4) That nothing contained in this
section shall prevent price changes
from time to time where made in re-
sponse to changing conditions affecting
the market for or the marketability of
the goods concerned, such as but not
limited to actual or imminent deterio-
ration of perishable goods, obsoles-
cence of seasonal goods, distress sales
under court process, or sales in good
faith in discontinuance of business in
the goods concerned;

(5) That nothing contained in this
section shall prevent the meeting in
good faith of an equally low price of a
competitor or a greater promotional
allowance or other service or facility
paid for or furnished by a competitor.

NOTE: ‘‘Meeting competition in good faith’
is an affirmative defense which may be un-
dertaken by a supplier charged with a viola-
tion of subsection (a), (d), or (e) of section 2
of the amended Clayton Act who can defend
his actions by establishing that his lower
price or granting of disproportionate pro-
motional allowance of other service or facil-
ity was made in good faith to meet an equal-
ly low price of a competitor or a greater pro-
motional allowance or other service or facil-
ity paid for or furnished by a competitor.
This defense, however, is subject to impor-
tant limitations. For instance, it is insuffi-
cient to defend a charge of violating sub-
section (a), (d) and (e) of section 2 of the
amended Clayton Act solely on the basis
that competition in a particular industry is
very keen, requiring that special prices or al-
lowances be given to some customers if a
seller is ‘‘to be competitive.”

(b) The following are examples of
price differential practices to be con-
sidered as subject to the provisions of
this section when involving goods of
like grade and quality which are sold
for use, consumption, or resale within
any place under the jurisdiction of the
United States, and which are not pur-
chased by the U.S. Government, State
and local government entities, schools,
colleges, universities, public libraries,
churches, hospitals, and charitable in-
stitutions not operated for profit, as
supplies for their own use, and when—

(1) The commerce requirements spec-
ified in this section are present; and

(2) The price differential has a rea-
sonable probability of substantially
lessening competition or tending to


Federal Trade Commission

create a monopoly in any line of com-
merce, or of injuring, destroying, or
preventing competition with the indus-
try member or with the customer re-
ceiving the benefit of the price dif-
ferential, or with customers of either
of them; and provided that—

(3) The price differential was not jus-
tified by cost savings (see paragraph
(a)(2) of this section); or

(4) The price differential was not
made in response to changing condi-
tions affecting the market for or the
marketability of the goods concerned
(see paragraph (a)(4) of this section); or

(5) The lower price was not made to
meet in good faith an equally low price
of a competitor (see paragraph (a)(5) of
this section):

Ezample 1. At the end of a given period an
industry member grants a discount to a cus-
tomer equivalent to a fixed percentage of the
total of the customer’s purchases during
such period and fails to grant a discount of
the same percentage to other customers on
their purchases during such period.

Ezample 2. An industry member sells hand-
bags to one or more of his customers at a
higher price than he charges other customers
for lke merchandise. It is immaterial
whether or not such discrimination is ac-
complished by misrepresentation as to the
grade and quality of the products sold.

Example 3. An industry member sells hand-
bags directly to a retailer at a lower price
than he charges distributors whose retail
customers compete with the favored retailer.

Erample 4. An industry member pays
freight on shipments to one customer and
does not pay freight on shipments to another
customer, or pays freight on shipments to a
distributor’s customer and does not pay such
freight on shipments to other distributors’
customers thereby effecting a difference in
price between customers.

Ezample 5. Terms of %o prox. are granted
by an industry member to some customers
on handbags purchased by them from the in-
dustry member. Another customer or cus-
tomers are, nevertheless, allowed to take an
additional discount when making payment
to the industry member within the time pre-
scribed or granted an extended period of time
within which to avail themselves of the
originally offered discount.

Ezample 6. An industry member invoices
handbags to all his customers at the same
price but supplies additional quantities of
such goods at no extra charge to one or
more, but not to all, such customers; or sup-
plies other goods or premiums to one or
more, but not to all, such customers for
which he makes no extra charge and which

§ 247.8

effects an actual price difference in favor of
certain of his customers.

NOTE: Functional discounts. Neither this
section, nor section 2(a) of the Clayton Act,
as amended, of which this section is interpre-
tive, expressly permits or prohibits the
granting of functional discounts. The propri-
ety of such discounts is contingent, prin-
cipally, on whether they may substantially
lessen competition or tend to create a mo-
nopoly. Ordinarily, however, a seller may
grant a lower price to wholesalers than to re-
tailers to the extent that such wholesalers
resell to retailers, without such effects as
may substantially lessen competition or
tend. to create a monopoly. But if such
wholesalers also sell at retail, in competi-
tion with other of the seller’s retail cus-
tomers, they may not properly be granted a
price lower than the prices granted to com-
peting retailers on that portion of the goods
they sel at retail.

[Guide 7)

§247.8 Advertising or promotional al-
lowances, or services or facilities.

(a) Advertising or promotional allow-
ances. No member of the industry en-
gaged in commerce should pay or con-
tract for the payment of advertising or
promotional allowances or any other
thing of value to or for the benefit of a
customer of such member in the course
of such commerce as compensation or
in consideration for any services or fa-
cilities furnished by or through such
customer in connection with the proc-
essing, handling, sale, or offering for
sale of any industry products manufac-
tured, sold, or offered for sale by such
member, unless such payment or con-
sideration is offered to and made avail-
able on proportionally equal terms to
all other customers competing in the
distribution of the seller’s products of
like grade and quality.

(b) Services or facilities. No member of
the industry engaged in commerce
should discriminate in favor of one pur-
chaser against another purchaser or
purchasers of industry products bought
for resale, with or without processing,
by contracting to furnish or furnishing,
or by contributing to the furnishing of,
any services or facilities connected
with the processing, handling, sale, or
offering for sale of such products unless
such services or facilities are offered to
and made available on proportionally
equal terms to all other customers
competing in the distribution of the


§ 247.9

seller’s products of like grade and qual-
ity.

NOTE 1: The ‘“‘meeting competition in good
faith” defense which is set forth in the note
following paragraph (a)(5) of §247.7 is also ap-
plicable to provisions of both paragraphs (a)
and (b) of this section.

NOTE 2: For farther guidance in this area
see Part 240 of this chapter for the Commis-
sion’s Guides for Advertising Allowances and
Other Merchandising Payments and Serv-
ices.

(Guide 8]

§247.9 Inducing or receiving illegal
discrimination in price, advertis
or promotional allowances, or serv-
ices or facilities.

NOTE: §247.9 is interpretive of section 2(f)
of the amended Clayton Act and of section 5
of the Federal Trade Commission Act, as
amended.

(a) Industry members engaged in
commerce, in the course of such com-
merce, should not knowingly induce or
receive a discrimination in price, ad-
vertising or promotional allowances, or
services or facilities, as reflected in
§§ 247.7 and 247.8 of this part.

(b) The following are examples of in-
ducing or receiving discriminations in
‘price, advertising or promotional al-
jowances, or services or facilities, to be
considered as subject to this section
when the requisites of an improper dis-
crimination on the part of the seller as
reflected in §§ 247.7 and 247.8 of this part
are present and the party receiving the
discriminations knows or has reason to
know that the discriminations are ille-
gal. '

Ezample 1. An industry member purchases
handbags purportedly for resale to retailers,
and is charged a lower price than the seller
charges other customers for handbags which
they resell at retail; but the member then
transfers such handbags to another part of
its business where they are resold at retail,
thereby receiving a discrimination in price
which is covered in §247.7 of this part.

Example 2. An industry member induces
suppliers to contribute sums of money to de-
fray some or all of the costs of advertising
sponsored by such member and designed to
promote the sale of such suppliers’ handbags
in its place of business, when the industry
member knows or should know that allow-
ances for such purpose are not made avail-
able on proportionally equal terms by the
same suppliers to other customers competing
with the favored member, thereby receiving

66

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

a discrimination in promotional allowances
subject to the provisions reflected in §247.8
of this part.

(Guide 9]

PART 248—GUIDES FOR THE BEAU-
TY AND BARBER EQUIPMENT AND
SUPPLIES INDUSTRY

Sec.

248.0 Definitions.

248.1 Misrepresentation in general.

248.2 Misrepresentation as to character of
business.

248.38 Deceptive plaques and certificates.

248.4 Deceptive pricing.

248.5 Deceptive use and imitation of trade
or corporate names, trademarks, etc.

248.6 False invoicing.

248.7 Defamation of competitors or false
disparagement of their products.

248.8 Push money.

248.9 Enticing away employees of competi-

tors.

248.10 Inducing breach of contract.

248.11 Exclusive deals.

248.12 Commercial bribery.

248.13 Discriminatory prices, rebates, dis-
counts, etc.

248.14 Advertising or promotional allow-
ances, or services or facilities.

248.15 Inducing or receiving an illegal dis-
crimination in price, advertising or pro-
motional allowances, or services or fa-
cilities.

AUTHORITY: Secs. 5, 6, 38 Stat. 719, as
amended, 721; 15 U.S.C. 45, 46: 49 Stat. 1526; 15
U.S.C. 18, as amended.

SOURCE: 33 FR 11987, Aug. 23, 1968, unless
otherwise noted.

$248.0 Definitions.

As used in this part the terms indus-
try products, industry member, beauty
salon, beauty school, beauty clinic, cos-
metology, hairdressing, barber shop, and
barber school shall have the following
meanings, respectively:

(a) Industry products. Items used by
or marketed through barber shops, bar-
ber schools, beauty parlors, beauty sa-
lons, beauty schools and beauty clinics.
(Such products embrace a wide range of
beauty and barber preparations; also
the many articles or items of equip-
ment, furnishings and supplies for such
aforementioned establishments.)

(b) Industry member. Any person, firm,
corporation, organization, barber shop,
beauty salon, beauty school, beauty
clinic or similar establishment engaged