Guide Concerning Use Of The Word "Free" And Similar Representations

16 CFR Part 251 · Guides · in the Code of Federal Regulations 1973-1995 (23 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 These rules and guides are historical: most were rescinded or replaced, so do not assume any is in force.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: 1973 CFR

Text (1995 edition, OCR)

Federal Trade Commission

tion that an industry product is new
unless such product has not been used
and is composed entirely of unused ma-
terials and parts.

(b) In connection with the sale of fur-
niture which has the appearance of
being new but which contains used ma-
terials or parts, such as springs, latex
foam rubber stuffing, or hardware,
members of the industry should con-
spicuously disclose, in a manner pro-
vided for in §250.1 of this part, such
fact (e.g., ‘cushions made from reused
shredded latex foam rubber’’). —

(NOTE: See also § 250.9.)
(Guide 8]

§250.9 Misuse of the terms “floor sam-
ple”, “discontinued model”, etc.

(a) Representations that furniture is
a ‘floor sample’, ‘demonstration
piece’’, etc., should not be used to de-
scribe ‘‘trade-in’’, repossessed, rented,
or any furniture except that displayed
for inspection by prospective pur-
chasers at the place of sale for the pur-
pose of determining their preference
and its suitability for their use.

(b) Furniture should not be described
as ‘discontinued’ or ‘‘discontinued
. model’ unless the manufacturer has in
fact discontinued its manufacture or
the industry member offering it for
sale will discontinue offering it en-
tirely after clearance of his existing in-
ventories of furniture so described.
(Guide 9]

§250.10 Passing off through imitation
or simulation of trademarks, trade
names, etc.

Members of the industry should not
mislead or deceive purchasers by pass-
ing off the products of one industry
member as and for those of another
through the imitation or simulation of
trademarks, trade names, brands, or la-
bels. [Guide 10)

§250.11 Misrepresentation as to char-
acter of business.

Members of the industry should not
represent, directly or by implication,
in advertising or otherwise, that they
produce or manufacture products of the
industry, or that they own or control a
factory making such products, when
such is not the fact, or that they are a

719

§ 251.1

manufacturer, wholesale distributor or
a wholesaler when such is not the fact,
or in any other manner misrepresent
the character, extent, or type of their
business. (Guide 11]

$250.12 Commercial bribery.

Members of the industry should not
give, or offer to give, or permit or
cause to be given, directly or indi-
rectly, money or anything of value to
agents; employees, or representatives
of customers or prospective customers,
or to agents, employees, or representa-
tives of competitors’ customers or pro-
spective customers, without the knowl-
edge of their employers or principals,
as an inducement to influence their
employers or principals to purchase or
contract to purchase products manu-
factured or sold by such industry mem-
ber or the maker of such gift or offer,
or to influence such employers or prin-
cipals to refrain from dealing in the
products of competitors or from deal-
ing or contracting to deal with com-
petitors. [Guide 12]

§ 250.13 Other parts in this Title 16 ap-
plicable to industry.

The Commission has adopted Guides
Against Deceptive Pricing, Part 233,
Guides Against Deceptive Advertising
of Guarantees, Part 239, and Guides
Against Bait Advertising, Part 238, all
of which have general application and
furnish additional guidance for mem-
bers of the Household Furniture Indus-
try. Members of this industry should
comply with those parts.

PART 251—GUIDE CONCERNING
USE OF THE WORD “FREE” AND
SIMILAR REPRESENTATIONS

§251.1 The guide.

(a) General. (1) The offer of ‘‘Free’’
merchandise or service is a _ pro-
motional device frequently used to at-
tract customers. Providing such mer-
chandise or service with the purchase
of some other article or service has
often been found to be a useful and val-
uable marketing tool.

(2) Because the purchasing public
continually searches for the best buy,
and regards the offer of ‘‘Free’’ mer-
chandise or service to be a special bar-


§251.1

gain, all] such offers must be made with
extreme care so as to avoid any possi-
bility that consumers will be misled or
deceived. Representative of the lan-
guage frequently used in such offers
are ‘‘Free’’, “Buy 1-Get 1 Free’, ‘‘2-for-
1 Sale’, ‘50% off with purchase of
Two’’, “1l¢ Sale’’, etc. (Related rep-
resentations that raise many of the
same questions include ‘‘W—— Cents-
Off’, ‘‘Half-Price Sale’, ‘‘% Off’, etc.
See the Commission’s ‘‘Fair Packaging
and Labeling Regulation Regarding
‘Cents-Off and Guides Against Decep-
tive Pricing.”’)

(b) Meaning of ‘‘Free’’. (1) The public
understands that, except in the case of
introductory offers in connection with
the sale of a product or service (See
paragraph (f) of this section), an offer
of ‘‘Free’’? merchandise or service is
based upon a regular price for the mer-
chandise or service which must be pur-
chased by consumers in order to avail
themselves of that which is represented
to be ‘‘Free’’. In other words, when the
purchaser is told that an article is
‘Free’? to him if another article is pur-
chased, the word ‘‘Free’’ indicates that
he is paying nothing for that article
and no more than the regular price for
the other. Thus, a purchaser has a
right to believe that the merchant will
not directly and immediately recover,
in whole or in part, the cost of the free
merchandise or service by marking up
the price of the article which must be
purchased, by the substitution of infe-
rior merchandise or service, or other-
wise.

(2) The term “regular’? when used
with the term “price’’, means the
price, in the same quantity, quality
and with the same service, at which
the seller or advertiser of the product
or service has openly and actively sold
the product or service in the geo-
graphic market or trade area in which
he is making a ‘‘Free’’ or similar offer
in the most recent and regular course
of business, for a reasonably substan-
tial period of time, i.e., a 30-day period.
For consumer products or services
which fluctuate in price, the “regular’’
price shall be the lowest price at which
any substantial sales were made during
the aforesaid 30-day period. Except in
the case of introductory offers, if no
substantial sales were made, in fact, at

80

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

the “regular” price, a ‘“‘Free” or simi-
lar offer would not be proper.

(c) Disclosure of conditions. When
making ‘“‘Free’’ or similar offers all the
terms, conditions and obligations upon
which receipt and retention of the
“Free”? item are contingent should be
set forth clearly and conspicuously at
the outset of the offer so as to leave no
reasonable probability that the terms
of the offer might be misunderstood.
Stated differently, all of the terms,
conditions and obligations should ap-
pear in close conjunction with the offer
of ‘‘Free’’ merchandise or service. For
example, disclosure of the terms of the
offer set forth in a footnote of an ad-
vertisement to which reference is made
by an asterisk or other symbol placed
next to the offer, is not regarded as
making disclosure at the outset. How-
ever, mere notice of the existence of a
“Free’’ offer on the main display panel
of a label or package is not precluded
provided that (1) the notice does not
constitute an offer or identify the item
being offered ‘‘Free’’, (2) the notice in-
forms the customer of the location,
elsewhere on the package or label,
where the disclosures required by this
section may be found, (3) no purchase
or other such material affirmative act
is required in order to discover the
terms and conditions of the offer, and
(4) the notice and the offer are not oth-
erwise deceptive.

(d) Supplier’s responsibilities. Nothing
in this section should be construed as
authorizing or condoning the illegal
setting or policing of retail prices by a
supplier. However, if the supplier
knows, or should know, that a ‘‘Free’’
offer he is promoting is not being
passed on by a reseller, or otherwise is
being used by a reseller as an instru-
mentality for deception, it is improper
for the supplier to continue to offer the
product as promoted to such reseller.
He should take appropriate steps to
bring an end to the _ deception,
inlcuding the withdrawal of the ‘‘Free’”’
offer.

(e) Resellers’ participation in supplier’s
offers. Prior to advertising a ‘‘Free”
promotion, a supplier should offer the
product as promoted to all competing
resellers as provided for in the Com-
mission’s “Guides for Advertising Al-
lowances and Other Merchandising


Federal Trade Commission

Payments and Services.’’ In advertis-
ing the ‘‘Free’’ promotion, the supplier
should identify those areas in which
the offer is not available if the adver-
tising is likely to be seen in such areas,
and should clearly state that it is

available only through participating .

resellers, indicating the extent of par-
ticipation by the use of such terms as
“gome”’, ‘‘all’’, “a majority’, or “a
few’’, as the case may be.

(f) Introductory offers. (1) No ‘‘Free’’
offer should be made in connection
with the introduction of a new product
or service offered for sale at a specified
price unless the offeror expects, in good
faith, to discontinue the offer after a
limited time and to commence selling
the product or service promoted, sepa-
rately, at the same price at which it
was promoted with the ‘‘Free”’ offer.

(2) In such offers, no representation
may be made that the price is for one
item and that the other is ‘‘Free”’ un-
less the offeror expects, in good faith,
to discontinue the offer after a limited
time and to commence selling the
product or service promoted, sepa-
rately, at the same price at which it
was promoted with a ‘“‘Free’’ offer.

(g) Negotiated sales. If a product or
service usually is sold at a price ar-
rived at through bargaining, rather
than at a regular price, it is improper
to represent that another product or
service is being offered ‘‘Free”’ with the
sale. The same representation is also
improper where there may be a regular
price, but where other material factors
such as quantity, quality, or size are
arrived at through bargaining.

(h) Frequency of offers. So that a
“Free” offer will be special and mean-
ingful, a single size of a product or a
single kind of service should not be ad-
vertised with a ‘‘Free”’ offer in a trade
area for more than 6 months in any 12-
month period. At least 30 days should
elapse before another such offer is pro-
moted in the same trade area. No more
than three such offers should be made
in the same area in any 12-month pe-
riod. In such period, the offeror’s sale
in that area of the product in the size
promoted with a ‘‘Free” offer should
not exceed 50 percent of the total vol-
ume of his sales of the product, in the
same size, in the area. ‘

81

§ 252.0

(i) Similar terms. Offers of ‘‘Free’’ mer-
chandise or services which may be de-
ceptive for failure to meet the provi-
sions of this section may not be cor-
rected by the substitution of such simi-
lar words and terms as “‘gift’’, “given
without charge’’, ‘“‘bonus’’, or other
words or terms. which tend to convey
the impression to the consuming public
that an article of merchandise or serv-
ice is ‘“‘Free’’.

(38 Stat. 717, as amended; 15 U.S.C. 41-58)
[86 FR 21517, Nov. 10, 1971]

PART 252—GUIDES FOR LABELING,
ADVERTISING, AND SALE OF
WIGS AND OTHER HAIRPIECES

Sec.

252.0 Definitions.

252.1 Misrepresentation (general).

252.2 Disclosure of hair composition.

252.3 Disclosure of foreign origin.

2562.4 Flammability.

252.5 Use of terms such as “‘hair’’, “natural

hair’, ‘“‘real hair’’, etc., and trade names.

252.6 Disclosure relating to used industry
products or parts thereof.

252.7 Representations as to ‘Handmade’,
etc.

252.8 Representations
made’’, etc.

252.9 Representations as to color.

252.10 Representations as to style.

252.11 Representations as to “‘virgin’’ hair.

AUTHORITY: 38 Stat. 717, as amended; 15
U.S.C. 41-58.

SOURCE: 35 FR 12718, Aug. 11, 1970, unless
otherwise noted.

EDITORIAL NOTE: See 36 FR 18078, Sept. 9,
1971, for a statement of enforcement policy.

§252.0 Definitions.

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

(b) Industry Product means any kind
or type of lady’s wig, wiglet, fall, chi-
gnon, or other hairpiece and any kind
or type of man’s toupee or other hair-
piece.

(c) Hair Composition means the type
of hair fiber contained in an industry
product. Hair composition may consist
of, or be a combination of, three basic
types of fiber, namely, human hair,
animal hair, and artificial hair.

as to’ “Custom-