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* Quoted from "http://www.ftc.gov/bcp/guides/free.htm":
FTC 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 promotional device frequently used to attract customers.
Providing such merchandise or service with the purchase of some
other article or service has often been found to be a useful
and valuable marketing tool.
(2) Because the purchasing public continually searches for
the best buy, and regards the offer of ``Free'' merchandise or
service to be a special bargain, all such offers must be made
with extreme care so as to avoid any possibility that consumers
will be misled or deceived. Representative of the language frequently
used in such offers are ``Free'', ``Buy 1-Get 1 Free'', ``2-for-1
Sale'', ``50% off with purchase of Two'', ``1 Sale'', etc. (Related
representations that raise many of the same questions include
``XX Cents-Off'', ``Half-Price Sale'', ``\1/2\ Off'', etc. See
the Commission's ``Fair Packaging and Labeling Regulation Regarding
`Cents-Off' and Guides Against Deceptive 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 merchandise or service which must be purchased
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 purchased,
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 inferior
merchandise or service, or otherwise.
(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 geographic
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 substantial 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 the ``regular'' price, a ``Free'' or similar
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 appear 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 advertisement 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. However, 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 informs 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 otherwise 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 instrumentality 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, including 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 Commission's ``Guides for Advertising Allowances and Other
Merchandising Payments and Services.'' In advertising the ``Free''
promotion, the supplier should identify those areas in which
the offer is not available if the advertising is likely to be
seen in such areas, and should clearly state that it is available
only through participating resellers, indicating the extent of
participation by the use of such terms as ``some'', ``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, separately,
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'' unless the
offeror expects, in good faith, to discontinue the offer after
a limited time and to commence selling the product or service
promoted, separately, 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 arrived 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 meaningful, a single size of a product or a single
kind of service should not be advertised 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 promoted
in the same trade area. No more than three such offers should
be made in the same area in any 12-month period. 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
volume of his sales of the product, in the same size, in the
area.
(i) Similar terms. Offers of ``Free'' merchandise or services
which may be deceptive for failure to meet the provisions of
this section may not be corrected by the substitution of such
similar 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 service
is ``Free''.
(38 Stat. 717, as amended; 15 U.S.C. 41 - 58)
[36 FR 21517, Nov. 10, 1971]
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