[Title 16 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2017 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

          Title 16

Commercial Practices


________________________

Parts 0 to 999

                         Revised as of January 1, 2017

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2017
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

[[Page ii]]

          U.S. GOVERNMENT OFFICIAL EDITION NOTICE

          Legal Status and Use of Seals and Logos
          
          
          The seal of the National Archives and Records Administration 
              (NARA) authenticates the Code of Federal Regulations (CFR) as 
              the official codification of Federal regulations established 
              under the Federal Register Act. Under the provisions of 44 
              U.S.C. 1507, the contents of the CFR, a special edition of the 
              Federal Register, shall be judicially noticed. The CFR is 
              prima facie evidence of the original documents published in 
              the Federal Register (44 U.S.C. 1510).

          It is prohibited to use NARA's official seal and the stylized Code 
              of Federal Regulations logo on any republication of this 
              material without the express, written permission of the 
              Archivist of the United States or the Archivist's designee. 
              Any person using NARA's official seals and logos in a manner 
              inconsistent with the provisions of 36 CFR part 1200 is 
              subject to the penalties specified in 18 U.S.C. 506, 701, and 
              1017.

          Use of ISBN Prefix

          This is the Official U.S. Government edition of this publication 
              and is herein identified to certify its authenticity. Use of 
              the 0-16 ISBN prefix is for U.S. Government Publishing Office 
              Official Editions only. The Superintendent of Documents of the 
              U.S. Government Publishing Office requests that any reprinted 
              edition clearly be labeled as a copy of the authentic work 
              with a new ISBN.

              
              
          U . S . G O V E R N M E N T P U B L I S H I N G O F F I C E

          ------------------------------------------------------------------

          U.S. Superintendent of Documents  Washington, DC 
              20402-0001

          http://bookstore.gpo.gov

          Phone: toll-free (866) 512-1800; DC area (202) 512-1800

[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 16:
          Chapter I--Federal Trade Commission                        3
  Finding Aids:
      Table of CFR Titles and Chapters........................     757
      Alphabetical List of Agencies Appearing in the CFR......     777
      List of CFR Sections Affected...........................     787

[[Page iv]]





                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 16 CFR 0.1 refers to 
                       title 16, part 0, section 
                       1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2017), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

PAST PROVISIONS OF THE CODE

    Provisions of the Code that are no longer in force and effect as of 
the revision date stated on the cover of each volume are not carried. 
Code users may find the text of provisions in effect on any given date 
in the past by using the appropriate List of CFR Sections Affected 
(LSA). For the convenience of the reader, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume. For changes to 
the Code prior to the LSA listings at the end of the volume, consult 
previous annual editions of the LSA. For changes to the Code prior to 
2001, consult the List of CFR Sections Affected compilations, published 
for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.

``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
Federal Regulations. An agency may add regulatory information at a 
``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used 
editorially to indicate that a portion of the CFR was left vacant and 
not accidentally dropped due to a printing or computer error.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed as 
an approved incorporation by reference, please contact the agency that 
issued the regulation containing that incorporation. If, after 
contacting the agency, you find the material is not available, please 
notify the Director of the Federal Register, National Archives and 
Records Administration, 8601 Adelphi Road, College Park, MD 20740-6001, 
or call 202-741-6010.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Authorities 
and Rules. A list of CFR titles, chapters, subchapters, and parts and an 
alphabetical list of agencies publishing in the CFR are also included in 
this volume.

[[Page vii]]

    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, 8601 Adelphi Road, College Park, MD 
20740-6001 or e-mail [email protected]

SALES

    The Government Publishing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call toll-free, 
866-512-1800, or DC area, 202-512-1800, M-F 8 a.m. to 4 p.m. e.s.t. or 
fax your order to 202-512-2104, 24 hours a day. For payment by check, 
write to: US Government Publishing Office - New Orders, P.O. Box 979050, 
St. Louis, MO 63197-9000.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Public Papers of the Presidents of the United 
States, Compilation of Presidential Documents and the Privacy Act 
Compilation are available in electronic format via www.ofr.gov. For more 
information, contact the GPO Customer Contact Center, U.S. Government 
Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-
mail, [email protected]
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.archives.gov/federal-
register.
    The e-CFR is a regularly updated, unofficial editorial compilation 
of CFR material and Federal Register amendments, produced by the Office 
of the Federal Register and the Government Publishing Office. It is 
available at www.ecfr.gov.

    Oliver A. Potts,
    Director,
    Office of the Federal Register.
    January 1, 2017.







[[Page ix]]



                               THIS TITLE

    Title 16--Commercial Practices is composed of two volumes. The first 
volume contains parts 0-999 and comprises chapter I--Federal Trade 
Commission. The second volume containing part 1000 to end comprises 
chapter II--Consumer Product Safety Commission. The contents of these 
volumes represent all current regulations codified under this title of 
the CFR as of January 1, 2017.

    For this volume, Robert J. Sheehan, III was Chief Editor. The Code 
of Federal Regulations publication program is under the direction of 
John Hyrum Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                     TITLE 16--COMMERCIAL PRACTICES




                   (This book contains parts 0 to 999)

  --------------------------------------------------------------------
                                                                    Part

chapter i--Federal Trade Commission.........................           0

[[Page 3]]



                   CHAPTER I--FEDERAL TRADE COMMISSION




  --------------------------------------------------------------------

      SUBCHAPTER A--ORGANIZATION, PROCEDURES AND RULES OF PRACTICE
Part                                                                Page
0               Organization................................           7
1               General procedures..........................          11
2               Nonadjudicative procedures..................          35
3               Rules of practice for adjudicative 
                    proceedings.............................          52
4               Miscellaneous rules.........................          95
5               Standards of conduct........................         131
6               Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Federal 
                    Trade Commission........................         135
14              Administrative interpretations, general 
                    policy statements, and enforcement 
                    policy statements.......................         143
16              Advisory committee management...............         146
              SUBCHAPTER B--GUIDES AND TRADE PRACTICE RULES
17              Application of guides in preventing unlawful 
                    practices...............................         153
18              Guides for the nursery industry.............         153
20              Guides for the rebuilt, reconditioned and 
                    other used automobile parts industry....         157
23              Guides for the jewelry, precious metals, and 
                    pewter industries.......................         158
24              Guides for select leather and imitation 
                    leather products........................         171
25-227          [Reserved]

233             Guides against deceptive pricing............         173
238             Guides against bait advertising.............         177
239             Guides for the advertising of warranties and 
                    guarantees..............................         178
240             Guides for advertising allowances and other 
                    merchandising payments and services.....         180
251             Guide concerning use of the word ``free'' 
                    and similar representations.............         187
254             Guides for private vocational and distance 
                    education schools.......................         188

[[Page 4]]

255             Guides concerning use of endorsements and 
                    testimonials in advertising.............         192
259             Guide concerning fuel economy advertising 
                    for new automobiles.....................         201
260             Guides for the use of environmental 
                    marketing claims........................         203
        SUBCHAPTER C--REGULATIONS UNDER SPECIFIC ACTS OF CONGRESS
300             Rules and regulations under the Wool 
                    Products Labeling Act of 1939...........         218
301             Rules and regulations under Fur Products 
                    Labeling Act............................         231
303             Rules and regulations under the Textile 
                    Fiber Products Identification Act.......         245
304             Rules and regulations under the Hobby 
                    Protection Act..........................         268
305             Energy and water use labeling for consumer 
                    products under the Energy Policy and 
                    Conservation Act (``Energy Labeling 
                    Rule'').................................         270
306             Automotive fuel ratings, certification and 
                    posting.................................         368
307             [Reserved]

308             Trade regulation rule pursuant to the 
                    Telephone Disclosure and Dispute 
                    Resolution Act of 1992..................         380
309             Labeling requirements for alternative fuels 
                    and alternative fueled vehicles.........         392
310             Telemarketing sales rule 16 CFR part 310....         401
311             Test procedures and labeling standards for 
                    recycled oil............................         415
312             Children's online privacy protection rule...         416
313             Privacy of consumer financial information...         425
314             Standards for safeguarding customer 
                    information.............................         453
315             Contact lens rule...........................         454
316             Can-spam rule...............................         458
317             Prohibition of energy market manipulation 
                    rule....................................         461
318             Health breach notification rule.............         462
320             Disclosure requirements for depository 
                    institutions lacking Federal deposit 
                    insurance...............................         465
321             Mortgage acts and practices--Advertising....         465
322             Mortgage assistance relief services.........         466
                  SUBCHAPTER D--TRADE REGULATION RULES
408             Unfair or deceptive advertising and labeling 
                    of cigarettes in relation to the health 
                    hazards of smoking......................         467
410             Deceptive advertising as to sizes of 
                    viewable pictures shown by television 
                    receiving sets..........................         467

[[Page 5]]

423             Care labeling of textile wearing apparel and 
                    certain piece goods as amended..........         467
424             Retail food store advertising and marketing 
                    practices...............................         473
425             Use of prenotification negative option plans         474
429             Rule concerning cooling-off period for sales 
                    made at homes or at certain other 
                    locations...............................         476
432             Power output claims for amplifiers utilized 
                    in home entertainment products..........         479
433             Preservation of consumers' claims and 
                    defenses................................         481
435             Mail, internet, or telephone order 
                    merchandise.............................         482
436             Disclosure requirements and prohibitions 
                    concerning franchising..................         487
437             Business opportunity rule...................         517
444             Credit practices............................         525
453             Funeral industry practices..................         528
455             Used motor vehicle trade regulation rule....         534
456             Ophthalmic practice rules (eyeglass rule)...         550
460             Labeling and advertising of home insulation.         550
    SUBCHAPTER E--RULES, REGULATIONS, STATEMENT OF GENERAL POLICY OR 
 INTERPRETATION AND EXEMPTIONS UNDER THE FAIR PACKAGING AND LABELING ACT
500             Regulations under section 4 of the Fair 
                    Packaging and Labeling Act..............         559
501             Exemptions from requirements and 
                    prohibitions under part 500.............         572
502             Regulations under section 5(c) of the Fair 
                    Packaging and Labeling Act..............         573
503             Statements of general policy or 
                    interpretation..........................         574
                 SUBCHAPTER F--FAIR CREDIT REPORTING ACT
600             [Reserved]

602             Fair and Accurate Credit Transactions Act of 
                    2003....................................         579
603             Definitions.................................         579
604             Fair Credit Reporting Act rules.............         580
610             Free annual file disclosures................         580
611             Prohibition against circumventing treatment 
                    as a nationwide consumer reporting 
                    agency..................................         580
613             Duration of active duty alerts..............         580
614             Appropriate proof of identity...............         580
640             Duties of creditors regarding risk-based 
                    pricing.................................         580
641             Duties of users of consumer reports 
                    regarding address discrepancies.........         594
642             Prescreen opt-out notice....................         595
660             Duties of furnishers of information to 
                    consumer reporting agencies.............         596

[[Page 6]]

680             Affiliate marketing.........................         601
681             Identity theft rules........................         614
682             Disposal of consumer report information and 
                    records.................................         620
698             Model forms and disclosures.................         621
 SUBCHAPTER G--RULES, REGULATIONS, STATEMENTS AND INTERPRETATIONS UNDER 
                     THE MAGNUSON-MOSS WARRANTY ACT
700             Interpretations of Magnuson-Moss Warranty 
                    Act.....................................         660
701             Disclosure of written consumer product 
                    warranty terms and conditions...........         666
702             Pre-sale availability of written warranty 
                    terms...................................         668
703             Informal dispute settlement procedures......         671
 SUBCHAPTER H--RULES, REGULATIONS, STATEMENTS AND INTERPRETATIONS UNDER 
        THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976
801             Coverage rules..............................         677
802             Exemption rules.............................         701
803             Transmittal rules...........................         719
            SUBCHAPTER I--FAIR DEBT COLLECTION PRACTICES ACT
901             Procedures for State application for 
                    exemption from the provisions of the Act         753
902-999         [Reserved]

Cross References: Animal and Plant Health Inspection Service, Department 
  of Agriculture: 9 CFR Chapter I. Commodity Futures Trading Commission: 
  17 CFR Chapter I. Consumer Product Safety Commission: 16 CFR Chapter 
  II. Securities and Exchange Commission: 17 CFR Chapter II.

Supplementary Publications: Federal Trade Commission decisions, Volumes 
  1-90 Index digest of volumes 1, 2, and 3 of decisions of the Federal 
  Trade Commission with annotation of Federal cases. Mar. 16, 1915-June 
  30, 1921. Statutes and decisions pertaining to the Federal Trade 
  Commission. 1914-1929, 1930-1938, 1939-1943, 1944-1948, 1949-1955, 
  1956-1960, 1961-1965, 1966-1970, 1971-1975, 1976, 1977.

[[Page 7]]



       SUBCHAPTER A_ORGANIZATION, PROCEDURES AND RULES OF PRACTICE





PART 0_ORGANIZATION--Table of Contents



Sec.
0.1 The Commission.
0.2 Official address.
0.3 Hours.
0.4 Laws administered.
0.5 Laws authorizing monetary claims.
0.6 [Reserved]
0.7 Delegation of functions.
0.8 The Chairman.
0.9 Organization structure.
0.10 Office of the Executive Director.
0.11 Office of the General Counsel.
0.12 Office of the Secretary.
0.13 Office of the Inspector General.
0.14 Office of Administrative Law Judges.
0.15 [Reserved]
0.16 Bureau of Competition.
0.17 Bureau of Consumer Protection.
0.18 Bureau of Economics.
0.19 The Regional Offices.
0.20 Office of International Affairs.

    Authority: 5 U.S.C. 552(a)(1); 15 U.S.C. 46(g).

    Source: 41 FR 54483, Dec. 14, 1976, unless otherwise noted.



Sec. 0.1  The Commission.

    The Federal Trade Commission is an independent administrative agency 
which was organized in 1915 pursuant to the Federal Trade Commission Act 
of 1914 (38 Stat. 717, as amended; 15 U.S.C. 41-58). It is responsible 
for the administration of a variety of statutes which, in general, are 
designed to promote competition and to protect the public from unfair 
and deceptive acts and practices in the advertising and marketing of 
goods and services. It is composed of five members appointed by the 
President and confirmed by the Senate for terms of seven years.



Sec. 0.2  Official address.

    The principal office of the Commission is at Washington, DC. All 
communications to the Commission should be addressed to the Federal 
Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580, 
unless otherwise specifically directed. The Commission's Web site 
address is www.ftc.gov.

[63 FR 71582, Dec. 29, 1998, as amended at 65 FR 78408, Dec. 15, 2000]



Sec. 0.3  Hours.

    Principal and field offices are open on each business day from 8:30 
a.m. to 5 p.m.



Sec. 0.4  Laws administered.

    The Commission exercises enforcement and administrative authority 
under the Federal Trade Commission Act (15 U.S.C. 41-58), Clayton Act 
(15 U.S.C. 12-27), Robinson-Patman Act (15 U.S.C. 13-13b, 21a), Webb-
Pomerene (Export Trade) Act (15 U.S.C. 61-66), Packers and Stockyards 
Act (7 U.S.C. 181-229), Wool Products Labeling Act of 1939 (15 U.S.C. 
68-68j), Lanham Trade-Mark Act (15 U.S.C. 1064), Fur Products Labeling 
Act (15 U.S.C. 69-69j), Textile Fiber Products Identification Act (15 
U.S.C. 70-70k), Federal Cigarette Labeling and Advertising Act (15 
U.S.C. 1331-1340), Fair Packaging and Labeling Act (15 U.S.C. 1451-
1461), Truth in Lending Act (15 U.S.C. 1601-1667f), Fair Credit 
Reporting Act (15 U.S.C. 1681-1681u), Fair Credit Billing Act (15 U.S.C. 
1666-1666j), Equal Credit Opportunity Act (15 U.S.C. 1691-1691f), Fair 
Debt Collection Practices Act (15 U.S.C. 1692-1692o), Electronic Fund 
Transfer Act (15 U.S.C. 1693-1693r), Hobby Protection Act (15 U.S.C. 
2101-2106), Magnuson-Moss Warranty--Federal Trade Commission Improvement 
Act (15 U.S.C. 2301-2312, 45-58), Energy Policy and Conservation Act (42 
U.S.C. 6201-6422, 15 U.S.C. 2008), Hart-Scott-Rodino Antitrust 
Improvements Act of 1976 (15 U.S.C. 18a), Petroleum Marketing Practices 
Act (15 U.S.C. 2801-2841), Comprehensive Smokeless Tobacco Health 
Education Act of 1986 (15 U.S.C. 4401-4408), Telephone Disclosure and 
Dispute Resolution Act of 1992 (15 U.S.C. 5701-5724), Telemarketing and 
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6101-6108), 
International Antitrust Enforcement Assistance Act of 1994 (15 U.S.C. 
46, 57b-1, 1311-1312, 6201 & note, 6202-6212), Credit Repair 
Organizations Act (15 U.S.C. 1679-1679j), Children's Online Privacy 
Protection Act (15 U.S.C. 6501-6506), Identity Theft Assumption and 
Deterrence Act of 1998 (18

[[Page 8]]

U.S.C. 1028 note), Gramm-Leach-Bliley Act (15 U.S.C. 6801-6809), and 
other Federal statutes.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.5  Laws authorizing monetary claims.

    The Commission is authorized to entertain monetary claims against it 
under three statutes. The Federal Tort Claims Act (28 U.S.C. 2671-2680) 
provides that the United States will be liable for injury or loss of 
property or personal injury or death caused by the negligent or wrongful 
acts or omissions of its employees acting within the scope of their 
employment or office. The Military Personnel and Civilian Employees 
Claims Act of 1964 (31 U.S.C. 3701, 3721) authorizes the Commission to 
compensate employees' claims for damage to or loss of personal property 
incident to their service. The Equal Access to Justice Act (5 U.S.C. 504 
and 28 U.S.C. 2412) provides that an eligible prevailing party other 
than the United States will be awarded fees and expenses incurred in 
connection with any adversary adjudicative and court proceeding, unless 
the adjudicative officer finds that the agency was substantially 
justified or that special circumstances make an award unjust. In 
addition, eligible parties, including certain small businesses, will be 
awarded fees and expenses incurred in defending against an agency demand 
that is substantially in excess of the final decision of the 
adjudicative officer and is unreasonable when compared with such 
decision under the facts and circumstances of the case, unless the 
adjudicative officer finds that the party has committed a willful 
violation of law or otherwise acted in bad faith, or special 
circumstances make an award unjust. Questions may be addressed to the 
Office of the General Counsel, (202) 326-2462.

[63 FR 36340, July 6, 1998]



Sec. 0.6  [Reserved]



Sec. 0.7  Delegation of functions.

    The Commission, under the authority provided by Reorganization Plan 
No. 4 of 1961, may delegate, by published order or rule, certain of its 
functions to a division of the Commission, an individual Commissioner, 
an administrative law judge, or an employee or employee board, and 
retains a discretionary right to review such delegated action upon its 
own initiative or upon petition of a party to or an intervenor in such 
action.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.8  The Chairman.

    The Chairman of the Commission is designated by the President, and, 
subject to the general policies of the Commission, is the executive and 
administrative head of the agency. He presides at meetings of and 
hearings before the Commission and participates with other Commissioners 
in all Commission decisions. Attached to the Office of the Chairman, and 
reporting directly to him, and through him to the Commission, are the 
following staff units:
    (a) The Office of Public Affairs, which furnishes information 
concerning Commission activities to news media and the public; and
    (b) the Office of Congressional Relations, which coordinates all 
liaison activities with Congress.

[50 FR 53303, Dec. 31, 1985]



Sec. 0.9  Organization structure.

    The Federal Trade Commission comprises the following principal 
units: Office of the Executive Director; Office of the General Counsel; 
Office of the Secretary; Office of the Inspector General; Office of the 
Administrative Law Judges; Office of International Affairs; Bureau of 
Competition; Bureau of Consumer Protection; Bureau of Economics; and the 
Regional Offices.

[72 FR 9434, Mar. 2, 2007]



Sec. 0.10  Office of the Executive Director.

    The Executive Director, under the direction of the Chairman, is the 
chief operating official who develops and implements management and 
administrative policies, programs and directives for the Commission. The 
Executive Director works closely with the Bureaus on strategic planning 
and assessing the management and resource implications of any proposed 
action. In addition, the Executive Director manages the Commission's 
facilities and administrative

[[Page 9]]

services, financial management, information technology, and human 
resources.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.11  Office of the General Counsel.

    The General Counsel is the Commission's chief law officer and 
adviser, who renders necessary legal services to the Commission, 
represents the Commission in the Federal and State courts, advises the 
Commission and other agency officials and staff with respect to 
questions of law and policy, including advice with respect to 
legislative matters and ethics, and responds to requests and appeals 
filed under the Freedom of Information and Privacy Acts and to intra- 
and intergovernmental access requests.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.12  Office of the Secretary.

    The Secretary is responsible for the minutes of Commission meetings 
and is the legal custodian of the Commission's seal, property, papers, 
and records, including legal and public records. The Secretary, or in 
the Secretary's absence an Acting Secretary designated by the 
Commission, signs Commission orders and official correspondence. In 
addition, the Secretary is responsible for the publication of all 
Commission actions that appear in the Federal Register and for the 
publication of Federal Trade Commission Decisions.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.13  Office of the Inspector General.

    The Office of Inspector General (OIG) was established within the 
Federal Trade Commission in 1989 as required by the Inspector General 
Act Amendments of 1988 (5 U.S.C. app. 3). The OIG promotes the economy, 
efficiency and effectiveness of FTC programs and operations. To this 
end, the OIG independently conducts audits and investigations to find 
and prevent fraud, waste, and abuse within the agency.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.14  Office of Administrative Law Judges.

    Administrative law judges are officials to whom the Commission, in 
accordance with law, delegates the initial performance of statutory 
fact-finding functions and initial rulings on conclusions of law, to be 
exercised in conformity with Commission decisions and policy directives 
and with its Rules of Practice. The administrative law judges also serve 
as presiding officers assigned to conduct rulemaking proceedings under 
section 18(a)(1)(B) of the Federal Trade Commission Act as amended and 
other rulemaking proceedings as directed. The Chief Administrative Law 
Judge also serves as the Chief Presiding Officer. Administrative law 
judges are appointed under the authority and subject to the prior 
approval of the Office of Personnel Management.

[54 FR 19885, May 9, 1989, as amended at 65 FR 78409, Dec. 15, 2000]



Sec. 0.15  [Reserved]



Sec. 0.16  Bureau of Competition.

    The Bureau is responsible for enforcing Federal antitrust and trade 
regulation laws under section 5 of the Federal Trade Commission Act, the 
Clayton Act, and a number of other special statutes that the Commission 
is charged with enforcing. The Bureau's work aims to preserve the free 
market system and assure the unfettered operation of the forces of 
supply and demand. Its activities seek to ensure price competition, 
quality products and services and efficient operation of the national 
economy. The Bureau carries out its responsibilities by investigating 
alleged law violations, and recommending to the Commission such further 
action as may be appropriate. Such action may include injunctive and 
other equitable relief in Federal district court, complaint and 
litigation before the agency's administrative law judges, formal 
nonadjudicative settlement of complaints, trade regulation rules, or 
reports. The Bureau also conducts compliance investigations and 
initiates proceedings for civil penalties to assure compliance with 
final Commission orders dealing with competition and trade restraint 
matters. The

[[Page 10]]

Bureau's activities also include business and consumer education and 
staff advice on competition laws and compliance, and liaison functions 
with respect to foreign antitrust and competition law enforcement 
agencies and organizations, including requests for international 
enforcement assistance.

[65 FR 78409, Dec. 15, 2000]



Sec. 0.17  Bureau of Consumer Protection.

    The Bureau investigates unfair or deceptive acts or practices under 
section 5 of the Federal Trade Commission Act as well as potential 
violations of numerous special statutes which the Commission is charged 
with enforcing. It prosecutes before the agency's administrative law 
judges alleged violations of law after issuance of a complaint by the 
Commission or obtains through negotiation consented-to orders, which 
must be accepted and issued by the Commission. In consultation with the 
General Counsel, the Bureau may also seek injunctive or other equitable 
relief under section 13(b) of the Federal Trade Commission Act. The 
Bureau participates in trade regulation rulemaking proceedings under 
section 18(a)(1)(B) of the Federal Trade Commission Act and other 
rulemaking proceedings under statutory authority. It investigates 
compliance with final orders and trade regulation rules and seeks civil 
penalties or consumer redress for their violation, as well as injunctive 
and other equitable relief under section 13(b) of the Act. In addition, 
the Bureau seeks to educate both consumers and the business community 
about the laws it enforces, and to assist and cooperate with other 
state, local, foreign, and international agencies and organizations in 
consumer protection enforcement and regulatory matters. The Bureau also 
maintains the agency's public reference facilities, where the public may 
inspect and copy a current index of opinions, orders, statements of 
policy and interpretations, staff manuals and instructions that affect 
any member of the public, and other public records of the Commission.

[65 FR 78409, Dec. 15, 2000]



Sec. 0.18  Bureau of Economics.

    The bureau aids and advises the Commission concerning the economic 
aspects of all of its functions, and is responsible for the preparation 
of various economic reports and surveys. The bureau provides economic 
and statistical assistance to the enforcement bureaus in the 
investigation and trial of cases.

[41 FR 54483, Dec. 14, 1976. Redesignated at 45 FR 36341, May 29, 1980, 
and amended at 50 FR 53303, Dec. 31, 1985]



Sec. 0.19  The Regional Offices.

    (a) These offices are investigatory arms of the Commission, and have 
responsibility for investigational, trial, compliance, and consumer 
educational activities as delegated by the Commission. They are under 
the general supervision of the Office of the Executive Director, and 
clear their activities through the appropriate operating Bureaus.
    (b) The names, geographic areas of responsibility, and addresses of 
the respective regional offices are as follows:
    (1) Northeast Region (located in New York City, New York), covering 
Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, 
Rhode Island, Vermont, and Puerto Rico. Federal Trade Commission, One 
Bowling Green, Suite 318, New York, New York 10004.
    (2) Southeast Region (located in Atlanta, Georgia), covering 
Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, 
and Tennessee. Federal Trade Commission, Suite 5M35, Midrise Building, 
60 Forsyth Street, SW., Atlanta, Georgia 30303.
    (3) East Central Region (located in Cleveland, Ohio), covering 
Delaware, District of Columbia, Maryland, Michigan, Ohio, Pennsylvania, 
Virginia, and West Virginia. Federal Trade Commission, Eaton Center, 
Suite 200, 1111 Superior Avenue, Cleveland, Ohio 44114.
    (4) Midwest Region (located in Chicago, Illinois), covering 
Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Missouri, 
Nebraska, North Dakota, South Dakota, and Wisconsin. Federal Trade 
Commission, 55 East Monroe Street, Suite 1860, Chicago, Illinois 60603-
5701.

[[Page 11]]

    (5) Southwest Region (located in Dallas, Texas), covering Arkansas, 
Louisiana, New Mexico, Oklahoma, and Texas. Federal Trade Commission, 
1999 Bryan Street, Suite 2150, Dallas, Texas 75201.
    (6) Northwest Region (located in Seattle, Washington), covering 
Alaska, Idaho, Montana, Oregon, Washington, and Wyoming. Federal Trade 
Commission, 915 Second Avenue, Suite 2896, Seattle, Washington 98174.
    (7) Western Region (located in San Francisco and Los Angeles, 
California), covering Arizona, California, Colorado, Hawaii, Nevada, and 
Utah.
    (i) San Francisco Office: Federal Trade Commission, 901 Market 
Street, Suite 570, San Francisco, California 94103.
    (ii) Los Angeles Office: Federal Trade Commission, 10877 Wilshire 
Boulevard, Suite 700, Los Angeles, California 90024.
    (c) Each of the regional offices is supervised by a Regional 
Director, who is available for conferences with attorneys, consumers, 
and other members of the public on matters relating to the Commission's 
activities.

[41 FR 54483, Dec. 14, 1976, as amended at 42 FR 27218, May 27, 1977; 43 
FR 754, Jan. 4, 1978; 43 FR 6579, Feb. 15, 1978. Redesignated at 45 FR 
36341, May 29, 1980, as amended at 50 FR 53303, Dec. 31, 1985; 63 FR 
71582, Dec. 29, 1998; 64 FR 71284, Dec. 21, 1999; 65 FR 78409, Dec. 15, 
2000]



Sec. 0.20  Office of International Affairs.

    The Office of International Affairs (OIA) comprises international 
antitrust, international consumer protection, and international 
technical assistance. OIA is responsible for designing and implementing 
the Commission's international program, which provides support and 
advice to the Bureaus of Competition and Consumer Protection with regard 
to the international aspects of investigation and prosecution of 
unlawful conduct. OIA builds cooperative relationships between the 
Commission and foreign authorities; works closely with Bureau personnel 
to recommend agency priorities and policies and works, through bilateral 
relationships and multilateral organizations, to promote those policies 
internationally; and implements Commission policy and participation in 
the competition and consumer protection aspects of trade fora and 
negotiations, such as the U.S. inter-agency delegations negotiating 
bilateral and multilateral free trade agreements. OIA works with 
authorized funding sources to develop and implement competition and 
consumer protection technical assistance programs.

[72 FR 9434, Mar. 2, 2007]



PART 1_GENERAL PROCEDURES--Table of Contents



                       Subpart A_Industry Guidance

                            Advisory Opinions

Sec.
1.1 Policy.
1.2 Procedure.
1.3 Advice.
1.4 Public disclosure.

                             Industry Guides

1.5 Purpose.
1.6 How promulgated.

 Subpart B_Rules and Rulemaking Under Section 18(a)(1)(B) of the FTC Act

1.7 Scope of rules in this subpart.
1.8 Nature, authority and use of trade regulation rules.
1.9 Petitions to commence trade regulation rule proceedings.
1.10 Advance notice of proposed rulemaking.
1.11 Commencement of a rulemaking proceeding.
1.12 Final notice.
1.13 Rulemaking proceeding.
1.14 Promulgation.
1.15 Amendment or repeal of a rule.
1.16 Petition for exemption from trade regulation rule.
1.17 [Reserved]
1.18 Rulemaking record.
1.19 Modification of a rule by the Commission at the time of judicial 
          review.
1.20 Alternative procedures.

     Subpart C_Rules Promulgated Under Authority Other Than Section 
                       18(a)(1)(B) of the FTC Act

1.21 Scope of the rules in this subpart.
1.22 Rulemaking.
1.23 Quantity limit rules.
1.24 Rules applicable to wool, fur, and textile fiber products and rules 
          promulgated under the Fair Packaging and Labeling Act.
1.25 Initiation of proceedings--petitions.
1.26 Procedure.

[[Page 12]]

Subpart D [Reserved]

                   Subpart E_Export Trade Associations

1.41 Limited antitrust exemption.
1.42 Notice to Commission.
1.43 Recommendations.

               Subpart F_Trademark Cancellation Procedure

1.51 Applications.

            Subpart G_Injunctive and Condemnation Proceedings

1.61 Injunctions.
1.62 Ancillary court orders pending review.
1.63 Injunctions: Wool, fur, and textile cases.
1.64 Condemnation proceedings.

        Subpart H_Administration of the Fair Credit Reporting Act

1.71 Administration.
1.72 Examination, counseling and staff advice.
1.73 Interpretations.

 Subpart I_Procedures for Implementation of the National Environmental 
                           Policy Act of 1969

1.81 Authority and incorporation of CEQ Regulations.
1.82 Declaration of policy.
1.83 Whether to commence the process for an environmental impact 
          statement.
1.84 Draft environmental impact statements: Availability and comment.
1.85 Final environmental impact statements.
1.86 Supplemental statements.
1.87 NEPA and agency decisionmaking.
1.88 Implementing procedures.
1.89 Effect on prior actions.

         Subpart J_Economic Surveys, Investigations, and Reports

1.91 Authority and purpose.

      Subpart K_Penalties for Violation of Appliance Labeling Rules

1.92 Scope.
1.93 Notice of proposed penalty.
1.94 Commission proceeding to assess civil penalty.
1.95 Procedures upon election.
1.96 Compromise of penalty.
1.97 Amount of penalty.

 Subpart L_Civil Penalty Adjustments Under the Federal Civil Penalties 
              Inflation Adjustment Act of 1990, as Amended

1.98 Adjustment of civil monetary penalty amounts.

 Subpart M_Submissions Under the Small Business Regulatory Enforcement 
                              Fairness Act

1.99 Submission of rules, guides, interpretations, and policy statements 
          to Congress and the Comptroller General.

                Subpart N_Administrative Wage Garnishment

1.100 Administrative wage garnishment.

  Subpart O_OMB Control Numbers for Commission Information Collection 
                              Requirements

1.101 OMB control numbers assigned pursuant to the Paperwork Reduction 
          Act.
1.102--1.109 [Reserved]

   Subpart P_Administrative Debt Collection, Including Administrative 
                                 Offset

1.110 Application of Government-wide administrative claims collections 
          standards and adoption of administrative offset regulations.
1.111-1.119 [Reserved]

                       Subpart Q_Tax Refund Offset

1.120 Purpose.
1.121 Notification of intent to collect.
1.122 Commission action as a result of consideration of evidence 
          submitted in response to the notice of intent.
1.123 Change in notification to Bureau of the Fiscal Service.
1.124 Interest, penalties, and costs.

    Authority: Sec. 6, 38 Stat. 721 (15 U.S.C. 46), unless otherwise 
noted.

    Source: 32 FR 8444, June 13, 1967, unless otherwise noted.



                       Subpart A_Industry Guidance

                            Advisory Opinions



Sec. 1.1  Policy.

    (a) Any person, partnership, or corporation may request advice from 
the Commission with respect to a course of action which the requesting 
party proposes to pursue. The Commission will consider such requests for 
advice and

[[Page 13]]

inform the requesting party of the Commission's views, where 
practicable, under the following circumstances.
    (1) The matter involves a substantial or novel question of fact or 
law and there is no clear Commission or court precedent; or
    (2) The subject matter of the request and consequent publication of 
Commission advice is of significant public interest.
    (b) The Commission has authorized its staff to consider all requests 
for advice and to render advice, where practicable, in those 
circumstances in which a Commission opinion would not be warranted. 
Hypothetical questions will not be answered, and a request for advice 
will ordinarily be considered inappropriate where:
    (1) The same or substantially the same course of action is under 
investigation or is or has been the subject of a current proceeding 
involving the Commission or another governmental agency, or
    (2) An informed opinion cannot be made or could be made only after 
extensive investigation, clinical study, testing, or collateral inquiry.

[44 FR 21624, Apr. 11, 1979; 44 FR 23515, Apr. 20, 1979, as amended at 
54 FR 14072, Apr. 7, 1989]



Sec. 1.2  Procedure.

    (a) Application. The request for advice or interpretation should be 
submitted in writing (one original and two copies) to the Secretary of 
the Commission and should: (1) State clearly the question(s) that the 
applicant wishes resolved; (2) cite the provision of law under which the 
question arises; and (3) state all facts which the applicant believes to 
be material. In addition, the identity of the companies and other 
persons involved should be disclosed. Letters relating to unnamed 
companies or persons may not be answered. Submittal of additional facts 
may be requested prior to the rendering of any advice.
    (b) Compliance matters. If the request is for advice as to whether 
the proposed course of action may violate an outstanding order to cease 
and desist issued by the Commission, such request will be considered as 
provided for in Sec. 2.41 of this chapter.

[44 FR 21624, Apr. 11, 1979, as amended at 44 FR 40638, July 12, 1979]



Sec. 1.3  Advice.

    (a) On the basis of the materials submitted, as well as any other 
information available, and if practicable, the Commission or its staff 
will inform the requesting party of its views.
    (b) Any advice given by the Commission is without prejudice to the 
right of the Commission to reconsider the questions involved and, where 
the public interest requires, to rescind or revoke the action. Notice of 
such rescission or revocation will be given to the requesting party so 
that he may discontinue the course of action taken pursuant to the 
Commission's advice. The Commission will not proceed against the 
requesting party with respect to any action taken in good faith reliance 
upon the Commission's advice under this section, where all the relevant 
facts were fully, completely, and accurately presented to the Commission 
and where such action was promptly discontinued upon notification of 
rescission or revocation of the Commission's approval.
    (c) Advice rendered by the staff is without prejudice to the right 
of the Commission later to rescind the advice and, where appropriate, to 
commence an enforcement proceeding.

[44 FR 21624, Apr. 11, 1979]



Sec. 1.4  Public disclosure.

    Written advice rendered pursuant to this section and requests 
therefor, including names and details, will be placed in the 
Commission's public record immediately after the requesting party has 
received the advice, subject to any limitations on public disclosure 
arising from statutory restrictions, the Commission's rules, and the 
public interest. A request for confidential treatment of information 
submitted in connection with the questions should be made separately.

[44 FR 21624, Apr. 11, 1979]

[[Page 14]]

                             Industry Guides



Sec. 1.5  Purpose.

    Industry guides are administrative interpretations of laws 
administered by the Commission for the guidance of the public in 
conducting its affairs in conformity with legal requirements. They 
provide the basis for voluntary and simultaneous abandonment of unlawful 
practices by members of industry. Failure to comply with the guides may 
result in corrective action by the Commission under applicable statutory 
provisions. Guides may relate to a practice common to many industries or 
to specific practices of a particular industry.



Sec. 1.6  How promulgated.

    Industry guides \1\ are promulgated by the Commission on its own 
initiative or pursuant to petition filed with the Secretary or upon 
informal application therefor, by any interested person or group, when 
it appears to the Commission that guidance as to the legal requirements 
applicable to particular practices would be beneficial in the public 
interest and would serve to bring about more widespread and equitable 
observance of laws administered by the Commission. In connection with 
the promulgation of industry guides, the Commission at any time may 
conduct such investigations, make such studies, and hold such 
conferences or hearings as it may deem appropriate. All or any part of 
any such investigation, study, conference, or hearing may be conducted 
under the provisions of subpart A of part 2 of this chapter.
---------------------------------------------------------------------------

    \1\ In the past, certain of these have been promulgated and referred 
to as trade practice rules.
---------------------------------------------------------------------------



 Subpart B_Rules and Rulemaking Under Section 18(a)(1)(B) of the FTC Act

    Authority: 15 U.S.C. 46; 15 U.S.C. 57a; 5 U.S.C. 552; sec. 212(a), 
Pub. L. 104-121, 110 Stat. 857 (5 U.S.C. 601 note).



Sec. 1.7  Scope of rules in this subpart.

    The rules in this subpart apply to and govern proceedings for the 
promulgation of rules as provided in section 18(a)(1)(B) of the Federal 
Trade Commission Act. Such rules shall be known as trade regulation 
rules. All other rulemaking proceedings shall be governed by the rules 
in subpart C, except as otherwise required by law or as otherwise 
specified in this chapter.

[46 FR 26288, May 12, 1981, as amended at 50 FR 53303, Dec. 31, 1985]



Sec. 1.8  Nature, authority and use of trade regulation rules.

    (a) For the purpose of carrying out the provisions of the Federal 
Trade Commission Act, the Commission is empowered to promulgate trade 
regulation rules which define with specificity acts or practices which 
are unfair or deceptive acts or practices in or affecting commerce. Such 
rules may include requirements prescribed for the purpose of preventing 
such acts or practices. A violation of a rule shall constitute an unfair 
or deceptive act or practice in violation of section 5(a)(1) of that 
Act, unless the Commission otherwise expressly provides in its rule. 
However, the respondent in an adjudicative proceeding may show that his 
conduct does not violate the rule or assert any other defense to which 
he is legally entitled.
    (b) The Commission at any time may conduct such investigations, make 
such studies and hold such conferences as it may deem necessary. All or 
any part of any such investigation may be conducted under the provisions 
of subpart A of part 2 of this chapter.

[46 FR 26288, May 12, 1981]



Sec. 1.9  Petitions to commence trade regulation rule proceedings.

    Trade regulation rule proceedings may be commenced by the Commission 
upon its own initiative or pursuant to written petition filed with the 
Secretary by any interested person stating reasonable grounds therefor. 
If the Commission determines to commence a trade regulation rule 
proceeding pursuant to the petition, the petitioner shall be mailed a 
copy of the public notices issued under Sec. Sec. 1.10, 1.11 and 1.12. 
Any person whose petition is not deemed by the Commission sufficient to 
warrant

[[Page 15]]

commencement of a rulemaking proceeding shall be notified of that 
determination and may be given an opportunity to submit additional data.

[46 FR 26288, May 12, 1981, as amended at 50 FR 53303, Dec. 31, 1985]



Sec. 1.10  Advance notice of proposed rulemaking.

    (a) Prior to the commencement of any trade regulation rule 
proceeding, the Commission shall publish in the Federal Register an 
advance notice of such proposed proceeding.
    (b) The advance notice shall:
    (1) Contain a brief description of the area of inquiry under 
consideration, the objectives which the Commission seeks to achieve, and 
possible regulatory alternatives under consideration by the Commission; 
and
    (2) Invite the response of interested persons with respect to such 
proposed rulemaking, including any suggestions or alternative methods 
for achieving such objectives.
    (c) The advance notice shall be submitted to the Committee on 
Commerce, Science, and Transportation of the Senate and to the Committee 
on Interstate and Foreign Commerce of the House of Representatives.
    (d) The Commission may, in addition to publication of the advance 
notice, use such additional mechanisms as it considers useful to obtain 
suggestions regarding the content of the area of inquiry before 
publication of an initial notice of proposed rulemaking pursuant to 
Sec. 1.11.

[46 FR 26288, May 12, 1981, as amended at 50 FR 53303, Dec. 31, 1985]



Sec. 1.11  Commencement of a rulemaking proceeding.

    (a) Initial notice. A trade regulation rule proceeding shall 
commence with an initial notice of proposed rulemaking. Such notice 
shall be published in the Federal Register not sooner than 30 days after 
it has been submitted to the Committee on Commerce, Science, and 
Transportation of the Senate and to the Committee on Interstate and 
Foreign Commerce of the House of Representatives. The initial notice 
shall include:
    (1) The text of the proposed rule including any alternatives which 
the Commission proposes to promulgate;
    (2) Reference to the legal authority under which the rule is 
proposed;
    (3) A statement describing with particularity the reason for the 
proposed rule;
    (4) An invitation to all interested persons to propose issues which 
meet the criteria of Sec. 1.13(d)(1)(i) for consideration in accordance 
with Sec. 1.13 (d)(5) and (d)(6);
    (5) An invitation to all interested persons to comment on the 
proposed rule; and
    (6) A statement of the manner in which the public may obtain copies 
of the preliminary regulatory analysis.
    (b) Preliminary regulatory analysis. Except as otherwise provided by 
statute, the Commission shall, when commencing a rulemaking proceeding, 
issue a preliminary regulatory analysis which shall contain:
    (1) A concise statement of the need for, and the objectives of, the 
proposed rule;
    (2) A description of any reasonable alternatives to the proposed 
rule which may accomplish the stated objective of the rule in a manner 
consistent with applicable law;
    (3) For the proposed rule, and for each of the alternatives 
described in the analysis, a preliminary analysis of the projected 
benefits and any adverse economic effects and any other effects, and of 
the effectiveness of the proposed rule and each alternative in meeting 
the stated objectives of the proposed rule; and
    (4) The information required by the Regulatory Flexibility Act, 5 
U.S.C. 601-612, and the Paperwork Reduction Act, 44 U.S.C. 3501-3520, if 
applicable.

[46 FR 26288, May 12, 1981, as amended at 50 FR 53303, Dec. 31, 1985; 63 
FR 36340, July 6, 1998]



Sec. 1.12  Final notice.

    A final notice of proposed rulemaking shall be published in the 
Federal Register and, to the extent practicable, otherwise made 
available to interested persons. The final notice shall include:

[[Page 16]]

    (a) Designated issues, unless there are none, which are to be 
considered in accordance with Sec. 1.13 (d)(5) and (d)(6);
    (b) The time and place of an informal hearing;
    (c) Instructions to interested persons seeking to make oral 
presentations;
    (d) A requirement that interested persons who desire to avail 
themselves of the procedures of Sec. 1.13 (d)(5) and (d)(6) with 
respect to any issue designated in paragraph (a) of this section must 
identify their interests with respect to those issues in such manner as 
may be established by the presiding officer; and
    (e) an incorporation by reference of the contents of the initial 
notice.

[40 FR 33966, Aug. 13, 1975, as amended at 50 FR 53303, Dec. 31, 1985]



Sec. 1.13  Rulemaking proceeding.

    (a) Written comments. After commencement of a trade regulation rule 
proceeding, the Commission shall accept written submissions of data, 
views, and arguments on all issues of fact, law, and policy. The initial 
notice shall specify the deadline for filing written comments under this 
subsection.
    (b) Comments proposing issues subject to the procedures of Sec. 
1.13 (d)(5) and (d)(6). Interested persons may propose issues for 
consideration in accordance with Sec. 1.13 (d)(5) and (d)(6) until 
thirty (30) days after the close of the written comment period or such 
other period as the Commission may establish in the initial notice.
    (c) Presiding officer--(1) Assignment. Upon commencement of a 
proposed trade regulation rule proceeding, a presiding officer shall be 
appointed by the Chief Presiding Officer or, when the Commission or one 
or more of its members serves as presiding officer, by the Commission.
    (2) Powers of the presiding officer. The presiding officer shall be 
responsible for the orderly conduct of the rulemaking proceeding and the 
maintenance of the rulemaking and public records until the close of the 
postrecord comment period. He shall have all powers necessary to that 
end including the following:
    (i) To publish a final notice in accordance with Sec. 1.12 or issue 
any other public notice that may be necessary for the orderly conduct of 
the rulemaking proceeding;
    (ii) To designate or modify, issues for consideration in accordance 
with Sec. 1.13 (d)(5) and (d)(6);
    (iii) To set the time and place of the informal hearing and to 
change any time periods prescribed in this subpart;
    (iv) To prescribe rules or issue rulings to avoid unnecessary costs 
or delay. Such rules or rulings may include, but are not limited to, the 
imposition of reasonable time limits on each person's oral presentation; 
and requirements that any examination; including cross-examination, 
which a person may be entitled to conduct or have conducted be conducted 
by the presiding officer on behalf of that person in such a manner as 
the presiding officer determines to be appropriate and to be required 
for a full and true disclosure with respect to any issue designated for 
consideration in accordance with Sec. 1.13 (d)(5) and (d)(6);
    (v) To make rules and rulings limiting the representation of 
interested persons for the purpose of examination, including cross-
examination, and governing the manner in which such examination is 
limited, including the selection of a representative from among a group 
of persons with the same or similar interests;
    (vi) To require that oral presentations at the informal hearing or 
responses to written questions be under oath;
    (vii) To require that oral presentations at the informal hearing be 
submitted in writing in advance of presentation;
    (viii) To certify questions to the Commission for its determination; 
and
    (ix) To rule upon all motions or petitions of interested persons, 
which motions or petitions must be filed with the presiding officer 
until the close of the postrecord comment period.
    (3) Review of rulings by the presiding officer--(i) Review after 
certification by the presiding officer. Except as otherwise provided in 
paragraph (c)(3)(ii) of this section, applications for review of a 
ruling will not be entertained by the Commission prior to its review of 
the record pursuant to Sec. 1.14, unless the presiding officer 
certifies in writing to

[[Page 17]]

the Commission that a ruling involves a controlling question of law or 
policy as to which there is substantial ground for difference of opinion 
and that an immediate review of the ruling may materially advance the 
ultimate termination of the proceeding or subsequent review will be an 
inadequate remedy. Within five (5) days after a ruling by the presiding 
officer, any interested person may petition the presiding officer for 
certification of that ruling to the Commission. Certification of a 
ruling shall not stay the rulemaking proceeding unless the presiding 
officer or the Commission shall so order. Submissions to the Commission 
not to exceed fifteen (15) pages may be made within ten (10) days of the 
presiding officer's certification. All such filings shall be a part of 
the rulemaking record. The Commission may thereupon, in its discretion, 
permit the appeal. Commission review, if permitted, will be based on the 
application for review and any additional submissions, without oral 
argument or further briefs, unless otherwise ordered by the Commission.
    (ii) Review without certification by the presiding officer. Within 
ten (10) days after publication of the final notice, any interested 
person may petition the Commission for addition, modification or 
deletion of a designated issue, accompanied by a filing not to exceed 
fifteen (15) pages. Additional submissions on the issue by other 
interested persons, not to exceed fifteen (15) pages, may be made within 
twenty (20) days of the publication of the final notice. The Commission 
may thereupon, in its discretion, permit the appeal. Commission review, 
if permitted, will be based on the petition and any additional 
submissions, without oral argument or further briefs, unless otherwise 
ordered by the Commission. A petition hereunder shall not stay the 
rulemaking proceeding unless the presiding officer or the Commission 
shall so order. All petitions filed under this paragraph shall be a part 
of the rulemaking record. Notice of the filing of any such petition may 
be obtained from the Office of the Secretary of the Commission. In the 
event any designated issue is added or substantially modified by the 
Commission, interested persons shall be given a further opportunity to 
identify their interests with respect to those issues.
    (4) Substitution of presiding officer. In the event of the 
substitution of a new presiding officer for the one originally 
appointed, any motion predicated upon such substitution shall be made 
within five (5) days thereafter.
    (5) Organization. In the performance of their rulemaking functions, 
presiding officers shall be responsible to the chief presiding officer 
who shall not be responsible to any other officer or employee of the 
Commission.
    (6) Ex parte communications. Except as required for the disposition 
of ex parte matters as authorized by law, no presiding officer shall 
consult any person or party with respect to any fact in issue unless 
such officer gives notice and opportunity for all parties to 
participate.
    (d) Informal hearings. An informal hearing with the opportunity for 
oral presentations on all issues shall be conducted by the presiding 
officer. In addition, if an issue is designated pursuant to these rules 
for consideration in accordance with Sec. 1.13(d) (5) and (6), the 
informal hearing on such issues shall be conducted in accordance with 
those paragraphs. For all other issues the presiding officer may in his 
discretion employ, in whole or in part, the procedures of those 
paragraphs.
    (1) Nature of issues for consideration in accordance with Sec. 1.13 
(d)(5) and (d)(6)--(i) Issues that must be considered in accordance with 
Sec. 1.13(d)(5) and (d)(6). The only issues that must be designated for 
consideration in accordance with paragraphs (d)(5) and (d)(6) of this 
section are disputed issues of fact that are determined by the 
Commission or the presiding officer to be material and necessary to 
resolve.
    (ii) Issues that may be considered in accordance with Sec. 
1.13(d)(5) and (d)(6). The Commission and the presiding officer retain 
the power to designate any other issues for consideration in accordance 
with paragraphs (d)(5) and (d)(6) of this section.
    (2) Addition or modification of issues for consideration in 
accordance with Sec. 1.13(d)(5) and (d)(6). The presiding officer may 
at any time on his own motion or pursuant to a written petition by 
interested persons, add or modify any

[[Page 18]]

issues designated pursuant to Sec. 1.12(a). No such petition shall be 
considered unless good cause is shown why any such proposed issue was 
not proposed pursuant to Sec. 1.13(b).
    (3) Identification of interests. Not later than twenty (20) days 
after publication of the final notice each interested person who desires 
to avail himself of the procedures of paragraphs (d)(5) and (d)(6) of 
this section shall notify the presiding officer in writing of his 
particular interest with respect to each issue designated for 
consideration in accordance with those subsections. In the event that 
new issues are designated, each interested person shall promptly notify 
the presiding officer of his particular interest with respect to each 
such issue.
    (4) Examination and cross-examination by the presiding officer. The 
presiding officer may conduct any examination, including cross-
examination, to which a person may be entitled. For that purpose he may 
require submission of written requests for presentation of questions to 
any person making oral presentations and shall determine whether to ask 
such questions or any other questions. All requests for presentation of 
questions shall be placed in the rulemaking record.
    (5) Examination, cross-examination, and the presentation of rebuttal 
submissions by interested persons--(i) In general. The presiding officer 
shall conduct or allow to be conducted examination, including cross-
examination of oral presentations and the presentation of rebuttal 
submissions relevant to the issues designated for consideration in 
accordance with paragraphs (d)(5) and (d)(6) of this section. 
Examination, including, cross-examination, and the presentation of 
rebuttal submissions, shall be allowed to the extent to which it is 
appropriate and is required for a full and true disclosure with respect 
to those issues. Requests for an opportunity to examine, including 
cross-examine, or to present rebuttal submissions, shall be accompanied 
by a specific justification therefor. In determining whether or not to 
grant such requests, the presence of the following circumstances 
indicate that such requests should be granted:
    (A) An issue for examination including cross-examination, or the 
presentation of rebuttal submissions, is an issue of specific in 
contrast to legislative fact.
    (B) A full and true disclosure with respect to the issue can only be 
achieved through examination including cross-examination rather than 
through rebuttal submissions or the presentation of additional oral 
submissions.
    (C) Circumstantial guarantees of the trustworthiness of a 
presentation do not exist.
    (D) The particular presentation is required for the resolution of a 
designated issue.
    (ii) Selection of representatives for cross-examination. After 
consideration of the information supplied in response to the final 
notice, the presiding officer shall identify groups of persons with the 
same or similar interests in the proceeding. Any such group may be 
required to select a single representative for the purpose of 
examination, including cross-examination. If a group is unable to select 
a representative then the presiding officer may select a representative 
of each such group.
    (iii) Inability to select representative for examination, including 
cross-examination. No person shall be denied the opportunity to conduct 
or have conducted, examination, including cross-examination, under 
paragraph (d)(5)(i) of this section if he is a member of a group as 
described in paragraph (d)(5)(ii) of this section and is unable to agree 
upon group representation with other group members after a good faith 
effort to do so and seeks to present substantial and relevant issues 
which will not be adequately presented by the group representative. In 
that event he shall be allowed to conduct or have conducted any 
examination, including cross-examination, to which he is entitled on 
issues designated for consideration in accordance with paragraphs (d)(5) 
and (d)(6) of this section and which affect his particular interest.
    (6) Requests to compel the attendance of persons or the production 
of documents or to obtain responses to written questions. During the 
course of the rulemaking proceeding, the presiding officer shall 
entertain requests from the Commission's staff or any interested person 
to

[[Page 19]]

compel the attendance of persons or the production of documents or to 
obtain responses to written questions. Requests to compel the attendance 
of persons or the production of documents or to obtain responses to 
written questions shall contain a statement showing the general 
relevancy of the material, information or presentation, and the 
reasonableness of the scope of the request, together with a showing that 
such material, information or presentation is not available by voluntary 
methods and cannot be obtained through examination, including cross-
examination, of oral presentations or the presentation of rebuttal 
submissions, and is appropriate and required for a full and true 
disclosure with respect to the issues designated for consideration in 
accordance with paragraphs (d)(5) and (d)(6) of this section. If the 
presiding officer determines that a request should be granted, he shall 
transmit his determination to the Commission which shall determine 
whether to issue a civil investigative demand under Sec. 2.7(b). 
Information received in response to such a demand may be disclosed in 
the rulemaking proceeding subject to an in camera order under Sec. 
1.18(b).
    (e) Written transcript. A verbatim transcript shall be made of the 
informal hearing which transcript shall be placed in the rulemaking 
record.
    (f) Staff recommendations. The staff shall make recommendations to 
the Commission in a report on the rulemaking record. Such report shall 
contain its analysis of the record and its recommendations as to the 
form of the final rule.
    (g) Recommended decision. After publication of the staff report, the 
presiding officer shall make a recommended decision based upon his or 
her findings and conclusions as to all relevant and material evidence, 
and taking into account the staff report. The recommended decision shall 
be made by the presiding officer who presided over the rulemaking 
proceeding except that such recommended decision may be made by another 
officer if the officer who presided over the proceeding is no longer 
available to the Commission.
    (h) Postrecord comment. The staff report and the presiding officer's 
recommended decision shall be the subject of public comment for a period 
to be prescribed by the presiding officer at the time the recommended 
decision is placed in the rulemaking record. The comment period shall be 
no less than sixty (60) days. The comments shall be confined to 
information already in the record and may include requests for review by 
the Commission of determinations made by the presiding officer.
    (i) Commission review of the rulemaking record. The Commission shall 
review the rulemaking record to determine what form of rule, if any, it 
should promulgate. During this review process, the Commission may allow 
persons who have previously participated in the proceeding to make oral 
presentations to the Commission, unless it determines with respect to 
that proceeding that such presentations would not significantly assist 
it in its deliberations. Presentations shall be confined to information 
already in the rulemaking record. Requests to participate in an oral 
presentation must be received by the Commission no later than the close 
of the comment period under Sec. 1.13(h). The identity of the 
participants and the format of such presentations will be announced in 
advance by the Office of Public Information in the Commisison's Weekly 
Calendar and Notice of ``Sunshine'' Meetings and in accordance with the 
applicable provisions of 5 U.S.C. 552(b) and Sec. 4.15 of the 
Commission's Rules of Practice. Such presentations will be transcribed 
verbatim or summarized at the discretion of the Commission and a copy of 
the transcript or summary and copies of any written communications and 
summaries of any oral communications relating to such presentations 
shall be placed on the rulemaking record.

[40 FR 33966, Aug. 13, 1975, as amended at 43 FR 39084, Sept. 1, 1978; 
45 FR 36341, May 29, 1980; 45 FR 78628, Nov. 26, 1980; 46 FR 14888, Mar. 
3, 1981; 46 FR 26288, May 12, 1981; 50 FR 53303, Dec. 31, 1985; 54 FR 
19886, May 9, 1989]



Sec. 1.14  Promulgation.

    (a) The Commission, after review of the rulemaking record, may 
issue, modify, or decline to issue any rule. Where it believes that it 
should have further information or additional views of interested 
persons, it may withhold

[[Page 20]]

final action pending the receipt of such additional information or 
views. If it determines not to issue a rule, it may adopt and publish an 
explanation for not doing so.
    (1) Statement of Basis and Purpose. If the Commission determines to 
promulgate a rule, it shall adopt a Statement of Basis and Purpose to 
accompany the rule which shall include:
    (i) A statement as to the prevalence of the acts or practices 
treated by the rule;
    (ii) A statement as to the manner and context in which such acts or 
practices are unfair or deceptive;
    (iii) A statement as to the economic effect of the rule, taking into 
account the effect on small businesses and consumers;
    (iv) a statement as to the effect of the rule on state and local 
laws; and
    (v) A statement of the manner in which the public may obtain copies 
of the final regulatory analysis.
    (2) Final regulatory analysis. Except as otherwise provided by 
statute, if the Commission determines to promulgate a final rule, it 
shall issue a final regulatory analysis relating to the final rule. Each 
final regulatory analysis shall contain:
    (i) A concise statement of the need for, and the objectives of, the 
final rule;
    (ii) A description of any alternatives to the final rule which were 
considered by the Commission;
    (iii) An analysis of the projected benefits and any adverse economic 
effects and any other effects of the final rule;
    (iv) An explanation of the reasons for the determination of the 
Commission that the final rule will attain its objectives in a manner 
consistent with applicable law and the reasons the particular 
alternative was chosen;
    (v) A summary of any significant issues raised by the comments 
submitted during the public comment period in response to the 
preliminary regulatory analysis, and a summary of the assessment by the 
Commission of such issues; and
    (vi) The information required by the Regulatory Flexibility Act, 5 
U.S.C. 601-612, and the Paperwork Reduction Act, 44 U.S.C. 3501-3520, if 
applicable.
    (3) Small entity compliance guide. For each rule for which the 
Commission must prepare a final regulatory flexibility analysis, the 
Commission will publish one or more guides to assist small entities in 
complying with the rule. Such guides will be designated as ``small 
entity compliance guides.''
    (b) In the event the Commission determines, upon its review of the 
rulemaking record, to propose a revised rule for further proceedings in 
accordance with this subpart, such proceedings, including the 
opportunity of interested persons to avail themselves of the procedures 
of Sec. 1.13 (d)(5) and (d)(6), shall be limited to those portions of 
the revised rule, the subjects and issues of which were not 
substantially the subject of comment in response to a previous notice of 
proposed rulemaking.
    (c) The final rule and Statement of Basis and Purpose shall be 
published in the Federal Register. A rule issued under this subpart 
shall be deemed promulgated at 3 p.m. Eastern Standard Time on the 
fourth day after the date on which the final rule and Statement of Basis 
and Purpose are published in the Federal Register. In the event such day 
is a Saturday, Sunday or national holiday, then the rule is deemed 
promulgated at 3 p.m. Eastern Standard Time on the following business 
day.

[40 FR 33966, Aug. 13, 1975, as amended at 46 FR 26289, May 12, 1981; 50 
FR 53304, Dec. 31, 1985; 63 FR 36340, July 6, 1998]



Sec. 1.15  Amendment or repeal of a rule.

    (a) Substantive amendment or repeal of a rule. The procedures for 
substantive amendment to or repeal of a rule are the same as for the 
issuance thereof.
    (b) Nonsubstantive amendment of a rule. The Commission may make a 
nonsubstantive amendment to a rule by announcing the amendment in the 
Federal Register.

[46 FR 26289, May 12, 1981]



Sec. 1.16  Petition for exemption from trade regulation rule.

    Any person to whom a rule would otherwise apply may petition the 
Commission for an exemption from such rule. The procedures for 
determining

[[Page 21]]

such a petition shall be those of subpart C of these rules.

[40 FR 33966, Aug. 13, 1975]



Sec. 1.17  [Reserved]



Sec. 1.18  Rulemaking record.

    (a) Definition. For purposes of these rules the term rulemaking 
record includes the rule, its Statement of Basis and Purpose, the 
verbatim transcripts of the informal hearing, written submissions, the 
recommended decision of the presiding officer, and the staff 
recommendations as well as any public comment thereon, verbatim 
transcripts or summaries of oral presentations to the Commission any 
communications placed on the rulemaking record pursuant to Sec. 1.18c 
and any other information which the Commission considers relevant to the 
rule.
    (b) Public availability. The rulemaking record shall be publicly 
available except when the presiding officer, for good cause shown, 
determines that it is in the public interest to allow any submission to 
be received in camera subject to the provisions of Sec. 4.11 of this 
chapter.
    (c) Communications to Commissioners and Commissioners' personal 
staffs--(1) Communications by outside parties. Except as otherwise 
provided in this subpart or by the Commission, after the Commission 
votes to issue an initial notice of proposed rulemaking, comment on the 
proposed rule should be directed to the presiding officer pursuant to 
Sec. 1.13. Communications with respect to the merits of that proceeding 
from any outside party to any Commissioner or Commissioner advisor shall 
be subject to the following treatment:
    (i) Written communications. Written communications, including 
written communications from members of Congress, received within the 
period for acceptance of initial written comments shall be forwarded 
promptly to the presiding officer for placement on the rulemaking 
record. Written communications received after the time period for 
acceptance of initial written comments but prior to any other deadline 
for the acceptance of written submissions will be forwarded promptly to 
the presiding officer, who will determine whether such communications 
comply with the applicable requirements for written submissions at that 
stage of the proceeding. Communications that comply with such 
requirements will be promptly placed on the rulemaking record. 
Noncomplying communications and all communications received after the 
time periods for acceptance of written submissions will be placed 
promptly on the public record.
    (ii) Oral communications. Oral communications are permitted only 
when advance notice of such oral communications is published by the 
Commission's Office of Public Information in its Weekly Calendar and 
Notice of ``Sunshine'' Meetings and when such oral communications are 
transcribed verbatim or summarized at the discretion of the Commissioner 
or Commissioner advisor to whom such oral communications are made and 
are promptly placed on the rulemaking record together with any written 
communications and summaries of any oral communications relating to such 
oral communications. Transcripts or summaries of oral communications 
which occur after the time period for acceptance of initial written 
comments but prior to any other deadline for the acceptance of written 
submissions will be forwarded promptly to the presiding officer together 
with any written communications and summaries of any oral communications 
relating to such oral communications. The presiding officer will 
determine whether such oral communications comply with the applicable 
requirements for written submissions at that stage of the proceeding. 
Transcripts or summaries of oral communications that comply with such 
requirements will be promptly placed on the rulemaking record together 
with any written communications and summaries of any oral communications 
relating to such oral communications. Transcripts or summaries of 
noncomplying oral communications will be promptly placed on the public 
record together with any written communications and summaries of any 
oral communications relating to such oral communications. No oral 
communications are permitted subsequent to the close of the postrecord 
comment period, except as provided in Sec. 1.13(i). If an oral

[[Page 22]]

communication does otherwise occur, the Commissioner or Commissioner 
advisor will promptly place on the public record either a transcript of 
the communication or a memorandum setting forth the contents of the 
communication and the circumstances thereof; such transcript or 
memorandum will not be part of the rulemaking record.
    (iii) Congressional communications. The provisions of paragraph 
(c)(1)(ii) of this section do not apply to communications from members 
of Congress. Memoranda prepared by the Commissioner or Commissioner 
advisor setting forth the contents of any oral congressional 
communications will be placed on the public record. If the communication 
occurs within the initial comment period and is transcribed verbatim or 
summarized, the transcript or summary will be promptly placed on the 
rulemaking record. A transcript or summary of any oral communication 
which occurs after the time period for acceptance of initial written 
comments but prior to any other deadline for the acceptance of written 
submissions will be forwarded promptly to the presiding officer, who 
will determine whether such oral communication complies with the 
applicable requirements for written submissions at that stage of the 
proceeding. Transcripts or summaries of oral communications that comply 
with such requirements will be promptly placed on the rulemaking record. 
Transcripts or summaries of noncomplying oral communications will be 
placed promptly on the public record.
    (2) Communications by certain officers, employees, and agents of the 
Commission. Any officer, employee, or agent of the Commission with 
investigative or other responsibility relating to any rulemaking 
proceeding within any operating bureau of the Commission is prohibited 
from communicating or causing to be communicated to any Commissioner or 
to the personal staff of any Commissioner any fact which is relevant to 
the merits of such proceeding and which is not on the rulemaking record 
of such proceeding, unless such communication is made available to the 
public and is included in the rulemaking record. The provisions of this 
subsection shall not apply to any communication to the extent such 
communication is required for the disposition of ex parte matters as 
authorized by law.

(Sec. 6(g), 38 Stat. 721 (15 U.S.C. 46), 80 Stat. 383, as amended (5 
U.S.C. 552))

[42 FR 43974, Sept. 1, 1977, as amended at 42 FR 60563, Nov. 28, 1977; 
44 FR 16368, Mar. 19, 1979; 44 FR 21005, Apr. 9, 1979; 45 FR 78628, Nov. 
26, 1980; 50 FR 53304, Dec. 31, 1985]



Sec. 1.19  Modification of a rule by the Commission at the time 
of judicial review.

    In the event that a reviewing court determines under section 
18(e)(2) of the Federal Trade Commission Act, to allow further 
submissions and presentations on the rule, the Commission may modify or 
set aside its rule or make a new rule by reason of the additional 
submissions and presentations. Such modified or new rule shall then be 
filed with the court together with an appropriate Statement of Basis and 
Purpose and the return of such submissions and presentations.

[40 FR 33966, Aug. 13, 1975, as amended at 50 FR 53304, Dec. 31, 1985]



Sec. 1.20  Alternative procedures.

    If the Commission determines at the commencement of a rulemaking 
proceeding to employ procedures other than those established in the 
remainder of this subpart, it may do so by announcing those procedures 
in the Federal Register notice commencing the rulemaking proceeding.

[43 FR 35683, Aug. 11, 1978]



     Subpart C_Rules Promulgated Under Authority Other Than Section 
                       18(a)(1)(B) of the FTC Act

    Authority: 15 U.S.C. 46; 5 U.S.C. 552; Sec. 212(a), Pub. L. 104-121, 
110 Stat. 857 (5 U.S.C. 601 note).



Sec. 1.21  Scope of the rules in this subpart.

    This subpart sets forth procedures for the promulgation of rules 
under authority other than section 18(a)(1)(B) of the FTC Act except as 
otherwise required by law or otherwise specified in the rules of this 
chapter. This subpart

[[Page 23]]

does not apply to the promulgation of industry guides, general 
statements of policy, rules of agency organization, procedure, or 
practice, or rules governed by subpart B of this part.

[50 FR 53304, Dec. 31, 1985]



Sec. 1.22  Rulemaking.

    (a) Nature and authority. For the purpose of carrying out the 
provisions of the statutes administered by it, the Commission is 
empowered to promulgate rules and regulations applicable to unlawful 
trade practices. Such rules and regulations express the experience and 
judgment of the Commission, based on facts of which it has knowledge 
derived from studies, reports, investigations, hearings, and other 
proceedings, or within official notice, concerning the substantive 
requirements of the statutes which it administers.
    (b) Scope. Rules may cover all applications of a particular 
statutory provision and may be nationwide in effect, or they may be 
limited to particular areas or industries or to particular product or 
geographic markets, as may be appropriate.
    (c) Use of rules in adjudicative proceedings. When a rule is 
relevant to any issue involved in an ajudicative proceeding thereafter 
instituted, the Commission may rely upon the rule to resolve such issue, 
provided that the respondent shall have been given a fair hearing on the 
applicability of the rule to the particular case.

[40 FR 15232, Apr. 4, 1975]



Sec. 1.23  Quantity limit rules.

    Quantity limit rules are authorized by section 2(a) of the Clayton 
Act, as amended by the Robinson-Patman Act. These rules have the force 
and effect of law.

[32 FR 8444, June 13, 1967. Redesignated at 40 FR 15232, Apr. 4, 1975]



Sec. 1.24  Rules applicable to wool, fur, and textile fiber products
and rules promulgated under the Fair Packaging and Labeling Act.

    Rules having the force and effect of law are authorized under 
section 6 of the Wool Products Labeling Act of 1939, section 8 of the 
Fur Products Labeling Act, section 7 of the Textile Fiber Products 
Identification Act, and sections 4, 5, and 6 of the Fair Packaging and 
Labeling Act.

[40 FR 15233, Apr. 4, 1975]



Sec. 1.25  Initiation of proceedings--petitions.

    Proceedings for the issuance of rules or regulations, including 
proceedings for exemption of products or classes of products from 
statutory requirements, may be commenced by the Commission upon its own 
initiative or pursuant to petition filed with the Secretary by any 
interested person or group stating reasonable grounds therefor. Anyone 
whose petition is not deemed by the Commission sufficient to warrant the 
holding of a rulemaking proceeding will be promptly notified of that 
determination and given an opportunity to submit additional data. 
Procedures for the amendment or repeal of a rule or regulation are the 
same as for the issuance thereof.

[32 FR 8444, June 13, 1967. Redesignated at 40 FR 15232, Apr. 4, 1975]



Sec. 1.26  Procedure.

    (a) Investigations and conferences. In connection with any 
rulemaking proceeding, the Commission at any time may conduct such 
investigations, make such studies, and hold such conferences as it may 
deem necessary. All or any part of any such investigation may be 
conducted under the provisions of subpart A of part 2 of this chapter.
    (b) Notice. General notice of proposed rulemaking will be published 
in the Federal Register and, to the extent practicable, otherwise made 
available to interested persons except when the Commission for good 
cause finds that notice and public procedure relating to the rule are 
impractical, unnecessary or contrary to the public interest and 
incorporates such finding and a brief statement of the reasons therefor 
in the rule. If the rulemaking proceeding was instituted pursuant to 
petition, a copy of the notice will be served on the petitioner. Such 
notice will include:
    (1) A statement of the time, place, and nature of the public 
proceedings;
    (2) Reference to the authority under which the rule is proposed;

[[Page 24]]

    (3) Either the terms or substance of the proposed rule or 
description of the subjects and issues involved;
    (4) An opportunity for interested persons to participate in the 
proceeding through the submission of written data, views, or arguments; 
and
    (5) A statement setting forth such procedures for treatment of 
communications from persons not employed by the Commission to 
Commissioners or Commissioner Advisors with respect to the merits of the 
proceeding as will incorporate the requirements of Sec. 1.18(c), 
including the transcription of oral communications required by Sec. 
1.18(c)(2), adapted in such form as may be appropriate to the 
circumstances of the particular proceeding.
    (c) Oral hearings. Oral hearing on a proposed rule may be held 
within the discretion of the Commission, unless otherwise expressly 
required by law. Any such hearing will be conducted by the Commission, a 
member thereof, or a member of the Commission's staff. At the hearing 
interested persons may appear and express their views as to the proposed 
rule and may suggest such amendments, revisions, and additions thereto 
as they may consider desirable and appropriate. The presiding officer 
may impose reasonable limitations upon the length of time allotted to 
any person. If by reason of the limitations imposed the person cannot 
complete the presentation of his suggestions, he may within twenty-four 
(24) hours file a written statement covering those relevant matters 
which he did not orally present.
    (d) Promulgation of rules or orders. The Commission, after 
consideration of all relevant matters of fact, law, policy, and 
discretion, including all relevant matters presented by interested 
persons in the proceeding, will adopt and publish in the Federal 
Register an appropriate rule or order, together with a concise general 
statement of its basis and purpose and any necessary findings, or will 
give other appropriate public notice of disposition of the proceeding. 
The Federal Register publication will contain the information required 
by the Paperwork Reduction Act, 44 U.S.C. 3501-3520, and the Regulatory 
Flexibility Act, 5 U.S.C. 601-612, if applicable. For each rule for 
which the Commission must prepare a final regulatory flexibility 
analysis, the Commission will publish one or more guides to assist small 
entities in complying with the rule. Such guides will be designated as 
``small entity compliance guides.''
    (e) Effective date of rules. Except as provided in paragraphs (f) 
and (g) of this section, the effective date of any rule, or of the 
amendment, suspension, or repeal of any rule will be as specified in a 
notice published in the Federal Register, which date will be not less 
than thirty (30) days after the date of such publication unless an 
earlier effective date is specified by the Commission upon good cause 
found and published with the rule.
    (f) Effective date of rules and orders under Fair Packaging and 
Labeling Act. The effective date of any rule or order under the Fair 
Packaging and Labeling Act will be as specified by order published in 
the Federal Register, but shall not be prior to the day following the 
last day on which objections may be filed under paragraph (g) of this 
section.
    (g) Objections and request for hearing under Fair Packaging and 
Labeling Act. On or before the thirtieth (30th) day after the date of 
publication of an order in the Federal Register pursuant to paragraph 
(f) of this section, any person who will be adversely affected by the 
order if placed in effect may file objections thereto with the Secretary 
of the Commission, specifying with particularity the provisions of the 
order deemed objectionable, stating the grounds therefor, and requesting 
a public hearing upon such objections. Objections will be deemed 
sufficient to warrant the holding of a public hearing only:
    (1) If they establish that the objector will be adversely affected 
by the order;
    (2) If they specify with particularity the provisions of the order 
to which objection is taken; and
    (3) If they are supported by reasonable grounds which, if valid and 
factually supported, may be adequate to justify the relief sought.

Anyone who files objections which are not deemed by the Commission 
sufficient to warrant the holding of a public hearing will be promptly 
notified of

[[Page 25]]

that determination. As soon as practicable after the time for filing 
objections has expired, the Commission will publish a notice in the 
Federal Register specifying those parts of the order which have been 
stayed by the filing of objections or, if no objections sufficient to 
warrant the holding of a hearing have been filed, stating that fact.

[32 FR 8444, June 13, 1967. Redesignated at 40 FR 15232, Apr. 4, 1975, 
as amended at 44 FR 16368, Mar. 19, 1979; 50 FR 53304, Dec. 31, 1985; 63 
FR 36340, July 6, 1998]

Subpart D [Reserved]



                   Subpart E_Export Trade Associations



Sec. 1.41  Limited antitrust exemption.

    The Export Trade Act authorizes the organization and operation of 
export trade associations, and extends to them certain limited 
exemptions from the Sherman Act and the Clayton Act. It also extends the 
jurisdiction of the Commission under the Federal Trade Commission Act to 
unfair methods of competition used in export trade against competitors 
engaged in export trade, even though the acts constituting such unfair 
methods are done without the territorial jurisdiction of the United 
States.



Sec. 1.42  Notice to Commission.

    To obtain the exemptions afforded by the Act, an export trade 
association is required to file with the Commission, within thirty (30) 
days after its creation, a verified written statement setting forth the 
location of its offices and places of business, names, and addresses of 
its officers, stockholders, or members, and copies of its documents of 
incorporation or association. On the first day of January of each year 
thereafter, each association must file a like statement and, when 
required by the Commission to do so, must furnish to the Commission 
detailed information as to its organization, business, conduct, 
practices, management, and relation to other associations, corporations, 
partnerships, and individuals.



Sec. 1.43  Recommendations.

    Whenever the Commission has reason to believe that an association 
has violated the prohibitions of section 2 of the Act, it may conduct an 
investigation. If, after investigation, it concludes that the law has 
been violated, it may make to such association recommendations for the 
readjustment of its business. If the association fails to comply with 
the recommendations, the Commission will refer its findings and 
recommendations to the Attorney General for appropriate action.



               Subpart F_Trademark Cancellation Procedure



Sec. 1.51  Applications.

    Applications for the institution of proceedings for the cancellation 
of registration of trade, service, or certification marks under the 
Trade-Mark Act of 1946 may be filed with the Secretary of the 
Commission. Such applications shall be in writing, signed by or in 
behalf of the applicant, and should identify the registration concerned 
and contain a short and simple statement of the facts constituting the 
alleged basis for cancellation, the name and address of the applicant, 
together with all relevant and available information. If, after 
consideration of the application, or upon its own initiative, the 
Commission concludes that cancellation of the mark may be warranted, it 
will institute a proceeding before the Commissioner of Patents for 
cancellation of the registration.



            Subpart G_Injunctive and Condemnation Proceedings



Sec. 1.61  Injunctions.

    In those cases where the Commission has reason to believe that it 
would be to the interest of the public, the Commission will apply to the 
courts for injunctive relief, pursuant to the authority granted in 
section 13 of the Federal Trade Commission Act.

[40 FR 15233, Apr. 4, 1975]

[[Page 26]]



Sec. 1.62  Ancillary court orders pending review.

    Where petition for review of an order to cease and desist has been 
filed in a U.S. court of appeals, the Commission may apply to the court 
for issuance of such writs as are ancillary to its jurisdiction or are 
necessary in its judgment to prevent injury to the public or to 
competitors pendente lite.



Sec. 1.63  Injunctions: Wool, fur, and textile cases.

    In those cases arising under the Wool Products Labeling Act of 1939, 
Fur Products Labeling Act, and Textile Fiber Products Identification 
Act, where it appears to the Commission that it would be to the public 
interest for it to do so, the Commission will apply to the courts for 
injunctive relief, pursuant to the authority granted in such Acts.

[32 FR 8444, June 13, 1967, as amended at 41 FR 4814, Feb. 2, 1976]



Sec. 1.64  Condemnation proceedings.

    In those cases arising under the Wool Products Labeling Act of 1939 
and Fur Products Labeling Act, and where it appears to the Commission 
that the public interest requires such action, the Commission will apply 
to the courts for condemnation, pursuant to the authority granted in 
such Acts.

[32 FR 8444, June 13, 1967, as amended at 41 FR 4814, Feb. 2, 1976]



        Subpart H_Administration of the Fair Credit Reporting Act

    Authority: 84 Stat. 1128, 15 U.S.C. 1681 et seq.



Sec. 1.71  Administration.

    The general administration of the Fair Credit Reporting Act (Title 
VI of the Consumer Credit Protection Act of 1968; enacted October 26, 
1970; Pub. L. 91-508, 82 Stat. 146, 15 U.S.C. 1601 et seq.) is carried 
out by the Bureau of Consumer Protection, Division of Credit Practices. 
Any interested person may obtain copies of the Act and these procedures 
and rules of practice upon request to the Secretary of the Commission, 
Washington, DC 20580.

[36 FR 9293, May 22, 1971, as amended at 36 FR 18788, Sept. 22, 1971; 38 
FR 32438, Nov. 26, 1973; 46 FR 26290, May 12, 1981]



Sec. 1.72  Examination, counseling and staff advice.

    The Commission maintains a staff to carry out on-the-scene 
examination of records and procedures utilized to comply with the Fair 
Credit Reporting Act and to carry out industry counseling. Requests for 
staff interpretation of the Fair Credit Reporting Act should be directed 
to the Division of Credit Practices, Bureau of Consumer Protection. Such 
interpretations represent informal staff opinion which is advisory in 
nature and is not binding upon the Commission as to any action it may 
take in the matter. Administrative action to effect correction of minor 
infractions on a voluntary basis is taken in those cases where such 
procedure is believed adequate to effect immediate compliance and 
protect the public interest.

[36 FR 9293, May 22, 1971, as amended at 36 FR 18788, Sept. 22, 1971; 38 
FR 32438, Nov. 26, 1973; 46 FR 26290, May 12, 1981]



Sec. 1.73  Interpretations.

    (a) Nature and purpose. (1) The Commission issues and causes to be 
published in the Federal Register interpretations of the provisions of 
the Fair Credit Reporting Act on its own initiative or pursuant to the 
application of any person when it appears to the Commission that 
guidance as to the legal requirements of the Act would be in the public 
interest and would serve to bring about more widespread and equitable 
observance of the Act.
    (2) The interpretations are not substantive rules and do not have 
the force or effect of statutory provisions. They are guidelines 
intended as clarification of the Fair Credit Reporting Act, and, like 
industry guides, are advisory in nature. They represent the Commission's 
view as to what a particular provision of the Fair Credit Reporting Act 
means for the guidance of the public in conducting its affairs in 
conformity with that Act, and they provide the basis for voluntary and 
simultaneous abandonment of unlawful

[[Page 27]]

practices by members of industry. Failure to comply with such 
interpretations may result in corrective action by the Commission under 
applicable statutory provisions.
    (b) Procedure. (1) Requests for Commission interpretations should be 
submitted in writing to the Secretary of the Federal Trade Commission 
stating the nature of the interpretation requested and the reasons and 
justification therefor. If the request is granted, as soon as 
practicable thereafter, the Commission will publish a notice in the 
Federal Register setting forth the text of the proposed interpretation. 
Comments, views, or objections, together with the grounds therefor, 
concerning the proposed interpretation may be submitted to the Secretary 
of the Commission within thirty (30) days of public notice thereof. The 
proposed interpretation will automatically become final after the 
expiration of sixty (60) days from the date of public notice thereof, 
unless upon consideration of written comments submitted as hereinabove 
provided, the Commission determine to rescind, revoke, modify, or 
withdraw the proposed interpretation, in which event notification of 
such determination will be published in the Federal Register.
    (2) The issuance of such interpretations is within the discretion of 
the Commission and the Commission at any time may conduct such 
investigations and hold such conferences or hearings as it may deem 
appropriate. Any interpretation issued pursuant to this chapter is 
without prejudice to the right of the Commission to reconsider the 
interpretation, and where the public interest requires, to rescind, 
revoke, modify, or withdraw the interpretation, in which event 
notification of such action will be published in the Federal Register.
    (c) Applicability of interpretations. Interpretations issued 
pursuant to this subpart may cover all applications of a particular 
statutory provision, or they may be limited in application to a 
particular industry, as appropriate.

[36 FR 9293, May 22, 1971]



 Subpart I_Procedures for Implementation of the National Environmental 
                           Policy Act of 1969

    Authority: 15 U.S.C. 46(g), 42 U.S.C. 4321 et seq.

    Source: 47 FR 3096, Jan. 22, 1982, unless otherwise noted.



Sec. 1.81  Authority and incorporation of CEQ Regulations.

    This subpart is issued pursuant to 102(2) of the National 
Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321 et 
seq.). Pursuant to Executive Order 11514 (March 5, 1970, as amended by 
Executive Order 11991, May 24, 1977) and the Environmental Quality 
Improvement Act of 1980, as amended (42 U.S.C. 4371 et seq.) the Council 
on Environmental Quality (CEQ) has issued comprehensive regulations for 
implementing the procedural provisions of NEPA (40 CFR parts 1500 
through 1508) (``CEQ Regulations''). Although it is the Commission's 
position that these regulations are not binding on it, the Commission's 
policy is to comply fully with the CEQ Regulations unless it determines 
in a particular instance or for a category of actions that compliance 
would not be consistent with the requirements of law. With this caveat, 
the Commission incorporates into this subpart the CEQ Regulations. The 
following are supplementary definitions and procedures to be applied in 
conjunction with the CEQ Regulations.

[47 FR 3096, Jan. 22, 1982, as amended at 50 FR 53304, Dec. 31, 1985]



Sec. 1.82  Declaration of policy.

    (a) Except for actions which are not subject to the requirements of 
section 102(2)(C) of NEPA, no Commission proposal for a major action 
significantly affecting the quality of the human environment will be 
instituted unless an environmental impact statement has been prepared 
for consideration in the decisionmaking. All relevant environmental 
documents, comments, and responses as provided in this subpart shall 
accompany such proposal through all review processes. ``Major actions, 
significantly affecting the quality of the human environment'' referred 
to in

[[Page 28]]

this subpart ``do not include bringing judicial or administrative civil 
or criminal enforcement actions'' CEQ Regulation (40 CFR 1508.18(a)). In 
the event that the Commission in an administrative enforcement 
proceeding actively contemplates the adoption of standards or a form of 
relief which it determines may have a significant effect on the 
environment, the Commission will, when consistent with the requirements 
of law, provide for the preparation of an environmental assessment or an 
environmental impact statement or such other action as will permit the 
Commission to assess alternatives with a view toward avoiding or 
minimizing any adverse effect upon the environment.
    (b) No Commission proposal for legislation significantly affecting 
the quality of the human environment and concerning a subject matter in 
which the Commission has primary responsibility will be submitted to 
Congress without an accompanying environmental impact statement.
    (c) When the Commission finds that emergency action is necessary and 
an environmental impact statement cannot be prepared in conformance with 
the CEQ Regulations, the Commission will consult with CEQ about 
alternative arrangements in accordance with CEQ Regulation (40 CFR 
1506.11).



Sec. 1.83  Whether to commence the process for an environmental
impact statement.

    (a) The Bureau responsible for submitting a proposed rule, guide, or 
proposal for legislation to the Commission for agency action shall, 
after consultation with the Office of the General Counsel, initially 
determine whether or not the proposal is one which requires an 
environmental impact statement. Except for matters where the 
environmental effects, if any, would appear to be either (1) clearly 
significant and therefore the decision is made to prepare an 
environmental impact statement, or (2) so uncertain that environmental 
analysis would be based on speculation, the Bureau should normally 
prepare an ``environmental assessment'' CEQ Regulation (40 CFR 1508.9) 
for purposes of providing sufficient evidence and analysis for 
determining whether to prepare an environmental impact statement or a 
finding of no significant impact. The Bureau should involve 
environmental agencies to the extent practicable in preparing an 
assessment. An environmental assessment shall be made available to the 
public when the proposed action is made public along with any ensuing 
environmental impact statement or finding of no significant impact.
    (b) If the Bureau determines that the proposal is one which requires 
an environmental impact statement, it shall commence the ``scoping 
process'' CEQ Regulation (40 CFR 1501.7) except that the impact 
statement which is part of a proposal for legislation need not go 
through a scoping process but shall conform to CEQ Regulation (40 CFR 
1506.8). As soon as practicable after its decision to prepare an 
environmental impact statement and before the scoping process, the 
Bureau shall publish a notice of intent as provided in CEQ Regulations 
(40 CFR 1501.7 and 1508.22).
    (c) If, on the basis of an environmental assessment, the 
determination is made not to prepare a statement, a finding of ``no 
significant impact'' shall be made in accordance with CEQ Regulation (40 
CFR 1508.3) and shall be made available to the public as specified in 
CEQ Regulation (40 CFR 1506.6).



Sec. 1.84  Draft environmental impact statements: Availability
and comment.

    Except for proposals for legislation, environmental impact 
statements shall be prepared in two stages: Draft statement and final 
statement.
    (a) Proposed rules or guides. (1) An environmental impact statement, 
if deemed necessary, shall be in draft form at the time a proposed rule 
or guide is published in the Federal Register and shall accompany the 
proposal throughout the decisionmaking process.
    (2) The major decision points with respect to rules and guides are:
    (i) Preliminary formulation of a staff proposal;
    (ii) The time the proposal is initially published in the Federal 
Register as a Commission proposal;

[[Page 29]]

    (iii) Presiding officer's report (in trade regulation rule 
proceedings);
    (iv) Submission to the Commission of the staff report or 
recommendation for final action on the proposed guide or rule;
    (v) Final decision by the Commission. The decision on whether or not 
to prepare an environmental impact statement should occur at point 
(a)(2)(i) of this section. The publication of any draft impact statement 
should occur at point (a)(2)(ii) of this section. The publication of the 
final environmental impact statement should occur at point (a)(2)(iv) of 
this section.
    (b) Legislative proposals. In legislative matters, a legislative 
environmental impact statement shall be prepared in accordance with CEQ 
Regulation (40 CFR 1506.8).
    (c) In rule or guide proceedings the draft environmental impact 
statement shall be prepared in accordance with CEQ Regulation (40 CFR 
1502.9) and shall be placed in the public record to which it pertains; 
in legislative matters, the legislative impact statement shall be placed 
in a public record to be established, containing the legislative report 
to which it pertains; these will be available to the public through the 
Office of the Secretary and will be published in full with the 
appropriate proposed rule, guide, or legislative report; such statements 
shall also be filed with the Environmental Protection Agency's (EPA) 
Office of Environmental Review (CEQ Regulation (40 CFR 1506.9)) for 
listing in the weekly Federal Register Notice of draft environmental 
impact statements, and shall be circulated, in accordance with CEQ 
Regulations (40 CFR 1502.19, 1506.6) to appropriate federal, state and 
local agencies.
    (d) Forty-five (45) days will be allowed for comment on the draft 
environmental impact statement, calculated from the date of publication 
in the EPA's weekly Federal Register list of draft environmental impact 
statements. The Commission may in its discretion grant such longer 
period as the complexity of the issues may warrant.



Sec. 1.85  Final environmental impact statements.

    (a) After the close of the comment period, the Bureau responsible 
for the matter will consider the comments received on the draft 
environmental impact statement and will put the draft statement into 
final form in accordance with the requirements of CEQ Regulation (40 CFR 
1502.9(b)), attaching the comments received (or summaries if response 
was exceptionally voluminous).
    (b) Upon Bureau approval of the final environmental impact statement 
the final statement will be
    (1) Filed with the EPA;
    (2) Forwarded to all parties which commented on the draft 
environmental impact statement and to other interested parties, if 
practicable;
    (3) Placed in the public record of the proposed rule or guide 
proceeding or legislative matter to which it pertains;
    (4) Distributed in any other way which the Bureau in consultation 
with CEQ deems appropriate.
    (c) In rule and guide proceedings, at least thirty (30) days will be 
allowed for comment on the final environmental impact statement, 
calculated from the date of publication in the EPA's weekly Federal 
Register list of final environmental impact statements. In no event will 
a final rule or guide be promulgated prior to ninety (90) days after 
notice of the draft environmental impact statement, except where 
emergency action makes such time period impossible.



Sec. 1.86  Supplemental statements.

    Except for proposals for legislation, as provided in CEQ Regulation 
(40 CFR 1502.9(c)), the Commission shall publish supplements to either 
draft or final environmental statements if:
    (a) The Commission makes substantial changes in the proposed action 
that are relevant to environmental concerns; or
    (b) There are significant new circumstances or information relevant 
to environmental concerns and bearing on the proposed action and its 
impacts. In the course of a trade regulation rule proceeding, the 
supplement will be placed in the rulemaking record.

[[Page 30]]



Sec. 1.87  NEPA and agency decisionmaking.

    In its final decision on the proposed action or, if appropriate, in 
its recommendation to Congress, the Commission shall consider all the 
alternatives in the environmental impact statement and other relevant 
environmental documents and shall prepare a concise statement which, in 
accordance with CEQ Regulation Sec. 1505.2, shall:
    (a) Identify all alternatives considered by the Commission in 
reaching its decision or recommendation, specifying the alternatives 
which were considered to be environmentally preferable;
    (b) State whether all practicable means to avoid or minimize 
environmental harm from the alternative selected have been adopted, and 
if not, why they were not.



Sec. 1.88  Implementing procedures.

    (a) The General Counsel is designated the official responsible for 
coordinating the Commission's efforts to improve environmental quality. 
He will provide assistance to the staff in determining when an 
environmental impact statement is needed and in its preparation.
    (b) The Commission will determine finally whether an action complies 
with NEPA.
    (c) The Directors of the Bureaus of Consumer Protection and 
Competition will supplement these procedures for their Bureaus to assure 
that every proposed rule and guide is reviewed to assess the need for an 
environmental impact statement and that, where need exists, an 
environmental impact statement is developed to assure timely 
consideration of environmental factors.
    (d) The General Counsel will establish procedures to assure that 
every legislative proposal on a matter for which the Commission has 
primary responsibility is reviewed to assess the need for an 
environmental impact statement and that, where need exists, and 
environmental impact statement is developed to assure timely 
consideration of environmental factors.
    (e) Parties seeking information or status reports on environmental 
impact statements and other elements of the NEPA process, should contact 
the Assistant General Counsel for Litigation and Environmental Policy.



Sec. 1.89  Effect on prior actions.

    It is the policy of the Commission to apply these procedures to the 
fullest extent possible to proceedings which are already in progress.



         Subpart J_Economic Surveys, Investigations and Reports



Sec. 1.91  Authority and purpose.

    General and special economic surveys, investigations, and reports 
are made by the Bureau of Economics under the authority of the various 
laws which the Federal Trade Commission administers. The Commission may 
in any such survey or investigation invoke any or all of the compulsory 
processes authorized by law.

[32 FR 8444, June 13, 1967. Redesignated at 40 FR 15233, Apr. 4, 1975]



      Subpart K_Penalties for Violation of Appliance Labeling Rules

    Source: 45 FR 67318, Oct. 10, 1980, unless otherwise noted.



Sec. 1.92  Scope.

    The rules in this subpart apply to and govern proceedings for the 
assessment of civil penalties for the violation of section 332 of the 
Energy Policy and Conservation Act, 42 U.S.C. 6302, and the Commission's 
Rules on Labeling and Advertising of Consumer Appliances, 16 CFR part 
305, promulgated under sections 324 and 326 of the Energy Policy and 
Conservation Act, 42 U.S.C. 6294 and 6296.



Sec. 1.93  Notice of proposed penalty.

    (a) Notice. Before issuing an order assessing a civil penalty under 
this subpart against any person, the Commission shall provide to such 
person notice of the proposed penalty. This notice shall:
    (1) Inform such person of the opportunity to elect in writing within 
30 days of receipt of the notice of proposed penalty to have procedures 
of Sec. 1.95 (in lieu of those of Sec. 1.94) apply with respect to 
such assessment; and

[[Page 31]]

    (2) Include a copy of a proposed complaint conforming to the 
provision of Sec. 3.11(b) (1) and (2) of the Commission's Rules of 
Practice, or a statement of the material facts constituting the alleged 
violation and the legal basis for the proposed penalty; and
    (3) Include the amount of the proposed penalty; and
    (4) Include a statement of the procedural rules that the Commission 
will follow if respondent elects to proceed under Sec. 1.94 unless the 
Commission chooses to follow subparts B, C, D, E, and F of part 3 of 
this chapter.
    (b) Election. Within 30 days of receipt of the notice of proposed 
penalty, the respondent shall, if it wishes to elect to have the 
procedures of Sec. 1.95 apply, notify the Commission of the election in 
writing. The notification, to be filed in accordance with Sec. 4.2 of 
this chapter, may include any factual or legal reasons for which the 
proposed assessment order should not issue, should be reduced in amount, 
or should otherwise be modified.



Sec. 1.94  Commission proceeding to assess civil penalty.

    If the respondent fails to elect to have the procedures of Sec. 
1.95 apply, the Commission shall determine whether to issue a complaint 
and thereby commence an adjudicative proceeding in conformance with 
section 333(d)(2)(A) of the Energy Policy and Conservation Act, 42 
U.S.C. 6303(d)(2)(A). If the Commission votes to issue a complaint, the 
proceeding shall be conducted in accordance with subparts B, C, D, E and 
F of part 3 of this chapter, unless otherwise ordered in the notice of 
proposed penalty. In assessing a penalty, the Commission shall take into 
account the factors listed in Sec. 1.97.



Sec. 1.95  Procedures upon election.

    (a) After receipt of the notification of election to apply the 
procedures of this section pursuant to Sec. 1.93, the Commission shall 
promptly assess such penalty as it deems appropriate, in accordance with 
Sec. 1.97.
    (b) If the civil penalty has not been paid within 60 calendar days 
after the assessment order has been issued under paragraph (a) of this 
section, the General Counsel, unless otherwise directed, shall institute 
an action in the appropriate district court of the United States for an 
order enforcing the assessment of the civil penalty.
    (c) Any election to have this section apply may not be revoked 
except with the consent of the Commission.



Sec. 1.96  Compromise of penalty.

    The Commission may compromise any penalty or proposed penalty at any 
time, with leave of court when necessary, taking into account the nature 
and degree of violation and the impact of a penalty upon a particular 
respondent.



Sec. 1.97  Amount of penalty.

    All penalties assessed under this subchapter shall be in the amount 
per violation as described in section 333(a) of the Energy Policy and 
Conservation Act, 42 U.S.C. 6303(a), adjusted for inflation pursuant to 
Sec. 1.98, unless the Commission otherwise directs. In considering the 
amount of penalty, the Commission shall take into account:
    (a) Respondent's size and ability to pay;
    (b) Respondent's good faith;
    (c) Any history of previous violations;
    (d) The deterrent effect of the penalty action;
    (e) The length of time involved before the Commission was made aware 
of the violation;
    (f) The gravity of the violation, including the amount of harm to 
consumers and the public caused by the violation; and
    (g) Such other matters as justice may require.

[32 FR 8444, June 13, 1967, as amended at 61 FR 54548, Oct. 21, 1996]



 Subpart L_Civil Penalty Adjustments Under the Federal Civil Penalties 
              Inflation Adjustment Act of 1990, as Amended

    Authority: 28 U.S.C. 2461 note.



Sec. 1.98  Adjustment of civil monetary penalty amounts.

    This section makes inflation adjustments in the dollar amounts of 
civil monetary penalties provided by law

[[Page 32]]

within the Commission's jurisdiction. The following maximum civil 
penalty amounts apply only to penalties assessed after August 1, 2016, 
including those penalties whose associated violation predated August 1, 
2016.
    (a) Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18a(g)(1)--
$40,000;
    (b) Section 11(l) of the Clayton Act, 15 U.S.C. 21(l)--$21,250;
    (c) Section 5(l) of the FTC Act, 15 U.S.C. 45(l)--$40,000;
    (d) Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. 45(m)(1)(A)--
$40,000;
    (e) Section 5(m)(1)(B) of the FTC Act, 15 U.S.C. 45(m)(1)(B)--
$40,000;
    (f) Section 10 of the FTC Act, 15 U.S.C. 50--$525;
    (g) Section 5 of the Webb-Pomerene (Export Trade) Act, 15 U.S.C. 
65--$525;
    (h) Section 6(b) of the Wool Products Labeling Act, 15 U.SC. 
68d(b)--$525;
    (i) Section 3(e) of the Fur Products Labeling Act, 15 U.S.C. 
69a(e)--$525;
    (j) Section 8(d)(2) of the Fur Products Labeling Act, 15 U.S.C. 
69f(d)(2)--$525;
    (k) Section 333(a) of the Energy Policy and Conservation Act, 42 
U.S.C. 6303(a)--$433;
    (l) Sections 525(a) and (b) of the Energy Policy and Conservation 
Act, 42 U.S.C. 6395(a) and (b), respectively--$21,250 and $40,000, 
respectively;
    (m) Section 621(a)(2) of the Fair Credit Reporting Act, 15 U.S.C. 
1681s(a)(2)--$3,756;
    (n) Section 1115(a) of the Medicare Prescription Drug Improvement 
and Modernization Act of 2003, Public Law 108-173, 21 U.S.C. 355 note--
$14,142;
    (o) Section 814(a) of the Energy Independence and Security Act of 
2007, 42 U.S.C. 17304--$1,138,330; and
    (p) Civil monetary penalties authorized by reference to the Federal 
Trade Commission Act under any other provision of law within the 
jurisdiction of the Commission--refer to the amounts set forth in 
paragraphs (c), (d), (e) and (f) of this section, as applicable.

[81 FR 42478, June 30, 2016]



 Subpart M_Submissions Under the Small Business Regulatory Enforcement 
                              Fairness Act

    Authority: 5 U.S.C. 801-804.



Sec. 1.99  Submission of rules, guides, interpretations, and policy
statements to Congress and the Comptroller General.

    Whenever the Commission issues or substantively amends a rule or 
industry guide or formally adopts an interpretation or policy statement 
that constitutes a ``rule'' within the meaning of 5 U.S.C. 804(3), a 
copy of the final rule, guide, interpretation or statement, together 
with a concise description, the proposed effective date, and a statement 
of whether the rule, guide, interpretation or statement is a ``major 
rule'' within the meaning of 5 U.S.C. 804(2), will be transmitted to 
each House of Congress and to the Comptroller General. The material 
transmitted to the Comptroller General will also include any additional 
relevant information required by 5 U.S.C. 801(a)(1)(B). This provision 
generally applies to rules issued or substantively amended pursuant to 
Sec. 1.14(c), Sec. 1.15(a), Sec. 1.19, or Sec. 1.26(d); industry 
guides issued pursuant to Sec. 1.6; interpretations and policy 
statements formally adopted by the Commission; and any rule of agency 
organization, practice or procedure that substantially affects the 
rights or obligations of non-agency parties.

[63 FR 36340, July 8, 1998]



                Subpart N_Administrative Wage Garnishment



Sec. 1.100  Administrative wage garnishment.

    (a) General. The Commission may use administrative wage garnishment 
for debts, including those referred to Bureau of the Fiscal Service, 
Department of Treasury, for cross-servicing. Regulations in 31 CFR 
285.11 govern the collection of delinquent nontax debts owed to federal 
agencies through administrative garnishment of non-Federal wages. 
Whenever the Bureau of the Fiscal Service collects such a debt for the 
Commission using administrative wage garnishment, the statutory 
administrative requirements in 31 CFR 285.11 will govern.
    (b) Hearing official. Any hearing required to establish the 
Commission's right to collect a debt through administrative wage 
garnishment shall be

[[Page 33]]

conducted by a qualified individual selected at the discretion of the 
Chairman of the Commission, as specified in 31 CFR 285.11.

[75 FR 68418, Nov. 8, 2010, as amended at 81 FR 2742, Jan. 19, 2016]



  Subpart O_OMB Control Numbers for Commission Information Collection 
                              Requirements

    Authority: 44 U.S.C. 3501-3521.



Sec. 1.101  OMB control numbers assigned pursuant to the Paperwork
Reduction Act.

    (a) Purpose. This part collects and displays control numbers 
assigned by the Office of Management and Budget (OMB) pursuant to the 
Paperwork Reduction Act of 1995 to information collection requirements 
in rules issued or enforced by the Commission. A response to an 
information collection is not required unless the collection of 
information displays a valid OMB control number. This part fulfills the 
mandate (44 U.S.C. 3507(a)(3), 44 U.S.C. 3512) that agencies display the 
current control number assigned by the OMB Director to agency 
information collection requirements and inform affected persons that 
they need not respond to a collection of information unless it displays 
a valid control number.
    (b) Display.

------------------------------------------------------------------------
                                              16 CFR part where the
                                              information collection
    Current OMB control number  (all        requirement is located (or
       numbers begin with 3084-)          alternate part(s) if issued by
                                          another agency, co-enforced by
                                          the Federal Trade Commission)
------------------------------------------------------------------------
0005...................................  801-803.
0025...................................  453.
0068...................................  306.
0069...................................  305.
0085...................................  12 CFR part 205; 12 CFR part
                                          1005.
0086...................................  12 CFR part 213; 12 CFR part
                                          1013.
0087...................................  12 CFR part 202; 12 CFR part
                                          1002.
0088...................................  12 CFR part 226; 12 CFR part
                                          1026.
0094...................................  309.
0097...................................  310.
0099...................................  301.
0100...................................  300.
0101...................................  303.
0102...................................  308.
0103...................................  423.
0104...................................  425.
0105...................................  432.
0106...................................  435.
0107...................................  436.
0108...................................  455.
0109...................................  460.
0110...................................  500-503.
0111...................................  701.
0112...................................  702.
0113...................................  703.
0117...................................  312.
0121...................................  313.
0127...................................  315.
0128...................................  12 CFR 1022.136; 12 CFR
                                          1022.137.
0131...................................  680; 12 CFR 1022.20.
0132...................................  642; 12 CFR 1022.54.
0137...................................  641; 681.
0142...................................  437.
0144...................................  660; 12 CFR 1022.42; 12 CFR
                                          1022.43.
0145...................................  640; 12 CFR 1022.70.
0150...................................  318.
0156...................................  12 CFR part 1014.
0157...................................  12 CFR part 1015.
------------------------------------------------------------------------


[[Page 34]]


[78 FR 65558, Nov. 1, 2013]



Sec. Sec. 1.102-1.109  [Reserved]



   Subpart P_Administrative Debt Collection, Including Administrative 
                                 Offset

    Authority: 31 U.S.C. 3701 et seq.

    Source: 81 FR 2742, Jan. 19, 2016, unless otherwise noted.



Sec. 1.110  Application of Government-wide administrative claims
collections standards and adoption of administrative offset
regulations.

    (a) The Commission shall apply the Federal Claims Collection 
Standards (FCCS), 31 CFR parts 900-904, in the administrative 
collection, offset, compromise, suspension, termination, and referral of 
collection activity for civil claims for money, funds, or property, as 
defined by 31 U.S.C. 3701(b), unless specific Federal agency statutes or 
regulations apply to such activities or, as provided for by Title 11 of 
the United States Code, when the claims involve bankruptcy. The 
Commission shall also follow Department of Treasury regulations set 
forth at 31 CFR part 285, as applicable, for administrative debt 
collection, including centralized offset of federal payments to collect 
non-tax debts that may be owed to the Commission, 31 CFR 285.5. Nothing 
in this subpart shall be construed to supersede or require the 
Commission to provide additional notice or other procedures that may 
have already been provided or afforded to a debtor in the course of 
administrative or judicial litigation or otherwise.
    (b) For purposes of 31 U.S.C. 3716(b)(1), the Commission adopts 
without change the regulations on collection by administrative offset 
set forth at 31 CFR 901.3 and other relevant sections of the FCCS 
applicable to such offset.



Sec. Sec. 1.111-1.119  [Reserved]



                       Subpart Q_Tax Refund Offset

    Authority: 31 U.S.C. 3716 and 3720A, 31 CFR 285.2(c).

    Source: 81 FR 2742, Jan. 19, 2016, unless otherwise noted.



Sec. 1.120  Purpose.

    This subpart establishes procedures for the Commission's referral of 
past-due legally enforceable debts to the Department of the Treasury's 
Bureau of the Fiscal Service (Fiscal Service) for offset against the tax 
refund payments of the debtor, consistent with applicable Fiscal Service 
regulations and definitions set forth in 31 CFR 285.2 and 285.5.



Sec. 1.121  Notification of intent to collect.

    (a) Notification before tax refund offset. Reduction of a tax refund 
payment will be made only after the Commission makes a determination 
that an amount is owed and past-due and gives or makes a reasonable 
attempt to give the debtor 60 days written notice of the intent to 
collect by tax refund offset.
    (b) Contents of notice. The Commission's notice of intent to collect 
by tax refund offset will state:
    (1) The amount of the debt;
    (2) That unless the debt is repaid within 60 days from the date of 
the notice, the Commission intends to collect the debt by requesting a 
reduction of any amounts payable to the debtor as a Federal tax refund 
payment by an amount equal to the amount of the debt and all accumulated 
interest and other charges;
    (3) That the debtor, within 60 days from the date of the notice, has 
an opportunity to make a written agreement to repay the amount of the 
debt, unless such opportunity has previously been provided;
    (4) A mailing address for forwarding any written correspondence and 
a contact name and a telephone number for any questions; and
    (5) That the debtor may present evidence to the Commission that all 
or part of the debt is not past due or legally enforceable by:
    (i) Sending a written request for a review of the evidence to the 
address provided in the notice;
    (ii) Stating in the request the amount disputed and the reasons why 
the debtor believes that the debt is not past due or is not legally 
enforceable; and
    (iii) Including in the request any documents that the debtor wishes 
to be

[[Page 35]]

considered or stating that the additional information will be submitted 
within the remainder of the 60-day period.
    (c) A debtor may dispute the existence or amount of the debt or the 
terms of repayment, except with respect to debts established by a 
judicial or administrative order. In those cases, the debtor may not 
dispute matters or issues already settled, litigated, or otherwise 
established by such order, including the amount of the debt or the 
debtor's liability for that debt, except to the extent that the debtor 
alleges that the amount of the debt does not reflect payments already 
made to repay the debt in whole or part.



Sec. 1.122  Commission action as a result of consideration of evidence
submitted in response to the notice of intent.

    (a) Consideration of evidence. If, in response to the notice 
provided to the debtor under Sec. 1.121, the Commission is notified 
that the debtor will submit additional evidence, or the Commission 
receives additional evidence from the debtor within the prescribed time, 
tax refund offset will be stayed until the Commission can:
    (1) Consider the evidence presented by the debtor;
    (2) Determine whether all or a portion of the debt is still past due 
and legally enforceable; and
    (3) Notify the debtor of its determination, as set forth in 
paragraph (b) of this section.
    (b) Commission action on the debt. (1) If, after considering any 
additional evidence from the debtor, the Commission determines that the 
debt remains past-due and legally enforceable, the Commission will 
notify the debtor of its intent to refer the debt to the Fiscal Service 
for offset against the debtor's Federal tax refund payment, including 
whether the amount of the debt remains the same or is modified; or
    (2) If, after considering any additional evidence from the debtor, 
the Commission determines that no part of the debt remains past-due and 
legally enforceable, the Commission will so notify the debtor and will 
not refer the debt to the Fiscal Service for offset against the debtor's 
Federal tax refund payment.



Sec. 1.123  Change in notification to Bureau of the Fiscal Service.

    After the Commission sends the Fiscal Service notification of a 
debtor's liability for a debt, the Commission will promptly notify the 
Fiscal Service if the Commission:
    (a) Determines that there is a material error or other material 
change in the information contained in the notification, including in 
the amount of the debt, subject to any additional due process 
requirements, where applicable, under this subpart or the Federal Claims 
Collection Standards, if the amount of debt has increased;
    (b) Receives a payment or credits a payment to the account of the 
debtor named in the notification that reduces the amount of the debt 
referred to Fiscal Service for offset; or
    (c) Otherwise concludes that such notification is appropriate or 
necessary.



Sec. 1.124  Interest, penalties, and costs.

    To the extent permitted or required by 31 U.S.C. 3717 or other law, 
regulation, or order, all interest, penalties, and costs applicable to 
the debt or incurred in connection with its referral for collection by 
tax refund offset will be assessed on the debt and thus increase the 
amount of the offset.



PART 2_NONADJUDICATIVE PROCEDURES--Table of Contents



        Subpart A_Inquiries; Investigations; Compulsory Processes

Sec.
2.1 How initiated.
2.2 Complaint or request for Commission action.
2.3 Policy as to private controversies.
2.4 Investigational policy.
2.5 By whom conducted.
2.6 Notification of purpose.
2.7 Compulsory process in investigations.
2.8 [Reserved]
2.9 Rights of witnesses in investigations.
2.10 Petitions to limit or quash Commission compulsory process.
2.11 Withholding requested material.
2.12 [Reserved]
2.13 Noncompliance with compulsory processes.
2.14 Disposition.

[[Page 36]]

2.15 Orders requiring witnesses to testify or provide other information 
          and granting immunity.
2.16 Custodians.
2.17 Statutory delays of notifications and prohibitions of disclosure.

   Subpart B_Petitions Filed Under Section 7A of the Clayton Act, as 
     Amended, for Review of Requests for Additional Information or 
                          Documentary Material

2.20 Petitions for review of requests for additional information or 
          documentary material.

                    Subpart C_Consent Order Procedure

2.31 Opportunity to submit a proposed consent order.
2.32 Agreement.
2.33 Compliance procedure.
2.34 Disposition.

                     Subpart D_Reports of Compliance

2.41 General compliance obligations and specific obligations regarding 
          acquisitions and divestitures.

                      Subpart E_Requests To Reopen

2.51 Requests to reopen.

    Authority: 15 U.S.C. 46.



        Subpart A_Inquiries; Investigations; Compulsory Processes



Sec. 2.1  How initiated.

    Commission investigations and inquiries may be originated upon the 
request of the President, Congress, governmental agencies, or the 
Attorney General; upon referrals by the courts; upon complaint by 
members of the public; or by the Commission upon its own initiative. The 
Commission has delegated to the Director, Deputy Directors, and 
Assistant Directors of the Bureau of Competition, the Director, Deputy 
Directors, and Associate Directors of the Bureau of Consumer Protection 
and, the Regional Directors and Assistant Regional Directors of the 
Commission's regional offices, without power of redelegation, limited 
authority to initiate investigations. The Director of the Bureau of 
Competition has also been delegated, without power of redelegation, 
authority to open investigations in response to requests pursuant to an 
agreement under the International Antitrust Enforcement Assistance Act, 
15 U.S.C. 6201 et seq., if the requests do not ask the Commission to use 
process. Before responding to such a request, the Bureau Director shall 
transmit the proposed response to the Secretary and the Secretary shall 
notify the Commission of the proposed response. If no Commissioner 
objects within three days following the Commission's receipt of such 
notification, the Secretary shall inform the Bureau Director that he or 
she may proceed.

[48 FR 41374, Sept. 15, 1983, as amended at 50 FR 53304, Dec. 31, 1985; 
65 FR 67259, Nov. 9, 2000]



Sec. 2.2  Complaint or request for Commission action.

    (a) A complaint or request for Commission action may be submitted 
via the Commission's web-based complaint site (https://
www.ftccomplaintassistant.gov/); by a telephone call to 1-877-FTC-HELP 
(1-877-382-4357); or by a signed statement setting forth the alleged 
violation of law with such supporting information as is available, and 
the name and address of the person or persons complained of, filed with 
the Office of the Secretary in conformity with Sec. 4.2(d) of this 
chapter. No forms or formal procedures are required.
    (b) The person making the complaint or request is not regarded as a 
party to any proceeding that might result from the investigation.
    (c) Where the complainant's identity is not otherwise made public, 
the Commission's policy is not to publish or divulge the name of a 
complainant except as authorized by law or by the Commission's rules. 
Complaints or requests submitted to the Commission may, however, be 
lodged in a database and made available to federal, state, local, and 
foreign law enforcement agencies that commit to maintain the privacy and 
security of the information provided. Further, where a complaint is by a 
consumer or consumer representative concerning a specific consumer 
product or service, the Commission in the course of a referral of the 
complaint or request, or in furtherance of an investigation, may 
disclose the identity of the complainant. In referring any such consumer 
complaint, the Commission specifically retains its

[[Page 37]]

right to take such action as it deems appropriate in the public interest 
and under any of the statutes it administers.

[77 FR 59305, Sept. 27, 2012]



Sec. 2.3  Policy as to private controversies.

    The Commission acts only in the public interest and does not 
initiate an investigation or take other action when the alleged 
violation of law is merely a matter of private controversy and does not 
tend adversely to affect the public.

[32 FR 8446, June 13, 1967]



Sec. 2.4  Investigational policy.

    Consistent with obtaining the information it needs for 
investigations, including documentary material, the Commission 
encourages the just and speedy resolution of investigations. The 
Commission will therefore employ compulsory process when in the public 
interest. The Commission encourages cooperation in its investigations. 
In all matters, whether involving compulsory process or voluntary 
requests for documents and information, the Commission expects all 
parties to engage in meaningful discussions with staff to prevent 
confusion or misunderstandings regarding the nature and scope of the 
information and material being sought, in light of the inherent value of 
genuinely cooperative discovery.

[77 FR 59305, Sept. 27, 2012]



Sec. 2.5  By whom conducted.

    Inquiries and investigations are conducted under the various 
statutes administered by the Commission by Commission representatives 
designated and duly authorized for the purpose. Such representatives are 
``examiners'' or ``Commission investigators'' within the meaning of the 
Federal Trade Commission Act and are authorized to exercise and perform 
the duties of their office in accordance with the laws of the United 
States and the regulations of the Commission. Included among such duties 
is the administration of oaths and affirmations in any matter under 
investigation by the Commission.

[45 FR 36341, May 29, 1980]



Sec. 2.6  Notification of purpose.

    Any person, partnership, or corporation under investigation 
compelled or requested to furnish information or documentary material 
shall be advised of the purpose and scope of the investigation, the 
nature of the acts or practices under investigation, and the applicable 
provisions of law. A copy of a Commission resolution, as prescribed 
under Sec. 2.7(a), shall be sufficient to give persons, partnerships, 
or corporations notice of the purpose of the investigation. While 
investigations are generally nonpublic, Commission staff may disclose 
the existence of an investigation to potential witnesses or other third 
parties to the extent necessary to advance the investigation.

[77 FR 59305, Sept. 27, 2012]



Sec. 2.7  Compulsory process in investigations.

    (a) In general. When the public interest warrants, the Commission 
may issue a resolution authorizing the use of compulsory process. The 
Commission or any Commissioner may, pursuant to a Commission resolution, 
issue a subpoena, or a civil investigative demand, directing the 
recipient named therein to appear before a designated representative at 
a specified time and place to testify or to produce documentary 
material, or both, and in the case of a civil investigative demand, to 
provide a written report or answers to questions, relating to any matter 
under investigation by the Commission. For the purposes of this subpart, 
the term:
    (1) Electronically stored information (``ESI'') means any writings, 
drawings, graphs, charts, photographs, sound recordings, images and 
other data or data compilations stored in any electronic medium from 
which information can be obtained either directly or, if necessary, 
after translation by the responding party into a reasonably usable form.
    (2) ``Documentary material'' includes all documents, materials, and 
information, including ESI, within the meaning of the Federal Rules of 
Civil Procedure.

[[Page 38]]

    (3) ``Compulsory process'' means any subpoena, CID, access order, or 
order for a report issued by the Commission.
    (4) ``Protected status'' refers to information or material that may 
be withheld from production or disclosure on the grounds of any 
privilege, work product protection, or statutory exemption.
    (b) Civil Investigative Demands. Civil Investigative Demands 
(``CIDs'') shall be the only form of compulsory process issued in 
investigations with respect to unfair or deceptive acts or practices 
under section 5(a)(1) of the Federal Trade Commission Act (hereinafter 
referred to as ``unfair or deceptive acts or practices'').
    (1) CIDs for the production of documentary material, including ESI, 
shall describe each class of material to be produced with sufficient 
definiteness and certainty as to permit such material to be fairly 
identified, prescribe a return date providing a reasonable period of 
time within which the material so demanded may be assembled and made 
available for inspection and copying or reproduction, and identify the 
Commission's custodian to whom such material shall be made available. 
Documentary material, including ESI, for which a CID has been issued 
shall be made available as prescribed in the CID. Such productions shall 
be made in accordance with the procedures prescribed by section 
20(c)(11) of the Federal Trade Commission Act.
    (2) CIDs for tangible things, including electronic media, shall 
describe each class of tangible thing to be produced with sufficient 
definiteness and certainty as to permit each such thing to be fairly 
identified, prescribe a return date providing a reasonable period of 
time within which the things so demanded may be assembled and submitted, 
and identify the Commission's custodian to whom such things shall be 
submitted. Submission of tangible things in response to a CID shall be 
made in accordance with the procedures prescribed by section 20(c)(12) 
of the Federal Trade Commission Act.
    (3) CIDs for written reports or answers to questions shall propound 
with sufficient definiteness and certainty the reports to be produced or 
the questions to be answered, prescribe a return date, and identify the 
Commission's custodian to whom such reports or answers to questions 
shall be submitted. The submission of written reports or answers to 
questions in response to a CID shall be made in accordance with the 
procedures prescribed by section 20(c)(13) of the Federal Trade 
Commission Act.
    (4) CIDs for the giving of oral testimony shall prescribe a date, 
time, and place at which oral testimony shall commence, and identify the 
hearing official and the Commission custodian. Oral testimony in 
response to a CID shall be taken in accordance with the procedures set 
forth in section 20(c)(14) of the Federal Trade Commission Act.
    (c) Subpoenas. Except in investigations with respect to unfair or 
deceptive acts or practices, the Commission may require by subpoena the 
attendance and testimony of witnesses and the production of documentary 
material relating to any matter under investigation. Subpoenas for the 
production of documentary material, including ESI, shall describe each 
class of material to be produced with sufficient definiteness and 
certainty as to permit such material to be fairly identified, prescribe 
a return date providing a reasonable period of time for production, and 
identify the Commission's custodian to whom such material shall be made 
available. A subpoena may require the attendance of the witness or the 
production of documentary material at any place in the United States.
    (d) Special reports. Except in investigations regarding unfair or 
deceptive acts or practices, the Commission may issue an order requiring 
a person, partnership, or corporation to file a written report or 
answers to specific questions relating to any matter under 
investigation, study or survey, or under any of the Commission's 
reporting programs.
    (e) Commission orders requiring access. Except in investigations 
regarding unfair or deceptive acts or practices, the Commission may 
issue an order requiring any person, partnership, or corporation under 
investigation to grant access to their files, including electronic 
media, for the purpose of examination and to make copies.
    (f) Investigational hearings. (1) Investigational hearings may be 
conducted

[[Page 39]]

in the course of any investigation undertaken by the Commission, 
including rulemaking proceedings under subpart B of part 1 of this 
chapter, inquiries initiated for the purpose of determining whether a 
respondent is complying with an order of the Commission or to monitor 
performance under, and compliance with, a decree entered in suits 
brought by the United States under the antitrust laws, the development 
of facts in cases referred by the courts to the Commission as a master 
in chancery, and investigations made under section 5 of the Webb-
Pomerene (Export Trade) Act.
    (2) Investigational hearings shall be conducted by one or more 
Commission employees designated for the purpose of hearing the testimony 
of witnesses (the ``hearing official'') and receiving documents and 
information relating to any subject under investigation. Such hearings 
shall be under oath or affirmation, stenographically recorded, and the 
transcript made a part of the record of the investigation. The 
Commission may, in addition, employ other means to record the hearing.
    (3) Unless otherwise ordered by the Commission, investigational 
hearings shall not be public. For investigational hearings conducted 
pursuant to a CID for the giving of oral testimony, the hearing official 
shall exclude from the hearing room all persons other than the person 
being examined, counsel for the person being examined, Commission staff, 
and any stenographer or other person recording such testimony. A copy of 
the transcript shall promptly be forwarded by the hearing official to 
the Commission custodian designated under Sec. 2.16 of this part. At 
the discretion of the hearing official, and with the consent of the 
person being examined (or, in the case of an entity, its counsel), 
persons other than Commission staff, court reporters, and the hearing 
official may be present in the hearing room.
    (g) Depositions. Except in investigations with respect to unfair or 
deceptive acts or practices, the Commission may order by subpoena a 
deposition pursuant to section 9 of the Federal Trade Commission Act, of 
any person, partnership, or corporation, at any stage of an 
investigation. The deposition shall take place upon notice to the 
subjects of the investigation, and the examination and cross-examination 
may proceed as they would at trial. Depositions shall be conducted by a 
hearing official, for the purpose of hearing the testimony of witnesses 
and receiving documents and information relating to any subject under 
investigation. Depositions shall be under oath or affirmation, 
stenographically recorded, and the transcript made a part of the record 
of the investigation. The Commission may, in addition, employ other 
means to record the deposition.
    (h) Testimony from an entity. Where Commission compulsory process 
requires oral testimony from an entity, the compulsory process shall 
describe with reasonable particularity the matters for examination and 
the entity must designate one or more officers, directors, or managing 
agents, or designate other persons who consent, to testify on its 
behalf. Unless a single individual is designated by the entity, the 
entity must designate in advance and in writing the matters on which 
each designee will testify. The persons designated must testify about 
information known or reasonably available to the entity and their 
testimony shall be binding upon the entity.
    (i) Inspection, copying, testing, and sampling of documentary 
material, including electronic media. The Commission, through compulsory 
process, may require the production of documentary material, or 
electronic media or other tangible things, for inspection, copying, 
testing, or sampling.
    (j) Manner and form of production of ESI. When Commission compulsory 
process requires the production of ESI, it shall be produced in 
accordance with the instructions provided by Commission staff regarding 
the manner and form of production. All instructions shall be followed by 
the recipient of the process absent written permission to the contrary 
from a Commission official identified in paragraph (l) of this section. 
Absent any instructions as to the form for producing ESI, ESI must be 
produced in the form or forms in which it is ordinarily maintained or in 
a reasonably usable form.

[[Page 40]]

    (k) Mandatory pre-petition meet and confer process. Unless excused 
in writing or granted an extension of no more than 30 days by a 
Commission official identified in paragraph (l) of this section, a 
recipient of Commission compulsory process shall meet and confer with 
Commission staff within 14 days after receipt of process or before the 
deadline for filing a petition to quash, whichever is first, to discuss 
compliance and to address and attempt to resolve all issues, including 
issues relating to protected status and the form and manner in which 
claims of protected status will be asserted. The initial meet and confer 
session and all subsequent meet and confer sessions may be in person or 
by telephone. The recipient must make available personnel with the 
knowledge necessary for resolution of the issues relevant to compliance 
with compulsory process. Such personnel could include individuals 
knowledgeable about the recipient's information or records management 
systems, individuals knowledgeable about other relevant materials such 
as organizational charts, and persons knowledgeable about samples of 
material required to be produced. If any issues relate to ESI, the 
recipient shall have a person familiar with its ESI systems and methods 
of retrieval participate in the meeting. The Commission will not 
consider petitions to quash or limit absent a pre-filing meet and confer 
session with Commission staff and, absent extraordinary circumstances, 
will consider only issues raised during the meet and confer process.
    (l) Delegations. The Directors of the Bureaus of Competition, 
Consumer Protection, and Economics and the Office of Policy Planning, 
their Deputy Directors, the Assistant Directors of the Bureaus of 
Competition and Economics, the Associate Directors of the Bureau of 
Consumer Protection, the Regional Directors, and the Assistant Regional 
Directors are all authorized to modify and, in writing, approve the 
terms of compliance with all compulsory process, including subpoenas, 
CIDs, reporting programs, orders requiring reports, answers to 
questions, and orders requiring access. If a recipient of compulsory 
process has demonstrated satisfactory progress toward compliance, a 
Commission official identified in this paragraph may, at his or her 
discretion, extend the time for compliance with Commission compulsory 
process. The subpoena power conferred by section 329 of the Energy 
Policy and Conservation Act (42 U.S.C. 6299) and section 5 of the Webb-
Pomerene (Export Trade) Act (15 U.S.C. 65) are specifically included 
within this delegation of authority.

[77 FR 59305, Sept. 27, 2012, as amended at 80 FR 15160, Mar. 23, 2015]



Sec. 2.8  [Reserved]



Sec. 2.9  Rights of witnesses in investigations.

    (a) Any person compelled to submit data to the Commission or to 
testify in a deposition or investigational hearing shall be entitled to 
retain a copy or, on payment of lawfully prescribed costs, procure a 
copy of any document submitted, and of any testimony as stenographically 
recorded, except that in a nonpublic hearing the witness may for good 
cause be limited to inspection of the official transcript of the 
testimony. Upon completion of transcription of the testimony, the 
witness shall be offered an opportunity to read the transcript. Any 
changes by the witness shall be entered and identified upon the 
transcript by the hearing official, together with a statement of the 
reasons given by the witness for requesting such changes. After the 
changes are entered, the transcript shall be signed by the witness 
unless the witness cannot be found, is ill and unavailable, waives in 
writing his or her right to sign, or refuses to sign. If the transcript 
is not signed by the witness within 30 days of having been afforded a 
reasonable opportunity to review it, the hearing official shall sign the 
transcript and state on the hearing record the fact of the waiver, 
illness, absence of the witness, or the refusal to sign, together with 
any reasons given for the failure to sign, as prescribed by section 
20(c)(14)(E)(ii) of the Federal Trade Commission Act.
    (b) Any witness compelled to appear in person in a deposition or 
investigational hearing may be accompanied,

[[Page 41]]

represented, and advised by counsel, as follows:
    (1) In depositions or investigational hearings conducted pursuant to 
section 9 of the Federal Trade Commission Act, counsel may not consult 
with the witness while a question directed to a witness is pending, 
except with respect to issues involving protected status.
    (2) Any objection during a deposition or investigational hearing 
shall be stated concisely on the hearing record in a nonargumentative 
and nonsuggestive manner. Neither the witness nor counsel shall 
otherwise object or refuse to answer any question. Following an 
objection, the examination shall proceed and the testimony shall be 
taken, except for testimony requiring the witness to divulge information 
protected by the claim of protected status. Counsel may instruct a 
witness not to answer only when necessary to preserve a claim of 
protected status.
    (3) The hearing official may elect to recess the deposition or 
investigational hearing and reconvene the deposition or hearing at a 
later date to continue a course of inquiry interrupted by any objection 
made under paragraph (b)(1) or (2) of this section. The hearing official 
shall provide written notice of the date of the reconvened deposition or 
hearing to the witness, which may be in the form of an email or 
facsimile. Failure to reappear or to file a petition to limit or quash 
in accordance with Sec. 2.10 of this part shall constitute 
noncompliance with Commission compulsory process for the purposes of a 
Commission enforcement action under Sec. 2.13 of this part.
    (4) In depositions or investigational hearings, immediately 
following the examination of a witness by the hearing official, the 
witness or his or her counsel may on the hearing record request that the 
hearing official permit the witness to clarify any answers. The grant or 
denial of such request shall be within the discretion of the hearing 
official and would ordinarily be granted except for good cause stated 
and explained on the hearing record, and with an opportunity for counsel 
to undertake to correct the expressed concerns of the hearing official 
or otherwise to reply.
    (5) The hearing official shall conduct the deposition or 
investigational hearing in a manner that avoids unnecessary delay, and 
prevents and restrains disorderly or obstructionist conduct. The hearing 
official shall, where appropriate, report pursuant to Sec. 4.1(e) of 
this chapter any instance where an attorney, in the course of the 
deposition or hearing, has allegedly refused to comply with his or her 
directions, or has allegedly engaged in conduct addressed in Sec. 
4.1(e). The Commission may take any action as circumstances may warrant 
under Sec. 4.1(e) of this chapter.

[77 FR 59307, Sept. 27, 2012]



Sec. 2.10  Petitions to limit or quash Commission compulsory process.

    (a) In general. (1) Petitions. Any petition to limit or quash any 
compulsory process shall be filed with the Secretary within 20 days 
after service of the Commission compulsory process or, if the return 
date is less than 20 days after service, prior to the return date. Such 
petition shall set forth all assertions of protected status or other 
factual and legal objections to the Commission compulsory process, 
including all appropriate arguments, affidavits, and other supporting 
documentation. Such petition shall not exceed 5,000 words, including all 
headings, footnotes, and quotations, but excluding the cover, table of 
contents, table of authorities, glossaries, copies of the compulsory 
process order or excerpts thereof, appendices containing only sections 
of statutes or regulations, the statement required by paragraph (a)(2) 
of this section, and affidavits and other supporting documentation. 
Petitions to limit or quash that fail to comply with these provisions 
shall be rejected by the Secretary pursuant to Sec. 4.2(g) of this 
chapter.
    (2) Statement. Each petition filed pursuant to paragraph (a)(1) of 
this section shall be accompanied by a signed separate statement 
representing that counsel for the petitioner has conferred with 
Commission staff pursuant to Sec. 2.7(k) of this part in an effort in 
good faith to resolve by agreement the issues raised by the petition and 
has

[[Page 42]]

been unable to reach such an agreement. If some of the issues in 
controversy have been resolved by agreement, the statement shall, in a 
nonargumentative manner, specify the issues so resolved and the issues 
remaining unresolved. The statement shall recite the date, time, and 
place of each conference between counsel, and the names of all parties 
participating in each such conference. Failure to include the required 
statement may result in a denial of the petition.
    (3) Reconvened investigational hearings or depositions. If the 
hearing official elects pursuant to Sec. 2.9(b)(3) of this part to 
recess the investigational hearing or deposition and reconvene it at a 
later date, the witness compelled to reappear may challenge the 
reconvening by filing with the Secretary a petition to limit or quash 
the reconvening of the hearing or deposition. Such petition shall be 
filed within 5 days after receiving written notice of the reconvened 
hearing; shall set forth all assertions of protected status or other 
factual and legal objections to the reconvening of the hearing or 
deposition, including all appropriate arguments, affidavits, and other 
supporting documentation; and shall be subject to the word count limit 
in paragraph (a)(1) of this section. Except for good cause shown, the 
Commission will not consider issues presented and ruled upon in any 
earlier petition filed by or on behalf of the witness.
    (4) Staff reply. Commission staff may, without serving the 
petitioner, provide the Commission a statement that shall set forth any 
factual and legal response to the petition to limit or quash.
    (5) Extensions of time. The Directors of the Bureaus of Competition, 
Consumer Protection, and Economics and the Office of Policy Planning, 
their Deputy Directors, the Assistant Directors of the Bureaus of 
Competition and Economics, the Associate Directors of the Bureau of 
Consumer Protection, the Regional Directors, and the Assistant Regional 
Directors are delegated, without power of redelegation, the authority to 
rule upon requests for extensions of time within which to file petitions 
to limit or quash Commission compulsory process.
    (b) Stay of compliance period. The timely filing of a petition to 
limit or quash any Commission compulsory process shall stay the 
remaining amount of time permitted for compliance as to the portion or 
portions of the challenged specifications or provisions. If the petition 
is denied in whole or in part, the ruling by the Commission shall 
specify new terms for compliance, including a new return date, for the 
Commission's compulsory process.
    (c) Disposition and review. The Commission will issue an order 
ruling on a petition to limit or quash within 40 days after the petition 
is filed with the Secretary. The order may be served on the petitioner 
via email, facsimile, or any other method reasonably calculated to 
provide notice to the petitioner of the order.
    (d) Public disclosure. All petitions to limit or quash Commission 
compulsory process and all Commission orders in response to those 
petitions shall become part of the public records of the Commission, 
except for information granted confidential treatment under Sec. 4.9(c) 
of this chapter.

[77 FR 59308, Sept. 27, 2012, as amended at 80 FR 15160, Mar. 23, 2015]



Sec. 2.11  Withholding requested material.

    (a)(1) Any person withholding information or material responsive to 
an investigational subpoena, CID, access order, or order to file a 
report issued pursuant to Sec. 2.7 of this part, or any other request 
for production of material issued under this part, shall assert a claim 
of protected status, as that term is defined in Sec. 2.7(a)(4), not 
later than the date set for the production of the material. The claim of 
protected status shall include a detailed log of the items withheld, 
which shall be attested by the lead attorney or attorney responsible for 
supervising the review of the material and who made the determination to 
assert the claim. A document, including all attachments, may be withheld 
or redacted only to the extent necessary to preserve any claim of 
protected status. The information provided in the log shall be of 
sufficient detail to enable the Commission staff to assess the validity 
of the claim for each document, including attachments,

[[Page 43]]

without disclosing the protected information. The failure to provide 
information sufficient to support a claim of protected status may result 
in a denial of the claim. Absent an instruction as to the form and 
content of the log, the log shall be submitted in a searchable 
electronic format, and shall, for each document, including attachments, 
provide:
    (i) Document control number(s);
    (ii) The full title (if the withheld material is a document) and the 
full file name (if the withheld material is in electronic form);
    (iii) A description of the material withheld (for example, a letter, 
memorandum, or email), including any attachments;
    (iv) The date the material was created;
    (v) The date the material was sent to each recipient (if different 
from the date the material was created);
    (vi) The email addresses, if any, or other electronic contact 
information to the extent used in the document, from which and to which 
each document was sent;
    (vii) The names, titles, business addresses, email addresses or 
other electronic contact information, and relevant affiliations of all 
authors;
    (viii) The names, titles, business addresses, email addresses or 
other electronic contact information, and relevant affiliations of all 
recipients of the material;
    (ix) The names, titles, business addresses, email addresses or other 
electronic contact information, and relevant affiliations of all persons 
copied on the material;
    (x) The factual basis supporting the claim that the material is 
protected (for example, that it was prepared by an attorney rendering 
legal advice to a client in a confidential communication, or prepared by 
an attorney in anticipation of litigation regarding a specifically 
identified claim); and
    (xi) Any other pertinent information necessary to support the 
assertion of protected status by operation of law.
    (2) Each attorney who is an author, recipient, or person copied on 
the material shall be identified in the log by an asterisk. The titles, 
business addresses, email addresses, and relevant affiliations of all 
authors, recipients, and persons copied on the material may be provided 
in a legend appended to the log. However, the information required by 
paragraph (a)(1)(vi) of this section shall be provided in the log.
    (b) A person withholding responsive material solely for the reasons 
described in paragraph (a) of this section shall meet and confer with 
Commission staff pursuant to Sec. 2.7(k) of this part to discuss and 
attempt to resolve any issues associated with the manner and form in 
which privilege or protection claims will be asserted. The participants 
in the meet and confer session may agree to modify the logging 
requirements set forth in paragraph (a) of this section. The failure to 
comply with paragraph (a) shall constitute noncompliance subject to 
judicial enforcement under Sec. 2.13(a) of this part.
    (c) Unless otherwise provided in the instructions accompanying the 
compulsory process, and except for information or material subject to a 
valid claim of protected status, all responsive information and material 
shall be produced without redaction.
    (d)(1)(i) The disclosure of material protected by the attorney-
client privilege or as work product shall not operate as a waiver if:
    (A) The disclosure is inadvertent;
    (B) The holder of the privilege or protection took reasonable steps 
to prevent disclosure; and
    (C) The holder promptly took reasonable steps to rectify the error, 
including notifying Commission staff of the claim and the basis for it.
    (ii) After being so notified, Commission staff must:
    (A) Promptly return or destroy the specified material and any 
copies, not use or disclose the material until any dispute as to the 
validity of the claim is resolved; and take reasonable measures to 
retrieve the material from all persons to whom it was disclosed before 
being notified; or
    (B) Sequester such material until such time as an Administrative Law 
Judge or court may rule on the merits of the claim of privilege or 
protection in a proceeding or action resulting from the investigation.
    (iii) The producing party must preserve the material until the claim 
of

[[Page 44]]

privilege or protection is resolved, the investigation is closed, or any 
enforcement proceeding is concluded.
    (2) When a disclosure is made that waives attorney-client privilege 
or work product, the waiver extends to an undisclosed communication or 
information only if:
    (i) The waiver is intentional;
    (ii) The disclosed and undisclosed information or material concern 
the same subject matter; and
    (iii) They ought in fairness to be considered together.

[77 FR 59308, Sept. 27, 2012]



Sec. 2.12  [Reserved]



Sec. 2.13  Noncompliance with compulsory processes.

    (a) In cases of failure to comply with Commission compulsory 
processes, appropriate action may be initiated by the Commission or the 
Attorney General, including actions for enforcement, forfeiture, civil 
penalties, or criminal sanctions. The Commission may also take any 
action as the circumstances may warrant under Sec. 4.1(e) of this 
chapter.
    (b) The General Counsel, pursuant to delegation of authority by the 
Commission, without power of redelegation, is authorized, when he or she 
deems appropriate:
    (1) To initiate, on behalf of the Commission, an enforcement 
proceeding in connection with the failure or refusal of a recipient to 
comply with, or to obey, a subpoena, a CID, or an access order, if the 
return date or any extension thereof has passed, or if the recipient 
breaches any modification regarding compliance;
    (2) To approve and have prepared and issued, in the name of the 
Commission, a notice of default in connection with the failure of a 
recipient of an order to file a report pursuant to section 6(b) of the 
Federal Trade Commission Act to timely file that report, if the return 
date or any extension thereof has passed; to initiate, on behalf of the 
Commission, an enforcement proceeding; or to request to the Attorney 
General, on behalf of the Commission, to initiate a civil action in 
connection with the failure of such recipient to timely file a report, 
when the return date or any extension thereof has passed;
    (3) To initiate, on behalf of the Commission, an enforcement 
proceeding under section 7A(g)(2) of the Clayton Act (15 U.S.C. 
18a(g)(2)) in connection with the failure to substantially comply with 
any request for the submission of additional information or documentary 
material under section 7A(e)(1) of the Clayton Act (15 U.S.C. 
18a(e)(1)), provided that the General Counsel shall provide notice to 
the Commission at least 2 days before initiating such action; and
    (4) To seek an order of civil contempt in cases where a court order 
enforcing compulsory process has been violated.

[77 FR 59309, Sept. 27, 2012]



Sec. 2.14  Disposition.

    (a) When an investigation indicates that corrective action is 
warranted, and the matter is not subject to a consent settlement 
pursuant to subpart C of this part, the Commission may initiate further 
proceedings.
    (b) When corrective action is not necessary or warranted in the 
public interest, the investigation shall be closed. The matter may 
nevertheless be further investigated at any time if circumstances so 
warrant.
    (c) In matters in which a recipient of a preservation demand, an 
access letter, or Commission compulsory process has not been notified 
that an investigation has been closed or otherwise concluded, after a 
period of twelve months following the last written communication from 
the Commission staff to the recipient or the recipient's counsel, the 
recipient is relieved of any obligation to continue preserving 
information, documentary material, or evidence, for purposes of 
responding to the Commission's process or the staff's access letter. The 
``written communication'' may be in the form of a letter, an email, or a 
facsimile.
    (d) The Commission has delegated to the Directors of the Bureaus of 
Competition and Consumer Protection, their Deputy Directors, the 
Assistant Directors of the Bureau of Competition, the Associate 
Directors of the Bureau of Consumer Protection, and the Regional 
Directors, without power of

[[Page 45]]

redelegation, limited authority to close investigations.

[77 FR 59309, Sept. 27, 2012]



Sec. 2.15  Orders requiring witnesses to testify or provide other
information and granting immunity.

    (a) The Bureau Director, Deputy Directors, and Assistant Directors 
in the Bureaus of Competition and Economics, the Bureau Director, Deputy 
Directors and Associate Directors of the Bureau of Consumer Protection, 
Regional Directors and Assistant Regional Directors are hereby 
authorized to request, through the Commission's liaison officer, 
approval from the Attorney General for the issuance of an order 
requiring a witness to testify or provide other information granting 
immunity under title 18, section 6002, of the United States Code.
    (b) The Commission retains the right to review the exercise of any 
of the functions delegated under paragraph (a) of this section. Appeals 
to the Commission from an order requiring a witness to testify or 
provide other information will be entertained by the Commission only 
upon a showing that a substantial question is involved, the 
determination of which is essential to serve the interests of justice. 
Such appeals shall be made on the record and shall be in the form of a 
brief not to exceed fifteen (15) pages in length and shall be filed 
within five (5) days after notice of the complained of action. The 
appeal shall not operate to suspend the hearing unless otherwise 
determined by the person conducting the hearing or ordered by the 
Commission.

(18 U.S.C. 6002, 6004)

[37 FR 5016, Mar. 9, 1972, as amended at 48 FR 41375, Sept. 15, 1983; 61 
FR 50645, Sept. 26, 1996]



Sec. 2.16  Custodians.

    (a) Designation. The Commission shall designate a custodian and one 
or more deputy custodians for material to be delivered pursuant to 
compulsory process in an investigation, a purpose of which is to 
determine whether any person may have violated any provision of the laws 
administered by the Commission. The custodian shall have the powers and 
duties prescribed by section 21 of the FTC Act. Deputy custodians may 
perform all of the duties assigned to custodians. The appropriate Bureau 
Directors, Deputy Directors, Associate Directors in the Bureau of 
Consumer Protection, Assistant Directors in the Bureau of Competition, 
Regional Directors or Assistant Regional Directors shall take the action 
required by section 21(b)(7) of the FTC Act if it is necessary to 
replace a custodian or deputy custodian.
    (b) Copying of custodial documents. The custodian designated 
pursuant to section 21 of the Federal Trade Commission Act (subject to 
the general supervision of the Executive Director) may, from among the 
material submitted, select the material the copying of which is 
necessary or appropriate for the official use of the Commission, and 
shall determine, the number of copies of any such material that are to 
be reproduced. Copies of material in the physical possession of the 
custodian may be reproduced by or under the authority of an employee of 
the Commission designated by the custodian.
    (c) Material produced pursuant to the Federal Trade Commission Act, 
while in the custody of the custodian, shall be for the official use of 
the Commission in accordance with the Act; but such material shall upon 
reasonable notice to the custodian be made available for examination by 
the person who produced such material, or his duly authorized 
representative, during regular office hours established for the 
Commission.

[45 FR 36343, May 29, 1980, as amended at 46 FR 26291, May 12, 1981; 48 
FR 41376, Sept. 15, 1983; 50 FR 53305, Dec. 31, 1985]



Sec. 2.17  Statutory delays of notifications and prohibitions 
of disclosure.

    Upon authorization by the Commissioner who issues compulsory process 
pursuant to Sec. 2.7(a) or, alternatively, upon authorization by the 
General Counsel, Commission attorneys may seek to delay notifications or 
prohibit disclosures pursuant to the Right to Financial Privacy Act (12 
U.S.C. 3409), the Electronic Communications Privacy Act (18 U.S.C. 
2705), or section 7 of the U.S. SAFE WEB Act (15 U.S.C. 57b-2a).

[76 FR 54691, Sept. 2, 2011]

[[Page 46]]



   Subpart B_Petitions Filed Under Section 7A of the Clayton Act, as 
     Amended, for Review of Requests for Additional Information or 
                          Documentary Material

    Authority: 15 U.S.C. 18a(d), (e).



Sec. 2.20  Petitions for review of requests for additional information
or documentary material.

    (a) For purposes of this section, ``second request'' refers to a 
request for additional information or documentary material issued under 
16 CFR 803.20.
    (b) Second request procedures--(1) Notice. Every request for 
additional information or documentary material issued under 16 CFR 
803.20 shall inform the recipient(s) of the request that the recipient 
has a right to discuss modifications or clarifications of the request 
with an authorized representative of the Commission. The request shall 
identify the name and telephone number of at least one such 
representative.
    (2) Second request conference. An authorized representative of the 
Commission shall invite the recipient to discuss the request for 
additional information or documentary material soon after the request is 
issued. At the conference, the authorized representative shall discuss 
the competitive issues raised by the proposed transaction, to the extent 
then known, and confer with the recipient about the most effective way 
to obtain information and documents relating to the competitive issues 
raised. The conference will ordinarily take place within 5 business days 
of issuance of the request, unless the recipient declines the invitation 
or requests a later date.
    (3) Modification of requests. The authorized representative shall 
modify the request for additional information or documentary material, 
or recommend such modification to the responsible Assistant Director of 
the Bureau of Competition, if he or she determines that a less 
burdensome request would be consistent with the needs of the 
investigation. A request for additional information or documentary 
material may be modified only in writing signed by the authorized 
representative.
    (4) Review of request decisions. (i) If the recipient of a request 
for additional information or documentary material believes that 
compliance with portions of the request should not be required and the 
recipient has exhausted reasonable efforts to obtain clarifications or 
modifications of the request from an authorized representative, the 
recipient may petition the General Counsel to consider and rule on 
unresolved issues. Such petition shall be submitted by letter to the 
General Counsel with a copy to the authorized representative who 
participated in the second request conference held under paragraph 
(b)(3) of this section. The petition shall not, without leave of the 
General Counsel, exceed 500 words, excluding any cover, table of 
contents, table of authorities, glossaries, proposed form of relief and 
any appendices containing only sections of statutes or regulations, and 
shall address petitioner's efforts to obtain modification from the 
authorized representative.
    (ii) Within 2 business days after receiving such a petition, the 
General Counsel shall set a date for a conference with the petitioner 
and the authorized representative.
    (iii) Such conference shall take place within 7 business days after 
the General Counsel receives the petition, unless the request recipient 
agrees to a later date or declines to attend a conference.
    (iv) Not later than 3 business days before the date of the 
conference, the petitioner and the authorized representative may each 
submit memoranda regarding the issues presented in the petition. Such 
memoranda shall not, without leave of the General Counsel, exceed 1250 
words, excluding any cover, table of contents, table of authorities, 
glossaries, proposed form of relief and appendices containing only 
sections of statutes or regulations. Such memoranda shall be delivered 
to counsel for the other participants on the same day they are delivered 
to the General Counsel.
    (v) The petitioner's memorandum shall include a concise statement of 
reasons why the request should be

[[Page 47]]

modified, together with proposed modifications, or a concise explanation 
why the recipient believes it has substantially complied with the 
request for additional information or documentary material.
    (vi) The authorized representative's memorandum shall include a 
concise statement of reasons why the petitioner's proposed modifications 
are inappropriate or a concise statement of the reasons why the 
representative believes that the petitioner has not substantially 
complied with the request for additional information and documentary 
material.
    (vii) The General Counsel shall advise the petitioner and the 
authorized representative of his or her decision within 3 business days 
following the conference.

[66 FR 8721, Feb. 1, 2001]



                    Subpart C_Consent Order Procedure



Sec. 2.31  Opportunity to submit a proposed consent order.

    (a) Where time, the nature of the proceeding, and the public 
interest permit, any individual, partnership, or corporation being 
investigated shall be afforded the opportunity to submit through the 
operating Bureau or Regional Office having responsibility in the matter 
a proposal for disposition of the matter in the form of a consent order 
agreement executed by the party being investigated and complying with 
the requirements of Sec. 2.32, for consideration by the Commission in 
connection with a proposed complaint submitted by the Commission's 
staff.
    (b) After a complaint has been issued, the consent order procedure 
described in this part will not be available except as provided in Sec. 
3.25(b).

[40 FR 15235, Apr. 4, 1975]



Sec. 2.32  Agreement.

    Every agreement in settlement of a Commission complaint shall 
contain, in addition to an appropriate proposed order, either an 
admission of the proposed findings of fact and conclusions of law 
submitted simultaneously by the Commission's staff or an admission of 
all jurisdictional facts and an express waiver of the requirement that 
the Commission's decision contain a statement of findings of fact and 
conclusions of law. Every agreement also shall waive further procedural 
steps and all rights to seek judicial review or otherwise to challenge 
or contest the validity of the order. In addition, where appropriate, 
every agreement in settlement of a Commission complaint challenging the 
lawfulness of a proposed merger or acquisition shall also contain a 
hold-separate or asset-maintenance order. The agreement may state that 
the signing thereof is for settlement purposes only and does not 
constitute an admission by any party that the law has been violated as 
alleged in the complaint. Every agreement shall provide that:
    (a) The complaint may be used in construing the terms of the order;
    (b) No agreement, understanding, representation, or interpretation 
not contained in the order or the aforementioned agreement may be used 
to vary or to contradict the terms of the order;
    (c) The order will have the same force and effect and may be 
altered, modified or set aside in the same manner provided by statute 
for Commission orders issued on a litigated or stipulated record;
    (d) Except as provided by order of the Commission, any order issued 
pursuant to the agreement will become final upon service;
    (e) The agreement will not become a part of the public record unless 
and until it is accepted by the Commission; and
    (f) If the Commission accepts the agreement, further proceedings 
will be governed by Sec. 2.34.

[64 FR 46268, Aug. 25, 1999]



Sec. 2.33  Compliance procedure.

    The Commission may in its discretion require that a proposed 
agreement containing an order to cease and desist be accompanied by an 
initial report signed by the respondent setting forth in precise detail 
the manner in which the respondent will comply with the order when and 
if entered. Such report will not become part of the public record unless 
and until the accompanying agreement and order are accepted by the 
Commission. At the time

[[Page 48]]

any such report is submitted a respondent may request confidentiality 
for any portion thereof with a precise showing of justification therefor 
as set out in Sec. 4.9(c) and the General Counsel or the General 
Counsel's designee will dispose of such requests in accordance with that 
section.

[63 FR 32977, June 17, 1998]



Sec. 2.34  Disposition.

    (a) Acceptance of proposed consent agreement. The Commission may 
accept or refuse to accept a proposed consent agreement. Except as 
otherwise provided in paragraph (c) of this section, acceptance does not 
constitute final approval, but it serves as the basis for further 
actions leading to final disposition of the matter.
    (b) Effectiveness of hold-separate or asset-maintenance order. 
Following acceptance of a consent agreement, the Commission will, if it 
deems a hold-separate or asset-maintenance order appropriate, issue a 
complaint and such an order as agreed to by the parties. Such order will 
be final upon service. The issuance of a complaint under this paragraph 
will neither commence an adjudicatory proceeding subject to part 3 of 
this chapter nor subject the consent agreement proceeding to the 
prohibitions specified in Sec. 4.7 of this chapter.
    (c) Public comment. Promptly after its acceptance of the consent 
agreement, the Commission will place the order contained in the consent 
agreement, the complaint, and the consent agreement on the public record 
for a period of 30 days, or such other period as the Commission may 
specify, for the receipt of comments or views from any interested 
person. At the same time, the Commission will place on the public record 
an explanation of the provisions of the order and the relief to be 
obtained thereby and any other information that it believes may help 
interested persons understand the order. The Commission also will 
publish the explanation in the Federal Register. The Commission retains 
the discretion to issue a complaint and a Final Decision and Order, 
incorporating the order contained in a consent agreement, in appropriate 
cases before seeking public comment. Unless directed otherwise by the 
Commission, such Decision and Order will be final upon service.
    (d) Comment on initial compliance report. If respondents have filed 
an initial report of compliance pursuant to Sec. 2.33, the Commission 
will place that report on the public record, except for portions, if 
any, granted confidential treatment pursuant to Sec. 4.9(c) of this 
chapter, with the complaint, the order, and the consent agreement.
    (e) Action following comment period. (1) Following the comment 
period, on the basis of comments received or otherwise, the Commission 
may either withdraw its acceptance of the agreement and so notify 
respondents, in which event it will take such other action as it may 
consider appropriate, or issue and serve its complaint in such form as 
the circumstances may require and its decision in disposition of the 
proceeding.
    (2) The Commission, following the comment period, may determine, on 
the basis of the comments or otherwise, that a Final Decision and Order 
that was issued in advance of the comment period should be modified. 
Absent agreement by respondents to the modifications, the Commission may 
initiate a proceeding to reopen and modify the decision and order in 
accordance with Sec. 3.72(b) of this chapter or commence a new 
administrative proceeding by issuing a complaint in accordance with 
Sec. 3.11 of this chapter.

[64 FR 46269, Aug. 25, 1999]



                     Subpart D_Reports of Compliance



Sec. 2.41  General compliance obligations and specific obligations
regarding acquisitions and divestitures.

    (a) In every proceeding in which the Commission has issued an order 
pursuant to the provisions of section 5 of the Federal Trade Commission 
Act or section 11 of the Clayton Act, as amended, and except as 
otherwise specifically provided in any such order, each respondent named 
in such order shall file with the Commission, within sixty (60) days 
after service thereof, or within such other time as may be provided by 
the order or the rules in this chapter, a report in writing, signed by 
the respondent, setting forth in detail the

[[Page 49]]

manner and form of his compliance with the order, and shall thereafter 
file with the Commission such further signed, written reports of 
compliance as it may require. An original and one copy of each such 
report shall be filed with the Secretary of the Commission, and one copy 
of each such report shall be filed with the Associate Director for 
Enforcement in the Bureau of Consumer Protection (for consumer 
protection orders) or with the Assistant Director for Compliance in the 
Bureau of Competition (for competition orders). Reports of compliance 
shall be under oath if so requested. Where the order prohibits the use 
of a false advertisement of a food, drug, device, or cosmetic which may 
be injurious to health because of results from its use under the 
conditions prescribed in the advertisement, or under such conditions as 
are customary or usual, or if the use of such advertisement is with 
intent to defraud or mislead, or in any other case where the 
circumstances so warrant, the order may provide for an interim report 
stating whether and how respondents intend to comply to be filed within 
ten (10) days after service of the order. Neither the filing of an 
application for stay pursuant to Sec. 3.56, nor the filing of a 
petition for judicial review, shall operate to postpone the time for 
filing a compliance report under the order or this section. If the 
Commission, or a court, determines to grant a stay of an order, or 
portion thereof, pending judicial review, or if any order provision is 
automatically stayed by statute, no compliance report shall be due as to 
those portions of the order that are stayed unless ordered by the court. 
Thereafter, as to orders, or portions thereof, that are stayed, the time 
for filing a report of compliance shall begin to run de novo from the 
final judicial determination, except that if no petition for certiorari 
has been filed following affirmance of the order of the Commission by a 
court of appeals, the compliance report shall be due the day following 
the date on which the time expires for the filing of such petition. 
Staff of the Bureaus of Competition and Consumer Protection will review 
such reports of compliance and may advise each respondent whether the 
staff intends to recommend that the Commission take any enforcement 
action. The Commission may, however, institute proceedings, including 
certification of facts to the Attorney General pursuant to the 
provisions of section 5(l) of the Federal Trade Commission Act (15 
U.S.C. 45(l)) and section 11(1) of the Clayton Act, as amended (15 
U.S.C. 21(1)), to enforce compliance with an order, without advising a 
respondent whether the actions set forth in a report of compliance 
evidence compliance with the Commission's order or without prior notice 
of any kind to a respondent.
    (b) The Commission has delegated to the Director, the Deputy 
Directors, and the Assistant Director for Compliance of the Bureau of 
Competition, and to the Director, the Deputy Directors, and the 
Associate Director for Enforcement of the Bureau of Consumer Protection 
the authority to monitor compliance reports and to open and close 
compliance investigations. With respect to any compliance matter which 
has received previous Commission consideration as to compliance or in 
which the Commission or any Commissioner has expressed an interest, any 
matter proposed to be closed by reason of expense of investigation or 
testing, or any matter involving substantial questions as to the public 
interest, Commission policy or statutory construction, the Bureaus shall 
submit an analysis to the Commission regarding their intended actions.
    (c) The Commission has delegated to the Director, Deputy Directors, 
and Assistant Directors of the Bureau of Competition and to the 
Director, Deputy Directors, and Associate Directors of the Bureau of 
Consumer Protection, and to the Regional Directors, the authority, for 
good cause shown, to extend the time within which reports of compliance 
with orders to cease and desist may be filed. It is to be noted, 
however, that an extension of time within which a report of compliance 
may be filed, or the filing of a report which does not evidence full 
compliance with the order, does not in any circumstances suspend or 
relieve a respondent from his obligation under the law with respect to 
compliance with such order. An order of the Commission to cease and 
desist becomes final on

[[Page 50]]

the date and under the conditions provided in the Federal Trade 
Commission Act and the Clayton Act. Any person, partnership or 
corporation against which an order to cease and desist has been issued 
who is not in full compliance with such order on and after the date 
provided in these statutes for the order to become final is in violation 
of such order and is subject to an immediate action for civil penalties. 
The authority under this paragraph may not be redelegated, except that 
the Associate Director for Enforcement in the Bureau of Consumer 
Protection and the Assistant Director for Compliance in the Bureau of 
Competition may each name a designee under this paragraph.
    (d) Any respondent subject to a Commission order may request advice 
from the Commission as to whether a proposed course of action, if 
pursued by it, will constitute compliance with such order. The request 
for advice should be submitted in writing to the Secretary of the 
Commission and should include full and complete information regarding 
the proposed course of action. On the basis of the facts submitted, as 
well as other information available to the Commission, the Commission 
will inform the respondent whether or not the proposed course of action, 
if pursued, would constitute compliance with its order. A request 
ordinarily will be considered inappropriate for such advice:
    (1) Where the course of action is already being followed by the 
requesting party;
    (2) Where the same or substantially the same course of action is 
under investigation or is or has been the subject of a current 
proceeding, order, or decree initiated or obtained by the Commission or 
another governmental agency; or
    (3) Where the proposed course of action or its effects may be such 
that an informed decision thereon cannot be made or could be made only 
after extensive investigation, clinical study, testing or collateral 
inquiry.

Furthermore, the filing of a request for advice under this paragraph 
does not in any circumstances suspend or relieve a respondent from his 
obligation under the law with respect to his compliance with the order. 
He must in any event be in full compliance on and after the date the 
order becomes final as prescribed by statute referred to in paragraph 
(b) of this section. Advice to respondents under this paragraph will be 
published by the Commission in the same manner and subject to the same 
restrictions and considerations as advisory opinions under Sec. 1.4 of 
this chapter.
    (e) The Commission may at any time reconsider any advice given under 
this section and, where the public interest requires, rescind or revoke 
its prior advice. In such event the respondent will be given notice of 
the Commission's intent to revoke or rescind and will be given an 
opportunity to submit its views to the Commission. The Commission will 
not proceed against a respondent for violation of an order with respect 
to any action which was taken in good faith reliance upon the 
Commission's advice under this section, where all relevant facts were 
fully, completely, and accurately presented to the Commission and where 
such action was promptly discontinued upon notification of rescission or 
revocation of the Commission's advice.
    (f)(1) All applications for approval of proposed divestitures, 
acquisitions, or similar transactions subject to Commission review under 
outstanding orders (including modifications to previously approved 
transactions) shall fully describe the terms of the transaction or 
modification and shall set forth why the transaction or modification 
merits Commission approval. Such applications will be placed on the 
public record, together with any additional applicant submissions that 
the Commission directs be placed on the public record. The Director of 
the Bureau of Competition is delegated authority to direct such 
placement.
    (2) The Commission will receive public comment on a prior approval 
application submitted pursuant to paragraphs (f)(1) or (5) of this 
section for thirty (30) days. During the comment period, any person may 
file formal written objections or comments with the Secretary of the 
Commission, and such objections or comments shall be placed on the 
public record. In appropriate cases, the Commission may shorten, 
eliminate, extend, or reopen a comment period.

[[Page 51]]

    (3) Responses to applications under this section, together with a 
statement of supporting reasons, will be published when made, together 
with responses to any public comments filed under this section.
    (4) Persons submitting information that is subject to public record 
disclosure under this section may request confidential treatment for 
that information or portions thereof in accordance with Sec. 4.9(c) and 
the General Counsel or the General Counsel's designee will dispose of 
such requests in accordance with that section. Nothing in this section 
requires that confidentiality requests be resolved prior to, or 
contemporaneously with, the disposition of the application.
    (5)(i) Any application to modify either:
    (A) An agreement that has been approved by the Commission pursuant 
to paragraph (f) of this section, or
    (B) An agreement incorporated by reference into a final order of the 
Commission issued in connection with a merger, acquisition, or similar 
transaction shall be subject to review and approval in the manner 
described in paragraphs (f)(1) through (4) of this section, except as 
provided in paragraph (f)(5)(ii) of this section.
    (ii) If the application establishes that the proposed modification 
is purely ministerial, or unlikely under any plausible facts to affect 
achieving the remedial purposes of the order at issue, the Commission 
has delegated to the Director, Deputy Directors, and Assistant Director 
for Compliance of the Bureau of Competition, without power of 
redelegation, for good cause shown, the authority.
    (A) To waive the approval requirement of paragraph (f)(5)(i) of this 
section; and
    (B) To shorten, eliminate, extend or reopen the comment period 
pursuant to paragraph (f)(2) of this section.
    (iii) Any agreement containing a modification approved, or for which 
the approval requirement is waived, pursuant to this paragraph (f)(5), 
shall be subject to any outstanding Commission order to the same extent 
as was the original agreement.

[32 FR 8449, June 13, 1967]

    Editorial Note: For Federal Register citations affecting Sec. 2.41, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and at www.fdsys.gov.



                      Subpart E_Requests To Reopen



Sec. 2.51  Requests to reopen.

    (a) Scope. Any person, partnership, or corporation subject to a 
Commission decision containing a rule or order which has become 
effective, or an order to cease and desist which has become final, may 
file with the Secretary a request that the Commission reopen the 
proceeding to consider whether the rule or order, including any 
affirmative relief provision contained therein, should be altered, 
modified, or set aside in whole or in part.
    (b) Contents. A request under this section shall contain a 
satisfactory showing that changed conditions of law or fact require the 
rule or order to be altered, modified or set aside, in whole or in part, 
or that the public interest so requires.
    (1) This requirement shall not be deemed satisfied if a request is 
merely conclusory or otherwise fails to set forth by affidavit(s) 
specific facts demonstrating in detail:
    (i) The nature of the changed conditions and the reasons why they 
require the requested modifications of the rule or order; or
    (ii) The reasons why the public interest would be served by the 
modification.
    (2) Each affidavit shall set forth facts that would be admissible in 
evidence and shall show that the affiant is competent to testify to the 
matters stated therein. All information and material that the requester 
wishes the Commission to consider shall be contained in the request at 
the time of filing.
    (c) Opportunity for public comment. A request under this section 
shall be placed on the public record except for material exempt from 
public disclosure under rule 4.10(a). Unless the Commission determines 
that earlier disposition is necessary, the request shall remain on the 
public record for thirty (30) days after a press release on the request 
is issued. Bureau Directors are authorized to publish a notice in the 
Federal

[[Page 52]]

Register announcing the receipt of a request to reopen at their 
discretion. The public is invited to comment on the request while it is 
on the public record.
    (d) Determination. After the period for public comments on a request 
under this section has expired and no later than one hundred and twenty 
(120) days after the date of the filing of the request, the Commission 
shall determine whether the request complies with paragraph (b) of this 
section and whether the proceeding shall be reopened and the rule or 
order should be altered, modified, or set aside as requested. In doing 
so, the Commission may, in its discretion, issue an order reopening the 
proceeding and modifying the rule or order as requested, issue an order 
to show cause pursuant to Sec. 3.72, or take such other action as is 
appropriate: Provided, however, That any action under Sec. 3.72 or 
otherwise shall be concluded within the specified 120-day period.

(Sec. 6(g), 38 Stat. 721 (15 U.S.C. 46(g)); 80 Stat. 383, as amended, 81 
Stat. 54 (5 U.S.C. 552))

[45 FR 36344, May 29, 1980, as amended at 46 FR 26291, May 12, 1981; 47 
FR 33251, Aug. 2, 1982; 50 FR 53305, Dec. 31, 1985; 53 FR 40868, Oct. 
19, 1988; 65 FR 50637, Aug. 21, 2000]



PART 3_RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS--
Table of Contents



      Subpart A_Scope of Rules; Nature of Adjudicative Proceedings

Sec.
3.1 Scope of the rules in this part; expedition of proceedings.
3.2 Nature of adjudicative proceedings.

                           Subpart B_Pleadings

3.11 Commencement of proceedings.
3.12 Answer.
3.13 Adjudicative hearing on issues arising in rulemaking proceedings 
          under the Fair Packaging and Labeling Act.
3.14 Intervention.
3.15 Amendments and supplemental pleadings.

Subpart C_Prehearing Procedures; Motions; Interlocutory Appeals; Summary 
                                Decisions

3.21 Prehearing procedures.
3.22 Motions.
3.23 Interlocutory appeals.
3.24 Summary decisions.
3.25 Consent agreement settlements.
3.26 Motions following denial of preliminary injunctive relief.

                 Subpart D_Discovery; Compulsory Process

3.31 General discovery provisions.
3.31A Expert discovery.
3.32 Admissions.
3.33 Depositions.
3.34 Subpoenas.
3.35 Interrogatories to parties.
3.36 Applications for subpoenas for records of or appearances by certain 
          officials or employees of the Commission or officials or 
          employees of governmental agencies other than the Commission, 
          and subpoenas to be served in a foreign country.
3.37 Production of documents, electronically stored information, and any 
          tangible things; access for inspection and other purposes.
3.38 Motion for order compelling disclosure or discovery; sanctions.
3.38A Withholding requested material.
3.39 Orders requiring witnesses to testify or provide other information 
          and granting immunity.
3.40 Admissibility of evidence in advertising substantiation cases.

                           Subpart E_Hearings

3.41 General hearing rules.
3.42 Presiding officials.
3.43 Evidence.
3.44 Record.
3.45 In camera orders.
3.46 Proposed findings, conclusions, and order.

                           Subpart F_Decision

3.51 Initial decision.
3.52 Appeal from initial decision.
3.53 Review of initial decision in absence of appeal.
3.54 Decision on appeal or review.
3.55 Reconsideration.
3.56 Effective date of orders; application for stay.

Subpart G [Reserved]

                   Subpart H_Reopening of Proceedings

3.71 Authority.
3.72 Reopening.

 Subpart I_Recovery of Awards Under the Equal Access to Justice Act in 
                         Commission Proceedings

3.81 General provisions.
3.82 Information required from applicants.
3.83 Procedures for considering applicants.


[[Page 53]]


    Authority: 15 U.S.C. 46.

    Source: 32 FR 8449, June 13, 1967, unless otherwise noted.



      Subpart A_Scope of Rules; Nature of Adjudicative Proceedings



Sec. 3.1  Scope of the rules in this part; expedition of proceedings.

    The rules in this part govern procedure in formal adjudicative 
proceedings. To the extent practicable and consistent with requirements 
of law, the Commission's policy is to conduct such proceedings 
expeditiously. In the conduct of such proceedings the Administrative Law 
Judge and counsel for all parties shall make every effort at each stage 
of a proceeding to avoid delay. In the event of a scheduling conflict 
between a proceeding in which the Commission also has sought or is 
seeking relief under Section 13(b) of the FTC Act, 15 U.S.C. 53(b), and 
another proceeding, the proceeding in which the Commission also has 
sought or is seeking relief under Section 13(b) shall take precedence. 
The Commission, at any time, or the Administrative Law Judge at any time 
prior to the filing of his or her initial decision, may, with the 
consent of the parties, shorten any time limit prescribed by these Rules 
of Practice.

[74 FR 20208, May 1, 2009]



Sec. 3.2  Nature of adjudicative proceedings.

    Adjudicative proceedings are those formal proceedings conducted 
under one or more of the statutes administered by the Commission which 
are required by statute to be determined on the record after opportunity 
for an agency hearing. The term includes hearings upon objections to 
orders relating to the promulgation, amendment, or repeal of rules under 
sections 4, 5 and 6 of the Fair Packaging and Labeling Act, but does not 
include rulemaking proceedings up to the time when the Commission 
determines under Sec. 1.26(g) of this chapter that objections 
sufficient to warrant the holding of a public hearing have been filed. 
The term also includes proceedings for the assessment of civil penalties 
pursuant to Sec. 1.94 of this chapter. The term does not include other 
proceedings such as negotiations for and Commission consideration of the 
entry of consent orders; investigational hearings as distinguished from 
proceedings after the issuance of a complaint; requests for extensions 
of time to comply with final orders or other proceedings involving 
compliance with final orders; proceedings for the promulgation of 
industry guides or trade regulation rules; or the promulgation of 
substantive rules and regulations.

[74 FR 1820, Jan. 13, 2009]



                           Subpart B_Pleadings



Sec. 3.11  Commencement of proceedings.

    (a) Complaint. Except as provided in Sec. 3.13, an adjudicative 
proceeding is commenced when an affirmative vote is taken by the 
Commission to issue a complaint.
    (b) Form of complaint. The Commission's complaint shall contain the 
following:
    (1) Recital of the legal authority and jurisdiction for institution 
of the proceeding, with specific designation of the statutory provisions 
alleged to have been violated;
    (2) A clear and concise factual statement sufficient to inform each 
respondent with reasonable definiteness of the type of acts or practices 
alleged to be in violation of the law;
    (3) Where practical, a form of order which the Commission has reason 
to believe should issue if the facts are found to be as alleged in the 
complaint; and
    (4) Notice of the specific date, time and place for the evidentiary 
hearing. Unless a different date is determined by the Commission, the 
date of the evidentiary hearing shall be 5 months from the date of the 
administrative complaint in a proceeding in which the Commission, in an 
ancillary proceeding, has sought or is seeking relief pursuant to 
Section 13(b) of the FTC Act, 15 U.S.C. 53(b), and 8 months from the 
date of issuance of the administrative complaint in all other 
proceedings.

[74 FR 1820, Jan. 13, 2009]

[[Page 54]]



Sec. 3.12  Answer.

    (a) Time for filing. A respondent shall file an answer within 14 
days after being served with the complaint.
    (b) Content of answer. An answer shall conform to the following:
    (1) If allegations of complaint are contested. An answer in which 
the allegations of a complaint are contested shall contain:
    (i) A concise statement of the facts constituting each ground of 
defense;
    (ii) Specific admission, denial, or explanation of each fact alleged 
in the complaint or, if the respondent is without knowledge thereof, a 
statement to that effect. Allegations of a complaint not thus answered 
shall be deemed to have been admitted.
    (2) If allegations of complaint are admitted. If the respondent 
elects not to contest the allegations of fact set forth in the 
complaint, the answer shall consist of a statement that the respondent 
admits all of the material allegations to be true. Such an answer shall 
constitute a waiver of hearings as to the facts alleged in the 
complaint, and together with the complaint will provide a record basis 
on which the Commission shall issue a final decision containing 
appropriate findings and conclusions and a final order disposing of the 
proceeding. In such an answer, the respondent may, however, reserve the 
right to submit proposed findings of fact and conclusions of law under 
Sec. 3.46.
    (c) Default. Failure of the respondent to file an answer within the 
time provided shall be deemed to constitute a waiver of the respondent's 
right to appear and contest the allegations of the complaint and to 
authorize the Commission, without further notice to the respondent, to 
find the facts to be as alleged in the complaint and to enter a final 
decision containing appropriate findings and conclusions and a final 
order disposing of the proceeding.

[74 FR 1820, Jan. 13, 2009]



Sec. 3.13  Adjudicative hearing on issues arising in rulemaking
proceedings under the Fair Packaging and Labeling Act.

    (a) Notice of hearing. When the Commission, acting under Sec. 
1.26(g) of this chapter, determines that objections which have been 
filed are sufficient to warrant the holding of an adjudicative hearing 
in rulemaking proceedings under the Fair Packaging and Labeling Act, or 
when the Commission otherwise determines that the holding of such a 
hearing would be in the public interest, a hearing will be held before 
an Administrative Law Judge for the purpose of receiving evidence 
relevant and material to the issues raised by such objections or other 
issues specified by the Commission. In such case the Commission will 
publish a notice in the Federal Register containing a statement of:
    (1) The provisions of the rule or order to which objections have 
been filed;
    (2) The issues raised by the objections or the issues on which the 
Commission wishes to receive evidence;
    (3) The time and place for hearing, the time to be at least thirty 
(30) days after publication of the notice; and
    (4) The time within which, and the conditions under which, any 
person who petitioned for issuance, amendment, or repeal of the rule or 
order, or any person who filed objections sufficient to warrant the 
holding of the hearing, or any other interested person, may file notice 
of intention to participate in the proceeding.
    (b) Parties. Any person who petitions for issuance, amendment, or 
repeal of a rule or order, and any person who files objections 
sufficient to warrant the holding of a hearing, and who files timely 
notice of intention to participate, shall be regarded as a party and 
shall be individually served with any pleadings filed in the proceeding. 
Upon written application to the Administrative Law Judge and a showing 
of good cause, any interested person may be designated by the 
Administrative Law Judge as a party.

[32 FR 8449, June 13, 1967, as amended at 40 FR 33969, Aug. 13, 1975]



Sec. 3.14  Intervention.

    (a) Any individual, partnership, unincorporated association, or 
corporation desiring to intervene in an adjudicative proceeding shall 
make written application in the form of a motion setting forth the basis 
therefor. Such application shall be served upon each party to the 
proceeding in accordance with the provisions of Sec. 4.4(b) of this 
chapter.

[[Page 55]]

The answer filed by any party shall be served upon the applicant in 
accordance with the provisions of Sec. 4.4(b). The Administrative Law 
Judge or the Commission may by order permit the intervention to such 
extent and upon such terms as are provided by law or as otherwise may be 
deemed proper.
    (b) In an adjudicative proceeding where the complaint states that 
divestiture relief is contemplated, the labor organization[s] 
representing employees of the respondent[s] may intervene as a matter of 
right. Applications for such intervention are to be made in accordance 
with the procedures set forth in paragraph (a) of this section and must 
be filed within 60 days of the issuance of the complaint. Intervention 
as a matter of right shall be limited to the issue of the effect, if 
any, of proposed remedies on employment, with full rights of 
participation in the proceeding concerning this issue. This paragraph 
does not affect a labor organization's ability to petition for leave to 
intervene pursuant to Sec. 3.14(a).

[32 FR 8449, June 13, 1967, as amended at 46 FR 20979, Apr. 8, 1981; 80 
FR 25941, May 12, 2015]



Sec. 3.15  Amendments and supplemental pleadings.

    (a) Amendments--(1) By leave. If and whenever determination of a 
controversy on the merits will be facilitated thereby, the 
Administrative Law Judge may, upon such conditions as are necessary to 
avoid prejudicing the public interest and the rights of the parties, 
allow appropriate amendments to pleadings or notice of hearing: 
Provided, however, That a motion for amendment of a complaint or notice 
may be allowed by the Administrative Law Judge only if the amendment is 
reasonably within the scope of the original complaint or notice. Motions 
for other amendments of complaints or notices shall be certified to the 
Commission.
    (2) Conformance to evidence. When issues not raised by the pleadings 
or notice of hearing but reasonably within the scope of the original 
complaint or notice of hearing are tried by express or implied consent 
of the parties, they shall be treated in all respects as if they had 
been raised in the pleadings or notice of hearing; and such amendments 
of the pleadings or notice as may be necessary to make them conform to 
the evidence and to raise such issues shall be allowed at any time.
    (b) Supplemental pleadings. The Administrative Law Judge may, upon 
reasonable notice and such terms as are just, permit service of a 
supplemental pleading or notice setting forth transactions, occurrences, 
or events which have happened since the date of the pleading or notice 
sought to be supplemented and which are relevant to any of the issues 
involved.



Subpart C_Prehearing Procedures; Motions; Interlocutory Appeals; Summary 
                                Decisions



Sec. 3.21  Prehearing procedures.

    (a) Meeting of the parties before scheduling conference. As early as 
practicable before the prehearing scheduling conference described in 
paragraph (b) of this section, but in any event no later than 5 days 
after the answer is filed by the last answering respondent, counsel for 
the parties shall meet to discuss the nature and basis of their claims 
and defenses and the possibilities for a prompt settlement or resolution 
of the case. The parties shall also agree, if possible, on--
    (1) A proposed discovery plan specifically addressing a schedule for 
depositions of fact witnesses, the production of documents and 
electronically stored information, and the timing of expert discovery 
pursuant to Sec. 3.31A. The parties' agreement regarding electronically 
stored information should include the scope of and a specified time 
period for the exchange of such information that is subject to 
Sec. Sec. 3.31(b)(2), 3.31(c), and 3.37(a), and the format for the 
disclosure of such information, consistent with Sec. Sec. 3.31(c)(3) 
and 3.37(c);
    (2) A preliminary estimate of the time required for the evidentiary 
hearing; and
    (3) Any other matters to be determined at the scheduling conference.
    (b) Scheduling conference. Not later than 10 days after the answer 
is filed by the last answering respondent, the Administrative Law Judge 
shall hold a

[[Page 56]]

scheduling conference. At the scheduling conference, counsel for the 
parties shall be prepared to address:
    (1) Their factual and legal theories;
    (2) The current status of any pending motions;
    (3) A schedule of proceedings that is consistent with the date of 
the evidentiary hearing set by the Commission;
    (4) Steps taken to preserve evidence relevant to the issues raised 
by the claims and defenses;
    (5) The scope of anticipated discovery, any limitations on 
discovery, and a proposed discovery plan, including the disclosure of 
electronically stored information;
    (6) Issues that can be narrowed by agreement or by motion, 
suggestions to expedite the presentation of evidence at trial, and any 
request to bifurcate issues, claims or defenses; and
    (7) Other possible agreements or steps that may aid in the just and 
expeditious disposition of the proceeding and to avoid unnecessary cost.
    (c) Prehearing scheduling order. (1) Not later than 2 days after the 
scheduling conference, the Administrative Law Judge shall enter an order 
that sets forth the results of the conference and establishes a schedule 
of proceedings that will permit the evidentiary hearing to commence on 
the date set by the Commission, including a plan of discovery that 
addresses the deposition of fact witnesses, timing of expert discovery, 
and the production of documents and electronically stored information, 
dates for the submission and hearing of motions, the specific method by 
which exhibits shall be numbered or otherwise identified and marked for 
the record, and the time and place of a final prehearing conference. The 
Commission may, upon a showing of good cause, order a later date for the 
evidentiary hearing than the one specified in the complaint.
    (2) The Administrative Law Judge may, upon a showing of good cause, 
grant a motion to extend any deadline or time specified in this 
scheduling order other than the date of the evidentiary hearing. Such 
motion shall set forth the total period of extensions, if any, 
previously obtained by the moving party. In determining whether to grant 
the motion, the Administrative Law Judge shall consider any extensions 
already granted, the length of the proceedings to date, the complexity 
of the issues, and the need to conclude the evidentiary hearing and 
render an initial decision in a timely manner. The Administrative Law 
Judge shall not rule on ex parte motions to extend the deadlines 
specified in the scheduling order, or modify such deadlines solely upon 
stipulation or agreement of counsel.
    (d) Meeting prior to final prehearing conference. Counsel for the 
parties shall meet before the final prehearing conference described in 
paragraph (e) of this section to discuss the matters set forth therein 
in preparation for the conference.
    (e) Final prehearing conference. As close to the commencement of the 
evidentiary hearing as practicable, the Administrative Law Judge shall 
hold a final prehearing conference, which counsel shall attend in 
person, to submit any proposed stipulations as to law, fact, or 
admissibility of evidence, exchange exhibit and witness lists, and 
designate testimony to be presented by deposition. At this conference, 
the Administrative Law Judge shall also resolve any outstanding 
evidentiary matters or pending motions (except motions for summary 
decision) and establish a final schedule for the evidentiary hearing.
    (f) Additional prehearing conferences and orders. The Administrative 
Law Judge shall hold additional prehearing and status conferences or 
enter additional orders as may be needed to ensure the just and 
expeditious disposition of the proceeding and to avoid unnecessary cost. 
Such conferences shall be held in person to the extent practicable.
    (g) Public access and reporting. Prehearing conferences shall be 
public unless the Administrative Law Judge determines in his or her 
discretion that the conference (or any part thereof) shall be closed to 
the public. The Administrative Law Judge shall have discretion to 
determine whether a prehearing conference shall be stenographically 
reported.

[74 FR 1820, Jan. 13, 2009]

[[Page 57]]



Sec. 3.22  Motions.

    (a) Presentation and disposition. Motions filed under Sec. 4.17 of 
this chapter shall be directly referred to and ruled on by the 
Commission. Motions to dismiss filed before the evidentiary hearing 
(other than motions to dismiss under Sec. 3.26(d)), motions to strike, 
and motions for summary decision shall be directly referred to the 
Commission and shall be ruled on by the Commission unless the Commission 
in its discretion refers the motion to the Administrative Law Judge. 
Except as otherwise provided by an applicable rule, motions not referred 
to the Administrative Law Judge shall be ruled on by the Commission 
within 45 days of the filing of the last-filed answer or reply to the 
motion, if any, unless the Commission determines there is good cause to 
extend the deadline. If the Commission refers the motion to the 
Administrative Law Judge, it may set a deadline for the ruling by the 
Administrative Law Judge, and a party may seek review of the ruling of 
the Administrative Law Judge in accordance with Sec. 3.23. During the 
time a proceeding is before an Administrative Law Judge, all other 
motions shall be addressed to and decided by the Administrative Law 
Judge, if within his or her authority. The Administrative Law Judge 
shall certify to the Commission a motion to disqualify filed under Sec. 
3.42(g) if the Administrative Law Judge does not disqualify himself or 
herself within 10 days. The Administrative Law Judge shall certify to 
the Commission forthwith any other motion upon which he or she has no 
authority to rule. Rulings containing information granted in camera 
status pursuant to Sec. 3.45 shall be filed in accordance with Sec. 
3.45(f). When a motion to dismiss is made at the close of the evidence 
offered in support of the complaint based upon an alleged failure to 
establish a prima facie case, the Administrative Law Judge shall defer 
ruling thereon until immediately after all evidence has been received 
and the hearing record is closed. All written motions shall be filed 
with the Secretary of the Commission, and all motions addressed to the 
Commission shall be in writing. The moving party shall also provide a 
copy of its motion to the Administrative Law Judge at the time the 
motion is filed with the Secretary.
    (b) Proceedings not stayed. A motion under consideration by the 
Commission shall not stay proceedings before the Administrative Law 
Judge unless the Commission so orders or unless otherwise provided by an 
applicable rule.
    (c) Content. All written motions shall state the particular order, 
ruling, or action desired and the grounds therefor. Memoranda in support 
of, or in opposition to, any dispositive motion shall not exceed 10,000 
words. Memoranda in support of, or in opposition to, any other motion 
shall not exceed 2,500 words. Any reply in support of a dispositive 
motion shall not exceed 5,000 words and any reply in support of any 
other motion authorized by the Administrative Law Judge or the 
Commission shall not exceed 1,250 words. These word count limitations 
include headings, footnotes, and quotations, but do not include the 
cover, table of contents, table of citations or authorities, glossaries, 
statements with respect to oral argument, any addendums containing 
statutes, rules or regulations, any certificates of counsel, proposed 
form of order, and any attachment required by Sec. 3.45(e). Documents 
that fail to comply with these provisions shall not be filed with the 
Secretary. Motions must also include the name, address, telephone 
number, fax number, and e-mail address (if any) of counsel and attach a 
draft order containing the proposed relief. If a party includes in a 
motion information that has been granted in camera status pursuant to 
Sec. 3.45(b) or is subject to confidentiality protections pursuant to a 
protective order, the party shall file 2 versions of the motion in 
accordance with the procedures set forth in Sec. 3.45(e). The party 
shall mark its confidential filings with brackets or similar conspicuous 
markings to indicate the material for which it is claiming confidential 
treatment. The time period specified by Sec. 3.22(d) within which an 
opposing party may file an answer will begin to run upon service on that 
opposing party of the confidential version of the motion.
    (d) Responses. Within 10 days after service of any written motion, 
or within such longer or shorter time as may be designated by the 
Administrative

[[Page 58]]

Law Judge or the Commission, the opposing party shall answer or shall be 
deemed to have consented to the granting of the relief asked for in the 
motion. If an opposing party includes in an answer information that has 
been granted in camera status pursuant to Sec. 3.45(b) or is subject to 
confidentiality protections pursuant to a protective order, the opposing 
party shall file 2 versions of the answer in accordance with the 
procedures set forth in Sec. 3.45(e). The moving party shall have no 
right to reply, except for dispositive motions or as otherwise permitted 
by the Administrative Law Judge or the Commission. Reply and surreply 
briefs to motions other than dispositive motions shall be permitted only 
in circumstances where the parties wish to draw the Administrative Law 
Judge's or the Commission's attention to recent important developments 
or controlling authority that could not have been raised earlier in the 
party's principal brief. The reply may be conditionally filed with the 
motion seeking leave to reply. Any reply with respect to a dispositive 
motion, or any permitted reply to any other motion, shall be filed 
within 5 days after service of the last answer to that motion.
    (e) Rulings on motions. Unless otherwise provided by a relevant 
rule, the Administrative Law Judge shall rule on motions within 14 days 
after the filing of all motion papers authorized by this section. The 
Commission, for good cause, may extend the time allowed for a ruling.
    (f) Motions for extensions. The Administrative Law Judge or the 
Commission may waive the requirements of this section as to motions for 
extensions of time; however, the Administrative Law Judge shall have no 
authority to rule on ex parte motions for extensions of time.
    (g) Statement. Each motion to quash filed pursuant to Sec. 3.34(c), 
each motion to compel or determine sufficiency pursuant to Sec. 
3.38(a), each motion for sanctions pursuant to Sec. 3.38(b), and each 
motion for enforcement pursuant to Sec. 3.38(c) shall be accompanied by 
a signed statement representing that counsel for the moving party has 
conferred with opposing counsel in an effort in good faith to resolve by 
agreement the issues raised by the motion and has been unable to reach 
such an agreement. If some of the matters in controversy have been 
resolved by agreement, the statement shall specify the matters so 
resolved and the matters remaining unresolved. The statement shall 
recite the date, time, and place of each such conference between 
counsel, and the names of all parties participating in each such 
conference. Unless otherwise ordered by the Administrative Law Judge, 
the statement required by this rule must be filed only with the first 
motion concerning compliance with the discovery demand at issue.

[74 FR 1821, Jan. 13, 2009, as amended at 80 FR 15160, Mar. 23, 2015]



Sec. 3.23  Interlocutory appeals.

    (a) Appeals without a determination by the Administrative Law Judge. 
(1) The Commission may, in its discretion, entertain interlocutory 
appeals where a ruling of the Administrative Law Judge:
    (i) Requires the disclosure of records of the Commission or another 
governmental agency or the appearance of an official or employee of the 
Commission or another governmental agency pursuant to Sec. 3.36, if 
such appeal is based solely on a claim of privilege: Provided, that the 
Administrative Law Judge shall stay until further order of the 
Commission the effectiveness of any ruling, whether or not appeal is 
sought, that requires the disclosure of nonpublic Commission minutes, 
Commissioner circulations, or similar documents prepared by the 
Commission, an individual Commissioner, or the Office of the General 
Counsel;
    (ii) Suspends an attorney from participation in a particular 
proceeding pursuant to Sec. 3.42(d); or
    (iii) Grants or denies an application for intervention pursuant to 
the provisions of Sec. 3.14.
    (2) Appeal from such rulings may be sought by filing with the 
Commission an application for review within 3 days after notice of the 
Administrative Law Judge's ruling. An answer may be filed within 3 days 
after the application for review is filed. The Commission upon its own 
motion may enter an order staying compliance with a discovery

[[Page 59]]

demand authorized by the Administrative Law Judge pursuant to Sec. 3.36 
or placing the matter on the Commission's docket for review. Any order 
placing the matter on the Commission's docket for review will set forth 
the scope of the review and the issues which will be considered and will 
make provision for the filing of memoranda of law if deemed appropriate 
by the Commission.
    (b) Other interlocutory appeals. A party may request the 
Administrative Law Judge to determine that a ruling involves a 
controlling question of law or policy as to which there is substantial 
ground for difference of opinion and that an immediate appeal from the 
ruling may materially advance the ultimate termination of the litigation 
or subsequent review will be an inadequate remedy. An answer may be 
filed within 3 days after the request for determination is filed. The 
Administrative Law Judge shall issue a ruling on the request for 
determination within 3 days of the deadline for filing an answer. The 
party may file an application for review with the Commission within 1 
day after notice that the Administrative Law Judge has issued the 
requested determination or 1 day after the deadline has passed for the 
Administrative Law Judge to issue a ruling on the request for 
determination and the Administrative Law Judge has not issued his or her 
ruling. An answer may be filed within 3 days after the application for 
review is filed.
    (c) The application for review shall attach the ruling from which 
appeal is being taken and any other portions of the record on which the 
moving party relies. Neither the application for review nor the answer 
shall exceed 2,500 words. This word count limitation includes headings, 
footnotes, and quotations, but does not include the cover, table of 
contents, table of citations or authorities, glossaries, statements with 
respect to oral argument, any addendums containing statutes, rules or 
regulations, any certificates of counsel, proposed form of order, and 
any attachment required by Sec. 3.45(e). The Commission may order 
additional briefing on the application.
    (d) Ruling on application for review. Within 3 days after the 
deadline for filing an answer, the Commission will determine whether to 
grant the application for review. The denial of an application shall not 
constitute a ruling on the merits of the ruling that is the subject of 
the application.
    (e) Proceedings not stayed. An application for review and appeal 
hereunder shall not stay proceedings before the Administrative Law Judge 
unless the Judge or the Commission shall so order.

[74 FR 1822, Jan. 13, 2009, as amended at 80 FR 15160, Mar. 23, 2015]



Sec. 3.24  Summary decisions.

    (a) Procedure. (1) Any party may move, with or without supporting 
affidavits, for a summary decision in the party's favor upon all or any 
part of the issues being adjudicated. The motion shall be accompanied by 
a separate and concise statement of the material facts as to which the 
moving party contends there is no genuine issue for trial. Counsel in 
support of the complaint may so move at any time after 20 days following 
issuance of the complaint and any respondent may so move at any time 
after issuance of the complaint. Any such motion by any party, however, 
shall be filed in accordance with the scheduling order issued pursuant 
to Sec. 3.21, but in any case at least 30 days before the date fixed 
for the hearing.
    (2) Any other party may, within 14 days after service of the motion, 
file opposing affidavits. The opposing party shall include a separate 
and concise statement of those material facts as to which the opposing 
party contends there exists a genuine issue for trial, as provided in 
Sec. 3.24(a)(3). The parties may file memoranda of law in support of, 
or in opposition to, the motion consistent with Sec. 3.22(c). If a 
party includes in any such brief or memorandum information that has been 
granted in camera status pursuant to Sec. 3.45(b) or is subject to 
confidentiality protections pursuant to a protective order, the party 
shall file 2 versions of the document in accordance with the procedures 
set forth in Sec. 3.45(e). If the Commission (or, when appropriate, the 
Administrative Law Judge) determines that there is no genuine issue as 
to any material fact regarding liability or relief, it shall issue

[[Page 60]]

a final decision and order. In the event that the motion has been 
referred to the Administrative Law Judge, such determination by the 
Administrative Law Judge shall constitute his or her initial decision 
and shall conform to the procedures set forth in Sec. 3.51(c). A 
summary decision, interlocutory in character and in compliance with the 
procedures set forth in Sec. 3.51(c), may be rendered on the issue of 
liability alone although there is a genuine issue as to relief.
    (3) Affidavits shall set forth such facts as would be admissible in 
evidence and shall show affirmatively that the affiant is competent to 
testify to the matters stated therein. The Commission (or, when 
appropriate, the Administrative Law Judge) may permit affidavits to be 
supplemented or opposed by depositions, answers to interrogatories, or 
further affidavits. When a motion for summary decision is made and 
supported as provided in this rule, a party opposing the motion may not 
rest upon the mere allegations or denials of his or her pleading; the 
response, by affidavits or as otherwise provided in this rule, must set 
forth specific facts showing that there is a genuine issue of material 
fact for trial. If no such response is filed, summary decision, if 
appropriate, shall be rendered.
    (4) Should it appear from the affidavits of a party opposing the 
motion that it cannot, for reasons stated, present by affidavit facts 
essential to justify its opposition, the Commission (or, when 
appropriate, the Administrative Law Judge) may deny the motion for 
summary decision or may order a continuance to permit affidavits to be 
obtained or depositions to be taken or discovery to be had or make such 
other order as is appropriate and a determination to that effect shall 
be made a matter of record.
    (5) If on motion under this rule a summary decision is not rendered 
upon the whole case or for all the relief asked and a trial is 
necessary, the Commission (or, when appropriate, the Administrative Law 
Judge) shall issue an order specifying the facts that appear without 
substantial controversy and directing further proceedings in the action. 
The facts so specified shall be deemed established.
    (b) Affidavits filed in bad faith. (1) Should it appear to the 
satisfaction of the Commission (or, when appropriate, the Administrative 
Law Judge) at any time that any of the affidavits presented pursuant to 
this rule are presented in bad faith, or solely for the purpose of 
delay, or are patently frivolous, the Commission (or, when appropriate, 
the Administrative Law Judge) shall enter a determination to that effect 
upon the record.
    (2) If upon consideration of all relevant facts attending the 
submission of any affidavit covered by paragraph (b)(1) of this section, 
the Commission (or, when appropriate, the Administrative Law Judge) 
concludes that action to suspend or remove an attorney from the case is 
warranted, it shall take action as specified in Sec. 3.42(d). If the 
Administrative Law Judge to whom the Commission has referred a motion 
for summary decision concludes, upon consideration of all the relevant 
facts attending the submission of any affidavit covered by paragraph 
(b)(1) of this section, that the matter should be certified to the 
Commission for consideration of disciplinary action against an attorney, 
including reprimand, suspension or disbarment, the Administrative Law 
Judge shall certify the matter, with his or her findings and 
recommendations, to the Commission for its consideration of disciplinary 
action in the manner provided by the Commission's rules. If the 
Commission has addressed the motion directly, it may consider such 
disciplinary action without a certification by the Administrative Law 
Judge.

[74 FR 1822, Jan. 13, 2009]



Sec. 3.25  Consent agreement settlements.

    (a) The Administrative Law Judge may, in his or her discretion and 
without suspension of prehearing procedures, hold conferences for the 
purpose of supervising negotiations for the settlement of the case, in 
whole or in part, by way of consent agreement.
    (b) A proposal to settle a matter in adjudication by consent shall 
be submitted by way of a motion to withdraw the matter from adjudication 
for the

[[Page 61]]

purpose of considering a proposed settlement. Such motion shall be filed 
with the Secretary of the Commission, as provided in Sec. 4.2. Any such 
motion shall be accompanied by a consent proposal; the proposal itself, 
however, shall not be placed on the public record unless and until it is 
accepted by the Commission as provided herein. If the consent proposal 
affects only some of the respondents or resolves only some of the 
charges in adjudication, the motion required by this paragraph shall so 
state and shall specify the portions of the matter that the proposal 
would resolve.
    (c) If a consent agreement accompanying the motion has been executed 
by one or more respondents and by complaint counsel, has been approved 
by the appropriate Bureau Director, and conforms to Sec. 2.32, and the 
matter is pending before an Administrative Law Judge, the Secretary 
shall issue an order withdrawing from adjudication those portions of the 
matter that the proposal would resolve and all proceedings before the 
Administrative Law Judge shall be stayed with respect to such portions, 
pending a determination by the Commission pursuant to paragraph (f) of 
this section. If a consent proposal is not in the form of a consent 
agreement executed by a respondent, does not otherwise conform to Sec. 
2.32, or has not been executed by complaint counsel, and the matter is 
pending before the Administrative Law Judge, he or she shall certify the 
motion and proposal to the Commission upon a written determination that 
there is a reasonable possibility of settlement. The certification may 
be accompanied by a recommendation to the Commission as to the 
disposition of the motion. The Administrative Law Judge shall make a 
determination as to whether to certify the motion within 5 days after 
the filing of the motion. The filing of a motion under paragraph (b) of 
this section and certification thereof to the Commission shall not stay 
proceedings before the Administrative Law Judge unless the Commission 
shall so order. Upon certification of such motion, the Commission in its 
discretion may issue an order withdrawing from adjudication those 
portions of the matter that the proposal would resolve for the purpose 
of considering the consent proposal.
    (d) If the matter is no longer pending before the Administrative Law 
Judge, the Commission in its discretion may, upon motion filed under 
paragraph (b) of this section, issue an order withdrawing from 
adjudication those portions of the matter that the proposal would 
resolve for the purpose of considering the consent proposal. Such order 
may issue whether or not the consent proposal is in the form of a 
consent agreement executed by a respondent, otherwise conforms to Sec. 
2.32, or has been executed by complaint counsel.
    (e) The Commission will treat those portions of a matter withdrawn 
from adjudication pursuant to paragraphs (c) or (d) of this section as 
being in a nonadjudicative status. Portions not so withdrawn shall 
remain in an adjudicative status.
    (f) After some or all of the allegations in a matter have been 
withdrawn from adjudication, the Commission may accept a proposed 
consent agreement, reject it and return the matter or affected portions 
thereof to adjudication for further proceedings, or take such other 
action as it may deem appropriate. If an agreement is accepted, it will 
be disposed of as provided in Sec. 2.34 of this chapter, except that 
if, following the public comment period provided for in Sec. 2.34, the 
Commission decides, based on comments received or otherwise, to withdraw 
its acceptance of the agreement, it will so notify the parties and will 
return to adjudication any portions of the matter previously withdrawn 
from adjudication for further proceedings or take such other action it 
considers appropriate.
    (g) This rule will not preclude the settlement of the case by 
regular adjudicatory process through the filing of an admission answer 
or submission of the case to the Administrative Law Judge on a 
stipulation of facts and an agreed order.

[74 FR 20208, May 1, 2009]



Sec. 3.26  Motions following denial of preliminary injunctive relief.

    (a) This section sets forth two procedures by which respondents may 
obtain consideration of whether continuation of an adjudicative 
proceeding is in the

[[Page 62]]

public interest after a court has denied preliminary injunctive relief 
in a separate proceeding brought under section 13(b) of the Federal 
Trade Commission Act, 15 U.S.C. 53(b), in aid of the adjudicative 
proceeding.
    (b) A motion under this section shall be addressed to the Commission 
and must be filed within 14 days after, but no earlier than:
    (1) A district court has denied the Commission's request for a 
preliminary injunction, if the Commission has not filed a motion for 
relief pending appeal with the court of appeals within 7 days following 
the district court's denial of a preliminary injunction; or
    (2) A court of appeals has denied a Commission motion for relief 
pending appeal.
    (c) Withdrawal from adjudication. Following denial of court relief 
as specified in paragraph (b) of this section, respondents may move that 
the adjudicative proceeding be withdrawn from adjudication in order to 
consider whether the public interest warrants further litigation. 
Although all respondents must consent to the filing of such a motion, a 
motion under this paragraph (c) may be filed jointly or separately by 
each of the respondents in the adjudicative proceeding. At the time 
respondents file a motion under this paragraph (c), respondents must 
also electronically transmit a copy to complaint counsel. The Secretary 
shall issue an order withdrawing the matter from adjudication 2 days 
after such a motion is filed, except that, if complaint counsel file an 
objection asserting that the conditions of paragraph (b) of this section 
have not been met, the Commission shall decide the motion within 10 days 
after the objection is filed.
    (d) Consideration on the record of a motion to dismiss. (1) In lieu 
of a motion to withdraw the adjudicative proceeding from adjudication 
under paragraph (c) of this section, any respondent may file a motion 
under this paragraph to dismiss the administrative complaint on the 
basis that the public interest does not warrant further litigation after 
a court has denied preliminary injunctive relief to the Commission.
    (2) Stay. The filing of a motion under this paragraph (d) shall stay 
the proceeding until 7 days following the disposition of the motion by 
the Commission, and all deadlines established by these rules shall be 
tolled for the amount of time the proceeding is so stayed.
    (3) Answer. Complaint counsel may file a response within 7 days 
after such motion is filed.
    (4) Ruling by Commission. Within 30 days after the deadline for 
filing a response, the Commission shall rule on any motion under this 
paragraph (d).
    (e) Form. Memoranda in support of or in opposition to motions 
authorized by this section shall not exceed 10,000 words. This word 
count limitation includes headings, footnotes, and quotations, but does 
not include the cover, table of contents, table of citations or 
authorities, glossaries, statements with respect to oral argument, any 
addendums containing statutes, rules or regulations, any certificates of 
counsel, proposed form of order, and any attachment required by Sec. 
3.45(e).
    (f) In camera materials. If any filing includes materials that are 
subject to confidentiality protections pursuant to an order entered in 
either the proceeding under section 13(b) or the adjudicative 
proceeding, such materials shall be treated as in camera materials for 
purposes of this paragraph and the party shall file 2 versions of the 
document in accordance with the procedures set forth in Sec. 3.45(e). 
The time within which complaint counsel may file an objection or 
response under this section will begin to run upon service of the in 
camera version of the motion (including any supporting briefs and 
memoranda).

[80 FR 15161, Mar. 23, 2015]



                 Subpart D_Discovery; Compulsory Process



Sec. 3.31  General discovery provisions.

    (a) Discovery methods. Parties may obtain discovery by one or more 
of the following methods: Depositions upon oral examination or written 
questions; written interrogatories; production of documents or things 
for inspection and other purposes; and requests for admission. Except as 
provided in the rules, or unless the Administrative Law Judge

[[Page 63]]

orders otherwise, the frequency or sequence of these methods is not 
limited. The parties shall, to the greatest extent practicable, conduct 
discovery simultaneously; the fact that a party is conducting discovery 
shall not operate to delay any other party's discovery. Unless all 
parties expressly agree otherwise, no discovery shall take place before 
the issuance of a prehearing scheduling order under Sec. 3.21(c), 
except for the mandatory initial disclosures required by paragraph (b) 
of this section.
    (b) Mandatory initial disclosures. Complaint counsel and 
respondent's counsel shall, within 5 days of receipt of a respondent's 
answer to the complaint and without awaiting a discovery request, 
provide to each other:
    (1) The name, and, if known, the address and telephone number of 
each individual likely to have discoverable information relevant to the 
allegations of the Commission's complaint, to the proposed relief, or to 
the defenses of the respondent, as set forth in Sec. 3.31(c)(1); and
    (2) A copy of, or a description by category and location of, all 
documents and electronically stored information including declarations, 
transcripts of investigational hearings and depositions, and tangible 
things in the possession, custody, or control of the Commission or 
respondent(s) that are relevant to the allegations of the Commission's 
complaint, to the proposed relief, or to the defenses of the respondent, 
as set forth in Sec. 3.31(c)(1); unless such information or materials 
are subject to the limitations in Sec. 3.31(c)(2), privileged as 
defined in Sec. 3.31(c)(4), pertain to hearing preparation as defined 
in Sec. 3.31(c)(5), pertain to experts as defined in Sec. 3.31A, or 
are obtainable from some other source that is more convenient, less 
burdensome, or less expensive. A party shall make its disclosures based 
on the information then reasonably available to it and is not excused 
from making its disclosures because it has not fully completed its 
investigation.
    (c) Scope of discovery. Unless otherwise limited by order of the 
Administrative Law Judge or the Commission in accordance with these 
rules, the scope of discovery under all the rules in this part is as 
follows:
    (1) In general. Parties may obtain discovery to the extent that it 
may be reasonably expected to yield information relevant to the 
allegations of the complaint, to the proposed relief, or to the defenses 
of any respondent. Such information may include the existence, 
description, nature, custody, condition, and location of any books, 
documents, other tangible things, electronically stored information, and 
the identity and location of persons having any knowledge of any 
discoverable matter. Information may not be withheld from discovery on 
grounds that the information will be inadmissible at the hearing if the 
information sought appears reasonably calculated to lead to the 
discovery of admissible evidence.
    (2) Limitations. Complaint counsel need only search for materials 
that were collected or reviewed in the course of the investigation of 
the matter or prosecution of the case and that are in the possession, 
custody or control of the Bureaus or Offices of the Commission that 
investigated the matter, including the Bureau of Economics. The 
Administrative Law Judge may authorize for good cause additional 
discovery of materials in the possession, custody, or control of those 
Bureaus or Offices, or authorize other discovery pursuant to Sec. 3.36. 
Neither complaint counsel, respondent, nor a third party receiving a 
discovery request under these rules is required to search for materials 
generated and transmitted between an entity's counsel (including 
counsel's legal staff or in-house counsel) and not shared with anyone 
else, or between complaint counsel and non-testifying Commission 
employees, unless the Administrative Law Judge determines there is good 
cause to provide such materials. The frequency or extent of use of the 
discovery methods otherwise permitted under these rules shall be limited 
by the Administrative Law Judge if he or she determines that:
    (i) The discovery sought from a party or third party is unreasonably 
cumulative or duplicative, or is obtainable from some other source that 
is more convenient, less burdensome, or less expensive;

[[Page 64]]

    (ii) The party seeking discovery has had ample opportunity by 
discovery in the action to obtain the information sought; or
    (iii) The burden and expense of the proposed discovery on a party or 
third party outweigh its likely benefit.
    (3) Electronically stored information. A party or third party need 
not provide discovery of electronically stored information from sources 
that the party or third party identifies as not reasonably accessible 
because of undue burden or cost. On a motion to compel discovery, the 
party or third party from whom discovery is sought must show that the 
information is not reasonably accessible because of undue burden or 
cost. If that showing is made, the Administrative Law Judge may 
nonetheless order discovery if the requesting party shows good cause, 
considering the limitations of paragraph (c)(2). The Administrative Law 
Judge may specify conditions for the discovery.
    (4) Privilege. Discovery shall be denied or limited in order to 
preserve the privilege of a witness, person, or governmental agency as 
governed by the Constitution, any applicable act of Congress, or the 
principles of the common law as they may be interpreted by the 
Commission in the light of reason and experience.
    (5) Hearing preparations: Materials. Subject to the provisions of 
Sec. 3.31A, a party may obtain discovery of documents and tangible 
things otherwise discoverable under paragraph (c)(1) of this section and 
prepared in anticipation of litigation or for hearing by or for another 
party or by or for that other party's representative (including the 
party's attorney, consultant, or agent) only upon a showing that the 
party seeking discovery has substantial need of the materials in the 
preparation of its case and that the party is unable without undue 
hardship to obtain the substantial equivalent of the materials by other 
means. In ordering discovery of such materials when the required showing 
has been made, the Administrative Law Judge shall protect against 
disclosure of the mental impressions, conclusions, opinions, or legal 
theories of an attorney or other representative of a party.
    (d) Protective orders; orders to preserve evidence. In order to 
protect the parties and third parties against improper use and 
disclosure of confidential information, the Administrative Law Judge 
shall issue a protective order as set forth in the appendix to this 
section. The Administrative Law Judge may also deny discovery or make 
any other order which justice requires to protect a party or other 
person from annoyance, embarrassment, oppression, or undue burden or 
expense, or to prevent undue delay in the proceeding. Such an order may 
also be issued to preserve evidence upon a showing that there is 
substantial reason to believe that such evidence would not otherwise be 
available for presentation at the hearing.
    (e) Supplementation of disclosures and responses. A party who has 
made a mandatory initial disclosure under Sec. 3.31(b) or responded to 
a request for discovery with a disclosure or response is under a duty to 
supplement or correct the disclosure or response to include information 
thereafter acquired if ordered by the Administrative Law Judge or in the 
following circumstances:
    (1) A party is under a duty to supplement at appropriate intervals 
its mandatory initial disclosures under Sec. 3.31(b) if the party 
learns that in some material respect the information disclosed is 
incomplete or incorrect and if the additional or corrective information 
has not otherwise been made known to the other parties during the 
discovery process or in writing.
    (2) A party is under a duty to amend in a timely manner a prior 
response to an interrogatory, request for production, or request for 
admission if the party learns that the response is in some material 
respect incomplete or incorrect.
    (f) Stipulations. When approved by the Administrative Law Judge, the 
parties may by written stipulation (1) provide that depositions may be 
taken before any person, at any time or place, upon any notice, and in 
any manner and when so taken may be used like other depositions, and (2) 
modify the procedures provided by these rules for other methods of 
discovery.
    (g) Disclosure of privileged or protected information or 
communications; scope of

[[Page 65]]

waiver; obligations of receiving party. (1)(i) The disclosure of 
privileged or protected information or communications during a part 3 
proceeding or during a Commission precomplaint investigation shall not 
operate as a waiver if:
    (A) The disclosure is inadvertent;
    (B) The holder of the privilege or protection took reasonable steps 
to prevent disclosure; and
    (C) The holder promptly took reasonable steps to rectify the error, 
including notifying any party that received the information or 
communication of the claim and the basis for it.
    (ii) After being notified, the receiving party must promptly return, 
sequester, or destroy the specified information and any copies it has; 
must not use or disclose the information until the claim is resolved; 
must take reasonable steps to retrieve the information if the party 
disclosed it before being notified; and may promptly present the 
information to the Administrative Law Judge under seal for a 
determination of the claim. The producing party must preserve the 
information until the claim is resolved.
    (2) The disclosure of privileged or protected information or 
communications during a part 3 proceeding or during a Commission 
precomplaint investigation shall waive the privilege or protection as to 
undisclosed information or communications only if:
    (i) The waiver is intentional;
    (ii) The disclosed and undisclosed information or communications 
concern the same subject matter; and
    (iii) They ought in fairness to be considered together.
    (h) Restriction on filings. Unless otherwise ordered by the 
Administrative Law Judge in his or her discretion, mandatory initial and 
supplemental disclosures, interrogatories, depositions, requests for 
documents, requests for admissions, and answers and responses thereto 
shall be served upon other parties but shall not be filed with the 
Office of the Secretary, the Administrative Law Judge, or otherwise 
provided to the Commission, except to support or oppose a motion or to 
offer as evidence.

          Appendix A to Sec. 3.31: Standard Protective Order.

    For the purpose of protecting the interests of the parties and third 
parties in the above-captioned matter against improper use and 
disclosure of confidential information submitted or produced in 
connection with this matter:
    IT IS HEREBY ORDERED THAT this Protective Order Governing 
Confidential Material (``Protective Order'') shall govern the handling 
of all Discovery Material, as hereafter defined.
    1. As used in this Order, ``confidential material'' shall refer to 
any document or portion thereof that contains privileged information, 
competitively sensitive information, or sensitive personal information. 
``Sensitive personal information'' shall refer to, but shall not be 
limited to, an individual's Social Security number, taxpayer 
identification number, financial account number, credit card or debit 
card number, driver's license number, state-issued identification 
number, passport number, date of birth (other than year), and any 
sensitive health information identifiable by individual, such as an 
individual's medical records. ``Document'' shall refer to any 
discoverable writing, recording, transcript of oral testimony, or 
electronically stored information in the possession of a party or a 
third party. ``Commission'' shall refer to the Federal Trade Commission 
(``FTC''), or any of its employees, agents, attorneys, and all other 
persons acting on its behalf, excluding persons retained as consultants 
or experts for purposes of this proceeding.
    2. Any document or portion thereof submitted by a respondent or a 
third party during a Federal Trade Commission investigation or during 
the course of this proceeding that is entitled to confidentiality under 
the Federal Trade Commission Act, or any other federal statute or 
regulation, or under any federal court or Commission precedent 
interpreting such statute or regulation, as well as any information that 
discloses the substance of the contents of any confidential materials 
derived from a document subject to this Order, shall be treated as 
confidential material for purposes of this Order. The identity of a 
third party submitting such confidential material shall also be treated 
as confidential material for the purposes of this Order where the 
submitter has requested such confidential treatment.
    3. The parties and any third parties, in complying with informal 
discovery requests, disclosure requirements, or discovery demands in 
this proceeding may designate any responsive document or portion thereof 
as confidential material, including documents obtained by them from 
third parties pursuant to discovery or as otherwise obtained.

[[Page 66]]

    4. The parties, in conducting discovery from third parties, shall 
provide to each third party a copy of this Order so as to inform each 
such third party of his, her, or its rights herein.
    5. A designation of confidentiality shall constitute a 
representation in good faith and after careful determination that the 
material is not reasonably believed to be already in the public domain 
and that counsel believes the material so designated constitutes 
confidential material as defined in Paragraph 1 of this Order.
    6. Material may be designated as confidential by placing on or 
affixing to the document containing such material (in such manner as 
will not interfere with the legibility thereof), or if an entire folder 
or box of documents is confidential by placing or affixing to that 
folder or box, the designation ``CONFIDENTIAL--FTC Docket No. XXXX'' or 
any other appropriate notice that identifies this proceeding, together 
with an indication of the portion or portions of the document considered 
to be confidential material. Confidential information contained in 
electronic documents may also be designated as confidential by placing 
the designation ``CONFIDENTIAL--FTC Docket No. XXXX'' or any other 
appropriate notice that identifies this proceeding, on the face of the 
CD or DVD or other medium on which the document is produced. Masked or 
otherwise redacted copies of documents may be produced where the 
portions masked or redacted contain privileged matter, provided that the 
copy produced shall indicate at the appropriate point that portions have 
been masked or redacted and the reasons therefor.
    7. Confidential material shall be disclosed only to: (a) the 
Administrative Law Judge presiding over this proceeding, personnel 
assisting the Administrative Law Judge, the Commission and its 
employees, and personnel retained by the Commission as experts or 
consultants for this proceeding; (b) judges and other court personnel of 
any court having jurisdiction over any appellate proceedings involving 
this matter; (c) outside counsel of record for any respondent, their 
associated attorneys and other employees of their law firm(s), provided 
they are not employees of a respondent; (d) anyone retained to assist 
outside counsel in the preparation or hearing of this proceeding 
including consultants, provided they are not affiliated in any way with 
a respondent and have signed an agreement to abide by the terms of the 
protective order; and (e) any witness or deponent who may have authored 
or received the information in question.
    8. Disclosure of confidential material to any person described in 
Paragraph 7 of this Order shall be only for the purposes of the 
preparation and hearing of this proceeding, or any appeal therefrom, and 
for no other purpose whatsoever, provided, however, that the Commission 
may, subject to taking appropriate steps to preserve the confidentiality 
of such material, use or disclose confidential material as provided by 
its Rules of Practice; sections 6(f) and 21 of the Federal Trade 
Commission Act; or any other legal obligation imposed upon the 
Commission.
    9. In the event that any confidential material is contained in any 
pleading, motion, exhibit or other paper filed or to be filed with the 
Secretary of the Commission, the Secretary shall be so informed by the 
Party filing such papers, and such papers shall be filed in camera. To 
the extent that such material was originally submitted by a third party, 
the party including the materials in its papers shall immediately notify 
the submitter of such inclusion. Confidential material contained in the 
papers shall continue to have in camera treatment until further order of 
the Administrative Law Judge, provided, however, that such papers may be 
furnished to persons or entities who may receive confidential material 
pursuant to Paragraphs 7 or 8. Upon or after filing any paper containing 
confidential material, the filing party shall file on the public record 
a duplicate copy of the paper that does not reveal confidential 
material. Further, if the protection for any such material expires, a 
party may file on the public record a duplicate copy which also contains 
the formerly protected material.
    10. If counsel plans to introduce into evidence at the hearing any 
document or transcript containing confidential material produced by 
another party or by a third party, they shall provide advance notice to 
the other party or third party for purposes of allowing that party to 
seek an order that the document or transcript be granted in camera 
treatment. If that party wishes in camera treatment for the document or 
transcript, the party shall file an appropriate motion with the 
Administrative Law Judge within 5 days after it receives such notice. 
Except where such an order is granted, all documents and transcripts 
shall be part of the public record. Where in camera treatment is 
granted, a duplicate copy of such document or transcript with the 
confidential material deleted therefrom may be placed on the public 
record.
    11. If any party receives a discovery request in any investigation 
or in any other proceeding or matter that may require the disclosure of 
confidential material submitted by another party or third party, the 
recipient of the discovery request shall promptly notify the submitter 
of receipt of such request. Unless a shorter time is mandated by an 
order of a court, such notification shall be in writing and be received 
by the submitter at least 10 business days before production, and shall 
include a copy of this Protective Order and a cover letter that will 
apprise the submitter of its rights hereunder. Nothing

[[Page 67]]

herein shall be construed as requiring the recipient of the discovery 
request or anyone else covered by this Order to challenge or appeal any 
order requiring production of confidential material, to subject itself 
to any penalties for non-compliance with any such order, or to seek any 
relief from the Administrative Law Judge or the Commission. The 
recipient shall not oppose the submitter's efforts to challenge the 
disclosure of confidential material. In addition, nothing herein shall 
limit the applicability of Rule 4.11(e) of the Commission's Rules of 
Practice, 16 CFR 4.11(e), to discovery requests in another proceeding 
that are directed to the Commission.
    12. At the time that any consultant or other person retained to 
assist counsel in the preparation of this action concludes participation 
in the action, such person shall return to counsel all copies of 
documents or portions thereof designated confidential that are in the 
possession of such person, together with all notes, memoranda or other 
papers containing confidential information. At the conclusion of this 
proceeding, including the exhaustion of judicial review, the parties 
shall return documents obtained in this action to their submitters, 
provided, however, that the Commission's obligation to return documents 
shall be governed by the provisions of Rule 4.12 of the Rules of 
Practice, 16 CFR 4.12.
    13. The provisions of this Protective Order, insofar as they 
restrict the communication and use of confidential discovery material, 
shall, without written permission of the submitter or further order of 
the Commission, continue to be binding after the conclusion of this 
proceeding.

[74 FR 1824, Jan. 13, 2009, as amended at 74 FR 20309, May 1, 2009; 76 
FR 52251, 52252, Aug. 22, 2011]



Sec. 3.31A  Expert discovery.

    (a) The parties shall serve each other with a list of experts they 
intend to call as witnesses at the hearing not later than 1 day after 
the close of fact discovery, meaning the close of discovery except for 
depositions and other discovery permitted under Sec. 3.24(a)(4), and 
discovery for purposes of authenticity and admissibility of exhibits. 
Complaint counsel shall serve the other parties with a report prepared 
by each of its expert witnesses not later than 14 days after the close 
of fact discovery. Each respondent shall serve each other party with a 
report prepared by each of its expert witnesses not later than 14 days 
after the deadline for service of complaint counsel's expert reports. 
Complaint counsel shall serve respondents with a list of any rebuttal 
expert witnesses and a rebuttal report prepared by each such witness not 
later than 10 days after the deadline for service of respondent's expert 
reports. Aside from any information required by paragraph (c), a 
rebuttal report shall be limited to rebuttal of matters set forth in a 
respondent's expert reports. If material outside the scope of fair 
rebuttal is presented, a respondent may file a motion not later than 5 
days after the deadline for service of complaint counsel's rebuttal 
reports, seeking appropriate relief with the Administrative Law Judge, 
including striking all or part of the report, leave to submit a 
surrebuttal report by respondent's experts, or leave to call a 
surrebuttal witness and to submit a surrebuttal report by that witness.
    (b) No party may call an expert witness at the hearing unless he or 
she has been listed and has provided reports as required by this 
section. Each side will be limited to calling at the evidentiary hearing 
5 expert witnesses, including any rebuttal or surrebuttal expert 
witnesses. A party may file a motion seeking leave to call additional 
expert witnesses due to extraordinary circumstances.
    (c) Each report shall be signed by the expert and contain a complete 
statement of all opinions to be expressed and the basis and reasons 
therefor; the data, materials, or other information considered by the 
witness in forming the opinions; any exhibits to be used as a summary of 
or support for the opinions; the qualifications of the witness, 
including a list of all publications authored by the witness within the 
preceding 10 years; the compensation to be paid for the study and 
testimony; and a listing of any other cases in which the witness has 
testified as an expert at trial or by deposition within the preceding 4 
years. A rebuttal or surrebuttal report need not include any information 
already included in the initial report of the witness.
    (d) A party may depose any person who has been identified as an 
expert whose opinions may be presented at trial. Unless otherwise 
ordered by the Administrative Law Judge, a deposition of any expert 
witness shall be conducted after the disclosure of a report

[[Page 68]]

prepared by the witness in accordance with paragraph (a) of this 
section. Depositions of expert witnesses shall be completed not later 
than 65 days after the close of fact discovery. Upon motion, the 
Administrative Law Judge may order further discovery by other means, 
subject to such restrictions as to scope as the Administrative Law Judge 
may deem appropriate.
    (e) A party may not discover facts known or opinions held by an 
expert who has been retained or specifically employed by another party 
in anticipation of litigation or preparation for hearing and who is not 
listed as a witness for the evidentiary hearing. A party may not 
discover drafts of any report required by this section, regardless of 
the form in which the draft is recorded, or any communications between 
another party's attorney and any of that other party's testifying 
experts, regardless of the form of the communications, except to the 
extent that the communications:
    (1) Relate to compensation for the expert's study or testimony;
    (2) Identify facts or data that the other party's attorney provided 
and that the expert considered in forming the opinions to be expressed; 
or
    (3) Identify assumptions that the other party's attorney provided 
and that the expert relied on in forming the opinions to be expressed.
    (f) The Administrative Law Judge may, upon a finding of good cause, 
alter the pre-hearing schedule set forth in this section; provided, 
however, that no such alteration shall affect the date of the 
evidentiary hearing noticed in the complaint.

[74 FR 1826, Jan. 13, 2009, as amended at 76 FR 52252, Aug. 22, 2011]



Sec. 3.32  Admissions.

    (a) At any time after 30 days after issuance of a complaint, or 
after publication of notice of an adjudicative hearing in a rulemaking 
proceeding under Sec. 3.13, any party may serve on any other party a 
written request for admission of the truth of any matters relevant to 
the pending proceeding set forth in the request that relate to 
statements or opinions of fact or of the application of law to fact, 
including the genuineness of any documents described in the request. 
Copies of documents shall be served with the request unless they have 
been or are otherwise furnished or are known to be, and in the request 
are stated as being, in the possession of the other party. Each matter 
of which an admission is requested shall be separately set forth.
    (b) The matter is admitted unless, within 10 days after service of 
the request, or within such shorter or longer time as the Administrative 
Law Judge may allow, the party to whom the request is directed serves 
upon the party requesting the admission a sworn written answer or 
objection addressed to the matter. If objection is made, the reasons 
therefor shall be stated. The answer shall specifically deny the matter 
or set forth in detail the reasons why the answering party cannot 
truthfully admit or deny the matter. A denial shall fairly meet the 
substance of the requested admission, and when good faith requires that 
a party qualify its answer or deny only a part of the matter of which an 
admission is requested, the party shall specify so much of it as is true 
and qualify or deny the remainder. An answering party may not give lack 
of information or knowledge as a reason for failure to admit or deny 
unless the party states that it has made reasonable inquiry and that the 
information known to or readily obtainable by the party is insufficient 
to enable it to admit or deny. A party who considers that a matter of 
which an admission has been requested presents a genuine issue for trial 
may not, on that ground alone, object to the request; the party may deny 
the matter or set forth reasons why the party cannot admit or deny it.
    (c) Any matter admitted under this rule is conclusively established 
unless the Administrative Law Judge on motion permits withdrawal or 
amendment of the admission. The Administrative Law Judge may permit 
withdrawal or amendment when the presentation of the merits of the 
proceeding will be subserved thereby and the party who obtained the 
admission fails to satisfy the Administrative Law Judge that withdrawal 
or amendment will prejudice him in maintaining his action or defense on 
the merits. Any admission made by a party under this rule is for

[[Page 69]]

the purpose of the pending proceeding only and is not an admission by 
him for any other purpose nor may it be used against him in any other 
proceeding.

[43 FR 56865, Dec. 4, 1978, as amended at 50 FR 53305, Dec. 31, 1985; 80 
FR 15161, Mar. 23, 2015]



Sec. 3.33  Depositions.

    (a) In general. Any party may take a deposition of any named person 
or of a person or persons described with reasonable particularity, 
provided that such deposition is reasonably expected to yield 
information within the scope of discovery under Sec. 3.31(c)(1) and 
subject to the requirements in Sec. 3.36. Such party may, by motion, 
obtain from the Administrative Law Judge an order to preserve relevant 
evidence upon a showing that there is substantial reason to believe that 
such evidence would not otherwise be available for presentation at the 
hearing. Depositions may be taken before any person having power to 
administer oaths, either under the law of the United States or of the 
state or other place in which the deposition is taken, who may be 
designated by the party seeking the deposition, provided that such 
person shall have no interest in the outcome of the proceeding. The 
party seeking the deposition shall serve upon each person whose 
deposition is sought and upon each party to the proceeding reasonable 
notice in writing of the time and place at which it will be taken, and 
the name and address of each person or persons to be examined, if known, 
and if the name is not known, a description sufficient to identify them. 
The parties may stipulate in writing or the Administrative Law Judge may 
upon motion order that a deposition be taken by telephone or other 
remote electronic means. A deposition taken by such means is deemed 
taken at the place where the deponent is to answer questions.
    (b) The Administrative Law Judge may rule on motion by a party that 
a deposition shall not be taken upon a determination that such 
deposition would not be reasonably expected to meet the scope of 
discovery set forth under Sec. 3.31(c), or that the value of the 
deposition would be outweighed by the considerations set forth under 
Sec. 3.43(b). The fact that a witness testifies at an investigative 
hearing does not preclude the deposition of that witness.
    (c)(1) Notice to corporation or other organization. A party may name 
as the deponent a public or private corporation, partnership, 
association, governmental agency other than the Federal Trade 
Commission, or any bureau or regional office of the Federal Trade 
Commission, and describe with reasonable particularity the matters on 
which examination is requested. The organization so named shall 
designate one or more officers, directors, or managing agents, or other 
persons who consent to testify on its behalf, and may set forth, for 
each person designated, the matters on which he or she will testify. A 
subpoena shall advise a non-party organization of its duty to make such 
a designation. The persons so designated shall testify as to matters 
known or reasonably available to the organization. This subsection does 
not preclude taking a deposition by any other procedure authorized in 
these rules.
    (2) Restriction on filings. Except as provided in Sec. 3.31(h), 
notices of depositions shall not be filed with the Office of the 
Secretary or with the Administrative Law Judge, or otherwise provided to 
the Commission.
    (d) Taking of deposition. Each deponent shall be duly sworn, and any 
party shall have the right to question him or her. Objections to 
questions or to evidence presented shall be in short form, stating the 
grounds of objections relied upon. The questions propounded and the 
answers thereto, together with all objections made, shall be recorded 
and certified by the officer. Thereafter, upon payment of the charges 
therefor, the officer shall furnish a copy of the deposition to the 
deponent and to any party.
    (e) Depositions upon written questions. A party desiring to take a 
deposition upon written questions shall serve them upon every other 
party with a notice stating:
    (1) The name and address of the person who is to answer them, and
    (2) The name or descriptive title and address of the officer before 
whom the deposition is to be taken.

[[Page 70]]

    A deposition upon written questions may be taken of a public or 
private corporation, partnership, association, governmental agency other 
than the Federal Trade Commission, or any bureau or regional office of 
the Federal Trade Commission in accordance with the provisions of Sec. 
3.33(c). Within 30 days after the notice and written questions are 
served, any other party may serve cross questions upon all other 
parties. Within 10 days after being served with cross questions, the 
party taking the deposition may serve redirect questions upon all other 
parties. Within 10 days after being served with redirect questions, any 
other party may serve recross questions upon all other parties. The 
content of any question shall not be disclosed to the deponent prior to 
the taking of the deposition. A copy of the notice and copies of all 
questions served shall be delivered by the party taking the deposition 
to the officer designated in the notice, who shall proceed promptly to 
take the testimony of the deponent in response to the questions and to 
prepare, certify, and file or mail the deposition, attaching thereto the 
copy of the notice and the questions received by him or her. When the 
deposition is filed the party taking it shall promptly give notice 
thereof to all other parties.
    (f) Correction of deposition. A deposition may be corrected, as to 
form or substance, in the manner provided by Sec. 3.44(b). Any such 
deposition shall, in addition to the other required procedures, be read 
to or by the deponent and signed by him or her, unless the parties by 
stipulation waive the signing or the deponent is unavailable or cannot 
be found or refuses to sign. If the deposition is not signed by the 
deponent within 30 days of its submission or attempted submission, the 
officer shall sign it and certify that the signing has been waived or 
that the deponent is unavailable or that the deponent has refused to 
sign, as the case may be, together with the reason for the refusal to 
sign, if any has been given. The deposition may then be used as though 
signed unless, on a motion to suppress under Sec. 3.33(g)(2)(iv), the 
Administrative Law Judge determines that the reasons given for the 
refusal to sign require rejection of the deposition in whole or in part. 
In addition to and not in lieu of the procedure for formal correction of 
the deposition, the deponent may enter in the record at the time of 
signing a list of objections to the transcription of his or her remarks, 
stating with specificity the alleged errors in the transcript.
    (g) Objections; errors and irregularities--(1) Objections to 
admissibility. Subject to the provisions of paragraph (g)(2) of this 
section, objection may be made at the hearing to receiving in evidence 
any deposition or part thereof for any reason which would require the 
exclusion of the evidence if the witness were then present and 
testifying.
    (2) Effect of errors and irregularities in depositions--(i) As to 
notice. All errors and irregularities in the notice for taking a 
deposition are waived unless written objection is promptly served upon 
the party giving the notice.
    (ii) As to disqualification of officer. Objection to taking a 
deposition because of disqualification of the officer before whom it is 
to be taken is waived unless made before the taking of the deposition 
begins or as soon thereafter as the disqualification becomes known or 
could be discovered with reasonable diligence.
    (iii) As to taking of deposition. (A) Objections to the competency 
of a witness or to the competency, relevancy, or materiality of 
testimony are not waived by failure to make them before or during the 
taking of the deposition, unless the ground of the objection is one 
which might have been obviated or removed if presented at that time.
    (B) Errors and irregularities occurring at the oral examination in 
the manner of taking the deposition, in the form of the questions or 
answers, in the oath or affirmation, or in the conduct of parties, and 
errors of any kind which might be obviated, removed, or cured if 
promptly presented, are waived unless seasonable objection thereto is 
made at the taking of the deposition.
    (C) Objections to the form of written questions are waived unless 
served in writing upon all parties within the time allowed for serving 
the succeeding cross or other questions and within 5 days after service 
of the last questions authorized.

[[Page 71]]

    (iv) As to completion and return of deposition. Errors and 
irregularities in the manner in which the testimony is transcribed or 
the deposition is prepared, signed, certified, endorsed, or otherwise 
dealt with by the officer are waived unless a motion to suppress the 
deposition or some part thereof is made with reasonable promptness after 
such defect is or with due diligence might have been ascertained.

[74 FR 1827, Jan. 13, 2009, as amended at 80 FR 15162, Mar. 23, 2015]



Sec. 3.34  Subpoenas.

    (a) Subpoenas ad testificandum. Counsel for a party may sign and 
issue a subpoena, on a form provided by the Secretary, requiring a 
person to appear and give testimony at the taking of a deposition to a 
party requesting such subpoena or to attend and give testimony at an 
adjudicative hearing.
    (b) Subpoenas duces tecum; subpoenas to permit inspection of 
premises. Counsel for a party may sign and issue a subpoena, on a form 
provided by the Secretary, commanding a person to produce and permit 
inspection and copying of designated books, documents, or tangible 
things, or commanding a person to permit inspection of premises, at a 
time and place therein specified. The subpoena shall specify with 
reasonable particularity the material to be produced. The person 
commanded by the subpoena need not appear in person at the place of 
production or inspection unless commanded to appear for a deposition or 
hearing pursuant to paragraph (a) of this section. As used herein, the 
term ``documents'' includes written materials, electronically stored 
information, and tangible things. A subpoena duces tecum may be used by 
any party for purposes of discovery, for obtaining documents for use in 
evidence, or for both purposes, and shall specify with reasonable 
particularity the materials to be produced.
    (c) Motions to quash; limitation on subpoenas. Any motion by the 
subject of a subpoena to limit or quash the subpoena shall be filed 
within the earlier of 10 days after service thereof or the time for 
compliance therewith. Such motions shall set forth all assertions of 
privilege or other factual and legal objections to the subpoena, 
including all appropriate arguments, affidavits and other supporting 
documentation, and shall include the statement required by Sec. 
3.22(g). Nothing in paragraphs (a) and (b) of this section authorizes 
the issuance of subpoenas except in accordance with Sec. Sec. 
3.31(c)(2) and 3.36.

[74 FR 1828, Jan. 13, 2009]



Sec. 3.35  Interrogatories to parties.

    (a) Availability; procedures for use. (1) Any party may serve upon 
any other party written interrogatories, not exceeding 25 in number, 
including all discrete subparts, to be answered by the party served or, 
if the party served is a public or private corporation, partnership, 
association or governmental agency, by any officer or agent, who shall 
furnish such information as is available to the party. For this purpose, 
information shall not be deemed to be available insofar as it is in the 
possession of the Commissioners, the General Counsel, the office of 
Administrative Law Judges, or the Secretary in his or her capacity as 
custodian or recorder of any such information, or their respective 
staffs.
    (2) Each interrogatory shall be answered separately and fully in 
writing under oath, unless it is objected to on grounds not raised and 
ruled on in connection with the authorization, in which event the 
reasons for objection shall be stated in lieu of an answer. The answers 
are to be signed by the person making them, and the objections signed by 
the attorney making them. The party upon whom the interrogatories have 
been served shall serve a copy of the answers, and objections, if any, 
within 30 days after the service of the interrogatories. The 
Administrative Law Judge may allow a shorter or longer time.
    (3) Except as provided in Sec. 3.31(h), interrogatories shall not 
be filed with the Office of the Secretary, the Administrative Law Judge, 
or otherwise provided to the Commission.
    (b) Scope; use at hearing. (1) Interrogatories may relate to any 
matters that can be inquired into under Sec. 3.31(c)(1), and the 
answers may be used to the extent permitted by the rules of evidence.
    (2) An interrogatory otherwise proper is not necessarily 
objectionable merely

[[Page 72]]

because an answer to the interrogatory involves an opinion or contention 
that relates to fact or the application of law to fact, but such an 
interrogatory need not be answered until after designated discovery has 
been completed, but in no case later than 3 days before the final 
prehearing conference.
    (c) Option to produce records. Where the answer to an interrogatory 
may be derived or ascertained from the records of the party upon whom 
the interrogatory has been served or from an examination, audit, or 
inspection of such records, or from a compilation, abstract, or summary 
based thereon, and the burden of deriving or ascertaining the answer is 
substantially the same for the party serving the interrogatory as for 
the party served, it is a sufficient answer to such interrogatory to 
specify the records from which the answer may be derived or ascertained 
and to afford to the party serving the interrogatory reasonable 
opportunity to examine, audit or inspect such records and to make 
copies, compilations, abstracts or summaries. The specification shall 
include sufficient detail to permit the interrogating party to identify 
readily the individual documents from which the answer may be 
ascertained.

[74 FR 1828, Jan. 13, 2009, as amended at 80 FR 15162, Mar. 23, 2015]



Sec. 3.36  Applications for subpoenas for records of or appearances by
certain officials or employees of the Commission or officials or 
employees of governmental agencies other than the Commission, and
subpoenas to be served in a foreign country.

    (a) Form. An application for issuance of a subpoena for the 
production of documents, as defined in Sec. 3.34(b), or for the 
issuance of a request requiring the production of or access to 
documents, other tangible things, or electronically stored information 
for the purposes described in Sec. 3.37(a), in the possession, custody, 
or control of the Commissioners, the General Counsel, any Bureau or 
Office not involved in the matter, the office of Administrative Law 
Judges, or the Secretary in his or her capacity as custodian or recorder 
of any such information, or their respective staffs, or of a 
governmental agency other than the Commission or the officials or 
employees of such other agency, or for the issuance of a subpoena 
requiring the appearance of a Commissioner, the General Counsel, an 
official of any Bureau or Office not involved in the matter, an 
Administrative Law Judge, or the Secretary in his or her capacity as 
custodian or recorder of any such information, or their respective 
staffs, or of an official or employee of another governmental agency, or 
for the issuance of a subpoena to be served in a foreign country, shall 
be made in the form of a written motion filed in accordance with the 
provisions of Sec. 3.22(a). No application for records pursuant to 
Sec. 4.11 of this chapter or the Freedom of Information Act may be 
filed with the Administrative Law Judge.
    (b) Content. The motion shall make a showing that:
    (1) The material sought is reasonable in scope;
    (2) If for purposes of discovery, the material falls within the 
limits of discovery under Sec. 3.31(c)(1), or, if for an adjudicative 
hearing, the material is reasonably relevant;
    (3) If for purposes of discovery, the information or material sought 
cannot reasonably be obtained by other means or, if for purposes of 
compelling a witness to appear at the evidentiary hearing, the movant 
has a compelling need for the testimony;
    (4) With respect to subpoenas to be served in a foreign country, 
that the party seeking discovery or testimony has a good faith belief 
that the discovery requested would be permitted by treaty, law, custom, 
or practice in the country from which the discovery or testimony is 
sought and that any additional procedural requirements have been or will 
be met before the subpoena is served; and
    (5) If the subpoena requires access to documents or other tangible 
things, it meets the requirements of Sec. 3.37.
    (c) Execution. If an Administrative Law Judge issues an order 
authorizing a subpoena pursuant to this section, the moving party may 
forward to the Secretary a request for the authorized subpoena, with a 
copy of the authorizing order attached. Each such subpoena shall be 
signed by the Secretary; shall have attached to it a copy of the

[[Page 73]]

authorizing order; and shall be served by the moving party only in 
conjunction with a copy of the authorizing order.

[74 FR 1828, Jan. 13, 2009]



Sec. 3.37  Production of documents, electronically stored information,
and any tangible things; access for inspection and other purposes.

    (a) Availability; procedures for use. Any party may serve on another 
party a request: to produce and permit the party making the request, or 
someone acting on the party's behalf, to inspect and copy any designated 
documents or electronically stored information, as defined in Sec. 
3.34(b), or to inspect and copy, test, or sample any tangible things 
which are within the scope of Sec. 3.31(c)(1) and in the possession, 
custody, or control of the party upon whom the request is served; or to 
permit entry upon designated land or other property in the possession or 
control of the party upon whom the order would be served for the purpose 
of inspection and measuring, surveying, photographing, testing, or 
sampling the property or any designated object or operation thereon, 
within the scope of Sec. 3.31(c)(1). Each such request shall specify 
with reasonable particularity the documents or things to be produced or 
inspected, or the property to be entered. Each such request shall also 
specify a reasonable time, place, and manner of making the production or 
inspection and performing the related acts. Each request may specify the 
form in which electronically stored information is to be produced, but 
the requested form of electronically stored information must not be 
overly burdensome or unnecessarily costly to the producing party. A 
party shall make documents available as they are kept in the usual 
course of business or shall organize and label them to correspond with 
the categories in the request. A person not a party to the action may be 
compelled to produce documents and things or to submit to an inspection 
as provided in Sec. 3.34. Except as provided in Sec. 3.31(h), requests 
under this section shall not be filed with the Office of the Secretary, 
the Administrative Law Judge, or otherwise provided to the Commission.
    (b) Response; objections. No more than 30 days after receiving the 
request, the response of the party upon whom the request is served shall 
state, with respect to each item or category, that inspection and 
related activities will be permitted as requested, unless the request is 
objected to, in which event the reasons for the objection shall be 
stated. If objection is made to part of an item or category, the part 
shall be specified and inspection permitted of the remaining parts. The 
response may state an objection to a requested form for producing 
electronically stored information. If the responding party objects to a 
requested form - or if no form was specified in the request - the party 
must state the form it intends to use. The party submitting the request 
may move for an order under Sec. 3.38(a) with respect to any objection 
to or other failure to respond to the request or any part thereof, or 
any failure to permit inspection as requested.
    (c) Production of documents or electronically stored information. 
Unless otherwise stipulated or ordered by the Administrative Law Judge, 
these procedures apply to producing documents or electronically stored 
information:
    (i) A party must produce documents as they are kept in the usual 
course of business or must organize and label them to correspond to the 
categories in the request;
    (ii) If a request does not specify a form for producing 
electronically stored information, a party must produce it in a form in 
which it is ordinarily maintained or in a reasonably usable form; and
    (iii) A party need not produce the same electronically stored 
information in more than one form.

[74 FR 1829, Jan. 13, 2009]



Sec. 3.38  Motion for order compelling disclosure or discovery;
sanctions.

    (a) Motion for order to compel. A party may apply by motion to the 
Administrative Law Judge for an order compelling disclosure or 
discovery, including a determination of the sufficiency of the answers 
or objections with respect to the mandatory initial disclosures required 
by Sec. 3.31(b), a request for admission under Sec. 3.32, a deposition 
under Sec. 3.33, an interrogatory under Sec. 3.35, or a

[[Page 74]]

production of documents or things or access for inspection or other 
purposes under Sec. 3.37. Any memorandum in support of such motion 
shall be no longer than 2,500 words. Any response to the motion by the 
opposing party must be filed within 5 days of receipt of service of the 
motion and shall be no longer than 2,500 words. These word count 
limitations include headings, footnotes, and quotations, but do not 
include the cover, table of contents, table of citations or authorities, 
glossaries, statements with respect to oral argument, any addendums 
containing statutes, rules or regulations, any certificates of counsel, 
proposed form of order, and any attachment required by Sec. 3.45(e). 
The Administrative Law Judge shall rule on a motion to compel within 3 
business days of the date in which the response is due. Unless the 
Administrative Law Judge determines that the objection is justified, the 
Administrative Law Judge shall order that an initial disclosure or an 
answer to any requests for admissions, documents, depositions, or 
interrogatories be served or disclosure otherwise be made.
    (b) If a party or an officer or agent of a party fails to comply 
with any discovery obligation imposed by these rules, upon motion by the 
aggrieved party, the Administrative Law Judge or the Commission, or 
both, may take such action in regard thereto as is just, including but 
not limited to the following:
    (1) Order that any answer be amended to comply with the request, 
subpoena, or order;
    (2) Order that the matter be admitted or that the admission, 
testimony, documents, or other evidence would have been adverse to the 
party;
    (3) Rule that for the purposes of the proceeding the matter or 
matters concerning which the order or subpoena was issued be taken as 
established adversely to the party;
    (4) Rule that the party may not introduce into evidence or otherwise 
rely, in support of any claim or defense, upon testimony by such party, 
officer, agent, expert, or fact witness, or the documents or other 
evidence, or upon any other improperly withheld or undisclosed 
materials, information, witnesses, or other discovery;
    (5) Rule that the party may not be heard to object to introduction 
and use of secondary evidence to show what the withheld admission, 
testimony, documents, or other evidence would have shown;
    (6) Rule that a pleading, or part of a pleading, or a motion or 
other submission by the party, concerning which the order or subpoena 
was issued, be stricken, or that a decision of the proceeding be 
rendered against the party, or both.
    (c) Any such action may be taken by written or oral order issued in 
the course of the proceeding or by inclusion in an initial decision of 
the Administrative Law Judge or an order or opinion of the Commission. 
It shall be the duty of parties to seek and Administrative Law Judges to 
grant such of the foregoing means of relief or other appropriate relief 
as may be sufficient to compensate for withheld testimony, documents, or 
other evidence. If in the Administrative Law Judge's opinion such relief 
would not be sufficient, or in instances where a nonparty fails to 
comply with a subpoena or order, he or she shall certify to the 
Commission a request that court enforcement of the subpoena or order be 
sought.

[74 FR 1829, Jan. 13, 2009]



Sec. 3.38A  Withholding requested material.

    (a) Any person withholding material responsive to a subpoena issued 
pursuant to Sec. 3.34 or Sec. 3.36, written interrogatories requested 
pursuant to Sec. 3.35, a request for production or access pursuant to 
Sec. 3.37, or any other request for the production of materials under 
this part, shall assert a claim of privilege or any similar claim not 
later than the date set for production of the material. Such person 
shall, if so directed in the subpoena or other request for production, 
submit, together with such claim, a schedule which describes the nature 
of the documents, communications, or tangible things not produced or 
disclosed - and does so in a manner that, without revealing information 
itself privileged or protected, will enable other parties to assess the 
claim. The schedule need not describe any material outside the scope of 
the duty to search set forth in Sec. 3.31(c)(2) except to

[[Page 75]]

the extent that the Administrative Law Judge has authorized additional 
discovery as provided in that paragraph.
    (b) A person withholding material for reasons described in Sec. 
3.38A(a) shall comply with the requirements of that subsection in lieu 
of filing a motion to limit or quash compulsory process.
    (Sec. 5 of theFTC Act (15 U.S.C. 45))

[74 FR 1830, Jan. 13, 2009]



Sec. 3.39  Orders requiring witnesses to testify or provide other 
information and granting immunity.

    (a) Where Commission complaint counsel desire the issuance of an 
order requiring a witness or deponent to testify or provide other 
information and granting immunity under 18 U.S.C. 6002, Directors and 
Assistant Directors of Bureaus and Regional Directors and Assistant 
Regional Directors of Commission Regional Offices who supervise 
complaint counsel responsible for presenting evidence in support of the 
complaint are authorized to determine:
    (1) That the testimony or other information sought from a witness or 
deponent, or prospective witness or deponent, may be necessary to the 
public interest, and
    (2) That such individual has refused or is likely to refuse to 
testify or provide such information on the basis of his or her privilege 
against self-incrimination; and to request, through the Commission's 
liaison officer, approval by the Attorney General for the issuance of 
such order. Upon receipt of approval by the Attorney General (or his or 
her designee), the Administrative Law Judge is authorized to issue an 
order requiring the witness or deponent to testify or provide other 
information and granting immunity when the witness or deponent has 
invoked his or her privilege against self-incrimination and it cannot be 
determined that such privilege was improperly invoked.
    (b) Requests by counsel other than Commission complaint counsel for 
an order requiring a witness to testify or provide other information and 
granting immunity under 18 U.S.C. 6002 may be made to the Administrative 
Law Judge and may be made ex parte. When such requests are made, the 
Administrative Law Judge is authorized to determine:
    (1) That the testimony or other information sought from a witness or 
deponent, or prospective witness or deponent, may be necessary to the 
public interest, and
    (2) That such individual has refused or is likely to refuse to 
testify or provide such information on the basis of his or her privilege 
against self-incrimination; and, upon making such determinations, to 
request, through the Commission's liaison officer, approval by the 
Attorney General for the issuance of an order requiring a witness to 
testify or provide other information and granting immunity; and, after 
the Attorney General (or his or her designee) has granted such approval, 
to issue such order when the witness or deponent has invoked his or her 
privilege against self-incrimination and it cannot be determined that 
such privilege was improperly invoked.
    (18 U.S.C. 6002, 6004)

[74 FR 1830, Jan. 13, 2009]



Sec. 3.40  Admissibility of evidence in advertising substantiation
cases.

    (a) If a person, partnership, or corporation is required through 
compulsory process under section 6, 9 or 20 of the Act issued after 
October 26, 1977 to submit to the Commission substantiation in support 
of an express or an implied representation contained in an 
advertisement, such person, partnership or corporation shall not 
thereafter be allowed, in any adjudicative proceeding in which it is 
alleged that the person, partnership, or corporation lacked a reasonable 
basis for the representation, and for any purpose relating to the 
defense of such allegation, to introduce into the record, whether 
directly or indirectly through references contained in documents or oral 
testimony, any material of any type whatsoever that was required to be 
but was not timely submitted in response to said compulsory process. 
Provided, however, that a person, partnership, or corporation is not, 
within the meaning of this section, required through compulsory process 
to submit substantiation with respect to those portions of said 
compulsory process to which such person, partnership, or corporation has

[[Page 76]]

raised good faith legal objections in a timely motion pursuant to the 
Commission's Rules of Practice and Procedure, until the Commission 
denies such motion; or if the person, partnership, or corporation 
thereafter continues to refuse to comply, until such process has been 
judicially enforced.
    (b) The Administrative Law Judge shall, upon motion, at any stage 
exclude all material that was required to be but was not timely 
submitted in response to compulsory process described in paragraph (a) 
of this section, or any reference to such material, unless the person, 
partnership, or corporation demonstrates in a hearing, and the 
Administrative Law Judge finds, that by the exercise of due diligence 
the material could not have been timely submitted in response to the 
compulsory process, and that the Commission was notified of the 
existence of the material immediately upon its discovery. Said findings 
of the Administrative Law Judge shall be in writing and shall specify 
with particularity the evidence relied upon. The rules normally 
governing the admissibility of evidence in Commission proceedings shall 
in any event apply to any material coming within the above exception.

[42 FR 56500, Oct. 10, 1977; 42 FR 61450, Dec. 5, 1977, as amended at 45 
FR 45578, July 7, 1980]



                           Subpart E_Hearings



Sec. 3.41  General hearing rules.

    (a) Public hearings. All hearings in adjudicative proceedings shall 
be public unless an in camera order is entered by the Administrative Law 
Judge pursuant to Sec. 3.45(b) of this chapter or unless otherwise 
ordered by the Commission.
    (b) Expedition. Hearings shall proceed with all reasonable 
expedition, and, insofar as practicable, shall be held at one place and 
shall continue, except for brief intervals of the sort normally involved 
in judicial proceedings, without suspension until concluded. The hearing 
will take place on the date specified in the notice accompanying the 
complaint, pursuant to Sec. 3.11(b)(4), and should be limited to no 
more than 210 hours. The Commission, upon a showing of good cause, may 
order a later date for the evidentiary hearing to commence or extend the 
number of hours for the hearing. Consistent with the requirements of 
expedition:
    (1) The Administrative Law Judge may order hearings at more than one 
place and may grant a reasonable recess at the end of a case-in-chief 
for the purpose of discovery deferred during the prehearing procedure if 
the Administrative Law Judge determines that such recess will materially 
expedite the ultimate disposition of the proceeding.
    (2) When actions involving a common question of law or fact are 
pending before the Administrative Law Judge, the Commission or the 
Administrative Law Judge may order a joint hearing of any or all the 
matters in issue in the actions; the Commission or the Administrative 
Law Judge may order all the actions consolidated; and the Commission or 
the Administrative Law Judge may make such orders concerning proceedings 
therein as may tend to avoid unnecessary costs or delay.
    (3) When separate hearings will be conducive to expedition and 
economy, the Commission or the Administrative Law Judge may order a 
separate hearing of any claim, or of any separate issue, or of any 
number of claims or issues.
    (4) Each side shall be allotted no more than half of the trial time 
within which to present its opening statements, in limine motions, all 
arguments excluding the closing argument, direct or cross examinations, 
or other evidence.
    (5) Each side shall be permitted to make an opening statement that 
is no more than 2 hours in duration.
    (6) Each side shall be permitted to make a closing argument no later 
than 5 days after the last filed proposed findings. The closing argument 
shall last no longer than 2 hours.
    (c) Rights of parties. Every party, except intervenors, whose rights 
are determined under Sec. 3.14, shall have the right of due notice, 
cross-examination, presentation of evidence, objection, motion, 
argument, and all other rights essential to a fair hearing.
    (d) Adverse witnesses. An adverse party, or an officer, agent, or 
employee thereof, and any witness who appears to be hostile, unwilling, 
or evasive,

[[Page 77]]

may be interrogated by leading questions and may also be contradicted 
and impeached by the party calling him or her.
    (e) Requests for an order requiring a witness to testify or provide 
other information and granting immunity under 18 U.S.C. 6002 shall be 
disposed of in accordance with Sec. 3.39.
    (f) Collateral federal court actions. (1) The pendency of a 
collateral federal court action that relates to the administrative 
adjudication shall not stay the proceeding:
    (i) Unless a court of competent jurisdiction, or the Commission for 
good cause, so directs; or
    (ii) Except as provided in Sec. 3.26.
    (2) A stay shall toll any deadlines set by the rules.

[74 FR 1830, Jan. 13, 2009, as amended at 80 FR 15162, Mar. 23, 2015]



Sec. 3.42  Presiding officials.

    (a) Who presides. Hearings in adjudicative proceedings shall be 
presided over by a duly qualified Administrative Law Judge or by the 
Commission or one or more members of the Commission sitting as 
Administrative Law Judges; and the term Administrative Law Judge as used 
in this part means and applies to the Commission or any of its members 
when so sitting.
    (b) How assigned. The presiding Administrative Law Judge shall be 
designated by the Chief Administrative Law Judge or, when the Commission 
or one or more of its members preside, by the Commission, who shall 
notify the parties of the Administrative Law Judge designated.
    (c) Powers and duties. Administrative Law Judges shall have the duty 
to conduct fair and impartial hearings, to take all necessary action to 
avoid delay in the disposition of proceedings, and to maintain order. 
They shall have all powers necessary to that end, including the 
following:
    (1) To administer oaths and affirmations;
    (2) To issue subpoenas and orders requiring answers to questions;
    (3) To take depositions or to cause depositions to be taken;
    (4) To compel admissions, upon request of a party or on their own 
initiative;
    (5) To rule upon offers of proof and receive evidence;
    (6) To regulate the course of the hearings and the conduct of the 
parties and their counsel therein;
    (7) To hold conferences for settlement, simplification of the 
issues, or any other proper purpose;
    (8) To consider and rule upon, as justice may require, all 
procedural and other motions appropriate in an adjudicative proceeding, 
including motions to open defaults;
    (9) To make and file initial decisions;
    (10) To certify questions to the Commission for its determination;
    (11) To reject written submissions that fail to comply with rule 
requirements, or deny in camera status without prejudice until a party 
complies with all relevant rules; and
    (12) To take any action authorized by the rules in this part or in 
conformance with the provisions of the Administrative Procedure Act as 
restated and incorporated in title 5, U.S.C.
    (d) Suspension of attorneys by Administrative Law Judge. The 
Administrative Law Judge shall have the authority, for good cause stated 
on the record, to suspend or bar from participation in a particular 
proceeding any attorney who shall refuse to comply with his directions, 
or who shall be guilty of disorderly, dilatory, obstructionist, or 
contumacious conduct, or contemptuous language in the course of such 
proceeding. Any attorney so suspended or barred may appeal to the 
Commission in accordance with the provisions of Sec. 3.23(a). The 
appeal shall not operate to suspend the hearing unless otherwise ordered 
by the Administrative Law Judge or the Commission; in the event the 
hearing is not suspended, the attorney may continue to participate 
therein pending disposition of the appeal.
    (e) Substitution of Administrative Law Judge. In the event of the 
substitution of a new Administrative Law Judge for the one originally 
designated, any motion predicated upon such substitution shall be made 
within five (5) days thereafter.
    (f) Interference. In the performance of their adjudicative 
functions, Administrative Law Judges shall not be responsible to or 
subject to the supervision or

[[Page 78]]

direction of any officer, employee, or agent engaged in the performance 
of investigative or prosecuting functions for the Commission, and all 
direction by the Commission to Administrative Law Judges concerning any 
adjudicative proceedings shall appear in and be made a part of the 
record.
    (g) Disqualification of Administrative Law Judges. (1) When an 
Administrative Law Judge deems himself disqualified to preside in a 
particular proceeding, he shall withdraw therefrom by notice on the 
record and shall notify the Director of Administrative Law Judges of 
such withdrawal.
    (2) Whenever any party shall deem the Administrative Law Judge for 
any reason to be disqualified to preside, or to continue to preside, in 
a particular proceeding, such party may file with the Secretary a motion 
addressed to the Administrative Law Judge to disqualify and remove him, 
such motion to be supported by affidavits setting forth the alleged 
grounds for disqualification. If the Administrative Law Judge does not 
disqualify himself within ten (10) days, he shall certify the motion to 
the Commission, together with any statement he may wish to have 
considered by the Commission. The Commission shall promptly determine 
the validity of the grounds alleged, either directly or on the report of 
another Administrative Law Judge appointed to conduct a hearing for that 
purpose.
    (3) Such motion shall be filed at the earliest practicable time 
after the participant learns, or could reasonably have learned, of the 
alleged grounds for disqualification.
    (h) Failure to comply with Administrative Law Judge's directions. 
Any party who refuses or fails to comply with a lawfully issued order or 
direction of an Administrative Law Judge may be considered to be in 
contempt of the Commission. The circumstances of any such neglect, 
refusal, or failure, together with a recommendation for appropriate 
action, shall be promptly certified by the Administrative Law Judge to 
the Commission. The Commission may make such orders in regard thereto as 
the circumstances may warrant.

[32 FR 8449, June 13, 1967, as amended at 37 FR 5609, Mar. 17, 1972; 41 
FR 8340, Feb. 26, 1976; 43 FR 56868, Dec. 4, 1978; 46 FR 45750, Sept. 
15, 1981; 50 FR 53306, Dec. 31, 1985; 66 FR 17629, Apr. 3, 2001; 80 FR 
15162, Mar. 23, 2015]



Sec. 3.43  Evidence.

    (a) Burden of proof. Counsel representing the Commission, or any 
person who has filed objections sufficient to warrant the holding of an 
adjudicative hearing pursuant to Sec. 3.13, shall have the burden of 
proof, but the proponent of any factual proposition shall be required to 
sustain the burden of proof with respect thereto.
    (b) Admissibility. Relevant, material, and reliable evidence shall 
be admitted. Irrelevant, immaterial, and unreliable evidence shall be 
excluded. Evidence, even if relevant, may be excluded if its probative 
value is substantially outweighed by the danger of unfair prejudice, 
confusion of the issues, or if the evidence would be misleading, or 
based on considerations of undue delay, waste of time, or needless 
presentation of cumulative evidence. Evidence that constitutes hearsay 
may be admitted if it is relevant, material, and bears satisfactory 
indicia of reliability so that its use is fair. Hearsay is a statement, 
other than one made by the declarant while testifying at the hearing, 
offered in evidence to prove the truth of the matter asserted. If 
otherwise meeting the standards for admissibility described in this 
paragraph, depositions, investigational hearings, prior testimony in 
Commission or other proceedings, expert reports, and any other form of 
hearsay, shall be admissible and shall not be excluded solely on the 
ground that they are or contain hearsay. However, absent the consent of 
the parties, before admitting prior testimony (including expert reports) 
from other proceedings where either the Commission or respondent did not 
participate, except for other proceedings where the Commission and at 
least one respondent did participate, the Administrative Law Judge must 
make a finding upon the motion of a party seeking the admission of such 
evidence that the prior testimony would not be duplicative, would not

[[Page 79]]

present unnecessary hardship to a party or delay to the proceedings, and 
would aid in the determination of the matter. Statements or testimony by 
a party-opponent, if relevant, shall be admitted.
    (c) Admissibility of third party documents. Extrinsic evidence of 
authenticity as a condition precedent to admissibility of documents 
received from third parties is not required with respect to the original 
or a duplicate of a domestic record of regularly conducted activity by 
that third party that otherwise meets the standards of admissibility 
described in paragraph (b) if accompanied by a written declaration of 
its custodian or other qualified person, in a manner complying with any 
Act of Congress or rule prescribed by the Supreme Court pursuant to 
statutory authority, certifying that the record:
    (1) Was made at or near the time of the occurrence of the matters 
set forth by, or from information transmitted by, a person with 
knowledge of those matters;
    (2) Was kept in the course of the regularly conducted activity; and
    (3) Was made by the regularly conducted activity as a regular 
practice.
    (d) Presentation of evidence. (1) A party is entitled to present its 
case or defense by sworn oral testimony and documentary evidence, to 
submit rebuttal evidence, and to conduct such cross-examination as, in 
the discretion of the Commission or the Administrative Law Judge, may be 
required for a full and true disclosure of the facts.
    (2) The Administrative Law Judge shall exercise reasonable control 
over the mode and order of interrogating witnesses and presenting 
evidence so as to--
    (i) Make the interrogation and presentation effective for the 
ascertainment of the truth;
    (ii) Avoid needless consumption of time; and
    (iii) Protect witnesses from harassment or undue embarrassment.
    (3) As respondents are in the best position to determine the nature 
of documents generated by such respondents and which come from their own 
files, the burden of proof is on the respondent to introduce evidence to 
rebut a presumption that such documents are authentic and kept in the 
regular course of business.
    (e) Information obtained in investigations. Any documents, papers, 
books, physical exhibits, or other materials or information obtained by 
the Commission under any of its powers may be disclosed by counsel 
representing the Commission when necessary in connection with 
adjudicative proceedings and may be offered in evidence by counsel 
representing the Commission in any such proceeding
    (f) Official notice. ``Official notice'' may be taken of any 
material fact that is not subject to reasonable dispute in that it is 
either generally known within the Commission's expertise or capable of 
accurate and ready determination by resort to sources whose accuracy 
cannot reasonably be questioned. If official notice is requested or is 
taken of a material fact not appearing in the evidence in the record, 
the parties, upon timely request, shall be afforded an opportunity to 
disprove such noticed fact.
    (g) Objections. Objections to evidence shall timely and briefly 
state the grounds relied upon, but the transcript shall not include 
argument or debate thereon except as ordered by the Administrative Law 
Judge. Rulings on all objections shall appear in the record.
    (h) Exceptions. Formal exception to an adverse ruling is not 
required.
    (i) Excluded evidence. When an objection to a question propounded to 
a witness is sustained, the questioner may make a specific offer of what 
he or she expects to prove by the answer of the witness, or the 
Administrative Law Judge may, in his or her discretion, receive and 
report the evidence in full. Rejected exhibits, adequately marked for 
identification, shall be retained in the record so as to be available 
for consideration by any reviewing authority.

[74 FR 1831, Jan. 13, 2009, as amended at 76 FR 52252, Aug. 22, 2011]



Sec. 3.44  Record.

    (a) Reporting and transcription. Hearings shall be stenographically 
reported and transcribed by the official reporter of the Commission 
under the supervision of the Administrative Law Judge, and the original 
transcript shall

[[Page 80]]

be a part of the record and the sole official transcript. Upon a motion 
by any party, for good cause shown the Administrative Law Judge may 
order that the live oral testimony of all witnesses be video recorded 
digitally, at the expense of the moving party, and in such cases the 
video recording and the written transcript of the testimony shall be 
made part of the record. If a video recording is so ordered, the moving 
party shall not pay or retain any person or entity to perform such 
recording other than the reporter designated by the Commission to 
transcribe the proceeding, except by order of the Administrative Law 
Judge upon a finding of good cause. In any order allowing for video 
recording by a person or entity other than the Commission's designated 
reporter, the Administrative Law Judge shall prescribe standards and 
procedures for the video recording to ensure that it is a complete and 
accurate record of the witnesses' testimony. Copies of the written 
transcript and video recording are available from the reporter at rates 
not to exceed the maximum rates fixed by contract between the Commission 
and the reporter. Copies of a video recording made by a person or entity 
other than the reporter shall be available at the same rates, or no more 
than the actual cost of duplication, whichever is higher.
    (b) Corrections. Corrections of the official transcript may be made 
only when they involve errors affecting substance and then only in the 
manner herein provided. Corrections ordered by the Administrative Law 
Judge or agreed to in a written stipulation signed by all counsel and 
parties not represented by counsel, and approved by the Administrative 
Law Judge, shall be included in the record, and such stipulations, 
except to the extent they are capricious or without substance, shall be 
approved by the Administrative Law Judge. Corrections shall not be 
ordered by the Administrative Law Judge except upon notice and 
opportunity for the hearing of objections. Such corrections shall be 
made by the official reporter by furnishing substitute type pages, under 
the usual certificate of the reporter, for insertion in the official 
record. The original uncorrected pages shall be retained in the files of 
the Commission.
    (c) Closing of the hearing record. Upon completion of the 
evidentiary hearing, the Administrative Law Judge shall issue an order 
closing the hearing record after giving the parties 3 business days to 
determine if the record is complete or needs to be supplemented. The 
Administrative Law Judge shall retain the discretion to permit or order 
correction of the record as provided in Sec. 3.44(b).

[74 FR 1832, Jan. 13, 2009, as amended at 76 FR 52252, Aug. 22, 2011]



Sec. 3.45  In camera orders.

    (a) Definition. Except as hereinafter provided, material made 
subject to an in camera order will be kept confidential and not placed 
on the public record of the proceeding in which it was submitted. Only 
respondents, their counsel, authorized Commission personnel, and court 
personnel concerned with judicial review may have access thereto, 
provided that the Administrative Law Judge, the Commission and reviewing 
courts may disclose such in camera material to the extent necessary for 
the proper disposition of the proceeding.
    (b) In camera treatment of material. A party or third party may 
obtain in camera treatment for material, or portions thereof, offered 
into evidence only by motion to the Administrative Law Judge. Parties 
who seek to use material obtained from a third party subject to 
confidentiality restrictions must demonstrate that the third party has 
been given at least 10 days notice of the proposed use of such material. 
Each such motion must include an attachment containing a copy of each 
page of the document in question on which in camera or otherwise 
confidential excerpts appear. The Administrative Law Judge shall order 
that such material, whether admitted or rejected, be placed in camera 
only after finding that its public disclosure will likely result in a 
clearly defined, serious injury to the person, partnership, or 
corporation requesting in camera treatment or after finding that the 
material constitutes sensitive personal information. ``Sensitive 
personal information'' shall include, but shall not be

[[Page 81]]

limited to, an individual's Social Security number, taxpayer 
identification number, financial account number, credit card or debit 
card number, driver's license number, state-issued identification 
number, passport number, date of birth (other than year), and any 
sensitive health information identifiable by individual, such as an 
individual's medical records. For material other than sensitive personal 
information, a finding that public disclosure will likely result in a 
clearly defined, serious injury shall be based on the standard 
articulated in H.P. Hood & Sons, Inc., 58 F.T.C. 1184, 1188 (1961); see 
also Bristol-Myers Co., 90 F.T.C. 455, 456 (1977), which established a 
three-part test that was modified by General Foods Corp., 95 F.T.C. 352, 
355 (1980). The party submitting material for which in camera treatment 
is sought must provide, for each piece of such evidence and affixed to 
such evidence, the name and address of any person who should be notified 
in the event that the Commission intends to disclose in camera 
information in a final decision. No material, or portion thereof, 
offered into evidence, whether admitted or rejected, may be withheld 
from the public record unless it falls within the scope of an order 
issued in accordance with this section, stating the date on which in 
camera treatment will expire, and including:
    (1) A description of the material;
    (2) A statement of the reasons for granting in camera treatment; and
    (3) A statement of the reasons for the date on which in camera 
treatment will expire, except in the case of sensitive personal 
information, which shall be accorded permanent in camera treatment 
unless disclosure or an expiration date is required or provided by law. 
For in camera material other than sensitive personal information, an 
expiration date may not be omitted except in unusual circumstances, in 
which event the order shall state with specificity the reasons why the 
need for confidentiality of the material, or portion thereof at issue is 
not likely to decrease over time, and any other reasons why such 
material is entitled to in camera treatment for an indeterminate period. 
If an in camera order is silent as to duration, without explanation, 
then it will expire 3 years after its date of issuance. Material subject 
to an in camera order shall be segregated from the public record and 
filed in a sealed envelope, or other appropriate container, bearing the 
title, the docket number of the proceeding, the notation ``In Camera 
Record under Sec. 3.45,'' and the date on which in camera treatment 
expires. If the Administrative Law Judge has determined that in camera 
treatment should be granted for an indeterminate period, the notation 
should state that fact. Parties are not required to provide documents 
subject to in camera treatment, including documents obtained from third 
parties, to any individual or entity other than the Administrative Law 
Judge, counsel for other parties, and, during an appeal, the Commission 
or a federal court.
    (c) Release of in camera material. In camera material constitutes 
part of the confidential records of the Commission and is subject to the 
provisions of Sec. 4.11 of this chapter.
    (d) Briefs and other submissions referring to in camera or 
confidential information. Parties shall not disclose information that 
has been granted in camera status pursuant to Sec. 3.45(b) or is 
subject to confidentiality protections pursuant to a protective order in 
the public version of proposed findings, briefs, or other documents. 
This provision does not preclude references in such proposed findings, 
briefs, or other documents to in camera or other confidential 
information or general statements based on the content of such 
information.
    (e) When in camera or confidential information is included in briefs 
and other submissions. If a party includes specific information that has 
been granted in camera status pursuant to paragraph (b) of this section 
or is subject to confidentiality protections pursuant to a protective 
order in any document filed in a proceeding under this part, the party 
shall file 2 versions of the document. A complete version shall be 
marked ``In Camera'' or ``Subject to Protective Order,'' as appropriate, 
on every page and shall be filed with the Secretary and served by the 
party on the other parties in accordance with the Commission's rules. 
Submitters of

[[Page 82]]

in camera or other confidential material should mark any such material 
in the complete versions of their submissions in a conspicuous matter, 
such as with highlighting or bracketing. References to in camera or 
confidential material must be supported by record citations to relevant 
evidentiary materials and associated Administrative Law Judge in camera 
or other confidentiality rulings to confirm that in camera or other 
confidential treatment is warranted for such material. In addition, the 
document must include an attachment containing a copy of each page of 
the document in question on which in camera or otherwise confidential 
excerpts appear, and providing the name and address of any person who 
should be notified of the Commission's intent to disclose in a final 
decision any of the in camera or otherwise confidential information in 
the document. Any time period within which these rules allow a party to 
respond to a document shall run from the date the party is served with 
the complete version of the document. An expurgated version of the 
document, marked ``Public Record'' on every page and omitting the in 
camera and confidential information and attachment that appear in the 
complete version, shall be filed with the Secretary within 5 days after 
the filing of the complete version, unless the Administrative Law Judge 
or the Commission directs otherwise, and shall be served by the party on 
the other parties in accordance with the rules in this part. The 
expurgated version shall indicate any omissions with brackets or 
ellipses, and its pagination and depiction of text on each page shall be 
identical to that of the in camera version.
    (f) When in camera or confidential information is included in 
rulings or recommendations of the Administrative Law Judge. If the 
Administrative Law Judge includes in any ruling or recommendation 
information that has been granted in camera status pursuant to paragraph 
(b) of this section or is subject to confidentiality protections 
pursuant to a protective order, the Administrative Law Judge shall file 
2 versions of the ruling or recommendation. A complete version shall be 
marked ``In Camera'' or ``Subject to Protective Order,'' as appropriate, 
on every page and shall be served upon the parties. The complete version 
will be placed in the in camera record of the proceeding. An expurgated 
version, to be filed within 5 days after the filing of the complete 
version, shall omit the in camera and confidential information that 
appears in the complete version, shall be marked ``Public Record'' on 
every page, shall be served upon the parties, and shall be included in 
the public record of the proceeding.
    (g) Provisional in camera rulings. The Administrative Law Judge may 
make a provisional grant of in camera status to materials if the showing 
required in Sec. 3.45(b) cannot be made at the time the material is 
offered into evidence but the Administrative Law Judge determines that 
the interests of justice would be served by such a ruling. Within 20 
days of such a provisional grant of in camera status, the party offering 
the evidence or an interested third party must present a motion to the 
Administrative Law Judge for a final ruling on whether in camera 
treatment of the material is appropriate pursuant to Sec. 3.45(b). If 
no such motion is filed, the Administrative Law Judge may either exclude 
the evidence, deny in camera status, or take such other action as is 
appropriate.

[74 FR 1832, Jan. 13, 2009, as amended at 76 FR 52253, Aug. 22, 2011; 80 
FR 15162, Mar. 3, 2015]



Sec. 3.46  Proposed findings, conclusions, and order.

    (a) General. Within 21 days of the closing of the hearing record, 
each party may file with the Secretary for consideration of the 
Administrative Law Judge proposed findings of fact, conclusions of law, 
and rule or order, together with reasons therefor and briefs in support 
thereof. Such proposals shall be in writing, shall be served upon all 
parties, and shall contain adequate references to the record and 
authorities relied on. If a party includes in the proposals information 
that has been granted in camera status pursuant to Sec. 3.45(b), the 
party shall file 2 versions of the proposals in accordance with the 
procedures set forth in Sec. 3.45(e). Reply findings of fact, 
conclusions of law, and briefs may be filed by

[[Page 83]]

each party within 10 days of service of the initial proposed findings.
    (b) Exhibit index. The first statement of proposed findings of fact 
and conclusions of law filed by a party shall include an index listing 
for each exhibit offered by the party and received in evidence:
    (1) The exhibit number, followed by
    (2) The exhibit's title or a brief description if the exhibit is 
untitled;
    (3) The transcript page at which the Administrative Law Judge ruled 
on the exhibit's admissibility or a citation to any written order in 
which such ruling was made;
    (4) The transcript pages at which the exhibit is discussed;
    (5) An identification of any other exhibit which summarizes the 
contents of the listed exhibit, or of any other exhibit of which the 
listed exhibit is a summary;
    (6) A cross-reference, by exhibit number, to any other portions of 
that document admitted as a separate exhibit on motion by any other 
party; and
    (7) A statement whether the exhibit has been accorded in camera 
treatment, and a citation to the in camera ruling.
    (c) Witness index. The first statement of proposed findings of fact 
and conclusions of law filed by a party shall also include an index to 
the witnesses called by that party, to include for each witness:
    (1) The name of the witness;
    (2) A brief identification of the witness;
    (3) The transcript pages at which any testimony of the witness 
appears; and
    (4) A statement whether the witness testimony has been accorded in 
camera treatment, and a citation to the in camera ruling.
    (d) Stipulated indices. As an alternative to the filing of separate 
indices, the parties are encouraged to stipulate to joint exhibit and 
witness indices at the time the first statement of proposed findings of 
fact and conclusions of law is due to be filed.
    (e) Rulings. The record shall show the Administrative Law Judge's 
ruling on each proposed finding and conclusion, except when the order 
disposing of the proceeding otherwise informs the parties of the action 
taken.

[74 FR 1833, Jan. 13, 2009, as amended at 80 FR 15162, Mar. 23, 2015]



                           Subpart F_Decision



Sec. 3.51  Initial decision.

    (a) When filed and when effective. The Administrative Law Judge 
shall file an initial decision within 70 days after the filing of the 
last filed initial or reply proposed findings of fact, conclusions of 
law and order pursuant to Sec. 3.46, within 85 days of the closing the 
hearing record pursuant to Sec. 3.44(c) where the parties have waived 
the filing of proposed findings, or within 14 days after the granting of 
a motion for summary decision following a referral of such motion from 
the Commission. The Administrative Law Judge may extend any of these 
time periods by up to 30 days for good cause. The Commission may further 
extend any of these time periods for good cause. Except in cases subject 
to Sec. 3.52(a), once issued, the initial decision shall become the 
decision of the Commission 30 days after service thereof upon the 
parties or 30 days after the filing of a timely notice of appeal, 
whichever shall be later, unless a party filing such a notice shall have 
perfected an appeal by the timely filing of an appeal brief or the 
Commission shall have issued an order placing the case on its own docket 
for review or staying the effective date of the decision.
    (b) Exhaustion of administrative remedies. An initial decision shall 
not be considered final agency action subject to judicial review under 5 
U.S.C. 704. Any objection to a ruling by the Administrative Law Judge, 
or to a finding, conclusion or a provision of the order in the initial 
decision, which is not made a part of an appeal to the Commission shall 
be deemed to have been waived.
    (c) Content, format for filing. (1) An initial decision shall be 
based on a consideration of the whole record relevant to the issues 
decided, and shall be supported by reliable and probative evidence. The 
initial decision shall include a statement of findings of fact (with 
specific page references to principal supporting items of evidence in

[[Page 84]]

the record) and conclusions of law, as well as the reasons or basis 
therefor, upon all the material issues of fact, law, or discretion 
presented on the record (or those designated under paragraph (c)(2) of 
this section) and an appropriate rule or order. Rulings containing 
information granted in camera status pursuant to Sec. 3.45 shall be 
filed in accordance with Sec. 3.45(f).
    (2) The initial decision shall be prepared in a common word 
processing format, such as WordPerfect or Microsoft Word, and shall be 
filed by the Administrative Law Judge with the Office of the Secretary 
in both electronic and paper versions.
    (3) When more than one claim for relief is presented in an action, 
or when multiple parties are involved, the Administrative Law Judge may 
direct the entry of an initial decision as to one or more but fewer than 
all of the claims or parties only upon an express determination that 
there is no just reason for delay and upon an express direction for the 
entry of initial decision.
    (d) By whom made. The initial decision shall be made and filed by 
the Administrative Law Judge who presided over the hearings, except when 
he or she shall have become unavailable to the Commission.
    (e) Reopening of proceeding by Administrative Law Judge; termination 
of jurisdiction. (1) At any time from the close of the hearing record 
pursuant to Sec. 3.44(c) until the filing of his or her initial 
decision, an Administrative Law Judge may reopen the proceeding for the 
reception of further evidence for good cause shown.
    (2) Except for the correction of clerical errors or pursuant to an 
order of remand from the Commission, the jurisdiction of the 
Administrative Law Judge is terminated upon the filing of his or her 
initial decision with respect to those issues decided pursuant to 
paragraph (c)(1) of this section.

[74 FR 1834, Jan. 13, 2009]



Sec. 3.52  Appeal from initial decision.

    (a) Automatic review of cases in which the Commission sought 
preliminary relief in federal court; timing. For proceedings with 
respect to which the Commission has sought preliminary relief in federal 
court under 15 U.S.C. 53(b), the Commission will review the initial 
decision without the filing of a notice of appeal.
    (1) In such cases, any party may file objections to the initial 
decision or order of the Administrative Law Judge by filing its opening 
appeal brief, subject to the requirements in paragraph (c), within 20 
days of the issuance of the initial decision. Any party may respond to 
any objections filed by another party by filing an answering brief, 
subject to the requirements of paragraph (d), within 20 days of service 
of the opening brief. Any party may file a reply to an answering brief, 
subject to the requirements of paragraph (e), within 5 days of service 
of the answering brief. Unless the Commission orders that there shall be 
no oral argument, it will hold oral argument within 10 days after the 
deadline for the filing of any reply briefs. The Commission will issue 
its final decision pursuant to Sec. 3.54 within 45 days after oral 
argument. If no oral argument is scheduled, the Commission will issue 
its final decision pursuant to Sec. 3.54 within 45 days after the 
deadline for the filing of any reply briefs.
    (2) If no objections to the initial decision are filed, the 
Commission may in its discretion hold oral argument within 10 days after 
the deadline for the filing of objection, and will issue its final 
decision pursuant to Sec. 3.54 within 45 days after oral argument. If 
no oral argument is scheduled, the Commission will issue its final 
decision pursuant to Sec. 3.54 within 45 days after the deadline for 
the filing of objections.
    (b) Review in all other cases; timing. (1) In all cases other than 
those subject to paragraph (a), any party may file objections to the 
initial decision or order of the Administrative Law Judge by filing a 
notice of appeal with the Secretary within 10 days after service of the 
initial decision. The notice shall specify the party or parties against 
whom the appeal is taken and shall designate the initial decision and 
order or part thereof appealed from. If a timely notice of appeal is 
filed by a party, any other party may thereafter file a notice of appeal 
within 5 days after service of the first notice, or within 10 days after 
service of the initial decision, whichever period expires last.

[[Page 85]]

    (2) In such cases, any party filing a notice of appeal must perfect 
its appeal by filing its opening appeal brief, subject to the 
requirements in paragraph (c), within 30 days of the issuance of the 
initial decision. Any party may respond to the opening appeal brief by 
filing an answering brief, subject to the requirements of paragraph (d), 
within 30 days of service of the opening brief. Any party may file a 
reply to an answering brief, subject to the requirements of paragraph 
(e), within 7 days of service of the answering brief. Unless the 
Commission orders that there shall be no oral argument, it will hold 
oral argument within 15 days after the deadline for the filing of any 
reply briefs. The Commission will issue its final decision pursuant to 
Sec. 3.54 within 100 days after oral argument. If no oral argument is 
scheduled, the Commission will issue its final decision pursuant to 
Sec. 3.54 within 100 days after the deadline for the filing of any 
reply briefs.
    (c) Appeal brief. (1) The opening appeal brief shall contain, in the 
order indicated, the following:
    (i) A subject index of the matter in the brief, with page 
references, and a table of cases (alphabetically arranged), textbooks, 
statutes, and other material cited, with page references thereto;
    (ii) A concise statement of the case, which includes a statement of 
facts relevant to the issues submitted for review, and a summary of the 
argument, which must contain a succinct, clear, and accurate statement 
of the arguments made in the body of the brief, and which must not 
merely repeat the argument headings;
    (iii) A specification of the questions intended to be urged;
    (iv) The argument presenting clearly the points of fact and law 
relied upon in support of the position taken on each question, with 
specific page references to the record and the legal or other material 
relied upon; and
    (v) A proposed form of order for the Commission's consideration 
instead of the order contained in the initial decision.
    (2) The brief shall not, without leave of the Commission, exceed 
14,000 words.
    (d) Answering brief. The answering brief shall contain a subject 
index, with page references, and a table of cases (alphabetically 
arranged), textbooks, statutes, and other material cited, with page 
references thereto, as well as arguments in response to the appellant's 
appeal brief. The answering brief shall not, without leave of the 
Commission, exceed 14,000 words.
    (e) Reply brief. The reply brief shall be limited to rebuttal of 
matters in the answering brief and shall not, without leave of the 
Commission, exceed 7,000 words. The Commission will not consider new 
arguments or matters raised in reply briefs that could have been raised 
earlier in the principal briefs. No further briefs may be filed except 
by leave of the Commission.
    (f) In camera information. If a party includes in any brief to be 
filed under this section information that has been granted in camera 
status pursuant to Sec. 3.45(b) or is subject to confidentiality 
provisions pursuant to a protective order, the party shall file 2 
versions of the brief in accordance with the procedures set forth in 
Sec. 3.45(e). The time period specified by this section within which a 
party may file an answering or reply brief will begin to run upon 
service on the party of the in camera or confidential version of a 
brief.
    (g) Signature. (1) The original of each brief filed shall have a 
hand-signed signature by an attorney of record for the party, or in the 
case of parties not represented by counsel, by the party itself, or by a 
partner if a partnership, or by an officer of the party if it is a 
corporation or an unincorporated association.
    (2) Signing a brief constitutes a representation by the signer that 
he or she has read it; that to the best of his or her knowledge, 
information, and belief, the statements made in it are true; that it is 
not interposed for delay; that it complies with the applicable word 
count limitation; and that to the best of his or her knowledge, 
information, and belief, it complies with all the other rules in this 
part. If a brief is not signed or is signed with intent to defeat the 
purpose of this section, it may be stricken as sham and false and the 
proceeding may go forward as though the brief has not been filed.

[[Page 86]]

    (h) Oral argument. All oral arguments shall be public unless 
otherwise ordered by the Commission. Oral arguments will be held in all 
cases on appeal or review to the Commission, unless the Commission 
otherwise orders upon its own initiative or upon request of any party 
made at the time of filing his or her brief. Oral arguments before the 
Commission shall be reported stenographically, unless otherwise ordered, 
and a member of the Commission absent from an oral argument may 
participate in the consideration and decision of the appeal in any case 
in which the oral argument is stenographically reported.
    (i) Corrections in transcript of oral argument. The Commission will 
entertain only joint motions of the parties requesting corrections in 
the transcript of oral argument, except that the Commission will receive 
a unilateral motion which recites that the parties have made a good 
faith effort to stipulate to the desired corrections but have been 
unable to do so. If the parties agree in part and disagree in part, they 
should file a joint motion incorporating the extent of their agreement, 
and, if desired, separate motions requesting those corrections to which 
they have been unable to agree. The Secretary, pursuant to delegation of 
authority by the Commission, is authorized to prepare and issue in the 
name of the Commission a brief ``Order Correcting Transcript'' whenever 
a joint motion to correct transcript is received.
    (j) Briefs of amicus curiae. A brief of an amicus curiae may be 
filed by leave of the Commission granted on motion with notice to the 
parties or at the request of the Commission, except that such leave 
shall not be required when the brief is presented by an agency or 
officer of the United States; or by a State, territory, commonwealth, or 
the District of Columbia, or by an agency or officer of any of them. The 
brief may be conditionally filed with the motion for leave. A motion for 
leave shall identify the interest of the applicant and state how a 
Commission decision in the matter would affect the applicant or persons 
it represents. The motion shall also state the reasons why a brief of an 
amicus curiae is desirable. Except as otherwise permitted by the 
Commission, an amicus curiae shall file its brief within the time 
allowed the parties whose position as to affirmance or reversal the 
amicus brief will support. The Commission shall grant leave for a later 
filing only for cause shown, in which event it shall specify within what 
period such brief must be filed. A motion for an amicus curiae to 
participate in oral argument will be granted only for extraordinary 
reasons. An amicus brief may be no more than one-half the maximum length 
authorized by these rules for a party's principal brief.
    (k) Word count limitation. The word count limitations in this 
section include headings, footnotes and quotations, but do not include 
the cover, table of contents, table of citations or authorities, 
glossaries, statements with respect to oral argument, any addendums 
containing statutes, rules or regulations, any certificates of counsel, 
proposed form of order, and any attachment required by Sec. 3.45(e). 
Extensions of word count limitations are disfavored, and will only be 
granted where a party can make a strong showing that undue prejudice 
would result from complying with the existing limit.

[74 FR 1834, Jan. 13, 2009, as amended at 76 FR 52253, Aug. 22, 2011; 80 
FR 15162, Mar. 23, 2015]



Sec. 3.53  Review of initial decision in absence of appeal.

    An order by the Commission placing a case on its own docket for 
review will set forth the scope of such review and the issues which will 
be considered and will make provision for the filing of briefs if deemed 
appropriate by the Commission.



Sec. 3.54  Decision on appeal or review.

    (a) Upon appeal from or review of an initial decision, the 
Commission will consider such parts of the record as are cited or as may 
be necessary to resolve the issues presented and, in addition, will, to 
the extent necessary or desirable, exercise all the powers which it 
could have exercised if it had made the initial decision.
    (b) In rendering its decision, the Commission will adopt, modify, or 
set

[[Page 87]]

aside the findings, conclusions, and rule or order contained in the 
initial decision, and will include in the decision a statement of the 
reasons or basis for its action and any concurring and dissenting 
opinions.
    (c) In those cases where the Commission believes that it should have 
further information or additional views of the parties as to the form 
and content of the rule or order to be issued, the Commission, in its 
discretion, may withhold final action pending the receipt of such 
additional information or views.
    (d) The order of the Commission disposing of adjudicative hearings 
under the Fair Packaging and Labeling Act will be published in the 
Federal Register and, if it contains a rule or regulation, will specify 
the effective date thereof, which will not be prior to the ninetieth 
(90th) day after its publication unless the Commission finds that 
emergency conditions exist necessitating an earlier effective date, in 
which event the Commission will specify in the order its findings as to 
such conditions.



Sec. 3.55  Reconsideration.

    Within fourteen (14) days after completion of service of a 
Commission decision, any party may file with the Commission a petition 
for reconsideration of such decision, setting forth the relief desired 
and the grounds in support thereof. Any petition filed under this 
subsection must be confined to new questions raised by the decision or 
final order and upon which the petitioner had no opportunity to argue 
before the Commission. Any party desiring to oppose such a petition 
shall file an answer thereto within ten (10) days after service upon him 
of the petition. The filing of a petition for reconsideration shall not 
operate to stay the effective date of the decision or order or to toll 
the running of any statutory time period affecting such decision or 
order unless specifically so ordered by the Commission.

[32 FR 8449, June 13, 1967, as amended at 61 FR 50650, Sept. 26, 1996]



Sec. 3.56  Effective date of orders; application for stay.

    (a) Other than consent orders, an order to cease and desist under 
section 5 of the FTC Act becomes effective upon the sixtieth day after 
service, except as provided in section 5(g)(3) of the FTC Act, and 
except for divestiture provisions, as provided in section 5(g)(4) of the 
FTC Act.
    (b) Any party subject to a cease and desist order under section 5 of 
the FTC Act, other than a consent order, may apply to the Commission for 
a stay of all or part of that order pending judicial review. If, within 
30 days after the application was received by the Commission, the 
Commission either has denied or has not acted on the application, a stay 
may be sought in a court of appeals where a petition for review of the 
order is pending.
    (c) An application for stay shall state the reasons a stay is 
warranted and the facts relied upon, and shall include supporting 
affidavits or other sworn statements, and a copy of the relevant 
portions of the record. The application shall address the likelihood of 
the applicant's success on appeal, whether the applicant will suffer 
irreparable harm if a stay is not granted, the degree of injury to other 
parties if a stay is granted, and why the stay is in the public 
interest.
    (d) An application for stay shall be filed within 30 days of service 
of the order on the party. Such application shall be served in 
accordance with the provisions of Sec. 4.4(b) of this part that are 
applicable to service in adjudicative proceedings. Any party opposing 
the application may file an answer within 5 business days after receipt 
of the application. The applicant may file a reply brief, limited to new 
matters raised by the answer, within 3 business days after receipt of 
the answer.

[60 FR 37748, July 21, 1995]

Subpart G [Reserved]



                   Subpart H_Reopening of Proceedings



Sec. 3.71  Authority.

    Except while pending in a U.S. court of appeals on a petition for 
review

[[Page 88]]

(after the transcript of the record has been filed) or in the U.S. 
Supreme Court, a proceeding may be reopened by the Commission at any 
time in accordance with Sec. 3.72. Any person subject to a Commission 
decision containing a rule or order which has become effective, or an 
order to cease and desist which has become final may file a request to 
reopen the proceeding in accordance with Sec. 2.51.

[44 FR 40637, July 12, 1979]



Sec. 3.72  Reopening.

    (a) Before statutory review. At any time prior to the expiration of 
the time allowed for filing a petition for review or prior to the filing 
of the transcript of the record of a proceeding in a U.S. court of 
appeals pursuant to a petition for review, the Commission may upon its 
own initiative and without prior notice to the parties reopen the 
proceeding and enter a new decision modifying or setting aside the whole 
or any part of the findings as to the facts, conclusions, rule, order, 
or opinion issued by the Commission in such proceeding.
    (b) After decision has become final. (1) Whenever the Commission is 
of the opinion that changed conditions of fact or law or the public 
interest may require that a Commission decision containing a rule or 
order which has become effective, or an order to cease and desist which 
has become final by reason of court affirmance or expiration of the 
statutory period for court review without a petition for review having 
been filed, or a Commission decision containing an order dismissing a 
proceeding, should be altered, modified, or set aside in whole or in 
part, the Commission will, except as provided in Sec. 2.51, serve upon 
each person subject to such decision (in the case of proceedings 
instituted under Sec. 3.13, such service may be by publication in the 
Federal Register) an order to show cause, stating the changes it 
proposes to make in the decision and the reasons they are deemed 
necessary. Within thirty (30) days after service of such order to show 
cause, any person served may file an answer thereto. Any person not 
responding to the order within the time allowed may be deemed to have 
consented to the proposed changes.
    (2) Whenever an order to show cause is not opposed, or if opposed 
but the pleadings do not raise issues of fact to be resolved, the 
Commission, in its discretion, may decide the matter on the order to 
show cause and answer thereto, if any, or it may serve upon the parties 
(in the case of proceedings instituted under Sec. 3.13, such service 
may be by publication in Federal Register) a notice of hearing, setting 
forth the date when the cause will be heard. In such a case, the hearing 
will be limited to the filing of briefs and may include oral argument 
when deemed necessary by the Commission. When the pleadings raise 
substantial factual issues, the Commission will direct such hearings as 
it deems appropriate, including hearings for the receipt of evidence by 
it or by an Administrative Law Judge. Unless otherwise ordered and 
insofar as practicable, hearings before an Administrative Law Judge to 
receive evidence shall be conducted in accordance with subparts B, C, D, 
and E of part 3 of this chapter. Upon conclusion of hearings before an 
Administrative Law Judge, the record and the Administrative Law Judge's 
recommendations shall be certified to the Commission for final 
disposition of the matter.
    (3) Termination of existing orders--(i) Generally. Notwithstanding 
the foregoing provisions of this rule, and except as provided in 
paragraphs (b)(3) (ii) and (iii) of this section, an order issued by the 
Commission before August 16, 1995, will be deemed, without further 
notice or proceedings, to terminate 20 years from the date on which the 
order was first issued, or on January 2, 1996, whichever is later.
    (ii) Exception. This paragraph applies to the termination of an 
order issued before August 16, 1995, where a complaint alleging a 
violation of the order was or is filed (with or without an accompanying 
consent decree) in federal court by the United States or the Federal 
Trade Commission while the order remains in force, either on or after 
August 16, 1995, or within the 20 years preceding that date. If more 
than one complaint was or is filed while the order remains in force, the 
relevant

[[Page 89]]

complaint for purposes of this paragraph will be the latest filed 
complaint. An order subject to this paragraph will terminate 20 years 
from the date on which a court complaint described in this paragraph was 
or is filed, except as provided in the following sentence. If the 
complaint was or is dismissed, or a federal court rules or has ruled 
that the respondent did not violate any provision of the order, and the 
dismissal or ruling was or is not appealed, or was or is upheld on 
appeal, the order will terminate according to paragraph (b)(3)(i) of 
this section as though the complaint was never filed; provided, however, 
that the order will not terminate between the date that such complaint 
is filed and the later of the deadline for appealing such dismissal or 
ruling and the date such dismissal or ruling is upheld on appeal. The 
filing of a complaint described in this paragraph will not affect the 
duration of any order provision that has expired, or will expire, by its 
own terms. The filing of a complaint described in this paragraph also 
will not affect the duration of an order's application to any respondent 
that is not named in the complaint.
    (iii) Stay of Termination. Any party to an order may seek to stay, 
in whole or part, the termination of the order as to that party pursuant 
to paragraph (b)(3) (i) or (ii) of this section. Petitions for such 
stays shall be filed in accordance with the procedures set forth in 
Sec. 2.51 of these rules. Such petitions shall be filed on or before 
the date on which the order would be terminated pursuant to paragraph 
(b)(3) (i) or (ii) of this section. Pending the disposition of such a 
petition, the order will be deemed to remain in effect without 
interruption.
    (iv) Orders not terminated. Nothing in Sec. 3.72(b)(3) is intended 
to apply to in camera orders or other procedural or interlocutory 
rulings by an Administrative Law Judge or the Commission.

[32 FR 8449, June 13, 1967, as amended at 44 FR 40637, July 12, 1979; 45 
FR 21623, Apr. 2, 1980; 60 FR 58515, Nov. 28, 1995]



 Subpart I_Recovery of Awards Under the Equal Access to Justice Act in 
                         Commission Proceedings

    Authority: 5 U.S.C. 504 and 5 U.S.C. 553(b).

    Source: 63 FR 36341, July 6, 1998, unless otherwise noted.



Sec. 3.81  General provisions.

    (a) Purpose of these rules. The Equal Access to Justice Act, 5 
U.S.C. 504 (called ``the Act'' in this subpart), provides for the award 
of attorney fees and other expenses to eligible individuals and entities 
who are parties to adversary adjudicative proceedings under part 3 of 
this title. The rules in this subpart describe the parties eligible for 
awards, how to apply for awards, and the procedures and standards that 
the Commission will use to make them.
    (1) When an eligible party will receive an award. An eligible party 
will receive an award when:
    (i) It prevails in the adjudicative proceeding, unless the 
Commission's position in the proceeding was substantially justified or 
special circumstances make an award unjust. Whether or not the position 
of the agency was substantially justified will be determined on the 
basis of the administrative record as a whole that is made in the 
adversary proceeding for which fees and other expenses are sought; or
    (ii) The agency's demand is substantially in excess of the decision 
of the adjudicative officer, and is unreasonable when compared with that 
decision, under all the facts and circumstances of the case. Demand 
means the express final demand made by the agency prior to initiation of 
the adversary adjudication, but does not include a recitation by the 
agency of the statutory penalty in the administrative complaint or 
elsewhere when accompanied by an express demand for a lesser amount.
    (b) When the Act applies. (1) Section 504(a)(1) of the Act applies 
to any adversarial adjudicative proceeding pending before the Commission 
at any time after October 1, 1981. This includes proceedings begun 
before October 1, 1981, if final Commission action has not been taken 
before that date.

[[Page 90]]

    (2) Section 504(a)(4) applies to any adversarial adjudicative 
proceeding pending before the Commission at any time on or after March 
29, 1996.
    (c) Proceedings covered. (1) The Act applies to all adjudicative 
proceedings under part 3 of the rules of practice as defined in Sec. 
3.2, except hearings relating to the promulgation, amendment, or repeal 
of rules under the Fair Packaging and Labeling Act.
    (2) [Reserved]
    (d) Eligibility of applicants. (1) To be eligible for an award of 
attorney fees and other expenses under the Act, the applicant must be a 
party to the adjudicative proceeding in which it seeks an award. The 
term party is defined in 5 U.S.C. 551(3). The applicant must show that 
it meets all conditions of eligibility set out in this subpart.
    (2) The types of eligible applicants are as follows:
    (i) An individual with a net worth of not more than $2 million;
    (ii) The sole owner of an unincorporated business who has a net 
worth of not more than $7 million, including both personal and business 
interests, and not more than 500 employees;
    (iii) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)) 
with not more than 500 employees;
    (iv) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act (12 U.S.C. 1141j(a)) with not more than 500 
employees;
    (v) Any other partnership, corporation, association, unit of local 
government, or organization with a net worth of not more than $7 million 
and not more than 500 employees; and
    (vi) For purposes of receiving an award for fees and expenses for 
defending against an excessive Commission demand, any small entity, as 
that term is defined under 5 U.S.C. 601.
    (3) Eligibility of a party shall be determined as of the date the 
proceeding was initiated.
    (4) An applicant who owns an unincorporated business will be 
considered as an ``individual'' rather than a ``sole owner of an 
unincorporated business'' if the issues on which the applicant prevails 
are related primarily to personal interests rather than to business 
interests.
    (5) The employees of an applicant include all persons who regularly 
perform services for remuneration for the applicant, under the 
applicant's direction and control. Part-time employees shall be included 
on a proportional basis.
    (6) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation or other entity that directly or indirectly 
controls or owns a majority of the voting shares or other interest of 
the applicant, or any corporation or other entity of which the applicant 
directly or indirectly owns or controls a majority of the voting shares 
or other interest, will be considered an affiliate for purposes of this 
part, unless the Administrative Law Judge determines that such treatment 
would be unjust and contrary to the purposes of the Act in light of the 
actual relationship between the affiliated entities. In addition, the 
Administrative Law Judge may determine that financial relationships of 
the applicant other than those described in this paragraph constitute 
special circumstances that would make an award unjust.
    (7) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.
    (e) Standards for awards. (1) For a prevailing party:
    (i) A prevailing applicant will receive an award for fees and 
expenses incurred after initiation of the adversary adjudication in 
connection with the entire adversary adjudication, or on a substantive 
portion of the adversary adjudication that is sufficiently significant 
and discrete to merit treatment as a separate unit unless the position 
of the agency was substantially justified. The burden of proof that an 
award should not be made to an eligible prevailing applicant is on 
complaint counsel, which may avoid an award by showing that its position 
had a reasonable basis in law and fact.
    (ii) An award to prevailing party will be reduced or denied if the 
applicant has unduly or unreasonably protracted

[[Page 91]]

the proceeding or if special circumstances make an award unjust.
    (2) For a party defending against an excessive demand:
    (i) An eligible applicant will receive an award for fees and 
expenses incurred after initiation of the adversary adjudication related 
to defending against the excessive portion of a Commission demand that 
is substantially in excess of the decision of the adjudicative officer 
and is unreasonable when compared with that decision under all the facts 
and circumstances of the case.
    (ii) An award will be denied if the applicant has committed a 
willful violation of law or otherwise acted in bad faith or if special 
circumstances make an award unjust.
    (f) Allowable fees and expenses. (1) Awards will be based on rates 
customarily charged by persons engaged in the business of acting as 
attorneys, agents and expert witnesses, even if the services were made 
available without charge or at a reduced rate to the applicant.
    (2) No award for the fee of an attorney or agent under these rules 
may exceed the hourly rate specified in 5 U.S.C. 504(b)(1)(A). No award 
to compensate an expert witness may exceed the highest rate at which the 
Commission paid expert witnesses for similar services at the time the 
fees were incurred. The appropriate rate may be obtained from the Office 
of the Executive Director. However, an award may also include the 
reasonable expenses of the attorney, agent, or witness as a separate 
item, if the attorney, agent or witness ordinarily charges clients 
separately for such expenses.
    (3) In determining the reasonableness of the fee sought for an 
attorney, agent or expert witness, the Administrative Law Judge shall 
consider the following:
    (i) If the attorney, agent or witness is in private practice, his or 
her customary fee for similar services, or, if an employee of the 
applicant, the fully allocated cost of the services;
    (ii) The prevailing rate for similar services in the community in 
which the attorney, agent or witness ordinarily performs services;
    (iii) The time actually spent in the representation of the 
applicant;
    (iv) The time reasonably spent in light of the difficulty or 
complexity of the issues in the proceeding; and
    (v) Such other factors as may bear on the value of the services 
provided.
    (4) The reasonable cost of any study, analysis, engineering report, 
test, project or similar matter prepared on behalf of a party may be 
awarded, to the extent that the charge for the service does not exceed 
the prevailing rate for similar services, and the study or other matter 
was necessary for preparation of the applicant's case.
    (5) Any award of fees or expenses under the Act is limited to fees 
and expenses incurred after initiation of the adversary adjudication 
and, with respect to excessive demands, the fees and expenses incurred 
in defending against the excessive portion of the demand.
    (g) Rulemaking on maximum rates for attorney fees. If warranted by 
an increase in the cost of living or by special circumstances (such as 
limited availability of attorneys qualified to handle certain types of 
proceedings), the Commission may, upon its own initiative or on petition 
of any interested person or group, adopt regulations providing that 
attorney fees may be awarded at a rate higher than the rate specified in 
5 U.S.C. 504(b)(1)(A) per hour in some or all the types of proceedings 
covered by this part. Rulemaking under this provision will be in 
accordance with Rules of Practice part 1, subpart C of this chapter.



Sec. 3.82  Information required from applicants.

    (a) Contents of application. An application for an award of fees and 
expenses under the Act shall contain the following:
    (1) Identity of the applicant and the proceeding for which the award 
is sought;
    (2) A showing that the applicant has prevailed; or, if the applicant 
has not prevailed, a showing that the Commission's demand was the final 
demand before initiation of the adversary adjudication and that it was 
substantially in excess of the decision of the adjudicative officer and 
was unreasonable when compared with that decision;

[[Page 92]]

    (3) Identification of the Commission position(s) that applicant 
alleges was (were) not substantially justified; or, identification of 
the Commission's demand that is alleged to be excessive and unreasonable 
and an explanation as to why the demand was excessive and unreasonable;
    (4) A brief description of the type and purpose of the organization 
or business (unless the applicant is an individual);
    (5) A statement of how the applicant meets the criteria of Sec. 
3.81(d);
    (6) The amount of fees and expenses incurred after the initiation of 
the adjudicative proceeding or, in the case of a claim for defending 
against an excessive demand, the amount of fees and expenses incurred 
after the initiation of the adjudicative proceeding attributable to the 
excessive portion of the demand;
    (7) Any other matters the applicant wishes the Commission to 
consider in determining whether and in what amount an award should be 
made; and
    (8) A written verification under oath or under penalty or perjury 
that the information provided is true and correct accompanied by the 
signature of the applicant or an authorized officer or attorney.
    (b) Net worth exhibit. (1) Each applicant except a qualified tax-
exempt organization or cooperative association must provide with its 
application a detailed exhibit showing the net worth of the application 
and any affiliates (as defined in Sec. 3.81(d)(6)) when the proceeding 
was initiated. The exhibit may be in any form convenient to the 
applicant that provides full disclosure of the applicant's and its 
affiliates' assets and liabilities and is sufficient to determine 
whether the applicant qualifies under the standards in this part. The 
Administrative Law Judge may require an applicant to file additional 
information to determine its eligibility for an award.
    (2) Ordinarily, the net worth exhibit will be included in the public 
record of the proceeding. However, if an applicant objects to public 
disclosure of information in any portion of the exhibit and believes 
there are legal grounds for withholding it from disclosure, the 
applicant may submit that portion of the exhibit directly to the 
Administrative Law Judge in a sealed envelope labeled ``Confidential 
Financial Information,'' accompanied by a motion to withhold the 
information from public disclosure. The motion shall describe the 
information sought to be withheld and explain, in detail, why it falls 
within one or more of the specific exemptions from mandatory disclosure 
under the Freedom of Information Act, 5 U.S.C. 552(b) (1) through (9), 
why public disclosure of the information would adversely affect the 
applicant, and why disclosure is not required in the public interest. 
The material in question shall be served on complaint counsel but need 
not be served on any other party to the proceeding. If the 
Administrative Law Judge finds that the information should not be 
withheld from disclosure, it shall be placed in the public record of the 
proceeding. Otherwise, any request to inspect or copy the exhibit shall 
be disposed of in accordance with Sec. 4.11.
    (c) Documentation of fees and expenses. The application shall be 
accompanied by full documentation of the fees and expenses incurred 
after initiation of the adversary adjudication, including the cost of 
any study, analysis, engineering report, test, project or similar 
matter, for which an award is sought. With respect to a claim for fees 
and expenses involving an excessive demand, the application shall be 
accompanied by full documentation of the fees and expenses incurred 
after initiation of the adversary adjudication, including the cost of 
any study, analysis, engineering report, test, project or similar 
matter, for which an award is sought attributable to the portion of the 
demand alleged to be excessive and unreasonable. A separate itemized 
statement shall be submitted for each professional firm or individual 
whose services are covered by the application, showing the hours spent 
in connection with the proceeding by each individual, a description of 
the specific services performed, the rate at which each fee has been 
computed, any expenses for which reimbursement is sought, the total 
amount claimed, and the total amount paid or payable by the applicant or 
by any other person or entity

[[Page 93]]

for the services provided. The Administrative Law Judge may require the 
applicant to provide vouchers, receipts, or other substantiation for any 
expenses claimed.
    (d) When an application may be filed--(1) For a prevailing party:
    (i) An application may be filed not later than 30 days after the 
Commission has issued an order or otherwise taken action that results in 
final disposition of the proceeding.
    (ii) If review or reconsideration is sought or taken of a decision 
as to which an applicant believes it has prevailed, proceedings for the 
award of fees shall be stayed pending final disposition of the 
underlying controversy.
    (2) For a party defending against an excessive demand:
    (i) An application may be filed not later than 30 days after the 
Commission has issued an order or otherwise taken action that results in 
final disposition of the proceeding.
    (ii) If review or reconsideration is sought or taken of a decision 
as to which an applicant believes the agency's demand was excessive and 
unreasonable, proceedings for the award of fees and expenses shall be 
stayed pending final disposition of the underlying controversy.
    (3) For purposes of this subpart, final disposition means the later 
of--
    (i) The date that the initial decision of the Administrative Law 
Judge becomes the decision of the Commission pursuant to Sec. 3.51(a);
    (ii) The date that the Commission issues an order disposing of any 
petitions for reconsideration of the Commission's final order in the 
proceeding; or
    (iii) The date that the Commission issues a final order or any other 
final resolution of a proceeding, such as a consent agreement, 
settlement or voluntary dismissal, which is not subject to a petition 
for reconsideration.



Sec. 3.83  Procedures for considering applicants.

    (a) Filing and service of documents. Any application for an award or 
other pleading or document related to an application shall be filed and 
served on all parties as specified in Sec. Sec. 4.2 and 4.4(b) of this 
chapter, except as provided in Sec. 3.82(b)(2) for confidential 
financial information.
    (b) Answer to application. (1) Within 30 days after service of an 
application, complaint counsel may file an answer to the application. 
Unless complaint counsel requests an extension of time for filing or 
files a statement of intent to negotiate under paragraph (b)(2) of this 
section, failure to file an answer within the 30-day period may be 
treated as a consent to the award requested.
    (2) If complaint counsel and the applicant believe that the issues 
in the fee application can be settled, they may jointly file a statement 
of their intent to negotiate a settlement. The filing of this statement 
shall extend the time for filing an answer for an additional 30 days, 
and further extensions may be granted by the Administrative Law Judge 
upon request by complaint counsel and the applicant.
    (3) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of complaint 
counsel's position. If the answer is based on any alleged facts not 
already in the record of the proceeding, complaint counsel shall include 
with the answer either supporting affidavits or a request for further 
proceedings under paragraph (f) of this section.
    (c) Reply. Within 15 days after service of an answer, the applicant 
may file a reply. If the reply is based on any alleged facts not already 
in the record of the proceeding, the applicant shall include with the 
reply either supporting affidavits or a request for further proceedings 
under paragraph (f) of this section.
    (d) Comments by other parties. Any party to a proceeding other than 
the applicant and complaint counsel may file comments on an application 
within 30 days after it is served or on an answer within 15 days after 
it is served. A commenting party may not participate further in 
proceedings on the application unless the Administrative Law Judge 
determines that the public interest requires such participation in order 
to permit full exploration of matters in the comments.
    (e) Settlement. The applicant and complaint counsel may agree on a 
proposed

[[Page 94]]

settlement of the award before final action on the application. A 
proposed award settlement entered into in connection with a consent 
agreement covering the underlying proceeding will be considered in 
accordance with Sec. 3.25. The Commission may request findings of fact 
or recommendations on the award settlement from the Administrative Law 
Judge. A proposed award settlement entered into after the underlying 
proceeding has been concluded will be considered and may be approved or 
disapproved by the Administrative Law Judge subject to Commission review 
under paragraph (h) of this section. If an applicant and complaint 
counsel agree on a proposed settlement of an award before an application 
has been filed, the application shall be filed with the proposed 
settlement.
    (f) Further proceedings. (1) Ordinarily, the determination of an 
award will be made on the basis of the written record. However, on 
request of either the applicant or complaint counsel, or on his or her 
own initiative, the Administrative Law Judge may order further 
proceedings, such as an informal conference, oral argument, additional 
written submissions or an evidentiary hearing. Such further proceedings 
shall be held only when necessary for full and fair resolution of the 
issues arising from the application, and shall be conducted as promptly 
as possible.
    (2) A request that the Administrative Law Judge order further 
proceedings under this section shall specifically identify the 
information sought or the disputed issues and shall explain why the 
additional proceedings are necessary to resolve the issues.
    (g) Decision. The Administrative Law Judge shall issue an initial 
decision on the application within 30 days after closing proceedings on 
the application.
    (1) For a decision involving a prevailing party: The decision shall 
include written findings and conclusions on the applicant's eligibility 
and status as a prevailing party, and an explanation of the reasons for 
any difference between the amount requested and the amount awarded. The 
decision shall also include, if at issue, findings on whether the 
agency's position was substantially justified, whether the applicant 
unduly protracted the proceedings, or whether special circumstances make 
an award unjust.
    (2) For a decision involving an excessive agency demand: The 
decision shall include written findings and conclusions on the 
applicant's eligibility and an explanation of the reasons why the 
agency's demand was or was not determined to be substantially in excess 
of the decision of the adjudicative officer and was or was not 
unreasonable when compared with that decision. That decision shall be 
based upon all the facts and circumstances of the case. The decision 
shall also include, if at issue, findings on whether the applicant has 
committed a willful violation of law or otherwise acted in bad faith, or 
whether special circumstances make an award unjust.
    (h) Agency review. Either the applicant or complaint counsel may 
seek review of the initial decision on the fee application by filing a 
notice of appeal under Sec. 3.52(a), or the Commission may decide to 
review the decision on its own initiative, in accordance with Sec. 
3.53. If neither the applicant nor complaint counsel seeks review and 
the Commission does not take review on its own initiative, the initial 
decision on the application shall become a final decision of the 
Commission 30 days after it is issued. Whether to review a decision is a 
matter within the discretion of the Commission. If review is taken, the 
Commission will issue a final decision on the application or remand the 
application to the Administrative Law Judge for further proceedings.
    (i) Judicial review. Judicial review of final Commission decisions 
on awards may be sought as provided in 5 U.S.C. 504(c)(2).
    (j) Payment of award. An applicant seeking payment of an award shall 
submit to the Secretary of the Commission a copy of the Commission's 
final decision granting the award, accompanied by a statement that the 
applicant will not seek review of the decision in the United States 
courts. The agency will pay the amount awarded to the applicant within 
60 days, unless judicial review of the award or of the underlying 
decision of the adjudicative

[[Page 95]]

proceeding has been sought by the applicant or any party to the 
proceeding.

[63 FR 36341, July 6, 1998, as amended at 76 FR 52253, Aug. 22, 2011; 80 
FR 25941, May 6, 2015]



PART 4_MISCELLANEOUS RULES--Table of Contents



Sec.
4.1 Appearances.
4.2 Requirements as to form, and filing of documents other than 
          correspondence.
4.3 Time.
4.4 Service.
4.5 Fees.
4.6 Cooperation with other agencies.
4.7 Ex parte communications.
4.8 Costs for obtaining Commission records.
4.9 The public record.
4.10 Nonpublic material.
4.11 Disclosure requests.
4.12 Disposition of documents submitted to the Commission.
4.13 Privacy Act rules.
4.14 Conduct of business.
4.15 Commission meetings.
4.16 Privilege against self-incrimination.
4.17 Disqualification of Commissioners.

    Authority: 15 U.S.C. 46.




Sec. 4.1  Appearances.

    (a) Qualifications--(1) Attorneys--(i) U.S.-admitted. Members of the 
bar of a Federal court or of the highest court of any State or Territory 
of the United States are eligible to practice before the Commission.
    (ii) European Community (EC)-qualified. Persons who are qualified to 
practice law in a Member State of the European Community and authorized 
to practice before The Commission of the European Communities in 
accordance with Regulation No. 99/63/EEC are eligible to practice before 
the Commission.
    (iii) Any attorney desiring to appear before the Commission or an 
Administrative Law Judge may be required to show to the satisfaction of 
the Commission or the Administrative Law Judge his or her acceptability 
to act in that capacity.
    (2) Others. (i) Any individual or member of a partnership involved 
in any proceeding or investigation may appear on behalf or himself or of 
such partnership upon adequate identification. A corporation or 
association may be represented by a bona fide officer thereof upon a 
showing of adequate authorization.
    (ii) At the request of counsel representing any party in an 
adjudicative proceeding, the Administrative Law Judge may permit an 
expert in the same discipline as an expert witness to conduct all or a 
portion of the cross-examination of such witness.
    (b) Restrictions as to former members and employees--(1) General 
prohibition. Except as provided in this section, or otherwise 
specifically authorized by the Commission, no former member or employee 
(``former employee'' or ``employee'') of the Commission may communicate 
to or appear before the Commission, as attorney or counsel, or otherwise 
assist or advise behind-the-scenes, regarding a formal or informal 
proceeding or investigation \1\ (except that a former employee who is 
disqualified solely under paragraph (b)(1)(ii) or paragraph (b)(1)(iv) 
of this section, is not prohibited from assisting or advising behind-
the-scenes) if:
---------------------------------------------------------------------------

    \1\ It is important to note that a new ``proceeding or 
investigation'' may be considered the same matter as a seemingly 
separate ``proceeding or investigation'' that was pending during the 
former employee's tenure. This is because a ``proceeding or 
investigation'' may continue in another form or in part. In determining 
whether two matters are actually the same, the Commission will consider: 
the extent to which the matters involve the same or related facts, 
issues, confidential information and parties; the time elapsed; and the 
continuing existence of an important Federal interest. See 5 CFR 
2637.201(c)(4). For example, where a former employee intends to 
participate in an investigation of compliance with a Commission order, 
submission of a request to reopen an order, or a proceeding with respect 
to reopening an order, the matter will be considered the same as the 
adjudicative proceeding or investigation that resulted in the order. A 
former employee who is uncertain whether the matter in which he seeks 
clearance to participate is wholly separate from any matter that was 
pending during his tenure should seek advice from the General Counsel or 
the General Counsel's designee before participating.
---------------------------------------------------------------------------

    (i) The former employee participated personally and substantially on 
behalf of the Commission in the same proceeding or investigation in 
which the employee now intends to participate;
    (ii) The participation would begin within two years after the 
termination of the former employee's service and,

[[Page 96]]

within a period of one year prior to the employee's termination, the 
proceeding or investigation was pending under the employee's official 
responsibility;
    (iii) Nonpublic documents or information pertaining to the 
proceeding or investigation in question, and of the kind delineated in 
Sec. 4.10(a), came to, or would be likely to have come to, the former 
employee's attention in the course of the employee's duties, (unless 
Commission staff determines that the nature of the documents or 
information is such that no present advantage could thereby be derived); 
or
    (iv) The former employee's participation would begin within one year 
after the employee's termination and, at the time of termination, the 
employee was a member of the Commission or a ``senior employee'' as 
defined in 18 U.S.C. 207(c).
    (2) Clearance request required. Any former employee, before 
participating in a Commission proceeding or investigation (see footnote 
1), whether through an appearance before a Commission official or 
behind-the-scenes assistance, shall file with the Secretary a request 
for clearance to participate, containing the information listed in Sec. 
4.1(b)(4) if:
    (i) The proceeding or investigation was pending in the Commission 
while the former employee served;
    (ii) A proceeding or investigation from which such proceeding or 
investigation directly resulted was pending during the former employee's 
service; or
    (iii) Nonpublic documents or information pertaining to the 
proceeding or investigation in question, and of the kind delineated in 
Sec. 4.10(a), came to or would likely have come to the former 
employee's attention in the course of the employee's duties, and the 
employee left the Commission within the previous three years.

    Note: This requirement applies even to a proceeding or investigation 
that had not yet been initiated formally when the former employee 
terminated employment, if the employee had learned nonpublic information 
relating to the subsequently initiated proceeding or investigation.

    (3) Exceptions. (i) Paragraphs (b) (1) and (2) of this section do 
not apply to:
    (A) Making a pro se filing of any kind;
    (B) Submitting a request or appeal under the Freedom of Information 
Act, the Privacy Act, or the Government in the Sunshine Act;
    (C) Testifying under oath (except that a former employee who is 
subject to the restrictions contained in paragraph (b)(1)(i) of this 
section with respect to a particular matter may not, except pursuant to 
court order, serve as an expert witness for any person other than the 
United States in that same matter);
    (D) Submitting a statement required to be made under penalty of 
perjury; or
    (E) Appearing on behalf of the United States.
    (ii) With the exception of subparagraph (b)(1)(iv), paragraphs (b) 
(1) and (2) of this section do not apply to participating in a 
Commission rulemaking proceeding, including submitting comments on a 
matter on which the Commission has invited public comment.
    (iii) Paragraph (b)(1)(iv) of this section does not apply to 
submitting a statement based on the former employee's own special 
knowledge in the particular area that is the subject of the statement, 
provided that no compensation is thereby received, other than that 
regularly provided by law or by Sec. 4.5 for witnesses.
    (iv) Paragraph (b)(2) of this section does not apply to filing a 
premerger notification form or participating in subsequent events 
concerning compliance or noncompliance with Section 7A of the Clayton 
Act, 15 U.S.C. 18a, or any regulation issued under that section.
    (4) Request contents. Clearance requests filed pursuant to Sec. 
4.1(b)(2) shall contain:
    (i) The name and matter number (if known) of the proceeding or 
investigation in question;
    (ii) A description of the contemplated participation;
    (iii) The name of the Commission office(s) or division(s) in which 
the former employee was employed and the position(s) the employee 
occupied;
    (iv) A statement whether, while employed by the Commission, the 
former employee participated in any proceeding or investigation 
concerning

[[Page 97]]

the same company, individual, or industry currently involved in the 
matter in question;
    (v) A certification that while employed by the Commission, the 
employee never participated personally and substantially in the same 
matter or proceeding;
    (vi) If the employee's Commission employment terminated within the 
past two years, a certification that the matter was not pending under 
the employee's official responsibility during any part of the one year 
before the employee's termination;
    (vii) If the employee's Commission employment terminated within the 
past three years, either a declaration that nonpublic documents or 
information pertaining to the proceeding or investigation in question, 
and of the kind delineated in Sec. 4.10(a), never came to the 
employee's attention, or a description of why the employee believes that 
such nonpublic documents or information could not confer a present 
advantage to the employee or to the employee's client in the proceeding 
or investigation in question; and
    (viii) A certification that the employee has read, and understands, 
both the criminal conflict of interest law on post-employment activities 
(18 U.S.C. 207) and this Rule in their entirety.
    (5) Definitions. The following definitions apply for purposes of 
this section:
    (i) Behind-the-scenes participation includes any form of 
professional consultation, assistance, or advice to anyone about the 
proceeding or investigation in question, whether formal or informal, 
oral or written, direct or indirect.
    (ii) Communicate to or appear before means making any oral or 
written communication to, or any formal or informal appearance before, 
the Commission or any of its members or employees on behalf of any 
person (except the United States) with the intent to influence.
    (iii) Directly resulted from means that the proceeding or 
investigation in question emanated from an earlier phase of the same 
proceeding or investigation or from a directly linked, antecedent 
investigation. The existence of some attenuated connection between a 
proceeding or investigation that was pending during the requester's 
tenure and the proceeding or investigation in question does not 
constitute a direct result.
    (iv) Pending under the employee's official responsibility means that 
the former employee had the direct administrative or operating authority 
to approve, disapprove, or otherwise direct official actions in the 
proceeding or investigation, irrespective of whether the employee's 
authority was intermediate or final, and whether it was exercisable 
alone or only in conjunction with others.
    (v) Personal and substantial participation. A former employee 
participated in the proceeding or investigation personally if the 
employee either participated directly or directed a subordinate in doing 
so. The employee participated substantially if the involvement was 
significant to the matter or reasonably appeared to be significant. A 
series of peripheral involvements may be considered insubstantial, while 
a single act of approving or participating in a critical step may be 
considered substantial.
    (vi) Present advantage. Whether exposure to nonpublic information 
about the proceeding or investigation could confer a present advantage 
to a former employee will be analyzed and determined on a case-by-case 
basis. Relevant factors include, inter alia, the nature and age of the 
information, its relation and current importance to the proceeding or 
investigation in question, and the amount of time that has passed since 
the employee left the Commission.
    (vii) Proceeding or investigation shall be interpreted broadly and 
includes an adjudicative or other proceeding; the consideration of an 
application; a request for a ruling or other determination; a contract; 
a claim; a controversy; an investigation; or an interpretive ruling.
    (6) Advice as to whether clearance request is required. A former 
employee may ask the General Counsel, either orally or in writing, 
whether the employee is required to file a request for clearance to 
participate in a Commission matter pursuant to paragraph (b)(2) of this 
section. The General

[[Page 98]]

Counsel, or the General Counsel's designee, will make any such 
determination within three business days.
    (7) Deadline for determining clearance requests. By the close of the 
tenth business day after the date on which the clearance request is 
filed, the General Counsel, or the General Counsel's designee, will 
notify the requester either that:
    (i) The request for clearance has been granted;
    (ii) The General Counsel or the General Counsel's designee has 
decided to recommend that the Commission prohibit the requester's 
participation; or
    (iii) The General Counsel or the General Counsel's designee is, for 
good cause, extending the period for reaching a determination on the 
request by up to an additional ten business days.
    (8) Participation of partners or associates of former employees. (i) 
If a former employee is prohibited from participating in a proceeding or 
investigation by virtue of having worked on the matter personally and 
substantially while a Commission employee, no partner or legal or 
business associate of that individual may participate except after 
filing with the Secretary of the Commission an affidavit attesting that:
    (A) The former employee will not participate in the proceeding or 
investigation in any way, directly or indirectly (and describing how the 
former employee will be screened from participating);
    (B) The former employee will not share in any fees resulting from 
the participation;
    (C) Everyone who intends to participate is aware of the requirement 
that the former employee be screened;
    (D) The client(s) have been informed; and
    (E) The matter was not brought to the participant(s) through the 
active solicitation of the former employee.
    (ii) If the Commission finds that the screening measures being taken 
are unsatisfactory or that the matter was brought to the participant(s) 
through the active solicitation of the former employee, the Commission 
will notify the participant(s) to cease the representation immediately.
    (9) Effect on other standards. The restrictions and procedures in 
this section are intended to apply in lieu of restrictions and 
procedures that may be adopted by any state or jurisdiction, insofar as 
such restrictions and procedures apply to appearances or participation 
in Commission proceedings or investigations. Nothing in this section 
supersedes other standards of conduct applicable under paragraph (e) of 
this section. Requests for advice about this section, or about any 
matter related to other applicable rules and standards of ethical 
conduct, shall be directed to the Office of the General Counsel.
    (c) Public disclosure. Any request for clearance filed by a former 
member or employee pursuant to this section, as well as any written 
response, are part of the public records of the Commission, except for 
information exempt from disclosure under Sec. 4.10(a) of this chapter. 
Information identifying the subject of a nonpublic Commission 
investigation will be redacted from any request for clearance or other 
document before it is placed on the public record.
    (d) Notice of appearance. Any attorney desiring to appear before the 
Commission or an Administrative Law Judge on behalf of a person or party 
shall file with the Secretary of the Commission a written notice of 
appearance, stating the basis for eligibility under this section and 
including the attorney's jurisdiction of admission/qualification, 
attorney identification number, if applicable, and a statement by the 
appearing attorney attesting to his/her good standing within the legal 
profession. No other application shall be required for admission to 
practice, and no register of attorneys will be maintained.
    (e) Reprimand, suspension, or disbarment of attorneys. (1)(i) The 
following provisions govern the evaluation of allegations of misconduct 
by attorneys practicing before the Commission who are not employed by 
the Commission.\1\

[[Page 99]]

The Commission may publicly reprimand, suspend, or disbar from practice 
before the Commission any such person who has practiced, is practicing, 
or holds himself or herself out as entitled to practice before the 
Commission if it finds that such person:
---------------------------------------------------------------------------

    \1\ The standards of conduct and disciplinary procedures under this 
Sec. 4.1(e) apply only to outside attorneys practicing before the 
Commission and not to Commission staff. Allegations of misconduct by 
Commission employees will be handled pursuant to procedures for employee 
discipline or pursuant to investigations by the Office of Inspector 
General.
---------------------------------------------------------------------------

    (A) Does not possess the qualifications required by Sec. 4.1(a);
    (B) Has failed to act in a manner consistent with the rules of 
professional conduct of the attorney's state(s) of licensure;
    (C) Has engaged in obstructionist, contemptuous, or unprofessional 
conduct during the course of any Commission proceeding or investigation; 
or
    (D) Has knowingly or recklessly given false or misleading 
information, or has knowingly or recklessly participated in the giving 
of false information to the Commission or any officer or employee of the 
Commission.\2\
---------------------------------------------------------------------------

    \2\ For purposes of this rule, knowingly giving false or misleading 
information includes knowingly omitting material facts necessary to make 
any oral or written statements not misleading in light of the 
circumstances under which they were made.
---------------------------------------------------------------------------

    (ii) An attorney may be responsible for another attorney's violation 
of this paragraph (e) if the attorney orders, or with knowledge of the 
specific conduct, ratifies the conduct involved. In addition, an 
attorney who has direct supervisory authority over another attorney may 
be responsible for that attorney's violation of this paragraph (e) if 
the supervisory attorney knew of the conduct at a time when its 
consequences could have been avoided or mitigated but failed to take 
reasonable remedial action.
    (2) Allegations of attorney misconduct in violation of paragraph 
(e)(1) of this section may be proffered by any person possessing 
information concerning the alleged misconduct. Any such allegations may 
be submitted orally or in writing to a Bureau Officer who will evaluate 
the sufficiency of the allegations in the first instance to determine 
whether further action by the Commission is warranted. The Director of 
the Bureau or office responsible for the matter about which the 
allegations are made, or the Director's designee, shall serve as the 
Bureau Officer.
    (3) After review and evaluation of the allegations, any supporting 
materials, and any additional information that the Bureau Officer may 
acquire, the Bureau Officer, if he or she determines that further action 
is warranted, shall in writing notify the subject of the complaint of 
the underlying allegations and potential sanctions available to the 
Commission under this section, and provide him or her an opportunity to 
respond to the allegations and provide additional relevant information 
and material. The Bureau Officer may request that the Commission issue a 
resolution authorizing the use of compulsory process, and may thereafter 
initiate the service of compulsory process, to assist in obtaining 
information for the purpose of making a recommendation to the Commission 
whether further action may be warranted.
    (4) If the Bureau Officer, after review and evaluation of the 
allegations, supporting material, response by the subject of the 
allegations, if any, and all additional available information and 
material, determines that no further action is warranted, he or she may 
close the matter if the Commission has not issued a resolution 
authorizing the use of compulsory process. In the event the Bureau 
Officer determines that further Commission action may be warranted, or 
if the Commission has issued a resolution authorizing the use of 
compulsory process, he or she shall make a recommendation to the 
Commission. The recommendation shall include all relevant information 
and material as to whether further Commission action, or any other 
disposition of the matter, may be warranted.
    (5) If the Commission has reason to believe, after review of the 
Bureau Officer's recommendation, that an attorney has engaged in 
professional misconduct of the type described in paragraph (e)(1) of 
this section, the Commission may institute administrative disciplinary 
proceedings proposing public reprimand, suspension, or disbarment of the 
attorney from practice before the Commission. Except as provided in 
paragraph (e)(7) of this section, administrative disciplinary 
proceedings shall be handled in accordance with the following 
procedures:

[[Page 100]]

    (i) The Commission shall serve the respondent attorney with an order 
to show cause why the Commission should not impose sanctions against the 
attorney. The order to show cause shall specify the alleged misconduct 
at issue and the possible sanctions. The order to show cause shall be 
accompanied by all declarations, deposition transcripts, or other 
evidence the staff wishes the Commission to consider in support of the 
allegations of misconduct.
    (ii) Within 14 days of service of the order to show cause, the 
respondent may file a response to the allegations of misconduct. If the 
response disputes any of the allegations of misconduct, it shall do so 
with specificity and include all materials the respondent wishes the 
Commission to consider relating to the allegations. If no response is 
filed, the allegations shall be deemed admitted.
    (iii) If, upon considering the written submissions of the 
respondent, the Commission determines that there remains a genuine 
dispute as to any material fact, the Commission may order further 
proceedings to be presided over by an Administrative Law Judge or by one 
or more Commissioners sitting as Administrative Law Judges (hereinafter 
referred to collectively as the Administrative Law Judge), or by the 
Commission. The Commission order shall specify the nature and scope of 
any proceeding, including whether live testimony will be heard and 
whether any pre-hearing discovery will be allowed and if so to what 
extent. The attorney respondent shall be granted due opportunity to be 
heard in his or her own defense and may be represented by counsel. If 
the written submissions of the respondent raise no genuine dispute of 
material fact, the Commission may issue immediately any or all of the 
sanctions enumerated in the order to show cause provided for in 
paragraph (e)(5)(i) of this section.
    (iv) Commission counsel shall be appointed by the Bureau Officer to 
prosecute the allegations of misconduct in any administrative 
disciplinary proceedings instituted pursuant to this rule.
    (v) If the Commission assigns the matter to an Administrative Law 
Judge, the Commission will establish a deadline for an initial decision. 
The deadline shall not be modified by the Administrative Law Judge 
except that it may be amended by leave of the Commission.
    (vi) Based on the entirety of the record of administrative 
proceedings, the Administrative Law Judge or the Commission if it 
reviews the matter in the first instance, shall issue a decision either 
dismissing the allegations or, if it is determined that the allegations 
are supported by a preponderance of the evidence, specify an appropriate 
sanction. An Administrative Law Judge's decision may be appealed to the 
Commission by either party within 30 days. If the Administrative Law 
Judge's decision is appealed, the Commission will thereafter issue a 
scheduling order governing the appeal.
    (vii) Investigations and administrative proceedings prior to the 
hearing on the order to show cause will be nonpublic unless otherwise 
ordered by the Commission. Any administrative hearing on the order to 
show cause, and any oral argument on appeal, shall be open to the public 
unless otherwise ordered for good cause by the Commission or the 
Administrative Law Judge.
    (6) Regardless of any action or determination the Commission may or 
may not make, the Commission may direct the General Counsel to refer the 
allegations of misconduct to the appropriate state, territory, or 
District of Columbia bar or any other appropriate authority for further 
action.
    (7) Upon receipt of notification from any authority having power to 
suspend or disbar an attorney from the practice of law within any state, 
territory, or the District of Columbia, demonstrating that an attorney 
practicing before the Commission is subject to an order of final 
suspension (not merely temporary suspension pending further action) or 
disbarment by such authority, the Commission may, without resort to any 
of the procedures described in this section, enter an order temporarily 
suspending the attorney from practice before it and directing the 
attorney to show cause within 30 days from the date of said order why 
the Commission should not impose further discipline against the 
attorney. If no response is filed, the attorney will be deemed to have 
acceded to such further

[[Page 101]]

discipline as the Commission deems appropriate. If a response is 
received, the Commission may take action or initiate proceedings 
consistent with paragraph (e)(5) of this section before making a 
determination whether, and to what extent, to impose further discipline 
against the attorney.
    (8) The disciplinary process described in this section is in 
addition to, and does not supersede, the authority of the Commission or 
an Administrative Law Judge to discipline attorneys participating in 
part 3 proceedings pursuant to Sec. Sec. 3.24(b)(2) or 3.42(d).

[32 FR 8456, June 13, 1967, as amended at 40 FR 15235, Apr. 4, 1975; 41 
FR 16453, Apr. 19, 1976; 46 FR 26295, May 12, 1981; 48 FR 44767, Sept. 
30, 1983; 50 FR 50781, Dec. 12, 1985; 50 FR 53306, Dec. 31, 1985; 56 FR 
44139, Sept. 27, 1991; 58 FR 40737, July 30, 1993; 63 FR 15758, Apr. 1, 
1998; 64 FR 14830, Mar. 29, 1999; 66 FR 13645, Mar. 7, 2001; 66 FR 
64143, Dec. 12, 2001; 77 FR 59309, Sept. 27, 2012]



Sec. 4.2  Requirements as to form, and filing of documents other than
correspondence.

    (a) Filing. (1) All paper and electronic documents filed with the 
Commission or with an Administrative Law Judge pursuant to part 0, part 
1, part 2, or part 3 of this chapter shall be filed with the Secretary 
of the Commission, except that:
    (i) Documents produced in response to compulsory process issued 
pursuant to part 2 or part 3 of this chapter shall instead be produced 
to the custodian, deputy custodian, or other person prescribed therein, 
and in the manner prescribed therein; and
    (ii) Comments filed in response to a Commission request for public 
comment shall instead be filed in the manner prescribed in the Federal 
Register document or other Commission document containing the request 
for such comment.
    (2) All paper and electronic documents filed with the Commission 
pursuant to parts 4-999 of this chapter shall be filed with the 
Secretary of the Commission, except as otherwise provided in such part.
    (b) Title and public or nonpublic status. All paper and electronic 
documents filed with the Commission or with an Administrative Law Judge 
pursuant to any part of this chapter shall clearly show the file or 
docket number and title of the action in connection with which they are 
filed. Every page of each such document shall be clearly and accurately 
labeled ``Public'', ``In Camera'' or ``Confidential''.
    (c) Paper and electronic copies of filings before the Commission or 
an Administrative Law Judge in adjudicative proceedings under part 3 of 
this chapter. (1) Each document filed in an adjudicative proceeding 
under part 3, except documents covered by Sec. 4.2(a)(1)(i), shall be 
filed with the Secretary of the Commission, shall be in 12-point font 
with 1-inch margins, and shall comply with the requirements of 
Sec. Sec. 4.2(b) and (f) and 4.3(d). Documents may be filed with the 
Office of the Secretary either electronically or in hard copy.
    (i) Documents may be filed electronically by using the Office of the 
Secretary's electronic filing system and complying with the Secretary's 
directions for using that system. Documents filed electronically shall 
be in Adobe portable document format or such other format as the 
Secretary may direct.
    (ii) Documents filed in hard copy shall include a paper original, 
one paper copy, and an electronic copy in Adobe portable document format 
or such other format as the Secretary shall direct.
    (2) If the document is labeled ``In Camera'' or ``Confidential'', it 
must include as an attachment either a motion requesting in camera or 
other confidential treatment, in the form prescribed by Sec. 3.45 of 
this chapter, or a copy of a Commission, Administrative Law Judge, or 
federal court order granting such treatment. The document must also 
include as a separate attachment a set of only those pages of the 
document on which the in camera or otherwise confidential material 
appears and comply with all other requirements of Sec. 3.45 and any 
other applicable rules governing in camera treatment. A document labeled 
``In Camera'' or ``Confidential'' may be filed electronically using the 
electronic filing system.
    (3) Sensitive personal information, as defined in Sec. 3.45(b) of 
this chapter, shall not be included in, and must be redacted or omitted 
from, filings where the filing party determines that such

[[Page 102]]

information is not relevant or otherwise necessary for the conduct of 
the proceeding.
    (4) A copy of each document filed in accordance with this section in 
an adjudicative proceeding under part 3 of this chapter shall be served 
by the party filing the document or person acting for that party on all 
other parties pursuant to Sec. 4.4, at or before the time the original 
is filed.
    (d) Other documents filed with the Commission. (1) Each document 
filed with the Commission, and not covered by Sec. 4.2(a)(1)(i) or (ii) 
or Sec. 4.2(c), shall be filed with the Secretary of the Commission, 
and shall be clearly and accurately labeled as required by Sec. 4.2(b).
    (2) Each such document shall be signed and shall comply with the 
requirements of Sec. 4.2(f). Documents filed under this paragraph (d) 
shall include a paper original, one paper copy, and an electronic copy 
in Adobe portable document format, unless the Secretary shall otherwise 
direct.
    (3) Each such document labeled ``Public'' may be placed on the 
public record of the Commission at the time it is filed.
    (4) If such a document is labeled ``Confidential'', and it is filed 
pursuant to Sec. 2.10(a), Sec. 2.41(f), or Sec. 2.51 of this chapter, 
it will be rejected for filing pursuant to Sec. 4.2(g), and will not 
stay compliance with any applicable obligation imposed by the Commission 
or the Commission staff, unless the filer simultaneously files:
    (i) An explicit request for confidential treatment that includes the 
factual and legal basis for the request, identifies the specific 
portions of the document to be withheld from the public record, provides 
the name and address of the person(s) who should be notified in the 
event the Commission determines to disclose some or all of the material 
labeled ``Confidential'', and otherwise conforms to the requirements of 
Sec. 4.9(c); and
    (ii) A redacted public version of the document that is clearly 
labeled ``Public''.
    (e) Form. Paper documents filed with the Secretary of the Commission 
shall be printed, typewritten, or otherwise processed in permanent form 
and on good unglazed paper. A motion or other document filed in an 
adjudicative proceeding under part 3 of this chapter shall contain a 
caption setting forth the title of the case, the docket number, and a 
brief descriptive title indicating the purpose of the document.
    (f) Signature. (1) The original of each document filed shall be 
signed by an attorney of record for the filing party, or in the case of 
parties not represented by counsel, by the party itself, or by a partner 
if a partnership, or by an officer of the party if it is a corporation 
or an unincorporated association. For documents filed electronically 
using the Office of the Secretary's electronic filing system, documents 
must be signed using a scanned signature image, an ``s/'' followed by 
the name of the filer using the electronic filing system, or another 
signature method as the Secretary may direct.
    (2) Signing a document constitutes a representation by the signer 
that he or she has read it; that to the best of his or her knowledge, 
information, and belief, the statements made in it are true; that it is 
not interposed for delay; and that to the best of his or her knowledge, 
information, and belief, it complies with the rules in this part. If a 
document is not signed or is signed with intent to defeat the purpose of 
this section, it may be stricken as sham and false and the proceeding 
may go forward as though the document had not been filed.
    (g) Authority to reject documents for filing. The Secretary of the 
Commission may reject a document for filing that fails to comply with 
the Commission's rules. In cases of extreme hardship, the Secretary may 
excuse compliance with a rule regarding the filing of documents if the 
Secretary determines that the non-compliance would not interfere with 
the functions of the Commission.

[74 FR 1835, Jan. 13, 2009, as amended at 74 FR 20209, May 1, 2009; 76 
FR 52253, Aug. 22, 2011; 77 FR 59311, Sept. 27, 2012; 80 FR 25941, May 
6, 2015]



Sec. 4.3  Time.

    (a) Computation. Computation of any period of time prescribed or 
allowed by the rules in this chapter, by order of the Commission or an 
Administrative

[[Page 103]]

Law Judge, or by any applicable statute, shall begin with the first 
business day following that on which the act, event, or development 
initiating such period of time shall have occurred. When the last day of 
the period so computed is a Saturday, Sunday, or national holiday, or 
other day on which the office of the Commission is closed, the period 
shall run until the end of the next following business day. When such 
period of time, with the intervening Saturdays, Sundays, and national 
holidays counted, is seven (7) days or less, each of the Saturdays, 
Sundays, and such holidays shall be excluded from the computation. When 
such period of time, with the intervening Saturdays, Sundays, and 
national holidays counted, exceeds seven (7) days, each of the 
Saturdays, Sundays, and such holidays shall be included in the 
computation.
    (b) Extensions. For good cause shown, the Administrative Law Judge 
may, in any proceeding before him or her: (1) Extend any time limit 
prescribed or allowed by order of the Administrative Law Judge or the 
Commission (if the Commission order expressly authorizes the 
Administrative Law Judge to extend time periods); or (2) extend any time 
limit prescribed by the rules in this chapter, except those governing 
motions directed to the Commission, interlocutory appeals and initial 
decisions and deadlines that the rules expressly authorize only the 
Commission to extend. Except as otherwise provided by law, the 
Commission, for good cause shown, may extend any time limit prescribed 
by the rules in this chapter or by order of the Commission or an 
Administrative Law Judge, provided, however, that in a proceeding 
pending before an Administrative Law Judge, any motion on which he or 
she may properly rule shall be made to the Administrative Law Judge. 
Notwithstanding the above, where a motion to extend is made after the 
expiration of the specified period, the motion may be considered where 
the untimely filing was the result of excusable neglect.
    (c) Additional time after certain kinds of service. Whenever a party 
in an adjudicative proceeding under part 3 of this chapter is required 
or permitted to do an act within a prescribed period after service of a 
document upon it and the document is served by first-class mail pursuant 
to Sec. 4.4(a)(2) or (b), 3 days shall be added to the prescribed 
period. Whenever a party in an adjudicative proceeding under part 3 is 
required or permitted to do an act within a prescribed period after 
service of a document upon it and the document is served by electronic 
delivery pursuant to Sec. 4.4(e), 1 day shall be added to the 
prescribed period.
    (d) Date of filing. Documents permitted to be filed using the 
electronic filing system must be received by 11:59 p.m. Eastern Time to 
be deemed timely filed that day. All other documents must be received in 
the Office of the Secretary by 5:00 p.m. Eastern Time to be deemed filed 
that day, and any such document received after 5:00 p.m. Eastern Time 
will be deemed filed the following business day.

[32 FR 8456, June 13, 1967, as amended at 42 FR 30150, June 13, 1977; 50 
FR 28097, July 10, 1985; 50 FR 53306, Dec. 31, 1985; 66 FR 17633, Apr. 
3, 2001; 74 FR 1836, Jan. 13, 2009; 80 FR 25942, May 6, 2015]



Sec. 4.4  Service.

    (a) By the Commission. (1) Service of complaints, initial decisions, 
final orders and other processes of the Commission under 15 U.S.C. 45 
may be effected as follows:
    (i) By registered or certified mail. A copy of the document shall be 
addressed to the person, partnership, corporation or unincorporated 
association to be served at his, her or its residence or principal 
office or place of business, registered or certified, and mailed; 
service under this provision is complete upon delivery of the document 
by the Post Office; or
    (ii) By delivery to an individual. A copy thereof may be delivered 
to the person to be served, or to a member of the partnership to be 
served, or to the president, secretary, or other executive officer or a 
director of the corporation or unincorporated association to be served; 
service under this provision is complete upon delivery as specified 
herein; or
    (iii) By delivery to an address. A copy thereof may be left at the 
principal office or place of business of the person,

[[Page 104]]

partnership, corporation, or unincorporated association, or it may be 
left at the residence of the person or of a member of the partnership or 
of an executive officer or director of the corporation, or 
unincorporated association to be served; service under this provision is 
complete upon delivery as specified herein.
    (2) All documents served by the Commission or Administrative Law 
Judge in adjudicative proceedings under part 3 of this chapter, other 
than documents governed by paragraph (a)(1) of this section, may be 
served by personal delivery (including delivery by courier), by 
electronic delivery in accordance with Sec. 4.4(e), or by first-class 
mail. Unless otherwise specified in Sec. 4.4(e), documents shall be 
deemed served on the day of personal or electronic delivery or the day 
of mailing.
    (3) All other orders and notices, including subpoenas, orders 
requiring access, orders to file annual and special reports, and notices 
of default, may be served by any method reasonably certain to inform the 
affected person, partnership, corporation or unincorporated association, 
including any method specified in paragraph (a)(1) of this section, 
except that civil investigative demands may only be served in the manner 
provided by section 20(c)(8) of the FTC Act (in the case of service on a 
partnership, corporation, association, or other legal entity) or section 
20(c)(9) of the FTC Act (in the case of a natural person). Service under 
this provision is complete upon delivery by the Post Office or upon 
personal delivery (including delivery by courier).
    (b) By parties or third parties in adjudicative proceedings under 
part 3 of this chapter. (1) Service of documents by complaint counsel, 
respondents, or third parties in adjudicative proceedings under part 3 
shall be by delivering copies using the following methods.
    (i) Upon complaint counsel. A copy may be served by personal 
delivery (including delivery by courier), by electronic delivery in 
accordance with Sec. 4.4(e), or by first-class mail to the lead 
complaint counsel, with a copy to the Administrative Law Judge.
    (ii) Upon a party other than complaint counsel or upon a third 
party. A copy may be served by personal delivery (including delivery by 
courier), by electronic delivery in accordance with Sec. 4.4(e), or by 
first-class mail, with a copy to the Administrative Law Judge. If the 
party is an individual or partnership, delivery shall be to such 
individual or a member of the partnership; if a corporation or 
unincorporated association, to an officer or agent authorized to accept 
service of process therefor. Personal delivery includes handing the 
document to be served to the individual, partner, officer, or agent; 
leaving it at his or her office with a person in charge thereof; or, if 
there is no one in charge or if the office is closed or if the party has 
no office, leaving it at his or her dwelling house or usual place of 
abode with some person of suitable age and discretion then residing 
therein.
    (2) Unless otherwise specified in Sec. 4.4(e), documents served in 
adjudicative proceedings under part 3 shall be deemed served on the day 
of personal delivery (including delivery by courier), the day of 
electronic delivery, or the day of mailing.
    (c) Service upon counsel. When counsel has appeared in a proceeding 
on behalf of a party, service upon such counsel of any document, other 
than a complaint, shall be deemed service upon the party. However, 
service of those documents specified in paragraph (a)(1) of this section 
shall be in accordance with paragraphs (a)(1)(i), (ii), and (iii) of 
this section.
    (d) Proof of service. In an adjudicative proceeding under part 3, 
documents presented for filing shall contain proof of service in the 
form of a statement of the date and manner of service and of the names 
of the persons served, certified by the person who made service. Proof 
of service must appear on or be affixed to the documents filed.
    (e) Service by electronic delivery in an adjudicative proceeding 
under part 3 of this chapter--(1) Service through the electronic filing 
system. A party may elect, for documents labeled ``Public'' pursuant to 
Sec. 4.2(b), to be served via the electronic filing system provided by 
the Office of the Secretary. The electronic filing system cannot be used 
to serve third parties. For parties that have

[[Page 105]]

elected to be served via the electronic filing system:
    (i) Service of documents labeled ``Public'' pursuant to Sec. 4.2(b) 
may be effected through the electronic filing system;
    (ii) Each such party thereby agrees that, for any document served 
through the electronic filing system, transmission of the notice of 
electronic filing provided by the electronic filing system shall satisfy 
the service obligations of the serving party; and
    (iii) A document served via the electronic filing system shall be 
deemed served on the date the notice of electronic filing is 
transmitted, unless the serving party learns that the notice of 
electronic filing did not reach the person to be served.
    (2) Service by other methods of electronic delivery. (i) In the 
following circumstances, service by other methods of electronic delivery 
(including service by email) may be effected as the Administrative Law 
Judge and the Secretary may direct:
    (A) The document to be served is labeled ``In Camera'' or 
``Confidential'' pursuant to Sec. 4.2(b);
    (B) The party to be served has not elected to be served via the 
electronic filing system;
    (C) The document is to be served upon a third party; or
    (D) Service under paragraph (e)(1) of this section is unavailable 
for technical reasons.
    (ii) If documents labeled ``In Camera'' or ``Confidential'' are 
being served under this paragraph (e)(2), the documents must be 
encrypted prior to transit or must be transferred through a secure file 
transfer protocol. Service of a document under this paragraph (e)(2) 
shall be complete upon transmission by the serving party, unless the 
serving party learns that the document did not reach the person to be 
served.
    (f) Service of process upon the Commission. Documents served upon 
the Commission may be served by personal delivery (including delivery by 
courier) or by first-class mail to the Office of the Secretary of the 
Commission.

[80 FR 25942, May 6, 2015; 80 FR 60797, Oct. 8, 2015]



Sec. 4.5  Fees.

    (a) Deponents and witnesses. Any person compelled to appear in 
person in response to subpoena shall be paid the same fees and mileage 
as are paid witnesses in the courts of the United States.
    (b) Presiding officers. Officers before whom depositions are taken 
shall be entitled to the same fees as are paid for like services in the 
courts of the United States.
    (c) Responsibility. The fees and mileage referred to in this section 
shall be paid by the party at whose instance deponents or witnesses 
appear.

[32 FR 8456, June 13, 1967]



Sec. 4.6  Cooperation with other agencies.

    It is the policy of the Commission to cooperate with other 
governmental agencies to avoid unnecessary overlapping or duplication of 
regulatory functions.

[32 FR 8456, June 13, 1967]



Sec. 4.7  Ex parte communications.

    (a) Definitions. For purposes of this section, ex parte 
communication means an oral or written communication not on the public 
record with respect to which reasonable prior notice to all parties is 
not given, but it shall not include requests for status reports on any 
matter or proceeding.
    (b) Prohibited ex parte communications. While a proceeding is in 
adjudicative status within the Commission, except to the extent required 
for the disposition of ex parte matters as authorized by law:
    (1) No person not employed by the Commission, and no employee or 
agent of the Commission who performs investigative or prosecuting 
functions in adjudicative proceedings, shall make or knowingly cause to 
be made to any member of the Commission, or to the Administrative Law 
Judge, or to any other employee who is or who reasonably may be expected 
to be involved in the decisional process in the proceeding, an ex parte 
communciation relevant to the merits of that or a factually related 
proceeding; and
    (2) No member of the Commission, the Administrative Law Judge, or 
any

[[Page 106]]

other employee who is or who reasonably may be expected to be involved 
in the decisional process in the proceeding, shall make or knowingly 
cause to be made to any person not employed by the Commission, or to any 
employee or agent of the Commission who performs investigative or 
prosecuting functions in adjudicative proceedings, an ex parte 
communication relevant to the merits of that or a factually related 
proceeding.
    (c) Procedures. A Commissioner, the Administrative Law Judge or any 
other employee who is or who may reasonably be expected to be involved 
in the decisional process who receives or who make or knowingly causes 
to be made, a communication prohibited by paragraph (b) of this section 
shall promptly provide to the Secretary of the Commission:
    (1) All such written communications;
    (2) Memoranda stating the substance of and circumstances of all such 
oral communications; and
    (3) All written responses, and memoranda stating the substance of 
all oral responses, to the materials described in paragraphs (c) (1) and 
(2) of this section. The Secretary shall make relevant portions of any 
such materials part of the public record of the Commission, pursuant to 
Sec. 4.9, and place them in the docket binder of the proceeding to 
which it pertains, but they will not be considered by the Commission as 
part of the record for purposes of decision unless introduced into 
evidence in the proceeding. The Secretary shall also send copies of the 
materials to or otherwise notify all parties to the proceeding.
    (d) Sanctions. (1) Upon receipt of an ex parte communication 
knowingly made or knowingly caused to be made by a party and prohibited 
by paragraph (b) of this section, the Commission, Administrative Law 
Judge, or other employee presiding over the proceeding may, to the 
extent consistent with the interests of justice and the policy of the 
underlying statutes administered by the Commission, require the party to 
show cause why his claim or interest in the proceeding should not be 
dismissed, denied, disregarded, or otherwise adversely affected on 
account of such violation. The Commission may take such action as it 
considers appropriate, including but not limited to, action under Sec. 
4.1(e)(2) and 5 U.S.C. 556(d).
    (2) A person, not a party to the proceeding who knowingly makes or 
causes to be made an ex parte communication prohibited by paragraph (b) 
of this section shall be subject to all sanctions provided herein if he 
subsequently becomes a party to the proceeding.
    (e) The prohibitions of this section shall apply in an adjudicative 
proceeding from the time the Commission votes to issue a complaint 
pursuant to Sec. 3.11, to conduct adjudicative hearings pursuant to 
Sec. 3.13, or to issue an order to show cause pursuant to Sec. 
3.72(b), or from the time an order by a U.S. court of appeals remanding 
a Commission decision and order for further proceedings becomes 
effective, until the time the Commission votes to enter its decision in 
the proceeding and the time permitted by Sec. 3.55 to seek 
reconsideration of that decision has elapsed. For purposes of this 
section, an order of remand by a U.S. court of appeals shall be deemed 
to become effective when the Commission determines not to file a 
petition for a writ of certiorari, or when the time for filing such a 
petition has expired without a petition having been filed, or when such 
a petition has been denied. If a petition for reconsideration of a 
Commission decision is filed pursuant to Sec. 3.55, the provisions of 
this section shall apply until the time the Commission votes to enter an 
order disposing of the petition. In addition, the prohibitions of this 
section shall apply with respect to communications concerning an 
application for stay filed with the Commission pursuant to Sec. 3.56 
from the time that the application is filed until its disposition.
    (f) The prohibitions of paragraph (b) of this section do not apply 
to a communication occasioned by and concerning a nonadjudicative 
function of the Commission, including such functions as the initiation, 
conduct, or disposition of a separate investigation, the issuance of a 
complaint, or the initiation of a rulemaking or other proceeding, 
whether or not it involves a

[[Page 107]]

party already in an adjudicative proceeding; preparations for judicial 
review of a Commission order; a proceeding outside the scope of Sec. 
3.2, including a matter in state or federal court or before another 
governmental agency; a nonadjudicative function of the Commission, 
including but not limited to an obligation under Sec. 4.11 or a 
communication with Congress; or the disposition of a consent settlement 
under Sec. 3.25 concerning some or all of the charges involved in a 
complaint and executed by some or all respondents. The Commission, at 
its discretion and under such restrictions as it may deem appropriate, 
may disclose to the public or to respondent(s) in a pending adjudicative 
proceeding a communication made exempt by this paragraph from the 
prohibitions of paragraph (b) of this section, however, when the 
Commission determines that the interests of justice would be served by 
the disclosure. The prohibitions of paragraph (b) of this section also 
do not apply to a communication between any member of the Commission, 
the Administrative Law Judge, or any other employee who is or who 
reasonably may be expected to be involved in the decisional process, and 
any employee who has been directed by the Commission or requested by an 
individual Commissioner or Administrative Law Judge to assist in the 
decision of the adjudicative proceeding. Such employee shall not, 
however, have performed an investigative or prosecuting function in that 
or a factually related proceeding.

[42 FR 43974, Sept. 1, 1977, as amended at 44 FR 40637, July 12, 1979; 
46 FR 32435, June 23, 1981; 50 FR 53306, Dec. 31, 1985; 51 FR 36802, 
Oct. 16, 1986; 57 FR 10805, Mar. 31, 1992; 60 FR 37748, July 21, 1995; 
60 FR 67325, Dec. 29, 1995]



Sec. 4.8  Costs for obtaining Commission records.

    (a) Definitions. For the purpose of this section:
    (1) The term search includes all time spent looking, manually or by 
automated means, for material that is responsive to a request, including 
page-by-page or line-by-line identification of material within 
documents.
    (2) The term duplication refers to the process of making a copy of a 
document for the purpose of releasing that document in response to a 
request for Commission records. Such copies can take the form of paper 
copy, microform, audio-visual materials, or machine readable 
documentation such as magnetic tape or computer disc. For copies 
prepared by computer and then saved to a computer disc, the Commission 
charges the direct costs, including operator time, of production of the 
disc or other output format. Where paper documents must be scanned in 
order to comply with a requester's preference to receive the records in 
an electronic format, the requester shall pay the direct costs 
associated with scanning those materials. As set out in Sec. 4.8(b), 
certain requesters do not pay for direct costs associated with 
duplicating the first 100 pages.
    (3) The term review refers to the examination of documents located 
in response to a request to determine whether any portion of such 
documents may be withheld, and the redaction or other processing of 
documents for disclosure. Review costs are recoverable from commercial 
use requesters even if a record ultimately is not disclosed. Review time 
includes time spent considering formal objections to disclosure made by 
a business submitter but does not include time spent resolving general 
legal or policy issues regarding the release of the document.
    (4) The term direct costs means expenditures that the Commission 
actually incurs in processing requests. Direct costs include the salary 
of the employee performing work (the basic rate of pay for the employee 
plus 16 percent of that rate to cover benefits) and the cost of 
operating duplicating machinery. Not included in direct costs are 
overhead expenses such as costs of document review facilities or the 
costs of heating or lighting such a facility or other facilities in 
which records are stored. The direct costs of specific services are set 
forth in Sec. 4.8(b)(6).
    (b) Fees. User fees pursuant to 31 U.S.C. 9701 and 5 U.S.C. 552(a) 
shall be charged according to this paragraph, unless the requester 
establishes the applicability of a public interest fee waiver pursuant 
to Sec. 4.8(e). The chart summarizes the types of charges that apply

[[Page 108]]

to requester categories set out in paragraphs (b)(1)-(b)(3).

----------------------------------------------------------------------------------------------------------------
                                         Fee charged for all      Fee charged for all
         Requester categories                search time              review time          Duplication charges
----------------------------------------------------------------------------------------------------------------
Commercial...........................  Fee....................  Fee....................  Fee charged for all
                                                                                          duplication.
Educational, Non-commercial            No charge..............  No charge..............  No charge for first 100
 Scientific Institution, or News                                                          pages.
 Media.
All other requesters (including        Fee after two hours....  No charge..............  No charge for first 100
 members of the general public).                                                          pages.
----------------------------------------------------------------------------------------------------------------

    (1) Commercial use requesters. Commercial use requesters will be 
charged for the direct costs to search for, review, and duplicate 
documents. A commercial use requester is a requester who seeks 
information for a use or purpose that furthers the commercial, trade, or 
profit interests of the requester or the person on whose behalf the 
request is made.
    (2) Educational requesters, non-commercial scientific institution 
requesters, and representative of the news media. Requesters in these 
categories will be charged for the direct costs to duplicate documents, 
excluding charges for the first 100 pages.
    (i) An educational institution is a preschool, a public or private 
elementary or secondary school, an institution of graduate higher 
education, an institution of undergraduate higher education, an 
institution of professional education, and an institution of vocational 
education, which operates a program or programs of scholarly research. 
To be in this category, a requester must show that the request is 
authorized by and is made under the auspices of a qualifying institution 
and that the records are sought to further the scholarly research of the 
institution and are not sought for a commercial or an individual use or 
goal.
    (ii) A non-commercial scientific institution is an institution that 
is not operated on a commercial basis as that term is referenced in 
paragraph (b)(1) of this section, and that is operated solely to conduct 
scientific research the results of which are not intended to promote any 
particular product or industry.
    (iii) A representative of the news media is any person or entity 
that gathers information of potential interest to a segment of the 
public, uses its editorial skills to turn the raw materials into a 
distinct work, and distributes that work to the public. The term 
``news'' means information that is about current events or that would be 
of current interest to the public. Examples of news media entities 
include television or radio stations broadcasting to the public at large 
and publishers of periodicals (but only in those instances where they 
can qualify as disseminators of news) who make their products available 
for purchase by or subscription by the general public or free 
distribution to the general public. These examples are not intended to 
be all-inclusive. As traditional methods of news delivery evolve (e.g., 
electronic dissemination of newspapers through telecommunications 
services), such alternative media shall be considered to be news-media 
entities. A freelance journalist shall be regarded as working for a 
news-media entity if the journalist can demonstrate a solid basis for 
expecting publication through that entity, whether or not the journalist 
is actually employed by the entity. A publication contract would provide 
a solid basis for such an expectation, but the past publication record 
of a requester may also be considered in making such a determination.
    (3) Other requesters. Other requesters not described in paragraphs 
(b)(1) or (2) will be charged for the direct costs to search for and 
duplicate documents, except that the first 100 pages of duplication and 
the first two hours of search time shall be furnished without charge.
    (4) Waiver of small charges. Notwithstanding the provisions of 
paragraphs (b)(1), (2), and (3) of this section, charges will be waived 
if the total chargeable fees for a request are under $25.00.
    (5) Materials available without charge. These provisions do not 
apply to public records, including but not limited to Commission 
decisions, orders, and

[[Page 109]]

other public materials that may be made available to all requesters 
without charge.
    (6)(i) Schedule of direct costs. The following uniform schedule of 
fees applies to records held by all constituent units of the Commission:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Duplication:
    Paper to paper copy (up to 8.5 x 14)..
    Converting paper into electronic        Quarter hour rate of
     format (scanning).                      operator (Clerical, Other
                                             Professional, Attorney/
                                             Economist).
    Other reproduction (e.g., computer      Actual direct cost,
     disk or printout, microfilm,            including operator time.
     microfiche, or microform).
Electronic Services:
    Preparing electronic records and media  $10.00 per qtr. hour.
    Compact disc (CD).....................  $3.00 per disc.
    DVD...................................  $3.00 per disc.
    Videotape cassette....................  $2.00 per cassette.
Microfilm Services:
    Conversion of existing fiche/film to    $0.14 per page.
     paper.
Other Fees:
    Certification.........................  $25.00 each.
    Express Mail..........................  U.S. Postal Service Market
                                             Rates.
    Records maintained at Iron Mountain or  Contract Rates.
     Washington National Records Center
     facilities (records retrieval, re-
     filing, et cetera).
    Other Services as they arise..........  Market Rates.
------------------------------------------------------------------------

    (ii) Search, review and duplication fees. Agency staff is divided 
into three categories: Clerical, attorney/economist, and other 
professional. Fees for search and review purposes, as well the costs of 
operating duplication machinery such as converting paper to electronic 
format (scanning), are assessed on a quarter-hourly basis, and are 
determined by identifying the category into which the staff member(s) 
conducting the search or review or duplication procedure belong(s), 
determining the average quarter-hourly wages of all staff members within 
that category, and adding 16 percent to reflect the cost of additional 
benefits accorded to government employees. The exact fees are calculated 
and announced periodically and are available from the Consumer Response 
Center, Federal Trade Commission, 600 Pennsylvania Avenue NW., 
Washington, DC 20580; (202) 326-2222.
    (7) Untimely responses. Search fees will not be assessed for 
responses that fail to comply with the time limits in which to respond 
to a Freedom of Information Act request, provided at 5 U.S.C. 
552(a)(4)(A)(viii) and Sec. 4.11(a)(1)(ii), if there are no unusual or 
exceptional circumstances, as those terms are defined by 5 U.S.C. 
552(a)(6) and Sec. 4.11(a)(1)(ii). Duplication fees will not be 
assessed for an untimely response, where there are no unusual or 
exceptional circumstances, made to a requester qualifying for one of the 
fee categories set forth in Sec. 4.8(b)(2).
    (c) Information to determine fees. Each request for records shall 
set forth whether the request is made for either commercial or non-
commercial purposes or whether the requester is an educational 
institution, a noncommercial scientific institution, or a representative 
of the news media. The deciding official (as designated by the General 
Counsel) will use this information, any additional information provided 
by the requester, and any other relevant information to determine the 
appropriate fee category in which to place the requester. See Sec. 
4.11(a)(3)(i)(A)(3) for procedures on appealing fee category and fee 
waiver determinations.
    (d) Agreement to pay fees. (1) Each request that does not contain an 
application for a fee waiver as set forth in Sec. 4.8(e) shall 
specifically indicate that the requester will either:
    (i) Pay, in accordance with Sec. 4.8(b), whatever fees may be 
charged for processing the request; or
    (ii) Pay such fees up to a specified amount, whereby the processing 
of the request would cease once the specified amount has been reached.
    (2) Each request that contains an application for a fee waiver shall 
specifically indicate whether the requester, in the case that the fee 
waiver is not granted, will:
    (i) Pay, in accordance with Sec. 4.8(b), whatever fees may be 
charged for processing the request;
    (ii) Pay fees up to a specified amount, whereby the processing of 
the request would cease once the specified amount has been reached; or
    (iii) Not pay fees, whereby the processing of the request will cease 
at the point fees are to be incurred in accordance with Sec. 4.8(b).

[[Page 110]]

    (3) If the agreement required by this section is absent, and if the 
estimated fees exceed $25.00, the requester will be advised of the 
estimated fees and the request will not be processed until the requester 
agrees to pay such fees. If the requester does not respond to the 
notification that the estimated fees exceed $25.00 within 20 calendar 
days from the date of the notification, the request will be closed.
    (e) Public interest fee waivers--(1) Procedures. A requester may 
apply for a waiver of fees. The requester shall explain in sufficient 
detail why a waiver is appropriate under the standards set forth in this 
paragraph. The application shall also include a statement, as provided 
by paragraph (d) of this section, of whether the requester agrees to pay 
costs if the waiver is denied. The deciding official (as designated by 
the General Counsel) will rule on applications for fee waivers. To 
appeal the deciding official's determination of the fee waiver, a 
requester must follow the procedures set forth in Sec. 4.11(a)(3).
    (2) Standards. (i) The first requirement for a fee waiver is that 
disclosure will likely contribute significantly to public understanding 
of the operations or activities of the government. This requirement 
shall be met if the requester establishes that:
    (A) The subject matter of the requested information concerns the 
operations or activities of the Federal government;
    (B) The disclosure is likely to contribute to an understanding of 
these operations or activities;
    (C) The understanding to which disclosure is likely to contribute is 
the understanding of the public at large, as opposed to the 
understanding of the individual requester or a narrow segment of 
interested persons; (e.g., by providing specific information about the 
requester's expertise in the subject area of the request and about the 
ability and intention to disseminate the information to the public); and
    (D) The likely contribution to public understanding will be 
significant.
    (ii) The second requirement for a fee waiver is that the request not 
be primarily in the commercial interest of the requester. This 
requirement shall be met if the requester shows either:
    (A) That the requester does not have a commercial interest that 
would be furthered by the requested disclosure; or
    (B) If the requester does have a commercial interest that would be 
furthered by the requested disclosure, that the public interest in 
disclosure outweighs the identified commercial interest of the requester 
so that the disclosure is not primarily in the requester's commercial 
interest.
    (f) Searches that do not yield responsive records. Charges may be 
assessed for search time even if the agency fails to locate any 
responsive records or if it locates only records that are determined to 
be exempt from disclosure.
    (g) Aggregating requests. If the deciding official (as designated by 
the General Counsel) initially, or the General Counsel on appeal, 
reasonably believes that a requester, or a group of requesters acting in 
concert, is attempting to evade an assessment of fees by dividing a 
single request into a series of smaller requests, the requests may be 
aggregated and fees charged accordingly.
    (h) Advance payment. If the deciding official (as designated by the 
General Counsel) initially, or the General Counsel on appeal, estimates 
or determines that allowable charges that a requester may be required to 
pay are likely to exceed $250.00, or if the requester has previously 
failed to pay a fee within 30 days of the date of billing, the requester 
may be required to pay some or all of the total estimated charge in 
advance. Further, the requester may be required to pay all unpaid bills, 
including accrued interest, prior to processing the request.
    (i) Means of payment. Payment shall be made by check or money order 
payable to the Treasury of the United States.
    (j) Interest charges. The Commission will begin assessing interest 
charges on an unpaid bill starting on the 31st day following the day on 
which the bill was sent. Interest will accrue from the date of the 
billing, and will be calculated at the rate prescribed in 31 U.S.C. 
3717.
    (k) Effect of the Debt Collection Act of 1982 (Pub. L. 97-365), as 
amended by the Debt Collection Improvement Act of 1996 (Pub. L. 104-
134). The Commission will pursue repayment, where appropriate,

[[Page 111]]

by employing the provisions of the Debt Collection Act of 1982, as 
amended by the Debt Collection Improvement Act of 1996, the Federal 
Claims Collection Standards (FCSS), 31 CFR 900-904, and any other 
applicable authorities in collecting unpaid fees assessed under this 
section, including disclosure to consumer reporting agencies and use of 
collection agencies. The FTC also reserves the legal right to employ 
other lawful debt collection methods such as alternative dispute 
resolution and arbitration when appropriate.

[57 FR 10806, Mar. 31, 1992, as amended at 63 FR 45646, Aug. 26, 1998; 
64 FR 3012, Jan. 20, 1999; 66 FR 64144, Dec. 12, 2001; 78 FR 15683, Mar. 
21, 2014]



Sec. 4.9  The public record.

    (a) General. (1) Materials on the public record of the Commission 
are available for public inspection and copying either from the 
Commission's Web site or upon request.
    (2) Materials that are exempt from mandatory public disclosure, or 
are otherwise not available from the Commission's public record, may be 
made available only upon request under the procedures set forth in Sec. 
4.11, or as provided in Sec. Sec. 4.10(d) through (g), 4.13, and 
4.15(b)(3), or by the Commission.
    (3) Electronic access to public records. The majority of recent 
Commission public records are available for review electronically on the 
Commission's Web site on the Internet, www.ftc.gov. Copies of records 
that the Commission is required to make available to the public 
electronically, pursuant to 5 U.S.C. 552(a)(2), may be obtained in that 
format from http://www.ftc.gov/foia/readingroom.shtm.
    (4) Requesting public records--(i) Procedures. Certain older public 
records may not be available at the FTC Web site. Any person may request 
copies of such records by contacting the FTC Reading Room by telephone 
at (202) 326-2222, extension 2. These requests shall specify as clearly 
and accurately as reasonably possible the records desired. For records 
that cannot be specified with complete clarity and particularity, 
requesters shall provide descriptions sufficient to enable qualified 
Commission personnel to locate the records sought. The Commission, the 
Supervisor of the Consumer Response Center, the General Counsel, or the 
deciding official (as designated by the General Counsel) may decide to 
provide only one copy of any public record and may refuse to provide 
copies to the requester if the records have been published or are 
publicly available at places other than the Commission's offices.
    (ii) Costs; agreement to pay costs. Requesters will be charged 
search and duplication costs prescribed by Rule 4.8 for requests under 
this section. All requests shall include a statement of the information 
needed to determine fees, as provided by Sec. 4.8(c), and an agreement 
to pay fees (or a statement that the requester will not pay fees if a 
fee waiver is denied), as provided by Sec. 4.8(d). Requests may also 
include an application for a fee waiver, as provided by Sec. 4.8(e). 
Advance payment may be required, as provided by Sec. 4.8(h).
    (iii) Records for sale at another government agency. If requested 
materials are available for sale at another government agency, the 
requester will not be provided with copies of the materials but will be 
advised to obtain them from the selling agency. The U.S. Government 
Printing Office (``GPO''), the official bookstore for most U.S. 
Government publications, can be contacted at (202) 512-1800 or toll-free 
at (866) 512-1800, and at [email protected] The GPO's online store 
can be accessed at http://bookstore.gpo.gov and mail orders should be 
directed to U.S. Government Printing Office, P.O. Box 979050, St. Louis, 
MO 63197-9000.
    (b) Categories. Except to the extent material is confidential, as 
provided in paragraph (c) of this section, the public record of the 
Commission includes, but is not necessarily limited to:
    (1) Commission Organization and Procedures (16 CFR part 0 and 
Sec. Sec. 4.14 through 4.15, 4.17). (i) A current index of opinions, 
orders, statements of policy and interpretations, administrative staff 
manuals, general instructions and other public records of the 
Commission;
    (ii) A current record of the final votes of each member of the 
Commission in all matters of public record, including matters of public 
record decided by notational voting;

[[Page 112]]

    (iii) Descriptions of the Commission's organization, including 
descriptions of where, from whom, and how the public may secure 
information, submit documents or requests, and obtain copies of orders, 
decisions and other materials;
    (iv) Statements of the Commission's general procedures and policies 
and interpretations, its nonadjudicative procedures, its rules of 
practice for adjudicative proceedings, and its miscellaneous rules, 
including descriptions of the nature and requirements of all formal and 
informal procedures available, and
    (v) Reprints of the principal laws under which the Commission 
exercises enforcement or administrative responsibilities.
    (2) Industry Guidance (16 CFR 1.1-1.6). (i) Any advice, advisory 
opinion or response given and required to be made public under 
Sec. Sec. 1.4 and 2.41 (d) or (f) of this chapter (whether by the 
Commission or the staff), together with a statement of supporting 
reasons;
    (ii) Industry guides, digests of advisory opinions and compliance 
advice believed to be of interest to the public generally and other 
administrative interpretations;
    (iii) Transcripts of hearings in all industry guide proceedings, as 
well as written statements filed with or forwarded to the Commission in 
connection with these proceedings; and
    (iv) Petitions filed with the Secretary of the Commission for the 
promulgation or issuance, amendment, or repeal of industry guides.
    (3) Rulemaking (16 CFR 1.7 through 1.26). (i) Petitions filed with 
the Secretary of the Commission for the promulgation or issuance, 
amendment, or repeal of rules or regulations within the scope of 
Sec. Sec. 1.7 and 1.21 of this chapter, and petitions for exemptions;
    (ii) Notices and advance notices of proposed rulemaking and rules 
and orders issued in rulemaking proceedings; and
    (iii) Transcripts of hearings of all rulemaking proceedings, all 
other materials that are distributed to the public during these 
proceedings, and written statements filed with or forwarded to the 
Commission in connection with these proceedings.
    (4) Investigations. (i) Petitions to limit or quash compulsory 
process and the rulings thereon; and
    (ii) Closing letters in initial phase and full phase investigations.
    (5) Adjudicative proceedings, stay applications, requests to reopen, 
and litigated orders. (16 CFR 2.51, 3.1 through 3.24, 3.31 through 3.56, 
3.71 through 3.72, 4.7)--Except for transcripts of matters heard in 
camera pursuant to Sec. 3.45 and material filed in camera pursuant to 
Sec. Sec. 3.22, 3.24, 3.45, 3.46, 3.51 and 3.52,
    (i) The versions of pleadings and transcripts of prehearing 
conferences to the extent made available under Sec. 3.21(e), motions, 
certifications, orders, and the transcripts of hearings (including 
public conferences), testimony, oral arguments, and other material made 
a part thereof, and exhibits and material received in evidence or made a 
part of the public record in adjudicative proceedings;
    (ii) Initial decisions of administrative law judges;
    (iii) Orders and opinions in interlocutory matters;
    (iv) Final orders and opinions in adjudications, and rulings on stay 
applications, including separate statements of Commissioners;
    (v) Petitions for reconsideration, and answers thereto, filed 
pursuant to Sec. 3.55;
    (vi) Applications for stay, answers thereto, and replies, filed 
pursuant to Sec. 3.56;
    (vii) Petitions, applications, pleadings, briefs, and other records 
filed by the Commission with the courts in connection with adjudicative, 
injunctive, enforcement, compliance, and condemnation proceedings, and 
in connection with judicial review of Commission actions, and opinions 
and orders of the courts in disposition thereof;
    (viii) Records of ex parte communications in adjudicative 
proceedings and stay applications;
    (ix) Petitions to reopen proceedings and orders to determine whether 
orders should be altered, modified, or set aside in accordance with 
Sec. 2.51; and
    (x) Decisions reopening proceedings, and orders to show cause under 
Sec. 3.72.
    (6) Consent agreements (16 CFR 2.31 through 2.34, 3.25). (i) 
Agreements containing orders, after acceptance by the

[[Page 113]]

Commission pursuant to Sec. Sec. 2.34 and 3.25(f) of this chapter;
    (ii) Comments and other materials filed or placed on the public 
record under Sec. Sec. 2.34 and 3.25(f) concerning proposed consent 
agreements and related orders; and
    (iii) Decisions and orders issued and served under Sec. Sec. 2.34 
and 3.25(f), including separate statements of Commissioners.
    (7) Compliance/enforcement (16 CFR 2.33, 2.41). (i) Reports of 
compliance filed pursuant to the rules in this chapter or pursuant to a 
provision in a Commission order and supplemental materials filed in 
connection with these reports, except for reports of compliance, and 
supplemental materials filed in connection with Commission orders 
requiring divestitures or establishment of business enterprises of 
facilities, which are confidential until the last divestiture or 
establishment of a business enterprise or facility, as required by a 
particular order, has been finally approved by the Commission, and staff 
letters to respondents advising them that their compliance reports do 
not warrant any further action. At the time each such report is 
submitted the filing party may request confidential treatment in 
accordance with paragraph (c) of this section and the General Counsel or 
the General Counsel's designee will pass upon such request in accordance 
with that paragraph;
    (ii) Materials required to be made public under 16 CFR 2.41(f) in 
connection with applications for approval of proposed divestitures, 
acquisitions or similar transactions subject to Commission review under 
outstanding orders.
    (8) Access to documents and meetings (16 CFR 4.8, 4.11, 4.13, 4.15). 
(i) Letters requesting access to Commission records pursuant to Sec. 
4.11(a) of this chapter and the Freedom of Information Act, 5 U.S.C. 
552, and letters granting or denying such requests (not including access 
requests and answers thereto from the Congress or other government 
agencies);
    (ii) Announcements of Commission meetings as required under the 
Sunshine Act, 5 U.S.C. 552b, including records of the votes to close 
such meetings;
    (iii) Summaries or other explanatory materials relating to matters 
to be considered at open meetings made available pursuant to Sec. 
4.15(b)(3)
    (iv) Commission minutes of open meetings, and, to the extent they 
are not exempt from mandatory public disclosure under the Sunshine Act 
or the Freedom of Information Act, portions of minutes or transcripts of 
closed meetings; and
    (v) A guide for requesting records or information from the 
Commission, including an index of all major information systems, a 
description of major information and record locator systems maintained 
by the Commission, and a handbook for obtaining various types and 
categories of public information.
    (9) Standards of conduct (16 CFR 5.5 through 5.6, 5.10 through 5.26, 
5.31, 5.57 through 5.68). (i) Memoranda to staff elaborating or 
clarifying standards described in administrative staff manuals and part 
5 of this subchapter.
    (10) Miscellaneous (press releases, clearance requests, reports 
filed by or with the Commission, continuing guaranties, registered 
identification numbers). (i) Releases by the Commission's Office of 
Public Affairs supplying information concerning the activities of the 
Commission;
    (ii) Applications under Sec. 4.1(b)(2) of this chapter for 
clearance or authorization to appear or participate in a proceeding or 
investigation and of the Commission's responses thereto;
    (iii) Continuing guaranties filed under the Wool, Fur, and Textile 
Acts;
    (iv) Published reports by the staff or by the Commission on economic 
surveys and investigations of general interest;
    (v) Filings by the Commission or by the staff in connection with 
proceedings before other federal agencies or state or local government 
bodies;
    (vi) Registration statements and annual reports filed with the 
Commission by export trade associations, and bulletins, pamphlets, and 
reports with respect to such associations released by the Commission;
    (vii) The identities of holders of registered identification numbers 
issued

[[Page 114]]

by the Commission pursuant to Sec. 1.32 of this chapter;
    (viii) The Commission's annual report submitted after the end of 
each fiscal year, summarizing its work during the year (with copies 
obtainable from the Superintendent of Documents, U.S. Government 
Publishing Office, Washington, DC 20402) and any other annual reports 
made to Congress on activities of the Commission as required by law;
    (ix) Records, as determined by the General Counsel or his or her 
designee, that have been released in response to a request made under 
the Freedom of Information Act, 5 U.S.C. 552, and which, because of the 
nature of the subject matter, have become or are likely to become the 
subject of subsequent requests for substantially the same records, or 
that have been requested three or more times, except where some or all 
of those records would be exempt from disclosure under 5 U.S.C. 552 if 
requested by another party;
    (x) A general index of the records referred to under paragraph 
(b)(10)(ix) of this section;
    (xi) Grants of early termination of waiting periods published in 
accordance with the Hart-Scott-Rodino premerger notification provisions 
of the Clayton Act, 15 U.S.C. 18a(b)(2);
    (xii) Reports on appliance energy consumption or efficiency filed 
with the Commission pursuant to Sec. 305.8 of this chapter;
    (xiii) Annual filings by professional boxing sanctioning 
organizations as required by the Muhammed Ali Boxing Reform Act, 15 
U.S.C. 6301 note, 6307a-6307h;
    (xiv) All transcripts or other materials that are distributed by 
staff at public workshops;
    (xv) Other documents that the Commission has determined to place on 
the public record; and
    (xvi) Every amendment, revision, substitute, or repeal of any of the 
foregoing items listed in paragraphs (b)(1) through (10) of this 
section.
    (c) Confidentiality and in camera material. (1) Persons submitting 
material to the Commission described in this section may designate that 
material or portions of it confidential and request that it be withheld 
from the public record. All requests for confidential treatment shall be 
supported by a showing of justification in light of applicable statutes, 
rules, orders of the Commission or its administrative law judges, orders 
of the courts, or other relevant authority. The General Counsel or the 
General Counsel's designee will act upon such request with due regard 
for legal constraints and the public interest. No such material or 
portions of material (including documents generated by the Commission or 
its staff containing or reflecting such material or portions of 
material) will be placed on the public record until the General Counsel 
or the General Counsel's designee has ruled on the request for 
confidential treatment and provided any prior notice to the submitter 
required by law.
    (2) Motions seeking in camera treatment of material submitted in 
connection with a proceeding under part 3 of these rules, except stay 
applications under Sec. 3.56, shall be filed with the Administrative 
Law Judge who is presiding over the proceeding. Requests for 
confidential treatment of material submitted in connection with a stay 
application shall be made in accordance with Sec. 4.9(c)(1).
    (3) To the extent that any material or portions of material 
otherwise falling within paragraph (b) of this section contain 
information that is not required to be made public under Sec. 4.10 of 
this part, the General Counsel or the General Counsel's designee may 
determine, with due regard for legal constraints and the public 
interest, to withhold such materials from the public record.

[50 FR 50779, Dec. 12, 1985, as amended at 57 FR 10805, Mar. 31, 1992; 
59 FR 34970, July 8, 1994; 60 FR 37749, July 21, 1995; 63 FR 18820, Apr. 
16, 1998; 63 FR 32977, June 17, 1998; 63 FR 45647, Aug. 26, 1998; 64 FR 
46269, Aug. 25, 1999; 66 FR 17633, Apr. 3, 2001; 66 FR 64144, Dec. 12, 
2001; 77 FR 59311, Sept. 27, 2012; 78 FR 13474, Feb. 28, 2013; 80 FR 
15162, Mar. 23, 2015; 80 FR 16961, Mar. 31, 2015; 81 FR 93805, Dec. 22, 
2016]



Sec. 4.10  Nonpublic material.

    (a) The following records and other material of the Commission are 
not required to be made public pursuant to 5 U.S.C. 552.

[[Page 115]]

    (1) Records, except to the extent required to be disclosed under 
other laws or regulations, related solely to the internal personnel 
rules and practices of the Commission. This exemption applies to 
internal rules or instructions to Commission personnel which must be 
kept confidential in order to assure effective performance of the 
functions and activities for which the Commission is responsible and 
which do not affect members of the public.
    (2) Trade secrets and commercial or financial information obtained 
from a person and privileged or confidential. As provided in section 
6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), this 
exemption applies to competitively sensitive information, such as costs 
or various types of sales statistics and inventories. It includes trade 
secrets in the nature of formulas, patterns, devices, and processes of 
manufacture, as well as names of customers in which there is a 
proprietary or highly competitive interest.
    (3) Interagency or intra-agency memoranda or letters that would not 
routinely be available by law to a private party in litigation with the 
Commission, provided that the deliberative process privilege shall not 
apply to records created 25 years or more before the date on which the 
records are requested. This exemption preserves the existing freedom of 
Commission officials and employees to engage in full and frank 
communication with each other and with officials and employees of other 
governmental agencies. This exemption includes records of the 
deliberations of the Commission except for the record of the final votes 
of each member of the Commission in every agency proceeding. It includes 
intraagency and interagency reports, memorandums, letters, 
correspondence, work papers, and minutes of meetings, as well as staff 
papers prepared for use within the Commission or between the Commission 
and other governmental agencies. It also includes information scheduled 
for public release, but as to which premature release would be contrary 
to the public interest;
    (4) Personnel and medical files and similar files the disclosure of 
which would constitute a clearly unwarranted invasion of personal 
privacy except to the extent such files or materials must be disclosed 
under other laws or regulations. This exemption applies to personnel and 
medical records and similar records containing private or personal 
information concerning any individual which, if disclosed to any person 
other than the individual concerned or his designated legal 
representative without his permission in writing, would constitute a 
clearly unwarranted invasion of personal privacy. Examples of files 
exempt from disclosure include, but are not limited to:
    (i) The personnel records of the Commission;
    (ii) Files containing reports, records or other material pertaining 
to individual cases in which disciplinary or other administrative action 
has been or may be taken, including records of proceedings pertaining to 
the conduct or performance of duties by Commission personnel;
    (5) Records or information compiled for law enforcement purposes, 
but only to the extent that production of such law enforcement records 
or information:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to a fair trial or an 
impartial adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a State, local, or foreign agency or 
authority or any private institution that furnished information on a 
confidential basis, and, in the case of a record or information compiled 
by a criminal law enforcement authority in the course of a criminal 
investigation, or by an agency conducting a lawful national security 
intelligence investigation, information furnished by a confidential 
source;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such

[[Page 116]]

disclosure could reasonably be expected to risk circumvention of the 
law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual.
    (6) Information contained in or related to examination, operating, 
or condition reports prepared by, on behalf of, or for the use of an 
agency responsible for the regulation or supervision of financial 
institutions;
    (7) Geological and geophysical information and data, including maps, 
concerning wells; and
    (8) Material, as that term is defined in section 21(a) of the 
Federal Trade Commission Act, which is received by the Commission:
    (i) In an investigation, a purpose of which is to determine whether 
any person may have violated any provision of the laws administered by 
the Commission; and
    (ii) Which is provided pursuant to any compulsory process under the 
Federal Trade Commission Act, 15 U.S.C. 41, et seq., or which is 
provided voluntarily in place of compulsory process in such an 
investigation. See section 21(f) of the Federal Trade Commission Act.
    (9) Material, as that term is defined in section 21(a) of the 
Federal Trade Commission Act, which is received by the Commission 
pursuant to compulsory process in an investigation, a purpose of which 
is to determine whether any person may have violated any provision of 
the laws administered by the Commission. See section 21(b)(3)(C) of the 
Federal Trade Commission Act.
    (10) Such other material of the Commission as may from time to time 
be designated by the Commission as confidential pursuant to statute or 
Executive Order. This exempts from disclosure any information that has 
been designated nonpublic pursuant to criteria and procedures prescribed 
by Executive Order and that has not been subsequently declassified in 
accordance with applicable procedures. The exemption also preserves the 
full force and effect of statutes that restrict public access to 
specific government records or material.
    (11) Material in an investigation or proceeding that involves a 
possible violation of criminal law, when there is reason to believe that 
the subject of the investigation or proceeding is not aware of its 
pendency, and disclosure of the existence of the investigation could 
reasonably be expected to interfere with enforcement proceedings. When a 
request is made for records under Sec. 4.11(a), the Commission may 
treat the records as not subject to the requirements of the Freedom of 
Information Act.
    (b) With respect to information contained in transcripts of 
Commission meetings, the exemptions contained in paragraph (a) of this 
section, except for paragraphs (a)(3) and (a)(7) of this section, shall 
apply; in addition, such information will not be made available if it is 
likely to have any of the effects described in 5 U.S.C. 552b (c)(5), 
(c)(9), or (c)(10).
    (c) Under section 10 of the Federal Trade Commission Act, any 
officer or employee of the Commission who shall make public any 
information obtained by the Commission, without its authority, unless 
directed by a court, shall be deemed guilty of a misdemeanor, and upon 
conviction thereof, may be punished by a fine not exceeding five 
thousand dollars ($5,000), or by imprisonment not exceeding 1 year, or 
by fine and imprisonment, in the discretion of the court.
    (d) Except as provided in paragraphs (f) or (g) of this section or 
in Sec. 4.11(b), (c), (d), (i), or (j), no material that is marked or 
otherwise identified as confidential and that is within the scope of 
Sec. 4.10(a)(8), and no material within the scope of Sec. 4.10(a)(9) 
that is not otherwise public, will be made available without the consent 
of the person who produced the material, to any individual other than a 
duly authorized officer or employee of the Commission or a consultant or 
contractor retained by the Commission who has agreed in writing not to 
disclose the information. All other Commission records may be made 
available to a requester under the procedures set forth in Sec. 4.11 or 
may be disclosed by the Commission except where prohibited by law.
    (e) Except as provided in paragraphs (f) or (g) of this section or 
in Sec. 4.11(b), (c), (d), (i), or (j), material not within the scope 
of Sec. 4.10(a)(8) or Sec. 4.10(a)(9) that is received by the 
Commission and

[[Page 117]]

is marked or otherwise identified as confidential may be disclosed only 
if it is determined that the material is not within the scope of Sec. 
4.10(a)(2), and the submitter is provided at least ten days notice of 
the intent to disclose the material.
    (f) Nonpublic material obtained by the Commission may be disclosed 
to persons other than the submitter in connection with the taking of 
oral testimony without the consent of the submitter only if the material 
or transcript is not within the scope of Sec. 4.10(a)(2). If the 
material is marked confidential, the submitter will be provided 10 days' 
notice of the intended disclosure or will be afforded an opportunity to 
seek an appropriate protective order.
    (g) Material obtained by the Commission:
    (1) Through compulsory process and protected by section 21(b) of the 
Federal Trade Commission Act, 15 U.S.C. 57b-2(b) or voluntarily in lieu 
thereof and designated by the submitter as confidential and protected by 
section 21(f) of the Federal Trade Commission Act, 15 U.S.C. 57b-2(f), 
and Sec. 4.10(d) of this part; or
    (2) That is designated by the submitter as confidential, and 
protected by section 21(c) of the Federal Trade Commission Act, 15 
U.S.C. 57b-2(c), and Sec. 4.10(e) of this part; or
    (3) That is confidential commercial or financial information 
protected by section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 
46(f), and Sec. 4.10(a)(2) of this part, may be disclosed in Commission 
administrative or court proceedings subject to Commission or court 
protective or in camera orders as appropriate. See Sec. Sec. 1.18(b) 
and 3.45.

Prior to disclosure of such material in a proceeding, the submitter will 
be afforded an opportunity to seek an appropriate protective or in 
camera order. All other material obtained by the Commission may be 
disclosed in Commission administrative or court proceedings at the 
discretion of the Commission except where prohibited by law.

(15 U.S.C. 41 et seq.)

[38 FR 1731, Jan. 18, 1973, as amended at 40 FR 7629, Feb. 21, 1975; 40 
FR 23278, May 29, 1975; 42 FR 13540, Mar. 11, 1977; 46 FR 26291, May 12, 
1981; 49 FR 30166, July 27, 1984; 54 FR 7399, Feb. 21, 1989; 57 FR 
10807, Mar. 31, 1992; 60 FR 37749, July 21, 1995; 63 FR 38473, July 17, 
1998; 65 FR 67259, Nov. 9, 2000; 66 FR 17633, Apr. 3, 2001; 72 FR 28853, 
May 23, 2007; 81 FR 93805, Dec. 22, 2016]



Sec. 4.11  Disclosure requests.

    (a) Freedom of Information Act--(1) Initial requests--(i) Form and 
contents; time of receipt. (A) A request under the provisions of the 
Freedom of Information Act, 5 U.S.C. 552, as amended, for access to 
Commission records shall be in writing and transmitted by one of the 
following means: by the form located on the FTC's FOIA Web site, found 
at www.ftc.gov; by email message to the FOIA email account at 
[email protected]; by facsimile transmission to (202) 326-2477; or by mail to 
the following address: Freedom of Information Act Request, Office of the 
General Counsel, Federal Trade Commission, 600 Pennsylvania Avenue NW., 
Washington, DC 20580.
    (B) Failure to mark the envelope and the request in accordance with 
paragraph (a)(1)(i)(A) of this section, or the filing of a request for 
expedited treatment under paragraph (a)(1)(i)(G) of this section, will 
result in the request (or requests, if expedited treatment has been 
requested) as received on the date that the processing unit in the 
Office of General Counsel actually receives the request(s).
    (C) Acknowledgment of requests. Once a FOIA request is properly 
received by the processing unit in the Office of the General Counsel, a 
letter acknowledging the receipt of the request shall be mailed to the 
requester if processing the request will likely take more than 5 
business days.
    (D) Identifiability. (1) A properly filed FOIA request shall 
reasonably describe the records sought with enough detail to enable the 
Commission to locate them with a reasonable amount of effort. Whenever 
possible, the request should include specific information about each 
record sought such as date, title, name, author, recipient, subject

[[Page 118]]

matter of the record, provide information regarding fees pursuant to 
Sec. 4.8(c), and provide sufficient contact information for a response 
to be sent. Although a mailing address is generally required, an email 
address can suffice in some instances. The FOIA Office will consider 
requests to send responses by email.
    (2) A denial of a request may state that the description required by 
paragraph (a)(2)(ii)(A) of this section is insufficient to allow 
identification and location of the records.
    (E) Costs; agreement to pay costs. Requesters will be charged 
search, review, duplication and other chargeable direct costs as 
prescribed by Sec. 4.8 for requests under this section. All requests 
shall include a statement of the information needed to determine fees, 
as provided by Sec. 4.8(c), and an agreement to pay fees (or a 
statement that the requester will not pay fees if a fee waiver is 
denied), as provided by Sec. 4.8(d). Requests may also include an 
application for a fee waiver, as provided by Sec. 4.8(e). An advance 
payment may be required in appropriate cases as provided by Sec. 
4.8(h).
    (F) Failure to agree to pay fees. If a request does not include an 
agreement to pay fees, and if the requester is notified of the estimated 
costs pursuant to Sec. 4.8(d)(3), the request will be deemed not to 
have been received until the requester agrees to pay such fees. If a 
requester declines to pay fees within 20 calendar days and is not 
granted a fee waiver, the request will be denied.
    (G) Expedited treatment. Requests may include an application for 
expedited treatment. Where such an application is not included with an 
initial request for access to records under paragraph (a)(1) of this 
section, the application may be included in any appeal of that request 
filed under paragraph (a)(3) of this section. Such application, which 
shall be certified by the requester to be true and correct to the best 
of such person's knowledge and belief, shall describe the compelling 
need for expedited treatment, including an explanation as to why a 
failure to obtain the requested records on an expedited basis could 
reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual, or, with respect to a request made by 
a person primarily engaged in disseminating information, an explanation 
of the urgency to inform the public concerning actual or alleged Federal 
Government activity. The deciding official (as designated by the General 
Counsel) will, within 10 calendar days of receipt of a request for 
expedited treatment, notify the requester, in writing, of the decision 
to either grant or deny the request for expedited treatment, and, if the 
request is denied, advise the requester that this determination may be 
appealed to the General Counsel.
    (H) Records for sale at another government agency. If requested 
materials are available for sale at another government agency, the 
requester will not be provided with copies of the materials but will be 
advised to obtain them from the selling agency. The U.S. Government 
Printing Office (``GPO''), the official bookstore for most U.S. 
Government publications, can be contacted at (202) 512-1800 (for those 
in the Washington, DC area), toll-free at (866) 512-1800 and at 
[email protected] The GPO's online store can be accessed at http://
bookstore.gpo.gov and mail orders should be directed to U.S. Government 
Printing Office, P.O. Box 979050, St. Louis, MO 63197-9000.
    (ii) Time limit for initial determination. (A) The deciding official 
(as designated by the General Counsel) will, within 20 working days of 
the receipt of a request, or if applicable, the date that a request is 
properly filed, either grant or deny, in whole or in part, such request, 
unless the request has been granted expedited treatment in accordance 
with this section, in which case the request will be processed as soon 
as practicable. The date that a request is properly filed is the date on 
which the requester agrees to pay fees necessary for a response, 
reasonably describes the records sought, and provides sufficient contact 
information for a response to be sent. Any tolling of the 20-working day 
period will be done in compliance with the FOIA statute, as amended.
    (B) Except in exceptional circumstances as provided in paragraph 
(a)(1)(ii)(C) of this section, the deciding official (as designated by 
the General Counsel) may extend the time limit by

[[Page 119]]

not more than 10 working days if such extension is:
    (1) Necessary to search for and collect the records from field 
facilities or other establishments that are separate from the office 
processing the request; or
    (2) Necessary to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which are sought in a 
single or series of closely related requests; or
    (3) Necessary for consultation with another agency having a 
substantial interest in the determination, or for consultation among two 
or more components of the Commission having substantial subject matter 
interest therein.
    (C) If the deciding official (as designated by the General Counsel) 
extends the time limit for initial determination pursuant to paragraph 
(a)(1)(ii)(B) of this section, the requester will be notified in 
accordance with 5 U.S.C. 552(a)(6)(B). In exceptional circumstances, 
when the request cannot be processed within the extended time limit, the 
requester will be so notified and provided an opportunity to limit the 
scope of the request so that it may be processed within such time limit, 
or to arrange an alternative time frame for processing the request or a 
modified request. In exceptional circumstances, when the request cannot 
be processed within the extended time limit, the Commission will also 
make available the agency's FOIA Public Liaison to assist in the 
resolution of any disputes and notify the requester of the right to seek 
dispute resolution services from the Office of Government Information 
Services. ``Exceptional'' circumstances will not include delays 
resulting from a predictable workload of requests under this section. 
Unwillingness to make reasonable modifications in the scope of the 
request or to agree to an alternative time frame may be considered as 
factors in determining whether exceptional circumstances exist and 
whether the agency has exercised due diligence in responding to the 
request.
    (D) If the deciding official (as designated by the General Counsel) 
reasonably believes that requests made by a requester, or a group of 
requesters acting in concert, actually constitute a single request that 
would otherwise involve unusual circumstances, as specified in paragraph 
(a)(1)(ii)(B) of this section, and the requests involve clearly related 
matters, those multiple requests may be aggregated.
    (E) If a request is not granted within the time limits set forth in 
paragraphs (a)(1)(ii)(A) and (B) of this section, the request shall be 
deemed to be denied and the requesting party may appeal such denial to 
the General Counsel in accordance with paragraph (a)(3) of this section.
    (iii) Initial determination. (A) The deciding official (as 
designated by the General Counsel) will make reasonable efforts to 
search, using either manual or electronic means, for documents that 
exist as of the date of the receipt of a request for the requested 
records in electronic form or format, except when such efforts would 
significantly interfere with the operation of the Commission's automated 
information systems. The deciding official will only withhold 
information if the agency reasonably foresees that disclosure would harm 
an interest protected by a FOIA exemption or disclosure is prohibited by 
law. The deciding official shall consider whether partial disclosure of 
information is possible whenever there is a determination that a full 
disclosure of a requested record is not possible and take reasonable 
steps necessary to segregate and release nonexempt information. 
Determination letters to a requester shall include the reasons therefor 
and the right of such person to seek assistance from the FTC's FOIA 
Public Liaison. Denials will advise the requester that this 
determination may be appealed to the General Counsel not more than 90 
days after the date of the determination if the requester believes 
either that the records are not exempt, or that the General Counsel 
should exercise discretion to release such records notwithstanding their 
exempt status. The deciding official (as designated by the General 
Counsel) will also provide a reasonable, good-faith estimate of the 
volume of any materials to which access is denied, unless providing such 
an estimate would harm an interest protected by an exemption in 5 U.S.C. 
552(b) that was cited as a

[[Page 120]]

basis for withholding materials. In the case of an adverse 
determination, FOIA response letters will notify requesters that they 
may seek dispute resolution services from the FTC's FOIA Public Liaison 
or from the Office of Government Information Services.
    (B) The deciding official (as designated by the General Counsel) is 
deemed to be the sole official responsible for all denials of initial 
requests, except denials of access to materials contained in active 
investigatory files, in which case the Director or Deputy Director of 
the Bureau or the Director of the Regional Office responsible for the 
investigation will be the responsible official.
    (C) Records to which access has been granted will be made available 
to the requester in any form or format specified by the requester, if 
the records are readily reproducible in that form or format, or can be 
converted to that form or format with a reasonable amount of effort. 
Certain records which are not easily copied or duplicated, such as 
tangible exhibits, will be made be available for inspection for a period 
not to exceed 30 days from date of notification to the requester unless 
the requester asks for and receives the consent of the deciding official 
(as designated by the General Counsel) to a longer period. Records 
assembled pursuant to a request will remain available only during this 
period and thereafter will be refiled. Appropriate fees may be imposed 
for any new or renewed request for the same records.
    (D) If a requested record cannot be located from the information 
supplied, or is known to have been destroyed or otherwise disposed of, 
the requester shall be so notified. The requester will also be notified 
if a record that is part of an official agency file is lost or missing. 
If the person so requests, he will also be notified if the record should 
subsequently be located.
    (2) FOIA Requester Service Center. If a requester has questions or 
comments about the FOIA process, the requester should call the FOIA 
Requester Service Center at (202) 326-2430 to either speak directly to a 
FOIA Case Officer or leave a voice message. A requester should also ask 
the FOIA Case Officer to speak with the FOIA Public Liaison if there are 
concerns about the quality of the service received, or seek mediation 
resolution assistance during the FOIA response process.
    (3) Appeals to the General Counsel from initial denials--(i) Form 
and contents; time of receipt--(A)(1) If an initial request for 
expedited treatment is denied, the requester, at any time before the 
initial determination of the underlying request for records by the 
deciding official (as designated by the General Counsel) (or, if the 
request for expedited treatment was filed with any appeal filed under 
paragraph (a)(3)(i)(A)(2) of this section, at any time before the 
General Counsel's determination on such an appeal), may appeal the 
denial of expedited treatment to the General Counsel.
    (2) If an initial request for records is denied in its entirety, the 
requester may, within 90 days after the adverse determination, appeal 
such denial to the General Counsel. If an initial request is denied in 
part, the time for appeal will not expire until 90 days after the date 
of the final letter notifying the requester that all records to which 
access has been granted have been made available. In unusual 
circumstances, the General Counsel or his or her designee may extend the 
time to appeal.
    (3) If an initial request for a fee waiver or reduction is denied, 
the requester may, within 30 days of the date of the letter notifying 
the requester of that decision, appeal such denial to the General 
Counsel. In unusual circumstances, the time to appeal may be extended by 
the General Counsel or his or her designee.
    (4) The appeal shall be in writing and shall clearly refer to the 
adverse decision, or portions of the decision, being appealed; the 
appeal should include a copy of the initial request and a copy of the 
response to that initial request, if any. The appeal may be: mailed to 
Freedom of Information Act Appeal, Office of the General Counsel, 
Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 
20580; submitted by facsimile to (202) 326-3198; or emailed to 
[email protected]
    (B) If the appeal is mailed, failure to mark the envelope and the 
appeal in accordance with paragraph

[[Page 121]]

(a)(3)(i)(A)(4) of this section will result in the appeal (and any 
request for expedited treatment filed with that appeal) being treated as 
received on the actual date of receipt by the Office of General Counsel.
    (C) Each appeal to the General Counsel that requests him or her to 
exercise his discretion to release exempt records shall set forth the 
interest of the requester in the subject matter and the purpose for 
which the records will be used if the request is granted.
    (ii) Time limit for appeal. (A)(1) Regarding appeals from initial 
denials of a request for expedited treatment, the General Counsel will 
either grant or deny the appeal expeditiously;
    (2) Regarding appeals from initial denials of a request for records, 
the General Counsel will, within 20 working days of the Office of 
General Counsel's receipt of such an appeal, either grant or deny it, in 
whole or in part, unless expedited treatment has been granted in 
accordance with this section, in which case the appeal will be processed 
expeditiously.
    (B) The General Counsel may, by written notice to the requester in 
accordance with 5 U.S.C. 552(a)(6)(B), extend the time limit for 
deciding an appeal by not more than 10 working days pursuant to 
paragraph (a)(1)(ii)(B) of this section, provided that the amount of any 
extension utilized during the initial consideration of the request under 
that paragraph will be subtracted from the amount of additional time 
otherwise available. Where exceptional circumstances do not permit the 
processing of the appeal within the extended time limit, the notice and 
procedures set forth in paragraph (a)(1)(ii)(C) of this section shall 
apply.
    (iii) Determination of appeal. (A) The General Counsel has the 
authority to grant or deny all appeals and to release as an exercise of 
discretion records exempt from mandatory disclosure under 5 U.S.C. 
552(b). In unusual or difficult cases, the General Counsel may, in his 
or her sole discretion, refer an appeal to the Commission for 
determination. A denial of an appeal in whole or in part will set forth 
the basis for the denial; will include a reasonable, good-faith estimate 
of the volume of any materials to which access is denied, unless 
providing such an estimate would harm an interest protected by an 
exemption in 5 U.S.C. 552(b) that was cited as a basis for withholding 
materials; and will advise the requester that judicial review of the 
decision is available by civil suit in the district in which the 
requester resides, or has his principal place of business, or in which 
the agency records are situated, or in the District of Columbia.
    (B) The General Counsel may designate a Deputy General Counsel to 
make any determination assigned to the General Counsel by paragraph (a) 
of this section. The General Counsel or the official designated by the 
General Counsel to make the determination shall be deemed solely 
responsible for the denial of all appeals, except where an appeal is 
denied by the Commission. In such instances, the Commission shall be 
deemed solely responsible for the denial.
    (b) Requests from congressional committees and subcommittees. 
Requests from congressional committees and subcommittees for nonpublic 
material shall be referred to the General Counsel for presentation to 
the Commission, subject to the provisions in 5 U.S.C. 552(c) and FTC Act 
21(b) that neither the Freedom of Information Act, 5 U.S.C. 552, nor the 
Federal Trade Commission Act, 15 U.S.C. 41, et seq., is authority to 
withhold information from Congress. Upon receipt of a request from a 
congressional committee or subcommittee, notice will be given to the 
submitter of any material marked confidential, or any material within 
the scope of Sec. 4.10(a)(9), that is responsive to the request that 
the request has been received. No other notice need be provided prior to 
granting the request. The Commission will inform the committee or 
subcommittee that the submitter considers such information confidential.
    (c) Requests from Federal and State law enforcement agencies. 
Requests from law enforcement agencies of the Federal and State 
governments for nonpublic records shall be addressed to a liaison 
officer, where the Commission has appointed such an officer, or if there 
is none, to the General Counsel. With respect to requests under this 
paragraph,

[[Page 122]]

the General Counsel, the General Counsel's designee, or the appropriate 
liaison officer is delegated the authority to dispose of them. 
Alternatively, the General Counsel may refer such requests to the 
Commission for determination, except that requests must be referred to 
the Commission for determination where the Bureau having the material 
sought and the General Counsel do not agree on the disposition. Prior to 
granting access under this section to any material submitted to the 
Commission, the General Counsel, the General Counsel's designee, or the 
liaison officer will obtain from the requester a certification that such 
information will be maintained in confidence and will be used only for 
official law enforcement purposes. The certificate will also describe 
the nature of the law enforcement activity and the anticipated relevance 
of the information to that activity. A copy of the certificate will be 
forwarded to the submitter of the information at the time the request is 
granted unless the agency requests that the submitter not be notified. 
Requests for material pursuant to compulsory process, or for voluntary 
testimony, in cases or matters in which the Commission is not a party 
will be treated in accordance with paragraph (e) of this section.
    (d) Requests from Federal and State agencies for purposes other than 
law enforcement. Requests from Federal and State agencies for access to 
nonpublic records for purposes not related to law enforcement should be 
addressed to the General Counsel. The General Counsel or the General 
Counsel's designee is delegated the authority to dispose of requests 
under this paragraph. Disclosure of nonpublic information will be made 
consistent with sections 6(f) and 21 of the FTC Act. Requests under this 
section shall be subject to the fee and fee waiver provisions of Sec. 
4.8. Requests for material pursuant to compulsory process, or for 
voluntary testimony, in cases or matters in which the Commission is not 
a party will be treated in accordance with paragraph (e) of this 
section.
    (e) Requests for testimony, pursuant to compulsory process or 
otherwise, and requests for material pursuant to compulsory process, in 
cases or matters to which the Commission is not a party. (1) The 
procedures specified in this section will apply to compulsory process 
and requests for voluntary testimony directed to Commission employees, 
except special government employees, that relate in any way to the 
employees' official duties. These procedures will also apply to 
compulsory process and requests for voluntary testimony directed to 
former Commission employees or to current or former special government 
employees of the Commission that seek nonpublic materials or information 
acquired during Commission employment. The provisions of paragraph 
(e)(3) of this section will also apply when requests described above are 
directed to the Commission. For purposes of this section, the term 
testimony includes any written or oral statement by a witness, such as 
depositions, affidavits, declarations, and statements at a hearing or 
trial; the term nonpublic includes any material or information which, 
under Sec. 4.10, is not required to be made public; the term employees, 
except where otherwise specified, includes special government employees 
and other Commission employees; and the term special government 
employees includes consultants and other employees as defined by section 
202 of title 18 of the United States Code.
    (2) Any employee or former employee who is served with compulsory 
process shall promptly advise the General Counsel of its service, the 
nature of the material or information sought, and all relevant facts and 
circumstances. This notification requirement also applies to any 
employee or former employee whose testimony is sought on a voluntary 
basis under the conditions set forth in paragraph (e)(1) of this 
section.
    (3) A party who causes compulsory process to be issued to, or who 
requests testimony by, the Commission or any employee or former employee 
of the Commission shall furnish a statement to the General Counsel, 
unless, with respect to a request by a Federal or State agency, the 
General Counsel determines, as a matter of discretion, to waive this 
requirement. The statement shall set forth the party's interest in the 
case or matter, the relevance of the desired testimony or material, and 
a

[[Page 123]]

discussion of whether it is reasonably available from other sources. If 
testimony is desired, the statement shall also contain a general summary 
of the testimony and a discussion of whether Commission records could be 
produced and used in its place. Any authorization for testimony will be 
limited to the scope of the demand as summarized in such statement.
    (4) Absent authorization from the General Counsel, the employee or 
former employee shall respectfully decline to produce requested material 
or to disclose requested information. The refusal should be based on 
this paragraph and on United States ex rel. Touhy v. Ragen, 340 U.S. 462 
(1951).
    (5) The General Counsel will consider and act upon compulsory 
process and requests for voluntary testimony under this section with due 
regard for statutory restrictions, the Commission's rules and the public 
interest, taking into account such factors as the need to conserve the 
time of employees for conducting official business; the need to avoid 
spending the time and money of the United States for private purposes; 
the need to maintain impartiality between private litigants in cases 
where a substantial government interest is not involved; and the 
established legal standards for determining whether justification exists 
for the disclosure of confidential information and material.
    (6) Invitations to testify before Congressional committees or 
subcommittees or to testify before other government bodies on the 
possible effects of legislative and regulatory proposals are not subject 
to paragraphs (e)(1) through (5) of this section.
    (f) Requests by current or former employees to use nonpublic 
memoranda as writing samples shall be addressed to the General Counsel. 
The General Counsel or the General Counsel's designee is delegated the 
authority to dispose of such requests consistent with applicable 
nondisclosure provisions, including sections 6(f) and 21 of the FTC Act.
    (g) Employees are encouraged to engage in teaching, lecturing, and 
writing that is not prohibited by law, Executive order, or regulation. 
However, an employee shall not use information obtained as a result of 
his Government employment, except to the extent that such information 
has been made available to the general public or will be made available 
on request, or when the General Counsel or the General Counsel's 
designee gives written authorization for the use of nonpublic 
information on the basis that the use is in the public interest.
    (h) The General Counsel (or General Counsel's designee) may 
authorize a Commission member, other Commission official, or Commission 
staff to disclose an item or category of information from Commission 
records not currently available to the public for routine inspection and 
copying under Rule 4.9(b) where the General Counsel (or General 
Counsel's designee) determines that such disclosure would facilitate the 
conduct of official agency business and would not otherwise be 
prohibited by applicable law, order, or regulation. Requests for such 
determinations shall be set forth in writing and, in the case of staff 
requests, shall be forwarded to the General Counsel (or General 
Counsel's designee) through the relevant Bureau. In unusual or difficult 
cases, the General Counsel may refer the request to the Commission for 
determination.
    (i) The Director of the Bureau of Competition is authorized, without 
power of redelegation, to respond to access requests for records and 
other materials pursuant to an agreement under the International 
Antitrust Enforcement Assistance Act, 15 U.S.C. 6201 et seq. Before 
responding to such a request, the Bureau Director shall transmit the 
proposed response to the Secretary and the Secretary shall notify the 
Commission of the proposed response. If no Commissioner objects within 
three days following the Commission's receipt of such notification, the 
Secretary shall inform the Bureau Director that he or she may proceed.
    (j)(1) The procedures specified in this section apply to disclosures 
of certain records to foreign law enforcement agencies in specified 
circumstances in accordance with the U.S. SAFE WEB Act of 2006. Nothing 
in this section authorizes the disclosure of material obtained in 
connection with the administration of the Federal antitrust laws or

[[Page 124]]

foreign antitrust laws, as defined in paragraph (j)(5)(i) of this 
section.
    (2) Requests from foreign law enforcement agencies, as defined in 
paragraph (j)(5)(ii) of this section, for nonpublic records shall be 
addressed to the Director of the Office of International Affairs or the 
Director's designee, who shall forward them to the General Counsel with 
recommendations for disposition after obtaining any required 
certification described in paragraph (j)(3) of this section and approval 
of the Bureau of Consumer Protection. With respect to requests under 
this paragraph, the General Counsel or the General Counsel's designee is 
delegated the authority to dispose of them. Alternatively, the General 
Counsel may refer such requests to the Commission for determination, 
except that requests must be referred to the Commission for 
determination where the Bureau of Consumer Protection or the Office of 
International Affairs disagrees with the General Counsel's proposed 
disposition.
    (3) Access under this section to any material subject to the 
disclosure restrictions in sections 6(f) or 21(b) of the FTC Act or 
Sec. 4.10(d) may not be granted unless--
    (i) An appropriate official of the foreign law enforcement agency 
has certified, either by prior agreement or memorandum of understanding 
or by other written certification, that such material will be maintained 
in confidence and will be used only for official law enforcement 
purposes; and
    (ii)(A) The foreign law enforcement agency has set forth a bona fide 
legal basis for its authority to maintain the material in confidence;
    (B) The materials are to be used for purposes of investigating, or 
engaging in enforcement proceedings related to, possible violations of:
    (1) Foreign laws prohibiting fraudulent or deceptive commercial 
practices, or other practices substantially similar to practices 
prohibited by any law administered by the Commission;
    (2) A law administered by the Commission, if disclosure of the 
material would further a Commission investigation or enforcement 
proceeding; or
    (3) With the approval of the Attorney General, other foreign 
criminal laws, if such foreign criminal laws are offenses defined in or 
covered by a criminal mutual legal assistance treaty in force between 
the government of the United States and the foreign law enforcement 
agency's government;
    (C) The appropriate Federal banking agency, (as defined in section 
3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)) or, in the 
case of a Federal credit union, the National Credit Union Administration 
has given its prior approval if the materials to be provided under 
paragraph (j)(3)(ii)(B) of this section are requested by the foreign law 
enforcement agency for the purpose of investigating, or engaging in 
enforcement proceedings based on, possible violations of law by a bank, 
a savings and loan institution described in section 18(f)(3) of the 
Federal Trade Commission Act (15 U.S.C. 57a(f)(3)), or a Federal credit 
union described in section 18(f)(4) of the Federal Trade Commission Act 
(15 U.S.C. 57a(f)(4)); and
    (D) The foreign law enforcement agency is not from a foreign state 
that the Secretary of State has determined, in accordance with section 
6(j) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)), 
has repeatedly provided support for acts of international terrorism, 
unless and until such determination is rescinded pursuant to section 
6(j)(4) of that Act (50 U.S.C. App. 2405(j)(4)).
    (4) A copy of the certificate described in paragraph (j)(3) of this 
section will be forwarded to the submitter of the information at the 
time the request is granted unless the foreign law enforcement agency 
requests that the submitter not be notified.
    (5) For purposes of this section:
    (i) ``Federal antitrust laws'' and ``foreign antitrust laws'' are to 
be interpreted as defined in paragraphs (5) and (7), respectively, of 
section 12 of the International Antitrust Enforcement Assistance Act of 
1994 (15 U.S.C. 6211); and
    (ii) ``Foreign law enforcement agency'' is defined as:
    (A) Any agency or judicial authority of a foreign government, 
including a foreign state, a political subdivision of a foreign state, 
or a multinational organization constituted by and comprised of foreign 
states, that is vested

[[Page 125]]

with law enforcement or investigative authority in civil, criminal, or 
administrative matters and
    (B) Any multinational organization, to the extent that it is acting 
on behalf of an entity described in paragraph (j)(5)(i)(A) of this 
section.

(15 U.S.C. 41 et seq.)

[40 FR 7629, Feb. 21, 1975]

    Editorial Note: For Federal Register citations affecting Sec. 4.11, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and at www.fdsys.gov.



Sec. 4.12  Disposition of documents submitted to the Commission.

    (a) Material submitted to the Commission. (1) Any person who has 
submitted material to the Commission may obtain, on request, the return 
of material submitted to the Commission which has not been received into 
evidence:
    (i) After the close of the proceeding in connection with which the 
material was submitted; or
    (ii) When no proceeding in which the material may be used has been 
commenced within a reasonable time after completion of the examination 
and analysis of all such material and other information assembled in the 
course of the investigation.
    (2) Such request shall be in writing, addressed to the custodian 
designated pursuant to Sec. 2.16 or the Secretary of the Commission in 
all other circumstances, and shall reasonably describe the material 
requested. A request for return of material may be filed at any time, 
but material will not be returned nor will commitments to return 
material be undertaken prior to the time described in this paragraph.
    (b) Commission-made copies of documents submitted to the Commission. 
The Commission will not return to the submitter copies of documents made 
by the Commission unless, upon a showing of extraordinary circumstances, 
the Commission determines that return would be required in the public 
interest.
    (c) Disposition of material not returned. Subsequent to the time 
prescribed in paragraph (a) of this section, the staff will examine all 
submitted material and Commission-made copies of documents located in a 
reasonable search of the Commission's files and will determine, 
consistent with the Federal Records Act, 44 U.S.C. 3301, which materials 
are appropriate for preservation as evidence of the organization, 
functions, policies, decisions, procedures, operations, or other 
activities of the Commission or because of the information value of data 
in them. The Commission will dispose of all material determined not to 
be appropriate for preservation in accordance with applicable 
regulations of the National Archives and Records Administration.

[46 FR 26292, May 12, 1981, as amended at 60 FR 37751, July 21, 1995; 78 
FR 13474, Feb. 28, 2013]



Sec. 4.13  Privacy Act rules.

    (a) Purpose and scope. (1) This section is promulgated to implement 
the Privacy Act of 1974 (Pub. L. 93-579, 5 U.S.C. 552a) by establishing 
procedures whereby an individual can, as to all systems of records 
maintained by the Commission except those set forth in Sec. 4.13(m) as 
exempt from disclosure, (i) Request notification of whether the 
Commission maintains a record pertaining to him in any system of 
records, (ii) request access to such a record or to an accounting of its 
disclosure, (iii) request that the record be amended or corrected, and 
(iv) appeal an initial adverse determination of any such request. This 
section also establishes those systems of records that are specifically 
exempt from disclosure and from other requirements.
    (2) The procedures of this section apply only to requests by an 
individual as defined in Sec. 4.13(b). Except as otherwise provided, 
they govern only records containing personal information in systems of 
records for which notice has been published by the Commission in the 
Federal Register pursuant to section 552a(e)(4) of the Privacy Act of 
1974 and which are neither exempt from the provisions of this section 
nor contained in government-wide systems of personnel records for which 
notice has been published in the Federal Register by the Office of 
Personnel Management. Requests for notification, access, and amendment 
of personnel records which are contained in a system of records for 
which notice has been given by the Office of Personnel

[[Page 126]]

Management are governed by the Office of Personnel Management's notices, 
5 CFR part 297. Access to records which are not subject to the 
requirements of the Privacy Act are governed by Sec. Sec. 4.8 through 
4.11.
    (b) Definitions. The following definitions apply to this section 
only:
    (1) Individual means a natural person who is a citizen of the United 
States or an alien lawfully admitted for permanent residence.
    (2) Record means any item, collection, or grouping of personal 
information about an individual that is maintained by the Commission, 
including, but not limited to, his education, financial transactions, 
medical history, and criminal or employment history and that contains 
his name, or the identifying number, symbol, or other identifying 
particular assigned to the individual, such as a finger or voice print 
or a photograph, but does not include information concerning 
proprietorships, businesses, or corporations.
    (3) System of records means a group of any records under the control 
of the Commission from which information is retrieved by the name of the 
individual or by some identifying number, symbol, or other identifying 
particular assigned to the individual, for which notice has been 
published by the Commission in the Federal Register pursuant to 5 U.S.C. 
552a(e)(4).
    (c) Procedures for requests pertaining to individual records in a 
record system. An individual may request access to his or her records or 
any information pertaining to that individual in a system of records, 
and notification of whether and to whom the Commission has disclosed a 
record for which an accounting of disclosures is required to be kept and 
made available to the individual, using the procedures of this section. 
Requests for the disclosure of records under this section or to 
determine whether a system of records contains records pertaining to an 
individual or to obtain an accounting of disclosures, shall be in 
writing and if mailed, addressed as follows:

Privacy Act Request, Office of the General Counsel, Federal Trade 
Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.


If requests are presented in person at the Office of the General 
Counsel, the individual shall be required to execute a written request. 
All requests shall name the system of records that is the subject of the 
request, and shall include any additional information specified in the 
pertinent system notice as necessary to locate the records requested. If 
the requester wants another person to accompany him or her to review the 
records, the request shall so state. Nothing in this section will allow 
an individual access to any information compiled in reasonable 
anticipation of a civil action or proceeding.
    (d) Times, places, and requirements for identification of 
individuals making requests. Verification of identity of persons making 
written requests to the deciding official (as designated by the General 
Counsel) ordinarily will not be required. The signature on such requests 
will be deemed a certification by the signatory that he or she is the 
individual to whom the record pertains or is the parent or guardian of a 
minor or the legal guardian of the individual to whom the record 
pertains. The deciding official (as designated by the General Counsel) 
may require additional verification of a requester's identity when such 
information is reasonably necessary to assure that records are not 
improperly disclosed; provided, however, that no verification of 
identity will be required if the records sought are publicly available 
under the Freedom of Information Act.
    (e) Disclosure of requested information to individuals. Within 10 
working days of receipt of a request under Sec. 4.13(c), the deciding 
official (as designated by the General Counsel) will acknowledge receipt 
of the request. Within 30 working days of the receipt of a request under 
Sec. 4.13(c), the deciding official (as designated by the General 
Counsel) will inform the requester whether a system of records 
containing retrievable information pertaining to the requester exists, 
and if so, either that the request has been granted or that the 
requested records or information is exempt from disclosure pursuant to 
Sec. 4.13(m). When, for good cause shown, the deciding official (as 
designated by the General Counsel) is unable to respond within 30

[[Page 127]]

working days of the receipt of the request, that official will notify 
the requester and inform him or her approximately when a response will 
be made.
    (f) Special procedures: Medical records. When the deciding official 
(as designated by the General Counsel) determines that disclosure of a 
medical or psychological record directly to a requesting individual 
could have an adverse effect on the individual, he or she will require 
the individual to designate a medical doctor to whom the record will be 
transmitted.
    (g) Request for correction or amendment of record. An individual to 
whom access to his records or any information pertaining to him in a 
system of records has been granted may request that any portion thereof 
be amended or corrected because he believes it is not accurate, 
relevant, timely, or complete. An initial request for correction or 
amendment of a record shall be in writing whether presented in person or 
by mail, and if by mail, addressed as in Sec. 4.13(c). In making a 
request under this subsection, the requesting party shall state the 
nature of the information in the record the individual believes to be 
inaccurate, irrelevant, untimely, or incomplete, the correction or 
amendment desired, and the reasons therefore.
    (h) Agency review of request for correction or amendment of record. 
Whether presented in person or by mail, requests under Sec. 4.13(g) 
will be acknowledged by the deciding official (as designated by the 
General Counsel) within 10 working days of the receipt of the request if 
action on the request cannot be completed and the individual notified of 
the results within that time. Thereafter, the deciding official (as 
designated by the General Counsel) will promptly either make the 
requested amendment or correction or inform the requester of his refusal 
to make the amendment or correction, the reasons for the refusal, and 
the requester's right to appeal that refusal in accordance with Sec. 
4.13(i).
    (i) Appeal of initial adverse agency determination. (1) If an 
initial request filed under Sec. 4.13(c) or Sec. 4.13(g) is denied, 
the requester may appeal that denial to the General Counsel. The appeal 
shall be in writing and addressed as follows:

Privacy Act Appeal, Office of the General Counsel, Federal Trade 
Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.


Within 30 working days of the receipt of the appeal, the General Counsel 
will notify the requester of the disposition of that appeal, except that 
the General Counsel may extend the 30-day period for good cause, in 
which case, the General Counsel will advise the requester of the 
approximate date on which review will be completed. In unusual or 
difficult cases, the General Counsel may, in his or her sole discretion, 
refer an appeal to the Commission for determination.
    (2)(i) If the General Counsel refuses to amend or correct the record 
in accordance with a request under Sec. 4.13(g), the General Counsel 
will notify the requester of that decision and inform the requester of 
the right to file with the deciding official (as designated by the 
General Counsel) a concise statement setting forth the reasons for the 
requester's disagreement with the General Counsel's determination and 
the fact that the requester's statement will be treated as set forth in 
paragraph (i)(2)(ii) of this section. The General Counsel will also 
inform the requester that judicial review of the decision is available 
by a civil suit in the district in which the requester resides, or has 
his principal place of business, or in which the agency records are 
situated, or in the District of Columbia.
    (ii) If the individual files a statement disagreeing with the 
General Counsel's determination not to amend or correct a record, such 
disagreement will be clearly noted in the record involved and the 
individual's statement will be made available to anyone to whom the 
record has been disclosed after September 27, 1975, or is subsequently 
disclosed together with, if the General Counsel deems it appropriate, a 
brief statement of his or her reasons for declining to amend the record.
    (j) Disclosure of record to person other than the individual to whom 
it pertains. Except as provided by 5 U.S.C. 552a(b), the written request 
or prior written consent of the individual to whom a

[[Page 128]]

record pertains, or of his parent if a minor, or legal guardian if 
incompetent, shall be required before such record is disclosed. If the 
individual elects to inspect a record in person and desires to be 
accompanied by another person, the deciding official (as designated by 
the General Counsel) may require the individual to furnish a signed 
statement authorizing disclosure of his or her record in the presence of 
the accompanying named person.
    (k) Fees. No fees will be charged for searching for a record, 
reviewing it, or for copies of records made by the Commission for its 
own purposes incident to granting access to a requester. Copies of 
records to which access has been granted under this section may be 
obtained by the requester from the deciding official (as designated by 
the General Counsel) on payment of the reproduction fees provided in 
Sec. 4.8(b)(6).
    (l) Penalties. Section 552a(i)(3) of the Privacy Act, 5 U.S.C. 
552a(i)(3), makes it a misdemeanor, subject to a maximum fine of $5,000, 
to knowingly and willfully request or obtain any record concerning an 
individual under false pretenses. Sections 552a(i) (1) and (2) of the 
Privacy Act, 5 U.S.C. 552a(i) (1) and (2), provide penalties for 
violations by agency employees of the Privacy Act or regulations 
established thereunder. Title 18 U.S.C. 1001, Crimes and Criminal 
Procedures, makes it a criminal offense, subject to a maximum fine of 
$10,000 or imprisonment for not more than 5 years or both, to knowingly 
and willfully make or cause to be made any false or fraudulent 
statements or representations in any matter within the jurisdiction of 
any agency of the United States.
    (m) Specific exemptions. (1) Pursuant to 5 U.S.C. 552a(j)(2), 
investigatory materials maintained by an agency component in connection 
with any activity relating to criminal law enforcement in the following 
systems of records are exempt from all subsections of 5 U.S.C. 552a, 
except (b), (c)(1) and (2), (e)(4)(A) through (F), (e)(6), (7), (9), 
(10), and (11), and (i), and from the provisions of this section, except 
as otherwise provided in 5 U.S.C. 552a(j)(2):
    (i) I-7--Office of Inspector General Investigative Files--FTC.
    (ii) [Reserved]
    (2) Pursuant to 5 U.S.C. 552a(k)(2), investigatory materials 
compiled for law enforcement purposes in the following systems of 
records are exempt from subsections (c)(3), (d), (e)(1), (e)(4)(G), (H), 
and (I), and (f) of 5 U.S.C. 552a, and from the provisions of this 
section, except as otherwise provided in 5 U.S.C. 552a(k)(2):
    (i) I-1--Nonpublic Investigational and Other Nonpublic Legal Program 
Records--FTC.
    (ii) I-2--Disciplinary Action Investigatory Files--FTC.
    (iii) I-4--Clearance Application and Response Files--FTC.
    (iv) I-5--Matter Management System--FTC.
    (v) I-7--Office of Inspector General Investigative Files--FTC.
    (vi) I-8--Stenographic Reporting Services Request System--FTC.
    (vii) II-3--Worker's Compensation--FTC.
    (viii) II-6--Discrimination Complaint System--FTC.
    (ix) IV-1--Consumer Information System--FTC.
    (x) V-1--Freedom of Information Act Requests and Appeals--FTC.
    (xi) V-2--Privacy Act Requests and Appeals--FTC.
    (xii) VII-6--Document Management and Retrieval System--FTC.
    (3) Pursuant to 5 U.S.C. 552a(k)(5), investigatory materials 
compiled to determine suitability, eligibility, or qualifications for 
Federal civilian employment, military service, Federal contracts, or 
access to classified information, but only where disclosure would reveal 
the identity of a confidential source of information, in the following 
systems of records are exempt from subsections (c)(3), (d), (e)(1), 
(e)(4)(G), (H), and (I), and (f) of 5 U.S.C. 552a, and from the 
provisions of this section, except as otherwise provided in 5 U.S.C. 
552a(k)(5):
    (i) II-4--Employment Application-Related Records--FTC.

[[Page 129]]

    (ii) II-11--Personnel Security, Identity Management and Access 
Control Records System--FTC.

[40 FR 40780, Sept. 3, 1975, as amended at 46 FR 26292, May 12, 1981; 48 
FR 4280, Jan. 31, 1983; 55 FR 37700, Sept. 13, 1990; 55 FR 38801, Sept. 
21, 1990; 57 FR 10808, Mar. 31, 1992; 58 FR 7047, Feb. 4, 1993; 63 FR 
45648, Aug. 26, 1998; 64 FR 3014, Jan. 20, 1999; 64 FR 69397, Dec. 13, 
1999; 66 FR 64144, Dec. 12, 2001; 67 FR 123, Jan. 2, 2002; 80 FR 15163, 
Mar. 23, 2015]



Sec. 4.14  Conduct of business.

    (a) Matters before the Commission for consideration may be resolved 
either at a meeting under Sec. 4.15 or by written circulation. Any 
Commissioner may direct that a matter presented for consideration be 
placed on the agenda of a Commission meeting.
    (b) A majority of the members of the Commission in office and not 
recused from participating in a matter (by virtue of 18 U.S.C. 208 or 
otherwise) constitutes a quorum for the transaction of business in that 
matter.
    (c) Any Commission action, either at a meeting or by written 
circulation, may be taken only with the affirmative concurrence of a 
majority of the participating Commissioners, except where a greater 
majority is required by statute or rule or where the action is taken 
pursuant to a valid delegation of authority. No Commissioner may 
delegate the authority to determine his or her vote in any matter 
requiring Commission action, but authority to report a Commissioner's 
vote on a particular matter resolved either by written circulation, or 
at a meeting held in the Commissioner's absence, may be vested in a 
member of the Commissioner's staff.

[42 FR 13540, Mar. 11, 1977, as amended at 50 FR 53306, Dec. 31, 1985; 
70 FR 53297, Sept. 8, 2005]



Sec. 4.15  Commission meetings.

    (a) In general. (1) Meetings of the Commission, as defined in 5 
U.S.C. 552b(a)(2), are held at the principal office of the Commission, 
unless otherwise directed.
    (2) Initial announcements of meetings. For each meeting, the 
Commission shall announce:
    (i) The time, place and subject matter of the meeting,
    (ii) Whether the meeting will be open or closed to the public, and
    (iii) The name and phone number of the official who will respond to 
requests for information about the meeting.

Such announcement shall be made at least one week before the meeting 
except that where the agency determines pursuant to 5 U.S.C. 552b(e)(1) 
to call the meeting on less than one week's notice, or where the agency 
determines to close the meeting pursuant to paragraph (c)(2) of this 
section, the announcement shall be made at the earliest practicable 
time.
    (3) Announcements of changes in meetings. Following the announcement 
of a meeting, any change in the time, place or subject matter will be 
announced at the earliest practicable time, and, except with respect to 
meetings closed under paragraph (c)(2) of this section, any change in 
the subject matter or decision to open or close a meeting shall be made 
only as provided in 5 U.S.C. 552b(e)(2).
    (4) Deletions from announcements. The requirements of paragraphs 
(a)(2) and (a)(3) of this section do not require the disclosure of any 
information pertaining to a portion of a closed meeting where such 
disclosure is likely to concern a matter within the scope of 5 U.S.C. 
552b(c).
    (5) Dissemination of notices. Notices required under paragraphs 
(a)(2) and (a)(3) of this section will be posted at the principal office 
of the Commission, recorded on a telephone message device, and, except 
as to notices of meetings closed under paragraph (c)(2) of this section, 
submitted to the Federal Register for publication. In addition, notices 
issued under paragraph (a)(2) of this section one week in advance of the 
meeting will be sent to all persons and organizations who have requested 
inclusion on a meeting notice mailing list, and will be issued as a 
press release to interested media.
    (b) Open meetings. (1) Commission meetings shall be open to public 
observation unless the Commission determines that portions may be closed 
pursuant to 5 U.S.C. 552b(c).

[[Page 130]]

    (2) Any person whose interest may be directly affected if a portion 
of a meeting is open, may request that the Commission close that portion 
for any of the reasons described in 5 U.S.C. 552b(c). The Commission 
shall vote on such requests if at least one member desires to do so. 
Such requests shall be in writing, filed at the earliest practicable 
time, and describe how the matters to be discussed will have any of the 
effects enumerated in 5 U.S.C. 552b(c). Requests shall be addressed as 
follows:

Closed Meeting Request, Office of the General Counsel, Federal Trade 
Commission, 6th Street and Pennsylvania Avenue NW., Washington, DC 
20580.

    (3) The Commissioner to whom a matter has been assigned for 
presentation to the Commission shall have the authority to make 
available to the public, prior to consideration of that matter at an 
open meeting, material sufficient to inform the public of the issues 
likely to be discussed in connection with that matter.
    (c) Closed meetings. (1) Whenever the Commission votes to close a 
meeting or series of meetings under these rules, it shall make publicly 
available within one day notices both of such vote and the General 
Counsel's determination regarding certification under 5 U.S.C. 
552b(f)(1). Such determination by the General Counsel shall be made 
prior to the Commission vote to close a meeting or series of meetings. 
Further, except with respect to meetings closed under paragraph (c)(2) 
of this section, the Commission shall make publicly available within one 
day a full written explanation of its action in closing any meeting, and 
a list specifying the names and affiliations of all persons expected to 
attend, except Commission employees and consultants and any stenographer 
or court reporter attending for the sole purpose of preparing a verbatim 
transcript. All Commission employees and consultants may attend 
nonadjudicative portions of any closed meeting and members of 
Commissioners' personal staffs, the General Counsel and his staff, and 
the Secretary and his staff may attend the adjudicative portions of any 
closed meeting except to the extent the notice of a particular closed 
meeting otherwise specifically provides. Stenographers or court 
reporters may attend any closed meeting at which their services are 
required by the Commission.
    (2) If a Commission meeting, or portions thereof, may be closed 
pursuant to 5 U.S.C. 552b(c)(10), the Commission may, by vote recorded 
at the beginning of the meeting, or portion thereof, close the portion 
or portions of the meeting so exempt.
    (3) Closed meeting transcripts or minutes required by 5 U.S.C. 
552b(f)(1) will be released to the public insofar as they contain 
information that either is not exempt from disclosure under 5 U.S.C. 
552b(c), or, although exempt, should be disclosed in the public 
interest. The Commission will determine whether to release, in whole or 
in part, the minutes of its executive sessions to consider oral 
arguments. With regard to all other closed meetings, the General Counsel 
or the General Counsel's designee shall determine, in accordance with 
Sec. 4.9(c), which portions of the transcripts or minutes may be 
released.
    (d) The presiding officer shall be responsible for preserving order 
and decorum at meetings and shall have all powers necessary to that end.

[42 FR 13541, Mar. 11, 1977; 42 FR 15409, Mar. 22, 1977, as amended at 
42 FR 62912, Dec. 14, 1977: 43 FR 1937, Jan. 13, 1978; 43 FR 35684, Aug. 
11, 1978; 63 FR 32978, June 17, 1998]



Sec. 4.16  Privilege against self-incrimination.

    Section 2.11 of Pub. L. 91-462 specifically repeals paragraph 7 of 
section 9 of the Federal Trade Commission Act. Title 18, section 6002, 
of the United States Code provides that whenever a witness refuses, on 
the basis of his privilege against self-incrimination, to testify or 
provide other information in a proceeding before or ancillary to:
    (a) A court or grand jury of the United States,
    (b) An agency of the United States, or
    (c) Either House of Congress, a joint committee of the two Houses, 
or a committee or a subcommittee of either House, and the person 
presiding over the proceeding communicates to the witness an order 
issued under section 6004, the witness may not refuse to

[[Page 131]]

comply with the order on the basis of his privilege against self-
incrimination; but no testimony or other information compelled under the 
order (or any information directly or indirectly derived from such 
testimony or other information) may be used against the witness in any 
criminal case, except a prosecution for perjury, giving a false 
statement, or otherwise failing to comply with the order. Title 18, 
section 6004, of the United States Code provides that:
    (1) In the case of any individual who has been or who may be called 
to testify or provide other information at any proceeding before an 
agency of the United States, the agency may, with the approval of the 
Attorney General, issue, in accordance with subsection (b) of section 
6004, an order requiring the individual to give testimony or provide 
other information which he refused to give or provide on the basis of 
his privilege against self-incrimination, such order to become effective 
as provided in title 18, section 6002, of the United States Code;
    (2) An agency of the United States may issue an order under 
subsection (a) of section 6004 only if in its judgment
    (i) The testimony or other information from such individual may be 
necessary to the public interest; and
    (ii) Such individual has refused or is likely to refuse to testify 
or provide other information on the basis of his privilege against self-
incrimination.

(18 U.S.C. 6002, 6004)

[37 FR 5017, Mar. 9, 1972. Redesignated at 45 FR 36345, May 29, 1980]



Sec. 4.17  Disqualification of Commissioners.

    (a) Applicability. This section applies to all motions seeking the 
disqualification of a Commissioner from any adjudicative or rulemaking 
proceeding.
    (b) Procedures. (1) Whenever any participant in a proceeding shall 
deem a Commissioner for any reason to be disqualified from participation 
in that proceeding, such participant may file with the Secretary a 
motion to the Commission to disqualify the Commissioner, such motion to 
be supported by affidavits and other information setting forth with 
particularity the alleged grounds for disqualification.
    (2) Such motion shall be filed at the earliest practicable time 
after the participant learns, or could reasonably have learned, of the 
alleged grounds for disqualification.
    (3)(i) Such motion shall be addressed in the first instance by the 
Commissioner whose disqualification is sought.
    (ii) In the event such Commissioner declines to recuse himself or 
herself from further participation in the proceeding, the Commission 
shall determine the motion without the participation of such 
Commissioner.
    (c) Standards. Such motion shall be determined in accordance with 
legal standards applicable to the proceeding in which such motion is 
filed.

(15 U.S.C. 46(g))

[46 FR 45750, Sept. 15, 1981]



PART 5_STANDARDS OF CONDUCT--Table of Contents



Subpart A_Employee Conduct Standards and Financial Conflicts of Interest

Sec.
5.1 Cross-reference to executive branch-wide regulations.
5.2 Exemption of insubstantial financial conflicts.

               Subpart B_Financial Disclosure Requirements

5.10 Cross-reference to executive branch-wide regulations.

Subparts C-D [Reserved]

  Subpart E_Disciplinary Actions Concerning Postemployment Conflict of 
                                Interest

5.51 Scope and applicability.
5.52 Nonpublic proceedings.
5.53 Initiation of investigation.
5.54 Referral to the Office of Government Ethics and to the Department 
          of Justice.
5.55 Conduct of investigation.
5.56 Disposition.
5.57 Order to show cause.
5.58 Answer and request for a hearing.
5.59 Presiding official.
5.60 Scheduling of hearing.
5.61 Prehearing procedures; motions; interlocutory appeals; summary 
          decision; discovery; compulsory process.
5.62 Hearing rights of respondent.
5.63 Evidence; transcript; in camera orders; proposed findings of fact 
          and conclusions of law.
5.64 Initial decision.

[[Page 132]]

5.65 Review of initial decision.
5.66 Commission decision and reconsideration.
5.67 Sanctions.
5.68 Judicial review.

    Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government Act of 
1978); 15 U.S.C. 46(g); E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 
215, as modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306; 
5 CFR part 2635.

    Source: 32 FR 13272, Sept. 20, 1967, unless otherwise noted. 
Redesignated at 41 FR 54483, Dec. 14, 1976.



Subpart A_Employee Conduct Standards and Financial Conflicts of Interest



Sec. 5.1  Cross-reference to executive branch-wide regulations.

    Commissioners and employees, including special government employees, 
of the Federal Trade Commission (FTC) are subject to and should refer to 
the ``Standards of Ethical Conduct for Employees of the Executive 
Branch'' at 5 CFR part 2635 (``executive branch-wide Standards of 
Conduct'') and to the FTC regulations at 5 CFR 5701 that supplement the 
executive branch-wide Standards of Conduct.

[58 FR 15764, Mar. 24, 1993, as amended at 64 FR 42594, Aug. 5, 1999]



Sec. 5.2  Exemption of insubstantial financial conflicts.

    (a) An employee or special Government employee will not be subject 
to remedial or disciplinary action or to criminal prosecution under 18 
U.S.C. 208(a), if he makes a full disclosure in writing to the official 
responsible for his appointment of the nature and circumstances of the 
particular matter involved and of his conflicting financial interest 
relating thereto, and receives in advance a written determination made 
by such official that the interest is not so substantial as to be deemed 
likely to affect the integrity of the services which the Government may 
expect from the employee or special Government employee.
    (b) For the purposes of paragraph (a) of this section, the 
``official responsible for appointment'' shall be the Executive Director 
in all cases where the employee is classified at grade GS-15 or below, 
or at a comparable pay level, except that each Commissioner shall be the 
``official responsible for appointment'' of advisors in the 
Commissioner's immediate office.
    (c) In all other cases, the Chairman shall be the ``official 
responsible for appointment.''
    (d) Pursuant to 5 CFR part 2640, certain financial interests are 
exempted from the provisions of 18 U.S.C. 208(a) as being too remote too 
inconsequential to affect the integrity of an employee's services.

[58 FR 15764, Mar. 24, 1993, as amended at 63 FR 35130, June 29, 1998]



               Subpart B_Financial Disclosure Requirements



Sec. 5.10  Cross-reference to executive branch-wide regulations.

    Commissioners and employees, including special government employees, 
of the Federal Trade Commission are subject to and should refer to the 
executive branch-wide financial disclosure regulations at 5 CFR part 
2634, and to the procedures for filing and review of financial 
disclosure reports found in Chapter 3 of the FTC Administrative Manual.

[58 FR 15765, Mar. 24, 1993]

Subparts C-D [Reserved]



  Subpart E_Disciplinary Actions Concerning Postemployment Conflict of 
                                Interest

    Authority: 15 U.S.C. 41 et seq.

    Source: 46 FR 26050, May 11, 1981, unless otherwise noted.



Sec. 5.51  Scope and applicability.

    These regulations establish procedures for investigating and 
determining alleged violations of 18 U.S.C. 207 (postemployment 
restrictions applicable to federal employees) or regulations issued by 
the Office of Government Ethics, set forth in 5 CFR parts 2637 and 2641, 
reflecting the views of the Office of Government Ethics and

[[Page 133]]

the Department of Justice as to the requirements of 18 U.S.C. 207.

[58 FR 15765, Mar. 24, 1993]



Sec. 5.52  Nonpublic proceedings.

    Any investigation or proceedings held under this part shall be 
nonpublic unless the respondent specifically requests otherwise, except 
to the extent required by the Freedom of Information Act (5 U.S.C. 552) 
or by the Sunshine Act (5 U.S.C. 552b). However, the presiding 
official's initial decision and any final decision of the Commission 
shall be placed on the public record, except that information may be 
designated in camera in accordance with Sec. 3.45 of the Commission's 
Rules of Practice.



Sec. 5.53  Initiation of investigation.

    (a) Investigations under this part may be initiated upon the 
submission by any person of a written statement to the Secretary setting 
forth sufficient information to indicate a possible violation of 18 
U.S.C. 207 or by the Commission on its own initiative when a possible 
violation is indicated by information within the Commission's 
possession.
    (b) At the direction of the Commission, the General Counsel shall 
investigate any alleged violation of 18 U.S.C. 207.



Sec. 5.54  Referral to the Office of Government Ethics and to the
Department of Justice.

    (a) The General Counsel shall make a preliminary determination of 
whether the matter appears frivolous and, if not, shall expeditiously 
transmit any available information to the Director of the Office of 
Government Ethics and to the Criminal Division, Department of Justice.
    (b) Unless the Department of Justice communicates to the Commission 
that it does not intend to initiate criminal prosecution, the General 
Counsel shall coordinate any investigation or proceeding under this part 
with the Department of Justice in order to avoid prejudicing criminal 
proceedings.



Sec. 5.55  Conduct of investigation.

    (a) The General Counsel may (1) exercise the authority granted in 
Sec. 2.5 of the Commission's Rules of Practice to administer oaths and 
affirmations; and (2) conduct investigational hearings pursuant to part 
2 of these rules. He may also recommend that the Commission issue 
compulsory process in connection with an investigation under this 
section.
    (b) Witnesses in investigations shall have the rights set forth in 
Sec. 2.9 of the Commission's Rules of Practice.



Sec. 5.56  Disposition.

    (a) Upon the conclusion of an investigation under this part, the 
General Counsel shall forward to the Commission a summary of the facts 
disclosed by the investigation along with a recommendation as to whether 
the Commission should issue an order to show cause pursuant to Sec. 
5.57.
    (b) When the former government employee involved is an attorney, the 
General Counsel shall also recommend whether the matter should be 
referred to the disciplinary committee of the bar(s) of which the 
attorney is a member.



Sec. 5.57  Order to show cause.

    (a) Upon a Commission determination that there exists reasonable 
cause to believe a former government employee has violated 18 U.S.C. 
207, the Commission may issue an order requiring the former employee to 
show cause why sanctions should not be imposed.
    (b) The show cause order shall contain:
    (1) The statutory provisions alleged to have been violated and a 
clear and concise description of the acts of the former employee that 
are alleged to constitute the violation;
    (2) Notice of the respondent's right to submit an answer and request 
a hearing, and the time and manner in which the request is to be made; 
and
    (3) A statement of the sanctions that may be imposed pursuant to 
Sec. 5.67 of this part.
    (c) Subsequent to the issuance of an order to show cause, any 
communications to or from the Commission or any member of the Commission 
shall be governed by the ex parte provisions of Sec. 4.7 of the 
Commission's Rules of Practice. 16 CFR 4.7.

[[Page 134]]



Sec. 5.58  Answer and request for a hearing.

    (a) An answer and request for a hearing must be filed with the 
Secretary of the Commission within thirty (30) days after service of the 
order to show cause.
    (b) In the absence of good cause shown, failure to file an answer 
and request for a hearing within the specified time limit:
    (1) Will be deemed a waiver of the respondent's right to contest the 
allegations of the show cause order or request a hearing and
    (2) Shall authorize the Commission to find the facts to be as 
alleged in the show cause order and enter a final decision providing for 
the imposition of such sanctions specified in Sec. 5.67 as the 
Commission deems appropriate.
    (c) An answer shall contain (1) a concise statement of the facts or 
law constituting each ground of defense and (2) specific admission, 
denial, or explanation of each fact alleged in the show cause order or, 
if the respondent is without knowledge thereof, a statement to that 
effect. Any allegations of a complaint not answered in this manner will 
be deemed admitted.
    (d) Hearings shall be deemed waived as to any facts in the show 
cause order that are specifically admitted or deemed to be admitted as a 
result of respondent's failure to deny them. Those portions of 
respondent's answer, together with the show cause order, will provide a 
record basis for initial decision by the Administrative Law Judge or for 
final decision by the Commission.
    (e) If all material factual allegations of the show cause order are 
specifically admitted or have been deemed admitted in accordance with 
paragraph (c) of this section, the Commission will decide the matter on 
the basis of the allegations set forth in the show cause order and 
respondent's answer.



Sec. 5.59  Presiding official.

    (a) Upon the receipt of an answer and request for a hearing, the 
Secretary shall refer the matter to the Chief Administrative Law Judge, 
who shall appoint an Administrative Law Judge to preside over the 
hearing and shall notify the respondent and the General Counsel as to 
the person selected.
    (b) The powers and duties of the presiding official shall be as set 
forth in Sec. 3.42(b) through (h) of the Commission's Rules of 
Practice.



Sec. 5.60  Scheduling of hearing.

    The presiding official shall fix the date, time and place of the 
hearing. The hearing shall not be scheduled earlier than fifteen days 
after receipt of the respondent's answer and request for a hearing. In 
fixing the time, date and place of the hearing, the presiding official 
shall give due regard to the respondent's need for adequate time to 
prepare a defense and an expeditious resolution of allegations that may 
be damaging to his or her reputation.



Sec. 5.61  Prehearing procedures; motions; interlocutory appeals;
summary decision; discovery; compulsory process.

    Because of the nature of the issues involved in proceedings under 
this part, the Commission anticipates that extensive motions, prehearing 
proceedings and discovery will not be required in most cases. For this 
reason, detailed procedures will not be established under this part. 
However, to the extent deemed warranted by the presiding official, 
prehearing conferences, motions, interlocutory appeals, summary 
decisions, discovery and compulsory process shall be permitted and shall 
be governed, where appropriate, by the provisions set forth in subparts 
C and D, part 3, of the Commission's Rules of Practice.



Sec. 5.62  Hearing rights of respondent.

    In any hearing under this subpart, the respondent shall have the 
right:
    (a) To be represented by counsel;
    (b) To present and cross-examine witnesses and submit evidence;
    (c) To present objections, motions, and arguments, oral or written; 
and
    (d) To obtain a transcript of the proceedings on request.



Sec. 5.63  Evidence; transcript; in camera orders; proposed findings
of fact and conclusions of law.

    Sections 3.43, 3.44, 3.45, and 3.46 of the Commission's Rules of 
Practice shall

[[Page 135]]

govern, respectively, the receipt and objections to admissibility of 
evidence, the transcript of the hearing, in camera orders and the 
submission and consideration of proposed findings of fact and 
conclusions of law except that (a) a copy of the hearing transcript 
shall be provided the respondent; and (b) the Commission has the burden 
of establishing, by a preponderance of the evidence on the record as a 
whole, the allegations stated in the order to show cause.



Sec. 5.64  Initial decision.

    Section 3.51 of the Commission's Rules of Practice shall govern the 
initial decision in proceedings under this subpart, except that the 
determination of the Administrative Law Judge must be supported by a 
preponderance of the evidence.



Sec. 5.65  Review of initial decision.

    Appeals from the initial decision of the Administrative Law Judge or 
review by the Commission in the absence of an appeal shall be governed 
by Sec. Sec. 3.52 and 3.53 of the Commission's Rules of Practice except 
that oral arguments shall be nonpublic subject to the exceptions stated 
in Sec. 3.52 of this part.



Sec. 5.66  Commission decision and reconsideration.

    The Commission's decision and any reconsideration or reopening of 
the proceeding shall be governed by Sec. Sec. 2.51, 3.54, 3.55, 3.71 
and 3.72 of the Commission's Rules of Practice, except that (a) if the 
initial decision is modified or reversed, the Commission shall specify 
such findings of fact and conclusions of law as are different from those 
of the presiding official; and (b) references therein to ``court of 
appeals'' shall be deemed for purposes of proceedings under this part to 
refer to ``district court.''



Sec. 5.67  Sanctions.

    In the case of any respondent who fails to request a hearing after 
receiving adequate notice of the allegations pursuant to Sec. 5.57 or 
who is found in the Commission's final decision to have violated 18 
U.S.C. 207 (a), (b), or (c), the Commission may order such disciplinary 
action as it deems warranted, including:
    (a) Reprimand;
    (b) Suspension from participating in a particular matter or matters 
before the Commission; or
    (c) Prohibiting the respondent from making, with the intent to 
influence, any formal or informal appearance before, or any oral or 
written communication to, the Commission or its staff on any matter or 
business on behalf of any other person (except the United States) for a 
period not to exceed five (5) years.



Sec. 5.68  Judicial review.

    A respondent against whom the Commission has issued an order 
imposing disciplinary action under this part may seek judicial review of 
the Commission's determination in an appropriate United States District 
Court by filing a petition for such review within sixty (60) days of 
receipt of notice of the Commission's final decision.



PART 6_ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP
IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE FEDERAL TRADE COMMISSION
--Table of Contents



Sec.
6.101 Purpose.
6.102 Application.
6.103 Definitions.
6.104-6.109 [Reserved]
6.110 Self-evaluation.
6.111 Notice.
6.112-6.129 [Reserved]
6.130 General prohibitions against discrimination.
6.131-6.139 [Reserved]
6.140 Employment.
6.141-6.148 [Reserved]
6.149 Program accessibility: Discrimination prohibited.
6.150 Program accessibility: Existing facilities.
6.151 Program accessibility: New construction and alterations.
6.152 Program accessibility: Electronic and information technology.
6.153-6.159 [Reserved]
6.160 Communications.
6.161-6.169 [Reserved]
6.170 Compliance procedures.
6.171-6.999 [Reserved]

    Authority: 29 U.S.C. 794, 794d.

[[Page 136]]


    Source: 52 FR 45628, Dec. 1, 1987, unless otherwise noted.



Sec. 6.101  Purpose.

    This part effectuates section 119 of the Rehabilitation, 
Comprehensive Services, and Developmental Disabilities Amendments of 
1978, which amended section 504 of the Rehabilitation Act of 1973 to 
prohibit discrimination on the basis of handicap in programs or 
activities conducted by Executive agencies or the United States Postal 
Service. This part also implements section 508 of the Rehabilitation Act 
of 1973, as amended, with respect to the accessibility of electronic and 
information technology developed, procured, maintained, or used by the 
agency.

[52 FR 45628, Dec. 1, 1987, as amended at 66 FR 51863, Oct. 11, 2001]



Sec. 6.102  Application.

    This part applies to all programs or activities conducted by the 
Commission except for programs or activities conducted outside the 
United States that do not involve individuals with handicaps in the 
United States.



Sec. 6.103  Definitions.

    For purposes of this part, the term--
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and to enjoy the benefits of, programs or 
activities conducted by the Commission. For example, auxiliary aids 
useful for persons with impaired vision include readers, Brailled 
materials, audio recordings, and other similar services and devices. 
Auxiliary aids useful for persons with impaired hearing include 
telephone handset amplifiers, telephones compatible with hearing aids, 
telecommunication devices for deaf persons (TDD's), interpreters, 
notetakers, written materials, and other similar services and devices.
    Commission means the Federal Trade Commission.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the Commission's alleged 
discriminatory action in sufficient detail to inform the Commission of 
the nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Electronic and information technology includes information 
technology and any equipment or interconnected system or subsystem of 
equipment that is used in the creation, conversion, or duplication of 
data or information. The term includes, but is not limited to, 
telecommunications products (such as telephones), information kiosks and 
transaction machines, World Wide Web sites, multimedia, and office 
equipment such as copiers and fax machines. The term does not include 
any equipment that contains embedded information technology that is used 
as an integral part of the product, but the principal function of which 
is not the acquisition, storage, manipulation, management, movement, 
control, display, switching, interchange, transmission, or reception of 
data or information. For example, HVAC (heating, ventilation, and air 
conditioning) equipment such as thermostats or temperature control 
devices, and medical equipment where information technology is integral 
to its operation are not electronic and information technology.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Individual with handicaps means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities, has a record of such an impairment, or is regarded as having 
such an impairment. As used in this definition, the phrase:
    (1) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive;

[[Page 137]]

digestive; genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term physical or mental impairment 
includes, but is not limited to, such diseases and conditions as 
orthopedic, visual, speech, and hearing impairments, cerebral palsy, 
epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, 
diabetes, mental retardation, emotional illness, and drug addiction and 
alcoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the Commission as 
constituting such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in paragraph (1) of this 
definition but is treated by the Commission as having such an 
impairment.
    Information technology means any equipment or interconnected system 
or subsystem of equipment that is used in the automatic acquisition, 
storage, manipulation, management, movement, control, display, 
switching, interchange, transmission, or reception of data or 
information. The term ``information technology'' includes computers, 
ancillary equipment, software, firmware and similar procedures, services 
(including support services), and related resources.
    Qualified individual with handicaps means--
    (1) With respect to any Commission program or activity under which a 
person is required to perform services or to achieve a level of 
accomplishment, an individual with handicaps who meets the essential 
eligibility requirements and who can achieve the purpose of the program 
or activity without modifications in the program or activity that the 
Commission can demonstrate would result in a fundamental alteration in 
its nature; and
    (2) With respect to any other program or activity, an individual 
with handicaps who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity.
    (3) Qualified handicapped person as that term is defined for 
purposes of employment in 29 CFR 1613.702 (f), which is made applicable 
to this part by Sec. 6.140.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617); 
the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955) and the 
Rehabilitation Act Amendments of 1986 (Pub. L. 99-506, 100 Stat. 1810). 
As used in this part, section 504 applies only to programs or activities 
conducted by Executive agencies and not to federally assisted programs.
    Section 508 means section 508 of the Rehabilitation Act of 1973, as 
amended.

[52 FR 45628, Dec. 1, 1987, as amended at 66 FR 51863, Oct. 11, 2001]



Sec. Sec. 6.104-6.109  [Reserved]



Sec. 6.110  Self-evaluation.

    (a) The Commission shall, by February 1, 1989, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part, and, to the extent modification of 
any such policies and practices is required, the Commission shall 
proceed to make the necessary modifications.
    (b) The Commission shall provide an opportunity to interested 
persons, including individuals with handicaps or organizations 
representing individuals with handicaps, to participate in the

[[Page 138]]

self-evaluation process by submitting comments (both oral and written).
    (c) The Commission shall, for at least three years following 
completion of the self-evaluation required under paragraph (a) of this 
section, maintain on file and make available for public inspection:
    (1) A description of areas examined and any problems identified, and
    (2) A description of any modifications made.



Sec. 6.111  Notice.

    The Commission shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the Commission, and make such 
information available to them in such manner as the Chairman or his or 
her designee finds necessary to apprise such persons of the protections 
against discrimination assured to them by section 504 and this 
regulation.



Sec. Sec. 6.112-6.129  [Reserved]



Sec. 6.130  General prohibitions against discrimination.

    (a) No qualified individual with handicaps shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity conducted by the Commission.
    (b)(1) The Commission, in providing any aid, benefit, or service, 
may not, directly or through contractual, licensing, or other 
arrangements, on the basis of handicap--
    (i) Deny a qualified individual with handicaps the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified individual with handicaps an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified individual with handicaps with an aid, 
benefit, or service that is not as effective in affording equal 
opportunity to obtain the same result, to gain the same benefit, or to 
reach the same level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
individuals with handicaps or to any class of individuals with handicaps 
than is provided to others unless such action is necessary to provide 
qualified individuals with handicaps with aid, benefits, or services 
that are as effective as those provided to others;
    (v) Deny a qualified individual with handicaps the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified individual with handicaps in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving the aid, benefit, or service.
    (2) The Commission may not deny a qualified individual with 
handicaps the opportunity to participate in programs or activities that 
are not separate or different, despite the existence of permissibly 
separate or different programs or activities.
    (3) The Commission may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified individuals with handicaps to discrimination 
on the basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with handicaps.
    (4) The Commission may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude individuals with handicaps from, deny them the benefits 
of, or otherwise subject them to discrimination under any program or 
activity conducted by the Commission; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to individuals with 
handicaps.
    (5) The Commission, in the selection of procurement contractors, may 
not use criteria that subject qualified individuals with handicaps to 
discrimination on the basis of handicap.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program

[[Page 139]]

limited by Federal statute or Executive order to individuals with 
handicaps or the exclusion of a specific class of individuals with 
handicaps from a program limited by Federal statute or Executive order 
to a different class of individuals with handicaps is not prohibited by 
this part.
    (d) The Commission shall administer programs and activities in the 
most integrated setting appropriate to the needs of qualified 
individuals with handicaps.



Sec. Sec. 6.131-6.139  [Reserved]



Sec. 6.140  Employment.

    No qualified individual with handicaps shall, on the basis of 
handicap, be subjected to discrimination in employment under any program 
or activity conducted by the Commission. The definitions, requirements 
and procedures of section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791), as established by the Equal Employment Opportunity 
Commission in 29 CFR part 1613, shall apply to employment in federally 
conducted programs or activities.



Sec. Sec. 6.141-6.148  [Reserved]



Sec. 6.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 6.150, no qualified 
individuals with handicaps shall, because the Commission's facilities 
are inaccessible to or unusable by individuals with handicaps, be denied 
the benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the Commission.



Sec. 6.150  Program accessibility: Existing facilities.

    (a) General. The Commission shall operate each program or activity 
so that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by individuals with handicaps. This paragraph 
does not--
    (1) Necessarily require the Commission to make each of its existing 
facilities accessible to and usable by individuals with handicaps, or
    (2) Require the Commission to take any action that it can 
demonstrate would result in a fundamental alteration in the nature of a 
program or activity or in undue financial and administrative burdens. In 
those circumstances where Commission personnel believe that the proposed 
action would fundamentally alter the program or activity or would result 
in undue financial and administrative burdens, the Commission has the 
burden of proving that compliance with Sec. 6.150(a) would result in 
such alteration or burdens. The decision that compliance would result in 
such alteration or burdens must be made by the Chairman or his or her 
designee after considering all Commission resources available for use in 
the funding and operation of the conducted program or activity, and must 
be accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the Commission shall take any other action that would not 
result in such an alteration or such burdens, but would, nevertheless, 
ensure that individuals with handicaps receive the benefits and services 
of the program or activity.
    (b) Methods. The Commission may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of aides to beneficiaries, 
home visits, delivery of services at alternate accessible sites, 
alteration of existing facilities and construction of new facilities, 
use of accessible rolling stock, or any methods that result in making 
its programs or activities readily accessible to and usable by 
individuals with handicaps. The Commission is not required to make 
structural changes in existing facilities where other methods are 
effective in achieving compliance with this section. The Commission, in 
making alterations to existing buildings, shall meet accessibility 
requirements to the extent compelled by the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157) and any regulations 
implementing it. In choosing among available methods for meeting the 
requirements of this section, the Commission shall give priority to 
those methods that offer programs and activities to qualified 
individuals with

[[Page 140]]

handicaps in the most integrated setting appropriate.
    (c) Time period for compliance. The Commission shall comply with the 
obligations established under this section by April 1, 1988, except that 
where structural changes in facilities are undertaken, such changes 
shall be made by February 1, 1991, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
Commission shall develop, by August 1, 1988, a transition plan setting 
forth the steps necessary to complete such changes. The Commission shall 
provide an opportunity to interested persons, including individuals with 
handicaps or organizations representing individuals with handicaps, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan shall be 
made available for public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the Commission's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period;
    (4) Indicate the official responsible for implementation of the 
plan; and
    (5) Identify the persons or groups with whose assistance the plan 
was prepared.



Sec. 6.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the Commission shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
individuals with handicaps. The definitions, requirements, and standards 
of the Architectural Barriers Act (42 U.S.C. 4151-4157), as established 
in 41 CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Sec. 6.152  Program accessibility: Electronic and information technology.

    (a) When developing, procuring, maintaining, or using electronic and 
information technology, the Commission shall ensure, unless an undue 
burden would be imposed on the agency, that the electronic and 
information technology allows, regardless of the type of medium of the 
technology:
    (1) Individuals with disabilities who are employees to have access 
to and use of information and data that is comparable to the access to 
and use of the information and data by employees who are not individuals 
with disabilities; and
    (2) Individuals with disabilities who are members of the public 
seeking information or services from the Commission to have access to 
and use of information and data that is comparable to the access to and 
use of the information and data by members of the public who are not 
individuals with disabilities.
    (b) When the development, procurement, maintenance, or use of 
electronic and information technology that meets the standards published 
by the Architectural and Transportation Barriers Compliance Board 
pursuant to section 508(a)(2) of the Rehabilitation Act of 1973, as 
amended, would impose an undue burden on the Commission, the Commission 
shall provide individuals with disabilities covered by paragraph (a) of 
this section with the information and data involved by an alternative 
means of access that allows such individuals to use the information and 
data.
    (c) This section shall not apply to any matter legally exempted by 
section 508, by the standards referenced in paragraph (b) of this 
section, or by other applicable law or regulation. Nothing in this 
section shall be construed to limit any right, remedy, or procedure 
otherwise available under any provision of federal law (including 
sections 501 through 505 of the Rehabilitation Act of 1973, as amended) 
that provides greater or equal protection for

[[Page 141]]

the rights of individuals with disabilities than section 508.

[66 FR 51863, Oct. 11, 2001]



Sec. Sec. 6.153-6.159  [Reserved]



Sec. 6.160  Communications.

    (a) The Commission shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The Commission shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the Commission.
    (i) In determining what type of auxiliary aid is necessary, the 
Commission shall give primary consideration to the requests of the 
individual with handicaps.
    (ii) The Commission need not provide individually prescribed 
devices, readers for personal use or study, or other devices of a 
personal nature.
    (2) Where the Commission communicates with applicants and 
beneficiaries by telephone, telecommunication devices for deaf persons 
(TDD's), or equally effective telecommunication systems shall be used.
    (b) The Commission shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The Commission shall provide signs at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the Commission to take any action 
that it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity, or in undue financial and 
administrative burdens. In those circumstances where Commission 
personnel believe that the proposed action would fundamentally alter the 
program or activity or would result in undue financial and 
administrative burdens, the Commission has the burden of proving that 
compliance with Sec. 6.160 would result in such alteration or burdens. 
The decision that compliance would result in such alteration or burdens 
must be made by the Chairman or his or her designee after considering 
all Commission resources available for use in the funding and operation 
of the conducted program or activity, and must be accompanied by a 
written statement of the reasons for reaching that conclusion. If an 
action required to comply with this section would result in such an 
alteration or such burdens, the Commission shall take any other action 
that would not result in such an alteration or burdens but would 
nevertheless ensure that, to the maximum extent possible, individuals 
with handicaps receive the benefits and services of the program or 
activity.



Sec. Sec. 6.161-6.169  [Reserved]



Sec. 6.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the Commission.
    (b) The Commission shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791). The Commission shall apply the same procedures to process 
complaints alleging violations of section 508. Complaints alleging a 
violation of section 508 may not be filed with respect to any exempted 
matters as described in Sec. 6.152(c) of this chapter, and may be filed 
only with respect to electronic and information technology procured by 
the Commission on or after June 21, 2001.
    (c) Responsibility for implementation and operation of this section 
is vested in the Director of Equal Employment Opportunity.
    (d)(1) A complete complaint under this section may be filed by any 
person who believes that he or she or any specific class of persons of 
which he or she

[[Page 142]]

is a member has been subjected to discrimination prohibited by this 
part. The complaint may also be filed by an authorized representative of 
any such person.
    (2) The complaint must be filed within 180 days of the alleged act 
of discrimination unless the Director of Equal Employment Opportunity 
extends the time period for good cause.
    (3) The complaint must be addressed to the Director of Equal 
Employment Opportunity, Federal Trade Commission, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580.
    (e) If the Director of Equal Employment Opportunity receives a 
complaint over which the Commission does not have jurisdiction, he or 
she shall promptly notify the complainant and shall make reasonable 
efforts to refer the complaint to the appropriate Government entity.
    (f) The Director of Equal Employment Opportunity shall notify the 
Architectural and Transportation Barriers Compliance Board upon receipt 
of any complaint alleging that a building or facility that is subject to 
the Architectural Barriers Act of 1968, as amended (42 U.S.C. 4151-4157) 
is not readily accessible to and usable by individuals with handicaps.
    (g)(1) The Director of Equal Employment Opportunity shall accept and 
investigate a complete complaint that is filed in accordance with 
paragraph (d) of this section and over which the Commission has 
jurisdiction.
    (2) If the Director of Equal Employment Opportunity receives a 
complaint that is not complete (see Sec. 6.103), he or she shall, 
within 30 days thereafter, notify the complainant that additional 
information is needed. If the complainant fails to complete the 
complaint within 30 days of the date of the Director's notice, the 
Director of Equal Employment Opportunity may dismiss the complaint 
without prejudice.
    (h) Within 180 days of the receipt of a complete complaint over 
which the Commission has jurisdiction, the Director of Equal Employment 
Opportunity shall notify the complainant of the results of the 
investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal to the Commission's General 
Counsel.
    (i)(1) An appeal under this section must be filed within 90 days of 
the complainant's receipt of the letter under paragraph (h) of this 
section unless the General Counsel extends the time period for good 
cause.
    (2) The appeal must be addressed to the General Counsel, Federal 
Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.
    (3) The appeal shall specify the questions raised by the appeal and 
the arguments on the points of fact and law relied upon in support of 
the position taken on each question; and it shall include copies of the 
complaint filed under paragraph (d) of this section and the letter by 
the Director of Equal Employment Opportunity under paragraph (h) of this 
section as well as any other material relied upon in support of the 
appeal.
    (j) The General Counsel shall notify the complainant of the results 
of the appeal within 60 days of the receipt of the appeal. If the 
General Counsel determines that additional information is needed from 
the complainant, the General Counsel shall have 60 days from the date of 
receipt of the additional information to make a final determination on 
the appeal. The General Counsel may submit the appeal to the Commission 
for final determination provided that any final determination of the 
appeal is made by the Commission within the 60-day period specified by 
this paragraph.
    (k) The time limits specified by paragraphs (h) and (j) of this 
section may be extended by the Chairman for good cause.
    (l) The Commission may delegate its authority for conducting 
complaint investigations to other Federal agencies, except that the 
authority for making the final determination may not be delegated.

[52 FR 45628, Dec. 1, 1987, as amended at 66 FR 51864, Oct. 11, 2001]

[[Page 143]]



Sec. Sec. 6.171-6.999  [Reserved]



PART 14_ADMINISTRATIVE INTERPRETATIONS, GENERAL POLICY STATEMENTS,
AND ENFORCEMENT POLICY STATEMENTS--Table of Contents



Sec.
14.9 Requirements concerning clear and conspicuous disclosures in 
          foreign language advertising and sales materials.
14.12 Use of secret coding in marketing research.
14.15 In regard to comparative advertising.
14.16 Interpretation of Truth-in-Lending Orders consistent with 
          amendments to the Truth-in-Lending Act and Regulation Z.

    Authority: 15 U.S.C. 41-58.



Sec. 14.9  Requirements concerning clear and conspicuous disclosures
in foreign language advertising and sales materials.

    The Federal Trade Commission has noted that, with increasing 
intensity, advertisers are making special efforts to reach foreign 
language-speaking consumers. As part of this special effort, 
advertisements, brochures and sales documents are being printed in 
foreign languages. In recent years the Commission has issued various 
cease-and-desist orders as well as rules, guides and other statements, 
which require affirmative disclosures in connection with certain kinds 
of representations and business activities. Generally, these disclosures 
are required to be ``clear and conspicuous.'' Because questions have 
arisen as to the meaning and application of the phrase ``clear and 
conspicuous'' with respect to foreign language advertisements and sales 
materials, the Commission deems it appropriate to set forth the 
following enforcement policy statement:
    (a) Where cease-and-desist orders as well as rules, guides and other 
statements require ``clear and conspicuous'' disclosure of certain 
information in an advertisement or sales material in a newspaper, 
magazine, periodical, or other publication that is not in English, the 
disclosure shall appear in the predominant language of the publication 
in which the advertisement or sales material appears. In the case of any 
other advertisement or sales material, the disclosure shall appear in 
the language of the target audience (ordinarily the language principally 
used in the advertisement or sales material).
    (b) Any respondent who fails to comply with this requirement may be 
the subject of a civil penalty or other law enforcement proceeding for 
violating the terms of a Commission cease-and-desist order or rule.

(Sec. 5, 38 Stat. 719, as amended; 15 U.S.C. 45)

[38 FR 21494, Aug. 9, 1973, as amended at 63 FR 34808, June 26, 1998]



Sec. 14.12  Use of secret coding in marketing research.

    (a) The Federal Trade Commission has determined to close its 
industry-wide investigation of marketing research firms that was 
initiated in November 1975, to determine if the firms were using 
questionnaires with invisible coding that could be used to reveal a 
survey respondent's identity. After a thorough investigation, the 
Commission has determined that invisible coding has been used by the 
marketing research industry, but it is neither a commonly used nor 
widespread practice. Moreover, use of the practice appears to have 
diminished in recent years. For these reasons, the Commission has 
determined that further action is not warranted at this time.
    (b) However, for the purpose of providing guidance to the marketing 
research industry, the Commission is issuing the following statement 
with regard to its future enforcement intentions. The Commission has 
reason to believe that it is an unfair or deceptive act or practice, 
violative of section 5 of the Federal Trade Commission Act (15 U.S.C. 
45) to induce consumers to provide information about themselves by 
expressly or implicitly promising that such information is being 
provided anonymously, when, in fact, a secret or invisible code is used 
on the survey form or return envelope that allows identification of the 
consumer who has provided the information.
    (c) While the Commission has made no final determination regarding 
the legality of the foregoing practice, the Commission will take 
appropriate enforcement action should it discover the practice to be 
continuing in the future, and in the event that it may be causing 
substantial consumer injury. Among

[[Page 144]]

the circumstances in which the Commission believes that the use of 
secret coding may cause significant consumer harm are those in which:
    (1) A misleading promise of anonymity is used to obtain highly 
sensitive information about a consumer that such consumer would not 
choose to disclose if he or she were informed that a code was being used 
that would allow his or her name to be associated with the response; and
    (2) Information of any sort is used for purposes other than those of 
the market survey.

[43 FR 42742, Sept. 21, 1978]



Sec. 14.15  In regard to comparative advertising.

    (a) Introduction. The Commission's staff has conducted an 
investigation of industry trade associations and the advertising media 
regarding their comparative advertising policies. In the course of this 
investigation, numerous industry codes, statements of policy, 
interpretations and standards were examined. Many of the industry codes 
and standards contain language that could be interpreted as discouraging 
the use of comparative advertising. This Policy Statement enunciates the 
Commission's position that industry self-regulation should not restrain 
the use by advertisers of truthful comparative advertising.
    (b) Policy Statement. The Federal Trade Commission has determined 
that it would be of benefit to advertisers, advertising agencies, 
broadcasters, and self-regulation entities to restate its current policy 
concerning comparative advertising. \1\ Commission policy in the area of 
comparative advertising encourages the naming of, or reference to 
competitiors, but requires clarity, and, if necessary, disclosure to 
avoid deception of the consumer. Additionally, the use of truthful 
comparative advertising should not be restrained by broadcasters or 
self-regulation entities.
---------------------------------------------------------------------------

    \1\ For purposes of this Policy Statement, comparative advertising 
is defined as advertising that compares alternative brands on 
objectively measurable attributes or price, and identifies the 
alternative brand by name, illustration or other distinctive 
information.
---------------------------------------------------------------------------

    (c) The Commission has supported the use of brand comparisions where 
the bases of comparision are clearly identified. Comparative 
advertising, when truthful and nondeceptive, is a source of important 
information to consumers and assists them in making rational purchase 
decisions. Comparative advertising encourages product improvement and 
innovation, and can lead to lower prices in the marketplace. For these 
reasons, the Commission will continue to scrutinize carefully restraints 
upon its use.
    (1) Disparagement. Some industry codes which prohibit practices such 
as ``disparagement,'' ``disparagement of competitors,'' ``improper 
disparagement,'' ``unfairly attaching,'' ``discrediting,'' may operate 
as a restriction on comparative advertising. The Commission has 
previously held that disparaging advertising is permissible so long as 
it is truthful and not deceptive. In Carter Products, Inc., 60 F.T.C. 
782, modified, 323 F.2d 523 (5th Cir. 1963), the Commission narrowed an 
order recommended by the hearing examiner which would have prohibited 
respondents from disparaging competing products through the use of false 
or misleading pictures, depictions, or demonstrations, ``or otherwise'' 
disparaging such products. In explaining why it eliminated ``or 
otherwise'' from the final order, the Commission observed that the 
phrase would have prevented:

    respondents from making truthful and non-deceptive statements that a 
product has certain desirable properties or qualities which a competing 
product or products do not possess. Such a comparison may have the 
effect of disparaging the competing product, but we know of no rule of 
law which prevents a seller from honestly informing the public of the 
advantages of its products as opposed to those of competing products. 60 
F.T.C. at 796.


Industry codes which restrain comparative advertising in this manner are 
subject to challenge by the Federal Trade Commission.
    (2) Substantiation. On occasion, a higher standard of substantiation 
by advertisers using comparative advertising has been required by self-
regulation entities. The Commission evaluates comparative advertising in 
the same manner as it evaluates all other

[[Page 145]]

advertising techniques. The ultimate question is whether or not the 
advertising has a tendency or capacity to be false or deceptive. This is 
a factual issue to be determined on a case-by-case basis. However, 
industry codes and interpretations that impose a higher standard of 
substantiation for comparative claims than for unilateral claims are 
inappropriate and should be revised.

(Sec. 5, 38 Stat. 719, as amended; 15 U.S.C. 45)

[44 FR 47328, Aug. 13, 1979]



Sec. 14.16  Interpretation of Truth-in-Lending Orders consistent
with amendments to the Truth-in-Lending Act and Regulation Z.

                              Introduction

    The Federal Trade Commission (FTC) has determined that there is a 
need to clarify the compliance responsibilities under the Truth-in-
Lending Act (TILA) (Title I, Consumer Credit Protection Act, 15 U.S.C. 
1601 et seq.), as amended by the Truth-in-Lending Simplification and 
Reform Act of 1980 (Pub. L. 96-221, 94 Stat. 168), and under revised 
Regulation Z (12 CFR part 226, 46 FR 20848), and subsequent amendments 
to the TILA and Regulation Z, of those creditors and advertisers who are 
subject to final cease and desist orders that require compliance with 
provisions of the Truth-in-Lending statute or Regulation Z. 
Clarification is necessary because the Truth-in-Lending Simplification 
and Reform Act and revised Regulation Z significantly relaxed prior 
Truth-in-Lending requirements on which provisions of numerous 
outstanding orders were based. The Policy Statement provides that the 
Commission will interpret and enforce Truth-in-Lending provisions of all 
orders so as to impose no greater or different disclosure obligations on 
creditors and advertisers named in such orders than are required 
generally of creditors and advertisers under the TILA and Regulation Z, 
and subsequent amendments to the TILA and Regulation Z.

                            Policy Statement

    (a) All cease and desist orders issued by the FTC that require 
compliance with provisions of the Truth-in-Lending Act and Regulation Z 
(12 CFR part 226) will be interpreted and enforced consistent with the 
amendments to the TILA incorporated by the Truth-in-Lending 
Simplification and Reform Act of 1980, and the revision of Regulation Z 
implementing the same, promulgated on April 1, 1981 by the Board of 
Governors of the Federal Reserve System (46 FR 20848), and by subsequent 
amendments to the TILA and Regulation Z. Likewise, the Federal Reserve 
Board staff commentary to revised Regulation Z (46 FR 50288, October 9, 
1981), and subsequent revisions to the Federal Reserve Board staff 
commentary to Regulation Z, will be considered in interpreting the 
requirements of existing orders.
    (b) After an amendment to Regulation Z becomes effective, compliance 
with the revised credit disclosure requirements will be considered 
compliance with the existing order, and:
    (1) To the extent that revised Regulation Z deletes disclosure 
requirements imposed by any Commission order, compliance with these 
requirements will no longer be required; however,
    (2) To the extent that revised Regulation Z imposes additional 
disclosure or format requirements, a failure to comply with the added 
requirements will be considered a violation of the TILA.
    (c) A creditor or advertiser must continue to comply with all 
provisions of the order which do not relate to Truth-in-Lending Act 
requirements or are unaffected by Regulation Z. These provisions are not 
affected by this policy statement and will remain in full force and 
effect.

                          Staff Clarifications

    The Commission intends that this Enforcement Policy Statement 
obviate the need for any creditor or advertiser to file a petition to 
reopen and modify any affected order under section 2.51 of the 
Commission's rules of practice (16 CFR 2.51). However, the Commission 
recognizes that the policy statement may not provide clear guidance to 
every creditor or advertiser under order. The staff of the Division of 
Enforcement, Bureau of Consumer Protection, will respond to written 
requests

[[Page 146]]

for clarification of any order affected by this policy statement.

[60 FR 42033, Aug. 15, 1995]



PART 16_ADVISORY COMMITTEE MANAGEMENT--Table of Contents



Sec.
16.1 Purpose and scope.
16.2 Definitions.
16.3 Policy.
16.4 Advisory Committee Management Officer.
16.5 Establishment of advisory committees.
16.6 Charter.
16.7 Meetings.
16.8 Closed meetings.
16.9 Notice of meetings.
16.10 Minutes and transcripts of meetings.
16.11 Annual comprehensive review.
16.12 Termination of advisory committees.
16.13 Renewal of advisory committees.
16.14 Amendments.
16.15 Reports of advisory committees.
16.16 Compensation.

    Authority: Federal Advisory Committee Act, 5 U.S.C. App. I Section 
8(a).

    Source: 51 FR 30055, Aug. 22, 1986, unless otherwise noted.



Sec. 16.1  Purpose and scope.

    (a) The regulations in this part implement the Federal Advisory 
Committee Act, 5 U.S.C. App. I.
    (b) These regulations shall apply to any advisory committee, as 
defined in paragraph (b) of Sec. 16.2 of this part. However, to the 
extent that an advisory committee is subject to particular statutory 
provisions that are inconsistent with the Federal Advisory Committee 
Act, these regulations do not apply.



Sec. 16.2  Definitions.

    For purposes of this part:
    (a) Administrator means the Administrator of the General Services 
Administration.
    (b) Advisory committee, subject to exclusions described in paragraph 
(b)(2) of this section, means any committee, board, commission, council, 
panel, task force, or other similar group, or any subcommittee or other 
subgroup thereof, which is established or utilized by the Commission for 
the purpose of obtaining advice or recommendations for the Commission or 
other agency or officer of the Federal Government on matters that are 
within the scope of the Commission's jurisdiction.
    (1) Where a group provides some advice to the Commission but the 
group's advisory function is incidental and inseparable from other 
(e.g., operational or management) functions, the provisions of this part 
do not apply. However, if the advisory function is separable, the group 
is subject to this part to the extent that the group operates as an 
advisory committee.
    (2) Groups excluded from the effect of the provisions of this part 
include:
    (i) Any committee composed wholly of full-time officers or employees 
of the Federal Government;
    (ii) Any committee, subcommittee or subgroup that is exclusively 
operational in nature (e.g., has functions that include making or 
implementing decisions, as opposed to the offering of advice or 
recommendations);
    (iii) Any inter-agency advisory committee unless specifically made 
applicable by the establishing authority.
    (c) Commission means the Federal Trade Commission.
    (d) GSA means the General Services Administration.
    (e) Secretariat means the Committee Management Secretariat of the 
General Services Administration.
    (f) Sunshine Act means the Government in the Sunshine Act, 5 U.S.C. 
552b.



Sec. 16.3  Policy.

    (a) The Commission's policy shall be to:
    (1) Establish an advisory committee only when it is essential to the 
conduct of agency business;
    (2) Insure that adequate information is provided to the Congress and 
the public regarding advisory committees, and that there are adequate 
opportunities for access by the public to advisory committee meetings;
    (3) Insure that the membership of the advisory committee is balanced 
in terms of the points of view represented and the functions to be 
performed; and
    (4) Terminate an advisory committee whenever the stated objectives 
of the committee have been accomplished; the subject matter or work of 
the advisory committee has become obsolete;

[[Page 147]]

the cost of operating the advisory committee is excessive in relation to 
the benefits accruing to the Commission; or the advisory committee is 
otherwise no longer a necessary or appropriate means to carry out the 
purposes for which it was established.
    (b) No advisory committee may be used for functions that are not 
solely advisory unless specifically authorized to do so by law. The 
Commission shall be solely responsible for making policy decisions and 
determining action to be taken with respect to any matter considered by 
an advisory committee.



Sec. 16.4  Advisory Committee Management Officer.

    (a) The Commission shall designate the Executive Director as the 
Advisory Committee Management Officer who shall:
    (1) Exercise control and supervision over the establishment, 
procedures, and accomplishments of the advisory committees established 
by the Commission;
    (2) Assemble and maintain the reports, records, and other papers of 
any advisory committee during its existence;
    (3) Carry out, on behalf of the Commission, the provisions of the 
Freedom of Information Act, 5 U.S.C. 552, with respect to such reports, 
records, and other papers;
    (4) Maintain in a single location a complete set for the charters 
and membership lists of each of the Commission's advisory committees;
    (5) Maintain information on the nature, functions, and operations of 
each of the Commission's advisory committees; and
    (6) Provide information on how to obtain copies of minutes of 
meetings and reports of each of the Commission's advisory committees.
    (b) The name of the Advisory Committee Management Officer designated 
in accordance with this part, and his or her agency address and 
telephone number, shall be provided to the Secretariat.



Sec. 16.5  Establishment of advisory committees.

    (a) No advisory committee shall be established under this part 
unless such establishment is:
    (1) Specifically authorized by statute; or
    (2) Determined as a matter of formal record by the Commission, after 
consultation with the Administrator, to be in the public interest in 
connection with the performance of duties imposed on the Commission by 
law.
    (b) In establishing an advisory committee, the Commission shall:
    (1) Prepare a proposed charter for the advisory committee in 
accordance with Sec. 16.6 of this part; and
    (2) Submit an original and one copy of a letter to the Administrator 
requesting concurrence in the Commission's proposal to establish an 
advisory committee. The letter from the Commission shall describe the 
nature and purpose of the proposed advisory committee, including an 
explanation of why establishment of the advisory committee is essential 
to the conduct of agency business and in the public interest and why the 
functions of the proposed committee could not be performed by the 
Commission, by an existing committee, or through other means. The letter 
shall also describe the Commission's plan to attain balanced membership 
on the proposed advisory committee in terms of points of view to be 
represented and functions to be performed. The letter shall be 
accompanied by two copies of the proposed charter.
    (c) Upon the receipt of notification from the Administrator of his 
or her concurrence or nonconcurrence, the Commission shall notify the 
Administrator in writing that either:
    (1) The advisory committee is being established. The filing of an 
advisory committee charter as specified in Sec. 16.6 of this part shall 
be deemed appropriate written notification in this instance; or
    (2) The advisory committee is not being established.
    (d) If the Commission determines that an advisory committee should 
be established in accordance with paragraph (c) of this section, the 
Commission shall publish notice to that effect

[[Page 148]]

in the Federal Register at least fifteen days prior to the filing of the 
advisory committee's charter unless the Administrator authorizes 
publication of such notice within a shorter period of time. The notice 
shall identify the name and purpose of the advisory committee, state 
that the committee is necessary and in the public interest, and identify 
the name and address of the Commission official to whom the public may 
submit comments.
    (e) The Commission may issue regulations or guidelines as may be 
necessary to operate and oversee a particular advisory committee.



Sec. 16.6  Charter.

    (a) No advisory committee established, utilized, reestablished or 
renewed by the Commission under this part shall meet or take any action 
until its charter has been filed by the Commission with the standing 
committees of the Senate and House of Representatives having legislative 
jurisdiction over the Commission.
    (b) The charter required by paragraph (a) of this section shall 
include the following information:
    (1) The committee's official designation;
    (2) The committee's objectives and the scope of its activity;
    (3) The period of time necessary for the committee to carry out its 
purposes;
    (4) The Commission component or official to whom the committee 
reports;
    (5) The agency or official responsible for providing the necessary 
support for the committee;
    (6) A description of the duties for which the committee is 
responsible, and, if such duties are not solely advisory, a 
specification of the authority for such functions;
    (7) The estimated annual operating cost in dollars and man-years for 
the committee;
    (8) The estimated number and frequency of committee meetings;
    (9) The committee's termination date, if less than two years from 
the date of committee's establishment; and
    (10) The date the charter is filed.
    (c) A copy of the charter required by paragraph (a) of this section 
shall also be furnished at the time of filing to the Secretariat and the 
Library of Congress.
    (d) The requirements of this section shall also apply to committees 
utilized as advisory committees, even though not expressly established 
for that purpose.



Sec. 16.7  Meetings.

    (a) The Commission shall designate an officer or employee of the 
Federal Government as the Designated Federal Officer for the advisory 
committee. The Designated Federal Officer shall attend the meetings of 
the advisory committee, and shall adjourn committee meetings whenever he 
or she determines that adjournment is in the public interest. The 
Commission, in its discretion, may authorize the Designated Federal 
Officer to chair meetings of the advisory committee.
    (b) No meeting of any advisory committee shall be held except at the 
call of, or with the advance approval of, the Designated Federal Officer 
and with an agenda approved by such official.
    (c) The agenda required by paragraph (b) of this section shall 
identify, in general terms, matters to be considered at the meeting and 
shall indicate whether any part of the meeting will concern matters that 
the General Counsel has determined to be covered by one or more of the 
exemptions of the Sunshine Act.
    (d) Timely notice of each meeting of the advisory committee shall be 
provided in accordance with Sec. 16.9 of this part.
    (e) Subject to the provisions of Sec. 16.8 of this part, each 
meeting of an advisory committee as defined in Sec. 16.2(b) of this 
part shall be open to the public. Subcommittees and subgroups that are 
not utilized by the Commission for the purpose of obtaining advice or 
recommendations do not constitute advisory committees within the meaning 
of Sec. 16.2(b) and are not subject to the meeting and other 
requirements of this part.
    (f) Meetings that are completely or partly open to the public shall 
be held at reasonable times and at places that are reasonably accessible 
to members of the public. The size of the meeting

[[Page 149]]

room shall be sufficient to accommodate members of the public who can 
reasonably be expected to attend.
    (g) Any member of the public shall be permitted to file a written 
statement with the committee concerning any matter to be considered in a 
meeting. Interested persons may be permitted by the committee chairman 
to speak at such meetings in accordance with procedures established by 
the committee and subject to the time constraints under which the 
meeting is to be conducted.
    (h) No meeting of any advisory committee shall be held in the 
absence of a quorum. Unless otherwise established by statute or in the 
charter of the committee, a quorum shall consist of a majority of the 
committee's authorized membership.



Sec. 16.8  Closed meetings.

    (a) Paragraphs (e), (f), and (g) of Sec. 16.7 of this part, which 
require that meetings shall be open to the public and that the public 
shall be afforded an opportunity to participate in such meetings, shall 
not apply to any advisory committee meeting (or any portion thereof) 
which the Commission determines is concerned with any matter covered by 
one or more of the exemptions set forth in paragraph (c) of the Sunshine 
Act, 5 U.S.C. section 552b(c).
    (b) An advisory committee that seeks to have all or part of its 
meeting closed shall notify the Commission at least thirty days before 
the scheduled date of the meeting. The notification shall be in writing 
and shall identify the specific provisions of the Sunshine Act which 
justify closure. The Commission may waive the thirty-day requirement 
when a lesser period of time is requested and justified by the advisory 
committee.
    (c) The General Counsel shall review all requests to close meetings 
and shall advise the Commission on the disposition of each such request.
    (d) If the Commission determines that the request is consistent with 
the policies of the Sunshine Act and the Federal Advisory Committee Act, 
it shall issue a determination that all or part of the meeting may be 
closed. A copy of the Commission's determination shall be made available 
to the public upon request.
    (e) The advisory committee shall issue, on an annual basis, a report 
that sets forth a summary of its activities in meetings closed pursuant 
to this section, addressing those related matters as would be 
informative to the public and consistent with the policy of the Sunshine 
Act and of this part. Notice of the availability of such annual reports 
shall be published in accordance with Sec. 16.15 of this part.



Sec. 16.9  Notice of meetings.

    (a) Notice of each advisory committee meeting, whether open or 
closed to the public, shall be published in the Federal Register at 
least 15 days before the meeting date. Such notice shall include the 
exact name of the advisory committee as chartered; the time, date, place 
and purpose of the meeting; and a summary of the meeting agenda. Notice 
shall also state that the meeting is open to the public or closed in 
whole or in part, and, if closed, cite the specific exemptions of the 
Sunshine Act as the basis for closure. The Commission may permit the 
advisory committee to provide notice of less than fifteen days in 
extraordinary situations, provided that the reasons for doing so are 
included in the meeting notice.
    (b) In addition to the notice required by paragraph (a) of this 
section, other forms of notice such as press releases and notices in 
professional journals may be used to inform interested members of the 
public of advisory committee meetings.



Sec. 16.10  Minutes and transcripts of meetings.

    (a) Detailed minutes of each advisory committee meeting shall be 
kept. The minutes shall reflect the time, date and place of the meeting; 
and accurate summary of each matter that was discussed and each 
conclusion reached; and a copy of each report or other document 
received, issued, or approved by the advisory committee. In addition, 
the minutes shall include a list of advisory committee members and staff 
and full-time Federal employees who attended the meeting; a list of 
members of the public who presented oral or

[[Page 150]]

written statements; and an estimated number of members of the public who 
were present at the meeting. The minutes shall describe the extent to 
which the meeting was open to the public and the nature and extent of 
any public participation. If it is impracticable to attach to the 
minutes of the meeting any document received, issued, or approved by the 
advisory committee, then the minutes shall describe the document in 
sufficient detail to enable any person who may request the document to 
identify it readily.
    (b) The accuracy of all minutes shall be certified to by the 
chairperson of the advisory committee.
    (c) Minutes need not be kept if a verbatim transcript is made.



Sec. 16.11  Annual comprehensive review.

    (a) The Commission shall conduct an annual comprehensive review of 
the activities and responsibilities of each advisory committee to 
determine:
    (1) Whether such committee is carrying out its purpose;
    (2) Whether, consistent with the provisions of applicable statutes, 
the responsibilities assigned to it should be revised;
    (3) Whether it should be merged with any other advisory committee or 
committees; or
    (4) Whether it should be abolished.
    (b) Pertinent factors to be considered in the comprehensive review 
required by paragraph (a) of this section include the following:
    (1) The number of times the committee has met in the past year;
    (2) The number of reports or recommendations submitted by the 
committee;
    (3) An evaluation of the substance of the committee's reports or 
recommendations with respect to the Commission's programs or operations;
    (4) An evaluation (with emphasis on the preceding twelve month 
period of the committee's work) of the history of the Commission's 
utilization of the committee's recommendations in policy formulation, 
program planning, decision making, more effective achievement of program 
objectives, and more economical accomplishment of programs in general.
    (5) Whether information or recommendations could be obtained from 
sources within the Commission or from another advisory committee already 
in existence;
    (6) The degree of duplication of effort by the committee as compared 
with that of other parts of the Commission or other advisory committees; 
and
    (7) The estimated annual cost of the committee.
    (c) The annual review required by this section shall be conducted on 
a fiscal year basis, and results of the review shall be included in the 
annual report to the GSA required by Sec. 16.15 of this part. The 
report shall contain a justification of each advisory committee which 
the Commission determines should be continued, making reference, as 
appropriate, to the factors specified in paragraph (b) of this section.



Sec. 16.12  Termination of advisory committees.

    Any advisory committee shall automatically terminate not later than 
two years after it is established, reestablished, or renewed, unless:
    (a) Its duration is otherwise provided by law;
    (b) It is renewed in accordance with Sec. 16.13 of this part; or
    (c) The Commission terminates it before that time.



Sec. 16.13  Renewal of advisory committees.

    (a) Any advisory committee established under this part may be 
renewed by appropriate action of the Commission and the filing of a new 
charter. An advisory committee may be continued by such action for 
successive two-year periods.
    (b) Before it renews an advisory committee in accordance with 
paragraph (a) of this section, the Commission will inform the 
Administrator by letter, not more than sixty days nor less than thirty 
days before the committee expires, of the following:
    (1) Its determination that a renewal is necessary and in the public 
interest;
    (2) The reasons for its determination;
    (3) The Commission's plan to maintain balanced membership on the 
committee;

[[Page 151]]

    (4) An explanation of why the committee's functions cannot be 
performed by the Commission or by an existing advisory committee.
    (c) Upon receipt of the Administrator's notification of concurrence 
or nonconcurrence, the Commission shall publish a notice of the renewal 
in the Federal Register, which shall certify that the renewal of the 
advisory committee is in the public interest and shall include all the 
matters set forth in paragraph (b) of this section. The Commission shall 
cause a new charter to be prepared and filed in accordance with the 
provisions of Sec. Sec. 16.5 and 16.6 of this part.
    (d) No advisory committee that is required under this section to 
file a new charter for the purpose of renewal shall take any action, 
other than preparation and filing of such charter, between the date the 
new charter is required and the date on which such charter is actually 
filed.



Sec. 16.14  Amendments.

    (a) The charter of an advisory committee may be amended when the 
Commission determines that the existing charter no longer accurately 
describes the committee itself or its goals or procedures. Changes may 
be minor, such as revising the name of the advisory committee, or may be 
major, to the extent that they deal with the basic objectives or 
composition of the committee.
    (1) To make a minor amendment to an advisory committee charter, the 
Commission shall:
    (i) Amend the charter language as necessary; and
    (ii) File the amended charter in accordance with the provisions of 
Sec. 16.6 of this part.
    (2) To make a major amendment to an advisory committee charter, the 
Commission shall:
    (i) Amend the charter language as necessary;
    (ii) Submit the proposed amended charter with a letter to the 
Administrator requesting concurrence in the amended language and an 
explanation of why the changes are essential and in the public interest; 
and
    (iii) File the amended charter in accordance with the provisions of 
Sec. 16.6 of this part.
    (b) Amendment of an existing charter does not constitute renewal of 
the advisory committee under Sec. 16.13 of this part.



Sec. 16.15  Reports of advisory committees.

    (a) The Commission shall furnish, on a fiscal year basis, a report 
of the activities of each of its advisory committees to the GSA.
    (b) Results of the annual comprehensive review of the advisory 
committee made under Sec. 16.11 shall be included in the annual report.
    (c) The Commission shall notify the GSA, by letter, of the 
termination of, changes in the membership of, or other significant 
developments with respect to, an advisory committee.



Sec. 16.16  Compensation.

    (a) Committee members. Unless otherwise provided by law, the 
Commission shall not compensate advisory committee members for their 
service on an advisory committee. In the exceptional case where the 
Commission is unable to meet the need for technical expertise or the 
requirement for balanced membership solely through the appointment of 
noncompensated members, the Commission may contract for or authorize the 
advisory committee to contract for the services of a specific consultant 
who may be appointed as a member of the advisory committee. In such a 
case, the Commission shall follow the procedures set forth in paragraph 
(b) of this section.
    (b) Consultants. Prior to hiring or authorizing the advisory 
committee to hire a consultant to an advisory committee, the Commission 
shall determine that the expertise or viewpoint to be offered by the 
consultant is not otherwise available without cost to the Commission. 
The compensation to be paid to such consultant may not exceed the 
maximum rate of pay authorized by 5 U.S.C. section 3109. Hiring of 
consultants shall be in accordance with OMB Circular A-120 and 
applicable statutes, regulations, and Executive Orders.

[[Page 152]]

    (c) Staff members. The Commission may fix the pay of each advisory 
committee staff member at a rate of the General Schedule, General 
Management Schedule, or Senior Executive Service in which the Staff 
member's position would appropriately be placed (5 U.S.C. chapter 51). 
The Commission may not fix the pay of a staff member at a rate higher 
than the daily equivalent of the maximum rate for GS-15, unless the 
Commission has determined that under the General Schedule, General 
Management Schedule, or Senior Executive Service classification system, 
the staff member's position would appropriately be placed at a grade 
higher than GS-15. The Commission shall review this determination 
annually.

[[Page 153]]



              SUBCHAPTER B_GUIDES AND TRADE PRACTICE RULES





PART 17_APPLICATION OF GUIDES IN PREVENTING UNLAWFUL PRACTICES
--Table of Contents



    Note: Industry guides are administrative interpretations of laws 
administered by the Commission for the guidance of the public in 
conducting its affairs in conformity with legal requirements. They 
provide the basis for voluntary and simultaneous abandonment of unlawful 
practices by members of industry. Failure to comply with the guides may 
result in corrective action by the commission under applicable statutory 
provisions. Guides may relate to a practice common to many industries or 
to specific practices of a particular industry.
    (Authority: Sec. 6(g), 38 Stat. 722; (15 U.S.C. 46(g))

[44 FR 11176, Feb. 27, 1979]



PART 18_GUIDES FOR THE NURSERY INDUSTRY--Table of Contents



Sec.
18.0 Definitions.
18.1 Deception (general).
18.2 Deception through use of names.
18.3 Substitution of products.
18.4 Size and grade designations.
18.5 Deception as to blooming, fruiting, or growing ability.
18.6 Plants collected from the wild state.
18.7 Misrepresentation as to character of business.
18.8 Deception as to origin or source of industry products.

    Authority: Secs. 5, 6 FTC Act; 38 Stat. 719, 721; 15 U.S.C. 45, 46.

    Source: 44 FR 11177, Feb. 27, 1979, unless otherwise noted.



Sec. 18.0  Definitions.

    Industry products. As used in this part, the term industry products 
includes all types of trees, small fruit plants, shrubs, vines, 
ornamentals, herbaceous annuals, biennials and perennials, bulbs, corms, 
rhizomes, and tubers which are offered for sale or sold to the general 
public. Included are products propagated sexually or asexually and 
whether grown in a commercial nursery or collected from the wild state. 
Such products are customarily used for outdoor planting. Not included 
are florists' or greenhouse plants solely for inside culture or use and 
annual vegetable plants.
    Industry members. Any person, firm, corporation, or organization 
engaged in the sale, offering for sale, or distribution in commerce of 
industry products, as defined above.
    Lining-out stock. Includes all plant material coming from 
propagating houses, beds, or frames, and young material such as 
seedlings rooted or unrooted cuttings, grafts or layers, of suitable 
size to transplant either in the nursery row or in containers for 
``growing on.''
    Nursery-propagated. Reproduced and grown under cultivation, 
including reproduced and grown under cultivation from plants, seeds or 
cuttings lawfully collected from the wild state.
    Propagated. Reproduced from seeds, cuttings, callus or other plant 
tissue, spores or other propagules under a controlled environment that 
is intensely manipulated by human intervention for the purpose of 
producing selected species or hybrids.

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994]



Sec. 18.1  Deception (general).

    (a) It is an unfair or deceptive act or practice to sell, offer for 
sale, or distribute industry products by any method or under any 
circumstance or condition that misrepresents directly or by implication 
to purchasers or prospective purchasers the products with respect to 
quantity, size, grade, kind, species, age, maturity, condition, vigor, 
hardiness, number of times transplanted, growth ability, growth 
characteristics, rate of growth or time required before flowering or 
fruiting, price, origin or place where grown, or any other material 
aspect of the industry product.
    (b) The inhibitions of this section shall apply to every type of 
advertisement or method of representation, whether in newspaper, 
periodical, sales catalog, circular, by tag, label or insignia, by radio 
or television, by sales representatives, or otherwise.

[[Page 154]]

    (c) Among practices inhibited by the foregoing are direct or 
indirect representations:
    (1) That plants have been propagated by grafting or bud selection 
methods, when such is not the fact.
    (2) That industry products are healthy, will grow anywhere without 
the use of fertilizer, or will survive and produce without special care, 
when such is not the fact.
    (3) That plants will bloom the year round, or will bear an 
extraordinary number of blooms of unusual size or quality, when such is 
not the fact.
    (4) That an industry product is a new variety, when in fact it is a 
standard variety to which the industry member has given a new name.
    (5) That an industry product cannot be purchased through usual 
retail outlets, or that there are limited stocks available, when such is 
not the fact.
    (6) That industry products offered for sale will be delivered in 
time for the next (or any specified) seasonal planting when the industry 
member is aware of factors which make such delivery improbable.
    (7) That the appearance of an industry product as to size, color, 
contour, foliage, bloom, fruit or other physical characteristic is 
normal or usual when the appearance so represented is in fact abnormal 
or unusual.
    (8) That the root system of any plant is larger in depth or diameter 
than that which actually exists, whether accomplished by excessive 
packaging material, or excessive balling, or other deceptive or 
misleading practice.
    (9) That bulblets are bulbs.
    (10) That an industry product is a rare or unusual item when such is 
not the fact.


[Guide 1]

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994; 
72 FR 902, Jan. 9, 2007]



Sec. 18.2  Deception through use of names.

    (a) In the sale, offering for sale, or distribution of an industry 
product, it is an unfair or deceptive act or practice for any industry 
member to use a name for such product that misrepresents directly or by 
implication to purchasers or prospective purchasers its true identity.
    (b) Subject to the foregoing:
    (1) When an industry product has a generally recognized and well-
established common name, it is proper to use such name as a designation 
therefor, either alone or in conjunction with the correct botanical name 
of the product.
    (2) When an industry product has a generally recognized and well-
established common name, it is an unfair or deceptive act or practice 
for an industry member to adopt and use a new name for the product 
unless such new name is immediately accompanied by the generally 
recognized and well-established common name, or by the correct botanical 
name, or by a description of the nature and properties of the product 
which is of sufficient detail to prevent confusion and deception of 
purchasers or prospective purchasers as to the true identity of the 
product.
    (3) When an industry product does not have a generally recognized 
and well-established common name, and a name other than the correct 
botanical name of the product is applied thereto, such other name shall 
be immediately accompanied by either the correct botanical name of the 
product, or a description of the nature and properties of the product 
which is of sufficient detail as to prevent confusion and deception of 
purchasers and prospective purchasers as to the true identity of the 
product.

    Note: Industry recommendation. The industry recommends that in 
administering the guide in this section the Commission give 
consideration to the use of plant names listed in such works as 
Checklist of Woody Ornamental Plants of California, 1977, University of 
California; Hillier's Manual of Trees and Shrubs, 1971, Hillier & Sons; 
Manual of Cultivated Conifers, 1965, P. Den Ouden & B. K. Boom; Hortus 
III, 1976, L. H. Bailey Hortorium; Naming and Registering New Cultivars, 
1974, American Association of Nurserymen, Inc.; and to plant name lists 
periodically published by the plant societies and the horticultural 
organizations selected as international and national cultivar 
registration authorities as enumerated in Appendix of Naming and 
Registering New Cultivars.


[Guide 2]

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994]

[[Page 155]]



Sec. 18.3  Substitution of products.

    With respect to industry products offered for sale by an industry 
member, it is an unfair or deceptive act or practice for any member of 
the industry:
    (a) To ship or deliver industry products which do not conform to 
representations made prior to securing the order or to specifications 
upon which the sale is consummated, without advising the purchaser of 
the substitution and obtaining the purchaser's consent thereto prior to 
making shipment or delivery, where failure to advise would be misleading 
to purchasers; or
    (b) To falsely represent the reason for making a substitution: 
Provided, however, That nothing in this section is intended to inhibit 
the shipment of products different from those ordered, prior to 
obtaining the purchaser's consent to such substitution, when the order 
is received by the industry member near the close of the planting season 
for the products ordered and the substitution involved relates but to a 
product or products the total price of which is comparatively small, and 
when:
    (1) At the commencement of the planting season for the products 
ordered the industry member had a supply of such products sufficient to 
meet normal and reasonably expected orders therefor, and such supply has 
been exhausted; and
    (2) The products substituted are of similar variety and of equal or 
greater value to those ordered by the purchaser and no additional charge 
is made therefor; and
    (3) Notice of the substitution, with adequate identification of the 
substituted item or items, and with commitment of the industry member to 
refund any purchase price received for the substituted products if such 
products are not acceptable to the purchaser and to compensate the 
purchaser for any expense involved in the return of the substituted 
products if refund is conditioned on the return thereof, is given the 
purchaser at the time of his receipt of such products: And provided 
further, That nothing in this section is to be construed as sanctioning 
the dissemination of an advertisement of an industry product or products 
or the personal solicitation of orders therefor unless at the time of 
such dissemination or solicitation the industry member has a supply of 
such product or products sufficient to meet normal and reasonably 
expected orders therefor.


 [Guide 3]

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994]



Sec. 18.4  Size and grade designations.

    (a) In the sale, offering for sale, or distribution of industry 
products, it is an unfair or deceptive act or practice for an industry 
member to use any term, designation, number, letter, mark, or symbol as 
a size or grade designation for any industry product in a manner or 
under any circumstance that misrepresents directly or by implication to 
purchasers or prospective purchasers the actual size or grade of such 
products.
    (b) Under this section industry members offering lining-out stock 
for sale shall specify conspicuously and accurately the size and age of 
such stock when failure to do so may misrepresent directly or by 
implication such stock to purchasers or prospective purchasers.
    (c) Nothing in this section is to be construed as inhibiting the 
designation of the size or grade of an industry product by use of a size 
or grade designation for which a standard has been established which is 
generally recognized in the industry when the identity of such standard 
is conjunctively disclosed, the product qualifies for the designation 
under such standard, and no deception of purchasers or prospective 
purchasers results in the use of such designation.

    Note: It is the consensus of the industry that the grade and size 
standard set forth in the current edition of American Standard for 
Nursery Stock, ANSI Z60.1, as approved by the American National Standard 
Institute, Inc., is generally recognized in the industry, and that use 
of the size and grade designation therein set forth, in accordance with 
the requirements of the standard for the designations, in the marketing 
of industry products to which such standard relates, will prevent 
deception and confusion of purchasers and prospective purchasers of such 
products.


[[Page 156]]



[Guide 4]

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994]



Sec. 18.5  Deception as to blooming, fruiting, or growing ability.

    In the sale, offering for sale, or distribution of industry 
products, it is an unfair or deceptive act or practice for any industry 
member to misrepresent directly or by implication to purchasers or 
prospective purchasers the ability of such products:
    (a) To bloom, flower, or fruit within a specified period of time; or
    (b) To produce crops within a specified period of time, or to give 
multiple crops each year, or to produce crops in unfavorable climatic 
regions; or
    (c) To bear fruit through self-pollinization; or
    (d) To grow, flourish, and survive irrespective of the climatic 
conditions, the care exercised in or after planting, or the soil 
characteristics of the locality in which they are to be planted.

    Note 1: Under this section, when flower bulbs are of such immaturity 
as not reasonably to be expected to bloom and flower the first season of 
their planting, such fact shall be clearly and conspicuously disclosed 
in all advertisements and sales promotional literature relating to such 
products: Provided, however, That such disclosure need not be made when 
sales are confined to nurseries and commercial growers for their use as 
planting stock.
    Note 2: Under this section, in order to avoid deception of 
purchasers and prospective purchasers thereof, when rose bushes have 
been used in a greenhouse for the commercial production of cut flowers, 
they shall be tagged or labeled so as to clearly, adequately and 
conspicuously disclose such fact, and such tags and labels shall be so 
attached thereto as to remain thereon until consummation of consumer 
sale. A similar disclosure shall be made in all advertising and sales 
promotional literature relating to such products. And when, by reason of 
such previous greenhouse use or their condition at the time of removal 
therefrom or their handling during or subsequent thereto, there is 
probability that such rose bushes will not satisfactorily thrive and 
produce flowers when replanted outdoors, or will satisfactorily thrive 
and produce flowers outdoors only if given special treatment and 
attention during and after their replanting, such fact shall also be 
clearly, conspicuously, and nondeceptively disclosed in close 
conjunction with, and in the same manner as, the aforesaid required 
disclosure that such products have been used in a greenhouse for the 
commercial production of cut flowers.


[Guide 5]

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994]



Sec. 18.6  Plants collected from the wild state.

    It is an unfair or deceptive act or practice to sell, offer for 
sale, or distribute industry products collected from the wild state 
without disclosing that they were collected from the wild state; 
provided, however, that plants propagated in nurseries from plants 
lawfully collected from the wild state may be designated as ``nursery-
propagated.''


[Guide 6]

[59 FR 64549, Dec. 14, 1994]



Sec. 18.7  Misrepresentation as to character of business.

    (a) In the sale, offering for sale, or distribution of industry 
products, it is an unfair or deceptive act or practice for any industry 
member to represent itself directly or by implication to be a grower or 
propagator of such products, or any portion thereof, or to have any 
other experience or qualification either relating to the growing or 
propagation of such products or enabling the industry member to be of 
assistance to purchasers or prospective purchasers in the selection by 
them of the kinds or types of products, or the placement thereof, when 
such is not the fact, or in any other manner to misrepresent directly or 
by implication the character, nature, or extent of the industry member's 
business.

    Note: Among practices subject to the inhibitions of this section is 
a representation by an industry member to the effect that he is a 
landscape architect when his training, experience, and knowledge do not 
qualify him for such representation.

    (b) It is also an unfair or deceptive act or practice for an 
industry member to use the word ``guild,'' ``club,'' ``association,'' 
``council,'' ``society,'' ``foundation,'' or any other word of similar 
import or meaning, as part of a trade name, or otherwise, in such a 
manner or under such circumstances as to indicate or imply that its 
business is other

[[Page 157]]

than a commercial enterprise operated for profit, unless such be true in 
fact, or so as to deceive purchasers or prospective purchasers in any 
other material respect.


[Guide 7]

[59 FR 64549, Dec. 14, 1994]



Sec. 18.8  Deception as to origin or source of industry products.

    (a) It is an unfair or deceptive act or practice to sell, offer for 
sale, or advertise an industry product by misrepresenting directly or by 
implication the origin or source of such product to purchasers or 
prospective purchasers (e.g., by use of the term Holland to describe 
bulbs grown in the U.S.A.); provided, however, that when a plant has an 
accepted common name that incorporates a geographical term and such term 
has lost its geographical significance as so used, the mere use of such 
common names does not constitute a misrepresentation as to source or 
origin (e.g., ``Colorado Blue Spruce,'' ``Arizona Cypress,'' ``Black 
Hills Spruce,'' ``California Privet,'' ``Japanese Barberry,'' etc.).
    (b) It is also an unfair or deceptive act or practice to advertise, 
sell, or offer for sale an industry product of foreign origin without 
adequate and non-deceptive disclosure of the name of the foreign country 
from which it came, where the failure to make such disclosure would be 
misleading to purchasers or prospective purchasers.


[Guide 8]

[59 FR 64550, Dec. 14, 1994]



PART 20_GUIDES FOR THE REBUILT, RECONDITIONED, AND OTHER USED
AUTOMOBILE PARTS INDUSTRY--Table of Contents



Sec.
20.0 Scope and purpose of the guides.
20.1 Deception generally.
20.2 Deception as to identity of a rebuilder, remanufacturer, 
          reconditioner, reliner, or other reworker.
20.3 Misrepresentation of the terms ``rebuilt,'' ``factory rebuilt,'' 
          ``remanufactured,'' etc.

    Authority: 15 U.S.C. 41-58.

    Source: 79 FR 40628, July 14, 2014, unless otherwise noted.



Sec. 20.0  Scope and purpose of the guides.

    (a) The Guides in this part apply to the manufacture, sale, 
distribution, marketing and advertising (including advertising in 
electronic format, such as on the Internet) of parts that are not new, 
and assemblies containing such parts, that were designed for use in 
automobiles, trucks, motorcycles, tractors, or similar self-propelled 
vehicles, regardless of whether such parts or assemblies have been 
cleaned, repaired, reconstructed, or reworked in any other way (industry 
product or product). Industry products include, but are not limited to, 
airbags, alternators and generators, anti-lock brake systems, brake 
cylinders, carburetors, catalytic converters, differentials, engines, 
fuel injectors, hybrid drive systems and hybrid batteries, navigation 
and audio systems, power steering pumps, power window motors, rack and 
pinion units, starters, steering gears, superchargers and turbochargers, 
tires, transmissions and transaxles, and water pumps.
    (b) These guides set forth the Federal Trade Commission's current 
views about the manufacture, sale, distribution, and advertising of 
industry products. The guides help businesses avoid making claims that 
are unfair or deceptive under Section 5 of the FTC Act, 15 U.S.C. 45. 
They do not confer any rights on any person and do not operate to bind 
the FTC or the public. The Commission, however, can take action under 
the FTC Act if a business makes a claim inconsistent with the guides. In 
any such enforcement action, the Commission must prove that the 
challenged act or practice is unfair or deceptive in violation of 
Section 5 of the FTC Act.



Sec. 20.1  Deception generally.

    (a) It is unfair or deceptive to represent, directly or by 
implication, that any industry product is new or unused when such is not 
the fact, or to misrepresent the current condition, or extent of 
previous use, reconstruction, or repair of any industry product.
    (b) It is unfair or deceptive to offer for sale or sell any industry 
product

[[Page 158]]

without disclosing, clearly and conspicuously, in advertising, in 
promotional literature, on invoices, and on the product's packaging that 
the item is an industry product. Additionally, it is unfair or deceptive 
to offer for sale or to sell any industry product that appears new or 
unused without disclosing on the product itself that it is an industry 
product, using appropriate descriptive terms with sufficient permanency 
to remain visible for a reasonable time after installation. Examples of 
appropriate descriptive terms include, but are not limited to ``Used,'' 
``Secondhand,'' ``Repaired,'' ``Relined,'' ``Reconditioned,'' 
``Rebuilt,'' or ``Remanufactured.'' If the term ``recycled'' is used, it 
should be used in a manner consistent with the requirements for that 
term set forth in the Guides for the Use of Environmental Marketing 
Claims, 16 CFR 260.7(e). On invoices to the trade only, the disclosure 
may be by use of any number, mark, or other symbol that is clearly 
understood by industry members as meaning that the part so marked on the 
invoices is not new.
    (c) It is unfair or deceptive to place any means or instrumentality 
in the hands of others so that they may mislead consumers as to the 
previous use of industry products.



Sec. 20.2  Deception as to the identity of a rebuilder,
remanufacturer, reconditioner, reliner, or other reworker.

    (a) It is unfair or deceptive to misrepresent the identity of the 
rebuilder, remanufacturer, reconditioner, reliner or other reworker of 
an industry product.
    (b) If the identity of the original manufacturer of an industry 
product, or the identity of the manufacturer for which the product was 
originally made, is revealed and the product was rebuilt, 
remanufactured, reconditioned, relined, or otherwise reworked by someone 
else, it is unfair or deceptive to fail to disclose such fact wherever 
the original manufacturer is identified in advertising or promotional 
literature concerning the industry product, on the container in which 
the product is packed, and on the product itself, in close conjunction 
with, and of the same permanency and conspicuousness as, the disclosure 
that the product is not new. Examples of such disclosures include:
    (1) Disclosure of the identity of the rebuilder: ``Rebuilt by John 
Doe Co.''
    (2) Disclosure that the industry product was rebuilt by an 
independent rebuilder: ``Rebuilt by an Independent Rebuilder.''
    (3) Disclosure that the industry product was rebuilt by someone 
other than the manufacturer identified: ``Rebuilt by other than XYZ 
Motors.''
    (4) Disclosure that the industry product was rebuilt for the 
identified manufacturer: ``Rebuilt for XYZ Motors.''



Sec. 20.3  Misrepresentation of the terms ``rebuilt,'' 
``factory rebuilt,'' ``remanufactured,'' etc.

    (a) It is unfair or deceptive to use the word ``Rebuilt,'' or any 
word of similar import, to describe an industry product which, since it 
was last subjected to any use, has not been dismantled and reconstructed 
as necessary, all of its internal and external parts cleaned and made 
rust and corrosion free, all impaired, defective or substantially worn 
parts restored to a sound condition or replaced with new, rebuilt (in 
accord with the provisions of this paragraph) or unimpaired used parts, 
all missing parts replaced with new, rebuilt or unimpaired used parts, 
and such rewinding or machining and other operations performed as are 
necessary to put the industry product in sound working condition.
    (b) It is unfair or deceptive to represent an industry product as 
``Remanufactured'' or ``Factory Rebuilt'' unless the product was rebuilt 
as described in paragraph (a) of this section at a factory generally 
engaged in the rebuilding of such products.



PART 23_GUIDES FOR THE JEWELRY, PRECIOUS METALS, AND PEWTER INDUSTRIES
--Table of Contents



Sec.
23.0 Scope and application.
23.1 Deception (general).
23.2 Misleading illustrations.
23.3 Misuse of the terms ``hand-made,'' ``hand-polished,'' etc.
23.4 Misrepresentation as to gold content.
23.5 Misuse of the word ``vermeil.''
23.6 Misrepresentation as to silver content.

[[Page 159]]

23.7 Misuse of the words ``platinum,'' ``iridium,'' ``palladium,'' 
          ``ruthenium,'' ``rhodium,'' and ``osmium.''
23.8 Misrepresentation as to content of pewter.
23.9 Additional guidance for the use of quality marks.
23.10 Misuse of ``corrosion proof,'' ``noncorrosive,'' ``corrosion 
          resistant,'' ``rust proof,'' ``rust resistant,'' etc.
23.11 Definition and misuse of the word ``diamond.''
23.12 Misuse of the words ``flawless,'' ``perfect,'' etc.
23.13 Disclosure of treatments to diamonds.
23.14 Misuse of the term ``blue white.''
23.15 Misuse of the term ``properly cut,'' etc.
23.16 Misuse of the words ``brilliant'' and ``full cut.''
23.17 Misrepresentation of weight and ``total weight.''
23.18 Definitions of various pearls.
23.19 Misuse of the word ``pearl.''
23.20 Misuse of terms such as ``cultured pearl,'' ``seed pearl,'' 
          ``Oriental pearl,'' ``natura,'' ``kultured,'' ``real,'' 
          ``gem,'' ``synthetic,'' and regional designations.
23.21 Misrepresentation as to cultured pearls.
23.22 Disclosure of treatment to gemstones.
23.23 Misuse of the words ``ruby,'' ``sapphire,'' ``emerald,'' 
          ``topaz,'' ``stone,'' ``birthstone,'' ``gemstone,'' etc.
23.24 Misuse of the words ``real,'' ``genuine,'' ``natural,'' 
          ``precious,'' etc.
23.25 Misuse of the word ``gem.''
23.26 Misuse of the words ``flawless,'' ``perfect,'' etc.

Appendix to Part 23--Exemptions Recognized in the Assay for Quality of 
          Gold Alloy, Gold Filled, Gold Overlay, Rolled Gold Plate, 
          Silver, and Platinum Industry Products

    Authority: 15 U.S.C. 45, 46.

    Source: 61 FR 27212, May 30, 1996, unless otherwise noted.



Sec. 23.0  Scope and application.

    (a) These guides apply to jewelry industry products, which include, 
but are not limited to, the following: gemstones and their laboratory-
created and imitation substitutes; natural and cultured pearls and their 
imitations; and metallic watch bands not permanently attached to 
watches. These guides also apply to articles, including optical frames, 
pens and pencils, flatware, and hollowware, fabricated from precious 
metals (gold, silver and platinum group metals), precious metal alloys, 
and their imitations. These guides also apply to all articles made from 
pewter. For the purposes of these guides, all articles covered by these 
guides are defined as ``industry products.''
    (b) These guides apply to persons, partnerships, or corporations, at 
every level of the trade (including but not limited to manufacturers, 
suppliers, and retailers) engaged in the business of offering for sale, 
selling, or distributing industry products.

    Note to paragraph (b):
    To prevent consumer deception, persons, partnerships, or 
corporations in the business of appraising, identifying, or grading 
industry products should utilize the terminology and standards set forth 
in the guides.

    (c) These guides apply to claims and representations about industry 
products included in labeling, advertising, promotional materials, and 
all other forms of marketing, whether asserted directly or by 
implication, through words, symbols, emblems, logos, illustrations, 
depictions, product brand names, or through any other means.
    (d) These guides set forth the Federal Trade Commission's current 
thinking about claims for jewelry and other articles made from precious 
metals and pewter. The guides help marketers and other industry members 
avoid making claims that are unfair or deceptive under Section 5 of the 
FTC Act, 15 U.S.C. 45. They do not confer any rights on any person and 
do not operate to bind the FTC or the public. The Commission, however, 
may take action under the FTC Act if a marketer or other industry member 
makes a claim inconsistent with the guides. In any such enforcement 
action, the Commission must prove that the challenged act or practice is 
unfair or deceptive in violation of Section 5 of the FTC Act.
    (e) The guides consist of general principles, specific guidance on 
the use of particular claims for industry products, and examples. Claims 
may raise issues that are addressed by more than one example and in more 
than one section of the guides. The examples provide the Commission's 
views on how reasonable consumers likely interpret certain claims. 
Industry members may use an alternative approach if the approach 
satisfies the requirements of Section 5 of the FTC Act. Whether a

[[Page 160]]

particular claim is deceptive will depend on the net impression of the 
advertisement, label, or other promotional material at issue. In 
addition, although many examples present specific claims and options for 
qualifying claims, the examples do not illustrate all permissible claims 
or qualifications under Section 5 of the FTC Act.

[61 FR 27212, May 30, 1996, as amended at 64 FR 33194, June 22, 1999; 75 
FR 81453, Dec. 28, 2010]



Sec. 23.1  Deception (general).

    It is unfair or deceptive to misrepresent the type, kind, grade, 
quality, quantity, metallic content, size, weight, cut, color, 
character, treatment, substance, durability, serviceability, origin, 
price, value, preparation, production, manufacture, distribution, or any 
other material aspect of an industry product.

    Note 1 to Sec. 23.1: If, in the sale or offering for sale of an 
industry product, any representation is made as to the grade assigned 
the product, the identity of the grading system used should be 
disclosed.
    Note 2 to Sec. 23.1: To prevent deception, any qualifications or 
disclosures, such as those described in the guides, should be 
sufficiently clear and prominent. Clarity of language, relative type 
size and proximity to the claim being qualified, and an absence of 
contrary claims that could undercut effectiveness, will maximize the 
likelihood that the qualifications and disclosures are appropriately 
clear and prominent.



Sec. 23.2  Misleading illustrations.

    It is unfair or deceptive to use, as part of any advertisement, 
packaging material, label, or other sales promotion matter, any visual 
representation, picture, televised or computer image, illustration, 
diagram, or other depiction which, either alone or in conjunction with 
any accompanying words or phrases, misrepresents the type, kind, grade, 
quality, quantity, metallic content, size, weight, cut, color, 
character, treatment, substance, durability, serviceability, origin, 
preparation, production, manufacture, distribution, or any other 
material aspect of an industry product.

    Note to Sec. 23.2: An illustration or depiction of a diamond or 
other gemstone that portrays it in greater than its actual size may 
mislead consumers, unless a disclosure is made about the item's true 
size.



Sec. 23.3  Misuse of the terms ``hand-made,'' ``hand-polished,'' etc.

    (a) It is unfair or deceptive to represent, directly or by 
implication, that any industry product is hand-made or hand-wrought 
unless the entire shaping and forming of such product from raw materials 
and its finishing and decoration were accomplished by hand labor and 
manually-controlled methods which permit the maker to control and vary 
the construction, shape, design, and finish of each part of each 
individual product.

    Note to paragraph (a):
    As used herein, ``raw materials'' include bulk sheet, strip, wire, 
and similar items that have not been cut, shaped, or formed into jewelry 
parts, semi-finished parts, or blanks.

    (b) It is unfair or deceptive to represent, directly or by 
implication, that any industry product is hand-forged, hand-engraved, 
hand-finished, or hand-polished, or has been otherwise hand-processed, 
unless the operation described was accomplished by hand labor and 
manually-controlled methods which permit the maker to control and vary 
the type, amount, and effect of such operation on each part of each 
individual product.



Sec. 23.4  Misrepresentation as to gold content.

    (a) It is unfair or deceptive to misrepresent the presence of gold 
or gold alloy in an industry product, or the quantity or karat fineness 
of gold or gold alloy contained in the product, or the karat fineness, 
thickness, weight ratio, or manner of application of any gold or gold 
alloy plating, covering, or coating on any surface of an industry 
product or part thereof.
    (b) The following are examples of markings or descriptions that may 
be misleading: \2\
---------------------------------------------------------------------------

    \2\ See Sec. 23.4(c) for examples of acceptable markings and 
descriptions.
---------------------------------------------------------------------------

    (1) Use of the word ``Gold'' or any abbreviation, without 
qualification, to describe all or part of an industry product, which is 
not composed throughout of fine (24 karat) gold.

[[Page 161]]

    (2) Use of the word ``Gold'' or any abbreviation to describe all or 
part of an industry product composed throughout of an alloy of gold, 
unless a correct designation of the karat fineness of the alloy 
immediately precedes the word ``Gold'' or its abbreviation, and such 
fineness designation is of at least equal conspicuousness.
    (3) Use of the word ``Gold'' or any abbreviation to describe all or 
part of an industry product that is not composed throughout of gold or a 
gold alloy, but is surface-plated or coated with gold alloy, unless the 
word ``Gold'' or its abbreviation is adequately qualified to indicate 
that the product or part is only surface-plated.
    (4) Use of the term ``Gold Plate,'' ``Gold Plated,'' or any 
abbreviation to describe all or part of an industry product unless such 
product or part contains a surface-plating of gold alloy, applied by any 
process, which is of such thickness and extent of surface coverage that 
reasonable durability is assured.
    (5) Use of the terms ``Gold Filled,'' ``Rolled Gold Plate,'' 
``Rolled Gold Plated,'' ``Gold Overlay,'' or any abbreviation to 
describe all or part of an industry product unless such product or part 
contains a surface-plating of gold alloy applied by a mechanical process 
and of such thickness and extent of surface coverage that reasonable 
durability is assured, and unless the term is immediately preceded by a 
correct designation of the karat fineness of the alloy that is of at 
least equal conspicuousness as the term used.
    (6) Use of the terms ``Gold Plate,'' ``Gold Plated,'' ``Gold 
Filled,'' ``Rolled Gold Plate,'' ``Rolled Gold Plated,'' ``Gold 
Overlay,'' or any abbreviation to describe a product in which the layer 
of gold plating has been covered with a base metal (such as nickel), 
which is covered with a thin wash of gold, unless there is a disclosure 
that the primary gold coating is covered with a base metal, which is 
gold washed.
    (7) Use of the term ``Gold Electroplate,'' ``Gold Electroplated,'' 
or any abbreviation to describe all or part of an industry product 
unless such product or part is electroplated with gold or a gold alloy 
and such electroplating is of such karat fineness, thickness, and extent 
of surface coverage that reasonable durability is assured.
    (8) Use of any name, terminology, or other term to misrepresent that 
an industry product is equal or superior to, or different than, a known 
and established type of industry product with reference to its gold 
content or method of manufacture.
    (9) Use of the word ``Gold'' or any abbreviation, or of a quality 
mark implying gold content (e.g., 9 karat), to describe all or part of 
an industry product that is composed throughout of an alloy of gold of 
less than 10 karat fineness.

    Note to paragraph (b) Sec. 23.4:
    The provisions regarding the use of the word ``Gold,'' or any 
abbreviation, as described above, are applicable to ``Duragold,'' 
``Diragold,'' ``Noblegold,'' ``Goldine,'' ``Layered Gold,'' or any words 
or terms of similar meaning.

    (c) The following are examples of markings and descriptions that are 
consistent with the principles described above:
    (1) An industry product or part thereof, composed throughout of an 
alloy of gold of not less than 10 karat fineness, may be marked and 
described as ``Gold'' when such word ``Gold,'' wherever appearing, is 
immediately preceded by a correct designation of the karat fineness of 
the alloy, and such karat designation is of equal conspicuousness as the 
word ``Gold'' (for example, ``14 Karat Gold,'' ``14 K. Gold,'' or ``14 
Kt. Gold''). Such product may also be marked and described by a 
designation of the karat fineness of the gold alloy unaccompanied by the 
word ``Gold'' (for example, ``14 Karat,'' ``14 Kt.,'' or ``14 K.'').

    Note to paragraph (c)(1):
    Use of the term ``Gold'' or any abbreviation to describe all or part 
of a product that is composed throughout of gold alloy, but contains a 
hollow center or interior, may mislead consumers, unless the fact that 
the product contains a hollow center is disclosed in immediate proximity 
to the term ``Gold'' or its abbreviation (for example, ``14 Karat Gold-
Hollow Center,'' or ``14 K. Gold Tubing,'' when of a gold alloy tubing 
of such karat fineness). Such products should not be marked or described 
as ``solid'' or as being solidly of gold or of a gold alloy. For 
example, when the composition of such a product is 14 karat gold alloy,

[[Page 162]]

it should not be described or marked as either ``14 Kt. Solid Gold'' or 
as ``Solid 14 Kt. Gold.''

    (2) An industry product or part thereof, on which there has been 
affixed on all significant surfaces, by any process, a coating, 
electroplating, or deposition by any means, of gold or gold alloy of not 
less than 10 karat fineness that is of substantial thickness, \3\ and 
the minimum thickness throughout of which is equivalent to one-half 
micron (or approximately 20 millionths of an inch) of fine gold, \4\ may 
be marked or described as ``Gold Plate'' or ``Gold Plated,'' or 
abbreviated, as, for example, G.P. The exact thickness of the plate may 
be marked on the item, if it is immediately followed by a designation of 
the karat fineness of the plating which is of equal conspicuousness as 
the term used (as, for example, ``2 microns 12 K. gold plate'' or 
``2[micro] 12 K. G.P.'' for an item plated with 2 microns of 12 karat 
gold.)
---------------------------------------------------------------------------

    \3\ The term substantial thickness means that all areas of the 
plating are of such thickness as to assure a durable coverage of the 
base metal to which it has been affixed. Since industry products include 
items having surfaces and parts of surfaces that are subject to 
different degrees of wear, the thickness of plating for all items or for 
different areas of the surface of individual items does not necessarily 
have to be uniform.
    \4\ A product containing 1 micron (otherwise known as 1[micro]) of 
12 karat gold is equivalent to one-half micron of 24 karat gold.

    Note to paragraph (c)(2):
    If an industry product has a thicker coating or electroplating of 
gold or gold alloy on some areas than others, the minimum thickness of 
the plate should be marked.

    (3) An industry product or part thereof on which there has been 
affixed on all significant surfaces by soldering, brazing, welding, or 
other mechanical means, a plating of gold alloy of not less than 10 
karat fineness and of substantial thickness \5\ may be marked or 
described as ``Gold Filled,'' ``Gold Overlay,'' ``Rolled Gold Plate,'' 
or an adequate abbreviation, when such plating constitutes at least \1/
20\th of the weight of the metal in the entire article and when the term 
is immediately preceded by a designation of the karat fineness of the 
plating which is of equal conspicuousness as the term used (for example, 
``14 Karat Gold Filled,'' ``14 Kt. Gold Filled,'' ``14 Kt. G.F.,'' ``14 
Kt. Gold Overlay,'' or ``14K. R.G.P.''). When conforming to all such 
requirements except the specified minimum of \1/20\th of the weight of 
the metal in the entire article, the terms ``Gold Overlay'' and ``Rolled 
Gold Plate'' may be used when the karat fineness designation is 
immediately preceded by a fraction accurately disclosing the portion of 
the weight of the metal in the entire article accounted for by the 
plating, and when such fraction is of equal conspicuousness as the term 
used (for example, ``\1/40\th 12 Kt. Rolled Gold Plate'' or ``\1/40\ 12 
Kt. R.G.P.'').
---------------------------------------------------------------------------

    \5\ See footnote 3.
---------------------------------------------------------------------------

    (4) An industry product or part thereof, on which there has been 
affixed on all significant surfaces by an electrolytic process, an 
electroplating of gold, or of a gold alloy of not less than 10 karat 
fineness, which has a minimum thickness throughout equivalent to .175 
microns (approximately \7\/1,000,000ths of an inch) of fine 
gold, may be marked or described as ``Gold Electroplate'' or ``Gold 
Electroplated,'' or abbreviated, as, for example, ``G.E.P.'' When the 
electroplating meets the minimum fineness but not the minimum thickness 
specified above, the marking or description may be ``Gold Flashed'' or 
``Gold Washed.'' When the electroplating is of the minimum fineness 
specified above and of a minimum thickness throughout equivalent to two 
and one half (2\1/2\) microns (or approximately \100\/
1,000,000ths of an inch) of fine gold, the marking or 
description may be ``Heavy Gold Electroplate'' or ``Heavy Gold 
Electroplated.'' When electroplatings qualify for the term ``Gold 
Electroplate'' (or ``Gold Electroplated''), or the term ``Heavy Gold 
Electroplate'' (or ``Heavy Gold Electroplated''), and have been applied 
by use of a particular kind of electrolytic process, the marking may be 
accompanied by identification of the process used, as for example, 
``Gold Electroplated (X Process)'' or ``Heavy Gold Electroplated (Y 
Process).''
    (d) The provisions of this section relating to markings and 
descriptions of industry products and parts thereof are subject to the 
applicable tolerances of

[[Page 163]]

the National Stamping Act or any amendment thereof. \6\
---------------------------------------------------------------------------

    \6\ Under the National Stamping Act, articles or parts made of gold 
or of gold alloy that contain no solder have a permissible tolerance of 
three parts per thousand. If the part tested contains solder, the 
permissible tolerance is seven parts per thousand. For full text, see 15 
U.S.C. 295, et seq.

    Note 4 to paragraph (d):
    Exemptions recognized in the assay of karat gold industry products 
and in the assay of gold filled, gold overlay, and rolled gold plate 
industry products, and not to be considered in any assay for quality, 
are listed in the appendix.



Sec. 23.5  Misuse of the word ``vermeil.''

    (a) It is unfair or deceptive to represent, directly or by 
implication, that an industry product is ``vermeil'' if such mark or 
description misrepresents the product's true composition.
    (b) An industry product may be described or marked as ``vermeil'' if 
it consists of a base of sterling silver coated or plated on all 
significant surfaces with gold, or gold alloy of not less than 10 karat 
fineness, that is of substantial thickness \7\ and a minimum thickness 
throughout equivalent to two and one half (2\1/2\) microns (or 
approximately \100\/1,000,000ths of an inch) of fine gold.
---------------------------------------------------------------------------

    \7\ See footnote 3.

    Note 1 to Sec. 23.5: It is unfair or deceptive to use the term 
``vermeil'' to describe a product in which the sterling silver has been 
covered with a base metal (such as nickel) plated with gold unless there 
is a disclosure that the sterling silver is covered with a base metal 
that is plated with gold.
    Note 2 to Sec. 23.5: Exemptions recognized in the assay of gold 
filled, gold overlay, and rolled gold plate industry products are listed 
in the appendix.



Sec. 23.6  Misrepresentation as to silver content.

    (a) It is unfair or deceptive to misrepresent that an industry 
product contains silver, or to misrepresent an industry product as 
having a silver content, plating, electroplating, or coating.
    (b) It is unfair or deceptive to mark, describe, or otherwise 
represent all or part of an industry product as ``silver,'' ``solid 
silver,'' ``Sterling Silver,'' ``Sterling,'' or the abbreviation 
``Ster.'' unless it is at least \925/1,000\ths pure silver.
    (c) It is unfair or deceptive to mark, describe, or otherwise 
represent all or part of an industry product as ``coin'' or ``coin 
silver'' unless it is at least \900/1,000\ths pure silver.
    (d) It is unfair or deceptive to mark, describe, or otherwise 
represent all or part of an industry product as being plated or coated 
with silver unless all significant surfaces of the product or part 
contain a plating or coating of silver that is of substantial thickness. 
\8\
---------------------------------------------------------------------------

    \8\ See footnote 3.
---------------------------------------------------------------------------

    (e) The provisions of this section relating to markings and 
descriptions of industry products and parts thereof are subject to the 
applicable tolerances of the National Stamping Act or any amendment 
thereof. \9\
---------------------------------------------------------------------------

    \9\ Under the National Stamping Act, sterling silver articles or 
parts that contain no solder have a permissible tolerance of four parts 
per thousand. If the part tested contains solder, the permissible 
tolerance is ten parts per thousand. For full text, see 15 U.S.C. 294, 
et seq.

    Note 1 to Sec. 23.6: The National Stamping Act provides that 
silverplated articles shall not ``be stamped, branded, engraved or 
imprinted with the word `sterling' or the word `coin,' either alone or 
in conjunction with other words or marks.'' 15 U.S.C. 297(a).
    Note 2 to Sec. 23.6: Exemptions recognized in the assay of silver 
industry products are listed in the appendix.



Sec. 23.7  Misuse of the words ``platinum,'' ``iridium,'' 
``palladium,'' ``ruthenium,'' ``rhodium,'' and ``osmium.''

    (a) It is unfair or deceptive to use the words ``platinum,'' 
``iridium,'' ``palladium,'' ``ruthenium,'' ``rhodium,'' and ``osmium,'' 
or any abbreviation to mark or describe all or part of an industry 
product if such marking or description misrepresents the product's true 
composition. The Platinum Group Metals (PGM) are Platinum, Iridium, 
Palladium, Ruthenium, Rhodium, and Osmium.
    (b) The following are examples of markings or descriptions that may 
be misleading: \10\
---------------------------------------------------------------------------

    \10\ See paragraph (c) of this section for examples of acceptable 
markings and descriptions.

---------------------------------------------------------------------------

[[Page 164]]

    (1) Use of the word ``Platinum'' or any abbreviation, without 
qualification, to describe all or part of an industry product that is 
not composed throughout of 950 parts per thousand pure Platinum.
    (2) Use of the word ``Platinum'' or any abbreviation accompanied by 
a number indicating the parts per thousand of pure Platinum contained in 
the product without mention of the number of parts per thousand of other 
PGM contained in the product, to describe all or part of an industry 
product that is not composed throughout of at least 850 parts per 
thousand pure platinum, for example, ``600Plat.''
    (3) Use of the word ``Platinum'' or any abbreviation thereof, to 
mark or describe any product that is not composed throughout of at least 
500 parts per thousand pure Platinum.
    (4) Use of the word ``Platinum,'' or any abbreviation accompanied by 
a number or percentage indicating the parts per thousand of pure 
Platinum contained in the product, to describe all or part of an 
industry product that contains at least 500 parts per thousand, but less 
than 850 parts per thousand, pure Platinum, and does not contain at 
least 950 parts per thousand PGM (for example, ``585 Plat.'') without a 
clear and conspicuous disclosure, immediately following the name or 
description of such product:
    (i) Of the full composition of the product (by name and not 
abbreviation) and percentage of each metal; and
    (ii) That the product may not have the same attributes or properties 
as traditional platinum products. Provided, however, that the marketer 
need not make disclosure under Sec. 23.7(b)(4)(ii), if the marketer has 
competent and reliable scientific evidence that such product does not 
differ materially from any one product containing at least 850 parts per 
thousand pure Platinum with respect to the following attributes or 
properties: durability, luster, density, scratch resistance, tarnish 
resistance, hypoallergenicity, ability to be resized or repaired, 
retention of precious metal over time, and any other attribute or 
property material to consumers.

    Note to paragraph (b)(4):
    When using percentages to qualify platinum representations, 
marketers should convert the amount in parts per thousand to a 
percentage that is accurate to the first decimal place (e.g., 58.5% 
Platinum, 41.5% Cobalt).

    (c) The following are examples of markings and descriptions that are 
not considered unfair or deceptive:
    (1) The following abbreviations for each of the PGM may be used for 
quality marks on articles: ``Plat.'' or ``Pt.'' for Platinum; ``Irid.'' 
or ``Ir.'' for Iridium; ``Pall.'' or ``Pd.'' for Palladium; ``Ruth.'' or 
``Ru.'' for Ruthenium; ``Rhod.'' or ``Rh.'' for Rhodium; and ``Osmi.'' 
or ``Os.'' for Osmium.
    (2) An industry product consisting of at least 950 parts per 
thousand pure Platinum may be marked or described as ``Platinum.''
    (3) An industry product consisting of 850 parts per thousand pure 
Platinum, 900 parts per thousand pure Platinum, or 950 parts per 
thousand pure Platinum may be marked ``Platinum,'' provided that the 
Platinum marking is preceded by a number indicating the amount in parts 
per thousand of pure Platinum (for industry products consisting of 950 
parts per thousand pure Platinum, the marking described in Sec. 
23.7(b)(2) above is also appropriate). Thus, the following markings may 
be used: ``950Pt.,'' ``950Plat.,'' ``900Pt.,'' ``900Plat.,'' ``850Pt.,'' 
or ``850Plat.''
    (4) An industry product consisting of at least 950 parts per 
thousand PGM, and of at least 500 parts per thousand pure Platinum, may 
be marked ``Platinum,'' provided that the mark of each PGM constituent 
is preceded by a number indicating the amount in parts per thousand of 
each PGM, as for example, ``600Pt.350Ir.,'' ``600Plat.350Irid.,'' or 
``550Pt.350Pd.50Ir.,'' ``550Plat.350Pall.50Irid.''
    (5) An industry product consisting of at least 500 parts per 
thousand, but less than 850 parts per thousand, pure Platinum, and not 
consisting of at least 950 parts per thousand PGM, may be marked or 
stamped accurately, with a quality marking on the article, using parts 
per thousand and standard chemical abbreviations (e.g., 585 Pt., 415 
Co.).

    Note to Sec. 23.7: Exemptions recognized in the assay of platinum 
industry products are listed in appendix A of this part.

[62 FR 16675, Apr. 8, 1997, as amended at 75 FR 81453, Dec. 28, 2010]

[[Page 165]]



Sec. 23.8  Misrepresentation as to content of pewter.

    (a) It is unfair or deceptive to mark, describe, or otherwise 
represent all or part of an industry product as ``Pewter'' or any 
abbreviation if such mark or description misrepresents the product's 
true composition.
    (b) An industry product or part thereof may be described or marked 
as ``Pewter'' or any abbreviation if it consists of at least 900 parts 
per 1000 Grade A Tin, with the remainder composed of metals appropriate 
for use in pewter.



Sec. 23.9  Additional guidance for the use of quality marks.

    As used in these guides, the term quality mark means any letter, 
figure, numeral, symbol, sign, word, or term, or any combination 
thereof, that has been stamped, embossed, inscribed, or otherwise placed 
on any industry product and which indicates or suggests that any such 
product is composed throughout of any precious metal or any precious 
metal alloy or has a surface or surfaces on which there has been plated 
or deposited any precious metal or precious metal alloy. Included are 
the words ``gold,'' ``karat,'' ``carat,'' ``silver,'' ``sterling,'' 
``vermeil,'' ``platinum,'' ``iridium,'' ``palladium,'' ``ruthenium,'' 
``rhodium,'' or ``osmium,'' or any abbreviations thereof, whether used 
alone or in conjunction with the words ``filled,'' ``plated,'' 
``overlay,'' or ``electroplated,'' or any abbreviations thereof. Quality 
markings include those in which the words or terms ``gold,'' ``karat,'' 
``silver,'' ``vermeil,'' ``platinum'' (or platinum group metals), or 
their abbreviations are included, either separately or as suffixes, 
prefixes, or syllables.
    (a) Deception as to applicability of marks. (1) If a quality mark on 
an industry product is applicable to only part of the product, the part 
of the product to which it is applicable (or inapplicable) should be 
disclosed when, absent such disclosure, the location of the mark 
misrepresents the product or part's true composition.
    (2) If a quality mark is applicable to only part of an industry 
product, but not another part which is of similar surface appearance, 
each quality mark should be closely accompanied by an identification of 
the part or parts to which the mark is applicable.
    (b) Deception by reason of difference in the size of letters or 
words in a marking or markings. It is unfair or deceptive to place a 
quality mark on a product in which the words or letters appear in 
greater size than other words or letters of the mark, or when different 
markings placed on the product have different applications and are in 
different sizes, when the net impression of any such marking would be 
misleading as to the metallic composition of all or part of the product. 
(An example of improper marking would be the marking of a gold 
electroplated product with the word ``electroplate'' in small type and 
the word ``gold'' in larger type, with the result that purchasers and 
prospective purchasers of the product might only observe the word 
``gold.'')

    Note 1 to Sec. 23.9: Legibility of markings. If a quality mark is 
engraved or stamped on an industry product, or is printed on a tag or 
label attached to the product, the quality mark should be of sufficient 
size type as to be legible to persons of normal vision, should be so 
placed as likely to be observed by purchasers, and should be so attached 
as to remain thereon until consumer purchase.
    Note 2 to Sec. 23.9: Disclosure of identity of manufacturers, 
processors, or distributors. The National Stamping Act provides that any 
person, firm, corporation, or association, being a manufacturer or 
dealer subject to section 294 of the Act, who applies or causes to be 
applied a quality mark, or imports any article bearing a quality mark 
``which indicates or purports to indicate that such article is made in 
whole or in part of gold or silver or of an alloy of either metal'' 
shall apply to the article the trademark or name of such person. 15 
U.S.C. 297.



Sec. 23.10  Misuse of ``corrosion proof,'' ``noncorrosive,''
``corrosion resistant,'' ``rust proof,'' ``rust resistant,'' etc.

    (a) It is unfair or deceptive to:
    (1) Use the terms ``corrosion proof,'' ``noncorrosive,'' ``rust 
proof,'' or any other term of similar meaning to describe an industry 
product unless all parts of the product will be immune from rust and 
other forms of corrosion during the life expectancy of the product; or
    (2) Use the terms ``corrosion resistant,'' ``rust resistant,'' or 
any other

[[Page 166]]

term of similar meaning to describe an industry product unless all parts 
of the product are of such composition as to not be subject to material 
damage by corrosion or rust during the major portion of the life 
expectancy of the product under normal conditions of use.
    (b) Among the metals that may be considered as corrosion (and rust) 
resistant are: Pure nickel; Gold alloys of not less than 10 Kt. 
fineness; and Austenitic stainless steels.



Sec. 23.11  Definition and misuse of the word ``diamond.''

    (a) A diamond is a natural mineral consisting essentially of pure 
carbon crystallized in the isometric system. It is found in many colors. 
Its hardness is 10; its specific gravity is approximately 3.52; and it 
has a refractive index of 2.42.
    (b) It is unfair or deceptive to use the unqualified word 
``diamond'' to describe or identify any object or product not meeting 
the requirements specified in the definition of diamond provided above, 
or which, though meeting such requirements, has not been symmetrically 
fashioned with at least seventeen (17) polished facets.

    Note 1 to paragraph (b):
    It is unfair or deceptive to represent, directly or by implication, 
that industrial grade diamonds or other non-jewelry quality diamonds are 
of jewelry quality.

    (c) The following are examples of descriptions that are not 
considered unfair or deceptive:
    (1) The use of the words ``rough diamond'' to describe or designate 
uncut or unfaceted objects or products satisfying the definition of 
diamond provided above; or
    (2) The use of the word ``diamond'' to describe or designate objects 
or products satisfying the definition of diamond but which have not been 
symmetrically fashioned with at least seventeen (17) polished facets 
when in immediate conjunction with the word ``diamond'' there is either 
a disclosure of the number of facets and shape of the diamond or the 
name of a type of diamond that denotes shape and that usually has less 
than seventeen (17) facets (e.g., ``rose diamond'').

    Note 2 to paragraph (c):
    Additional guidance about imitation and laboratory-created diamond 
representations and misuse of words ``gem,'' ``real,'' ``genuine,'' 
``natural,'' etc., are set forth in Sec. Sec. 23.23, 23.24, and 23.25.



Sec. 23.12  Misuse of the words ``flawless,'' ``perfect,'' etc.

    (a) It is unfair or deceptive to use the word ``flawless'' to 
describe any diamond that discloses flaws, cracks, inclusions, carbon 
spots, clouds, internal lasering, or other blemishes or imperfections of 
any sort when examined under a corrected magnifier at 10-power, with 
adequate illumination, by a person skilled in diamond grading.
    (b) It is unfair or deceptive to use the word ``perfect,'' or any 
representation of similar meaning, to describe any diamond unless the 
diamond meets the definition of ``flawless'' and is not of inferior 
color or make.
    (c) It is unfair or deceptive to use the words ``flawless'' or 
``perfect'' to describe a ring or other article of jewelry having a 
``flawless'' or ``perfect'' principal diamond or diamonds, and 
supplementary stones that are not of such quality, unless there is a 
disclosure that the description applies only to the principal diamond or 
diamonds.



Sec. 23.13  Disclosure of treatments to diamonds.

    A diamond is a gemstone product. Treatments to diamonds should be 
disclosed in the manner prescribed in Sec. 23.22 of these guides, 
Disclosure of treatments to gemstones.

[65 FR 78743, Dec. 15, 2000]



Sec. 23.14  Misuse of the term ``blue white.''

    It is unfair or deceptive to use the term ``blue white'' or any 
representation of similar meaning to describe any diamond that under 
normal, north daylight or its equivalent shows any color or any trace of 
any color other than blue or bluish.



Sec. 23.15  Misuse of the term ``properly cut,'' etc.

    It is unfair or deceptive to use the terms ``properly cut,'' 
``proper cut,'' ``modern cut,'' or any representation of similar meaning 
to describe any diamond that is lopsided, or is so thick or

[[Page 167]]

so thin in depth as to detract materially from the brilliance of the 
stone.

    Note to Sec. 23.15: Stones that are commonly called ``fisheye'' or 
``old mine'' should not be described as ``properly cut,'' ``modern 
cut,'' etc.



Sec. 23.16  Misuse of the words ``brilliant'' and ``full cut.''

    It is unfair or deceptive to use the unqualified expressions 
``brilliant,'' ``brilliant cut,'' or ``full cut'' to describe, identify, 
or refer to any diamond except a round diamond that has at least thirty-
two (32) facets plus the table above the girdle and at least twenty-four 
(24) facets below.

    Note to Sec. 23.16: Such terms should not be applied to single or 
rose-cut diamonds. They may be applied to emerald-(rectangular) cut, 
pear-shaped, heart-shaped, oval-shaped, and marquise-(pointed oval) cut 
diamonds meeting the above-stated facet requirements when, in immediate 
conjunction with the term used, the form of the diamond is disclosed.



Sec. 23.17  Misrepresentation of weight and ``total weight.''

    (a) It is unfair or deceptive to misrepresent the weight of a 
diamond.
    (b) It is unfair or deceptive to use the word ``point'' or any 
abbreviation in any representation, advertising, marking, or labeling to 
describe the weight of a diamond, unless the weight is also stated as 
decimal parts of a carat (e.g., 25 points or .25 carat).

    Note 1 to paragraph (b):
    A carat is a standard unit of weight for a diamond and is equivalent 
to 200 milligrams (\1/5\ gram). A point is one one hundredth (\1/100\) 
of a carat.

    (c) If diamond weight is stated as decimal parts of a carat (e.g., 
.47 carat), the stated figure should be accurate to the last decimal 
place. If diamond weight is stated to only one decimal place (e.g., .5 
carat), the stated figure should be accurate to the second decimal place 
(e.g., ``.5 carat'' could represent a diamond weight between .495-.504).
    (d) If diamond weight is stated as fractional parts of a carat, a 
conspicuous disclosure of the fact that the diamond weight is not exact 
should be made in close proximity to the fractional representation and a 
disclosure of a reasonable range of weight for each fraction (or the 
weight tolerance being used) should also be made.

    Note to paragraph (d):
    When fractional representations of diamond weight are made, as 
described in paragraph d of this section, in catalogs or other printed 
materials, the disclosure of the fact that the actual diamond weight is 
within a specified range should be made conspicuously on every page 
where a fractional representation is made. Such disclosure may refer to 
a chart or other detailed explanation of the actual ranges used. For 
example, ``Diamond weights are not exact; see chart on p.X for ranges.''



Sec. 23.18  Definitions of various pearls.

    As used in these guides, the terms set forth below have the 
following meanings:
    (a) Pearl: A calcareous concretion consisting essentially of 
alternating concentric layers of carbonate of lime and organic material 
formed within the body of certain mollusks, the result of an abnormal 
secretory process caused by an irritation of the mantle of the mollusk 
following the intrusion of some foreign body inside the shell of the 
mollusk, or due to some abnormal physiological condition in the mollusk, 
neither of which has in any way been caused or induced by humans.
    (b) Cultured pearl: The composite product created when a nucleus 
(usually a sphere of calcareous mollusk shell) planted by humans inside 
the shell or in the mantle of a mollusk is coated with nacre by the 
mollusk.
    (c) Imitation pearl: A manufactured product composed of any material 
or materials that simulate in appearance a pearl or cultured pearl.
    (d) Seed pearl: A small pearl, as defined in (a), that measures 
approximately two millimeters or less.



Sec. 23.19  Misuse of the word ``pearl.''

    (a) It is unfair or deceptive to use the unqualified word ``pearl'' 
or any other word or phrase of like meaning to describe, identify, or 
refer to any object or product that is not in fact a pearl, as defined 
in Sec. 23.18(a).
    (b) It is unfair or deceptive to use the word ``pearl'' to describe, 
identify, or refer to a cultured pearl unless it is immediately 
preceded, with equal conspicuousness, by the word ``cultured'' or 
``cultivated,'' or by some other word

[[Page 168]]

or phrase of like meaning, so as to indicate definitely and clearly that 
the product is not a pearl.
    (c) It is unfair or deceptive to use the word ``pearl'' to describe, 
identify, or refer to an imitation pearl unless it is immediately 
preceded, with equal conspicuousness, by the word ``artificial,'' 
``imitation,'' or ``simulated,'' or by some other word or phrase of like 
meaning, so as to indicate definitely and clearly that the product is 
not a pearl.
    (d) It is unfair or deceptive to use the terms ``faux pearl,'' 
``fashion pearl,'' ``Mother of Pearl,'' or any other such term to 
describe or qualify an imitation pearl product unless it is immediately 
preceded, with equal conspicuousness, by the word ``artificial,'' 
``imitation,'' or ``simulated,'' or by some other word or phrase of like 
meaning, so as to indicate definitely and clearly that the product is 
not a pearl.



Sec. 23.20  Misuse of terms such as ``cultured pearl,''
``seed pearl,'' ``Oriental pearl,'' ``natura,'' ``kultured,''
``real,'' ``gem,'' ``synthetic,'' and  regional designations.

    (a) It is unfair or deceptive to use the term ``cultured pearl,'' 
``cultivated pearl,'' or any other word, term, or phrase of like meaning 
to describe, identify, or refer to any imitation pearl.
    (b) It is unfair or deceptive to use the term ``seed pearl'' or any 
word, term, or phrase of like meaning to describe, identify, or refer to 
a cultured or an imitation pearl, without using the appropriate 
qualifying term ``cultured'' (e.g., ``cultured seed pearl'') or 
``simulated,'' ``artificial,'' or ``imitation'' (e.g., ``imitation seed 
pearl'').
    (c) It is unfair or deceptive to use the term ``Oriental pearl'' or 
any word, term, or phrase of like meaning to describe, identify, or 
refer to any industry product other than a pearl taken from a salt water 
mollusk and of the distinctive appearance and type of pearls obtained 
from mollusks inhabiting the Persian Gulf and recognized in the jewelry 
trade as Oriental pearls.
    (d) It is unfair or deceptive to use the word ``Oriental'' to 
describe, identify, or refer to any cultured or imitation pearl.
    (e) It is unfair or deceptive to use the word ``natura,'' 
``natural,'' ``nature's,'' or any word, term, or phrase of like meaning 
to describe, identify, or refer to a cultured or imitation pearl. It is 
unfair or deceptive to use the term ``organic'' to describe, identify, 
or refer to an imitation pearl, unless the term is qualified in such a 
way as to make clear that the product is not a natural or cultured 
pearl.
    (f) It is unfair or deceptive to use the term ``kultured,'' ``semi-
cultured pearl,'' ``cultured-like,'' ``part-cultured,'' ``pre-mature 
cultured pearl,'' or any word, term, or phrase of like meaning to 
describe, identify, or refer to an imitation pearl.
    (g) It is unfair or deceptive to use the term ``South Sea pearl'' 
unless it describes, identifies, or refers to a pearl that is taken from 
a salt water mollusk of the Pacific Ocean South Sea Islands, Australia, 
or Southeast Asia. It is unfair or deceptive to use the term ``South Sea 
cultured pearl'' unless it describes, identifies, or refers to a 
cultured pearl formed in a salt water mollusk of the Pacific Ocean South 
Sea Islands, Australia, or Southeast Asia.
    (h) It is unfair or deceptive to use the term ``Biwa cultured 
pearl'' unless it describes, identifies, or refers to cultured pearls 
grown in fresh water mollusks in the lakes and rivers of Japan.
    (i) It is unfair or deceptive to use the word ``real,'' ``genuine,'' 
``precious,'' or any word, term, or phrase of like meaning to describe, 
identify, or refer to any imitation pearl.
    (j) It is unfair or deceptive to use the word ``gem'' to describe, 
identify, or refer to a pearl or cultured pearl that does not possess 
the beauty, symmetry, rarity, and value necessary for qualification as a 
gem.

    Note to paragraph (j):
    Use of the word ``gem'' with respect to cultured pearls should be 
avoided since few cultured pearls possess the necessary qualifications 
to properly be termed ``gems.'' Imitation pearls should not be described 
as ``gems.''

    (k) It is unfair or deceptive to use the word ``synthetic'' or 
similar terms to describe cultured or imitation pearls.
    (l) It is unfair or deceptive to use the terms ``Japanese Pearls,'' 
``Chinese

[[Page 169]]

Pearls,'' ``Mallorca Pearls,'' or any regional designation to describe, 
identify, or refer to any cultured or imitation pearl, unless the term 
is immediately preceded, with equal conspicuousness, by the word 
``cultured,'' ``artificial,'' ``imitation,'' or ``simulated,'' or by 
some other word or phrase of like meaning, so as to indicate definitely 
and clearly that the product is a cultured or imitation pearl.



Sec. 23.21  Misrepresentation as to cultured pearls.

    It is unfair or deceptive to misrepresent the manner in which 
cultured pearls are produced, the size of the nucleus artificially 
inserted in the mollusk and included in cultured pearls, the length of 
time that such products remained in the mollusk, the thickness of the 
nacre coating, the value and quality of cultured pearls as compared with 
the value and quality of pearls and imitation pearls, or any other 
material matter relating to the formation, structure, properties, 
characteristics, and qualities of cultured pearls.



Sec. 23.22  Disclosure of treatments to gemstones.

    It is unfair or deceptive to fail to disclose that a gemstone has 
been treated if:
    (a) The treatment is not permanent. The seller should disclose that 
the gemstone has been treated and that the treatment is or may not be 
permanent;
    (b) The treatment creates special care requirements for the 
gemstone. The seller should disclose that the gemstone has been treated 
and has special care requirements. It is also recommended that the 
seller disclose the special care requirements to the purchaser;
    (c) The treatment has a significant effect on the stone's value. The 
seller should disclose that the gemstone has been treated.

    Note to Sec. 23.22: The disclosures outlined in this section are 
applicable to sellers at every level of trade, as defined in Sec. 
23.0(b) of these Guides, and they may be made at the point of sale prior 
to sale; except that where a jewelry product can be purchased without 
personally viewing the product, (e.g., direct mail catalogs, online 
services, televised shopping programs) disclosure should be made in the 
solicitation for or description of the product.

[65 FR 78743, Dec. 15, 2000]



Sec. 23.23  Misuse of the words ``ruby,'' ``sapphire,'' ``emerald,''
``topaz,'' ``stone,'' ``birthstone,'' ``gemstone,'' etc.

    (a) It is unfair or deceptive to use the unqualified words ``ruby,'' 
``sapphire,'' ``emerald,'' ``topaz,'' or the name of any other precious 
or semi-precious stone to describe any product that is not in fact a 
natural stone of the type described.
    (b) It is unfair or deceptive to use the word ``ruby,'' 
``sapphire,'' ``emerald,'' ``topaz,'' or the name of any other precious 
or semi-precious stone, or the word ``stone,'' ``birthstone,'' 
``gemstone,'' or similar term to describe a laboratory-grown, 
laboratory-created, [manufacturer name]-created, synthetic, imitation, 
or simulated stone, unless such word or name is immediately preceded 
with equal conspicuousness by the word ``laboratory-grown,'' 
``laboratory-created,'' ``[manufacturer name]-created,'' ``synthetic,'' 
or by the word ``imitation'' or ``simulated,'' so as to disclose clearly 
the nature of the product and the fact it is not a natural gemstone.

    Note to paragraph (h):
    The use of the word ``faux'' to describe a laboratory-created or 
imitation stone is not an adequate disclosure that the stone is not 
natural.

    (c) It is unfair or deceptive to use the word ``laboratory-grown,'' 
``laboratory-created,'' ``[manufacturer name]-created,'' or 
``synthetic'' with the name of any natural stone to describe any 
industry product unless such industry product has essentially the same 
optical, physical, and chemical properties as the stone named.



Sec. 23.24  Misuse of the words ``real,'' ``genuine,'' ``natural,''
``precious,'' etc.

    It is unfair or deceptive to use the word ``real,'' ``genuine,'' 
``natural,'' ``precious,'' ``semi-precious,'' or similar terms to 
describe any industry product that is manufactured or produced 
artificially.

[[Page 170]]



Sec. 23.25  Misuse of the word ``gem.''

    (a) It is unfair or deceptive to use the word ``gem'' to describe, 
identify, or refer to a ruby, sapphire, emerald, topaz, or other 
industry product that does not possess the beauty, symmetry, rarity, and 
value necessary for qualification as a gem.
    (b) It is unfair or deceptive to use the word ``gem'' to describe 
any laboratory-created industry product unless the product meets the 
requirements of paragraph (a) of this section and unless such word is 
immediately accompanied, with equal conspicuousness, by the word 
``laboratory-grown,'' ``laboratory-created,'' or ``[manufacturer-name]-
created,'' ``synthetic,'' or by some other word or phrase of like 
meaning, so as to clearly disclose that it is not a natural gem.

    Note to Sec. 23.25: In general, use of the word ``gem'' with 
respect to laboratory-created stones should be avoided since few 
laboratory-created stones possess the necessary qualifications to 
properly be termed ``gems.'' Imitation diamonds and other imitation 
stones should not be described as ``gems.'' Not all diamonds or natural 
stones, including those classified as precious stones, possess the 
necessary qualifications to be properly termed ``gems.''



Sec. 23.26  Misuse of the words ``flawless,'' ``perfect,'' etc.

    (a) It is unfair or deceptive to use the word ``flawless'' as a 
quality description of any gemstone that discloses blemishes, 
inclusions, or clarity faults of any sort when examined under a 
corrected magnifier at 10-power, with adequate illumination, by a person 
skilled in gemstone grading.
    (b) It is unfair or deceptive to use the word ``perfect'' or any 
representation of similar meaning to describe any gemstone unless the 
gemstone meets the definition of ``flawless'' and is not of inferior 
color or make.
    (c) It is unfair or deceptive to use the word ``flawless,'' 
``perfect,'' or any representation of similar meaning to describe any 
imitation gemstone.



Sec. Appendix to Part 23--Exemptions Recognized in the Assay for Quality 
of Gold Alloy, Gold Filled, Gold Overlay, Rolled Gold Plate, Silver, and 
                       Platinum Industry Products

    (a) Exemptions recognized in the industry and not to be considered 
in any assay for quality of a karat gold industry product include 
springs, posts, and separable backs of lapel buttons, posts and nuts for 
attaching interchangeable ornaments, metallic parts completely and 
permanently encased in a nonmetallic covering, field pieces and bezels 
for lockets, \1\ and wire pegs or rivets used for applying mountings and 
other ornaments, which mountings or ornaments shall be of the quality 
marked.
---------------------------------------------------------------------------

    \1\ Field pieces of lockets are those inner portions used as frames 
between the inside edges of the locket and the spaces for holding 
pictures. Bezels are the separable inner metal rings to hold the 
pictures in place.

    Note: Exemptions recognized in the industry and not to be considered 
in any assay for quality of a karat gold optical product include: the 
hinge assembly (barrel or other special types such as are customarily 
used in plastic frames); washers, bushings, and nuts of screw 
assemblies; dowels; springs for spring shoe straps; metal parts 
permanently encased in a non-metallic covering; and for oxfords, \2\ 
coil and joint springs.
---------------------------------------------------------------------------

    \2\ Oxfords are a form of eyeglasses where a flat spring joins the 
two eye rims and the tension it exerts on the nose serves to hold the 
unit in place. Oxfords are also referred to as pince nez.

    (b) Exemptions recognized in the industry and not to be considered 
in any assay for quality of a gold filled, gold overlay and rolled gold 
plate industry product, other than watchcases, include joints, catches, 
screws, pin stems, pins of scarf pins, hat pins, etc., field pieces and 
bezels for lockets, posts and separate backs of lapel buttons, bracelet 
and necklace snap tongues, springs, and metallic parts completely and 
---------------------------------------------------------------------------
permanently encased in a nonmetallic covering.

    Note: Exemptions recognized in the industry and not to be considered 
in any assay for quality of a gold filled, gold overlay and rolled gold 
plate optical product include: screws; the hinge assembly (barrel or 
other special types such as are customarily used in plastic frames); 
washers, bushings, tubes and nuts of screw assemblies; dowels; pad 
inserts; springs for spring shoe straps, cores and/or inner windings of 
comfort cable temples; metal parts permanently encased in a non-metallic 
covering; and for oxfords, the handle and catch.


[[Page 171]]


    (c) Exemptions recognized in the industry and not to be considered 
in any assay for quality of a silver industry product include screws, 
rivets, springs, spring pins for wrist watch straps; posts and separable 
backs of lapel buttons; wire pegs, posts, and nuts used for applying 
mountings or other ornaments, which mountings or ornaments shall be of 
the quality marked; pin stems (e.g., of badges, brooches, emblem pins, 
hat pins, and scarf pins, etc.); levers for belt buckles; blades and 
skeletons of pocket knives; field pieces and bezels for lockets; 
bracelet and necklace snap tongues; any other joints, catches, or 
screws; and metallic parts completely and permanently encased in a 
nonmetallic covering.
    (d) Exemptions recognized in the industry and not to be considered 
in any assay for quality of an industry product of silver in combination 
with gold include joints, catches, screws, pin stems, pins of scarf 
pins, hat pins, etc., posts and separable backs of lapel buttons, 
springs, and metallic parts completely and permanently encased in a 
nonmetallic covering.
    (e) Exemptions recognized in the industry and not to be considered 
in any assay for quality of a platinum industry product include springs, 
winding bars, sleeves, crown cores, mechanical joint pins, screws, 
rivets, dust bands, detachable movement rims, hat-pin stems, and 
bracelet and necklace snap tongues. In addition, the following 
exemptions are recognized for products marked in accordance with section 
23.8(b)(5) of these Guides (i.e., products that are less than 500 parts 
per thousand platinum): pin tongues, joints, catches, lapel button backs 
and the posts to which they are attached, scarf-pin stems, hat pin 
sockets, shirt-stud backs, vest-button backs, and ear-screw backs, 
provided such parts are made of the same quality platinum as is used in 
the balance of the article.



PART 24_GUIDES FOR SELECT LEATHER AND IMITATION LEATHER PRODUCTS--
Table of Contents



Sec.
24.0 Scope and purpose of guides.
24.1 Deception (general).
24.2 Deception as to composition.
24.3 Misuse of the terms ``waterproof,'' ``dustproof,'' ``warpproof,'' 
          ``scuffproof,'' ``scratchproof,'' ``scuff resistant,'' or 
          ``scratch resistant.''

    Authority: 15 U.S.C. 45, 46.

    Source: 61 FR 51583, Oct. 3, 1996, unless otherwise noted.



Sec. 24.0  Scope and purpose of guides.

    (a) The Guides in this part apply to the manufacture, sale, 
distribution, marketing, or advertising of all kinds or types of leather 
or simulated-leather trunks, suitcases, traveling bags, sample cases, 
instrument cases, brief cases, ring binders, billfolds, wallets, key 
cases, coin purses, card cases, French purses, dressing cases, stud 
boxes, tie cases, jewel boxes, travel kits, gadget bags, camera bags, 
ladies' handbags, shoulder bags, purses, pocketbooks, footwear, belts 
(when not sold as part of a garment) and similar articles (hereinafter, 
``industry products'').
    (b) These Guides represent administrative interpretations of laws 
administered by the Federal Trade Commission for the guidance of the 
public in conducting its affairs in conformity with legal requirements. 
These Guides specifically address the application of section 5 of the 
FTC Act (15 U.S.C. 45) to the manufacture, sale, distribution, 
marketing, and advertising of industry products listed in paragraph (a) 
of this section. They provide the basis for voluntary compliance with 
such laws by members of industry. Conduct inconsistent with the 
positions articulated in these Guides may result in corrective action by 
the Commission under section 5 if, after investigation, the Commission 
has reason to believe that the behavior falls within the scope of 
conduct declared unlawful by the statute.



Sec. 24.1  Deception (general).

    It is unfair or deceptive to misrepresent, directly or by 
implication, the kind, grade, quality, quantity, material content, 
thickness, finish, serviceability, durability, price, origin, size, 
weight, ease of cleaning, construction, manufacture, processing, 
distribution, or any other material aspect of an industry product.



Sec. 24.2  Deception as to composition.

    It is unfair or deceptive to misrepresent, directly or by 
implication, the composition of any industry product or part thereof. It 
is unfair or deceptive to use the unqualified term ``leather'' or other 
unqualified terms suggestive of leather to describe industry products

[[Page 172]]

unless the industry product so described is composed in all substantial 
parts of leather. \1\ This section includes, but is not limited to, the 
following:
---------------------------------------------------------------------------

    \1\ For purposes of these Guides, footwear is composed of three 
parts: the upper, the lining and sock, and the outersole. These three 
parts are defined as follows: (1) The upper is the outer face of the 
structural element which is attached to the outersole; (2) the lining 
and sock are the lining of the upper and the insole, constituting the 
inside of the footwear article; and (3) the outersole is the bottom part 
of the footwear article subjected to abrasive wear and attached to the 
upper.
---------------------------------------------------------------------------

    (a) Imitation or simulated leather. If all or part of an industry 
product is made of non-leather material that appears to be leather, the 
fact that the material is not leather, or the general nature of the 
material as something other than leather, should be disclosed. For 
example: Not leather; Imitation leather; Simulated leather; Vinyl; Vinyl 
coated fabric; or Plastic.
    (b) Embossed or processed leather. The kind and type of leather from 
which an industry product is made should be disclosed when all or part 
of the product has been embossed, dyed, or otherwise processed so as to 
simulate the appearance of a different kind or type of leather. For 
example:
    (1) An industry product made wholly of top grain cowhide that has 
been processed so as to imitate pigskin may be represented as being made 
of Top Grain Cowhide.
    (2) Any additional representation concerning the simulated 
appearance of an industry product composed of leather should be 
immediately accompanied by a disclosure of the kind and type of leather 
in the product. For example: Top Grain Cowhide With Simulated Pigskin 
Grain.
    (c) Backing material. (1) The backing of any material in an industry 
product with another kind of material should be disclosed when the 
backing is not apparent upon casual inspection of the product, or when a 
representation is made which, absent such disclosure, would be 
misleading as to the product's composition. For example: Top Grain 
Cowhide Backed With Vinyl.
    (2) The composition of the different backing material should be 
disclosed if it is visible and consists of non-leather material with the 
appearance of leather, or leather processed so as to simulate a 
different kind of leather.
    (d) Misuse of trade names, etc. A trade name, coined name, 
trademark, or other word or term, or any depiction or device should not 
be used if it misrepresents, directly or by implication, that an 
industry product is made in whole or in part from animal skin or hide, 
or that material in an industry product is leather or other material. 
This includes, among other practices, the use of a stamp, tag, label, 
card, or other device in the shape of a tanned hide or skin or in the 
shape of a silhouette of an animal, in connection with any industry 
product that has the appearance of leather but that is not made wholly 
or in substantial part from animal skin or hide.
    (e) Misrepresentation that product is wholly of a particular 
composition. A misrepresentation should not be made, directly or by 
implication, that an industry product is made wholly of a particular 
composition. A representation as to the composition of a particular part 
of a product should clearly indicate the part to which the 
representation applies. \2\ Where a product is made principally of 
leather but has certain non-leather parts that appear to be leather, the 
product may be described as made of leather so long as accompanied by 
clear disclosure of the non-leather parts. For example:
---------------------------------------------------------------------------

    \2\ With regard to footwear, it is sufficient to disclose the 
presence of non-leather materials in the upper, the lining and sock, or 
the outersole, provided that the disclosure is made according to 
predominance of materials. For example, if the majority of the upper is 
composed of manmade material: Upper of manmade materials and leather.
---------------------------------------------------------------------------

    (1) An industry product made of top grain cowhide except for frame 
covering, gussets, and partitions that are made of plastic but have the 
appearance of leather may be described as: Top Grain Cowhide With 
Plastic Frame Covering, Gussets and Partitions; or Top Grain Cowhide 
With Gussets, Frame Covering and Partitions Made of Non-Leather 
Material.
    (2) An industry product made throughout, except for hardware, of 
vinyl backed with cowhide may be described as: Vinyl Backed With Cowhide

[[Page 173]]

(See also disclosure provision concerning use of backing material in 
paragraph (c) of this section).
    (3) An industry product made of top grain cowhide except for 
partitions and stay, which are made of plastic-coated fabric but have 
the appearance of leather, may be described as: Top Grain Cowhide With 
Partitions and Stay Made of Non-leather Material; or Top Grain Cowhide 
With Partitions and Stay Made of Plastic-Coated Fabric.
    (f) Ground, pulverized, shredded, reconstituted, or bonded leather. 
A material in an industry product that contains ground, pulverized, 
shredded, reconstituted, or bonded leather and thus is not wholly the 
hide of an animal should not be represented, directly or by implication, 
as being leather. This provision does not preclude an accurate 
representation as to the ground, pulverized, shredded, reconstituted, or 
bonded leather content of the material. However, if the material appears 
to be leather, it should be accompanied by either:
    (1) An adequate disclosure as described by paragraph (a) of this 
section; or
    (2) If the terms ``ground leather,'' ``pulverized leather,'' 
``shredded leather,'' ``reconstituted leather,'' or ``bonded leather'' 
are used, a disclosure of the percentage of leather fibers and the 
percentage of non-leather substances contained in the material. For 
example: An industry product made of a composition material consisting 
of 60% shredded leather fibers may be described as: Bonded Leather 
Containing 60% Leather Fibers and 40% Non-leather Substances.
    (g) Form of disclosures under this section. All disclosures 
described in this section should appear in the form of a stamping on the 
product, or on a tag, label, or card attached to the product, and should 
be affixed so as to remain on or attached to the product until received 
by the consumer purchaser. All such disclosures should also appear in 
all advertising of such products irrespective of the media used whenever 
statements, representations, or depictions appear in such advertising 
which, absent such disclosures, serve 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 listening to, such advertising. A disclosure necessitated by 
a particular representation should be in close conjunction with the 
representation.



Sec. 24.3  Misuse of the terms ``waterproof,'' ``dustproof,''
``warpproof,'' ``scuffproof,'' ``scratchproof,'' ``scuff resistant,
'' and ``scratch resistant.''

    It is unfair or deceptive to:
    (a) Use the term ``Waterproof'' to describe all or part of an 
industry product unless the designated product or material prevents 
water from contact with its contents under normal conditions of intended 
use during the anticipated life of the product or material.
    (b) Use the term ``Dustproof'' to describe an industry product 
unless the product is so constructed that when it is closed dust cannot 
enter it.
    (c) Use the term ``Warpproof'' to describe all or part of an 
industry product unless the designated product or part is such that it 
cannot warp.
    (d) Use the term ``Scuffproof,'' ``Scratchproof,'' or other terms 
indicating that the product is not subject to wear in any other respect, 
to describe an industry product unless the outside surface of the 
product is immune to scratches or scuff marks, or is not subject to wear 
as represented.
    (e) Use the term ``Scuff Resistant,'' ``Scratch Resistant,'' or 
other terms indicating that the product is resistant to wear in any 
other respect, unless there is a basis for the representation and the 
outside surface of the product is meaningfully and significantly 
resistant to scuffing, scratches, or to wear as represented.

                         PARTS 25	227 [RESERVED]



PART 233_GUIDES AGAINST DECEPTIVE PRICING--Table of Contents



Sec.
233.1 Former price comparisons.
233.2 Retail price comparisons; comparable value comparisons.

[[Page 174]]

233.3 Advertising retail prices which have been established or suggested 
          by manufacturers (or other nonretail distributors).
233.4 Bargain offers based upon the purchase of other merchandise.
233.5 Miscellaneous price comparisons.

    Authority: Secs. 5, 6, 38 Stat. 719, as amended, 721; 15 U.S.C. 45, 
46.

    Source: 32 FR 15534, Nov. 8, 1967, unless otherwise noted.



Sec. 233.1  Former price comparisons.

    (a) One of the most commonly used forms of bargain advertising is to 
offer a reduction from the advertiser's own former price for an article. 
If the former price is the actual, bona fide price at which the article 
was offered to the public on a regular basis for a reasonably 
substantial period of time, it provides a legitimate basis for the 
advertising of a price comparison. Where the former price is genuine, 
the bargain being advertised is a true one. If, on the other hand, the 
former price being advertised is not bona fide but fictitious--for 
example, where an artificial, inflated price was established for the 
purpose of enabling the subsequent offer of a large reduction--the 
``bargain'' being advertised is a false one; the purchaser is not 
receiving the unusual value he expects. In such a case, the ``reduced'' 
price is, in reality, probably just the seller's regular price.
    (b) A former price is not necessarily fictitious merely because no 
sales at the advertised price were made. The advertiser should be 
especially careful, however, in such a case, that the price is one at 
which the product was openly and actively offered for sale, for a 
reasonably substantial period of time, in the recent, regular course of 
his business, honestly and in good faith--and, of course, not for the 
purpose of establishing a fictitious higher price on which a deceptive 
comparison might be based. And the advertiser should scrupulously avoid 
any implication that a former price is a selling, not an asking price 
(for example, by use of such language as, ``Formerly sold at $------''), 
unless substantial sales at that price were actually made.
    (c) The following is an example of a price comparison based on a 
fictitious former price. John Doe is a retailer of Brand X fountain 
pens, which cost him $5 each. His usual markup is 50 percent over cost; 
that is, his regular retail price is $7.50. In order subsequently to 
offer an unusual ``bargain'', Doe begins offering Brand X at $10 per 
pen. He realizes that he will be able to sell no, or very few, pens at 
this inflated price. But he doesn't care, for he maintains that price 
for only a few days. Then he ``cuts'' the price to its usual level--
$7.50--and advertises: ``Terrific Bargain: X Pens, Were $10, Now Only 
$7.50!'' This is obviously a false claim. The advertised ``bargain'' is 
not genuine.
    (d) Other illustrations of fictitious price comparisons could be 
given. An advertiser might use a price at which he never offered the 
article at all; he might feature a price which was not used in the 
regular course of business, or which was not used in the recent past but 
at some remote period in the past, without making disclosure of that 
fact; he might use a price that was not openly offered to the public, or 
that was not maintained for a reasonable length of time, but was 
immediately reduced.
    (e) If the former price is set forth in the advertisement, whether 
accompanied or not by descriptive terminology such as ``Regularly,'' 
``Usually,'' ``Formerly,'' etc., the advertiser should make certain that 
the former price is not a fictitious one. If the former price, or the 
amount or percentage of reduction, is not stated in the advertisement, 
as when the ad merely states, ``Sale,'' the advertiser must take care 
that the amount of reduction is not so insignificant as to be 
meaningless. It should be sufficiently large that the consumer, if he 
knew what it was, would believe that a genuine bargain or saving was 
being offered. An advertiser who claims that an item has been ``Reduced 
to $9.99,'' when the former price was $10, is misleading the consumer, 
who will understand the claim to mean that a much greater, and not 
merely nominal, reduction was being offered. [Guide I]



Sec. 233.2  Retail price comparisons; comparable value comparisons.

    (a) Another commonly used form of bargain advertising is to offer 
goods at

[[Page 175]]

prices lower than those being charged by others for the same merchandise 
in the advertiser's trade area (the area in which he does business). 
This may be done either on a temporary or a permanent basis, but in 
either case the advertised higher price must be based upon fact, and not 
be fictitious or misleading. Whenever an advertiser represents that he 
is selling below the prices being charged in his area for a particular 
article, he should be reasonably certain that the higher price he 
advertises does not appreciably exceed the price at which substantial 
sales of the article are being made in the area--that is, a sufficient 
number of sales so that a consumer would consider a reduction from the 
price to represent a genuine bargain or saving. Expressed another way, 
if a number of the principal retail outlets in the area are regularly 
selling Brand X fountain pens at $10, it is not dishonest for retailer 
Doe to advertise: ``Brand X Pens, Price Elsewhere $10, Our Price 
$7.50''.
    (b) The following example, however, illustrates a misleading use of 
this advertising technique. Retailer Doe advertises Brand X pens as 
having a ``Retail Value $15.00, My Price $7.50,'' when the fact is that 
only a few small suburban outlets in the area charge $15. All of the 
larger outlets located in and around the main shopping areas charge 
$7.50, or slightly more or less. The advertisement here would be 
deceptive, since the price charged by the small suburban outlets would 
have no real significance to Doe's customers, to whom the advertisement 
of ``Retail Value $15.00'' would suggest a prevailing, and not merely an 
isolated and unrepresentative, price in the area in which they shop.
    (c) A closely related form of bargain advertising is to offer a 
reduction from the prices being charged either by the advertiser or by 
others in the advertiser's trade area for other merchandise of like 
grade and quality--in other words, comparable or competing merchandise--
to that being advertised. Such advertising can serve a useful and 
legitimate purpose when it is made clear to the consumer that a 
comparison is being made with other merchandise and the other 
merchandise is, in fact, of essentially similar quality and obtainable 
in the area. The advertiser should, however, be reasonably certain, just 
as in the case of comparisons involving the same merchandise, that the 
price advertised as being the price of comparable merchandise does not 
exceed the price at which such merchandise is being offered by 
representative retail outlets in the area. For example, retailer Doe 
advertises Brand X pen as having ``Comparable Value $15.00''. Unless a 
reasonable number of the principal outlets in the area are offering 
Brand Y, an essentially similar pen, for that price, this advertisement 
would be deceptive. [Guide II]



Sec. 233.3  Advertising retail prices which have been established or 
suggested by manufacturers (or other nonretail distributors).

    (a) Many members of the purchasing public believe that a 
manufacturer's list price, or suggested retail price, is the price at 
which an article is generally sold. Therefore, if a reduction from this 
price is advertised, many people will believe that they are being 
offered a genuine bargain. To the extent that list or suggested retail 
prices do not in fact correspond to prices at which a substantial number 
of sales of the article in question are made, the advertisement of a 
reduction may mislead the consumer.
    (b) There are many methods by which manufacturers' suggested retail 
or list prices are advertised: Large scale (often nationwide) mass-media 
advertising by the manufacturer himself; preticketing by the 
manufacturer; direct mail advertising; distribution of promotional 
material or price lists designed for display to the public. The 
mechanics used are not of the essence. This part is concerned with any 
means employed for placing such prices before the consuming public.
    (c) There would be little problem of deception in this area if all 
products were invariably sold at the retail price set by the 
manufacturer. However, the widespread failure to observe manufacturers' 
suggested or list prices, and the advent of retail discounting on a wide 
scale, have seriously undermined the dependability of list prices as 
indicators of the exact prices at which articles are in fact generally 
sold at retail.

[[Page 176]]

Changing competitive conditions have created a more acute problem of 
deception than may have existed previously. Today, only in the rare case 
are all sales of an article at the manufacturer's suggested retail or 
list price.
    (d) But this does not mean that all list prices are fictitious and 
all offers of reductions from list, therefore, deceptive. Typically, a 
list price is a price at which articles are sold, if not everywhere, 
then at least in the principal retail outlets which do not conduct their 
business on a discount basis. It will not be deemed fictitious if it is 
the price at which substantial (that is, not isolated or insignificant) 
sales are made in the advertiser's trade area (the area in which he does 
business). Conversely, if the list price is significantly in excess of 
the highest price at which substantial sales in the trade area are made, 
there is a clear and serious danger of the consumer being misled by an 
advertised reduction from this price.
    (e) This general principle applies whether the advertiser is a 
national or regional manufacturer (or other non-retail distributor), a 
mail-order or catalog distributor who deals directly with the consuming 
public, or a local retailer. But certain differences in the 
responsibility of these various types of businessmen should be noted. A 
retailer competing in a local area has at least a general knowledge of 
the prices being charged in his area. Therefore, before advertising a 
manufacturer's list price as a basis for comparison with his own lower 
price, the retailer should ascertain whether the list price is in fact 
the price regularly charged by principal outlets in his area.
    (f) In other words, a retailer who advertises a manufacturer's or 
distributor's suggested retail price should be careful to avoid creating 
a false impression that he is offering a reduction from the price at 
which the product is generally sold in his trade area. If a number of 
the principal retail outlets in the area are regularly engaged in making 
sales at the manufacturer's suggested price, that price may be used in 
advertising by one who is selling at a lower price. If, however, the 
list price is being followed only by, for example, small suburban 
stores, house-to-house canvassers, and credit houses, accounting for 
only an insubstantial volume of sales in the area, advertising of the 
list price would be deceptive.
    (g) On the other hand, a manufacturer or other distributor who does 
business on a large regional or national scale cannot be required to 
police or investigate in detail the prevailing prices of his articles 
throughout so large a trade area. If he advertises or disseminates a 
list or preticketed price in good faith (i.e., as an honest estimate of 
the actual retail price) which does not appreciably exceed the highest 
price at which substantial sales are made in his trade area, he will not 
be chargeable with having engaged in a deceptive practice. Consider the 
following example:
    (h) Manufacturer Roe, who makes Brand X pens and sells them 
throughout the United States, advertises his pen in a national magazine 
as having a ``Suggested Retail Price $10,'' a price determined on the 
basis of a market survey. In a substantial number of representative 
communities, the principal retail outlets are selling the product at 
this price in the regular course of business and in substantial volume. 
Roe would not be considered to have advertised a fictitious ``suggested 
retail price.'' If retailer Doe does business in one of these 
communities, he would not be guilty of a deceptive practice by 
advertising, ``Brand X Pens, Manufacturer's Suggested Retail Price, $10, 
Our Price, $7.50.''
    (i) It bears repeating that the manufacturer, distributor or 
retailer must in every case act honestly and in good faith in 
advertising a list price, and not with the intention of establishing a 
basis, or creating an instrumentality, for a deceptive comparison in any 
local or other trade area. For instance, a manufacturer may not affix 
price tickets containing inflated prices as an accommodation to 
particular retailers who intend to use such prices as the basis for 
advertising fictitious price reductions. [Guide III]



Sec. 233.4  Bargain offers based upon the purchase of other merchandise.

    (a) Frequently, advertisers choose to offer bargains in the form of 
additional merchandise to be given a customer on

[[Page 177]]

the condition that he purchase a particular article at the price usually 
offered by the advertiser. The forms which such offers may take are 
numerous and varied, yet all have essentially the same purpose and 
effect. Representative of the language frequently employed in such 
offers are ``Free,'' ``Buy One--Get One Free,'' ``2-For-1 Sale,'' ``Half 
Price Sale,'' ``1[cent] Sale,'' ``50% Off,'' etc. Literally, of course, 
the seller is not offering anything ``free'' (i.e., an unconditional 
gift), or \1/2\ free, or for only 1[cent], when he makes such an offer, 
since the purchaser is required to purchase an article in order to 
receive the ``free'' or ``1[cent]'' item. It is important, therefore, 
that where such a form of offer is used, care be taken not to mislead 
the consumer.
    (b) Where the seller, in making such an offer, increases his regular 
price of the article required to be bought, or decreases the quantity 
and quality of that article, or otherwise attaches strings (other than 
the basic condition that the article be purchased in order for the 
purchaser to be entitled to the ``free'' or ``1[cent]'' additional 
merchandise) to the offer, the consumer may be deceived.
    (c) Accordingly, whenever a ``free,'' ``2-for-1,'' ``half price 
sale,'' ``1[cent] sale,'' ``50% off'' or similar type of offer is made, 
all the terms and conditions of the offer should be made clear at the 
outset. [Guide IV]



Sec. 233.5  Miscellaneous price comparisons.

    The practices covered in the provisions set forth above represent 
the most frequently employed forms of bargain advertising. However, 
there are many variations which appear from time to time and which are, 
in the main, controlled by the same general principles. For example, 
retailers should not advertise a retail price as a ``wholesale'' price. 
They should not represent that they are selling at ``factory'' prices 
when they are not selling at the prices paid by those purchasing 
directly from the manufacturer. They should not offer seconds or 
imperfect or irregular merchandise at a reduced price without disclosing 
that the higher comparative price refers to the price of the merchandise 
if perfect. They should not offer an advance sale under circumstances 
where they do not in good faith expect to increase the price at a later 
date, or make a ``limited'' offer which, in fact, is not limited. In all 
of these situations, as well as in others too numerous to mention, 
advertisers should make certain that the bargain offer is genuine and 
truthful. Doing so will serve their own interest as well as that of the 
public. [Guide V]



PART 238_GUIDES AGAINST BAIT ADVERTISING--Table of Contents



Sec.
238.0 Bait advertising defined.
238.1 Bait advertisement.
238.2 Initial offer.
238.3 Discouragement of purchase of advertised merchandise.
238.4 Switch after sale.

    Authority: Secs. 5, 6, 38 Stat. 719, as amended, 721; 15 U.S.C. 45, 
46.

    Source: 32 FR 15540, Nov. 8, 1967, unless otherwise noted.



Sec. 238.0  Bait advertising defined. \1\
---------------------------------------------------------------------------

    \1\ For the purpose of this part ``advertising'' includes any form 
of public notice however disseminated or utilized.
---------------------------------------------------------------------------

    Bait advertising is an alluring but insincere offer to sell a 
product or service which the advertiser in truth does not intend or want 
to sell. Its purpose is to switch consumers from buying the advertised 
merchandise, in order to sell something else, usually at a higher price 
or on a basis more advantageous to the advertiser. The primary aim of a 
bait advertisement is to obtain leads as to persons interested in buying 
merchandise of the type so advertised.



Sec. 238.1  Bait advertisement.

    No advertisement containing an offer to sell a product should be 
published when the offer is not a bona fide effort to sell the 
advertised product. [Guide 1]



Sec. 238.2  Initial offer.

    (a) No statement or illustration should be used in any advertisement 
which creates a false impression of the grade, quality, make, value, 
currency of model, size, color, usability, or origin of the product 
offered, or which

[[Page 178]]

may otherwise misrepresent the product in such a manner that later, on 
disclosure of the true facts, the purchaser may be switched from the 
advertised product to another.
    (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. [Guide 2]



Sec. 238.3  Discouragement of purchase of advertised merchandise.

    No act or practice should be engaged in by an advertiser to 
discourage the purchase of the advertised merchandise as part of a bait 
scheme to sell other merchandise. Among acts or practices which will be 
considered in determining if an advertisement is a bona fide offer are:
    (a) The refusal to show, demonstrate, or sell the product offered in 
accordance with the terms of the offer,
    (b) The disparagement by acts or words of the advertised product or 
the disparagement of the guarantee, credit terms, availability of 
service, repairs or parts, or in any other respect, in connection with 
it,
    (c) The failure to have available at all outlets listed in the 
advertisement a sufficient quantity of the advertised product to meet 
reasonably anticipated demands, unless the advertisement clearly and 
adequately discloses that supply is limited and/or the merchandise is 
available only at designated outlets,
    (d) The refusal to take orders for the advertised merchandise to be 
delivered within a reasonable period of time,
    (e) The showing or demonstrating of a product which is defective, 
unusable or impractical for the purpose represented or implied in the 
advertisement,
    (f) Use of a sales plan or method of compensation for salesmen or 
penalizing salesmen, designed to prevent or discourage them from selling 
the advertised product. [Guide 3]



Sec. 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 
will 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 advertised product, then switching 
the purchaser 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 
disparagement 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 preclude the existence of a bait and switch scheme. 
It has been determined that, on occasions, 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 ADVERTISING OF WARRANTIES AND GUARANTEES--
Table of Contents



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 
          ``satisfaction guarantees'' or similar representations.
239.4 ``Lifetime'' and similar representations.
239.5 Performance of warranties or guarantees.

    Authority: Secs. 5, 6, 38 Stat. 719 as amended, 721; 15 U.S.C. 45, 
46.

    Source: 50 FR 18470, May 1, 1985, unless otherwise noted.



Sec. 239.1  Purpose and scope of the guides.

    The Guides for the Advertising of Warranties and Guarantees are 
intended to help advertisers avoid unfair or deceptive practices in the 
advertising of warranties or guarantees. The Guides are based upon 
Commission

[[Page 179]]

cases, and reflect changes in circumstances brought about by the 
Magnuson-Moss Warranty Act (15 U.S.C. 2301 et seq.) and the FTC Rules 
promulgated pursuant to the Act (16 CFR parts 701 and 702). The Guides 
do not purport to anticipate all possible unfair or deceptive acts or 
practices in the advertising of warranties or guarantees and the Guides 
should not be interpreted to limit the Commission's authority to proceed 
against such acts or practices under section 5 of the Federal Trade 
Commission Act. The Commission may bring an action under section 5 
against any advertiser who misrepresents the product or service offered, 
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 sections of the 
Guides apply to the advertising of any warranty or guarantee.

[50 FR 18470, May 1, 1985; 50 FR 20899, May 21, 1985]



Sec. 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 advertisement should disclose, 
with such clarity and prominence as will be noticed and understood by 
prospective purchasers, that prior to sale, at the place where the 
product is sold, prospective purchasers can see the written warranty or 
guarantee for complete details of the warranty coverage. \1\
---------------------------------------------------------------------------

    \1\ 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 portion, or, if in the video portion, it 
remains on the screen for at least five seconds.

    Examples: The following are examples of disclosures sufficient to 
convey to prospective purchasers that, prior to sale, at the place where 
the product is sold, they can see the written warranty or guarantee for 
complete 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 warranty 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 business. Read the details 
and compare wherever our fine products are sold.''
    D. ``See our full 2 year warranty at the store nearest you.''
    E. ``Don't take our word--take our warranty. See our limited 2 year 
warranty where you shop.''

    (b) If an advertisement in any catalogue, or in any other 
solicitation \2\ for mail order sales or for telephone order sales 
mentions a warranty or guarantee that is offered on the advertised 
product, the advertisement should disclose, with such clarity and 
prominence as will be noticed and understood by prospective purchasers, 
that prospective purchasers can obtain complete details of the written 
warranty or guarantee free from the seller upon specific written request 
or from the catalogue or other solicitation (whichever is applicable).
---------------------------------------------------------------------------

    \2\ See note 1.

    Examples: 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 placing a mail or telephone order. These 
examples are illustrative, not exhaustive. In each example, the portion 
of the advertisement 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 catalogue.''

[[Page 180]]

    C. ``Write to us for a free copy of our full warranty. You'll be 
impressed how we stand behind our product.''

[50 FR 20899, May 21, 1985]



Sec. 239.3  ``Satisfaction Guarantees'' and similar representations 
in advertising; disclosure in advertising that mentions ``satisfaction
guarantees'' or similar representations.

    (a) A seller or manufacturer should use the terms ``Satisfaction 
Guarantee,'' ``Money Back Guarantee,'' ``Free Trial Offer,'' or similar 
representations in advertising only if the seller or manufacturer, as 
the case may be, refunds the full purchase price of the advertised 
product at the purchaser's request.
    (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 ``Satisfaction 
Guarantee'' or similar representation.

    Examples: These examples are for both print and broadcast 
advertising. These examples are illustrative, not exhaustive.
    Example A: (In an advertisement mentioning a satisfaction guarantee 
that is conditioned upon return of the unused portion within 30 days) 
``We guarantee your satisfaction. If not completely satisfied with Acme 
Spot Remover, return the unused portion within 30 days for a full 
refund.''
    Example B: (In an advertisement mentioning a money back guarantee 
that is conditioned upon return of the product in its original 
packaging) ``Money Back Guarantee! Just return the ABC watch in its 
original package and ABC will fully refund your money.''



Sec. 239.4  ``Lifetime'' and similar representations.

    If an advertisement uses ``lifetime,'' ``life,'' or similar 
representations to describe the duration of a warranty or guarantee, 
then the advertisement should disclose, with such clarity and prominence 
as will be noticed and understood by prospective purchasers, the life to 
which the representation refers.

    Examples: These examples are for both print and broadcast 
advertising. These examples are illustrative, not exhaustive.
    Example A: (In an advertisement mentioning 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 mentioning 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!''



Sec. 239.5  Performance of warranties or guarantees.

    A seller or manufacturer should advertise that a product is 
warranted or guaranteed only if the seller or manufacturer, as the case 
may be, promptly and fully performs its obligations under the warranty 
or guarantee.



PART 240_GUIDES FOR ADVERTISING ALLOWANCES AND OTHER MERCHANDISING 
PAYMENTS AND SERVICES--Table of Contents



Sec.
240.1 Purpose of the Guides.
240.2 Applicability of the law.
240.3 Definition of seller.
240.4 Definition of customer.
240.5 Definition of competing customers.
240.6 Interstate commerce.
240.7 Services or facilities.
240.8 Need for a plan.
240.9 Proportionally equal terms.
240.10 Availability to all competing customers.
240.11 Wholesaler or third party performance of seller's obligations.
240.12 Checking customer's use of payments.
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: 79 FR 58252, Sept. 29, 2014, unless otherwise noted.



Sec. 240.1  Purpose of the Guides.

    The purpose of these Guides is to provide 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

[[Page 181]]

Guides are consistent with the case law, the Commission has sought to 
provide guidance in some areas where no definitive guidance is provided 
by the case law. The Guides are what their name implies--guidelines for 
compliance with the law. They do not have the force of law. They do not 
confer any rights on any person and do not operate to bind the FTC or 
the public.



Sec. 240.2  Applicability of the law.

    (a) The substantive provisions of section 2(d) and (e) apply only 
under certain circumstances. Section 2(d) applies 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 competition with one or more of the 
seller's other customers also engaged in the resale 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 competition with one or more of the 
seller's other customers also engaged in the resale 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 Sec. 240.13 of these 
Guides.



Sec. 240.3  Definition of seller.

    Seller includes any person (manufacturer, wholesaler, distributor, 
etc.) who sells products for resale, with or without further processing. 
For example, selling candy to a retailer is a sale for resale without 
processing. Selling corn syrup to a candy manufacturer is a sale for 
resale with processing.



Sec. 240.4  Definition of customer.

    A customer is any person who buys for resale directly from the 
seller, or the seller's agent or broker. In addition, a ``customer'' is 
any buyer of the seller's product for resale who purchases from or 
through a wholesaler or other intermediate reseller. The word 
``customer'' which is used in section 2(d) of the Act includes 
``purchaser'' which is used in section 2(e).

    Note: There may be some exceptions to this general definition of 
``customer.'' For example, the purchaser of distress merchandise would 
not be considered a ``customer'' simply on the basis of such purchase. 
Similarly, a retailer purchasing solely from other retailers, or making 
sporadic purchases from the seller or one that does not regularly sell 
the seller's product, or that is a type of retail outlet not usually 
selling such products (e.g., a hardware store stocking a few isolated 
food items) will not be considered a ``customer'' of the seller unless 
the seller has been put on notice that such retailer is selling its 
product.

    Example 1: A manufacturer sells to some retailers directly and to 
others through wholesalers. Retailer A purchases the manufacturer's 
product from a wholesaler and resells some of it to Retailer B. Retailer 
A is a customer of the manufacturer. Retailer B is not a customer unless 
the fact that it purchases the manufacturer's product is known to the 
manufacturer.
    Example 2: A manufacturer sells directly to some independent 
retailers, to the headquarters of chains and of retailer-owned 
cooperatives, and to wholesalers. The manufacturer offers promotional 
services or allowances for promotional activity to be performed at the 
retail level. With respect to such services and allowances, the direct-
buying independent retailers, the headquarters of the chains and 
retailer-owned cooperatives, and the wholesaler's independent retailer 
customers are customers of the manufacturer. Individual retail outlets 
of the chains and the members of the retailer-owned cooperatives are not 
customers of the manufacturer.
    Example 3: A seller offers to pay wholesalers to advertise the 
seller's product in the wholesalers' order books or in the wholesalers' 
price lists directed to retailers purchasing from the wholesalers. The 
wholesalers and retailer-owned cooperative headquarters and headquarters 
of other bona-fide buying groups are customers. Retailers are not 
customers for purposes of this promotion.

[[Page 182]]



Sec. 240.5  Definition of competing customers.

    Competing customers are all businesses that compete in the resale of 
the seller's products of like grade and quality at the same functional 
level of distribution regardless of whether they purchase directly from 
the seller or through some intermediary.

    Example 1: Manufacturer A, located in Wisconsin and distributing 
shoes nationally, sells shoes to three competing retailers that sell 
only in the Roanoke, Virginia area. Manufacturer A has no other 
customers selling in Roanoke or its vicinity. If Manufacturer A offers 
its promotion to one Roanoke customer, it should include all three, but 
it can limit the promotion to them. The trade area should be drawn to 
include retailers who compete.
    Example 2: A national seller has direct-buying retailing customers 
reselling exclusively within the Baltimore area, and other customers 
within the area purchasing through wholesalers. The seller may lawfully 
engage in a promotional campaign confined to the Baltimore area, 
provided that it affords all of its retailing customers within the area 
the opportunity to participate, including those that purchase through 
wholesalers.
    Example 3: B manufactures and sells a brand of laundry detergent for 
home use. In one metropolitan area, B's detergent is sold by a grocery 
store and a discount department store. If these stores compete with each 
other, any allowance, service or facility that B makes available to the 
grocery store should also be made available on proportionally equal 
terms to the discount department store.



Sec. 240.6  Interstate commerce.

    The term ``interstate commerce'' has not been precisely defined in 
the statute. In general, if there is any part of a business which is not 
wholly within one state (for example, sales or deliveries of products, 
their subsequent distribution or purchase, or delivery of supplies or 
raw materials), the business may be subject to sections 2(d) and 2(e) of 
the Act. (The commerce standard for sections 2(d) and (e) is at least as 
inclusive as the commerce standard for section 2(a).) Sales or 
promotional offers within the District of Columbia and most United 
States possessions are also covered by the Act.



Sec. 240.7  Services or facilities.

    The terms ``services'' and ``facilities'' have not been exactly 
defined by the statute or in decisions. One requirement, however, is 
that the services or facilities be used primarily to promote the resale 
of the seller's product by the customer. Services or facilities that 
relate primarily to the original sale are covered by section 2(a). The 
following list provides some examples--the list is not exhaustive--of 
promotional services and facilities covered by sections 2(d) and (e):

Cooperative advertising;
Handbills;
Demonstrators and demonstrations;
Catalogues;
Cabinets;
Displays;
Prizes or merchandise for conducting promotional contests;
Special packaging, or package sizes; and
Online advertising.

    Example 1: A seller offers a supermarket chain an allowance of $500 
per store to stock a new packaged food product and find space for it on 
the supermarket's shelves and a further allowance of $300 per store for 
placement of the new product on prime display space, an aisle endcap. 
The $500 allowance relates primarily to the initial sale of the product 
to the supermarket chain, and therefore should be assessed under section 
2(a) of the Act. In contrast, the $300 allowance for endcap display 
relates primarily to the resale of the product by the supermarket chain, 
and therefore should be assessed under section 2(d).
    Example 2: During the Halloween season, a seller of multi-packs of 
individually wrapped candy bars offers to provide those multi-packs to 
retailers in Halloween-themed packaging. The primary purpose of the 
special packaging is to promote customers' resale of the candy bars. 
Therefore, the special packaging is a promotional service or facility 
covered by section 2(d) or 2(e) of the Act.
    Example 3: A seller of liquid laundry detergent ordinarily packages 
its detergent in containers having a circular footprint. A customer asks 
the seller to furnish the detergent to it in special packaging having a 
square footprint, so that the customer can more efficiently warehouse 
and transship the detergent. Because the purpose of the special 
packaging is primarily to promote the original sale of the detergent to 
the customer and not its resale by the customer, the special packaging 
is not a promotional service or facility covered by section 2(d) or 2(e) 
of the Act.



Sec. 240.8  Need for a plan.

    A seller who makes payments or furnishes services that come under 
the

[[Page 183]]

Act should do so according to a plan. If there are many competing 
customers to be considered or if the plan is complex, the seller would 
be well advised to put the plan in writing. What the plan should include 
is described in more detail in the remainder of these Guides. Briefly, 
the plan should make payments or services functionally available to all 
competing customers on proportionally equal terms. (See Sec. 240.9 of 
this part.) Alternative terms and conditions should be made available to 
customers who cannot, in a practical sense, take advantage of any of the 
plan's offerings. The seller should inform competing customers of the 
plans available to them, in time for them to decide whether to 
participate. (See Sec. 240.10 of this part.)



Sec. 240.9  Proportionally equal terms.

    (a) Promotional services and allowances should be made available to 
all competing customers on proportionally equal terms. No single way to 
do this is prescribed by law. Any method that treats competing customers 
on proportionally equal terms may be used. Generally, this can be done 
most easily by basing the payments made or the services furnished on the 
dollar volume or on the quantity of the product purchased during a 
specified period. However, other methods that result in proportionally 
equal allowances and services being offered to all competing customers 
are acceptable.
    (b) When a seller offers more than one type of service, or payments 
for more than one type of service, all the services or payments should 
be offered on proportionally equal terms. The seller may do this by 
offering all the payments or services at the same rate per unit or 
amount purchased. Thus, a seller might offer promotional allowances of 
up to 12 cents a case purchased for expenditures on either newspaper or 
Internet advertising or handbills.

    Example 1: A seller may offer to pay a specified part (e.g., 50 
percent) of the cost of local advertising up to an amount equal to a 
specified percentage (e.g., 5 percent) of the dollar volume of purchases 
during a specified period of time.
    Example 2: A seller may place in reserve for each customer a 
specified amount of money for each unit purchased, and use it to 
reimburse these customers for the cost of advertising the seller's 
product.
    Example 3: A seller should not provide an allowance or service on a 
basis that has rates graduated with the amount of goods purchased, as, 
for instance, 1 percent of the first $1,000 purchased per month, 2 
percent of the second $1,000 per month, and 3 percent of all over that.
    Example 4: A seller should not identify or feature one or a few 
customers in its own advertising without making the same, or if 
impracticable, alternative services available on proportionally equal 
terms to customers competing with the identified customer or customers.
    Example 5: A seller who makes employees available or arranges with a 
third party to furnish personnel for purposes of performing work for a 
customer should make the same offer available on proportionally equal 
terms to all other competing customers or offer useable and suitable 
services or allowances on proportionally equal terms to competing 
customers for whom such services are not useable and suitable.
    Example 6: A seller should not offer to pay a straight line rate for 
advertising if such payment results in a discrimination between 
competing customers; e.g., the offer of $1.00 per line for advertising 
in a newspaper that charges competing customers different amounts for 
the same advertising space. The straight line rate is an acceptable 
method for allocating advertising funds if the seller offers small 
retailers that pay more than the lowest newspaper rate an alternative 
that enables them to obtain the same percentage of their advertising 
cost as large retailers. If the $1.00 per line allowance is based on 50 
percent of the newspaper's lowest contract rate of $2.00 per line, the 
seller should offer to pay 50 percent of the newspaper advertising cost 
of smaller retailers that establish, by invoice or otherwise, that they 
paid more than that contract rate.
    Example 7: A seller offers each customer promotional allowances at 
the rate of one dollar for each unit of its product purchased during a 
defined promotional period. If Buyer A purchases 100 units, Buyer B 50 
units, and Buyer C 25 units, the seller maintains proportional equality 
by allowing $100 to Buyer A, $50 to Buyer B, and $25 to Buyer C, to be 
used for the Buyers' expenditures on promotion.



Sec. 240.10  Availability to all competing customers.

    (a) Functional availability. (1) The seller should take reasonable 
steps to ensure that services and facilities are useable in a practical 
sense by all competing customers. This may require offering alternative 
terms and conditions under which customers can participate.

[[Page 184]]

When a seller provides alternatives in order to meet the availability 
requirement, it should take reasonable steps to ensure that the 
alternatives are proportionally equal, and the seller should inform 
competing customers of the various alternative plans.
    (2) The seller should insure that promotional plans or alternatives 
offered to retailers do not bar any competing retailers from 
participation, whether they purchase directly from the seller or through 
a wholesaler or other intermediary.
    (3) When a seller offers to competing customers alternative services 
or allowances that are proportionally equal and at least one such offer 
is useable in a practical sense by all competing customers, and refrains 
from taking steps to prevent customers from participating, it has 
satisfied its obligation to make services and allowances ``functionally 
available'' to all customers. Therefore, the failure of any customer to 
participate in the program does not place the seller in violation of the 
Act.

    Example 1: A manufacturer offers a plan for cooperative advertising 
on radio, TV, or in newspapers of general circulation. Because the 
purchases of some of the manufacturer's customers are too small this 
offer is not useable in a practical sense by them. The manufacturer 
should offer them alternative(s) on proportionally equal terms that are 
useable in a practical sense by them. In addition, some competing 
customers are online retailers that cannot make practical use of radio, 
TV, or newspaper advertising. The manufacturer should offer them 
proportionally equal alternatives, such as online advertising, that are 
useable by them in a practical sense.
    Example 2: A seller furnishes demonstrators to large department 
store customers. The seller should provide alternatives useable in a 
practical sense on proportionally equal terms to those competing 
customers who cannot use demonstrators. The alternatives may be services 
useable in a practical sense that are furnished by the seller, or 
payments by the seller to customers for their advertising or promotion 
of the seller's product.
    Example 3: A seller offers to pay 75 percent of the cost of 
advertising in daily newspapers, which are the regular advertising media 
of the seller's large or chain store customers, but a lesser amount, 
such as only 50 percent of the cost, or even nothing at all, for 
advertising in semi-weekly, weekly, or other newspapers or media, such 
as the Internet, that may be used by small retail customers. Such a plan 
discriminates against particular customers or classes of customers. To 
avoid that discrimination, the seller in offering to pay allowances for 
newspaper advertising should offer to pay the same percent of the cost 
of newspaper advertising for all competing customers in a newspaper of 
the customer's choice, or at least in those newspapers that meet the 
requirements for second class mail privileges. While a small customer 
may be offered, as an alternative to advertising in daily newspapers, 
allowances for other media and services such as envelope stuffers, 
handbills, window banners, Web sites, and the like, the small customer 
should have the choice to use its promotional allowance for advertising 
similar to that available to the larger customers, if it can practicably 
do so.
    Example 4: A seller offers short term displays of varying sizes, 
including some which are useable by each of its competing customers in a 
practical business sense. The seller requires uniform, reasonable 
certification of performance by each customer. Because they are 
reluctant to process the required paper work, some customers do not 
participate. This fact does not place the seller in violation of the 
functional availability requirement and it is under no obligation to 
provide additional alternatives.

    (b) Notice of available services and allowance.: The seller has an 
obligation to take steps reasonably designed to provide notice to 
competing customers of the availability of promotional services and 
allowances. Such notification should include enough details of the offer 
in time to enable customers to make an informed judgment whether to 
participate. When some competing customers do not purchase directly from 
the seller, the seller must take steps reasonably designed to provide 
notice to such indirect customers. Acceptable notification may vary. The 
following is a non-exhaustive list of acceptable methods of 
notification:
    (1) By providing direct notice to customers;
    (2) When a promotion consists of providing retailers with display 
materials, by including the materials within the product shipping 
container;
    (3) By including brochures describing the details of the offer in 
shipping containers;
    (4) By providing information on shipping containers or product 
packages of the availability and essential features of an offer, 
identifying a specific source for further information;
    (5) By placing at reasonable intervals in trade publications of 
general and

[[Page 185]]

widespread distribution announcements of the availability and essential 
features of promotional offers, identifying a specific source for 
further information; and
    (6) If the competing customers belong to an identifiable group on a 
specific mailing list, by providing relevant information of promotional 
offers to customers on that list. For example, if a product is sold 
lawfully only under Government license (alcoholic beverages, etc.), the 
seller may inform only its customers holding licenses.
    (c) A seller may contract with intermediaries or other third parties 
to provide notice. See Sec. 240.11.

    Example 1: A seller has a plan for the retail promotion of its 
product in Philadelphia. Some of its retailing customers purchase 
directly and it offers the plan to them. Other Philadelphia retailers 
purchase the seller's product through wholesalers. The seller may use 
the wholesalers to reach the retailing customers that buy through them, 
either by having the wholesalers notify these retailers, or by using the 
wholesalers' customer lists for direct notification by the seller.
    Example 2: A seller that sells on a direct basis to some retailers 
in an area, and to other retailers in the area through wholesalers, has 
a plan for the promotion of its product at the retail level. If the 
seller directly notifies competing direct purchasing retailers, and 
competing retailers purchasing through the wholesalers, the seller is 
not required to notify its wholesalers.
    Example 3: A seller regularly promotes its product at the retail 
level and during the year has various special promotional offers. The 
seller's competing customers include large direct-purchasing retailers 
and smaller retailers that purchase through wholesalers. The promotions 
offered can best be used by the smaller retailers if the funds to which 
they are entitled are pooled and used by the wholesalers on their behalf 
(newspaper advertisements, for example). If retailers purchasing through 
a wholesaler designate that wholesaler as their agent for receiving 
notice of, collecting, and using promotional allowances for them, the 
seller may assume that notice of, and payment under, a promotional plan 
to such wholesaler constitutes notice and payment to the retailer. The 
seller must have a reasonable basis for concluding that the retailers 
have designated the wholesaler as their agent.



Sec. 240.11  Wholesaler or third party performance of seller's
obligations.

    A seller may contract with intermediaries, such as wholesalers, 
distributors, or other third parties, to perform all or part of the 
seller's obligations under sections 2(d) and (e). The use of 
intermediaries does not relieve a seller of its responsibility to comply 
with the law. Therefore, in contracting with an intermediary, a seller 
should ensure that its obligations under the law are in fact fulfilled.



Sec. 240.12  Checking customer's use of payments.

    The seller should take reasonable precautions to see that the 
services the seller is paying for are furnished and that the seller is 
not overpaying for them. The customer should expend the allowance solely 
for the purpose for which it was given. If the seller knows or should 
know that what the seller is paying for or furnishing is not being 
properly used by some customers, the improper payments or services 
should be discontinued.



Sec. 240.13  Customer's and third party liability.

    (a) Customer's liability. Sections 2(d) and (e) apply to sellers and 
not to customers. However, where there is likely injury to competition, 
the Commission may proceed under section 5 of the Federal Trade 
Commission Act against a customer who knows, or should know, that it is 
receiving a discriminatory price through services or allowances not made 
available on proportionally equal terms to its competitors engaged in 
the resale of a seller's product. Liability for knowingly receiving such 
a discrimination may result whether the discrimination takes place 
directly through payments or services, or indirectly through deductions 
from purchase invoices or other similar means. In addition, the giving 
or knowing inducement or receipt of proportionally unequal promotional 
allowances may be challenged under sections 2(a) and 2(f) of the Act, 
respectively, where no promotional services are performed in return for 
the payments, or where the payments are not reasonably related to the 
customer's cost of providing the promotional services. See, e.g., 
American Booksellers Ass'n v. Barnes & Noble, 135 F. Supp. 2d 1031 (N.D. 
Cal. 2001); but see United Magazine Co. v. Murdoch Magazines Distrib., 
Inc. 2001

[[Page 186]]

U.S. Dist. Lexis 20878 (S.D.N.Y. 2001). Sections 2(a) and 2(f) of the 
Act may be enforced by disfavored customers, among others.

    Example 1: A customer should not induce or receive advertising 
allowances for special promotion of the seller's product in connection 
with the customer's anniversary sale or new store opening when the 
customer knows or should know that such allowances, or suitable 
alternatives, are not available on proportionally equal terms to all 
other customers competing with it in the distribution of the seller's 
product.
    Example 2: Frequently the employees of sellers or third parties, 
such as brokers, perform in-store services for their grocery retailer 
customers, such as stocking of shelves, building of displays and 
checking or rotating inventory, etc. A customer operating a retail 
grocery business should not induce or receive such services when the 
customer knows or should know that such services (or usable and suitable 
alternative services) are not available on proportionally equal terms to 
all other customers competing with it in the distribution of the 
seller's product.
    Example 3: Where a customer has entered into a contract, 
understanding, or arrangement for the purchase of advertising with a 
newspaper or other advertising medium, such as the Internet, that 
provides for a deferred rebate or other reduction in the price of the 
advertising, the customer should advise any seller from whom 
reimbursement for the advertising is claimed that the claimed rate of 
reimbursement is subject to a deferred rebate or other reduction in 
price. In the event that any rebate or adjustment in the price is 
received, the customer should refund to the seller the amount of any 
excess payment or allowance.
    Example 4: A customer should not induce or receive an allowance in 
excess of that offered in the seller's advertising plan by billing the 
seller at ``vendor rates'' or for any other amount in excess of that 
authorized in the seller's promotional program.

    (b) Third party liability. Third parties, such as advertising media, 
may violate section 5 of the Federal Trade Commission Act through double 
or fictitious rates or billing. An advertising medium, such as the 
Internet, a newspaper, broadcast station, or printer of catalogues, that 
publishes a rate schedule containing fictitious rates (or rates that are 
not reasonably expected to be applicable to a representative number of 
advertisers), may violate section 5 if the customer uses such deceptive 
schedule or invoice for a claim for an advertising allowance, payment or 
credit greater than that to which it would be entitled under the 
seller's promotional offering. Similarly, an advertising medium that 
furnishes a customer with an invoice that does not reflect the 
customer's actual net advertising cost may violate section 5 if the 
customer uses the invoice to obtain larger payments than it is entitled 
to receive.

    Example 1: A newspaper has a ``national'' rate and a lower ``local'' 
rate. A retailer places an advertisement with the newspaper at the local 
rate for a seller's product for which the retailer will seek 
reimbursement under the seller's cooperative advertising plan. The 
newspaper should not send the retailer two bills, one at the national 
rate and another at the local rate actually charged.
    Example 2: A newspaper has several published rates. A large retailer 
has in the past earned the lowest rate available. The newspaper should 
not submit invoices to the retailer showing a high rate by agreement 
between them unless the invoice discloses that the retailer may receive 
a rebate and states the amount (or approximate amount) of the rebate, if 
known, and if not known, the amount of rebate the retailer could 
reasonably anticipate.
    Example 3: A radio station has a flat rate for spot announcements, 
subject to volume discounts. A retailer buys enough spots to qualify for 
the discounts. The station should not submit an invoice to the retailer 
that does not show either the actual net cost or the discount rate.
    Example 4: An advertising agent buys a large volume of newspaper 
advertising space at a low, unpublished negotiated rate. Retailers then 
buy the space from the agent at a rate lower than they could buy this 
space directly from the newspaper. The agent should not furnish the 
retailers invoices showing a rate higher than the retailers actually 
paid for the space.



Sec. 240.14  Meeting competition.

    A seller charged with discrimination in violation of sections 2(d) 
and (e) may defend its actions by showing that particular payments were 
made or services furnished in good faith to meet equally high payments 
or equivalent services offered or supplied by a competing seller. This 
defense is available with respect to payments or services offered on an 
area-wide basis, to those offered to new as well as old customers, and 
regardless of whether the discrimination has been caused by a decrease 
or an increase in the payments or services offered. A seller must 
reasonably believe

[[Page 187]]

that its offers are necessary to meet a competitor's offer.



Sec. 240.15  Cost justification.

    It is no defense to a charge of unlawful discrimination in the 
payment of an allowance or the furnishing of a service for a seller to 
show that such payment or service could be justified through savings in 
the cost of manufacture, sale or delivery.



PART 251_GUIDE CONCERNING USE OF THE WORD ``FREE'' AND SIMILAR 
REPRESENTATIONS--Table of Contents





Sec. 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[cent] Sale'', etc. (Related representations that 
raise many of the same questions include ``---- 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,

[[Page 188]]

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, 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 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]



PART 254_GUIDES FOR PRIVATE VOCATIONAL AND DISTANCE EDUCATION 
SCHOOLS--Table of Contents



Sec.
254.0 Scope and application.
254.1 Definitions.
254.2 Deceptive trade or business names.
254.3 Misrepresentation of extent or nature of accreditation or 
          approval.
254.4 Misrepresentation of facilities, services, qualifications of 
          staff, status, and employment prospects for students after 
          training.

[[Page 189]]

254.5 Misrepresentations of enrollment qualifications or limitations.
254.6 Deceptive use of diplomas, degrees, or certificates.
254.7 Deceptive sales practices.

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



Sec. 254.0  Scope and application.

    (a) The Guides in this part apply to persons, firms, corporations, 
or organizations engaged in the operation of privately owned schools 
that offer resident or distance courses, training, or instruction 
purporting to prepare or qualify individuals for employment in any 
occupation or trade, or in work requiring mechanical, technical, 
artistic, business, or clerical skills, or that is for the purpose of 
enabling a person to improve his appearance, social aptitude, 
personality, or other attributes. These Guides do not apply to resident 
primary or secondary schools or institutions of higher education 
offering at least a 2-year program of accredited college level studies 
generally acceptable for credit toward a bachelor's degree.
    (b) These Guides represent administrative interpretations of laws 
administered by the Federal Trade Commission for the guidance of the 
public in conducting its affairs in conformity with legal requirements. 
These Guides specifically address the application of section 5 of the 
FTC Act (15 U.S.C. 45) to the advertising, promotion, marketing, and 
sale of, and the recruitment of students for, courses or programs of 
instruction offered by private vocational or distance education schools. 
The Guides provide the basis for voluntary compliance with the law by 
members of the industry. Practices inconsistent with these Guides may 
result in corrective action by the Commission under section 5 of the FTC 
Act if, after investigation, the Commission has reason to believe that 
the practices fall within the scope of conduct declared unlawful by the 
statute.

[63 FR 42572, Aug. 10, 1998, as amended at 78 FR 68989, Nov. 18, 2013]



Sec. 254.1  Definitions.

    (a) Accredited. A school or program of instruction that has been 
evaluated and found to meet established criteria by an accrediting 
agency or association recognized for such purposes by the U.S. 
Department of Education.
    (b) Approved. A school or program of instruction that has been 
recognized by a State or Federal agency as meeting educational standards 
or other related qualifications as prescribed by that agency for the 
school or program of instruction to which the term is applied. The term 
is not and should not be used interchangeably with ``Accredited.'' The 
term ``Approved'' is not justified by the mere grant of a corporate 
charter to operate or license to do business as a school and should not 
be used unless the represented ``approval'' has been affirmatively 
required or authorized by State or Federal law.
    (c) Industry member. Industry Members are the persons, firms, 
corporations, or organizations covered by these Guides, as explained in 
Sec. 254.0(a).

[78 FR 68990, Nov. 19, 2013]



Sec. 254.2  Deceptive trade or business names.

    (a) It is deceptive for an Industry Member to misrepresent, directly 
or indirectly, expressly or by implication, the nature of the school, 
its Accreditation, programs of instruction, methods of teaching, or any 
other material fact through the use of any trade or business name, 
label, insignia, or designation, or in any other manner.
    (b) It is deceptive for an Industry Member to deceptively conceal in 
any way the fact that it is a school or to misrepresent, directly or 
indirectly, expressly or by implication, through the use of a trade or 
business name or in any other manner that:
    (1) It is a part of or connected with a branch, bureau, or agency of 
the U.S. Government, including, but not limited to, the U.S. Department 
of Education, or of any State, or civil service commission; or
    (2) It is an employment agency or an employment agent or authorized 
training facility for any industry or business.

[78 FR 68990, Nov. 19, 2013]

[[Page 190]]



Sec. 254.3  Misrepresentation of extent or nature of accreditation
or approval.

    (a) It is deceptive for an Industry Member to misrepresent, directly 
or indirectly, expressly or by implication, the nature, extent, or 
purpose of any Approval by a State or Federal agency or Accreditation by 
an accrediting agency or association. For example, an Industry Member 
should not:
    (1) Represent, without qualification, that its school is Accredited 
unless all courses and programs of instruction have been Accredited by 
an accrediting agency recognized by the U.S. Department of Education. If 
an Accredited school offers courses or programs of instruction that are 
not Accredited, all advertisements or promotional materials pertaining 
to those courses or programs, and making reference to the Accreditation 
of the school, should clearly and conspicuously disclose that those 
particular courses or programs are not Accredited.
    (2) Represent that its school or program of instruction is Approved, 
unless the nature, extent, and purpose of that Approval are disclosed.
    (3) Misrepresent the extent to which a student successfully 
completing a course or program of instruction will be able to transfer 
any credits the student earns to any other postsecondary institution.
    (b) It is deceptive for an Industry Member to misrepresent, directly 
or indirectly, expressly or by implication, that a school or program of 
instruction has been Approved by a particular industry, or that 
successful completion of a course or program of instruction qualifies 
the student for admission to a labor union or similar organization or 
for receiving a State or Federal license to perform certain functions.
    (c) It is deceptive for an Industry Member to misrepresent, directly 
or indirectly, expressly or by implication, that its courses or programs 
of instruction are recommended by vocational counselors, high schools, 
colleges, educational organizations, employment agencies, or members of 
a particular industry, or that it has been the subject of unsolicited 
testimonials or endorsements from former students. It is deceptive for 
an Industry Member to use testimonials or endorsements that do not 
accurately reflect current practices of the school or current conditions 
or employment opportunities in the industry or occupation for which 
students are being trained.

    Note to paragraph (c):
    The Commission's Guides Concerning Use of Endorsements and 
Testimonials in Advertising (part 255 of this chapter) provide further 
guidance in this area.

    (d) It is deceptive for an Industry Member to misrepresent, directly 
or indirectly, expressly or by implication, that its courses or programs 
of instruction fulfill a requirement that must be completed prior to 
taking a licensing examination.

[78 FR 68990, Nov. 18, 2013]



Sec. 254.4  Misrepresentation of facilities, services, qualifications
of staff, status, and employment prospects for students after training.

    (a) It is deceptive for an Industry Member to misrepresent, directly 
or indirectly, expressly or by implication, in advertising, promotional 
materials, recruitment sessions, or in any other manner, the size, 
location, services, facilities, curriculum, books and materials, or 
equipment of its school or the number or educational qualifications of 
its faculty and other personnel. For example, an Industry Member should 
not:
    (1) Misrepresent the qualifications, credentials, experience, or 
educational background of its instructors, sales representatives, or 
other employees.
    (2) Misrepresent, through statements or pictures, or in any other 
manner, the nature or efficacy of its courses, training devices, 
methods, or equipment.
    (3) Misrepresent the availability of employment while the student is 
undergoing instruction or the role of the school in providing or 
arranging for such employment.
    (4) Misrepresent the availability, amount, or nature of any 
financial assistance available to students, including any Federal 
student financial assistance. If the cost of training is financed in 
whole or in part by loans, students should be informed that loans must 
be repaid whether or not they are successful in completing the program 
and obtaining employment.

[[Page 191]]

    (5) Misrepresent that a private entity providing any financial 
assistance to the students is part of the Federal government or that 
loans from the private entity have the same interest rate or repayment 
terms as loans received from the U.S. Department of Education.
    (6) Misrepresent the nature of any relationship between the school 
or its personnel and any government agency, or that students of the 
school will receive preferred consideration for employment with any 
government agency.
    (7) Misrepresent that certain individuals or classes of individuals 
are members of its faculty or advisory board, have prepared 
instructional materials, or are otherwise affiliated with the school.
    (8) Misrepresent the nature and extent of any personal instruction, 
guidance, assistance, or other service, including placement assistance 
and assistance overcoming language barriers or learning disabilities, it 
will provide students either during or after completion of a course.
    (9) Misrepresent the extent to which a prospective student will 
receive credit for courses or a program of instruction already completed 
at other postsecondary institutions.
    (10) Misrepresent the percentage of students who withdraw from a 
course or program of instruction, or the percentage of students who 
complete or graduate from a course or program of instruction.
    (11) Misrepresent security policies or crime statistics that the 
school must maintain.
    (b) It is deceptive for an Industry Member to misrepresent, directly 
or indirectly, expressly or by implication, that it is a nonprofit 
organization or that it is affiliated or otherwise connected with any 
public institution or private religious or charitable organization.
    (c) It is deceptive for an Industry Member that conducts its 
instruction by correspondence, or other form of distance education, to 
fail to clearly and conspicuously disclose that fact in all promotional 
materials.
    (d) It is deceptive for an Industry Member to misrepresent, directly 
or indirectly, expressly or by implication, that a course or program of 
instruction has been recently revised or instructional equipment is up-
to-date, or misrepresent its ability to keep a course or program of 
instruction current and up-to-date.
    (e) It is deceptive for an Industry Member, in promoting any course 
or program of instruction in its advertising, promotional materials, or 
in any other manner, to misrepresent, directly or indirectly, expressly 
or by implication, whether through the use of text, images, 
endorsements, or by other means, the availability of employment after 
graduation from a school or program of instruction, the specific type of 
employment available to a student after graduation from a school or 
program of instruction, the success that the Industry Member's graduates 
have realized in obtaining such employment, including the percentage of 
graduates who have received employment, or the salary or salary range 
that the Industry Member's graduates have received, or can be expected 
to receive, in such employment.

    Note to paragraph (e):
    The Commission's Guides Concerning Use of Endorsements and 
Testimonials in Advertising (part 255 of this chapter) provide further 
guidance in this area.

[63 FR 42573, Aug. 10, 1998, as amended at 63 FR 72350, Dec. 31, 1998; 
78 FR 68990, Nov. 18, 2013]



Sec. 254.5  Misrepresentations of enrollment qualifications 
or limitations.

    (a) It is deceptive for an Industry Member to misrepresent, directly 
or indirectly, expressly or by implication, the nature or extent of any 
prerequisites or qualifications for enrollment in a school or program of 
instruction.
    (b) It is deceptive for an Industry Member to misrepresent, directly 
or indirectly, expressly or by implication, that the lack of a high 
school education or prior training or experience is not an impediment to 
successful completion of a course or program of instruction or obtaining 
employment in the field for which the course or program of instruction 
provides training.
    (c) It is deceptive for an Industry Member to misrepresent, directly 
or

[[Page 192]]

indirectly, expressly or by implication, the time required to complete a 
course or program of instruction.
    (d) It is deceptive for an Industry Member to misrepresent, directly 
or indirectly, expressly or by implication, a student's likelihood of 
success in a school or program of instruction, including, but not 
limited to, misrepresenting the student's score on any admissions test.

[78 FR 68991, Nov. 18, 2013]



Sec. 254.6  Deceptive use of diplomas, degrees, or certificates.

    (a) It is deceptive for an Industry Member to issue a degree, 
diploma, certificate of completion, or any similar document, that 
misrepresents, directly or indirectly, expressly or by implication, the 
subject matter, substance, or content of the course or program of 
instruction or any other material fact concerning the course or program 
of instruction for which it was awarded or the accomplishments of the 
student to whom it was awarded.
    (b) It is deceptive for an Industry Member to offer or confer an 
academic, professional, or occupational degree, if the award of such 
degree has not been Approved by the appropriate State educational agency 
or Accredited by a nationally recognized accrediting agency, unless it 
clearly and conspicuously discloses, in all advertising and promotional 
materials that contain a reference to such degree, that its award has 
not been Approved or Accredited by such an agency.
    (c) It is deceptive for an Industry Member to offer or confer a high 
school diploma unless the program of instruction to which it pertains is 
substantially equivalent to that offered by a resident secondary school, 
and unless the student is informed, by a clear and conspicuous 
disclosure in writing prior to enrollment, that the Industry Member 
cannot guarantee or otherwise control the recognition that will be 
accorded the diploma by institutions of higher education, other schools, 
or prospective employers, and that such recognition is a matter solely 
within the discretion of those entities.

[78 FR 68991, Nov. 18, 2013]



Sec. 254.7  Deceptive sales practices.

    (a) It is deceptive for an Industry Member to use advertisements or 
promotional materials that misrepresent, directly or indirectly, 
expressly or by implication, that employment is being offered or that a 
talent hunt or contest is being conducted. For example, captions such 
as, ``Men/women wanted to train for * * * ,'' ``Help Wanted,'' 
``Employment,'' ``Business Opportunities,'' and words or terms of 
similar import, may falsely convey that employment is being offered and 
therefore should be avoided.
    (b) It is deceptive for an Industry Member to fail to disclose to a 
prospective student, prior to enrollment, the total cost of the program 
of instruction and the school's refund policy if the student does not 
complete the program of instruction.
    (c) It is deceptive for an Industry Member to fail to disclose to a 
prospective student, prior to enrollment, all requirements for 
successfully completing the course or program of instruction and the 
circumstances that would constitute grounds for terminating the 
student's enrollment prior to completion of the program of instruction.

[78 FR 68991, Nov. 18, 2013]



PART 255_GUIDES CONCERNING USE OF ENDORSEMENTS AND TESTIMONIALS
IN ADVERTISING--Table of Contents



Sec.
255.0 Purpose and definitions.
255.1 General considerations.
255.2 Consumer endorsements.
255.3 Expert endorsements.
255.4 Endorsements by organizations.
255.5 Disclosure of material connections.

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

    Source: 74 FR 53138, Oct. 15, 2009, unless otherwise noted.



Sec. 255.0  Purpose and definitions.

    (a) The Guides in this part represent administrative interpretations 
of laws enforced by the Federal Trade Commission for the guidance of the 
public in conducting its affairs in conformity with legal requirements. 
Specifically, the Guides address the application of

[[Page 193]]

Section 5 of the FTC Act (15 U.S.C. 45) to the use of endorsements and 
testimonials in advertising. The Guides provide the basis for voluntary 
compliance with the law by advertisers and endorsers. Practices 
inconsistent with these Guides may result in corrective action by the 
Commission under Section 5 if, after investigation, the Commission has 
reason to believe that the practices fall within the scope of conduct 
declared unlawful by the statute. The Guides set forth the general 
principles that the Commission will use in evaluating endorsements and 
testimonials, together with examples illustrating the application of 
those principles. The Guides do not purport to cover every possible use 
of endorsements in advertising. Whether a particular endorsement or 
testimonial is deceptive will depend on the specific factual 
circumstances of the advertisement at issue.
    (b) For purposes of this part, an endorsement means any advertising 
message (including verbal statements, demonstrations, or depictions of 
the name, signature, likeness or other identifying personal 
characteristics of an individual or the name or seal of an organization) 
that consumers are likely to believe reflects the opinions, beliefs, 
findings, or experiences of a party other than the sponsoring 
advertiser, even if the views expressed by that party are identical to 
those of the sponsoring advertiser. The party whose opinions, beliefs, 
findings, or experience the message appears to reflect will be called 
the endorser and may be an individual, group, or institution.
    (c) The Commission intends to treat endorsements and testimonials 
identically in the context of its enforcement of the Federal Trade 
Commission Act and for purposes of this part. The term endorsements is 
therefore generally used hereinafter to cover both terms and situations.
    (d) For purposes of this part, the term product includes any 
product, service, company or industry.
    (e) For purposes of this part, an expert is an individual, group, or 
institution possessing, as a result of experience, study, or training, 
knowledge of a particular subject, which knowledge is superior to what 
ordinary individuals generally acquire.

    Example 1: A film critic's review of a movie is excerpted in an 
advertisement. When so used, the review meets the definition of an 
endorsement because it is viewed by readers as a statement of the 
critic's own opinions and not those of the film producer, distributor, 
or exhibitor. Any alteration in or quotation from the text of the review 
that does not fairly reflect its substance would be a violation of the 
standards set by this part because it would distort the endorser's 
opinion. [See Sec. 255.1(b).]
    Example 2: A TV commercial depicts two women in a supermarket buying 
a laundry detergent. The women are not identified outside the context of 
the advertisement. One comments to the other how clean her brand makes 
her family's clothes, and the other then comments that she will try it 
because she has not been fully satisfied with her own brand. This 
obvious fictional dramatization of a real life situation would not be an 
endorsement.
    Example 3: In an advertisement for a pain remedy, an announcer who 
is not familiar to consumers except as a spokesman for the advertising 
drug company praises the drug's ability to deliver fast and lasting pain 
relief. He purports to speak, not on the basis of his own opinions, but 
rather in the place of and on behalf of the drug company. The 
announcer's statements would not be considered an endorsement.
    Example 4: A manufacturer of automobile tires hires a well-known 
professional automobile racing driver to deliver its advertising message 
in television commercials. In these commercials, the driver speaks of 
the smooth ride, strength, and long life of the tires. Even though the 
message is not expressly declared to be the personal opinion of the 
driver, it may nevertheless constitute an endorsement of the tires. Many 
consumers will recognize this individual as being primarily a racing 
driver and not merely a spokesperson or announcer for the advertiser. 
Accordingly, they may well believe the driver would not speak for an 
automotive product unless he actually believed in what he was saying and 
had personal knowledge sufficient to form that belief. Hence, they would 
think that the advertising message reflects the driver's personal views. 
This attribution of the underlying views to the driver brings the 
advertisement within the definition of an endorsement for purposes of 
this part.
    Example 5: A television advertisement for a particular brand of golf 
balls shows a prominent and well-recognized professional golfer 
practicing numerous drives off the tee. This would be an endorsement by 
the golfer even though she makes no verbal statement in the 
advertisement.

[[Page 194]]

    Example 6: An infomercial for a home fitness system is hosted by a 
well-known entertainer. During the infomercial, the entertainer 
demonstrates the machine and states that it is the most effective and 
easy-to-use home exercise machine that she has ever tried. Even if she 
is reading from a script, this statement would be an endorsement, 
because consumers are likely to believe it reflects the entertainer's 
views.
    Example 7: A television advertisement for a housewares store 
features a well-known female comedian and a well-known male baseball 
player engaging in light-hearted banter about products each one intends 
to purchase for the other. The comedian says that she will buy him a 
Brand X, portable, high-definition television so he can finally see the 
strike zone. He says that he will get her a Brand Y juicer so she can 
make juice with all the fruit and vegetables thrown at her during her 
performances. The comedian and baseball player are not likely to be 
deemed endorsers because consumers will likely realize that the 
individuals are not expressing their own views.
    Example 8: A consumer who regularly purchases a particular brand of 
dog food decides one day to purchase a new, more expensive brand made by 
the same manufacturer. She writes in her personal blog that the change 
in diet has made her dog's fur noticeably softer and shinier, and that 
in her opinion, the new food definitely is worth the extra money. This 
posting would not be deemed an endorsement under the Guides.
    Assume that rather than purchase the dog food with her own money, 
the consumer gets it for free because the store routinely tracks her 
purchases and its computer has generated a coupon for a free trial bag 
of this new brand. Again, her posting would not be deemed an endorsement 
under the Guides.
    Assume now that the consumer joins a network marketing program under 
which she periodically receives various products about which she can 
write reviews if she wants to do so. If she receives a free bag of the 
new dog food through this program, her positive review would be 
considered an endorsement under the Guides.



Sec. 255.1  General considerations.

    (a) Endorsements must reflect the honest opinions, findings, 
beliefs, or experience of the endorser. Furthermore, an endorsement may 
not convey any express or implied representation that would be deceptive 
if made directly by the advertiser. [See Sec. 255.2(a) and (b) 
regarding substantiation of representations conveyed by consumer 
endorsements.
    (b) The endorsement message need not be phrased in the exact words 
of the endorser, unless the advertisement affirmatively so represents. 
However, the endorsement may not be presented out of context or reworded 
so as to distort in any way the endorser's opinion or experience with 
the product. An advertiser may use an endorsement of an expert or 
celebrity only so long as it has good reason to believe that the 
endorser continues to subscribe to the views presented. An advertiser 
may satisfy this obligation by securing the endorser's views at 
reasonable intervals where reasonableness will be determined by such 
factors as new information on the performance or effectiveness of the 
product, a material alteration in the product, changes in the 
performance of competitors' products, and the advertiser's contract 
commitments.
    (c) When the advertisement represents that the endorser uses the 
endorsed product, the endorser must have been a bona fide user of it at 
the time the endorsement was given. Additionally, the advertiser may 
continue to run the advertisement only so long as it has good reason to 
believe that the endorser remains a bona fide user of the product. [See 
Sec. 255.1(b) regarding the ``good reason to believe'' 
requirement.](d)Advertisers are subject to liability for false or 
unsubstantiated statements made through endorsements, or for failing to 
disclose material connections between themselves and their endorsers 
[see Sec. 255.5]. Endorsers also may be liable for statements made in 
the course of their endorsements.
    Example 1: A building contractor states in an advertisement that he 
uses the advertiser's exterior house paint because of its remarkable 
quick drying properties and durability. This endorsement must comply 
with the pertinent requirements of Sec. 255.3 (Expert Endorsements). 
Subsequently, the advertiser reformulates its paint to enable it to 
cover exterior surfaces with only one coat. Prior to continued use of 
the contractor's endorsement, the advertiser must contact the contractor 
in order to determine whether the contractor would continue to specify 
the paint and to subscribe to the views presented previously.
    Example 2: A television advertisement portrays a woman seated at a 
desk on which rest five unmarked computer keyboards. An announcer says, 
``We asked X, an administrative assistant for over ten years, to try

[[Page 195]]

these five unmarked keyboards and tell us which one she liked best.''The 
advertisement portrays X typing on each keyboard and then picking the 
advertiser's brand. The announcer asks her why, and X gives her reasons. 
This endorsement would probably not represent that X actually uses the 
advertiser's keyboard at work. In addition, the endorsement also may be 
required to meet the standards of Sec. 255.3 (expert endorsements).
    Example 3: An ad for an acne treatment features a dermatologist who 
claims that the product is ``clinically proven'' to work. Before giving 
the endorsement, she received a write-up of the clinical study in 
question, which indicates flaws in the design and conduct of the study 
that are so serious that they preclude any conclusions about the 
efficacy of the product. The dermatologist is subject to liability for 
the false statements she made in the advertisement. The advertiser is 
also liable for misrepresentations made through the endorsement. [See 
Section 255.3 regarding the product evaluation that an expert endorser 
must conduct.
    Example 4: A well-known celebrity appears in an infomercial for an 
oven roasting bag that purportedly cooks every chicken perfectly in 
thirty minutes. During the shooting of the infomercial, the celebrity 
watches five attempts to cook chickens using the bag. In each attempt, 
the chicken is undercooked after thirty minutes and requires sixty 
minutes of cooking time. In the commercial, the celebrity places an 
uncooked chicken in the oven roasting bag and places the bag in one 
oven. He then takes a chicken roasting bag from a second oven, removes 
from the bag what appears to be a perfectly cooked chicken, tastes the 
chicken, and says that if you want perfect chicken every time, in just 
thirty minutes, this is the product you need. A significant percentage 
of consumers are likely to believe the celebrity's statements represent 
his own views even though he is reading from a script. The celebrity is 
subject to liability for his statement about the product. The advertiser 
is also liable for misrepresentations made through the endorsement.
    Example 5: A skin care products advertiser participates in a blog 
advertising service. The service matches up advertisers with bloggers 
who will promote the advertiser's products on their personal blogs. The 
advertiser requests that a blogger try a new body lotion and write a 
review of the product on her blog. Although the advertiser does not make 
any specific claims about the lotion's ability to cure skin conditions 
and the blogger does not ask the advertiser whether there is 
substantiation for the claim, in her review the blogger writes that the 
lotion cures eczema and recommends the product to her blog readers who 
suffer from this condition. The advertiser is subject to liability for 
misleading or unsubstantiated representations made through the blogger's 
endorsement. The blogger also is subject to liability for misleading or 
unsubstantiated representations made in the course of her endorsement. 
The blogger is also liable if she fails to disclose clearly and 
conspicuously that she is being paid for her services. [See Sec. 
255.5.]
    In order to limit its potential liability, the advertiser should 
ensure that the advertising service provides guidance and training to 
its bloggers concerning the need to ensure that statements they make are 
truthful and substantiated. The advertiser should also monitor bloggers 
who are being paid to promote its products and take steps necessary to 
halt the continued publication of deceptive representations when they 
are discovered.



Sec. 255.2  Consumer endorsements.

    (a) An advertisement employing endorsements by one or more consumers 
about the performance of an advertised product or service will be 
interpreted as representing that the product or service is effective for 
the purpose depicted in the advertisement. Therefore, the advertiser 
must possess and rely upon adequate substantiation, including, when 
appropriate, competent and reliable scientific evidence, to support such 
claims made through endorsements in the same manner the advertiser would 
be required to do if it had made the representation directly, i.e., 
without using endorsements. Consumer endorsements themselves are not 
competent and reliable scientific evidence.
    (b) An advertisement containing an endorsement relating the 
experience of one or more consumers on a central or key attribute of the 
product or service also will likely be interpreted as representing that 
the endorser's experience is representative of what consumers will 
generally achieve with the advertised product or service in actual, 
albeit variable, conditions of use. Therefore, an advertiser should 
possess and rely upon adequate substantiation for this representation. 
If the advertiser does not have substantiation that the endorser's 
experience is representative of what consumers will generally achieve, 
the advertisement should clearly and conspicuously disclose the 
generally expected performance in the depicted circumstances, and the 
advertiser must possess and rely on adequate

[[Page 196]]

substantiation for that representation. \105\
---------------------------------------------------------------------------

    \105\The Commission tested the communication of advertisements 
containing testimonials that clearly and prominently disclosed either 
``Results not typical'' or the stronger ``These testimonials are based 
on the experiences of a few people and you are not likely to have 
similar results.''Neither disclosure adequately reduced the 
communication that the experiences depicted are generally 
representative. Based upon this research, the Commission believes that 
similar disclaimers regarding the limited applicability of an endorser's 
experience to what consumers may generally expect to achieve are 
unlikely to be effective.
    Nonetheless, the Commission cannot rule out the possibility that a 
strong disclaimer of typicality could be effective in the context of a 
particular advertisement. Although the Commission would have the burden 
of proof in a law enforcement action, the Commission notes that an 
advertiser possessing reliable empirical testing demonstrating that the 
net impression of its advertisement with such a disclaimer is non-
deceptive will avoid the risk of the initiation of such an action in the 
first instance.
---------------------------------------------------------------------------

    (c) Advertisements presenting endorsements by what are represented, 
directly or by implication, to be ``actual consumers'' should utilize 
actual consumers in both the audio and video, or clearly and 
conspicuously disclose that the persons in such advertisements are not 
actual consumers of the advertised product.
    Example 1: A brochure for a baldness treatment consists entirely of 
testimonials from satisfied customers who say that after using the 
product, they had amazing hair growth and their hair is as thick and 
strong as it was when they were teenagers. The advertiser must have 
competent and reliable scientific evidence that its product is effective 
in producing new hair growth.
    The ad will also likely communicate that the endorsers' experiences 
are representative of what new users of the product can generally 
expect. Therefore, even if the advertiser includes a disclaimer such as, 
``Notice: These testimonials do not prove our product works. You should 
not expect to have similar results,'' the ad is likely to be deceptive 
unless the advertiser has adequate substantiation that new users 
typically will experience results similar to those experienced by the 
testimonialists.
    Example 2: An advertisement disseminated by a company that sells 
heat pumps presents endorsements from three individuals who state that 
after installing the company's heat pump in their homes, their monthly 
utility bills went down by $100, $125, and $150, respectively. The ad 
will likely be interpreted as conveying that such savings are 
representative of what consumers who buy the company's heat pump can 
generally expect. The advertiser does not have substantiation for that 
representation because, in fact, less than 20% of purchasers will save 
$100 or more. A disclosure such as, ``Results not typical'' or, ``These 
testimonials are based on the experiences of a few people and you are 
not likely to have similar results'' is insufficient to prevent this ad 
from being deceptive because consumers will still interpret the ad as 
conveying that the specified savings are representative of what 
consumers can generally expect. The ad is less likely to be deceptive if 
it clearly and conspicuously discloses the generally expected savings 
and the advertiser has adequate substantiation that homeowners can 
achieve those results. There are multiple ways that such a disclosure 
could be phrased, e.g., ``the average homeowner saves $35 per month,'' 
``the typical family saves $50 per month during cold months and $20 per 
month in warm months,'' or ``most families save 10% on their utility 
bills.''
    Example 3: An advertisement for a cholesterol-lowering product 
features an individual who claims that his serum cholesterol went down 
by 120 points and does not mention having made any lifestyle changes. A 
well-conducted clinical study shows that the product reduces the 
cholesterol levels of individuals with elevated cholesterol by an 
average of 15% and the advertisement clearly and conspicuously discloses 
this fact. Despite the presence of this disclosure, the advertisement 
would be deceptive if the advertiser does not have adequate 
substantiation that the product can produce the specific results claimed 
by the endorser (i.e., a 120-point drop in serum cholesterol without any 
lifestyle changes).
    Example 4: An advertisement for a weight-loss product features a 
formerly obese woman. She says in the ad, ``Every day, I drank 2 
WeightAway shakes, ate only raw vegetables, and exercised vigorously for 
six hours at the gym. By the end of six months, I had gone from 250 
pounds to 140 pounds.''The advertisement accurately describes the 
woman's experience, and such a result is within the range that would be 
generally experienced by an extremely overweight individual who consumed 
WeightAway shakes, only ate raw vegetables, and exercised as the 
endorser did. Because the endorser clearly describes the limited and 
truly exceptional circumstances under which she achieved her results, 
the ad is not likely to convey that consumers who weigh substantially 
less or use WeightAway under less extreme circumstances will lose 110 
pounds in six months. (If the advertisement simply says that the 
endorser lost 110

[[Page 197]]

pounds in six months using WeightAway together with diet and exercise, 
however, this description would not adequately alert consumers to the 
truly remarkable circumstances leading to her weight loss.)The 
advertiser must have substantiation, however, for any performance claims 
conveyed by the endorsement (e.g., that WeightAway is an effective 
weight loss product).
    If, in the alternative, the advertisement simply features ``before'' 
and ``after'' pictures of a woman who says ``I lost 50 pounds in 6 
months with WeightAway,'' the ad is likely to convey that her experience 
is representative of what consumers will generally achieve. Therefore, 
if consumers cannot generally expect to achieve such results, the ad 
should clearly and conspicuously disclose what they can expect to lose 
in the depicted circumstances (e.g., ``most women who use WeightAway for 
six months lose at least 15 pounds'').
    If the ad features the same pictures but the testimonialist simply 
says, ``I lost 50 pounds with WeightAway,'' and WeightAway users 
generally do not lose 50 pounds, the ad should disclose what results 
they do generally achieve (e.g., ``most women who use WeightAway lose 15 
pounds'').
    Example 5: An advertisement presents the results of a poll of 
consumers who have used the advertiser's cake mixes as well as their own 
recipes. The results purport to show that the majority believed that 
their families could not tell the difference between the advertised mix 
and their own cakes baked from scratch. Many of the consumers are 
actually pictured in the advertisement along with relevant, quoted 
portions of their statements endorsing the product. This use of the 
results of a poll or survey of consumers represents that this is the 
typical result that ordinary consumers can expect from the advertiser's 
cake mix.
    Example 6: An advertisement purports to portray a ``hidden camera'' 
situation in a crowded cafeteria at breakfast time. A spokesperson for 
the advertiser asks a series of actual patrons of the cafeteria for 
their spontaneous, honest opinions of the advertiser's recently 
introduced breakfast cereal. Even though the words ``hidden camera'' are 
not displayed on the screen, and even though none of the actual patrons 
is specifically identified during the advertisement, the net impression 
conveyed to consumers may well be that these are actual customers, and 
not actors. If actors have been employed, this fact should be clearly 
and conspicuously disclosed.
    Example 7: An advertisement for a recently released motion picture 
shows three individuals coming out of a theater, each of whom gives a 
positive statement about the movie. These individuals are actual 
consumers expressing their personal views about the movie. The 
advertiser does not need to have substantiation that their views are 
representative of the opinions that most consumers will have about the 
movie. Because the consumers' statements would be understood to be the 
subjective opinions of only three people, this advertisement is not 
likely to convey a typicality message.
    If the motion picture studio had approached these individuals 
outside the theater and offered them free tickets if they would talk 
about the movie on camera afterwards, that arrangement should be clearly 
and conspicuously disclosed. [See Sec. 255.5.]



Sec. 255.3  Expert endorsements.

    (a) Whenever an advertisement represents, directly or by 
implication, that the endorser is an expert with respect to the 
endorsement message, then the endorser's qualifications must in fact 
give the endorser the expertise that he or she is represented as 
possessing with respect to the endorsement.
    (b) Although the expert may, in endorsing a product, take into 
account factors not within his or her expertise (e.g., matters of taste 
or price), the endorsement must be supported by an actual exercise of 
that expertise in evaluating product features or characteristics with 
respect to which he or she is expert and which are relevant to an 
ordinary consumer's use of or experience with the product and are 
available to the ordinary consumer. This evaluation must have included 
an examination or testing of the product at least as extensive as 
someone with the same degree of expertise would normally need to conduct 
in order to support the conclusions presented in the endorsement. To the 
extent that the advertisement implies that the endorsement was based 
upon a comparison, such comparison must have been included in the 
expert's evaluation; and as a result of such comparison, the expert must 
have concluded that, with respect to those features on which he or she 
is expert and which are relevant and available to an ordinary consumer, 
the endorsed product is at least equal overall to the competitors' 
products. Moreover, where the net impression created by the endorsement 
is that the advertised product is superior to other products with 
respect to any such feature or features, then the expert must in fact 
have found such superiority. [See

[[Page 198]]

Sec. 255.1(d) regarding the liability of endorsers.]

    Example 1: An endorsement of a particular automobile by one 
described as an ``engineer'' implies that the endorser's professional 
training and experience are such that he is well acquainted with the 
design and performance of automobiles. If the endorser's field is, for 
example, chemical engineering, the endorsement would be deceptive.
    Example 2: An endorser of a hearing aid is simply referred to as 
``Doctor'' during the course of an advertisement. The ad likely implies 
that the endorser is a medical doctor with substantial experience in the 
area of hearing. If the endorser is not a medical doctor with 
substantial experience in audiology, the endorsement would likely be 
deceptive. A non-medical ``doctor'' (e.g., an individual with a Ph.D. in 
exercise physiology) or a physician without substantial experience in 
the area of hearing can endorse the product, but if the endorser is 
referred to as ``doctor,'' the advertisement must make clear the nature 
and limits of the endorser's expertise.
    Example 3: A manufacturer of automobile parts advertises that its 
products are approved by the ``American Institute of Science.''From its 
name, consumers would infer that the ``American Institute of Science'' 
is a bona fide independent testing organization with expertise in 
judging automobile parts and that, as such, it would not approve any 
automobile part without first testing its efficacy by means of valid 
scientific methods. If the American Institute of Science is not such a 
bona fide independent testing organization (e.g., if it was established 
and operated by an automotive parts manufacturer), the endorsement would 
be deceptive. Even if the American Institute of Science is an 
independent bona fide expert testing organization, the endorsement may 
nevertheless be deceptive unless the Institute has conducted valid 
scientific tests of the advertised products and the test results support 
the endorsement message.
    Example 4: A manufacturer of a non-prescription drug product 
represents that its product has been selected over competing products by 
a large metropolitan hospital. The hospital has selected the product 
because the manufacturer, unlike its competitors, has packaged each dose 
of the product separately. This package form is not generally available 
to the public. Under the circumstances, the endorsement would be 
deceptive because the basis for the hospital's choice--convenience of 
packaging--is neither relevant nor available to consumers, and the basis 
for the hospital's decision is not disclosed to consumers.
    Example 5: A woman who is identified as the president of a 
commercial ``home cleaning service'' states in a television 
advertisement that the service uses a particular brand of cleanser, 
instead of leading competitors it has tried, because of this brand's 
performance. Because cleaning services extensively use cleansers in the 
course of their business, the ad likely conveys that the president has 
knowledge superior to that of ordinary consumers. Accordingly, the 
president's statement will be deemed to be an expert endorsement. The 
service must, of course, actually use the endorsed cleanser. In 
addition, because the advertisement implies that the cleaning service 
has experience with a reasonable number of leading competitors to the 
advertised cleanser, the service must, in fact, have such experience, 
and, on the basis of its expertise, it must have determined that the 
cleaning ability of the endorsed cleanser is at least equal (or 
superior, if such is the net impression conveyed by the advertisement) 
to that of leading competitors' products with which the service has had 
experience and which remain reasonably available to it. Because in this 
example the cleaning service's president makes no mention that the 
endorsed cleanser was ``chosen,'' ``selected,'' or otherwise evaluated 
in side-by-side comparisons against its competitors, it is sufficient if 
the service has relied solely upon its accumulated experience in 
evaluating cleansers without having performed side-by-side or scientific 
comparisons.
    Example 6: A medical doctor states in an advertisement for a drug 
that the product will safely allow consumers to lower their cholesterol 
by 50 points. If the materials the doctor reviewed were merely letters 
from satisfied consumers or the results of a rodent study, the 
endorsement would likely be deceptive because those materials are not 
what others with the same degree of expertise would consider adequate to 
support this conclusion about the product's safety and efficacy.



Sec. 255.4  Endorsements by organizations.

    Endorsements by organizations, especially expert ones, are viewed as 
representing the judgment of a group whose collective experience exceeds 
that of any individual member, and whose judgments are generally free of 
the sort of subjective factors that vary from individual to individual. 
Therefore, an organization's endorsement must be reached by a process 
sufficient to ensure that the endorsement fairly reflects the collective 
judgment of the organization. Moreover, if an organization is 
represented as being expert, then, in conjunction with a proper exercise 
of its expertise in evaluating the

[[Page 199]]

product under Sec. 255.3 (expert endorsements), it must utilize an 
expert or experts recognized as such by the organization or standards 
previously adopted by the organization and suitable for judging the 
relevant merits of such products. [See Sec. 255.1(d) regarding the 
liability of endorsers.]

    Example: A mattress seller advertises that its product is endorsed 
by a chiropractic association. Because the association would be regarded 
as expert with respect to judging mattresses, its endorsement must be 
supported by an evaluation by an expert or experts recognized as such by 
the organization, or by compliance with standards previously adopted by 
the organization and aimed at measuring the performance of mattresses in 
general and not designed with the unique features of the advertised 
mattress in mind.



Sec. 255.5  Disclosure of material connections.

    When there exists a connection between the endorser and the seller 
of the advertised product that might materially affect the weight or 
credibility of the endorsement (i.e., the connection is not reasonably 
expected by the audience), such connection must be fully disclosed. For 
example, when an endorser who appears in a television commercial is 
neither represented in the advertisement as an expert nor is known to a 
significant portion of the viewing public, then the advertiser should 
clearly and conspicuously disclose either the payment or promise of 
compensation prior to and in exchange for the endorsement or the fact 
that the endorser knew or had reason to know or to believe that if the 
endorsement favored the advertised product some benefit, such as an 
appearance on television, would be extended to the endorser. Additional 
guidance, including guidance concerning endorsements made through other 
media, is provided by the examples below.

    Example 1: A drug company commissions research on its product by an 
outside organization. The drug company determines the overall subject of 
the research (e.g., to test the efficacy of a newly developed product) 
and pays a substantial share of the expenses of the research project, 
but the research organization determines the protocol for the study and 
is responsible for conducting it. A subsequent advertisement by the drug 
company mentions the research results as the ``findings'' of that 
research organization. Although the design and conduct of the research 
project are controlled by the outside research organization, the weight 
consumers place on the reported results could be materially affected by 
knowing that the advertiser had funded the project. Therefore, the 
advertiser's payment of expenses to the research organization should be 
disclosed in this advertisement.
    Example 2: A film star endorses a particular food product. The 
endorsement regards only points of taste and individual preference. This 
endorsement must, of course, comply with Sec. 255.1; but regardless of 
whether the star's compensation for the commercial is a $1 million cash 
payment or a royalty for each product sold by the advertiser during the 
next year, no disclosure is required because such payments likely are 
ordinarily expected by viewers.
    Example 3: During an appearance by a well-known professional tennis 
player on a television talk show, the host comments that the past few 
months have been the best of her career and during this time she has 
risen to her highest level ever in the rankings. She responds by 
attributing the improvement in her game to the fact that she is seeing 
the ball better than she used to, ever since having laser vision 
correction surgery at a clinic that she identifies by name. She 
continues talking about the ease of the procedure, the kindness of the 
clinic's doctors, her speedy recovery, and how she can now engage in a 
variety of activities without glasses, including driving at night. The 
athlete does not disclose that, even though she does not appear in 
commercials for the clinic, she has a contractual relationship with it, 
and her contract pays her for speaking publicly about her surgery when 
she can do so. Consumers might not realize that a celebrity discussing a 
medical procedure in a television interview has been paid for doing so, 
and knowledge of such payments would likely affect the weight or 
credibility consumers give to the celebrity's endorsement. Without a 
clear and conspicuous disclosure that the athlete has been engaged as a 
spokesperson for the clinic, this endorsement is likely to be deceptive. 
Furthermore, if consumers are likely to take away from her story that 
her experience was typical of those who undergo the same procedure at 
the clinic, the advertiser must have substantiation for that claim.
    Assume that instead of speaking about the clinic in a television 
interview, the tennis player touts the results of her surgery--
mentioning the clinic by name--on a social networking site that allows 
her fans to read in real time what is happening in her life. Given the 
nature of the medium in which her endorsement is disseminated, consumers 
might not realize that she is a paid endorser. Because that information 
might affect the weight consumers give to her endorsement,

[[Page 200]]

her relationship with the clinic should be disclosed.
    Assume that during that same television interview, the tennis player 
is wearing clothes bearing the insignia of an athletic wear company with 
whom she also has an endorsement contract. Although this contract 
requires that she wear the company's clothes not only on the court but 
also in public appearances, when possible, she does not mention them or 
the company during her appearance on the show. No disclosure is required 
because no representation is being made about the clothes in this 
context.
    Example 4: An ad for an anti-snoring product features a physician 
who says that he has seen dozens of products come on the market over the 
years and, in his opinion, this is the best ever. Consumers would expect 
the physician to be reasonably compensated for his appearance in the ad. 
Consumers are unlikely, however, to expect that the physician receives a 
percentage of gross product sales or that he owns part of the company, 
and either of these facts would likely materially affect the credibility 
that consumers attach to the endorsement. Accordingly, the advertisement 
should clearly and conspicuously disclose such a connection between the 
company and the physician.
    Example 5: An actual patron of a restaurant, who is neither known to 
the public nor presented as an expert, is shown seated at the counter. 
He is asked for his ``spontaneous'' opinion of a new food product served 
in the restaurant. Assume, first, that the advertiser had posted a sign 
on the door of the restaurant informing all who entered that day that 
patrons would be interviewed by the advertiser as part of its TV 
promotion of its new soy protein ``steak.'' This notification would 
materially affect the weight or credibility of the patron's endorsement, 
and, therefore, viewers of the advertisement should be clearly and 
conspicuously informed of the circumstances under which the endorsement 
was obtained.
    Assume, in the alternative, that the advertiser had not posted a 
sign on the door of the restaurant, but had informed all interviewed 
customers of the ``hidden camera'' only after interviews were completed 
and the customers had no reason to know or believe that their response 
was being recorded for use in an advertisement. Even if patrons were 
also told that they would be paid for allowing the use of their opinions 
in advertising, these facts need not be disclosed.
    Example 6: An infomercial producer wants to include consumer 
endorsements for an automotive additive product featured in her 
commercial, but because the product has not yet been sold, there are no 
consumer users. The producer's staff reviews the profiles of individuals 
interested in working as ``extras'' in commercials and identifies 
several who are interested in automobiles. The extras are asked to use 
the product for several weeks and then report back to the producer. They 
are told that if they are selected to endorse the product in the 
producer's infomercial, they will receive a small payment. Viewers would 
not expect that these ``consumer endorsers'' are actors who were asked 
to use the product so that they could appear in the commercial or that 
they were compensated. Because the advertisement fails to disclose these 
facts, it is deceptive.
    Example 7: A college student who has earned a reputation as a video 
game expert maintains a personal weblog or ``blog'' where he posts 
entries about his gaming experiences. Readers of his blog frequently 
seek his opinions about video game hardware and software. As it has done 
in the past, the manufacturer of a newly released video game system 
sends the student a free copy of the system and asks him to write about 
it on his blog. He tests the new gaming system and writes a favorable 
review. Because his review is disseminated via a form of consumer-
generated media in which his relationship to the advertiser is not 
inherently obvious, readers are unlikely to know that he has received 
the video game system free of charge in exchange for his review of the 
product, and given the value of the video game system, this fact likely 
would materially affect the credibility they attach to his endorsement. 
Accordingly, the blogger should clearly and conspicuously disclose that 
he received the gaming system free of charge. The manufacturer should 
advise him at the time it provides the gaming system that this 
connection should be disclosed, and it should have procedures in place 
to try to monitor his postings for compliance.
    Example 8: An online message board designated for discussions of new 
music download technology is frequented by MP3 player enthusiasts. They 
exchange information about new products, utilities, and the 
functionality of numerous playback devices. Unbeknownst to the message 
board community, an employee of a leading playback device manufacturer 
has been posting messages on the discussion board promoting the 
manufacturer's product. Knowledge of this poster's employment likely 
would affect the weight or credibility of her endorsement. Therefore, 
the poster should clearly and conspicuously disclose her relationship to 
the manufacturer to members and readers of the message board.
    Example 9: A young man signs up to be part of a ``street team'' 
program in which points are awarded each time a team member talks to his 
or her friends about a particular advertiser's products. Team members 
can then exchange their points for prizes, such as concert tickets or 
electronics. These incentives would materially affect the weight or 
credibility of the team member's endorsements. They should be clearly 
and conspicuously

[[Page 201]]

disclosed, and the advertiser should take steps to ensure that these 
disclosures are being provided.



PART 259_GUIDE CONCERNING FUEL ECONOMY ADVERTISING FOR NEW AUTOMOBILES
--Table of Contents



Sec.
259.1 Definitions.
259.2 Advertising disclosures.

    Authority: 15 U.S.C. 41-58.



Sec. 259.1  Definitions.

    For the purposes of this part, the following definitions shall 
apply:
    (a) New automobile. Any passenger automobile or light truck for 
which a fuel economy label is required under the Energy Policy and 
Conservation Act (42 U.S.C. 6201 et seq.) or rules promulgated 
thereunder, the equitable or legal title to which has never been 
transferred by a manufacturer, distributor, or dealer to an ultimate 
purchaser. The term manufacturer shall mean any person engaged in the 
manufacturing or assembling of new automobiles, including any person 
importing new automobiles for resale and any person who acts for and is 
under control of such manufacturer, assembler, or importer in connection 
with the distribution of new automobiles. The term dealer shall mean any 
person, resident or located in the United States or any territory 
thereof, engaged in the sale or distribution of new automobiles to the 
ultimate purchaser. The term ultimate purchaser means, for purposes of 
this part, the first person, other than a dealer purchasing in his or 
her capacity as a dealer, who in good faith purchases such new 
automobile for purposes other than resale, including a person who leases 
such vehicle for his or her personal use.
    (b) Estimated city mpg. The gasoline consumption or mileage of new 
automobiles as determined in accordance with the city test procedure 
employed and published by the U.S. Environmental Protection Agency as 
described in 40 CFR 600.209-85 and expressed in miles-per-gallon, to the 
nearest whole mile-per-gallon, as measured, reported, published, or 
accepted by the U.S. Environmental Protection Agency.
    (c) Estimated highway mpg. The gasoline consumption or mileage of 
new automobiles as determined in accordance with the highway test 
procedure employed and published by the U.S. Environmental Protection 
Agency as described in 40 CFR 600.209-85 and expressed in miles-per-
gallon, to the nearest whole mile-per-gallon, as measured, reported, 
published, or accepted by the U.S. Environmental Protection Agency.
    (d) Vehicle configuration. The unique combination of automobile 
features, as defined in 40 CFR 600.002-85(24).
    (e) Estimated in-use fuel economy range. The estimated range of city 
and highway fuel economy of the particular new automobile on which the 
label is affixed, as determined in accordance with procedures employed 
by the U.S. Environmental Protection Agency as described in 40 CFR 
600.311 (for the appropriate model year), and expressed in miles-per-
gallon, to the nearest whole mile-per-gallon, as measured, reported or 
accepted by the U.S. Environment Protection Agency.
    (f) Range of estimated fuel economy values for the class of new 
automobiles. The estimated city and highway fuel economy values of the 
class of automobile (e.g., compact) as determined by the U.S. 
Environmental Protection Agency pursuant to 40 CFR 600.315 (for the 
appropriate model year) and expressed in miles-per-gallon, to the 
nearest whole mile-per-gallon.

[60 FR 56231, Nov. 8, 1995]



Sec. 259.2  Advertising disclosures.

    (a) No manufacturer or dealer shall make any express or implied 
representation in advertising concerning the fuel economy of any new 
automobile \1\ unless such representation is accompanied by the 
following clear and conspicuous disclosures:
---------------------------------------------------------------------------

    \1\ The Commission will regard as an express or implied fuel economy 
representation one which a reasonable consumer, upon considering the 
representation in the context of the entire advertisement, would 
understand as referring to the fuel economy performance of the vehicle 
or vehicles advertised.
---------------------------------------------------------------------------

    (1) If the advertisement makes:

[[Page 202]]

    (i) Both a city and a highway fuel economy representation, both the 
``estimated city mpg'' and the ``estimated highway mpg'' of such new 
automobile, \2\ must be disclosed;
---------------------------------------------------------------------------

    \2\ For purposes of Sec. 259.2(a), the ``estimated city mpg'' and 
the ``estimated highway mpg'' must be those applicable to the specific 
nameplate being advertised. Fuel economy estimates assigned to ``unique 
nameplates'' (see 40 CFR 600.207-86(a)(2)) apply only to such unique car 
lines. For example, if a manufacturer has a model named the ``XZA'' that 
has fuel economy estimates assigned to it and a derivative model named 
the ``Econo-XZA'' that has separate, higher fuel economy estimates 
assigned to it, these higher numbers assigned to the ``Econo-XZA'' 
cannot be used in advertisements for the ``XZA.''
---------------------------------------------------------------------------

    (ii) A representation regarding only city or only highway fuel 
economy, only the corresponding EPA estimate must be disclosed; \3\
---------------------------------------------------------------------------

    \3\ For example, if the representation clearly refers only to 
highway fuel economy, only the ``estimated highway mpg'' need be 
disclosed.
---------------------------------------------------------------------------

    (iii) A general fuel economy claim without reference to either city 
or highway, or if the representation refers to any combined fuel economy 
number, the ``estimated city mpg'' must be disclosed; \4\ and
---------------------------------------------------------------------------

    \4\ Nothing in this section should be construed as prohibiting 
disclosure of both the city and highway estimates.
---------------------------------------------------------------------------

    (2) That the U.S. Environmental Protection Agency is the source of 
the ``estimated city mpg'' and ``estimated highway mpg'' and that the 
numbers are estimates. \5\
---------------------------------------------------------------------------

    \5\ The Commission will regard the following as the minimum 
disclosure necessary to comply with Sec. 259.2(a)(2), regardless of the 
media in which the advertisement appears: ``EPA estimate(s).''
    For television, if the estimated mpg appears in the video, the 
disclosure must appear in the video; if the estimated mpg is audio, the 
disclosure must be audio.
---------------------------------------------------------------------------

    (b) If an advertisement for a new automobile cites:
    (1) The ``estimated in-use fuel economy range,'' the advertisement 
must state with equal prominence both the upper and lower number of the 
range, an explanation of the meaning of the numbers (i.e., city mpg 
range or highway mpg range or both), and that the U.S. Environmental 
Protection Agency is the source of the figures.
    (2) The ``range of estimated fuel economy values for the class of 
new automobiles'' as a basis for comparing the fuel economy of two or 
more automobiles, such comparison must be made to the same type of range 
(i.e., city or highway). \6\
---------------------------------------------------------------------------

    \6\ For example, an advertisement could not state that ``according 
to EPA estimates new automobiles in this class get as little as X mpg 
(citing a figure from the city range) while EPA estimates that this 
automobile gets X + mpg (citing the EPA highway estimates or a number 
from the EPA estimated in-use fuel economy highway range for the 
automobile).
---------------------------------------------------------------------------

    (c) Fuel economy estimates derived from a non-EPA test may be 
disclosed provided that:
    (1) The advertisement also discloses the ``estimated city mpg'' and/
or the ``estimated highway mpg,'' as required by Sec. 259.2(a), and the 
disclosure required by Sec. 259.2(a), and gives the ``estimated city 
mpg'' and/or the ``estimated highway mpg'' figure(s) substantially more 
prominence than any other estimate; \7\ provided, however, for radio and 
television advertisements in which any other estimate is used only in 
the

[[Page 203]]

audio, equal prominence must be given the ``estimated city mpg'' and/or 
the ``estimated highway mpg'' figure(s); \8\
---------------------------------------------------------------------------

    \7\ The Commission will regard the following as constituting 
``substantially more prominence:''
    For television only: If the estimated city and/or highway mpg and 
any other mileage estimate(s) appear only in the visual portion, the 
estimated city and/or highway mpg must appear in numbers twice as large 
as those used for any other estimate, and must remain on the screen at 
least as long as any other estimate. If the estimated city and highway 
mpg appear in the audio portion, visual broadcast of any other estimate 
must be accompanied by the simultaneous, at least equally prominent, 
visual broadcast of the estimated city and/or highway mpg. Each visual 
estimated city and highway mpg must be broadcast against a solid color 
background that contrasts easily with the color used for the numbers 
when viewed on both color and black and white television.
    For print only: The estimated city and/or highway mpg must appear in 
clearly legible type at least twice as large as that used for any other 
estimate. Alternatively, if the estimated city and highway mpg appear in 
type of the same size as such other estimate, they must be clearly 
legible and conspicuously circled. The estimated city and highway mpg 
must appear against a solid color, contrasting background. They may not 
appear in a footnote unless all references to fuel economy appear in a 
footnote.
    \8\ The Commission will regard the following as constituting equal 
prominence. For radio and television when any other estimate is used in 
the audio: The estimated city and/or highway mpg must be stated, either 
before or after each disclosure of such other estimate at least as 
audibly as such other estimate.
---------------------------------------------------------------------------

    (2) The source of the non-EPA test is clearly and conspicuously 
identified;
    (3) The driving conditions and variables simulated by the test which 
differ from those used to measure the ``estimated city mpg'' and/or the 
``estimated highway mpg,'' and which result in a change in fuel economy, 
are clearly and conspicuously disclosed. \9\ Such conditions and 
variables may include, but are not limited to, road or dynamometer test, 
average speed, range of speed, hot or cold start, and temperature; and
---------------------------------------------------------------------------

    \9\ For dynamometer tests any difference between the EPA and non-EPA 
tests must be disclosed. For in-use tests, the Commission realizes that 
it is impossible to duplicate the EPA test conditions, and that in-use 
tests may be designed to simulate a particular driving situation. It 
must be clear from the context of the advertisement what driving 
situation is being simulated (e.g., cold weather driving, highway 
driving, heavy load conditions). Furthermore, any driving or vehicle 
condition must be disclosed if it is significantly different from that 
which an appreciable number of consumers (whose driving condition is 
being simulated) would expect to encounter.
---------------------------------------------------------------------------

    (4) The advertisement clearly and conspicuously discloses any 
distinctions in ``vehicle configuration'' and other equipment affecting 
mileage performance (e.g., design or equipment differences which 
distinguish subconfigurations as defined by EPA) between the automobiles 
tested in the non-EPA test and the EPA tests.

[60 FR 56231, Nov. 8, 1995]



PART 260_GUIDES FOR THE USE OF ENVIRONMENTAL MARKETING CLAIMS--
Table of Contents



Sec.
260.1 Purpose, scope, and structure of the guides.
260.2 Interpretation and substantiation of environmental marketing 
          claims.
260.3 General principles.
260.4 General environmental benefit claims.
260.5 Carbon offsets.
260.6 Certifications and seals of approval.
260.7 Compostable claims.
260.8 Degradable claims.
260.9 Free-of claims.
260.10 Non-toxic claims.
260.11 Ozone-safe and ozone-friendly claims.
260.12 Recyclable claims.
260.13 Recycled content claims.
260.14 Refillable claims.
260.15 Renewable energy claims.
260.16 Renewable materials claims.
260.17 Source reduction claims.

    Authority: 15 U.S.C. 41-58.

    Source: 77 FR 62124, Oct. 11, 2012, unless otherwise noted.



Sec. 260.1  Purpose, scope, and structure of the guides.

    (a) These guides set forth the Federal Trade Commission's current 
views about environmental claims. The guides help marketers avoid making 
environmental marketing claims that are unfair or deceptive under 
Section 5 of the FTC Act, 15 U.S.C. 45. They do not confer any rights on 
any person and do not operate to bind the FTC or the public. The 
Commission, however, can take action under the FTC Act if a marketer 
makes an environmental claim inconsistent with the guides. In any such 
enforcement action, the Commission must prove that the challenged act or 
practice is unfair or deceptive in violation of Section 5 of the FTC 
Act.
    (b) These guides do not preempt federal, state, or local laws. 
Compliance with those laws, however, will not necessarily preclude 
Commission law enforcement action under the FTC Act.
    (c) These guides apply to claims about the environmental attributes 
of a product, package, or service in connection with the marketing, 
offering for sale, or sale of such item or service to individuals. These 
guides also apply to business-to-business transactions. The guides apply 
to environmental claims in labeling, advertising, promotional materials, 
and all other forms of marketing in any medium, whether asserted 
directly or by implication, through words, symbols, logos, depictions, 
product brand names, or any other means.

[[Page 204]]

    (d) The guides consist of general principles, specific guidance on 
the use of particular environmental claims, and examples. Claims may 
raise issues that are addressed by more than one example and in more 
than one section of the guides. The examples provide the Commission's 
views on how reasonable consumers likely interpret certain claims. The 
guides are based on marketing to a general audience. However, when a 
marketer targets a particular segment of consumers, the Commission will 
examine how reasonable members of that group interpret the 
advertisement. Whether a particular claim is deceptive will depend on 
the net impression of the advertisement, label, or other promotional 
material at issue. In addition, although many examples present specific 
claims and options for qualifying claims, the examples do not illustrate 
all permissible claims or qualifications under Section 5 of the FTC Act. 
Nor do they illustrate the only ways to comply with the guides. 
Marketers can use an alternative approach if the approach satisfies the 
requirements of Section 5 of the FTC Act. All examples assume that the 
described claims otherwise comply with Section 5. Where particularly 
useful, the Guides incorporate a reminder to this effect.



Sec. 260.2  Interpretation and substantiation of environmental 
marketing claims.

    Section 5 of the FTC Act prohibits deceptive acts and practices in 
or affecting commerce. A representation, omission, or practice is 
deceptive if it is likely to mislead consumers acting reasonably under 
the circumstances and is material to consumers' decisions. See FTC 
Policy Statement on Deception, 103 FTC 174 (1983). To determine if an 
advertisement is deceptive, marketers must identify all express and 
implied claims that the advertisement reasonably conveys. Marketers must 
ensure that all reasonable interpretations of their claims are truthful, 
not misleading, and supported by a reasonable basis before they make the 
claims. See FTC Policy Statement Regarding Advertising Substantiation, 
104 FTC 839 (1984). In the context of environmental marketing claims, a 
reasonable basis often requires competent and reliable scientific 
evidence. Such evidence consists of tests, analyses, research, or 
studies that have been conducted and evaluated in an objective manner by 
qualified persons and are generally accepted in the profession to yield 
accurate and reliable results. Such evidence should be sufficient in 
quality and quantity based on standards generally accepted in the 
relevant scientific fields, when considered in light of the entire body 
of relevant and reliable scientific evidence, to substantiate that each 
of the marketing claims is true.



Sec. 260.3  General principles.

    The following general principles apply to all environmental 
marketing claims, including those described in Sec. Sec. 260.4 through 
240.16. Claims should comport with all relevant provisions of these 
guides.
    (a) Qualifications and disclosures. To prevent deceptive claims, 
qualifications and disclosures should be clear, prominent, and 
understandable. To make disclosures clear and prominent, marketers 
should use plain language and sufficiently large type, should place 
disclosures in close proximity to the qualified claim, and should avoid 
making inconsistent statements or using distracting elements that could 
undercut or contradict the disclosure.
    (b) Distinction between benefits of product, package, and service. 
Unless it is clear from the context, an environmental marketing claim 
should specify whether it refers to the product, the product's 
packaging, a service, or just to a portion of the product, package, or 
service. In general, if the environmental attribute applies to all but 
minor, incidental components of a product or package, the marketer need 
not qualify the claim to identify that fact. However, there may be 
exceptions to this general principle. For example, if a marketer makes 
an unqualified recyclable claim, and the presence of the incidental 
component significantly limits the ability to recycle the product, the 
claim would be deceptive.

    Example 1: A plastic package containing a new shower curtain is 
labeled ``recyclable'' without further elaboration. Because the context 
of the claim does not make clear whether it refers to the plastic 
package or

[[Page 205]]

the shower curtain, the claim is deceptive if any part of either the 
package or the curtain, other than minor, incidental components, cannot 
be recycled.
    Example 2: A soft drink bottle is labeled ``recycled.'' The bottle 
is made entirely from recycled materials, but the bottle cap is not. 
Because the bottle cap is a minor, incidental component of the package, 
the claim is not deceptive.

    (c) Overstatement of environmental attribute. An environmental 
marketing claim should not overstate, directly or by implication, an 
environmental attribute or benefit. Marketers should not state or imply 
environmental benefits if the benefits are negligible.

    Example 1: An area rug is labeled ``50% more recycled content than 
before.'' The manufacturer increased the recycled content of its rug 
from 2% recycled fiber to 3%. Although the claim is technically true, it 
likely conveys the false impression that the manufacturer has increased 
significantly the use of recycled fiber.
    Example 2: A trash bag is labeled ``recyclable'' without 
qualification. Because trash bags ordinarily are not separated from 
other trash at the landfill or incinerator for recycling, they are 
highly unlikely to be used again for any purpose. Even if the bag is 
technically capable of being recycled, the claim is deceptive since it 
asserts an environmental benefit where no meaningful benefit exists.

    (d) Comparative claims. Comparative environmental marketing claims 
should be clear to avoid consumer confusion about the comparison. 
Marketers should have substantiation for the comparison.

    Example 1: An advertiser notes that its glass bathroom tiles contain 
``20% more recycled content.'' Depending on the context, the claim could 
be a comparison either to the advertiser's immediately preceding product 
or to its competitors' products. The advertiser should have 
substantiation for both interpretations. Otherwise, the advertiser 
should make the basis for comparison clear, for example, by saying ``20% 
more recycled content than our previous bathroom tiles.''
    Example 2: An advertiser claims that ``our plastic diaper liner has 
the most recycled content.'' The diaper liner has more recycled content, 
calculated as a percentage of weight, than any other on the market, 
although it is still well under 100%. The claim likely conveys that the 
product contains a significant percentage of recycled content and has 
significantly more recycled content than its competitors. If the 
advertiser cannot substantiate these messages, the claim would be 
deceptive.
    Example 3: An advertiser claims that its packaging creates ``less 
waste than the leading national brand.'' The advertiser implemented the 
source reduction several years ago and supported the claim by 
calculating the relative solid waste contributions of the two packages. 
The advertiser should have substantiation that the comparison remains 
accurate.
    Example 4: A product is advertised as ``environmentally 
preferable.'' This claim likely conveys that the product is 
environmentally superior to other products. Because it is highly 
unlikely that the marketer can substantiate the messages conveyed by 
this statement, this claim is deceptive. The claim would not be 
deceptive if the marketer accompanied it with clear and prominent 
language limiting the environmental superiority representation to the 
particular attributes for which the marketer has substantiation, 
provided the advertisement's context does not imply other deceptive 
claims. For example, the claim ``Environmentally preferable: contains 
50% recycled content compared to 20% for the leading brand'' would not 
be deceptive.



Sec. 260.4  General environmental benefit claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product, package, or service offers a general environmental 
benefit.
    (b) Unqualified general environmental benefit claims are difficult 
to interpret and likely convey a wide range of meanings. In many cases, 
such claims likely convey that the product, package, or service has 
specific and far-reaching environmental benefits and may convey that the 
item or service has no negative environmental impact. Because it is 
highly unlikely that marketers can substantiate all reasonable 
interpretations of these claims, marketers should not make unqualified 
general environmental benefit claims.
    (c) Marketers can qualify general environmental benefit claims to 
prevent deception about the nature of the environmental benefit being 
asserted. To avoid deception, marketers should use clear and prominent 
qualifying language that limits the claim to a specific benefit or 
benefits. Marketers

[[Page 206]]

should not imply that any specific benefit is significant if it is, in 
fact, negligible. If a qualified general claim conveys that a product is 
more environmentally beneficial overall because of the particular touted 
benefit(s), marketers should analyze trade-offs resulting from the 
benefit(s) to determine if they can substantiate this claim.
    (d) Even if a marketer explains, and has substantiation for, the 
product's specific environmental attributes, this explanation will not 
adequately qualify a general environmental benefit claim if the 
advertisement otherwise implies deceptive claims. Therefore, marketers 
should ensure that the advertisement's context does not imply deceptive 
environmental claims.

    Example 1: The brand name ``Eco-friendly'' likely conveys that the 
product has far-reaching environmental benefits and may convey that the 
product has no negative environmental impact. Because it is highly 
unlikely that the marketer can substantiate these claims, the use of 
such a brand name is deceptive. A claim, such as ``Eco-friendly: made 
with recycled materials,'' would not be deceptive if: (1) The statement 
``made with recycled materials'' is clear and prominent; (2) the 
marketer can substantiate that the entire product or package, excluding 
minor, incidental components, is made from recycled material; (3) making 
the product with recycled materials makes the product more 
environmentally beneficial overall; and (4) the advertisement's context 
does not imply other deceptive claims.
    Example 2: A marketer states that its packaging is now ``Greener 
than our previous packaging.'' The packaging weighs 15% less than 
previous packaging, but it is not recyclable nor has it been improved in 
any other material respect. The claim is deceptive because reasonable 
consumers likely would interpret ``Greener'' in this context to mean 
that other significant environmental aspects of the packaging also are 
improved over previous packaging. A claim stating ``Greener than our 
previous packaging'' accompanied by clear and prominent language such 
as, ``We've reduced the weight of our packaging by 15%,'' would not be 
deceptive, provided that reducing the packaging's weight makes the 
product more environmentally beneficial overall and the advertisement's 
context does not imply other deceptive claims.
    Example 3: A marketer's advertisement features a picture of a laser 
printer in a bird's nest balancing on a tree branch, surrounded by a 
dense forest. In green type, the marketer states, ``Buy our printer. 
Make a change.'' Although the advertisement does not expressly claim 
that the product has environmental benefits, the featured images, in 
combination with the text, likely convey that the product has far-
reaching environmental benefits and may convey that the product has no 
negative environmental impact. Because it is highly unlikely that the 
marketer can substantiate these claims, this advertisement is deceptive.
    Example 4: A manufacturer's Web site states, ``Eco-smart gas-powered 
lawn mower with improved fuel efficiency!'' The manufacturer increased 
the fuel efficiency by 1/10 of a percent. Although the manufacturer's 
claim that it has improved its fuel efficiency technically is true, it 
likely conveys the false impression that the manufacturer has 
significantly increased the mower's fuel efficiency.
    Example 5: A marketer reduces the weight of its plastic beverage 
bottles. The bottles' labels state: ``Environmentally-friendly 
improvement. 25% less plastic than our previous packaging.'' The plastic 
bottles are 25 percent lighter but otherwise are no different. The 
advertisement conveys that the bottles are more environmentally 
beneficial overall because of the source reduction. To substantiate this 
claim, the marketer likely can analyze the impacts of the source 
reduction without evaluating environmental impacts throughout the 
packaging's life cycle. If, however, manufacturing the new bottles 
significantly alters environmental attributes earlier or later in the 
bottles' life cycle, i.e., manufacturing the bottles requires more 
energy or a different kind of plastic, then a more comprehensive 
analysis may be appropriate.



Sec. 260.5  Carbon offsets.

    (a) Given the complexities of carbon offsets, sellers should employ 
competent and reliable scientific and accounting methods to properly 
quantify claimed emission reductions and to ensure that they do not sell 
the same reduction more than one time.
    (b) It is deceptive to misrepresent, directly or by implication, 
that a carbon offset represents emission reductions that have already 
occurred or will occur in the immediate future. To avoid deception, 
marketers should clearly and prominently disclose if the carbon offset 
represents emission reductions that will not occur for two years or 
longer.
    (c) It is deceptive to claim, directly or by implication, that a 
carbon offset represents an emission reduction if the reduction, or the 
activity that caused the reduction, was required by law.


[[Page 207]]


    Example 1: On its Web site, an online travel agency invites 
consumers to purchase offsets to ``neutralize the carbon emissions from 
your flight.'' The proceeds from the offset sales fund future projects 
that will not reduce greenhouse gas emissions for two years. The claim 
likely conveys that the emission reductions either already have occurred 
or will occur in the near future. Therefore, the advertisement is 
deceptive. It would not be deceptive if the agency's Web site stated 
``Offset the carbon emissions from your flight by funding new projects 
that will begin reducing emissions in two years.''
    Example 2: An offset provider claims that its product ``will offset 
your own `dirty' driving habits.'' The offset is based on methane 
capture at a landfill facility. State law requires this facility to 
capture all methane emitted from the landfill. The claim is deceptive 
because the emission reduction would have occurred regardless of whether 
consumers purchased the offsets.



Sec. 260.6  Certifications and seals of approval.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product, package, or service has been endorsed or certified by an 
independent third party.
    (b) A marketer's use of the name, logo, or seal of approval of a 
third-party certifier or organization may be an endorsement, which 
should meet the criteria for endorsements provided in the FTC's 
Endorsement Guides, 16 CFR part 255, including Definitions (Sec. 
255.0), General Considerations (Sec. 255.1), Expert Endorsements (Sec. 
255.3), Endorsements by Organizations (Sec. 255.4), and Disclosure of 
Material Connections (Sec. 255.5).\44\
---------------------------------------------------------------------------

    \44\ The examples in this section assume that the certifiers' 
endorsements meet the criteria provided in the Expert Endorsements 
(Sec. 255.3) and Endorsements by Organizations (Sec. 255.4) sections 
of the Endorsement Guides.
---------------------------------------------------------------------------

    (c) Third-party certification does not eliminate a marketer's 
obligation to ensure that it has substantiation for all claims 
reasonably communicated by the certification.
    (d) A marketer's use of an environmental certification or seal of 
approval likely conveys that the product offers a general environmental 
benefit (see Sec. 260.4) if the certification or seal does not convey 
the basis for the certification or seal, either through the name or some 
other means. Because it is highly unlikely that marketers can 
substantiate general environmental benefit claims, marketers should not 
use environmental certifications or seals that do not convey the basis 
for the certification.
    (e) Marketers can qualify general environmental benefit claims 
conveyed by environmental certifications and seals of approval to 
prevent deception about the nature of the environmental benefit being 
asserted. To avoid deception, marketers should use clear and prominent 
qualifying language that clearly conveys that the certification or seal 
refers only to specific and limited benefits.

    Example 1: An advertisement for paint features a ``GreenLogo'' seal 
and the statement ``GreenLogo for Environmental Excellence.'' This 
advertisement likely conveys that: (1) the GreenLogo seal is awarded by 
an independent, third-party certifier with appropriate expertise in 
evaluating the environmental attributes of paint; and (2) the product 
has far-reaching environmental benefits. If the paint manufacturer 
awarded the seal to its own product, and no independent, third-party 
certifier objectively evaluated the paint using independent standards, 
the claim would be deceptive. The claim would not be deceptive if the 
marketer accompanied the seal with clear and prominent language: (1) 
indicating that the marketer awarded the GreenLogo seal to its own 
product; and (2) clearly conveying that the award refers only to 
specific and limited benefits.
    Example 2: A manufacturer advertises its product as ``certified by 
the American Institute of Degradable Materials.'' Because the 
advertisement does not mention that the American Institute of Degradable 
Materials (``AIDM'') is an industry trade association, the certification 
likely conveys that it was awarded by an independent certifier. To be 
certified, marketers must meet standards that have been developed and 
maintained by a voluntary consensus standard body.\45\ An

[[Page 208]]

independent auditor applies these standards objectively. This 
advertisement likely is not deceptive if the manufacturer complies with 
Sec. 260.8 of the Guides (Degradable Claims) because the certification 
is based on independently-developed and -maintained standards and an 
independent auditor applies the standards objectively.
---------------------------------------------------------------------------

    \45\ Voluntary consensus standard bodies are ``organizations which 
plan, develop, establish, or coordinate voluntary consensus standards 
using agreed-upon procedures. * * * A voluntary consensus standards body 
is defined by the following attributes: (i) Openness, (ii) balance of 
interest, (iii) due process, (iv) an appeals process, (v) consensus, 
which is defined as general agreement, but not necessarily unanimity, 
and includes a process for attempting to resolve objections by 
interested parties, as long as all comments have been fairly considered, 
each objector is advised of the disposition of his or her objection(s) 
and the reasons why, and the consensus members are given an opportunity 
to change their votes after reviewing the comments.'' Memorandum for 
Heads of Executive Departments and Agencies on Federal Participation in 
the Development and Use of Voluntary Consensus Assessment Activities, 
February 10, 1998, Circular No. A-119 Revised, Office of Management and 
Budget at http://www.whitehouse.gov/omb/circulars--a119.
---------------------------------------------------------------------------

    Example 3: A product features a seal of approval from ``The Forest 
Products Industry Association,'' an industry certifier with appropriate 
expertise in evaluating the environmental attributes of paper products. 
Because it is clear from the certifier's name that the product has been 
certified by an industry certifier, the certification likely does not 
convey that it was awarded by an independent certifier. The use of the 
seal likely is not deceptive provided that the advertisement does not 
imply other deceptive claims.
    Example 4: A marketer's package features a seal of approval with the 
text ``Certified Non-Toxic.'' The seal is awarded by a certifier with 
appropriate expertise in evaluating ingredient safety and potential 
toxicity. It applies standards developed by a voluntary consensus 
standard body. Although non-industry members comprise a majority of the 
certifier's board, an industry veto could override any proposed changes 
to the standards. This certification likely conveys that the product is 
certified by an independent organization. This claim would be deceptive 
because industry members can veto any proposed changes to the standards.
    Example 5: A marketer's industry sales brochure for overhead 
lighting features a seal with the text ``EcoFriendly Building 
Association'' to show that the marketer is a member of that 
organization. Although the lighting manufacturer is, in fact, a member, 
this association has not evaluated the environmental attributes of the 
marketer's product. This advertisement would be deceptive because it 
likely conveys that the EcoFriendly Building Association evaluated the 
product through testing or other objective standards. It also is likely 
to convey that the lighting has far-reaching environmental benefits. The 
use of the seal would not be deceptive if the manufacturer accompanies 
it with clear and prominent qualifying language: (1) indicating that the 
seal refers to the company's membership only and that the association 
did not evaluate the product's environmental attributes; and (2) 
limiting the general environmental benefit representations, both express 
and implied, to the particular product attributes for which the marketer 
has substantiation. For example, the marketer could state: ``Although we 
are a member of the EcoFriendly Building Association, it has not 
evaluated this product. Our lighting is made from 100 percent recycled 
metal and uses energy efficient LED technology.''
    Example 6: A product label contains an environmental seal, either in 
the form of a globe icon or a globe icon with the text ``EarthSmart.'' 
EarthSmart is an independent, third-party certifier with appropriate 
expertise in evaluating chemical emissions of products. While the 
marketer meets EarthSmart's standards for reduced chemical emissions 
during product usage, the product has no other specific environmental 
benefits. Either seal likely conveys that the product has far-reaching 
environmental benefits, and that EarthSmart certified the product for 
all of these benefits. If the marketer cannot substantiate these claims, 
the use of the seal would be deceptive. The seal would not be deceptive 
if the marketer accompanied it with clear and prominent language clearly 
conveying that the certification refers only to specific and limited 
benefits. For example, the marketer could state next to the globe icon: 
``EarthSmart certifies that this product meets EarthSmart standards for 
reduced chemical emissions during product usage.'' Alternatively, the 
claim would not be deceptive if the EarthSmart environmental seal itself 
stated: ``EarthSmart Certified for reduced chemical emissions during 
product usage.''
    Example 7: A one-quart bottle of window cleaner features a seal with 
the text ``Environment Approved,'' granted by an independent, third-
party certifier with appropriate expertise. The certifier granted the 
seal after evaluating 35 environmental attributes. This seal likely 
conveys that the product has far-reaching environmental benefits and 
that Environment Approved certified the product for all of these 
benefits and therefore is likely deceptive. The seal would likely not be 
deceptive if the marketer accompanied it with clear and prominent 
language clearly conveying that the seal refers only to specific and 
limited benefits. For example, the seal could state: ``Virtually all 
products impact the environment. For details on which attributes we 
evaluated, go to [a Web site that discusses this product].'' The 
referenced Web page provides a detailed summary of the examined 
environmental attributes. A reference to a Web site is appropriate 
because the additional information provided on the Web site is not 
necessary to prevent the advertisement from being misleading. As always, 
the marketer also should ensure that the advertisement

[[Page 209]]

does not imply other deceptive claims, and that the certifier's criteria 
are sufficiently rigorous to substantiate all material claims reasonably 
communicated by the certification.
    Example 8: Great Paper Company sells photocopy paper with packaging 
that has a seal of approval from the No Chlorine Products Association, a 
non-profit third-party association. Great Paper Company paid the No 
Chlorine Products Association a reasonable fee for the certification. 
Consumers would reasonably expect that marketers have to pay for 
certification. Therefore, there are no material connections between 
Great Paper Company and the No Chlorine Products Association. The claim 
would not be deceptive.



Sec. 260.7  Compostable Claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is compostable.
    (b) A marketer claiming that an item is compostable should have 
competent and reliable scientific evidence that all the materials in the 
item will break down into, or otherwise become part of, usable compost 
(e.g., soil-conditioning material, mulch) in a safe and timely manner 
(i.e., in approximately the same time as the materials with which it is 
composted) in an appropriate composting facility, or in a home compost 
pile or device.
    (c) A marketer should clearly and prominently qualify compostable 
claims to the extent necessary to avoid deception if:
    (1) The item cannot be composted safely or in a timely manner in a 
home compost pile or device; or
    (2) The claim misleads reasonable consumers about the environmental 
benefit provided when the item is disposed of in a landfill.
    (d) To avoid deception about the limited availability of municipal 
or institutional composting facilities, a marketer should clearly and 
prominently qualify compostable claims if such facilities are not 
available to a substantial majority of consumers or communities where 
the item is sold.

    Example 1: A manufacturer indicates that its unbleached coffee 
filter is compostable. The unqualified claim is not deceptive, provided 
the manufacturer has substantiation that the filter can be converted 
safely to usable compost in a timely manner in a home compost pile or 
device. If so, the extent of local municipal or institutional composting 
facilities is irrelevant.
    Example 2: A garden center sells grass clipping bags labeled as 
``Compostable in California Municipal Yard Trimmings Composting 
Facilities.'' When the bags break down, however, they release toxins 
into the compost. The claim is deceptive if the presence of these toxins 
prevents the compost from being usable.
    Example 3: A manufacturer makes an unqualified claim that its 
package is compostable. Although municipal or institutional composting 
facilities exist where the product is sold, the package will not break 
down into usable compost in a home compost pile or device. To avoid 
deception, the manufacturer should clearly and prominently disclose that 
the package is not suitable for home composting.
    Example 4: Nationally marketed lawn and leaf bags state 
``compostable'' on each bag. The bags also feature text disclosing that 
the bag is not designed for use in home compost piles. Yard trimmings 
programs in many communities compost these bags, but such programs are 
not available to a substantial majority of consumers or communities 
where the bag is sold. The claim is deceptive because it likely conveys 
that composting facilities are available to a substantial majority of 
consumers or communities. To avoid deception, the marketer should 
clearly and prominently indicate the limited availability of such 
programs. A marketer could state ``Appropriate facilities may not exist 
in your area,'' or provide the approximate percentage of communities or 
consumers for which such programs are available.
    Example 5: A manufacturer sells a disposable diaper that states, 
``This diaper can be composted if your community is one of the 50 that 
have composting facilities.'' The claim is not deceptive if composting 
facilities are available as claimed and the manufacturer has 
substantiation that the diaper can be converted safely to usable compost 
in solid waste composting facilities.
    Example 6: A manufacturer markets yard trimmings bags only to 
consumers residing in particular geographic areas served by county yard 
trimmings composting programs. The bags meet specifications for these 
programs and are labeled, ``Compostable Yard Trimmings Bag for County 
Composting Programs.'' The claim is not deceptive. Because the bags are 
compostable where they are sold, a qualification is not needed to 
indicate the limited availability of composting facilities.

[[Page 210]]



Sec. 260.8  Degradable claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is degradable, biodegradable, oxo-degradable, 
oxo-biodegradable, or photodegradable. The following guidance for 
degradable claims also applies to biodegradable, oxo-degradable, oxo-
biodegradable, and photodegradable claims.
    (b) A marketer making an unqualified degradable claim should have 
competent and reliable scientific evidence that the entire item will 
completely break down and return to nature (i.e., decompose into 
elements found in nature) within a reasonably short period of time after 
customary disposal.
    (c) It is deceptive to make an unqualified degradable claim for 
items entering the solid waste stream if the items do not completely 
decompose within one year after customary disposal. Unqualified 
degradable claims for items that are customarily disposed in landfills, 
incinerators, and recycling facilities are deceptive because these 
locations do not present conditions in which complete decomposition will 
occur within one year.
    (d) Degradable claims should be qualified clearly and prominently to 
the extent necessary to avoid deception about:
    (1) The product's or package's ability to degrade in the environment 
where it is customarily disposed; and
    (2) The rate and extent of degradation.

    Example 1: A marketer advertises its trash bags using an unqualified 
``degradable'' claim. The marketer relies on soil burial tests to show 
that the product will decompose in the presence of water and oxygen. 
Consumers, however, place trash bags into the solid waste stream, which 
customarily terminates in incineration facilities or landfills where 
they will not degrade within one year. The claim is, therefore, 
deceptive.
    Example 2: A marketer advertises a commercial agricultural plastic 
mulch film with the claim ``Photodegradable,'' and clearly and 
prominently qualifies the term with the phrase ``Will break down into 
small pieces if left uncovered in sunlight.'' The advertiser possesses 
competent and reliable scientific evidence that within one year, the 
product will break down, after being exposed to sunlight, into 
sufficiently small pieces to become part of the soil. Thus, the 
qualified claim is not deceptive. Because the claim is qualified to 
indicate the limited extent of breakdown, the advertiser need not meet 
the consumer expectations for an unqualified photodegradable claim, 
i.e., that the product will not only break down, but also will decompose 
into elements found in nature.
    Example 3: A marketer advertises its shampoo as ``biodegradable'' 
without qualification. The advertisement makes clear that only the 
shampoo, and not the bottle, is biodegradable. The marketer has 
competent and reliable scientific evidence demonstrating that the 
shampoo, which is customarily disposed in sewage systems, will break 
down and decompose into elements found in nature in a reasonably short 
period of time in the sewage system environment. Therefore, the claim is 
not deceptive.
    Example 4: A plastic six-pack ring carrier is marked with a small 
diamond. Several state laws require that the carriers be marked with 
this symbol to indicate that they meet certain degradability standards 
if the carriers are littered. The use of the diamond by itself, in an 
inconspicuous location, does not constitute a degradable claim. 
Consumers are unlikely to interpret an inconspicuous diamond symbol, 
without more, as an unqualified photodegradable claim.\46\
---------------------------------------------------------------------------

    \46\ The Guides' treatment of unqualified degradable claims is 
intended to help prevent deception and is not intended to establish 
performance standards to ensure the degradability of products when 
littered.
---------------------------------------------------------------------------

    Example 5: A fiber pot containing a plant is labeled 
``biodegradable.'' The pot is customarily buried in the soil along with 
the plant. Once buried, the pot fully decomposes during the growing 
season, allowing the roots of the plant to grow into the surrounding 
soil. The unqualified claim is not deceptive.



Sec. 260.9  Free-of claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product, package, or service is free of, or does not contain or 
use, a substance. Such claims should be clearly and prominently 
qualified to the extent necessary to avoid deception.
    (b) A truthful claim that a product, package, or service is free of, 
or does not contain or use, a substance may nevertheless be deceptive 
if:
    (1) The product, package, or service contains or uses substances 
that pose the same or similar environmental risks as the substance that 
is not present; or
    (2) The substance has not been associated with the product category.

[[Page 211]]

    (c) Depending on the context, a free-of or does-not-contain claim is 
appropriate even for a product, package, or service that contains or 
uses a trace amount of a substance if:
    (1) The level of the specified substance is no more than that which 
would be found as an acknowledged trace contaminant or background level 
\47\;
---------------------------------------------------------------------------

    \47\ ``Trace contaminant'' and ``background level'' are imprecise 
terms, although allowable manufacturing ``trace contaminants'' may be 
defined according to the product area concerned. What constitutes a 
trace amount or background level depends on the substance at issue, and 
requires a case-by-case analysis.
---------------------------------------------------------------------------

    (2) The substance's presence does not cause material harm that 
consumers typically associate with that substance; and
    (3) The substance has not been added intentionally to the product.

    Example 1: A package of t-shirts is labeled ``Shirts made with a 
chlorine-free bleaching process.'' The shirts, however, are bleached 
with a process that releases a reduced, but still significant, amount of 
the same harmful byproducts associated with chlorine bleaching. The 
claim overstates the product's benefits because reasonable consumers 
likely would interpret it to mean that the product's manufacture does 
not cause any of the environmental risks posed by chlorine bleaching. A 
substantiated claim, however, that the shirts were ``bleached with a 
process that releases 50% less of the harmful byproducts associated with 
chlorine bleaching'' would not be deceptive.
    Example 2: A manufacturer advertises its insulation as 
``formaldehyde free.'' Although the manufacturer does not use 
formaldehyde as a binding agent to produce the insulation, tests show 
that the insulation still emits trace amounts of formaldehyde. The 
seller has substantiation that formaldehyde is present in trace amounts 
in virtually all indoor and (to a lesser extent) outdoor environments 
and that its insulation emits less formaldehyde than is typically 
present in outdoor environments. Further, the seller has substantiation 
that the trace amounts of formaldehyde emitted by the insulation do not 
cause material harm that consumers typically associate with 
formaldehyde. In this context, the trace levels of formaldehyde 
emissions likely are inconsequential to consumers. Therefore, the 
seller's free-of claim would not be deceptive.



Sec. 260.10  Non-toxic claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product, package, or service is non-toxic. Non-toxic claims 
should be clearly and prominently qualified to the extent necessary to 
avoid deception.
    (b) A non-toxic claim likely conveys that a product, package, or 
service is non-toxic both for humans and for the environment generally. 
Therefore, marketers making non-toxic claims should have competent and 
reliable scientific evidence that the product, package, or service is 
non-toxic for humans and for the environment or should clearly and 
prominently qualify their claims to avoid deception.

    Example: A marketer advertises a cleaning product as ``essentially 
non-toxic'' and ``practically non-toxic.'' The advertisement likely 
conveys that the product does not pose any risk to humans or the 
environment, including household pets. If the cleaning product poses no 
risk to humans but is toxic to the environment, the claims would be 
deceptive.



Sec. 260.11  Ozone-safe and ozone-friendly claims.

    It is deceptive to misrepresent, directly or by implication, that a 
product, package, or service is safe for, or friendly to, the ozone 
layer or the atmosphere.

    Example 1: A product is labeled ``ozone-friendly.'' The claim is 
deceptive if the product contains any ozone-depleting substance, 
including those substances listed as Class I or Class II chemicals in 
Title VI of the Clean Air Act Amendments of 1990, Public Law. 101-549, 
and others subsequently designated by EPA as ozone-depleting substances. 
These chemicals include chlorofluorocarbons (CFCs), halons, carbon 
tetrachloride, 1,1,1-trichloroethane, methyl bromide, 
hydrobromofluorocarbons, and hydrochlorofluorocarbons (HCFCs).
    Example 2: An aerosol air freshener is labeled ``ozone-friendly.'' 
Some of the product's ingredients are volatile organic compounds (VOCs) 
that may cause smog by contributing to ground-level ozone formation. The 
claim likely conveys that the product is safe for the atmosphere as a 
whole, and, therefore, is deceptive.



Sec. 260.12  Recyclable claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is recyclable. A product

[[Page 212]]

or package should not be marketed as recyclable unless it can be 
collected, separated, or otherwise recovered from the waste stream 
through an established recycling program for reuse or use in 
manufacturing or assembling another item.
    (b) Marketers should clearly and prominently qualify recyclable 
claims to the extent necessary to avoid deception about the availability 
of recycling programs and collection sites to consumers.
    (1) When recycling facilities are available to a substantial 
majority of consumers or communities where the item is sold, marketers 
can make unqualified recyclable claims. The term ``substantial 
majority,'' as used in this context, means at least 60 percent.
    (2) When recycling facilities are available to less than a 
substantial majority of consumers or communities where the item is sold, 
marketers should qualify all recyclable claims. Marketers may always 
qualify recyclable claims by stating the percentage of consumers or 
communities that have access to facilities that recycle the item. 
Alternatively, marketers may use qualifications that vary in strength 
depending on facility availability. The lower the level of access to an 
appropriate facility is, the more strongly the marketer should emphasize 
the limited availability of recycling for the product. For example, if 
recycling facilities are available to slightly less than a substantial 
majority of consumers or communities where the item is sold, a marketer 
may qualify a recyclable claim by stating: ``This product [package] may 
not be recyclable in your area,'' or ``Recycling facilities for this 
product [package] may not exist in your area.'' If recycling facilities 
are available only to a few consumers, marketers should use stronger 
clarifications. For example, a marketer in this situation may qualify 
its recyclable claim by stating: ``This product [package] is recyclable 
only in the few communities that have appropriate recycling 
facilities.''
    (c) Marketers can make unqualified recyclable claims for a product 
or package if the entire product or package, excluding minor incidental 
components, is recyclable. For items that are partially made of 
recyclable components, marketers should clearly and prominently qualify 
the recyclable claim to avoid deception about which portions are 
recyclable.
    (d) If any component significantly limits the ability to recycle the 
item, any recyclable claim would be deceptive. An item that is made from 
recyclable material, but, because of its shape, size, or some other 
attribute, is not accepted in recycling programs, should not be marketed 
as recyclable.\48\
---------------------------------------------------------------------------

    \48\ Batteries labeled in accordance with the Mercury-Containing and 
Rechargeable Battery Management Act, 42 U.S.C. 14322(b), are deemed to 
be in compliance with these Guides.

    Example 1: A packaged product is labeled with an unqualified claim, 
``recyclable.'' It is unclear from the type of product and other context 
whether the claim refers to the product or its package. The unqualified 
claim likely conveys that both the product and its packaging, except for 
minor, incidental components, can be recycled. Unless the manufacturer 
has substantiation for both messages, it should clearly and prominently 
qualify the claim to indicate which portions are recyclable.
    Example 2: A nationally marketed plastic yogurt container displays 
the Resin Identification Code (RIC) \49\ (which consists of a design of 
arrows in a triangular shape containing a number in the center and an 
abbreviation identifying the component plastic resin) on the front label 
of the container, in close proximity to the product name and logo. This 
conspicuous use of the RIC constitutes a recyclable claim. Unless 
recycling facilities for this container are available to a substantial 
majority of consumers or communities, the manufacturer should qualify 
the claim to disclose the limited availability of recycling programs. If 
the manufacturer places the RIC, without more, in an inconspicuous 
location on the container (e.g., embedded in the bottom of the 
container), it would not constitute a recyclable claim.
---------------------------------------------------------------------------

    \49\ The RIC, formerly known as the Society of the Plastics 
Industry, Inc. (SPI) code, is now covered by ASTM D 7611.
---------------------------------------------------------------------------

    Example 3: A container can be burned in incinerator facilities to 
produce heat and power. It cannot, however, be recycled into another 
product or package. Any claim that the container is recyclable would be 
deceptive.
    Example 4: A paperboard package is marketed nationally and labeled 
either ``Recyclable where facilities exist'' or ``Recyclable B Check to 
see if recycling facilities exist in your area.'' Recycling programs for 
these

[[Page 213]]

packages are available to some consumers, but not available to a 
substantial majority of consumers nationwide. Both claims are deceptive 
because they do not adequately disclose the limited availability of 
recycling programs. To avoid deception, the marketer should use a 
clearer qualification, such as one suggested in Sec. 260.12(b)(2).
    Example 5: Foam polystyrene cups are advertised as ``Recyclable in 
the few communities with facilities for foam polystyrene cups.'' A half-
dozen major metropolitan areas have established collection sites for 
recycling those cups. The claim is not deceptive because it clearly 
discloses the limited availability of recycling programs.
    Example 6: A package is labeled ``Includes some recyclable 
material.'' The package is composed of four layers of different 
materials, bonded together. One of the layers is made from recyclable 
material, but the others are not. While programs for recycling the 25 
percent of the package that consists of recyclable material are 
available to a substantial majority of consumers, only a few of those 
programs have the capability to separate the recyclable layer from the 
non-recyclable layers. The claim is deceptive for two reasons. First, it 
does not specify the portion of the product that is recyclable. Second, 
it does not disclose the limited availability of facilities that can 
process multi-layer products or materials. An appropriately qualified 
claim would be ``25 percent of the material in this package is 
recyclable in the few communities that can process multi-layer 
products.''
    Example 7: A product container is labeled ``recyclable.'' The 
marketer advertises and distributes the product only in Missouri. 
Collection sites for recycling the container are available to a 
substantial majority of Missouri residents but are not yet available 
nationally. Because programs are available to a substantial majority of 
consumers where the product is sold, the unqualified claim is not 
deceptive.
    Example 8: A manufacturer of one-time use cameras, with dealers in a 
substantial majority of communities, operates a take-back program that 
collects those cameras through all of its dealers. The manufacturer 
reconditions the cameras for resale and labels them ``Recyclable through 
our dealership network.'' This claim is not deceptive, even though the 
cameras are not recyclable through conventional curbside or drop-off 
recycling programs.
    Example 9: A manufacturer advertises its toner cartridges for 
computer printers as ``Recyclable. Contact your local dealer for 
details.'' Although all of the company's dealers recycle cartridges, the 
dealers are not located in a substantial majority of communities where 
cartridges are sold. Therefore, the claim is deceptive. The manufacturer 
should qualify its claim consistent with Sec. 260.11(b)(2).
    Example 10: An aluminum can is labeled ``Please Recycle.'' This 
statement likely conveys that the can is recyclable. If collection sites 
for recycling these cans are available to a substantial majority of 
consumers or communities, the marketer does not need to qualify the 
claim.



Sec. 260.13  Recycled content claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is made of recycled content. Recycled content 
includes recycled raw material, as well as used,\50\ reconditioned, and 
re-manufactured components.
---------------------------------------------------------------------------

    \50\ The term ``used'' refers to parts that are not new and that 
have not undergone any remanufacturing or reconditioning.
---------------------------------------------------------------------------

    (b) It is deceptive to represent, directly or by implication, that 
an item contains recycled content unless it is composed of materials 
that have been recovered or otherwise diverted from the waste stream, 
either during the manufacturing process (pre-consumer), or after 
consumer use (post-consumer). If the source of recycled content includes 
pre-consumer material, the advertiser should have substantiation that 
the pre-consumer material would otherwise have entered the waste stream. 
Recycled content claims may--but do not have to--distinguish between 
pre-consumer and post-consumer materials. Where a marketer distinguishes 
between pre-consumer and post-consumer materials, it should have 
substantiation for any express or implied claim about the percentage of 
pre-consumer or post-consumer content in an item.
    (c) Marketers can make unqualified claims of recycled content if the 
entire product or package, excluding minor, incidental components, is 
made from recycled material. For items that are partially made of 
recycled material, the marketer should clearly and prominently qualify 
the claim to avoid deception about the amount or percentage, by weight, 
of recycled content in the finished product or package.
    (d) For products that contain used, reconditioned, or re-
manufactured components, the marketer should

[[Page 214]]

clearly and prominently qualify the recycled content claim to avoid 
deception about the nature of such components. No such qualification is 
necessary where it is clear to reasonable consumers from context that a 
product's recycled content consists of used, reconditioned, or re-
manufactured components.

    Example 1: A manufacturer collects spilled raw material and scraps 
from the original manufacturing process. After a minimal amount of 
reprocessing, the manufacturer combines the spills and scraps with 
virgin material for use in production of the same product. A recycled 
content claim is deceptive since the spills and scraps are normally 
reused by industry within the original manufacturing process and would 
not normally have entered the waste stream.
    Example 2: Fifty percent of a greeting card's fiber weight is 
composed from paper that was diverted from the waste stream. Of this 
material, 30% is post-consumer and 20% is pre-consumer. It would not be 
deceptive if the marketer claimed that the card either ``contains 50% 
recycled fiber'' or ``contains 50% total recycled fiber, including 30% 
post-consumer fiber.''
    Example 3: A paperboard package with 20% recycled fiber by weight is 
labeled ``20% post-consumer recycled fiber.'' The recycled content was 
composed of overrun newspaper stock never sold to customers. Because the 
newspapers never reached consumers, the claim is deceptive.
    Example 4: A product in a multi-component package, such as a 
paperboard box in a shrink-wrapped plastic cover, indicates that it has 
recycled packaging. The paperboard box is made entirely of recycled 
material, but the plastic cover is not. The claim is deceptive because, 
without qualification, it suggests that both components are recycled. A 
claim limited to the paperboard box would not be deceptive.
    Example 5: A manufacturer makes a package from laminated layers of 
foil, plastic, and paper, although the layers are indistinguishable to 
consumers. The label claims that ``one of the three layers of this 
package is made of recycled plastic.'' The plastic layer is made 
entirely of recycled plastic. The claim is not deceptive, provided the 
recycled plastic layer constitutes a significant component of the entire 
package.
    Example 6: A frozen dinner package is composed of a plastic tray 
inside a cardboard box. It states ``package made from 30% recycled 
material.'' Each packaging component is one-half the weight of the total 
package. The box is 20% recycled content by weight, while the plastic 
tray is 40% recycled content by weight. The claim is not deceptive, 
since the average amount of recycled material is 30%.
    Example 7: A manufacturer labels a paper greeting card ``50% 
recycled fiber.'' The manufacturer purchases paper stock from several 
sources, and the amount of recycled fiber in the stock provided by each 
source varies. If the 50% figure is based on the annual weighted average 
of recycled material purchased from the sources after accounting for 
fiber loss during the papermaking production process, the claim is not 
deceptive.
    Example 8: A packaged food product is labeled with a three-chasing-
arrows symbol (a M[ouml]bius loop) without explanation. By itself, the 
symbol likely conveys that the packaging is both recyclable and made 
entirely from recycled material. Unless the marketer has substantiation 
for both messages, the claim should be qualified. The claim may need to 
be further qualified, to the extent necessary, to disclose the limited 
availability of recycling programs and/or the percentage of recycled 
content used to make the package.
    Example 9: In an office supply catalog, a manufacturer advertises 
its printer toner cartridges ``65% recycled.'' The cartridges contain 
25% recycled raw materials and 40% reconditioned parts. The claim is 
deceptive because reasonable consumers likely would not know or expect 
that a cartridge's recycled content consists of reconditioned parts. It 
would not be deceptive if the manufacturer claimed ``65% recycled 
content; including 40% from reconditioned parts.''
    Example 10: A store sells both new and used sporting goods. One of 
the items for sale in the store is a baseball helmet that, although 
used, is no different in appearance than a brand new item. The helmet 
bears an unqualified ``Recycled'' label. This claim is deceptive because 
reasonable consumers likely would believe that the helmet is made of 
recycled raw materials, when it is, in fact, a used item. An acceptable 
claim would bear a disclosure clearly and prominently stating that the 
helmet is used.
    Example 11: An automotive dealer, automobile recycler, or other 
qualified entity recovers a serviceable engine from a wrecked vehicle. 
Without repairing, rebuilding, re-manufacturing, or in any way altering 
the engine or its components, the dealer attaches a ``Recycled'' label 
to the engine, and offers it for sale in its used auto parts store. In 
this situation, an unqualified recycled content claim likely is not 
deceptive because reasonable consumers in the automotive context likely 
would understand that the engine is used and has not undergone any 
rebuilding.
    Example 12: An automobile parts dealer, automobile recycler, or 
other qualified entity purchases a transmission that has been recovered 
from a salvaged or end-of-life vehicle. Eighty-five percent of the 
transmission,

[[Page 215]]

by weight, was rebuilt and 15% constitutes new materials. After 
rebuilding \51\ the transmission in accordance with industry practices, 
the dealer packages it for resale in a box labeled ``Rebuilt 
Transmission,'' or ``Rebuilt Transmission (85% recycled content from 
rebuilt parts),'' or ``Recycled Transmission (85% recycled content from 
rebuilt parts).'' Given consumer perception in the automotive context, 
these claims are not deceptive.
---------------------------------------------------------------------------

    \51\ The term ``rebuilding'' means that the dealer dismantled and 
reconstructed the transmission as necessary, cleaned all of its internal 
and external parts and eliminated rust and corrosion, restored all 
impaired, defective or substantially worn parts to a sound condition (or 
replaced them if necessary), and performed any operations required to 
put the transmission in sound working condition.
---------------------------------------------------------------------------



Sec. 260.14  Refillable claims.

    It is deceptive to misrepresent, directly or by implication, that a 
package is refillable. A marketer should not make an unqualified 
refillable claim unless the marketer provides the means for refilling 
the package. The marketer may either provide a system for the collection 
and refill of the package, or offer for sale a product that consumers 
can purchase to refill the original package.
    Example 1: A container is labeled ``refillable three times.'' The 
manufacturer has the capability to refill returned containers and can 
show that the container will withstand being refilled at least three 
times. The manufacturer, however, has established no collection program. 
The unqualified claim is deceptive because there is no means to return 
the container to the manufacturer for refill.
    Example 2: A small bottle of fabric softener states that it is in a 
``handy refillable container.'' In the same market area, the 
manufacturer also sells a large-sized bottle that consumers use to 
refill the smaller bottles. The claim is not deceptive because there is 
a reasonable means for the consumer to refill the smaller container.



Sec. 260.15  Renewable energy claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is made with renewable energy or that a 
service uses renewable energy. A marketer should not make unqualified 
renewable energy claims, directly or by implication, if fossil fuel, or 
electricity derived from fossil fuel, is used to manufacture any part of 
the advertised item or is used to power any part of the advertised 
service, unless the marketer has matched such non-renewable energy use 
with renewable energy certificates.
    (b) Research suggests that reasonable consumers may interpret 
renewable energy claims differently than marketers may intend. Unless 
marketers have substantiation for all their express and reasonably 
implied claims, they should clearly and prominently qualify their 
renewable energy claims. For instance, marketers may minimize the risk 
of deception by specifying the source of the renewable energy (e.g., 
wind or solar energy).
    (c) It is deceptive to make an unqualified ``made with renewable 
energy'' claim unless all, or virtually all, of the significant 
manufacturing processes involved in making the product or package are 
powered with renewable energy or non-renewable energy matched by 
renewable energy certificates. When this is not the case, marketers 
should clearly and prominently specify the percentage of renewable 
energy that powered the significant manufacturing processes involved in 
making the product or package.
    (d) If a marketer generates renewable electricity but sells 
renewable energy certificates for all of that electricity, it would be 
deceptive for the marketer to represent, directly or by implication, 
that it uses renewable energy.

    Example 1: A marketer advertises its clothing line as ``made with 
wind power.'' The marketer buys wind energy for 50% of the energy it 
uses to make the clothing in its line. The marketer's claim is deceptive 
because reasonable consumers likely interpret the claim to mean that the 
power was composed entirely of renewable energy. If the marketer stated, 
``We purchase wind energy for half of our manufacturing facilities,'' 
the claim would not be deceptive.
    Example 2: A company purchases renewable energy from a portfolio of 
sources that includes a mix of solar, wind, and other renewable energy 
sources in combinations and proportions that vary over time. The company 
uses renewable energy from that portfolio to power all of the 
significant manufacturing processes involved in making its product. The 
company advertises its product as ``made with renewable energy.'' The 
claim would not be deceptive if the marketer clearly and prominently 
disclosed all renewable energy sources. Alternatively, the claim

[[Page 216]]

would not be deceptive if the marketer clearly and prominently stated, 
``made from a mix of renewable energy sources,'' and specified the 
renewable source that makes up the greatest percentage of the portfolio. 
The company may calculate which renewable energy source makes up the 
greatest percentage of the portfolio on an annual basis.
    Example 3: An automobile company uses 100% non-renewable energy to 
produce its cars. The company purchases renewable energy certificates to 
match the non-renewable energy that powers all of the significant 
manufacturing processes for the seats, but no other parts, of its cars. 
If the company states, ``The seats of our cars are made with renewable 
energy,'' the claim would not be deceptive, as long as the company 
clearly and prominently qualifies the claim such as by specifying the 
renewable energy source.
    Example 4: A company uses 100% non-renewable energy to manufacture 
all parts of its product, but powers the assembly process entirely with 
renewable energy. If the marketer advertised its product as ``assembled 
using renewable energy,'' the claim would not be deceptive.
    Example 5: A toy manufacturer places solar panels on the roof of its 
plant to generate power, and advertises that its plant is ``100% solar-
powered.'' The manufacturer, however, sells renewable energy 
certificates based on the renewable attributes of all the power it 
generates. Even if the manufacturer uses the electricity generated by 
the solar panels, it has, by selling renewable energy certificates, 
transferred the right to characterize that electricity as renewable. The 
manufacturer's claim is therefore deceptive. It also would be deceptive 
for this manufacturer to advertise that it ``hosts'' a renewable power 
facility because reasonable consumers likely interpret this claim to 
mean that the manufacturer uses renewable energy. It would not be 
deceptive, however, for the manufacturer to advertise, ``We generate 
renewable energy, but sell all of it to others.''



Sec. 260.16  Renewable materials claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is made with renewable materials.
    (b) Research suggests that reasonable consumers may interpret 
renewable materials claims differently than marketers may intend. Unless 
marketers have substantiation for all their express and reasonably 
implied claims, they should clearly and prominently qualify their 
renewable materials claims. For example, marketers may minimize the risk 
of unintended implied claims by identifying the material used and 
explaining why the material is renewable.
    (c) Marketers should also qualify any ``made with renewable 
materials'' claim unless the product or package (excluding minor, 
incidental components) is made entirely with renewable materials.

    Example 1: A marketer makes the unqualified claim that its flooring 
is ``made with renewable materials.'' Reasonable consumers likely 
interpret this claim to mean that the flooring also is made with 
recycled content, recyclable, and biodegradable. Unless the marketer has 
substantiation for these implied claims, the unqualified ``made with 
renewable materials'' claim is deceptive. The marketer could qualify the 
claim by stating, clearly and prominently, ``Our flooring is made from 
100 percent bamboo, which grows at the same rate, or faster, than we use 
it.'' The marketer still is responsible for substantiating all remaining 
express and reasonably implied claims.
    Example 2: A marketer's packaging states that ``Our packaging is 
made from 50% plant-based renewable materials. Because we turn fast-
growing plants into bio-plastics, only half of our product is made from 
petroleum-based materials.'' By identifying the material used and 
explaining why the material is renewable, the marketer has minimized the 
risk of unintended claims that the product is made with recycled 
content, recyclable, and biodegradable. The marketer has adequately 
qualified the amount of renewable materials in the product.



Sec. 260.17  Source reduction claims.

    It is deceptive to misrepresent, directly or by implication, that a 
product or package has been reduced or is lower in weight, volume, or 
toxicity. Marketers should clearly and prominently qualify source 
reduction claims to the extent necessary to avoid deception about the 
amount of the source reduction and the basis for any comparison.

    Example: An advertiser claims that disposal of its product generates 
``10% less waste.'' The marketer does not accompany this claim with a 
general environmental benefit claim. Because this claim could be a 
comparison to the advertiser's immediately preceding product or to its 
competitors' products, the advertiser should have substantiation for 
both interpretations. Otherwise, the advertiser should clarify which 
comparison it intends and have substantiation for that comparison. A 
claim of ``10% less waste than our previous product'' would

[[Page 217]]

not be deceptive if the advertiser has substantiation that shows that 
the current product's disposal contributes 10% less waste by weight or 
volume to the solid waste stream when compared with the immediately 
preceding version of the product.

[[Page 218]]



        SUBCHAPTER C_REGULATIONS UNDER SPECIFIC ACTS OF CONGRESS





PART 300_RULES AND REGULATIONS UNDER THE WOOL PRODUCTS LABELING
ACT OF 1939--Table of Contents



                               Definitions

Sec.
300.1 Terms defined.

                                Labeling

300.2 General requirement.
300.3 Required label information.
300.4 Registered identification numbers.
300.5 Required label and method of affixing.
300.6 Labels to be avoided.
300.7 English language requirement.
300.8 Use of fiber trademark and generic names.
300.9 Abbreviations, ditto marks, and asterisks.
300.10 Disclosure of information on labels.
300.11 Improper methods of labeling.
300.12 Labeling of pairs or products containing two or more units.
300.13 Name or other identification required to appear on labels.
300.14 Substitute label requirement.
300.15 Labeling of containers or packaging of wool products.
300.16 Ornamentation.
300.17 Use of the term ``all'' or ``100%''.
300.18 Use of name of specialty fiber.
300.19 Use of terms ``mohair'' and ``cashmere''.
300.20 Use of the terms ``virgin'' or ``new''.
300.20a Labeling of very fine wool.
300.21 Marking of samples, swatches, or specimens.
300.22 Sectional disclosure of content.
300.23 Linings, paddings, stiffening, trimmings and facings.
300.24 Representations as to fiber content.
300.25 Country where wool products are processed or manufactured.
300.25a Country of origin in mail order advertising.
300.26 Pile fabrics and products composed thereof.
300.27 Wool products containing superimposed or added fibers.
300.28 Undetermined quantities of reclaimed fibers.
300.29 Garments or products composed of or containing miscellaneous 
          cloth scraps.
300.30 Deceptive labeling in general.

                         Manufacturers' Records

300.31 Maintenance of records.

                               Guarantees

300.32 Form of separate guaranty.
300.33 Continuing guaranty filed with Federal Trade Commission.
300.34 Reference to existing guaranty on labels not permitted.

                                 General

300.35 Hearings under section 4(d) of the act.

    Authority: 15 U.S.C. 68-68j.

    Source: 6 FR 3426, July 15, 1941, unless otherwise noted.

                               Definitions



Sec. 300.1  Terms defined.

    (a) The term Act means the Wool Products Labeling Act of 1939, 15 
U.S.C. 68 et seq., as amended by Public Law 96-242, 94 Stat. 344, and 
Public Law 109-428, 120 Stat. 2913.
    (b) The terms rule, rules, regulations and rules and regulations 
mean the rules and regulations prescribed by the Commission pursuant to 
the Act.
    (c) The term ornamentation means any fibers or yarns imparting a 
visibly discernible pattern or design to a yarn or fabric.
    (d) The term fiber trademark means a word or words used by a person 
to identify a particular fiber produced or sold by him and to 
distinguish it from fibers of the same generic class produced or sold by 
others. Such term shall not include any trademark, product mark, house 
mark, trade name or other name which does not identify a particular 
fiber.
    (e) The terms required information or information required mean such 
information as is required to be disclosed on the required stamp, tag, 
label or other means of identification under the Act and regulations.
    (f) The definitions of terms contained in section 2 of the Act shall 
be applicable also to such terms when used in rules promulgated under 
the Act.
    (g) The term United States means the several States, the District of 
Columbia, and the territories and possessions of the United States.

[[Page 219]]

    (h) The terms mail order catalog and mail order promotional material 
mean any materials, used in the direct sale or direct offering for sale 
of wool products, that are disseminated to ultimate consumers in print 
or by electronic means, other than by broadcast, and that solicit 
ultimate consumers to purchase such wool products by mail, telephone, 
electronic mail, or some other method without examining the actual 
product purchased.
    (i) The terms label, labels, labeled, and labeling mean the stamp, 
tag, label, or other means of identification, or authorized substitute 
therefore, required to be on or affixed to wool products by the Act or 
Regulations and on which the information required is to appear.
    (j) The terms invoice and invoice or other document have the meaning 
set forth in Sec. 303.1(h) of this chapter.
    (k) The term trimmings has the meaning set forth in Sec. 303.12 of 
this chapter.

[29 FR 6623, May 21, 1964, as amended at 45 FR 44261, July 1, 1980; 50 
FR 15105, Apr. 17, 1985; 63 FR 7516, Feb. 13, 1998; 79 FR 32163, June 4, 
2014]

                                Labeling



Sec. 300.2  General requirement.

    Each and every wool product subject to the act shall be marked by a 
stamp, tag, label, or other means of identification, in conformity with 
the requirements of the act and the rules and regulations thereunder.



Sec. 300.3  Required label information.

    (a) The marking of wool products under the Act shall be in the form 
of a stamp, tag, label or other means of identification, showing and 
displaying upon the product the required information legibly, 
conspicuously, and nondeceptively. The information required to be shown 
and displayed upon the product in the stamp, tag, label, or other mark 
of identification, shall be that which is required by the Act and the 
rules and regulations thereunder, including the following:
    (1) The fiber content of the product specified in section 4(a)(2)(A) 
of the Act. The generic names and percentages by weight of the 
constituent fibers present in the wool product, exclusive of permissive 
ornamentation, shall appear on such label with any percentage of fiber 
or fibers designated as ``other fiber'' or ``other fibers'' as provided 
by section 4(a)(2)(A)(4) of the Act appearing last
    (2) The maximum percentage of the total weight of the wool product 
of any nonfibrous loading, filling or adulterating matter as prescribed 
by section 4(a)(2)(B) of the Act.
    (3) The name or registered identification number issued by the 
Commission of the manufacturer of the wool product or the name or 
registered identification number of one or more persons subject to 
section 3 of the Act with respect to such wool product.
    (4) The name of the country where the wool product was processed or 
manufactured.
    (b) In disclosing the constituent fibers in information required by 
the Act and regulations in this part or in any non-required information, 
no fiber present in the amount of less than 5 percent shall be 
designated by its generic name or fiber trademark but shall be 
designated as ``other fiber,'' except that the percentage of wool or 
recycled wool shall always be stated, in accordance with section 
4(a)(2)(A) of the Act. When more than one of such fibers, other than 
wool or recycled wool, are present in amounts of less than 5 percent, 
they shall be designated in the aggregate as ``other fibers.'' Provided, 
however, that nothing in this section shall prevent the disclosure of 
any fiber present in the product which has a clearly established and 
definite functional significance when present in the amount stated, as 
for example:

``98% wool
2% nylon.''

[29 FR 6623, May 21, 1964, as amended at 45 FR 44261, July 1, 1980; 50 
FR 15105, Apr. 17, 1985; 63 FR 7516, Feb. 13, 1998; 79 FR 32163, June 4, 
2014]



Sec. 300.4  Registered identification numbers.

    (a) A registered identification number assigned by the Federal Trade 
Commission under and in accordance with the provisions of this section 
may be used upon the stamp, tag, label, or other mark of identification 
required under the Act to be affixed to a wool

[[Page 220]]

product, as and for the name of the person to whom such number has been 
assigned.
    (b) Any manufacturer of a wool product or person subject to section 
3 of the Act with respect to such wool product, residing in the United 
States, may apply to the Federal Trade Commission for a registered 
identification number for use by the applicant on the stamp, tag, label, 
or other mark of identification required under the Act.
    (c) Registered identification numbers shall be used only by the 
person or firm to whom they are issued, and such numbers are not 
transferable or assignable. Registered identification numbers shall be 
subject to cancellation whenever any such number was procured or has 
been used improperly or contrary to the requirements of the Acts 
administered by the Federal Trade Commission, and regulations in this 
part, or when otherwise deemed necessary in the public interest. 
Registered identification numbers shall be subject to cancellation if 
the Commission fails to receive prompt notification of any change in 
name, business address, or legal business status of a person or firm to 
whom a registered identification number has been assigned, by 
application duly executed in the form set out in paragraph (e) of this 
section, reflecting the current name, business address, and legal 
business status of the person or firm.
    (d) Registered identification numbers assigned under this section 
may be used on labels required in labeling products subject to the 
provisions of the Fur Products Labeling Act and Textile Fiber Products 
Identification Act, and numbers previously assigned by the Commission 
under such Acts may be used as and for the required name in labeling 
under this Act. When so used by the person or firm to whom assigned, the 
use of the numbers shall be construed as identifying and binding the 
applicant as fully and in all respects as though assigned under the 
specific Act for which it is used.
    (e) The form to apply for a registered identification number or to 
update information pertaining to an existing number is found in Sec. 
303.20(d) of this chapter. The form is available upon request from the 
Textile Section, Enforcement Division, Federal Trade Commission, 600 
Pennsylvania Avenue, NW, Washington, DC 20580, or on the Internet at 
http://www.ftc.gov.

[29 FR 6623, May 21, 1964, as amended at 48 FR 12516, Mar. 25, 1983; 63 
FR 7516, Feb. 13, 1998; 63 FR 71582, Dec. 28, 1998; 65 FR 75156, Dec. 1, 
2000]



Sec. 300.5  Required label and method of affixing.

    (a) A label is required to be affixed to each wool product and, 
where required, to its package or container in a secure manner. Such 
label shall be conspicuous and shall be of such durability as to remain 
attached to the product and its package throughout any distribution, 
sale, resale and until sold and delivered to the ultimate consumer.
    (b) Each wool product with a neck must have a label disclosing the 
country of origin affixed to the inside center of the neck midway 
between the shoulder seams or in close proximity to another label 
affixed to the inside center of the neck. The fiber content and RN or 
name of the company may be disclosed on the same label as the country of 
origin or on another conspicuous and readily accessible label or labels 
on the inside or outside of the garment. On all other wool products, the 
required information shall be disclosed on a conspicuous and readily 
accessible label or labels on the inside or outside of the product. The 
country of origin disclosure must always appear on the front side of the 
label. Other required information may appear either on the front side or 
the reverse side of a label, provided that the information is 
conspicuous and readily accessible.
    (c) In the case of hosiery products, this section does not require 
affixing a label to each hosiery product contained in a package if, (1) 
such hosiery products are intended for sale to the ultimate consumer in 
such package, (2) such package has affixed to it a label bearing the 
required information for the hosiery products contained in the package, 
and (3) the information on the label affixed to the package is equally 
applicable to each wool product contained therein.

[50 FR 15105, Apr. 17, 1985, as amended at 63 FR 7516, Feb. 13, 1998]

[[Page 221]]



Sec. 300.6  Labels to be avoided.

    Stamps, tags, labels, or other marks of identification, which are 
insecurely attached, or which in the course of offering the product for 
sale, selling, reselling, transporting, marketing, or handling incident 
thereto are likely to become detached, indistinct, obliterated, 
illegible, mutilated, inaccessible, or inconspicuous, shall not be used.



Sec. 300.7  English language requirement.

    All words, statements and other information required by or under 
authority of the Act and the rules and regulations thereunder to appear 
on the stamp, tag, label, or other mark of identification, shall appear 
in the English language. If the product bears any stamp, tag, label, or 
mark of identification which contains any of the required information in 
a language other than English, all of the required information shall 
appear both in such other language and in the English language.



Sec. 300.8  Use of fiber trademark and generic names.

    (a) Except where another name is required or permitted under the Act 
or regulations, the respective common generic name of the fiber shall be 
used when naming fibers in the required information; as for example, 
``wool,'' ``recycled wool,'' ``cotton,'' ``rayon,'' ``silk,'' ``linen,'' 
``acetate,'' ``nylon,'' ``polyester.''
    (b) The generic names of manufactured fibers as heretofore or 
hereafter established in Sec. 303.7 of this part (Rule 7) of the 
regulations promulgated under the Textile Fiber Products Identification 
Act (72 Stat. 1717; 15 U.S.C. 70) shall be used in setting forth the 
required fiber content information as to wool products.
    (c) A non-deceptive fiber trademark may be used on a label in 
conjunction with the generic name of the fiber to which it relates. 
Where such a trademark is placed on a label in conjunction with the 
required information, the generic name of the fiber must appear in 
immediate conjunction therewith, and such trademark and generic name 
must appear in type or lettering of equal size and conspicuousness.
    (d) Where a generic name or a fiber trademark is used on any label, 
whether required or non-required, a full fiber content disclosure with 
percentages shall be made in accordance with the Act and regulations. 
Where a generic name or a fiber trademark is used on any hang-tag 
attached to a wool product that has a label providing required 
information and the hang-tag provides non-required information, such as 
a hang-tag stating only a generic fiber name or trademark or providing 
information about a particular fiber's characteristics, the hang-tag 
need not provide a full fiber content disclosure; however, if the wool 
product contains any fiber other than the fiber identified by the 
generic fiber name or trademark, the hang-tag must disclose clearly and 
conspicuously that it does not provide the product's full fiber content; 
for example:
    ``This tag does not disclose the product's full fiber content.'' or
    ``See label for the product's full fiber content.''
    (e) If a fiber trademark is not used in the required information, 
but is used elsewhere on the label as nonrequired information, the 
generic name of the fiber shall accompany the fiber trademark in legible 
and conspicuous type or lettering the first time the trademark is used.
    (f) No fiber trademark or generic name or word, coined word, symbol 
or depiction which connotes or implies any fiber trademark or generic 
name shall be used on any label or elsewhere on the product in such a 
manner as to be false, deceptive, or misleading as to fiber content, or 
to indicate directly or indirectly that a wool product is composed 
wholly or in part of a particular fiber, when such is not the case.
    (g) The term fur fiber may be used to describe the hair or fur fiber 
or mixtures thereof of any animal or animals other than the sheep, lamb, 
Angora goat, Cashmere goat, camel, alpaca, llama and vicuna. If the 
name, symbol, or depiction of any animal producing the hair or fur fiber 
is used on the stamp, tag, label, or other means of identification 
applied or affixed to the wool product, the percentage by weight of such 
hair or fur fiber in the total fiber weight of the wool product shall be 
separately stated in the required fiber content disclosure: Provided, 
That

[[Page 222]]

no such name, symbol or depiction shall be used where such hair or fur 
fiber is present in the amount of less than five per centum of the total 
fiber weight. No such name, symbol or depiction shall be used in such a 
way as to imply in any manner that a wool product contains the fur or 
hair of an animal when the hair or fur fiber of such animal is not 
present in the product in the amount of five per centum or more of the 
total fiber weight. The following are examples of fiber content 
disclosures under this paragraph:

60% Wool
40% Fur Fiber
 or
60% Wool
30% Fur Fiber
10% Angora Rabbit
 or
100% Cashgora Hair
 or
100% Paco-Vicuna Hair

[29 FR 6624, May 21, 1964, as amended at 45 FR 44261, July 1, 1980; 63 
FR 7516, Feb. 13, 1998; 79 FR 32163, June 4, 2014]



Sec. 300.9  Abbreviations, ditto marks, and asterisks.

    (a) In disclosing required information, words or terms shall not be 
designated by ditto marks or appear in footnotes referred to by 
asterisks or other symbols in required information, and shall not be 
abbreviated.
    (b) Where the generic name of a textile fiber is required to appear 
in immediate conjunction with a fiber trademark, a disclosure of the 
generic name by means of a footnote, to which reference is made by use 
of an asterisk or other symbol placed next to the fiber trademark, shall 
not be sufficient in itself to constitute compliance with the Act and 
regulations.

[29 FR 6624, May 21, 1964]



Sec. 300.10  Disclosure of information on labels.

    (a) Subject to the provisions of Sec. 300.5(b), the required 
information may appear on any label or labels attached to the product, 
including the care label required by 16 CFR part 423, provided all the 
pertinent requirements of the Act and regulations in this part are met 
and so long as the combination of required information and non-required 
information is not misleading. All parts of the required information 
shall be set forth in such a manner as to be clearly legible, 
conspicuous, and readily accessible to the prospective purchaser. All 
parts of the required fiber content information shall appear in type or 
lettering of equal size and conspicuousness.
    (b) Subject to the provisions of Sec. 300.8, any non-required 
information or representations placed on the product shall not minimize, 
detract from, or conflict with required information and shall not be 
false, deceptive, or misleading.

[63 FR 7517, Feb. 13, 1998]



Sec. 300.11  Improper methods of labeling.

    The stamp, tag, label, or other mark of identification required 
under the act, or the required information contained therein, shall not 
be minimized, rendered obscure or inconspicuous, or be so placed as 
likely to be unnoticed or unseen by purchasers and purchaser-consumers 
when the product is offered or displayed for sale or sold to purchasers 
or the consuming public, by reason of, among others:
    (a) Small or indistinct type.
    (b) Failure to use letters and numerals of equal size and 
conspicuousness in naming all fibers and percentages of such fibers as 
required by the act.
    (c) Insufficient background contrast.
    (d) Crowding, intermingling, or obscuring with designs, vignettes, 
or other written, printed or graphic matter.



Sec. 300.12  Labeling of pairs or products containing two or more units.

    (a) Where a wool product consists of two or more parts, units, or 
items of different fiber content, a separate label containing the 
required information shall be affixed to each of such parts, units, or 
items showing the required information as to such part, unit, or item, 
provided that where such parts, units, or items, are marketed or handled 
as a single product or ensemble and are sold and delivered to the 
ultimate consumer as a single product or ensemble, the required 
information may be set out on a single label in such a manner as to 
separately show the

[[Page 223]]

fiber composition of each part, unit, or item.
    (b) Where garments, wearing apparel, or other wool products are 
marketed or handled in pairs or ensembles of the same fiber content, 
only one unit of the pair or ensemble need be labeled with the required 
information when sold and delivered to the ultimate consumer.
    (c) Where parts or units of wool products of the types referred to 
in paragraphs (a) and (b) of this section are sold separately, such 
parts or units shall be labeled with the information required by the Act 
and regulations.

[29 FR 6624, May 21, 1964]



Sec. 300.13  Name or other identification required to appear on labels.

    (a) The name required by the Act to be used on labels shall be the 
name under which the manufacturer of the wool product or other person 
subject to section 3 of the Act with respect to such product is doing 
business. Trade names, trade marks or other names which do not 
constitute the name under which such person is doing business shall not 
be used for required identification purposes.
    (b) Registered identification numbers, as provided for in Sec. 
300.4 of this part (Rule 4), may be used for identification purposes in 
lieu of the required name.

[29 FR 6625, May 21, 1964]



Sec. 300.14  Substitute label requirement.

    When necessary to avoid deception, the name of any person other than 
the manufacturer of the product appearing on the stamp, tag, label, or 
other mark of identification affixed to such product shall be 
accompanied by appropriate words showing that the product was not 
manufactured by such person; as for example:

Manufactured for: --------------
Distributed by: --------------
------------------ Distributors



Sec. 300.15  Labeling of containers or packaging of wool products.

    When wool products are marketed and delivered in a package which is 
intended to remain unbroken and intact until after delivery to the 
ultimate consumer, each wool product in the package, except hosiery, and 
the package shall be labeled with the required information. If the 
package is transparent to the extent it allows for a clear reading of 
the required information on the wool product, the package is not 
required to be labeled.

[50 FR 15106, Apr. 17, 1985]



Sec. 300.16  Ornamentation.

    (a) Where the wool product contains fiber ornamentation not 
exceeding 5 percent of the total fiber weight of the product and the 
stated percentages of fiber content of the product are exclusive of such 
ornamentation, the stamp, tag, label, or other means of identification 
shall contain a phrase or statement showing such fact; as for example:

50% Wool
25% Recycled Wool
25% Cotton
Exclusive of Ornamentation


The fiber content of such ornamentation may be disclosed where the 
percentage of the ornamentation in relation to the total fiber weight of 
the principal fiber or blend of fibers is shown; as for example:

70% Recycled Wool
30% Acetate
Exclusive of 4% Metallic Ornamentation

    (b) Where the fiber ornamentation exceeds five per centum it shall 
be included in the statement of required percentages of fiber content.
    (c) Where the ornamentation constitutes a distinct section of the 
product, sectional disclosure may be made in accordance with Sec. 
300.23 of this part (Rule 23).

[29 FR 6625, May 21, 1964, as amended at 45 FR 44261, July 1, 1980]



Sec. 300.17  Use of the term ``all'' or ``100%.''

    Where the fabric or product to which the stamp, tag, label, or mark 
of identification applies is composed wholly of one kind of fiber, 
either the word all or the term 100% may be used with the correct fiber 
name; as for example ``100% Wool,'' ``All Wool,'' ``100% Recycled 
Wool,'' ``All Recycled Wool.'' If any such product is composed wholly of

[[Page 224]]

one fiber with the exception of fiber ornamentation not exceeding 5%, 
such term ``all'' or ``100%'' as qualifying the name of the fiber may be 
used, provided it is immediately followed by the phrase ``exclusive of 
ornamentation,'' or by a phrase of like meaning; such as, for example:

All Wool--Exclusive of Ornamentation

 or

100% Wool--Exclusive of Ornamentation.

[45 FR 44261, July 1, 1980]



Sec. 300.18  Use of name of specialty fiber.

    (a) In setting forth the required fiber content of a product 
containing any of the specialty fibers named in Section 2(b) of the Act, 
the name of the specialty fiber present may be used in lieu of the word 
``wool,'' provided the percentage of each named specialty fiber is 
given, and provided further that the name of the specialty fiber so used 
is qualified by the word ``recycled'' when the fiber referred to is 
``recycled wool'' as defined in the Act. The following are examples of 
fiber content designation permitted under this rule:

55% Alpaca--45% Camel Hair
50% Recycled Camel Hair--50% Wool
60% Recycled Alpaca--40% Rayon
35% Recycled Llama--35% Recycled Vicuna--30% Cotton
60% Cotton--40% Recycled Llama.

    (b) Where an election is made to use the name of a specialty fiber 
in lieu of the word ``wool'' in describing such specialty fiber, such 
name shall be used at any time reference is made to the specialty fiber 
either in required or nonrequired information. The name of the specialty 
fiber or any word, coined word, symbol or depiction connoting or 
implying the presence of such specialty fiber shall not be used in 
nonrequired information on the required label or on any secondary or 
auxiliary label attached to the wool product if the name of such 
specialty fiber does not appear in the required fiber content 
disclosure.

[29 FR 6625, May 21, 1964, as amended at 45 FR 44262, July 1, 1980]



Sec. 300.19  Use of terms ``mohair'' and ``cashmere.''

    (a)(1) In setting forth the required fiber content of a wool 
product, the term ``cashmere'' may be used for such fiber content only 
if:
    (i) Such fiber consists of the fine (dehaired) undercoat fibers 
produced by a cashmere goat (capra hircus laniger);
    (ii) The average diameter of such cashmere fiber does not exceed 19 
microns; and
    (iii) The cashmere fibers in such wool product contain no more than 
3 percent (by weight) of cashmere fibers with average diameters that 
exceed 30 microns.
    (2) The average fiber diameter may be subject to a coefficient of 
variation around the mean that shall not exceed 24 percent.
    (b) In setting forth the required fiber content of a product 
containing hair of the Angora goat known as mohair or containing 
cashmere (as defined in paragraph (a) of this section), the term 
``mohair'' or ``cashmere,'' respectively, may be used for such fiber in 
lieu of the word ``wool,'' provided the respective percentage of each 
such fiber designated as ``mohair'' or ``cashmere'' is given, and 
provided further that such term ``mohair'' or ``cashmere'' where used is 
qualified by the word ``recycled'' when the fiber referred to is 
``recycled wool'' as defined in the Act. The following are examples of 
fiber content designations permitted under this section:

50% mohair-50% wool
60% recycled mohair-40% cashmere
60% cotton-40% recycled cashmere

    (c) Where an election is made to use the term ``mohair'' or 
``cashmere'' in lieu of the term ``wool'' as permitted by this section, 
the appropriate designation of ``mohair'' or ``cashmere'' shall be used 
at any time reference is made to such fiber in either required or 
nonrequired information. The term ``mohair'' or ``cashmere'' or any 
words, coined words, symbols or depictions connoting or implying the 
presence of such fibers shall not be used in non-required information on 
the required label or on any secondary or auxiliary label attached to 
the wool product if the term ``mohair'' or ``cashmere,'' as the case may 
be, does not appear in the required fiber content disclosure.

[79 FR 3163, June 4, 2014]

[[Page 225]]



Sec. 300.20  Use of the terms ``virgin'' or ``new.''

    The terms ``virgin'' or ``new'' as descriptive of a wool product, or 
any fiber or part thereof, shall not be used when the product, fiber or 
part so described is not composed wholly of new or virgin fiber which 
has never been reclaimed from any spun, woven, knitted, felted, braided, 
bonded, or otherwise manufactured or used product.

[79 FR 32163, June 4, 2014]



Sec. 300.20a  Labeling of very fine wool.

    A wool product stamped, tagged, labeled, or otherwise identified in 
the manner described below is mislabeled:
    (a) ``Super 80's'' or ``80's,'' if the average diameter of wool 
fiber of such wool product does not average 19.75 microns or finer;
    (b) ``Super 90's'' or ``90's,'' if the average diameter of wool 
fiber of such wool product does not average 19.25 microns or finer;
    (c) ``Super 100's'' or ``100's,'' if the average diameter of wool 
fiber of such wool product does not average 18.75 microns or finer;
    (d) ``Super 110's'' or ``110's,'' if the average diameter of wool 
fiber of such wool product does not average 18.25 microns or finer;
    (e) ``Super 120's'' or ``120's,'' if the average diameter of wool 
fiber of such wool product does not average 17.75 microns or finer;
    (f) ``Super 130's'' or ``130's,'' if the average diameter of wool 
fiber of such wool product does not average 17.25 microns or finer;
    (g) ``Super 140's'' or ``140's,'' if the average diameter of wool 
fiber of such wool product does not average 16.75 microns or finer;
    (h) ``Super 150's'' or ``150's,'' if the average diameter of wool 
fiber of such wool product does not average 16.25 microns or finer;
    (i) ``Super 160's'' or ``160's,'' if the average diameter of wool 
fiber of such wool product does not average 15.75 microns or finer;
    (j) ``Super 170's'' or ``170's,'' if the average diameter of wool 
fiber of such wool product does not average 15.25 microns or finer;
    (k) ``Super 180's'' or ``180's,'' if the average diameter of wool 
fiber of such wool product does not average 14.75 microns or finer;
    (l) ``Super 190's'' or ``190's,'' if the average diameter of wool 
fiber of such wool product does not average 14.25 microns or finer;
    (m) ``Super 200's'' or ``200's,'' if the average diameter of wool 
fiber of such wool product does not average 13.75 microns or finer;
    (n) ``Super 210's'' or ``210's,'' if the average diameter of wool 
fiber of such wool product does not average 13.25 microns or finer;
    (o) ``Super 220's'' or ``220's,'' if the average diameter of wool 
fiber of such wool product does not average 12.75 microns or finer;
    (p) ``Super 230's'' or ``230's,'' if the average diameter of wool 
fiber of such wool product does not average 12.25 microns or finer;
    (q) ``Super 240's'' or ``240's,'' if the average diameter of wool 
fiber of such wool product does not average 11.75 microns or finer; and
    (r) ``Super 250's'' or ``250's,'' if the average diameter of wool 
fiber of such wool product does not average 11.25 microns or finer.

[79 FR 32163, June 4, 2014]



Sec. 300.21  Marking of samples, swatches or specimens.

    Where samples, swatches or specimens of wool products subject to the 
act were used to promote or effect sales of such wool products in 
commerce, said samples, swatches and specimens, as well as the products 
themselves, shall be labeled or marked to show their respective fiber 
contents and other information required by law.

[6 FR 3426, July 15, 1941. Redesignated at 63 FR 7517, Feb. 13, 1998]



Sec. 300.22  Sectional disclosure of content.

    (a) Permissive. Where a wool product is composed of two or more 
sections which are of different fiber composition, the required 
information as to fiber content may be separated on the same label in 
such manner as to show the fiber composition of each section.

[[Page 226]]

    (b) Mandatory. The disclosure as above provided shall be made in all 
instances where such form of marking is necessary to avoid deception.

[29 FR 6626, May 21, 1964. Redesignated at 63 FR 7517, Feb. 13, 1998]



Sec. 300.23  Linings, paddings, stiffening, trimmings and facings.

    (a) In labeling or marking garments or articles of apparel which are 
wool products, the fiber content of any linings, paddings, stiffening, 
trimmings or facings of such garments or articles of apparel shall be 
given and shall be set forth separately and distinctly in the stamp, 
tag, label, or other mark of identification of the products.
    (1) If such linings, trimmings or facings contain, purport to 
contain or are represented as containing wool, or recycled wool; or
    (2) If such linings are metallically coated, or coated or laminated 
with any substance for warmth, or if such linings are composed of pile 
fabrics, or any fabrics incorporated for warmth or represented directly 
or by implication as being incorporated for warmth, which articles the 
Commission finds constitute a class of articles which is customarily 
accompanied by express or implied representations of fiber content; or
    (3) If any express or implied representations of fiber content of 
any of such linings, paddings, stiffening, trimmings or facings are 
customarily made.
    (b) In the case of garments which contain interlinings, the fiber 
content of such interlinings shall be set forth separately and 
distinctly as part of the required information on the stamp, tag, label, 
or other mark of identification of such garment. For purposes of this 
paragraph (b) the term interlining means any fabric or fibers 
incorporated into a garment or article of wearing apparel as a layer 
between an outershell and an inner lining.
    (c) In the case of wool products which are not garments or articles 
of apparel, but which contain linings, paddings, stiffening, trimmings, 
or facings, the stamp, tag, label, or other mark of identification of 
the product shall show the fiber content of such linings, paddings, 
stiffening, trimmings or facings, set forth separately and distinctly in 
such stamp, tag, label, or other mark of identification.
    (d) Wool products which are or have been manufactured for sale or 
sold for use as linings, interlinings, paddings, stiffening, trimmings 
or facings, but not contained in a garment, article of apparel, or other 
product, shall be labeled or marked with the required information as in 
the case of other wool products.

[29 FR 6626, May 21, 1964, as amended at 45 FR 44262, July 1, 1980. 
Redesignated at 63 FR 7517, Feb. 13, 1998]



Sec. 300.24  Representations as to fiber content.

    (a) Words, coined words, symbols, or depictions which constitute or 
imply the name or designation of a fiber which is not present in the 
product shall not appear on labels. Any word or coined word which is 
phonetically similar to the name or designation of a fiber or which is 
only a slight variation in spelling from the name or designation of a 
fiber shall not be used in such a manner as to represent or imply that 
such fiber is present in the product when the fiber is not present as 
represented.
    (b) Where a word, coined word, symbol, or depiction which connotes 
or implies the presence of a fiber is used on any label, whether 
required or non-required, a full fiber content disclosure with 
percentages shall be made on such label in accordance with the Act and 
regulations. Where a word, coined word, symbol, or depiction which 
connotes or implies the presence of a fiber is used on any hang-tag 
attached to a wool product that has a label providing required 
information and the hang-tag provides non-required information, such as 
a hang-tag providing information about a particular fiber's 
characteristics, the hang-tag need not provide a full fiber content 
disclosure; however, if the wool product contains any fiber other than 
the fiber identified on the hang-tag, the hang-tag must disclose clearly 
and conspicuously that it does not provide the product's full fiber 
content; for example:
    ``This tag does not disclose the product's full fiber content.'' or

[[Page 227]]

    ``See label for the product's full fiber content.''

[29 FR 6626, May 21, 1964, as amended at 50 FR 15106, Apr. 17, 1985. 
Redesignated at 63 FR 7517, Feb. 13, 1998, as amended at 79 FR 32164, 
June 4, 2014]



Sec. 300.25  Country where wool products are processed or manufactured.

    (a) In addition to the other information required by the Act and 
Regulations:
    (1) Each imported wool product shall be labeled with the name of the 
country where such imported product was processed or manufactured;
    (2) Each wool product completely made in the United States of 
materials that were made in the United States shall be labeled using the 
term Made in U.S.A. or some other clear and equivalent term.
    (3) Each wool product made in the United States, either in whole or 
in part of imported materials, shall contain a label disclosing these 
facts; for example:

``Made in USA of imported fabric''

 or

``Knitted in USA of imported yarn'' and

    (4) Each wool product partially manufactured in a foreign country 
and partially manufactured in the United States shall contain on a label 
the following information:
    (i) The manufacturing process in the foreign country and in the USA; 
for example:

``Imported cloth, finished in USA''

 or

``Sewn in USA of imported components''

 or

``Made in [foreign country], finished in USA''

 or

``Scarf made in USA of fabric made in China''

 or

``Comforter Filled, Sewn and Finished in the U.S. With Shell Made in 
China''

 or

``Made in [Foreign Country]/fabric made in USA''

 or

``Knit in USA, assembled in [Foreign Country]''.

    (ii) When the U.S. Customs Service requires an origin label on the 
unfinished product, the manufacturing processes as required in paragraph 
(a)(4)(i) of this section or the name of the foreign country required by 
Customs, for example:

``Made in (foreign country)''

    (b) For the purpose of determining whether a product should be 
marked under paragraphs (a) (2), (3), or (4) of this section, a 
manufacturer needs to consider the origin of only those materials that 
are covered under the Act and that are one step removed from that 
manufacturing process. For example, a yarn manufacturer must identify 
fiber if it is imported, a cloth manufacturer must identify imported 
yarn and a household product manufacturer must identify imported cloth 
or imported yarn for household products made directly from yarn, or 
imported fiber used as filling for warmth.
    (c) The term country means the political entity known as a nation. 
Except for the United States, colonies, possessions or protectorates 
outside the boundaries of the mother country shall be considered 
separate countries, and the name thereof shall be deemed acceptable in 
designating the country where the wool product was processed or 
manufactured unless the Commission shall otherwise direct.
    (d) The country of origin of an imported wool product as determined 
under the laws and regulations enforced by United States Customs and 
Border Protection shall be considered to be the country where such wool 
product was processed or manufactured.
    (e) The English name of the country where the imported wool product 
was processed or manufactured shall be used. The adjectival form of the 
name of the country will be accepted as the name of the country where 
the wool product was processed or manufactured, provided the adjectival 
form of the name does not appear with such other words so as to refer to 
a kind of species of product. Variant spellings which clearly indicate 
the English name of the country, such as Brasil for Brazil and Italie 
for Italy, are acceptable. Abbreviations which

[[Page 228]]

unmistakenly indicate the name of a country, such as Gt. Britain for 
Great Britain, are acceptable.
    (f) Nothing in this rule shall be construed as limiting in any way 
the information required to be disclosed on labels under the provisions 
of any Tariff Act of the United States or regulations promulgated 
thereunder.

[50 FR 15106, Apr. 17, 1985. Redesignated and amended at 63 FR 7517, 
Feb. 13, 1998; 65 FR 75156, Dec. 1, 2000; 79 FR 32164, June 4, 2014]



Sec. 300.25a  Country of origin in mail order advertising.

    When a wool product is advertised in any mail order catalog or mail 
order promotional material, the description of such product shall 
contain a clear and conspicuous statement that the product was either 
made in U.S.A., imported, or both. Other words or phrases with the same 
meaning may be used. The statement of origin required by this section 
shall not be inconsistent with the origin labeling of the product being 
advertised.

[50 FR 15106, Apr. 17, 1985. Redesignated at 63 FR 7517, Feb. 13, 1998]



Sec. 300.26  Pile fabrics and products composed thereof.

    The fiber content of pile fabrics or products made thereof may be 
stated in the label or mark of identification in such segregated form as 
will show the fiber content of the face or pile and of the back or base, 
with the percentages of the respective fibers as they exist in the face 
or pile and in the back or base: Provided, That in such disclosure the 
respective percentages of the face and the back be given in such manner 
as will show the ratio between the face and the back. Examples of the 
form of marking pile fabrics as to fiber content provided for in this 
section are as follows:

100% Wool Pile
100% Cotton Back
(Back constitutes 60% of fabric and pile 40%)
Pile--60% Recycled Wool, 40% Wool
Back--70% Cotton, 30% Rayon
(Pile constitutes 60% of fabric and back 40%).

[6 FR 3426, July 15, 1941, as amended at 45 FR 44262, July 1, 1980]



Sec. 300.27  Wool products containing superimposed or added fibers.

    Where a wool product is made wholly of one fiber or a blend of 
fibers with the exception of an additional fiber in minor proportion 
superimposed or added in certain separate and distinct areas or sections 
for reinforcing or other useful purposes, the product may be designated 
according to the fiber content of the principal fiber or blend of 
fibers, with an excepting naming the superimposed or added fiber, giving 
the percentage thereof in relation to the total fiber weight of the 
principal fiber or blend of fibers, and indicating the area or section 
which contains the superimposed or added fiber. An example of this type 
of fiber content disclosure, as applied to products having reinforcing 
fibers added to a particular area or section, is as follows:

55% Recycled Wool
45% Rayon
Except 5% Nylon added to toe and heel

[29 FR 6626, May 21, 1964, as amended at 45 FR 44262, July 1, 1980]



Sec. 300.28  Undetermined quantities of reclaimed fibers.

    (a) Where a wool product is composed in part of various man-made 
fibers recovered from textile products containing underdetermined 
qualities of such fibers, the percentage content of the respective 
fibers recovered from such products may be disclosed on the required 
stamp, tag, or label, in aggregate form as ``man-made fibers'' followed 
by the naming of such fibers in the order of their predominance by 
weight, as for example:

60% Wool
40% Man-made fibers
Rayon
Acetate
Nylon

    (b) Where a wool product is composed in part of wool, or recycled 
wool and in part of unknown and, for practical purposes, undeterminable 
non-woolen fibers reclaimed from any spun, woven, knitted, felted, 
braided, bonded or otherwise manufactured or used product, the required 
fiber content disclosure may, when truthfully applicable, in

[[Page 229]]

lieu of the fiber content disclosure otherwise required by the Act and 
regulations, set forth (1) the percentages of wool or recycled wool, and 
(2) the generic names and the percentages of all other fibers whose 
presence is known or practically ascertainable and (3) the percentage of 
the unknown and undeterminable reclaimed fibers, designating such 
reclaimed fibers as ``unknown reclaimed fibers'' or ``undetermined 
reclaimed fibers,'' as for example:

75% Recycled Wool--25% Unknown Reclaimed Fibers.
35% recycled Wool--30% Acetate--15% Cotton--20% Undetermined Reclaimed 
Fibers.


In making the required fiber content disclosure any fibers referred to 
as ``unknown reclaimed fibers'' or ``undetermined reclaimed fibers'' 
shall be listed last.
    (c) The terms unknown recycled fibers and undetermined recycled 
fibers may be used in describing the unknown and undeterminable 
reclaimed fibers referred to in paragraph (b) of this rule in lieu of 
the terms specified therein, provided, however, That the same standard 
is used in determining the applicability of the term recycled as is used 
in defining ``recycled wool'' in section 2(c) of the Act.
    (d) For purposes of this rule undetermined or unascertained amounts 
of wool or recycled wool may be classified and designated as recycled 
wool.
    (e) Nothing contained in this rule shall excuse a full and accurate 
disclosure of fiber content with correct percentages if the same is 
known or practically ascertainable, or permit a deviation from the 
requirements of section 4(a)(2)(A) of the Act with respect to products 
not labeled under the provisions of this rule or permit a higher 
classification of wool or recycled wool than that provided by Section 2 
of the Act.

[29 FR 6626, May 21, 1964, as amended at 45 FR 44262, July 1, 1980; 45 
FR 49542, July 25, 1980]



Sec. 300.29  Garments or products composed of or containing 
miscellaneous cloth scraps.

    (a) For wool products which consist of, or are made from, 
miscellaneous cloth scraps comprising manufacturing by-products and 
containing various fibers of undetermined percentages, the following 
form of disclosure as to fiber content of such wool products, where 
truthfully appliable and with appropriate percentage figure inserted, 
may be used in the stamp, tag, label, or mark of identification of such 
product:
    (1) Where the product contains chiefly cotton as well as woolen 
fibers in the minimum percentage designated for recycled wool:

Made of Miscellaneous Cloth Scraps Composed Chiefly of Cotton With 
Minimum of ----% Recycled Wool.

    (2) Where the product contains chiefly rayon as well as woolen 
fibers in the minimum percentage designated for recycled wool:

Made of Miscellaneous Cloth Scraps Composed Chiefly of Rayon With 
Minimum of ----% Recycled Wool.

    (3) Where the product is composed chiefly of a mixture of cotton and 
rayon as well as woolen fibers in the minimum percentage designated for 
recycled wool:

Made of Miscellaneous Cloth Scraps Composed Chiefly of Cotton and Rayon 
With Minimum of ----% Recycled Wool.

    (4) Where the product contains chiefly woolen fibers with the 
balance of undetermined mixtures of cotton, rayon or other non-woolen 
fibers:

Made of Miscellaneous Cloth Scraps Containing Cotton, Rayon and Other 
Non-Woolen Fibers, With Minimum of ----% Recycled Wool.

    (b) Where the cotton or rayon content or the non-woolen fiber 
content mentioned in such forms of disclosure is not known to comprise 
as much as 50% of the fiber content of the product, the word ``chiefly'' 
in the respective form of disclosure specified in this section shall be 
omitted.
    (c) The words ``Contents are'' may be used in the above-mentioned 
forms of marking in lieu of the words ``Made of'' where appropriate to 
the nature of the product.
    (d) For purposes of this rule, undetermined or unascertained amounts 
of wool or recycled wool which may be

[[Page 230]]

contained in the product may be classified and designated as recycled 
wool.

[6 FR 3426, July 15, 1941, as amended at 45 FR 44262, July 1, 1980]



Sec. 300.30  Deceptive labeling in general.

    Products subject to the act shall not bear, nor have used in 
connection therewith, any stamp, tag, label, mark or representation 
which is false, misleading or deceptive in any respect.

                         Manufacturers' Records



Sec. 300.31  Maintenance of records.

    (a) Pursuant to the provisions of section 6 of the Act, every 
manufacturer of a wool product subject to the Act, irrespective of 
whether any guaranty has been given or received, shall maintain records 
showing the information required by the Act and Regulations with respect 
to all such wool products made by such manufacturer. Such records shall 
show:
    (1) The fiber content of the product specified in section 4(a)(2)(A) 
of the Act.
    (2) The maximum percentage of the total weight of the wool product 
of any non-fibrous loading, filling or adulterating matter as prescribed 
by section 4(a)(2)(B) of the Act.
    (3) The name, or registered identification number issued by the 
Commission, of the manufacturer of the wool product or the name or 
registered identification number of one or more persons subject to 
section 3 of the Act with respect to such wool product.
    (4) The name of the country where the wool product was processed or 
manufactured as prescribed by sections 300.25a and/or .25b.
    (b) Any person substituting labels shall keep such records as will 
show the information on the label removed and the name or names of the 
person or persons from whom the wool product was received.
    (c) The purpose of these records is to permit a determination that 
the requirements of the Act and Regulations have been met and to 
establish a traceable line of continuity from raw material through 
processing to finished product. The records shall be preserved for at 
least three years.

[53 FR 31314, Aug. 18, 1988]

                               Guaranties



Sec. 300.32  Form of separate guaranty.

    (a) The following are suggested forms of separate guaranties under 
section 9 of the Act which may be used by a guarantor residing in the 
United States on or as part of an invoice or other document relating to 
the marketing or handling of any wool products listed and designated 
therein and showing the date of such invoice or other document and the 
signature and address of the guarantor:
    (1) General form.

    ``We guarantee that the wool products specified herein are not 
misbranded under the provisions of the Wool Products Labeling Act and 
rules and regulations thereunder.''

    (2) Guaranty based on guaranty.

    ``Based upon a guaranty received, we guarantee that the wool 
products specified herein are not misbranded under the provisions of the 
Wool Products Labeling Act and rules and regulations thereunder.''

    Note to paragraph (a):
    The printed name and address on the invoice or other document will 
suffice to meet the signature and address requirements.

    (b) The mere disclosure of required information including the fiber 
content of wool products on a label or on an invoice or other document 
relating to its marketing or handling shall not be considered a form of 
separate guaranty.

[79 FR 32164, June 4, 2014]



Sec. 300.33  Continuing guaranty filed with Federal Trade Commission.

    (a)(1) Under section 9 of the Act any person residing in the United 
States and marketing or handling wool products may file a continuing 
guaranty with the Federal Trade Commission.
    (2) When filed with the Commission a continuing guaranty shall be 
fully executed in duplicate. Forms for use in preparing continuing 
guaranties will be supplied by the Commission upon request.

[[Page 231]]

    (3) Continuing guaranties filed with the Commission shall continue 
in effect until revoked. The guarantor shall promptly report any change 
in business status to the Commission.
    (b) The prescribed form for a continuing guaranty is found in Sec. 
303.38(b) of this chapter. The form is available upon request from the 
Textile Section, Enforcement Division, Federal Trade Commission, 600 
Pennsylvania Avenue, NW, Washington, DC 20580.
    (c) Any person who has a continuing guaranty on file with the 
Commission may, during the effective dates of the guaranty, give notice 
of such fact by setting forth on the invoice or other document covering 
the marketing or handling of the product guaranteed the following:

    Continuing Guaranty under the Wool Products Labeling Act filed with 
the Federal Trade Commission.

    (d) Any person who falsely represents that he has a continuing 
guaranty on file with the Federal Trade Commission shall be deemed to 
have furnished a false guaranty under section 9(b) of the Act.

[29 FR 6627, May 21, 1964, as amended at 48 FR 12517, Mar. 25, 1983; 63 
FR 7517, Feb. 13, 1998; 63 FR 71583, Dec. 28, 1998; 79 FR 32164, June 4, 
2014]



Sec. 300.34  Reference to existing guaranty on labels not permitted.

    No representation or suggestion that a wool product is guaranteed 
under the act by the Government, or any branch thereof shall be made on 
or in the stamp, tag, label, or other mark of identification, applied or 
affixed to wool products.

                                 General



Sec. 300.35  Hearings under section 4(d) of the act.

    Hearings under section 4(d) of the act will be held when deemed by 
the Commission to be in the public interest. Interested persons may file 
applications for such hearings. Such applications shall be filed in 
quadruplicate and shall contain a detailed technical description of the 
class or classes of articles or products regarding which applicant 
requests a determination and announcement by the Commission concerning 
express or implied representations of fiber content of articles or 
concerning insignificant or inconsequential textile content of products.

(Sec. 4(d), 54 Stat. 1129; 15 U.S.C. 68b(d))



PART 301_RULES AND REGULATIONS UNDER FUR PRODUCTS LABELING ACT--
Table of Contents



                               Name Guide

Sec.
301.0 Fur products name guide.

                               Regulations

301.1 Terms defined.
301.2 General requirements.
301.3 English language requirements.
301.4 Abbreviations or ditto marks prohibited.
301.5 Use of Fur Products Name Guide.
301.6 Animals not listed in Fur Products Name Guide.
301.7 Describing furs by certain breed names prohibited.
301.8 Use of terms ``Persian Lamb,'' ``Broadtail Lamb,'' and ``Persian-
          broadtail Lamb'' permitted.
301.9 Use of terms ``Mouton Lamb'' and ``Shearling Lamb'' permitted.
301.10 Use of term ``Broadtail-processed Lamb'' permitted.
301.11 Fictitious or non-existing animal designations prohibited.
301.12 Country of origin of imported furs.
301.13 Fur products having furs with different countries of origin.
301.14 Country of origin of used furs.
301.15 Designation of section producing domestic furs permitted.
301.16 Disclosure of origin of certain furs raised or taken in United 
          States.
301.17 Misrepresentation of origin of furs.
301.18 Passing off domestic furs as imported furs prohibited.
301.19 Pointing, dyeing, bleaching or otherwise artificially coloring.
301.20 Fur products composed of pieces.
301.21 Disclosure of used furs.
301.22 Disclosure of damaged furs.
301.23 Second-hand fur products.
301.24 Repairing, restyling and remodeling fur products for consumer.
301.25 Name required to appear on labels and invoices.
301.26 Registered identification numbers.
301.27 Label and method of affixing.
301.28 [Reserved]
301.29 Requirements in respect to disclosure on label.
301.30 [Reserved]
301.31 Labeling of fur products consisting of two or more units.

[[Page 232]]

301.32 Fur product containing material other than fur.
301.33 Labeling of samples.
301.34 Misbranded or falsely invoiced fur products.
301.35 Substitution of labels.
301.36 Sectional fur products.
301.37 Manner of invoicing furs and fur products.
301.38 Advertising of furs and fur products.
301.39 Exempted fur products.
301.40 [Reserved]
301.41 Maintenance of records.
301.42 Deception as to nature of business.
301.43 Use of deceptive trade or corporate names, trademarks or graphic 
          representations prohibited.
301.44 Misrepresentation of prices.
301.45 Representations as to construction of fur products.
301.46 Reference to guaranty by Government prohibited.
301.47 Form of separate guaranty.
301.48 Continuing guaranties.
301.48a Guaranties not received in good faith.
301.49 Deception in general.

    Authority: 15 U.S.C. 69 et seq.

                               Name Guide



Sec. 301.0  Fur products name guide.

----------------------------------------------------------------------------------------------------------------
                Name                          Order                  Family                 Genus-species
----------------------------------------------------------------------------------------------------------------
Alpaca.............................  Artiodactyla..........  Camelidae.............  Lama pacos.
Antelope...........................  Artiodactyla..........  Bovidae...............  Hippotragus niger and
                                                                                      Antilope cervicapra.
Badger.............................  Carnivora.............  Mustelidae............  Taxida sp. and Meles sp.
Bassarisk..........................  ......do..............  Procyonidae...........  Bassariscus astutus.
Bear...............................  ......do..............  Ursidae...............  Ursus sp.
Bear, Polar........................  ......do..............  ......do..............  Ursus maritimus.
Beaver.............................  Rodentia..............  Castoridae............  Castor canadensis.
Burunduk...........................  ......do..............  Sciuridae.............  Eutamias asiaticus.
Calf...............................  Artiodactyla..........  Bovidae...............  Bos taurus.
Cat, Caracal.......................  Carnivora.............  Felidae...............  Caracal caracal.
Cat, Domestic......................  ......do..............  ......do..............  Felis catus.
Cat, Leopard.......................  ......do..............  ......do..............  Prionailurus bengalensis.
Cat, Lynx..........................  ......do..............  ......do..............  Lynx rufus.
Cat, Manul.........................  ......do..............  ......do..............  Felis manul.
Cat, Margay........................  ......do..............  ......do..............  Leopardus wiedii.
Cat, Spotted.......................  ......do..............  ......do..............  Felis sp. (South America).
Cat, Wild..........................  ......do..............  ......do..............  Felis catus and Felis
                                                                                      lybica.
Cheetah............................  ......do..............  ......do..............  Acinonyx jubatus.
Chinchilla.........................  Rodentia..............  Chinchillidae.........  Chinchilla chinchilla.
Chipmunk...........................  ......do..............  Sciuridae.............  Tamias sp.
Civet..............................  Carnivora.............  Viverridae............  Viverra sp., Viverricula
                                                                                      sp., Paradoxurus sp., and
                                                                                      Paguma sp.
Desman.............................  Soricomorpha..........  Talpidae..............  Desmana moschata and
                                                                                      Galemys pyrenaicus.
Dog................................  Carnivora.............  Canidae...............  Canis familiaris.
Ermine.............................  ......do..............  Mustelidae............  Mustela erminea.
Fisher.............................  ......do..............  ......do..............  Martes pennanti.
Fitch..............................  ......do..............  ......do..............  Mustela putorius.
Fox................................  ......do..............  Canidae...............  Vulpes vulpes, Vulpes
                                                                                      macrotis.
Fox, Blue..........................  ......do..............  ......do..............  Vulpes lagopus.
Fox, Grey..........................  ......do..............  ......do..............  Urocyon cinereoargenteus
                                                                                      and Urocyon littoralis.
Fox, Kit...........................  ......do..............  ......do..............  Vulpes velox.
Fox, White.........................  Carnivora.............  Canidae...............  Vulpes lagopus.
Genet..............................  ......do..............  Viverridae............  Genetta genetta.
Goat...............................  Artiodactyla..........  Bovidae...............  Capra hircus.
Guanaco, or its young, the           ......do..............  Camelidae.............  Lama guanicoe.
 Guanaquito.
Hamster............................  Rodentia..............  Cricetidae............  Cricetus cricetus.
Hare...............................  ......do..............  Leporidae.............  Lepus sp. and Lepus
                                                                                      europaeus occidentalis.
Jackal.............................  Carnivora.............  Canidae...............  Canis aureus and Canis
                                                                                      adustus.
Jackal, Cape.......................  ......do..............  ......do..............  Canis mesomelas.
Jaguar.............................  ......do..............  Felidae...............  Panthera onca.
Jaguarundi.........................  ......do..............  ......do..............  Herpailurus yagouaroundi.
Kangaroo...........................  Diprotodontia.........  Macropodidae..........  Marcopus sp.
Kangaroo-rat.......................  ......do..............  Potoroidae............  Bettongia sp.
Kid................................  Artiodactyla..........  Bovidae...............  Capra hircus.
Kinkajou...........................  Carnivora.............  Procyonidae...........  Potos flavus.
Koala..............................  Diprotodontia.........  Phascolarctidae ......  Phascolarctos cinereus.
Kolinsky...........................  Carnivora.............  Mustelidae............  Mustela sibirica.
Lamb...............................  Artiodactyla..........  Bovidae...............  Ovis aries.
Leopard............................  Carnivora.............  Felidae...............  Panthera pardus.

[[Page 233]]

 
Llama..............................  Artiodactyla..........  Camelidae.............  Lama glama.
Lynx...............................  Carnivora.............  Felidae...............  Lynx canadensis and Lynx
                                                                                      lynx.
Marmot.............................  Rodentia..............  Sciuridae.............  Marmota bobak.
Marten, American...................  Carnivora.............  Mustelidae............  Martes americana and Martes
                                                                                      caurina.
Marten, Baum.......................  ......do..............  ......do..............  Martes martes.
Marten, Japanese...................  ......do..............  ......do..............  Martes melampus.
Marten, Stone......................  ......do..............  ......do..............  Martes foina.
Mink...............................  ......do..............  ......do..............  Mustela vison and Mustela
                                                                                      lutreola.
Mole...............................  Soricomorpha..........  Talpidae..............  Talpa sp.
Monkey.............................  Primates..............  Cercopithecidae.......  Colobus polykomos.
Muskrat............................  Rodentia..............  Muridae...............  Ondatra zibethicus.
Nutria.............................  ......do..............  Myocastoridae.........  Myocastor coypus.
Ocelot.............................  Carnivora.............  Felidae...............  Leopardus pardalis
Opossum............................  Didelphimorphia.......  Didelphidae...........  Didelphis sp.
Opossum, Australian................  Diprotodontia.........  Phalangeridae.........  Trichosurus vulpecula.
Opossum, Ringtail..................  ......do..............  Pseudocheiridae.......  Pseudocheirus sp.
Opossum, South American............  Didelphimorphia.......  Didelphidae...........  Lutreolina crassicaudata.
Opossum, Water.....................  ......do..............  ......do..............  Chironectes minimus.
Otter..............................  Carnivora.............  Mustelidae............  Lontra canadensis,
                                                                                      Pteronura brasiliensis,
                                                                                      and Lutra lutra.
Otter, Sea.........................  ......do..............  ......do..............  Enhydra lutris.
Pahmi..............................  ......do..............  ......do..............  Helictis moschata and
                                                                                      Helictis personata.
Panda..............................  Carnivora.............  Ailuridae.............  Ailurus fulgens.
Peschanik..........................  Rodentia..............  Sciuridae.............  Spermophilus fulvus.
Pony...............................  Perissodactyla........  Equidae...............  Equus caballus.
Rabbit.............................  Lagomorpha............  Leporidae.............  Oryctolagus cuniculus.
Raccoon............................  Carnivora.............  Procyonidae...........  Procyon lotor and Procyon
                                                                                      cancrivorus.
Raccoon, Asiatic...................  ......do..............  Canidae...............  Nyctereutes procyonoides.
Raccoon, Mexican...................  ......do..............  Procyonidae...........  Nasua sp.
Reindeer...........................  Artiodactyla..........  Cervidae..............  Rangifer tarandus.
Sable..............................  Carnivora.............  Mustelidae............  Martes zibellina.
Sable, American....................  ......do..............  ......do..............  Martes americana and Martes
                                                                                      caurina.
Seal, Fur..........................  Carnivora.............  Otariidae.............  Callorhinus ursinus.
Seal, Hair.........................  ......do..............  Phocidae..............  Phoca sp.
Seal, Roc..........................  ......do..............  Otariidae.............  Otaria flavescens.
Sheep..............................  Artiodactyla..........  Bovidae...............  Ovis aries.
Skunk..............................  Carnivora.............  Mephitidae............  Mephitis mephitis, Mephitis
                                                                                      macroura, Conepatus
                                                                                      semistriatus and Conepatus
                                                                                      sp.
Skunk, Spotted ....................  ......do..............  ......do..............  Spilogale sp.
Squirrel...........................  Rodentia..............  Sciuridae.............  Sciurus vulgaris.
Squirrel, Flying...................  ......do..............  ......do..............  Eupetaurus cinereus,
                                                                                      Pteromys volans and
                                                                                      Petaurista leucogenys.
Suslik.............................  ......do..............  ......do..............  Spermophilus citellus,
                                                                                      Spermophilus major
                                                                                      rufescens and Spermophilus
                                                                                      suslicus.
Vicuna.............................  Artiodactyla..........  Camelidae.............  Vicugna vicugna.
Viscacha...........................  Rodentia..............  Chinchillidae.........  Lagidium sp.
Wallaby............................  Diprotodontia.........  Macropodidae..........  Wallabia sp., Petrogale
                                                                                      sp., and Thylogale sp.
Weasel.............................  Carnivora.............  Mustelidae............  Mustela frenata.
Weasel, Chinese....................  ......do..............  ......do..............  Mustela sibirica.
Weasel, Japanese...................  ......do..............  ......do..............  Mustela itatsi (also
                                                                                      classified as Mustela
                                                                                      sibirica itatsi).
Weasel, Manchurian.................  Carnivora.............  Mustelidae............  Mustela altaica and Mustela
                                                                                      nivalis rixosa.
Wolf...............................  ......do..............  Canidae...............  Canis lupus.
Wolverine..........................  ......do..............  Mustelidae............  Gulo gulo.
Wombat.............................  Diprotodontia.........  Vombatidae............  Vombatus sp.
Woodchuck..........................  Rodentia..............  Sciuridae.............  Marmota monax.
----------------------------------------------------------------------------------------------------------------


[79 FR 30456, May 28, 2014]

                               Regulations

    Source: 17 FR 6075, July 8, 1952, unless otherwise noted.



Sec. 301.1  Terms defined.

    (a) As used in this part, unless the context otherwise specifically 
requires:
    (1) The term act means the Fur Products Labeling Act (approved Aug. 
8, 1951, Pub. L. 110, 82d Cong., 1st Sess.; 15 U.S.C.A. sec. 69; 65 
Stat. 179).
    (2) The terms rule, rules, regulations, and rules and regulations, 
mean the rules and regulations prescribed by the Commission pursuant to 
section 8 (b) of the act.

[[Page 234]]

    (3) The definitions of terms contained in section 2 of the act shall 
be applicable also to such terms when used in rules promulgated under 
the act.
    (4) The terms Fur Products Name Guide and Name Guide mean the 
register of names of hair, fleece, and fur-bearing animals issued and 
amended by the Commission pursuant to the provisions of section 7 of the 
act.
    (5) The terms required information and information required mean the 
information required to be disclosed on labels, invoices and in 
advertising under the act and rules and regulations, and such further 
information as may be permitted by the regulations, when and if used.
    (6) The terms invoice and invoice or other document mean an account, 
order, memorandum, list, or catalog, which is issued to a purchaser, 
consignee, bailee, correspondent, agent, or any other person, 
electronically, in writing, or in some other form capable of being read 
and preserved in a form that is capable of being accurately reproduced 
for later reference, whether by transmission, printing, or otherwise, in 
connection with the marketing or handling of any fur or fur product 
transported or delivered to such person.
    (b) The term wearing apparel as used in the definition of a fur 
product in section 2(d) of the Act means (1) Any articles of clothing or 
covering for any part of the body; and (2) shall include any assembled 
furs, used furs, or waste furs, in attached form, including mats, plates 
or garment shells or furs flat off the board, and furs which have been 
dyed, tip-dyed, bleached or artificially colored, intended for use as or 
in wearing apparel: Provided, however, That the provisions of section 
4(2) of the Act shall not be applicable to those fur products set out in 
paragraph (b)(2) of this section.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3186, Apr. 14, 1961; 61 
FR 67709, Dec. 24, 1996; 65 FR 82270, Dec. 28, 2000; 79 FR 30458, May 
28, 2014]



Sec. 301.2  General requirements.

    (a) Each and every fur product, except those exempted under Sec. 
301.39 of this part, shall be labeled and invoiced in conformity with 
the requirements of the act and rules and regulations.
    (b) Each and every fur, except those exempted under Sec. 301.39, 
shall be invoiced in conformity with the requirements of the act and 
rules and regulations.
    (c) Any advertising of fur products or furs, except those exempted 
under Sec. 301.39, shall be in conformity with the requirements of the 
act and rules and regulations.

[17 FR 6075, July 8, 1952, as amended at 79 FR 30458, May 28, 2014]



Sec. 301.3  English language requirements.

    All information required under the act and rules and regulations to 
appear on labels, invoices, and in advertising, shall be set out in the 
English language. If labels, invoices or advertising matter contain any 
of the required information in a language other than English, all of the 
required information shall appear also in the English language. The 
provisions of this section shall not apply to advertisements in foreign 
language newspapers or periodicals, but such advertising shall in all 
other respects comply with the act and regulations.



Sec. 301.4  Abbreviations or ditto marks prohibited.

    In disclosing required information in labeling and advertising, 
words or terms shall not be abbreviated or designated by the use of 
ditto marks but shall be spelled out fully, and in invoicing the 
required information shall not be abbreviated but shall be spelled out 
fully.



Sec. 301.5  Use of Fur Products Name Guide.

    (a) The Fur Products Name Guide (Sec. 301.0 of this part) is set up 
in four columns under the headings of Name, Order, Family and Genus-
Species. The applicable animal name appearing in the column headed 
``Name'' shall be used in the required information in labeling, 
invoicing and advertising of fur products and furs. The scientific names 
appearing under the columns headed Order, Family, and Genus-Species are 
furnished for animal identification purposes and shall not be used.
    (b) Where the name of the animal appearing in the Name Guide 
consists of two separate words the second word

[[Page 235]]

shall precede the first in designating the name of the animal in the 
required information; as for example: ``Fox, Black'' shall be disclosed 
as ``Black Fox.''



Sec. 301.6  Animals not listed in Fur Products Name Guide.

    (a) All furs are subject to the act and regulations regardless of 
whether the name of the animal producing the fur appears in the Fur 
Products Name Guide.
    (b) Where fur is obtained from an animal not listed in the Fur 
Products Name Guide it shall be designated in the required information 
by the true English name of the animal or in the absence of a true 
English name, by the name which properly identifies such animal in the 
United States.



Sec. 301.7  Describing furs by certain breed names prohibited.

    If the fur of an animal is described in any manner by its breed, 
species, strain or coloring, irrespective of former usage, such 
descriptive matter shall not contain the name of another animal either 
in the adjective form or otherwise nor shall such description (subject 
to any exception contained in this part or animal names appearing in the 
Fur Products Name Guide) contain a name in an adjective form or 
otherwise which connotes a false geographic origin of the animal. For 
example, such designations as ``Sable Mink,'' ``Chinchilla Rabbit,'' and 
``Aleutian Mink'' shall not be used.



Sec. 301.8  Use of terms ``Persian Lamb,'' ``Broadtail Lamb,''
and ``Persian-broadtail Lamb'' permitted.

    (a) The term Persian Lamb may be used to describe the skin of the 
young lamb of the Karakul breed of sheep or top-cross breed of such 
sheep, having hair formed in knuckled curls.
    (b) The term Broadtail Lamb may be used to describe the skin of the 
prematurely born, stillborn, or very young lamb of the Karakul breed of 
sheep or top-cross breed of such sheep, having flat light-weight fur 
with a moire pattern.
    (c) The term Persian-broadtail Lamb may be used to describe the skin 
of the very young lamb of the Karakul breed of sheep or top-cross breed 
of such sheep, having hair formed in flattened knuckled curls with a 
moire pattern.
    (d) The terms ``Persian Lamb'', ``Broadtail Lamb'', or ``Persian-
broadtail Lamb'' shall not be used to describe: (1) The so-called 
Krimmer, Bessarabian, Rumanian, Shiraz, Salzfelle, Metis, Dubar, Meshed, 
Caracul, Iranian, Iraqi, Chinese, Mongolian, Chekiang, or Indian lamb 
skins, unless such lamb skins conform with the requirements set out in 
paragraph (a), (b), or (c) of this section respectively; or (2) any 
other lamb skins having hair in a wavy or open curl pattern.



Sec. 301.9  Use of terms ``Mouton Lamb'' and ``Shearling Lamb''
permitted.

    (a) The term Mouton Lamb may be used to describe the skin of a lamb 
which has been sheared, the hair straightened, chemically treated, and 
thermally set to produce a moisture repellant finish; as for example:

Dyed Mouton Lamb

    (b) The term Shearling Lamb may be used to describe the skin of a 
lamb which has been sheared and combed.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3186, Apr. 14, 1961]



Sec. 301.10  Use of term ``Broadtail-processed Lamb'' permitted.

    The term Broadtail-processed Lamb may be used to describe the skin 
of a lamb which has been sheared, leaving a moire hair pattern on the 
pelt having the appearance of the true fur pattern of ``Broadtail 
Lamb''; as for example:

Dyed Broadtail-processed Lamb
Fur origin: Argentina



Sec. 301.11  Fictitious or non-existing animal designations
prohibited.

    No trade names, coined names, nor other names or words descriptive 
of a fur as being the fur of an animal which is in fact fictitious or 
non-existent shall be used in labeling, invoicing or advertising of a 
fur or fur product.



Sec. 301.12  Country of origin of imported furs.

    (a)(1) In the case of furs imported into the United States from a 
foreign country, the country of origin of such furs shall be set forth 
as a part of the

[[Page 236]]

information required by the act in invoicing and advertising.
    (2) In the case of fur products imported into the United States from 
a foreign country, or fur products made from furs imported into the 
United States from a foreign country, the country of origin of the furs 
contained in such products shall be set forth as a part of the 
information required by the act in labeling, invoicing and advertising.
    (b) The term country means the political entity known as a nation. 
Colonies, possessions or protectorates outside the boundaries of the 
mother country shall be considered separate countries and the name 
thereof shall be deemed acceptable in designating the ``country of 
origin'' unless the Commission shall otherwise direct.
    (c) The country in which the animal producing the fur was raised, or 
if in a feral state, was taken, shall be considered the ``country of 
origin.''
    (d) When furs are taken within the territorial waters of a country, 
such country shall be considered the ``country of origin.'' Furs taken 
outside such territorial waters, or on the high seas, shall have as 
their country of origin the country having the nearest mainland.
    (e)(1) The English name of the country of origin shall be used. 
Abbreviations which unmistakably indicate the name of a country, such as 
``Gt. Britain'' for ``Great Britain,'' are acceptable. Abbreviations 
such as ``N.Z.'' for ``New Zealand'' are not acceptable.
    (2) The name of the country of origin, when used as a part of the 
required information in labeling shall be preceded by the term fur 
origin; as for example:

Dyed Muskrat
Fur Origin: Russia

 or

Dyed China Mink
Fur Origin: China

    (3) In addition to the required disclosure of country of origin the 
name of the country may also appear in adjective form in connection with 
the name of the animal; as for example:

Tip-dyed Canadian American Sable
Fur Origin: Canada

 or

Russian Sable
Fur Origin: Russia

    (f) Nothing in this section shall be construed as limiting in any 
way the information required to be disclosed on labels under the 
provisions of any Tariff Act of the United States or regulations 
prescribed by the Secretary of the Treasury.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3186, Apr. 14, 1961; 61 
FR 67709, Dec. 24, 1996]



Sec. 301.13  Fur products having furs with different countries 
of origin.

    When a fur product is composed of furs with different countries of 
origin the names of such countries shall be set forth in the required 
information in the order of predominance by surface areas of the furs in 
the fur product.



Sec. 301.14  Country of origin of used furs.

    When the country of origin of used furs is unknown, and no 
representations are made directly or by implication with respect 
thereto, this fact shall be set out as a part of the required 
information in lieu of the country of origin as ``Fur origin: Unknown.''



Sec. 301.15  Designation of section producing domestic furs permitted.

    In the case of furs produced in the United States the name of the 
section or area producing the furs used in the fur product may be set 
out in connection with the name of the animal; as for example:

Dyed Fur Seal
Fur origin: Alaska

 or

Dyed Muskrat
Fur origin: Minnesota



Sec. 301.16  Disclosure of origin of certain furs raised or taken
in United States.

    If the name of any animal set out in the Fur Products Name Guide or 
term permitted by the regulations to be used in connection therewith 
connotes foreign origin and such animal is raised or taken in the United 
States, furs obtained therefrom shall be described in disclosing the 
required information as having the United States as the country of 
origin; as for example:

Dyed Persian Lamb

[[Page 237]]

Fur origin: United States

 or

Mexican Raccoon
Fur origin: United States



Sec. 301.17  Misrepresentation of origin of furs.

    No misleading nor deceptive statements as to the geographical or 
zoological origin of the animal producing a fur shall be used directly 
or indirectly in labeling, invoicing or advertising furs or fur 
products.



Sec. 301.18  Passing off domestic furs as imported furs prohibited.

    No domestic furs nor fur products shall be labeled, invoiced or 
advertised in such a manner as to represent directly or by implication 
that they have been imported.



Sec. 301.19  Pointing, dyeing, bleaching or otherwise artificially
coloring.

    (a) Where a fur or fur product is pointed or contains or is composed 
of bleached, dyed or otherwise artificially colored fur, such facts 
shall be disclosed as a part of the required information in labeling, 
invoicing and advertising.
    (b) The term pointing means the process of inserting separate hairs 
into furs or fur products for the purpose of adding guard hairs, either 
to repair damaged areas or to simulate other furs.
    (c) The term bleaching means the process for producing a lighter 
shade of a fur, or removing off-color spots and stains by a bleaching 
agent.
    (d) The term dyeing (which includes the processes known in the trade 
of tipping the hair or fur, feathering, and beautifying) means the 
process of applying dyestuffs to the hair or fur, either by immersion in 
a dye bath or by application of the dye by brush, feather, spray, or 
otherwise, for the purpose of changing the color of the fur or hair, or 
to accentuate its natural color. When dyestuff is applied by immersion 
in a dye bath or by application of the dye by brush, feather, or spray, 
it may respectively be described as ``vat dyed'', ``brush dyed'', 
``feather dyed'', or ``spray dyed'', as the case may be. When dyestuff 
is applied only to the ends of the hair or fur, by feather or otherwise, 
it may also be described as ``tip-dyed''. The application of dyestuff to 
the leather or the skin (known in the trade as ``tipping'', as 
distinguished from tip-dyeing the hair or fur as above described) and 
which does not affect a change of, nor accentuate the natural color of 
the hair or fur, shall not be considered as ``dyeing''. When fluorescent 
dye is applied to a fur or fur product it may be described as 
``brightener added''.
    (e) The term artificial coloring means any change or improvement in 
color of a fur or fur product in any manner other than by pointing, 
bleaching, dyeing, or tip-dyeing, and shall be described in labeling, 
invoicing and advertising as ``color altered'' or ``color added''.
    (f) The term blended shall not be used as a part of the required 
information to describe the pointing, bleaching, dyeing, tip-dyeing, or 
otherwise artificially coloring of furs.
    (g) Where a fur or fur product is not pointed, bleached, dyed, tip-
dyed, or otherwise artificially colored it shall be described as 
``natural''.
    (h) Where any fur or fur product is dressed, processed or treated 
with a solution or compound containing any metal and such compound or 
solution effects any change or improvement in the color of the hair, 
fleece or fur fiber, such fur or fur product shall be described in 
labeling, invoicing and advertising as ``color altered'' or ``color 
added''.
    (i)(1) Any person dressing, processing or treating a fur pelt in 
such a manner that it is required under paragraph (e) or (h) of this 
section to be described as ``color altered'' or ``color added'' shall 
place a black stripe at least one half inch (1.27 cm) in width across 
the leather side of the skin immediately above the rump or place a stamp 
with a solid black center in the form of either a two inch (5.08 cm) 
square or a circle at least two inches (5.08 cm) in diameter on the 
leather side of the pelt and shall use black ink for all other stamps or 
markings on the leather side of the pelt.
    (2) Any person dressing, processing or treating a fur pelt which 
after processing is considered natural under paragraph (g) of this 
section shall place a white stripe at least one half inch

[[Page 238]]

(1.27 cm) in width across the leather side of the skin immediately above 
the rump or place a stamp with a solid white center in the form of 
either a two inch (5.08 cm) square or a circle at least two inches (5.08 
cm) in diameter on the leather side of the pelt and shall use white ink 
for all other stamps or markings on the leather side of the pelt.
    (3) Any person dressing, processing or treating a fur pelt in such a 
manner that it is considered dyed under paragraph (d) of this section 
shall place a yellow stripe at least one half inch (1.27 cm) in width 
across the leather side immediately above the rump or place a stamp with 
a solid yellow center in the form of either a two inch (5.08 cm) square 
or a circle at least two inches (5.08 cm) in diameter on the leather 
side of the pelt and shall use yellow ink for all other stamps or 
markings on the leather side of the pelt.
    (4) In lieu of the marking or stamping otherwise required by 
paragraphs (i) (1), (2), and (3) of this section, any person dressing, 
processing or treating a fur pelt so as to be subject to the stamping or 
marking requirements of this paragraph may stamp the leather side of the 
pelt with the appropriate truthful designation ``dyed'', ``color 
altered'', ``color added'', or ``natural'', as the case may be, in such 
manner that the stamp will not be obliterated or mutilated by further 
processing and will remain clearly legible until the finished fur 
product reaches the ultimate consumer.
    (5) Where, after assembling, fur garment shells, mats, plates or 
other assembled furs are processed or treated in such a manner as to 
fall within the stamping or marking provisions of this paragraph, such 
assembled furs, in lieu of the stamping or marking of each individual 
pelt or piece, may be appropriately stamped on the leather side as 
provided in this paragraph in such a manner that the stamp will remain 
on the finished fur product and clearly legible until it reaches the 
ultimate consumer and will not be mutilated or obliterated by further 
processing.
    (j) Any person who shall process a fur pelt in such a manner that 
after such processing it is no longer considered as natural shall 
clearly, conspicuously and legibly stamp on the leather side of the pelt 
and on required invoices relating thereto a lot number or other 
identifying number which relates to such records of the processor as 
will show the source and disposition of the pelts and the details of the 
processing performed. Such person shall also stamp his name or 
registered identification number on the leather side of the pelt.
    (k) Any person who possesses fur pelts of a type which are always 
considered as dyed under paragraph (d) of this section after processing 
or any person who processes fur pelts which are always natural at the 
time of sale to the ultimate consumer, which pelts for a valid reason 
cannot be marked or stamped as provided in this section, may file an 
affidavit with the Federal Trade Commission's Bureau of Consumer 
Protection setting forth such facts as will show that the pelts are 
always dyed or natural as the case may be and that the stamping of such 
pelts cannot be reasonably accomplished. If the Bureau of Consumer 
Protection is satisfied that the public interest will be protected by 
the filing of the affidavit, it may accept such affidavit and advise the 
affiant that marking of the fur pelts themselves as provided in this 
section will be unnecessary until further notice. Any person filing such 
an affidavit shall promptly notify the Commission of any change in 
circumstances with respect to its operations.
    (l) Any person subject to this section who incorrectly marks or 
fails to mark fur pelts as provided in paragraphs (i) and (j) of this 
section shall be deemed to have misbranded such products under section 
4(l) of the Act. Any person subject to this section who furnishes a 
false or misleading affidavit under paragraph (k) of this section or 
fails to give the notice required by paragraph (k) of this section shall 
be deemed to have neglected and refused to maintain the records required 
by section 8(d) of the Act.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3186, Apr. 14, 1961; 34 
FR 381, Jan. 10, 1969; 36 FR 5689, Mar. 26, 1971; 41 FR 2636, Jan. 19, 
1976; 53 FR 31314, Aug. 18, 1988; 61 FR 67709, Dec. 24, 1996; 79 FR 
30458, May 28, 2014]

[[Page 239]]



Sec. 301.20  Fur products composed of pieces.

    (a) Where fur products, or fur mats and plates, are composed in 
whole or in substantial part of paws, tails, bellies, gills, ears, 
throats, heads, scrap pieces, or waste fur, such fact shall be disclosed 
as a part of the required information in labeling, invoicing, and 
advertising. Where a fur product is made of the backs of skins, such 
fact may be set out in labels, invoices, and advertising.
    (b) Where fur products, or fur mats and plates, are composed wholly 
or substantially of two or more of the parts set out in paragraph (a) of 
this section or one or more of such parts and other fur, disclosure in 
respect thereto shall be made by naming such parts or other fur in order 
of predominance by surface area.
    (c) The terms substantial part and substantially mean ten per centum 
(10 percent) or more in surface area.
    (d) The term assembled shall not be used in lieu of the terms set 
forth in paragraph (a) of this section to describe fur products or fur 
mats and plates composed of such parts.

[17 FR 6075, July 8, 1952, as amended at 79 FR 30458, May 28, 2014]



Sec. 301.21  Disclosure of used furs.

    (a) When fur in any form has been worn or used by an ultimate 
consumer it shall be designated ``used fur'' as a part of the required 
information in invoicing and advertising.
    (b) When fur products or fur mats and plates are composed in whole 
or in part of used fur, such fact shall be disclosed as a part of the 
required information in labeling, invoicing and advertising; as for 
example:

Leopard
Used Fur

 or

Dyed Muskrat
Contains Used Fur



Sec. 301.22  Disclosure of damaged furs.

    (a) The term damaged fur, as used in this part, means a fur, which, 
because of a known or patent defect resulting from natural causes or 
from processing, is of such a nature that its use in a fur product would 
decrease the normal life and durability of such product.
    (b) When damaged furs are used in a fur product, full disclosure of 
such fact shall be made as a part of the required information in 
labeling, invoicing, or advertising such product; as for example:

Mink
Fur origin: Canada
Contains Damaged Fur



Sec. 301.23  Second-hand fur products.

    When a fur product has been used or worn by an ultimate consumer and 
is subsequently marketed in its original, reconditioned, or rebuilt form 
with or without the addition of any furs or used furs, the requirements 
of the act and regulations in respect to labeling, invoicing and 
advertising of such product shall be applicable thereto, subject, 
however, to the provisions of Sec. 301.14 of this part as to country of 
origin requirement, and in addition, as a part of the required 
information such product shall be designated ``Second-hand'', 
``Reconditioned-Second-hand'', or ``Rebuilt-Second-hand'', as the case 
may be.



Sec. 301.24  Repairing, restyling and remodeling fur products for
consumer.

    When fur products owned by and to be returned to the ultimate-
consumer are repaired, restyled or remodeled and used fur or fur is 
added thereto, labeling of the fur product shall not be required. 
However, the person adding such used fur or fur to the fur product, or 
who is responsible therefor, shall give to the owner an invoice 
disclosing the information required under the act and regulations 
respecting the used fur or fur added to the fur product, subject, 
however, to the provisions of Sec. 301.14 of this part as to country of 
origin requirements.



Sec. 301.25  Name required to appear on labels and invoices.

    The name required by the act to be used on labels and invoices shall 
be the full name under which the person is doing business, and no trade-
mark, trade name nor other name which does not constitute such full name 
shall be used in lieu thereof.

[[Page 240]]



Sec. 301.26  Registered identification numbers.

    (a) Registered numbers for use as the required identification in 
lieu of the name on fur product labels as provided in section 4(2)(E) of 
the act will be issued by the Commission to qualified persons residing 
in the United States upon receipt of an application duly executed in the 
form set out in paragraph (d) of this section.
    (b)(1) Registered identification numbers shall be used only by the 
person or concern to whom they are issued, and such numbers are not 
transferable or assignable.
    (2) Registered identification numbers shall be subject to 
cancellation if the Federal Trade Commission fails to receive prompt 
notification of any change in name, business address, or legal business 
status of a person or firm to whom a registered identification number 
has been assigned, by application duly executed in the form set out in 
paragraph (d) of this section, reflecting the current name, business 
address, and legal business status of the person or firm.
    (3) Registered identification numbers shall be subject to 
cancellation whenever any such number was procured or has been used 
improperly or contrary to the requirements of the act and regulations, 
or when otherwise deemed necessary in the public interest.
    (c) Registered identification numbers assigned under this rule may 
be used on labels required in labeling products subject to the 
provisions of the Wool Products Labeling Act and Textile Fiber Products 
Identification Act, and numbers previously assigned or to be assigned by 
the Commission under such Acts may be used as and for the required name 
in labeling under this Act. When so used by the person or firm to whom 
assigned, the use of the numbers shall be construed as identifying and 
binding the applicant as fully and in all respects as though assigned 
under the specific Act for which it is used.
    (d) The form to apply for a registered identification number or to 
update information pertaining to an existing number is found in Sec. 
303.20(d) of this chapter. The form is available upon request from the 
Textile Section, Enforcement Division, Federal Trade Commission, 600 
Pennsylvania Avenue, NW, Washington, DC 20580, or on the Internet at 
http://www.ftc.gov.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3187, Apr. 14, 1961; 48 
FR 12516, Mar. 25, 1983; 63 FR 7517, Feb. 13, 1998; 63 FR 71583, Dec. 
28, 1998]



Sec. 301.27  Labels and method of affixing.

    At all times during the marketing of a fur product the required 
label shall be conspicuous and of such durability as to remain attached 
to the product throughout any distribution, sale, or resale, and until 
sold and delivered to the ultimate consumer.

[79 FR 30458, May 28, 2014]



Sec. 301.28  [Reserved]



Sec. 301.29  Requirements in respect to disclosure on label.

    (a) The required information shall be set forth in such a manner as 
to be clearly legible, conspicuous, and readily accessible to the 
prospective purchaser, and all parts of the required information shall 
be set out in letters of equal size and conspicuousness. All of the 
required information with respect to the fur product shall be set out on 
one side of the label. The label may include any nonrequired information 
which is true and non-deceptive and which is not prohibited by the act 
and regulations, but in all cases the animal name used shall be that set 
out in the Name Guide.
    (b) The required information may be set out in hand printing 
provided it conforms to the requirements of paragraph (a) of this 
section, and is set out in indelible ink in a clear, distinct, legible 
and conspicuous manner. Handwriting shall not be used in setting out any 
of the required information on the label.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3187, Apr. 14, 1961; 79 
FR 30458, May 28, 2014]



Sec. 301.30  [Reserved]



Sec. 301.31  Labeling of fur products consisting of two or more units.

    (a) The label shall be attached to and appear upon each garment or 
separate article of wearing apparel subject to the act irrespective of 
whether two or more garments or articles may be sold

[[Page 241]]

or marketed together or in combination with each other.
    (b) In the case of fur products that are marketed or handled in 
pairs or ensembles, only one label is required if all units in the pair 
or group are of the same fur and have the same country of origin. The 
information set out on the label must be applicable to each unit and 
supply the information required under the act and rules and regulations.

[17 FR 6075, July 8, 1952, as amended at 79 FR 30458, May 28, 2014]



Sec. 301.32  Fur product containing material other than fur.

    (a) Where a fur product contains a material other than fur the 
content of which is required to be disclosed on labels under other 
statutes administered by the Commission, such information may be set out 
on the same side of the label and in immediate conjunction with the 
information required under this Act; as for example:

100% Wool
Interlining--100% Recycled Wool
Trim--Dyed Muskrat
Fur Origin: Canada

 or

Body: 100% Cotton
Lining: 100% Nylon
Collar: Dyed Mouton Lamb
Fur Origin: Argentina

    (b) Information which may be desirable or necessary to fully inform 
the purchaser of other material content of a fur product may be set out 
on the same side of the label as used for disclosing the information 
required under the Act and rules and regulations; as for example:

Body--Leather
Trim--Dyed Mink

[26 FR 3187, Apr. 14, 1961, as amended at 45 FR 44263, July 1, 1980]



Sec. 301.33  Labeling of samples.

    Where samples of furs or fur products subject to the act are used to 
promote or effect sales of fur products, said samples, as well as the 
fur products purchased therefrom, shall be labeled to show the 
information required under the act and regulations.



Sec. 301.34  Misbranded or falsely invoiced fur products.

    (a) If a person subject to section 3 of the Act with respect to a 
fur product finds that a fur product is misbranded he shall correct the 
label or replace same with a substitute containing the required 
information.
    (b) If a person subject to section 3 of the Act with respect to a 
fur or fur product finds that the invoice issued to him is false or 
deceptive, he shall, in connection with any invoice issued by him in 
relation to such fur or fur product correctly set forth all of the 
information required by the Act and regulations in relation to such fur 
or fur product.

[26 FR 3187, Apr. 14, 1961]



Sec. 301.35  Substitution of labels.

    (a) Persons authorized under the provisions of section 3(e) of the 
act to substitute labels affixed to fur products may do so, provided the 
substitute label is complete and carries all the information required 
under the act and rules and regulations in the same form and manner as 
required in respect to the original label. The substitute label need 
not, however, show the name or registered number appearing on the 
original label if the name or registered number of the person who 
affixes the substitute appears thereon.
    (b) The original label may be used as a substitute label provided 
the name or registered number of the person making the substitution is 
inserted thereon without interfering with or obscuring in any manner 
other required information. In connection with such substitution the 
name or registered number as well as any record numbers appearing on the 
original label may be removed.
    (c) Persons substituting labels under the provision of this section 
shall maintain the records required under Sec. 301.41 of this part.

[17 FR 6075, July 8, 1952, as amended at 79 FR 30458, May 28, 2014]



Sec. 301.36  Sectional fur products.

    (a) Where a fur product is composed of two or more sections 
containing different animal furs the required information with respect 
to each section

[[Page 242]]

shall be separately set forth in labeling, invoicing or advertising; as 
for example:

Dyed Rabbit
Fur origin: France
Trimming: Dyed Mouton-processed Lamb
Fur origin: Argentina

 or

Body: Dyed Kolinsky
Fur origin: Russia
Tail: Dyed Mink
Fur origin: Canada

    (b) The provisions of this section shall not be interpreted so as to 
require the disclosure of very small amounts of different animal furs 
added to complete a fur product or skin such as the ears, snoot, or 
under part of the jaw.



Sec. 301.37  Manner of invoicing furs and fur products.

    (a) In the invoicing of furs and fur products, all of the required 
information shall be set out in a clear, legible, distinct and 
conspicuous manner. The invoice shall be issued at the time of the sale 
or other transaction involving furs or fur products, but the required 
information need not be repeated in subsequent periodic statements of 
account respecting the same furs or fur products.
    (b) Non-required information or representations appearing in the 
invoicing of furs and fur products shall in no way be false or deceptive 
nor include any names, terms or representations prohibited by the act 
and regulations. Nor shall such information or representations be set 
forth or used in such manner as to interfere with the required 
information.



Sec. 301.38