[Federal Register Volume 60, Number 152 (Tuesday, August 8, 1995)] [Rules and Regulations] [Pages 40265-40267] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 95-19543] ----------------------------------------------------------------------- FEDERAL TRADE COMMISSION 16 CFR Part 242 Guide Against Deceptive Use of the Word ``Free'' in Connection With the Sale of Photographic Film and Film Processing Service AGENCY: Federal Trade Commission. ACTION: Elimination of guide. ----------------------------------------------------------------------- SUMMARY: The Guide Against Deceptive Use of the Word ``Free'' in Connection With the Sale of Photographic Film and Film Processing Service (``Free Film Guide'') sets forth industry guidance concerning offers of ``free'' film in connection with the sale of photographic processing services. The Commission's Guide Concerning Use of the Word ``Free'' and Similar Representations, which was adopted after the Free Film Guide and which applies to all industries, sets forth essentially the same guidance concerning offers of ``free'' merchandise or service in connection with the sale of some other merchandise or service. The Free Film Guide has thus been supplanted by the Guide Concerning Use of the Word ``Free'' and Similar Representations and is no longer needed. Accordingly, the Commission has determined that it is in the public interest to eliminate the Guide Against Deceptive Use of the Word ``Free'' in Connection With the Sale of Photographic Film and Film Processing Service. [[Page 40266]] Although the Commission is eliminating the Free Film Guide, proceedings still may be brought against businesses under section 5(a)(1) of the Federal Trade Commission Act, 15 U.S.C. 45(a)(1), for engaging in unfair or deceptive acts or practices in or affecting commerce in the advertising and sale of these products and services. EFFECTIVE DATE: August 8, 1995. ADDRESSES: Requests for copies of this notice should be sent to the Public Reference Branch, Room 130, Federal Trade Commission, Washington, DC 20580. FOR FURTHER INFORMATION CONTACT: Robert J. Schroeder, Seattle Regional Office, Federal Trade Commission, 915 Second Avenue, Suite 2806, Seattle, Washington, 98174, (206) 220-6350. SUPPLEMENTARY INFORMATION: I. Introduction As a part of its ongoing project to review all rules and guides, the Commission has evaluated the continued need for the Guide Against Deceptive Use of the Word ``Free'' in Connection With the Sale of Photographic Film and Film Processing Service. The same deceptive practices described in the Free Film Guide and the same industry guidance on how to avoid them in this specific industry also appear in the more general Guide Concerning Use of the Word ``Free'' and Similar Representations, 16 CFR part 251. Accordingly, the Commission has determined to repeal the Free Film Guide. Because the industry guidance in the Free Film Guide is duplicated in the Guide Concerning Use of the Word ``Free'' and Similar Representations, the Commission has further determined that public comment is not necessary at this time.\1\ Public comment on the issues raised by offers of ``free'' merchandise or services may be sought at a later date during regulatory review of the Guide Concerning Use of the Word ``Free'' and Similar Representations. \1\ The Administrative Procedure Act requires that interpretive rules, such as guides, be published in their final form in the Federal Register. 5 U.S.C. 552(a)(1)(D). It does not require the opportunity for public participation in the issuance or repeal of interpretive rules. 5 U.S.C. 553(b). As a matter of discretion, however, the Commission generally seeks public comment on proposed actions involving industry guides. In this case, the Commission has determined such comment is unnecessary. --------------------------------------------------------------------------- II. Background On June 5, 1968, the Commission adopted the Guide Against Deceptive Use of the Word ``Free'' in Connection With the Sale of Photographic Film and Film Processing Service.\2\ The Free Film Guide describes various deceptive practices that may be associated with offers of ``free'' film in connection with the sale of photographic processing services, and provides industry guidance on how to avoid these types of deception. On November 10, 1971, the Commission adopted the Guide Concerning Use of the Word ``Free'' and Similar Representations.\3\ This guide describes various deceptive practices that may be associated with offers of ``free'' merchandise or services of any kind, and provides industry guidance on how to avoid these types of deception. The Federal Register Notice announcing it specifically states that ``provisions of all existing guides and trade practice rules that include coverage of use of the term ``Free'' or similar representations will be construed in the light hereof.'' \4\ The two guides describe essentially the same deceptive practices and give essentially the same guidance. \2\ 33 FR 8336. \3\ 36 FR 21517. \4\ Id. III. Review of the Guide The content of the Guide Against Deceptive Use of the Word ``Free'' in Connection With the Sale of Photographic Film and Film Processing Service is repeated, in slightly different language but to the same effect, in the Guide Concerning Use of the Word ``Free'' and Similar Representations. Thus the Free Film Guide has been supplanted and is no longer needed. The Free Film Guide generally proscribes representing that film is provided free with the purchase of processing service when that is not the case. The guide states: Film processors should avoid representing film as ``free'' [in connection with the purchase of processing service] when their quoted price for processing is not their regular price for such service. * * * A regular price is the price at which an article or service is openly and actively sold by the advertiser to the public on a regular basis for a reasonably substantial period of time in the recent and regular course of business.\5\ \5\ 16 CFR 242.1(b). The Guide Concerning Use of the Word ``Free'' and Similar Representations contains the same general proscription in slightly --------------------------------------------------------------------------- different language: [W]hen 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. * * * 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 most recent and regular course of business, for a reasonably substantial period of time, i.e., a 30-day period.\6\ \6\ 16 CFR 251.1(b)(1)-(b)(2). Both guides expound that consumers understand ``free'' offers to mean that the price of the processing, or other article that must be purchased, has not been increased to cover the cost of the ``free'' film or other article.\7\ Both guides counsel that introductory offers should not include a representation of ``free'' film or other article unless the offeror expects, in good faith, to discontinue the offer after a limited time and commence selling the processing service, or other article that must be purchased, separately at the same price at which it was promoted with the ``free'' offer.\8\ Both guides further provide that ``free'' offers should not be continuous or frequent.\9\ \7\ 16 CFR 242.1(c); 16 CFR 251.1(b)(1). \8\ 16 CFR 242.1(f); 16 CFR 251.1(f). \9\ 16 CFR 242.1(e); 16 CFR 251.1(h). --------------------------------------------------------------------------- Two provisions of the Free Film Guide, while not having specific counterparts in the Guide Concerning Use of the Word ``Free'' and Similar Representations, are implicitly contained in the more general language of that guide. The first is the statement that a processor has no basis for a ``free'' film representation where it has not established a regular price for processing service by itself (except in the case of introductory offers).\10\ This is implicit in the discussion of the regular price requirement in both guides. The second is the caveat that the Free Film Guide is not intended to preclude the use of nondeceptive ``combination'' offers of film and processing where there is no representation that one of the items is ``free''.\11\ There is nothing in either guide to suggest that such offers would be precluded because the guides, by their terms, apply only to use of the word ``free'' and similar terms. \10\ 16 CFR 242.1(d). \11\ 16 CFR 242.1(g). --------------------------------------------------------------------------- The Free Film Guide has been supplanted by the Guide Concerning Use of the Word ``Free'' and Similar Representations. Accordingly, the Commission has determined that it is in the public interest to eliminate the Free Film Guide. List of Subjects in 16 CFR Part 242 Advertising, Photographic industry, Trade practices. [[Page 40267]] PART 242--[REMOVED] The Commission, under authority of sections 5(a)(1) and 6(g) of the Federal Trade Commission Act, 15 U.S.C. 45(a)(1) and 46(g), amends chapter I of title 16 of the Code of Federal Regulations by removing Part 242. By direction of the Commission. Donald S. Clark, Secretary. Statement of Commissioner Mary L. Azcuenaga Concurring in 16 CFR Part 14, Matter No. P954215; Repeal of Mail Order Insurance Guides, Matter No. P954903; Repeal of Guides Re: Debt Collection, Matter No. P954809; and Free Film Guide Review, Matter No. P959101 In a flurry of deregulation, the Commission today repeals or substantially revises several Commission guides and other interpretive rules.\1\ The Commission does so without seeking public comment. I have long supported the general goal of repealing or revising unnecessary, outdated, or unduly burdensome legislative and interpretive rules, and I agree that the repeal or revision of these particular guides and interpretive rules appears reasonable. Nevertheless, I cannot agree with the Commission's decision not to seek public comment before making these changes. \1\ Administrative Interpretations, General Policy Statements, and Enforcement Policy Statements, 16 C.F.R. Part 14; Guides for the Mail Order Insurance Industry, 16 C.F.R. Part 234; Guides Against Debt Collection Deception, 16 C.F.R. Part 237; and Guide Against Deceptive use of the Word ``Free'' In Connection With the Sale of Photographic Film and Film Processing Services, 16 C.F.R. Part 242. --------------------------------------------------------------------------- Although it is not required to do so under the Administrative Procedure Act, 5 U.S.C. Sec. 553(b)(A), the Commission traditionally has sought public comment before issuing, revising, or repealing its guides and other interpretive rules. More specifically, the Commission adopted a policy in 1992 of reviewing each of its guides at least once every ten years and issuing a request for public comment as part of this review. See FTC Operating Manual ch. 8.3.8. The Commission decided to seek public comment on issues such as: (1) The economic impact of and continuing need for the guide; (2) changes that should be made in the guide to minimize any adverse economic effect; (3) any possible conflict between the guide and any federal, state, or local laws; and (4) the effect on the guide of technological, economic, or other industry changes, if any, since the guide was promulgated. Id. The Commission has sought public comment and has posed these questions concerning a number of guides since adopting its procedures for regulatory review in 1992.\2\ \2\ See, e.g., Request for Comments Concerning Guides for the Hosiery Industry, 59 Fed. Reg. 18004 (Apr. 15, 1994); Request for Comment Concerning Guides for the Feather and Down Products Industry, 59 Fed. Reg. 18006 (Apr. 15, 1994). --------------------------------------------------------------------------- Notwithstanding its long-standing, general practice of seeking public comment and its specific policy of seeking public comment as part of its regulatory review process, the Commission has chosen not to seek public comment before repealing or revising these guides and interpretive rules. Why not? Has the Commission changed its view about the potential value of public comment? Perhaps the Commission knows all the answers, but then again, perhaps not. Although reasonable arguments can be made for repeal or revision of these guides and interpretive rules, public comment still might prove to be beneficial. In addition, the relatively short period of time that would be required for public comment should not be problematic. The Commission has not addressed any of these guides or interpretive rules in the last ten years. Indeed, it has not addressed some of them for thirty years or more. For example, the Commission apparently has not addressed the interpretive rule concerning the use of the word ``tile'' in designation of non-ceramic products since it was issued in 1950.\3\ The continued existence of these guides and interpretive rules during a brief public comment period surely would cause no harm because they are not binding and because, arguably, they are obsolete. I seriously question the need to act so precipitously as to preclude the opportunity for public comment.\4\ \3\ 16 C.F.R. 14.2. \4\ Unfortunately, seeking public comment would not permit the Commission to count the repeal and revision of these guides and interpretive rules in its tally of completed actions in the Regulatory Reinvention Initiative Report that will be sent to the President on August 1, 1995, but perhaps that harm could be mitigated by reporting to the President that the Commission is seeking public comment concerning repeal or revision. --------------------------------------------------------------------------- In 1992, the Commission announced a careful, measured approach for reviewing its guides and interpretive rules, and public comment has been an important part of that process. Incorporating public comment into the review is appropriate and sensible. Although I have voted in favor of repealing or revising these guides and interpretive rules, I strongly would have preferred that the Commission seek public comment before doing so. [FR Doc. 95-19543 Filed 8-7-95; 8:45 am] BILLING CODE 6750-01-M