[Title 16 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2021 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

                                           Title 16

                                    Commercial Practices
                                  ________________________

                                     Parts 0 to 999

                         Revised as of January 1, 2021

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2021
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

[[Page ii]]

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                            Table of Contents



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

  Title 16:
          Chapter I--Federal Trade Commission                        3
  Finding Aids:
      Table of CFR Titles and Chapters........................     717
      Alphabetical List of Agencies Appearing in the CFR......     737
      List of CFR Sections Affected...........................     747

[[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 
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    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2021), 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 
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Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
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Code a note has been inserted to reflect the future effective date. In 
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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 
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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 
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not dropped in error.

INCORPORATION BY REFERENCE

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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 
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    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
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    An index to the text of ``Title 3--The President'' is carried within 
that volume.

[[Page vii]]

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the revision dates of the 50 CFR titles.

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    Oliver A. Potts,
    Director,
    Office of the Federal Register
    January 1, 2021







[[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, 2021.

    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..................          36
3               Rules of practice for adjudicative 
                    proceedings.............................          53
4               Miscellaneous rules.........................          96
5               Standards of conduct........................         133
6               Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Federal 
                    Trade Commission........................         137
14              Administrative interpretations, general 
                    policy statements, and enforcement 
                    policy statements.......................         144
16              Advisory committee management...............         147
              SUBCHAPTER B--GUIDES AND TRADE PRACTICE RULES
17              Application of guides in preventing unlawful 
                    practices...............................         154
20              Guides for the rebuilt, reconditioned and 
                    other used automobile parts industry....         154
23              Guides for the jewelry, precious metals, and 
                    pewter industries.......................         155
24              Guides for select leather and imitation 
                    leather products........................         169
25-227          [Reserved]

233             Guides against deceptive pricing............         171
238             Guides against bait advertising.............         175
239             Guides for the advertising of warranties and 
                    guarantees..............................         176
240             Guides for advertising allowances and other 
                    merchandising payments and services.....         178
251             Guide concerning use of the word ``free'' 
                    and similar representations.............         184
254             Guides for private vocational and distance 
                    education schools.......................         186
255             Guides concerning use of endorsements and 
                    testimonials in advertising.............         190

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259             Guide concerning fuel economy advertising 
                    for new automobiles.....................         198
260             Guides for the use of environmental 
                    marketing claims........................         204
        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..........................         267
305             Energy and water use labeling for consumer 
                    products under the Energy Policy and 
                    Conservation Act (``Energy Labeling 
                    Rule'').................................         269
306             Automotive fuel ratings, certification and 
                    posting.................................         351
307             [Reserved]

308             Trade regulation rule pursuant to the 
                    Telephone Disclosure and Dispute 
                    Resolution Act of 1992..................         364
309             Labeling requirements for alternative fuels 
                    and alternative fueled vehicles.........         376
310             Telemarketing sales rule....................         385
311             Test procedures and labeling standards for 
                    recycled oil............................         399
312             Children's online privacy protection rule...         400
313             Privacy of consumer financial information...         409
314             Standards for safeguarding customer 
                    information.............................         437
315             Contact lens rule...........................         438
316             Can-spam rule...............................         443
317             Prohibition of energy market manipulation 
                    rule....................................         446
318             Health breach notification rule.............         447
320             Disclosure requirements for depository 
                    institutions lacking Federal deposit 
                    insurance...............................         451
321             Mortgage acts and practices--Advertising....         451
322             Mortgage assistance relief services.........         451
                  SUBCHAPTER D--TRADE REGULATION RULES
408             Unfair or deceptive advertising and labeling 
                    of cigarettes in relation to the health 
                    hazards of smoking......................         452
423             Care labeling of textile wearing apparel and 
                    certain piece goods as amended..........         452
424             Retail food store advertising and marketing 
                    practices...............................         458
425             Use of prenotification negative option plans         458

[[Page 5]]

429             Rule concerning cooling-off period for sales 
                    made at homes or at certain other 
                    locations...............................         460
432             Power output claims for amplifiers utilized 
                    in home entertainment products..........         463
433             Preservation of consumers' claims and 
                    defenses................................         465
435             Mail, internet, or telephone order 
                    merchandise.............................         467
436             Disclosure requirements and prohibitions 
                    concerning franchising..................         471
437             Business opportunity rule...................         500
444             Credit practices............................         508
453             Funeral industry practices..................         511
455             Used motor vehicle trade regulation rule....         517
456             Ophthalmic practice rules (eyeglass rule)...         527
460             Labeling and advertising of home insulation.         528
    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..............         538
501             Exemptions from requirements and 
                    prohibitions under part 500.............         551
502             Regulations under section 5(c) of the Fair 
                    Packaging and Labeling Act..............         552
503             Statements of general policy or 
                    interpretation..........................         553
                 SUBCHAPTER F--FAIR CREDIT REPORTING ACT
600             [Reserved]

602             Fair and Accurate Credit Transactions Act of 
                    2003....................................         558
603             Definitions.................................         558
604             Fair Credit Reporting Act rules.............         559
609             Free electronic credit monitoring for active 
                    duty military...........................         559
610             Free annual file disclosures................         561
611             Prohibition against circumventing treatment 
                    as a nationwide consumer reporting 
                    agency..................................         561
613             Duration of active duty alerts..............         562
614             Appropriate proof of identity...............         562
640             Duties of creditors regarding risk-based 
                    pricing.................................         562
641             Duties of users of consumer reports 
                    regarding address discrepancies.........         576
642             Prescreen opt-out notice....................         577
660             Duties of furnishers of information to 
                    consumer reporting agencies.............         578
680             Affiliate marketing.........................         583
681             Identity theft rules........................         596

[[Page 6]]

682             Disposal of consumer report information and 
                    records.................................         601
698             Model forms and disclosures.................         603
 SUBCHAPTER G--RULES, REGULATIONS, STATEMENTS AND INTERPRETATIONS UNDER 
                     THE MAGNUSON-MOSS WARRANTY ACT
700             Interpretations of Magnuson-Moss Warranty 
                    Act.....................................         618
701             Disclosure of written consumer product 
                    warranty terms and conditions...........         624
702             Pre-sale availability of written warranty 
                    terms...................................         626
703             Informal dispute settlement procedures......         629
 SUBCHAPTER H--RULES, REGULATIONS, STATEMENTS AND INTERPRETATIONS UNDER 
        THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976
801             Coverage rules..............................         635
802             Exemption rules.............................         659
803             Transmittal rules...........................         677
            SUBCHAPTER I--FAIR DEBT COLLECTION PRACTICES ACT
901             Procedures for State application for 
                    exemption from the provisions of the Act         713
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.

    (a) 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.
    (b) The Commission delegates its functions, subject to certain 
limitations, when no quorum is available for the transaction of 
business. The delegate or delegates are authorized to act in instances 
in which no party or intervenor would be adversely affected by the 
delegated action and entitled to seek review by the Commission, as 
provided by section 1(b) of Reorganization Plan No. 4 of 1961, or in 
instances in which all such adversely affected parties or intervenors 
have waived such a right. In actions in which at least one Commissioner 
is participating, this delegation is to the participating Commissioner 
or to the body of Commissioners who are participating. In actions in 
which no Commissioner is available or no Commissioner is participating, 
the General Counsel in consultation, where appropriate, with the 
Directors of the Bureaus of Consumer Protection, Competition, and 
Economics shall exercise this delegated authority without power of 
redelegation. This delegation does not alter or affect other delegations 
to Commission staff. This delegation is only authorized for those 
instances in which the Commission lacks a quorum as set forth in 
Commission Rule 4.14(b), 16 CFR 4.14(b) (Commission quorum).

[83 FR 7110, Feb. 20, 2018]



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:

[[Page 9]]

    (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 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]

[[Page 10]]



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 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.

[[Page 11]]

    (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.
    (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.

[[Page 12]]

 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.

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]

[[Page 13]]

   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.
1.125--1.129 [Reserved

    Subpart R_Policy With Regard to Indemnification of FTC Employees

1.130 Policy on employee indemnification.

    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 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

[[Page 14]]

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]

                             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

[[Page 15]]

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 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,

[[Page 16]]

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:
    (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

[[Page 17]]

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 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.

[[Page 18]]

    (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 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

[[Page 19]]

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 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

[[Page 20]]

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 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.

[[Page 21]]

    (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 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

[[Page 22]]

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 
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

[[Page 23]]

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 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

[[Page 24]]

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;
    (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.

[[Page 25]]

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 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.

[[Page 26]]



               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]



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

[[Page 27]]

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 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

[[Page 28]]

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 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

[[Page 29]]

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;
    (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.

[[Page 30]]

    (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.



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]

[[Page 31]]



      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
    (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:

[[Page 32]]

    (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 within the Commission's 
jurisdiction. The following maximum civil penalty amounts apply only to 
penalties assessed after January 14, 2020, including those penalties 
whose associated violation predated January 14, 2020.
    (a) Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18a(g)(1)-
$43,280;
    (b) Section 11(l) of the Clayton Act, 15 U.S.C. 21(l)-$22,994;
    (c) Section 5(l) of the FTC Act, 15 U.S.C. 45(l)-$43,280;
    (d) Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. 45(m)(1)(A)-
$43,280;
    (e) Section 5(m)(1)(B) of the FTC Act, 15 U.S.C. 45(m)(1)(B)-
$43,280;
    (f) Section 10 of the FTC Act, 15 U.S.C. 50-$569;
    (g) Section 5 of the Webb-Pomerene (Export Trade) Act, 15 U.S.C. 65-
$569;
    (h) Section 6(b) of the Wool Products Labeling Act, 15 U.SC. 68d(b)-
$569;
    (i) Section 3(e) of the Fur Products Labeling Act, 15 U.S.C. 69a(e)-
$569;
    (j) Section 8(d)(2) of the Fur Products Labeling Act, 15 U.S.C. 
69f(d)(2)-$569;
    (k) Section 333(a) of the Energy Policy and Conservation Act, 42 
U.S.C. 6303(a)-$468;
    (l) Sections 525(a) and (b) of the Energy Policy and Conservation 
Act, 42 U.S.C. 6395(a) and (b), respectively-$22,994 and $43,280, 
respectively;
    (m) Section 621(a)(2) of the Fair Credit Reporting Act, 15 U.S.C. 
1681s(a)(2)-$4,063;
    (n) Section 1115(a) of the Medicare Prescription Drug Improvement 
and Modernization Act of 2003, Public Law 108-173, as amended by Public 
Law 115-263, 21 U.S.C. 355 note-$15,301;
    (o) Section 814(a) of the Energy Independence and Security Act of 
2007, 42 U.S.C. 17304-$1,231,690; 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.

[85 FR 2016, Jan. 14, 2020]



 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),

[[Page 33]]

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 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.

[[Page 34]]

 
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.
------------------------------------------------------------------------


[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;

[[Page 35]]

    (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 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.

[[Page 36]]



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.



Sec. Sec.1.125--1.129  [Reserved]



    Subpart R_Policy With Regard to Indemnification of FTC Employees

    Authority: 15 U.S.C. 46.

    Source: 82 FR 30966, July 5, 2017, unless otherwise noted.



Sec.1.130  Policy on employee indemnification.

    (a) The Commission may indemnify, in whole or in part, its employees 
(which for the purpose of this regulation includes former employees) for 
any verdict, judgment, or other monetary award which is rendered against 
any such employee, provided that the conduct giving rise to the verdict, 
judgment, or award was taken within the scope of his or her employment 
with the Federal Trade Commission and that such indemnification is in 
the interest of the Federal Trade Commission, as determined as a matter 
of discretion by the Commission, or its designee.
    (b) The Commission may settle or compromise a personal damage claim 
against its employee by the payment of available funds, at any time, 
provided the alleged conduct giving rise to the personal damage claim 
was taken within the scope of employment and that such settlement or 
compromise is in the interest of the Federal Trade Commission, as 
determined as a matter of discretion by the Commission, or its designee.
    (c) Absent exceptional circumstances, as determined by the 
Commission or its designee, the Commission will not entertain a request 
either to agree to indemnify or to settle a personal damage claim before 
entry of an adverse verdict, judgment, or monetary award.
    (d) When an employee of the Federal Trade Commission becomes aware 
that an action may be or has been filed against the employee in his or 
her individual capacity as a result of conduct taken within the scope of 
his or her employment, the employee shall immediately notify his or her 
supervisor that such an action is pending or threatened. The supervisor 
shall promptly thereafter notify the Office of the General Counsel. 
Employees may be authorized to receive legal representation by the 
Department of Justice in accordance with 28 CFR 50.15.
    (e)(1) The employee may, thereafter, request either:
    (i) Indemnification to satisfy a verdict, judgment or award entered 
against the employee; or
    (ii) Payment to satisfy the requirements of a settlement proposal.
    (2) The employee shall submit a written request, with documentation 
including copies of the verdict, judgment, award, or settlement 
proposal, as appropriate, to the head of his or her division or office, 
who thereupon shall submit to the General Counsel, in a timely manner, a 
recommended disposition of the request. The General Counsel may also 
seek the views of the Department of Justice. The failure of an employee 
to provide notification under paragraph (d) of this section or make a 
request under this paragraph (e) shall not impair the agency's ability 
to provide indemnification or payment under this section if it 
determines it is appropriate to do so.
    (f) Any amount paid under this section either to indemnify a Federal 
Trade Commission employee or to settle a personal damage claim shall be 
contingent upon the availability of appropriated funds of the Federal 
Trade Commission.



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.

[[Page 37]]

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.
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

[[Page 38]]

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 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

[[Page 39]]

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.
    (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.

[[Page 40]]

    (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 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

[[Page 41]]

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.
    (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

[[Page 42]]

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, 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

[[Page 43]]

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 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

[[Page 44]]

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, 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

[[Page 45]]

    (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 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.

[[Page 46]]

    (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 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

[[Page 47]]

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]



   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

[[Page 48]]

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 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

[[Page 49]]

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 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

[[Page 50]]

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 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

[[Page 51]]

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 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.

[[Page 52]]

    (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.
    (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.govinfo.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

[[Page 53]]

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 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.

[[Page 54]]

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.

    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

[[Page 55]]

    (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]



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

[[Page 56]]

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. 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

[[Page 57]]

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 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

[[Page 58]]

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]



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

[[Page 59]]

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 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;

[[Page 60]]

    (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 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

[[Page 61]]

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 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]

[[Page 62]]



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 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

[[Page 63]]

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 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]

[[Page 64]]



                 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 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

[[Page 65]]

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;
    (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.

[[Page 66]]

    (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 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

[[Page 67]]

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.
    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

[[Page 68]]

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 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

[[Page 69]]

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 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

[[Page 70]]

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 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.

[[Page 71]]

    (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.
    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

[[Page 72]]

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.
    (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

[[Page 73]]

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 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

[[Page 74]]

    (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 
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]

[[Page 75]]



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 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

[[Page 76]]

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 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

[[Page 77]]

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 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.

[[Page 78]]

    (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, 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.

[[Page 79]]

    (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 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

[[Page 80]]

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 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]

[[Page 81]]



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 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

[[Page 82]]

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 
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

[[Page 83]]

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 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

[[Page 84]]

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 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

[[Page 85]]

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 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

[[Page 86]]

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.
    (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

[[Page 87]]

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.
    (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,

[[Page 88]]

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 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]

[[Page 89]]



                   Subpart H_Reopening of Proceedings



Sec.3.71  Authority.

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

[[Page 90]]

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 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

[[Page 91]]

final Commission action has not been taken before that date.
    (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

[[Page 92]]

has unduly or unreasonably protracted 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 93]]

    (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 94]]

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 95]]

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 96]]

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;

[[Page 97]]

    (ii) The participation would begin within two years after the 
termination of the former employee's service and, 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;

[[Page 98]]

    (iv) A statement whether, while employed by the Commission, the 
former employee participated in any proceeding or investigation 
concerning 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

[[Page 99]]

clearance to participate in a Commission matter pursuant to paragraph 
(b)(2) of this section. The General 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 notifythe 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 Commis-
sion.1 The Commission may publicly

------------
  \1\ The standards of conduct and disciplinary procedures under this 
Sec.4.1(e) apply only to
                                       Continued

[[Page 100]]

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:
    (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\
    (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

------------
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.
  \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.
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

[[Page 101]]

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:
    (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

[[Page 102]]

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 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

[[Page 103]]

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 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

[[Page 104]]

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 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

[[Page 105]]

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, 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 deliv-ering 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.

[[Page 106]]

    (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 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, as amended at 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

[[Page 107]]

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 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 theinterests 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

[[Page 108]]

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 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 
auto-mated 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

[[Page 109]]

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 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 an audience. 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. To 
qualify for news media status, a request must not be for a 
nonjournalistic commercial use. A request for records supporting the 
news dissemination function of the requester is not considered a 
commercial use.
    (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.

[[Page 110]]

    (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 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[sec] x    $0.14 per page.
 14[sec]).
Converting paper into electronic format  Quarter hour rate of operator
 (scanning).                              (Clerical, Other Professional,
                                          Attorney/Economist).
Other reproduction (e.g., converting     Actual direct cost, including
 from one electronic format to computer   operator time.
 disk or printout, microfilm,
 microfiche, or microform).
------------------------------------------------------------------------
                           Electronic Services
------------------------------------------------------------------------
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,
 refiling, 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. (i) Except as provided in paragraphs 
(b)(7)(ii)-(iv) of this section, search fees for responding to a Freedom 
of Information Act request will not be assessed for responses that fail 
to comply with the time limits, as provided at 5 U.S.C. 
552(a)(4)(A)(viii), Sec.4.11(a)(1)(ii) and Sec.4.11(a)(3)(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). Except as 
provided below, duplication fees will not be assessed for an untimely 
response, where

[[Page 111]]

there are no unusual or exceptional circumstances, made to a requester 
qualifying for one of the fee categories set forth in paragraph (b)(2) 
of this section.
    (ii) If the Commission has determined that unusual circumstances 
apply and has provided a timely written notice to the requester in 
accordance with 5 U.S.C. 552(a)(6)(B), the delay in a response is 
excused for an additional 10 days. If the Commission fails to comply 
with the extended time limit, it will not charge search fees (or, for a 
requester qualifying for one of the fee categories set forth in 
paragraph (b)(2) of this section, will not charge duplication fees).
    (iii) If the Commission has determined that unusual circumstances 
apply and more than 5,000 pages are necessary to respond to the request, 
the agency may charge search fees (or, for requesters qualifying for one 
of the fee categories set forth in paragraph (b)(2) of this section, may 
charge duplication fees) if timely written notice has been provided to 
the requester and the agency has discussed with the requester via 
written mail, electronic mail, or telephone (or made not less than 3 
good-faith attempts to do so) how the requester could effectively limit 
the scope of the request.
    (iv) If a court determines that exceptional circumstances exist, the 
Commission's failure to comply with a time limit shall be excused for 
the length of time provided by the court order.
    (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).
    (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:

[[Page 112]]

    (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 
public understanding, 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 either electronically 
through the Department of Treasury's pay.gov Web site or 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, 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; 82 FR 21686, May 10, 2017]



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

[[Page 113]]

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;
    (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;

[[Page 114]]

    (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 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

[[Page 115]]

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 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

[[Page 116]]

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]

    Editorial Note: At 80 FR 15162, Mar. 23, 2015, in Sec.4.9, 
paragraph (a)(10)(viii) was revised, however no paragraph (a)(10)(viii) 
exists, so the amendment could not be incorporated.



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.
    (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

[[Page 117]]

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 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

[[Page 118]]

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 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

[[Page 119]]

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 
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

[[Page 120]]

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 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

[[Page 121]]

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 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

[[Page 122]]

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 (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

[[Page 123]]

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, 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.

[[Page 124]]

    (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 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

[[Page 125]]

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 
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

[[Page 126]]

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 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.govinfo.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

[[Page 127]]

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 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

[[Page 128]]

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 
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

[[Page 129]]

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 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

[[Page 130]]

(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.
    (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

[[Page 131]]

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).
    (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

[[Page 132]]

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 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]

[[Page 133]]



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.
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]

[[Page 134]]



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 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.

[[Page 135]]



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.



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

[[Page 136]]

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 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.

[[Page 137]]



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.

    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]

[[Page 138]]



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; 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

[[Page 139]]

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 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

[[Page 140]]

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 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

[[Page 141]]

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 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,

[[Page 142]]

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 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

[[Page 143]]

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 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

[[Page 144]]

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]



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,

[[Page 145]]

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 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

[[Page 146]]

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 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

[[Page 147]]

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 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.

[[Page 148]]



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; 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

[[Page 149]]

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 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;

[[Page 150]]

    (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 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

[[Page 151]]

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 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;

[[Page 152]]

    (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;
    (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

[[Page 153]]

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.
    (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 154]]



              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 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 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,''

[[Page 155]]

``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 Misuse of the terms ``handmade,'' ``hand-polished,'' etc.
23.3 Misrepresentation as to gold content.
23.4 Misuse of the word ``vermeil.''
23.5 Misrepresentation as to silver content.
23.6 Misuse of the words ``platinum,'' ``iridium,'' ``palladium,'' 
          ``ruthenium,'' ``rhodium,'' and ``osmium.''
23.7 Disclosure of surface-layer application of rhodium.
23.8 Misrepresentation as to products containing more than one precious 
          metal.
23.9 Misrepresentation as to content of pewter.
23.10 Additional guidance for the use of quality marks.
23.11 Misuse of ``corrosion proof,'' ``non-corrosive,'' ``corrosion 
          resistant,'' ``rust proof,'' ``rust resistant,'' etc.
23.12 Definition and misuse of the word ``diamond.''
23.13 Misuse of the words ``flawless,'' ``perfect,'' etc.
23.14 Disclosure of treatments to diamonds.
23.15 Misuse of the term ``blue white.''

[[Page 156]]

23.16 Misuse of the term ``properly cut,'' etc.
23.17 Misuse of the words ``brilliant'' and ``full cut.''
23.18 Misrepresentation of weight and ``total weight.''
23.19 Definitions of various pearls.
23.20 Misuse of the word ``pearl.''
23.21 Misuse of terms such as ``cultured pearl,'' ``seed pearl,'' 
          ``Oriental pearl,'' ``natura,'' ``kultured,'' ``real,'' 
          ``gem,'' ``synthetic,'' and regional designations.
23.22 Misrepresentation as to cultured pearls.
23.23 Disclosure of treatments to pearls and cultured pearls.
23.24 Disclosure of treatments to gemstones.
23.25 Misuse of the words ``ruby,'' ``sapphire,'' ``emerald,'' 
          ``topaz,'' ``stone,'' ``birthstone,'' ``gemstone,'' etc.
23.26 Misrepresentation as to varietal name.
23.27 Misuse of the words ``real,'' ``genuine,'' ``natural,'' 
          ``precious,'' etc.
23.28 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: 83 FR 40667, Aug. 16, 2018, unless otherwise noted.



Sec.23.0  Scope and application.

    (a) The guides in this part 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 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 
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.

[[Page 157]]



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.
    Note 3 to Sec.23.1: 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.23.2  Misuse of the terms ``handmade,'' ``hand-polished,'' etc.

    (a) It is unfair or deceptive to represent, directly or by 
implication, that any industry product is handmade 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, precious metal clays, ingots, casting grain, 
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.23.3  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: \24\
---------------------------------------------------------------------------

    \24\ See paragraph (c) of this section 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, including 
the surface layer of a coated product, which is not composed throughout 
of fine (24 karat) gold.
    (2) Use of the word ``Gold'' or any abbreviation to describe all or 
part of an industry product (including the surface layer of a coated 
product) composed throughout of an alloy of gold (i.e., gold that is 
less than 24 karats), 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) Marking, describing, or otherwise representing all or part of an 
industry product as being plated or coated with gold or gold alloy 
unless all significant surfaces of the product or part contain a plating 
or coating of gold or gold alloy that is of reasonable durability.\25\
---------------------------------------------------------------------------

    \25\ For the purpose of this section, ``reasonable durability'' 
means that all areas of the plating are sufficiently thick to assure 
coverage that reasonable consumers would expect from the surface 
application. Since industry products include items having surfaces and 
parts of surfaces that are subject to different degrees of wear, the 
thickness of the surface application for all items or for different 
areas of the surface of individual items does not necessarily have to be 
uniform.

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

[[Page 158]]

    (5) 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 \26\ 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.
---------------------------------------------------------------------------

    \26\ See footnote 2.
---------------------------------------------------------------------------

    (6) 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 \27\ 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.
---------------------------------------------------------------------------

    \27\ See footnote 2.
---------------------------------------------------------------------------

    (7) 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.
    (8) 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 \28\ 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.
---------------------------------------------------------------------------

    \28\ See footnote 2.
---------------------------------------------------------------------------

    (9) 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.
    (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 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,'' ``14 Kt. Gold,'' ``9 Karat 
Gold,'' or ``9 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,'' 
``14Kt.,'' ``14 K.,'' or ``9 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, 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 soldering, brazing, welding, or 
other mechanical means a plating of gold alloy of not

[[Page 159]]

less than 10 karat fineness and of reasonable durability \29\ may be 
marked or described as ``Gold Plate,'' ``Gold Plated,'' ``Gold 
Overlay,'' ``Rolled Gold Plate,'' ``Rolled Gold Plated,'' or an adequate 
abbreviation, when such plating constitutes at least 1/40th 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 Kt. Gold Overlay,'' or ``14K. R.G.P.''). When such plating 
constitutes at least 1/20th of the weight of the metal in the entire 
article, the term ``Gold Filled'' may be used. The terms ``Gold 
Overlay,'' ``Rolled Gold Plate,'' and ``Rolled Gold Plated'' 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, ``1/40th 12 
Kt. Rolled Gold Plate'' or ``1/40 12 Kt. R.G.P.'').
---------------------------------------------------------------------------

    \29\ See footnote 2.
---------------------------------------------------------------------------

    (3) 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 is of reasonable durability \30\ and has a minimum 
thickness throughout equivalent to 0.175 microns (approximately 7/
1,000,000ths of an inch) of fine gold,\31\ may be marked or described as 
``Gold Plate,'' ``Gold Plated,'' ``Gold Electroplate'' or ``Gold 
Electroplated,'' or so abbreviated, if the term is immediately preceded 
by a designation of the karat fineness of the plating which is of equal 
conspicuousness as the term used (e.g., ``12 Karat Gold Electroplate'' 
or ``12K G.E.P.''). 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).''
---------------------------------------------------------------------------

    \30\ See footnote 2.
    \31\ A product containing 1 micron (otherwise known as 1[micro]) of 
12 karat gold is equivalent to one-half micron of 24-karat gold.
---------------------------------------------------------------------------

    (d) 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.\32\
---------------------------------------------------------------------------

    \32\ 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 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.23.4  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 reasonable durability \33\ 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.
---------------------------------------------------------------------------

    \33\ See footnote 2.

    Note 1 to Sec.23.4: 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.23.4: Exemptions recognized in the assay of gold 
filled, gold overlay, and rolled gold plate industry products are listed 
in the appendix.

[[Page 160]]



Sec.23.5  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) The following are examples of markings or descriptions that may 
be misleading:
    (1) Use of the unqualified word ``silver'' to mark, describe, or 
otherwise represent all or part of an industry product, including the 
surface layer of a coated product, unless an equally conspicuous, 
accurate quality fineness designation indicating the pure silver content 
in parts per thousand immediately precedes the term (e.g., ``750 
silver'').
    (2) Use of the words ``solid silver,'' ``Sterling Silver,'' 
``Sterling,'' or the abbreviation ``Ster.'' to mark, describe, or 
otherwise represent all or part of an industry product unless it is at 
least 925/1,000ths pure silver.
    (3) Use of the words ``coin'' or ``coin silver'' to mark, describe, 
or otherwise represent all or part of an industry product unless it is 
at least 900/1,000ths pure silver.
    (4) Use of the word ``silver'' to mark, describe, or otherwise 
represent all or part of an industry product that is not composed 
throughout of silver, but has a surface layer or coating of silver, 
unless the term is adequately qualified to indicate that the product or 
part is only coated.
    (5) Marking, describing, or otherwise representing 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 reasonable durability.\34\
---------------------------------------------------------------------------

    \34\ See footnote 2.
---------------------------------------------------------------------------

    (c) 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.\35\
---------------------------------------------------------------------------

    \35\ 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.23.5: The National Stamping Act provides that silver 
plated 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.23.5: Exemptions recognized in the assay of silver 
industry products are listed in the appendix.



Sec.23.6  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: \36\
---------------------------------------------------------------------------

    \36\ See paragraph (c) of this section for examples of acceptable 
markings and descriptions.
---------------------------------------------------------------------------

    (1) Use of the word ``Platinum'' or any abbreviation to describe all 
or part of a product that is not composed throughout of platinum, but 
has a surface layer or coating of platinum, unless the word ``Platinum'' 
or its abbreviation is adequately qualified to indicate that the product 
or part is only coated.
    (2) Marking, describing, or otherwise representing all or part of an 
industry product as being plated or coated with platinum unless all 
significant surfaces of the product or part contain a plating or coating 
of platinum that is of reasonable durability.\37\
---------------------------------------------------------------------------

    \37\ See footnote 2.
---------------------------------------------------------------------------

    (3) Use of the word ``Platinum'' or any abbreviation, without 
qualification, to describe all or part of an industry product (including 
the surface layer of a coated product) that is not composed throughout 
of 950 parts per thousand pure Platinum.
    (4) Use of the word ``Platinum'' or any abbreviation accompanied by 
a

[[Page 161]]

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.''
    (5) 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.
    (6) 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 this paragraph (b)(6)(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)(6): 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 (e.g., ``600Pt.350Ir.,'' ``600Plat.350Irid.,'' 
``550Pt.350Pd.50Ir.,'' or ``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.23.6: Exemptions recognized in the assay of platinum 
industry products are listed in the appendix.



Sec.23.7  Disclosure of surface-layer application of rhodium.

    It is unfair or deceptive to fail to disclose a surface-layer 
application of rhodium on products marked or described as precious 
metal.

[[Page 162]]



Sec.23.8  Misrepresentation as to products containing more than one
precious metal.

    (a) It is unfair or deceptive to misrepresent the relative quantity 
of each precious metal in a product that contains more than than one 
precious metal. Marketers should list precious metals in the order of 
their relative weight in the product from greatest to least (i.e., 
leading with the predominant metal). Listing precious metals in order of 
relative weight is not necessary where it is clear to reasonable 
consumers from context that the metal listed first is not predominant.
    (b) The following are examples of markings or descriptions that may 
be misleading:
    (1) Use of the terms ``Platinum + Silver'' to describe a product 
that contains more silver than platinum by weight.
    (2) Use of the terms ``14K/Sterling'' to describe a product that 
contains more silver than gold by weight.
    (c) The following are examples of markings and descriptions that are 
not considered unfair or deceptive:
    (1) For a product comprised primarily of silver with a surface-layer 
application of platinum, ``900 platinum over silver.''
    (2) For a product comprised primarily of silver with visually 
distinguishable parts of gold, ``14k gold-accented silver.''
    (3) For a product comprised primarily of gold with visually 
distinguishable parts of platinum, ``850 Platinum inset, 14K gold 
ring.''



Sec.23.9  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 1,000 Grade A Tin, with the remainder composed of metals appropriate 
for use in pewter.



Sec.23.10  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

[[Page 163]]

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.23.10: 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.23.10: 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.23.11  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 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.23.12  Definition and misuse of the word ``diamond.''

    (a) A diamond is a 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 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'').
    (3) The use of the word ``cultured'' to describe laboratory-created 
diamonds that have essentially the same optical, physical, and chemical 
properties as mined diamonds if the term is qualified by a clear and 
conspicuous disclosure (for example, the words ``laboratory-created,'' 
``laboratory-grown,'' ``[manufacturer name]-created,'' or some other 
word or phrase of like meaning) conveying that the product is not a 
mined stone.

    Note to Paragraph (c): Additional guidance about imitation and 
laboratory-created diamond representations and misuse of the

[[Page 164]]

words ``real,'' ``genuine,'' ``natural,'' ``precious,'' ``semi-
precious,'' and similar terms is set forth in Sec. Sec.23.25 and 
23.27.



Sec.23.13  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.23.14  Disclosure of treatments to diamonds.

    A diamond is a gemstone product. Treatments to diamonds should be 
disclosed in the manner prescribed in Sec.23.24 of these guides 
(Disclosure of treatments to gemstones).



Sec.23.15  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.23.16  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 so thin in 
depth as to detract materially from the brilliance of the stone.

    Note to Sec.23.16: Stones that are commonly called ``fisheye'' or 
``old mine'' should not be described as ``properly cut,'' ``modern 
cut,'' etc.



Sec.23.17  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.23.17: 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.23.18  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 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.


[[Page 165]]


    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.23.19  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 paragraph (a), that 
measures approximately two millimeters or less.



Sec.23.20  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.23.19(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 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.23.21  Misuse of terms such as ``cultured pearl,'' ``seed pearl,''
``Oriental pearl,'' ``natura,'' ``kultured,'' ``real,'' ``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

[[Page 166]]

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,'' ``premature 
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 ``synthetic'' or 
similar terms to describe cultured or imitation pearls.
    (k) It is unfair or deceptive to use the terms ``Japanese Pearls,'' 
``Chinese 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.23.22  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.23.23  Disclosure of treatments to pearls and cultured pearls.

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

    Note to Sec.23.23: 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 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.



Sec.23.24  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

[[Page 167]]

special care requirements to the purchaser; or
    (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.23.24: 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 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.



Sec.23.25  Misuse of the words ``ruby,'' ``sapphire,'' ``emerald,''
``topaz,'' ``stone,'' ``birthstone,'' ``gem,'' ``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 
mined 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,'' ``gem,'' 
``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,'' or some other 
word or phrase of like meaning, or by the word ``imitation'' or 
``simulated,'' so as to disclose clearly the nature of the product and 
the fact it is not a mined gemstone.

    Note 1 to paragraph (b): The use of the word ``faux'' to describe a 
laboratory-created or imitation stone is not an adequate disclosure that 
the stone is not a mined stone.
    Note 2 to paragraph (b): Marketers may use the word ``cultured'' to 
describe laboratory-created gemstone products that have essentially the 
same optical, physical, and chemical properties as the named stone if 
the term (e.g., ``cultured ruby'') is qualified by a clear and 
conspicuous disclosure (for example, the words ``laboratory-created,'' 
``laboratory-grown,'' ``[manufacturer name]-created,'' or some other 
word or phrase of like meaning) conveying that the product is not a 
mined stone. Additional guidance regarding the use of ``cultured'' to 
describe a laboratory-created diamond is set forth in Sec.23.12(c)(3).

    (c) It is unfair or deceptive to use the word ``laboratory-grown,'' 
``laboratory-created,'' ``[manufacturer name]-created,'' ``synthetic,'' 
or other word or phrase of like meaning with the name of any natural 
stone to describe any industry product unless such product has 
essentially the same optical, physical, and chemical properties as the 
stone named.
    (d) It is unfair or deceptive to describe products made with 
gemstone material and any amount of filler or binder, such as lead 
glass, in the following way:
    (1) With the unqualified word ``ruby,'' ``sapphire,'' ``emerald,'' 
``topaz,'' or name of any other precious or semi-precious stone;
    (2) As a ``treated ruby,'' ``treated sapphire,'' ``treated 
emerald,'' ``treated topaz,'' or ``treated [gemstone name]'';
    (3) As a ``laboratory-grown [gemstone name],'' ``laboratory-created 
[gemstone name],'' ``[manufacturer name]-created [gemstone name],'' ``or 
``synthetic [gemstone name];'' or
    (4) As a ``composite [gemstone name],'' ``hybrid [gemstone name],'' 
or ``manufactured [gemstone name],'' unless the term is qualified to 
disclose clearly and conspicuously that the product: (A) Does not have 
the same characteristics as the named stone; and (B) requires special 
care. It is further recommended that the seller disclose the special 
care requirements to the purchaser.



Sec.23.26  Misrepresentation as to varietal name.

    (a) It is unfair or deceptive to mark or describe an industry 
product with the incorrect varietal name.
    (b) The following are examples of markings or descriptions that may 
be misleading:
    (1) Use of the term ``yellow emerald'' to describe golden beryl or 
heliodor.
    (2) Use of the term ``green amethyst'' to describe prasiolite.

    Note to Sec.23.26: A varietal name is given for a division of gem 
species or genus based on a color, type of optical phenomenon, or

[[Page 168]]

other distinguishing characteristic of appearance.



Sec.23.27  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.



Sec.23.28  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, bracelet and necklace snap tongues, 
metallic parts completely and permanently encased in a nonmetallic 
covering, field pieces and bezels for lockets,\38\ and wire pegs or 
rivets used for applying mountings and other ornaments, which mountings 
or ornaments shall be of the quality marked.
---------------------------------------------------------------------------

    \38\ 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 to Paragraph (a): 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,\39\ 
coil and joint springs.
---------------------------------------------------------------------------

    \39\ 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 to Paragraph (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 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 
nonmetallic covering; and for oxfords, the handle and catch.

    (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, bracelet and necklace snap tongues, and metallic parts 
completely

[[Page 169]]

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.



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 
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:

[[Page 170]]

    (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 
(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

[[Page 171]]

    (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.
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

[[Page 172]]

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 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''.

[[Page 173]]

    (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. 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.

[[Page 174]]

    (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 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

[[Page 175]]

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 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

[[Page 176]]

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 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

[[Page 177]]

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.''
    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.

[[Page 178]]

    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 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.

[[Page 179]]

    (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.



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

[[Page 180]]

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 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

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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. 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

[[Page 182]]

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 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

[[Page 183]]

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 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.

[[Page 184]]

    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 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

[[Page 185]]

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, 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.

[[Page 186]]

    (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.
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

[[Page 187]]

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]



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

[[Page 188]]

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.
    (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

[[Page 189]]

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 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.

[[Page 190]]

    (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 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

[[Page 191]]

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.
    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,

[[Page 192]]

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 
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

[[Page 193]]

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 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

[[Page 194]]

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 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

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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 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

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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 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

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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, 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

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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 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 Purpose.
259.2 Definitions.
259.3 Qualifications and disclosures.
259.4 Advertising guidance.

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

    Source: 82 FR 43687, Sept. 19, 2017, unless otherwise noted.



 Sec.259.1  Purpose.

    The Guide in this part contains administrative interpretations of 
laws enforced by the Federal Trade Commission. Specifically, the Guide 
addresses the application of Section 5 of the FTC Act (15 U.S.C. 45) to 
the use of fuel economy information in advertising for new automobiles. 
This guidance provides the basis for voluntary compliance with the law 
by advertisers and endorsers. Practices inconsistent with this Guide may 
result in corrective action by the Commission under Section

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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 Guide sets forth the general principles that the Commission 
will use in such an investigation together with examples illustrating 
the application of those principles. The Guide does not purport to cover 
every possible use of fuel economy in advertising. Whether a particular 
advertisement is deceptive will depend on the specific advertisement at 
issue.



Sec.259.2  Definitions.

    For the purposes of this part, the following definitions shall 
apply:
    Alternative fueled vehicle. Any vehicle that qualifies as a covered 
vehicle under part 309 of this chapter.
    Automobile. Any new passenger automobile, medium duty passenger 
vehicle, or light truck for which a fuel economy label is required under 
the Energy Policy and Conservation Act (42 U.S.C. 32901 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 or lessee. For the purposes of this part, the terms 
``vehicle'' and ``car'' have the same meaning as ``automobile.''
    Dealer. Any person located in the United States or any territory 
thereof engaged in the sale or distribution of new automobiles to the 
ultimate purchaser.
    EPA. The U.S. Environmental Protection Agency.
    EPA city fuel economy estimate. The city fuel economy determined in 
accordance with the city test procedure as defined and determined 
pursuant to 40 CFR part 600, subpart D.
    EPA combined fuel economy estimate. The fuel economy value 
determined for a vehicle (or vehicles) by harmonically averaging the 
city and highway fuel economy values, weighted 0.55 and 0.45 
respectively, determined pursuant to 40 CFR part 600, subpart D.
    EPA driving range estimate. An estimate of the number of miles a 
vehicle will travel between refueling as defined and determined pursuant 
to 40 CFR part 600, subpart D.
    EPA fuel economy estimate. The average number of miles traveled by 
an automobile per volume of fuel consumed (i.e., Miles-Per-Gallon 
(``MPG'') rating) as calculated under 40 CFR part 600, subpart D.
    EPA highway fuel economy estimate. The highway fuel economy 
determined in accordance with the highway test procedure as defined and 
determined pursuant to 40 CFR part 600, subpart D.
    Flexible fueled vehicle. Any motor vehicle (or motor vehicle engine) 
engineered and designed to be operated on any mixture of two or more 
different fuels.
    Fuel. (1) Gasoline and diesel fuel for gasoline- or diesel-powered 
automobiles;
    (2) Electricity for electrically-powered automobiles;
    (3) Alcohol for alcohol-powered automobiles;
    (4) Natural gas for natural gas-powered automobiles; or
    (5) Any other fuel type used in a vehicle for which EPA requires a 
fuel economy label under 40 CFR part 600, subpart D.
    Manufacturer. 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 the control, of such 
manufacturer, assembler, or importer in connection with the distribution 
of new automobiles.
    Model type. A unique combination of car line, basic engine, and 
transmission class as defined by 40 CFR part 600, subpart D.
    Ultimate purchaser or lessee. The first person, other than a dealer 
purchasing in his or her capacity as a dealer, who in good faith 
purchases a new automobile for purposes other than resale or leases such 
vehicle for his or her personal use.
    Vehicle configuration. The unique combination of automobile 
features, as defined in 40 CFR part 600.



Sec.259.3  Qualifications and disclosures.

    To prevent deceptive claims, qualifications and disclosures should 
be clear, prominent, and understandable.

[[Page 200]]

To make disclosures clear and prominent, marketers should use plain 
language and sufficiently large type for a person to see and understand 
them, 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. 
The disclosures should also appear in the same format as the claim. For 
example, for television advertisements, if the fuel economy claim 
appears in the video, the disclosure recommended by this Guide should 
appear in the visual format; if the fuel economy claim is audio, the 
disclosure should be in audio.



Sec.259.4  Advertising guidance.

    (a) Misrepresentations. It is deceptive to misrepresent, directly or 
by implication, the fuel economy or driving range of an automobile.
    (b) General fuel economy claims. General unqualified fuel economy 
claims, which do not reference a specific fuel economy estimate, likely 
convey a wide range of meanings about a vehicle's fuel economy relative 
to other vehicles. Such claims, which inherently involve comparisons to 
other vehicles, can mislead consumers about the vehicle class included 
in the comparison, as well as the extent to which the advertised 
vehicle's fuel economy differs from other models. Because it is highly 
unlikely that advertisers can substantiate all reasonable 
interpretations of these claims, advertisers making general fuel economy 
claims should disclose the advertised vehicle's EPA fuel economy 
estimate in the form of the EPA MPG rating.

    Example 1: A new car advertisement states: ``This vehicle gets great 
mileage.'' The claim is likely to convey a variety of meanings, 
including that the vehicle has a better MPG rating than all or almost 
all other cars on the market. However, the advertised vehicle's EPA fuel 
economy estimates are only slightly better than the average vehicle on 
the market. Because the advertiser cannot substantiate that the 
vehicle's rating is better than all or almost all other cars on the 
market, the advertisement is deceptive. In addition, the advertiser may 
not be able to substantiate other reasonable interpretations of the 
claim. To avoid deception, the advertisement should disclose the 
vehicle's EPA fuel economy estimate (e.g., ``EPA-estimated 27 combined 
MPG'').
    Example 2: An advertisement states: ``This car gets great gas 
mileage compared to other compact cars.'' The claim is likely to convey 
a variety of meanings, including that the vehicle gets better gas 
mileage than all or almost all other compact cars. However, the 
vehicle's EPA fuel economy estimates are only slightly better than 
average compared to other models in its class. Because the advertiser 
cannot substantiate that the vehicle's rating is better than all or 
almost all other compact cars, the advertisement is deceptive. In 
addition, the advertiser may not be able to substantiate other 
reasonable interpretations of the claim. To address this problem, the 
advertisement should disclose the vehicle's EPA fuel economy estimate.

    (c) Matching the EPA estimate to the claim. EPA fuel economy 
estimates should match the mode of driving claim appearing in the 
advertisement. If they do not, consumers are likely to associate the 
stated fuel economy estimate with a different type of driving. 
Specifically, if an advertiser makes a city or a highway fuel economy 
claim, it should disclose the corresponding EPA-estimated city or 
highway fuel economy estimate. If the advertiser makes both a city and a 
highway fuel economy claim, it should disclose both the EPA estimated 
city and highway fuel economy rating. If the advertiser makes a general 
fuel economy claim without specifically referencing city or highway 
driving, it should disclose the EPA combined fuel economy estimate, or, 
alternatively, both the EPA city and highway fuel economy estimates.

    Example 1: An automobile advertisement states that model ``XYZ gets 
great gas mileage in town.'' However, the advertisement does not 
disclose the EPA city fuel economy estimate. Instead, it only discloses 
the EPA highway fuel economy estimate, which is higher than the model's 
city estimate. This claim likely conveys to a significant proportion of 
reasonable consumers that the highway estimate disclosed in the 
advertisement applies to city driving. Thus, the advertisement is 
deceptive to consumers. To remedy this problem, the advertisement should 
disclose the EPA city fuel economy estimate (e.g., ``32 MPG in the city 
according to the EPA estimate'').
    Example 2: A new car advertisement states that model ``XZA gives you 
great gas mileage'' but only provides the EPA highway fuel economy 
estimate. Given the likely inconsistency between the general fuel 
economy claim, which does not reference a specific

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type of driving, and the disclosed EPA highway estimate, the 
advertisement is deceptive to consumers. To address this problem, the 
advertisement should disclose the EPA combined estimate (e.g., ``37 MPG 
for combined driving according to the EPA estimate''), or both the EPA 
city and highway fuel economy estimates.
    Example 3: An advertisement states: ``according to EPA estimates, 
new cars in this class are rated at between 20 and 32 MPG, while the EPA 
estimate for this car is an impressive 35 MPG highway.'' The 
advertisement is likely to imply that the 20 to 32 MPG range and 35 MPG 
estimate are comparable. In fact, the ``20 and 32 MPG'' range reflects 
EPA city estimates. Therefore, the advertisement is deceptive. To 
address this problem, the advertisement should only provide an apples-
to-apples comparison--either using the highway range for the class or 
using the city estimate for the advertised vehicle.

    (d) Identifying fuel economy and driving range ratings as estimates. 
Advertisers citing EPA fuel economy or driving range figures should 
disclose that these numbers are estimates. Without such disclosures, 
consumers may incorrectly assume that they will achieve the mileage or 
range stated in the advertisement. In fact, their actual mileage or 
range will likely vary for many reasons, including driving conditions, 
driving habits, and vehicle maintenance. To address potential deception, 
advertisers may state that the values are ``EPA estimate(s),'' or use 
equivalent language that informs consumers that they will not 
necessarily achieve the stated MPG rating or driving range.

    Example 1: An automobile manufacture's Web site states, without 
qualification, ``This car gets 40 MPG on the highway.'' The claim likely 
conveys to a significant proportion of reasonable consumers that they 
will achieve 40 MPG driving this vehicle on the highway. The advertiser 
based its claim on an EPA highway estimate. However, EPA provides that 
estimate primarily for comparison purposes--it does not necessarily 
reflect real world driving results. Therefore, the claim is deceptive. 
In addition, the use of the term ``gets,'' without qualification, may 
lead some consumers to believe not only that they can, but will 
consistently, achieve the stated mileage. To address these problems, the 
advertisement should clarify that the MPG value is an estimate by 
stating ``EPA estimate'' or equivalent language.

    (e) Disclosing EPA test as source of fuel economy and driving range 
estimates. Advertisers citing any EPA fuel economy or driving range 
figures should identify EPA as the source of the test so consumers 
understand that the estimate is comparable to EPA estimates for 
competing models. Doing so prevents deception by ensuring that consumers 
do not associate the claimed ratings with a test other than the EPA-
required procedures. Advertisers may avoid deception by stating that the 
values are ``EPA estimate(s),'' or equivalent language that identifies 
the EPA test as the source.

    Example 1: A radio commercial for the ``XTQ'' car states that the 
vehicle ``is rated at an estimated 28 MPG in the city'' but does not 
disclose that an EPA test is the source of this MPG estimate. This 
advertisement may convey that the source of this test is an entity other 
than EPA. To avoid deception, the advertisement should state that the 
MPG figures are EPA estimates.

    (f) Specifying driving modes for fuel economy estimates. If an 
advertiser cites an EPA fuel economy estimate, it should identify the 
particular type of driving associated with the estimate (i.e., estimated 
city, highway, or combined MPG). Advertisements failing to do so can 
deceive consumers who incorrectly assume the disclosure applies to a 
specific type of driving, such as combined or highway, which may not be 
the driving type the advertiser intended. Thus, such consumers may 
believe the model's fuel economy rating is higher than it actually is.

    Example 1: A television commercial for the car model ``ZTA'' informs 
consumers that the ZTA is rated at ``25 miles per gallon according to 
the EPA estimate'' but does not disclose whether this number is a 
highway, city, or combined estimate. The advertisement likely conveys to 
a significant proportion of reasonable consumers that the 25 MPG figure 
reflects normal driving (i.e., a combination of city and highway 
driving), not the highway rating as intended by the advertiser. In fact, 
the 25 MPG rating is the vehicle's EPA highway estimate. Therefore, the 
advertisement is deceptive.

    (g) Within vehicle class comparisons. If an advertisement contains 
an express comparative fuel economy claim where the relevant comparison 
is to any group or class, other than all available automobiles, the 
advertisement should

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identify the group or class of vehicles used in the comparison. Without 
such qualifying information, many consumers are likely to assume that 
the advertisement compares the vehicle to all new automobiles.

    Example 1: An advertisement claims that sports car X ``outpaces 
other cars' gas mileage.'' The claim likely conveys a variety of 
meanings to a significant proportion of reasonable consumers, including 
that this vehicle has a higher MPG rating than all or almost all other 
vehicles on the market. Although the vehicle's MPG rating compares 
favorably to other sports cars, its fuel economy is only better than 
roughly half of all new automobiles on the market. Therefore, the claim 
is deceptive.

    (h) Comparing different model types. Fuel economy estimates are 
assigned to specific model types under 40 CFR part 600, subpart D (i.e., 
unique combinations of car line, basic engine, and transmission class). 
Therefore, advertisers citing MPG ratings for certain models should 
ensure that the rating applies to the model type depicted in the 
advertisement. It is deceptive to state or imply that a rated fuel 
economy figure applies to a vehicle featured in an advertisement if the 
estimate does not apply to vehicles of that model type.

    Example 1: A manufacturer's advertisement states that model ``PDQ'' 
gets ``great gas mileage'' but depicts the MPG numbers for a similar 
model type known as the ``Econo-PDQ.'' The advertisement is likely to 
convey that the claimed MPG rating applies to all types of the PDQ 
model. However, the ``Econo-PDQ'' has a better fuel economy rating than 
other types of the ``PDQ'' model. Therefore, the advertisement is 
deceptive.

    (i) ``Up to'' claims. Advertisers should avoid using the term ``up 
to'' without adequate explanatory language if they intend to communicate 
that certain versions of a model (i.e., model types) are rated at a 
stated fuel economy estimate. A significant proportion of reasonable 
consumers are likely to interpret such claims to mean that the stated 
MPG can be achieved if the vehicle is driven under certain conditions. 
Therefore, to address the risk of deception, advertisers should qualify 
the claim by clearly and prominently disclosing the stated MPG applies 
to a particular vehicle model type.

    Example 1: An advertisement states, without further explanation, 
that a vehicle model VXR will achieve ``up to 40 MPG on the highway.'' 
The advertisement is based on a particularly efficient type of this 
model, with specific options, with an EPA highway estimate of 40 MPG. 
However, other types of model VXR have lower EPA MPG estimates. A 
significant proportion of reasonable consumers likely interpret the ``up 
to'' claim as applying to all VXR model types. Therefore, the 
advertisement is deceptive. To address this problem, the advertisement 
should clearly and prominently disclose that the 40 MPG rating does not 
apply to all model types of the VXR or use language other than ``up to'' 
that better conveys the claim.

    (j) Claims for flexible-fueled vehicles. Advertisements for 
flexible-fueled vehicles should not mislead consumers about the 
vehicle's fuel economy when operated with alternative fuel. If an 
advertisement for a flexible-fueled vehicle (other than a plug-in hybrid 
electric vehicle) mentions the vehicle's flexible-fuel capability and 
makes a fuel economy claim, it should clearly and prominently qualify 
the claim to identify the type of fuel used. Without such qualification, 
consumers are likely to take away that the stated fuel economy estimate 
applies to both gasoline and alternative fuel operation.

    Example 1: An automobile advertisement states: ``This flex-fuel 
powerhouse has a 30 MPG highway rating according to the EPA estimate.'' 
The advertisement likely implies that the 30 MPG rating applies to both 
gasoline and alternative fuel operation. In fact, the ethanol EPA 
estimate for this vehicle is 25 MPG. Therefore, the advertisement is 
deceptive. To address this problem, the advertisement could clearly and 
prominently qualify the claim or disclose the MPG ratings for both 
gasoline and alternative fuel operation.

    (k) General driving range claims. General unqualified driving range 
claims, which do not reference a specific driving range estimate, are 
difficult for consumers to interpret and likely convey a wide range of 
meanings about a vehicle's range relative to other vehicles. Such 
claims, which inherently involve comparisons to other vehicles, can 
mislead consumers about the vehicle class included in the comparison as 
well as the extent to which the advertised vehicle's driving range 
differs from other models. Consumers may

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take away a range of reasonable interpretations from these claims. To 
avoid possible deception, advertisers making general driving range 
claims should disclose the advertised vehicle's EPA driving range 
estimate.

    Example 1: An advertisement for an electric vehicle states: ``This 
car has a great driving range.'' This claim likely conveys a variety of 
meanings, including that the vehicle has a better driving range than all 
or almost all other electric vehicles. However, the EPA driving range 
estimate for this vehicle is only slightly better than roughly half of 
all other electric vehicles on the market. Because the advertiser cannot 
substantiate that the vehicle's driving range is better than all or 
almost all other electric vehicles, the advertisement is deceptive. In 
addition, the advertiser may not be able to substantiate other 
reasonable interpretations of the claim. To address this problem, the 
advertisement should disclose the vehicle's EPA driving range estimate 
(e.g., ``EPA-estimated range of 70 miles per charge'').

    (l) Use of non-EPA estimates--(1) Disclosure content. Given 
consumers' exposure to EPA estimated fuel economy values over the last 
several decades, fuel economy and driving range estimates derived from 
non-EPA tests can lead to deception if consumers understand such 
estimates to be fuel economy ratings derived from EPA-required tests. 
Accordingly, advertisers should avoid such claims and disclose the EPA 
fuel economy or driving range estimates. However, if an advertisement 
includes a claim about a vehicle's fuel economy or driving range based 
on a non-EPA estimate, advertisers should disclose the EPA estimate and 
disclose with substantially more prominence than the non-EPA estimate:
    (i) That the fuel economy or driving range information is based on a 
non-EPA test;
    (ii) The source of the non-EPA test;
    (iii) The EPA fuel economy estimates or EPA driving range estimates 
for the vehicle; and
    (iv) All driving conditions or vehicle configurations simulated by 
the non-EPA test that are different from those used in the EPA test. 
Such conditions and variables may include, but are not limited to, road 
or dynamometer test, average speed, range of speed, hot or cold start, 
temperature, and design or equipment differences.
    (2) Disclosure format. The Commission regards the following as 
constituting ``substantially more prominence'':
    (i) For visual disclosures on television. If the fuel economy claims 
appear only in the visual portion, the EPA figures should appear in 
numbers twice as large as those used for any other estimate, and should 
remain on the screen at least as long as any other estimate. Each EPA 
figure should 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.
    (ii) For audio disclosures. For radio and television advertisements 
in which any other estimate is used only in the audio, equal prominence 
should be given to the EPA figures. The Commission will regard the 
following as constituting equal prominence: The EPA estimated city and/
or highway MPG should be stated, either before or after each disclosure 
of such other estimate, at least as audibly as such other estimate.
    (iii) For print and Internet disclosures. The EPA figures should 
appear in clearly legible type at least twice as large as that used for 
any other estimate. The EPA figures should appear against a solid color, 
and contrasting background. They may not appear in a footnote unless all 
references to fuel economy appear in a footnote.

    Example 1: An Internet advertisement states: ``Independent driving 
experts took the QXT car for a weekend spin and managed to get 55 miles-
per-gallon under a variety of driving conditions.'' It does not disclose 
the actual EPA fuel economy estimates, nor does it explain how 
conditions during the ``weekend spin'' differed from those under the EPA 
tests. This advertisement likely conveys that the 55 MPG figure is the 
same or comparable to an EPA fuel economy estimate for the vehicle. This 
claim is deceptive because it fails to disclose that fuel economy 
information is based on a non-EPA test, the source of the non-EPA test, 
the EPA fuel economy estimates for the vehicle, and all driving 
conditions or vehicle configurations simulated by the non-EPA test that 
are different from those used in the EPA test.
    Example 2: An advertisement states: ``The XZY electric car has a 
driving range of 110 miles per charge in summer conditions according to 
our expert's test.'' It provides no additional information regarding 
this driving range claim. This advertisement likely

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conveys that this 110-mile driving range figure is comparable to an EPA 
driving range estimate for the vehicle. The advertisement is deceptive 
because it does not clearly state that the test is a non-EPA test; it 
does not provide the EPA estimated driving range; and it does not 
explain how conditions referred to in the advertisement differed from 
those under the EPA tests. Without this information, consumers are 
likely to confuse the claims with range estimates derived from the 
official EPA test procedures.



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.
    (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

[[Page 205]]

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 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.


[[Page 206]]


    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 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

[[Page 207]]

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.

    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

[[Page 208]]

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 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

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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 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

[[Page 210]]

    (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.



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

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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\
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    \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.
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    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.
    (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\;
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    \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.
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    (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

[[Page 212]]

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 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,

[[Page 213]]

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\
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    \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.
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    \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 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

[[Page 214]]

``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.
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    \50\ The term ``used'' refers to parts that are not new and that 
have not undergone any remanufacturing or reconditioning.
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    (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 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.

[[Page 215]]

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, 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.
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    \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.
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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.

[[Page 216]]



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 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

[[Page 217]]

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 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 and manner 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) Requests for a registered identification number, to update 
information pertaining to an existing number, or to cancel an existing 
number shall be made through the Commission's Web site at https://
rn.ftc.gov. Unless otherwise directed by the Commission or its designee, 
requests made by other means (including but not limited to email) will 
not be accepted and approved.

[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; 82 FR 43691, Sept. 19, 2017]



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

[[Page 221]]

applicable to each wool product contained therein.

[50 FR 15105, Apr. 17, 1985, as amended at 63 FR 7516, Feb. 13, 1998]



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

[[Page 222]]

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 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

[[Page 223]]

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 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

[[Page 224]]

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 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

[[Page 225]]

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]



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]

[[Page 226]]



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.
    (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

[[Page 227]]

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
    ``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

[[Page 228]]

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 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,

[[Page 229]]

knitted, felted, braided, bonded or otherwise manufactured or used 
product, the required fiber content disclosure may, when truthfully 
applicable, in 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''

[[Page 230]]

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 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 on the 
Commission's Web site at https://rn.ftc.gov or by such means as the 
Commission or its designee may direct.
    (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 and manner 
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) Requests for a registered identification number, to update 
information pertaining to an existing number, or to cancel an existing 
number shall be made through the Commission's Web site at https://
rn.ftc.gov. Unless otherwise directed by the Commission or its designee, 
requests made by other means (including but not limited to email) will 
not be accepted and approved.

[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; 82 FR 43691, Sept. 19, 2017]



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

[[Page 241]]

article of wearing apparel subject to the act irrespective of whether 
two or more garments or articles may be sold 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]

[[Page 242]]



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 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  Advertising of furs and fur products.

    (a)(1) In advertising furs or fur products, all parts of the 
required information shall be stated in close proximity with each other 
and, if printed, in legible and conspicuous type of equal size.
    (2) Non-required information or representations appearing in the 
advertising 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.
    (b)(1) In general advertising of a group of fur products composed in 
whole or in part of imported furs having various countries of origin, 
the disclosure of such countries of origin may, by reference, be made 
through the use of the following statement in the advertisement in a 
clear and conspicuous manner:

Fur products labeled to show country of origin of imported furs

    (2) The provisions of this paragraph shall not be applicable in the 
case of catalogue, mail order, or other types of advertising which 
solicit the purchase of fur products in such a manner that the purchaser 
or prospective purchaser would not have the opportunity of viewing the 
product and attached label prior to delivery thereof.
    (c) In advertising of an institutional type referring only to the 
general nature or kind of business conducted or to the general 
classification of the types or kinds of furs or fur products 
manufactured or handled, and which advertising is not intended to aid, 
promote, or assist directly or indirectly in the sale or offering for 
sale of any specific fur products or furs, the required information need 
not be set forth: Provided, however, That if reference is made in the 
advertisement to a color of the fur which was caused by dyeing, 
bleaching or other artificial coloring, such facts shall be disclosed in 
the advertising, and provided further, that when animal names are used 
in such advertising, such names shall be those set forth in the Fur 
Products Name Guide. For example, the kind of advertising contemplated 
by this paragraph is as follows:

X Fur Company
Famous for its Black Dyed Persian Lamb Since 1900

 or

X Company
Manufacturers of Fine Muskrat Coats, Capes and Stoles

[[Page 243]]



Sec.301.39  Exempted fur products.

    The requirements of the act and regulations in this part do not 
apply to fur products that consist of fur obtained from an animal 
through trapping or hunting and that are sold in a face-to-face 
transaction at a place such as a residence, craft fair, or other 
location used on a temporary or short-term basis, by the person who 
trapped or hunted the animal, where the revenue from the sale of apparel 
or fur products is not the primary source of income of such person.

[79 FR 30458, May 28, 2014]



Sec.301.40  [Reserved]



Sec.301.41  Maintenance of records.

    (a) Pursuant to section 3(e) and section 8(d)(1), of the Act, each 
manufacturer or dealer in fur products or furs (including dressers, 
dyers, bleachers and processors), irrespective of whether any guaranty 
has been given or received, shall maintain records showing all of the 
required information relative to such fur products or furs in such 
manner as will readily identify each fur or fur product manufactured or 
handled. Such records shall show:
    (1) That the fur product contains or is composed of natural, 
pointed, bleached, dyed, tip-dyed or otherwise artificially colored fur, 
when such is the fact;
    (2) That the fur product contains used fur, when such is the fact;
    (3) The name or names (as set forth in the Fur Products Name Guide) 
of the animal or animals that produced the fur;
    (4) That the fur product is composed in whole or in substantial part 
of paws, tails, bellies, gills, ears, throats, heads, scrap pieces, or 
waste fur, when such is the fact;
    (5) The name of the country of origin of any imported furs used in 
the fur products;
    (6) The name, or other identification issued and registered by the 
Commission, of one or more of the persons who manufacture, import, sell, 
advertise, offer, transport or distribute the fur product in commerce.
    (b) The purpose of the 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 31315, Aug. 18, 1988, as amended at 79 FR 30458, May 28, 2014]



Sec.301.42  Deception as to nature of business.

    When necessary to avoid deception, the name of any person other than 
the manufacturer of the fur product appearing on the label or invoice 
shall be accompanied by appropriate words showing that the fur product 
was not manufactured by such person; as for example:

Distributed by ______

 or

______ Wholesalers



Sec.301.43  Use of deceptive trade or corporate names, trademarks
or graphic representations prohibited.

    No person shall use in labeling, invoicing or advertising any fur or 
fur product a trade name, corporate name, trademark or other trade 
designation or graphic representation which misrepresents directly or by 
implication to purchasers, prospective purchasers or the consuming 
public:
    (a) The character of the product including method of construction;
    (b) The name of the animal producing the fur;
    (c) The method or manner of distribution; or
    (d) The geographical or zoological origin of the fur.

[61 FR 67710, Dec. 24, 1996]



Sec.301.44  Misrepresentation of prices.

    (a) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product at alleged wholesale prices or at alleged 
manufacturers cost or less, unless such representations are true in 
fact; nor shall any person advertise a fur or fur product at prices 
purported to be reduced from what are in fact fictitious prices, nor at 
a purported reduction in price when such purported reduction is in fact 
fictitious.

[[Page 244]]

    (b) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product with comparative prices and percentage savings 
claims except on the basis of current market values or unless the time 
of such compared price is given.
    (c) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product as being ``made to sell for'', being ``worth'' 
or ``valued at'' a certain price, or by similar statements, unless such 
claim or representation is true in fact.
    (d) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product as being of a certain value or quality unless 
such claims or representations are true in fact.
    (e) Persons making pricing claims or representations of the types 
described in paragraphs (a), (b), (c) and (d) of this section shall 
maintain full and adequate records disclosing the facts upon which such 
claims or representations are based.
    (f) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product by the use of an illustration which shows such 
fur or fur product to be a higher priced product than the one so 
advertised.
    (g) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product as being ``bankrupt stock'', ``samples'', ``show 
room models'', ``Hollywood Models'', ``Paris Models'', ``French 
Models'', ``Parisian Creations'', ``Furs Worn by Society Women'', 
``Clearance Stock'', ``Auction Stock'', ``Stock of a business in a state 
of liquidation'', or similar statements, unless such representations or 
claims are true in fact.



Sec.301.45  Representations as to construction of fur products.

    (a) No misleading nor deceptive statements as to the construction of 
fur products shall be used directly or indirectly in labeling, invoicing 
or advertising such products. (For example, a fur product made by the 
skin-on-skin method should not be represented as having been made by the 
letout method.)
    (b) Where a fur product is made by the method known in the trade as 
letting-out, or is made of fur which has been sheared or plucked, such 
facts may be set out in labels, invoices and advertising.



Sec.301.46  Reference to guaranty by Government prohibited.

    No representation nor suggestion that a fur or fur product is 
guaranteed under the act by the Government, or any branch thereof, shall 
be made in the labeling, invoicing or advertising in connection 
therewith.



Sec.301.47  Form of separate guaranty.

    The following is a suggested form of separate guaranty under section 
10 of the Act which may be used by a guarantor residing in the United 
States, on and as part of an invoice or other document in which the 
merchandise covered is listed and specified and which shows the date of 
such document and the signature and address of the guarantor:

    We guarantee that the fur products or furs specified herein are not 
misbranded nor falsely nor deceptively advertised or invoiced under the 
provisions of the Fur Products Labeling Act and rules and regulations 
thereunder.

    Note to Sec.301.47. The printed name and address on the invoice or 
other document will suffice to meet the signature and address 
requirements.

[79 FR 30458, May 28, 2014]



Sec.301.48  Continuing guaranties.

    (a)(1) Under section 10 of the Act any person residing in the United 
States and handling fur or fur products may file a continuing guaranty 
with the Federal Trade Commission. When filed with the Commission a 
continuing guaranty shall be fully executed in duplicate. Forms for use 
in preparing continuing guaranties shall be supplied by the Commission 
upon request.
    (2) 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.
    (3) 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.

[[Page 245]]

    (b) 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 Fur Products Labeling Act filed with the 
Federal Trade Commission.''
    (c) Any person who falsely represents in writing that he has a 
continuing guaranty on file with the Federal Trade Commission when such 
is not a fact shall be deemed to have furnished a false guaranty under 
section 10(b) of the Act.

[26 FR 3188, Apr. 14, 1961, as amended at 48 FR 12517, Mar. 25, 1983; 63 
FR 7517, Feb. 13, 1998; 63 FR 71583, Dec. 28, 1998; 79 FR 30458, May 28, 
2014]



Sec.301.48a  Guaranties not received in good faith.

    A guaranty shall not be deemed to have been received in good faith 
within the meaning of section 10(a) of the Act:
    (a) Unless the recipient of such guaranty shall have examined the 
required label, required invoice and advertisement relating to the fur 
product or fur so guaranteed;
    (b) If the recipient of the guaranty has knowledge that the fur or 
fur product guaranteed is misbranded, falsely invoiced or falsely 
advertised.

[26 FR 3188, Apr. 14, 1961]



Sec.301.49  Deception in general.

    No furs nor fur products shall be labeled, invoiced, or advertised 
in any manner which is false, misleading or deceptive in any respect.



PART 303_RULES AND REGULATIONS UNDER THE TEXTILE FIBER PRODUCTS 
IDENTIFICATION ACT--Table of Contents



Sec.
303.1 Terms defined.
303.2 General requirements.
303.3 Fibers present in amounts of less than 5 percent.
303.4 English language requirement.
303.5 Abbreviations, ditto marks, and asterisks prohibited.
303.6 Generic names of fibers to be used.
303.7 Generic names and definitions for manufactured fibers.
303.8 Procedure for establishing generic names for manufactured fibers.
303.9 Use of fur-bearing animal names and symbols prohibited.
303.10 Fiber content of special types of products.
303.11 Floor coverings containing backings, fillings, and paddings.
303.12 Trimmings of household textile articles.
303.13 Sale of remnants and products made of remnants.
303.14 Products containing unknown fibers.
303.15 Required label and method of affixing.
303.16 Arrangement and disclosure of information on labels.
303.17 Use of fiber trademarks and generic names on labels.
303.18 Terms implying fibers not present.
303.19 Name or other identification required to appear on labels.
303.20 Registered identification numbers.
303.21 Marking of samples, swatches, or specimens and products sold 
          therefrom.
303.22 Products containing linings, interlinings, fillings, and 
          paddings.
303.23 Textile fiber products containing superimposed or added fibers.
303.24 Pile fabrics and products composed thereof.
303.25 Sectional disclosure of content.
303.26 Ornamentation.
303.27 Use of the term ``All'' or ``100%.''
303.28 Products contained in packages.
303.29 Labeling of pairs or products containing two or more units.
303.30 Textile fiber products in form for consumer.
303.31 Invoice in lieu of label.
303.32 Products containing reused stuffing.
303.33 Country where textile fiber products are processed or 
          manufactured.
303.34 Country of origin in mail order advertising.
303.35 Use of terms ``virgin'' or ``new.''
303.36 Form of separate guaranty.
303.37 Form of continuing guaranty from seller to buyer.
303.38 Continuing guaranty filed with Federal Trade Commission.
303.39 Maintenance of records.
303.40 Use of terms in written advertisements that imply presence of a 
          fiber.
303.41 Use of fiber trademarks and generic names in advertising.
303.42 Arrangement of information in advertising textile fiber products.
303.43 Fiber content tolerances.
303.44 Products not intended for uses subject to the act.
303.45 Exclusions from the act.

    Authority: 15 U.S.C. 70 et seq.

    Source: 24 FR 4480, June 2, 1959, unless otherwise noted.

[[Page 246]]



Sec.303.1  Terms defined.

    As used in this part, unless the context otherwise specifically 
requires:
    (a) The term Act means the Textile Fiber Products Identification Act 
(approved September 2, 1958, 85th Congress, 2d Sess.; 15 U.S.C. 70, 72 
Stat. 1717).
    (b) The terms rule, rules, regulations, and rules and regulations 
mean the rules and regulations prescribed by the Commission pursuant to 
section 7(c) of the Act.
    (c) The definition of terms contained in section 2 of the Act shall 
be applicable also to such terms when used in rules promulgated under 
the Act.
    (d) The term United States means the several States, the District of 
Columbia, and the Territories and possessions of the United States.
    (e) The terms required information and information required mean 
such information as is required to be disclosed on labels or invoices 
and in advertising under the Act and regulations.
    (f) The terms label, labels, labeled, and labeling mean the stamp, 
tag, label, or other means of identification, or authorized substitute 
therefor, required to be on or affixed to textile fiber products by the 
Act and regulations and on which the information required is to appear.
    (g) The terms marketing or handling and marketed or handled, when 
applied to textile fiber products, mean any one or all of the 
transactions set forth in section 3 of the Act.
    (h) 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 textile fiber product 
transported or delivered to such person.
    (i) The term outer coverings of furniture, mattresses, and box 
springs means those coverings as are permanently incorporated in such 
articles.
    (j) The term wearing apparel means any costume or article of 
clothing or covering for any part of the body worn or intended to be 
worn by individuals.
    (k) The term beddings means sheets, covers, blankets, comforters, 
pillows, pillowcases, quilts, bedspreads, pads, and all other textile 
fiber products used or intended to be used on or about a bed or other 
place for reclining or sleeping but shall not include furniture, 
mattresses or box springs.
    (l) The term headwear means any textile fiber product worn 
exclusively on or about the head or face by individuals.
    (m) The term backings, when applied to floor coverings, means that 
part of a floor covering to which the pile, face, or outer surface is 
woven, tufted, hooked, knitted, or otherwise attached, and which 
provides the structural base of the floor covering. The term backing 
shall also include fabrics attached to the structural base of the floor 
covering in such a way as to form a part of such structural base, but 
shall not include the pile, face, or outer surface of the floor covering 
or any part thereof.
    (n) The term elastic material means a fabric composed of yarn 
consisting of an elastomer or a covered elastomer.
    (o) The term coated fabric means any fabric which is coated, filled, 
impregnated, or laminated with a continuous-film-forming polymeric 
composition in such a manner that the weight added to the base fabric is 
at least 35 percent of the weight of the fabric before coating, filling, 
impregnation, or lamination.
    (p) The term upholstered product means articles of furniture 
containing stuffing and shall include mattresses and box springs.
    (q) The term ornamentation means any fibers or yarns imparting a 
visibly discernible pattern or design to a yarn or fabric.
    (r) 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 trade mark, product mark, house 
mark, trade name or other name which does not identify a particular 
fiber.
    (s) The term wool means the fiber from the fleece of the sheep or 
lamb or

[[Page 247]]

hair of the Angora or Cashmere goat (and may include the so-called 
specialty fibers from the hair of the camel, alpaca, llama, and vicuna) 
which has never been reclaimed from any woven or felted wool product.
    (t) The term recycled wool means (1) the resulting fiber when wool 
has been woven or felted into a wool product which, without ever having 
been utilized in any way by the ultimate consumer, subsequently has been 
made into a fibrous state, or (2) the resulting fiber when wool or 
reprocessed wool has been spun, woven, knitted, or felted into a wool 
product which, after having been used in any way by the ultimate 
consumer, subsequently has been made into a fibrous state.
    (u) The terms mail order catalog and mail order promotional material 
mean any materials, used in the direct sale or direct offering for sale 
of textile 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 textile products by mail, telephone, 
electronic mail, or some other method without examining the actual 
product purchased.

[24 FR 4480, June 2, 1959, as amended at 45 FR 44263, July 1, 1980; 50 
FR 15106, Apr. 17, 1985; 63 FR 7517, Feb. 13, 1998; 79 FR 18770, Apr. 4, 
2014]



Sec.303.2  General requirements.

    (a) Each textile fiber product, except those exempted or excluded 
under section 12 of the Act, shall be labeled or invoiced in conformity 
with the requirements of the Act and regulations.
    (b) Any advertising of textile fiber products subject to the Act 
shall be in conformity with the requirements of the Act and regulations.
    (c) The requirements of the Act and regulations shall not be 
applicable to products required to be labeled under the Wool Products 
Labeling Act of 1939 (Pub. L. 76-850, 15 U.S.C. 68, 54 Stat. 1128).
    (d) Any person marketing or handling textile fiber products who 
shall cause or direct a processor or finisher to label, invoice, or 
otherwise identify any textile fiber product with required information 
shall be responsible under the Act and regulations for any failure of 
compliance with the Act and regulations by reason of any statement or 
omission in such label, invoice, or other means of identification 
utilized in accordance with his direction: Provided, That nothing herein 
shall relieve the processor or finisher of any duty or liability to 
which he may be subject under the Act and regulations.



Sec.303.3  Fibers present in amounts of less than 5 percent.

    (a) Except as permitted in sections 4(b)(1) and 4(b)(2) of the Act, 
as amended, no fiber present in the amount of less than 5 percent of the 
total fiber weight shall be designated by its generic name or fiber 
trademark in disclosing the constituent fibers in required information, 
but shall be designated as ``other fiber.'' When more than one of such 
fibers are present in a product, they shall be designated in the 
aggregate as ``other fibers.'' Provided, however, that nothing in this 
section shall be construed as prohibiting the disclosure of any fiber 
present in a textile fiber product which has a clearly established and 
definite functional significance when present in the amount contained in 
such product, as for example:

96 percent Acetate
4 percent Spandex.

    (b) In making such disclosure, all of the provisions of the Act and 
regulations in this part setting forth the manner and form of disclosure 
of fiber content information, including the provisions of Sec. Sec.
303.17 and 303.41 of this part relating to the use of generic names and 
fiber trademarks, shall be applicable.

[63 FR 7518, Feb. 13, 1998]



Sec.303.4  English language requirement.

    All required information shall be set out in the English language. 
If the required information appears in a language other than English, it 
also shall appear 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.

[[Page 248]]



Sec.303.5  Abbreviations, ditto marks, and asterisks prohibited.

    (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 except as permitted in Sec.303.33(e) of this part.
    (b) Where the generic name of a textile fiber is required to appear 
in immediate conjunction with a fiber trademark in advertising, 
labeling, or invoicing, 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.

[24 FR 4480, June 2, 1959, as amended at 65 FR 75156, Dec. 1, 2000]



Sec.303.6  Generic names of fibers to be used.

    (a) Except where another name is permitted under the Act and 
regulations, the respective generic names of all fibers present in the 
amount of 5 per centum or more of the total fiber weight of the textile 
fiber product shall be used when naming fibers in the required 
information; as for example: ``cotton,'' ``rayon,'' ``silk,'' ``linen,'' 
``nylon,'' etc.
    (b) Where a textile fiber product contains the hair or fiber of a 
fur-bearing animal present in the amount 5 per centum or more of the 
total fiber weight of the product, the name of the animal producing such 
fiber may be used in setting forth the required information, provided 
the name of such animal is used in conjunction with the words ``fiber,'' 
``hair,'' or ``blend;'' as for example:

80 percent Rabbit hair.
20 percent Nylon.

 or

80 percent Silk.
20 percent Mink fiber.

    (c) 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 or vicuna where such 
hair or fur fiber or mixture is present in the amount of 5 per centum or 
more of the total fiber weight of the textile fiber product and no 
direct or indirect representations are made as to the animal or animals 
from which the fiber so designated was obtained; as for example:

60 percent Cotton.
40 percent Fur fiber.

 or

50 percent Nylon.
30 percent Mink hair.
20 percent Fur fiber.

    (d) Where textile fiber products subject to the Act contain (1) wool 
or (2) recycled wool in amounts of five per centum or more of the total 
fiber weight, such fibers shall be designated and disclosed as wool or 
recycled wool as the case may be.

[24 FR 4480, June 2, 1959, as amended at 45 FR 44263, July 1, 1980]



Sec.303.7  Generic names and definitions for manufactured fibers.

    Pursuant to the provisions of section 7(c) of the Act, the 
Commission hereby establishes the generic names for manufactured fibers, 
together with their respective definitions, set forth in this section, 
and the generic names for manufactured fibers, together with their 
respective definitions, set forth in International Organization for 
Standardization (ISO) 2076:2013(E). ISO 2076:2013(E), ``Textiles--Man-
made fibres--Generic names,'' Sixth edition, November 15, 2013, is 
incorporated by reference into this section with the approval of the 
Director of the Federal Register under 5 U.S.C. 552(a) and 1 CFR part 
51.
    To enforce any edition other than that specified in this section, 
the Federal Trade Commission must publish notice of change in the 
Federal Register and the material must be available to the public. All 
approved material is available for inspection at the Federal Trade 
Commission, 600 Pennsylvania Avenue NW, Room H-630, Washington, DC 
20580, (202) 326-2222, and is available from: (a) The International 
Organization for Standardization, ISO Central Secretariat, Chemin de 
Blandonnet 8, CP 401-1214 Vernier, Geneva, Switzerland; (+41 22 749 01 
11); [email protected]; https://www.iso.org/

[[Page 249]]

home.html; and (b) the American National Standards Institute, 25 West 
43rd Street, Fourth Floor, New York, NY 10036-7417; (212) 642-4900; 
[email protected]; https://www.ansi.org. It is also available for inspection 
at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, email 
[email protected], or go to http://www.archives.gov/federal-
register/cfr/ibr-locations.html.
    (a) Acrylic. A manufactured fiber in which the fiber-forming 
substance is any long chain synthetic polymer composed of at least 85 
percent by weight of acrylonitrile units
[GRAPHIC] [TIFF OMITTED] TC29SE91.004

    (b) Modacrylic. A manufactured fiber in which the fiber-forming 
substance is any long chain synthetic polymer composed of less than 85 
percent but at least 35 percent by weight of acrylonitrile units
[GRAPHIC] [TIFF OMITTED] TC29SE91.005


except fibers qualifying under paragraph (j)(2) of this section and 
fibers qualifying under paragraph (q) of this section. (Sec. 7, 72 Stat. 
1717; 15 U.S.C. section 70e)
    (c) Polyester. A manufactured fiber in which the fiber-forming 
substance is any long chain synthetic polymer composed of at least 85% 
by weight of an ester of a substituted aromatic carboxylic acid, 
including but not restricted to substituted terephthalate units,
[GRAPHIC] [TIFF OMITTED] TC29SE91.006


and para substituted hydroxy-benzoate units,
[GRAPHIC] [TIFF OMITTED] TC29SE91.007

    (1) Where the fiber is formed by the interaction of two or more 
chemically distinct polymers (of which none exceeds 85% by weight), and 
contains ester groups as the dominant functional unit (at least 85% by 
weight of the total polymer content of the fiber), and which, if 
stretched at least 100%, durably and rapidly reverts substantially to 
its unstretched length when the tension is removed, the term elasterell-
p may be used as a generic description of the fiber.
    (2) Where the glycol used to form the ester consists of at least 
ninety mole percent 1,3-propanediol, the term ``triexta'' may be used as 
a generic description of the fiber.
    (d) Rayon.A manufactured fiber composed of regenerated cellulose, as 
well as manufactured fibers composed of regenerated cellulose in which 
substituents have replaced not more than 15% of the hydrogens of the 
hydroxyl groups. Where the fiber is composed of cellulose precipitated 
from an organic solution in which no substitution of the hydroxyl groups 
takes place and no chemical intermediates are formed, the term lyocell 
may be used as a generic description of the fiber.
    (e) Acetate. A manufactured fiber in which the fiber-forming 
substance is cellulose acetate. Where not less than 92 percent of the 
hydroxyl groups are acetylated, the term triacetate may be used as a 
generic description of the fiber.
    (f) Saran. A manufactured fiber in which the fiber-forming substance 
is any long chain synthetic polymer composed of at least 80 percent by 
weight of vinylidene chloride units (-CH9-CCl2-).
    (g) Azlon. A manufactured fiber in which the fiber-forming substance 
is composed of any regenerated naturally occurring proteins.
    (h) Nytril. A manufactured fiber containing at least 85 percent of a 
long chain polymer of vinylidene dinitrile (-CH2-
C(CN)2-) where the vinylidene

[[Page 250]]

dinitrile content is no less than every other unit in the polymer chain.
    (i) Nylon. A manufactured fiber in which the fiber-forming substance 
is a long-chain synthetic polyamide in which less than 85 percent of the 
amide
[GRAPHIC] [TIFF OMITTED] TC29SE91.008


linkages are attached directly to two aromatic rings.
    (j) Rubber. A manufactured fiber in which the fiber-forming 
substance is comprised of natural or synthetic rubber, including the 
following categories:
    (1) A manufactured fiber in which the fiber-forming substance is a 
hydrocarbon such as natural rubber, polyisoprene, polybutadiene, 
copolymers of dienes and hydrocarbons, or amorphous (noncrystalline) 
polyolefins.
    (2) A manufactured fiber in which the fiber-forming substance is a 
copolymer of acrylonitrile and a diene (such as butadiene) composed of 
not more than 50 percent but at least 10 percent by weight of 
acrylonitrile units
[GRAPHIC] [TIFF OMITTED] TC29SE91.009


The term lastrile may be used as a generic description for fibers 
falling within this category.
    (3) A manufactured fiber in which the fiber-forming substance is a 
polychloroprene or a copolymer of chloroprene in which at least 35 
percent by weight of the fiber-forming substance is composed of 
chloroprene units
[GRAPHIC] [TIFF OMITTED] TC29SE91.010

    (k) Spandex. A manufactured fiber in which the fiber-forming 
substance is a long chain synthetic polymer comprised of at least 85 
percent of a segmented polyurethane.
    (l) Vinal. A manufactured fiber in which the fiber-forming substance 
is any long chain synthetic polymer composed of at least 50 percent by 
weight of vinyl alcohol units (-CH2-CHOH-), and in which the 
total of the vinyl alcohol units and any one or more of the various 
acetal units is at least 85 percent by weight of the fiber.
    (m) Olefin. A manufactured fiber in which the fiber-forming 
substance is any long chain synthetic polymer composed of at least 85 
percent by weight of ethylene, propylene, or other olefin units, except 
amorphous (noncrystalline) polyolefins qualifying under paragraph (j)(1) 
of this section [Rule 7]. Where the fiber-forming substance is a cross-
linked synthetic polymer, with low but significant crystallinity, 
composed of at least 95 percent by weight of ethylene and at least one 
other olefin unit, and the fiber is substantially elastic and heat 
resistant, the term lastol may be used as a generic description of the 
fiber.
    (n) Vinyon. A manufactured fiber in which the fiber-forming 
substance is any long chain synthetic polymer composed of at least 85 
percent by weight of vinyl chloride units (-CH2-CHCl-).
    (o) Metallic. A manufactured fiber composed of metal, plastic-coated 
metal, metal-coated plastic, or a core completely covered by metal.
    (p) Glass. A manufactured fiber in which the fiber-forming substance 
is glass.
    (q) Anidex. A manufactured fiber in which the fiber-forming 
substance is any long chain synthetic polymer composed of at least 50 
percent by weight of one or more esters of a monohydric alcohol and 
acrylic acid, CH2=CH--COOH.
    (r) Novoloid. A manufactured fiber containing at least 85 percent by 
weight of a cross-linked novolac.
    (s) Aramid. A manufactured fiber in which the fiber-forming 
substance is a long-chain synthetic polyamide in which at least 85 
percent of the amide
[GRAPHIC] [TIFF OMITTED] TC29SE91.011


linkages are attached directly to two aromatic rings.
    (t) Sulfar. A manufactured fiber in which the fiber-forming 
substance is a long chain synthetic polysulfide in

[[Page 251]]

which at least 85% of the sulfide (--S--) linkages are attached directly 
to two (2) aromatic rings.
    (u) PBI. A manufactured fiber in which the fiber-forming substance 
is a long chain aromatic polymer having reoccurring imidazole groups as 
an integral part of the polymer chain.
    (v) Elastoester. A manufactured fiber in which the fiber-forming 
substance is a long-chain synthetic polymer composed of at least 50% by 
weight of aliphatic polyether and at least 35% by weight of polyester, 
as defined in paragraph (c) of this section.
    (w) Melamine. A manufactured fiber in which the fiber-forming 
substance is a synthetic polymer composed of at least 50% by weight of a 
cross-linked melamine polymer.
    (x) Fluoropolymer. A manufactured fiber containing at least 95% of a 
long-chain polymer synthesized from aliphatic fluorocarbon monomers.
    (y) PLA. A manufactured fiber in which the fiber-forming substance 
is composed of at least 85% by weight of lactic acid ester units derived 
from naturally occurring sugars.

(Sec. 6, 72 Stat. 1717; 15 U.S.C. 70e)

[24 FR 4480, June 2, 1959; 24 FR 5737, July 17, 1959]

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



Sec.303.8  Procedure for establishing generic names for manufactured
fibers.

    (a) Prior to the marketing or handling of a manufactured fiber for 
which no generic name has been established or otherwise recognized by 
the Commission, the manufacturer or producer thereof shall file a 
written application with the Commission, requesting the establishment of 
a generic name for such fiber, stating therein:
    (1) The reasons why the applicant's fiber should not be identified 
by one of the generic names established by the Commission in Sec.303.7 
of this part;
    (2) The chemical composition of the fiber, including the fiber-
forming substances and respective percentages thereof, together with 
samples of the fiber;
    (3) Suggested names for consideration as generic, together with a 
proposed definition for the fiber;
    (4) Any other information deemed by the applicant to be pertinent to 
the application, including technical data in the form of test methods;
    (5) The earliest date on which the application proposes to market or 
handle the fiber in commerce for other than developmental or testing 
purposes.
    (b) Upon receipt of the application, the Commission will, within 
sixty (60) days, either deny the application or assign to the fiber a 
numerical or alphabetical symbol for temporary use during further 
consideration of such application.
    (c) After taking the necessary procedure in consideration of the 
application, the Commission in due course shall establish a generic name 
or advise the applicant of its refusal to grant the application and 
designate the proper existing generic name for the fiber.

[24 FR 4480, June 2, 1959, as amended at 63 FR 7518, Feb. 13, 1998]



Sec.303.9  Use of fur-bearing animal names and symbols prohibited.

    (a) The advertising or the labeling of a textile fiber product shall 
not contain any names, words, depictions, descriptive matter, or other 
symbols which connote or signify a fur-bearing animal, unless such 
product or the part thereof in connection with which the names, words, 
depictions, descriptive matter, or other symbols are used is a fur 
product within the meaning of the Fur Products Labeling Act.
    (b) Subject to the provisions of paragraph (a) of this section and 
Sec.303.6 of this part, a textile fiber product shall not be described 
or referred to in any manner in an advertisement or label with:
    (1) The name or part of the name of a fur-bearing animal, whether as 
a single word or a combination word, or any coined word which is 
phonetically similar to a fur-bearing animal name, or which is only a 
slight variation in spelling of a fur-bearing animal name or part of the 
name. As for example, such terms as ``Ermine,'' ``Mink,'' ``Persian,'' 
``Broadtail,'' ``Beaverton,'' ``Marmink,'' ``Sablelon,'' ``Lam,''

[[Page 252]]

``Pershian,'' ``Minx,'' or similar terms shall not be used.
    (2) Any word or name symbolic of a fur-bearing animal by reason of 
conventional usage or by reason of its close relationship with fur-
bearing animals. As for example, such terms as ``guardhair,'' 
``underfur,'' and ``mutation,'' or similar terms, shall not be used.
    (c) Nothing contained herein shall prevent:
    (1) The nondeceptive use of animal names or symbols in referring to 
a textile fiber product where the fur of such animal is not commonly or 
commercially used in fur products, as that term is defined in the Fur 
Products Labeling Act, as for example ``kitten soft'', ``Bear Brand'', 
etc.
    (2) The nondeceptive use of a trademark or trade name containing the 
name, symbol, or depiction of a fur-bearing animal unless:
    (i) The textile fiber product in connection with which such 
trademark or trade name is used simulates a fur or fur product; or
    (ii) Such trademark or trade name is used in any advertisement of a 
textile fiber product together with any depiction which has the 
appearance of a fur or fur product; or
    (iii) The use of such trademark or trade name is prohibited by the 
Fur Products Labeling Act.

[24 FR 4480, June 2, 1959, as amended at 28 FR 722, Jan. 16, 1963]



Sec.303.10  Fiber content of special types of products.

    (a) Where a textile product is made wholly of elastic yarn or 
material, with minor parts of non-elastic material for structural 
purposes, it shall be identified as to the percentage of the elastomer, 
together with the percentage of all textile coverings of the elastomer 
and all other yarns or materials used therein.


Where a textile fiber product is made in part of elastic material and in 
part of other fabric, the fiber content of such fabric shall be set 
forth sectionally by percentages as in the case of other fabrics. In 
such cases the elastic material may be disclosed by describing the 
material as elastic followed by a listing in order of predominance by 
weight of the fibers used in such elastic, including the elastomer, 
where such fibers are present by 5 per centum or more with the 
designation ``other fiber'' or ``other fibers'' appearing last when 
fibers required to be so designated are present. An example of labeling 
under this paragraph is:

Front and back non-elastic sections:
 50 percent Acetate.
 50 percent Cotton.
Elastic: Rayon, cotton, nylon, rubber.

    (b) Where drapery or upholstery fabrics are manufactured on hand-
operated looms for a particular customer after the sale of such fabric 
has been consummated, and the amount of the order does not exceed 100 
yards (91.44 m) of fabric, the required fiber content disclosure may be 
made by listing the fibers present in order of predominance by weight 
with any fiber or fibers required to be designated as ``other fiber'' or 
``other fibers'' appearing last, as for example:

Rayon
Wool
Acetate
Metallic
Other fibers

    (c)(1) Where a manufactured textile fiber is essentially a physical 
combination or mixture of two or more chemically distinct constituents 
or components combined at or prior to the time of extrusion, which 
components if separately extruded would each fall within different 
existing definitions of textile fibers as set forth in Sec.303.7 of 
this part (Rule 7), the fiber content disclosure as to such fiber, shall 
for all purposes under the regulations in this part
    (i) Disclose such fact in the required fiber content information by 
appropriate nondeceptive descriptive terminology, such as 
``biconstituent fiber'' or ``multiconstituent fiber,''
    (ii) Set out the components contained in the fiber by the 
appropriate generic name specified in Sec.303.7 of this part (Rule 7) 
in the order of their predominance by weight, and
    (iii) Set out the respective percentages of such components by 
weight.
    (2) If the components of such fibers are of a matrix-fibril 
configuration, the term matrix-fibril fiber or matrix fiber

[[Page 253]]

may be used in setting forth the information required by this paragraph.
    (3) Examples of proper fiber content designations under this 
paragraph are:

100% Biconstituent Fiber
(65% Nylon, 35% Polyester)
80% Matrix Fiber (60% Nylon, 40% Polyester)
15% Polyester
5% Rayon

    (4) All of the provisions as to fiber content disclosures contained 
in the Act and regulations, including the provisions relative to fiber 
content tolerances and disclosures of fibers present in amounts of less 
than 5 percentum of the total fiber weight, shall also be applicable to 
the designations and disclosures prescribed by this paragraph.

[25 FR 7044, July 26, 1960, as amended at 30 FR 14253, Nov. 13, 1965; 34 
FR 12134 July 19, 1969; 61 FR 11544, Mar. 21, 1996]



Sec.303.11  Floor coverings containing backings, fillings, 
and paddings.

    In disclosing the required fiber content information as to floor 
coverings containing exempted backings, fillings, or paddings, the 
disclosure shall be made in such manner as to indicate that it relates 
only to the face, pile, or outer surface of the floor covering and not 
to the backing, filling, or padding. Examples of the form of marking 
these types of floor coverings as to fiber content are as follows:

100% Cotton Pile
Face--60% Rayon, 40% Cotton
Outer Surface--100% Wool



Sec.303.12  Trimmings of household textile articles.

    (a) Pursuant to section 12 of the Act, trimmings incorporated in 
articles of wearing apparel and other household textile articles are 
exempt from the Act and regulations, except for decorative trim, 
decorative patterns and designs, and elastic materials in findings 
exceeding the surface area thresholds described in paragraphs (a)(3) and 
(b) of this section. Trimmings may, among other forms of trim, include:
    (1) Rickrack, tape, belting, binding, braid, labels (either required 
or non-required), collars, cuffs, wrist bands, leg bands, waist bands, 
gussets, gores, welts, and findings, including superimposed garters in 
hosiery, and elastic materials and threads inserted in or added to the 
basic product or garment in minor proportion for holding, reinforcing or 
similar structural purposes;
    (2) Decorative trim, whether applied by embroidery, overlay, 
applique, or attachment; and
    (3) Decorative patterns or designs which are an integral part of the 
fabric out of which the household textile article is made. Provided, 
that such decorative trim or decorative pattern or design, as specified 
in paragraphs (a)(2) and (3) of this section, does not exceed 15 percent 
of the surface area of the household textile article. If no 
representation is made as to the fiber content of the decorative trim or 
decoration, as provided for in paragraphs (a)(2) and (3) of this 
section, and the fiber content of the decorative trim or decoration 
differs from the fiber content designation of the basic fabric, the 
fiber content designation of the basic fabric shall be followed by the 
statement ``exclusive of decoration.''
    (b) The term findings may also include elastic material which 
constitutes a part of the basic fabric or material out of which the 
household textile article is made, where such elastic material does not 
exceed 20 percent of the surface area of the household textile article: 
Provided, That the required information as to fiber content of products 
subject to this paragraph is followed by the statement ``exclusive of 
elastic.''

[24 FR 4480, June 2, 1959, as amended at 79 FR 18770, Apr. 4, 2014]



Sec.303.13  Sale of remnants and products made of remnants.

    (a) In disclosing the required fiber content information as to 
remnants of fabric which are for practical purposes of unknown or 
undeterminable fiber content:
    (1) The fiber content disclosure of such remnants of fabrics may be 
designated in the required information as ``remnants of undetermined 
fiber content.''
    (2) Where such remnants of fabrics are displayed for sale at retail, 
a conspicuous sign may, in lieu of individual labeling, be used in 
immediate conjunction with such display, stating with respect to 
required fiber content

[[Page 254]]

disclosure that the goods are ``remnants of undetermined fiber 
content.''
    (3) Where textile fiber products are made of such remnants, the 
required fiber content information of the products may be disclosed as 
``made of remnants of undetermined fiber content.'' If any 
representations as to fiber content are made with respect to such 
remnants, the provisions of this paragraph shall not apply.
    (b) Where remnants of fabrics are marketed or handled in bales, 
bundles, or packages and are all of the same fiber content or are 
designated in the manner permitted by paragraph (a) of this section, the 
individual remnants need not be labeled if the bales, bundles, or 
packages containing such remnants are labeled with the required 
information including fiber content percentages or the designation 
permitted by paragraph (a) of this section.
    (c) Where remnants of fabrics of the same fiber content are 
displayed for sale at retail, a conspicuous sign may, in lieu of 
individual labeling, be used in immediate conjunction with such display, 
stating the fiber content information with respect to such remnants; as 
for example: ``remnants, 100 percent cotton,'' ``remnants, 50 percent 
rayon, 50 percent acetate,'' etc.



Sec.303.14  Products containing unknown fibers.

    (a) Where a textile fiber product is made from miscellaneous scraps, 
rags, odd lots, secondhand materials, textile by-products, or waste 
materials of unknown, and for practical purposes, undeterminable fiber 
content, the required fiber content disclosure may, when truthfully 
applicable, in lieu of the fiber content disclosure otherwise required 
by the Act and regulations, indicate that such product is composed of 
miscellaneous scraps, rags, odd lots, textile by-products, secondhand 
materials (in case of secondhand materials, words of like import may be 
used) or waste materials, as the case may be, of unknown or undetermined 
fiber content, as for example:

Made of miscellaneous scraps of undetermined fiber content
100% unknown fibers--rags
All undetermined fibers--textile by-products
100% miscellaneous odd lots of undetermined fiber content
Secondhand materials--fiber content unknown
Made of unknown fibers--waste materials

    (b) Where a textile fiber product is made in part from miscellaneous 
scraps, rags, odd lots, textile by-products, second-hand materials or 
waste materials of unknown and, for practical purposes, undeterminable 
fiber content together with a percentage of known or determinable 
fibers, the required fiber content disclosure may, when truthfully 
applicable, in lieu of the fiber content disclosure otherwise required 
by the Act and regulations, indicate the percentage of miscellaneous 
scraps, rags, odd lots, secondhand materials (in case of secondhand 
materials, words of like import may be used), textile by-products, or 
waste materials of unknown or undetermined fiber content and the 
percentage of known fibers, as for example:

45% Rayon
30% Acetate
25% Miscellaneous scraps of undetermined fiber content.

60% Cotton
40% Unknown fibers--waste materials.

40% Acrylic
20% Modacrylic
40% Undetermined fibers--odd lots.

50% Polyester
30% Cotton
20% Textile by-products of undetermined fiber content.

50% Rayon
50% Secondhand materials--fiber content unknown.

45% Acetate
30% Cotton
25% Miscellaneous rags--undetermined fiber content.

    (c) No representation as to fiber content shall be made as to any 
textile product or any portion of a textile fiber product designated as 
composed of unknown or undetermined fibers. If any such representation 
is made, a full and complete fiber content disclosure shall be required.
    (d) Nothing contained in this section shall excuse a full disclosure 
as to fiber content if the same is known or practically ascertainable.

[25 FR 4317, May 14, 1960]

[[Page 255]]



Sec.303.15  Required label and method of affixing.

    (a) A label is required to be affixed to each textile 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 textile fiber 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 textile 
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 shall not be 
construed as requiring the affixing of 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 textile fiber product contained therein.
    (d) Socks provided for in subheading 6115.92.90, 6115.93.90, 
6115.99.18, 6111.20.60, 6111.30.50, or 6111.90.50 of the Harmonized 
Tariff Schedule of the United States, as in effect on September 1, 2003, 
shall be marked, as legibly, indelibly, and permanently as the nature of 
the article or package will permit, to disclose the English name of the 
country of origin. This disclosure shall appear on the front of the 
package, adjacent to the size designation of the product, and shall be 
set forth in such a manner as to be clearly legible, conspicuous, and 
readily accessible to the ultimate consumer. Provided, however, any 
package that contains several different types of goods and includes 
socks classified under subheading 6115.92.90, 6115.93.90, 6115.99.18, 
6111.20.60, 6111.30.50, or 6111.90.50 of the Harmonized Tariff Schedule 
of the United States, as in effect on September 1, 2003, shall not be 
subject to the requirements of this subsection.

[50 FR 15106, Apr. 17, 1985, as amended at 63 FR 7518, Feb. 13, 1998; 70 
FR 73369, Dec. 12, 2005]



Sec.303.16  Arrangement and disclosure of information on labels.

    (a) Subject to the provisions of Sec.303.15(b), information 
required by the Act and regulations in this part may appear on any label 
or labels attached to the textile fiber 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. The required information shall include the following:
    (1) The generic names and percentages by weight of the constituent 
fibers present in the textile fiber product, excluding permissive 
ornamentation, in amounts of 5 percent or more and any fibers disclosed 
in accordance with Sec.303.3(a) shall appear in order of predominance 
by weight with any percentage of fiber or fibers required to be 
designated as ``other fiber'' or ``other fibers'' appearing last.
    (2) The name, provided for in Sec.303.19, or registered 
identification number issued by the Commission, of the manufacturer or 
of one or more persons marketing or handling the textile fiber product.
    (3) The name of the country where such product was processed or 
manufactured, as provided for in Sec.303.33.
    (b) All parts of the required information shall be set forth in such 
a manner as to be clearly legible, conspicuous,

[[Page 256]]

and readily accessible to the prospective purchaser. All parts of the 
fiber content information shall appear in type or lettering of equal 
size and conspicuousness.
    (c) Subject to the provisions of Sec.303.17, 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.
    (d) Non-deceptive terms which are properly and truthfully 
descriptive of a fiber may be used in conjunction with the generic name 
of such fiber; as for example: ``100 percent cross-linked rayon,'' ``100 
percent solution dyed acetate,'' ``100 percent combed cotton,'' ``100 
percent nylon 66,'' etc.

[24 FR 4480, June 2, 1959, as amended at 25 FR 4317, May 14, 1960; 30 FR 
14254, Nov. 13, 1965; 30 FR 15313, Dec. 11, 1965; 50 FR 15107, Apr. 17, 
1985; 53 FR 31315, Aug. 18, 1988; 63 FR 7518, Feb. 13, 1998]



Sec.303.17  Use of fiber trademarks and generic names on labels.

    (a) 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.
    (b) Where a generic name or a fiber trademark is used on any label 
providing required information, a full fiber content disclosure shall be 
made in accordance with the Act and regulations the first time the 
generic name or fiber trademark appears on the label. Where a fiber 
generic name or trademark is used on any hang-tag attached to a textile 
fiber product that has a label providing required information and the 
hang-tag provides non-required information, such as a hang-tag stating 
only a fiber generic 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 textile fiber product contains 
any fiber other than the fiber identified by the fiber generic 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.''

    (c) If a fiber trademark is not used in the required information, 
but is used elsewhere on the label as non-required 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.
    (d) No fiber trademark or generic name shall be used in non-required 
information on a label in such a manner as to be false, deceptive, or 
misleading as to fiber content, or to indicate directly or indirectly 
that a textile fiber product is composed wholly or in part of a 
particular fiber, when such is not the case.

[24 FR 4480, June 2, 1959, as amended at 79 FR 18771, Apr. 4, 2014]



Sec.303.18  Terms implying fibers not present.

    Words, coined words, symbols or depictions, (a) which constitute or 
imply the name or designation of a fiber which is not present in the 
product, (b) which are phonetically similar to the name or designation 
of such a fiber, or (c) which are only a slight variation of spelling 
from the name or designation of such a fiber shall not be used in such a 
manner as to represent or imply that such fiber is present in the 
product.

[30 FR 13693, Oct. 28, 1965]



Sec.303.19  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 person is doing business. Where a person has a word 
trademark, used as a house mark, registered in the United States Patent 
Office, such word trademark may be used on labels in lieu of the name 
otherwise required. No trademark, trade names, or other names except 
those provided for

[[Page 257]]

above shall be used for required identification purposes.
    (b) Registered identification numbers, as provided for in Sec.
303.20 of this part, may be used for identification purposes in lieu of 
the required name.

[24 FR 4480, June 2, 1959, as amended at 83 FR 3071, Jan. 23, 2018]



Sec.303.20  Registered identification numbers.

    (a) Registered numbers for use as the required identification in 
lieu of the name on textile fiber product labels, as provided in section 
4(b)(3) of the Act, will be issued by the Commission to qualified 
persons residing in the United States upon receipt of an application 
duly executed on the Commission's Web site at https://rn.ftc.gov or by 
such means as the Commission or its designee may direct.
    (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 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 promulgated thereunder, or 
when otherwise deemed necessary in the public interest.
    (3) 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 on the Commission's Web site at 
https://rn.ftc.gov or by such means as the Commission or its designee 
may direct.
    (c) Registered identification numbers assigned under this section 
may be used on labels required in labeling products subject to the 
provisions of the Wool Products Labeling Act and Fur Products Labeling 
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.
    (d) Requests for a registered identification number, to update 
information pertaining to an existing number, or to cancel an existing 
number shall be made through the Commission's Web site at https://
rn.ftc.gov. Unless otherwise directed by the Commission or its designee, 
requests made by other means (including but not limited to email) will 
not be accepted and approved.

[82 FR 43692, Sept. 19, 2017]



Sec.303.21  Marking of samples, swatches, or specimens and products
sold therefrom.

    (a) Where samples, swatches, or specimens of textile fiber products 
subject to the Act are used to promote or effect sales of such textile 
fiber products, the samples, swatches, or specimens, as well as the 
products themselves, shall be labeled to show their respective fiber 
contents and other required information: Provided, That such samples, 
swatches or specimens need not be labeled:
    (1) If the samples, swatches, or specimens are less than two square 
inches (12.9 cm\2\) in area and the information otherwise required to 
appear on the label is clearly, conspicuously, and non-deceptively 
disclosed on accompanying promotional matter in accordance with the Act 
and regulations.
    (2) If the samples, swatches, or specimens are keyed to a catalogue 
to which reference is necessary in order to complete the sale of the 
textile fiber products, and which catalogue at the necessary point of 
reference clearly, conspicuously, and non-deceptively discloses the 
information otherwise required to appear on the label in accordance with 
the Act and regulations; or
    (3) If such samples, swatches, or specimens are not used to effect 
sales to ultimate consumers and are not in the form intended for sale or 
delivery to, or for use by, the ultimate consumer, and are accompanied 
by an invoice or other document showing the required information.

[[Page 258]]

    (b) Where properly labeled samples, swatches, or specimens are used 
to effect the sale of articles of wearing apparel or other household 
textile articles which are manufactured specifically for a particular 
customer after the sale is consummated, the articles of wearing apparel 
or other household textile articles need not be labeled if they are of 
the same fiber content as the samples, swatches, or specimens from which 
the sale was effected and an invoice or other document accompanies them 
showing the information otherwise required to appear on the label.

[24 FR 4480, June 2, 1959, as amended at 61 FR 11544, Mar. 21, 1996; 79 
FR 18771, Apr. 4, 2014]



Sec.303.22  Products containing linings, interlinings, fillings,
and paddings.

    In disclosing the required information as to textile fiber products, 
the fiber content of any linings, interlinings, fillings, or paddings 
shall be set forth separately and distinctly if such linings, 
interlinings, fillings, or paddings are incorporated in the product for 
warmth rather than for structural purposes, or if any express or implied 
representations are made as to their fiber content. Examples are as 
follows:

100% Nylon
Interlining: 100% Rayon
Covering: 100% Rayon
Filling: 100% Cotton.



Sec.303.23  Textile fiber products containing superimposed or added
fibers.

    Where a textile fiber 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 exception 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. Examples of this type of 
fiber content disclosure, as applied to products having reinforcing 
fibers added to a particular area or section, are as follows:

55% Cotton
45% Rayon
Except 5% Nylon added to toe and heel.
All Cotton except 1% Nylon added to neckband.



Sec.303.24  Pile fabrics and products composed thereof.

    The fiber content of pile fabrics or products composed thereof may 
be stated on the label in such segregated form as will show the fiber 
content of the face or pile and of the back or base, with 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 back be given in such manner as will show the ratio between 
the face and the back. Examples of the form of marking pile fabric as to 
fiber content provided for in this section are as follows:

100% Nylon Pile
100% Cotton Back
(Back constitutes 60% of fabric and pile 40%).
Face--60% Rayon, 40% Nylon
Back--70% Cotton, 30% Rayon
(Face constitutes 60% of fabric and back 40%).



Sec.303.25  Sectional disclosure of content.

    (a) Permissive. Where a textile fiber product is composed of two or 
more sections which are of different fiber composition, the required 
information as to fiber content may be separated in the same label in 
such manner as to show the fiber composition of each section.
    (b) Mandatory. The disclosure as above provided shall be made in all 
instances where such form of marking is necessary to avoid deception.



Sec.303.26  Ornamentation.

    (a)(1) Where the textile fiber product contains fiber ornamentation 
not exceeding five per centum of the total fiber weight of the product 
and the stated percentages of the fiber content are exclusive of such 
ornamentation, the label or any invoice used in lieu

[[Page 259]]

thereof shall contain a phrase or statement showing such fact; as for 
example:

60% Cotton
40% Rayon

Exclusive of Ornamentation;

 or
All Cotton
Exclusive of Ornamentation.

    (2) 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% Nylon
30% Acetate
Exclusive of 4% Metallic Ornamentation;

 or

100% Rayon
Exclusive of 3% Silk 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.
303.25 of this part.



Sec.303.27  Use of the term ``All'' or ``100%.''

    Where a textile fiber product or part thereof is comprised wholly of 
one fiber, other than any fiber ornamentation, decoration, elastic, or 
trimming as to which fiber content disclosure is not required, either 
the word All or the term 100% may be used in labeling, together with the 
correct generic name of the fiber and any qualifying phrase, when 
required; as for example: ``100% Cotton,'' ``All Rayon, Exclusive of 
Ornamentation,'' ``100% Acetate, Exclusive of Decoration,'' ``All Nylon, 
Exclusive of Elastic,'' etc.



Sec.303.28  Products contained in packages.

    When textile products are marketed and delivered in a package which 
is intended to remain unbroken and intact until after delivery to the 
ultimate consumer, each textile 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 textile product, the package is not 
required to be labeled.

[50 FR 15107, Apr. 17, 1985]



Sec.303.29  Labeling of pairs or products containing two or more units.

    (a) Where a textile fiber 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 fiber composition of each part, unit, or item.
    (b) Where garments, wearing apparel, or other textile fiber 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.

[24 FR 4480, June 2, 1959, as amended at 25 FR 4318, May 14, 1960]



Sec.303.30  Textile fiber products in form for consumer.

    A textile fiber product shall be considered to be in the form 
intended for sale or delivery to, or for use by, the ultimate consumer 
when the manufacturing or processing of the textile fiber product is 
substantially complete. The fact that minor or insignificant details of 
the manufacturing or processing have not been completed shall not excuse 
the labeling of such products as to the required information. For 
example, a garment must be labeled even though such matters as the 
finishing of a hem or cuff or the affixing of buttons thereto remain to 
be completed.



Sec.303.31  Invoice in lieu of label.

    Where a textile fiber product is not in the form intended for sale, 
delivery to, or for use by the ultimate consumer, an invoice or other 
document

[[Page 260]]

may be used in lieu of a label, and such invoice or other document shall 
show, in addition to the name and address of the person issuing the 
invoice or other document, the fiber content of such product as provided 
in the Act and regulations as well as any other required information.

[79 FR 18771, Apr. 4, 2014]



Sec.303.32  Products containing reused stuffing.

    Any upholstered product, mattress, or cushion which contains 
stuffing which has been previously used as stuffing in any other 
upholstered product, mattress, or cushion shall have securely attached 
thereto a substantial tag or label, at least 2 inches (5.08 cm) by 3 
inches (7.62 cm) in size, and statements thereon conspicuously stamped 
or printed in the English language and in plain type not less than \1/3\ 
inch (8.38 mm) high, indicating that the stuffing therein is composed in 
whole or in part of ``reused stuffing,'' ``secondhand stuffing,'' 
``previously used stuffing,'' or ``used stuffing.''

[61 FR 11544, Mar. 21, 1996]



Sec.303.33  Country where textile fiber products are processed 
or manufactured.

    (a) In addition to the other information required by the Act and 
Regulations:
    (1) Each imported textile fiber product shall be labeled with the 
name of the country where such imported product was processed or 
manufactured;
    (2) Each textile fiber 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 textile fiber 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 textile fiber 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 textile fiber product was

[[Page 261]]

processed or manufactured unless the Commission shall otherwise direct.
    (d) The country of origin of an imported textile fiber 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 textile fiber product was processed or manufactured.
    (e) The English name of the country where the imported textile fiber 
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 textile fiber 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 or 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 
unmistakably indicate the name of a country, such as ``Gt. Britain'' for 
``Great Britain,'' are acceptable.
    (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 
promulgated thereunder.

[24 FR 4480, June 2, 1959, as amended at 50 FR 15107, Apr. 17, 1985; 63 
FR 7521, Feb. 13, 1998; 65 FR 75158, Dec. 1, 2000; 79 FR 18771, Apr. 4, 
2014]



Sec.303.34  Country of origin in mail order advertising.

    When a textile fiber 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 15107, Apr. 17, 1985]



Sec.303.35  Use of terms ``virgin'' or ``new.''

    The terms virgin or new as descriptive of a textile fiber 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, bonded, 
or similarly manufactured product.

[79 FR 18771, Apr. 4, 2014]



Sec.303.36  Form of separate guaranty.

    (a) The following are suggested forms of separate guaranties under 
section 10 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 textile fiber 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 textile fiber products 
specified herein are not misbranded nor falsely nor deceptively 
advertised or invoiced under the provisions of the Textile Fiber 
Products Identification Act and rules and regulations thereunder.
    (2) Guaranty based on guaranty. Based upon a guaranty received, we 
guaranty that the textile fiber products specified herein are not 
misbranded nor falsely nor deceptively advertised or invoiced under the 
provisions of the Textile Fiber Products Identification Act and rules 
and regulations thereunder.
    Note: 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 a textile fiber product 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.

[24 FR 4480, June 2, 1959, as amended at 79 FR 18771, Apr. 4, 2014]



Sec.303.37  Form of continuing guaranty from seller to buyer.

    Under section 10 of the Act, a seller residing in the United States 
may give a buyer a continuing guaranty to be applicable to all textile 
fiber products sold or to be sold. The following is the prescribed form 
of continuing guaranty from seller to buyer:

[[Page 262]]

    We, the undersigned, guaranty that all textile fiber products now 
being sold or which may hereafter be sold or delivered to ________ are 
not, and will not be misbranded or falsely or deceptively advertised or 
invoiced under the provisions of the Textile Fiber Products 
Identification Act and rules and regulations thereunder. We acknowledge 
that furnishing a false guaranty is an unlawful unfair and deceptive act 
or practice pursuant to the Federal Trade Commission Act, and certify 
that we will actively monitor and ensure compliance with the Textile 
Fiber Products Identification Act and rules and regulations thereunder 
during the duration of this guaranty.
    Dated, signed, and certified this __ day of __, 20_, at ________ 
(City), ________ (State or Territory) ________ (name under which 
business is conducted.)
    I certify that the information supplied in this form is true and 
correct.
________________________________________________________________________

Signature of Proprietor, Principal Partner, or Corporate Official
________________________________________________________________________

Name (Print or Type) and Title

[79 FR 18771, Apr. 4, 2014]



Sec.303.38  Continuing guaranty filed with Federal Trade Commission.

    (a)(1) Under section 10 of the act any person residing in the United 
States and marketing or handling textile fiber products may file a 
continuing guaranty with the Federal Trade Commission. 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.
    (2) 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) Prescribed form for a continuing guaranty:

[[Page 263]]

[GRAPHIC] [TIFF OMITTED] TR04AP14.030

    (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

[[Page 264]]

the Textile Fiber Products Identification Act filed with the Federal 
Trade Commission.
    (d) Any person who falsely represents in writing that he has a 
continuing guaranty on file with the Federal Trade Commission when such 
is not a fact shall be deemed to have furnished a false guaranty under 
section 10(b) of the Act.

[24 FR 4486, June 2, 1959, as amended at 48 FR 12517, Mar. 25, 1983; 63 
FR 7521, Feb. 18, 1998; 63 FR 71585, Dec. 28, 1998; 79 FR 18772, Apr. 4, 
2014]



Sec.303.39  Maintenance of records.

    (a) Pursuant to the provisions of section 6 of the Act, every 
manufacturer of a textile fiber 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 textile fiber products made by such manufacturer. 
Such records shall show:
    (1) The generic names and percentages by weight of the constituent 
fibers present in the textile fiber product, exclusive of permissive 
ornamentation, in amounts of five per centum or more.
    (2) The name, provided for in Sec.303.19, or registered 
identification number issued by the Commission, of the manufacturer or 
of one or more persons marketing or handling the textile fiber product.
    (3) The name of the country where such product was processed or 
manufactured as provided for in Sec.303.33.

The purpose of the 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.
    (b) Any person substituting a stamp, tag, label, or other 
identification pursuant to section 5(b) of the Act shall keep such 
records as will show the information set forth on the stamp, tag, label, 
or other identification that he removed and the name or names of the 
person or persons from whom such textile fiber product was received.
    (c) The records required to be maintained pursuant to the provisions 
of this rule shall be preserved for at least three years.

[24 FR 4480, June 2, 1959, as amended at 53 FR 31315, Aug. 18, 1988]



Sec.303.40  Use of terms in written advertisements that imply 
presence of a fiber.

    The use of terms in written advertisements, including advertisements 
disseminated through the Internet and similar electronic media, that are 
descriptive of a method of manufacture, construction, or weave, and that 
by custom and usage are also indicative of a textile fiber or fibers, or 
the use of terms in such advertisements that constitute or connote the 
name or presence of a fiber or fibers, shall be deemed to be an 
implication of fiber content under section 4(c) of the Act, except that 
the provisions of this section shall not be applicable to non-deceptive 
shelf or display signs in retail stores indicating the location of 
textile fiber products and not intended as advertisements.

[63 FR 7523, Feb. 13, 1998]



Sec.303.41  Use of fiber trademarks and generic names in advertising.

    (a) In advertising textile fiber products, the use of a fiber 
trademark or a generic fiber name shall require a full disclosure of the 
fiber content information required by the Act and regulations in at 
least one instance in the advertisement.
    (b) Where a fiber trademark is used in advertising textile fiber 
products containing more than one fiber, other than permissible 
ornamentation, such fiber trademark and the generic name of the fiber 
must appear in the required fiber content information in immediate 
proximity and conjunction with each other in plainly legible type or 
lettering of equal size and conspicuousness.
    (c) Where a fiber trademark is used in advertising textile fiber 
products containing only one fiber, other than permissive ornamentation, 
such fiber trademark and the generic name of the fiber must appear in 
immediate proximity and conjunction with each other in plainly legible 
and conspicuous type or lettering at least once in the advertisement.

[[Page 265]]

    (d) Where a fiber trademark or generic name is used in non-required 
information in advertising, such fiber trademark or generic name, shall 
not be used in such a manner as to be false, deceptive, or misleading as 
to fiber content, or to indicate, directly or indirectly, that a textile 
fiber product is composed wholly or in part of a particular fiber, when 
such is not the case.

[24 FR 4480, June 2, 1959, as amended at 79 FR 18774, Apr. 4, 2014]



Sec.303.42  Arrangement of information in advertising textile fiber
products.

    (a) Where a textile fiber product is advertised in such manner as to 
require disclosure of the information required by the Act and 
regulations, all parts of the required information shall be stated in 
immediate conjunction with each other in legible and conspicuous type or 
lettering of equal size and prominence. In making the required 
disclosure of the fiber content of the product, the generic names of 
fibers present in an amount 5 percent or more of the total fiber weight 
of the product, together with any fibers disclosed in accordance with 
Sec.303.3(a), shall appear in order of predominance by weight, to be 
followed by the designation ``other fiber'' or ``other fibers'' if a 
fiber or fibers required to be so designated are present. The 
advertisement need not state the percentage of each fiber.
    (b) Non-required information or representations shall in no way be 
false, deceptive, or misleading as to fiber content and shall not 
include any names, terms, or representations prohibited by the Act and 
regulations. Such non-required information or representations shall not 
be set forth or so used as to interfere with, minimize, or detract from 
the required information.
    (c) Non-deceptive terms which are properly and truthfully 
descriptive of a fiber may be used in conjunction with the generic name 
of such fiber; as for example: ``cross-linked rayon,'' ``solution dyed 
acetate,'' ``combed cotton,'' ``nylon 66,'' etc.

[24 FR 4480, June 2, 1959, as amended at 30 FR 14254, Nov. 13, 1965; 30 
FR 15313, Dec. 11, 1965; 63 FR 7523, Feb. 13, 1998; 79 FR 18774, Apr. 4, 
2014]



Sec.303.43  Fiber content tolerances.

    (a) A textile fiber product which contains more than one fiber shall 
not be deemed to be misbranded as to fiber content percentages if the 
percentages by weight of any fibers present in the total fiber content 
of the product, exclusive of permissive ornamentation, do not deviate or 
vary from the percentages stated on the label in excess of 3 percent of 
the total fiber weight of the product. For example, where the label 
indicates that a particular fiber is present in the amount of 40 
percent, the amount of such fiber present may vary from a minimum of 37 
percent of the total fiber weight of such product to a maximum of 43 
percent of the total fiber weight of such product.
    (b) Where the percentage of any fiber or fibers contained in a 
textile fiber product deviates or varies from the percentage stated on 
the label by more than the tolerance or variation provided in paragraph 
(a) of this section, such product shall be misbranded unless the person 
charged proves that the entire deviation or variation from the fiber 
content percentages stated on the label resulted from unavoidable 
variations in manufacture and despite the exercise of due care.
    (c) Where representations are made to the effect that a textile 
fiber product is composed wholly of one fiber, the tolerance provided in 
section 4(b)(2) of the Act and paragraph (a) of this section shall not 
apply, except as to permissive ornamentation where the textile fiber 
product is represented to be composed of one fiber ``exclusive of 
ornamentation.''



Sec.303.44  Products not intended for uses subject to the Act.

    Textile fiber products intended for uses not within the scope of the 
Act and regulations or intended for uses in other textile fiber products 
which are exempted or excluded from the Act shall not be subject to the 
labeling and invoicing requirements of the Act and regulations: 
Provided, an invoice or other document covering the marketing or 
handling of such products is given, which indicates that the products 
are not intended for uses subject

[[Page 266]]

to the Textile Fiber Products Identification Act.

[79 FR 18774, Apr. 4, 2014]



Sec.303.45  Coverage and exclusions from the Act.

    (a) The following textile fiber products are subject to the Act and 
regulations in this part, unless excluded from the Act's requirements in 
paragraph (b) of this section:
    (1) Articles of wearing apparel;
    (2) Handkerchiefs;
    (3) Scarfs;
    (4) Beddings;
    (5) Curtains and casements;
    (6) Draperies;
    (7) Tablecloths, napkins, and doilies;
    (8) Floor coverings;
    (9) Towels;
    (10) Wash cloths and dish cloths;
    (11) Ironing board covers and pads;
    (12) Umbrellas and parasols;
    (13) Batts;
    (14) Products subject to section 4(h) of the Act;
    (15) Flags with heading or more than 216 square inches (13.9 dm\2\) 
in size;
    (16) Cushions;
    (17) All fibers, yarns and fabrics (including narrow fabrics except 
packaging ribbons);
    (18) Furniture slip covers and other covers or coverlets for 
furniture;
    (19) Afghans and throws;
    (20) Sleeping bags;
    (21) Antimacassars and tidies;
    (22) Hammocks; and
    (23) Dresser and other furniture scarfs.
    (b) Pursuant to section 12(b) of the Act, all textile fiber products 
other than those identified in paragraph (a) of this section, and the 
following textile fiber products, are excluded from the Act's 
requirements:
    (1) Belts, suspenders, arm bands, permanently knotted neckties, 
garters, sanitary belts, diaper liners, labels (either required or non-
required) individually and in rolls, looper clips intended for 
handicraft purposes, book cloth, artists' canvases, tapestry cloth, and 
shoe laces.
    (2) All textile fiber products manufactured by the operators of 
company stores and offered for sale and sold exclusively to their own 
employees as ultimate consumers.
    (3) Coated fabrics and those portions of textile fiber products made 
of coated fabrics.
    (4) Secondhand household textile articles which are discernibly 
secondhand or which are marked to indicate their secondhand character.
    (5) Non-woven products of a disposable nature intended for one-time 
use only.
    (6) All curtains, casements, draperies, and table place mats, or any 
portions thereof otherwise subject to the Act, made principally of 
slats, rods, or strips, composed of wood, metal, plastic, or leather.
    (7) All textile fiber products in a form ready for the ultimate 
consumer procured by the military services of the United States which 
are bought according to specifications, but shall not include those 
textile fiber products sold and distributed through post exchanges, 
sales commissaries, or ship stores; provided, however, that if the 
military services sell textile fiber products for nongovernmental 
purposes the information with respect to the fiber content of such 
products shall be furnished to the purchaser thereof who shall label 
such products in conformity with the Act and regulations before such 
products are distributed for civilian use.
    (8) All hand woven rugs made by Navajo Indians which have attached 
thereto the ``Certificate of Genuineness'' supplied by the Indian Arts 
and Crafts Board of the United States Department of Interior. The term 
Navajo Indian means any Indian who is listed on the register of the 
Navajo Indian Tribe or is eligible for listing thereon.
    (c) The exclusions provided for in paragraph (b) of this section 
shall not be applicable:
    (1) if any representations as to the fiber content of such products 
are made on any label or in any advertisement without making a full and 
complete fiber content disclosure on such label or in such advertisement 
in accordance with the Act and regulations in this part with the 
exception of those products excluded by paragraph (b)(5) of this 
section; or
    (2) If any false, deceptive, or misleading representations are made 
as to the fiber content of such products.

[[Page 267]]

    (d) The exclusions from the Act provided in paragraph (b) of this 
section are in addition to the exemptions from the Act provided in 
section 12(a) of the Act and shall not affect or limit such exemptions.

[79 FR 18774, Apr. 4, 2014]



PART 304_RULES AND REGULATIONS UNDER THE HOBBY PROTECTION ACT--
Table of Contents



Sec.
304.1 Terms defined.
304.2 General requirement.
304.3 Applicability.
304.4 Application of other law or regulation.
304.5 Marking requirements for imitation political items.
304.6 Marking requirements for imitation numismatic items.

    Authority: 15 U.S.C. 2101 et seq.

    Source: 40 FR 5496, Feb. 6, 1975, unless otherwise noted.



Sec.304.1  Terms defined.

    (a) Act means the Hobby Protection Act (approved November 29, 1973; 
Pub. L. 93-167, 87 Stat. 686, (15 U.S.C. 2101 et seq.)).
    (b) Commerce has the same meanings as such term has under the 
Federal Trade Commission Act.
    (c) Commission means the Federal Trade Commission.
    (d) Imitation numismatic item means an item which purports to be, 
but in fact is not, an original numismatic item or which is a 
reproduction, copy, or counterfeit of an original numismatic item. Such 
term includes an original numismatic item which has been altered or 
modified in such a manner that it could reasonably purport to be an 
original numismatic item other than the one which was altered or 
modified. The term shall not include any re-issue or re-strike of any 
original numismatic item by the United States or any foreign government.
    (e) Imitation political item means an item which purports to be, but 
in fact is not, an original political item, or which is a reproduction, 
copy or counterfeit of an original item.
    (f) Original numismatic item means anything which has been a part of 
a coinage or issue which has been used in exchange or has been used to 
commemorate a person, object, place, or event. Such term includes coins, 
tokens, paper money, and commemorative medals.
    (g) Original political item means any political button, poster, 
literature, sticker, or any advertisement produced for use in any 
political cause.
    (h) Person means any individual, group, association, partnership, or 
any other business entity.
    (i) Regulations means any or all regulations prescribed by the 
Federal Trade Commission pursuant to the Act.
    (j) United States means the States, the District of Columbia, and 
the Commonwealth of Puerto Rico.
    (k) Diameter of a reproduction means the length of the longest 
possible straight line connecting two points on the perimeter of the 
reproduction.

[40 FR 5496, Feb. 6, 1975, as amended at 53 FR 38942, Oct. 4, 1988]



Sec.304.2  General requirement.

    Imitation political or numismatic items subject to the Act shall be 
marked in conformity with the requirements of the Act and the 
regulations promulgated thereunder. Any violation of these regulations 
shall constitute a violation of the Act and of the Federal Trade 
Commission Act.



Sec.304.3  Applicability.

    Any person engaged in the manufacturing, or importation into the 
United States for introduction into or distribution in commerce, of 
imitation political or imitation numismatic items shall be subject to 
the requirements of the Act and the regulations promulgated thereunder. 
Any person engaged in the sale in commerce of imitation numismatic items 
shall be subject to the requirements of the Act and the regulations 
promulgated thereunder. It shall be a violation of the Act and the 
regulations promulgated thereunder for a person to provide substantial 
assistance or support to any manufacturer, importer, or seller of 
imitation numismatic items, or to any manufacturer or importer of 
imitation political items, if that person knows or should have known 
that the manufacturer, importer, or seller is engaged in any practice 
that violates the Act and

[[Page 268]]

the regulations promulgated thereunder.

[81 FR 70938, Oct. 14, 2016]



Sec.304.4  Application of other law or regulation.

    The provisions of these regulations are in addition to, and not in 
substitution for or limitation of, the provisions of any other law or 
regulation of the United States (including the existing statutes and 
regulations prohibiting the reproduction of genuine currency) or of the 
law or regulation of any State.



Sec.304.5  Marking requirements for imitation political items.

    (a) An imitation political item which is manufactured in the United 
States, or imported into the United States for introduction into or 
distribution in commerce, shall be plainly and permanently marked with 
the calendar year in which such item was manufactured.
    (b) The calendar year shall be marked upon the item legibly, 
conspicuously and nondeceptively, and in accordance with the further 
requirements of these regulations.
    (1) The calendar year shall appear in arabic numerals, shall be 
based upon the Gregorian calendar and shall consist of four digits.
    (2) The calendar year shall be marked on either the obverse or the 
reverse surface of the item. It shall not be marked on the edge of the 
item.
    (3) An imitation political item of incusable material shall be 
incused with the calendar year in sans-serif numerals. Each numeral 
shall have a vertical dimension of not less than two millimeters (2.0 
mm) and a minimum depth of three-tenths of one millimeter (0.3 mm) or 
one-half (\1/2\) the thickness of the reproduction, whichever is the 
lesser. The minimum total horizontal dimension for the four numerals 
composing the calendar year shall be six millimeters (6.0 mm).
    (4) An imitation political button, poster, literature, sticker, or 
advertisement composed of nonincusable material shall be imprinted with 
the calendar year in sans-serif numerals. Each numeral shall have a 
vertical dimension of not less than two millimeters (2.0 mm). The 
minimum total horizontal dimension of the four numerals composing the 
calendar year shall be six millimeters (6.0 mm).



Sec.304.6  Marking requirements for imitation numismatic items.

    (a) An imitation numismatic item which is manufactured in the United 
States, or imported into the United States for introduction into or 
distribution in commerce, shall be plainly and permanently marked 
``COPY''.
    (b) The word ``COPY'' shall be marked upon the item legibly, 
conspicuously, and nondeceptively, and in accordance with the further 
requirements of these regulations.
    (1) The word ``COPY'' shall appear in capital letters, in the 
English language.
    (2) The word ``COPY'' shall be marked on either the obverse or the 
reverse surface of the item. It shall not be marked on the edge of the 
item.
    (3) An imitation numismatic item of incusable material shall be 
incused with the word ``COPY'' in sans-serif letters having a vertical 
dimension of not less than two millimeters (2.0 mm) or not less than 
one-sixth of the diameter of the reproduction, and a minimum depth of 
three-tenths of one millimeter (0.3 mm) or to one-half (\1/2\) the 
thickness of the reproduction, whichever is the lesser. The minimum 
total horizontal dimension of the word ``COPY'' shall be six millimeters 
(6.0 mm) or not less than one-half of the diameter of the reproduction.
    (4) An imitation numismatic item composed of nonincusable material 
shall be imprinted with the word ``COPY'' in sans-serif letters having a 
vertical dimension of not less than two millimeters (2.0 mm) or not less 
than one-sixth of the diameter of the reproduction. The minimum total 
horizontal dimension of the word ``COPY'' shall be six millimeters (6.0 
mm) or not less than one-half of the diameter of the reproduction.

[40 FR 5496, Feb. 6, 1975, as amended at 53 FR 38942, Oct. 4, 1988]

[[Page 269]]



PART 305_ENERGY AND WATER USE LABELING FOR CONSUMER PRODUCTS UNDER
THE ENERGY POLICY AND CONSERVATION ACT (``ENERGY LABELING RULE'')
--Table of Contents



                                  Scope

Sec.
305.1 Scope of the regulations in this part.

                               Definitions

305.2 Definitions.
305.3 Description of appliances and consumer electronics.
305.4 Description of furnaces and central air conditioners.
305.5 Description of lighting products.
305.6 Description of plumbing products.

                                 General

305.7 Prohibited acts.

                                 Testing

305.8 Determinations of estimated annual energy consumption, estimated 
          annual operating cost, and energy efficiency rating, water use 
          rate, and other required disclosure content.
305.9 Duty to provide labels on Web sites.
305.10 Determinations of capacity.
305.11 Submission of data.

                Representative Average Unit Energy Costs

305.9 [Reserved]
305.12 Ranges of comparability on the required labels.
305.13 Layout, format, and placement of labels for refrigerators, 
          refrigerator-freezers, freezers, dishwashers, clothes washers, 
          water heaters, room air conditioners, and pool heaters.
305.14 Label content for refrigerators, refrigerator-freezers, and 
          freezers.
305.15 Label content for clothes washers.
305.16 Label content for dishwashers.
305.17 Label content for water heaters.
305.18 Label content for room air conditioners.
305.19 Label content for pool heaters.

                          Required Disclosures

305.20 Labeling for central air conditioners, heat pumps, and furnaces.
305.21 Labeling for ceiling fans.
305.22 Energy information disclosures for heating and cooling equipment.
305.23 Labeling for lighting products.
305.24 Labeling and marking for plumbing products.
305.25 Television labeling.
305.26 Promotional material displayed or distributed at point of sale.
305.27 Paper catalogs and websites.

                         Additional Requirements

305.28 Test data records.
305.29 Required testing by designated laboratory.

                           Effect of This Part

305.30 Effect on other law.
305.31 Stayed or invalid parts.

Appendix A1 to Part 305--Refrigerators With Automatic Defrost
Appendix A2 to Part 305--Refrigerators and Refrigerator-Freezers With 
          Manual Defrost
Appendix A3 to Part 305--Refrigerator-Freezers With Partial Automatic 
          Defrost
Appendix A4 to Part 305--Refrigerator-Freezers With Automatic Defrost 
          With Top-Mounted Freezer No Through-the-Door Ice
Appendix A5 to Part 305--Refrigerator-Freezers With Automated Defrost 
          With Side-Mounted Freezer No Through-the-Door Ice
Appendix A6 to Part 305--Refrigerator-Freezers With Automated Defrost 
          With Bottom-Mounted Freezer No Through-the-Door Ice
Appendix A7 to Part 305--Refrigerator-Freezers With Automatic Defrost 
          With Top-Mounted Freezer With Through-the-Door Ice Service
Appendix A8 to Part 305--Refrigerator-Freezers With Automatic Defrost 
          With Side-Mounted Freezer With Through-the-Door Ice Service
Appendix A9 to Part 305--All Refrigerators and Refrigerator-Freezers
Appendix B1 to Part 305--Upright Freezers With Manual Defrost
Appendix B2 to Part 305--Upright Freezers With Automatic Defrost
Appendix B3 to Part 305--Chest Freezers and All Other Freezers
Appendix C1 to Part 305--Compact Dishwashers
Appendix C2 to Part 305--Standard Dishwashers
Appendix D1 to Part 305--Water Heaters--Gas
Appendix D2 to Part 305--Water Heaters--Electric
Appendix D3 to Part 305--Water Heaters--Oil
Appendix D4 to Part 305--Water Heaters--Instantaneous--Gas
Appendix D5 to Part 305--Water Heaters--Heat Pump
Appendix E to Part 305--Room Air Conditioners
Appendix F1 to Part 305--Standard Clothes Washers

[[Page 270]]

Appendix F2 to Part 305--Compact Clothes Washers
Appendix G1 to Part 305--Furnaces--Gas
Appendix G2 to Part 305--Furnaces--Electric
Appendix G3 to Part 305--Furnaces--Oil
Appendix G4 to Part 305--Mobil Home Furnaces
Appendix G5 to Part 305--Boilers--Gas (Except Steam)
Appendix G6 to Part 305--Boilers--Gas (Steam)
Appendix G7 to Part 305--Boilers--Oil
Appendix G8 to Part 305--Boilers--Electric
Appendix H to Part 305--Cooling Performance and Cost for Central Air 
          Conditioners
Appendix I to Part 305--Heating Performance and Cost for Central Air 
          Conditioners
Appendix J1 to Part 305--Pool Heaters--Gas
Appendix J2 to Part 305--Pool Heaters--Oil
Appendix K1 to Part 305--Representative Average Unit Energy Costs for 
          Refrigerators, Refrigerator-Freezers, Freezers, Clothes 
          Washers, and Water Heater Labels
Appendix K2 to Part 305--Representative Average Unit Energy Costs for 
          Dishwasher and Room Air Conditioner Labels
Appendix L to Part 305--Sample Labels

    Authority: 42 U.S.C. 6294.

    Source: 52 FR 46894, Dec. 10, 1987, unless otherwise noted.

                                  Scope



Sec.305.1  Scope of the regulations in this part.

    The rule in this part establishes requirements for consumer 
appliance products, as hereinafter described, in commerce, as 
``commerce'' is defined in the Energy Policy and Conservation Act, 42 
U.S.C. 6291, with respect to:
    (a) Labeling and/or marking the products with information required 
by this part indicating their operating cost (or different useful 
measure of energy consumption) and related information, disclosing their 
water use rate and related information, or stating their compliance with 
applicable standards under section 325 of the Energy Policy and 
Conservation Act, 42 U.S.C. 6295;
    (b) Including in printed matter displayed or distributed at the 
point of sale of such products, or including in any catalog from which 
the products may be purchased, information concerning their water use or 
their energy consumption;
    (c) Including on the labels, separately attaching to the products, 
or shipping with the products, additional information relating to energy 
consumption, energy efficiency, or energy cost; and
    (d) Making representations, in writing or in broadcast advertising, 
respecting the water use, energy consumption, or energy efficiency of 
the products, or the cost of water used or energy consumed by the 
products.

[52 FR 46894, Dec. 10, 1987, as amended at 54 FR 28034, July 5, 1989]

                               Definitions



Sec.305.2  Definitions.

    (a) Act means the Energy Policy and Conservation Act (Pub. L. 94-
163), and amendments thereto.
    (b) ANSI means the American National Standards Institute and, as 
used herein, is the prefix for national standards and codes adopted by 
ANSI.
    (c) ASME means the American Society of Mechanical Engineers and, as 
used herein, is the prefix for national standards and codes adopted by 
ASME.
    (d) Average lamp efficacy means the lamp efficacy readings taken 
over a statistically significant period of manufacture with the readings 
averaged over that period.
    (e) Ballast efficacy factor means the relative light output divided 
by the power input of a fluorescent lamp ballast, as measured under test 
conditions specified in American National Standards Institute (ANSI) 
standard C82.2-1984, or as may be prescribed by the Secretary of Energy. 
Copies of ANSI standard C82.2-1984 may be obtained from the American 
National Standards Institute, 11 West 42nd St., New York, NY 10036.
    (f) Base for lamps means the portion of the lamp which screws into 
the socket.
    (g) Bulb shape means the shape of the lamp, especially the glass 
portion.
    (h) Catalog means printed material, including material disseminated 
over the Internet, which contains the terms of sale, retail price, and 
instructions for ordering, from which a retail consumer can order a 
covered product.

[[Page 271]]

    (i) Color rendering index or CRI for lamps means the measure of the 
degree of color shift objects undergo when illuminated by a light source 
as compared with the color of those same objects when illuminated by a 
reference source of comparable color temperature.
    (j) Commission means the Federal Trade Commission.
    (k) Consumer product means any article (other than an automobile, as 
``automobile'' is defined in 15 U.S.C. 2001(1) [sec. 501(1) of the Motor 
Vehicle Information and Cost Savings Act]) of a type--
    (1) Which in operation consumes, or is designed to consume, energy 
or, with respect to showerheads, faucets, water closets, and urinals, 
water; and
    (2) Which, to any significant extent, is distributed in commerce for 
personal use or consumption by individuals; without regard to whether 
such article or such type is in fact distributed in commerce for 
personal use or consumption by an individual, except that such term 
includes fluorescent lamp ballasts, metal halide lamp fixtures, general 
service fluorescent lamps, medium base compact fluorescent lamps, 
general service incandescent lamps (including incandescent reflector 
lamps), showerheads, faucets, water closets, and urinals distributed in 
commerce for personal or commercial use or consumption.
    (l) Consumer appliance product means any of the following consumer 
products, excluding those products designed solely for use in 
recreational vehicles and other mobile equipment:
    (1) Refrigerators, refrigerator-freezers, and freezers that can be 
operated by alternating current electricity, excluding--
    (i) Any type designed to be used without doors; and
    (ii) Any type which does not include a compressor and condenser unit 
as an integral part of the cabinet assembly.
    (2) Dishwashers.
    (3) Water heaters.
    (4) Room air conditioners.
    (5) Clothes washers.
    (6) Clothes dryers.
    (7) Central air conditioners and central air conditioning heat 
pumps.
    (8) Furnaces.
    (9) Direct heating equipment.
    (10) Pool heaters.
    (11) Kitchen ranges and ovens.
    (12) Television sets.
    (13) Fluorescent lamp ballasts.
    (14) General service fluorescent lamps.
    (15) Medium base compact fluorescent lamps.
    (16) General service incandescent lamps, including incandescent 
reflector lamps.
    (17) Showerheads.
    (18) Faucets.
    (19) Water closets.
    (20) Urinals.
    (21) Metal halide lamp fixtures.
    (22) Ceiling fans.
    (23) Any other type of consumer product that the Department of 
Energy classifies as a covered product under section 322(b) of the Act 
(42 U.S.C. 6292).
    (m) Correlated color temperature for lamps means the absolute 
temperature of a blackbody whose chromaticity most nearly resembles that 
of the light source.
    (n) Covered product means any consumer product or consumer appliance 
product described in Sec.305.3, Sec.305.4, Sec.305.5, or Sec.
305.6 of this part.
    (o) Distributor means a person (other than a manufacturer or 
retailer) to whom a consumer appliance product is delivered or sold for 
purposes of distribution in commerce.
    (p) Energy efficiency rating means the following product-specific 
energy usage descriptors: annual fuel utilization efficiency (AFUE) for 
furnaces; combined energy efficiency ratio (CEER) for room air 
conditioners; seasonal energy efficiency ratio (SEER) for the cooling 
function of central air conditioners and heat pumps; heating seasonal 
performance factor (HSPF) for the heating function of heat pumps; 
airflow efficiency for ceiling fans; and, thermal efficiency (TE) for 
pool heaters, as these descriptors are determined in accordance with 
tests prescribed under section 323 of the Act (42 U.S.C. 6293). These 
product-specific energy usage descriptors shall be used in satisfying 
all the requirements of this part.
    (q) Estimated annual energy consumption and estimated annual 
operating or energy cost--(1) Estimated annual energy

[[Page 272]]

consumption means the energy or (for plumbing products) water that is 
likely to be consumed annually in representative use of a consumer 
product, as determined in accordance with tests prescribed under section 
323 of the Act (42 U.S.C. 6293).
    (i) Kilowatt-hour use per year, or kWh/yr., means estimated annual 
energy consumption expressed in kilowatt-hours of electricity.
    (ii) Therm use per year, or therms/yr., means estimated annual 
energy consumption expressed in therms of natural gas.
    (iii) Gallon use per year, or gallons/yr., means estimated annual 
energy consumption expressed in gallons of propane or No. 2 heating oil.
    (2) Estimated annual operating or energy cost means the aggregate 
retail cost of the energy that is likely to be consumed annually in 
representative use of a consumer product, as determined in accordance 
with tests prescribed under section 323 of the Act (42 U.S.C. 6293).
    (r) Flow restricting or controlling spout end device means an 
aerator used in a faucet.
    (s) Flushometer valve means a valve attached to a pressured water 
supply pipe and so designed that, when actuated, it opens the line for 
direct flow into the fixture at a rate and quantity to operate properly 
the fixture, and then gradually closes to provide trap reseal in the 
fixture in order to avoid water hammer. The pipe to which this device is 
connected is in itself of sufficient size that, when opened, will allow 
the device to deliver water at a sufficient rate of flow for flushing 
purposes.
    (t) IES means the Illuminating Engineering Society of North America 
and, as used herein, is the prefix for test procedures adopted by IES.
    (u) Lamp efficacy means the light output of a lamp divided by its 
wattage, expressed in lumens per watt (LPW).
    (v) Lamp type means all lamps designated as having the same 
electrical and lighting characteristics and made by one manufacturer.
    (w) Life and lifetime for lamps mean length of operating time of a 
statistically large group of lamps between first use and failure of 50 
percent of the group.
    (x) Light output for lamps means the total luminous flux (power) of 
a lamp in lumens.
    (y) Luminaire means a complete lighting unit consisting of a 
fluorescent lamp or lamps, together with parts designed to distribute 
the light, to position and protect such lamps, and to connect such lamps 
to the power supply through the ballast.
    (z) Manufacturer means any person who manufactures, produces, 
assembles, or imports a consumer appliance product. Assembly operations 
which are solely decorative are not included.
    (aa) New covered product means a covered product the title of which 
has not passed to a purchaser who buys the product for purposes other 
than resale or leasing for a period in excess of one year.
    (bb) Private labeler means an owner of a brand or trademark on the 
label of a consumer appliance product which bears a private label.
    (cc) Range of comparability means a group of models within a class 
of covered products, each model of which satisfies approximately the 
same consumer needs.
    (dd) Range of energy efficiency ratings means the range of energy 
efficiency ratings for all models within a designated range of 
comparability.
    (ee) Range of estimated annual energy cost means the range of 
estimated annual energy cost per year of all models within a designated 
range of comparability.
    (ff) Retailer means a person to whom a consumer appliance product is 
delivered or sold, if such delivery or sale is for purposes of sale or 
distribution in commerce to purchasers who buy such product for purposes 
other than resale. The term retailer includes purchasers of appliances 
who install such appliances in newly constructed or newly rehabilitated 
housing, or mobile homes, with the intent to sell the covered appliances 
as part of the sale of such housing or mobile homes.
    (gg) Water use means the quantity of water flowing through a 
showerhead, faucet, water closet, or urinal at point of use, determined 
in accordance with test procedures under section 323 of the Act, 42 
U.S.C. 6293.

[[Page 273]]

    (hh) Wattage for lamps means the total electrical power consumed by 
a lamp in watts, after an initial seasoning period and including, for 
fluorescent lamps, arc watts plus cathode watts.

[72 FR 49965, Aug. 29, 2007, as amended at 73 FR 39225, July 9, 2008; 73 
FR 63066, Oct. 23, 2008; 83 FR 7596, Feb. 22, 2018; 84 FR 58028, Oct. 
30, 2019]



Sec.305.3  Description of appliances and consumer electronics.

    (a) Refrigerators and refrigerator-freezers--(1) Electric 
refrigerator means a cabinet designed for the refrigerated storage of 
food, designed to be capable of achieving storage temperatures above 32 
[deg]F (0 [deg]C) and below 39[deg]F (3.9 [deg]C), and having a source 
of refrigeration requiring single phase, alternating current electric 
energy input only. An electric refrigerator may include a compartment 
for the freezing and storage of food at temperatures below 32 [deg]F (0 
[deg]C), but does not provide a separate low temperature compartment 
designed for the freezing and storage of food at temperatures below 8 
[deg]F (-13.3 [deg]C).
    (2) Electric refrigerator-freezer means a cabinet which consists of 
two or more compartments with at least one of the compartments designed 
for the refrigerated storage of food and designed to be capable of 
achieving storage temperatures above 32 [deg]F (0 [deg]C) and below 39 
[deg]F (3.9 [deg]C), and with at least one of the compartments designed 
for the freezing and storage of food at temperatures below 8 [deg]F (-
13.3 [deg]C) which may be adjusted by the user to a temperature of 0 
[deg]F (-17.8 [deg]C) or below. The source of refrigeration requires 
single phase, alternating current electric energy input only.
    (b) Freezer means a cabinet designed as a unit for the freezing and 
storage of food at temperatures of 0 [deg]F or below, and having a 
source of refrigeration requiring single phase, alternating current 
electric energy input only.
    (c) Dishwasher means a cabinet-like appliance which, with the aid of 
water and detergent, washes, rinses, and dries (when a drying process is 
included) dishware, glassware, eating utensils and most cooking utensils 
by chemical, mechanical, and/or electrical means and discharges to the 
plumbing drainage system.
    (1) Water heating dishwasher means a dishwasher which is designed 
for heating cold inlet water (nominal 50 [deg]F) or a dishwasher for 
which the manufacturer recommends operation with a nominal inlet water 
temperature of 120 [deg]F and may operate at either of these inlet water 
temperatures by providing internal water heating to above 120 [deg]F in 
at least one wash phase of the normal cycle.
    (2) [Reserved]
    (d) Water heater means a product which utilizes oil, gas, or 
electricity to heat potable water for use outside the heater upon 
demand, including--
    (1) Storage type units which heat and store water at a 
thermostatically controlled temperature, including gas storage water 
heaters with an input of 75,000 Btu per hour or less, oil storage water 
heaters with an input of 105,000 Btu per hour or less, and electric 
storage water heaters with an input of 12 kilowatts or less;
    (2) Instantaneous type units that heat water but contain no more 
than one gallon of water per 4,000 Btu per hour of input, including gas 
instantaneous water heaters with an input of 200,000 Btu per hour or 
less, oil instantaneous water heaters with an input of 210,000 Btu per 
hour or less, and electric instantaneous water heaters with an input of 
12 kilowatts or less; and
    (3) Heat pump type units, with a maximum current rating of 24 
amperes at a voltage no greater than 250 volts, which are products 
designed to transfer thermal energy from one temperature level to a 
higher temperature level for the purpose of heating water, including all 
ancillary equipment such as fans, storage tanks, pumps, or controls 
necessary for the device to perform its function.
    (e) Room air conditioner means a consumer product, other than a 
packaged terminal air conditioner, which is powered by a single phase 
electric current and which is an encased assembly designed as a unit for 
mounting in a window or through the wall for the purpose of providing 
delivery of conditioned air to an enclosed space. It includes a prime 
source of refrigeration

[[Page 274]]

and may include a means for ventilating and heating.
    (f) Clothes washer means a consumer product designed to clean 
clothes, utilizing a water solution of soap and/or detergent and 
mechanical agitation or other movement, and must be one of the following 
classes: Automatic clothes washers, semi-automatic clothes washers, and 
other clothes washers.
    (1) Automatic clothes washer means a class of clothes washer which 
has a control system capable of scheduling a pre-selected combination of 
operations, such as regulation of water fill level, and performance of 
wash, rinse, drain and spin functions, without the need for the user to 
intervene subsequent to the initiation of machine operation. Some models 
may require user intervention to initiate these different segments of 
the cycle after the machine has begun operation, but they do not require 
the user to intervene to regulate the water temperature by adjusting the 
external water faucet valves.
    (2) Semi-automatic clothes washer means a class of clothes washer 
that is the same as an automatic clothes washer except that the user 
must intervene to regulate the water temperature by adjusting the 
external water faucet valves.
    (3) Other clothes washer means a class of clothes washer that is not 
an automatic or semi-automatic clothes washer.
    (g) Ceiling fan means a nonportable device that is suspended from a 
ceiling for circulating air via the rotation of fan blades, excluding 
large-diameter and high-speed small diameter fans as defined in appendix 
U of subpart B of 10 CFR part 430. The requirements of this part are 
otherwise limited to those ceiling fans for which the Department of 
Energy has adopted and published test procedures for measuring energy 
usage.
    (h) Television means a product that is designed to produce dynamic 
video, contains an internal TV tuner encased within the product housing, 
and is capable of receiving dynamic visual content from wired or 
wireless sources including but not limited to: Broadcast and similar 
services for terrestrial, cable, satellite, and/or broadband 
transmission of analog and/or digital signals; and/or display-specific 
data connections, such as HDMI, Component video, S-video, Composite 
video; and/or media storage devices such as a USB flash drive, memory 
card, or a DVD; and/or network connections, usually using internet 
Protocol, typically carried over Ethernet or Wi-Fi. The requirements of 
this part are limited to those televisions for which the Department of 
Energy has adopted and published test procedures for measuring energy 
use.
    (i) Pool heater means an appliance designed for heating nonpotable 
water contained at atmospheric pressure, including heating water in 
swimming pools, spas, hot tubs and similar applications.

[84 FR 58028, Oct. 30, 2019]

                                 General



Sec.305.4  Description of furnaces and central air conditioners.

    (a) Furnaces--(1) Furnace means a product that utilizes only single-
phase electric current, or single-phase electric current or DC current 
in conjunction with natural gas, propane, or home heating oil, and 
which--
    (i) Is designed to be the principal heating source for the living 
space of a residence;
    (ii) Is not contained within the same cabinet with a central air 
conditioner whose rated cooling capacity is above 65,000 Btu per hour;
    (iii) Is an electric central furnace, electric boiler, forced-air 
central furnace, gravity central furnace, or low pressure steam or hot 
water boiler; and
    (iv) Has a heat input rate of less than 300,000 Btu per hour for 
electric boilers and low pressure steam or hot water boilers and less 
than 225,000 Btu per hour for forced-air central furnaces, gravity 
central furnaces, and electric central furnaces.
    (2) Electric central furnace means a furnace designed to supply heat 
through a system of ducts with air as the heating medium, in which heat 
is generated by one or more electric resistance heating elements and the 
heated air is circulated by means of a fan or blower.

[[Page 275]]

    (3) Forced air central furnace means a gas or oil burning furnace 
designed to supply heat through a system of ducts with air as the 
heating medium. The heat generated by combustion of gas or oil is 
transferred to the air within a casing by conduction through heat 
exchange surfaces and is circulated through the duct system by means of 
a fan or blower.
    (4) Gravity central furnace means a gas fueled furnace which depends 
primarily on natural convection for circulation of heated air and which 
is designed to be used in conjunction with a system of ducts.
    (5) Electric boiler means an electrically powered furnace designed 
to supply low pressure steam or hot water for space heating application. 
A low pressure steam boiler operates at or below 15 pounds per square 
inch gauge (psig) steam pressure; a hot water boiler operates at or 
below 160 psig water pressure and 250 [deg]F water temperature.
    (6) Low pressure steam or hot water boiler means an electric, gas or 
oil burning furnace designed to supply low pressure steam or hot water 
for space heating application. A low pressure steam boiler operates at 
or below 15 pounds psig steam pressure; a hot water boiler operates at 
or below 160 psig water pressure and 250 [deg]F water temperature.
    (7) Outdoor furnace or boiler is a furnace or boiler normally 
intended for installation out-of-doors or in an unheated space (such as 
an attic or a crawl space).
    (8) Weatherized warm air furnace or boiler means a furnace or boiler 
designed for installation outdoors, approved for resistance to wind, 
rain, and snow, and supplied with its own venting system.
    (b) Central air conditioner means a product, other than a packaged 
terminal air conditioner, which is powered by single phase electric 
current, air cooled, rated below 65,000 Btu per hour, not contained 
within the same cabinet as a furnace, the rated capacity of which is 
above 225,000 Btu per hour, and is a heat pump or a cooling only unit.
    (1) Condenser-evaporator coil combination means a condensing unit 
made by one manufacturer and one of several evaporator coils, either 
manufactured by the same manufacturer or another manufacturer, intended 
to be combined with that particular condensing unit.
    (2) Condensing unit means a component of a ``central air 
conditioner'' which is designed to remove heat absorbed by the 
refrigerant and to transfer it to the outside environment, and which 
consists of an outdoor coil, compressor(s), and air moving device.
    (3) Evaporator coil means a component of a central air conditioner 
that is designed to absorb heat from an enclosed space and transfer the 
heat to a refrigerant.
    (4) Single package unit means any central air conditioner in which 
all the major assemblies are enclosed in one cabinet.
    (5) Split system means any central air conditioner in which one or 
more of the major assemblies are separate from the others.
    (c) Heat pump means a product, other than a packaged terminal heat 
pump, which consists of one or more assemblies, powered by single phase 
electric current, rated below 65,000 Btu per hour, utilizing an indoor 
conditioning coil, compressor, and refrigerant-to-outdoor air heat 
exchanger to provide air heating, and may also provide air cooling, 
dehumidifying, humidifying, circulating, and air cleaning.

[84 FR 58029, Oct. 30, 2019]



Sec.305.5  Description of lighting products.

    (a) Fluorescent lamp ballast means a device which is used to start 
and operate fluorescent lamps by providing a starting voltage and 
current and limiting the current during normal operation.
    (b) Fluorescent lamp means:
    (1) A low pressure mercury electric-discharge source in which a 
fluorescing coating transforms some of the ultra-violet energy generated 
by the mercury discharge into light, including only the following:
    (i) Any straight-shaped lamp (commonly referred to as 4-foot medium 
bi-pin lamps) with medium bi-pin bases of nominal overall length of 48 
inches and rated wattage of 28 or more;
    (ii) Any U-shaped lamp (commonly referred to as 2-foot U-shaped 
lamps) with medium bi-pin bases of nominal

[[Page 276]]

overall length between 22 and 25 inches and rated wattage of 28 or more;
    (iii) Any rapid start lamp as defined at 42 U.S.C. 6291(30)(A)(iii); 
and
    (iv) Any instant start lamp as defined at 42 U.S.C. 6291(30)(A)(iv); 
but
    (2) Fluorescent lamp does not mean any lamp excluded by the 
Department of Energy, by rule, as a result of a determination that 
standards for such lamp would not result in significant energy savings 
because such lamp is designed for special applications or has special 
characteristics not available in reasonably substitutable lamp types; 
and
    (3) General service fluorescent lamp means a fluorescent lamp which 
can be used to satisfy the majority of fluorescent applications, but 
does not mean any lamp designed and marketed for the following 
nongeneral lighting applications:
    (i) Fluorescent lamps designed to promote plant growth;
    (ii) Fluorescent lamps specifically designed for cold temperature 
installations;
    (iii) Colored fluorescent lamps;
    (iv) Impact-resistant fluorescent lamps;
    (v) Reflectorized or aperture lamps;
    (vi) Fluorescent lamps designed for use in reprographic equipment;
    (vii) Lamps primarily designed to produce radiation in the ultra-
violet region of the spectrum; and
    (viii) Lamps with a color rendering index of 82 or greater.
    (c) General service lamp means:
    (1) A lamp that is:
    (i) A medium base compact fluorescent lamp;
    (ii) A general service incandescent lamp;
    (iii) A general service light-emitting diode (LED or OLED) lamp; or
    (iv) Any other lamp that the Secretary of Energy determines is used 
to satisfy lighting applications traditionally served by general service 
incandescent lamps.
    (2) Exclusions: The term general service lamp does not include--
    (i) Any lighting application or bulb shape described in paragraphs 
(e)(3)(ii)(A) through (T) of this section; and
    (ii) Any general service fluorescent lamp.
    (d) Medium base compact fluorescent lamp means an integrally 
ballasted fluorescent lamp with a medium screw base, a rated input 
voltage range of 115 to 130 volts and which is designed as a direct 
replacement for a general service incandescent lamp; however, the term 
does not include--
    (1) Any lamp that is:
    (i) Specifically designed to be used for special purpose 
applications; and
    (ii) Unlikely to be used in general purpose applications, such as 
the applications described in the definition of ``General Service 
Incandescent Lamp'' in paragraph (e)(3)(ii) of this section; or
    (2) Any lamp not described in the definition of ``General Service 
Incandescent Lamp'' in this section and that is excluded by the 
Department of Energy, by rule, because the lamp is--
    (i) Designed for special applications; and
    (ii) Unlikely to be used in general purpose applications.
    (e) Incandescent lamp means:
    (1) A lamp in which light is produced by a filament heated to 
incandescence by an electric current, including only the following:
    (i) Any lamp (commonly referred to as lower wattage nonreflector 
general service lamps, including any tungsten halogen lamp) that has a 
rated wattage between 30 and 199 watts, has an E26 medium screw base, 
has a rated voltage or voltage range that lies at least partially within 
115 and 130 volts, and is not a reflector lamp;
    (ii) Any lamp (commonly referred to as a reflector lamp) which is 
not colored or designed for rough or vibration service applications, 
that contains an inner reflective coating on the outer bulb to direct 
the light, an R, PAR, ER, BR, BPAR, or similar bulb shapes with E26 
medium screw bases, a rated voltage or voltage range that lies at least 
partially within 115 and 130 volts, a diameter which exceeds 2.25 
inches, and has a rated wattage that is 40 watts or higher;
    (iii) Any general service incandescent lamp (commonly referred to as 
a high- or higher-wattage lamp) that has a rated wattage above 199 watts 
(above

[[Page 277]]

205 watts for a high wattage reflector lamp); but
    (2) Incandescent lamp does not mean any lamp excluded by the 
Secretary of Energy, by rule, as a result of a determination that 
standards for such lamp would not result in significant energy savings 
because such lamp is designed for special applications or has special 
characteristics not available in reasonably substitutable lamp types;
    (3) General service incandescent lamp means:
    (i) In general, a standard incandescent, halogen, or reflector type 
lamp that--
    (A) Is intended for general service applications;
    (B) Has a medium screw base;
    (C) Has a lumen range of not less than 310 lumens and not more than 
2,600 lumens; and
    (D) Is capable of being operated at a voltage range at least 
partially within 110 and 130 volts.
    (ii) Exclusions. The term ``general service incandescent lamp'' does 
not include the following incandescent lamps:
    (A) An appliance lamp as defined at 42 U.S.C. 6291(30);
    (B) A black light lamp;
    (C) A bug lamp;
    (D) A colored lamp as defined at 42 U.S.C. 6291(30);
    (E) An infrared lamp;
    (F) A left hand thread lamp;
    (G) A marine lamp;
    (H) A marine signal service lamp;
    (I) A mine service lamp;
    (J) A plant light lamp;
    (K) A rough service lamp as defined at 42 U.S.C. 6291(30);
    (L) A shatter resistant lamp (including a shatter-proof lamp and a 
shatter-protected lamp);
    (M) A sign service lamp;
    (N) A silver bowl lamp;
    (O) A showcase lamp;
    (P) A traffic signal lamp;
    (Q) A vibration service lamp as defined at 42 U.S.C. 6291(30);
    (R) A G shape lamp as defined at 42 U.S.C. 6291(30)(D)(ii)(XX);
    (S) A T shape lamp as defined at 42 U.S.C. 6291(30)(D)(ii)(XXI); or
    (T) A B, BA, CA, F, G16-1/2, G-25, G-30, S, or M-14 lamp as defined 
at 42 U.S.C. 6291(30)(D)(ii)(XXII).
    (4) Incandescent reflector lamp means a lamp described in paragraph 
(e)(1)(ii) of this section; and
    (5) Tungsten halogen lamp means a gas filled tungsten filament 
incandescent lamp containing a certain proportion of halogens in an 
inert gas.
    (f) Light emitting diode (LED) means a p-n junction solid state 
device the radiated output of which is a function of the physical 
construction, material used, and exciting current of the device. The 
output of a light emitting diode may be in--
    (1) The infrared region;
    (2) The visible region; or
    (3) The ultraviolet region.
    (g) Organic light emitting diode (OLED) means a thin-film light-
emitting device that typically consists of a series of organic layers 
between 2 electrical contacts (electrodes).
    (h) General service light-emitting diode (LED or OLED) lamp means 
any light emitting diode (LED or OLED) lamp that:
    (1) Is a consumer product;
    (2) Is intended for general service applications;
    (3) Has a medium screw base;
    (4) Has a lumen range of not less than 310 lumens and not more than 
2,600 lumens; and
    (5) Is capable of being operated at a voltage range at least 
partially within 110 and 130 volts.
    (i) Metal halide lamp fixture means a light fixture for general 
lighting application that is designed to be operated with a metal halide 
lamp and a ballast for a metal halide lamp and that is subject to and 
complies with Department of Energy efficiency standards issued pursuant 
to 42 U.S.C. 6295.
    (1) Metal halide ballast means a ballast used to start and operate 
metal halide lamps.
    (2) Metal halide lamp means a high intensity discharge lamp in which 
the major portion of the light is produced by radiation of metal halides 
and their products of dissociation, possibly in combination with 
metallic vapors.
    (j) Specialty consumer lamp means:
    (1) Any lamp that:
    (i) Is not included under the definition of general service lamp in 
this part;

[[Page 278]]

    (ii) Has a lumen range between 310 lumens and no more than 2,600 
lumens or a rated wattage between 30 and 199;
    (iii) Has one of the following bases:
    (A) A medium screw base;
    (B) A candelabra screw base;
    (C) A GU-10 base; or
    (D) A GU-24 base; and
    (iv) Is capable of being operated at a voltage range at least 
partially within 110 and 130 volts.
    (2) Inclusions: The term specialty consumer lamp includes, but is 
not limited to, the following lamps if such lamps meet the conditions 
listed in paragraph (1):
    (i) Vibration-service lamps as defined at 42 U.S.C. 6291(30)(AA);
    (ii) Rough service lamps as defined at 42 U.S.C. 6291(30)(X);
    (iii) Appliance lamps as defined at 42 U.S.C. 6291(30)(T); and
    (iv) Shatter resistant lamps (including a shatter proof lamp and a 
shatter protected lamp) as defined in 42 U.S.C. 6291(30)(Z).
    (3) Exclusions: The term specialty consumer lamp does not include:
    (i) A black light lamp;
    (ii) A bug lamp;
    (iii) A colored lamp;
    (iv) An infrared lamp;
    (v) A left-hand thread lamp;
    (vi) A marine lamp;
    (vii) A marine signal service lamp;
    (viii) A mine service lamp;
    (ix) A sign service lamp;
    (x) A silver bowl lamp;
    (xi) A showcase lamp;
    (xii) A traffic signal lamp;
    (xiii) A G-shape lamp with diameter of 5 inches or more;
    (xiv) A C7, M-14, P, RP, S, or T shape lamp;
    (xv) A intermediate screw-base lamp; and
    (xvi) A plant light lamp.

[84 FR 58030, Oct. 30, 2019]



Sec.305.6  Description of plumbing products.

    (a) Showerhead means a component or set of components distributed in 
commerce for attachment to a single supply fitting, for spraying water 
onto a bather, typically from an overhead position, excluding safety 
shower showerheads.
    (b) Faucet means a lavatory faucet, kitchen faucet, metering faucet, 
or replacement aerator for a lavatory or kitchen faucet.
    (c) Water closet means a plumbing fixture having a water-containing 
receptor which receives liquid and solid body waste and, upon actuation, 
conveys the waste through an exposed integral trap seal into a gravity 
drainage system, except such term does not include fixtures designed for 
installation in prisons.
    (d) Urinal means a plumbing fixture that receives only liquid body 
waste and, on demand, conveys the waste through a trap seal into a 
gravity drainage system, except such term does not include fixtures 
designed for installation in prisons.

[84 FR 58032, Oct. 30, 2019]



Sec.305.7  Prohibited acts.

    (a) It shall be unlawful and subject to the enforcement penalties of 
section 333 of the Act, as adjusted for inflation pursuant to Sec.1.98 
of this chapter, for each unit of any new covered product to which the 
part applies:
    (1) For any manufacturer or private labeler knowingly to distribute 
in commerce any new covered product unless such covered product is 
marked and/or labeled in accordance with this part with a marking, 
label, hang tag, or energy fact sheet which conforms to the provisions 
of the Act and this part.
    (2) For any manufacturer, distributor, retailer, or private labeler 
knowingly to remove or render illegible any marking or label required to 
be provided with such product by this part.
    (3) For any manufacturer or private labeler knowingly to distribute 
in commerce any new covered product, if there is not included (i) on the 
label, (ii) separately attached to the product, or (iii) shipped with 
the product, additional information relating to energy consumption or 
energy efficiency which conforms to the requirements in this part.
    (b) Subject to enforcement penalties assessed per model per day of 
violation pursuant to 42 U.S.C. 6303 and adjusted for inflation by Sec.
1.98 of this chapter, it shall be unlawful for any manufacturer or 
private labeler knowingly to:

[[Page 279]]

    (1) Refuse a request by the Commission or its designated 
representative for access to, or copying of, records required to be 
supplied under this part.
    (2) Refuse to make reports or provide upon request by the Commission 
or its designated representative any information required to be supplied 
under this part.
    (3) Refuse upon request by the Commission or its designated 
representative to permit a representative designated by the Commission 
to observe any testing required by this part while such testing is being 
conducted or to inspect the results of such testing. This section shall 
not limit the Commission from requiring additional testing under this 
part.
    (4) Refuse, when requested by the Commission or its designated 
representative, to supply at the manufacturer's expense, no more than 
two of each model of each covered product to any laboratory designated 
by the Commission for the purpose of ascertaining whether the 
information in catalogs or set out on the label or marked on the product 
as required by this part is accurate. This action will be taken only 
after review of a manufacturer's testing records and an opportunity to 
revalidate test data has been extended to the manufacturer.
    (5) Distribute in commerce any catalog containing a listing for a 
covered product without the information required by Sec.305.27 of this 
part. This subsection shall also apply to distributors and retailers.
    (6) Fail to make a label for a covered product available on a 
publicly accessible Web site in accordance with Sec.305.9. This 
provision applies only to manufacturers.
    (c) Pursuant to section 333(c) of the Act, it shall be an unfair or 
deceptive act or practice in violation of section 5(a)(1) of the Federal 
Trade Commission Act (15 U.S.C. 45(a)(1)) for any manufacturer, 
distributor, retailer, or private labeler in or affecting commerce to 
display or distribute at point of sale any printed material applicable 
to a covered product under this rule if such printed material does not 
contain the information required by Sec.305.26. This requirement does 
not apply to any broadcast advertisement or to any advertisement in a 
newspaper, magazine, or other periodical.
    (d)(1) It shall be an unfair or deceptive act or practice in 
violation of section 5(a)(1) of the Federal Trade Commission Act, 15 
U.S.C. 45(a)(1), for any manufacturer, distributor, retailer or private 
labeler to make any representation in or affecting commerce, in writing 
(including a representation on a label) or in any broadcast 
advertisement, with respect to the energy use or efficiency or, in the 
case of showerheads, faucets, water closets, and urinals, water use of a 
covered product to which a test procedure is applicable under section 
323 of the Act, 42 U.S.C. 6293, or the cost of energy consumed by such 
product, unless such product has been tested in accordance with such 
test procedure and such representation fairly discloses the results of 
such testing.
    (2) Effective 180 days after an amended or new test procedure 
applicable to a covered product is prescribed or established under 
section 323(b) of the Act, 42 U.S.C. 6293(b), it shall be an unfair or 
deceptive act or practice in violation of section 5(a)(1) of the Federal 
Trade Commission Act, 15 U.S.C. 45(a)(1), for any manufacturer, 
distributor, retailer or private labeler to make any representation in 
or affecting commerce, in writing (including a representation on a 
label) or in any broadcast advertisement, with respect to the energy use 
or efficiency or, in the case of showerheads, faucets, water closets and 
urinals, water use of such product, or cost of energy consumed by such 
product, unless the product has been tested in accordance with such 
amended or new test procedures and such representation fairly discloses 
the results of such testing. This requirement is not limited to consumer 
appliance products covered by the labeling requirements of this part.
    (e) This part shall not apply to:
    (1) Any covered product if it is manufactured, imported, sold, or 
held for sale for export from the United States, so long as such product 
is not in fact distributed in commerce for use in the United States, and 
such covered product or the container thereof bears a stamp or label 
stating that such covered product is intended for export.

[[Page 280]]

    (2) Televisions manufactured before May 10, 2011.
    (f) As used in paragraphs (a) and (b) of this section, the term 
knowingly means:
    (1) The having of actual knowledge, or
    (2) The presumed having of knowledge deemed to be possessed by a 
reasonable person who acts in the circumstances, including knowledge 
obtainable upon the exercise of due care.

[52 FR 46894, Dec. 10, 1987, as amended at 54 FR 28035, July 5, 1989; 58 
FR 54964, Oct. 25, 1993; 59 FR 49563, Sept. 28, 1994; 59 FR 67526, Dec. 
29, 1994; 61 FR 54549, Oct. 21, 1996; 72 FR 49966, Aug. 29, 2007; 76 FR 
1050, Jan. 6, 2011; 78 FR 2207, Jan. 10, 2013. Redesignated at 84 FR 
58029, Oct. 30, 2019, as amended at 84 FR 58032, Oct. 30, 2019]

                                 Testing



Sec.305.8  Determinations of estimated annual energy consumption,
estimated annual operating cost, and energy efficiency rating, 
water use rate, and other required disclosure content.

    (a) Unless otherwise stated in paragraphs (b) and (c) of this 
section, the content of any disclosures required by this part must be 
determined in accordance with the testing and sampling provisions 
required by the Department of Energy as set forth in subpart B to 10 CFR 
part 430, 10 CFR part 431, and 10 CFR 429.11.
    (b) For any representations required by this part but not subject to 
Department of Energy requirements and not otherwise specified in this 
section, manufacturers and private labelers of any covered product must 
possess and rely upon a reasonable basis consisting of competent and 
reliable scientific tests and procedures substantiating the 
representation.
    (c) Representations for ceiling fans under Sec.305.21 and 
televisions under Sec.305.25 must be derived from applicable 
procedures in 10 CFR parts 429, 430, and 431.

[78 FR 2207, Jan. 10, 2013, as amended at 79 FR 19467, Apr. 9, 2014; 83 
FR 7596, Feb. 22, 2018. Redesignated at 84 FR 58029, Oct. 30, 2019, as 
amended at 84 FR 58032, Oct. 30, 2019]



Sec.305.9  Duty to provide labels on websites.

    For each covered product required by this part to bear an 
EnergyGuide or Lighting Facts label, the manufacturer must make a copy 
of the label available on a publicly accessible website in a manner that 
allows catalog sellers to hyperlink to the label or download it for use 
in websites or paper catalogs. The label for each specific model must 
remain on the website for six months after production of that model 
ceases.

[84 FR 58032, Oct. 30, 2019]



Sec.305.10  Determinations of capacity.

    The capacity of covered products shall be determined as follows:
    (a) Refrigerators and refrigerator-freezers. The capacity shall be 
the total refrigerated volume (VT) in cubic feet, rounded to the nearest 
one-tenth of a cubic foot, as determined according to appendix A to 10 
CFR part 430, subpart B.
    (b) Freezers. The capacity shall be the total refrigerated volume 
(VT) in cubic feet, rounded to the nearest one-tenth of a cubic foot, as 
determined according to appendix B to 10 CFR part 430, subpart B.
    (c) Dishwashers. The capacity shall be the place-setting capacity, 
determined according to appendix C to 10 CFR part 430, subpart B.
    (d) Water heaters. The capacity shall be the rated storage volume 
and first hour rating (for storage-type models), and gallons per minute 
(for instantaneous-type models), as determined according to appendix E 
to 10 CFR part 430, subpart B.
    (e) Pool heaters. The capacity shall be the heating capacity in 
Btu's per hour, rounded to the nearest 1,000 Btu's per hour, as 
determined according to appendix P to 10 CFR part 430, subpart B.
    (f) Room air conditioners. The capacity shall be the cooling 
capacity in Btu's per hour, as determined according to appendix F to 10 
CFR part 430, subpart B, but rounded to the nearest value ending in 
hundreds that will satisfy the relationship that the value of CEER used 
in representations equals the rounded value of capacity divided by the 
value of input power in watts. If a

[[Page 281]]

value ending in hundreds will not satisfy this relationship, the 
capacity may be rounded to the nearest value ending in 50 that will.
    (g) Clothes washers. The capacity shall be the tub capacity as 
determined according to Department of Energy test procedures in 10 CFR 
part 430, subpart B, expressed in terms of ``Capacity (tub volume)'' in 
cubic feet, rounded to the nearest one-tenth of a cubic foot, and the 
capacity class designations ``standard'' or ``compact.''
    (h) Furnaces. The capacity shall be the heating capacity in Btu's 
per hour, rounded to the nearest 1,000 Btu's per hour, as determined 
according to appendix N to 10 CFR part 430, subpart B.
    (i) Central air conditioners, cooling. The capacity shall be the 
cooling capacity in Btu's per hour, as determined according to appendix 
M to 10 CFR part 430, subpart B, rounded to the nearest 100 Btu's per 
hour for capacities less than 20,000 Btu's per hour; to the nearest 200 
Btu's per hour for capacities between 20,000 and 37,999 Btu's per hour; 
and to the nearest 500 Btu's per hour for capacities between 38,000 and 
64,999 Btu's per hour.
    (j) Central air conditioners, heating. The capacity shall be the 
heating capacity in Btu's per hour, as determined according to appendix 
M to 10 CFR part 430, subpart B, rounded to the nearest 100 Btu's per 
hour for capacities less than 20,000 Btu's per hour; to the nearest 200 
Btu's per hour for capacities between 20,000 and 37,999 Btu's per hour; 
and to the nearest 500 Btu's per hour for capacities between 38,000 and 
64,999 Btu's per hour.
    (k) Fluorescent lamp ballasts. The capacity shall be the ballast 
input voltage, as determined according to appendix Q to 10 CFR part 430, 
subpart B.
    (l) Ceiling fans. The capacity shall be the airflow in cubic feet 
per minute as determined according to appendix U of 10 CFR part 430, 
subpart B.

[59 FR 34033, July 1, 1994, as amended at 59 FR 49564, Sept. 28, 1994; 
70 FR 3875, Jan. 27, 2005; 73 FR 63067, Oct. 23, 2008; 78 FR 43981, July 
23, 2013; 79 FR 77870, Dec. 29, 2014; 80 FR 67299, Nov. 2, 2015; 81 FR 
7202, Feb. 11, 2016; 81 FR 63646, Sept. 15, 2016; 83 FR 7596, Feb. 22, 
2018. Redesignated at 84 FR 58029, Oct. 30, 2019]



Sec.305.11  Submission of data.

    (a)(1) Except as provided in paragraphs (a)(2) through (4) of this 
section, each manufacturer of a covered product subject to the 
disclosure requirements of this part and subject to Department of Energy 
certification requirements in 10 CFR part 429 shall submit annually a 
report for each model in current production containing the same 
information that must be submitted to the Department of Energy pursuant 
to 10 CFR part 429 for that product, and that the Department has 
identified as public information pursuant to 10 CFR part 429. In lieu of 
submitting the required information to the Commission as required by 
this section, manufacturers may submit such information to the 
Department of Energy via the CCMS at https://regulations.doe.gov/ccms as 
provided by 10 CFR 429.12.
    (2) Manufacturers of ceiling fans shall submit annually a report 
containing the brand name, model number, diameter (in inches), wattage 
excluding any lights, airflow (capacity) for each basic model in current 
production, and starting serial number, date code or other means of 
identifying the date of manufacture with the first submission for each 
basic model. In lieu of submitting the required information to the 
Commission as required by this section, manufacturers may submit such 
information to the Department of Energy via the Compliance and 
Certification Management System (CCMS) at https://regulations.doe.gov/
ccms as provided by 10 CFR 429.12.
    (3) Manufacturers of televisions shall submit annually a report 
containing the brand name; model number; screen size (diagonal in 
inches); power (in watts) consumed in on mode, standby-passive mode, in 
standby-active mode, low mode, and off mode; and annual energy 
consumption (kWh/year) for each basic model in current production. The 
report should also include a starting serial number, date code, or other 
means of identifying the date of manufacture with the first submission 
for each basic model. In lieu of submitting the required information to 
the Commission as required by this section, manufacturers may submit 
such information to the Department of Energy

[[Page 282]]

via the Compliance and Certification Management System (CCMS) at https:/
/regulations.doe.gov/ccms as provided by 10 CFR 429.12.
    (4) This section does not require reports for general service light-
emitting diode (LED or OLED) lamps or specialty consumer lamps.
    (5) Manufacturers must submit a website address for the online 
EnergyGuide labels covered by Sec.305.9 in new model and annual 
reports required by this section. Manufacturers may accomplish this by 
either submitting a specific link to a URL for each label, a link to a 
PDF download for each label, or a link to a website that takes users 
directly to a searchable database of the covered labels from which the 
label image or download may be accessed using the model number as 
certified to DOE pursuant to 10 CFR part 429 and the model number 
advertised in product literature. Such label information must be 
submitted either at the time the model is certified to DOE pursuant to 
10 CFR part 429 or at some time on or before the annual report date 
immediately following such certification. In lieu of submitting the 
required information to the Commission, manufacturers may submit such 
information to the Department of Energy via the CCMS at https://
regulations.doe.gov/ccms as provided by 10 CFR 429.12. The requirements 
in this paragraph do not apply to Lighting Facts labels.
    (b)(1) All data required by Sec.305.11(a) except serial numbers 
shall be submitted to the Commission annually, on or before the 
following dates:

------------------------------------------------------------------------
             Product category               Deadline for data submission
------------------------------------------------------------------------
Refrigerators.............................  Aug. 1
Refrigerators-freezers....................  Aug. 1
Freezers..................................  Aug. 1
Central air conditioners..................  July 1
Heat pumps................................  July 1
Dishwashers...............................  June 1
Water heaters.............................  May 1
Room air conditioners.....................  July 1
Furnaces..................................  May 1
Pool heaters..............................  May 1
Clothes washers...........................  Oct. 1
Fluorescent lamp ballasts.................  Mar. 1
Showerheads...............................  Mar. 1
Faucets...................................  Mar. 1
Water closets.............................  Mar. 1
Ceiling fans..............................  Mar. 1
Urinals...................................  Mar. 1
Metal halide lamp fixtures................  Sept. 1
General service fluorescent lamps.........  Mar. 1
Medium base compact fluorescent lamps.....  Mar. 1
General service incandescent lamps........  Mar. 1
Televisions...............................  June 1
------------------------------------------------------------------------

    (2) All revisions to such data (both additions to and deletions from 
the preceding data) shall be submitted to the Commission as part of the 
next annual report period.
    (c) All information required by paragraphs (a)(1) through (3) of 
this section must be submitted for new models prior to any distribution 
of such model. Models subject to design or retrofit alterations which 
change the data contained in any annual report shall be reported in the 
manner required for new models. Models which are discontinued shall be 
reported in the next annual report.

[52 FR 46894, Dec. 10, 1987. Redesignated at 84 FR 58029, Oct. 30, 
20192019]

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



Sec.305.12  Ranges of comparability on the required labels.

    (a) Range of estimated annual energy costs or energy efficiency 
ratings. The range of estimated annual operating costs or energy 
efficiency ratings for each covered product (except televisions, ceiling 
fans, fluorescent lamp ballasts, lamps, metal halide lamp fixtures, 
showerheads, faucets, water closets and urinals) shall be taken from the 
appropriate appendix to this part in effect at the time the labels are 
affixed to the product. The Commission shall publish revised ranges in 
the Federal Register in 2022. When the ranges are revised, all 
information disseminated after 90 days following the publication of the 
revision shall conform to the revised ranges. Products that have been 
labeled prior to the effective date of a modification under this section 
need not be relabeled.
    (b) Representative average unit energy cost. The Representative 
Average Unit Energy Cost to be used on labels as required by Sec.
305.14 through Sec.305.19 and disclosures as required by Sec.305.27 
are listed in appendices K1 and K2 to this

[[Page 283]]

part. The Commission shall publish revised Representative Average Unit 
Energy Cost figures in the Federal Register in 2022. When the cost 
figures are revised, all information disseminated after 90 days 
following the publication of the revision shall conform to the new cost 
figure.
    (c) Operating costs or efficiency ratings outside current range. 
When the estimated annual operating cost or energy efficiency rating of 
a given model of a product covered by this section falls outside the 
limits of the current range for that product, which could result from 
the introduction of a new or changed model, the manufacturer shall:
    (1) Omit placement of such product on the scale appearing on the 
label, and
    (2) Add one of the two sentences below, as appropriate, in the space 
just below the scale on the label, as follows:

    The estimated yearly energy cost of this model was not available at 
the time the range was published.
    The energy efficiency rating of this model was not available at the 
time the range was published.

    (3) For refrigerator and refrigerator-freezer labels:
    (i) If the model's energy cost falls outside of either or both 
ranges on the label, include the language in paragraph (c)(2) of this 
section.
    (ii) If the model's energy cost only falls outside of the range for 
models with similar features, but is within the range for all models, 
include the product on the scale and place a triangle below the dollar 
value.
    (iii) If the model's energy cost falls outside of both ranges of 
comparability, omit the triangle beneath the yearly operating cost 
value.

[72 FR 49967, Aug. 29, 2007, as amended at 73 FR 63067, Oct. 23, 2008; 
76 FR 1050, Jan. 6, 2011; 78 FR 43981, July 23, 2013; 81 FR 7202, Feb. 
11, 2016; 83 FR 7596, Feb. 22, 2018. Redesignated at 84 FR 58029, Oct. 
30, 2019, as amended at 84 FR 58032, Oct. 30, 2019]



Sec.305.13  Layout, format, and placement of labels for refrigerators,
refrigerator-freezers, freezers, dishwashers, clothes washers,
water heaters, room air conditioners, and pool heaters.

    (a) Coverage. The requirements of this section apply to labels for 
refrigerators, refrigerator-freezers, freezers, dishwashers, clothes 
washers, water heaters, room air conditioners, and pool heaters.
    (b) Layout. Energy labels shall use one size, similar colors, and 
typefaces with consistent positioning of headline, copy, and charts to 
maintain uniformity for immediate consumer recognition and readability. 
Trim size dimensions for the labels shall be as follows: Width must be 
between 5\1/4\ inches and 5\1/2\ inches (13.34 cm. and 13.97 cm.); 
length must be between 7\3/8\ inches (18.73 cm.) and 7\5/8\ (19.37 cm.). 
Copy is to be set between 27 picas and 29 picas and copy page should be 
centered (right to left and top to bottom). Depth is variable but should 
follow closely the prototype and sample labels appearing at the end of 
this part illustrating the basic layout. All positioning, spacing, type 
sizes, and line widths should be similar to and consistent with the 
prototype and sample labels in appendix L to this part.
    (c) Type style and setting. The Arial series typeface or equivalent 
shall be used exclusively on the label. Specific sizes and faces to be 
used are indicated on the prototype labels. No hyphenation should be 
used in setting headline or copy text. Positioning and spacing should 
follow the prototypes closely. Generally, text must be set flush left 
with two points leading except where otherwise indicated. See the 
prototype labels for specific directions.
    (d) Colors. Except as indicated in paragraph (e)(3) of this section, 
the basic colors of all labels covered by this section shall be process 
yellow or equivalent and process black. The label shall be printed full 
bleed process yellow. All type and graphics shall be print process 
black.
    (e) Label types. Except as indicated in paragraph (e)(3) of this 
section, the labels must be affixed to the product in the form of an 
adhesive label for any product covered by this section, or in the form 
of a hang tag for refrigerators, refrigerator-freezers, freezers, 
dishwashers, and clothes washers, as follows:
    (1) Adhesive labels. All adhesive labels should be applied so they 
can be easily removed without the use of tools or liquids, other than 
water, but should be

[[Page 284]]

applied with an adhesive with an adhesion capacity sufficient to prevent 
their dislodgment during normal handling throughout the chain of 
distribution to the retailer or consumer. The paper stock for pressure-
sensitive or other adhesive labels shall have a basic weight of not less 
than 58 pounds per 500 sheets (25[sec] x 38[sec]) or equivalent, 
exclusive of the release liner and adhesive. A minimum peel adhesion 
capacity for the adhesive of 12 ounces per square inch is suggested, but 
not required if the adhesive can otherwise meet the above standard. In 
lieu of a label with adhesive backing, manufacturers may adhere the 
label with adhesive tape, provided the tape is affixed along the entire 
top and bottom of the label.
    (2) Hang tags. Labels may be affixed to the product interior in the 
form of a hang tag using cable ties or double strings connected through 
reinforced punch holes, or with attachment and label material of 
equivalent or greater strength and durability. If paper stock is used 
for hang tags, it shall have a basic weight of not less than 110 pounds 
per 500 sheets (25\1/2\[sec] x 30\1/2\[sec] index). When materials are 
used to attach the hang tags to appliance products, the materials shall 
be of sufficient strength to insure that if gradual pressure is applied 
to the hang tag by pulling it away from where it is affixed to the 
product, the hang tag will tear before the material used to affix the 
hang tag to the product breaks.
    (3) Package labels for certain products. Labels for electric 
instantaneous water heaters shall be printed on or affixed to the 
product's packaging in a conspicuous location. Labels for room air 
conditioners produced on or after October 1, 2019 shall be printed on or 
affixed to the principal display panel of the product's packaging. The 
labels for electric instantaneous water heaters and room air 
conditioners shall be black type and graphics on a process yellow or 
other neutral contrasting background.
    (f) Placement--(1) Adhesive labels. Manufacturers shall affix 
adhesive labels to the covered products in such a position that it is 
easily read by a consumer examining the product. The label should be 
generally located on the upper-right-front corner of the product's front 
exterior. However, some other prominent location may be used as long as 
the label will not become dislodged during normal handling throughout 
the chain of distribution to the retailer or consumer. The top of the 
label should not exceed 74 inches from the base of taller products. The 
label can be displayed in the form of a flap tag adhered to the top of 
the appliance and bent (folded at 90[deg]) to hang over the front, as 
long as this can be done with assurance that it will be readily visible.
    (2) Hang tags. A hang tag shall be affixed to the interior of the 
product in such a position that it can be easily read by a consumer 
examining the product. A hang tag can be affixed in any position that 
meets this requirement as long as the label will not become dislodged 
during normal handling throughout the chain of distribution to the 
retailer or consumer. Hang tags may only be affixed in refrigerators, 
refrigerator-freezers, freezers, dishwashers, and clothes washers.

[84 FR 58032, Oct. 30, 2019]



Sec.305.14  Label content for refrigerators, refrigerator-freezers,
and freezers.

    (a) Label content. (1) Headlines and texts, as illustrated in the 
prototype and sample labels in appendix L to this part, are standard for 
all labels.
    (2) Name of manufacturer or private labeler shall, in the case of a 
corporation, be deemed to be satisfied only by the actual corporate 
name, which may be preceded or followed by the name of the particular 
division of the corporation. In the case of an individual, partnership, 
or association, the name under which the business is conducted shall be 
used. Inclusion of the name of the manufacturer or private labeler is 
optional at the discretion of the manufacturer or private labeler.
    (3) Model number(s) will be the designation given by the 
manufacturer or private labeler.
    (4) Capacity or size is that determined in accordance with this 
part. The capacity provided on the label shall be the model's total 
refrigerated

[[Page 285]]

volume (VT) as determined in accordance with this part and the model 
description must be consistent with the categories described in 
Appendices A and B to this part.
    (5) Unless otherwise indicated in this paragraph, estimated annual 
operating costs must be determined in accordance with this part. Labels 
for dual-mode refrigerator-freezers that can operate as either a 
refrigerator or a freezer must reflect the estimated energy cost of the 
model's most energy intensive configuration.
    (6) Unless otherwise indicated in this paragraph, ranges of 
comparability for estimated annual operating costs are found in the 
appropriate appendices accompanying this part.
    (7) Placement of the labeled product on the scale shall be 
proportionate to the lowest and highest estimated annual operating 
costs.
    (8) Labels must contain the model's estimated annual energy 
consumption as determined in accordance with this part and as indicated 
on the sample labels in appendix L.
    (9) Labels must contain statements as illustrated in the prototype 
labels in appendix L and specified as follows by product type:
    (i) Labels for refrigerators, refrigerator-freezers, and freezers 
shall contain the text and graphics illustrated in sample labels of 
appendix L, including the statement:
    Compare ONLY to other labels with yellow numbers.
    Labels with yellow numbers are based on the same test procedures.
    (ii) Labels for refrigerators and refrigerator-freezers must contain 
a statement as illustrated in the prototype labels in appendix L and 
specified as follows (fill in the blanks with the appropriate energy 
cost figure):

    Your cost will depend on your utility rates and use.
    Both cost ranges based on models of similar size capacity.
    [Insert statement required by paragraph (a)(9)(iii) of this 
section].
    Estimated energy cost based on a national average electricity cost 
of __ cents per kWh.
    ftc.gov/energy.

    (iii) Labels for refrigerators and refrigerator-freezers shall 
include the following as part of the statement required by paragraph 
(a)(9)(ii) of this section:
    (A) For models covered under appendix A1 to this part, the sentence 
shall read:

    Models with similar features have automatic defrost and no freezer.

    (B) For models covered under appendix A2 to this part, the sentence 
shall read:

    Models with similar features have manual defrost.

    (C) For models covered under appendix A3 to this part, the sentence 
shall read:

    Models with similar features have partial automatic defrost.

    (D) For models covered under appendix A4 to this part, the sentence 
shall read:

    Models with similar features have automatic defrost, top-mounted 
freezer, and no through-the-door ice.

    (E) For models covered under appendix A5 to this part, the sentence 
shall read:

    Models with similar features have automatic defrost, side-mounted 
freezer, and no through-the-door ice.

    (F) For models covered under appendix A6 to this part, the sentence 
shall read:

    Models with similar features have automatic defrost, bottom-mounted 
freezer, and no through-the-door ice.

    (G) For models covered under appendix A7 to this part, the sentence 
shall read:

    Models with similar features have automatic defrost, bottom-mounted 
freezer and through-the-door ice.

    (H) For models covered under appendix A8 to this part, the sentence 
shall read:

    Models with similar features have automatic defrost, side-mounted 
freezer, and through-the-door ice.

    (iv) Labels for freezers must contain a statement as illustrated in 
the prototype labels in appendix L and specified as follows (fill in the 
blanks with the appropriate energy cost figure):


[[Page 286]]


    Your cost will depend on your utility rates and use.
    [Insert statement required by paragraph (a)(10)(v) of this section].
    Estimated energy cost based on a national average electricity cost 
of __cents per kWh.
    ftc.gov/energy.

    (v) For freezers, the following sentence shall be included as part 
of the statement required by paragraph (a)(9)(iv) of this section:
    (A) For models covered under appendix B1 to this part, the sentence 
shall read:

    Cost range based only on upright freezer models of similar capacity 
with manual defrost.

    (B) For models covered under appendix B2 to this part, the sentence 
shall read:

    Cost range based only on upright freezer models of similar capacity 
with automatic defrost.

    (C) For models covered under appendix B3 to this part, the sentence 
shall read:

    Cost range based only on chest and other freezer models of similar 
capacity.

    (10) The following statement shall appear on each label as 
illustrated in the prototype and sample labels in appendix L to this 
part:

    Federal law prohibits removal of this label before consumer 
purchase.

    (b) Additional information. No marks or information other than that 
specified in this part shall appear on or directly adjoining this label 
except that:
    (1) A part or publication number identification may be included on 
this label, as desired by the manufacturer. If a manufacturer elects to 
use a part or publication number, it must appear in the lower right-hand 
corner of the label and be set in 12-point type or smaller.
    (2) The energy use disclosure labels required by the governments of 
Canada or Mexico may appear directly adjoining this label, as desired by 
the manufacturer.
    (3) The manufacturer or private labeler may include the ENERGY STAR 
logo on the bottom right corner of the label for certified products. The 
logo must be 1 inch by 1 inch in size. Only manufacturers that have 
signed a Memorandum of Understanding with the Department of Energy or 
the Environmental Protection Agency may add the ENERGY STAR logo to 
labels on certified covered products; such manufacturers may add the 
ENERGY STAR logo to labels only on those covered products that are 
contemplated by the Memorandum of Understanding.

[84 FR 58033, Oct. 30, 2019]



Sec.305.15  Label content for clothes washers.

    (a) Label content. (1) Headlines and texts, as illustrated in the 
prototype and sample labels in appendix L to this part, are standard for 
all labels.
    (2) Name of manufacturer or private labeler shall, in the case of a 
corporation, be deemed to be satisfied only by the actual corporate 
name, which may be preceded or followed by the name of the particular 
division of the corporation. In the case of an individual, partnership, 
or association, the name under which the business is conducted shall be 
used. Inclusion of the name of the manufacturer or private labeler is 
optional at the discretion of the manufacturer or private labeler.
    (3) Model number(s) will be the designation given by the 
manufacturer or private labeler.
    (4) Capacity or size is that determined in accordance with this 
part.
    (5) Estimated annual operating costs are as determined in accordance 
with this part. Labels must disclose estimated annual operating cost for 
both electricity and natural gas as illustrated in the sample labels in 
appendix L to this part.
    (6) Unless otherwise indicated in this paragraph, ranges of 
comparability for estimated annual operating costs are found in the 
appropriate appendices accompanying this part.
    (7) Placement of the labeled product on the scale shall be 
proportionate to the lowest and highest estimated annual operating 
costs.
    (8) Labels must contain the model's estimated annual energy 
consumption as determined in accordance with this part and as indicated 
on the sample labels in appendix L.
    (9) The label shall contain the text and graphics illustrated in the 
sample

[[Page 287]]

labels in appendix L, including the statement:

    Compare ONLY to other labels with yellow numbers.
    Labels with yellow numbers are based on the same test procedures.

    (10) Labels must contain a statement as illustrated in the prototype 
labels in appendix L and specified as follows (fill in the blanks with 
the appropriate capacity and energy cost figures):

    Your costs will depend on your utility rates and use.
    Cost range based only on [compact/standard] capacity models.
    Estimated energy cost is based on six wash loads a week and a 
national average electricity cost of __ cents per kWh and natural gas 
cost of $ __ per therm.
    ftc.gov/energy.

    (11) The following statement shall appear on each label as 
illustrated in the prototype and sample labels in appendix L:

    Federal law prohibits removal of this label before consumer 
purchase.
    (b) Additional information. No marks or information other than that 
specified in this part shall appear on or directly adjoining this label 
except that:
    (1) A part or publication number identification may be included on 
this label, as desired by the manufacturer. If a manufacturer elects to 
use a part or publication number, it must appear in the lower right-hand 
corner of the label and be set in 12-point type or smaller.
    (2) The energy use disclosure labels required by the governments of 
Canada or Mexico may appear directly adjoining this label, as desired by 
the manufacturer.
    (3) The manufacturer or private labeler may include the ENERGY STAR 
logo on the bottom right corner of the label for certified products. The 
logo must be 1 inch by 1 inch in size. Only manufacturers that have 
signed a Memorandum of Understanding with the Department of Energy or 
the Environmental Protection Agency may add the ENERGY STAR logo to 
labels on certified covered products; such manufacturers may add the 
ENERGY STAR logo to labels only on those covered products that are 
contemplated by the Memorandum of Understanding.

[84 FR 58034, Oct. 30, 2019]



Sec.305.16  Label content for dishwashers.

    (a) Label content. (1) Headlines and texts, as illustrated in the 
prototype and sample labels in appendix L to this part, are standard for 
all labels.
    (2) Name of manufacturer or private labeler shall, in the case of a 
corporation, be deemed to be satisfied only by the actual corporate 
name, which may be preceded or followed by the name of the particular 
division of the corporation. In the case of an individual, partnership, 
or association, the name under which the business is conducted shall be 
used. Inclusion of the name of the manufacturer or private labeler is 
optional at the discretion of the manufacturer or private labeler.
    (3) Model number(s) will be the designation given by the 
manufacturer or private labeler.
    (4) Capacity or size is that determined in accordance with this 
part.
    (5) Estimated annual operating costs are as determined in accordance 
with this part. Labels must disclose estimated annual operating cost for 
both electricity and natural gas as illustrated in the sample labels in 
appendix L to this part.
    (6) Unless otherwise indicated in this paragraph, ranges of 
comparability for estimated annual operating costs are found in the 
appropriate appendices accompanying this part.
    (7) Placement of the labeled product on the scale shall be 
proportionate to the lowest and highest estimated annual operating 
costs.
    (8) Labels must contain the model's estimated annual energy 
consumption as determined in accordance with this part and as indicated 
on the sample labels in appendix L.
    (9) Labels must contain a statement as illustrated in the prototype 
labels in appendix L and specified as follows (fill in the brackets with 
the appropriate capacity and the energy cost figures):

    Your costs will depend on your utility rates and use.
    Cost range based only on [compact/standard] capacity models.
    Estimated energy cost is based on four wash loads a week, and a 
national average

[[Page 288]]

electricity cost of [__] cents per kWh and natural gas cost of $[__] per 
therm.
    For more information, visit www.ftc.gov/energy.

    (10) The following statement shall appear on each label as 
illustrated in the prototype and sample labels in appendix L to this 
part:

    Federal law prohibits removal of this label before consumer 
purchase.

    (b) Additional information. No marks or information other than that 
specified in this part shall appear on or directly adjoining this label 
except that:
    (1) A part or publication number identification may be included on 
this label, as desired by the manufacturer. If a manufacturer elects to 
use a part or publication number, it must appear in the lower right-hand 
corner of the label and be set in 12-point type or smaller.
    (2) The energy use disclosure labels required by the governments of 
Canada or Mexico may appear directly adjoining this label, as desired by 
the manufacturer.
    (3) The manufacturer or private labeler may include the ENERGY STAR 
logo on the bottom right corner of the label for certified products. The 
logo must be 1 inch by 1 inch in size. Only manufacturers that have 
signed a Memorandum of Understanding with the Department of Energy or 
the Environmental Protection Agency may add the ENERGY STAR logo to 
labels on certified covered products; such manufacturers may add the 
ENERGY STAR logo to labels only on those covered products that are 
contemplated by the Memorandum of Understanding.

[84 FR 58035, Oct. 30, 2019]



Sec.305.17  Label content for water heaters.

    (a) Label content. (1) Headlines and texts, as illustrated in the 
prototype and sample labels in appendix L to this part, are standard for 
all labels.
    (2) Name of manufacturer or private labeler shall, in the case of a 
corporation, be deemed to be satisfied only by the actual corporate 
name, which may be preceded or followed by the name of the particular 
division of the corporation. In the case of an individual, partnership, 
or association, the name under which the business is conducted shall be 
used. Inclusion of the name of the manufacturer or private labeler is 
optional at the discretion of the manufacturer or private labeler.
    (3) Model number(s) will be the designation given by the 
manufacturer or private labeler.
    (4) Capacity or size is that determined in accordance with this 
part. Capacity for storage water heaters shall be presented in both 
rated storage volume (``tank size (storage capacity)'') and first hour 
rating as indicated on the sample label in appendix L to this part.
    (5) Estimated annual operating costs are as determined in accordance 
with this part.
    (6) Unless otherwise indicated in this paragraph, ranges of 
comparability for estimated annual operating costs are found in the 
appropriate appendices accompanying this part.
    (7) Placement of the labeled product on the scale shall be 
proportionate to the lowest and highest estimated annual operating 
costs.
    (8) Labels must contain the model's estimated annual energy 
consumption as determined in accordance with this part and as indicated 
on the sample labels in appendix L to this part.
    (9) Labels must contain a statement as illustrated in the prototype 
labels in appendix L to this part and specified as follows by product 
type:
    (i) For water heaters covered by appendices D1, D2, and D3 to this 
part, the statement will read as follows (fill in the blanks with the 
appropriate fuel type, and energy cost figures):

    Your costs will depend on your utility rates and use.
    Cost range based only on models fueled by [natural gas, oil, 
propane, or electricity] with a [very small, low, medium, or high] first 
hour rating [fewer than 18 gallons, 18-50.9 gallons, 51-74.9 gallons, or 
greater than 75 gallons].
    Estimated energy cost is based on a national average [electricity, 
natural gas, propane, or oil] cost of [__ cents per kWh or $__ per therm 
or gallon].
    Estimated yearly energy use: __ [kWh or therms].
    ftc.gov/energy.

    (ii) For instantaneous water heaters, the statement will read as 
follows (fill in the blanks with the appropriate

[[Page 289]]

model type, and the energy cost figures):

    Your costs will depend on your utility rates and use.
    Cost range based only on [electric models or models fueled by 
natural gas] with a [very small, low, medium, or high] gallons per 
minute rating [0 to 1.6, 1.7 to 2.7, 2.8 to 4.0, or greater than 4.0].
    Estimated energy cost is based on a national average [electricity, 
natural gas, or propane] cost of [__ cents per kWh or $__ per therm or 
gallon].
    Estimated yearly energy use: __ [kWh or therms].
    ftc.gov/energy.

    (10) The following statement shall appear on each label as 
illustrated in the prototype and sample labels in appendix L:

    Federal law prohibits removal of this label before consumer 
purchase.

    (b) Additional information. No marks or information other than that 
specified in this part shall appear on or directly adjoining this label 
except that:
    (1) A part or publication number identification may be included on 
this label, as desired by the manufacturer. If a manufacturer elects to 
use a part or publication number, it must appear in the lower right-hand 
corner of the label and be set in 12-point type or smaller.
    (2) The energy use disclosure labels required by the governments of 
Canada or Mexico may appear directly adjoining this label, as desired by 
the manufacturer.
    (3) The manufacturer or private labeler may include the ENERGY STAR 
logo on the bottom right corner of the label for certified products. The 
logo must be 1 inch by 1 inch in size. Only manufacturers that have 
signed a Memorandum of Understanding with the Department of Energy or 
the Environmental Protection Agency may add the ENERGY STAR logo to 
labels on certified covered products; such manufacturers may add the 
ENERGY STAR logo to labels only on those covered products that are 
contemplated by the Memorandum of Understanding.

[84 FR 58035, Oct. 30, 2019]



Sec.305.18  Label content for room air conditioners.

    (a) Label content. (1) Headlines and texts, as illustrated in the 
prototype and sample labels in appendix L to this part, are standard for 
all labels.
    (2) Name of manufacturer or private labeler shall, in the case of a 
corporation, be deemed to be satisfied only by the actual corporate 
name, which may be preceded or followed by the name of the particular 
division of the corporation. In the case of an individual, partnership, 
or association, the name under which the business is conducted shall be 
used. Inclusion of the name of the manufacturer or private labeler is 
optional at the discretion of the manufacturer or private labeler.
    (3) Model number(s) will be the designation given by the 
manufacturer or private labeler.
    (4) Capacity or size is that determined in accordance with this 
part.
    (5) Estimated annual operating costs are as determined in accordance 
with this part.
    (6) Unless otherwise indicated in this paragraph, ranges of 
comparability for estimated annual operating costs are found in the 
appropriate appendices accompanying this part.
    (7) Placement of the labeled product on the scale shall be 
proportionate to the lowest and highest estimated annual operating 
costs.
    (8) Labels must contain the model's estimated annual energy 
consumption as determined in accordance with this part and as indicated 
on the sample labels in appendix L. Labels must contain the model's 
energy efficiency rating, as applicable, as determined in accordance 
with this part and as indicated on the sample labels in appendix L to 
this part.
    (9) Labels must contain a statement as illustrated in the prototype 
labels in appendix L and specified as follows (fill in the blanks with 
the appropriate model type, year, energy type, and energy cost figure):

    Your costs will depend on your utility rates and use.
    Cost range based only on models [of similar capacity without reverse 
cycle and with louvered sides; of similar capacity without reverse cycle 
and without louvered sides; with reverse cycle and with louvered sides;

[[Page 290]]

or with reverse cycle and without louvered sides].
    Estimated annual energy cost is based on a national average 
electricity cost of __ cents per kWh and a seasonal use of 8 hours use 
per day over a 3 month period.
    For more information, visit www.ftc.gov/energy.

    (10) The following statement shall appear on each label as 
illustrated in the prototype and sample labels in appendix L:

    Federal law prohibits removal of this label before consumer 
purchase.

    (b) Additional information. No marks or information other than that 
specified in this part shall appear on or directly adjoining this label 
except that:
    (1) A part or publication number identification may be included on 
this label, as desired by the manufacturer. If a manufacturer elects to 
use a part or publication number, it must appear in the lower right-hand 
corner of the label and be set in 12-point type or smaller.
    (2) The energy use disclosure labels required by the governments of 
Canada or Mexico may appear directly adjoining this label, as desired by 
the manufacturer.
    (3) The manufacturer or private labeler may include the ENERGY STAR 
logo on the bottom right corner of the label for certified products. The 
logo must be 1 inch by 1 inch in size. Only manufacturers that have 
signed a Memorandum of Understanding with the Department of Energy or 
the Environmental Protection Agency may add the ENERGY STAR logo to 
labels on certified covered products; such manufacturers may add the 
ENERGY STAR logo to labels only on those covered products that are 
contemplated by the Memorandum of Understanding.

[84 FR 58036, Oct. 30, 2019]



Sec.305.19  Label content for pool heaters.

    (a) Label content. (1) Headlines and texts, as illustrated in the 
prototype and sample labels in appendix L to this part, are standard for 
all labels.
    (2) Name of manufacturer or private labeler shall, in the case of a 
corporation, be deemed to be satisfied only by the actual corporate 
name, which may be preceded or followed by the name of the particular 
division of the corporation. In the case of an individual, partnership, 
or association, the name under which the business is conducted shall be 
used. Inclusion of the name of the manufacturer or private labeler is 
optional at the discretion of the manufacturer or private labeler.
    (3) Model number(s) will be the designation given by the 
manufacturer or private labeler.
    (4) Capacity or size is that determined in accordance with this 
part.
    (5) Thermal efficiencies are as determined in accordance with this 
part.
    (6) Unless otherwise indicated in this paragraph, ranges of 
comparability for thermal efficiencies are found in the appropriate 
appendices accompanying this part.
    (7) Placement of the labeled product on the scale shall be 
proportionate to the lowest and highest thermal efficiencies.
    (8) Labels must contain the model's energy efficiency rating or 
thermal efficiency, as applicable, as determined in accordance with this 
part and as indicated on the sample labels in appendix L to this part.
    (9) Labels must contain a statement as illustrated in the prototype 
labels in appendix L and specified as follows:

    Efficiency range based only on models fueled by [natural gas or 
oil].
    For more information, visit www.ftc.gov/energy.

    (10) The following statement shall appear on each label as 
illustrated in the prototype and sample labels in appendix L to this 
part:

    Federal law prohibits removal of this label before consumer 
purchase.

    (b) Additional information. No marks or information other than that 
specified in this part shall appear on or directly adjoining this label 
except that:
    (1) A part or publication number identification may be included on 
this label, as desired by the manufacturer. If a manufacturer elects to 
use a part or publication number, it must appear in the lower right-hand 
corner of the label and be set in 12-point type or smaller.
    (2) The energy use disclosure labels required by the governments of 
Canada

[[Page 291]]

or Mexico may appear directly adjoining this label, as desired by the 
manufacturer.
    (3) The manufacturer or private labeler may include the ENERGY STAR 
logo on the bottom right corner of the label for certified products. The 
logo must be 1 inch by 1 inch in size. Only manufacturers that have 
signed a Memorandum of Understanding with the Department of Energy or 
the Environmental Protection Agency may add the ENERGY STAR logo to 
labels on certified covered products; such manufacturers may add the 
ENERGY STAR logo to labels only on those covered products that are 
contemplated by the Memorandum of Understanding.

[84 FR 58036, Oct. 30, 2019]

                          Required Disclosures



Sec.305.20  Labeling for central air conditioners, heat pumps,
and furnaces.

    (a) Layout. All energy labels for central air conditioners, heat 
pumps, and furnaces (including boilers) shall use one size, similar 
colors, and typefaces with consistent positioning of headline, copy, and 
charts to maintain uniformity for immediate consumer recognition and 
readability. Trim size dimensions for all labels shall be as follows: 
width must be between 5\1/4\ inches and 5\1/2\ inches (13.34 cm. and 
13.97 cm.); length must be between 7\3/8\ inches (18.78 cm.) and 7\5/8\ 
(19.34 cm.). Copy is to be set between 27 picas and 29 picas and copy 
page should be centered (right to left and top to bottom). Depth is 
variable but should follow closely the prototype labels appearing at the 
end of this part illustrating the basic layout. All positioning, 
spacing, type sizes, and line widths should be similar to and consistent 
with the prototype and sample labels in appendix L.
    (b) Type style and setting. The Arial series typeface or equivalent 
shall be used exclusively on the label. Specific sizes and faces to be 
used are indicated on the prototype labels. No hyphenation should be 
used in setting headline or copy text. Positioning and spacing should 
follow the prototypes closely. Generally, text must be set flush left 
with two points leading except where otherwise indicated. See the 
prototype labels for specific directions.
    (c) Colors. The basic colors of all labels covered by this section 
shall be process yellow or equivalent and process black. The label shall 
be printed full bleed process yellow. All type and graphics shall be 
print process black.
    (d) Label type. The labels must be affixed in the form of an 
adhesive label, unless otherwise indicated by this section. All adhesive 
labels should be applied with an adhesive with an adhesion capacity 
sufficient to prevent their dislodgment during normal handling 
throughout the chain of distribution to the retailer or consumer. The 
paper stock for pressure-sensitive or other adhesive labels shall have a 
basic weight of not less than 58 pounds per 500 sheets (25''x38'') or 
equivalent, exclusive of the release liner and adhesive. A minimum peel 
adhesion capacity for the adhesive of 12 ounces per square inch is 
suggested, but not required if the adhesive can otherwise meet the above 
standard.
    (e) Placement. (1) Manufacturers shall affix adhesive labels to the 
covered products in such a position that they are easily read by persons 
examining the products. The labels should be generally located on the 
upper-right-front corner of each product's front exterior. However, 
other prominent locations may be used as long as labels will not become 
dislodged during normal handling throughout the chain of distribution to 
retailers or consumers. Tops of the labels should not exceed 74 inches 
from the base of taller products. Labels can be displayed in the form of 
a flap tag adhered to the top of the appliance and bent (folded at 
90[deg]) to hang over the front, as long as this can be done with 
assurance that it will be readily visible. Labels for split-system 
central air conditioners should be affixed to the condensing unit.
    (2) In addition to the requirements of paragraph (e)(1), for split-
system and single-package central air conditioners, and all non-
weatherized and mobile home furnaces manufactured on or after the 
compliance date of regional efficiency standards issued by the 
Department of Energy for those products in 10 CFR part 430, 
manufacturers shall affix labels to covered product packages or the 
products

[[Page 292]]

themselves in positions that allow persons examining the packaged 
products to read the labels easily. Labels on packaging must be affixed 
via adhesive or another means sufficient to prevent their dislodgment 
during normal handling throughout the chain of distribution to the 
retailer or consumer. Labels for split-system central air conditioners 
should be affixed to condensing units' packages or condensing units 
consistent with this paragraph.
    (f) Content of furnace labels: Content of labels for non-weatherized 
furnaces, weatherized furnaces, mobile home furnaces, electric furnaces, 
and boilers. (1) Headlines and texts, as illustrated in the prototype 
and sample labels in appendix L to this part.
    (2) Name of manufacturer or private labeler shall, in the case of a 
corporation, be deemed to be satisfied only by the actual corporate 
name, which may be preceded or followed by the name of the particular 
division of the corporation. In the case of an individual, partnership, 
or association, the name under which the business is conducted shall be 
used. Inclusion of the name of the manufacturer or private labeler is 
optional at the discretion of the manufacturer or private labeler.
    (3) The model's basic model number. The label may include multiple 
model numbers on a single label for models as long as the models share 
the same efficiency ratings and capacities and the presentation of such 
information is clear and prominent.
    (4) The model's capacity. Inclusion of capacity is optional at the 
discretion of the manufacturer or private labeler.
    (5) The annual fuel utilization efficiency (AFUE) for furnace models 
as determined in accordance with this part.
    (6) Ranges of comparability consisting of the lowest and highest 
annual fuel utilization efficiency (AFUE) ratings for all furnaces of 
the model's type consistent with the sample labels in appendix L.
    (7) Placement of the labeled product on the scale shall be 
proportionate to the lowest and highest annual fuel utilization 
efficiency ratings forming the scale.
    (8) The following statement shall appear in bold print on furnace 
labels adjacent to the range(s) as illustrated in the sample labels in 
appendix L:

For energy cost info, visit productinfo.energy.gov.

    (9) The following statement shall appear at the top of the label as 
illustrated in the sample labels in appendix L to this part:

Federal law prohibits removal of this label before consumer purchase.

    (10) No marks or information other than that specified in this part 
shall appear on or directly adjoining this label except that:
    (i) A part or publication number identification may be included on 
this label, as desired by the manufacturer. If a manufacturer elects to 
use a part or publication number, it must appear in the lower right-hand 
corner of the label and be set in 12-point type or smaller.
    (ii) The energy use disclosure labels required by the governments of 
Canada or Mexico may appear directly adjoining this label, as desired by 
the manufacturer.
    (iii) The manufacturer may include the ENERGY STAR logo on the label 
for certified products in a location consistent with the sample labels 
in appendix L to this part. The logo must be no larger than 1 inch by 3 
inches in size. Only manufacturers that have signed a Memorandum of 
Understanding with the Department of Energy or the Environmental 
Protection Agency may add the ENERGY STAR logo to labels on qualifying 
covered products; such manufacturers may add the ENERGY STAR logo to 
labels only on those covered products that are contemplated by the 
Memorandum of Understanding.
    (11) Manufacturers of boilers shipped with more than one input 
nozzle to be installed in the field must label such boilers with the 
AFUE of the system when it is set up with the nozzle that results in the 
lowest AFUE rating.
    (12) Manufacturers that ship out boilers that may be set up as 
either steam or hot water units must label the boilers with the AFUE 
rating derived by conducting the required test on the boiler as a hot 
water unit.
    (13) Manufacturers of oil furnaces must label their products with 
the

[[Page 293]]

AFUE rating associated with the furnace's input capacity set by the 
manufacturer at shipment. The oil furnace label may also contain a 
chart, as illustrated in sample label 9B in appendix L to this part, 
indicating the efficiency rating at up to three additional input 
capacities offered by the manufacturer. Consistent with paragraph 
(f)(10)(iii) of this section, labels for oil furnaces may include the 
ENERGY STAR logo only if the model qualifies for that program on all 
input capacities displayed on the label.
    (14) Manufacturers of models that qualify as both furnaces and 
central air conditioners or heat pumps under DOE requirements may 
combine the disclosures required by this section on one label for models 
that meet all applicable DOE regional efficiency standards.
    (g) Content of central air conditioner labels: Content of labels for 
central air conditioners and heat pumps. (1) Headlines and texts, as 
illustrated in the prototype and sample labels in appendix L to this 
part.
    (2) Name of manufacturer or private labeler shall, in the case of a 
corporation, be deemed to be satisfied only by the actual corporate 
name, which may be preceded or followed by the name of the particular 
division of the corporation. In the case of an individual, partnership, 
or association, the name under which the business is conducted shall be 
used. Inclusion of the name of the manufacturer or private labeler is 
optional at the discretion of the manufacturer or private labeler.
    (3) The model's basic model number. The label may include multiple 
model numbers on a single label for models as long as the models share 
the same efficiency ratings and capacities and the presentation of such 
information is clear and prominent.
    (4) The model's capacity. Inclusion of capacity is optional at the 
discretion of the manufacturer or private labeler for all models except 
split-system labels, which may not disclose capacity.
    (5) The seasonal energy efficiency ratio (SEER) for the cooling 
function of central air conditioners as determined in accordance with 
this part. For the heating function, the heating seasonal performance 
factor (HSPF) shall be calculated for heating Region IV for the 
standardized design heating requirement nearest the capacity measured in 
the High Temperature Test in accordance with this part. In addition, as 
illustrated in the sample labels in appendix L to this part, the ratings 
for any split-system air conditioner condenser evaporator coil 
combinations shall be the minimum rating of all condenser-evaporator 
coil combinations certified to the Department of Energy pursuant to 10 
CFR part 430. The ratings for any split-system heat pump condenser-
evaporator coil combinations shall include the low and high ratings of 
all condenser-evaporator coil combinations certified to the Department 
of Energy pursuant to 10 CFR part 430.
    (6)(i) Each cooling-only central air conditioner label shall contain 
a range of comparability consisting of the lowest and highest SEER for 
all cooling-only central air conditioners consistent with sample label 7 
in appendix L to this part.
    (ii) Each heat pump label, except as noted in paragraph (g)(6)(iii) 
of this section, shall contain two ranges of comparability. The first 
range shall consist of the lowest and highest seasonal energy efficiency 
ratios for the cooling side of all heat pumps consistent with sample 
label 8 in appendix L to this part. The second range shall consist of 
the lowest and highest heating seasonal performance factors for the 
heating side of all heat pumps consistent with sample label 8 in 
appendix L to this part.
    (iii) Each heating-only heat pump label shall contain a range of 
comparability consisting of the lowest and highest heating seasonal 
performance factors for all heating-only heat pumps following the format 
of sample label 8 in appendix L to this part.
    (7) Placement of the labeled product on the scale shall be 
proportionate to the lowest and highest efficiency ratings forming the 
scale.
    (8) The following statement shall appear on the label in bold print 
as indicated in the sample labels in appendix L to this part.
    For energy cost info, visit productinfo.energy.gov.

[[Page 294]]

    (9) All labels on split-system condenser units must contain one of 
the following three statements:
    (i) For labels disclosing only the seasonal energy efficiency ratio 
for cooling, the statement should read:
    * Your air conditioner's efficiency rating may be better depending 
on the coil your contractor installs.
    (ii) For labels disclosing both the seasonal energy efficiency ratio 
for cooling and the heating seasonal performance factor for heating, the 
statement should read:
    This system's efficiency ratings depend on the coil your contractor 
installs with this unit. The heating efficiency rating varies slightly 
in different geographic regions. Ask your contractor for details.
    (iii) For labels disclosing only the heating seasonal performance 
factor for heating, the statement should read:
    This system's efficiency rating depends on the coil your contractor 
installs with this unit. The efficiency rating varies slightly in 
different geographic regions. Ask your contractor for details.
    (10) The following statement shall appear at the top of the label as 
illustrated in the sample labels in appendix L of this part:
    Federal law prohibits removal of this label before consumer 
purchase.
    (11) For any single-package air conditioner with a minimum Energy 
Efficiency Ratio (EER) of at least 11.0, any split system central air 
conditioner with a rated cooling capacity of at least 45,000 Btu/h and 
minimum efficiency ratings of at least 14 SEER and 11.7 EER, and any 
split-system central air conditioners with a rated cooling capacity less 
than 45,000 Btu/h and minimum efficiency ratings of at least 14 SEER and 
12.2 EER, the label must contain the following regional standards 
information:
    (i) A statement that reads:
    Notice Federal law allows this unit to be installed in all U.S. 
states and territories.
    (ii) For split systems, a statement that reads:
    Energy Efficiency Ratio (EER): The installed system's minimum EERis 
__.
    (iii) For single-package air conditioners, a statement that reads:
    Energy Efficiency Ratio (EER): This model's EER is [__].
    (12) For any split system central air conditioner with a rated 
cooling capacity of at least 45,000 Btu/h and minimum efficiency ratings 
of at least 14 SEER but lower than 11.7 EER, and any split-system 
central air conditioners with a rated cooling capacity less than 45,000 
Btu/h and minimum efficiency ratings of at least 14 SEER but lower than 
12.2 EER, the label must contain the following regional standards 
information.
    (i) A statement that reads:
    Notice Federal law allows this unit to be installed only in: AK, AL, 
AR, CO, CT, DC, DE, FL, GA, HI, ID, IL, IA, IN, KS, KY, LA, MA, ME, MD, 
MI, MN, MO, MS, MT, NC, ND, NE., NH, NJ, NY, OH, OK, OR, PA, RI, SC, SD, 
TN, TX, UT, VA, VT, WA, WV, WI, WY and U.S. territories. Federal law 
prohibits installation of this unit in other states.
    (ii) A map appropriate for the model and accompanying text as 
illustrated in the sample label 7 in appendix L of this part.
    (iii) A statement that reads:
    Energy Efficiency Ratio (EER): The installed system's minimum EERis 
__.
    (13) For any split system central air conditioner with a minimum 
rated efficiency rating less than 14 SEER, the label must contain the 
following regional standards information:
    (i) A statement that reads:
    Notice Federal law allows this unit to be installed only in: AK, CO, 
CT, ID, IL, IA, IN, KS, MA, ME, MI, MN, MO, MT, ND, NE., NH, NJ, NY, OH, 
OR, PA, RI, SD, UT, VT, WA, WV, WI, WY, and U.S. Territories. Federal 
law prohibits installation of this unit in other states.
    (ii) A map appropriate for the model and accompanying text as 
illustrated in the sample label 7 in appendix L of this part.
    (iii) A statement that reads:
    Energy Efficiency Ratio (EER): The installed system's minimum EER is 
__.
    (14) For any single-package air conditioner with a minimum EER below 
11.0, the label must contain the following regional standards 
information:

[[Page 295]]

    (i) A statement that reads:
    Notice Federal law allows this unit to be installed only in: AK, AL, 
AR, CO, CT, DC, DE, FL, GA, HI, ID, IL, IA, IN, KS, KY, LA, MA, ME, MD, 
MI, MN, MO, MS, MT, NC, ND, NE., NH, NJ, NY, OH, OK, OR, PA, RI, SC, SD, 
TN, TX, UT, VA, VT, WA, WV, WI, WY and U.S. territories. Federal law 
prohibits installation of this unit in other states.
    (ii) A map appropriate for the model and accompanying text as 
illustrated in the sample label 7 in appendix L of this part.
    (15) No marks or information other than that specified in this part 
shall appear on or directly adjoining this label except that:
    (i) A part or publication number identification may be included on 
this label, as desired by the manufacturer. If a manufacturer elects to 
use a part or publication number, it must appear in the lower right-hand 
corner of the label and be set in 12-point type or smaller.
    (ii) The energy use disclosure labels required by the governments of 
Canada or Mexico may appear directly adjoining this label, as desired by 
the manufacturer.
    (iii) The manufacturer may include the ENERGY STAR logo on the label 
for certified products in a location consistent with the sample labels 
in appendix L to this part. The logo must be no larger than 1 inch by 3 
inches in size. Only manufacturers that have signed a Memorandum of 
Understanding with the Department of Energy or the Environmental 
Protection Agency may add the ENERGY STAR logo to labels on qualifying 
covered products; such manufacturers may add the ENERGY STAR logo to 
labels only on those covered products that are contemplated by the 
Memorandum of Understanding.

[72 FR 49969, Aug. 29, 2007, as amended at 78 FR 2208, Jan. 10, 2013; 78 
FR 8374, Feb. 6, 2013; 78 FR 43982, July 23, 2013; 79 FR 77870, Dec. 29, 
2014; 81 FR 63648, Sept. 15, 2016; 83 FR 7596, Feb. 22, 2018. 
Redesignated at 84 FR 58029, Oct. 30, 2019, as amended at 84 FR 58037, 
Oct. 30, 2019]



Sec.305.21  Labeling for ceiling fans.

    (a) Ceiling fans--(1) Content. Any covered product that is a ceiling 
fan, except for large diameter and high-speed small diameter fans as 
defined in 10 CFR part 430, shall be labeled clearly and conspicuously 
on the package's principal display panel with the following information 
on the label consistent with the sample label in appendix L to this 
part:
    (i) Headlines, including the title ``EnergyGuide,'' and text as 
illustrated in the sample label in appendix L to this part;
    (ii) The product's estimated yearly energy cost based on 6.4 hours 
use per day and 12 cents per kWh;
    (iii) The product's airflow expressed in cubic feet per minute and 
determined pursuant to Sec.305.8;
    (iv) The product's energy use expressed in watts and determined 
pursuant to Sec.305.8 as indicated in the sample label in appendix L 
of this part;
    (v) The statement ``Based on 12 cents per kWh and 6.4 hours use per 
day'';
    (vi) The statement ``Your cost depends on rates and use'';
    (vii) The statement ``All estimates based on typical use, excluding 
lights'';
    (viii) The statement ``The higher the airflow, the more air the fan 
will move'';
    (ix) The statement ``Airflow Efficiency: __Cubic Feet Per Minute Per 
Watt'';
    (x) The address ftc.gov/energy;
    (xi) For fans less than 19 inches in diameter, the label shall 
display a cost range of $10 to $50 along with the statement underneath 
the range ``Cost Range of Similar Models (18[sec] or smaller)'';
    (xii) For fans from 19 or more inches and less than or equal to 84 
inches in diameter, the label shall display a cost range of $3 to $34 
along with the statement underneath the range ``Cost Range of Similar 
Models (19[sec]-84[sec]).
    (xiii) Placement of the labeled product on the scale proportionate 
to the lowest and highest estimated annual energy costs as illustrated 
in the Sample Labels in appendix L. When the estimated annual energy 
cost of a given model falls outside the limits of the current range for 
that product, the manufacturer shall place the product at the end of the 
range closest to the model's energy cost.

[[Page 296]]

    (xiv) The ENERGY STAR logo as illustrated on the ceiling fan label 
illustration in Appendix L for qualified products, if desired by the 
manufacturer. Only manufacturers that have signed a Memorandum of 
Understanding with the Department of Energy or the Environmental 
Protection Agency may add the ENERGY STAR logo to labels on qualifying 
covered products; such manufacturers may add the ENERGY STAR logo to 
labels only on those products that are covered by the Memorandum of 
Understanding;
    (2) Label size, color, and text font. The label shall be four inches 
wide and three inches high. The label colors shall be black text on a 
process yellow or other neutral contrasting background. The text font 
shall be Arial or another equivalent font. The label's text size, 
format, content, and the order of the required disclosures shall be 
consistent with the ceiling fan label illustration of appendix L of this 
part.
    (3) Placement. The ceiling fan label shall be printed on or affixed 
to the principal display panel of the product's packaging.
    (4) Additional information. No marks or information other than that 
specified in this part shall appear on this label, except a model name, 
number, or similar identifying information.
    (5) Labeling for ``multi-mount'' fans. For ``multi-mount'' fan 
models that can be installed either extended from the ceiling or flush 
with the ceiling, the label content must reflect the lowest efficiency 
(cubic feet per minute per watt) configuration. Manufacturers may 
provide a second label depicting the efficiency at the other 
configuration.
    (b) [Reserved]

[73 FR 63068, Oct. 23, 2008, as amended at 81 FR 63649, Sept. 15, 2016; 
81 FR 74917, Oct. 28, 2016; 82 FR 29236, June 28, 2017. Redesignated at 
84 FR 58029, Oct. 30, 2019, as amended at 84 FR 58037, Oct. 30, 2019]



Sec.305.22  Energy information disclosures for heating and cooling
equipment.

    The following provisions apply to any covered central air 
conditioner, heat pump, or furnace.
    (a) Manufacturer duty to provide labels. For any covered central air 
conditioner, heat pump, or furnace model that a manufacturer distributes 
in commerce, the manufacturer must make a copy of the EnergyGuide label 
available on a publicly accessible Web site in a manner that allows 
catalog sellers and consumers to hyperlink to the label or download it 
for their use. The labels must remain on the Web site for six months 
after the manufacturer ceases the model's production.
    (b) Distribution. (1) Manufacturers and private labelers must 
provide to distributors and retailers, including assemblers, EnergyGuide 
labels for covered central air conditioners, heat pumps, and furnaces 
(including boilers) they sell to them. The label may be provided in 
paper or electronic form (including Internet-based access). Distributors 
must give this information to retailers, including assemblers, they 
supply.
    (2) Retailers, including assemblers, who sell covered central air 
conditioners, heat pumps, and furnaces (including boilers) to consumers 
must show the labels for the products they offer to customers and let 
them read the labels before the customers agree to purchase the product. 
For example, the retailer may display labeled units in their store or 
direct consumers to the labels in a binder or computer at a counter or 
service desk.
    (3) Retailers, including installers and assemblers, who negotiate or 
make sales at a place other than their regular places of business, 
including sales over the telephone or through electronic communications, 
must show the labels for the products they offer to customers and let 
them read the labels before the customers agree to purchase the product. 
If the labels are on a Web site, retailers, including assemblers, who 
negotiate or make sales at a place other than their regular places of 
business, may choose to provide customers with instructions to access 
such labels in lieu of showing them a paper version of the information. 
Retailers who choose to use the Internet for the required label 
disclosures must provide customers the opportunity to read such 
information prior to sale of the product.
    (c) Oil furnace labels. If an installer installs an oil furnace with 
an input

[[Page 297]]

capacity different from that set by the manufacturer and the 
manufacturer identifies alternative capacities on the label, the 
installer must permanently mark the appropriate box on the EnergyGuide 
label displaying the installed input capacity and the associated AFUE as 
illustrated in Sample Labels in appendix L to this part.

[81 FR 63650, Sept. 15, 2016. Redesignated at 84 FR 58029, Oct. 30, 
2019]



Sec.305.23  Labeling for lighting products.

    (a) Fluorescent lamp ballasts and luminaires--(1) Contents. 
Fluorescent lamp ballasts that are ``covered products,'' as defined in 
this part, and to which standards are applicable under section 325 of 
the Act, shall be marked conspicuously, in color-contrasting ink, with a 
capital letter ``E'' printed within a circle. Packaging for such 
fluorescent lamp ballasts, as well as packaging for luminaires into 
which they are incorporated, shall also be marked conspicuously with a 
capital letter ``E'' printed within a circle. For purposes of this 
section, the encircled capital letter ``E'' will be deemed 
``conspicuous,'' in terms of size, if it is as large as either the 
manufacturer's name or another logo, such as the ``UL,'' ``CBM'' or 
``ETL'' logos, whichever is larger, that appears on the fluorescent lamp 
ballast, the packaging for such ballast or the packaging for the 
luminaire into which the covered ballast is incorporated, whichever is 
applicable for purpose of labeling.
    (2) Product labeling. The encircled capital letter ``E'' on 
fluorescent lamp ballasts must appear conspicuously, in color-
contrasting ink, (i.e., in a color that contrasts with the background on 
which the encircled capital letter ``E'' is placed) on the surface that 
is normally labeled. It may be printed on the label that normally 
appears on the fluorescent lamp ballast, printed on a separate label, or 
stamped indelibly on the surface of the fluorescent lamp ballast.
    (3) Package labeling. For purposes of labeling under this section, 
packaging for such fluorescent lamp ballasts and the luminaires into 
which they are incorporated consists of the plastic sheeting, or 
``shrink-wrap,'' covering pallet loads of fluorescent lamp ballasts or 
luminaires as well as any containers in which such fluorescent lamp 
ballasts or the luminaires into which they are incorporated are marketed 
individually or in small numbers. The encircled capital letter ``E'' on 
packages containing fluorescent lamp ballasts or the luminaires into 
which they are incorporated must appear conspicuously, in color-
contrasting ink, on the surface of the package on which printing or a 
label normally appears. If the package contains printing on more than 
one surface, the label must appear on the surface on which the product 
inside the package is described. The encircled capital letter ``E'' may 
be printed on the surface of the package, printed on a label containing 
other information, printed on a separate label, or indelibly stamped on 
the surface of the package. In the case of pallet loads containing 
fluorescent lamp ballasts or the luminaires into which they are 
incorporated, the encircled capital letter ``E'' must appear 
conspicuously, in color-contrasting ink, on the plastic sheeting, unless 
clear plastic sheeting is used and the encircled capital letter ``E'' is 
legible underneath this packaging. The encircled capital letter ``E'' 
must also appear conspicuously on any documentation that would normally 
accompany such a pallet load. The encircled capital letter ``E'' may 
appear on a label affixed to the sheeting or may be indelibly stamped on 
the sheeting. It may be printed on the documentation, printed on a 
separate label that is affixed to the documentation or indelibly stamped 
on the documentation.
    (b) General service lamps. Except as provided in paragraph (f) of 
this section, any covered product that is a general service lamp shall 
be labeled as follows:
    (1) Principal display panel content. The principal display panel of 
the product package shall be labeled clearly and conspicuously with the 
following information:
    (i) The light output of each lamp included in the package, expressed 
as ``Brightness'' in average initial lumens rounded to the nearest five; 
and
    (ii) The estimated annual energy cost of each lamp included in the 
package, expressed as ``Estimated Energy Cost''

[[Page 298]]

in dollars and based on usage of 3 hours per day and 11 cents ($0.11) 
per kWh.
    (2) Principal display panel format. The light output (brightness) 
and energy cost shall appear in that order and with equal clarity and 
conspicuousness on the principal display panel of the product package. 
The format, terms, specifications, and minimum sizes shall follow the 
specifications and minimum sizes displayed in Prototype Label 5 in 
appendix L of this part.
    (3) Lighting Facts label content. The side or rear display panel of 
the product package shall be labeled clearly and conspicuously with a 
Lighting Facts label that contains the following information in the 
following order:
    (i) The light output of each lamp included in the package, expressed 
as ``Brightness'' in average initial lumens rounded to the nearest five;
    (ii) The estimated annual energy cost of each lamp included in the 
package based on the average initial wattage, a usage rate of 3 hours 
per day and 11 cents ($0.11) per kWh and explanatory text as illustrated 
in Prototype Label 6 in appendix L of this part;
    (iii) The life, as defined in this part, of each lamp included in 
the package, expressed in years rounded to the nearest tenth (based on 3 
hours operation per day);
    (iv) The correlated color temperature of each lamp included in the 
package, as measured in degrees Kelvin and expressed as ``Light 
Appearance'' and by a number and a marker in the form of a scale as 
illustrated in Prototype Label 6 to appendix L of this part placed 
proportionately on the scale where the left end equals 2,600 K and the 
right end equals 6,600 K;
    (v) The wattage, as defined in this part, for each lamp included in 
the package, expressed as energy used in average initial wattage;
    (vi) The ENERGY STAR logo as illustrated in Prototype Label 6 to 
appendix L of this part for certified products, if desired by the 
manufacturer or private labeler. Only manufacturers or private labelers 
that have signed a Memorandum of Understanding with the Department of 
Energy or the Environmental Protection Agency may add the ENERGY STAR 
logo to labels on certified covered products; such manufacturers or 
private labelers may add the ENERGY STAR logo to labels only on those 
products that are covered by the Memorandum of Understanding;
    (vii) The design voltage of each lamp included in the package, if 
other than 120 volts;
    (viii) For any general service lamp containing mercury, the 
following statement: ``Contains Mercury For more on clean up and safe 
disposal, visit epa.gov/cfl.'' The manufacturer may also print an 
``Hg[Encircled]'' symbol on the label after the term ``Contains 
Mercury''; and
    (ix) No marks or information other than that specified in this part 
shall appear on the Lighting Facts label.
    (4) Standard Lighting Facts label format. Except as provided in 
paragraph (b)(5) of this section, information specified in paragraph 
(b)(3) of this section shall be presented on covered lamp packages in 
the format, terms, explanatory text, specifications, and minimum sizes 
as shown in Prototype Labels 6 in appendix L of this part and consistent 
in format and orientation with Sample Labels 10, 11, or 12 in appendix 
L. The text and lines shall be all black or one color type, printed on a 
white or other neutral contrasting background whenever practical.
    (i) The Lighting Facts information shall be set off in a box by use 
of hairlines and shall be all black or one color type, printed on a 
white or other neutral contrasting background whenever practical.
    (ii) All information within the Lighting Facts label shall utilize:
    (A) Arial or an equivalent type style;
    (B) Upper and lower case letters;
    (C) Leading as indicated in Prototype Label 6 in appendix L of this 
part;
    (D) Letters that never touch;
    (E) The box and hairlines separating information as illustrated in 
Prototype Labels 6 in appendix L of this part; and
    (F) The minimum font sizes and line thicknesses as illustrated in 
Prototype Label 6 in appendix L of this part.
    (5) Lighting Facts format for small packages. If the total surface 
area of the product package available for labeling is less than 24 
square inches and the package shape or size cannot accommodate the 
standard label required by paragraph (b)(4) of this section,

[[Page 299]]

manufacturers may provide the information specified in paragraph (b)(3) 
of this section using a smaller, linear label following the format, 
terms, explanatory text, specifications, and minimum sizes illustrated 
in Prototype Label 7 in appendix L of this part.
    (6) Bilingual labels. The information required by paragraphs (b)(1) 
through (5) of this section may be presented in a second language either 
by using separate labels for each language or in a bilingual label with 
the English text in the format required by this section immediately 
followed by the text in the second language. Sample Label 13 in appendix 
L of this part provides an example of a bilingual Lighting Facts label. 
All required information must be included in both languages. Numeric 
characters that are identical in both languages need not be repeated.
    (7) Product labeling. Any general service lamp shall be labeled 
legibly on the product with the following information:
    (i) The lamp's average initial lumens, expressed as a number rounded 
to the nearest five, adjacent to the word ``lumens,'' both provided in 
minimum 8 point font; and
    (ii) For general service lamps containing mercury, the following 
statement: ``Mercury disposal: epa.gov/cfl'' in minimum 8 point font.
    (c) Specialty consumer lamps. (1) Any specialty consumer lamp that 
is a vibration-service lamp as defined at 42 U.S.C. 6291, rough service 
lamp as defined at 42 U.S.C. 6291(30), appliance lamp as defined at 42 
U.S.C. 6291(30); or shatter resistant lamp (including a shatter proof 
lamp and a shatter protected lamp) must be labeled pursuant to the 
requirements in paragraphs (b)(1) through (7) of this section.
    (2) Specialty consumer lamp Lighting Facts label content. All 
specialty consumer lamps not covered by paragraph (c)(1) of this section 
shall be labeled pursuant to the requirements of paragraphs (b)(1) 
through (7) of this section or as follows:
    (i) The principal display panel of the product package shall be 
labeled clearly and conspicuously with the following information 
consistent with the Prototype Labels in Appendix L:
    (A) The light output of each lamp included in the package, expressed 
as ``Brightness'' in average initial lumens rounded to the nearest five;
    (B) The estimated annual energy cost of each lamp included in the 
package, expressed as ``Estimated Energy Cost'' in dollars and based on 
usage of 3 hours per day and 11 cents ($0.11) per kWh; and
    (C) The life, as defined in this part, of each lamp included in the 
package, expressed in years rounded to the nearest tenth (based on 3 
hours operation per day).
    (ii)(A) If the lamp contains mercury, the principal display panel 
shall contain the following statement in minimum 10 point font:
    ``Contains Mercury For more on clean up and safe disposal, visit 
epa.gov/cfl.''
    (B) The manufacturer may also print an ``Hg[Encircled]'' symbol on 
package after the term ``Contains Mercury.''
    (iii) If the lamp contains mercury, the lamp shall be labeled 
legibly on the product with the following statement: ``Mercury disposal: 
epa.gov/cfl'' in minimum 8 point font.
    (iv) If the required disclosures for a lamp covered by paragraph 
(c)(2) of this section will not be legible on the front panel of a 
single-card, blister package due to the small size of the panel, the 
manufacturer or private labeler may print the statement ``Lighting Facts 
see back'' on the principal display panel consistent with the sample 
label in Appendix L as long as the Lighting Facts label required by 
paragraph (b)(3) of this section appears on the rear panel.
    (v) No marks or information other than that specified in this part 
shall appear on the Lighting Facts label.
    (3) Specialty Lighting Facts label format. Information specified in 
paragraph (c)(2) of this section shall be presented on covered lamp 
packages in the format, terms, explanatory text, specifications, and 
minimum sizes as shown in the Prototype Labels of appendix L and 
consistent in format and orientation with Sample Labels in Appendix L of 
this part. The text and lines shall be all black or one color type, 
printed on a white or other neutral contrasting background whenever 
practical.

[[Page 300]]

    (i) The Lighting Facts information shall be set off in a box by use 
of hairlines and shall be all black or one color type, printed on a 
white or other neutral contrasting background whenever practical.
    (ii) All information within the Lighting Facts label shall utilize:
    (A) Arial or an equivalent type style;
    (B) Upper and lower case letters;
    (C) Leading as indicated in the Prototype Labels in Appendix L of 
this part;
    (D) Letters that never touch;
    (E) The box and hairlines separating information as illustrated in 
the Prototype Labels in appendix L of this part; and
    (F) The minimum font sizes and line thicknesses as illustrated in 
Prototype Labels in Appendix L of this part.
    (iii) For small package labels covered by (c)(2)(iv) of this 
section, the words ``Lighting Facts see back'' shall appear on the 
primary display panel in a size and format specified in appendix L of 
this part.
    (4) Bilingual labels. The information required by paragraph (c) of 
this section may be presented in a second language either by using 
separate labels for each language or in a bilingual label with the 
English text in the format required by this section immediately followed 
by the text in the second language. All required information must be 
included in both languages. Numeric characters that are identical in 
both languages need not be repeated.
    (d) For lamps that do not meet the definition of general service 
lamp or specialty consumer lamp, manufacturers and private labelers have 
the discretion to label with the Lighting Facts label as long as they 
comply with all requirements applicable to specialty consumer lamps in 
this part.
    (e)(1) Any covered incandescent lamp that is subject to and does not 
comply with the January 1, 2012 or January 1, 2013 efficiency standards 
specified in 42 U.S.C. 6295 or the DOE standards at 10 CFR 430.32(n)(5) 
effective July 14, 2012 shall be labeled clearly and conspicuously on 
the principal display panel of the product package with the following 
information in lieu of the labeling requirements specified in paragraph 
(b):
    (2) The light output, energy usage and life ratings of any product 
covered by paragraph (c)(1) of this section shall appear in that order 
and with equal clarity and conspicuousness on the product's principal 
display panel. The light output, energy usage and life ratings shall be 
disclosed in terms of ``lumens,'' ``watts,'' and ``hours'' respectively, 
with the lumens, watts, and hours rating numbers each appearing in the 
same type style and size and with the words ``lumens,'' ``watts,'' and 
``hours'' each appearing in the same type style and size. The words 
``light output,'' ``energy used,'' and ``life'' shall precede and have 
the same conspicuousness as both the rating numbers and the words 
``lumens,'' ``watts,'' and ``hours,'' except that the letters of the 
words ``lumens,'' ``watts,'' and ``hours'' shall be approximately 50% of 
the sizes of those used for the words ``light output,'' ``energy used,'' 
and ``life,'' respectively.
    (f)(1) The required disclosures of any covered product that is a 
general service lamp or specialty consumer lamp shall be measured at 120 
volts, regardless of the lamp's design voltage. If a lamp's design 
voltage is 125 volts or 130 volts, the disclosures of the wattage, light 
output, energy cost, and life ratings shall in each instance be:
    (i) At 120 volts and followed by the phrase ``at 120 volts.'' In 
such case, the labels for such lamps also may disclose the lamp's 
wattage, light output, energy cost, and life at the design voltage 
(e.g., ``Light Output 1710 Lumens at 125 volts''); or
    (ii) At the design voltage and followed by the phrase ``at (125 
volts/130 volts)'' if the ratings at 120 volts are disclosed clearly and 
conspicuously on another panel of the package, and if all panels of the 
package that contain a claimed light output, energy cost, wattage or 
lifeclearly and conspicuously identify the lamp as ``(125 volt/130 
volt),'' and if the principal display panel clearly and conspicuously 
discloses the following statement:

This product is designed for (125/130) volts. When used on the normal 
line voltage of 120 volts, the light output and energy efficiency are 
noticeably reduced. See (side/back) panel for 120 volt ratings.

    (2) For any covered product that is an incandescent reflector lamp, 
the required disclosures of light output shall

[[Page 301]]

be given for the lamp's total forward lumens.
    (3) For any covered product that is a compact fluorescent lamp, the 
required light output disclosure shall be measured at a base-up 
position; but, if the manufacturer or private labeler has reason to 
believe that the light output at a base-down position would be more than 
5% different, the label also shall disclose the light output at the 
base-down position or, if no test data for the base-down position exist, 
the fact that at a base-down position the light output might be more 
than 5% less.
    (4) For any covered product that is a general service lamp or 
specialty consumer lamp and operates at discrete, multiple light levels 
(e.g., 800, 1600, and 2500 lumens), the light output, energy cost, and 
wattage disclosures required by this section must be provided at each of 
the lamp's levels of light output and the lamp's life provided on the 
basis of the shortest lived operating mode. The multiple numbers shall 
be separated by a ``/'' (e.g., 800/1600/2500 lumens) if they appear on 
the same line on the label.
    (5) A manufacturer or private labeler who distributes general 
service fluorescent lamps, general service lamps, or specialty consumer 
lamp without labels attached to the lamps or without labels on 
individual retail-sale packaging for one or more lamps may meet the 
package disclosure requirements of this section by making the required 
disclosures, in the manner and form required by those paragraphs, on the 
bulk shipping cartons that are to be used to display the lamps for 
retail sale.
    (6) Any manufacturer or private labeler who makes any 
representation, other than those required by this section, on a package 
of any covered product that is a general service fluorescent lamp, 
general service lamp, or specialty consumer lamp regarding the cost of 
operation or life of such lamp shall clearly and conspicuously disclose 
in close proximity to such representation the assumptions upon which it 
is based, including, e.g., purchase price, unit cost of electricity, 
hours of use, patterns of use. If those assumptions differ from those 
required for the cost and life information on the Lighting Facts label 
(11 cents per kWh and 3 hours per day), the manufacturer or private 
labeler must also disclose, with equal clarity and conspicuousness and 
in close proximity to, the same representation based on the assumptions 
for cost and life required on the Lighting Facts label.
    (g)(1) Any covered product that is a general service fluorescent 
lamp or an incandescent reflector lamp shall be labeled clearly and 
conspicuously with a capital letter ``E'' printed within a circle and 
followed by an asterisk. The label shall also clearly and conspicuously 
disclose, either in close proximity to that asterisk or elsewhere on the 
label, the following statement:

*[The encircled ``E''] means this bulb meets Federal minimum efficiency 
standards.

    (i) If the statement is not disclosed on the principal display 
panel, the asterisk shall be followed by the following statement:

See [Back,Top, Side] panel for details.

    (ii) For purposes of this paragraph, the encircled capital letter 
``E'' shall be clearly and conspicuously disclosed in color-contrasting 
ink on the label of any covered product that is a general service 
fluorescent lamp and will be deemed ``conspicuous,'' in terms of size, 
if it appears in typeface at least as large as either the manufacturer's 
name or logo or another logo disclosed on the label, such as the ``UL'' 
or ``ETL'' logos, whichever is larger.
    (2) Instead of labeling any covered product that is a general 
service fluorescent lamp with the encircled ``E'' and with the statement 
described in paragraph (e)(1) of this section, a manufacturer or private 
labeler who would not otherwise put a label on such a lamp may meet the 
disclosure requirements of that paragraph by permanently marking the 
lamp clearly and conspicuously with the encircled ``E.''
    (3) Any cartons in which any covered products that are general 
service fluorescent lamps and general service lamps are shipped within 
the United States or imported into the United States shall disclose 
clearly and conspicuously the following statement:

These lamps comply with Federal energy efficiency labeling requirements.


[[Page 302]]


    (h) Metal halide lamp fixtures and metal halide ballasts--(1) 
Contents. Metal halide ballasts contained in a metal halide lamp fixture 
covered by this Part shall be marked conspicuously, in color-contrasting 
ink, with a capital letter ``E'' printed within a circle. Packaging for 
metal halide lamp fixtures covered by this part shall also be marked 
conspicuously with a capital letter ``E'' printed within a circle. For 
purposes of this section, the encircled capital letter ``E'' will be 
deemed ``conspicuous,'' in terms of size, if it is as large as either 
the manufacturer's name or another logo, such as the ``UL,'' ``CBM'' or 
``ETL'' logos, whichever is larger, that appears on the metal halide 
ballast, or the packaging for the metal halide lamp fixture, whichever 
is applicable for purposes of labeling.
    (2) Product labeling. The encircled capital letter ``E'' on metal 
halide ballasts must appear conspicuously, in color-contrasting ink 
(i.e., in a color that contrasts with the background on which the 
encircled capital letter ``E'' is placed) on the surface that is 
normally labeled. It may be printed on the label that normally appears 
on the metal halide ballast, printed on a separate label, or stamped 
indelibly on the surface of the metal halide ballast.
    (3) Package labeling. For purposes of labeling under this section, 
packaging for metal halide lamp fixtures consists of the plastic 
sheeting, or ``shrink-wrap,'' covering pallet loads of metal halide lamp 
fixtures as well as any containers in which such metal halide lamp 
fixtures are marketed individually or in small numbers. The encircled 
capital letter ``E'' on packages containing metal halide lamp fixtures 
must appear conspicuously, in color-contrasting ink, on the surface of 
the package on which printing or a label normally appears. If the 
package contains printing on more than one surface, the label must 
appear on the surface on which the product inside the package is 
described. The encircled capital letter ``E'' may be printed on the 
surface of the package, printed on a label containing other information, 
printed on a separate label, or indelibly stamped on the surface of the 
package. In the case of pallet loads containing metal halide lamp 
fixtures, the encircled capital letter ``E'' must appear conspicuously, 
in color-contrasting ink, on the plastic sheeting, unless clear plastic 
sheeting is used and the encircled capital letter ``E'' is legible 
underneath this packaging.

[72 FR 49971, Aug. 29, 2007, as amended at 73 FR 63068, Oct. 23, 2008; 
75 FR 41714, July 19, 2010; 76 FR 20236, Apr. 12, 2011; 78 FR 2209, Jan. 
10, 2013; 82 FR 67299, Nov. 2, 2017; 83 FR 14583, Apr. 5, 2018. 
Redesignated at 84 FR 58029, Oct. 30, 2019, as amended at 84 FR 58037, 
Oct. 30, 2019]



Sec.305.24  Labeling and marking for plumbing products.

    (a) Showerheads and faucets. Showerheads and faucets shall be marked 
and labeled as follows:
    (1) Each showerhead and flow restricting or controlling spout end 
device shall bear a permanent legible marking indicating the flow rate, 
expressed in gallons per minute (gpm) or gallons per cycle (gpc), and 
the flow rate value shall be the actual flow rate or the maximum flow 
rate specified by the standards established in subsection (j) of section 
325 of the Act, 42 U.S.C. 6295(j). Except where impractical due to the 
size of the fitting, each flow rate disclosure shall also be given in 
liters per minute (L/min) or liters per cycle (L/cycle). For purposes of 
this section, the marking indicating the flow rate will be deemed 
``legible,'' in terms of placement, if it is located in close proximity 
to the manufacturer's identification marking.
    (2) Each showerhead and faucet shall bear a permanent legible 
marking to identify the manufacturer. This marking shall be the trade 
name, trademark, or other mark known to identify the manufacturer. Such 
marking shall be located where it can be seen after installation.
    (3) The package for each showerhead and faucet shall disclose the 
manufacturer's name and the model number.
    (4) The package or any label attached to the package for each 
showerhead or faucet shall contain at least the following: The flow rate 
expressed in gallons per minute (gpm) or gallons per cycle (gpc), and 
the flow rate value shall be the actual flow rate or the maximum flow 
rate specified by the

[[Page 303]]

standards established in subsection (j) of section 325 of the Act, 42 
U.S.C. 6295(j). Each flow rate disclosure shall also be given in liters 
per minute (L/min) or liters per cycle (L/cycle).
    (b) Water closets and urinals. Water closets and urinals shall be 
marked and labeled as follows:
    (1) Each such fixture (and flushometer valve associated with such 
fixture) shall bear a permanent legible marking indicating the flow 
rate, expressed in gallons per flush (gpf), and the water use value 
shall be the actual water use or the maximum water use specified by the 
standards established in subsection (k) of section 325 of the Act, 42 
U.S.C. 6295(k). Except where impractical due to the size of the fixture, 
each flow rate disclosure shall also be given in liters per flush (Lpf). 
For purposes of this section, the marking indicating the flow rate will 
be deemed ``legible,'' in terms of placement, if it is located in close 
proximity to the manufacturer's identification marking.
    (2) Each water closet (and each component of the water closet if the 
fixture is comprised of two or more components) and urinal shall be 
marked with the manufacturer's name or trademark or, in the case of 
private labeling, the name or registered trademark of the customer for 
whom the unit was manufactured. This mark shall be legible, readily 
identified, and applied so as to be permanent. The mark shall be located 
so as to be visible after the fixture is installed, except for fixtures 
built into or for a counter or cabinet.
    (3) The package, and any labeling attached to the package, for each 
water closet and urinal shall disclose the flow rate, expressed in 
gallons per flush (gpf), and the water use value shall be the actual 
water use or the maximum water use specified by the standards 
established in subsection (k) of section 325 of the Act, 42 U.S.C. 
6295(k). Each flow rate disclosure shall also be given in liters per 
flush (Lpf).
    (c) Annual operating cost claims for covered plumbing products. 
Until such time as the Commission has prescribed a format and manner of 
display for labels conveying estimated annual operating costs of covered 
showerheads, faucets, water closets, and urinals or ranges of estimated 
annual operating costs for the types or classes of such plumbing 
products, the Act prohibits manufacturers from making such 
representations on the labels of such covered products. 42 U.S.C. 
6294(c)(8). If, before the Commission has prescribed such a format and 
manner of display for labels of such products, a manufacturer elects to 
provide for any such product a label conveying such a claim, it shall 
submit the proposed claim to the Commission so that a format and manner 
of display for a label may be prescribed.

[73 FR 49973, Aug. 29, 2007, as amended at 82 FR 29236, June 28, 2017; 
83 FR 7597, Feb. 22, 2018. Redesignated at 84 FR 58029, Oct. 30, 2019, 
as amended at 84 FR 58037, Oct. 30, 2019]



Sec.305.25  Television labeling.

    (a) Layout. All energy labels for televisions shall use one of three 
shapes: a vertical rectangle, a horizontal rectangle, and a triangle as 
detailed in Prototype Labels in appendix L. All label size, positioning, 
spacing, type sizes, positioning of headline, copy, and line widths must 
be consistent with the prototype and sample labels in appendix L. The 
minimum label size for the vertical rectangle label is 1.5 x 
5.5. The minimum size for the horizontal rectangle label is 
1.5 x 5.23. The minimum size for the triangle 
label is 4.5 x 4.5 (right angle sides).
    (b) Type style and setting. The Arial series typeface or equivalent 
shall be used exclusively on the label. Prototype Labels in appendix L 
contain specific directions for type style and setting and indicate the 
specific sizes, leading, faces, positioning, and spacing to be used. No 
hyphenations should be used in setting headline or copy text.
    (c) Colors. The basic colors of all labels and icons covered by this 
section shall be process yellow or equivalent and process black. The 
label shall be printed full bleed process yellow. All type and graphics 
shall be printed process black.
    (d) Label types. Except as provided in paragraph (i), the labels 
must be affixed to the product in the form of either an adhesive label, 
cling label, or alternative label as follows:
    (1) Adhesive label. All adhesive labels shall be applied so they can 
be easily

[[Page 304]]

removed without the use of tools or liquids, other than water, but shall 
be applied with an adhesive with an adhesion capacity sufficient to 
prevent their dislodgment during normal handling throughout the chain of 
distribution to the retailer and consumer. The paper stock for pressure-
sensitive or other adhesive labels shall have a basic weight of not less 
than 58 pounds per 500 sheets (25 x 38) or equivalent, exclusive of the 
release liner and adhesive. A minimum peel adhesion capacity for the 
adhesive of 12 ounces per square inch is suggested, but not required if 
the adhesive can otherwise meet the above standard.
    (2) Cling label. Labels may be affixed, using the screen's static 
charge, to the product in the form of a cling label. The cling label 
shall be affixed in a manner that prevents dislodgment during normal 
handling throughout the chain of distribution to the retailer and 
consumer.
    (3) Alternative label. In lieu of an adhesive or cling label, labels 
may be affixed using an alternative method to secure the label to the 
product as long as the method will prevent dislodgment during normal 
handling throughout the chain of distribution to the retailer and 
consumer. The label may not be affixed using a hang tag as described in 
Sec.305.13(e)(2). The label shall consist of paper stock having a 
basic weight of not less than 110 pounds per 500 sheets (25 \1/
2\ x 30 \1/2\) or other material of equivalent 
durability.
    (e) Placement--(1) In general. Except as provided in paragraph (i), 
all labels must be clear and conspicuous to consumers viewing the 
television screen from the front.
    (2) Adhesive label. The adhesive label shall be in the shape of a 
horizontal or vertical rectangle and shall be located on the bezel in 
the bottom right-hand corner of the television. The horizontal 
rectangular label shall be located on the far right of the bottom bezel 
and the vertical rectangular label shall be located on the bottom of the 
right-hand bezel. Another location on the bezel may be used if the 
television's configuration prevents such placement.
    (3) Cling label. The cling label shall be in the shape of a triangle 
and shall be located in the bottom right-hand corner of the screen.
    (4) Alternative label. The alternative label shall be in the shape 
of either a horizontal rectangle, vertical rectangle, or triangle. It 
shall be visible from the front of the television and located in the 
bottom right-hand corner of the television. Another prominent location 
visible from the front of the television may be used if the television's 
configuration or the mechanism to secure the alternative label prevents 
such placement.
    (f) Label content. The television label shall contain the following 
information:
    (1) Headlines, texts, and statements as illustrated in the prototype 
and sample labels in appendix L to this part.
    (2) Name of manufacturer or private labeler. This requirement shall, 
in the case of a corporation, be satisfied only by the actual corporate 
name, which may be preceded or followed by the name of a particular 
division of the corporation. In the case of an individual, partnership, 
or association, the name under which the business is conducted shall be 
used.
    (3) Model number(s) as designated by the manufacturer or private 
labeler.
    (4) Estimated annual energy costs determined in accordance with this 
part and based on a usage rate of 5 hours in on mode and 19 hours in 
standby (sleep) mode per day and an electricity cost rate of 12 cents 
per kWh.
    (5) The applicable ranges of comparability for estimated annual 
energy costs based on the labeled product's diagonal screen size, 
according to the following table:

------------------------------------------------------------------------
                                           Annual energy cost ranges for
                                                    televisions
         Screen size (diagonal)          -------------------------------
                                                Low            High
------------------------------------------------------------------------
16-20 (16.0 to 20.49)...................................
21-23 (20.5 to 23.49)...................................
24-29 (23.5 to 29.49)...................................
30-34 (29.5 to 34.49)...................................
35-39 (34.5 to 39.49)...................................
40-44 (39.5 to 44.49)...................................
45-49 (44.5 to 49.49)...................................
50-54 (49.5 to 54.49)...................................
55-59 (54.5 to 59.49)...................................
60-64 (59.5 to 64.49)...................................
65-69 (64.5 to 69.49)...................................
69.5 or greater..............              15              97
------------------------------------------------------------------------


[[Page 305]]

    (6) Placement of the labeled product on the scale proportionate to 
the lowest and highest estimated annual energy costs as illustrated in 
Prototype and Sample Labels in appendix L. When the estimated annual 
energy cost of a given television model falls outside the limits of the 
current range for that product, the manufacturer shall place the product 
at the end of the range closest to the model's energy cost.
    (7) The model's estimated annual energy consumption as determined in 
accordance with this part and based on a usage rate of 5 hours in on 
mode and 19 hours in sleep (standby) mode per day.
    (8) No marks or information other than that specified in this part 
shall appear on or directly adjoining this label except that:
    (i) A manufacturer may include a part or publication number 
identification on the label, as long as it appears in the lower right-
hand corner of the label and is set in 6-point type or smaller.
    (ii) The manufacturer may include the ENERGY STAR logo on the label 
as illustrated in Sample Labels in appendix L. The logo must be 
0.375 wide. Only manufacturers that have signed a Memorandum 
of Understanding with the Department of Energy or the Environmental 
Protection Agency covering the televisions to be labeled may add the 
ENERGY STAR logo to those labels.
    (g) Distribution of labels. Consistent with Sec.305.9 of this 
part, for each covered television that a manufacturer distributes in 
commerce which is required by this part to bear an EnergyGuide label, 
the manufacturer must make a copy of the label available on a publicly 
accessible Web site in a manner that allows catalog sellers to hyperlink 
to the label or download it for use in Web sites or paper catalogs. The 
label for each specific model must remain on the Web site for six months 
after production of the model ceases.

[76 FR 1050, Jan. 6, 2011, as amended at 78 FR 2209, Jan. 10, 2013; 78 
FR 43982, July 23, 2013; 79 FR 19467, Apr. 9, 2014; 80 FR 16260, Mar. 
27, 2015. Redesignated at 84 FR 58029, Oct. 30, 2019, as amended at 84 
FR 58037, Oct. 30, 2019]



Sec.305.26  Promotional material displayed or distributed at point
of sale.

    (a)(1) Any manufacturer, distributor, retailer or private labeler 
who prepares printed material for display or distribution at point of 
sale concerning a covered product (except fluorescent lamp ballasts, 
metal halide lamp fixtures, general service fluorescent lamps, general 
service lamps, showerheads, faucets, water closets or urinals) shall 
clearly and conspicuously include in such printed material the following 
required disclosure:

    Before purchasing this appliance, read important information about 
its estimated annual energy consumption, yearly operating cost, or 
energy efficiency rating that is available from your retailer.

    (2) Any manufacturer, distributor, retailer or private labeler who 
prepares printed material for display or distribution at point of sale 
concerning a covered product that is a fluorescent lamp ballast or metal 
halide lamp fixture to which standards are applicable under section 325 
of the Act, shall disclose conspicuously in such printed material, in 
each description of such product, an encircled capital letter ``E''.
    (3) Any manufacturer, distributer, retailer, or private labeler who 
prepares printed material for display or distribution at point of sale 
concerning a covered product that is a general service fluorescent lamp, 
general service lamps, and who makes any representation in such 
promotional material regarding the cost of operation of such lamp shall 
clearly and conspicuously disclose in close proximity to such 
representation the assumptions upon which it is based, including, e.g., 
purchase price, unit cost of electricity, hours of use, and patterns of 
use.
    (4) Any manufacturer, distributor, retailer, or private labeler who 
prepares printed material for display or distribution at point-of-sale 
concerning a covered product that is a showerhead, faucet, water closet, 
or urinal shall clearly and conspicuously include in such printed 
material the product's water use, expressed in gallons and liters per 
minute (gpm and L/min) or per cycle (gpc and L/cycle) or gallons and

[[Page 306]]

liters per flush (gpf and Lpf) as specified in this part.
    (b) This section shall not apply to:
    (1) Written warranties.
    (2) Use and care manuals, installation instructions, or other 
printed material containing primarily post-purchase information for the 
purchaser.
    (3) Printed material containing only the identification of a covered 
product, pricing information and/or non-energy related representations 
concerning that product.
    (4) Any printed material distributed prior to the effective date 
listed in Sec.305.7(e).

[59 FR 34036, July 1, 1994, as amended at 59 FR 67530, Dec. 29, 1994; 60 
FR 14211, Mar. 16, 1995. Redesignated at 72 FR 49971, Aug. 29, 2007, as 
amended at 72 FR 49974, Aug. 29, 2007; 73 FR 39226, July 9, 2008; 75 FR 
41716, July 19, 2010. Redesignated at 84 FR 58029, Oct. 30, 2019, as 
amended at 84 FR 58037, Oct. 30, 2019]



Sec.305.27  Paper catalogs and Web sites.

    (a) Covered products offered for sale on the Internet. Any 
manufacturer, distributor, retailer, or private labeler who advertises a 
covered product on an Internet Web site in a manner that qualifies as a 
catalog under this Part shall disclose energy information as follows:
    (1) Content.--(i) Products required to bear EnergyGuide or Lighting 
Facts labels. All Web sites advertising covered refrigerators, 
refrigerator-freezers, freezers, room air conditioners, clothes washers, 
dishwashers, ceiling fans, pool heaters, central air conditioners, heat 
pumps, furnaces, general service lamps, specialty consumer lamps (for 
products offered for sale after May 2, 2018), and televisions must 
display, for each model, a recognizable and legible image of the label 
required for that product by this part. The Web site may hyperlink to 
the image of the label using the sample EnergyGuide and Lighting Facts 
icons depicted in appendix L of this part. The Web site must hyperlink 
the image in a way that does not require consumers to save the 
hyperlinked image in order to view it.
    (ii) Products not required to bear EnergyGuide or Lighting Facts 
labels. All Web sites advertising covered showerheads, faucets, water 
closets, urinals, general service fluorescent lamps, fluorescent lamp 
ballasts, and metal halide lamp fixtures must include the following 
disclosures for each covered product. For plumbing products, the Web 
site may hyperlink to the disclosures using a prominent link labeled 
``Water Usage'' or a similar description which facilitates the 
disclosure of the covered product's rated water usage.
    (A) Showerheads, faucets, water closets, and urinals. The product's 
water use, expressed in gallons and liters per minute (gpm and L/min) or 
per cycle (gpc and L/cycle) or gallons and liters per flush (gpf and 
Lpf) as specified in this part.
    (B) General service fluorescent lamps, fluorescent lamp ballasts, 
and metal halide lamp fixtures. A capital letter ``E'' printed within a 
circle.
    (2) Format. The required Web site disclosures, whether label image, 
icon, or text, must appear clearly and conspicuously and in close 
proximity to the covered product's price on each Web page that contains 
a detailed description of the covered product and its price. The label 
and hyperlink icon must conform to the prototypes in appendix L, but may 
be altered in size to accommodate the Web page's design, as long as they 
remain clear and conspicuous to consumers viewing the page.
    (b) Covered products offered for sale in paper catalogs. Any 
manufacturer, distributor, retailer, or private labeler that advertises 
a covered product in a paper publication that qualifies as a catalog 
under this Part shall disclose energy information as follows:
    (1) Content. (i) Products required to bear EnergyGuide or Lighting 
Facts labels. All paper catalogs advertising covered products required 
by this Part to bear EnergyGuide or Lighting Facts labels illustrated in 
appendix L (refrigerators, refrigerator-freezers, freezers, room air 
conditioners, clothes washers, dishwashers, ceiling fans, pool heaters, 
central air conditioners, heat pumps, furnaces, general service 
fluorescent lamps, general service lamps, and televisions) must either 
display an image of the full label prepared in accordance with this 
Part, or make a text disclosure as follows:

[[Page 307]]

    (A) Refrigerator, refrigerator-freezer, and freezer. The capacity of 
the model determined in accordance with this part, the estimated annual 
operating cost determined in accordance with this part, and a disclosure 
stating ``Your energy cost depends on your utility rates and use. The 
estimated cost is based on __ cents per kWh. For more information, visit 
www.ftc.gov/energy.''
    (B) Room air conditioners and water heaters. The capacity of the 
model determined in accordance with this part, the estimated annual 
operating cost determined in accordance with this part, and a disclosure 
stating ``Your operating costs will depend on your utility rates and 
use. The estimated operating cost is based on a [electricity, natural 
gas, propane, or oil] cost of [$ __ per kWh, therm, or gallon]. For more 
information, visit www.ftc.gov/energy.''
    (C) Clothes washers and dishwashers. The capacity of the model for 
clothes washers determined in accordance with this part and the 
estimated annual operating cost for clothes washers and dishwashers 
determined in accordance with this part, and a disclosure stating ``Your 
energy cost depends on your utility rates and use. The estimated cost is 
based on [4 washloads a week for dishwashers, or 8 washloads a week for 
clothes washers] and _ cents per kWh for electricity and $_ per therm 
for natural gas. For more information, visit www.ftc.gov/energy.''
    (D) General service fluorescent lamps or general service lamps. All 
the information concerning that lamp required by Sec.305.23 of this 
part to be disclosed on the lamp's package, and, for general service 
lamps, a disclosure stating ``Your energy cost depends on your utility 
rates and use. The estimated cost and life is based on 11 cents per kWh 
and 3 hours of use per day. For more information, visit www.ftc.gov/
energy.'' For the ``Light Appearance'' disclosure required by Sec.
305.23(b)(3)(iv), the catalog need only disclose the lamp's correlated 
color temperature in Kelvin (e.g., 2700 K). General service fluorescent 
lamps or incandescent reflector lamps must also include a capital letter 
``E'' printed within a circle and the statement described in Sec.
305.23(g)(1).
    (E) Ceiling fans. All the information required by Sec.305.21.
    (F) Televisions. The estimated annual operating cost determined in 
accordance with this part and a disclosure stating ``Your energy cost 
depends on your utility rates and use. The estimated cost is based on 12 
cents per kWh and 5 hours of use per day. For more information, visit 
www.ftc.gov/energy.''
    (G) Central air conditioners, heat pumps, and furnaces (including 
boilers), and pool heaters. The capacity of the model determined in 
accordance with this part and the energy efficiency or thermal 
efficiency ratings determined in accordance with this part on each page 
that lists the covered product.
    (ii) Products not required to bear EnergyGuide or Lighting Facts 
labels. All paper catalogs advertising covered products not required by 
this part to bear labels with specific design characteristics 
illustrated in appendix L (showerheads, faucets, water closets, urinals, 
fluorescent lamp ballasts, and metal halide lamp fixtures) must make a 
text disclosure for each covered product identical to those required for 
Internet disclosures under Sec.305.27(a)(1)(ii).
    (2) Format. The required disclosures, whether text, label image, or 
icon, must appear clearly and conspicuously on each page that contains a 
detailed description of the covered product and its price. If a catalog 
displays an image of the full label, the size of the label may be 
altered to accommodate the catalog's design, as long as the label 
remains clear and conspicuous to consumers. For text disclosures made 
pursuant to Sec.305.27(b)(1)(i) and (ii), the required disclosure may 
be displayed once per page per type of product if the catalog offers 
multiple covered products of the same type on a page, as long as the 
disclosure remains clear and conspicuous.

[78 FR 2209, Jan. 10, 2013, as amended at 80 FR 67300, Nov. 2, 2015; 82 
FR 29236, June 28, 2017. Redesignated at 84 FR 58029, Oct. 30, 2019, as 
amended at 84 FR 58037, Oct. 30, 2019]

[[Page 308]]

                         Additional Requirements



Sec.305.28  Test data records.

    (a) Test data shall be kept on file by the manufacturer of a covered 
product for a period of two years after production of that model has 
been terminated.
    (b) Upon notification by the Commission or its designated 
representative, a manufacturer or private labeler shall provide, within 
30 days of the date of such request, the underlying test data from which 
the water use or energy consumption rate, the energy efficiency rating, 
the estimated annual cost of using each basic model, or the light 
output, energy usage, correlated color temperature, and life ratings 
and, for fluorescent lamps, the color rendering index, for each basic 
model or lamp type were derived.

[52 FR 46894, Dec. 10, 1987, as amended at 59 FR 67530, Dec. 29, 1994. 
Redesignated at 72 FR 49971, Aug. 29, 2007, as amended at 75 FR 41717, 
July 19, 2010. Redesignated at 84 FR 58029, Oct. 30, 2019]



Sec.305.29  Required testing by designated laboratory.

    Upon notification by the Commission or its designated 
representative, a manufacturer of a covered product shall supply, at the 
manufacturer's expense, no more than two of each model of each product 
to a laboratory, which will be identified by the Commission or its 
designated representative in the notice, for the purpose of ascertaining 
whether the estimated annual energy consumption, the estimated annual 
operating cost, or the energy efficiency rating, or the light output, 
energy usage and life ratings or, for general service fluorescent lamps, 
the color rendering index, disclosed on the label or fact sheet or in an 
industry directory, or, as required in a catalog, or the representation 
made by the label that the product is in compliance with applicable 
standards in section 325 of the Act, 42 U.S.C. 6295, is accurate. Such a 
procedure will only be followed after the Commission or its staff has 
examined the underlying test data provided by the manufacturer as 
required by Sec.305.28(b) and after the manufacturer has been afforded 
the opportunity to reverify test results from which the estimated annual 
energy consumption, the estimated annual operating cost, or the energy 
efficiency rating for each basic model was derived, or the light output, 
energy usage and life ratings or, for general service fluorescent lamps, 
the color rendering index, for each basic model or lamp type was 
derived. A representative designated by the Commission shall be 
permitted to observe any reverification procedures required by this 
part, and to inspect the results of such reverification. The Commission 
will pay the charges for testing by designated laboratories.

[59 FR 67530, Dec. 29, 1994. Redesignated at 72 FR 49971, Aug. 29, 2007, 
as amended at 72 FR 49974, Aug. 29, 2007. Redesignated at 84 FR 58029, 
Oct. 30, 2019, as amended at 84 FR 58037, Oct. 30, 2019]

                           Effect of This Part



Sec.305.30  Effect on other law.

    This regulation supersedes any State regulation to the extent 
required by section 327 of the Act. Pursuant to the Act, all State 
regulations that require the disclosure for any covered product of 
information with respect to energy consumption, other than the 
information required to be disclosed in accordance with this part, are 
superseded.

[52 FR 46894, Dec. 10, 1987. Redesignated at 72 FR 49971, Aug. 29, 2007, 
and further redesignated at 84 FR 58029, Oct. 30, 2019]



Sec.305.31  Stayed or invalid parts.

    If any section or portion of a section of this part is stayed or 
held invalid, the remainder of the part will not be affected.

[52 FR 46894, Dec. 10, 1987. Redesignated at 59 FR 34036, July 1, 1994, 
and further redesignated at 72 FR 49974, Aug. 29, 2007, and further 
redesignated at 84 FR 58029, Oct. 30, 2019]



Sec.305.32  [Reserved]

[[Page 309]]



   Sec. Appendix A1 to Part 305--Refrigerators With Automatic Defrost

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 10.5..........................             $18             $39
10.5 to 12.4............................              30              34
12.5 to 14.4............................              34              36
14.5 to 16.4............................             (*)             (*)
16.5 to 18.4............................              34              40
18.5 to 20.4............................              40              41
20.5 to 22.4............................              37              48
22.5 to 24.4............................              45              50
24.5 to 26.4............................             (*)             (*)
26.5 to 28.4............................             (*)             (*)
28.5 and over...........................             (*)             (*)
------------------------------------------------------------------------
(*) No data.


[81 FR 63650, Sept. 15, 2016]



 Sec. Appendix A2 to Part 305--Refrigerators and Refrigerator-Freezers 
                           With Manual Defrost

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 10.5..........................             $24             $41
10.5 to 12.4............................             (*)             (*)
12.5 to 14.4............................              30              30
14.5 to 16.4............................             (*)             (*)
16.5 to 18.4............................             (*)             (*)
18.5 to 20.4............................             (*)             (*)
20.5 to 22.4............................             (*)             (*)
22.5 to 24.4............................             (*)             (*)
24.5 to 26.4............................             (*)             (*)
26.5 to 28.4............................             (*)             (*)
28.5 and over...........................             (*)             (*)
------------------------------------------------------------------------
(*) No data.


[81 FR 63650, Sept. 15, 2016]



    Sec. Appendix A3 to Part 305--Refrigerator-Freezers With Partial 
                            Automatic Defrost

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 10.5..........................             $25             $44
10.5 to 12.4............................             (*)             (*)
12.5 to 14.4............................             (*)             (*)
14.5 to 16.4............................             (*)             (*)
16.5 to 18.4............................             (*)             (*)
18.5 to 20.4............................             (*)             (*)
20.5 to 22.4............................             (*)             (*)
22.5 to 24.4............................             (*)             (*)
24.5 to 26.4............................             (*)             (*)
26.5 to 28.4............................             (*)             (*)
28.5 and over...........................             (*)             (*)
------------------------------------------------------------------------
(*) No data.


[[Page 310]]


[81 FR 63650, Sept. 15, 2016]



   Sec. Appendix A4 to Part 305--Refrigerator-Freezers With Automatic 
        Defrost With Top-Mounted Freezer No Through-the-Door Ice

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 10.5..........................             $36             $53
10.5 to 12.4............................              37              51
12.5 to 14.4............................              40              55
14.5 to 16.4............................              40              57
16.5 to 18.4............................              43              59
18.5 to 20.4............................              45              62
20.5 to 22.4............................              46              63
22.5 to 24.4............................              56              66
24.5 to 26.4............................             (*)             (*)
26.5 to 28.4............................             (*)             (*)
28.5 and over...........................             (*)             (*)
------------------------------------------------------------------------
(*) No data.


[81 FR 63650, Sept. 15, 2016]



   Sec. Appendix A5 to Part 305--Refrigerator-Freezers With Automated 
        Defrost With Side-Mounted Freezer No Through-the-Door Ice

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 10.5..........................             $25             $70
10.5 to 12.4............................             (*)             (*)
12.5 to 14.4............................             (*)             (*)
14.5 to 16.4............................              37              37
16.5 to 18.4............................             (*)             (*)
18.5 to 20.4............................             (*)             (*)
20.5 to 22.4............................              63              86
22.5 to 24.4............................              67              90
24.5 to 26.4............................              69              93
26.5 to 28.4............................              85              96
28.5 and over...........................              86             101
------------------------------------------------------------------------
(*) No data.


[81 FR 63650, Sept. 15, 2016]



   Sec. Appendix A6 to Part 305--Refrigerator-Freezers With Automated 
       Defrost With Bottom-Mounted Freezer No Through-the-Door Ice

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 10.5..........................             $19             $62
10.5 to 12.4............................              38              63
12.5 to 14.4............................              49              65
14.5 to 16.4............................              52              72
16.5 to 18.4............................              54              73
18.5 to 20.4............................              54              75
20.5 to 22.4............................              58              79
22.5 to 24.4............................              71              83
24.5 to 26.4............................              64              81

[[Page 311]]

 
26.5 to 28.4............................              77              84
28.5 and over...........................              78              86
------------------------------------------------------------------------


[81 FR 63650, Sept. 15, 2016]



   Sec. Appendix A7 to Part 305--Refrigerator-Freezers With Automatic 
  Defrost With Bottom-Mounted Freezer With Through-the-Door Ice Service

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 10.5..........................             (*)             (*)
10.5 to 12.4............................             (*)             (*)
12.5 to 14.4............................             (*)             (*)
14.5 to 16.4............................             (*)             (*)
16.5 to 18.4............................             (*)             (*)
18.5 to 20.4............................             $77             $83
20.5 to 22.4............................              79              87
22.5 to 24.4............................              80              91
24.5 to 26.4............................              76              93
26.5 to 28.4............................              74              95
28.5 and over...........................              78             103
------------------------------------------------------------------------
(*) No data.


[81 FR 63650, Sept. 15, 2016]



   Sec. Appendix A8 to Part 305--Refrigerator-Freezers With Automatic 
   Defrost With Side-Mounted Freezer With Through-the-Door Ice Service

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 10.5..........................             (*)             (*)
10.5 to 12.4............................             (*)             (*)
12.5 to 14.4............................             (*)             (*)
14.5 to 16.4............................             (*)             (*)
16.5 to 18.4............................             (*)             (*)
18.5 to 20.4............................             $78             $78
20.5 to 22.4............................              72              94
22.5 to 24.4............................              81              98
24.5 to 26.4............................              73              99
26.5 to 28.4............................              89             104
28.5 and over...........................              82             107
------------------------------------------------------------------------
(*) No data.


[81 FR 63650, Sept. 15, 2016]

[[Page 312]]



    Sec. Appendix A9 to Part 305--All Refrigerators and Refrigerator-
                                Freezers

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 10.5..........................             $18             $70
10.5 to 12.4............................              30              63
12.5 to 14.4............................              30              65
14.5 to 16.4............................              37              72
16.5 to 18.4............................              34              73
18.5 to 20.4............................              40              83
20.5 to 22.4............................              37              94
22.5 to 24.4............................              45              98
24.5 to 26.4............................              64              99
26.5 to 28.4............................              74             104
28.5 and over...........................              78             107
------------------------------------------------------------------------


[81 FR 63653, Sept. 15, 2016]



   Sec. Appendix B1 to Part 305--Upright Freezers With Manual Defrost

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 5.5...........................             $26             $36
5.5 to 7.4..............................              37              38
7.5 to 9.4..............................              30              30
9.5 to 11.4.............................              31              31
11.5 to 13.4............................              38              38
13.5 to 15.4............................              40              40
15.5 to 17.4............................              43              43
17.5 to 19.4............................             (*)             (*)
19.5 to 21.4............................              48              48
21.5 to 23.4............................             (*)             (*)
23.5 to 25.4............................             (*)             (*)
25.5 to 27.4............................             (*)             (*)
27.5 to 29.4............................             (*)             (*)
29.5 and over...........................             (*)             (*)
------------------------------------------------------------------------
(*) No data.


[81 FR 63653, Sept. 15, 2016]



  Sec. Appendix B2 To Part 305--Upright Freezers With Automatic Defrost

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 5.5...........................             $32             $32
5.5 to 7.4..............................             (*)             (*)
7.5 to 9.4..............................              53              59
9.5 to 11.4.............................              59              59
11.5 to 13.4............................              57              67
13.5 to 15.4............................              47              73
15.5 to 17.4............................              52              74
17.5 to 19.4............................              54              71
19.5 to 21.4............................              57              76
21.5 to 23.4............................              81              87
23.5 to 25.4............................             (*)             (*)
25.5 to 27.4............................             (*)             (*)
27.5 to 29.4............................             (*)             (*)

[[Page 313]]

 
29.5 and over...........................             (*)             (*)
------------------------------------------------------------------------
(*) No data.


[81 FR 63653, Sept. 15, 2016]



   Sec. Appendix B3 To Part 305--Chest Freezers And All Other Freezers

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
 Manufacturer's rated total refrigerated  operating costs (dollars/year)
          volume in cubic feet           -------------------------------
                                                Low            High
------------------------------------------------------------------------
Less than 5.5...........................             $16             $27
5.5 to 7.4..............................              24              30
7.5 to 9.4..............................              23              31
9.5 to 11.4.............................              25              30
11.5 to 13.4............................             (*)             (*)
13.5 to 15.4............................              35              36
15.5 to 17.4............................              33              37
17.5 to 19.4............................              40              40
19.5 to 21.4............................             (*)             (*)
 21.5 to 23.4...........................              46              46
23.5 to 25.4............................             (*)             (*)
25.5 to 27.4............................             (*)             (*)
27.5 to 29.4............................             (*)             (*)
29.5 and over...........................             (*)             (*)
------------------------------------------------------------------------
(*) No data.


[81 FR 63653, Sept. 15, 2016]



            Sec. Appendix C1 to Part 305--Compact Dishwashers

                            Range Information

    ``Compact'' includes countertop dishwasher models with a capacity of 
fewer than eight (8) place settings. Place settings shall be in 
accordance with appendix C to 10 CFR part 430, subpart B. Load patterns 
shall conform to the operating normal for the model being tested.

------------------------------------------------------------------------
                                             Range of estimated annual
                                            energy costs (dollars/year)
                Capacity                 -------------------------------
                                                Low            High
------------------------------------------------------------------------
Compact.................................             $17             $27
------------------------------------------------------------------------


[83 FR 7597, Feb. 22, 2018]



           Sec. Appendix C2 to Part 305--Standard Dishwashers

                            Range Information

    ``Standard'' includes dishwasher models with a capacity of eight (8) 
or more place settings. Place settings shall be in accordance with 
appendix C to 10 CFR part 430, subpart B. Load patterns shall conform to 
the operating normal for the model being tested.

[[Page 314]]



------------------------------------------------------------------------
                                             Range of estimated annual
                                            energy costs (dollars/year)
                Capacity                 -------------------------------
                                                Low            High
------------------------------------------------------------------------
Standard................................             $26             $40
------------------------------------------------------------------------


[83 FR 7597, Feb. 22, 2018]



            Sec. Appendix D1 To Part 305--Water Heaters--Gas

                                                Range Information
----------------------------------------------------------------------------------------------------------------
     Capacity (first hour rating in gallons)           Range of estimated annual energy costs (dollars/year)
----------------------------------------------------------------------------------------------------------------
                                                       Natural gas ($/year)              Propane ($/year)
                First hour rating                ---------------------------------------------------------------
                                                        Low            High             Low            High
----------------------------------------------------------------------------------------------------------------
``Very Small''--less than 18....................               *               *               *               *
``Low''--18 to 50.9.............................            $154            $155               *               *
``Medium''--51 to 74.9..........................             177             206             437             560
``High''--over 75...............................             225             297             506             732
----------------------------------------------------------------------------------------------------------------
* No data.


[81 FR 63654, Sept. 15, 2016]



          Sec. Appendix D2 to Part 305--Water Heaters Electric

                            Range Information
------------------------------------------------------------------------
 Capacity (first hour rating in gallons)     Range of estimated annual
-----------------------------------------   energy costs (dollars/year)
                                         -------------------------------
            First hour rating                   Low            High
------------------------------------------------------------------------
``Very Small''--less than 18............               *               *
``Low''--18 to 50.9.....................             $93            $295
``Medium''--51 to 74.9..................             120             423
High''--over 75.........................             191             252
------------------------------------------------------------------------
* No data.


[81 FR 63654, Sept. 15, 2016]



            Sec. Appendix D3 to Part 305--Water Heaters--Oil

                            Range Information
------------------------------------------------------------------------
 Capacity (first hour rating in gallons)     Range of estimated annual
-----------------------------------------   energy costs (dollars/year)
                                         -------------------------------
            First hour rating                   Low            High
------------------------------------------------------------------------
``Very Small''--less than 18............               *               *
``Low''--18 to 50.9.....................               *               *
``Medium''--51 to 74.9..................               *               *
High''--over 75.........................            $649            $730
------------------------------------------------------------------------
* No data.


[81 FR 63654, Sept. 15, 2016]

[[Page 315]]



     Sec. Appendix D4 to Part 305--Water Heaters--Instantaneous-Gas

                                                Range Information
----------------------------------------------------------------------------------------------------------------
                    Capacity                           Range of estimated annual energy costs (dollars/year)
----------------------------------------------------------------------------------------------------------------
                                                       Natural gas ($/year)              Propane ($/year)
Capacity (maximum flow rate); gallons per minute ---------------------------------------------------------------
                      (gpm)                             Low            High             Low            High
----------------------------------------------------------------------------------------------------------------
``Very Small''--less than 1.6...................               *               *               *               *
``Low''--1.7 to 2.7.............................               *               *               *               *
``Medium''--2.8 to 3.9..........................            $130            $151            $321            $372
``High''--over 4.0..............................             195             230             485             567
----------------------------------------------------------------------------------------------------------------
* No data.


[81 FR 63654, Sept. 15, 2016]



  Sec. Appendix D5 to Part 305--Water Heaters--Instantaneous--Electric

                            Range Information
------------------------------------------------------------------------
                                             Range of estimated annual
                                            energy costs (dollars/year)
                Capacity                 -------------------------------
                                                Low            High
------------------------------------------------------------------------
Capacity (maximum flow rate); gallons
 per minute (gpm):
    ``Very Small''--less than 1.6.......             $72             $74
    ``Low''--1.7 to 2.7.................               *               *
    ``Medium''--2.8 to 3.9..............               *               *
    ``High''--over 4.0..................               *               *
------------------------------------------------------------------------


[82 FR 29236, June 28, 2017]



           Sec. Appendix E to Part 305--Room Air Conditioners

                            Range Information

------------------------------------------------------------------------
                                             Range of estimated annual
Manufacturer's rated cooling capacity in    energy costs (dollars/year)
                Btu's/hr                 -------------------------------
                                                Low            High
------------------------------------------------------------------------
Without Reverse Cycle and with Louvered
 Sides:
    Less than 6,000 Btu.................             $40             $53
    6,000 to 7,999 Btu..................              48              72
    8,000 to 13,999 Btu.................              65             127
    14,000 to 19,999 Btu................             115             182
    20,000 and more Btu.................             189             386
Without Reverse Cycle and without
 Louvered Sides:
    Less than 6,000 Btu.................             (*)             (*)
    6,000 to 7,999 Btu..................              58              80
    8,000 to 13,999 Btu.................              69             147
    14,000 to 19,999 Btu................             117             158
    20,000 and more Btu.................             (*)             (*)
With Reverse Cycle and with Louvered                  68             238
 Sides..................................
With Reverse Cycle, without Louvered                 (*)             (*)
 Sides..................................
------------------------------------------------------------------------
* No sufficient data submitted.


[83 FR 7597, Feb. 22, 2018]

[[Page 316]]



         Sec. Appendix F1 to Part 305--Standard Clothes Washers

                            Range Information

    ``Standard'' includes all household clothes washers with a tub 
capacity of 1.6 cu. ft. or more.

------------------------------------------------------------------------
                                               Range of estimated annual
                                               operating costs (dollars/
                  Capacity                               year)
                                             ---------------------------
                                                   Low          High
------------------------------------------------------------------------
Standard....................................           $8           $51
------------------------------------------------------------------------


[81 FR 7202, Feb. 11, 2016]



          Sec. Appendix F2 to Part 305--Compact Clothes Washers

                            Range Information

    ``Compact'' includes all household clothes washers with a tub 
capacity of less than 1.6 cu. ft.

------------------------------------------------------------------------
                                               Range of estimated annual
                                               operating costs (dollars/
                  Capacity                               year)
                                             ---------------------------
                                                   Low          High
------------------------------------------------------------------------
Compact.....................................          $10           $24
------------------------------------------------------------------------


[81 FR 7202, Feb. 11, 2016]



               Sec. Appendix G1 to Part 305--Furnaces--Gas

------------------------------------------------------------------------
                                               Range of annual fuel
                                             utilization efficiencies
              Furnace type                            (AFUEs)
                                         -------------------------------
                                                Low            High
------------------------------------------------------------------------
Non-Weatherized Gas Furnaces--All                   80.0            98.7
 Capacities.............................
Weatherized Gas Furnaces--All Capacities            81.0            95.0
------------------------------------------------------------------------


[83 FR 7598, Feb. 22, 2018]



            Sec. Appendix G2 to Part 305--Furnaces-- Electric

------------------------------------------------------------------------
                                               Range of annual fuel
                                             utilization efficiencies
              Furnace type                            (AFUEs)
                                         -------------------------------
                                                Low            High
------------------------------------------------------------------------
Electric Furnaces--All Capacities.......           100.0           100.0
------------------------------------------------------------------------


[83 FR 7598, Feb. 22, 2018]



               Sec. Appendix G3 to Part 305--Furnaces--Oil

------------------------------------------------------------------------
                                               Range of annual fuel
                                             utilization efficiencies
                  Type                                (AFUEs)
                                         -------------------------------
                                                Low            High
------------------------------------------------------------------------
Non-Weatherized Oil Furnaces--All                   83.0            96.7
 Capacities.............................
Weatherized Oil Furnaces--All Capacities            78.0            83.0
------------------------------------------------------------------------


[83 FR 7598, Feb. 22, 2018]

[[Page 317]]



         Sec. Appendix G4 to Part 305--Mobile Home Furnaces--Gas

------------------------------------------------------------------------
                                               Range of annual fuel
                                             utilization efficiencies
                  Type                                (AFUEs)
                                         -------------------------------
                                                Low            High
------------------------------------------------------------------------
Mobile Home Gas Furnaces--All Capacities            80.0            97.3
------------------------------------------------------------------------


[83 FR 7598, Feb. 22, 2018]



         Sec. Appendix G5 to Part 305--Mobile Home Furnaces--Oil

------------------------------------------------------------------------
                                               Range of annual fuel
                                             utilization efficiencies
                  Type                                (AFUEs)
                                         -------------------------------
                                                Low            High
------------------------------------------------------------------------
Mobile Home Oil Furnaces--All Capacities            80.0            87.0
------------------------------------------------------------------------


[83 FR 7598, Feb. 22, 2018]



               Sec. Appendix G6 to Part 305--Boilers (Gas)

------------------------------------------------------------------------
                                               Range of annual fuel
                                             utilization efficiencies
                  Type                                (AFUEs)
                                         -------------------------------
                                                Low            High
------------------------------------------------------------------------
Gas Boilers (except steam)--All                     82.0            96.8
 Capacities.............................
Gas Boilers (steam)--All Capacities.....            80.4            83.4
------------------------------------------------------------------------


[83 FR 7598, Feb. 22, 2018]



               Sec. Appendix G7 to Part 305--Boilers (Oil)

------------------------------------------------------------------------
                                               Range of annual fuel
                                             utilization efficiencies
                  Type                                (AFUEs)
                                         -------------------------------
                                                Low            High
------------------------------------------------------------------------
Oil Boilers--All Capacities.............            82.0            90.0
------------------------------------------------------------------------


[83 FR 7598, Feb. 22, 2018]



            Sec. Appendix G8 to Part 305--Boilers (Electric)

------------------------------------------------------------------------
                                               Range of annual fuel
                                             utilization efficiencies
                  Type                                (AFUEs)
                                         -------------------------------
                                                Low            High
------------------------------------------------------------------------
Electric Boilers--All Capacities........             100             100
------------------------------------------------------------------------


[83 FR 7598, Feb. 22, 2018]



    Sec. Appendix H to Part 305--Cooling Performance for Central Air 
                              Conditioners

------------------------------------------------------------------------
                                                  Range of SEER's
  Manufacturer's rated cooling capacity  -------------------------------
               (btu's/hr)                       Low            High
------------------------------------------------------------------------
                          Single Package Units
------------------------------------------------------------------------
Central Air Conditioners (Cooling Only):              14              20
 All capacities.........................
Heat Pumps (Cooling Function): All                    14            18.1
 capacities.............................
------------------------------------------------------------------------
                           Split System Units
------------------------------------------------------------------------
Central Air Conditioner models allowed                13              26
 only in northern states (listed in
 305.12(g)(13)) (Cooling Only): All
 capacities.............................
Central Air Conditioner models allowed
 in all states (Cooling Only):
    All capacities......................              14              26

[[Page 318]]

 
    Heat Pumps (Cooling Function): All                14            30.5
     capacities.........................
Small-duct, high-velocity Systems.......              12            12.5
------------------------------------------------------------------------
                       Space-Constrained Products
------------------------------------------------------------------------
Central Air Conditioners (Cooling Only):              12              14
 All capacities.........................
Heat Pumps (Cooling Function): All                    12              14
 capacities.............................
------------------------------------------------------------------------


[81 FR 63656, Sept. 15, 2016]



 Sec. Appendix I to Part 305--Heating Performance and Cost for Central 
                            Air Conditioners

------------------------------------------------------------------------
                                                  Range of HSPF's
  Manufacturer's rated heating capacity  -------------------------------
               (Btu's/hr.)                      Low            High
------------------------------------------------------------------------
          Single Package Units
 
Heat Pumps (Heating Function): All                   8.0             9.2
 capacities.............................
 
           Split System Units
 
Heat Pumps (Heating Function): All                   8.2            13.5
 capacities.............................
 
Small-duct, high-velocity Systems                    7.2             7.2
       Space-Constrained Products
 
Heat Pumps (Heating Function): All                   7.4             7.6
 capacities.............................
------------------------------------------------------------------------


[79 FR 52550, Sept. 4, 2014]



             Sec. Appendix J1 to Part 305--Pool Heaters--Gas

                            Range Information

----------------------------------------------------------------------------------------------------------------
                                                              Range of thermal efficiencies (percent)
                                                 ---------------------------------------------------------------
     Manufacturer's rated heating capacities                Natural Gas                       Propane
                                                 ---------------------------------------------------------------
                                                        Low            High             Low            High
----------------------------------------------------------------------------------------------------------------
All capacities..................................            82.0            96.0            82.0            96.0
----------------------------------------------------------------------------------------------------------------


[83 FR 7599, Feb. 22, 2018]



             Sec. Appendix J2 to Part 305--Pool Heaters--Oil

                            Range Information

------------------------------------------------------------------------
                                           Range of thermal efficiencies
                                                     (percent)
 Manufacturer's rated heating capacities -------------------------------
                                                Low            High
------------------------------------------------------------------------
All capacities..........................             (*)             (*)
------------------------------------------------------------------------
* No data submitted.


[83 FR 7599, Feb. 22, 2018]

[[Page 319]]



 Sec. Appendix K1 to Part 305--Representative Average Unit Energy Costs 
for Refrigerators, Refrigerator-Freezers, Freezers, Clothes Washers, and 
                           Water Heater Labels

    This Table contains the representative unit energy costs that must 
be utilized to calculate estimated annual energy cost disclosures 
required under Sec. Sec.305.14, 305.15, 305.17, and 305.27 for 
refrigerators, refrigerator-freezers, freezers, clothes washers, and 
water heaters. This Table is based on information published by the U.S. 
Department of Energy in 2013.

----------------------------------------------------------------------------------------------------------------
                                                                                      As required by DOE test
                  Type of energy                       In commonly used terms                procedure
----------------------------------------------------------------------------------------------------------------
Electricity......................................  [cent]12.00/kWh \2\ \3\.......  $.1200/kWh.
Natural Gas......................................  $1.09/therm \4\ or $11.12/MCF   $0.0000109/Btu.
                                                    \5\ \6\.
No. 2 Heating Oil................................  $3.80/gallon \7\..............  $0.00002740/Btu.
Propane..........................................  $2.41/gallon \8\..............  $0.00002639/Btu.
Kerosene.........................................  $4.21/gallon \9\..............  $0.00003119/Btu.
----------------------------------------------------------------------------------------------------------------
\1\ Btu stands for British thermal unit.
\2\ kWh stands for kiloWatt hour.
\3\ 1 kWh = 3,412 Btu.
\4\ 1 therm = 100,000 Btu. Natural gas prices include taxes.
\5\ MCF stands for 1,000 cubic feet.
\6\ For the purposes of this table, 1 cubic foot of natural gas has an energy equivalence of 1,023 Btu.
\7\ For the purposes of this table, 1 gallon of No. 2 heating oil has an energy equivalence of 138,690 Btu.
\8\ For the purposes of this table, 1 gallon of liquid propane has an energy equivalence of 91,333 Btu.
\9\ For the purposes of this table, 1 gallon of kerosene has an energy equivalence of 135,000 Btu.


[83 FR 7600, Feb. 22, 2018, as amended at 84 FR 58037, Oct. 30, 2019]



 Sec. Appendix K2 to Part 305--Representative Average Unit Energy Costs 
             for Dishwasher and Room Air Conditioner Labels

    This Table contains the representative unit energy costs that must 
be utilized to calculate estimated annual energy cost disclosures 
required under Sec. Sec.305.16, 305.18 and 305.27 for dishwashers and 
room air conditioners. This Table is based on information published by 
the U.S. Department of Energy in 2017.

----------------------------------------------------------------------------------------------------------------
                                                                                       As required by DOE test
                    Type of energy                        In commonly used terms              procedure
----------------------------------------------------------------------------------------------------------------
Electricity..........................................  [cent]13.00/kWh \2\ \3\....  $.1300/kWh.
Natural Gas..........................................  $1.05/therm \4\ or $10.86/   $0.00001052/Btu.
                                                        MCF \5\ \6\.
No. 2 Heating Oil....................................  $2.59/gallon \7\...........  $0.00001883/Btu.
Propane..............................................  $1.53/gallon \8\...........  $0.00001672/Btu.
Kerosene.............................................  $3.01/gallon \9\...........  $0.00002232/Btu.
----------------------------------------------------------------------------------------------------------------
\1\ Btu stands for British thermal units.
\2\ kWh stands for kilowatt hour.
\3\ kWh = 3,412 Btu.
\4\ therm = 100,000 Btu.
\5\ MCF stands for 1,000 cubic feet.
\6\ For the purposes of this table, one cubic foot of natural gas has an energy equivalence of 1,032 Btu.
\7\ For the purposes of this table, one gallon of No. 2 heating oil has an energy equivalence of 137,561 Btu.
\8\ For the purposes of this table, one gallon of liquid propane has an energy equivalence of 91,333 Btu.
\9\ For the purposes of this table, one gallon of kerosene has an energy equivalence of 135,000 Btu.


[83 FR 7600, Feb. 22, 2018, as amended at 84 FR 58038, Oct. 30, 2019]

[[Page 320]]



               Sec. Appendix L to Part 305--Sample Labels
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[59 FR 25212, May 13, 1994; 59 FR 34053, July 1, 1994. Redesignated at 
59 FR 49565, Sept. 28, 1994]

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



PART 306_AUTOMOTIVE FUEL RATINGS, CERTIFICATION AND POSTING--
Table of Contents



                                 General

Sec.
306.0 Definitions.
306.1 What this rule does.
306.2 Who is covered.
306.3 Stayed or invalid parts.
306.4 Preemption.

              Duties of Refiners, Importers, and Producers

306.5 Automotive fuel rating.
306.6 Certification.
306.7 Recordkeeping.

[[Page 352]]

                         Duties of Distributors

306.8 Certification.
306.9 Recordkeeping.

                           Duties of Retailers

306.10 Automotive fuel rating posting.
306.11 Recordkeeping.

                          Label Specifications

306.12 Labels.
306.13 Incorporation by reference.

Appendix A to Part 306--Summary of Labeling Requirements for Biodiesel 
          Fuels

    Authority: 15 U.S.C. 2801 et seq.; 42 U.S.C. 17021.

    Source: 44 FR 19169, Mar. 30, 1979, unless otherwise noted.

                                 General



Sec.306.0  Definitions.

    As used in this part:
    (a) Octane rating means the rating of the anti-knock characteristics 
of a grade or type of gasoline as determined by dividing by 2 the sum of 
the research octane number plus the motor octane number.
    (b) Research octane number and motor octane number. These terms have 
the meanings given such terms in the specifications of ASTM D4814-15a, 
Standard Specification for Automotive Spark-Ignition Engine Fuel, 
(incorporated by reference, see Sec.306.13) and, with respect to any 
grade or type of gasoline, are determined in accordance with one of the 
following test methods or protocols:
    (1) ASTM D2699-15a, Standard Test Method for Research Octane Number 
of Spark-Ignition Engine Fuel, and ASTM D2700-14, Standard Test Method 
for Motor Octane Number of Spark-Ignition Engine Fuel, (both 
incorporated by reference, see Sec.306.13) or
    (2) ASTM D2885-13, Standard Test Method for Determination of Octane 
Number of Spark-Ignition Engine Fuels by On-Line Direct Comparison 
Technique, (incorporated by reference, see Sec.306.13).
    (c) Refiner means any person engaged in the production or 
importation of automotive fuel.
    (d) Producer means any person who purchases component elements and 
combines them to produce and market automotive fuel.
    (e) Distributor means any person who receives automotive fuel and 
distributes such automotive fuel to another person other than the 
ultimate purchaser.
    (f) Retailer means any person who markets automotive fuel to the 
general public for ultimate consumption.
    (g) Ultimate purchaser means, with respect to any item, the first 
person who purchases such item for purposes other than resale.
    (h) Person, for purposes of applying any provision of the Federal 
Trade Commission Act, 15 U.S.C. 41 et seq., with respect to any 
provision of this part, includes a partnership and a corporation.
    (i) Automotive fuel means liquid fuel of a type distributed for use 
as a fuel in any motor vehicle, and the term includes, but is not 
limited to:
    (1) Gasoline, an automotive spark-ignition engine fuel, which 
includes, but is not limited to, gasohol (generally a mixture of 
approximately 90 percent unleaded gasoline and 10 percent ethanol) and 
fuels developed to comply with the Clean Air Act, 42 U.S.C. 7401 et 
seq., such as reformulated gasoline and oxygenated gasoline; and
    (2) Alternative liquid automotive fuels, including, but not limited 
to:
    (i) Methanol, denatured ethanol, and other alcohols;
    (ii) Mixtures containing 85 percent or more by volume of methanol 
and/or other alcohols (or such other percentage, as provided by the 
Secretary of the United States Department of Energy, by rule), with 
gasoline or other fuels;
    (iii) Ethanol flex fuels;
    (iv) Liquefied natural gas;
    (v) Liquefied petroleum gas;
    (vi) Coal-derived liquid fuels;
    (vii) Biodiesel;
    (viii) Biomass-based diesel;
    (ix) Biodiesel blends containing more than 5 percent biodiesel by 
volume; and
    (x) Biomass-based diesel blends containing more than 5 percent 
biomass-based diesel by volume.
    (3) Biodiesel blends and biomass-based diesel blends that contain 
less than or equal to 5 percent biodiesel by

[[Page 353]]

volume and less than or equal to 5 percent biomass-based diesel by 
volume, and that meet ASTM D975-07b, Standard Specification for Diesel 
Fuel Oils (incorporated by reference, see Sec.306.13), are not 
automotive fuels covered by the requirements of this part.

    Note to paragraph (i): Provided, however, that biodiesel blends and 
biomass-based diesel blends that contain less than or equal to 5 percent 
biodiesel by volume and less than or equal to 5 percent biomass-based 
diesel by volume, and that meet ASTM D975-09b, Standard Specification 
for Diesel Fuel Oils (incorporated by reference, see Sec.306.13), are 
not automotive fuels covered by the requirements of this part.

    (j) Automotive fuel rating means--
    (1) For gasoline, the octane rating.
    (2) For an alternative liquid automotive fuel other than biodiesel, 
biomass-based diesel, biodiesel blends, biomass-based diesel blends, and 
ethanol flex fuels, the commonly used name of the fuel with a disclosure 
of the amount, expressed as the minimum percentage by volume, of the 
principal component of the fuel. A disclosure of other components, 
expressed as the minimum percentage by volume, may be included, if 
desired.
    (3) For biomass-based diesel, biodiesel, biomass-based diesel blends 
with more than 5 percent biomass-based diesel, and biodiesel blends with 
more than 5 percent biodiesel, a disclosure of the biomass-based diesel 
or biodiesel component, expressed as the percentage by volume.
    (4) For ethanol flex fuels, a disclosure of the ethanol component, 
expressed as the percentage by volume and the text ``Use Only in Flex-
Fuel Vehicles/May Harm Other Engines.''
    (k) Biomass-based diesel means a diesel fuel substitute produced 
from nonpetroleum renewable resources that meets the registration 
requirements for fuels and fuel additives established by the 
Environmental Protection Agency under 42 U.S.C. 7545, and includes fuel 
derived from animal wastes, including poultry fats and poultry wastes, 
and other waste materials, or from municipal solid waste and sludges and 
oils derived from wastewater and the treatment of wastewater, except 
that the term does not include biodiesel as defined in this part.
    (l) Biodiesel means the monoalkyl esters of long chain fatty acids 
derived from plant or animal matter that meet: The registration 
requirements for fuels and fuel additives under 40 CFR part 79; and the 
requirements of ASTM D6751-10, Standard Specification for Biodiesel Fuel 
Blend Stock (B100) for Middle Distillate Fuels, (incorporated by 
reference, see Sec.306.13).
    (m) Biodiesel blend means a blend of petroleum-based diesel fuel 
with biodiesel.
    (n) Biomass-based diesel blend means a blend of petroleum-based 
diesel fuel with biomass-based diesel.
    (o) Ethanol flex fuels means a mixture of gasoline and ethanol 
containing more than 10 percent but not greater than 83 percent ethanol 
by volume.

[58 FR 41372, Aug. 3, 1993, as amended at 69 FR 18803, Apr. 9, 2004; 73 
FR 40162, July 11, 2008; 76 FR 19690, Apr. 8, 2011; 81 FR 2062, Jan. 14, 
2016]



Sec.306.1  What this rule does.

    This rule deals with the certification and posting of automotive 
fuel ratings in or affecting commerce as ``commerce'' is defined in the 
Federal Trade Commission Act, 15 U.S.C. 41 et seq. It applies to 
persons, partnerships, and corporations. If you are covered by this 
regulation, breaking any of its rules is an unfair or deceptive act or 
practice under section 5 of that Act. You can be fined up to $10,000 
(plus an adjustment for inflation, under Sec.1.98 of this chapter) 
each time you break a rule.

[58 FR 41373, Aug. 3, 1993, as amended at 61 FR 54549, Oct. 21, 1996; 61 
FR 55840, Oct. 29, 1996]



Sec.306.2  Who is covered.

    You are covered by this rule if you are a refiner, importer, 
producer, distributor, or retailer of automotive fuel.

[58 FR 41373, Aug. 3, 1993]



Sec.306.3  Stayed or invalid parts.

    If any part of this rule is stayed or held invalid, the rest of it 
will stay in force.

[44 FR 19169, Mar. 30, 1979. Redesignated at 58 FR 41372, Aug. 3, 1993]

[[Page 354]]



Sec.306.4  Preemption.

    The Petroleum Marketing Practices Act (``PMPA''), 15 U.S.C. 2801 et 
seq., as amended, is the law that directs the FTC to enact this rule. 
Section 204 of PMPA, 15 U.S.C. 2824, provides:

    (a) To the extent that any provision of this title applies to any 
act or omission, no State or any political subdivision thereof may adopt 
or continue in effect, except as provided in subsection (b), any 
provision of law or regulation with respect to such act or omission, 
unless such provision of such law or regulation is the same as the 
applicable provision of this title.
    (b) A State or political subdivision thereof may provide for any 
investigative or enforcement action, remedy, or penalty (including 
procedural actions necessary to carry out such investigative or 
enforcement actions, remedies, or penalties) with respect to any 
provision of law or regulation permitted by subsection (a).

[58 FR 41373, Aug. 3, 1993]

               Duties of Refiners, Importers and Producers



Sec.306.5  Automotive fuel rating.

    If you are a refiner, importer, or producer, you must determine the 
automotive fuel rating of all automotive fuel before you transfer it. 
You can do that yourself or through a testing lab.
    (a) To determine the automotive fuel rating of gasoline, add the 
research octane number and the motor octane number and divide by two, as 
explained by ASTM D4814-15a, Standard Specifications for Automotive 
Spark-Ignition Engine Fuel, (incorporated by reference, see Sec.
306.13). To determine the research octane and motor octane numbers, you 
may do one of the following:
    (1) Use ASTM D2699-15a, Standard Test Method for Research Octane 
Number of Spark-Ignition Engine Fuel (incorporated by reference, see 
Sec.306.13), to determine the research octane number, and ASTM D2700-
14, Standard Test Method for Motor Octane Number of Spark-Ignition 
Engine Fuel (incorporated by reference, see Sec.306.13), to determine 
the motor octane number; or
    (2) Use the test method set forth in ASTM D2885-13, Standard Test 
Method for Determination of Octane Number of Spark-Ignition Engine Fuels 
by On-Line Direct Comparison Technique (incorporated by reference, see 
Sec.306.13).
    (b) To determine automotive fuel ratings for alternative liquid 
automotive fuels other than ethanol flex fuels, biodiesel blends, and 
biomass-based diesel blends, you must possess a reasonable basis, 
consisting of competent and reliable evidence, for the percentage by 
volume of the principal component of the alternative liquid automotive 
fuel that you must disclose. In the case of biodiesel blends, you must 
possess a reasonable basis, consisting of competent and reliable 
evidence, for the percentage of biodiesel contained in the fuel. In the 
case of biomass-based diesel blends, you must possess a reasonable 
basis, consisting of competent and reliable evidence, for the percentage 
of biomass-based diesel contained in the fuel. In the case of ethanol 
flex fuels, you must possess a reasonable basis, consisting of competent 
and reliable evidence, for the percentage of ethanol contained in the 
fuel. You also must have a reasonable basis, consisting of competent and 
reliable evidence, for the minimum percentages by volume of other 
components that you choose to disclose.

[81 FR 2063, Jan. 14, 2016]



Sec.306.6  Certification.

    In each transfer you make to anyone who is not a consumer, you must 
certify the automotive fuel rating of the automotive fuel consistent 
with your determination. You can do this in either of two ways:
    (a) Include a delivery ticket or other paper with each transfer of 
automotive fuel. It may be an invoice, bill of lading, bill of sale, 
terminal ticket, delivery ticket, or any other written proof of 
transfer. It must contain at least these four items:
    (1) Your name;
    (2) The name of the person to whom the automotive fuel is 
transferred;
    (3) The date of the transfer;
    (4) The automotive fuel rating. Octane rating numbers may be rounded 
off to a whole or half number equal to or less than the number 
determined by you.
    (b) Give the person a letter or other written statement. This letter 
must include the date, your name, the other

[[Page 355]]

person's name, and the automotive fuel rating of any automotive fuel you 
will transfer to that person from the date of the letter onwards. Octane 
rating numbers may be rounded to a whole or half number equal to or less 
than the number determined by you. This letter of certification will be 
good until you transfer automotive fuel with a lower automotive fuel 
rating, except that a letter certifying the fuel rating of biomass-based 
diesel, biodiesel, a biomass-based diesel blend, a biodiesel blend, or 
an ethanol flex fuel will be good only until you transfer those fuels 
with a different automotive fuel rating, whether the rating is higher or 
lower. When this happens, you must certify the automotive fuel rating of 
the new automotive fuel either with a delivery ticket or by sending a 
new letter of certification.
    (c) When you transfer automotive fuel to a common carrier, you must 
certify the automotive fuel rating of the automotive fuel to the common 
carrier, either by letter or on the delivery ticket or other paper.

[58 FR 41373, Aug. 3, 1993, as amended at 59 FR 48798, Sept. 23, 1994; 
73 FR 40163, July 11, 2008; 76 FR 19691, Apr. 8, 2011; 81 FR 2063, Jan. 
14, 2016]



Sec.306.7  Recordkeeping.

    You must keep records of how you determined automotive fuel ratings 
for one year. They must be available for inspection by Federal Trade 
Commission and Environmental Protection Agency staff members, or by 
people authorized by FTC or EPA.

[58 FR 41374, Aug. 3, 1993]

                         Duties of Distributors



Sec.306.8  Certification.

    If you are a distributor, you must certify the automotive fuel 
rating of the automotive fuel in each transfer you make to anyone who is 
not a consumer.
    (a) In the case of gasoline, if you do not blend the gasoline with 
other gasoline, you must certify the gasoline's octane rating consistent 
with the octane rating certified to you. If you blend the gasoline with 
other gasoline, you must certify consistent with your determination of 
the average, weighted by volume, of the octane ratings certified to you 
for each gasoline in the blend, or consistent with the lowest octane 
rating certified to you for any gasoline in the blend. Whether you blend 
gasoline or not, you may choose to certify the octane rating of the 
gasoline consistent with your determination of the octane rating 
according to the method in Sec.306.5. In cases involving gasoline, the 
octane rating may be rounded to a whole or half number equal to or less 
than the number certified to you or determined by you.
    (b) If you do not blend alternative liquid automotive fuels, you 
must certify consistent with the automotive fuel rating certified to 
you. If you blend alternative liquid automotive fuels, you must possess 
a reasonable basis, consisting of competent and reliable evidence, for 
the automotive fuel rating that you certify for the blend.
    (c) You may certify either by using a delivery ticket with each 
transfer of automotive fuel, as outlined in Sec.306.6(a), or by using 
a letter of certification, as outlined in Sec.306.6(b).
    (d) When you transfer automotive fuel to a common carrier, you must 
certify the automotive fuel rating of the automotive fuel to the common 
carrier, either by letter or on the delivery ticket or other paper. When 
you receive automotive fuel from a common carrier, you also must receive 
from the common carrier a certification of the automotive fuel rating of 
the automotive fuel, either by letter or on the delivery ticket or other 
paper.

[58 FR 41374, Aug. 3, 1993, as amended at 59 FR 48798, Sept. 23, 1994]



Sec.306.9  Recordkeeping.

    You must keep for one year any delivery tickets or letters of 
certification on which you based your automotive fuel rating 
certifications. You must also keep for one year records of any 
automotive fuel rating determinations you made according to Sec.306.5. 
They must be available for inspection by Federal Trade Commission and 
Environmental Protection Agency staff members, or by persons authorized 
by FTC or EPA.

[58 FR 41374, Aug. 3, 1993]

[[Page 356]]

                           Duties of Retailers



Sec.306.10  Automotive fuel rating posting.

    (a) If you are a retailer, you must post the automotive fuel rating 
of all automotive fuel you sell to consumers. You must do this by 
putting at least one label on each face of each dispenser through which 
you sell automotive fuel. If you are selling two or more kinds of 
automotive fuel with different automotive fuel ratings from a single 
dispenser, you must put separate labels for each kind of automotive fuel 
on each face of the dispenser. Provided, however, that you do not need 
to post the automotive fuel rating of a mixture of gasoline and ethanol 
containing more than 10 but not more than 15 percent ethanol if the face 
of the dispenser is labeled in accordance with 40 CFR 80.1501.
    (b)(1) The label, or labels, must be placed conspicuously on the 
dispenser so as to be in full view of consumers and as near as 
reasonably practical to the price per unit of the automotive fuel.
    (2) You may petition for an exemption from the placement 
requirements by writing the Secretary of the Federal Trade Commission, 
Washington, DC 20580. You must state the reasons that you want the 
exemption.
    (c) In the case of gasoline, if you do not blend the gasoline with 
other gasoline, you must post the octane rating of the gasoline 
consistent with the octane rating certified to you. If you blend the 
gasoline with other gasoline, you must post consistent with your 
determination of the average, weighted by volume, of the octane ratings 
certified to you for each gasoline in the blend, or consistent with the 
lowest octane rating certified to you for any gasoline in the blend. 
Whether you blend gasoline or not, you may choose to post the octane 
rating of the gasoline consistent with your determination of the octane 
rating according to the method in Sec.306.5. In cases involving 
gasoline, the octane rating must be shown as a whole or half number 
equal to or less than the number certified to you or determined by you.
    (d) If you do not blend alternative liquid automotive fuels, you 
must post consistent with the automotive fuel rating certified to you. 
If you blend alternative liquid automotive fuels, you must possess a 
reasonable basis, consisting of competent and reliable evidence, for the 
automotive fuel rating that you post for the blend.
    (e)(1) You must maintain and replace labels as needed to make sure 
consumers can easily see and read them.
    (2) If the labels you have are destroyed or are unusable or 
unreadable for some unexpected reason, you can satisfy the law by 
posting a temporary label as much like the required label as possible. 
You must still get and post the required label without delay.
    (f) The following examples of automotive fuel rating disclosures for 
some presently available alternative liquid automotive fuels are meant 
to serve as illustrations of compliance with this part, but do not limit 
the Rule's coverage to only the mentioned fuels:
    (1) ``Methanol/Minimum __% Methanol''
    (2) ``__% Ethanol/Use Only in Flex-Fuel Vehicles/May Harm Other 
engines''
    (3) ``M85/Minimum __% Methanol''
    (4) ``LPG/Minimum __% Propane'' or ``LPG/Minimum __% Propane and __% 
Butane''
    (5) ``LNG/Minimum __% Methane''
    (6) ``B20 Biodiesel Blend/contains biomass-based diesel or biodiesel 
in quantities between 5 percent and 20 percent''
    (7) ``20% Biomass-Based Diesel Blend/contains biomass-based diesel 
or biodiesel in quantities between 5 percent and 20 percent''
    (8) ``B100 Biodiesel/contains 100 percent biodiesel''
    (9) ``100% Biomass-Based Diesel/contains 100 percent biomass-based 
diesel''
    (g) When you receive automotive fuel from a common carrier, you also 
must receive from the common carrier a certification of the automotive 
fuel rating of the automotive fuel, either by letter or on the delivery 
ticket or other paper.

[58 FR 41374, Aug. 3, 1993, as amended at 59 FR 48798, Sept. 23, 1994; 
73 FR 40163, July 11, 2008; 81 FR 2063, Jan. 14, 2016]

[[Page 357]]



Sec.306.11  Recordkeeping.

    You must keep for one year any delivery tickets or letters of 
certification on which you based your posting of automotive fuel 
ratings. You also must keep for one year records of any automotive fuel 
rating determinations you made according to Sec.306.5. These records 
may be kept at the retail outlet or at another, reasonably close 
location. They must be available for inspection by Federal Trade 
Commission and Environmental Protection Agency staff members or by 
persons authorized by FTC or EPA.

[58 FR 41374, Aug. 3, 1993]

                          Label Specifications



Sec.306.12  Labels.

    All labels must meet the following specifications:
    (a) Layout--(1) For gasoline labels. The label is 3 inches (7.62 cm) 
wide x 2\1/2\ inches (6.35 cm) long. The illustrations appearing at the 
end of this rule are prototype labels that demonstrate the proper 
layout. ``Helvetica Black'' or equivalent type is used throughout except 
for the octane rating number on octane labels, which is in Franklin 
gothic type. All type is centered. Spacing of the label is \1/4\ inch 
(.64 cm) between the top border and the first line of text, \1/8\ inch 
(.32 cm) between the first and second line of text, \1/4\ inch (.64 cm) 
between the octane rating and the line of text above it. All text and 
numerals are centered within the interior borders.
    (2) For alternative liquid automotive fuel labels (one principal 
component), other than biodiesel, biomass-based diesel, biodiesel 
blends, or biomass-based diesel blends. The label is 3 inches (7.62 cm) 
wide x 2\1/2\ inches (6.35 cm) long. ``Helvetica Black'' or equivalent 
type is used throughout. All type is centered. The band at the top of 
the label contains the name of the fuel. This band should measure 1 inch 
(2.54 cm) deep. Spacing of the fuel name is \1/4\ inch (.64 cm) from the 
top of the label and \3/16\ inch (.48 cm) from the bottom of the black 
band, centered horizontally within the black band. The first line of 
type beneath the black band is \1/8\ inch (.32 cm) from the bottom of 
the black band. All type below the black band is centered horizontally, 
with \1/8\ inch (.32 cm) between each line. The bottom line of type is 
\3/16\ inch (.48 cm) from the bottom of the label. All type should fall 
no closer than \3/16\ inch (.48 cm) from the side edges of the label. If 
you wish to change the dimensions of this one principal component label 
to accommodate a fuel descriptor that is longer than shown in the sample 
labels, you must petition the Federal Trade Commission. You can do this 
by writing to the Secretary of the Federal Trade Commission, Washington, 
DC 20580. You must state the size and contents of the label that you 
wish to use, and the reasons that you want to use it.
    (3) For alternative liquid automotive fuel labels (two components). 
The label is 3 inches (7.62 cm) wide x 2\1/2\ inches (6.35 cm) long. 
``Helvetica Black'' or equivalent type is used throughout. All type is 
centered. The band at the top of the label contains the name of the 
fuel. This band should measure 1 inch (2.54 cm) deep. Spacing of the 
fuel name is \1/4\ inch (.64 cm) from the top of the label and \3/16\ 
inch (.48 cm) from the bottom of the black band, centered horizontally 
within the black band. The first line of type beneath the black band is 
\3/16\ inch (.48 cm) from the bottom of the black band. All type below 
the black band is centered horizontally, with \1/8\ inch (.32 cm) 
between each line. The bottom line of type is \1/4\ inch (.64 cm) from 
the bottom of the label. All type should fall no closer than \3/16\ inch 
(.48 cm) from the side edges of the label. If you wish to change the 
dimensions of this two component label to accommodate additional fuel 
components, you must petition the Federal Trade Commission. You can do 
this by writing to the Secretary of the Federal Trade Commission, 
Washington, DC 20580. You must state the size and contents of the label 
that you wish to use, and the reasons that you want to use it.
    (4) For ethanol flex fuels. (i) The label is 3 inches (7.62 cm) wide 
x 2\1/2\ inches (6.35 cm) long. ``Helvetica Black'' or equivalent type 
is used throughout. The band at the top of the label contains one of the 
following:
    (A) For all ethanol flex fuels. The numerical value representing the 
volume

[[Page 358]]

percentage of ethanol in the fuel followed by the percentage sign and 
then by the term ``ETHANOL''; or
    (B) For ethanol flex fuels containing more than 10 percent and no 
greater than 50 percent ethanol by volume. The numerical value 
representing the volume percentage of ethanol in the fuel, rounded to 
the nearest multiple of 10, followed by the percentage sign and then the 
term ``ETHANOL''; or
    (C) For ethanol flex fuels containing more than 50 percent and no 
greater than 83 percent ethanol by volume. The numerical value 
representing the volume percentage of ethanol in the fuel, rounded to 
the nearest multiple of 10, followed by the percentage sign and then the 
term ``ETHANOL'' or the phrase, ``51%-83% ETHANOL.''
    (ii) The band should measure 1 inch (2.54 cm) deep. The type in the 
band is centered both horizontally and vertically. The percentage 
disclosure and the word ``ETHANOL'' are in 24 point font. In the case of 
labels including the phrase, ``51%-83% ETHANOL,'' the percentage 
disclosure is in 18 point font, and the word ``ETHANOL'' is in 24 point 
font and at least \1/8\ inch (.32 cm) below the percentage disclosure. 
The type below the black band is centered vertically and horizontally. 
The first line is the text: ``USE ONLY IN.'' It is in 16 point font, 
except for the word ``ONLY,'' which is in 26 point font. The word 
``ONLY'' is underlined with a 2 point (or thicker) underline. The second 
line is in 16 point font, at least \1/8\ inch (.32 cm) below the first 
line, and is the text: ``FLEX-FUEL VEHICLES.'' The third line is in 10 
point font, at least \1/8\ inch (.32 cm) below the first line, and is 
the text ``MAY HARM OTHER ENGINES.''
    (5) For biodiesel blends containing more than 5 percent and no 
greater than 20 percent biodiesel by volume. (i) The label is 3 inches 
(7.62 cm) wide x 2\1/2\ inches (6.35 cm) long. ``Helvetica Black'' or 
equivalent type is used throughout. All type is centered. The band at 
the top of the label contains either:
    (A) The capital letter ``B'' followed immediately by the numerical 
value representing the volume percentage of biodiesel in the fuel (e.g., 
``B20'') and then by the term ``Biodiesel Blend''; or
    (B) The term ``Biodiesel Blend.''
    (ii) The band should measure 1 inch (2.54 cm) deep. Spacing of the 
text in the band is \1/4\ inch (.64 cm) from the top of the label and 
\3/16\ inch (.48 cm) from the bottom of the black band, centered 
horizontally within the black band. Directly underneath the black band, 
the label shall read ``contains biomass-based diesel or biodiesel in 
quantities between 5 percent and 20 percent.'' The script underneath the 
black band must be centered horizontally, with \1/8\ inch (.32 cm) 
between each line. The bottom line of type is \1/4\ inch (.64 cm) from 
the bottom of the label. All type should fall no closer than \3/16\ inch 
(.48 cm) from the side edges of the label.
    (6) For biomass-based diesel blends containing more than 5 percent 
and no greater than 20 percent biomass-based diesel by volume. (i) The 
label is 3 inches (7.62 cm) wide x 2\1/2\ inches (6.35 cm) long. 
``Helvetica Black'' or equivalent type is used throughout. All type is 
centered. The band at the top of the label contains either:
    (A) The numerical value representing the volume percentage of 
biomass-based diesel in the fuel followed immediately by the percentage 
symbol (e.g., ``20%'') and then by the term ``Biomass-Based Diesel 
Blend''; or
    (B) The term ``Biomass-Based Diesel Blend.''
    (ii) The band should measure 1 inch (2.54 cm) deep. Spacing of the 
text in the band is \1/4\ inch (.64 cm) from the top of the label and 
\3/16\ inch (.48 cm) from the bottom of the black band, centered 
horizontally within the black band. Directly underneath the black band, 
the label shall read ``contains biomass-based diesel or biodiesel in 
quantities between 5 percent and 20 percent.'' The script underneath the 
black band must be centered horizontally, with \1/8\ inch (.32 cm) 
between each line. The bottom line of type is \1/4\ inch (.64 cm) from 
the bottom of the label. All type should fall no closer than \3/16\ inch 
(.48 cm) from the side edges of the label.
    (7) For biodiesel blends containing more than 20 percent biodiesel 
by volume. The requirements are the same as in paragraph (a)(4) of this 
section, except that the black band at the top of the label

[[Page 359]]

shall contain the capital letter ``B'' followed immediately by the 
numerical value representing the volume percentage of biodiesel in the 
fuel (e.g., ``B-70'') and then the term ``Biodiesel Blend.'' In 
addition, the words directly underneath the black band shall read 
``contains more than 20 percent biomass-based diesel or biodiesel.''
    (8) For biomass-based diesel blends containing more than 20 percent 
biomass-based diesel by volume. The requirements are the same as in 
paragraph (a)(5) of this section, except that the black band at the top 
of the label shall contain the numerical value representing the volume 
percentage of biomass-based diesel in the fuel followed immediately by 
the percentage symbol (e.g., ``70%'') and then the term ``Biomass-Based 
Diesel Blend.'' In addition, the words directly underneath the black 
band shall read ``contains more than 20 percent biomass-based diesel or 
biodiesel.''
    (9) For 100% biodiesel. The requirements are the same as in 
paragraph (a)(4) of this section, except that the black band at the top 
of the label shall contain the phrase ``B-100 Biodiesel.'' In addition, 
the words directly underneath the black band shall read ``contains 100 
percent biodiesel.''
    (10) For 100% biomass-based diesel. The requirements are the same as 
in paragraph (a)(5) of this section, except that the black band at the 
top of the label shall contain the phrase ``100% Biomass-Based Diesel.'' 
In addition, the words directly underneath the black band shall read 
``contains 100 percent biomass-based diesel.''
    (b) Type size and setting--(1) For gasoline labels. The Helvetica 
series or equivalent type is used for all numbers and letters with the 
exception of the octane rating number. Helvetica is available in a 
variety of phototype setting systems, by linotype, and in a variety of 
computer desk-top and phototype setting systems. Its name may vary, but 
the type must conform in style and thickness to the sample provided 
here. The line ``Minimum Octane Rating'' is set in 12 point Helvetica 
Bold, all capitals, with letterspace set at 12\1/2\ points. The line 
``(R + M)/2 METHOD'' is set in 10 point Helvetica Bold, all capitals, 
with letterspace set at 10\1/2\ points. The octane number is set in 96 
point Franklin gothic condensed with \1/8\ inch (.32 cm) space between 
the numbers.
    (2) For alternative liquid automotive fuel labels (one principal 
component). Except as provided above, labels should conform to the 
following specifications. All type should be set in upper case (all 
caps) ``Helvetica Black'' or equivalent type throughout. Helvetica Black 
is available in a variety of computer desk-top and phototype setting 
systems. Its name may vary, but the type must conform in style and 
thickness to the sample provided here. The spacing between letters and 
words should be set as ``normal.'' The type for the fuel name is 50 
point (\1/2\ inch (1.27 cm) cap height) ``Helvetica Black,'' knocked out 
of a 1 inch (2.54 cm) deep band. The type for the words ``MINIMUM'' and 
the principal component is 24 point (\1/4\ inch (.64 cm) cap height). 
The type for percentage is 36 point (\3/8\ inch (.96 cm) cap height).
    (3) For alternative liquid automotive fuel labels (two components). 
All type should be set in upper case (all caps) ``Helvetica Black'' or 
equivalent type throughout. Helvetica Black is available in a variety of 
computer desk-top and phototype setting systems. Its name may vary, but 
the type must conform in style and thickness to the sample provided 
here. The spacing between letters and words should be set as ``normal.'' 
The type for the fuel name is 50 point (\1/2\ inch (1.27 cm) cap height) 
``Helvetica Black,'' knocked out of a 1 inch (2.54 cm) deep band. All 
other type is 24 point (\1/4\ inch (.64 cm) cap height).
    (c) Colors--(1) For gasoline labels. The basic color on all octane 
labels is process yellow. All type is process black. All borders are 
process black. All colors must be non-fade.
    (2) For alternative liquid automotive fuel labels other than 
biodiesel and biodiesel blends. The background color on all the labels 
is Orange: PMS 1495 or its equivalent. The knock-out type within the 
black band is Orange: PMS 1495 or its equivalent. All other type is 
process black. All borders are process black. All colors must be non-
fade.
    (3) For biodiesel and biodiesel blends. The background color on all 
the labels is Blue: PMS 277 or its equivalent. The

[[Page 360]]

knock-out type within the black band is Blue: PMS 277 or its equivalent. 
All other type is process black. All borders are process black. All 
colors must be non-fade.
    (d) Contents. Examples of the contents are shown in the sample 
labels. The proper octane rating for each gasoline must be shown. The 
proper automotive fuel rating for each alternative liquid automotive 
fuel must be shown. No marks or information other than that called for 
by this rule may appear on the labels.
    (e) Special label protection. All labels must be capable of 
withstanding extremes of weather conditions for a period of at least one 
year. They must be resistant to automotive fuel, oil, grease, solvents, 
detergents, and water.
    (f) Illustrations of labels. Labels should meet the specifications 
in this section, and should look like these examples, except the black 
print should be on the appropriately colored background.
[GRAPHIC] [TIFF OMITTED] TC29SE91.039


[[Page 361]]


[GRAPHIC] [TIFF OMITTED] TC29SE91.040


[[Page 362]]


[GRAPHIC] [TIFF OMITTED] TR11JY08.025


[[Page 363]]


[GRAPHIC] [TIFF OMITTED] TR14JA16.000


[58 FR 41375, Aug. 3, 1993, as amended at 73 FR 40163, July 11, 2008; 76 
FR 19691, Apr. 8, 2011; 81 FR 2063, Jan. 14, 2016]

    Editorial Note: At 81 FR 2063, Jan. 14, 2016, Sec.306.12 was 
amended by removing the illustration of the ``E-100'' label, however, 
since the label is part of a larger illustration, it could not be 
removed.



Sec.306.13  Incorporation by reference.

    (a) Certain material is incorporated by reference into this part 
with the approval of the Director of the Federal Register under 5 U.S.C. 
552(a) and 1 CFR part 51. You may inspect all approved material at the 
FTC Library, (202) 326-2395, Federal Trade Commission, Room H-630, 600 
Pennsylvania Avenue NW., Washington, DC 20580, and at the National 
Archives and Records Administration (``NARA''). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal-register/cfr/ibr-locations.html.
    (b) ASTM International (ASTM), 100 Barr Harbor Drive, West 
Conshohocken, PA 19428 telephone: 1-877-909-2786; Internet address: 
http://www.astm.org.

[[Page 364]]

    (1) ASTM D975-07b, Standard Specification for Diesel Fuel Oils, 
published July 2007; IBR approved for Sec.306.0(i).
    (2) ASTM D975-09b, Standard Specification for Diesel Fuel Oils, 
published August 2009; IBR approved for Sec.306.0(i).
    (3) ASTM D2699-15a, Standard Test Method for Research Octane Number 
of Spark-Ignition Engine Fuel, published November 2015; IBR approved for 
Sec. Sec.306.0(b) and 306.5(a).
    (4) ASTM D2700-14, Standard Test Method for Motor Octane Number of 
Spark-Ignition Engine Fuel, published November 2014; IBR approved for 
Sec. Sec.306.0(b) and 306.5(a).
    (5) ASTM D2885-13, Standard Test Method for Determination of Octane 
Number of Spark-Ignition Engine Fuels by On-Line Direct Comparison 
Technique, published July 2013; IBR approved for Sec. Sec.306.0(b) and 
306.5(a).
    (6) ASTM D4814-15a, Standard Specification for Automotive Spark-
Ignition Engine Fuel, published August 2015; IBR approved for Sec. Sec.
306.0(b) and 306.5(a).
    (7) ASTM D6751-10, Standard Specification for Biodiesel Fuel Blend 
Stock (B100) for Middle Distillate Fuels, published October 2010; IBR 
approved for Sec.306.0(l).

[81 FR 2064, Jan. 14, 2016]



   Sec. Appendix A to Part 306--Summary of Labeling Requirements for 
                             Biodiesel Fuels

                              (Part 1 of 2)
------------------------------------------------------------------------
                                 Blends of more than 5 but not more than
                    Blends of 5                 20 percent
    Fuel type       percent or  ----------------------------------------
                       less         Header         Text         Color
------------------------------------------------------------------------
Biodiesel          No label      Either ``B-   contains      Blue
                    required      XX            biomass-
                                  Biodiesel     based
                                  Blend'' or    diesel or
                                  ``Biodiesel   biodiesel
                                  Blend''       in
                                                quantities
                                                between 5
                                                percent and
                                                20 percent
------------------------------------------------------------------------
Biomass-Based      No label      Either ``XX%  contains      Orange
 Diesel             required      Biomass-      biomass-
                                  Based         based
                                  Diesel        diesel or
                                  Blend'' or    biodiesel
                                  ``Biomass-    in
                                  Based         quantities
                                  Diesel        between 5
                                  Blend''       percent and
                                                20 percent
------------------------------------------------------------------------


                              (Part 2 of 2)
------------------------------------------------------------------------
                 Blends of more than 20       Pure (100%) Biodiesel or
                         percent                Biomass-Based diesel
  Fuel type  -----------------------------------------------------------
               Header     Text      Color    Header     Text      Color
------------------------------------------------------------------------
Biodiesel     B-XX      contains  Blue      B-100     contains  Blue
               Biodies   more                Biodies   100
               el        than 20             el        percent
               Blend     percent                       biodies
                         biomass-                      el
                         based
                         diesel
                         or
                         biodies
                         el
------------------------------------------------------------------------
Biomass-      XX%       contains  Orange    100%      contains  Orange
 Based         Biomass-  more                Biomass-  100
 Diesel        Based     than 20             Based     percent
               Diesel    percent             Diesel    biomass-
               Blend     biomass-                      based
                         based                         diesel
                         diesel
                         or
                         biodies
                         el
------------------------------------------------------------------------


[73 FR 40164, July 11, 2008]

                           PART 307 [RESERVED]



PART 308_TRADE REGULATION RULE PURSUANT TO THE TELEPHONE DISCLOSURE
AND DISPUTE RESOLUTION ACT OF 1992--Table of Contents



Sec.
308.1 Scope of regulations in this part.
308.2 Definitions.
308.3 Advertising of pay-per-call services.

[[Page 365]]

308.4 Special rule for infrequent publications.
308.5 Pay-per-call service standards.
308.6 Access to information.
308.7 Billing and collection for pay-per-call services.
308.8 Severability.
308.9 Rulemaking review.

    Authority: Pub. L. 102-556, 106 Stat. 4181 (15 U.S.C. 5701, et seq.)

    Source: 58 FR 42400, Aug. 9, 1993, unless otherwise noted.



Sec.308.1  Scope of regulations in this part.

    This rule implements titles II and III of the Telephone Disclosure 
and Dispute Resolution Act of 1992, to be codified in relevant part at 
15 U.S.C. 5711-14, 5721-24.



Sec.308.2  Definitions.

    (a) Bona fide educational service means any pay-per-call service 
dedicated to providing information or instruction relating to education, 
subjects of academic study, or other related areas of school study.
    (b) Commission means the Federal Trade Commission.
    (c) Pay-per-call service has the meaning provided in section 228 of 
the Communications Act of 1934, 47 U.S.C. 228. \1\
---------------------------------------------------------------------------

    \1\ Section 228 of the Communications Act of 1934 states:
    (1) The term pay-per-call services means any service--
    (A) In which any person provides or purports to provide--
    (i) Audio information or audio entertainment produced or packaged by 
such person;
    (ii) Access to simultaneous voice conversation services; or
    (iii) Any service, including the provision of a product, the charges 
for which are assessed on the basis of the completion of the call;
    (B) For which the caller pays a per-call or per-time-interval charge 
that is greater than, or in addition to, the charge for transmission of 
the call; and
    (C) Which is accessed through use of a 900 telephone number or other 
prefix or area code designated by the (Federal Communications) 
Commission in accordance with subsection (b)(5) (47 U.S.C. 228(b)(5)).
    (2) Such term does not include directory services provided by a 
common carrier or its affiliate or by a local exchange carrier or its 
affiliate, or any service the charge for which is tariffed, or any 
service for which users are assessed charges only after entering into a 
presubcription or comparable arrangement with the provider of such 
service.
---------------------------------------------------------------------------

    (d) Person means any individual, partnership, corporation, 
association, government or governmental subdivision or agency, or other 
entity.
    (e)(1) Presubscription or comparable arrangement means a contractual 
agreement in which
    (i) The service provider clearly and conspicuously discloses to the 
consumer all material terms and conditions associated with the use of 
the service, including the service provider's name and address, a 
business telephone number which the consumer may use to obtain 
additional information or to register a complaint, and the rates for the 
service;
    (ii) The service provider agrees to notify the consumer of any 
future rate changes;
    (iii) The consumer agrees to utilize the service on the terms and 
conditions disclosed by the service provider; and
    (iv) The service provider requires the use of an identification 
number or other means to prevent unauthorized access to the service by 
nonsubscribers.
    (2) Disclosure of a credit card or charge card number, along with 
authorization to bill that number, made during the course of a call to a 
pay-per-call service shall constitute a presubscription or comparable 
arrangement if the credit or charge card is subject to the dispute 
resolution requirements of the Fair Credit Billing Act and the Truth in 
Lending Act, as amended. No other action taken by the consumer during 
the course of a call to a pay-per-call service can be construed as 
creating a presubscription or comparable arrangement.
    (f) Program-length commercial means any commercial or other 
advertisement fifteen (15) minutes in length or longer or intended to 
fill a television or radio broadcasting or cablecasting time slot of 
fifteen (15) minutes in length or longer.
    (g) Provider of pay-per-call services means any person who sells or 
offers to sell a pay-per-call service. A person who provides only 
transmission services or billing and collection services shall not be 
considered a provider of pay-per-call services.

[[Page 366]]

    (h) Reasonably understandable volume means at an audible level that 
renders the message intelligible to the receiving audience, and, in any 
event, at least the same audible level as that principally used in the 
advertisement or the pay-per-call service.
    (i) Service bureau means any person, other than a common carrier, 
who provides, among other things, access to telephone service and voice 
storage to pay-per-call service providers.
    (j) Slow and deliberate manner means at a rate that renders the 
message intelligible to the receiving audience, and, in any event, at a 
cadence or rate no faster than that principally used in the 
advertisement or the pay-per-call service.
    (k) Sweepstakes, including games of chance, means a game or 
promotional mechanism that involves the elements of a prize and chance 
and does not require consideration.



Sec.308.3  Advertising of pay-per-call services.

    (a) General requirements. The following requirements apply to 
disclosures required in advertisements under Sec. Sec.308.3 (b)-(d), 
and (f):
    (1) The disclosures shall be made in the same language as that 
principally used in the advertisement.
    (2) Television video and print disclosures shall be of a color or 
shade that readily contrasts with the background of the advertisement.
    (3) In print advertisements, disclosures shall be parallel with the 
base of the advertisement.
    (4) Audio disclosures, whether in television or radio, shall be 
delivered in a slow and deliberate manner and in a reasonably 
understandable volume.
    (5) Nothing contrary to, inconsistent with, or in mitigation of, the 
required disclosures shall be used in any advertisement in any medium; 
nor shall any audio, video or print technique be used that is likely to 
detract significantly from the communication of the disclosures.
    (6) In any program-length commercial, required disclosures shall be 
made at least three times (unless more frequent disclosure is otherwise 
required) near the beginning, middle and end of the commercial.
    (b) Cost of the call. (1) The provider of pay-per-call services 
shall clearly and conspicuously disclose the cost of the call, in Arabic 
numerals, in any advertisement for the pay-per-call service, as follows:
    (i) If there is a flat fee for the call, the advertisement shall 
state the total cost of the call.
    (ii) If the call is billed on a time-sensitive basis, the 
advertisement shall state the cost per minute and any minimum charges. 
If the length of the program can be determined in advance, the 
advertisement shall also state the maximum charge that could be incurred 
if the caller listens to the complete program.
    (iii) If the call is billed on a variable rate basis, the 
advertisement shall state, in accordance with Sec. Sec.308.3(b)(1) (i) 
and (ii), the cost of the initial portion of the call, any minimum 
charges, and the range of rates that may be charged depending on the 
options chosen by the caller.
    (iv) The advertisement shall disclose any other fees that will be 
charged for the service.
    (v) if the caller may be transferred to another pay-per-call 
service, the advertisement shall disclose the cost of the other call, in 
accordance with Sec. Sec.308.3(b)(1) (i), (ii), (iii), and (iv).
    (2) For purposes of Sec.308.3(b), disclosures shall be made 
``clearly and conspicuously'' as set forth in Sec.308.3(a) and as 
follows:
    (i) In a television or videotape advertisement, the video disclosure 
shall appear adjacent to each video presentation of the pay-per-call 
number. However, in an advertisement displaying more than one pay-per-
call number with the same cost, the video disclosure need only appear 
adjacent to the largest presentation of the pay-per-call number. Each 
letter or numeral of the video disclosure shall be, at a minimum, one-
half the size of each letter or numeral of the pay-per-call number to 
which the disclosure is adjacent. In addition, the video disclosure 
shall appear on the screen for the duration of the presentation of the 
pay-per-call number. An audio disclosure shall be made at least once, 
simultaneously with a video presentation of the disclosure. However, no 
audio presentation of

[[Page 367]]

the disclosure is required in: (A) An advertisement fifteen (15) seconds 
or less in length in which the pay-per-call number is not presented in 
the audio portion, or (B) an advertisement in which there is no audio 
presentation of information regarding the pay-per-call service, 
including the pay-per-call number. In an advertisement in which the pay-
per-call number is presented only in the audio portion, the cost of the 
call shall be delivered immediately following the first and last 
delivery of the pay-per-call number, except that in a program-length 
commercial, the disclosure shall be delivered immediately following each 
delivery of the pay-per-call number.
    (ii) In a print advertisement, the disclosure shall be placed 
adjacent to each presentation of the pay-per-call number. However, in an 
advertisement displaying more than one pay-per-call number with the same 
cost, the disclosure need only appear adjacent to the largest 
presentation of the pay-per-call number. Each letter or numeral of the 
disclosure shall be, at a minimum, one-half the size of each letter or 
numeral of the pay-per-call number to which the disclosure is adjacent.
    (iii) In a radio advertisement, the disclosure shall be made at 
least once, and shall be delivered immediately following the first 
delivery of the pay-per-call number. In a program-length commercial, the 
disclosure shall be delivered immediately following each delivery of the 
pay-per-call number.
    (c) Sweepstakes; games of chance. (1) The provider of pay-per-call 
services that advertises a prize or award or a service or product at no 
cost or for a reduced cost, to be awarded to the winner of any 
sweepstakes, including games of chance, shall clearly and conspicuously 
disclose in the advertisement the odds of being able to receive the 
prize, award, service, or product at no cost or reduced cost. If the 
odds are not calculable in advance, the advertisement shall disclose the 
factors used in calculating the odds. Either the advertisement or the 
preamble required by Sec.308.5(a) for such service shall clearly and 
conspicuously disclose that no call to the pay-per-call service is 
required to participate, and shall also disclose the existence of a free 
alternative method of entry, and either instructions on how to enter, or 
a local or toll-free telephone number or address to which consumers may 
call or write for information on how to enter the sweepstakes. Any 
description or characterization of the prize, award, service, or product 
that is being offered at no cost or reduced cost shall be truthful and 
accurate.
    (2) For purposes of Sec.308.3(c), disclosures shall be made 
``clearly and conspicuously'' as set forth in Sec.308.3(a) and as 
follows:
    (i) In a television or videotape advertisement, the disclosures may 
be made in either the audio or video portion of the advertisement. If 
the disclosures are made in the video portion, they shall appear on the 
screen in sufficient size and for sufficient time to allow consumers to 
read and comprehend the disclosures.
    (ii) In a print advertisement, the disclosures shall appear in a 
sufficient size and prominence and such location to be readily 
noticeable, readable and comprehensible.
    (d) Federal programs. (1) The provider of pay-per-call services that 
advertises a pay-per-call service that is not operated or expressly 
authorized by a Federal agency, but that provides information on a 
Federal program, shall clearly and conspicuously disclose in the 
advertisement that the pay-per-call service is not authorized, endorsed, 
or approved by any Federal agency. Advertisements providing information 
on a Federal program shall include, but not be limited to, 
advertisements that contain a seal, insignia, trade or brand name, or 
any other term or symbol that reasonably could be interpreted or 
construed as implying any Federal government connection, approval, or 
endorsement.
    (2) For purposes of Sec.308.3(d), disclosures shall be made 
``clearly and conspicuously'' as set forth in Sec.308.3(a) and as 
follows:
    (i) In a television or videotape advertisement, the disclosure may 
be made in either the audio or video portion of the advertisement. If 
the disclosure is made in the video portion, it shall appear on the 
screen in sufficient size and for sufficient time to allow consumers to 
read and comprehend the disclosure.

[[Page 368]]

The disclosure shall begin within the first fifteen (15) seconds of the 
advertisement.
    (ii) In a print advertisement, the disclosure shall appear in a 
sufficient size and prominence and such location to be readily 
noticeable, readable and comprehensible. The disclosure shall appear in 
the top one-third of the advertisement.
    (iii) In a radio advertisement, the disclosure shall begin within 
the first fifteen (15) seconds of the advertisement.
    (e) Prohibition on advertising to children. (1) The provider of pay-
per-call services shall not direct advertisements for such pay-per-call 
services to children under the age of 12, unless the service is a bona 
fide educational service.
    (2) For the purposes of this regulation, advertisements directed to 
children under 12 shall include: any pay-per-call advertisement 
appearing during or immediately adjacent to programming for which 
competent and reliable audience composition data demonstrate that more 
than 50% of the audience is composed of children under 12, and any pay-
per-call advertisement appearing in a periodical for which competent and 
reliable readership data demonstrate that more than 50% of the 
readership is composed of children under 12.
    (3) For the purposes of this regulation, if competent and reliable 
audience composition or readership data does not demonstrate that more 
than 50% of the audience or readership is composed of children under 12, 
then the Commission shall consider the following criteria in determining 
whether an advertisement is directed to children under 12:
    (i) Whether the advertisement appears in a publication directed to 
children under 12, including, but not limited to, books, magazines and 
comic books;
    (ii) Whether the advertisement appears during or immediately 
adjacent to television programs directed to children under 12, 
including, but not limited to, children's programming as defined by the 
Federal Communications Commission, animated programs, and after-school 
programs;
    (iii) Whether the advertisement appears on a television station or 
channel directed to children under 12;
    (iv) Whether the advertisement is broadcast during or immediately 
adjacent to radio programs directed to children under 12, or broadcast 
on a radio station directed to children under 12;
    (v) Whether the advertisement appears on the same video as a 
commercially-prepared video directed to children under 12, or preceding 
a movie directed to children under 12 shown in a movie theater;
    (vi) Whether the advertisement or promotion appears on product 
packaging directed to children under 12; and
    (vii) Whether the advertisement, regardless of when or where it 
appears, is directed to children under 12 in light of its subject 
matter, visual content, age of models, language, characters, tone, 
message, or the like.
    (f) Advertising to individuals under the age of 18. (1) The provider 
of pay-per-call services shall ensure that any pay-per-call 
advertisement directed primarily to individuals under the age of 18 
shall contain a clear and conspicuous disclosure that all individuals 
under the age of 18 must have the permission of such individual's parent 
or legal guardian prior to calling such pay-per-call service.
    (2) For purposes of Sec.308.3(f), disclosures shall be made 
``clearly and conspicuously'' as set forth in Sec.308.3(a) and as 
follows:
    (i) In a television or videotape advertisement, each letter or 
numeral of the video disclosure shall be, at a minimum, one-half the 
size of each letter or numeral of the largest presentation of the pay-
per-call number. The video disclosure shall appear on the screen for 
sufficient time to allow consumers to read and comprehend the 
disclosure. An audio disclosure shall be made at least once, 
simultaneously with a video presentation of the disclosure. However, no 
audio presentation of the disclosure is required in: (A) An 
advertisement fifteen (15) seconds or less in length in which the pay-
per-call number is not presented in the audio portion, or (B) an 
advertisement in which there is no audio presentation of information 
regarding the pay-per-call service, including the pay-per-call number.

[[Page 369]]

    (ii) In a print advertisement, each letter or numeral of the 
disclosure shall be, at a minimum, one-half the size of each letter or 
numeral of the largest presentation of the pay-per-call number.
    (3) For the purposes of this regulation, advertisements directed 
primarily to individuals under 18 shall include: Any pay-per-call 
advertisement appearing during or immediately adjacent to programming 
for which competent and reliable audience composition data demonstrate 
that more than 50% of the audience is composed of individuals under 18, 
and any pay-per-call advertisement appearing in a periodical for which 
competent and reliable readership data demonstrate that more than 50% of 
the readership is composed of individuals under 18.
    (4) For the purposes of this regulation, if competent and reliable 
audience composition or readership data does not demonstrate that more 
than 50% of the audience or readership is composed of individuals under 
18, then the Commission shall consider the following criteria in 
determining whether an advertisement is directed primarily to 
individuals under 18:
    (i) Whether the advertisement appears in publications directed 
primarily to individuals under 18, including, but not limited to, books, 
magazines and comic books;
    (ii) Whether the advertisement appears during or immediately 
adjacent to television programs directed primarily to individuals under 
18, including, but not limited to, mid-afternoon weekday television 
shows;
    (iii) Whether the advertisement is broadcast on radio stations that 
are directed primarily to individuals under 18;
    (iv) Whether the advertisement appears on a cable or broadcast 
television station directed primarily to individuals under 18;
    (v) Whether the advertisement appears on the same video as a 
commercially-prepared video directed primarily to individuals under 18, 
or preceding a movie directed primarily to individuals under 18 shown in 
a movie theater; and
    (vi) Whether the advertisement, regardless of when or where it 
appears, is directed primarily to individuals under 18 in light of its 
subject matter, visual content, age of models, language, characters, 
tone, massage, or the like.
    (g) Electronic tones in advertisements. The provider of pay-per-call 
services is prohibited from using advertisements that emit electronic 
tones that can automatically dial a pay-per-call service.
    (h) Telephone solicitations. The provider of pay-per-call services 
shall ensure that any telephone message that solicits calls to the pay-
per-call service discloses the cost of the call in a slow and deliberate 
manner and in a reasonably understandable volume, in accordance with 
Sec. Sec.308.3(b)(1)(i)-(v).
    (i) Referral to toll-free telephone numbers. The provider of pay-
per-call services is prohibited from referring in advertisements to an 
800 telephone number, or any other telephone number advertised as or 
widely understood to be toll-free, if that number violates the 
prohibition concerning toll-free numbers set forth in Sec.308.5(i).



Sec.308.4  Special rule for infrequent publications.

    (a) The provider of any pay-per-call service that advertises a pay-
per-call service in a publication that meets the requirements set forth 
in Sec.308.4(c) may include in such advertisement, in lieu of the cost 
disclosures required by Sec.308.3(b), a clear and conspicuous 
disclosure that a call to the advertised pay-per-call service may result 
in a substantial charge.
    (b) The provider of any pay-per-call service that places an 
alphabetical listing in a publication that meets the requirements set 
forth in Sec.308.4(c) is not required to make any of the disclosures 
required by Sec. Sec.308.3 (b), (c), (d) and (f) in the alphabetical 
listing, provided that such listing does not contain any information 
except the name, address and telephone number of the pay-per-call 
provider.
    (c) The publication referred to in Sec.308.4 (a) and (b) must be:
    (1) Widely distributed;
    (2) Printed annually or less frequently; and
    (3) One that has an established policy of not publishing specific 
prices in advertisements.

[[Page 370]]



Sec.308.5  Pay-per-call service standards.

    (a) Preamble message. The provider of pay-per-call services shall 
include, in each pay-per-call message, an introductory disclosure 
message (``preamble'') in the same language as that principally used in 
the pay-per-call message, that clearly, in a slow and deliberate manner 
and in a reasonably understandable volume:
    (1) Identifies the name of the provider of the pay-per-call service 
and describes the service being provided;
    (2) Specifies the cost of the service as follows:
    (i) If there is a flat fee for the call, the preamble shall state 
the total cost of the call;
    (ii) If the call is billed on a time-sensitive basis, the preamble 
shall state the cost per minute and any minimum charges; if the length 
of the program can be determined in advance, the preamble shall also 
state the maximum charge that could be incurred if the caller listens to 
the complete program;
    (iii) If the call is billed on a variable rate basis, the preamble 
shall state, in accordance with Sec. Sec.308.5(a)(2) (i) and (ii), the 
cost of the initial portion of the call, any minimum charges, and the 
range of rates that may be charged depending on the options chosen by 
the caller;
    (iv) Any other fees that will be charged for the service shall be 
disclosed, as well as fees for any other pay-per-call service to which 
the caller may be transferred;
    (3) Informs the caller that charges for the call begin, and that to 
avoid charges the call must be terminated, three seconds after a clearly 
discernible signal or tone indicating the end of the preamble;
    (4) Informs the caller that anyone under the age of 18 must have the 
permission of parent or legal guardian in order to complete the call; 
and
    (5) Informs the caller, in the case of a pay-per-call service that 
is not operated or expressly authorized by a Federal agency but that 
provides information on a Federal program, or that uses a trade or brand 
name or any other term that reasonably could be interpreted or construed 
as implying any Federal government connection, approval or endorsement, 
that the pay-per-call service is not authorized, endorsed, or approved 
by any Federal agency.
    (b) No charge to caller for preamble message. The provider of pay-
per-call services is prohibited from charging a caller any amount 
whatsoever for such a service if the caller hangs up at any time prior 
to three seconds after the signal or tone indicating the end of the 
preamble described in Sec.308.5(a). However, the three-second delay, 
and the message concerning such delay described in Sec.308.5(a)(3), is 
not required if the provider of pay-per-call services offers the caller 
an affirmative means (such as pressing a key on a telephone keypad) of 
indicating a decision to incur the charges.
    (c) Nominal cost calls. The preamble described in Sec.308.5(a) is 
not required when the entire cost of the pay-per-call service, whether 
billed as a flat rate or on a time sensitive basis, is $2.00 or less.
    (d) Data service calls. The preamble described in Sec.308.5(a) is 
not required when the entire call consists of the non-verbal 
transmission of information.
    (e) Bypass mechanism. The provider of pay-per-call services that 
offers to frequent callers or regular subscribers to such services the 
option of activating a bypass mechanism to avoid listening to the 
preamble during subsequent calls shall not be deemed to be in violation 
of Sec.308.5(a), provided that any such bypass mechanism shall be 
disabled for a period of no less than 30 days immediately after the 
institution of an increase in the price for the service or a change in 
the nature of the service offered.
    (f) Billing limitations. The provider of pay-per-call services is 
prohibited from billing consumers in excess of the amount described in 
the preamble for those services and from billing for any services 
provided in violation of any section of this rule.
    (g) Stopping the assessment of time-based charges. The provider of 
pay-per-call services shall stop the assessment of time-based charges 
immediately upon disconnection by the caller.
    (h) Prohibition on services to children. The provider of pay-per-
call services

[[Page 371]]

shall not direct such services to children under the age of 12, unless 
such service is a bona fide educational service. The Commission shall 
consider the following criteria in determining whether a pay-per-call 
service is directed to children under 12:
    (1) Whether the pay-per-call service is advertised in the manner set 
forth in Sec. Sec.308.3(e) (2) and (3); and
    (2) Whether the pay-per-call service, regardless of when or where it 
is advertised, is directed to children under 12, in light of its subject 
matter, content, language, featured personality, characters, tone, 
message, or the like.
    (i) Prohibition concerning toll-free numbers. Any person is 
prohibited from using an 800 number or other telephone number advertised 
as or widely understood to be toll-free in a manner that would result 
in:
    (1) The calling party being assessed, by virtue of completing the 
call, a charge for the call;
    (2) The calling party being connected to an access number for, or 
otherwise transferred to, a pay-per-call service;
    (3) The calling party being charged for information conveyed during 
the call unless the calling party has a presubscription or comparable 
arrangement to be charged for the information; or
    (4) The calling party being called back collect for the provision of 
audio or data information services, simultaneous voice conversation 
services, or products.
    (j) Disclosure requirements for billing statements. The provider of 
pay-per-call services shall ensure that any billing statement for such 
provider's charges shall:
    (1) Display any charges for pay-per-call services in a portion of 
the consumer's bill that is identified as not being related to local and 
long distance telephone charges;
    (2) For each charge so displayed, specify the type of service, the 
amount of the charge, and the date, time, and, for calls billed on a 
time-sensitive basis, the duration of the call; and
    (3) Display the local or toll-free telephone number where consumers 
can obtain answers to their questions and information on their rights 
and obligations with regard to their use of pay-per-call services, and 
can obtain the name and mailing address of the provider of pay-per-call 
services.
    (k) Refunds to consumers. The provider of pay-per-call services 
shall be liable for refunds or credits to consumers who have been billed 
for pay-per-call services, and who have paid the charges for such 
services, pursuant to pay-per-call programs that have been found to have 
violated any provision of this rule or any other Federal rule or law.
    (l) Service bureau liability. A service bureau shall be liable for 
violations of the rule by pay-per-call services using its call 
processing facilities where it knew or should have known of the 
violation.



Sec.308.6  Access to information.

    Any common carrier that provides telecommunication services to any 
provider of pay-per-call services shall make available to the 
Commission, upon written request, any records and financial information 
maintained by such carrier relating to the arrangements (other than for 
the provision of local exchange service) between such carrier and any 
provider of pay-per-call services.



Sec.308.7  Billing and collection for pay-per-call services.

    (a) Definitions. For the purposes of this section, the following 
definitions shall apply:
    (1) Billing entity means any person who transmits a billing 
statement to a customer for a telephone-billed purchase, or any person 
who assumes responsibility for receiving and responding to billing error 
complaints or inquiries.
    (2) Billing error means any of the following:
    (i) A reflection on a billing statement of a telephone-billed 
purchase that was not made by the customer nor made from the telephone 
of the customer who was billed for the purchase or, if made, was not in 
the amount reflected on such statement.
    (ii) A reflection on a billing statement of a telephone-billed 
purchase for which the customer requests additional clarification, 
including documentary evidence thereof.

[[Page 372]]

    (iii) A reflection on a billing statement of a telephone-billed 
purchase that was not accepted by the customer or not provided to the 
customer in accordance with the stated terms of the transaction.
    (iv) A reflection on a billing statement of a telephone-billed 
purchase for a call made to an 800 or other toll free telephone number.
    (v) The failure to reflect properly on a billing statement a payment 
made by the customer or a credit issued to the customer with respect to 
a telephone-billed purchase.
    (vi) A computation error or similar error of an accounting nature on 
a billing statement of a telephone-billed purchase.
    (vii) Failure to transmit a billing statement for a telephone-billed 
purchase to a customer's last known address if that address was 
furnished by the customer at least twenty days before the end of the 
billing cycle for which the statement was required.
    (viii) A reflection on a billing statement of a telephone-billed 
purchase that is not identified in accordance with the requirements of 
Sec.308.5(j).
    (3) Customer means any person who acquires or attempts to acquire 
goods or services in a telephone-billed purchase, or who receives a 
billing statement for a telephone-billed purchase charged to a telephone 
number assigned to that person by a providing carrier.
    (4) Preexisting agreement means a ``presubscription or comparable 
arrangement,'' as that term is defined in Sec.308.2(e).
    (5) Providing carrier means a local exchange or interexchange common 
carrier providing telephone services (other than local exchange 
services) to a vendor for a telephone-billed purchase that is the 
subject of a billing error complaint or inquiry.
    (6) Telephone-billed purchase means any purchase that is completed 
solely as a consequence of the completion of the call or a subsequent 
dialing, touch tone entry, or comparable action of the caller. Such term 
does not include:
    (i) A purchase by a caller pursuant to a preexisting agreement with 
a vendor;
    (ii) Local exchange telephone services or interexchange telephone 
services or any service that the Federal Communications Commission 
determines by rule--
    (A) Is closely related to the provision of local exchange telephone 
services or interexchange telephone services; and
    (B) Is subject to billing dispute resolution procedures required by 
Federal or state statute or regulation; or
    (iii) The purchase of goods or services that is otherwise subject to 
billing dispute resolution procedures required by Federal statute or 
regulation.
    (7) Vendor means any person who, through the use of the telephone, 
offers goods or services for a telephone-billed purchase.
    (b) Initiation of billing review. A customer may initiate a billing 
review with respect to a telephone-billed purchase by providing the 
billing entity with notice of a billing error no later than 60 days 
after the billing entity transmitted the first billing statement that 
contains a charge for such telephone-billed purchase. If the billing 
error is the reflection on a billing statement of a telephone-billed 
purchase not provided to the customer in accordance with the stated 
terms of the transaction, the 60-day period shall begin to run from the 
date the goods or services are delivered or, if not delivered, should 
have been delivered, if such date is later than the date the billing 
statement was transmitted. A billing error notice shall:
    (1) Set forth or otherwise enable the billing entity to identify the 
customer's name and the telephone number to which the charge was billed;
    (2) Indicate the customer's belief that the statement contains a 
billing error and the type, date, and amount of such; and
    (3) Set forth the reasons for the customer's belief, to the extent 
possible, that the statement contains a billing error.
    (c) Disclosure of method of providing notice; presumption if oral 
notice is permitted. A billing entity shall clearly and conspicuously 
\2\ disclose on each

[[Page 373]]

billing statement or on other material accompanying the billing 
statement the method (oral or written) by which the customer may provide 
notice to initiate review of a billing error in the manner set forth in 
Sec.308.7(b). If oral notice is permitted, any customer who orally 
communicates an allegation of a billing error to a billing entity shall 
be presumed to have properly initiated a billing review in accordance 
with the requirements of Sec.308.7(b).
---------------------------------------------------------------------------

    \2\ The standard for ``clear and conspicuous'' as used in this 
section shall be the standard enunciated by the Board of Governors of 
the Federal Reserve System in its Official Staff Commentary on 
Regulation Z, which requires simply that the disclosures be in a 
reasonably understandable form. See 12 CFR part 226, Supplement I, 
Comment 226.5(a)(1)-1.
---------------------------------------------------------------------------

    (d) Response to customer notice. A billing entity that receives 
notice of a billing error as described in Sec.308.7(b) shall:
    (1) Send a written acknowledgement to the customer including a 
statement that any disputed amount need not be paid pending 
investigation of the billing error. This shall be done no later than 
forty (40) days after receiving the notice, unless the action required 
by Sec.308.7(d)(2) is taken within such 40-day period; and
    (2)(i) Correct the billing error and credit the customer's account 
for any disputed amount and any related charges, and notify the customer 
of the correction. The billing entity also shall disclose to the 
customer that collection efforts may occur despite the credit, and shall 
provide the names, mailing addresses, and business telephone numbers of 
the vendor and providing carrier, as applicable, that are the subject of 
the telephone-billed purchase, or provide the customer with a local or 
toll-free telephone number that the customer may call to obtain this 
information directly. However, the billing entity is not required to 
make the disclosure concerning collection efforts if the vendor, its 
agent, or the providing carrier, as applicable, will not collect or 
attempt to collect the disputed charge; or
    (ii) Transmit an explanation to the customer, after conducting a 
reasonable investigation (including, where appropriate, contacting the 
vendor or providing carrier), \3\ setting forth the reasons why it has 
determined that no billing error occurred or that a different billing 
error occurred from that asserted, make any appropriate adjustments to 
the customer's account, and, if the customer so requests, provide a 
written explanation and copies of documentary evidence of the customer's 
indebtedness.
---------------------------------------------------------------------------

    \3\ If a customer submits a billing error notice alleging either the 
nondelivery of goods or services or that information appearing on a 
billing statement has been reported incorrectly to the billing entity, 
the billing entity shall not deny the assertion unless it conducts a 
reasonable investigation and determines that the goods or services were 
actually delivered as agreed or that the information was correct. There 
shall be a rebuttable presumption that goods or services were actually 
delivered to the extent that a vendor or providing carrier produces 
documents prepared and maintained in the ordinary course of business 
showing the date on, and the place to, which the goods or services were 
transmitted or delivered.
---------------------------------------------------------------------------

    (3) The action required by Sec.308.7(d)(2) shall be taken no later 
than two complete billing cycles of the billing entity (in no event 
later than ninety (90) days) after receiving the notice of the billing 
error and before taking any action to collect the disputed amount, or 
any part thereof. After complying with Sec.308.7(d)(2), the billing 
entity shall:
    (i) If it is determined that any disputed amount is in error, 
promptly notify the appropriate providing carrier or vendor, as 
applicable, of its disposition of the customer's billing error and the 
reasons therefor; and
    (ii) Promptly notify the customer in writing of the time when 
payment is due of any portion of the disputed amount determined not to 
be in error, which time shall be the longer of ten (10) days or the 
number of days the customer is ordinarily allowed (whether by custom, 
contract or state law) to pay undisputed amounts, and that failure to 
pay such amount may be reported to a credit reporting agency or subject 
the customer to a collection action, if that in fact may happen.
    (e) Withdrawal of billing error notice. A billing entity need not 
comply with the requirements of Sec.308.7(d) if the customer has, 
after giving notice of a billing error and before the expiration of the 
time limits specified therein, agreed that the billing statement was 
correct or agreed to withdraw voluntarily the billing error notice.

[[Page 374]]

    (f) Limitation on responsibility for billing error. After complying 
with the provisions of Sec.308.7(d), a billing entity has no further 
responsibility under that section if the customer continues to make 
substantially the same allegation with respect to a billing error.
    (g) Customer's right to withhold disputed amount; limitation on 
collection action. Once the customer has submitted notice of a billing 
error to a billing entity, the customer need not pay, and the billing 
entity, providing carrier, or vendor may not try to collect, any portion 
of any required payment that the customer reasonably believes is related 
to the disputed amount until the billing entity receiving the notice has 
complied with the requirements of Sec.308.7(d). The billing entity, 
providing carrier, or vendor are not prohibited from taking any action 
to collect any undisputed portion of the bill, or from reflecting a 
disputed amount and related charges on a billing statement, provided 
that the billing statement clearly states that payment of any disputed 
amount or related charges is not required pending the billing entity's 
compliance with Sec.308.7(d).
    (h) Prohibition on charges for initiating billing review. A billing 
entity, providing carrier, or vendor may not impose on the customer any 
charge related to the billing review, including charges for 
documentation or investigation.
    (i) Restrictions on credit reporting--(1) Adverse credit reports 
prohibited. Once the customer has submitted notice of a billing error to 
a billing entity, a billing entity, providing carrier, vendor, or other 
agent may not report or threaten directly or indirectly to report 
adverse information to any person because of the customer's withholding 
payment of the disputed amount or related charges, until the billing 
entity has met the requirements of Sec.308.7(d) and allowed the 
customer as many days thereafter to make payment as prescribed by Sec.
308.7(d)(3)(ii).
    (2) Reports on continuing disputes. If a billing entity receives 
further notice from a customer within the time allowed for payment under 
Sec.308.7(i)(1) that any portion of the billing error is still in 
dispute, a billing entity, providing carrier, vendor, or other agent may 
not report to any person that the customer's account is delinquent 
because of the customer's failure to pay that disputed amount unless the 
billing entity, providing carrier, vendor, or other agent also reports 
that the amount is in dispute and notifies the customer in writing of 
the name and address of each person to whom the vendor, billing entity, 
providing carrier, or other agent has reported the account as 
delinquent.
    (3) Reporting of dispute resolutions required. A billing entity, 
providing carrier, vendor, or other agent shall report in writing any 
subsequent resolution of any matter reported pursuant to Sec.
308.7(i)(2) to all persons to whom such matter was initially reported.
    (j) Forfeiture of right to collect disputed amount. Any billing 
entity, providing carrier, vendor, or other agent who fails to comply 
with the requirements of Sec. Sec.308.7(c), (d), (g), (h), or (i) 
forfeits any right to collect from the customer the amount indicated by 
the customer, under Sec.308.7(b)(2), to be in error, and any late 
charges or other related charges thereon, up to $50 per transaction.
    (k) Prompt notification of returns and crediting of refunds. When a 
vendor other than the billing entity accepts the return of property or 
forgives a debt for services in connection with a telephone-billed 
purchase, the vendor shall, within seven (7) business days from 
accepting the return or forgiving the debt, either:
    (1) Mail or deliver a cash refund directly to the customer's 
address, and notify the appropriate billing entity that the customer has 
been given a refund, or
    (2) Transmit a credit statement to the billing entity through the 
vendor's normal channels for billing telephone-billed purchases. The 
billing entity shall, within seven (7) business days after receiving a 
credit statement, credit the customer's account with the amount of the 
refund.
    (l) Right of customer to assert claims or defenses. Any billing 
entity or providing carrier who seeks to collect charges from a customer 
for a telephone-billed purchase that is the subject of a dispute between 
the customer and the vendor shall be subject to all

[[Page 375]]

claims (other than tort claims) and defenses arising out of the 
transaction and relating to the failure to resolve the dispute that the 
customer could assert against the vendor, if the customer has made a 
good faith attempt to resolve the dispute with the vendor or providing 
carrier (other than the billing entity). The billing entity or providing 
carrier shall not be liable under this paragraph for any amount greater 
than the amount billed to the customer for the purchase (including any 
related charges).
    (m) Retaliatory actions prohibited. A billing entity, providing 
carrier, vendor, or other agent may not accelerate any part of the 
customer's indebtedness or restrict or terminate the customer's access 
to pay-per-call services solely because the customer has exercised in 
good faith rights provided by this section.
    (n) Notice of billing error rights--(1) Annual statement. (i) A 
billing entity shall mail or deliver to each customer, with the first 
billing statement for a telephone-billed purchase mailed or delivered 
after the effective date of these regulations, a statement of the 
customer's billing rights with respect to telephone-billed purchases. 
Thereafter the billing entity shall mail or deliver the billing rights 
statement at least once per calendar year to each customer to whom it 
has mailed or delivered a billing statement for a telephone-billed 
purchase during the previous twelve months. The billing rights statement 
shall disclose that the rights and obligations of the customer and the 
billing entity, set forth therein, are provided under the federal 
Telephone Disclosure and Dispute Resolution Act. The statement shall 
describe the procedure that the customer must follow to notify the 
billing entity of a billing error and the steps that the billing entity 
must take in response to the customer's notice. If the customer is 
permitted to provide oral notice of a billing error, the statement shall 
disclose that a customer who orally communicates an allegation of a 
billing error is presumed to have provided sufficient notice to initiate 
a billing review. The statement shall also disclose the customer's right 
to withhold payment of any disputed amount, and that any action to 
collect any disputed amount will be suspended, pending completion of the 
billing review. The statement shall further disclose the customer's 
rights and obligations if the billing entity determines that no billing 
error occurred, including what action the billing entity may take if the 
customer continues to withhold payment of the disputed amount. 
Additionally, the statement shall inform the customer of the billing 
entity's obligation to forfeit any disputed amount (up to $50 per 
transaction) if the billing entity fails to follow the billing and 
collection procedures prescribed by Sec.308.7 of this rule.
    (ii) A billing entity that is a common carrier may comply with Sec.
308.7(n)(1)(i) by, within 60 days after the effective date of these 
regulations, mailing or delivering the billing rights statement to all 
of its customers and, thereafter, mailing or delivering the billing 
rights statement at least once per calendar year, at intervals of not 
less than 6 months nor more than 18 months, to all of its customers.
    (2) Alternative summary statement. As an alternative to Sec.
308.7(n)(1), a billing entity may mail or deliver, on or with each 
billing statement, a statement that sets forth the procedure that a 
customer must follow to notify the billing entity of a billing error. 
The statement shall also disclose the customer's right to withhold 
payment of any disputed amount, and that any action to collect any 
disputed amount will be suspended, pending completion of the billing 
review.
    (3) General disclosure requirements. (i) The disclosures required by 
Sec.308.7(n)(1) shall be made clearly and conspicuously on a separate 
statement that the customer may keep.
    (ii) The disclosures required by Sec.308.7(n)(2) shall be made 
clearly and conspicuously and may be made on a separate statement or on 
the customer's billing statement. If any of the disclosures are provided 
on the back of the billing statement, the billing entity shall include a 
reference to those disclosures on the front of the statement.
    (iii) At the billing entity's option, additional information or 
explanations may be supplied with the disclosures

[[Page 376]]

required by Sec.308.7(n), but none shall be stated, utilized, or 
placed so as to mislead or confuse the customer or contradict, obscure, 
or detract attention from the information required to be disclosed. The 
disclosures required by Sec.308.7(n) shall appear separately and above 
any other disclosures.
    (o) Multiple billing entities. If a telephone-billed purchase 
involves more than one billing entity, only one set of disclosures need 
by given, and the billing entities shall agree among themselves which 
billing entity must comply with the requirements that this regulation 
imposes on any or all of them. The billing entity designated to receive 
and respond to billing errors shall remain the only billing entity 
responsible for complying with the terms of Sec.308.7(d). If a billing 
entity other than the one designated to receive and respond to billing 
errors receives notice of a billing error as described in Sec.
308.7(b), that billing entity shall either: (1) Promptly transmit to the 
customer the name, mailing address, and business telephone number of the 
billing entity designated to receive and respond to billing errors; or 
(2) transmit the billing error notice within fifteen (15) days to the 
billing entity designated to receive and respond to billing errors. The 
time requirements in Sec.308.7(d) shall not begin to run until the 
billing entity designated to receive and respond to billing errors 
receives notice of the billing error, either from the customer or from 
the billing entity to whom the customer transmitted the notice.
    (p) Multiple customers. If there is more than one customer involved 
in a telephone-billed purchase, the disclosures may be made to any 
customer who is primarily liable on the account.



Sec.308.8  Severability.

    The provisions of this rule are separate and severable from one 
another. If any provision is stayed or determined to be invalid, it is 
the Commission's intention that the remaining provisions shall continue 
in effect.



Sec.308.9  Rulemaking review.

    No later than four years after the effective date of this Rule, the 
Commission shall initiate a rulemaking review proceeding to evaluate the 
operation of the rule.



PART 309_LABELING REQUIREMENTS FOR ALTERNATIVE FUELS AND ALTERNATIVE
FUELED VEHICLES--Table of Contents



                            Subpart A_General

Sec.
309.1 Definitions.
309.2 What this part does.
309.3 Stayed or invalid portions.
309.4 Preemption.

              Subpart B_Requirements for Alternative Fuels

 Duties of Importers, Producers, and Refiners of Non-Liquid Alternative 
Vehicle Fuels (Other Than Electricity) and of Manufacturers of Electric 
                     Vehicle Fuel Dispensing Systems

309.10 Alternative vehicle fuel rating.
309.11 Certification.
309.12 Recordkeeping.

 Duties of Distributors of Non-Liquid Alternative Vehicle Fuels (Other 
    Than Electricity) and of Electric Vehicle Fuel Dispensing Systems

309.13 Certification.
309.14 Recordkeeping.

                           Duties of Retailers

309.15 Posting of non-liquid alternative vehicle fuel rating.
309.16 Recordkeeping.

                          Label Specifications

309.17 Labels.

         Subpart C_Requirements for Alternative Fueled Vehicles

309.20 Labeling requirements for new covered vehicles.
309.21 Recordkeeping.

Appendix A to Part 309--Figures for Part 309

    Authority: 42 U.S.C. 13232(a).

    Source: 60 FR 26955, May 19, 1995, unless otherwise noted.



                            Subpart A_General



Sec.309.1  Definitions.

    As used in subparts B and C of this part:
    (a) Acquisition includes either of the following:

[[Page 377]]

    (1) Acquiring the beneficial title to a covered vehicle; or
    (2) Acquiring a covered vehicle for transportation purposes pursuant 
to a contract or similar arrangement for a period of 120 days or more.
    (b) Aftermarket conversion system means any combination of hardware 
which allows a vehicle or engine to operate on a fuel other than the 
fuel which the vehicle or engine was originally certified to use.
    (c) Alternative fuel means
    (1) Methanol, denatured ethanol, and other alcohols;
    (2) Mixtures containing 85 percent or more by volume of methanol, 
denatured ethanol, and/or other alcohols (or such other percentage, but 
not less than 70 percent, as determined by the Secretary, by rule, to 
provide for requirements relating to cold start, safety, or vehicle 
functions), with gasoline or other fuels;
    (3) Natural gas;
    (4) Liquefied petroleum gas;
    (5) Hydrogen;
    (6) Coal-derived liquid fuels;
    (7) Fuels (other than alcohol) derived from biological materials;
    (8) Electricity (including electricity from solar energy); and
    (9) Any other fuel the Secretary determines, by rule, is 
substantially not petroleum and would yield substantial energy security 
benefits and substantial environmental benefits.
    (d)(1) Consumer in subpart C means an individual, corporation, 
partnership, association, State, municipality, political subdivision of 
a State, and any agency, department, or instrumentality of the United 
States.
    (2) Consumer or ultimate purchaser in subpart B means, with respect 
to any non-liquid alternative vehicle fuel (including electricity), the 
first person who purchases such fuel for purposes other than resale.
    (e) Conventional fuel means gasoline or diesel fuel.
    (f) Covered vehicle means either of the following:
    (1) A dedicated or dual fueled passenger car (or passenger car 
derivative) capable of seating 12 passengers or less; or
    (2) A dedicated or dual fueled motor vehicle (other than a passenger 
car or passenger car derivative) with a gross vehicle weight rating less 
than 8,500 pounds which has a vehicle curb weight of less than 6,000 
pounds and which has a basic vehicle frontal area of less than 45 square 
feet, which is:
    (i) Designed primarily for purposes of transportation of property or 
is a derivation of such a vehicle; or
    (ii) Designed primarily for transportation of persons and has a 
capacity of more than 12 persons; or
    (3) Any vehicle that is--
    (i) A new qualified fuel cell motor vehicle (as defined in 26 U.S.C. 
30B(b)(3));
    (ii) A new advanced lean burn technology motor vehicle (as defined 
in 26 U.S.C. 30B(c)(3));
    (iii) A new qualified hybrid motor vehicle (as defined in 26 U.S.C. 
30B(d)(3)); or
    (iv) Any other type of vehicle that the Administrator of the 
Environmental Protection Agency demonstrates to the Secretary would 
achieve a significant reduction in petroleum consumption.
    (g) Dedicated means designed to operate solely on alternative fuel.
    (h) Distributor means any person, except a common carrier, who 
receives non-liquid alternative vehicle fuel (other than electricity) 
and distributes such fuel to another person other than the consumer. It 
also means any person, except a common carrier, who receives an electric 
vehicle fuel dispensing system and distributes such system to a 
retailer.
    (i) Dual fueled means capable of operating on alternative fuel and 
capable of operating on conventional fuel.
    (j) Electric charging system equipment means equipment that includes 
an electric battery charger and is used for dispensing electricity to 
consumers for the purpose of recharging batteries in an electric 
vehicle.
    (k) Electric vehicle (``EV'') means a vehicle designed to operate 
exclusively on electricity stored in a rechargeable battery, multiple 
batteries, or battery pack.
    (l) Electric vehicle fuel dispensing system means electric charging 
system equipment or an electrical energy dispensing system.
    (m) Electrical energy dispensing system means equipment that does 
not include

[[Page 378]]

an electric charger and is used for dispensing electricity to consumers 
for the purpose of recharging batteries in an electric vehicle that 
contains an on-board electric battery charger.
    (n) Emission certification standard means the emission standard to 
which a covered vehicle has been certified pursuant to 40 CFR parts 86 
and 88.
    (o) Estimated cruising range for non-EVs means a manufacturer's 
reasonable estimate of the number of miles a new covered vehicle will 
travel between refueling, expressed as a lower estimate (i.e., minimum 
estimated cruising range) and an upper estimate (i.e., maximum estimated 
cruising range), as determined by Sec.309.22. Estimated cruising range 
for EVs means a manufacturer's reasonable estimate of the number of 
miles a new covered EV will travel between recharging, expressed as a 
single estimate, as determined by Sec.309.22.
    (p) Fuel dispenser means:
    (1) For non-liquid alternative vehicle fuels (other than 
electricity), the dispenser through which a retailer sells the fuel to 
consumers.
    (2) For electric vehicle fuel dispensing systems, the dispenser 
through which a retailer dispenses electricity to consumers for the 
purpose of recharging batteries in an electric vehicle.
    (q) Fuel rating means:
    (1) For non-liquid alternative vehicle fuels (other than 
electricity), including, but not limited to, compressed natural gas and 
hydrogen gas, the commonly used name of the fuel with a disclosure of 
the amount, expressed as a minimum molecular percentage, of the 
principal component of the fuel. A disclosure of other components, 
expressed as a minimum molecular percentage, may be included, if 
desired.
    (2) For electric vehicle fuel dispensing systems, a common 
identifier (such as, but not limited to, ``electricity,'' ``electric 
charging system,'' ``electric charging station'') with a disclosure of 
the system's kilowatt (``kW'') capacity, voltage, whether the voltage is 
alternating current (``ac'') or direct current (``dc''), amperage, and 
whether the system is conductive or inductive.
    (r) Manufacturer means the person who obtains a certificate of 
conformity that the vehicle complies with the standards and requirements 
of 40 CFR parts 86 and 88.
    (s) Manufacturer of an electric vehicle fuel dispensing system means 
any person who manufactures or assembles an electric vehicle fuel 
dispensing system that is distributed specifically for use by retailers 
in dispensing electricity to consumers for the purpose of recharging 
batteries in an electric vehicle.
    (t) New covered vehicle means a covered vehicle which has not been 
acquired by a consumer.
    (u) New vehicle dealer means a person who is engaged in the sale or 
leasing of new covered vehicles.
    (v) New vehicle label means a window sticker containing the 
information required by Sec.309.20(e).
    (w) Non-liquid alternative fueled vehicle means a vehicle capable of 
operating on a non-liquid alternative vehicle fuel.
    (x) Non-liquid alternative vehicle fuel means alternative fuel used 
for the purpose of powering a non-liquid alternative fueled vehicle, 
including, but not limited to, compressed natural gas (``CNG''), 
hydrogen gas (``hydrogen''), electricity, and any other non-liquid 
vehicle fuel the Secretary determines, by rule, is substantially not 
petroleum and would yield substantial energy benefits and substantial 
environmental benefits.
    (y) Person means an individual, partnership, corporation, or any 
other business organization.
    (z) Producer means any person who purchases component elements and 
combines them to produce and market non-liquid alternative vehicle fuel 
(other than electricity).
    (aa) Refiner means any person engaged in the production or 
importation of non-liquid alternative vehicle fuel (other than 
electricity).
    (bb) Retailer means any person who offers for sale, sells, or 
distributes non-liquid alternative vehicle fuel (including electricity) 
to consumers.
    (cc) Secretary means the Secretary of the United States Department 
of Energy.

[[Page 379]]

    (dd) Vehicle fuel tank capacity means the tank's usable capacity 
(i.e., the volume of fuel that can be pumped into the tank through the 
filler pipe with the vehicle on a level surface and with the unusable 
capacity already in the tank). The term does not include unusable 
capacity (i.e., the volume of fuel left at the bottom of the tank when 
the vehicle's fuel pump can no longer draw fuel from the tank), the 
vapor volume of the tank (i.e., the space above the fuel tank filler 
neck), or the volume of the fuel tank filler neck.

[60 FR 26955, May 19, 1995, as amended at 78 FR 23835, Apr. 23, 2013]



Sec.309.2  What this part does.

    This part establishes labeling requirements for non-liquid 
alternative vehicle fuels, and for certain vehicles powered in whole or 
in part by alternative fuels.



Sec.309.3  Stayed or invalid portions.

    If any portion of this part is stayed or held invalid, the rest of 
it will stay in force.



Sec.309.4  Preemption.

    Inconsistent state and local regulations are preempted to the extent 
they would frustrate the purposes of this part.



              Subpart B_Requirements for Alternative Fuels

 Duties of Importers, Producers, and Refiners of Non-Liquid Alternative 
Vehicle Fuels (Other Than Electricity) and of Manufacturers of Electric 
                     Vehicle Fuel Dispensing Systems



Sec.309.10  Alternative vehicle fuel rating.

    (a) If you are an importer, producer, or refiner of non-liquid 
alternative vehicle fuel (other than electricity), you must determine 
the fuel rating of all non-liquid alternative vehicle fuel (other than 
electricity) before you transfer it. You can do that yourself or through 
a testing lab. To determine fuel ratings, you must possess a reasonable 
basis, consisting of competent and reliable evidence, for the minimum 
percentage of the principal component of the non-liquid alternative 
vehicle fuel (other than electricity) that you must disclose, and for 
the minimum percentages of other components that you choose to disclose. 
For the purposes of this section, fuel ratings for the minimum 
percentage of the principal component of compressed natural gas are to 
be determined in accordance with test methods set forth in American 
Society for Testing and Materials (``ASTM'') D 1945-91, ``Standard Test 
Method for Analysis of Natural Gas by Gas Chromatography.'' For the 
purposes of this section, fuel ratings for the minimum percentage of the 
principal component of hydrogen gas are to be determined in accordance 
with test methods set forth in ASTM D 1946-90, ``Standard Practice for 
Analysis of Reformed Gas by Gas Chromatography.'' This incorporation by 
reference was approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of D 1945-91 
and D 1946-90 may be obtained from the American Society for Testing and 
Materials, 1916 Race Street, Philadelphia, PA 19103, or may be inspected 
at the Federal Trade Commission, Public Reference Room, room 130, 600 
Pennsylvania Avenue, NW, Washington, DC, or at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.
    (b) If you are a manufacturer of electric vehicle fuel dispensing 
systems, you must determine the fuel rating of the electric charge 
delivered by the electric vehicle fuel dispensing system before you 
transfer such systems. To determine the fuel rating of the electric 
vehicle fuel dispensing system, you must possess a reasonable basis, 
consisting of competent and reliable evidence, for the following output 
information you must disclose: kilowatt (``kW'') capacity, voltage, 
whether the voltage is alternating current (``ac'') or direct current 
(``dc''), amperage, and whether the system is conductive or inductive.

[60 FR 26955, May 19, 1995, as amended at 69 FR 18803, Apr. 9, 2004]

[[Page 380]]



Sec.309.11  Certification.

    (a) For non-liquid alternative vehicle fuel (other than 
electricity), in each transfer you make to anyone who is not a consumer, 
you must certify the fuel rating of the non-liquid alternative vehicle 
fuel (other than electricity) consistent with your determination. You 
can do this in either of two ways:
    (1) Include a delivery ticket or other paper with each transfer of 
non-liquid alternative vehicle fuel (other than electricity). It may be 
an invoice, bill of lading, bill of sale, terminal ticket, delivery 
ticket, or any other written proof of transfer. It must contain at least 
these four items:
    (i) Your name;
    (ii) The name of the person to whom the non-liquid alternative 
vehicle fuel (other than electricity) is transferred;
    (iii) The date of the transfer; and
    (iv) The fuel rating.
    (2) Give the person a letter or written statement. This letter must 
include the date, your name, the other person's name, and the fuel 
rating of any non-liquid alternative vehicle fuel (other than 
electricity) you will transfer to that person from the date of the 
letter onwards. This letter of certification will be good until you 
transfer non-liquid alternative vehicle fuel (other than electricity) 
with a lower percentage of the principal component, or of any other 
component disclosed in the certification. When this happens, you must 
certify the fuel rating of the new non-liquid alternative vehicle fuel 
(other than electricity) either with a delivery ticket or by sending a 
new letter of certification.
    (b) For electric vehicle fuel dispensing systems, in each transfer 
you make to anyone who is not a consumer, you must certify the fuel 
rating of the electric vehicle fuel dispensing system consistent with 
your determination. You can do this in either of two ways:
    (1) Include a delivery ticket or other paper with each transfer of 
an electric vehicle fuel dispensing system. It may be an invoice, bill 
of lading, bill of sale, delivery ticket, or any other written proof of 
transfer. It must contain at least these five items:
    (i) Your name;
    (ii) The name of the person to whom the electric vehicle fuel 
dispensing system is transferred;
    (iii) The date of the transfer;
    (iv) The model number, serial number, or other identifier of the 
electric vehicle fuel dispensing system; and
    (v) The fuel rating.
    (2) Make the required certification by placing clearly and 
conspicuously on the electric vehicle fuel dispensing system a permanent 
legible marking or permanently attached label that discloses the 
manufacturer's name, the model number, serial number, or other 
identifier of the system, and the fuel rating. Such marking or label 
must be located where it can be seen after installation of the system. 
The marking or label will be deemed ``legible,'' in terms of placement, 
if it is located in close proximity to the manufacturer's identification 
marking. This marking or label must be in addition to, and not a 
substitute for, the label required to be posted on the electric vehicle 
fuel dispensing system by the retailer.
    (c) When you transfer non-liquid alternative vehicle fuel (other 
than electricity), or an electric vehicle fuel dispensing system, to a 
common carrier, you must certify the fuel rating of the non-liquid 
alternative vehicle fuel (other than electricity) or electric vehicle 
fuel dispensing system to the common carrier, either by letter or on the 
delivery ticket or other paper, or by a permanent marking or label 
attached to the electric vehicle fuel dispensing system by the 
manufacturer.



Sec.309.12  Recordkeeping.

    You must keep for one year records of how you determined fuel 
ratings. The records must be available for inspection by Federal Trade 
Commission staff members, or by people authorized by FTC.

 Duties of Distributors of Non-Liquid Alternative Vehicle Fuels (Other 
    Than Electricity) and of Electric Vehicle Fuel Dispensing Systems



Sec.309.13  Certification.

    (a) If you are a distributor of non-liquid alternative vehicle fuel 
(other than electricity), you must certify the fuel rating of the fuel 
in each transfer you

[[Page 381]]

make to anyone who is not a consumer. You may certify either by using a 
delivery ticket or other paper with each transfer of fuel, as outlined 
in Sec.309.11(a)(1), or by using a letter of certification, as 
outlined in Sec.309.11(a)(2).
    (b) If you are a distributor of electric vehicle fuel dispensing 
systems, you must certify the fuel rating of the system in each transfer 
you make to anyone who is not a consumer. You may certify by using a 
delivery ticket or other paper with each transfer, as outlined in Sec.
309.11(b)(1), or by using the permanent marking or permanent label 
attached to the system by the manufacturer, as outlined in Sec.
309.11(b)(2).
    (c) If you do not blend non-liquid alternative vehicle fuels (other 
than electricity), you must certify consistent with the fuel rating 
certified to you. If you blend non-liquid alternative vehicle fuel 
(other than electricity), you must possess a reasonable basis, 
consisting of competent and reliable evidence, as required by Sec.
309.10(a), for the fuel rating that you certify for the blend.
    (d) When you transfer non-liquid alternative vehicle fuel (other 
than electricity), or an electric vehicle fuel dispensing system, to a 
common carrier, you must certify the fuel rating of the non-liquid 
alternative vehicle fuel (other than electricity) or electric vehicle 
fuel dispensing system to the common carrier, either by letter or on the 
delivery ticket or other paper, or by a permanent marking or label 
attached to the electric vehicle fuel dispensing system by the 
manufacturer. When you receive non-liquid alternative vehicle fuel 
(other than electricity), or an electric vehicle fuel dispensing system, 
from a common carrier, you also must receive from the common carrier a 
certification of the fuel rating of the non-liquid alternative vehicle 
fuel (other than electricity) or electric vehicle fuel dispensing 
system, either by letter or on the delivery ticket or other paper, or by 
a permanent marking or label attached to the electric vehicle fuel 
dispensing system by the manufacturer.



Sec.309.14  Recordkeeping.

    You must keep for one year any delivery tickets, letters of 
certification, or other paper on which you based your fuel rating 
certifications for non-liquid alternative vehicle fuels (other than 
electricity) and for electric vehicle fuel dispensing systems. You also 
must keep for one year records of any fuel rating determinations you 
made according to Sec.309.10. If you rely for your certification on a 
permanent marking or permanent label attached to the electric vehicle 
fuel dispensing system by the manufacturer, you must not remove or 
deface the permanent marking or label. The records must be available for 
inspection by Federal Trade Commission staff members, or by persons 
authorized by FTC.

                           Duties of Retailers



Sec.309.15  Posting of non-liquid alternative vehicle fuel rating.

    (a) If you are a retailer who offers for sale or sells non-liquid 
alternative vehicle fuel (other than electricity) to consumers, you must 
post the fuel rating of each non-liquid alternative vehicle fuel. If you 
are a retailer who offers for sale or sells electricity to consumers 
through an electric vehicle fuel dispensing system, you must post the 
fuel rating of the electric vehicle fuel dispensing system you use. You 
must do this by putting at least one label on the face of each fuel 
dispenser through which you sell non-liquid alternative vehicle fuel. If 
you are selling two or more kinds of non-liquid alternative vehicle 
fuels with different fuel ratings from a single fuel dispenser, you must 
put separate labels for each kind of non-liquid alternative vehicle fuel 
on the face of the fuel dispenser.
    (b)(1) The label, or labels, must be placed conspicuously on the 
fuel dispenser so as to be in full view of consumers and as near as 
reasonably practical to the price per unit of the non-liquid alternative 
vehicle fuel.
    (2) You may petition for an exemption from the placement 
requirements by writing the Secretary of the Federal Trade Commission, 
Washington, DC 20580. You must state the reasons that you want the 
exemption.
    (c) If you do not blend non-liquid alternative vehicle fuels (other 
than electricity), you must post consistent with the fuel rating 
certified to you. If

[[Page 382]]

you blend non-liquid alternative vehicle fuel (other than electricity), 
you must possess a reasonable basis, consisting of competent and 
reliable evidence, as required by Sec.309.10(a), for the fuel rating 
that you post for the blend.
    (d)(1) You must maintain and replace labels as needed to make sure 
consumers can easily see and read them.
    (2) If the labels you have are destroyed or are unusable or 
unreadable for some unexpected reason, you may satisfy this part by 
posting a temporary label as much like the required label as possible. 
You must still get and post the required label without delay.
    (e) The following examples of fuel rating disclosures for CNG and 
hydrogen are meant to serve as illustrations of compliance with this 
part, but do not limit the rule's coverage to only the mentioned non-
liquid alternative vehicle fuels (other than electricity):
    (1) ``CNG''

``Minimum''
``XXX%''
``Methane''

    (2) ``Hydrogen''

``Minimum''
``XXX%''
``Hydrogen''

    (f) The following example of fuel rating disclosures for electric 
vehicle fuel dispensing systems is meant to serve as an illustration of 
compliance with this part:

``Electricity''
``XX kW''
``XXX vac/XX amps''
``Inductive''

    (g) When you receive non-liquid alternative vehicle fuel (other than 
electricity), or an electric vehicle fuel dispensing system, from a 
common carrier, you also must receive from the common carrier a 
certification of the fuel rating of the non-liquid alternative vehicle 
fuel (other than electricity) or electric vehicle fuel dispensing 
system, either by letter or on the delivery ticket or other paper, or by 
a permanent marking or label attached to the electric vehicle fuel 
dispensing system by the manufacturer.



Sec.309.16  Recordkeeping.

    You must keep for one year any delivery tickets, letters of 
certification, or other paper on which you based your posting of fuel 
ratings for non-liquid alternative vehicle fuels. You also must keep for 
one year records of any fuel rating determinations you made according to 
Sec.309.10. If you rely for your posting on a permanent marking or 
permanent label attached to the electric vehicle fuel dispensing system 
by the manufacturer, you must not remove or deface the permanent marking 
or label. The required records, other than the permanent marking or 
label on the electric vehicle fuel dispensing system, may be kept at the 
retail outlet or at a reasonably close location. The records, including 
the permanent marking or label on each electric vehicle fuel dispensing 
system, must be available for inspection by Federal Trade Commission 
staff members or by persons authorized by FTC.

                          Label Specifications



Sec.309.17  Labels.

    All labels must meet the following specifications:
    (a) Layout:
    (1) Non-liquid alternative vehicle fuel (other than electricity) 
labels with disclosure of principal component only. The label is 
3 (7.62 cm) wide x 2\1/2\ (6.35 cm) long. 
``Helvetica black'' type is used throughout. All type is centered. The 
band at the top of the label contains the name of the fuel. This band 
should measure 1 (2.54 cm) deep. Spacing of the fuel name is 
\1/4\ (.64 cm) from the top of the label and \3/
16\ (.48 cm) from the bottom of the black band, centered 
horizontally within the black band. The first line of type beneath the 
black band is \1/8\ (.32 cm) from the bottom of the black 
band. All type below the black band is centered horizontally, with \1/
8\ (.32 cm) between lines. The bottom line of type is \3/
16\ (.48 cm) from the bottom of the label. All type should 
fall no closer than \3/16\ (.48 cm) from the side edges of 
the label. If you wish to change the format of this single component 
label, you must petition the Federal Trade Commission. You can do this 
by writing to the Secretary of the

[[Page 383]]

Federal Trade Commission, Washington, DC 20580. You must state the size 
and contents of the label that you wish to use, and the reasons that you 
want to use it.
    (2) Non-liquid alternative vehicle fuel (other than electricity) 
labels with disclosure of two components. The label is 3 
(7.62 cm) wide x 2\1/2\ (6.35 cm) long. ``Helvetica black'' 
type is used throughout. All type is centered. The band at the top of 
the label contains the name of the fuel. This band should measure 
1 (2.54 cm) deep. Spacing of the fuel name is \1/
4\ (.64 cm) from the top of the label and \3/16\ 
(.48 cm) from the bottom of the black band, centered horizontally within 
the black band. The first line of type beneath the black band is \3/
16\ (.48 cm) from the bottom of the black band. All type 
below the black band is centered horizontally, with \1/8\ 
(.32 cm) between lines. The bottom line of type is \1/4\ (.64 
cm) from the bottom of the label. All type should fall no closer than 
\3/16\ (.48 cm) from the side edges of the label. If you wish 
to change the format of this two component label, you must petition the 
Federal Trade Commission. You can do this by writing to the Secretary of 
the Federal Trade Commission, Washington, DC 20580. You must state the 
size and contents of the label that you wish to use, and the reasons 
that you want to use it.
    (3) Electric vehicle fuel dispensing system labels. The label is 
3 (7.62 cm) wide x 2\1/2\ (6.35 cm) long. 
``Helvetica black'' type is used throughout. All type is centered. The 
band at the top of the label contains the common identifier of the fuel. 
This band should measure 1 (2.54 cm) deep. Spacing of the 
common identifier is \1/4\ (.64 cm) from the top of the label 
and \3/16\ (.48 cm) from the bottom of the black band, 
centered horizontally within the black band. The first line of type 
beneath the black band is \3/16\ (.48 cm) from the bottom of 
the black band. All type below the black band is centered horizontally, 
with \1/8\ (.32 cm) between lines. The bottom line of type is 
\1/4\ (.64 cm) from the bottom of the label. All type should 
fall no closer than \3/16\ (.48 cm) from the side edges of 
the label.
    (b) Type size and setting:
    (1) Labels for non-liquid alternative vehicle fuels (other than 
electricity) with disclosure of principal component only. All type 
should be set in upper case (all caps) ``Helvetica Black'' throughout. 
Helvetica Black is available in a variety of computer desk-top and 
photo-typesetting systems. Its name may vary, but the type must conform 
in style and thickness to the sample provided here. The spacing between 
letters and words should be set as ``normal.'' The type for the fuel 
name is 50 point (\1/2\ (1.27 cm) cap height) knocked out of 
a 1 (2.54 cm) deep band. The type for the words ``MINIMUM'' 
and the principal component is 24 pt. (\1/4\ (.64 cm) cap 
height). The type for percentage is 36 pt. (\3/8\ (.96 cm) 
cap height).
    (2) Labels for non-liquid alternative vehicle fuels (other than 
electricity) with disclosure of two components. All type should be set 
in upper case (all caps) ``Helvetica Black'' throughout. Helvetica Black 
is available in a variety of computer desk-top and photo-typesetting 
systems. Its name may vary, but the type must conform in style and 
thickness to the sample provided here. The spacing between letters and 
words should be set as ``normal.'' The type for the fuel name is 50 
point (\1/2\ 1.27 cm) cap height) knocked out of a 
1 (2.54 cm) deep band. All other type is 24 pt. (\1/
4\ (.64 cm) cap height).
    (3) Labels for electric vehicle fuel dispensing systems. All type 
should be set in upper case (all caps) ``Helvetica Black'' throughout. 
Helvetica Black is available in a variety of computer desk-top and 
photo-typesetting systems. Its name may vary, but the type must conform 
in style and thickness to the sample provided here. The spacing between 
letters and words should be set as ``normal.'' The type for the common 
identifier is 50 point (\1/2\ 1.27 cm) cap height) knocked 
out of a 1 (2.54 cm) deep band. All other type is 24 pt. (\1/
4\ (.64 cm) cap height).
    (c) Colors: The background color on the labels for all non-liquid 
alternative vehicle fuels (including electricity), and the color of the 
knock-out type within the black band, is Orange: PMS 1495. All other 
type is process black. All borders are process black. All colors must be 
non-fade.

[[Page 384]]

    (d) Contents. Examples of the contents are shown in Figures 1 
through 3. The proper fuel rating for each non-liquid alternative 
vehicle fuel (including electricity) must be shown. No marks or 
information other than that called for by this part may appear on the 
labels.
    (e) Special label protection. All labels must be capable of 
withstanding extremes of weather conditions for a period of at least one 
year. They must be resistant to vehicle fuel, oil, grease, solvents, 
detergents, and water.
    (f) Illustrations of labels. Labels must meet the specifications in 
this section and look like Figures 1 through 3 of appendix A, except the 
black print should be on the appropriately colored background.



         Subpart C_Requirements for Alternative Fueled Vehicles



Sec.309.20  Labeling requirements for new covered vehicles.

    (a) Before offering a new covered vehicle for acquisition to 
consumers, manufacturers shall affix or cause to be affixed, and new 
vehicle dealers shall maintain or cause to be maintained, fuel economy 
labels as required by 40 CFR part 600. For dual fueled vehicles, such 
labels must include driving range information for alternative fuel and 
gasoline operation and be otherwise consistent with provisions in 40 CFR 
part 600.
    (b) If an aftermarket conversion system is installed on a vehicle by 
a person other than the manufacturer prior to such vehicle's being 
acquired by a consumer, the manufacturer shall provide that person with 
the vehicle's fuel economy label prepared pursuant to 40 CFR part 600 
and ensure that new fuel economy vehicle labels are affixed to such 
vehicles as required by paragraph (a) of this section.

[78 FR 23835, Apr. 23, 2013]



Sec.309.21  Recordkeeping.

    Manufacturers required to comply this subpart shall establish, 
maintain, and retain copies of all data, reports, records, and 
procedures used to meet the requirements of this subpart for three years 
after the end of the model year to which they relate. They must be 
available for inspection by Federal Trade Commission staff members, or 
by people authorized by the Federal Trade Commission.

[60 FR 26955, May 19, 1995. Redesignated at 78 FR 23835, Apr. 23, 2013]

[[Page 385]]



            Sec. Appendix A to Part 309--Figures for Part 309
[GRAPHIC] [TIFF OMITTED] TC29SE91.044


[60 FR 26955, May 19, 1995, as amended at 69 FR 55339, Sept. 14, 2004; 
78 FR 23835, Apr. 23, 2013]



PART 310_TELEMARKETING SALES RULE--Table of Contents



Sec.
310.1 Scope of regulations in this part.
310.2 Definitions.
310.3 Deceptive telemarketing acts or practices.
310.4 Abusive telemarketing acts or practices.
310.5 Recordkeeping requirements.
310.6 Exemptions.
310.7 Actions by states and private persons.
310.8 Fee for access to the National Do Not Call Registry.
310.9 Severability.

    Authority: 15 U.S.C. 6101-6108.

    Source: 75 FR 48516, Aug. 10, 2010, unless otherwise noted.



Sec.310.1  Scope of regulations in this part.

    This part implements the Telemarketing and Consumer Fraud and Abuse 
Prevention Act, 15 U.S.C. 6101-6108, as amended.



Sec.310.2  Definitions.

    (a) Acquirer means a business organization, financial institution, 
or an agent of a business organization or financial institution that has 
authority from an organization that operates or licenses a credit card 
system to authorize merchants to accept, transmit, or process payment by 
credit card through the credit card system for money, goods or services, 
or anything else of value.

[[Page 386]]

    (b) Attorney General means the chief legal officer of a state.
    (c) Billing information means any data that enables any person to 
access a customer's or donor's account, such as a credit card, checking, 
savings, share or similar account, utility bill, mortgage loan account, 
or debit card.
    (d) Caller identification service means a service that allows a 
telephone subscriber to have the telephone number, and, where available, 
name of the calling party transmitted contemporaneously with the 
telephone call, and displayed on a device in or connected to the 
subscriber's telephone.
    (e) Cardholder means a person to whom a credit card is issued or who 
is authorized to use a credit card on behalf of or in addition to the 
person to whom the credit card is issued.
    (f) Cash-to-cash money transfer means the electronic (as defined in 
section 106(2) of the Electronic Signatures in Global and National 
Commerce Act (15 U.S.C. 7006(2)) transfer of the value of cash received 
from one person to another person in a different location that is sent 
by a money transfer provider and received in the form of cash. For 
purposes of this definition, money transfer provider means any person or 
financial institution that provides cash-to-cash money transfers for a 
person in the normal course of its business, whether or not the person 
holds an account with such person or financial institution. The term 
cash-to-cash money transfer includes a remittance transfer, as defined 
in section 919(g)(2) of the Electronic Fund Transfer Act (``EFTA''), 15 
U.S.C. 1693a, that is a cash-to-cash transaction; however it does not 
include any transaction that is:
    (1) An electronic fund transfer as defined in section 903 of the 
EFTA;
    (2) Covered by Regulation E, 12 CFR 1005.20, pertaining to gift 
cards; or
    (3) Subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq.
    (g) Cash reload mechanism is a device, authorization code, personal 
identification number, or other security measure that makes it possible 
for a person to convert cash into an electronic (as defined in section 
106(2) of the Electronic Signatures in Global and National Commerce Act 
(15 U.S.C. 7006(2)) form that can be used to add funds to a general-use 
prepaid card, as defined in Regulation E, 12 CFR 1005.2, or an account 
with a payment intermediary. For purposes of this definition, a cash 
reload mechanism is not itself a general-use prepaid debit card or a 
swipe reload process or similar method in which funds are added directly 
onto a person's own general-use prepaid card or account with a payment 
intermediary.
    (h) Charitable contribution means any donation or gift of money or 
any other thing of value.
    (i) Commission means the Federal Trade Commission.
    (j) Credit means the right granted by a creditor to a debtor to 
defer payment of debt or to incur debt and defer its payment.
    (k) Credit card means any card, plate, coupon book, or other credit 
device existing for the purpose of obtaining money, property, labor, or 
services on credit.
    (l) Credit card sales draft means any record or evidence of a credit 
card transaction.
    (m) Credit card system means any method or procedure used to process 
credit card transactions involving credit cards issued or licensed by 
the operator of that system.
    (n) Customer means any person who is or may be required to pay for 
goods or services offered through telemarketing.
    (o) Debt relief service means any program or service represented, 
directly or by implication, to renegotiate, settle, or in any way alter 
the terms of payment or other terms of the debt between a person and one 
or more unsecured creditors or debt collectors, including, but not 
limited to, a reduction in the balance, interest rate, or fees owed by a 
person to an unsecured creditor or debt collector.
    (p) Donor means any person solicited to make a charitable 
contribution.
    (q) Established business relationship means a relationship between a 
seller and a consumer based on:
    (1) the consumer's purchase, rental, or lease of the seller's goods 
or services or a financial transaction between the

[[Page 387]]

consumer and seller, within the eighteen (18) months immediately 
preceding the date of a telemarketing call; or
    (2) the consumer's inquiry or application regarding a product or 
service offered by the seller, within the three (3) months immediately 
preceding the date of a telemarketing call.
    (r) Free-to-pay conversion means, in an offer or agreement to sell 
or provide any goods or services, a provision under which a customer 
receives a product or service for free for an initial period and will 
incur an obligation to pay for the product or service if he or she does 
not take affirmative action to cancel before the end of that period.
    (s) Investment opportunity means anything, tangible or intangible, 
that is offered, offered for sale, sold, or traded based wholly or in 
part on representations, either express or implied, about past, present, 
or future income, profit, or appreciation.
    (t) Material means likely to affect a person's choice of, or conduct 
regarding, goods or services or a charitable contribution.
    (u) Merchant means a person who is authorized under a written 
contract with an acquirer to honor or accept credit cards, or to 
transmit or process for payment credit card payments, for the purchase 
of goods or services or a charitable contribution.
    (v) Merchant agreement means a written contract between a merchant 
and an acquirer to honor or accept credit cards, or to transmit or 
process for payment credit card payments, for the purchase of goods or 
services or a charitable contribution.
    (w) Negative option feature means, in an offer or agreement to sell 
or provide any goods or services, a provision under which the customer's 
silence or failure to take an affirmative action to reject goods or 
services or to cancel the agreement is interpreted by the seller as 
acceptance of the offer.
    (x) Outbound telephone call means a telephone call initiated by a 
telemarketer to induce the purchase of goods or services or to solicit a 
charitable contribution.
    (y) Person means any individual, group, unincorporated association, 
limited or general partnership, corporation, or other business entity.
    (z) Preacquired account information means any information that 
enables a seller or telemarketer to cause a charge to be placed against 
a customer's or donor's account without obtaining the account number 
directly from the customer or donor during the telemarketing transaction 
pursuant to which the account will be charged.
    (aa) Prize means anything offered, or purportedly offered, and 
given, or purportedly given, to a person by chance. For purposes of this 
definition, chance exists if a person is guaranteed to receive an item 
and, at the time of the offer or purported offer, the telemarketer does 
not identify the specific item that the person will receive.
    (bb) Prize promotion means:
    (1) A sweepstakes or other game of chance; or
    (2) An oral or written express or implied representation that a 
person has won, has been selected to receive, or may be eligible to 
receive a prize or purported prize.
    (cc) Remotely created payment order means any payment instruction or 
order drawn on a person's account that is created by the payee or the 
payee's agent and deposited into or cleared through the check clearing 
system. The term includes, without limitation, a ``remotely created 
check,'' as defined in Regulation CC, Availability of Funds and 
Collection of Checks, 12 CFR 229.2(fff), but does not include a payment 
order cleared through an Automated Clearinghouse (ACH) Network or 
subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq., and 
Regulation Z, 12 CFR part 1026.
    (dd) Seller means any person who, in connection with a telemarketing 
transaction, provides, offers to provide, or arranges for others to 
provide goods or services to the customer in exchange for consideration.
    (ee) State means any state of the United States, the District of 
Columbia, Puerto Rico, the Northern Mariana Islands, and any territory 
or possession of the United States.
    (ff) Telemarketer means any person who, in connection with 
telemarketing, initiates or receives telephone calls to or from a 
customer or donor.
    (gg) Telemarketing means a plan, program, or campaign which is 
conducted

[[Page 388]]

to induce the purchase of goods or services or a charitable 
contribution, by use of one or more telephones and which involves more 
than one interstate telephone call. The term does not include the 
solicitation of sales through the mailing of a catalog which: contains a 
written description or illustration of the goods or services offered for 
sale; includes the business address of the seller; includes multiple 
pages of written material or illustrations; and has been issued not less 
frequently than once a year, when the person making the solicitation 
does not solicit customers by telephone but only receives calls 
initiated by customers in response to the catalog and during those calls 
takes orders only without further solicitation. For purposes of the 
previous sentence, the term ``further solicitation'' does not include 
providing the customer with information about, or attempting to sell, 
any other item included in the same catalog which prompted the 
customer's call or in a substantially similar catalog.
    (hh) Upselling means soliciting the purchase of goods or services 
following an initial transaction during a single telephone call. The 
upsell is a separate telemarketing transaction, not a continuation of 
the initial transaction. An ``external upsell'' is a solicitation made 
by or on behalf of a seller different from the seller in the initial 
transaction, regardless of whether the initial transaction and the 
subsequent solicitation are made by the same telemarketer. An ``internal 
upsell'' is a solicitation made by or on behalf of the same seller as in 
the initial transaction, regardless of whether the initial transaction 
and subsequent solicitation are made by the same telemarketer.

[75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77557, Dec. 14, 2015]



Sec.310.3  Deceptive telemarketing acts or practices.

    (a) Prohibited deceptive telemarketing acts or practices. It is a 
deceptive telemarketing act or practice and a violation of this Rule for 
any seller or telemarketer to engage in the following conduct:
    (1) Before a customer consents to pay \659\ for goods or services 
offered, failing to disclose truthfully, in a clear and conspicuous 
manner, the following material information:
---------------------------------------------------------------------------

    \659\ When a seller or telemarketer uses, or directs a customer to 
use, a courier to transport payment, the seller or telemarketer must 
make the disclosures required by Sec.310.3(a)(1) before sending a 
courier to pick up payment or authorization for payment, or directing a 
customer to have a courier pick up payment or authorization for payment. 
In the case of debt relief services, the seller or telemarketer must 
make the disclosures required by Sec.310.3(a)(1) before the consumer 
enrolls in an offered program.
---------------------------------------------------------------------------

    (i) The total costs to purchase, receive, or use, and the quantity 
of, any goods or services that are the subject of the sales offer; \660\
---------------------------------------------------------------------------

    \660\ For offers of consumer credit products subject to the Truth in 
Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR 226, 
compliance with the disclosure requirements under the Truth in Lending 
Act and Regulation Z shall constitute compliance with Sec.
310.3(a)(1)(i) of this Rule.
---------------------------------------------------------------------------

    (ii) All material restrictions, limitations, or conditions to 
purchase, receive, or use the goods or services that are the subject of 
the sales offer;
    (iii) If the seller has a policy of not making refunds, 
cancellations, exchanges, or repurchases, a statement informing the 
customer that this is the seller's policy; or, if the seller or 
telemarketer makes a representation about a refund, cancellation, 
exchange, or repurchase policy, a statement of all material terms and 
conditions of such policy;
    (iv) In any prize promotion, the odds of being able to receive the 
prize, and, if the odds are not calculable in advance, the factors used 
in calculating the odds; that no purchase or payment is required to win 
a prize or to participate in a prize promotion and that any purchase or 
payment will not increase the person's chances of winning; and the no-
purchase/no-payment method of participating in the prize promotion with 
either instructions on how to participate or an address or local or 
toll-free telephone number to which customers may write or call for 
information on how to participate;

[[Page 389]]

    (v) All material costs or conditions to receive or redeem a prize 
that is the subject of the prize promotion;
    (vi) In the sale of any goods or services represented to protect, 
insure, or otherwise limit a customer's liability in the event of 
unauthorized use of the customer's credit card, the limits on a 
cardholder's liability for unauthorized use of a credit card pursuant to 
15 U.S.C. 1643;
    (vii) If the offer includes a negative option feature, all material 
terms and conditions of the negative option feature, including, but not 
limited to, the fact that the customer's account will be charged unless 
the customer takes an affirmative action to avoid the charge(s), the 
date(s) the charge(s) will be submitted for payment, and the specific 
steps the customer must take to avoid the charge(s); and
    (viii) In the sale of any debt relief service:
    (A) the amount of time necessary to achieve the represented results, 
and to the extent that the service may include a settlement offer to any 
of the customer's creditors or debt collectors, the time by which the 
debt relief service provider will make a bona fide settlement offer to 
each of them;
    (B) to the extent that the service may include a settlement offer to 
any of the customer's creditors or debt collectors, the amount of money 
or the percentage of each outstanding debt that the customer must 
accumulate before the debt relief service provider will make a bona fide 
settlement offer to each of them;
    (C) to the extent that any aspect of the debt relief service relies 
upon or results in the customer's failure to make timely payments to 
creditors or debt collectors, that the use of the debt relief service 
will likely adversely affect the customer's creditworthiness, may result 
in the customer being subject to collections or sued by creditors or 
debt collectors, and may increase the amount of money the customer owes 
due to the accrual of fees and interest; and
    (D) to the extent that the debt relief service requests or requires 
the customer to place funds in an account at an insured financial 
institution, that the customer owns the funds held in the account, the 
customer may withdraw from the debt relief service at any time without 
penalty, and, if the customer withdraws, the customer must receive all 
funds in the account, other than funds earned by the debt relief service 
in compliance with Sec.310.4(a)(5)(i)(A) through (C).
    (2) Misrepresenting, directly or by implication, in the sale of 
goods or services any of the following material information:
    (i) The total costs to purchase, receive, or use, and the quantity 
of, any goods or services that are the subject of a sales offer;
    (ii) Any material restriction, limitation, or condition to purchase, 
receive, or use goods or services that are the subject of a sales offer;
    (iii) Any material aspect of the performance, efficacy, nature, or 
central characteristics of goods or services that are the subject of a 
sales offer;
    (iv) Any material aspect of the nature or terms of the seller's 
refund, cancellation, exchange, or repurchase policies;
    (v) Any material aspect of a prize promotion including, but not 
limited to, the odds of being able to receive a prize, the nature or 
value of a prize, or that a purchase or payment is required to win a 
prize or to participate in a prize promotion;
    (vi) Any material aspect of an investment opportunity including, but 
not limited to, risk, liquidity, earnings potential, or profitability;
    (vii) A seller's or telemarketer's affiliation with, or endorsement 
or sponsorship by, any person or government entity;
    (viii) That any customer needs offered goods or services to provide 
protections a customer already has pursuant to 15 U.S.C. 1643;
    (ix) Any material aspect of a negative option feature including, but 
not limited to, the fact that the customer's account will be charged 
unless the customer takes an affirmative action to avoid the charge(s), 
the date(s) the charge(s) will be submitted for payment, and the 
specific steps the customer must take to avoid the charge(s); or

[[Page 390]]

    (x) Any material aspect of any debt relief service, including, but 
not limited to, the amount of money or the percentage of the debt amount 
that a customer may save by using such service; the amount of time 
necessary to achieve the represented results; the amount of money or the 
percentage of each outstanding debt that the customer must accumulate 
before the provider of the debt relief service will initiate attempts 
with the customer's creditors or debt collectors or make a bona fide 
offer to negotiate, settle, or modify the terms of the customer's debt; 
the effect of the service on a customer's creditworthiness; the effect 
of the service on collection efforts of the customer's creditors or debt 
collectors; the percentage or number of customers who attain the 
represented results; and whether a debt relief service is offered or 
provided by a non-profit entity.
    (3) Causing billing information to be submitted for payment, or 
collecting or attempting to collect payment for goods or services or a 
charitable contribution, directly or indirectly, without the customer's 
or donor's express verifiable authorization, except when the method of 
payment used is a credit card subject to protections of the Truth in 
Lending Act and Regulation Z,\661\ or a debit card subject to the 
protections of the Electronic Fund Transfer Act and Regulation E.\662\ 
Such authorization shall be deemed verifiable if any of the following 
means is employed:
---------------------------------------------------------------------------

    \661\ Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation 
Z, 12 CFR part 226.
    \662\ Electronic Fund Transfer Act, 15 U.S.C. 1693 et seq., and 
Regulation E, 12 CFR part 205.
---------------------------------------------------------------------------

    (i) Express written authorization by the customer or donor, which 
includes the customer's or donor's signature;\663\
---------------------------------------------------------------------------

    \663\ For purposes of this Rule, the term ``signature'' shall 
include an electronic or digital form of signature, to the extent that 
such form of signature is recognized as a valid signature under 
applicable federal law or state contract law.
---------------------------------------------------------------------------

    (ii) Express oral authorization which is audio-recorded and made 
available upon request to the customer or donor, and the customer's or 
donor's bank or other billing entity, and which evidences clearly both 
the customer's or donor's authorization of payment for the goods or 
services or charitable contribution that are the subject of the 
telemarketing transaction and the customer's or donor's receipt of all 
of the following information:
    (A) An accurate description, clearly and conspicuously stated, of 
the goods or services or charitable contribution for which payment 
authorization is sought;
    (B) The number of debits, charges, or payments (if more than one);
    (C) The date(s) the debit(s), charge(s), or payment(s) will be 
submitted for payment;
    (D) The amount(s) of the debit(s), charge(s), or payment(s);
    (E) The customer's or donor's name;
    (F) The customer's or donor's billing information, identified with 
sufficient specificity such that the customer or donor understands what 
account will be used to collect payment for the goods or services or 
charitable contribution that are the subject of the telemarketing 
transaction;
    (G) A telephone number for customer or donor inquiry that is 
answered during normal business hours; and
    (H) The date of the customer's or donor's oral authorization; or
    (iii) Written confirmation of the transaction, identified in a clear 
and conspicuous manner as such on the outside of the envelope, sent to 
the customer or donor via first class mail prior to the submission for 
payment of the customer's or donor's billing information, and that 
includes all of the information contained in Sec. Sec.
310.3(a)(3)(ii)(A)-(G) and a clear and conspicuous statement of the 
procedures by which the customer or donor can obtain a refund from the 
seller or telemarketer or charitable organization in the event the 
confirmation is inaccurate; provided, however, that this means of 
authorization shall not be deemed verifiable in instances in which goods 
or services are offered in a transaction involving a free-to-pay 
conversion and preacquired account information.
    (4) Making a false or misleading statement to induce any person to 
pay for goods or services or to induce a charitable contribution.

[[Page 391]]

    (b) Assisting and facilitating. It is a deceptive telemarketing act 
or practice and a violation of this Rule for a person to provide 
substantial assistance or support to any seller or telemarketer when 
that person knows or consciously avoids knowing that the seller or 
telemarketer is engaged in any act or practice that violates Sec. Sec.
310.3(a), (c) or (d), or Sec.310.4 of this Rule.
    (c) Credit card laundering. Except as expressly permitted by the 
applicable credit card system, it is a deceptive telemarketing act or 
practice and a violation of this Rule for:
    (1) A merchant to present to or deposit into, or cause another to 
present to or deposit into, the credit card system for payment, a credit 
card sales draft generated by a telemarketing transaction that is not 
the result of a telemarketing credit card transaction between the 
cardholder and the merchant;
    (2) Any person to employ, solicit, or otherwise cause a merchant, or 
an employee, representative, or agent of the merchant, to present to or 
deposit into the credit card system for payment, a credit card sales 
draft generated by a telemarketing transaction that is not the result of 
a telemarketing credit card transaction between the cardholder and the 
merchant; or
    (3) Any person to obtain access to the credit card system through 
the use of a business relationship or an affiliation with a merchant, 
when such access is not authorized by the merchant agreement or the 
applicable credit card system.
    (d) Prohibited deceptive acts or practices in the solicitation of 
charitable contributions. It is a fraudulent charitable solicitation, a 
deceptive telemarketing act or practice, and a violation of this Rule 
for any telemarketer soliciting charitable contributions to 
misrepresent, directly or by implication, any of the following material 
information:
    (1) The nature, purpose, or mission of any entity on behalf of which 
a charitable contribution is being requested;
    (2) That any charitable contribution is tax deductible in whole or 
in part;
    (3) The purpose for which any charitable contribution will be used;
    (4) The percentage or amount of any charitable contribution that 
will go to a charitable organization or to any particular charitable 
program;
    (5) Any material aspect of a prize promotion including, but not 
limited to: the odds of being able to receive a prize; the nature or 
value of a prize; or that a charitable contribution is required to win a 
prize or to participate in a prize promotion; or
    (6) A charitable organization's or telemarketer's affiliation with, 
or endorsement or sponsorship by, any person or government entity.

[75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77558, Dec. 14, 2015]



Sec.310.4  Abusive telemarketing acts or practices.

    (a) Abusive conduct generally. It is an abusive telemarketing act or 
practice and a violation of this Rule for any seller or telemarketer to 
engage in the following conduct:
    (1) Threats, intimidation, or the use of profane or obscene 
language;
    (2) Requesting or receiving payment of any fee or consideration for 
goods or services represented to remove derogatory information from, or 
improve, a person's credit history, credit record, or credit rating 
until:
    (i) The time frame in which the seller has represented all of the 
goods or services will be provided to that person has expired; and
    (ii) The seller has provided the person with documentation in the 
form of a consumer report from a consumer reporting agency demonstrating 
that the promised results have been achieved, such report having been 
issued more than six months after the results were achieved. Nothing in 
this Rule should be construed to affect the requirement in the Fair 
Credit Reporting Act, 15 U.S.C. 1681, that a consumer report may only be 
obtained for a specified permissible purpose;
    (3) Requesting or receiving payment of any fee or consideration from 
a person for goods or services represented to recover or otherwise 
assist in the return of money or any other item of value paid for by, or 
promised to, that person in a previous transaction, until seven (7) 
business days after such money or other item is delivered to that 
person. This provision shall not

[[Page 392]]

apply to goods or services provided to a person by a licensed attorney;
    (4) Requesting or receiving payment of any fee or consideration in 
advance of obtaining a loan or other extension of credit when the seller 
or telemarketer has guaranteed or represented a high likelihood of 
success in obtaining or arranging a loan or other extension of credit 
for a person;
    (5)(i) Requesting or receiving payment of any fee or consideration 
for any debt relief service until and unless:
    (A) The seller or telemarketer has renegotiated, settled, reduced, 
or otherwise altered the terms of at least one debt pursuant to a 
settlement agreement, debt management plan, or other such valid 
contractual agreement executed by the customer;
    (B) The customer has made at least one payment pursuant to that 
settlement agreement, debt management plan, or other valid contractual 
agreement between the customer and the creditor or debt collector; and
    (C) To the extent that debts enrolled in a service are renegotiated, 
settled, reduced, or otherwise altered individually, the fee or 
consideration either:
    (1) Bears the same proportional relationship to the total fee for 
renegotiating, settling, reducing, or altering the terms of the entire 
debt balance as the individual debt amount bears to the entire debt 
amount. The individual debt amount and the entire debt amount are those 
owed at the time the debt was enrolled in the service; or
    (2) Is a percentage of the amount saved as a result of the 
renegotiation, settlement, reduction, or alteration. The percentage 
charged cannot change from one individual debt to another. The amount 
saved is the difference between the amount owed at the time the debt was 
enrolled in the service and the amount actually paid to satisfy the 
debt.
    (ii) Nothing in Sec.310.4(a)(5)(i) prohibits requesting or 
requiring the customer to place funds in an account to be used for the 
debt relief provider's fees and for payments to creditors or debt 
collectors in connection with the renegotiation, settlement, reduction, 
or other alteration of the terms of payment or other terms of a debt, 
provided that:
    (A) The funds are held in an account at an insured financial 
institution;
    (B) The customer owns the funds held in the account and is paid 
accrued interest on the account, if any;
    (C) The entity administering the account is not owned or controlled 
by, or in any way affiliated with, the debt relief service;
    (D) The entity administering the account does not give or accept any 
money or other compensation in exchange for referrals of business 
involving the debt relief service; and
    (E) The customer may withdraw from the debt relief service at any 
time without penalty, and must receive all funds in the account, other 
than funds earned by the debt relief service in compliance with Sec.
310.4(a)(5)(i)(A) through (C), within seven (7) business days of the 
customer's request.
    (6) Disclosing or receiving, for consideration, unencrypted consumer 
account numbers for use in telemarketing; provided, however, that this 
paragraph shall not apply to the disclosure or receipt of a customer's 
or donor's billing information to process a payment for goods or 
services or a charitable contribution pursuant to a transaction;
    (7) Causing billing information to be submitted for payment, 
directly or indirectly, without the express informed consent of the 
customer or donor. In any telemarketing transaction, the seller or 
telemarketer must obtain the express informed consent of the customer or 
donor to be charged for the goods or services or charitable contribution 
and to be charged using the identified account. In any telemarketing 
transaction involving preacquired account information, the requirements 
in paragraphs (a)(7)(i) through (ii) of this section must be met to 
evidence express informed consent.
    (i) In any telemarketing transaction involving preacquired account 
information and a free-to-pay conversion feature, the seller or 
telemarketer must:
    (A) Obtain from the customer, at a minimum, the last four (4) digits 
of the account number to be charged;
    (B) Obtain from the customer his or her express agreement to be 
charged for the goods or services and to be

[[Page 393]]

charged using the account number pursuant to paragraph (a)(7)(i)(A) of 
this section; and,
    (C) Make and maintain an audio recording of the entire telemarketing 
transaction.
    (ii) In any other telemarketing transaction involving preacquired 
account information not described in paragraph (a)(7)(i) of this 
section, the seller or telemarketer must:
    (A) At a minimum, identify the account to be charged with sufficient 
specificity for the customer or donor to understand what account will be 
charged; and
    (B) Obtain from the customer or donor his or her express agreement 
to be charged for the goods or services and to be charged using the 
account number identified pursuant to paragraph (a)(7)(ii)(A) of this 
section;
    (8) Failing to transmit or cause to be transmitted the telephone 
number, and, when made available by the telemarketer's carrier, the name 
of the telemarketer, to any caller identification service in use by a 
recipient of a telemarketing call; provided that it shall not be a 
violation to substitute (for the name and phone number used in, or 
billed for, making the call) the name of the seller or charitable 
organization on behalf of which a telemarketing call is placed, and the 
seller's or charitable organization's customer or donor service 
telephone number, which is answered during regular business hours;
    (9) Creating or causing to be created, directly or indirectly, a 
remotely created payment order as payment for goods or services offered 
or sold through telemarketing or as a charitable contribution solicited 
or sought through telemarketing; or
    (10) Accepting from a customer or donor, directly or indirectly, a 
cash-to-cash money transfer or cash reload mechanism as payment for 
goods or services offered or sold through telemarketing or as a 
charitable contribution solicited or sought through telemarketing.
    (b) Pattern of calls. (1) It is an abusive telemarketing act or 
practice and a violation of this Rule for a telemarketer to engage in, 
or for a seller to cause a telemarketer to engage in, the following 
conduct:
    (i) Causing any telephone to ring, or engaging any person in 
telephone conversation, repeatedly or continuously with intent to annoy, 
abuse, or harass any person at the called number;
    (ii) Denying or interfering in any way, directly or indirectly, with 
a person's right to be placed on any registry of names and/or telephone 
numbers of persons who do not wish to receive outbound telephone calls 
established to comply with paragraph (b)(1)(iii)(A) of this section, 
including, but not limited to, harassing any person who makes such a 
request; hanging up on that person; failing to honor the request; 
requiring the person to listen to a sales pitch before accepting the 
request; assessing a charge or fee for honoring the request; requiring a 
person to call a different number to submit the request; and requiring 
the person to identify the seller making the call or on whose behalf the 
call is made;
    (iii) Initiating any outbound telephone call to a person when:
    (A) That person previously has stated that he or she does not wish 
to receive an outbound telephone call made by or on behalf of the seller 
whose goods or services are being offered or made on behalf of the 
charitable organization for which a charitable contribution is being 
solicited; or
    (B) That person's telephone number is on the ``do-not-call'' 
registry, maintained by the Commission, of persons who do not wish to 
receive outbound telephone calls to induce the purchase of goods or 
services unless the seller or telemarketer:
    (1) Can demonstrate that the seller has obtained the express 
agreement, in writing, of such person to place calls to that person. 
Such written agreement shall clearly evidence such person's 
authorization that calls made by or on behalf of a specific party may be 
placed to that person, and shall include the telephone number to which 
the calls may be placed and the signature \664\ of that person; or
---------------------------------------------------------------------------

    \664\ For purposes of this Rule, the term ``signature'' shall 
include an electronic or digital form of signature, to the extent that 
such form of signature is recognized as a valid signature under 
applicable federal law or state contract law.

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

[[Page 394]]

    (2) Can demonstrate that the seller has an established business 
relationship with such person, and that person has not stated that he or 
she does not wish to receive outbound telephone calls under paragraph 
(b)(1)(iii)(A) of this section; or
    (iv) Abandoning any outbound telephone call. An outbound telephone 
call is ``abandoned'' under this section if a person answers it and the 
telemarketer does not connect the call to a sales representative within 
two (2) seconds of the person's completed greeting.
    (v) Initiating any outbound telephone call that delivers a 
prerecorded message, other than a prerecorded message permitted for 
compliance with the call abandonment safe harbor in Sec.
310.4(b)(4)(iii), unless:
    (A) In any such call to induce the purchase of any good or service, 
the seller has obtained from the recipient of the call an express 
agreement, in writing, that:
    (i) The seller obtained only after a clear and conspicuous 
disclosure that the purpose of the agreement is to authorize the seller 
to place prerecorded calls to such person;
    (ii) The seller obtained without requiring, directly or indirectly, 
that the agreement be executed as a condition of purchasing any good or 
service;
    (iii) Evidences the willingness of the recipient of the call to 
receive calls that deliver prerecorded messages by or on behalf of a 
specific seller; and
    (iv) Includes such person's telephone number and signature;\665\ and
---------------------------------------------------------------------------

    \665\ For purposes of this Rule, the term ``signature'' shall 
include an electronic or digital form of signature, to the extent that 
such form of signature is recognized as a valid signature under 
applicable federal law or state contract law.
---------------------------------------------------------------------------

    (B) In any such call to induce the purchase of any good or service, 
or to induce a charitable contribution from a member of, or previous 
donor to, a non-profit charitable organization on whose behalf the call 
is made, the seller or telemarketer:
    (i) Allows the telephone to ring for at least fifteen (15) seconds 
or four (4) rings before disconnecting an unanswered call; and
    (ii) Within two (2) seconds after the completed greeting of the 
person called, plays a prerecorded message that promptly provides the 
disclosures required by Sec.310.4(d) or (e), followed immediately by a 
disclosure of one or both of the following:
    (A) In the case of a call that could be answered in person by a 
consumer, that the person called can use an automated interactive voice 
and/or keypress-activated opt-out mechanism to assert a Do Not Call 
request pursuant to Sec.310.4(b)(1)(iii)(A) at any time during the 
message. The mechanism must:
    (1) Automatically add the number called to the seller's entity-
specific Do Not Call list;
    (2) Once invoked, immediately disconnect the call; and
    (3) Be available for use at any time during the message; and
    (B) In the case of a call that could be answered by an answering 
machine or voicemail service, that the person called can use a toll-free 
telephone number to assert a Do Not Call request pursuant to Sec.
310.4(b)(1)(iii)(A). The number provided must connect directly to an 
automated interactive voice or keypress-activated opt-out mechanism 
that:
    (1) Automatically adds the number called to the seller's entity-
specific Do Not Call list;
    (2) Immediately thereafter disconnects the call; and
    (3) Is accessible at any time throughout the duration of the 
telemarketing campaign; and
    (iii) Complies with all other requirements of this part and other 
applicable federal and state laws.
    (C) Any call that complies with all applicable requirements of this 
paragraph (v) shall not be deemed to violate Sec.310.4(b)(1)(iv) of 
this part.
    (D) This paragraph (v) shall not apply to any outbound telephone 
call that delivers a prerecorded healthcare message made by, or on 
behalf of, a covered entity or its business associate, as those terms 
are defined in the HIPAA Privacy Rule, 45 CFR 160.103.
    (2) It is an abusive telemarketing act or practice and a violation 
of this Rule for any person to sell, rent, lease, purchase, or use any 
list established to comply with Sec.310.4(b)(1)(iii)(A), or

[[Page 395]]

maintained by the Commission pursuant to Sec.310.4(b)(1)(iii)(B), for 
any purpose except compliance with the provisions of this Rule or 
otherwise to prevent telephone calls to telephone numbers on such lists.
    (3) A seller or telemarketer will not be liable for violating Sec.
310.4(b)(1)(ii) and (iii) if it can demonstrate that, as part of the 
seller's or telemarketer's routine business practice:
    (i) It has established and implemented written procedures to comply 
with Sec.310.4(b)(1)(ii) and (iii);
    (ii) It has trained its personnel, and any entity assisting in its 
compliance, in the procedures established pursuant to Sec.
310.4(b)(3)(i);
    (iii) The seller, or a telemarketer or another person acting on 
behalf of the seller or charitable organization, has maintained and 
recorded a list of telephone numbers the seller or charitable 
organization may not contact, in compliance with Sec.
310.4(b)(1)(iii)(A);
    (iv) The seller or a telemarketer uses a process to prevent 
telemarketing to any telephone number on any list established pursuant 
to Sec.310.4(b)(3)(iii) or 310.4(b)(1)(iii)(B), employing a version of 
the ``do-not-call'' registry obtained from the Commission no more than 
thirty-one (31) days prior to the date any call is made, and maintains 
records documenting this process;
    (v) The seller or a telemarketer or another person acting on behalf 
of the seller or charitable organization, monitors and enforces 
compliance with the procedures established pursuant to Sec.
310.4(b)(3)(i); and
    (vi) Any subsequent call otherwise violating paragraph (b)(1)(ii) or 
(iii) of this section is the result of error and not of failure to 
obtain any information necessary to comply with a request pursuant to 
paragraph (b)(1)(iii)(A) of this section not to receive further calls by 
or on behalf of a seller or charitable organization.
    (4) A seller or telemarketer will not be liable for violating Sec.
310.4(b)(1)(iv) if:
    (i) The seller or telemarketer employs technology that ensures 
abandonment of no more than three (3) percent of all calls answered by a 
person, measured over the duration of a single calling campaign, if less 
than 30 days, or separately over each successive 30-day period or 
portion thereof that the campaign continues.
    (ii) The seller or telemarketer, for each telemarketing call placed, 
allows the telephone to ring for at least fifteen (15) seconds or four 
(4) rings before disconnecting an unanswered call;
    (iii) Whenever a sales representative is not available to speak with 
the person answering the call within two (2) seconds after the person's 
completed greeting, the seller or telemarketer promptly plays a recorded 
message that states the name and telephone number of the seller on whose 
behalf the call was placed\666\; and
---------------------------------------------------------------------------

    \666\ This provision does not affect any seller's or telemarketer's 
obligation to comply with relevant state and federal laws, including but 
not limited to the TCPA, 47 U.S.C. 227, and 47 CFR part 64.1200.
---------------------------------------------------------------------------

    (iv) The seller or telemarketer, in accordance with Sec.310.5(b)-
(d), retains records establishing compliance with Sec.310.4(b)(4)(i)-
(iii).
    (c) Calling time restrictions. Without the prior consent of a 
person, it is an abusive telemarketing act or practice and a violation 
of this Rule for a telemarketer to engage in outbound telephone calls to 
a person's residence at any time other than between 8:00 a.m. and 9:00 
p.m. local time at the called person's location.
    (d) Required oral disclosures in the sale of goods or services. It 
is an abusive telemarketing act or practice and a violation of this Rule 
for a telemarketer in an outbound telephone call or internal or external 
upsell to induce the purchase of goods or services to fail to disclose 
truthfully, promptly, and in a clear and conspicuous manner to the 
person receiving the call, the following information:
    (1) The identity of the seller;
    (2) That the purpose of the call is to sell goods or services;
    (3) The nature of the goods or services; and
    (4) That no purchase or payment is necessary to be able to win a 
prize or participate in a prize promotion if a prize promotion is 
offered and that any purchase or payment will not increase the person's 
chances of winning. This disclosure must be made before or in 
conjunction with the description of the prize to the person called. If 
requested

[[Page 396]]

by that person, the telemarketer must disclose the no-purchase/no-
payment entry method for the prize promotion; provided, however, that, 
in any internal upsell for the sale of goods or services, the seller or 
telemarketer must provide the disclosures listed in this section only to 
the extent that the information in the upsell differs from the 
disclosures provided in the initial telemarketing transaction.
    (e) Required oral disclosures in charitable solicitations. It is an 
abusive telemarketing act or practice and a violation of this Rule for a 
telemarketer, in an outbound telephone call to induce a charitable 
contribution, to fail to disclose truthfully, promptly, and in a clear 
and conspicuous manner to the person receiving the call, the following 
information:
    (1) The identity of the charitable organization on behalf of which 
the request is being made; and
    (2) That the purpose of the call is to solicit a charitable 
contribution.

[75 FR 48516, Aug. 10, 2010, as amended at 76 FR 58716, Sept. 22, 2011; 
80 FR 77559, Dec. 14, 2015]



Sec.310.5  Recordkeeping requirements.

    (a) Any seller or telemarketer shall keep, for a period of 24 months 
from the date the record is produced, the following records relating to 
its telemarketing activities:
    (1) All substantially different advertising, brochures, 
telemarketing scripts, and promotional materials;
    (2) The name and last known address of each prize recipient and the 
prize awarded for prizes that are represented, directly or by 
implication, to have a value of $25.00 or more;
    (3) The name and last known address of each customer, the goods or 
services purchased, the date such goods or services were shipped or 
provided, and the amount paid by the customer for the goods or 
services;\667\
---------------------------------------------------------------------------

    \667\ For offers of consumer credit products subject to the Truth in 
Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR 226, 
compliance with the recordkeeping requirements under the Truth in 
Lending Act, and Regulation Z, shall constitute compliance with Sec.
310.5(a)(3) of this Rule.
---------------------------------------------------------------------------

    (4) The name, any fictitious name used, the last known home address 
and telephone number, and the job title(s) for all current and former 
employees directly involved in telephone sales or solicitations; 
provided, however, that if the seller or telemarketer permits fictitious 
names to be used by employees, each fictitious name must be traceable to 
only one specific employee; and
    (5) All verifiable authorizations or records of express informed 
consent or express agreement required to be provided or received under 
this Rule.
    (b) A seller or telemarketer may keep the records required by Sec.
310.5(a) in any form, and in the same manner, format, or place as they 
keep such records in the ordinary course of business. Failure to keep 
all records required by Sec.310.5(a) shall be a violation of this 
Rule.
    (c) The seller and the telemarketer calling on behalf of the seller 
may, by written agreement, allocate responsibility between themselves 
for the recordkeeping required by this Section. When a seller and 
telemarketer have entered into such an agreement, the terms of that 
agreement shall govern, and the seller or telemarketer, as the case may 
be, need not keep records that duplicate those of the other. If the 
agreement is unclear as to who must maintain any required record(s), or 
if no such agreement exists, the seller shall be responsible for 
complying with Sec. Sec.310.5(a)(1)-(3) and (5); the telemarketer 
shall be responsible for complying with Sec.310.5(a)(4).
    (d) In the event of any dissolution or termination of the seller's 
or telemarketer's business, the principal of that seller or telemarketer 
shall maintain all records as required under this section. In the event 
of any sale, assignment, or other change in ownership of the seller's or 
telemarketer's business, the successor business shall maintain all 
records required under this section.



Sec.310.6  Exemptions.

    (a) Solicitations to induce charitable contributions via outbound 
telephone calls are not covered by Sec.310.4(b)(1)(iii)(B) of this 
Rule.
    (b) The following acts or practices are exempt from this Rule:

[[Page 397]]

    (1) The sale of pay-per-call services subject to the Commission's 
Rule entitled ``Trade Regulation Rule Pursuant to the Telephone 
Disclosure and Dispute Resolution Act of 1992,'' 16 CFR part 308, 
provided, however, that this exemption does not apply to the 
requirements of Sec. Sec.310.4(a)(1), (a)(7), (b), and (c);
    (2) The sale of franchises subject to the Commission's Rule entitled 
``Disclosure Requirements and Prohibitions Concerning Franchising,'' 
(``Franchise Rule'') 16 CFR part 436, and the sale of business 
opportunities subject to the Commission's Rule entitled ``Disclosure 
Requirements and Prohibitions Concerning Business Opportunities,'' 
(``Business Opportunity Rule'') 16 CFR part 437, provided, however, that 
this exemption does not apply to the requirements of Sec. Sec.
310.4(a)(1), (a)(7), (b), and (c);
    (3) Telephone calls in which the sale of goods or services or 
charitable solicitation is not completed, and payment or authorization 
of payment is not required, until after a face-to-face sales or donation 
presentation by the seller or charitable organization, provided, 
however, that this exemption does not apply to the requirements of 
Sec. Sec.310.4(a)(1), (a)(7), (b), and (c);
    (4) Telephone calls initiated by a customer or donor that are not 
the result of any solicitation by a seller, charitable organization, or 
telemarketer, provided, however, that this exemption does not apply to 
any instances of upselling included in such telephone calls;
    (5) Telephone calls initiated by a customer or donor in response to 
an advertisement through any medium, other than direct mail 
solicitation, provided, however, that this exemption does not apply to:
    (i) Calls initiated by a customer or donor in response to an 
advertisement relating to investment opportunities, debt relief 
services, business opportunities other than business arrangements 
covered by the Franchise Rule or Business Opportunity Rule, or 
advertisements involving offers for goods or services described in Sec.
310.3(a)(1)(vi) or Sec.310.4(a)(2) through (4);
    (ii) The requirements of Sec.310.4(a)(9) or (10); or
    (iii) Any instances of upselling included in such telephone calls;
    (6) Telephone calls initiated by a customer or donor in response to 
a direct mail solicitation, including solicitations via the U.S. Postal 
Service, facsimile transmission, electronic mail, and other similar 
methods of delivery in which a solicitation is directed to specific 
address(es) or person(s), that clearly, conspicuously, and truthfully 
discloses all material information listed in Sec.310.3(a)(1), for any 
goods or services offered in the direct mail solicitation, and that 
contains no material misrepresentation regarding any item contained in 
Sec.310.3(d) for any requested charitable contribution; provided, 
however, that this exemption does not apply to:
    (i) Calls initiated by a customer in response to a direct mail 
solicitation relating to prize promotions, investment opportunities, 
debt relief services, business opportunities other than business 
arrangements covered by the Franchise Rule or Business Opportunity Rule, 
or goods or services described in Sec.310.3(a)(1)(vi) or Sec.
310.4(a)(2) through (4);
    (ii) The requirements of Sec.310.4(a)(9) or (10); or
    (iii) Any instances of upselling included in such telephone calls; 
and
    (7) Telephone calls between a telemarketer and any business to 
induce the purchase of goods or services or a charitable contribution by 
the business, except calls to induce the retail sale of nondurable 
office or cleaning supplies; provided, however, that Sec. Sec.
310.4(b)(1)(iii)(B) and 310.5 shall not apply to sellers or 
telemarketers of nondurable office or cleaning supplies.

[75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77559, Dec. 14, 2015]



Sec.310.7  Actions by states and private persons.

    (a) Any attorney general or other officer of a state authorized by 
the state to bring an action under the Telemarketing and Consumer Fraud 
and Abuse Prevention Act, and any private person who brings an action 
under that Act, shall serve written notice of its action on the 
Commission, if feasible, prior to its initiating an action under this 
Rule. The notice shall be sent to

[[Page 398]]

the Office of the Director, Bureau of Consumer Protection, Federal Trade 
Commission, Washington, DC 20580, and shall include a copy of the 
state's or private person's complaint and any other pleadings to be 
filed with the court. If prior notice is not feasible, the state or 
private person shall serve the Commission with the required notice 
immediately upon instituting its action.
    (b) Nothing contained in this Section shall prohibit any attorney 
general or other authorized state official from proceeding in state 
court on the basis of an alleged violation of any civil or criminal 
statute of such state.



Sec.310.8  Fee for access to the National Do Not Call Registry.

    (a) It is a violation of this Rule for any seller to initiate, or 
cause any telemarketer to initiate, an outbound telephone call to any 
person whose telephone number is within a given area code unless such 
seller, either directly or through another person, first has paid the 
annual fee, required by Sec.310.8(c), for access to telephone numbers 
within that area code that are included in the National Do Not Call 
Registry maintained by the Commission under Sec.310.4(b)(1)(iii)(B); 
provided, however, that such payment is not necessary if the seller 
initiates, or causes a telemarketer to initiate, calls solely to persons 
pursuant to Sec. Sec.310.4(b)(1)(iii)(B)(i) or (ii), and the seller 
does not access the National Do Not Call Registry for any other purpose.
    (b) It is a violation of this Rule for any telemarketer, on behalf 
of any seller, to initiate an outbound telephone call to any person 
whose telephone number is within a given area code unless that seller, 
either directly or through another person, first has paid the annual 
fee, required by Sec.310.8(c), for access to the telephone numbers 
within that area code that are included in the National Do Not Call 
Registry; provided, however, that such payment is not necessary if the 
seller initiates, or causes a telemarketer to initiate, calls solely to 
persons pursuant to Sec. Sec.310.4(b)(1)(iii)(B)(i) or (ii), and the 
seller does not access the National Do Not Call Registry for any other 
purpose.
    (c) The annual fee, which must be paid by any person prior to 
obtaining access to the National Do Not Call Registry, is $66 for each 
area code of data accessed, up to a maximum of $18,044; provided, 
however, that there shall be no charge to any person for accessing the 
first five area codes of data, and provided further, that there shall be 
no charge to any person engaging in or causing others to engage in 
outbound telephone calls to consumers and who is accessing area codes of 
data in the National Do Not Call Registry if the person is permitted to 
access, but is not required to access, the National Do Not Call Registry 
under this Rule, 47 CFR 64.1200, or any other Federal regulation or law. 
No person may participate in any arrangement to share the cost of 
accessing the National Do Not Call Registry, including any arrangement 
with any telemarketer or service provider to divide the costs to access 
the registry among various clients of that telemarketer or service 
provider.
    (d) Each person who pays, either directly or through another person, 
the annual fee set forth in paragraph (c) of this section, each person 
excepted under paragraph (c) from paying the annual fee, and each person 
excepted from paying an annual fee under Sec.310.4(b)(1)(iii)(B), will 
be provided a unique account number that will allow that person to 
access the registry data for the selected area codes at any time for the 
twelve month period beginning on the first day of the month in which the 
person paid the fee (``the annual period''). To obtain access to 
additional area codes of data during the first six months of the annual 
period, each person required to pay the fee under paragraph (c) of this 
section must first pay $66 for each additional area code of data not 
initially selected. To obtain access to additional area codes of data 
during the second six months of the annual period, each person required 
to pay the fee under paragraph (c) of this section must first pay $33 
for each additional area code of data not initially selected. The 
payment of the additional fee will permit the person to access the 
additional area codes of data for the remainder of the annual period.

[[Page 399]]

    (e) Access to the National Do Not Call Registry is limited to 
telemarketers, sellers, others engaged in or causing others to engage in 
telephone calls to consumers, service providers acting on behalf of such 
persons, and any government agency that has law enforcement authority. 
Prior to accessing the National Do Not Call Registry, a person must 
provide the identifying information required by the operator of the 
registry to collect the fee, and must certify, under penalty of law, 
that the person is accessing the registry solely to comply with the 
provisions of this Rule or to otherwise prevent telephone calls to 
telephone numbers on the registry. If the person is accessing the 
registry on behalf of sellers, that person also must identify each of 
the sellers on whose behalf it is accessing the registry, must provide 
each seller's unique account number for access to the national registry, 
and must certify, under penalty of law, that the sellers will be using 
the information gathered from the registry solely to comply with the 
provisions of this Rule or otherwise to prevent telephone calls to 
telephone numbers on the registry.

[75 FR 48516, Aug. 10, 2010; 75 FR 51934, Aug. 24, 2010, as amended at 
77 FR 51697, Aug. 27, 2012; 78 FR 53643, Aug. 30, 2013; 79 FR 51478, 
Aug. 29, 2014; 80 FR 77560, Dec. 14, 2016; 81 FR 59845, Aug. 31, 2016; 
82 FR 39534, Aug. 21, 2017; 83 FR 46640, Sept. 14, 2018; 84 FR 44687, 
Aug. 27, 2019; 85 FR 62597, Oct. 5, 2020]



Sec.310.9  Severability.

    The provisions of this Rule are separate and severable from one 
another. If any provision is stayed or determined to be invalid, it is 
the Commission's intention that the remaining provisions shall continue 
in effect.



PART 311_TEST PROCEDURES AND LABELING STANDARDS FOR RECYCLED OIL--
Table of Contents



Sec.
311.1 Definitions.
311.2 Stayed or invalid parts.
311.3 Preemption.
311.4 Testing.
311.5 Labeling.
311.6 Prohibited acts.

    Authority: 42 U.S.C. 6363(d).

    Source: 60 FR 55421, Oct. 31, 1995, unless otherwise noted.



Sec.311.1  Definitions.

    As used in this part:
    (a) Manufacturer means any person who re-refines or otherwise 
processes used oil to remove physical or chemical impurities acquired 
through use or who blends such re-refined or otherwise processed used 
oil with new oil or additives.
    (b) New oil means any synthetic oil or oil that has been refined 
from crude oil and which has not been used and may or may not contain 
additives. Such term does not include used oil or recycled oil.
    (c) Processed used oil means re-refined or otherwise processed used 
oil or blend of oil, consisting of such re-refined or otherwise 
processed used oil and new oil or additives.
    (d) Recycled oil means processed used oil that the manufacturer has 
determined, pursuant to section 311.4 of this part, is substantially 
equivalent to new oil for use as engine oil.
    (e) Used oil means any synthetic oil or oil that has been refined 
from crude oil, which has been used and, as a result of such use, has 
been contaminated by physical or chemical impurities.
    (f) Re-refined oil means used oil from which physical and chemical 
contaminants acquired through use have been removed.



Sec.311.2  Stayed or invalid parts.

    If any part of this rule is stayed or held invalid, the rest of it 
will remain in force.



Sec.311.3  Preemption.

    No law, regulation, or order of any State or political subdivision 
thereof may apply, or remain applicable, to any container of recycled 
oil, if such law, regulation, or order requires any container of 
recycled oil, which container bears a label in accordance with the terms 
of Sec.311.5 of this part, to bear any label with respect to the 
comparative characteristics of such recycled oil with new oil that is 
not identical to that permitted by Sec.311.5 of this part.

[[Page 400]]



Sec.311.4  Testing.

    To determine the substantial equivalency of processed used oil with 
new oil for use as engine oil, manufacturers or their designees must use 
the test procedures in API 1509, Engine Oil Licensing and Certification 
System, Seventeenth Edition, September 2012 (Addendum 1, October 2014, 
Errata, March 2015). The Director of the Federal Register approves this 
incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR 
part 51. You may obtain a copy from API, 1220 L Street NW, Washington, 
DC 20005; telephone: 202-682-8000; internet address: https://
www.api.org. You may inspect a copy at the FTC Library, 202-326-2395, 
Federal Trade Commission, Room H-630, 600 Pennsylvania Avenue NW, 
Washington, DC 20580. It is also available for inspection at the 
National Archives and Records Administration (NARA). For information on 
the availability of this material at NARA, call 202-741-6030 or go to 
http://www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.

[83 FR 48216, Sept. 24, 2018]



Sec.311.5  Labeling.

    A manufacturer or other seller may represent, on a label on a 
container of processed used oil, that such oil is substantially 
equivalent to new oil for use as engine oil only if the manufacturer has 
determined that the oil is substantially equivalent to new oil for use 
as engine oil in accordance with the NIST test procedures prescribed 
under Sec.311.4 of this part, and has based the representation on that 
determination.



Sec.311.6  Prohibited acts.

    It is unlawful for any manufacturer or other seller to represent, on 
a label on a container of processed used oil, that such oil is 
substantially equivalent to new oil for use as engine oil unless the 
manufacturer or other seller has based such representation on the 
manufacturer's determination that the processed used oil is 
substantially equivalent to new oil for use as engine oil in accordance 
with the NIST test procedures prescribed under Sec.311.4 of this part. 
Violations will be subject to enforcement through civil penalties (as 
adjusted for inflation pursuant to Sec.1.98 of this chapter), 
imprisonment, and/or injunctive relief in accordance with the 
enforcement provisions of Section 525 of the Energy Policy and 
Conservation Act (42 U.S.C. 6395).

[60 FR 55421, Oct. 31, 1995, as amended at 65 FR 69666, Nov. 20, 2000]



PART 312_CHILDREN'S ONLINE PRIVACY PROTECTION RULE--
Table of Contents



Sec.
312.1 Scope of regulations in this part.
312.2 Definitions.
312.3 Regulation of unfair or deceptive acts or practices in connection 
          with the collection, use, and/or disclosure of personal 
          information from and about children on the Internet.
312.4 Notice.
312.5 Parental consent.
312.6 Right of parent to review personal information provided by a 
          child.
312.7 Prohibition against conditioning a child's participation on 
          collection of personal information.
312.8 Confidentiality, security, and integrity of personal information 
          collected from children.
312.9 Enforcement.
312.10 Data retention and deletion requirements.
312.11 Safe harbor programs.
312.12 Voluntary Commission Approval Processes.
312.13 Severability.

    Authority: 15 U.S.C. 6501-6508.

    Source: 78 FR 4008, Jan. 17, 2013, unless otherwise noted.



Sec.312.1  Scope of regulations in this part.

    This part implements the Children's Online Privacy Protection Act of 
1998, (15 U.S.C. 6501, et seq.,) which prohibits unfair or deceptive 
acts or practices in connection with the collection, use, and/or 
disclosure of personal information from and about children on the 
Internet.



Sec.312.2  Definitions.

    Child means an individual under the age of 13.
    Collects or collection means the gathering of any personal 
information from a child by any means, including but not limited to:

[[Page 401]]

    (1) Requesting, prompting, or encouraging a child to submit personal 
information online;
    (2) Enabling a child to make personal information publicly available 
in identifiable form. An operator shall not be considered to have 
collected personal information under this paragraph if it takes 
reasonable measures to delete all or virtually all personal information 
from a child's postings before they are made public and also to delete 
such information from its records; or
    (3) Passive tracking of a child online.
    Commission means the Federal Trade Commission.
    Delete means to remove personal information such that it is not 
maintained in retrievable form and cannot be retrieved in the normal 
course of business.
    Disclose or disclosure means, with respect to personal information:
    (1) The release of personal information collected by an operator 
from a child in identifiable form for any purpose, except where an 
operator provides such information to a person who provides support for 
the internal operations of the Web site or online service; and
    (2) Making personal information collected by an operator from a 
child publicly available in identifiable form by any means, including 
but not limited to a public posting through the Internet, or through a 
personal home page or screen posted on a Web site or online service; a 
pen pal service; an electronic mail service; a message board; or a chat 
room.
    Federal agency means an agency, as that term is defined in Section 
551(1) of title 5, United States Code.
    Internet means collectively the myriad of computer and 
telecommunications facilities, including equipment and operating 
software, which comprise the interconnected world-wide network of 
networks that employ the Transmission Control Protocol/Internet 
Protocol, or any predecessor or successor protocols to such protocol, to 
communicate information of all kinds by wire, radio, or other methods of 
transmission.
    Obtaining verifiable consent means making any reasonable effort 
(taking into consideration available technology) to ensure that before 
personal information is collected from a child, a parent of the child:
    (1) Receives notice of the operator's personal information 
collection, use, and disclosure practices; and
    (2) Authorizes any collection, use, and/or disclosure of the 
personal information.
    Online contact information means an email address or any other 
substantially similar identifier that permits direct contact with a 
person online, including but not limited to, an instant messaging user 
identifier, a voice over internet protocol (VOIP) identifier, or a video 
chat user identifier.
    Operator means any person who operates a Web site located on the 
Internet or an online service and who collects or maintains personal 
information from or about the users of or visitors to such Web site or 
online service, or on whose behalf such information is collected or 
maintained, or offers products or services for sale through that Web 
site or online service, where such Web site or online service is 
operated for commercial purposes involving commerce among the several 
States or with 1 or more foreign nations; in any territory of the United 
States or in the District of Columbia, or between any such territory and 
another such territory or any State or foreign nation; or between the 
District of Columbia and any State, territory, or foreign nation. This 
definition does not include any nonprofit entity that would otherwise be 
exempt from coverage under Section 5 of the Federal Trade Commission Act 
(15 U.S.C. 45). Personal information is collected or maintained on 
behalf of an operator when:
    (1) It is collected or maintained by an agent or service provider of 
the operator; or
    (2) The operator benefits by allowing another person to collect 
personal information directly from users of such Web site or online 
service.
    Parent includes a legal guardian.
    Person means any individual, partnership, corporation, trust, 
estate, cooperative, association, or other entity.
    Personal information means individually identifiable information 
about an individual collected online, including:
    (1) A first and last name;

[[Page 402]]

    (2) A home or other physical address including street name and name 
of a city or town;
    (3) Online contact information as defined in this section;
    (4) A screen or user name where it functions in the same manner as 
online contact information, as defined in this section;
    (5) A telephone number;
    (6) A Social Security number;
    (7) A persistent identifier that can be used to recognize a user 
over time and across different Web sites or online services. Such 
persistent identifier includes, but is not limited to, a customer number 
held in a cookie, an Internet Protocol (IP) address, a processor or 
device serial number, or unique device identifier;
    (8) A photograph, video, or audio file where such file contains a 
child's image or voice;
    (9) Geolocation information sufficient to identify street name and 
name of a city or town; or
    (10) Information concerning the child or the parents of that child 
that the operator collects online from the child and combines with an 
identifier described in this definition.
    Release of personal information means the sharing, selling, renting, 
or transfer of personal information to any third party.
    Support for the internal operations of the Web site or online 
service means:
    (1) Those activities necessary to:
    (i) Maintain or analyze the functioning of the Web site or online 
service;
    (ii) Perform network communications;
    (iii) Authenticate users of, or personalize the content on, the Web 
site or online service;
    (iv) Serve contextual advertising on the Web site or online service 
or cap the frequency of advertising;
    (v) Protect the security or integrity of the user, Web site, or 
online service;
    (vi) Ensure legal or regulatory compliance; or
    (vii) Fulfill a request of a child as permitted by Sec.312.5(c)(3) 
and (4);
    (2) So long as The information collected for the activities listed 
in paragraphs (1)(i)-(vii) of this definition is not used or disclosed 
to contact a specific individual, including through behavioral 
advertising, to amass a profile on a specific individual, or for any 
other purpose.
    Third party means any person who is not:
    (1) An operator with respect to the collection or maintenance of 
personal information on the Web site or online service; or
    (2) A person who provides support for the internal operations of the 
Web site or online service and who does not use or disclose information 
protected under this part for any other purpose.
    Web site or online service directed to children means a commercial 
Web site or online service, or portion thereof, that is targeted to 
children.
    (1) In determining whether a Web site or online service, or a 
portion thereof, is directed to children, the Commission will consider 
its subject matter, visual content, use of animated characters or child-
oriented activities and incentives, music or other audio content, age of 
models, presence of child celebrities or celebrities who appeal to 
children, language or other characteristics of the Web site or online 
service, as well as whether advertising promoting or appearing on the 
Web site or online service is directed to children. The Commission will 
also consider competent and reliable empirical evidence regarding 
audience composition, and evidence regarding the intended audience.
    (2) A Web site or online service shall be deemed directed to 
children when it has actual knowledge that it is collecting personal 
information directly from users of another Web site or online service 
directed to children.
    (3) A Web site or online service that is directed to children under 
the criteria set forth in paragraph (1) of this definition, but that 
does not target children as its primary audience, shall not be deemed 
directed to children if it:
    (i) Does not collect personal information from any visitor prior to 
collecting age information; and
    (ii) Prevents the collection, use, or disclosure of personal 
information from visitors who identify themselves as under age 13 
without first complying

[[Page 403]]

with the notice and parental consent provisions of this part.
    (4) A Web site or online service shall not be deemed directed to 
children solely because it refers or links to a commercial Web site or 
online service directed to children by using information location tools, 
including a directory, index, reference, pointer, or hypertext link.



Sec.312.3  Regulation of unfair or deceptive acts or practices in 
connection with the collection, use, and/or disclosure of personal
information from and about children on the Internet.

    General requirements. It shall be unlawful for any operator of a Web 
site or online service directed to children, or any operator that has 
actual knowledge that it is collecting or maintaining personal 
information from a child, to collect personal information from a child 
in a manner that violates the regulations prescribed under this part. 
Generally, under this part, an operator must:
    (a) Provide notice on the Web site or online service of what 
information it collects from children, how it uses such information, and 
its disclosure practices for such information (Sec.312.4(b));
    (b) Obtain verifiable parental consent prior to any collection, use, 
and/or disclosure of personal information from children (Sec.312.5);
    (c) Provide a reasonable means for a parent to review the personal 
information collected from a child and to refuse to permit its further 
use or maintenance (Sec.312.6);
    (d) Not condition a child's participation in a game, the offering of 
a prize, or another activity on the child disclosing more personal 
information than is reasonably necessary to participate in such activity 
(Sec.312.7); and
    (e) Establish and maintain reasonable procedures to protect the 
confidentiality, security, and integrity of personal information 
collected from children (Sec.312.8).



Sec.312.4  Notice.

    (a) General principles of notice. It shall be the obligation of the 
operator to provide notice and obtain verifiable parental consent prior 
to collecting, using, or disclosing personal information from children. 
Such notice must be clearly and understandably written, complete, and 
must contain no unrelated, confusing, or contradictory materials.
    (b) Direct notice to the parent. An operator must make reasonable 
efforts, taking into account available technology, to ensure that a 
parent of a child receives direct notice of the operator's practices 
with regard to the collection, use, or disclosure of personal 
information from children, including notice of any material change in 
the collection, use, or disclosure practices to which the parent has 
previously consented.
    (c) Content of the direct notice to the parent--(1) Content of the 
direct notice to the parent under Sec.312.5(c)(1) (Notice to Obtain 
Parent's Affirmative Consent to the Collection, Use, or Disclosure of a 
Child's Personal Information). This direct notice shall set forth:
    (i) That the operator has collected the parent's online contact 
information from the child, and, if such is the case, the name of the 
child or the parent, in order to obtain the parent's consent;
    (ii) That the parent's consent is required for the collection, use, 
or disclosure of such information, and that the operator will not 
collect, use, or disclose any personal information from the child if the 
parent does not provide such consent;
    (iii) The additional items of personal information the operator 
intends to collect from the child, or the potential opportunities for 
the disclosure of personal information, should the parent provide 
consent;
    (iv) A hyperlink to the operator's online notice of its information 
practices required under paragraph (d) of this section;
    (v) The means by which the parent can provide verifiable consent to 
the collection, use, and disclosure of the information; and
    (vi) That if the parent does not provide consent within a reasonable 
time from the date the direct notice was sent, the operator will delete 
the parent's online contact information from its records.

[[Page 404]]

    (2) Content of the direct notice to the parent under Sec.
312.5(c)(2) (Voluntary Notice to Parent of a Child's Online Activities 
Not Involving the Collection, Use or Disclosure of Personal 
Information). Where an operator chooses to notify a parent of a child's 
participation in a Web site or online service, and where such site or 
service does not collect any personal information other than the 
parent's online contact information, the direct notice shall set forth:
    (i) That the operator has collected the parent's online contact 
information from the child in order to provide notice to, and 
subsequently update the parent about, a child's participation in a Web 
site or online service that does not otherwise collect, use, or disclose 
children's personal information;
    (ii) That the parent's online contact information will not be used 
or disclosed for any other purpose;
    (iii) That the parent may refuse to permit the child's participation 
in the Web site or online service and may require the deletion of the 
parent's online contact information, and how the parent can do so; and
    (iv) A hyperlink to the operator's online notice of its information 
practices required under paragraph (d) of this section.
    (3) Content of the direct notice to the parent under Sec.
312.5(c)(4) (Notice to a Parent of Operator's Intent to Communicate with 
the Child Multiple Times). This direct notice shall set forth:
    (i) That the operator has collected the child's online contact 
information from the child in order to provide multiple online 
communications to the child;
    (ii) That the operator has collected the parent's online contact 
information from the child in order to notify the parent that the child 
has registered to receive multiple online communications from the 
operator;
    (iii) That the online contact information collected from the child 
will not be used for any other purpose, disclosed, or combined with any 
other information collected from the child;
    (iv) That the parent may refuse to permit further contact with the 
child and require the deletion of the parent's and child's online 
contact information, and how the parent can do so;
    (v) That if the parent fails to respond to this direct notice, the 
operator may use the online contact information collected from the child 
for the purpose stated in the direct notice; and
    (vi) A hyperlink to the operator's online notice of its information 
practices required under paragraph (d) of this section.
    (4) Content of the direct notice to the parent required under Sec.
312.5(c)(5) (Notice to a Parent In Order to Protect a Child's Safety). 
This direct notice shall set forth:
    (i) That the operator has collected the name and the online contact 
information of the child and the parent in order to protect the safety 
of a child;
    (ii) That the information will not be used or disclosed for any 
purpose unrelated to the child's safety;
    (iii) That the parent may refuse to permit the use, and require the 
deletion, of the information collected, and how the parent can do so;
    (iv) That if the parent fails to respond to this direct notice, the 
operator may use the information for the purpose stated in the direct 
notice; and
    (v) A hyperlink to the operator's online notice of its information 
practices required under paragraph (d) of this section.
    (d) Notice on the Web site or online service. In addition to the 
direct notice to the parent, an operator must post a prominent and 
clearly labeled link to an online notice of its information practices 
with regard to children on the home or landing page or screen of its Web 
site or online service, and, at each area of the Web site or online 
service where personal information is collected from children. The link 
must be in close proximity to the requests for information in each such 
area. An operator of a general audience Web site or online service that 
has a separate children's area must post a link to a notice of its 
information practices with regard to children on the home or landing 
page or screen of the children's area. To be complete, the online notice 
of the Web site or online service's information practices must state the 
following:
    (1) The name, address, telephone number, and email address of all 
operators collecting or maintaining personal

[[Page 405]]

information from children through the Web site or online service. 
Provided that: The operators of a Web site or online service may list 
the name, address, phone number, and email address of one operator who 
will respond to all inquiries from parents concerning the operators' 
privacy policies and use of children's information, as long as the names 
of all the operators collecting or maintaining personal information from 
children through the Web site or online service are also listed in the 
notice;
    (2) A description of what information the operator collects from 
children, including whether the Web site or online service enables a 
child to make personal information publicly available; how the operator 
uses such information; and, the operator's disclosure practices for such 
information; and
    (3) That the parent can review or have deleted the child's personal 
information, and refuse to permit further collection or use of the 
child's information, and state the procedures for doing so.



Sec.312.5  Parental consent.

    (a) General requirements. (1) An operator is required to obtain 
verifiable parental consent before any collection, use, or disclosure of 
personal information from children, including consent to any material 
change in the collection, use, or disclosure practices to which the 
parent has previously consented.
    (2) An operator must give the parent the option to consent to the 
collection and use of the child's personal information without 
consenting to disclosure of his or her personal information to third 
parties.
    (b) Methods for verifiable parental consent. (1) An operator must 
make reasonable efforts to obtain verifiable parental consent, taking 
into consideration available technology. Any method to obtain verifiable 
parental consent must be reasonably calculated, in light of available 
technology, to ensure that the person providing consent is the child's 
parent. (2) Existing methods to obtain verifiable parental consent that 
satisfy the requirements of this paragraph include:
    (i) Providing a consent form to be signed by the parent and returned 
to the operator by postal mail, facsimile, or electronic scan;
    (ii) Requiring a parent, in connection with a monetary transaction, 
to use a credit card, debit card, or other online payment system that 
provides notification of each discrete transaction to the primary 
account holder;
    (iii) Having a parent call a toll-free telephone number staffed by 
trained personnel;
    (iv) Having a parent connect to trained personnel via video-
conference;
    (v) Verifying a parent's identity by checking a form of government-
issued identification against databases of such information, where the 
parent's identification is deleted by the operator from its records 
promptly after such verification is complete; or
    (vi) Provided that, an operator that does not ``disclose'' (as 
defined by Sec.312.2) children's personal information, may use an 
email coupled with additional steps to provide assurances that the 
person providing the consent is the parent. Such additional steps 
include: Sending a confirmatory email to the parent following receipt of 
consent, or obtaining a postal address or telephone number from the 
parent and confirming the parent's consent by letter or telephone call. 
An operator that uses this method must provide notice that the parent 
can revoke any consent given in response to the earlier email.
    (3) Safe harbor approval of parental consent methods. A safe harbor 
program approved by the Commission under Sec.312.11 may approve its 
member operators' use of a parental consent method not currently 
enumerated in paragraph (b)(2) of this section where the safe harbor 
program determines that such parental consent method meets the 
requirements of paragraph (b)(1) of this section.
    (c) Exceptions to prior parental consent. Verifiable parental 
consent is required prior to any collection, use, or disclosure of 
personal information from a child except as set forth in this paragraph:
    (1) Where the sole purpose of collecting the name or online contact 
information of the parent or child is to provide notice and obtain 
parental consent under Sec.312.4(c)(1). If the operator has not 
obtained parental consent after

[[Page 406]]

a reasonable time from the date of the information collection, the 
operator must delete such information from its records;
    (2) Where the purpose of collecting a parent's online contact 
information is to provide voluntary notice to, and subsequently update 
the parent about, the child's participation in a Web site or online 
service that does not otherwise collect, use, or disclose children's 
personal information. In such cases, the parent's online contact 
information may not be used or disclosed for any other purpose. In such 
cases, the operator must make reasonable efforts, taking into 
consideration available technology, to ensure that the parent receives 
notice as described in Sec.312.4(c)(2);
    (3) Where the sole purpose of collecting online contact information 
from a child is to respond directly on a one-time basis to a specific 
request from the child, and where such information is not used to re-
contact the child or for any other purpose, is not disclosed, and is 
deleted by the operator from its records promptly after responding to 
the child's request;
    (4) Where the purpose of collecting a child's and a parent's online 
contact information is to respond directly more than once to the child's 
specific request, and where such information is not used for any other 
purpose, disclosed, or combined with any other information collected 
from the child. In such cases, the operator must make reasonable 
efforts, taking into consideration available technology, to ensure that 
the parent receives notice as described in Sec.312.4(c)(3). An 
operator will not be deemed to have made reasonable efforts to ensure 
that a parent receives notice where the notice to the parent was unable 
to be delivered;
    (5) Where the purpose of collecting a child's and a parent's name 
and online contact information, is to protect the safety of a child, and 
where such information is not used or disclosed for any purpose 
unrelated to the child's safety. In such cases, the operator must make 
reasonable efforts, taking into consideration available technology, to 
provide a parent with notice as described in Sec.312.4(c)(4);
    (6) Where the purpose of collecting a child's name and online 
contact information is to:
    (i) Protect the security or integrity of its Web site or online 
service;
    (ii) Take precautions against liability;
    (iii) Respond to judicial process; or
    (iv) To the extent permitted under other provisions of law, to 
provide information to law enforcement agencies or for an investigation 
on a matter related to public safety; and where such information is not 
be used for any other purpose;
    (7) Where an operator collects a persistent identifier and no other 
personal information and such identifier is used for the sole purpose of 
providing support for the internal operations of the Web site or online 
service. In such case, there also shall be no obligation to provide 
notice under Sec.312.4; or
    (8) Where an operator covered under paragraph (2) of the definition 
of Web site or online service directed to children in Sec.312.2 
collects a persistent identifier and no other personal information from 
a user who affirmatively interacts with the operator and whose previous 
registration with that operator indicates that such user is not a child. 
In such case, there also shall be no obligation to provide notice under 
Sec.312.4.



Sec.312.6  Right of parent to review personal information provided
by a child.

    (a) Upon request of a parent whose child has provided personal 
information to a Web site or online service, the operator of that Web 
site or online service is required to provide to that parent the 
following:
    (1) A description of the specific types or categories of personal 
information collected from children by the operator, such as name, 
address, telephone number, email address, hobbies, and extracurricular 
activities;
    (2) The opportunity at any time to refuse to permit the operator's 
further use or future online collection of personal information from 
that child, and to direct the operator to delete the child's personal 
information; and
    (3) Notwithstanding any other provision of law, a means of reviewing 
any personal information collected from

[[Page 407]]

the child. The means employed by the operator to carry out this 
provision must:
    (i) Ensure that the requestor is a parent of that child, taking into 
account available technology; and
    (ii) Not be unduly burdensome to the parent.
    (b) Neither an operator nor the operator's agent shall be held 
liable under any Federal or State law for any disclosure made in good 
faith and following reasonable procedures in responding to a request for 
disclosure of personal information under this section.
    (c) Subject to the limitations set forth in Sec.312.7, an operator 
may terminate any service provided to a child whose parent has refused, 
under paragraph (a)(2) of this section, to permit the operator's further 
use or collection of personal information from his or her child or has 
directed the operator to delete the child's personal information.



Sec.312.7  Prohibition against conditioning a child's participation
on collection of personal information.

    An operator is prohibited from conditioning a child's participation 
in a game, the offering of a prize, or another activity on the child's 
disclosing more personal information than is reasonably necessary to 
participate in such activity.



Sec.312.8  Confidentiality, security, and integrity of personal 
information collected from children.

    The operator must establish and maintain reasonable procedures to 
protect the confidentiality, security, and integrity of personal 
information collected from children. The operator must also take 
reasonable steps to release children's personal information only to 
service providers and third parties who are capable of maintaining the 
confidentiality, security and integrity of such information, and who 
provide assurances that they will maintain the information in such a 
manner.



Sec.312.9  Enforcement.

    Subject to sections 6503 and 6505 of the Children's Online Privacy 
Protection Act of 1998, a violation of a regulation prescribed under 
section 6502 (a) of this Act shall be treated as a violation of a rule 
defining an unfair or deceptive act or practice prescribed under section 
18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 
57a(a)(1)(B)).



Sec.312.10  Data retention and deletion requirements.

    An operator of a Web site or online service shall retain personal 
information collected online from a child for only as long as is 
reasonably necessary to fulfill the purpose for which the information 
was collected. The operator must delete such information using 
reasonable measures to protect against unauthorized access to, or use 
of, the information in connection with its deletion.



Sec.312.11  Safe harbor programs.

    (a) In general. Industry groups or other persons may apply to the 
Commission for approval of self-regulatory program guidelines (``safe 
harbor programs''). The application shall be filed with the Commission's 
Office of the Secretary. The Commission will publish in the Federal 
Register a document seeking public comment on the application. The 
Commission shall issue a written determination within 180 days of the 
filing of the application.
    (b) Criteria for approval of self-regulatory program guidelines. 
Proposed safe harbor programs must demonstrate that they meet the 
following performance standards:
    (1) Program requirements that ensure operators subject to the self-
regulatory program guidelines (``subject operators'') provide 
substantially the same or greater protections for children as those 
contained in Sec. Sec.312.2 through 312.8, and 312.10.
    (2) An effective, mandatory mechanism for the independent assessment 
of subject operators' compliance with the self-regulatory program 
guidelines. At a minimum, this mechanism must include a comprehensive 
review by the safe harbor program, to be conducted not less than 
annually, of each subject operator's information policies, practices, 
and representations. The assessment mechanism required under this 
paragraph can be provided by an independent enforcement program, such as 
a seal program.

[[Page 408]]

    (3) Disciplinary actions for subject operators' non-compliance with 
self-regulatory program guidelines. This performance standard may be 
satisfied by:
    (i) Mandatory, public reporting of any action taken against subject 
operators by the industry group issuing the self-regulatory guidelines;
    (ii) Consumer redress;
    (iii) Voluntary payments to the United States Treasury in connection 
with an industry-directed program for violators of the self-regulatory 
guidelines;
    (iv) Referral to the Commission of operators who engage in a pattern 
or practice of violating the self-regulatory guidelines; or
    (v) Any other equally effective action.
    (c) Request for Commission approval of self-regulatory program 
guidelines. A proposed safe harbor program's request for approval shall 
be accompanied by the following:
    (1) A detailed explanation of the applicant's business model, and 
the technological capabilities and mechanisms that will be used for 
initial and continuing assessment of subject operators' fitness for 
membership in the safe harbor program;
    (2) A copy of the full text of the guidelines for which approval is 
sought and any accompanying commentary;
    (3) A comparison of each provision of Sec. Sec.312.2 through 
312.8, and 312.10 with the corresponding provisions of the guidelines; 
and
    (4) A statement explaining:
    (i) How the self-regulatory program guidelines, including the 
applicable assessment mechanisms, meet the requirements of this part; 
and
    (ii) How the assessment mechanisms and compliance consequences 
required under paragraphs (b)(2) and (b)(3) provide effective 
enforcement of the requirements of this part.
    (d) Reporting and recordkeeping requirements. Approved safe harbor 
programs shall:
    (1) By July 1, 2014, and annually thereafter, submit a report to the 
Commission containing, at a minimum, an aggregated summary of the 
results of the independent assessments conducted under paragraph (b)(2) 
of this section, a description of any disciplinary action taken against 
any subject operator under paragraph (b)(3) of this section, and a 
description of any approvals of member operators' use of a parental 
consent mechanism, pursuant to Sec.312.5(b)(3);
    (2) Promptly respond to Commission requests for additional 
information; and
    (3) Maintain for a period not less than three years, and upon 
request make available to the Commission for inspection and copying:
    (i) Consumer complaints alleging violations of the guidelines by 
subject operators;
    (ii) Records of disciplinary actions taken against subject 
operators; and
    (iii) Results of the independent assessments of subject operators' 
compliance required under paragraph (b)(2) of this section.
    (e) Post-approval modifications to self-regulatory program 
guidelines. Approved safe harbor programs must submit proposed changes 
to their guidelines for review and approval by the Commission in the 
manner required for initial approval of guidelines under paragraph 
(c)(2) of this section. The statement required under paragraph (c)(4) of 
this section must describe how the proposed changes affect existing 
provisions of the guidelines.
    (f) Revocation of approval of self-regulatory program guidelines. 
The Commission reserves the right to revoke any approval granted under 
this section if at any time it determines that the approved self-
regulatory program guidelines or their implementation do not meet the 
requirements of this part. Safe harbor programs that were approved prior 
to the publication of the Final Rule amendments must, by March 1, 2013, 
submit proposed modifications to their guidelines that would bring them 
into compliance with such amendments, or their approval shall be 
revoked.
    (g) Operators' participation in a safe harbor program. An operator 
will be deemed to be in compliance with the requirements of Sec. Sec.
312.2 through 312.8, and 312.10 if that operator complies with 
Commission-approved safe harbor program guidelines. In considering 
whether to initiate an investigation or

[[Page 409]]

bring an enforcement action against a subject operator for violations of 
this part, the Commission will take into account the history of the 
subject operator's participation in the safe harbor program, whether the 
subject operator has taken action to remedy such non-compliance, and 
whether the operator's non-compliance resulted in any one of the 
disciplinary actions set forth in paragraph (b)(3).

[78 FR 4008, Jan. 17, 2013, as amended at 78 FR 76986, Dec. 20, 2013]



Sec.312.12  Voluntary Commission Approval Processes.

    (a) Parental consent methods. An interested party may file a written 
request for Commission approval of parental consent methods not 
currently enumerated in Sec.312.5(b). To be considered for approval, a 
party must provide a detailed description of the proposed parental 
consent methods, together with an analysis of how the methods meet Sec.
312.5(b)(1). The request shall be filed with the Commission's Office of 
the Secretary. The Commission will publish in the Federal Register a 
document seeking public comment on the request. The Commission shall 
issue a written determination within 120 days of the filing of the 
request; and
    (b) Support for internal operations of the Web site or online 
service. An interested party may file a written request for Commission 
approval of additional activities to be included within the definition 
of support for internal operations. To be considered for approval, a 
party must provide a detailed justification why such activities should 
be deemed support for internal operations, and an analysis of their 
potential effects on children's online privacy. The request shall be 
filed with the Commission's Office of the Secretary. The Commission will 
publish in the Federal Register a document seeking public comment on the 
request. The Commission shall issue a written determination within 120 
days of the filing of the request.



Sec.312.13  Severability.

    The provisions of this part are separate and severable from one 
another. If any provision is stayed or determined to be invalid, it is 
the Commission's intention that the remaining provisions shall continue 
in effect.



PART 313_PRIVACY OF CONSUMER FINANCIAL INFORMATION--Table of Contents



Sec.
313.1 Purpose and scope.
313.2 Model privacy form and examples.
313.3 Definitions.

                  Subpart A_Privacy and Opt Out Notices

313.4 Initial privacy notice to consumers required.
313.5 Annual privacy notice to customers required.
313.6 Information to be included in privacy notices.
313.7 Form of opt out notice to consumers; opt out methods.
313.8 Revised privacy notices.
313.9 Delivering privacy and opt out notices.

                     Subpart B_Limits on Disclosures

313.10 Limitation on disclosure of nonpublic personal information to 
          nonaffiliated third parties.
313.11 Limits on redisclosure and reuse of information.
313.12 Limits on sharing account number information for marketing 
          purposes.

                          Subpart C_Exceptions

313.13 Exception to opt out requirements for service providers and joint 
          marketing.
313.14 Exceptions to notice and opt out requirements for processing and 
          servicing transactions.
313.15 Other exceptions to notice and opt out requirements.

            Subpart D_Relation to Other Laws; Effective Date

313.16 Protection of Fair Credit Reporting Act.
313.17 Relation to State laws.
313.18 Effective date; transition rule.

Appendix A to Part 313--Model Privacy Form

    Authority: 15 U.S.C. 6801 et seq.

    Source: 65 FR 33677, May 24, 2000, unless otherwise noted.

[[Page 410]]



Sec.313.1  Purpose and scope.

    (a) Purpose. This part governs the treatment of nonpublic personal 
information about consumers by the financial institutions listed in 
paragraph (b) of this section. This part:
    (1) Requires a financial institution in specified circumstances to 
provide notice to customers about its privacy policies and practices;
    (2) Describes the conditions under which a financial institution may 
disclose nonpublic personal information about consumers to nonaffiliated 
third parties; and
    (3) Provides a method for consumers to prevent a financial 
institution from disclosing that information to most nonaffiliated third 
parties by ``opting out'' of that disclosure, subject to the exceptions 
in Sec. Sec.313.13, 313.14, and 313.15.
    (b) Scope. This part applies only to nonpublic personal information 
about individuals who obtain financial products or services primarily 
for personal, family or household purposes from the institutions listed 
below. This part does not apply to information about companies or about 
individuals who obtain financial products or services for business, 
commercial, or agricultural purposes. This part applies to those 
``financial institutions'' and ``other persons'' over which the Federal 
Trade Commission (``Commission'') has enforcement authority pursuant to 
Section 505(a)(7) of the Gramm-Leach-Bliley Act. An entity is a 
``financial institution'' if its business is engaging in a financial 
activity as described in Section 4(k) of the Bank Holding Company Act of 
1956, 12 U.S.C. 1843(k), which incorporates by reference activities 
enumerated by the Federal Reserve Board in 12 CFR 211.5(d) and 12 CFR 
225.28. The ``financial institutions'' subject to the Commission's 
enforcement authority are those that are not otherwise subject to the 
enforcement authority of another regulator under Section 505 of the 
Gramm-Leach-Bliley Act. More specifically, those entities include, but 
are not limited to, mortgage lenders, ``pay day'' lenders, finance 
companies, mortgage brokers, account servicers, check cashers, wire 
transferors, travel agencies operated in connection with financial 
services, collection agencies, credit counselors and other financial 
advisors, tax preparation firms, non-federally insured credit unions, 
and investment advisors that are not required to register with the 
Securities and Exchange Commission. They are referred to in this part as 
``You.'' The ``other persons'' to whom this part applies are third 
parties that are not financial institutions, but that receive nonpublic 
personal information from financial institutions with whom they are not 
affiliated. Nothing in this part modifies, limits, or supersedes the 
standards governing individually identifiable health information 
promulgated by the Secretary of Health and Human Services under the 
authority of sections 262 and 264 of the Health Insurance Portability 
and Accountability Act of 1996, 42 U.S.C. 1320d-1320d-8. Any institution 
of higher education that complies with the Federal Educational Rights 
and Privacy Act (``FERPA''), 20 U.S.C. 1232g, and its implementing 
regulations, 34 CFR part 99, and that is also a financial institution 
subject to the requirements of this part, shall be deemed to be in 
compliance with this part if it is in compliance with FERPA.



Sec.313.2  Model privacy form and examples.

    (a) Model privacy form. Use of the model privacy form in appendix A 
of this part, consistent with the instructions in appendix A, 
constitutes compliance with the notice content requirements of 
Sec. Sec.313.6 and 313.7 of this part, although use of the model 
privacy form is not required.
    (b) Examples. The examples in this part are not exclusive. 
Compliance with an example, to the extent applicable, constitutes 
compliance with this part.

[74 FR 62965, Dec. 1, 2009]



Sec.313.3  Definitions.

    As used in this part, unless the context requires otherwise:
    (a) Affiliate means any company that controls, is controlled by, or 
is under common control with another company.
    (b)(1) Clear and conspicuous means that a notice is reasonably 
understandable and designed to call attention to the nature and 
significance of the information in the notice.

[[Page 411]]

    (2) Examples--(i) Reasonably understandable. You make your notice 
reasonably understandable if you:
    (A) Present the information in the notice in clear, concise 
sentences, paragraphs, and sections;
    (B) Use short explanatory sentences or bullet lists whenever 
possible;
    (C) Use definite, concrete, everyday words and active voice whenever 
possible;
    (D) Avoid multiple negatives;
    (E) Avoid legal and highly technical business terminology whenever 
possible; and
    (F) Avoid explanations that are imprecise and readily subject to 
different interpretations.
    (ii) Designed to call attention. You design your notice to call 
attention to the nature and significance of the information in it if 
you:
    (A) Use a plain-language heading to call attention to the notice;
    (B) Use a typeface and type size that are easy to read;
    (C) Provide wide margins and ample line spacing;
    (D) Use boldface or italics for key words; and
    (E) In a form that combines your notice with other information, use 
distinctive type size, style, and graphic devices, such as shading or 
sidebars, when you combine your notice with other information.
    (iii) Notices on web sites. If you provide a notice on a web page, 
you design your notice to call attention to the nature and significance 
of the information in it if you use text or visual cues to encourage 
scrolling down the page if necessary to view the entire notice and 
ensure that other elements on the web site (such as text, graphics, 
hyperlinks, or sound) do not distract attention from the notice, and you 
either:
    (A) Place the notice on a screen that consumers frequently access, 
such as a page on which transactions are conducted; or
    (B) Place a link on a screen that consumers frequently access, such 
as a page on which transactions are conducted, that connects directly to 
the notice and is labeled appropriately to convey the importance, nature 
and relevance of the notice.
    (c) Collect means to obtain information that you organize or can 
retrieve by the name of an individual or by identifying number, symbol, 
or other identifying particular assigned to the individual, irrespective 
of the source of the underlying information.
    (d) Company means any corporation, limited liability company, 
business trust, general or limited partnership, association, or similar 
organization.
    (e)(1) Consumer means an individual who obtains or has obtained a 
financial product or service from you that is to be used primarily for 
personal, family, or household purposes, or that individual's legal 
representative.
    (2) Examples--(i) An individual who applies to you for credit for 
personal, family, or household purposes is a consumer of a financial 
service, regardless of whether the credit is extended.
    (ii) An individual who provides nonpublic personal information to 
you in order to obtain a determination about whether he or she may 
qualify for a loan to be used primarily for personal, family, or 
household purposes is a consumer of a financial service, regardless of 
whether the loan is extended.
    (iii) An individual who provides nonpublic personal information to 
you in connection with obtaining or seeking to obtain financial, 
investment, or economic advisory services is a consumer, regardless of 
whether you establish a continuing advisory relationship.
    (iv) If you hold ownership or servicing rights to an individual's 
loan that is used primarily for personal, family, or household purposes, 
the individual is your consumer, even if you hold those rights in 
conjunction with one or more other institutions. (The individual is also 
a consumer with respect to the other financial institutions involved.) 
An individual who has a loan in which you have ownership or servicing 
rights is your consumer, even if you, or another institution with those 
rights, hire an agent to collect on the loan.
    (v) An individual who is a consumer of another financial institution 
is not your consumer solely because you act as agent for, or provide 
processing or other services to, that financial institution.

[[Page 412]]

    (vi) An individual is not your consumer solely because he or she has 
designated you as trustee for a trust.
    (vii) An individual is not your consumer solely because he or she is 
a beneficiary of a trust for which you are a trustee.
    (viii) An individual is not your consumer solely because he or she 
is a participant or a beneficiary of an employee benefit plan that you 
sponsor or for which you act as a trustee or fiduciary.
    (f) Consumer reporting agency has the same meaning as in section 
603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)).
    (g) Control of a company means:
    (1) Ownership, control, or power to vote 25 percent or more of the 
outstanding shares of any class of voting security of the company, 
directly or indirectly, or acting through one or more other persons;
    (2) Control in any manner over the election of a majority of the 
directors, trustees, or general partners (or individuals exercising 
similar functions) of the company; or
    (3) The power to exercise, directly or indirectly, a controlling 
influence over the management or policies of the company.
    (h) Customer means a consumer who has a customer relationship with 
you.
    (i)(1) Customer relationship means a continuing relationship between 
a consumer and you under which you provide one or more financial 
products or services to the consumer that are to be used primarily for 
personal, family, or household purposes.
    (2) Examples--(i) Continuing relationship. A consumer has a 
continuing relationship with you if the consumer:
    (A) Has a credit or investment account with you;
    (B) Obtains a loan from you;
    (C) Purchases an insurance product from you;
    (D) Holds an investment product through you, such as when you act as 
a custodian for securities or for assets in an Individual Retirement 
Arrangement;
    (E) Enters into an agreement or understanding with you whereby you 
undertake to arrange or broker a home mortgage loan, or credit to 
purchase a vehicle, for the consumer;
    (F) Enters into a lease of personal property on a non-operating 
basis with you;
    (G) Obtains financial, investment, or economic advisory services 
from you for a fee;
    (H) Becomes your client for the purpose of obtaining tax preparation 
or credit counseling services from you;
    (I) Obtains career counseling while seeking employment with a 
financial institution or the finance, accounting, or audit department of 
any company (or while employed by such a financial institution or 
department of any company);
    (J) Is obligated on an account that you purchase from another 
financial institution, regardless of whether the account is in default 
when purchased, unless you do not locate the consumer or attempt to 
collect any amount from the consumer on the account;
    (K) Obtains real estate settlement services from you; or
    (L) Has a loan for which you own the servicing rights.
    (ii) No continuing relationship. A consumer does not, however, have 
a continuing relationship with you if:
    (A) The consumer obtains a financial product or service from you 
only in isolated transactions, such as using your ATM to withdraw cash 
from an account at another financial institution; purchasing a money 
order from you; cashing a check with you; or making a wire transfer 
through you;
    (B) You sell the consumer's loan and do not retain the rights to 
service that loan;
    (C) You sell the consumer airline tickets, travel insurance, or 
traveler's checks in isolated transactions;
    (D) The consumer obtains one-time personal or real property 
appraisal services from you; or
    (E) The consumer purchases checks for a personal checking account 
from you.
    (j) Federal functional regulator means:
    (1) The Board of Governors of the Federal Reserve System;
    (2) The Office of the Comptroller of the Currency;
    (3) The Board of Directors of the Federal Deposit Insurance 
Corporation;

[[Page 413]]

    (4) The Director of the Office of Thrift Supervision;
    (5) The National Credit Union Administration Board; and
    (6) The Securities and Exchange Commission.
    (k)(1) Financial institution means any institution the business of 
which is engaging in financial activities as described in section 4(k) 
of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)). An 
institution that is significantly engaged in financial activities is a 
financial institution.
    (2) Examples of financial institution. (i) A retailer that extends 
credit by issuing its own credit card directly to consumers is a 
financial institution because extending credit is a financial activity 
listed in 12 CFR 225.28(b)(1) and referenced in section 4(k)(4)(F) of 
the Bank Holding Company Act and issuing that extension of credit 
through a proprietary credit card demonstrates that a retailer is 
significantly engaged in extending credit.
    (ii) A personal property or real estate appraiser is a financial 
institution because real and personal property appraisal is a financial 
activity listed in 12 CFR 225.28(b)(2)(i) and referenced in section 
4(k)(4)(F) of the Bank Holding Company Act.
    (iii) An automobile dealership that, as a usual part of its 
business, leases automobiles on a nonoperating basis for longer than 90 
days is a financial institution with respect to its leasing business 
because leasing personal property on a nonoperating basis where the 
initial term of the lease is at least 90 days is a financial activity 
listed in 12 CFR 225.28(b)(3) and referenced in section 4(k)(4)(F) of 
the Bank Holding Company Act.
    (iv) A career counselor that specializes in providing career 
counseling services to individuals currently employed by or recently 
displaced from a financial organization, individuals who are seeking 
employment with a financial organization, or individuals who are 
currently employed by or seeking placement with the finance, accounting 
or audit departments of any company is a financial institution because 
such career counseling activities are financial activities listed in 12 
CFR 225.28(b)(9)(iii) and referenced in section 4(k)(4)(F) of the Bank 
Holding Company Act.
    (v) A business that prints and sells checks for consumers, either as 
its sole business or as one of its product lines, is a financial 
institution because printing and selling checks is a financial activity 
that is listed in 12 CFR 225.28(b)(10)(ii) and referenced in section 
4(k)(4)(F) of the Bank Holding Company Act.
    (vi) A business that regularly wires money to and from consumers is 
a financial institution because transferring money is a financial 
activity referenced in section 4(k)(4)(A) of the Bank Holding Company 
Act and regularly providing that service demonstrates that the business 
is significantly engaged in that activity.
    (vii) A check cashing business is a financial institution because 
cashing a check is exchanging money, which is a financial activity 
listed in section 4(k)(4)(A) of the Bank Holding Company Act.
    (viii) An accountant or other tax preparation service that is in the 
business of completing income tax returns is a financial institution 
because tax preparation services is a financial activity listed in 12 
CFR 225.28(b)(6)(vi) and referenced in section 4(k)(4)(G) of the Bank 
Holding Company Act.
    (ix) A business that operates a travel agency in connection with 
financial services is a financial institution because operating a travel 
agency in connection with financial services is a financial activity 
listed in 12 CFR 211.5(d)(15) and referenced in section 4(k)(4)(G) of 
the Bank Holding Company Act.
    (x) An entity that provides real estate settlement services is a 
financial institution because providing real estate settlement services 
is a financial activity listed in 12 CFR 225.28(b)(2)(viii) and 
referenced in section 4(k)(4)(F) of the Bank Holding Company Act.
    (xi) A mortgage broker is a financial institution because brokering 
loans is a financial activity listed in 12 CFR 225.28(b)(1) and 
referenced in section 4(k)(4)(F) of the Bank Holding Company Act.
    (xii) An investment advisory company and a credit counseling service

[[Page 414]]

are each financial institutions because providing financial and 
investment advisory services are financial activities referenced in 
section 4(k)(4)(C) of the Bank Holding Company Act.
    (3) Financial institution does not include:
    (i) Any person or entity with respect to any financial activity that 
is subject to the jurisdiction of the Commodity Futures Trading 
Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.);
    (ii) The Federal Agricultural Mortgage Corporation or any entity 
chartered and operating under the Farm Credit Act of 1971 (12 U.S.C. 
2001 et seq.); or
    (iii) Institutions chartered by Congress specifically to engage in 
securitizations, secondary market sales (including sales of servicing 
rights) or similar transactions related to a transaction of a consumer, 
as long as such institutions do not sell or transfer nonpublic personal 
information to a nonaffiliated third party other than as permitted by 
Sec. Sec.313.14 and 313.15 of this part.
    (iv) Entities that engage in financial activities but that are not 
significantly engaged in those financial activities.
    (4) Examples of entities that are not significantly engaged in 
financial activities. (i) A retailer is not a financial institution if 
its only means of extending credit are occasional ``lay away'' and 
deferred payment plans or accepting payment by means of credit cards 
issued by others.
    (ii) A retailer is not a financial institution merely because it 
accepts payment in the form of cash, checks, or credit cards that it did 
not issue.
    (iii) A merchant is not a financial institution merely because it 
allows an individual to ``run a tab.''
    (iv) A grocery store is not a financial institution merely because 
it allows individuals to whom it sells groceries to cash a check, or 
write a check for a higher amount than the grocery purchase and obtain 
cash in return.
    (l)(1) Financial product or service means any product or service 
that a financial holding company could offer by engaging in a financial 
activity under section 4(k) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1843(k)).
    (2) Financial service includes your evaluation or brokerage of 
information that you collect in connection with a request or an 
application from a consumer for a financial product or service.
    (m)(1) Nonaffiliated third party means any person except:
    (i) Your affiliate; or
    (ii) A person employed jointly by you and any company that is not 
your affiliate (but nonaffiliated third party includes the other company 
that jointly employs the person).
    (2) Nonaffiliated third party includes any company that is an 
affiliate by virtue of your or your affiliate's direct or indirect 
ownership or control of the company in conducting merchant banking or 
investment banking activities of the type described in section 
4(k)(4)(H) or insurance company investment activities of the type 
described in section 4(k)(4)(I) of the Bank Holding Company Act (12 
U.S.C. 1843(k)(4)(H) and (I)).
    (n)(1) Nonpublic personal information means:
    (i) Personally identifiable financial information; and
    (ii) Any list, description, or other grouping of consumers (and 
publicly available information pertaining to them) that is derived using 
any personally identifiable financial information that is not publicly 
available.
    (2) Nonpublic personal information does not include:
    (i) Publicly available information, except as included on a list 
described in paragraph (n)(1)(ii) of this section; or
    (ii) Any list, description, or other grouping of consumers (and 
publicly available information pertaining to them) that is derived 
without using any personally identifiable financial information that is 
not publicly available.
    (3) Examples of lists--(i) Nonpublic personal information includes 
any list of individuals' names and street addresses that is derived in 
whole or in part using personally identifiable financial information 
(that is not publicly available), such as account numbers.
    (ii) Nonpublic personal information does not include any list of 
individuals' names and addresses that contains

[[Page 415]]

only publicly available information, is not derived, in whole or in 
part, using personally identifiable financial information that is not 
publicly available, and is not disclosed in a manner that indicates that 
any of the individuals on the list is a consumer of a financial 
institution.
    (o)(1) Personally identifiable financial information means any 
information:
    (i) A consumer provides to you to obtain a financial product or 
service from you;
    (ii) About a consumer resulting from any transaction involving a 
financial product or service between you and a consumer; or
    (iii) You otherwise obtain about a consumer in connection with 
providing a financial product or service to that consumer.
    (2) Examples--(i) Information included. Personally identifiable 
financial information includes:
    (A) Information a consumer provides to you on an application to 
obtain a loan, credit card, or other financial product or service;
    (B) Account balance information, payment history, overdraft history, 
and credit or debit card purchase information;
    (C) The fact that an individual is or has been one of your customers 
or has obtained a financial product or service from you;
    (D) Any information about your consumer if it is disclosed in a 
manner that indicates that the individual is or has been your consumer;
    (E) Any information that a consumer provides to you or that you or 
your agent otherwise obtain in connection with collecting on, or 
servicing, a credit account;
    (F) Any information you collect through an Internet ``cookie'' (an 
information collecting device from a web server); and
    (G) Information from a consumer report.
    (ii) Information not included. Personally identifiable financial 
information does not include:
    (A) A list of names and addresses of customers of an entity that is 
not a financial institution; and
    (B) Information that does not identify a consumer, such as aggregate 
information or blind data that does not contain personal identifiers 
such as account numbers, names, or addresses.
    (p)(1) Publicly available information means any information that you 
have a reasonable basis to believe is lawfully made available to the 
general public from:
    (i) Federal, State, or local government records;
    (ii) Widely distributed media; or
    (iii) Disclosures to the general public that are required to be made 
by Federal, State, or local law.
    (2) Reasonable basis. You have a reasonable basis to believe that 
information is lawfully made available to the general public if you have 
taken steps to determine:
    (i) That the information is of the type that is available to the 
general public; and
    (ii) Whether an individual can direct that the information not be 
made available to the general public and, if so, that your consumer has 
not done so.
    (3) Examples--(i) Government records. Publicly available information 
in government records includes information in government real estate 
records and security interest filings.
    (ii) Widely distributed media. Publicly available information from 
widely distributed media includes information from a telephone book, a 
television or radio program, a newspaper, or a web site that is 
available to the general public on an unrestricted basis. A web site is 
not restricted merely because an Internet service provider or a site 
operator requires a fee or a password, so long as access is available to 
the general public.
    (iii) Reasonable basis--(A) You have a reasonable basis to believe 
that mortgage information is lawfully made available to the general 
public if you have determined that the information is of the type 
included on the public record in the jurisdiction where the mortgage 
would be recorded.
    (B) You have a reasonable basis to believe that an individual's 
telephone number is lawfully made available to the general public if you 
have located the telephone number in the telephone book or the consumer 
has informed you

[[Page 416]]

that the telephone number is not unlisted.
    (q) You includes each ``financial institution'' (but excludes any 
``other person'') over which the Commission has enforcement jurisdiction 
pursuant to section 505(a)(7) of the Gramm-Leach-Bliley Act.



                  Subpart A_Privacy and Opt Out Notices



Sec.313.4  Initial privacy notice to consumers required.

    (a) Initial notice requirement. You must provide a clear and 
conspicuous notice that accurately reflects your privacy policies and 
practices to:
    (1) Customer. An individual who becomes your customer, not later 
than when you establish a customer relationship, except as provided in 
paragraph (e) of this section; and
    (2) Consumer. A consumer, before you disclose any nonpublic personal 
information about the consumer to any nonaffiliated third party, if you 
make such a disclosure other than as authorized by Sec. Sec.313.14 and 
313.15.
    (b) When initial notice to a consumer is not required. You are not 
required to provide an initial notice to a consumer under paragraph (a) 
of this section if:
    (1) You do not disclose any nonpublic personal information about the 
consumer to any nonaffiliated third party, other than as authorized by 
Sec. Sec.313.14 and 313.15; and
    (2) You do not have a customer relationship with the consumer.
    (c) When you establish a customer relationship--(1) General rule. 
You establish a customer relationship when you and the consumer enter 
into a continuing relationship.
    (2) Special rule for loans. You establish a customer relationship 
with a consumer when you originate a loan to the consumer for personal, 
family, or household purposes. If you subsequently transfer the 
servicing rights to that loan to another financial institution, the 
customer relationship transfers with the servicing rights.
    (3)(i) Examples of establishing customer relationship. You establish 
a customer relationship when the consumer:
    (A) Opens a credit card account with you;
    (B) Executes the contract to obtain credit from you or purchase 
insurance from you;
    (C) Agrees to obtain financial, economic, or investment advisory 
services from you for a fee; or
    (D) Becomes your client for the purpose of your providing credit 
counseling or tax preparation services, or to obtain career counseling 
while seeking employment with a financial institution or the finance, 
accounting, or audit department of any company (or while employed by 
such a company or financial institution);
    (E) Provides any personally identifiable financial information to 
you in an effort to obtain a mortgage loan through you;
    (F) Executes the lease for personal property with you;
    (G) Is an obligor on an account that you purchased from another 
financial institution and whom you have located and begun attempting to 
collect amounts owed on the account; or
    (H) Provides you with the information necessary for you to compile 
and provide access to all of the consumer's on-line financial accounts 
at your Web site.
    (ii) Examples of loan rule. You establish a customer relationship 
with a consumer who obtains a loan for personal, family, or household 
purposes when you:
    (A) Originate the loan to the consumer and retain the servicing 
rights; or
    (B) Purchase the servicing rights to the consumer's loan.
    (d) Existing customers. When an existing customer obtains a new 
financial product or service from you that is to be used primarily for 
personal, family, or household purposes, you satisfy the initial notice 
requirements of paragraph (a) of this section as follows:
    (1) You may provide a revised privacy notice, under Sec.313.8, 
that covers the customer's new financial product or service; or
    (2) If the initial, revised, or annual notice that you most recently 
provided to that customer was accurate with respect to the new financial 
product or service, you do not need to provide a new privacy notice 
under paragraph (a) of this section.

[[Page 417]]

    (e) Exceptions to allow subsequent delivery of notice. (1) You may 
provide the initial notice required by paragraph (a)(1) of this section 
within a reasonable time after you establish a customer relationship if:
    (i) Establishing the customer relationship is not at the customer's 
election; or
    (ii) Providing notice not later than when you establish a customer 
relationship would substantially delay the customer's transaction and 
the customer agrees to receive the notice at a later time.
    (2) Examples of exceptions--(i) Not at customer's election. 
Establishing a customer relationship is not at the customer's election 
if you acquire a customer's loan, or the servicing rights, from another 
financial institution and the customer does not have a choice about your 
acquisition.
    (ii) Substantial delay of customer's transaction. Providing notice 
not later than when you establish a customer relationship would 
substantially delay the customer's transaction when:
    (A) You and the individual agree over the telephone to enter into a 
customer relationship involving prompt delivery of the financial product 
or service; or
    (B) You establish a customer relationship with an individual under a 
program authorized by Title IV of the Higher Education Act of 1965 (20 
U.S.C. 1070 et seq.) or similar student loan programs where loan 
proceeds are disbursed promptly without prior communication between you 
and the customer.
    (iii) No substantial delay of customer's transaction. Providing 
notice not later than when you establish a customer relationship would 
not substantially delay the customer's transaction when the relationship 
is initiated in person at your office or through other means by which 
the customer may view the notice, such as through a web site.
    (f) Delivery. When you are required to deliver an initial privacy 
notice by this section, you must deliver it according to Sec.313.9. If 
you use a short-form initial notice for non-customers according to Sec.
313.6(d), you may deliver your privacy notice according to Sec.
313.6(d)(3).



Sec.313.5  Annual privacy notice to customers required.

    (a)(1) General rule. You must provide a clear and conspicuous notice 
to customers that accurately reflects your privacy policies and 
practices not less than annually during the continuation of the customer 
relationship. Annually means at least once in any period of 12 
consecutive months during which that relationship exists. You may define 
the 12-consecutive-month period, but you must apply it to the customer 
on a consistent basis.
    (2) Example. You provide a notice annually if you define the 12-
consecutive-month period as a calendar year and provide the annual 
notice to the customer once in each calendar year following the calendar 
year in which you provided the initial notice. For example, if a 
customer opens an account on any day of year 1, you must provide an 
annual notice to that customer by December 31 of year 2.
    (b)(1) Termination of customer relationship. You are not required to 
provide an annual notice to a former customer.
    (2) Examples. Your customer becomes a former customer when:
    (i) In the case of a closed-end loan, the customer pays the loan in 
full, you charge off the loan, or you sell the loan without retaining 
servicing rights;
    (ii) In the case of a credit card relationship or other open-end 
credit relationship, you sell the receivables without retaining 
servicing rights;
    (iii) In the case of credit counseling services, the customer has 
failed to make required payments under a debt management plan, has been 
notified that the plan is terminated, and you no longer provide any 
statements or notices to the customer concerning that relationship;
    (iv) In the case of mortgage or vehicle loan brokering services, 
your customer has obtained a loan through you (and you no longer provide 
any statements or notices to the customer concerning that relationship), 
or has ceased using your services for such purposes;
    (v) In the case of tax preparation services, you have provided and 
received payment for the service and no

[[Page 418]]

longer provide any statements or notices to the customer concerning that 
relationship;
    (vi) In the case of providing real estate settlement services, at 
the time the customer completes execution of all documents related to 
the real estate closing, you have received payment, or you have 
completed all of your responsibilities with respect to the settlement, 
including filing documents on the public record, whichever is later.
    (vii) In cases where there is no definitive time at which the 
customer relationship has terminated, you have not communicated with the 
customer about the relationship for a period of 12 consecutive months, 
other than to provide annual privacy notices or promotional material.
    (c) Special rule for loans. If you do not have a customer 
relationship with a consumer under the special rule for loans in Sec.
313.4(c)(2), then you need not provide an annual notice to that consumer 
under this section.
    (d) Delivery. When you are required to deliver an annual privacy 
notice by this section, you must deliver it according to Sec.313.9.



Sec.313.6  Information to be included in privacy notices.

    (a) General rule. The initial, annual, and revised privacy notices 
that you provide under Sec. Sec.313.4, 313.5, and 313.8 must include 
each of the following items of information that applies to you or to the 
consumers to whom you send your privacy notice, in addition to any other 
information you wish to provide:
    (1) The categories of nonpublic personal information that you 
collect;
    (2) The categories of nonpublic personal information that you 
disclose;
    (3) The categories of affiliates and nonaffiliated third parties to 
whom you disclose nonpublic personal information, other than those 
parties to whom you disclose information under Sec. Sec.313.14 and 
313.15;
    (4) The categories of nonpublic personal information about your 
former customers that you disclose and the categories of affiliates and 
nonaffiliated third parties to whom you disclose nonpublic personal 
information about your former customers, other than those parties to 
whom you disclose information under Sec. Sec.313.14 and 313.15;
    (5) If you disclose nonpublic personal information to a 
nonaffiliated third party under Sec.313.13 (and no exception under 
Sec.313.14 or Sec.313.15 applies to that disclosure), a separate 
statement of the categories of information you disclose and the 
categories of third parties with whom you have contracted;
    (6) An explanation of the consumer's right under Sec.313.10(a) to 
opt out of the disclosure of nonpublic personal information to 
nonaffiliated third parties, including the method(s) by which the 
consumer may exercise that right at that time;
    (7) Any disclosures that you make under section 603(d)(2)(A)(iii) of 
the Fair Credit Reporting Act (15 U.S.C. 1681a(d)(2)(A)(iii)) (that is, 
notices regarding the ability to opt out of disclosures of information 
among affiliates);
    (8) Your policies and practices with respect to protecting the 
confidentiality and security of nonpublic personal information; and
    (9) Any disclosure that you make under paragraph (b) of this 
section.
    (b) Description of nonaffiliated third parties subject to 
exceptions. If you disclose nonpublic personal information to third 
parties as authorized under Sec. Sec.313.14 and 313.15, you are not 
required to list those exceptions in the initial or annual privacy 
notices required by Sec. Sec.313.4 and 313.5. When describing the 
categories with respect to those parties, it is sufficient to state that 
you make disclosures to other nonaffiliated companies for your everyday 
business purposes, such as to process transactions, maintain account(s), 
respond to court orders and legal investigations, or report to credit 
bureaus.
    (c) Examples--(1) Categories of nonpublic personal information that 
you collect. You satisfy the requirement to categorize the nonpublic 
personal information that you collect if you list the following 
categories, as applicable:
    (i) Information from the consumer;
    (ii) Information about the consumer's transactions with you or your 
affiliates;
    (iii) Information about the consumer's transactions with 
nonaffiliated third parties; and

[[Page 419]]

    (iv) Information from a consumer reporting agency.
    (2) Categories of nonpublic personal information you disclose--(i) 
You satisfy the requirement to categorize the nonpublic personal 
information that you disclose if you list the categories described in 
paragraph (e)(1) of this section, as applicable, and a few examples to 
illustrate the types of information in each category.
    (ii) If you reserve the right to disclose all of the nonpublic 
personal information about consumers that you collect, you may simply 
state that fact without describing the categories or examples of the 
nonpublic personal information you disclose.
    (3) Categories of affiliates and nonaffiliated third parties to whom 
you disclose. You satisfy the requirement to categorize the affiliates 
and nonaffiliated third parties to whom you disclose nonpublic personal 
information if you list them using the following categories, as 
applicable, and a few applicable examples to illustrate the significant 
types of third parties covered in each category.
    (i) Financial service providers, followed by illustrative examples 
such as mortgage bankers, securities broker-dealers, and insurance 
agents.
    (ii) Non-financial companies, followed by illustrative examples such 
as retailers, magazine publishers, airlines, and direct marketers; and
    (iii) Others, followed by examples such as nonprofit organizations.
    (4) Disclosures under exception for service providers and joint 
marketers. If you disclose nonpublic personal information under the 
exception in Sec.313.13 to a nonaffiliated third party to market 
products or services that you offer alone or jointly with another 
financial institution, you satisfy the disclosure requirement of 
paragraph (a)(5) of this section if you:
    (i) List the categories of nonpublic personal information you 
disclose, using the same categories and examples you used to meet the 
requirements of paragraph (a)(2) of this section, as applicable; and
    (ii) State whether the third party is:
    (A) A service provider that performs marketing services on your 
behalf or on behalf of you and another financial institution; or
    (B) A financial institution with whom you have a joint marketing 
agreement.
    (5) Simplified notices. If you do not disclose, and do not wish to 
reserve the right to disclose, nonpublic personal information about 
customers or former customers to affiliates or nonaffiliated third 
parties except as authorized under Sec. Sec.313.14 and 313.15, you may 
simply state that fact, in addition to the information you must provide 
under paragraphs (a)(1), (a)(8), (a)(9), and (b) of this section.
    (6) Confidentiality and security. You describe your policies and 
practices with respect to protecting the confidentiality and security of 
nonpublic personal information if you do both of the following:
    (i) Describe in general terms who is authorized to have access to 
the information; and
    (ii) State whether you have security practices and procedures in 
place to ensure the confidentiality of the information in accordance 
with your policy. You are not required to describe technical information 
about the safeguards you use.
    (d) Short-form initial notice with opt out notice for non-
customers--(1) You may satisfy the initial notice requirements in 
Sec. Sec.313.4(a)(2), 313.7(b), and 313.7(c) for a consumer who is not 
a customer by providing a short-form initial notice at the same time as 
you deliver an opt out notice as required in Sec.313.7.
    (2) A short-form initial notice must:
    (i) Be clear and conspicuous;
    (ii) State that your privacy notice is available upon request; and
    (iii) Explain a reasonable means by which the consumer may obtain 
that notice.
    (3) You must deliver your short-form initial notice according to 
Sec.313.9. You are not required to deliver your privacy notice with 
your short-form initial notice. You instead may simply provide the 
consumer a reasonable means to obtain your privacy notice. If a consumer 
who receives your short-form notice requests your privacy notice, you 
must deliver your privacy notice according to Sec.313.9.

[[Page 420]]

    (4) Examples of obtaining privacy notice. You provide a reasonable 
means by which a consumer may obtain a copy of your privacy notice if 
you:
    (i) Provide a toll-free telephone number that the consumer may call 
to request the notice; or
    (ii) For a consumer who conducts business in person at your office, 
maintain copies of the notice on hand that you provide to the consumer 
immediately upon request.
    (e) Future disclosures. Your notice may include:
    (1) Categories of nonpublic personal information that you reserve 
the right to disclose in the future, but do not currently disclose; and
    (2) Categories of affiliates or nonaffiliated third parties to whom 
you reserve the right in the future to disclose, but to whom you do not 
currently disclose, nonpublic personal information.
    (f) Model privacy form. Pursuant to Sec.313.2(a) of this part, a 
model privacy form that meets the notice content requirements of this 
section is included in appendix A of this part.

[65 FR 33677, May 24, 2000, as amended at 74 FR 62965, Dec. 1, 2009]



Sec.313.7  Form of opt out notice to consumers; opt out methods.

    (a)(1) Form of opt out notice. If you are required to provide an opt 
out notice under Sec.313.10(a), you must provide a clear and 
conspicuous notice to each of your consumers that accurately explains 
the right to opt out under that section. The notice must state:
    (i) That you disclose or reserve the right to disclose nonpublic 
personal information about your consumer to a nonaffiliated third party;
    (ii) That the consumer has the right to opt out of that disclosure; 
and
    (iii) A reasonable means by which the consumer may exercise the opt 
out right.
    (2) Examples--(i) Adequate opt out notice. You provide adequate 
notice that the consumer can opt out of the disclosure of nonpublic 
personal information to a nonaffiliated third party if you:
    (A) Identify all of the categories of nonpublic personal information 
that you disclose or reserve the right to disclose, and all of the 
categories of nonaffiliated third parties to which you disclose the 
information, as described in Sec.313.6(a) (2) and (3) and state that 
the consumer can opt out of the disclosure of that information; and
    (B) Identify the financial products or services that the consumer 
obtains from you, either singly or jointly, to which the opt out 
direction would apply.
    (ii) Reasonable opt out means. You provide a reasonable means to 
exercise an opt out right if you:
    (A) Designate check-off boxes in a prominent position on the 
relevant forms with the opt out notice;
    (B) Include a reply form that includes the address to which the form 
should be mailed; or
    (C) Provide an electronic means to opt out, such as a form that can 
be sent via electronic mail or a process at your web site, if the 
consumer agrees to the electronic delivery of information; or
    (D) Provide a toll-free telephone number that consumers may call to 
opt out.
    (iii) Unreasonable opt out means. You do not provide a reasonable 
means of opting out if:
    (A) The only means of opting out is for the consumer to write his or 
her own letter to exercise that opt out right; or
    (B) The only means of opting out as described in any notice 
subsequent to the initial notice is to use a check-off box that you 
provided with the initial notice but did not include with the subsequent 
notice.
    (iv) Specific opt out means. You may require each consumer to opt 
out through a specific means, as long as that means is reasonable for 
that consumer.
    (b) Same form as initial notice permitted. You may provide the opt 
out notice together with or on the same written or electronic form as 
the initial notice you provide in accordance with Sec.313.4.
    (c) Initial notice required when opt out notice delivered subsequent 
to initial notice. If you provide the opt out notice later than required 
for the initial notice in accordance with Sec.313.4, you must also 
include a copy of the initial

[[Page 421]]

notice with the opt out notice in writing or, if the consumer agrees, 
electronically.
    (d) Joint relationships. (1) If two or more consumers jointly obtain 
a financial product or service from you, you may provide a single opt 
out notice, unless one or more of those consumers requests a separate 
opt out notice. Your opt out notice must explain how you will treat an 
opt out direction by a joint consumer (as explained in paragraph 
(d)(5)(ii)of this section).
    (2) Any of the joint consumers may exercise the right to opt out. 
You may either:
    (i) Treat an opt out direction by a joint consumer as applying to 
all of the associated joint consumers; or
    (ii) Permit each joint consumer to opt out separately.
    (3) If you permit each joint consumer to opt out separately, you 
must permit one of the joint consumers to opt out on behalf of all of 
the joint consumers.
    (4) You may not require all joint consumers to opt out before you 
implement any opt out direction.
    (5) Example. If John and Mary have a joint credit card account with 
you and arrange for you to send statements to John's address, you may do 
any of the following, but you must explain in your opt out notice which 
opt out policy you will follow:
    (i) Send a single opt out notice to John's address, but you must 
accept an opt out direction from either John or Mary.
    (ii) Treat an opt out direction by either John or Mary as applying 
to the entire account. If you do so, and John opts out, you may not 
require Mary to opt out as well before implementing John's opt out 
direction.
    (iii) Permit John and Mary to make different opt out directions. If 
you do so,
    (A) You must permit John and Mary to opt out for each other;
    (B) If both opt out, you must permit both to notify you in a single 
response (such as on a form or through a telephone call); and
    (C) If John opts out and Mary does not, you may only disclose 
nonpublic personal information about Mary, but not about John and not 
about John and Mary jointly.
    (e) Time to comply with opt out. You must comply with a consumer's 
opt out direction as soon as reasonably practicable after you receive 
it.
    (f) Continuing right to opt out. A consumer may exercise the right 
to opt out at any time.
    (g) Duration of consumer's opt out direction. (1) A consumer's 
direction to opt out under this section is effective until the consumer 
revokes it in writing or, if the consumer agrees, electronically.
    (2) When a customer relationship terminates, the customer's opt out 
direction continues to apply to the nonpublic personal information that 
you collected during or related to that relationship. If the individual 
subsequently establishes a new customer relationship with you, the opt 
out direction that applied to the former relationship does not apply to 
the new relationship.
    (h) Delivery. When you are required to deliver an opt out notice by 
this section, you must deliver it according to Sec.313.9.
    (i) Model privacy form. Pursuant to Sec.313.2(a) of this part, a 
model privacy form that meets the notice content requirements of this 
section is included in appendix A of this part.

[65 FR 33677, May 24, 2000, as amended at 74 FR 62966, Dec. 1, 2009]



Sec.313.8  Revised privacy notices.

    (a) General rule. Except as otherwise authorized in this part, you 
must not, directly or through any affiliate, disclose any nonpublic 
personal information about a consumer to a nonaffiliated third party 
other than as described in the initial notice that you provided to that 
consumer under Sec.313.4, unless:
    (1) You have provided to the consumer a clear and conspicuous 
revised notice that accurately describes your policies and practices;
    (2) You have provided to the consumer a new opt out notice;
    (3) You have given the consumer a reasonable opportunity, before you 
disclose the information to the nonaffiliated third party, to opt out of 
the disclosure; and
    (4) the consumer does not opt out.
    (b) Examples--(1) Except as otherwise permitted by Sec. Sec.
313.13, 313.14, and 313.15,

[[Page 422]]

you must provide a revised notice before you:
    (i) Disclose a new category of nonpublic personal information to any 
nonaffiliated third party;
    (ii) Disclose nonpublic personal information to a new category of 
nonaffiliated third party; or
    (iii) Disclose nonpublic personal information about a former 
customer to a nonaffiliated third party if that former customer has not 
had the opportunity to exercise an opt out right regarding that 
disclosure.
    (2) A revised notice is not required if you disclose nonpublic 
personal information to a new nonaffiliated third party that you 
adequately described in your prior notice.
    (c) Delivery. When you are required to deliver a revised privacy 
notice by this section, you must deliver it according to Sec.313.9.



Sec.313.9  Delivering privacy and opt out notices.

    (a) How to provide notices. You must provide any privacy notices and 
opt out notices, including short-form initial notices, that this part 
requires so that each consumer can reasonably be expected to receive 
actual notice in writing or, if the consumer agrees, electronically.
    (b)(1) Examples of reasonable expectation of actual notice. You may 
reasonably expect that a consumer will receive actual notice if you:
    (i) Hand-deliver a printed copy of the notice to the consumer;
    (ii) Mail a printed copy of the notice to the last known address of 
the consumer;
    (iii) For the consumer who conducts transactions electronically, 
clearly and conspicuously post the notice on the electronic site and 
require the consumer to acknowledge receipt of the notice as a necessary 
step to obtaining a particular financial product or service;
    (iv) For an isolated transaction with the consumer, such as an ATM 
transaction, post the notice on the ATM screen and require the consumer 
to acknowledge receipt of the notice as a necessary step to obtaining 
the particular financial product or service.
    (2) Examples of unreasonable expectation of actual notice. You may 
not, however, reasonably expect that a consumer will receive actual 
notice of your privacy policies and practices if you:
    (i) Only post a sign in your branch or office or generally publish 
advertisements of your privacy policies and practices;
    (ii) Send the notice via electronic mail to a consumer who does not 
obtain a financial product or service from you electronically.
    (c) Annual notices only. You may reasonably expect that a customer 
will receive actual notice of your annual privacy notice if:
    (1) The customer uses your web site to access financial products and 
services electronically and agrees to receive notices at the web site 
and you post your current privacy notice continuously in a clear and 
conspicuous manner on the web site; or
    (2) The customer has requested that you refrain from sending any 
information regarding the customer relationship, and your current 
privacy notice remains available to the customer upon request.
    (d) Oral description of notice insufficient. You may not provide any 
notice required by this part solely by orally explaining the notice, 
either in person or over the telephone.
    (e) Retention or accessibility of notices for customers--(1) For 
customers only, you must provide the initial notice required by Sec.
313.4(a)(1), the annual notice required by Sec.313.5(a), and the 
revised notice required by Sec.313.8 so that the customer can retain 
them or obtain them later in writing or, if the customer agrees, 
electronically.
    (2) Examples of retention or accessibility. You provide a privacy 
notice to the customer so that the customer can retain it or obtain it 
later if you:
    (i) Hand-deliver a printed copy of the notice to the customer;
    (ii) Mail a printed copy of the notice to the last known address of 
the customer; or
    (iii) Make your current privacy notice available on a web site (or a 
link to another web site) for the customer who obtains a financial 
product or

[[Page 423]]

service electronically and agrees to receive the notice at the web site.
    (f) Joint notice with other financial institutions. You may provide 
a joint notice from you and one or more of your affiliates or other 
financial institutions, as identified in the notice, as long as the 
notice is accurate with respect to you and the other institutions.
    (g) Joint relationships. If two or more consumers jointly obtain a 
financial product or service from you, you may satisfy the initial, 
annual, and revised notice requirements of Sec. Sec.313.4(a), 
313.5(a), and 313.8(a) by providing one notice to those consumers 
jointly, unless one or more of those consumers requests separate 
notices.



                     Subpart B_Limits on Disclosures



Sec.313.10  Limits on disclosure of non-public personal information
to nonaffiliated third parties.

    (a)(1) Conditions for disclosure. Except as otherwise authorized in 
this part, you may not, directly or through any affiliate, disclose any 
nonpublic personal information about a consumer to a nonaffiliated third 
party unless:
    (i) You have provided to the consumer an initial notice as required 
under Sec.313.4;
    (ii) You have provided to the consumer an opt out notice as required 
in Sec.313.7;
    (iii) You have given the consumer a reasonable opportunity, before 
you disclose the information to the nonaffiliated third party, to opt 
out of the disclosure; and
    (iv) The consumer does not opt out.
    (2) Opt out definition. Opt out means a direction by the consumer 
that you not disclose nonpublic personal information about that consumer 
to a nonaffiliated third party, other than as permitted by Sec. Sec.
313.13, 313.14, and 313.15.
    (3) Examples of reasonable opportunity to opt out. You provide a 
consumer with a reasonable opportunity to opt out if:
    (i) By mail. You mail the notices required in paragraph (a)(1) of 
this section to the consumer and allow the consumer to opt out by 
mailing a form, calling a toll-free telephone number, or any other 
reasonable means within 30 days from the date you mailed the notices.
    (ii) By electronic means. A customer opens an on-line account with 
you and agrees to receive the notices required in paragraph (a)(1) of 
this section electronically, and you allow the customer to opt out by 
any reasonable means within 30 days after the date that the customer 
acknowledges receipt of the notices in conjunction with opening the 
account.
    (iii) Isolated transaction with consumer. For an isolated 
transaction, such as the purchase of a money order by a consumer, you 
provide the consumer with a reasonable opportunity to opt out if you 
provide the notices required in paragraph (a)(1) of this section at the 
time of the transaction and request that the consumer decide, as a 
necessary part of the transaction, whether to opt out before completing 
the transaction.
    (b) Application of opt out to all consumers and all nonpublic 
personal information--(1) You must comply with this section, regardless 
of whether you and the consumer have established a customer relationship
    (2) Unless you comply with this section, you may not, directly or 
through any affiliate, disclose any nonpublic personal information about 
a consumer that you have collected, regardless of whether you collected 
it before or after receiving the direction to opt out from the consumer.
    (c) Partial opt out. You may allow a consumer to select certain 
nonpublic personal information or certain nonaffiliated third parties 
with respect to which the consumer wishes to opt out.



Sec.313.11  Limits on redisclosure and reuse of information.

    (a)(1) Information you receive under an exception. If you receive 
nonpublic personal information from a nonaffiliated financial 
institution under an exception in Sec.313.14 or Sec.313.15 of this 
part, your disclosure and use of that information is limited as follows:
    (i) You may disclose the information to the affiliates of the 
financial institution from which you received the information;
    (ii) You may disclose the information to your affiliates, but your 
affiliates may, in turn, disclose and use the information only to the 
extent that you

[[Page 424]]

may disclose and use the information; and
    (iii) You may disclose and use the information pursuant to an 
exception in Sec.313.14 or Sec.313.15 in the ordinary course of 
business to carry out the activity covered by the exception under which 
you received the information.
    (2) Example. If you receive a customer list from a nonaffiliated 
financial institution in order to provide account processing services 
under the exception in Sec.313.14(a), you may disclose that 
information under any exception in Sec.313.14 or Sec.313.15 in the 
ordinary course of business in order to provide those services. You 
could also disclose that information in response to a properly 
authorized subpoena. You could not disclose that information to a third 
party for marketing purposes or use that information for your own 
marketing purposes.
    (b)(1) Information you receive outside of an exception. If you 
receive nonpublic personal information from a nonaffiliated financial 
institution other than under an exception in Sec.313.14 or Sec.
313.15 of this part, you may disclose the information only:
    (i) To the affiliates of the financial institution from which you 
received the information;
    (ii) To your affiliates, but your affiliates may, in turn, disclose 
the information only to the extent that you can disclose the 
information; and
    (iii) To any other person, if the disclosure would be lawful if made 
directly to that person by the financial institution from which you 
received the information.
    (2) Example. If you obtain a customer list from a nonaffiliated 
financial institution outside of the exceptions in Sec. Sec.313.14 and 
313.15:
    (i) You may use that list for your own purposes; and
    (ii) You may disclose that list to another nonaffiliated third party 
only if the financial institution from which you purchased the list 
could have lawfully disclosed the list to that third party. That is, you 
may disclose the list in accordance with the privacy policy of the 
financial institution from which you received the list, as limited by 
the opt out direction of each consumer whose nonpublic personal 
information you intend to disclose, and you may disclose the list in 
accordance with an exception in Sec.313.14 or Sec.313.15, such as to 
your attorneys or accountants.
    (c) Information you disclose under an exception. If you disclose 
nonpublic personal information to a nonaffiliated third party under an 
exception in Sec.313.14 or 313.15 of this part, the third party may 
disclose and use that information only as follows:
    (1) The third party may disclose the information to your affiliates;
    (2) The third party may disclose the information to its affiliates, 
but its affiliates may, in turn, disclose and use the information only 
to the extent that the third party may disclose and use the information; 
and
    (3) The third party may disclose and use the information pursuant to 
an exception in Sec.313.14 or Sec.313.15 in the ordinary course of 
business to carry out the activity covered by the exception under which 
it received the information.
    (d) Information you disclose outside of an exception. If you 
disclose nonpublic personal information to a nonaffiliated third party 
other than under an exception in Sec.313.14 or Sec.313.15 of this 
part, the third party may disclose the information only:
    (1) To your affiliates;
    (2) To its affiliates, but its affiliates, in turn, may disclose the 
information only to the extent the third party can disclose the 
information; and
    (3) To any other person, if the disclosure would be lawful if you 
made it directly to that person.



Sec.313.12  Limits on sharing account number information for 
marketing purposes.

    (a) General prohibition on disclosure of account numbers. You must 
not, directly or through an affiliate, disclose, other than to a 
consumer reporting agency, an account number or similar form of access 
number or access code for a consumer's credit card account, deposit 
account, or transaction account to any nonaffiliated third party for use 
in telemarketing, direct mail marketing, or other marketing through 
electronic mail to the consumer.

[[Page 425]]

    (b) Exceptions. Paragraph (a) of this section does not apply if you 
disclose an account number or similar form of access number or access 
code:
    (1) To your agent or service provider solely in order to perform 
marketing for your own products or services, as long as the agent or 
service provider is not authorized to directly initiate charges to the 
account; or
    (2) To a participant in a private label credit card program or an 
affinity or similar program where the participants in the program are 
identified to the customer when the customer enters into the program.
    (c) Examples--(1) Account number. An account number, or similar form 
of access number or access code, does not include a number or code in an 
encrypted form, as long as you do not provide the recipient with a means 
to decode the number or code.
    (2) Transaction account. A transaction account is an account other 
than a deposit account or a credit card account. A transaction account 
does not include an account to which third parties cannot initiate 
charges.



                          Subpart C_Exceptions



Sec.313.13  Exception to opt out requirements for service providers
and joint marketing.

    (a) General rule. (1) The opt out requirements in Sec. Sec.313.7 
and 313.10 do not apply when you provide nonpublic personal information 
to a nonaffiliated third party to perform services for you or functions 
on your behalf, if you:
    (i) Provide the initial notice in accordance with Sec.313.4; and
    (ii) Enter into a contractual agreement with the third party that 
prohibits the third party from disclosing or using the information other 
than to carry out the purposes for which you disclosed the information, 
including use under an exception in Sec.313.14 or Sec.313.15 in the 
ordinary course of business to carry out those purposes.
    (2) Example. If you disclose nonpublic personal information under 
this section to a financial institution with which you perform joint 
marketing, your contractual agreement with that institution meets the 
requirements of paragraph (a)(1)(ii) of this section if it prohibits the 
institution from disclosing or using the nonpublic personal information 
except as necessary to carry out the joint marketing or under an 
exception in Sec.313.14 or Sec.313.15 in the ordinary course of 
business to carry out that joint marketing.
    (b) Service may include joint marketing. The services a 
nonaffiliated third party performs for you under paragraph (a) of this 
section may include marketing of your own products or services or 
marketing of financial products or services offered pursuant to joint 
agreements between you and one or more financial institutions.
    (c) Definition of joint agreement. For purposes of this section, 
joint agreement means a written contract pursuant to which you and one 
or more financial institutions jointly offer, endorse, or sponsor a 
financial product or service.



Sec.313.14  Exceptions to notice and opt out requirements for 
processing and servicing transactions.

    (a) Exceptions for processing transactions at consumer's request. 
The requirements for initial notice in Sec.313.4(a)(2), for the opt 
out in Sec. Sec.313.7 and 313.10, and for service providers and joint 
marketing in Sec.313.13 do not apply if you disclose nonpublic 
personal information as necessary to effect, administer, or enforce a 
transaction that a consumer requests or authorizes, or in connection 
with:
    (1) Servicing or processing a financial product or service that a 
consumer requests or authorizes;
    (2) Maintaining or servicing the consumer's account with you, or 
with another entity as part of a private label credit card program or 
other extension of credit on behalf of such entity; or
    (3) A proposed or actual securitization, secondary market sale 
(including sales of servicing rights), or similar transaction related to 
a transaction of the consumer.
    (b) Necessary to effect, administer, or enforce a transaction means 
that the disclosure is:
    (1) Required, or is one of the lawful or appropriate methods, to 
enforce

[[Page 426]]

your rights or the rights of other persons engaged in carrying out the 
financial transaction or providing the product or service; or
    (2) Required, or is a usual, appropriate or acceptable method:
    (i) To carry out the transaction or the product or service business 
of which the transaction is a part, and record, service, or maintain the 
consumer's account in the ordinary course of providing the financial 
service or financial product;
    (ii) To administer or service benefits or claims relating to the 
transaction or the product or service business of which it is a part;
    (iii) To provide a confirmation, statement, or other record of the 
transaction, or information on the status or value of the financial 
service or financial product to the consumer or the consumer's agent or 
broker;
    (iv) To accrue or recognize incentives or bonuses associated with 
the transaction that are provided by you or any other party;
    (v) To underwrite insurance at the consumer's request or for 
reinsurance purposes, or for any of the following purposes as they 
relate to a consumer's insurance: account administration, reporting, 
investigating, or preventing fraud or material misrepresentation, 
processing premium payments, processing insurance claims, administering 
insurance benefits (including utilization review activities), 
participating in research projects, or as otherwise required or 
specifically permitted by Federal or State law;
    (vi) In connection with:
    (A) The authorization, settlement, billing, processing, clearing, 
transferring, reconciling or collection of amounts charged, debited, or 
otherwise paid using a debit, credit, or other payment card, check, or 
account number, or by other payment means;
    (B) The transfer of receivables, accounts, or interests therein; or
    (C) The audit of debit, credit, or other payment information.



Sec.313.15  Other exceptions to notice and opt out requirements.

    (a) Exceptions to opt out requirements. The requirements for initial 
notice in Sec.313.4(a)(2), for the opt out in Sec. Sec.313.7 and 
313.10, and for service providers and joint marketing in Sec.313.13 do 
not apply when you disclose nonpublic personal information:
    (1) With the consent or at the direction of the consumer, provided 
that the consumer has not revoked the consent or direction;
    (2)(i) To protect the confidentiality or security of your records 
pertaining to the consumer, service, product, or transaction;
    (ii) To protect against or prevent actual or potential fraud, 
unauthorized transactions, claims, or other liability;
    (iii) For required institutional risk control or for resolving 
consumer disputes or inquiries;
    (iv) To persons holding a legal or beneficial interest relating to 
the consumer; or
    (v) To persons acting in a fiduciary or representative capacity on 
behalf of the consumer;
    (3) To provide information to insurance rate advisory organizations, 
guaranty funds or agencies, agencies that are rating you, persons that 
are assessing your compliance with industry standards, and your 
attorneys, accountants, and auditors;
    (4) To the extent specifically permitted or required under other 
provisions of law and in accordance with the Right to Financial Privacy 
Act of 1978 (12 U.S.Cet seq.), to law enforcement agencies (including a 
federal functional regulator, the Secretary of the Treasury, with 
respect to 31 U.S.C. Chapter 53, Subchapter II (Records and Reports on 
Monetary Instruments and Transactions) and 12 U.S.C. Chapter 21 
(Financial Recordkeeping), a State insurance authority, with respect to 
any person domiciled in that insurance authority's State that is engaged 
in providing insurance, and the Federal Trade Commission), self-
regulatory organizations, or for an investigation on a matter related to 
public safety;
    (5)(i) To a consumer reporting agency in accordance with the Fair 
Credit Reporting Act (15 U.S.C. 1681 et seq.), or
    (ii) From a consumer report reported by a consumer reporting agency;
    (6) In connection with a proposed or actual sale, merger, transfer, 
or exchange of all or a portion of a business or operating unit if the 
disclosure of

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nonpublic personal information concerns solely consumers of such 
business or unit; or
    (7)(i) To comply with Federal, State, or local laws, rules and other 
applicable legal requirements;
    (ii) To comply with a properly authorized civil, criminal, or 
regulatory investigation, or subpoena or summons by Federal, State, or 
local authorities; or
    (iii) To respond to judicial process or government regulatory 
authorities having jurisdiction over you for examination, compliance, or 
other purposes as authorized by law.
    (b) Examples of consent and revocation of consent. (1) A consumer 
may specifically consent to your disclosure to a nonaffiliated insurance 
company of the fact that the consumer has applied to you for a mortgage 
so that the insurance company can offer homeowner's insurance to the 
consumer.
    (2) A consumer may revoke consent by subsequently exercising the 
right to opt out of future disclosures of nonpublic personal information 
as permitted under Sec.313.7(f).



            Subpart D_Relation to Other Laws; Effective Date



Sec.313.16  Protection of Fair Credit Reporting Act.

    Nothing in this part shall be construed to modify, limit, or 
supersede the operation of the Fair Credit Reporting Act (15 U.S.C. 1681 
et seq.), and no inference shall be drawn on the basis of the provisions 
of this part regarding whether information is transaction or experience 
information under section 603 of that Act.



Sec.313.17  Relation to State laws.

    (a) In general. This part shall not be construed as superseding, 
altering, or affecting any statute, regulation, order, or interpretation 
in effect in any State, except to the extent that such State statute, 
regulation, order, or interpretation is inconsistent with the provisions 
of this part, and then only to the extent of the inconsistency.
    (b) Greater protection under State law. For purposes of this 
section, a State statute, regulation, order, or interpretation is not 
inconsistent with the provisions of this part if the protection such 
statute, regulation, order, or interpretation affords any consumer is 
greater than the protection provided under this part, as determined by 
the Commission on its own motion or upon the petition of any interested 
party, after consultation with the applicable federal functional 
regulator or other authority.



Sec.313.18  Effective date; transition rule.

    (a) Effective date--(1) General rule. This part is effective 
November 13, 2000. In order to provide sufficient time for you to 
establish policies and systems to comply with the requirements of this 
part, the Commission has extended the time for compliance with this part 
until July 1, 2001.
    (2) Exception. This part is not effective as to any institution that 
is significantly engaged in activities that the Federal Reserve Board 
determines, after November 12, 1999, (pursuant to its authority in 
Section 4(k)(1-3) of the Bank Holding Company Act), are activities that 
a financial holding company may engage in, until the Commission so 
determines.
    (b)(1) Notice requirement for consumers who are your customers on 
the compliance date. By July 1, 2001, you must have provided an initial 
notice, as required by Sec.313.4, to consumers who are your customers 
on July 1, 2001.
    (2) Example. You provide an initial notice to consumers who are your 
customers on July 1, 2001, if, by that date, you have established a 
system for providing an initial notice to all new customers and have 
mailed the initial notice to all your existing customers.
    (c) Two-year grandfathering of service agreements. Until July 1, 
2002, a contract that you have entered into with a nonaffiliated third 
party to perform services for you or functions on your behalf satisfies 
the provisions of Sec.313.13(a)(1) of this part, even if the contract 
does not include a requirement that the third party maintain the 
confidentiality of nonpublic personal information, as long as you 
entered into the contract on or before July 1, 2000.



             Sec. Appendix A to Part 313--Model Privacy Form

                        A. The Model Privacy Form

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                  1. How the Model Privacy Form is Used

    (a) The model form may be used, at the option of a financial 
institution, including a group of financial institutions that use a 
common privacy notice, to meet the content requirements of the privacy 
notice and opt-out notice set forth in Sec. Sec.313.6 and 313.7 of 
this part.
    (b) The model form is a standardized form, including page layout, 
content, format, style, pagination, and shading. Institutions seeking to 
obtain the safe harbor through use of the model form may modify it only 
as described in these Instructions.
    (c) Note that disclosure of certain information, such as assets, 
income, and information from a consumer reporting agency, may give rise 
to obligations under the Fair Credit Reporting Act [15 U.S.C. 1681-
1681x] (FCRA), such as a requirement to permit a consumer to opt out of 
disclosures to affiliates or designation as a consumer reporting agency 
if disclosures are made to nonaffiliated third parties.
    (d) The word ``customer'' may be replaced by the word ``member'' 
whenever it appears in the model form, as appropriate.

                2. The Contents of the Model Privacy Form

    The model form consists of two pages, which may be printed on both 
sides of a single sheet of paper, or may appear on two separate pages. 
Where an institution provides a long list of institutions at the end of 
the model form in accordance with Instruction C.3(a)(1), or provides 
additional information in accordance with Instruction C.3(c), and such 
list or additional information exceeds the space available on page two 
of the model form, such list or additional information may extend to a 
third page.
    (a) Page One. The first page consists of the following components:
    (1) Date last revised (upper right-hand corner).
    (2) Title.
    (3) Key frame (Why?, What?, How?).
    (4) Disclosure table (``Reasons we can share your personal 
information'').
    (5) ``To limit our sharing'' box, as needed, for the financial 
institution's opt-out information.
    (6) ``Questions'' box, for customer service contact information.
    (7) Mail-in opt-out form, as needed.
    (b) Page Two. The second page consists of the following components:
    (1) Heading (Page 2).
    (2) Frequently Asked Questions (``Who we are'' and ``What we do'').
    (3) Definitions.
    (4) ``Other important information'' box, as needed.

                 3. The Format of the Model Privacy Form

    The format of the model form may be modified only as described 
below.
    (a) Easily readable type font. Financial institutions that use the 
model form must use an easily readable type font. While a number of 
factors together produce an easily readable type font, institutions are 
required to use a minimum of 10-point font (unless otherwise expressly 
permitted in these Instructions) and sufficient spacing between the 
lines of type.
    (b) Logo. A financial institution may include a corporate logo on 
any page of the notice, so long as it does not interfere with the 
readability of the model form or the space constraints of each page.

[[Page 434]]

    (c) Page size and orientation. Each page of the model form must be 
printed on paper in portrait orientation, the size of which must be 
sufficient to meet the layout and minimum font size requirements, with 
sufficient white space on the top, bottom, and sides of the content.
    (d) Color. The model form must be printed on white or light color 
paper (such as cream) with black or other contrasting ink color. Spot 
color may be used to achieve visual interest, so long as the color 
contrast is distinctive and the color does not detract from the 
readability of the model form. Logos may also be printed in color.
    (e) Languages. The model form may be translated into languages other 
than English.

            C. Information Required in the Model Privacy Form

    The information in the model form may be modified only as described 
below:

1. Name of the Institution or Group of Affiliated Institutions Providing 
                               the Notice

    Insert the name of the financial institution providing the notice or 
a common identity of affiliated institutions jointly providing the 
notice on the form wherever [name of financial institution] appears.

                               2. Page One

    (a) Last revised date. The financial institution must insert in the 
upper right-hand corner the date on which the notice was last revised. 
The information shall appear in minimum 8-point font as ``rev. [month/
year]'' using either the name or number of the month, such as ``rev. 
July 2009'' or ``rev. 7/09''.
    (b) General instructions for the ``What?'' box. (1) The bulleted 
list identifies the types of personal information that the institution 
collects and shares. All institutions must use the term ``Social 
Security number'' in the first bullet.
    (2) Institutions must use five (5) of the following terms to 
complete the bulleted list: income; account balances; payment history; 
transaction history; transaction or loss history; credit history; credit 
scores; assets; investment experience; credit-based insurance scores; 
insurance claim history; medical information; overdraft history; 
purchase history; account transactions; risk tolerance; medical-related 
debts; credit card or other debt; mortgage rates and payments; 
retirement assets; checking account information; employment information; 
wire transfer instructions.
    (c) General instructions for the disclosure table. The left column 
lists reasons for sharing or using personal information. Each reason 
correlates to a specific legal provision described in paragraph C.2(d) 
of this Instruction. In the middle column, each institution must provide 
a ``Yes'' or ``No'' response that accurately reflects its information 
sharing policies and practices with respect to the reason listed on the 
left. In the right column, each institution must provide in each box one 
of the following three (3) responses, as applicable, that reflects 
whether a consumer can limit such sharing: ``Yes'' if it is required to 
or voluntarily provides an opt-out; ``No'' if it does not provide an 
opt-out; or ``We don't share'' if it answers ``No'' in the middle 
column. Only the sixth row (``For our affiliates to market to you'') may 
be omitted at the option of the institution. See paragraph C.2(d)(6) of 
this Instruction.
    (d) Specific disclosures and corresponding legal provisions. (1) For 
our everyday business purposes. This reason incorporates sharing 
information under Sec. Sec.313.14 and 313.15 and with service 
providers pursuant to Sec.313.13 of this part other than the purposes 
specified in paragraphs C.2(d)(2) or C.2(d)(3) of these Instructions.
    (2) For our marketing purposes. This reason incorporates sharing 
information with service providers by an institution for its own 
marketing pursuant to Sec.313.13 of this part. An institution that 
shares for this reason may choose to provide an opt-out.
    (3) For joint marketing with other financial companies. This reason 
incorporates sharing information under joint marketing agreements 
between two or more financial institutions and with any service provider 
used in connection with such agreements pursuant to Sec.313.13 of this 
part. An institution that shares for this reason may choose to provide 
an opt-out.
    (4) For our affiliates' everyday business purposes--information 
about transactions and experiences. This reason incorporates sharing 
information specified in sections 603(d)(2)(A)(i) and (ii) of the FCRA. 
An institution that shares for this reason may choose to provide an opt-
out.
    (5) For our affiliates' everyday business purposes--information 
about creditworthiness. This reason incorporates sharing information 
pursuant to section 603(d)(2)(A)(iii) of the FCRA. An institution that 
shares for this reason must provide an opt-out.
    (6) For our affiliates to market to you. This reason incorporates 
sharing information specified in section 624 of the FCRA. This reason 
may be omitted from the disclosure table when: the institution does not 
have affiliates (or does not disclose personal information to its 
affiliates); the institution's affiliates do not use personal 
information in a manner that requires an opt-out; or the institution 
provides the affiliate marketing notice separately. Institutions that 
include this reason must provide an opt-out of indefinite duration. An 
institution that is required to provide an affiliate marketing opt-out, 
but does not include that opt-out in the

[[Page 435]]

model form under this part, must comply with section 624 of the FCRA and 
16 CFR parts 680 and 698 with respect to the initial notice and opt-out 
and any subsequent renewal notice and opt-out. An institution not 
required to provide an opt-out under this subparagraph may elect to 
include this reason in the model form.
    (7) For nonaffiliates to market to you. This reason incorporates 
sharing described in Sec. Sec.313.7 and 313.10(a) of this part. An 
institution that shares personal information for this reason must 
provide an opt-out.
    (e) To limit our sharing: A financial institution must include this 
section of the model form only if it provides an opt-out. The word 
``choice'' may be written in either the singular or plural, as 
appropriate. Institutions must select one or more of the applicable opt-
out methods described: telephone, such as by a toll-free number; a Web 
site; or use of a mail-in opt-out form. Institutions may include the 
words ``toll-free'' before telephone, as appropriate. An institution 
that allows consumers to opt out online must provide either a specific 
Web address that takes consumers directly to the opt-out page or a 
general Web address that provides a clear and conspicuous direct link to 
the opt-out page. The opt-out choices made available to the consumer who 
contacts the institution through these methods must correspond 
accurately to the ``Yes'' responses in the third column of the 
disclosure table. In the part titled ``Please note'' institutions may 
insert a number that is 30 or greater in the space marked ``[30].'' 
Instructions on voluntary or state privacy law opt-out information are 
in paragraph C.2(g)(5) of these Instructions.
    (f) Questions box. Customer service contact information must be 
inserted as appropriate, where [phone number] or [Web site] appear. 
Institutions may elect to provide either a phone number, such as a toll-
free number, or a Web address, or both. Institutions may include the 
words ``toll-free'' before the telephone number, as appropriate.
    (g) Mail-in opt-out form. Financial institutions must include this 
mail-in form only if they state in the ``To limit our sharing'' box that 
consumers can opt out by mail. The mail-in form must provide opt-out 
options that correspond accurately to the ``Yes'' responses in the third 
column in the disclosure table. Institutions that require customers to 
provide only name and address may omit the section identified as 
``[account ].'' Institutions that require additional or different 
information, such as a random opt-out number or a truncated account 
number, to implement an opt-out election should modify the ``[account 
]'' reference accordingly. This includes institutions that require 
customers with multiple accounts to identify each account to which the 
opt-out should apply. An institution must enter its opt-out mailing 
address: In the far right of this form (see version 3); or below the 
form (see version 4). The reverse side of the mail-in opt-out form must 
not include any content of the model form.
    (1) Joint accountholder. Only institutions that provide their joint 
accountholders the choice to opt out for only one accountholder, in 
accordance with paragraph C.3(a)(5) of these Instructions, must include 
in the far left column of the mail-in form the following statement: ``If 
you have a joint account, your choice(s) will apply to everyone on your 
account unless you mark below. [square] Apply my choice(s) only to me.'' 
The word ``choice'' may be written in either the singular or plural, as 
appropriate. Financial institutions that provide insurance products or 
services, provide this option, and elect to use the model form may 
substitute the word ``policy'' for ``account'' in this statement. 
Institutions that do not provide this option may eliminate this left 
column from the mail-in form.
    (2) FCRA Section 603(d)(2)(A)(iii) opt-out. If the institution 
shares personal information pursuant to section 603(d)(2)(A)(iii) of the 
FCRA, it must include in the mail-in opt-out form the following 
statement: ``[square] Do not share information about my creditworthiness 
with your affiliates for their everyday business purposes.''
    (3) FCRA Section 624 opt-out. If the institution incorporates 
section 624 of the FCRA in accord with paragraph C.2(d)(6) of these 
Instructions, it must include in the mail-in opt-out form the following 
statement: ``[square] Do not allow your affiliates to use my personal 
information to market to me.''
    (4) Nonaffiliate opt-out. If the financial institution shares 
personal information pursuant to Sec.313.10(a) of this part, it must 
include in the mail-in opt-out form the following statement: ``[square] 
Do not share my personal information with nonaffiliates to market their 
products and services to me.''
    (5) Additional opt-outs. Financial institutions that use the 
disclosure table to provide opt-out options beyond those required by 
Federal law must provide those opt-outs in this section of the model 
form. A financial institution that chooses to offer an opt-out for its 
own marketing in the mail-in opt-out form must include one of the two 
following statements: ``[square] Do not share my personal information to 
market to me.'' or ``[square] Do not use my personal information to 
market to me.'' A financial institution that chooses to offer an opt-out 
for joint marketing must include the following statement: ``[square] Do 
not share my personal information with other financial institutions to 
jointly market to me.''
    (h) Barcodes. A financial institution may elect to include a barcode 
and/or ``tagline'' (an internal identifier) in 6-point font at the 
bottom of page one, as needed for information internal to the 
institution, so long as

[[Page 436]]

these do not interfere with the clarity or text of the form.

                               3. Page Two

    (a) General Instructions for the Questions. Certain of the Questions 
may be customized as follows:
    (1) ``Who is providing this notice?'' This question may be omitted 
where only one financial institution provides the model form and that 
institution is clearly identified in the title on page one. Two or more 
financial institutions that jointly provide the model form must use this 
question to identify themselves as required by Sec.313.9(f) of this 
part. Where the list of institutions exceeds four (4) lines, the 
institution must describe in the response to this question the general 
types of institutions jointly providing the notice and must separately 
identify those institutions, in minimum 8-point font, directly following 
the ``Other important information'' box, or, if that box is not included 
in the institution's form, directly following the ``Definitions.'' The 
list may appear in a multi-column format.
    (2) ``How does [name of financial institution] protect my personal 
information?'' The financial institution may only provide additional 
information pertaining to its safeguards practices following the 
designated response to this question. Such information may include 
information about the institution's use of cookies or other measures it 
uses to safeguard personal information. Institutions are limited to a 
maximum of 30 additional words.
    (3) ``How does [name of financial institution] collect my personal 
information?'' Institutions must use five (5) of the following terms to 
complete the bulleted list for this question: Open an account; deposit 
money; pay your bills; apply for a loan; use your credit or debit card; 
seek financial or tax advice; apply for insurance; pay insurance 
premiums; file an insurance claim; seek advice about your investments; 
buy securities from us; sell securities to us; direct us to buy 
securities; direct us to sell your securities; make deposits or 
withdrawals from your account; enter into an investment advisory 
contract; give us your income information; provide employment 
information; give us your employment history; tell us about your 
investment or retirement portfolio; tell us about your investment or 
retirement earnings; apply for financing; apply for a lease; provide 
account information; give us your contact information; pay us by check; 
give us your wage statements; provide your mortgage information; make a 
wire transfer; tell us who receives the money; tell us where to send the 
money; show your government-issued ID; show your driver's license; order 
a commodity futures or option trade. Institutions that collect personal 
information from their affiliates and/or credit bureaus must include 
after the bulleted list the following statement: ``We also collect your 
personal information from others, such as credit bureaus, affiliates, or 
other companies.'' Institutions that do not collect personal information 
from their affiliates or credit bureaus but do collect information from 
other companies must include the following statement instead: ``We also 
collect your personal information from other companies.'' Only 
institutions that do not collect any personal information from 
affiliates, credit bureaus, or other companies can omit both statements.
    (4) ``Why can't I limit all sharing?'' Institutions that describe 
state privacy law provisions in the ``Other important information'' box 
must use the bracketed sentence: ``See below for more on your rights 
under state law.'' Other institutions must omit this sentence.
    (5) ``What happens when I limit sharing for an account I hold 
jointly with someone else?'' Only financial institutions that provide 
opt-out options must use this question. Other institutions must omit 
this question. Institutions must choose one of the following two 
statements to respond to this question: ``Your choices will apply to 
everyone on your account.'' or ``Your choices will apply to everyone on 
your account--unless you tell us otherwise.'' Financial institutions 
that provide insurance products or services and elect to use the model 
form may substitute the word ``policy'' for ``account'' in these 
statements.
    (b) General Instructions for the Definitions. The financial 
institution must customize the space below the responses to the three 
definitions in this section. This specific information must be in 
italicized lettering to set off the information from the standardized 
definitions.
    (1) Affiliates. As required by Sec.313.6(a)(3) of this part, where 
[affiliate information] appears, the financial institution must:
    (i) If it has no affiliates, state: ``[name of financial 
institution] has no affiliates'';
    (ii) If it has affiliates but does not share personal information, 
state: ``[name of financial institution] does not share with our 
affiliates''; or
    (iii) If it shares with its affiliates, state, as applicable: ``Our 
affiliates include companies with a [common corporate identity of 
financial institution] name; financial companies such as [insert 
illustrative list of companies]; nonfinancial companies, such as [insert 
illustrative list of companies;] and others, such as [insert 
illustrative list].''
    (2) Nonaffiliates. As required by Sec.313.6(c)(3) of this part, 
where [nonaffiliate information] appears, the financial institution 
must:
    (i) If it does not share with nonaffiliated third parties, state: 
``[name of financial institution] does not share with nonaffiliates so 
they can market to you''; or

[[Page 437]]

    (ii) If it shares with nonaffiliated third parties, state, as 
applicable: ``Nonaffiliates we share with can include [list categories 
of companies such as mortgage companies, insurance companies, direct 
marketing companies, and nonprofit organizations].''
    (3) Joint Marketing. As required by Sec.313.13 of this part, where 
[joint marketing] appears, the financial institution must:
    (i) If it does not engage in joint marketing, state: ``[name of 
financial institution] doesn't jointly market''; or
    (ii) If it shares personal information for joint marketing, state, 
as applicable: ``Our joint marketing partners include [list categories 
of companies such as credit card companies].''
    (c) General instructions for the ``Other important information'' 
box. This box is optional. The space provided for information in this 
box is not limited. Only the following types of information can appear 
in this box.
    (1) State and/or international privacy law information; and/or
    (2) Acknowledgment of receipt form.

[74 FR 62966, Dec. 1, 2009]



PART 314_STANDARDS FOR SAFEGUARDING CUSTOMER INFORMATION--
Table of Contents



Sec.
314.1 Purpose and scope.
314.2 Definitions.
314.3 Standards for safeguarding customer information.
314.4 Elements.
314.5 Effective date.

    Authority: 15 U.S.C. 6801(b), 6805(b)(2).

    Source: 67 FR 36493, May 23, 2002, unless otherwise noted.



Sec.314.1  Purpose and scope.

    (a) Purpose. This part, which implements sections 501 and 505(b)(2) 
of the Gramm-Leach-Bliley Act, sets forth standards for developing, 
implementing, and maintaining reasonable administrative, technical, and 
physical safeguards to protect the security, confidentiality, and 
integrity of customer information.
    (b) Scope. This part applies to the handling of customer information 
by all financial institutions over which the Federal Trade Commission 
(``FTC'' or ``Commission'') has jurisdiction. This part refers to such 
entities as ``you.'' This part applies to all customer information in 
your possession, regardless of whether such information pertains to 
individuals with whom you have a customer relationship, or pertains to 
the customers of other financial institutions that have provided such 
information to you.



Sec.314.2  Definitions.

    (a) In general. Except as modified by this part or unless the 
context otherwise requires, the terms used in this part have the same 
meaning as set forth in the Commission's rule governing the Privacy of 
Consumer Financial Information, 16 CFR part 313.
    (b) Customer information means any record containing nonpublic 
personal information as defined in 16 CFR 313.3(n), about a customer of 
a financial institution, whether in paper, electronic, or other form, 
that is handled or maintained by or on behalf of you or your affiliates.
    (c) Information security program means the administrative, 
technical, or physical safeguards you use to access, collect, 
distribute, process, protect, store, use, transmit, dispose of, or 
otherwise handle customer information.
    (d) Service provider means any person or entity that receives, 
maintains, processes, or otherwise is permitted access to customer 
information through its provision of services directly to a financial 
institution that is subject to this part.



Sec.314.3  Standards for safeguarding customer information.

    (a) Information security program. You shall develop, implement, and 
maintain a comprehensive information security program that is written in 
one or more readily accessible parts and contains administrative, 
technical, and physical safeguards that are appropriate to your size and 
complexity, the nature and scope of your activities, and the sensitivity 
of any customer information at issue. Such safeguards shall include the 
elements set forth in Sec.314.4 and shall be reasonably designed to 
achieve the objectives of this part, as set forth in paragraph (b) of 
this section.
    (b) Objectives. The objectives of section 501(b) of the Act, and of 
this part, are to:
    (1) Insure the security and confidentiality of customer information;

[[Page 438]]

    (2) Protect against any anticipated threats or hazards to the 
security or integrity of such information; and
    (3) Protect against unauthorized access to or use of such 
information that could result in substantial harm or inconvenience to 
any customer.



Sec.314.4  Elements.

    In order to develop, implement, and maintain your information 
security program, you shall:
    (a) Designate an employee or employees to coordinate your 
information security program.
    (b) Identify reasonably foreseeable internal and external risks to 
the security, confidentiality, and integrity of customer information 
that could result in the unauthorized disclosure, misuse, alteration, 
destruction or other compromise of such information, and assess the 
sufficiency of any safeguards in place to control these risks. At a 
minimum, such a risk assessment should include consideration of risks in 
each relevant area of your operations, including:
    (1) Employee training and management;
    (2) Information systems, including network and software design, as 
well as information processing, storage, transmission and disposal; and
    (3) Detecting, preventing and responding to attacks, intrusions, or 
other systems failures.
    (c) Design and implement information safeguards to control the risks 
you identify through risk assessment, and regularly test or otherwise 
monitor the effectiveness of the safeguards' key controls, systems, and 
procedures.
    (d) Oversee service providers, by:
    (1) Taking reasonable steps to select and retain service providers 
that are capable of maintaining appropriate safeguards for the customer 
information at issue; and
    (2) Requiring your service providers by contract to implement and 
maintain such safeguards.
    (e) Evaluate and adjust your information security program in light 
of the results of the testing and monitoring required by paragraph (c) 
of this section; any material changes to your operations or business 
arrangements; or any other circumstances that you know or have reason to 
know may have a material impact on your information security program.



Sec.314.5  Effective date.

    (a) Each financial institution subject to the Commission's 
jurisdiction must implement an information security program pursuant to 
this part no later than May 23, 2003.
    (b) Two-year grandfathering of service contracts. Until May 24, 
2004, a contract you have entered into with a nonaffiliated third party 
to perform services for you or functions on your behalf satisfies the 
provisions of Sec.314.4(d), even if the contract does not include a 
requirement that the service provider maintain appropriate safeguards, 
as long as you entered into the contract not later than June 24, 2002.



PART 315_CONTACT LENS RULE--Table of Contents



Sec.
315.1 Scope of regulations in this part.
315.2 Definitions.
315.3 Availability of contact lens prescriptions to patients.
315.4 Limits on requiring immediate payment.
315.5 Prescriber verification.
315.6 Expiration of contact lens prescriptions.
315.7 Content of advertisements and other representations.
315.8 Prohibition of certain waivers.
315.9 Enforcement.
315.10 Severability.
315.11 Effect on state and local laws.

    Authority: 15 U.S.C. 7601-7610.

    Source: 69 FR 40508, July 2, 2004, unless otherwise noted.



Sec.315.1  Scope of regulations in this part.

    This part, which shall be called the ``Contact Lens Rule,'' 
implements the Fairness to Contact Lens Consumers Act, codified at 15 
U.S.C. 7601-7610, which requires that rules be issued to address the 
release, verification, and sale of contact lens prescriptions. This part 
specifically governs contact lens prescriptions and related issues. Part 
456 of Title 16 governs the availability of eyeglass prescriptions and 
related issues (the Ophthalmic Practice Rules (Eyeglass Rule)).

[[Page 439]]



Sec.315.2  Definitions.

    For purposes of this part, the following definitions shall apply:
    Business hour means an hour between 9 a.m. and 5 p.m., during a 
weekday (Monday through Friday), excluding Federal holidays. ``Business 
hour'' also may include, at the seller's option, a prescriber's regular 
business hours on Saturdays, provided that the seller has actual 
knowledge of these hours. ``Business hour'' shall be determined based on 
the time zone of the prescriber.
    ``Eight (8) business hours'' shall be calculated from the time the 
prescriber receives the prescription verification information from the 
seller, and shall conclude when eight (8) business hours have elapsed. 
For verification requests received by a prescriber during non-business 
hours, the calculation of ``eight (8) business hours'' shall begin at 9 
a.m. on the next weekday that is not a Federal holiday or, if 
applicable, on Saturday at the beginning of the prescriber's actual 
business hours.
    Commission means the Federal Trade Commission.
    Contact lens means any contact lens for which State or Federal law 
requires a prescription.
    Contact lens fitting means the process that begins after an initial 
eye examination for contact lenses and ends when a successful fit has 
been achieved or, in the case of a renewal prescription, ends when the 
prescriber determines that no change in the existing prescription is 
required, and such term may include:
    (1) An examination to determine lens specifications;
    (2) Except in the case of a renewal of a contact lens prescription, 
an initial evaluation of the fit of the contact lens on the eye; and
    (3) Medically necessary follow-up examinations.
    Contact lens prescription means a prescription, issued in accordance 
with State and Federal law, that contains sufficient information for the 
complete and accurate filling of a prescription for contact lenses, 
including the following:
    (1) The name of the patient;
    (2) The date of examination;
    (3) The issue date and expiration date of prescription;
    (4) The name, postal address, telephone number, and facsimile 
telephone number of prescriber;
    (5) The power, material or manufacturer or both of the prescribed 
contact lens;
    (6) The base curve or appropriate designation of the prescribed 
contact lens;
    (7) The diameter, when appropriate, of the prescribed contact lens; 
and
    (8) In the case of a private label contact lens, the name of the 
manufacturer, trade name of the private label brand, and, if applicable, 
trade name of equivalent brand name.
    Direct communication means completed communication by telephone, 
facsimile, or electronic mail.
    Issue date means the date on which the patient receives a copy of 
the prescription at the completion of a contact lens fitting.
    Ophthalmic goods are contact lenses, eyeglasses, or any component of 
eyeglasses.
    Ophthalmic services are the measuring, fitting, and adjusting of 
ophthalmic goods subsequent to an eye examination.
    Prescriber means, with respect to contact lens prescriptions, an 
ophthalmologist, optometrist, or other person permitted under State law 
to issue prescriptions for contact lenses in compliance with any 
applicable requirements established by the Food and Drug Administration. 
``Other person,'' for purposes of this definition, includes a dispensing 
optician who is permitted under State law to issue prescriptions and who 
is authorized or permitted under State law to perform contact lens 
fitting services.
    Private label contact lenses mean contact lenses that are sold under 
the label of a seller where the contact lenses are identical to lenses 
made by the same manufacturer but sold under the labels of other 
sellers.
    Provide to the patient a copy means giving a patient a copy of his 
or her contact lens prescription:
    (1) On paper; or
    (2) In a digital format that can be accessed, downloaded, and 
printed by the patient. For a copy provided in a digital format, the 
prescriber shall

[[Page 440]]

identify to the patient the specific method or methods of electronic 
delivery to be used, such as text message, electronic mail, or an online 
patient portal, and obtain the patient's verifiable affirmative consent 
to receive a digital copy through the identified method or methods; and 
maintain records or evidence of a patient's affirmative consent for a 
period of not less than three years. Such records or evidence shall be 
available for inspection by the Federal Trade Commission, its employees, 
and its representatives.
    Reasonably understandable volume means at an audible level that 
renders the message intelligible to the receiving audience.
    Slow and deliberate manner means at a rate that renders the message 
intelligible to the receiving audience.

[69 FR 40508, July 2, 2004, as amended at 85 FR 50717, Aug. 17, 2020]



Sec.315.3  Availability of contact lens prescriptions to patients.

    (a) In general. When a prescriber completes a contact lens fitting, 
the prescriber:
    (1) Whether or not requested by the patient, shall provide to the 
patient a copy of the contact lens prescription;
    (2) Shall, as directed by any person designated to act on behalf of 
the patient, verify the contact lens prescription by electronic or other 
means; and
    (3) Shall, upon request, provide any person designated to act on 
behalf of the patient with a copy of the patient's contact lens 
prescription by electronic or other means within forty (40) business 
hours of receipt of the request. A prescriber shall note in the 
patient's record the name of the requester and the date and time that 
the prescription was provided to the requester.
    (b) Limitations. A prescriber may not:
    (1) Require the purchase of contact lenses from the prescriber or 
from another person as a condition of providing a copy of a prescription 
under paragraph (a)(1) or (a)(3) of this section or as a condition of 
verification of a prescription under paragraph (a)(2) of this section;
    (2) Require payment in addition to, or as part of, the fee for an 
eye examination, fitting, and evaluation as a condition of providing a 
copy of a prescription under paragraph (a)(1) or (a)(3) of this section 
or as a condition of verification of a prescription under paragraph 
(a)(2) of this section; or
    (3) Require the patient to sign a waiver or release as a condition 
of releasing or verifying a prescription under paragraph (a)(1), (a)(2), 
or (a)(3) of this section.
    (c) Confirmation of prescription release. (1)(i) Upon completion of 
a contact lens fitting, the prescriber shall do one of the following:
    (A) Request that the patient acknowledge receipt of the contact lens 
prescription by signing a statement confirming receipt of the contact 
lens prescription;
    (B) Request that the patient sign a prescriber-retained copy of a 
contact lens prescription that contains a statement confirming receipt 
of the contact lens prescription;
    (C) Request that the patient sign a prescriber-retained copy of the 
receipt for the examination that contains a statement confirming receipt 
of the contact lens prescription; or
    (D) If a digital copy of the prescription was provided to the 
patient (via methods including an online portal, electronic mail, or 
text message) in compliance with paragraph (a)(1) of this section, 
retain evidence that the prescription was sent, received, or made 
accessible, downloadable, and printable.
    (ii) If the prescriber elects to confirm prescription release via 
paragraphs (c)(1)(i)(A), (B), or (C) of this section, the prescriber 
may, but is not required to, use the statement, ``My eye care 
professional provided me with a copy of my contact lens prescription at 
the completion of my contact lens fitting'' to satisfy the requirement.
    (iii) In the event the patient declines to sign a confirmation 
requested under paragraph (c)(1)(i)(A), (B), or (C) of this section, the 
prescriber shall note the patient's refusal on the document and sign it.
    (2) A prescriber shall maintain the records or evidence required 
under paragraph (c)(1) of this section for a period of not less than 
three years. Such records or evidence shall be available for inspection 
by the Federal Trade

[[Page 441]]

Commission, its employees, and its representatives.
    (3) Paragraphs (c)(1) and (c)(2) of this section shall not apply to 
prescribers who do not have a direct or indirect financial interest in 
the sale of contact lenses, including, but not limited to, through an 
association, affiliation, or co-location with a contact lens seller.

[69 FR 40508, July 2, 2004, as amended at 85 FR 50717, Aug. 17, 2020]



Sec.315.4  Limits on requiring immediate payment.

    A prescriber may require payment of fees for an eye examination, 
fitting, and evaluation before the release of a contact lens 
prescription, but only if the prescriber requires immediate payment in 
the case of an examination that reveals no requirement for ophthalmic 
goods. For purposes of the preceding sentence, presentation of proof of 
insurance coverage for that service shall be deemed to be a payment.



Sec.315.5  Prescriber verification.

    (a) Prescription requirement. A seller may sell contact lenses only 
in accordance with a contact lens prescription for the patient that is:
    (1) Presented to the seller by the patient or prescriber directly or 
by facsimile; or
    (2) Verified by direct communication.
    (b) Information for verification. When seeking verification of a 
contact lens prescription, a seller shall provide the prescriber with 
the following information through direct communication:
    (1) The patient's full name and address;
    (2) The contact lens power, manufacturer, base curve or appropriate 
designation, and diameter when appropriate;
    (3) The quantity of lenses ordered;
    (4) The date of patient request;
    (5) The date and time of verification request;
    (6) The name of a contact person at the seller's company, including 
facsimile and telephone numbers; and
    (7) If the seller opts to include the prescriber's regular business 
hours on Saturdays as ``business hours'' for purposes of paragraph 
(c)(3) of this section, a clear statement of the prescriber's regular 
Saturday business hours.
    (c) Verification events. A prescription is verified under paragraph 
(a)(2) of this section only if one of the following occurs:
    (1) The prescriber confirms the prescription is accurate by direct 
communication with the seller;
    (2) The prescriber informs the seller through direct communication 
that the prescription is inaccurate and provides the accurate 
prescription; or
    (3) The prescriber fails to communicate with the seller within eight 
(8) business hours after receiving from the seller the information 
described in paragraph (b) of this section. During these eight (8) 
business hours, the seller shall provide a reasonable opportunity for 
the prescriber to communicate with the seller concerning the 
verification request.
    (d) Automated telephone verification messages. If a seller verifies 
prescriptions through calls that use, in whole or in part, an automated 
message, the seller must:
    (1) Record the entire call;
    (2) Commence the call by identifying it as a request for 
prescription verification made in accordance with the Contact Lens Rule;
    (3) Deliver the information required by paragraph (b) of this 
section in a slow and deliberate manner and at a reasonably 
understandable volume; and
    (4) Make the information required by paragraph (b) of this section 
repeatable at the prescriber's option.
    (e) Invalid prescription. If a prescriber informs a seller before 
the deadline under paragraph (c)(3) of this section that the contact 
lens prescription is inaccurate, expired, or otherwise invalid, the 
seller shall not fill the prescription. The prescriber shall specify the 
basis for the inaccuracy or invalidity of the prescription. If the 
prescription communicated by the seller to the prescriber is inaccurate, 
the prescriber shall correct it, and the prescription shall then be 
deemed verified under paragraph (c)(2) of this section.
    (f) No alteration of prescription. A seller may not alter a contact 
lens prescription. In the context of prescription verification, 
alteration includes,

[[Page 442]]

but is not limited to, providing the prescriber with the name of a 
manufacturer or brand other than that specified by the patient's 
prescription, unless such name is provided because the patient entered 
or orally provided it when asked for the manufacturer or brand listed on 
the patient's prescription. Notwithstanding the preceding sentences, for 
private label contact lenses, a seller may substitute for contact lenses 
specified on a prescription identical contact lenses that the same 
company manufactures and sells under different labels.
    (g) Seller requirement to accept prescription presentation: A seller 
shall provide a prominent method, and a clear and prominent disclosure 
of that method, for the patient to present the seller with a copy of the 
patient's prescription. Such method and the disclosure shall be provided 
prior to requesting a prescriber's contact information for verification 
of the prescription; provided, however, in the case of an order placed 
by telephone, a seller shall comply by providing a disclosure of the 
method prior to requesting a prescriber's contact information for 
verification of the prescription. The method to present the prescription 
shall be provided through (i) the same medium by which the order is 
placed, or (ii) electronic mail, text message, or file upload.
    (h) Recordkeeping requirement--verification requests. A seller shall 
maintain a record of all direct communications referred to in paragraph 
(a) of this section. Such record shall consist of the following:
    (1) For prescriptions presented to the seller: the prescription 
itself, or the facsimile version thereof (including an email containing 
a digital image of the prescription), that was presented to the seller 
by the patient or prescriber.
    (2) For verification requests by the seller:
    (i) If the communication occurs via facsimile or e-mail, a copy of 
the verification request, including the information provided to the 
prescriber pursuant to paragraph (b) of this section, and confirmation 
of the completed transmission thereof, including a record of the date 
and time the request was made;
    (ii) If the communication occurs via telephone, a log:
    (A) Describing the information provided pursuant to paragraph (b) of 
this section,
    (B) Setting forth the date and time the request was made,
    (C) Indicating how the call was completed, and
    (D) Listing the names of the individuals who participated in the 
call.
    (iii) If the communication occurs via telephone and uses an 
automated message, the complete recording required pursuant to paragraph 
(d)(1) of this section.
    (3) For communications from the prescriber, including prescription 
verifications:
    (i) If the communication occurs via facsimile or e-mail, a copy of 
the communication and a record of the time and date it was received;
    (ii) If the communication occurs via telephone, a log describing the 
information communicated, the date and time that the information was 
received, and the names of the individuals who participated in the call.
    (4) The records required to be maintained under this section shall 
be maintained for a period of not less than three years, and these 
records must be available for inspection by the Federal Trade 
Commission, its employees, and its representatives.
    (i) Recordkeeping requirement--Saturday business hours. A seller 
that exercises its option to include a prescriber's regular Saturday 
business hours in the time period for a request for a copy of the 
prescription specified in Sec.315.3(a)(3) or for verification 
specified in paragraph (c)(3) of this section shall maintain a record of 
the prescriber's regular Saturday business hours and the basis for the 
seller's actual knowledge thereof. Such records shall be maintained for 
a period of not less than three years, and these records must be 
available for inspection by the Federal Trade Commission, its employees, 
and its representatives.

[69 FR 40508, July 2, 2004, as amended at 85 FR 50717, Aug. 17, 2020]

[[Page 443]]



Sec.315.6  Expiration of contact lens prescriptions.

    (a) In general. A contact lens prescription shall expire:
    (1) On the date specified by the law of the State in which the 
prescription was written, if that date is one year or more after the 
issue date of the prescription;
    (2) Not less than one year after the issue date of the prescription 
if such State law specifies no date or specifies a date that is less 
than one year after the issue date of the prescription; or
    (3) Notwithstanding paragraphs (a)(1) and (a)(2) of this section, on 
the date specified by the prescriber, if that date is based on the 
medical judgment of the prescriber with respect to the ocular health of 
the patient.
    (b) Special rules for prescriptions of less than one year. (1) If a 
prescription expires in less than one year, the specific reasons for the 
medical judgment referred to in paragraph (a)(3) of this section shall 
be documented in the patient's medical record with sufficient detail to 
allow for review by a qualified professional in the field.
    (2) The documentation described in the paragraph above shall be 
maintained for a period of not less than three years, and it must be 
available for inspection by the Federal Trade Commission, its employees, 
and its representatives.
    (3) No prescriber shall include an expiration date on a prescription 
that is less than the period of time that he or she recommends for a 
reexamination of the patient that is medically necessary.



Sec.315.7  Content of advertisements and other representations.

    Any person who engages in the manufacture, processing, assembly, 
sale, offering for sale, or distribution of contact lenses may not 
represent, by advertisement, sales presentation, or otherwise, that 
contact lenses may be obtained without a prescription.



Sec.315.8  Prohibition of certain waivers.

    A prescriber may not place on a prescription, or require the patient 
to sign, or deliver to the patient, a form or notice waiving or 
disclaiming the liability or responsibility of the prescriber for the 
accuracy of the eye examination. The preceding sentence does not impose 
liability on a prescriber for the ophthalmic goods and services 
dispensed by another seller pursuant to the prescriber's correctly 
verified prescription.



Sec.315.9  Enforcement.

    Any violation of this Rule shall be treated as a violation of a rule 
under section 18 of the Federal Trade Commission Act, 15 U.S.C. 57a, 
regarding unfair or deceptive acts or practices, and the Commission will 
enforce this Rule in the same manner, by the same means, and with the 
same jurisdiction, powers, and duties as are available to it pursuant to 
the Federal Trade Commission Act, 15 U.S.C. 41 et seq.



Sec.315.10  Severability.

    The provisions of this part are separate and severable from one 
another. If any provision is stayed or determined to be invalid, it is 
the Commission's intention that the remaining provisions shall continue 
in effect.



Sec.315.11  Effect on state and local laws.

    (a) State and local laws and regulations that establish a 
prescription expiration date of less than one year or that restrict 
prescription release or require active verification are preempted.
    (b) Any other State or local laws or regulations that are 
inconsistent with the Act or this part are preempted to the extent of 
the inconsistency.



PART 316_CAN-SPAM RULE--Table of Contents



Sec.
316.1 Scope.
316.2 Definitions.
316.3 Primary purpose.
316.4 Requirement to place warning labels on commercial electronic mail 
          that contains sexually oriented material.
316.5 Prohibition on charging a fee or imposing other requirements on 
          recipients who wish to opt out.
316.6 Severability.

    Authority: 15 U.S.C. 7701-7713.

    Source: 73 FR 29677, May 21, 2008, unless otherwise noted.

[[Page 444]]



Sec.316.1  Scope.

    This part implements the Controlling the Assault of Non-Solicited 
Pornography and Marketing Act of 2003 (``CAN-SPAM Act''), 15 U.S.C. 
7701-7713.



Sec.316.2  Definitions.

    (a) The definition of the term ``affirmative consent'' is the same 
as the definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(1).
    (b) ``Character'' means an element of the American Standard Code for 
Information Interchange (``ASCII'') character set.
    (c) The definition of the term ``commercial electronic mail 
message'' is the same as the definition of that term in the CAN-SPAM 
Act, 15 U.S.C. 7702(2).
    (d) The definition of the term ``electronic mail address'' is the 
same as the definition of that term in the CAN-SPAM Act, 15 U.S.C. 
7702(5).
    (e) The definition of the term ``electronic mail message'' is the 
same as the definition of that term in the CAN-SPAM Act, 15 U.S.C. 
7702(6).
    (f) The definition of the term ``initiate'' is the same as the 
definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(9).
    (g) The definition of the term ``Internet'' is the same as the 
definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(10).
    (h) ``Person'' means any individual, group, unincorporated 
association, limited or general partnership, corporation, or other 
business entity.
    (i) The definition of the term ``procure'' is the same as the 
definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(12).
    (j) The definition of the term ``protected computer'' is the same as 
the definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(13).
    (k) The definition of the term ``recipient'' is the same as the 
definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(14).
    (l) The definition of the term ``routine conveyance'' is the same as 
the definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(15).
    (m) The definition of the term ``sender'' is the same as the 
definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(16), 
provided that, when more than one person's products, services, or 
Internet website are advertised or promoted in a single electronic mail 
message, each such person who is within the Act's definition will be 
deemed to be a ``sender,'' except that, only one person will be deemed 
to be the ``sender'' of that message if such person: (A) is within the 
Act's definition of ``sender''; (B) is identified in the ``from'' line 
as the sole sender of the message; and (C) is in compliance with 15 
U.S.C. 7704(a)(1), 15 U.S.C. 7704(a)(2), 15 U.S.C. 7704(a)(3)(A)(i), 15 
U.S.C. 7704(a)(5)(A), and 16 CFR 316.4.
    (n) The definition of the term ``sexually oriented material'' is the 
same as the definition of that term in the CAN-SPAM Act, 15 U.S.C. 
7704(d)(4).
    (o) The definition of the term ``transactional or relationship 
messages'' is the same as the definition of that term in the CAN-SPAM 
Act, 15 U.S.C. 7702(17).
    (p) ``Valid physical postal address'' means the sender's current 
street address, a Post Office box the sender has accurately registered 
with the United States Postal Service, or a private mailbox the sender 
has accurately registered with a commercial mail receiving agency that 
is established pursuant to United States Postal Service regulations.



Sec.316.3  Primary purpose.

    (a) In applying the term ``commercial electronic mail message'' 
defined in the CAN-SPAM Act, 15 U.S.C. 7702(2), the ``primary purpose'' 
of an electronic mail message shall be deemed to be commercial based on 
the criteria in paragraphs (a)(1) through (3) and (b) of this section: 
\1\
---------------------------------------------------------------------------

    \1\ The Commission does not intend for these criteria to treat as a 
``commercial electronic mail message'' anything that is not commercial 
speech.
---------------------------------------------------------------------------

    (1) If an electronic mail message consists exclusively of the 
commercial advertisement or promotion of a commercial product or 
service, then the ``primary purpose'' of the message shall be deemed to 
be commercial.
    (2) If an electronic mail message contains both the commercial 
advertisement or promotion of a commercial

[[Page 445]]

product or service as well as transactional or relationship content as 
set forth in paragraph (c) of this section, then the ``primary purpose'' 
of the message shall be deemed to be commercial if:
    (i) A recipient reasonably interpreting the subject line of the 
electronic mail message would likely conclude that the message contains 
the commercial advertisement or promotion of a commercial product or 
service; or
    (ii) The electronic mail message's transactional or relationship 
content as set forth in paragraph (c) of this section does not appear, 
in whole or in substantial part, at the beginning of the body of the 
message.
    (3) If an electronic mail message contains both the commercial 
advertisement or promotion of a commercial product or service as well as 
other content that is not transactional or relationship content as set 
forth in paragraph (c) of this section, then the ``primary purpose'' of 
the message shall be deemed to be commercial if:
    (i) A recipient reasonably interpreting the subject line of the 
electronic mail message would likely conclude that the message contains 
the commercial advertisement or promotion of a commercial product or 
service; or
    (ii) A recipient reasonably interpreting the body of the message 
would likely conclude that the primary purpose of the message is the 
commercial advertisement or promotion of a commercial product or 
service. Factors illustrative of those relevant to this interpretation 
include the placement of content that is the commercial advertisement or 
promotion of a commercial product or service, in whole or in substantial 
part, at the beginning of the body of the message; the proportion of the 
message dedicated to such content; and how color, graphics, type size, 
and style are used to highlight commercial content.
    (b) In applying the term ``transactional or relationship message'' 
defined in the CAN-SPAM Act, 15 U.S.C. 7702(17), the ``primary purpose'' 
of an electronic mail message shall be deemed to be transactional or 
relationship if the electronic mail message consists exclusively of 
transactional or relationship content as set forth in paragraph (c) of 
this section.
    (c) Transactional or relationship content of email messages under 
the CAN-SPAM Act is content:
    (1) To facilitate, complete, or confirm a commercial transaction 
that the recipient has previously agreed to enter into with the sender;
    (2) To provide warranty information, product recall information, or 
safety or security information with respect to a commercial product or 
service used or purchased by the recipient;
    (3) With respect to a subscription, membership, account, loan, or 
comparable ongoing commercial relationship involving the ongoing 
purchase or use by the recipient of products or services offered by the 
sender, to provide --
    (i) Notification concerning a change in the terms or features;
    (ii) Notification of a change in the recipient's standing or status; 
or
    (iii) At regular periodic intervals, account balance information or 
other type of account statement;
    (4) To provide information directly related to an employment 
relationship or related benefit plan in which the recipient is currently 
involved, participating, or enrolled; or
    (5) To deliver goods or services, including product updates or 
upgrades, that the recipient is entitled to receive under the terms of a 
transaction that the recipient has previously agreed to enter into with 
the sender.



Sec.316.4  Requirement to place warning labels on commercial 
electronic mail that contains sexually oriented material.

    (a) Any person who initiates, to a protected computer, the 
transmission of a commercial electronic mail message that includes 
sexually oriented material must:
    (1) Exclude sexually oriented materials from the subject heading for 
the electronic mail message and include in the subject heading the 
phrase ``SEXUALLY-EXPLICIT: '' in capital letters

[[Page 446]]

as the first nineteen (19) characters at the beginning of the subject 
line; \2\
---------------------------------------------------------------------------

    \2\ The phrase ``SEXUALLY-EXPLICIT'' comprises 17 characters, 
including the dash between the two words. The colon (:) and the space 
following the phrase are the 18\th\ and 19\th\ characters.
---------------------------------------------------------------------------

    (2) Provide that the content of the message that is initially 
viewable by the recipient, when the message is opened by any recipient 
and absent any further actions by the recipient, include only the 
following information:
    (i) The phrase ``SEXUALLY-EXPLICIT: '' in a clear and conspicuous 
manner; \3\
---------------------------------------------------------------------------

    \3\ This phrase consists of nineteen (19) characters and is 
identical to the phrase required in 316.5(a)(1) of this Rule.
---------------------------------------------------------------------------

    (ii) Clear and conspicuous identification that the message is an 
advertisement or solicitation;
    (iii) Clear and conspicuous notice of the opportunity of a recipient 
to decline to receive further commercial electronic mail messages from 
the sender;
    (iv) A functioning return electronic mail address or other Internet-
based mechanism, clearly and conspicuously displayed, that
    (A) A recipient may use to submit, in a manner specified in the 
message, a reply electronic mail message or other form of Internet-based 
communication requesting not to receive future commercial electronic 
mail messages from that sender at the electronic mail address where the 
message was received; and
    (B) Remains capable of receiving such messages or communications for 
no less than 30 days after the transmission of the original message;
    (v) Clear and conspicuous display of a valid physical postal address 
of the sender; and
    (vi) Any needed instructions on how to access, or activate a 
mechanism to access, the sexually oriented material, preceded by a clear 
and conspicuous statement that to avoid viewing the sexually oriented 
material, a recipient should delete the email message without following 
such instructions.
    (b) Prior affirmative consent. Paragraph (a) does not apply to the 
transmission of an electronic mail message if the recipient has given 
prior affirmative consent to receipt of the message.



Sec.316.5  Prohibition on charging a fee or imposing other
requirements on recipients who wish to opt out.

    Neither a sender nor any person acting on behalf of a sender may 
require that any recipient pay any fee, provide any information other 
than the recipient's electronic mail address and opt-out preferences, or 
take any other steps except sending a reply electronic mail message or 
visiting a single Internet Web page, in order to:
    (a) Use a return electronic mail address or other Internet-based 
mechanism, required by 15 U.S.C. 7704(a)(3), to submit a request not to 
receive future commercial electronic mail messages from a sender; or
    (b) Have such a request honored as required by 15 U.S.C. 
7704(a)(3)(B) and (a)(4).



Sec.316.6  Severability.

    The provisions of this Part are separate and severable from one 
another. If any provision is stayed or determined to be invalid, it is 
the Commission's intention that the remaining provisions shall continue 
in effect.



PART 317_PROHIBITION OF ENERGY MARKET MANIPULATION RULE--
Table of Contents



Sec.
317.1 Scope.
317.2 Definitions.
317.3 Prohibited practices.
317.4 Preemption.
317.5 Severability.

    Authority: 42 U.S.C. 17301-17305; 15 U.S.C. 41-58.

    Source: 74 FR 40701, Aug. 12, 2009, unless otherwise noted.



Sec.317.1  Scope.

    This part implements Subtitle B of Title VIII of The Energy 
Independence and Security Act of 2007 (``EISA''), Pub. L. 110-140, 121 
Stat. 1723 (December 19, 2007), codified at 42 U.S.C. 17301-17305. This 
Rule applies to any person over which the Federal Trade Commission has 
jurisdiction under the Federal Trade Commission Act, 15 U.S.C. 41 et 
seq.

[[Page 447]]



Sec.317.2  Definitions.

    The following definitions shall apply throughout this Rule:
    (a) Crude oil means any mixture of hydrocarbons that exists:
    (1) In liquid phase in natural underground reservoirs and that 
remains liquid at atmospheric pressure after passing through separating 
facilities; or
    (2) As shale oil or tar sands requiring further processing for sale 
as a refinery feedstock.
    (b) Gasoline means:
    (1) Finished gasoline, including, but not limited to, conventional, 
reformulated, and oxygenated blends; and
    (2) Conventional and reformulated gasoline blendstock for oxygenate 
blending.
    (c) Knowingly means that the person knew or must have known that his 
or her conduct was fraudulent or deceptive.
    (d) Person means any individual, group, unincorporated association, 
limited or general partnership, corporation, or other business entity.
    (e) Petroleum distillates means:
    (1) Jet fuels, including, but not limited to, all commercial and 
military specification jet fuels; and
    (2) Diesel fuels and fuel oils, including, but not limited to, No. 
1, No. 2, and No. 4 diesel fuel, and No. 1, No. 2, and No. 4 fuel oil.
    (f) Wholesale means:
    (1) All purchases or sales of crude oil or jet fuel; and
    (2) All purchases or sales of gasoline or petroleum distillates 
(other than jet fuel) at the terminal rack or upstream of the terminal 
rack level.



Sec.317.3  Prohibited practices.

    It shall be unlawful for any person, directly or indirectly, in 
connection with the purchase or sale of crude oil, gasoline, or 
petroleum distillates at wholesale, to:
    (a) Knowingly engage in any act, practice, or course of business--
including the making of any untrue statement of material fact--that 
operates or would operate as a fraud or deceit upon any person; or
    (b) Intentionally fail to state a material fact that under the 
circumstances renders a statement made by such person misleading, 
provided that such omission distorts or is likely to distort market 
conditions for any such product.



Sec.317.4  Preemption.

    The Federal Trade Commission does not intend, through the 
promulgation of this Rule, to preempt the laws of any state or local 
government, except to the extent that any such law conflicts with this 
Rule. A law is not in conflict with this Rule if it affords equal or 
greater protection from the prohibited practices set forth in Sec.
317.3.



Sec.317.5  Severability.

    The provisions of this Rule are separate and severable from one 
another. If any provision is stayed or determined to be invalid, it is 
the Commission's intention that the remaining provisions shall continue 
in effect.



PART 318_HEALTH BREACH NOTIFICATION RULE--Table of Contents



Sec.
318.1 Purpose and scope.
318.2 Definitions.
318.3 Breach notification requirement.
318.4 Timeliness of notification.
318.5 Method of notice.
318.6 Content of notice.
318.7 Enforcement.
318.8 Effective date.
318.9 Sunset.

    Authority: Public Law 111-5, 123 Stat. 115 (2009).

    Source: 74 FR 42980, Aug. 25, 2009, unless otherwise noted.



Sec.318.1  Purpose and scope.

    (a) This part, which shall be called the ``Health Breach 
Notification Rule,'' implements section 13407 of the American Recovery 
and Reinvestment Act of 2009. It applies to foreign and domestic vendors 
of personal health records, PHR related entities, and third party 
service providers, irrespective of any jurisdictional tests in the 
Federal Trade Commission (FTC) Act, that maintain information of U.S. 
citizens or residents. It does not apply to HIPAA-covered entities, or 
to any other entity to the extent that it engages in activities as a 
business associate of a HIPAA-covered entity.

[[Page 448]]

    (b) This part preempts state law as set forth in section 13421 of 
the American Recovery and Reinvestment Act of 2009.



Sec.318.2  Definitions.

    (a) Breach of security means, with respect to unsecured PHR 
identifiable health information of an individual in a personal health 
record, acquisition of such information without the authorization of the 
individual. Unauthorized acquisition will be presumed to include 
unauthorized access to unsecured PHR identifiable health information 
unless the vendor of personal health records, PHR related entity, or 
third party service provider that experienced the breach has reliable 
evidence showing that there has not been, or could not reasonably have 
been, unauthorized acquisition of such information.
    (b) Business associate means a business associate under the Health 
Insurance Portability and Accountability Act, Public Law 104-191, 110 
Stat. 1936, as defined in 45 CFR 160.103.
    (c) HIPAA-covered entity means a covered entity under the Health 
Insurance Portability and Accountability Act, Public Law 104-191, 110 
Stat. 1936, as defined in 45 CFR 160.103.
    (d) Personal health record means an electronic record of PHR 
identifiable health information on an individual that can be drawn from 
multiple sources and that is managed, shared, and controlled by or 
primarily for the individual.
    (e) PHR identifiable health information means ``individually 
identifiable health information,'' as defined in section 1171(6) of the 
Social Security Act (42 U.S.C. 1320d(6)), and, with respect to an 
individual, information:
    (1) That is provided by or on behalf of the individual; and
    (2) That identifies the individual or with respect to which there is 
a reasonable basis to believe that the information can be used to 
identify the individual.
    (f) PHR related entity means an entity, other than a HIPAA-covered 
entity or an entity to the extent that it engages in activities as a 
business associate of a HIPAA-covered entity, that:
    (1) Offers products or services through the Web site of a vendor of 
personal health records;
    (2) Offers products or services through the Web sites of HIPAA-
covered entities that offer individuals personal health records; or
    (3) Accesses information in a personal health record or sends 
information to a personal health record.
    (g) State means any of the several States, the District of Columbia, 
Puerto Rico, the Virgin Islands, Guam, American Samoa and the Northern 
Mariana Islands.
    (h) Third party service provider means an entity that:
    (1) Provides services to a vendor of personal health records in 
connection with the offering or maintenance of a personal health record 
or to a PHR related entity in connection with a product or service 
offered by that entity; and
    (2) Accesses, maintains, retains, modifies, records, stores, 
destroys, or otherwise holds, uses, or discloses unsecured PHR 
identifiable health information as a result of such services.
    (i) Unsecured means PHR identifiable information that is not 
protected through the use of a technology or methodology specified by 
the Secretary of Health and Human Services in the guidance issued under 
section 13402(h)(2) of the American Reinvestment and Recovery Act of 
2009.
    (j) Vendor of personal health records means an entity, other than a 
HIPAA-covered entity or an entity to the extent that it engages in 
activities as a business associate of a HIPAA-covered entity, that 
offers or maintains a personal health record.



Sec.318.3  Breach notification requirement.

    (a) In general. In accordance with Sec. Sec.318.4, 318.5, and 
318.6, each vendor of personal health records, following the discovery 
of a breach of security of unsecured PHR identifiable health information 
that is in a personal health record maintained or offered by such 
vendor, and each PHR related entity, following the discovery of a breach 
of security of such information that is obtained through a product or 
service provided by such entity, shall:

[[Page 449]]

    (1) Notify each individual who is a citizen or resident of the 
United States whose unsecured PHR identifiable health information was 
acquired by an unauthorized person as a result of such breach of 
security; and
    (2) Notify the Federal Trade Commission.
    (b) Third party service providers. A third party service provider 
shall, following the discovery of a breach of security, provide notice 
of the breach to an official designated in a written contract by the 
vendor of personal health records or the PHR related entity to receive 
such notices or, if such a designation is not made, to a senior official 
at the vendor of personal health records or PHR related entity to which 
it provides services, and obtain acknowledgment from such official that 
such notice was received. Such notification shall include the 
identification of each customer of the vendor of personal health records 
or PHR related entity whose unsecured PHR identifiable health 
information has been, or is reasonably believed to have been, acquired 
during such breach. For purposes of ensuring implementation of this 
requirement, vendors of personal health records and PHR related entities 
shall notify third party service providers of their status as vendors of 
personal health records or PHR related entities subject to this Part.
    (c) Breaches treated as discovered. A breach of security shall be 
treated as discovered as of the first day on which such breach is known 
or reasonably should have been known to the vendor of personal health 
records, PHR related entity, or third party service provider, 
respectively. Such vendor, entity, or third party service provider shall 
be deemed to have knowledge of a breach if such breach is known, or 
reasonably should have been known, to any person, other than the person 
committing the breach, who is an employee, officer, or other agent of 
such vendor of personal health records, PHR related entity, or third 
party service provider.



Sec.318.4  Timeliness of notification.

    (a) In general. Except as provided in paragraph (c) of this section 
and Sec.318.5(c), all notifications required under Sec. Sec.
318.3(a)(1), 318.3(b), and 318.5(b) shall be sent without unreasonable 
delay and in no case later than 60 calendar days after the discovery of 
a breach of security.
    (b) Burden of proof. The vendor of personal health records, PHR 
related entity, and third party service provider involved shall have the 
burden of demonstrating that all notifications were made as required 
under this Part, including evidence demonstrating the necessity of any 
delay.
    (c) Law enforcement exception. If a law enforcement official 
determines that a notification, notice, or posting required under this 
Part would impede a criminal investigation or cause damage to national 
security, such notification, notice, or posting shall be delayed. This 
paragraph shall be implemented in the same manner as provided under 45 
CFR 164.528(a)(2), in the case of a disclosure covered under such 
section.



Sec.318.5  Methods of notice.

    (a) Individual notice. A vendor of personal health records or PHR 
related entity that discovers a breach of security shall provide notice 
of such breach to an individual promptly, as described in Sec.318.4, 
and in the following form:
    (1) Written notice, by first-class mail to the individual at the 
last known address of the individual, or by email, if the individual is 
given a clear, conspicuous, and reasonable opportunity to receive 
notification by first-class mail, and the individual does not exercise 
that choice. If the individual is deceased, the vendor of personal 
health records or PHR related entity that discovered the breach must 
provide such notice to the next of kin of the individual if the 
individual had provided contact information for his or her next of kin, 
along with authorization to contact them. The notice may be provided in 
one or more mailings as information is available.
    (2) If, after making reasonable efforts to contact all individuals 
to whom notice is required under Sec.318.3(a), through the means 
provided in paragraph (a)(1) of this section, the vendor of personal 
health records or PHR related entity finds that contact information for 
ten or more individuals is insufficient or out-of-date, the vendor of 
personal health records or PHR related entity

[[Page 450]]

shall provide substitute notice, which shall be reasonably calculated to 
reach the individuals affected by the breach, in the following form:
    (i) Through a conspicuous posting for a period of 90 days on the 
home page of its Web site; or
    (ii) In major print or broadcast media, including major media in 
geographic areas where the individuals affected by the breach likely 
reside. Such a notice in media or web posting shall include a toll-free 
phone number, which shall remain active for at least 90 days, where an 
individual can learn whether or not the individual's unsecured PHR 
identifiable health information may be included in the breach.
    (3) In any case deemed by the vendor of personal health records or 
PHR related entity to require urgency because of possible imminent 
misuse of unsecured PHR identifiable health information, that entity may 
provide information to individuals by telephone or other means, as 
appropriate, in addition to notice provided under paragraph (a)(1) of 
this section.
    (b) Notice to media. A vendor of personal health records or PHR 
related entity shall provide notice to prominent media outlets serving a 
State or jurisdiction, following the discovery of a breach of security, 
if the unsecured PHR identifiable health information of 500 or more 
residents of such State or jurisdiction is, or is reasonably believed to 
have been, acquired during such breach.
    (c) Notice to FTC. Vendors of personal health records and PHR 
related entities shall provide notice to the Federal Trade Commission 
following the discovery of a breach of security. If the breach involves 
the unsecured PHR identifiable health information of 500 or more 
individuals, then such notice shall be provided as soon as possible and 
in no case later than ten business days following the date of discovery 
of the breach. If the breach involves the unsecured PHR identifiable 
health information of fewer than 500 individuals, the vendor of personal 
health records or PHR related entity may maintain a log of any such 
breach, and submit such a log annually to the Federal Trade Commission 
no later than 60 calendar days following the end of the calendar year, 
documenting breaches from the preceding calendar year. All notices 
pursuant to this paragraph shall be provided according to instructions 
at the Federal Trade Commission's Web site.



Sec.318.6  Content of notice.

    Regardless of the method by which notice is provided to individuals 
under Sec.318.5 of this part, notice of a breach of security shall be 
in plain language and include, to the extent possible, the following:
    (a) A brief description of what happened, including the date of the 
breach and the date of the discovery of the breach, if known;
    (b) A description of the types of unsecured PHR identifiable health 
information that were involved in the breach (such as full name, Social 
Security number, date of birth, home address, account number, or 
disability code);
    (c) Steps individuals should take to protect themselves from 
potential harm resulting from the breach;
    (d) A brief description of what the entity that suffered the breach 
is doing to investigate the breach, to mitigate harm, and to protect 
against any further breaches; and
    (e) Contact procedures for individuals to ask questions or learn 
additional information, which shall include a toll-free telephone 
number, an email address, Web site, or postal address.



Sec.318.7  Enforcement.

    A violation of this part shall be treated as an unfair or deceptive 
act or practice in violation of a regulation under Sec.18(a)(1)(B) of 
the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)) regarding 
unfair or deceptive acts or practices.



Sec.318.8  Effective date.

    This part shall apply to breaches of security that are discovered on 
or after September 24, 2009.



Sec.318.9  Sunset.

    If new legislation is enacted establishing requirements for 
notification in the case of a breach of security that apply to entities 
covered by this part, the provisions of this part shall not

[[Page 451]]

apply to breaches of security discovered on or after the effective date 
of regulations implementing such legislation.



PART 320_DISCLOSURE REQUIREMENTS FOR DEPOSITORY INSTITUTIONS LACKING
FEDERAL DEPOSIT INSURANCE--Table of Contents



    Authority: 12 U.S.C. 1831t; 15 U.S.C. 41 et seq.

    Source: 77 FR 22203, Apr. 13, 2012, unless otherwise noted.



Sec.320.1  Cross-reference.

    The rules formerly at 16 CFR part 320 have been republished by the 
Consumer Financial Protection Bureau at 12 CFR part 1009, ``Disclosure 
Requirements for Depository Institutions Lacking Federal Deposit 
Insurance (Regulation I).''



PART 321_MORTGAGE ACTS AND PRACTICES_ADVERTISING--Table of Contents



    Authority: Pub. L. 111-8, section 626, 123 Stat. 524, as amended by 
Pub. L. 111-24, section 511, 123 Stat. 1734.

    Source: 77 FR 22203, Apr. 13, 2012, unless otherwise noted.



Sec.321.1  Cross-reference.

    The rules formerly at 16 CFR part 321 have been republished by the 
Consumer Financial Protection Bureau at 12 CFR part 1014, ``Mortgage 
Acts and Practices Advertising (Regulation N).''



PART 322_MORTGAGE ASSISTANCE RELIEF SERVICES--Table of Contents



    Authority: Pub. L. 111-8, section 626, 123 Stat. 524, as amended by 
Pub. L. 111-24, section 511, 123 Stat. 1734.

    Source: 77 FR 22203, Apr. 13, 2012, unless otherwise noted.



Sec.322.1  Cross-reference.

    The rules formerly at 16 CFR part 322 have been republished by the 
Consumer Financial Protection Bureau at 12 CFR part 1015, ``Mortgage 
Assistance Relief Services (Regulation O).''

[[Page 452]]



                   SUBCHAPTER D_TRADE REGULATION RULES





PART 408_UNFAIR OR DECEPTIVE ADVERTISING AND LABELING OF CIGARETTES
IN RELATION TO THE HEALTH HAZARDS OF SMOKING--Table of Contents



    Cross Reference: For a statement of basis and purpose of Trade 
Regulation Rule, see 29 FR 8325 of July 2, 1964.

[30 FR 9485, July 29, 1965]



PART 423_CARE LABELING OF TEXTILE WEARING APPAREL AND CERTAIN PIECE 
GOODS AS AMENDED--Table of Contents



Sec.
423.1 Definitions.
423.2 Terminology.
423.3 What this regulation does.
423.4 Who is covered.
423.5 Unfair or deceptive acts or practices.
423.6 Textile wearing apparel.
423.7 Certain piece goods.
423.8 Exemptions.
423.9 Conflict with flammability standards.
423.10 Stayed or invalid parts.

Appendix A to Part 423--Glossary of Standard Terms

    Authority: 38 Stat. 717, as amended; (15 U.S.C. 41, et seq.)

    Source: 48 FR 22743, May 20, 1983; 48 FR 24869, June 3, 1983, unless 
otherwise noted.



Sec.423.1  Definitions.

    (a) Care label means a permanent label or tag, containing regular 
care information and instructions, that is attached or affixed in such a 
manner that it will not become separated from the product and will 
remain legible during the useful life of the product.
    (b) Certain Piece Goods means textile products sold by the piece 
from bolts or rolls for the purpose of making home sewn textile wearing 
apparel. This includes remnants, the fiber content of which is known, 
that are cut by or for a retailer but does not include manufacturers' 
remnants, up to ten yards long, that are clearly and conspicuously 
marked pound goods or fabrics of undetermined origin (i.e., fiber 
content is not known and cannot be easily ascertained) and trim, up to 
five inches wide.
    (c) Dryclean means a commercial process by which soil is removed 
from products or specimens in a machine which uses any common organic 
solvent (e.g. petroleum, perchlorethylene, fluorocarbon). The process 
may also include adding moisture to the solvent, up to 75% relative 
humidity, hot tumble drying up to 160 degrees F (71 degrees C) and 
restoration by steam press or steam-air finishing.
    (d) Machine Wash means a process by which soil is removed from 
products in a specially designed machine using water, detergent or soap 
and agitation. When no temperature is given, e.g., warm or cold, hot 
water up to 145 degrees F (63 degrees C) can be regularly used.
    (e) Regular Care means customary and routine care, not spot care.
    (f) Textile Product means any commodity, woven, knit or otherwise 
made primarily of fiber, yarn or fabric and intended for sale or resale, 
requiring care and maintenance to effectuate ordinary use and enjoyment.
    (g) Textile Wearing Apparel means any finished garment or article of 
clothing made from a textile product that is customarily used to cover 
or protect any part of the body, including hosiery, excluding footwear, 
gloves, hats or other articles used exclusively to cover or protect the 
head or hands.

[48 FR 22743, May 20, 1983; 48 FR 24869, June 3, 1983, as amended at 65 
FR 47275, Aug. 2, 2000]



Sec.423.2  Terminology.

    (a) Any appropriate terms may be used on care labels or care 
instructions so long as they clearly and accurately describe regular 
care procedures and otherwise fulfill the requirements of this 
regulation.
    (b) Any appropriate symbols may be used on care labels or care 
instructions, in addition to the required appropriate terms so long as 
the terms fulfill the requirements of this part. See Sec.423.8(g) for 
conditional exemption allowing the use of symbols without terms.

[[Page 453]]

    (c) The terminology set forth in appendix A may be used to fulfill 
the requirements of this regulation.

[48 FR 22743, May 20, 1983; 48 FR 24869, June 3, 1983; 62 FR 29008, May 
29, 1997]



Sec.423.3  What this regulation does.

    This regulation requires manufacturers and importers of textile 
wearing apparel and certain piece goods, in or affecting commerce, as 
``commerce'' is defined in the Federal Trade Commission Act, to provide 
regular care instructions at the time such products are sold to 
purchasers through the use of care labels or other methods described in 
this rule.



Sec.423.4  Who is covered.

    Manufacturers and importers of textile wearing apparel and certain 
piece goods are covered by this regulation. This includes any person or 
organization that directs or controls the manufacture or importation of 
covered products.



Sec.423.5  Unfair or deceptive acts or practices.

    (a) Textile wearing apparel and certain piece goods. In connection 
with the sale, in or affecting commerce, of textile wearing apparel and 
certain piece goods, it is an unfair or deceptive act or practice for a 
manufacturer or importer:
    (1) To fail to disclose to a purchaser, prior to sale, instructions 
which prescribe a regular care procedure necessary for the ordinary use 
and enjoyment of the product;
    (2) To fail to warn a purchaser, prior to sale, when the product 
cannot be cleaned by any cleaning procedure, without being harmed;
    (3) To fail to warn a purchaser, prior to sale, when any part of the 
prescribed regular care procedure, which a consumer or professional 
cleaner could reasonably be expected to use, would harm the product or 
others being cleaned with it;
    (4) To fail to provide regular care instructions and warnings, 
except as to piece goods, in a form that can be referred to by the 
consumer throughout the useful life of the product;
    (5) To fail to possess, prior to sale, a reasonable basis for all 
regular care information disclosed to the purchaser.
    (b) Violations of this regulation. The Commission has adopted this 
regulation to prevent the unfair or deceptive acts or practices, defined 
in paragraph (a) of this section. Each manufacturer or importer covered 
by this regulation must comply with the requirements in Sec. Sec.423.2 
and 423.6 through 423.8 of this regulation. Any manufacturer or importer 
who complies with the requirements of Sec. Sec.423.2 and 423.6 through 
423.8 does not violate this regulation.

(Approved by the Office of Management and Budget under control number 
3084-0046)



Sec.423.6  Textile wearing apparel.

    This section applies to textile wearing apparel.
    (a) Manufacturers and importers must attach care labels so that they 
can be seen or easily found when the product is offered for sale to 
consumers. If the product is packaged, displayed, or folded so that 
customers cannot see or easily find the label, the care information must 
also appear on the outside of the package or on a hang tag fastened to 
the product.
    (b) Care labels must state what regular care is needed for the 
ordinary use of the product. In general, labels for textile wearing 
apparel must have either a washing instruction or a drycleaning 
instruction. If a washing instruction is included, it must comply with 
the requirements set forth in paragraph (b)(1) of this section. If a 
drycleaning instruction is included, it must comply with the 
requirements set forth in paragraph (b)(2) of this section. If either 
washing or drycleaning can be used on the product, the label need have 
only one of these instructions. If the product cannot be cleaned by any 
available cleaning method without being harmed, the label must so state. 
[For example, if a product would be harmed both by washing and by 
drycleaning, the label might say ``Do not wash--do not dryclean,'' or 
``Cannot be successfully cleaned.''] The instructions for washing and 
drycleaning are as follows:
    (1) Washing, drying, ironing, bleaching and warning instructions 
must follow these requirements:

[[Page 454]]

    (i) Washing. The label must state whether the product should be 
washed by hand or machine. The label must also state a water 
temperature--in terms such as cold, warm, or hot--that may be used. 
However, if the regular use of hot water up to 145 degrees F (63 degrees 
C) will not harm the product, the label need not mention any water 
temperature. [For example, Machine wash means hot, warm or cold water 
can be used.]
    (ii) Drying. The label must state whether the product should be 
dried by machine or by some other method. If machine drying is called 
for, the label must also state a drying temperature that may be used. 
However, if the regular use of a high temperature will not harm the 
product, the label need not mention any drying temperature. [For 
example, Tumble dry means that a high, medium, or low temperature 
setting can be used.]
    (iii) Ironing. Ironing must be mentioned on a label only if it will 
be needed on a regular basis to preserve the appearance of the product, 
or if it is required under paragraph (b)(1)(v) of this section, 
Warnings. If ironing is mentioned, the label must also state an ironing 
temperature that may be used. However, if the regular use of a hot iron 
will not harm the product, the label need not mention any ironing 
temperature.
    (iv) Bleaching. (A) If all commercially available bleaches can 
safely be used on a regular basis, the label need not mention bleaching.
    (B) If all commercially available bleaches would harm the product 
when used on a regular basis, the label must say ``No bleach'' or ``Do 
not bleach.''
    (C) If regular use of chlorine bleach would harm the product, but 
regular use of a non-chlorine bleach would not, the label must say 
``Only non-chlorine bleach, when needed.''
    (v) Warnings. (A) If there is any part of the prescribed washing 
procedure which consumers can reasonably be expected to use that would 
harm the product or others being washed with it in one or more washings, 
the label must contain a warning to this effect. The warning must use 
words ``Do not,'' ``No,'' ``Only,'' or some other clear wording. [For 
example, if a shirt is not colorfast, its label should state ``Wash with 
like colors'' or ``Wash separately.'' If a pair of pants will be harmed 
by ironing, its label should state ``Do not iron.'']
    (B) Warnings are not necessary for any procedure that is an 
alternative to the procedure prescribed on the label. [For example, if 
an instruction states ``Dry flat,'' it is not necessary to give the 
warning ``Do not tumble dry.'']
    (2) Drycleaning--(i) General. If a drycleaning instruction is 
included on the label, it must also state at least one type of solvent 
that may be used. However, if all commercially available types of 
solvent can be used, the label need not mention any types of solvent. 
The terms ``Drycleanable'' or ``Commercially Dryclean'' may not be used 
in an instruction. [For example, if drycleaning in perchlorethylene 
would harm a coat, the label might say ``Professionally dryclean: 
fluorocarbon or petroleum.'']
    (ii) Warnings. (A) If there is any part of the drycleaning procedure 
which consumers or drycleaners can reasonably be expected to use that 
would harm the product or others being cleaned with it, the label must 
contain a warning to this effect. The warning must use the words ``Do 
not,'' ``No,'' ``Only,'' or some other clear wording. [For example, the 
drycleaning process normally includes moisture addition to solvent up to 
75% relative humidity, hot tumble drying up to 160 degrees F and 
restoration by steam press or steam-air finish. If a product can be 
drycleaned in all solvents but steam should not be used, its label 
should state ``Professionally dryclean. No steam.'']
    (B) Warnings are not necessary to any procedure which is an 
alternative to the procedure prescribed on the label. [For example, if 
an instruction states ``Professionally dryclean, fluorocarbon,'' it is 
not necessary to give the warning ``Do not use perchlorethylene.'']
    (c) A manufacturer or importer must establish a reasonable basis for 
care information by processing prior to sale:

[[Page 455]]

    (1) Reliable evidence that the product was not harmed when cleaned 
reasonably often according to the instructions on the label, including 
instructions when silence has a meaning. [For example, if a shirt is 
labeled ``Machine wash. Tumble dry. Cool iron.,'' the manufacturer or 
importer must have reliable proof that the shirt is not harmed when 
cleaned by machine washing (in hot water), with any type of bleach, 
tumble dried (at a high setting), and ironed with a cool iron]; or
    (2) Reliable evidence that the product or a fair sample of the 
product was harmed when cleaned by methods warned against on the label. 
However, the manufacturer or importer need not have proof of harm when 
silence does not constitute a warning. [For example, if a shirt is 
labeled ``Machine wash warm. Tumble dry medium'', the manufacturer need 
not have proof that the shirt would be harmed if washed in hot water or 
dried on high setting]; or
    (3) Reliable evidence, like that described in paragraph (c)(1) or 
(2) of this section, for each component part of the product in 
conjunction with reliable evidence for the garment as a whole; or
    (4) Reliable evidence that the product or a fair sample of the 
product was successfully tested. The tests may simulate the care 
suggested or warned against on the label; or
    (5) Reliable evidence of current technical literature, past 
experience, or the industry expertise supporting the care information on 
the label; or
    (6) Other reliable evidence.

[48 FR 22743, May 20, 1983; 48 FR 24869, June 3, 1983, as amended at 65 
FR 47275, Aug. 2, 2000]



Sec.423.7  Certain piece goods.

    This section applies to certain piece goods.
    (a) Manufacturers and importers of certain piece goods must provide 
care information clearly and conspicuously on the end of each bolt or 
roll.
    (b) Care information must say what regular care is needed for the 
ordinary use of the product, pursuant to the instructions set forth in 
Sec.423.6. Care information on the end of the bolt need only address 
information applicable to the fabric.



Sec.423.8  Exemptions.

    (a) Any item of textile wearing apparel, without pockets, that is 
totally reversible (i.e., the product is designed to be used with either 
side as the outer part or face) is exempt from the care label 
requirement.
    (b) Manufacturers or importers can ask for an exemption from the 
care label requirement for any other textile wearing apparel product or 
product line, if the label would harm the appearance or usefulness of 
the product. The request must be made in writing to the Secretary of the 
Commission. The request must be accompanied by a labeled sample of the 
product and a full statement explaining why the request should be 
granted.
    (c) If an item is exempt from care labeling under paragraph (a) or 
(b), of this section the consumers still must be given the required care 
information for the product. However, the care information can be put on 
a hang tag, on the package, or in some other conspicuous place, so that 
consumers will be able to see the care information before buying the 
product.
    (d) Manufacturers and importers of products covered by Sec.423.5 
are exempt from the requirement for a permanent care label if the 
product can be cleaned safely under the harshest procedures. This 
exemption is available only if there is reliable proof that all of the 
following washing and drycleaning procedures can safely be used on a 
product:
    (1) Machine washing in hot water;
    (2) Machine drying at a high setting;
    (3) Ironing at a hot setting;
    (4) Bleaching with all commercially available bleaches;
    (5) Drycleaning with all commercially available solvents. In such 
case, the statement ``wash or dry clean, any normal method'' must appear 
on a hang tag, on the package, or in some other conspicuous place, so 
that consumers will be able to see the statement before buying the 
product.

If a product meets the requirements outlined above, it is automatically 
exempt from the care label requirement. It is not necessary to file a 
request for this exemption.
    (e) Manufacturers and importers need not provide care information 
with

[[Page 456]]

products sold to institutional buyers for commercial use.
    (f) All exemption granted under Sec.423.1(c) (1) or (2) or the 
Care Labeling Rule issued on December 9, 1971, will continue to be in 
effect if the product still meets the standards on which the original 
exemption was based. Otherwise, the exemption is automatically revoked.
    (g) The symbol system developed by the American Society for Testing 
and Materials (ASTM) and designated as ASTM Standard D5489-96c Guide to 
Care Symbols for Care Instructions on Consumer Textile Products may be 
used on care labels or care instructions in lieu of terms so long as the 
symbols fulfill the requirements of this part. In addition, symbols from 
the symbol system designated as ASTM Standard D5489-96c may be combined 
with terms so long as the symbols and terms used fulfill the 
requirements of this part. Provided, however, that for the 18-month 
period beginning on July 1, 1997, such symbols may be used on care 
labels in lieu of terms only if an explanation of the meaning of the 
symbols used on the care label in terms is attached to, or provided 
with, the item of textile wearing apparel. This incorporation by 
reference was approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of ASTM 
Standard D5489-96c Guide to Care Symbols for Care Instructions on 
Textile Products may be obtained from the American Society for Testing 
and Materials, 100 Barr Harbor Drive, West Conshohocken, PA 19428, or 
may be inspected at the Federal Trade Commission, room 130, 600 
Pennsylvania Avenue, NW., Washington, DC, or at the National Archives 
and Records Administration (NARA). For information on the availability 
of this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.

(15 U.S.C. 41-58)

[48 FR 22743, May 20, 1983; 48 FR 24869, June 3, 1983, as amended at 62 
FR 29008, May 29, 1997; 69 FR 18803, Apr. 9, 2004]



Sec.423.9  Conflict with flammability standards.

    If there is a conflict between this regulation and any regulations 
issued under the Flammable Fabrics Act, the Flammable Fabics regulation 
govern over this one.



Sec.423.10  Stayed or invalid parts.

    If any part of this regulation is stayed or held invalid, the rest 
of it will stay in force.



         Sec. Appendix A to Part 423--Glossary of Standard Terms

1. Washing, Machine Methods:
    a. ``Machine wash''--a process by which soil may be removed from 
products or specimens through the use of water, detergent or soap, 
agitation, and a machine designed for this purpose. When no temperature 
is given, e.g., ``warm'' or ``cold,'' hot water up to 145 degrees F (63 
degrees C) can be regularly used.
    b. ``Hot''--initial water temperature ranging from 112 to 145 
degrees F [45 to 63 degrees C].
    c. ``Warm''--initial water temperature ranging from 87 to 111 
degrees F [31 to 44 degrees C].
    d. ``Cold''--initial water temperature up to 86 degrees F [30 
degrees C].
    e. ``Do not have commercially laundered''--do not employ a laundry 
which uses special formulations, sour rinses, extermely large loads or 
extermely high temperatures or which otherwise is employed for 
commercial, industrial or institutional use. Employ laundering methods 
designed for residential use or use in a self-service establishment.
    f. ``Small load''--smaller than normal washing load.
    g. ``Delicate cycle'' or ``gentle cycle''--slow agitation and 
reduced time.
    h. ``Durable press cycle'' or ``permanent press cycle''--cool down 
rinse or cold rinse before reduced spinning.
    i. ``Separately''--alone.
    j. ``With like colors''--with colors of similar hue and intensity.
    k. ``Wash inside out''--turn product inside out to protect face of 
fabric.
    l. ``Warm rinse''--initial water temperature setting 90[deg] to 110 
[deg]F (32[deg] to 43 [deg]C).
    m. ``Cold rinse''--initial water temperature setting same as cold 
water tap up to 85 [deg]F (29 [deg]C).
    n. ``Rinse thoroughly''--rinse several times to remove detergent, 
soap, and bleach.
    o. ``No spin'' or ``Do not spin''--remove material start of final 
spin cycle.
    p. ``No wring'' or ``Do not wring''--do not use roller wringer, nor 
wring by hand.


[[Page 457]]


2. Washing, Hand Methods:
    a. ``Hand wash''--a process by which soil may be manually removed 
from products or specimens through the use of water, detergent or soap, 
and gentle squeezing action. When no temperature is given, e.g., 
``warm'' or ``cold'', hot water up to 150 [deg]F (66 [deg]C) can be 
regularly used.
    b. ``Warm''--initial water temperature 90[deg] to 110 [deg]F 
(32[deg] to 43 [deg]C) (hand comfortable).
    c. ``Cold''--initial water temperature same as cold water tap up to 
85 [deg]F (29 [deg]C).
    d. ``Separately''--alone.
    e. ``With like colors''--with colors of similar hue and intensity.
    f. ``No wring or twist''--handle to avoid wrinkles and distortion.
    g. ``Rinse thoroughly''--rinse several times to remove detergent, 
soap, and bleach.
    h. ``Damp wipe only''--surface clean with damp cloth or sponge.

3. Drying, All Methods:

    a. ``Tumble dry''--use machine dryer. When no temperature setting is 
given, machine drying at a hot setting may be regularly used.
    b. ``Medium''--set dryer at medium heat.
    c. ``Low''--set dryer at low heat.
    d. ``Durable press'' or ``Permanent press''--set dryer at permanent 
press setting.
    e. ``No heat''--set dryer to operate without heat.
    f. ``Remove promptly''--when items are dry, remove immediately to 
prevent wrinkling.
    g. ``Drip dry''--hang dripping wet with or without hand shaping and 
smoothing.
    h. ``Line dry''--hang damp from line or bar in or out of doors.
    i. ``Line dry in shade''--dry away from sun.
    j. ``Line dry away from heat''--dry away from heat.
    k. ``Dry flat''--lay out horizontally for drying.
    l. ``Block to dry''--reshape to original dimensions while drying.
    m. ``Smooth by hand''--by hand, while wet, remove wrinkles, 
straighten seams and facings.

4. Ironing and Pressing:

    a. ``Iron''--Ironing is needed. When no temperature is given iron at 
the highest temperature setting may be regularly used.
    b. ``Warm iron''--medium temperature setting.
    c. ``Cool iron''--lowest temperature setting.
    d. ``Do not iron''--item not to be smoothed or finished with an 
iron.
    e. ``Iron wrong side only''--article turned inside out for ironing 
or pressing.
    f. ``No steam'' or ``Do not steam''--steam in any form not to be 
used.
    g. ``Steam only''--steaming without contact pressure.
    h. ``Steam press'' or ``Steam iron''--use iron at steam setting.
    i. ``Iron damp''--articles to be ironed should feel moist.
    j. ``Use press cloth''--use a dry or a damp cloth between iron and 
fabric.

5. Bleaching:

    a. ``Bleach when needed''--all bleaches may be used when necessary.
    b. ``No bleach'' or ``Do not bleach''--no bleaches may be used.
    c. ``Only non-chlorine bleach, when needed''--only the bleach 
specified may be used when necessary. Chlorine bleach may not be used.

6. Washing or Drycleaning:

    a. ``Wash or dryclean, any normal method''--can be machine washed in 
hot water, can be machine dried at a high setting, can be ironed at a 
hot setting, can be bleached with all commercially available bleaches 
and can be drycleaned with all commercially available solvents.

7. Drycleaning, All Procedures:

    a. ``Dryclean''--a process by which soil may be removed from 
products or specimens in a machine which uses any common organic solvent 
(for example, petroleum, perchlorethylene, fluorocarbon) located in any 
commercial establishment. The process may include moisture addition to 
solvent up to 75% relative humidity, hot tumble drying up to 160 [deg]F 
(71 [deg]C) and restoration by steam press or steam-air finishing.
    b. ``Professionally dryclean''--use the drycleaning process but 
modified to ensure optimum results either by a drycleaning attendant or 
through the use of a drycleaning machine which permits such 
modifications or both. Such modifications or special warnings must be 
included in the care instruction.
    c. ``Petroleum'', ``Fluorocarbon'', or ``Perchlorethylene''--employ 
solvent(s) specified to dryclean the item.
    d. ``Short cycle''--reduced or minimum cleaning time, depending upon 
solvent used.
    e. ``Minimum extraction''--least possible extraction time.
    f. ``Reduced moisture'' or ``Low moisture''--decreased relative 
humidity.
    g. ``No tumble'' or ``Do not tumble''--do not tumble dry.
    h. ``Tumble warm''--tumble dry up to 120 [deg]F (49 [deg]C).
    i. ``Tumble cool''--tumble dry at room temperature.
    j. ``Cabinet dry warm''--cabinet dry up to 120 [deg]F (49 [deg]C).
    k. ``Cabinet dry cool''--cabinet dry at room temperature.
    l. ``Steam only''--employ no contact pressure when steaming.
    m. ``No steam'' or ``Do not steam''--do not use steam in pressing, 
finishing, steam cabinets or wands.


[[Page 458]]


8. Leather and Suede Cleaning:
    a. ``Leather clean''--have cleaned only by a professional cleaner 
who uses special leather or suede care methods.

[48 FR 22743, May 20, 1983; 48 FR 24868, June 3, 1983; 48 FR 27225, June 
14, 1983, as amended at 65 FR 47275, Aug. 2, 2000]



PART 424_RETAIL FOOD STORE ADVERTISING AND MARKETING PRACTICES--
Table of Contents



Sec.
424.1 Unfair or deceptive acts or practices.
424.2 Defenses.

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



Sec.424.1  Unfair or deceptive acts or practices.

    In connection with the sale or offering for sale by retail food 
stores of food, grocery products or other merchandise to consumers in or 
affecting commerce as ``commerce'' is defined in section 4 of the 
Federal Trade Commission Act, 15 U.S.C. 44, it is an unfair or deceptive 
act or practice in violation of section 5(a)(1) of the Federal Trade 
Commission Act, 15 U.S.C. 45(a)(1), to offer any such products for sale 
at a stated price, by means of an advertisement disseminated in an area 
served by any stores which are covered by the advertisement, if those 
stores do not have the advertised products in stock and readily 
available to customers during the effective period of the advertisement, 
unless the advertisement clearly and adequately discloses that supplies 
of the advertised products are limited or the advertised products are 
available only at some outlets.

[54 FR 35467, Aug. 28, 1989, as amended at 79 FR 70056, Nov. 25, 2014]



Sec.424.2  Defenses.

    No violation of Sec.424.1 shall be found if:
    (a) The advertised products were ordered in adequate time for 
delivery in quantities sufficient to meet reasonably anticipated demand;
    (b) The food retailer offers a ``raincheck'' for the advertised 
products;
    (c) The food retailer offers at the advertised price or at a 
comparable price reduction a similar product that is at least comparable 
in value to the advertised product; or
    (d) The food retailer offers other compensation at least equal to 
the advertised value.

[54 FR 35467, Aug. 28, 1989, as amended at 79 FR 70056, Nov. 25, 2014]



PART 425_USE OF PRENOTIFICATION NEGATIVE OPTION PLANS--
Table of Contents





Sec.425.1  The rule.

    (a) In connection with the sale, offering for sale, or distribution 
of goods and merchandise in or affecting commerce, as ``commerce'' is 
defined in the Federal Trade Commission Act, it is an unfair or 
deceptive act or practice, for a seller in connection with the use of 
any negative option plan to fail to comply with the following 
requirements:
    (1) Promotional material shall clearly and conspicuously disclose 
the material terms of the plan, including:
    (i) That aspect of the plan under which the subscriber must notify 
the seller, in the manner provided for by the seller, if he does not 
wish to purchase the selection;
    (ii) Any obligation assumed by the subscriber to purchase a minimum 
quantity of merchandise;
    (iii) The right of a contract-complete subscriber to cancel his 
membership at any time;
    (iv) Whether billing charges will include an amount for postage and 
handling;
    (v) A disclosure indicating that the subscriber will be provided 
with at least ten (10) days in which to mail any form, contained in or 
accompanying an announcement identifying the selection, to the seller;
    (vi) A disclosure that the seller will credit the return of any 
selections sent to a subscriber, and guarantee to the Postal Service or 
the subscriber postage to return such selections to the seller when the 
announcement and form are not received by the subscriber in time to 
afford him at least ten (10) days in which to mail his form to the 
seller;
    (vii) The frequency with which the announcements and forms will be 
sent

[[Page 459]]

to the subscriber and the maximum number of announcements and forms 
which will be sent to him during a 12-month period.
    (2) Prior to sending any selection, the seller shall mail to its 
subscribers, within the time specified by paragraph (a)(3) of this 
section:
    (i) An announcement identifying the selection;
    (ii) A form, contained in or accompanying the announcement, clearly 
and conspicuously disclosing that the subscriber will receive the 
selection identified in the announcement unless he instructs the seller 
that he does not want the selection, designating a procedure by which 
the form may be used for the purpose of enabling the subscriber so to 
instruct the seller, and specifying either the return date or the 
mailing date.
    (3) The seller shall mail the announcement and form either at least 
twenty (20) days prior to the return date or at least fifteen (15) days 
prior to the mailing date, or provide a mailing date at least ten (10) 
days after receipt by the subscriber, provided, however, that whichever 
system the seller chooses for mailing the announcement and form, such 
system must provide the subscriber with at least ten (10) days in which 
to mail his form.
    (b) In connection with the sale or distribution of goods and 
merchandise in or affecting commerce, as ``commerce'' is defined in the 
Federal Trade Commission Act, it shall constitute an unfair or deceptive 
act or practice for a seller in connection with the use of any negative 
option plan to:
    (1) Refuse to credit, for the full invoiced amount thereof, the 
return of any selection sent to a subscriber, and to guarantee to the 
Postal Service or the subscriber postage adequate to return such 
selection to the seller, when:
    (i) The selection is sent to a subscriber whose form indicating that 
he does not want to receive the selection was received by the seller by 
the return date or was mailed by the subscriber by the mailing date;
    (ii) Such form is received by the seller after the return date, but 
has been mailed by the subscriber and postmarked at least 3 days prior 
to the return date;
    (iii) Prior to the date of shipment of such selection, the seller 
has received from a contract-complete subscriber, a written notice of 
cancellation of membership adequately identifying the subscriber; 
however, this provision is applicable only to the first selection sent 
to a canceling contract-complete subscriber after the seller has 
received written notice of cancellation. After the first selection 
shipment, all selection shipments thereafter are deemed to be unordered 
merchandise pursuant to section 3009 of the Postal Reorganization Act of 
1970, as adopted by the Federal Trade Commission in its public notice, 
dated September 11, 1970;
    (iv) The announcement and form are not received by the subscriber in 
time to afford him at least ten (10) days in which to mail his form.
    (2) Fail to notify a subscriber known by the seller to be within any 
of the circumstances set forth in paragraphs (b)(1)(i) through (iv) of 
this section, that if the subscriber elects, the subscriber may return 
the selection with return postage guaranteed and receive a credit to his 
account.
    (3) Refuse to ship within 4 weeks after receipt of an order 
merchandise due subscribers as introductory and bonus merchandise, 
unless the seller is unable to deliver the merchandise originally 
offered due to unanticipated circumstances beyond the seller's control 
and promptly makes a reasonably equivalent alternative offer. However, 
where the subscriber refuses to accept alternatively offered 
introductory merchandise, but instead insists upon termination of his 
membership due to the seller's failure to provide the subscriber with 
his originally requested introductory merchandise, or any portion 
thereof, the seller must comply with the subscriber's request for 
cancellation of membership, provided the subscriber returns to the 
seller any introductory merchandise which already may have been sent 
him.
    (4) Fail to terminate promptly the membership of a properly 
identified contract-complete subscriber upon his written request.
    (5) Ship, without the express consent of the subscriber, substituted 
merchandise for that ordered by the subscriber.
    (c) For the purposes of this part:

[[Page 460]]

    (1) Negative option plan refers to a contractual plan or arrangement 
under which a seller periodically sends to subscribers an announcement 
which identifies merchandise (other than annual supplements to 
previously acquired merchandise) it proposes to send to subscribers to 
such plan, and the subscribers thereafter receive and are billed for the 
merchandise identified in each such announcement, unless by a date or 
within a time specified by the seller with respect to each such 
announcement the subscribers, in conformity with the provisions of such 
plan, instruct the seller not to send the identified merchandise.
    (2) Subscriber means any person who has agreed to receive the 
benefits of, and assume the obligations entailed in, membership in any 
negative option plan and whose membership in such negative option plan 
has been approved and accepted by the seller.
    (3) Contract-complete subscriber refers to a subscriber who has 
purchased the minimum quantity of merchandise required by the terms of 
membership in a negative option plan.
    (4) Promotional material refers to an advertisement containing or 
accompanying any device or material which a prospective subscriber sends 
to the seller to request acceptance or enrollment in a negative option 
plan.
    (5) Selection refers to the merchandise identified by a seller under 
any negative option plan as the merchandise which the subscriber will 
receive and be billed for, unless by the date, or within the period 
specified by the seller, the subscriber instructs the seller not to send 
such merchandise.
    (6) Announcement refers to any material sent by a seller using a 
negative option plan in which the selection is identified and offered to 
subscribers.
    (7) Form refers to any form which the subscriber returns to the 
seller to instruct the seller not to send the selection.
    (8) Return date refers to a date specified by a seller using a 
negative option plan as the date by which a form must be received by the 
seller to prevent shipment of the selection.
    (9) Mailing date refers to the time specified by a seller using a 
negative option plan as the time by or within which a form must be 
mailed by a subscriber to prevent shipment of the selection.

(38 Stat. 717, as amended; 15 U.S.C. 41-58)

[38 FR 4896; Feb. 22, 1973; 38 FR 6991, Mar. 15, 1973, as amended at 63 
FR 44562, Aug. 20, 1998]



PART 429_RULE CONCERNING COOLING-OFF PERIOD FOR SALES MADE AT HOMES
OR AT CERTAIN OTHER LOCATIONS--Table of Contents



Sec.
429.0 Definitions.
429.1 The Rule.
429.2 Effect on State laws and municipal ordinances.
429.3 Exemptions.

    Authority: Sections 1-23, FTC Act, 15 U.S.C. 41-58.



Sec.429.0  Definitions.

    For the purposes of this part the following definitions shall apply:
    (a) Door-to-Door Sale--A sale, lease, or rental of consumer goods or 
services in which the seller or his representative personally solicits 
the sale, including those in response to or following an invitation by 
the buyer, and the buyer's agreement or offer to purchase is made at a 
place other than the place of business of the seller (e.g., sales at the 
buyer's residence or at facilities rented on a temporary or short-term 
basis, such as hotel or motel rooms, convention centers, fairgrounds and 
restaurants, or sales at the buyer's workplace or in dormitory lounges), 
and which has a purchase price of $25 or more if the sale is made at the 
buyer's residence or a purchase price of $130 or more if the sale is 
made at locations other than the buyer's residence, whether under single 
or multiple contracts. The term door-to-door sale does not include a 
transaction:
    (1) Made pursuant to prior negotiations in the course of a visit by 
the buyer to a retail business establishment having a fixed permanent 
location where the goods are exhibited or the services are offered for 
sale on a continuing basis; or

[[Page 461]]

    (2) In which the consumer is accorded the right of rescission by the 
provisions of the Consumer Credit Protection Act (15 U.S.C. 1635) or 
regulations issued pursuant thereto; or
    (3) In which the buyer has initiated the contact and the goods or 
services are needed to meet a bona fide immediate personal emergency of 
the buyer, and the buyer furnishes the seller with a separate dated and 
signed personal statement in the buyer's handwriting describing the 
situation requiring immediate remedy and expressly acknowledging and 
waiving the right to cancel the sale within 3 business days; or
    (4) Conducted and consummated entirely by mail or telephone; and 
without any other contact between the buyer and the seller or its 
representative prior to delivery of the goods or performance of the 
services; or
    (5) In which the buyer has initiated the contact and specifically 
requested the seller to visit the buyer's home for the purpose of 
repairing or performing maintenance upon the buyer's personal property. 
If, in the course of such a visit, the seller sells the buyer the right 
to receive additional services or goods other than replacement parts 
necessarily used in performing the maintenance or in making the repairs, 
the sale of those additional goods or services would not fall within 
this exclusion; or
    (6) Pertaining to the sale or rental of real property, to the sale 
of insurance, or to the sale of securities or commodities by a broker-
dealer registered with the Securities and Exchange Commission.
    (b) Consumer Goods or Services--Goods or services purchased, leased, 
or rented primarily for personal, family, or household purposes, 
including courses of instruction or training regardless of the purpose 
for which they are taken.
    (c) Seller--Any person, partnership, corporation, or association 
engaged in the door-to-door sale of consumer goods or services.
    (d) Place of Business--The main or permanent branch office or local 
address of a seller.
    (e) Purchase Price--The total price paid or to be paid for the 
consumer goods or services, including all interest and service charges.
    (f) Business Day--Any calendar day except Sunday or any federal 
holiday (e.g., New Year's Day, Presidents' Day, Martin Luther King's 
Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, 
Veterans' Day, Thanksgiving Day, and Christmas Day.)

[60 FR 54186, Oct. 20, 1995, as amended at 80 FR 1332, Jan. 9, 2015]



Sec.429.1  The Rule.

    In connection with any door-to-door sale, it constitutes an unfair 
and deceptive act or practice for any seller to:
    (a) Fail to furnish the buyer with a fully completed receipt or copy 
of any contract pertaining to such sale at the time of its execution, 
which is in the same language, e.g., Spanish, as that principally used 
in the oral sales presentation and which shows the date of the 
transaction and contains the name and address of the seller, and in 
immediate proximity to the space reserved in the contract for the 
signature of the buyer or on the front page of the receipt if a contract 
is not used and in bold face type of a minimum size of 10 points, a 
statement in substantially the following form:

    ``You, the buyer, may cancel this transaction at any time prior to 
midnight of the third business day after the date of this transaction. 
See the attached notice of cancellation form for an explanation of this 
right.''


The seller may select the method of providing the buyer with the 
duplicate notice of cancellation form set forth in paragraph (b) of this 
section, provided however, that in the event of cancellation the buyer 
must be able to retain a complete copy of the contract or receipt. 
Furthermore, if both forms are not attached to the contract or receipt, 
the seller is required to alter the last sentence in the statement above 
to conform to the actual location of the forms.
    (b) Fail to furnish each buyer, at the time the buyer signs the 
door-to-door sales contract or otherwise agrees to buy consumer goods or 
services from the seller, a completed form in duplicate, captioned 
either ``NOTICE OF

[[Page 462]]

RIGHT TO CANCEL'' or ``NOTICE OF CANCELLATION,'' which shall (where 
applicable) contain in ten point bold face type the following 
information and statements in the same language, e.g., Spanish, as that 
used in the contract.

                         Notice of Cancellation

[enter date of transaction]

________________________________________________________________________
(Date)

    You may CANCEL this transaction, without any Penalty or Obligation, 
within THREE BUSINESS DAYS from the above date.
    If you cancel, any property traded in, any payments made by you 
under the contract or sale, and any negotiable instrument executed by 
you will be returned within TEN BUSINESS DAYS following receipt by the 
seller of your cancellation notice, and any security interest arising 
out of the transaction will be cancelled.
    If you cancel, you must make available to the seller at your 
residence, in substantially as good condition as when received, any 
goods delivered to you under this contract or sale, or you may, if you 
wish, comply with the instructions of the seller regarding the return 
shipment of the goods at the seller's expense and risk.
    If you do make the goods available to the seller and the seller does 
not pick them up within 20 days of the date of your Notice of 
Cancellation, you may retain or dispose of the goods without any further 
obligation. If you fail to make the goods available to the seller, or if 
you agree to return the goods to the seller and fail to do so, then you 
remain liable for performance of all obligations under the contract.
    To cancel this transaction, mail or deliver a signed and dated copy 
of this Cancellation Notice or any other written notice, or send a 
telegram, to [Name of seller], at [address of seller's place of 
business] NOT LATER THAN MIDNIGHT OF [date].
    I HEREBY CANCEL THIS TRANSACTION.
(Date)__________________________________________________________________
(Buyer's signature)_____________________________________________________

    (c) Fail, before furnishing copies of the ``Notice of Cancellation'' 
to the buyer, to complete both copies by entering the name of the 
seller, the address of the seller's place of business, the date of the 
transaction, and the date, not earlier than the third business day 
following the date of the transaction, by which the buyer may give 
notice of cancellation.
    (d) Include in any door-to-door contract or receipt any confession 
of judgment or any waiver of any of the rights to which the buyer is 
entitled under this section including specifically the buyer's right to 
cancel the sale in accordance with the provisions of this section.
    (e) Fail to inform each buyer orally, at the time the buyer signs 
the contract or purchases the goods or services, of the buyer's right to 
cancel.
    (f) Misrepresent in any manner the buyer's right to cancel.
    (g) Fail or refuse to honor any valid notice of cancellation by a 
buyer and within 10 business days after the receipt of such notice, to: 
(i) Refund all payments made under the contract or sale; (ii) return any 
goods or property traded in, in substantially as good condition as when 
received by the seller; (iii) cancel and return any negotiable 
instrument executed by the buyer in connection with the contract or sale 
and take any action necessary or appropriate to terminate promptly any 
security interest created in the transaction.
    (h) Negotiate, transfer, sell, or assign any note or other evidence 
of indebtedness to a finance company or other third party prior to 
midnight of the fifth business day following the day the contract was 
signed or the goods or services were purchased.
    (i) Fail, within 10 business days of receipt of the buyer's notice 
of cancellation, to notify the buyer whether the seller intends to 
repossess or to abandon any shipped or delivered goods.

[37 FR 22934, Oct. 26, 1972, as amended at 38 FR 30105, Nov. 1, 1973; 38 
FR 31828, Nov. 19, 1973; 53 FR 45459, Nov. 10, 1988; 60 FR 54186, Oct. 
20, 1995]



Sec.429.2  Effect on State laws and municipal ordinances.

    (a) The Commission is cognizant of the significant burden imposed 
upon door-to-door sellers by the various and often inconsistent State 
laws that provide the buyer the right to cancel a door-to-door sales 
transaction. However, it does not believe that this constitutes 
sufficient justification for preempting all of the provisions of such 
laws and the ordinances of the political subdivisions of the various 
States. The rulemaking record in this proceeding supports the view that 
the joint and

[[Page 463]]

coordinated efforts of both the Commission and State and local officials 
are required to insure that consumers who have purchased from a door-to-
door seller something they do not want, do not need, or cannot afford, 
be accorded a unilateral right to rescind, without penalty, their 
agreements to purchase those goods or services.
    (b) This part will not be construed to annul, or exempt any seller 
from complying with, the laws of any State or the ordinances of a 
political subdivision thereof that regulate door-to-door sales, except 
to the extent that such laws or ordinances, if they permit door-to-door 
selling, are directly inconsistent with the provisions of this part. 
Such laws or ordinances which do not accord the buyer, with respect to 
the particular transaction, a right to cancel a door-to-door sale that 
is substantially the same or greater than that provided in this part, 
which permit the imposition of any fee or penalty on the buyer for the 
exercise of such right, or which do not provide for giving the buyer a 
notice of the right to cancel the transaction in substantially the same 
form and manner provided for in this part, are among those which will be 
considered directly inconsistent.

[60 FR 54187, Oct. 20, 1995]



Sec.429.3  Exemptions.

    (a) The requirements of this part do not apply for sellers of 
automobiles, vans, trucks or other motor vehicles sold at auctions, tent 
sales or other temporary places of business, provided that the seller is 
a seller of vehicles with a permanent place of business.
    (b) The requirements of this part do not apply for sellers of arts 
or crafts sold at fairs or similar places.

[60 FR 54187, Oct. 20, 1995]



PART 432_POWER OUTPUT CLAIMS FOR AMPLIFIERS UTILIZED IN HOME
ENTERTAINMENT PRODUCTS--Table of Contents



Sec.
432.1 Scope.
432.2 Required disclosures.
432.3 Standard test conditions.
432.4 Optional disclosures.
432.5 Prohibited disclosures.
432.6 Liability for violation.

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

    Source: 39 FR 15387, May 3, 1974, unless otherwise noted.



Sec.432.1  Scope.

    (a) Except as provided in paragraph (b) of this section, this part 
shall apply whenever any power output (in watts or otherwise), power 
band or power frequency response, or distortion capability or 
characteristic is represented, either expressly or by implication, in 
connection with the advertising, sale, or offering for sale, in commerce 
as ``commerce'' is defined in the Federal Trade Commission Act, of sound 
power amplification equipment manufactured or sold for home 
entertainment purposes, such as for example, radios, record and tape 
players, radio-phonograph and/or tape combinations, component audio 
amplifiers, self-powered speakers for computers, multimedia systems and 
sound systems, and the like.
    (b) Representations shall be exempt from this part if all 
representations of performance characteristics referred to in paragraph 
(a) of this section clearly and conspicuously disclose a manufacturer's 
rated power output and that rated output does not exceed two (2) watts 
(per channel or total).
    (c) It is an unfair method of competition and an unfair or deceptive 
act or practice within the meaning of section 5(a)(1) of the Federal 
Trade Commission Act (15 U.S.C. 45(a)(1)) to violate any applicable 
provision of this part.

[39 FR 15387, May 3, 1974, as amended at 63 FR 37235, July 9, 1998]



Sec.432.2  Required disclosures.

    (a) Whenever any direct or indirect representation is made of the 
power output, power band or power frequency response, or distortion 
characteristics of sound power amplification equipment, the following 
disclosure shall be made clearly, conspicuously, and more prominently 
than any other representations or disclosures permitted under this part: 
The manufacturer's rated minimum sine wave continuous average power 
output, in watts, per channel

[[Page 464]]

(if the equipment is designed to amplify two or more channels 
simultaneously) at an impedance of 8 ohms, or, if the amplifier is not 
designed for an 8-ohm impedance, at the impedance for which the 
amplifier is primarily designed, measured with all associated channels 
fully driven to rated per channel power. Provided, however, when 
measuring maximum per channel output of self-powered combination speaker 
systems that employ two or more amplifiers dedicated to different 
portions of the audio frequency spectrum, such as those incorporated 
into combination subwoofer-satellite speaker systems, only those 
channels dedicated to the same audio frequency spectrum should be 
considered associated channels that need be fully driven simultaneously 
to rated per channel power.
    (b) In addition, whenever any direct or indirect representation is 
made of the power output, power band or power frequency response, or 
distortion characteristics of sound power amplification equipment in any 
product brochure or manufacturer specification sheet, the following 
disclosures also shall be made clearly, conspicuously, and more 
prominently than any other representations or disclosures permitted 
under this part:
    (1) The manufacturer's rated power band or power frequency response, 
in Hertz (Hz), for the rated power output required to be disclosed in 
paragraph (a) of this section; and
    (2) The manufacturer's rated percentage of maximum total harmonic 
distortion at any power level from 250 mW to the rated power output, and 
its corresponding rated power band or power frequency response.

[65 FR 81239, Dec. 22, 2000]



Sec.432.3  Standard test conditions.

    For purposes of performing the tests necessary to make the 
disclosures required under Sec.432.2 of this part:
    (a) The power line voltage shall be 120 volts AC (230 volts when the 
equipment is made for foreign sale or use, unless a different nameplate 
rating is permanently affixed to the product by the manufacturer in 
which event the latter figure would control), RMS, using a sinusoidal 
wave containing less than 2 percent total harmonic content. In the case 
of equipment designed for battery operation only, tests shall be made 
with the battery power supply for which the particular equipment is 
designed and such test voltage must be disclosed under the required 
disclosures of Sec.432.2 of this part. If capable of both AC and DC 
battery operation, testing shall be with AC line operation;
    (b) The AC power line frequency for domestic equipment shall be 60 
Hz and 50 Hz for equipment made for foreign sale or use;
    (c) The amplifier shall be preconditioned by simultaneously 
operating all channels at one-eighth of rated power output for one hour 
using a sinusoidal wave at a frequency of 1,000 Hz; provided, however, 
that for amplifiers utilized as a component in a self-powered subwoofer 
system, the sinusoidal wave used as a preconditioning signal may be any 
frequency within the amplifier's intended operating bandwidth that will 
allow the amplifier to be driven to one-eighth of rated power for one 
hour;
    (d) The preconditioning and testing shall be in still air and an 
ambient temperature of at least 77 [deg]F (25 [deg]C);
    (e) Rated power shall be obtainable at all frequencies within the 
rated power band without exceeding the rated maximum percentage of total 
harmonic distortion after input signals at said frequencies have been 
continuously applied at full rated power for not less than five (5) 
minutes at the amplifier's auxiliary input, or if not provided, at the 
phono input.
    (f) At all times during warm-up and testing, tone loudness-contour 
and other controls shall be preset for the flattest response.

[39 FR 15387, May 3, 1974, as amended at 65 FR 81240, Dec. 22, 2000]



Sec.432.4  Optional disclosures.

    Other operating characteristics and technical specifications not 
required in Sec.432.2 of this part may be disclosed: Provided:
    (a) That any other power output is rated by the manufacturer, is 
expressed in minimum watts per channel, and such power output 
representation(s) complies with the provisions of Sec.432.2 of this 
part; except that if a peak or other instantaneous power rating, such

[[Page 465]]

as music power or peak power, is represented under this section, the 
maximum percentage of total harmonic distortion (see Sec.432.2(d) of 
this part) may be disclosed only at such rated output: And provided 
further,
    (b) That all disclosures or representations made under this section 
are less conspicuously, and prominently made than the disclosures 
required in Sec.432.2 of this part; and
    (c) The rating and testing methods or standards used in determining 
such representations are disclosed, and well known and generally 
recognized by the industry at the time the representations or 
disclosures are made, are neither intended nor likely to deceive or 
confuse the consumers and are not otherwise likely to frustrate the 
purpose of this part.

    Note 1: For the purpose of paragraph (b) of this section, optional 
disclosures will not be considered less prominent if they are either 
bold faced or are more than two-thirds the height of the disclosures 
required by Sec.432.2.
    Note 2: Use of the asterisk in effecting any of the disclosures 
required by Sec.432.2 and permitted by Sec.432.4 shall not be deemed 
conspicuous disclosure.

[39 FR 15387, May 3, 1974; 39 FR 17838, May 21, 1974]



Sec.432.5  Prohibited disclosures.

    No performance characteristics to which this part applies shall be 
represented or disclosed if they are not obtainable as represented or 
disclosed when the equipment is operated by the consumer in the usual 
and normal manner without the use of extraneous aids.



Sec.432.6  Liability for violation.

    If the manufacturer or, in the case of foreign made products, the 
importer or domestic sales representative of a foreign manufacturer, of 
any product covered by this part furnishes the information required or 
permitted under this part, then any other seller of the product shall 
not be deemed to be in violation of Sec.432.5 of this part due to his 
reliance upon or transmittal of the written representations of the 
manufacturer or importer if such seller has been furnished by the 
manufacturer, importer, or sales representative a written certification 
attesting to the accuracy of the representations to which this part 
applies: And provided further, That such seller is without actual 
knowledge of the violation contained in said written certification.



PART 433_PRESERVATION OF CONSUMERS' CLAIMS AND DEFENSES--
Table of Contents



Sec.
433.1 Definitions.
433.2 Preservation of consumers' claims and defenses, unfair or 
          deceptive acts or practices.
433.3 Exemption of sellers taking or receiving open end consumer credit 
          contracts before November 1, 1977 from requirements of Sec.
          433.2(a).

    Authority: 38 Stat. 717, as amended; (15 U.S.C. 41, et seq.)



Sec.433.1  Definitions.

    (a) Person. An individual, corporation, or any other business 
organization.
    (b) Consumer. A natural person who seeks or acquires goods or 
services for personal, family, or household use.
    (c) Creditor. A person who, in the ordinary course of business, 
lends purchase money or finances the sale of goods or services to 
consumers on a deferred payment basis; Provided, such person is not 
acting, for the purposes of a particular transaction, in the capacity of 
a credit card issuer.
    (d) Purchase money loan. A cash advance which is received by a 
consumer in return for a ``Finance Charge'' within the meaning of the 
Truth in Lending Act and Regulation Z, which is applied, in whole or 
substantial part, to a purchase of goods or services from a seller who 
(1) refers consumers to the creditor or (2) is affiliated with the 
creditor by common control, contract, or business arrangement.
    (e) Financing a sale. Extending credit to a consumer in connection 
with a ``Credit Sale'' within the meaning of the Truth in Lending Act 
and Regulation Z.
    (f) Contract. Any oral or written agreement, formal or informal, 
between a creditor and a seller, which

[[Page 466]]

contemplates or provides for cooperative or concerted activity in 
connection with the sale of goods or services to consumers or the 
financing thereof.
    (g) Business arrangement. Any understanding, procedure, course of 
dealing, or arrangement, formal or informal, between a creditor and a 
seller, in connection with the sale of goods or services to consumers or 
the financing thereof.
    (h) Credit card issuer. A person who extends to cardholders the 
right to use a credit card in connection with purchases of goods or 
services.
    (i) Consumer credit contract. Any instrument which evidences or 
embodies a debt arising from a ``Purchase Money Loan'' transaction or a 
``financed sale'' as defined in paragraphs (d) and (e) of this section.
    (j) Seller. A person who, in the ordinary course of business, sells 
or leases goods or services to consumers.

[40 FR 53506, Nov. 18, 1975]



Sec.433.2  Preservation of consumers' claims and defenses, unfair
or deceptive acts or practices.

    In connection with any sale or lease of goods or services to 
consumers, in or affecting commerce as ``commerce'' is defined in the 
Federal Trade Commission Act, it is an unfair or deceptive act or 
practice within the meaning of section 5 of that Act for a seller, 
directly or indirectly, to:
    (a) Take or receive a consumer credit contract which fails to 
contain the following provision in at least ten point, bold face, type:

                                 NOTICE

    ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS 
AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS 
OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. 
RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE 
DEBTOR HEREUNDER.


or,

    (b) Accept, as full or partial payment for such sale or lease, the 
proceeds of any purchase money loan (as purchase money loan is defined 
herein), unless any consumer credit contract made in connection with 
such purchase money loan contains the following provision in at least 
ten point, bold face, type:

                                 NOTICE

    ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS 
AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS 
OR SERVICES OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE 
DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.

[40 FR 53506, Nov. 18, 1975; 40 FR 58131, Dec. 15, 1975]



Sec.433.3  Exemption of sellers taking or receiving open end consumer
credit contracts before November 1, 1977 from requirements of
Sec.433.2(a).

    (a) Any seller who has taken or received an open end consumer credit 
contract before November 1, 1977, shall be exempt from the requirements 
of 16 CFR part 433 with respect to such contract provided the contract 
does not cut off consumers' claims and defenses.
    (b) Definitions. The following definitions apply to this exemption:
    (1) All pertinent definitions contained in 16 CFR 433.1.
    (2) Open end consumer credit contract: a consumer credit contract 
pursuant to which ``open end credit'' is extended.
    (3) ``Open end credit'': consumer credit extended on an account 
pursuant to a plan under which a creditor may permit an applicant to 
make purchases or make loans, from time to time, directly from the 
creditor or indirectly by use of a credit card, check, or other device, 
as the plan may provide. The term does not include negotiated advances 
under an open-end real estate mortgage or a letter of credit.
    (4) Contract which does not cut off consumers' claims and defenses: 
A consumer credit contract which does not constitute or contain a 
negotiable instrument, or contain any waiver, limitation, term, or 
condition which has the effect of limiting a consumer's right to assert 
against any holder of the contract all legally sufficient claims and 
defenses which the consumer could assert against the seller of

[[Page 467]]

goods or services purchased pursuant to the contract.

[42 FR 19490, Apr. 14, 1977, as amended at 42 FR 46510, Sept. 16, 1977]



PART 435_MAIL, INTERNET, OR TELEPHONE ORDER MERCHANDISE--
Table of Contents



Sec.
435.1 Definitions.
435.2 Mail, Internet, or telephone order sales.
435.3 Limited applicability.

    Authority: 15 U.S.C. 57a.

    Source: 79 FR 55619, Sept. 17, 2014, unless otherwise noted.



Sec.435.1  Definitions.

    For purposes of this part:
    (a) Mail, Internet, or telephone order sales shall mean sales in 
which the buyer has ordered merchandise from the seller by mail, via the 
Internet, or by telephone, regardless of the method of payment or the 
method used to solicit the order.
    (b) Prompt refund shall mean:
    (1) Where a refund is made pursuant to paragraph (d)(1), (d)(2)(ii), 
(d)(2)(iii), or (d)(3) of this section, a refund sent by any means at 
least as fast and reliable as first class mail within seven (7) working 
days of the date on which the buyer's right to refund vests under the 
provisions of this part. Provided, however, that where the seller cannot 
provide a refund by the same method payment was tendered, prompt refund 
shall mean a refund sent in the form of cash, check, or money order, by 
any means at least as fast and reliable as first class mail, within 
seven (7) working days of the date on which the seller discovers it 
cannot provide a refund by the same method as payment was tendered;
    (2) Where a refund is made pursuant to paragraph (d)(2)(i) of this 
section, a refund sent by any means at least as fast and reliable as 
first class mail within one (1) billing cycle from the date on which the 
buyer's right to refund vests under the provisions of this part.
    (c) Receipt of a properly completed order shall mean, where the 
buyer tenders full or partial payment in the proper amount in the form 
of cash, check, or money order; authorization from the buyer to charge 
an existing charge account; or other payment methods, the time at which 
the seller receives both said payment and an order from the buyer 
containing all of the information needed by the seller to process and 
ship the order. Provided, however, that where the seller receives notice 
that a payment by means other than cash or credit as tendered by the 
buyer has been dishonored or that the buyer does not qualify for a 
credit sale, receipt of a properly completed order shall mean the time 
at which:
    (1) The seller receives notice that a payment by means other than 
cash or credit in the proper amount tendered by the buyer has been 
honored;
    (2) The buyer tenders cash in the proper amount; or
    (3) The seller receives notice that the buyer qualifies for a credit 
sale.
    (d) Refund shall mean:
    (1) Where the buyer tendered full payment for the unshipped 
merchandise in the form of cash, check, or money order, a return of the 
amount tendered in the form of cash, check, or money order sent to the 
buyer;
    (2) Where there is a credit sale:
    (i) And the seller is a creditor, a copy of a credit memorandum or 
the like or an account statement sent to the buyer reflecting the 
removal or absence of any remaining charge incurred as a result of the 
sale from the buyer's account;
    (ii) And a third party is the creditor, an appropriate credit 
memorandum or the like sent to the third party creditor which will 
remove the charge from the buyer's account and a copy of the credit 
memorandum or the like sent to the buyer that includes the date that the 
seller sent the credit memorandum or the like to the third party 
creditor and the amount of the charge to be removed, or a statement from 
the seller acknowledging the cancellation of the order and representing 
that it has not taken any action regarding the order which will result 
in a charge to the buyer's account with the third party;
    (iii) And the buyer tendered partial payment for the unshipped 
merchandise in the form of cash, check, or money order, a return of the 
amount

[[Page 468]]

tendered in the form of cash, check, or money order sent to the buyer.
    (3) Where the buyer tendered payment for the unshipped merchandise 
by any means other than those enumerated in paragraph (d)(1) or (2) of 
this section:
    (i) Instructions sent to the entity that transferred payment to the 
seller instructing that entity to return to the buyer the amount 
tendered in the form tendered and a statement sent to the buyer setting 
forth the instructions sent to the entity, including the date of the 
instructions and the amount to be returned to the buyer; or
    (ii) A return of the amount tendered in the form of cash, check, or 
money order sent to the buyer; or
    (iii) A statement from the seller sent to the buyer acknowledging 
the cancellation of the order and representing that the seller has not 
taken any action regarding the order which will access any of the 
buyer's funds.
    (e) Shipment shall mean the act by which the merchandise is 
physically placed in the possession of the carrier.
    (f) Telephone refers to any direct or indirect use of the telephone 
to order merchandise, regardless of whether the telephone is activated 
by, or the language used is that of human beings, machines, or both.
    (g) The time of solicitation of an order shall mean that time when 
the seller has:
    (1) Mailed or otherwise disseminated the solicitation to a 
prospective purchaser;
    (2) Made arrangements for an advertisement containing the 
solicitation to appear in a newspaper, magazine or the like or on radio 
or television which cannot be changed or cancelled without incurring 
substantial expense; or
    (3) Made arrangements for the printing of a catalog, brochure or the 
like which cannot be changed without incurring substantial expense, in 
which the solicitation in question forms an insubstantial part.



Sec.435.2  Mail, Internet, or telephone order sales.

    In connection with mail, Internet, or telephone order sales in or 
affecting commerce, as ``commerce'' is defined in the Federal Trade 
Commission Act, it constitutes an unfair method of competition, and an 
unfair or deceptive act or practice for a seller:
    (a)(1) To solicit any order for the sale of merchandise to be 
ordered by the buyer through the mail, via the Internet, or by telephone 
unless, at the time of the solicitation, the seller has a reasonable 
basis to expect that it will be able to ship any ordered merchandise to 
the buyer:
    (i) Within that time clearly and conspicuously stated in any such 
solicitation; or
    (ii) If no time is clearly and conspicuously stated, within thirty 
(30) days after receipt of a properly completed order from the buyer. 
Provided, however, where, at the time the merchandise is ordered the 
buyer applies to the seller for credit to pay for the merchandise in 
whole or in part, the seller shall have fifty (50) days, rather than 
thirty (30) days, to perform the actions required in this paragraph 
(a)(1)(ii).
    (2) To provide any buyer with any revised shipping date, as provided 
in paragraph (b) of this section, unless, at the time any such revised 
shipping date is provided, the seller has a reasonable basis for making 
such representation regarding a definite revised shipping date.
    (3) To inform any buyer that it is unable to make any representation 
regarding the length of any delay unless:
    (i) The seller has a reasonable basis for so informing the buyer; 
and
    (ii) The seller informs the buyer of the reason or reasons for the 
delay.
    (4) In any action brought by the Federal Trade Commission, alleging 
a violation of this part, the failure of a respondent-seller to have 
records or other documentary proof establishing its use of systems and 
procedures which assure the shipment of merchandise in the ordinary 
course of business within any applicable time set forth in this part 
will create a rebuttable presumption that the seller lacked a reasonable 
basis for any expectation of shipment within said applicable time.
    (b)(1) Where a seller is unable to ship merchandise within the 
applicable time set forth in paragraph (a)(1) of this section, to fail 
to offer to the buyer, clearly and conspicuously and without prior 
demand, an option either

[[Page 469]]

to consent to a delay in shipping or to cancel the buyer`s order and 
receive a prompt refund. Said offer shall be made within a reasonable 
time after the seller first becomes aware of its inability to ship 
within the applicable time set forth in paragraph (a)(1) of this 
section, but in no event later than said applicable time.
    (i) Any offer to the buyer of such an option shall fully inform the 
buyer regarding the buyer's right to cancel the order and to obtain a 
prompt refund and shall provide a definite revised shipping date, but 
where the seller lacks a reasonable basis for providing a definite 
revised shipping date the notice shall inform the buyer that the seller 
is unable to make any representation regarding the length of the delay.
    (ii) Where the seller has provided a definite revised shipping date 
which is thirty (30) days or less later than the applicable time set 
forth in paragraph (a)(1) of this section, the offer of said option 
shall expressly inform the buyer that, unless the seller receives, prior 
to shipment and prior to the expiration of the definite revised shipping 
date, a response from the buyer rejecting the delay and cancelling the 
order, the buyer will be deemed to have consented to a delayed shipment 
on or before the definite revised shipping date.
    (iii) Where the seller has provided a definite revised shipping date 
which is more than thirty (30) days later than the applicable time set 
forth in paragraph (a)(1) of this section or where the seller is unable 
to provide a definite revised shipping date and therefore informs the 
buyer that it is unable to make any representation regarding the length 
of the delay, the offer of said option shall also expressly inform the 
buyer that the buyer's order will automatically be deemed to have been 
cancelled unless:
    (A) The seller has shipped the merchandise within thirty (30) days 
of the applicable time set forth in paragraph (a)(1) of this section, 
and has received no cancellation prior to shipment; or
    (B) The seller has received from the buyer within thirty (30) days 
of said applicable time, a response specifically consenting to said 
shipping delay. Where the seller informs the buyer that it is unable to 
make any representation regarding the length of the delay, the buyer 
shall be expressly informed that, should the buyer consent to an 
indefinite delay, the buyer will have a continuing right to cancel the 
buyer's order at any time after the applicable time set forth in 
paragraph (a)(1) of this section by so notifying the seller prior to 
actual shipment.
    (iv) Nothing in this paragraph shall prohibit a seller who furnishes 
a definite revised shipping date pursuant to paragraph (b)(1)(i) of this 
section, from requesting, simultaneously with or at any time subsequent 
to the offer of an option pursuant to paragraph (b)(1) of this section, 
the buyer's express consent to a further unanticipated delay beyond the 
definite revised shipping date in the form of a response from the buyer 
specifically consenting to said further delay. Provided, however, that 
where the seller solicits consent to an unanticipated indefinite delay 
the solicitation shall expressly inform the buyer that, should the buyer 
so consent to an indefinite delay, the buyer shall have a continuing 
right to cancel the buyer's order at any time after the definite revised 
shipping date by so notifying the seller prior to actual shipment.
    (2) Where a seller is unable to ship merchandise on or before the 
definite revised shipping date provided under paragraph (b)(1)(i) of 
this section and consented to by the buyer pursuant to paragraph 
(b)(1)(ii) or (iii) of this section, to fail to offer to the buyer, 
clearly and conspicuously and without prior demand, a renewed option 
either to consent to a further delay or to cancel the order and to 
receive a prompt refund. Said offer shall be made within a reasonable 
time after the seller first becomes aware of its inability to ship 
before the said definite revised date, but in no event later than the 
expiration of the definite revised shipping date. Provided, however, 
that where the seller previously has obtained the buyer's express 
consent to an unanticipated delay until a specific date beyond the 
definite revised shipping date, pursuant to paragraph (b)(1)(iv) of this 
section or to a further delay until a

[[Page 470]]

specific date beyond the definite revised shipping date pursuant to 
paragraph (b)(2) of this section, that date to which the buyer has 
expressly consented shall supersede the definite revised shipping date 
for purposes of paragraph (b)(2) of this section.
    (i) Any offer to the buyer of said renewed option shall provide the 
buyer with a new definite revised shipping date, but where the seller 
lacks a reasonable basis for providing a new definite revised shipping 
date, the notice shall inform the buyer that the seller is unable to 
make any representation regarding the length of the further delay.
    (ii) The offer of a renewed option shall expressly inform the buyer 
that, unless the seller receives, prior to the expiration of the old 
definite revised shipping date or any date superseding the old definite 
revised shipping date, notification from the buyer specifically 
consenting to the further delay, the buyer will be deemed to have 
rejected any further delay, and to have cancelled the order if the 
seller is in fact unable to ship prior to the expiration of the old 
definite revised shipping date or any date superseding the old definite 
revised shipping date. Provided, however, that where the seller offers 
the buyer the option to consent to an indefinite delay the offer shall 
expressly inform the buyer that, should the buyer so consent to an 
indefinite delay, the buyer shall have a continuing right to cancel the 
buyer's order at any time after the old definite revised shipping date 
or any date superseding the old definite revised shipping date.
    (iii) Paragraph (b)(2) of this section shall not apply to any 
situation where a seller, pursuant to the provisions of paragraph 
(b)(1)(iv) of this section, has previously obtained consent from the 
buyer to an indefinite extension beyond the first revised shipping date.
    (3) Wherever a buyer has the right to exercise any option under this 
part or to cancel an order by so notifying the seller prior to shipment, 
to fail to furnish the buyer with adequate means, at the seller's 
expense, to exercise such option or to notify the seller regarding 
cancellation.
    (4) Nothing in paragraph (b) of this section shall prevent a seller, 
where it is unable to make shipment within the time set forth in 
paragraph (a)(1) of this section or within a delay period consented to 
by the buyer, from deciding to consider the order cancelled and 
providing the buyer with notice of said decision within a reasonable 
time after it becomes aware of said inability to ship, together with a 
prompt refund.
    (c) To fail to deem an order cancelled and to make a prompt refund 
to the buyer whenever:
    (1) The seller receives, prior to the time of shipment, notification 
from the buyer cancelling the order pursuant to any option, renewed 
option or continuing option under this part;
    (2) The seller has, pursuant to paragraph (b)(1)(iii) of this 
section, provided the buyer with a definite revised shipping date which 
is more than thirty (30) days later than the applicable time set forth 
in paragraph (a)(1) of this section or has notified the buyer that it is 
unable to make any representation regarding the length of the delay and 
the seller:
    (i) Has not shipped the merchandise within thirty (30) days of the 
applicable time set forth in paragraph (a)(1) of this section, and
    (ii) Has not received the buyer's express consent to said shipping 
delay within said thirty (30) days;
    (3) The seller is unable to ship within the applicable time set 
forth in paragraph (b)(2) of this section, and has not received, within 
the said applicable time, the buyer's consent to any further delay;
    (4) The seller has notified the buyer of its inability to make 
shipment and has indicated its decision not to ship the merchandise;
    (5) The seller fails to offer the option prescribed in paragraph 
(b)(1) of this section and has not shipped the merchandise within the 
applicable time set forth in paragraph (a)(1) of this section.
    (d) In any action brought by the Federal Trade Commission, alleging 
a violation of this part, the failure of a respondent-seller to have 
records or other documentary proof establishing its use of systems and 
procedures which assure compliance, in the ordinary course of business, 
with any requirement of paragraph (b) or (c) of this section will create 
a rebuttable

[[Page 471]]

presumption that the seller failed to comply with said requirement.



Sec.435.3  Limited applicability.

    (a) This part shall not apply to:
    (1) Subscriptions, such as magazine sales, ordered for serial 
delivery, after the initial shipment is made in compliance with this 
part;
    (2) Orders of seeds and growing plants;
    (3) Orders made on a collect-on-delivery (C.O.D.) basis;
    (4) Transactions governed by the Federal Trade Commission`s Trade 
Regulation Rule entitled ``Use of Prenotification Negative Option 
Plans,'' 16 CFR Part 425.
    (b) By taking action in this area:
    (1) The Federal Trade Commission does not intend to preempt action 
in the same area, which is not inconsistent with this part, by any 
State, municipal, or other local government. This part does not annul or 
diminish any rights or remedies provided to consumers by any State law, 
municipal ordinance, or other local regulation, insofar as those rights 
or remedies are equal to or greater than those provided by this part. In 
addition, this part does not supersede those provisions of any State 
law, municipal ordinance, or other local regulation which impose 
obligations or liabilities upon sellers, when sellers subject to this 
part are not in compliance therewith.
    (2) This part does supersede those provisions of any State law, 
municipal ordinance, or other local regulation which are inconsistent 
with this part to the extent that those provisions do not provide a 
buyer with rights which are equal to or greater than those rights 
granted a buyer by this part. This part also supersedes those provisions 
of any State law, municipal ordinance, or other local regulation 
requiring that a buyer be notified of a right which is the same as a 
right provided by this part but requiring that a buyer be given notice 
of this right in a language, form, or manner which is different in any 
way from that required by this part. In those instances where any State 
law, municipal ordinance, or other local regulation contains provisions, 
some but not all of which are partially or completely superseded by this 
part, the provisions or portions of those provisions which have not been 
superseded retain their full force and effect.
    (c) If any provision of this part, or its application to any person, 
partnership, corporation, act or practice is held invalid, the remainder 
of this part or the application of the provision to any other person, 
partnership, corporation, act or practice shall not be affected thereby.



PART 436_DISCLOSURE REQUIREMENTS AND PROHIBITIONS CONCERNING
FRANCHISING--Table of Contents



                          Subpart A_Definitions

Sec.
436.1 Definitions.

                   Subpart B_Franchisor's Obligations

436.2 Obligation to furnish documents.

               Subpart C_Contents of a Disclosure Document

436.3 Cover page.
436.4 Table of contents.
436.5 Disclosure items.

                         Subpart D_Instructions

436.6 Instructions for preparing disclosure documents.
436.7 Instructions for updating disclosures.

                          Subpart E_Exemptions

436.8 Exemptions.

                         Subpart F_Prohibitions

436.9 Additional prohibitions.

                       Subpart G_Other Provisions

436.10 Other laws and rules.
436.11 Severability.

Appendix A to Part 436--Sample Item 10 Table--Summary of Financing 
          Offered
Appendix B to Part 436--Sample Item 20(1) Table--Systemwide Outlet 
          Summary
Appendix C to Part 436--Sample Item 20(2) Table--Transfers of Franchised 
          Outlets
Appendix D to Part 436--Sample Item 20(3) Table--Status of Franchise 
          Outlets
Appendix E to Part 436--Sample Item 20(4) Table--Status of Company-Owned 
          Outlets

[[Page 472]]

Appendix F to Part 436--Sample Item 20(5) Table--Projected New 
          Franchised Outlets

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

    Source: 72 FR 15544, Mar. 30, 2007, unless otherwise noted.



                          Subpart A_Definitions



Sec.436.1  Definitions.

    Unless stated otherwise, the following definitions apply throughout 
part 436:
    (a) Action includes complaints, cross claims, counterclaims, and 
third-party complaints in a judicial action or proceeding, and their 
equivalents in an administrative action or arbitration.
    (b) Affiliate means an entity controlled by, controlling, or under 
common control with, another entity.
    (c) Confidentiality clause means any contract, order, or settlement 
provision that directly or indirectly restricts a current or former 
franchisee from discussing his or her personal experience as a 
franchisee in the franchisor's system with any prospective franchisee. 
It does not include clauses that protect franchisor's trademarks or 
other proprietary information.
    (d) Disclose, state, describe, and list each mean to present all 
material facts accurately, clearly, concisely, and legibly in plain 
English.
    (e) Financial performance representation means any representation, 
including any oral, written, or visual representation, to a prospective 
franchisee, including a representation in the general media, that 
states, expressly or by implication, a specific level or range of actual 
or potential sales, income, gross profits, or net profits. The term 
includes a chart, table, or mathematical calculation that shows possible 
results based on a combination of variables.
    (f) Fiscal year refers to the franchisor's fiscal year.
    (g) Fractional franchise means a franchise relationship that 
satisfies the following criteria when the relationship is created:
    (1) The franchisee, any of the franchisee's current directors or 
officers, or any current directors or officers of a parent or affiliate, 
has more than two years of experience in the same type of business; and
    (2) The parties have a reasonable basis to anticipate that the sales 
arising from the relationship will not exceed 20% of the franchisee's 
total dollar volume in sales during the first year of operation.
    (h) Franchise means any continuing commercial relationship or 
arrangement, whatever it may be called, in which the terms of the offer 
or contract specify, or the franchise seller promises or represents, 
orally or in writing, that:
    (1) The franchisee will obtain the right to operate a business that 
is identified or associated with the franchisor's trademark, or to 
offer, sell, or distribute goods, services, or commodities that are 
identified or associated with the franchisor's trademark;
    (2) The franchisor will exert or has authority to exert a 
significant degree of control over the franchisee's method of operation, 
or provide significant assistance in the franchisee's method of 
operation; and
    (3) As a condition of obtaining or commencing operation of the 
franchise, the franchisee makes a required payment or commits to make a 
required payment to the franchisor or its affiliate.
    (i) Franchisee means any person who is granted a franchise.
    (j) Franchise seller means a person that offers for sale, sells, or 
arranges for the sale of a franchise. It includes the franchisor and the 
franchisor's employees, representatives, agents, subfranchisors, and 
third-party brokers who are involved in franchise sales activities. It 
does not include existing franchisees who sell only their own outlet and 
who are otherwise not engaged in franchise sales on behalf of the 
franchisor.
    (k) Franchisor means any person who grants a franchise and 
participates in the franchise relationship. Unless otherwise stated, it 
includes subfranchisors. For purposes of this definition, a 
``subfranchisor'' means a person who functions as a franchisor by 
engaging in both pre-sale activities and post-sale performance.

[[Page 473]]

    (l) Leased department means an arrangement whereby a retailer 
licenses or otherwise permits a seller to conduct business 
from the retailer's location where the seller purchases no goods, 
services, or commodities directly or indirectly from the retailer, a 
person the retailer requires the seller to do business with, or a 
retailer-affiliate if the retailer advises the seller to do business 
with the affiliate.
    (m) Parent means an entity that controls another entity directly, or 
indirectly through one or more subsidiaries.
    (n) Person means any individual, group, association, limited or 
general partnership, corporation, or any other entity.
    (o) Plain English means the organization of information and language 
usage understandable by a person unfamiliar with the franchise business. 
It incorporates short sentences; definite, concrete, everyday language; 
active voice; and tabular presentation of information, where possible. 
It avoids legal jargon, highly technical business terms, and multiple 
negatives.
    (p) Predecessor means a person from whom the franchisor acquired, 
directly or indirectly, the major portion of the franchisor's assets.
    (q) Principal business address means the street address of a 
person's home office in the United States. A principal business address 
cannot be a post office box or private mail drop.
    (r) Prospective franchisee means any person (including any agent, 
representative, or employee) who approaches or is approached by a 
franchise seller to discuss the possible establishment of a franchise 
relationship.
    (s) Required payment means all consideration that the franchisee 
must pay to the franchisor or an affiliate, either by contract or by 
practical necessity, as a condition of obtaining or commencing operation 
of the franchise. A required payment does not include payments for the 
purchase of reasonable amounts of inventory at bona fide wholesale 
prices for resale or lease.
    (t) Sale of a franchise includes an agreement whereby a person 
obtains a franchise from a franchise seller for value by purchase, 
license, or otherwise. It does not include extending or renewing an 
existing franchise agreement where there has been no interruption in the 
franchisee's operation of the business, unless the new agreement 
contains terms and conditions that differ materially from the original 
agreement. It also does not include the transfer of a franchise by an 
existing franchisee where the franchisor has had no significant 
involvement with the prospective transferee. A franchisor's approval or 
disapproval of a transfer alone is not deemed to be significant 
involvement.
    (u) Signature means a person's affirmative step to authenticate his 
or her identity. It includes a person's handwritten signature, as well 
as a person's use of security codes, passwords, electronic signatures, 
and similar devices to authenticate his or her identity.
    (v) Trademark includes trademarks, service marks, names, logos, and 
other commercial symbols.
    (w) Written or in writing means any document or information in 
printed form or in any form capable of being preserved in tangible form 
and read. It includes: type-set, word processed, or handwritten 
document; information on computer disk or CD-ROM; information sent via 
email; or information posted on the Internet. It does not include mere 
oral statements.



                   Subpart B_Franchisors' Obligations



Sec.436.2  Obligation to furnish documents.

    In connection with the offer or sale of a franchise to be located in 
the United States of America or its territories, unless the transaction 
is exempted under subpart E of this part, it is an unfair or deceptive 
act or practice in violation of Section 5 of the Federal Trade 
Commission Act:
    (a) For any franchisor to fail to furnish a prospective franchisee 
with a copy of the franchisor's current disclosure document, as 
described in subparts C and D of this part, at least 14 calendar-days 
before the prospective franchisee signs a binding agreement with, or 
makes any payment to, the franchisor or an affiliate in connection with 
the proposed franchise sale.

[[Page 474]]

    (b) For any franchisor to alter unilaterally and materially the 
terms and conditions of the basic franchise agreement or any related 
agreements attached to the disclosure document without furnishing the 
prospective franchisee with a copy of each revised agreement at least 
seven calendar-days before the prospective franchisee signs the revised 
agreement. Changes to an agreement that arise out of negotiations 
initiated by the prospective franchisee do not trigger this seven 
calendar-day period.
    (c) For purposes of paragraphs (a) and (b) of this section, the 
franchisor has furnished the documents by the required date if:
    (1) A copy of the document was hand-delivered, faxed, emailed, or 
otherwise delivered to the prospective franchisee by the required date;
    (2) Directions for accessing the document on the Internet were 
provided to the prospective franchisee by the required date; or
    (3) A paper or tangible electronic copy (for example, computer disk 
or CD-ROM) was sent to the address specified by the prospective 
franchisee by first-class United States mail at least three calendar 
days before the required date.



               Subpart C_Contents of a Disclosure Document



Sec.436.3  Cover page.

    Begin the disclosure document with a cover page, in the order and 
form as follows:
    (a) The title ``FRANCHISE DISCLOSURE DOCUMENT'' in capital letters 
and bold type.
    (b) The franchisor's name, type of business organization, principal 
business address, telephone number, and, if applicable, email address 
and primary home page address.
    (c) A sample of the primary business trademark that the franchisee 
will use in its business.
    (d) A brief description of the franchised business.
    (e) The following statements:
    (1) The total investment necessary to begin operation of a 
[franchise system name] franchise is [the total amount of Item 7 (Sec.
436.5(g))]. This includes [the total amount in Item 5 (Sec.436.5(e))] 
that must be paid to the franchisor or affiliate.
    (2) This disclosure document summarizes certain provisions of your 
franchise agreement and other information in plain English. Read this 
disclosure document and all accompanying agreements carefully. You must 
receive this disclosure document at least 14 calendar-days before you 
sign a binding agreement with, or make any payment to, the franchisor or 
an affiliate in connection with the proposed franchise sale. [The 
following sentence in bold type] Note, however, that no governmental 
agency has verified the information contained in this document.
    (3) The terms of your contract will govern your franchise 
relationship. Don't rely on the disclosure document alone to understand 
your contract. Read all of your contract carefully. Show your contract 
and this disclosure document to an advisor, like a lawyer or an 
accountant.
    (4) Buying a franchise is a complex investment. The information in 
this disclosure document can help you make up your mind. More 
information on franchising, such as ``A Consumer's Guide to Buying a 
Franchise,'' which can help you understand how to use this disclosure 
document, is available from the Federal Trade Commission. You can 
contact the FTC at 1-877-FTC-HELP or by writing to the FTC at 600 
Pennsylvania Avenue, NW., Washington, D.C. 20580. You can also visit the 
FTC's home page at www.ftc.gov for additional information. Call your 
state agency or visit your public library for other sources of 
information on franchising.
    (5) There may also be laws on franchising in your state. Ask your 
state agencies about them.
    (6) [The issuance date].
    (f) A franchisor may include the following statement between the 
statements set out at paragraphs (e)(2) and (3) of this section: ``You 
may wish to receive your disclosure document in another format that is 
more convenient for you. To discuss the availability of disclosures in 
different formats, contact [name or office] at [address] and [telephone 
number].''

[[Page 475]]

    (g) Franchisors may include additional disclosures on the cover 
page, on a separate cover page, or addendum to comply with state pre-
sale disclosure laws.



Sec.436.4  Table of contents.

    Include the following table of contents. State the page where each 
disclosure Item begins. List all exhibits by letter, as shown in the 
following example.

                            Table of Contents

1. The Franchisor and any Parents, Predecessors, and Affiliates
2. Business Experience
3. Litigation
4. Bankruptcy
5. Initial Fees
6. Other Fees
7. Estimated Initial Investment
8. Restrictions on Sources of Products and Services
9. Franchisee's Obligations
10. Financing
11. Franchisor's Assistance, Advertising, Computer Systems, and Training
12. Territory
13. Trademarks
14. Patents, Copyrights, and Proprietary Information
15. Obligation to Participate in the Actual Operation of the Franchise 
Business
16. Restrictions on What the Franchisee May Sell
17. Renewal, Termination, Transfer, and Dispute Resolution
18. Public Figures
19. Financial Performance Representations
20. Outlets and Franchisee Information
21. Financial Statements
22. Contracts
23. Receipts

Exhibits

    A. Franchise Agreement



Sec.436.5  Disclosure items.

    (a) Item 1: The Franchisor, and any Parents, Predecessors, and 
Affiliates. Disclose:
    (1) The name and principal business address of the franchisor; any 
parents; and any affiliates that offer franchises in any line of 
business or provide products or services to the franchisees of the 
franchisor.
    (2) The name and principal business address of any predecessors 
during the 10-year period immediately before the close of the 
franchisor's most recent fiscal year.
    (3) The name that the franchisor uses and any names it intends to 
use to conduct business.
    (4) The identity and principal business address of the franchisor's 
agent for service of process.
    (5) The type of business organization used by the franchisor (for 
example, corporation, partnership) and the state in which it was 
organized.
    (6) The following information about the franchisor's business and 
the franchises offered:
    (i) Whether the franchisor operates businesses of the type being 
franchised.
    (ii) The franchisor's other business activities.
    (iii) The business the franchisee will conduct.
    (iv) The general market for the product or service the franchisee 
will offer. In describing the general market, consider factors such as 
whether the market is developed or developing, whether the goods will be 
sold primarily to a certain group, and whether sales are seasonal.
    (v) In general terms, any laws or regulations specific to the 
industry in which the franchise business operates.
    (vi) A general description of the competition.
    (7) The prior business experience of the franchisor; any 
predecessors listed in Sec.436.5(a)(2) of this part; and any 
affiliates that offer franchises in any line of business or provide 
products or services to the franchisees of the franchisor, including:
    (i) The length of time each has conducted the type of business the 
franchisee will operate.
    (ii) The length of time each has offered franchises providing the 
type of business the franchisee will operate.
    (iii) Whether each has offered franchises in other lines of 
business. If so, include:
    (A) A description of each other line of business.
    (B) The number of franchises sold in each other line of business.
    (C) The length of time each has offered franchises in each other 
line of business.
    (b) Item 2: Business Experience. Disclose by name and position the 
franchisor's directors, trustees, general partners, principal officers, 
and any

[[Page 476]]

other individuals who will have management responsibility relating to 
the sale or operation of franchises offered by this document. For each 
person listed in this section, state his or her principal positions and 
employers during the past five years, including each position's starting 
date, ending date, and location.
    (c) Item 3: Litigation. (1) Disclose whether the franchisor; a 
predecessor; a parent or affiliate who induces franchise sales by 
promising to back the franchisor financially or otherwise guarantees the 
franchisor's performance; an affiliate who offers franchises under the 
franchisor's principal trademark; and any person identified in Sec.
436.5(b) of this part:
    (i) Has pending against that person:
    (A) An administrative, criminal, or material civil action alleging a 
violation of a franchise, antitrust, or securities law, or alleging 
fraud, unfair or deceptive practices, or comparable allegations.
    (B) Civil actions, other than ordinary routine litigation incidental 
to the business, which are material in the context of the number of 
franchisees and the size, nature, or financial condition of the 
franchise system or its business operations.
    (ii) Was a party to any material civil action involving the 
franchise relationship in the last fiscal year. For purposes of this 
section, ``franchise relationship'' means contractual obligations 
between the franchisor and franchisee directly relating to the operation 
of the franchised business (such as royalty payment and training 
obligations). It does not include actions involving suppliers or other 
third parties, or indemnification for tort liability.
    (iii) Has in the 10-year period immediately before the disclosure 
document's issuance date:
    (A) Been convicted of or pleaded nolo contendere to a felony charge.
    (B) Been held liable in a civil action involving an alleged 
violation of a franchise, antitrust, or securities law, or involving 
allegations of fraud, unfair or deceptive practices, or comparable 
allegations. ``Held liable'' means that, as a result of claims or 
counterclaims, the person must pay money or other consideration, must 
reduce an indebtedness by the amount of an award, cannot enforce its 
rights, or must take action adverse to its interests.
    (2) Disclose whether the franchisor; a predecessor; a parent or 
affiliate who guarantees the franchisor's performance; an affiliate who 
has offered or sold franchises in any line of business within the last 
10 years; or any other person identified in Sec.436.5(b) of this part 
is subject to a currently effective injunctive or restrictive order or 
decree resulting from a pending or concluded action brought by a public 
agency and relating to the franchise or to a Federal, State, or Canadian 
franchise, securities, antitrust, trade regulation, or trade practice 
law.
    (3) For each action identified in paragraphs (c)(1) and (2) of this 
section, state the title, case number or citation, the initial filing 
date, the names of the parties, the forum, and the relationship of the 
opposing party to the franchisor (for example, competitor, supplier, 
lessor, franchisee, former franchisee, or class of franchisees). Except 
as provided in paragraph (c)(4) of this section, summarize the legal and 
factual nature of each claim in the action, the relief sought or 
obtained, and any conclusions of law or fact. \1\ In addition, state:
---------------------------------------------------------------------------

    \1\ Franchisors may include a summary opinion of counsel concerning 
any action if counsel consent to use the summary opinion and the full 
opinion is attached to the disclosure document.
---------------------------------------------------------------------------

    (i) For pending actions, the status of the action.
    (ii) For prior actions, the date when the judgment was entered and 
any damages or settlement terms. \2\
---------------------------------------------------------------------------

    \2\ If a settlement agreement must be disclosed in this Item, all 
material settlement terms must be disclosed, whether or not the 
agreement is confidential. However, franchisors need not disclose the 
terms of confidential settlements entered into before commencing 
franchise sales. Further, any franchisor who has historically used only 
the Franchise Rule format, or who is new to franchising, need not 
disclose confidential settlements entered prior to the effective date of 
this Rule.
---------------------------------------------------------------------------

    (iii) For injunctive or restrictive orders, the nature, terms, and 
conditions of the order or decree.

[[Page 477]]

    (iv) For convictions or pleas, the crime or violation, the date of 
conviction, and the sentence or penalty imposed.
    (4) For any other franchisor-initiated suit identified in paragraph 
(c)(1)(ii) of this section, the franchisor may comply with the 
requirements of paragraphs (c)(3)(i) through (iv) of this section by 
listing individual suits under one common heading that will serve as the 
case summary (for example, ``royalty collection suits'').
    (d) Item 4: Bankruptcy. (1) Disclose whether the franchisor; any 
parent; predecessor; affiliate; officer, or general partner of the 
franchisor, or any other individual who will have management 
responsibility relating to the sale or operation of franchises offered 
by this document, has, during the 10-year period immediately before the 
date of this disclosure document:
    (i) Filed as debtor (or had filed against it) a petition under the 
United States Bankruptcy Code (``Bankruptcy Code'').
    (ii) Obtained a discharge of its debts under the Bankruptcy Code.
    (iii) Been a principal officer of a company or a general partner in 
a partnership that either filed as a debtor (or had filed against it) a 
petition under the Bankruptcy Code, or that obtained a discharge of its 
debts under the Bankruptcy Code while, or within one year after, the 
officer or general partner held the position in the company.
    (2) For each bankruptcy, state:
    (i) The current name, address, and principal place of business of 
the debtor.
    (ii) Whether the debtor is the franchisor. If not, state the 
relationship of the debtor to the franchisor (for example, affiliate, 
officer).
    (iii) The date of the original filing and the material facts, 
including the bankruptcy court, and the case name and number. If 
applicable, state the debtor's discharge date, including discharges 
under Chapter 7 and confirmation of any plans of reorganization under 
Chapters 11 and 13 of the Bankruptcy Code.
    (3) Disclose cases, actions, and other proceedings under the laws of 
foreign nations relating to bankruptcy.
    (e) Item 5: Initial Fees. Disclose the initial fees and any 
conditions under which these fees are refundable. If the initial fees 
are not uniform, disclose the range or formula used to calculate the 
initial fees paid in the fiscal year before the issuance date and the 
factors that determined the amount. For this section, ``initial fees'' 
means all fees and payments, or commitments to pay, for services or 
goods received from the franchisor or any affiliate before the 
franchisee's business opens, whether payable in lump sum or 
installments. Disclose installment payment terms in this section or in 
Sec.436.5(j) of this part.
    (f) Item 6: Other Fees. Disclose, in the following tabular form, all 
other fees that the franchisee must pay to the franchisor or its 
affiliates, or that the franchisor or its affiliates impose or collect 
in whole or in part for a third party. State the title ``OTHER FEES'' in 
capital letters using bold type. Include any formula used to compute the 
fees. \3\
---------------------------------------------------------------------------

    \3\ If fees may increase, disclose the formula that determines the 
increase or the maximum amount of the increase. For example, a 
percentage of gross sales is acceptable if the franchisor defines the 
term ``gross sales.''

                              Item 6 Table
                               OTHER FEES
------------------------------------------------------------------------
 Column 1 Type of                       Column 3 Due
       fee          Column 2 Amount         Date        Column 4 Remarks
------------------------------------------------------------------------
                   .................  ................  ................
------------------------------------------------------------------------

    (1) In column 1, list the type of fee (for example, royalties, and 
fees for lease negotiations, construction, remodeling, additional 
training or assistance, advertising, advertising cooperatives, 
purchasing cooperatives, audits,

[[Page 478]]

accounting, inventory, transfers, and renewals).
    (2) In column 2, state the amount of the fee.
    (3) In column 3, state the due date for each fee.
    (4) In column 4, include remarks, definitions, or caveats that 
elaborate on the information in the table. If remarks are long, 
franchisors may use footnotes instead of the remarks column. If 
applicable, include the following information in the remarks column or 
in a footnote:
    (i) Whether the fees are payable only to the franchisor.
    (ii) Whether the fees are imposed and collected by the franchisor.
    (iii) Whether the fees are non-refundable or describe the 
circumstances when the fees are refundable.
    (iv) Whether the fees are uniformly imposed.
    (v) The voting power of franchisor-owned outlets on any fees imposed 
by cooperatives. If franchisor-owned outlets have controlling voting 
power, disclose the maximum and minimum fees that may be imposed.
    (g) Item 7: Estimated Initial Investment. Disclose, in the following 
tabular form, the franchisee's estimated initial investment. State the 
title ``YOUR ESTIMATED INITIAL INVESTMENT'' in capital letters using 
bold type. Franchisors may include additional expenditure tables to show 
expenditure variations caused by differences such as in site location 
and premises size.

                                                  Item 7 Table:
                                        YOUR ESTIMATED INITIAL INVESTMENT
----------------------------------------------------------------------------------------------------------------
                                                                                              Column 4 To whom
   Column 1 Type of       Column 2 Amount       Column 3 Method of     Column 4 When due      payment is to be
     expenditure                                     payment                                        made
----------------------------------------------------------------------------------------------------------------
                       .....................  .....................  .....................  ....................
----------------------------------------------------------------------------------------------------------------
Total.                 .....................  .....................  .....................  ....................
----------------------------------------------------------------------------------------------------------------

    (1) In column 1:
    (i) List each type of expense, beginning with pre-opening expenses. 
Include the following expenses, if applicable. Use footnotes to include 
remarks, definitions, or caveats that elaborate on the information in 
the Table.
    (A) The initial franchise fee.
    (B) Training expenses.
    (C) Real property, whether purchased or leased.
    (D) Equipment, fixtures, other fixed assets, construction, 
remodeling, leasehold improvements, and decorating costs, whether 
purchased or leased.
    (E) Inventory to begin operating.
    (F) Security deposits, utility deposits, business licenses, and 
other prepaid expenses.
    (ii) List separately and by name any other specific required 
payments (for example, additional training, travel, or advertising 
expenses) that the franchisee must make to begin operations.
    (iii) Include a category titled ``Additional funds-- [initial 
period]'' for any other required expenses the franchisee will incur 
before operations begin and during the initial period of operations. 
State the initial period. A reasonable initial period is at least three 
months or a reasonable period for the industry. Describe in general 
terms the factors, basis, and experience that the franchisor considered 
or relied upon in formulating the amount required for additional funds.
    (2) In column 2, state the amount of the payment. If the amount is 
unknown, use a low-high range based on the franchisor's current 
experience. If real property costs cannot be estimated in a low-high 
range, describe the approximate size of the property and building and 
the probable location of the building (for example, strip shopping 
center, mall, downtown, rural, or highway).
    (3) In column 3, state the method of payment.
    (4) In column 4, state the due date.

[[Page 479]]

    (5) In column 5, state to whom payment will be made.
    (6) Total the initial investment, incorporating ranges of fees, if 
used.
    (7) In a footnote, state:
    (i) Whether each payment is non-refundable, or describe the 
circumstances when each payment is refundable.
    (ii) If the franchisor or an affiliate finances part of the initial 
investment, the amount that it will finance, the required down payment, 
the annual interest rate, rate factors, and the estimated loan 
repayments. Franchisors may refer to Sec.436.5(j) of this part for 
additional details.
    (h) Item 8: Restrictions on Sources of Products and Services. 
Disclose the franchisee's obligations to purchase or lease goods, 
services, supplies, fixtures, equipment, inventory, computer hardware 
and software, real estate, or comparable items related to establishing 
or operating the franchised business either from the franchisor, its 
designee, or suppliers approved by the franchisor, or under the 
franchisor's specifications. Include obligations to purchase imposed by 
the franchisor's written agreement or by the franchisor's practice. \4\ 
For each applicable obligation, state:
---------------------------------------------------------------------------

    \4\ Franchisors may include the reason for the requirement. 
Franchisors need not disclose in this Item the purchase or lease of 
goods or services provided as part of the franchise without a separate 
charge (such as initial training, if the cost is included in the 
franchise fee). Describe such fees in Item 5 of this section. Do not 
disclose fees already described in Sec.436.5(f) of this part.
---------------------------------------------------------------------------

    (1) The good or service required to be purchased or leased.
    (2) Whether the franchisor or its affiliates are approved suppliers 
or the only approved suppliers of that good or service.
    (3) Any supplier in which an officer of the franchisor owns an 
interest.
    (4) How the franchisor grants and revokes approval of alternative 
suppliers, including:
    (i) Whether the franchisor's criteria for approving suppliers are 
available to franchisees.
    (ii) Whether the franchisor permits franchisees to contract with 
alternative suppliers who meet the franchisor's criteria.
    (iii) Any fees and procedures to secure approval to purchase from 
alternative suppliers.
    (iv) The time period in which the franchisee will be notified of 
approval or disapproval.
    (v) How approvals are revoked.
    (5) Whether the franchisor issues specifications and standards to 
franchisees, subfranchisees, or approved suppliers. If so, describe how 
the franchisor issues and modifies specifications.
    (6) Whether the franchisor or its affiliates will or may derive 
revenue or other material consideration from required purchases or 
leases by franchisees. If so, describe the precise basis by which the 
franchisor or its affiliates will or may derive that consideration by 
stating:
    (i) The franchisor's total revenue. \5\
---------------------------------------------------------------------------

    \5\ Take figures from the franchisor's most recent annual audited 
financial statement required in Sec.436.5(u) of this part. If audited 
statements are not yet required, or if the entity deriving the income is 
an affiliate, disclose the sources of information used in computing 
revenues.
---------------------------------------------------------------------------

    (ii) The franchisor's revenues from all required purchases and 
leases of products and services.
    (iii) The percentage of the franchisor's total revenues that are 
from required purchases or leases.
    (iv) If the franchisor's affiliates also sell or lease products or 
services to franchisees, the affiliates' revenues from those sales or 
leases.
    (7) The estimated proportion of these required purchases and leases 
by the franchisee to all purchases and leases by the franchisee of goods 
and services in establishing and operating the franchised businesses.
    (8) If a designated supplier will make payments to the franchisor 
from franchisee purchases, disclose the basis for the payment (for 
example, specify a percentage or a flat amount). For purposes of this 
disclosure, a ``payment'' includes the sale of similar goods or services 
to the franchisor at a lower price than to franchisees.
    (9) The existence of purchasing or distribution cooperatives.

[[Page 480]]

    (10) Whether the franchisor negotiates purchase arrangements with 
suppliers, including price terms, for the benefit of franchisees.
    (11) Whether the franchisor provides material benefits (for example, 
renewal or granting additional franchises) to a franchisee based on a 
franchisee's purchase of particular products or services or use of 
particular suppliers.
    (i) Item 9: Franchisee's Obligations. Disclose, in the following 
tabular form, a list of the franchisee's principal obligations. State 
the title ``FRANCHISEE'S OBLIGATIONS'' in capital letters using bold 
type. Cross-reference each listed obligation with any applicable section 
of the franchise or other agreement and with the relevant disclosure 
document provision. If a particular obligation is not applicable, state 
``Not Applicable.'' Include additional obligations, as warranted.

                              Item 9 Table:
                        FRANCHISEE'S OBLIGATIONS
     [In bold] This table lists your principal obligations under the
   franchise and other agreements. It will help you find more detailed
   information about your obligations in these agreements and in other
                   items of this disclosure document.
------------------------------------------------------------------------
                                        Section in         Disclosure
            Obligation                  agreement        document item
------------------------------------------------------------------------
a. Site selection and acquisition/  .................  .................
 lease
------------------------------------------------------------------------
b. Pre-opening purchase/leases      .................  .................
------------------------------------------------------------------------
c. Site development and other pre-  .................  .................
 opening requirements
------------------------------------------------------------------------
d. Initial and ongoing training     .................  .................
------------------------------------------------------------------------
e. Opening                          .................  .................
------------------------------------------------------------------------
f. Fees                             .................  .................
------------------------------------------------------------------------
g. Compliance with standards and    .................  .................
 policies/operating manual
------------------------------------------------------------------------
h. Trademarks and proprietary       .................  .................
 information
------------------------------------------------------------------------
i. Restrictions on products/        .................  .................
 services offered
------------------------------------------------------------------------
j. Warranty and customer service    .................  .................
 requirements
------------------------------------------------------------------------
k. Territorial development and      .................  .................
 sales quotas
------------------------------------------------------------------------
l. Ongoing product/service          .................  .................
 purchases
------------------------------------------------------------------------
m. Maintenance, appearance, and     .................  .................
 remodeling requirements
------------------------------------------------------------------------
n. Insurance                        .................  .................
------------------------------------------------------------------------
o. Advertising                      .................  .................
------------------------------------------------------------------------
p. Indemnification                  .................  .................
------------------------------------------------------------------------
q. Owner's participation/           .................  .................
 management/staffing
------------------------------------------------------------------------
r. Records and reports              .................  .................
------------------------------------------------------------------------
s. Inspections and audits           .................  .................
------------------------------------------------------------------------
t. Transfer                         .................  .................
------------------------------------------------------------------------
u. Renewal                          .................  .................
------------------------------------------------------------------------
v. Post-termination obligations     .................  .................
------------------------------------------------------------------------
w. Non-competition covenants        .................  .................
------------------------------------------------------------------------
x. Dispute resolution               .................  .................
------------------------------------------------------------------------
y. Other (describe)                 .................  .................
------------------------------------------------------------------------
------------------------------------------------------------------------


[[Page 481]]

    (j) Item 10: Financing. (1) Disclose the terms of each financing 
arrangement, including leases and installment contracts, that the 
franchisor, its agent, or affiliates offer directly or indirectly to the 
franchisee. \6\ The franchisor may summarize the terms of each financing 
arrangement in tabular form, using footnotes to provide additional 
information. For a sample Item 10 table, see appendix A of this part. 
For each financing arrangement, state:
---------------------------------------------------------------------------

    \6\ Indirect offers of financing include a written arrangement 
between a franchisor or its affiliate and a lender, for the lender to 
offer financing to a franchisee; an arrangement in which a franchisor or 
its affiliate receives a benefit from a lender in exchange for financing 
a franchise purchase; and a franchisor's guarantee of a note, lease, or 
other obligation of the franchisee.
---------------------------------------------------------------------------

    (i) What the financing covers (for example, the initial franchise 
fee, site acquisition, construction or remodeling, initial or 
replacement equipment or fixtures, opening or ongoing inventory or 
supplies, or other continuing expenses). \7\
---------------------------------------------------------------------------

    \7\ Include sample copies of the financing documents as an exhibit 
to Sec.436.5(v) of this part. Cite the section and name of the 
document containing the financing terms and conditions.
---------------------------------------------------------------------------

    (ii) The identity of each lender providing financing and their 
relationship to the franchisor (for example, affiliate).
    (iii) The amount of financing offered or, if the amount depends on 
an actual cost that may vary, the percentage of the cost that will be 
financed.
    (iv) The rate of interest, plus finance charges, expressed on an 
annual basis. If the rate of interest, plus finance charges, expressed 
on an annual basis, may differ depending on when the financing is 
issued, state what that rate was on a specified recent date.
    (v) The number of payments or the period of repayment.
    (vi) The nature of any security interest required by the lender.
    (vii) Whether a person other than the franchisee must personally 
guarantee the debt.
    (viii) Whether the debt can be prepaid and the nature of any 
prepayment penalty.
    (ix) The franchisee's potential liabilities upon default, including 
any:
    (A) Accelerated obligation to pay the entire amount due;
    (B) Obligations to pay court costs and attorney's fees incurred in 
collecting the debt;
    (C) Termination of the franchise; and
    (D) Liabilities from cross defaults such as those resulting directly 
from non-payment, or indirectly from the loss of business property.
    (x) Other material financing terms.
    (2) Disclose whether the loan agreement requires franchisees to 
waive defenses or other legal rights (for example, confession of 
judgment), or bars franchisees from asserting a defense against the 
lender, the lender's assignee or the franchisor. If so, describe the 
relevant provisions.
    (3) Disclose whether the franchisor's practice or intent is to sell, 
assign, or discount to a third party all or part of the financing 
arrangement. If so, state:
    (i) The assignment terms, including whether the franchisor will 
remain primarily obligated to provide the financed goods or services; 
and
    (ii) That the franchisee may lose all its defenses against the 
lender as a result of the sale or assignment.
    (4) Disclose whether the franchisor or an affiliate receives any 
consideration for placing financing with the lender. If such payments 
exist:
    (i) Disclose the amount or the method of determining the payment; 
and
    (ii) Identify the source of the payment and the relationship of the 
source to the franchisor or its affiliates.
    (k) Item 11: Franchisor's Assistance, Advertising, Computer Systems, 
and Training. Disclose the franchisor's principal assistance and related 
obligations of both the franchisor and franchisee as follows. For each 
obligation, cite the section number of the franchise agreement imposing 
the obligation. Begin by stating the following sentence in bold type: 
``Except as listed below, [the franchisor] is not required to provide 
you with any assistance.''
    (1) Disclose the franchisor's pre-opening obligations to the 
franchisee, including any assistance in:
    (i) Locating a site and negotiating the purchase or lease of the 
site. If such assistance is provided, state:

[[Page 482]]

    (A) Whether the franchisor generally owns the premises and leases it 
to the franchisee.
    (B) Whether the franchisor selects the site or approves an area in 
which the franchisee selects a site. If so, state further whether and 
how the franchisor must approve a franchisee-selected site.
    (C) The factors that the franchisor considers in selecting or 
approving sites (for example, general location and neighborhood, traffic 
patterns, parking, size, physical characteristics of existing buildings, 
and lease terms).
    (D) The time limit for the franchisor to locate or approve or 
disapprove the site and the consequences if the franchisor and 
franchisee cannot agree on a site.
    (ii) Conforming the premises to local ordinances and building codes 
and obtaining any required permits.
    (iii) Constructing, remodeling, or decorating the premises.
    (iv) Hiring and training employees.
    (v) Providing for necessary equipment, signs, fixtures, opening 
inventory, and supplies. If any such assistance is provided, state:
    (A) Whether the franchisor provides these items directly or only 
provides the names of approved suppliers.
    (B) Whether the franchisor provides written specifications for these 
items.
    (C) Whether the franchisor delivers or installs these items.
    (2) Disclose the typical length of time between the earlier of the 
signing of the franchise agreement or the first payment of consideration 
for the franchise and the opening of the franchisee's business. Describe 
the factors that may affect the time period, such as ability to obtain a 
lease, financing or building permits, zoning and local ordinances, 
weather conditions, shortages, or delayed installation of equipment, 
fixtures, and signs.
    (3) Disclose the franchisor's obligations to the franchisee during 
the operation of the franchise, including any assistance in:
    (i) Developing products or services the franchisee will offer to its 
customers.
    (ii) Hiring and training employees.
    (iii) Improving and developing the franchised business.
    (iv) Establishing prices.
    (v) Establishing and using administrative, bookkeeping, accounting, 
and inventory control procedures.
    (vi) Resolving operating problems encountered by the franchisee.
    (4) Describe the advertising program for the franchise system, 
including the following:
    (i)The franchisor's obligation to conduct advertising, including:
    (A) The media the franchisor may use.
    (B) Whether media coverage is local, regional, or national.
    (C) The source of the advertising (for example, an in-house 
advertising department or a national or regional advertising agency).
    (D) Whether the franchisor must spend any amount on advertising in 
the area or territory where the franchisee is located.
    (ii) The circumstances when the franchisor will permit franchisees 
to use their own advertising material.
    (iii) Whether there is an advertising council composed of 
franchisees that advises the franchisor on advertising policies. If so, 
disclose:
    (A) How members of the council are selected.
    (B) Whether the council serves in an advisory capacity only or has 
operational or decision-making power.
    (C) Whether the franchisor has the power to form, change, or 
dissolve the advertising council.
    (iv) Whether the franchisee must participate in a local or regional 
advertising cooperative. If so, state:
    (A) How the area or membership of the cooperative is defined.
    (B) How much the franchisee must contribute to the fund and whether 
other franchisees must contribute a different amount or at a different 
rate.
    (C) Whether the franchisor-owned outlets must contribute to the fund 
and, if so, whether those contributions are on the same basis as those 
for franchisees.
    (D) Who is responsible for administering the cooperative (for 
example, franchisor, franchisees, or advertising agency).
    (E) Whether cooperatives must operate from written governing 
documents

[[Page 483]]

and whether the documents are available for the franchisee to review.
    (F) Whether cooperatives must prepare annual or periodic financial 
statements and whether the statements are available for review by the 
franchisee.
    (G) Whether the franchisor has the power to require cooperatives to 
be formed, changed, dissolved, or merged.
    (v) Whether the franchisee must participate in any other advertising 
fund. If so, state:
    (A) Who contributes to the fund.
    (B) How much the franchisee must contribute to the fund and whether 
other franchisees must contribute a different amount or at a different 
rate.
    (C) Whether the franchisor-owned outlets must contribute to the fund 
and, if so, whether it is on the same basis as franchisees.
    (D) Who administers the fund.
    (E) Whether the fund is audited and when it is audited.
    (F) Whether financial statements of the fund are available for 
review by the franchisee.
    (G) How the funds were used in the most recently concluded fiscal 
year, including the percentages spent on production, media placement, 
administrative expenses, and a description of any other use.
    (vi) If not all advertising funds are spent in the fiscal year in 
which they accrue, how the franchisor uses the remaining amount, 
including whether franchisees receive a periodic accounting of how 
advertising fees are spent.
    (vii) The percentage of advertising funds, if any, that the 
franchisor uses principally to solicit new franchise sales.
    (5) Disclose whether the franchisor requires the franchisee to buy 
or use electronic cash registers or computer systems. If so, describe 
the systems generally in non-technical language, including the types of 
data to be generated or stored in these systems, and state the 
following:
    (i) The cost of purchasing or leasing the systems.
    (ii) Any obligation of the franchisor, any affiliate, or third party 
to provide ongoing maintenance, repairs, upgrades, or updates.
    (iii) Any obligations of the franchisee to upgrade or update any 
system during the term of the franchise, and, if so, any contractual 
limitations on the frequency and cost of the obligation.
    (iv) The annual cost of any optional or required maintenance, 
updating, upgrading, or support contracts.
    (v) Whether the franchisor will have independent access to the 
information that will be generated or stored in any electronic cash 
register or computer system. If so, describe the information that the 
franchisor may access and whether there are any contractual limitations 
on the franchisor's right to access the information.
    (6) Disclose the table of contents of the franchisor's operating 
manual provided to franchisees as of the franchisor's last fiscal year-
end or a more recent date. State the number of pages devoted to each 
subject and the total number of pages in the manual as of this date. 
This disclosure may be omitted if the franchisor offers the prospective 
franchisee the opportunity to view the manual before buying the 
franchise.
    (7) Disclose the franchisor's training program as of the 
franchisor's last fiscal year-end or a more recent date.
    (i) Describe the training program in the following tabular form. 
Title the table ``TRAINING PROGRAM'' in capital letters and bold type.

                              Item 11 Table
                            TRAINING PROGRAM
------------------------------------------------------------------------
                   Column 2 Hours of   Column 3 Hours
 Column 1 Subject      Classroom        of On-The-Job       Column 4
                        Training          Training          Location
------------------------------------------------------------------------
                   .................  ................  ................
------------------------------------------------------------------------

    (A) In column 1, state the subjects taught.
    (B) In column 2, state the hours of classroom training for each 
subject.

[[Page 484]]

    (C) In column 3, state the hours of on-the-job training for each 
subject.
    (D) In column 4, state the location of the training for each 
subject.
    (ii) State further:
    (A) How often training classes are held and the nature of the 
location or facility where training is held (for example, company, home, 
office, franchisor-owned store).
    (B) The nature of instructional materials and the instructor's 
experience, including the instructor's length of experience in the field 
and with the franchisor. State only experience relevant to the subject 
taught and the franchisor's operations.
    (C) Any charges franchisees must pay for training and who must pay 
travel and living expenses of the training program enrollees.
    (D) Who may and who must attend training. State whether the 
franchisee or other persons must complete the program to the 
franchisor's satisfaction. If successful completion is required, state 
how long after signing the agreement or before opening the business the 
training must be completed. If training is not mandatory, state the 
percentage of new franchisees that enrolled in the training program 
during the preceding 12 months.
    (E) Whether additional training programs or refresher courses are 
required.
    (l) Item 12: Territory. Disclose:
    (1) Whether the franchise is for a specific location or a location 
to be approved by the franchisor.
    (2) Any minimum territory granted to the franchisee (for example, a 
specific radius, a distance sufficient to encompass a specified 
population, or another specific designation).
    (3) The conditions under which the franchisor will approve the 
relocation of the franchised business or the franchisee's establishment 
of additional franchised outlets.
    (4) Franchisee options, rights of first refusal, or similar rights 
to acquire additional franchises.
    (5) Whether the franchisor grants an exclusive territory.
    (i) If the franchisor does not grant an exclusive territory, state: 
``You will not receive an exclusive territory. You may face competition 
from other franchisees, from outlets that we own, or from other channels 
of distribution or competitive brands that we control.''
    (ii) If the franchisor grants an exclusive territory, disclose:
    (A) Whether continuation of territorial exclusivity depends on 
achieving a certain sales volume, market penetration, or other 
contingency, and the circumstances when the franchisee's territory may 
be altered. Describe any sales or other conditions. State the 
franchisor's rights if the franchisee fails to meet the requirements.
    (B) Any other circumstances that permit the franchisor to modify the 
franchisee's territorial rights (for example, a population increase in 
the territory giving the franchisor the right to grant an additional 
franchise in the area) and the effect of such modifications on the 
franchisee's rights.
    (6) For all territories (exclusive and non-exclusive):
    (i) Any restrictions on the franchisor from soliciting or accepting 
orders from consumers inside the franchisee's territory, including:
    (A) Whether the franchisor or an affiliate has used or reserves the 
right to use other channels of distribution, such as the Internet, 
catalog sales, telemarketing, or other direct marketing sales, to make 
sales within the franchisee's territory using the franchisor's principal 
trademarks.
    (B) Whether the franchisor or an affiliate has used or reserves the 
right to use other channels of distribution, such as the Internet, 
catalog sales, telemarketing, or other direct marketing, to make sales 
within the franchisee's territory of products or services under 
trademarks different from the ones the franchisee will use under the 
franchise agreement.
    (C) Any compensation that the franchisor must pay for soliciting or 
accepting orders from inside the franchisee's territory.
    (ii) Any restrictions on the franchisee from soliciting or accepting 
orders from consumers outside of his or her territory, including whether 
the franchisee has the right to use other channels of distribution, such 
as the Internet, catalog sales, telemarketing,

[[Page 485]]

or other direct marketing, to make sales outside of his or her 
territory.
    (iii) If the franchisor or an affiliate operates, franchises, or has 
plans to operate or franchise a business under a different trademark and 
that business sells or will sell goods or services similar to those the 
franchisee will offer, describe:
    (A) The similar goods and services.
    (B) The different trademark.
    (C) Whether outlets will be franchisor owned or operated.
    (D) Whether the franchisor or its franchisees who use the different 
trademark will solicit or accept orders within the franchisee's 
territory.
    (E) The timetable for the plan.
    (F) How the franchisor will resolve conflicts between the franchisor 
and franchisees and between the franchisees of each system regarding 
territory, customers, and franchisor support.
    (G) The principal business address of the franchisor's similar 
operating business. If it is the same as the franchisor's principal 
business address stated in Sec.436.5(a) of this part, disclose whether 
the franchisor maintains (or plans to maintain) physically separate 
offices and training facilities for the similar competing business.
    (m) Item 13: Trademarks. (1) Disclose each principal trademark to be 
licensed to the franchisee. For this Item, ``principal trademark'' means 
the primary trademarks, service marks, names, logos, and commercial 
symbols the franchisee will use to identify the franchised business. It 
may not include every trademark the franchisor owns.
    (2) Disclose whether each principal trademark is registered with the 
United States Patent and Trademark Office. If so, state:
    (i) The date and identification number of each trademark 
registration.
    (ii) Whether the franchisor has filed all required affidavits.
    (iii) Whether any registration has been renewed.
    (iv) Whether the principal trademarks are registered on the 
Principal or Supplemental Register of the United States Patent and 
Trademark Office.
    (3) If the principal trademark is not registered with the United 
States Patent and Trademark Office, state whether the franchisor has 
filed any trademark application, including any ``intent to use'' 
application or an application based on actual use. If so, state the date 
and identification number of the application.
    (4) If the trademark is not registered on the Principal Register of 
the United States Patent and Trademark Office, state: ``We do not have a 
federal registration for our principal trademark. Therefore, our 
trademark does not have many legal benefits and rights as a federally 
registered trademark. If our right to use the trademark is challenged, 
you may have to change to an alternative trademark, which may increase 
your expenses.''
    (5) Disclose any currently effective material determinations of the 
United States Patent and Trademark Office, the Trademark Trial and 
Appeal Board, or any state trademark administrator or court; and any 
pending infringement, opposition, or cancellation proceeding. Include 
infringement, opposition, or cancellation proceedings in which the 
franchisor unsuccessfully sought to prevent registration of a trademark 
in order to protect a trademark licensed by the franchisor. Describe how 
the determination affects the ownership, use, or licensing of the 
trademark.
    (6) Disclose any pending material federal or state court litigation 
regarding the franchisor's use or ownership rights in a trademark. For 
each pending action, disclose: \8\
---------------------------------------------------------------------------

    \8\ The franchisor may include an attorney's opinion relative to the 
merits of litigation or of an action if the attorney issuing the opinion 
consents to its use. The text of the disclosure may include a summary of 
the opinion if the full opinion is attached and the attorney issuing the 
opinion consents to the use of the summary.
---------------------------------------------------------------------------

    (i) The forum and case number.
    (ii) The nature of claims made opposing the franchisor's use of the 
trademark or by the franchisor opposing another person's use of the 
trademark.
    (iii) Any effective court or administrative agency ruling in the 
matter.
    (7) Disclose any currently effective agreements that significantly 
limit the franchisor's rights to use or license the use of trademarks 
listed in this section

[[Page 486]]

in a manner material to the franchise. For each agreement, disclose:
    (i) The manner and extent of the limitation or grant.
    (ii) The extent to which the agreement may affect the franchisee.
    (iii) The agreement's duration.
    (iv) The parties to the agreement.
    (v) The circumstances when the agreement may be canceled or 
modified.
    (vi) All other material terms.
    (8) Disclose:
    (i) Whether the franchisor must protect the franchisee's right to 
use the principal trademarks listed in this section, and must protect 
the franchisee against claims of infringement or unfair competition 
arising out of the franchisee's use of the trademarks.
    (ii) The franchisee's obligation to notify the franchisor of the use 
of, or claims of rights to, a trademark identical to or confusingly 
similar to a trademark licensed to the franchisee.
    (iii) Whether the franchise agreement requires the franchisor to 
take affirmative action when notified of these uses or claims.
    (iv) Whether the franchisor or franchisee has the right to control 
any administrative proceedings or litigation involving a trademark 
licensed by the franchisor to the franchisee.
    (v) Whether the franchise agreement requires the franchisor to 
participate in the franchisee's defense and/or indemnify the franchisee 
for expenses or damages if the franchisee is a party to an 
administrative or judicial proceeding involving a trademark licensed by 
the franchisor to the franchisee, or if the proceeding is resolved 
unfavorably to the franchisee.
    (vi) The franchisee's rights under the franchise agreement if the 
franchisor requires the franchisee to modify or discontinue using a 
trademark.
    (9) Disclose whether the franchisor knows of either superior prior 
rights or infringing uses that could materially affect the franchisee's 
use of the principal trademarks in the state where the franchised 
business will be located. For each use of a principal trademark that the 
franchisor believes is an infringement that could materially affect the 
franchisee's use of a trademark, disclose:
    (i) The nature of the infringement.
    (ii) The locations where the infringement is occurring.
    (iii) The length of time of the infringement (to the extent known).
    (iv) Any action taken or anticipated by the franchisor.
    (n) Item 14: Patents, Copyrights, and Proprietary Information. (1) 
Disclose whether the franchisor owns rights in, or licenses to, patents 
or copyrights that are material to the franchise. Also, disclose whether 
the franchisor has any pending patent applications that are material to 
the franchise. If so, state:
    (i) The nature of the patent, patent application, or copyright and 
its relationship to the franchise.
    (ii) For each patent:
    (A) The duration of the patent.
    (B) The type of patent (for example, mechanical, process, or 
design).
    (C) The patent number, issuance date, and title.
    (iii) For each patent application:
    (A) The type of patent application (for example, mechanical, 
process, or design).
    (B) The serial number, filing date, and title.
    (iv) For each copyright:
    (A) The duration of the copyright.
    (B) The registration number and date.
    (C) Whether the franchisor can and intends to renew the copyright.
    (2) Describe any current material determination of the United States 
Patent and Trademark Office, the United States Copyright Office, or a 
court regarding the patent or copyright. Include the forum and matter 
number. Describe how the determination affects the franchised business.
    (3) State the forum, case number, claims asserted, issues involved, 
and effective determinations for any material proceeding pending in the 
United States Patent and Trademark Office or any court. \9\
---------------------------------------------------------------------------

    \9\ If counsel consents, the franchisor may include a counsel's 
opinion or a summary of the opinion if the full opinion is attached.
---------------------------------------------------------------------------

    (4) If an agreement limits the use of the patent, patent 
application, or copyright, state the parties to and duration of the 
agreement, the extent to which the agreement may affect the

[[Page 487]]

franchisee, and other material terms of the agreement.
    (5) Disclose the franchisor's obligation to protect the patent, 
patent application, or copyright; and to defend the franchisee against 
claims arising from the franchisee's use of patented or copyrighted 
items, including:
    (i) Whether the franchisor's obligation is contingent upon the 
franchisee notifying the franchisor of any infringement claims or 
whether the franchisee's notification is discretionary.
    (ii) Whether the franchise agreement requires the franchisor to take 
affirmative action when notified of infringement.
    (iii) Who has the right to control any litigation.
    (iv) Whether the franchisor must participate in the defense of a 
franchisee or indemnify the franchisee for expenses or damages in a 
proceeding involving a patent, patent application, or copyright licensed 
to the franchisee.
    (v) Whether the franchisor's obligation is contingent upon the 
franchisee modifying or discontinuing the use of the subject matter 
covered by the patent or copyright.
    (vi) The franchisee's rights under the franchise agreement if the 
franchisor requires the franchisee to modify or discontinue using the 
subject matter covered by the patent or copyright.
    (6) If the franchisor knows of any patent or copyright infringement 
that could materially affect the franchisee, disclose:
    (i) The nature of the infringement.
    (ii) The locations where the infringement is occurring.
    (iii) The length of time of the infringement (to the extent known).
    (iv) Any action taken or anticipated by the franchisor.
    (7) If the franchisor claims proprietary rights in other 
confidential information or trade secrets, describe in general terms the 
proprietary information communicated to the franchisee and the terms for 
use by the franchisee. The franchisor need only describe the general 
nature of the proprietary information, such as whether a formula or 
recipe is considered to be a trade secret.
    (o) Item 15: Obligation to Participate in the Actual Operation of 
the Franchise Business. (1) Disclose the franchisee's obligation to 
participate personally in the direct operation of the franchisee's 
business and whether the franchisor recommends participation. Include 
obligations arising from any written agreement or from the franchisor's 
practice.
    (2) If personal ``on-premises'' supervision is not required, 
disclose the following:
    (i) If the franchisee is an individual, whether the franchisor 
recommends on-premises supervision by the franchisee.
    (ii) Limits on whom the franchisee can hire as an on-premises 
supervisor.
    (iii) Whether an on-premises supervisor must successfully complete 
the franchisor's training program.
    (iv) If the franchisee is a business entity, the amount of equity 
interest, if any, that the on-premises supervisor must have in the 
franchisee's business.
    (3) Disclose any restrictions that the franchisee must place on its 
manager (for example, maintain trade secrets, covenants not to compete).
    (p) Item 16: Restrictions on What the Franchisee May Sell. Disclose 
any franchisor-imposed restrictions or conditions on the goods or 
services that the franchisee may sell or that limit access to customers, 
including:
    (1) Any obligation on the franchisee to sell only goods or services 
approved by the franchisor.
    (2) Any obligation on the franchisee to sell all goods or services 
authorized by the franchisor.
    (3) Whether the franchisor has the right to change the types of 
authorized goods or services and whether there are limits on the 
franchisor's right to make changes.
    (q) Item 17: Renewal, Termination, Transfer, and Dispute Resolution. 
Disclose, in the following tabular form, a table that cross-references 
each enumerated franchise relationship item with the applicable 
provision in the franchise or related agreement. Title the table ``THE 
FRANCHISE RELATIONSHIP'' in capital letters and bold type.

[[Page 488]]

    (1) Describe briefly each contractual provision. If a particular 
item is not applicable, state ``Not Applicable.''
    (2) If the agreement is silent about one of the listed provisions, 
but the franchisor unilaterally offers to provide certain benefits or 
protections to franchisees as a matter of policy, use a footnote to 
describe the policy and state whether the policy is subject to change.
    (3) In the summary column for Item 17(c), state what the term 
``renewal'' means for your franchise system, including, if applicable, a 
statement that franchisees may be asked to sign a contract with 
materially different terms and conditions than their original contract.

                                                 Item 17 Table:
                                           THE FRANCHISE RELATIONSHIP
[In bold] This table lists certain important provisions of the franchise and related agreements. You should read
                    these provisions in the agreements attached to this disclosure document.
----------------------------------------------------------------------------------------------------------------
                                                         Section in franchise or
                      Provision                              other agreement                   Summary
----------------------------------------------------------------------------------------------------------------
a. Length of the franchise term                       ............................  ............................
----------------------------------------------------------------------------------------------------------------
b. Renewal or extension of the term                   ............................  ............................
----------------------------------------------------------------------------------------------------------------
c. Requirements for franchisee to renew or extend     ............................  ............................
----------------------------------------------------------------------------------------------------------------
d. Termination by franchisee                          ............................  ............................
----------------------------------------------------------------------------------------------------------------
e. Termination by franchisor without cause            ............................  ............................
----------------------------------------------------------------------------------------------------------------
f. Termination by franchisor with cause               ............................  ............................
----------------------------------------------------------------------------------------------------------------
g. ``Cause'' defined--curable defaults                ............................  ............................
----------------------------------------------------------------------------------------------------------------
h. ``Cause'' defined--non-curable defaults            ............................  ............................
----------------------------------------------------------------------------------------------------------------
i. Franchisee's obligations on termination/non-       ............................  ............................
 renewal
----------------------------------------------------------------------------------------------------------------
j. Assignment of contract by franchisor               ............................  ............................
----------------------------------------------------------------------------------------------------------------
k. ``Transfer'' by franchisee--defined                ............................  ............................
----------------------------------------------------------------------------------------------------------------
l. Franchisor approval of transfer by franchisee      ............................  ............................
----------------------------------------------------------------------------------------------------------------
m. Conditions for franchisor approval of transfer     ............................  ............................
----------------------------------------------------------------------------------------------------------------
n. Franchisor's right of first refusal to acquire     ............................  ............................
 franchisee's business
----------------------------------------------------------------------------------------------------------------
o. Franchisor's option to purchase franchisee's       ............................  ............................
 business
----------------------------------------------------------------------------------------------------------------
p. Death or disability of franchisee                  ............................  ............................
----------------------------------------------------------------------------------------------------------------
q. Non-competition covenants during the term of the   ............................  ............................
 franchise
----------------------------------------------------------------------------------------------------------------
r. Non-competition covenants after the franchise is   ............................  ............................
 terminated or expires
----------------------------------------------------------------------------------------------------------------
s. Modification of the agreement                      ............................  ............................
----------------------------------------------------------------------------------------------------------------
t. Integration/merger clause                          ............................  ............................
----------------------------------------------------------------------------------------------------------------
u. Dispute resolution by arbitration or mediation     ............................  ............................
----------------------------------------------------------------------------------------------------------------
v. Choice of forum                                    ............................  ............................
----------------------------------------------------------------------------------------------------------------
w. Choice of law                                      ............................  ............................
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------

    (r) Item 18: Public Figures. Disclose:
    (1) Any compensation or other benefit given or promised to a public 
figure arising from either the use of the public figure in the franchise 
name or symbol, or the public figure's endorsement or recommendation of 
the franchise to prospective franchisees.

[[Page 489]]

    (2) The extent to which the public figure is involved in the 
management or control of the franchisor. Describe the public figure's 
position and duties in the franchisor's business structure.
    (3) The public figure's total investment in the franchisor, 
including the amount the public figure contributed in services performed 
or to be performed. State the type of investment (for example, common 
stock, promissory note).
    (4) For purposes of this section, a public figure means a person 
whose name or physical appearance is generally known to the public in 
the geographic area where the franchise will be located.
    (s) Item 19: Financial Performance Representations. (1) Begin by 
stating the following:

     The FTC's Franchise Rule permits a franchisor to provide 
information about the actual or potential financial performance of its 
franchised and/or franchisor-owned outlets, if there is a reasonable 
basis for the information, and if the information is included in the 
disclosure document. Financial performance information that differs from 
that included in Item 19 may be given only if: (1) a franchisor provides 
the actual records of an existing outlet you are considering buying; or 
(2) a franchisor supplements the information provided in this Item 19, 
for example, by providing information about possible performance at a 
particular location or under particular circumstances.

    (2) If a franchisor does not provide any financial performance 
representation in Item 19, also state:

     We do not make any representations about a franchisee's future 
financial performance or the past financial performance of company-owned 
or franchised outlets. We also do not authorize our employees or 
representatives to make any such representations either orally or in 
writing. If you are purchasing an existing outlet, however, we may 
provide you with the actual records of that outlet. If you receive any 
other financial performance information or projections of your future 
income, you should report it to the franchisor's management by 
contacting [name, address, and telephone number], the Federal Trade 
Commission, and the appropriate state regulatory agencies.

    (3) If the franchisor makes any financial performance representation 
to prospective franchisees, the franchisor must have a reasonable basis 
and written substantiation for the representation at the time the 
representation is made and must state the representation in the Item 19 
disclosure. The franchisor must also disclose the following:
    (i) Whether the representation is an historic financial performance 
representation about the franchise system's existing outlets, or a 
subset of those outlets, or is a forecast of the prospective 
franchisee's future financial performance.
    (ii) If the representation relates to past performance of the 
franchise system's existing outlets, the material bases for the 
representation, including:
    (A) Whether the representation relates to the performance of all of 
the franchise system's existing outlets or only to a subset of outlets 
that share a particular set of characteristics (for example, geographic 
location, type of location (such as free standing vs. shopping center), 
degree of competition, length of time the outlets have operated, 
services or goods sold, services supplied by the franchisor, and whether 
the outlets are franchised or franchisor-owned or operated).
    (B) The dates when the reported level of financial performance was 
achieved.
    (C) The total number of outlets that existed in the relevant period 
and, if different, the number of outlets that had the described 
characteristics.
    (D) The number of outlets with the described characteristics whose 
actual financial performance data were used in arriving at the 
representation.
    (E) Of those outlets whose data were used in arriving at the 
representation, the number and percent that actually attained or 
surpassed the stated results.
    (F) Characteristics of the included outlets, such as those 
characteristics noted in paragraph (3)(ii)(A) of this section, that may 
differ materially from those of the outlet that may be offered to a 
prospective franchisee.
    (iii) If the representation is a forecast of future financial 
performance, state the material bases and assumptions on which the 
projection is based.

[[Page 490]]

The material assumptions underlying a forecast include significant 
factors upon which a franchisee's future results are expected to depend. 
These factors include, for example, economic or market conditions that 
are basic to a franchisee's operation, and encompass matters affecting, 
among other things, a franchisee's sales, the cost of goods or services 
sold, and operating expenses.
    (iv) A clear and conspicuous admonition that a new franchisee's 
individual financial results may differ from the result stated in the 
financial performance representation.
    (v) A statement that written substantiation for the financial 
performance representation will be made available to the prospective 
franchisee upon reasonable request.
    (4) If a franchisor wishes to disclose only the actual operating 
results for a specific outlet being offered for sale, it need not comply 
with this section, provided the information is given only to potential 
purchasers of that outlet.
    (5) If a franchisor furnishes financial performance information 
according to this section, the franchisor may deliver to a prospective 
franchisee a supplemental financial performance representation about a 
particular location or variation, apart from the disclosure document. 
The supplemental representation must:
    (i) Be in writing.
    (ii) Explain the departure from the financial performance 
representation in the disclosure document.
    (iii) Be prepared in accordance with the requirements of paragraph 
(s)(3)(i)-(iv) of this section.
    (iv) Be furnished to the prospective franchisee.
    (t) Item 20: Outlets and Franchisee Information. (1) Disclose, in 
the following tabular form, the total number of franchised and company-
owned outlets for each of the franchisor's last three fiscal years. For 
purposes of this section, ``outlet'' includes outlets of a type 
substantially similar to that offered to the prospective franchisee. A 
sample Item 20(1) Table is attached as appendix B to this part.

                                               Item 20 Table No. 1
                                            Systemwide Outlet Summary
                                              For years [ ] to [ ]
----------------------------------------------------------------------------------------------------------------
                                               Column 3 Outlets at    Column 4 Outlets at
 Column 1 Outlet Type      Column 2 Year      the Start of the Year   the End of the Year    Column 5 Net Change
----------------------------------------------------------------------------------------------------------------
Franchised              2004                  .....................  .....................  ....................
                      ------------------------------------------------------------------------------------------
                        2005                  .....................  .....................  ....................
                      ------------------------------------------------------------------------------------------
                        2006                  .....................  .....................  ....................
----------------------------------------------------------------------------------------------------------------
Company-Owned           2004                  .....................  .....................  ....................
                      ------------------------------------------------------------------------------------------
                        2005                  .....................  .....................  ....................
                      ------------------------------------------------------------------------------------------
                        2006                  .....................  .....................  ....................
----------------------------------------------------------------------------------------------------------------
Total Outlets           2004                  .....................  .....................  ....................
                      ------------------------------------------------------------------------------------------
                        2005                  .....................  .....................  ....................
                      ------------------------------------------------------------------------------------------
                        2006                  .....................  .....................  ....................
----------------------------------------------------------------------------------------------------------------

    (i) In column 1, include three outlet categories titled 
``franchised,'' ``company-owned, and ``total outlets.''
    (ii) In column 2, state the last three fiscal years.
    (iii) In column 3, state the total number of each type of outlet 
operating at the beginning of each fiscal year.
    (iv) In column 4, state the total number of each type of outlet 
operating at the end of each fiscal year.
    (v) In column 5, state the net change, and indicate whether the 
change is positive or negative, for each type of outlet during each 
fiscal year.

[[Page 491]]

    (2) Disclose, in the following tabular form, the number of 
franchised and company-owned outlets and changes in the number and 
ownership of outlets located in each state during each of the last three 
fiscal years. Except as noted, each change in ownership shall be 
reported only once in the following tables. If multiple events occurred 
in the process of transferring ownership of an outlet, report the event 
that occurred last in time. If a single outlet changed ownership two or 
more times during the same fiscal year, use footnotes to describe the 
types of changes involved and the order in which the changes occurred.
    (i) Disclose, in the following tabular form, the total number of 
franchised outlets transferred in each state during each of the 
franchisor's last three fiscal years. For purposes of this section, 
``transfer'' means the acquisition of a controlling interest in a 
franchised outlet, during its term, by a person other than the 
franchisor or an affiliate. A sample Item 20(2) Table is attached as 
appendix C to this part.

                           Item 20 Table No. 2
   Transfers of Outlets from Franchisees to New Owners (other than the
                               Franchisor)
                          For years [ ] to [ ]
------------------------------------------------------------------------
                                                    Column 3 Number of
     Column 1 State           Column 2 Year              Transfers
------------------------------------------------------------------------
                          2004                    ......................
                        ------------------------------------------------
                          2005                    ......................
                        ------------------------------------------------
                          2006                    ......................
------------------------------------------------------------------------
                          2004                    ......................
                        ------------------------------------------------
                          2005                    ......................
                        ------------------------------------------------
                          2006                    ......................
------------------------------------------------------------------------
Total                     2004                    ......................
                        ------------------------------------------------
                          2005                    ......................
                        ------------------------------------------------
                          2006                    ......................
------------------------------------------------------------------------

    (A) In column 1, list each state with one or more franchised 
outlets.
    (B) In column 2, state the last three fiscal years.
    (C) In column 3, state the total number of completed transfers in 
each state during each fiscal year.
    (ii) Disclose, in the following tabular form, the status of 
franchisee-owned outlets located in each state for each of the 
franchisor's last three fiscal years. A sample Item 20(3) Table is 
attached as appendix D to this part.

                                               Item 20 Table No. 3
                                          Status of Franchised Outlets
                                              For years [ ] to [ ]
----------------------------------------------------------------------------------------------------------------
                       Column 3                                             Column 7       Column 8     Column 9
 Column 1   Column 2  Outlets at   Column 4      Column 5      Column 6    Reacquired       Ceased      Outlets
  State       Year     Start of     Outlets    Terminations      Non-          by        Operations-   at End of
                         Year       Opened                     Renewals    Franchisor   Other Reasons   the Year
----------------------------------------------------------------------------------------------------------------
            2004      ..........  ..........  ..............  ..........  ............  .............  .........
          ------------
            2005      ..........  ..........  ..............  ..........  ............  .............  .........
          ------------
            2006      ..........  ..........  ..............  ..........  ............  .............  .........
----------------------------------------------------------------------------------------------------------------
            2004      ..........  ..........  ..............  ..........  ............  .............  .........
          ------------
            2005      ..........  ..........  ..............  ..........  ............  .............  .........
          ------------
            2006      ..........  ..........  ..............  ..........  ............  .............  .........
----------------------------------------------------------------------------------------------------------------
Totals      2004      ..........  ..........  ..............  ..........  ............  .............  .........
          ------------------------------------------------------------------------------------------------------
            2005      ..........  ..........  ..............  ..........  ............  .............  .........
          ------------------------------------------------------------------------------------------------------
            2006      ..........  ..........  ..............  ..........  ............  .............  .........
----------------------------------------------------------------------------------------------------------------


[[Page 492]]

    (A) In column 1, list each state with one or more franchised 
outlets.
    (B) In column 2, state the last three fiscal years.
    (C) In column 3, state the total number of franchised outlets in 
each state at the start of each fiscal year.
    (D) In column 4, state the total number of franchised outlets opened 
in each state during each fiscal year. Include both new outlets and 
existing company-owned outlets that a franchisee purchased from the 
franchisor. (Also report the number of existing company-owned outlets 
that are sold to a franchisee in Column 7 of Table 4).
    (E) In column 5, state the total number of franchised outlets that 
were terminated in each state during each fiscal year. For purposes of 
this section, ``termination'' means the franchisor's termination of a 
franchise agreement prior to the end of its term and without providing 
any consideration to the franchisee (whether by payment or forgiveness 
or assumption of debt).
    (F) In column 6, state the total number of non-renewals in each 
state during each fiscal year. For purposes of this section, ``non-
renewal'' occurs when the franchise agreement for a franchised outlet is 
not renewed at the end of its term.
    (G) In column 7, state the total number of franchised outlets 
reacquired by the franchisor in each state during each fiscal year. For 
purposes of this section, a ``reacquisition'' means the franchisor's 
acquisition for consideration (whether by payment or forgiveness or 
assumption of debt) of a franchised outlet during its term. (Also report 
franchised outlets reacquired by the franchisor in column 5 of Table 4).
    (H) In column 8, state the total number of outlets in each state not 
operating as one of the franchisor's outlets at the end of each fiscal 
year for reasons other than termination, non-renewal, or reacquisition 
by the franchisor.
    (I) In column 9, state the total number of franchised outlets in 
each state at the end of the fiscal year.
    (iii) Disclose, in the following tabular form, the status of 
company-owned outlets located in each state for each of the franchisor's 
last three fiscal years. A sample Item 20(4) Table is attached as 
appendix E to this part.

                                               Item 20 Table No. 4
                                         Status of Company-Owned Outlets
                                              For years [ ] to [ ]
----------------------------------------------------------------------------------------------------------------
                            Column 3                      Column 5                                     Column 8
  Column 1     Column 2    Outlets at     Column 4        Outlets        Column 6       Column 7      Outlets at
   State         Year       Start of       Outlets    Reacquired From     Outlets     Outlets Sold    End of the
                              Year         Opened        Franchisee       Closed      to Franchisee      Year
----------------------------------------------------------------------------------------------------------------
              2004        ............  ............  ...............  ............  ..............  ...........
            ----------------------------------------------------------------------------------------------------
              2005        ............  ............  ...............  ............  ..............  ...........
            ----------------------------------------------------------------------------------------------------
              2006        ............  ............  ...............  ............  ..............  ...........
----------------------------------------------------------------------------------------------------------------
              2004        ............  ............  ...............  ............  ..............  ...........
            ----------------------------------------------------------------------------------------------------
              2005        ............  ............  ...............  ............  ..............  ...........
            ----------------------------------------------------------------------------------------------------
              2006        ............  ............  ...............  ............  ..............  ...........
----------------------------------------------------------------------------------------------------------------
Totals        2004        ............  ............  ...............  ............  ..............  ...........
            ----------------------------------------------------------------------------------------------------
              2005        ............  ............  ...............  ............  ..............  ...........
            ----------------------------------------------------------------------------------------------------
              2006        ............  ............  ...............  ............  ..............  ...........
----------------------------------------------------------------------------------------------------------------

    (A) In column 1, list each state with one or more company-owned 
outlets.
    (B) In column 2, state the last three fiscal years.
    (C) In column 3, state the total number of company-owned outlets in 
each state at the start of the fiscal year.
    (D) In column 4, state the total number of company-owned outlets 
opened in each state during each fiscal year.

[[Page 493]]

    (E) In column 5, state the total number of franchised outlets 
reacquired from franchisees in each state during each fiscal year.
    (F) In column 6, state the total number of company-owned outlets 
closed in each state during each fiscal year. Include both actual 
closures and instances when an outlet ceases to operate under the 
franchisor's trademark.
    (G) In column 7, state the total number of company-owned outlets 
sold to franchisees in each state during each fiscal year.
    (H) In column 8, state the total number of company-owned outlets 
operating in each state at the end of each fiscal year.
    (3) Disclose, in the following tabular form, projected new 
franchised and company-owned outlets. A sample Item 20(5) Table is 
attached as appendix F to this part.

                           Item 20 Table No. 5
         Projected Openings As Of [Last Day of Last Fiscal Year]
------------------------------------------------------------------------
                        Column 2          Column 3          Column 4
                       Franchise        Projected New     Projected New
  Column 1 State   Agreements Signed     Franchised       Company-Owned
                     But Outlet Not     Outlet In The     Outlet In the
                         Opened       Next Fiscal Year  Next Fiscal Year
------------------------------------------------------------------------
                   .................  ................  ................
------------------------------------------------------------------------
                   .................  ................  ................
------------------------------------------------------------------------
Total              .................  ................  ................
------------------------------------------------------------------------

    (i) In column 1, list each state where one or more franchised or 
company-owned outlets are located or are projected to be located.
    (ii) In column 2, state the total number of franchise agreements 
that had been signed for new outlets to be located in each state as of 
the end of the previous fiscal year where the outlet had not yet opened.
    (iii) In column 3, state the total number of new franchised outlets 
in each state projected to be opened during the next fiscal year.
    (iv) In column 4, state the total number of new company-owned 
outlets in each state that are projected to be opened during the next 
fiscal year.
    (4) Disclose the names of all current franchisees and the address 
and telephone number of each of their outlets. Alternatively, disclose 
this information for all franchised outlets in the state, but if these 
franchised outlets total fewer than 100, disclose this information for 
franchised outlets from contiguous states and then the next closest 
states until at least 100 franchised outlets are listed.
    (5) Disclose the name, city and state, and current business 
telephone number, or if unknown, the last known home telephone number of 
every franchisee who had an outlet terminated, canceled, not renewed, or 
otherwise voluntarily or involuntarily ceased to do business under the 
franchise agreement during the most recently completed fiscal year or 
who has not communicated with the franchisor within 10 weeks of the 
disclosure document issuance date. \10\ State in immediate conjunction 
with this information: ``If you buy this franchise, your contact 
information may be disclosed to other buyers when you leave the 
franchise system.''
---------------------------------------------------------------------------

    \10\ Franchisors may substitute alternative contact information at 
the request of the former franchisee, such as a home address, post 
office address, or a personal or business email address.
---------------------------------------------------------------------------

    (6) If a franchisor is selling a previously-owned franchised outlet 
now under its control, disclose the following additional information for 
that outlet for the last five fiscal years. This information may be 
attached as an addendum to a disclosure document, or, if disclosure has 
already been made, then in a supplement to the previously furnished 
disclosure document.
    (i) The name, city and state, current business telephone number, or 
if unknown, last known home telephone number of each previous owner of 
the outlet;

[[Page 494]]

    (ii) The time period when each previous owner controlled the outlet;
    (iii) The reason for each previous change in ownership (for example, 
termination, non-renewal, voluntary transfer, ceased operations); and
    (iv) The time period(s) when the franchisor retained control of the 
outlet (for example, after termination, non-renewal, or reacquisition).
    (7) Disclose whether franchisees signed confidentiality clauses 
during the last three fiscal years. If so, state the following: ``In 
some instances, current and former franchisees sign provisions 
restricting their ability to speak openly about their experience with 
[name of franchise system]. You may wish to speak with current and 
former franchisees, but be aware that not all such franchisees will be 
able to communicate with you.'' Franchisors may also disclose the number 
and percentage of current and former franchisees who during each of the 
last three fiscal years signed agreements that include confidentiality 
clauses and may disclose the circumstances under which such clauses were 
signed.
    (8) Disclose, to the extent known, the name, address, telephone 
number, email address, and Web address (to the extent known) of each 
trademark-specific franchisee organization associated with the franchise 
system being offered, if such organization:
    (i) Has been created, sponsored, or endorsed by the franchisor. If 
so, state the relationship between the organization and the franchisor 
(for example, the organization was created by the franchisor, sponsored 
by the franchisor, or endorsed by the franchisor).
    (ii) Is incorporated or otherwise organized under state law and asks 
the franchisor to be included in the franchisor's disclosure document 
during the next fiscal year. Such organizations must renew their request 
on an annual basis by submitting a request no later than 60 days after 
the close of the franchisor's fiscal year. The franchisor has no 
obligation to verify the organization's continued existence at the end 
of each fiscal year. Franchisors may also include the following 
statement: ``The following independent franchisee organizations have 
asked to be included in this disclosure document.''
    (u) Item 21: Financial Statements. (1) Include the following 
financial statements prepared according to United States generally 
accepted accounting principles, as revised by any future United States 
government mandated accounting principles, or as permitted by the 
Securities and Exchange Commission. Except as provided in paragraph 
(u)(2) of this section, these financial statements must be audited by an 
independent certified public accountant using generally accepted United 
States auditing standards. Present the required financial statements in 
a tabular form that compares at least two fiscal years.
    (i) The franchisor's balance sheet for the previous two fiscal year-
ends before the disclosure document issuance date.
    (ii) Statements of operations, stockholders equity, and cash flows 
for each of the franchisor's previous three fiscal years.
    (iii) Instead of the financial disclosures required by paragraphs 
(u)(1)(i) and (ii) of this section, the franchisor may include financial 
statements of any of its affiliates if the affiliate's financial 
statements satisfy paragraphs (u)(1)(i) and (ii) of this section and the 
affiliate absolutely and unconditionally guarantees to assume the duties 
and obligations of the franchisor under the franchise agreement. The 
affiliate's guarantee must cover all of the franchisor's obligations to 
the franchisee, but need not extend to third parties. If this 
alternative is used, attach a copy of the guarantee to the disclosure 
document.
    (iv) When a franchisor owns a direct or beneficial controlling 
financial interest in a subsidiary, its financial statements should 
reflect the financial condition of the franchisor and its subsidiary.
    (v) Include separate financial statements for the franchisor and any 
subfranchisor, as well as for any parent that commits to perform post-
sale obligations for the franchisor or guarantees the franchisor's 
obligations. Attach a copy of any guarantee to the disclosure document.
    (2) A start-up franchise system that does not yet have audited 
financial

[[Page 495]]

statements may phase-in the use of audited financial statements by 
providing, at a minimum, the following statements at the indicated 
times:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
(i) The franchisor' first partial    An unaudited opening balance sheet.
 or full fiscal year selling
 franchises.
------------------------------------------------------------------------
(ii) The franchisor' second fiscal   Audited balance sheet opinion as of
 year selling franchises.             the end of the first partial or
                                      full fiscal year selling
                                      franchises.
------------------------------------------------------------------------
(iii) The franchisor' third and      All required financial statements
 subsequent fiscal years selling      for the previous fiscal year, plus
 franchises.                          any previously disclosed audited
                                      statements that still must be
                                      disclosed according to paragraphs
                                      (u)(1)(i) and (ii) of this
                                      section.
------------------------------------------------------------------------

    (iv) Start-up franchisors may phase-in the disclosure of audited 
financial statements, provided the franchisor:
    (A) Prepares audited financial statements as soon as practicable.
    (B) Prepares unaudited statements in a format that conforms as 
closely as possible to audited statements.
    (C) Includes one or more years of unaudited financial statements or 
clearly and conspicuously discloses in this section that the franchisor 
has not been in business for three years or more, and cannot include all 
financial statements required in paragraphs (u)(1)(i) and (ii) of this 
section.
    (v) Item 22: Contracts. Attach a copy of all proposed agreements 
regarding the franchise offering, including the franchise agreement and 
any lease, options, and purchase agreements.
    (w) Item 23: Receipts. Include two copies of the following 
detachable acknowledgment of receipt in the following form as the last 
pages of the disclosure document:
    (1) State the following:

     Receipt

     This disclosure document summarizes certain provisions of the 
franchise agreement and other information in plain language. Read this 
disclosure document and all agreements carefully.

     If [name of franchisor] offers you a franchise, it must provide 
this disclosure document to you 14 calendar-days before you sign a 
binding agreement with, or make a payment to, the franchisor or an 
affiliate in connection with the proposed franchise sale.

     If [name of franchisor] does not deliver this disclosure document 
on time or if it contains a false or misleading statement, or a material 
omission, a violation of federal law and state law may have occurred and 
should be reported to the Federal Trade Commission, Washington, D.C. 
20580 and [state agency].

    (2) Disclose the name, principal business address, and telephone 
number of each franchise seller offering the franchise.
    (3) State the issuance date.
    (4) If not disclosed in paragraph (a) of this section, state the 
name and address of the franchisor's registered agent authorized to 
receive service of process.
    (5) State the following:
    I received a disclosure document dated _____ that included the 
following Exhibits:
    (6) List the title(s) of all attached Exhibits.
    (7) Provide space for the prospective franchisee's signature and 
date.
    (8) Franchisors may include any specific instructions for returning 
the receipt (for example, street address, email address, facsimile 
telephone number).



                         Subpart D_Instructions



Sec.436.6  Instructions for preparing disclosure documents.

    (a) It is an unfair or deceptive act or practice in violation of 
Section 5 of the FTC Act for any franchisor to fail to include the 
information and follow the instructions for preparing disclosure 
documents set forth in subpart C (basic disclosure requirements) and 
subpart D (updating requirements) of part 436. The Commission will 
enforce this provision according to the standards of liability under 
Sections 5, 13(b), and 19 of the FTC Act.
    (b) Disclose all required information clearly, legibly, and 
concisely in a single document using plain English. The

[[Page 496]]

disclosures must be in a form that permits each prospective franchisee 
to store, download, print, or otherwise maintain the document for future 
reference.
    (c) Respond fully to each disclosure Item. If a disclosure Item is 
not applicable, respond negatively, including a reference to the type of 
information required to be disclosed by the Item. Precede each 
disclosure Item with the appropriate heading.
    (d) Do not include any materials or information other than those 
required or permitted by part 436 or by state law not preempted by part 
436. For the sole purpose of enhancing the prospective franchisee's 
ability to maneuver through an electronic version of a disclosure 
document, the franchisor may include scroll bars, internal links, and 
search features. All other features (e.g., multimedia tools such as 
audio, video, animation, pop-up screens, or links to external 
information) are prohibited.
    (e) Franchisors may prepare multi-state disclosure documents by 
including non-preempted, state-specific information in the text of the 
disclosure document or in Exhibits attached to the disclosure document.
    (f) Subfranchisors shall disclose the required information about the 
franchisor, and, to the extent applicable, the same information 
concerning the subfranchisor.
    (g) Before furnishing a disclosure document, the franchisor shall 
advise the prospective franchisee of the formats in which the disclosure 
document is made available, any prerequisites for obtaining the 
disclosure document in a particular format, and any conditions necessary 
for reviewing the disclosure document in a particular format.
    (h) Franchisors shall retain, and make available to the Commission 
upon request, a sample copy of each materially different version of 
their disclosure documents for three years after the close of the fiscal 
year when it was last used.
    (i) For each completed franchise sale, franchisors shall retain a 
copy of the signed receipt for at least three years.



Sec.436.7  Instructions for updating disclosures.

    (a) All information in the disclosure document shall be current as 
of the close of the franchisor's most recent fiscal year. After the 
close of the fiscal year, the franchisor shall, within 120 days, prepare 
a revised disclosure document, after which a franchise seller may 
distribute only the revised document and no other disclosure document.
    (b) The franchisor shall, within a reasonable time after the close 
of each quarter of the fiscal year, prepare revisions to be attached to 
the disclosure document to reflect any material change to the 
disclosures included, or required to be included, in the disclosure 
document. Each prospective franchisee shall receive the disclosure 
document and the quarterly revisions for the most recent period 
available at the time of disclosure.
    (c) If applicable, the annual update shall include the franchisor's 
first quarterly update, either by incorporating the quarterly update 
information into the disclosure document itself, or through an addendum.
    (d) When furnishing a disclosure document, the franchise seller 
shall notify the prospective franchisee of any material changes that the 
seller knows or should have known occurred in the information contained 
in any financial performance representation made in Item 19 (section 
436.5(s)).
    (e) Information that must be audited pursuant to Sec.436.5(u) of 
this part need not be audited for quarterly revisions; provided, 
however, that the franchisor states in immediate conjunction with the 
information that such information was not audited.



                          Subpart E_Exemptions



Sec.436.8  Exemptions.

    (a) The provisions of part 436 shall not apply if the franchisor can 
establish any of the following:
    (1) The total of the required payments, or commitments to make a 
required payment, to the franchisor or an affiliate that are made any 
time from before to within six months after commencing operation of the 
franchisee's business is less than $615.

[[Page 497]]

    (2) The franchise relationship is a fractional franchise.
    (3) The franchise relationship is a leased department.
    (4) The franchise relationship is covered by the Petroleum Marketing 
Practices Act, 15 U.S.C. 2801.
    (5)(i) The franchisee's initial investment, excluding any financing 
received from the franchisor or an affiliate and excluding the cost of 
unimproved land, totals at least $1,233,000 and the prospective 
franchisee signs an acknowledgment verifying the grounds for the 
exemption. The acknowledgment shall state: ``The franchise sale is for 
more than $1,233,000--excluding the cost of unimproved land and any 
financing received from the franchisor or an affiliate-- and thus is 
exempted from the Federal Trade Commission's Franchise Rule disclosure 
requirements, pursuant to 16 CFR 436.8(a)(5)(i)''; \11\ or
---------------------------------------------------------------------------

    \11\ The large franchise exemption applies only if at least one 
individual prospective franchisee in an investor-group qualifies for the 
exemption by investing at the threshold level stated in this section.
---------------------------------------------------------------------------

    (ii) The franchisee (or its parent or any affiliates) is an entity 
that has been in business for at least five years and has a net worth of 
at least $6,165,000.
    (6) One or more purchasers of at least a 50% ownership interest in 
the franchise: within 60 days of the sale, has been, for at least two 
years, an officer, director, general partner, individual with management 
responsibility for the offer and sale of the franchisor's franchises or 
the administrator of the franchised network; or within 60 days of the 
sale, has been, for at least two years, an owner of at least a 25% 
interest in the franchisor.
    (7) There is no written document that describes any material term or 
aspect of the relationship or arrangement.
    (b) For purposes of the exemptions set forth in this section, the 
Commission shall adjust the size of the monetary thresholds every fourth 
year based upon the Consumer Price Index. For purposes of this section, 
``Consumer Price Index'' means the Consumer Price Index for all urban 
consumers published by the Department of Labor.

[72 FR 15544, Mar. 30, 2007, as amended at 77 FR 36150, June 18, 2012; 
81 FR 31501, May 19, 2016; 85 FR 38791, June 29, 2020]



                         Subpart F_Prohibitions



Sec.436.9  Additional prohibitions.

    It is an unfair or deceptive act or practice in violation of Section 
5 of the Federal Trade Commission Act for any franchise seller covered 
by part 436 to:
    (a) Make any claim or representation, orally, visually, or in 
writing, that contradicts the information required to be disclosed by 
this part.
    (b) Misrepresent that any person:
    (1) Purchased a franchise from the franchisor or operated a 
franchise of the type offered by the franchisor.
    (2) Can provide an independent and reliable report about the 
franchise or the experiences of any current or former franchisees.
    (c) Disseminate any financial performance representations to 
prospective franchisees unless the franchisor has a reasonable basis and 
written substantiation for the representation at the time the 
representation is made, and the representation is included in Item 19 
(Sec.436.5(s)) of the franchisor's disclosure document. In conjunction 
with any such financial performance representation, the franchise seller 
shall also:
    (1) Disclose the information required by Sec. Sec.
436.5(s)(3)(ii)(B) and (E) of this part if the representation relates to 
the past performance of the franchisor's outlets.
    (2) Include a clear and conspicuous admonition that a new 
franchisee's individual financial results may differ from the result 
stated in the financial performance representation.
    (d) Fail to make available to prospective franchisees, and to the 
Commission upon reasonable request, written substantiation for any 
financial performance representations made in Item 19 (Sec.436.5(s)).
    (e) Fail to furnish a copy of the franchisor's disclosure document 
to a prospective franchisee earlier in the sales process than required 
under Sec.436.2 of this part, upon reasonable request.

[[Page 498]]

    (f) Fail to furnish a copy of the franchisor's most recent 
disclosure document and any quarterly updates to a prospective 
franchisee, upon reasonable request, before the prospective franchisee 
signs a franchise agreement.
    (g) Present for signing a franchise agreement in which the terms and 
conditions differ materially from those presented as an attachment to 
the disclosure document, unless the franchise seller informed the 
prospective franchisee of the differences at least seven days before 
execution of the franchise agreement.
    (h) Disclaim or require a prospective franchisee to waive reliance 
on any representation made in the disclosure document or in its exhibits 
or amendments. Provided, however, that this provision is not intended to 
prevent a prospective franchisee from voluntarily waiving specific 
contract terms and conditions set forth in his or her disclosure 
document during the course of franchise sale negotiations.
    (i) Fail to return any funds or deposits in accordance with any 
conditions disclosed in the franchisor's disclosure document, franchise 
agreement, or any related document.



                       Subpart G_Other Provisions



Sec.436.10  Other laws and rules.

    (a) The Commission does not approve or express any opinion on the 
legality of any matter a franchisor may be required to disclose by part 
436. Further, franchisors may have additional obligations to impart 
material information to prospective franchisees outside of the 
disclosure document under Section 5 of the Federal Trade Commission Act. 
The Commission intends to enforce all applicable statutes and rules.
    (b) The FTC does not intend to preempt the franchise practices laws 
of any state or local government, except to the extent of any 
inconsistency with part 436. A law is not inconsistent with part 436 if 
it affords prospective franchisees equal or greater protection, such as 
registration of disclosure documents or more extensive disclosures.



Sec.436.11  Severability.

    If any provision of this part is stayed or held invalid, the 
remainder will stay in force.



Sec. Appendix A to Part 436--Sample Item 10 Table--Summary of Financing 
                                 Offered

                                                              SUMMARY OF FINANCING OFFERED
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                Loss of
                            Source of        Down        Amount       Term      Interest     Monthly     Prepay      Security     Liability      Legal
      Item Financed         Financing      Payment      Financed     (Yrs)        Rate       Payment     Penalty     Required   Upon Default   Right on
                                                                                                                                                Default
--------------------------------------------------------------------------------------------------------------------------------------------------------
Initial Fee               .............  ...........  ...........  .........  ...........  ..........  ..........  ...........  ............  ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Land/Constr               .............  ...........  ...........  .........  ...........  ..........  ..........  ...........  ............  ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Leased Space              .............  ...........  ...........  .........  ...........  ..........  ..........  ...........  ............  ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Equip. Lease              .............  ...........  ...........  .........  ...........  ..........  ..........  ...........  ............  ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Equip.                    .............  ...........  ...........  .........  ...........  ..........  ..........  ...........  ............  ..........
 Purchase
--------------------------------------------------------------------------------------------------------------------------------------------------------
Opening                   .............  ...........  ...........  .........  ...........  ..........  ..........  ...........  ............  ..........
 Inventory
--------------------------------------------------------------------------------------------------------------------------------------------------------
Other                     .............  ...........  ...........  .........  ...........  ..........  ..........  ...........  ............  ..........
 Financing
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 499]]



Sec. Appendix B to Part 436--Sample Item 20(1) Table--Systemwide Outlet 
                                 Summary

                                            Systemwide Outlet Summary
                                             For years 2004 to 2006
----------------------------------------------------------------------------------------------------------------
                                               Column 3 Outlets at    Column 4 Outlets at
 Column 1 Outlet Type      Column 2 Year      the Start of the Year   the End of the Year    Column 5 Net Change
----------------------------------------------------------------------------------------------------------------
Franchised             2004                   859                    1,062                   + 203
                      ------------------------------------------------------------------------------------------
                       2005                   1,062                  1,296                   + 234
                      ------------------------------------------------------------------------------------------
                       2006                   1,296                  2,720                   + 1,424
----------------------------------------------------------------------------------------------------------------
Company Owned          2004                   125                    145                     + 20
                      ------------------------------------------------------------------------------------------
                       2005                   145                    76                     -69
                      ------------------------------------------------------------------------------------------
                       2006                   76                     141                     + 65
----------------------------------------------------------------------------------------------------------------
Total Outlets          2004                   984                    1,207                   + 223
                      ------------------------------------------------------------------------------------------
                       2005                   1,207                  1,372                   + 165
                      ------------------------------------------------------------------------------------------
                       2006                   1,372                  2,861                   + 1,489
----------------------------------------------------------------------------------------------------------------



   Sec. Appendix C to Part 436--Sample Item 20(2) Table--Transfers of 
                           Franchised Outlets

  Transfers of Franchised Outlets from Franchisees to New Owners (other
                          than the Franchisor)
                         For years 2004 to 2006
------------------------------------------------------------------------
                                                    Column 3 Number of
     Column 1 State           Column 2 Year              Transfers
------------------------------------------------------------------------
NC                       2004                     1
                        ------------------------------------------------
                         2005                     0
                        ------------------------------------------------
                         2006                     2
------------------------------------------------------------------------
SC                       2004                     0
                        ------------------------------------------------
                         2005                     0
                        ------------------------------------------------
                         2006                     2
------------------------------------------------------------------------
Total                    2004                     1
                        ------------------------------------------------
                         2005                     0
                        ------------------------------------------------
                         2006                     4
------------------------------------------------------------------------



    Sec. Appendix D to Part 436--Sample Item 20(3) Table--Status of 
                            Franchise Outlets

                                           Status of Franchise Outlets
                                             For years 2004 to 2006
----------------------------------------------------------------------------------------------------------------
                       Column 3                                             Column 7       Column 8     Column 9
 Column 1   Column 2  Outlets at   Column 4      Column 5      Column 6    Reacquired       Ceased      Outlets
  State       Year     Start of     Outlets    Terminations      Non-          by        Operations-   at End of
                         Year       Opened                     Renewals    Franchisor   Other Reasons   the Year
----------------------------------------------------------------------------------------------------------------
AL         2004       10          2           1               0           0             1              10
          ------------------------------------------------------------------------------------------------------
           2005       11          5           0               1           0             0              15
          ------------------------------------------------------------------------------------------------------
           2006       15          4           1               0           1             2              15
----------------------------------------------------------------------------------------------------------------
AZ         2004       20          5           0               0           0             0              25
          ------------------------------------------------------------------------------------------------------
           2005       25          4           1               0           0             2              26
          ------------------------------------------------------------------------------------------------------
           2006       26          4           0               0           0             0              30
----------------------------------------------------------------------------------------------------------------
Totals     2004       30          7           1               0           0             1              35
          ------------------------------------------------------------------------------------------------------

[[Page 500]]

 
           2005       36          9           1               1           0             2              41
          ------------------------------------------------------------------------------------------------------
           2006       41          8           1               0           1             2              45
----------------------------------------------------------------------------------------------------------------



Sec. Appendix E to Part 436--Sample Item 20(4) Table--Status of Company-
                              Owned Outlets

                                         Status of Company-Owned Outlets
                                             For years 2004 to 2006
----------------------------------------------------------------------------------------------------------------
                            Column 3                      Column 5                                     Column 8
  Column 1     Column 2    Outlets at     Column 4        Outlets        Column 6       Column 7      Outlets at
   State         Year       Start of       Outlets    Reacquired From    Outlets    Outlets Sold to   End of the
                              Year         Opened       Franchisees       Closed      Franchisees        Year
----------------------------------------------------------------------------------------------------------------
NY           2004         1             0             1                0            0                2
            ----------------------------------------------------------------------------------------------------
             2005         2             2             0                1            0                3
            ----------------------------------------------------------------------------------------------------
             2006         3             0             0                3            0                0
----------------------------------------------------------------------------------------------------------------
OR           2004         4             0             1                0            0                5
            ----------------------------------------------------------------------------------------------------
             2005         5             0             0                2            0                3
            ----------------------------------------------------------------------------------------------------
             2006         3             0             0                0            1                2
----------------------------------------------------------------------------------------------------------------
Totals       2004         5             0             2                0            0                7
            ----------------------------------------------------------------------------------------------------
             2005         7             2             0                3            0                6
            ----------------------------------------------------------------------------------------------------
             2006         6             0             0                3            1                2
----------------------------------------------------------------------------------------------------------------



  Sec. Appendix F to Part 436--Sample Item 20(5) Table--Projected New 
                           Franchised Outlets

                    Projected New Franchised Outlets
                         As of December 31, 2006
------------------------------------------------------------------------
                                                            Column 4
                        Column 2          Column 3        Projected New
                       Franchise        Projected New     Company-Owned
  Column 1 State   Agreements Signed     Franchised      Outlets in the
                     But Outlet Not    Outlets in the    Current Fiscal
                         Opened       Next Fiscal Year        Year
------------------------------------------------------------------------
CO                 2                  3                 1
------------------------------------------------------------------------
NM                 0                  4                 2
------------------------------------------------------------------------
Total              2                  7                 3
------------------------------------------------------------------------
------------------------------------------------------------------------



PART 437_BUSINESS OPPORTUNITY RULE--Table of Contents



Sec.
437.1 Definitions.
437.2 The obligation to furnish written documents.
437.3 The disclosure document.
437.4 Earnings claims.
437.5 Sales conducted in Spanish or other languages besides English.
437.6 Other prohibited practices.
437.7 Record retention.
437.8 Franchise exemption.
437.9 Outstanding orders; preemption.
437.10 Severability.

Appendix A to Part 437--Disclosure of Important Information About 
          Business Opportunity
Appendix B to Part 437--Disclosure of Important Information About 
          Business Opportunity (Spanish-Language Version)

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

[[Page 501]]


    Source: 76 FR 76860, Dec. 8, 2012, unless otherwise noted.



Sec.437.1  Definitions.

    The following definitions shall apply throughout this part:
    (a) Action means a criminal information, indictment, or proceeding; 
a civil complaint, cross claim, counterclaim, or third party complaint 
in a judicial action or proceeding; arbitration; or any governmental 
administrative proceeding, including, but not limited to, an action to 
obtain or issue a cease and desist order, an assurance of voluntary 
compliance, and an assurance of discontinuance.
    (b) Affiliate means an entity controlled by, controlling, or under 
common control with a business opportunity seller.
    (c) Business opportunity means a commercial arrangement in which:
    (1) A seller solicits a prospective purchaser to enter into a new 
business; and
    (2) The prospective purchaser makes a required payment; and
    (3) The seller, expressly or by implication, orally or in writing, 
represents that the seller or one or more designated persons will:
    (i) Provide locations for the use or operation of equipment, 
displays, vending machines, or similar devices, owned, leased, 
controlled, or paid for by the purchaser; or
    (ii) Provide outlets, accounts, or customers, including, but not 
limited to, Internet outlets, accounts, or customers, for the 
purchaser's goods or services; or
    (iii) Buy back any or all of the goods or services that the 
purchaser makes, produces, fabricates, grows, breeds, modifies, or 
provides, including but not limited to providing payment for such 
services as, for example, stuffing envelopes from the purchaser's home.
    (d) Designated person means any person, other than the seller, whose 
goods or services the seller suggests, recommends, or requires that the 
purchaser use in establishing or operating a new business.
    (e) Disclose or state means to give information in writing that is 
clear and conspicuous, accurate, concise, and legible.
    (f) Earnings claim means any oral, written, or visual representation 
to a prospective purchaser that conveys, expressly or by implication, a 
specific level or range of actual or potential sales, or gross or net 
income or profits. Earnings claims include, but are not limited to:
    (1) Any chart, table, or mathematical calculation that demonstrates 
possible results based upon a combination of variables; and
    (2) Any statements from which a prospective purchaser can reasonably 
infer that he or she will earn a minimum level of income (e.g., ``earn 
enough to buy a Porsche,'' ``earn a six-figure income,'' or ``earn your 
investment back within one year'').
    (g) Exclusive territory means a specified geographic or other actual 
or implied marketing area in which the seller promises not to locate 
additional purchasers or offer the same or similar goods or services as 
the purchaser through alternative channels of distribution.
    (h) General media means any instrumentality through which a person 
may communicate with the public, including, but not limited to, 
television, radio, print, Internet, billboard, Web site, commercial bulk 
email, and mobile communications.
    (i) Material means likely to affect a person's choice of, or conduct 
regarding, goods or services.
    (j) New business means a business in which the prospective purchaser 
is not currently engaged, or a new line or type of business.
    (k) Person means an individual, group, association, limited or 
general partnership, corporation, or any other business entity.
    (l) Prior business means:
    (1) A business from which the seller acquired, directly or 
indirectly, the major portion of the business' assets; or
    (2) Any business previously owned or operated by the seller, in 
whole or in part.
    (m) Providing locations, outlets, accounts, or customers means 
furnishing the prospective purchaser with existing

[[Page 502]]

or potential locations, outlets, accounts, or customers; requiring, 
recommending, or suggesting one or more locators or lead generating 
companies; providing a list of locator or lead generating companies; 
collecting a fee on behalf of one or more locators or lead generating 
companies; offering to furnish a list of locations; or otherwise 
assisting the prospective purchaser in obtaining his or her own 
locations, outlets, accounts, or customers, provided, however, that 
advertising and general advice about business development and training 
shall not be considered as ``providing locations, outlets, accounts, or 
customers.''
    (n) Purchaser means a person who buys a business opportunity.
    (o) Quarterly means as of January 1, April 1, July 1, and October 1.
    (p) Required payment means all consideration that the purchaser must 
pay to the seller or an affiliate, either by contract or by practical 
necessity, as a condition of obtaining or commencing operation of the 
business opportunity. Such payment may be made directly or indirectly 
through a third party. A required payment does not include payments for 
the purchase of reasonable amounts of inventory at bona fide wholesale 
prices for resale or lease.
    (q) Seller means a person who offers for sale or sells a business 
opportunity.
    (r) Signature or signed means a person's affirmative steps to 
authenticate his or her identity.
    It includes a person's handwritten signature, as well as an 
electronic or digital form of signature to the extent that such 
signature is recognized as a valid signature under applicable federal 
law or state contract law.
    (s) Written or in writing means any document or information in 
printed form or in any form capable of being downloaded, printed, or 
otherwise preserved in tangible form and read. It includes: type-set, 
word processed, or handwritten documents; information on computer disk 
or CD-ROM; information sent via email; or information posted on the 
Internet. It does not include mere oral statements.



Sec.437.2  The obligation to furnish written documents.

    In connection with the offer for sale, sale, or promotion of a 
business opportunity, it is a violation of this Rule and an unfair or 
deceptive act or practice in violation of Section 5 of the Federal Trade 
Commission Act (``FTC Act'') for any seller to fail to furnish a 
prospective purchaser with the material information required by 
Sec. Sec.437.3(a) and 437.4(a) of this part in writing at least seven 
calendar days before the earlier of the time that the prospective 
purchaser:
    (a) Signs any contract in connection with the business opportunity 
sale; or
    (b) Makes a payment or provides other consideration to the seller, 
directly or indirectly through a third party.



Sec.437.3  The disclosure document.

    In connection with the offer for sale, sale, or promotion of a 
business opportunity, it is a violation of this Rule and an unfair or 
deceptive act or practice in violation of Section 5 of the FTC Act, for 
any seller to:
    (a) Fail to disclose to a prospective purchaser the following 
material information in a single written document in the form and using 
the language set forth in appendix A to this part; or if the offer for 
sale, sale, or promotion of a business opportunity is conducted in 
Spanish, in the form and using the language set forth in appendix B to 
this part; or if the offer for sale, sale, or promotion of a business 
opportunity is conducted in a language other than English or Spanish, 
using the form and an accurate translation of the language set forth in 
appendix A to this part:
    (1) Identifying information. State the name, business address, and 
telephone number of the seller, the name of the salesperson offering the 
opportunity, and the date when the disclosure document is furnished to 
the prospective purchaser.
    (2) Earnings claims. If the seller makes an earnings claim, check 
the ``yes'' box and attach the earnings statement required by Sec.
437.4. If not, check the ``no'' box.
    (3) Legal actions. (i) If any of the following persons has been the 
subject of

[[Page 503]]

any civil or criminal action for misrepresentation, fraud, securities 
law violations, or unfair or deceptive practices, including violations 
of any FTC Rule, within the 10 years immediately preceding the date that 
the business opportunity is offered, check the ``yes'' box:
    (A) The seller;
    (B) Any affiliate or prior business of the seller; or
    (C) Any of the seller's officers, directors, sales managers, or any 
individual who occupies a position or performs a function similar to an 
officer, director, or sales manager of the seller.
    (ii) If the ``yes'' box is checked, disclose all such actions in an 
attachment to the disclosure document. State the full caption of each 
action (names of the principal parties, case number, full name of court, 
and filing date). For each action, the seller may also provide a brief 
accurate statement not to exceed 100 words that describes the action.
    (iii) If there are no actions to disclose, check the ``no'' box.
    (4) Cancellation or refund policy. If the seller offers a refund or 
the right to cancel the purchase, check the ``yes'' box. If so, state 
all material terms and conditions of the refund or cancellation policy 
in an attachment to the disclosure document. If no refund or 
cancellation is offered, check the ``no'' box.
    (5) References. (i) State the name, state, and telephone number of 
all purchasers who purchased the business opportunity within the last 
three years. If more than 10 purchasers purchased the business 
opportunity within the last three years, the seller may limit the 
disclosure by stating the name, state, and telephone number of at least 
the 10 purchasers within the past three years who are located nearest to 
the prospective purchaser's location. Alternatively, a seller may 
furnish a prospective buyer with a list disclosing all purchasers 
nationwide within the last three years. If choosing this option, insert 
the words ``See Attached List'' without removing the list headings or 
the numbers 1 through 10, and attach a list of the references to the 
disclosure document.
    (ii) Clearly and conspicuously, and in immediate conjunction with 
the list of references, state the following: ``If you buy a business 
opportunity from the seller, your contact information can be disclosed 
in the future to other buyers.''
    (6) Receipt. Attach a duplicate copy of the disclosure document to 
be signed and dated by the purchaser. The seller may inform the 
prospective purchaser how to return the signed receipt (for example, by 
sending to a street address, email address, or facsimile telephone 
number).
    (b) Fail to update the disclosures required by paragraph (a) of this 
section at least quarterly to reflect any changes in the required 
information, including, but not limited to, any changes in the seller's 
refund or cancellation policy, or the list of references; provided, 
however, that until a seller has 10 purchasers, the list of references 
must be updated monthly.



Sec.437.4  Earnings claims.

    In connection with the offer for sale, sale, or promotion of a 
business opportunity, it is a violation of this Rule and an unfair or 
deceptive act or practice in violation of Section 5 of the FTC Act, for 
the seller to:
    (a) Make any earnings claim to a prospective purchaser, unless the 
seller:
    (1) Has a reasonable basis for its claim at the time the claim is 
made;
    (2) Has in its possession written materials that substantiate its 
claim at the time the claim is made;
    (3) Makes the written substantiation available upon request to the 
prospective purchaser and to the Commission; and
    (4) Furnishes to the prospective purchaser an earnings claim 
statement. The earnings claim statement shall be a single written 
document and shall state the following information:
    (i) The title ``EARNINGS CLAIM STATEMENT REQUIRED BY LAW'' in 
capital, bold type letters;
    (ii) The name of the person making the earnings claim and the date 
of the earnings claim;
    (iii) The earnings claim;
    (iv) The beginning and ending dates when the represented earnings 
were achieved;

[[Page 504]]

    (v) The number and percentage of all persons who purchased the 
business opportunity prior to the ending date in paragraph (a)(4)(iv) of 
this section who achieved at least the stated level of earnings;
    (vi) Any characteristics of the purchasers who achieved at least the 
represented level of earnings, such as their location, that may differ 
materially from the characteristics of the prospective purchasers being 
offered the business opportunity; and
    (vii) A statement that written substantiation for the earnings claim 
will be made available to the prospective purchaser upon request.
    (b) Make any earnings claim in the general media, unless the seller:
    (1) Has a reasonable basis for its claim at the time the claim is 
made;
    (2) Has in its possession written material that substantiates its 
claim at the time the claim is made;
    (3) States in immediate conjunction with the claim:
    (i) The beginning and ending dates when the represented earnings 
were achieved; and
    (ii) The number and percentage of all persons who purchased the 
business opportunity prior to the ending date in paragraph (b)(3)(i) of 
this section who achieved at least the stated level of earnings.
    (c) Disseminate industry financial, earnings, or performance 
information unless the seller has written substantiation demonstrating 
that the information reflects, or does not exceed, the typical or 
ordinary financial, earnings, or performance experience of purchasers of 
the business opportunity being offered for sale.
    (d) Fail to notify any prospective purchaser in writing of any 
material changes affecting the relevance or reliability of the 
information contained in an earnings claim statement before the 
prospective purchaser signs any contract or makes a payment or provides 
other consideration to the seller, directly or indirectly, through a 
third party.



Sec.437.5  Sales conducted in Spanish or other languages besides
English.

    (a) If the seller conducts the offer for sale, sale, or promotion of 
a business opportunity in Spanish, the seller must provide the 
disclosure document required by Sec.437.3(a) in the form and language 
set forth in appendix B to this part, and the disclosures required by 
Sec. Sec.437.3(a) and 437.4 must be made in Spanish.
    (b) If the seller conducts the offer for sale, sale, or promotion of 
a business opportunity in a language other than English or Spanish, the 
seller must provide the disclosure document required by Sec.437.3(a) 
using the form and an accurate translation of the language set forth in 
appendix A to this part, and the disclosures required by Sec. Sec.
437.3(a) and 437.4 must be made in that language.



Sec.437.6  Other prohibited practices.

    In connection with the offer for sale, sale, or promotion of a 
business opportunity, it is a violation of this part and an unfair or 
deceptive act or practice in violation of Section 5 of the FTC Act for 
any seller, directly or indirectly through a third party, to:
    (a) Disclaim, or require a prospective purchaser to waive reliance 
on, any statement made in any document or attachment that is required or 
permitted to be disclosed under this Rule;
    (b) Make any claim or representation, orally, visually, or in 
writing, that is inconsistent with or contradicts the information 
required to be disclosed by Sec. Sec.437.3 (basic disclosure document) 
and 437.4 (earnings claims document) of this Rule;
    (c) Include in any disclosure document or earnings claim statement 
any materials or information other than what is explicitly required or 
permitted by this Rule. For the sole purpose of enhancing the 
prospective purchaser's ability to maneuver through an electronic 
version of a disclosure document or earnings statement, the seller may 
include scroll bars and internal links. All other features (e.g., 
multimedia tools such as audio, video, animation, or pop-up screens) are 
prohibited;
    (d) Misrepresent the amount of sales, or gross or net income or 
profits a prospective purchaser may earn or that prior purchasers have 
earned;

[[Page 505]]

    (e) Misrepresent that any governmental entity, law, or regulation 
prohibits a seller from:
    (1) Furnishing earnings information to a prospective purchaser; or
    (2) Disclosing to prospective purchasers the identity of other 
purchasers of the business opportunity;
    (f) Fail to make available to prospective purchasers, and to the 
Commission upon request, written substantiation for the seller's 
earnings claims;
    (g) Misrepresent how or when commissions, bonuses, incentives, 
premiums, or other payments from the seller to the purchaser will be 
calculated or distributed;
    (h) Misrepresent the cost, or the performance, efficacy, nature, or 
central characteristics of the business opportunity or the goods or 
services offered to a prospective purchaser;
    (i) Misrepresent any material aspect of any assistance offered to a 
prospective purchaser;
    (j) Misrepresent the likelihood that a seller, locator, or lead 
generator will find locations, outlets, accounts, or customers for the 
purchaser;
    (k) Misrepresent any term or condition of the seller's refund or 
cancellation policies;
    (l) Fail to provide a refund or cancellation when the purchaser has 
satisfied the terms and conditions disclosed pursuant to Sec.
437.3(a)(4);
    (m) Misrepresent a business opportunity as an employment 
opportunity;
    (n) Misrepresent the terms of any territorial exclusivity or 
territorial protection offered to a prospective purchaser;
    (o) Assign to any purchaser a purported exclusive territory that, in 
fact, encompasses the same or overlapping areas already assigned to 
another purchaser;
    (p) Misrepresent that any person, trademark or service mark holder, 
or governmental entity, directly or indirectly benefits from, sponsors, 
participates in, endorses, approves, authorizes, or is otherwise 
associated with the sale of the business opportunity or the goods or 
services sold through the business opportunity;
    (q) Misrepresent that any person:
    (1) Has purchased a business opportunity from the seller or has 
operated a business opportunity of the type offered by the seller; or
    (2) Can provide an independent or reliable report about the business 
opportunity or the experiences of any current or former purchaser.
    (r) Fail to disclose, with respect to any person identified as a 
purchaser or operator of a business opportunity offered by the seller:
    (1) Any consideration promised or paid to such person. Consideration 
includes, but is not limited to, any payment, forgiveness of debt, or 
provision of equipment, services, or discounts to the person or to a 
third party on the person's behalf; or
    (2) Any personal relationship or any past or present business 
relationship other than as the purchaser or operator of the business 
opportunity being offered by the seller.



Sec.437.7  Record retention.

    To prevent the unfair and deceptive acts or practices specified in 
this Rule, business opportunity sellers and their principals must 
prepare, retain, and make available for inspection by Commission 
officials copies of the following documents for a period of three years:
    (a) Each materially different version of all documents required by 
this Rule;
    (b) Each purchaser's disclosure receipt;
    (c) Each executed written contract with a purchaser; and
    (d) All substantiation upon which the seller relies for each 
earnings claim from the time each such claim is made.



Sec.437.8  Franchise exemption.

    The provisions of this Rule shall not apply to any business 
opportunity that constitutes a ``franchise,'' as defined in the 
Franchise Rule, 16 CFR part 436; provided, however, that the provisions 
of this Rule shall apply to any such franchise if it is exempted from 
the provisions of part 436 because, either:
    (a) Under Sec.436.8(a)(1), the total of the required payments or 
commitments to make a required payment, to the franchisor or an 
affiliate that are made any time from before to within six months after 
commencing operation of the franchisee's business is less than $500, or

[[Page 506]]

    (b) Under Sec.436.8(a)(7), there is no written document describing 
any material term or aspect of the relationship or arrangement.



Sec.437.9  Outstanding orders; preemption.

    (a) A business opportunity required by prior FTC or court order to 
follow the Franchise Rule, 16 CFR part 436, may petition the Commission 
to amend the order or to stipulate to an amendment of the court order so 
that the business opportunity may follow the provisions of this part.
    (b) The FTC does not intend to preempt the business opportunity 
sales practices laws of any state or local government, except to the 
extent of any conflict with this part. A law is not in conflict with 
this Rule if it affords prospective purchasers equal or greater 
protection, such as registration of disclosure documents or more 
extensive disclosures. All such disclosures, however, must be made in a 
separate state disclosure document.



Sec.437.10  Severability.

    The provisions of this part are separate and severable from one 
another. If any provision is stayed or determined to be invalid, the 
remaining provisions shall continue in effect.

[[Page 507]]

[GRAPHIC] [TIFF OMITTED] TR08DE11.000


[[Page 508]]


[GRAPHIC] [TIFF OMITTED] TR08DE11.001



PART 444_CREDIT PRACTICES--Table of Contents



Sec.
444.1 Definitions.
444.2 Unfair credit practices.
444.3 Unfair or deceptive cosigner practices.
444.4 Late charges.
444.5 State exemptions.


[[Page 509]]


    Authority: Sec. 18(a), 88 Stat. 2193, as amended 93 Stat. 95 (15 
U.S.C. 57a); 80 Stat. 383, as amended, 81 Stat. 54 (5 U.S.C. 552).

    Source: 49 FR 7789, Mar. 1, 1984, unless otherwise noted.



Sec.444.1  Definitions.

    (a) Lender. A person who engages in the business of lending money to 
consumers within the jurisdiction of the Federal Trade Commission.
    (b) Retail installment seller. A person who sells goods or services 
to consumers on a deferred payment basis or pursuant to a lease-purchase 
arrangement within the jurisdiction of the Federal Trade Commission.
    (c) Person. An individual, corporation, or other business 
organization.
    (d) Consumer. A natural person who seeks or acquires goods, 
services, or money for personal, family, or household use.
    (e) Obligation. An agreement between a consumer and a lender or 
retail installment seller.
    (f) Creditor. A lender or a retail installment seller.
    (g) Debt. Money that is due or alleged to be due from one to 
another.
    (h) Earnings. Compensation paid or payable to an individual or for 
his or her account for personal services rendered or to be rendered by 
him or her, whether denominated as wages, salary, commission, bonus, or 
otherwise, including periodic payments pursuant to a pension, 
retirement, or disability program.
    (i) Household goods. Clothing, furniture, appliances, one radio and 
one television, linens, china, crockery, kitchenware, and personal 
effects (including wedding rings) of the consumer and his or her 
dependents, provided that the following are not included within the 
scope of the term household goods:
    (1) Works of art;
    (2) Electronic entertainment equipment (except one television and 
one radio);
    (3) Items acquired as antiques; and
    (4) Jewelry (except wedding rings).
    (j) Antique. Any item over one hundred years of age, including such 
items that have been repaired or renovated without changing their 
original form or character.
    (k) Cosigner. A natural person who renders himself or herself liable 
for the obligation of another person without compensation. The term 
shall include any person whose signature is requested as a condition to 
granting credit to another person, or as a condition for forbearance on 
collection of another person's obligation that is in default. The term 
shall not include a spouse whose signature is required on a credit 
obligation to perfect a security interest pursuant to State law. A 
person who does not receive goods, services, or money in return for a 
credit obligation does not receive compensation within the meaning of 
this definition. A person is a cosigner within the meaning of this 
definition whether or not he or she is designated as such on a credit 
obligation.



Sec.444.2  Unfair credit practices.

    (a) In connection with the extension of credit to consumers in or 
affecting commerce, as commerce is defined in the Federal Trade 
Commission Act, it is an unfair act or practice within the meaning of 
Section 5 of that Act for a lender or retail installment seller directly 
or indirectly to take or receive from a consumer an obligation that:
    (1) Constitutes or contains a cognovit or confession of judgment 
(for purposes other than executory process in the State of Louisiana), 
warrant of attorney, or other waiver of the right to notice and the 
opportunity to be heard in the event of suit or process thereon.
    (2) Constitutes or contains an executory waiver or a limitation of 
exemption from attachment, execution, or other process on real or 
personal property held, owned by, or due to the consumer, unless the 
waiver applies solely to property subject to a security interest 
executed in connection with the obligation.
    (3) Constitutes or contains an assignment of wages or other earnings 
unless:
    (i) The assignment by its terms is revocable at the will of the 
debtor, or
    (ii) The assignment is a payroll deduction plan or preauthorized 
payment plan, commencing at the time of the transaction, in which the 
consumer authorizes a series of wage deductions as a method of making 
each payment, or

[[Page 510]]

    (iii) The assignment applies only to wages or other earnings already 
earned at the time of the assignment.
    (4) Constitutes or contains a nonpossessory security interest in 
household goods other than a purchase money security interest.
    (b) [Reserved]



Sec.444.3  Unfair or deceptive cosigner practices.

    (a) In connection with the extension of credit to consumers in or 
affecting commerce, as commerce is defined in the Federal Trade 
Commission Act, it is:
    (1) A deceptive act or practice within the meaning of section 5 of 
that Act for a lender or retail installment seller, directly or 
indirectly, to misrepresent the nature or extent of cosigner liability 
to any person.
    (2) An unfair act or practice within the meaning of section 5 of 
that Act for a lender or retail installment seller, directly or 
indirectly, to obligate a cosigner unless the cosigner is informed prior 
to becoming obligated, which in the case of open end credit shall mean 
prior to the time that the agreement creating the cosigner's liability 
for future charges is executed, of the nature of his or her liability as 
cosigner.
    (b) Any lender or retail installment seller who complies with the 
preventive requirements in paragraph (c) of this section does not 
violate paragraph (a) of this section.
    (c) To prevent these unfair or deceptive acts or practices, a 
disclosure, consisting of a separate document that shall contain the 
following statement and no other, shall be given to the cosigner prior 
to becoming obligated, which in the case of open end credit shall mean 
prior to the time that the agreement creating the cosigner's liability 
for future charges is executed:

                           Notice to Cosigner

    You are being asked to guarantee this debt. Think carefully before 
you do. If the borrower doesn't pay the debt, you will have to. Be sure 
you can afford to pay if you have to, and that you want to accept this 
responsibility.
    You may have to pay up to the full amount of the debt if the 
borrower does not pay. You may also have to pay late fees or collection 
costs, which increase this amount.
    The creditor can collect this debt from you without first trying to 
collect from the borrower. The creditor can use the same collection 
methods against you that can be used against the borrower, such as suing 
you, garnishing your wages, etc. If this debt is ever in default, that 
fact may become a part of your credit record.
    This notice is not the contract that makes you liable for the debt.



Sec.444.4  Late charges.

    (a) In connection with collecting a debt arising out of an extension 
of credit to a consumer in or affecting commerce, as commerce is defined 
in the Federal Trade Commission Act, it is an unfair act or practice 
within the meaning of section 5 of that Act for a creditor, directly or 
indirectly, to levy or collect any deliquency charge on a payment, which 
payment is otherwise a full payment for the applicable period and is 
paid on its due date or within an applicable grace period, when the only 
delinquency is attributable to late fee(s) or delinquency charge(s) 
assessed on earlier installment(s).
    (b) For purposes of this section, collecting a debt means any 
activity other than the use of judicial process that is intended to 
bring about or does bring about repayment of all or part of a consumer 
debt.



Sec.444.5  State exemptions.

    (a) If, upon application to the Federal Trade Commission by an 
appropriate State agency, the Federal Trade Commission determines that:
    (1) There is a State requirement or prohibition in effect that 
applies to any transaction to which a provision of this rule applies; 
and
    (2) The State requirement or prohibition affords a level of 
protection to consumers that is substantially equivalent to, or greater 
than, the protection afforded by this rule;

Then that provision of the rule will not be in effect in that State to 
the extent specified by the Federal Trade Commission in its 
determination, for as long as the State administers and enforces the 
State requirement or prohibition effectively.
    (b) [Reserved]

[[Page 511]]



PART 453_FUNERAL INDUSTRY PRACTICES--Table of Contents



Sec.
453.1 Definitions.
453.2 Price disclosures.
453.3 Misrepresentations.
453.4 Required purchase of funeral goods or funeral services.
453.5 Services provided without prior approval.
453.6 Retention of documents.
453.7 Comprehension of disclosures.
453.8 Declaration of intent.
453.9 State exemptions.

    Authority: 15 U.S.C. 57a(a); 15 U.S.C. 46(g); 5 U.S.C. 552.

    Source: 59 FR 1611, Jan. 11, 1994, unless otherwise noted.



Sec.453.1  Definitions.

    (a) Alternative container. An ``alternative container'' is an 
unfinished wood box or other non-metal receptacle or enclosure, without 
ornamentation or a fixed interior lining, which is designed for the 
encasement of human remains and which is made of fiberboard, pressed-
wood, composition materials (with or without an outside covering) or 
like materials.
    (b) Cash advance item. A ``cash advance item'' is any item of 
service or merchandise described to a purchaser as a ``cash advance,'' 
``accommodation,'' ``cash disbursement,'' or similar term. A cash 
advance item is also any item obtained from a third party and paid for 
by the funeral provider on the purchaser's behalf. Cash advance items 
may include, but are not limited to: cemetery or crematory services; 
pallbearers; public transportation; clergy honoraria; flowers; musicians 
or singers; nurses; obituary notices; gratuities and death certificates.
    (c) Casket. A ``casket'' is a rigid container which is designed for 
the encasement of human remains and which is usually constructed of 
wood, metal, fiberglass, plastic, or like material, and ornamented and 
lined with fabric.
    (d) Commission. ``Commission'' refers to the Federal Trade 
Commission.
    (e) Cremation. ``Cremation'' is a heating process which incinerates 
human remains.
    (f) Crematory. A ``crematory'' is any person, partnership or 
corporation that performs cremation and sells funeral goods.
    (g) Direct cremation. A ``direct cremation'' is a disposition of 
human remains by cremation, without formal viewing, visitation, or 
ceremony with the body present.
    (h) Funeral goods. ``Funeral goods'' are the goods which are sold or 
offered for sale directly to the public for use in connection with 
funeral services.
    (i) Funeral provider. A ``funeral provider'' is any person, 
partnership or corporation that sells or offers to sell funeral goods 
and funeral services to the public.
    (j) Funeral services. ``Funeral services'' are any services which 
may be used to:
    (1) Care for and prepare deceased human bodies for burial, cremation 
or other final disposition; and
    (2) arrange, supervise or conduct the funeral ceremony or the final 
disposition of deceased human bodies.
    (k) Immediate burial. An ``immediate burial'' is a disposition of 
human remains by burial, without formal viewing, visitation, or ceremony 
with the body present, except for a graveside service.
    (l) Memorial service. A ``memorial service'' is a ceremony 
commemorating the deceased without the body present.
    (m) Funeral ceremony. A ``funeral ceremony'' is a service 
commemorating the deceased with the body present.
    (n) Outer burial container. An ``outer burial container'' is any 
container which is designed for placement in the grave around the casket 
including, but not limited to, containers commonly known as burial 
vaults, grave boxes, and grave liners.
    (o) Person. A ``person'' is any individual, partnership, 
corporation, association, government or governmental subdivision or 
agency, or other entity.
    (p) Services of funeral director and staff. The ``services of 
funeral director and staff'' are the basic services, not to be included 
in prices of other categories in Sec.453.2(b)(4), that are furnished 
by a funeral provider in arranging any funeral, such as conducting the 
arrangements conference, planning the

[[Page 512]]

funeral, obtaining necessary permits, and placing obituary notices.



Sec.453.2  Price disclosures.

    (a) Unfair or deceptive acts or practices. In selling or offering to 
sell funeral goods or funeral services to the public, it is an unfair or 
deceptive act or practice for a funeral provider to fail to furnish 
accurate price information disclosing the cost to the purchaser for each 
of the specific funeral goods and funeral services used in connection 
with the disposition of deceased human bodies, including at least the 
price of embalming, transportation of remains, use of facilities, 
caskets, outer burial containers, immediate burials, or direct 
cremations, to persons inquiring about the purchase of funerals. Any 
funeral provider who complies with the preventive requirements in 
paragraph (b) of this section is not engaged in the unfair or deceptive 
acts or practices defined here.
    (b) Preventive requirements. To prevent these unfair or deceptive 
acts or practices, as well as the unfair or deceptive acts or practices 
defined in Sec.453.4(b)(1), funeral providers must:
    (1) Telephone price disclosure. Tell persons who ask by telephone 
about the funeral provider's offerings or prices any accurate 
information from the price lists described in paragraphs (b)(2) through 
(4) of this section and any other readily available information that 
reasonably answers the question.
    (2) Casket price list. (i) Give a printed or typewritten price list 
to people who inquire in person about the offerings or prices of caskets 
or alternative containers. The funeral provider must offer the list upon 
beginning discussion of, but in any event before showing caskets. The 
list must contain at least the retail prices of all caskets and 
alternative containers offered which do not require special ordering, 
enough information to identify each, and the effective date for the 
price list. In lieu of a written list, other formats, such as notebooks, 
brochures, or charts may be used if they contain the same information as 
would the printed or typewritten list, and display it in a clear and 
conspicuous manner. Provided, however, that funeral providers do not 
have to make a casket price list available if the funeral providers 
place on the general price list, specified in paragraph (b)(4) of this 
section, the information required by this paragraph.
    (ii) Place on the list, however produced, the name of the funeral 
provider's place of business and a caption describing the list as a 
``casket price list.''
    (3) Outer burial container price list. (i) Give a printed or 
typewritten price list to persons who inquire in person about outer 
burial container offerings or prices. The funeral provider must offer 
the list upon beginning discussion of, but in any event before showing 
the containers. The list must contain at least the retail prices of all 
outer burial containers offered which do not require special ordering, 
enough information to identify each container, and the effective date 
for the prices listed. In lieu of a written list, the funeral provider 
may use other formats, such as notebooks, brochures, or charts, if they 
contain the same information as the printed or typewritten list, and 
display it in a clear and conspicuous manner. Provided, however, that 
funeral providers do not have to make an outer burial container price 
list available if the funeral providers place on the general price list, 
specified in paragraph (b)(4) of this section, the information required 
by this paragraph.
    (ii) Place on the list, however produced, the name of the funeral 
provider's place of business and a caption describing the list as an 
``outer burial container price list.''
    (4) General price list. (i)(A) Give a printed or typewritten price 
list for retention to persons who inquire in person about the funeral 
goods, funeral services or prices of funeral goods or services offered 
by the funeral provider. The funeral provider must give the list upon 
beginning discussion of any of the following:
    (1) The prices of funeral goods or funeral services;
    (2) The overall type of funeral service or disposition; or
    (3) Specific funeral goods or funeral services offered by the 
funeral provider.
    (B) The requirement in paragraph (b)(4)(i)(A) of this section 
applies

[[Page 513]]

whether the discussion takes place in the funeral home or elsewhere. 
Provided, however, that when the deceased is removed for transportation 
to the funeral home, an in-person request at that time for authorization 
to embalm, required by Sec.453.5(a)(2), does not, by itself, trigger 
the requirement to offer the general price list if the provider in 
seeking prior embalming approval discloses that embalming is not 
required by law except in certain special cases, if any. Any other 
discussion during that time about prices or the selection of funeral 
goods or services triggers the requirement under paragraph (b)(4)(i)(A) 
of this section to give consumers a general price list.
    (C) The list required in paragraph (b)(4)(i)(A) of this section must 
contain at least the following information:
    (1) The name, address, and telephone number of the funeral 
provider's place of business;
    (2) A caption describing the list as a ``general price list''; and
    (3) The effective date for the price list;
    (ii) Include on the price list, in any order, the retail prices 
(expressed either as the flat fee, or as the price per hour, mile or 
other unit of computation) and the other information specified below for 
at least each of the following items, if offered for sale:
    (A) Forwarding of remains to another funeral home, together with a 
list of the services provided for any quoted price;
    (B) Receiving remains from another funeral home, together with a 
list of the services provided for any quoted price;
    (C) The price range for the direct cremations offered by the funeral 
provider, together with:
    (1) A separate price for a direct cremation where the purchaser 
provides the container;
    (2) Separate prices for each direct cremation offered including an 
alternative container; and
    (3) A description of the services and container (where applicable), 
included in each price;
    (D) The price range for the immediate burials offered by the funeral 
provider, together with:
    (1) A separate price for an immediate burial where the purchaser 
provides the casket;
    (2) Separate prices for each immediate burial offered including a 
casket or alternative container; and
    (3) A description of the services and container (where applicable) 
included in that price;
    (E) Transfer of remains to funeral home;
    (F) Embalming;
    (G) Other preparation of the body;
    (H) Use of facilities and staff for viewing;
    (I) Use of facilities and staff for funeral ceremony;
    (J) Use of facilities and staff for memorial service;
    (K) Use of equipment and staff for graveside service;
    (L) Hearse; and
    (M) Limousine.
    (iii) Include on the price list, in any order, the following 
information:
    (A) Either of the following:
    (1) The price range for the caskets offered by the funeral provider, 
together with the statement: ``A complete price list will be provided at 
the funeral home.''; or
    (2) The prices of individual caskets, disclosed in the manner 
specified by paragraph (b)(2)(i) of this section; and
    (B) Either of the following:
    (1) The price range for the outer burial containers offered by the 
funeral provider, together with the statement: ``A complete price list 
will be provided at the funeral home.''; or
    (2) The prices of individual outer burial containers, disclosed in 
the manner specified by paragraph (b)(3)(i) of this section; and
    (C) Either of the following:
    (1) The price for the basic services of funeral director and staff, 
together with a list of the principal basic services provided for any 
quoted price and, if the charge cannot be declined by the purchaser, the 
statement: ``This fee for our basic services will be added to the total 
cost of the funeral arrangements you select. (This fee is already 
included in our charges for direct cremations, immediate burials, and 
forwarding or receiving remains.)''. If the charge cannot be declined by 
the purchaser, the quoted price shall include all charges

[[Page 514]]

for the recovery of unallocated funeral provider overhead, and funeral 
providers may include in the required disclosure the phrase ``and 
overhead'' after the word ``services''; or
    (2) The following statement: ``Please note that a fee of (specify 
dollar amount) for the use of our basic services is included in the 
price of our caskets. This same fee shall be added to the total cost of 
your funeral arrangements if you provide the casket. Our services 
include (specify).'' The fee shall include all charges for the recovery 
of unallocated funeral provider overhead, and funeral providers may 
include in the required disclosure the phrase ``and overhead'' after the 
word ``services.'' The statement must be placed on the general price 
list together with the casket price range, required by paragraph 
(b)(4)(iii)(A)(1) of this section, or together with the prices of 
individual caskets, required by (b)(4)(iii)(A)(2) of this section.
    (iv) The services fee permitted by Sec.453.2(b)(4)(iii)(C)(1) or 
(C)(2) is the only funeral provider fee for services, facilities or 
unallocated overhead permitted by this part to be non-declinable, unless 
otherwise required by law.
    (5) Statement of funeral goods and services selected. (i) Give an 
itemized written statement for retention to each person who arranges a 
funeral or other disposition of human remains, at the conclusion of the 
discussion of arrangements. The statement must list at least the 
following information:
    (A) The funeral goods and funeral services selected by that person 
and the prices to be paid for each of them;
    (B) Specifically itemized cash advance items. (These prices must be 
given to the extent then known or reasonably ascertainable. If the 
prices are not known or reasonably ascertainable, a good faith estimate 
shall be given and a written statement of the actual charges shall be 
provided before the final bill is paid.); and
    (C) The total cost of the goods and services selected.
    (ii) The information required by this paragraph (b)(5) may be 
included on any contract, statement, or other document which the funeral 
provider would otherwise provide at the conclusion of discussion of 
arrangements.
    (6) Other pricing methods. Funeral providers may give persons any 
other price information, in any other format, in addition to that 
required by Sec.453.2(b)(2), (3), and (4) so long as the statement 
required by Sec.453.2(b)(5) is given when required by the rule.



Sec.453.3  Misrepresentations.

    (a) Embalming provisions--(1) Deceptive acts or practices. In 
selling or offering to sell funeral goods or funeral services to the 
public, it is a deceptive act or practice for a funeral provider to:
    (i) Represent that state or local law requires that a deceased 
person be embalmed when such is not the case;
    (ii) Fail to disclose that embalming is not required by law except 
in certain special cases, if any.
    (2) Preventive requirements. To prevent these deceptive acts or 
practices, as well as the unfair or deceptive acts or practices defined 
in Sec. Sec.453.4(b)(1) and 453.5(2), funeral providers must:
    (i) Not represent that a deceased person is required to be embalmed 
for:
    (A) Direct cremation;
    (B) Immediate burial; or
    (C) A closed casket funeral without viewing or visitation when 
refrigeration is available and when state or local law does not require 
embalming; and
    (ii) Place the following disclosure on the general price list, 
required by Sec.453.2(b)(4), in immediate conjunction with the price 
shown for embalming: ``Except in certain special cases, embalming is not 
required by law. Embalming may be necessary, however, if you select 
certain funeral arrangements, such as a funeral with viewing. If you do 
not want embalming, you usually have the right to choose an arrangement 
that does not require you to pay for it, such as direct cremation or 
immediate burial.'' The phrase ``except in certain special cases'' need 
not be included in this disclosure if state or local law in the area(s) 
where the provider does business does not require embalming under any 
circumstances.
    (b) Casket for cremation provisions--(1) Deceptive acts or 
practices. In selling or offering to sell funeral goods or funeral 
services to the public, it is a deceptive act or practice for a funeral 
provider to:

[[Page 515]]

    (i) Represent that state or local law requires a casket for direct 
cremations;
    (ii) Represent that a casket is required for direct cremations.
    (2) Preventive requirements. To prevent these deceptive acts or 
practices, as well as the unfair or deceptive acts or practices defined 
in Sec.453.4(a)(1), funeral providers must place the following 
disclosure in immediate conjunction with the price range shown for 
direct cremations: ``If you want to arrange a direct cremation, you can 
use an alternative container. Alternative containers encase the body and 
can be made of materials like fiberboard or composition materials (with 
or without an outside covering). The containers we provide are (specify 
containers).'' This disclosure only has to be placed on the general 
price list if the funeral provider arranges direct cremations.
    (c) Outer burial container provisions--(1) Deceptive acts or 
practices. In selling or offering to sell funeral goods and funeral 
services to the public, it is a deceptive act or practice for a funeral 
provider to:
    (i) Represent that state or local laws or regulations, or particular 
cemeteries, require outer burial containers when such is not the case;
    (ii) Fail to disclose to persons arranging funerals that state law 
does not require the purchase of an outer burial container.
    (2) Preventive requirement. To prevent these deceptive acts or 
practices, funeral providers must place the following disclosure on the 
outer burial container price list, required by Sec.453.2(b)(3)(i), or, 
if the prices of outer burial containers are listed on the general price 
list, required by Sec.453.2(b)(4), in immediate conjunction with those 
prices: ``In most areas of the country, state or local law does not 
require that you buy a container to surround the casket in the grave. 
However, many cemeteries require that you have such a container so that 
the grave will not sink in. Either a grave liner or a burial vault will 
satisfy these requirements.'' The phrase ``in most areas of the 
country'' need not be included in this disclosure if state or local law 
in the area(s) where the provider does business does not require a 
container to surround the casket in the grave.
    (d) General provisions on legal and cemetery requirements--(1) 
Deceptive acts or practices. In selling or offering to sell funeral 
goods or funeral services to the public, it is a deceptive act or 
practice for funeral providers to represent that federal, state, or 
local laws, or particular cemeteries or crematories, require the 
purchase of any funeral goods or funeral services when such is not the 
case.
    (2) Preventive requirements. To prevent these deceptive acts or 
practices, as well as the deceptive acts or practices identified in 
Sec. Sec.453.3(a)(1), 453.3(b)(1), and 453.3(c)(1), funeral providers 
must identify and briefly describe in writing on the statement of 
funeral goods and services selected (required by Sec.453.2(b)(5)) any 
legal, cemetery, or crematory requirement which the funeral provider 
represents to persons as compelling the purchase of funeral goods or 
funeral services for the funeral which that person is arranging.
    (e) Provisions on preservative and protective value claims. In 
selling or offering to sell funeral goods or funeral services to the 
public, it is a deceptive act or practice for a funeral provider to:
    (1) Represent that funeral goods or funeral services will delay the 
natural decomposition of human remains for a long-term or indefinite 
time;
    (2) Represent that funeral goods have protective features or will 
protect the body from gravesite substances, when such is not the case.
    (f) Cash advance provisions--(1) Deceptive acts or practices. In 
selling or offering to sell funeral goods or funeral services to the 
public, it is a deceptive act or practice for a funeral provider to:
    (i) Represent that the price charged for a cash advance item is the 
same as the cost to the funeral provider for the item when such is not 
the case;
    (ii) Fail to disclose to persons arranging funerals that the price 
being charged for a cash advance item is not the same as the cost to the 
funeral provider for the item when such is the case.

[[Page 516]]

    (2) Preventive requirements. To prevent these deceptive acts or 
practices, funeral providers must place the following sentence in the 
itemized statement of funeral goods and services selected, in immediate 
conjunction with the list of itemized cash advance items required by 
Sec.453.2(b)(5)(i)(B): ``We charge you for our services in obtaining: 
(specify cash advance items),'' if the funeral provider makes a charge 
upon, or receives and retains a rebate, commission or trade or volume 
discount upon a cash advance item.



Sec.453.4  Required purchase of funeral goods or funeral services.

    (a) Casket for cremation provisions--(1) Unfair or deceptive acts or 
practices. In selling or offering to sell funeral goods or funeral 
services to the public, it is an unfair or deceptive act or practice for 
a funeral provider, or a crematory, to require that a casket be 
purchased for direct cremation.
    (2) Preventive requirement. To prevent this unfair or deceptive act 
or practice, funeral providers must make an alternative container 
available for direct cremations, if they arrange direct cremations.
    (b) Other required purchases of funeral goods or funeral services--
(1) Unfair or deceptive acts or practices. In selling or offering to 
sell funeral goods or funeral services, it is an unfair or deceptive act 
or practice for a funeral provider to:
    (i) Condition the furnishing of any funeral good or funeral service 
to a person arranging a funeral upon the purchase of any other funeral 
good or funeral service, except as required by law or as otherwise 
permitted by this part;
    (ii) Charge any fee as a condition to furnishing any funeral goods 
or funeral services to a person arranging a funeral, other than the fees 
for: (1) Services of funeral director and staff, permitted by Sec.
453.2(b)(4)(iii)(C); (2) other funeral services and funeral goods 
selected by the purchaser; and (3) other funeral goods or services 
required to be purchased, as explained on the itemized statement in 
accordance with Sec.453.3(d)(2).
    (2) Preventive requirements. (i) To prevent these unfair or 
deceptive acts or practices, funeral providers must:
    (A) Place the following disclosure in the general price list, 
immediately above the prices required by Sec.453.2(b)(4) (ii) and 
(iii): ``The goods and services shown below are those we can provide to 
our customers. You may choose only the items you desire. If legal or 
other requirements mean you must buy any items you did not specifically 
ask for, we will explain the reason in writing on the statement we 
provide describing the funeral goods and services you selected.'' 
Provided, however, that if the charge for ``services of funeral director 
and staff'' cannot be declined by the purchaser, the statement shall 
include the sentence: ``However, any funeral arrangements you select 
will include a charge for our basic services'' between the second and 
third sentences of the statement specified above herein. The statement 
may include the phrase ``and overhead'' after the word ``services'' if 
the fee includes a charge for the recovery of unallocated funeral 
provider overhead;
    (B) Place the following disclosure in the statement of funeral goods 
and services selected, required by Sec.453.2(b)(5)(i): ``Charges are 
only for those items that you selected or that are required. If we are 
required by law or by a cemetery or crematory to use any items, we will 
explain the reasons in writing below.''
    (ii) A funeral provider shall not violate this section by failing to 
comply with a request for a combination of goods or services which would 
be impossible, impractical, or excessively burdensome to provide.



Sec.453.5  Services provided without prior approval.

    (a) Unfair or deceptive acts or practices. In selling or offering to 
sell funeral goods or funeral services to the public, it is an unfair or 
deceptive act or practice for any provider to embalm a deceased human 
body for a fee unless:
    (1) State or local law or regulation requires embalming in the 
particular circumstances regardless of any funeral choice which the 
family might make; or
    (2) Prior approval for embalming (expressly so described) has been 
obtained from a family member or other authorized person; or

[[Page 517]]

    (3) The funeral provider is unable to contact a family member or 
other authorized person after exercising due diligence, has no reason to 
believe the family does not want embalming performed, and obtains 
subsequent approval for embalming already performed (expressly so 
described). In seeking approval, the funeral provider must disclose that 
a fee will be charged if the family selects a funeral which requires 
embalming, such as a funeral with viewing, and that no fee will be 
charged if the family selects a service which does not require 
embalming, such as direct cremation or immediate burial.
    (b) Preventive requirement. To prevent these unfair or deceptive 
acts or practices, funeral providers must include on the itemized 
statement of funeral goods and services selected, required by Sec.
453.2(b)(5), the statement: ``If you selected a funeral that may require 
embalming, such as a funeral with viewing, you may have to pay for 
embalming. You do not have to pay for embalming you did not approve if 
you selected arrangements such as a direct cremation or immediate 
burial. If we charged for embalming, we will explain why below.''



Sec.453.6  Retention of documents.

    To prevent the unfair or deceptive acts or practices specified in 
Sec. Sec.453.2 and 453.3 of this rule, funeral providers must retain 
and make available for inspection by Commission officials true and 
accurate copies of the price lists specified in Sec. Sec.453.2(b) (2) 
through (4), as applicable, for at least one year after the date of 
their last distribution to customers, and a copy of each statement of 
funeral goods and services selected, as required by Sec.453.2(b)(5), 
for at least one year from the date of the arrangements conference.



Sec.453.7  Comprehension of disclosures.

    To prevent the unfair or deceptive acts or practices specified in 
Sec. Sec.453.2 through 453.5, funeral providers must make all 
disclosures required by those sections in a clear and conspicuous 
manner. Providers shall not include in the casket, outer burial 
container, and general price lists, required by Sec. Sec.453.2(b)(2)-
(4), any statement or information that alters or contradicts the 
information required by this part to be included in those lists.



Sec.453.8  Declaration of intent.

    (a) Except as otherwise provided in Sec.453.2(a), it is a 
violation of this rule to engage in any unfair or deceptive acts or 
practices specified in this rule, or to fail to comply with any of the 
preventive requirements specified in this rule;
    (b) The provisions of this rule are separate and severable from one 
another. If any provision is determined to be invalid, it is the 
Commission's intention that the remaining provisions shall continue in 
effect.
    (c) This rule shall not apply to the business of insurance or to 
acts in the conduct thereof.



Sec.453.9  State exemptions.

    If, upon application to the Commission by an appropriate state 
agency, the Commission determines that:
    (a) There is a state requirement in effect which applies to any 
transaction to which this rule applies; and
    (b) That state requirement affords an overall level of protection to 
consumers which is as great as, or greater than, the protection afforded 
by this rule; then the Commission's rule will not be in effect in that 
state to the extent specified by the Commission in its determination, 
for as long as the State administers and enforces effectively the state 
requirement.



PART 455_USED MOTOR VEHICLE TRADE REGULATION RULE--Table of Contents



Sec.
455.1 General duties of a used vehicle dealer; definitions.
455.2 Consumer sales--window form.
455.3 Window form.
455.4 Contrary statements.
455.5 Spanish language sales.
455.6 State exemptions.
455.7 Severability.

Figure 1 to Part 455--``AS IS'' - NO DEALER WARRANTY Buyers Guide 
          (English)
Figure 2 to Part 455--IMPLIED WARRANTIES ONLY Buyers Guide (English)
Figure 3 to Part 455--Back of Buyers Guide (English)
Figure 4 to Part 455--``AS IS'' - NO DEALER WARRANTY Buyers Guide 
          (Spanish)
Figure 5 to Part 455--IMPLIED WARRANTIES ONLY Buyers Guide (Spanish)

[[Page 518]]

Figure 6 to Part 455--Back of Buyers Guide (Spanish)

    Authority: 15 U.S.C. 2309; 15 U.S.C. 41-58.

    Source: 49 FR 45725, Nov. 19, 1984, unless otherwise noted.



Sec.455.1  General duties of a used vehicle dealer; definitions.

    (a) It is a deceptive act or practice for any used vehicle dealer, 
when that dealer sells or offers for sale a used vehicle in or affecting 
commerce as commerce is defined in the Federal Trade Commission Act:
    (1) To misrepresent the mechanical condition of a used vehicle;
    (2) To misrepresent the terms of any warranty offered in connection 
with the sale of a used vehicle; and
    (3) To represent that a used vehicle is sold with a warranty when 
the vehicle is sold without any warranty.
    (b) It is an unfair act or practice for any used vehicle dealer, 
when that dealer sells or offers for sale a used vehicle in or affecting 
commerce as commerce is defined in the Federal Trade Commission Act:
    (1) To fail to disclose, prior to sale, that a used vehicle is sold 
without any warranty; and
    (2) To fail to make available, prior to sale, the terms of any 
written warranty offered in connection with the sale of a used vehicle.
    (c) The Commission has adopted this Rule in order to prevent the 
unfair and deceptive acts or practices defined in paragraphs (a) and 
(b). It is a violation of this Rule for any used vehicle dealer to fail 
to comply with the requirements set forth in Sec. Sec.455.2 through 
455.5 of this part. If a used vehicle dealer complies with the 
requirements of Sec. Sec.455.2 through 455.5 of this part, the dealer 
does not violate this Rule.
    (d) The following definitions shall apply for purposes of this part:
    (1) Vehicle means any motorized vehicle, other than a motorcycle, 
with a gross vehicle weight rating (GVWR) of less than 8500 lbs., a curb 
weight of less than 6,000 lbs., and a frontal area of less than 46 sq. 
ft.
    (2) Used vehicle means any vehicle driven more than the limited use 
necessary in moving or road testing a new vehicle prior to delivery to a 
consumer, but does not include any vehicle sold only for scrap or parts 
(title documents surrendered to the State and a salvage certificate 
issued).
    (3) Dealer means any person or business which sells or offers for 
sale a used vehicle after selling or offering for sale five (5) or more 
used vehicles in the previous twelve months, but does not include a bank 
or financial institution, a business selling a used vehicle to an 
employee of that business, or a lessor selling a leased vehicle by or to 
that vehicle's lessee or to an employee of the lessee.
    (4) Consumer means any person who is not a used vehicle dealer.
    (5) Warranty means any undertaking in writing, in connection with 
the sale by a dealer of a used vehicle, to refund, repair, replace, 
maintain or take other action with respect to such used vehicle and 
provided at no extra charge beyond the price of the used vehicle.
    (6) Implied warranty means an implied warranty arising under State 
law (as modified by the Magnuson-Moss Act) in connection with the sale 
by a dealer of a used vehicle.
    (7) Service contract means a contract in writing for any period of 
time or any specific mileage to refund, repair, replace, or maintain a 
used vehicle and provided at an extra charge beyond the price of the 
used vehicle, unless offering such contract is ``the business of 
insurance'' and such business is regulated by State law.
    (8) You means any dealer, or any agent or employee of a dealer, 
except where the term appears on the window form required by Sec.
455.2(a).

[49 FR 45725, Nov. 19, 1984, as amended at 81 FR 81678, Nov. 18, 2016]



Sec.455.2  Consumer sales--window form.

    (a) General duty. Before you offer a used vehicle for sale to a 
consumer, you must prepare, fill in as applicable and display on that 
vehicle the applicable ``Buyers Guide'' illustrated by Figures 1-2 at 
the end of this part. Dealers may use remaining stocks of the version of 
the Buyers Guide in effect prior to the effective date of this Rule for 
up to one year after that effective date (i.e., until January 27, 2018). 
Dealers who opt to use their existing stock and choose to disclose the 
applicability of a non-dealer warranty, must add the

[[Page 519]]

following as applicable below the ``Full/Limited Warranty'' disclosure: 
``Manufacturer's Warranty still applies. The manufacturer's original 
warranty has not expired on the vehicle;'' ``Manufacturer's Used Vehicle 
Warranty Applies;'' or ``Other Used Vehicle Warranty Applies,'' followed 
by the statement, ``Ask the dealer for a copy of the warranty document 
and an explanation of warranty coverage, exclusions, and repair 
obligations.''
    (1) The Buyers Guide shall be displayed prominently and 
conspicuously in any location on a vehicle and in such a fashion that 
both sides are readily readable. You may remove the form temporarily 
from the vehicle during any test drive, but you must return it as soon 
as the test drive is over.
    (2) The capitalization, punctuation and wording of all items, 
headings, and text on the form must be exactly as required by this Rule. 
The entire form must be printed in 100% black ink on a white stock no 
smaller than 11 inches high by 7\1/4\ inches wide in the type styles, 
sizes and format indicated. When filling out the form, follow the 
directions in paragraphs (b) through (f) of this section and Sec.
455.4.
    (b) Warranties--(1) No Implied Warranty--``As Is''/No Dealer 
Warranty. (i) If you offer the vehicle without any implied warranty, 
i.e., ``as is,'' mark the box appearing in Figure 1. If you offer the 
vehicle with implied warranties only, substitute the IMPLIED WARRANTIES 
ONLY disclosure specified in paragraph (b)(1)(ii) of this section, and 
mark the IMPLIED WARRANTIES ONLY box illustrated by Figure 2. If you 
first offer the vehicle ``as is'' or with implied warranties only but 
then sell it with a warranty, cross out the ``As Is--No Dealer 
Warranty'' or ``Implied Warranties Only'' disclosure, and fill in the 
warranty terms in accordance with paragraph (b)(2) of this section.
    (ii) If your State law limits or prohibits ``as is'' sales of 
vehicles, that State law overrides this part and this rule does not give 
you the right to sell ``as is.'' In such States, the heading ``As Is--No 
Dealer Warranty'' and the paragraph immediately accompanying that phrase 
must be deleted from the form, and the following heading and paragraph 
must be substituted as illustrated in the Buyers Guide in Figure 2. If 
you sell vehicles in States that permit ``as is'' sales, but you choose 
to offer implied warranties only, you must also use the following 
disclosure instead of ``As Is--No Dealer Warranty'' as illustrated by 
the Buyers Guide in Figure 2. See Sec.455.5 for the Spanish version of 
this disclosure.

                         IMPLIED WARRANTIES ONLY

    The dealer doesn't make any promises to fix things that need repair 
when you buy the vehicle or afterward. But implied warranties under your 
state's laws may give you some rights to have the dealer take care of 
serious problems that were not apparent when you bought the vehicle.

    (2) Full/Limited Warranty. If you offer the vehicle with a warranty, 
briefly describe the warranty terms in the space provided. This 
description must include the following warranty information:
    (i) Whether the warranty offered is ``Full'' or ``Limited.'' Mark 
the box next to the appropriate designation. A ``Full'' warranty is 
defined by the Federal Minimum Standards for Warranty set forth in 
section 104 of the Magnuson-Moss Act, 15 U.S.C. 2304 (1975). The 
Magnuson-Moss Act does not apply to vehicles manufactured before July 4, 
1975. Therefore, if you choose not to designate ``Full'' or ``Limited'' 
for such vehicles, cross out both designations, leaving only 
``Warranty.''
    (ii) Which of the specific systems are covered (for example, 
``engine, transmission, differential''). You cannot use shorthand, such 
as ``drive train'' or ``power train'' for covered systems.
    (iii) The duration (for example, ``30 days or 1,000 miles, whichever 
occurs first'').
    (iv) The percentage of the repair cost paid by you (for example, 
``The dealer will pay 100% of the labor and 100% of the parts.'')
    (v) You may, but are not required to, disclose that a warranty from 
a source other than the dealer applies to the vehicle. If you choose to 
disclose the applicability of a non-dealer warranty, mark the applicable 
box or boxes beneath ``NON-DEALER WARRANTIES FOR THIS VEHICLE'' to 
indicate: ``MANUFACTURER'S WARRANTY STILL APPLIES. The manufacturer's 
original warranty has not expired on

[[Page 520]]

some components of the vehicle,'' ``MANUFACTURER'S USED VEHICLE WARRANTY 
APPLIES,'' and/or ``OTHER USED VEHICLE WARRANTY APPLIES.''
    If, following negotiations, you and the buyer agree to changes in 
the warranty coverage, mark the changes on the form, as appropriate. If 
you first offer the vehicle with a warranty, but then sell it without 
one, cross out the offered warranty and mark either the ``As Is--No 
Dealer Warranty'' box or the ``Implied Warranties Only'' box, as 
appropriate.
    (3) Service contracts. If you make a service contract available on 
the vehicle, you must add the following heading and paragraph below the 
Non-Dealer Warranties Section and mark the box labeled ``Service 
Contract,'' unless offering such service contract is ``the business of 
insurance'' and such business is regulated by State law. See Sec.455.5 
for the Spanish version of this disclosure.

    [square] SERVICE CONTRACT. A service contract on this vehicle is 
available for an extra charge. Ask for details about coverage, 
deductible, price, and exclusions. If you buy a service contract within 
90 days of your purchase of this vehicle, implied warranties under your 
state's laws may give you additional rights.

    (c) Name and Address. Put the name and address of your dealership in 
the space provided. If you do not have a dealership, use the name and 
address of your place of business (for example, your service station) or 
your own name and home address.
    (d) Make, Model, Model Year, VIN. Put the vehicle's make (for 
example, ``Chevrolet''), model (for example, ``Corvette''), model year, 
and Vehicle Identification Number (VIN) in the spaces provided. You may 
write the dealer stock number in the space provided or you may leave 
this space blank.
    (e) Complaints. In the space provided, put the name and telephone 
number of the person who should be contacted if any complaints arise 
after sale.
    (f) Optional Signature Line. In the space provided for the name of 
the individual to be contacted in the event of complaints after sale, 
you may include a signature line for a buyer's signature. If you opt to 
include a signature line, you must include a disclosure in immediate 
proximity to the signature line stating: ``I hereby acknowledge receipt 
of the Buyers Guide at the closing of this sale.'' You may pre-print 
this language on the form if you choose.

[49 FR 45725, Nov. 19, 1984, as amended at 60 FR 62205, Dec. 5, 1995; 77 
FR 73914, Dec. 12, 2012; 81 FR 81678, Nov. 18, 2016]



Sec.455.3  Window form.

    (a) Form given to buyer. Give the buyer of a used vehicle sold by 
you the window form displayed under Sec.455.2 containing all of the 
disclosures required by the Rule and reflecting the warranty coverage 
agreed upon. If you prefer, you may give the buyer a copy of the 
original, so long as that copy accurately reflects all of the 
disclosures required by the Rule and the warranty coverage agreed upon.
    (b) Incorporated into contract. The information on the final version 
of the window form is incorporated into the contract of sale for each 
used vehicle you sell to a consumer. Information on the window form 
overrides any contrary provisions in the contract of sale. To inform the 
consumer of these facts, include the following language conspicuously in 
each consumer contract of sale:

    The information you see on the window form for this vehicle is part 
of this contract. Information on the window form overrides any contrary 
provisions in the contract of sale.



Sec.455.4  Contrary statements.

    You may not make any statements, oral or written, or take other 
actions which alter or contradict the disclosures required by Sec. Sec.
455.2 and 455.3. You may negotiate over warranty coverage, as provided 
in Sec.455.2(b) of this part, as long as the final warranty terms are 
identified in the contract of sale and summarized on the copy of the 
window form you give to the buyer.



Sec.455.5  Spanish language sales.

    (a) If you conduct a sale in Spanish, the window form required by 
Sec.455.2 and the contract disclosures required by Sec.455.3 must be 
in that language. You may display on a vehicle both an English language 
window form and a

[[Page 521]]

Spanish language translation of that form. Use the translation and 
layout for Spanish language sales in Figures 4, 5, and 6.
    (b) Use the following language for the ``Implied Warranties Only'' 
disclosure when required by Sec.455.2(b)(1) as illustrated by Figure 
5:

                 SOLO GARANT[Iacute]AS IMPL[Iacute]CITAS

    El concesionario no hace ninguna promesa de reparar lo que sea 
necesario cuando compre el veh[iacute]culo o posteriormente. Sin 
embargo, las garant[iacute]as impl[iacute]citas seg[uacute]n las leyes 
estatales podr[iacute]an darle algunos derechos para hacer que el 
concesionario se encargue de ciertos problemas que no fueran evidentes 
cuando compr[oacute] el veh[iacute]culo.

    (c) Use the following language for the ``Service Contract'' 
disclosure required by Sec.455.2(b)(3) as illustrated by Figures 4 and 
5:

    CONTRATO DE MANTENIMIENTO. Con un cargo adicional, puede obtener un 
contrato de mantenimiento para este veh[iacute]culo. Pregunte acerca de 
los detalles de la cobertura, los deducibles, el precio y las 
exclusiones. Si compra un contrato de mantenimiento dentro de los 90 
d[iacute]as desde el momento en que compr[oacute] el veh[iacute]culo, 
las garant[iacute]as impl[iacute]citas seg[uacute]n las leyes de su 
estado podr[iacute]an darle derechos adicionales.

    (d) Use the following language if you choose to use the Optional 
Signature Line provided by Sec.455.2(f):

    Por este medio confirmo que he recibido copia de la Gu[iacute]a del 
Comprador al momento de la compraventa.

[81 FR 81679, Nov. 18, 2016]



Sec.455.6  State exemptions.

    (a) If, upon application to the Commission by an appropriate State 
agency, the Commission determines, that--
    (1) There is a State requirement in effect which applies to any 
transaction to which this rule applies; and
    (2) That State requirement affords an overall level of protection to 
consumers which is as great as, or greater than, the protection afforded 
by this Rule; then the Commission's Rule will not be in effect in that 
State to the extent specified by the Commission in its determination, 
for as long as the State administers and enforces effectively the State 
requirement.
    (b) Applications for exemption under subsection (a) should be 
directed to the Secretary of the Commission. When appropriate, 
proceedings will be commenced in order to make a determination described 
in paragraph (a) of this section, and will be conducted in accordance 
with subpart C of part 1 of the Commission's Rules of Practice.



Sec.455.7  Severability.

    The provisions of this part are separate and severable from one 
another. If any provision is determined to be invalid, it is the 
Commission's intention that the remaining provisions shall continue in 
effect.

[[Page 522]]



 Sec. Figure 1 to Part 455--``AS IS'' - NO DEALER WARRANTY Buyers Guide 
                                (English)
[GRAPHIC] [TIFF OMITTED] TR18NO16.402


[81 FR 81679, Nov. 18, 2016]

[[Page 523]]



    Sec. Figure 2 to Part 455--IMPLIED WARRANTIES ONLY Buyers Guide 
                                (English)
[GRAPHIC] [TIFF OMITTED] TR18NO16.403


[81 FR 81679, Nov. 18, 2016]

[[Page 524]]



        Sec. Figure 3 to Part 455--Back of Buyers Guide (English)
[GRAPHIC] [TIFF OMITTED] TR18NO16.404


[81 FR 81679, Nov. 18, 2016]

[[Page 525]]



 Sec. Figure 4 to Part 455--``AS IS'' - NO DEALER WARRANTY Buyers Guide 
                                (Spanish)
[GRAPHIC] [TIFF OMITTED] TR18NO16.405


[81 FR 81679, Nov. 18, 2016]

[[Page 526]]



    Sec. Figure 5 to Part 455--IMPLIED WARRANTIES ONLY Buyers Guide 
                                (Spanish)
[GRAPHIC] [TIFF OMITTED] TR18NO16.406


[81 FR 81679, Nov. 18, 2016]

[[Page 527]]



        Sec. Figure 6 to Part 455--Back of Buyers Guide (Spanish)
[GRAPHIC] [TIFF OMITTED] TR18NO16.407


[81 FR 81679, Nov. 18, 2016]



PART 456_OPHTHALMIC PRACTICE RULES (EYEGLASS RULE)--Table of Contents



Sec.
456.1 Definitions.
456.2 Separation of examination and dispensing.
456.3 Federal or State employees.
456.4 Declaration of Commission Intent.
456.5 Rules applicable to prescriptions for contact lenses and related 
          issues.

    Authority: 15 U.S.C. 57a; 5 U.S.C. 552.

    Source: 57 FR 18822, May 1, 1992, unless otherwise noted.



Sec.456.1  Definitions.

    (a) A patient is any person who has had an eye examination.
    (b) An eye examination is the process of determining the refractive 
condition

[[Page 528]]

of a person's eyes or the presence of any visual anomaly by the use of 
objective or subjective tests.
    (c) Ophthalmic goods are eyeglasses, or any component of eyeglasses, 
and contact lenses.
    (d) Ophthalmic services are the measuring, fitting, and adjusting of 
ophthalmic goods subsequent to an eye examination.
    (e) An ophthalmologist is any Doctor of Medicine or Osteopathy who 
performs eye examinations.
    (f) An optometrist is any Doctor of Optometry.
    (g) A prescription is the written specifications for lenses for 
eyeglasses which are derived from an eye examination, including all of 
the information specified by state law, if any, necessary to obtain 
lenses for eyeglasses.



Sec.456.2  Separation of examination and dispensing.

    It is an unfair act or practice for an ophthalmologist or 
optometrist to:
    (a) Fail to provide to the patient one copy of the patient's 
prescription immediately after the eye examination is completed. 
Provided: An ophthalmologist or optometrist may refuse to give the 
patient a copy of the patient's prescription until the patient has paid 
for the eye examination, but only if that ophthalmologist or optometrist 
would have required immediate payment from that patient had the 
examination revealed that no ophthalmic goods were required;
    (b) Condition the availability of an eye examination to any person 
on a requirement that the patient agree to purchase any ophthalmic goods 
from the ophthalmologist or optometrist;
    (c) Charge the patient any fee in addition to the ophthalmologist's 
or optometrist's examination fee as a condition to releasing the 
prescription to the patient. Provided: An ophthalmologist or optometrist 
may charge an additional fee for verifying ophthalmic goods dispensed by 
another seller when the additional fee is imposed at the time the 
verification is performed; or
    (d) Place on the prescription, or require the patient to sign, or 
deliver to the patient a form or notice waiving or disclaiming the 
liability or responsibility of the ophthalmologist or optometrist for 
the accuracy of the eye examination or the accuracy of the ophthalmic 
goods and services dispensed by another seller.



Sec.456.3  Federal or State employees.

    This rule does not apply to ophthalmologists or optometrists 
employed by any Federal, State or local government entity.



Sec.456.4  Declaration of Commission Intent.

    In prohibiting the use of waivers and disclaimers of liability in 
Sec.456.2(d), it is not the Commission's intent to impose liability on 
an ophthalmologist or optometrist for the ophthalmic goods and services 
dispensed by another seller pursuant to the ophthalmologist's or 
optometrist's prescription.



Sec.456.5  Rules applicable to prescriptions for contact lenses
and related issues.

    Rules applicable to prescriptions for contact lenses and related 
issues may be found at 16 CFR part 315 (Contact Lens Rule).

[69 FR 40511, July 2, 2004]



PART 460_LABELING AND ADVERTISING OF HOME INSULATION--
Table of Contents



Sec.
460.1 What this regulation does.
460.2 What is home insulation.
460.3 Who is covered.
460.4 When the rules in this part apply.
460.5 R-value tests.
460.6 ``Representative thickness'' testing.
460.7 [Reserved]
460.8 R-value tolerances.
460.9 What test records you must keep.
460.10 How statements must be made.
460.11 Rounding off R-values.
460.12 Labels.
460.13 Fact sheets.
460.14 How retailers must handle fact sheets.
460.15 How installers must handle fact sheets.
460.16 What new home sellers must tell new home buyers.
460.17 What installers must tell their customers.
460.18 Insulation ads.
460.19 Savings claims.
460.20 R-value per inch claims.
460.21 Government claims.
460.22 R-value claims for non-insulation products.

[[Page 529]]

460.23 Tax claims.
460.24 Other laws, rules, and orders.
460.25 Stayed or invalid parts.

Appendix A to Part 460--Exemptions

    Authority: 15 U.S.C. 41 et seq. (38 Stat. 717, as amended).
    Appendix A also issued under 46 FR 22179 (April 16, 1981); 46 FR 
22180 (April 16, 1981); 48 FR 31192 (July 7, 1983).

    Source: 44 FR 50242, Aug. 27, 1979, unless otherwise noted.



Sec.460.1  What this part does.

    This part deals with R-value claims, as well as home insulation 
labels, fact sheets, ads, and other promotional materials in or 
affecting commerce, as ``commerce'' is defined in the Federal Trade 
Commission Act. If you are covered by this part, breaking any of its 
rules is an unfair or deceptive act or practice or an unfair method of 
competition under Section 5 of that Act. You can be fined heavily (up to 
the civil monetary penalty amount specified in Sec.1.98 of this 
chapter) each time you break a rule.

[84 FR 20788, May 13, 2019]



Sec.460.2  What is home insulation.

    Insulation is any material mainly used to slow heat flow. It may be 
mineral or organic, fibrous, cellular, or reflective. It may be in 
rigid, semirigid, flexible, or loose-fill form. Home insulation is for 
use in old or new homes, condominiums, cooperatives, apartments, modular 
homes, or mobile homes. It does not include pipe insulation. It does not 
include any kind of duct insulation except for duct wrap. It also 
includes insulation developed and marketed for commercial or industrial 
buildings that is also marketed for and used in residential buildings.

[84 FR 20788, May 13, 2019]



Sec.460.3  Who is covered.

    You are covered by this part if you are a member of the home 
insulation industry. This includes individuals, firms, partnerships, and 
corporations. It includes manufacturers, distributors, franchisors, 
installers, retailers, utility companies, and trade associations. 
Advertisers and advertising agencies are also covered. So are labs doing 
tests for industry members. If you sell new homes to consumers, you are 
covered. If you make R-value claims for non-insulation products 
described in Sec.460.22, you are covered by the requirements of that 
section.

[84 FR 20788, May 13, 2019]



Sec.460.4  When the rules in this part apply.

    You must follow the rules in this part each time you import, 
manufacture, distribute, sell, install, promote, or label home 
insulation. You must follow them each time you prepare, approve, place, 
or pay for home insulation labels, fact sheets, ads, or other 
promotional materials for consumer use. You must also follow them each 
time you supply anyone covered by this part with written information 
that is to be used in labels, fact sheets, ads, or other promotional 
materials for consumer use. Testing labs must follow the rules unless 
the industry members tell them, in writing, that labels, fact sheets, 
ads, or other promotional materials for home insulation will not be 
based on the test results. You must follow the requirements in Sec.
460.22 each time you make an R-value claim for non-insulation products 
marketed in whole or in part to reduce residential energy use by slowing 
heat flow.

[84 FR 20788, May 13, 2019]



Sec.460.5  R-value tests.

    R-value measures resistance to heat flow. R-values given in labels, 
fact sheets, ads, or other promotional materials must be based on tests 
done under the methods listed in paragraphs (a) through (d) of this 
section.
    (a) All types of insulation except reflective insulation must be 
tested with ASTM C177-13, ``Standard Test Method for Steady-State Heat 
Flux Measurements and Thermal Transmission Properties by Means of the 
Guarded-Hot-Plate Apparatus;'' ASTM C518-17, ``Standard Test Method for 
Steady-State Thermal Transmission Properties by Means of the Heat Flow 
Meter Apparatus;'' ASTM C1363-11, ``Standard Test Method for Thermal 
Performance of Building Materials and Envelope Assemblies by Means of a 
Hot Box Apparatus'' or ASTM C1114-06, ``Standard Test Method for Steady-
State Thermal

[[Page 530]]

Transmission Properties by Means of the Thin-Heater Apparatus.'' The 
tests must be done at a mean temperature of 75 degrees Fahrenheit and 
with a temperature difference of 50 degrees Fahrenheit plus or minus 10 
degrees Fahrenheit. The tests must be done on the insulation material 
alone (excluding any airspace). R-values (``thermal resistance'') based 
upon heat flux measurements according to ASTM C177-13 or ASTM C518-17 
must be reported only in accordance with the requirements and 
restrictions of ASTM C1045-07, ``Standard Practice for Calculating 
Thermal Transmission Properties Under Steady-State Conditions.''
    (1) For polyurethane, polyisocyanurate, and extruded polystyrene, 
the tests must be done on samples that fully reflect the effect of aging 
on the product's R-value.
    (2) For loose-fill cellulose, the tests must be done at the settled 
density determined under paragraph 8 of ASTM C739-17, ``Standard 
Specification for Cellulosic Fiber Loose-Fill Thermal Insulation.''
    (3) For loose-fill mineral wool, self-supported, spray-applied 
cellulose, and stabilized cellulose, the tests must be done on samples 
that fully reflect the effect of settling on the product's R-value.
    (4) For self-supported spray-applied cellulose, the tests must be 
done at the density determined pursuant to ASTM C1149-17, ``Standard 
Specification for Self-Supported Spray Applied Cellulosic Thermal 
Insulation.''
    (5) For loose-fill insulations, the initial installed thickness for 
the product must be determined pursuant to ASTM C1374-14, ``Standard 
Test Method for Determination of Installed Thickness of Pneumatically 
Applied Loose-Fill Building Insulation,'' for R-values of 13, 19, 22, 
30, 38, 49 and any other R-values provided on the product's label 
pursuant to Sec.460.12.
    (b) Single sheet reflective insulation materials must be tested with 
ASTM E408-13, ``Standard Test Methods for Total Normal Emittance of 
Surfaces Using Inspection-Meter Techniques,'' or ASTM C1371-15, 
``Standard Test Method for Determination of Emittance of Materials Near 
Room Temperature Using Portable Emissometers.'' This test determines the 
emittance of the reflective surfaces--its power to radiate heat. To get 
the R-value for a specific emittance, air space, and direction of heat 
flow, use Table 3 in the ASHRAE Handbook, Chapter 26, if the product is 
intended for applications that meet the conditions specified in the 
tables. You must use the R-value shown for 50 degrees Fahrenheit, with a 
temperature difference of 30 degrees Fahrenheit.
    (c) Reflective insulation systems with more than one sheet, and 
single sheet systems that are intended for applications that do not meet 
the conditions specified in Table 3 in the ASHRAE Handbook, Chapter 26 
must be tested with ASTM C1363-11, ``Standard Test Method for Thermal 
Performance of Building Materials and Envelope Assemblies by Means of a 
Hot Box Apparatus,'' in a test panel constructed according to ASTM 
C1224-15, ``Standard Specification for Reflective Insulation for 
Building Applications,'' and under the test conditions specified in ASTM 
C1224-15. To get the R-value from the results of those tests, use the 
formula specified in ASTM C1224-15.
    (d) For insulation materials with reflective facings, you must test 
the R-value of the material alone (excluding any air spaces) under the 
methods listed in paragraph (a) of this section. You can also determine 
the R-value of the material in conjunction with an air space. You can 
use one of two methods to do this:
    (1) You can test the system, with its air space, under ASTM C1363-
11, ``Standard Test Method for Thermal Performance of Building Materials 
and Envelope Assemblies by Means of a Hot Box Apparatus'' If you do 
this, you must follow the requirements in paragraph (a) of this section 
on temperature, aging and settled density.
    (2) You can add up the tested R-value of the material and the R-
value of the air space. To get the R-value for the air space, you must 
follow the requirements in paragraph (b) of this section.
    (e) The standards required in this section are incorporated by 
reference into this section with the approval of the Director of the 
Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. All approved 
material is available for

[[Page 531]]

inspection at the FTC Library (202-326-2395), Federal Trade Commission, 
Room H-630, 600 Pennsylvania Avenue NW, Washington, DC 20580 and is 
available from the sources listed in paragraphs (e)(1) and (2) of this 
section. It is also available for inspection at the National Archives 
and Records Administration (NARA). For information on the availability 
of this material at NARA, call 202-741-6030 or go to www.archives.gov/
federal-register/cfr/ibr-locations.html.
    (1) ASHRAE Headquarters, 1791 Tullie Circle, NE, Atlanta, GA 30329; 
telephone (404) 636-8400; https://www.ashrae.org.
    (i) 2017 ASHRAE Handbook--Fundamentals, Chapter 26: Heat, Air, and 
Moisture Control in Building Assemblies--Material Properties, Inch Pound 
(I-P) Edition (Copyright 2017).
    (ii) [Reserved]
    (2) ASTM Int'l, 100 Barr Harbor Drive, P.O. Box C700, West 
Conshocken, PA 19428-2959, 877-909-2786, www.astm.org/.
    (i) ASTM C 177-13, ``Standard Test Method for Steady-State Heat Flux 
Measurements and Thermal Transmission Properties by Means of the 
Guarded-Hot-Plate Apparatus'' (published October 2013).
    (ii) ASTM C 518-17, ``Standard Test Method for Steady-State Thermal 
Transmission Properties by Means of the Heat Flow Meter Apparatus'' 
(published July 2017).
    (iii) ASTM C 739-17, ``Standard Specification for Cellulosic Fiber 
Loose-Fill Thermal Insulation'' (published August 2017).
    (iv) ASTM C 1045-07 (Reapproved 2013), ``Standard Practice for 
Calculating Thermal Transmission Properties Under Steady-State 
Conditions'' (published January 2014).
    (v) ASTM C 1114-06 (Reapproved 2013), ``Standard Test Method for 
Steady-State Thermal Transmission Properties by Means of the Thin-Heater 
Apparatus'' (published January 2014).
    (vi) ASTM C 1149-17, ``Standard Specification for Self-Supported 
Spray Applied Cellulosic Thermal Insulation'' (published October 2017).
    (vii) ASTM C 1224-15, ``Standard Specification for Reflective 
Insulation for Building Applications'' (published November 2015).
    (viii) ASTM C 1363-11, ``Standard Test Method for Thermal 
Performance of Building Materials and Envelope Assemblies by Means of a 
Hot Box Apparatus'' (published June 2011).
    (ix) ASTM C 1371-15, ``Standard Test Method for Determination of 
Emittance of Materials Near Room Temperature Using Portable 
Emissometers'' (published June 2015).
    (x) ASTM C 1374-14, ``Standard Test Method for Determination of 
Installed Thickness of Pneumatically Applied Loose-Fill Building 
Insulation'' (published May 2014).
    (xi) ASTM E 408-13, ``Standard Test Methods for Total Normal 
Emittance of Surfaces Using Inspection-Meter Techniques'' (published 
June 2013).

[84 FR 20788, May 13, 2019]



Sec.460.6  ``Representative thickness'' testing.

    All tests except reflective insulation tests must be done at a 
representative thickness for every thickness shown in a label, fact 
sheet, ad, or other promotional material. ``Representative thickness'' 
means a thickness at which the R-value per unit will vary no more than 
plus or minus 2% with increases in thickness. However, if the thickness 
shown in your label, fact sheet, ad, or promotional material is less 
than the representative thickness, then you can test the insulation at 
the thickness shown.

[44 FR 50242, Aug. 27, 1979, as amended at 84 FR 20789, May 13, 2019]



Sec.460.7  [Research]



Sec.460.8  R-value tolerances.

    If you are a manufacturer of home insulation, no individual specimen 
of the insulation you sell can have an R-value more than 10% below the 
R-value shown in a label, fact sheet, ad, or other promotional material 
for that insulation. If you are not a manufacturer, you can rely on the 
R-value data given to you by the manufacturer, unless you know or should 
know that the data is false or not based on the proper tests.

[70 FR 31275, May 31, 2005]

[[Page 532]]



Sec.460.9  What test records you must keep.

    Manufacturers and testing labs must keep records of each item of 
information in the ``Report'' section of the ASTM test method that is 
used for a test. They must also keep the following records:
    (a) The name and address of the testing lab that did each test.
    (b) The date of each test.
    (c) For manufacturers, the date each test report was received from a 
lab. For labs, the date each test report was sent to a manufacturer.
    (d) For extruded polystyrene, polyurethane, and polyisocyanurate, 
the age (in days) of the specimen that was tested.
    (e) For reflective insulation, the emittance level that was found in 
the test.

Manufacturers who own their own testing labs need not keep records of 
the information in paragraph (c) of this section.

Keep these records for at least three years. If the documents show proof 
for your claims, the three years will begin again each time you make the 
claim. Federal Trade Commission staff members can check these records at 
any time, but they must give you reasonable notice first.

[44 FR 50242, Aug. 27, 1979, as amended at 84 FR 20789, May 13, 2019]



Sec.460.10  How statements must be made.

    All statements called for by this regulation must be made clearly 
and conspicuously. Among other things, you must follow the Commission's 
enforcement policy statement for clear and conspicuous disclosures in 
foreign language advertising and sales materials, 16 CFR 14.9.

[61 FR 13666, Mar. 28, 1996]



Sec.460.11  Rounding off R-values.

    R-values shown in labels, fact sheets, ads, or other promotional 
materials must be rounded to the nearest tenth. However, R-values of 10 
or more may be rounded to the nearest whole number.



Sec.460.12  Labels.

    If you are a manufacturer, you must label all packages of your 
insulation. The labels must contain:
    (a) The type of insulation.
    (b) A chart showing these items:
    (1) For batts and blankets of any type: the R-value, length, width, 
thickness, and square feet of insulation in the package.
    (2) For all loose-fill insulation: the minimum settled thickness, 
initial installed thickness, maximum net coverage area, number of bags 
per 1,000 square feet, and minimum weight per square foot at R-values of 
13, 19, 22, 30, 38, and 49. You must also give this information for any 
additional R-values you list on the chart. Labels for these products 
must state the minimum net weight of the insulation in the package. You 
must also provide information about the blowing machine and machine 
settings used to derive the initial installed thickness information.
    (3) For boardstock: the R-value, length, width, and thickness of the 
boards in the package, and the square feet of insulation in the package.
    (4) For reflective insulation: The number of sheets; the number and 
thickness of the air spaces; and the R-value provided by that system 
when the direction of heat flow is up, down, and horizontal. You can 
show the R-value for only one direction of heat flow if you clearly and 
conspicuously state that the insulation can only be used in that 
application.
    (5) For insulation materials with reflective facings, you must 
follow the rule in this section that applies to the material itself. For 
example, if you manufacture boardstock with a reflective facing, follow 
paragraph (b)(3) of this section. You can also show the R-value of the 
insulation when it is installed in conjunction with an air space. This 
is its ``system R-value.'' If you do this, you must clearly and 
conspicuously state the conditions under which the system R-value can be 
attained.
    (6) For air duct insulation: the R-value, length, width, thickness, 
and square feet of insulation in the package.
    (c) The following statement: ``R means resistance to heat flow. The

[[Page 533]]

higher the R-value, the greater the insulating power.''
    (d) If installation instructions are included on the label or with 
the package, add this statement: ``To get the marked R-value, it is 
essential that this insulation be installed properly. If you do it 
yourself, follow the instructions carefully.''
    (e) If no instructions are included, add this statement: ``To get 
the marked R-value, it is essential that this insulation be installed 
properly. If you do it yourself, get instructions and follow them 
carefully. Instructions do not come with this package.''

[70 FR 31276, May 31, 2005, as amended at 84 FR 20789, May 13, 2019]



Sec.460.13  Fact sheets.

    If you are a manufacturer, you must give retailers and installers 
fact sheets for the insulation products you sell to them. Each sheet 
must contain what is listed here. You can add any disclosures that are 
required by federal laws, regulations, rules, or orders. You can add any 
disclosures that are required by State or local laws, rules, and orders, 
unless they are inconsistent with the provisions of this regulation. Do 
not add anything else. Each fact sheet must contain these items:
    (a) The name and address of the manufacturer. It can also include a 
logo or other symbol that the manufacturer uses.
    (b) A heading: ``This is ____ insulation.'' Fill in the blank with 
the type and form of your insulation.
    (c) The heading must be followed by a chart:
    (1) If Sec.460.12(b) requires a chart for your product's label, 
you must use that chart. For foamed-in-place insulations, you must show 
the R-value of your product at 3\1/2\ inches. You can also show R-values 
at other thicknesses.
    (2) You can put the charts for similar products on the same fact 
sheet. For example, if you sell insulation boards or batts in three 
different thicknesses, you can put the label charts for all three 
products on one fact sheet. If you sell loose-fill insulation in two 
different bag sizes, you can put both coverage charts on one fact sheet, 
as long as you state which coverage chart applies to each bag size.
    (d) For air duct insulation, the chart must be followed by this 
statement:

``The R-value of this insulation varies depending on how much it is 
compressed during installation.''

    (e) After the chart and any statement dealing with the specific type 
of insulation, ALL fact sheets must carry this statement, boxed, in 12-
point type:

                        READ THIS BEFORE YOU BUY

                   What You Should Know About R-values

    The chart shows the R-value of this insulation. R means resistance 
to heat flow. The higher the R-value, the greater the insulating power. 
Compare insulation R-values before you buy.
    There are other factors to consider. The amount of insulation you 
need depends mainly on the climate you live in. Also, your fuel savings 
from insulation will depend upon the climate, the type and size of your 
house, the amount of insulation already in your house, your fuel use 
patterns and family size, proper installation of your insulation, and 
how tightly your house is sealed against air leaks. If you buy too much 
insulation, it will cost you more than what you'll save on fuel.
    To get the marked R-value, it is essential that this insulation be 
installed properly.

    (f) For R-19 insulation batts, the fact sheet must also disclose the 
insulation's R-value when installed in wall cavities where the 
insulation's thickness exceeds the depth of the cavity.

[44 FR 50242, Aug. 27, 1979, as amended at 45 FR 68928, Oct. 17, 1980; 
70 FR 31276, May 31, 2005; 84 FR 20789, May 13, 2019]



Sec.460.14  How retailers must handle labels and fact sheets.

    If you sell insulation to do-it-yourself customers, you must have 
fact sheets for the insulation products you sell. You must make the fact 
sheets available to your customers, whether you offer insulation 
products for sale offline or online. You can decide how to do this, as 
long as your insulation customers are likely to notice them. For 
example, you can put them in a display, and let customers take copies of 
them. You can keep them in a binder at a counter or service desk, and 
have a sign telling customers where the fact sheets are. You need not 
make the fact sheets available to customers if you display insulation 
packages on the

[[Page 534]]

sales floor where your insulation customers are likely to notice them 
and each individual insulation package offered for sale contains all 
package label and fact sheet disclosures required by Sec. Sec.460.12 
and 460.13. If you are offering products for sale online, the product 
labels and fact sheets required by this part, or a direct link to this 
information, must appear clearly and conspicuously and in close 
proximity to the covered product's price on each web page that contains 
a detailed description of the covered product and its price.

[84 FR 20790, May 13, 2019]



Sec.460.15  How installers must handle fact sheets.

    If you are an installer, you must have fact sheets for the 
insulation products you sell. Before customers agree to buy insulation 
from you, you must show them the fact sheet(s) for the type(s) of 
insulation they want. You can decide how to do this. For example, you 
can give each customer a copy of the fact sheet(s). You can keep the 
fact sheets in a binder, and show customers the binder before they agree 
to buy.



Sec.460.16  What new home sellers must tell new home buyers.

    If you are a new home seller, you must put the following information 
in every sales contract: The type, thickness, and R-value of the 
insulation that will be installed in each part of the house. There is an 
exception to this rule. If the buyer signs a sales contract before you 
know what type of insulation will be put in the house, or if there is a 
change in the contract, you can give the buyer a receipt stating this 
information as soon as you find out.



Sec.460.17  What installers must tell their customers.

    If you are an installer, you must give your customers a contract or 
receipt for the insulation you install. For all insulation except loose-
fill and reflective insulation, the receipt must show the coverage area, 
thickness, and R-value of the insulation you installed. The receipt must 
be dated and signed by the installer. To figure out the R-value of the 
insulation, use the data that the manufacturer gives you. If you put 
insulation in more than one part of the house, put the data for each 
part on the receipt. You can do this on one receipt, as long as you do 
not add up the coverage areas or R-values for different parts of the 
house. Do not multiply the R-value for one inch by the number of inches 
you installed. For loose-fill, the receipt must show the coverage area, 
initial installed thickness, minimum settled thickness, R-value, and the 
number of bags used. For reflective insulation, the receipt must show 
the number and thickness of the air spaces, the direction of heat flow, 
and the R-value.

[70 FR 31276, May 31, 2005, as amended at 84 FR 20790, May 13, 2019]



Sec.460.18  Insulation ads.

    (a) If your ad gives an R-value, you must give the type of 
insulation and the thickness needed to get that R-value. Also, add this 
statement explaining R-values: ``The higher the R-value, the greater the 
insulating power. Ask your seller for the fact sheet on R-values.''
    (b) If your ad gives a price, you must give the type of insulation, 
the R-value at a specific thickness, the statement explaining R-values 
in paragraph (a) of this section, and the coverage area for that 
thickness. If you give the price per square foot, you do not have to 
give the coverage area.
    (c) If your ad gives the thickness of your insulation, you must give 
its R-value at that thickness and the statement explaining R-values in 
paragraph (a) of this section.
    (d) If your ad compares one type of insulation to another, the 
comparison must be based on the same coverage areas. You must give the 
R-value at a specific thickness for each insulation, and the statement 
explaining R-values in paragraph (a) of this section. If you give the 
price of each insulation, you must also give the coverage area for the 
price and thickness shown. However, if you give the price per square 
foot, you do not have to give the coverage area.
    (e) The affirmative disclosure requirements in this section do not 
apply to television or radio advertisements

[[Page 535]]

or to space-constrained advertisements. For the purposes of this part, 
``space-constrained advertisement'' means any communication made through 
interactive media (such as the internet, online services, and software, 
including but not limited to internet search results and banner ads) 
that has space, format, size or technological limitations or 
restrictions that prevent industry members from making disclosures 
required by this part clearly and conspicuously. Industry members 
maintain the burden of showing that there is insufficient space to 
provide the disclosures that this part otherwise requires be made 
clearly and conspicuously.

[44 FR 50242, Aug. 27, 1979, as amended at 51 FR 39651, Oct. 30, 1986; 
70 FR 31276, May 31, 2005; 84 FR 20790, May 13, 2019]



Sec.460.19  Savings claims.

    (a) If you say or imply in your ads, labels, or other promotional 
materials that insulation can cut fuel bills or fuel use, you must have 
a reasonable basis for the claim. For example, if you say that 
insulation can ``slash'' or ``lower'' fuel bills, or that insulation 
``saves money,'' you must have a reasonable basis for the claim. Also, 
if you say that insulation can ``cut fuel use in half,'' or ``lower fuel 
bills by 30%,'' you must have a reasonable basis for the claim.
    (b) If you say or imply in your ads, labels, or other promotional 
materials that insulation can cut fuel bills or fuel use, you must make 
this statement about savings: ``Savings vary. Find out why in the 
seller's fact sheet on R-values. Higher R-values mean greater insulating 
power.''
    (c) If you say or imply that a combination of products can cut fuel 
bills or use, you must have a reasonable basis for the claim. You must 
make the statement about savings in paragraph (b) of this section. Also, 
you must list the combination of products used. They may be two or more 
types of insulation; one or more types of insulation and one or more 
other insulating products, like storm windows or siding; or insulation 
for two or more parts of the house, like the attic and walls. You must 
say how much of the savings came from each product or location. If you 
cannot give exact or approximate figures, you must give a ranking. For 
instance, if your ad says that insulation and storm doors combined to 
cut fuel use by 50%, you must say which one saved more.
    (d) If your ad or other promotional material is covered by Sec.
460.18 (a), (b), (c), or (d), and also makes a savings claim, you must 
follow the rules in Sec. Sec.460.18 and 460.19. However, you need not 
make the statement explaining R-value in Sec.460.18(a).
    (e) Manufacturers are liable if they do not have a reasonable basis 
for their savings claims before the claim is made. If you are not a 
manufacturer, you are liable only if you know or should know that the 
manufacturer does not have a reasonable basis for the claim.
    (f) Keep records of all data on savings claims for at least three 
years. For the records showing proof for claims, the three years will 
begin again each time you make the claim. Federal Trade Commission staff 
members can check these records at any time, but they must give you 
reasonable notice first.
    (g) The affirmative disclosure requirements in this section do not 
apply to television or radio advertisements or to space-constrained 
advertisements. ``Space-constrained advertisement'' is defined in Sec.
460.18(e).

[44 FR 50242, Aug. 27, 1979, as amended at 51 FR 39651, Oct. 30, 1986; 
70 FR 31276, May 31, 2005; 84 FR 20790, May 13, 2019]



Sec.460.20  R-value per inch claims.

    In labels, fact sheets, ads, or other promotional materials, do not 
give the R-value for one inch or the ``R-value per inch'' of your 
product. There are two exceptions:
    (a) If an outstanding FTC Cease and Desist Order applies to you but 
differs from the rules given here, you can petition to amend the order.
    (b) You can do this if actual test results prove that the R-values 
per inch of your product does not drop as it gets thicker.

You can list a range of R-value per inch. If you do, you must say 
exactly how much the R-value drops with greater thickness. You must also 
add this statement: ``The R-value per inch

[[Page 536]]

of this insulation varies with thickness. The thicker the insulation, 
the lower the R-value per inch.''

[44 FR 50242, Aug. 27, 1979, as amended at 70 FR 31276, May 31, 2005]



Sec.460.21  Government claims.

    Do not say or imply that a government agency uses, certifies, 
recommends, or otherwise favors your product unless it is true. Do not 
say or imply that your insulation complies with a governmental standard 
or specification unless it is true.



Sec.460.22  R-value claims for non-insulation products.

    If you make an R-value claim for a product, other than a 
fenestration-related product, that is not home insulation and is 
marketed in whole or in part to reduce residential energy use by slowing 
heat flow, you must test the product pursuant to Sec.460.5 using a 
test or tests in that section appropriate to the product. Any advertised 
R-value claims must fairly reflect the results of those tests. For the 
purposes of this section, fenestration-related products include windows, 
doors, and skylights as well as attachments for those products.

[84 FR 20790, May 13, 2019]



Sec.460.23  Tax claims.

    Do not say or imply that your product qualifies for a tax benefit 
unless it is true.

[44 FR 50242, Aug. 27, 1979. Redesignated at 84 FR 20790, May 13, 2019]



Sec.460.24  Other laws, rules, and orders.

    (a) If an outstanding FTC Cease and Desist Order applies to you but 
differs from the rules given here, you can petition to amend to order.
    (b) State and local laws and regulations that are inconsistent with, 
or frustrate the purposes of, the provisions of this regulation are 
preempted. However, a State or local government may petition the 
Commission, for good cause, to permit the enforcement of any part of a 
State or local law or regulation that would be preempted by this 
section.
    (c) The Commission's three-day cooling-off rule stays in force.

[44 FR 50242, Aug. 27, 1979, as amended at 70 FR 31276, May 31, 2005. 
Redesignated at 84 FR 20790, May 13, 2019]



Sec.460.25  Stayed or invalid parts.

    If any part of this regulation is stayed or held invalid, the rest 
of it will stay in force.

[44 FR 50242, Aug. 27, 1979. Redesignated at 84 FR 20790, May 13, 2019]



                 Sec. Appendix A to Part 460--Exemptions

    Section 18(g)(2) of the Federal Trade Commission Act, 15 U.S.C. 
57a(g)(2), authorizes the Commission to exempt a person or class of 
persons from all or part of a trade regulation rule if the Commission 
finds that application of the rule is not necessary to prevent the 
unfair or deceptive acts or practices to which the rule relates. In 
response to petitions from industry representatives, the Commission has 
granted exemptions from specific requirements of this part to certain 
classes of sellers. Some of these exemptions are conditioned upon the 
performance of alternative actions. The exemptions are limited to 
specific sections of this part. All other requirements of this part 
apply to these sellers. The exemptions are summarized in paragraphs (a) 
through (d) of this appendix. For an explanation of the scope and 
application of the exemptions, see the formal Commission decisions cited 
in the authority citation to this part.
    (a) Manufacturers of perlite insulation products that have an 
inverse relationship between R-value and density or weight per square 
foot are exempted from the requirements in Sec. Sec.460.12(b)(2) and 
460.13(c)(1) that they disclose minimum weight per square foot for R-
values listed on labels and fact sheets. This exemption is conditioned 
upon the alternative disclosure in labels and fact sheets of the maximum 
weight per square foot for each R-value required to be listed.
    (b) Manufacturers of rigid, flat-roof insulation products used in 
flat, built-up roofs are exempted from the requirements in Sec.460.12 
that they label these home insulation products.
    (c)(1) New home sellers are exempted from:
    (i) the requirement in Sec.460.18(a) that they disclose the type 
and thickness of the insulation when they make a representation in an 
advertisement or other promotional material about the R-value of the 
insulation in a new home;
    (ii) the requirement that they disclose in an advertisement or other 
promotional material the R-value explanatory statement

[[Page 537]]

specified in Sec.460.18(a) or the savings explanatory statement 
specified in Sec.460.19(b), conditioned upon the new home sellers 
alternatively disclosing the appropriate explanatory statement in the 
sales contract along with the disclosures required by Sec.460.16;
    (iii) the requirement that they make the disclosures specified in 
Sec.460.19(c) if they claim that insulation, along with other products 
in a new home, will cut fuel bills or fuel use; and
    (iv) the requirement that they include the reference to fact sheets 
when they must disclose the R-value explanatory statement or the savings 
claim explanatory statement under Sec.460.18(a) or Sec.460.19(b), 
respectively.
    (2) The exemptions for new home sellers also apply to home 
insulation sellers other than new home sellers when they participate 
with a new home seller to advertise and promote the sale of new homes, 
provided that the primary thrust of the advertisement or other 
promotional material is the promotion of new homes, and not the 
promotion of the insulation product.
    (d) The requirements in Sec. Sec.460.6 through 460.21 do not apply 
to R-value claims covered by Sec.460.22.

[61 FR 13666, Mar. 28, 1996, as amended at 84 FR 20790, May 13, 2019]

[[Page 538]]



    SUBCHAPTER E_RULES, REGULATIONS, STATEMENT OF GENERAL POLICY OR 
 INTERPRETATION AND EXEMPTIONS UNDER THE FAIR PACKAGING AND LABELING ACT





PART 500_REGULATIONS UNDER SECTION 4 OF THE FAIR PACKAGING 
AND LABELING ACT--Table of Contents



Sec.
500.1 Scope of the regulations of this part.
500.2 Terms defined.
500.3 Prohibited acts, coverage, general labeling requirements, 
          exemption procedures.
500.4 Statement of identity.
500.5 Name and place of business of manufacturer, packer or distributor.
500.6 Net quantity of contents declaration, location.
500.7 Net quantity of contents, method of expression.
500.8 Units of weight or mass and measure.
500.9 Units of weight or mass, how expressed.
500.10 Units of fluid measure, how expressed.
500.11 Measurement of commodity length, how expressed.
500.12 Measurement of commodities by length and width, how expressed.
500.13 Measurement of commodities by area measure only, how expressed.
500.14 Statements of cubic measure and dry measure.
500.15 Units of count, more than one ply.
500.16 Measurement of container type commodities, how expressed.
500.17 Fractions.
500.18 SI metric prefixes.
500.19 Conversion of SI metric quantities to inch/pound quantities and 
          inch/pound quantities to SI metric quantities.
500.20 Conspicuousness.
500.21 Type size in relationship to the area of the principal display 
          panel.
500.22 Abbreviations.
500.23 Expression of net quantity of contents in SI Metric units.
500.24 Supplemental statements.
500.25 Net quantity, average quantity, permitted variations.
500.26 Representations of servings, uses, applications.
500.27 Multiunit packages.
500.28 Variety packages.
500.29 Combination packages.

    Authority: 15 U.S.C. 1453, 1454, 1455.

    Source: 59 FR 1872, Jan. 12, 1994, unless otherwise noted.



Sec.500.1  Scope of the regulations of this part.

    The regulations in this part establish requirements for labeling of 
consumer commodities as hereinafter defined with respect to identity of 
the commodity; the name and place of business of the manufacturer, 
packer, or distributor; the net quantity of contents; and net quantity 
of servings, uses, or applications represented to be present.



Sec.500.2  Terms defined.

    As used in this part, unless the context otherwise specifically 
requires:
    (a) The term Act means the ``Fair Packaging and Labeling Act'' (Pub. 
L. 89-755, approved Nov. 3, 1966; 80 Stat. 1296 et seq.; 15 U.S.C. 1451 
et seq., as amended by Public Law 102-329, August 3, 1992).
    (b) The term regulation or regulations means regulations promulgated 
by the Commission pursuant to sections 4, 5, and 6 of the Act (15 U.S.C. 
1453, 1454, 1455).
    (c) The term consumer commodity or commodity means any article, 
product, or commodity of any kind or class which is customarily produced 
or distributed for sale through retail sales agencies or 
instrumentalities for consumption by individuals, or use by individuals 
for purposes of personal care or in the performance of services 
ordinarily rendered within the household, and which usually is consumed 
or expended in the course of such consumption or use. For purposes of 
the regulations in this part the term consumer commodity does not 
include any food, drug, device or cosmetic as defined by section 201 of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321); any meat or 
meat product, poultry or poultry product, or tobacco or tobacco product; 
any commodity subject to packaging or labeling requirements imposed by 
the Administrator of the Environmental Protection Agency pursuant to the 
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. 136 et 
seq.); any commodity subject to

[[Page 539]]

the provisions of the eighth paragraph under the heading ``Bureau of 
Animal Industry'' of the Virus-Serum-Toxin Act (21 U.S.C. 151-157); any 
beverage subject to or complying with packaging or labeling requirements 
imposed under the Federal Alcohol Administration Act (27 U.S.C. 201 et 
seq.); any commodity subject to the provisions of the Federal Seed Act 
(7 U.S.C. 1551-1610).
    (d) The term package means any container or wrapping in which any 
consumer commodity is enclosed for use in the delivery or display of 
that commodity to retail purchasers. For purposes of the regulations in 
this part the term package does not include shipping containers or 
wrappings used solely for the transportation of any consumer commodity 
in bulk or in quantity to manufacturers, packers, or processors, or to 
wholesale or retail distributors thereof unless used in retail display; 
shipping containers or outer wrappings used by retailers to ship or 
deliver any commodity to retail customers if such containers and 
wrappings bear no printed matter pertaining to any particular commodity; 
or containers subject to the provisions of the Act of August 3, 1912 (37 
Stat. 250, as amended; 15 U.S.C. 231-233), the Act of March 4, 1915 (38 
Stat. 1186, as amended; 15 U.S.C. 234-236); or transparent wrappers or 
containers which do not bear written, printed, or graphic matter 
obscuring any part of the label information required by this part.
    (e) The term label means any written, printed, or graphic matter 
affixed to or appearing upon any consumer commodity or affixed to or 
appearing upon a package containing any consumer commodity; except that:
    (1) An inspector's tag or other nonpromotional matter affixed to or 
appearing upon a consumer commodity shall not be deemed to be a label 
requiring the repetition of label information required by this part, and
    (2) For the purposes of the regulations in this part the term label 
does not include written, printed, or graphic matter affixed to or 
appearing upon commodities, or affixed to or appearing upon containers 
or wrappers for commodities sold or distributed to industrial or 
institutional users.
    (f) The term person includes any firm, corporation or associations.
    (g) The term commerce means:
    (1) Commerce between any State, the District of Columbia, the 
Commonwealth of Puerto Rico, or any territory or possession of the 
United States, and any place outside thereof, and
    (2) Commerce within the District of Columbia or within any territory 
or possession of the United States, not organized with a legislature, 
but shall not include exports to foreign countries.
    (h) The term principal display panel means that part of a label that 
is most likely to be displayed, presented, shown, or examined under 
normal and customary conditions of display for retail sale. The 
principal display panel must be large enough to accommodate all the 
mandatory label information required to be placed thereon by this part 
without obscuring designs, vignettes, or crowding. This definition does 
not preclude utilization of alternate principal display panels on a 
label of a package, but alternate principal display panels must 
duplicate the information required to be placed on the principal display 
panel by this part. This definition does not preclude utilization of the 
container closure as the surface bearing the principal display panel if 
that label location is the one most likely to be displayed, presented, 
shown, or examined under normal and customary conditions of display for 
retail sale. The principal display panel of a label appearing on a 
cylindrical surface is that 40 percent of the circumference which is 
more likely to be displayed, presented, shown, or examined under normal 
and customary conditions of display for retail sale. The principal 
display panel of a consumer commodity marketed in a decorative type 
container, or a container having a capacity of \1/4\ ounce (7.4 mL) or 
less, may be considered to be a tear-away tag or tape affixed to the 
container and bearing the mandatory label information as required by 
this part, but the type size of the net quantity of contents statement 
shall be governed by the dimensions of the container itself.

[[Page 540]]

The principal display panel of a consumer commodity marketed on a 
display card to which the immediate container of the commodity is 
affixed may be considered to be the display panel of the card, and the 
type size of the net quantity of contents statement is governed by the 
dimensions of the display card.
    (i) The term random package means a package which is one of a lot, 
shipment, or delivery of packages of the same consumer commodity with 
varying weights, that is, packages with no fixed weight pattern.
    (j) The term SI metric refers to units belonging to the 
International System of Units (abbreviated ``SI'' from the French, Le 
Systeme International d'Unites), as interpreted or modified for use in 
the United States by the Secretary of Commerce. They include the SI 
units (together with their multiples and submultiples) as well as other 
metric units (e.g., the liter) that are accepted for use with the SI 
units because of their practical importance.
    (k) The term customary inch/pound refers to units belonging to the 
system of units used in the United States based on or derived from the 
ounce, pound, and ton for weight; the inch, foot, yard, and mile for 
length; the fluid ounce, pint, quart, and gallon for volume; and dry 
pint, dry quart, peck, and bushel for dry measure.
    (l) The term ``e'' mark refers to the symbol ``e'' used in 
connection with the quantity declarations on labels of some consumer 
commodities marketed primarily in the European Community (EC). The ``e'' 
mark constitutes a representation by the packer or importer that the 
package to which it is applied has been filled in accordance with the 
average system of quantity specified by the EC. The average system is a 
method of declaring package fill in the EC and other countries of the 
world, including the United States.



Sec.500.3  Prohibited acts, coverage, general labeling requirements,
exemption procedures.

    (a) No person engaged in the packaging or labeling of any consumer 
commodity for distribution in commerce, and no person (other than a 
common carrier for hire, or a freight forwarder for hire) engaged in the 
distribution in commerce of any packaged or labeled consumer commodity, 
shall distribute or cause to be distributed in commerce any such 
commodity if such commodity is contained in a package, or if there is 
affixed to that commodity a label, which does not conform to the 
provisions of the Act and of the regulations in this part.
    (b) Persons engaged in business as wholesale or retail distributors 
of consumer commodities shall be subject to the Act and the regulations 
in this part to the extent that such persons are engaged in the 
packaging or labeling of consumer commodities, or prescribe or specify 
by any means the manner in which such consumer commodities are packaged 
or labeled.
    (c) Each packaged or labeled consumer commodity, unless it has been 
exempted through proceedings under section 5(b) of the Act (15 U.S.C. 
1454(b)), shall, upon being prepared for distribution in commerce or for 
sale at retail, and before being distributed in commerce or offered for 
sale at retail, be labeled in accordance with the requirements of the 
Act and the regulations in this part.
    (d) Each packaged or labeled consumer commodity, unless it has been 
exempted through proceedings under section 5(b) of the Act, shall bear a 
label specifying the identity of the commodity; the name and place of 
business of the manufacturer, packer, or distributor; the net quantity 
of contents; and the net quantity per serving, use or application, where 
there is a label representation as to the number of servings, uses, or 
applications obtainable from the commodity. Many products exempted 
through proceedings under section 5(b) of the Act and section 500.3(e) 
of this chapter or excluded under part 503 of this chapter nonetheless 
fall within the purview of the weights-and-measures laws of the 
individual states.
    (e) Regulations will be promulgated by the Commission exempting 
particular consumer commodities from one or more of the requirements of 
section 4 of the Act and the regulations thereunder to the extent and 
under such conditions as are consistent with the declared policy of the 
Act whenever

[[Page 541]]

the Commission finds that, because of the nature, form, or quantity of 
the particular consumer commodity, or for other good and sufficient 
reasons, full compliance with all the requirements otherwise applicable 
is impracticable or is not necessary for the adequate protection of 
consumers. Proceedings for the promulgation of such exempting 
regulations 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 for the proposed exemption, 
pursuant to Sec.1.15 of this chapter of the Commission's general 
procedures.

[59 FR 1872, Jan. 12, 1994, as amended at 80 FR 71689, Nov. 17, 2015]



Sec.500.4  Statement of identity.

    (a) The principal display panel of a consumer commodity shall bear a 
specification of the identity of the commodity.
    (b) Such specification of identity shall comprise a principal 
feature of the principal display panel, shall be in such type size and 
so positioned as to render it easily read and understood by the 
consumer, and shall be in lines generally parallel to the base on which 
the package or commodity rests as it is designed to be displayed.
    (c) Such specification of identity shall be in terms of:
    (1) The name now or hereafter specified in or required by any 
applicable Federal law or regulation; or in the absence thereof,
    (2) The common or usual name of the commodity; or in the absence 
thereof,
    (3) The generic name or in other appropriately descriptive terms 
such as a specification which includes a statement of function.
    (d) The specification of identity shall not be false, misleading, or 
deceptive in any respect. Ingredients or components which are not 
present in the commodity in a substantial or significantly effective 
amount may not be mentioned in the specification of identity; except 
that a component present in a formulation in substantial and effective 
amounts, but not present in the final product due to conversion or 
transformation into a different entity (which different entity is 
present in the final product), may be mentioned in the specification of 
identity.



Sec.500.5  Name and place of business of manufacturer,
packer or distributor.

    (a) The label of a consumer commodity shall specify conspicuously 
the name and place of business of the manufacturer, packer, or 
distributor. Where the consumer commodity is not manufactured by the 
person whose name appears on the label, the name shall be qualified by a 
phrase that reveals the connection such person has with such commodity; 
such as ``Manufactured for ___,'' ``Distributed by ___,'' or any other 
wording that expresses the facts.
    (b) The requirement for declaration of the manufacturer, packer, or 
distributor shall in the case of a corporation be deemed to be satisfied 
only by the actual corporate name, which may be preceded or followed by 
the name of the particular division of the corporation. In the case of 
an individual, partnership, or association, the name under which the 
business is conducted shall be used.
    (c) The statement of the place of business shall include the street 
address, city, state, and zip code; however, the street address may be 
omitted if it is listed in a readily accessible, widely published, and 
publicly available resource, including but not limited to a printed 
directory, electronic database, or Web site.
    (d) If a person manufactures, packs, or distributes a consumer 
commodity at a place other than his principal place of business, the 
label may state the principal place of business in lieu of the actual 
place where such consumer commodity was manufactured or packed or is to 
be distributed, unless such statement would be misleading.
    (e) Standard abbreviations may be used in complying with the 
requirements of this section.

[59 FR 1872, Jan. 12, 1994, as amended at 80 FR 71689, Nov. 17, 2015]



Sec.500.6  Net quantity of contents declaration, location.

    (a) The label of a consumer commodity shall bear a declaration of 
the net quantity of contents separately

[[Page 542]]

and accurately stated on the principal display panel.
    (b) The declaration of net quantity shall appear as a distinct item 
on the principal display panel, shall be separated (by at least a space 
equal to the height of the lettering used in the declaration) from other 
printed label information appearing above or below the declaration and, 
shall not include any term qualifying a unit of weight or mass, measure, 
or count such as ``jumbo quart,'' ``giant liter,'' ``full gallon,'' 
``when packed,'' ``minimum,'' or words of similar import. The 
declaration of net quantity shall be separated (by at least a space 
equal to twice the width of the letter ``N'' of the style of type used 
in the net quantity statement) from other printed label information 
appearing to the left or right of the declaration. However, the ``e'' 
mark shall not be considered to be a qualifying word or phrase and may 
be used as part of the statement of the net quantity of contents where 
warranted. When used, the ``e'' mark shall be at least 3 millimeters 
(approximately \1/8\ in) in height. The declaration of net quantity of 
contents shall be placed on the principal display panel within the 
bottom 30 percent of the area of the label panel in lines generally 
parallel to the base on which the package or commodity rests as it is 
designed to be displayed: Provided, that:
    (1) On consumer commodities having a principal display panel of 5 
square inches (32.2 cm\2\) or less, the requirement for placement within 
the bottom 30 percent of the area of the label panel shall not apply 
when the declaration of net quantity of contents meets the other 
requirements of this part, and
    (2) The requirements as to separation, location, and type size, 
specified in this part are waived with respect to variety and 
combination packages as defined in this part.



Sec.500.7  Net quantity of contents, method of expression.

    The net quantity of contents shall be expressed in terms of weight 
or mass, measure, numerical count, or a combination of numerical count 
and weight or mass, size, or measure so as to give accurate information 
regarding the net quantity of contents thereof, and thereby facilitate 
value comparisons by consumers. The net quantity of contents statement 
shall be in terms of fluid measure if the commodity is liquid, or in 
terms of weight or mass if the commodity is solid, semi-solid, or 
viscous, or a mixture of solid and liquid. If there is a firmly 
established general consumer usage and trade custom of declaring the 
contents of a liquid by weight or mass, or a solid, semi-solid, or 
viscous product by fluid measure, numerical count, and/or size, or (as 
in the case of lawn and plant care products) by cubic measure, it may be 
used, when such declaration provides sufficient information to 
facilitate value comparisons by consumers. The declaration may appear in 
more than one line of print or type.



Sec.500.8  Units of weight or mass and measure.

    (a) Statements of weight or mass shall be in terms of both 
avoirdupois pound and ounce and SI metric kilograms, grams, or 
milligrams. (Examples of avoirdupois/metric declarations: ``Net Wt 15 oz 
(425 g)'' or ``Net Wt 1\1/2\ lbs (680 g)'' or `` 2.5 oz (70.8 g)''; 
examples of metric/avoirdupois declarations: ``Net Mass 425 g (15 oz)'' 
or ``Net Mass 680 g (1\1/2\ lbs)'' or ``100 g e (3.5 oz).'')
    (b) Statements of fluid measure shall be in terms of both the U.S. 
gallon of 231 cubic inches and quart, pint, and fluid ounce subdivisions 
thereof and SI metric liters or milliliters and shall (except in the 
case of petroleum products, for which the declaration shall express the 
volume at 60 [deg]Fahrenheit (15.6 [deg]Celsius)) express the volume at 
68 [deg]Fahrenheit (20 [deg]Celsius). (Examples of gallon/metric 
declarations: ``Net 12 fl oz (354 mL)'' or ``Net Contents 1 gal (3.78 
L)'' or ``8 fl oz (236 mL)''; examples of metric/gallon declarations: 
``Net 500 mL (1.05 pt)'' or ``Net Contents 1 L (1.05 qt).'')
    (c) Statements of linear measure shall be in terms of both yards, 
feet, and inches and SI metric meters, centimeters, or millimeters.
    (d) Statements of measure of area shall be in terms of both square 
yards, square feet, and square inches and SI metric square meters, 
square decimeters, square centimeters, or square millimeters.

[[Page 543]]

    (e) Statements of dry measure shall be in terms of both the U.S. 
bushel of 2,150.42 cubic inches and peck, dry quart, and dry pint 
subdivisions thereof and SI metric liters or milliliters.
    (f) Statements of cubic measure shall be in terms of both cubic 
yard, cubic foot, and cubic inch and SI metric cubic meters, cubic 
decimeters, or cubic centimeters.



Sec.500.9  Units of weight or mass, how expressed.

    (a) The term net weight or net mass may be used in stating the net 
quantity of contents in terms of weight or mass. However, where the term 
``net weight'' or ``net mass'' is not used, the quantity of contents 
shall always disclose the net quantity of contents. For example: ``453 g 
(1 lb)'' or ``Net Wt 1 lb (453 g)'' or ``Net Mass 453 g (1 lb)''.
    (b) With the exception of random packages, the statement of net 
quantity of contents in terms of avoirdupois weight shall be expressed 
as follows:
    (1) If less than 1 pound, in terms of ounces. (Examples: ``Net 
Weight 12 oz. (340 g)'' or ``Net Mass 340 g (12 oz)''.)
    (2) If at least 1 pound but less than 4 pounds, in whole pounds, 
with any remainder in ounces or common or decimal fractions of the 
pound, except that it shall be optional to include an immediately 
adjacent additional expression of net quantity in terms of ounces.

    (Examples: ``Net Wt. 1 lb. 8 oz. (680 g)'' or ``Net Wt. 1.5 lb./24 
oz. (680 g)'' or ``24 oz. (1\1/2\ lb.) 680 g''.)

    (3) If 4 pounds or more, in terms of whole pounds, with any 
remainder in terms of ounces or common or decimal fractions of the 
pound, except that it shall be optional to include an immediately 
adjacent additional expression of net quantity in terms of ounces. 
(Examples: ``Net Weight 5 pounds 4 ounces (2.38 kg)'' or ``Net Mass 2.38 
kg (5 lbs 4 oz)'' or ``Net Wt. 5\1/4\ lbs. (2.38 kg)'' or ``Net Mass 
2.38 kg (5\1/4\ lbs.)'' or ``Net Wt. 5.25 lbs. (2.38 kg) or ``Net Mass 
2.38 kg (5.25 lbs)''.)
    (c) If the net quantity of contents declaration appears on a random 
package it may, when the net weight exceeds 1 pound, be expressed in 
terms of pounds and decimal fractions of the pound carried out to not 
more than three decimal places. When the net weight does not exceed 1 
pound, the declaration on the random package may be in terms of decimal 
fractions of the pound in lieu of ounces. (Examples: ``Net Wt. 0.75 
lb.'' and ``Net Weight 1.05 pounds.'') Such decimal declaration shall be 
exempt from the type size and placement requirements of section 4(a) of 
the Act if the accurate statement of net weight is presented prominently 
and conspicuously on the principal display panel of the package. The net 
quantity of contents declaration on a random package is not required to, 
but may include a statement in terms of the SI metric system carried out 
to not more than 3 decimal places.
    (d) It is sufficient to distinguish avoirdupois ounce from fluid 
ounce through association of terms. (Examples: ``Net Wt. 6 oz.'' vs. ``6 
fl. oz.'' or ``Net Contents 6 fl. oz.'')



Sec.500.10  Units of fluid measure, how expressed.

    (a) Use of the terms ``net'' or ``net contents'' is optional.
    (b) Declaration of net quantity of contents in terms of fluid 
measure shall be identified as such in each instance and the statement 
of U.S. gallon of 231 cubic inches and quart, pint, and fluid ounce 
subdivisions thereof shall be expressed as follows:
    (1) If less than 1 pint, in terms of fluid ounces. (Example: ``Net 
Contents 8 fl. oz. (236 mL)'' or ``Net Contents 236 mL (8 fl. oz.)''.)
    (2) If at least 1 pint but less than 1 gallon, in terms of the 
largest whole unit (quarts, quarts and pints or pints, as appropriate), 
with any remainder in terms of fluid ounces or common or decimal 
fractions of the pint or quart, except that it shall be optional to 
include an immediately adjacent additional expression of net quantity in 
terms of fluid ounces. (Examples: ``1 qt. (946 mL)'' or ``Net contents 1 
qt. 1 pt. 8 oz./56 fl. oz. (1.65 L)'', but not in terms of quart and 
ounce such as ``1 quart 24 ounces (1.65 L)''.)
    (3) If 1 gallon or more, in terms of the largest whole unit (gallons 
followed by common or decimal fractions of a gallon or by the next 
smaller whole unit or units viz, quarts and pints) with any remainder in 
terms of fluid ounces or

[[Page 544]]

common or decimal fractions of the pint or quart, except that it shall 
be optional to include an immediately adjacent additional expression of 
net quantity in terms of fluid ounces.

    (Examples: ``Net contents 2\1/2\ gal. (9.46 L)'', ``Contents 2.5 
gal. (9.46 L)'', or ``Net contents 2 gallons 2 quarts (9.46 L)'' but not 
as ``2 gallons 4 pints (9.46 L)''.)



Sec.500.11  Measurement of commodity length, how expressed.

    Declaration of net quantity in terms of yards, feet, and inches 
shall be expressed as follows:
    (a) If less than 1 foot, in terms of inches and fractions thereof.
    (b) If 1 foot or more, in terms of the largest whole unit (a yard or 
foot) with any remainder in terms of inches or common or decimal 
fractions of the foot or yard, except that it shall be optional to 
express the length in the preceding manner followed by a statement of 
the length in terms of inches.



Sec.500.12  Measurement of commodities by length and width,
how expressed.

    For bidimensional commodities (including roll-type commodities) 
measured in terms of commodity length and width, the declaration of net 
quantity of contents shall be expressed in the following manner:
    (a) The declaration of net quantity for bidimensional commodities 
having a width of more than 4 inches (10.1 cm) shall:
    (1) When the commodity has an area of less than 1 square foot (929 
cm\2\) be expressed in terms of length and width in linear measure. The 
customary inch/pound statement is to be expressed in inches and 
fractions thereof.
    (2) When the commodity has an area of 1 square foot (929 cm\2\) or 
more, but less than 4 square feet (37.1 dm\2\), be expressed in terms of 
area, followed by the length and width. The customary inch/pound 
statement of area is to be expressed in square inches with length and 
width expressed in the largest whole unit (yard or foot) with any 
remainder in inches or common or decimal fractions of the yard or foot 
except that a dimension of less than 2 feet (60.9 cm) may be stated in 
inches. Commodities consisting of usable individual units (e.g., paper 
napkins) while requiring a declaration of unit area need not declare the 
total area of all such individual units.
    (3) When the commodity has an area of 4 square feet (37.1 dm\2\) or 
more, be expressed in terms of area, followed by the length and width. 
The customary inch/pound statement of area is to be expressed in square 
feet with the length and width expressed in the largest whole units 
(yards or feet) with any remainder in terms of inches or common or 
decimal fractions of the foot or yard except that a dimension of less 
than 2 feet (60.96 cm) may be stated in inches.
    (4) For any commodity for which the quantity of contents is required 
by paragraph (a) (2) or (3) of this section to include a declaration of 
the linear dimensions, the quantity of contents, in addition to being 
declared in the manner prescribed by the appropriate provisions of this 
regulation, may also include, after the customary inch/pound statement 
of the linear dimensions of the largest unit of measurement, a 
parenthetical declaration of the linear dimensions of said commodity in 
terms of inches.

    (Example: ``25 sq. ft. (12 in. x 8.33 yd.) (12 in. x 300 in.) 42.32 
m\2\ (30.4 cm x 7.62 m)''.)

    (b) For bidimensional commodities having a width of 4 inches (10.16 
cm) or less, the declaration of net quantity shall be expressed in terms 
of width and length in linear measure. The customary inch/pound 
statement of width shall be expressed in terms of linear inches and 
fractions thereof, and length shall be expressed in the largest whole 
unit (yard or foot) with any remainder in terms of the common or decimal 
fractions of the yard or foot, except that it shall be optional to 
express the length in the largest whole unit followed by a statement of 
length in inches or to express the length in inches followed by a 
statement of length in the largest whole unit.

    (Example: ``2 inches x 10 yards (5.08 cm x 9.14 m)'', ``2 inches x 
10 yards (360 inches) 5.08 cm x 9.14 m'', or ``2 inches x 360 inches (10 
yards) 5.08 cm x 9.14 m''.)

[[Page 545]]



Sec.500.13  Measurement of commodities by area measure only,
how expressed.

    For commodities measured in terms of area measure only declaration 
of net quantity in terms of square yards, square feet, and square inches 
shall be expressed in the following manner:
    (a) If less than 1 square foot (929 cm\2\), in terms of square 
inches and fractions thereof.
    (b) If at least 1 square foot (929 cm\2\) but less than 4 square 
feet (37.1 dm\2\), in terms of square feet with any remainder in terms 
of square inches or common or decimal fractions of the square foot.
    (c) If 4 square feet (37.1 dm\2\) or more, in terms of the largest 
appropriate whole unit (square yards, square yards and square feet, or 
square feet) with any remainder in terms of square inches or common or 
decimal fractions of the square foot or square yard.



Sec.500.14  Statements of cubic measure and dry measure.

    Statements of cubic measure and dry measure shall be expressed in 
terms most appropriate to the providing of accurate information as to 
the net quantity of contents, and to the facilitating of value 
comparisons by consumers. When the content declaration on a commodity 
sold in compressed form is stated in terms of cubic measure there may 
also be a statement indicating the amount of material from which the 
final product was compressed. Such statement shall not exceed the actual 
amount of material that can be recovered.



Sec.500.15  Units of count, more than one ply.

    If the commodity is in distinct usable units made up of one or more 
components or ply, the statement of net quantity of contents shall (in 
addition to complying with the requirements of linear and area 
measurement declaration for each unit as specified in Sec.500.12) 
include the number of ply and the total number of usable units.

    (Example: ``100 2-ply facial tissues, 8\1/2\ inches x 10 inches'' 
(21.5 x 25.4 cm).)


For the purposes of this section, roll type commodities (e.g. paper 
towels), irrespective of perforations, shall not be considered to be 
usable units, and shall be labeled in terms of total area measurement 
and the number of ply. Such area measurement, however, shall be 
supplemented by a count statement and the dimensions of a single unit.



Sec.500.16  Measurement of container type commodities, how expressed.

    Notwithstanding other provisions of this part 500 of the regulations 
pertaining to the expression of net quantity of contents by measurement, 
commodities designed and sold at retail to be used as containers for 
other materials or objects, such as bags, cups, boxes, and pans, shall 
be labeled in accordance with the following paragraphs:
    (a) The declaration of net quantity for container commodities shall 
be expressed as follows:
    (1) For bag type commodities, in terms of count followed by linear 
dimensions of the bag (whether packaged in a perforated roll or 
otherwise) Net quantity of contents in terms of feet and inches shall be 
expressed as follows:
    (i) When the unit bag is characterized by two dimensions because of 
the absence of a gusset, the width and length will be expressed in 
inches, except that a dimension of 2 feet or more will be expressed in 
feet with any remainder in terms of inches or common or decimal 
fractions of the foot.

    (Example: ``25 bags, 17 in. x 20 in. (43.1 x 50.8 cm)'' or ``200 
bags, 20 in. x 2 ft. 6 in. (50.8 x 76.2 cm)'', or ``50 bags, 20 in. x 
2\1/2\ ft. (50.8 x 76.2 cm)''.)

    (ii) When the unit bag is gussetted, the dimensions will be 
expressed as width, depth and length in terms of inches except that any 
dimensions of 2 feet or more will be expressed in feet with any 
remainder in terms of inches or the common or decimal fractions of the 
foot.

    (Examples: ``25 bags, 17 in. x 4 in. x 20 in. (43 x 10 x 50 cm)'', 
or ``200 bags, 20 in. x 12 in. x 2\1/2\ ft. (50.8 x 30.4 x 76.2 cm)''.)

    (2) For other square, oblong, rectangular or similarly shaped 
containers, in terms of count followed by length, width, and depth 
except depth need not

[[Page 546]]

be listed when less than 2 inches (5.08 cm).

    (Example: ``2 cake pans, 8 in. x 8 in. (20.3 x 20.3 cm)'', or 
``roasting pan, 12 in. x 8 in. x 3 in. (30.4 x 20.3 x 7.62 cm)''.)

    (3) For circular or other generally round shaped containers, except 
cups, and the like, in terms of count followed by diameter and depth 
except depth need not be listed when less than 2 inches (5.08 cm).

    (Example: ``4 pie pans, 8 in. diameter (20.3 cm)'' or ``2 cake pans, 
8 in. diameter x 4 in. (20.3 x 10.1 cm)''.)

    (b) When the functional use of the container is related by label 
reference in standard terms of measure to the capability of holding a 
specific quantity of substance or class of substances such references 
shall be a part of the net quantity statement and shall specify capacity 
as follows:
    (1) Liquid measure for containers which are intended to be used for 
liquids, semi-solids, viscous materials or mixtures of solids and 
liquids. The customary inch/pound statement of capacity shall be stated 
in terms of the largest whole U.S. gallon of 231 cubic inches, quart, 
pint, or ounce with any remainder in terms of the common or decimal 
fraction of that unit.

    (Example: Freezer Boxes: ``4 boxes, 1 qt. capacity, 6 in. x 6 in. x 
4 in. (946 mL capacity, 15.2 x 15.2 x 10.1 cm)''.)

    (2) Dry measure for containers which are intended to be used for 
solids. The customary inch/pound statement of capacity shall be stated 
in terms of the largest whole U.S. bushel of 2,150.42 cubic inches, 
peck, dry quart, or dry pint with any remainder in terms of the common 
or decimal fraction of that unit.

    (Example: Leaf Bags: ``8 bags, 6 bushel capacity, 4 feet x 5 feet 
(211 L capacity--1.21 m x 1.52 m)''.)

    (3) Where containers are used as liners for other more permanent 
containers, in the same terms as are normally used to express the 
capacity of the more permanent container.

    (Example: Garbage Can Liners: ``10 liners, 2 ft. 6 in. x 3 ft. 1 
in., fits up to 30 gallon cans (76.2 x 93.9 cm, fits up to 113 L 
cans''.)

    (c) Notwithstanding the above requirements, the net quantity 
statement for containers such as cups will be listed in terms of count 
and liquid capacity per unit.

    (Example: ``24 cups, 6 fl. oz. capacity (177 mL)''.)

    (d) For purposes of this section, the use of the terms ``capacity,'' 
``diameter,'' and ``fluid'' is optional.



Sec.500.17  Fractions.

    (a) SI metric declarations of net quantity of contents of any 
consumer commodity may contain only decimal fractions. Other 
declarations of net quantity of contents may contain common or decimal 
fractions. A common fraction shall be in terms of halves, quarters, 
eighths, sixteenths, or thirty-seconds; except that:
    (1) If there exists a firmly established general consumer usage and 
trade custom of employing different common fractions in the net quantity 
declaration of a particular commodity, they may be employed, and
    (2) If linear measurements are required in terms of yards or feet, 
common fractions may be in terms of thirds. A common fraction shall be 
reduced to its lowest terms; a decimal fraction shall not be carried out 
to more than three places.
    (b) If a statement includes small fractions, smaller variations in 
the actual size or weight of the commodity will be permitted as provided 
in Sec.500.25, than in cases where the larger fractions or whole 
numbers are used.



Sec.500.18  SI metric prefixes.

    The following chart indicates SI prefixes that may be used on a 
broad range of consumer commodity labels:

------------------------------------------------------------------------
                                                     Multiplying factor
              Prefix                    Symbol               \1\
------------------------------------------------------------------------
Kilo-............................  k                x 10\3\
Deca-............................  da                x 10
Deci-............................  d                 x 10-1
Centi-...........................  c                 x 10-2
Milli-...........................  m                 x 10-3
Micro-...........................  [micro]           x 10-6
------------------------------------------------------------------------
\1\ 10\2\=100; 10\3\=1000; 10-1=0.1; 10-2=0.01.
Thus, 2 kg=2 x 1000 g=2000 g, and 3 cm=3 x 0.01 m=0.03 m.


[[Page 547]]



Sec.500.19  Conversion of SI metric quantities to inch/pound 
quantities and inch/pound quantities to SI metric quantities.

    (a) For calculating the conversion of SI metric quantities to and 
from customary inch/pound quantities, the conversion chart published in 
the following handbook shall be employed: National Institute of 
Standards and Technology (NIST) Handbook 133, Checking the Net Contents 
of Packaged Goods, Appendix E--General Tables of Units of Measurements, 
2015 Edition, adopted November 2014. This incorporation by reference was 
approved by the Director of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. You may obtain a copy of NIST Handbook 
133 at the National Institute of Standards and Technology's Web site, 
http://www.nist.gov/pml/wmd/pubs/hb133.cfm. You may inspect a copy at 
FTC Library, (202) 326-2395, Federal Trade Commission, Room H-630, 600 
Pennsylvania Avenue NW., Washington, DC 20580, or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal-register/cfr/ibr-locations.html.
    (b) The SI metric quantity declaration should be shown in three 
digits except where the quantity is below 100 grams, milliliters, 
centimeters, square centimeters or cubic centimeters, where it can be 
shown in two figures. In either case, any final zero appearing to the 
right of a decimal point need not be shown.

    (Examples: ``1 lb (453 g)'' not ``1 lb (453.592 g)''; ``Net Wt. 2 oz 
(56 g)'' or ``Net Wt 2 oz (56.6 g)'' not ``Net Wt. 2 oz (56.69 g)''.)

[59 FR 1872, Jan. 12, 1994, as amended at 80 FR 71689, Nov. 17, 2015]



Sec.500.20  Conspicuousness.

    The statement of net quantity of contents shall appear in 
conspicuous and easily legible boldface type or print in distinct 
contrast (by typography, layout, color, embossing, or molding) to other 
matter on the package; except that a statement of net quantity blown, 
embossed, or molded on a glass or plastic surface is permissible when 
all label information is so formed on the surface.



Sec.500.21  Type size in relationship to the area of the principal
display panel.

    (a) The statement of net quantity of contents shall be in letters 
and numerals in a type size established in relationship to the area of 
the principal display panel of the package or commodity and shall be 
uniform for all packages or commodities of substantially the same size. 
For this purpose, ``area of the principal display panel'' means the area 
of the side or surface that bears the principal display panel, exclusive 
of tops, bottoms, flanges at tops and bottoms of cans, and shoulders and 
necks of bottles and jars. This area shall be:
    (1) In the case of a rectangular package or commodity where one 
entire side properly can be considered to be a principal display panel 
side, the product of the height times the width of that side;
    (2) In the case of a cylindrical or nearly cylindrical container or 
commodity, 40 percent of the product of the height of the container or 
commodity times the circumference; and
    (3) In the case of any otherwise shaped container or commodity, 40 
percent of the total surface of the container or commodity: Provided, 
however, that where such container or commodity presents an obvious 
``principal display panel'' such as the top of a triangular or oval 
shaped container, the area shall consist of the entire top surface.
    (b) With area of principal display panel defined as above, the type 
size in relationship to area of that panel shall comply with the 
following specifications:
    (1) Not less than \1/16\ inch (1.5 mm) in height on packages the 
principal display panel of which has an area of 5 square inches or (32.2 
cm \2\) less.
    (2) Not less than \1/8\ inch (3.1 mm) in height on packages the 
principal display panel of which has an area of more than 5 (32.2 cm 
\2\) but not more than 25 square inches (161 cm \2\).
    (3) Not less than \3/16\ inch (4.7 mm) in height on packages the 
principal display panel of which has an area of more

[[Page 548]]

than 25 (161 cm \2\) but not more than 100 square inches (6.45 dm \2\).
    (4) Not less than \1/4\ inch (6.35 mm) in height on packages the 
principal display panel of which has an area of more than 100 square 
inches (6.45 dm \2\), except not less than \1/2\ (12.7 mm) inch in 
height if the area is more than 400 square inches (25.8 dm \2\).
    (c) Where the statement of net quantity of contents is blown, 
embossed, or molded on a glass or plastic surface rather than by 
printing, typing, or coloring, the lettering sizes specified in 
paragraph (b) of this section shall be increased by \1/16\ of an inch 
(1.5 mm).
    (d) Letter heights pertain to upper case or capital letters. When 
upper and lower case or all lower case letters are used, it is the lower 
case letter ``o'' or its equivalent that shall meet the minimum 
standards.
    (e) The ratio of height to width of a letter shall not exceed a 
differential of 3 units to 1 unit (no more than 3 times as high as it is 
wide).
    (f) When fractions are used, each component shall meet one-half the 
minimum height standards.
    (g) The type size requirements specified in this section do not 
apply to the ``e'' mark. (See Sec.500.6(b).)
    (h) When upper and lower case or all lowercase letters are used in 
SI metric symbols, it is the uppercase ``L,'' lowercase ``d,'' or their 
equivalent in the print or type used that shall meet the minimum height 
requirement. Other letters and exponents must be presented in the same 
type style and in proportion to the type size used. However, no letter 
shall be less than 1.6 mm (\1/16\ inch) in height.



Sec.500.22  Abbreviations.

    The following abbreviations and none other may be employed in the 
required net quantity declaration:

Inch--in.
Feet or foot--ft.
Fluid--fl.
Liquid--liq.
Ounce--oz.
Gallon--gal.
Pint--pt.
Pound--lb.
Quart--qt.
Square--sq.
Weight--wt.
Yard--yd.
Avoirdupois--avdp.
Cubic--cu.
    Note: Periods and plural forms shall be optional. Exponents are 
permitted.

[80 FR 71689, Nov. 17, 2015]



Sec.500.23  Expression of net quantity of contents in SI Metric units.

    (a) The selected multiple or submultiple prefixes for SI metric 
units shall result in numerical values between 1 and 1000, except that 
centimeters or millimeters may be used where a length declaration is 
less than 100 centimeters. For example, ``1.96 kg'' instead of ``1960 
g'' and ``750 mL'' instead of ``0.75 L''.
    (b) The following symbols for SI metric units and none others may be 
employed in the required net quantity declaration:

centimeter--cm
cubic centimeter--cm \3\
cubic decimeter--dm \3\
meter--m
milligram--mg
liter--L or l
milliliter--mL or ml
square decimeter--dm \2\
cubic meter--m \3\
kilogram--kg
micrometer--[micro]m
gram--g
millimeter--mm
square meter--m\2\
square centimeter--cm\2\

    Note: Symbols, except for liter, are not capitalized. Periods should 
not be used after the symbol. Symbols are always written in the singular 
form.



Sec.500.24  Supplemental statements.

    Nothing contained in the regulations in this part shall prohibit 
supplemental statements, at locations other than the principal display 
panel, describing in non-deceptive terms the net quantity of contents: 
Provided that such supplemental statements of net quantity of contents 
shall not include any term qualifying a unit of weight or mass, measure, 
or count that tends to exaggerate the amount of commodity contained in 
the package. (Examples of prohibited language are: ``Giant Quart,'' 
``Jumbo Liter,'' ``Full Gallon,'' ``When Packed,'' ``Minimum,'' or words 
of similar import.) Required combination declarations of net quantity of

[[Page 549]]

contents (for example, a combination of net weight or mass plus 
numerical count, numerical count plus dimensions of the commodity, etc.) 
are not regarded as supplemental net quantity statements and shall be 
located on the principal display panel. Dilution directions or other 
similar directions for use are not regarded as supplemental net quantity 
statements and may be located on the principal display panel. Size 
characterizations in compliance with standards promulgated under section 
5(c)(1) of the Act may appear on the principal display panel.



Sec.500.25  Net quantity, average quantity, permitted variations.

    (a) The statement of net quantity of contents shall accurately 
reveal the quantity of the commodity in the container exclusive of 
wrappers and other material packed therewith: Provided, that in the case 
of a commodity packed in a container designed to deliver the commodity 
under pressure, the statement shall declare the net quantity of the 
contents that will be expelled when the instructions for use are 
followed. The propellant is included in the net quantity statement.
    (b) Variations from the stated weight or mass or measure shall be 
permitted when caused by ordinary and customary exposure, after the 
commodity is introduced into interstate commerce, to conditions which 
normally occur in good distribution practice and which unavoidably 
result in change of weight or mass or measure.
    (c) Variations from the stated weight or mass, measure, or numerical 
count shall be permitted when caused by unavoidable deviations in 
weighing, measuring, or counting the contents of individual packages 
which occur in good packaging practice: Provided, that such variations 
shall not be permitted to such extent that the average of the quantities 
in the packages comprising a shipment or other delivery of the commodity 
is below the quantity stated, and no unreasonable shortage in any 
package will be permitted even though overages in other packages in the 
same shipment or delivery compensate for such shortage. Variations from 
stated quantity of contents shall not be unreasonably large.



Sec.500.26  Representations of servings, uses, applications.

    (a) The label of any packaged consumer commodity which bears a 
representation as to the number of servings, uses, or applications of 
such commodity contained in such package shall bear in immediate 
conjunction therewith, and in letters the same size as those used for 
such representations, a statement of the net quantity (in terms of 
weight or mass, measure, or numerical count) of each such serving, use, 
or application: Provided, that such statement may be expressed in terms 
that differ from terms used in the required statement of net contents 
(e.g., cupsful, tablespoonful, etc.), when such differing terms describe 
a constant quantity. Such statement may not be misleading in any 
particular.
    (b) Representations as to the total amount of object or objects to 
which the commodity may be applied or upon which or in which the 
commodity may be used, will not be considered to be representations as 
to servings, uses, or applications, if such amount is expressed in terms 
of standard units of weight or mass, measure, size, or count.
    (c) If there exists a voluntary product standard promulgated 
pursuant to the procedures found in 15 CFR part 10, by the Department of 
Commerce, quantitatively defining the meaning of the terms serving, use, 
or application with respect to a particular consumer commodity, then any 
label representation as to the number of servings, uses, or applications 
in such packaged consumer commodity shall correspond with such 
quantitative definition. (Copies of published standards will be 
available upon request from the National Institute of Standards and 
Technology, Department of Commerce, Washington, DC 20899.)



Sec.500.27  Multiunit packages.

    (a) A multiunit package is a package intended for retail sale, 
containing two or more individual packaged or labeled units of an 
identical commodity in the same quantity. The declaration of net 
quantity of contents of a multiunit package shall be expressed as 
follows:
    (1) The number of individual packaged or labeled units;

[[Page 550]]

    (2) The quantity of each individual packaged or labeled unit; and
    (3) The total quantity of the multiunit package.

    Examples: Soap bars: ``6 Bars, Net Wt. 3.4 ozs. (96.3 g) each, Total 
Net Wt. 1 lb. 4.4 oz. (578 g)'' Facial Tissues: ``10 Packs, each 25 two-
ply tissues, 9.7 in. x 8.2 in. (24.6 x 20.8 cm), Total 250 Tissues.''

    (b) The individual packages or labeled units of a multiunit package, 
when intended for individual sale separate from the multiunit package, 
shall be labeled in compliance with the regulations under this part 500 
applicable to that package.
    (c) A multiunit package containing unlabeled individual packages 
which are not intended for retail sale separate from the multiunit 
package may contain, in lieu of the requirements of Paragraph (a) of 
this section, a declaration of quantity of contents expressing the total 
quantity of the multiunit package without regard for inner packaging. 
For such multiunit packages it shall be optional to include a statement 
of the number of individual packages when such a statement is not 
otherwise required by the regulations.

    Examples: Deodorant Cakes: ``5 Cakes, Net Wt. 4 ozs. (113 g) each, 
Total Net Wt. 1.25 lb. (566 g)'' or ``5 Cakes, Total Net Wt. 1 lb. 4 
ozs. (566 g)'';

    Soap Packets: ``10 Packets, Net Wt. 2 ozs. (56.6 g) each, total Net 
Wt 1.25 lb. (566 g)'' or ``Net Wt 1 lb. 4 ozs. (566 g)'' or ``10 
Packets, Total Net Wt. 1 lb. 4 ozs. (566 g).''



Sec.500.28  Variety packages.

    (a) A variety package is a package intended for retail sale, 
containing two or more individual packages or units of similar but not 
identical commodities. Commodities which are generically the same but 
which differ in weight or mass, measure, volume, appearance or quality 
are considered similar but not identical. The declaration of net 
quantity for a variety package will be expressed as follows:
    (1) The number of units for each identical commodity followed by the 
weight or mass, volume, or measure of that commodity: and
    (2) The total quantity by weight or mass, volume, measure, and 
count, as appropriate, of the variety package. The statement of total 
quantity shall appear as the last item in the declaration of net 
quantity and shall not be of greater prominence than other terms used.

                                Examples:

    (i) ``2 sponges 4\1/2\ ins. x 4 ins. x \3/4\ in. (11.4 cm x 10.1 cm 
x 1.9 cm); 1 sponge 4\1/2\ ins. x 8 ins. x \3/4\ in. (11.4 cm x 20.3 cm 
x 1.9 cm); 4 sponges 2\1/2\ ins. x 4 ins. x \1/2\ in. (6.3 cm x 10.1 cm 
x 1.2 cm)

Total: 7 sponges''.

    (ii) ``2 soap bars Net Wt. 3.2 ozs. (90 g) each; 1 soap bar Net Wt. 
5.0 ozs. (141 g).

Total: 3 bars Net Wt. 11.4 ozs. (323 g).''

    (iii) Liquid Shoe Polish: ``1 Brown 3 fl. ozs. (88 mL); 1 Black 3 
fl. ozs. (88 mL); 1 White 5 fl. ozs. (147 mL).

Total: 11 fl. ozs. (325 mL).''

    (iv) Picnic Ware: ``34 spoons; 33 forks; 33 knives.

Total: 100 pieces.''

    (b) When the individual units in a variety package are either 
packaged or labeled and are intended for retail sale as individual 
units, each unit shall be labeled in compliance with the applicable 
regulations under this part 500.



Sec.500.29  Combination packages.

    (a) A combination package is a package intended for retail sale, 
containing two or more individual packages or units of dissimilar 
commodities. The declaration of net quantity for a combination package 
will contain an expression of weight or mass, volume, measure or count 
or a combination, thereof, as appropriate for each individual package or 
unit: Provided, that the quantity statements for identical packages or 
units shall be combined.

                                Examples

    (1) Lighter fluid and flints: ``2 cans--each 8 fl. ozs. (236 mL); 1 
package--8 flints.''
    (2) Sponges & Cleaner: ``2 sponges each 4 in. x 6 in. x 1 in. (10.1 
x 15.2 x 2.5 cm); 1 box cleaner--Net Wt. 6 ozs. (170 g)''
    (3) Picnic Pack: ``20 spoons, 10 knives and 10 forks, 10 2-ply 
napkins 10 ins. x 10 ins. (25.4 x 25.4 cm) 10 cups--6 fl. ozs. (177 
mL)''.

[[Page 551]]

    (b) When the individual units in a combination package are either 
packaged or labeled and are intended for retail sale as individual 
units, each unit shall be in compliance with the applicable regulations 
under this part 500.



PART 501_EXEMPTIONS FROM REQUIREMENTS AND PROHIBITIONS UNDER PART 500
--Table of Contents



Sec.
501.1 Camera film.
501.2 Christmas tree ornaments.
501.3 Replacement bags for vacuum cleaners.
501.4 Chamois.
501.5 Paper table covers, bedsheets, pillowcases.
501.6 Cellulose sponges, irregular dimensions.
501.7 Candles.
501.8 Solder.

    Authority: Secs. 5, 6, 80 Stat. 1298, 1299, 1300; 15 U.S.C. 1454, 
1455.



Sec.501.1  Camera film.

    Camera film packaged and labeled for retail sale is exempt from the 
net quantity statement requirements of part 500 of this chapter which 
specify how measurement of commodities should be expressed, provided:
    (a) The net quantity of contents on packages of movie film and bulk 
still film is expressed in terms of the number of lineal feet of usable 
film contained therein.
    (b) The net quantity of contents on packages of still film is 
expressed in terms of the number of exposures the contents will provide. 
The length and width measurements of the individual exposures, expressed 
in millimeters or inches, are authorized as an optional statement. 
(Example: ``36 exposures, 36 x 24 mm. or 12 exposures, 2\1/4\ x 2\1/4\ 
inches''.)

[35 FR 75, Jan. 3, 1970]



Sec.501.2  Christmas tree ornaments.

    Christmas tree ornaments packaged and labeled for retail sale are 
exempt from the net quantity statement requirements of part 500 of this 
chapter which specify how the net quantity statement should be 
expressed, provided:
    (a) The quantity of contents is expressed in terms of numerical 
count of the ornaments, and
    (b) The ornaments are so packaged that the ornaments are clearly 
visible to the retail purchaser at the time of purchase.

[35 FR 9108, June 12, 1970]



Sec.501.3  Replacement bags for vacuum cleaners.

    Replacement bags for vacuum cleaners, packaged and labeled for 
retail sale are exempt from the requirements of Sec.500.15a of this 
chapter which specifies how measurement of container type commodities 
should be expressed, provided:
    (a) The quantity of contents is expressed in terms of numerical 
count of the bags;
    (b) A statement appears on the principal display panel of the 
package accurately identifying the make and model of the vacuum cleaner 
or cleaners in which the replacement bag is intended to effectively 
function;
    (c) The name and place of business of the manufacturer, packer, or 
distributor of the replacement bags, in addition to the requirements of 
Sec.500.5 of this chapter, appears on the principal display panel of 
the package.

[35 FR 10510, June 27, 1970]



Sec.501.4  Chamois.

    Chamois packaged or labeled for retail sale is exempt from the 
requirements of Sec.500.13 of this chapter which specifies how 
measurement of commodities by area measure should be expressed: 
Provided:
    (a) The quantity of contents for full skins is expressed in terms of 
square feet with any remainder in terms of the common or decimal 
fraction of the square foot.
    (b) The quantity of contents for cut skins of any configuration is 
expressed in terms of square inches and fractions thereof. Where the 
area of a cut skin is at least one square foot or more, the statement of 
square inches shall be followed in parentheses by a declaration in 
square feet with any remainder in terms of square inches or common or 
decimal fractions of the square foot.

[35 FR 19572, Dec. 24, 1970]

[[Page 552]]



Sec.501.5  Paper table covers, bedsheets, pillowcases.

    Table covers, bedsheets, and pillowcases, fabricated from paper, are 
exempt from the requirements of Sec.500.12 of this chapter which 
specifies the expression of measurement of bidimensional commodities: 
Provided, That such commodities shall clearly present their actual 
length and width in terms of inches.

[35 FR 19077, Dec. 17, 1970]



Sec.501.6  Cellulose sponges, irregular dimensions.

    Variety packages of cellulose sponges of irregular dimensions, are 
exempted from the requirements of Sec.500.25 of this chapter, 
provided:
    (a) Such sponges are packaged in transparent packages which afford 
visual inspection of the varied sizes, shapes, and irregular dimensions; 
and
    (b) The quantity of contents declaration is expressed as a 
combination of count accompanied by the term irregular dimensions.

    Example: ``10 Assorted Sponges--Irregular dimensions.''

[35 FR 18510, Dec. 5, 1970]



Sec.501.7  Candles.

    Tapered candles and irregularly shaped decorative candles which are 
either hand dipped or molded are exempt from the requirements of Sec.
500.7 of this chapter which specifies that the net quantity of contents 
shall be expressed in terms of count and measure (e.g., length and 
diameter), to the extent that diameter of such candles need not be 
expressed. The requirements of Sec.500.7 of this chapter for these 
candles will be met by an expression of count and length or height in 
inches.

[36 FR 5690, Mar. 26, 1971]



Sec.501.8  Solder.

    Solder and brazing alloys containing precious metals when packaged 
and labeled for retail sale are exempt from the net quantity statement 
requirements of part 500 of this chapter which specify that all 
statements of weight shall be in terms of avoirdupois pound and ounce 
provided the net quantity declaration is stated in terms of the troy 
pound and ounce and the term troy is used in each declaration.

[37 FR 4429, Mar. 3, 1972]



PART 502_REGULATIONS UNDER SECTION 5(C) OF THE FAIR PACKAGING 
AND LABELING ACT--Table of Contents



                                  Scope

Sec.
502.1 Scope of the regulations in this part.

                               Definitions

502.2 Terms defined.

                          General Requirements

502.3 Prohibited acts.

                    Characterization of Package Size

502.4-502.99 [Reserved]

                    Retail Sale Price Representations

502.100-502.102 [Reserved]

                   Common Name and Ingredient Listing

502.200-502.299 [Reserved]

                        Nonfunctional-Slack-Fill

502.300-502.399 [Reserved]

    Authority: 15 U.S.C. 1454, 1455.

    Source: 36 FR 12286, June 30, 1971, unless otherwise noted.

                                  Scope



Sec.502.1  Scope of the regulations in this part.

    The regulations in this part establish requirements for labeling of 
consumer commodities with respect to use of package size 
characterizations, retail sale price representations, and common name 
and ingredient listing. Additionally, the regulations in this part 
establish criteria to prevent nonfunctional-slack-fill of packages 
containing consumer commodities.

                               Definitions



Sec.502.2  Terms defined.

    As used in this part, unless the context otherwise specifically 
requires:
    (a) The terms Act, regulation or regulations, consumer commodity, 
package, label, person, commerce, principal display panel, and random 
package have the

[[Page 553]]

same meaning as those terms are defined under part 500 of this chapter.
    (b) The term packager and labeler means any person engaged in the 
packaging or labeling of any consumer commodity for distribution in 
commerce or any person, other than a common carrier for hire, a contract 
carrier for hire, or a freight forwarder for hire, engaged in the 
distribution in commerce of any packaged or labeled consumer commodity; 
except persons engaged in business as wholesale or retail distributors 
of consumer commodities are not included unless such persons (1) are 
engaged in the packaging or labeling of such commodities, or (2) 
prescribe or specify by any means the manner in which such commodities 
are packaged or labeled.
    (c) The terms ordinary and customary and regular when used with the 
term price means the price at which a consumer commodity has been openly 
and actively sold in the most recent and regular course of business in a 
particular market or trade area for a reasonably substantial period of 
time, i.e., a 30-day period. For consumer commodities which fluctuate in 
price, the ordinary and customary price shall be the lowest price at 
which any substantial sales were made during the aforesaid 30-day 
period.

                          General Requirements



Sec.502.3  Prohibited acts.

    (a) No person engaged in the packaging or labeling of any consumer 
commodity for distribution in commerce, and no person (other than a 
common carrier for hire, a contract carrier for hire, or a freight 
forwarder for hire) engaged in the distribution in commerce of any 
packaged or labeled consumer commodity, shall distribute or cause to be 
distributed in commerce any such commodity if such commodity is 
contained in a package, or if there is affixed to that commodity a 
label, which does not conform to the provisions of the Act and of the 
regulations in this part.
    (b) Persons engaged in business as wholesale or retail distributors 
of consumer commodities shall be subject to the Act and the regulations 
in this part to the extent that such persons are engaged in the 
packaging or labeling of consumer commodities, or prescribe or specify 
by any means the manner in which such consumer commodities are packaged 
or labeled.

                    Characterization of Package Size



Sec. Sec.502.4-502.99  [Reserved]

                    Retail Sale Price Representations



Sec. Sec.502.100--502.102  [Reserved]

                   Common Name and Ingredient Listing



Sec. Sec.502.200-502.299  [Reserved]

                        Nonfunctional-Slack-Fill



Sec. Sec.502.300-502.399  [Reserved]



PART 503_STATEMENTS OF GENERAL POLICY OR INTERPRETATION--
Table of Contents



Sec.
503.1 Interpretations.
503.2 Status of specific items under the Fair Packaging and Labeling 
          Act.
503.3 Name and place of business of manufacturer, packer, or 
          distributor.
503.4 Net quantity of contents, numerical count.
503.5 Interpretation of the definition of ``consumer commodity'' as 
          contained in section 10(a) of the Fair Packaging and Labeling 
          Act.
503.6 Packagers' duty to withhold availability of packages imprinted 
          with retail sale price representations.

    Authority: Secs. 4, 6, 10, 80 Stat. 1297, 1999, 1300, 1301; 15 
U.S.C. 1453, 1455, 1456.



Sec.503.1  Interpretations.

    The regulations in parts 500, 501, and 502 of this chapter are 
necessarily general in application and requests for formal rulings, 
statements of policy or interpretations shall be addressed to the 
Secretary of the Commission for consideration. Statements of policy or 
interpretations binding on the Commission will be published in the 
Federal Register. However, technical questions not involving policy 
consideration may be answered by the staff.

[36 FR 23058, Dec. 3, 1971]

[[Page 554]]



Sec.503.2  Status of specific items under the Fair Packaging and Labeling Act.

    Recent questions submitted to the Commission concerning whether 
certain articles, products or commodities are included under the 
definition of the term consumer commodity, as contained in section 10(a) 
of the Fair Packaging and Labeling Act, have been considered in the 
light of the Commission's interpretation of that term as set forth in 
Sec.503.5 of this part as follows:
    (a) The Commission is of the opinion that the following commodities 
or classes of commodities are not ``consumer commodities'' within the 
meaning of the Act.

Antifreeze.
Artificial flowers and parts.
Automotive accessories.
Automotive chemical products.
Automotive replacement parts.
Bicycle tires and tubes.
Books.
Brushes (bristle, nylon, etc.).
Brooms and mops.
Cameras.
Chinaware.
Christmas light sets.
Cigarette lighters.
Clothespins (wooden, plastic).
Compacts and mirrors.
Diaries and calendars.
Flower seeds.
Footwear.
Garden tools.
Gift ties and tapes.
Glasses and glassware.
Gloves (work type).
Greeting cards.
Hand tools.
Handicraft and sewing thread.
Hardware.
Household cooking utensils.
Inks.
Jewelry.
Luggage.
Magnetic recording tape.
Metal pails.
Motor oil (automobile).
Mouse and rat traps.
Musical instruments.
Paintings and wall plaques.
Photo albums.
Pictures.
Plastic table cloths, plastic placement and plastic shelf paper.
Rubber gloves (household).
Safety flares.
Safety pins.
School supplies.
Sewing accessories.
Silverware, stainless steelware and pewterware.
Small arms ammunition.
Smoking pipes.
Souvenirs.
Sporting goods.
Toys.
Typewriter ribbons.
Woodenware.

    (b) The Commission is of the opinion that the following commodities 
or classes of commodities are ``consumer commodities'' within the 
meaning of the Act:

Adhesives and sealants.
Aluminum foil cooking utensils.
Aluminum wrap.
Camera supplies.
Candles.
Christmas decorations.
Cordage.
Disposable diapers.
Dry cell batteries.
Light bulbs.
Liquified petroleum gas for other than heating and cooking.
Lubricants for home use.
Photographic chemicals.
Pressure sensitive tapes, excluding gift tapes.
Solder.
Solvents and cleaning fluids for home use.
Sponges and chamois.
Waxes for home use.

[35 FR 6185, Apr. 16, 1970]



Sec.503.3  Name and place of business of manufacturer, packer,
or distributor.

    To clarify the identity of a manufacturer, packer, or distributor 
for the purpose of Sec.500.5 of this chapter, the following represents 
the opinions of the Commission.
    (a) A manufacturer of a bulk product who supplies the product to a 
contract packager and permits his bulk product to be packaged by the 
contract packager remains the manufacturer of the commodity, if the 
contract packager does not perform any act other than package filling 
and labeling.
    (b)(1) A manufacturer of a bulk product who supplies the bulk to a 
contract packager but permits the packager to modify the bulk commodity 
by the addition of any substance which changes the identity of the bulk, 
ceases to be the manufacturer of the consumer commodity. At that point, 
if the manufacturer of the bulk elects to use his

[[Page 555]]

name on the label of the consumer commodity, his name should be 
qualified to show ``Distributed by _______'', or ``Manufactured for 
_________''.
    (2) The identity of a bulk substance received by a contract packager 
is changed if the packager, for example, adds a propellant as in the 
case of an aerosol, or adds a solvent as in the case of a paint, or 
blends two or more components, or changes the physical state as in the 
case of a liquid being changed to a gel or a semisolid being changed to 
a solid.
    (c) A person or firm who supplies a formula and/or specifications to 
a contract packager but who takes no part in the actual production of 
the consumer commodity is not the manufacturer of the consumer commodity 
for the purpose of Sec.500.5(a) of this chapter. This is true whether 
the person or firm who supplies the formula or specifications, or both, 
also supplies the raw materials which are to be reacted, mixed, or 
otherwise modified to produce the consumer commodity.
    (d) A corporation which wholly owns a manufacturing subsidiary which 
retains its separate corporate identity, is not the manufacturer of the 
consumer commodities manufactured by the wholly owned subsidiary, but 
must qualify its name if it elects to use its name on the label. Such 
qualification may be ``Manufactured for ______'', ``Distributed by 
_______'', or ``Manufactured by _______ (XYZ, Inc., City, State, Zip 
Code, a subsidiary of ABC, Inc.)''.

[34 FR 4956, Mar. 7, 1969, as amended at 34 FR 11199, July 3, 1969]



Sec.503.4  Net quantity of contents, numerical count.

    To clarify the requirement for declaration of net quantity in terms 
of count for the purpose of Sec. Sec.500.6 and 500.7 of this chapter, 
the following interpretation is rendered.
    (a) When a consumer commodity is properly measured in terms of count 
only, or in terms of count and weight, volume, area, or dimension, the 
regulations are interpreted not to require the declaration of the net 
content as ``one'', provided the statement of identity clearly expresses 
the fact that only one unit is contained in the package. Thus the unit 
synthetic sponge, the unit light bulb, and the unit dry cell battery do 
not require a net quantity statement of ``one sponge,'' ``one light 
bulb,'' or ``one dry cell battery.'' However, there still exists the 
necessity to provide a net quantity statement to specify weight, volume, 
area, or dimensions when such are required. For example, the synthetic 
sponge which is packaged, requires dimensions such as ``5 in. x 3 in. x 
1 in.'' A multicomponent package or a package containing two or more 
units of the same commodity shall bear the net quantity statement in 
terms of count, and weight, volume, area, or dimensions as required. 
This interpretation does not preclude the option to enumerate a unit 
count on a single packaged commodity if so desired.
    (b) [Reserved]

[34 FR 18087, Nov. 8, 1969]



Sec.503.5  Interpretation of the definition of ``consumer commodity''
as contained in section 10(a) of the Fair Packaging and Labeling Act.

    (a) Section 10(a) of the Fair Packaging and Labeling Act defines the 
term consumer commodity in four classifications. These are:
    (1) Any food, drug, device, or cosmetic;
    (2) And any other article, product, or commodity of any kind or 
class which is customarily produced or distributed for sale through 
retail sales agencies or instrumentalities.
    (i) For consumption by individuals and which usually is consumed or 
expended in the course of such consumption.
    (ii) For use by individuals for purposes of personal care and which 
usually is consumed or expended in the course of such use.
    (iii) For use by individuals in the performance of services 
ordinarily rendered within the household and which usually is consumed 
or expended in the course of such use.
    (b) Section 10(a) then expressly excludes
    (1) Meats, poultry, and tobacco,
    (2) Economic poisons and biologics for animals,
    (3) Prescription drugs,

[[Page 556]]

    (4) Alcoholic beverages, and
    (5) Agricultural and vegetable seeds.
    (c) Pursuant to sections 5 and 7 of the Fair Packaging and Labeling 
Act, the authority to promulgate regulations and to enforce the Act as 
to any food, drug, device, or cosmetic has been delegated to the 
Secretary of Health, Education, and Welfare and as to any other 
``consumer commodity'' to the Federal Trade Commission.
    (d) As to these articles, products, or commodities subject to 
regulation by the Federal Trade Commission, the legislative history of 
the Act demonstrates the intent of Congress, for the reasons stated 
therein, to place the following categories outside the scope of the 
definition of ``consumer commodity'':
    (1) Durable articles or commodities;
    (2) Textiles or items of apparel;
    (3) Any household appliance, equipment, or furnishing, including 
feather and down-filled products, synthetic-filled bed pillows, mattress 
pads and patchwork quilts, comforters and decorative curtains;
    (4) Bottled gas for heating or cooking purposes;
    (5) Paints and kindred products;
    (6) Flowers, fertilizer, and fertilizer materials, plants or shrubs, 
garden and lawn supplies;
    (7) Pet care supplies;
    (8) Stationery and writing supplies, gift wraps, fountain pens, 
mechanical pencils, and kindred products.
    (e) The articles, products, or commodities that are within the terms 
of section 10(a) of the Act and subject to regulation by the Federal 
Trade Commission are either expendable commodities for consumption by 
individuals, expendable commodities used for personal care, or 
expendable commodities used for household services. The primary terms in 
section 10(a) for defining these categories are:
    (1) Consumption by individuals;
    (2) Use by individuals;
    (3) Personal care by individuals;
    (4) Performances of services ordinarily rendered within the 
household by individuals;
    (5) Consumed or expended.
    (f) These terms are defined as follows:
    (1) Consumption by individuals. This term as it is used in section 
10(a) means the using up of an article, product, or commodity by an 
individual.
    (2) Use by individuals. This term as it is used in section 10(a) 
means the employment or application of an article, product, or commodity 
by an individual.
    (3) Personal care by individuals. This term as it is used in section 
10(a) means that activity of an individual which is concerned with 
protecting, enhancing, and providing for the general cleanliness, 
health, or appearance of the individual.
    (4) Performance of services ordinarily rendered within the household 
by individuals. These terms as they are used in section 10(a) mean: The 
term household refers to the interior and exterior of dwellings or 
residences occupied by individuals, including the surrounding premises. 
The term performance of services ordinarily rendered within the 
household means the doing of any activity by an individual within the 
above-described area which is normally done in connection with the 
maintenance and occupation of the above-described area as a habitation 
for individuals.
    (5) Consumed or expended. These terms as they are used in section 
10(a) mean (i) the immediate destruction or extinction of an article, 
product, or commodity, or of the part used; or (ii) the substantial 
diminution in the quantity, quality or utility of an article, product, 
or commodity which results from usage upon one or several occasions over 
a comparatively short period of time.
    (g) The foregoing definition serves to amplify the definition of 
``consumer commodity'' supplied by Congress in section 10(a) of the Act. 
As questions arise as to whether specific articles, products, or 
commodities are included in the above definition, the Commission will 
consider, among other things, the Congressional policy declared in 
section 2 of the Act, namely, that packages and labels should enable 
consumers to obtain accurate information as to the quantity of contents 
and should facilitate value comparisons. That is, in making its 
determinations of inclusions and exclusions under this

[[Page 557]]

definition, the Commission will consider the requirements of both the 
Act and the pertinent regulations and in that connection will regard as 
one criterion the extent to which the disclosures required on ``consumer 
commodities'' are material to a consumer's selection of a particular 
article, product, or commodity. Interpretative rulings in such instances 
will be made public, and can be expected to further contribute to the 
development of clearer delineation of the scope of the term ``consumer 
commodity''.
    (h) With respect to articles, products, or commodities included 
within the definition of ``consumer commodities'', the Commission will 
consider requests for exemptions in accordance with section 5(b) of the 
Act and Sec.500.3(e) of this chapter, and will make public its rulings 
on all such requests.

[34 FR 12945, Aug. 9, 1969]



Sec.503.6  Packagers' duty to withhold availability of packages 
imprinted with retail sale price representations.

    To clarify the requirements, under part 502 of this chapter, that a 
packager or labeler will not make packages marked with retail sale price 
representations available in any circumstance where he knows or should 
have reason to know that it will be used as an instrumentality for 
deception or for frustration of value comparison, the following 
represents the opinions of the Commission:
    (a) Details of a plan to provide special packaging or special 
package sizes bearing retail sale price representations should contain 
the condition that customers will not be provided with such packages 
unless they resell the package at a price which fully passes on to the 
purchasers the represented savings or sale price advantage.
    (b) A packager or labeler who, in good faith, takes reasonable and 
prudent measures to verify the performance of his customers will be 
deemed to have satisfied his obligation under the regulations. If the 
packager has taken such steps, the fact that a particular customer has 
failed to resell the packages at a price which fully passes on to the 
purchaser the represented savings or sale price advantage shall not 
alone place a seller in violation of the regulations.
    (c) Any packager or labeler who determines that a customer does not 
intend to fulfill or has not fulfilled the conditions of an offer should 
immediately refrain from further sale under that offer to the customer. 
In situations where proper fulfillment of the conditions of an offer are 
in question, the Commission will resolve the issue after appropriate 
investigation of the facts submitted.

[36 FR 23058, Dec. 3, 1971]

[[Page 558]]



                 SUBCHAPTER F_FAIR CREDIT REPORTING ACT



                           PART 600 [RESERVED]



PART 602_FAIR AND ACCURATE CREDIT TRANSACTIONS ACT OF 2003--
Table of Contents



    Authority: 15 U.S.C. 1681s; sec. 3, Pub. L. 108-159; 117 Stat. 1953.



Sec.602.1  Effective dates.

    (a)-(b) [Reserved]
    (c) The applicable provisions of the Fair and Accurate Credit 
Transactions Act of 2003 (FACT Act), Pub. L. 108-159, 117 Stat. 1952, 
shall be effective in accordance with the following schedule:
    (1) Provisions effective December 31, 2003.
    (i) Sections 151(a)(2), 212(e), 214(c), 311(b), and 711, concerning 
the relation to state laws; and
    (ii) Each of the provisions of the FACT Act that authorizes an 
agency to issue a regulation or to take other action to implement the 
applicable provision of the FACT Act or the applicable provision of the 
Fair Credit Reporting Act, as amended by the FACT Act, but only with 
respect to that agency's authority to propose and adopt the implementing 
regulation or to take such other action.
    (2) Provisions effective March 31, 2004.
    (i) Section 111, concerning the definitions;
    (ii) Section 156, concerning the statute of limitations
    (iii) Sections 312(d), (e), and (f), concerning the furnisher 
liability exception, liability and enforcement, and rule of 
construction, respectively;
    (iv) Section 313(a), concerning action regarding complaints;
    (v) Section 611, concerning communications for certain employee 
investigations; and
    (vi) Section 811, concerning clerical amendments.
    (3) Provisions effective December 1, 2004.
    (i) Section 112, concerning fraud alerts and active duty alerts;
    (ii) Section 114, concerning procedures for the identification of 
possible instances of identity theft;
    (iii) Section 115, concerning truncation of the social security 
number in a consumer report;
    (iv) Section 151(a)(1), concerning the summary of rights of identity 
theft victims;
    (v) Section 152, concerning blocking of information resulting from 
identity theft;
    (vi) Section 153, concerning the coordination of identity theft 
complaint investigations;
    (vii) Section 154, concerning the prevention of repollution of 
consumer reports;
    (viii) Section 155, concerning notice by debt collectors with 
respect to fraudulent information;
    (ix) Section 211(c), concerning a summary of rights of consumers;
    (x) Section 212(a)-(d), concerning the disclosure of credit scores;
    (xi) Section 213(c), concerning duration of elections;
    (xii) Section 217(a), concerning the duty to provide notice to a 
consumer;
    (xiii) Section 311(a), concerning the risk-based pricing notice;
    (xiv) Section 312(a)-(c), concerning procedures to enhance the 
accuracy and integrity of information furnished to consumer reporting 
agencies;
    (xv) Section 314, concerning improved disclosure of the results of 
reinvestigation;
    (xvi) Section 315, concerning reconciling addresses;
    (xvii) Section 316, concerning notice of dispute through reseller; 
and
    (xviii) Section 317, concerning the duty to conduct a reasonable 
reinvestigation.

[69 FR 29063, May 20, 2004]



PART 603_DEFINITIONS--Table of Contents



    Authority: Pub. L. 108-159, sec. 111; 15 U.S.C. 1681a.

    Source: 77 FR 22203, Apr. 13, 2012, unless otherwise noted.



Sec.603.1  Cross-reference.

    The rules formerly at 16 CFR part 603 have been republished by the 
Consumer Financial Protection Bureau at 12 CFR

[[Page 559]]

1022.3, ``Fair Credit Reporting (Regulation V).''



PART 604_FAIR CREDIT REPORTING ACT RULES--Table of Contents



    Authority: Pub. L. 108-159, secs. 3, 111, 112, 114, 151, 153, 211, 
212, 213, 214, 216, 311, 315; 15 U.S.C. 1681s.

    Source: 69 FR 29063, May 20, 2004, unless otherwise noted.



Sec.604.1  Severability.

    All parts and subparts of this subchapter are separate and severable 
from one another. If any part or subpart is stayed or determined to be 
invalid, the Commission intends that the remaining parts and subparts 
shall continue in effect.



PART 609_FREE ELECTRONIC CREDIT MONITORING FOR ACTIVE DUTY MILITARY--
Table of Contents



Sec.
609.1 Scope of regulations in this part.
609.2 Definitions.
609.3 Requirement to provide free electronic credit monitoring service.
609.4 Timing of electronic credit monitoring notices.
609.5 Additional information to be included in electronic credit 
          monitoring notices.
609.6 Severability.

    Authority: 15 U.S.C. 1681c-1(k).

    Source: 84 FR 31191, July 1, 2019, unless otherwise noted.



Sec.[thinsp]609.1  Scope of regulations in this part.

    This part implements Section 605A(k)(2) of the Fair Credit Reporting 
Act, 15 U.S.C. 1681c-1(k)(2), which requires consumer reporting agencies 
that compile and maintain files on consumers on a nationwide basis to 
provide a free electronic credit monitoring service to active duty 
military consumers that, at a minimum, notifies them of any material 
additions or modifications to their files.



Sec.[thinsp]609.2  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Active duty military consumer means:
    (1) A consumer in military service as defined in 15 U.S.C. 
1681a(q)(1); or
    (2) A member of the National Guard as defined in 10 U.S.C. 101(c).
    (b) Appropriate proof of identity has the meaning set forth in 12 
CFR 1022.123.
    (c) Consumer has the meaning provided in 15 U.S.C. 1681a(c).
    (d) Consumer report has the meaning provided in 15 U.S.C. 1681a(d).
    (e) Contact information means information about a consumer, such as 
a consumer's first and last name and email address, that is reasonably 
necessary to collect in order to provide the electronic credit 
monitoring service.
    (f) Credit has the meaning provided in 15 U.S.C. 1681a(r)(5).
    (g) Electronic credit monitoring service means a service through 
which nationwide consumer reporting agencies provide, at a minimum, 
electronic notification of material additions or modifications to a 
consumer's file and following a notification, access to all information 
in the consumer's file at the nationwide consumer reporting agency at 
the time of the notification, in accordance with 15 U.S.C. 1681g(a).
    (h) Electronic notification means:
    (1) A notice provided to the consumer via:
    (i) Mobile application;
    (ii) Email; or
    (iii) Text message;
    (2) If the notice in paragraph (h)(1) of this section does not 
inform the consumer of the specific material addition or modification 
that has been made, such notice must link to a website that provides 
that information.
    (i) File has the meaning provided in 15 U.S.C. 1681a(g).
    (j) Firm offer of credit has the meaning provided in 15 U.S.C. 
1681a(l).
    (k) Free means provided at no cost to the consumer.
    (l) Material additions or modifications means significant changes to 
a consumer's file, including:
    (1) New accounts opened in the consumer's name, including new 
collection accounts;
    (2) Inquiries or requests for a consumer report;
    (i) However, an inquiry made for a prescreened list obtained for the 
purpose of making a firm offer of credit or

[[Page 560]]

insurance as described in 15 U.S.C. 1681b(c)(1)(B) or for the purpose of 
reviewing or collecting an account of the consumer shall not be 
considered a material addition or modification.
    (ii) [Reserved]
    (3) Material changes to a consumer's address;
    (4) Changes to credit account limits of $100 or greater; and
    (5) Negative information.
    (m) Nationwide consumer reporting agency has the meaning provided in 
15 U.S.C. 1681a(p).
    (n) Negative information means accounts furnished to the nationwide 
consumer reporting agencies as more than 30 days delinquent, accounts 
furnished to the nationwide consumer reporting agencies as being 
included in bankruptcy petition filings, and new public records, 
including, but not limited to, bankruptcy filings, civil court 
judgments, foreclosures, liens, and convictions.



Sec.609.3  Requirement to provide free electronic credit monitoring 
service.

    (a) General requirements. Nationwide consumer reporting agencies 
must provide a free electronic credit monitoring service to active duty 
military consumers.
    (b) Determining whether a consumer must receive electronic credit 
monitoring service. Nationwide consumer reporting agencies may condition 
provision of the service required under paragraph (a) of this section 
upon the consumer providing:
    (1) Appropriate proof of identity;
    (2) Contact information; and
    (3) Appropriate proof that the consumer is an active duty military 
consumer.
    (c) Appropriate proof of active duty military consumer status. (1) A 
consumer's status as an active duty military consumer can be verified 
through:
    (i) A method or service approved by the Department of Defense; or
    (ii) A certification of active duty military consumer status 
approved by the nationwide consumer reporting agency.
    (2) Provided, however, that the procedures a nationwide consumer 
reporting agency uses to determine appropriate proof of active duty 
military consumer status must include methods that allow all eligible 
consumers to enroll. A nationwide consumer reporting agency shall be 
deemed in compliance with paragraph (c) of this section if it provides 
free electronic credit monitoring services to:
    (i) Consumers who self-certify active duty status, as defined in 10 
U.S.C. 101(d);
    (ii) Consumers who self-certify that they are a reservist performing 
duty under a call or order to active duty under a provision of law 
referred to in 10 U.S.C. 101(a)(13); and
    (iii) Consumers who self-certify that they are a member of the 
National Guard, as defined in 10 U.S.C. 101(c).
    (3) A nationwide consumer reporting agency's verification of active 
duty military consumer status is valid for two years. After the 
expiration of the two-year period, the nationwide consumer reporting 
agency may require the consumer to provide proof that the consumer 
continues to be an active duty military consumer in accordance with 
paragraphs (c)(1) and (2) of this section.
    (d) Information use and disclosure. Any information collected from 
consumers as a result of a request to obtain the service required under 
paragraph (a) of this section, may be used or disclosed by the 
nationwide consumer reporting agency only:
    (1) To provide the free electronic credit monitoring service 
requested by the consumer;
    (2) To process a transaction requested by the consumer at the same 
time as a request for the free electronic credit monitoring service;
    (3) To comply with applicable legal requirements; or
    (4) To update information already maintained by the nationwide 
consumer reporting agency for the purpose of providing consumer reports, 
provided that the nationwide consumer reporting agency uses and 
discloses the updated information subject to the same restrictions that 
would apply, under any applicable provision of law or regulation, to the 
information updated or replaced.

[[Page 561]]

    (e) Communications surrounding enrollment in electronic credit 
monitoring service. (1) Once a consumer is in the process of accessing 
the ability to enroll in the service required under paragraph (a) of 
this section and only during the enrollment process, any advertising or 
marketing for products or services, or any communications or 
instructions that advertise or market any products and services, must be 
delayed until after the consumer has enrolled in that service.
    (2) Any communications, instructions, or permitted advertising or 
marketing shall not interfere with, detract from, contradict, or 
otherwise undermine the purpose of providing a free electronic credit 
monitoring service to active duty military consumers that notifies them 
of any material additions or modifications to their files.
    (3) Examples of interfering, detracting, inconsistent, and/or 
undermining communications include:
    (i) Materials that represent, expressly or by implication, that an 
active duty military consumer must purchase a paid product or service in 
order to receive the service required under paragraph (a) of this 
section; or
    (ii) Materials that falsely represent, expressly or by implication, 
that a product or service offered ancillary to receipt of the free 
electronic credit monitoring service, such as identity theft insurance, 
is free, or that fail to clearly and prominently disclose that consumers 
must cancel a service, advertised as free for an initial period of time, 
to avoid being charged, if such is the case.
    (f) Other prohibited practices. A nationwide consumer reporting 
agency shall not ask or require an active duty military consumer to 
agree to terms or conditions in connection with obtaining a free 
electronic credit monitoring service, other than those terms or 
conditions required to comply with applicable legal requirements.



Sec.[thinsp]609.4  Timing of electronic credit monitoring notices.

    The notice required in Sec.609.3(a) must be provided within 48 
hours of any material additions or modifications to a consumer's file.



Sec.[thinsp]609.5  Additional information to be included in electronic
credit monitoring notices.

    (a) The notice required in Sec.609.3(a), or the first page within 
the electronic credit monitoring service to which the notice may direct 
the consumer, shall include a hyperlink to a summary of the consumer's 
rights under the Fair Credit Reporting Act, as prescribed by the Bureau 
of Consumer Financial Protection under 15 U.S.C. 1681g(c).
    (b) The nationwide consumer reporting agency shall provide to a 
consumer, with each file disclosure provided in Sec.609.3(a), the 
summary of the consumer's rights under the Fair Credit Reporting Act, as 
prescribed by the Bureau of Consumer Financial Protection under 15 
U.S.C. 1681g(c).



Sec.[thinsp]609.6  Severability.

    The provisions of this part are separate and severable from one 
another. If any provision is stayed, or determined to be invalid, it is 
the Commission's intention that the remaining provisions shall continue 
in effect.



PART 610_FREE ANNUAL FILE DISCLOSURES--Table of Contents



    Authority: 15 U.S.C. 1681a, g, and h; sec. 211(a) and (d), Pub. L. 
108-159, 117 Stat. 1968 and 1972 (15 U.S.C. 1681j); Pub. L. 111-24.

    Source: 77 FR 22203, Apr. 13, 2012, unless otherwise noted.



Sec.610.1  Cross-reference.

    The rules formerly at 16 CFR part 610 have been republished by the 
Consumer Financial Protection Bureau at 12 CFR 1022.130, ``Fair Credit 
Reporting (Regulation V).''



PART 611_PROHIBITION AGAINST CIRCUMVENTING TREATMENT AS A NATIONWIDE 
CONSUMER REPORTING AGENCY--Table of Contents



    Authority: Pub. L. 108-159, sec. 211(b); 15 U.S.C. 1681x.

    Source: 77 FR 22203, Apr. 13, 2012, unless otherwise noted.

[[Page 562]]



Sec.611.1  Cross-reference.

    The rules formerly at 16 CFR part 611 have been republished by the 
Consumer Financial Protection Bureau at 12 CFR 1022.140, ``Fair Credit 
Reporting (Regulation V).''



PART 613_DURATION OF ACTIVE DUTY ALERTS--Table of Contents



    Authority: Pub. L. 108-159, sec. 112(a); 15 U.S.C. 1681c-1.

    Source: 77 FR 22203, Apr. 13, 2012, unless otherwise noted.



Sec.613.1  Cross-reference.

    The rules formerly at 16 CFR part 613 have been republished by the 
Consumer Financial Protection Bureau at 12 CFR 1022.121, ``Fair Credit 
Reporting (Regulation V).''



PART 614_APPROPRIATE PROOF OF IDENTITY--Table of Contents



    Authority: Pub. L. 108-159, sec. 112(b).

    Source: 77 FR 22204, Apr. 13, 2012, unless otherwise noted.



Sec.614.1  Cross-reference.

    The rules formerly at 16 CFR part 614 have been republished by the 
Consumer Financial Protection Bureau at 12 CFR 1022.123, ``Fair Credit 
Reporting (Regulation V).''



PART 640_DUTIES OF CREDITORS REGARDING RISK-BASED PRICING--
Table of Contents



Sec.
640.1 Scope.
640.2 Definitions.
640.3 General requirements for risk-based pricing notices.
640.4 Content, form, and timing of risk-based pricing notices.
640.5 Exceptions.
640.6 Rules of construction.

    Authority: 12 U.S.C. 5519; 15 U.S.C. 1681m(h).

    Source: 75 FR 2769, Jan. 15, 2010, unless otherwise noted.



Sec.640.1  Scope.

    (a) Coverage--(1) In general. This part applies to any person that 
both--
    (i) Uses a consumer report in connection with an application for, or 
a grant, extension, or other provision of, credit to a consumer that is 
primarily for personal, family, or household purposes; and
    (ii) Based in whole or in part on the consumer report, grants, 
extends, or otherwise provides credit to the consumer on material terms 
that are materially less favorable than the most favorable material 
terms available to a substantial proportion of consumers from or through 
that person.
    (2) Business credit excluded. This part does not apply to an 
application for, or a grant, extension, or other provision of, credit to 
a consumer or to any other applicant primarily for a business purpose.
    (b) Relation to Board of Governors of the Federal Reserve System 
rules. The rules in this part were developed jointly with the Board of 
Governors of the Federal Reserve System (Board) and are substantively 
identical to the Board's risk-based pricing rules in 12 CFR part 222. 
Both rules apply to the covered person described in paragraph (a) of 
this section. Compliance with either the Board's rules or the 
Commission's rules satisfies the requirements of the statute (15 U.S.C. 
1681m(h)).
    (c) Enforcement. The provisions of this part will be enforced in 
accordance with the enforcement authority set forth in sections 621(a) 
and (b) of the FCRA.



Sec.640.2  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Adverse action has the same meaning as in 15 U.S.C. 
1681a(k)(1)(A).
    (b) Annual percentage rate has the same meaning as in 12 CFR 
226.14(b) with respect to an open-end credit plan and as in 12 CFR 
226.22 with respect to closed-end credit.
    (c) Closed-end credit has the same meaning as in 12 CFR 
226.2(a)(10).
    (d) Consumer has the same meaning as in 15 U.S.C. 1681a(c).
    (e) Consummation has the same meaning as in 12 CFR 226.2(a)(13).
    (f) Consumer report has the same meaning as in 15 U.S.C. 1681a(d).
    (g) Consumer reporting agency has the same meaning as in 15 U.S.C. 
1681a(f).

[[Page 563]]

    (h) Credit has the same meaning as in 15 U.S.C. 1681a(r)(5).
    (i) Creditor has the same meaning as in 15 U.S.C. 1681a(r)(5).
    (j) Credit card has the same meaning as in 15 U.S.C. 1681a(r)(2).
    (k) Credit card issuer has the same meaning as in 15 U.S.C. 
1681a(r)(1)(A).
    (l) Credit score has the same meaning as in 15 U.S.C. 
1681g(f)(2)(A).
    (m) Firm offer of credit has the same meaning as in 15 U.S.C. 
1681a(l).
    (n) Material terms means--
    (1) (i) Except as otherwise provided in paragraphs (n)(1)(ii) and 
(n)(3) of this section, in the case of credit extended under an open-end 
credit plan, the annual percentage rate required to be disclosed under 
12 CFR 226.6(a)(1)(ii) or 12 CFR 226.6(b)(2)(i), excluding any temporary 
initial rate that is lower than the rate that will apply after the 
temporary rate expires, any penalty rate that will apply upon the 
occurrence of one or more specific events, such as a late payment or an 
extension of credit that exceeds the credit limit, and any fixed annual 
percentage rate option for a home equity line of credit;
    (ii) In the case of a credit card (other than a credit card that is 
used to access a home equity line of credit or a charge card), the 
annual percentage rate required to be disclosed under 12 CFR 
226.6(b)(2)(i) that applies to purchases (``purchase annual percentage 
rate'') and no other annual percentage rate, or in the case of a credit 
card that has no purchase annual percentage rate, the annual percentage 
rate that varies based on information in a consumer report and that has 
the most significant financial impact on consumers;
    (2) In the case of closed-end credit, the annual percentage rate 
required to be disclosed under 12 CFR 226.17(c) and 226.18(e); and
    (3) In the case of credit for which there is no annual percentage 
rate, the financial term that varies based on information in a consumer 
report and that has the most significant financial impact on consumers, 
such as a deposit required in connection with credit extended by a 
telephone company or utility or an annual membership fee for a charge 
card.
    (o) Materially less favorable means, when applied to material terms, 
that the terms granted, extended, or otherwise provided to a consumer 
differ from the terms granted, extended, or otherwise provided to 
another consumer from or through the same person such that the cost of 
credit to the first consumer would be significantly greater than the 
cost of credit granted, extended, or otherwise provided to the other 
consumer. For purposes of this definition, factors relevant to 
determining the significance of a difference in cost include the type of 
credit product, the term of the credit extension, if any, and the extent 
of the difference between the material terms granted, extended, or 
otherwise provided to the two consumers.
    (p) Open-end credit plan has the same meaning as in 15 U.S.C. 
1602(i), as interpreted by the Board in Regulation Z and the Official 
Staff Commentary to Regulation Z.
    (q) Person has the same meaning as in 15 U.S.C. 1681a(b).



Sec.640.3  General requirements for risk-based pricing notices.

    (a) In general. Except as otherwise provided in this part, a person 
must provide to a consumer a notice (``risk-based pricing notice'') in 
the form and manner required by this part if the person both--
    (1) Uses a consumer report in connection with an application for, or 
a grant, extension, or other provision of, credit to that consumer that 
is primarily for personal, family, or household purposes; and
    (2) Based in whole or in part on the consumer report, grants, 
extends, or otherwise provides credit to that consumer on material terms 
that are materially less favorable than the most favorable material 
terms available to a substantial proportion of consumers from or through 
that person.
    (b) Determining which consumers must receive a notice. A person may 
determine whether paragraph (a) of this section applies by directly 
comparing the material terms offered to each consumer and the material 
terms offered to other consumers for a specific type of credit product. 
For purposes of this

[[Page 564]]

section, a ``specific type of credit product'' means one or more credit 
products with similar features that are designed for similar purposes. 
Examples of a specific type of credit product include student loans, 
unsecured credit cards, secured credit cards, new automobile loans, used 
automobile loans, fixed-rate mortgage loans, and variable-rate mortgage 
loans. As an alternative to making this direct comparison, a person may 
make the determination by using one of the following methods:
    (1) Credit score proxy method--(i) In general. A person that sets 
the material terms of credit granted, extended, or otherwise provided to 
a consumer, based in whole or in part on a credit score, may comply with 
the requirements of paragraph (a) of this section by--
    (A) Determining the credit score (hereafter referred to as the 
``cutoff score'') that represents the point at which approximately 40 
percent of the consumers to whom it grants, extends, or provides credit 
have higher credit scores and approximately 60 percent of the consumers 
to whom it grants, extends, or provides credit have lower credit scores; 
and
    (B) Providing a risk-based pricing notice to each consumer to whom 
it grants, extends, or provides credit whose credit score is lower than 
the cutoff score.
    (ii) Alternative to the 40/60 cutoff score determination. In the 
case of credit that has been granted, extended, or provided on the most 
favorable material terms to more than 40 percent of consumers, a person 
may, at its option, set its cutoff score at a point at which the 
approximate percentage of consumers who historically have been granted, 
extended, or provided credit on material terms other than the most 
favorable terms would receive risk-based pricing notices under this 
section.
    (iii) Determining the cutoff score--(A) Sampling approach. A person 
that currently uses risk-based pricing with respect to the credit 
products it offers must calculate the cutoff score by considering the 
credit scores of all or a representative sample of the consumers to whom 
it has granted, extended, or provided credit for a specific type of 
credit product.
    (B) Secondary source approach in limited circumstances. A person 
that is a new entrant into the credit business, introduces new credit 
products, or starts to use risk-based pricing with respect to the credit 
products it currently offers may initially determine the cutoff score 
based on information derived from appropriate market research or 
relevant third-party sources for a specific type of credit product, such 
as research or data from companies that develop credit scores. A person 
that acquires a credit portfolio as a result of a merger or acquisition 
may determine the cutoff score based on information from the party which 
it acquired, with which it merged, or from which it acquired the 
portfolio.
    (C) Recalculation of cutoff scores. A person using the credit score 
proxy method must recalculate its cutoff score(s) no less than every two 
years in the manner described in paragraph (b)(1)(iii)(A) of this 
section. A person using the credit score proxy method using market 
research, third-party data, or information from a party which it 
acquired, with which it merged, or from which it acquired the portfolio 
as permitted by paragraph (b)(1)(iii)(B) of this section generally must 
calculate a cutoff score(s) based on the scores of its own consumers in 
the manner described in paragraph (b)(1)(iii)(A) of this section within 
one year after it begins using a cutoff score derived from market 
research, third-party data, or information from a party which it 
acquired, with which it merged, or from which it acquired the portfolio. 
If such a person does not grant, extend, or provide credit to new 
consumers during that one-year period such that it lacks sufficient data 
with which to recalculate a cutoff score based on the credit scores of 
its own consumers, the person may continue to use a cutoff score derived 
from market research, third-party data, or information from a party 
which it acquired, with which it merged, or from which it acquired the 
portfolio as provided in paragraph (b)(1)(iii)(B) until it obtains 
sufficient data on which to base the recalculation. However, the person 
must recalculate its cutoff score(s) in the

[[Page 565]]

manner described in paragraph (b)(1)(iii)(A) of this section within two 
years, if it has granted, extended, or provided credit to some new 
consumers during that two-year period.
    (D) Use of two or more credit scores. A person that generally uses 
two or more credit scores in setting the material terms of credit 
granted, extended, or provided to a consumer must determine the cutoff 
score using the same method the person uses to evaluate multiple scores 
when making credit decisions. These evaluation methods may include, but 
are not limited to, selecting the low, median, high, most recent, or 
average credit score of each consumer to whom it grants, extends, or 
provides credit. If a person that uses two or more credit scores does 
not consistently use the same method for evaluating multiple credit 
scores (e.g., if the person sometimes chooses the median score and other 
times calculates the average score), the person must determine the 
cutoff score using a reasonable means. In such cases, use of any one of 
the methods that the person regularly uses or the average credit score 
of each consumer to whom it grants, extends, or provides credit is 
deemed to be a reasonable means of calculating the cutoff score.
    (iv) Credit score not available. For purposes of this section, a 
person using the credit score proxy method who grants, extends, or 
provides credit to a consumer for whom a credit score is not available 
must assume that the consumer receives credit on material terms that are 
materially less favorable than the most favorable credit terms offered 
to a substantial proportion of consumers from or through that person and 
must provide a risk-based pricing notice to the consumer.
    (v) Examples. (A) A credit card issuer engages in risk-based pricing 
and the annual percentage rates it offers to consumers are based in 
whole or in part on a credit score. The credit card issuer takes a 
representative sample of the credit scores of consumers to whom it 
issued credit cards within the preceding three months. The credit card 
issuer determines that approximately 40 percent of the sampled consumers 
have a credit score at or above 720 (on a scale of 350 to 850) and 
approximately 60 percent of the sampled consumers have a credit score 
below 720. Thus, the card issuer selects 720 as its cutoff score. A 
consumer applies to the credit card issuer for a credit card. The card 
issuer obtains a credit score for the consumer. The consumer's credit 
score is 700. Since the consumer's 700 credit score falls below the 720 
cutoff score, the credit card issuer must provide a risk-based pricing 
notice to the consumer.
    (B) A credit card issuer engages in risk-based pricing, and the 
annual percentage rates it offers to consumers are based in whole or in 
part on a credit score. The credit card issuer takes a representative 
sample of the consumers to whom it issued credit cards over the 
preceding six months. The credit card issuer determines that 
approximately 80 percent of the sampled consumers received credit at its 
lowest annual percentage rate, and 20 percent received credit at a 
higher annual percentage rate. Approximately 80 percent of the sampled 
consumers have a credit score at or above 750 (on a scale of 350 to 
850), and 20 percent have a credit score below 750. Thus, the card 
issuer selects 750 as its cutoff score. A consumer applies to the credit 
card issuer for a credit card. The card issuer obtains a credit score 
for the consumer. The consumer's credit score is 740. Since the 
consumer's 740 credit score falls below the 750 cutoff score, the credit 
card issuer must provide a risk-based pricing notice to the consumer.
    (C) An auto lender engages in risk-based pricing, obtains credit 
scores from one of the nationwide consumer reporting agencies, and uses 
the credit score proxy method to determine which consumers must receive 
a risk-based pricing notice. A consumer applies to the auto lender for 
credit to finance the purchase of an automobile. A credit score about 
that consumer is not available from the consumer reporting agency from 
which the lender obtains credit scores. The lender nevertheless grants, 
extends, or provides credit to the consumer. The lender must provide a 
risk-based pricing notice to the consumer.
    (2) Tiered pricing method--(i) In general. A person that sets the 
material terms of credit granted, extended, or provided to a consumer by 
placing the

[[Page 566]]

consumer within one of a discrete number of pricing tiers for a specific 
type of credit product, based in whole or in part on a consumer report, 
may comply with the requirements of paragraph (a) of this section by 
providing a risk-based pricing notice to each consumer who is not placed 
within the top pricing tier or tiers, as described below.
    (ii) Four or fewer pricing tiers. If a person using the tiered 
pricing method has four or fewer pricing tiers, the person complies with 
the requirements of paragraph (a) of this section by providing a risk-
based pricing notice to each consumer to whom it grants, extends, or 
provides credit who does not qualify for the top tier (that is, the 
lowest-priced tier). For example, a person that uses a tiered pricing 
structure with annual percentage rates of 8, 10, 12, and 14 percent 
would provide the risk-based pricing notice to each consumer to whom it 
grants, extends, or provides credit at annual percentage rates of 10, 
12, and 14 percent.
    (iii) Five or more pricing tiers. If a person using the tiered 
pricing method has five or more pricing tiers, the person complies with 
the requirements of paragraph (a) of this section by providing a risk-
based pricing notice to each consumer to whom it grants, extends, or 
provides credit who does not qualify for the top two tiers (that is, the 
two lowest-priced tiers) and any other tier that, together with the top 
tiers, comprise no less than the top 30 percent but no more than the top 
40 percent of the total number of tiers. Each consumer placed within the 
remaining tiers must receive a risk-based pricing notice. For example, 
if a person has nine pricing tiers, the top three tiers (that is, the 
three lowest-priced tiers) comprise no less than the top 30 percent but 
no more than the top 40 percent of the tiers. Therefore, a person using 
this method would provide a risk-based pricing notice to each consumer 
to whom it grants, extends, or provides credit who is placed within the 
bottom six tiers.
    (c) Application to credit card issuers--(1) In general. A credit 
card issuer subject to the requirements of paragraph (a) of this section 
may use one of the methods set forth in paragraph (b) of this section to 
identify consumers to whom it must provide a risk-based pricing notice. 
Alternatively, a credit card issuer may satisfy its obligations under 
paragraph (a) of this section by providing a risk-based pricing notice 
to a consumer when--
    (i) A consumer applies for a credit card either in connection with 
an application program, such as a direct-mail offer or a take-one 
application, or in response to a solicitation under 12 CFR 226.5a, and 
more than a single possible purchase annual percentage rate may apply 
under the program or solicitation; and
    (ii) Based in whole or in part on a consumer report, the credit card 
issuer provides a credit card to the consumer with an annual percentage 
rate referenced in Sec.640.2(n)(1)(ii) that is greater than the lowest 
annual percentage rate referenced in Sec.640.2(n)(1)(ii) available in 
connection with the application or solicitation.
    (2) No requirement to compare different offers. A credit card issuer 
is not subject to the requirements of paragraph (a) of this section and 
is not required to provide a risk-based pricing notice to a consumer 
if--
    (i) The consumer applies for a credit card for which the card issuer 
provides a single annual percentage rate referenced in Sec.
640.2(n)(1)(ii), excluding a temporary initial rate that is lower than 
the rate that will apply after the temporary rate expires and a penalty 
rate that will apply upon the occurrence of one or more specific events, 
such as a late payment or an extension of credit that exceeds the credit 
limit; or
    (ii) The credit card issuer offers the consumer the lowest annual 
percentage rate referenced in Sec.640.2(n)(1)(ii) available under the 
credit card offer for which the consumer applied, even if a lower annual 
percentage rate referenced in Sec.640.2(n)(1)(ii) is available under a 
different credit card offer issued by the card issuer.
    (3) Examples. (i) A credit card issuer sends a solicitation to the 
consumer that discloses several possible purchase annual percentage 
rates that may apply, such as 10, 12, or 14 percent, or a range of 
purchase annual percentage

[[Page 567]]

rates from 10 to 14 percent. The consumer applies for a credit card in 
response to the solicitation. The card issuer provides a credit card to 
the consumer with a purchase annual percentage rate of 12 percent based 
in whole or in part on a consumer report. Unless an exception applies 
under Sec.640.5, the card issuer may satisfy its obligations under 
paragraph (a) of this section by providing a risk-based pricing notice 
to the consumer because the consumer received credit at a purchase 
annual percentage rate greater than the lowest purchase annual 
percentage rate available under that solicitation.
    (ii) The same facts as in the example in paragraph (c)(3)(i) of this 
section, except that the card issuer provides a credit card to the 
consumer at a purchase annual percentage rate of 10 percent. The card 
issuer is not required to provide a risk-based pricing notice to the 
consumer even if, under a different credit card solicitation, that 
consumer or other consumers might qualify for a purchase annual 
percentage rate of 8 percent.
    (d) Account review--(1) In general. Except as otherwise provided in 
this part, a person is subject to the requirements of paragraph (a) of 
this section and must provide a risk-based pricing notice to a consumer 
in the form and manner required by this part if the person--
    (i) Uses a consumer report in connection with a review of credit 
that has been extended to the consumer; and
    (ii) Based in whole or in part on the consumer report, increases the 
annual percentage rate (the annual percentage rate referenced in Sec.
640.2(n)(1)(ii) in the case of a credit card).
    (2) Example. A credit card issuer periodically obtains consumer 
reports for the purpose of reviewing the terms of credit it has extended 
to consumers in connection with credit cards. As a result of this 
review, the credit card issuer increases the purchase annual percentage 
rate applicable to a consumer's credit card based in whole or in part on 
information in a consumer report. The credit card issuer is subject to 
the requirements of paragraph (a) of this section and must provide a 
risk-based pricing notice to the consumer.



Sec.640.4  Content, form, and timing of risk-based pricing notices.

    (a) Content of the notice--(1) In general. The risk-based pricing 
notice required by Sec.640.3(a) or (c) must include:
    (i) A statement that a consumer report (or credit report) includes 
information about the consumer's credit history and the type of 
information included in that history;
    (ii) A statement that the terms offered, such as the annual 
percentage rate, have been set based on information from a consumer 
report;
    (iii) A statement that the terms offered may be less favorable than 
the terms offered to consumers with better credit histories;
    (iv) A statement that the consumer is encouraged to verify the 
accuracy of the information contained in the consumer report and has the 
right to dispute any inaccurate information in the report;
    (v) The identity of each consumer reporting agency that furnished a 
consumer report used in the credit decision;
    (vi) A statement that federal law gives the consumer the right to 
obtain a copy of a consumer report from the consumer reporting agency or 
agencies identified in the notice without charge for 60 days after 
receipt of the notice;
    (vii) A statement informing the consumer how to obtain a consumer 
report from the consumer reporting agency or agencies identified in the 
notice and providing contact information (including a toll-free 
telephone number, where applicable) specified by the consumer reporting 
agency or agencies;
    (viii) A statement directing consumers to the Web sites of the 
Federal Reserve Board and Federal Trade Commission to obtain more 
information about consumer reports; and
    (ix) If a credit score of the consumer to whom a person grants, 
extends, or otherwise provides credit is used in setting the material 
terms of credit:
    (A) A statement that a credit score is a number that takes into 
account information in a consumer report, that the consumer's credit 
score was used to set the terms of credit offered, and that a credit 
score can change over time to reflect changes in the consumer's credit 
history;

[[Page 568]]

    (B) The credit score used by the person in making the credit 
decision;
    (C) The range of possible credit scores under the model used to 
generate the credit score;
    (D) All of the key factors that adversely affected the credit score, 
which shall not exceed four key factors, except that if one of the key 
factors is the number of enquiries made with respect to the consumer 
report, the number of key factors shall not exceed five;
    (E) The date on which the credit score was created; and
    (F) The name of the consumer reporting agency or other person that 
provided the credit score.
    (2) Account review. The risk-based pricing notice required by Sec.
640.3(d) must include:
    (i) A statement that a consumer report (or credit report) includes 
information about the consumer's credit history and the type of 
information included in that credit history;
    (ii) A statement that the person has conducted a review of the 
account using information from a consumer report;
    (iii) A statement that as a result of the review, the annual 
percentage rate on the account has been increased based on information 
from a consumer report;
    (iv) A statement that the consumer is encouraged to verify the 
accuracy of the information contained in the consumer report and has the 
right to dispute any inaccurate information in the report;
    (v) The identity of each consumer reporting agency that furnished a 
consumer report used in the account review;
    (vi) A statement that federal law gives the consumer the right to 
obtain a copy of a consumer report from the consumer reporting agency or 
agencies identified in the notice without charge for 60 days after 
receipt of the notice;
    (vii) A statement informing the consumer how to obtain a consumer 
report from the consumer reporting agency or agencies identified in the 
notice and providing contact information (including a toll-free 
telephone number, where applicable) specified by the consumer reporting 
agency or agencies;
    (viii) A statement directing consumers to the Web sites of the 
Federal Reserve Board and Federal Trade Commission to obtain more 
information about consumer reports; and
    (ix) If a credit score of the consumer whose extension of credit is 
under review is used in increasing the annual percentage rate:
    (A) A statement that a credit score is a number that takes into 
account information in a consumer report, that the consumer's credit 
score was used to set the terms of credit offered, and that a credit 
score can change over time to reflect changes in the consumer's credit 
history;
    (B) The credit score used by the person in making the credit 
decision;
    (C) The range of possible credit scores under the model used to 
generate the credit score;
    (D) All of the key factors that adversely affected the credit score, 
which shall not exceed four key factors, except that if one of the key 
factors is the number of enquiries made with respect to the consumer 
report, the number of key factors shall not exceed five;
    (E) The date on which the credit score was created; and
    (F) The name of the consumer reporting agency or other person that 
provided the credit score.
    (b) Form of the notice--(1) In general. The risk-based pricing 
notice required by Sec.640.3(a), (c), or (d) must be:
    (i) Clear and conspicuous; and
    (ii) Provided to the consumer in oral, written, or electronic form.
    (2) Model forms. Model forms of the risk-based pricing notice 
required by Sec.640.3(a) and (c) are contained in appendices A-1 and 
A-6 of this part. Appropriate use of Model form A-1 or A-6 is deemed to 
comply with the requirements of Sec.640.3(a) and (c). Model forms of 
the risk-based pricing notice required by Sec.640.3(d) are contained 
in appendices A-2 and A-7 of this part. Appropriate use of Model form A-
2 or A-7 is deemed to comply with the requirements of Sec.640.3(d). 
Use of the model forms is optional.
    (c) Timing--(1) General. Except as provided in paragraph (c)(3) of 
this section, a risk-based pricing notice must be provided to the 
consumer--

[[Page 569]]

    (i) In the case of a grant, extension, or other provision of closed-
end credit, before consummation of the transaction, but not earlier than 
the time the decision to approve an application for, or a grant, 
extension, or other provision of, credit, is communicated to the 
consumer by the person required to provide the notice;
    (ii) In the case of credit granted, extended, or provided under an 
open-end credit plan, before the first transaction is made under the 
plan, but not earlier than the time the decision to approve an 
application for, or a grant, extension, or other provision of, credit is 
communicated to the consumer by the person required to provide the 
notice; or
    (iii) In the case of a review of credit that has been extended to 
the consumer, at the time the decision to increase the annual percentage 
rate (annual percentage rate referenced in Sec.640.2(n)(1)(ii) in the 
case of a credit card) based on a consumer report is communicated to the 
consumer by the person required to provide the notice, or if no notice 
of the increase in the annual percentage rate is provided to the 
consumer prior to the effective date of the change in the annual 
percentage rate (to the extent permitted by law), no later than five 
days after the effective date of the change in the annual percentage 
rate.
    (2) Application to certain automobile lending transactions. When a 
person to whom a credit obligation is initially payable grants, extends, 
or provides credit to a consumer for the purpose of financing the 
purchase of an automobile from an auto dealer or other party that is not 
affiliated with the person, any requirement to provide a risk-based 
pricing notice pursuant to this part is satisfied if the person:
    (i) Provides a notice described in Sec. Sec.640.3(a), 640.5(e), or 
640.5(f) to the consumer within the time periods set forth in paragraph 
(c)(1)(i) of this section, Sec.640.5(e)(3), or Sec.640.5(f)(4), as 
applicable; or
    (ii) Arranges to have the auto dealer or other party provide a 
notice described in Sec. Sec.640.3(a), 640.5(e), or 640.5(f) to the 
consumer on its behalf within the time periods set forth in paragraph 
(c)(1)(i) of this section, Sec.640.5(e)(3), or Sec.640.5(f)(4), as 
applicable, and maintains reasonable policies and procedures to verify 
that the auto dealer or other party provides such notice to the consumer 
within the applicable time periods. If the person arranges to have the 
auto dealer or other party provide a notice described in Sec.640.5(e), 
the person's obligation is satisfied if the consumer receives a notice 
containing a credit score obtained by the dealer or other party, even if 
a different credit score is obtained and used by the person on whose 
behalf the notice is provided.
    (3) Timing requirements for contemporaneous purchase credit. When 
credit under an open-end credit plan is granted, extended, or provided 
to a consumer in person or by telephone for the purpose of financing the 
contemporaneous purchase of goods or services, any risk-based pricing 
notice required to be provided pursuant to this part (or the disclosures 
permitted under Sec.640.5(e) or (f)) may be provided at the earlier 
of:
    (i) The time of the first mailing by the person to the consumer 
after the decision is made to approve the grant, extension, or other 
provision of open-end credit, such as in a mailing containing the 
account agreement or a credit card; or
    (ii) Within 30 days after the decision to approve the grant, 
extension, or other provision of credit.
    (d) Multiple credit scores--(1) In general. When a person obtains or 
creates two or more credit scores and uses one of those credit scores in 
setting the material terms of credit, for example, by using the low, 
middle, high, or most recent score, the notices described in paragraphs 
(a)(1) and (2) of this section must include that credit score and 
information relating to that credit score required by paragraphs 
(a)(1)(ix) and (a)(2)(ix). When a person obtains or creates two or more 
credit scores and uses multiple credit scores in setting the material 
terms of credit by, for example, computing the average of all the credit 
scores obtained or created, the notices described in paragraphs (a)(1) 
and (2) of this section must include one of those credit scores and 
information relating to credit scores required by paragraphs (a)(1)(ix) 
and (a)(2)(ix). The

[[Page 570]]

notice may, at the person's option, include more than one credit score, 
along with the additional information specified in paragraphs (a)(1)(ix) 
and (a)(2)(ix) of this section for each credit score disclosed.
    (2) Examples. (i) A person that uses consumer reports to set the 
material terms of credit cards granted, extended, or provided to 
consumers regularly requests credit scores from several consumer 
reporting agencies and uses the low score when determining the material 
terms it will offer to the consumer. That person must disclose the low 
score in the notices described in paragraphs (a)(1) and (2) of this 
section.
    (ii) A person that uses consumer reports to set the material terms 
of automobile loans granted, extended, or provided to consumers 
regularly requests credit scores from several consumer reporting 
agencies, each of which it uses in an underwriting program in order to 
determine the material terms it will offer to the consumer. That person 
may choose one of these scores to include in the notices described in 
paragraph (a)(1) and (2) of this section.

[75 FR 2769, Jan. 15, 2010, as amended at 76 FR 41621, July 15, 2011; 84 
FR 23473, May 22, 2019]



Sec.640.5  Exceptions.

    (a) Application for specific terms--(1) In general. A person is not 
required to provide a risk-based pricing notice to the consumer under 
Sec.640.3(a) or (c) if the consumer applies for specific material 
terms and is granted those terms, unless those terms were specified by 
the person using a consumer report after the consumer applied for or 
requested credit and after the person obtained the consumer report. For 
purposes of this section, ``specific material terms'' means a single 
material term, or set of material terms, such as an annual percentage 
rate of 10 percent, and not a range of alternatives, such as an annual 
percentage rate that may be 8, 10, or 12 percent, or between 8 and 12 
percent.
    (2) Example. A consumer receives a firm offer of credit from a 
credit card issuer. The terms of the firm offer are based in whole or in 
part on information from a consumer report that the credit card issuer 
obtained under the FCRA's firm offer of credit provisions. The 
solicitation offers the consumer a credit card with a single purchase 
annual percentage rate of 12 percent. The consumer applies for and 
receives a credit card with an annual percentage rate of 12 percent. 
Other customers with the same credit card have a purchase annual 
percentage rate of 10 percent. The exception applies because the 
consumer applied for specific material terms and was granted those 
terms. Although the credit card issuer specified the annual percentage 
rate in the firm offer of credit based in whole or in part on a consumer 
report, the credit card issuer specified that material term before, not 
after, the consumer applied for or requested credit.
    (b) Adverse action notice. A person is not required to provide a 
risk-based pricing notice to the consumer under Sec.640.3(a), (c), or 
(d) if the person provides an adverse action notice to the consumer 
under section 615(a) of the FCRA.
    (c) Prescreened solicitations--(1) In general. A person is not 
required to provide a risk-based pricing notice to the consumer under 
Sec.640.3(a) or (c) if the person:
    (i) Obtains a consumer report that is a prescreened list as 
described in section 604(c)(2) of the FCRA; and
    (ii) Uses the consumer report for the purpose of making a firm offer 
of credit to the consumer.
    (2) More favorable material terms. This exception applies to any 
firm offer of credit offered by a person to a consumer, even if the 
person makes other firm offers of credit to other consumers on more 
favorable material terms.
    (3) Example. A credit card issuer obtains two prescreened lists from 
a consumer reporting agency. One list includes consumers with high 
credit scores. The other list includes consumers with low credit scores. 
The issuer mails a firm offer of credit to the high credit score 
consumers with a single purchase annual percentage rate of 10 percent. 
The issuer also mails a firm offer of credit to the low credit score 
consumers with a single purchase annual percentage rate of 14 percent. 
The credit card issuer is not required to provide a risk-based pricing 
notice

[[Page 571]]

to the low credit score consumers who receive the 14 percent offer 
because use of a consumer report to make a firm offer of credit does not 
trigger the risk-based pricing notice requirement.
    (d) Loans secured by residential real property--credit score 
disclosure--(1) In general. A person is not required to provide a risk-
based pricing notice to a consumer under Sec.640.3(a) or (c) if:
    (i) The consumer requests from the person an extension of credit 
that is or will be secured by one to four units of residential real 
property; and
    (ii) The person provides to each consumer described in paragraph 
(d)(1)(i) of this section a notice that contains the following--
    (A) A statement that a consumer report (or credit report) is a 
record of the consumer's credit history and includes information about 
whether the consumer pays his or her obligations on time and how much 
the consumer owes to creditors;
    (B) A statement that a credit score is a number that takes into 
account information in a consumer report and that a credit score can 
change over time to reflect changes in the consumer's credit history;
    (C) A statement that the consumer's credit score can affect whether 
the consumer can obtain credit and what the cost of that credit will be;
    (D) The information required to be disclosed to the consumer 
pursuant to section 609(g) of the FCRA;
    (E) The distribution of credit scores among consumers who are scored 
under the same scoring model that is used to generate the consumer's 
credit score using the same scale as that of the credit score that is 
provided to the consumer, presented in the form of a bar graph 
containing a minimum of six bars that illustrates the percentage of 
consumers with credit scores within the range of scores reflected in 
each bar or by other clear and readily understandable graphical means, 
or a clear and readily understandable statement informing the consumer 
how his or her credit score compares to the scores of other consumers. 
Use of a graph or statement obtained from the person providing the 
credit score that meets the requirements of this paragraph (d)(1)(ii)(E) 
is deemed to comply with this requirement;
    (F) A statement that the consumer is encouraged to verify the 
accuracy of the information contained in the consumer report and has the 
right to dispute any inaccurate information in the report;
    (G) A statement that federal law gives the consumer the right to 
obtain copies of his or her consumer reports directly from the consumer 
reporting agencies, including a free report from each of the nationwide 
consumer reporting agencies once during any 12-month period;
    (H) Contact information for the centralized source from which 
consumers may obtain their free annual consumer reports; and
    (I) A statement directing consumers to the web sites of the Board 
and Federal Trade Commission to obtain more information about consumer 
reports.
    (2) Form of the notice. The notice described in paragraph (d)(1)(ii) 
of this section must be:
    (i) Clear and conspicuous;
    (ii) Provided on or with the notice required by section 609(g) of 
the FCRA;
    (iii) Segregated from other information provided to the consumer, 
except for the notice required by section 609(g) of the FCRA; and
    (iv) Provided to the consumer in writing and in a form that the 
consumer may keep.
    (3) Timing. The notice described in paragraph (d)(1)(ii) of this 
section must be provided to the consumer at the time the disclosure 
required by section 609(g) of the FCRA is provided to the consumer, but 
in any event at or before consummation in the case of closed-end credit 
or before the first transaction is made under an open-end credit plan.
    (4) Multiple credit scores--(i) In general. When a person obtains 
two or more credit scores from consumer reporting agencies and uses one 
of those credit scores in setting the material terms of credit granted, 
extended, or otherwise provided to a consumer, for example, by using the 
low, middle, high, or most recent score, the notice described in 
paragraph (d)(1)(ii) of this section must include that credit score and 
the other information required by

[[Page 572]]

that paragraph. When a person obtains two or more credit scores from 
consumer reporting agencies and uses multiple credit scores in setting 
the material terms of credit granted, extended, or otherwise provided to 
a consumer, for example, by computing the average of all the credit 
scores obtained, the notice described in paragraph (d)(1)(ii) of this 
section must include one of those credit scores and the other 
information required by that paragraph. The notice may, at the person's 
option, include more than one credit score, along with the additional 
information specified in paragraph (d)(1)(ii) of this section for each 
credit score disclosed.
    (ii) Examples. (A) A person that uses consumer reports to set the 
material terms of mortgage credit granted, extended, or provided to 
consumers regularly requests credit scores from several consumer 
reporting agencies and uses the low score when determining the material 
terms it will offer to the consumer. That person must disclose the low 
score in the notice described in paragraph (d)(1)(ii) of this section.
    (B) A person that uses consumer reports to set the material terms of 
mortgage credit granted, extended, or provided to consumers regularly 
requests credit scores from several consumer reporting agencies, each of 
which it uses in an underwriting program in order to determine the 
material terms it will offer to the consumer. That person may choose one 
of these scores to include in the notice described in paragraph 
(d)(1)(ii) of this section.
    (5) Model form. A model form of the notice described in paragraph 
(d)(1)(ii) of this section consolidated with the notice required by 
section 609(g) of the FCRA is contained in 16 CFR part 698, appendix B. 
Appropriate use of Model Form A-3 is deemed to comply with the 
requirements of Sec.640.5(d). Use of the model form is optional.
    (e) Other extensions of credit--credit score disclosure--(1) In 
general. A person is not required to provide a risk-based pricing notice 
to a consumer under Sec.640.3(a) or (c) if:
    (i) The consumer requests from the person an extension of credit 
other than credit that is or will be secured by one to four units of 
residential real property; and
    (ii) The person provides to each consumer described in paragraph 
(e)(1)(i) of this section a notice that contains the following--
    (A) A statement that a consumer report (or credit report) is a 
record of the consumer's credit history and includes information about 
whether the consumer pays his or her obligations on time and how much 
the consumer owes to creditors;
    (B) A statement that a credit score is a number that takes into 
account information in a consumer report and that a credit score can 
change over time to reflect changes in the consumer's credit history;
    (C) A statement that the consumer's credit score can affect whether 
the consumer can obtain credit and what the cost of that credit will be;
    (D) The current credit score of the consumer or the most recent 
credit score of the consumer that was previously calculated by the 
consumer reporting agency for a purpose related to the extension of 
credit;
    (E) The range of possible credit scores under the model used to 
generate the credit score;
    (F) The distribution of credit scores among consumers who are scored 
under the same scoring model that is used to generate the consumer's 
credit score using the same scale as that of the credit score that is 
provided to the consumer, presented in the form of a bar graph 
containing a minimum of six bars that illustrates the percentage of 
consumers with credit scores within the range of scores reflected in 
each bar, or by other clear and readily understandable graphical means, 
or a clear and readily understandable statement informing the consumer 
how his or her credit score compares to the scores of other consumers. 
Use of a graph or statement obtained from the person providing the 
credit score that meets the requirements of this paragraph (e)(1)(ii)(F) 
is deemed to comply with this requirement;
    (G) The date on which the credit score was created;
    (H) The name of the consumer reporting agency or other person that 
provided the credit score;

[[Page 573]]

    (I) A statement that the consumer is encouraged to verify the 
accuracy of the information contained in the consumer report and has the 
right to dispute any inaccurate information in the report;
    (J) A statement that federal law gives the consumer the right to 
obtain copies of his or her consumer reports directly from the consumer 
reporting agencies, including a free report from each of the nationwide 
consumer reporting agencies once during any 12-month period;
    (K) Contact information for the centralized source from which 
consumers may obtain their free annual consumer reports; and
    (L) A statement directing consumers to the web sites of the Federal 
Reserve Board and Federal Trade Commission to obtain more information 
about consumer reports.
    (2) Form of the notice. The notice described in paragraph (e)(1)(ii) 
of this section must be:
    (i) Clear and conspicuous;
    (ii) Segregated from other information provided to the consumer; and
    (iii) Provided to the consumer in writing and in a form that the 
consumer may keep.
    (3) Timing. The notice described in paragraph (e)(1)(ii) of this 
section must be provided to the consumer as soon as reasonably 
practicable after the credit score has been obtained, but in any event 
at or before consummation in the case of closed-end credit or before the 
first transaction is made under an open-end credit plan.
    (4) Multiple credit scores--(i) In General. When a person obtains 
two or more credit scores from consumer reporting agencies and uses one 
of those credit scores in setting the material terms of credit granted, 
extended, or otherwise provided to a consumer, for example, by using the 
low, middle, high, or most recent score, the notice described in 
paragraph (e)(1)(ii) of this section must include that credit score and 
the other information required by that paragraph. When a person obtains 
two or more credit scores from consumer reporting agencies and uses 
multiple credit scores in setting the material terms of credit granted, 
extended, or otherwise provided to a consumer, for example, by computing 
the average of all the credit scores obtained, the notice described in 
paragraph (e)(1)(ii) of this section must include one of those credit 
scores and the other information required by that paragraph. The notice 
may, at the person's option, include more than one credit score, along 
with the additional information specified in paragraph (e)(1)(ii) of 
this section for each credit score disclosed.
    (ii) Examples. The manner in which multiple credit scores are to be 
disclosed under this section are substantially identical to the manner 
set forth in the examples contained in paragraph (d)(4)(ii) of this 
section.
    (5) Model form. A model form of the notice described in paragraph 
(e)(1)(ii) of this section is contained in 16 CFR part B, appendix B. 
Appropriate use of Model Form A-4 is deemed to comply with the 
requirements of Sec.640.5(e). Use of the model form is optional.
    (f) Credit score not available--(1) In general. A person is not 
required to provide a risk-based pricing notice to a consumer under 
Sec.640.3(a) or (c) if the person:
    (i) Regularly obtains credit scores from a consumer reporting agency 
and provides credit score disclosures to consumers in accordance with 
paragraphs (d) or (e) of this section, but a credit score is not 
available from the consumer reporting agency from which the person 
regularly obtains credit scores for a consumer to whom the person 
grants, extends, or provides credit;
    (ii) Does not obtain a credit score from another consumer reporting 
agency in connection with granting, extending, or providing credit to 
the consumer; and
    (iii) Provides to the consumer a notice that contains the 
following--
    (A) A statement that a consumer report (or credit report) includes 
information about the consumer's credit history and the type of 
information included in that history;
    (B) A statement that a credit score is a number that takes into 
account information in a consumer report and that a credit score can 
change over time in response to changes in the consumer's credit 
history;
    (C) A statement that credit scores are important because consumers 
with

[[Page 574]]

higher credit scores generally obtain more favorable credit terms;
    (D) A statement that not having a credit score can affect whether 
the consumer can obtain credit and what the cost of that credit will be;
    (E) A statement that a credit score about the consumer was not 
available from a consumer reporting agency, which must be identified by 
name, generally due to insufficient information regarding the consumer's 
credit history;
    (F) A statement that the consumer is encouraged to verify the 
accuracy of the information contained in the consumer report and has the 
right to dispute any inaccurate information in the consumer report;
    (G) A statement that federal law gives the consumer the right to 
obtain copies of his or her consumer reports directly from the consumer 
reporting agencies, including a free consumer report from each of the 
nationwide consumer reporting agencies once during any 12-month period;
    (H) The contact information for the centralized source from which 
consumers may obtain their free annual consumer reports; and
    (I) A statement directing consumers to the web sites of the Board 
and Federal Trade Commission to obtain more information about consumer 
reports.
    (2) Example. A person that uses consumer reports to set the material 
terms of non-mortgage credit granted, extended, or provided to consumers 
regularly requests credit scores from a particular consumer reporting 
agency and provides those credit scores and additional information to 
consumers to satisfy the requirements of paragraph (e) of this section. 
That consumer reporting agency provides to the person a consumer report 
on a particular consumer that contains one trade line, but does not 
provide the person with a credit score on that consumer. If the person 
does not obtain a credit score from another consumer reporting agency 
and, based in whole or in part on information in a consumer report, 
grants, extends, or provides credit to the consumer, the person may 
provide the notice described in paragraph (f)(1)(iii) of this section. 
If, however, the person obtains a credit score from another consumer 
reporting agency, the person may not rely upon the exception in 
paragraph (f) of this section, but may satisfy the requirements of 
paragraph (e) of this section.
    (3) Form of the notice. The notice described in paragraph 
(f)(1)(iii) of this section must be:
    (i) Clear and conspicuous;
    (ii) Segregated from other information provided to the consumer; and
    (iii) Provided to the consumer in writing and in a form that the 
consumer may keep.
    (4) Timing. The notice described in paragraph (f)(1)(iii) of this 
section must be provided to the consumer as soon as reasonably 
practicable after the person has requested the credit score, but in any 
event not later than consummation of a transaction in the case of 
closed-end credit or when the first transaction is made under an open-
end credit plan.
    (5) Model form. A model form of the notice described in paragraph 
(f)(1)(iii) of this section is contained in 16 CFR part 698, appendix B. 
Appropriate use of Model Form A-5 is deemed to comply with the 
requirements of Sec.640.5(f). Use of the model form is optional.

[75 FR 2769, Jan. 15, 2010, as amended at 84 FR 23473, May 22, 2019]



Sec.640.6  Rules of construction.

    For purposes of this part, the following rules of construction 
apply:
    (a) One notice per credit extension. A consumer is entitled to no 
more than one risk-based pricing notice under Sec.640.3(a) or (c), or 
one notice under Sec.640.5(d), (e), or (f), for each grant, extension, 
or other provision of credit. Notwithstanding the foregoing, even if a 
consumer has previously received a risk-based pricing notice in 
connection with a grant, extension, or other provision of credit, 
another risk-based pricing notice is required if the conditions set 
forth in Sec.640.3(d) have been met.
    (b) Multi-party transactions--(1) Initial creditor. The person to 
whom a credit obligation is initially payable must provide the risk-
based pricing notice described in Sec.640.3(a) or (c), or satisfy the 
requirements for and provide the notice required under one of the 
exceptions in Sec.640.5(d), (e), or (f), even if that person 
immediately assigns the credit

[[Page 575]]

agreement to a third party and is not the source of funding for the 
credit.
    (2) Purchasers or assignees. A purchaser or assignee of a credit 
contract with a consumer is not subject to the requirements of this part 
and is not required to provide the risk-based pricing notice described 
in Sec.640.3(a) or (c), or satisfy the requirements for and provide 
the notice required under one of the exceptions in Sec.640.5(d), (e), 
or (f).
    (3) Examples. (i) A consumer obtains credit to finance the purchase 
of an automobile. If the auto dealer is the person to whom the loan 
obligation is initially payable, such as where the auto dealer is the 
original creditor under a retail installment sales contract, the auto 
dealer must provide the risk-based pricing notice to the consumer (or 
satisfy the requirements for and provide the notice required under one 
of the exceptions noted above), even if the auto dealer immediately 
assigns the loan to a bank or finance company. The bank or finance 
company, which is an assignee, has no duty to provide a risk-based 
pricing notice to the consumer.
    (ii) A consumer obtains credit to finance the purchase of an 
automobile. If a bank or finance company is the person to whom the loan 
obligation is initially payable, the bank or finance company must 
provide the risk-based pricing notice to the consumer (or satisfy the 
requirements for and provide the notice required under one of the 
exceptions noted above) based on the terms offered by that bank or 
finance company only. The auto dealer has no duty to provide a risk-
based pricing notice to the consumer. However, the bank or finance 
company may comply with this rule if the auto dealer has agreed to 
provide notices to consumers before consummation pursuant to an 
arrangement with the bank or finance company, as permitted under Sec.
640.4(c).
    (c) Multiple consumers--(1) Risk-based pricing notices. In a 
transaction involving two or more consumers who are granted, extended, 
or otherwise provided credit, a person must provide a notice to each 
consumer to satisfy the requirements of Sec.640.3(a) or (c). Whether 
the consumers have the same address or not, the person must provide a 
separate notice to each consumer if a notice includes a credit score(s). 
Each separate notice that includes a credit score(s) must contain only 
the credit score(s) of the consumer to whom the notice is provided, and 
not the credit score(s) of the other consumer. If the consumers have the 
same address, and the notice does not include a credit score(s), a 
person may satisfy the requirements by providing a single notice 
addressed to both consumers.
    (2) Credit score disclosure notices. In a transaction involving two 
or more consumers who are granted, extended, or otherwise provided 
credit, a person must provide a separate notice to each consumer to 
satisfy the exceptions in Sec.640.5(d), (e), or (f). Whether the 
consumers have the same address or not, the person must provide a 
separate notice to each consumer. Each separate notice must contain only 
the credit score(s) of the consumer to whom the notice is provided, and 
not the credit score(s) of the other consumer.
    (3) Examples. (i) Two consumers jointly apply for credit with a 
creditor. The creditor obtains credit scores on both consumers. Based in 
part on the credit scores, the creditor grants credit to the consumers 
on material terms that are materially less favorable than the most 
favorable terms available to other consumers from the creditor. The 
creditor provides risk-based pricing notices to satisfy its obligations 
under this subpart. The creditor must provide a separate risk-based 
pricing notice to each consumer whether the consumers have the same 
address or not. Each risk-based pricing notice must contain only the 
credit score(s) of the consumer to whom the notice is provided.
    (ii) Two consumers jointly apply for credit with a creditor. The two 
consumers reside at the same address. The creditor obtains credit scores 
on each of the two consumer applicants. The creditor grants credit to 
the consumers. The creditor provides credit score disclosure notices to 
satisfy its obligations under this part. Even though the two consumers 
reside at the same address, the creditor must provide a separate credit 
score disclosure notice to each of the consumers. Each notice must 
contain only the credit

[[Page 576]]

score of the consumer to whom the notice is provided.

[75 FR 2769, Jan. 15, 2010, as amended at 76 FR 41622, July 15, 2011]



PART 641_DUTIES OF USERS OF CONSUMER REPORTS REGARDING ADDRESS
DISCREPANCIES--Table of Contents



    Authority: Public Law 108-159, sec. 315; 15 U.S.C. 1681c(h).

    Source: 74 FR 22644, May 14, 2009, unless otherwise noted.



Sec.641.1  Duties of users of consumer reports regarding address 
discrepancies.

    (a) Scope. This section applies to users of consumer reports that 
are subject to administrative enforcement of the FCRA by the Federal 
Trade Commission pursuant to 15 U.S.C. 1681s(a)(1) (users).
    (b) Definition. For purposes of this section, a notice of address 
discrepancy means a notice sent to a user by a consumer reporting agency 
described in 15 U.S.C. 1681a(p) pursuant to 15 U.S.C. 1681c(h)(1), that 
informs the user of a substantial difference between the address for the 
consumer that the user provided to request the consumer report and the 
address(es) in the agency's file for the consumer.
    (c) Reasonable belief--(1) Requirement to form a reasonable belief. 
A user must develop and implement reasonable policies and procedures 
designed to enable the user to form a reasonable belief that a consumer 
report relates to the consumer about whom it has requested the report, 
when the user receives a notice of address discrepancy.
    (2) Examples of reasonable policies and procedures. (i) Comparing 
the information in the consumer report provided by the consumer 
reporting agency with information the user:
    (A) Obtains and uses to verify the consumer's identity in accordance 
with the requirements of the Customer Identification Program (CIP) rules 
implementing 31 U.S.C. 5318(l) (31 CFR 103.121);
    (B) Maintains in its own records, such as applications, change of 
address notifications, other customer account records, or retained CIP 
documentation; or
    (C) Obtains from third-party sources; or
    (ii) Verifying the information in the consumer report provided by 
the consumer reporting agency with the consumer.
    (d) Consumer's address--(1) Requirement to furnish consumer's 
address to a consumer reporting agency. A user must develop and 
implement reasonable policies and procedures for furnishing an address 
for the consumer that the user has reasonably confirmed is accurate to 
the consumer reporting agency described in 15 U.S.C. 1681a(p) from whom 
it received the notice of address discrepancy when the user:
    (i) Can form a reasonable belief that the consumer report relates to 
the consumer about whom the user requested the report;
    (ii) Establishes a continuing relationship with the consumer; and
    (iii) Regularly and in the ordinary course of business furnishes 
information to the consumer reporting agency from which the notice of 
address discrepancy relating to the consumer was obtained.
    (2) Examples of confirmation methods. The user may reasonably 
confirm an address is accurate by:
    (i) Verifying the address with the consumer about whom it has 
requested the report;
    (ii) Reviewing its own records to verify the address of the 
consumer;
    (iii) Verifying the address through third-party sources; or
    (iv) Using other reasonable means.
    (3) Timing. The policies and procedures developed in accordance with 
paragraph (d)(1) of this section must provide that the user will furnish 
the consumer's address that the user has reasonably confirmed is 
accurate to the consumer reporting agency described in 15 U.S.C. 
1681a(p) as part of the information it regularly furnishes for the 
reporting period in which it establishes a relationship with the 
consumer.

[[Page 577]]



PART 642_PRESCREEN OPT-OUT NOTICE--Table of Contents



Sec.
642.1 Purpose and scope.
642.2 Definitions.
642.3 Prescreen opt-out notice.
642.4 Effective date.

    Authority: Pub. L. 108-159, sec. 213(a); 15 U.S.C. 1681m(d).

    Source: 70 FR 5032, Jan. 31, 2005, unless otherwise noted.



Sec.642.1  Purpose and scope.

    (a) Purpose. This part implements section 213(a) of the Fair and 
Accurate Credit Transactions Act of 2003, which requires the Federal 
Trade Commission to establish the format, type size, and manner of the 
notices to consumers, required by section 615(d) of the Fair Credit 
Reporting Act (``FCRA''), regarding the right to prohibit (``opt out'' 
of) the use of information in a consumer report to send them 
solicitations of credit or insurance.
    (b) Scope. This part applies to any person who uses a consumer 
report on any consumer in connection with any credit or insurance 
transaction that is not initiated by the consumer, and that is provided 
to that person under section 604(c)(1)(B) of the FCRA (15 U.S.C. 
1681b(c)(1)(B)).



Sec.642.2  Definitions.

    As used in this part:
    (a) Simple and easy to understand means:
    (1) A layered format as described in Sec.642.3 of this part;
    (2) Plain language designed to be understood by ordinary consumers; 
and
    (3) Use of clear and concise sentences, paragraphs, and sections.
    (i) Examples. For purposes of this part, examples of factors to be 
considered in determining whether a statement is in plain language and 
uses clear and concise sentences, paragraphs, and sections include:
    (A) Use of short explanatory sentences;
    (B) Use of definite, concrete, everyday words;
    (C) Use of active voice;
    (D) Avoidance of multiple negatives;
    (E) Avoidance of legal and technical business terminology;
    (F) Avoidance of explanations that are imprecise and reasonably 
subject to different interpretations; and
    (G) Use of language that is not misleading.
    (ii) [Reserved]
    (b) Principal promotional document means the document designed to be 
seen first by the consumer, such as the cover letter.



Sec.642.3  Prescreen opt-out notice.

    Any person who uses a consumer report on any consumer in connection 
with any credit or insurance transaction that is not initiated by the 
consumer, and that is provided to that person under section 604(c)(1)(B) 
of the FCRA (15 U.S.C. 1681b(c)(1)(B)), shall, with each written 
solicitation made to the consumer about the transaction, provide the 
consumer with the following statement, consisting of a short portion and 
a long portion, which shall be in the same language as the offer of 
credit or insurance:
    (a) Short notice. The short notice shall be a clear and conspicuous, 
and simple and easy to understand statement as follows:
    (1) Content. The short notice shall state that the consumer has the 
right to opt out of receiving prescreened solicitations, and shall 
provide the toll-free number the consumer can call to exercise that 
right. The short notice also shall direct the consumer to the existence 
and location of the long notice, and shall state the heading for the 
long notice. The short notice shall not contain any other information.
    (2) Form. The short notice shall be:
    (i) In a type size that is larger than the type size of the 
principal text on the same page, but in no event smaller than 12-point 
type, or if provided by electronic means, then reasonable steps shall be 
taken to ensure that the type size is larger than the type size of the 
principal text on the same page;
    (ii) On the front side of the first page of the principal 
promotional document in the solicitation, or, if provided 
electronically, on the same page and in close proximity to the principal 
marketing message;
    (iii) Located on the page and in a format so that the statement is 
distinct

[[Page 578]]

from other text, such as inside a border; and
    (iv) In a type style that is distinct from the principal type style 
used on the same page, such as bolded, italicized, underlined, and/or in 
a color that contrasts with the color of the principal text on the page, 
if the solicitation is in more than one color.
    (b) Long notice. The long notice shall be a clear and conspicuous, 
and simple and easy to understand statement as follows:
    (1) Content. The long notice shall state the information required by 
section 615(d) of the Fair Credit Reporting Act (15 U.S.C. 1681m(d)). 
The long notice shall not include any other information that interferes 
with, detracts from, contradicts, or otherwise undermines the purpose of 
the notice.
    (2) Form. The long notice shall:
    (i) Appear in the solicitation;
    (ii) Be in a type size that is no smaller than the type size of the 
principal text on the same page, and, for solicitations provided other 
than by electronic means, the type size shall in no event be smaller 
than 8-point type;
    (iii) Begin with a heading in capital letters and underlined, and 
identifying the long notice as the ``PRESCREEN & OPT-OUT NOTICE'';
    (iv) Be in a type style that is distinct from the principal type 
style used on the same page, such as bolded, italicized, underlined, 
and/or in a color that contrasts with the color of the principal text on 
the page, if the solicitation is in more than one color; and
    (v) Be set apart from other text on the page, such as by including a 
blank line above and below the statement, and by indenting both the left 
and right margins from other text on the page.



Sec.642.4  Effective date.

    This part is effective on August 1, 2005.



PART 660_DUTIES OF FURNISHERS OF INFORMATION TO CONSUMER REPORTING
AGENCIES--Table of Contents



Sec.
660.1 Scope.
660.2 Definitions.
660.3 Reasonable policies and procedures concerning the accuracy and 
          integrity of furnisher information.
660.4 Direct disputes.

Appendix A to Part 660--Interagency Guidelines Concerning the Accuracy 
          and Integrity of Information Furnished to Consumer Reporting 
          Agencies

    Authority: 15 U.S.C. 1681s-2(a)(8) and 1681s-2(e); Sec. 312, Pub. L. 
108-159, 117 Stat. 1989.

    Source: 74 FR 31525, July 1, 2009, unless otherwise noted.



Sec.660.1  Scope.

    This part applies to furnishers of information to consumer reporting 
agencies that are subject to administrative enforcement of the FCRA by 
the Federal Trade Commission pursuant to 15 U.S.C. 1681s(a)(1) (referred 
to as ``furnishers'').



Sec.660.2  Definitions.

    For purposes of this part and appendix A of this part, the following 
definitions apply:
    (a) Accuracy means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer correctly:
    (1) Reflects the terms of and liability for the account or other 
relationship;
    (2) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship; and
    (3) Identifies the appropriate consumer.
    (b) Direct dispute means a dispute submitted directly to a furnisher 
(including a furnisher that is a debt collector) by a consumer 
concerning the accuracy of any information contained in a consumer 
report and pertaining to an account or other relationship that the 
furnisher has or had with the consumer.
    (c) Furnisher means an entity that furnishes information relating to 
consumers to one or more consumer reporting agencies for inclusion in a 
consumer report. An entity is not a furnisher when it:
    (1) Provides information to a consumer reporting agency solely to 
obtain a consumer report in accordance with sections 604(a) and (f) of 
the Fair Credit Reporting Act;

[[Page 579]]

    (2) Is acting as a ``consumer reporting agency'' as defined in 
section 603(f) of the Fair Credit Reporting Act;
    (3) Is a consumer to whom the furnished information pertains; or
    (4) Is a neighbor, friend, or associate of the consumer, or another 
individual with whom the consumer is acquainted or who may have 
knowledge about the consumer, and who provides information about the 
consumer's character, general reputation, personal characteristics, or 
mode of living in response to a specific request from a consumer 
reporting agency.
    (d) Identity theft has the same meaning as in 16 CFR 603.2(a).
    (e) Integrity means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer:
    (1) Is substantiated by the furnisher's records at the time it is 
furnished;
    (2) Is furnished in a form and manner that is designed to minimize 
the likelihood that the information may be incorrectly reflected in a 
consumer report; and
    (3) Includes the information in the furnisher's possession about the 
account or other relationship that the Commission has:
    (i) Determined that the absence of which would likely be materially 
misleading in evaluating a consumer's creditworthiness, credit standing, 
credit capacity, character, general reputation, personal 
characteristics, or mode of living; and (ii) Listed in section 
I.(b)(2)(iii) of Appendix A of this part.



Sec.660.3  Reasonable policies and procedures concerning the accuracy 
and integrity of furnished information.

    (a) Policies and procedures. Each furnisher must establish and 
implement reasonable written policies and procedures regarding the 
accuracy and integrity of the information relating to consumers that it 
furnishes to a consumer reporting agency. The policies and procedures 
must be appropriate to the nature, size, complexity, and scope of each 
furnisher's activities.
    (b) Guidelines. Each furnisher must consider the guidelines in 
Appendix A of this part in developing its policies and procedures 
required by this section, and incorporate those guidelines that are 
appropriate.
    (c) Reviewing and updating policies and procedures. Each furnisher 
must review its policies and procedures required by this section 
periodically and update them as necessary to ensure their continued 
effectiveness.



Sec.660.4  Direct disputes.

    (a) General rule. Except as otherwise provided in this section, a 
furnisher must conduct a reasonable investigation of a direct dispute if 
it relates to:
    (1) The consumer's liability for a credit account or other debt with 
the furnisher, such as direct disputes relating to whether there is or 
has been identity theft or fraud against the consumer, whether there is 
individual or joint liability on an account, or whether the consumer is 
an authorized user of a credit account;
    (2) The terms of a credit account or other debt with the furnisher, 
such as direct disputes relating to the type of account, principal 
balance, scheduled payment amount on an account, or the amount of the 
credit limit on an open-end account;
    (3) The consumer's performance or other conduct concerning an 
account or other relationship with the furnisher, such as direct 
disputes relating to the current payment status, high balance, date a 
payment was made, the amount of a payment made, or the date an account 
was opened or closed; or
    (4) Any other information contained in a consumer report regarding 
an account or other relationship with the furnisher that bears on the 
consumer's creditworthiness, credit standing, credit capacity, 
character, general reputation, personal characteristics, or mode of 
living.
    (b) Exceptions. The requirements of paragraph (a) of this section do 
not apply to a furnisher if:
    (1) The direct dispute relates to:
    (i) The consumer's identifying information (other than a direct 
dispute relating to a consumer's liability for a credit account or other 
debt with the furnisher, as provided in paragraph (a)(1) of this 
section) such as name(s), date of birth, Social Security number, 
telephone number(s), or address(es);

[[Page 580]]

    (ii) The identity of past or present employers;
    (iii) Inquiries or requests for a consumer report;
    (iv) Information derived from public records, such as judgments, 
bankruptcies, liens, and other legal matters (unless provided by a 
furnisher with an account or other relationship with the consumer);
    (v) Information related to fraud alerts or active duty alerts; or
    (vi) Information provided to a consumer reporting agency by another 
furnisher; or
    (2) The furnisher has a reasonable belief that the direct dispute is 
submitted by, is prepared on behalf of the consumer by, or is submitted 
on a form supplied to the consumer by, a credit repair organization, as 
defined in 15 U.S.C. 1679a(3), or an entity that would be a credit 
repair organization, but for 15 U.S.C. 1679a(3)(B)(i).
    (c) Direct dispute address. A furnisher is required to investigate a 
direct dispute only if a consumer submits a dispute notice to the 
furnisher at:
    (1) The address of a furnisher provided by a furnisher and set forth 
on a consumer report relating to the consumer;
    (2) An address clearly and conspicuously specified by the furnisher 
for submitting direct disputes that is provided to the consumer in 
writing or electronically (if the consumer has agreed to the electronic 
delivery of information from the furnisher); or
    (3) Any business address of the furnisher if the furnisher has not 
so specified and provided an address for submitting direct disputes 
under paragraphs (c)(1) or (2) of this section.
    (d) Direct dispute notice contents. A dispute notice must include:
    (1) Sufficient information to identify the account or other 
relationship that is in dispute, such as an account number and the name, 
address, and telephone number of the consumer, if applicable;
    (2) The specific information that the consumer is disputing and an 
explanation of the basis for the dispute; and
    (3) All supporting documentation or other information reasonably 
required by the furnisher to substantiate the basis of the dispute. This 
documentation may include, for example: a copy of the relevant portion 
of the consumer report that contains the allegedly inaccurate 
information; a police report; a fraud or identity theft affidavit; a 
court order; or account statements.
    (e) Duty of furnisher after receiving a direct dispute notice. After 
receiving a dispute notice from a consumer pursuant to paragraphs (c) 
and (d) of this section, the furnisher must:
    (1) Conduct a reasonable investigation with respect to the disputed 
information;
    (2) Review all relevant information provided by the consumer with 
the dispute notice;
    (3) Complete its investigation of the dispute and report the results 
of the investigation to the consumer before the expiration of the period 
under section 611(a)(1) of the Fair Credit Reporting Act (15 U.S.C. 
1681i(a)(1)) within which a consumer reporting agency would be required 
to complete its action if the consumer had elected to dispute the 
information under that section; and
    (4) If the investigation finds that the information reported was 
inaccurate, promptly notify each consumer reporting agency to which the 
furnisher provided inaccurate information of that determination and 
provide to the consumer reporting agency any correction to that 
information that is necessary to make the information provided by the 
furnisher accurate.
    (f) Frivolous or irrelevant disputes. (1) A furnisher is not 
required to investigate a direct dispute if the furnisher has reasonably 
determined that the dispute is frivolous or irrelevant. A dispute 
qualifies as frivolous or irrelevant if:
    (i) The consumer did not provide sufficient information to 
investigate the disputed information as required by paragraph (d) of 
this section;
    (ii) The direct dispute is substantially the same as a dispute 
previously submitted by or on behalf of the consumer, either directly to 
the furnisher or through a consumer reporting agency, with respect to 
which the furnisher has already satisfied the applicable requirements of 
the Act or this section; provided, however, that a direct dispute is not 
substantially the same as a

[[Page 581]]

dispute previously submitted if the dispute includes information listed 
in paragraph (d) of this section that had not previously been provided 
to the furnisher; or
    (iii) The furnisher is not required to investigate the direct 
dispute because one or more of the exceptions listed in paragraph (b) of 
this section applies.
    (2) Notice of determination. Upon making a determination that a 
dispute is frivolous or irrelevant, the furnisher must notify the 
consumer of the determination not later than five business days after 
making the determination, by mail or, if authorized by the consumer for 
that purpose, by any other means available to the furnisher.
    (3) Contents of notice of determination that a dispute is frivolous 
or irrelevant. A notice of determination that a dispute is frivolous or 
irrelevant must include the reasons for such determination and identify 
any information required to investigate the disputed information, which 
notice may consist of a standardized form describing the general nature 
of such information.



   Sec. Appendix A to Part 660--Interagency Guidelines Concerning the 
 Accuracy and Integrity of Information Furnished to Consumer Reporting 
                                Agencies

    The Commission encourages voluntary furnishing of information to 
consumer reporting agencies. Section 660.3 of this part requires each 
furnisher to establish and implement reasonable written policies and 
procedures concerning the accuracy and integrity of the information it 
furnishes to consumer reporting agencies. Under Sec.660.3(b), a 
furnisher must consider the guidelines set forth below in developing its 
policies and procedures. In establishing these policies and procedures, 
a furnisher may include any of its existing policies and procedures that 
are relevant and appropriate. Section 660.3(c) requires each furnisher 
to review its policies and procedures periodically and update them as 
necessary to ensure their continued effectiveness.

       I. Nature, Scope, and Objectives of Policies and Procedures

    (a) Nature and Scope. Section 660.3(a) of this part requires that a 
furnisher's policies and procedures be appropriate to the nature, size, 
complexity, and scope of the furnisher's activities. In developing its 
policies and procedures, a furnisher should consider, for example:
    (1) The types of business activities in which the furnisher engages;
    (2) The nature and frequency of the information the furnisher 
provides to consumer reporting agencies; and
    (3) The technology used by the furnisher to furnish information to 
consumer reporting agencies.
    (b) Objectives. A furnisher's policies and procedures should be 
reasonably designed to promote the following objectives:
    (1) To furnish information about accounts or other relationships 
with a consumer that is accurate, such that the furnished information:
    (i) Identifies the appropriate consumer;
    (ii) Reflects the terms of and liability for those accounts or other 
relationships; and
    (iii) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship;
    (2) To furnish information about accounts or other relationships 
with a consumer that has integrity, such that the furnished information:
    (i) Is substantiated by the furnisher's records at the time it is 
furnished;
    (ii) Is furnished in a form and manner that is designed to minimize 
the likelihood that the information may be incorrectly reflected in a 
consumer report; thus, the furnished information should:
    (A) Include appropriate identifying information about the consumer 
to whom it pertains; and
    (B) Be furnished in a standardized and clearly understandable form 
and manner and with a date specifying the time period to which the 
information pertains; and
    (iii) Includes the credit limit, if applicable and in the 
furnisher's possession;
    (3) To conduct reasonable investigations of consumer disputes and 
take appropriate actions based on the outcome of such investigations; 
and
    (4) To update the information it furnishes as necessary to reflect 
the current status of the consumer's account or other relationship, 
including, for example:
    (i) Any transfer of an account (e.g., by sale or assignment for 
collection) to a third party; and
    (ii) Any cure of the consumer's failure to abide by the terms of the 
account or other relationship.

        II. Establishing and Implementing Policies and Procedures

    In establishing and implementing its policies and procedures, a 
furnisher should:
    (a) Identify practices or activities of the furnisher that can 
compromise the accuracy or integrity of information furnished to 
consumer reporting agencies, such as by:
    (1) Reviewing its existing practices and activities, including the 
technological means

[[Page 582]]

and other methods it uses to furnish information to consumer reporting 
agencies and the frequency and timing of its furnishing of information;
    (2) Reviewing its historical records relating to accuracy or 
integrity or to disputes; reviewing other information relating to the 
accuracy or integrity of information provided by the furnisher to 
consumer reporting agencies; and considering the types of errors, 
omissions, or other problems that may have affected the accuracy or 
integrity of information it has furnished about consumers to consumer 
reporting agencies;
    (3) Considering any feedback received from consumer reporting 
agencies, consumers, or other appropriate parties;
    (4) Obtaining feedback from the furnisher's staff; and
    (5) Considering the potential impact of the furnisher's policies and 
procedures on consumers.
    (b) Evaluate the effectiveness of existing policies and procedures 
of the furnisher regarding the accuracy and integrity of information 
furnished to consumer reporting agencies; consider whether new, 
additional, or different policies and procedures are necessary; and 
consider whether implementation of existing policies and procedures 
should be modified to enhance the accuracy and integrity of information 
about consumers furnished to consumer reporting agencies.
    (c) Evaluate the effectiveness of specific methods (including 
technological means) the furnisher uses to provide information to 
consumer reporting agencies; how those methods may affect the accuracy 
and integrity of the information it provides to consumer reporting 
agencies; and whether new, additional, or different methods (including 
technological means) should be used to provide information to consumer 
reporting agencies to enhance the accuracy and integrity of that 
information.

           III. Specific Components of Policies and Procedures

    In developing its policies and procedures, a furnisher should 
address the following, as appropriate:
    (a) Establishing and implementing a system for furnishing 
information about consumers to consumer reporting agencies that is 
appropriate to the nature, size, complexity, and scope of the 
furnisher's business operations.
    (b) Using standard data reporting formats and standard procedures 
for compiling and furnishing data, where feasible, such as the 
electronic transmission of information about consumers to consumer 
reporting agencies.
    (c) Maintaining records for a reasonable period of time, not less 
than any applicable recordkeeping requirement, in order to substantiate 
the accuracy of any information about consumers it furnishes that is 
subject to a direct dispute.
    (d) Establishing and implementing appropriate internal controls 
regarding the accuracy and integrity of information about consumers 
furnished to consumer reporting agencies, such as by implementing 
standard procedures and verifying random samples of information provided 
to consumer reporting agencies.
    (e) Training staff that participates in activities related to the 
furnishing of information about consumers to consumer reporting agencies 
to implement the policies and procedures.
    (f) Providing for appropriate and effective oversight of relevant 
service providers whose activities may affect the accuracy or integrity 
of information about consumers furnished to consumer reporting agencies 
to ensure compliance with the policies and procedures.
    (g) Furnishing information about consumers to consumer reporting 
agencies following mergers, portfolio acquisitions or sales, or other 
acquisitions or transfers of accounts or other obligations in a manner 
that prevents re-aging of information, duplicative reporting, or other 
problems that may similarly affect the accuracy or integrity of the 
information furnished.
    (h) Deleting, updating, and correcting information in the 
furnisher's records, as appropriate, to avoid furnishing inaccurate 
information.
    (i) Conducting reasonable investigations of disputes.
    (j) Designing technological and other means of communication with 
consumer reporting agencies to prevent duplicative reporting of 
accounts, erroneous association of information with the wrong 
consumer(s), and other occurrences that may compromise the accuracy or 
integrity of information provided to consumer reporting agencies.
    (k) Providing consumer reporting agencies with sufficient 
identifying information in the furnisher's possession about each 
consumer about whom information is furnished to enable the consumer 
reporting agency properly to identify the consumer.
    (l) Conducting a periodic evaluation of its own practices, consumer 
reporting agency practices of which the furnisher is aware, 
investigations of disputed information, corrections of inaccurate 
information, means of communication, and other factors that may affect 
the accuracy or integrity of information furnished to consumer reporting 
agencies.
    (m) Complying with applicable requirements under the Fair Credit 
Reporting Act and its implementing regulations.

[[Page 583]]



PART 680_AFFILIATE MARKETING--Table of Contents



Sec.
680.1 Purpose and scope.
680.2 Examples.
680.3 Definitions.
680.4-680.20 [Reserved]
680.21 Affiliate marketing opt-out and exceptions.
680.22 Scope and duration of opt-out.
680.23 Contents of opt-out notice; consolidated and equivalent notices.
680.24 Reasonable opportunity to opt out.
680.25 Reasonable and simple methods of opting out.
680.26 Delivery of opt-out notices.
680.27 Renewal of opt-out.
680.28 Effective date, compliance date, and prospective application.

    Authority: 12 U.S.C. 5519; 15 U.S.C. 1681s-3; 15 U.S.C. 1681s-3 
note.

    Source: 72 FR 61455, Oct. 30, 2007, unless otherwise noted.



Sec.680.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to implement section 214 of 
the Fair and Accu-rate Credit Transactions Act of 2003, which (by adding 
section 624 to Fair Credit Reporting Act) regulates the use, for 
marketing solicitation purposes, of consumer information provided by 
persons affiliated with the person making the solicitation.
    (b) Scope. This part applies to any person over which the Federal 
Trade Commission has jurisdiction that uses information from its 
affiliates for the purpose of marketing solicitations, or provides 
information to its affiliates for that purpose.



Sec.680.2  Examples.

    The examples in this part are not exclusive. Compliance with an 
example, to the extent applicable, constitutes compliance with this 
part. Examples in a paragraph illustrate only the issue described in the 
paragraph and do not illustrate any other issue that may arise in this 
part.



Sec.680.3  Definitions.

    As used in this part:
    (a) Act. The term ``Act'' means the Fair Credit Reporting Act (15 
U.S.C. 1681 et seq.).
    (b) Affiliate. The term ``affiliate'' means any company that is 
related by common ownership or common corporate control with another 
company.
    (c) Clear and conspicuous. The term ``clear and conspicuous'' means 
reasonably under-standable and designed to call attention to the nature 
and significance of the information presented.
    (d) Common ownership or common corporate control. The term ``common 
ownership or common corporate control'' means a relationship between two 
companies under which:
    (1) One company has, with respect to the other company:
    (i) Ownership, control, or the power to vote 25 percent or more of 
the outstanding shares of any class of voting security of a company, 
directly or indirectly, or acting through one or more other persons;
    (ii) Control in any manner over the election of a majority of the 
directors, trustees, or general partners (or individuals exercising 
similar functions) of a company; or
    (iii) The power to exercise, directly or indirectly, a controlling 
influence over the management or policies of a company, as the 
Commission determines; or
    (2) Any person has, with respect to both companies, a relationship 
described in paragraphs (d)(1)(i) through (d)(1)(iii) of this section.
    (e) Company. The term ``company'' means any corporation, limited 
liability company, business trust, general or limited partnership, 
association, or similar organization.
    (f) Concise--(1) In general. The term ``concise'' means a reasonably 
brief expression or statement.
    (2) Combination with other required disclosures. A notice required 
by this part may be concise even if it is combined with other 
disclosures required or authorized by federal or state law.
    (g) Consumer. The term ``consumer'' means an individual.
    (h) Eligibility information. The term ``eligibility information'' 
means any information the communication of which would be a consumer 
report if the exclusions from the definition of ``consumer report'' in 
section 603(d)(2)(A) of the Act did not apply. Eligibility information 
does not include aggregate or blind data that does

[[Page 584]]

not contain personal identifiers such as account numbers, names, or 
addresses.
    (i) Person. The term ``person'' means any individual, partnership, 
corporation, trust, estate, cooperative, association, government or 
governmental subdivision or agency, or other entity.
    (j) Pre-existing business relationship--(1) In general. The term 
``pre-existing business relationship'' means a relationship between a 
person, or a person's licensed agent, and a consumer based on--
    (i) A financial contract between the person and the consumer which 
is in force on the date on which the consumer is sent a solicitation 
covered by this part;
    (ii) The purchase, rental, or lease by the consumer of the persons' 
goods or services, or a financial transaction (including holding an 
active account or a policy in force or having another continuing 
relationship) between the consumer and the person, during the 18-month 
period immediately preceding the date on which the consumer is sent a 
solicitation covered by this part; or
    (iii) An inquiry or application by the consumer regarding a product 
or service offered by that person during the three-month period 
immediately preceding the date on which the consumer is sent a 
solicitation covered by this part.
    (2) Examples of pre-existing business relationships. (i) If a 
consumer has an existing loan account with a creditor, the creditor has 
a pre-existing business relationship with the consumer and can use 
eligibility information it receives from its affiliates to make 
solicitations to the consumer about its products or services.
    (ii) If a consumer obtained a mortgage from a mortgage lender, but 
refinanced the mortgage loan with a different lender when the mortgage 
loan came due, the first mortgage lender has a pre-existing business 
relationship with the consumer and can use eligibility information it 
receives from its affiliates to make solicitations to the consumer about 
its products or services for 18 months after the date the outstanding 
balance of the loan is paid and the loan is closed.
    (iii) If a consumer obtains a mortgage, the mortgage lender has a 
pre-existing business relationship with the consumer. If the mortgage 
lender sells the consumer's entire loan to an investor, the mortgage 
lender has a pre-existing business relationship with the consumer and 
can use eligibility information it receives from its affiliates to make 
solicitations to the consumer about its products or services for 18 
months after the date it sells the loan, and the investor has a pre-
existing business relationship with the consumer upon purchasing the 
loan. If, however, the mortgage lender sells a fractional interest in 
the consumer's loan to an investor but also retains an ownership 
interest in the loan, the mortgage lender continues to have a pre-
existing business relationship with the consumer, but the investor does 
not have a pre-existing business relationship with the consumer. If the 
mortgage lender retains ownership of the loan, but sells ownership of 
the servicing rights to the consumer's loan, the mortgage lender 
continues to have a pre-existing business relationship with the 
consumer. The purchaser of the servicing rights also has a pre-existing 
business relationship with the consumer as of the date it purchases 
ownership of the servicing rights, but only if it collects payments from 
or otherwise deals directly with the consumer on a continuing basis.
    (iv) If a consumer applies to a creditor for a product or service 
that it offers, but does not obtain a product or service from or enter 
into a financial contract or transaction with the creditor, the creditor 
has a pre-existing business relationship with the consumer and can 
therefore use eligibility information it receives from an affiliate to 
make solicitations to the consumer about its products or services for 
three months after the date of the application.
    (v) If a consumer makes a telephone inquiry to a creditor about its 
products or services and provides contact information to the creditor, 
but does not obtain a product or service from or enter into a financial 
contract or transaction with the creditor, the creditor has a pre-
existing business relationship with the consumer and can therefore use 
eligibility information it

[[Page 585]]

receives from an affiliate to make solicitations to the consumer about 
its products or services for three months after the date of the inquiry.
    (vi) If a consumer makes an inquiry to a creditor by e-mail about 
its products or services, but does not obtain a product or service from 
or enter into a financial contract or transaction with the creditor, the 
creditor has a pre-existing business relationship with the consumer and 
can therefore use eligibility information it receives from an affiliate 
to make solicitations to the consumer about its products or services for 
three months after the date of the inquiry.
    (vii) If a consumer has an existing relationship with a creditor 
that is part of a group of affiliated companies, makes a telephone call 
to the centralized call center for the group of affiliated companies to 
inquire about products or services offered by the insurance affiliate, 
and provides contact information to the call center, the call 
constitutes an inquiry to the insurance affiliate that offers those 
products or services. The insurance affiliate has a pre-existing 
business relationship with the consumer and can therefore use 
eligibility information it receives from its affiliated creditor to make 
solicitations to the consumer about its products or services for three 
months after the date of the inquiry.
    (3) Examples where no pre-existing business relationship is created. 
(i) If a consumer makes a telephone call to a centralized call center 
for a group of affiliated companies to inquire about the consumer's 
existing account with a creditor, the call does not constitute an 
inquiry to any affiliate other than the creditor that holds the 
consumer's account and does not establish a pre-existing business 
relationship between the consumer and any affiliate of the account-
holding creditor.
    (ii) If a consumer who has a loan account with a creditor makes a 
telephone call to an af-filiate of the creditor to ask about the 
affiliate's retail locations and hours, but does not make an inquiry 
about the affiliate's products or services, the call does not constitute 
an inquiry and does not establish a pre-existing business relationship 
between the consumer and the affiliate. Also, the affiliate's capture of 
the consumer's telephone number does not constitute an inquiry and does 
not establish a pre-existing business relationship between the consumer 
and the affiliate.
    (iii) If a consumer makes a telephone call to a creditor in response 
to an advertisement that offers a free promotional item to consumers who 
call a toll-free number, but the advertisement does not indicate that 
creditor's products or services will be marketed to consumers who call 
in response, the call does not create a pre-existing business 
relationship between the consumer and the creditor because the consumer 
has not made an inquiry about a product or service offered by the 
creditor, but has merely responded to an offer for a free promotional 
item.
    (k) Solicitation--(1) In general. The term ``solicitation'' means 
the marketing of a product or service initiated by a person to a 
particular consumer that is--
    (i) Based on eligibility information communicated to that person by 
its affiliate as described in this part; and
    (ii) Intended to encourage the consumer to purchase or obtain such 
product or service.
    (2) Exclusion of marketing directed at the general public. A 
solicitation does not include marketing communications that are directed 
at the general public. For example, television, general circulation 
magazine, and billboard advertisements do not constitute solicitations, 
even if those communications are intended to encourage consumers to 
purchase products and services from the person initiating the 
communications.
    (3) Examples of solicitations. A solicitation would include, for 
example, a telemarketing call, direct mail, e-mail, or other form of 
marketing communication directed to a particular consumer that is based 
on eligibility information received from an affiliate.
    (l) You means a person described in Sec.680.1(b).

[[Page 586]]



Sec. Sec.680.4-680.20  [Reserved]



Sec.680.21  Affiliate marketing opt-out and exceptions.

    (a) Initial notice and opt-out requirement--(1) In general. You may 
not use eligibility information about a consumer that you receive from 
an affiliate to make a solicitation for marketing purposes to the 
consumer, unless--
    (i) It is clearly and conspicuously disclosed to the consumer in 
writing or, if the consumer agrees, electronically, in a concise notice 
that you may use eligibility information about that consumer received 
from an affiliate to make solicitations for marketing purposes to the 
consumer;
    (ii) The consumer is provided a reasonable opportunity and a 
reasonable and simple method to ``opt out,'' or prohibit you from using 
eligibility information to make solicitations for marketing purposes to 
the consumer; and
    (iii) The consumer has not opted out.
    (2) Example. A consumer has a homeowner's insurance policy with an 
insurance company. The insurance company furnishes eligibility 
information about the consumer to its affiliated creditor. Based on that 
eligibility information, the creditor wants to make a solicitation to 
the consumer about its home equity loan products. The creditor does not 
have a pre-existing business relationship with the consumer and none of 
the other exceptions apply. The creditor is prohibited from using 
eligibility information received from its insurance affiliate to make 
solicitations to the consumer about its home equity loan products unless 
the consumer is given a notice and opportunity to opt out and the 
consumer does not opt out.
    (3) Affiliates who may provide the notice. The notice required by 
this paragraph (a) must be provided:
    (i) By an affiliate that has or has previously had a pre-existing 
business relationship with the consumer; or
    (ii) As part of a joint notice from two or more members of an 
affiliated group of companies, provided that at least one of the 
affiliates on the joint notice has or has previously had a pre-existing 
business relationship with the consumer.
    (b) Making solicitations--(1) In general. For purposes of this part, 
you make a solicitation for marketing purposes if--
    (i) You receive eligibility information from an affiliate;
    (ii) You use that eligibility information to do one or more of the 
following:
    (A) Identify the consumer or type of consumer to receive a 
solicitation;
    (B) Establish criteria used to select the consumer to receive a 
solicitation; or
    (C) Decide which of your products or services to market to the 
consumer or tailor your solicitation to that consumer; and
    (iii) As a result of your use of the eligibility information, the 
consumer is provided a solicitation.
    (2) Receiving eligibility information from an affiliate, including 
through a common database. You may receive eligibility information from 
an affiliate in various ways, including when the affiliate places that 
information into a common database that you may access.
    (3) Receipt or use of eligibility information by your service 
provider. Except as provided in paragraph (b)(5) of this section, you 
receive or use an affiliate's eligibility information if a service 
provider acting on your behalf (whether an affiliate or a nonaffiliated 
third party) receives or uses that information in the manner described 
in paragraphs (b)(1)(i) or (b)(1)(ii) of this section. All relevant 
facts and circumstances will determine whether a person is acting as 
your service provider when it receives or uses an affiliate's 
eligibility information in connection with marketing your products and 
services.
    (4) Use by an affiliate of its own eligibility information. Unless 
you have used eligibility information that you receive from an affiliate 
in the manner described in paragraph (b)(1)(ii) of this section, you do 
not make a solicitation subject to this part if your affiliate:
    (i) Uses its own eligibility information that it obtained in 
connection with a pre-existing business relationship it has or had with 
the consumer to market your products or services to the consumer; or
    (ii) Directs its service provider to use the affiliate's own 
eligibility information that it obtained in connection

[[Page 587]]

with a pre-existing business relationship it has or had with the 
consumer to market your products or services to the consumer, and you do 
not communicate directly with the service provider regarding that use.
    (5) Use of eligibility information by a service provider--(i) In 
general. You do not make a solicitation subject to this part if a 
service provider (including an affiliated or third-party service 
provider that maintains or accesses a common database that you may 
access) receives eligibility information from your affiliate that your 
affiliate obtained in connection with a pre-existing business 
relationship it has or had with the consumer and uses that eligibility 
information to market your products or services to the consumer, so long 
as--
    (A) Your affiliate controls access to and use of its eligibility 
information by the service provider (including the right to establish 
the specific terms and conditions under which the service provider may 
use such information to market your products or services);
    (B) Your affiliate establishes specific terms and conditions under 
which the service provider may access and use the affiliate's 
eligibility information to market your products and services (or those 
of affiliates generally) to the consumer, such as the identity of the 
affiliated companies whose products or services may be marketed to the 
consumer by the service provider, the types of products or services of 
affiliated companies that may be marketed, and the number of times the 
consumer may receive marketing materials, and periodically evaluates the 
service provider's compliance with those terms and conditions;
    (C) Your affiliate requires the service provider to implement 
reasonable policies and procedures designed to ensure that the service 
provider uses the affiliate's eligibility information in accordance with 
the terms and conditions established by the affiliate relating to the 
marketing of your products or services;
    (D) Your affiliate is identified on or with the marketing materials 
provided to the consumer; and
    (E) You do not directly use your affiliate's eligibility information 
in the manner described in paragraph (b)(1)(ii) of this section.
    (ii) Writing requirements. (A) The requirements of paragraphs 
(b)(5)(i)(A) and (C) of this section must be set forth in a written 
agreement between your affiliate and the service provider; and
    (B) The specific terms and conditions established by your affiliate 
as provided in paragraph (b)(5)(i)(B) of this section must be set forth 
in writing.
    (6) Examples of making solicitations. (i) A consumer has a loan 
account with a creditor, which is affiliated with an insurance company. 
The insurance company receives eligibility information about the 
consumer from the creditor. The insurance company uses that eligibility 
information to identify the consumer to receive a solicitation about 
insurance products, and, as a result, the insurance company provides a 
solicitation to the consumer about its insurance products. Pursuant to 
paragraph (b)(1) of this section, the insurance company has made a 
solicitation to the consumer.
    (ii) The same facts as in the example in paragraph (b)(6)(i) of this 
section, except that after using the eligibility information to identify 
the consumer to receive a solicitation about insurance products, the 
insurance company asks the creditor to send the solicitation to the 
consumer and the creditor does so. Pursuant to paragraph (b)(1) of this 
section, the insurance company has made a solicitation to the consumer 
because it used eligibility information about the consumer that it 
received from an affiliate to identify the consumer to receive a 
solicitation about its products or services, and, as a result, a 
solicitation was provided to the consumer about the insurance company's 
products.
    (iii) The same facts as in the example in paragraph (b)(6)(i) of 
this section, except that eligibility information about consumers that 
have loan accounts with the creditor is placed into a common database 
that all members of the affiliated group of companies may independently 
access and use. Without using the creditor's eligibility information, 
the insurance company develops selection criteria and provides those 
criteria, marketing materials,

[[Page 588]]

and related instructions to the creditor. The creditor reviews 
eligibility information about its own consumers using the selection 
criteria provided by the insurance company to determine which consumers 
should receive the insurance company's marketing materials and sends 
marketing materials about the insurance company's products to those 
consumers. Even though the insurance company has received eligibility 
information through the common database as provided in paragraph (b)(2) 
of this section, it did not use that information to identify consumers 
or establish selection criteria; instead, the creditor used its own 
eligibility information. Therefore, pursuant to paragraph (b)(4)(i) of 
this section, the insurance company has not made a solicitation to the 
consumer.
    (iv) The same facts as in the example in paragraph (b)(6)(iii) of 
this section, except that the creditor provides the insurance company's 
criteria to the creditor's service provider and directs the service 
provider to use the creditor's eligibility information to identify 
creditor consumers who meet the criteria and to send the insurance 
company's marketing materials to those consumers. The insurance company 
does not communicate directly with the service provider regarding the 
use of the creditor's information to market its products to the 
creditor's consumers. Pursuant to paragraph (b)(4)(ii) of this section, 
the insurance company has not made a solicitation to the consumer.
    (v) An affiliated group of companies includes a creditor, an 
insurance company, and a service provider. Each affiliate in the group 
places information about its consumers into a common database. The 
service provider has access to all information in the common database. 
The creditor controls access to and use of its eligibility information 
by the service provider. This control is set forth in a written 
agreement between the creditor and the service provider. The written 
agreement also requires the service provider to establish reasonable 
policies and procedures designed to ensure that the service provider 
uses the creditor's eligibility information in accordance with specific 
terms and conditions established by the creditor relating to the 
marketing of the products and services of all affiliates, including the 
insurance company. In a separate written communication, the creditor 
specifies the terms and conditions under which the service provider may 
use the creditor's eligibility information to market the insurance 
company's products and services to the creditor's consumers. The 
specific terms and conditions are: a list of affiliated companies 
(including the insurance company) whose products or services may be 
marketed to the creditor's consumers by the service provider; the 
specific products or types of products that may be marketed to the 
creditor's consumers by the service provider; the categories of 
eligibility information that may be used by the service provider in 
marketing products or services to the creditor's consumers; the types or 
categories of the creditor's consumers to whom the service provider may 
market products or services of creditor affiliates; the number and/or 
types of marketing communications that the service provider may send to 
the creditor's consumers; and the length of time during which the 
service provider may market the prod-ucts or services of the creditor's 
affiliates to its consumers. The creditor periodically evaluates the 
service provider's compliance with these terms and conditions. The 
insurance company asks the service provider to market insurance products 
to certain consumers who have loan accounts with the creditor. Without 
using the creditor's eligibility information, the insurance company 
develops selection criteria and provides those criteria, marketing 
materials, and related instructions to the service provider. The service 
provider uses the creditor's eligibility information from the common 
database to identify the creditor's consumers to whom insurance products 
will be marketed. When the insurance company's marketing materials are 
provided to the identified consumers, the name of the creditor is 
displayed on the insurance marketing materials, an introductory letter 
that accompanies the marketing materials, an account statement that 
accompanies the marketing materials, or the envelope containing the 
marketing materials. The re-

[[Page 589]]

quirements of paragraph (b)(5) of this section have been satisfied, and 
the insurance company has not made a solicitation to the consumer.
    (vi) The same facts as in the example in paragraph (b)(6)(v) of this 
section, except that the terms and conditions permit the service 
provider to use the creditor's eligibility information to market the 
products and services of other affiliates to the creditor's consumers 
whenever the service provider deems it appropriate to do so. The service 
provider uses the creditor's eligibility information in accordance with 
the discretion af-forded to it by the terms and conditions. Because the 
terms and conditions are not specific, the requirements of paragraph 
(b)(5) of this section have not been satisfied.
    (c) Exceptions. The provisions of this part do not apply to you if 
you use eligibility information that you receive from an affiliate:
    (1) To make a solicitation for marketing purposes to a consumer with 
whom you have a pre-existing business relationship;
    (2) To facilitate communications to an individual for whose benefit 
you provide employee benefit or other services pursuant to a contract 
with an employer related to and arising out of the current employment 
relationship or status of the individual as a participant or beneficiary 
of an employee benefit plan;
    (3) To perform services on behalf of an affiliate, except that this 
paragraph shall not be construed as permitting you to send solicitations 
on behalf of an affiliate if the affiliate would not be permitted to 
send the solicitation as a result of the election of the consumer to opt 
out under this part;
    (4) In response to a communication about your products or services 
initiated by the consumer;
    (5) In response to an authorization or request by the consumer to 
receive solicitations; or
    (6) If your compliance with this part would prevent you from 
complying with any provision of State insurance laws pertaining to 
unfair discrimination in any State in which you are lawfully doing 
business.
    (d) Examples of exceptions--(1) Example of the pre-existing business 
relationship exception. A consumer has a loan account with a creditor. 
The consumer also has a relationship with the creditor's securities 
affiliate for management of the consumer's securities portfolio. The 
creditor receives eligibility information about the consumer from its 
securities affiliate and uses that information to make a solicitation to 
the consumer about the creditor's wealth management services. The 
creditor may make this solicitation even if the consumer has not been 
given a notice and opportunity to opt out because the creditor has a 
pre-existing business relationship with the consumer.
    (2) Examples of service provider exception. (i) A consumer has an 
insurance policy issued by an insurance company. The insurance company 
furnishes eligibility information about the consumer to an affiliated 
creditor. Based on that eligibility information, the creditor wants to 
make a solicitation to the consumer about its credit products. The 
creditor does not have a pre-existing business relationship with the 
consumer and none of the other exceptions in para-graph (c) of this 
section apply. The consumer has been given an opt-out notice and has 
elected to opt out of receiving such solicitations. The creditor asks a 
service provider to send the solicitation to the consumer on its behalf. 
The service provider may not send the solicitation on behalf of the 
creditor because, as a result of the consumer's opt-out election, the 
creditor is not permitted to make the solicitation.
    (ii) The same facts as in paragraph (d)(2)(i) of this section, 
except the consumer has been given an opt-out notice, but has not 
elected to opt out. The creditor asks a service provider to send the 
solicitation to the consumer on its behalf. The service provider may 
send the solicitation on behalf of the creditor because, as a result of 
the consumer's not opting out, the creditor is permitted to make the 
solicitation.
    (3) Examples of consumer-initiated communications. (i) A consumer 
who has a consumer loan account with a finance company initiates a 
communication with the creditor's mortgage lending affiliate to request 
information about a mortgage. The mortgage lender affiliate may use 
eligibility information

[[Page 590]]

about the consumer it obtains from the finance company or any other 
affiliate to make solicitations regarding mortgage products in response 
to the consumer-initiated communication.
    (ii) A consumer who has a loan account with a creditor contacts the 
creditor to request information about how to save and invest for a 
child's college education without specifying the type of product in 
which the consumer may be interested. Information about a range of 
different products or services offered by the creditor and one or more 
affiliates of the creditor may be responsive to that communication. Such 
products or services may include the following: mutual funds offered by 
the creditor's mutual fund affil-iate; section 529 plans offered by the 
creditor, its mutual fund affiliate, or another securities affiliate; or 
trust services offered by a different creditor in the affiliated group. 
Any affiliate offering investment products or services that would be 
responsive to the consumer's request for information about saving and 
investing for a child's college education may use eligibility 
information to make solicitations to the consumer in response to this 
communication.
    (iii) A credit card issuer makes a marketing call to the consumer 
without using eligibility information received from an affiliate. The 
issuer leaves a voice-mail message that invites the consumer to call a 
toll-free number to apply for the issuer's credit card. If the consumer 
calls the toll-free number to inquire about the credit card, the call is 
a consumer-initiated communication about a product or service and the 
credit card issuer may now use eligibility information it receives from 
its affiliates to make solicitations to the consumer.
    (iv) A consumer calls a creditor to ask about retail locations and 
hours, but does not request information about products or services. The 
creditor may not use eligibility information it receives from an 
affiliate to make solicitations to the consumer about its products or 
services because the consumer-initiated communication does not relate to 
the creditor's products or services. Thus, the use of eligibility 
information received from an affiliate would not be responsive to the 
communication and the exception does not apply.
    (v) A consumer calls a creditor to ask about office locations and 
hours. The customer service representative asks the consumer if there is 
a particular product or service about which the consumer is seeking 
information. The consumer responds that the consumer wants to stop in 
and find out about second mortgage loans. The customer service 
representative offers to provide that information by telephone and mail 
additional information and application materials to the consumer. The 
consumer agrees and provides or confirms contact information for receipt 
of the materials to be mailed. The creditor may use eligibility 
information it receives from an affiliate to make solicitations to the 
consumer about mortgage loan products because such solicitations respond 
to the consumer-initiated communication about products or services.
    (4) Examples of consumer authorization or request for solicitations. 
(i) A consumer who obtains a mortgage from a mortgage lender authorizes 
or requests information about homeowner's insurance offered by the 
mortgage lender's insurance affiliate. Such authorization or request, 
whether given to the mortgage lender or to the insurance affiliate, 
would permit the insurance affiliate to use eligibility information 
about the consumer it obtains from the mortgage lender or any other 
affiliate to make solicitations to the consumer about homeowner's 
insurance.
    (ii) A consumer completes an online application to apply for a 
credit card from a department store. The store's online application 
contains a blank check box that the consumer may check to authorize or 
request information from the store's affiliates. The consumer checks the 
box. The consumer has authorized or requested solicitations from store's 
affiliates.
    (iii) A consumer completes an online application to apply for a 
credit card from a department store. The store's online application 
contains a pre-selected check box indicating that the consumer 
authorizes or requests information from the store's affiliates. The 
consumer does not deselect the check box. The consumer has not 
authorized

[[Page 591]]

or requested solicitations from the store's affiliates.
    (iv) The terms and conditions of a credit account agreement contain 
preprinted boilerplate language stating that by applying to open an 
account the consumer authorizes or requests to receive solicitations 
from the creditor's affiliates. The consumer has not authorized or 
requested solicitations from the creditor's affiliates.
    (e) Relation to affiliate-sharing notice and opt-out. Nothing in 
this part limits the responsibility of a person to comply with the 
notice and opt-out provisions of section 603(d)(2)(A)(iii) of the Act 
where applicable.



Sec.680.22  Scope and duration of opt-out.

    (a) Scope of opt-out--(1) In general. Except as otherwise provided 
in this section, the consumer's election to opt out prohibits any 
affiliate covered by the opt-out notice from using eligibility 
information received from another affiliate as described in the notice 
to make solicitations to the consumer.
    (2) Continuing relationship--(i) In general. If the consumer 
establishes a continuing relationship with you or your affiliate, an 
opt-out notice may apply to eligibility information obtained in 
connection with--
    (A) A single continuing relationship or multiple continuing 
relationships that the consumer establishes with you or your affiliates, 
including continuing relationships established subsequent to delivery of 
the opt-out notice, so long as the notice adequately describes the 
continuing relationships covered by the opt-out; or
    (B) Any other transaction between the consumer and you or your 
affiliates as described in the notice.
    (ii) Examples of continuing relationships. A consumer has a 
continuing relationship with you or your affiliate if the consumer--
    (A) Opens a credit account with you or your affiliate;
    (B) Obtains a loan for which you or your affiliate owns the 
servicing rights;
    (C) Purchases an insurance product from you or your affiliate;
    (D) Holds an investment product through you or your affiliate, such 
as when you act or your affiliate acts as a custodian for securities or 
for assets in an individual retirement arrangement;
    (E) Enters into an agreement or understanding with you or your 
affiliate whereby you or your affiliate undertakes to arrange or broker 
a home mortgage loan for the consumer;
    (F) Enters into a lease of personal property with you or your 
affiliate; or
    (G) Obtains financial, investment, or economic advisory services 
from you or your affiliate for a fee.
    (3) No continuing relationship--(i) In general. If there is no 
continuing relationship between a consumer and you or your affiliate, 
and you or your affiliate obtain eligibility information about a 
consumer in connection with a transaction with the consumer, such as an 
isolated transaction or a credit application that is denied, an opt-out 
notice provided to the consumer only applies to eligibility information 
obtained in connection with that transaction.
    (ii) Examples of isolated transactions. An isolated transaction 
occurs if--
    (A) The consumer uses your or your affiliate's ATM to withdraw cash 
from an account at a financial institution; or
    (B) You or your affiliate sells the consumer a money order, airline 
tickets, travel insurance, or traveler's checks in isolated 
transactions.
    (4) Menu of alternatives. A consumer may be given the opportunity to 
choose from a menu of alternatives when electing to prohibit 
solicitations, such as by electing to prohibit solicitations from 
certain types of affiliates covered by the opt-out notice but not other 
types of affiliates covered by the notice, electing to prohibit 
solicitations based on certain types of eligibility information but not 
other types of eligibility information, or electing to prohibit 
solicitations by certain methods of delivery but not other methods of 
delivery. However, one of the alternatives must allow the consumer to 
prohibit all solicitations from all of the affiliates that are covered 
by the notice.
    (5) Special rule for a notice following termination of all 
continuing relationships--(i) In general. A consumer must be given a new 
opt-out notice if, after

[[Page 592]]

all continuing relationships with you or your affiliate(s) are 
terminated, the consumer subsequently establishes another continuing 
relationship with you or your affiliate(s) and the consumer's 
eligibility information is to be used to make a solicitation. The new 
opt-out notice must apply, at a minimum, to eligibility information 
obtained in connection with the new continuing relationship. Consistent 
with paragraph (b) of this section, the consumer's decision not to opt 
out after receiving the new opt-out notice would not override a prior 
opt-out election by the consumer that applies to eligibility information 
obtained in connection with a terminated relationship, regardless of 
whether the new opt-out notice applies to eligibility information 
obtained in connection with the terminated relationship.
    (ii) Example. A consumer has an automobile loan account with a 
creditor that is part of an affiliated group. The consumer pays off the 
loan. After paying off the loan, the consumer subsequently obtains a 
second mortgage loan from the creditor. The consumer must be given a new 
notice and opportunity to opt out before the creditor's affiliates may 
make solicitations to the consumer using eligibility information 
obtained by the creditor in connection with the new mortgage 
relationship, regardless of whether the consumer opted out in connection 
with the automobile loan account.
    (b) Duration of opt-out. The election of a consumer to opt out must 
be effective for a period of at least five years (the ``opt-out 
period'') beginning when the consumer's opt-out election is received and 
implemented, unless the consumer subsequently revokes the opt-out in 
writing or, if the consumer agrees, electronically. An opt-out period of 
more than five years may be established, including an opt-out period 
that does not expire unless revoked by the consumer.
    (c) Time of opt-out. A consumer may opt out at any time.



Sec.680.23  Contents of opt-out notice; consolidated and equivalent
notices.

    (a) Contents of opt-out notice--(1) In general. A notice must be 
clear, conspicuous, and concise, and must accurately disclose:
    (i) The name of the affiliate(s) providing the notice. If the notice 
is provided jointly by multiple affiliates and each affiliate shares a 
common name, such as ``ABC,'' then the notice may indicate that it is 
being provided by multiple companies with the ABC name or multiple 
companies in the ABC group or family of companies, for example, by 
stating that the notice is provided by ``all of the ABC companies,'' 
``the ABC banking, credit card, insurance, and securities companies,'' 
or by listing the name of each affiliate providing the notice. But if 
the affiliates providing the joint notice do not all share a common 
name, then the notice must either separately identify each affiliate by 
name or identify each of the common names used by those affiliates, for 
example, by stating that the notice is provided by ``all of the ABC and 
XYZ companies'' or by ``the ABC banking and credit card companies and 
the XYZ insurance companies;''
    (ii) A list of the affiliates or types of affiliates whose use of 
eligibility information is covered by the notice, which may include 
companies that become affiliates after the notice is provided to the 
consumer. If each affiliate covered by the notice shares a common name, 
such as ``ABC,'' then the notice may indicate that it applies to 
multiple companies with the ABC name or multiple companies in the ABC 
group or family of companies, for example, by stating that the notice is 
provided by ``all of the ABC companies,'' ``the ABC banking, credit 
card, insurance, and securities companies,'' or by listing the name of 
each affiliate providing the notice. But if the affiliates covered by 
the notice do not all share a common name, then the notice must either 
separately identify each covered affiliate by name or identify each of 
the common names used by those affiliates, for example, by stating that 
the notice applies to ``all of the ABC and XYZ companies'' or to ``the 
ABC banking and credit card companies and the XYZ insurance companies;''
    (iii) A general description of the types of eligibility information 
that

[[Page 593]]

may be used to make solicitations to the consumer;
    (iv) That the consumer may elect to limit the use of eligibility 
information to make solicitations to the consumer;
    (v) That the consumer's election will apply for the specified period 
of time stated in the notice and, if applicable, that the consumer will 
be allowed to renew the election once that period expires;
    (vi) If the notice is provided to consumers who may have previously 
opted out, such as if a notice is provided to consumers annually, that 
the consumer who has chosen to limit solicitations does not need to act 
again until the consumer receives a renewal notice; and
    (vii) A reasonable and simple method for the consumer to opt out.
    (2) Joint relationships. (i) If two or more consumers jointly obtain 
a product or service, a single opt-out notice may be provided to the 
joint consumers. Any of the joint consumers may exercise the right to 
opt out.
    (ii) The opt-out notice must explain how an opt-out direction by a 
joint consumer will be treated. An opt-out direction by a joint consumer 
may be treated as applying to all of the associated joint consumers, or 
each joint consumer may be permitted to opt out separately. If each 
joint consumer is permitted to opt out separately, one of the joint 
consumers must be permitted to opt out on behalf of all of the joint 
consumers and the joint consumers must be permitted to exercise their 
separate rights to opt out in a single response.
    (iii) It is impermissible to require all joint consumers to opt out 
before implementing any opt-out direction.
    (3) Alternative contents. If the consumer is afforded a broader 
right to opt out of receiving marketing than is required by this part, 
the requirements of this section may be satisfied by providing the 
consumer with a clear, conspicuous, and concise notice that accurately 
discloses the consumer's opt-out rights.
    (4) Model notices. Model notices are provided in appendix B of part 
698 of this chapter.
    (b) Coordinated and consolidated notices. A notice required by this 
part may be coordinated and consolidated with any other notice or 
disclosure required to be issued under any other provision of law by the 
entity providing the notice, including but not limited to the notice de-
scribed in section 603(d)(2)(A)(iii) of the Act and the Gramm-Leach-
Bliley Act privacy notice.
    (c) Equivalent notices. A notice or other disclosure that is 
equivalent to the notice required by this part, and that is provided to 
a consumer together with disclosures required by any other provision of 
law, satisfies the requirements of this section.

[72 FR 61455, Oct. 30, 2007, as amended at 84 FR 23473, May 22, 2019]



Sec.680.24  Reasonable opportunity to opt out.

    (a) In general. You must not use eligibility information about a 
consumer that you receive from an affiliate to make a solicitation to 
the consumer about your products or services, unless the consumer is 
provided a reasonable opportunity to opt out, as required by
    Sec.680.21(a)(1)(ii) of this part.
    (b) Examples of a reasonable opportunity to opt out. The consumer is 
given a reasonable opportunity to opt out if:
    (1) By mail. The opt-out notice is mailed to the consumer. The 
consumer is given 30 days from the date the notice is mailed to elect to 
opt out by any reasonable means.
    (2) By electronic means. (i) The opt-out notice is provided 
electronically to the consumer, such as by posting the notice at an 
Internet Web site at which the consumer has obtained a product or 
service. The consumer acknowledges receipt of the electronic notice. The 
consumer is given 30 days after the date the consumer acknowledges 
receipt to elect to opt out by any reasonable means.
    (ii) The opt-out notice is provided to the consumer by e-mail where 
the consumer has agreed to receive disclosures by e-mail from the person 
sending the notice. The consumer is given 30 days after the e-mail is 
sent to elect to opt out by any reasonable means.
    (3) At the time of an electronic transaction. The opt-out notice is 
provided

[[Page 594]]

to the consumer at the time of an electronic transaction, such as a 
transaction conducted on an Internet Web site. The consumer is required 
to decide, as a necessary part of proceeding with the transaction, 
whether to opt out before completing the transaction. There is a simple 
process that the consumer may use to opt out at that time using the same 
mechanism through which the transaction is conducted.
    (4) At the time of an in-person transaction. The opt-out notice is 
provided to the consumer in writing at the time of an in-person 
transaction. The consumer is required to decide, as a necessary part of 
proceeding with the transaction, whether to opt out before completing 
the transaction, and is not permitted to complete the transaction 
without making a choice. There is a simple process that the consumer may 
use during the course of the in-person transaction to opt out, such as 
completing a form that requires consumers to write a ``yes'' or ``no'' 
to indicate their opt-out preference or that requires the consumer to 
check one of two blank check boxes--one that allows consumers to 
indicate that they want to opt out and one that allows consumers to 
indicate that they do not want to opt out.
    (5) By including in a privacy notice. The opt-out notice is included 
in a Gramm-Leach-Bliley Act privacy notice. The consumer is allowed to 
exercise the opt-out within a reasonable period of time and in the same 
manner as the opt-out under that privacy notice.



Sec.680.25  Reasonable and simple methods of opting out.

    (a) In general. You must not use eligibility information about a 
consumer that you receive from an affiliate to make a solicitation to 
the consumer about your products or services, unless the consumer is 
provided a reasonable and simple method to opt out, as required by Sec.
680.21(a)(1)(ii) of this part.
    (b) Examples--(1) Reasonable and simple opt-out methods. Reasonable 
and simple methods for exercising the opt-out right include--
    (i) Designating a check-off box in a prominent position on the opt-
out form;
    (ii) Including a reply form and a self-addressed envelope together 
with the opt-out notice;
    (iii) Providing an electronic means to opt out, such as a form that 
can be electronically mailed or processed at an Internet Web site, if 
the consumer agrees to the electronic delivery of information;
    (iv) Providing a toll-free telephone number that consumers may call 
to opt out; or
    (v) Allowing consumers to exercise all of their opt-out rights 
described in a consolidated opt-out notice that includes the privacy 
opt-out under the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et seq., the 
affiliate sharing opt-out under the Act, and the affiliate marketing 
opt-out under the Act, by a single method, such as by calling a single 
toll-free telephone number.
    (2) Opt-out methods that are not reasonable and simple. Reasonable 
and simple methods for exercising an opt-out right do not include--
    (i) Requiring the consumer to write his or her own letter;
    (ii) Requiring the consumer to call or write to obtain a form for 
opting out, rather than including the form with the opt-out notice;
    (iii) Requiring the consumer who receives the opt-out notice in 
electronic form only, such as through posting at an Internet Web site, 
to opt out solely by paper mail or by visiting a different Web site 
without providing a link to that site.
    (c) Specific opt-out means. Each consumer may be required to opt out 
through a specific means, as long as that means is reasonable and simple 
for that consumer.



Sec.680.26  Delivery of opt-out notices.

    (a) In general. The opt-out notice must be provided so that each 
consumer can reasonably be expected to receive actual notice. For opt-
out notices provided electronically, the notice may be provided in 
compliance with either the electronic disclosure provisions in this part 
or the provisions in section 101 of the Electronic Signatures in Global 
and National Commerce Act, 15 U.S.C. 7001 et seq.

[[Page 595]]

    (b) Examples of reasonable expectation of actual notice. A consumer 
may reasonably be expected to receive actual notice if the affiliate 
providing the notice:
    (1) Hand-delivers a printed copy of the notice to the consumer;
    (2) Mails a printed copy of the notice to the last known mailing 
address of the consumer;
    (3) Provides a notice by e-mail to a consumer who has agreed to 
receive electronic disclosures by e-mail from the affiliate providing 
the notice; or
    (4) Posts the notice on the Internet Web site at which the consumer 
obtained a product or service electronically and requires the consumer 
to acknowledge receipt of the notice.
    (c) Examples of no reasonable expectation of actual notice. A 
consumer may not reasonably be expected to receive actual notice if the 
affiliate providing the notice:
    (1) Only posts the notice on a sign in a branch or office or 
generally publishes the notice in a newspaper;
    (2) Sends the notice via e-mail to a consumer who has not agreed to 
receive electronic disclosures by e-mail from the affiliate providing 
the notice; or
    (3) Posts the notice on an Internet Web site without requiring the 
consumer to acknowledge receipt of the notice.



Sec.680.27  Renewal of opt-out.

    (a) Renewal notice and opt-out requirement--(1) In general. After 
the opt-out period expires, you may not make solicitations based on 
eligibility information you receive from an affiliate to a consumer who 
previously opted out, unless:
    (i) The consumer has been given a renewal notice that complies with 
the requirements of this section and Sec. Sec.680.24 through 680.26 of 
this part, and a reasonable opportunity and a reasonable and simple 
method to renew the opt-out, and the consumer does not renew the opt-
out; or
    (ii) An exception in Sec.680.21(c) of this part applies.
    (2) Renewal period. Each opt-out renewal must be effective for a 
period of at least five years as provided in Sec.680.22(b) of this 
part.
    (3) Affiliates who may provide the notice. The notice required by 
this paragraph must be provided:
    (i) By the affiliate that provided the previous opt-out notice, or 
its successor; or
    (ii) As part of a joint renewal notice from two or more members of 
an affiliated group of companies, or their successors, that jointly 
provided the previous opt-out notice.
    (b) Contents of renewal notice. The renewal notice must be clear, 
conspicuous, and concise, and must accurately disclose:
    (1) The name of the affiliate(s) providing the notice. If the notice 
is provided jointly by multiple affiliates and each affiliate shares a 
common name, such as ``ABC,'' then the notice may indicate that it is 
being provided by multiple companies with the ABC name or multiple 
companies in the ABC group or family of companies, for example, by 
stating that the notice is provided by ``all of the ABC companies,'' 
``the ABC banking, credit card, insurance, and securities companies,'' 
or by listing the name of each affiliate providing the notice. But if 
the affiliates providing the joint notice do not all share a common 
name, then the notice must either separately identify each affiliate by 
name or identify each of the common names used by those affiliates, for 
example, by stating that the notice is provided by ``all of the ABC and 
XYZ companies'' or by ``the ABC banking and credit card companies and 
the XYZ insurance companies;''
    (2) A list of the affiliates or types of affiliates whose use of 
eligibility information is covered by the notice, which may include 
companies that become affiliates after the notice is provided to the 
consumer. If each affiliate covered by the notice shares a common name, 
such as ``ABC,'' then the notice may indicate that it applies to 
multiple companies with the ABC name or multiple companies in the ABC 
group or family of companies, for example, by stating that the notice is 
provided by ``all of the ABC companies,'' ``the ABC banking, credit 
card, insurance, and securities companies,'' or by listing the name of 
each affiliate providing the notice. But if the affiliates covered by 
the

[[Page 596]]

notice do not all share a common name, then the notice must either 
separately identify each covered affiliate by name or identify each of 
the common names used by those affiliates, for example, by stating that 
the notice applies to ``all of the ABC and XYZ companies'' or to ``the 
ABC banking and credit card companies and the XYZ insurance companies;''
    (3) A general description of the types of eligibility information 
that may be used to make solicitations to the consumer;
    (4) That the consumer previously elected to limit the use of certain 
information to make solicitations to the consumer;
    (5) That the consumer's election has expired or is about to expire;
    (6) That the consumer may elect to renew the consumer's previous 
election;
    (7) If applicable, that the consumer's election to renew will apply 
for the specified period of time stated in the notice and that the 
consumer will be allowed to renew the election once that period expires; 
and
    (8) A reasonable and simple method for the consumer to opt out.
    (c) Timing of the renewal notice--(1) In general. A renewal notice 
may be provided to the consumer either--
    (i) A reasonable period of time before the expiration of the opt-out 
period; or
    (ii) Any time after the expiration of the opt-out period but before 
solicitations that would have been prohibited by the expired opt-out are 
made to the consumer.
    (2) Combination with annual privacy notice. If you provide an annual 
privacy notice under the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et seq., 
providing a renewal notice with the last annual privacy notice provided 
to the consumer before expiration of the opt-out period is a reasonable 
period of time before expiration of the opt-out in all cases.
    (d) No effect on opt-out period. An opt-out period may not be 
shortened by sending a renewal notice to the consumer before expiration 
of the opt-out period, even if the consumer does not renew the opt out.



Sec.680.28  Effective date, compliance date, and prospective 
application.

    (a) Effective date. This part is effective January 1, 2008.
    (b) Mandatory compliance date. Compliance with this part is required 
not later than October 1, 2008.
    (c) Prospective application. The provisions of this part shall not 
prohibit you from using eligibility information that you receive from an 
affiliate to make solicitations to a consumer if you receive such 
information prior to October 1, 2008. For purposes of this section, you 
are deemed to receive eligibility information when such information is 
placed into a common database and is accessible by you.



PART 681_IDENTITY THEFT RULES--Table of Contents



Sec.
681.1 Duties regarding the detection, prevention, and mitigation of 
          identity theft.
681.2 Duties of card issuers regarding changes of address.

Appendix A to Part 681--Interagency Guidelines on Identity Theft 
          Detection, Prevention, and Mitigation

    Authority: 15 U.S.C. 1681m(e); 15 U.S.C. 1681m(e)(4); 15 U.S.C. 
1681c(h).

    Source: 72 FR 63771, Nov. 9, 2007, unless otherwise noted.



Sec.681.1  Duties regarding the detection, prevention, and mitigation
of identity theft.

    (a) Scope. This section applies to financial institutions and 
creditors that are subject to administrative enforcement of the FCRA by 
the Federal Trade Commission pursuant to 15 U.S.C. 1681s(a)(1).
    (b) Definitions. For purposes of this section, and Appendix A, the 
following definitions apply:
    (1) Account means a continuing relationship established by a person 
with a financial institution or creditor to obtain a product or service 
for personal, family, household or business purposes. Account includes:
    (i) An extension of credit, such as the purchase of property or 
services involving a deferred payment; and
    (ii) A deposit account.
    (2) The term board of directors includes:

[[Page 597]]

    (i) In the case of a branch or agency of a foreign bank, the 
managing official in charge of the branch or agency; and
    (ii) In the case of any other creditor that does not have a board of 
directors, a designated employee at the level of senior management.
    (3) Covered account means:
    (i) An account that a financial institution or creditor offers or 
maintains, primarily for personal, family, or household purposes, that 
involves or is designed to permit multiple payments or transactions, 
such as a credit card account, mortgage loan, automobile loan, margin 
account, cell phone account, utility account, checking account, or 
savings account; and
    (ii) Any other account that the financial institution or creditor 
offers or maintains for which there is a reasonably foreseeable risk to 
customers or to the safety and soundness of the financial institution or 
creditor from identity theft, including financial, operational, 
compliance, reputation, or litigation risks.
    (4) Credit has the same meaning as in 15 U.S.C. 1681a(r)(5).
    (5) Creditor has the same meaning as in 15 U.S.C. 1681m(e)(4).
    (6) Customer means a person that has a covered account with a 
financial institution or creditor.
    (7) Financial institution has the same meaning as in 15 U.S.C. 
1681a(t).
    (8) Identity theft has the same meaning as in 16 CFR 603.2(a).
    (9) Red Flag means a pattern, practice, or specific activity that 
indicates the possible existence of identity theft.
    (10) Service provider means a person that provides a service 
directly to the financial institution or creditor.
    (c) Periodic Identification of Covered Accounts. Each financial 
institution or creditor must periodically determine whether it offers or 
maintains covered accounts. As a part of this determination, a financial 
institution or creditor must conduct a risk assessment to determine 
whether it offers or maintains covered accounts described in paragraph 
(b)(3)(ii) of this section, taking into consideration:
    (1) The methods it provides to open its accounts;
    (2) The methods it provides to access its accounts; and
    (3) Its previous experiences with identity theft.
    (d) Establishment of an Identity Theft Prevention Program--(1) 
Program requirement. Each financial institution or creditor that offers 
or maintains one or more covered accounts must develop and implement a 
written Identity Theft Prevention Program (Program) that is designed to 
detect, prevent, and mitigate identity theft in connection with the 
opening of a covered account or any existing covered account. The 
Program must be appropriate to the size and complexity of the financial 
institution or creditor and the nature and scope of its activities.
    (2) Elements of the Program. The Program must include reasonable 
policies and procedures to:
    (i) Identify relevant Red Flags for the covered accounts that the 
financial institution or creditor offers or maintains, and incorporate 
those Red Flags into its Program;
    (ii) Detect Red Flags that have been incorporated into the Program 
of the financial institution or creditor;
    (iii) Respond appropriately to any Red Flags that are detected 
pursuant to paragraph (d)(2)(ii) of this section to prevent and mitigate 
identity theft; and
    (iv) Ensure the Program (including the Red Flags determined to be 
relevant) is updated periodically, to reflect changes in risks to 
customers and to the safety and soundness of the financial institution 
or creditor from identity theft.
    (e) Administration of the Program. Each financial institution or 
creditor that is required to implement a Program must provide for the 
continued administration of the Program and must:
    (1) Obtain approval of the initial written Program from either its 
board of directors or an appropriate committee of the board of 
directors;
    (2) Involve the board of directors, an appropriate committee 
thereof, or a designated employee at the level of senior management in 
the oversight, development, implementation and administration of the 
Program;

[[Page 598]]

    (3) Train staff, as necessary, to effectively implement the Program; 
and
    (4) Exercise appropriate and effective oversight of service provider 
arrangements.
    (f) Guidelines. Each financial institution or creditor that is 
required to implement a Program must consider the guidelines in appendix 
A of this part and include in its Program those guidelines that are 
appropriate.

[74 FR 22645, May 14, 2009, as amended at 77 FR 72715, Dec. 6, 2012]



Sec.681.2  Duties of card issuers regarding changes of address.

    (a) Scope. This section applies to a person described in Sec.
681.1(a) that issues a debit or credit card (card issuer).
    (b) Definitions. For purposes of this section:
    (1) Cardholder means a consumer who has been issued a credit or 
debit card.
    (2) Clear and conspicuous means reasonably understandable and 
designed to call attention to the nature and significance of the 
information presented.
    (c) Address validation requirements. A card issuer must establish 
and implement reasonable policies and procedures to assess the validity 
of a change of address if it receives notification of a change of 
address for a consumer's debit or credit card account and, within a 
short period of time afterwards (during at least the first 30 days after 
it receives such notification), the card issuer receives a request for 
an additional or replacement card for the same account. Under these 
circumstances, the card issuer may not issue an additional or 
replacement card, until, in accordance with its reasonable policies and 
procedures and for the purpose of assessing the validity of the change 
of address, the card issuer:
    (1)(i) Notifies the cardholder of the request:
    (A) At the cardholder's former address; or
    (B) By any other means of communication that the card issuer and the 
cardholder have previously agreed to use; and
    (ii) Provides to the cardholder a reasonable means of promptly 
reporting incorrect address changes; or
    (2) Otherwise assesses the validity of the change of address in 
accordance with the policies and procedures the card issuer has 
established pursuant to Sec.681.1 of this part.
    (d) Alternative timing of address validation. A card issuer may 
satisfy the requirements of paragraph (c) of this section if it 
validates an address pursuant to the methods in paragraph (c)(1) or 
(c)(2) of this section when it receives an address change notification, 
before it receives a request for an additional or replacement card.
    (e) Form of notice. Any written or electronic notice that the card 
issuer provides under this paragraph must be clear and conspicuous and 
provided separately from its regular correspondence with the cardholder.

[74 FR 22645, May 14, 2009]



 Sec. Appendix A to Part 681--Interagency Guidelines on Identity Theft 
                  Detection, Prevention, and Mitigation

    Section 681.1 of this part requires each financial institution and 
creditor that offers or maintains one or more covered accounts, as 
defined in Sec.681.1(b)(3) of this part, to develop and provide for 
the continued administration of a written Program to detect, prevent, 
and mitigate identity theft in connection with the opening of a covered 
account or any existing covered account. These guidelines are intended 
to assist financial institutions and creditors in the formulation and 
maintenance of a Program that satisfies the requirements of Sec.681.1 
of this part.

                             I. The Program

    In designing its Program, a financial institution or creditor may 
incorporate, as appropriate, its existing policies, procedures, and 
other arrangements that control reasonably foreseeable risks to 
customers or to the safety and soundness of the financial institution or 
creditor from identity theft.

                   II. Identifying Relevant Red Flags

    (a) Risk Factors. A financial institution or creditor should 
consider the following factors in identifying relevant Red Flags for 
covered accounts, as appropriate:
    (1) The types of covered accounts it offers or maintains;
    (2) The methods it provides to open its covered accounts;
    (3) The methods it provides to access its covered accounts; and
    (4) Its previous experiences with identity theft.

[[Page 599]]

    (b) Sources of Red Flags. Financial institutions and creditors 
should incorporate relevant Red Flags from sources such as:
    (1) Incidents of identity theft that the financial institution or 
creditor has experienced;
    (2) Methods of identity theft that the financial institution or 
creditor has identified that reflect changes in identity theft risks; 
and
    (3) Applicable supervisory guidance.
    (c) Categories of Red Flags. The Program should include relevant Red 
Flags from the following categories, as appropriate. Examples of Red 
Flags from each of these categories are appended as supplement A to this 
appendix A.
    (1) Alerts, notifications, or other warnings received from consumer 
reporting agencies or service providers, such as fraud detection 
services;
    (2) The presentation of suspicious documents;
    (3) The presentation of suspicious personal identifying information, 
such as a suspicious address change;
    (4) The unusual use of, or other suspicious activity related to, a 
covered account; and
    (5) Notice from customers, victims of identity theft, law 
enforcement authorities, or other persons regarding possible identity 
theft in connection with covered accounts held by the financial 
institution or creditor.

                        III. Detecting Red Flags

    The Program's policies and procedures should address the detection 
of Red Flags in connection with the opening of covered accounts and 
existing covered accounts, such as by:
    (a) Obtaining identifying information about, and verifying the 
identity of, a person opening a covered account, for example, using the 
policies and procedures regarding identification and verification set 
forth in the Customer Identification Program rules implementing 31 
U.S.C. 5318(l) (31 CFR 103.121); and
    (b) Authenticating customers, monitoring transactions, and verifying 
the validity of change of address requests, in the case of existing 
covered accounts.

              IV. Preventing and Mitigating Identity Theft

    The Program's policies and procedures should provide for appropriate 
responses to the Red Flags the financial institution or creditor has 
detected that are commensurate with the degree of risk posed. In 
determining an appropriate response, a financial institution or creditor 
should consider aggravating factors that may heighten the risk of 
identity theft, such as a data security incident that results in 
unauthorized access to a customer's account records held by the 
financial institution, creditor, or third party, or notice that a 
customer has provided information related to a covered account held by 
the financial institution or creditor to someone fraudulently claiming 
to represent the financial institution or creditor or to a fraudulent 
website. Appropriate responses may include the following:
    (a) Monitoring a covered account for evidence of identity theft;
    (b) Contacting the customer;
    (c) Changing any passwords, security codes, or other security 
devices that permit access to a covered account;
    (d) Reopening a covered account with a new account number;
    (e) Not opening a new covered account;
    (f) Closing an existing covered account;
    (g) Not attempting to collect on a covered account or not selling a 
covered account to a debt collector;
    (h) Notifying law enforcement; or
    (i) Determining that no response is warranted under the particular 
circumstances.

                         V. Updating the Program

    Financial institutions and creditors should update the Program 
(including the Red Flags determined to be relevant) periodically, to 
reflect changes in risks to customers or to the safety and soundness of 
the financial institution or creditor from identity theft, based on 
factors such as:
    (a) The experiences of the financial institution or creditor with 
identity theft;
    (b) Changes in methods of identity theft;
    (c) Changes in methods to detect, prevent, and mitigate identity 
theft;
    (d) Changes in the types of accounts that the financial institution 
or creditor offers or maintains; and
    (e) Changes in the business arrangements of the financial 
institution or creditor, including mergers, acquisitions, alliances, 
joint ventures, and service provider arrangements.

                VI. Methods for Administering the Program

    (a) Oversight of Program. Oversight by the board of directors, an 
appropriate committee of the board, or a designated employee at the 
level of senior management should include:
    (1) Assigning specific responsibility for the Program's 
implementation;
    (2) Reviewing reports prepared by staff regarding compliance by the 
financial institution or creditor with Sec.681.1 of this part; and
    (3) Approving material changes to the Program as necessary to 
address changing identity theft risks.
    (b) Reports. (1) In general. Staff of the financial institution or 
creditor responsible for development, implementation, and administration 
of its Program should report to the board of directors, an appropriate 
committee of the board, or a designated employee at the

[[Page 600]]

level of senior management, at least annually, on compliance by the 
financial institution or creditor with Sec.681.1 of this part.
    (2) Contents of report. The report should address material matters 
related to the Program and evaluate issues such as: The effectiveness of 
the policies and procedures of the financial institution or creditor in 
addressing the risk of identity theft in connection with the opening of 
covered accounts and with respect to existing covered accounts; service 
provider arrangements; significant incidents involving identity theft 
and management's response; and recommendations for material changes to 
the Program.
    (c) Oversight of service provider arrangements. Whenever a financial 
institution or creditor engages a service provider to perform an 
activity in connection with one or more covered accounts the financial 
institution or creditor should take steps to ensure that the activity of 
the service provider is conducted in accordance with reasonable policies 
and procedures designed to detect, prevent, and mitigate the risk of 
identity theft. For example, a financial institution or creditor could 
require the service provider by contract to have policies and procedures 
to detect relevant Red Flags that may arise in the performance of the 
service provider's activities, and either report the Red Flags to the 
financial institution or creditor, or to take appropriate steps to 
prevent or mitigate identity theft.

                VII. Other Applicable Legal Requirements

    Financial institutions and creditors should be mindful of other 
related legal requirements that may be applicable, such as:
    (a) For financial institutions and creditors that are subject to 31 
U.S.C. 5318(g), filing a Suspicious Activity Report in accordance with 
applicable law and regulation;
    (b) Implementing any requirements under 15 U.S.C. 1681c-1(h) 
regarding the circumstances under which credit may be extended when the 
financial institution or creditor detects a fraud or active duty alert;
    (c) Implementing any requirements for furnishers of information to 
consumer reporting agencies under 15 U.S.C. 1681s-2, for example, to 
correct or update inaccurate or incomplete information, and to not 
report information that the furnisher has reasonable cause to believe is 
inaccurate; and
    (d) Complying with the prohibitions in 15 U.S.C. 1681m on the sale, 
transfer, and placement for collection of certain debts resulting from 
identity theft.

                       Supplement A to Appendix A

    In addition to incorporating Red Flags from the sources recommended 
in section II.b. of the Guidelines in appendix A of this part, each 
financial institution or creditor may consider incorporating into its 
Program, whether singly or in combination, Red Flags from the following 
illustrative examples in connection with covered accounts:

   Alerts, Notifications or Warnings from a Consumer Reporting Agency

    1. A fraud or active duty alert is included with a consumer report.
    2. A consumer reporting agency provides a notice of credit freeze in 
response to a request for a consumer report.
    3. A consumer reporting agency provides a notice of address 
discrepancy, as defined in Sec.641.1(b) of this part.
    4. A consumer report indicates a pattern of activity that is 
inconsistent with the history and usual pattern of activity of an 
applicant or customer, such as:
    a. A recent and significant increase in the volume of inquiries;
    b. An unusual number of recently established credit relationships;
    c. A material change in the use of credit, especially with respect 
to recently established credit relationships; or
    d. An account that was closed for cause or identified for abuse of 
account privileges by a financial institution or creditor.

                          Suspicious Documents

    5. Documents provided for identification appear to have been altered 
or forged.
    6. The photograph or physical description on the identification is 
not consistent with the appearance of the applicant or customer 
presenting the identification.
    7. Other information on the identification is not consistent with 
information provided by the person opening a new covered account or 
customer presenting the identification.
    8. Other information on the identification is not consistent with 
readily accessible information that is on file with the financial 
institution or creditor, such as a signature card or a recent check.
    9. An application appears to have been altered or forged, or gives 
the appearance of having been destroyed and reassembled.

               Suspicious Personal Identifying Information

    10. Personal identifying information provided is inconsistent when 
compared against external information sources used by the financial 
institution or creditor. For example:
    a. The address does not match any address in the consumer report; or
    b. The Social Security Number (SSN) has not been issued, or is 
listed on the Social Security Administration's Death Master File.
    11. Personal identifying information provided by the customer is not 
consistent with other personal identifying information provided by the 
customer. For example, there is a lack of correlation between the SSN 
range and date of birth.

[[Page 601]]

    12. Personal identifying information provided is associated with 
known fraudulent activity as indicated by internal or third-party 
sources used by the financial institution or creditor. For example:
    a. The address on an application is the same as the address provided 
on a fraudulent application; or
    b. The phone number on an application is the same as the number 
provided on a fraudulent application.
    13. Personal identifying information provided is of a type commonly 
associated with fraudulent activity as indicated by internal or third-
party sources used by the financial institution or creditor. For 
example:
    a. The address on an application is fictitious, a mail drop, or a 
prison; or
    b. The phone number is invalid, or is associated with a pager or 
answering service.
    14. The SSN provided is the same as that submitted by other persons 
opening an account or other customers.
    15. The address or telephone number provided is the same as or 
similar to the address or telephone number submitted by an unusually 
large number of other persons opening accounts or by other customers.
    16. The person opening the covered account or the customer fails to 
provide all required personal identifying information on an application 
or in response to notification that the application is incomplete.
    17. Personal identifying information provided is not consistent with 
personal identifying information that is on file with the financial 
institution or creditor.
    18. For financial institutions and creditors that use challenge 
questions, the person opening the covered account or the customer cannot 
provide authenticating information beyond that which generally would be 
available from a wallet or consumer report.

 Unusual Use of, or Suspicious Activity Related to, the Covered Account

    19. Shortly following the notice of a change of address for a 
covered account, the institution or creditor receives a request for a 
new, additional, or replacement card or a cell phone, or for the 
addition of authorized users on the account.
    20. A new revolving credit account is used in a manner commonly 
associated with known patterns of fraud. For example:
    a. The majority of available credit is used for cash advances or 
merchandise that is easily convertible to cash (e.g., electronics 
equipment or jewelry); or
    b. The customer fails to make the first payment or makes an initial 
payment but no subsequent payments.
    21. A covered account is used in a manner that is not consistent 
with established patterns of activity on the account. There is, for 
example:
    a. Nonpayment when there is no history of late or missed payments;
    b. A material increase in the use of available credit;
    c. A material change in purchasing or spending patterns;
    d. A material change in electronic fund transfer patterns in 
connection with a deposit account; or
    e. A material change in telephone call patterns in connection with a 
cellular phone account.
    22. A covered account that has been inactive for a reasonably 
lengthy period of time is used (taking into consideration the type of 
account, the expected pattern of usage and other relevant factors).
    23. Mail sent to the customer is returned repeatedly as 
undeliverable although transactions continue to be conducted in 
connection with the customer's covered account.
    24. The financial institution or creditor is notified that the 
customer is not receiving paper account statements.
    25. The financial institution or creditor is notified of 
unauthorized charges or transactions in connection with a customer's 
covered account.

   Notice from Customers, Victims of Identity Theft, Law Enforcement 
   Authorities, or Other Persons Regarding Possible Identity Theft in 
 Connection With Covered Accounts Held by the Financial Institution or 
                                Creditor

    26. The financial institution or creditor is notified by a customer, 
a victim of identity theft, a law enforcement authority, or any other 
person that it has opened a fraudulent account for a person engaged in 
identity theft.

[72 FR 63771, Nov. 9, 2007, as amended at 74 FR 22646, May 14, 2009]



PART 682_DISPOSAL OF CONSUMER REPORT INFORMATION AND RECORDS--
Table of Contents



Sec.
682.1 Definitions.
682.2 Purpose and scope.
682.3 Proper disposal of consumer information.
682.4 Relation to other laws.
682.5 Effective date.

    Authority: Pub. L. 108-159, sec. 216.

    Source: 69 FR 68697, Nov. 24, 2004, unless otherwise noted.



Sec.682.1  Definitions.

    (a) In general. Except as modified by this part or unless the 
context otherwise requires, the terms used in this part have the same 
meaning as set

[[Page 602]]

forth in the Fair Credit Reporting Act, 15 U.S.C. 1681 et seq.
    (b) ``Consumer information'' means any record about an individual, 
whether in paper, electronic, or other form, that is a consumer report 
or is derived from a consumer report. Consumer information also means a 
compilation of such records. Consumer information does not include 
information that does not identify individuals, such as aggregate 
information or blind data.
    (c) ``Dispose,'' ``disposing,'' or ``disposal'' means:
    (1) The discarding or abandonment of consumer information, or
    (2) The sale, donation, or transfer of any medium, including 
computer equipment, upon which consumer information is stored.



Sec.682.2  Purpose and scope.

    (a) Purpose. This part (``rule'') implements section 216 of the Fair 
and Accurate Credit Transactions Act of 2003, which is designed to 
reduce the risk of consumer fraud and related harms, including identity 
theft, created by improper disposal of consumer information.
    (b) Scope. This rule applies to any person over which the Federal 
Trade Commission has jurisdiction, that, for a business purpose, 
maintains or otherwise possesses consumer information.



Sec.682.3  Proper disposal of consumer information.

    (a) Standard. Any person who maintains or otherwise possesses 
consumer information for a business purpose must properly dispose of 
such information by taking reasonable measures to protect against 
unauthorized access to or use of the information in connection with its 
disposal.
    (b) Examples. Reasonable measures to protect against unauthorized 
access to or use of consumer information in connection with its disposal 
include the following examples. These examples are illustrative only and 
are not exclusive or exhaustive methods for complying with the rule in 
this part.
    (1) Implementing and monitoring compliance with policies and 
procedures that require the burning, pulverizing, or shredding of papers 
containing consumer information so that the information cannot 
practicably be read or reconstructed.
    (2) Implementing and monitoring compliance with policies and 
procedures that require the destruction or erasure of electronic media 
containing consumer information so that the information cannot 
practicably be read or reconstructed.
    (3) After due diligence, entering into and monitoring compliance 
with a contract with another party engaged in the business of record 
destruction to dispose of material, specifically identified as consumer 
information, in a manner consistent with this rule. In this context, due 
diligence could include reviewing an independent audit of the disposal 
company's operations and/or its compliance with this rule, obtaining 
information about the disposal company from several references or other 
reliable sources, requiring that the disposal company be certified by a 
recognized trade association or similar third party, reviewing and 
evaluating the disposal company's information security policies or 
procedures, or taking other appropriate measures to determine the 
competency and integrity of the potential disposal company.
    (4) For persons or entities who maintain or otherwise possess 
consumer information through their provision of services directly to a 
person subject to this part, implementing and monitoring compliance with 
policies and procedures that protect against unauthorized or 
unintentional disposal of consumer information, and disposing of such 
information in accordance with examples (b)(1) and (2) of this section.
    (5) For persons subject to the Gramm-Leach-Bliley Act, 15 U.S.C. 
6081 et seq., and the Federal Trade Commission's Standards for 
Safeguarding Customer Information, 16 CFR part 314 (``Safeguards 
Rule''), incorporating the proper disposal of consumer information as 
required by this rule into the information security program required by 
the Safeguards Rule.



Sec.682.4  Relation to other laws.

    Nothing in the rule in this part shall be construed:
    (a) To require a person to maintain or destroy any record pertaining 
to a

[[Page 603]]

consumer that is not imposed under other law; or
    (b) To alter or affect any requirement imposed under any other 
provision of law to maintain or destroy such a record.



Sec.682.5  Effective date.

    The rule in this part is effective on June 1, 2005.



PART 698_MODEL FORMS AND DISCLOSURES--Table of Contents



Sec.
698.1 Authority and purpose.
698.2 Legal effect.
698.3 Definitions.

Appendix A to Part 698--Model Forms for Risk-Based Pricing and Credit 
          Score Disclosure Exception Notices
Appendix B to Part 698--Model Forms for Affiliate Marketing Opt-Out 
          Notices

    Authority: 12 U.S.C. 5519; 15 U.S.C. 1681m(h); 15 U.S.C. 1681s-3; 15 
U.S.C. 1681s-3 note.

    Source: 69 FR 35500, June 24, 2004, unless otherwise noted.



Sec.698.1  Authority and purpose.

    (a) Authority. This part is issued by the Commission pursuant to the 
provisions of the Fair Credit Reporting Act (15 U.S.C. 1681 et seq.), as 
amended by the Consumer Credit Reporting Reform Act of 1996 (Title II, 
Subtitle D, Chapter 1, of the Omnibus Consolidated Appropriations Act 
for Fiscal Year 1997), Public Law 104-208, 110 Stat. 3009-426 (Sept. 30, 
1996), the Fair and Accurate Credit Transactions Act of 2003, Public Law 
108-159, 117 Stat. 1952 (Dec. 4, 2003), and the Dodd-Frank Wall Street 
Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376-
2223 (July 21, 2010).
    (b) Purpose. The purpose of this part is to comply with sections 
615(h) and 624 of the Fair Credit Reporting Act, as amended by the Fair 
and Accurate Credit Transactions Act of 2003, and section 214(b) of the 
Fair and Accurate Credit Transactions Act of 2003.

[84 FR 23473, May 22, 2019]



Sec.698.2  Legal effect.

    The model forms and disclosures prescribed by the FTC in this part 
do not constitute a trade regulation rule. The issuance of the model 
forms and disclosures set forth in appendices A and B of this part carry 
out the directive in the statute that the FTC prescribe these forms and 
disclosures. Use or distribution of the model forms and disclosures in 
this part will constitute compliance with any section or subsection of 
the FCRA requiring that such forms and disclosures be used by any motor 
vehicle dealer subject to the FTC's rulemaking authority.

[84 FR 23473, May 22, 2019]



Sec.698.3  Definitions.

    As used in this part, unless otherwise provided:
    (a) Substantially similar means that all information in the 
Commission's prescribed model is included in the document that is 
distributed, and that the document distributed is formatted in a way 
consistent with the format prescribed by the Commission. The document 
that is distributed shall not include anything that interferes with, 
detracts from, or otherwise undermines the information contained in the 
Commission's prescribed model.

[69 FR 69784, Nov. 30, 2004]



  Sec. Appendix A to Part 698--Model Forms for Risk-Based Pricing and 
                Credit Score Disclosure Exception Notices

    1. This appendix contains four model forms for risk-based pricing 
notices and three model forms for use in connection with the credit 
score disclosure exceptions. Each of the model forms is designated for 
use in a particular set of circumstances as indicated by the title of 
that model form.
    2. Model form A-1 is for use in complying with the general risk-
based pricing notice requirements in Sec.640.3 if a credit score is 
not used in setting the material terms of credit.

[[Page 604]]

Model form A-2 is for risk-based pricing notices given in connection 
with account review if a credit score is not used in increasing the 
annual percentage rate. Model form A-3 is for use in connection with the 
credit score disclosure exception for loans secured by residential real 
property. Model form A-4 is for use in connection with the credit score 
disclosure exception for loans that are not secured by residential real 
property. Model form A-5 is for use in connection with the credit score 
disclosure exception when no credit score is available for a consumer. 
Model form A-6 is for use in complying with the general risk-based 
pricing notice requirements in Sec.640.3 if a credit score is used in 
setting the material terms of credit. Model form A-7 is for risk-based 
pricing notices given in connection with account review if a credit 
score is used in increasing the annual percentage rate. All forms 
contained in this appendix are models; their use is optional.
    3. A person may change the forms by rearranging the format or by 
making technical modifications to the language of the forms, in each 
case without modifying the substance of the disclosures. Any such 
rearrangement or modification of the language of the model forms may not 
be so extensive as to materially affect the substance, clarity, 
comprehensibility, or meaningful sequence of the forms. Persons making 
revisions with that effect will lose the benefit of the safe harbor for 
appropriate use of the model forms in this appendix. A person is not 
required to conduct consumer testing when rearranging the format of the 
model forms.
    a. Acceptable changes include, for example:
    i. Corrections or updates to telephone numbers, mailing addresses, 
or website addresses that may change over time.
    ii. The addition of graphics or icons, such as the person's 
corporate logo.
    iii. Alteration of the shading or color contained in the model 
forms.
    iv. Use of a different form of graphical presentation to depict the 
distribution of credit scores.
    v. Substitution of the words ``credit'' and ``creditor'' or 
``finance'' and ``finance company'' for the terms ``loan'' and 
``lender.''
    vi. Including pre-printed lists of the sources of consumer reports 
or consumer reporting agencies in a ``check-the-box'' format.
    vii. Including the name of the consumer, transaction identification 
numbers, a date, and other information that will assist in identifying 
the transaction to which the form pertains.
    viii. Including the name of an agent, such as an auto dealer or 
other party, when providing the ``Name of the Entity Providing the 
Notice.''
    b. Unacceptable changes include, for example:
    i. Providing model forms on register receipts or interspersed with 
other disclosures.
    ii. Eliminating empty lines and extra spaces between sentences 
within the same section.
    4. Optional language in model forms A-6 and A-7 may be used to 
direct the consumer to the entity (which may be a consumer reporting 
agency or the creditor itself, for a proprietary score that meets the 
definition of a credit score) that provided the credit score for any 
questions about the credit score, along with the entity's contact 
information. Creditors may use or not use the additional language 
without losing the safe harbor, since the language is optional.
    A-1 Model form for risk-based pricing notice.
    A-2 Model form for account review risk-based pricing notice.
    A-3 Model form for credit score disclosure exception for loans 
secured by one to four units of residential real property.
    A-4 Model form for credit score disclosure exception for loans not 
secured by residential real property.
    A-5 Model form for credit score disclosure exception for loans where 
credit score is not available.
    A-6 Model form for risk-based pricing notice with credit score 
information.
    A-7 Model form for account review risk-based pricing notice with 
credit score information.

[[Page 605]]

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                    Notice to the Home Loan Applicant

    In connection with your application for a home loan, the lender must 
disclose to you the score that a consumer reporting agency distributed 
to users and the lender used in connection with your home loan, and the 
key factors affecting your credit scores.
    The credit score is a computer generated summary calculated at the 
time of the request and based on information that a consumer reporting 
agency or lender has on file. The scores are based on data about your 
credit history and payment patterns. Credit scores are important because 
they are used to assist the lender in determining whether you will 
obtain a loan. They may also be used to determine what interest rate you 
may be offered on the mortgage. Credit scores can change over time, 
depending on your conduct, how your credit history and payment patterns 
change, and how credit scoring technologies change.
    Because the score is based on information in your credit history, it 
is very important that you review the credit-related information that is 
being furnished to make sure it is accurate. Credit records may vary 
from one company to another.
    If you have questions about your credit score or the credit 
information that is furnished to you, contact the consumer reporting 
agency at the address and telephone number provided with this notice, or 
contact the lender, if the lender developed or generated the credit 
score. The consumer reporting agency plays no part in the decision to 
take any action on the loan application and is unable to provide you 
with specific reasons for the decision on a loan application.
    If you have questions concerning the terms of the loan, contact the 
lender.

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[84 FR 23473, May 22, 2019]



Sec. Appendix B to Part 698--Model Forms for Affiliate Marketing Opt-Out 
                                 Notices

    A. Although use of the model forms is not required, use of the model 
forms in this Appendix (as applicable) complies with the requirement in 
section 624 of the Act for clear, conspicuous, and concise notices.
    B. Certain changes may be made to the language or format of the 
model forms without losing the protection from liability afforded by use 
of the model forms. These changes may not be so extensive as to affect 
the substance, clarity, or meaningful sequence of the language in the 
model forms. Persons making such extensive revisions will lose the safe 
harbor that this Appendix provides. Acceptable changes include, for 
example:
    1. Rearranging the order of the references to ``your income,'' 
``your account history,'' and ``your credit score.''
    2. Substituting other types of information for ``income,'' ``account 
history,'' or ``credit score'' for accuracy, such as ``payment 
history,'' ``credit history,'' ``payoff status,'' or ``claims history.''
    3. Substituting a clearer and more accurate description of the 
affiliates providing or covered by the notice for phrases such as ``the 
[ABC] group of companies,'' including without limitation a statement 
that the entity providing the notice recently purchased the consumer's 
account.
    4. Substituting other types of affiliates covered by the notice for 
``credit card,'' ``insurance,'' or ``securities'' affiliates.
    5. Omitting items that are not accurate or applicable. For example, 
if a person does not limit the duration of the opt-out period, the 
notice may omit information about the renewal notice.
    6. Adding a statement informing consumers how much time they have to 
opt out before shared eligibility information may be used to make 
solicitations to them.
    7. Adding a statement that the consumer may exercise the right to 
opt out at any time.
    8. Adding the following statement, if accurate: ``If you previously 
opted out, you do not need to do so again.''

[[Page 616]]

    9. Providing a place on the form for the consumer to fill in 
identifying information, such as his or her name and address.
B-1 Model Form for Initial Opt-out notice (Single-Affiliate Notice)
B-2 Model Form for Initial Opt-out notice (Joint Notice)
B-3 Model Form for Renewal Notice (Single-Affiliate Notice)
B-4 Model Form for Renewal Notice (Joint Notice)
B-5 Model Form for Voluntary ``No Marketing'' Notice

   B-1 Model Form for Initial Opt-Out Notice (Single-Affiliate Notice)

          [Your Choice To Limit Marketing]/[Marketing Opt-Out]

     [Name of Affiliate] is providing this notice.
     [Optional: Federal law gives you the right to 
limit some but not all marketing from our affiliates. Federal law also 
requires us to give you this notice to tell you about your choice to 
limit marketing from our affiliates.]
     You may limit our affiliates in the [ABC] group 
of companies, such as our [credit card, insurance, and securities] 
affiliates, from marketing their products or services to you based on 
your personal information that we collect and share with them. This 
information includes your [income], your [account history with us], and 
your [credit score].
     Your choice to limit marketing offers from our 
affiliates will apply [until you tell us to change your choice]/[for x 
years from when you tell us your choice]/[for at least 5 years from when 
you tell us your choice]. [Include if the opt-out period expires.] Once 
that period expires, you will receive a renewal notice that will allow 
you to continue to limit marketing offers from our affiliates for 
[another x years]/[at least another 5 years].
     [Include, if applicable, in a subsequent notice, 
including an annual notice, for consumers who may have previously opted 
out.] If you have already made a choice to limit marketing offers from 
our affiliates, you do not need to act again until you receive the 
renewal notice.
    To limit marketing offers, contact us [include all that apply]:
     By telephone: 1-877--
     On the web: www.--.com
     By mail: Check the box and complete the form 
below, and send the form to:
    [Company name]
    [Company address]
    __Do not allow your affiliates to use my personal information to 
market to me.

        B-2 Model Form for Initial Opt-Out Notice (Joint Notice)

          [Your Choice To Limit Marketing]/[Marketing Opt-Out]

     The [ABC group of companies] is providing this 
notice.
     [Optional: Federal law gives you the right to 
limit some but not all marketing from the [ABC] companies. Federal law 
also requires us to give you this notice to tell you about your choice 
to limit marketing from the [ABC] companies.]
     You may limit the [ABC companies], such as the 
[ABC credit card, insurance, and securities] affiliates, from marketing 
their products or services to you based on your personal information 
that they receive from other [ABC] companies. This information includes 
your [income], your [account history], and your [credit score].
     Your choice to limit marketing offers from the 
[ABC] companies will apply [until you tell us to change your choice]/
[for x years from when you tell us your choice]/[for at least 5 years 
from when you tell us your choice]. [Include if the opt-out period 
expires.] Once that period expires, you will receive a renewal notice 
that will allow you to continue to limit marketing offers from the [ABC] 
companies for [another x years]/[at least another 5 years].
     [Include, if applicable, in a subsequent notice, 
including an annual notice, for consumers who may have previously opted 
out.] If you have already made a choice to limit marketing offers from 
the [ABC] companies, you do not need to act again until you receive the 
renewal notice.
    To limit marketing offers, contact us [include all that apply]:
     By telephone: 1-877--
     On the web: www.--.com
     By mail: Check the box and complete the form 
below, and send the form to:
    [Company name]
    [Company address]
    __Do not allow any company [in the ABC group of companies] to use my 
personal information to market to me.

       B-3 Model Form for Renewal Notice (Single-Affiliate Notice)

 [Renewing Your Choice To Limit Marketing]/[Renewing Your Marketing Opt-
                                  Out]

     [Name of Affiliate] is providing this notice.
     [Optional: Federal law gives you the right to 
limit some but not all marketing from our affiliates. Federal law also 
requires us to give you this notice to tell you about your choice to 
limit marketing from our affiliates.]
     You previously chose to limit our affiliates in 
the [ABC] group of companies, such

[[Page 617]]

as our [credit card, insurance, and securities] affiliates, from 
marketing their products or services to you based on your personal 
information that we share with them. This information includes your 
[income], your [account history with us], and your [credit score].
     Your choice has expired or is about to expire.
    To renew your choice to limit marketing for [x] more years, contact 
us [include all that apply]:
     By telephone: 1-877--
     On the web: www.--.com
     By mail: Check the box and complete the form 
below, and send the form to:
    [Company name]
    [Company address]
    __Renew my choice to limit marketing for [x] more years.

            B-4 Model Form for Renewal Notice (Joint Notice)

 [Renewing Your Choice To Limit Marketing]/[Renewing Your Marketing Opt-
                                  Out]

     The [ABC group of companies] is providing this 
notice.
     [Optional: Federal law gives you the right to 
limit some but not all marketing from the [ABC] companies. Federal law 
also requires us to give you this notice to tell you about your choice 
to limit marketing from the [ABC] companies.]
     You previously chose to limit the [ABC 
companies], such as the [ABC credit card, insurance, and securities] 
affiliates, from marketing their products or services to you based on 
your personal information that they receive from other [ABC] companies. 
This information includes your [income], your [account history], and 
your [credit score].
     Your choice has expired or is about to expire.
    To renew your choice to limit marketing for [x] more years, contact 
us [include all that apply]:
     By telephone: 1-877--
     On the web: www.--.com
     By mail: Check the box and complete the form 
below, and send the form to:
    [Company name]
    [Company address]
    __Renew my choice to limit marketing for [x] more years.

          B-5 Model Form for Voluntary ``No Marketing'' Notice

    Your Choice To Stop Marketing
     [Name of Affiliate] is providing this notice.
     You may choose to stop all marketing from us and 
our affiliates.
     [Your choice to stop marketing from us and our 
all affiliates will apply until you tell us to change your choice.]
    To stop all marketing offers, contact us [include all that apply]:
     By telephone: 1-877--
     On the web: www.--.com
     By mail: check the box and complete the form 
below, and send the form to:
    [Company name]
    [Company address]
    __Do not market to me.

[84 FR 23485, May 22, 2019]

[[Page 618]]



 SUBCHAPTER G_RULES, REGULATIONS, STATEMENTS AND INTERPRETATIONS UNDER 
                     THE MAGNUSON-MOSS WARRANTY ACT





PART 700_INTERPRETATIONS OF MAGNUSON-MOSS WARRANTY ACT--
Table of Contents



Sec.
700.1 Products covered.
700.2 Date of manufacture.
700.3 Written warranty.
700.4 Parties ``actually making'' a written warranty.
700.5 Expressions of general policy.
700.6 Designation of warranties.
700.7 Use of warranty registration cards.
700.8 Warrantor's decision as final.
700.9 Duty to install under a full warranty.
700.10 Prohibited tying.
700.11 Written warranty, service contract, and insurance distinguished 
          for purposes of compliance under the Act.
700.12 Effective date of 16 CFR parts 701 and 702.

    Authority: Magnuson-Moss Warranty Act, Pub. L. 93-637, 15 U.S.C. 
2301.

    Source: 42 FR 36114, July 13, 1977, unless otherwise noted.



Sec.700.1  Products covered.

    (a) The Act applies to written warranties on tangible personal 
property which is normally used for personal, family, or household 
purposes. This definition includes property which is intended to be 
attached to or installed in any real property without regard to whether 
it is so attached or installed. This means that a product is a 
``consumer product'' if the use of that type of product is not uncommon. 
The percentage of sales or the use to which a product is put by any 
individual buyer is not determinative. For example, products such as 
automobiles and typewriters which are used for both personal and 
commercial purposes come within the definition of consumer product. 
Where it is unclear whether a particular product is covered under the 
definition of consumer product, any ambiguity will be resolved in favor 
of coverage.
    (b) Agricultural products such as farm machinery, structures and 
implements used in the business or occupation of farming are not covered 
by the Act where their personal, family, or household use is uncommon. 
However, those agricultural products normally used for personal or 
household gardening (for example, to produce goods for personal 
consumption, and not for resale) are consumer products under the Act.
    (c) The definition of ``Consumer product'' limits the applicability 
of the Act to personal property, ``including any such property intended 
to be attached to or installed in any real property without regard to 
whether it is so attached or installed.'' This provision brings under 
the Act separate items of equipment attached to real property, such as 
air conditioners, furnaces, and water heaters.
    (d) The coverage of separate items of equipment attached to real 
property includes, but is not limited to, appliances and other thermal, 
mechanical, and electrical equipment. (It does not extend to the wiring, 
plumbing, ducts, and other items which are integral component parts of 
the structure.) State law would classify many such products as fixtures 
to, and therefore a part of, realty. The statutory definition is 
designed to bring such products under the Act regardless of whether they 
may be considered fixtures under state law.
    (e) The coverage of building materials which are not separate items 
of equipment is based on the nature of the purchase transaction. An 
analysis of the transaction will determine whether the goods are real or 
personal property. The numerous products which go into the construction 
of a consumer dwelling are all consumer products when sold ``over the 
counter,'' as by hardware and building supply retailers. This is also 
true where a consumer contracts for the purchase of such materials in 
connection with the improvement, repair, or modification of a home (for 
example, paneling, dropped ceilings, siding, roofing, storm windows, 
remodeling). However, where such

[[Page 619]]

products are at the time of sale integrated into the structure of a 
dwelling they are not consumer products as they cannot be practically 
distinguished from realty. Thus, for example, the beams, wallboard, 
wiring, plumbing, windows, roofing, and other structural components of a 
dwelling are not consumer products when they are sold as part of real 
estate covered by a written warranty.
    (f) In the case where a consumer contracts with a builder to 
construct a home, a substantial addition to a home, or other realty 
(such as a garage or an in-ground swimming pool) the building materials 
to be used are not consumer products. Although the materials are 
separately identifiable at the time the contract is made, it is the 
intention of the parties to contract for the construction of realty 
which will integrate the component materials. Of course, as noted above, 
any separate items of equipment to be attached to such realty are 
consumer products under the Act.
    (g) Certain provisions of the Act apply only to products actually 
costing the consumer more than a specified amount. Section 103, 15 
U.S.C. 2303, applies to consumer products actually costing the consumer 
more than $10, excluding tax. The $10 minimum will be interpreted to 
include multiple-packaged items which may individually sell for less 
than $10, but which have been packaged in a manner that does not permit 
breaking the package to purchase an item or items at a price less than 
$10. Thus, a written warranty on a dozen items packaged and priced for 
sale at $12 must be designated, even though identical items may be 
offered in smaller quantities at under $10. This interpretation applies 
in the same manner to the minimum dollar limits in section 102, 15 
U.S.C. 2302, and rules promulgated under that section.
    (h) Warranties on replacement parts and components used to repair 
consumer products are covered; warranties on services are not covered. 
Therefore, warranties which apply solely to a repairer's workmanship in 
performing repairs are not subject to the Act. Where a written agreement 
warrants both the parts provided to effect a repair and the workmanship 
in making that repair, the warranty must comply with the Act and the 
rules thereunder.
    (i) The Act covers written warranties on consumer products 
``distributed in commerce'' as that term is defined in section 101(13), 
15 U.S.C. 2301(13). Thus, by its terms the Act arguably applies to 
products exported to foreign jurisdictions. However, the public interest 
would not be served by the use of Commission resources to enforce the 
Act with respect to such products. Moreover, the legislative intent to 
apply the requirements of the Act to such products is not sufficiently 
clear to justify such an extraordinary result. The Commission does not 
contemplate the enforcement of the Act with respect to consumer products 
exported to foreign jurisdictions. Products exported for sale at 
military post exchanges remain subject to the same enforcement standards 
as products sold within the United States, its territories and 
possessions.

[42 FR 36114, July 13, 1977, as amended at 80 FR 42721, July 20, 2015]



Sec.700.2  Date of manufacture.

    Section 112 of the Act, 15 U.S.C. 2312, provides that the Act shall 
apply only to those consumer products manufactured after July 4, 1975. 
When a consumer purchases repair of a consumer product the date of 
manufacture of any replacement parts used is the measuring date for 
determining coverage under the Act. The date of manufacture of the 
consumer product being repaired is in this instance not relevant. Where 
a consumer purchases or obtains on an exchange basis a rebuilt consumer 
product, the date that the rebuilding process is completed determines 
the Act's applicability.

[42 FR 36114, July 13, 1977; 42 FR 38341, July 28, 1977, as amended at 
80 FR 42721, July 20, 2015]



Sec.700.3  Written warranty.

    (a) The Act imposes specific duties and liabilities on suppliers who 
offer written warranties on consumer products. Certain representations, 
such as energy efficiency ratings for electrical appliances, care 
labeling of wearing apparel, and other product information disclosures 
may be express warranties under the Uniform Commercial Code.

[[Page 620]]

However, these disclosures alone are not written warranties under this 
Act. Section 101(6), 15 U.S.C. 2301(6), provides that a written 
affirmation of fact or a written promise of a specified level of 
performance must relate to a specified period of time in order to be 
considered a ``written warranty.'' \1\ A product information disclosure 
without a specified time period to which the disclosure relates is 
therefore not a written warranty. In addition, section 111(d), 15 U.S.C. 
2311(d), exempts from the Act (except section 102(c), 15 U.S.C. 2302(c)) 
any written warranty the making or content of which is required by 
federal law. The Commission encourages the disclosure of product 
information which is not deceptive and which may benefit consumers, and 
will not construe the Act to impede information disclosure in product 
advertising or labeling.
---------------------------------------------------------------------------

    \1\ A ``written warranty'' is also created by a written affirmation 
of fact or a written promise that the product is defect free, or by a 
written undertaking of remedial action within the meaning of section 
101(6)(B), 15 U.S.C. 2301(6)(B).
---------------------------------------------------------------------------

    (b) Certain terms, or conditions, of sale of a consumer product may 
not be ``written warranties'' as that term is defined in section 101(6), 
15 U.S.C. 2301(6), and should not be offered or described in a manner 
that may deceive consumers as to their enforceability under the Act. For 
example, a seller of consumer products may give consumers an 
unconditional right to revoke acceptance of goods within a certain 
number of days after delivery without regard to defects or failure to 
meet a specified level of performance. Or a seller may permit consumers 
to return products for any reason for credit toward purchase of another 
item. Such terms of sale taken alone are not written warranties under 
the Act. Therefore, suppliers should avoid any characterization of such 
terms of sale as warranties. The use of such terms as ``free trial 
period'' and ``trade-in credit policy'' in this regard would be 
appropriate. Furthermore, such terms of sale should be stated separately 
from any written warranty. Of course, the offering and performance of 
such terms of sale remain subject to section 5 of the Federal Trade 
Commission Act, 15 U.S.C. 45.
    (c) The Magnuson-Moss Warranty Act generally applies to written 
warranties covering consumer products. Many consumer products are 
covered by warranties which are neither intended for, nor enforceable 
by, consumers. A common example is a warranty given by a component 
supplier to a manufacturer of consumer products. (The manufacturer may, 
in turn, warrant these components to consumers.) The component 
supplier's warranty is generally given solely to the product 
manufacturer, and is neither intended to be conveyed to the consumer nor 
brought to the consumer's attention in connection with the sale. Such 
warranties are not subject to the Act, since a written warranty under 
section 101(6) of the Act, 15 U.S.C. 2301(6), must become ``part of the 
basis of the bargain between a supplier and a buyer for purposes other 
than resale.'' However, the Act applies to a component supplier's 
warranty in writing which is given to the consumer. An example is a 
supplier's written warranty to the consumer covering a refrigerator that 
is sold installed in a boat or recreational vehicle. The supplier of the 
refrigerator relies on the boat or vehicle assembler to convey the 
written agreement to the consumer. In this case, the supplier's written 
warranty is to a consumer, and is covered by the Act.

[42 FR 36114, July 13, 1977, as amended at 80 FR 42721, July 20, 2015]



Sec.700.4  Parties ``actually making'' a written warranty.

    Section 110(f) of the Act, 15 U.S.C. 2310(f), provides that only the 
supplier ``actually making'' a written warranty is liable for purposes 
of FTC and private enforcement of the Act. A supplier who does no more 
than distribute or sell a consumer product covered by a written warranty 
offered by another person or business and which identifies that person 
or business as the warrantor is not liable for failure of the written 
warranty to comply with the Act or rules thereunder. However,

[[Page 621]]

other actions and written and oral representations of such a supplier in 
connection with the offer or sale of a warranted product may obligate 
that supplier under the Act. If under State law the supplier is deemed 
to have ``adopted'' the written affirmation of fact, promise, or 
undertaking, the supplier is also obligated under the Act. Suppliers are 
advised to consult State law to determine those actions and 
representations which may make them co-warrantors, and therefore 
obligated under the warranty of the other person or business.

[42 FR 36114, July 13, 1977, as amended at 80 FR 42721, July 20, 2015]



Sec.700.5  Expressions of general policy.

    (a) Under section 103(b), 15 U.S.C. 2303(b), statements or 
representations of general policy concerning customer satisfaction which 
are not subject to any specific limitation need not be designated as 
full or limited warranties, and are exempt from the requirements of 
sections 102, 103, and 104 of the Act, 15 U.S.C. 2302-2304, and rules 
thereunder. However, such statements remain subject to the enforcement 
provisions of section 110 of the Act, 15 U.S.C. 2310, and to section 5 
of the Federal Trade Commission Act, 15 U.S.C. 45.
    (b) The section 103(b), 15 U.S.C. 2303(b), exemption applies only to 
general policies, not to those which are limited to specific consumer 
products manufactured or sold by the supplier offering such a policy. In 
addition, to qualify for an exemption under section 103(b), 15 U.S.C. 
2303(b), such policies may not be subject to any specific limitations. 
For example, policies which have an express limitation of duration or a 
limitation of the amount to be refunded are not exempted. This does not 
preclude the imposition of reasonable limitations based on the 
circumstances in each instance a consumer seeks to invoke such an 
agreement. For instance, a warrantor may refuse to honor such an 
expression of policy where a consumer has used a product for 10 years 
without previously expressing any dissatisfaction with the product. Such 
a refusal would not be a specific limitation under this provision.

[42 FR 36114, July 13, 1977, as amended at 80 FR 42721, July 20, 2015]



Sec.700.6  Designation of warranties.

    (a) Section 103 of the Act, 15 U.S.C. 2303, provides that written 
warranties on consumer products manufactured after July 4, 1975, and 
actually costing the consumer more than $10, excluding tax, must be 
designated either ``Full (statement of duration) Warranty'' or ``Limited 
Warranty''. Warrantors may include a statement of duration in a limited 
warranty designation. The designation or designations should appear 
clearly and conspicuously as a caption, or prominent title, clearly 
separated from the text of the warranty. The full (statement of 
duration) warranty and limited warranty are the exclusive designations 
permitted under the Act, unless a specific exception is created by rule.
    (b) Based on section 104(b)(4), 15 U.S.C. 2304(b)(4), the duties 
under subsection (a) of section 104, 15 U.S.C. 2304, extend from the 
warrantor to each person who is a consumer with respect to the consumer 
product. Section 101(3), 15 U.S.C. 2301(3), defines a consumer as a 
buyer (other than for purposes of resale) of any consumer product, any 
person to whom such product is transferred during the duration of an 
implied or written warranty (or service contract) applicable to the 
product. Therefore, a full warranty may not expressly restrict the 
warranty rights of a transferee during its stated duration. However, 
where the duration of a full warranty is defined solely in terms of 
first purchaser ownership there can be no violation of section 
104(b)(4), 15 U.S.C. 2304(b)(4), since the duration of the warranty 
expires, by definition, at the time of transfer. No rights of a 
subsequent transferee are cut off as there is no transfer of ownership 
``during the duration of (any) warranty.'' Thus, these provisions do not 
preclude the offering of a full warranty with its duration determined 
exclusively by the period during which the first purchaser owns the 
product, or uses it in conjunction with another product. For example, an 
automotive battery or muffler warranty may be designated as ``full

[[Page 622]]

warranty for as long as you own your car.'' Because this type of 
warranty leads the consumer to believe that proof of purchase is not 
needed so long as he or she owns the product a duty to furnish 
documentary proof may not be reasonably imposed on the consumer under 
this type of warranty. The burden is on the warrantor to prove that a 
particular claimant under this type of warranty is not the original 
purchaser or owner of the product. Warrantors or their designated agents 
may, however, ask consumers to state or affirm that they are the first 
purchaser of the product.

[42 FR 36114, July 13, 1977, as amended at 80 FR 42721, July 20, 2015]



Sec.700.7  Use of warranty registration cards.

    (a) Under section 104(b)(1) of the Act, 15 U.S.C. 2304(b)(1), a 
warrantor offering a full warranty may not impose on consumers any duty 
other than notification of a defect as a condition of securing remedy of 
the defect or malfunction, unless such additional duty can be 
demonstrated by the warrantor to be reasonable. Warrantors have in the 
past stipulated the return of a ``warranty registration'' or similar 
card. By ``warranty registration card'' the Commission means a card 
which must be returned by the consumer shortly after purchase of the 
product and which is stipulated or implied in the warranty to be a 
condition precedent to warranty coverage and performance.
    (b) A requirement that the consumer return a warranty registration 
card or a similar notice as a condition of performance under a full 
warranty is an unreasonable duty. Thus, a provision such as, ``This 
warranty is void unless the warranty registration card is returned to 
the warrantor'' is not permissible in a full warranty, nor is it 
permissible to imply such a condition in a full warranty.
    (c) This does not prohibit the use of such registration cards where 
a warrantor suggests use of the card as one possible means of proof of 
the date the product was purchased. For example, it is permissible to 
provide in a full warranty that a consumer may fill out and return a 
card to place on file proof of the date the product was purchased. Any 
such suggestion to the consumer must include notice that failure to 
return the card will not affect rights under the warranty, so long as 
the consumer can show in a reasonable manner the date the product was 
purchased. Nor does this interpretation prohibit a seller from obtaining 
from purchasers at the time of sale information requested by the 
warrantor.

[42 FR 36114, July 13, 1977, as amended at 80 FR 42721, July 20, 2015]



Sec.700.8  Warrantor's decision as final.

    A warrantor shall not indicate in any written warranty or service 
contract either directly or indirectly that the decision of the 
warrantor, service contractor, or any designated third party is final or 
binding in any dispute concerning the warranty or service contract. Nor 
shall a warrantor or service contractor state that it alone shall 
determine what is a defect under the agreement. Such statements are 
deceptive since section 110(d) of the Act, 15 U.S.C. 2310(d), gives 
state and federal courts jurisdiction over suits for breach of warranty 
and service contract.

[42 FR 36114, July 13, 1977, as amended at 80 FR 42721, July 20, 2015]



Sec.700.9  Duty to install under a full warranty.

    Under section 104(a)(1) of the Act, 15 U.S.C. 2304(a)(1), the remedy 
under a full warranty must be provided to the consumer without charge. 
If the warranted product has utility only when installed, a full 
warranty must provide such installation without charge regardless of 
whether or not the consumer originally paid for installation by the 
warrantor or his agent. However, this does not preclude the warrantor 
from imposing on the consumer a duty to remove, return, or reinstall 
where such duty can be demonstrated by the warrantor to meet the 
standard of reasonableness under section 104(b)(1), 15 U.S.C. 
2304(b)(1).

[42 FR 36114, July 13, 1977, as amended at 80 FR 42721, July 20, 2015]

[[Page 623]]



Sec.700.10  Prohibited tying.

    (a) Section 102(c), 15 U.S.C. 2302(c), prohibits tying arrangements 
that condition coverage under a written warranty on the consumer's use 
of an article or service identified by brand, trade, or corporate name 
unless that article or service is provided without charge to the 
consumer.
    (b) Under a limited warranty that provides only for replacement of 
defective parts and no portion of labor charges, section 102(c), 15 
U.S.C. 2302(c), prohibits a condition that the consumer use only service 
(labor) identified by the warrantor to install the replacement parts. A 
warrantor or his designated representative may not provide parts under 
the warranty in a manner which impedes or precludes the choice by the 
consumer of the person or business to perform necessary labor to install 
such parts.
    (c) No warrantor may condition the continued validity of a warranty 
on the use of only authorized repair service and/or authorized 
replacement parts for non-warranty service and maintenance (other than 
an article of service provided without charge under the warranty or 
unless the warrantor has obtained a waiver pursuant to section 102(c) of 
the Act, 15 U.S.C. 2302(c)). For example, provisions such as, ``This 
warranty is void if service is performed by anyone other than an 
authorized `ABC' dealer and all replacement parts must be genuine `ABC' 
parts,'' and the like, are prohibited where the service or parts are not 
covered by the warranty. These provisions violate the Act in two ways. 
First, they violate the section 102(c), 15 U.S.C. 2302(c), ban against 
tying arrangements. Second, such provisions are deceptive under section 
110 of the Act, 15 U.S.C. 2310, because a warrantor cannot, as a matter 
of law, avoid liability under a written warranty where a defect is 
unrelated to the use by a consumer of ``unauthorized'' articles or 
service. In addition, warranty language that implies to a consumer 
acting reasonably in the circumstances that warranty coverage requires 
the consumer's purchase of an article or service identified by brand, 
trade or corporate name is similarly deceptive. For example, a provision 
in the warranty such as, ``use only an authorized `ABC' dealer'' or 
``use only `ABC' replacement parts,'' is prohibited where the service or 
parts are not provided free of charge pursuant to the warranty. This 
does not preclude a warrantor from expressly excluding liability for 
defects or damage caused by ``unauthorized'' articles or service; nor 
does it preclude the warrantor from denying liability where the 
warrantor can demonstrate that the defect or damage was so caused.

[42 FR 36114, July 13, 1977, as amended at 80 FR 42721, July 20, 2015]



Sec.700.11  Written warranty, service contract, and insurance 
distinguished for purposes of compliance under the Act.

    (a) The Act recognizes two types of agreements which may provide 
similar coverage of consumer products, the written warranty, and the 
service contract. In addition, other agreements may meet the statutory 
definitions of either ``written warranty'' or ``service contract,'' but 
are sold and regulated under state law as contracts of insurance. One 
example is the automobile breakdown insurance policies sold in many 
jurisdictions and regulated by the state as a form of casualty 
insurance. The McCarran-Ferguson Act, 15 U.S.C. 1011 et seq., provides 
that most federal laws (including the Magnuson-Moss Warranty Act) shall 
not be construed to invalidate, impair, or supersede any law enacted by 
any State for the purpose of regulating the business of insurance. While 
three specific laws are subject to a separate proviso, the Magnuson-Moss 
Warranty Act is not one of them. Thus, to the extent the Magnuson-Moss 
Warranty Act's service contract provisions apply to the business of 
insurance, they are effective so long as they do not invalidate, impair, 
or supersede a State law enacted for the purpose of regulating the 
business of insurance.
    (b) ``Written warranty'' and ``service contract'' are defined in 
sections 101(6) and 101(8) of the Act, 15 U.S.C. 2301(6) and 15 U.S.C. 
2301(8), respectively. This means that it must be conveyed at the time 
of sale of the consumer product and the consumer must not give any 
consideration beyond the purchase price of the consumer product in order

[[Page 624]]

to benefit from the agreement. It is not a requirement of the Act that 
an agreement obligate a supplier of the consumer product to a written 
warranty, but merely that it be part of the basis of the bargain between 
a supplier and a consumer. This contemplates written warranties by 
third-party non-suppliers.
    (c) A service contract under the Act must meet the definitions of 
section 101(8), 15 U.S.C. 2301(8). An agreement which would meet the 
definition of written warranty in section 101(6)(A) or (B), 15 U.S.C. 
2301(6)(A) or (B), but for its failure to satisfy the basis of the 
bargain test is a service contract. For example, an agreement which 
calls for some consideration in addition to the purchase price of the 
consumer product, or which is entered into at some date after the 
purchase of the consumer product to which it applies, is a service 
contract. An agreement which relates only to the performance of 
maintenance and/or inspection services and which is not an undertaking, 
promise, or affirmation with respect to a specified level of 
performance, or that the product is free of defects in materials or 
workmanship, is a service contract. An agreement to perform periodic 
cleaning and inspection of a product over a specified period of time, 
even when offered at the time of sale and without charge to the 
consumer, is an example of such a service contract.

[42 FR 36114, July 13, 1977, as amended at 80 FR 42722, July 20, 2015]



Sec.700.12  Effective date of 16 CFR parts 701 and 702.

    The Statement of Basis and Purpose of the final rules promulgated on 
December 31, 1975, provides that parts 701 and 702 of this chapter will 
become effective one year after the date of promulgation, December 31, 
1976. The Commission intends this to mean that these rules apply only to 
written warranties on products manufactured after December 31, 1976.



PART 701_DISCLOSURE OF WRITTEN CONSUMER PRODUCT WARRANTY TERMS
AND CONDITIONS--Table of Contents



Sec.
701.1 Definitions.
701.2 Scope.
701.3 Written warranty terms.
701.4 Owner registration cards.

    Authority: 15 U.S.C. 2302 and 2309.

    Source: 40 FR 60188, Dec. 31, 1975, unless otherwise noted.



Sec.701.1  Definitions.

    (a) The Act means the Magnuson-Moss Warranty Federal Trade 
Commission Improvement Act, 15 U.S.C. 2301, et seq.
    (b) Consumer product means any tangible personal property which is 
distributed in commerce and which is normally used for personal, family, 
or household purposes (including any such property intended to be 
attached to or installed in any real property without regard to whether 
it is so attached or installed. Products which are purchased solely for 
commercial or industrial use are excluded solely for purposes of this 
part.
    (c) Written warranty means:
    (1) Any written affirmation of fact or written promise made in 
connection with the sale of a consumer product by a supplier to a buyer 
which relates to the nature of the material or workmanship and affirms 
or promises that such material or workmanship is defect free or will 
meet a specified level of performance over a specified period of time, 
or
    (2) Any undertaking in writing in connection with the sale by a 
supplier of a consumer product to refund, repair, replace, or take other 
remedial action with respect to such product in the event that such 
product fails to meet the specifications set forth in the undertaking, 
which written affirmation, promise or undertaking becomes part of the 
basis of the bargain between a supplier and a buyer for purposes other 
than resale of such product.
    (d) Implied warranty means an implied warranty arising under State 
law (as modified by sections 104(a) and 108 of the Act, 15 U.S.C. 
2304(a) and 2308), in

[[Page 625]]

connection with the sale by a supplier of a consumer product.
    (e) Remedy means whichever of the following actions the warrantor 
elects:
    (1) Repair,
    (2) Replacement, or
    (3) Refund; except that the warrantor may not elect refund unless:
    (i) The warrantor is unable to provide replacement and repair is not 
commercially practicable or cannot be timely made, or
    (ii) The consumer is willing to accept such refund.
    (f) Supplier means any person engaged in the business of making a 
consumer product directly or indirectly available to consumers.
    (g) Manufacturer means any person engaged in the business of making 
a consumer product.
    (h) Warrantor means any supplier, manufacturer, or other person who 
gives or offers to give a written warranty.
    (i) Consumer means a buyer (other than for purposes of resale or use 
in the ordinary course of the buyer's business) of any consumer product, 
any person to whom such product is transferred during the duration of an 
implied or written warranty applicable to the product, and any other 
such person who is entitled by the terms of such warranty or under 
applicable State law to enforce against the warrantor the obligations of 
the warranty.
    (j) On the face of the warranty means:
    (1) Where the warranty is a single sheet with printing on both sides 
of the sheet or where the warranty is comprised of more than one sheet, 
the page on which the warranty text begins;
    (2) Where the warranty is included as part of a larger document, 
such as a use and care manual, the page in such document on which the 
warranty text begins;
    (3) Where the warranty is on an Internet Web site or displayed 
electronically, in close proximity to the location where the warranty 
text begins.

[40 FR 60188, Dec. 31, 1975, as amended at 80 FR 42722, July 20, 2015; 
81 FR 63669, Sept. 15, 2016]



Sec.701.2  Scope.

    The regulations in this part establish requirements for warrantors 
for disclosing the terms and conditions of written warranties on 
consumer products actually costing the consumer more than $15.00.



Sec.701.3  Written warranty terms.

    (a) Any warrantor warranting to a consumer by means of a written 
warranty a consumer product actually costing the consumer more than 
$15.00 shall clearly and conspicuously disclose in a single document in 
simple and readily understood language, the following items of 
information:
    (1) The identity of the party or parties to whom the written 
warranty is extended, if the enforceability of the written warranty is 
limited to the original consumer purchaser or is otherwise limited to 
persons other than every consumer owner during the term of the warranty;
    (2) A clear description and identification of products, or parts, or 
characteristics, or components or properties covered by and where 
necessary for clarification, excluded from the warranty;
    (3) A statement of what the warrantor will do in the event of a 
defect, malfunction or failure to conform with the written warranty, 
including the items or services the warrantor will pay for or provide, 
and, where necessary for clarification, those which the warrantor will 
not pay for or provide;
    (4) The point in time or event on which the warranty term commences, 
if different from the purchase date, and the time period or other 
measurement of warranty duration;
    (5) A step-by-step explanation of the procedure which the consumer 
should follow in order to obtain performance of any warranty obligation, 
including the persons or class of persons authorized to perform warranty 
obligations. This includes the name(s) of the warrantor(s), together 
with: The mailing address(es) of the warrantor(s), and/or the name or 
title and the address of any employee or department of the warrantor 
responsible for the performance of warranty obligations, and/or a 
telephone number which consumers may use without charge to obtain 
information on warranty performance;

[[Page 626]]

    (6) Information respecting the availability of any informal dispute 
settlement mechanism elected by the warrantor in compliance with part 
703 of this subchapter;
    (7) Any limitations on the duration of implied warranties, disclosed 
on the face of the warranty as provided in section 108 of the Act, 15 
U.S.C. 2308, accompanied by the following statement:

Some States do not allow limitations on how long an implied warranty 
lasts, so the above limitation may not apply to you.

    (8) Any exclusions of or limitations on relief such as incidental or 
consequential damages, accompanied by the following statement, which may 
be combined with the statement required in paragraph (a)(7) of this 
section:

Some States do not allow the exclusion or limitation of incidental or 
consequential damages, so the above limitation or exclusion may not 
apply to you.

    (9) A statement in the following language:

This warranty gives you specific legal rights, and you may also have 
other rights which vary from State to State.

    (b) Paragraphs (a) (1) through (9) of this section shall not be 
applicable with respect to statements of general policy on emblems, 
seals or insignias issued by third parties promising replacement or 
refund if a consumer product is defective, which statements contain no 
representation or assurance of the quality or performance 
characteristics of the product; Provided That: (1) The disclosures 
required by paragraphs (a) (1) through (9) of this section are published 
by such third parties in each issue of a publication with a general 
circulation, and (2) such disclosures are provided free of charge to any 
consumer upon written request.

[40 FR 60188, Dec. 31, 1975, as amended at 80 FR 42722, July 20, 2015]



Sec.701.4  Owner registration cards.

    When a warrantor employs any card such as an owner's registration 
card, a warranty registration card, or the like, and the return of such 
card is a condition precedent to warranty coverage and performance, the 
warrantor shall disclose this fact in the warranty. If the return of 
such card reasonably appears to be a condition precedent to warranty 
coverage and performance, but is not such a condition, that fact shall 
be disclosed in the warranty.



PART 702_PRE-SALE AVAILABILITY OF WRITTEN WARRANTY TERMS--
Table of Contents



Sec.
702.1 Definitions.
702.2 Scope.
702.3 Pre-sale availability of written warranty terms.

    Authority: 15 U.S.C. 2302 and 2309.

    Source: 40 FR 60189, Dec. 31, 1975, unless otherwise noted.



Sec.702.1  Definitions.

    (a) The Act means the Magnuson-Moss Warranty Federal Trade 
Commission Improvement Act, 15 U.S.C. 2301, et seq.
    (b) Consumer product means any tangible personal property which is 
distributed in commerce and which is normally used for personal, family, 
or household purposes (including any such property intended to be 
attached to or installed in any real property without regard to whether 
it is so attached or installed). Products which are purchased solely for 
commercial or industrial use are excluded solely for purposes of this 
part.
    (c) Written warranty means--
    (1) Any written affirmation of fact or written promise made in 
connection with the sale of a consumer product by a supplier to a buyer 
which relates to the nature of the material or workmanship and affirms 
or promises that such material or workmanship is defect free or will 
meet a specified level of performance over a specified period of time, 
or
    (2) Any undertaking in writing in connection with the sale by a 
supplier of a consumer product to refund, repair, replace or take other 
remedial action with respect to such product in the event that such 
product fails to meet the specifications set forth in the undertaking,

which written affirmation, promise, or undertaking becomes part of the 
basis of the bargain between a supplier and a buyer for purposes other 
than resale of such product.

[[Page 627]]

    (d) Warrantor means any supplier, manufacturer, or other person who 
gives or offers to give a written warranty.
    (e) Seller means any person who sells or offers for sale for 
purposes other than resale or use in the ordinary course of the buyer's 
business any consumer product.
    (f) Supplier means any person engaged in the business of making a 
consumer product directly or indirectly available to consumers.
    (g) Manufacturer means any person engaged in the business of making 
a consumer product.

[40 FR 60189, Dec. 31, 1975, as amended at 52 FR 7574, Mar. 12, 1987; 81 
FR 63669, Sept. 15, 2016]



Sec.702.2  Scope.

    The regulations in this part establish requirements for sellers and 
warrantors for making the terms of any written warranty on a consumer 
product available to the consumer prior to sale.



Sec.702.3  Pre-sale availability of written warranty terms.

    The following requirements apply to consumer products actually 
costing the consumer more than $15.00:
    (a) Duties of seller. Except as provided in paragraphs (c) through 
(d) of this section, the seller of a consumer product with a written 
warranty shall make a text of the warranty readily available for 
examination by the prospective buyer by:
    (1) Displaying it in close proximity to the warranted product 
(including through electronic or other means, if the warrantor has 
elected the option described in paragraph (b)(2) of this section), or
    (2) Furnishing it upon request prior to sale (including through 
electronic or other means, if the warrantor has elected the option 
described in paragraph (b)(2) of this section) and placing signs 
reasonably calculated to elicit the prospective buyer's attention in 
prominent locations in the store or department advising such prospective 
buyers of the availability of warranties upon request.
    (b) Duties of the warrantor. (1) A warrantor who gives a written 
warranty warranting to a consumer a consumer product actually costing 
the consumer more than $15.00 shall:
    (i) Provide sellers with warranty materials necessary for such 
sellers to comply with the requirements set forth in paragraph (a) of 
this section, by the use of one or more of the following means:
    (A) Providing a copy of the written warranty with every warranted 
consumer product;
    (B) Providing a tag, sign, sticker, label, decal or other attachment 
to the product, which contains the full text of the written warranty;
    (C) Printing on or otherwise attaching the text of the written 
warranty to the package, carton, or other container if that package, 
carton or other container is normally used for display purposes. If the 
warrantor elects this option a copy of the written warranty must also 
accompany the warranted product; or
    (D) Providing a notice, sign, or poster disclosing the text of a 
consumer product warranty. If the warrantor elects this option, a copy 
of the written warranty must also accompany each warranted product.
    (ii) Provide catalog, mail order, and door-to-door sellers with 
copies of written warranties necessary for such sellers to comply with 
the requirements set forth in paragraphs (c) and (d) of this section.
    (2) As an alternative method of compliance with paragraph (b)(1) of 
this section, a warrantor may provide the warranty terms in an 
accessible digital format on the warrantor's Internet Web site. If the 
warrantor elects this option, the warrantor must:
    (i) Provide information to the consumer that will inform the 
consumer how to obtain warranty terms by indicating, in a clear and 
conspicuous manner, in the product manual or on the product or product 
packaging:
    (A) The Internet Web site of the warrantor where such warranty terms 
can be reviewed, and
    (B) The phone number, the postal mailing address of the warrantor, 
or other reasonable non-Internet based means for the consumer to request 
a copy of the warranty terms;
    (ii) Provide a hard copy of the warranty terms promptly and free of

[[Page 628]]

charge upon request by a consumer or seller made pursuant to paragraph 
(b)(2)(i)(B) of this section;
    (iii) Ensure that warranty terms are posted in a clear and 
conspicuous manner and remain accessible to the consumer on the Internet 
Web site of the warrantor; and
    (iv) Provide information with the consumer product or on the 
Internet Web site of the warrantor sufficient to allow the consumer to 
readily identify on such Internet Web sites the warranty terms that 
apply to the specific warranted product.
    (3) Paragraph (a)(1) of this section shall not be applicable with 
respect to statements of general policy on emblems, seals or insignias 
issued by third parties promising replacement or refund if a consumer 
product is defective, which statements contain no representation or 
assurance of the quality or performance characteristics of the product; 
provided that
    (i) The disclosures required by Sec.701.3(a)(1) through (9) of 
this chapter are published by such third parties in each issue of a 
publication with a general circulation, and
    (ii) Such disclosures are provided free of charge to any consumer 
upon written request.
    (c) Catalog and mail order sales. (1) For purposes of this 
paragraph:
    (i) Catalog or mail order sales means any offer for sale, or any 
solicitation for an order for a consumer product with a written 
warranty, which includes instructions for ordering the product which do 
not require a personal visit to the seller's establishment.
    (ii) Close conjunction means on the page containing the description 
of the warranted product, or on the page facing that page.
    (2) Any seller who offers for sale to consumers consumer products 
with written warranties by means of a catalog or mail order solicitation 
shall clearly and conspicuously disclose in such catalog or solicitation 
in close conjunction to the description of the warranted product, or in 
an information section of the catalog or solicitation clearly 
referenced, including a page number, in close conjunction to the 
description of the warranted product, either:
    (i) The full text of the written warranty; or
    (ii) The address of the Internet Web site of the warrantor where 
such warranty terms can be reviewed (if such Internet Web site exists), 
as well as that the written warranty can be obtained free upon specific 
request, and the address or phone number where such warranty can be 
requested. If this option is elected, such seller shall promptly provide 
a copy of any written warranty requested by the consumer (and may 
provide such copy through electronic or other means, if the warrantor 
has elected the option described in paragraph (b)(2) of this section).
    (d) Door-to-door sales. (1) For purposes of this paragraph:
    (i) Door-to-door sale means a sale of consumer products in which the 
seller or his representative personally solicits the sale, including 
those in response to or following an invitation by a buyer, and the 
buyer's agreement to offer to purchase is made at a place other than the 
place of business of the seller.
    (ii) Prospective buyer means an individual solicited by a door-to-
door seller to buy a consumer product who indicates sufficient interest 
in that consumer product or maintains sufficient contact with the seller 
for the seller reasonably to conclude that the person solicited is 
considering purchasing the product.
    (2) Any seller who offers for sale to consumers consumer products 
with written warranties by means of door-to-door sales shall, prior to 
the consummation of the sale, disclose the fact that the sales 
representative has copies of the warranties for the warranted products 
being offered for sale, which may be inspected by the prospective buyer 
at any time during the sales presentation. Such disclosure shall be made 
orally and shall be included in any written materials shown to 
prospective buyers. If the warrantor has elected the option described in 
paragraph (b)(2) of this section, the sales representative may provide a 
copy of the warranty through electronic or other means.

[81 FR 63669, Sept. 15, 2016]

[[Page 629]]



PART 703_INFORMAL DISPUTE SETTLEMENT PROCEDURES--Table of Contents



Sec.
703.1 Definitions.
703.2 Duties of warrantor.

                  Minimum Requirements of the Mechanism

703.3 Mechanism organization.
703.4 Qualification of members.
703.5 Operation of the Mechanism.
703.6 Recordkeeping.
703.7 Audits.
703.8 Openness of records and proceedings.

    Authority: 15 U.S.C. 2309 and 2310.

    Source: 40 FR 60215, Dec. 31, 1975, unless otherwise noted.



Sec.703.1  Definitions.

    (a) The Act means the Magnuson-Moss Warranty--Federal Trade 
Commission Improvement Act, 15 U.S.C. 2301, et seq.
    (b) Consumer product means any tangible personal property which is 
distributed in commerce and which is normally used for personal, family, 
or household purposes (including any such property intended to be 
attached to or installed in any real property without regard to whether 
it is so attached or installed).
    (c) Written warranty means:
    (1) Any written affirmation of fact or written promise made in 
connection with the sale of a consumer product by a supplier to a buyer 
which relates to the nature of the material or workmanship and affirms 
or promises that such material or workmanship is defect free or will 
meet a specified level of performance over a specified period of time, 
or
    (2) Any undertaking in writing in connection with the sale by a 
supplier of a consumer product to refund, repair, replace, or take other 
remedial action with respect to such product in the event that such 
product fails to meet the specifications set forth in the undertaking, 
which written affirmation, promise or undertaking becomes part of the 
basis of the bargain between a supplier and a buyer for purposes other 
than resale of such product.
    (d) Warrantor means any person who gives or offers to give a written 
warranty which incorporates an informal dispute settlement mechanism.
    (e) Mechanism means an informal dispute settlement procedure which 
is incorporated into the terms of a written warranty to which any 
provision of Title I of the Act applies, as provided in section 110 of 
the Act, 15 U.S.C. 2310.
    (f) Members means the person or persons within a Mechanism actually 
deciding disputes.
    (g) Consumer means a buyer (other than for purposes of resale) of 
any consumer product, any person to whom such product is transferred 
during the duration of a written warranty applicable to the product, and 
any other person who is entitled by the terms of such warranty or under 
applicable state law to enforce against the warrantor the obligations of 
the warranty.
    (h) On the face of the warranty means:
    (1) If the warranty is a single sheet with printing on both sides of 
the sheet, or if the warranty is comprised of more than one sheet, the 
page on which the warranty text begins;
    (2) If the warranty is included as part of a longer document, such 
as a use and care manual, the page in such document on which the 
warranty text begins.

[40 FR 60215, Dec. 31, 1975, as amended at 80 FR 42722, July 20, 2015]



Sec.703.2  Duties of warrantor.

    (a) The warrantor shall not incorporate into the terms of a written 
warranty a Mechanism that fails to comply with the requirements 
contained in Sec. Sec.703.3 through 703.8 of this part. This paragraph 
(a) shall not prohibit a warrantor from incorporating into the terms of 
a written warranty the step-by-step procedure which the consumer should 
take in order to obtain performance of any obligation under the warranty 
as described in section 102(a)(7) of the Act, 15 U.S.C. 2302(a)(7), and 
required by part 701 of this subchapter.
    (b) The warrantor shall disclose clearly and conspicuously at least 
the following information on the face of the written warranty:
    (1) A statement of the availability of the informal dispute 
settlement mechanism;
    (2) The name and address of the Mechanism, or the name and a 
telephone number of the Mechanism which consumers may use without 
charge;

[[Page 630]]

    (3) A statement of any requirement that the consumer resort to the 
Mechanism before exercising rights or seeking remedies created by Title 
I of the Act; together with the disclosure that if a consumer chooses to 
seek redress by pursuing rights and remedies not created by Title I of 
the Act, resort to the Mechanism would not be required by any provision 
of the Act; and
    (4) A statement, if applicable, indicating where further information 
on the Mechanism can be found in materials accompanying the product, as 
provided in Sec.703.2(c) of this section.
    (c) The warrantor shall include in the written warranty or in a 
separate section of materials accompanying the product, the following 
information:
    (1) Either
    (i) A form addressed to the Mechanism containing spaces requesting 
the information which the Mechanism may require for prompt resolution of 
warranty disputes; or
    (ii) A telephone number of the Mechanism which consumers may use 
without charge;
    (2) The name and address of the Mechanism;
    (3) A brief description of Mechanism procedures;
    (4) The time limits adhered to by the Mechanism; and
    (5) The types of information which the Mechanism may require for 
prompt resolution of warranty disputes.
    (d) The warrantor shall take steps reasonably calculated to make 
consumers aware of the Mechanism's existence at the time consumers 
experience warranty disputes. Nothing contained in paragraphs (b), (c), 
or (d) of this section shall limit the warrantor's option to encourage 
consumers to seek redress directly from the warrantor as long as the 
warrantor does not expressly require consumers to seek redress directly 
from the warrantor. The warrantor shall proceed fairly and expeditiously 
to attempt to resolve all disputes submitted directly to the warrantor.
    (e) Whenever a dispute is submitted directly to the warrantor, the 
warrantor shall, within a reasonable time, decide whether, and to what 
extent, it will satisfy the consumer, and inform the consumer of its 
decision. In its notification to the consumer of its decision, the 
warrantor shall include the information required in Sec.703.2 (b) and 
(c) of this section.
    (f) The warrantor shall:
    (1) Respond fully and promptly to reasonable requests by the 
Mechanism for information relating to disputes;
    (2) Upon notification of any decision of the Mechanism that would 
require action on the part of the warrantor, immediately notify the 
Mechanism whether, and to what extent, warrantor will abide by the 
decision; and
    (3) Perform any obligations it has agreed to.
    (g) The warrantor shall act in good faith in determining whether, 
and to what extent, it will abide by a Mechanism decision.
    (h) The warrantor shall comply with any reasonable requirements 
imposed by the Mechanism to fairly and expeditiously resolve warranty 
disputes.

[40 FR 60215, Dec. 31, 1975, as amended at 80 FR 42722, July 20, 2015]

                  Minimum Requirements of the Mechanism



Sec.703.3  Mechanism organization.

    (a) The Mechanism shall be funded and competently staffed at a level 
sufficient to ensure fair and expeditious resolution of all disputes, 
and shall not charge consumers any fee for use of the Mechanism.
    (b) The warrantor and the sponsor of the Mechanism (if other than 
the warrantor) shall take all steps necessary to ensure that the 
Mechanism, and its members and staff, are sufficiently insulated from 
the warrantor and the sponsor, so that the decisions of the members and 
the performance of the staff are not influenced by either the warrantor 
or the sponsor. Necessary steps shall include, at a minimum, committing 
funds in advance, basing personnel decisions solely on merit, and not 
assigning conflicting warrantor or sponsor duties to Mechanism staff 
persons.
    (c) The Mechanism shall impose any other reasonable requirements 
necessary to ensure that the members and staff act fairly and 
expeditiously in each dispute.

[[Page 631]]



Sec.703.4  Qualification of members.

    (a) No member deciding a dispute shall be:
    (1) A party to the dispute, or an employee or agent of a party other 
than for purposes of deciding disputes; or
    (2) A person who is or may become a party in any legal action, 
including but not limited to class actions, relating to the product or 
complaint in dispute, or an employee or agent of such person other than 
for purposes of deciding disputes. For purposes of this paragraph (a) a 
person shall not be considered a ``party'' solely because he or she 
acquires or owns an interest in a party solely for investment, and the 
acquisition or ownership of an interest which is offered to the general 
public shall be prima facie evidence of its acquisition or ownership 
solely for investment.
    (b) When one or two members are deciding a dispute, all shall be 
persons having no direct involvement in the manufacture, distribution, 
sale or service of any product. When three or more members are deciding 
a dispute, at least two-thirds shall be persons having no direct 
involvement in the manufacture, distribution, sale or service of any 
product. ``Direct involvement'' shall not include acquiring or owning an 
interest solely for investment, and the acquisition or ownership of an 
interest which is offered to the general public shall be prima facie 
evidence of its acquisition or ownership solely for investment. Nothing 
contained in this section shall prevent the members from consulting with 
any persons knowledgeable in the technical, commercial or other areas 
relating to the product which is the subject of the dispute.
    (c) Members shall be persons interested in the fair and expeditious 
settlement of consumer disputes.



Sec.703.5  Operation of the Mechanism.

    (a) The Mechanism shall establish written operating procedures which 
shall include at least those items specified in paragraphs (b) through 
(j) of this section. Copies of the written procedures shall be made 
available to any person upon request.
    (b) Upon notification of a dispute, the Mechanism shall immediately 
inform both the warrantor and the consumer of receipt of the dispute.
    (c) The Mechanism shall investigate, gather and organize all 
information necessary for a fair and expeditious decision in each 
dispute. When any evidence gathered by or submitted to the Mechanism 
raises issues relating to the number of repair attempts, the length of 
repair periods, the possibility of unreasonable use of the product, or 
any other issues relevant in light of Title I of the Act (or rules 
thereunder), including issues relating to consequential damages, or any 
other remedy under the Act (or rules thereunder), the Mechanism shall 
investigate these issues. When information which will or may be used in 
the decision, submitted by one party, or a consultant under Sec.
703.4(b) of this part, or any other source tends to contradict facts 
submitted by the other party, the Mechanism shall clearly, accurately, 
and completely disclose to both parties the contradictory information 
(and its source) and shall provide both parties an opportunity to 
explain or rebut the information and to submit additional materials. The 
Mechanism shall not require any information not reasonably necessary to 
decide the dispute.
    (d) If the dispute has not been settled, the Mechanism shall, as 
expeditiously as possible but at least within 40 days of notification of 
the dispute, except as provided in paragraph (e) of this section:
    (1) Render a fair decision based on the information gathered as 
described in paragraph (c) of this section, and on any information 
submitted at an oral presentation which conforms to the requirements of 
paragraph (f) of this section (A decision shall include any remedies 
appropriate under the circumstances, including repair, replacement, 
refund, reimbursement for expenses, compensation for damages, and any 
other remedies available under the written warranty or the Act (or rules 
thereunder); and a decision shall state a specified reasonable time for 
performance);
    (2) Disclose to the warrantor its decision and the reasons therefor;
    (3) If the decision would require action on the part of the 
warrantor, determine whether, and to what extent,

[[Page 632]]

warrantor will abide by its decision; and
    (4) Disclose to the consumer its decision, the reasons therefor, 
warrantor's intended actions (if the decision would require action on 
the part of the warrantor), and the information described in paragraph 
(g) of this section. For purposes of paragraph (d) of this section a 
dispute shall be deemed settled when the Mechanism has ascertained from 
the consumer that:
    (i) The dispute has been settled to the consumer's satisfaction; and
    (ii) The settlement contains a specified reasonable time for 
performance.
    (e) The Mechanism may delay the performance of its duties under 
paragraph (d) of this section beyond the 40 day time limit:
    (1) Where the period of delay is due solely to failure of a consumer 
to provide promptly his or her name and address, brand name and model 
number of the product involved, and a statement as to the nature of the 
defect or other complaint; or
    (2) For a 7 day period in those cases where the consumer has made no 
attempt to seek redress directly from the warrantor.
    (f) The Mechanism may allow an oral presentation by a party to a 
dispute (or a party's representative) only if:
    (1) Both warrantor and consumer expressly agree to the presentation;
    (2) Prior to agreement the Mechanism fully discloses to the consumer 
the following information:
    (i) That the presentation by either party will take place only if 
both parties so agree, but that if they agree, and one party fails to 
appear at the agreed upon time and place, the presentation by the other 
party may still be allowed;
    (ii) That the members will decide the dispute whether or not an oral 
presentation is made;
    (iii) The proposed date, time and place for the presentation; and
    (iv) A brief description of what will occur at the presentation 
including, if applicable, parties' rights to bring witnesses and/or 
counsel; and
    (3) Each party has the right to be present during the other party's 
oral presentation. Nothing contained in this paragraph (b) of this 
section shall preclude the Mechanism from allowing an oral presentation 
by one party, if the other party fails to appear at the agreed upon time 
and place, as long as all of the requirements of this paragraph have 
been satisfied.
    (g) The Mechanism shall inform the consumer, at the time of 
disclosure required in paragraph (d) of this section that:
    (1) If he or she is dissatisfied with its decision or warrantor's 
intended actions, or eventual performance, legal remedies, including use 
of small claims court, may be pursued;
    (2) The Mechanism's decision is admissible in evidence as provided 
in section 110(a)(3) of the Act, 15 U.S.C. 2310(a)(3); and
    (3) The consumer may obtain, at reasonable cost, copies of all 
Mechanism records relating to the consumer's dispute.
    (h) If the warrantor has agreed to perform any obligations, either 
as part of a settlement agreed to after notification to the Mechanism of 
the dispute or as a result of a decision under paragraph (d) of this 
section, the Mechanism shall ascertain from the consumer within 10 
working days of the date for performance whether performance has 
occurred.
    (i) A requirement that a consumer resort to the Mechanism prior to 
commencement of an action under section 110(d) of the Act, 15 U.S.C. 
2310(d), shall be satisfied 40 days after notification to the Mechanism 
of the dispute or when the Mechanism completes all of its duties under 
paragraph (d) of this section, whichever occurs sooner. Except that, if 
the Mechanism delays performance of its paragraph (d) of this section 
duties as allowed by paragraph (e) of this section, the requirement that 
the consumer initially resort to the Mechanism shall not be satisfied 
until the period of delay allowed by paragraph (e) of this section has 
ended.
    (j) Decisions of the Mechanism shall not be legally binding on any 
person. However, the warrantor shall act in good faith, as provided in 
Sec.703.2(g) of this part. In any civil action arising out of a 
warranty obligation and relating to a matter considered by the 
Mechanism, any decision of the Mechanism shall be admissible in 
evidence, as

[[Page 633]]

provided in section 110(a)(3) of the Act, 15 U.S.C. 2310(a)(3).

[40 FR 60215, Dec. 31, 1975, as amended at 80 FR 42722, July 20, 2015]



Sec.703.6  Recordkeeping.

    (a) The Mechanism shall maintain records on each dispute referred to 
it which shall include:
    (1) Name, address and telephone number of the consumer;
    (2) Name, address, telephone number and contact person of the 
warrantor;
    (3) Brand name and model number of the product involved;
    (4) The date of receipt of the dispute and the date of disclosure to 
the consumer of the decision;
    (5) All letters or other written documents submitted by either 
party;
    (6) All other evidence collected by the Mechanism relating to the 
dispute, including summaries of relevant and material portions of 
telephone calls and meetings between the Mechanism and any other person 
(including consultants described in Sec.703.4(b) of this part);
    (7) A summary of any relevant and material information presented by 
either party at an oral presentation;
    (8) The decision of the members including information as to date, 
time and place of meeting, and the identity of members voting; or 
information on any other resolution;
    (9) A copy of the disclosure to the parties of the decision;
    (10) A statement of the warrantor's intended action(s);
    (11) Copies of follow-up letters (or summaries of relevant and 
material portions of follow-up telephone calls) to the consumer, and 
responses thereto; and
    (12) Any other documents and communications (or summaries of 
relevant and material portions of oral communications) relating to the 
dispute.
    (b) The Mechanism shall maintain an index of each warrantor's 
disputes grouped under brand name and sub-grouped under product model.
    (c) The Mechanism shall maintain an index for each warrantor as will 
show:
    (1) All disputes in which the warrantor has promised some 
performance (either by settlement or in response to a Mechanism 
decision) and has failed to comply; and
    (2) All disputes in which the warrantor has refused to abide by a 
Mechanism decision.
    (d) The Mechanism shall maintain an index as will show all disputes 
delayed beyond 40 days.
    (e) The Mechanism shall compile semi-annually and maintain 
statistics which show the number and percent of disputes in each of the 
following categories:
    (1) Resolved by staff of the Mechanism and warrantor has complied;
    (2) Resolved by staff of the Mechanism, time for compliance has 
occurred, and warrantor has not complied;
    (3) Resolved by staff of the Mechanism and time for compliance has 
not yet occurred;
    (4) Decided by members and warrantor has complied;
    (5) Decided by members, time for compliance has occurred, and 
warrantor has not complied;
    (6) Decided by members and time for compliance has not yet occurred;
    (7) Decided by members adverse to the consumer;
    (8) No jurisdiction;
    (9) Decision delayed beyond 40 days under Sec.703.5(e)(1) of this 
part;
    (10) Decision delayed beyond 40 days under Sec.703.5(e)(2) of this 
part;
    (11) Decision delayed beyond 40 days for any other reason; and
    (12) Pending decision.
    (f) The Mechanism shall retain all records specified in paragraphs 
(a) through (e) of this section for at least 4 years after final 
disposition of the dispute.



Sec.703.7  Audits.

    (a) The Mechanism shall have an audit conducted at least annually, 
to determine whether the Mechanism and its implementation are in 
compliance with this part. All records of the Mechanism required to be 
kept under Sec.703.6 of this part shall be available for audit.
    (b) Each audit provided for in paragraph (a) of this section shall 
include at a minimum the following:

[[Page 634]]

    (1) Evaluation of warrantors' efforts to make consumers aware of the 
Mechanism's existence as required in Sec.703.2(d) of this part;
    (2) Review of the indexes maintained pursuant to Sec.703.6 (b), 
(c), and (d) of this part; and
    (3) Analysis of a random sample of disputes handled by the Mechanism 
to determine the following:
    (i) Adequacy of the Mechanism's complaint and other forms, 
investigation, mediation and follow-up efforts, and other aspects of 
complaint handling; and
    (ii) Accuracy of the Mechanism's statistical compilations under 
Sec.703.6(e) of this part. (For purposes of this subparagraph 
``analysis'' shall include oral or written contact with the consumers 
involved in each of the disputes in the random sample.)
    (c) A report of each audit under this section shall be submitted to 
the Federal Trade Commission, and shall be made available to any person 
at reasonable cost. The Mechanism may direct its auditor to delete names 
of parties to disputes, and identity of products involved, from the 
audit report.
    (d) Auditors shall be selected by the Mechanism. No auditor may be 
involved with the Mechanism as a warrantor, sponsor or member, or 
employee or agent thereof, other than for purposes of the audit.



Sec.703.8  Openness of records and proceedings.

    (a) The statistical summaries specified in Sec.703.6(e) of this 
part shall be available to any person for inspection and copying.
    (b) Except as provided under paragraphs (a) and (e) of this section, 
and paragraph (c) of Sec.703.7 of this part, all records of the 
Mechanism may be kept confidential, or made available only on such terms 
and conditions, or in such form, as the Mechanism shall permit.
    (c) The policy of the Mechanism with respect to records made 
available at the Mechanism's option shall be set out in the procedures 
under Sec.703.5(a) of this part; the policy shall be applied uniformly 
to all requests for access to or copies of such records.
    (d) Meetings of the members to hear and decide disputes shall be 
open to observers on reasonable and nondiscriminatory terms. The 
identity of the parties and products involved in disputes need not be 
disclosed at meetings.
    (e) Upon request the Mechanism shall provide to either party to a 
dispute:
    (1) Access to all records relating to the dispute; and
    (2) Copies of any records relating to the dispute, at reasonable 
cost.
    (f) The Mechanism shall make available to any person upon request, 
information relating to the qualifications of Mechanism staff and 
members.

[[Page 635]]



 SUBCHAPTER H_RULES, REGULATIONS, STATEMENTS AND INTERPRETATIONS
 UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976





PART 801_COVERAGE RULES--Table of Contents



Sec.
801.1 Definitions.
801.2 Acquiring and acquired persons.
801.3 Activities in or affecting commerce.
801.4 Secondary acquisitions.
801.10 Value of voting securities, non-corporate interests and assets to 
          be acquired.
801.11 Annual net sales and total assets.
801.12 Calculating percentage of voting securities.
801.13 Aggregation of voting securities, assets and non-corporate 
          interests.
801.14 Aggregate total amount of voting securities and assets.
801.15 Aggregation of voting securities, non-corporate interests and 
          assets the acquisition of which was exempt.
801.20 Acquisitions subsequent to exceeding threshold.
801.21 Securities and cash not considered assets when acquired.
801.30 Tender offers and acquisitions of voting securities and non-
          corporate interests from third parties.
801.31 Acquisitions of voting securities by offerees in tender offers.
801.32 Conversion and acquisition.
801.33 Consummation of an acquisition by acceptance of tendered shares 
          of payment.
801.40 Formation of joint venture or other corporations.
801.50 Formation of unincorporated entities.
801.90 Transactions or devices for avoidance.

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

    Source: 43 FR 33537, July 31, 1978, unless otherwise noted.



Sec.801.1  Definitions.

    When used in the act and these rules--
    (a)(1) Person. Except as provided in paragraphs (a) and (b) of Sec.
801.12, the term person means an ultimate parent entity and all entities 
which it controls directly or indirectly.

    Examples: 1. In the case of corporations, ``person'' encompasses the 
entire corporate structure, including all parent corporations, 
subsidiaries and divisions (whether consolidated or unconsolidated, and 
whether incorporated or unincorporated), and all related corporations 
under common control with any of the foregoing.
    2. Corporations A and B are each directly controlled by the same 
foreign state. They are not included within the same ``person,'' 
although the corporations are under common control, because the foreign 
state which controls them is not an ``entity'' (see Sec.801.1(a)(2)). 
Corporations A and B* are the ultimate parent entities within persons 
``A'', and ``B'' which include any entities each may control.
---------------------------------------------------------------------------

    * Throughout the examples to the rules, persons are designated 
(``A'', ``B,'' etc.) with quotation marks, and entities are designated 
(A, B, etc.) without quotation marks.
---------------------------------------------------------------------------

    3. Since a natural person is an entity (see Sec.801.1(a)(2)), a 
natural person and a corporation which he or she controls are part of 
the same ``person.'' If that natural person controls two otherwise 
separate corporations, both corporations and the natural person are all 
part of the same ``person.''
    4. See the example to Sec.801.2(a).

    (2) Entity. The term entity means any natural person, corporation, 
company, partnership, joint venture, association, joint-stock company, 
trust, estate of a deceased natural person, foundation, fund, 
institution, society, union, or club, whether incorporated or not, 
wherever located and of whatever citizenship, or any receiver, trustee 
in bankruptcy or similar official or any liquidating agent for any of 
the foregoing, in his or her capacity as such; or any joint venture or 
other corporation which has not been formed but the acquisition of the 
voting securities or other interest in which, if already formed, would 
require notification under the act and these rules:
    Provided, however, that the term entity shall not include any 
foreign state, foreign government, or agency thereof (other than a 
corporation or unincorporated entity engaged in commerce), nor the 
United States, any of the States thereof, or any political subdivision 
or agency of either (other than a corporation or unincorporated entity 
engaged in commerce).
    (3) Ultimate parent entity. The term ultimate parent entity means an 
entity

[[Page 636]]

which is not controlled by any other entity.

    Examples: 1. If corporation A holds 100 percent of the stock of 
subsidiary B, and B holds 75 percent of the stock of its subsidiary C, 
corporation A is the ultimate parent entity, since it controls 
subsidiary B directly and subsidiary C indirectly, and since it is the 
entity within the person which is not controlled by any other entity.
    2. If corporation A is controlled by natural person D, natural 
person D is the ultimate parent entity.
    3. P and Q are the ultimate parent entities within persons ``P'' and 
``Q.'' If P and Q each own 50 percent of the voting securities of R, 
then P and Q are both ultimate parents of R, and R is part of both 
persons ``P'' and ``Q.''

    (b) Control. The term control (as used in the terms control(s), 
controlling, controlled by and under common control with) means:
    (1) Either. (i) Holding 50 percent or more of the outstanding voting 
securities of an issuer or
    (ii) In the case of an unincorporated entity, having the right to 50 
percent or more of the profits of the entity, or having the right in the 
event of dissolution to 50 percent or more of the assets of the entity; 
or
    (2) Having the contractual power presently to designate 50 percent 
or more of the directors of a for-profit or not-for-profit corporation, 
or 50 percent or more of the trustees in the case of trusts that are 
irrevocable and/or in which the settlor does not retain a reversionary 
interest.

    Examples: 1. Corporation A holds 100 percent of the stock of 
corporation B, 75 percent of the stock of corporation C, 50 percent of 
the stock of corporation D, and 30 percent of the stock of corporation 
E. Corporation A controls corporations B, C and D, but not corporation 
E. Corporation A is the ultimate parent entity of a person comprised of 
corporations A, B, C and D, and each of these corporations (but not 
corporation E) is ``included within the person.''
    2. A statutory limited partnership agreement provides as follows: 
The general partner ``A'' is entitled to 50 percent of the partnership 
profits, ``B'' is entitled to 40 percent of the profits and ``C'' is 
entitled to 10 percent of the profits. Upon dissolution, ``B'' is 
entitled to 75 percent of the partnership assets and ``C'' is entitled 
to 25 percent of those assets. All limited and general partners are 
entitled to vote on the following matters: the dissolution of the 
partnership, the transfer of assets not in the ordinary course of 
business, any change in the nature of the business, and the removal of 
the general partner. The interest of each partner is evidenced by an 
ownership certificate that is transferable under the terms of the 
partnership agreement and is subject to the Securities Act of 1933. For 
purposes of these rules, control of this partnership is determined by 
paragraph (1)(ii) of this section. Although partnership interests may be 
securities and have some voting rights attached to them, they do not 
entitle the owner of that interest to vote for a corporate ``director'' 
as required by Sec.801.1(f)(1). Thus control of a partnership is not 
determined on the basis of either paragraph (1)(i) or (2) of this 
section. Consequently, ``A'' is deemed to control the partnership 
because of its right to 50 percent of the partnership's profits. ``B'' 
is also deemed to control the partnership because it is entitled to 75 
percent of the partnership's assets upon dissolution.
    3. ``A'' is a nonprofit charitable foundation that has formed a 
partnership joint venture with ``B,'' a nonprofit university, to 
establish C, a nonprofit hospital corporation that does not issue voting 
securities. Pursuant to its charter ``A'' and ``B'' are each entitled to 
appoint three of C's six directors. ``A'' and ``B'' would each be deemed 
to control C, pursuant to Sec.801.1(b)(2) because each is deemed to 
have the contractual power presently to designate 50 percent or more of 
the directors of a not-for-profit corporation.
    4. ``A'' is entitled to 50 percent of the profits of partnership B 
and 50 percent of the profits of partnership C. B and C form a 
partnership E with ``D'' in which each entity has a right to one-third 
of the profits. When E acquires company X, ``A'' must report the 
transaction (assuming it is otherwise reportable). Pursuant to Sec.
801.1(b)(1)(ii), E is deemed to be controlled by ``A,'' even though 
``A'' ultimately will receive only one-third of the profits of E. 
Because B and C are considered as part of ``A,'' the rules attribute all 
profits to which B and C are entitled (two-thirds of the profits of E in 
this example) to ``A.''
    5. A is the settlor of an irrevocable trust in which it does not 
retain a reversionary interest in the corpus of the trust. A is entitled 
under the trust indenture to designate four of the eight trustees of the 
trust. A controls the trust pursuant to Sec.801.1(b)(2) and is deemed 
to hold the assets that constitute the corpus of the trust. Note that 
the right to designate 50 percent or more of the trustees of a business 
trust that has equity holders entitled to profits or assets upon 
dissolution of the business trust does not constitute control. Such 
business trusts are treated as unincorporated entities and control is 
determined pursuant to Sec.801.1(b)(1)(ii).

    (c) Hold. (1) Subject to the provisions of paragraphs (c) (2) 
through (8) of this

[[Page 637]]

section, the term hold (as used in the terms hold(s), holding, holder 
and held) means beneficial ownership, whether direct, or indirect 
through fiduciaries, agents, controlled entities or other means.

    Example: If a stockbroker has stock in ``street name'' for the 
account of a natural person, only the natural person (who has beneficial 
ownership) and not the stockbroker (which may have record title) 
``holds'' that stock.

    (2) The holdings of spouses and their minor children shall be 
holdings of each of them.
    (3) Except for a common trust fund or collective investment fund 
within the meaning of 12 CFR 9.18(a) (both of which are hereafter 
referred to in this paragraph as ``collective investment funds''), and 
any revocable trust or an irrevocable trust in which the settlor retains 
a reversionary interest in the corpus, a trust, including a pension 
trust, shall hold all assets and voting securities constituting the 
corpus of the trust.

    Example: Under this paragraph the trust--and not the trustee--
``holds'' the voting securities and assets constituting the corpus of 
any irrevocable trust (in which the settlor retains no reversionary 
interest, and which is not a collective investment fund). Therefore, the 
trustee need not aggregate its holdings of any other assets or voting 
securities with the holdings of the trust for purposes of determining 
whether the requirements of the act apply to an acquisition by the 
trust. Similarly, the trustee, if making an acquisition for its own 
account, need not aggregate its holdings with those of any trusts for 
which it serves as trustee. (However, the trustee must aggregate any 
collective investment funds which it administers; see paragraph (c)(6) 
of this section.)

    (4) The assets and voting securities constituting the corpus of a 
revocable trust or the corpus of an irrevocable trust in which the 
settlor(s) retain(s) a reversionary interest in the corpus shall be 
holdings of the settlor(s) of such trust.
    (5) Except as provided in paragraph (c)(4) of this section, 
beneficiaries of a trust, including a pension trust or a collective 
investment fund, shall not hold any assets or voting securities 
constituting the corpus of such trust.
    (6) A bank or trust company which administers one or more collective 
investment funds shall hold all assets and voting securities 
constituting the corpus of each such fund.

    Example: Suppose A, a bank or trust company, administers collective 
investment funds W, X, Y and Z. Whenever person ``A'' is to make an 
acquisition, whether of not on behalf of one or more of the funds, it 
must aggregate the holdings of W, X, Y and Z in determining whether the 
requirements of the act apply to the acquisition.

    (7) An insurance company shall hold all assets and voting securities 
held for the benefit of any general account of, or any separate account 
administered by, such company.
    (8) A person holds all assets and voting securities held by the 
entities included within it; in addition to its own holding, an entity 
holds all assets and voting securities held by the entities which it 
controls directly or indirectly.
    (d)(1) Affiliate. An entity is an affiliate of a person if it is 
controlled, directly or indirectly, by the ultimate parent entity of 
such person.
    (2) Associate. For purposes of Items 6 and 7 of the Form, an 
associate of an acquiring person shall be an entity that is not an 
affiliate of such person but:
    (A) Has the right, directly or indirectly, to manage the operations 
or investment decisions of an acquiring entity (a ``managing entity''); 
or
    (B) Has its operations or investment decisions, directly or 
indirectly, managed by the acquiring person; or
    (C) Directly or indirectly controls, is controlled by, or is under 
common control with a managing entity; or
    (D) Directly or indirectly manages, is managed by, or is under 
common operational or investment decision management with a managing 
entity.

    Examples: 1. ABC Investment Group has organized a number of 
investment partnerships. Each of the partnerships is its own ultimate 
parent, but ABC makes the investment decisions for all of the 
partnerships. One of the partnerships intends to make a reportable 
acquisition. For purposes of Items 6(c) and 7, each of the other 
investment partnerships, and ABC Investment Group itself are associates 
of the partnership that is the acquiring person. In response to Item 
6(c)(i), the acquiring person will disclose any of its 5 percent or 
greater minority holdings that generate revenues in any of the same 
NAICS

[[Page 638]]

codes as the acquired entity(s) in the reportable transaction. In Item 
6(c)(ii) it would report any 5 percent or greater minority holdings of 
its associates in the acquired entity(s) and in any entities that 
generate revenues in any of the same NAICS codes as the acquired 
entity(s). In Item 7, the acquiring person will indicate whether there 
are any NAICS code overlaps between the acquired entity(s) in the 
reportable transaction, on the one hand, and the acquiring person and 
all of its associates, on the other.
    2. XYZ Corporation is its own ultimate parent and intends to make a 
reportable acquisition. Pursuant to a management contract, Fund MNO has 
the right to manage the investments of XYZ Corporation. For the HSR 
filing by XYZ Corporation, Fund MNO is an associate of XYZ, as is any 
other entity that either controls, or is controlled by, or manages or is 
managed by Fund MNO or is under common control or common investment 
management with Fund MNO.
    3. EFG Investment Group has the contractual power to determine the 
investments of PRS Corporation, which is its own ultimate parent. 
Natural person Mr. X, who is not an employee of EFG Investment Group, 
has been contracted by EFG Investment Group as its investment manager. 
When PRS Corporation makes an acquisition, its associates include (i) 
EFG Investment Group, (ii) any entity over which EFG Investment Group 
has investment authority, (iii) any entity that controls, or is 
controlled by, EFG Investment Group, (iv) Natural person Mr. X, (v) any 
entity over which Natural person Mr. X has investment management 
authority, and (vi) any entity which is controlled by Natural person Mr. 
X, directly or indirectly.
    4. CORP1 controls GP1 and GP2, the sole general partners of private 
equity funds LP1 and LP2 respectively. LP1 controls GP3, the sole 
general partner of MLP1, a newly formed master limited partnership which 
is its own ultimate parent entity. LP2 controls GP4, the sole general 
partner of MLP2, another master limited partnership that is its own 
ultimate parent entity and which owns and operates a natural gas 
pipeline. In addition, GP4 holds 25 percent of the voting securities of 
CORP2, which also owns and operates a natural gas pipeline.
    MLP1 is acquiring 100 percent of the membership interests of LLC1, 
also the owner and operator of a natural gas pipeline. MLP2, CORP2 and 
LLC1 all derive revenues in the same NAICS code (Pipeline Transportation 
of Natural Gas). All of the entities under common investment management 
of CORP1, including GP4 and MLP2, are associates of MLP1, the acquiring 
person.
    In Item 7 of its HSR filing, MLP1 would identify MLP2 as an 
associate that has an overlap in pipeline transportation of natural gas 
with LLC1, the acquired person. Because GP4 does not control CORP2 it 
would not be listed in Item 7, however, GP4 would be listed in Item 
6(c)(ii) as an associate that holds 25 percent of the voting securities 
of CORP2. In this example, even though there is no direct overlap 
between the acquiring person (MLP1) and the acquired person (LLC1), 
there is an overlap reported for an associate (MLP2) of the acquiring 
person in Item 7. 5. LLC is the investment manager for and ultimate 
parent entity of general partnerships GP1 and GP2. GP1 is the general 
partner of LP1, a limited partnership that holds 30 percent of the 
voting securities of CORP1. GP2 is the general partner of LP2, which 
holds 55 percent of the voting securities of CORP1. GP2 also directly 
holds 2 percent of the voting securities of CORP1. LP1 is acquiring 100 
percent of the voting securities of CORP2. CORP1 and CORP2 both derive 
revenues in the same NAICS code (Industrial Gas Manufacturing).
    All of the entities under common investment management of the 
managing entity LLC, including GP1, GP2, LP2 and CORP1 are associates of 
LP1. In Item 6(c)(i) of its HSR filing, LP1 would report its own holding 
of 30 percent of the voting securities of CORP1. It would not report the 
55 percent holding of LP2 in Item 6(c)(ii) because it is greater than 50 
percent. It also would not report GP2's 2 percent holding because it is 
less than 5 percent. In Item 7, LP1 would identify both LP2 and CORP1 as 
associates that derive revenues in the same NAICS code as CORP2.
    6. LLC is the investment manager for GP1 and GP2 which are the 
general partners of limited partnerships LP1 and LP2, respectively. LLC 
holds no equity interests in either general partnership but manages 
their investments and the investments of the limited partnerships by 
contract. LP1 is newly formed and its own ultimate parent entity. It 
plans to acquire 100 percent of the voting securities of CORP1, which 
derives revenues in the NAICS code for Consumer Lending. LP2 controls 
CORP2, which derives revenues in the same NAICS code. All of the 
entities under the common management of LLC, including LP2 and CORP2, 
are associates of LP1. For purposes of Item 7, LP1 would report LP2 and 
CORP2 as associates that derive revenues in the NAICS code that overlaps 
with CORP1. Even though the investment manager (LLC) holds no equity 
interest in GP1 or GP2, the contractual arrangement with them makes them 
associates of LP1 through common management.

[[Page 639]]

[GRAPHIC] [TIFF OMITTED] TR19JY11.100

    7. Corporation A is its own ultimate parent entity and is making an 
acquisition of Corporation B. Although Corporation A is operationally 
managed by its officers and its investments, including the acquisition 
of Corporation B, are managed by its directors, neither the officers nor 
directors are considered associates of A.

[[Page 640]]

    8. Limited partnership A is an investment partnership that is making 
an acquisition. LLC B has no equity interest in A, but has a contract to 
manage its investments for a fee. LLC B has an investment committee 
comprised of twelve of its employees that makes the actual investment 
decisions. LLC B is an associate of A but none of the twelve employees 
are associates of A, as LLC B is a managing entity and the twelve 
individuals are merely its employees. Contrast this with example 3 where 
a managing entity, EFG, is itself managed by another entity, Mr. X, who 
is thus an associate.
    9. GP is the general partner of FUND. GP has contracted with LLC to 
act as an investment advisor with respect to FUND's investments. In this 
role, LLC acts as a consultant who makes recommendations to GP on what 
portfolio companies FUND should invest in. The recommendations are non-
binding and GP is the only entity that has the authority to exercise 
investment discretion over FUND's acquisitions of interests in portfolio 
companies. In this example, GP is an associate of FUND, while LLC is 
not.
    10. GP A is the general partner and investment manager of FUND A1. 
Mr. X is a principal in the A family of private equity funds and has the 
contractual right to veto certain proposed actions of GP A and FUND A1, 
for example, divestitures of stock that would result in a change of 
control in a portfolio company. His contractual right to veto certain 
proposed actions does not constitute managing operations. Mr. X does not 
have the authority under the contract to veto proposed investments of 
FUND A1 directed by GP A or to direct GP A to authorize investments by 
FUND A1. In this example, GP A is an associate of FUND A1, while Mr. X 
is not.
    11. LLC is the general partner of LP and has entered into a 
management contract to exercise investment discretion over LP's 
investments in portfolio companies as well as to provide certain other 
administrative services for LP. Mr. Y is the managing member of LLC and 
as such is the person who actually makes the investment decisions on 
behalf of LLC. Mr. Y has no management contract with either LLC or LP. 
In this example, LLC is an associate of LP, while Mr. Y is not. Compare 
with Example 7 where officers and directors of a corporation are not 
associates of the corporation.
    12. GP is the general partner of LP and has entered into a 
management contract to exercise investment discretion over LP's 
investments in portfolio companies. GP has entered into a contract with 
CORP, under which CORP will manage building maintenance and certain back 
office functions (e.g., maintenance of phones and computers, accounting, 
IT and human resources) for LP. GP is an associate of LP because it 
manages LP's investments. However, the management services provided by 
CORP do not constitute operational management, therefore, CORP is not an 
associate of LP.

    (e)(1)(i) United States person. The term United States person means 
a person the ultimate parent entity of which--
    (A) Is incorporated in the United States, is organized under the 
laws of the United States or has its principal offices within the United 
States; or
    (B) If a natural person, either is a citizen of the United States or 
resides in the United States.
    (ii) United States issuer. The term United States issuer means an 
issuer which is incorporated in the United States, is organized under 
the laws of the United States or has its principal offices within the 
United States.
    (2)(i) Foreign person. The term foreign person means a person the 
ultimate parent entity of which--
    (A) Is not incorporated in the United States, is not organized under 
the laws of the United States and does not have its principal offices 
within the United States; or
    (B) If a natural person, neither is a citizen of the United States 
nor resides in the United States.
    (ii) Foreign issuer. The term foreign issuer means an issuer which 
is not incorporated in the United States, is not organized under the 
laws of the United States and does not have its principal offices within 
the United States.
    (f)(1)(i) Voting securities. The term voting securities means any 
securities which at present or upon conversion entitle the owner or 
holder thereof to vote for the election of directors of the issuer, or 
of an entity included within the same person as the issuer.
    (ii) Non-corporate interest. The term ``non-corporate interest'' 
means an interest in any unincorporated entity which gives the holder 
the right to any profits of the entity or in the event of dissolution of 
that entity the right to any of its assets after payment of its debts. 
These unincorporated entities include, but are not limited to, general 
partnerships, limited partnerships, limited liability partnerships, 
limited liability companies, cooperatives and business trusts; but these 
unincorporated entities do not include trusts that are irrevocable and/
or in which the settlor does not retain a reversionary interest and any 
interest in

[[Page 641]]

such a trust is not a non-corporate interest as defined by this rule.
    (2) Convertible voting security. The term convertible voting 
security means a voting security which presently does not entitle its 
owner or holder to vote for directors of any entity.
    (3) Conversion. The term conversion means the exercise of a right 
inherent in the ownership or holding of particular voting securities to 
exchange such securities for securities which presently entitle the 
owner or holder to vote for directors of the issuer or of any entity 
included within the same person as the issuer.

    Examples: 1. The acquisition of convertible debentures which are 
convertible into common stock is an acquisition of ``voting 
securities.'' However, Sec.802.31 exempts the acquisition of such 
securities from the requirements of the act, provided that they have no 
present voting rights.
    2. Options and warrants are also ``voting securities'' for purposes 
of the act, because they can be exchanged for securities with present 
voting rights. Section 802.31 exempts the acquisition of options and 
warrants as well, since they do not themselves have present voting 
rights and hence are convertible voting securities. Notification may be 
required prior to exercising options and warrants, however.
    3. Assume that X has issued preferred shares which presently entitle 
the holder to vote for directors of X, and that these shares are 
convertible into common shares of X. Because the preferred shares confer 
a present right to vote for directors of X, they are ``voting 
securities.'' (See Sec.801.1(f)(1).) They are not ``convertible voting 
securities,'' however, because the definition of that term excludes 
securities which confer a present right to vote for directors of any 
entity. (See Sec.801.1(f)(2).) Thus, an acquisition of these preferred 
shares issued by X would not be exempt as an acquisition of 
``convertible voting securities.'' (See Sec.802.31.) If the criteria 
in section 7A(a) are met, an acquisition of X's preferred shares would 
be subject to the reporting and waiting period requirements of the Act. 
Moreover, the conversion of these preferred shares into common shares of 
X would also be potentially reportable, since the holder would be 
exercising a right to exchange particular voting securities for 
different voting securities having a present right to vote for directors 
of the issuer. Because this exchange would be a ``conversion,'' Sec.
801.30 would apply. (See Sec.801.30(a)(6).)

    (g)(1) Tender offer. The term tender offer means any offer to 
purchase voting securities which is a tender offer within the meaning of 
section 14 of the Securities Exchange Act of 1934, 15 U.S.C. 78n.
    (2) Cash tender offer. The term cash tender offer means a tender 
offer in which cash is the only consideration offered to the holders of 
the voting securities to be acquired.
    (3) Non-cash tender offer. The term non-cash tender offer means any 
tender offer which is not a cash tender offer.
    (h) Notification threshold. The term ``notification threshold'' 
means:
    (1) An aggregate total amount of voting securities of the acquired 
person valued at greater than $50 million (as adjusted) but less than 
$100 million (as adjusted);
    (2) An aggregate total amount of voting securities of the acquired 
person valued at $100 million (as adjusted) or greater but less than 
$500 million (as adjusted);
    (3) An aggregate total amount of voting securities of the acquired 
person valued at $500 million (as adjusted) or greater;
    (4) Twenty-five percent of the outstanding voting securities of an 
issuer if valued at greater than $1 billion (as adjusted); or
    (5) Fifty percent of the outstanding voting securities of an issuer 
if valued at greater than $50 million (as adjusted).
    (i)(1) Solely for the purpose of investment. Voting securities are 
held or acquired ``solely for the purpose of investment'' if the person 
holding or acquiring such voting securities has no intention of 
participating in the formulation, determination, or direction of the 
basic business decisions of the issuer.

    Example: If a person holds stock ``solely for the purpose of 
investment'' and thereafter decides to influence or participate in 
management of the issuer of that stock, the stock is no longer held 
``solely for the purpose of investment.''

    (2) Investment assets. The term investment assets means cash, 
deposits in financial institutions, other money market instruments, and 
instruments evidencing government obligations.
    (j) Engaged in manufacturing. A person is engaged in manufacturing 
if it produces and derives annual sales or revenues in excess of $1 
million from

[[Page 642]]

products within industries in Sectors 31-33 as coded by the North 
American Industry Classification System (2002 Edition) published by the 
Executive Office of the President, Office of Management and Budget.
    (k) United States. The term United States shall include the several 
States, the territories, possessions, and commonwealths of the United 
States, and the District of Columbia.
    (l) Commerce. The term commerce shall have the meaning ascribed to 
that term in section 1 of the Clayton Act, 15 U.S.C. 12, or section 4 of 
the Federal Trade Commission Act, 15 U.S.C. 44.
    (m) The act. References to ``the act'' refer to Section 7A of the 
Clayton Act, 15 U.S.C. 18a, as added by section 201 of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, Pub. L. 94-435, 90 Stat. 
1390, and as amended by Pub. L. 106-553, 114 Stat. 2762. References to 
``Section 7A( )'' refer to subsections of Section 7A of the Clayton Act. 
References to ``this section'' refer to the section of these rules in 
which the term appears.
    (n) (as adjusted). The parenthetical ``(as adjusted)'' refers to the 
adjusted values published in the Federal Register notice titled 
``Revised Jurisdictional Threshold for Section 7A of the Clayton Act.'' 
This Federal Register notice will be published in January of each year 
and the values contained therein will be effective as of the effective 
date published in the Federal Register notice and will remain effective 
until superseded in the next calendar year. The notice will also be 
available at http://www.ftc.gov. Such adjusted values will be calculated 
in accordance with Section 7A(a)(2)(A) and will be rounded up to the 
next highest $100,000.
    (o) All commercially significant rights. For purposes of paragraph 
(g) of Sec.801.2, the term all commercially significant rights means 
the exclusive rights to a patent that allow only the recipient of the 
exclusive patent rights to use the patent in a particular therapeutic 
area (or specific indication within a therapeutic area).
    (p) Limited manufacturing rights. For purposes of paragraph (o) of 
this section and paragraph (g) of Sec.801.2, the term limited 
manufacturing rights means the rights retained by a patent holder to 
manufacture the product(s) covered by a patent when all other exclusive 
rights to the patent within a therapeutic area (or specific indication 
within a therapeutic area) have been transferred to the recipient of the 
patent rights. The retained right to manufacture is limited in that it 
is retained by the patent holder solely to provide the recipient of the 
patent rights with product(s) covered by the patent (which either the 
patent holder alone or both the patent holder and the recipient may 
manufacture).
    (q) Co-rights. For purposes of paragraph (o) of this section and 
paragraph (g) of Sec.801.2, the term co-rights means shared rights 
retained by the patent holder to assist the recipient of the exclusive 
patent rights in developing and commercializing the product covered by 
the patent. These co-rights include, but are not limited to, co-
development, co-promotion, co-marketing and co-commercialization.

[43 FR 33537, July 31, 1978, as amended at 48 FR 34429, July 29, 1983; 
52 FR 20063, May 29, 1987; 66 FR 8687, Feb. 1, 2001; 66 FR 23565, May 9, 
2001; 68 FR 2430, Jan. 17, 2003; 70 FR 4990, Jan. 31, 2005; 70 FR 11510, 
Mar. 8, 2005; 70 FR 73372, Dec. 12, 2005; 70 FR 77313, Dec. 30, 2005; 76 
FR 42479, July 19, 2011; 78 FR 68712, Nov. 15, 2013; 83 FR 32770, July 
16, 2018]



Sec.801.2  Acquiring and acquired persons.

    (a) Any person which, as a result of an acquisition, will hold 
voting securities or assets, either directly or indirectly, or through 
fiduciaries, agents, or other entities acting on behalf of such person, 
is an acquiring person.

    Example: Assume that corporations A and B, which are each ultimate 
parent entitles of their respective ``persons,'' created a joint 
venture, corporation V, and that each holds half of V's shares. 
Therefore, A and B each control V (see Sec.801.1(b)), and V is 
included within two persons, ``A'' and ``B.'' Under this section, if V 
is to acquire corporation X, both ``A'' and ``B'' are acquiring persons.

    (b) Except as provided in paragraphs (a) and (b) of Sec.801.12, 
the person(s) within which the entity whose assets or voting securities 
are being acquired is included, is an acquired person.

    Examples: 1. Assume that person ``Q'' will acquire voting securities 
of corporation X

[[Page 643]]

held by ``P'' and that X is not included within person ``P.'' Under this 
section, the acquired person is the person within which X is included, 
and is not ``P.''
    2. In the example to paragraph (a) of this section, if V were to be 
acquired by X, then both ``A'' and ``B'' would be acquired persons.

    (c) For purposes of the act and these rules, a person may be an 
acquiring person and an acquired person with respect to separate 
acquisitions which comprise a single transaction.
    (d)(1)(i) Mergers and consolidations are transactions subject to the 
act and shall be treated as acquisitions of voting securities.
    (ii) In a merger, the person which, after consummation, will include 
the corporation in existence prior to consummation which is designated 
as the surviving corporation in the plan, agreement, or certificate of 
merger required to be filed with State authorities to effectuate the 
transaction shall be deemed to have made an acquisition of voting 
securities.
    (2)(i) Any person party to a merger or consolidation is an acquiring 
person if, as a result of the transaction, such person will hold any 
assets or voting securities which it did not hold prior to the 
transaction.
    (ii) Any person party to a merger or consolidation is an acquired 
person if, as a result of the transaction, the assets or voting 
securities of any entity included within such person will be held by any 
other person.
    (iii) All persons party to a transaction as a result of which all 
parties will lose their separate pre-acquisition identities or will 
become wholly owned subsidiaries of a newly formed entity shall be both 
acquiring and acquired persons. This includes any combination of 
corporations and unincorporated entities consolidating into any newly 
formed entity. In such transactions, each consolidating entity is deemed 
to be acquiring all of the voting securities (in the case of a 
corporation) or interests (in the case of an unincorporated entity) of 
each of the others.

    Examples: 1. Corporation A (the ultimate parent entity included 
within person ``A'') proposes to acquire Y, a wholly-owned subsidiary of 
B (the ultimate parent entity included within person ``B''). The 
transaction is to be carried out by merging Y into X, a wholly-owned 
subsidiary of A, with X surviving, and by distributing the assets of X 
to B, the only shareholder of Y. The assets of X consist solely of cash 
and the voting securities of C, an entity unrelated to ``A'' or ``B''. 
Since X is designated the surviving corporation in the plan or agreement 
of merger or consolidation and since X will be included in ``A'' after 
consummation of the transaction, ``A'' will be deemed to have made an 
acquisition of voting securities. In this acquisition, ``A'' is an 
acquiring person because it will hold assets or voting securities it did 
not hold prior to the transaction, and ``B'' is an acquired person 
because the assets or the voting securities of an entity previously 
included within it will be held by A as a result of the acquisition. B 
will hold the cash and voting securities of C as a result of the 
transaction, but since Sec.801.21 applies, this acquisition is not 
reportable. ``A'' is therefore an acquiring person only, and ``B'' is an 
acquired person only. ``B'' may, however, have a separate reporting 
obligation as an acquiring person in a separate transaction involving 
the voting securities of C.
    2. In the above example, suppose the consideration for Y consists of 
$8 million worth of the voting securities of A. With regard to the 
transfer of this consideration, ``B'' is an acquiring person because it 
will hold voting securities it did not previously hold, and ``A'' is an 
acquired person because its voting securities will be held by B. Since 
these voting securities are worth less than $50 million (as adjusted), 
the acquisition of these securities is not reportable. ``A'' will 
therefore report as an acquiring person only and ``B'' as an acquired 
person only.
    3. In the above example, suppose that, as consideration for Y, A 
transfers to B a manufacturing plant valued in excess of $50 million (as 
adjusted). ``B'' is thus an acquiring person and ``A'' an acquired 
person in a reportable acquisition of assets. ``A'' and ``B'' will each 
report as both an acquiring and an acquired person in this transaction 
because each occupies each role in a reportable acquisition.
    4. Corporations A (the ultimate parent entity in person ``A'') and B 
(the ultimate parent entity in person ``B'') propose to consolidate into 
C, a newly formed corporation. All shareholders of A and B will receive 
shares of C, and both A and B will lose their separate pre-acquisition 
identities. ``A'' and ``B'' are both acquiring and acquired persons 
because they are parties to a transaction in which all parties lose 
their separate pre-acquisition identities
    5. Partnership A and Corporation B form a new LLC in which they 
combine their businesses. A and B cease to exist and partners of A and 
shareholders of B receive membership interests in the new LLC. For 
purposes of determining reportability, A is deemed to be acquiring 100 
percent of the voting securities

[[Page 644]]

of B and B is deemed to be acquiring 100 percent of the interests of A. 
Pursuant to Sec.803.9(b) of this chapter, even if such a transaction 
consists of two reportable acquisitions, only one filing fee is 
required.

    (e) Whenever voting securities or assets are to be acquired from an 
acquiring person in connection with an acquisition, the acquisition of 
voting securities or assets shall be separately subject to the act.
    (f)(1)(i) In an acquisition of non-corporate interests which results 
in an acquiring person controlling the entity, that person is deemed to 
hold all of the assets of the entity as a result of the acquisition. The 
acquiring person is the person acquiring control of the entity and the 
acquired person is the pre-acquisition ultimate parent entity of the 
entity.
    (ii) The value of an acquisition described in paragraph (f)(1)(i) of 
this section is determined in accordance with Sec.801.10(d).
    (2) Any contribution of assets or voting securities to an existing 
unincorporated entity or to any successor thereof is deemed an 
acquisition of such voting securities or assets by the ultimate parent 
entity of that entity and is not subject to Sec.801.50.

    Examples: 1. A, B and C each hold 33\1/3\ percent of the interests 
in Partnership X. D contributes assets valued in excess of $50 million 
(as adjusted) to X and as a result D receives 40 percent of the 
interests in X and A, B and C are each reduced to 20 percent. 
Partnership X is deemed to be acquiring the assets from D, in a 
transaction which may be reportable. This is not treated as a formation 
of a new partnership. Because no person will control Partnership X, no 
additional filing is required by any of the four partners.
    2. LLC X is its own ultimate parent entity. A contributes a 
manufacturing plant valued in excess of $200 million (as adjusted) to X 
which issues new interests to A resulting in A having a 50% interest in 
X. A is acquiring non-corporate interests which confer control of X and 
therefore will file as an acquiring person. Because A held the plant 
prior to the transaction and continues to hold it through its 
acquisition of control of LLC X after the transaction is completed no 
acquisition of the plant has occurred and LLC X is therefore not an 
acquiring person.

    (3) Any person who acquires control of an existing not-for-profit 
corporation which has no outstanding voting securities is deemed to be 
acquiring all of the assets of that corporation.
    Example: A becomes the sole corporate member of not-for-profit 
corporation B and accordingly has the right to designate all of the 
directors of B. A is deemed to be acquiring all of the assets of B as a 
result.
    (g) Transfers of patent rights within NAICS Industry Group 3254.
    (1) This paragraph applies only to patents covering products whose 
manufacture and sale would generate revenues in NAICS Industry Group 
3254, including:

325411 Medical and Botanical Manufacturing
325412 Pharmaceutical Preparation Manufacturing
325413 In-Vitro Diagnostic Substance Manufacturing
325414 Biological Product (except Diagnostic) Manufacturing

    (2) The transfer of patent rights covered by this paragraph 
constitutes an asset acquisition; and
    (3) Patent rights are transferred if and only if all commercially 
significant rights to a patent, as defined in Sec.801.1(o), for any 
therapeutic area (or specific indication within a therapeutic area) are 
transferred to another entity. All commercially significant rights are 
transferred even if the patent holder retains limited manufacturing 
rights, as defined in Sec.801.1(p), or co-rights, as defined in Sec.
801.1(q).
    Examples: Although these examples refer to licenses, which are 
typically used to effect the transfer of pharmaceutical patent rights to 
a recipient of those rights, other methods of transferring patent 
rights, by assignment or grant, among others, are similarly covered by 
these rules and examples.
    1. B holds a patent relating to an active pharmaceutical ingredient 
for cardiovascular use. A will obtain a license from B that grants A the 
exclusive right to all of B's patent rights except that both A and B can 
manufacture the active pharmaceutical ingredient to be sold by A under 
the exclusive license agreement. B retains limited manufacturing rights 
as defined in Sec.801.1(p) because it retains the right to manufacture 
the product covered by the patent for cardiovascular use solely to 
provide the product to A. A is still receiving all commercially 
significant rights to the

[[Page 645]]

patent, and the transfer of these rights via the license constitutes an 
asset acquisition. Further, even if B retained all rights to manufacture 
(so that A could not manufacture), B would still retain limited 
manufacturing rights, and A would still receive all commercially 
significant rights to the patent. Thus, the transfer of these rights via 
the license would also constitute an asset acquisition.
    2. B holds a patent for an in-vitro diagnostic substance relating to 
arthritis. B will grant A an exclusive license to all of B's patent 
rights for all veterinary indications. B retains all patent rights for 
all human indications. The exclusive license to all commercially 
significant rights for all veterinary indications is an asset 
acquisition because A is receiving all rights to the patent for a 
therapeutic area.
    3. B holds a patent relating to a biological product. B will grant A 
an exclusive license to all of B's patent rights in all therapeutic 
areas. A and B are also entering into a co-development and co-
commercialization agreement under which B will assist A in developing, 
marketing and promoting the product to physicians. B cannot separately 
use the patent in the same therapeutic area as A under the co-
development and co-commercialization agreement. A will book all sales of 
the product and will pay B a portion of the profits resulting from those 
sales. Despite B's retention of these co-rights, A is still receiving 
all commercially significant rights. The licensing agreement is an asset 
acquisition. This would be an asset acquisition even if B also retained 
limited manufacturing rights.
    4. B holds a patent relating to an active pharmaceutical ingredient 
and a bulk compound that contains that active pharmaceutical ingredient. 
B will grant A an exclusive license to use the bulk compound to 
manufacture and sell a finished product in the neurological therapeutic 
area. B cannot manufacture the active pharmaceutical ingredient or bulk 
compound for any other finished products in the neurological area, but 
it can manufacture either for use by another party in a different 
therapeutic area. Despite B's retention of manufacturing rights of the 
active pharmaceutical ingredient and bulk compound for therapeutic areas 
other than neurology, A is still receiving all commercially significant 
rights in a therapeutic area and the licensing agreement is the 
acquisition of an asset.
    5. B holds a patent related to a pharmaceutical product that has 
been approved by the FDA. B will enter into an exclusive distribution 
agreement with A that will give A the right to distribute the product in 
the U.S. B will manufacture the product for A and will receive a portion 
of all revenues from the sale of the product. A receives no exclusive 
patent rights under the distribution agreement. A has not obtained all 
commercially significant rights to the patent because it is only 
handling the logistics of selling and distributing the product on B's 
behalf. Therefore, the exclusive distribution agreement is not an asset 
acquisition.

[43 FR 33537, July 31, 1978, as amended at 48 FR 34431, July 29, 1983; 
66 FR 8688, Feb. 1, 2001; 70 FR 4990, Jan. 31, 2005; 70 FR 11510, Mar. 
8, 2005; 78 FR 68713, Nov. 15, 2013]



Sec.801.3  Activities in or affecting commerce.

    Section 7A(a)(1) is satisfied if any entity included within the 
acquiring person, or any entity included within the acquired person, is 
engaged in commerce or in any activity affecting commerce.

    Examples: 1. A foreign subsidiary of a U.S. corporation seeks to 
acquire a foreign business. The acquiring person includes the U.S. 
parent corporation. If the U.S. corporation, or the foreign subsidiary, 
or any entity controlled by either one of them, is engaged in commerce 
or in any activity affecting commerce, section 7A(a)(1) is satisfied. 
Note, however, that Sec. Sec.802.50-802.52 may exempt certain 
acquisitions of foreign businesses or assets.
    2. Even if none of the entities within the acquiring person is 
engaged in commerce or in any activity affecting commerce, the 
acquisition nevertheless satisfies section 7A(a)(1) if any entity 
included within the acquired person is so engaged.

[43 FR 33537, July 31, 1978; 43 FR 36054, Aug. 15, 1978]



Sec.801.4  Secondary acquisitions.

    (a) Whenever as the result of an acquisition (the ``primary 
acquisition'')

[[Page 646]]

an acquiring person controls an entity which holds voting securities of 
an issuer that entity does not control, then the acquiring person's 
acquisition of the issuer's voting securities is a secondary acquisition 
and is separately subject to the act and these rules.
    (b) Exemptions. (1) No secondary acquisition shall be exempt from 
the requirements of the act solely because the related primary 
acquisition is exempt from the requirements of the act.
    (2) A secondary acquisition may itself be exempt from the 
requirements of the act under section 7A(c) or these rules.

    Examples: 1. Assume that acquiring person ``A'' proposes to acquire 
all the voting securities of corporation B. This section provides that 
the acquisition of voting securities of issuers held but not controlled 
by B or by any entity which B controls are secondary acquisitions by 
``A.'' Thus, if B holds more than $50 million (as adjusted) of the 
voting securities of corporation X (but does not control X), and ``A'' 
and ``X'' satisfy Sections 7A (a)(1) and (a)(2), ``A'' must file 
notification separately with respect to its secondary acquisition of 
voting securities of X. ``X'' must file notification within fifteen days 
(or in the case of a cash tender offer, 10 days) after ``A'' files, 
pursuant to Sec.801.30.
    2. If in the previous example ``A'' acquires only 50 percent of the 
voting securities of B, the result would remain the same. Since ``A'' 
would be acquiring control of B, all of B's holdings in X would be 
attributable to ``A.''
    3. In the previous examples, if ``A's'' acquisition of the voting 
securities of B is exempt, ``A'' may still be required to file 
notification with respect to its secondary acquisition of the voting 
securities of X, unless that acquisition is itself exempt.
    4. In the previous examples, assume A's acquisition of B is 
accomplished by merging B into A's subsidiary, S, and S is designated 
the surviving corporation. B's voting securities are cancelled, and B's 
shareholders are to receive cash in return. Since S is designated the 
surviving corporation and A will control S and also hold assets or 
voting securities it did not hold previously, ``A'' is an acquiring 
person in an acquisition of voting securities by virtue of Sec. Sec.
801.2 (d)(1)(ii) and (d)(2)(i). A will be deemed to have acquired 
control of B, and A's resulting acquisition of the voting securities of 
X is a secondary acquisition. Since cash, the only consideration paid 
for the voting securities of B, is not considered an asset of the person 
from which it is acquired, by virtue of Sec.801.2(d)(2) ``A'' is an 
acquiring person only. The acquisition of the minority holding of B in X 
is therefore a secondary acquisition by ``A,'' but since ``B'' is an 
acquired person only, ``B'' is not deemed to make any secondary 
acquisition in this transaction.
    5. In previous Example 4, suppose the consideration paid by A for 
the acquisition of B is in excess of $50 million (as adjusted) worth of 
the voting securities of A. By virtue of Sec.801.2(d)(2), ``A'' and 
``B'' are each both acquiring and acquired persons. A will still be 
deemed to have acquired control of B, and therefore the resulting 
acquisition of the voting securities of X is a secondary acquisition. 
Although ``B'' is now also an acquiring person, unless B gains control 
of A in the transaction, B still makes no secondary acquisitions of 
stock held by A. If the consideration paid by A is the voting securities 
of one of A's subsidiaries and B thereby gains control of that 
subsidiary, B will make secondary acquisitions of any minority holdings 
of that subsidiary.
    6. Assume that A and B propose through consolidation to create a new 
corporation, C, and that both A and B will lose their corporate 
identities as a result. Since no participating corporation in existence 
prior to consummation is the designated surviving corporation, ``A'' and 
``B'' are each both acquiring and acquired persons by virtue of Sec.
801.2(d)(2)(iii). The acquisition of the minority holdings of entities 
within each are therefore potential secondary acquisitions by the other.

    (c) Where the primary acquisition is--
    (1) A cash tender offer, the waiting period procedures established 
for cash tender offers pursuant to sections 7A(a) and 7A(e) of the act 
shall be applicable to both the primary acquisition and the secondary 
acquisition;
    (2) A non-cash tender offer, the waiting period procedures 
established for tender offers pursuant to section 7A(e)(2) of the act 
shall be applicable to both the primary acquisition and the secondary 
acquisition.

[43 FR 33537, July 31, 1978, as amended at 48 FR 34432, July 29, 1983; 
52 FR 7080, Mar. 6, 1987; 66 FR 8688, Feb. 1, 2001; 67 FR 11902, Mar. 
18, 2002; 70 FR 4990, Jan. 31, 2005; 70 FR 11511, Mar. 8, 2005]



Sec.801.10  Value of voting securities, non-corporate interests
and assets to be acquired.

    Except as provided in Sec.801.13, the value of voting securities 
and assets to be acquired shall be determined as follows:
    (a) Voting securities. (1) If the security is traded on a national 
securities exchange or is authorized to be quoted in

[[Page 647]]

an interdealer quotation system of a national securities association 
registered with the U.S. Securities and Exchange Commission--
    (i) And the acquisition price has been determined, the value shall 
be the market price or the acquisition price, whichever is greater; or 
if
    (ii) The acquisition price has not been determined, the value shall 
be the market price.
    (2) If paragraph (a)(1) of this section is inapplicable--
    (i) But the acquisition price has been determined, the value shall 
be the acquisition price; or if
    (ii) The acquisition price has not been determined, the value shall 
be the fair market value.
    (b) Assets. The value of assets to be acquired shall be the fair 
market value of the assets, or, if determined and greater than the fair 
market value, the acquisition price.
    (c) For purposes of this section and Sec.801.13(a)(2):
    (1) Market price. (i) For acquisitions subject to Sec.801.30, the 
market price shall be the lowest closing quotation, or, in an 
interdealer quotation system, the lowest closing bid price, within the 
45 calendar days prior to the receipt of the notice required by Sec.
803.5(a) or prior to the consummation of the acquisition.
    (ii) For acquisitions not subject to Sec.801.30, the market price 
shall be the lowest closing quotation, or, in an interdealer quotation 
system, the lowest closing bid price, within the 45 or fewer calendar 
days which are prior to the consummation of the acquisition but not 
earlier than the day prior to the execution of the contract, agreement 
in principle or letter of intent to merge or acquire.
    (iii) When the security was not traded within the period specified 
by this paragraph, the last closing quotation or closing bid price 
preceding such period shall be used. If such closing quotations are 
available in more than one market, the person filing notification may 
select any such quotation.
    (2) Acquisition price. The acquisition price shall include the value 
of all consideration for such voting securities, non-corporate interests 
or assets to be acquired.
    (3) Fair market value. The fair market value shall be determined in 
good faith by the board of directors of the ultimate parent entity 
included within the acquiring person, or, if unincorporated, by 
officials exercising similar functions; or by an entity delegated that 
function by such board or officials. Such determination must be made as 
of any day within 60 calendar days prior to the filing of the 
notification required by the act, or, if such notification has not been 
filed, within 60 calendar days prior to the consummation of the 
acquisition.

    Example: Corporation A, the ultimate parent entity in person ``A,'' 
contracts to acquire assets of corporation B, and the contract provides 
that the acquisition price is not to be determined until after the 
acquisition is effected. Under paragraph (b) of this section, for 
purposes of the act, the value of the assets is to be the fair market 
value of the assets. Under paragraph (c)(3), the board of directors of 
corporation A must in good faith determine the fair market value. That 
determination will control for 60 days whether ``A'' and ``B'' must 
observe the requirements of the act; that is, ``A'' and ``B'' must 
either file notification or consummate the acquisition within that time. 
If ``A'' and ``B'' neither file nor consummate within 60 days, the 
parties would no longer be entitled to rely on the determination of fair 
market value, and, if in doubt about whether required to observe the 
requirements of the act, would have to make a second determination of 
fair market value.
    (d) Value of interests in an unincorporated entity. In an 
acquisition of non-corporate interests that confers control of either an 
existing or a newly-formed unincorporated entity, the value of the non-
corporate interests held as a result of the acquisition is the sum of 
the acquisition price of the interests to be acquired (provided the 
acquisition price has been determined), and the fair market value of any 
of the interests in the same unincorporated entity held by the acquiring 
person prior to the acquisition; or, if the acquisition price has not 
been determined, the fair market value of interests held as a result of 
the acquisition.

[43 FR 33537, July 31, 1978, as amended at 66 FR 8688, Feb. 1, 2001; 70 
FR 11511, Mar. 8, 2005; 76 FR 42482, July 19, 2011]

[[Page 648]]



Sec.801.11  Annual net sales and total assets.

    (a) The annual net sales and total assets of a person shall include 
all net sales and all assets held, whether foreign or domestic, except 
as provided in paragraphs (d) and (e) of this section.
    (b) Except for the total assets of a corporation or unincorporated 
entity at the time of its formation which shall be determined pursuant 
to Sec. 801.40(d) or 801.50(c) the annual net sales and total assets of 
a person shall be as stated on the financial statements specified in 
paragraph (c) of this section: Provided:
    (1) That the annual net sales and total assets of each entity 
included within such person are consolidated therein. If the annual net 
sales and total assets of any entity included within the person are not 
consolidated in such statements, the annual net sales and total assets 
of the person filing notification shall be recomputed to include the 
nonduplicative annual net sales and nonduplicative total assets of each 
such entity; and
    (2) That such statements, and any restatements pursuant to paragraph 
(b)(1) of this section (insofar as possible), have been prepared in 
accordance with the accounting principles normally used by such person, 
and are of a date not more than 15 months prior to the date of filing of 
the notification required by the act, or the date of consummation of the 
acquisition.

    Example: Person ``A'' is composed of entity A, subsidiaries B1 and 
B2 which A controls, subsidiaries C1 and C2 which B1 controls, and 
subsidiary C3 which B2 controls. Suppose that A's most recent financial 
statement consolidates the annual net sales and total assets of B1, C1, 
and C2, but not B2 or C3. In order to determine whether person ``A'' 
meets the criteria of Section 7A(a)(2)(B), as either an acquiring or an 
acquired person, A must recompute its annual net sales and total assets 
to reflect consolidation of the nonduplicative annual net sales and 
nonduplicative total assets of B2 and C3.

    (c) Subject to the provisions of paragraph (b) of this section:
    (1) The annual net sales of a person shall be as stated on the last 
regularly prepared annual statement of income and expense of that 
person; and
    (2) The total assets of a person shall be as stated on the last 
regularly prepared balance sheet of that person.

    Example: Suppose ``A'' sells assets to ``B'' on January 1. ``A's'' 
next regularly prepared balance sheet, dated February 1, reflects that 
sale. On March 1, ``A'' proposes to sell more assets to ``B.'' ``A's'' 
total assets on March 1 are ``A's'' total assets as stated on its 
February 1 balance sheet.

    (d) No assets of any natural person or of any estate of a deceased 
natural person, other than investment assets, voting securities and 
other income-producing property, shall be included in determining the 
total assets of a person.
    (e) Subject to the limitations of paragraph (d) of this section, the 
total assets of:
    (1) An acquiring person that does not have the regularly prepared 
balance sheet described in paragraph (c)(2) of this section shall be, 
for acquisitions of each acquired person:
    (i) All assets held by the acquiring person at the time of the 
acquisition,
    (ii) Less all cash that will be used by the acquiring person as 
consideration in an acquisition of assets from, or in an acquisition of 
voting securities issued by, or in an acquisition of non-corporate 
interests of, that acquired person (or an entity within that acquired 
person) and less all cash that will be used for expenses incidental to 
the acquisition, and less all securities of the acquired person (or an 
entity within that acquired person); and
    (2) An acquired person that does not have the regularly prepared 
balance sheet described in paragraph (c)(2) of this section shall be 
either
    (i) All assets held by the acquired person at the time of the 
acquisition, or
    (ii) Where applicable, its assets as determined in accordance with 
Sec.801.40(d).

    Examples: For examples 1-4, assume that A is a newly-formed company 
which is not controlled by any other entity. Assume also that A has no 
sales and does not have the balance sheet described in paragraph (c)(2) 
of this section.
    1. A will borrow $105 million in cash and will purchase assets from 
B for $100 million. In order to establish whether A's acquisition of B's 
assets is reportable, A's total assets are determined by subtracting the 
$100 million that it will use to acquire B's assets

[[Page 649]]

from the $105 million that A will have at the time of the acquisition. 
Therefore, A has total assets of less than $10 million (as adjusted) and 
does not meet any size-of-person test of Section 7A(a)(2).
    2. Assume that A will acquire assets from B and that, at the time it 
acquires B's assets, A will have $85 million in cash and a factory 
valued at $60 million. A will exchange the factory and $80 million cash 
for B's assets. To determine A's total assets, A should subtract from 
the $85 million cash the $80 million that will be used to acquire assets 
from B and add the remainder to the value of the factory. Thus, A has 
total assets of $65 million. Even though A will use the factory as part 
of the consideration for the acquisition, the value of the factory must 
still be included in A's total assets. Note that A and B may also have 
to report the acquisition by B of A's non-cash assets (i.e., the 
factory). For that acquisition, the value of the cash A will use to buy 
B's assets is not excluded from A's total assets. Thus, in the 
acquisition by B, A's total assets are $145 million.
    3. Assume that company A will make a $150 million acquisition and 
that it must pay a loan origination fee of $5 million. A borrows $161 
million. A does not meet the size-of-person test in Section 7A(a)(2) 
because its total assets are less than $10 million (as adjusted). $150 
million is excluded because it will be consideration for the acquisition 
and $5 million is excluded because it is an expense incidental to the 
acquisition. Therefore, A is only a $6 million person. Note that if A 
were making an acquisition valued at over $200 million (as adjusted), 
the acquisition would be reportable without regard to the sizes of the 
persons involved.
    4. Assume that ``A'' borrows $195 million to acquire $100 million of 
assets from ``B'' and $60 million of voting securities of ``C.'' The 
balance of the loan will be used for working capital. To determine its 
size for purposes of its acquisition from ``B,'' ``A'' subtracts the 
$100 million that it will use for that acquisition. Therefore, A has 
total assets of $95 million for purposes of its acquisition from ``B.'' 
To determine its size with respect to its acquisition from ``C,'' ``A'' 
subtracts the $60 million that will be paid for ``C's'' voting 
securities. Thus, for purposes of its acquisition from ``C'', ``A'' has 
total assets of $135 million. In the first acquisition ``A'' meets the 
$10 million (as adjusted) size-of-person test and in the second 
acquisition ``A'' meets the $100 million (as adjusted) size-of-person 
test of Section 7A(a)(2).

[43 FR 33537, July 31, 1978, as amended at 48 FR 34429, July 29, 1983; 
52 FR 7080, Mar. 6, 1987; 66 FR 8688, Feb. 1, 2001; 70 FR 4990, Jan. 31, 
2005; 70 FR 11511, Mar. 8, 2005; 70 FR 73372, Dec. 12, 2005]



Sec.801.12  Calculating percentage of voting securities.

    (a) Voting securities. Whenever the act or these rules require 
calculation of the percentage of voting securities to be held or 
acquired, the issuer whose voting securities are being acquired shall be 
deemed the ``acquired persons.''

    Example: Person ``A'' is composed of corporation A1 and subsidiary 
A2; person ``B'' is composed of corporation B1 and subsidiary B2. Assume 
that A2 proposes to sell assets to B1 in exchange for common stock of 
B2. Under this paragraph, for purposes of calculating the percentage of 
voting securities to be held, the ``acquired person'' is B2. For all 
other purposes, the acquired person is ``B.'' (For all purposes, the 
``acquiring persons'' are ``A'' and ``B.'')

    (b) Percentage of voting securities. (1) Whenever the act or these 
rules require calculation of the percentage of voting securities of an 
issuer to be held or acquired, the percentage shall be the sum of the 
separate ratios for each class of voting securities, expressed as a 
percentage. The ratio for each class of voting securities equals:
    (i)(A) The number of votes for directors of the issuer which the 
holder of a class of voting securities is presently entitled to cast, 
and as a result of the acquisition, will become entitled to cast, 
divided by,
    (B) The total number of votes for directors of the issuer which 
presently may be cast by that class, and which will be entitled to be 
cast by that class after the acquisition, multiplied by,
    (ii)(A) The number of directors that class is entitled to elect, 
divided by (B) the total number of directors.

    Examples: In each of the following examples company X has two 
classes of voting securities, class A, consisting of 1000 shares with 
each share having one vote, and class B, consisting of 100 shares with 
each share having one vote. The class A shares elect four of the ten 
directors and the class B shares elect six of the ten directors.
    In this situation, Sec.801.12(b) requires calculations of the 
percentage of voting securities held to be made according to the 
following formula:
    Number of votes of class A held divided by Total votes of class A 
times Directors elected by class A stock divided by Total number of 
directors


Plus


[[Page 650]]


    Number of votes of class B held divided by Total votes of class B 
times Directors elected by class B stock divided by Total number of 
directors

    1. Assume that company Y holds all 100 shares of class B stock and 
no shares of class A stock. By virtue of its class B holdings, Y has all 
100 of the votes which may be cast by class B stock and can elect six of 
company X's ten directors. Applying the formula which results from the 
rule, Y calculates that it holds 100/100 x 6/10 or 60 percent of the 
voting securities of company X because of its holdings of class B stock 
and no additional percentage derived from holdings of class A stock. 
Consequently, Y holds a total of 60 percent of the voting securities of 
company X.
    2. Assume that company Y holds 500 shares of class A stock and no 
shares of class B stock. By virtue of its class A holdings, Y has 500 of 
the 1000 votes which may be cast by class A to elect four of company X's 
ten directors. Applying the formula, Y calculates that it holds 500/1000 
x 4/10 or 20 percent of the voting securities of company X from its 
holdings of class A stock and no additional percentage derived from 
holdings of class B stock. Consequently, Y holds a total of 20 percent 
of the voting securities of company X.
    3. Assume that company Y holds 500 shares of class A stock and 60 
shares of class B stock. Y calculates that it holds 20 percent of the 
voting securities of company X because of its holdings of class A stock 
(see example 2). Additionally, as a result of its class B holdings Y has 
60 of the 100 votes which may be cast by class B stock to elect six of 
company X's ten directors. Applying the formula, Y calculates that it 
holds 60/100 x 6/10 or 36 percent of the voting securities of company X 
because of its holdings of class B stock. Since the formula requires 
that a person that holds different classes of voting securities of the 
same issuer add together the separate percentages calculated for each 
class, Y holds a total of 56 percent (20 percent plus 36 percent) of the 
voting securities of company X.

    (2) Authorized but unissued voting securities and treasury voting 
securities shall not be considered securities presently entitled to vote 
for directors of the issuer.
    (3) For purposes of determining the number of outstanding voting 
securities of an issuer, a person may rely upon the most recent 
information set forth in filings with the U.S. Securities and Exchange 
Commission, unless such person knows or has reason to believe that the 
information contained therein is inaccurate.

    Examples: 1. In the example to paragraph (a), to determine the 
percentage of B2's voting securities which will be held by ``A'' after 
the transaction, all voting securities of B2 held by ``A,'' the 
``acquiring person'' (including A2 and all other entities included in 
person ``A''), must be aggregated. If ``A'' holds convertible securities 
of B2 which meet the definition of voting securities in Sec.801.1(f), 
these securities are to be disregarded in calculating the percentage of 
voting securities held by ``A.''
    2. Under this formula, any votes obtained by means of proxies from 
other persons are also disregarded in calculating the percentage of 
voting securities to be held or acquired.

[43 FR 33537, July 31, 1978; 43 FR 36054, Aug. 15, 1978, as amended at 
52 FR 7081, Mar. 6, 1987; 66 FR 8689, Feb. 1, 2001]



Sec.801.13  Aggregation of voting securities, assets and 
non-corporate interests.

    (a) Voting securities. (1) Subject to the provisions of Sec.
801.15, and paragraph (a)(3) of this section, all voting securities of 
the issuer which will be held by the acquiring person after the 
consummation of an acquisition shall be deemed voting securities held as 
a result of the acquisition. The value of such voting securities shall 
be the sum of the value of the voting securities to be acquired, 
determined in accordance with Sec.801.10(a), and the value of the 
voting securities held by the acquiring person prior to the acquisition, 
determined in accordance with paragraph (a)(2) of this section.
    (2) The value of voting securities of an issuer held prior to an 
acquisition shall be--
    (i) If the security is traded on a national securities exchange or 
is authorized to be quoted in an interdealer quotation system of a 
national securities association registered with the United States 
Securities and Exchange Commission, the market price calculated in 
accordance with Sec.801.10(c)(1); or
    (ii) If paragraph (a)(2)(i) of this section is not applicable, the 
fair market value determined in accordance with Sec.801.10(c)(3).

    Examples: 1. Assume that acquiring person ``A'' holds in excess of 
$50 million (as adjusted) of the voting securities of X, and is to 
acquire another $1 million of the same voting securities. Since under 
paragraph (a) of

[[Page 651]]

this section all voting securities ``A'' will hold after the acquisition 
are held ``as a result of'' the acquisition, ``A'' will hold in excess 
of $50 million (as adjusted) of the voting securities of X as a result 
of the acquisition. ``A'' must therefore observe the requirements of the 
act before making the acquisition, unless the present acquisition is 
exempt under Section 7A(c), Sec.802.21 or any other rule.
    2. See Sec.801.15 and the examples to that rule.
    3. See Sec.801.20 and the examples to that rule.
    4. On January 1, company A acquired in excess of $50 million (as 
adjusted) of voting securities of company B. ``A'' and ``B'' filed 
notification and observed the waiting period for that acquisition. 
Company A plans to acquire $1 million of assets from company B on May 1 
of the same year. Under Sec.801.13(a)(3), ``A'' and ``B'' do not 
aggregate the value of the earlier acquired voting securities to 
determine whether the acquisition is subject to the act. Therefore, the 
value of the acquisition is $1 million and it is not reportable.

    (3) Voting securities held by the acquiring person prior to an 
acquisition shall not be deemed voting securities held as a result of 
that subsequent acquisition if:
    (i) The acquiring person is, in the subsequent acquisition, 
acquiring only assets; and
    (ii) The acquisition of the previously acquired voting securities 
was subject to the filing and waiting requirements of the act (and such 
requirements were observed) or was exempt pursuant to Sec.802.21.
    (b) Assets. (1) All assets to be acquired from the acquired person 
shall be assets held as a result of the acquisition. The value of such 
assets shall be determined in accordance with Sec.801.10(b).
    (2) If the acquiring person signs a letter of intent or agreement in 
principle to acquire assets from an acquired person, and within the 
previous 180 days the acquiring person has
    (i) Signed a letter of intent or agreement in principle to acquire 
assets from the same acquired person, which is still in effect but has 
not been consummated, or has acquired assets from the same acquired 
person which it still holds; and
    (ii) The previous acquisition (whether consummated or still 
contemplated) was not subject to the requirements of the Act; then for 
purposes of the size-of-transaction test of Section 7A(a)(2), both the 
acquiring and the acquired persons shall treat the assets that were the 
subject of the earlier letter of intent or agreement in principal as 
though they are being acquired as part of the present acquisition. The 
value of any assets which are subject to this paragraph is determined in 
accordance with Sec.801.10(b).

    Examples: 1. On day 1, A enters into an agreement with B to acquire 
assets valued at $45 million. On day 90, A and B sign a letter of intent 
pursuant to which A will acquire additional assets from B, valued at $45 
million. The original transaction has not closed, however, the agreement 
is still in effect. For purposes of the size-of-transaction test in 
Section 7A(a)(2), A must aggregate the value of both of its acquisitions 
and file prior to acquiring the assets if the aggregate value exceeds 
$50 million (as adjusted).
    2. On March 30, A enters into a letter of intent to acquire assets 
of B valued at $45 million. On January 31, earlier the same year, A 
closed on an acquisition of assets of B valued at $45 million. For 
purposes of the size-of-transaction test in Section 7A(a)(2), A must 
aggregate the value of both of its acquisitions and file prior to 
acquiring the assets of B if the aggregate value exceeds $50 million (as 
adjusted).
    3. On day 1, A enters into an agreement with B to acquire assets 
valued in excess of $50 million (as adjusted). A and B file notification 
and observe the waiting period. On day 60, A signs a letter of intent to 
acquire an additional $40 million of assets from B. Because the earlier 
acquisition was subject to the requirements of the Act, A does not 
aggregate the two acquisitions of assets and is free to acquire the 
additional assets of B without filing an additional notification.
    4. On day 1, A consummates an acquisition of assets of B valued at 
$45 million. On day 60, A consummates a sale of the same assets to an 
unrelated third party. On day 120, A enters into an agreement to acquire 
additional assets of B valued at $45 million. Because A no longer holds 
the assets from the previous acquisition, no aggregation of the two 
asset acquisitions is required and A may acquire all of the additional 
assets without filing notification.

    (c)(1) Non-corporate interests. In an acquisition of non-corporate 
interests, any previously acquired non-corporate interests in the same 
unincorporated entity is aggregated with the newly acquired interests. 
The value of such an acquisition is determined in accordance with Sec.
801.10(d) of these rules.
    (2) Other assets or voting securities of the same acquired person. 
An acquisition

[[Page 652]]

of non-corporate interests which does not confer control of the 
unincorporated entity is not aggregated with any other assets or voting 
securities which have been or are currently being acquired from the same 
acquired person.

    Examples: 1. A currently has the right to 30 percent of the profits 
in LLC. B has the right to the remaining 70 percent. A acquires an 
additional 30 percent interest in LLC from B for $90 million in cash. As 
a result of the acquisition, A is deemed to now have a 60 percent 
interest in LLC. The current acquisition is valued at $90 million, the 
acquisition price. The value of the 30 percent interest that A already 
holds is the fair market value of that interest. The value for size-of-
transaction purposes is the sum of the two.
    2. A acquires the following from B: (1) All of the assets of a 
subsidiary of B; (2) all of the voting securities of another subsidiary 
of B; and (3) a 30 percent interest in an LLC which is currently wholly-
owned by B. In determining the size-of-transaction, A aggregates the 
value of the voting securities and assets of the subsidiaries that it is 
acquiring from B, but does not include the value of the 30 percent 
interest in the LLC, pursuant to Sec.801.13(c)(2).

[43 FR 33537, July 31, 1978, as amended at 52 FR 7081, Mar. 6, 1987; 66 
FR 8689, Feb. 1, 2001; 70 FR 4991, Jan. 31, 2005; 70 FR 11513, Mar. 8, 
2005]



Sec.801.14  Aggregate total amount of voting securities and assets.

    For purposes of Section 7A(a)(2) and Sec.801.1(h), the aggregate 
total amount of voting securities and assets shall be the sum of:
    (a) The value of all voting securities of the acquired person which 
the acquiring person would hold as a result of the acquisition, 
determined in accordance with Sec.801.13(a); and
    (b) The value of all assets of the acquired person which the 
acquiring person would hold as a result of the acquisition, determined 
in accordance with Sec.801.13(b).

    Examples: 1. Acquiring person ``A'' previously acquired less than 
$50 million (as adjusted) of the voting securities (not convertible 
voting securities) of corporation X. ``A'' now intends to acquire 
additional assets of X. Under paragraph (a) of this section, ``A'' looks 
to Sec.801.13(a) and determines that the voting securities are to be 
held ``as a result of'' the acquisition. Section 801.13(a) also provides 
that ``A'' must determine the present value of the previously acquired 
securities. Under paragraph (b) of this section, ``A'' looks to Sec.
801.13(b)(1) and determines that the assets to be acquired will be held 
``as a result of'' the acquisition, and are valued under Sec.
801.10(b). Therefore, if the voting securities have a present value 
which when combined with the value of the assets would exceed $50 
million (as adjusted), the asset acquisition is subject to the 
requirements of the act since, as a result of it, ``A'' would hold an 
aggregate total amount of the voting securities and assets of ``X'' in 
excess of $50 million (as adjusted) .
    2. In the previous example, assume that the assets acquisition 
occurred first, and that the acquisition of the voting securities is to 
occur within 180 days of the first acquisition. ``A'' now looks to Sec.
801.13(b)(2) and determines that because the second acquisition is of 
voting securities and not assets, the asset and voting securities 
acquisitions are not treated as one transaction. Therefore, the second 
acquisition would not be subject to the requirements of the act since 
the value of the securities to be acquired does not exceed the $50 
million (as adjusted) size-of-transaction test.
    (c) The value of all non-corporate interests of the acquired person 
which the acquiring person would hold as a result of the acquisition, 
determined in accordance with Sec.801.13(c).

[43 FR 33537, July 31, 1978, as amended at 66 FR 8689, Feb. 1, 2001; 67 
FR 11902, Mar. 18, 2002; 70 FR 4991, Jan. 31, 2005; 70 FR 73372, Dec. 
12, 2005]



Sec.801.15  Aggregation of voting securities, non-corporate interests
and assets the acquisition of which was exempt.

    Notwithstanding Sec.801.13, for purposes of determining the 
aggregate total amount of voting securities, non-corporate interests and 
assets of the acquired person held by the acquiring person under Section 
7A(a)(2) and Sec.801.1(h), none of the following will be held as a 
result of an acquisition:
    (a) Assets, non-corporate interests or voting securities the 
acquisition of which was exempt at the time of acquisition (or would 
have been exempt, had the act and these rules been in effect), or the 
present acquisition of which is exempt, under--
    (1) Sections 7A(c)(1), (3), (5), (6), (7), (8), and (11)(B);
    (2) Sections 802.1, 802.2, 802.5, 802.6(b)(1), 802.8, 802.30, 
802.31, 802.35, 802.52, 802.53, 802.63, and 802.70 of this chapter;

[[Page 653]]

    (b) Assets, non-corporate interests or voting securities the 
acquisition of which was exempt at the time of acquisition (or would 
have been exempt, had the Act and these rules been in effect), or the 
present acquisition of which is exempt, under Section 7A(c)(9) and 
Sec. Sec.802.3, 802.4, and 802.64 of this chapter unless the 
limitations contained in Section 7A(c)(9) or those sections do not apply 
or as a result of the acquisition would be exceeded, in which case the 
assets or voting securities so acquired will be held; and
    (c) Voting securities the acquisition of which was exempt at the 
time of acquisition (or would have been exempt, had the Act and these 
rules been in effect), or the present acquisition of which is exempt, 
under section 7A(c)(11)(A) unless additional voting securities of the 
same issuer have been or are being acquired; and
    (d) Assets or voting securities the acquisition of which was exempt 
at the time of acquisition (or would have been exempt, had the Act and 
these rules been in effect), or the present acquisition of which is 
exempt, under Sec. Sec.802.50(a), 802.51(a), 802.51(b) of this chapter 
unless the limitations, in aggregate for Sec. Sec.802.50(a), 
802.51(a), 802.51(b) , do not apply or as a result of the acquisition 
would be exceeded, in which case the assets or voting securities so 
acquired will be held.

    Examples: 1. Assume that acquiring person ``A'' is simultaneously to 
acquire in excess of $50 million (as adjusted) of the convertible voting 
securities of X and less than $50 million (as adjusted) of the voting 
common stock of X. Although the acquisition of the convertible voting 
securities is exempt under Sec.802.31, since the overall value of the 
securities to be acquired is greater than $50 million (as adjusted), 
``A'' must determine whether it is obliged to file notification and 
observe a waiting period before acquiring the securities. Because Sec.
802.31 is one of the exemptions listed in paragraph (a)(2) of this 
section, ``A'' would not hold the convertible voting securities as a 
result of the acquisition. Therefore, since as a result of the 
acquisition ``A'' would hold only the common stock, the size-of-
transaction tests of Section 7A(a)(2) would not be satisfied, and ``A'' 
need not observe the requirements of the act before acquiring the common 
stock. (Note, however, that the value of the convertible voting 
securities would be reflected in ``A's'' next regularly prepared balance 
sheet, for purposes of Sec.801.11).
    2. In the previous example, the rule was applied to voting 
securities the present acquisition of which is exempt. Assume instead 
that ``A'' had acquired the convertible voting securities prior to its 
acquisition of the common stock. ``A'' still would not hold the 
convertible voting securities as a result of the acquisition of the 
common stock, because the rule states that voting securities the 
previous acquisition of which was exempt also fall within the rule. 
Thus, the size-of-transaction tests of Section 7A(a)(2) would again not 
be satisfied, and ``A'' need not observe the requirements of the act 
before acquiring the common stock.
    3. In example 2, assume instead that ``A'' acquired the convertible 
voting securities in 1975, before the act and rules went into effect. 
Since the rule applies to voting securities the acquisition of which 
would have been exempt had the act and rules been in effect, the result 
again would be identical. If the rules had been in effect in 1975, the 
acquisition of the convertible voting securities would have been exempt 
under Sec.802.31.
    4. Assume that acquiring person ``B,'' a United States person, 
acquired from corporation ``X'' two manufacturing plants located abroad, 
and assume that the acquisition price was in excess of $50 million (as 
adjusted). In the most recent year, sales into the United States 
attributable to the plants were less than $50 million (as adjusted), and 
thus the acquisition was exempt under Sec.802.50(a)(2). Within 180 
days of that acquisition, ``B'' seeks to acquire a third plant from 
``X,'' to which United States sales were attributable in the most recent 
year. Since under Sec.801.13(b)(2), as a result of the acquisition, 
``B'' would hold all three plants of ``X,''if the $50 million (as 
adjusted) limitation in Sec.802.50(a)(2) would be exceeded, under 
paragraph (b) of this section, ``B'' would hold the previously acquired 
assets for purposes of the second acquisition. Therefore, as a result of 
the second acquisition, ``B'' would hold assets of ``X'' exceeding $50 
million (as adjusted) in value, would not qualify for the exemption in 
Sec.802.50(a)(2), and must observe the requirements of the act and 
file notification for the acquisition of all three plants before 
acquiring the third plant
    5. ``A'' acquires producing oil reserves valued at $400 million from 
``B.'' Two months later, ``A'' agrees to acquire oil and gas rights 
valued at $75 million from ``B.'' Paragraph (b) of this section and 
Sec.801.13(b)(2) require aggregating the previously exempt acquisition 
of oil reserves with the second acquisition. If the two acquisitions, 
when aggregated, exceed the $500 million limitation on the exemption for 
oil and gas reserves in Sec.802.3(a), ``A'' and ``B'' will be required 
to file notification for the latter acquisition, including within the 
filings the earlier acquisition. Since, in this example, the total value 
of the assets in the two acquisitions, when

[[Page 654]]

aggregated, is less than $500 million, both acquisitions are exempt from 
the notification requirements. In determining whether the value of the 
assets in the two acquisitions exceeds $500 million, ``A'' need not 
determine the current fair market value of the oil reserves acquired in 
the first transaction, since these assets are now within the person of 
``A.'' Instead, ``A'' is directed by Sec.801.13(b)(2)(ii) to use the 
value of the oil reserves at the time of their prior acquisition in 
accordance with Sec.801.10(b).
    6. ``X'' acquired 55 percent of the voting securities of M, an 
entity controlled by ``Z,'' six months ago and now proposes to acquire 
50 percent of the voting stock of N, another entity controlled by ``Z.'' 
M's assets consist of $150 million worth of producing coal reserves plus 
less than $50 million (as adjusted) worth of non-exempt assets and N's 
assets consist of a producing coal mine worth $100 million together with 
non-exempt assets with a fair market value of less than $50 million (as 
adjusted). ``X's'' acquisition of the voting securities of M was exempt 
under Sec.802.4(a) because M held exempt assets pursuant to Sec.
802.3(b) and less than $50 million (as adjusted) of non-exempt assets. 
Because ``X'' acquired control of M in the earlier transaction, M is now 
within the person of ``X,'' and the assets of M need not be aggregated 
with those of N to determine if the subsequent acquisition of N will 
exceed the limitation for coal reserves or for non-exempt assets. Since 
the assets of N alone do not exceed these limitations, ``X's'' 
acquisition of N also is not reportable.
    7. In previous Example 6, assume that ``X'' acquired 30 percent of 
the voting securities of M and proposes to acquire 40 percent of the 
voting securities of N, another entity controlled by ``Z.'' Assume also 
that M's assets at the time of ``X's'' acquisition of M's voting 
securities consisted of $90 million worth of producing coal reserves and 
non-exempt assets with a fair market value of less than $50 million (as 
adjusted), and that N's assets currently consist of $60 million worth of 
producing coal reserves and non-exempt assets with a fair market value 
which when aggregated with M's non-exempt assets would exceed $50 
million (as adjusted). Since ``X'' acquired a minority interest in M and 
intends to acquire a minority interest in N, and since M and N are 
controlled by ``Z,'' the assets of M and N must be aggregated, pursuant 
to Secs. 801.15(b) and 801.13, to determine whether the acquisition of 
N's voting securities is exempt. ``X'' is required to determine the 
current fair market value of M's assets. If the fair market value of M's 
coal reserves is unchanged, the aggregated exempt assets do not exceed 
the limitation for coal reserves. However, if the present fair market 
value of N's non-exempt assets also is unchanged, the present fair 
market value of the non-exempt assets of M and N when aggregated is 
greater than $50 million. Thus the acquisition of the voting securities 
of N is not exempt. If ``X'' proposed to acquire 50 percent or more of 
the voting securities of both M and N in the same acquisition, the 
assets of M and N must be aggregated to determine if the acquisition of 
the voting securities of both issuers is exempt. Since the fair market 
value of the aggregated non-exempt assets exceeds $50 million (as 
adjusted), the acquisition would not be exempt.
    8. ``A'' acquired 49 percent of the voting securities of M and 45 
percent of the voting securities of N. Both M and N are controlled by 
``B.'' At the time of the acquisition, M held rights to producing coal 
reserves worth $90 million and N held a producing coal mine worth $90 
million. This acquisition was exempt since the aggregated holdings fell 
below the $200 million limitation for coal in Sec.802.3(b) of this 
chapter. A year later, ``A'' proposes to acquire an additional 10 
percent of the voting securities of both M and N. In the intervening 
year, M has acquired coal reserves so that its holdings are now valued 
at $140 million, and the value of N's assets remained unchanged. ``A's'' 
second acquisition would not be exempt. ``A'' is required to determine 
the value of the exempt assets and any non-exempt assets held by any 
issuer whose voting securities it intends to acquire before each 
proposed acquisition (unless ``A'' already owns 50 percent or more of 
the voting securities of the issuer) to determine if the value of those 
holdings of the issuer falls below the limitation of the applicable 
exemption. Here, the holdings of M and N now exceed the $200 million 
exemption for acquisitions of coal reserves in Sec.802.3 of this 
chapter, and thus do not qualify for the exemption of voting securities 
provided by Sec.802.4(a) of this chapter.
    9. A acquires assets of B located outside of the U.S. with sales 
into the U.S. of $45 million. It also acquires voting securities of B's 
foreign subsidiary X which has sales into the U.S. of $45 million. Both 
the assets and the voting securities of X are exempt under Sec. Sec.
802.50 and 802.51 respectively when analyzed separately. However, 
because Sec.801.15(d) requires that the sales into the U.S. for both 
the assets and the voting securities be aggregated to determine whether 
the $50 million (as adjusted) limitation has been exceeded, both are 
held as a result of the acquisition because the aggregate sales into the 
U.S. total in excess of $50 million (as adjusted).

[43 FR 33537, July 31, 1978, as amended at 52 FR 7081, Mar. 6, 1987; 61 
FR 13684, Mar. 28, 1996; 66 FR 8689, Feb. 1, 2001; 67 FR 11902, Mar. 18, 
2002; 70 FR 11512, Mar. 8, 2005; 76 FR 42482, July 19, 2011]

[[Page 655]]



Sec.801.20  Acquisitions subsequent to exceeding threshold.

    Acquisitions meeting the criteria of section 7A(a), and not 
otherwise exempted by section 7A(c) or Sec.802.21 or any other of 
these rules, are subject to the requirements of the act even though:
    (a) Earlier acquisitions of assets or voting securities may have 
been subject to the requirements of the act;
    (b) The acquiring person's holdings initially may have met or 
exceeded a notification threshold before the effective date of these 
rules; or
    (c) The acquiring person's holdings initially may have met or 
exceeded a notification threshold by reason of increases in market 
values or events other than acquisitions.

[43 FR 33537, July 31, 1978, as amended at 66 FR 8690, Feb. 1, 2001; 70 
FR 4992, Jan. 31, 2005]



Sec.801.21  Securities and cash not considered assets when acquired.

    For purposes of determining the aggregate total amount of assets 
under Section 7A(a)(2)(A), Section 7A(a)(2)(B)(i), Sec. 801.13(b), and 
Sec. 802.4:
    (a) Cash shall not be considered an asset of the person from which 
it is acquired; and
    (b) Neither voting or nonvoting securities nor obligations referred 
to in section 7A(c)(2) shall be considered assets of another person from 
which they are acquired.

    Examples: 1. Assume that acquiring person ``A'' acquires voting 
securities of issuer X from ``B,'' a person unrelated to X. Under this 
paragraph, the acquisition is treated only as one of voting securities, 
requiring ``A'' and ``X'' to comply with the requirements of the act, 
rather than one in which ``A'' acquires the assets of ``B,'' requiring 
``A'' and ``B'' to comply. See also example 2 to Sec.801.30. Note that 
for purposes of section 7A(a)(2)--that is, for the next regularly 
prepared balance sheet of ``A'' referred to in Sec.801.11--the voting 
securities of X must be reflected after their acquisition; see Sec.
801.11(c)(2).
    2. In the previous example, if ``A'' acquires nonvoting securities 
of X from ``B,'' then under this section the acquisition would be 
treated only as one of nonvoting securities of X (and would be exempt 
under section 7A(c)(2)), rather than one in which ``A'' acquires assets 
of ``B,'' requiring ``A'' and ``B'' to comply. Again, the nonvoting 
securities of X would have to be reflected in ``A's'' next regularly 
prepared balance sheet for purposes of section 7A(a)(2).
    3. In example 1, assume that ``B'' receives only cash from ``A'' in 
exchange for the voting securities of X. Under this section, ``B's'' 
acquisition of cash is not an acquisition of the ``assets'' of ``A,'' 
and ``B'' is not required to file notification as an acquiring person.

[43 FR 33537, July 31, 1978, as amended at 66 FR 8690, Feb. 1, 2001; 68 
FR 2430, Jan. 17, 2003; 70 FR 4992, Jan. 31, 2005]



Sec.801.30  Tender offers and acquisitions of voting securities 
and non-corporate interests from third parties.

    (a) This section applies to:
    (1) Acquisitions on a national securities exchange or through an 
interdealer quotation system registered with the United States 
Securities and Exchange Commission;
    (2) Acquisitions described by Sec.801.31;
    (3) Tender offers;
    (4) Secondary acquisitions;
    (5) All acquisitions (other than mergers and consolidations) in 
which voting securities or non-corporate interests are to be acquired 
from a holder or holders other than the issuer or unincorporated entity 
or an entity included within the same person as the issuer or 
unincorporated entity;
    (6) Conversions; and
    (7) Acquisitions of voting securities resulting from the exercise of 
options or warrants which are--
    (i) Issued by the issuer whose voting securities are to be acquired 
(or by any entity included within the same person as the issuer); and
    (ii) The subject of a currently effective registration statement 
filed with the United States Securities and Exchange Commission under 
the Securities Act of 1933.
    (b) For acquisitions described by paragraph (a) of this section:
    (1) The waiting period required under the act shall commence upon 
the filing of notification by the acquiring person as provided in Sec.
803.10(a); and
    (2) The acquired person shall file the notification required by the 
act, in accordance with these rules, no later than 5 p.m. Eastern Time 
on the 15th (or, in the case of cash tender offers, the 10th) calendar 
day following the date of receipt, as defined by Sec.803.10(a), by the 
Federal Trade Commission and

[[Page 656]]

Assistant Attorney General of the notification filed by the acquiring 
person. Should the 15th (or, in the case of cash tender offers, the 
10th) calendar day fall on a weekend day or federal holiday, the 
notification shall be filed no later than 5 p.m. Eastern Time on the 
next following business day.

    Examples: 1. Acquiring person ``A'' proposes to acquire from 
corporation B the voting securities of B's wholly owned subsidiary, 
corporation S. Since ``A'' is acquiring the shares of S from its parent, 
this section does not apply, and the waiting period does not begin until 
both ``A'' and ``B'' file notification.
    2. Acquiring person ``A'' proposes to acquire in excess of $50 
million (as adjusted) of the voting securities of corporation X on a 
securities exchange. The waiting period begins when ``A'' files 
notification. ``X'' must file notification within 15 calendar days 
thereafter. The seller of the X shares is not subject to any obligations 
under the act.
    3. Suppose that acquiring person ``A'' proposes to acquire 50 
percent of the voting securities of corporation B which in turn owns 30 
percent of the voting securities of corporation C. Thus ``A's'' 
acquisition of C's voting securities is a secondary acquisition (see 
Sec.801.4) to which this section applies because ``A'' is acquiring 
C's voting securities from a third party (B). Therefore, the waiting 
period with respect to ``A's'' acquisition of C's voting securities 
begins when ``A'' files its separate Notification and Report Form with 
respect to C, and ``C'' must file within 15 days (or in the case of a 
cash tender offer, 10 days) thereafter. ``A's'' primary and secondary 
acquisitions of the voting securities of B and C are subject to separate 
waiting periods; see Sec.801.4.

[43 FR 33537, July 31, 1978; 43 FR 36054, Aug. 15, 1978, as amended at 
52 FR 7082, Mar. 6, 1987; 66 FR 8690, Feb. 1, 2001; 70 FR 4992, Jan. 31, 
2005; 76 FR 42482, July 19, 2011]



Sec.801.31  Acquisitions of voting securities by offerees in tender
offers.

    Whenever an offeree in a noncash tender offer is required to, and 
does, file notification with respect to an acquisition described in 
Sec.801.2(e):
    (a) The waiting period with respect to such acquisition shall begin 
upon filing of notification by the offeree, pursuant to Sec. Sec.
801.30 and 803.10(a)(1);
    (b) The person within which the issuer of the shares to be acquired 
by the offeree is included shall file notification as required by Sec.
801.30(b);
    (c) Any request for additional information or documentary material 
pursuant to section 7A(e) and Sec.803.20 shall extend the waiting 
period in accordance with Sec.803.20(c); and
    (d) The voting securities to be acquired by the offeree may be 
placed into escrow, for the benefit of the offeree, pending expiration 
or termination of the waiting period with respect to the acquisition of 
such securities; Provided however, That no person may vote any voting 
securities placed into escrow pursuant to this paragraph.

    Example: Assume that ``A,'' which has annual net sales exceeding 
$100 million (as adjusted), makes a tender offer for voting securities 
of corporation X. The consideration for the tender offer is to be voting 
securities of A. ``S,'' a shareholder of X with total assets exceeding 
$10 million (as adjusted), wishes to tender its holdings of X and in 
exchange would receive shares of A valued in excess of $50 million (as 
adjusted). Under this section, ``S's'' acquisition of the shares of A 
would be an acquisition separately subject to the requirements of the 
act. Before ``S'' may acquire the voting securities of A, ``S'' must 
first file notification and observe a waiting period--which is separate 
from any waiting period that may apply with respect to ``A'' and ``X.'' 
Since Sec.801.30 applies, the waiting period applicable to ``A'' and 
``S'' begins upon filing by ``S,'' and ``A'' must file with respect to 
``S's'' acquisition within 15 days pursuant to Sec.801.30(b). Should 
the waiting period with respect to ``A'' and ``X'' expire or be 
terminated prior to the waiting period with respect to ``S'' and ``A,'' 
``S'' may wish to tender its X-shares and place the A-shares into a 
nonvoting escrow until the expiration or termination of the latter 
waiting period.

[43 FR 33537, July 31, 1978, as amended at 66 FR 8690, Feb. 1, 2001; 70 
FR 4992, Jan. 31, 2005]



Sec.801.32  Conversion and acquisition.

    A conversion is an acquisition within the meaning of the act.

    Example: Assume that acquiring person ``A'' wishes to convert 
convertible voting securities of issuer X, and is to receive common 
stock of X valued in excess of $50 million (as adjusted). If ``A'' and 
``X'' satisfy the criteria of Section 7A(a)(1) and Section 
7A(a)(2)(B)(ii), then ``A'' and ``X'' must file notification and observe 
the waiting period before ``A'' completes the acquisition of the X 
common stock, unless exempted by Section 7A(c) or the regulations in 
this part. Since Sec.801.30 applies, the waiting period begins upon 
notification by ``A,'' and ``X'' must file notification within 15 days.

[43 FR 33537, July 31, 1978, as amended at 66 FR 8690, Feb. 1, 2001; 70 
FR 4992, Jan. 31, 2005]

[[Page 657]]



Sec.801.33  Consummation of an acquisition by acceptance of tendered
shares of payment.

    The acceptance for payment of any shares tendered in a tender offer 
is the consummation of an acquisition of those shares within the meaning 
of the act.

[48 FR 34433, July 29, 1983]



Sec.801.40  Formation of joint venture or other corporations.

    (a) In the formation of a joint venture or other corporation (other 
than in connection with a merger or consolidation), even though the 
persons contributing to the formation of a joint venture or other 
corporation and the joint venture or other corporation itself may, in 
the formation transaction, be both acquiring and acquired persons within 
the meaning of Sec.801.2, the contributors shall be deemed acquiring 
persons only, and the joint venture or other corporation shall be deemed 
the acquired person only.
    (b) Unless exempted by the act or any of these rules, upon the 
formation of a joint venture or other corporation, in a transaction 
meeting the criteria of Section 7A(a)(1) and 7A(a)(2)(A) (other than in 
connection with a merger or consolidation), an acquiring person shall be 
subject to the requirements of the act.
    (c) Unless exempted by the act or any of these rules, upon the 
formation of a joint venture or other corporation, in a transaction 
meeting the criteria of Section 7A(a)(1) and the criteria of Section 
7A(a)(2)(B)(i) (other than in connection with a merger or 
consolidation), an acquiring person shall be subject to the requirements 
of the act if:
    (1)(i) The acquiring person has annual net sales or total assets of 
$100 million (as adjusted) or more;
    (ii) The joint venture or other corporation will have total assets 
of $10 million (as adjusted) or more; and
    (iii) At least one other acquiring person has annual net sales or 
total assets of $10 million (as adjusted) or more; or
    (2)(i) The acquiring person has annual net sales or total assets of 
$10 million (as adjusted) or more;
    (ii) The joint venture or other corporation will have total assets 
of $100 million (as adjusted) or more; and
    (iii) At least one other acquiring person has annual net sales or 
total assets of $10 million (as adjusted) or more.
    (d) For purposes of paragraphs (b) and (c) of this section and 
determining whether any exemptions provided by the act and these rules 
apply to its formation, the assets of the joint venture or other 
corporation shall include:
    (1) All assets which any person contributing to the formation of the 
joint venture or other corporation has agreed to transfer or for which 
agreements have been secured for the joint venture or other corporation 
to obtain at any time, whether or not such person is subject to the 
requirements of the act; and
    (2) Any amount of credit or any obligations of the joint venture or 
other corporation which any person contributing to the formation has 
agreed to extend or guarantee, at any time.
    (e) The commerce criterion of Section 7A(a)(1) is satisfied if 
either the activities of any acquiring person are in or affect commerce, 
or the person filing notification should reasonably believe that the 
activities of the joint venture or other corporation will be in or will 
affect commerce.

    Examples: 1. Persons ``A,'' ``B,'' and ``C'' agree to create new 
corporation ``N,'' a joint venture. ``A,'' ``B,'' and ``C'' will each 
hold one third of the shares of ``N.'' ``A'' has more than $100 million 
(as adjusted) in annual net sales. ``B'' has more than $10 million (as 
adjusted) in total assets but less than $100 million (as adjusted) in 
annual net sales and total assets. Both ``C's'' total assets and its 
annual net sales are less than $10 million (as adjusted). ``A,'' ``B,'' 
and ``C'' are each engaged in commerce. ``A,'' ``B,'' and ``C'' have 
agreed to make an aggregate initial contribution to the new entity of 
$18 million in assets and each to make additional contributions of $21 
million in each of the next three years. Under paragraph (d) of this 
section, the assets of the new corporation are $207 million. Under 
paragraph (c) of this section, ``A'' and ``B'' must file notification. 
Note that ``A'' and ``B'' also meet the criterion of Section 
7A(a)(2)(B)(i) since they will be acquiring one third of the voting 
securities of the new entity for in excess of $50 million (as adjusted). 
N need not file notification; see Sec.802.41.
    2. In the preceding example ``A'' has over $10 million (as adjusted) 
but less than $100 million (as adjusted) in sales and assets, ``B''

[[Page 658]]

and ``C'' have less than $10 million (as adjusted) in sales and assets. 
``N'' has total assets of $500 million. Assume that ``A'' will acquire 
50 percent of the voting securities of ``N'' and ``B'' and ``C'' will 
each acquire 25 percent. Since ``A'' will acquire in excess of $200 
million (as adjusted) in voting securities of ``N'', the size-of-person 
test in Sec.801.40(c) is inapplicable and ``A'' is required to file 
notification.

[43 FR 33537, July 31, 1978, as amended at 48 FR 34434, July 29, 1983; 
52 FR 7082, Mar. 6, 1987; 66 FR 8690, Feb. 1, 2001; 70 FR 4992, Jan. 31, 
2005]



Sec.801.50  Formation of unincorporated entities.

    (a) In the formation of an unincorporated entity (other than in 
connection with a consolidation), even though the persons contributing 
to the formation of the unincorporated entity and the unincorporated 
entity itself may, in the formation transaction, be both acquiring and 
acquired persons within the meaning of Sec.801.2, the contributors 
shall be deemed acquiring persons only and the unincorporated entity 
shall be deemed the acquired person only.
    (b) Unless exempted by the Act or any of these rules, upon the 
formation of an unincorporated entity, in a transaction meeting the 
criteria of Section 7A(a)(1) and 7A(a)(2)(A) (other than in connection 
with a consolidation), a person is subject to the requirements of the 
Act if it acquires control of the newly-formed entity. Unless exempted 
by the Act or any of these rules, upon the formation of an 
unincorporated entity, in a transaction meeting the criteria of Section 
7A(a)(1), the criteria of Section 7A(a)(2)(B)(i) (other than in 
connection with a consolidation), a person is subject to the 
requirements of the Act if:
    (1)(i) The acquiring person has annual net sales or total assets of 
$100 million (as adjusted) or more;
    (ii) The newly-formed entity has total assets of $10 million (as 
adjusted) or more; and
    (iii) The acquiring person acquires control of the newly-formed 
entity; or
    (2)(i) The acquiring person has annual net sales or total assets of 
$10 million (as adjusted) or more;
    (ii) The newly-formed entity has total assets of $100 million (as 
adjusted) or more; and
    (iii) The acquiring person acquires control of the newly-formed 
entity.
    (c) For purposes of paragraph (b) of this section, the total assets 
of the newly-formed entity is determined in accordance with Sec.
801.40(d).
    (d) Any person acquiring control of the newly-formed entity 
determines the value of its acquisition in accordance with Sec.
801.10(d).
    (e) The commerce criterion of Section 7A(a)(1) is satisfied if 
either the Activities of any acquiring person are in or affect commerce, 
or the person filing notification should reasonably believe that the 
Activities of the newly-formed entity will be in or will affect 
commerce.

    Example: A and B form a new partnership (LP) in which each will 
acquire a 50 percent interest. A contributes a plant valued at $250 
million and $100 million in cash. B contributes $350 million in cash. 
Because each is acquiring non-corporate interests, valued in excess of 
$50 million (as adjusted) which confer control of LP both A and B are 
acquiring persons in the formation. Each must now determine if the 
exemption in Sec.802.4 is applicable to their acquisitions of non-
corporate interests in LP. For A, LP's exempt assets consist of all of 
the cash contributed by A and B (pursuant to Sec.801.21) and A's 
contribution of the plant (pursuant to Sec.802.30(c)). Because all of 
the assets of LP are exempt with regard to A, A's acquisition of non-
corporate interests in LP is exempt under Sec.802.4. For B, LP's 
exempt assets include only the cash contributions by A and B. The plant 
contributed by A, valued at $250 million is not exempt under Sec.
802.30(c) with regard to B. Because LP has non-exempt assets in excess 
of $50 million (as adjusted) with regard to B, B's acquisition of non-
corporate interests in LP is not exempt under Sec.802.4. B must now 
value its acquisition of non-corporate interests pursuant to Sec.
801.10(d) and because the value of the non-corporate interests is the 
same as B's contribution to the formation ($350 million), the value 
exceeds $200 million (as adjusted) and B must file notification prior to 
acquiring non-corporate interests in LP. See additional examples 
following Sec. Sec.802.30(c) and 802.4.

[70 FR 11512, Mar. 8, 2005]



Sec.801.90  Transactions or devices for avoidance.

    Any transaction(s) or other device(s) entered into or employed for 
the purpose of avoiding the obligation to comply with the requirements 
of the act shall be disregarded, and the obligation

[[Page 659]]

to comply shall be determined by applying the act and these rules to the 
substance of the transaction.

    Examples: 1. Suppose corporations A and B wish to form a joint 
venture. A and B contemplate a total investment of over $100 million (as 
adjusted) in the joint venture; persons ``A'' and ``B'' each have total 
assets in excess of $100 million (as adjusted). Instead of filing 
notification pursuant to Sec.801.40, A creates a new subsidiary, A1, 
which issues half of its authorized shares to A. Assume that A1 has 
total assets of $3000. ``A'' then sells 50 percent of its A1 stock to 
``B'' for $1500. Thereafter, ``A'' and ``B'' each contribute in excess 
of $50 million (as adjusted) to A1 in exchange for the remaining 
authorized A1 stock (one-fourth each to ``A'' and ``B''). A's creation 
of A1 was exempt under Sec. 802.30; its $1500 sale of A1 stock to ``B'' 
did not meet the size-of-transaction filing threshold in Section 
7A(a)(2)(B); and the second acquisition of stock in A1 by ``A'' and 
``B'' was exempt under Sec.802.30 and Sections 7A(c)(3) and (10). 
Since this scheme appears to be for the purpose of avoiding the 
requirements of the act, the sequence of transactions will be 
disregarded. The transactions will be viewed as the formation of a joint 
venture corporation by ``A'' and ``B'' having over $10 million (as 
adjusted) in assets. Such a transaction would be covered by Sec.801.40 
and ``A'' and ``B'' must file notification and observe the waiting 
period.
    2. Suppose ``A'' wholly owns and operates a chain of twenty retail 
hardware stores, each of which is separately incorporated and has assets 
of less than $10 million. The aggregate fair market value of the assets 
of the twenty store corporations is in excess of $50 million (as 
adjusted). ``A'' proposes to sell the stores to ``B'' for in excess of 
$50 million (as adjusted). For various reasons it is decided that ``B'' 
will buy the stock of each of the store corporations from ``A.'' Instead 
of filing notification and observing the waiting period as contemplated 
by the act, ``A'' and ``B'' enter into a series of five stock purchase-
sale agreements for $12 million each. Under the terms of each contract, 
the stock of four stores will pass from ``A'' to ``B''. The five 
agreements are to be consummated on five successive days. Because after 
each of these transactions the store corporations are no longer part of 
the acquired person (Sec.801.13(a) does not apply because control has 
passed, see Sec.801.2), and because $12 million is below the size-of-
transaction filing threshold of Section 7A(a)(2)(B), none of the 
contemplated acquisitions would be subject to the requirements of the 
act. However, if the stock of all of the store corporations were to be 
purchased in one transaction, no exemption would be applicable, and the 
act's requirements would have to be met. Because it appears that the 
purpose of making five separate contracts is to avoid the requirements 
of the act, this section would ignore the form of the separate 
transactions and consider the substance to be one transaction requiring 
compliance with the act.

[43 FR 33537, July 31, 1978, as amended at 66 FR 8691, Feb. 1, 2001; 67 
FR 11903, Mar. 18, 2002; 70 FR 4992, Jan. 31, 2005]



PART 802_EXEMPTION RULES--Table of Contents



Sec.
802.1 Acquisitions of goods in the ordinary course of business.
802.2 Certain acquisitions of real property assets.
802.3 Acquisitions of carbon-based mineral reserves.
802.4 Acquisitions of voting securities of issuers or non-corporate 
          interests in unincorporated entities holding certain assets 
          the acquisition of which is exempt.
802.5 Acquisitions of investment rental property assets.
802.6 Federal agency approval.
802.8 Certain supervisory acquisitions.
802.9 Acquisition solely for the purpose of investment.
802.10 Stock dividends and splits; reorganizations.
802.20 [Reserved]
802.21 Acquisitions of voting securities not meeting or exceeding 
          greater notification threshold (as adjusted).
802.23 Amended or renewed tender offers.
802.30 Intraperson transactions.
802.31 Acquisitions of convertible voting securities.
802.35 Acquisitions by employee trusts.
802.40 Exempt formation of corporations or unincorporated entities.
802.41 Corporations or unincorporated entities at time of formation.
802.42 Partial exemption for acquisitions in connection with the 
          formation of certain joint ventures or other corporations.
802.50 Acquisitions of foreign assets.
802.51 Acquisitions of voting securities of a foreign issuer.
802.52 Acquisitions by or from foreign governmental entities.
802.53 Certain foreign banking transactions.
802.60 Acquisitions by securities underwriters.
802.63 Certain acquisitions by creditors and insurers.
802.64 Acquisitions of voting securities by certain institutional 
          investors.
802.65 Exempt acquisition of non-corporate interests in financing 
          transactions.
802.70 Acquisitions subject to order.
802.71 Acquisitions by gift, intestate succession or devise, or by 
          irrevocable trust.
802.80 Transitional rule for transactions investigated by the agencies.


[[Page 660]]


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

    Source: 43 FR 33544, July 31, 1978, unless otherwise noted.



Sec.802.1  Acquisitions of goods in the ordinary course of business.

    Pursuant to section 7A(c)(1) of the Clayton Act (the ``Act''), 
acquisitions of goods transferred in the ordinary course of business are 
exempt from the notification requirements of the Act. This section 
identifies certain acquisitions of goods that are exempt as transfers in 
the ordinary course of business. This section also identifies certain 
acquisitions of goods that are not in the ordinary course of business 
and, therefore, do not qualify for the exemption.
    (a) Operating unit. An acquisition of all or substantially all the 
assets of an operating unit is not an acquisition in the ordinary course 
of business. Operating unit means assets that are operated by the 
acquired person as a business undertaking in a particular location or 
for particular products or services, even though those assets may not be 
organized as a separate legal entity.
    (b) New goods. An acquisition of new goods is in the ordinary course 
of business, except when the goods are acquired as part of an 
acquisition described in paragraph (a) of this section.
    (c) Current supplies. An acquisition of current supplies is in the 
ordinary course of business, except when acquired as part of an 
acquisition described in paragraph (a) of this section. The term 
``current supplies'' includes the following kinds of new or used assets:
    (1) Goods acquired and held solely for the purpose of resale or 
leasing to an entity not within the acquiring person (e.g., inventory),
    (2) Goods acquired for consumption in the acquiring person's 
business (e.g., office supplies, maintenance supplies or electricity), 
and
    (3) Goods acquired to be incorporated in the final product (e.g., 
raw materials and components).
    (d) Used durable goods. A good is ``durable'' if it is designed to 
be used repeatedly and has a useful life greater than one year. An 
acquisition of used durable goods is an acquisition in the ordinary 
course of business if the goods are not acquired as part of an 
acquisition described in paragraph (a) of this section and any of the 
following criteria are met:
    (1) The goods are acquired and held solely for the purpose of resale 
or leasing to an entity not within the acquiring person; or
    (2) The goods are acquired from an acquired person who acquired and 
has held the goods solely for resale or leasing to an entity not within 
the acquired person; or
    (3) The acquired person has replaced, by acquisition or lease, all 
or substantially all of the productive capacity of the goods being sold 
within six months of that sale, or the acquired person has in good faith 
executed a contract to replace within six months after the sale, by 
acquisition or lease, all or substantially all of the productive 
capacity of the goods being sold; or
    (4) The goods have been used by the acquired person solely to 
provide management and administrative support services for its business 
operations, and the acquired person has in good faith executed a 
contract to obtain substantially similar services as were provided by 
the goods being sold. Management and administrative support services 
include services such as accounting, legal, purchasing, payroll, billing 
and repair and maintenance of the acquired person's own equipment. 
Manufacturing, research and development, testing and distribution (i.e., 
warehousing and transportation) are not considered management and 
administrative support services.

    Examples: 1. Greengrocer Inc. intends to sell to ``A'' all of the 
assets of one of the 12 grocery stores that it owns and operates 
throughout the metropolitan area of City X. Each of Greengrocer's stores 
constitutes an operating unit, i.e., a business undertaking in a 
particular location. Thus ``A's'' acquisition is not exempt as an 
acquisition in the ordinary course of business. However, the acquisition 
will not be subject to the notification requirements if the acquisition 
price or fair market value of the store's assets does not exceed $50 
million (as adjusted).
    2. ``A,'' a manufacturer of airplane engines, agrees to pay in 
excess of $50 million (as adjusted) to ``B,'' a manufacturer of airplane 
parts, for certain new engine components to be used in the manufacture 
of airplane engines. The acquisition is exempt under

[[Page 661]]

Sec.802.1(b) as new goods as well as under Sec.802.1(c)(3) as 
current supplies.
    3. ``A,'' a power generation company, proposes to purchase from 
``B,'' a coal company, in excess of $50 million (as adjusted) of coal 
under a long-term contract for use in its facilities to supply electric 
power to a regional public utility and steam to several industrial 
sites. This transaction is exempt under Sec.802.1(c)(2) as an 
acquisition of current supplies. However, if ``A'' proposed to purchase 
coal reserves rather than enter into a contract to acquire output of a 
coal mine, the acquisition would not be exempt as an acquisition of 
goods in the ordinary course of business. The acquisition may still be 
exempt pursuant to Sec.802.3(b) as an acquisition of reserves of coal 
if the requirements of that section are met.
    4. ``A,'' a national producer of canned fruit, preserves, jams and 
jellies, agrees to purchase from ``B'' for in excess of $50 million (as 
adjusted) a total of 20,000 acres of orchards and vineyards in several 
locations throughout the U.S. ``A'' plans to harvest the fruit from the 
acreage for use in its canning operations. The acquisition is not exempt 
under this section because orchards and vineyards are real property, not 
``goods.'' If, on the other hand, ``A'' had contracted to acquire from 
``B'' the fruit and grapes harvested from the orchards and vineyards, 
the acquisition would qualify for the exemption as an acquisition of 
current supplies under paragraph (c)(3) of this section. Although the 
transfer of orchards and vineyards is not exempt under this section, the 
acquisition could be exempt under Sec.802.2(g) as an acquisition of 
agricultural property.
    5. ``A,'' a railcar leasing company, will purchase in excess of $50 
million (as adjusted) of new railcars from a railcar manufacturer in 
order to expand its existing fleet of cars available for lease. The 
transaction is exempt under Sec.802.1(b) as an acquisition of new 
goods and Sec.802.1(c), as an acquisition of current supplies. If 
``A'' subsequently sells the railcars to ``C,'' a commercial railroad 
company, that acquisition would be exempt under Sec.802.1(d)(2), 
provided that ``A'' acquired and held the railcars solely for resale or 
leasing to an entity not within itself.
    6. ``A,'' a major oil company, proposes to sell two of its used oil 
tankers for in excess of $50 million (as adjusted) to ``B,'' a dealer 
who purchases oil tankers from the major U.S. oil companies. ``B's'' 
acquisition of the used oil tankers is exempt under Sec.802.1(d)(1) 
provided that ``B'' is actually acquiring beneficial ownership of the 
used tankers and is not acting as an agent of the seller or purchaser.
    7. ``A,'' a cruise ship operator, plans to sell for in excess of $50 
million (as adjusted) one of its cruise ships to ``B,'' another cruise 
ship operator. ``A'' has, in good faith, executed a contract to acquire 
a new cruise ship with substantially the same capacity from a 
manufacturer. The contract specifies that ``A'' will receive the new 
cruise ship within one month after the scheduled date of the sale of its 
used cruise ship to ``B.'' Since ``B'' is acquiring a used durable good 
that ``A'' has contracted to replace within six months of the sale, the 
acquisition is exempt under Sec.802.1(d)(3).
    8. ``A,'' a luxury cruise ship operator, proposes to sell to ``B,'' 
a credit company engaged in the ordinary course of its business in lease 
financing transactions, its fleet of six passenger ships under a 10-year 
sale/leaseback arrangement. That acquisition is exempt pursuant to Sec.
802.1(d)(1), used durable goods acquired for leasing purposes. The 
acquisition is also exempt under Sec.802.63(a) as a bona fide credit 
transaction entered into in the ordinary course of ``B's'' business. 
``B'' now proposes to sell the ships, subject to the current lease 
financing arrangement, to ``C,'' another lease financing company. This 
transaction is exempt under Sec. Sec.802.1(d)(1) and 802.1(d)(2).
    9. Three months ago ``A,'' a manufacturing company, acquired several 
new machines that will replace equipment on one of its production lines. 
``A's'' capacity to produce the same products increased modestly when 
the integration of the new equipment was completed. ``B,'' a 
manufacturing company that produces products similar to those produced 
by ``A,'' has entered into a contract to acquire for in excess of $50 
million (as adjusted) the machinery that ``A'' replaced. Delivery of the 
equipment by ``A'' to ``B'' is scheduled to occur within thirty days. 
Since ``A'' purchased new machinery to replace the productive capacity 
of the used equipment, which it sold within six months of the purchase 
of the new equipment, the acquisition by ``B'' is exempt under Sec.
802.1(d)(3).
    10. ``A'' will sell to ``B'' for in excess of $50 million (as 
adjusted) all of the equipment ``A'' uses exclusively to perform its 
billing requirements. ``B'' will use the equipment to provide ``A's'' 
billing needs pursuant to a contract which ``A'' and ``B'' executed 30 
days ago in conjunction with the equipment purchase agreement. Although 
the assets ``B'' will acquire make up essentially all of the assets of 
one of ``A's'' management and administrative support services divisions, 
the acquisition qualifies for the exemption under Sec.802.1(d)(4) 
because a company's internal management and administrative support 
services, however organized, are not an operating unit as defined by 
Sec.802.1(a). Management and administrative support services are not a 
``business undertaking'' as that term is used in Sec.802.1(a). Rather, 
they provide support and benefit to the company's operating units and 
support the company's business operations. However, if the assets being 
sold also derived revenues from providing billing services for third 
parties, then

[[Page 662]]

the transfer of these assets would not be exempt under Sec.
802.1(d)(4), since the equipment is not being used solely to provide 
management and administrative support services to ``A''.
    11. ``A,'' a manufacturer of pharmaceutical products, and ``B'' have 
entered into a contract under which ``B'' will provide all of ``A's'' 
research and development needs. Pursuant to the contract, ``B'' will 
also purchase all of the equipment that ``A'' formerly used to perform 
its own research and development activities. The sale of the equipment 
is not an exempt transaction under Sec.802.1(d)(3) because ``A'' is 
not replacing the productive capacity of the equipment being sold. The 
sale is also not exempt under Sec.802.1(d)(4), because functions such 
as research and development and testing are not management and 
administrative support services of a company but are integral to the 
design, development or production of the company's products.
    12. ``A,'' an automobile manufacturer, is discontinuing its 
manufacture of metal seat frames for its cars. ``A'' enters into a 
contract with ``B,'' a manufacturer of various fabricated metal 
products, to sell its seat frame production lines and to purchase from 
``B'' all of its metal seat frame needs for the next five years. This 
transfer of productive capacity by ``A'' is not exempt pursuant to Sec.
802.1(d)(3), since ``A'' is not replacing the productive capacity of the 
equipment being sold. The acquisition is also not exempt under Sec.
802.1(d)(4). ``A's'' sale of production lines is not the transfer of 
goods that provide management and administrative services to support the 
business operations of''A''; this manufacturing equipment is an integral 
part of ``A's'' production operations.

[61 FR 13684, Mar. 28, 1996, as amended at 66 FR 8691, Feb. 1, 2001; 70 
FR 4993, Jan. 31, 2005; 83 FR 32770, July 16, 2018]



Sec.802.2  Certain acquisitions of real property assets.

    (a) New facilities. An acquisition of a new facility shall be exempt 
from the requirements of the act. A new facility is a structure that has 
not produced income and was either constructed by the acquired person 
for sale or held at all times by the acquired person solely for resale. 
The new facility may include realty, equipment or other assets 
incidental to the ownership of the new facility. In an acquisition that 
includes a new facility, the transfer of any other assets shall be 
subject to the requirements of the act and these rules as if they were 
being acquired in a separate acquisition.
    (b) Used facilities. An acquisition of a used facility shall be 
exempt from the requirements of the act if the facility is acquired from 
a lessor that has held title to the facility for financing purposes in 
the ordinary course of the lessor's business by a lessee that has had 
sole and continuous possession and use of the facility since it was 
first built as a new facility. The used facility may include realty, 
equipment or other assets associated with the operation of the facility. 
In an acquisition that includes a used facility that meets the 
requirements of this paragraph, the transfer of any other assets shall 
be subject to the requirements of the act and these rules as if they 
were acquired in a separate transaction.
    (c) Unproductive real property. An acquisition of unproductive real 
property shall be exempt from the requirements of the act. In an 
acquisition that includes unproductive real property, the transfer of 
any assets that are not unproductive real property shall be subject to 
the requirements of the act and these rules as if they were being 
acquired in a separate acquisition.
    (1) Subject to the limitations of (c)(2), unproductive real property 
is any real property, including raw land, structures or other 
improvements (but excluding equipment), associated production and 
exploration assets as defined in Sec.802.3(c), natural resources and 
assets incidental to the ownership of the real property, that has not 
generated total revenues in excess of $5 million during the thirty-six 
(36) months preceding the acquisition.
    (2) Unproductive real property does not include the following:
    (i) Manufacturing or non-manufacturing facilities that have not yet 
begun operation;
    (ii) Manufacturing or non-manufacturing facilities that were in 
operation at any time during the twelve (12) months preceding the 
acquisition; and
    (iii) Real property that is either adjacent to or used in 
conjunction with real property that is not unproductive real property 
and is included in the acquisition.
    (d) Office and residential property. (1) An acquisition of office or 
residential property shall be exempt from the requirements of the act. 
In an acquisition that includes office or residential property, the 
transfer of any assets

[[Page 663]]

that are not office or residential property shall be subject to the 
requirements of the act and these rules as if such assets were being 
transferred in a separate acquisition.
    (2) Office and residential property is real property that is used 
primarily for office or residential purposes. In determining whether 
real property is used primarily for office or residential purposes, all 
real property, the acquisition of which is exempt under another 
provision of the act and these rules, shall be excluded from the 
determination. Office and residential property includes:
    (i) Office buildings,
    (ii) Residences,
    (iii) Common areas on the property, including parking and 
recreational facilities, and
    (iv) Assets incidental to the ownership of such property, including 
cash, prepaid taxes or insurance, rental receivables and the like.
    (3) If the acquisition includes the purchase of a business conducted 
on the office and residential property, the transfer of that business, 
including the space in which the business is conducted, shall be subject 
to the requirements of the act and these rules as if such business were 
being transferred in a separate acquisition.
    (e) Hotels and motels. (1) An acquisition of a hotel or motel, its 
improvements such as golf, swimming, tennis, restaurant, health club or 
parking facilities (but excluding ski facilities), and assets incidental 
to the ownership and operation of the hotel or motel (e.g., prepaid 
taxes or insurance, management contracts and licenses to use trademarks 
associated with the hotel or motel being acquired) shall be exempt from 
the requirements of the act. In an acquisition that includes a hotel or 
motel, the transfer of any assets that are not a hotel or motel, its 
improvements such as golf, swimming, tennis, restaurant, health club or 
parking facilities (but excluding ski facilities) and assets incidental 
to the ownership of the hotel or motel, shall be subject to the 
requirements of the act and these rules as if they were being acquired 
in a separate acquisition.
    (2) Notwithstanding paragraph (1) of the section, an acquisition of 
a hotel or motel that includes a gambling casino shall be subject to the 
requirements of the act and these rules.
    (f) Recreational land. An acquisition of recreational land shall be 
exempt from the requirements of the act. Recreational land is real 
property used primarily as a golf course or a swimming or tennis club 
facility, and assets incidental to the ownership of such property. In an 
acquisition that includes recreational land, the transfer of any 
property or assets that are not recreational land shall be subject to 
the requirements of the act and these rules as if they were being 
acquired in a separate acquisition.
    (g) Agricultural property. An acquisition of agricultural property 
and assets incidental to the ownership of such property shall be exempt 
from the requirements of the Act. Agricultural property is real property 
that primarily generates revenues from the production of crops, fruits, 
vegetables, livestock, poultry, milk and eggs (certain activities within 
NAICS sector 11).
    (1) Agricultural property does not include either:
    (i) Processing facilities such as poultry and livestock 
slaughtering, processing and packing facilities; or
    (ii) Any real property and assets either adjacent to or used in 
conjunction with processing facilities that are included in the 
acquisition; or
    (iii) Timberland or other real property that generates revenues from 
activities within NAICS subsector 113 (Forestry and logging) or NAICS 
industry group 1153 (Support activities for forestry and logging).
    (2) In an acquisition that includes agricultural property, the 
transfer of any assets that are not agricultural property or assets 
incidental to the ownership of such property (cash, prepaid taxes or 
insurance, rentals receivable and the like) shall be subject to the 
requirements of the act and these rules as if such assets were being 
transferred in a separate acquisition.
    (h) Retail rental space; warehouses. An acquisition of retail rental 
space (including shopping centers) or warehouses and assets incidental 
to the ownership of retail rental space or warehouses shall be exempt 
from the requirements of the act, except when

[[Page 664]]

the retail rental space or warehouse is to be acquired in an acquisition 
of a business conducted on the real property. In an acquisition that 
includes retail rental space or warehouses, the transfer of any assets 
that are neither retail rental space nor warehouses shall be subject to 
the requirements of the act and these rules as if such assets were being 
transferred in a separate acquisition.

    Examples. 1. ``A,'' a major automobile manufacturer, builds a new 
automobile plant in anticipation of increased demand for its cars. The 
market does not improve and ``A'' never occupies the facility. ``A'' 
then sells the facility, which is fully equipped and ready for 
operation, to ``B,'' another automobile manufacturer. The acquisition of 
this plant, including any equipment and assets associated with its 
operation, is not exempt as an acquisition of a new facility, even 
though the facility has not produced any income, since ``A'' did not 
construct the facility for sale or hold it at all times solely for 
resale. Also, the acquisition is not exempt as an acquisition of 
unproductive property, because manufacturing facilities that have not 
yet begun operations are explicitly excluded from that exemption.
    2. ``B,'' a subsidiary of ``A,'' a financial institution, acquired a 
newly constructed power plant, which it leased to ``X'' pursuant to a 
lease financing arrangement. ``A's'' acquisition of the plant through B 
was exempt under Sec.802.63(a) as a bona fide credit transaction 
entered into in the ordinary course of ``A's'' business. ``X'' operated 
the plant as sole lessee for the next eight years and now proposes to 
exercise an option to buy the plant for in excess of $50 million (as 
adjusted). ``X's'' acquisition of the plant is exempt pursuant to Sec.
802.2(b). The plant is being acquired from B, the lessor, which held 
title to the plant for financing purposes, and the purchaser, ``X,'' has 
had sole and continuous possession and use of the plant since its 
construction.
    3. ``A'' proposes to acquire a tract of wilderness land from ``B'' 
for consideration in excess of $50 million (as adjusted). Copper 
deposits valued in excess of $50 million (as adjusted) and timber 
reserves valued in excess of $50 million (as adjusted) are situated on 
the land and will be conveyed as part of this transaction. During the 
last three fiscal years preceding the sale, the property generated 
$50,000 from the sale of a small amount of timber cut from the reserves 
two years ago. ``A's'' acquisition of the wilderness land from ``B'' is 
exempt as an acquisition of unproductive real property because the 
property did not generate revenues exceeding $5 million during the 
thirty-six months preceding the acquisition. The copper deposits and 
timber reserves are by definition unproductive real property and, thus, 
are not separately subject to the notification requirements.
    4. ``A'' proposes to purchase from ``B'' for in excess of $200 
million (as adjusted) an old steel mill that is not currently operating 
to add to ``A's'' existing steel production capacity. The mill has not 
generated revenues during the 36 months preceding the acquisition but 
contains equipment valued in excess of $50 million (as adjusted) that 
``A'' plans to refurbish for use in its operations. ``A's'' acquisition 
of the mill and the land on which it is located is exempt as 
unproductive real property. However, the transfer of the equipment and 
any assets other than the unproductive property is not exempt and is 
separately subject to the notification requirements of the act.
    5. ``A'' proposes to purchase two downtown lots, Parcels 1 and 2, 
from ``B'' for in excess of $50 million (as adjusted). Parcel 1, located 
in the southwest section, contains no structures or improvements. A 
hotel is located in the northeast section on Parcel 2, and it has 
generated $9 million in revenues during the past three years. The 
purchase of Parcel 1 is exempt if it qualifies as unproductive real 
property, i.e., it has not generated annual revenues in excess of $5 
million in the three fiscal years prior to the acquisition. Parcel 2 is 
not unproductive real property, but its acquisition is exempt under 
Sec.802.2(e) as the acquisition of a hotel.
    6. ``A'' plans to purchase from ``B,'' a manufacturer, a newly-
constructed building that ``B'' had intended to equip for use in its 
manufacturing operations. ``B'' was unable to secure financing to 
purchase the necessary equipment and ``A'', also a manufacturer, will be 
required to invest in excess of $50 million (as adjusted) in order to 
equip the building for use in its production operations. This building 
is not a new facility under Sec.802.2 (a), because it was not 
constructed or held by ``B'' for sale or resale. However, the 
acquisition of the building qualifies for exemption as unproductive real 
property pursuant to Sec.802.2(c)(1). The building is not yet a 
manufacturing facility since it does not contain equipment and requires 
significant capital investment before it can be used as a manufacturing 
facility.
    7. ``A'' proposes to purchase from ``B,'' for in excess of $50 
million (as adjusted), a 100 acre parcel of land that includes a 
currently operating factory occupying 10 acres. The other 90 adjoining 
acres are vacant and unimproved and are used by ``B'' for storage of 
supplies and equipment. The factory and the unimproved acreage have an 
aggregate fair market value of in excess of $50 million (as adjusted). 
The transaction is not exempt under Sec.802.2(c) because the vacant 
property is adjacent to property occupied by the operating factory. 
Moreover, if the 90 acres were

[[Page 665]]

not adjacent to the 10 acres occupied by the factory, the transaction 
would not be exempt because the 90 acres are being used in conjunction 
with the factory being acquired and thus are not unproductive property.
    8. ``X'' proposes to buy a five-story building from ``Y.'' The 
ground floor of this building houses a department store, and ``X'' 
currently leases the third floor to operate a medical laboratory. The 
remaining three floors are used for offices. ``X'' is not acquiring the 
business of the department store. Because the ground floor is rental 
retail space, the acquisition of which is exempt under Sec.802.2(h), 
this part of the building is excluded from the determination of whether 
the building is used primarily for office purposes. The laboratory is 
therefore the only non-office use, and, since it makes up 25 percent of 
the remainder of the building, the building is used 75 percent for 
offices. Thus the building qualifies as an office building and its 
acquisition is therefore exempt under Sec.802.2(d).
    9. ``A'' intends to acquire three shopping centers from ``B'' for a 
total of in excess of $200 million (as adjusted). The anchor stores in 
two of the shopping centers are department stores, the businesses of 
which ``A'' is buying from ``B'' as part of the overall transaction. The 
acquisition of the shopping centers is an acquisition of retail rental 
space that is exempt under Sec.802.2(h). However, ``A's'' acquisition 
of the department store businesses, including the portion of the 
shopping centers that the two department stores being purchased occupy, 
are separately subject to the notification requirements. If the value of 
these assets exceeds $50 million (as adjusted), ``A'' must comply with 
the requirements of the act for this part of the transaction.
    10. ``A'' wishes to purchase from ``B'' a parcel of land for in 
excess of $50 million (as adjusted). The parcel contains a race track 
and a golf course. The golf course qualifies as recreational land 
pursuant to Sec.802.2(f), but the race track is not included in the 
exemption. Therefore, if the value of the race track is more than $50 
million (as adjusted), ``A'' will have to file notification for the 
purchase of the race track.
    11. ``A'' intends to purchase a poultry farm from ``B.'' The 
acquisition of the poultry farm is a transfer of agricultural property 
that is exempt pursuant to Sec.802.2(g). If, however, ``B'' has a 
poultry slaughtering and processing facility on his farm that is 
included in the acquisition, ``A's'' acquisition of the farm is not 
exempt as an acquisition of agricultural property because agricultural 
property does not include property or assets adjacent to or used in 
conjunction with a processing facility that is included in an 
acquisition.
    12. ``A'' proposes to purchase the prescription drug wholesale 
distribution business of ``B'' for in excess of $50 million (as 
adjusted). The business includes six regional warehouses used for 
``B's'' national wholesale drug distribution business. Since ``A'' is 
acquiring the warehouses in connection with the acquisition of ``B's'' 
prescription drug wholesale distribution business, the acquisition of 
the warehouses is not exempt.

[61 FR 13686, Mar. 28, 1996, as amended at 66 FR 8692, Feb. 1, 2001; 66 
FR 23565, May 9, 2001; 67 FR 11903, Mar. 18, 2002; 70 FR 4993, Jan. 31, 
2005; 70 FR 11513, Mar. 8, 2005]



Sec.802.3  Acquisitions of carbon-based mineral reserves.

    (a) An acquisition of reserves of oil, natural gas, shale or tar 
sands, or rights to reserves of oil, natural gas, shale or tar sands 
together with associated exploration or production assets shall be 
exempt from the requirements of the act if the value of the reserves, 
the rights and the associated exploration or production assets to be 
held as a result of the acquisition does not exceed $500 million. In an 
acquisition that includes reserves of oil, natural gas, shale or tar 
sands, or rights to reserves of oil, natural gas, shale or tar sands and 
associated exploration or production assets, the transfer of any other 
assets shall be subject to the requirements of the act and these rules 
as if they were being acquired in a separate acquisition.
    (b) An acquisition of reserves of coal, or rights to reserves of 
coal and associated exploration or production assets, shall be exempt 
from the requirements of the act if the value of the reserves, the 
rights and the associated exploration or production assets to be held as 
a result of the acquisition does not exceed $200 million. In an 
acquisition that includes reserves of coal, rights to reserves of coal 
and associated exploration or production assets, the transfer of any 
other assets shall be subject to the requirements of the act and these 
rules as if they were being acquired in a separate acquisition.
    (c) Associated exploration or production assets means equipment, 
machinery, fixtures and other assets that are integral and exclusive to 
current or future exploration or production activities associated with 
the carbon-based mineral reserves that are being acquired. Associated 
exploration or production assets do not include the following:

[[Page 666]]

    (1) Any pipeline and pipeline system or processing facility which 
transports or processes oil and gas after it passes through the meters 
of a producing field located within reserves that are being acquired; 
and
    (2) Any pipeline or pipeline system that receives gas directly from 
gas wells for transportation to a natural gas processing facility or 
other destination.

    Examples: 1. ``A'' proposes to purchase from ``B'' for $550 million 
gas reserves that are not yet in production and have not generated any 
income. ``A'' will also acquire from ``B'' for $280 million producing 
oil reserves and associated assets such as wells, compressors, pumps and 
other equipment. The acquisition of the gas reserves is exempt as a 
transfer of unproductive property under Sec.802.2(c). The acquisition 
of the oil reserves and associated assets is exempt pursuant to Sec.
802.3(a), since the value of the reserves and associated assets does not 
exceed the $500 million limitation.
    2. ``A,'' an oil company, proposes to acquire for $180 million oil 
reserves currently in production along with field pipelines and treating 
and metering facilities which serve such reserves exclusively. The 
acquisition of the reserves and the associated assets are exempt. ``A'' 
will also acquire from ``B'' for in excess of $50 million (as adjusted) 
a natural gas processing plant and its associated gathering pipeline 
system. This acquisition is not exempt since Sec.802.3(c) excludes 
these assets from the exemption in Sec.802.3 for transfers of 
associated exploration or production assets.
    3. ``A,'' an oil company, proposes to acquire a coal mine currently 
in operation and associated production assets for $90 million from 
``B,'' an oil company. ``A'' will also purchase from ``B'' producing oil 
reserves valued at $100 million and an oil refinery valued at $13 
million. The acquisition of the coal mine and the oil reserves is exempt 
pursuant to Sec.802.3. Although Sec.802.3(c) excludes the refinery 
from the exemption in Sec.802.3 for transfers of associated 
exploration and production assets, ``A's'' acquisition of the refinery 
is not subject to the notification requirements of the act because its 
value does not exceed $50 million (as adjusted).
    4. ``X'' proposes to acquire from ``Z'' coal reserves which, 
together with associated exploration assets, are valued at $230 million. 
Since the value of the reserves and the assets exceeds the $200 million 
limitation in Sec.802.3(b), this transaction is not exempt under Sec.
802.3. However, if the coal reserves qualify as unproductive property 
under the requirements of Sec.802.2(c), their acquisition, along with 
the acquisition of their associated assets, would be exempt.

[61 FR 13688, Mar. 28, 1996, as amended at 66 FR 8692, Feb. 1, 2001; 70 
FR 4994, Jan. 31, 2005]



Sec.802.4  Acquisitions of voting securities of issuers or non-
corporate interests in unincorporated entities holding certain 
assets the acquisition of which is exempt.

    (a) An acquisition of voting securities of an issuer or non-
corporate interests in an unincorporated entity whose assets together 
with those of all entities it controls consist or will consist of assets 
whose acquisition is exempt from the requirements of the Act pursuant to 
section 7A(c) of the Act, this part 802, or pursuant to Sec.801.21, is 
exempt from the reporting requirements if the acquired issuer or 
unincorporated entity and all entities it controls do not hold non-
exempt assets with an aggregate fair market value of more than $50 
million (as adjusted). The value of voting or non-voting securities of 
any other issuer or interests in any unincorporated entity not included 
within the acquired issuer or unincorporated entity does not count 
toward the $50 million (as adjusted) limitation for non-exempt assets.
    (b) For purposes of paragraph (a) of this section, the assets of all 
issuers and unincorporated entities that are being acquired from the 
same acquired person are included in determining if the limitation for 
non-exempt assets is exceeded.
    (c) In connection with paragraph (a) of this section and Sec.
801.15 (b), the value of the assets of an issuer whose voting securities 
or an unincorporated entity whose non-corporate interests are being 
acquired pursuant to this section shall be the fair market value, 
determined in accordance with Sec.801.10(c).

    Examples: 1. ``A,'' a real estate investment company, proposes to 
purchase 100 percent of the voting securities of C, a wholly-owned 
subsidiary of ``B,'' a construction company. C's assets are a newly 
constructed, never occupied hotel, including fixtures, furnishings and 
insurance policies. The acquisition of the hotel would be exempt under 
Sec.802.2(a) as a new facility and under Sec.802.2(d). Therefore, 
the acquisition of the voting securities of C is exempt pursuant to 
Sec.802.4(a) since C holds

[[Page 667]]

assets whose direct purchase would be exempt under Sec.802.2 and does 
not hold non-exempt assets exceeding $50 million (as adjusted) in value.
    2. ``A'' proposes to acquire 60 percent of the voting securities of 
C from ``B.'' C's assets consist of a portfolio of mortgages valued at 
$55 million and a small manufacturing plant valued at $26 million. The 
manufacturing plant is an operating unit for purposes of Sec.802.1(a). 
Since the acquisition of the mortgages would be exempt pursuant to 
Section 7A(c)(2) of the act and since the value of the non-exempt 
manufacturing plant is less than $50 million (as adjusted), this 
acquisition is exempt under Sec.802.4(a).
    3. ``A'' proposes to acquire from ``B'' 100 percent of the voting 
securities of each of three issuers, M, N and O, simultaneously. M's 
assets consist of oil reserves worth $160 million and coal reserves 
worth $40 million. N has assets consisting of $130 million of gas 
reserves and $100 million of coal reserves. O's assets are oil shale 
reserves worth $140 million and a coal mine worth $80 million. Since 
``A'' is simultaneously acquiring the voting securities of three issuers 
from the same acquired person, it must aggregate the assets of the 
issuers to determine if any of the limitations in Sec.802.3 is 
exceeded. As a result of aggregating the assets of M, N and O, ``A's'' 
holdings of oil and gas reserves are below the $500 limitation for such 
assets in Sec.802.3(a). However, the aggregated holdings exceed the 
$200 million limitation for coal reserves in Sec.802.3(b). ``A's'' 
acquisition therefore is not exempt, and it must report the entire 
transaction.

[61 FR 13688, Mar. 28, 1996, as amended at 66 FR 8693, Feb. 1, 2001; 70 
FR 4994, Jan. 31, 2005; 70 FR 11513, Mar. 8, 2005; 76 FR 42482, July 19, 
2011]



Sec.802.5  Acquisitions of investment rental property assets.

    (a) Acquisitions of investment rental property assets shall be 
exempt from the requirements of the act.
    (b) Investment rental property assets. ``Investment rental property 
assets'' means real property that will not be rented to entities 
included within the acquiring person except for the sole purpose of 
maintaining, managing or supervising the operation of the real property, 
and will be held solely for rental or investment purposes. In an 
acquisition that includes investment rental property assets, the 
transfer of any property or assets that are not investment rental 
property assets shall be subject to the requirements of the act and 
these rules as if they were being acquired in a separate transaction. 
Investment rental property assets include:
    (1) Property currently rented,
    (2) Property held for rent but not currently rented,
    (3) Common areas on the property, and
    (4) Assets incidental to the ownership of property, which may 
include cash, prepaid taxes or insurance, rental receivables and the 
like.
    Example: 1. ``X'', a corporation, proposes to purchase a sports/
entertainment complex which it will rent to professional sports teams 
and promoters of special events for concerts, ice shows, sporting events 
and other entertainment activities. ``X'' will provide office space in 
the complex for ``Y'', a management company which will maintain and 
manage the facility for ``X.'' This acquisition is an exempt acquisition 
of investment rental property assets since ``X'' intends to rent the 
facility to third parties and is providing space within the facility to 
a management company solely to maintain, manage or supervise the 
operation of the facility on its behalf. If, however, ``X'' controls Z, 
a concert promoter to whom it also intends to rent the complex, the 
acquisition would not be exempt under Sec.802.5, since the property 
would not meet the requirements of Sec.802.5(b)(1).
    2. ``X'' intends to buy from ``Y'' a development commonly referred 
to as an industrial park. The industrial park contains a warehouse/
distribution center, a retail tire and automobile parts store, an office 
building, and a small factory. The industrial park also contains several 
parcels of vacant land. If ``X'' intends to acquire this industrial park 
as investment rental property, the acquisition will be exempt pursuant 
to Sec.802.5. If, however, ``X'' intends to use the factory for its 
own manufacturing operations, this exemption would be unavailable. The 
exemptions in Sec.802.2 for warehouses, rental retail space, office 
buildings, and undeveloped land may still apply and, if the value of the 
factory is $50 million (as adjusted) or less, the entire transaction may 
be exempted by that section.

[61 FR 13688, Mar. 28, 1996, as amended at 66 FR 8693, Feb. 1, 2001; 70 
FR 4994, Jan. 31, 2005]



Sec.802.6  Federal agency approval.

    (a) For the purposes of section 7A (c)(6) and (c)(8), the term 
information and documentary material includes one copy of all documents, 
application forms, and all written submissions of

[[Page 668]]

any type whatsoever. In lieu of providing all such information and 
documentary material, or any portion thereof, one copy of an index 
describing such information and documentary material may be provided, 
together with a certification that any such information or documentary 
material not provided will be provided within 10 calendar days upon 
request by the Federal Trade Commission or Assistant Attorney General, 
or a delegated official of either. Any material submitted pursuant to 
this section shall be submitted to the offices specified in Sec.
803.10(c).
    (b)(1) A mixed transaction is one that has some portion that is 
exempt under Section 7A (c)(6), (c)(7) or (c)(8) because it requires 
regulatory agency premerger competitive review and approval, and another 
portion that does not require such review.
    (2) The portion of a mixed transaction that does not require advance 
competitive review and approval by a regulatory agency is subject to the 
act and these rules as if it were being acquired in a separate 
acquisition.

    Example: Bank ``A'' acquires Bank ``B'', which owns a financial 
subsidiary engaged in securities underwriting. ``A'''s acquisition of 
``B'' requires agency approval by the Office of the Comptroller of the 
Currency, the Board of Governors of the Federal Reserve System or 
Federal Deposit Insurance Corporation (depending on whether ``A'' is a 
national bank, state member bank, or state non-member bank under section 
18(c) of the FDI Act), and therefore is exempt from filing under Section 
7A (c)(7). However, the acquisition of the financial subsidiary is 
subject to HSR reporting requirements, and ``A'' and ``B'' each must 
make a filing for that portion of the transaction and observe the 
waiting period if the act's thresholds are met.

[43 FR 33544, July 31, 1978, as amended at 48 FR 34435, July 29, 1983; 
66 FR 8693, Feb. 1, 2001; 67 FR 11903, Mar. 18, 2002]



Sec.802.8  Certain supervisory acquisitions.

    (a) A merger, consolidation, purchase of assets, or acquisition 
requiring agency approval under sections 403 or 408(e) of the National 
Housing Act, 12 U.S.C. 1726, 1730a(e), or under section 5 of the Home 
Owners' Loan Act of 1933, 12 U.S.C. 1464, shall be exempt from the 
requirements of the act, including specifically the filing requirement 
of Section 7A(c)(8), if the agency whose approval is required finds that 
approval of such merger, consolidation, purchase of assets, or 
acquisition is necessary to prevent the probable failure of one of the 
institutions involved.
    (b)(1) A merger, consolidation, purchase of assets, or acquisition 
which requires agency approval under 12 U.S.C. 1817(j) or 12 U.S.C. 
1730(q) shall be exempt from the requirements of the act if copies of 
all information and documentary materials filed with any such agency are 
contemporaneously filed with the Federal Trade Commission and the 
Assistant Attorney General at least 30 days prior to consummation of the 
proposed acquisition.
    (2) A transaction described in paragraph (b)(1) of this section 
shall be exempt from the requirements of the act, including specifically 
the filing requirement, if the agency whose approval is required finds 
that approval of such transaction is necessary to prevent the probable 
failure of one of the institutions involved.

[43 FR 33544, July 31, 1978, as amended at 48 FR 34436, July 29, 1983; 
67 FR 11903, Mar. 18, 2002]



Sec.802.9  Acquisition solely for the purpose of investment.

    An acquisition of voting securities shall be exempt from the 
requirements of the act pursuant to section 7A(c)(9) if made solely for 
the purpose of investment and if, as a result of the acquisition, the 
acquiring person would hold ten percent or less of the outstanding 
voting securities of the issuer, regardless of the dollar value of 
voting securities so acquired or held.

    Examples: 1. Suppose that acquiring person ``A'' acquires 6 percent 
of the voting securities of issuer X, valued in excess of $50 million 
(as adjusted). If the acquisition is solely for the purpose of 
investment, it is exempt under Section 7A(c)(9).
    2. After the acquisition in example 1, ``A'' decides to acquire an 
additional 7 percent of the voting securities of X. Regardless of ``A'' 
's intentions, the acquisition is not exempt under section 7A(c)(9).
    3. After the acquisition in example 1, acquiring person ``A'' 
decides to participate in the management of issuer X. Any subsequent

[[Page 669]]

acquisitions of X stock by ``A'' would not be exempt under section 
7A(c)(9).

[43 FR 33544, July 31, 1978, as amended at 66 FR 8693, Feb. 1, 2001; 70 
FR 4994, Jan. 31, 2005]



Sec.802.10  Stock dividends and splits; reorganizations.

    (a) The acquisition of voting securities pursuant to a stock split 
or pro rata stock dividend is exempt from the requirements of the Act 
under section 7A(c)(10).
    (b) An acquisition of non-corporate interests or voting securities 
as a result of the conversion of a corporation or unincorporated entity 
into a new entity is exempt from the requirements of the Act if:
    (1) No new assets will be contributed to the new entity as a result 
of the conversion; and
    (2) Either:
    (i) As a result of the transaction the acquiring person does not 
increase its per centum holdings in the new entity relative to its per 
centum holdings in the original entity; or
    (ii) The acquiring person controlled the original entity.

    Examples: 1. Partners A and B hold 60 percent and 40 percent 
respectively of the partnership interests in C. C is converted to a 
corporation in which A and B hold 60 percent and 40 percent respectively 
of the voting securities. No new assets are contributed. The conversion 
to a corporation is exempt from notification for both A and B.
    2. Shareholder A holds 55% and B holds 45% of the voting securities 
of corporation C. C is converted to a limited liability company in which 
A holds 60% and B holds 40% of the membership interests. No new assets 
are contributed. The conversion to a limited liability company is exempt 
from notification because A controlled the corporation. If however, B 
holds 55% and A holds 45% in the new limited liability company, the 
conversion is not exempt for B and may require notification because 
control changes.
    3. Shareholders A, B and C each hold one third of the voting 
securities of corporation X. Pursuant to a reorganization agreement, A 
and B each contribute new assets to X and C contributes cash. X is then 
being reincorporated in a new state. Each of A, B and C receive one 
third of the voting securities of newly reincorporated C. The 
reincorporation is not exempt from notification and may be reportable 
for A, B and C because of the contribution of new assets.

[70 FR 11513, Mar. 8, 2005]



Sec.802.20  [Reserved]



Sec.802.21  Acquisitions of voting securities not meeting or exceeding
greater notification threshold (as adjusted).

    (a) An acquisition of voting securities shall be exempt from the 
requirements of the act if:
    (1) The acquiring person and all other persons required by the act 
and these rules to file notification filed notification with respect to 
an earlier acquisition of voting securities of the same issuer;
    (2) The waiting period with respect to the earlier acquisition has 
expired, or been terminated pursuant to Sec.803.11, and the 
acquisition will be consummated within 5 years of such expiration or 
termination; and
    (3) The acquisition will not increase the holdings of the acquiring 
person to meet or exceed a notification threshold (as adjusted) greater 
than the greatest notification threshold met or exceeded in the earlier 
acquisition.

    Examples: 1. In 2004, Corporation A acquired $53 million of the 
voting securities of corporation B and both ``A'' and ``B'' filed 
notification as required, indicating the $50 million threshold. Within 
five years of the expiration of the original waiting period, ``A'' 
acquires additional voting securities of B but not in an amount 
sufficient to meet or exceed $100 million (as adjusted) or 50 percent of 
the voting securities of B. No additional notification is required.
    2. In 2004, Corporation A acquired $53 million of the voting 
securities of corporation B and both ``A'' and ``B'' filed notification 
as required, indicating the $50 million threshold. Suppose that in year 
three following the expiration of the waiting period, the $50 million 
notification threshold has been adjusted to $56 million pursuant to 
Section 7A(a)(2)(a) of the Act. ``A'' now intends to acquire an 
additional $5 million of the voting securities of B. ``A'' is not 
required to file another notification even though it now holds voting 
securities in excess of the $56 million notification threshold (which is 
greater than the $50 million notification threshold indicated in its 
filing), because it has not met or exceeded a notification threshold (as 
adjusted) greater than the notification threshold exceeded in the 
earlier acquisition (i.e. $100 million (as adjusted) or 50% notification 
thresholds).
    3. Same facts as in Example 2 above except now the five year period 
has expired. Suppose that, the $50 million notification threshold has 
been adjusted to $57 million

[[Page 670]]

pursuant to Section 7A(a)(2)(a) of the Act. ``A'' now holds $58 million 
of voting securities of B. Because Sec.802.21(a)(2) is no longer 
satisfied, the acquisition of any additional voting securities of B will 
require a new filing because ``A'' will hold voting securities valued in 
excess of the $57 million notification threshold. If, however, the $50 
million notification threshold had been adjusted to $60 million at the 
end of the five-year period, A could acquire up to that threshold 
without a new filing.
    4. This section also allows a person to recross any of the threshold 
notification levels that were in effect at the time of filing 
notification any number of times within five years of the expiration of 
the waiting period following notification. Thus, if in Example 1, ``A'' 
had disposed of some voting securities so that it held less than $50 
million of the voting securities of B, and thereafter had increased its 
holdings to more than $50 million but less than $100 million or 50 
percent of B, notification would not be required if the increase 
occurred within 5 years of the expiration of the original waiting 
period.
    5. A files notification at the $50 million notification threshold 
and acquires $51 million of the voting securities of B in the year 
following expiration of the waiting period. The next greater 
notification threshold at the time of filing was $100 million. In year 
three, the $100 million notification threshold has been adjusted to $106 
million. A can now acquire up to, but not meet or exceed, voting 
securities of B valued at $106 million. As the original $100 million 
threshold is adjusted upward in years four and five, A can acquire up to 
those new thresholds as the adjustments are effected.
    6. A files notification at the $50 million threshold in January of 
year one. In February of year one, the $50 million threshold is adjusted 
to $52 million. A only needs to acquire in excess of $50 million of 
voting securities of B, not in excess of $52 million, to have exceeded 
the threshold which was filed for in the year following expiration of 
the waiting period (see Sec.803.7). It may then acquire up to the next 
greater notification threshold (as adjusted) during the five years 
following expiration of the waiting period.

    (b) [Reserved]

[43 FR 33544, July 31, 1978, as amended at 66 FR 8693, Feb. 1, 2001; 67 
FR 11906, Mar. 18, 2002; 70 FR 4995, Jan. 31, 2005; 76 FR 42482, July 
19, 2011]



Sec.802.23  Amended or renewed tender offers.

    Whenever a tender offer is amended or renewed after notification has 
been filed by the offeror, no new notification shall be required, and 
the running of the waiting period shall be unaffected, except as 
follows:
    (a) If the number of voting securities to be acquired pursuant to 
the offer is increased such that a greater notification threshold would 
be met or exceeded, only the acquiring person need again file 
notification, but a new waiting period must be observed;
    (b) If a noncash tender offer is amended to become a cash tender 
offer, (1) one copy of the amended tender offer shall be filed in the 
manner prescribed by Sec.803.10(c) with the Federal Trade Commission 
and Assistant Attorney General, and (2) subject to the provisions of 
Sec.803.10(b)(1), the waiting period shall expire on the 15th day 
after the date of receipt (determined in accordance with Sec.
803.10(c)) of the amended tender offer, or on the 30th day after filing 
notification, whichever is earlier; or
    (c) If a cash tender offer is amended to become a noncash tender 
offer, (1) one copy of the amended tender offer shall be filed in the 
manner prescribed by Sec.803.10(c) with the Federal Trade Commission 
and Assistant Attorney General, and (2) subject to the provisions of 
Sec.803.10(b)(1), the waiting period shall expire on the 15th day 
after the date of receipt (as determined in accordance with Sec.
803.10(c)) of the amended tender offer, or on the 30th day after filing 
notification, whichever is later.

    Examples: 1. Assume that corporation A makes a tender offer for 20 
percent of the voting securities of corporation B and that ``A'' files 
notification. Under this section, if A subsequently amends its tender 
offer only as to the amount of consideration offered, the waiting period 
so commenced is not affected, and no new notification need be filed.
    2. In the previous example, assume that A makes an amended tender 
offer for 27 percent of the voting securities of B, valued at greater 
than $1 billion. Since a new notification threshold will be crossed, 
this section requires that ``A'' must again file notification and 
observe a new waiting period. Paragraph (a) of this section, however, 
provides that ``B'' need not file notification again.
    3. Assume that ``A'' makes a tender offer for shares of corporation 
B. ``A'' includes its voting securities as part of the consideration. 
``A'' files notification. Five days later, ``A'' changes its tender 
offer to a cash tender offer, and on the same day files copies of its 
amended tender offer with the offices designated in Sec.803.10(c). 
Under paragraph (b) of

[[Page 671]]

this section, the waiting period expires (unless extended or terminated) 
15 days after the receipt of the amended offer (on the 20th day after 
filing notification), since that occurs earlier than the expiration of 
the original waiting period (which would occur on the 30th day after 
filing).
    4. Assume that ``A'' makes a cash tender offer for shares of 
corporation B and files notification. Six days later, ``A'' amends the 
tender offer and adds voting securities as consideration, and on the 
same day files copies of the amended tender offer with the offices 
designated in Sec.803.10(c). Under paragraph (c) of this section, the 
waiting period expires (unless extended or terminated) on the 30th day 
following the date of filing of notification (determined under Sec.
803.10(c)), since that occurs later than the 15th day after receipt of 
the amended tender offer (which would occur on the 21st day).

[43 FR 33544, July 31, 1978; 43 FR 36054, Aug. 15, 1978, as amended at 
66 FR 8694, Feb. 1, 2001]



Sec.802.30  Intraperson transactions.

    (a) An acquisition (other than the formation of a corporation or 
unincorporated entity under Sec.801.40 or Sec.801.50 of this 
chapter) in which the acquiring and at least one of the acquired persons 
are, the same person by reason of Sec.801.1(b)(1) of this chapter, or 
in the case of a not-for-profit corporation which has no outstanding 
voting securities, by reason of Sec.801.1(b)(2) of this chapter, is 
exempt from the requirements of the Act.

    Examples to paragraph (a): 1. A and B each have the right to 50% of 
the profits of partnership X. A also holds 100% of the voting securities 
of corporation Y. A pays B in excess of $50 million in cash (as 
adjusted) and transfers certain assets of X to Y. Because A is the 
acquiring person through its control of Y, pursuant to Sec.
801.1(b)(1)(i), and one of the acquired persons through its control of X 
pursuant to Sec.801.1(b)(1)(ii), the acquisition of assets is exempt 
under Sec.802.30(a).
    2. A and B each have the right to 50% of the profits of partnership 
X. A contributes assets to X valued in excess of $50 million (as 
adjusted). B contributes cash to X. Because B is an acquiring person but 
not an acquired person, its acquisition of the assets contributed to X 
by A is not exempt under Sec.802.30(a). However, A is both an 
acquiring and acquired person, and its acquisition of the assets it is 
contributing to X is exempt under Sec.802.30(a).

    (b) The formation of any wholly owned entity is exempt from the 
requirements of the Act.
    (c) For purposes of applying Sec.802.4(a) to an acquisition that 
may be reportable under Sec.801.40 or Sec.801.50, assets, voting 
securities, or non-corporate interests contributed by the acquiring 
person to a new entity upon its formation are assets, voting securities, 
or non- corporate interests whose acquisition by that acquiring person 
is exempt from the requirements of the Act.

    Examples to paragraph (c): 1. A and B form a new partnership to 
which A contributes a manufacturing plant valued at $102 million and 
acquires a 51% interest in the partnership. B contributes $98 million in 
cash and acquires a 49% interest. B is not acquiring non-corporate 
interests which confer control of the partnership and therefore is not 
making a reportable acquisition. A is acquiring non-corporate interests 
which confer control of the partnership, however, the manufacturing 
plant it is contributing to the formation is exempt under Sec.
802.30(c) and the cash contributed by B is excluded under Sec.801.21, 
therefore, the acquisition of non-corporate interests by A is exempt 
under Sec.802.4.
    2. A and B form a new corporation to which A contributes a plant 
valued at $120 million and acquires 60% of the voting securities of the 
new corporation. B contributes a plant valued at $80 million and 
acquires 40% of the voting securities of the new corporation. While the 
assets contributed to the formation are exempted by Sec.802.30(c) for 
each of A and B, the new corporation holds more than $50 million (as 
adjusted) in non-exempt assets (the plant contributed by the other 
person) with respect to both acquisitions. A is now acquiring voting 
securities of an issuer which holds $80 million in non-exempt assets 
(the plant contributed by B), and B is acquiring voting securities of an 
issuer which holds $120 million in non-exempt assets (the plant 
contributed by A). Therefore neither acquisition of voting securities is 
exempt under Sec.802.4. Note that in contrast to the formation of the 
partnership in Example 1, B is not required to acquire a controlling 
interest in the corporation in order to have a reportable transaction.
    3. A and B form a 50/50 partnership. A contributes a plant valued at 
$100 million and B contributes a plant valued at $40 million and $60 
million in cash. Because with respect to A, the new partnership has non-
exempt assets of $40 million (the plant contributed by B), A's 
acquisition of non-corporate interests is exempt under Sec.802.4. With 
respect to B, the new partnership holds in excess of $50 million (as 
adjusted) in non-exempt assets (the plant contributed by A), therefore 
B's

[[Page 672]]

acquisition of non-corporate interests would not be exempt under Sec.
802.4.

[70 FR 11513, Mar. 8, 2005, as amended at 83 FR 32771, July 16, 2018]



Sec.802.31  Acquisitions of convertible voting securities.

    Acquisitions of convertible voting securities shall be exempt from 
the requirements of the act.

    Example: This section applies regardless of the dollar value of the 
convertible voting securities held or to be acquired. Note, however, 
that subsequent conversions of convertible voting securities may be 
subject to the requirements of the act. See Sec.801.32.

[43 FR 33544, July 31, 1978, as amended at 66 FR 8694, Feb. 1, 2001]



Sec.802.35  Acquisitions by employee trusts.

    An acquisition of voting securities shall be exempt from the 
notification requirements of the act if:
    (a) The securities are acquired by a trust that meets the 
qualifications of section 401 of the Internal Revenue Code;
    (b) The trust is controlled by a person that employs the 
beneficiaries and,
    (c) The voting securities acquired are those of that person or an 
entity within that person.

    Examples: 1. Company A establishes a trust for its employees that 
meets the qualifications of section 401 of the Internal Revenue Code. 
Company A has the power to designate the trustee of the trust. That 
trust then acquires 30% of the voting securities of Company A for in 
excess of $50 million (as adjusted). Later, the trust acquires 20% of 
the stock of Company B, a wholly-owned subsidiary of Company A, for in 
excess of $50 million (as adjusted). Neither acquisition is reportable.
    2. Assume that in the example above, ``A'' has total assets of $100 
million (as adjusted). ``C'' also has total assets of $100 million (as 
adjusted) and is not controlled by Company A. The trust controlled by 
Company A plans to acquire 40 percent of the voting securities of 
Company C for in excess of $50 million (as adjusted). Since Company C is 
not included within ``A,'' ``A'' must observe the requirements of the 
act before the trust makes the acquisition of Company C's shares.

[52 FR 7082, Mar. 6, 1987, as amended at 66 FR 8694, Feb. 1, 2001; 70 FR 
4995, Jan. 31, 2005]



Sec.802.40  Exempt formation of corporations or unincorporated
entities.

    The formation of an entity is exempt from the requirements of the 
Act if the entity will be not-for-profit within the meaning of sections 
501(c)(1)-(4), (6)-(15), (17)-(20) or (d) of the Internal Revenue Code.

[70 FR 11514, Mar. 8, 2005]



Sec.802.41  Corporations or unincorporated entities at time 
of formation.

    Whenever any person(s) contributing to the formation of an entity 
are subject to the requirements of the Act by reason of Sec.801.40 or 
Sec.801.50 of this chapter, the new entity need not file the 
notification required by the Act and Sec.803.1 of this chapter.

    Examples: 1. Corporations A and B, each having sales of in excess of 
$100 million (as adjusted), each propose to contribute in excess of $50 
million (as adjusted) in assets in exchange for 50 percent of the voting 
securities of a new corporation, N. Under this section, the new 
corporation need not file notification, although both A and B must do so 
and observe the waiting period prior to receiving any voting securities 
of N.
    2. In addition to the facts in Example 1 of this section, A and B 
have agreed that upon creation N will purchase 100 percent of the voting 
securities of corporation C for in excess of $50 million (as adjusted). 
Because N's purchase of C is not a transaction in connection with N's 
formation, and because in any event C is not a contributor to the 
formation of N, ``A,'' ``B'' and ``C'' must file with respect to the 
proposed acquisition of C and must observe the waiting period.

[43 FR 33544, July 31, 1978, as amended at 52 FR 7082, Mar. 6, 1987; 70 
FR 4995, Jan. 31, 2005; 70 FR 11514, Mar. 8, 2005; 83 FR 32771, July 16, 
2018]



Sec.802.42  Partial exemption for acquisitions in connection with
the formation of certain joint ventures or other corporations.

    (a) Whenever one or more of the contributors in the formation of a 
joint venture or other corporation which otherwise would be subject to 
the requirements of the act by reason of Sec.801.40 are exempt from 
these requirements under section 7A(c)(8), any other contributor in the 
formation which is subject to the act and not exempt under section 
7A(c)(8) need not file a

[[Page 673]]

Notification and Report Form, provided that no less than 30 days prior 
to the date of consummation any such contributor claiming this exemption 
has submitted an affidavit to the Federal Trade Commission and to the 
Assistant Attorney General stating its good faith intention to make the 
proposed acquisition and asserting the applicability of this exemption.
    (b) Persons relieved of the requirement to file a Notification and 
Report Form pursuant to paragraph (a) of this section remain subject to 
all other provisions of the act and these rules.

[48 FR 34436, July 29, 1983]



Sec.802.50  Acquisitions of foreign assets.

    (a) The acquisition of assets located outside the United States 
shall be exempt from the requirements of the act unless the foreign 
assets the acquiring person would hold as a result of the acquisition 
generated sales in or into the U.S. exceeding $50 million (as adjusted) 
during the acquired person's most recent fiscal year.
    (b) Where the foreign assets being acquired exceed the threshold in 
paragraph (a) of this section, the acquisition nevertheless shall be 
exempt where:
    (1) Both acquiring and acquired persons are foreign;
    (2) The aggregate sales of the acquiring and acquired persons in or 
into the United States are less than $110 million (as adjusted) in their 
respective most recent fiscal years;
    (3) The aggregate total assets of the acquiring and acquired persons 
located in the United States (other than investment assets, voting or 
nonvoting securities of another person, and assets included pursuant to 
Sec.801.40(d)(2) of this chapter) are less than $110 million (as 
adjusted); and
    (4) The transaction does not meet the criteria of Section 
7A(a)(2)(A).

    Example to Sec.802.50: 1. Assume that ``A'' and ``B'' are both 
U.S. persons. ``A'' proposes selling to ``B'' a manufacturing plant 
located abroad. Sales in or into the United States attributable to the 
plant totaled $13 million in the most recent fiscal year. The 
transaction is exempt under this paragraph (a) of this section.
    2. Sixty days after the transaction in example 1, ``A'' proposes to 
sell to ``B'' a second manufacturing plant located abroad; sales in or 
into the United States attributable to this plant, when combined with 
the sales into the United States of the first plant, totaled in excess 
of $50 million (as adjusted) in the most recent fiscal year. Since ``B'' 
would be acquiring the second plant within 180 days of the first plant, 
both plants would be considered assets of ``A'' held by ``B'' as a 
result of the second acquisition (see Sec.801.13(b)(2) of this 
chapter). Since the total sales in or into the United States exceed $50 
million (as adjusted), the acquisition of the second plant would not be 
exempt under this paragraph (a) of this section.
    3. Assume that ``A'' and ``B'' are foreign persons with aggregate 
sales in or into the United States of in excess of $110 million (as 
adjusted). If ``A'' acquires only foreign assets of ``B,'' and if those 
assets generated $50 million (as adjusted) or less in sales in or into 
the United States, the transaction is exempt.
    4. Assume that ``A'' and ``B'' are foreign persons with aggregate 
sales in or into the United States and assets located in the United 
Sates of less than $110 million (as adjusted). If ``A'' acquires only 
foreign assets of ``B,'' and those assets generated in excess of $50 
million (as adjusted) in sales in or into the United States during the 
most recent fiscal year, the transaction is exempt from reporting if the 
assets are valued at $200 million (as adjusted) or less, but is 
reportable if valued at greater than $200 million (as adjusted).

[67 FR 11903, Mar. 18, 2002, as amended at 70 FR 4995, Jan. 31, 2005]



Sec.802.51  Acquisitions of voting securities of a foreign issuer.

    (a) By U.S. persons. (1) The acquisition of voting securities of a 
foreign issuer by a U.S. person shall be exempt from the requirements of 
the act unless the issuer (including all entities controlled by the 
issuer) either: holds assets located in the United States (other than 
investment assets, voting or nonvoting securities of another person, and 
assets included pursuant to Sec.801.40(d)(2) of this chapter) having 
an aggregate total value of over $50 million (as adjusted); or made 
aggregate sales in or into the United States of over $50 million (as 
adjusted) in its most recent fiscal year.
    (2) If interests in multiple foreign issuers are being acquired from 
the same acquired person, the assets located in the United States and 
sales in or into the United States of all the

[[Page 674]]

issuers must be aggregated to determine whether either $50 million (as 
adjusted) limitation is exceeded.
    (b) By foreign persons. (1) The acquisition of voting securities of 
a foreign issuer by a foreign person shall be exempt from the 
requirements of the act unless the acquisition will confer control of 
the issuer and the issuer (including all entities controlled by the 
issuer) either: holds assets located in the United States (other than 
investment assets, voting or nonvoting securities of another person, and 
assets included pursuant to Sec.801.40(d)(2) of this chapter) having 
an aggregate total value of over $50 million (as adjusted); or made 
aggregate sales in or into the United States of over $50 million (as 
adjusted) in its most recent fiscal year.
    (2) If controlling interests in multiple foreign issuers are being 
acquired from the same acquired person, the assets located in the United 
States and sales in or into the United States of all the issuers must be 
aggregated to determine whether either $50 million (as adjusted) 
limitation is exceeded.
    (c) Where a foreign issuer whose securities are being acquired 
exceeds the threshold in paragraph (b)(1) of this section, the 
acquisition nevertheless shall be exempt where:
    (1) Both acquiring and acquired persons are foreign;
    (2) The aggregate sales of the acquiring and acquired persons in or 
into the United States are less than $110 million (as adjusted) in their 
respective most recent fiscal years;
    (3) The aggregate total assets of the acquiring and acquired persons 
located in the United States (other than investment assets, voting or 
nonvoting securities of another person, and assets included pursuant to 
Sec.801.40(d)(2) of this chapter) are less than $110 million (as 
adjusted); and
    (4) The transaction does not meet the criteria of Section 
7A(a)(2)(A).

    Example to Sec.802.51 1. ``A,'' a U.S. person, is to acquire the 
voting securities of C, a foreign issuer. C has no assets in the United 
States, but made aggregate sales into the United States of in excess of 
50 million (as adjusted) in the most recent fiscal year. The transaction 
is not exempt under this section.
    2. Assume that ``A'' and ``B'' are foreign persons with aggregate 
sales in or into the United States in excess of $110 million (as 
adjusted), and that ``A'' is acquiring 100% of the voting securities of 
``B.'' Included within ``B'' is U.S. issuer C, whose total U.S. assets 
are valued in excess of $50 million (as adjusted). Since ``A'' will be 
acquiring control of an issuer, C, with total U.S. assets of more than 
$50 million (as adjusted), and the parties' aggregate sales in or into 
the U.S. in the relevant time period exceed $110 million (as adjusted), 
the acquisition is not exempt under this section.
    3. ``A,'' a foreign person, intends to acquire 100 percent of the 
voting securities of two wholly owned subsidiaries of ``B'' for a total 
of in excess of $50 million (as adjusted). BSUB1 is a foreign issuer 
with less than $50 million (as adjusted) in sales into the U.S. in its 
most recent fiscal year and with assets of less than $50 million (as 
adjusted) located in the U.S. Less than $50 million (as adjusted) of the 
acquisition price has been allocated to BSUB1. BSUB2 is a U.S. issuer 
with more than $50 million (as adjusted) in U.S. sales and more than $50 
million (as adjusted) in assets located in the U.S. Less than $50 
million (as adjusted) of the acquisition price is allocated to BSUB2. 
Since BSUB1 does not exceed the $50 million (as adjusted) limitation for 
U.S. sales or assets in Sec.802.51(b), its voting securities are not 
held as a result of the acquisition (see Sec.801.15(b) of this 
chapter). Since the acquisition price for BSUB2 alone would not result 
in ``A'' holding in excess of $50 million (as adjusted) of voting 
securities of the acquired person, the transaction is non-reportable in 
its entirety. Note that the U.S. sales and assets of BSUB1 are not 
aggregated with those of BSUB2 for purposes of determining whether the 
limitations in paragraph (b) of this section are exceeded. If BSUB2 were 
also a foreign issuer, such aggregation would be required under 
paragraph (b)(2) of this section, and the transaction in its entirety 
would be reportable.

[67 FR 11904, Mar. 18, 2002; 67 FR 13716, Mar. 26, 2002, as amended at 
70 FR 4996, Jan. 31, 2005]



Sec.802.52  Acquisitions by or from foreign governmental entities.

    An acquisition shall be exempt from the requirements of the act if:
    (a) The ultimate parent entity of either the acquiring person or the 
acquired person is controlled by a foreign state, foreign government, or 
agency thereof; and
    (b) The acquisition is of assets located within that foreign state 
or of voting securities or non-corporate interests of an entity 
organized under the laws of that state.

    Example: The government of foreign country X has decided to sell 
assets of its wholly

[[Page 675]]

owned corporation, B, all of which are located in foreign country X. The 
buyer is ``A,'' a U.S. person. Regardless of the aggregate sales in or 
into the United States attributable to the assets of B, the transaction 
is exempt under this section. (If such aggregate sales were $50 million 
(as adjusted) or less, the transaction would also be exempt under Sec.
802.50).

[43 FR 33544, July 31, 1978, as amended at 67 FR 11904, Mar. 18, 2002; 
70 FR 4996, Jan. 31, 2005; 76 FR 42482, July 19, 2011]



Sec.802.53  Certain foreign banking transactions.

    An acquisition which requires the consent or approval of the Board 
of Governors of the Federal Reserve System under section 25 or section 
25(a) of the Federal Reserve Act, 12 U.S.C. 601, 615, shall be exempt 
from the requirements of the act if copies of all information and 
documentary material filed with the Board of Governors are 
contemporaneously filed with the Federal Trade Commission and Assistant 
Attorney General at least 30 days prior to consummation of the 
acquisition. In lieu of such information and documentary material or any 
portion thereof, an index describing such material may be provided in 
the manner authorized by Sec.802.6(a).

[43 FR 33544, July 31, 1978, as amended at 48 FR 34435, July 29, 1983]



Sec.802.60  Acquisitions by securities underwriters.

    An acquisition of voting securities by a person acting as a 
securities underwriter, in the ordinary course of business, and in the 
process of underwriting, shall be exempt from the requirements of the 
act.



Sec.802.63  Certain acquisitions by creditors and insurers.

    (a) Creditors. An acquisition of collateral or receivables, or an 
acquisition in foreclosure, or upon default, or in connection with the 
establishment of a lease financing, or in connection with a bona fide 
debt work-out shall be exempt from the requirements of the act if made 
by a creditor in a bona fide credit transaction entered into in the 
ordinary course of the creditor's business.
    (b) Insurers. An acquisition pursuant to a condition in a contract 
of insurance relating to fidelity, surety, or casualty obligations shall 
be exempt from the requirements of the act if made by an insurer in the 
ordinary course of business.

    Examples: 1. A bank makes a loan and takes actual or constructive 
possession of collateral in any form. Since the bank is not the 
beneficial owner of the collateral, the bank's receipt of it is not an 
acquisition which is subject to the requirements of the act. However, if 
upon default the bank becomes the beneficial owner of the collateral, 
that acquisition is exempt under this section.
    2. This section exempts only the acquisition by the creditor or 
insurer, and not the subsequent disposition of the assets or voting 
securities. If a creditor or insurer sells voting securities or assets 
that have come into its possession in a transaction which is exempt 
under this section, the requirements of the act may apply to that 
disposition.



Sec.802.64  Acquisitions of voting securities by certain institutional
investors.

    (a) Institutional investor. For purposes of this section, the term 
institutional investor means any entity of the following type:
    (1) A bank within the meaning of 15 U.S.C. 80b-2(a)(2);
    (2) Savings bank;
    (3) Savings and loan or building and loan company or association;
    (4) Trust company;
    (5) Insurance company;
    (6) Investment company registered with the U.S. Securities and 
Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 
80a-1 et seq.);
    (7) Finance company;
    (8) Broker-dealer within the meaning of 15 U.S.C. 78c(a)(4) or 
(a)(5);
    (9) Small Business Investment Company or Minority Enterprise Small 
Business Investment Company regulated by the U.S. Small Business 
Administration pursuant to 15 U.S.C. 662;
    (10) A stock bonus, pension, or profit-sharing trust qualified under 
section 401 of the Internal Revenue Code;
    (11) Bank holding company within the meaning of 12 U.S.C. 1841;
    (12) An entity which is controlled directly or indirectly by an 
institutional investor and the activities of which are in the ordinary 
course of business of the institutional investor;

[[Page 676]]

    (13) An entity which may supply incidental services to entities 
which it controls directly or indirectly but which performs no operating 
functions, and which is otherwise engaged only in holding controlling 
interests in institutional investors; or
    (14) A nonprofit entity within the meaning of sections 501(c) (1) 
through (4), (6) through (15), (17) through (20), or (d) of the Internal 
Revenue Code.
    (b) Exemption. An acquisition of voting securities shall be exempt 
from the requirements of the act, except as provided in paragraph (c) of 
this section, if:
    (1) Made directly by an institutional investor;
    (2) Made in the ordinary course of business;
    (3) Made solely for the purpose of investment; and
    (4) As a result of the acquisition the acquiring person would hold 
fifteen percent or less of the outstanding voting securities of the 
issuer.
    (c) Exception to exemption. Notwithstanding paragraph (b) of this 
section:
    (1) No acquisition of voting securities of an institutional investor 
of the same type as any entity included within the acquiring person 
shall be exempt under this section; and
    (2) No acquisition by an institutional investor shall be exempt 
under this section if any entity included within the acquiring person 
which is not an institutional investor holds any voting securities of 
the issuer whose voting securities are to be acquired.

    Examples: 1. Assume that A and its subsidiary, B, are both 
institutional investors as defined in paragraph (a) of this section, 
that X is not, and that the conditions set forth in paragraphs (b)(2), 
(3) and (4) of this section are satisfied. Either A or B may acquire 
voting securities of X worth in excess of $50 million (as adjusted) as 
long as the aggregate amount held by person ``A'' as a result of the 
acquisition does not exceed 15 percent of X's outstanding voting 
securities. If the aggregate holdings would exceed 15 percent, ``A'' may 
acquire no more than $50 million (as adjusted) worth of voting 
securities without being subject to the requirements of the act.
    2. In example 1, assume that B plans to make the acquisition, but 
that corporation B's parent, corporation A, is not an institutional 
investor and is engaged in manufacturing. Subparagraph (c)(2) provides 
that acquisitions by B can never be exempt under this section if A owns 
any amount of X's voting securities.
    3. In example 1, the exemption does not apply if X is also an 
institutional investor of the same type as either A or B.
    4. Assume that H is a holding company which controls a life 
insurance company, a casualty insurer and a finance company. The life 
insurance company controls a data processing company which performs 
services for the two insurers. Any acquisition by any of these entities 
could qualify for exemption under this section.
    5. In example 4, if H also controls a manufacturing entity, H is not 
an institutional investor, and only the acquisitions made by the two 
insurance companies, the finance company and the data processing company 
can qualify for the exemption under this section.

[43 FR 33544, July 31, 1978, as amended at 66 FR 8694, Feb. 1, 2001; 70 
FR 4996, Jan. 31, 2005]



Sec.802.65  Exempt acquisition of non-corporate interests in financing
transactions.

    An acquisition of non-corporate interests that confers control of a 
new or existing unincorporated entity is exempt from the notification 
requirements of the Act if:
    (a) The acquiring person is contributing only cash to the 
unincorporated entity;
    (b) For the purpose of providing financing; and
    (c) The terms of the financing agreement are such that the acquiring 
person will no longer control the entity after it realizes its preferred 
return.

[70 FR 11514, Mar. 8, 2005]



Sec.802.70  Acquisitions subject to order.

    An acquisition shall be exempt from the requirements of the act if 
the voting securities or assets are to be acquired from an entity 
pursuant to and in accordance with:
    (a) An order of the Federal Trade Commission or of any Federal court 
in an action brought by the Federal Trade Commission or the Department 
of Justice;
    (b) An Agreement Containing Consent Order that has been accepted by 
the Commission for public comment, pursuant to the Commission's Rules of 
Practice; or
    (c) A proposal for a consent judgment that has been submitted to a 
Federal

[[Page 677]]

court by the Federal Trade Commission or the Department of Justice and 
that is subject to public comment.

[63 FR 34594, June 25, 1998]



Sec.802.71  Acquisitions by gift, intestate succession or devise,
or by irrevocable trust.

    Acquisitions resulting from a gift, intestate succession, 
testamentary disposition or transfer by a settlor to an irrevocable 
trust shall be exempt from the requirements of the act.



Sec.802.80  Transitional rule for transactions investigated by the
agencies.

    Sec. Sec.801.2 and 801.50 shall not apply to any transaction that 
has been the subject of investigation by either the Federal Trade 
Commission or the Antitrust Division of the Department of Justice in 
which, prior to the effective date of that section, the reviewing agency 
obtained documentary material and information under compulsory process 
from all parties that would be required to submit a Notification and 
Report Form for Certain Mergers and Acquisitions under Section 801.50 
but for this transitional rule.

[70 FR 11514, Mar. 8, 2005]



PART 803_TRANSMITTAL RULES--Table of Contents



Sec.
803.1 Notification and Report Form.
803.2 Instructions applicable to Notification and Report Form.
803.3 Statement of reasons for noncompliance.
803.4 Foreign persons refusing to file notification.
803.5 Affidavits required.
803.6 Certification.
803.7 Expiration of notification.
803.8 Foreign language documents.
803.9 Filing fee.
803.10 Running of time.
803.11 Termination of waiting period.
803.12 Withdraw and refile notification.
803.20 Requests for additional information or documentary material.
803.21 Additional information shall be supplied within reasonable time.
803.30 Formal and informal interpretations of requirements under the Act 
          and the rules.
803.90 Separability.

Appendix A to Part 803--Notification and Report Form for Certain Mergers 
          and Acquisitions
Appendix B to Part 803--Instructions to the Notification and Report Form 
          for Certain Mergers and Acquisitions

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

    Source: 43 FR 33548, July 31, 1978, unless otherwise noted.



Sec.803.1  Notification and Report Form.

    (a) The notification required by the act shall be the Notification 
and Report Form set forth in the appendix to this part, as amended from 
time to time. All acquiring and acquired persons required to file 
notification by the act and these rules shall do so by completing and 
filing the Notification and Report Form, in accordance with the 
instructions thereon and these rules. The current version of the Form 
can be obtained at http://www.ftc.gov.
    (b) Any person filing notification may, in addition to the 
submissions required by this section, submit any other information or 
documentary material which such person believes will be helpful to the 
Federal Trade Commission and Assistant Attorney General in assessing the 
impact of the acquisition upon competition.

[43 FR 33548, July 31, 1978, as amended at 66 FR 8695, Feb. 1, 2001; 71 
FR 35998, June 23, 2006; 81 FR 60259, Sept. 1, 2016]



Sec.803.2  Instructions applicable to Notification and Report Form.

    (a) The notification required by the act shall be filed by the 
preacquisition ultimate parent entity, or by any entity included within 
the person authorized by such preacquisition ultimate parent entity to 
file notification on its behalf. In the case of a natural person 
required by the act to file notification, such notification may be filed 
by his or her legal representative: Provided however, That 
notwithstanding Sec. Sec.801.1(c)(2) and 801.2, only one notification 
shall be filed by or on behalf of a natural person, spouse and minor 
children with respect to an acquisition as a result of which more than 
one such natural person will hold voting securities of the same issuer.

    Example: Jane Doe, her husband and minor child collectively hold 
more than 50 percent

[[Page 678]]

of the shares of family corporation F. Therefore, Jane Doe (or her 
husband or minor child) is the ``ultimate parent entity'' of a 
``person'' composed to herself (or her husband or minor child) and F; 
see paragraphs (a)(3), (b) and (c)(2) of Sec.801.1. If corporation F 
is to acquire corporation X, under this paragraph only one notification 
is to be filed by Jane Doe, her husband and minor child collectively.

    (b) Except as provided in paragraph (b)(2) of this section and 
paragraph (c) of this section:
    (1) Items 5-8 of the Notification and Report Form must be 
completed--
    (i) By acquiring persons, with respect to all entities included 
within the acquiring person;
    (ii) By acquired persons, in the case of an acquisition of assets, 
only with respect to the assets to be acquired;
    (iii) By acquired persons, in the case of an acquisition of voting 
securities, with respect to only the issuer whose voting securities are 
being acquired, and all entities controlled by such issuer; and
    (iv) By acquired persons, in the case of an acquisition of non-
corporate interests, with respect to the unincorporated entity whose 
non-corporate interests are being acquired, and all entities controlled 
by such unincorporated entity; and
    (v) By persons which are both acquiring and acquired persons, 
separately in the manner that would be required of acquiring and 
acquired persons under this paragraph, if different.
    (2) For purposes of item 7 of the Notification and Report Form, the 
acquiring person shall regard the acquired person in the manner 
described in paragraphs (b)(1)(ii), (iii) and (iv) of this section.

    Example: Person ``A'' is comprised of entities separately engaged in 
grocery retailing, auto rental, and coal mining. Person ``B'' is 
comprised of entities separately engaged in wholesale magazine 
distribution, auto rental and book publishing. ``A'' proposes to 
purchase 100 percent of the voting securities of ``B''s book publishing 
subsidiary. For purposes of item 5, under clause (b)(1)(i), ``A'' 
reports the activities of all its entities; under clause (b)(1)(iii), 
``B'' reports only the operations of its book publishing subsidiary. For 
purposes of items 7 and 8, under paragraph (b)(2) of this section, ``A'' 
must regard ``B'' as consisting only of its book publishing subsidiary 
and must disregard the fact that ``A'' and ``B'' are both engaged in the 
auto rental business.

    (c) In response to items 5, 7, and 8 of the Notification and Report 
Form--Information need not be supplied with respect to assets or voting 
securities to be acquired, the acquisition of which is exempt from the 
requirements of the act.
    (d) The term dollar revenues, as used in the Notification and Report 
Form, means value of shipments for manufacturing operations, and sales, 
receipts, revenues, or other appropriate dollar value measure for 
operations other than manufacturing, f.o.b. the plant or establishment 
less returns, after discounts and allowances and excluding freight 
charges and excise taxes. Dollar revenues including delivery may be 
supplied if delivery is an integral part of the sales price. Dollar 
revenues include interplant transfers.
    (e) For documents required by item 4(b) of the Notification and 
Report Form, a person filing the notification may, instead of submitting 
a document, provide a cite to an operative Internet address directly 
linking to the document, if the linked document is complete and payment 
is not required to access the document. If an Internet address becomes 
inoperative during the waiting period, or the document is otherwise 
rendered inaccessible or incomplete, upon notification by the Commission 
or Assistant Attorney General, the parties must make the document 
available to the agencies by either referencing an operative Internet 
address where the complete document may be accessed or by providing 
paper copies to the agencies as provided in Sec.803.10(c)(1) by 5 p.m. 
on the next regular business day. Failure to make the document 
available, by the Internet or by providing paper copies, by 5 p.m. on 
the next regular business day, will result in notice of a deficient 
filing pursuant to Sec.803.10(c)(2).
    (f) Filings made via DVD must comply with all format requirements 
set forth at the Premerger Notification Office pages at http://
www.ftc.gov. The use of any format not specified as acceptable, or any 
other failure to comply

[[Page 679]]

with the applicable format requirements, shall render the entire filing 
deficient within the meaning of Sec.803.10(c)(2).

[43 FR 33548, July 31, 1978, as amended at 48 FR 34438, July 29, 1983; 
66 FR 8695, Feb. 1, 2001; 66 FR 23565, May 9, 2001; 70 FR 11514, Mar. 8, 
2005; 70 FR 73372, Dec. 12, 2005; 71 FR 35998, June 23, 2006; 76 FR 
42483, July 19, 2011; 81 FR 60259, Sept. 1, 2016]



Sec.803.3  Statement of reasons for noncompliance.

    A complete response shall be supplied to each item on the 
Notification and Report Form and to any request for additional 
information pursuant to section 7A(e) and Sec.803.20. Whenever the 
person filing notification is unable to supply a complete response, that 
person shall provide, for each item for which less than a complete 
response has been supplied, a statement of reasons for noncompliance. 
The statement of reasons for noncompliance shall contain all information 
upon which a person relies in explanation of its noncompliance and shall 
include at least the following:
    (a) Why the person is unable to supply a complete response;
    (b) What information, and what specific documents or categories of 
documents, would have been required for a complete response;
    (c) Who, if anyone, has the required information, and specific 
documents or categories of documents; and a description of all efforts 
made to obtain such information and documents, including the names of 
persons who searched for required information and documents, and where 
the search was conducted. If no such efforts were made, provide an 
explanation of the reasons why, and a description of all efforts 
necessary to obtain required information and documents;
    (d) Where noncompliance is based on a claim of privilege, a 
statement of the claim of privilege and all facts relied on in support 
thereof, including the identity of each document, its author, the 
author's title/position, addressee, the addressee's title/position, 
date, subject matter, all recipients of the original and of any copies, 
the recipients' titles/positions, the document's present location, and 
who has control of it.

[48 FR 34439, July 29, 1983, as amended at 81 FR 60259, Sept. 1, 2016]



Sec.803.4  Foreign persons refusing to file notification.

    (a) In an acquisition to which Sec.801.30 does not apply, and in 
which no assets (other than investment assets) located in the United 
States and no voting securities of a United States issuer will be 
acquired directly or indirectly, if a foreign acquired person refuses to 
file notification, then any other person which is a party to the 
acquisition may file notification on behalf of the foreign person. Such 
notification shall constitute the notification required of the foreign 
person by the act and these rules.
    (b) Any person filing on behalf of the foreign person pursuant to 
this section must state in the affidavit required by Sec.803.5(b) that 
such foreign person has refused to file notification and must explain 
all efforts made by the person filing on behalf of the foreign person to 
obtain compliance with the act and these rules by such foreign person.
    (c) Any notification filed on behalf of a foreign person pursuant to 
this section must contain all information and documentary material 
reasonably available to the person filing on behalf of the foreign 
person which such foreign person would be required to provide. Whenever 
information or documentary material is not reasonably available, the 
person filing on behalf of the foreign person shall so indicate on the 
Notification and Report Form, and need not supply the statement of 
reasons for noncompliance required by Sec.803.3.
    (d) Any foreign person on whose behalf notification has been filed 
by another person pursuant to this section shall be a ``person filing 
notification'' for purposes of the act and these rules. Nothing in this 
section shall exempt a foreign person from the requirements of the act 
or these rules with respect to a request for additional information or 
an extension of the waiting period pursuant to section 7A(e) and these 
rules.

[[Page 680]]



Sec.803.5  Affidavits required.

    (a)(1) Section 801.30 acquisitions. For acquisitions to which Sec.
801.30 applies, the notification required by the Act from each acquiring 
person shall contain an affidavit, attached to the front of the 
notification, or with the DVD submission, attesting that the issuer or 
unincorporated entity whose voting securities or non-corporate interests 
are to be acquired has received written notice delivered to an officer 
(or a person exercising similar functions in the case of an entity 
without officers) by email, certified or registered mail, wire, or hand 
delivery, at its principal executive offices, of:
    (i) The identity of the acquiring person;
    (ii) The fact that the acquiring person intends to acquire voting 
securities or non-corporate interests of the issuer or unincorporated 
entity;
    (iii) The specific classes of voting securities or non-corporate 
interests of the issuer or unincorporated entity sought to be acquired; 
and if known, the number of voting securities or non-corporate interests 
of each such class that would be held by the acquiring person as a 
result of the acquisition or, if the number of voting securities is not 
known in the case of an issuer, the specific notification threshold that 
the acquiring person intends to meet or exceed; and, if designated by 
the acquiring person, a higher threshold for additional voting 
securities it may hold in the year following the expiration of the 
waiting period;
    (iv) The fact that the acquisition may be subject to the act, and 
that the acquiring person will file notification under the act with the 
Federal Trade Commission and Assistant Attorney General;
    (v) The anticipated date of receipt of such notification under Sec.
803.10(c); and
    (vi) The fact that the person within which the issuer or 
unincorporated entity is included may be required to file notification 
under the act.

    Example to paragraph (a)(1)(vi): 1. Company A intends to acquire 
voting securities of Company B. ``A'' sends, via email, a notice letter 
to a general email account, [email protected]. ``A'' has not 
provided sufficient notice. Alternatively, ``A'' sends, via email, a 
notice letter to ``B's'' President, Jane Doe, at [email protected]. 
``A'' has provided email notice to a specific officer of ``B.''

    (2) The affidavit required by this paragraph must also state the 
good faith intention of the person filing notification to make the 
acquisition, and, in the case of a tender offer, that the intention to 
make the tender offer has been publicly announced.

    Examples to paragraph (a)(2) 1. This paragraph permits the tender 
offeror to file notification at any time after the intention to make the 
tender offer has been publicly announced.
    In examples 2-5 assume that one percent of B's shares are valued at 
$15 million.
    2. ``A'' holds 100,000 shares of the voting securities of Company B. 
``A'' has a good faith intention to acquire an additional 900,000 shares 
of Company B's voting securities. ``A'' states in its notice to B, inter 
alia, that as a result of the acquisition it will hold 1,000,000 shares. 
If 1,000,000 shares of Company B represent 20 percent of Company B's 
outstanding voting securities, the statement will be deemed by the 
enforcement agencies a notification for the $100 million threshold (as 
adjusted).
    3. Company A intends to acquire voting securities of Company B. 
``A'' does not know exactly how many shares it will acquire, but it 
knows it will definitely acquire in excess of $50 million (as adjusted) 
worth and may acquire 50 percent of Company B's shares. ``A'''s notice 
to the acquired person would meet the requirements of Sec. 
803.5(a)(1)(iii) if it states, inter alia, either: ``Company A has a 
present good faith intention to acquire in excess of $50 million (as 
adjusted) of the outstanding voting securities of Company B, and 
depending on market conditions, may acquire more of the voting 
securities of Company B and thus designates the 50 percent threshold,'' 
or ``Company A has a present good faith intention to acquire in excess 
of $50 million (as adjusted) of the outstanding voting securities of 
Company B, and depending on market conditions may acquire 50 percent or 
more of the voting securities of Company B.'' The Commission would deem 
either of these statements as intending to give notice for the 50 
percent threshold.
    4. ``A'' states, inter alia, that, ``depending on market conditions, 
it may acquire 100 percent of the shares of B.'' ``A'''s notice does not 
comply with Sec.803.5 because it does not state an intent to meet or 
exceed any notification threshold. ``A'' 's filing will be considered 
deficient within the meaning of Sec.803.10(c)(2).
    5. ``A'' states, inter alia, that it has commenced a tender offer 
for ``up to 55 percent of the outstanding voting securities of Company 
B.'' ``A'' 's notice does not comply with

[[Page 681]]

Sec.803.5 because use of the term ``up to'' does not state an intent 
to meet or exceed any notification threshold. The filing will therefore 
be considered deficient within the meaning of Sec.803.10 (c)(2).

    (3) The affidavit required by this paragraph must have attached to 
it a copy of the written notice received by the acquired person pursuant 
to paragraph (a)(1) of this section. For DVD filings, the written notice 
(in a form specified in the instructions) must be included on the DVD.
    (b) Non-section 801.30 acquisitions. For acquisitions to which Sec.
801.30 does not apply, the notification required by the act shall 
contain an affidavit, attached to the front of the notification, or with 
the DVD submission, attesting that a contract, agreement in principle or 
letter of intent to merge or acquire has been executed, and further 
attesting to the good faith intention of the person filing notification 
to complete the transaction.

[43 FR 33548, July 31, 1978, as amended at 48 FR 34439, July 29, 1983; 
52 FR 7082, Mar. 6, 1987; 66 FR 8695, Feb. 1, 2001; 70 FR 4996, Jan. 31, 
2005; 71 FR 35998, June 23, 2006; 76 FR 42483, July 19, 2011; 81 FR 
60259, Sept. 1, 2016; 83 FR 32771, July 16, 2018]



Sec.803.6  Certification.

    (a) The notification required by the act shall be certified:
    (1) In the case of a partnership, by any general partner thereof;
    (2) In the case of a corporation, by any officer or director 
thereof;
    (3) In the case of a person lacking officers, directors, or 
partners, by any individual exercising similar functions;
    (4) In the case of a natural person, by such natural person or his 
or her legal representative;
    (5) In the case of the estate of a deceased natural person, by any 
duly authorized legal representative of such estate.
    (b) Additional information or documentary material submitted in 
response to a request pursuant to section 7A(e) and Sec.803.20 shall 
be accompanied by a certification in the format appearing at the end of 
the Notification and Report Form, completed in accordance with paragraph 
(a) of this section by the person or individual to whom it was directed.
    (c) In all cases, the certifying individual must possess actual 
authority to make the certification on behalf of the person filing 
notification.

[43 FR 33548, July 31, 1978, as amended at 48 FR 34429, July 29, 1983]



Sec.803.7  Expiration of notification.

    (a) One year after waiting period expired. Notification with respect 
to an acquisition shall expire 1 year following the expiration of the 
waiting period. If the acquiring person's holdings do not, within such 
time period, meet or exceed the notification threshold with respect to 
which the notification was filed, the requirements of the act must 
thereafter be observed with respect to any notification threshold not 
met or exceeded.

    Example: ``A'' files notification that in excess of $100 million (as 
adjusted) of the voting securities of corporation B are to be acquired. 
One year after the expiration of the waiting period, ``A'' has acquired 
less than $100 million (as adjusted) of B's voting securities. Although 
Sec.802.21 will permit ``A'' to purchase any amount of B's voting 
securities short of $100 million (as adjusted) within 5 years from the 
expiration of the waiting period, A's holdings may not meet or exceed 
the $100 million (as adjusted) notification threshold without ``A'' and 
``B'' again filing notification and observing a waiting period.

    (b) Upon failure to comply with request for additional information. 
An acquiring person's notification and, in the case of an acquisition to 
which Sec.801.30 does not apply, an acquired person's notification, 
shall expire eighteen months following the date of receipt of such 
person's notification if a request for additional information or 
documentary material remains outstanding to such person (or entities 
included therein, officers, directors, partners, agents or employees 
thereof), without a certification as required by Sec.803.6(b), on such 
date. If either person's notification expires pursuant to this 
paragraph, both parties must file a new notification in order to carry 
out the transaction.

    Example: A files notification on January 15 of Year 1 to acquire 
voting securities of B. On February 15 of Year 1, prior to expiration of 
the waiting period, requests for additional information or documentary 
material are issued to A and B. Before A supplies the information and 
documentary material requested, business conditions change, and A

[[Page 682]]

and B decide not to go forward with the transaction. A does not withdraw 
its filing and takes the position that it will comply with the request 
for additional information and documentary material if and when the 
proposed transaction is ever revived. A's notification expires July 15 
of Year 2, eighteen months following the date of receipt of its 
notification. If A and B wish to revive their transaction, both parties 
must file a new notification and observe the waiting period in order to 
carry out the transaction.

[70 FR 73372, Dec. 12, 2005]



Sec.803.8  Foreign language documents.

    (a) Whenever at the time of filing a Notification and Report Form 
there is an English language outline, summary, extract or verbatim 
translation of any information or of all or portions of any documentary 
materials in a foreign language required to be submitted by the act or 
these rules, all such English language versions shall be filed along 
with the foreign language information or materials.
    (b) Documentary materials or information in a foreign language 
required to be submitted in responses to a request for additional 
information or documentary material shall be submitted with verbatim 
English language translations, or all existing English language 
versions, or both, as specified in such request.

[48 FR 34440, July 29, 1983]



Sec.803.9  Filing fee.

    (a) Each acquiring person shall pay the filing fee required by the 
act to the Federal Trade Commission, except as provided in paragraphs 
(b), (c) and (f) of this section. No additional fee is to be submitted 
to the Antitrust Division of the Department of Justice.

    Examples: 1. ``A'' wishes to acquire voting securities issued by B, 
where the greater of the acquisition price and the market price is in 
excess of $50 million (as adjusted) but less than $100 million (as 
adjusted) pursuant to Sec.801.10. When ``A'' files notification for 
the transaction, it must indicate the $50 million (as adjusted) 
threshold and pay a filing fee of $45,000 because the aggregate total 
amount of the acquisition is less than $100 million (as adjusted), but 
greater than $50 million (as adjusted).
    2. ``A'' acquires less than $50 million (as adjusted) of assets from 
``B.'' The parties meet the size of person criteria of Section 
7A(a)(2)(B), but the transaction is not reportable because it does not 
exceed the $50 million (as adjusted) size of transaction threshold of 
that provision. Two months later ``A'' acquires additional assets from 
``B'' valued at between $50 million (as adjusted) and $100 million (as 
adjusted). Pursuant to the aggregation requirements of Sec.
801.13(b)(2)(ii), the aggregate total amount of ``B's'' assets that 
``A'' will hold as a result of the second acquisition is in excess of 
$100 million (as adjusted). Accordingly, when ``A'' files notification 
for the second transaction, ``A'' must indicate the $100 million (as 
adjusted) threshold and pay a filing fee of $125,000 because the 
aggregate total amount of the acquisition is less than $500 million (as 
adjusted), but not less than $100 million (as adjusted).
    3. ``A'' acquires in excess of $50 million (as adjusted) of voting 
securities issued by B after submitting its notification and $45,000 
filing fee and indicates the $50 million (as adjusted) threshold. Two 
years later, ``A'' files to acquire additional voting securities issued 
by B valued at $50 million (as adjusted) because it will exceed the next 
higher reporting threshold (see Sec. Sec.801.1(h)). Assuming the 
second transaction is reportable and the value of its initial holdings 
is unchanged (see Sec. Sec.801.13(a)(2) and 801.10(c)), the provisions 
of Sec.801.13(a)(1) require that ``A'' report that the value of the 
second transaction is in excess of $100 million (as adjusted) because 
``A'' must aggregate previously acquired securities in calculating the 
value of B's voting securities that it will hold as a result of the 
second acquisition. ``A'' should pay a filing fee of $125,000.
    4. ``A'' signs a contract with a stated purchase price in excess of 
$100 million (as adjusted), subject to adjustments, to acquire all of 
the assets of ``B.'' If the amount of adjustments can be reasonably 
estimated, the acquisition price--as adjusted to reflect that estimate--
is determined. If the amount of adjustments cannot be reasonably 
estimated, the acquisition price is undetermined. In either case the 
board or its delegee must also determine in good faith the fair market 
value. (Sec.801.10(b) states that the value of an asset acquisition is 
to be the fair market value or the acquisition price, if determined and 
greater than fair market value.) ``A'' files notification and submits a 
$45,000 filing fee. ``A'''s decision to pay that fee may be justified on 
either of two bases, and ``A'' should submit an attachment to the 
Notification and Report Form explaining the valuation. First, ``A'' may 
have concluded that the acquisition price can be reasonably estimated to 
be less than $100 million (as adjusted), because of anticipated 
adjustments--e.g., based on due diligence by ``A's'' accounting firm 
indicating that one third of the inventory is not saleable. If fair 
market value is also determined in good faith to be less than $100 
million (as adjusted), the

[[Page 683]]

$45,000 fee is appropriate. Alternatively, ``A'' may conclude that 
because the adjustments cannot reasonably be estimated, acquisition 
price is undetermined. If so, ``A'' would base the valuation on the good 
faith determination of fair market value. The acquiring party's 
execution of the Certification also attests to the good faith valuation 
of the value of the transaction.
    5. ``A'' contracts to acquire all of the assets of ``B'' for in 
excess of $500 million (as adjusted). The assets include hotels, office 
buildings, and rental retail property, all of which are exempted by 
Sec.802.2. Section 802.2 directs that these assets are exempt from the 
requirements of the act and that reporting requirements for the 
transaction should be determined by analyzing the remainder of the 
acquisition as if it were a separate transaction. Furthermore, Sec.
801.15(a)(2) states that those exempt assets are never held as a result 
of the acquisition. Accordingly, the aggregate amount of the transaction 
is in excess of $100 million (as adjusted), but less than $500 million 
(as adjusted). ``A'' will be liable for a filing fee of $125,000, rather 
than $280,000, because the value of the transaction is not less than 
$100 million (as adjusted) but less than $500 million (as adjusted). 
Note, however, that ``A'' must include an attachment in its Notification 
and Report Form setting out both the in excess of $500 million (as 
adjusted) total purchase price and the basis for its determination that 
the aggregate total amount of the acquisition under the rules is between 
$100 million (as adjusted) and $500 million (as adjusted) rather than in 
excess of $500 million (as adjusted), in accordance with the 
Instructions to the Form.
    6. ``A'' acquires coal reserves from ``B'' valued at $150 million. 
No notification or filing fee is required because the acquisition is 
exempted by Sec.802.3(b). Three months later, A proposes to acquire 
additional coal reserves from ``B'' valued at $500 million (as 
adjusted). This transaction is subject to the notification requirements 
of the act because the value of the acquisition exceeds the $200 million 
limitation on the exemption in Sec.802.3(b). As a result of Sec.
801.13(b)(2)(ii), the prior $150 million acquisition must be added 
because the additional $500 million (as adjusted) of coal reserves were 
acquired from the same person within 180 days of the initial 
acquisition. Because aggregating the two acquisitions exceeds the $200 
million exemption limitation, Sec.801.15(b) directs that ``A'' will 
also hold the previously exempt $150 million acquisition; thus, the 
aggregate amount held as a result of the $500 million (as adjusted) 
acquisition exceeds $500 million (as adjusted). Accordingly, ``A'' must 
file notification to acquire the coal reserves valued in excess of $500 
million (as adjusted) and pay a filing fee of $280,000.
    7. ``A'' intends to acquire 20 percent of the voting securities of 
B, a non-publicly traded issuer. The agreed upon acquisition price is 
$99 million subject to post-closing adjustments of up to plus or minus 
$2 million. ``A'' estimates that the adjustments will be minus $1 
million. In this example, since ``A'' is able in good faith to 
reasonably estimate the adjustments to the agreed-on price, the 
acquisition price is deemed to be determined and the appropriate filing 
fee threshold is $50 million. Even if the post-closing adjustments cause 
the final price actually paid to exceed $100 million, ``A'' would be 
deemed to hold $98 million in B voting securities as a result of this 
acquisition. Note, however, since the potential acquisition price 
subject to adjustments could have exceeded the $100 million threshold 
(e.g., ``straddles two filing fee thresholds''), an explanation of why 
the lower threshold was indicated should be attached. Also note that any 
additional acquisition by ``A'' of B voting stock (if the value of the 
stock currently held by ``A'' is $100 million or more) will cause ``A'' 
to cross the $100 million threshold and another filing and the 
appropriate fee will be required.
    8. ``A'' intends to make a cash tender offer for a minimum of 50 
percent plus one share of the voting securities of B, a non-publicly 
traded issuer, but will accept up to 100 percent of the shares if they 
are tendered. There are 12 million shares of B voting stock outstanding 
and the tender offer price is $10 per share. In this instance, since 
there is no cap on the number of shares that can be tendered, the value 
of the transaction will be the value of 100 percent of B's voting 
securities, and ``A'' must pay the $125,000 fee for the $100 million 
filing fee threshold. Note that if the tender offer had been for a 
maximum of 50 percent plus one share the value of the transaction would 
be $60 million, and the appropriate fee would be $45,000, based on the 
$50 million filing fee threshold. This would be true even if the tender 
offer were to be followed by a merger which would be exempt under 
Section 7A(c)(3),

    (b) For a transaction described by Sec.801.2(d)(2)(iii), the 
parties shall pay only one filing fee. In accordance with Sec.
801.2(d)(2)(iii), both parties to a consolidation are acquiring and 
acquired persons and must submit a Notification and Report Form where 
the transaction meets the reporting requirements of that act; however, 
only one filing fee is required in connection with such a transaction, 
and is payable by either party to the transaction. The filing fee is 
based on the greater of the two sizes of transaction in the 
consolidation.

[[Page 684]]

    (c) For a reportable transaction in which the acquiring entity has 
two ultimate parent entities, both ultimate parent entities are 
acquiring persons; however, if the responses for both ultimate parent 
entities would be the same for item 5 of the Notification and Report 
Form, only one filing fee is required in connection with the 
transaction.
    (d) Manner of payment. Fees may be paid by United States postal 
money order, bank money order, bank cashier's check, certified check or 
by electronic wire transfer (EWT). The fee must be paid in U.S. 
currency.
    (1) Fees paid by money order or check shall be made payable to the 
``Federal Trade Commission,'' omitting the name or title of any official 
of the Commission, and shall be submitted to the Premerger Notification 
Office of the Federal Trade Commission along with the Notification and 
Report Form.
    (2) Fees paid by EWT shall be deposited to the Treasury's account at 
the New York Federal Reserve Bank. Specific instructions for making EWT 
payments are contained in the Instructions to the Notification and 
Report Form.
    (e) Refunds. Except as provided in this paragraph, no filing fee 
received by the Commission will be returned to the payer and no part of 
the filing fee shall be refunded. The filing fee shall be refunded only 
if the Commission's staff determines, based on the information and 
representations contained in the filing person's notification, that 
premerger notification was not required by the act. Once the 
Commission's staff has determined that the notification was required, 
the filing fee shall not be refunded even if it appears at the time of 
consummation that the transaction does not meet the reporting 
requirements established in the act.
    (f) For a transaction described by paragraph (c) of Sec.803.12, 
the parties shall pay no additional filing fee.

[66 FR 8695, Feb. 1, 2001, as amended at 68 FR 2431, Jan. 17, 2003; 70 
FR 4997, Jan. 31, 2005; 78 FR 41296, July 10, 2013]



Sec.803.10  Running of time.

    (a) Beginning of waiting period. The waiting period required by the 
act shall begin on the date of receipt of the notification required by 
the act, in the manner provided by these rules (or, if such notification 
is not completed, the notification to the extent completed and a 
statement of the reasons for such noncompliance in accordance with Sec.
803.3) from:
    (1) In the case of acquisitions to which Sec.801.30 applies, the 
acquiring person;
    (2) In the case of the formation of a corporation covered by Sec. 
801.40 or an unincorporated entity covered by Sec. 801.50, all persons 
contributing to the formation of the joint venture or other corporation 
that are required by the act and these rules to file notification;
    (3) In the case of all other acquisitions, all persons required by 
the act and these rules to file notification.
    (b) Expiration of waiting period. (1) Subject to paragraph (b)(3) of 
this section, for purposes of Section 7A(b)(1)(B), the waiting period 
shall expire at 11:59 p.m. Eastern Time on the 30th (or in the case of a 
cash tender offer or of an acquisition covered by 11 U.S.C. 363(b), the 
15th) calendar day (or if Sec.802.23 applies, such other day as that 
section may provide) following the beginning of the waiting period as 
determined under paragraph (a) of this section, unless extended pursuant 
to Section 7A(e) and Sec.803.20, or Section 7A(g)(2), or unless 
terminated pursuant to Section 7A(b)(2) and Sec.803.11.
    (2) Unless further extended pursuant to Section 7A(g)(2), or 
terminated pursuant to Section 7A(b)(2) and Sec.803.11, any waiting 
period which has been extended pursuant to Section 7A(e)(2) and Sec.
803.20 shall, subject to paragraph (b)(3) of this section, expire at 
11:59 p.m. Eastern Time--
    (i) On the 30th (or, in the case of a cash tender offer or of an 
acquisition covered by 11 U.S.C. 363(b), the 10th) day following the 
date of receipt of all additional information or documentary material 
requested from all persons to whom such requests have been directed (or, 
if a request is not fully complied

[[Page 685]]

with, the information and documentary material submitted and a statement 
of the reasons for such noncompliance in accordance with Sec.803.3), 
by the Federal Trade Commission or Assistant Attorney General, whichever 
requested additional information or documentary material, at the office 
designated in paragraph (c) of this section, or
    (ii) As provided in paragraph (b)(1) of this section, whichever is 
later.
    (3) If any waiting period would expire on a Saturday, Sunday, or 
legal public holiday (as defined in 5 U.S.C. 6103(a)) the waiting period 
shall be extended to 11:59 p.m. Eastern Time of the next regular 
business day.
    (c)(1) Date of receipt and means of delivery. For purposes of this 
section, these procedures shall apply.
    (i) For paper copy filings and DVD filings, the date of receipt 
shall be the date on which delivery is effected to the designated 
offices (Premerger Notification Office, Federal Trade Commission, Room 
5301, 400 7th Street SW., Washington, DC 20024, and Director of Civil 
Enforcement, Office of Operations, Antitrust Division, Department of 
Justice, 950 Pennsylvania Avenue NW., Room 3335, Washington, DC 20530) 
during normal business hours. Delivery should be effected directly to 
the designated offices, either by hand or by certified or registered 
mail (including FedEx and UPS). In the event one or both of the delivery 
sites are unavailable, the FTC and DOJ may designate alternate sites for 
delivery of the filing. Notification of the alternate delivery sites 
will normally be made through a press release and, if possible, on the 
http://www.ftc.gov Web site.
    (ii) Delivery effected after 5 p.m. eastern time on a business day, 
or at any time on any day other than a business day, shall be deemed 
effected on the next following business day. If delivery of all required 
filings to all offices required to receive such filings is not effected 
on the same date, the date of receipt shall be the latest of the dates 
on which delivery is effected.

    Example: In an acquisition other than a tender offer, assume that 
requests for additional information are issued to both the acquiring and 
acquired persons on the 26th day of the waiting period. One person 
submits the additional information on the 35th day, while the other 
responds on the 44th day. Under this section, the waiting period expires 
thirty days following the last receipt of additional information, that 
is, it expires on the 74th day (unless that day is a Saturday, Sunday or 
legal public holiday).

    (2) Deficient filings. If notification or a response to a request 
for additional information or documentary material received by the 
Commission or Assistant Attorney General does not comply with these 
rules, the Commission or the Assistant Attorney General shall promptly 
notify the person filing such notification or response of the 
deficiencies in such filing, and the date of receipt shall be the date 
on which a filing which complies with these rules is received.

[43 FR 33548, July 31, 1978; 43 FR 36054, Aug. 15, 1978, as amended at 
52 FR 7083, Mar. 6, 1987; 66 FR 8696, Feb. 1, 2001; 70 FR 11514, Mar. 8, 
2005; 71 FR 35998, June 23, 2006; 79 FR 25663, May 6, 2014; 81 FR 60260, 
Sept. 1, 2016]



Sec.803.11  Termination of waiting period.

    (a) Except as provided in paragraph (c) of this section, no waiting 
period shall be terminated pursuant to section 7A(b)(2) unless--
    (1) All notifications required to be filed with respect to the 
acquisition by the act and these rules (or, if such notification is not 
completed, the notification to the extent completed and a statement of 
the reasons for such noncompliance in accordance with Sec.803.3) have 
been received,
    (2) It has been determined that no additional information or 
documentary material pursuant to section 7A(e) and Sec.803.20 will be 
requested, or, if such additional information or documentary material 
has been requested, it (or, if a request is not fully complied with, the 
information and documentary material submitted and a statement of the 
reasons for such noncompliance in accordance with Sec.803.3) has been 
received, and
    (3) The Federal Trade Commission and the Assistant Attorney General 
have concluded that neither intends to take any further action within 
the waiting period.
    (b) Any request for additional information or documentary material 
pursuant to section 7A(e) and Sec.803.20 shall

[[Page 686]]

constitute a denial of all pending requests for termination of the 
waiting period.
    (c) The Federal Trade Commission and the Assistant Attorney General 
may, in their discretion, terminate a waiting period upon the written 
request of any person filing notification or, notwithstanding paragraph 
(a) of this section, sua sponte. A request for termination of the 
waiting period shall be sent to the offices designated in Sec.
803.10(c). Termination shall be effective upon notice to any requesting 
person by either email or telephone, and such notice shall be given as 
soon as possible. Such notice shall be made to each person which has 
filed notification, and notice of termination shall be published in the 
Federal Register in accordance with section 7A(b)(2) of the Clayton Act 
(the ``act''). The Federal Trade Commission and the Assistant Attorney 
General also may use other means to make the termination public, prior 
to publication in the Federal Register in a manner that will make the 
information equally accessible to all members of the public.

[43 FR 33548, July 31, 1978, as amended at 54 FR 21427, May 18, 1989; 83 
FR 32771, July 16, 2018]



Sec.803.12  Withdraw and refile notification.

    (a) Voluntary. An acquiring person, and in the case of an 
acquisition to which Sec.801.30 does not apply, an acquired person, 
may withdraw its notification by notifying the Federal Trade Commission 
and the Antitrust Division in writing by email or mail of such 
withdrawal.
    (b) Upon public announcement of termination. An acquiring person's 
notification or, in the case of an acquisition to which Sec.801.30 of 
this chapter does not apply, an acquiring or an acquired person's 
notification, will be deemed to have been withdrawn if any filing that 
publicly announces the expiration, termination or withdrawal of a tender 
offer or the termination of an agreement or letter of intent is made by 
the acquiring person or the acquired person with the U.S. Securities and 
Exchange Commission (``SEC'') under the Securities Exchange Act of 1934 
(15 U.S.C. 78a et seq.) and rules promulgated under that act. The 
acquiring person or acquired person must notify the Federal Trade 
Commission and the Antitrust Division in writing by email or mail that 
such filing has been made with the SEC and the withdrawal shall be 
deemed effective on the date of the SEC filing. Withdrawal of the HSR 
notification(s) shall occur even if statements are made in the SEC 
filing indicating a desire to recommence the tender offer or enter into 
a new or amended agreement or letter of intent. This paragraph is 
inapplicable if the initial 15-day or 30-day waiting period has expired 
without issuance of a request for additional information or documentary 
material and without an agreement in place with the Agencies to delay 
closing of the transaction (``a timing agreement''); or early 
termination of that waiting period has been granted, without a timing 
agreement in place; or if a request for additional information or 
documentary material has been issued and the Agencies have either 
granted early termination or allowed the extended waiting period to 
expire following certification of compliance without a timing agreement 
in place.
    (c) Resubmission without a new filing fee. (1) An acquiring person 
whose notification has been voluntarily withdrawn pursuant to paragraph 
(a) of this section, or an acquiring person whose notification is deemed 
to have been automatically withdrawn under paragraph (b) of this 
section, may resubmit its notification, thereby initiating a new waiting 
period for the same transaction without an additional filing fee 
pursuant to Sec.803.9(f). This procedure may be used only one time, 
and only under the following circumstances:
    (i) The notification is withdrawn prior to the expiration or early 
termination of the waiting period and prior to the issuance of a request 
for additional information pursuant to Sec.803.20 and section 7A(e) of 
the act;
    (ii) The proposed acquisition does not change in any material way;
    (iii) The resubmitted notification is recertified, and the 
submission, as it relates to Items 4(a), 4(b), 4(c), and 4(d) of the 
Notification and Report Form, is updated to the date of the 
resubmission;

[[Page 687]]

    (iv) A new executed affidavit is provided with the resubmitted HSR 
filing; and
    (v) The resubmitted notification is refiled prior to the close of 
the second business day after withdrawal.
    (2) If the acquired person, in the case of an acquisition to which 
Sec.801.30 of this chapter does not apply, withdraws its notification 
under paragraph (a) of this section or if its notification is 
automatically withdrawn under paragraph (b) of this section, no 
resubmission is available under this paragraph.

    Examples: 1. A commences a tender offer to acquire 100% of B's 
voting securities and files a Schedule TO with the SEC and a premerger 
notification filing with the Federal Trade Commission and the Antitrust 
Division (``the Agencies''). Subsequently, A decides to withdraw the 
tender offer and files an amended Schedule TO announcing the withdrawal. 
A states in its amended filing, designated as a Schedule TO-T/A on 
EDGAR, the SEC's Electronic Data Gathering, Analysis, and Retrieval 
system, which announces the tender offer withdrawal that it reserves the 
right to recommence the tender offer, should circumstances change. A's 
premerger notification filing is deemed to have been withdrawn on the 
date of the filing of the Schedule TO-T/A with the SEC.
    2. A commences a tender offer for at least 75% of B's voting 
securities and files a Schedule TO with the SEC stating that the tender 
offer will expire after 30 days. A also files a premerger notification 
filing with the Agencies and a request for additional information or 
documentary material (``Second Request'') is issued. At the end of the 
30 day effective period of the tender offer sufficient shares have not 
been tendered and the tender offer expires. A files a closing Schedule 
TO-T/A with the SEC announcing the expiration of the tender offer. A's 
premerger notification filing is deemed to have been withdrawn on the 
date of the filing of the Schedule TO-T/A with the SEC.
    3. A commences a tender offer for 100% of B's voting securities and 
files a Schedule TO with the SEC stating that shareholders tendering 
their shares will receive $2.00 per share. During the effective period 
of the tender offer, A increases the amount it will pay per share to 
$2.25 and files a Schedule TO-T/A with the SEC announcing the increased 
share price. A's premerger notification filing is not deemed to have 
been withdrawn on the date of the filing of the Schedule TO-T/A with the 
SEC because it is not notifying the SEC that the tender offer has 
expired or is being withdrawn.
    4. A commences a tender offer for 100% of B's voting securities and 
files a Schedule TO with the SEC. During the effective period of the 
tender offer, A and B enter into a merger agreement and A files a 
Schedule TO-T/A with the SEC announcing the withdrawal of the tender 
offer. A's premerger notification filing is deemed to have been 
withdrawn on the date of the filing of the Schedule TO-T/A with the SEC. 
A can, however, refile within two business days on the merger agreement, 
commencing a new waiting period, without paying an additional filing 
fee, if it meets the requirements of Sec.803.12(c).
    5. A and B enter into a merger agreement conditioned on successful 
completion of due diligence. A and B file premerger notification filings 
with the Agencies and also Form 8-Ks with the SEC announcing they have 
entered into an agreement to merge. Subsequent findings in the course of 
due diligence cause A and B to terminate the merger agreement and A 
files an additional Form 8-K announcing the termination of an agreement. 
A states that it may seek to enter into a new or amended merger 
agreement with B. A's premerger notification filing is deemed to have 
been withdrawn on the date of the filing of the Form 8-K announcing the 
termination of the merger agreement. A can, however, refile within two 
business days on a new merger agreement, commencing a new waiting 
period, without paying an additional filing fee, if it meets the 
requirements of Sec.803.12(c).
    6. A and B enter into a merger agreement and file premerger 
notification filings with the Agencies and Form 8-Ks with the SEC. 
Second requests are issued. A and B subsequently certify compliance with 
the second request, starting the extended waiting period. Prior to the 
expiration of the extended waiting period, the parties enter into an 
agreement with the agency conducting the investigation to delay closing 
of the transaction, allowing the consummation of the acquisition only 
after 30-days' notice (a ``timing agreement''), and the extended waiting 
period expires. During the pendency of the timing agreement, A and B 
terminate the merger agreement and A files a Form 8-K with the SEC 
announcing the termination of an agreement. A's premerger notification 
filing is deemed withdrawn on the date of the SEC filing as a result of 
that filing, even though the extended waiting period has expired and the 
parties are still within the one year period following that expiration 
under Sec.803.7(a). Note that had the extended waiting period expired 
and no timing agreement had been entered into, a filing with the SEC 
announcing the termination of the agreement would not result in the 
withdrawal of A's premerger notification filing.
    7. A and B enter into a merger agreement and file premerger 
notification filings with the Agencies and Form 8-Ks with the SEC. The 
agencies complete their review and

[[Page 688]]

early termination of the initial 30-day waiting period is granted. Prior 
to the expiration of the one year period following the grant of early 
termination, A and B terminate the merger agreement and A files a Form 
8-K with the SEC announcing the termination of an agreement. A's 
premerger notification filing is not deemed withdrawn as a result of the 
SEC filing because the initial 30-day premerger notification waiting 
period had been granted early termination. Therefore, the parties still 
have the full one year period prior to the expiration of the 
notification under Sec.803.7(a) to consummate the transaction should 
it be recommenced.

[78 FR 41296, July 10, 2013, as amended at 83 FR 32771, July 16, 2018]



Sec.803.20  Requests for additional information or documentary 
material.

    (a)(1) Persons and individuals subject to request. Pursuant to 
section 7A(e)(1), the submission of additional information or 
documentary material relevant to the acquisition may be required from 
one or more persons required to file notification, and, with respect to 
each such person, from one or more entities included therein, or from 
one or more officers, directors, partners, agents, or employees thereof, 
if so required by the same request.

    Example: A request for additional information may require a 
corporation and, in addition, a named officer or employee to provide 
certain information or documents, if both the corporation and the 
officer or employee are named in the same request. See subparagraph 
(b)(3) of this section.

    (2) All the information and documentary material required to be 
submitted pursuant to a request under paragraph (a)(1) of this section 
shall be supplied to the Commission or to the Assistant Attorney 
General, whichever made such request, at such location as may be 
designated in the request, or, if no such location is designated, at the 
office designated in Sec.803.10(c). If such request is not fully 
complied with, a statement of reasons for noncompliance pursuant to 
Sec.803.3 shall be provided for each item or portion of such request 
which is not fully complied with.
    (b)(1) Who may require submission. A request for additional 
information or documentary material with respect to an acquisition may 
be issued by the Federal Trade Commission or its designee, or by the 
Assistant Attorney General or his or her designee, but not by both to 
the same person, any entities included therein, or any officers, 
directors, partners, agents, or employees of that person.
    (2) When request effective. A request for additional information or 
documentary material shall be effective--
    (i) In the case of a written request, upon receipt of the request by 
the ultimate parent entity of the person to which the request is 
directed (or, if another entity included within the person filed 
notification pursuant to Sec.803.2(a), then by such entity), within 
the original 30-day (or, in the case of a cash tender offer or of an 
acquisition covered by 11 U.S.C. 363(b), 15-day) waiting period (or, if 
Sec.802.23 applies, such other period as that section provides); or
    (ii) In the case of a written request, upon notice of the issuance 
of such request to the person to which it is directed within the 
original 30-day (or, in the case of a cash tender offer or of an 
acquisition covered by 11 U.S.C. 363(b), 15-day) waiting period (or, if 
Sec.802.23 applies, such other period as that section provides), 
provided that written confirmation of the request is emailed or mailed 
to the person to which the request is directed within the original 30-
day (or, in the case of a cash tender offer or of an acquisition covered 
by 11 U.S.C. 363(b), 15-day) waiting period (or, if Sec.802.23 
applies, such other period as that section provides). Notice to the 
person to which the request is directed may be given by email, telephone 
or in person. The person filing notification shall keep a designated 
individual reasonably available during normal business hours throughout 
the waiting period at the email or telephone number supplied in the 
Notification and Report Form. Notice of a request for additional 
information or documentary material need be given by email or telephone 
only to that individual or to the individual designated in accordance 
with paragraph (b)(2)(iii) of this section. The written confirmation of 
the request shall be emailed or mailed to the ultimate parent entity of 
the person filing notification, or if another entity within the person 
filed notification pursuant to Sec.803.2(a), then to such entity.

[[Page 689]]

    (iii) When the individual designated in accordance with paragraph 
(b)(2)(ii) of this section is not located in the United States, the 
person filing notification shall designate an additional individual 
located within the United States to be reasonably available during 
normal business hours throughout the waiting period through a telephone 
number supplied on the certification page of the Notification and Report 
Form. This individual shall be designated for the limited purpose of 
receiving notification of the issuance of requests for additional 
information or documentary material in accordance with the procedure 
described in paragraph (b)(2)(ii) of this section.
    (3) Requests to natural persons. A request addressed to an 
individual, requiring that he or she submit additional information or 
documentary material, shall be transmitted to the person filing 
notification of which the individual is an ultimate parent entity, 
officer, director, partner, agent or employee, and shall be effective as 
to that individual when effective as to the person filing notification 
pursuant to paragraph (b)(2) of this section. A written copy of the 
request shall also be delivered to the individual by email, by hand, or 
by registered or certified mail at his or her home or business address.

    Example: A designee of the Federal Trade Commission sends, by email, 
a written request for additional information to the CEO of corporation 
W, the ultimate parent entity within a person that filed notification. 
The request is effective under paragraph (b)(2)(i) of this section. If 
the email also addressed a request for documentary material to the 
Secretary of corporation W, a named individual, under this paragraph 
(b)(3), the request would likewise be effective as to the individual 
upon receipt of the email by corporation W. In the latter case, the 
Federal Trade Commission also would send a copy of the request to the 
Secretary of the corporation at his or her home or business address, or 
email.

    (c) Waiting period extended. (1) During the time period when a 
request for additional information or documentary material remains 
outstanding to any person other than either:
    (i) In the case of a tender offer, the person whose voting 
securities are sought to be acquired by the tender offeror (or any 
officer, director, partner, agent or employee thereof), or
    (ii) In the case of an acquisition covered by 11 U.S.C. 363(b), the 
acquired person, the waiting period shall remain in effect, even though 
the waiting period would have expired (see Sec.803.10(b)) if no such 
request had been made.
    (2) A request for additional information or documentary material to 
any person other than either:
    (i) In the case of a tender offer, the person whose voting 
securities are being acquired pursuant to the tender offer (or any 
officer, director, partner, agent or employee thereof), or
    (ii) In the case of an acquisition covered by 11 U.S.C. 363(b), the 
acquired person, shall in every instance extend the waiting period for a 
period of 30 (or, in the case of a cash tender offer or of an 
acquisition covered by 11 U.S.C. 363(b), 10) calendar days from the date 
of receipt (as determined under Sec.803.10) of the additional 
information or documentary material requested.

    Example: Acquiring person ``A'' makes a non-cash tender offer for 
voting securities of corporation ``X'', and files notification. Under 
Sec.801.30, the waiting period begins upon filing by ``A,'' and ``X'' 
must file within 15 days thereafter (10 days if it were a cash tender 
offer). Assume that before the end of the waiting period, the Assistant 
Attorney General issues a request for additional information to ``A'' 
and ``X.'' Since the transaction is a non-cash tender offer, the waiting 
period is extended for 30 days (10 days if it were a cash tender offer) 
beyond the date on which ``A'' responds. Note that under Sec.803.21, 
even though the waiting period is not affected by the second request to 
``X'' or by ``X'' supplying the requested information, ``X'' is obliged 
to respond to the request within a reasonable time. Nevertheless, the 
Federal Trade Commission and Assistant Attorney General could, 
notwithstanding the pendency of the request for additional information, 
terminate the waiting period sua sponte pursuant to Sec.803.11(c).

    (d)(1) Identification of requests. Every request for additional 
information or documentary material shall be clearly identified as such, 
whether communicated in person, by telephone or in writing, and shall 
clearly identify the person, entity or entities, or individual(s) to 
which it is addressed.
    (2) Request for clarification. No request for clarification or 
amplification of a

[[Page 690]]

response to any item on the Notification and Report Form, whether 
communicated in person, by telephone or in writing, shall be considered 
a request for additional information or documentary material within the 
meaning of section 7A(e) and this section.

[43 FR 33548, July 31, 1978, as amended at 48 FR 34441, July 29, 1983; 
66 FR 8697, Feb. 1, 2001; 68 FR 2431, Jan. 17, 2003; 83 FR 32772, July 
16, 2018]



Sec.803.21  Additional information shall be supplied within 
reasonable time.

    All additional information or documentary material requested 
pursuant to section 7A(e) and Sec.803.20 (or, if such request is not 
fully complied with, the information or documentary material submitted 
and a statement of the reasons for such noncompliance in accordance with 
Sec.803.3) shall be supplied within a reasonable time.



Sec.803.30  Formal and informal interpretations of requirements 
under the Act and the rules.

    (a) The Commission staff may consider requests for formal or 
informal interpretations as to the obligations under the act and these 
rules of any party to an acquisition. A request for a formal 
interpretation shall be made in writing to the offices designated in 
Sec.803.10(c), and shall state: (1) all facts which the applicant 
believes to be material, (2) the reasons why the requirements of the act 
are or may be applicable and (3) the question(s) that the applicant 
wishes resolved. The Commission staff may, in its discretion, render a 
formal or informal response to any request, however made, or may decline 
to render such advice.
    (b) In the sole discretion of the staff, any request for 
interpretation may be referred to the Commission.
    (c) Formal interpretations by the Commission staff or by the 
Commission shall be rendered with the concurrence of the Assistant 
Attorney General or his or her designee.
    (d) Any formal interpretation shall be without prejudice to the 
right of either the Commission or the Assistant Attorney General to 
rescind any such interpretation rendered pursuant to this section. In 
the event of such rescission, the party which requested the 
interpretation shall be so notified in writing.
    (e) The Commission shall publish a summary of formal interpretations 
by the Commission, and any rescissions thereof, in the Federal Register.



Sec.803.90  Separability.

    If any provision of the rules in this subchapter (H) (including the 
Notification and Report Form) or the application of any such provision 
to any person or circumstances is held invalid, neither the other 
provisions of the rules nor the application of such provision to other 
persons or circumstances shall be affected thereby.

[[Page 691]]



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                        Mergers and Acquisitions
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[84 FR 30597, June 27, 2019]

[[Page 702]]



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                Form for Certain Mergers and Acquisitions
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[84 FR 30608, June 27, 2019]

[[Page 713]]



             SUBCHAPTER I_FAIR DEBT COLLECTION PRACTICES ACT





PART 901_PROCEDURES FOR STATE APPLICATION FOR EXEMPTION FROM THE 
PROVISIONS OF THE ACT--Table of Contents



    Authority: Pub. L. 95-109, 91 Stat. 874, 15 U.S.C. 1692o; 5 U.S.C. 
552.

    Source: 77 FR 22204, Apr. 13, 2012, unless otherwise noted.



Sec.901.1  Cross-reference.

    The rules formerly at 16 CFR part 901 have been republished by the 
Consumer Financial Protection Bureau at 12 CFR part 1006, ``Fair Debt 
Collection Practices Act (Regulation F).''

                        PARTS 902	999 [RESERVED]

[[Page 715]]



                              FINDING AIDS




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

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.


  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 717]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 2021)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
       III  Administrative Conference of the United States (Parts 
                300--399)
        IV  Miscellaneous Agencies (Parts 400--599)
        VI  National Capital Planning Commission (Parts 600--699)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 2--199)
        II  Office of Management and Budget Guidance (Parts 200--
                299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300--
                399)
        IV  Department of Agriculture (Parts 400--499)
        VI  Department of State (Parts 600--699)
       VII  Agency for International Development (Parts 700--799)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
         X  Department of the Treasury (Parts 1000--1099)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1800--1899)
        XX  United States Nuclear Regulatory Commission (Parts 
                2000--2099)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Department of Housing and Urban Development (Parts 
                2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)

[[Page 718]]

     XXVII  Small Business Administration (Parts 2700--2799)
    XXVIII  Department of Justice (Parts 2800--2899)
      XXIX  Department of Labor (Parts 2900--2999)
       XXX  Department of Homeland Security (Parts 3000--3099)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)
     XXXIV  Department of Education (Parts 3400--3499)
      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
     XXXVI  Office of National Drug Control Policy, Executive 
                Office of the President (Parts 3600--3699)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)
       LIX  Gulf Coast Ecosystem Restoration Council (Parts 5900--
                5999)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
        IV  Office of Personnel Management and Office of the 
                Director of National Intelligence (Parts 1400--
                1499)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Parts 2100--2199)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600--3699)

[[Page 719]]

    XXVIII  Department of Justice (Parts 3800--3899)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  U.S. International Development Finance Corporation 
                (Parts 4300--4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
     XXXVI  Department of Homeland Security (Parts 4600--4699)
    XXXVII  Federal Election Commission (Parts 4700--4799)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)
     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
      XLIX  Federal Labor Relations Authority (Parts 5900--5999)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
       LXX  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 8000--8099)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)

[[Page 720]]

     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)
    LXXXIV  Bureau of Consumer Financial Protection (Parts 9400--
                9499)
    LXXXVI  National Credit Union Administration (Parts 9600--
                9699)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)
    XCVIII  Council of the Inspectors General on Integrity and 
                Efficiency (Parts 9800--9899)
      XCIX  Military Compensation and Retirement Modernization 
                Commission (Parts 9900--9999)
         C  National Council on Disability (Parts 10000--10049)
        CI  National Mediation Board (Part 10101)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--199)
         X  Privacy and Civil Liberties Oversight Board (Parts 
                1000--1099)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Agricultural Marketing Service (Federal Grain 
                Inspection Service, Fair Trade Practices Program), 
                Department of Agriculture (Parts 800--899)

[[Page 721]]

        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  [Reserved]
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  [Reserved]
       XXV  Office of Advocacy and Outreach, Department of 
                Agriculture (Parts 2500--2599)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  National Institute of Food and Agriculture (Parts 
                3400--3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

[[Page 722]]

         L  Rural Business-Cooperative Service, Rural Housing 
                Service, and Rural Utilities Service, Department 
                of Agriculture (Parts 5001--5099)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Agricultural Marketing Service (Federal Grain 
                Inspection Service, Fair Trade Practices Program), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XIII  Nuclear Waste Technical Review Board (Parts 1300--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts 9400--9499)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  (Parts 500--599) [Reserved]
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  (Parts 900--999) [Reserved]

[[Page 723]]

         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research (Parts 1600--1699)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--1199)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)

[[Page 724]]

      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  National Technical Information Service, Department of 
                Commerce (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399) [Reserved]

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  U.S. Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  U.S. Immigration and Customs Enforcement, Department 
                of Homeland Security (Parts 400--599) [Reserved]

[[Page 725]]

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Millennium Challenge Corporation (Parts 1300--1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

[[Page 726]]

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XV  Emergency Mortgage Insurance and Loan Programs, 
                Department of Housing and Urban Development (Parts 
                2700--2799) [Reserved]
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
      XXIV  Board of Directors of the HOPE for Homeowners Program 
                (Parts 4000--4099) [Reserved]
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

[[Page 727]]

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--899)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900--999)
        VI  Office of the Assistant Secretary, Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--End)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--799)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)

[[Page 728]]

        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Bureau of Safety and Environmental Enforcement, 
                Department of the Interior (Parts 200--299)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
         V  Bureau of Ocean Energy Management, Department of the 
                Interior (Parts 500--599)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)
       XII  Office of Natural Resources Revenue, Department of the 
                Interior (Parts 1200--1299)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)

[[Page 729]]

      VIII  Office of Investment Security, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)
         X  Financial Crimes Enforcement Network, Department of 
                the Treasury (Parts 1000--1099)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Department of Defense, Defense Logistics Agency (Parts 
                1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army, Department 
                of Defense (Parts 200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)

[[Page 730]]

       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Career, Technical, and Adult Education, 
                Department of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599) 
                [Reserved]
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799) 
                [Reserved]
            Subtitle C--Regulations Relating to Education
        XI  (Parts 1100--1199) [Reserved]
       XII  National Council on Disability (Parts 1200--1299)

                          Title 35 [Reserved]

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
        VI  [Reserved]
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Parts 1500--
                1599)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  U.S. Copyright Office, Library of Congress (Parts 
                200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                300--399)
        IV  National Institute of Standards and Technology, 
                Department of Commerce (Parts 400--599)

[[Page 731]]

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)
      VIII  Gulf Coast Ecosystem Restoration Council (Parts 1800--
                1899)

          Title 41--Public Contracts and Property Management

            Subtitle A--Federal Procurement Regulations System 
                [Note]
            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
   62--100  [Reserved]
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
  103--104  (Parts 103-001--104-099) [Reserved]
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
  129--200  [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]

[[Page 732]]

            Subtitle E--Federal Information Resources Management 
                Regulations System [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
   II--III  [Reserved]
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--699)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1099)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 400--999)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10099)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)

[[Page 733]]

       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
        IX  Denali Commission (Parts 900--999)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Administration for Children and Families, Department 
                of Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission of Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Parts 2300--2399)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

[[Page 734]]

        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)
         V  The First Responder Network Authority (Parts 500--599)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  Agency for International Development (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management, Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199) [Reserved]
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399) 
                [Reserved]

[[Page 735]]

        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  Civilian Board of Contract Appeals, General Services 
                Administration (Parts 6100--6199)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--1499) 
                [Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)

[[Page 736]]

        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

[[Page 737]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 2021)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Conference of the United States    1, III
Advisory Council on Historic Preservation         36, VIII
Advocacy and Outreach, Office of                  7, XXV
Afghanistan Reconstruction, Special Inspector     5, LXXXIII
     General for
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              2, VII; 22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, VIII, IX, X, XI; 9, 
                                                  II
Agricultural Research Service                     7, V
Agriculture, Department of                        2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  Agricultural Marketing Service                  7, I, VIII, IX, X, XI; 9, 
                                                  II
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Economic Research Service                       7, XXXVII
  Energy Policy and New Uses, Office of           2, IX; 7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  National Institute of Food and Agriculture      7, XXXIV
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force, Department of                          32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
   Compliance Board
[[Page 738]]

Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI; 38, II
Army, Department of                               32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase from People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Career, Technical, and Adult Education, Office    34, IV
     of
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazard Investigation Board    40, VI
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X, XIII
Civil Rights, Commission on                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce, Department of                           2, XIII; 44, IV; 50, VI
  Census Bureau                                   15, I
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II; 37, IV
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Technical Information Service          15, XI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Secretary of Commerce, Office of                15, Subtitle A
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Financial Protection Bureau              5, LXXXIV; 12, X
Consumer Product Safety Commission                5, LXXI; 16, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Council of the Inspectors General on Integrity    5, XCVIII
     and Efficiency
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
     for the District of Columbia
Customs and Border Protection                     19, I
Defense, Department of                            2, XI; 5, XXVI; 32, 
                                                  Subtitle A; 40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III; 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I

[[Page 739]]

  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy, Department of                             32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
Denali Commission                                 45, IX
Disability, National Council on                   5, C; 34, XII
District of Columbia, Court Services and          5, LXX; 28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          2, XXXIV; 5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Career, Technical, and Adult Education, Office  34, IV
       of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
Educational Research and Improvement, Office of   34, VII
Election Assistance Commission                    2, LVIII; 11, II
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Policy, National Commission for        1, IV
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             2, IX; 5, XXIII; 10, II, 
                                                  III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   2, XV; 5, LIV; 40, I, IV, 
                                                  VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99
  National Drug Control Policy, Office of         2, XXXVI; 21, III
  National Security Council                       32, XXI; 47, II
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           2, XXXV; 5, LII; 12, IV

[[Page 740]]

Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       5, XXXVII; 11, I
Federal Emergency Management Agency               44, I
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Agency                    5, LXXX; 12, XII
Federal Labor Relations Authority                 5, XIV, XLIX; 22, XIV
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Financial Crimes Enforcement Network              31, X
Financial Research Office                         12, XVI
Financial Stability Oversight Council             12, XIII
Fine Arts, Commission of                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F

[[Page 741]]

  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Gulf Coast Ecosystem Restoration Council          2, LIX; 40, VIII
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          2, III; 5, XLV; 45, 
                                                  Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X, XIII
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  2, XXX; 5, XXXVI; 6, I; 8, 
                                                  I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection                   19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Housing and Urban Development, Department of      2, XXIV; 5, LXV; 24, 
                                                  Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Immigration and Customs Enforcement Bureau        19, IV
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Independent Counsel, Offices of                   28, VI
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Industry and Security, Bureau of                  15, VII

[[Page 742]]

Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII, XV
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior, Department of                           2, XIV
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Natural Resource Revenue, Office of             30, XII
  Ocean Energy Management, Bureau of              30, V
  Reclamation, Bureau of                          43, I
  Safety and Enforcement Bureau, Bureau of        30, II
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Development Finance Corporation,    5, XXXIII; 22, VII
     U.S.
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
Investment Security, Office of                    31, VIII
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice, Department of                            2, XXVIII; 5, XXVIII; 28, 
                                                  I, XI; 40, IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Independent Counsel, Offices of                 28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor, Department of                              2, XXIX; 5, XLII
  Benefits Review Board                           20, VII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment Standards Administration             20, VI
  Employment and Training Administration          20, V
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50

[[Page 743]]

  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I, VI
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Libraries and Information Science, National       45, XVII
     Commission on
Library of Congress                               36, VII
  Copyright Royalty Board                         37, III
  U.S. Copyright Office                           37, II
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Military Compensation and Retirement              5, XCIX
     Modernization Commission
Millennium Challenge Corporation                  22, XIII
Mine Safety and Health Administration             30, I
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space Administration     2, XVIII; 5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   2, XXII; 45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Capital Planning Commission              1, IV, VI
National Counterintelligence Center               32, XVIII
National Credit Union Administration              5, LXXXVI; 12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           2, XXXVI; 21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Geospatial-Intelligence Agency           32, I
National Highway Traffic Safety Administration    23, II, III; 47, VI; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II; 37, IV
National Intelligence, Office of Director of      5, IV; 32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          5, CI; 29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       2, XXV; 5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI; 47, II
National Security Council and Office of Science   47, II
   and Technology Policy
[[Page 744]]

National Technical Information Service            15, XI
National Telecommunications and Information       15, XXIII; 47, III, IV, V
     Administration
National Transportation Safety Board              49, VIII
Natural Resource Revenue, Office of               30, XII
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy, Department of                               32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     2, XX; 5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Ocean Energy Management, Bureau of                30, V
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       2, XXXVII; 22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, IV, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory Commission                      5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Privacy and Civil Liberties Oversight Board       6, X
Procurement and Property Management, Office of    7, XXXII
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Contracts, Department of Labor             41, 50
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Utilities Service                           7, XVII, XVIII, XLII
Safety and Environmental Enforcement, Bureau of   30, II
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                5, XXXIV; 17, II
Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI

[[Page 745]]

Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State, Department of                              2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Tennessee Valley Authority                        5, LXIX; 18, XIII
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     2, XII; 5, L
  Commercial Space Transportation                 14, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 47, IV; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury, Department of the                       2, X; 5, XXI; 12, XV; 17, 
                                                  IV; 31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection                   19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Financial Crimes Enforcement Network            31, X
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, Office of                  31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
U.S. Copyright Office                             37, II
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs, Department of                   2, VIII; 38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I, VII
World Agricultural Outlook Board                  7, XXXVIII

[[Page 747]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations (CFR) that 
were made by documents published in the Federal Register since January 
1, 2016 are enumerated in the following list. Entries indicate the 
nature of the changes effected. Page numbers refer to Federal Register 
pages. The user should consult the entries for chapters, parts and 
subparts as well as sections for revisions.
For changes to this volume of the CFR prior to this listing, consult the 
annual edition of the monthly List of CFR Sections Affected (LSA). The 
LSA is available at www.govinfo.gov. For changes to this volume of the 
CFR prior to 2001, see the ``List of CFR Sections Affected, 1949-1963, 
1964-1972, 1973-1985, and 1986-2000'' published in 11 separate volumes. 
The ``List of CFR Sections Affected 1986-2000'' is available at 
www.govinfo.gov.

                                  2016

16 CFR
                                                                   81 FR
                                                                    Page
Chapter I
1.98 (Subpart L) Revised; interim..................................42478
1.100 (a) amended...................................................2742
1.110--1.119 (Subpart P) Added......................................2742
1.120--1.124 (Subpart Q) Added......................................2742
4.9 (b)(10)(ix) revised............................................93805
4.10 (a)(3) revised................................................93805
4.11 (a)(1)(i)(A), (D)(1), (ii)(B)(1), (C), (iii)(A), (2) and 
        (3)(i)(A)(2) revised.......................................93805
304.3 Revised......................................................70938
305.3 (x) revised; eff. 9-17-18....................................63646
305.7 (g) revised...................................................7202
    (a), (b) and (d) revised; eff. 6-12-17.........................63646
305.8 Amended; (a)(5) added; eff. 6-12-17..........................63646
305.10 (b) revised..................................................7202
305.11 (f)(9)(viii) removed; (f)(9)(ix) and (x) redesignated as 
        new (f)(9)(viii) and (ix); (f)(5), (6), (9)(ii) and new 
        (viii) revised..............................................7202
    (a) and (f) revised; eff. 6-12-17..............................63646
305.12 (f)(2), (3) and (g) revised; (f)(14) added; eff. 6-12-17....63648
305.13 (a) revised; eff. 9-17-18...................................63649
    (a)(1) introductory text, (xii) and (5) corrected..............74917
305.14 Revised; eff. 6-12-17.......................................63650
305 Appendixes F1 and F2 revised; Appendix L amended................7202
    Appendixes A1 through A8 revised; eff. 6-12-17.................63650
    Appendix A9 added; Appendixes B1, B2 and B3 revised; eff. 6-
12-17..............................................................63653
    Appendixes D1 through D4 revised; eff. 6-12-17.................63654
    Appendix D5 removed; Appendix H revised; eff. 6-12-17..........63656
    Appendix L amended; eff. 9-17-18...............................63656
    Appendix L corrected...........................................74917
306 Policy statement...............................................86914
306.0 (b), (i), (j) and (l) revised; (o) added......................2062
306.5 Revised.......................................................2063
306.6 (b) revised...................................................2063
306.10 (a) and (f) revised..........................................2063
306.12 (a)(4) through (9) redesignated as (a)(5) through (10); new 
        (a)(4) added; (f) amended...................................2063
306.13 Added........................................................2064
310.8 (c) and (d) revised..........................................59845
436.8 (a)(1), (5)(i) and (ii) amended..............................31501
455.1 (d)(7) revised; eff. 1-27-17.................................81678
455.2 (a) introductory text, (2) and (b) revised; eff. 1-27-17.....81678
455.5 Revised; eff. 1-27-17........................................81679

[[Page 748]]

455 Figures 1 through 6 added; eff. 1-27-17........................81679
701.1 (g), (h) and (i) redesignated as (h), (i) and (j); new (g) 
        added; new (h) and (j) revised.............................63669
702.1 (d) revised; (g) added.......................................63669
702.3 Revised......................................................63669
803.1 (a) revised..................................................60259
803.2 (e) and (f) revised..........................................60259
803.3 (d) revised..................................................60259
803.5 (a)(1) introductory text, (3) and (b) revised................60259
803.10 (c)(1)(i) revised; (c)(1)(ii) and (iii) removed; (c)(1)(iv) 
        redesignated as new (c)(1)(ii).............................60260
803 Appendix amended...............................................60260

                                  2017

16 CFR
                                                                   82 FR
                                                                    Page
Chapter I
1.98 Revised........................................................8137
1.125--1.129 (Subpart Q) Added.....................................30966
1.130 (Subpart R) Added............................................30966
4.8 (b)(2)(iii), (6)(i), (7), (e)(2)(i)(C) and (i) revised.........21686
259 Revised........................................................43687
300.4 (c) and (e) revised..........................................43691
301.26 (a), (b)(2) and (d) revised.................................43691
303.20 Revised.....................................................43692
305.11 (d) introductory text, (f)(9)(i), (iv) and (vii) through 
        (x) revised; (d)(3) added..................................29235
305.13 (a)(1)(xii) revised; eff. 9-17-18...........................29236
305.16 (a)(3), (4), (b)(3) and (4) revised.........................29236
305.20 (b)(1)(i)(F) revised........................................29236
305 Appendix D5 revised............................................29236
310.8 (c) and (d) revised..........................................39534
312 Policy statement...............................................58076
682 Regulation at 81 FR 63435 confirmed............................52846
803 Appendix revised...............................................32124

                                  2018

16 CFR
                                                                   83 FR
                                                                    Page
Chapter I
0.7 Revised.........................................................7110
1.98 Revised........................................................2903
23 Revised.........................................................40667
303.19 (a) revised..................................................3071
305.2 (p) amended...................................................7596
305.5 (a) revised; (c) removed; (d) redesignated as new (c).........7596
305.7 (f) amended...................................................7596
305.8 (c) revised...................................................7596
305.10 (a), (b), and (c)(2) revised; (c)(3) added...................7596
305.11 (d) introductory text, (3), and (f)(9)(x) revised; (f)(10) 
        and (11) added..............................................7596
305.12 (g)(12)(ii), (13)(ii), (14) introductory text, and (ii) 
        revised.....................................................7596
305.15 (b) revised.................................................14583
305.16 (a)(5) removed...............................................7597
305 Appendix C1 revised.............................................7597
305 Appendix C2 revised.............................................7597
305 Appendix E revised..............................................7597
305 Appendix G1 through Appendix G8 revised.........................7598
305 Appendix J1 and Appendix J2 revised.............................7599
305 Appendix K removed..............................................7599
305 Appendix K1 and Appendix K2 added...............................7600
305 Appendix L amended..............................................7600
305 Appendix L amended; CFR correction.............................47067
310.8 (c) and (d) revised..........................................46640
311.4 Revised......................................................48216
410 Removed; eff. 1-7-19...........................................50487
801.1 (b)(2) introductory text revised.............................32770
802.1 (d)(4) heading, introductory text, and Example 4 revised.....32770
802.30 (c) introductory text revised...............................32771
802.41 Example 1 revised...........................................32771
803.5 (a)(1) introductory text revised; (a)(1)(vi) Example added; 
        (a)(2) amended.............................................32771
803.11 (c) revised.................................................32771
803.12 (a), (b), and (c)(1) revised................................32771
803.20 (b)(2)(ii) and (3) revised..................................32772
803 Appendix redesignated as Appendix A; Appendix B added..........32772
803 Appendix B amended.............................................45555

                                  2019

16 CFR
                                                                   84 FR
                                                                    Page
Chapter I
1.98 Revised........................................................3981
18 Removed.........................................................20777
305.2 (n), (q), and (aa) revised...................................58028
305.3 Revised......................................................58028

[[Page 749]]

305.4 Redesignated as 305.7; new 305.4 added.......................58029
305.5 Redesignated as 305.8........................................58029
    Added..........................................................58030
305.6 Redesignated as 305.9........................................58029
    Added..........................................................58032
305.7 Redesignated as 305.10; new 305.7 redesignated from 305.4....58029
    (b)(5), (6), and (c) amended; (d)(3) removed; (e) revised......58032
305.8 Redesignated as 305.11; new 305.8 redesignated from 305.5....58029
    (c) revised....................................................58032
305.9 Redesignated from 305.6......................................58029
    Revised........................................................58032
305.10 Redesignated as 305.12; new 305.10 redesignated from 305.7 
                                                                   58029
305.11 Removed; new 305.11 redesignated from 305.8.................58029
    (a)(5) revised; (b)(1) introductory text amended...............58032
305.12 Redesignated as 305.20; new 305.12 redesignated from 305.10
                                                                   58029
    (b) amended; (c) introductory text and (1) revised.............58032
305.13 Redesignated as 305.21......................................58029
    Added..........................................................58032
305.14 Redesignated as 305.22......................................58029
    Added..........................................................58033
305.15 Redesignated as 305.23......................................58029
    Added..........................................................58034
305.16 Redesignated as 305.24......................................58029
    Added..........................................................58035
305.17 Redesignated as 305.25......................................58029
    Added..........................................................58035
305.18 Added.......................................................58036
305.19 Redesignated as 305.26......................................58029
    Added..........................................................58036
305.20 Redesignated as 305.27; new 305.20 redesignated from 305.12
                                                                   58029
    (f)(5), (10)(i), (g)(5), (6)(i), and (15)(i) amended...........58037
305.21 Redesignated as 305.28; new 305.21 redesignated from 305.13
                                                                   58029
    (a)(1)(iii) and (iv) amended...................................58037
305.22 Redesignated as 305.29; new 305.22 redesignated from 305.14
                                                                   58029
305.23 Redesignated as 305.30; new 305.23 redesignated from 305.15
                                                                   58029
    (a)(1), (b)(3)(iii), (v), and (c)(2)(i)(C) amended.............58037
305.24 Redesignated as 305.31; new 305.24 redesignated from 305.16
                                                                   58029
    (b)(4) and (5) removed.........................................58037
305.25 Redesignated from 305.17....................................58029
    (d)(3), (f)(4), (7), and (g) amended...........................58037
305.26 Redesignated from 305.19....................................58029
    (a)(4) and (b)(4) amended......................................58037
305.27 Redesignated from 305.20....................................58029
    (a)(1)(ii)(A), (b)(1)(i)(A) through (G), (b)(ii), and (2) 
amended............................................................58037
305.28 Redesignated from 305.21....................................58029
305.29 Redesignated from 305.22....................................58029
    Amended........................................................58037
305.30 Redesignated from 305.23....................................58029
305.31 Redesignated from 305.24....................................58029
305.32 Redesignated from 305.25....................................58029
305 Appendix A4, Appendix A5, Appendix A6, and Appendix K1 amended
                                                                   58037
305 Appendix K2 and Appendix L amended.............................58038
310.8 (c) and (d) revised..........................................44687
316 Policy statement...............................................13115
433 Policy statement...............................................18711
460 Authority citation revised.....................................20788
460.1 Revised; eff. 5-13-20........................................20788
460.2 Revised; eff. 5-13-20........................................20788
460.3 Revised; eff. 5-13-20........................................20788
460.4 Revised; eff. 5-13-20........................................20788
460.5 Revised; eff. 5-13-20........................................20788
460.6 Amended; eff. 5-13-20........................................20789
460.7 Removed; eff. 5-13-20........................................20789
460.9 (e) amended; eff. 5-13-20....................................20789
460.12 (b)(4) and (5) revised; eff. 5-13-20........................20789
460.13 Introductory text amended; (e) revised; (f) added; eff. 5-
        13-20......................................................20789
460.14 Revised; eff. 5-13-20.......................................20790
460.17 Amended; eff. 5-13-20.......................................20790
460.18 (e) revised; eff. 5-13-20...................................20790

[[Page 750]]

460.19 (g) revised; eff. 5-13-20...................................20790
460.22 Redesignated as 460.23; new section added; eff. 5-13-20.....20790
460.23 Redesignated as 460.24; new section redesignated from 
        460.22; eff. 5-13-20.......................................20790
460.24 Redesignated as 460.25; new section redesignated from 
        460.23; eff. 5-13-20.......................................20790
460.25 Redesignated from 460.24; eff. 5-13-20......................20790
460 Existing Appendix designated as Appendix A; eff. 5-13-20.......20790
600--698 (Subchapter F) Heading revised............................31191
609 Added..........................................................31191
640 Authority citation revised.....................................23473
640.4 (b)(2) amended...............................................23473
640.5 Amended......................................................23473
680 Authority citation revised.....................................23473
680.23 (a)(4) amended..............................................23473
698 Authority citation revised.....................................23473
698.1 Revised......................................................23473
698.2 Revised......................................................23473
698 Appendices A through H removed; new Appendix A added...........23473
698 Appendix B added...............................................23485
803 Appendix A revised.............................................30597
803 Appendix B revised.............................................30608

                                  2020

16 CFR
                                                                   85 FR
                                                                    Page
1.98 Revised........................................................2016
303.7 Introductory text revised; (v) amended.......................63014
310 Heading revised................................................62597
310.8 (c) and (d) revised..........................................62597
315 Authority citation revised.....................................50717
315.2 Amended......................................................50717
315.3 (a)(1), (2), and (b)(1) through (3) revised; (a)(3) and (c) 
        added......................................................50717
315.5 (d) through (g) redesignated as (e) through (i); new (d), 
        (g), and (h)(2)(iii) added; new (f) and (i) revised........50717
436.8 (a)(1), (5)(i), and (ii) amended.............................38791


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