[Federal Register Volume 60, Number 152 (Tuesday, August 8, 1995)]
[Rules and Regulations]
[Pages 40265-40267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19543]



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FEDERAL TRADE COMMISSION
16 CFR Part 242


Guide Against Deceptive Use of the Word ``Free'' in Connection 
With the Sale of Photographic Film and Film Processing Service

AGENCY: Federal Trade Commission.

ACTION: Elimination of guide.

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SUMMARY: The Guide Against Deceptive Use of the Word ``Free'' in 
Connection With the Sale of Photographic Film and Film Processing 
Service (``Free Film Guide'') sets forth industry guidance concerning 
offers of ``free'' film in connection with the sale of photographic 
processing services. The Commission's Guide Concerning Use of the Word 
``Free'' and Similar Representations, which was adopted after the Free 
Film Guide and which applies to all industries, sets forth essentially 
the same guidance concerning offers of ``free'' merchandise or service 
in connection with the sale of some other merchandise or service. The 
Free Film Guide has thus been supplanted by the Guide Concerning Use of 
the Word ``Free'' and Similar Representations and is no longer needed. 
Accordingly, the Commission has determined that it is in the public 
interest to eliminate the Guide Against Deceptive Use of the Word 
``Free'' in Connection With the Sale of Photographic Film and Film 
Processing Service. 

[[Page 40266]]

    Although the Commission is eliminating the Free Film Guide, 
proceedings still may be brought against businesses under section 
5(a)(1) of the Federal Trade Commission Act, 15 U.S.C. 45(a)(1), for 
engaging in unfair or deceptive acts or practices in or affecting 
commerce in the advertising and sale of these products and services.

EFFECTIVE DATE: August 8, 1995.

ADDRESSES: Requests for copies of this notice should be sent to the 
Public Reference Branch, Room 130, Federal Trade Commission, 
Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Robert J. Schroeder, Seattle Regional 
Office, Federal Trade Commission, 915 Second Avenue, Suite 2806, 
Seattle, Washington, 98174, (206) 220-6350.

SUPPLEMENTARY INFORMATION: 

I. Introduction

    As a part of its ongoing project to review all rules and guides, 
the Commission has evaluated the continued need for the Guide Against 
Deceptive Use of the Word ``Free'' in Connection With the Sale of 
Photographic Film and Film Processing Service. The same deceptive 
practices described in the Free Film Guide and the same industry 
guidance on how to avoid them in this specific industry also appear in 
the more general Guide Concerning Use of the Word ``Free'' and Similar 
Representations, 16 CFR part 251. Accordingly, the Commission has 
determined to repeal the Free Film Guide.
    Because the industry guidance in the Free Film Guide is duplicated 
in the Guide Concerning Use of the Word ``Free'' and Similar 
Representations, the Commission has further determined that public 
comment is not necessary at this time.\1\ Public comment on the issues 
raised by offers of ``free'' merchandise or services may be sought at a 
later date during regulatory review of the Guide Concerning Use of the 
Word ``Free'' and Similar Representations.

    \1\ The Administrative Procedure Act requires that interpretive 
rules, such as guides, be published in their final form in the 
Federal Register. 5 U.S.C. 552(a)(1)(D). It does not require the 
opportunity for public participation in the issuance or repeal of 
interpretive rules. 5 U.S.C. 553(b). As a matter of discretion, 
however, the Commission generally seeks public comment on proposed 
actions involving industry guides. In this case, the Commission has 
determined such comment is unnecessary.
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II. Background

    On June 5, 1968, the Commission adopted the Guide Against Deceptive 
Use of the Word ``Free'' in Connection With the Sale of Photographic 
Film and Film Processing Service.\2\ The Free Film Guide describes 
various deceptive practices that may be associated with offers of 
``free'' film in connection with the sale of photographic processing 
services, and provides industry guidance on how to avoid these types of 
deception. On November 10, 1971, the Commission adopted the Guide 
Concerning Use of the Word ``Free'' and Similar Representations.\3\ 
This guide describes various deceptive practices that may be associated 
with offers of ``free'' merchandise or services of any kind, and 
provides industry guidance on how to avoid these types of deception. 
The Federal Register Notice announcing it specifically states that 
``provisions of all existing guides and trade practice rules that 
include coverage of use of the term ``Free'' or similar representations 
will be construed in the light hereof.'' \4\ The two guides describe 
essentially the same deceptive practices and give essentially the same 
guidance.

    \2\ 33 FR 8336.
    \3\ 36 FR 21517.
    \4\ Id.
III. Review of the Guide

    The content of the Guide Against Deceptive Use of the Word ``Free'' 
in Connection With the Sale of Photographic Film and Film Processing 
Service is repeated, in slightly different language but to the same 
effect, in the Guide Concerning Use of the Word ``Free'' and Similar 
Representations. Thus the Free Film Guide has been supplanted and is no 
longer needed.
    The Free Film Guide generally proscribes representing that film is 
provided free with the purchase of processing service when that is not 
the case. The guide states:

    Film processors should avoid representing film as ``free'' [in 
connection with the purchase of processing service] when their 
quoted price for processing is not their regular price for such 
service. * * * A regular price is the price at which an article or 
service is openly and actively sold by the advertiser to the public 
on a regular basis for a reasonably substantial period of time in 
the recent and regular course of business.\5\

    \5\ 16 CFR 242.1(b).

    The Guide Concerning Use of the Word ``Free'' and Similar 
Representations contains the same general proscription in slightly 
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different language:

    [W]hen the purchaser is told that an article is ``Free'' to him 
if another article is purchased, the word ``Free'' indicates that he 
is paying nothing for that article and no more than the regular 
price for the other. * * * The term ``regular'' when used with the 
term ``price'', means the price, in the same quantity, quality and 
with the same service, at which the seller or advertiser of the 
product or service has openly and actively sold the product or 
service * * * in the most recent and regular course of business, for 
a reasonably substantial period of time, i.e., a 30-day period.\6\

    \6\ 16 CFR 251.1(b)(1)-(b)(2).

    Both guides expound that consumers understand ``free'' offers to 
mean that the price of the processing, or other article that must be 
purchased, has not been increased to cover the cost of the ``free'' 
film or other article.\7\ Both guides counsel that introductory offers 
should not include a representation of ``free'' film or other article 
unless the offeror expects, in good faith, to discontinue the offer 
after a limited time and commence selling the processing service, or 
other article that must be purchased, separately at the same price at 
which it was promoted with the ``free'' offer.\8\ Both guides further 
provide that ``free'' offers should not be continuous or frequent.\9\

    \7\ 16 CFR 242.1(c); 16 CFR 251.1(b)(1).
    \8\ 16 CFR 242.1(f); 16 CFR 251.1(f).
    \9\ 16 CFR 242.1(e); 16 CFR 251.1(h).
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    Two provisions of the Free Film Guide, while not having specific 
counterparts in the Guide Concerning Use of the Word ``Free'' and 
Similar Representations, are implicitly contained in the more general 
language of that guide. The first is the statement that a processor has 
no basis for a ``free'' film representation where it has not 
established a regular price for processing service by itself (except in 
the case of introductory offers).\10\ This is implicit in the 
discussion of the regular price requirement in both guides. The second 
is the caveat that the Free Film Guide is not intended to preclude the 
use of nondeceptive ``combination'' offers of film and processing where 
there is no representation that one of the items is ``free''.\11\ There 
is nothing in either guide to suggest that such offers would be 
precluded because the guides, by their terms, apply only to use of the 
word ``free'' and similar terms.

    \10\ 16 CFR 242.1(d).
    \11\ 16 CFR 242.1(g).
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    The Free Film Guide has been supplanted by the Guide Concerning Use 
of the Word ``Free'' and Similar Representations. Accordingly, the 
Commission has determined that it is in the public interest to 
eliminate the Free Film Guide.

List of Subjects in 16 CFR Part 242

    Advertising, Photographic industry, Trade practices.

[[Page 40267]]


PART 242--[REMOVED]

    The Commission, under authority of sections 5(a)(1) and 6(g) of the 
Federal Trade Commission Act, 15 U.S.C. 45(a)(1) and 46(g), amends 
chapter I of title 16 of the Code of Federal Regulations by removing 
Part 242.

    By direction of the Commission.
Donald S. Clark,
Secretary.
Statement of Commissioner Mary L. Azcuenaga Concurring in 16 CFR Part 
14, Matter No. P954215; Repeal of Mail Order Insurance Guides, Matter 
No. P954903; Repeal of Guides Re: Debt Collection, Matter No. P954809; 
and Free Film Guide Review, Matter No. P959101

    In a flurry of deregulation, the Commission today repeals or 
substantially revises several Commission guides and other 
interpretive rules.\1\ The Commission does so without seeking public 
comment. I have long supported the general goal of repealing or 
revising unnecessary, outdated, or unduly burdensome legislative and 
interpretive rules, and I agree that the repeal or revision of these 
particular guides and interpretive rules appears reasonable. 
Nevertheless, I cannot agree with the Commission's decision not to 
seek public comment before making these changes.

    \1\ Administrative Interpretations, General Policy Statements, 
and Enforcement Policy Statements, 16 C.F.R. Part 14; Guides for the 
Mail Order Insurance Industry, 16 C.F.R. Part 234; Guides Against 
Debt Collection Deception, 16 C.F.R. Part 237; and Guide Against 
Deceptive use of the Word ``Free'' In Connection With the Sale of 
Photographic Film and Film Processing Services, 16 C.F.R. Part 242.
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    Although it is not required to do so under the Administrative 
Procedure Act, 5 U.S.C. Sec. 553(b)(A), the Commission traditionally 
has sought public comment before issuing, revising, or repealing its 
guides and other interpretive rules. More specifically, the 
Commission adopted a policy in 1992 of reviewing each of its guides 
at least once every ten years and issuing a request for public 
comment as part of this review. See FTC Operating Manual ch. 8.3.8. 
The Commission decided to seek public comment on issues such as:
    (1) The economic impact of and continuing need for the guide; 
(2) changes that should be made in the guide to minimize any adverse 
economic effect; (3) any possible conflict between the guide and any 
federal, state, or local laws; and (4) the effect on the guide of 
technological, economic, or other industry changes, if any, since 
the guide was promulgated.

Id. The Commission has sought public comment and has posed these 
questions concerning a number of guides since adopting its 
procedures for regulatory review in 1992.\2\

    \2\ See, e.g., Request for Comments Concerning Guides for the 
Hosiery Industry, 59 Fed. Reg. 18004 (Apr. 15, 1994); Request for 
Comment Concerning Guides for the Feather and Down Products 
Industry, 59 Fed. Reg. 18006 (Apr. 15, 1994).
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    Notwithstanding its long-standing, general practice of seeking 
public comment and its specific policy of seeking public comment as 
part of its regulatory review process, the Commission has chosen not 
to seek public comment before repealing or revising these guides and 
interpretive rules. Why not? Has the Commission changed its view 
about the potential value of public comment? Perhaps the Commission 
knows all the answers, but then again, perhaps not. Although 
reasonable arguments can be made for repeal or revision of these 
guides and interpretive rules, public comment still might prove to 
be beneficial.
    In addition, the relatively short period of time that would be 
required for public comment should not be problematic. The 
Commission has not addressed any of these guides or interpretive 
rules in the last ten years. Indeed, it has not addressed some of 
them for thirty years or more. For example, the Commission 
apparently has not addressed the interpretive rule concerning the 
use of the word ``tile'' in designation of non-ceramic products 
since it was issued in 1950.\3\ The continued existence of these 
guides and interpretive rules during a brief public comment period 
surely would cause no harm because they are not binding and because, 
arguably, they are obsolete. I seriously question the need to act so 
precipitously as to preclude the opportunity for public comment.\4\

    \3\ 16 C.F.R. 14.2.
    \4\ Unfortunately, seeking public comment would not permit the 
Commission to count the repeal and revision of these guides and 
interpretive rules in its tally of completed actions in the 
Regulatory Reinvention Initiative Report that will be sent to the 
President on August 1, 1995, but perhaps that harm could be 
mitigated by reporting to the President that the Commission is 
seeking public comment concerning repeal or revision.
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    In 1992, the Commission announced a careful, measured approach 
for reviewing its guides and interpretive rules, and public comment 
has been an important part of that process. Incorporating public 
comment into the review is appropriate and sensible. Although I have 
voted in favor of repealing or revising these guides and 
interpretive rules, I strongly would have preferred that the 
Commission seek public comment before doing so.

[FR Doc. 95-19543 Filed 8-7-95; 8:45 am]
BILLING CODE 6750-01-M