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

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