Guide Concerning Fuel Economy Advertising of New Automobiles

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FEDERAL TRADE COMMISSION

16 CFR Part 259

Guide Concerning Fuel Economy Advertising of New Automobiles

AGENCY: Federal Trade Commission.

ACTION: Final Amendment of the Guide.

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SUMMARY: The Federal Trade Commission (FTC) is amending the ``Guide

Concerning Fuel Economy Advertising for New Automobiles'' to conform to

the Environmental Protection Agency's (EPA) rule regarding fuel economy

labeling of new automobiles. In particular, the amendments are intended

to conform the Guide to those portions of EPA's rule that now require

disclosure of certain fuel economy information, including adjusted city

and adjusted highway miles-per-gallon (mpg) numbers, rather than the

one ``estimated mpg'' number previously required.

EFFECTIVE DATE: December 8, 1995.

FOR FURTHER INFORMATION CONTACT:

Brinley H. Williams, Attorney, or Gerald C. Zeman, Attorney, Cleveland

Regional Office, Federal Trade Commission, 668 Euclid Avenue, Suite

520-A, Cleveland, Ohio 44114. Telephone (216) 522-4210.

SUPPLEMENTARY INFORMATION:

I. Background

The FTC's ``Guide Concerning Fuel Economy Advertising for New

Automobiles'' was first promulgated in 1975.\1\ The Guide was issued in

response to a dramatic increase in advertising fuel economy claims

based on a proliferation of different test procedures. The record of

that proceeding showed both the importance of fuel economy to consumers

in their automobile purchasing decisions and the need for meaningful

fuel economy information based on a standard testing procedure. The

original Guide adopted in 1975 by the Commission stated that fuel

economy representations in advertising should be accompanied by

disclosure of estimated city and highway mpg figures based on EPA test

procedures.

\1\ 40 FR 42003 (September 10, 1975).

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In 1978 the FTC Guide was amended to make advertising disclosures

consistent with changed EPA requirements for fuel economy labels on new

automobiles.\2\ At that time, the EPA mandated disclosure of a single

number, designated ``estimated mpg,'' and the FTC Guide was amended to

require that fuel economy advertising representations be accompanied by

disclosure of this figure.

\2\ 43 FR 55757 (November 29, 1978).

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Subsequently, in 1984, the EPA again amended its rule to require

that adjusted city and highway mpg estimates, as well as certain other

fuel economy information, appear on labels for new automobiles. By

Federal Register notice of March 21, 1985 (50 FR 11378) (comment period

reopened November 7, 1985, 50 FR 46300), the FTC proposed amendments to

conform its Guide to the revised EPA rule. In publishing its request

for comments, the Commission stated that because the revised EPA rule

was already in effect, automobile manufacturers and dealers could make

fuel economy claims consistent with the proposal pending final

amendment of the Guide. Thus, the proposal has been in effect

informally since its date of original publication. The Commission now

takes the final step of formally adopting the changes to its

advertising Guide.

II. Public Comments

In the preamble to the 1985 Federal Register notice, the FTC

discussed the history of the Guide and the changes in the EPA fuel

economy labeling rule which led to the proposed changes in the

advertising Guide. The preamble also described the changes to the Guide

that the FTC proposed to make based on the changes to the EPA rule and

the FTC's own experience with the advertising Guide. Additionally, in

the preamble, the FTC requested comments regarding the cost of

providing the information, the effect the Guide has on fuel economy

advertising, and the utility of the information to consumers.

Comments were received from: the American Automobile Association;

CBS, Inc.; the Center for Auto Safety; Dancer Fitzgerald Sample; the

Department of Energy; the Environmental Protection Agency; General

Motors Corporation; the Leo Burnett Advertising Agency; the National

Association of Broadcasters; and the National Automobiles Dealers

Association. Three comments were also received from individuals: Arthur

and Louise Britton; Ralph Williams; and Walt and Cathy Zimmerman.

A. General Comments

Some comments received from the automobile industry, the

broadcasting industry, and one advertising agency either opposed

retention of fuel economy disclosure requirements, or proposed that the

disclosure requirements be limited to specific circumstances, such as

advertisements making quantitative or comparative fuel economy claims.

The comments opposing retention contended that the requirements are

burdensome, costly, and do not provide useful information to consumers.

On the other hand, comments from individuals, public interest groups,

the Department of Energy, EPA, and another advertising agency generally

favored retention of the disclosure requirements. These comments

contended that disclosure of the EPA mpg figures provides consumers

with useful comparative fuel economy information, while adding little

to advertising costs. One comment contended that elimination of these

requirements would precipitate a variety of confusing fuel economy

claims.

The FTC continues to believe that disclosure of EPA mpg numbers

provides to consumers useful and understandable comparative fuel

economy information. (See 40 FR 42003, September 10, 1975.) While there

is undoubtedly a cost to providing this information, the FTC believes

that the cost is relatively small \3\ and is more than offset by the

value of the information, which enables consumers to judge the relative

fuel economy of comparative automobile models. Moreover, the 1985

proposed amendments to the Guide substantially shortened the

disclosures that must accompany advertised EPA estimates, thereby

reducing costs. Furthermore, as discussed below, the FTC is allowing

certain fuel economy advertisements to disclose only one EPA estimate--

either the highway estimate or the city estimate--without simultaneous

disclosure of the other number. Thus, advertisers now have both a

shorter disclosure requirement and more flexibility when advertising

fuel economy of new automobiles than was the case under the previously

existing Guide.

\3\ General Motors was the only commenting party to submit

specific cost data. Its figures were disputed by the Center for Auto

Safety. Dancer Fitzgerald Sample, an advertising agency, stated that

it believed the cost of providing EPA estimates in fuel economy

advertising to be minimal.

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B. EPA Estimates

Some commenters contended that both the city and highway estimates

should be disclosed in all fuel economy advertisements in order to

maintain consistency with the EPA labeling rule. Other comments

suggested that disclosure of the EPA estimate should be required only

when explicit mileage claims are made.

The FTC has determined to adhere to the 1985 proposal, requiring

disclosure of the EPA number corresponding to the claim that is made.

For example, if only a highway mileage claim is made in the

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ad, then only the EPA highway estimate must be disclosed. If a general

(i.e., nonspecific) mileage claim is made, only the city estimate must

be disclosed. However, if the advertising claim addresses both city and

highway driving, then both figures must be disclosed.

The FTC is adopting these disclosure requirements because the

current EPA city and highway numbers more accurately predict actual in-

use mileage. As a result, the FTC believes that disclosure of the city

estimate may not be necessary in advertisements directed only to

highway driving. Of course, advertisers are always free to disclose

both city and highway numbers in their advertising.

Based on the reliability of the EPA city and highway numbers, the

FTC's 1985 proposal did not include the lengthy disclosure, required

under the previous Guide, warning that the consumer's actual mileage

probably will be less and will depend upon factors such as weather

conditions and driving speed.

The FTC, however, continues to believe that it is important that

the EPA estimate accompany implicit as well as explicit mileage claims.

Any mileage claim inherently involves a comparison to other vehicles.

The EPA estimates provide consumers with a meaningful method of

comparing competing claims.

The 1985 proposal, which has been in effect informally during the

intervening years, is now time-tested. It appears that the proposal has

worked well, and the Commission has not seen evidence of deceptive or

misleading claims because of the changed disclosures. Therefore, formal

adoption of the proposed Guide is warranted.

C. Non-EPA Test Results

The greatest number of comments addressed use of non-EPA test

results. The comments ranged from advocating a prohibition on the use

of such test results to espousing elimination of all disclosure of EPA

estimates in ads using non-EPA results. Some comments also objected to

the specific proposal that would allow the EPA estimates to be

disclosed in ``equal prominence'' to the non-EPA results, in the audio

portion of broadcast ads, instead of requiring ``greater prominence''

than the non-EPA results.

The FTC believes that if a non-EPA test is advertised, the

appropriate EPA estimate should be disclosed with greater prominence,

except in audio portions of advertisements. In the prior version of the

Guide, the requirement had been that the EPA estimate had to be given

before and after the non-EPA estimate in audio broadcast ads. As a

result, advertisers had less flexibility in developing broadcast ads

than they did print ads. Unlike a printed disclosure, which may not be

seen among other textual material unless it is more prominently

displayed, however, an audio disclosure of the EPA estimate will be as

likely to be heard as the non-EPA estimate. Accordingly, the FTC

believes that adopting an ``equal prominence'' provision for audio

portions of advertisements will reasonably ensure that the EPA

estimates are conveyed to the listener without unduly burdening the

advertiser.

List of Subjects in 16 CFR Part 259

Advertising, Fuel economy, Trade practices.

For the reasons set forth in the preamble, 16 CFR Part 259 is

amended to read as follows:

PART 259--GUIDE CONCERNING FUEL ECONOMY ADVERTISING FOR NEW

AUTOMOBILES

Sec.

259.1 Definitions.

259.2 Advertising disclosures.

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

Sec. 259.1 Definitions.

For the purposes of this part, the following definitions shall

apply:

(a) New automobile. Any passenger automobile or light truck for

which a fuel economy label is required under the Energy Policy and

Conservation Act (42 U.S.C. 6201 et seq.) or rules promulgated

thereunder, the equitable or legal title to which has never been

transferred by a manufacturer, distributor, or dealer to an ultimate

purchaser. The term ``manufacturer'' shall mean any person engaged in

the manufacturing or assembling of new automobiles, including any

person importing new automobiles for resale and any person who acts for

and is under control of such manufacturer, assembler, or importer in

connection with the distribution of new automobiles. The term

``dealer'' shall mean any person, resident or located in the United

States or any territory thereof, engaged in the sale or distribution of

new automobiles to the ultimate purchaser. The term ``ultimate

purchaser'' means, for purposes of this part, the first person, other

than a dealer purchasing in his or her capacity as a dealer, who in

good faith purchases such new automobile for purposes other than

resale, including a person who leases such vehicle for his or her

personal use.

(b) Estimated city mpg. The gasoline consumption or mileage of new

automobiles as determined in accordance with the city test procedure

employed and published by the U.S. Environmental Protection Agency as

described in 40 CFR 600.209-85 and expressed in miles-per-gallon, to

the nearest whole mile-per-gallon, as measured, reported, published, or

accepted by the U.S. Environmental Protection Agency.

(c) Estimated highway mpg. The gasoline consumption or mileage of

new automobiles as determined in accordance with the highway test

procedure employed and published by the U.S. Environmental Protection

Agency as described in 40 CFR 600.209-85 and expressed in miles-per-

gallon, to the nearest whole mile-per-gallon, as measured, reported,

published, or accepted by the U.S. Environmental Protection Agency.

(d) Vehicle configuration. The unique combination of automobile

features, as defined in 40 CFR 600.002-85(24).

(e) Estimated in-use fuel economy range. The estimated range of

city and highway fuel economy of the particular new automobile on which

the label is affixed, as determined in accordance with procedures

employed by the U.S. Environmental Protection Agency as described in 40

CFR 600.311 (for the appropriate model year), and expressed in miles-

per-gallon, to the nearest whole mile-per-gallon, as measured, reported

or accepted by the U.S. Environment Protection Agency.

(f) Range of estimated fuel economy values for the class of new

automobiles. The estimated city and highway fuel economy values of the

class of automobile (e.g., compact) as determined by the U.S.

Environmental Protection Agency pursuant to 40 CFR 600.315 (for the

appropriate model year) and expressed in miles-per-gallon, to the

nearest whole mile-per-gallon.

Sec. 259.2 Advertising disclosures.

(a) No manufacturer or dealer shall make any express or implied

representation in advertising concerning the fuel economy of any new

automobile \1\ unless such representation is accompanied by the

following clear and conspicuous disclosures:

\1\ The Commission will regard as an express or implied fuel

economy representation one which a reasonable consumer, upon

considering the representation in the context of the entire

advertisement, would understand as referring to the fuel economy

performance of the vehicle or vehicles advertised.

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(1) If the advertisement makes:

(i) Both a city and a highway fuel economy representation, both the

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``estimated city mpg'' and the ``estimated highway mpg'' of such new

automobile,\2\ must be disclosed;

\2\ For purposes of Sec. 259.2(a), the ``estimated city mpg''

and the ``estimated highway mpg'' must be those applicable to the

specific nameplate being advertised. Fuel economy estimates assigned

to ``unique nameplates'' (see 40 CFR 600.207-86(a)(2)) apply only to

such unique car lines. For example, if a manufacturer has a model

named the ``XZA'' that has fuel economy estimates assigned to it and

a derivative model named the ``Econo-XZA'' that has separate, higher

fuel economy estimates assigned to it, these higher numbers assigned

to the ``Econo-XZA'' cannot be used in advertisements for the

``XZA.''

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(ii) A representation regarding only city or only highway fuel

economy, only the corresponding EPA estimate must be disclosed; \3\

\3\ For example, if the representation clearly refers only to

highway fuel economy, only the ``estimated highway mpg'' need be

disclosed.

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(iii) A general fuel economy claim without reference to either city

or highway, or if the representation refers to any combined fuel

economy number, the ``estimated city mpg'' must be disclosed; \4\ and

\4\ Nothing in this section should be construed as prohibiting

disclosure of both the city and highway estimates.

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(2) That the U.S. Environmental Protection Agency is the source of

the ``estimated city mpg'' and ``estimated highway mpg'' and that the

numbers are estimates.\5\

\5\ The Commission will regard the following as the minimum

disclosure necessary to comply with Sec. 259.2(a)(2), regardless of

the media in which the advertisement appears: ``EPA estimate(s).''

For television, if the estimated mpg appears in the video, the

disclosure must appear in the video; if the estimated mpg is audio,

the disclosure must be audio.

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(b) If an advertisement for a new automobile cites:

(1) The ``estimated in-use fuel economy range,'' the advertisement

must state with equal prominence both the upper and lower number of the

range, an explanation of the meaning of the numbers (i.e., city mpg

range or highway mpg range or both), and that the U.S. Environmental

Protection Agency is the source of the figures.

(2) The ``range of estimated fuel economy values for the class of

new automobiles'' as a basis for comparing the fuel economy of two or

more automobiles, such comparison must be made to the same type of

range (i.e., city or highway).\6\

\6\ For example, an advertisement could not state that

``according to EPA estimates new automobiles in this class get as

little as X mpg (citing a figure from the city range) while EPA

estimates that this automobile gets X + mpg (citing the EPA highway

estimates or a number from the EPA estimated in-use fuel economy

highway range for the automobile).

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(c) Fuel economy estimates derived from a non-EPA test may be

disclosed provided that:

(1) The advertisement also discloses the ``estimated city mpg''

and/or the ``estimated highway mpg,'' as required by Sec. 259.2(a), and

the disclosure required by Sec. 259.2(a), and gives the ``estimated

city mpg'' and/or the ``estimated highway mpg'' figure(s) substantially

more prominence than any other estimate; \7\ provided, however, for

radio and television advertisements in which any other estimate is used

only in the audio, equal prominence must be given the ``estimated city

mpg'' and/or the ``estimated highway mpg'' figure(s); \8\

\7\ The Commission will regard the following as constituting

``substantially more prominence:''

For television only: If the estimated city and/or highway mpg

and any other mileage estimate(s) appear only in the visual portion,

the estimated city and/or highway mpg must appear in numbers twice

as large as those used for any other estimate, and must remain on

the screen at least as long as any other estimate. If the estimated

city and highway mpg appear in the audio portion, visual broadcast

of any other estimate must be accompanied by the simultaneous, at

least equally prominent, visual broadcast of the estimated city and/

or highway mpg. Each visual estimated city and highway mpg must be

broadcast against a solid color background that contrasts easily

with the color used for the numbers when viewed on both color and

black and white television.

For print only: The estimated city and/or highway mpg must

appear in clearly legible type at least twice as large as that used

for any other estimate. Alternatively, if the estimated city and

highway mpg appear in type of the same size as such other estimate,

they must be clearly legible and conspicuously circled. The

estimated city and highway mpg must appear against a solid color,

contrasting background. They may not appear in a footnote unless all

references to fuel economy appear in a footnote.

\8\ The Commission will regard the following as constituting

equal prominence. For radio and television when any other estimate

is used in the audio: The estimated city and/or highway mpg must be

stated, either before or after each disclosure of such other

estimate at least as audibly as such other estimate.

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(2) The source of the non-EPA test is clearly and conspicuously

identified;

(3) The driving conditions and variables simulated by the test

which differ from those used to measure the ``estimated city mpg'' and/

or the ``estimated highway mpg,'' and which result in a change in fuel

economy, are clearly and conspicuously disclosed.\9\ Such conditions

and variables may include, but are not limited to, road or dynamometer

test, average speed, range of speed, hot or cold start, and

temperature; and

\9\ For dynamometer tests any difference between the EPA and

non-EPA tests must be disclosed. For in-use tests, the Commission

realizes that it is impossible to duplicate the EPA test conditions,

and that in-use tests may be designed to simulate a particular

driving situation. It must be clear from the context of the

advertisement what driving situation is being simulated (e.g., cold

weather driving, highway driving, heavy load conditions).

Furthermore, any driving or vehicle condition must be disclosed if

it is significantly different from that which an appreciable number

of consumers (whose driving condition is being simulated) would

expect to encounter.

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(4) The advertisement clearly and conspicuously discloses any

distinctions in ``vehicle configuration'' and other equipment affecting

mileage performance (e.g., design or equipment differences which

distinguish subconfigurations as defined by EPA) between the

automobiles tested in the non-EPA test and the EPA tests.

By direction of the Commission.

Donald S. Clark,

Secretary.

Concurring Statement of Commissioner Mary L. Azcuenaga, New Automobile

Mileage Guide, Matter No. P844508

Today, the Commission issues amendments to the Fuel Economy

Advertising Guide. I join the Commission in issuing the amended

Guide because the amendments are needed to conform the Guide to the

Environmental Protection Agency's rules concerning fuel economy and

because the amendments otherwise appear to be improvements. The

Commission proposed these amendments to the Guide and received

comments on them in 1985. Given that the record on which the

amendments are based closed a decade ago, I would have preferred,

before finalizing the amendments, to reopen the comment period for

thirty days to ascertain whether the amendments should be issued as

is or should be revised to reflect any new information.\1\

\1\ Reopening the comment period would have been consistent with

the Commission's ongoing regulatory review program under which its

rules and guides are reviewed at least once every ten years.

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When the proposed amendments were published for comment, the

Commission stated that it would not consider advertising that

complied with the amendments to violate Section 5 of the FTC Act. It

is my understanding that most fuel economy advertising since 1985

has been consistent with the proposed amendments to the Guide. It is

also my understanding that fuel economy advertising has become less

prevalent since 1985. The decrease in fuel economy advertising may

be due to changes in the relative importance that consumers attach

to fuel economy information when making a new automobile purchase.

In the alternative, fuel economy advertising may have become less

prevalent because the standards contained in the amended Guide are

overly regulatory and have deterred truthful as well as deceptive

advertising. The record supporting the amendments, having closed a

decade ago, sheds no light on why fuel economy advertising has

decreased during the ensuing years. Given the potential value of

truthful fuel economy advertising, it would have been worthwhile to

seek public comment again before issuing the amended Guide to ensure

that it not only helps to prevent deception but also does not deter

truthful advertising.

[FR Doc. 95-27686 Filed 11-7-95; 8:45 am]

BILLING CODE 6750-01-M