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Title 16 →Chapter I →Subchapter B →Part251
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Title 16: Commercial Practices
PART 251—GUIDE CONCERNING USE OF THE WORD “FREE” AND SIMILAR REPRESENTATIONS
Contents
§251.1 The guide.
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§251.1 The guide.
(a) General. (1)Theofferof“Free”merchandiseorserviceisapromotionaldevicefrequentlyused
to attract customers. Providing such merchandise or service with the purchase of some other article or service has 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”merchandiseorservicetobeaspecialbargain,allsuchoffers must be made with extreme care so as to avoid any possibility that consumers will be misled or deceived. Representative of the languagefrequentlyusedinsuchoffersare“Free”,“Buy1-Get1Free”,“2-for-1Sale”,“50%offwith
purchaseofTwo”,“1¢Sale”,etc.(Relatedrepresentationsthatraisemanyofthesamequestions
include“__Cents-Off”,“Half-PriceSale”,“1⁄2 Off”,etc.SeetheCommission's“FairPackagingand
LabelingRegulationRegarding‘Cents-Off’andGuidesAgainstDeceptivePricing.”)
(b) Meaning of “Free”. (1) The public understands that, except in the case of introductory offers in connectionwiththesaleofaproductorservice(Seeparagraph(f)ofthissection),anofferof“Free”
merchandise or service is based upon a regular price for the merchandise or service which must be purchasedbyconsumersinordertoavailthemselvesofthatwhichisrepresentedtobe“Free”.In
otherwords,whenthepurchaseristoldthatanarticleis“Free”tohimifanotherarticleispurchased,
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the word“Free”indicatesthatheispayingnothingforthatarticleandnomorethantheregularprice
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”orsimilarofferinthemostrecentandregular course of business, for a reasonably
substantial period of time, i.e., a 30-day period. For consumer products or services which fluctuate inprice,the“regular”priceshallbethelowestpriceatwhichanysubstantialsalesweremade
during the aforesaid 30-day period. Except in the case of introductory offers, if no substantial sales weremade,infact,atthe“regular”price,a“Free”orsimilarofferwouldnotbeproper.
(c) Disclosure of conditions. Whenmaking“Free”orsimilaroffersalltheterms, conditions and obligationsuponwhichreceiptandretentionofthe“Free”itemarecontingentshouldbesetforth
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 obligationsshouldappearincloseconjunctionwiththeofferof“Free”merchandiseorservice.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 disclosureattheoutset.However,merenoticeoftheexistenceofa“Free”offeronthemaindisplay
panel of a label or package is not precluded provided that (1) the notice does not constitute an offer oridentifytheitembeingoffered“Free”,(2)thenoticeinformsthecustomerofthelocation,
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, orshouldknow,thata“Free”offerheispromotingisnotbeingpassedonbyareseller,orotherwise
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 anendtothedeception,inlcudingthewithdrawalofthe“Free”offer.
(e) Resellers' participation in supplier's offers. Priortoadvertisinga“Free”promotion,asupplier
should offer the product as promoted to all competing resellers as provided for in the Commission's
“GuidesforAdvertisingAllowancesandOtherMerchandisingPaymentsandServices.”In
advertisingthe“Free”promotion,thesuppliershouldidentifythoseareasinwhichtheofferisnot
available if the advertising is likely to be seen in such areas, and should clearly state that it is
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available only through participating resellers, indicating the extent of participation by the use of such termsas“some”,“all”,“amajority”,or“afew”,asthecasemaybe.
(f) Introductory offers. (1)No“Free”offershouldbemadeinconnectionwiththeintroductionofa
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”unlesstheofferorexpects,ingoodfaith,todiscontinuetheofferafteralimitedtimeandto
commence selling the product or service promoted, separately, at the same price at which it was promotedwitha“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”withthesale.Thesamerepresentationisalsoimproperwheretheremaybea
regular price, but where other material factors such as quantity, quality, or size are arrived at through bargaining.
(h) Frequency of offers. Sothata“Free”offerwillbespecialandmeaningful,asinglesizeofa
productorasinglekindofserviceshouldnotbeadvertisedwitha“Free”offerinatradeareafor
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 thesizepromotedwitha“Free”offershouldnotexceed50percentofthetotalvolumeofhissales
of the product, in the same size, in the area.
(i) Similar terms. Offersof“Free”merchandiseorserviceswhichmaybedeceptiveforfailureto
meet the provisions of this section may not be corrected by the substitution of such similar words andtermsas“gift”,“givenwithoutcharge”,“bonus”,orotherwordsortermswhichtendtoconvey
theimpressiontotheconsumingpublicthatanarticleofmerchandiseorserviceis“Free”.
(38 Stat. 717, as amended; 15 U.S.C. 41-58)
[36 FR 21517, Nov. 10, 1971]
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