b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nD ivision of M arketing Practices\nCraig Tregillus\nctregillus@ ftc.gov\n\nD irect D ial: (202) 326-2970\nFacsim ile: (202) 326-3395\n\nNovember 24, 2009\nHarvey I. Lapin, Esq.\nHarvey I. Lapin, PC\nP.O. Box 1327\nNorthbrook, IL 60065-1327\nDear Mr. Lapin:\nThis letter responds to your request for a staff opinion interpreting Section 453.4(e)(2) of\nthe Funeral Rule, which prohibits claims representing \xe2\x80\x9cthat funeral goods have protective\nfeatures or will protect the body from gravesite substances, when such is not the case.\xe2\x80\x9d1 You\nask, in particular, whether this provision bars an advertisement by a funeral provider that\nexpressly claims a burial vault is \xe2\x80\x9cwaterproof.\xe2\x80\x9d\nThe Commission\xe2\x80\x99s discussion of this provision in the Statement of Basis and Purpose\n(\xe2\x80\x9cSBP\xe2\x80\x9d) for the Rule specifically cites claims that caskets and burial vaults are \xe2\x80\x9cairtight,\nwatertight, or offer special protection against the elements\xe2\x80\x9d or are \xe2\x80\x9cwaterproof.\xe2\x80\x9d2 Although the\nSBP thus makes it clear that Section 453.4(e)(2) applies to a claim that a casket or vault is\n\xe2\x80\x9cwaterproof,\xe2\x80\x9d the prohibition only applies to such claims by funeral providers if they are untrue;\ni.e., \xe2\x80\x9cwhen such is not the case.\xe2\x80\x9d The SBP points out that it is typically \xe2\x80\x9cimpossible to estimate\nhow often such claims are false, because consumers are unable to discover whether protective\nclaims are inflated without exhuming the body.\xe2\x80\x9d\nYour request was prompted by an advertisement in which a funeral provider expressly\nrepresents that it sells \xe2\x80\x9ca quality VAULT that is water proof and has a warranty in writing\xe2\x80\x9d and\ncosts \xe2\x80\x9cless than you paid for a plastic or concrete box.\xe2\x80\x9d The funeral provider that placed this ad\nmay be held liable for violating Section 453.4(e)(2) of the Rule if the claim is untrue \xe2\x80\x93 even if\nthe provider is simply repeating a representation made by the manufacturer. Any funeral\nprovider that repeats a claim that funeral goods have protective features adopts that claim as its\nown and can be held liable for making false or unsubstantiated claims.\n\n1\n\n2\n\n16 C.F.R. \xc2\xa7 453.3(e)(2).\n\n47 Fed. Reg. 42280, 42278 & n.186 (Sept. 24, 1982), available at\nhttp://www.ftc.gov/bcp/rulemaking/funeral/funrlprac.pdf.\n\n\x0cHarvey I. Lapin, Esq.\nPage 2 of 2\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\non the FTC website at http://www.ftc.gov/bcp/conline/edcams/funerals/staffopinions.shtm.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Marketing Practices\n\nNovember 6, 2009\nStephen F. Ruffino\nGibney Anthony & Flaherty LLP\n665 Fifth Avenue\nNew York, NY 10022\nDear Mr. Ruffino:\nThis letter responds to your request for a staff advisory opinion regarding compliance\nwith the Magnuson-Moss Warranty Act (\xe2\x80\x9cAct\xe2\x80\x9d), 15 U.S.C. \xc2\xa7\xc2\xa7 2301-2312, and the Commission\xe2\x80\x99s\nrules promulgated under that Act. You seek guidance on the Act\xe2\x80\x99s application to your client\xe2\x80\x99s\none-year \xe2\x80\x9cService Warranty.\xe2\x80\x9d According to your letter, your client provides this service\nwarranty after a consumer has purchased one of your client\xe2\x80\x99s consumer products and\nsubsequently has had that product serviced through one of your client\xe2\x80\x99s dealers or service\ncenters. Specifically, you ask whether this service warranty is a \xe2\x80\x9cwritten warranty\xe2\x80\x9d as that term\nis defined in the Act. Based on the information you provide in your letter, and after considering\nthe purposes of the Act, it is the staff\xe2\x80\x99s opinion that the service warranty you describe is not a\n\xe2\x80\x9cwritten warranty\xe2\x80\x9d under the Act or the Commission\xe2\x80\x99s rules.\nYour Client\xe2\x80\x99s Course of Conduct and Proposal\nIn your letter you indicate that your client imports and distributes a line of high-end\nconsumer products. In connection with the sale of these products, your client offers from the\ndate of sale a Full Two-Year Warranty. This Full Two-Year Warranty provides that in the event\nof a malfunction arising within the warranty period, your client will remedy any defects at no\ncost to the consumer.\nAfter the expiration of the Full Two-Year Warranty period, consumers may choose to\npurchase additional maintenance and service for the product in what you refer to as \xe2\x80\x9cFactory\nService.\xe2\x80\x9d This Factory Service requires that the consumer take the product to an authorized\ndealer or service center for service. You indicate that this service can often entail a full overhaul\nof the product.\nAfter the completion of this service, your client issues a one-year \xe2\x80\x9cService Warranty\xe2\x80\x9d on\nthe serviced product, pursuant to which your client promises to remedy any defects at no cost to\nthe consumer for one year from the date of service. You indicate that there is no additional cost\nfor this Service Warranty.\n\n\x0cMr. Stephen F. Ruffino\nNovember 6, 2009\nPage 2\nYour client intends to revise its Service Warranty, but would like more flexibility in\ndrafting the text of the document. Therefore, you seek guidance on whether this Service\nWarranty, which accompanies the serviced consumer product, is a \xe2\x80\x9cwritten warranty\xe2\x80\x9d as defined\nin the Act.\nThe Warranty Act and Rules\nThe Act and Commission rules impose duties on warrantors that make written warranties\non consumer products.1 Under the Act, a \xe2\x80\x9cwritten warranty\xe2\x80\x9d is defined as either:\n(A) any written affirmation of fact or written promise made in connection with the\nsale of a consumer product by a supplier to a buyer which relates to the nature of the\nmaterial or workmanship and affirms or promises that such material or workmanship\nis defect free or will meet a specified level of performance over a specified period\nof time, or\n(B) any undertaking in writing in connection with the sale by a supplier of a\nconsumer product to refund, repair, replace, or take other remedial action with\nrespect to such product in the event that such product fails to meet the specifications\nset forth in the undertaking,\nwhich written affirmation, promise, or undertaking becomes part of the basis of the\nbargain between a supplier and a buyer for purposes other than resale of such\nproduct.\n15 U.S.C. \xc2\xa7 2301(6) (emphasis added). The Commission rules incorporate this definition of a\nwritten warranty.2\nThe Act and rules specifically distinguish between a written warranty and a \xe2\x80\x9cservice\ncontract.\xe2\x80\x9d A service contract is defined as a \xe2\x80\x9ccontract in writing to perform, over a fixed period\nof time or for a specified duration, services relating to the maintenance or repair (or both) of a\nconsumer product.\xe2\x80\x9d 15 U.S.C. \xc2\xa7 2301(8). The Commission rules expand on the distinction\nbetween a service contract and a written warranty, providing that a written warranty \xe2\x80\x9cmust be\n\xe2\x80\x98part of the basis of the bargain,\xe2\x80\x99 \xe2\x80\x9d meaning that it \xe2\x80\x9cmust be conveyed at the time of sale of the\nconsumer product and the consumer must not give any consideration beyond the purchase of the\nconsumer product in order to benefit from the agreement.\xe2\x80\x9d 16 C.F.R. \xc2\xa7 700.11(b).\n1\n\nThe term \xe2\x80\x9cconsumer product\xe2\x80\x9d means \xe2\x80\x9cany tangible personal property which is\ndistributed in commerce and which is normally used for personal, family, or household purposes\n(including any such property intended to be attached to or installed in any real property without\nregard to whether it is so attached or installed).\xe2\x80\x9d 15 U.S.C. \xc2\xa7 2301(1).\n2\n\nSee 16 C.F.R. \xc2\xa7\xc2\xa7 701.1(c); 702.1(c); 703.1(c). As acknowledged in your letter, your\nclient\xe2\x80\x99s Full Two-Year Warranty is a \xe2\x80\x9cwritten warranty\xe2\x80\x9d under the Act and Commission rules.\n\n\x0cMr. Stephen F. Ruffino\nNovember 6, 2009\nPage 3\nDiscussion\nAfter considering the plain language of the Act and the purposes of the statute, it is the\nstaff\xe2\x80\x99s opinion that the service warranty you describe would not be a \xe2\x80\x9cwritten warranty\xe2\x80\x9d under\nthe Act.\nFirst, the plain language of the Act provides that a \xe2\x80\x9cwritten warranty\xe2\x80\x9d must be part of the\nbasis of the bargain and must be made \xe2\x80\x9cin connection with the sale\xe2\x80\x9d of a consumer product. 15\nU.S.C. \xc2\xa7 2301(6). Your client\xe2\x80\x99s \xe2\x80\x9cservice warranty,\xe2\x80\x9d however, is provided to consumers after\nthey have purchased the consumer product and therefore forms no part of the basis of the\nbargain.\nSecond, the purposes of the Act would not be furthered by a determination that your\nclient\xe2\x80\x99s service warranty is a written warranty under the Act. In passing the Act, it was\nCongress\xe2\x80\x99s intent that consumers receive clear and complete information about warranty\ncoverage prior to sale; that consumers understand fully what to expect in the event of a consumer\nproduct failure or malfunction; and that manufacturers compete on the basis of warranty\ncoverage. 15 U.S.C. \xc2\xa7 2302(a). It is the staff\xe2\x80\x99s opinion that these purposes have little\napplication in the context of your client\xe2\x80\x99s service warranty.\nYou indicate in your letter that your client\xe2\x80\x99s Full Two-Year Warranty fully complies with\nthe Act. Accordingly, consumers have presumably received complete information about\nwarranty coverage prior to sale and understand what to expect in the event of product failure or\nmalfunction. Therefore, the first two purposes of the Act are served by the provision of the Full\nTwo-Year Warranty. A determination that your client\xe2\x80\x99s service warranty is a written warranty\nwould do little to further these purposes because the consumer has already received information\nregarding warranty coverage and would have been able to use that information in making a\npurchasing decision. Similarly, a determination that the service warranty is not a written\nwarranty would not impact competition on the basis of warranty coverage because the consumer\nhas already purchased the consumer product.3\n\n3\n\nMoreover, the staff\xe2\x80\x99s conclusion that your client\xe2\x80\x99s service warranty is not a written\nwarranty is not altered by 16 C.F.R. \xc2\xa7 700.1(h), which addresses warranties on replacement\nparts. Specifically, Rule 700.1(h) provides that \xe2\x80\x9cwarranties on replacement parts and\ncomponents used to repair consumer products are covered; warranties on services are not.\xe2\x80\x9d Rule\n700.1(h) is intended to address \xe2\x80\x9caftermarket\xe2\x80\x9d replacement products that are purchased by\nconsumers, and merely indicates that where a written warranty covers both parts and services, it\nis covered by the Act. See Curtis R. Reitz, Consumer Product Warranties Under Federal and\nState Laws \xc2\xa7 13.06 (2d ed. 1987). This provision, however, does not impact the meaning of a\n\xe2\x80\x9cwritten warranty\xe2\x80\x9d under the Act, nor does it alter the \xe2\x80\x9cbasis of the bargain\xe2\x80\x9d test.\n\n\x0cMr. Stephen F. Ruffino\nNovember 6, 2009\nPage 4\nConclusion\nBased on the plain text of the Act, which requires that a \xe2\x80\x9cwritten warranty\xe2\x80\x9d form part of\nthe basis of the bargain of the original sale, and because designating your client\xe2\x80\x99s service\nwarranty a \xe2\x80\x9cwritten warranty\xe2\x80\x9d would do little to advance the purposes of the Act, it is the staff\xe2\x80\x99s\nopinion that the service warranty you describe would not be a written warranty under the Act.\nThe opinions and conclusions expressed in the foregoing discussion are those of\nCommission staff only and are not attributable to, nor binding on, the Commission itself\nor any individual Commissioner. I hope this discussion is helpful to you. If you have any further\nquestions, please do not hesitate to contact me at (202) 326-2505.\n\nSincerely,\n\nAllyson Himelfarb\nInvestigator/Magnuson-Moss\nProgram Coordinator\n\n\x0c'


b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nD ivision of M arketing Practices\nCraig Tregillus\nctregillus@ ftc.gov\n\nD irect D ial: (202) 326-2970\nFacsim ile: (202) 326-3395\n\nApril 16, 2009\nT. Scott Gilligan, Esq.\nGilligan Law Offices\n3734 Eastern Avenue\nCincinnati, OH 45226\nDear Mr. Gilligan:\nYou have asked for a clarification of Staff Opinion 09-1,1 because you are concerned that\nportions of that opinion might be taken out of context and misinterpreted. You express\nparticular misgivings about statements you believe could be read to imply that \xe2\x80\x9cthe basic\nservices fee must be the same for each of the clients of a funeral provider,\xe2\x80\x9d and thus might\nsuggest that the Funeral Rule prohibits funeral providers from providing free or nominal cost\nfunerals for indigents and in other special cases.\nThe point we made in Opinion 09-1 was that funeral providers must charge the same\nbasic service fee listed on their General Price List (\xe2\x80\x9cGPL\xe2\x80\x9d) to clients who buy a discount\npackage of funeral goods and services and those who do not. Only the goods and services\nprovided in a discount package may be discounted, not the basic services fee, for the reasons\nexplained in the Opinion.\nIn fact, the statement from the Opinion that you cite as causing the greatest concern was\ncarefully footnoted with an acknowledgment that funeral providers may charge lower prices for\nspecial groups, such as indigents, infants, and memorial society members.2 The one prerequisite\nfor charging lower prices for such special groups, as the Opinion noted, is the requirement that a\nfuneral provider provide qualifying clients with an alternative price list. As the Compliance\nGuide emphasizes:\nRemember: Even if you use alternative price lists, you still must comply with all\nRule provisions, including mandatory disclosures and itemized prices.3\n1\n\nStaff Opinion 09-1 (Feb. 17, 2009).\n\n2\n\nId. at p.3, n.10, and accompanying text.\n\n3\n\nComplying with the Funeral Rule (June 2004), p. 13. See 47 Fed. Reg. 42260,\n42299 (Sept. 24, 1982) (\xe2\x80\x9cFinally, nothing in the rule will prevent funeral directors from meeting\nany perceived social responsibility to make services available at nominal charges for welfare\ncases or from charging special lower prices for infant deaths or other special cases.\xe2\x80\x9d)\n\n\x0cT. Scott Gilligan, Esq.\nPage 2 of 2\nYou also seek clarification that Opinion 09-1 is not meant to imply that a funeral\nprovider is required to include the full basic services fee listed in its GPL in its fees for\nforwarding and receipt of remains, direct cremation, and immediate burial. You are correct that\nbecause the Opinion does not address that question, no such inference can be drawn from it.\nThat issue has been raised in a separate request, and will be addressed in a forthcoming staff\nopinion.\nThe views expressed in this letter are those of the FTC staff. They have not been\nreviewed, approved, or adopted by the Commission, and they are not binding on the Commission\nor any individual Commissioner. However, they do reflect the views of FTC staff charged with\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted on the FTC\nwebsite at http://www.ftc.gov/bcp/conline/edcams/funerals/staffopinions.shtm.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n\x0c'


b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nD ivision of M arketing Practices\nCraig Tregillus\nctregillus@ ftc.gov\n\nD irect D ial: (202) 326-2970\nFacsim ile: (202) 326-3395\n\nApril 16, 2009\nMichael P. A. Cohen, Esq.\nPaul, Hastings, Janofsky and Walker, LLP\n875 15 th Street, N.W.\nWashington, DC 20005\nDear Mr. Cohen:\nOn behalf of Selected Independent Funeral Homes (\xe2\x80\x9cSIFH\xe2\x80\x9d), a professional association of\nindependent, locally owned funeral homes, you have requested a staff opinion on the application\nof the Funeral Rule to cemeteries. You state that many SIFH members also own cemeteries, and\nargue that staff\xe2\x80\x99s analysis in Opinion 08-1 1 of the Rule\xe2\x80\x99s application to crematories \xe2\x80\x9capplies with\nequal force to cemeteries,\xe2\x80\x9d and compels a conclusion that the Rule likewise applies to cemeteries.\nAs you may know, the Commission noted when it promulgated the Rule that a cemetery\n\xe2\x80\x9cwould generally not be considered a \xe2\x80\x98funeral provider\xe2\x80\x99\xe2\x80\x9d because it \xe2\x80\x9conly arranges or conducts\nfinal dispositions\xe2\x80\x9d and \xe2\x80\x9cdoes not prepare human remains for burial or other dispositions.\xe2\x80\x9d 2 In\n2008, the Commission decided not to commence a rulemaking proceeding to amend the Rule to\ncover all cemeteries operated for profit.3 Nothing in Opinion 08-1 is inconsistent with these\ndeterminations.\nIn Opinion 08-1, staff noted that the Rule applies only to \xe2\x80\x9cfuneral providers\xe2\x80\x9d that sell or\noffer to sell both \xe2\x80\x9cfuneral goods,\xe2\x80\x9d as defined by \xc2\xa7 453.1(h) of the Rule,4 and \xe2\x80\x9cfuneral services,\xe2\x80\x9d as\ndefined by \xc2\xa7 453.1(j).5 We stated that if a crematory sells or offers to sell \xe2\x80\x9cfuneral goods,\xe2\x80\x9d such\n\n1\n\nStaff Opinion 08-1, available at http://www.ftc.gov/bcp/conline/edcams/funerals\n/opinions/opinion08-1.pdf.\n2\n\n47 Fed. Reg. 42260, 42285 (Sept. 24, 1982).\n\n3\n\n73 Fed. Reg. 13740, 13742 (Mar. 13, 2008). The Commission observed that under\nthe FTC Act, 15 U.S. C. \xc2\xa7 45, it would have jurisdiction over for-profit cemeteries, but not over\nnon-profit cemeteries, and that the \xe2\x80\x9clopsided application of the Rule to some, but not all, cemeteries\nwould likely prove unduly costly.\xe2\x80\x9d 73 Fed. Reg. at 13744-45.\n4\n\n5\n\n16 CFR \xc2\xa7 453.1(h).\n\n16 CFR \xc2\xa7 453.1(j). The definition of \xe2\x80\x9cfuneral provider\xe2\x80\x9d in \xc2\xa7 453.1(i) of the Rule\nrequires the offer or sale of both \xe2\x80\x9cfuneral goods\xe2\x80\x9d and \xe2\x80\x9cfuneral services.\xe2\x80\x9d 16 CFR \xc2\xa7 453.1(i).\n\n\x0cMichael P. A. Cohen, Esq.\nPage 2 of 2\nas urns, it would be covered by the Rule because crematories also perform \xe2\x80\x9cfuneral services.\xe2\x80\x9d\nStaff\xe2\x80\x99s view that crematories perform \xe2\x80\x9cfuneral services\xe2\x80\x9d was based, in turn, on our analysis of the\ntwo tests prescribed by the definition of that term:\n\xe2\x80\x98Funeral services\xe2\x80\x99 are any services which may be used to:\n(1)\n\nCare for and prepare deceased human bodies for burial, cremation\nor other final disposition; and\n\n(2)\n\narrange, supervise or conduct the funeral ceremony or the final\ndisposition of deceased human remains. 6\n\nWhile we agree that the second element in the definition applies equally to cemeteries and\ncrematories, because both \xe2\x80\x9carrange, supervise or conduct . . . the final disposition,\xe2\x80\x9d staff is not\npersuaded that most cemeteries \xe2\x80\x9ccare for and prepare deceased human bodies for burial, \xe2\x80\x9das\nrequired by the first element. Unlike cemeteries, crematories typically must refrigerate and store\nremains for waiting periods prescribed by state law, and physically handle remains to transfer\nthem from regular or rental caskets to flammable containers, check for and remove prosthetics,\npacemakers, and jewelry prior to cremation, and collect the ashes when the process is completed.\nIt cannot be said that cemeteries likewise \xe2\x80\x9ccare for an prepare deceased human bodies for burial\xe2\x80\x9d\nsince they generally deal only with casketed remains.\nWhile the Funeral Rule generally does not apply to cemeteries, there may be some\ncircumstances in which commercial cemeteries are \xe2\x80\x9cfuneral providers\xe2\x80\x9d and are obliged to comply\nwith the Rule. For example, if a commercial cemetery provides \xe2\x80\x9cfuneral services\xe2\x80\x9d and offers or\nsells \xe2\x80\x9cfuneral goods,\xe2\x80\x9d it would be obligated to comply with the Rule.\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\non the FTC website at http://www.ftc.gov/bcp/conline/edcams/funerals/staffopinions.shtm.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n6\n\n16 CFR \xc2\xa7 453.1(j)(1)-(2).\n\n\x0c'


b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nD ivision of M arketing Practices\nCraig Tregillus\nctregillus@ ftc.gov\n\nD irect D ial: (202) 326-2970\nFacsim ile: (202) 326-3395\n\nMarch 18, 2009\nMr. Mark W. Duffey, President\nEverest Funeral Package, LLC\n1300 Post Oak Blvd. - Suite 1210\nHouston, TX 77056\nDear Mr. Duffey:\nYou have requested a staff opinion on whether the Commission\xe2\x80\x99s Funeral Rule permits a\nfuneral provider to decline to provide detailed price information in response to a telephone\nrequest made by or on behalf of your company. The Funeral Rule is clear: funeral providers\nmust provide price information by telephone to anyone who calls seeking such information.\nEverest is a nationwide funeral planning and concierge service that provides its\ncustomers with pre-need and at-need funeral planning assistance. A key feature of Everest\xe2\x80\x99s\nservices is its \xe2\x80\x9cPriceFinder Report, an online tool that allows consumers to obtain comparative\nprice information for funeral homes in their area. In order to obtain this information from the\nmore than 20,000 funeral providers in the United States, Everest contracts with a telephone call\ncenter that telephones each provider annually to ask for the information on its General Price List\n(\xe2\x80\x9cGPL\xe2\x80\x9d).\nSection 453.2(b)(1) of the Funeral Rule requires funeral providers to \xe2\x80\x9c[t]ell persons who\nask by telephone about the funeral provider\xe2\x80\x99s offerings or prices any accurate information from\nthe prices lists described in paragraphs (b)(2) through (4) of this section [the Casket Price List,\nthe Outer Burial Container Price List, and the GPL] and any other readily available information\nthat reasonably answers the question.\xe2\x80\x9d1 Section 453.1(o) of the Rule defines a \xe2\x80\x9cperson\xe2\x80\x9d as \xe2\x80\x9cany\nindividual, partnership, corporation, association, government or governmental subdivision or\nagency, or other entity.\xe2\x80\x9d2 Thus, Everest and its call center agents are \xe2\x80\x9cpersons\xe2\x80\x9d entitled by the\nRule to obtain price information by telephone from all \xe2\x80\x9cfuneral providers.\xe2\x80\x9d\nIn the original Statement of Basis and Purpose for the Rule (\xe2\x80\x9cSBP\xe2\x80\x9d), the Commission\nemphasized that the requirement that funeral providers give price information by telephone upon\nrequest advances one of the Rule\xe2\x80\x99s primary goals; namely, to allow for comparison shopping:\n\n1\n\n16 C.F.R. \xc2\xa7 453.2(b)(1) (emphasis added).\n\n2\n\n16 C.F.R. \xc2\xa7 453.1(o).\n\n\x0cMr. Mark W. Duffey\nPage 2 of 3\nThe second disclosure requirement, the telephone price disclosure requirement,\naddresses directly the record evidence that funeral directors have failed to respond\nto telephone inquiries about prices. Consumers will thus have the ability to call\nseveral funeral homes and compare their offerings before deciding where to\npurchase. . . . In many instances, obtaining price information by telephone\nrepresents the only practical opportunity for comparison shopping, since many\noptions are foreclosed once the funeral home is [chosen].\xe2\x80\x9d3\nThe FTC\xe2\x80\x99s Compliance Guide for funeral providers, Complying with the Funeral Rule\n(\xe2\x80\x9cCompliance Guide\xe2\x80\x9d or \xe2\x80\x9cGuide\xe2\x80\x9d), emphasizes that if a call requesting price information is\nreceived by a funeral provider, the call must be returned and the price information requested\nmust be provided.4 The Guide also makes it clear that funeral providers \xe2\x80\x9ccannot require callers\nto give their names, addresses, or phone numbers before [giving] them the requested\ninformation,\xe2\x80\x9d and cannot refuse to provide price information to callers who refuse to identify\nthemselves.5 The Guide also indicates, as the Rule provides, that the telephone price disclosure\nmust be made by a \xe2\x80\x9cfuneral provider\xe2\x80\x9d that receives a telephone inquiry about prices.6 Nothing in\nthe Rule authorizes a funeral provider to require a caller to place a second telephone call to a\nthird party (e.g., an attorney) to obtain price information by telephone.\nThe Funeral Rule is a trade regulation rule duly issued by the Commission that has the\nfull force and effect of federal law. As the Commission noted in the SBP, unless a state has\nobtained an exemption pursuant to \xc2\xa7 453.9 of the Rule, \xe2\x80\x9cany state laws which conflict with this\nrule after its effective date are preempted to the minimum extent necessary to resolve that\nconflict.7 The same would be true for any state law enacted since that time.\n\n3\n\n47 Fed. Reg. 42260, 42272 (1982). The Commission also noted that \xe2\x80\x9c[c]onsumer\ngroups and state officials in numerous states reported substantial resistance or flat refusals when\nthey attempted to gather price data by telephone for survey purposes.\xe2\x80\x9d 47 Fed. Reg. at 42268.\nWhen it amended the Rule in 1994, the Commission cited evidence that \xe2\x80\x9cthe Rule overall is\ncontributing to increased consumer \xe2\x80\x98price sensitivity\xe2\x80\x99 that leads some additional consumers to\n. . . seek comparative price information from non-industry sources . . . such as calling memorial\nsocieties, media price \xe2\x80\x98hotlines,\xe2\x80\x99 or state agencies that make comparative price information\navai1able.\xe2\x80\x9d 59 Fed. Reg. 1592, 1602 (1994).\n4\n\nCompliance Guide (2004), p. 20.\n\n5\n\nId.\n\n6\n\nId. (\xe2\x80\x9cYou must give consumers who telephone your place of business and ask\nabout your prices or offerings accurate information from your General Price List, Casket Price\nList, and Outer Burial Container Price List\xe2\x80\x9d) (emphasis added). See also 16 C.F.R.\n\xc2\xa7 453.2(b)(1).\n7\n\n47 Fed. Reg. at 42287 (footnote omitted).\n\n\x0cMr. Mark W. Duffey\nPage 3 of 3\nFor these reasons, it is a violation of the Funeral Rule for a funeral provider to refuse to\nprovide price information by telephone upon request to any person for any reason, such as:\n!\n\nState law does not require a funeral provider to disclose price information by telephone,\nor permits a funeral provider to refuse to provide price information by telephone;\n\n!\n\nPrice information can be provided only by a third-party other than the funeral provider\n(e.g., the funeral provider\xe2\x80\x99s attorney);\n\n!\n\nThe caller will not disclose information about their organization, or what it intends to do\nwith the information;\n\n!\n\nThe caller is not a consumer seeking to make funeral arrangements with the provider;\n\n!\n\nThe caller will or may profit from receipt of the pricing information requested;\n\n!\n\nThe caller has not requested price information in person at the funeral home;\n\n!\n\nThe caller has not requested price information in writing; or\n\n!\n\nThe caller has not paid a fee, or agreed to pay a fee, for the price information.\n\nAt the same time, as the Guide recognizes, funeral providers may: (1) use answering\nmachines to record incoming calls or to advise callers to call a specified number during business\nhours to get price information; (2) decline to provide price information outside of regular\nbusiness hours if that is the provider\xe2\x80\x99s normal practice; and (3) take a message if in the middle of\nan arrangements conference, and call back to provide price information at a later time.8 In each\nof these cases, the Rule requires that the funeral provider furnish price information promptly by\nreturning the telephone call.\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\non the FTC website at http://www.ftc.gov/bcp/conline/edcams/funerals/staffopinions.shtm.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n8\n\nId.\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Marketing Practices\nCraig Tregillus\nctregillus@ftc.gov\n\nDirect Dial: (202) 326-2970\nFacsimile: (202) 326-3395\n\nJuly 12, 2007\nMr. Joseph J. DellaVecchia, Jr.\nDellaVecchia, Reilly, Smith & Boyd Funeral Home, Inc.\n410 North Church St,\nWest Chester, PA 19380\nDear Mr. DellaVechhia:\nThis letter responds to your request for a staff opinion on whether the FTC Funeral Rule\npermits funeral homes to: (1) Charge a fee for disposal of the container in which a third-party\ncasket is shipped; (2) Charge a fee for storage of a third-party casket that is delivered in advance\nof the time it is needed; and (3) Furnish consumers with two separate contracts: one covering\ngoods and services provided by the funeral home, and one covering cash advance items secured\nfrom third parties by the funeral home on behalf of the consumer.\nWith respect to the first two questions, your letter acknowledges that the Funeral Rule\ndoes not permit funeral providers to charge a casket handling fee, but argues that providers\nshould be allowed to charge separate fees for disposing of the large containers in which thirdparty caskets are shipped, and for storing third-party caskets when they arrive several days before\nthey are needed for a visitation or service.\nThe requirement that funeral providers allow customers to use caskets purchased from\nthird parties comes from section 453.4(b) of the Rule. Section 453.4(b)(i) makes it an unfair or\ndeceptive act or practice for a funeral provider to \xe2\x80\x9c[c]ondition the furnishing of any funeral good\nor funeral service to a person arranging a funeral upon the purchase of any other funeral good or\nfuneral service, except as required by law or as otherwise permitted by this part.\xe2\x80\x9d1\nThe prohibition on casket handling fees, arises from section 453.4(b)(ii) of the Rule\nwhich prohibits funeral providers from charging \xe2\x80\x9cany fee as a condition to furnishing any funeral\ngoods or funeral services to a person arranging a funeral\xe2\x80\x9d other than the basic services fee,\npayments for the funeral goods and services selected, and payments for items required to meet\n\n1\n\n16 C.F.R. \xc2\xa7 453.4(b)(i).\n\n\x0clegal, cemetery or crematory requirements.2 Thus, when a customer purchases a casket from a\nthird party, a funeral provider is prohibited from requiring that the customer purchase any other\ngood or service, or pay \xe2\x80\x9cany fee\xe2\x80\x9d other than those permitted by the Funeral Rule. Requiring\ncustomers who use third party caskets to pay a casket handling fee would violate that section of\nthe Rule. Likewise, it is staff\xe2\x80\x99s opinion that requiring customers who use third party caskets to\npay a shipping container disposal fee or a casket storage fee would violate the same provision of\nthe Rule.\nYou also asked whether the Funeral Rule permits the use of two separate contracts so that\na funeral provider can distinguish its own charges from \xe2\x80\x9ccash advance\xe2\x80\x9d charges for payments to\nthird-party suppliers. It is staff\xe2\x80\x99s opinion that providing two separate contracts would conflict\nwith section 453.2(b)(5)(i) of the Rule. That section requires that at the conclusion of the\ndiscussion of arrangements, the funeral provider give the customer a written statement that lists\nthe \xe2\x80\x9cfuneral goods and services selected\xe2\x80\x9d; \xe2\x80\x9cspecifically itemized cash advance items\xe2\x80\x9d; and \xe2\x80\x9cthe\ntotal cost of the goods and services selected.\xe2\x80\x9d3 Thus, providing information about cash advance\nitems in a separate document and not in the Statement would violate the Rule. However, section\n453.2(b)(5)(ii) of the Rule provides that the information required by section 453.2(b)(5)(i) \xe2\x80\x9cmay\nbe included on any contract, statement or other document.\xe2\x80\x9d You are free, therefore, to format the\nStatement in a way that clearly distinguishes the charges for cash advance items to be paid to\nthird parties from the charges for the goods and services you provide.\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\ncharged with enforcement of the Funeral Rule.\nSincerely,\n\nCraig Tregillus\nFuneral Rule Coordinator\n\n2\n\n16 C.F.R. \xc2\xa7 453.4(b)(ii) (emphasis added).\n\n3\n\nSee 16 C.F.R. \xc2\xa7 453.2(b)(5).\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWA SHING TO N, D.C. 20580\n\nDivision of Marketing Practices\n\nApril 5, 2007\nMitchell N. Roth, Esq.\nWilliams Mullen\n8270 Geensboro Drive, Suite 700\nMcLean, Virginia 22102\nDear Mr. Roth:\nThis letter responds to your request of June 28, 2006, seeking an informal advisory\nopinion from staff of the Federal Trade Commission (the \xe2\x80\x9cCommission\xe2\x80\x9d or the \xe2\x80\x9cFTC\xe2\x80\x9d) regarding\nthe application of the Telemarketing Sales Rule (\xe2\x80\x9cTSR\xe2\x80\x9d or \xe2\x80\x9cthe Rule\xe2\x80\x9d), 16 C.F.R. Part 310, to a\nbusiness plan involving the telemarketing of automobile service contracts.1 In the proposed plan,\nyour client would supply auto service contracts under a sales program developed and maintained\nby a third party. You request guidance on whether the third party in this plan would be both a\n\xe2\x80\x9ctelemarketer\xe2\x80\x9d and a \xe2\x80\x9cseller\xe2\x80\x9d under the TSR, and whether your client would be neither. Based on\nyour letter\xe2\x80\x99s description of the proposed plan, we agree with your letter\xe2\x80\x99s determination that the\nthird party would meet the Rule\xe2\x80\x99s definition of a \xe2\x80\x9ctelemarketer,\xe2\x80\x9d and its definition of a \xe2\x80\x9cseller.\xe2\x80\x9d\nHowever, we also believe that your client would meet the definition of a \xe2\x80\x9cseller.\xe2\x80\x9d\nRelevant Rule Provisions\nThe TSR defines the terms \xe2\x80\x9cseller,\xe2\x80\x9d \xe2\x80\x9ctelemarketer,\xe2\x80\x9d and \xe2\x80\x9ctelemarketing\xe2\x80\x9d as follows:\nSeller means any person who, in connection with a telemarketing transaction, provides,\noffers to provide, or arranges for others to provide goods or services to the customer in\nexchange for consideration;\nTelemarketer means any person who, in connection with telemarketing, initiates or\nreceives telephone calls to or from a customer or donor;\nTelemarketing means a plan, program, or campaign which is conducted to induce the\npurchase of goods or services or a charitable contribution, by use of one or more\n\n1\n\nFTC staff generally understands such a contract to be a promise to perform or pay\nfor automobile repairs or services. See \xe2\x80\x9cAuto Service Contracts,\xe2\x80\x9d May 1997 (FTC consumer\neducation pamphlet available at http://www.ftc.gov/bcp/conline/pubs/autos/autoserv.pdf). We\nfurther understand that automobile service contracts sold by automobile dealers are frequently\nhandled by independent companies called administrators, and that such administrators may act as\nclaims adjusters, authorizing payment of claims to any dealers under the contract. Id.\n\n\x0cMr. Mitchell N. Roth\nApril 5, 2007\nPage 2\ntelephones and which involves more than one interstate telephone call \xe2\x80\xa6 .\n16 C.F.R. \xc2\xa7\xc2\xa7 310.2(z), (bb), and (cc).2\nDiscussion\nIn your letter\xe2\x80\x99s description of your client\xe2\x80\x99s proposed business plan, you state that your\nclient will, among other things: sell and administer automobile mechanical breakdown contracts;\nsupply the service contract for sale under a program developed and maintained by a third party;\nserve as the administrator of the service contract and take responsibility for claims payments and\nadministering contractual obligations; and receive a predetermined wholesale cost per service\ncontract sold.\nYou state that the third party will, among other things: develop its own sales strategy;\ndevelop its own marketing strategy and materials; develop scripts relevant to the sale of service\ncontracts; manage its own sales persons and sales methods/programs; maintain all licenses and\nbonds required of a telemarketing seller; dictate retail product pricing; take responsibility for\ncollecting payment; conduct all fulfillment services; and inform customers that it is selling the\nservice contracts on its own behalf.\nThe staff agrees with your letter\xe2\x80\x99s assertion that the third party in the proposed plan\nwould meet the Rule\xe2\x80\x99s definitions of both \xe2\x80\x9ctelemarketer\xe2\x80\x9d and \xe2\x80\x9cseller.\xe2\x80\x9d The third party would\napparently initiate or receive telephone calls to or from a customer. It appears that, by\n\xe2\x80\x9cconduct[ing] all fulfillment services\xe2\x80\x9d and \xe2\x80\x9cinform[ing] consumers that it is selling the Service\nContracts on its own behalf,\xe2\x80\x9d the third party would also provide or offer to provide services to\nthe customer. Because the third party is responsible for \xe2\x80\x9ccollection of payment,\xe2\x80\x9d it would\nprovide or offer to provide these services in exchange for consideration. Finally, the third party\nwould initiate or receive these calls, and provide or offer to provide these services, in connection\nwith telemarketing. Therefore, the third party would likely meet the Rule\xe2\x80\x99s definitions of both a\n\xe2\x80\x9ctelemarketer\xe2\x80\x9d and a \xe2\x80\x9cseller.\xe2\x80\x9d\nHowever, the staff disagrees with your letter\xe2\x80\x99s assertion that your client would meet\nneither of these definitions. Our view, based on your letter\xe2\x80\x99s discussion of the proposed business\nplan, is that your client would meet the Rule\xe2\x80\x99s definition of a \xe2\x80\x9cseller.\xe2\x80\x9d According to your letter,\nyour client would be \xe2\x80\x9cresponsible for claims payment and administration of contractual\nobligations under the Service Contract,\xe2\x80\x9d and would thus provide services to the customer. In\nother words, your client would remain responsible to provide the consumer with the services that\n\n2\n\nWhen the Commission amended the TSR in 2003, 68 Fed. Reg. 4580 (Jan. 29,\n2003), these definitions were modified pursuant to the USA PATRIOT Act, Pub. L. 107-56\n(Oct. 26, 2001), to reach not only calls made to induce purchases, but also those made to induce\ncharitable contributions. Otherwise, the definitions are substantively the same as in the original\nrule, although they were renumbered. 60 Fed. Reg. 43843 (Aug. 23, 1995).\n\n\x0cMr. Mitchell N. Roth\nApril 5, 2007\nPage 3\ncomprise, in large measure, what the consumer is purchasing. In return, your client would\n\xe2\x80\x9creceive a predetermined wholesale cost per service contract sold.\xe2\x80\x9d Finally, your Client would\nperform these services in connection with telemarketing. We believe that this activity is\nsufficient to bring your client\xe2\x80\x99s role in the proposed business plan within the Rule\xe2\x80\x99s definition of\na \xe2\x80\x9cseller.\xe2\x80\x9d We note that neither the text of the Rule itself nor the Statement of Basis and Purpose\nthat accompanied it when issued suggest that in a given transaction one and only one party can be\na \xe2\x80\x9cseller\xe2\x80\x9d for purposes of Rule coverage. Arrangements such as described in your letter may\nresult in more than one \xe2\x80\x9cseller\xe2\x80\x9d in a particular transaction.\nThe fact that the marketing campaign for the sales contract would be developed and\nexecuted by a third party is not determinative as to the question of who meets the definition of\n\xe2\x80\x9cseller\xe2\x80\x9d under the Rule. As the Commission noted in the Statement of Basis and Purpose for the\noriginal TSR:\nthe term [\xe2\x80\x98seller\xe2\x80\x99] includes not only persons who, in connection with a\ntelemarketing transaction, provide or offer to provide goods and services to the\ncustomer in exchange for consideration, but also persons who, in connection with\na telemarketing transaction, arrange for others to provide goods or services to the\ncustomer \xe2\x80\xa6 . [T]he Rule\xe2\x80\x99s coverage cannot be avoided by structuring a sale so\nthat someone other than the seller actually provides the goods or services directly\nto the customer.\n60 Fed. Reg. 43844, Aug. 23, 1995. In light of our conclusion that your client would meet the\nRule\xe2\x80\x99s definition of a \xe2\x80\x9cseller\xe2\x80\x9d under the described business plan, we advise that your client would\nremain within the scope of the Rule\xe2\x80\x99s coverage.\nThe opinions expressed in the foregoing discussion and the basis for this conclusion are\nthose of Commission staff only and are not attributable to, nor binding on, the Commission itself\nor any individual Commissioner. I hope this discussion is helpful to you. If you have any further\nquestions, please do not hesitate to contact me at 202-326-2330.\nSincerely,\n\nGary Ivens\n\n\x0c'


b'S~nnenschein\n\n1301 K Street N.W.\nSuite 600, East Tower Chicago\nWashington, D.C. 20005-3364 Kansas\n202.408.6400 Los Angeles\n202.408.6399 fax New Vork\nwww,sonnenscheln.com Phoenix\n\nS O N N E N S C H E I N N A T H & R O S E N T H A L LLP\n\nChristopher Smith\n202.408.923 1\n\nkitsmith@sonnenschein.com\n\nSan Francisco\nShort Hills, N.J.\nSt. Louis\nWashington, D.C.\nWesf Palm Beach\n\nElaine D. Kolish\n202.408.3243\n\neltolish@sonnenschein.com\n\nNovember 15,2006\n\nThe Honorable Donald S. Clark\nSecretary\nFederal Trade Commission\n600 Pennsylvania Ave., N.W.\nWashington, DC 20580\nRe:\n\nRequest For a Staff Advisory Opinion\n\nDear Mr. Clark:\nOn behalf of Sony Electronics Inc. (Sony) we are requesting a staff advisory opinion,\npursuant to 16 C.F.R. fj 1.1, on the question of whether Sony may lawfully market and sell as\nnew certain returned consumer electronics products that have never been used and that are\nindistinguishable from products straight fiom the factory. Specifically, Sony seeks guidance on\nthe acceptability of selling consumer electronics products as new products under a narrowly\ndefined program in which Sony or its authorized vendor would:\n(i)\n\nidentify, fi-om among the products returned by retailers to Sony or its authorized\nvendor, those that have never been turned on;\n\n(ii) visually inspect those products that have not been turned on and reject any damaged\nproducts;\n(iii) ensure that returned products that satisfy the first two conditions have all of their\nrequisite parts, components, and manuals;\n(iv) repackage the returned products that meet the above conditions;\n(v)\n\nprovide the same warranty for these returned products as for new products that have\nnever been sold; and\n\nY\n\nE\n\n2\n\nA\n\n0\n\nR\n\n0\n\nS\n\n6\n\n\x0cS~nnenschein\n\nSONNENSCHEIN NATH & ROSENTHAL LLP\n\nFederal Trade Commission\nNovember 15,2006\nPage 2\n\n(vi) return them to a retailer for sale as new products.\'\nThis request is based on our understanding of prior Commission policy and precedent\nthat require a seller to disclose when it is selling goods that have been previously used, but do\nnot require returned goods that have merely been "inspected" by consumers to be described as\nused when resold. Sony3srequest does not require the FTC staff to define the entire scope of\nactions that can reasonably constitute inspection. Instead, we only ask the staff to conclude (a)\nthat a product that has never been turned on will not be considered used, and (b) that the other\nelements of Sony\'s proposed program will assure that a consumer buying such a product will\nencounter the same product purchase and usage experience as if he or she had bought a new\nconsumer electronics product that had not been purchased previously.\nWe explain below the reasons for Sony\'s proposed course of action and provide\nadditional details about how the program would be implemented. Additionally, we set forth an\nanalysis of why we believe Sony\'s proposed conduct is legally permissible and why it is\nappropriate for the FTC staff to provide the requested guidance.\n\nSony\'s Proposal to Sell Certain Unused Returned Consumer Electronics as New\nLike many other consumer electronics companies, Sony experiences a high volume of\nproduct returns from consumers, the wholesale value of which has grown dramatically in recent\nyears. As a matter of policy, Sony generally treats all opened returned products as if they have\nbeen used by consumers. These returned products, which are often inspected and serviced, are\ndesignated by Sony as "Class B" products. These products are sold as refurbished products at a\nsignificantly discounted price, and they typically include a 90-day limited warranty rather than a\nlonger new product warranty.\nBecause of the undifferentiating nature of its resale policy, many products designated as\nClass B by Sony have never even been turned on - having merely been inspected by purchasers\nbefore being returned to Sony. Such products have nothing wrong with them when returned by\nconsumers and require no servicing before they are sold at a Class B discount.\n\n\'\n\nThe consumer electronics products potentially covered by Sony\'s program include but are not limited to the\nfollowing products: video products (e.g.,DVD playerslrecorders, digital cameras, camcorders, televisions, and\ncombination TVIVCR or TVDVD players); computers (desktop and notebook PCs and related equipment); video\ngame systems; audio products (desktop, component and portable devices); cell phones; portable digital assistants;\nand vehicle electronics.\n\nEGRITY\nY\n\nE\n2\n\nA\n0\n\nR\n0\n\nS\n6\n\n\x0cS~nnenschein\n\nSONNENSCHEIN NATH & ROSENTHAL LLP\n\nFederal Trade Commission\nNovember 15,2006\nPage 3\n\nThe financial cost to Sony of its Class B resale policy is substantial. Consequently, Sony\nwould like to modify its policy to distinguish between returned products that have not been\nturned on and those that have been operated. Such a modification would provide Sony with\ngreater flexibility in both inventory control and supply chain management while ensuring\ncompliance with the Commission\'s policies.\nAlthough even some use of a product reasonably could be considered mere "inspection,"\nSony proposes to take an extremely conservative approach to the question of whether a returned\nSony product has been used by a consumer. Sony\'s proposed program is based on the simple,\nbright line standard of whether a product has been turned on - i.e., if it has not been turned on, it\nhas not been used. This approach avoids a potential slippery slope, because it does not require\nthe FTC to evaluate or determine how much use is acceptable.\nTo implement this policy change in a consistent, verifiable manner, Sony would use\nexisting, reliable product and packaging technologies to determine if a purchaser has turned on a\nreturned product. For example, some of Sony\'s electronic products contain an internal chip or\nclock that allows Sony to determine if a product has been turned on and for how long. Sony also\nmay use tamper-evident tape, seals or labels, which can be affixed to AC plugs, connectors or\nbattery compartments, to provide a clear indicator of consumer use of a product. Sony would\ndetermine on a product-by-product basis which technology it would use to determine if a\nconsumer has turned on a product. If the consumer has turned on the product at all - even if only\nto conduct a cursory inspection of the product\'s operation - Sony would disqualify the product\nfi-om future sale as a new product. Sony\'s plan thus avoids subjective evaluations about whether\nor to what extent a returned product has been used by a consumer. Stated in its simplest terms, if\nelectrical power has been applied to any of the product\'s circuitry, then it cannot be sold as\nnew."\nLC\n\nThe other elements of Sony\'s program ensure that the consumer purchasing experience\nwould be the same as it would be with other new products. Sony would visually examine unused\nproducts to ensure that they are complete and undamaged, and if so, place them in new\npackaging.2 sony also would provide the same wmanty for these repackaged products as for\nThis program will not involve refurbishment of products to a "good as new" condition. If there is visible damage,\nsuch as scratches, dents or cracks, the product would not be eligible for the program. Of course, minor cosmetic\nblemishes, such as fingerprints that a consumer might leave on a product when handling it, would be removed and\nwould not render the product ineligible for the program. Otherwise damaged products would be designated for\nSony\'s refurbished sales program. Moreover, if the product is otherwise acceptable but a minor part or piece of\nproduct dormation (e.g.,a headphone, manual, or warranty card) is missing because the consumer omitted the item\nfrom the package when returning the product, then the missing item would be replaced.\n\n\x0cS~nnenschein\n\nSONNENSCHEIN NATH & ROSENTHALLLP\n\nFederal Trade Commission\nNovember 15,2006\nPage 4\n\nother new similar products. Because Sony (or its authorized agent), and not retailers, would run\nthe program, Sony can ensure that the policy is properly and uniformly applied across all returns.\n\nSony and Industry Experience With Returns Show the Significance of Sony\'s Request\nCurrently, as would be the case under the new program, retailers send all returned\nproducts to return centers operated by Sony or its authorized agent. These return centers perfom\nthe necessary inspections and refurbishment to prepare a returned item for resale as Class B\nproducts. Sony\'s experience through these return centers indicates that only a very small\npercentage of returns are actually defective products and that a very significant percentage fall\ninto the "no problems found" (NPF) category. Because many of the NPF products are items that\nhave never been turned on, Sony incurs significant losses from their sale as Class B products.\nSimilar industry-wide patterns of returns also have been reported. For example, a\nconsumer survey conducted by the Consumer Electronics Association (CEA) in 2005 indicated\nthat many consumers return products for reasons other than a defect, including (a) to obtain a\ndifferent brand or model, (b) because they no longer wanted it, (c) because they already owned\nit, or (d) because they spent too much money on i t 3 The CEA survey also indicated that nearly\n50 percent of all returns occur within a week after purchase. Overall, these statistics suggest that\nmany purchasers of consumer electronics products may merely open the box and inspect the\nproduct without using it before returning it to the retailer or to the manufacturer.\n\nSony\'s Proposed Course of Action Is Lawful\nSony believes that its proposed course of action, as described in this letter, is lawful and\nwould not be deceptive under the FTC Act or under the standards the Commission has expressed\nin its 1984 Policy Statement on Deception and in its 1969 Enforcement Policy on "Merchandise\nWhich Has Been Subjected To Previous Use On Trial Basis and Subsequently Resold as New."\nThe 1969 policy statement is particularly relevant. Although the 1969 Enforcement Policy\npredates the Commission\'s Policy Statement on Deception, it has not been repudiated by the\nCommission. Moreover, we believe that application of the Deception Statement\'s analytical\ntools leads to the same conclusion the Commission reached in its 1969 Enforcement Policy.\nThe 1969 statement, whle reaffirming the Commission\'s long-held view that consumers\nhave a preference for new or unused goods, also draws an important distinction between\n3\n\n"Return Rates and Issues for CE Products Update," Consumer Electronics Association (CEA) Market Research\nReport (Nov. 2005).\n\nEGRITY\nY\n\nE\n\nA\n\nR\n\nS\n\n\x0cS~nnenschein\nSONNENSCHEIN NATH & ROSENTHALLLP\n\nFederal Trade Commission\nNovember 15,2006\nPage 5\n\n"inspectionyyand\nSpecifically, the Commission concluded that trial use by a consumer\nand subsequent refix-bishment of returned products to a good-as-new conhtion requires\ndisclosure, but that its "policy applies only to merchandise that has been used, and not to\nmerchandise that has merely been inspected but not used."\'\nUnder the Deception Policy Statement there must be a representation, omission or\npractice that is likely to mislead a consumer, acting reasonably under the circumstances, to his or\nher detriment.6 In other words, the representation, omission or practice must be a material one.\nUnder its proposed program, Sony would treat the products as new, in terms of their pricing,\npackaging and warranty. The resulting implied representation that the repackaged products are\nnew would not be misleading to consumers because the products would in fact be new, having\nnever been used by their previous purchasers.7\nAlthough Sony recognizes that the FTC appreciates empirical data on consumer\nexpectations when it is available, we are unaware of any such empirical data in this case.\nNevertheless, the absence of such data is not a bar to an advisory opinion. It is well established\nin Cornmission case law that the Commission may use its accumulated expertise to determine\nwhat facts are material to consumers and when it is deceptive to omit those facts from marketing\nmaterials.\' In the past, the Commission has generally alleged a deceptive failure to disclose\ninformation only when the omitted information involved health or safety or the key financial\nterms and conditions of a transaction.\nWe also suggest that the FTC can find additional support for Sony\'s proposed course of\naction in various state laws that expressly or impliedly permit "unused" goods to be sold as new.\nMany of these states have based their laws on the Uniform Deceptive Trade Practices Act and\nthe Uniform Consumer Sales Act, which prohbit the resale, as new, of returned products only if\nthe products have been used, altered, reconditioned or reclaimed. Under those statutes, mere\n34. Fed. Reg. 176, 177.\n\nId. at 177.\nAppended to ClzffdaleAssociates, Inc., 103 F.T.C. 110, 174 (1984).\nJust as we believe that Sony has no legal obligation to disclose that goods are "used" because they have never been\nturned on and thus fall squarely into the "inspected" category, we also believe that disclosure of the mere fact of\nprior purchase is not a material omission that might trigger a disclosure requirement. The Commission\'s Policy\nStatement expressly recognizes that "not all omissions are deceptive, even if providing the information would\nbenefit consumers.. .." Id. at 183, n.4. Such a disclosure requirement also would be inconsistent with state laws, as\ndiscussed below.\n\nSee, e.g., PJzer, 81 F.T.C. 23, 58 (1972).\n\n\x0cS~nnenschein\n\nSONNENSCHEIN NATH & ROSENTHAL LLP\n\nFederal Trade Commission\nNovember 15,2006\nPage 6\n\ninspection that does not entail use or alteration of the product would not change the status of the\nNotably, the Ohio Administrative Code states affirmatively that\nproduct fiom "new" to\n"returned goods, which have not been used by a previous purchaser, shall be considered new or\nunused."I0\nFurthermore, in 1998 the Office of the Attorney General of the State of California came\nto the same conclusion reached by the FTC in 1969 when it analyzed the question: "must\nmerchandise be advertised as \'secondhand or usedyif it is used, worn, or sampled for a short\ntime by a consumer and then returned in like-new condition pursuant to the retailer\'s policy\nallowing returns of merchandise at the customer\'s discretion." Attorney General Daniel E.\nLungren concluded that it must be so advertised," unless such use is for inspection purposes\nonlY.\'~"\n\nIn analyzing the question, Attorney General Lungren was guided in part by the Oregon\nSupreme Court\'s decision in Weigel v. Ron Tonkin Chevrolet co.12 In that case the court held\nthat because there was a transfer of legal possession of the auto and the purchaser had\ndiscretionary use of the vehicle for his or her own purposes for five days, the auto must be\nrepresented as used or secondhand. The court\'s decision was based not on the fact of the sale,\nbut on the purchaser\'s use of the product. In that case, the court also commented on the common\npractice of using goods for inspection purposes only, stating that "merchandise other than\nautomobiles sometimes is sold, examined, or tried out at home, and returned to the seller.\nWhether such merchandise is \'new\' or \'usedy does not depend on the fact of an earlier sale; it\ndepends on whether the article was used."I3 The Attorney General believed that Weigel correctly\ninterpreted the terms "secondhand or used" for its purposes. Thus, under the Attorney General\'s\nopinion, disclosure of the prior purchase of a product depends upon whether the product has been\nused, unless such use is for inspection purposes only.\n\nSee Michael P. Sullivan, \'What Goods or Property are \'Used,\' \'Secondhand,\' or the Like, for Purposes of State\nConsumer Laws Prohibiting Claims that Such Items are New," 59 A.L.R. 4\' 1192,s 2.\n10\n\nSection 109:4-3-08. Other states such as Mississippi and Idaho have taken similar positions ("goods are not\nconsidered used if a prior consumer was given a full refund or exchange for the goods, in the normal course of\nbusiness, and if the goods are not known to presently or formerly have defects"). See, e.g., Mississippi, 24 000 002\nR.5 1 (2006), and Idaho, IDAPA 04.02.02.113 (Returned Goods) (2005). See also Louisiana, LAC 16:III.S11(2003).\nI \' Opinion of Daniel E. Lungren, Attorney General, Clayton P. Roche, Deputy Attorney General, No. 97-1009\n(May 22, 1998) (emphasis added).\n\nl3\n\nId. at 490, n.2.\n\nY\n\nE\n2\n\nA\n0\n\nR\n0\n\nS\n6\n\n\x0cS~nnenschein\n\nSONNENSCHEIN NATH & ROSENTHAL LLP\n\nFederal Trade Commission\nNovember 15,2006\nPage 7\n\nSony believes that, under its proposed program, consumer electronics products that have\nnot been turned on will not have been subjected to any use. The act of merely opening the\npackaging and examining a product without turning it on should be considered "inspection" and\nshould not trigger any affirmative disclosure duties nor any prohibition on representing the goods\nas new.\nAt its most basic level, Sony\'s proposed program embodies the principles contained in\nthe Commission\'s 1969 policy statement and in the principles expressed in state laws and in the\nCalifornia Attorney General\'s opinion regarding a company\'s disclosure duty. We believe that\nthe principles of the 1969 policy statement remain valid and are consistent with those in the more\nrecent Deception Policy Statement. Accordingly, Sony submits that it would be appropriate for\nthe FTC to conclude that Sony consumer electronics products returned by consumers without\never being turned on can be considered "merely inspected" and not "used" and thus be eligible\nfor sale as new products.\n\nSony\'s Request Satisfies the Commission\'s Criteria for a Staff Advisory Opinion\nSony believes that the issues raised by this request satisfy the criteria in the Commission\'s\nRules of Practice for issuance of a staff advisory opinion. The question posed by Sony is not a\npurely hypothetical or theoretical one, because Sony is prepared to act upon a favorable opinion\nissued by the staff. Sony is seeking this advisory opinion because, as noted above, the FTC has\nnot issued guidance in this area in nearly 40 years, and there is no clear FTC or other guidance\non the particular question posed by Sony. Furthermore, because of uncertainty about this issue,\nSony and possibly other manufacturers are unnecessarily designating unused, "merely inspected"\nproducts as Class B products. This situation creates substantial economic injury to\nmanufacturers such as Sony, as well as to consumers, who may pay higher overall retail prices or\nmay experience the effects of reduced marketplace competition resulting from lower\nmanufacturer profitability. Thus, resolution of Sony\'s question is likely to be of significant\npublic interest.\n\nConclusion\nThe conservative approach Sony is proposing will assure that returned products that\nqualify under this program will be indistinguishable from new products delivered &om the\nfactory. The fact that a qualifylng product was previously purchased will not affect its\nperformance because the product will never have been turned on and thus never have been used.\nMoreover, Sony\'s plan to examine qualifylng returned products visually for damage and\ncompleteness prior to repackaging and to provide a new product warranty will ensure that the\nreturned products are indistinguishable from products that have never been sold. This\n\nEGRlN\nY\n\nE\n\nA\n\nR\n\nS\n\n\x0cS~nnenschein\nSONNENSCHEIN NATH & ROSENTHAL LLP\n\nFederal Trade Commission\nNovember 15,2006\nPage 8\n\ncomprehensive plan will eliminate any potential harm to subsequent purchasers resulting from\nthe qualifying products\' previous purchase. Accordingly, Sony believes that its proposed\nprogram to sell, as new, returned products that have not been turned on and that meet the\nprogram\'s other criteria will satisfy the Commission\'s consmer protection objectives and\nrequirements.\nWe appreciate your consideration of this request. Please let us know if you would like us\nto provide additional information to assist the staffs review. We would also be pleased to meet\nwith the staff to discuss any questions they might have.\n.\n\n..\n\nYours very truly,\n\nChristopher Smith\nElaine D. Kolish\ncc:\n\nLydia B. Parnes, Director, Bureau of Consumer Protection\nJames A. Kohm, Associate Director, Division of Enforcement\nSandy Prabhu, Esq., Division of Enforcement\n\nY\n\nE\n\n2\n\nA\n\n0\n\nR\n\n0\n\nS\n\n6\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Enforcement\nBureau of Consumer Protection\n\nDecember 20,2006\n\nChristopher Smith, Esq. and Elaine Kolish, Esq.\nSonnenschein, Nath & Rosenthal LLP\n1301 K Street, NW\nSuite 600, East Tower\nWashington, DC 20005-3364\nDear Mr. Smith and Ms. Kolish:\nThis letter responds to your request on behalf of your client, Sony Electronics Inc.\n("Sony"), for a staff advisory opinion regarding Sony\'s proposal to resell, as "new," returned\nconsumer electronics products when the company or its authorized vendor can reliably determine\nthat the products have never been turned on and other particular conditions are met. This\nadvisory opinion is based on the information that you have provided to us in your letter of\nNovember 15,2006. All references to facts regarding your proposal are based on your\nrepresentations; we have not conducted an independent investigation, or otherwise verified the\ninformation that you provided.\nYou note that Sony, as well as other companies in the consumer electronics industry,\nexperience high return volumes.\' Sony\'s uniform practice has been to treat all opened and\nreturned products as used. As a result, following inspection and servicing, these products are\nsold as "refurbished" at significantly discounted prices and include a 90-day limited warranty.\nYou state that, because many of the returned products in fact have never been used, the current\nresale policy comes at a substantial financial cost to the company. Sony proposes modifying its\npractices by distinguishing between returned products that previously have been turned on and\nwith the latter category of products being eligible for resale as new, if\nthose that have notY2\nspecific criteria are met.\n\n1\n\nConsumer electronics products sold by Sony include video products (DVD\nplayers/recorders, digital cameras, camcorders, televisions, and combination TVNCR or\nTV/DVD players), computers (desktop and notebook PCs and related equipment), video game\nsystems, audio products (desktop, component and portable devices), cell phones, portable digital\nassistants, and vehicle electronics.\n2\n\nSony would regard a product has having been "turned on" if electrical power had\nbeen applied to any of the product\'s circuitry.\n\n\x0cChristopher Smith and Elaine Kolish\nDecember 12,2006\nPage 2\nYou state that Sony would implement the policy modification by having it or one of its\nauthorized vendors:\ni.\n\n..\n\nintroduce reliable product packaging technologies that ensure an objective\nand verifiable process for identifying returned products that have never\nbeen turned on.3\n\n11.\n\nidentify, fiom among the products returned by retailers to Sony or its\nauthorized vendor, those that have never been turned on;\n\niii.\n\nvisually inspect those products that have not been turned on and reject any\ndamaged products;\n\niv.\n\nensure that returned products that satisfy the first two conditions have all\nof their requisite parts, components, and manuals;\n\nv.\n\nrepackage the returned products that meet the above conditions;\n\nvi.\n\nprovide the same warranty for these returned products as for new products\nthat have never been sold; and\n\nvii.\n\nreturn them to a retailer for sale as new products.\n\nYou then ask for the staffs opinion as to whether Sony\'s proposed course of conduct complies\nwith the FTC Act and other Commission policy statements.\nSection 5 of the FTC Act, which prohibits deceptive acts or practices, governs the issue.\n15 U.S.C. tj 45. The Commission has explored the concept of deception under Section 5 in two\nrelevant policy statements.\nOur analysis begins with the Commission\'s 1969 Enforcement Policy on Merchandise\nWhich Has Been Subjected to Previous Use on Trial Basis and Subsequently Resold as New. 34\nFed. Reg. 176-77. The 1969 Enforcement Policy concerned the then-prevalent business practice\nof selling, as new, products that previously had been used on a trial basis by prospective\npurchasers. Id. at 176. In that policy statement, the Commission set out the broad principle that\ndeception lies where a marketer "[fails] to disclose material facts relevant to a purchaser\'s\ndecision to buy or not to buy." Id. Because consumers have a preference for new or unused\nproducts, the Commission found that prior use was material to the purchase decision. Id. The\nCommission, therefore, concluded that the failure to disclose prior use was unlawfbl even where\n3\n\nSome of these technologies include internal chips or clocks with the ability to\nindicate whether a product has been turned on; and tamper-evident tape, seals, or labels affixed to\nAC plugs, connectors, or battery compartments.\n\n\x0cChristopher Smith and Elaine Kolish\nDecember 12,2006\nPage 3\nreturned merchandise had been refurbished to "good as new" condition. Id. at 177. The\nCommission noted, however, that this policy applied only to products that in fact had been\n"used," as distinguished from products that had "merely been inspected but not used." Id.\nThe Commission provided more specific guidance in its Policy Statement on Deception,\nappended to Clifldale Assocs., Inc., 103 F.T.C. 110, 174 (1984). The Commission stated that it\nwill find deception where a representation, omission or practice is likely to materially mislead a\nconsumer acting reasonably under the circumstances. Id. at 176. Materiality is a core element of\ndeception. A misrepresentation or omission is material if it is "likely to affect a consumer\'s\nchoice of or conduct regarding the product," and therefore, injures the consumer who may have\notherwise made a different choice. Id. at 182-83.\nPursuant to the guidance provided by these policy statements, we do not believe that\nconsumers would be deceived by Sony\'s resale of returned consumer electronics within the\nguidelines described above. As an initial matter, by limiting its program to products that have\nnever been turned on, it appears that Sony would be reselling products that fall within the\n"inspected but not used" category referenced in the 1969 Enforcement Policy. However, the\nanalysis does not end there. The products, as a result of prior purchase, may carry defects upon\nreturn. For example, a returned product may never have been turned on, but nonetheless may be\ndamaged or missing requisite parts and inserts. Sony\'s program appears comprehensive enough\nto avoid such defects and protect consumers from injury, thereby likely rendering the fact of prior\npurchase immaterial. Therefore, we believe Sony would be acting lawfblly under Section 5 of\nthe FTC Act in implementing its proposed program, as represented to Commission staff.\nThis letter sets out the views of the staff of the Bureau of Consumer Protection, as\nauthorized by the Commission\'s Rules of Practice. Those views are based on information\nprovided to Commission staff by you. Staff have not engaged in independent factual\ninvestigation regarding the proposal. In accordance with Section 1.3(c) of the Commission\'s\nRules of Practice and Procedure, 16 C.F.R. 5 1.3(c), this is a staff opinion only and has not been\nreviewed or approved by the Commission or by any individual Commissioner, and is given\nwithout prejudice to the right of the Commission later to rescind the advice and, where\nappropriate, to commence an enforcement action. In accordance with Section 1.4 of the\nCommission\'s Rules of Practice and Procedure, 16 C.F.R. 5 1.4, your request for advice, along\nwith this response, will be placed on the public record.\nWe appreciate your taking the time to\n\n~ssdciateDirector for Enforcement\n\n\x0c'


b'UNITED STATES OF AMERICA \xe2\x84\xa2\nFEDERAL TRADE COMMISSION Wp\n\nWASHINGTON, D.C. 20580\n\naN A 6\nOffice of the Secretary ae\n\nApril 18, 2006\n\n \n\nCarl G. Bartholomaus, Corporate Counsel\nDuPont Company\n\nBuilding 23-2128\n\nBarley Mill Plaza\n\nWilmington, Delaware 19880-0023\n\nRe: Petition of Mohawk Industries, Inc., E.I. du Pont de Nemours and\nCompany, and PTT Poly Canada (\xe2\x80\x9cPetitioners\xe2\x80\x9d) for a new generic fiber\nname and definition under the Rules and Regulations Under the Textile\nFiber Products Identification Act, 16 C.F.R. Part 303.\n\nDear Mr. Bartholomaus:\n\nPursuant to Rule 8(b) of the Rules and Regulations Under the Textile Fiber Products\nIdentification Act, 16 C.F.R. \xc2\xa7 303.8(b), the Commission has assigned the designation \xe2\x80\x9cPTT001\xe2\x80\x9d\nto Petitioners\xe2\x80\x99 PTT fiber for temporary use until a final determination can be made as to the\nmerits of the application.\n\nThe assignment of this temporary designation should not be construed as indicating that\nthe Commission will either grant or deny the application or that the Commission has determined\n\nthe application to be complete.\n\nDonald S. Clark\nSecretary\n\nBy direction of the Commission.\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COh\'lMISSION\nWASHINGTON. D.C. 20580\n\nDivision of Advertising Practices\n\nMary Koelbel Engle\nAssociate Director\n\nMarch 15,2005\n\nVIA FIRST-CLASS MAIL and EMAIL\nAnnette Dickinson, Ph.D.\nPresident\nCouncil for Responsible Nutrition\n1828 L St. NW, Suite 900\nWashington, DC 20036-5114\n\nRe:\n\nCouncil for Res~onsibleNutrition\'s Comulaint Against\n\nDear Dr. Dickinson:\nThank you for your January 12,2005, letter and subsequent materials regarding\nConsumerLab.com, LLC ("ConsumerLab) and its Product Review and Voluntary Certification\nprograms for testing dietary supplements and similar consumer products ("Test Programs").\nCouncil for Responsible Nutrition alleges that ConsumerLab\'s "entire business model represents\nan egregious form of consumer fraud and deception," and asserts, among other things, that\n\n*\n\n*\n\n"[Clompanies are pressured . . . into paying a fee" for testing under the\nVoluntary Certification program to avoid potential negative consequences\nof having their products tested under the Product Review program; and\nthat\nConsumerLab\'s Test Programs and its reporting of test results "are likely\nto mislead consumers into believing that ConsumerLab is operating in the\npublic interest and cannot be influenced by any outside party."\n\nThe Commission has been directed by Congress to act in the interest of all consumers to\nprevent deceptive or unfair acts or practices, pursuant to Section 5 of the Federal Trade\nCommission Act, 15 U.S.C. 3 45. A representation, omission, or practice is deceptive if (1) it is\nlikely to mislead consumers acting reasonably under the circumstances; and (2) it is "matesial,"\nthat is, likely to affect consumers\' conduct or decisions with regard to a product or service. An\nact or practice is unfair if it causes or is likely to cause injury to consumers that (1) is substantial;\n(2) is not outweighed by countervailing benefits to consumers or to competition; and (3) is not\n\n\x0cCouncil for Responsible Nutrition\nMarch 15, 2005\nPage 2\nreasonably avoidable by consumers themselves.\nIn determining whether to take enforcement or other action in any particular situation, the\nCommission rnay consider a number of factors, including the type of violation alleged, the nature\nand amount of consumer injury at issue, the number of consumers affected, and the likelihood of\npreventing future unlawful conduct and securing redress or other relief. After reviewing the\ncomplaint and related materials, staff is not recommending agency action at this time. The\nCommission reserves the right, however, to take such further action as the public interest rnay\nrequire.\nThank you for bringing Council for Responsible Nutrition\'s concerns regarding\nConsumerLab.com,LLC to our attention.\nVery truly yours,\n\ncc:\n\nTod Cooperman, M.D.\nPresident\nConsumerLab.com,LLC\n\n\x0c'