The FTC announced late last week its upcoming schedule for regular review of its rules and guides to make sure the guidance is still sound in light of technological, industry or economic changes or whether there are any conflicts between other federal, state or local rules or law. The FTC publishes a review schedule each year and will sometimes expedite or delay reviews. Promoting the good news first, the FTC’s press release notes that by the end of 2012 more than a third of its 65 rules and industry guides will have been reviewed or will be under review. While many of us have now adopted a Zen like patience waiting for the final version of the revised Green Guides, the FTC promises it will review and seek comment on its Guides for Used Auto Parts , Jewelry Guides , and Guides for Advertising Allowances . Lots of the FTC’s rules were also rescinded with the transfer of that rulemaking authority to the CFPD under Dodd-Frank.
But due to “resource constraints” the FTC has decided to delay its review of the Guides Against Deceptive Pricing and its Guides Concerning the Use of the Word “Free” and its Guides Against Bait Advertising from 2012 until 2017. Now most would probably agree that the FTC’s guidance on not deceiving consumers with bait and switch advertising is not controversial nor in need of an overhaul. But the Pricing Guides are another story altogether. In the 1950s and 60s the FTC brought numerous cases challenging “fictitious price claims” – including when a company would advertise a good as on sale when few sales had occurred at the regular price. The Guides note that former price comparisons are one of the most commonly used form of bargain advertising and state that advertising a “former price” is not deceptive if “the former price is the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time.” The FTC has not brought such a case since 1979, likely recognizing that sales are good for consumers and enforcing in this area can often do more harm than good. This is an area where many states and local enforcers have stepped in, and there have been several recent well publicized cases out of New York, including a settlement with the craft retailer Michael’s . Some of the state laws are more specific and more onerous – requiring selling at the regular price for a specified period of time before offering a sale or even requiring proof of a number of sales at the regular price. Other states without specific pricing laws have a general policy of looking to the FTC guidance to interpret their own general consumer protection laws and have used the FTC pricing guides as a basis to bring cases where they perceive a company has had a sale but did not offer the product at regular price for what they believe to be a reasonably substantial period of time. These laws are obviously of no benefit to consumers who happen to be shopping during a non-sale week. During a time when the FTC is spending considerable resources to protect consumers down on their luck from fraud, perhaps some additional resources to overhaul its guides and clarify and limit what pricing claims are truly deceptive is in order so as not to deter legitimate aggressive price discounting.