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Federal Deception Law: Listing of Provisions, Source, and Authority

16 C.F.R.

§ 429.0 Definitions.

§ 429.1 The Rule.

§ 429.2 Effect on State laws and municipal ordinances.

§ 429.3 Exemptions.

SOURCE: 53 Fed. Reg. 45,459 (Nov. 10, 1988); 60 Fed. Reg. 54,186 (Oct. 20, 1995), unless otherwise noted.

AUTHORITY: Sections 1–23, F.T.C. Act, 15 U.S.C. §§ 41–58.

Federal Deception Law: 16 C.F.R. § 429.2. Effect on State laws and municipal ordinances

(a) The Commission is cognizant of the significant burden imposed upon door-to-door sellers by the various and often inconsistent State laws that provide the buyer the right to cancel a door-to-door sales transaction. However, it does not believe that this constitutes sufficient justification for preempting all of the provisions of such laws and the ordinances of the political subdivisions of the various States.

Federal Deception Law: 16 C.F.R. § 429.3. Exemptions

(a) The requirements of this part do not apply for sellers of automobiles, vans, trucks or other motor vehicles sold at auctions, tent sales or other temporary places of business, provided that the seller is a seller of vehicles with a permanent place of business.

(b) The requirements of this part do not apply for sellers of arts or crafts sold at fairs or similar places.

Federal Deception Law: 16 C.F.R. § 433.2. Preservation of consumers’ claims and defenses, unfair or deceptive acts or practices

In connection with any sale or lease of goods or services to consumers, in or affecting commerce as “commerce” is defined in the Federal Trade Commission Act, it is an unfair or deceptive act or practice within the meaning of Section 5 of that Act for a seller, directly or indirectly, to:

(a) Take or receive a consumer credit contract which fails to contain the following provision in at least ten point, bold face, type:

NOTICE

Federal Deception Law: 16 C.F.R. § 433.3. Exemption of sellers taking or receiving open end consumer credit contracts before November 1, 1977, from requirements of § 433.2(a)

(a) Any seller who has taken or received an open end consumer credit contract before November 1, 1977, shall be exempt from the requirements of 16 C.F.R. Part 433 with respect to such contract provided the contract does not cut off consumers’ claims and defenses.

(b) Definitions. The following definitions apply to this exemption:

(1) All pertinent definitions contained in 16 C.F.R. 433.1.

Federal Deception Law: A.5.2 FTC Advisory Opinion

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

Office of the Secretary

May 3, 2012

Jonathan Sheldon

Carolyn Carter

National Consumer Law Center

7 Winthrop Square

Boston, Massachusetts 02110

Dear Mr. Sheldon and Ms. Carter:

Federal Deception Law: 16 C.F.R. § 435.1. Definitions

For purposes of this part:

(a) Mail, Internet, or telephone order sales shall mean sales in which the buyer has ordered merchandise from the seller by mail, via the Internet, or by telephone, regardless of the method of payment or the method used to solicit the order.

(b) Prompt refund shall mean:

Federal Deception Law: 16 C.F.R. § 435.2. Mail, Internet, or telephone order sales

In connection with mail, Internet, or telephone order sales in or affecting commerce, as “commerce” is defined in the Federal Trade Commission Act, it constitutes an unfair method of competition, and an unfair or deceptive act or practice for a seller:

(a)(1) To solicit any order for the sale of merchandise to be ordered by the buyer through the mail, via the Internet, or by telephone unless, at the time of the solicitation, the seller has a reasonable basis to expect that it will be able to ship any ordered merchandise to the buyer:

Federal Deception Law: 16 C.F.R. § 435.3. Limited applicability

(a) This part shall not apply to:

(1) Subscriptions, such as magazine sales, ordered for serial delivery, after the initial shipment is made in compliance with this part;

(2) Orders of seeds and growing plants;

(3) Orders made on a collect-on-delivery (C.O.D.) basis;

Federal Deception Law: Listing of Provisions, Source, and Authority

16 C.F.R.

§ 436.1 Definitions.

§ 436.2 Obligation to furnish documents.

§ 436.3 Cover page.

§ 436.4 Table of contents.

§ 436.5 Disclosure items.

§ 436.6 Instructions for preparing disclosure documents.

§ 436.7 Instructions for updating disclosures.

§ 436.8 Exemptions.

§ 436.9 Additional prohibitions.

§ 436.10 Other laws and rules.

§ 436.11 Severability.

Appendix A to Part 436—Sample Item 10 Table

Appendix B to Part 436—Sample Item 20(1) Table

Appendix C to Part 436—Sample Item 20(2) Table

Federal Deception Law: 16 C.F.R. § 436.1. Definitions

Unless stated otherwise, the following definitions apply throughout part 436:

(a) Action includes complaints, cross claims, counterclaims, and third-party complaints in a judicial action or proceeding, and their equivalents in an administrative action or arbitration.

(b) Affiliate means an entity controlled by, controlling, or under common control with, another entity.

Federal Deception Law: 16 C.F.R. § 436.3. Cover page

Begin the disclosure document with a cover page, in the order and form as follows:

(a) The title “FRANCHISE DISCLOSURE DOCUMENT” in capital letters and bold type.

(b) The franchisor’s name, type of business organization, principal business address, telephone number, and, if applicable, email address and primary home page address.

(c) A sample of the primary business trademark that the franchisee will use in its business.

Federal Deception Law: 16 C.F.R. § 436.4. Table of contents

Include the following table of contents. State the page where each disclosure Item begins. List all exhibits by letter, as shown in the following example.

Table of Contents

1. The Franchisor and any Parents, Predecessors, and Affiliates

2. Business Experience

3. Litigation

4. Bankruptcy

5. Initial Fees

6. Other Fees

7. Estimated Initial Investment

8. Restrictions on Sources of Products and Services

9. Franchisee’s Obligations

10. Financing

11. Franchisor’s Assistance, Advertising, Computer Systems, and Training

Federal Deception Law: 16 C.F.R. § 436.5. Disclosure items

(a) Item 1: The Franchisor, and any Parents, Predecessors, and Affiliates.

Disclose:

(1) The name and principal business address of the franchisor; any parents; and any affiliates that offer franchises in any line of business or provide products or services to the franchisees of the franchisor.

Federal Deception Law: 16 C.F.R. § 436.6. Instructions for preparing disclosure documents

(a) It is an unfair or deceptive act or practice in violation of Section 5 of the FTC Act for any franchisor to fail to include the information and follow the instructions for preparing disclosure documents set forth in Subpart C (basic disclosure requirements) and Subpart D (updating requirements) of part 436. The Commission will enforce this provision according to the standards of liability under Sections 5, 13(b), and 19 of the FTC Act.

Federal Deception Law: 16 C.F.R. § 436.7. Instructions for updating disclosures

(a) All information in the disclosure document shall be current as of the close of the franchisor’s most recent fiscal year. After the close of the fiscal year, the franchisor shall, within 120 days, prepare a revised disclosure document, after which a franchise seller may distribute only the revised document and no other disclosure document.

Federal Deception Law: 16 C.F.R. § 436.8. Exemptions

(a) The provisions of part 436 shall not apply if the franchisor can establish any of the following:

(1) The total of the required payments, or commitments to make a required payment, to the franchisor or an affiliate that are made any time from before to within six months after commencing operation of the franchisee’s business is less than $615.

(2) The franchise relationship is a fractional franchise.

Federal Deception Law: 16 C.F.R. § 436.9. Additional prohibitions

It is an unfair or deceptive act or practice in violation of Section 5 of the Federal Trade Commission Act for any franchise seller covered by part 436 to:

(a) Make any claim or representation, orally, visually, or in writing, that contradicts the information required to be disclosed by this part.

(b) Misrepresent that any person:

(1) Purchased a franchise from the franchisor or operated a franchise of the type offered by the franchisor.

Federal Deception Law: 16 C.F.R. § 436.10. Other laws and rules

(a) The Commission does not approve or express any opinion on the legality of any matter a franchisor may be required to disclose by part 436. Further, franchisors may have additional obligations to impart material information to prospective franchisees outside of the disclosure document under Section 5 of the Federal Trade Commission Act. The Commission intends to enforce all applicable statutes and rules.