Skip to main content

Search

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

16 C.F.R.

§ 437.1 Definitions.

§ 437.2 The obligation to furnish written documents.

§ 437.3 The disclosure document.

§ 437.4 Earnings claims.

§ 437.5 Sales conducted in Spanish or other languages besides English.

§ 437.6 Other prohibited practices.

§ 437.7 Record retention.

§ 437.8 Franchise exemption.

§ 437.9 Outstanding orders; preemption.

§ 437.10 Severability.

Appendix A to Part 437—Disclosure of Important Information About Business Opportunity

Federal Deception Law: 16 C.F.R. § 437.1. Definitions

The following definitions shall apply throughout this part:

(a) Action means a criminal information, indictment, or proceeding; a civil complaint, cross claim, counterclaim, or third party complaint in a judicial action or proceeding; arbitration; or any governmental administrative proceeding, including, but not limited to, an action to obtain or issue a cease and desist order, an assurance of voluntary compliance, and an assurance of discontinuance.

Federal Deception Law: 16 C.F.R. § 437.2. The obligation to furnish written documents

In connection with the offer for sale, sale, or promotion of a business opportunity, it is a violation of this Rule and an unfair or deceptive act or practice in violation of Section 5 of the Federal Trade Commission Act (“FTC Act”) for any seller to fail to furnish a prospective purchaser with the material information required by §§437.3(a) and 437.4(a) of this part in writing at least seven calendar days before the earlier of the time that the prospective purchaser:

(a) Signs any contract in connection with the business opportunity sale; or

Federal Deception Law: 16 C.F.R. § 437.4. Earnings claims

In connection with the offer for sale, sale, or promotion of a business opportunity, it is a violation of this Rule and an unfair or deceptive act or practice in violation of Section 5 of the FTC Act, for the seller to:

(a) Make any earnings claim to a prospective purchaser, unless the seller:

(1) Has a reasonable basis for its claim at the time the claim is made;

Federal Deception Law: 16 C.F.R. § 437.6. Other prohibited practices

In connection with the offer for sale, sale, or promotion of a business opportunity, it is a violation of this part and an unfair or deceptive act or practice in violation of Section 5 of the FTC Act for any seller, directly or indirectly through a third party, to:

(a) Disclaim, or require a prospective purchaser to waive reliance on, any statement made in any document or attachment that is required or permitted to be disclosed under this Rule;

Federal Deception Law: 16 C.F.R. § 437.7. Record retention

To prevent the unfair and deceptive acts or practices specified in this Rule, business opportunity sellers and their principals must prepare, retain, and make available for inspection by Commission officials copies of the following documents for a period of three years:

(a) Each materially different version of all documents required by this Rule;

(b) Each purchaser’s disclosure receipt;

(c) Each executed written contract with a purchaser; and

Federal Deception Law: 16 C.F.R. § 437.8. Franchise exemption

The provisions of this Rule shall not apply to any business opportunity that constitutes a “franchise,” as defined in the Franchise Rule, 16 CFR part 436; provided, however, that the provisions of this Rule shall apply to any such franchise if it is exempted from the provisions of part 436 because, either:

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

16 C.F.R.

§ 444.1 Definitions.

§ 444.2 Unfair credit practices.

§ 444.3 Unfair or deceptive cosigner practices.

§ 444.4 Late charges.

§ 444.5 State exemptions.

SOURCE: 49 Fed. Reg. 7789 (Mar. 1, 1984), unless otherwise noted.

AUTHORITY: Sec. 18(a), 88 Stat. 2193, as amended by 93 Stat. 95 (15 U.S.C. § 57a); 80 Stat. 383, as amended by 81 Stat. 54 (5 U.S.C. § 552).

Federal Deception Law: 16 C.F.R. § 444.1. Definitions

(a) Lender. A person who engages in the business of lending money to consumers within the jurisdiction of the Federal Trade Commission.

(b) Retail installment seller. A person who sells goods or services to consumers on a deferred payment basis or pursuant to a lease-purchase arrangement within the jurisdiction of the Federal Trade Commission.

(c) Person. An individual corporation, or other business organization.

Federal Deception Law: 16 C.F.R. § 444.2. Unfair credit practices

(a) In connection with the extension of credit to consumers in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, it is an unfair act or practice within the meaning of Section 5 of that Act for a lender or retail installment seller directly or indirectly to take or receive from a consumer an obligation that:

Federal Deception Law: 16 C.F.R. § 444.3. Unfair or deceptive cosigner practices

(a) In connection with the extension of credit to consumers in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, it is:

(1) A deceptive act or practice within the meaning of section 5 of that Act for a lender or retail installment seller, directly or indirectly, to misrepresent the nature or extent of cosigner liability to any person.

Federal Deception Law: 16 C.F.R. § 444.4. Late charges

(a) In connection with collecting a debt arising out of an extension of credit to a consumer in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, it is an unfair act or practice within the meaning of section 5 of that Act for a creditor, directly or indirectly, to levy or collect any delinquency charge on a payment, which payment is otherwise a full payment for the applicable period and is paid on its due date or within an applicable grace period, when the only delinquency is attributable to late fee(s) or delinquency c

Federal Deception Law: 16 C.F.R. § 444.5. State exemptions

(a) If, upon application to the Federal Trade Commission by an appropriate State agency, the Federal Trade Commission determines that:

(1) There is a State requirement or prohibition in effect that applies to any transaction to which a provision of this rule applies; and

(2) The State requirement or prohibition affords a level of protection to consumers that is substantially equivalent to, or greater than, the protection afforded by this rule;