dustry, promulgated June 28, 1957, and amended November 17, 1959. [Guide 7]

§ 245.8 Deceptive selling of used, rebuilt, or secondhand products.

An industry product which in whole or in part is used, secondhand, rebuilt, repaired, refinished, or which contains parts that are used, secondhand, rebuilt, repaired or refinished, should not be sold, offered for sale or distributed unless the fact that such product or parts are not new, or are used, secondhand, rebuilt, or repaired, or refinished, is fully and nondeceptively disclosed in all advertising of the product, on the product itself or on a label firmly affixed thereto, and on the immediate container in which the product is sold to the ultimate consumer. [Guide 8]

§ 245.9 Deceptive imitation, obliteration, or concealment of trade names, trade-marks, and marks.

Industry members should not imitate or simulate the trade names or trademarks of competitors, or obliterate, conceal, or remove tags, labels, marks, or other disclosures placed on an industry product or on the package in which it is sold to the ultimate consumer under circumstances having the capacity and tendency of deceiving the ultimate consumer as to the identity of the manufacturer, origin of the product, or in any other material respect. [Guide 9] § 245.10

Disclosure of foreign origin of watch movements, movement parts, and related matters.

(a) Watches having movements of foreign origin or movements which contain parts of foreign origin should not be offered for sale or sold unless they are accompanied by a clear and conspicuous disclosure of the country or countries of origin of the movement.

(b) The countries of origin of a watch movement are the country in which the movement has been assembled and the country in which its substantial and significant parts have been manufactured. For purposes of this section, if parts constituting 50 percent or more of the cost to the assembler of all the parts of the movement are manufactured in a single country, those parts shall be presumed to be the substantial and significant parts of the movement.

(1) If the movement has been assembled in the same foreign country in which parts constituting 50 percent or

more of the cost to the assembler of all the parts of the movement have been manufactured, the name of that country alone should be used to designate the origin of the movement. Appropriate forms of disclosure would include "Swiss Made", or "Japan”.

(2) If the watch movement has been assembled in one country and parts constituting 50 percent or more of the cost to the assembler of all the parts of the movement have been manufactured in a single other country, the names of both such countries, and no other, should be used to designate the origin of the movement. Appropriate forms of disclosure would include "Assembled in France from Swiss parts", or "Japanese parts, assembled in the United States".

(3) If the watch movement has been assembled in one country but parts constituting 50 percent or more of the cost to the assembler of all the parts of the movement have not been manufactured in a single other country, only the name of the country of assembly should be used, accompanied by a disclosure that the parts are partially foreign, imported or domestic, as the case may be. Appropriate forms of disclosure would include "Movement assembled in the United States from domestic and imported parts" or "Movements assembled in France from foreign parts" or "Assembled in Germany with parts from foreign countries".

(4) For purposes of this section, the United States includes only the States, the District of Columbia, Puerto Rico, the American Virgin Islands, Guam and American Samoa.

(c) In making the disclosures under the circumstances set forth in paragraph (b) (2) and (3) of this section, care should be exercised to insure that the form selected does not imply directly or indirectly that the movement is solely a product of the country from which its substantial and significant parts were obtained, or that it is solely a product of the country in which the movement was assembled.

(d) The disclosures provided for in this section should be permanently marked on an exposed surface of the watch or on a label or tag affixed thereto which has such a degree of permanency as to remain thereon until consummation of the consumer sale of the watch and be of such size and conspicuousness that they will be readily apparent to

Members of the industry should not represent directly or indirectly in advertising or otherwise that an industry product may be purchased for a specified price, or at a saving, or at a reduced price, when such is not the fact; or otherwise deceive purchasers or prospective purchasers with respect to the price of any product offered for sale; or furnish any means or instrumentality by which others engaged in the sale of industry products may make any such representation.

NOTE: The Commission's January 8, 1964, Guides Against Deceptive Pricing furnish additional guidance respecting price savings representations and are to be considered as supplementing this section. Copies are available upon request.

Members of the industry should not give, offer to give, or permit or cause to be given, directly or indirectly, money or anything of value to employees or agents of customers or prospective customers, without the knowledge of their employers or principals, as an inducement to influence or cause their employers or principals to purchase or contract to purchase the products of such industry members, or to refrain from purchasing products from competitors of such members. [Guide 12]

§ 245.13 Coercing purchase of one product as a prerequisite to the purchase of other products.

Members of the industry should not coerce a customer or prospective customer to purchase one or more products as a prerequisite to the purchase of one or more other products, where the effect may be substantially to lessen competition, or tend to create a monopoly or to unreasonably restrain trade. [Guide 13] § 245.14 Misrepresentation of the character and size of business, extent of testing, etc.

Industry members should not falsely represent, directly or indirectly, in company, brand, or trade name, or in advertising, labeling or otherwise:

(a) The length of time they have been in business;

(b) The extent of their sales; (c) Their rank in the industry as producers or distributors of a product or type of product;

(d) That they are manufacturers of industry products or own or control a factory engaged in the manufacture of such products;

(e) That they own or operate a laboratory, or that their products have been tested in any particular manner or for any period of time, or with any particular results;

(f) That a product or manufacturing process is new or exclusive; or

(g) Any other material aspect of their business or products. [Guide 14]

§ 245.15 Guarantees, warranties, etc. (a) Industry members should not represent in advertising or otherwise that a product is "guaranteed" without clear and conspicuous disclosure in close conjunction with such representation of:

(1) The nature and extent of the guarantee, and

(2) Any material conditions or limitations in the guarantee which are imposed by the guarantor, and

(3) The manner in which the guarantor will perform thereunder, and

(4) The identity of the guarantor.

(b) A seller or manufacturer should not advertise or represent that a product is guaranteed when he cannot or does not promptly and scrupulously fulfill his obligations under the guarantee.

(c) A specific example of nonperformance of an obligation under the guarantee would arise in connection with the use of the phrase, "Satisfaction or your money back" if the guarantor does not promptly make a full refund of the purchase price upon request, irrespective of the reason for such request.

(d) Guarantees should not be used which under normal conditions are impractical of fulfillment or which are for such a period of time or are otherwise of such nature as to have the capacity and tendency of misleading purchasers or prospective purchasers into the belief that the product so guaranteed has a greater degree of serviceability, durability or performance capability in actual use than is true in fact.

(e) This section has application not only to "guarantees" but also to "warranties", to purported “guarantees" and "warranties", and to any promise or representation in the nature of a "guarantee" or "warranty."

NOTE: The Commission's April 26, 1960, Guides Against Deceptive Advertising of Guarantees furnish additional guidance respecting guarantee representations and are to be considered as supplementing this section. Copies are available upon request. [Guide 15]

§ 245.16 Use of the word "free".

In connection with the sale, offering for sale, or distribution of industry products, industry members should not use the word "free" or any other word or words of similar import, in advertisements or in other offers to the public, as descriptive of an article of merchandise, or service, which is not an unconditional gift, under the following circumstances:

(a) When all the conditions, obligations, or other prerequisites to the receipt and retention of the "free" article of merchandise or service offered are not clearly and conspicuously set forth at the outset so as to leave no reasonable probability that the terms of the offer will be misunderstood; and regardless of such disclosure:

(b) When, with respect to any article of merchandise required to be purchased in order to obtain the "free" article or service, the offerer (1) increases the ordinary and usual price of such article of merchandise, or (2) reduces its quantity, or (3) reduces the quantity or size thereof.

NOTE: The disclosure provided by paragraph (a) of this section should appear in close conjunction with the word "free" (or other word or words of similar import) wherever such word first appears in each advertisement or offer. A disclosure in the form of a footnote, to which reference is made by use of an asterisk or other symbol placed next to the word "free", will not be regarded as compliance. [Guide 16]

NOTE: Provisions of outstanding Cease and Desist Orders pertaining to subject matter covered by this part will not be construed by the Commission as prohibiting or requiring more than the relevant provisions of this part.

[33 F.R. 10332, July 19, 1968, as amended at 83 F.R. 15021, Oct. 8, 1968]

APPENDIX

Set forth in this appendix are the thickness tolerances, and tests referred to in the foregoing Guides in this part.

1. Thickness tolerances: plated and electroplated cases. The minimum thicknesses specified in paragraphs (d), (e), and (f) of § 245.3 for the coatings of gold or gold alloy on watchcases shall mean that the coating of precious metal affixed to the surface of the metal stock shall be throughout the surface

and at the thinnest point not less than the thickness specified after the completion of all finishing operations, including polishing, except, however, for such deviations therefrom, not exceeding 20 percent (minus) of the stated thickness, as may be proved by the manufacturer to have resulted from unavoidable variations in manufacturing processes and despite the exercise of due care, which deviation so proved shall be allowed if and when the quantity of precious metal remaining plated on the outside of the case is sufficient to equal the quantity necessary to provide the specified minimum thickness at all points on such watchcase including the thinnest point.

2. Gold electroplate: standards and tests. The gold electroplated surface coating of a watchcase should be free of cracks, blisters, pits or other flaws, and capable of successfully undergoing the following tests:

a. Adhesion. The watchcase should be heated to a temperature of not less than 360° nor more than 400° C. and maintained at that temperature for not less than 5 minutes. At the end of that time such surface coating should show no signs of blistering, flaking, peeling, or similar defects.

b. Hardness. Such surface coating should undergo a Knoop hardness test with a 25 gram load and achieve a rating of not less than 130.

c. Porosity. After such surface coating has been thoroughly cleaned and freed of any foreign material, the case should be:

(1) Immersed in a solution of one part concentrated nitric acid (sp.gr. 1.42) and one part water at room temperature for 5 minutes; and

(2) Exposed to fumes of concentrated nitric acid (sp.gr. 1.42) in a closed vessel for 3 hours at room temperature.

At the conclusion of each of the foregoing porosity tests, the surface coating should show no signs of having been attacked. Any discoloration or pitting should be considered as signs of an attack. The nitric acid solution in which the watchcase was immersed should be tested for the presence of metal by making it slightly alkaline with ammonium hydroxide and by adding a solution of ammonium or sodium sulfide. The formation of a black precipitate indicates that the coating has been attacked.

3. Test for shock resistance. A watch should be tested for shock resistance in a room having a temperature between 18° and 25° C. which does not vary by more than 2° during the test. A wrist watch which does not have a permanently affixed band should be tested without the band or strap.

The test should be conducted as follows: a. One hour after the watch has been fully wound, its daily rate in each of the following three positions should be determined by observing it for 2 minutes in each position:

(1) Position HB (horizontal with the dial facing down);

(2) Position VC (vertical with 3 o'clock to the watch's left);

(3) Position VB (vertical with 3 o'clock pointed downwards).

b. Shocks equal to that which the watch would receive if it were dropped from a height of 3 feet onto a horizontal hardwood surface should be applied as follows:

(1) The first shock should be applied to the middle of the watch at a position directly opposite the crown and in a direction which is parallel to the plane of the watch;

(2) The second shock should be applied to the crystal, and in a direction which is perpendicular to the plane of the watch.

c. Five minutes after the last shock, the daily rate of the watch in each of the three positions described in a. above should be determined by observing it for 2 minutes in each position. The differences in daily rate before and after the shock should be determined for each position. The residual effect of the shocks will be equal to the greatest of these differences.

A watch will be considered to have passed the foregoing test, if after application of the shocks, it does not stop; the residual effect does not exceed 60 seconds per day; and an examination of the watch does not disclose any physical damage which would affect its operation or appearance, e.g., hands bent or out of position, cracked crystal, or automatic or calendar devices inoperable or out of alignment.

4. Test for water resistance. A watch should be tested for water resistance by immersing it completely for at least 5 minutes in water under atmospheric pressure of 15 pounds per square inch and for at least another 5 minutes in water under an additional pressure of at least 35 pounds per square inch (total pressure of 50 pounds per square inch). If the watch does not admit any water or moisture it will be considered to have passed the test.

5. Test for antimagnetic qualities. A watch should be tested for its resistance to magnetism by placing it in a demagnetized condition in an electrical field of not less than 60 Gauss for at least 5 seconds in a vertical position and for at least 5 seconds in a horizontal position. If the daily rate of the watch has not been changed by more than 15 seconds as a result of the foregoing exposure, it shall be considered to have passed the test.

Sec.

247.6 Deceptive pricing.

247.7 Discriminatory prices, rebates, discounts, etc.

247.8 Advertising or promotional allowances, or services or facilities. 247.9 Inducing or receiving illegal discrimination in price, advertising or promotional allowances, or services or facilities.

AUTHORITY: The provisions of this Part 247 issued under secs. 5, 6, 38 Stat. 719, as amended, 15 U.S.C. 45, 46; 49 Stat. 1526; 15 U.S.C. 13, as amended, unless otherwise noted.

SOURCE: The provision of this Part 247 appear at 34 F.R. 9924, June 27, 1969, unless otherwise noted.

For purposes of this part the following definitions apply:

(a) "Industry member" means any person, firm, corporation, or organization engaged in the manufacture, sale, or distribution of any industry products as defined below.

(b) "Industry product" means all kinds and types of ladies' handbags, shoulder bags, purses, pocketbooks, and similar articles, of any composition. § 247.1

Misrepresentation (general).

No representation should be made in advertising, labeling, or any other manner, which is likely to mislead or deceive any purchaser concerning the material composition, quality, finish, durability, price, origin, construction, ease of cleaning, or any other feature, of an industry product.

[Guide 1]

§ 247.2

Misrepresentation and deception

as to material composition.

(a) The material composition of an industry product should not be misrepresented in any manner. Included in, but not limited to, representations which should not be made concerning material composition are the following:

(1) Any representation that an industry product or part thereof is made of top grain leather, split leather, leather from the skin or hide of a certain animal, vinyl, plastic, brass or other metal, or any other material, when such is not the fact.

(2) Any representation that an industry product is made wholly or substantially of a particular material when such is not the fact.

(3) Any trade name, coined name, trademark or other word, term or repre

sentation which has the capacity and tendency to convey the impression that an industry product is made in whole or in part from the skin or hide of an animal, or that material in the product is leather, split leather, vinyl, plastic, or other material, when such is not the fact. Also any stamping, tag, label, or other device, in the shape of an animal silhouette, used in connection with an industry product having the appearance of leather but which is not wholly or substantially made from the skin or hide of such an animal should not be used.

(4) Any trade name, coined name, trademark or other word, term or representation that has the capacity and tendency to convey the impression that an industry product is made in whole or in part from the skin or hide of an animal which in fact is nonexistent.

(b) In some instances the failure to disclose certain pertinent facts concerning the material composition of an industry product may have the capacity and tendency to mislead or deceive purchasers. Generally such instances involve split leather which has the appearance of being top grain leather, or nonleather material which has the appearance of being leather, or leather which has been processed to simulate a different kind of leather. Included in, but not limited to, disclosures which should be made concerning material composition are the following:

(1) Disclosure should be made of the split leather content of an industry product or part thereof if the split leather is visible or if any representation is made as to composition thereof.

NOTE: Split leather should be considered as that leather which results from the splitting of hides or skins into two or more thicknesses, other than the grain or hair side.

(2) Disclosure should be made concerning the material composition of an industry product or part thereof which is made of a nonleather material having the appearance of leather. Such disclosure may either state that the material is not leather or describe the general nature of the material in a manner that would clearly show that it is not leather. Thus, some examples of the manner in which such material may be described are:

Nonleather

Imitation Leather Simulated Leather

Vinyl

Vinyl Coated Fabric

Plastic

NOTE: Nonleather materials which have the appearance of leather and which primarily contain or ground, pulverized shredded leather, are subject to subparagraph (2) of this paragraph (b). Such materials may be described as "Nonleather", "Imitation Leather" or "Simulated Leather" or as "Ground Leather", "Pulverized Leather" or "Shredded Leather", as the case may be.

When nonleather material has been processed to simulate a particular kind of leather, such as alligator leather, any representation as may be made concerning the simulated appearance of the product should be immediately accompanied by the disclosure relating to the nonleather composition of the product. Some examples of the manner in which such material may be described are:

"Not Leather Simulated Alligator Grain” "Plastic with Imitation Alligator Grain"

(3) Disclosure should be made of the kind of leather of which an industry product or part thereof is made when the leather has been embossed, dyed, or otherwise processed to simulate the appearance of a different kind of leather. Thus, a product made wholly of top grain cowhide which has been processed to simulate alligator may be described

as:

"Top Grain Cowhide"

Any additional representation as may be made concerning the simulated appearance of the product should be immediately accompanied by the disclosure relating to the actual kind of leather in the product. An example of the manner in which such a product may be described is:

"Top Grain Cowhide Simulated Alligator

Grain"

(4) Disclosure should be made that any material in an industry product is backed with another kind of material when the backing is not apparent upon casual inspection of the product, or when representations are made which in the absence of such disclosure would be deceptive as to composition of the product. Some examples of the manner in which such material may be represented are: "Top Grain Cowhide Backed with Split

Cowhide"

"Split Cowhide Backed with Simulated Leather"

"Vinyl Backed with Other Material"

If the backing material is visible and is split leather, nonleather material having the appearance of leather, or leather processed to simulate a different kind of