b'UNITED STATES OF AMERICA\n\nFederal Trade Commission\nWASHINGTON, D.C. 20580\n\nCraig Tregillus\nDivision of Marketing Practices\nPhone: (202) 326-2970\nEmail: ctregillus@ftc.gov\n\nAugust 5, 2016\nMr. Thurman Higginbotham, President\nIndependent Funeral Directors Association of DC\n3145 Lady Banks Lane\nWaldorf, MD 20603\nDear Mr. Higginbotham:\nYour request for a staff opinion states that funeral providers serving the District of Columbia\nhave encountered a problem when a natural death occurs in a family home. Because they may not\nlawfully transport the body to the funeral home until death is pronounced,1 and because the D.C.\nMedical Examiner\xe2\x80\x99s Office does not pronounce most deaths from natural causes,2 it may be\nnecessary for funeral providers to locate and pay a licensed physician to perform that service. You\nask whether, and if so how, a charge for that service should be disclosed by a provider on the\nGeneral Price List (\xe2\x80\x9cGPL\xe2\x80\x9d), and entered on the Statement of Funeral Goods and Services Selected\n(\xe2\x80\x9cSFGSS\xe2\x80\x9d), in order to comply with the Funeral Rule.3\nThe Rule specifies that a funeral provider may charge only one non-declinable fee, the basic\nservices fee, unless another fee is necessitated by any legal, cemetery or crematory requirement that\nis disclosed in writing on the SFGSS.4 Accordingly, the Rule expressly prohibits funeral providers\nfrom charging:\n1\n\nA notice dated February 4, 2016, from the D.C. Board of Funeral Directors, states that a funeral\nprovider \xe2\x80\x9cshould not transport a body to a funeral services establishment for funeral services prior to\nan official pronouncement of death.\xe2\x80\x9d It cites a directive of the D.C. Department of Health dated\nDecember 23, 2015, which emphasizes that a death may be pronounced \xe2\x80\x9conly\xe2\x80\x9d by \xe2\x80\x9ca hospital\nemergency room physician or an authorized official from the District\xe2\x80\x99s Office of the Chief Medical\nExaminer, unless otherwise permitted by law.\xe2\x80\x9d\n\n2\n\nD.C. statutes state that the District\xe2\x80\x99s Office of the Chief Medical Examiner must pronounce and\ninvestigate possible unnatural deaths in enumerated circumstances, DC Code \xc2\xa7 5-1405, and that a\nbody may be removed from the place of death \xe2\x80\x9conly\xe2\x80\x9d with \xe2\x80\x9cthe consent of the medical examiner or\nthe treating physician who certifies the cause of death,\xe2\x80\x9d DC Code \xc2\xa7 7-214(c)(1), or when an\nexpected death occurs at home, after a registered nurse assisting a treating physician signs the\npronouncement of death section of the death certificate. DC Code \xc2\xa7\xc2\xa7 7-211(j); 7-214(c)(2). Thus, if\nthe treating physician or her assistant registered nurse is unavailable when an anticipated death\noccurs, or there is no treating physician when an unanticipated death from natural causes occurs, a\nfuneral provider may find it necessary to locate and pay a physician to pronounce the death.\n3\n4\n\n16 C.F.R. \xc2\xa7 453.\n16 C.F.R. \xc2\xa7\xc2\xa7 453.2(b)(4)(iv), 453.3(d)(2).\n\n\x0cMr. Thurman Higginbotham\nPage 2 of 2\nany fee as a condition of furnishing any funeral goods or funeral\nservices to a person arranging a funeral, other than the fees for:\n(1) Services of funeral director and staff, permitted by\n\xc2\xa7 453.2(b)(4)(iii)(C) [basic services fee]; (2) other funeral services and\nfuneral goods selected by the purchaser; and (3) other funeral goods or\nservices required to be purchased [i.e., by legal, cemetery or crematory\nmandates], as explained on the itemized statement [SFGSS] in\naccordance with \xc2\xa7 453.3(d)(2).5\nWhile the Rule does not permit a second non-declinable fee, it does permit fees for funeral\ngoods and services voluntarily \xe2\x80\x9cselected by the purchaser.\xe2\x80\x9d It is therefore staff\xe2\x80\x99s opinion that funeral\nproviders may offer to locate and pay a physician to pronounce an in-home death from natural\ncauses for a fee that is optional. No Rule violation occurs if purchasers voluntarily choose such a\nservice and are free to avoid the cost by, for example, declining it and making arrangements for the\ndeath pronouncement themselves.6\nTo allow purchasers to make a voluntary choice about finding and paying a physician to\npronounce an in-home death from natural causes, the funeral provider must disclose the optional\nfee on the provider\xe2\x80\x99s GPL. The provider must notify the purchaser about the optional fee orally and\nby providing a copy of the GPL when removal arrangements are discussed, or promptly upon\narriving for the removal of the body.7 The disclosure should state whether the provider\xe2\x80\x99s fee\nincludes or is in addition to the physician\xe2\x80\x99s fee. The provider should also list the fee on the SFGSS,\nand the physician\xe2\x80\x99s fee, if not included, should be listed as a cash advance item.8\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\nhave not been reviewed, approved, or adopted by the Commission, and they are not binding upon the\nCommission. However, they do reflect the opinions of those staff members charged with\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are now routinely posted on the\nFTC website currently located at: https://www.ftc.gov/policy/advisoryopinions?title=&term_node_tid_depth=3507&date_filter[min][date]=&date_filter[max][date].\nRespectfully yours,\n\nCraig Tregillus\nFuneral Rule Coordinator\n5\n\n16 C.F.R. \xc2\xa7 453.4(b)(1)(ii).\n\n6\n\nStaff Opinion 13-2 (Jan. 3, 2013) at 2, available at https://www.ftc.gov/policy/advisoryopinions/opinion-13-2.\n\n7\n\nSuch a fee can be listed on the GPL, for example, as \xe2\x80\x9cOptional service fee for arranging a\nphysician to pronounce a death from natural causes at a D.C. residence if no treating physician exists\nor if neither the treating physician nor her assistant registered nurse is available. This fee is in\naddition to the physician\xe2\x80\x99s fee.\xe2\x80\x9d\n8\n\nSuch a fee can be listed on the SFGSS, for example, as a \xe2\x80\x9cService fee for arranging a physician to\npronounce death at a D.C. residence. This fee is in addition to the physician\xe2\x80\x99s fee.\xe2\x80\x9d\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFederal Trade Commission\nWASHINGTON, D.C. 20580\n\nCraig Tregillus\nDivision of Marketing Practices\nPhone: (202) 326-2970\nEmail: ctregillus@ftc.gov\n\nJune 16, 2016\nT. Scott Gilligan, Esq.\nGeneral Counsel\nNational Funeral Directors Association\n3734 Eastern Avenue\nCincinnati, OH 45226\nDear Mr. Gilligan:\nYou have asked for a \xe2\x80\x9cclarification\xe2\x80\x9d of the applicability of staff opinion 15-1 to\nsituations where there is \xe2\x80\x9cno claim that the consumer had inquired about the offering of\ncaskets or containers.\xe2\x80\x9d That opinion stated staff\xe2\x80\x99s view that a funeral provider violates the\nFuneral Rule if its personnel place a consumer in a casket display room to wait to speak to a\nfuneral director without first showing the consumer a Casket Price List (\xe2\x80\x9cCPL\xe2\x80\x9d).1\nThe Funeral Rule requires a funeral provider to show \xe2\x80\x9cpeople who inquire in person\nabout the offerings or prices of caskets or alternative containers\xe2\x80\x9d a CPL \xe2\x80\x9cupon beginning\ndiscussion of, but in any event before showing caskets.\xe2\x80\x9d2 As the Funeral Rule Compliance\nGuide has stated for years, this means that \xe2\x80\x9c[c]onsumers must be able to look at the price list\nbefore discussing their options or seeing the actual caskets.\xe2\x80\x9d3 This requirement is based on\nevidence in the rulemaking record that less expensive caskets \xe2\x80\x9coften are not shown\xe2\x80\x9d when\ncaskets are displayed, and is designed \xe2\x80\x9cto ensure that consumers have a bona fide\nopportunity to purchase low-cost caskets . . . if they so desire.\xe2\x80\x9d4\nEven now, casket display rooms do not always include \xe2\x80\x9call caskets and alternative\ncontainers offered which do not require special ordering.\xe2\x80\x9d5 They may display only a limited\nselection. To ensure that consumers are aware that low-cost caskets that are not on display\n\n1\n\nStaff Opinion to T. Scott Gilligan (June 29, 2015) (emphasis added), available at\nhttps://www.ftc.gov/system/files/documents/advisory_opinions/opinion-15-1/opinion_151.pdf.\n\n2\n\n16 C.F.R. \xc2\xa7 453.2(b)(2)(i). The same requirements also apply to the Outer Burial Container\nPrice List (\xe2\x80\x9cOBCPL\xe2\x80\x9d). 16 C.F.R. \xc2\xa7 453.2(b)(3)(i).\n\n3\n\nComplying with the Funeral Rule (April 2015) (\xe2\x80\x9cCompliance Guide\xe2\x80\x9d) at 13. The\nCompliance Guide makes the same statement about the OBCPL. Compliance Guide at 14.\n\n4\n\nStatement of Basis and Purpose, 47 Fed. Reg. 42260, 42290 & n. 317 (Sept. 24, 1982).\n\n5\n\n16 C.F.R. \xc2\xa7 453.2(b)(2)(i).\n\n\x0cT. Scott Gilligan, Esq.\nPage 2 of 2\nare available, the Rule insists that funeral providers show the CPL to consumers \xe2\x80\x9cin any event\nbefore showing caskets.\xe2\x80\x9d\nAllowing providers to escort prospective customers to a casket display room to wait\nfor a funeral director who could respond to an inquiry, without first showing them a CPL,\nwould be to endorse a simple expedient for evading this core Rule requirement. Thus, we\ncannot accept your argument that funeral providers have no obligation to show consumers a\nCPL until the consumer \xe2\x80\x9cinquire[s] in person\xe2\x80\x9d about caskets or their prices.\nYour request expresses concern about the impact of opinion 15-1 on certain marketing\nvenues for funeral goods and services, including storefront facilities in strip malls, shopping\nmall stores, and mall carts and kiosks. In those venues, providers may choose to show\nselected caskets and vaults, or pictures or models of them, in locations where consumers\ncannot avoid viewing them immediately upon entering the store or approaching the display.\nBecause the casket displays in these venues are often limited by space constraints to a small\nnumber of selected caskets, the rule\xe2\x80\x99s requirement that a CPL be provided to inform\nconsumers about the availability of lower-cost caskets that are not on display assumes\nincreasing importance.\nGiven the unique circumstances of the venues at issue, and in the interest of enhancing\ncompetition and innovation, staff will exercise its enforcement discretion not to take action\nagainst providers of funeral goods and services operating out of strip mall storefronts and\nshopping mall stores, carts, or kiosks, that show caskets or pictures or models of them, if they\ndisplay and make available copies of their CPL clearly and conspicuously at prominent\nlocations in such venues. The CPL display must be located immediately inside each store\nentry, or on all sides of a cart or kiosk display, and must include clear and conspicuous\nsignage inviting consumers to take a readily available copy.6\nPlease be advised that the views expressed in this letter are those of the FTC staff.\nThey have not been reviewed, approved, or adopted by the Commission, and they are not\nbinding upon the Commission. However, they do reflect the opinions of those staff\nmembers charged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are\nnow routinely posted on the FTC website currently located at: Advisory Opinions | Federal\nTrade Commission.\nRespectfully yours,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n6\n\nStaff also will exercise its enforcement discretion not to take action where vaults or grave\nliners, or pictures or models of them, are on display in these facilities, if the same\nrequirements are met for posting and providing copies of the OBCPL.\n\n\x0c'


b'UNITED STATES DEPARTMENT OF EDUCATION\nOFFICE OF THE UNDER SECRETARY\n\nJanuary 14,2016\n\nStephanie Rosenthal\nChief of Staff, Division of Financial Practices\nFederal Trade Commission\nBureau of Consumer Protection\n600 Pennsylvania Avenue, NW\nWashington, DC 20580\nDear Ms. Rosenthal:\nThis letter follows up on your phone discussion on December 2, 20 l 5 with the Department of\nEducation\'s Office of General Counsel regarding the application of the Federal Trade\nConunission (FTC)\'s Holder Rule to claims brought by student and parent bonowers in the\nFederal Family Education Loan (FFEL) program. Borrower defenses to repayment ofFFEL\nloans that rest on claims against the school attended with the proceeds of the loan will almost\nalways be based on the FTC Holder Rule "preservation of defenses" clause, 16 CFR \xc2\xa7 433,\nincluded in the FFEL student and parent loan promissory notes. We seek a determination from\nyour office about the effect of applicable statutes of limitation on claims and defenses that might\nbe raised by a borrower, relying on the Holder Rule clause in the FFEL loan agreement, as a setoff to a demand for repayment on a FFEL loan.\nWe understand that the FTC\'s 1976 Guidelines on the Holder Rule discuss the impact of statutes\nof limitations on claims and defenses raised by a borrower by stating that: "[t] he words "Claims\nand Defenses" which must appear in the Notice are not given any special definition by the\nCommission .. . Appropriate statutes, decisions, and rules in each jurisdiction will control, and the\npertinent rules of law and equity, including rules of evidence, procedure, and statutes of\nlimitations. will continue to applx." FTC, Guidelines on Trade Regulation Rule Concerning\nPreservation ofConsumers\' Claims and Defenses, 41 FR 20022, 20023-20024 (May 14, 1976)\n(emphasis added). The Guidelines state, as an example, "Where a local jurisdiction has a twoyear statute of limitations on contract claims, such claims and defenses would be extinguished\nafter two years." Id. at 20024 (emphasis added).\nOur question arises in the context of claims against a merchant - here, the school - that are timebarred under applicable state law. We ask if it is the Commission\'s view that where a borrower\'s\nclaim against a school would be time-barred under state law, the borrower could assert that timebaiTed claim in an action by a lender seeking repayment of the loan, as a defense that would set\noff the amount of the claim against the unpaid balance on a loan. If the Commission considers a\nborrower to be able to assert the time-barred claim as a defense, we also ask whether the\n400 MARY!.AND AVE. SW, WASHINGTON, DC 20202\n\nwww.ed.gov\n\nThe Depc1rtment of Education\'s mh;sion is to promote student nr:hie1\xe2\x80\xa2ement and prepamtionlor global competitiveness\nby fostering educ,1tiona/ excellence and ensuri11g equal access.\n\n\x0cCommission views the Rule as enabling the borrower to assert the time-barred claim\naffirmatively in an action to recover amounts already paid to the lender.\nThe language of the FTC Guidelines seems to suggest that under the Rule, time-barred claims,\nfor example, for breach of contract, are "extinguished" for all purposes. !d. We understand,\nhowever, that courts commonly allow a patty to use a time-barred claim defensively if that claim\narises from the same transaction as the opponent\'s timely claim, and treat these claims as claims\nfor common law recoupment. The FTC Guidelines do not use the term recoupment but appear to\ncontemplate that concept when referring to what the Guidelines describe as a "set-off:"\n"(t]he Rule does apply to all claims or defenses cormected with the transaction,\nwhether in tort or contract. .. .It is also possible for a consumer to have a claim or\ndefense against a seller because of a separate transaction. The provision required by\nthe Rule would not allow him to assert such a claim or defense against the\nholder. The holder\'s obligations arc limited to those m;sing from the transaction\nwhich he finances. The vast majority of cases, in the staff\'s opinion. will involve a\nlimited right of set-off against the unpaid balance."\n(emphasis added).\nThe key similarity between common law recoupment and the set-off desclibed in the Guidelines\nappears to be that the Holder Rule clause allows the consumer to assert only those claims\nconnected to the same transaction as that financed with the loan. We understand that that the\nterm "setoff" is commonly used to describe a counterclaim that arises out of a transaction\nunrelated to a plaintiffs cause of action against the defendant. Based in these considerations and\nthe explanation ofthe scope of the Rule provided in the Guidelines, we question the meaning of\nthe statement in the Guidelines that time-barred claims are "extinguished." We ask for\nclarification whether.the Commission intends the Rule to enable the consumer to assert either\naffirmatively or as a defense to the loan only those claims that are within the otherwise\napplicable statute of limitations, or to assert time-barred claims as viable defenses, regardless of\nthe applicable statutes of limitations that would bar affirmative recovery on such claims.\nWe appreciate your consideration of our request. In order to assist us in a current rulemaking in\nthis area, we ask that you provide your response as expeditiously as practicable. Please do not\nhesitate to contact us if you have any questions about our request.\n\nSin~vW\ntAppel\nDeputy Under Secretary\nU.S. Department of Education\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFederal Trade Commission\nWASHINGTON, D.C. 20580\n\nCraig Tregillus\nDivision of Marketing Practices\nPhone: (202) 326-2970\nEmail: ctregillus@ftc.gov\n\nJune 29, 2015\nT. Scott Gilligan, Esq.\nGilligan Law Offices\n3734 Eastern Avenue\nCincinnati, Ohio 45226\nDear Mr. Gilligan:\nYou have questioned whether a funeral provider violates the Funeral Rule by placing a\nconsumer in its casket display room to wait to speak with a funeral director without first showing\nthe consumer a casket price list (\xe2\x80\x9cCPL\xe2\x80\x9d).\nAs you note, Section 453.2(b)(2)(i) of the rule requires a \xe2\x80\x9cfuneral provider\xe2\x80\x9d to show\nconsumers a CPL \xe2\x80\x9cupon beginning discussion of, but in any event before showing caskets.\xe2\x80\x9d You\ntake the position that until a funeral director arrives in the casket display room or other\narrangement room that also contains a display to meet with the consumer, there can be no\nviolation of this provision. You posit that prior to the funeral director\xe2\x80\x99s appearance, the\nconsumer cannot inquire about caskets, and there can be no discussion of caskets or their prices\nto trigger the obligation to show the consumer a CPL. We disagree with your interpretation\nbecause it ignores the plain and direct requirement that the CPL be shown \xe2\x80\x9cin any event before\nshowing caskets.\xe2\x80\x9d\nFirst, we note that the rule places the obligation to show the CPL on the \xe2\x80\x9cfuneral\nprovider,\xe2\x80\x9d not on an individual funeral director, and it is the funeral provider that is responsible\nfor training its personnel in rule compliance. Thus, the funeral provider\xe2\x80\x99s obligation to provide\nthe CPL starts before the arrival of the funeral director in the casket display room.\nSecond, as is the case with the Commission\xe2\x80\x99s trade regulation rules and other rules that\nimpose disclosure requirements, the timing of the disclosure is critical.1 In this context, the\nCommission deliberately sought to ensure that cost disclosure would be made \xe2\x80\x9cbefore showing\nthe caskets.\xe2\x80\x9d Significantly, the required price disclosure does not apply only to those caskets the\nprovider chooses to display. It also requires the provider to list the cost of other caskets it\noffers.2 This enables consumers to identify the least expensive options as they consider the\n1\n\nFor example, the 1984 Used Car Rule requires dealers to display a \xe2\x80\x9cBuyers Guide\xe2\x80\x9d on each vehicle\xe2\x80\x99s window\nstating, inter alia, whether it comes with or without a warranty and the duration of any warranty offered. 16 C.F.R.\n\xc2\xa7455.2.\n2\nThe funeral provider \xe2\x80\x9cneed list only those caskets that it usually offers for sale that do not require special\nordering. \xe2\x80\x98Special ordering\xe2\x80\x99 means purchasing a casket or container that is not in stock and not part of [the\n\n\x0cfavorable qualities of displayed models.3 The absence of a funeral director from the room is not\nrelevant to whether the consumer can review her purchase options.\nAccordingly, it is staff\xe2\x80\x99s opinion that a funeral provider violates the rule when placing a\nconsumer in its casket display or other arrangement room containing such items to wait for a\nfuneral director without first showing the consumer a CPL.\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\nhave not been reviewed, approved, or adopted by the Commission, and they are not binding upon\nthe Commission. However, they do reflect the opinions of those staff members charged with\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are now routinely posted on the\nFTC website currently located at https://www.ftc.gov/tips-advice/business-center/legalresources?type=advisory_opinion&field_industry_tid=315.\nRespectfully yours,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\nprovider\xe2\x80\x99s] regular offerings to [its] customers.\xe2\x80\x9d Complying With the Funeral Rule, 12 (FTC April 2015), available\nat https://www ftc.gov/tips-advice/business-center/guidance/complying-funeral-rule.\n3\nIn rejecting a proposal that funeral providers should be required to display their least expensive caskets, the\nCommission stated that the rule\xe2\x80\x99s advance price list disclosures \xe2\x80\x9cwould let consumers know what merchandise and\nservices the funeral providers sell, including the three least expensive caskets.\xe2\x80\x9d Statement of Basis and Purpose, 47\nFed. Reg. 42260, 42290 & n.317 (Sept. 24, 1982).\n\n\x0c'


b"UNITED STATES OF AMERICA\nFederal Trade Commission\nWASHINGTON, D.C. 20580\n\n \n\nMonica E. Vaca\n\nActing Associate Director\nDivision of Marketing Practices\n\nNovember 5, 2014\n\nMs. Karen J. Meyers, Assistant Attorney General\nDirector, Consumer Protection Division\n\nOffice of New Mexico Attorney General\n\n111 Lomas Boulevard \xe2\x80\x94 Suite 300\n\nAlbuquerque, NM 87102\n\nDear Ms. Meyers:\n\nYou have requested our opinion on whether the Telemarketing Sales Rule (\xe2\x80\x9cTSR\xe2\x80\x9d)\napplies to a business model in which a seller mails promotional materials that it labels \xe2\x80\x9ccatalogs\xe2\x80\x9d\nto solicit inbound calls from consumers to purchase the seller\xe2\x80\x99s debt relief services, The seller\xe2\x80\x99s\nmaterials, such as the example enclosed with your request, offer several debt relief plans, each of\nwhich asks consumers to \xe2\x80\x9cCall for Custom Price.\xe2\x80\x9d\n\nYour request describes a scenario in which a consumer who calls the number listed in the\ncatalog (and also in some cases in a cover letter or additional promotional materials!) cannot\npurchase a debt relief plan during that call, even if the consumer agrees to do so. This is because\nthe seller provides the consumer with an enrollment packet after the call by postal mail, email,\nfax or website. The packet includes a welcome kit and enroliment agreement that the consumer\nmust sign and return to complete a purchase. The packet also provides the first disclosures to the\nconsumer of all the terms and conditions for using the seller\xe2\x80\x99s debt relief services.\n\nAs you know, the definition of \xe2\x80\x9ctelemarketing\xe2\x80\x9d in the Telemarketing and Consumer\nFraud and Abuse Prevention Act of 1994 (\xe2\x80\x9cTelemarketing Act\xe2\x80\x9d or \xe2\x80\x9cAct\xe2\x80\x9d),? which directed the\nCommission to issue the TSR,\xe2\x80\x99 expressly excludes catalog sales.4 The Act defines telemarketing\nas \xe2\x80\x9ca plan, program, or campaign which is conducted to induce purchases of goods or services,\nor a charitable contribution, donation, or gift of money or any other thing of value, by use of one\n\n! You note that a recent court decision, New Mexico ex rel, King v. Credit Arbitrators, LLC, Civ.\nNo. 12-16 (D. N.M. Mar. 26, 2014). held that the TSR\xe2\x80\x99s debt relief requirements apply to a seller\nthat mails a debt relief catalog together with a cover letter or other promotional materials that\nsolicit inbound calls to a specified number. The same reasoning and holding apply with equal\nforce, in staff's view, to any mailing of promotional materials apart from a catalog that solicit\ninbound calls from consumers to the seller's telephone number.\n\n> 15 U.S.C. \xc2\xa7\xc2\xa7 6101-1606,\n\n> 15 USC. \xc2\xa7 6102(a)(1).\n\n* 15 US.C. \xc2\xa7 6106(4).\n\x0cMs. Karen Meyers\nPage 2 of 3\n\nor more telephones and which involves more than one interstate telephone call.\xe2\x80\x9d* The next\nsentence of the definition then limits the Commission\xe2\x80\x99s authority to apply the TSR to catalog\nsales as follows:\n\nThe term does not include the solicitation of sales through the mailing of a\ncatalog which: contains a written description or illustration of the goods or\nservices offered for sale; includes the business address of the seller; includes\nmultiple pages of written materials or illustrations; and has been issued not less\nfrequently than once a year, where the person making the solicitation does not\nsolicit customers by telephone but only receives calls initiated by customers in\nresponse to the catalog and during those calls takes orders only without\nSurther solicitation 6\n\nThe question you pose is whether this statutory exclusion prevents application of the TSR\xe2\x80\x99s debt\nrelief requirements to the business model described above.\xe2\x80\x99 In staff's opinion, it does not and the\nTSR would apply.\n\nThe statutory language unquestionably excludes legitimate mail order catalog sellers\nfrom the requirements of the TSR when a consumer can complete his or her order during the\ninitial call. For instance, this would occur when the seller takes the order, verifies payment, and\ncompletes the sale before the consumer hangs up\xc2\xa7 In contrast, consumers cannot complete an\norder for debt relief services during a call responding to a catalog offer under the business model\nyou describe. The text of the exclusion specifies that it is available to a catalog seller when it\n\xe2\x80\x9ctakes orders only without further solicitation\xe2\x80\x9d during a consumer\xe2\x80\x99s call. By contrast, if the sales\ntransaction cannot be completed during the call, the catalog sales exclusion would be\nunavailable.\n\n* 15 U.S.C. 6106(4).\n\n\xc2\xa9 Id. (emphasis added). The definition of telemarketing in the TSR tracks the statutory\nexclusion. 16 C.F.R. \xc2\xa7310.2(dd).\n\n7 Although the TSR generally exempts inbound calls initiated by a consumer in response to a\ndirect mail solicitation, this exemption does not extend to calls in response to offers of \xe2\x80\x9cdebt\nrelief services,\xe2\x80\x9d 16 C.F.R. \xc2\xa7 310.6(b)(6). The exemption also requires that a qualifying direct\nmail solicitation disclose. \xe2\x80\x98\xe2\x80\x98all material information listed.in \xc2\xa7 310.3(a)(1),\xe2\x80\x9d.rather.than deferring\nthose disclosures to an enrollment packet sent to a consumer only after the call.\n\n\xc2\xae While we have been unable to find any discussion of the exclusion in the legislative history of\nthe Act, there are multiple statements that Congress intended the Act to protect not only\nconsumers but also legitimate businesses engaged in telemarketing. E.g., S. REP. NO. 103-80, at\n2 (1993) (\xe2\x80\x9cThe effects of telemarketing fraud are felt throughout the Nation, and both consumers\nand legitimate telemarketers are impacted.\xe2\x80\x9d); H.R. REP. NO. 103-20, at 2 (1993) (\xe2\x80\x9cThe\nlegislation strikes an equitable balance between the interest of stopping deceptive (including\nfraudulent) and abusive telemarketing activities and not unduly burdening legitimate\nbusinesses.\xe2\x80\x9d\xe2\x80\x9d); 140 CONG, REC. H6158-06 (1994) (statement of Rep. Swift) (\xe2\x80\x9cThe telemarketing\nbill does not impose further regulations on the legitimate telemarketing industry.\xe2\x80\x9d).\n\x0cMs. Karen Meyers\nPage 3 of 3\n\nFurthermore, because the communications between the consumer and seller go beyond\nmere order taking, and must continue after the initial call to complete an order, the business\nmodel you describe involves \xe2\x80\x9cfurther solicitation\xe2\x80\x9d and is therefore outside the scope of the\nexemption. Indeed, the fact that the catalog you describe provides no prices for its debt relief\nofferings makes it clear that the seller must engage in \xe2\x80\x9cfurther solicitation\xe2\x80\x9d during a consumer\xe2\x80\x99s\ninitial call. Without being able to determine the price of the seller\xe2\x80\x99s debt relief plans from its\ncatalog, consumers cannot be prepared to make a purchase when they call, much less decide\nwhich of the seller\xe2\x80\x99s plans to buy, in the absence of \xe2\x80\x9cfurther solicitation.\xe2\x80\x9d\n\nFor the foregoing reasons, it is staff's opinion that neither the statutory exclusion in the\nTelemarketing Act, nor the parallel definition of \xe2\x80\x9ctelemarketing\xe2\x80\x9d in the TSR, shield a seller using\nthe debt relief business model you describe from the requirement to comply with the debt relief\nprovisions of the TSR. Any failure to comply with those provisions, including the prohibition in\nsection 310.4(a)(5) against collecting any fees for debt relief services until the promised debt\nrelief services have been provided? may subject the seller to an enforcement action seeking civil\npenalties of up to $16,000 for each violation.\xe2\x80\x9d\n\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\nhave not been reviewed. approved, or adopted by the Commission, and are not binding on the\nCommission. However, they reflect the opinion of the staff charged with enforcement of the\nTSR.\n\nRespectfully yours,\n\nWye, 2\nMonica E. Vaca\nActing Associate Director for Marketing Practices\n\n2 16 CFR. \xc2\xa7 310.4(a)(5).\n\n'\xc2\xae Civil penalties for trade regulation rule enforcement actions are authorized by 15 U.S.C.\n\n\xc2\xa7 5\xc2\xa2m)(1)(A). As required by the Federal Civil Penalties Inflation Adjustment Act of 1990\n(FCPIAA), 28 U.S.C. 2461 note, as amended by the Debt Collection Improvement Act of 1996,\nPublic Law 104-134, \xc2\xa7 31001(s)(1), 110 Stat. 1321-373, the penalty for violations of 15 U.S.C.\n\xc2\xa7 5(m)(1)(A) was most recently adjusted for inflation in 2009. 74 Fed. Reg. 857 (lan. 9, 2009).\n\x0c"


b'UNITED STATES OF AMERICA_\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nBureau of Consumer Protection\nDivision of Enforcement\nHampton Newsome\nDirect Dial: (202) 326-2889\nFax: (202) 326-2558\nEmail: hnewsome@ftc.gov\n\nApril28, 2014\n\nMatt Sigler\nTechnical Director\nPlumbing Manufacturers International\n1921 Rohlwing Road- Unit G\nRolling Meadows, IL 60008\nDear Mr. Sigler:\nDepartment of Energy (DOE) staff has informed Plumbing Manufacturers International\'s\n(PMI\'s) concerns about water use representations for dual-flush water closets. Specifically, you\nhave raised questions about whether manufacturers may make dual-flush volume disclosures not\nspecifically generated by DOE\'s test procedure. As discussed below, in the FTC staffs view,\nmanufacturers may provide such information as long as the representations are not deceptive and\notherwise comply with the provisions of the Energy Policy and Conservation Act (EPCA).\nBackground\nDual-flush water closets have two water use settings: a "full-flush mode" and a "reduced\nflush mode." Like other plumbing products, these products must meet DOE\'s water\nconservations standards (10 CFR 430.32(q)) (e.g., 1.6 gallons::-per-flush in full-flush mode). To\ndemonstrate compliance, manufacturers must test their models pursuant to DOE\'s test\nprocedures (1 0 CFR Part 430, subpart B, appendix T). For dual-flush water closets, these\nprocedures provide a method for manufacturers to measure both full-flush and reduced-flush\nvolumes "in accordance with the test requirements specified in section 7 .4, Water Consumption\nTest, of ASME A112.19.2-2008."\nIn the marketplace, manufacturers and other sellers routinely describe the performance of\ntheir dual-flush models using a weighted average (i.e., one full and two reduced flushes). The\nDOE test procedure makes no mention of this weighted average disclosure. However, various\nstate and federal agencies (e.g., the Environmental Protection Agency\'s Water Sense Program\nand the State of California) use this formula as the primary tool for demonstrating compliance\nwith their water efficiency programs. In addition, voluntary consensus standards adopted by the\nplumbingindustry (see section 7.4 of ASME A112.19.2) use the same formula. For several\nyears, manufacturers have disclosed the weighted average on specification sheets, packaging,\ninstallation guides, use and care manuals, packaging, tip sheets, websites, and other media for\n\n\x0cPage 2\ndual-flush water closets.\n\nRepresentations under EPCA\nUnder EPCA (42 U.S.C. 6293(c)), manufacturers cannot make water use claims for a\nproduct covered by DOE\'s standards and test procedures "unless such pr~duct has been tested in\naccordance with such test procedure and such representation fairly discloses the results of such\ntesting." A violation of this restriction constitutes an "unfair or deceptive act or practice" under\nthe Federal Trade Commission Act ("FTC Act"). 1 In essence, this requirement promotes\nuniformity in water use claims and helps consumers make meaningful comparisons of competing\nplumbing products. 2 However, EPCA does not prohibit marketers from disseminating truthful,\nsubstantiated water information derived from sources other than the DOE tests if that\ninformation is not otherwise unfair or deceptive.\n\nRepresentations for Dual-Flush Water Closets\nAlthough not established by the DOE test, truthful weighted dual-flush ratings can\nprovide useful information for consumers and others. Indeed, as noted above, certain state and\nfederal agencies use this information for their programs. Without evidence that weighted dualflush ratings are categorically unfair or deceptive, FTC staff believes that there is no basis for a\nblanket prohibition against disclosing these averages.\nAlthough the use of weighted dual-flush ratings generally is permissible, manufacturers\nand other marketers should exercise care in how they explain and disseminate these ratings to\navoid deception. If marketers fail to adequately explain these ratings, they risk blurring the\ndistinction between the dual-flush average rating (e.g., "average 1.28 gpf\') and the maximum\nflush volume generated by the DOE requirements (e.g., "1.6 gpf\'). In addition, in the absence of\nadequate explanation of the weighted dual-flush rating, consumers may not understand that the\naverage is weighted toward lower flush volume. Accordingly, FTC staff recommends that, if\nmarketers choose to disclose weighted average flush volumes, they should consider providing\nclear and conspicuous disclosures to avoid possible deception. 3 However, without information\nabout how consumers interpret ave~age flush volume claims, FTC staff cannot provide any more\nspecific guidance on the content of such disclosures.\n\n*\n1\n\n*\n\n*\n\n*\n\n*\n\nSee 42 U.S.C. \xe0\xb8\xa2\xe0\xb8\x87 6293(c) (EPCA) and 15 U.S.C. \xe0\xb8\xa2\xe0\xb8\x87 45(a)(l) (Section 5 ofthe FTC Act). Section\n5 of the FTC Act generally prohibits false and misleading statements made in advertising and\nother representations.\n2\nThe scope of representations covered by EPCA Section 6293(c) is broad. In the staffs view,\nthe provision covers not only representations made in conventional advertising but also\ninformation provided in directories, reports, catalogs, and other publications not necessarily\nintended for end-use consumers. Because EPCA covers any water-related representations, the\ncoverage of this section is not dependent on whether representations are made directly to\n\'\'consumers.\'\'\n3\nFor ratings marked on the products themselves, manufacturers should also consider whether\nenough space exists to adequately explain average flush volume disclosures.\n\n\x0cPage 3\n\nThe views expressed in this letter are those of FTC staff assigned to enforce the\nCommission\'s Energy Labeling Rule (16 C.F.R. Part 305). In accordance with Section 1.3(c) of\nthe Commission\'s Rules of Practice and Procedure, 16 CFR \xe0\xb8\xa2\xe0\xb8\x87 1.3(c), this is a staff opinion only\nand has not been reviewed or approved by the Commission or by any individual Commissioner.\nThe advice provided in this letter is not binding upon the Commission and is given without\nprejudice to the right of the Commission later to rescind the advice and, when appropriate, to\ncommence an enforcement proceeding. In conformance with Section 1.4 of the Commission\'s\nRules of Practice, 16 CFR \xe0\xb8\xa2\xe0\xb8\x87 1.4, this letter is being placed on the public record. If you have any\nfurther questions, please contact me at (202) 326-2889.\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nHealth Care Division\nBureau of Competition\n\nMarch 7, 2014\nJames L. S. Cobb\nWyrick Robbins Yates & Ponton LLP\n4101 Lake Boone Trail, Suite 300\nRaleigh, North Carolina 27607\n\nRe: Quest NPIA Advisory Opinion\nDear Mr. Cobb:\nThis letter responds to your request for an advisory opinion on whether a group purchasing\norganization based prescription-drug program that Quest Analytics Group intends to operate for\nthe benefit of a group of non-profit schools, colleges, and universities would fall within the NonProfit Institutions Act ("NPIA"). 1 As we understand it from your letter and from our conversations with you, schools, colleges, and universities have asked Quest to design the program to\nhelp them address the increasing cost of specialty drugs? Based on the information that you\nprovided, we conclude that, subject to certain caveats set forth below, the NPIA exemption\napplies to the purchase of specialty drugs through Quest\'s proposed program by the educational\ninstitutions identified below.\n\nDescription of the Proposed Program\nWe understand from your letter that Quest develops and distributes audit, sourcing, group\npurchasing organization, and technology lease services. It also designs and implements audit and\npurchasing tools for hospitals, insurance companies, long-term care facilities, and self-funded\nemployer groups 3\nThe Independent Colleges and Benefits Association ("the Association"), which is a health-care\ncooperative serving Florida non-profit educational institutions,4 has obtained audit and strategy\n1\n\n15 U.S.C. \xc2\xa7 13c. The NPIA exempts from the Robinson-Patman Act "purchases of ... supplies for their own use\nby schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for\nprofit."\n2\n\nSee Letter from James L.S. Cobb, Wyrick Robbins Yates & Ponton LLP, to DonaldS. Clark, Federal Trade\nCommission, I, 3 (Jan. 10, 2014) (hereinafter "Quest Request Letter").\n3\n\nSee Quest Request Letter, at 2.\n\n4\n\nSee http://www.icuba.org (viewed Jan. 16, 2014): Quest Request Letter, at 3.\n\n\x0cQuest NPIA Advisory Opinion\nMarch 7, 2014\nPage 2\nconsulting services from Quest since 2010. 5 As you have explained, the Association approached\nQuest in 2012 to obtain assistance in controlling specialty-drug costs for its member institutions 6\nIn response to the Association\'s request, Quest proposes to establish and operate a prescriptiondrug benefit program 7 to enable certain non-profit educational institutions (collectively the\n"educational institutions") to benefit from the NPIA exemption. Those educational institutions\nare Arthur I. Meyer Jewish Academy, Barry University, Beacon College, The Bolles School,\nCentral Florida Area Health Education Center, Clearwater Christian College, Corbett Preparatory\nSchool of IDS, Edward Waters College, Everglades Area Health Education Center, Florida\nInstitute of Technology, Florida Memorial University, Good Shepard Episcopal School, Nova\nSoutheastern University, Palm Beach Atlantic University, The Poynter Institute, Rollins College,\nSaint Edward\'s School, Saint Leo University, Saint Mark\'s Episcopal Day School, Saint Paul\'s\nSchool, San Jose Episcopal Day School, Tampa Preparatory School and The University of\nTampa. 8 Only the educational institutions\' employees, retirees, and their dependents (the\n"members") will be eligible to participate in the program. All of the educational institutions\ncurrently provide health programs with prescription-drug benefits to their members, but these\nprograms do not include NPIA-discounted drugs 9 The program\'s goal is to allow the educational\ninstitutions to access NPIA pricing when that pricing is the least expensive option. 10\nUnder the proposed program, Quest will (I) negotiate discounts with specialty-drug\nmanufacturers for the educational institutions\' specialty-drug needs, (2) audit claims to\ndetermine whether any are eligible for NPIA-discount pricing and to monitor compliance with\npharmacy benefits manager ("PBM") contracts, (3) request rebates from specialty\npharmaceutical manufacturers when the NPIA price is the lowest available price, and (4) provide\nreports to the educational institutions on claims volumes, rebates received, and other data points.\nQuest will not be purchasing any specialty drugs itself. 11\nTo implement the program, Quest will engage the services of pharmacies and PBMs. 12 The\nprogram\'s initial pharmacy will be NSU Clinic Pharmacy, a non-profit pharmacy affiliated with\n5\n\nSee Quest Request Letter, at 3, 6.\n\n6\n\nSee Quest Request Letter, at 3.\n\n7\n\nWe understand from your letter and from our discussions with you that the program is modeled on, though not\nidentical to, the program described in our 2010 advisory opinion to the University of Michigan.\n\n8\n\nSee Quest Request Letter, at 2.\n\n9\n\nSee Quest Request Letter, at 2.\n\n10\n\nSee Quest Request Letter, at 3.\n\n11\n\nSee Quest Request Letter, at 6.\n\n12\n\nYau state that Quest may add additional educational institutions. pharmacies, and PBMs to the program at a later\ntime. As explained further below, this opinion only applies to the program as currently structured and described in\nyour January 10, 2014 letter.\n\n\x0cQuest NPIA Advisory Opinion\nMarch 7, 2014\nPage 3\nNova Southeastern University. Catamaran PBM of Illinois ("Catamaran") will be the program\'s\ninitial PBM. 13 The program will work as follows:\n\xe2\x80\xa2\n\nThe pharmacy will fill members\' prescriptions by mail or retail distribution, collect copays, execute best practice customer service, manage the cost of the claims for the\neducational institution, and submit claims to the PBM for processing and payment.\n\n\xe2\x80\xa2\n\nUpon receipt of the claims, the PBM will reimburse the pharmacy for the prescriptions\ndispensed to program members at the pharmacy\'s billed costs plus a dispensing fee. The\ndispensing fee will be a flat fee not dependent on the type of claim (NPIA or not)\nprocessed.\n\n\xe2\x80\xa2\n\nThe applicable educational institution then will pay the PBM, per its contract, for the cost\nof the drugs plus the dispensing fee paid to the pharmacy. Any administrative fees\ncharged by the PBM will also be flat fees not dependent on the type of claim (NPIA or\nnot) processed.\n\n\xe2\x80\xa2\n\nThe PBM periodically will provide the educational institutions\' claims data to Quest, and\nQuest, using its proprietary algorithms, will compare prices already paid by the\neducational institutions with the NPIA-discounted rate available through the group\npurchasing organization from manufacturers with which Quest has negotiated discounts.\n\n\xe2\x80\xa2\n\nIf Quest determines the NPIA-discounted rate is lower than the rate already paid, Quest\nwill submit a claim to the manufacturer to rebate the difference in the rates directly to the\neducational institution or place it in a non-interest bearing escrow account administered\nby a bank for distribution to the educational institution.\n\nThe program\'s goal, in other words, is to allow the educational institutions to obtain the NPIA\nprice, where that price is the lowest price available, thereby reducing the cost educational\ninstitutions incur for health-benefits programs. 14\n\nAnalysis\nThe NPIA exemption is limited to certain eligible non-profit entities\' purchases of supplies for\ntheir own use. Thus, our analysis of whether Quest\'s proposed program is eligible for the NPIA\nexemption requires us to determine (I) whether those educational institutions for whose benefit\nthe proposed program will operate are eligible entities under the statute, and (2) whether the\nNPIA-discounted pharmaceuticals are properly considered "supplies" for the educational\n\n13\n\nSee Quest Request Letter, at 3.\n\n14\n\nSee Quest Request Letter, at 3-4.\n\n\x0cQuest NPIA Advisory Opinion\nMarch 7, 2014\nPage 4\ninstitutions\' "own use." 15 Additionally, because the proposed program also involves various forprofit entities, including Quest and Catamaran, we address whether these entities affect eligibility\nfor the exemption through their involvement in the proposed program.\n1. The Educational Institutions\' Eligibility for the NPIA Exemption\n\nThe NPIA exempts from the Robinson-Patman Act "purchases of ... supplies for their own use\nby schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions\nnot operated for profit." 16 You represent in your letter that the educational institutions are all\nnon-profit schools, colleges, or universities. 17 Thus, as the types of eligible entities specifically\nlisted in the language of the statute, the educational institutions appear to be eligible for the\nNPIA exemption to the Robinson-Patman Act. 18\n2. The "Supplies" and "Own Use" Requirements\n\nWe next examine whether the proposed program involves the purchase of "supplies" for the\neducational institutions\' "own use" as required by the statute. Courts have construed the term\n"supplies," as used in the NPIA, broadly to include "anything" required to meet the eligible\ninstitution\'s needs. 19 The term "own use" means use by an eligible entity "that is part of and\npromotes the [entity\'s] intended institutional operation."20\nAs you explain, the educational institutions currently provide health-insurance plans with a\nprescription-drug benefit to their employees, retirees, and their dependents. Continuing to offer\nthis program as an employee benefit contributes to their ability to attract and maintain a capable\nand healthy workforce. We reached similar conclusions in our 20 I 0 University of Michigan and\n15\n\n15 U.S.C. \xc2\xa7 l3c.\n\n16\n\n15 U.S.C. \xc2\xa7 l3c.\n\n17\n\nOur understanding is that they are either specifically incorporated as non-profits or to the extent they are not\nexplicitly incorporated as non-profits (some because their organization predates such statutory requirements), they\nhave all the indicia of non-profit entities. For instance, they operate for the advancement of education, do not operate\nfor the profit of any individual, and maintain 50 l ( c)(3) classifications under the federal tax code. See Quest Request\nLetter, at 4 (fu. 8). Additionally, we understand that the two Health Education Centers are non-profit 50l(c)(3)\norganizations affiliated with Nova Southeastern University and established to extend health education and resources\nto Florida\'s underserved communities. See Quest Request Letter, at 2 (fn. 4); http://tlahec.org (visited Jan. 17,\n2014). It seems to us that these entities, based on their affiliations with local universities and their educational\nmissions, could qualify as schools under the NPlA and that, in any event, they likely qualify as non-profit\n"charitable" institutions.\n"15 U.S.C. \xc2\xa7 13c.\n19\n\nSee Logan Lanes v. Brunswick Corp., 378 F.2d 212,216 (91" Cir. 1967), cert. denied, 389 U.S. 893 (1967); see\nalso Abbott Lab. v. Portland Retail Druggists Ass \'n, 425 U.S. I, 5 (1976) (noting that the district court had ruled\nthat purchases of pharmaceuticals by the hospitals were purchases of"supplies" for the hospitals\' "own use.").\n20\n\n425 U.S. l, at 16 (1976).\n\n\x0cQuest NPIA Advisory Opinion\nMarch 7, 2014\nPage 5\n2006 Alpena Public Schools advisory opinions 21 In those opinions, we noted that employees\nenable schools, colleges, and universities to carry out their educational missions. The availability\nof health benefits, including a prescription-drug benefit, has become a critical consideration in an\nindividual\'s employment decision-making process, and as such, the continued availability of\nthese plans is essential to the educational institutions\' ability to attract and retain the employees\nnecessary to carry out their institutional purposes. Providing a prescription-drug benefit to\nemployees also promotes an organization\'s efficient operation by making medicine more\naffordable and accessible to its employees, thereby improving their health and reducing\nemployee absences.\nWe believe that this analysis is consistent with the Supreme Court\'s decision in Abbott Laboratories v. Portland Retail Druggists Association. 22 In Abbott Laboratories, retail pharmacies\nsued pharmaceutical manufacturers under the Robinson-Patman Act, challenging the discounted\nsale of pharmaceuticals to non-profit hospitals. The hospitals resold those discounted phannaceuticals to various types of patients. The Court held that pharmaceuticals purchased for resale to\nhospital employees and their dependents were covered by the NPIA, because the employees were\nessential for the hospital to function. In the Court\'s view, providing them with pharmaceuticals\nenhanced the hospital\'s operation. 23 Thus, consistent with Abbott Laboratories and with prior\nFTC staff advisory opinions, we find that the educational institutions\' provision of discounted\npharmaceuticals to their employees and their dependents as part of their programs of providing\nemployee benefits would be covered by the NPIA exemption. It contributes to their ability to\nmaintain the workforce necessary to further their educational missions.\nFurther, we conclude that including retirees in the proposed program does not affect eligibility\nfor the NPIA exemption. As we explained in our University of Michigan advisory opinion,\nretiree benefits are an integral part of the compensation package offered to current and\nprospective employees and may help the educational institutions attract and retain qualified\nemployees. In this regard, providing a prescription pharmaceutical benefit to retirees furthers the\neducational institutions\' missions just as in the case of current employees. Thus, it is our view\nthat application of the NPIA discount to retirees\' prescription-drug claims as part of an\nestablished retirement benefit plan is within the educational institutions\' "own use" in the same\nway as it is for current employees\' claims. 24\nFinally, we do not think the fact that the educational institutions will access the NPIA discount\nthrough a rebate program, rather than through the actual transfer of NPIA -discounted\npharmaceuticals, affects the analysis. In fact, a rebate program seems to mitigate the risk that\n21\n\nSee University of Michigan (Apr. 9, 2010) (FTC staff opinion letter); Alpena Public Schools (May 22, 2006)\n(FTC staff opinion letter). See also Valley Baptist Medical Center (Mar. 31, 2003) (FTC staff opinion letter).\n22\n\n415 U.S. 1 (1976).\n\n23\n\n!d. at 16.\n\n24\n\nSee University of Michigan (Apr. 9, 2010) (FTC staff opinion letter).\n\n\x0cQuest NPIA Advisory Opinion\nMarch 7, 2014\nPage 6\nNPIA-discounted pharmaceuticals could be inappropriately diverted for ineligible uses, because\nthe rebate system will ensure that the NPIA discount is only applied after Quest determines a\nclaim is NPIA eligible.\n\n3. The Involvement of For-Profit Entities\nThe proposed program will involve a number of for-profit entities, initially including Quest and\nCatamaran and potentially expanding to include other for-profit PBMs and pharmacies. Although\nthe involvement offor-profit entities does not automatically disqualify the program for NPIA\neligibility, it does require caution to ensure that the for-profit entities--which are ineligible for\nthe NPIA exemption--do not benefit from it in any way. 25\nFirst, we address Quest\'s role to develop and implement the proposed program. As we\nunderstand it, Quest developed the program at the request of the NPIA-eligible educational\ninstitutions. Those institutions were concerned about the rising cost of continuing to provide a\nhealth-benefit plan that includes specialty-drug coverage. They asked Quest, which already\nprovided them with certain services through the Independent Colleges and Benefits Association,\nfor assistance, and Quest proposed this program. As explained above, Quest\'s role in the\nprogram is limited to negotiation of discounts, claims auditing, rebate processing, and data\nreporting. The educational institutions will pay Quest for these services on a flat-fee-per-claim\nbasis whether or not Quest determines the claim is NPIA eligible. 26 Quest will not charge any\nmembership fees for participation in the proposed program nor will it charge the educational\ninstitutions a percent-of-dollars-spent on group purchasing organization services. Thus, any\nfinancial benefit Quest receives under the program will be in exchange for its administrative\nservices only and will not result from the application of the NPIA discount. This is a critical\nfeature of the program because Quest, as a for-profit entity, is ineligible to benefit in any way\nfrom the NPIA exemption. The exemption applies only to the eligible educational institutions.\nFurthermore, we understand that Quest may seek to add additional educational institutions to the\nprogram or otherwise expand it at some time in the future. This advisory opinion only addresses\nQuest\'s proposal in its current form. Any changes or additions to the proposed program would\nalso need to comply with the NPIA.\nNext, we examine the role of Catamaran, the for-profit PBM, and the possible eventual inclusion\nof for-profit pharmacies in the proposed program. Again, we understand that the PBMs and\npharmacies involved in the program will provide only administrative services to the educational\ninstitutions. Fees earned by Catamaran and the pharmacies will cover only their costs and a flat\nfee that does not depend on the NPIA eligibility of the claim. Thus, as we understand the\nprogram, neither Catamaran nor any for-profit pharmacy that may participate in the program\nstands to benefit from the NPIA exemption. If, however, over the course of the program\'s\n25\n\nWe also note that Independent Colleges and Benefits Association, though not a for-profit entity, does not appear\nto quality as one of the types of entities eligible for the exemption.\n\n26\n\nSee Quest Request Letter, at 6.\n\n\x0cQuest NPIA Advisory Opinion\nMarch 7, 2014\nPage 7\noperation, it turns out that any ineligible for-profit entity (e.g., Quest, Catamaran, or a pharmacy)\nis benefitting financially from the NPIA exemption, the reasoning contained in this opinion\nwould not apply.\nFinally, we understand that the structure of the proposed program, whereby Quest will confirm\neach claim\'s eligibility for the NPIA discount before arranging the rebate, should effectively\neliminate the risk of the exemption being applied to ineligible claims such as walk-in customers.\nIn any event, Quest will maintain an auditable record through which it will confirm on an\nongoing basis that the program is operating within the boundaries of the NPIA. 27\n\nConclusion\nAs discussed above, and with the noted caveats, it is our opinion that the non-profit educational\ninstitutions\' purchases of specialty drugs through Quest\'s proposed program as described in your\nJanuary 10, 2014 letter would fall within the NPIA exemption to the Robinson-Patman Act. This\nletter sets out the views of the staff of the Bureau of Competition, as authorized by the Federal\nTrade Commission\'s Rules of Practice, and based on the facts as presented by the requesting\nentity. Under Rule\xc2\xa7 !.3(c), 16 C.F.R. \xc2\xa7 l.3(c), the Commission is not bound by this staff\nopinion and reserves the right to rescind it at a later time. In addition, this office retains the right\nto reconsider the questions involved and, with notice to the requesting party, to rescind or revoke\nthe opinion if implementation of the proposed program results in substantial anti competitive\neffects, if the program is used for improper purposes, if facts change significantly, or if it would\nbe in the public interest to do so.\nSincerely,\n\nMarkus H. Meier\nAssistant Director\n\n27\n\nSee Quest Request Letter, at 7.\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFederal Trade Commission\nWashington, D.C. 20580\n\nMichael J. Bloom\nAssistant Director\nBureau of Competition\nOffice of Policy & Coordination\nPhone: (202) 326-2475\nEmail: mjbloom@ftc.gov\n\nSeptember 4, 2013\nEzra C. Levine, Esq.\nMorrison & Foerster LLP\n2000 Pennsylvania Avenue, NW\nWashington, D.C. 20006\nDear Mr. Levine,\nThis letter responds to your request on behalf of The Money Services Round\nTable ("TMSRT") for an advisory opinion concerning TMSRT\'s proposal to collect and\ndisseminate certain information regarding terminated United States money transmitter\nagents. TMSRT wishes to know whether Federal Trade Commission ("FTC" or\n"Commission") staff is likely to recommend an enforcement action, challenging the\ninformation exchange as an anticompetitive restraint of trade.\nBased on the information you provided, 1 FTC staff has no present intention of\nrecommending law enforcement action. As discussed below, the stated purpose of the\nproposed information exchange is to improve money transmitters\' ability to evaluate\nprospective United States agents and to comply with federal and state money laundering\nand other laws, and there appears to be little or no potential for competitive harm\nassociated with the information exchange. Our conclusions, however, are entirely\ndependent on the completeness and accuracy of the information you provided to us, and\non our understanding ofthe pertinent facts, as described below. Should there be\ninformation that we are unaware of that qualifies, modifies or contradicts this\ninformation, or should the proposed information exchange materially change in the\nfuture, we may change our law enforcement recommendations accordingly.\n\n1\n\nOur analysis and conclusions rely on your representations to staff, including those made in\ncorrespondence you provided to us on July 25,2013 (which superseded an earlier June 14,2013 letter), as\nwell as those made during our telephone conversations with you and your colleague, Sean Ruff. We have\nnot conducted an independent investigation or otherwise verified the information that you provided.\n\n\x0cEzra C. Levine, Esq.\nSeptember 4, 2013\nPage 2 of6\nStatement of the Pertinent Facts\nTMSRT is a trade association comprised of six licensed national money\ntransmitters (hereinafter "TMSRT Participants"). 2 Money transmitters are non-bank\nentities that transfer funds from one individual or institution to another by wire, check,\ncomputer network, or other means. TMSRT Participants are the largest money\ntransmitters in the United States by volume and revenue, and offer money transfer\nservices to consumers through a network of agents located in cities across the United\nStates and abroad.\nUnder the money transmitter agent model, money transmitters enter into agent\nservice agreements with commercial entities, such as neighborhood grocery stores,\nconvenience stores, liquor stores, and check casher services, which seek to add money\ntransmission services to their existing inventory of consumer products and services?\nAgents serve as the point of contact for the money transmitter with the public, and act\npursuant to express contractual authority and the pertinent state\'s money transmitter law. 4\nMoney transmitters pay their agents a commission based on a percentage of their revenue\n-that is, the transaction fees charged to consumers to transfer funds. The commission\nmay be split between the sending agent (i.e., the agent that initiated the transaction) and\nthe receiving agent (the agent that paid the transaction). Agents frequently migrate among\nmoney transmitters to obtain higher commissions and other benefits. 5\nA typical money transmission requires four parties: the sender, the money\ntransmitter\'s sending agent, the money transmitter\'s receiving agent, and the recipient. 6 A\nsender walks in to one of the money transmitter\'s agent locations and provides the agent\nthe funds and instructions for delivery to the recipient, as well as the fee established by\nthe money transmitter for the transmission service. 7 The sending agent takes the funds\nand instructions, and enters the transaction information into a computer terminal owned\nby the money transmitter. 8 Upon receiving the instructions, the money transmitter\ncontacts the appropriate receiving agent for payment to the recipient.\nRecipients may receive payment within several minutes or several days,\ndepending on the sender\'s instructions, the money transmitter\'s policies, and the\n\n2\n\nTMSRT members include Western Union Financial Services, Inc.; MoneyGram Payment Systems, Inc.;\nAmerican Express Travel Related Services Co., Inc.; RIA Financial Services; Sigue Corporation; and\nIntegrated Payment Systems, Inc. Letter from Ezra C. Levine, Morrison & Foerster LLP, to DonaldS.\nClark, Secretary, Fed. Trade Comm\'n (July 25, 2013) ("July 25 Letter") at 1.\n3\nJuly 25 Letter at 2.\n4\n/d. Nearly every state regulates money transmission services through licensing requirements.\n5 !d.\n6\n!d. at 2-3. All United States money transmitter agents are contractually obligated to send and receive\ntransmissions.\n7\n!d. at 3.\n8\n/d. Transmissions also may occur by telephone, facsimile or other means.\n\n\x0cEzra C. Levine, Esq.\nSeptember 4, 2013\nPage 3 of6\nreceiving agent\'s location and availability. In certain instances, the money transmitter\nmay remit payment to the recipient before receiving the funds from the sending agent. 9\nFor example, the sending agent may not have transferred (deposited) the funds before the\nappointed transmission time. Alternatively, the sending agent may have fraudulently\nwithheld the funds from the money transmitter. 10\nBoth agent fraud and reliability concerns have prompted many money transmitters\nto vet prospective agents by conducting background checks. 11 In addition, money\ntransmitters are obligated to perform due diligence on prospective agents under various\nfederal and state laws designed to prevent money laundering, terrorist financing, and\nother criminal behavior. 12\n\n1. Federal Regulation\nThe Currency and Foreign Transactions Reporting Act (commonly referred to as\nthe "Bank Secrecy Act" or "BSA") 13 requires money transmitters, banks, and other\nfinancial institutions to maintain certain records and to file certain reports, which are used\nby law enforcement agencies to prevent and detect money laundering, terrorist financing,\nand other crimes. 14 In addition, the BSA requires money transmitters to develop and\nimplement an "effective anti-money laundering program reasonably designed to prevent\n[the money transmitter] from being used to facilitate money laundering and the financing\nof terrorist activities." 15 An effective anti-money laundering program includes\n"evaluat[ing] the suitability of prospective agents," which means that money transmitters\nthat contract with agents must conduct "reasonable, risk-based due diligence* * *to help\nensure that such agents themselves are not complicit in illegal activity." 16\n2. State Regulation\nNearly every state regulates money transmitters through licensing laws. In\naddition, several states have enacted statutes or implemented regulations that make\nviolations of the BSA a state violation. 17 Certain states also require money transmitters to\n\n9\n\n!d. at 3.\nSee id.\n\n10\n\nllld.\n\n!d.\nCurrency and Foreign Transactions Reporting Act, 31 U.S.C. \xc2\xa7\xc2\xa7 5311-5314, 5316-5322 (2013).\n14\nJuly 25 Letter at 3.\n15\nJd. (citing Rules for Money Services Businesses, 31 C.F.R. \xc2\xa7 1022.210(a) (2013)).\n16\nJd. at 4 (citing Financial Crimes Enforcement Network ("FinCEN") Interpretive Release 2004-1, AntiMoney Laundering Program Requirements for Money Services Businesses With Respect to Foreign Agents\nor Foreign Counterparties, 69 Fed. Reg. 74,439, 74,440 (Dec. 14, 2004)). FinCEN, a bureau of the United\nStates Department of Treasury, is authorized to implement and administer the regulations under the BSA.\n17\nJd. at 5 (citing, as an example, Wash. Rev. Code\xc2\xa7 19.230.180, which requires "every licensee and its\ndelegates [to] file all reports required by federal currency reporting, recordkeeping, and suspicious\ntransaction reporting requirements * * * and other federal and state laws pertaining to money laundering").\n12\n13\n\n\x0cEzra C. Levine, Esq.\nSeptember 4, 2013\nPage 4 of6\nconduct "risk-based background investigations" of prospective agents to determine\nwhether such agents have "complied with applicable state and federal law, including laws\ndealing with fraud and other criminal activities harmful to consumers." 18\n3. The Proposed Information Exchange\nSpurred, in part, by these federal and state requirements, TMSRT proposes an\ninformation exchange that will consist of a database developed, maintained, and secured\nby an independent third-party vendor. 19 The database will contain information regarding\nformer United States sending and receiving agents whose contractual relationships were\nterminated due to failure to comply with federal and/or state law, or money transmitter\ncontract terms or policies? 0 Exchange membership will be open to all licensed non-bank\nmoney transmitters, and will include TMSRT Participants. 21 Participation in the\ninformation exchange will be voluntary, 22 and each member of the information exchange\n("Exchange Member") will retain the right to decide unilaterally whether to appoint an\nagent that has been terminated by another Exchange Member (and thus included in the\ndatabase). 23\nPer your correspondence and conversations with staff, the following information will\nbe collected and made available in the Exchange Member database:\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\n\xe2\x80\xa2\n\xe2\x80\xa2\n\nthe name of the Exchange Member that supplied the terminated agent\ninformation;\nthe agent\'s name(s), address, telephone number, and business tax identification\nnumber (including any name under which the agent is doing business);\nthe name, address, telephone number, and individual or business tax identification\nnumber of any individual or entity that owns more than ten percent of the agent;\nthe name, addresses, telephone number, and tax identification number or social\nsecurity number of any other principal, including executive officers, directors, and\nmanagers;\nthe date of termination; and\nthe reason( s) for termination.\n\nOnce an agent has been added to the database, the third-party vendor will notify the agent\nin writing and provide the agent, upon the agent\'s request, a copy of its database record? 4\nExchange Members will be under a continuing obligation to update any information\nsubmitted to the exchange and to correct any errors? 5\n18\n\nI d.\nI d.\n20\nJd.\n21\nJd.\n22\nJd.\n23\nI d.\n24\nI d.\n25 Jd.\n19\n\n(citing, as examples, Tex. Fin. Code \xc2\xa7 151.402(b) and Fla. Stat. \xc2\xa7 560.1235).\nat 6, 8.\nat 6-7.\nat 1.\nat 8.\nat 6, 8.\nat 7.\n\n\x0cEzra C. Levine, Esq.\nSeptember 4, 2013\nPage 5 of6\n\nAnalysis of the Proposed Information Exchange\nTMSRT\'s proposal contemplates a type of information exchange among\ncompetitors? 6 Both the United States Department of Justice and the Commission have\nrecognized that information exchanges among competitors may be competitively neutral\nor even procompetitive? 7 However, certain information exchanges among competitors\nmay violate Section 1 of the Sherman Act, which prohibits a "contract, combination * * *\nor conspiracy" that unreasonably restrains trade. 28 The antitrust concern is that the\ninformation exchange may facilitate anticompetitive harm by advancing competitors\'\nability to collude or tacitly coordinate in a manner that lessens competition.\nUnder the antitrust laws, information exchanges among competitors generally are\nexamined under the "rule of reason. " 29 The "rule of reason" is a method of antitrust\nanalysis that distinguishes legitimate information exchanges from illegal ones by\nbalancing the information exchange\'s anticompetitive effects with its efficiencies and\nother procompetitive benefits. Various criteria are considered in assessing the legality of\nan information exchange, including the nature and quantity of the information shared, the\nparties\' intent in sharing the information, and how the information exchange is structured\nand controlled. 30\nBased on the information you provided, TMSRT\' s proposed exchange does not\nappear likely to facilitate collusion or anticompetitive refusals to deal, or to otherwise\nrestrict competition. To the contrary, the information exchange has the potential to\ngenerate efficiencies that benefit consumers. Our assessment is based on a number of\nfactors.\nFirst, the goals of the information exchange do not appear to be either directly or\nindirectly anticompetitive, or designed to further coordination among United States\nmoney transmitters with regard to any significant competitive factor, such as the\ncommission rates paid to agents for completing money transfer services. Given that the\ninformation sharing is unlikely to facilitate coordination on a significant competitive\n26\n\nWithout performing a formal market defmition exercise, it is not possible to know whether or to what\nextent Exchange Members are actual competitors. Nonetheless, for purposes of this analysis, we assume\nthat Exchange Members are competitors, at least with respect to one or more relevant United States\nmarkets.\n27\nU.S. DEP\'T OF JUSTICE AND FED. TRADE COMM\'N, ANTITRUST GUIDELINES FOR COLLABORATIONS\nAMONG COMPETITORS (2000), available at http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf (hereinafter\nthe "Collaboration Guidelines"). The Collaboration Guidelines provides a general outline of the analytical\nframework for evaluating collaborations among competitors.\n28\n15 U.S.C. \xc2\xa7 1.\n29\nUnited States v. United States Gypsum Co., 438 U.S. 422,441, n. 16 (1978) (information exchanges\namong competitors may be procompetitive, and thus such exchanges- when not evidence of actual\nagreements to limit competition- should be subject to the rule of reason).\n30\n!d. See also United States v. Container Corp. ofAmerica, 393 U.S. 333, 335-38 (1969) (finding a direct\nexchange of pricing information among competitors unlawful, despite finding no agreement on price,\nlargely because of the nature of the information exchanged, the structure of the market, and the absence of\na benign justification for the exchange).\n\n\x0cEzra C. Levine, Esq.\nSeptember 4, 2013\nPage 6 of6\nfactor, such as price, cost, or output, efforts by Exchange Members to identify and share\nterminated agent information is not likely to create a substantial risk of competitive harm.\nSecond, the proposed information exchange appears to contain several safeguards\nthat further lessen the risk of competitive harm. For example, the database will be\nmaintained and secured by a third-party vendor; participation in the exchange will be\nvoluntary; and each Exchange Member will conduct its own risk assessment and render\nits own judgment regarding whether to appoint a terminated agent.\nFinally, the proposed information exchange could generate efficiencies for\nExchange Members and enhance consumer welfare. For example, to the extent that the\nsharing of terminated agent information improves Exchange Members\' ability to conduct\nthorough background checks on prospective agents, the intormation exchange could\nprevent the appointment of problematic agents, including agents who may be money\nlaunderers or other criminal offenders, and thus benefit consumers.\n\nConclusion\nFor the reasons stated above, FTC staff believes that TMSRT\'s proposed\ninformation exchange is unlikely to constitute an unreasonable restraint of trade.\nAccordingly, we have no present intention to recommend a challenge to the program.\nThis letter sets out the views of the staff of the Bureau of Competition, as\nauthorized by Rule l.l(b) ofthe Commission\'s Rules ofPractice, 16 C.F.R. \xc2\xa7 l.l(b).\nUnder Commission Rule 1.3(c), 16 C.F.R. \xc2\xa7 1.3(c), the Commission is not bound by this\nstaff advisory opinion and reserves the right to rescind it at a later time. In addition, FTC\nstaff retains the right to reconsider this opinion, and, with notice to the requesting party,\nto rescind or revoke it if implementation of the proposed information exchange appears to\nresult in significant anticompetitive effects, if the exchange is used for improper\npurposes, if pertinent facts (or our understanding thereof) change significantly, or if it\nwould be in the public interest to do so.\n\nSincerely,\n\nMichael J. Bloom\nAssistant Director\nOffice of Policy & Coordination\n\n\x0c'


b"UNITED STATES OF AMERICA\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\n \n\nBureau of Consumer Protection\nDivision of Enforcement\nHampton Newsome\nDirect Dial: (202) 326-2889\nFax: (202) 326-2558\nEmail: hnewsome@fte.gov\n\nApril 15, 2013\n\nVia Email\n\nDavid Calabrese\n\nGeneral Counsel\n\nAir-Conditioning, Heating, and Refrigeration Institute\n2111 Wilson Boulevard, Suite 500\n\nArlington, VA 22201-3001\n\nDear Mr. Calabrese:\n\nOn April 5, 2013, the Department of Energy (DOE) announced that it will not enforce\nnew regional efficiency standards for furnaces pending the resolution of ongoing litigation.\nConsistent with this development, the FTC staff will not recommend enforcement action against\nmanufacturers that do not use the new label pending resolution of the ongoing litigation.\n\nOn June 27, 2011 (76 Fed. Reg. 37408), DOE published new energy conservation\nstandards for residential furnaces, central air conditioners, and heat pumps, including regional\nstandards for different product types. The American Public Gas Association (APGA) challenged\nthese standards for furnaces, and other entities intervened to challenge the standards for air\nconditioners and heat pumps. On January 11, 2013, the Department of Justice and APGA filed a\njoint motion asking the court to enter an agreement to settle APGA\xe2\x80\x99s challenge that would,\namong other things, vacate the DOE standards for non-weatherized gas furnaces. To date, the\ncourt has not approved the settlement agreement. Currently, the DOE regulations require\ncompliance with the new furnace standards beginning May 1, 2013. Given the uncertainty raised\nby the proposed settlement, DOE announced on April 5, 2013 that, during the pendency of the\nlitigation, it will \xe2\x80\x9cact in a manner consistent with the terms of the settlement agreement with\nregard to the enforcement of the standards.\xe2\x80\x9d\n\nEarlier this year, as directed by the Energy Policy and Conservation Act (EPCA),' the\n\nCommission issued new disclosures, including new EnergyGuide labels, to help industry\nmembers comply with the new DOE regional efficiency standards (78 Fed. Reg. 8362 (Feb. 6,\n\n1 42 U.S.C. \xc2\xa7\xc2\xa7 6291-6309.\n\x0cPage 2\n\n2013)). Aware of the pending settlement in the DOE litigation, the Commission tied\nimplementation of the new disclosures to DOE\xe2\x80\x99s compliance date, currently scheduled for May\n1, 2013 for certain furnaces. The FTC disclosure rules will not go into effect if the DOE\nstandards are vacated by the settlement. However, if the settlement is not approved by May 1,\n2013, the DOE standards and associated FTC labeling requirements become effective. The\ndissemination of the new labels at that time could cause significant confusion for consumers and\nindustry members as well as wasted resources should a final settlement eventually vacate the\nDOE standards.\n\nTherefore, consistent with DOE\xe2\x80\x99s April 5, 2013 enforcement statement, the FTC staff\nwill not recommend enforcement action against industry members that do not implement the new\nFTC disclosure requirements contained in the February 6, 2013 final rule notice pending\nresolution of the DOE litigation.\xe2\x80\x9d This approach will help coordinate implementation of the\nDOE standards with the FTC disclosures, which are designed to help consumers and industry\nmembers understand those standards.\n\nThe views expressed in this letter are those of the staff assigned to enforce the\nCommission\xe2\x80\x99s Energy Labeling Rule. In accordance with Section 1.3(c) of the Commission\xe2\x80\x99s\nRules of Practice and Procedure, 16 C.F.R. \xc2\xa7 1.3(c), this is a staff opinion only and has not been\nreviewed or approved by the Commission or by an individual Commissioner. It is not binding\nupon the Commission and is given without prejudice to the right of the Coramission later to\nrescind the advice and, when appropriate, to commence an enforcement proceeding. In\nconformance with Section 1.4 of the Commission\xe2\x80\x99s Rules of Practice, 16 C.F.R. \xc2\xa7 1.4, this letter\nis being placed on the public record. If you have any further questions, please contact me at\n(202) 326-2889.\n\nSingef\xc2\xa2ly,\n\nHampton Newsome\nAttorney\n\n2 The February 6, 2013 notice contained new EnergyGuide label design and content\nrequirements for all heating and cooling equipment, including a few product types not subject to\nthe DOE regional standards (e.g., boilers and oil furnaces). To promote consistency in the\ntiming of these broad label changes and to minimize confusion from inconsistent label designs,\nthis FTC staff enforcement position applies to all the new requirements in February 6, 2013\nnotice, whether they apply to products subject to regional standards or not. Once the DOE\nlitigation is resolved, the staff will provide guidance on updating labels for the various heating\nand cooling products covered by the Rule.\n\x0c"


b'UNITED STATES OF AMERICA\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\n \n\nBureau of Consumer Protection\nDivision of Enforcement\nHampton Newsome\nDirect Dial: (202)326-2889\nFax: (202) 326-2558\nEmail: bnewsome@fte.gov\n\nApril 15, 2013\n\nVia Email\n\nAniruddh Roy\n\nRegulatory Engineer\n\nAir-Conditioning, Heating, and Refrigeration Institute\n2111 Wilson Boulevard, Suite 500\n\nArlington, VA 22201-3001\n\nDear Mr. Roy:\n\nIn a March 28, 2013 letter to the Commission, you requested guidance on three issues\nrelated to the FT\'C\xe2\x80\x99s recent amendments for online energy disclosures (78 Fed. Reg. 2200 (Jan.\n10, 2013))." Those amendments require manufacturers to make their EnergyGuide labels\navailable online by July 15,2013. First, according to your letter, AHRI plans to post its\nmembers\xe2\x80\x99 labels on the AHRI website to facilitate their compliance with this new requirement.\nSecond, for split-system air conditioners, AHRI plans to include a disclaimer box on the online\nlabels directing consumers to a copy of the AHRI certification containing the ratings for specific\ncondenser-evaporator coil combinations. Finally, you have asked whether manufacturers selling\nproducts from their website may comply with section 305.20 of the Rule by linking to the AHRI\nwebsite.\n\nIn response to your inquiry, the FTC staff has no objection to AHRI\xe2\x80\x99s plan to place its\nmembers\xe2\x80\x99 EnergyGuide labels on its website. The new rule (16 C.F.R. 305.6) states that\nmanufacturers \xe2\x80\x9cmust make a copy of the label available on a publicly accessible website in a\nmanner that allows catalog sellers to hyperlink to the label or download it.\xe2\x80\x9d It does not mandate\nthat such websites belong to the manufacturer. Second, with regard to your proposal for a split-\nsystem air conditioner label disclosure, AHRI should not place such disclaimers on the label\nitself. Although nothing prohibits a disclaimer about split-system unit ratings on your website,\nthe Rule does not allow the inclusion of additional disclaimers on the label (see, e.g., 16 C.F.R.\n\n\' Your letter also requests changes to the recently announced requirements for the inclusion of\ncapacity information on heating and cooling equipment labels (78 Fed. Reg. 8362 (Feb. 5,\n2013)). The FTC staff plans to address those rulemaking issues in a later proceeding.\n\x0cPage 2\n\n305.12(f)(8)). Because online retailers (i.\xc2\xa2., catalog sellers) are likely to post the labels on their\nown sites to meet Rule\xe2\x80\x99s retailer requirements, a disclaimer about an AHRI certificate may be\nconfusing to consumers viewing the labels on such retail sites. Accordingly, we urge you to\ninclude such information in a location other than the label itself. Finally, manufacturers offering\ntheir products for sale on websites can link to the AHRI website using the EnergyGuide icon\nrequired by the Rule, as long as the link takes the consumer directly to the label.\n\nThe views expressed in this letter are those of the staff assigned to enforce the\nCommission\xe2\x80\x99s Energy Labeling Rule (16 C.F.R. Part 305). In accordance with Section 1.3(c) of\nthe Commission\xe2\x80\x99s Rules of Practice and Procedure, 16 C.F.R. \xc2\xa7 1.3(c), this is a staff opinion only\nand has not been reviewed or approved by the Commission or by an individual Commissioner. It\nis not binding upon the Commission and is given without prejudice to the right of the\nCommission later to rescind the advice and, when appropriate, to commence an enforcement\nproceeding. In conformance with Section 1.4 of the Commission\xe2\x80\x99s Rules of Practice, 16 C.F.R.\n\n\xc2\xa7 1.4, this letter is being placed on the public record. If you have any further questions, please\n\ncontact me at (202) 326-2889.\nSincerely,\nHampton Newsome\n\nAttorney\n\x0c'