b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Marketing Practices\nCraig Tregillus\nctregillus@ftc.gov\n\nDirect Dial: (202) 326-2970\nFacsimile: (202) 326-3395\n\nFebruary 17, 2009\n\nPamela D. Griebel\nAssistant Attorney General\nIowa Department of Justice\nHoover Bldg.\nDes Moines, IA 50319\nDear Ms. Griebel:\nYou have requested our views on funeral providers offering discounts only to clients who\npurchase a package of funeral goods and services that includes a casket. You specifically ask\nwhether such packages may discount the basic services fee that covers the services of the funeral\ndirector and staff, and may include the funeral provider\xe2\x80\x99s overhead.\nAs your inquiry notes, staff stated its view in Opinion 97-3 that the basic services fee\nmay not be discounted.1 We have considered the arguments of the National Funeral Directors\nAssociation (\xe2\x80\x9cNFDA\xe2\x80\x9d) challenging this staff opinion, and find no reason to alter this longstanding interpretation of the Funeral Rule (\xe2\x80\x9cRule\xe2\x80\x9d) for the reasons which follow.\nFirst, contrary to the NFDA\xe2\x80\x99s contention, the Commission\xe2\x80\x99s confirmation last year at the\nconclusion of its rule review that the Rule should be retained without proposing any of the\namendments sought by interested parties does not compel a different result.2 In particular, the\nCommission\xe2\x80\x99s decision not to propose an amendment to the Rule that would regulate the offer of\ndiscount funeral packages was based in large part on \xe2\x80\x9cinsufficient evidence to show a prevalent\npractice of funeral providers offering discount packages in a manner that unfairly interferes with\nconsumers\xe2\x80\x99 ability to provide their own caskets.\xe2\x80\x9d3 In retaining the Rule, the Commission simply\npreserved the status quo, and did nothing to alter prior Rule interpretations. In fact, the\nCommission not only cited, but expressly approved Opinion 97-3, noting that \xe2\x80\x9cfuneral homes\n\n1\n\nStaff Opinion 97-3 (Apr. 16, 1997), available at http://www.ftc.gov/bcp/conline\n/edcams/funerals/opinions/opinion97-3.pdf (concluding that only funeral goods and services that\nmust be itemized on a funeral provider\xe2\x80\x99s General Price List (\xe2\x80\x9cGPL\xe2\x80\x9d) may be discounted).\n2\n\n73 Fed. Reg. 13740 (Mar. 14, 2008).\n\n3\n\nId. at 13748.\n\n\x0cPamela D. Griebel\nPage 2 of 4\nmay encourage consumers to purchase a casket from their organization by offering discounts on\nservices or items except for a non-declinable Basic Services Fee.\xe2\x80\x99\xe2\x80\x994\nSecond, a close reading of the precedent on which NFDA relies does not support a\ndifferent conclusion. In its report recommending the 1994 Rule amendments,5 staff did not state\nor imply that the Rule permits funeral providers to discount the basic services fee in addition to\nother fees for goods and services that the Rule requires or permits to be itemized in the GPL, as\nNFDA contends. On the contrary, the report contemplated that funeral providers could discount\nonly fees for \xe2\x80\x9cthe itemized charges required by the Rule.\xe2\x80\x9d6 Similarly, the Third Circuit\xe2\x80\x99s\ndecision upholding the 1994 Rule amendment banning casket handling fees presumes that the\nbasic services fee will be the same for all of a funeral provider\xe2\x80\x99s clients, and that only the fees\nfor products and services itemized on the GPL may be discounted.7\nThird, although not contesting the conclusion in Opinion 97-3 that funeral providers may\nnot discount only the basic service fee, NFDA contends that the opinion does not cite any basis\nfor its determination that when the basic services fee is combined with the fees for other funeral\ngoods and services in a discount package, it also may not be discounted. While we think that\nOpinion 97-3 provided a clear basis for that conclusion, some elaboration may be helpful.\nThe basic services fee provisions of the Rule make it clear that this fee is to be the same\nfor each of a funeral provider\xe2\x80\x99s clients. Each client must receive a GPL, and unless the basic\nservices fee is included in the price of the funeral provider\xe2\x80\x99s caskets or is declinable, the GPL\nmust include the following statement: \xe2\x80\x9cThis fee for our basic services will be added to the total\ncost of the funeral arrangements you select. (This fee is already included in our charges for\ndirect cremations, immediate burials, and forwarding and receiving remains.)\xe2\x80\x9d8 Likewise, if the\nbasic services fee is included in the price of a funeral provider\xe2\x80\x99s caskets, the GPL must include a\nsimilar statement indicating that all of the provider\xe2\x80\x99s clients must pay the same fee: \xe2\x80\x9cPlease note\nthat a fee of (specify dollar amount) for the use of our basic services is included in the price of\nour caskets. This same fee shall be added to the total cost of your funeral arrangements if you\n\n4\n\nId. at n.93 (emphasis added).\n\n5\n\nFinal Staff Recommendations on the Mandatory Review (May 28, 1991).\n\n6\n\nId. at 39 (emphasis added).\n\n7\n\nSee Pa. Funeral Dir.s Ass\xe2\x80\x99n v. FTC, 41 F.3d 81, 89 (3d. Cir. 1994) (noting that\nfuneral providers can assure that consumers who buy third party caskets pay their fair share of\nthe provider\xe2\x80\x99s overhead costs by recouping those costs in the basic services fee that \xe2\x80\x9cthey are\npermitted to charge everyone,\xe2\x80\x9d rather than in a casket handling fee).\n8\n\n16 C.F.R. \xc2\xa7 453.2(b)(4)(iii)(C)(1). If the basic services fee is non-declinable, the\nrule also requires a disclosure at the beginning of the GPL that \xe2\x80\x9cany funeral arrangement you\nselect will include a charge for our basic services.\xe2\x80\x9d 16 C.F.R. \xc2\xa7 453.4(b)(2)(i)(A).\n\n\x0cPamela D. Griebel\nPage 3 of 4\nprovide the casket.\xe2\x80\x9d9 Thus, the Rule requires that all of a funeral provider\xe2\x80\x99s clients pay the same\nbasic services fee that is disclosed in its GPL.\nBecause the basic services fee disclosed in a funeral provider\xe2\x80\x99s GPL must be the same for\nall its clients, this fee may not be discounted.10 The Rule\xe2\x80\x99s definition of \xe2\x80\x9cservices of funeral\ndirector and staff,\xe2\x80\x9d or basic services fee, provides additional support for this conclusion. As we\nhave noted in a prior opinion,11 the definition limits the services that may be included in this fee\nto those \xe2\x80\x9cthat are furnished by a funeral provider in arranging any funeral,\xe2\x80\x9d and may not include\nservices \xe2\x80\x9cincluded in prices of other categories in \xc2\xa7 453.2(b)(4) [i.e., itemized services required\nor permitted to be disclosed in the GPL].\xe2\x80\x9d12 Likewise, it is only \xe2\x80\x9cunallocated funeral provider\noverhead\xe2\x80\x9d \xe2\x80\x93 i.e., overhead not attributable to the itemized services required or permitted to be\ndisclosed in the GPL \xe2\x80\x93 that the Rule permits funeral providers to include in the basic services\nfee.13\nThus, if the basic services fee could be discounted as part of a discount funeral package, a\nfuneral provider\xe2\x80\x99s clients would not bear an equal share of the costs common to \xe2\x80\x9cany\xe2\x80\x9d funeral, as\nthe Rule plainly requires. Moreover, if such a discount package were made available only to\nclients who purchase a casket from the funeral provider, clients who elect to purchase a casket\nfrom a third party and are not eligible to receive the discount package would pay a higher basic\nservices fee than everyone else. The difference between such a discounted basic services fee\npaid by clients who purchase a casket from the funeral provider, when subtracted from the full\nbasic services fee paid by those who purchase a casket from a third party, can only be regarded\nas an indirect casket handling fee. Casket handling fees, whether direct or indirect, are expressly\nprohibited by the Rule.14\nFourth, contrary to NFDA\xe2\x80\x99s apparent impression, Opinion 97-3 is not inconsistent with\nthe Commission\xe2\x80\x99s position, when it adopted the amendment banning casket handling fees, that\nthe Rule permits a funeral provider to offer discount funeral packages that are available only to\nclients who purchase one of its caskets. As the Third Circuit noted, \xe2\x80\x9cthe FTC distinguishes\n\n9\n\n16 C.F.R. \xc2\xa7 453.2(b)(4)(iii)(C)(2) (emphasis added).\n\n10\n\nThe rule does permit a funeral provider, in limited situations, to provide to\nmembers of specified groups (e.g., children and infants, memorial society members) a separate,\ncomplete GPL that may contain fees that are less than those listed in the GPL it provides to\nconsumers who are not members of such a group. Complying with the Funeral Rule, FTC (June\n2004) p. 13, available at http://www.ftc.gov/bcp/edu/pubs/business/adv/bus05.pdf.\n11\n\nStaff Opinion 07-2 (March 21, 2007), p. 2.\n\n12\n\n16 C.F.R. \xc2\xa7 453.2(p) (emphasis added).\n\n13\n\n16 C.F.R. \xc2\xa7 453.2(b)(4)(iii)(C)(1) and (C)(2),\n\n14\n\n16 C.F.R. \xc2\xa7 453.4(b)(1)(ii).\n\n\x0cPamela D. Griebel\nPage 4 of 4\ndirect casket handling fees from offering discounts to people who buy caskets from the funeral\nhome,\xe2\x80\x9d because \xe2\x80\x9c[t]he former is an anti-competitive penalty (the fee) and the latter is . . . .a\n[pro-competitive] way to encourage consumers to buy their caskets from funeral homes.\xe2\x80\x9d15\nSince that time, the Commission has stated consistently that the Rule permits discount packages\nconditioned on the purchase of a casket from the funeral provider, provided that the basic\nservices fee is not discounted, because of the pro-competitive benefits such packages provide.16\nTo comply with the Funeral Rule, a funeral provider must include its full basic services\nfee in the price of any discount funeral package offered, and discount only the prices itemized in\nits GPL for the goods or services that are included in the package. Although nothing in the\nrecord retention provision of the Rule requires funeral providers to create or retain a record of\nwhat is discounted in their discount packages,17 neither does the Rule prevent providers from\nmaintaining such records, if they wish, in order to protect themselves from any suggestion that\nthey are improperly discounting the basic services fee. Funeral providers could also discourage\nany such claim by including in the description of their discount funeral packages a truthful\nstatement that the price of their packages includes the full basic services fee.\nThe views expressed in this letter are those of the FTC staff. They have not been\nreviewed, approved, or adopted by the Commission, and they are not binding on the Commission\nor any individual Commissioner. However, they do reflect the views of FTC staff charged with\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted on the FTC\nwebsite at http://www.ftc.gov/bcp/conline/edcams/funerals/staffopinions.shtm.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n15\n\n41 F.3d at 90 (emphasis in original).\n\n16\n\n73 Fed. Reg. at 13748 & n.93 (noting that \xe2\x80\x9c[t]o the extent consumers wish to\npurchase a combination of the goods and services a funeral provider offers, bundling of discount\npackages likely confers benefits,\xe2\x80\x9d and citing staff opinion 97-3 with approval for its statement\nthat \xe2\x80\x98\xe2\x80\x98funeral homes may encourage consumers to purchase a casket from their organization by\noffering discounts on services or items except for a non-declinable Basic Services Fee.\xe2\x80\x99\xe2\x80\x99).\n17\n\nSee 16 C.F.R. \xc2\xa7 453.6.\n\n\x0c'


b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nDivision of Marketing Practices\n\nFebruary 17, 2009\nThomas M. Hughes\nHunton & Williams LLP\n1900 K Street NW\nWashington, DC 20006\nDear Mr. Hughes:\nThis letter responds to your request for a staff advisory opinion regarding compliance\nwith the Magnuson-Moss Warranty Act (\xe2\x80\x9cAct\xe2\x80\x9d), 15 U.S.C. \xc2\xa7\xc2\xa7 2301-2312, and the Commission\xe2\x80\x99s\nRules promulgated under that Act. You seek guidance on whether providing consumer product\nwarranties via electronic media, rather than in paper form, would comply with the Act and the\nDisclosure Rule. Based on the information you provide in your letter, and after considering the\npurposes of the Act, it is the staff\xe2\x80\x99s opinion that warranties provided in electronic formats could\ncomply with the Act and the Disclosure Rule.\nIn your letter you indicate that your client manufactures a variety of consumer\nelectronics, such as desktop, notebook, and handheld computers, printers, televisions, and digital\ncameras, and provides written warranties on those products. Your client\xe2\x80\x99s past practice has been\nto include the product\xe2\x80\x99s warranty in paper form within the product\xe2\x80\x99s package (\xe2\x80\x9cin-package\xe2\x80\x9d\nwarranty).1 You indicate that these in-package warranties can range in size from three to\neighteen pages, which requires printing millions of copies of warranties each year on tons of\npaper.\nYour Client\xe2\x80\x99s Proposal\nYour client proposes to \xe2\x80\x9creplace \xe2\x80\x98in-package\xe2\x80\x99 paper warranties with electronic written\nwarranties. Depending upon the product, the electronic warranty would be preloaded on an\ninternal fixed drive, or portable media such as a CD or DVD. The product \xe2\x80\x98set-up guide\xe2\x80\x99 will\ninform consumers that the warranty terms are provided electronically.\xe2\x80\x9d2\nYour client would continue to provide its warranties to retailers so that retailers can make\nthem available to consumers pre-sale. In addition, your client \xe2\x80\x9cwill continue to make warranties\n\n1\n\nYour letter also states that your client provides copies of its written warranties in paper\nform to retailers, in compliance with the Pre-Sale Availability Rule, 16 C.F.R. \xc2\xa7 702.3(b)(1)(i).\n2\n\nFTC staff agrees with the assertion in your letter that such an advisory would not be\nconsidered part of the written consumer product warranty, and therefore, would not implicate the\nsingle document requirement of the Warranty Disclosure Rule.\n\n\x0cMr. Thomas M. Hughes\nFebruary 17, 2009\nPage 2\navailable at its web site.\xe2\x80\x9d Thus, under your client\xe2\x80\x99s proposed course of action, consumers would\n\xe2\x80\x9cbe able to compare warranties presale and have post-sale access to their warranty terms and\nconditions so that they can obtain support as needed.\xe2\x80\x9d Your client estimates that \xe2\x80\x9creplacing\nmillions of paper in-package warranties with electronic versions would result in significant\nbenefits related to reduced paper, printing, transportation, and storage.\xe2\x80\x9d\nThe Warranty Act and Rules\nAs acknowledged in your letter, your client\xe2\x80\x99s proposed course of action implicates\nseveral provisions of the Act or the Commission\xe2\x80\x99s Rules under the Act. Specifically, the Act\nrequires that \xe2\x80\x9cany warrantor warranting a consumer product to a consumer by means of a written\nwarranty shall, to the extent required by rules of the Commission, fully and conspicuously\ndisclose in simple and readily understood language the terms and conditions of such warranty.\xe2\x80\x9d\n15 U.S.C. \xc2\xa7 2302(a). Following the mandate of the Act, the Commission\xe2\x80\x99s Rule on Disclosure\nof Written Consumer Product Warranty Terms and Conditions (the \xe2\x80\x9cWarranty Disclosure\nRule\xe2\x80\x9d), further specifies that \xe2\x80\x9cany warrantor warranting to a consumer by means of a written\nwarranty a consumer product actually costing the consumer more than $15.00 shall clearly and\nconspicuously disclose in a single document in simple and readily understood language\xe2\x80\x9d certain\nspecified items of information regarding the warranty terms and conditions. Moreover, the\nCommission\xe2\x80\x99s Rule on Pre-Sale Availability of Written Warranty Terms (the \xe2\x80\x9cPre-Sale\nAvailability Rule\xe2\x80\x9d) requires a \xe2\x80\x9cwarrantor who gives a written warranty warranting to a consumer\na consumer product actually costing the consumer more than $15.00\xe2\x80\x9d to \xe2\x80\x9cprovide sellers with\nwarranty materials necessary for such sellers to comply with the requirements\xe2\x80\x9d of the Rule so\nthat consumers can read a covered consumer product\xe2\x80\x99s warranty before buying it. 16 C.F.R.\n\xc2\xa7 702.3(b). The Pre-Sale Availability Rule also requires that warrantors provide \xe2\x80\x9ca copy of the\nwritten warranty with every warranted consumer product.\xe2\x80\x9d3\nDiscussion\nThe language of the Act, quoted above, does not specify the medium, form, or format by\nwhich disclosure of the terms and conditions of a written consumer product warranty must be\nmade, as long as the disclosure is made \xe2\x80\x9cfully and conspicuously . . . [and] in simple and readily\nunderstood language.\xe2\x80\x9d The Act, however, authorizes the Commission by Rule to make the\ndisclosure requirement more specific, and the Commission, in the Warranty Disclosure Rule,\n\n3\n\nThe Pre-Sale Availability Rule allows four methods for warrantors to provide sellers\nwith warranty materials necessary to make warranties available to consumers at point of sale.\nThree of these methods entail providing \xe2\x80\x9ca copy of the written warranty\xe2\x80\x9d with every covered\nconsumer product warranted, in addition to other action. The fourth method consists of\nproviding \xe2\x80\x9ca tag, sign, sticker, label, decal or other attachment to the product, which contains the\nfull text of the written warranty.\xe2\x80\x9d Thus, regardless of the method chosen, the text of the\nwarranty must accompany the warranted product. 16 C.F.R. \xc2\xa7 702.3(b)(1)(i)(A)-(D).\n\n\x0cMr. Thomas M. Hughes\nFebruary 17, 2009\nPage 3\nadded to the Act\xe2\x80\x99s requirements the specification that the disclosure be made \xe2\x80\x9cin a single\ndocument,\xe2\x80\x9d while reiterating the Act\xe2\x80\x99s requirement for \xe2\x80\x9csimple and readily understood\nlanguage.\xe2\x80\x9d Like the Act, the Warranty Disclosure Rule does not specify permissible media,\nforms, or formats. Similarly, the Pre-Sale Availability Rule specifies that \xe2\x80\x9ca copy of the written\nwarranty\xe2\x80\x9d be provided, but also does not specify permissible media, forms, or formats.\nAs your letter notes, in the context of warranties provided pursuant to online transactions,\nthe FTC staff has stated that \xe2\x80\x9c[w]arranties communicated through visual text on Web sites are no\ndifferent than paper versions and the same rules apply.\xe2\x80\x9d4 In addition, advisory opinions have\nbeen issued stating that a retailer may make a warranty available to consumers using certain nonpaper formats \xe2\x80\x93 such as on microfiche and ultrafiche readers \xe2\x80\x93 as a means of complying with the\nPre-Sale Availability Rule.5\nConclusion\nBased on the broad language used in the Pre-Sale Availability Rule, FTC staff\xe2\x80\x99s opinion is\nthat an electronic version of a consumer product warranty would constitute a \xe2\x80\x9ccopy\xe2\x80\x9d of the\nwritten warranty for purposes of compliance with the Warranty Act and Rules. Moreover, it is\nstaff\xe2\x80\x99s opinion that a written consumer product warranty that is included on a CD, DVD, or on the\ninternal drive of the warranted product would qualify as being \xe2\x80\x9cprovided with\xe2\x80\x9d or as\n\xe2\x80\x9caccompanying\xe2\x80\x9d the product.\nIn passing the Act, Congress\xe2\x80\x99s intent was to ensure that consumers receive clear and\ncomplete information about warranty coverage pre-sale, and that consumers be able to retain a\ncopy of the warranty post-sale for reference in case of product failure. In the opinion of FTC\nstaff, those purposes are sufficiently accomplished by providing, in electronic form, a copy of a\n\n4\n\nDot Com Disclosures: Information About Online Advertising, available at\nhttp://www.ftc.gov/bcp/edu/pubs/business/ecommerce/bus41.pdf.\n5\n\nSee 42 Fed. Reg. 39,381 (Aug. 4, 1977) (microfiche); 42 Fed. Reg. 15,679 (Mar. 23,\n1977) (ultrafiche); 41 Fed. Reg. 53,472 (Dec. 7, 1976) (microfiche). In those opinions, approval\nof microfiche and ultrafiche technologies for pre-sale availability purposes is predicated upon\nthe seller providing simple, complete instructions for using the microfiche and ultrafiche readers\nand ensuring that retail personnel were familiar with operating the readers to assist consumers if\nneeded. Similarly, here, if your client wishes to provide only electronic warranties to retailers\ninstead of paper copies, the retailers would need either to print out the warranties in paper form,\nor to have the capability to display the electronic warranty and personnel available to assist\nconsumers in viewing the warranty information, so that these retailers are \xe2\x80\x9cmak[ing] a text of the\nwarranty readily available for examination by the prospective buyer by: (1) displaying it in\nclose proximity to the warranted product, or (2) furnishing it upon request prior to sale . . .\xe2\x80\x9d\n16 C.F.R. \xc2\xa7 702.3(a). (Emphasis added.)\n\n\x0cMr. Thomas M. Hughes\nFebruary 17, 2009\nPage 4\nwritten consumer product warranty that otherwise complies with the requirements and\nprohibitions of the Warranty Act and Rules \xe2\x80\x93 provided the warranted consumer products include\nclear, conspicuous, and easy-to-follow instructions on how to access the warranty information\nprovided on the consumer product\xe2\x80\x99s internal drive or on an accompanying CD or DVD and that a\nconsumer can print out a paper copy of the warranty if needed. Further, consumers who receive\nyour client\xe2\x80\x99s warranties electronically may end up dependent on the copy of the warranty\navailable on your client\xe2\x80\x99s website if product failure occurs, because they may not be able to\naccess the internal drive or portable media. Therefore, if your client changes its warranty, it\nshould keep on its website a posting of printable earlier warranties and the dates they were in\neffect.\nThe opinions and conclusions expressed in the foregoing discussion are those of\nCommission staff only and are not attributable to, nor binding on, the Commission itself\nor any individual Commissioner. I hope this discussion is helpful to you. If you have any further\nquestions, please do not hesitate to contact me at (202) 326-2505.\n\nSincerely,\n\nAllyson Himelfarb\nInvestigator/Magnuson-Moss\nProgram Coordinator\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nPEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Enforcement\nBureau of Consumer Protection\n\nDecember 8, 2008\n\nMichael H. Bai, Esq.\nLittleton Joyce Ughetta Park & Kelly LLP\n39 Broadway, 34th Ploor\nNew York, NY 10006\nDear Mr. Bai:\nThank you for your letter to the Commission, dated October 10, 2008, requesting our\nadvice and interpretation concerning use of the term "Lyocell" on tires pursuant to 16 C.F.R. \xc2\xa7\n303. As you requested during a telephone conversation with my staff on December 3,2008, we\nare treating your letter as a request for a staff advisory opinion. This letter is a formal response\nto your request, memorializing the email response provided by Steve Ecklund on November 12,\n2008.\nTires are not subject to the Textile Fiber Products Identification Act and, therefore, the\nFTC list of generic fiber nan1es set forth at 16 C.P.R. \xc2\xa7 303.7 does not apply. However, any\nmarketing is stilI subject to Section 5 of the FTC Act, 15 U.S.C. \xc2\xa7 45, which forbids deceptive\nand tmfair practices in or affecting commerce. I suggest that you carefully review the following\ntwo Policy Statements in tIus regard:\nhttp://\\V\\vw.ftc.govlbcp/policvstmt/ad-decept.htm\nhttp://www.ftc.govlbcp/gllides/ad3subst.htm\nIf a company makes a claim about its product (such as that it contains LyoceIl), the claim\nshould not be "deceptive" and the company should have reasonable "substantiation" for that\nclaim. We are not textile chemists and we do not test products for their fiber content unless we\ndo so as part of an official law enforcement action - and then we would contract with a private\nlab to conduct the actual testing.! Therefore, we decline to render an opinion regarding whether\na representation that your tires contain Lyocell would comply witI1 Section 5 ofthe FTC Act.\nIn accordance with Section 1.3(c) of the Commission\'s Rules of Practice and Procedure,\n16 C.F.R. \xc2\xa7 1.3(c), this informal staff opinion has not been reviewed or approved by the\n\nIn accordance with Section 1.1 oftl1e Commission\'s Rules of Practice and Procedure,\n16 C.F.R. \xc2\xa7 1.1, we do not ordinarily provide an opinion if an infoDned opinion Call110t be made\nor could be made only after extensive investigation, clilucal study, testing, or collateral inquiry.\nI\n\n\x0cCommission or by an individual Commissioner, and is given without prejudice to the right of the\n. Commission later to rescind the advice and, where appropriate, to commence a law enforcement\naction. In addition, this office retains the right to reconsider its advice, and with notice to the\nrequesting patiy, rescind or revoke its opinion if the response is used for improper purposes, or if\nit would be in the public interest to do so.\nPursuant to Section 1.4 of the Commission\'s Rules of Practice and Procedure, 16 C.F.R.\n\xc2\xa7 1.4, this response along with your request for advice will be placed on the public record,\nsubject to any limitations on public disclosure arising from statutory restrictions, the\nCommission\'s rules, atld the public interest. Hopefully, the preceding has been helpful.\n\nKOlA\n\nlvi.-/\n\nJatn A.\nAssociate Director\nDivision ofEnfocement\n\n2\n\n\x0c39 Broadway\n\nLITTLETON JOYCE\nUGHETTA PARK\nNEW YORK CITY\n\n& KELLY LLP\n\nI PURCHASE,\n\nNY\n\nI\n\nR\'ED BANK. NJ\n\n34th Floor\nNew York. NYroo06\nTel (212) 404-5777\nFax (212) 232-0088\n\nwww.litllelonjt?J1ce.com\nDirect Dial: (212)404-5775\n\nE-Mail:"michael.bai@littletolljoyce.com\n\nOctober 10, 2008\nVIA FEDERAL EXPRESS\nFederal Trade Commission\n600 Pennsylvania Avenue, NW\nWashington, DC 20580\nAttention:\n\nRe:\n\nSecretary of the Commission\n\nUse of the Term "Lyocell" on Tires Pursuant to 16 CFR \xc2\xa7303.7(d)\n\nDear Secretary ofthe Commission:\nThe undersigned has been retaioed by Hyosung Corporation (\'\'Hyosung\'\') to obtain the\nFederal Trade Commission\'s ("FTC") advice/interpretation concerning whether, pursuant to 16\nCFR \xc2\xa7303.7(d), Hyosung and its customers, specifically Kurnho Tire Co., Inc. ("Kurnho Tire"),\nmay use the term "Lyocell" on the tire\'s sidewall to describe the fibers in the tire\'s cord\nmaterials.\nWe have received the attached letter (Exhibit "A") from the Chief Counsel for the\nNational Highway Traffic Safety Administration ("NHTSA") in response to our request for\ninterpretation on behalf of Kurnho Tire Co., Inc. (Exhibit "B"). NHTSA\'s Chief Counsel states\nthat pursuant to 49 CFR \xc2\xa7 571.139 paragraph S5.5(e), Kurnho Tire may use the FTC-established\ngeneric tenn "Lyocell" on the tire\'s sidewall to describe the fibers in the tire\'s cord materials.\nHowever, NHTSA\'s Chief Counsel informed us that its answer was conditioned upon FTC\nconcurrence that the generic name "Lyocell" is properly applicable to Kurnho Tire\'s tire fiber\ncord material.\nWe have attached Hyosung\'s formula fur the "Lyocell" material that is in the tire\'s cord\nmaterial (Exhibit "C"). Since the formula meets the definition for "Lyocell" pursuant to 16 CFR\n\xc2\xa7303.7(d), please confirm that Hyosung\'s customers, namely Kurnho Tire, may use the term\n"Lyocell" on the tire\'s sidewall in tires that use "Lyocell" cord material.\n\n\x0cUse ofthe Tenn \'\'Lyocell\'\' on Tires Pursuant to 16 CFR \xc2\xa7303.7(d)\nPage 2\n\nIf you have any questions, please do not hesitate to contact me at 212-404-5775. Ifany\nadditional information is necessary, please advise me. Thank you for your attention to this\nmatter.\nVery truly yours,\nLITTLETON JOYCE UGHET A PARK & KELLY LLP\n\n. Bai\n\nEnclosures:\n\nExhibit "A"\nExhibit "B"\nExhibit "c"\n\nAugust 25, 2008 Letter from NHTSA\nApril 2, 2008 Letter to NHTSA\nHyosuog Corporation\'s Lyocell FonnuIa\n\nLITTLETON JOYCE UGHETTA PARK\n\n& KELLY LLP\n\n\x0cAUG 2 5\nU.S. Department\nofTransportatlon\nNational Highway\nTraffic Salety\nAdministration\n\n>~U\n\n1200 New Jersey Avenue SE.\nWashIngton, DC 20590\n\nMr. Michael H. Bai\nLittleton Joyce Ughetta Park & Kelly LLP\n39 Broadway\n34th Floor\nNew York, NY 10006\nDear Mr. Bai:\nThis responds to your letter requesting an interpretation of one ofthe labeling\nrequirements of Federal Motor Vehicle Safety Standard (FMVSS) No: 139, New\npneumatic radial tires for light vehicles. You ask whether, if your client Kumho Tires\nincorporates "lyocell" fibers in the cord materials for the tire\'s plies, it would be\npermissible under S5.5(e) ofFMVSS No. 139 to label the tire sidewall with either\n"lyocell" or "rayon."\nOur answer is a qualified yes, We have made a few assumptions\'i\'!J answering yoUr letter.\nFirst, we assume that the cord material in question is in fact lyocell and that you simply\nask if reference to "Iyocell" or "rayon" may be used to describe the material. Second,\nyou state that under Federal Trade Commission (FTC) regulations, "Iyocell" and "rayon"\nare generic names for lyacell; for the purposes of this letter, we assume your\nunderstanding is correct. However, for a complete answer to your question, you should\ncontact the FTC to obtain its concurrence that you have correctly understood the FTC\nregulation.\nBy way of background, the National Highway Traffic Safety Administration (NHTSA) is\nauthorized to issue FMVSSs that set performance requirements for new motor vehicles\nand items of motor vehicle equipment (see 49 U.S .C, Chapter 301). NHTSA does not\nprovide approvals of motor vehicles or motor vehicle equipment. Instead, manufacturers\nare required to self-certify that their products conform to all applicable safety standards\nthat are in effect on the date of manufacture. NHTSA selects a sampling of new vehicles\nand equipment each year to detennine their compliance with applicable FMVSSs. If our\ntesting or examination reveals an apparent noncompliance, we may require the\nmanufacturer to reniedy the noncompliance, and may initiate an enforcement proceeding\nifnecessary to ensure that tile manufacturer takes appropriate action.\n\n*****\nNHTSA\n\n\x0c2\n\nParagraph S5.5 of FMVSS No. 139 specifies tire markings for new pneumatic radial tires\nfor use on motor vehicles (other than motorcycles and low speed vehicles) that have a\ngross vehicle weight rating (OVWR) of 10,000 pounds or less. Among the information\nrequired by S5.5 to be marked on the tire sidewall, S5.5(e) requires "The generic name of\neach cord material used in the plies (both sidewall and tread area) of the tire." NHTSA\nrequires this information to help tire purchasers select the characteristics they want in a\ngiven tire, because the many different cord materials that exist and their many different\ncharacteristics enable a tire to be specially geared to its anticipated use.\nYour letter states that FTC regulations (16 CFR \xc2\xa7 303.7(d)) permit the use ofthe generic\nname "lyocell" or "rayon" where the fabric used is "Iyocell." NHTSA has previously\nfavorably cited FTC-established generic names for cord materials. In a January 20, 1976\nletter of interpretation, NHTSA advised that if Kevlar was used as a cord material in a\ntire; it must be identified by its generic name, which, NHTSA stated, the FTC established\nas "Aramid" pursuant to the Textile Fiber Product Identification Act.\nAssuming you are correct that the FTC has established that lyoceJl fibers may be\nidentified by either the generic name "Iyocell" or the generic name "rayon," and because\nwe have previously accepted FTC-established generic names for tire cord material\nlabeling required by the FMVSSs, in our opinion using either "lyocell" or "rayon" as the\ngeneric name for lyocell tire cords would be acceptable under FMVSS No. 139.\nHowever, our answer is conditional on FTC concurrence that the genetic names "lyoceJl"\nand "rayon" are properly applicable to your client\'s tire cord material. We suggest that\nyou follow up with the FTC on this matter.\nI hope this information is helpful. If you have any further questions, please do not\nhesitate to contact Rebecca Schade of my staff at (202) 366-2992.\nSincerely yours,\n\n~\n\\(--Anthony M. Cooke\nChiefCounsel\n\n\x0cLITTLETON J OyeE\nUGHETTA PARK\nNEW YORK CITY\n\n& KELLY LLP\n\nI PURCHASE,\n\nNY\n\nI RED\n\nBANK, NJ\n\n39 Broadway\n34th floor\nNew York. NY 10006\nTel (212) 404-5777\nFax (212) 232-0088\n\nwww.littletonjl2Jce.com\nDirect Dial: (212) 404\xc2\xb75775\nE-Mail: michael.hai@littletonjoyce.com\n\nApril 2, 2008\nVIA FACSIMILE AND REGULAR MAIL\nThe Chief Counsel\nNational Highway Traffic Safety Administration, NCC-Ol\n400 7th Street, SW\nWashington, D.C. 20590\nRe:\n\nRequest for Interpretation of 49 CFR \xc2\xa7571.139 Concerning the Use of the\nGeneric Name "Lyocell" or "Rayon"\n\nDear Chief Counsel:\nThe undersigned serves as counsel for Kumho Tire Co., Inc. ("Kumho Tires"). Pursuant\nto 49 CFR \xc2\xa7 571.139 paragraph S5.5(e), ifKumho Tires incorporates "lyocell" fibers in the cord\nmaterials for the tire\'s plies, may Kumho Tires place either the generic name "lyocell" or\n"rayon" on the tire\'s sidewall?\nUnder 49 CFR \xc2\xa7 571.139 paragraph S5.5(e), Kumho Tires must identify the generic name\nof each cord material used in the tire\'s plies on the tire\'s sidewall. I Pursuant to 16 CFR\n\xc2\xa7303.7(d), the Federal Trade Commission ("FTC") allows for a manufacturer to use the term\n"lyocelJ" or "rayon" as a generic name for manufactured lyocelJ fibers. 2\n\n1\n\n49 CFR \xc2\xa7 571.139; New pneumatic tires for light vehicles.\n\n35.5 Tire markings. Except as specified in paragraphs Ca) through Ci) of S5.5. each tire must be marked on each sidewall\nwith the information specified in S5.5(.) through (d) and on one sidewall with the information specified in S5.5(0) through (i)\naccording to the phase~in schedule specified in 87 of this standard. The markings must be placed between the maximum section\nwidth and the bead on at least one sidewall. unless the maximum section width of the tire is located in an area that is not more\nthan one-fourth of the distance from the bead to the shoulder of the tire. If the maximum section width tails within that area,\nthose markings must appear between the bead and a point one-half the distance from the bead to the shoulder of the tire. on at\nleast one sidewall. The markings must be in letters and numerals not less than 0.078 inches high and raised above or sunk below\nthe tire surface not less than 0.015 inches.\n\n(c) The generic name oreach cord materia) used in the plies (both sidewall and tread area) of the tire;\n1\n\n16 CFR \xc2\xa7 303.7 Generic names and definitions for manufactured fibers.\n\n\x0cLetter to NHTSA re: Request for Interpretation of 49 CFR \xc2\xa7571.139 Concerning the Use of the\nGeneric Name "Lyocell" or "Rayon"\nApril 2, 2008\nPage 2\n\nAccording to the above-referenced regulations, the FTC permits the use of the genetic\nname "lyocell" or "rayon" where the fabric used is "lyocell". However, NHTSA regulations\nconcerning tire labeling are silent on the "generic name of each cord material" tlJat may be used.\nTherefore, we request clarification and confmnation that Kumho Tires may label its tires as\neither "lyocell" or "rayon" as long as the tire cord matetials are manufactured using "lyocell."\n\nIf NHTSA respond by requiring Kumho Tires to label the tires as "lyocell", we would\nappreciate it ifNHTSA could provide us with the regulation suppOliing NHTSA\'s conclusion.\nThank you for your attention and assistance in this matter. Your earliest reply would be\ngreatly appreciated. Please do not hesitate to contact the undersigned if you have questions.\nVery truly yours,\nLITTLETON JOYCE UGHETTA PARK & KELLY LLP\n\n\xe2\x80\xa2\nMichael H. Bai\n\nPursuant to the provisions of section 7(c) of the Act, the Commission hereby establishes the generic names for manufactured\nfibers, together with their respective definitions, set forth in this section, and the generic names for manufactured fibers, together\nwith their respective definitions, set forth in international Organization for Standardization ISO 2076: 1999(E), "Textiles-Man-\n\nmade\n\nfibres~~Generic\n\nnames. tl This incorporation by reference was approved by the Director of the Federal Register in\n\naccordance with 5 U.S.C. 552(a) and I CFR part 51. Copies may he ohtained from ti,e American National Standards Institute, II\nWest 42nd St., 13th floor, New York, NY 10036. Copies may be inspected at the Federal Trade Commission, Room 130,600\n\nPennsylvania Avenue, NW., Washington, DC 20580, or at the National Archives and Records Administration (NARA). For\ninformation on the availability of this material at NARA, cail 202-741-6030, or go to: http://www.archives.gov/federal-\n\nregistcr/code--of--federal-regulations/ibr-Iocations.html.\n(d) Rayon-A manufactured fiber composed of regenerated cellulose, as well as manufactured fibers composed of regenerated\ncellulose in which substituents have replaced not more than 15% of the hydrogens of the hydroxyl groups. Where the fiber is\ncomposed ofceltulose precipitated from an organic solution in which no substitution orihe hydroxyl groups takes place\nand no chemical intermediatesnre formed. the term Ivocell may be used as a generic description of the fiber.\n\nLITTLETON JOYCE UCHETTA PARK & KELLY LLP\n\n\x0c\xe2\x80\xa2I\n\nI\n\n0\n\nI\n\n0\n\nI\n\n"iii\n\n0\n\n0\n\n~\n\n0\n\n>.\n\n0\n\n..J\nI\n\n0\n\nI\n\n0\n0\n\nI\n\n0\n\nI\nfa\n.-\n\n:::s\n\n:;::;-\n\nE\nl0\n\nu.\n\n--\n\nCIJ\nU\n\n0\n\n"\n\nI\n\n(.)\n\n0\n\n"\n\nU)\n\n0\n\n0\n\n""\n\nc\n\n;-"\\/\n\no\n\n"\n\nell\n~\n\n:l\n\n<Il\n\nz\n\n"\'-----I \\ 0\n\n>-\n\n"0\nIII\n\nE\'\n\ne-\n\nIII\n\nis\n\n0\n\n:E\n:E\n\nz\n\n....I\n\nI\n\n\xe2\x80\xa2I\n\n0\n\nI\n\n0\n\nI\n\n0\n0\n\nI\n\n0\nJ:\n\n0\n\nJ:\n\n0\n\n0\n\nJ:\n\n0\n\nI\n\n\':2\'""\n0\n\n"iii\n()\n\n\x0c'


b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nD ivision of M arketing Practices\nCraig Tregillus\nctregillus@ ftc.gov\n\nD irect D ial: (202) 326-2970\nFacsim ile: (202) 326-3395\n\nOctober 2, 2008\nStephen Dirksen, General Counsel\nNorth Carolina Board of Funeral Service\n1033 Wade Ave. - Suite 108\nRaleigh, NC 27605\nDear Mr. Dirksen:\nYou have asked under what circumstances a crematory is required to comply with the\nfuneral rule. It is staff\xe2\x80\x99s view that a crematory must comply with all of the requirements of the\nrule if it offers or sells cremation services and any funeral goods, such as caskets, alternative\ncontainers, or urns.\nAs defined in section 453.1(f) of the rule \xe2\x80\x9c[a] \xe2\x80\x98crematory\xe2\x80\x99 is any person, partnership or\ncorporation that performs cremation and sells funeral goods.\xe2\x80\x9d This definition includes each of\nthe two elements \xe2\x80\x93 the offer or sale of both \xe2\x80\x9cfuneral goods\xe2\x80\x9d and \xe2\x80\x9cfuneral services\xe2\x80\x9d \xe2\x80\x93 that is\ncentral to the definition of \xe2\x80\x9cfuneral provider\xe2\x80\x9d in section 453.1(i), which states that \xe2\x80\x9c[a] \xe2\x80\x98funeral\nprovider\xe2\x80\x99 is any person, partnership or corporation that sells or offers to sell funeral goods and\nfuneral services.\xe2\x80\x9d\nNotwithstanding the fact that cremation would normally be regarded as a service, your\ninquiry questions whether the term \xe2\x80\x9cfuneral services\xe2\x80\x9d can encompass cremation, under a strict\nreading of the definition of that term in section 453.1(j):\n\xe2\x80\x98Funeral services\xe2\x80\x99 are any services which may be used to:\n(1)\n\nCare for and prepare deceased human bodies for burial, cremation\nor other final disposition; and\n\n(2)\n\narrange, supervise or conduct the funeral ceremony or the final\ndisposition of deceased human remains.\n\nIt is clear from the reference to \xe2\x80\x9ccremation or other final disposition\xe2\x80\x9d in the first subparagraph of\nthe definition that cremation is a \xe2\x80\x9cfinal disposition.\xe2\x80\x9d Accordingly, the requirement in the second\nsubparagraph is met, because a crematory \xe2\x80\x9csupervises\xe2\x80\x9d and \xe2\x80\x9cconducts\xe2\x80\x9d the final disposition.\nYour inquiry appears to question, however, whether the test in the first subparagraph can be met,\nperhaps because \xe2\x80\x9ccare and preparation of the body\xe2\x80\x9d is such a common description of a service\ntraditionally offered by funeral homes. You therefore may assume that a crematory cannot also\n\xe2\x80\x9ccare for and prepare\xe2\x80\x9d bodies for cremation.\n\n\x0cMr. Stephen Dirksen\nPage 2 of 2\n\nSuch an assumption is unjustified, and overlooks the history of the rule. Crematories\n\xe2\x80\x9ccare for\xe2\x80\x9d a body from the moment they receive it, because it has been remitted to their care, and\nmay need to be held or refrigerated for a period of time as required by state law or the\navailability of the crematory\xe2\x80\x99s retort. Crematories must also take any necessary steps to\n\xe2\x80\x9cprepare\xe2\x80\x9d the body for cremation, which may include, for example, removing the body from a\nshell container or rental casket, as well as removal of pacemakers, metal implants and jewelry.1\nThe original Statement of Basis and Purpose for the rule confirms this interpretation,\nmaking it clear that the definition of \xe2\x80\x9ccrematory,\xe2\x80\x9d which has not changed notwithstanding the\nsubsequent renumbering of the definition, includes both \xe2\x80\x9cfuneral goods\xe2\x80\x9d and \xe2\x80\x9cfuneral services:\xe2\x80\x9d2\nThe definition of crematory" in Section 453. 1(g) includes only those persons,\npartnerships and corporations that both perform cremations and sell funeral\ngoods. The Commission is aware that some crematories do not sell funeral\ngoods, and therefore would not fall within this definition. However, the\nCommission believes that \xc2\xa7 453. 1(g) is consistent with Section 19 of the 1980\nImprovements Act which limits the rule s coverage to persons who sell both\nfuneral goods and funeral services.\nConsequently, any crematory that offers or sells funeral goods must comply with the\nsame rule requirements as all other \xe2\x80\x9cfuneral providers.\xe2\x80\x9d This includes the requirement to\nprovide price information by telephone upon request, give consumers a General Price List\n(\xe2\x80\x9cGPL\xe2\x80\x9d) describing the goods and services the crematory offers for sale, and the requirement\nthat they show consumers a Casket Price List if caskets are offered but not listed in the GPL. It\nalso includes all applicable prohibitions and affirmative requirements of the rule, such as the\nprohibition in section 453.4(a)(1) against requiring the purchase of a casket for direct cremation,\nand the affirmative requirement in section 453.4(a)(2) to make an alternative casket available for\ndirect cremations.\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\non the FTC website at http://www.ftc.gov/bcp/conline/edcams/funerals/staffopinions.shtm.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n1\n\nSee, e.g., http://www.funeralplan.com/funeralplan/cremation/beforecremation.html.\n\n2\n\n47 Fed. Reg. 42260, 42285 (Sept. 24, 1982).\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Marketing Practices\n\nMay 5, 2008\nMatthew K. Cordis, Esq.\nClarke Silvergate & Campbell, P.A.\n799 Brickell Plaza, Suite 900\nMiami, FL 33131\nDear Mr. Cordis:\nThis letter responds to your request of March 3, 2008 seeking an advisory opinion from\nstaff of the Federal Trade Commission (the \xe2\x80\x9cCommission\xe2\x80\x9d or \xe2\x80\x9cFTC\xe2\x80\x9d) regarding the application\nof the Magnuson-Moss Warranty Act (\xe2\x80\x9cthe Act\xe2\x80\x9d), 15 U.S.C. \xc2\xa7 2301, et seq., to a 1300\nhorsepower diesel engine that your client imports and distributes. Your client also coordinates\nservices of those engines in the United States.\nYou request guidance on whether this engine would be a \xe2\x80\x9cconsumer product\xe2\x80\x9d under the\nAct. 15 U.S.C. \xc2\xa7 2301(1). Based on your letter\xe2\x80\x99s description of the engine and relevant sales\nand industry data included in your letter, FTC staff\xe2\x80\x99s opinion is that the engine in question would\nnot be a \xe2\x80\x9cconsumer product\xe2\x80\x9d for purposes of the Act.\nThe Act requires companies that offer written warranties on the consumer products they\nmanufacture or sell to provide consumers with detailed information about warranty coverage.\nFor example, the Act and the regulations the FTC adopted under the Act require that the key\nterms of warranty coverage be disclosed in a single document, 16 C.F.R. Part 701, and that the\ndocument be available at the point of purchase for consumers to review before purchasing a\nwarranted consumer product, 16 C.F.R. Part 702.\nThe Act defines a \xe2\x80\x9cconsumer product\xe2\x80\x9d as \xe2\x80\x9cany tangible personal property which is\ndistributed in commerce and which is normally used for personal, family, or household purposes\n(including any such property intended to be attached to or installed in any real property without\nregard to whether it is so attached or installed).\xe2\x80\x9d 15 U.S.C. \xc2\xa7 2301(1). The Commission has\npromulgated an interpretive rule that clarifies that \xe2\x80\x9ca product is a \xe2\x80\x98consumer product\xe2\x80\x99 if the use\nof that type of product [for personal, family, or household purposes] is not uncommon.\xe2\x80\x9d 16\nC.F.R \xc2\xa7 700.1(a).\nThe product you describe in your letter is a 1300 horsepower diesel engine commonly\nincorporated into industrial or commercial products such as cranes, buses, farm equipment,\nlocomotives, mining equipment, and commercial vessels. According to the sales data you\nprovide, the engine\xe2\x80\x99s manufacturer sold just 2% of these engines to manufacturers for\nincorporation into marine pleasure craft, and less than .01% directly to individuals for similar\nuse. Although the FTC\xe2\x80\x99s interpretative rule states that \xe2\x80\x9c[t]he percentage of sales . . . is not\ndeterminative,\xe2\x80\x9d 16 C.F.R. \xc2\xa7 700.1(a), sales information is relevant in determining a product\xe2\x80\x99s\n\n\x0cMr. Matthew K. Cordis\nMay 5, 2008\nPage 2\nnormal use, and whether that use is for personal, family, or household purposes such that it falls\nwithin the Act\xe2\x80\x99s coverage. The sales data you provide suggests that this engine is not one for\nwhich the normal use is for personal, family, or household purposes. Therefore, based on the\npurposes of the Act and the data you provided, we agree that this engine is not a \xe2\x80\x9cconsumer\nproduct\xe2\x80\x9d under the Act.1\nThe opinions expressed in the foregoing discussion and the basis for this conclusion are\nthose of Commission staff only and are not attributable to, nor binding on, the Commission itself\nor any individual Commissioner. I hope this discussion is helpful to you. If you have any\nfurther questions, please do not hesitate to contact me at (202) 326-2505.\n\nSincerely,\n\nAllyson Himelfarb\nInvestigator/Magnuson-Moss\nProgram Coordinator\n\n1\n\nThe industry data you provide also supports this conclusion. You indicate that in 2003,\nover 88% of all diesel engines with horsepower greater than 500 were incorporated into\nindustrial vessels, equipment and machinery, as compared to approximately 12% that were\nincorporated into large motor yachts. As you note, it is likely that a significant percentage of\nthese motor yachts are used solely for commercial purposes. Therefore, it appears uncommon\nfor a 1300 horsepower diesel engine to be used for \xe2\x80\x9cpersonal, family, or household purposes.\xe2\x80\x9d\n\n\x0c'


b"U N ITED STA T ES O F A M ER IC A\n\nFEDERAL TRADE COMMISSION\nW A SH IN G TO N , D .C . 20580\n\nD ivision of M arketing Practices\n\nApril 15, 2008\nMs. Kristen Marshall\nCopilevitz & Canter, LLC\n310 W. 20th Street, Ste. 300\nKansas City, Mo. 64108\nDear Ms. Marshall:\nThis letter responds to your request, dated January 31, 2008, for a staff advisory opinion\nregarding the interplay between the recordkeeping requirements of \xc2\xa7 310.5 of the Telemarketing\nSales Rule (\xe2\x80\x9cTSR\xe2\x80\x9d) and the Do Not Call and Call Abandonment \xe2\x80\x9csafe harbor\xe2\x80\x9d provisions of\n\xc2\xa7\xc2\xa7 310.4(b)(3) and (4). Specifically, you note that \xc2\xa7 310.5(a) requires that a seller or\ntelemarketer retain certain records \xe2\x80\x9cfor a period of 24 months from the date the record is\nproduced,\xe2\x80\x9d while \xc2\xa7 310.4(b)(3) provides, in relevant part, that:\nA seller or telemarketer will not be liable for violating \xc2\xa7 310.4(b)(1)(ii) and (iii) if\nit can demonstrate that, as part of the seller\xe2\x80\x99s or telemarketer\xe2\x80\x99s routine business\npractice:\n(i)\n\nIt has established and implemented written procedures to comply with\n\xc2\xa7 310.4(b)(1)(ii) and (iii); . . .\n\n(iii)\n\nThe seller, or a telemarketer or another person acting on behalf of the seller or\ncharitable organization, has maintained and recorded a list of telephone\nnumbers the seller or charitable organization may not contact, in\ncompliance with \xc2\xa7 310.4(b)(1)(iii)(A);\n\n(iv)\n\nThe seller or a telemarketer uses a process to prevent telemarketing to any\ntelephone number on any list established pursuant to \xc2\xa7 310.4(b)(3)(iii) or\n\xc2\xa7 310.4(b)(1)(iii)(B), employing a version of the \xe2\x80\x9cdo-not-call\xe2\x80\x9d registry obtained\nfrom the Commission no more than thirty-one (31) days prior to the date any\ncall is made, and maintains records documenting this process . . . . [Emphasis\nadded.]\n\nSimilarly, \xc2\xa7 310.4(b)(4) provides, in relevant part, that:\nA seller or telemarketer will not be liable for violating \xc2\xa7 310.4(b)(1)(iv) if:\n\n\x0cMs. Kristen Marshall\nCopilevitz & Canter, LLC\nApril 15, 2008\n\nPage 2 of 3\n\n(i)\n\nthe seller or telemarketer employs technology that ensures abandonment\nof no more than three (3) percent of all calls answered by a person,\nmeasured per day per calling campaign;\n\n(ii)\n\nthe seller or telemarketer, for each telemarketing call placed, allows the\ntelephone to ring for at least fifteen (15) seconds or four (4) rings before\ndisconnecting an unanswered call;\n\n(iii)\n\nwhenever a sales representative is not available to speak with the person\nanswering the call within two (2) seconds after the person's completed\ngreeting, the seller or telemarketer promptly plays a recorded message that\nstates the name and telephone number of the seller on whose behalf the\ncall was placed; and\n\n(i)\n\nthe seller or telemarketer, in accordance with \xc2\xa7310.5(b)-(d), retains\nrecords establishing compliance with \xc2\xa7310.4(b)(4)(i)-(iii).\n\n[Emphasis added.]\nYou ask whether the \xe2\x80\x9cduration of time for which the records [mentioned in \xc2\xa7 310.4(b)(3)\nand \xc2\xa7 310.4(b)(4), highlighted in boldface italic above] must be maintained . . . [is] the same [24\nmonths] as that found in \xc2\xa7 310.5.\xe2\x80\x9d\nOur conclusion is that the 24-month limitation on the recordkeeping requirements in\n\xc2\xa7 310.5 does not pertain to the safe harbor elements in \xc2\xa7 310.4(b)(3) and \xc2\xa7 310.4(b)(4). The\nreasons for this conclusion are set out below. Please be advised that this conclusion and the\nopinions expressed in the following discussion are those of Commission staff only and are not\nattributable to, nor binding on, the Commission itself or any individual Commissioner.\nDiscussion\nSection 310.5 sets forth affirmative recordkeeping requirements. If an entity subject to\nthe rule were to fail comply with these requirements for the specified 24 months, that failure\ncould, standing alone, constitute a law violation carrying a maximum civil penalty of $11,000 for\neach instance. An entity subject to the TSR must create and maintain the specified records and\nretain them for 24 months after creation.\nBy contrast, the elements of the \xc2\xa7\xc2\xa7 310.4(b)(3) and (4) safe harbors highlighted above are\nnot recordkeeping requirements, but rather provide an entity subject to the TSR with a means of\nexculpation in situations where the FTC has reason to believe that the entity is or has been in\nviolation of the Do Not Call provisions of \xc2\xa7 310.4(b)(1)(iii) or the Call Abandonment provisions\nof \xc2\xa7 310.4(b)(1)(iv). Put another way, the documentation that comprises the highlighted\nelements of the two safe harbors is in the nature of evidence necessary to support an affirmative\n\n\x0cMs. Kristen Marshall\nCopilevitz & Canter, LLC\nApril 15, 2008\n\nPage 3 of 3\n\ndefense. Such exculpatory evidence would be produced to rebut potential allegations of Do Not\nCall or Call Abandonment violations. On the other hand, failure of an entity to produce such\nevidence when faced with allegations of \xc2\xa7 310.4(b)(1)(iii) Do Not Call violations or of\n\xc2\xa7 310.4(b)(1)(iii) Call Abandonment violations could result in the entity being held liable to pay\na civil penalty for such violations.1\nEntities subject to the TSR may choose to retain the documentation that comprises\nelements of the two safe harbors for as long as they might be subject to enforcement action for\nnon-compliance with the Do Not Call or Call Abandonment requirements. The statute of\nlimitations for FTC enforcement actions for civil penalties for violation of the TSR and other\ntrade regulation rules is five years. 28 U.S.C. \xc2\xa7 2462.\nI hope this information is helpful.\nSincerely,\n\nAllen W. Hile, Jr.\nAssistant Director\n\n1\n\nUnder the FTC Act, the Commission may also seek restitution for consumers injured by\nviolations of the TSR, or disgorgement of ill-gotten gains attributable to violations of the TSR.\n15 U.S.C. \xc2\xa7 53(b).\n\n\x0c"


b"ADVISORY OPINION\n___________________\nIN THE MATTER OF\n\nU.S. FORECLOSURE NETWORK\nFTC File No. P084801\n\nOpinion, March 19, 2008\n\nRe:\nWhether the Fair Debt Collection Practices Act\n(\xe2\x80\x9cFDCPA\xe2\x80\x9d) prohibits a debt collector from notifying a\nconsumer of settlement options that may be available to\navoid foreclosure.\nDear Ms. Sinsley and Mr. Newburger:\nThis is in response to the request from the USFN, formerly\nknown as the U.S. Foreclosure Network, for a Commission advisory\nopinion (\xe2\x80\x9cRequest\xe2\x80\x9d) regarding whether the Fair Debt Collection\nPractices Act (\xe2\x80\x9cFDCPA\xe2\x80\x9d)1 prohibits a debt collector in the\nforeclosure context from discussing settlement options in the\ncollector\xe2\x80\x99s initial or subsequent communications with the consumer.\nThe Request asserts that the receipt of information about settlement\noptions could enable the consumer to save his or her home from\nforeclosure. As explained more fully below, the Commission\nconcludes that debt collectors do not commit a per se violation of the\nFDCPA when they provide such information to consumers.\nMoreover, the Commission believes that it is in the public interest\nfor consumers who may be subject to foreclosure to receive truthful,\nnon-misleading information about settlement options, especially in\nlight of the recent prevalence of mortgage borrowers who are\ndelinquent or in foreclosure.2\n1\n\n2\n\n15 U.S.C. \xc2\xa7\xc2\xa7 1692- 1692p.\n\nAccording to press reports, in 2007, there were an estimated 2.2 million\nforeclosure filings in the United States, a 75% increase from 2006. The number of\nforeclosure filings increased late in 2007- in December there were 215,749\nforeclosure filings, a 97% increase from the number of filings in December 2006.\nDecember was the fifth consecutive month in which foreclosure filings topped\n200,000. Associated Press, Home Foreclosure Rate Soars in 2007, N.Y.TIMES,\n\n\x0cU.S. FORECLOSURE NETWORK\n\n407\n\nOpinion of the Commission\n\nUSFN submitted the Request pursuant to Sections 1.1-1.4 of the\nCommission\xe2\x80\x99s Rules of Practice, 16 C.P.R. \xc2\xa7\xc2\xa7 1.1-1.4. The Request\nfocuses on two sections of the FDCPA, Sections 807 and 809, 15\nU.S.C. \xc2\xa7\xc2\xa7 1692e, 1692g,3 and presents three specific questions for\nconsideration:\n(1) Does a debt collector violate the FDCPA\nwhen he, in conjunction with the sending of a\n\xe2\x80\x9cvalidation notice\xe2\x80\x9d pursuant to Section 809(a) of the\nFDCPA, notifies a consumer of settlement options\nthat may be available to avoid foreclosure?\n(2) Does a debt collector violate the FDCPA\nwhen he, subsequent to sending the validation notice\npursuant to Section 809(a) of the FDCPA, notifies a\nconsumer of settlement options that might be\navailable to avoid foreclosure?\n(3) Does a debt collector commit a false,\nmisleading or deceptive act or practice in violation of\nSection 807 of the FDCPA when he presents to a\nconsumer settlement options that are available to the\nconsumer to avoid foreclosure?\n\nJan. 29, 2008, available at www.nytimes.com/aponline/us/AP-Foreclosure\n-Rates.html. Mortgage delinquency is also escalating. The number of borrowers\nfalling behind on first-lien mortgage payments for residences during 2007 was the\nhighest it has been since 1986-2.64 million borrowers fell behind on payments.\nMichael M. Phillips, Serena Ng & John D. McKinnon, Battle Lines Form Over\nMortgage Plan, WALL ST. J., Dec. 7, 2007, at Al.\n3\n\nThe Commission has considered only these sections in rendering this\nopinion and it should not be construed to pertain to any other section of the\nFDCPA, to any other law, or to any issue of legal ethics.\n\n\x0cFEDERAL TRADE COMMISSION DECISIONS\nVOLUME 145\n\n408\n\nOpinion of the Commission\n\nThe Request states that there is no case law addressing these specific\nquestions. We address the questions seriatim.\nUSFN\xe2\x80\x99s first two questions specifically reference Section 809(a)\nof the FDCPA, 15 U.S.C. \xc2\xa7 1692g(a). Section 809(a) provides, in\npertinent part, that a debt collector must, within the first five days\nafter the initial communication with the debtor, provide a written\nnotice containing specific information including the amount of the\ndebt, the debtor\xe2\x80\x99s right to dispute the validity of the debt in writing\nwithin 30 days, and the collector\xe2\x80\x99s obligation to obtain verification\nof the debt in response to the consumer\xe2\x80\x99s dispute document.\nCongress enacted Section 809 to \xe2\x80\x9celiminate the recurring problem of\ndebt collectors dunning the wrong person or attempting to collect\ndebts which the consumer has already paid.\xe2\x80\x9d4\nSection 809(a) does not expressly prohibit debt collectors from\nadding language to the written validation notice with the mandatory\ndisclosures. The statute also does not expressly prohibit debt\ncollectors from presenting information to consumers about\nsettlement options in subsequent communications. The Commission\ntherefore concludes that there is no per se violation of Section\n809(a) of the FDCPA if a debt collector includes information\nregarding foreclosure settlement options along with a validation\nnotice or in subsequent communications after that notice is\ndelivered.\nNevertheless, collectors must take care that communicating\ninformation about settlement options does not undermine the\nconsumer protections in Section 809(a). The touchstones of Section\n809(a) are the consumer\xe2\x80\x99s rights to dispute his or her debt in writing\nwithin 30 days and to obtain verification of that debt from the\ncollector. To protect these rights, in 2006 Congress amended\nSection 809(b) to expressly state that \xe2\x80\x9c[a]ny collection activities and\n4\n\n1698.\n\nS. Rep. No. 95-382, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695,\n\n\x0cU.S. FORECLOSURE NETWORK\n\n409\n\nOpinion of the Commission\n\ncommunication during the 30-day period may not overshadow or be\ninconsistent with the disclosure of the consumer\xe2\x80\x99s right to dispute\nthe debt. ...\xe2\x80\x9d5 This statutory amendment ratified court decisions\nholding that debt collectors that provide consumers with information\nin addition to the mandatory disclosures violate Section 809(a) if the\nadditional information effectively obscures the consumer\xe2\x80\x99s right to\ndispute his or her debt and obtain verification from the collector.6\nSpecifically, these cases concluded that providing additional\ninformation is unlawful if it overshadows or contradicts required\ndisclosures or creates confusion regarding the basic right to dispute\nthe debt and obtain verification from the collector.7 In making these\ndeterminations, courts considered the communication from the\nperspective of an unsophisticated consumer.8\nIn sum, with respect to USFN\xe2\x80\x99s first two questions presented in\nits Request, the Commission concludes that there is no per se\nviolation of Section 809(a) if a debt collector in the foreclosure\ncontext discusses settlement options in the collector\xe2\x80\x99s initial or\nsubsequent communications with the consumer. This conclusion,\nhowever, does not prevent a fact-based finding that a specific\ncommunication violates the Act if it overshadows or is inconsistent\nwith the disclosures of the consumer\xe2\x80\x99s right to dispute the debt\nwithin 30 days.\n\n5\n\n15 U.S.C. \xc2\xa7 1692g(b).\n\n6\n\nSee, e.g., Swanson v. Oregon Credit Servs., 869 F.2d 1222 (9th Cir. 1988).\n\n7\n\nId.; See, e.g., Durkin v. Equifax Check Servs., 406 F.3d 410 (7th Cir. 2005);\nShapiro v. Riddle & Assocs., 351 F.3d 63 (2d Cir. 2003); Renick v. Dun &\nBradstreet Receivable Mgmt. Servs., 290 F.3d 1055 (9th Cir. 2002).\n8\n\nSee, e.g., Sims v. G.C. Servs., 445 F.3d 959 (7th Cir. 2006) (\xe2\x80\x9cunsophisticated\nconsumer\xe2\x80\x9d); Smith v. Transworld Sys., 953 F.2d 1025 (6th Cir. 1992) (\xe2\x80\x9cleast\nsophisticated consumer\xe2\x80\x9d).\n\n\x0cFEDERAL TRADE COMMISSION DECISIONS\nVOLUME 145\n\n410\n\nOpinion of the Commission\n\nUSFN\xe2\x80\x99s third question asks whether a debt collector commits a\nfalse, misleading or deceptive act or practice in violation of Section\n807 of the FDCPA when he presents to a consumer settlement\noptions that are available to the consumer to avoid foreclosure.\nSection 807\xc2\xb7of the FDCPA establishes a general prohibition against\nthe use of any \xe2\x80\x9cfalse, deceptive or misleading representation or\nmeans in connection with the collection of any debt\xe2\x80\x9d and provides a\nlist of 16 specific practices that are per se false, deceptive or\nmisleading under the Act. In enacting Section 807, Congress noted\nthat this general prohibition on deceptive collection practices would\n\xe2\x80\x9cenable the courts, where appropriate, to proscribe other improper\nconduct which is not specifically addressed.\xe2\x80\x9d9\nAs a general matter, the Commission concludes that a debt\ncollector\xe2\x80\x99s communication with a consumer regarding his or her\noptions to resolve mortgage debts and to potentially avoid\nforeclosure would not necessarily violate either the general or\nspecific prohibitions of Section 807. However, we also stress that a\nparticular communication with settlement option information could\nbe deceptive in violation of Section 807 if it contains a false or\nmisleading representation or omission of material fact. Determining\nwhether a specific communication is false or misleading is a factbased inquiry that considers all the facts and circumstances\nsurrounding the particular communication at issue.10\nAfter reviewing the language of the FDCPA, its legislative\nhistory, and relevant case law, as well as the information contained\nin the Request, the Commission concludes that a debt collector in\nthe foreclosure context does not commit a per se violation of\n9\n\nS. Rep. No. 95-382, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1698.\n\n10\n\nSee Jeter v. Credit Bureau, Inc., 760 F.2d 1168 (11th Cir. 1985) (noting that\nFDCPA expands pre-existing FTC deception authority); see also FTC Policy\nStatement on Deception, appended to In re Cliffdale Associates, Inc., 103 F.T.C.\n110, 174-84 (1984) (setting forth deception test).\n\n\x0cU.S. FORECLOSURE NETWORK\n\n411\n\nOpinion of the Commission\n\nSections 807 or 809 of the FDCPA when he or she addresses\nsettlement options in the collector's initial or subsequent\ncommunications with the consumer.\nBy direction of the Commission.\n\n\x0c"