OAR 137-020-0010: Trade Practices Act

(1) Purpose: It is the purpose of this rule to declare as an unlawful trade practice certain representations relating to price reductions. (2) Scope: At present, it is unlawful under ORS 646.608(1)(j) to make “false or misleading representations of fact concerning the reasons for, existence of, or amounts of price reductions.” This rule is intended to define types of price comparisons which are in violation of that section, by establishing permissible types of reference price advertising. The rule does not address misrepresentations regarding the “reasons for” price reductions. The Examples provided in this rule are for illustrative purposes only. (3) Authority: This rule is adopted pursuant to ORS Chapter 183 on authority granted to the Attorney General by ORS 646.608(1)(s) and (4). (4) Effective Date: This rule applies to all advertisements (other than catalogues) printed, distributed, or broadcast, or offers for sale made, after September 1, 1976. Subsection (6)(e) of this rule applies to all catalogues distributed in Oregon after January 1, 1977. (5) Definitions: As used in this rule: (a) The definitions of terms set forth in ORS 646.605(1975) are applicable; (b) “Catalogue” means a multi-page solicitation in which a person offers more than one specific type of goods for sale from which a consumer can order goods directly without going to the seller’s place of business, and which is distributed to consumers by means other than by inclusion in a newspaper; (c) “Competitor” means a retail outlet in the person’s geographic market area with whom the person in fact competes for sales; (d) “Offering Price” means the price at which a person represents that goods will be sold or leased, whether stated as a definite sum of money or as a determinate reduction from a reference price; (e) “Reference Price” means any price, whether stated in dollars, in terms of a percentage or faction, or by any other method, to which a person compares the currently represented offering price of its own goods. Examples of “reference prices” include manufacturer’s suggested list or suggested retail prices; a competitor’s offering price for the same or similar goods; a price at which the person formerly offered for sale or sold the same or similar goods; and an unspecified price at which the person formerly offered for sale or sold the same or similar goods suggested by the use of terms such as “on sale,” “reduced to,” “________% off,” or the like; (f) “Readily Ascertainable Reference Price” means a reference price which is capable of being determined, from a stated offering price, by means of a simple arithmetic computation; (g) “Similar Goods” mean goods associated with a reference price which are similar in each significant aspect, including size, grade, quality, quantity, ingredients, utility and operating characteristics, to the offered goods. (6) Unfair or Deceptive Use of Reference Prices: A person engages in conduct which unfair or deceptive in trade or commerce when it represents that goods are available for sale or lease by it at an offering price less than a reference price unless such reference price comes within any one of the following exceptions: (a) The reference price is stated or readily ascertainable, and is a price at which the person, in the regular course of its business, made good faith sales of the same or similar goods or, if no sales were made, offered in good faith to make sales of the same or similar goods, either: (A) Within the preceding 30 days; or (B) At any other time in the past which is identified. EXAMPLE: This exception is intended to identify the most common price comparison — to a former price charged by the seller himself. The former price must be one which was used in good faith to make or offer to make sales. Good faith is absent if the person raises his price for the purpose of subsequently claiming reductions. Comparisons to “a” legitimate former price are allowed. Thus, if a chain store reduces its price in one or two outlets to meet localized competition, its price throughout the rest of the chain can be used as a reference price. Seasonal comparisons from year-to-year are also permitted. (b) The reference price is the price at which the person will offer the same or similar goods for sale in the future, provided that: (A) The reference price is stated or readily ascertainable; and (B) If the reference price will not be put into effect for more than 90 days after the representation, the effective date of the reference price is stated; and (C) Such reference price is actually put into effect for the purpose of offering in good faith to make sales. EXAMPLE: This exception permits introductory offering prices and the like. (c) The reference price is stated or readily ascertainable, and is a price at which an identified or identifiable competitor is or has in the recent regular course of its business offered to make good faith sales of the same or similar goods. EXAMPLE: A person may rely upon the recent advertised price of a competitor for the same or similar goods, if he reasonably believes the competitor was attempting to make sales at that price. Alternatively, a person can “shop” his competitor to determine the latter’s recent offering price. (d) The reference price is stated or readily ascertainable, and is required by federal or Oregon law to be affixed to the goods, and clear disclosure is made in the same representation that all sales of such goods are not necessarily made at such reference price, if such is in fact the case. EXAMPLE: This rule is directed at claimed price reductions from the “sticker prices” of automobiles. If a person makes such a price comparison and in fact similar automobiles are sold at less than the “sticker price,” that fact must be disclosed clearly in the same representation. (e) The reference price is stated in a catalogue, so long as the person employing such reference price includes a statement, printed in a manner which a reader of the catalogue is likely to notice, explaining: (A) The source of the reference price; and (B) That the reference prices may not continue to be in effect during the entire life of the catalogue, if such is in fact the case. The requirements of this section are satisfied by a single disclosure statement, which applies to the catalogue as a whole, made in conjunction with the explanation to the reader of how to make a purchase from the catalogue. (f) The reference price is stated and is a price, such as a manufacturer’s list price, which the person can document as having been employed in good faith offers to sell the same or similar goods within his market area during the preceding 30 days. EXAMPLE: Comparing one’s current offering price to a manufacturer’s list price is valid if the offerer can substantiate that goods have been offered or sold, in good faith, at that list price during the preceding 30 days. (g) Notwithstanding subsections (6)(a) through (f) of this rule, a person may represent a general price reduction on a variety of merchandise without using a stated or readily ascertainable reference price, so long as: (A) The amount of reduction is stated expressly, either in terms of a dollar amount or a percentage; (B) The reduction is from a price or prices at which the person made good faith sales of the same or similar goods at a time in the past which is identified; and (C) The represented reduction is true as to each item offered for sale. EXAMPLE: This would permit advertising seasonal clearance sales and the like by means of a general representation as to price reductions, without stating specifically either the reference price or the offering price.