DEPARTMENT OF ATTORNEY GENERAL

CONSUMER PROTECTION AND CHARITABLE TRUSTS DIVISION

PRICING AND ADVERTISING OF CONSUMER ITEMS

(By authority conferred on the attorney general by section 9(6) of Act No. 449 of

the Public Acts of 1976, being S445.359(6) of the Michigan Compiled Laws)

R 14.201 Definitions.

Rule 1. As used in these rules:

(a) "Act" means Act No. 449 of the Public Acts of 1976, being S445.351 et seq. of

the Michigan Compiled Laws.

(b) "Clearance sale" means an offer by a person to sell all offered in-stock

consumer items at a price reduced from that person's regular price if the person

intends to sell out all such items during the advertised period of sale, but will

nevertheless reorder the same or substantially similar items to be again sold by that

person not less than 90 days after the reorder.

(c) "Close out sale" means an offer by a person to sell offered in-stock consumer

items at a price reduced from the person's regular price if consumer items will not

be offered by that person again due to various factors, such as:

(i) The item is no longer manufactured.

(ii) The source of supply is out of business.

(iii) The person unilaterally refuses to carry the item.

(d) "Raincheck" means a written guarantee to deliver a specific consumer item.

(e) "Sale price" means a price offer for a consumer item appearing in advertising

by use of the word "sale" or words of similar meaning, which suggest to a reader,

listener, or viewer that the consumer item is being offered for purchase at a reduction

in price, at a bargain price, or at a savings compared with some other person's or the

advertiser's regular or customary higher price.

History: 1979 AC.

R 14.202 Sale or reduced price advertisements; disclosures.

Rule 2. An offer of a consumer item, except baked goods, fresh fruit, and fresh

vegetables as provided in section 5(4) of the act, for retail sale at a sale price, special

price, or at a price reduced by an amount or proportion, by means of an advertisement

disseminated in the trade area served by any of the advertisers' retail outlets

covered by

the advertisement, shall disclose clearly and conspicuously, in

conjunction therewith, either of the following:

(a) The dates the consumer item is available for purchase.

(b) The numerical quantity available for each consumer item, and where there is

a limitation on how many of the advertised consumer items may be purchased by any 1

person, a statement in numerical amount of how many a consumer may buy of each

advertised consumer item.

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History: 1979 AC.

R 14.203 Disclosing exceptions, limitations, or restrictions rainchecks

and substitutions.

Rule 3. (1) If an advertisement does not state the quantity of a consumer item

available, and the consumer item cannot be sold throughout the advertised period of

sale, the advertisement shall disclose all the seller's exceptions, limitations, or

restrictions with respect to stores, consumer items, or prices otherwise included in the

advertisement, and the advertiser shall make available a raincheck which obligates the

advertiser to deliver and sell to the consumer in possession of the raincheck the

consumer item specified in the raincheck, at the advertised price stated in the

raincheck, and at the future date stated in the raincheck, not in excess of 90 days, or

at an earlier time upon notification to the consumer by the advertiser. After notification

to the consumer is given, the advertiser may dispose of the item upon failure of the

consumer to pick up the item in the time specified in section 5(2) of the act.

(2) An advertiser, instead of providing the consumer with

a

raincheck, may

substitute for the unavailable advertised consumer item a similar consumer item of

equal or greater monetary value. This rule does not modify a person's obligations

under section 5(3) of the act.

(3) If an advertiser elects to substitute a consumer item of equal or greater

monetary value because the advertiser is unable to redeem a raincheck due to the

unavailability of the advertised consumer item, the advertiser may substitute either a

similar item bearing a substantially equivalent regular price at the advertised lower

price, or a similar item bearing a higher regular price at a price equal to the regular

price of the higher-priced item, less the percentage reduction offered for the

unavailable consumer item.

Example: An advertisement indicates a consumer item regularly sells for $50.00, but

is on this week for does not disclose the quantity available. The advertiser runs out of

the advertised item during the period of sale and knows that the item cannot be

obtained again to redeem a raincheck. The advertiser may then offer to a consumer

either of the following substitutesimilar items:

(a) Another similar $50.00 item at $30.00.

(b) Another similar item regularly selling for

$75.00 at a comparable savings or reduction in price; that is, 40% off or $45.00.

(4) An advertiser shall not limit the obligation to redeem a raincheck by including a

date in a raincheck less than 90 days from the date of the raincheck. For example, a

raincheck which provides for its redemption on or before a date less than 90 days

thereafter is insufficient compliance with the act if the purpose of the earlier date is to

evade compliance in the event the guarantee cannot be honored in the shorter

time. An advertiser may, however, redeem the raincheck earlier than 90 days upon

notification to the consumer.

(5) A raincheck shall contain, but not be limited to, the following:

(a) Space for a description of the unavailable item.

(b) Space for the price to be paid for the unavailable item of the consumer.

(c) Space for the signature or initials of a person authorizing the raincheck.

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(6) The raincheck shall be executed in duplicate, 1 copy to be given to the

consumer, the other to be retained by the merchant.

History: 1979 AC.

R 14.204 Successive advertisements.

Rule 4. Where an advertiser disseminates successive advertisements, either to

the same or different consumer groups,

and

each

advertisement contains the

disclosures required by section 5 of the act and these rules, the advertiser is not

obligated to recount or redetermine the quantity of consumer items then remaining

available for each successive advertisement if the advertiser clearly and conspicuously

discloses that the consumer items advertised and available in the quantities stated are

subject to prior sale dueto previous advertising during prior periods of time, and

states the date the advertising first appeared.

History: 1979 AC.

R 14.205 Determination of violation.

Rule 5. In determining whether a violation of the act has occurred, the following

shall be considered:

(a) All circumstances surrounding nondelivery of advertised consumer items

which were actually ordered in quantities sufficient to meet, or are reasonably related to

the intended response to,

the advertisement,

but were not delivered due to

circumstances beyond the advertiser's control.

(b) All circumstances surrounding failure to make advertised consumer items

conspicuously and readily available for sale at or below the advertised prices if the

consumer items were not made available at those prices due to circumstances beyond

the control of the advertiser. In such cases, the making available of a raincheck shall

be considered; however, the mere existence of a "policy" to provide a raincheck, in

and of itself, does not constitute compliance.

(c) Whether the advertiser instructed each of the advertiser's employees,

agents, or servants of theexistence of a raincheck; whether the advertiser required

those persons to inform consumers of its availability; whether, upon learning of the

unavailability of a particular consumer item, the advertiser posted a notice, proximate

to the location of the unavailable item, stating the procedure for obtaining a raincheck;

and whether the advertiser posted, in a clear and conspicuous central location in

the advertiser's store, a notice respecting the store's obligations to deliver a

raincheck or substitute.

History: 1979 AC.

R 14.206 Catalogs, media commercials, circulars, or newspaper inserts

prepared prior to dissemination.

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Rule 6. (1) When an advertiser prepares, or causes to

be

prepared,

an

advertisement in the form of a catalog, television or radio commercial, circular, or an

insert to a newspaper, which advertisement must be printed or submitted not less than 10

days prior to its dissemination to the public, and the advertisement offers to sell

consumer items at a sale price, a special price, or at a price reduced by an amount or

proportion, and the consumer items are readily and conspicuously made available for

sale at a price other than the advertised sale price, special price, or reduced price

during the interim period between the time of printing and the dissemination of the

advertisement to the public, the advertiser is not required to disclose in the

advertisement the numeric quantity available if the advertiser:

(a) Clearly and conspicuously discloses the period of time the consumer items are

available for sale.

(b) Makes available a raincheck to any person who seeks to purchase the

consumer item during the advertised period of sale, or substitutes an equal or greater

monetary value for the advertised item, if the consumer items are not intended to be

liquidated as part of a clearance or close out sale, or a sale of similar import or

meaning.

(2) Where the consumer items are not made readily and conspicuously

available for sale during the interim period, the advertiser may, instead of subrule(1)(a)

and (b) above, disclose the numeric quantity available at time of sale.

History: 1979 AC.

R 14.207 Clearance and close out sales.

Rule 7. (1) In connection with advertising offering consumer items pursuant to

either a clearance or close out sale, where the advertiser is, or will be, unable to either

give a raincheck or substitute an item of equal or greater monetary value, the

advertiser shall disclose the quantity on hand and available during a disclosed period of

sale. However, where the sale is announced in an advertisement required to be

produced not less than 10 days prior to publication, the numeric quantity to be

disclosed is that amount on hand at the time of preparation

of

the

advertisement if the sale items are in fact made readily and conspicuously available for

sale during the interim period between preparation and

publication and the advertisement discloses as of what date that numeric quantity

was determined; but if the sale items are not made readily and conspicuously

available during the interim period, then the numeric quantity stated in the

advertisement shall be equal to the greater of

those actually on hand at time of preparation of the advertisement or actually on

hand at time ofpublication.

(2) In connection with a "clearance" or "close out" sale, an advertiser with more

than 1 store, branch, or outlet participating in the sale

shall make readily and

conspicuously available in each store, branch, or outlet a reasonable number of each

consumer item subject to the sale, unless a disclaimer, as provided in R 14.208(2)(a)

or (b), is set forth.

History: 1979 AC.

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R 14.208 General and specific disclaimers; evasions of act or rules.

Rule 8. (1) General disclaimers in advertising relating to product availability

shall not constitute compliance with the disclosure provisions of the act or these

rules where the disclaimers, when used, are relied upon by a participating dealer or

store to evade the obligations imposed by the act or these rules. Examples of such

"general disclaimers" include the following:

(a) "Not all items available at all stores."

(b) "Available at most stores."

(c) "Available at participating stores."

(2) Specific disclaimers in advertising relating to consumer item availability

only in certain stores are in compliance with the disclosure requirements of the act and

these rules. Examples of a specific disclaimer include the following:

(a) "Available only at stores featuring delicatessen departments."

(b) "Available at the following participating stores: (name and address of each)."

(3) In determining whether a clearance or close out sale is used as a device to

evade the act or these rules, the following criteria shall be considered:

(a) Whether the advertiser regularly or repeatedly uses the terms "clearance

sale" or "close out sale" in connection with advertising of consumer items.

(b) Whether the advertiser has in fact made readily and conspicuously available

for sale all of the consumer items offered as part of the clearance or close out sale.

(c) Whether the clearance or close out sale is merely a temporary reduction in

prices, and there is an increase in prices on the same consumer items after the sale.

(d) Whether the advertiser has, prior to or during the sale, ordered or acquired all

or part of the advertised consumer items, other than from existing inventory, for the

purposes of the sale.

(e) Whether the advertiser has reordered the consumer items which are the

subject of the sale for the purposes of replacing the inventory of sold items so as to

make them available for sale within 90 days of the advertised clearance or close out

sale.

(4) In order to avoid leading a consumer to believe, in connection with an

advertisement disclosing numerical quantities where more than 1 store, outlet, or

dealership is participating, that each store, outlet or dealership has in fact the

numerical quantity listed for the consumer item, and in fact there is a variance in

quantity among such store, outlets, or dealerships, the advertiser may do either of the

following:

(a) Have readily and conspicuously available in each store, outlet, or dealership a

reasonable number of each consumer item subject to the sale advertising.

(b) Provide to each store, outlet, or dealership a quantity of consumer items equal

to the quantity disclosed for each item.

History: 1979 AC.

R 14.209 Enforcement and administration of act and rules.

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Rule 9. (1) The act and rules shall be enforced and administered by the department

of attorney general, consumer protection division, or such other division of the

department as from time to time is designated by the attorney general.

(2) The consumer protection division is located at the Law Building, Lansing,

Michigan 48913.

History: 1979 AC.

R 14.210 Assurance of discontinuance.

Rule 10. (1) When the attorney general or prosecuting attorney has information

indicating that a person may have engaged, is engaging, or is about to engage in a

method, act, or practice which may involve violation of the act, and if he deems the

public interest shall be fully safeguarded thereby, the attorney general or prosecuting

attorney may afford the person the opportunity to negotiate informally

assurance of discontinuance.

an

(2) In determining whether the public interest is safeguarded by an assurance of

discontinuance, the attorney general shall consider:

(a) The nature and gravity of the alleged violation.

(b) The prior record and good faith of the parties involved.

(c) Other factors, including, where appropriate, adequate assurance of voluntary

compliance.

(3) An assurance of discontinuance is accepted and final upon signing by the

attorney general or prosecuting attorney.

(4) An assurance of discontinuance shall include:

(a) A description of the methods, acts, and practices which a person agrees to

permanently discontinue.

(b) A reference to applicable provisions of the act or these rules.

(c) A statement that the person does not admit an issue of law or fact.

(5) An assurance of discontinuance may include:

(a) An agreement to pay the costs of investigation.

(b) An agreement to hold in escrow an amount pending the outcome of

litigation.

(c) An agreement for an amount of restitution to an aggrieved person.

(6) An assurance of discontinuance shall not be introduced in a proceeding

by a person other than a party to the assurance, who may introduce it in the

proceeding to modify its terms or to enforce its terms in whole or in part.

History: 1979 AC.

R 14.211 Declaratory ruling.

Rule 11. (1) A person may request a declaratory ruling from the attorney general as

specified in section 63 of Act No. 306 of the Public Acts of 1969, being S24.263 of

the Michigan Compiled Laws, with respect to determining whether a course of

action is in compliance with the act or these rules. The attorney general shall consider

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the requests

and,

where practical, make a declaratory ruling. A request for a

declaratory ruling is inappropriate where:

(a) The same, or substantially the same, course of action is under investigation,

or is, or has been, the subject of a current action, order, judgment, or decree initiated or

obtained by the attorney general.

(b) The course of action, or its effects, may be such that an informed decision

thereon cannot be made, or can be made only after extensive investigation, clinical

study, testing, or collateral inquiry.

(2) A request for declaratory ruling shall be submitted in writing to the attorney

general, and shall include full and complete information regarding the course of

action. Citations of legal authority supporting the theory or position of the requester

may accompany the request.

(3) A declaratory ruling given by the attorney general is without prejudice to

the right of the attorney general to reconsider the questions involved, and, where the

public interest requires, to prospectively change the ruling. Sixty days' notice of a

prospective change in a declaratory ruling shall be given to the requester so that a

person may discontinue a course of action taken in reliance upon the ruling.

History: 1979 AC.

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