Nissan Motor Corporation in U.S.A.; Proposed Consent Agreement With Analysis To Aid Public Comment |
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Topics: Nissan
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Donald S. Clark
Federal Trade Commission
March 21, 1994
[Federal Register Volume 59, Number 54 (Monday, March 21, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 94-6534]
[[Page Unknown]]
[Federal Register: March 21, 1994]
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FEDERAL TRADE COMMISSION
[File No. 902 3383]
Nissan Motor Corporation in U.S.A.; Proposed Consent Agreement
With Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
require, among other things, a California-based corporation to disclose
clearly and prominently in each advertisement either any significant
restrictions that apply to obtaining a promotional benefit in
connection with a test-drive offer, or that there are significant
restrictions that apply to obtaining the benefit, and would prohibit
the respondent from misrepresenting any conditions, restrictions or
limitations on any promotional benefit it offers consumers in the
future.
DATES: Comments must be received on or before May 20, 1994.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Phillip Broyles, Michael Milgrom or Melissa Sternlicht, FTC/Cleveland
Regional Office, 668 Euclid Ave., suite 520-A, Cleveland, Ohio 44114.
(216) 522-4210.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the
Commission's Rules of Practice (16 CFR 2.34), notice is hereby given
that the following consent agreement containing a consent order to
cease and desist, having been filed with and accepted, subject to final
approval, by the Commission, has been placed on the public record for a
period of sixty (60) days. Public comment is invited. Such comments or
views will be considered by the Commission and will be available for
inspection and copying at its principal office in accordance with
Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR
4.9(b)(6)(ii)).
Agreement Containing Consent Order To Cease and Desist
In the Matter of: Nissan Motor Corporation in U.S.A., a
corporation.
The Federal Trade Commission having initiated an investigation of
certain acts and practices of Nissan Motor Corporation in U.S.A., a
corporation (``proposed respondent''), and it now appearing that
proposed respondent is willing to enter into an agreement containing an
Order to Cease and Desist from the use of the acts or practices being
investigated,
It is hereby agreed by and between proposed respondent, by its duly
authorized officer and its attorney and counsel for the Federal Trade
Commission that:
1. Proposed respondent is a corporation organized, existing and
doing business under and by virtue of the laws of the State of
California, with its office and principal place of business located at
18501 South Figueroa Street, Carson, California 90248 (Mailing Address:
Post Office Box 191, Gardena, California 90248-0191).
2. Proposed respondent admits all the jurisdictional facts set
forth in the draft Complaint here attached.
3. Proposed respondent waives:
(a) Any further procedural steps;
(b) The requirement that the Commission's Decision contain a
statement of findings of fact and conclusion of law;
(c) All rights to seek judicial review or otherwise to challenge or
contest the validity of the Order entered pursuant to this Agreement;
and
(d) All claims under the Equal Access to Justice Act.
4. This Agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
Agreement is accepted by the Commission, it, together with the draft
Complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information with respect thereto
publicly released. The Commission thereafter may either withdraw its
acceptance of this Agreement and so notify proposed respondent, in
which event it will take such action as it may consider appropriate, or
issue and serve its Complaint (in such form as the circumstances may
require) and Decision, in disposition of the proceeding.
5. This Agreement is for settlement purposes only and does not
constitute an admission by proposed respondent that the law has been
violated as alleged in the attached draft Complaint, or that the facts
alleged in the draft complaint, other than the jurisdictional facts,
are true.
6. This Agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of section 2.34 of the
Commission's Rules, the Commission may, without further notice to
proposed respondent, (1) issue its Complaint corresponding in form and
substance with the draft Complaint and its Decision containing the
following Order to Cease and Desist in disposition of the proceeding,
and (2) make information public with respect thereto. When so entered,
the Order to Cease and Desist shall have the same force and effect and
may be altered, modified, or set aside in the same manner and within
the same time provided by statute for other orders. The Order shall
become final upon service. Delivery by the United States Postal Service
of the Complaint and Decision containing the agreed-to Order to
proposed respondent's address as stated in this Agreement shall
constitute service. Proposed respondent waives any right it may have to
any other manner of service. The Complaint attached hereto may be used
in construing the terms of the Order. No agreement, understanding,
representation, or interpretation not contained in the Order or the
Agreement may be used to vary or contradict the terms of the Order.
7. Proposed respondent has read the proposed Complaint and Order
contemplated hereby. Proposed respondent understands that once the
Order has been issued, it will be required to file one or more
compliance reports showing that it has fully complied with the Order.
Proposed respondent further understands that it may be liable for civil
penalties in the amount provided by law for each violation of the Order
after it becomes final.
Order
Definitions
1. ``Promotional benefit'' as used herein shall mean any prize,
award or consideration, including, but not limited to, money, favorable
credit terms and optional equipment packages, having a bona fide retail
value over $25.
2. ``Clearly and prominently'' as used herein shall mean as
follows:
(a) In a television or videotape advertisement, the disclosure
shall be presented simultaneously in both the audio and video portions
of the advertisement. The audio disclosure shall be delivered in a
volume and cadence and for a duration sufficient for an ordinary
consumer to hear and comprehend it. The video disclosure shall be of a
size and shade, and shall appear on the screen for a duration,
sufficient for an ordinary consumer to read and comprehend it.
(b) In a print advertisement, the disclosure shall be in close
proximity to the representation that triggers the disclosure in at
least (12) point type.
(c) In a radio advertisement, the disclosure shall be delivered in
a volume and cadence and for a duration sufficient for an ordinary
consumer to hear and comprehend it.
I
It is ordered that respondent Nissan Motor Corporation in U.S.A., a
corporation, its successors and assigns, and its officers, agents,
representatives and employees, directly or through any corporation,
subsidiary, division or other device, in connection with the
advertising, offering for sale, sale or distribution of any motor
vehicle in or affecting commerce, as commerce is defined in the Federal
Trade Commission Act, do forthwith cease and desist from representing,
in any manner, directly or by implication, that persons who test drive
a Nissan motor vehicle can readily obtain a promotional benefit when
significant restrictions prevent consumers from readily obtaining that
promotional benefit without disclosing clearly and prominently in each
advertisement in which the representation is made either the
significant restrictions or that there are significant restrictions
that apply to obtaining the promotional benefit.
II
It is further ordered that respondent Nissan Motor Corporation in
U.S.A., a corporation, its successors and assigns, and its officers,
agents, representatives and employees, directly or through any
corporation, subsidiary, division or other device, in connection with
the advertising, offering for sale, sale or distribution of any motor
vehicle in or affecting commence, as commerce is defined in the Federal
Trade Commission Act, do forthwith cease and desist from
misrepresenting, in any manner, directly or by implication, the
existence, nature or extent of any condition, restriction or limitation
on any promotional benefit offered to consumers.
III
It is further ordered that, for three (3) years from the date that
the advertisements are last disseminated, respondent shall maintain
and, upon request, make available to the Commission for inspection and
copying:
(A) Copies of all advertisements subject to Paragraph I or II of
this Order;
(B) Copies of all communications to affiliated dealers and all
information and other materials supplied by respondent to the dealer in
connection with any representation subject to Paragraphs I or II of
this Order; and
(C) All correspondence received from consumers, whether received by
respondent or by an agent of respondent, related to any promotional
benefit program advertised in a manner subject to Paragraphs I or II of
this Order.
IV
It is further ordered that respondent shall, within sixty (60) days
of service of this Order, distribute a copy of this Order to each of
its operating divisions and to each officer and other person
responsible for the preparation or review of advertising material
including outside advertising agencies, and to a representative of each
of its affiliated dealers and shall secure from each such person a
signed statement acknowledging receipt of a copy of this Order.
V
It is further ordered that respondent shall notify the Commission
at least thirty (30) days prior to the effective date of any proposed
change in the corporation such as dissolution, assignment or sale
resulting in the emergence of a successor corporation, the creation or
dissolution of subsidiaries, or any other change in the corporation
which may affect compliance obligations arising out of this Order.
VI
It is further ordered that respondent shall, within sixty (60) days
after service of this Order, file with the Commission a report, in
writing, setting forth in detail the manner in which it has complied
with this Order.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission has accepted an agreement to a
proposed consent order from Nissan Motor Corporation in U.S.A., a
marketer of new automobiles.
The proposed consent order has been placed on the public record for
sixty (60) days for the reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and will decide whether it should withdraw from the agreement
or make final the agreement's proposed order.
The Commission's complaint charges that the proposed respondents
disseminated advertisements for the Nissan Stanza Challenge Program, a
promotional program in which consumers were invited to drive the Nissan
Stanza and receive $100 if, after driving the Stanza, they bought one
of two competing cars--either a Toyota Camry or a Honda Accord.
The complaint charges that Nissan represented that consumers could
readily obtain the $100 when, in fact, in order to obtain it, the
consumer could not purchase the competing vehicle on the same day as
the test drive nor more than seven days thereafter, and had to
purchase, take delivery and submit detailed proof of purchase to Nissan
within the seven day time period. Therefore, the Commission charged
that the representation that the $100 could be readily obtained was
false and misleading.
The Commission also charged that the existence of the restrictions
mentioned above would have been material to consumers in deciding
whether to test drive the Stanza or otherwise take part in the program.
Therefore, failure to disclose that the program had significant
restrictions was deceptive.
The proposed consent order contains provisions designed to remedy
the violations charged and to prevent the respondent from engaging in
similar acts and practices in the future. Part I of the proposed order
prohibits Nissan from representing that consumers who test drive a
Nissan vehicle can readily obtain a promotional benefit, when
significant restrictions prevent consumers from obtaining the
promotional benefit, unless Nissan also discloses either (1) the
restrictions that apply, or (2) that significant restrictions apply to
obtaining the promotional benefit.\1\ Part II of the order prohibits
Nissan from misrepresenting the existence, nature, or extent of any
condition, restriction or limitation on any promotional benefit offered
to consumers.
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\1\The proposed order defines ``promotional benefit'' as any
prize, award, or consideration, including but not limited to, money,
favorable credit terms and optional equipment packages, having a
bona fide retail value over $25.
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The remainder of the proposed order consists of standard
recordkeeping and compliance provisions.
The purpose of this analysis is to facilitate public comment on the
proposed order, and it is not intended to constitute an official
interpretation of the agreement and proposed order, or to modify in any
way their terms.
Donald S. Clark,
Secretary.
Joint Dissenting Statement of Chairman Janet D. Steiger and
Commissioner Dennis A. Yao in Nissan Motor Corporation of USA, File No.
902-3383
We dissent from issuance of this proposed consent order with
Nissan Motor Corp. Because the proposed order does not sufficiently
remedy one of the alleged law violations, it may give implicit
approval to the use of seemingly attractive promotional offers that
many consumers simply cannot utilize because of limitations such as
severe time restrictions or extremely difficult documentation
requirements.
Through advertisements for the Nissan Stanza ``Challenge
Program'' Nissan ran a promotional program inviting consumers to
come to a Nissan dealership, test drive the Nissan Stanza and
receive $100 if, after driving the Stanza, they bought either a
Toyota Camry or a Honda Accord. The advertising expressly stated
that there was ``no catch'' to this offer. What consumers were not
told was that, in order to obtain the $100, it was necessary to
purchase and take delivery of the Camry or Accord and submit
detailed proof of purchase (including documents not usually retained
by consumers after purchase) to Nissan, all within seven days (but
not on the same day as the test drive). The complaint alleges that
the failure to disclose that the program had such significant
restrictions was deceptive, and that Nissan's explicit advertising
claim that the offer had ``no catch'' falsely represented that
consumers could readily obtain the $100 payment.
In our view, the proposed consent order may do little to remedy
the failure to disclose allegation. Part I of the proposed order
prohibits Nissan from representing, directly or by implication, that
persons who test drive a Nissan can ``readily obtain'' a promotional
benefit--when significant restrictions prevent consumers from
readily obtaining that benefit--unless Nissan also discloses either
those restrictions or that significant restrictions apply. Since
paragraph 5 of the complaint uses the same term, ``readily obtain,''
to characterize the express ``no catch'' claim in Nissan's ad, and
paragraph 4 of the complaint only references the advertisement with
an express ``no catch'' claim, the order could be interpreted to
require disclosure only when language similar to ``no catch'' or
``no catches'' is used.
To suggest otherwise--namely that the order requires disclosure
any time Nissan offers a promotion and uses very general language
such as ``Come on in and get a [benefit]''--would read out of the
order the ``readily obtain'' limiting language. Consequently,
although we understand that some would read the order differently,
the proposed order might be interpreted as standing for the
proposition that advertisements need not contain any disclosure of
the nature or even existence of limiting conditions, no matter how
onerous, unusual, or unexpected, unless the advertiser uses language
similar to a ``no catches'' claim.
Moreover, even when an affirmative expression such as ``no
catches'' is used in making an offer, the order would allow an
advertiser to disclose only that significant restrictions apply to
the offer, not what those restrictions are or where the consumer can
obtain additional information about them. Although reasonable minds
can differ on whether a disclosure that ``significant restrictions''
apply would adequately inform consumers when ready availability is
implied in an advertisement, such a disclosure for an express ``no
catches'' claim is manifestly contradictory. This order would seem
to allow advertisers to claim to consumers that there are no catches
in connection with the offer, so long as the ad elsewhere discloses
that there are significant restrictions. The use of such
contradictory statements in the same advertisement conflicts with
Commission precedent. See Commission Statement on Deception, 103
F.T.C. 110, 180-81.
Finally, the proposed order does not contain a point of sale
disclosure requirement. Consequently, even if consumers understand
the disclosure of ``significant restrictions'' as overriding the
express ``no catches'' claim, there is no sure way of learning about
the restrictions.
We do not suggest advertisers must disclose every limitation on
their offers in advertising. Consumers generally expect that offers
have reasonable time limits and other conditions. This order may
suggest, however, that even severe restrictions--i.e., those that
make the offer impractical or impossible for many consumers to
redeem--need not be disclosed in an adequate fashion. Such an
approach is not without cost to consumers--especially in cases, such
as this one, where consumers usually shop for the product by
visiting sales locations and, consequently, where such offers could
induce them to make a special visit.
Separate Statement of Commissioner Mary L. Azcuenaga, in Which
Commissioners Deborah K. Owen and Roscoe B. Starek, III, Join, in
Nissan Motor Corporation of USA File No. 902-3383
I write to respond to the concerns expressed in my colleagues'
joint dissenting statement about how the consent order in this
matter might be interpreted and what it would seem to allow in
connection with other promotional advertisements. Like other consent
orders, this order was negotiated in response to particular facts
and circumstances. Although the order identifies conduct the
Commission will not allow, no legal inference properly can be drawn
that conduct not mentioned in the complaint and order has been
approved. The legal standards by which promotional advertisements
are measured are well established in sources having precedential
value. As always, advertisers would be well-advised to consult these
sources to determine the legal standards to which they must conform.
[FR Doc. 94-6534 Filed 3-18-94; 8:45 am]
BILLING CODE 6750-01-M