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Winter 2007-04 New changes to misleading advertising regulation

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Number 66
Winter 2007

New changes to misleading advertising regulation
On October 13, 2006, the Puerto Rico Department of Consumer Affairs promulgated a new set of rules dealing with misleading practices and advertisements-Regulation Prohibiting Misleading Practices and Advertisements of 2006-which has been identified as "Regulation No. 7231."


Following is a summary of the most significant changes:

Scope of regulation

The scope of the regulation has been amended to clarify that the same applies to both natural and juridical persons (such as corporations and partnerships).

"Misleading advertisement"

The definition of what constitutes a misleading advertisement has been expanded to include any announcement that purposely fails to include information related to a product, good or service, and as a result prevents the consumer from making informed and intelligent decisions.

Purchase receipt

The new regulation defines the term "purchase receipt," and requires that the same contain at least the following information:

  • time and date of the transaction,
  • nature of the product or service,
  • person or entity that receives payment,
  • amount of the payment and
  • method of payment used.

Prohibited acts

The following have been added to the list of actions that constitute misleading practices and advertisements:

  • Charge additional amounts for nonexistent services, or services that are considered basic and necessary to the consumer, in order to acquire the product offered.
  • Failure to issue to any consumer a purchase receipt printed on non-perishable material that guarantees the preservation of the information for more than one year, or for the term of the warranty, whichever period is longer.
  • Failure to issue a written warranty printed on such non-perishable material, again lasting more than one year or for the term of the warranty, whichever is period is longer.

Advertisement of the price

A new section was added to provide that, in the event that a price scanner shows a different price than the one marked on the product, the consumer be charged the lower.

Availability of advertised goods

Merchants are required to respond to the anticipated reasonable demand for goods advertised. "Anticipated reasonable demand" is defined as a future projection in the inventory of a specific product, using as a basis for the projection the amount of such goods, or similar goods, sold during previous periods or under similar conditions. Quantities of articles advertised may only be limited if the reduced quantity per store is clearly stated. Stores must have not less than 50 units of each article.
Availability rules do not apply to special sales held on the day after Thanksgiving Day, commonly known as "Black Friday." However, Black Friday special sales may not include inventory blow-out merchandise, nor sales of out-of-season articles other than Thanksgiving merchandise.

Rebates

The final price of an article may not be advertised as already including a rebate unless the rebate is effective automatically at the time of payment. Otherwise, the advertisement must separately state the regular price and the amount of the rebate.

Personal information

A store may never request the consumer's Social Security number, except in order to verify credit history.

Excise tax

Until March 15, 2007, the Department of Consumer Affairs may require merchants that sell, offer, or advertise products or services in connection to which the repealed excise tax has not been excluded from the final sales price, to include in the advertisement or invoice prices before and after the exclusion of the excise tax.

Tips

The regulation also states that a consumer may object to having tips included as part of the final price in the purchase receipt. Whether or not, and how much, to tip is left exclusively to the consumer.


© 2007 Goldman Antonetti & Cordova, LLC

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