Guide Concerning Fuel Economy Advertising for New Automobiles, 36216-36228 [2016-13098]

Download as PDF 36216 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules PART 71—DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR TRAFFIC SERVICE ROUTES; AND REPORTING POINTS 1. The authority citation for 14 CFR part 71 continues to read as follows: ■ Authority: 49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–1963 Comp., p. 389. § 71.1 [Amended] 2. The incorporation by reference in 14 CFR 71.1 of FAA Order 7400.9Z, Airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015, is amended as follows: ■ Section 5000 * * Class D Airspace. * * * AGL IN D Grissom ARB, IN [Amended] Peru, Grissom Air Reserve Base, IN (Lat. 40°38′53″ N., long. 086°09′08″ W.) That airspace extending upward from the surface to and including 3,300 feet MSL within a 5.8 mile radius of Grissom ARB. This Class D airspace is effective during the specific dates and times established in advance by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Airport/Facility Directory. Issued in Fort Worth, TX, on May 25, 2016. Walter L. Tweedy, Acting Manager, Operations Support Group, ATO Central Service Center. [FR Doc. 2016–13144 Filed 6–3–16; 8:45 am] BILLING CODE 4910–13–P FEDERAL TRADE COMMISSION 16 CFR Part 259 Guide Concerning Fuel Economy Advertising for New Automobiles Federal Trade Commission Proposed amendments. AGENCY: ACTION: The Federal Trade Commission (‘‘FTC’’ or ‘‘Commission’’) seeks comments on proposed amendments to the Guide Concerning Fuel Economy Advertising for New Automobiles (‘‘Fuel Economy Guide’’ or ‘‘Guide’’) to reflect current Environmental Protection Agency (‘‘EPA’’) and National Highway Traffic Safety Administration (‘‘NHTSA’’) fuel economy labeling rules and to consider advertising claims prevalent in the market. DATES: Comments must be received by August 8, 2016. ADDRESSES: Interested parties may file a comment online or on paper by following the instructions in the Request for Comment part of the sradovich on DSK3TPTVN1PROD with PROPOSALS SUMMARY: VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 SUPPLEMENTARY INFORMATION section below. Write ‘‘Fuel Economy Guide Amendments, R711008’’ on your comment, and file your comment online at https://ftcpublic.commentworks.com/ ftc/fueleconomyamendments by following the instructions on the webbased form. If you prefer to file your comment on paper, write ‘‘Fuel Economy Guide Amendments, R711008’’ on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC–5610 (Annex B), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex B), Washington, DC 20024. FOR FURTHER INFORMATION CONTACT: Hampton Newsome, (202) 326–2889, Attorney, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Room C–9528, 600 Pennsylvania Avenue NW., Washington, DC 20580. SUPPLEMENTARY INFORMATION: I. Background The Commission issued the Fuel Economy Guide (16 CFR part 259) on September 10, 1975 (40 FR 42003) to prevent deceptive fuel economy advertising for new automobiles and thus facilitate the use of fuel efficiency information in advertising. To accomplish this goal, the current Guide advises advertisers to disclose established EPA fuel economy estimates (e.g., miles per gallon or ‘‘MPG’’) whenever they make any fuel economy claim based on those estimates. In addition, if advertisers make claims based on non-EPA tests, the Guide advises them to disclose EPA-derived information and provide details about the non-EPA tests, such as the test’s source, driving conditions, and vehicle configurations. On April 28, 2009 (74 FR 19148), the Commission published a notice soliciting comments on proposed amendments to the Guide as part of its regulatory review program. The Commission then postponed its review in a June 1, 2011 notice (76 FR 31467) pending new fuel economy labeling requirements from the EPA and completion of the FTC’s Alternative Fuels Rule (16 CFR part 309) review. The Commission explained that Fuel Economy Guide revisions would be premature before the conclusion of these regulatory proceedings. With PO 00000 Frm 00031 Fmt 4702 Sfmt 4702 those activities complete,1 the Commission resumed its review of the Guide on May 15, 2014) (79 FR 27820) (‘‘2014 Notice’’) seeking comment on potential amendments to address changes to the EPA and NHTSA (hereinafter ‘‘EPA’’) fuel economy labeling rules, address advertising for alternative fueled vehicles, and consider other advertising claims prevalent in the market. The Commission also announced plans to conduct consumer research on fuel economy advertising claims. After reviewing the comments generated by the 2014 Notice 2 and the consumer research results, the Commission proposes Guide amendments for comment. In considering these proposals, commenters should focus on information that helps advertisers avoid deceptive or unfair claims prohibited by the FTC Act.3 The Guide does not identify disclosures that are merely helpful or desirable to consumers. Likewise, commenters should not address the adequacy of EPA fuel economy test procedures or the accuracy of EPA label content. Such issues fall within the EPA’s purview and are generally outside the scope of the Guide. II. Consumer Research To aid the Commission in developing the proposed Guide amendments, the Commission conducted an Internetbased research study to explore consumer perceptions of certain fuel economy marketing claims.4 Using a 1 The Commission announced final revisions to the Alternative Fuels Rule in an April 23, 2013 Notice (78 FR 23832). In 2011, EPA and NHTSA completed revisions to their fuel economy labeling requirements, which, among other things, addressed labels for alternative fueled vehicles (AFVs) not specifically addressed in past EPA requirements. See 76 FR 39478 (July 6, 2011) (see 40 CFR parts 85, 86, and 600; and 49 CFR part 575). 2 The comments are available at https:// www.ftc.gov/policy/public-comments/initiative-573. The commenters included: Alliance of Automobile Manufacturers (Alliance) (#00004), Association of Global Automakers, Inc. (AGA) (#00007), Consumer Federation of America (on behalf of several organizations) (referred herein as ‘‘consumer groups’’) (#00006), LaRosa (#00002), National Automobile Dealers Association (NADA) (#00008), and Rodriguez (#00003). 3 15 U.S.C. 45(a). The Guides do not have the force and effect of law and are not independently enforceable. However, failure to comply with industry guides may result in law enforcement action under applicable statutory provisions. The Commission, therefore, can take action under the FTC Act if a business makes fuel economy claims inconsistent with the Guides. In any such enforcement action, the Commission must prove that the act or practice at issue is unfair or deceptive in violation of Section 5 of the FTC Act. 4 The Commission announced the study in its May 2014 Notice and provided further information E:\FR\FM\06JNP1.SGM 06JNP1 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules treatment-control comparison methodology, the study compared participant responses regarding their understanding of a variety of claim types, such as general fuel economy claims (e.g., ‘‘this car gets great gas mileage’’), specific MPG claims (e.g., ‘‘25 MPG in the city’’), driving range claims, electric vehicle claims, and ‘‘up to’’ mileage claims. The study collected responses from U.S. automobile consumers representing a broad spectrum of the U.S. adult population.5 By comparing the responses to various scenarios, the study provided useful insights about respondents’ understanding of fuel economy claims.6 This Notice contains relevant discussion of the proposed amendments, as well as specific study results. The Commission invites commenters to identify additional consumer research that may aid the FTC in considering the proposed Guide revisions. III. Guide Benefits sradovich on DSK3TPTVN1PROD with PROPOSALS Comments received in response to the 2014 Notice expressed general support for maintaining the Guide and provided general recommendations for improvement. Given this broad support, the Commission plans to retain the Guide. However, as detailed in this Notice, the Commission proposes to revise the Guide’s format and update its content to address new technologies and new types of claims. In expressing support for the Guide, several commenters discussed its benefits. NADA, for example, explained that the Guide helps prospective new vehicle purchasers obtain consistent and objective fuel economy information by advising manufacturers and dealers ‘‘to disclose fuel economy estimates in a fair, even-handed, and clear and conspicuous manner.’’ The consumer groups added that ‘‘automobile purchases are among the largest expenditures consumers make and bind them to purchase the fuel necessary to run their vehicles.’’ In their view, accurate mileage information benefits consumers, facilitates market functions, serves as a powerful incentive to in two additional notices (79 FR 26428 (May 8, 2014) and 79 FR 62618 (Oct. 20, 2014)). 5 The study sampled members of an Internet panel consisting of individuals recruited through a variety of convenience sampling procedures. The sample for this research, therefore, does not constitute a true, random sample of the adult U.S. population. However, because the study focused primarily on comparing responses across randomly assigned treatment groups, the Internet panel provided an appropriate sample frame. 6 Additional information about the study, including the questionnaire and results, is available on the FTC Web site. See https://www.ftc.gov/ policy/public-comments. VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 increase fuel efficiency, and contributes significantly to the overall public good. These various comments are consistent with the Commission’s past observation that ‘‘the Guide has been a benefit to consumers, providing fuel economy numbers in advertising that allow meaningful comparisons of different vehicle models.’’ 7 Commenters also provided Guide recommendations related to EPA label developments and market changes in recent years. For example, NADA and the Alliance emphasized the need to ensure the Guide reflects current EPA fuel economy labeling requirements. The Alliance added that the updated Guide should reflect new vehicle technologies, existing terminology, and the current EPA label format, while still providing advertisers flexibility in how they inform consumers about fuel economy. In addition, NADA and the Alliance recommended the Guide afford flexibility in the content and format of claims, as long as such claims maintain accuracy and clarity. In response to these comments, the Commission proposes to update the Guide, as detailed below, to take into account current EPA and NHTSA requirements, new vehicle technology, and new terminology. In addition, where appropriate, the proposed revisions provide flexibility to advertisers as long as they avoid deceptive claims. IV. Proposed Guide Revisions The Commission sought comments in the 2014 Notice on general issues related to the Guide, including a new format, technical definitions, citation format, types of fuel economy claims (including claims involving EPA-based MPG, non-EPA tests, vehicle configuration, fuel economy range, and alternative fueled vehicles), and limitedformat advertising such as on mobile devices. The Commission discusses each of these issues below. A. Guide Format Background: In the 2014 Notice, the Commission proposed improving the Guide’s format by making it consistent with recently amended FTC guides, such as the Guides for the Use of Environmental Marketing Claims.8 Under the proposed format, the Guide includes a list of general principles to help advertisers avoid deceptive practices with detailed examples to illustrate those principles. 7 67 FR 9924 (Mar. 5, 2002). Guides for the Use of Environmental Marketing Claims (Green Guides) (16 CFR part 260). 8 See PO 00000 Frm 00032 Fmt 4702 Sfmt 4702 36217 Comments: Commenters supported updating the Guide’s format. For example, NADA explained updates would help dealers maximize the clarity and utility of their fuel economy advertising. The Alliance noted that revisions would aid manufacturers, particularly in addressing potential claims not specifically addressed by the Guide. However, several commenters (e.g., NADA and AGA) urged the Commission to publish such changes for comment before making final amendments. Discussion: In response to comments, the Commission proposes to revise the Guide format to be consistent with recent Guide revisions for other topics, such as environmental claims. Specifically, the proposed revisions include a list of general principles for fuel economy advertising illustrated by specific examples. B. Definitions Background: In the 2014 Notice, the Commission proposed five changes related to the Guide’s definitions section (16 CFR 259.1).9 First, the Commission proposed to replace several outdated terms to ensure consistency with EPA’s current fuel economy rules.10 Specifically, the Commission proposed changing the definitions ‘‘estimated city miles per gallon’’ to ‘‘estimated city fuel economy;’’ and ‘‘estimated highway miles per gallon’’ to ‘‘estimated highway fuel economy.’’ It also proposed revising the definition of the term ‘‘fuel economy.’’ In addition, the Commission proposed eliminating the term ‘‘estimated in-use fuel economy range’’ because EPA’s fuel economy label no longer provides such information.11 Second, the Commission proposed adding the term ‘‘combined fuel economy’’ to Section 259.1 to ensure consistency and reduce potential confusion because EPA now uses this term on its label.12 The new term would expand the Commission’s guidance to advertisers whose vehicles now display 9 The Commission, in the 2009 Notice, also proposed to add two terms, ‘‘Fuel’’ and ‘‘Alternative Fueled Vehicles,’’ to distinguish vehicles that would be covered by EPA’s label requirements from those covered by the proposed guidance regarding AFVs. 74 FR 19148, 19153. 10 See 40 CFR 600.002. 11 The current Guide defines ‘‘estimated in-use fuel economy range’’ as the ‘‘estimated range of city and highway fuel economy of the particular new automobile on which the label is affixed, as determined in accordance with procedures employed by the U.S. Environmental Protection Agency as described in 40 CFR 600.311 (for the appropriate model year), and expressed in milesper-gallon, to the nearest whole mile-per-gallon, as measured, reported or accepted by the U.S. Environment Protection Agency.’’ 16 CFR 259.1(e). 12 See 40 CFR 600, Appendix VI. E:\FR\FM\06JNP1.SGM 06JNP1 36218 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules sradovich on DSK3TPTVN1PROD with PROPOSALS an estimate of combined fuel economy required by the EPA. Third, the Commission proposed to amend the Guide’s definition of ‘‘new automobile’’ to include ‘‘medium-duty passenger vehicle,’’ consistent with EPA’s existing fuel labeling requirements.13 Fourth, the Commission proposed several minor revisions, including eliminating the phrase ‘‘in use’’ in the definition of ‘‘range of fuel economy,’’ and changing the definitions for ‘‘estimated city MPG’’ and ‘‘estimated highway MPG’’ to ensure consistency with EPA’s terms and definitions. The Commission also proposed eliminating an obsolete reference to the term ‘‘unique nameplate’’ in footnote 2 and replacing it with the more appropriate EPA term ‘‘model type.’’ 14 Finally, the Commission proposed reorganizing the definition of ‘‘new automobile’’ to reduce its length and potential confusion. Specifically, the proposed amendment would remove the definitions of ‘‘dealer,’’ ‘‘manufacturer,’’ and ‘‘ultimate purchaser’’ from ‘‘new automobile’’ and list them as separate terms under section 259.1.15 Comments: Commenters supported conforming the definitions to current EPA label regulations.16 AGA, for example, explained that using EPA’s recent terminology would provide additional clarity and help ensure the Guide’s consistent use. AGA also recommended eliminating the term ‘‘estimated in-use fuel economy range’’ because EPA no longer uses it. Likewise, it concurred with the proposal to remove the term ‘‘in use’’ from the Guide because the term furthers consumers’ expectations that they will actually achieve the EPA numbers. Discussion: Given commenters’ support for these proposed changes, the Commission proposes to revise the definitions consistent with its proposals. In addition, the Commission has added the term ‘‘EPA’’ to the various ‘‘fuel economy’’ estimate definitions to clarify that such estimates are derived from required EPA test procedures. Furthermore, consistent with several proposed amendments discussed below, the proposed Guide contains new definitions for ‘‘alternative fueled vehicle,’’ ‘‘flexible fuel vehicle,’’ ‘‘EPA driving range estimate,’’ ‘‘EPA regulations,’’ and ‘‘fuel.’’ 17 13 40 CFR 86.1803–01. Previously, EPA required fuel economy labels for only passenger automobiles and light trucks. 14 74 FR at 19151. 15 The Commission does not propose otherwise altering these definitions. 16 See, e.g., Alliance, Global Automakers, and NADA. 17 See section 259.1 of the proposed Guide. VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 C. Regulatory Citations Background: In its previous Notice, the FTC proposed to replace all specific regulatory citations to EPA regulations in the Guide with a general citation (40 CFR part 600) to reduce the frequency of future Guide changes should EPA amend its regulations. Earlier comments noted that this proposal would create confusion because the cited general EPA provisions contain two different sets of fuel economy requirements, one of which is not directly applicable to FTC’s Guide. See 79 FR at 27821. Comments: In response to the 2014 Notice, NADA urged the Commission to use only a general citation to EPA’s regulations (i.e., 40 CFR part 600), arguing the benefits of a general citation (e.g., it would require fewer updates) outweigh any potential risks of confusion. Discussion: To avoid confusion identified in the comments, the Commission proposes to simplify the citations by using a general citation to ‘‘EPA regulations,’’ but defining that term to mean EPA’s ‘‘fuel economy labeling requirements in 40 CFR part 600, subpart D,’’ as opposed to other EPA vehicle-related regulations. This will clarify that the EPA regulations referenced in the Guide apply to that agency’s labeling requirements and not other EPA requirements inapplicable to the Guide. D. Types of Fuel Economy Claims As discussed below, the Commission sought comment on specific types of advertising claims, including EPA-based miles-per-gallon claims, claims based on non-EPA tests, claims related to vehicle configuration, range of fuel economy claims, and AFV claims. 1. Miles-Per-Gallon (MPG) Claims Background: In the 2014 Notice, the Commission sought comments on various aspects of the MPG provision of the current Guide (section 259.2(a)). Specifically, the Notice invited comments on the following issues: (1) Whether a general fuel economy claim (e.g., ‘‘XYZ car gets great mileage’’) should be accompanied by a specific MPG disclosure to prevent consumer deception or unfairness; (2) whether an advertisement is unfair or deceptive if it provides only one type of mileage rating (e.g., an advertisement that only provides highway MPG); (3) whether an unspecified MPG claim (e.g., ‘‘37 MPG’’) is deceptive if the advertisement fails to identify whether the rating is city, highway, or combined; (4) how consumers understand ‘‘up to’’ MPG claims (e.g., ‘‘up to 45 MPG’’); (5) PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 whether the combined EPA MPG rating should serve as the default disclosure for unspecified fuel economy claims (instead of the city MPG as currently indicated in the Guide); (6) whether the Guide should advise advertisers to avoid statements that imply a linear relationship between MPG and fuel costs; (7) whether fuel economy advertisements containing MPG claims should identify EPA as the source of the ratings; and (8) whether the FTC should provide additional guidance regarding disclaimers that the EPA ratings are only estimates. Each of these issues is addressed below. a. General Fuel Economy Claims Background: In the 2014 Notice, the Commission sought comments on whether a general fuel economy claim should be accompanied by a specific mileage disclosure to prevent consumer deception or unfairness. The Guide has advised advertisers to include such disclosures since its initial publication in the 1970’s. Specifically, section 259.2(a) states that an advertisement with a general fuel economy claim should disclose the vehicle’s city mileage rating.18 That section also indicates that any claim about city or highway driving should contain estimated city or highway MPG rating. Comments: Commenters supported the current Guide’s approach to specific mileage disclosures for general fuel economy claims. The Alliance explained that such mileage disclosures provide consumers ‘‘with context and backup for the specific claim being made.’’ Rodriquez stated that, given the potential for deception in general advertising claims, the Guide should continue to advise advertisers to include the fuel economy ratings. Discussion: The Commission proposes to retain the existing guidance advising advertisers to provide the EPA mileage estimates whenever they make a fuel economy claim. As discussed below, this approach, supported by commenters, is consistent with the recent consumer research, as well as the guidance the Commission has provided consistently for decades. In releasing the Guide in 1975, the Commission explained that ‘‘when no specific fuel economy figure is cited in advertising, the use of such vague and ill-defined terms as ‘saves gas,’ or ‘gas stingy engine’ may . . . be deceptive by implying existence of some level of ‘good fuel economy’ which may be perceived differently by different 18 At the time the Guide was created, EPA did not require combined fuel economy on the label. Therefore, the guidance pointed to the city mileage number as the default disclosure. E:\FR\FM\06JNP1.SGM 06JNP1 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules individuals.’’19 In choosing to retain the provision in 1995, the Commission explained that ‘‘it is important that the EPA estimate accompany implicit as well as explicit mileage claims. Any mileage claim inherently involves a comparison to other vehicles. The EPA estimates provide consumers with a meaningful method of comparing competing claims.’’ 20 The recent FTC consumer study supports these conclusions.21 Study respondents tended to assign multiple meanings to general fuel economy claims. For example, when asked about the meaning of the claim ‘‘this car gets great gas mileage,’’ various respondents said the vehicle had better mileage than other cars of its size, better mileage than all other cars, better mileage than similarly priced cars, or none of those choices.22 When the study narrowed the general fuel economy claim to a particular class size (‘‘This car gets great gas mileage compared to other compact cars’’), respondents offered varied responses about whether such claims applied to all, most, or many cars in the class.23 When asked to describe the 19 40 FR 42003 (Sept. 10, 1975). FR 56230, 56231 (Nov. 8, 1995). 21 Section II of this Notice contains background information about the study. 22 Specifically, when asked about a general claim’s meaning (Q1d), study participants, selecting from five responses, indicated the vehicle had better mileage than other cars of its size (36.8%), better mileage than all other cars (14.1%), better mileage than similarly priced cars (12.0%), not sure (15.6%), and none of above (21.5%). The responses were significant compared to control questions where the general claim was narrowed (Q1e and Q1f) (e.g., great mileage compared ‘‘to other compact cars’’ or ‘‘similarly priced cars’’). In response to those questions, the vast majority of respondents correctly identified the relevant comparison. Specifically, in Q1e where the claim included ‘‘other compact cars,’’ 78.8% of respondents accurately identified the comparison as ‘‘other cars of its size’’ while the results for all other choices were fewer than 10%. Where the claim involved a comparison of ‘‘similar priced’’ cars in Q1f, 62.7% accurately identified the comparison as ‘‘cars with a similar sales price’’ though 20.6% still identified the relevant comparison as ‘‘other cars of its size’’ even though the claim specifically identified ‘‘similarly-priced cars.’’ 23 When the advertisement said ‘‘This car gets great gas mileage compared to other compact cars’’ (Q2b), 23% of respondents indicated the car got better gas mileage than ‘‘all’’ other compact cars; 37% believed it got better gas mileage than ‘‘almost all’’ other compact cars; and 18% indicated it got better mileage than ‘‘at least half.’’ When the claim was altered to say ‘‘This car gets great gas mileage compared to many other compact cars’’ (Q2d), the responses also varied with 10% indicating the car had better mileage than all cars, 30% indicating better than almost all, and 30% indicating better than at least half. Only when respondents viewed a control which stated ‘‘This car gets great gas mileage compared to all other compact cars’’ (Q2c) did the variation decrease, with 52% indicating the advertised car got better mileage than all other cars. However, even under this scenario, 23% said the car got better mileage than ‘‘almost all’’ other compact cars. sradovich on DSK3TPTVN1PROD with PROPOSALS 20 60 VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 meaning of a general fuel economy claim in an open-ended format, the results were similarly diverse. Specifically, when respondents were asked about the meaning of the claim ‘‘This car gets great gas mileage,’’ they variously answered ‘‘more miles per gallon/saves money/less gas’’; ‘‘gets over 30 miles or more’’; gets ‘‘good’’ or ‘‘great’’ mileage; and ‘‘gets over 20 miles or more.’’ 24 These varied interpretations are likely impossible for an advertiser to substantiate simultaneously. To overcome such potential deception, the Commission has consistently recommended that advertisers disclose the EPA MPG ratings in advertisements that contain general fuel economy claims. Such ratings adequately qualify general fuel economy claims by providing clear objective information that allows consumers to compare competing models and thus mitigates the deceptive conclusions consumers may draw from general claims. Given the results of the research and the overwhelming commenter support for the existing guidance, the Commission does not propose to change it. b. Combined EPA MPG Rating as Default Disclosure Background: In the 2014 Notice, the Commission also solicited comments on whether the EPA combined city/ highway rating, rather than the city MPG, should serve as the default disclosure for general fuel economy claims. The current Guide (section 259.2(a)(1)(iii)), which the Commission issued before EPA began requiring the combined rating on the label, directs advertisers to provide the EPA city rating as the default disclosure to accompany any general fuel economy claim that does not reference city or highway driving. In 2011, EPA altered the fuel economy label’s design and content to feature the combined cityhighway rating.25 The EPA label continues to provide both the city and highway MPG ratings in a font smaller than that used for the combined rating. Comments: Commenters generally supported designating the combined (city/highway) mileage rating as the default disclosure for general fuel economy claims. In particular, the Alliance preferred the combined rating because it is the most prominent disclosure on EPA’s current label. The Alliance also explained that the city rating is no longer the lowest or most conservative value in all instances. For 24 Q1a. None of these various answers corresponded to more than 5% of participants’ responses. 25 76 FR 39478 (July 6, 2011). PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 36219 many hybrid vehicles, the city MPG rating is higher. AGA argued that advertisers should be able to disclose all the rating types—city, highway, and combined—in combination or alone because these ratings may be beneficial in specific cases (e.g., where a vehicle is intended primarily for city driving). The consumer groups argued that including all three ratings is the best way to avoid deception, though they noted the combined number alone may be appropriate in some cases. In addition, Rodriguez added that advertisements should include fuel economy ratings for both highway and city because evidence suggests that typical driving time is almost evenly split between the two, contrary to the EPA combined estimate, which weights 55% city and 45% highway. In Rodriguez’s view, such city and highway disclosures allow for more accurate fuel economy comparisons. Discussion: The Commission proposes advising advertisers to disclose either the combined fuel economy rating, or both the city and highway numbers, when using fuel economy claims that do not specifically mention city or highway driving. Based on an EPA-specified weighted ratio of city and highway driving, the combined number is now the most prominent EPA label disclosure. It provides an effective default disclosure because it serves as a common consistent indicator of a vehicle’s overall mileage. Additionally, the proposed guidance gives advertisers the option to disclose the city and highway estimates together. This disclosure allows consumers to gauge their expected mileage based on their own ratio of city-highway driving. Accordingly, the proposed provision would provide advertisers the flexibility to disclose either the combined rating or the city and highway ratings together. The Commission seeks comments on this approach.26 c. Single Mileage Ratings Background: The Commission also asked whether an advertisement is deceptive or unfair if it provides only one type of rating (e.g., an advertisement that only discloses highway MPG). The current Guide states that, if an MPG claim involves only city or only highway fuel economy, the advertisement need only disclose the corresponding EPA city or highway estimate. For example, under the current approach, only the ‘‘estimated highway MPG’’ need be disclosed if the representation clearly refers only to 26 74 FR at 19150. Currently, section 259.2(a) does not prohibit disclosure of both the city and highway estimates. E:\FR\FM\06JNP1.SGM 06JNP1 sradovich on DSK3TPTVN1PROD with PROPOSALS 36220 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules highway fuel economy. 16 CFR 259.2(a)(1)(ii). Comments: Commenters offered different opinions on the use of a single mileage rating (e.g., ‘‘43 MPG on the highway’’). For example, the consumer groups argued that single rating disclosures are clearly deceptive because few, if any, consumers drive solely on highways or local streets. Thus in their view, most consumers will not obtain the fuel efficiency represented by single highway ratings. The consumer groups also indicated that many advertisers use the highway rating ‘‘to present their vehicle in the best light possible.’’ To avoid deception, they argued that advertisers should disclose mileage estimates in one of two ways: (1) All three ratings together (i.e., city, highway, and combined) with the combined rating presented most prominently, or (2) the combined rating only where space for content is limited. Other commenters, particularly industry members, disagreed. For instance, NADA argued that advertisements containing a single fuel economy rating are not inherently unfair or deceptive. The Alliance agreed, stating that advertisers should have the flexibility to provide information that they believe is most relevant for each vehicle.27 The Alliance asserted that consumers ‘‘have had many years to become familiar with the City, Highway, and Combined rating system’’ and thus are unlikely to become confused by a single rating. Several of these commenters argued that the Guide should provide manufactures the flexibility to disclose the rating most relevant to the consumers of a particular product. The Alliance explained, for example, that consumers shopping for a compact car designed primarily for urban use are likely to be most interested in the city value. In its view, an advertisement is not deceptive as long as it discloses the EPA label value and identifies the rating involved (e.g., city mileage). Discussion: Consistent with the current guidance, the proposed Guide does not discourage single mileage ratings in advertisements tied to a particular type of driving (e.g., ‘‘This vehicle is rated at 40 MPG on the highway according to the EPA estimate’’). Such single-rating claims are not likely to be deceptive as long as the advertisement clearly identifies the type of estimate (e.g., city, highway, or combined), and the estimate matches the content of the advertised claims. 27 Both NADA and the Alliance emphasized that appropriate disclosures should be included in ads. VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 The FTC’s consumer study supports this approach. For example, when shown a single highway mileage claim (e.g., ‘‘This car is rated at 25 miles per gallon on the highway according to the EPA estimate’’), the vast majority of respondents (74.6%) correctly answered that car would likely achieve that MPG in highway driving, and the responses for alternative interpretations were low.28 The results were similar when respondents were asked about a claim for a combination of city and highway driving.29 In addition, respondents were able to distinguish between highway and combined driving ranges when asked whether they expected to achieve a certain mileage rating if they used the advertised vehicle for all their driving. For instance, when shown a 25 MPG highway claim, (Q6c) 62.2% of respondents indicated they would expect to get ‘‘a lot’’ or a ‘‘little’’ less than 25 MPG when driving the advertised car, while only 48.1% answered similarly when shown the 25 MPG combined driving claim (Q6d).30 When asked to identify the conditions that might lead to mileage higher or lower than the EPA estimate, more than half of respondents mentioned highway driving, city driving, or both.31 The research therefore suggests that consumers are not deceived by single mileage claims as long as the claim specifies the type of driving involved (e.g., highway, combined, etc.). Moreover, consumers have seen such estimates in advertising and on EPA labels for decades. In light of this ongoing exposure, it seems unlikely that a single, clearly-identified mileage estimate will lead to deception. Accordingly, absent additional evidence demonstrating that such claims are deceptive, the Commission does not propose changing its approach on this 28 See Q5c. The response results for other choices, with no control, were: city rating (5.8%), combined rating (10.7%), unsure (5.5%), and none of the above (3.5%). 29 The results for Q5d were, not accounting for a control: Combined (76.6%), highway (10%), city (4.2%), not sure (6.2%), and none of the above (2.5%). When the question presented an unspecified MPG claim (Q5b) (car ‘‘ . . . rated at 25 miles per gallon . . .’’), the responses were: combined (40.4%), highway (30.5%), city (8.5%), not sure (16.7%), and none of the above (4.1%). 30 The results for respondents expecting to achieve ‘‘a little’’ or ‘‘a lot’’ more than the stated rating were 7.6% for Q6c (highway claim) and 6.9% for Q6d (combined claim), with no control. 31 In both cases, the number of respondents indicating they would get better mileage than the stated MPG rating was low. These results suggest that a significant number of respondents expected to achieve lower mileage in combined driving than highway driving and believe that EPA test results may overstate actual mileage, regardless of the type of driving. PO 00000 Frm 00035 Fmt 4702 Sfmt 4702 issue. However, consistent with the existing Guide, the proposed amendments (section 259.4(c)) advise marketers that EPA fuel economy estimates should match the driving claims appearing in the advertisements. d. Unspecified MPG Claims Background: The 2014 Notice also asked commenters whether an unspecified MPG claim (e.g., ‘‘37 MPG’’) is deceptive if the advertisement fails to identify whether the rating is city, highway, or combined. The current Guide advises advertisers to tie specific mileage ratings to specific driving modes (i.e., city or highway).32 Comments: The consumer groups argued that an unspecified MPG rating is clearly deceptive because consumers do not know the driving mode upon which such a claim is based and, in cases where the number reflects the highway rating, consumers are unlikely to consistently achieve such mileage. Citing similar concerns, the Alliance recommended that, whenever an EPA label value appears in an advertisement, the advertiser disclose which EPA value applies (city, highway, or combined). Discussion: The Commission plans to continue to advise against using mileage ratings claims that fail to specify the type of rating (i.e., city, highway, or combined). The FTC consumer study suggests that such unqualified claims lead to confusion and potential deception because respondents interpreted them in different ways. For example, when presented with the claim that a car was ‘‘rated at 25 MPG,’’ 30.5% of the respondents linked the figure to highway driving, while 40.4% indicated it applied to a combination of highway and city driving.33 The results are consistent with the assumption underlying the current Guide that consumers’ interpretation of such unspecified mileage claims varies significantly in the absence of specific information (i.e., highway, city or combined), and that consumers do not 32 See section 259.2(a)(1)(iii). The Guide also advises disclosure of the ‘‘estimated city MPG’’ if advertisers make a ‘‘general fuel economy claim without reference to either city or highway, or if the representation refers to any combined fuel economy number.’’ As noted above, at the time the Guide was created, EPA did not require combined fuel economy on the label. Therefore, the guidance pointed to the city mileage number as the default disclosure. However, the current EPA label features combined city/highway MPG as the primary disclosure. 33 Q5b. The contrasting questions lend validity to these results. As discussed above, in a separate question (5c), when told the car was rated at 25 MPG on the highway, 74.6% indicated the car would get about 25 MPG on the highway. Similarly, when told the car was rated at 25 MPG in combined driving (Q5d), 76.6% responded that the car would achieve about 25 MPG in combined driving. E:\FR\FM\06JNP1.SGM 06JNP1 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules sradovich on DSK3TPTVN1PROD with PROPOSALS uniformly assume such estimates apply to a particular type of driving (e.g., highway). Accordingly, advertisers failing to identify the driving type associated with an MPG claim are likely to deceive a significant percentage of consumers regarding the rating’s basis.34 e. ‘‘Up To’’ Claims Background: The Commission also asked commenters to address how consumers understand ‘‘up to’’ MPG claims, which currently appear in dealership advertisements (e.g., ‘‘up to 45 MPG’’). In making such claims, advertisers often seek to convey that the advertised MPG applies to a specific version of the model (e.g., style, trim line, or option package), while other versions of the model have lower ratings. The current guidance does not address such claims. Comments: Commenters split on this issue, with the consumer groups arguing that the Guide should discourage ‘‘up to’’ claims and industry members disagreeing. In the Alliance’s view, such claims allow sellers to advertise a nameplate or family of vehicles by communicating ‘‘the range of capabilities across a nameplate or family.’’ The Alliance asserted that eliminating these claims would limit manufacturer flexibility and potentially prohibit simple ‘‘reasonably understood’’ information about vehicle groups. NADA added that, because single models have various engine and transmission options, the ‘‘up to’’ qualifier may be necessary to avoid deception. Alternatively, NADA suggested that dealers and manufacturers disclose a range of fuel economy label ratings when an advertisement involves multiple vehicles. The consumer groups, however, stated that ‘‘up to’’ claims are deceptive and, to avoid such deception, mileage ratings in ads must reflect the ‘‘vehicle configuration expected to be most popular for that year.’’ If a specific model configuration has a better fuel economy rating, the groups argued that the advertisement can present that rating in addition to the MPG of the most popular version. Discussion: The FTC proposes amending the Guide to advise advertisers to avoid unqualified ‘‘up to’’ MPG claims. The FTC consumer study suggested significant consumer confusion regarding these claims. In particular, the study gauged respondents’ interpretation of three 34 This guidance assumes the city and highway ratings for a particular vehicle are different, which is almost always the case. VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 versions of an ‘‘up to’’ claim, ranging from a basic claim with no explanatory information, to one that provided a detailed explanation. Most respondents (73.1%) interpreted ‘‘up to’’ in an unqualified claim to mean the depicted vehicle would achieve the stated MPG if it was driven in a certain way.35 In addition, when respondents were asked in an open-ended format to explain their understanding of a simple ‘‘up to’’ claim (i.e., ‘‘This model gets up to 30 miles per gallon’’), very few respondents mentioned that the claim relates to the MPG rating for a specific version of the model (Q3a). However, when respondents viewed a more detailed, qualified claim explaining that ‘‘up to’’ referred to a specific model version (Q3e (closeended question)), the confusion decreased significantly, with a majority (51.9%) indicating the claim meant a version of the advertised model was rated at 30 miles per gallon.36 With this more detailed disclosure, 30% of respondents interpreted the stated MPG as referring to the way in which the vehicle is driven, compared to the 73.1% who took away the same interpretation from the unqualified claim in Q3c.37 Caution should be used in interpreting this 30%, as it is an uncontrolled result. Thus, we cannot be sure how many of the responses actually indicate deception. However, it does suggest that drafting an adequate qualifying disclosure may be difficult. Accordingly, to minimize the risk of deception, advertisers should be careful to ensure that qualifying language properly conveys the meaning and limitations of any ‘‘up to’’ claims. In sum, the consumer study strongly suggests that unqualified ‘‘up to’’ claims are likely to be deceptive where the advertiser intends to communicate that a version of the advertised model will achieve the stated fuel economy rating. In addition, under the same circumstances, the results suggest that it is difficult to fashion qualifying language that adequately avoids consumer confusion. However, given 35 Specifically, 28.4% stated that ‘‘up to’’ meant the advertised MPG depended on the type of driving (e.g., highway or city), and 44.7% indicated the stated MPG could be achieved if the car was driven efficiently (Q3c). Only a few respondents (9.3%) interpreted the unqualified ‘‘up to’’ claim to mean the MPG rating applied to a specific model version, the meaning often intended by car advertisers. 36 The claim in Q3e read: ‘‘Different options for engine size and other features are available. Depending on the options chosen, this model gets up to 30 miles per gallon.’’ 37 Specifically, 14.2% choose type of driving (e.g., highway or city), and 15.8% indicated the stated MPG could be achieved if the car was driven efficiently (Q3e). PO 00000 Frm 00036 Fmt 4702 Sfmt 4702 36221 available information, the Commission cannot conclude that such ‘‘up to’’ claims are categorically deceptive. Therefore, the proposed guidance advises advertisers to ensure that qualifying language adequately clarifies such claims to prevent deception. f. Non-Linear Relationship Between MPG and Fuel Costs Background: In the 2014 Notice, the Commission asked whether the Guide should advise advertisers to avoid statements that imply a linear relationship between MPG and fuel costs. As explained in the earlier notice, MPG ratings and fuel savings do not increase proportionally. For instance, fuel savings due to an increase from 10 MPG to 20 MPG is much greater than from an increase from 50 to 60 MPG. Given this fact, some have recommended use of a different efficiency metric, such as ‘‘gallons per 100 miles,’’ which exhibits a linear relationship with fuel cost.38 Indeed, EPA requires a ‘‘gallons per 100 miles’’ figure as a secondary disclosure on its label. Comments: Commenters agreed that advertisers should not imply that there is a linear relationship between MPG and fuel costs. However, they also stated that no such claims currently appear in advertisements and thus did not identify a need for the Guide to address them.39 Discussion: Because commenters indicated that no claims currently appear in advertising implying a linear relationship between mileage and fuel cost, the Commission does not propose addressing this issue in the Guide.40 However, advertisers should remain mindful of the non-linear relationship between MPG and fuel costs and avoid claims that state or imply such a relationship. g. EPA as the Source of Estimate Background: The Commission also invited comments on whether it should retain its current advice that fuel economy values in advertisements should disclose that EPA is the source of the ‘‘estimated city MPG’’ and ‘‘estimated highway MPG.’’ Comments: Commenters agreed that the Guide should continue to advise advertisers to identify EPA as the source 38 See, e.g., Larrick, R.P. and J.B. Soll, ‘‘The MPG Illusion,’’ Science 320:1593–1594 (2008). 39 See Alliance and NADA comments. 40 As EPA has indicated in the past, a metric such as ‘‘gallons per 100 miles’’ provides consumers with ‘‘a better tool for making economically sound decisions’’ than traditional MPG disclosure. Accordingly, EPA now includes such a figure on the label despite its unfamiliarity to most consumers. 76 FR 39478, 39486 (July 6, 2011). E:\FR\FM\06JNP1.SGM 06JNP1 36222 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules sradovich on DSK3TPTVN1PROD with PROPOSALS of the estimates. The consumer groups explained that advertisements should always list EPA as the rating’s source because this designation reinforces the rating’s ‘‘official nature’’ and ensures consumers can make true vehicle-tovehicle comparisons. In their view, the FTC’s recommended disclosures help consumers understand that the fuel economy values do not derive from an unofficial process for marketing or advertising purposes. NADA agreed and urged the Commission to recognize the value in additional disclosures directing consumers to www.fueleconomy.gov. Discussion: The Commission does not propose changing its guidance for identifying EPA as the source of the estimates. No information on the record suggests a change is necessary. As comments explained, this disclosure clarifies the basis for mileage disclosures and thus helps avoids deception. The consumer research provides some support for this guidance. Although the study did not address this issue directly, respondents indicated significant confusion about the source of tests for driving range claims related to electric vehicles, suggesting the absence of the EPA disclosures could lead to deception.41 Finally, the Commission expects most advertisers will identify the EPA disclosure as a matter of course. Accordingly, continuing the guidance is unlikely to place any significant burden on advertisers. h. Additional Guidance on Ratings as ‘‘Estimates’’ Background: The current Guide advises advertisers to disclose that the EPA ratings are ‘‘estimates.’’ 42 In the 2014 Notice, the Commission asked whether the FTC should provide additional guidance on this issue. Comments: Commenters urged the Commission to retain its guidance regarding the estimate disclosure. NADA explained that the EPA fuel economy ratings do not convey the mileage particular vehicles will actually achieve, but, instead, furnish estimates to help prospective purchasers make vehicle comparisons. Rodriguez also cautioned that the EPA test cannot accurately predict fuel economy for all drivers and all driving conditions. The Alliance, which also supported the 41 In Question 4c, the Commission asked respondents about the source of a test used to determine a driving range claim. In open-ended responses, study participants pointed to a variety of results, with about 30% identifying the car company as the source, 11% identifying a government agency, and more than 40% indicating they were not sure. 42 See section 259.2(a)(2). VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 existing guidance, argued that any additional disclosures on this issue would increase consumer confusion. AGA suggested that FTC caution against phrases such as ‘‘X vehicle gets xx MPG in the city/on the highway’’ because such language may lead consumers to believe that they will actually achieve such mileage in their own driving. However, AGA recommended that advertisers use the term ‘‘rating’’ instead of ‘‘estimate,’’ because the latter term may mislead consumers into believing they will actually achieve the stated MPG number.43 The term ‘‘rating,’’ it argued, would help manage consumers’ expectations given other types of ratings, reviews, and other comparative tools typically based on individuals’ experience. AGA noted that the EPA uses ‘‘rating’’ somewhat interchangeably with ‘‘estimated fuel economy’’ on the fueleconomy.gov Web site. Discussion: The Commission does not propose to change its guidance advising advertisers to disclose that EPA numbers are ‘‘estimates.’’ The term ‘‘estimate’’ helps prevent deception by signaling to consumers that their actual mileage will vary. Specifically, the term helps reduce the likelihood consumers will believe they will achieve or ‘‘get’’ a certain mileage.44 Moreover, although one commenter recommended that the Guide discourage using the term ‘‘estimate,’’ there is no indication this term is deceptive other than that comment. In addition, EPA regulations and the underlying statute employ this term, and it has appeared on EPA labels and in advertising for decades.45 At the same time, the Commission recognizes that the term ‘‘estimate’’ does not represent the only non-deceptive means to inform consumers that their fuel economy results may vary from the EPA rating. 2. Claims Related to Model Types Background: The current Guide advises manufacturers to limit fuel economy ratings to the model type being advertised. Doing so ensures advertised fuel economy ratings match the advertised vehicles specification.46 Specifically, section 259.2, n. 2 of the 43 AGA noted that, in the European Union, advertisements must include additional text stating: ‘‘The mpg figures quoted are sourced from official EU-regulated test results, are provided for comparability purposes and may not reflect your actual driving experience.’’ 44 The revised Guidance also contains an example warning against the use of the term ‘‘gets’’ without adequate qualification. 45 See 40 CFR part 600, and 49 U.S.C. 32908. 46 The EPA’s fuel economy regulations define ‘‘model type’’ as ‘‘a unique combination of car line, basic engine, and transmission class.’’ 40 CFR 600.002–85. PO 00000 Frm 00037 Fmt 4702 Sfmt 4702 Guide warns against using a single fuel economy estimate for all vehicles bearing a common model name, if separate vehicles within that model group have different fuel economy ratings. The Commission sought comment on this issue including whether the FTC should provide further guidance to help advertisers avoid deceptive claims in this context. Comments: In response, NADA indicated that, where an advertisement includes only one model version, advertisers should not use mileage ratings for a different version of the same make or model. The Alliance agreed and argued the current Guide provides adequate guidance on this issue. In its opinion, additional information would create lengthy and unwieldy disclosures, with little benefit to consumers. The Alliance noted that several sources, including manufacturer Web sites, fueleconomy.gov, the vehicle’s EPA label, and dealers, have more detailed information about vehicle configuration to help consumers. Finally, AGA cautioned against revising guidance, explaining that EPA has been working to address how models are grouped for mileage purposes. Accordingly, AGA urged EPA and FTC to coordinate efforts to ensure consistency. Discussion: Responding to these comments, the Commission proposes to update its existing guidance on claims related to make or model groups to include current EPA terminology. Specifically, the proposed amendments remove the outdated term ‘‘unique nameplate’’ and replace it with the more general term ‘‘model type.’’ However, the proposed Guide remains consistent with existing advice. In particular, the proposal states that it is deceptive to state or imply that a rated fuel economy figure applies to vehicles not included in the same model type featured in the advertisement. Fuel economy estimates assigned to model types under EPA’s regulations apply only to specific versions of the model. Thus, any fuel economy claim for a vehicle should apply to the model type being advertised (e.g., a version with a 1.0 liter engine, automatic transmission). 3. Claims Based on Non-EPA Estimates Background: In the 2014 Notice, the Commission sought comment on the Guide’s treatment of fuel economy claims based on non-EPA tests. In issuing the Guide in 1975, the Commission explained that ‘‘the use in advertising of fuel economy results obtained from disparate test procedures may unfairly and deceptively deny to consumers information which will E:\FR\FM\06JNP1.SGM 06JNP1 sradovich on DSK3TPTVN1PROD with PROPOSALS Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules enable them to compare advertised automobiles on the basis of fuel economy.’’ 47 To address this issue, the Guide advises advertisers to provide several disclosures whenever they make a fuel economy claim based on non-EPA information. Specifically, section 259.2(c) states that fuel economy claims based on non-EPA information should: (1) Disclose the corresponding EPA estimates with more prominence than other estimates; (2) identify the source of the non-EPA information; and (3) disclose how the non-EPA test differs from the EPA test in terms of driving conditions and other relevant variables. The Commission sought input on this issue, asking commenters to address, among other things, the prevalence of non-EPA fuel economy claims, including both traditional fuel economy claims (e.g., MPG), as well as electric vehicle driving range claims (e.g., ‘‘100 miles per charge’’) and the adequacy of the current guidance for preventing deception. Comments: Commenters offered conflicting views on the Guide’s treatment of non-EPA fuel economy claims. Industry members agreed with the existing guidance but questioned its relevance. In AGA’s view, the current guidance could help consumers make comparisons when non-EPA ratings appear in advertisements. However, both NADA and AGA explained that manufacturers and dealers simply do not refer to such ratings in advertising, and there is no expectation they will do so in the future. Thus, both organizations questioned whether the guidance on non-EPA source is still necessary. Conversely, the consumer groups argued the Guide should ‘‘prevent the use of anything but standardized EPA MPG ratings’’ because such ratings provide the only means to avoid ‘‘significant deception.’’ The groups explained that the EPA ratings have become the standard on which manufacturers compete. In their view, many different techniques can produce mileage estimates, and the dissemination of such alternative ratings ‘‘would substantially increase deceptive advertising.’’ They argued that the EPA numbers, which appear on every vehicle sold in the U.S., must appear in the advertisements to avoid deception and confusion. They further asserted that EPA’s single rating system allows for ‘‘true competition and avoids the deception associated with multiple rating systems’’ and different testing methodologies. In their view, alternative (non-EPA) rating results prevent 47 40 FR 42003 (Sept. 10, 1975). VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 vehicle-to-vehicle comparisons and lead to ‘‘manipulation and skepticism.’’ Discussion: The Commission does not propose changing the Guide’s basic approach to advertising claims based on non-EPA data. The Commission has identified no basis to prohibit all fuel economy advertising claims based on non-EPA tests. There is no evidence that such claims are deceptive if adequately qualified. In addition, though advertisers may not commonly use nonEPA MPG ratings in advertising, that may not be the case for other claims, such as driving range representations for electric vehicles.48 Accordingly, the proposed Guide continues to recommend specific disclosures related to non-EPA claims to reduce the possibility of deception.49 The Commission seeks further comment on this issue, particularly whether nonEPA claims, including non-EPA driving range claims for electric vehicles, are common. Finally, the current Guide addresses the relative size and prominence of fuel economy claims based on non-EPA and EPA estimates in television, radio, and print advertisements. The Commission proposes to retain this guidance. The Commission, however, proposes to clarify that it applies to any advertising medium (not solely television, radio, and print). 4. Claims for Alternative Fueled Vehicles Background: In the 2014 Notice, the Commission sought comment on whether the Guide should address advertising for flexible fueled vehicles (FFVs), particularly pertaining to different fuel economy estimates for different fuels.50 Specifically, the Commission asked commenters to address whether advertisements that provide a vehicle’s gasoline MPG rating and identify the vehicle as an FFV should include disclosures about that vehicle’s alternative fuel MPG rating. Comments: In response, commenters recommended that the Guide address 48 In addition, to the extent such claims do not appear in advertising, the Guide imposes no burden on such claims. 49 The guidance assumes that the advertised nonEPA estimates are not identical to the EPA estimates. 50 Previously, the Commission had sought comments on Guide amendments specifically related to alternative fueled vehicles labeled under the Alternative Fuels Rule (16 CFR part 309). 74 FR at 19152. However, in April 2013, the Commission amended the Alternative Fuels Rule to consolidate the FTC’s alternative fueled vehicle labels with EPA’s new fuel economy labels. Because those amendments removed any potential conflict between FTC and EPA labels, the Guides need not address FTC alternative fueled vehicles labels. 78 FR 23832 (April 23, 2013). PO 00000 Frm 00038 Fmt 4702 Sfmt 4702 36223 alternative fueled vehicles, particularly electric vehicles, given their recent proliferation in the market. However, they recommended different approaches to addressing this issue. Electric Vehicle Driving Range: First, AGA recommended the Guide address plug-in hybrid electric vehicles (PHEVs), battery electric vehicles (BEVs), and fuel cell electric vehicles (FCEVs) to ensure consistent use of fuel economy ratings among these increasingly prevalent vehicles. AGA also recommended that the FTC consult with EPA to develop best practices for BEV, FCEV, and PHEV fuel economy advertising. In particular, AGA asked the Commission to consider guidance on driving range claims for alternative fueled vehicles to provide a better ‘‘apples-to-apples’’ comparison across all fuel and vehicle types, particularly given the importance of this information for PHEVs and ‘‘electric-only’’ ranges. In the Alliance’s view, any claims for a vehicle’s driving range should follow the same disclosure principles applicable to other claims. NADA added that the Commission’s guidance should promote uniformity and clarity in the use of all government fuel economy labeling for all AFVs in the same manner as conventionally fueled vehicles. Miles Per Gallon Equivalent (MPGe): The consumer groups recommended that electric vehicle advertisements disclose the vehicle’s miles per gallon equivalent (MPGe), which appears on the EPA label and converts the energy efficiency of electric vehicles into a miles per gallon estimate. However, to help consumers understand such information, the commenters suggested the following disclosure: ‘‘This vehicle does not use gasoline, the conversion from electric efficiency to miles per gallon is for comparative purposes.’’ For plug-in hybrid electric vehicles, the consumer groups argued that the fuel economy ratings should include separate ratings for operation on gasoline (or other combustion engine fuel) and on electricity, in equal prominence. Alternative Fuel: Finally, the consumer groups argued that FFV advertisements should disclose two MPG ratings: One for the model’s gasoline rating and one for the biofuel blend. However, they indicated that, if the advertisement does not mention the vehicle’s FFV capability, it would be adequate to disclose the gasoline-only MPG. Discussion: The Commission has considered issues related to electric vehicle driving range, MPGe E:\FR\FM\06JNP1.SGM 06JNP1 sradovich on DSK3TPTVN1PROD with PROPOSALS 36224 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules disclosures, and claims for FFVs. We discuss each below: Electric Driving Range Information: The Commission proposes to address driving range claims for several reasons. First, as with general fuel economy claims, general driving range claims (e.g., ‘‘will go far on a single charge’’) are likely to generate a variety of consumer interpretations about the vehicle’s range relative to other vehicle’s on the market. These multiple interpretations are likely impossible for many advertisers to substantiate simultaneously. Disclosing the EPA range estimates will help prevent deception by providing clear, objective information that allows consumers to compare the driving ranges of competing vehicles. Second, the consumer research suggested that confusion may exist regarding the source of driving range claims. Specifically, in response to an openended question about the source of the test used to derive a driving range (Q4c), respondents pointed to a variety of results, with about 30% identifying the car company as the source, 11% identifying a government agency, and more than 40% indicating they were not sure.51 Finally, driving range estimates are becoming increasingly important and prevalent. As with MPG disclosures for gasoline vehicles, range estimates for electric vehicles provide a fundamental measurement of an electric vehicle’s performance based on EPA testing requirements. Given these various considerations, the proposed Guide advises advertisers to disclose EPAmandated driving range results whenever they make a general driving range claim. Miles Per Gallon Equivalent (MPGe): The Commission does not propose advising advertisers to always disclose MPGe in advertising for electric vehicles as some comments suggested. It is unclear whether such disclosures are essential to preventing deception. Because MPGe is a relatively new and unfamiliar concept to most consumers, the extent to which they would understand and use such a disclosure is unclear. Indeed, the consumer research supports this. When viewing an MPGe claim (i.e., ‘‘This electric car is rated at 93 MPGe’’) (Q4d), respondents assigned a variety of interpretations to the term. Specifically, only about 35% understood that MPGe reflected the electric vehicle’s relative energy use (or energy cost) compared to conventional gasoline vehicles, and 40% indicated 51 The balance of respondents (about 19%) identified other sources such as non-governmental organizations. VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 they were not sure what the term meant.52 In addition, in shopping for electric vehicles, consumers are likely to focus on other energy performance metrics, such as driving range. Furthermore, it is likely that consumer understanding of MPGe will evolve rapidly as more electric vehicles enter the market. For now, however, the concept is too novel to incorporate into the guidance. Alternative Fuel: The Commission agrees with commenters that, if the advertisement mentions the vehicle’s alternative fuel capability, FFV advertisements should provide both the vehicle’s gasoline and alternative fuel ratings. Without such disclosures, consumers may assume the advertised MPG rating applies both to gasoline and alternative fuel operation. 5. Fuel Economy Range Claims for Specific Models Background: In the 2014 Notice, the Commission proposed to eliminate its guidance on ‘‘estimated in-use fuel economy range’’ claims (e.g., ‘‘expected range for most drivers 15 to 21 MPG’’). Because EPA’s label no longer contains this information, and no evidence suggests such claims are prevalent, the Commission proposed to eliminate this specific provision. Comments: The Alliance supported the proposal, explaining that the provision, as written, no longer applies to most vehicles. Discussion: For the reasons discussed above, including commenter support, the Commission proposes to eliminate the Guides’ provision related to ‘‘estimated in-use fuel economy range’’ (259.2(b)(1)). E. Limited Format Advertising Background and Comments: The Alliance urged the Commission to address space-constrained advertising, particularly in newer media formats. It recommended the Guide ‘‘grant maximum flexibility’’ for fuel economy advertising in new media formats while ensuring a level playing field and fair disclosures to consumers. Specifically, it suggested the Commission set general guidelines to allow familiar short-hand and weblinks in limited format advertising to direct consumers to mandated disclosures while avoiding overly prescriptive provisions. The Alliance stressed that such advertisements typically serve as a ‘‘starting point’’ for consumer awareness of the product and lead consumers to 52 The research (Q4e) suggests that respondents were much more likely to understand the term ‘‘MPGe’’ when the claims included extensive explanatory information. PO 00000 Frm 00039 Fmt 4702 Sfmt 4702 conduct additional research elsewhere. According to the Alliance, consumers understand that restricted-format advertisements do not contain complete information and routinely click on hyperlinks to access more detailed information. In its view, such links are more effective in providing disclosures to consumers than ‘‘attempting to include detailed footnotes that clutter a restricted-format advertisement and make it more difficult to read.’’ 53 The Alliance provided two specific suggestions. First, it recommended the Guide allow fuel economy advertisers to make abbreviated, but clearly understandable, disclosures of EPA label values in restricted-format media (e.g., ‘‘EPA-est. 35 MPG Hwy’’). Second, it argued that, in restricted format advertising, the Guide allow advertisers to provide necessary disclosures through web links directing consumers to the required information. Discussion: The Commission does not propose to cover space-constrained advertising in the Fuel Economy Guide because these issues are already addressed by the FTC’s ‘‘.Com Disclosures: How to Make Effective Disclosures in Digital Advertising’’ (‘‘.Com Disclosures’’).54 That guidance clarifies that advertisers are not exempt from general disclosure requirements simply because an advertisement has space constraints. However, it also provides recommendations for making disclosures in such contexts. The general principles in .Com Disclosures for space-constrained advertising hold true for fuel economy advertising. The Commission expects that advertisers will be able to include abbreviated forms of most disclosures identified in the proposed Guidance. Terms such as ‘‘EPA estimate’’ and ‘‘highway MPG’’ have been widespread in advertisements over the last four decades. Given the prevalence of these terms, the Commission expects that abbreviated disclosures, such as ‘‘EPA-est. 35 MPG Hwy,’’ coupled with a link to more detailed information, should be effective in conveying the disclosures to consumers.55 However, since the Commission cannot anticipate every abbreviated disclosure advertisers may use, empirical evidence may be 53 The consumer groups added that television and radio advertisements should include a clear, audible representation of the MPG. 54 See https://www.ftc.gov/sites/default/files/ attachments/press-releases/ftc-staff-revises-onlineadvertising-disclosure-guidelines/ 130312dotcomdisclosures.pdf. 55 In addition, if consumers do not click the link for more detailed disclosures, they will have an opportunity to see the information in the showroom on the EPA label, which appears on every new car in the showroom. E:\FR\FM\06JNP1.SGM 06JNP1 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules necessary to demonstrate that certain abbreviations or icons are effective. The Commission seeks further comment on these issues.56 sradovich on DSK3TPTVN1PROD with PROPOSALS V. Request for Comments You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before August 8, 2016. Write ‘‘Proposed Fuel Economy Guide Revisions’’ on your comment. Your comment— including your name and your state— will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/ publiccomments.shtm. As a matter of discretion, the Commission tries to remove individuals’ home contact information from comments before placing them on the Commission Web site. Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, such as anyone’s Social Security number, date of birth, driver’s license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, do not include any ‘‘[t]rade secret or any commercial or financial information which is . . . privileged or confidential,’’ as discussed in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names. If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).57 Your comment will be kept 56 The Commission does not propose to recommend audible MPG disclosures in all advertisements. Instead, consistent with the existing Guide, the proposed amendments continue to recommend that disclosures appear in the same format as the claim. For example, if the estimated MPG appears in the video of a television advertisement, the recommended disclosure should appear in the video. 57 In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 confidential only if the FTC General Counsel grants your request in accordance with the law and the public interest. Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at https:// ftcpublic.commentworks.com/ftc/ fueleconomyrevisions, by following the instruction on the web-based form. If this Notice appears at http:// www.regulations.gov, you also may file a comment through that Web site. If you prefer to file your comment on paper, write ‘‘Fuel Economy Guide Amendments, R711008’’ on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC–5610 (Annex B), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex B), Washington, DC 20024. Visit the Commission Web site at http://www.ftc.gov to read this Notice and the News Release describing this proceeding. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding, as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before August 8, 2016. You can find more information, including routine uses permitted by the Privacy Act, in the Commission’s privacy policy, at https://www.ftc.gov/site-information/ privacy-policy. VI. Proposed Amendments List of Subjects in 16 CFR Part 259 Advertising, Fuel economy, Trade practices. For the reasons set forth in this document, the Commission proposes to revise 16 CFR part 259 as follows: PART 259—GUIDE CONCERNING FUEL ECONOMY ADVERTISING FOR NEW AUTOMOBILES Sec 259.1 259.2 259.3 259.4 Purpose. Definitions. Qualifications and disclosures. Advertising guidance. Authority: 15 U.S.C. 41–58. portions of the comment to be withheld from the public record. See FTC Rule 4.9(c), 16 CFR 4.9(c). PO 00000 Frm 00040 Fmt 4702 Sfmt 4702 § 259.1 36225 Purpose. This Guide contains administrative interpretations of laws enforced by the Federal Trade Commission. Specifically, the Guide addresses the application of Section 5 of the FTC Act (15 U.S.C. 45) to the use of fuel economy information in advertising for new automobiles. This guidance provides the basis for voluntary compliance with the law by advertisers and endorsers. Practices inconsistent with this Guide may result in corrective action by the Commission under Section 5 if, after investigation, the Commission has reason to believe that the practices fall within the scope of conduct declared unlawful by the statute. The Guide sets forth the general principles that the Commission will use in such an investigation together with examples illustrating the application of those principles. The Guide does not purport to cover every possible use of fuel economy in advertising. Whether a particular advertisement is deceptive will depend on the specific advertisement at issue. § 259.2 Definitions. For the purposes of this part, the following definitions shall apply: (a) Alternative fueled vehicle. Any vehicle that qualifies as a covered vehicle under 16 CFR part 309. (b) Automobile. Any new passenger automobile, medium duty passenger vehicle, or light truck for which a fuel economy label is required under the Energy Policy and Conservation Act (42 U.S.C. 32901 et seq.) or rules promulgated thereunder, the equitable or legal title to which has never been transferred by a manufacturer, distributor, or dealer to an ultimate purchaser or lessee. For the purposes of this part, the terms ‘‘vehicle’’ and ‘‘car’’ have the same meaning as ‘‘automobile.’’ (c) Dealer. Any person located in the United States or any territory thereof engaged in the sale or distribution of new automobiles to the ultimate purchaser. (d) EPA. The U.S. Environmental Protection Agency. (e) EPA city fuel economy estimate. The city fuel economy determined in accordance with the city test procedure as defined and determined pursuant to EPA regulations. (f) EPA combined fuel economy estimate. The fuel economy value determined for a vehicle (or vehicles) by harmonically averaging the city and highway fuel economy values, weighted 0.55 and 0.45 respectively, determined pursuant to EPA regulations. (g) EPA driving range estimate. An estimate of the number of miles a E:\FR\FM\06JNP1.SGM 06JNP1 36226 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules vehicle will travel between refueling as defined and determined pursuant to EPA regulations. (h) EPA fuel economy estimate. The average number of miles traveled by an automobile per volume of fuel consumed (i.e., Miles-Per-Gallon (‘‘MPG’’) rating) as calculated under EPA regulations. (i) EPA highway fuel economy estimate. The highway fuel economy determined in accordance with the highway test procedure as defined and determined pursuant to EPA regulations. (j) EPA regulations. EPA regulatory requirements for fuel economy labeling set forth in 40 CFR part 600, subpart D. (k) Flexible Fuel Vehicle. Any motor vehicle (or motor vehicle engine) engineered and designed to be operated on any mixture of two or more different fuels. (l) Fuel. (1) Gasoline and diesel fuel for gasoline- or diesel-powered automobiles; or (2) Electricity for electrically-powered automobiles; or (3) Alcohol for alcohol-powered automobiles; (4) Natural gas for natural gaspowered automobiles; or (5) any other fuel type used in a vehicle for which EPA requires a fuel economy label under EPA regulations. (m) Manufacturer. Any person engaged in the manufacturing or assembling of new automobiles, including any person importing new automobiles for resale and any person who acts for, and is under the control, of such manufacturer, assembler, or importer in connection with the distribution of new automobiles. (n) Model type. A unique combination of car line, basic engine, and transmission class as defined by EPA regulations. (o) Ultimate purchaser or lessee. The first person, other than a dealer purchasing in his or her capacity as a dealer, who in good faith purchases a new automobile for purposes other than resale or leases such vehicle for his or her personal use. (p) Vehicle configuration. The unique combination of automobile features, as defined in 40 CFR part 600. sradovich on DSK3TPTVN1PROD with PROPOSALS § 259.3 Qualifications and disclosures. To prevent deceptive claims, qualifications and disclosures should be clear, prominent, and understandable. To make disclosures clear and prominent, marketers should use plain language and sufficiently large type for a person to see and understand them, should place disclosures in close proximity to the qualified claim, and VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 should avoid making inconsistent statements or using distracting elements that could undercut or contradict the disclosure. The disclosures should also appear in the same format as the claim. For example, for television advertisements, if the estimated MPG appears in the video, the disclosure recommended by this Guide should appear in the visual format; if the estimated MPG is audio, the disclosure should be in audio. § 259.4 Advertising guidance. (a) Misrepresentations: It is deceptive to misrepresent, directly or by implication, the fuel economy or driving range of an automobile. (b) General Fuel Economy Claims: General unqualified fuel economy claims, which do not reference a specific fuel economy estimate, likely convey a wide range of meanings about a vehicle’s fuel economy relative to other vehicles. Such claims, which inherently involve comparisons to other vehicles, can mislead consumers about the vehicle class included in the comparison, as well as the extent to which the advertised vehicle’s fuel economy differs from other models. Because it is highly unlikely that advertisers can substantiate all reasonable interpretations of these claims, advertisers making general fuel economy claims should disclose the advertised vehicle’s EPA fuel economy estimate in the form of the EPA MPG rating. Example 1: A new car advertisement states: ‘‘This vehicle gets great mileage.’’ The claim is likely to convey a variety of meanings, including that the vehicle has a better MPG rating than all or almost all other cars on the market. However, the advertised vehicle’s EPA fuel economy estimates are only slightly better than the average vehicle on the market. Because the advertiser cannot substantiate that the vehicle’s rating is better than all or almost all other cars on the market, the advertisement is likely to be deceptive. In addition, the advertiser may not be able to substantiate other reasonable interpretations of the claim. To avoid deception, the advertisement should disclose the vehicle’s EPA fuel economy estimate (e.g., ‘‘EPA-estimated 27 combined MPG’’). Example 2: An advertisement states: ‘‘This car gets great gas mileage compared to other compact cars.’’ The claim is likely to convey a variety of meanings, including that the vehicle gets better gas mileage than all or almost all other compact cars. However, the vehicle’s EPA fuel economy estimates are only slightly better than average compared to other models in its class. Because the advertiser cannot substantiate that the vehicle’s rating is better than all or almost all other compact cars, the advertisement is likely to be deceptive. In addition, the advertiser may not be able to substantiate other reasonable interpretations of the claim. PO 00000 Frm 00041 Fmt 4702 Sfmt 4702 To address this problem, the advertisement should disclose the vehicle’s EPA fuel economy estimate. (c) Matching the EPA Estimate to the Claim: EPA fuel economy estimates should match the driving claim appearing in the advertisement. If they do not, consumers are likely to associate the stated fuel economy estimate with a different type of driving. Specifically, if an advertiser makes a city or a highway fuel economy claim, it should disclose the corresponding EPA-estimated city or highway fuel economy estimate. If the advertiser makes both a city and a highway fuel economy claim, it should disclose both the EPA estimated city and highway fuel economy rating. If the advertiser makes a general fuel economy claim without specifically referencing city or highway driving, it should disclose the EPA combined fuel economy estimate, or, alternatively, both the EPA city and highway fuel economy estimates. Example 1: An automobile advertisement states that model ‘‘XYZ gets great gas mileage in town.’’ However, the advertisement does not disclose the EPA city fuel economy estimate. Instead, it only discloses the EPA highway fuel economy estimate, which is higher than the model’s city estimate. This claim likely conveys to a significant proportion of reasonable consumers that the highway estimate disclosed in the advertisement applies to city driving. Thus, the advertisement is likely to mislead consumers. To remedy this problem, the advertisement should disclose the EPA city fuel economy estimate (e.g., ‘‘32 MPG in the city according to the EPA estimate’’). Example 2: A new car advertisement states that model ‘‘XZA gives you great gas mileage’’ but only provides the EPA highway fuel economy estimate. Given the likely inconsistency between the general fuel economy claim, which does not reference a specific type of driving, and the disclosed EPA highway estimate, the advertisement is likely to mislead consumers. To address this problem, the advertisement should disclose the EPA combined estimate (e.g., ‘‘37 MPG for combined driving according to the EPA estimate’’), or both the EPA city and highway fuel economy estimates. Example 3: An advertisement states ‘‘according to EPA estimates, new cars in this class are rated at between 20 and 32 MPG, while the EPA estimate for this car is an impressive 35 MPG highway.’’ The advertisement is likely to imply that the 20 to 32 MPG range and 35 MPG estimate are comparable. In fact, the ‘‘20 and 32 MPG’’ range reflects EPA city estimates. Therefore, the advertisement is likely deceptive. To address this problem, the advertisement should only provide an apples-to-apples comparison—either using the highway range for the class or using the city estimate for the advertised vehicle. (d) Identifying Fuel Economy and Driving Range Ratings as Estimates: E:\FR\FM\06JNP1.SGM 06JNP1 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules Advertisers citing EPA fuel economy or driving range figures should disclose that these numbers are estimates. Without such disclosures, consumers may incorrectly assume that they will achieve the mileage or range stated in the advertisement. In fact, their actual mileage or range will likely vary for many reasons, including driving conditions, driving habits, and vehicle maintenance. To address potential deception, advertisers may state that the values are ‘‘EPA estimate(s),’’ or use equivalent language that informs consumers that they will not necessarily achieve the stated MPG rating or driving range. Example 1: An automobile manufacture’s Web site states, without qualification, ‘‘This car gets 40 MPG on the highway.’’ The claim likely conveys to a significant proportion of reasonable consumers that they will achieve 40 MPG driving this vehicle on the highway. The advertiser based its claim on an EPA highway estimate. However, EPA provides that estimate primarily for comparison purposes—it does not necessarily reflect real world driving results. Therefore, the claim is likely deceptive. In addition, the use of the term ‘‘gets,’’ without qualification, may lead some consumers to believe not only that they can, but will consistently, achieve the stated mileage. To address these problems, the advertisement should clarify that the MPG value is an estimate by stating ‘‘EPA estimate’’ or equivalent language. (e) Disclosing EPA Test as Source of Fuel Economy and Driving Range Estimates: Advertisers citing any EPA fuel economy or driving range figures should disclose EPA as the source of the test so consumers understand that the estimate is comparable to estimates for competing models. Doing so prevents deception by ensuring that consumers do not associate the claimed ratings with a test other than the EPA-required procedures. Advertisers may avoid deception by stating that the values are ‘‘EPA estimate(s),’’ or equivalent language that identifies the EPA test as the source. such as combined or highway, which may not be the driving type the advertiser intended. Thus, such consumers may believe the model’s fuel economy rating is higher than it actually is. Example 1: A television commercial for the car model ‘‘ZTA’’ informs consumers that the ZTA is rated at ‘‘25 miles per gallon according to the EPA estimate’’ but does not disclose whether this number is a highway, city, or combined estimate. The advertisement likely conveys to a significant proportion of reasonable consumers that the 25 MPG figure reflects normal driving (i.e., a combination of city and highway driving), not the highway rating as intended by the advertiser. In fact, the 25 MPG rating is the vehicle’s EPA highway estimate. Therefore, the advertisement is likely deceptive. (g) Within Vehicle Class Comparisons: If an advertisement contains an express comparative fuel economy claim where the relevant comparison is to any group or class, other than all available automobiles, the advertisement should identify the group or class of vehicles used in the comparison. Without such qualifying information, many consumers are likely to assume that the advertisement compares the vehicle to all new automobiles. Example 1: An advertisement claims that sports car X ‘‘outpaces other cars’ gas mileage.’’ The claim likely conveys a variety of meanings to a significant proportion of reasonable consumers, including that this vehicle has a higher MPG rating than all or almost all other vehicles on the market. Although the vehicle’s MPG rating compares favorably to other sports cars, its fuel economy is only better than roughly half of all new automobiles on the market. Therefore, the claim is likely deceptive. sradovich on DSK3TPTVN1PROD with PROPOSALS Example 1: A radio commercial for the ‘‘XTQ’’ car states that the vehicle ‘‘is rated at an estimated 28 MPG in the city’’ but does not disclose that an EPA test is the source of this MPG estimate. This advertisement may convey that the source of this test is an entity other than EPA. Therefore, the advertisement may be deceptive. (h) Comparing Different Model Types: Fuel economy estimates are assigned to specific model types under EPA regulations (i.e., unique combinations of car line, basic engine, and transmission class). Therefore, advertisers citing MPG ratings for certain models should ensure that the rating applies to the model type depicted in the advertisement. It is deceptive to state or imply that a rated fuel economy figure applies to vehicles not included in the model type featured in the advertisement, unless such rating in fact applies to that model type. (f) Specifying Driving Modes for Fuel Economy Estimates: If an advertiser cites an EPA fuel economy estimate, it should identify the particular type of driving associated with the estimate (i.e., estimated city, highway, or combined MPG). Advertisements failing to do so can deceive consumers who incorrectly assume the disclosure applies to a specific type of driving, Example 1: A manufacturer’s advertisement states that model ‘‘PDQ’’ gets ‘‘great gas mileage’’ but depicts the MPG numbers for a similar model type known as the ‘‘Econo-PDQ.’’ The advertisement is likely to convey that the claimed MPG rating applies to all types of the PDQ model. However, the ‘‘Econo-PDQ’’ has a better fuel economy rating than other types of the ‘‘PDQ’’ model. Therefore, the advertisement is likely to be deceptive. VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 PO 00000 Frm 00042 Fmt 4702 Sfmt 4702 36227 (i) ‘‘Up To’’ Claims: Advertisers should avoid using the term ‘‘up to’’ without adequate explanatory language if they intend to communicate that certain versions of a model (i.e., model types) are rated at a stated fuel economy estimate. A significant proportion of reasonable consumers are likely to interpret such claims to mean that the stated MPG can be achieved if the vehicle is driven under certain conditions. Therefore, to address the risk of deception, advertisers should qualify the term by clearly explaining the stated MPG applies to a particular vehicle model type. Example 1: An advertisement claims that a vehicle model VXR will achieve ‘‘up to 40 MPG on the highway’’ without further explanation. The advertisement is based on a particularly efficient type of this model, with specific options, with an EPA highway estimate of 40 MPG. However, other types of model VXR have lower EPA MPG estimates. A significant proportion of reasonable consumers likely interpret the ‘‘up to’’ claim as applying to all VXR model types. Therefore, the advertisement is likely deceptive. To address this problem, the advertisement should clearly explain that the 40 MPG rating does not apply to all model types of the VXR or use language other than ‘‘up to’’ that better conveys the basis for the claim. (j) Claims for Flexible-Fueled Vehicles: Advertisements for flexiblefueled vehicles should not mislead consumers about the vehicle’s fuel economy when operated with alternative fuel. If an advertisement for a flexible fueled vehicle mentions the vehicle’s flexible fuel capability and makes a fuel economy claim, it should include the EPA fuel economy estimates for both gasoline and alternative fuel operation. Without such disclosures, consumers are likely to assume the stated fuel economy estimate for gasoline operation also applies to alternative fuel operation. Example 1: An automobile advertisement states: ‘‘This flex-fuel powerhouse has a 30 MPG highway rating according to the EPA estimate.’’ The advertisement likely implies that the 30 MPG rating applies to both gasoline and alternative fuel operation. In fact, the ethanol EPA estimate for this vehicle is 25 MPG. Therefore, the advertisement is likely deceptive. (k) General Driving Range Claims: General unqualified driving range claims, which do not reference a specific driving range estimate, are difficult for consumers to interpret and likely convey a wide range of meanings about a vehicle’s range relative to other vehicles. Such claims, which inherently involve comparisons to other vehicles, can mislead consumers about the vehicle class included in the E:\FR\FM\06JNP1.SGM 06JNP1 36228 Federal Register / Vol. 81, No. 108 / Monday, June 6, 2016 / Proposed Rules comparison as well as the extent to which the advertised vehicle’s driving range differs from other models. Because it is highly unlikely that advertisers can substantiate all reasonable interpretations of these claims, advertisers making general driving range claims should disclose the advertised vehicle’s EPA driving range estimate. sradovich on DSK3TPTVN1PROD with PROPOSALS Example 1: An advertisement for an electric vehicle states: ‘‘This car has a great driving range.’’ This claim likely conveys a variety of meanings, including that the vehicle has a better driving range than all or almost all other electric vehicles. However, the EPA driving range estimate for this vehicle is only slightly better than roughly half of all other electric vehicles on the market. Because the advertiser cannot substantiate that the vehicle’s driving range is better than all or almost all other electric vehicles, the advertisement is likely to be deceptive. In addition, the advertiser may not be able to substantiate other reasonable interpretations of the claim. To address this problem, the advertisement should disclose the vehicle’s EPA driving range estimate (e.g., ‘‘EPA-estimated range of 70 miles per charge’’). (l) Use of Non-EPA Estimates.—(1) Disclosure Content: Given consumers’ reliance on EPA estimated fuel economy values over the last several decades, fuel economy and driving range estimates derived from non-EPA tests can lead to deception if consumers confuse such estimates with fuel economy ratings derived from EPA-required tests. Accordingly, advertisers should avoid such claims and disclose the EPA fuel economy or driving range estimates whenever possible. However, if an advertisement includes a claim about a vehicle’s fuel economy or driving range based on a non-EPA estimate, advertisers should disclose the EPA estimate and disclose with substantially more prominence than the non-EPA estimate: (i) That the fuel economy or driving range information is based on a nonEPA test; (ii) The source of the non-EPA test; (iii) The EPA fuel economy estimates or EPA driving range estimates for the vehicle; and (iv) All driving conditions or vehicle configurations simulated by the nonEPA test that are different from those used in the EPA test. Such conditions and variables may include, but are not limited to, road or dynamometer test, average speed, range of speed, hot or cold start, temperature, and design or equipment differences. (2) Disclosure format: The Commission regards the following as constituting ‘‘substantially more prominence’’: VerDate Sep<11>2014 16:27 Jun 03, 2016 Jkt 238001 (i) For visual disclosures on television: If the fuel economy claims appear only in the visual portion, the EPA figures should appear in numbers twice as large as those used for any other estimate, and should remain on the screen at least as long as any other estimate. Each EPA figure should be broadcast against a solid color background that contrasts easily with the color used for the numbers when viewed on both color and black and white television. (ii) For audio disclosures: For radio and television advertisements in which any other estimate is used only in the audio, equal prominence should be given to the EPA figures. The Commission will regard the following as constituting equal prominence: the EPA estimated city and/or highway MPG should be stated, either before or after each disclosure of such other estimate, at least as audibly as such other estimate. (iii) For print and Internet disclosures: The EPA figures should appear in clearly legible type at least twice as large as that used for any other estimate. The EPA figures should appear against a solid color, and contrasting background. They may not appear in a footnote unless all references to fuel economy appear in a footnote. Example 1: An internet advertisement states: ‘‘Independent driving experts took the QXT car for a weekend spin and managed to get 55 miles-per-gallon under a variety of driving conditions.’’ It does not disclose the actual EPA fuel economy estimates, nor does it explain how conditions during the ‘‘weekend spin’’ differed from those under the EPA tests. This advertisement likely conveys that the 55 MPG figure is the same or comparable to an EPA fuel economy estimate for the vehicle. This claim is likely to be deceptive because it fails to disclose that fuel economy information is based on a non-EPA test, the source of the non-EPA test, the EPA fuel economy estimates for the vehicle, and all driving conditions or vehicle configurations simulated by the non-EPA test that are different from those used in the EPA test. Example 2: An advertisement states: ‘‘The XZY electric car has a driving range of 110 miles per charge in summer conditions according to our expert’s test.’’ It provides no additional information regarding this driving range claim. This advertisement likely conveys that this 110 driving range figure is comparable to an EPA driving range estimate for the vehicle. The advertisement is likely deceptive because it does not clearly state that the test is a non-EPA test; it does not provide the EPA estimated driving range; and it does not explain how conditions referred to in the advertisement differed from those under the EPA tests. Without this information, consumers are likely to confuse the claims with range estimates derived from the official EPA test procedures. PO 00000 Frm 00043 Fmt 4702 Sfmt 4702 By direction of the Commission. Donald S. Clark, Secretary. [FR Doc. 2016–13098 Filed 6–3–16; 8:45 am] BILLING CODE 6750–01–P DEPARTMENT OF JUSTICE 28 CFR Part 16 [CPCLO Order No. 005–2016] Privacy Act of 1974; Implementation; Extension of Comment Period Federal Bureau of Investigation, United States Department of Justice. ACTION: Notice of proposed rulemaking; extension of comment period. AGENCY: The Department of Justice (Department or DOJ), Federal Bureau of Investigation (FBI), is extending the comment period for its proposal to exempt ‘‘The Next Generation Identification (NGI) System,’’ JUSTICE/ FBI–009, from certain provisions of the Privacy Act, published in the Federal Register on May 5, 2016 (81 FR 27288). The original comment period is scheduled to expire on June 6, 2016. The Department is now extending the time period for public comments by 30 days. The updated comment period is scheduled to expire on July 6, 2016. This action will allow interested persons additional time to analyze the proposal and prepare their comments. DATES: Comments on the notice of proposed rulemaking published May 5, 2016 (81 FR 27288) must be submitted on or before July 6, 2016. ADDRESSES: Address all comments to the Privacy Analyst, Privacy and Civil Liberties Office, National Place Building, 1331 Pennsylvania Ave. NW., Suite 1000, Washington, DC 20530– 0001 or facsimile 202–307–0693. To ensure proper handling, please reference either this CPCLO Order No., or the CPCLO Order No. from the original notice of proposed rulemaking (CPCLO Order No. 003–2016) on your correspondence. You may review an electronic version of the proposed rule at http://www.regulations.gov. You may also comment via the Internet to either ProposedRegulations@usdoj.gov; or by using the http://www.regulations.gov comment form. When submitting comments electronically, you must include the CPCLO Order No., as described above, in the subject box. Please note that the Department is requesting that electronic comments be submitted before midnight Eastern Daylight Savings Time on the day the SUMMARY: E:\FR\FM\06JNP1.SGM 06JNP1

Agencies

FEDERAL TRADE COMMISSION

[Federal Register Volume 81, Number 108 (Monday, June 6, 2016)]
[Proposed Rules]
[Pages 36216-36228]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-13098]

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FEDERAL TRADE COMMISSION

16 CFR Part 259

Guide Concerning Fuel Economy Advertising for New Automobiles

AGENCY: Federal Trade Commission

ACTION: Proposed amendments.

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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') seeks
comments on proposed amendments to the Guide Concerning Fuel Economy
Advertising for New Automobiles (``Fuel Economy Guide'' or ``Guide'')
to reflect current Environmental Protection Agency (``EPA'') and
National Highway Traffic Safety Administration (``NHTSA'') fuel economy
labeling rules and to consider advertising claims prevalent in the
market.

DATES: Comments must be received by August 8, 2016.

ADDRESSES: Interested parties may file a comment online or on paper by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``Fuel Economy Guide
Amendments, R711008'' on your comment, and file your comment online at
https://ftcpublic.commentworks.com/ftc/fueleconomyamendments by
following the instructions on the web-based form. If you prefer to file
your comment on paper, write ``Fuel Economy Guide Amendments, R711008''
on your comment and on the envelope, and mail your comment to the
following address: Federal Trade Commission, Office of the Secretary,
600 Pennsylvania Avenue NW., Suite CC-5610 (Annex B), Washington, DC
20580, or deliver your comment to the following address: Federal Trade
Commission, Office of the Secretary, Constitution Center, 400 7th
Street SW., 5th Floor, Suite 5610 (Annex B), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Hampton Newsome, (202) 326-2889,
Attorney, Division of Enforcement, Bureau of Consumer Protection,
Federal Trade Commission, Room C-9528, 600 Pennsylvania Avenue NW.,
Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Background

The Commission issued the Fuel Economy Guide (16 CFR part 259) on
September 10, 1975 (40 FR 42003) to prevent deceptive fuel economy
advertising for new automobiles and thus facilitate the use of fuel
efficiency information in advertising. To accomplish this goal, the
current Guide advises advertisers to disclose established EPA fuel
economy estimates (e.g., miles per gallon or ``MPG'') whenever they
make any fuel economy claim based on those estimates. In addition, if
advertisers make claims based on non-EPA tests, the Guide advises them
to disclose EPA-derived information and provide details about the non-
EPA tests, such as the test's source, driving conditions, and vehicle
configurations.
On April 28, 2009 (74 FR 19148), the Commission published a notice
soliciting comments on proposed amendments to the Guide as part of its
regulatory review program. The Commission then postponed its review in
a June 1, 2011 notice (76 FR 31467) pending new fuel economy labeling
requirements from the EPA and completion of the FTC's Alternative Fuels
Rule (16 CFR part 309) review. The Commission explained that Fuel
Economy Guide revisions would be premature before the conclusion of
these regulatory proceedings. With those activities complete,\1\ the
Commission resumed its review of the Guide on May 15, 2014) (79 FR
27820) (``2014 Notice'') seeking comment on potential amendments to
address changes to the EPA and NHTSA (hereinafter ``EPA'') fuel economy
labeling rules, address advertising for alternative fueled vehicles,
and consider other advertising claims prevalent in the market. The
Commission also announced plans to conduct consumer research on fuel
economy advertising claims.
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\1\ The Commission announced final revisions to the Alternative
Fuels Rule in an April 23, 2013 Notice (78 FR 23832). In 2011, EPA
and NHTSA completed revisions to their fuel economy labeling
requirements, which, among other things, addressed labels for
alternative fueled vehicles (AFVs) not specifically addressed in
past EPA requirements. See 76 FR 39478 (July 6, 2011) (see 40 CFR
parts 85, 86, and 600; and 49 CFR part 575).
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After reviewing the comments generated by the 2014 Notice \2\ and
the consumer research results, the Commission proposes Guide amendments
for comment. In considering these proposals, commenters should focus on
information that helps advertisers avoid deceptive or unfair claims
prohibited by the FTC Act.\3\ The Guide does not identify disclosures
that are merely helpful or desirable to consumers. Likewise, commenters
should not address the adequacy of EPA fuel economy test procedures or
the accuracy of EPA label content. Such issues fall within the EPA's
purview and are generally outside the scope of the Guide.
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\2\ The comments are available at https://www.ftc.gov/policy/public-comments/initiative-573. The commenters included: Alliance of
Automobile Manufacturers (Alliance) (#00004), Association of Global
Automakers, Inc. (AGA) (#00007), Consumer Federation of America (on
behalf of several organizations) (referred herein as ``consumer
groups'') (#00006), LaRosa (#00002), National Automobile Dealers
Association (NADA) (#00008), and Rodriguez (#00003).
\3\ 15 U.S.C. 45(a). The Guides do not have the force and effect
of law and are not independently enforceable. However, failure to
comply with industry guides may result in law enforcement action
under applicable statutory provisions. The Commission, therefore,
can take action under the FTC Act if a business makes fuel economy
claims inconsistent with the Guides. In any such enforcement action,
the Commission must prove that the act or practice at issue is
unfair or deceptive in violation of Section 5 of the FTC Act.
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II. Consumer Research

To aid the Commission in developing the proposed Guide amendments,
the Commission conducted an Internet-based research study to explore
consumer perceptions of certain fuel economy marketing claims.\4\ Using
a

[[Page 36217]]

treatment-control comparison methodology, the study compared
participant responses regarding their understanding of a variety of
claim types, such as general fuel economy claims (e.g., ``this car gets
great gas mileage''), specific MPG claims (e.g., ``25 MPG in the
city''), driving range claims, electric vehicle claims, and ``up to''
mileage claims. The study collected responses from U.S. automobile
consumers representing a broad spectrum of the U.S. adult
population.\5\ By comparing the responses to various scenarios, the
study provided useful insights about respondents' understanding of fuel
economy claims.\6\ This Notice contains relevant discussion of the
proposed amendments, as well as specific study results. The Commission
invites commenters to identify additional consumer research that may
aid the FTC in considering the proposed Guide revisions.
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\4\ The Commission announced the study in its May 2014 Notice
and provided further information in two additional notices (79 FR
26428 (May 8, 2014) and 79 FR 62618 (Oct. 20, 2014)).
\5\ The study sampled members of an Internet panel consisting of
individuals recruited through a variety of convenience sampling
procedures. The sample for this research, therefore, does not
constitute a true, random sample of the adult U.S. population.
However, because the study focused primarily on comparing responses
across randomly assigned treatment groups, the Internet panel
provided an appropriate sample frame.
\6\ Additional information about the study, including the
questionnaire and results, is available on the FTC Web site. See
https://www.ftc.gov/policy/public-comments.
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III. Guide Benefits

Comments received in response to the 2014 Notice expressed general
support for maintaining the Guide and provided general recommendations
for improvement. Given this broad support, the Commission plans to
retain the Guide. However, as detailed in this Notice, the Commission
proposes to revise the Guide's format and update its content to address
new technologies and new types of claims.
In expressing support for the Guide, several commenters discussed
its benefits. NADA, for example, explained that the Guide helps
prospective new vehicle purchasers obtain consistent and objective fuel
economy information by advising manufacturers and dealers ``to disclose
fuel economy estimates in a fair, even-handed, and clear and
conspicuous manner.'' The consumer groups added that ``automobile
purchases are among the largest expenditures consumers make and bind
them to purchase the fuel necessary to run their vehicles.'' In their
view, accurate mileage information benefits consumers, facilitates
market functions, serves as a powerful incentive to increase fuel
efficiency, and contributes significantly to the overall public good.
These various comments are consistent with the Commission's past
observation that ``the Guide has been a benefit to consumers, providing
fuel economy numbers in advertising that allow meaningful comparisons
of different vehicle models.'' \7\
---------------------------------------------------------------------------

\7\ 67 FR 9924 (Mar. 5, 2002).
---------------------------------------------------------------------------

Commenters also provided Guide recommendations related to EPA label
developments and market changes in recent years. For example, NADA and
the Alliance emphasized the need to ensure the Guide reflects current
EPA fuel economy labeling requirements. The Alliance added that the
updated Guide should reflect new vehicle technologies, existing
terminology, and the current EPA label format, while still providing
advertisers flexibility in how they inform consumers about fuel
economy. In addition, NADA and the Alliance recommended the Guide
afford flexibility in the content and format of claims, as long as such
claims maintain accuracy and clarity.
In response to these comments, the Commission proposes to update
the Guide, as detailed below, to take into account current EPA and
NHTSA requirements, new vehicle technology, and new terminology. In
addition, where appropriate, the proposed revisions provide flexibility
to advertisers as long as they avoid deceptive claims.

IV. Proposed Guide Revisions

The Commission sought comments in the 2014 Notice on general issues
related to the Guide, including a new format, technical definitions,
citation format, types of fuel economy claims (including claims
involving EPA-based MPG, non-EPA tests, vehicle configuration, fuel
economy range, and alternative fueled vehicles), and limited-format
advertising such as on mobile devices. The Commission discusses each of
these issues below.

A. Guide Format

Background: In the 2014 Notice, the Commission proposed improving
the Guide's format by making it consistent with recently amended FTC
guides, such as the Guides for the Use of Environmental Marketing
Claims.\8\ Under the proposed format, the Guide includes a list of
general principles to help advertisers avoid deceptive practices with
detailed examples to illustrate those principles.
---------------------------------------------------------------------------

\8\ See Guides for the Use of Environmental Marketing Claims
(Green Guides) (16 CFR part 260).
---------------------------------------------------------------------------

Comments: Commenters supported updating the Guide's format. For
example, NADA explained updates would help dealers maximize the clarity
and utility of their fuel economy advertising. The Alliance noted that
revisions would aid manufacturers, particularly in addressing potential
claims not specifically addressed by the Guide. However, several
commenters (e.g., NADA and AGA) urged the Commission to publish such
changes for comment before making final amendments.
Discussion: In response to comments, the Commission proposes to
revise the Guide format to be consistent with recent Guide revisions
for other topics, such as environmental claims. Specifically, the
proposed revisions include a list of general principles for fuel
economy advertising illustrated by specific examples.

B. Definitions

Background: In the 2014 Notice, the Commission proposed five
changes related to the Guide's definitions section (16 CFR 259.1).\9\
First, the Commission proposed to replace several outdated terms to
ensure consistency with EPA's current fuel economy rules.\10\
Specifically, the Commission proposed changing the definitions
``estimated city miles per gallon'' to ``estimated city fuel economy;''
and ``estimated highway miles per gallon'' to ``estimated highway fuel
economy.'' It also proposed revising the definition of the term ``fuel
economy.'' In addition, the Commission proposed eliminating the term
``estimated in-use fuel economy range'' because EPA's fuel economy
label no longer provides such information.\11\ Second, the Commission
proposed adding the term ``combined fuel economy'' to Section 259.1 to
ensure consistency and reduce potential confusion because EPA now uses
this term on its label.\12\ The new term would expand the Commission's
guidance to advertisers whose vehicles now display

[[Page 36218]]

an estimate of combined fuel economy required by the EPA. Third, the
Commission proposed to amend the Guide's definition of ``new
automobile'' to include ``medium-duty passenger vehicle,'' consistent
with EPA's existing fuel labeling requirements.\13\ Fourth, the
Commission proposed several minor revisions, including eliminating the
phrase ``in use'' in the definition of ``range of fuel economy,'' and
changing the definitions for ``estimated city MPG'' and ``estimated
highway MPG'' to ensure consistency with EPA's terms and definitions.
The Commission also proposed eliminating an obsolete reference to the
term ``unique nameplate'' in footnote 2 and replacing it with the more
appropriate EPA term ``model type.'' \14\ Finally, the Commission
proposed reorganizing the definition of ``new automobile'' to reduce
its length and potential confusion. Specifically, the proposed
amendment would remove the definitions of ``dealer,'' ``manufacturer,''
and ``ultimate purchaser'' from ``new automobile'' and list them as
separate terms under section 259.1.\15\
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\9\ The Commission, in the 2009 Notice, also proposed to add two
terms, ``Fuel'' and ``Alternative Fueled Vehicles,'' to distinguish
vehicles that would be covered by EPA's label requirements from
those covered by the proposed guidance regarding AFVs. 74 FR 19148,
19153.
\10\ See 40 CFR 600.002.
\11\ The current Guide defines ``estimated in-use fuel economy
range'' as the ``estimated range of city and highway fuel economy of
the particular new automobile on which the label is affixed, as
determined in accordance with procedures employed by the U.S.
Environmental Protection Agency as described in 40 CFR 600.311 (for
the appropriate model year), and expressed in miles-per-gallon, to
the nearest whole mile-per-gallon, as measured, reported or accepted
by the U.S. Environment Protection Agency.'' 16 CFR 259.1(e).
\12\ See 40 CFR 600, Appendix VI.
\13\ 40 CFR 86.1803-01. Previously, EPA required fuel economy
labels for only passenger automobiles and light trucks.
\14\ 74 FR at 19151.
\15\ The Commission does not propose otherwise altering these
definitions.
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Comments: Commenters supported conforming the definitions to
current EPA label regulations.\16\ AGA, for example, explained that
using EPA's recent terminology would provide additional clarity and
help ensure the Guide's consistent use. AGA also recommended
eliminating the term ``estimated in-use fuel economy range'' because
EPA no longer uses it. Likewise, it concurred with the proposal to
remove the term ``in use'' from the Guide because the term furthers
consumers' expectations that they will actually achieve the EPA
numbers.
---------------------------------------------------------------------------

\16\ See, e.g., Alliance, Global Automakers, and NADA.
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Discussion: Given commenters' support for these proposed changes,
the Commission proposes to revise the definitions consistent with its
proposals. In addition, the Commission has added the term ``EPA'' to
the various ``fuel economy'' estimate definitions to clarify that such
estimates are derived from required EPA test procedures. Furthermore,
consistent with several proposed amendments discussed below, the
proposed Guide contains new definitions for ``alternative fueled
vehicle,'' ``flexible fuel vehicle,'' ``EPA driving range estimate,''
``EPA regulations,'' and ``fuel.'' \17\
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\17\ See section 259.1 of the proposed Guide.
---------------------------------------------------------------------------

C. Regulatory Citations

Background: In its previous Notice, the FTC proposed to replace all
specific regulatory citations to EPA regulations in the Guide with a
general citation (40 CFR part 600) to reduce the frequency of future
Guide changes should EPA amend its regulations. Earlier comments noted
that this proposal would create confusion because the cited general EPA
provisions contain two different sets of fuel economy requirements, one
of which is not directly applicable to FTC's Guide. See 79 FR at 27821.
Comments: In response to the 2014 Notice, NADA urged the Commission
to use only a general citation to EPA's regulations (i.e., 40 CFR part
600), arguing the benefits of a general citation (e.g., it would
require fewer updates) outweigh any potential risks of confusion.
Discussion: To avoid confusion identified in the comments, the
Commission proposes to simplify the citations by using a general
citation to ``EPA regulations,'' but defining that term to mean EPA's
``fuel economy labeling requirements in 40 CFR part 600, subpart D,''
as opposed to other EPA vehicle-related regulations. This will clarify
that the EPA regulations referenced in the Guide apply to that agency's
labeling requirements and not other EPA requirements inapplicable to
the Guide.

D. Types of Fuel Economy Claims

As discussed below, the Commission sought comment on specific types
of advertising claims, including EPA-based miles-per-gallon claims,
claims based on non-EPA tests, claims related to vehicle configuration,
range of fuel economy claims, and AFV claims.
1. Miles-Per-Gallon (MPG) Claims
Background: In the 2014 Notice, the Commission sought comments on
various aspects of the MPG provision of the current Guide (section
259.2(a)). Specifically, the Notice invited comments on the following
issues: (1) Whether a general fuel economy claim (e.g., ``XYZ car gets
great mileage'') should be accompanied by a specific MPG disclosure to
prevent consumer deception or unfairness; (2) whether an advertisement
is unfair or deceptive if it provides only one type of mileage rating
(e.g., an advertisement that only provides highway MPG); (3) whether an
unspecified MPG claim (e.g., ``37 MPG'') is deceptive if the
advertisement fails to identify whether the rating is city, highway, or
combined; (4) how consumers understand ``up to'' MPG claims (e.g., ``up
to 45 MPG''); (5) whether the combined EPA MPG rating should serve as
the default disclosure for unspecified fuel economy claims (instead of
the city MPG as currently indicated in the Guide); (6) whether the
Guide should advise advertisers to avoid statements that imply a linear
relationship between MPG and fuel costs; (7) whether fuel economy
advertisements containing MPG claims should identify EPA as the source
of the ratings; and (8) whether the FTC should provide additional
guidance regarding disclaimers that the EPA ratings are only estimates.
Each of these issues is addressed below.
a. General Fuel Economy Claims
Background: In the 2014 Notice, the Commission sought comments on
whether a general fuel economy claim should be accompanied by a
specific mileage disclosure to prevent consumer deception or
unfairness. The Guide has advised advertisers to include such
disclosures since its initial publication in the 1970's. Specifically,
section 259.2(a) states that an advertisement with a general fuel
economy claim should disclose the vehicle's city mileage rating.\18\
That section also indicates that any claim about city or highway
driving should contain estimated city or highway MPG rating.
---------------------------------------------------------------------------

\18\ At the time the Guide was created, EPA did not require
combined fuel economy on the label. Therefore, the guidance pointed
to the city mileage number as the default disclosure.
---------------------------------------------------------------------------

Comments: Commenters supported the current Guide's approach to
specific mileage disclosures for general fuel economy claims. The
Alliance explained that such mileage disclosures provide consumers
``with context and backup for the specific claim being made.''
Rodriquez stated that, given the potential for deception in general
advertising claims, the Guide should continue to advise advertisers to
include the fuel economy ratings.
Discussion: The Commission proposes to retain the existing guidance
advising advertisers to provide the EPA mileage estimates whenever they
make a fuel economy claim. As discussed below, this approach, supported
by commenters, is consistent with the recent consumer research, as well
as the guidance the Commission has provided consistently for decades.
In releasing the Guide in 1975, the Commission explained that
``when no specific fuel economy figure is cited in advertising, the use
of such vague and ill-defined terms as `saves gas,' or `gas stingy
engine' may . . . be deceptive by implying existence of some level of
`good fuel economy' which may be perceived differently by different

[[Page 36219]]

individuals.''\19\ In choosing to retain the provision in 1995, the
Commission explained that ``it is important that the EPA estimate
accompany implicit as well as explicit mileage claims. Any mileage
claim inherently involves a comparison to other vehicles. The EPA
estimates provide consumers with a meaningful method of comparing
competing claims.'' \20\
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\19\ 40 FR 42003 (Sept. 10, 1975).
\20\ 60 FR 56230, 56231 (Nov. 8, 1995).
---------------------------------------------------------------------------

The recent FTC consumer study supports these conclusions.\21\ Study
respondents tended to assign multiple meanings to general fuel economy
claims. For example, when asked about the meaning of the claim ``this
car gets great gas mileage,'' various respondents said the vehicle had
better mileage than other cars of its size, better mileage than all
other cars, better mileage than similarly priced cars, or none of those
choices.\22\ When the study narrowed the general fuel economy claim to
a particular class size (``This car gets great gas mileage compared to
other compact cars''), respondents offered varied responses about
whether such claims applied to all, most, or many cars in the
class.\23\ When asked to describe the meaning of a general fuel economy
claim in an open-ended format, the results were similarly diverse.
Specifically, when respondents were asked about the meaning of the
claim ``This car gets great gas mileage,'' they variously answered
``more miles per gallon/saves money/less gas''; ``gets over 30 miles or
more''; gets ``good'' or ``great'' mileage; and ``gets over 20 miles or
more.'' \24\
---------------------------------------------------------------------------

\21\ Section II of this Notice contains background information
about the study.
\22\ Specifically, when asked about a general claim's meaning
(Q1d), study participants, selecting from five responses, indicated
the vehicle had better mileage than other cars of its size (36.8%),
better mileage than all other cars (14.1%), better mileage than
similarly priced cars (12.0%), not sure (15.6%), and none of above
(21.5%). The responses were significant compared to control
questions where the general claim was narrowed (Q1e and Q1f) (e.g.,
great mileage compared ``to other compact cars'' or ``similarly
priced cars''). In response to those questions, the vast majority of
respondents correctly identified the relevant comparison.
Specifically, in Q1e where the claim included ``other compact
cars,'' 78.8% of respondents accurately identified the comparison as
``other cars of its size'' while the results for all other choices
were fewer than 10%. Where the claim involved a comparison of
``similar priced'' cars in Q1f, 62.7% accurately identified the
comparison as ``cars with a similar sales price'' though 20.6% still
identified the relevant comparison as ``other cars of its size''
even though the claim specifically identified ``similarly-priced
cars.''
\23\ When the advertisement said ``This car gets great gas
mileage compared to other compact cars'' (Q2b), 23% of respondents
indicated the car got better gas mileage than ``all'' other compact
cars; 37% believed it got better gas mileage than ``almost all''
other compact cars; and 18% indicated it got better mileage than
``at least half.'' When the claim was altered to say ``This car gets
great gas mileage compared to many other compact cars'' (Q2d), the
responses also varied with 10% indicating the car had better mileage
than all cars, 30% indicating better than almost all, and 30%
indicating better than at least half. Only when respondents viewed a
control which stated ``This car gets great gas mileage compared to
all other compact cars'' (Q2c) did the variation decrease, with 52%
indicating the advertised car got better mileage than all other
cars. However, even under this scenario, 23% said the car got better
mileage than ``almost all'' other compact cars.
\24\ Q1a. None of these various answers corresponded to more
than 5% of participants' responses.
---------------------------------------------------------------------------

These varied interpretations are likely impossible for an
advertiser to substantiate simultaneously. To overcome such potential
deception, the Commission has consistently recommended that advertisers
disclose the EPA MPG ratings in advertisements that contain general
fuel economy claims. Such ratings adequately qualify general fuel
economy claims by providing clear objective information that allows
consumers to compare competing models and thus mitigates the deceptive
conclusions consumers may draw from general claims. Given the results
of the research and the overwhelming commenter support for the existing
guidance, the Commission does not propose to change it.
b. Combined EPA MPG Rating as Default Disclosure
Background: In the 2014 Notice, the Commission also solicited
comments on whether the EPA combined city/highway rating, rather than
the city MPG, should serve as the default disclosure for general fuel
economy claims. The current Guide (section 259.2(a)(1)(iii)), which the
Commission issued before EPA began requiring the combined rating on the
label, directs advertisers to provide the EPA city rating as the
default disclosure to accompany any general fuel economy claim that
does not reference city or highway driving. In 2011, EPA altered the
fuel economy label's design and content to feature the combined city-
highway rating.\25\ The EPA label continues to provide both the city
and highway MPG ratings in a font smaller than that used for the
combined rating.
---------------------------------------------------------------------------

\25\ 76 FR 39478 (July 6, 2011).
---------------------------------------------------------------------------

Comments: Commenters generally supported designating the combined
(city/highway) mileage rating as the default disclosure for general
fuel economy claims. In particular, the Alliance preferred the combined
rating because it is the most prominent disclosure on EPA's current
label. The Alliance also explained that the city rating is no longer
the lowest or most conservative value in all instances. For many hybrid
vehicles, the city MPG rating is higher. AGA argued that advertisers
should be able to disclose all the rating types--city, highway, and
combined--in combination or alone because these ratings may be
beneficial in specific cases (e.g., where a vehicle is intended
primarily for city driving).
The consumer groups argued that including all three ratings is the
best way to avoid deception, though they noted the combined number
alone may be appropriate in some cases. In addition, Rodriguez added
that advertisements should include fuel economy ratings for both
highway and city because evidence suggests that typical driving time is
almost evenly split between the two, contrary to the EPA combined
estimate, which weights 55% city and 45% highway. In Rodriguez's view,
such city and highway disclosures allow for more accurate fuel economy
comparisons.
Discussion: The Commission proposes advising advertisers to
disclose either the combined fuel economy rating, or both the city and
highway numbers, when using fuel economy claims that do not
specifically mention city or highway driving. Based on an EPA-specified
weighted ratio of city and highway driving, the combined number is now
the most prominent EPA label disclosure. It provides an effective
default disclosure because it serves as a common consistent indicator
of a vehicle's overall mileage. Additionally, the proposed guidance
gives advertisers the option to disclose the city and highway estimates
together. This disclosure allows consumers to gauge their expected
mileage based on their own ratio of city-highway driving. Accordingly,
the proposed provision would provide advertisers the flexibility to
disclose either the combined rating or the city and highway ratings
together. The Commission seeks comments on this approach.\26\
---------------------------------------------------------------------------

\26\ 74 FR at 19150. Currently, section 259.2(a) does not
prohibit disclosure of both the city and highway estimates.
---------------------------------------------------------------------------

c. Single Mileage Ratings
Background: The Commission also asked whether an advertisement is
deceptive or unfair if it provides only one type of rating (e.g., an
advertisement that only discloses highway MPG). The current Guide
states that, if an MPG claim involves only city or only highway fuel
economy, the advertisement need only disclose the corresponding EPA
city or highway estimate. For example, under the current approach, only
the ``estimated highway MPG'' need be disclosed if the representation
clearly refers only to

[[Page 36220]]

highway fuel economy. 16 CFR 259.2(a)(1)(ii).
Comments: Commenters offered different opinions on the use of a
single mileage rating (e.g., ``43 MPG on the highway''). For example,
the consumer groups argued that single rating disclosures are clearly
deceptive because few, if any, consumers drive solely on highways or
local streets. Thus in their view, most consumers will not obtain the
fuel efficiency represented by single highway ratings. The consumer
groups also indicated that many advertisers use the highway rating ``to
present their vehicle in the best light possible.'' To avoid deception,
they argued that advertisers should disclose mileage estimates in one
of two ways: (1) All three ratings together (i.e., city, highway, and
combined) with the combined rating presented most prominently, or (2)
the combined rating only where space for content is limited.
Other commenters, particularly industry members, disagreed. For
instance, NADA argued that advertisements containing a single fuel
economy rating are not inherently unfair or deceptive. The Alliance
agreed, stating that advertisers should have the flexibility to provide
information that they believe is most relevant for each vehicle.\27\
The Alliance asserted that consumers ``have had many years to become
familiar with the City, Highway, and Combined rating system'' and thus
are unlikely to become confused by a single rating. Several of these
commenters argued that the Guide should provide manufactures the
flexibility to disclose the rating most relevant to the consumers of a
particular product. The Alliance explained, for example, that consumers
shopping for a compact car designed primarily for urban use are likely
to be most interested in the city value. In its view, an advertisement
is not deceptive as long as it discloses the EPA label value and
identifies the rating involved (e.g., city mileage).
---------------------------------------------------------------------------

\27\ Both NADA and the Alliance emphasized that appropriate
disclosures should be included in ads.
---------------------------------------------------------------------------

Discussion: Consistent with the current guidance, the proposed
Guide does not discourage single mileage ratings in advertisements tied
to a particular type of driving (e.g., ``This vehicle is rated at 40
MPG on the highway according to the EPA estimate''). Such single-rating
claims are not likely to be deceptive as long as the advertisement
clearly identifies the type of estimate (e.g., city, highway, or
combined), and the estimate matches the content of the advertised
claims.
The FTC's consumer study supports this approach. For example, when
shown a single highway mileage claim (e.g., ``This car is rated at 25
miles per gallon on the highway according to the EPA estimate''), the
vast majority of respondents (74.6%) correctly answered that car would
likely achieve that MPG in highway driving, and the responses for
alternative interpretations were low.\28\ The results were similar when
respondents were asked about a claim for a combination of city and
highway driving.\29\
---------------------------------------------------------------------------

\28\ See Q5c. The response results for other choices, with no
control, were: city rating (5.8%), combined rating (10.7%), unsure
(5.5%), and none of the above (3.5%).
\29\ The results for Q5d were, not accounting for a control:
Combined (76.6%), highway (10%), city (4.2%), not sure (6.2%), and
none of the above (2.5%). When the question presented an unspecified
MPG claim (Q5b) (car `` . . . rated at 25 miles per gallon . . .''),
the responses were: combined (40.4%), highway (30.5%), city (8.5%),
not sure (16.7%), and none of the above (4.1%).
---------------------------------------------------------------------------

In addition, respondents were able to distinguish between highway
and combined driving ranges when asked whether they expected to achieve
a certain mileage rating if they used the advertised vehicle for all
their driving. For instance, when shown a 25 MPG highway claim, (Q6c)
62.2% of respondents indicated they would expect to get ``a lot'' or a
``little'' less than 25 MPG when driving the advertised car, while only
48.1% answered similarly when shown the 25 MPG combined driving claim
(Q6d).\30\ When asked to identify the conditions that might lead to
mileage higher or lower than the EPA estimate, more than half of
respondents mentioned highway driving, city driving, or both.\31\
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\30\ The results for respondents expecting to achieve ``a
little'' or ``a lot'' more than the stated rating were 7.6% for Q6c
(highway claim) and 6.9% for Q6d (combined claim), with no control.
\31\ In both cases, the number of respondents indicating they
would get better mileage than the stated MPG rating was low. These
results suggest that a significant number of respondents expected to
achieve lower mileage in combined driving than highway driving and
believe that EPA test results may overstate actual mileage,
regardless of the type of driving.
---------------------------------------------------------------------------

The research therefore suggests that consumers are not deceived by
single mileage claims as long as the claim specifies the type of
driving involved (e.g., highway, combined, etc.). Moreover, consumers
have seen such estimates in advertising and on EPA labels for decades.
In light of this ongoing exposure, it seems unlikely that a single,
clearly-identified mileage estimate will lead to deception.
Accordingly, absent additional evidence demonstrating that such claims
are deceptive, the Commission does not propose changing its approach on
this issue. However, consistent with the existing Guide, the proposed
amendments (section 259.4(c)) advise marketers that EPA fuel economy
estimates should match the driving claims appearing in the
advertisements.
d. Unspecified MPG Claims
Background: The 2014 Notice also asked commenters whether an
unspecified MPG claim (e.g., ``37 MPG'') is deceptive if the
advertisement fails to identify whether the rating is city, highway, or
combined. The current Guide advises advertisers to tie specific mileage
ratings to specific driving modes (i.e., city or highway).\32\
---------------------------------------------------------------------------

\32\ See section 259.2(a)(1)(iii). The Guide also advises
disclosure of the ``estimated city MPG'' if advertisers make a
``general fuel economy claim without reference to either city or
highway, or if the representation refers to any combined fuel
economy number.'' As noted above, at the time the Guide was created,
EPA did not require combined fuel economy on the label. Therefore,
the guidance pointed to the city mileage number as the default
disclosure. However, the current EPA label features combined city/
highway MPG as the primary disclosure.
---------------------------------------------------------------------------

Comments: The consumer groups argued that an unspecified MPG rating
is clearly deceptive because consumers do not know the driving mode
upon which such a claim is based and, in cases where the number
reflects the highway rating, consumers are unlikely to consistently
achieve such mileage. Citing similar concerns, the Alliance recommended
that, whenever an EPA label value appears in an advertisement, the
advertiser disclose which EPA value applies (city, highway, or
combined).
Discussion: The Commission plans to continue to advise against
using mileage ratings claims that fail to specify the type of rating
(i.e., city, highway, or combined). The FTC consumer study suggests
that such unqualified claims lead to confusion and potential deception
because respondents interpreted them in different ways. For example,
when presented with the claim that a car was ``rated at 25 MPG,'' 30.5%
of the respondents linked the figure to highway driving, while 40.4%
indicated it applied to a combination of highway and city driving.\33\
The results are consistent with the assumption underlying the current
Guide that consumers' interpretation of such unspecified mileage claims
varies significantly in the absence of specific information (i.e.,
highway, city or combined), and that consumers do not

[[Page 36221]]

uniformly assume such estimates apply to a particular type of driving
(e.g., highway). Accordingly, advertisers failing to identify the
driving type associated with an MPG claim are likely to deceive a
significant percentage of consumers regarding the rating's basis.\34\
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\33\ Q5b. The contrasting questions lend validity to these
results. As discussed above, in a separate question (5c), when told
the car was rated at 25 MPG on the highway, 74.6% indicated the car
would get about 25 MPG on the highway. Similarly, when told the car
was rated at 25 MPG in combined driving (Q5d), 76.6% responded that
the car would achieve about 25 MPG in combined driving.
\34\ This guidance assumes the city and highway ratings for a
particular vehicle are different, which is almost always the case.
---------------------------------------------------------------------------

e. ``Up To'' Claims
Background: The Commission also asked commenters to address how
consumers understand ``up to'' MPG claims, which currently appear in
dealership advertisements (e.g., ``up to 45 MPG''). In making such
claims, advertisers often seek to convey that the advertised MPG
applies to a specific version of the model (e.g., style, trim line, or
option package), while other versions of the model have lower ratings.
The current guidance does not address such claims.
Comments: Commenters split on this issue, with the consumer groups
arguing that the Guide should discourage ``up to'' claims and industry
members disagreeing. In the Alliance's view, such claims allow sellers
to advertise a nameplate or family of vehicles by communicating ``the
range of capabilities across a nameplate or family.'' The Alliance
asserted that eliminating these claims would limit manufacturer
flexibility and potentially prohibit simple ``reasonably understood''
information about vehicle groups. NADA added that, because single
models have various engine and transmission options, the ``up to''
qualifier may be necessary to avoid deception. Alternatively, NADA
suggested that dealers and manufacturers disclose a range of fuel
economy label ratings when an advertisement involves multiple vehicles.
The consumer groups, however, stated that ``up to'' claims are
deceptive and, to avoid such deception, mileage ratings in ads must
reflect the ``vehicle configuration expected to be most popular for
that year.'' If a specific model configuration has a better fuel
economy rating, the groups argued that the advertisement can present
that rating in addition to the MPG of the most popular version.
Discussion: The FTC proposes amending the Guide to advise
advertisers to avoid unqualified ``up to'' MPG claims. The FTC consumer
study suggested significant consumer confusion regarding these claims.
In particular, the study gauged respondents' interpretation of three
versions of an ``up to'' claim, ranging from a basic claim with no
explanatory information, to one that provided a detailed explanation.
Most respondents (73.1%) interpreted ``up to'' in an unqualified claim
to mean the depicted vehicle would achieve the stated MPG if it was
driven in a certain way.\35\ In addition, when respondents were asked
in an open-ended format to explain their understanding of a simple ``up
to'' claim (i.e., ``This model gets up to 30 miles per gallon''), very
few respondents mentioned that the claim relates to the MPG rating for
a specific version of the model (Q3a).
---------------------------------------------------------------------------

\35\ Specifically, 28.4% stated that ``up to'' meant the
advertised MPG depended on the type of driving (e.g., highway or
city), and 44.7% indicated the stated MPG could be achieved if the
car was driven efficiently (Q3c). Only a few respondents (9.3%)
interpreted the unqualified ``up to'' claim to mean the MPG rating
applied to a specific model version, the meaning often intended by
car advertisers.
---------------------------------------------------------------------------

However, when respondents viewed a more detailed, qualified claim
explaining that ``up to'' referred to a specific model version (Q3e
(close-ended question)), the confusion decreased significantly, with a
majority (51.9%) indicating the claim meant a version of the advertised
model was rated at 30 miles per gallon.\36\ With this more detailed
disclosure, 30% of respondents interpreted the stated MPG as referring
to the way in which the vehicle is driven, compared to the 73.1% who
took away the same interpretation from the unqualified claim in
Q3c.\37\ Caution should be used in interpreting this 30%, as it is an
uncontrolled result. Thus, we cannot be sure how many of the responses
actually indicate deception. However, it does suggest that drafting an
adequate qualifying disclosure may be difficult. Accordingly, to
minimize the risk of deception, advertisers should be careful to ensure
that qualifying language properly conveys the meaning and limitations
of any ``up to'' claims.
---------------------------------------------------------------------------

\36\ The claim in Q3e read: ``Different options for engine size
and other features are available. Depending on the options chosen,
this model gets up to 30 miles per gallon.''
\37\ Specifically, 14.2% choose type of driving (e.g., highway
or city), and 15.8% indicated the stated MPG could be achieved if
the car was driven efficiently (Q3e).
---------------------------------------------------------------------------

In sum, the consumer study strongly suggests that unqualified ``up
to'' claims are likely to be deceptive where the advertiser intends to
communicate that a version of the advertised model will achieve the
stated fuel economy rating. In addition, under the same circumstances,
the results suggest that it is difficult to fashion qualifying language
that adequately avoids consumer confusion. However, given available
information, the Commission cannot conclude that such ``up to'' claims
are categorically deceptive. Therefore, the proposed guidance advises
advertisers to ensure that qualifying language adequately clarifies
such claims to prevent deception.
f. Non-Linear Relationship Between MPG and Fuel Costs
Background: In the 2014 Notice, the Commission asked whether the
Guide should advise advertisers to avoid statements that imply a linear
relationship between MPG and fuel costs. As explained in the earlier
notice, MPG ratings and fuel savings do not increase proportionally.
For instance, fuel savings due to an increase from 10 MPG to 20 MPG is
much greater than from an increase from 50 to 60 MPG. Given this fact,
some have recommended use of a different efficiency metric, such as
``gallons per 100 miles,'' which exhibits a linear relationship with
fuel cost.\38\ Indeed, EPA requires a ``gallons per 100 miles'' figure
as a secondary disclosure on its label.
---------------------------------------------------------------------------

\38\ See, e.g., Larrick, R.P. and J.B. Soll, ``The MPG
Illusion,'' Science 320:1593-1594 (2008).
---------------------------------------------------------------------------

Comments: Commenters agreed that advertisers should not imply that
there is a linear relationship between MPG and fuel costs. However,
they also stated that no such claims currently appear in advertisements
and thus did not identify a need for the Guide to address them.\39\
---------------------------------------------------------------------------

\39\ See Alliance and NADA comments.
---------------------------------------------------------------------------

Discussion: Because commenters indicated that no claims currently
appear in advertising implying a linear relationship between mileage
and fuel cost, the Commission does not propose addressing this issue in
the Guide.\40\ However, advertisers should remain mindful of the non-
linear relationship between MPG and fuel costs and avoid claims that
state or imply such a relationship.
---------------------------------------------------------------------------

\40\ As EPA has indicated in the past, a metric such as
``gallons per 100 miles'' provides consumers with ``a better tool
for making economically sound decisions'' than traditional MPG
disclosure. Accordingly, EPA now includes such a figure on the label
despite its unfamiliarity to most consumers. 76 FR 39478, 39486
(July 6, 2011).
---------------------------------------------------------------------------

g. EPA as the Source of Estimate
Background: The Commission also invited comments on whether it
should retain its current advice that fuel economy values in
advertisements should disclose that EPA is the source of the
``estimated city MPG'' and ``estimated highway MPG.''
Comments: Commenters agreed that the Guide should continue to
advise advertisers to identify EPA as the source

[[Page 36222]]

of the estimates. The consumer groups explained that advertisements
should always list EPA as the rating's source because this designation
reinforces the rating's ``official nature'' and ensures consumers can
make true vehicle-to-vehicle comparisons. In their view, the FTC's
recommended disclosures help consumers understand that the fuel economy
values do not derive from an unofficial process for marketing or
advertising purposes. NADA agreed and urged the Commission to recognize
the value in additional disclosures directing consumers to
www.fueleconomy.gov.
Discussion: The Commission does not propose changing its guidance
for identifying EPA as the source of the estimates. No information on
the record suggests a change is necessary. As comments explained, this
disclosure clarifies the basis for mileage disclosures and thus helps
avoids deception. The consumer research provides some support for this
guidance. Although the study did not address this issue directly,
respondents indicated significant confusion about the source of tests
for driving range claims related to electric vehicles, suggesting the
absence of the EPA disclosures could lead to deception.\41\ Finally,
the Commission expects most advertisers will identify the EPA
disclosure as a matter of course. Accordingly, continuing the guidance
is unlikely to place any significant burden on advertisers.
---------------------------------------------------------------------------

\41\ In Question 4c, the Commission asked respondents about the
source of a test used to determine a driving range claim. In open-
ended responses, study participants pointed to a variety of results,
with about 30% identifying the car company as the source, 11%
identifying a government agency, and more than 40% indicating they
were not sure.
---------------------------------------------------------------------------

h. Additional Guidance on Ratings as ``Estimates''
Background: The current Guide advises advertisers to disclose that
the EPA ratings are ``estimates.'' \42\ In the 2014 Notice, the
Commission asked whether the FTC should provide additional guidance on
this issue.
---------------------------------------------------------------------------

\42\ See section 259.2(a)(2).
---------------------------------------------------------------------------

Comments: Commenters urged the Commission to retain its guidance
regarding the estimate disclosure. NADA explained that the EPA fuel
economy ratings do not convey the mileage particular vehicles will
actually achieve, but, instead, furnish estimates to help prospective
purchasers make vehicle comparisons. Rodriguez also cautioned that the
EPA test cannot accurately predict fuel economy for all drivers and all
driving conditions. The Alliance, which also supported the existing
guidance, argued that any additional disclosures on this issue would
increase consumer confusion. AGA suggested that FTC caution against
phrases such as ``X vehicle gets xx MPG in the city/on the highway''
because such language may lead consumers to believe that they will
actually achieve such mileage in their own driving. However, AGA
recommended that advertisers use the term ``rating'' instead of
``estimate,'' because the latter term may mislead consumers into
believing they will actually achieve the stated MPG number.\43\ The
term ``rating,'' it argued, would help manage consumers' expectations
given other types of ratings, reviews, and other comparative tools
typically based on individuals' experience. AGA noted that the EPA uses
``rating'' somewhat interchangeably with ``estimated fuel economy'' on
the fueleconomy.gov Web site.
---------------------------------------------------------------------------

\43\ AGA noted that, in the European Union, advertisements must
include additional text stating: ``The mpg figures quoted are
sourced from official EU-regulated test results, are provided for
comparability purposes and may not reflect your actual driving
experience.''
---------------------------------------------------------------------------

Discussion: The Commission does not propose to change its guidance
advising advertisers to disclose that EPA numbers are ``estimates.''
The term ``estimate'' helps prevent deception by signaling to consumers
that their actual mileage will vary. Specifically, the term helps
reduce the likelihood consumers will believe they will achieve or
``get'' a certain mileage.\44\
---------------------------------------------------------------------------

\44\ The revised Guidance also contains an example warning
against the use of the term ``gets'' without adequate qualification.
---------------------------------------------------------------------------

Moreover, although one commenter recommended that the Guide
discourage using the term ``estimate,'' there is no indication this
term is deceptive other than that comment. In addition, EPA regulations
and the underlying statute employ this term, and it has appeared on EPA
labels and in advertising for decades.\45\ At the same time, the
Commission recognizes that the term ``estimate'' does not represent the
only non-deceptive means to inform consumers that their fuel economy
results may vary from the EPA rating.
---------------------------------------------------------------------------

\45\ See 40 CFR part 600, and 49 U.S.C. 32908.
---------------------------------------------------------------------------

2. Claims Related to Model Types
Background: The current Guide advises manufacturers to limit fuel
economy ratings to the model type being advertised. Doing so ensures
advertised fuel economy ratings match the advertised vehicles
specification.\46\ Specifically, section 259.2, n. 2 of the Guide warns
against using a single fuel economy estimate for all vehicles bearing a
common model name, if separate vehicles within that model group have
different fuel economy ratings. The Commission sought comment on this
issue including whether the FTC should provide further guidance to help
advertisers avoid deceptive claims in this context.
---------------------------------------------------------------------------

\46\ The EPA's fuel economy regulations define ``model type'' as
``a unique combination of car line, basic engine, and transmission
class.'' 40 CFR 600.002-85.
---------------------------------------------------------------------------

Comments: In response, NADA indicated that, where an advertisement
includes only one model version, advertisers should not use mileage
ratings for a different version of the same make or model. The Alliance
agreed and argued the current Guide provides adequate guidance on this
issue. In its opinion, additional information would create lengthy and
unwieldy disclosures, with little benefit to consumers. The Alliance
noted that several sources, including manufacturer Web sites,
fueleconomy.gov, the vehicle's EPA label, and dealers, have more
detailed information about vehicle configuration to help consumers.
Finally, AGA cautioned against revising guidance, explaining that EPA
has been working to address how models are grouped for mileage
purposes. Accordingly, AGA urged EPA and FTC to coordinate efforts to
ensure consistency.
Discussion: Responding to these comments, the Commission proposes
to update its existing guidance on claims related to make or model
groups to include current EPA terminology. Specifically, the proposed
amendments remove the outdated term ``unique nameplate'' and replace it
with the more general term ``model type.'' However, the proposed Guide
remains consistent with existing advice. In particular, the proposal
states that it is deceptive to state or imply that a rated fuel economy
figure applies to vehicles not included in the same model type featured
in the advertisement. Fuel economy estimates assigned to model types
under EPA's regulations apply only to specific versions of the model.
Thus, any fuel economy claim for a vehicle should apply to the model
type being advertised (e.g., a version with a 1.0 liter engine,
automatic transmission).
3. Claims Based on Non-EPA Estimates
Background: In the 2014 Notice, the Commission sought comment on
the Guide's treatment of fuel economy claims based on non-EPA tests. In
issuing the Guide in 1975, the Commission explained that ``the use in
advertising of fuel economy results obtained from disparate test
procedures may unfairly and deceptively deny to consumers information
which will

[[Page 36223]]

enable them to compare advertised automobiles on the basis of fuel
economy.'' \47\ To address this issue, the Guide advises advertisers to
provide several disclosures whenever they make a fuel economy claim
based on non-EPA information. Specifically, section 259.2(c) states
that fuel economy claims based on non-EPA information should: (1)
Disclose the corresponding EPA estimates with more prominence than
other estimates; (2) identify the source of the non-EPA information;
and (3) disclose how the non-EPA test differs from the EPA test in
terms of driving conditions and other relevant variables. The
Commission sought input on this issue, asking commenters to address,
among other things, the prevalence of non-EPA fuel economy claims,
including both traditional fuel economy claims (e.g., MPG), as well as
electric vehicle driving range claims (e.g., ``100 miles per charge'')
and the adequacy of the current guidance for preventing deception.
---------------------------------------------------------------------------

\47\ 40 FR 42003 (Sept. 10, 1975).
---------------------------------------------------------------------------

Comments: Commenters offered conflicting views on the Guide's
treatment of non-EPA fuel economy claims. Industry members agreed with
the existing guidance but questioned its relevance. In AGA's view, the
current guidance could help consumers make comparisons when non-EPA
ratings appear in advertisements. However, both NADA and AGA explained
that manufacturers and dealers simply do not refer to such ratings in
advertising, and there is no expectation they will do so in the future.
Thus, both organizations questioned whether the guidance on non-EPA
source is still necessary.
Conversely, the consumer groups argued the Guide should ``prevent
the use of anything but standardized EPA MPG ratings'' because such
ratings provide the only means to avoid ``significant deception.'' The
groups explained that the EPA ratings have become the standard on which
manufacturers compete. In their view, many different techniques can
produce mileage estimates, and the dissemination of such alternative
ratings ``would substantially increase deceptive advertising.'' They
argued that the EPA numbers, which appear on every vehicle sold in the
U.S., must appear in the advertisements to avoid deception and
confusion. They further asserted that EPA's single rating system allows
for ``true competition and avoids the deception associated with
multiple rating systems'' and different testing methodologies. In their
view, alternative (non-EPA) rating results prevent vehicle-to-vehicle
comparisons and lead to ``manipulation and skepticism.''
Discussion: The Commission does not propose changing the Guide's
basic approach to advertising claims based on non-EPA data. The
Commission has identified no basis to prohibit all fuel economy
advertising claims based on non-EPA tests. There is no evidence that
such claims are deceptive if adequately qualified. In addition, though
advertisers may not commonly use non-EPA MPG ratings in advertising,
that may not be the case for other claims, such as driving range
representations for electric vehicles.\48\ Accordingly, the proposed
Guide continues to recommend specific disclosures related to non-EPA
claims to reduce the possibility of deception.\49\ The Commission seeks
further comment on this issue, particularly whether non-EPA claims,
including non-EPA driving range claims for electric vehicles, are
common. Finally, the current Guide addresses the relative size and
prominence of fuel economy claims based on non-EPA and EPA estimates in
television, radio, and print advertisements. The Commission proposes to
retain this guidance. The Commission, however, proposes to clarify that
it applies to any advertising medium (not solely television, radio, and
print).
---------------------------------------------------------------------------

\48\ In addition, to the extent such claims do not appear in
advertising, the Guide imposes no burden on such claims.
\49\ The guidance assumes that the advertised non-EPA estimates
are not identical to the EPA estimates.
---------------------------------------------------------------------------

4. Claims for Alternative Fueled Vehicles
Background: In the 2014 Notice, the Commission sought comment on
whether the Guide should address advertising for flexible fueled
vehicles (FFVs), particularly pertaining to different fuel economy
estimates for different fuels.\50\ Specifically, the Commission asked
commenters to address whether advertisements that provide a vehicle's
gasoline MPG rating and identify the vehicle as an FFV should include
disclosures about that vehicle's alternative fuel MPG rating.
---------------------------------------------------------------------------

\50\ Previously, the Commission had sought comments on Guide
amendments specifically related to alternative fueled vehicles
labeled under the Alternative Fuels Rule (16 CFR part 309). 74 FR at
19152. However, in April 2013, the Commission amended the
Alternative Fuels Rule to consolidate the FTC's alternative fueled
vehicle labels with EPA's new fuel economy labels. Because those
amendments removed any potential conflict between FTC and EPA
labels, the Guides need not address FTC alternative fueled vehicles
labels. 78 FR 23832 (April 23, 2013).
---------------------------------------------------------------------------

Comments: In response, commenters recommended that the Guide
address alternative fueled vehicles, particularly electric vehicles,
given their recent proliferation in the market. However, they
recommended different approaches to addressing this issue.
Electric Vehicle Driving Range: First, AGA recommended the Guide
address plug-in hybrid electric vehicles (PHEVs), battery electric
vehicles (BEVs), and fuel cell electric vehicles (FCEVs) to ensure
consistent use of fuel economy ratings among these increasingly
prevalent vehicles. AGA also recommended that the FTC consult with EPA
to develop best practices for BEV, FCEV, and PHEV fuel economy
advertising. In particular, AGA asked the Commission to consider
guidance on driving range claims for alternative fueled vehicles to
provide a better ``apples-to-apples'' comparison across all fuel and
vehicle types, particularly given the importance of this information
for PHEVs and ``electric-only'' ranges. In the Alliance's view, any
claims for a vehicle's driving range should follow the same disclosure
principles applicable to other claims. NADA added that the Commission's
guidance should promote uniformity and clarity in the use of all
government fuel economy labeling for all AFVs in the same manner as
conventionally fueled vehicles.
Miles Per Gallon Equivalent (MPGe): The consumer groups recommended
that electric vehicle advertisements disclose the vehicle's miles per
gallon equivalent (MPGe), which appears on the EPA label and converts
the energy efficiency of electric vehicles into a miles per gallon
estimate. However, to help consumers understand such information, the
commenters suggested the following disclosure: ``This vehicle does not
use gasoline, the conversion from electric efficiency to miles per
gallon is for comparative purposes.'' For plug-in hybrid electric
vehicles, the consumer groups argued that the fuel economy ratings
should include separate ratings for operation on gasoline (or other
combustion engine fuel) and on electricity, in equal prominence.
Alternative Fuel: Finally, the consumer groups argued that FFV
advertisements should disclose two MPG ratings: One for the model's
gasoline rating and one for the biofuel blend. However, they indicated
that, if the advertisement does not mention the vehicle's FFV
capability, it would be adequate to disclose the gasoline-only MPG.
Discussion: The Commission has considered issues related to
electric vehicle driving range, MPGe

[[Page 36224]]

disclosures, and claims for FFVs. We discuss each below:
Electric Driving Range Information: The Commission proposes to
address driving range claims for several reasons. First, as with
general fuel economy claims, general driving range claims (e.g., ``will
go far on a single charge'') are likely to generate a variety of
consumer interpretations about the vehicle's range relative to other
vehicle's on the market. These multiple interpretations are likely
impossible for many advertisers to substantiate simultaneously.
Disclosing the EPA range estimates will help prevent deception by
providing clear, objective information that allows consumers to compare
the driving ranges of competing vehicles. Second, the consumer research
suggested that confusion may exist regarding the source of driving
range claims. Specifically, in response to an open-ended question about
the source of the test used to derive a driving range (Q4c),
respondents pointed to a variety of results, with about 30% identifying
the car company as the source, 11% identifying a government agency, and
more than 40% indicating they were not sure.\51\ Finally, driving range
estimates are becoming increasingly important and prevalent. As with
MPG disclosures for gasoline vehicles, range estimates for electric
vehicles provide a fundamental measurement of an electric vehicle's
performance based on EPA testing requirements. Given these various
considerations, the proposed Guide advises advertisers to disclose EPA-
mandated driving range results whenever they make a general driving
range claim.
---------------------------------------------------------------------------

\51\ The balance of respondents (about 19%) identified other
sources such as non-governmental organizations.
---------------------------------------------------------------------------

Miles Per Gallon Equivalent (MPGe): The Commission does not propose
advising advertisers to always disclose MPGe in advertising for
electric vehicles as some comments suggested. It is unclear whether
such disclosures are essential to preventing deception. Because MPGe is
a relatively new and unfamiliar concept to most consumers, the extent
to which they would understand and use such a disclosure is unclear.
Indeed, the consumer research supports this. When viewing an MPGe claim
(i.e., ``This electric car is rated at 93 MPGe'') (Q4d), respondents
assigned a variety of interpretations to the term. Specifically, only
about 35% understood that MPGe reflected the electric vehicle's
relative energy use (or energy cost) compared to conventional gasoline
vehicles, and 40% indicated they were not sure what the term meant.\52\
In addition, in shopping for electric vehicles, consumers are likely to
focus on other energy performance metrics, such as driving range.
Furthermore, it is likely that consumer understanding of MPGe will
evolve rapidly as more electric vehicles enter the market. For now,
however, the concept is too novel to incorporate into the guidance.
---------------------------------------------------------------------------

\52\ The research (Q4e) suggests that respondents were much more
likely to understand the term ``MPGe'' when the claims included
extensive explanatory information.
---------------------------------------------------------------------------

Alternative Fuel: The Commission agrees with commenters that, if
the advertisement mentions the vehicle's alternative fuel capability,
FFV advertisements should provide both the vehicle's gasoline and
alternative fuel ratings. Without such disclosures, consumers may
assume the advertised MPG rating applies both to gasoline and
alternative fuel operation.
5. Fuel Economy Range Claims for Specific Models
Background: In the 2014 Notice, the Commission proposed to
eliminate its guidance on ``estimated in-use fuel economy range''
claims (e.g., ``expected range for most drivers 15 to 21 MPG'').
Because EPA's label no longer contains this information, and no
evidence suggests such claims are prevalent, the Commission proposed to
eliminate this specific provision.
Comments: The Alliance supported the proposal, explaining that the
provision, as written, no longer applies to most vehicles.
Discussion: For the reasons discussed above, including commenter
support, the Commission proposes to eliminate the Guides' provision
related to ``estimated in-use fuel economy range'' (259.2(b)(1)).

E. Limited Format Advertising

Background and Comments: The Alliance urged the Commission to
address space-constrained advertising, particularly in newer media
formats. It recommended the Guide ``grant maximum flexibility'' for
fuel economy advertising in new media formats while ensuring a level
playing field and fair disclosures to consumers. Specifically, it
suggested the Commission set general guidelines to allow familiar
short-hand and weblinks in limited format advertising to direct
consumers to mandated disclosures while avoiding overly prescriptive
provisions. The Alliance stressed that such advertisements typically
serve as a ``starting point'' for consumer awareness of the product and
lead consumers to conduct additional research elsewhere. According to
the Alliance, consumers understand that restricted[hyphen]format
advertisements do not contain complete information and routinely click
on hyperlinks to access more detailed information. In its view, such
links are more effective in providing disclosures to consumers than
``attempting to include detailed footnotes that clutter a
restricted[hyphen]format advertisement and make it more difficult to
read.'' \53\
---------------------------------------------------------------------------

\53\ The consumer groups added that television and radio
advertisements should include a clear, audible representation of the
MPG.
---------------------------------------------------------------------------

The Alliance provided two specific suggestions. First, it
recommended the Guide allow fuel economy advertisers to make
abbreviated, but clearly understandable, disclosures of EPA label
values in restricted-format media (e.g., ``EPA[hyphen]est. 35 MPG
Hwy''). Second, it argued that, in restricted format advertising, the
Guide allow advertisers to provide necessary disclosures through web
links directing consumers to the required information.
Discussion: The Commission does not propose to cover space-
constrained advertising in the Fuel Economy Guide because these issues
are already addressed by the FTC's ``.Com Disclosures: How to Make
Effective Disclosures in Digital Advertising'' (``.Com
Disclosures'').\54\ That guidance clarifies that advertisers are not
exempt from general disclosure requirements simply because an
advertisement has space constraints. However, it also provides
recommendations for making disclosures in such contexts. The general
principles in .Com Disclosures for space-constrained advertising hold
true for fuel economy advertising. The Commission expects that
advertisers will be able to include abbreviated forms of most
disclosures identified in the proposed Guidance. Terms such as ``EPA
estimate'' and ``highway MPG'' have been widespread in advertisements
over the last four decades. Given the prevalence of these terms, the
Commission expects that abbreviated disclosures, such as
``EPA[hyphen]est. 35 MPG Hwy,'' coupled with a link to more detailed
information, should be effective in conveying the disclosures to
consumers.\55\ However, since the Commission cannot anticipate every
abbreviated disclosure advertisers may use, empirical evidence may be

[[Page 36225]]

necessary to demonstrate that certain abbreviations or icons are
effective. The Commission seeks further comment on these issues.\56\
---------------------------------------------------------------------------

\54\ See https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-staff-revises-online-advertising-disclosure-guidelines/130312dotcomdisclosures.pdf.
\55\ In addition, if consumers do not click the link for more
detailed disclosures, they will have an opportunity to see the
information in the showroom on the EPA label, which appears on every
new car in the showroom.
\56\ The Commission does not propose to recommend audible MPG
disclosures in all advertisements. Instead, consistent with the
existing Guide, the proposed amendments continue to recommend that
disclosures appear in the same format as the claim. For example, if
the estimated MPG appears in the video of a television
advertisement, the recommended disclosure should appear in the
video.
---------------------------------------------------------------------------

V. Request for Comments

You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before August 8, 2016.
Write ``Proposed Fuel Economy Guide Revisions'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to
remove individuals' home contact information from comments before
placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, such as anyone's Social Security
number, date of birth, driver's license number or other state
identification number or foreign country equivalent, passport number,
financial account number, or credit or debit card number. You are also
solely responsible for making sure that your comment does not include
any sensitive health information, such as medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which is . . . privileged or confidential,'' as discussed in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c).\57\ Your comment will be kept
confidential only if the FTC General Counsel grants your request in
accordance with the law and the public interest.
---------------------------------------------------------------------------

\57\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------

Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/fueleconomyrevisions, by following the instruction on the web-based
form. If this Notice appears at http://www.regulations.gov, you also
may file a comment through that Web site.
If you prefer to file your comment on paper, write ``Fuel Economy
Guide Amendments, R711008'' on your comment and on the envelope, and
mail your comment to the following address: Federal Trade Commission,
Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610
(Annex B), Washington, DC 20580, or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex
B), Washington, DC 20024.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice and the News Release describing this proceeding. The FTC Act and
other laws that the Commission administers permit the collection of
public comments to consider and use in this proceeding, as appropriate.
The Commission will consider all timely and responsive public comments
that it receives on or before August 8, 2016. You can find more
information, including routine uses permitted by the Privacy Act, in
the Commission's privacy policy, at https://www.ftc.gov/site-information/privacy-policy.

VI. Proposed Amendments

List of Subjects in 16 CFR Part 259

Advertising, Fuel economy, Trade practices.

For the reasons set forth in this document, the Commission proposes
to revise 16 CFR part 259 as follows:

PART 259--GUIDE CONCERNING FUEL ECONOMY ADVERTISING FOR NEW
AUTOMOBILES

Sec
259.1 Purpose.
259.2 Definitions.
259.3 Qualifications and disclosures.
259.4 Advertising guidance.

Authority: 15 U.S.C. 41-58.

Sec. 259.1 Purpose.

This Guide contains administrative interpretations of laws enforced
by the Federal Trade Commission. Specifically, the Guide addresses the
application of Section 5 of the FTC Act (15 U.S.C. 45) to the use of
fuel economy information in advertising for new automobiles. This
guidance provides the basis for voluntary compliance with the law by
advertisers and endorsers. Practices inconsistent with this Guide may
result in corrective action by the Commission under Section 5 if, after
investigation, the Commission has reason to believe that the practices
fall within the scope of conduct declared unlawful by the statute. The
Guide sets forth the general principles that the Commission will use in
such an investigation together with examples illustrating the
application of those principles. The Guide does not purport to cover
every possible use of fuel economy in advertising. Whether a particular
advertisement is deceptive will depend on the specific advertisement at
issue.

Sec. 259.2 Definitions.

For the purposes of this part, the following definitions shall
apply:
(a) Alternative fueled vehicle. Any vehicle that qualifies as a
covered vehicle under 16 CFR part 309.
(b) Automobile. Any new passenger automobile, medium duty passenger
vehicle, or light truck for which a fuel economy label is required
under the Energy Policy and Conservation Act (42 U.S.C. 32901 et seq.)
or rules promulgated thereunder, the equitable or legal title to which
has never been transferred by a manufacturer, distributor, or dealer to
an ultimate purchaser or lessee. For the purposes of this part, the
terms ``vehicle'' and ``car'' have the same meaning as ``automobile.''
(c) Dealer. Any person located in the United States or any
territory thereof engaged in the sale or distribution of new
automobiles to the ultimate purchaser.
(d) EPA. The U.S. Environmental Protection Agency.
(e) EPA city fuel economy estimate. The city fuel economy
determined in accordance with the city test procedure as defined and
determined pursuant to EPA regulations.
(f) EPA combined fuel economy estimate. The fuel economy value
determined for a vehicle (or vehicles) by harmonically averaging the
city and highway fuel economy values, weighted 0.55 and 0.45
respectively, determined pursuant to EPA regulations.
(g) EPA driving range estimate. An estimate of the number of miles
a

[[Page 36226]]

vehicle will travel between refueling as defined and determined
pursuant to EPA regulations.
(h) EPA fuel economy estimate. The average number of miles traveled
by an automobile per volume of fuel consumed (i.e., Miles-Per-Gallon
(``MPG'') rating) as calculated under EPA regulations.
(i) EPA highway fuel economy estimate. The highway fuel economy
determined in accordance with the highway test procedure as defined and
determined pursuant to EPA regulations.
(j) EPA regulations. EPA regulatory requirements for fuel economy
labeling set forth in 40 CFR part 600, subpart D.
(k) Flexible Fuel Vehicle. Any motor vehicle (or motor vehicle
engine) engineered and designed to be operated on any mixture of two or
more different fuels.
(l) Fuel. (1) Gasoline and diesel fuel for gasoline- or diesel-
powered automobiles; or
(2) Electricity for electrically-powered automobiles; or
(3) Alcohol for alcohol-powered automobiles;
(4) Natural gas for natural gas-powered automobiles; or
(5) any other fuel type used in a vehicle for which EPA requires a
fuel economy label under EPA regulations.
(m) Manufacturer. Any person engaged in the manufacturing or
assembling of new automobiles, including any person importing new
automobiles for resale and any person who acts for, and is under the
control, of such manufacturer, assembler, or importer in connection
with the distribution of new automobiles.
(n) Model type. A unique combination of car line, basic engine, and
transmission class as defined by EPA regulations.
(o) Ultimate purchaser or lessee. The first person, other than a
dealer purchasing in his or her capacity as a dealer, who in good faith
purchases a new automobile for purposes other than resale or leases
such vehicle for his or her personal use.
(p) Vehicle configuration. The unique combination of automobile
features, as defined in 40 CFR part 600.

Sec. 259.3 Qualifications and disclosures.

To prevent deceptive claims, qualifications and disclosures should
be clear, prominent, and understandable. To make disclosures clear and
prominent, marketers should use plain language and sufficiently large
type for a person to see and understand them, should place disclosures
in close proximity to the qualified claim, and should avoid making
inconsistent statements or using distracting elements that could
undercut or contradict the disclosure. The disclosures should also
appear in the same format as the claim. For example, for television
advertisements, if the estimated MPG appears in the video, the
disclosure recommended by this Guide should appear in the visual
format; if the estimated MPG is audio, the disclosure should be in
audio.

Sec. 259.4 Advertising guidance.

(a) Misrepresentations: It is deceptive to misrepresent, directly
or by implication, the fuel economy or driving range of an automobile.
(b) General Fuel Economy Claims: General unqualified fuel economy
claims, which do not reference a specific fuel economy estimate, likely
convey a wide range of meanings about a vehicle's fuel economy relative
to other vehicles. Such claims, which inherently involve comparisons to
other vehicles, can mislead consumers about the vehicle class included
in the comparison, as well as the extent to which the advertised
vehicle's fuel economy differs from other models. Because it is highly
unlikely that advertisers can substantiate all reasonable
interpretations of these claims, advertisers making general fuel
economy claims should disclose the advertised vehicle's EPA fuel
economy estimate in the form of the EPA MPG rating.

Example 1: A new car advertisement states: ``This vehicle gets
great mileage.'' The claim is likely to convey a variety of
meanings, including that the vehicle has a better MPG rating than
all or almost all other cars on the market. However, the advertised
vehicle's EPA fuel economy estimates are only slightly better than
the average vehicle on the market. Because the advertiser cannot
substantiate that the vehicle's rating is better than all or almost
all other cars on the market, the advertisement is likely to be
deceptive. In addition, the advertiser may not be able to
substantiate other reasonable interpretations of the claim. To avoid
deception, the advertisement should disclose the vehicle's EPA fuel
economy estimate (e.g., ``EPA-estimated 27 combined MPG'').
Example 2: An advertisement states: ``This car gets great gas
mileage compared to other compact cars.'' The claim is likely to
convey a variety of meanings, including that the vehicle gets better
gas mileage than all or almost all other compact cars. However, the
vehicle's EPA fuel economy estimates are only slightly better than
average compared to other models in its class. Because the
advertiser cannot substantiate that the vehicle's rating is better
than all or almost all other compact cars, the advertisement is
likely to be deceptive. In addition, the advertiser may not be able
to substantiate other reasonable interpretations of the claim. To
address this problem, the advertisement should disclose the
vehicle's EPA fuel economy estimate.

(c) Matching the EPA Estimate to the Claim: EPA fuel economy
estimates should match the driving claim appearing in the
advertisement. If they do not, consumers are likely to associate the
stated fuel economy estimate with a different type of driving.
Specifically, if an advertiser makes a city or a highway fuel economy
claim, it should disclose the corresponding EPA-estimated city or
highway fuel economy estimate. If the advertiser makes both a city and
a highway fuel economy claim, it should disclose both the EPA estimated
city and highway fuel economy rating. If the advertiser makes a general
fuel economy claim without specifically referencing city or highway
driving, it should disclose the EPA combined fuel economy estimate, or,
alternatively, both the EPA city and highway fuel economy estimates.

Example 1: An automobile advertisement states that model ``XYZ
gets great gas mileage in town.'' However, the advertisement does
not disclose the EPA city fuel economy estimate. Instead, it only
discloses the EPA highway fuel economy estimate, which is higher
than the model's city estimate. This claim likely conveys to a
significant proportion of reasonable consumers that the highway
estimate disclosed in the advertisement applies to city driving.
Thus, the advertisement is likely to mislead consumers. To remedy
this problem, the advertisement should disclose the EPA city fuel
economy estimate (e.g., ``32 MPG in the city according to the EPA
estimate'').
Example 2: A new car advertisement states that model ``XZA
gives you great gas mileage'' but only provides the EPA highway fuel
economy estimate. Given the likely inconsistency between the general
fuel economy claim, which does not reference a specific type of
driving, and the disclosed EPA highway estimate, the advertisement
is likely to mislead consumers. To address this problem, the
advertisement should disclose the EPA combined estimate (e.g., ``37
MPG for combined driving according to the EPA estimate''), or both
the EPA city and highway fuel economy estimates.
Example 3: An advertisement states ``according to EPA
estimates, new cars in this class are rated at between 20 and 32
MPG, while the EPA estimate for this car is an impressive 35 MPG
highway.'' The advertisement is likely to imply that the 20 to 32
MPG range and 35 MPG estimate are comparable. In fact, the ``20 and
32 MPG'' range reflects EPA city estimates. Therefore, the
advertisement is likely deceptive. To address this problem, the
advertisement should only provide an apples-to-apples comparison--
either using the highway range for the class or using the city
estimate for the advertised vehicle.

(d) Identifying Fuel Economy and Driving Range Ratings as
Estimates:

[[Page 36227]]

Advertisers citing EPA fuel economy or driving range figures should
disclose that these numbers are estimates. Without such disclosures,
consumers may incorrectly assume that they will achieve the mileage or
range stated in the advertisement. In fact, their actual mileage or
range will likely vary for many reasons, including driving conditions,
driving habits, and vehicle maintenance. To address potential
deception, advertisers may state that the values are ``EPA
estimate(s),'' or use equivalent language that informs consumers that
they will not necessarily achieve the stated MPG rating or driving
range.

Example 1: An automobile manufacture's Web site states, without
qualification, ``This car gets 40 MPG on the highway.'' The claim
likely conveys to a significant proportion of reasonable consumers
that they will achieve 40 MPG driving this vehicle on the highway.
The advertiser based its claim on an EPA highway estimate. However,
EPA provides that estimate primarily for comparison purposes--it
does not necessarily reflect real world driving results. Therefore,
the claim is likely deceptive. In addition, the use of the term
``gets,'' without qualification, may lead some consumers to believe
not only that they can, but will consistently, achieve the stated
mileage. To address these problems, the advertisement should clarify
that the MPG value is an estimate by stating ``EPA estimate'' or
equivalent language.

(e) Disclosing EPA Test as Source of Fuel Economy and Driving Range
Estimates: Advertisers citing any EPA fuel economy or driving range
figures should disclose EPA as the source of the test so consumers
understand that the estimate is comparable to estimates for competing
models. Doing so prevents deception by ensuring that consumers do not
associate the claimed ratings with a test other than the EPA-required
procedures. Advertisers may avoid deception by stating that the values
are ``EPA estimate(s),'' or equivalent language that identifies the EPA
test as the source.

Example 1: A radio commercial for the ``XTQ'' car states that
the vehicle ``is rated at an estimated 28 MPG in the city'' but does
not disclose that an EPA test is the source of this MPG estimate.
This advertisement may convey that the source of this test is an
entity other than EPA. Therefore, the advertisement may be
deceptive.

(f) Specifying Driving Modes for Fuel Economy Estimates: If an
advertiser cites an EPA fuel economy estimate, it should identify the
particular type of driving associated with the estimate (i.e.,
estimated city, highway, or combined MPG). Advertisements failing to do
so can deceive consumers who incorrectly assume the disclosure applies
to a specific type of driving, such as combined or highway, which may
not be the driving type the advertiser intended. Thus, such consumers
may believe the model's fuel economy rating is higher than it actually
is.

Example 1: A television commercial for the car model ``ZTA''
informs consumers that the ZTA is rated at ``25 miles per gallon
according to the EPA estimate'' but does not disclose whether this
number is a highway, city, or combined estimate. The advertisement
likely conveys to a significant proportion of reasonable consumers
that the 25 MPG figure reflects normal driving (i.e., a combination
of city and highway driving), not the highway rating as intended by
the advertiser. In fact, the 25 MPG rating is the vehicle's EPA
highway estimate. Therefore, the advertisement is likely deceptive.

(g) Within Vehicle Class Comparisons: If an advertisement contains
an express comparative fuel economy claim where the relevant comparison
is to any group or class, other than all available automobiles, the
advertisement should identify the group or class of vehicles used in
the comparison. Without such qualifying information, many consumers are
likely to assume that the advertisement compares the vehicle to all new
automobiles.

Example 1: An advertisement claims that sports car X ``outpaces
other cars' gas mileage.'' The claim likely conveys a variety of
meanings to a significant proportion of reasonable consumers,
including that this vehicle has a higher MPG rating than all or
almost all other vehicles on the market. Although the vehicle's MPG
rating compares favorably to other sports cars, its fuel economy is
only better than roughly half of all new automobiles on the market.
Therefore, the claim is likely deceptive.

(h) Comparing Different Model Types: Fuel economy estimates are
assigned to specific model types under EPA regulations (i.e., unique
combinations of car line, basic engine, and transmission class).
Therefore, advertisers citing MPG ratings for certain models should
ensure that the rating applies to the model type depicted in the
advertisement. It is deceptive to state or imply that a rated fuel
economy figure applies to vehicles not included in the model type
featured in the advertisement, unless such rating in fact applies to
that model type.

Example 1: A manufacturer's advertisement states that model
``PDQ'' gets ``great gas mileage'' but depicts the MPG numbers for a
similar model type known as the ``Econo-PDQ.'' The advertisement is
likely to convey that the claimed MPG rating applies to all types of
the PDQ model. However, the ``Econo-PDQ'' has a better fuel economy
rating than other types of the ``PDQ'' model. Therefore, the
advertisement is likely to be deceptive.

(i) ``Up To'' Claims: Advertisers should avoid using the term ``up
to'' without adequate explanatory language if they intend to
communicate that certain versions of a model (i.e., model types) are
rated at a stated fuel economy estimate. A significant proportion of
reasonable consumers are likely to interpret such claims to mean that
the stated MPG can be achieved if the vehicle is driven under certain
conditions. Therefore, to address the risk of deception, advertisers
should qualify the term by clearly explaining the stated MPG applies to
a particular vehicle model type.

Example 1: An advertisement claims that a vehicle model VXR
will achieve ``up to 40 MPG on the highway'' without further
explanation. The advertisement is based on a particularly efficient
type of this model, with specific options, with an EPA highway
estimate of 40 MPG. However, other types of model VXR have lower EPA
MPG estimates. A significant proportion of reasonable consumers
likely interpret the ``up to'' claim as applying to all VXR model
types. Therefore, the advertisement is likely deceptive. To address
this problem, the advertisement should clearly explain that the 40
MPG rating does not apply to all model types of the VXR or use
language other than ``up to'' that better conveys the basis for the
claim.

(j) Claims for Flexible-Fueled Vehicles: Advertisements for
flexible-fueled vehicles should not mislead consumers about the
vehicle's fuel economy when operated with alternative fuel. If an
advertisement for a flexible fueled vehicle mentions the vehicle's
flexible fuel capability and makes a fuel economy claim, it should
include the EPA fuel economy estimates for both gasoline and
alternative fuel operation. Without such disclosures, consumers are
likely to assume the stated fuel economy estimate for gasoline
operation also applies to alternative fuel operation.

Example 1: An automobile advertisement states: ``This flex-fuel
powerhouse has a 30 MPG highway rating according to the EPA
estimate.'' The advertisement likely implies that the 30 MPG rating
applies to both gasoline and alternative fuel operation. In fact,
the ethanol EPA estimate for this vehicle is 25 MPG. Therefore, the
advertisement is likely deceptive.

(k) General Driving Range Claims: General unqualified driving range
claims, which do not reference a specific driving range estimate, are
difficult for consumers to interpret and likely convey a wide range of
meanings about a vehicle's range relative to other vehicles. Such
claims, which inherently involve comparisons to other vehicles, can
mislead consumers about the vehicle class included in the

[[Page 36228]]

comparison as well as the extent to which the advertised vehicle's
driving range differs from other models. Because it is highly unlikely
that advertisers can substantiate all reasonable interpretations of
these claims, advertisers making general driving range claims should
disclose the advertised vehicle's EPA driving range estimate.

Example 1: An advertisement for an electric vehicle states:
``This car has a great driving range.'' This claim likely conveys a
variety of meanings, including that the vehicle has a better driving
range than all or almost all other electric vehicles. However, the
EPA driving range estimate for this vehicle is only slightly better
than roughly half of all other electric vehicles on the market.
Because the advertiser cannot substantiate that the vehicle's
driving range is better than all or almost all other electric
vehicles, the advertisement is likely to be deceptive. In addition,
the advertiser may not be able to substantiate other reasonable
interpretations of the claim. To address this problem, the
advertisement should disclose the vehicle's EPA driving range
estimate (e.g., ``EPA-estimated range of 70 miles per charge'').

(l) Use of Non-EPA Estimates.--(1) Disclosure Content: Given
consumers' reliance on EPA estimated fuel economy values over the last
several decades, fuel economy and driving range estimates derived from
non-EPA tests can lead to deception if consumers confuse such estimates
with fuel economy ratings derived from EPA-required tests. Accordingly,
advertisers should avoid such claims and disclose the EPA fuel economy
or driving range estimates whenever possible. However, if an
advertisement includes a claim about a vehicle's fuel economy or
driving range based on a non-EPA estimate, advertisers should disclose
the EPA estimate and disclose with substantially more prominence than
the non-EPA estimate:
(i) That the fuel economy or driving range information is based on
a non-EPA test;
(ii) The source of the non-EPA test;
(iii) The EPA fuel economy estimates or EPA driving range estimates
for the vehicle; and
(iv) All driving conditions or vehicle configurations simulated by
the non-EPA test that are different from those used in the EPA test.
Such conditions and variables may include, but are not limited to, road
or dynamometer test, average speed, range of speed, hot or cold start,
temperature, and design or equipment differences.
(2) Disclosure format: The Commission regards the following as
constituting ``substantially more prominence'':
(i) For visual disclosures on television: If the fuel economy
claims appear only in the visual portion, the EPA figures should appear
in numbers twice as large as those used for any other estimate, and
should remain on the screen at least as long as any other estimate.
Each EPA figure should be broadcast against a solid color background
that contrasts easily with the color used for the numbers when viewed
on both color and black and white television.
(ii) For audio disclosures: For radio and television advertisements
in which any other estimate is used only in the audio, equal prominence
should be given to the EPA figures. The Commission will regard the
following as constituting equal prominence: the EPA estimated city and/
or highway MPG should be stated, either before or after each disclosure
of such other estimate, at least as audibly as such other estimate.
(iii) For print and Internet disclosures: The EPA figures should
appear in clearly legible type at least twice as large as that used for
any other estimate. The EPA figures should appear against a solid
color, and contrasting background. They may not appear in a footnote
unless all references to fuel economy appear in a footnote.

Example 1: An internet advertisement states: ``Independent
driving experts took the QXT car for a weekend spin and managed to
get 55 miles-per-gallon under a variety of driving conditions.'' It
does not disclose the actual EPA fuel economy estimates, nor does it
explain how conditions during the ``weekend spin'' differed from
those under the EPA tests. This advertisement likely conveys that
the 55 MPG figure is the same or comparable to an EPA fuel economy
estimate for the vehicle. This claim is likely to be deceptive
because it fails to disclose that fuel economy information is based
on a non-EPA test, the source of the non-EPA test, the EPA fuel
economy estimates for the vehicle, and all driving conditions or
vehicle configurations simulated by the non-EPA test that are
different from those used in the EPA test.
Example 2: An advertisement states: ``The XZY electric car has
a driving range of 110 miles per charge in summer conditions
according to our expert's test.'' It provides no additional
information regarding this driving range claim. This advertisement
likely conveys that this 110 driving range figure is comparable to
an EPA driving range estimate for the vehicle. The advertisement is
likely deceptive because it does not clearly state that the test is
a non-EPA test; it does not provide the EPA estimated driving range;
and it does not explain how conditions referred to in the
advertisement differed from those under the EPA tests. Without this
information, consumers are likely to confuse the claims with range
estimates derived from the official EPA test procedures.

By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-13098 Filed 6-3-16; 8:45 am]
BILLING CODE 6750-01-P