On November 19, 2014, the Federal Trade Commission announced that it would not change or repeal the Retail Food Store Advertising and Marketing Practices Rule (the “Unavailability Rule”) and took the opportunity to provide guidance about the Rule’s coverage. As we noted in September 2011, the FTC had issued a request for comments on the Unavailability Rule as part of its systematic review of its rules.
The Unavailability Rule, first issued in 1971, prohibits retail food stores, such as grocery stores and supercenters, from advertising a product at a given price unless they have the product in stock at (or below) the advertised prices during the effective period of the advertisement. In 1989, the FTC amended the Rule to create several exceptions. For example, retailers may comply with the Rule by ordering the product in sufficient quantities to meet “reasonably anticipated demand,” by providing consumers with a comparable product or “rainchecks” if the advertised product is unavailable, or by clearly and adequately disclosing that supplies are limited.
Some commenters recommended repeal of the Rule, arguing that market forces or state regulations are sufficient to protect consumers. Their arguments did not persuade the FTC, which said that there is evidence that the Rule remains necessary to protect consumers. Other commenters advocated expanding the rule beyond retail food stores to other types of retail stores. The FTC declined, noting that the commenters had not provided evidence about the potential effects of the Rule on other retailers. Moreover, the FTC explained that the existing Rule is not limited to “traditional” retail food stores, but also covers warehouse clubs, drug stores, and any other retailers that sell more than “incidental or minimal” amounts of food and advertise discounts for food products.
Although the FTC did not change the Rule, its decision to reaffirm and clarify the Rule is a reminder that food retailers--including “nontraditional” retailers--should ensure that their advertisements comply with the Rule.