Grocery stores would be allowed to offer consumers rain checks or substitute merchandise when they run out of advertised products, under rule changes proposed yesterday by the Federal Trade Commission.
The FTC voted 5 to 0 to begin the process of amending an existing rule that requires food stores to stock enough of an advertised item to meet reasonably anticipated demand.
Under the current rule, which applies only to food stores, a store that runs out of an advertised product is subject to fines of up to $10,000 if it does not have the item, even if it offers rain checks or substitute items, and even if it warns that items are only available in limited quantities.
The FTC voted yesterday to seek public comments on a staff proposal to change the "food unavailability rule" by allowing stores that run out to offer rain checks or substitutes or to advertise that certain items are available only in limited quantities.
More than 90 percent of food stores currently offer rain checks and offer substitutes when they run out, although both practices technically violate the 1971 law, the FTC staff said. Non-food stores commonly follow the same practices and do so legally.
The FTC action is designed to end more than a year of controversy triggered in July 1984, when the FTC staff first recommended modifying or eliminating the supermarket specials rule. The staff report said at the time that the rule "does not appear to be justified," arguing that the costs of compliance exceed the benefits to consumers.
Yesterday's unanimous FTC vote papered over divisions within the commission over the need for the rule. Commissioner Terry Calvani said he favored outright repeal of the rule but would support the changes as an improvement over the existing regulation. Commissioner Patricia P. Bailey said she was reluctant "to tinker with a regulation that isn't broken," but would support the amendments as a "step forward" compared with suggestions of scrapping the rule.
Consumers Union called the commission's action "reasonable and pleasing." But the organization will recommend additional improvements, said Mark Silbergeld, director of Consumers Union's Washington office.
The Food and Marketing Institute, which has urged the commission to throw out the existing rule, said it was "pleased" with the commission's action modifying it. "It seems to be aimed at eliminating the costs and protecting the consumer," said FMI Vice President George Green, adding that "we don't think the rule is necessary."
The commission received more than 3,600 public comments on the staff's original proposal. At least half of those comments reflected misunderstanding of the rule or the staff's recommendation, said Commissioner George W. Douglas. About 14.5 percent of the comments reflected the misperception that the existing rule requires stores to give rain checks, he said.
The staff has argued that the costs of the rule may exceed benefits by $57 million to $173 million a year. To comply with the rule, grocers may stock more goods than they need, spend more on documentation and incur extra legal expenses, the staff said.
The proposed changes would "preserve the protections the rule provides, but at significantly lower cost," said Carol T. Crawford, director of the bureau of consumer protection, at yesterday's commission meeting.
In separate action, the FTC voted 4 to 1 to drop a proposed hearing-aid rule that would have required vendors to offer a 30-day trial period.
The FTC staff reported last month that most hearing-aid companies already offer trial periods, and a survey found that customers are generally satisfied with the devices.
The commission acted to drop the proposal after rejecting a request from the American Association of Retired Persons and the American Speech-Language Hearing Association, which asked the FTC to postpone its decision for 90 days to allow for further comment.
Bailey argued in favor of granting the delay, and dissented in the final vote. "It is incredible to me that after 10 years and three months of studying this question with all our might, the commission would even consider refusing to defer its decision for 90 days to hear from that portion of our citizenry [that] is concerned," she said.
But the other commissioners said that the two associations already had sufficient time to comment.