Everybody loves a bargain. And what bargain could possibly be better than “free?” The crude sign next to a stack of used tires sitting along the shoulder of a rural road may be one thing. A commercial merchant’s offer of free merchandise, it turns out, is quite another. In fact, you may be surprised to learn that there are specific regulatory policies governing the offer and promotion of “free” products or services by businesses.

Since 1971 the Federal Trade Commission has enforced a policy outlined in its Guide Concerning Use of the Word “Free” and Similar Representations. Other non-governmental organizations such as the Better Business Bureaus and some self-regulatory trade associations have established related policies which, though not legally binding, have influential effect on the promotion of “free” offers by their affiliated businesses.

The FTC’s Guide is premised on the assumption that the public continually searches for the best buy. It reflects the underlying policy that offers of free merchandise or services should be designed and promoted in such a way as to avoid any possibility of misleading consumers.

For example, promotions frequently use language such as “Buy 1, get 1 free”, “2 for 1”, or “50% off with purchase of 2.” Often the free product or service offer is contingent on the purchase at full regular price of some other “tied” product or service. The Guide specifies that in making these types of promotions, the merchant must not directly or indirectly recover, either in whole or in part, the cost of the “free” merchandise by marking up the price of the tied merchandise. To meet the Guide’s criteria, the “regular” price of the tied product or service must:

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