Free, Bonus and Shipping and Handling Claims
Free means the consumer pays nothing beyond the regular price of the article that must be bought to get it. The seller may not raise that price, cut the quantity or quality, or recover the cost through a shipping and handling charge.
The rule in short
Under 16 CFR Part 251 a free offer requires that the article bought to obtain the free item be sold at its regular price, meaning the price at which it has been openly and actively sold in the trade area for a reasonably substantial period. The seller may not increase that price, reduce quantity or quality, or recoup the cost through a shipping and handling charge. All conditions must be disclosed with the offer, and repeated free offers of the same article are limited in frequency and duration.
Free means the consumer gets the item without paying anything for it beyond the regular price of whatever must be bought to qualify. The Guide at 16 CFR Part 251 turns that sentence into a set of operating conditions, most of which concern what the seller may not do to the companion purchase.
The regular price is the anchor
Every free offer rests on the price of the article the consumer must buy. That price has to be the seller's regular price: the price at which the article has been openly and actively sold in the trade area for a reasonably substantial and recent period, in the regular course of business, and not for the purpose of setting up a free offer.
Three prohibitions follow directly. The seller may not increase the price of the companion article during the offer. It may not reduce the quantity, and it may not reduce the quality. Any of the three recovers the cost of the free item from the consumer, which is the exact thing the word free denies. The regular price concept is the same one used in former price and was-now comparisons, and a seller with no defensible regular price has neither claim available.
Where a seller has not established a regular price because the article is new, the Guide's answer is that a free offer should not be made until one exists. Introductory pricing and a free offer at the same moment leave nothing for the free representation to be measured against.
Shipping and handling as a recovery channel
A shipping and handling charge may cover only the actual cost of shipping and handling, reasonably estimated. It may not be used to recover the cost of the free merchandise. This is the provision most often breached, because a fulfillment fee is easy to inflate quietly and hard for a consumer to check.
Two operational rules keep a seller inside the line. Calculate the rate from real carrier cost, packaging and handling labor, and keep the calculation. And apply the same rate to the same shipment when no free item is included, since a fee that rises when a free item is added is by definition recovering the item's cost.
| Offer as presented | What the seller may not do | What must be disclosed | Common failure |
|---|---|---|---|
| Buy one, get one free | Raise the price or cut the size of the purchased unit | That a purchase is required, and of what | A price increase timed to the promotion |
| Free gift with purchase | Recover the gift's cost in a fee | The minimum purchase and any exclusions | A handling charge introduced only for the gift |
| Free shipping over a threshold | Present the threshold away from the claim | The threshold and any excluded items or regions | Threshold shown only at checkout |
| Free trial converting to a charge | Charge without express informed consent | Amount, timing, frequency and how to cancel | Renewal terms placed in linked terms only |
| Two for the price of one | Change the base price for the promotion | The regular price of the single unit | No records showing the single-unit regular price |
The Guide requires all terms and conditions to appear with the offer, in close conjunction with it, rather than in a footnote or a linked page. A free claim with an asterisk carries the same defect as any other claim qualified out of sight: the consumer forms the impression at the headline. Where the condition is complex enough that it will not fit beside the claim, the claim itself is usually the wrong claim.
Bonus, gift and other equivalent words
The Guide is not limited to the word free. It reaches gift, given without charge, bonus, two for one, half price sale, one cent sale, fifty percent off and any similar representation conveying that the consumer receives something without charge or at a reduced price conditioned on a purchase. Substituting a synonym changes nothing.
Frequency is limited for all of them. A free offer on a particular article should not run for an extended part of the year in a single trade area, and consecutive offers on the same item should be separated by intervals at the regular price. Where the offer runs continuously, the combined package becomes the ordinary terms of sale and the free representation stops being true.
Records, suppliers and channel practice
A retailer running a supplier-funded free offer still makes the claim in its own name. Where the supplier sets the terms, the retailer should hold the documentation showing the regular price of the companion article in its own stores and the calculation behind any fulfillment fee. Supplier assurances are not substantiation, for the same reason described under the prior substantiation requirement.
Fee practices in adjacent regulated sectors show the same logic. Charges presented as pass-through costs draw scrutiny where they exceed what is actually paid, which is why carrier accessorial charges and broker fee arrangements are documented in the way described under broker bonds, duties and double brokering. In both settings the question is whether the fee corresponds to a real cost.
Presenting a free offer online
Online, the offer often spans several screens, and each screen is part of the presentation. A free claim on a category page, a condition on the product page and a fee at checkout is three-quarters of a disclosure. The condition has to travel with the claim, following the placement analysis in the clear and conspicuous factors.
Interfaces that add the free item automatically and require the consumer to remove it, or that pre-select a shipping option carrying a higher fee, raise a separate problem: consent obtained by design rather than by choice. Those practices are treated under the disclosure and consent rules on recurring charges, and they can make an otherwise lawful free offer unlawful in the way it is delivered.
The whole area rewards simplicity. An offer stating the purchase required, the item received, the fee charged and the period it runs, all in the same block of text, satisfies the Guide without a review cycle. Complexity in the presentation is almost always a sign that something in the offer will not survive being stated plainly.
Points to carry away
- The article that must be purchased has to be sold at its ordinary regular price during the offer.
- The cost of the free item may not be recovered through an inflated shipping and handling charge.
- Quantity and quality of the purchased article may not be reduced during the free offer.
- All conditions to receiving the free item must appear with the offer, not in separate terms.
- Repeated free offers of the same article in the same trade area are limited in duration and frequency.
- A shipping and handling charge must reflect the actual cost reasonably estimated.
Questions readers ask
Can a seller charge anything at all for shipping a free item?
It can charge no more than the actual cost of shipping and handling, reasonably estimated. The Guide bars using the charge to recover the cost of the free merchandise, so a fee set above real fulfillment cost converts the offer into a sale at an undisclosed price. Where a seller uses a flat rate across many items, the rate should approximate average cost rather than exceed it. Records showing how the rate was calculated are the practical answer to a challenge.
Does a free trial fall under the Free Guide?
A free trial is governed principally by the rules on recurring charges rather than by the Free Guide, because the deception at issue is the charge that follows rather than the price of a companion purchase. The trial offer must disclose that charges begin, when they begin, how much they are, and how to stop them, and the seller needs the consumer's express informed consent before charging. The Free Guide still applies to any companion article the consumer must buy.
How often may the same free offer run?
The Guide limits repetition so that a free offer does not become the ordinary terms of sale. A seller should not run a free offer on a particular article for more than a limited part of the year in a single trade area, and successive offers should be separated by a meaningful interval during which the article is sold at its regular price without the free item. Where the offer runs continuously, the combined price becomes the regular price and the free representation is no longer accurate.
Sources
- eCFR — 16 CFR Part 251, Guide Concerning Use of the Word Free and Similar RepresentationsThe conditions on a free offer, the regular price requirement and the frequency limits.
- eCFR — 16 CFR Part 233, Guides Against Deceptive PricingThe companion guide defining a regular price and governing comparisons to it.
- Cornell Legal Information Institute — 15 U.S.C. 45, Unfair or Deceptive Acts or PracticesThe prohibition under which a misleading free claim is charged.
- Cornell Legal Information Institute — 15 U.S.C. 8403, Negative Option Marketing on the InternetThe requirements attaching to a free trial that converts to a recurring charge.
- Federal Trade Commission — .com Disclosures: How to Make Effective Disclosures in Digital AdvertisingWhere the conditions on an offer must appear in an online presentation.
- Federal Trade Commission — Advertising FAQ's: A Guide for Small BusinessApplied guidance on offer presentation and required conditions.
Lawwise is a publication, not a law firm. This article states general rules and cites its sources; it is not advice about any particular case, and the law differs by state and changes over time.
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