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F E D ERAL R ESERVE BANK O F N E W YO R K f Circular No. 3 7 2 0 1 I June 14. 1951 I REGULATION W CONSUM ER C R E D IT Free M erchandise and Rebates T o all Persons Concerned with R egulation W in the Second Federal R eserve D istrict: The subject o f “ fr e e ” merchandise and rebates under R egulation W has been re-examined, especially as it relates to paragraph (8 ) o f the summaries published at 222.118, 15 B u l l e t in F ederal R e g is t e r 7827, N ovem ber 17, 1950, 1950 F ederal R eserve 1615, and at page 2 (Sum m ary No. 8) o f the pam phlet which was issued by this Bank on Decem ber 21, 1950. The B oa rd has concluded that the summary in paragraph (8), while o f course rem aining subject to the qualifications indicated fo r such summaries, should be revised to read as fo llo w s : ( 8 ) Free m erchandise and rebates. — A n instalment vendor o f a listed article is not prohibited by the regulation from giving a discount or rebate on the sales price o f a listed article or from making a bona fide “ fr e e ” g ift o f other merchandise to the buyer o f a listed article. However, in the case o f a cash discount or rebate, and also in the case o f a “ free ’ ’ g ift which allows the customer to make a selection among a variety o f merchandise or which is otherwise similar or equivalent to cash, the down payment to be obtained on the article must be net o f the amount received b y the purchaser from the vendor. In the case o f other “ fre e ” gifts, the down payment must be obtained on the gross price o f the listed article without any deduction for the “ fre e ” gift. A dditional copies o f this circular will be furnished upon request. A llan Sproul, President.