Craig, T. S

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IN THE MA'ITER OF T. S. CRAIG, DOING BUSINESS AS UNITED SILK COMPANY ('0:\IPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2490. Complaint, July 3, 1935-Decision, Sept. 1, 1936 Where an individual engaged in offer, sale, and distribution of hosiery to purchasers among the several States and in soliciting orders therefor in person and through salesmen, by house-to-house canvass in various towns and cities, and demanding and receiving, at time of order, part or all of purchase price, with any unpaid balance C. 0. D., and in exhibiting, in course of such solicitations, purported samples of each quality or grade and order blank purportedly showing mill number, regular retail price, and description of each style, number or sample, along with representation that various samples were respectively representative of the hosiery described and identified by purported mill numbers- ( a) Filled orders with hosiery which differed in size or color or quality from that ordered and was inferior in quality or grade to that of sample chosen and indicated by purported mill number description, notwithstanding his representation to purchasers that he would deliver goods of size and color desired and selected and of the quality or grade represented by samples chosen an~ indicated by purported mill number description; (b) Accepted all or part of purchase price for s~JCh hosiery which differed in size, etc., from that ordered, and was not delivered to purchaser at time promised, or at all, notwithstanding his aforesaid representations as to size, color, and quality or grade, and failed and refused to make good his aforesaid representations and promh;es and to deliver to purchasers hosiery of size, color, nnd quality or grade ordered, or to refund purchase price paid therefor;

(c) Falsely promised, in many instances, to include free pair with order for as many as six, ns inducement to prospect to purchase the larger quantity, and, in such instances, failed and refused so to do nt time of shipment, or to make good such promise through delivery of free pair upon having his attention called to failure to Include, as promised, such pair; (d) Hepresented, in many instances, to prospective purchasers that his hosiery would wear for a specified length of time and usually guaranteed six months' wear for three pairs and a year for six, and promised, in event of their failure so to wear, to repltJce worn with 11ew hosiery until expiration of guarantee period, notwithstanding fact said goods did not nnd would not, under normal conditions, wear for period specified and he did not make such replacements;

(e) llepresented, through said order blanks, exl1ihited to prosf)ectlve purchasers as aforesaid and display thereon of purported mill numbers and deseriptlon of hosiery designated thereby or otherwise, nnd use of tratle name including words "United Silk Company", together with dr:<l.:::nation "Dallas Office", that such pnrc·hasers were dealing with an established, substantial com·ern which carried In stock or had available for delivery hosiery of quality or grades indicated as aforesaid, facts being so-called company was a trade name merely and not an established, substantial business and UNITED SILK CO. 369 868 Complaint had no "Dallas Office" other than said individual's residence In said city, and such indivitlual had no offices elsewhere ant! <lid not carry in stock or have available for delivery hosiery in qualities or grades indicated by mill numbers, but filled orders by purchasing from various merchants in aforesaid city hosiery of no fixed quality or grade, but inferior to qualities or grades exhibited and indicated as above set forth, and purchased same wherever he could secure most advantageous price: and (f) Represented as regular retail prices for such products purported prices therefor, incluuing ueposit and C. 0. D. amounts displayed on said order blanks, exhibitetl as aforesaid, together with an enumeration of different items of hose offered, and supposed mill number, and caused purchasers to believe that they were the regular prices for said goods and accepted orders at prices ranging from one-half to one-third of those Indicated, and thereby lead purchasers to believe that they were buying hosiery of quality or grade iudicateu at a substantial reduction from regular prices, facts being prices thus displayed were wholly fictitious:

With effect of misleading and deceiving prospective purchasers into erroneous belief that said false and fraudulent representations were true and tllat he would perform such false and fraudulent promises, and of causing substantial number of prospective purchasers to buy said goods in lieu of those of competitors, which, but for such acts and practices, they would purchase, and of thereby substantially diverting trade to himself from his competitors: to their Injury and that of the public: lield, That such acts and practices, under the conditions and circumstances set forth, were to the prejudice of the public and competitors and constituted unfair metilous of competition in violation of section 5. Before iJfr. lV. lV. Sheppard, trial examiner. 11/r, Edw. lV. Thomerson for the Commission. Court.\INT Pursuant to the provisions of an Act of Congress, approved September 26, 1914, entitled, "An Act to create a Federal Traue Commission, to define its powers and unties, and for other purposes," the Federal Traue Commission, having reason to believe that T. S. Craig, hereinafter referred to as respondent, has been and is using unfair methous of competition in commerce, as "commerce" is Jefined in said act, and it appearing to said Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent is an individual trading as the United Silk Company, with his principal place of business in the city of Dallas, ·State of Texas. Respondent is now, and has been for the several years last past, engaged in offering for sale, selling, and distributing hosiery to purchasers in commerce among the sewral States of the United States. Respondent ~'tuses said hosiery when sold, to be transported from his principal place of business in the city of Dallas, State of Texas, into and across the several States of the Complaint 23F.T.C.

United States to the purchasers thereof located at various points in the said several States of the United States, other than the State of Texas. Other persons and corporations, associations, and partnerships, who do not use the methods of competition used by the respondent as hereinafter alleged, are engaged in offering for sale, selling, and distributing hosiery to purchasers in said commerce among the several States of the United States. Respondent, in the course and conduct of his business in said commerce as aforesaid, is in substantial competition with such other persons and corporations, associations, and partnerships in offering for sale, selling and distributing said products in said commerce. PAR. 2. Respondent, in the course and conduct of his business in said commerce as above alleged, personally, and at times through salesmen employed by him, solicits and accepts orders for said hosiery by canvassing from house to house in various towns and cities located in the several States of the United States, contacting prospective purchasers for his said product. \Vhen an order is secured, respondent demands and receives a part or all of the purchase price and promises to make delivery of the order by mail at a subsequent date. If all of the purchase price is not paid at the time the order is accepted, the merchandise is to be sent C. 0. D. for the balancn due. Respondent, in person and through said salesmen, in so soliciting and accepting orders for hosiery, exhibits to prospective purchasers purported samples of each quality or grade of hosiery sold by him, and exhibits an order b·lank which purports to show the mill number, the regular retail price and a description of each of tho samples exhibited.

PAR. 3. Respondent, in the course and conduct of his business in said commerce as aforesaid, represents that each of said samples exhibited is representative of the hosiery described and identified by one of the purported mill numbers on the order blank, and falsely and fraudulently represents to purchasers of his hosiery that he will deliver to them hosiery of the size and color desired and selected and of the quality or grade represented by the sample selected and as indicated by the purported mill number description. In truth and in fact respondent ships hosiery of a quality or grade inferior to the sample selected and of a quality and grade inferior to that indicated by the purported mill number description, and not of the size and color selected by the purchaser. After discovery and complaint by the purchaser of the size, color, and inferior quality or grade of the hosiery delivered by the respondent, the respondent fails and refuses to make good his represehtations and promises and to deliver the hosiery ordered or to refund the purchase price therefor. UNITED SILK CO. 371 868 Complaint PAR. 4. Respondent, in the course and conduct of his business in said commerce as aforesaid, in many instances represents to prospective purchasers that his hosiery will last for a specified length of time, usually that three pairs will last for 6 months and that six. pairs will last for 1 year, and promises that, if it does not last tho· prescribed period of time, he will replace the worn hosiery with new hosiery until the expiration of the period of time for which the guarantee is made. In truth and in fact said hosiery will not and cloe., not, under normal wear, last for the period of time specified and the respondent will not and does not replace worn hosiery with new hosiery until the expiration of such period of time as promised. PAR. 5. Respondent, in the course and conduct of his business in said commerce as aforesaid, in many instances, to induce prospective purchasers to purchase a larger quantity of .hosiery, promises v-, include one pair free if as many as six pairs are ordered. In such instances, the respondent fails and refuses to include the so-called free pair in the order when shipment is made, but ships only th!' number of pairs ordered and for which payment is made, and ho thereafter fails and refuses to deliver said free pair as promised. PAR. 6. Respondent, in the course and conduct of his business in said commerce as aforesaid, in many instances, solicits and accepts orders for hosiery, demanding and receiving payment of all or a substantial part of the purchase price, promising to make delive1·y of the hosiery ordered by mail, and does not thereafter make deliver,\' of any hosiery to such purchaser nor does he return to such purchaser all or any part of the advance payment made. PAR. 7. The order blanks exhibited to prospective purchasers by the respondent are, in part, substantially as follows: Pay Only Deposit as Printed Dallas UNITED SILK CO.

Office Dallas, Texas 1\IIU No.

102 Ladies Chiffon Hose------------------------------ Deposit______ 3.75 6 PAIR FOR 15.00------------------------------- C. 0. D ------ 11.25 100 Ladies Silk Hose--------------------------------- Deposit------ 2.50 6 PAIU FOR 10.00------------------------------- C. 0. D ------ 7.50 108 Ladles Full Fashioned Hose----------------------- Deposit______ 3.25 6. PAIR FOR 13.00------------------------------- C. 0. D ------ 9.75 102-A Ladies Service Hose------------------------------· Deposit_ ____ _ 1.50 6 PAIR FOR 6.00-------------------------------- C. 0. D ------ 4.50 600 l\Ien's Fancy Silk Hose---------------------------· Deposit----- 1.50 6 PAIR FOR 6.00-------------------------------- C. 0. D ------ 4.50 300 Gus.ranteed Men's Hose--------------------------- Deposit------ 1.00 6 PAIR FOR 3.00-------------------------------- C. 0. D ------ 2.00 7>'0"15'"-30-vol. 23-26 372 FEDERAL TRADE COl\IMISSION DECISIONS Complaint 23 F. 'l'. C.· The use on said blanks of the name "United Silk Co." and the designation "Dallas Office" and the use of the term "Mill No." with the description and purported price o£ each quality or grade is calculated and intended by the respondent to and does cause such prospective purchasers to believe that they are dealing with an established, substantial concern which carries in stock or has available for delivery hosiery of the qualities or grades indicateJ by the mill number. In truth and in fact the "United Silk Co." is a trade name used by the respondent and is not an established, substantial business and has no Dallas, Tex., office other than respondent's residence, nor has respondent an office elsewhere, and respondent does not carry in stock nor has he available for delivery hosiery of the qualities or grades indicated by the mill number, but he fills the orders secured by purchasing from various merchants in Dallas, Tex., wherever the price is most advantageous, hosiery of no fixed quality or grade and inferior to the qualities and grades exhibited and indicated by the mill number.

The prices printed on said order blanks are fictitious, without any basis in fact, and are calculated and intended to and do cause purchasers to believe that the price indicated is the regular price for each mill number as indicated. Respondent represents to purchasers that he is making a special offer and accepts o1·ders for hosiery at prices ranging from one-third ,to one-half of the prices indicated on said order blank.

PAR. 8. The above alleged acts and practices o£ the respondent have the capacity and tendency to and do mislead and deceive prospective purchasers of hosiery into the erroneous belief that such false and fraudulent representations are true and have the capacity and tendency to and do cause a substantial number of such prospective purchasers to purchase respondent's said hosiery in lieu and instead of the hosiery of his competitors, which such prospective purchasers would purchase but for the acts and practices of the respondent, thereby substantially diverting trade to the respondent from his competitors.

PAR. 9. The above alleged acts and practices of the respondent are all to the injury and prejudice of the public and of the competitors of respondent, and constitute unfair methods of competition within the intent and meaning of section 5 o£ the Act of Congress, approved September 2G, 1914, entitled, "An Act to create a Federal Trade Commission, to define its powers and duties, and for othor purposes."

UNITED SILK CO. 373 3GS Findings REPORT, FINDINGS AS TO THE FACTs, AND Onion Pursuant to the provisions o£ an Act o£ Congress, approved September 26, 1914, entitled, "An Act to create a Federal Trade Commission, to define its powers and duties, and £or other purposes," the Federal Trade Commission on the 3rd day of July A. D. 1935, issned its complaint against the respondent, T. S. Craig, trading~ as the United Silk Company, charging him with the use of unfair methods of competition in commerce in violation of the provisions of said act.

After the issuance of said complaint, no answer having been filed by the.respondent, testimony and evidence, in support of the allegations of the said complaint, were introduced by Edw. ,V. Thomerson, :attorney for the Commission, before ,V. ,V. Sheppard, an examiner -of the Commission, theretofore duly designated by it, no testimony -or evidence being offered in defense of the allegations of the complaint by the respondent; and said testimony and evidence were duly J·ecorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commission -on the said complaint, testimony and evidence, brief in support of the complaint, no brief having been filed by the respondent, and oral nrgument having been waived; and the Commission having duly considered the· record and being fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its nndings as to the facts and conclusion drawn therefrom. FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent T. S. Craig is an individual trading as the United Silk Company, with his principal place of business in the city of Dallas, and State of Texas. Respondent has been for the several years last past engaged in offering for sale, selling, and distributing hosiery to purchasers in commerce among the several States Qf the United States. Respondent causes said hosiery, when sold, to he transported from Dallas, Tex., to the purchasers thereof located at various points in the said several States of the United States other than the State of Texas. l\fany other persons and many corporations, nssociations, and partnerships, who do not use the methods of competition used by the respondent as hereinafter set out, are engaged in offering for sale, selling, :mel distributing hosiery to purchasers in said commerce among the several States of the United States, and the respondent, in the course and conduct of his business, is in substantial competition with such persons, corporations, associations, and Findings 23 F,T. C.

partnerships in offering tor. sale, selling, and distributing said hosiery in said commerce.

PAR. 2. Respondent, in the course and conduct of his business in said commerce, personally and at times through salesmen employed by him, solicits and accepts orders for hosiery by canvassing from house to house in various towns and cities, located in the several States of the United States. When an order is secured, the respondent demands and receives a part or all of the purchase price and promises: to make delivery of the order by mail at a subsequent date. If aU of the purchase price is not paid at the time the order is acceptedr the hosiery is to be sent C. 0. D. for the balance due. Respondent, in person and through said salesmen, in so soliciting and accepting orders for hosiery exhibits to prospective purchasers purported samples of each quality or grade of hosiery for which he solicits and accepts orders, and exhibits to prospective purchasers an order blank which purports to show the mill number, the regular retail price, and a description of each of the samples exhibited, and represents that each of said samples exhibited is representative of the hosiery described and identified by one of the purported mill numbers of said order blank.

PAR. 3. Respondent represents to purchasers of his hosiery that hewill deliver to them hosiery of the size and color desired and selected and of the quality or grade represented by the sample selected nnd as indicated by the purported mill number description. In truth and in fact respondent ships to said purchasers hosiery of a. quality or grade inferior to the sample selected and of a quality or grade inferior to that indicated by the purported mill number description, and of a size and color other than that selected by such purchasers. After discovery and complaint by said purchasers as tothe size, color, and inferior quality or grade of the hosiery delivered by the respondent, he fails and refuses to make good his representations and promises and to deliver to such purchasers hosiery of thesize, color, and quality or grade ordered, or to refund the purchase price paid therefor.

PAR. 4. Respondent, in many instances, represents to prospective· purchasers that his hosiery will wear for a specified length of time,. usually guaranteeing that three pairs will wear for 6 months and that. six pairs will wear for 1 year, and promises that, if the hosiery ordered does not wear the prescribed length of time, he will replacethe worn hosiery with new hosiery until the expiration of the period of time for which the guarantee is made. In truth and in fact, said hosiery will not and does not, under normal conditions, wear for theperiod of time specified, and the respondent does not replace worn UNITED SILK CO. 375 368 Findings hosiery with new hosiery until the expiration of the period of time for which the hosiery is guaranteed.

PAR. 5. Respondent, in many instances, to induce prospective purchasers to purchase a larger quantity of hosiery, promises to include one pair free if as many as six pairs are ordered and, in such instances fails and refuses to include the promised free pair in the order when shipment is made, and ships only the number of pairs ordered and for which payment is made; and thereafter, when his attention is called to the fact that he has not included the promised free pair, refuses and fails to make good his promise by delivering said so-called free pair of hosiery.

PAR. 6. Respondent, in many instances, after having solicited and accepted orders for hosiery and having received payment of all or a substantial part of the purchase price and promising to make delivery of the hosiery ordered by mail, does not make delivery of any hosiery at all to such purchasers, nor does he return to such purchasers all or any part of the advance payment made.

PAR. 7. Tho order blanks exhibited to prospective purchasers by respondent are, in part, substantially as follows: Pay Only Deposit as Printed UNITED SILK CO.

Dallas Dallas, Texas Office Mill No.

102 Ladies Chiffon Hose----------------------· Deposit____________ 3. 75 6 PAIR FOR 15•00----------------------- C. 0. D ____________ 11.25 100 Ladles Silk Hose-------------------------· Deposit____________ 2. 50 6 PAIR FOR 10.00------------------------ C. 0. D------------ 7. 50 108 Ladies Full Fashioned Hose---------------· Deposit------------ 3. 25 6 PAIR FOR 13.00------------------------ C. 0. D------------ 9. 75 102-A Ladies Service Hose----------------------· Deposit----------- 1. 50 6 PAIR FOR 6.00------------------------- C. 0. D------------ 4. 50 too l\len's Fancy Silk Hose-------------------- Deposit____________ 1. 50 6 PAIR FOR 6.00------------------------· C. 0. D------------ 4. 50 300 Guaranteed Men's Hose ___________________ Deposit____________ 1. 00 6 PAIR FOR 3.00------------------------ C. 0. D------------ 2. 00 The u~e on said blanks of the name "United Silk Co." and the designation "Dallas Office," and the use of the term "Mill No." with the description and purported price of each quality or grade of hoisery, causes purchasers to believe that they are dealing with an established, substantial concern which carries in stock or has avail- Conclusion 23F.T.O.

able for delivery hosiery of the qualities or grades indicated by the mill number. In truth and in fact the "United Silk Company" is a trade name used by the respondent and is not an established, substantial business and has no "Dallas Office,'' other than that the respondent's residence is in Dallas, nor has the respondent offices located else- 'vhere, and respondent does not carry in stock nor has he available for delivery hosiery of the qualities or grades indicated by the mill numbers, but fills orders secured by purchasing from various merchants in Dallas, Tex., hosiery of no fixed quality or grade and inferior to the qualities or grades exhibited and indicated by the mlll numbers. Respondent makes said purchases of hosiery wherever he can secure the most advantageous price.

The prices as printed on said order blanks are wholly fictitious, without any basis in fact, and cause purchasers to believe that the prices indicated on said order blanks are the regular prices for said hosiery. The respondent represents that the prices indicated on the order blanks are the regular retail prices for the hosiery, and he accepts orders for hosiery at prices ranging from one-third to one-half of the prices so indicated on said order blanks, leading purchasers to believe that they are purchasing hosiery of the qualities or grades indicated at u substantial reduction from the regular prices. PAR. 8. Respondent's acts and practices as above set out have the capacity and tendency to and do mislead and deceive prospective purchasers of hostery into the erroneous belief that said false and fraudulent representations are true and that the respondent will do and perform the false and fraudulent promises made; and have the capacity and tendency to and do cause a substantial number of prospective purchasers of hosiery to purchase respondent's said hosiery in lieu and instead of the hosiery of his competitors• which hosiery such prospective purchasers would purchase but for the acts and practices of the respondent, thereby substantially diverting trade to the respondent from his competitors, to their injury and to the injury of the public.

CONCLUSION The aforesaid acts and practices of the respondent, under the conditions and circumstances set out in the foregoing findings are to the prejudice of the public and of respondent's competitors and are unfair methods of competition in commerce and constitute a violation of Section 5 of an Act of Congress approved September 26, 19141 entitled, "An Act to create a Federal Trade Commission, to define its powers 11nd duties~ and for other purposes."

UNITED _SJLK CO. 377 3G8 Order ORDER TO CEASE AND DESIST This proceeding having been heard by the Commission upon the complaint filed herein on July 3, 1935, the testimony and evidence in support of the charges of said complaint and the brief filed by counsel for the Commission, no answer or brief having been filed by the respondent and oral argument having been waived, and the Commission having made its findings as to the facts and conclusion that the respondent has violated the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

It is ordered, That the respondent T. S. Craig, trading as the United Silk Company, his agents, servants, and employees, in connection with offering for sale and selling hosiery in commerce among the several States of the United States, forthwith cease and desist from: 1. Filling orders with hosiery different from the size, or color, or quality ordered;

2. Accepting all or any part of the purchase price for hosiery when hosiery of the size, color, and quality or grade ordered is not delivered to the purchaser at the time promised;

3. Representing, directly or indirectly, to purchasers of hosiery that a free pair will be shipped with an order, unless and until a free pair is shipped with such order without added cost to the purchaser; 4. Representing, directly or indirectly,· to purchasers that a certain number of pairs of hosiery will wear for a specified period of time and that, if they do not, the worn hosiery will be replaced with new hosiery until the expiration of the period of time specified, unless and until said hosiery will, under normal wear, last for the period of time specified; or if such hosiery does not wear for the period of time specified, until and unless respondent replaces such worn hosiery with new hosiery for the time specified.

5. Representing, by the use of purported mill numbers and a description of the hosiery designated by the mill numbers, or otherwise, that respondent has the hosiery offered for sale in stock and available for delivery, when such is not the fact;

6. Using the term "Dallas office", or other words of similar import and meaning, on order blanks, unless and until respondent actually maintains an office for the transaction of business in the city of Dallas, State of Texas;

7. Representing, directly ·or indirectly, through fictitious price marking on order blanks, or otherwise, that the price at which hosiery :378 l!'EDERAL TRADE COMMISSION DECISIONS Order 23 F.T.C.

is offered is less than the usual and customary retail price for said -hosiery, when such is not the fact.

It ia further ordered, That the respondent T. S. Craig, trading as the United Silk Company, shall, within 60 days after service upon him of a copy of this order, file with the Federal Trade Commission a report in writing, setting forth in detail the manner and form in which he has complied with the order to cease and desist hereinabove :Set forth.

LIBERTY CHOCOLATE CO., ETC.

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