Pike-Hansen, Inc

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IN THE MATTER OF PIKE-HANSEN, INC.

COMPLAINT, rrJNDINGS, AND ORDER IN REGARD TO Tile ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2938. Complaint, Oct. 2, 1936-Decision, Mar. 10, 1931 Where a corporation engaged In the offer and sale of men's clothing through some five hundred traveling salesmen whom it equipped with order blanks containing spaces for the Individual measurements of each purchaser and with samples of materials for purchaser's selections as to color, weave, and quality ot mnte1·lal from which the suit or other garment was to be made, aud price of which varied according to quality of material selected, an(} wl1o solicited and accepted orders for such clothing, taking purchaser's measurements and recording such and other Information regaruing his weight, height, etc., on the order blank, and forwarding same and collecting substantial part of agreed purchase price at time of acceptance of order, with balance payable upon delivery; and such agents or representatives, as case might be-- (a) Represented and implied to prospective purchasers of its said clothing that it would make for and deliver to them made-to-measm·e or tailor-made garments made from material of the color, weave and quality selected from the samples exhibited, notwithstanding fact that garments delivered, iu many Instances, were not made-to-measure or tailor-made, as understood by purchasing public, did not fit In same manner as do such gannents, due to lack of experience or sldll on the part of its salesmen and its employees In mnldng up the same, and, in some instances, did not fit at all or with any reasonaiJle relation to individual to whom delivered, and, in many instances, were so cut und constructed that it was not possible for expert tailors to nltet· same so as to make them fit, and its failure and refusal to return part'lw~e money rpcelved from such purchasers or to deliver to tlwm gnnncnts that would fit;

(b) lleprt:>I>!('Hted to purchaflers of its said clothing that it would mal;:e for and deliver to 1:hem garments from materiali! of the colo!", weave, and quality sclectt:>d by such purchasers from samples furni!ihed to its salesmen or exhibited to su<'h purchasers, notwith:;tanding fact, in many instances, it did not deliver to purchaser garment thus made, but delivered one made from material which It hud substituted for that sdected by purchaser and which was different in color and weave from and inferior in quality to material st>lected, and failure and refusal in such instances to rPtnrn pur· chase mon~>y received or deliver garm"nt matle from material sPlPCtetl; and (c) ll~o"presented, in soliciting !iale of its said clothing, to many pro~pective purc·hasers, that {}('livery would be made to tlwm by salt>smen or agent in person, so as to afford them opportunity to inspect the garment ordered as to material from which made and as to fit, prior to payment of balance of purcha~e money due it, llotwlthstanding fact garment wus ship1wd to pur· chuser by parcel post, cash on tlelivery for balance of purchase money, no inspl.'ctlon was pPrmltted, and Its failure and refu;;al to return purchase price received or permit inspection before tlelivery; PIKE-HANSEN, INC. 821 820 Complaint With effect of misleading and deceiving many purchasers and causing them erroneously to believe that garments sold by it were made-to-measure or tailor-nuttle, us understood by purchasing public, that gat·ments would !Je made from materials selected by purchasers and be delivered by per~<on taking or•ler, and that inspection would be permitted prior to payment of balance as aforesaid, and of causing many prospective purchasers, because of such erroneous beliefs, to buy clothing from it, and of thereby unfairly diverting trade in commerce to it from its competitors who do not use a('ts, practices and methods employed by it; to their sub:;tantial injury an•l that of the public:

llcld, That such acts and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. l.!r. Edw. W. Thomerson for the Commission. Complain'!' Pursuant to the provisions of an Act of Congress, approved September 2G, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that Pike-Hansen, Inc., hereinafter referred to as respondent, has been and is using Unfair methods of competition in commerce, as "commerce" is defined 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 Pike-Hansen, Inc., is a corporation existing under and by virtue of the laws of the State of Illinois, with its office and principal place of business at 1113 North Franklin Street, in the city of Chicago, State of Illinois. Respondent is now, and has been for several years last past, engaged in the business of offering for sale and selling men's clothing through salesmen or agents who travel throughout the United States soliciting and accepting orders for such clothing. Respondent causes said clothing, when sold, to be transported from its said place of business in the city o£ Chicago, State o£ Illinois, in,to and across the several States of the United States to the purchasers thereof located at various points in the said several States of the United States other than the State of Illinois. Respondent, in the course and conduct of its business in said commerce as aforesaid, is in substantial competition with other corporations and with associations, partnerships, and persons engaged in commerce between and among the several States of the United States in the business of selling and distributing men's clothing. Among the competitors of the respondent are many who sell their clothing lll. said commerce through salesmen or agents and who do not use Complaint 24F.T.C.

the acts, practices, and methods in the sale thereof used by the respondent in the sale of its clothing as hereinafter alleged. PAR. 2. Respondent, in the course and conduct of its business as aforesaid, employs approximately 500 salesmen or agents located throughout the several States of the United States to solicit and accept orders for its said clothing. These salesmen or agents are equipped by the respondent with order blanks, containing spaces for the taking of the individual measurements of each purchaser, and with samples of materials from which the purchasers make selections as to color, weave, and quality of the material from which tl}.e suit or other garment ordered is to be made. The prices at which said clothing is sold vary according to the quality of the material selected and said salesmen or agents collect from the purchasers of said clothing a substantial part of the agreed purchase price at the time the order is accepted and the balance of the purchase price is to be paid when the purchase is delivered. When a salesman or agent sells a garment, such salesman or agent takes the measurements of the pur· chaser and places this and other information regarding the weight, height, general build and appearance, etc. of the purchaser, together with a number identifying the material selected by the purchaser on the said order blank, and forwards the same to the respondent at its said place of business in Chicago, Ill., where the garment ordered is ·I purportedly made from the material selected to the individual 1 measurements of the purchaser of the garment. 1 PAn. 3. Made-to-measure or tailor-made clothing is understood by the trade and purchasing public generally to be and mean garments which are cut and made to the individual measurements of the person for whom intended. In order to make a made-to-measure or tailormade garment as understood by the trade and purchasing public, it is necessary and essential that a person, experienced and skilled in taking and making measurements for such garments, measure the person for whom the garment is to be made, so as to convey to the tailor actually making the garment accurate and exact measurements and the information regarding the weight, height, general build and appearance, etc. of the person measured. To secure this information with any degree of accuracy and exactness requires experience and skill on the part of the person taking or making the measurements. There exists among the purchasing public the belief that made-to· measure or tailor-made garments fit with more accuracy than do garments which are not so made and there exists a preference on the part of a substantial portion of the purchasing public for made· to-measure or tailor-made garments.

PIKE-HANSEN, INC. 823 820 Complaint PAn. 4. Respondent, in the course and conduct of its l.msiness and by the means and in the manner aforesaid, represents and implies to prospective purchasers of its said clothing that it will make for, and deliver to, purchasers of its clothing made-to-measure or tailormade garments made from materials of the color, weave, and quality selected by purchasers from the samples exhibited by its salesmen or agents. In truth and in fact, in many instances, the garments delivered by the respondent to purchasers are not made-to-measure or tailor-made garments, as that term is understood by the purchasing public as above alleged. Because of the lack of experience and skill on the part of its salesmen or agents in makii1g and taking measurements and securing accurate information regarding the weight, height, general build and appearance, etc. of purchasers or because of the lack of skill on the pa1t of its workmen in making the garments, the garments delivered do not fit in the same manner as do made-to-measure or tailor-made garments and in some instances do not fit at all or with any reasonable relation to the individual to whom they are delivered. In many instances, the garments delivered to purchasers are so cut and constructed that it is not possible for expert tailors by alteration to make them fit and the respondent fails and refuses to return the purchase money received from the purchasers of said garments or to deli\·er to them garments that will fit.. ILAR. 5. Respondent, in the course and conduct of its businpss as aforesaid, represents to purchasers of its said clothing that it will rnake for, and deliver to, them garments made from materials of the color, weave, and quality selected by such purchasers from the samples furnished to its salemen or agents by the respondent and by said salesmen or agents exhibited to said purchasers •. In truth and fact, in many instances, the respondent cloPs not deliver to a purchaser a garment made from the material selected by such purchaser, but delivers a garment made from a material which it has substituted for the material selected by the purchaser and which is different in color and weave from, and inferior in quality to, the material selected by the customer. The respondent in such instances fails and refuses to return the purchase money received or to deliver a garment made from the material selected. PAn. 6. HespondPnt's salesmen or agents, in soliciting the sale of its said clothing and for the purpose of inducing prospective purcllasPrs to purchase. said clothing, represent to many such prospectire purchasers that delivery will be made to them by the salesman or agent in person so as to afford purchasers an opporunity to inspect the garment ordered as to the material from which made nnd ns 824 FEDERAL TRADE CO:\Il\IISSION DECISIONS Findings 24 F. T. C. to its fit prior to the time payment is made of the balance of the purchase money due the respondent. In truth and fact, in many such instances, the garment is shipped to the purchaser by parcel post, cash on delivery for the balance of the purchase money, and no inspection is permitted; and the respondent fails and refuses to return the purchase money recf'ived or to permit inspf'ction of the garment before delivery is made.

PAR. 7. The aforesaid acts, practices, and methods of the respondent have the capacity and tendency to and do mislead and decei\·e llli\lly purchasers and cause tlwm erron€'ously to believe that the garments sold by the respondent are made-to-measure or tailor-made garments, as those terms are understood by the purchasing public; that the garments ordered will be made from the materials selected by the purchasers and will be delivered by the person taking the order, and that inspectio~ will be permitted prior to the payment of the balance of the purchase money to the respondent. Saiu acts, practices, and methods have the capacity and tendency to and do cause many prospective purchases, because of said erroneous beliefs, to purchase clothing from the respondent, thereby unfairly diverting 1trade in said commerce to the respondent from its competitors who do not use the acts, practices, and methods used by the responuent, to the substantial injury of said. competitors and to the injury of the public.

PAR. 8. The above allf'geu acts, practices, and methods of the' respondent are all to the injury and prejudice of the public and of the competitors of respondent and constitute unfair methods oi competition in commerce within the intent and meaning of Section 5 of the Act of Congress, approved September 2G, 1!>14, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and. for other purposes."

REPORT, FINDINGS AS TO Tile FACTS, AND Onm:u Pursuant to the provisions of an Act of Congress approved September 2G, 1914, entitled "An Act to create a Fe<leral Trade Commission, to define its powers anu dutif's, and for other purpose'!'," the Federal Trade Commission, on October 2, 193G, issued its complaint in this proceeding against Pike-Hansen, Inc., a corporation, charging it with the u~e of unfair methous. of competition in commerce in violation of the provisions of said act. After the issuance of Sitid complaint and the filing of respondent's answer, the Commission by oruer entered herein, granted respondent's motion for permission to withdraw said answer and to substitute therefor an answer admitting PIKE-HANSEN, INC, 825 820 Findings all the material allegations of the complaint to be true and waiving the taking of further evidence and all other intervening procedure, which substitute answer was duly filed in the office of the Commission. Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and the substitute an· swer, briefs and oral arguments of counsel having been waived, and the Commission having duly considered the same and being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom:

FDWINGS AS TO Tile FACTS PARAGRAPH 1. Uespondent, Pike-Hansen, Inc., is a corporation existing under and by virtue of the laws of the State of Illinois, with its office and principal place of business at 1113 North Franklin Street, in the city of Chicago, State of Illinois, and it is now, and has been for several years last past, engaged in the business of offering for sale and selling men's clothing through salesmen or agents who traye} throughout the United States soliciting and accepting orders for such elothing. Respondent causes said clothing, when sold, to be transported from its place of business in Chicago, Ill., to the purcha~ers thereof located at various points in the States of the United States other than the State of Illinois.

Respondent is in substantial competition with other corporations and with associations, partnerships, and persons engaged in com· rnerce between and among the several States of the United States in the business of selling and distributing men's clothing. Among the competitors of the respondent are many who sell their clothing in said commerce through salesmen or agents and who do not use the acts, l)l'a.ctices, and methods in the sale thereof used by the respond· ent in the sale of its clothing as hereillafter set out. PAn. 2. Respondent, in the course and conduct of its business as aforesaid, employs approximately 500 salesmen or agents located at ''arious points throughout the United States to solicit and accept orders for its said clothing. These salesm('n or agents are equipp('d ~y the respondent with order Llanks, containing spaces for the tak· 111g of the individual measut'('l1lents of each purchaser, a.ncl with samples of mnt('rials from which the purchasers make selections as to color, weave, and quality of the material from which the suit or other ganmnt ord('r('d is to Le made. The prices at which said ~·clothing- is sold nry according to the quality of the material se~ eeted nnd said salesmen or ugents collect from the purchasers of 826 FEDI<.:RAL TRADE COMMISSION DECISIONS Findings 24 F. T. C. said clothing a substantial part of the agreed purchase price at the time the order is accepted and the balance of the purchase price is to be paid when the purchase is delivered. When a salesman or agent sells a garment such salesman or agent takes the measurements of the purchaser and places this and other information regarding the weight, height, general build and appearance, etc., of the purchaser, together with a number identifying the material selected by the purchaser on the said order blank, and forwards the same to the respondent at its said place of business in Chicago, Ill., where the garment ordered is purportedly made from the material selected to the individual measurements of the purchaser of the garment. PAR. 3. Made-to-measure or tailor-made clothing is understood by the trade and purchasing public generally to be and mean garments which are cut and made to the individual measurements of the person for whom intended. In order to make a made-to-measure or tailor-made garment as understood by the trade and purchasing pub· lie, it is necessary and essential that a person experienced and skilled in taking and making measmements for such garments, measure the person for whom the garment is to be made, so as to convey to the tailor actually making the garment accurate and exact measurements and information regarding the weight, height, general build and appearance, of the person for whom the garment is to be made. To secure this information with any degree of accuracy and exactness requires experience and skill on the part of the person taking the measurements. There exists among the purchasing public the belief that made-to-measure or tailor-made garments fit with more accuracy than do garments which are not so made and there exists a preference on the part of a substantial portion of the purchasing public for made-to-measure or tailor-made garments. PAR. 4. Respondent represents and implies to prospective purchasers of its said clothing that it will make for, and deliver to, purchasers of its clothing made-to-measure or tailor-made garments made from material of the color, weave, and quality selected by purchasers from the samples exhibited by its salesmen or agents. In truth and in fact, in many instances, the garments delivered by the respondent to purchasers are not made-to-measure or tailormade garments, as that term is understood by the purchasing public. Because of the lack of experience and skill on the part of its salesmen or agents in making and taking measurements and securing accurate information I'{'crardin!.! the wei(rht heicrht general build and appearance of purchasers"" <> or becausel:l of' thel:l lack' of skill on the part of its workmen in makincr the garments the garments d e1.1vered do not fit in the same mannerl:l as do made-to-measure' or PIKE-HANSEN, INC. 827 820 Findings tailor-made garments and in some instances do not fit at all or with any reasonable relation to the individual to whom they are delivered. In many instances, the garments delivered to purchasers are so cut and constructed that it is not possible for expert tailors by alteration to make them fit and the respondent fails and refuses to return the purchase money received from the purchasers of said garments or to deliver to them garments that will fit. PAR. 5. Respondent represents to purchasers of its said clothing that it will make for, and deliver to, them garments from materials of the color, weave, and quality selected by such purchasers from the samples furnished to its salesmen or agents exhibited to said purchasers.

In truth and fact, in many instances, the respondent docs not deliver to a purchaser a garment made from the material selected by such purchaser, but delivers a garment made from a material which it has substituted for the material selected by the purchaser, and which is different in color and weave from, and inferior in quality to, the material selected by the customer. The respondent in such instances fails and refuses to return the purchase money received or to deliver a garment made from the material selected. PAR. 6. Respondent's salesmen, or agents, in soliciting the sale of its said clothing and for the purpose of inducing prospective purchasers to purchase said clothing, represent to many such prospective Purchasers that delivery will be made to them by the salesmen or agent in person so as to afford purchasers an opportunity to inspect the garment ordered as to the material from which made and as to its fit prior to the time payment is made of the balance of the purchase lnoney due the respondent. In truth and fact, in many such instances, the garment is shipped to the purchaser by parcel post, ~ash on delivery for the balance of the purchase money, and no Inspection is permitted; and the respondent fails and refuses to return the purchase money received or to permit inspection of the garment before delivery is made.

PAR. 7. The aforesaid acts, practices, and methods of the respondent have the capacity and tendency to and do mislead and deceive many purchasers and cause them erroneously to believe that the garments sold by the respondent are made-to-measure or tailormade garments as those terms are understood by the purchasing Public; that the garments ordered will be made from the materials sehlected by the purchasers and will be delivered by the person taking t e order, and that inspection will be permitted prior to the paylnent of the balance of the purchase money to the i-respondent. Said acts, practices, and methods have the capacity and tendency to and 828 FEDERAL TRADE COl\Il\USSION DECISIONS Order 24F.T.C.

do cause many prospective purchasers, because of said erroneous beliefs, to purchase clothing from the respondent, thereby unfairly diverting trade in said commerce to the respondent from its com~ petitors who do not use the acts, practices, and methods used by the respondent, to the substantial injury of said competitors and to the injury of the public.

CONCLUSION The aforesaid acts and practices of the respondent Pike-Hansen, Inc., a corporation, are to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in commerce, within the intent and meaning of Section 5 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."

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer filed herein on February 24, 1937, by respondent admitting all the material allegations of the complaint to be true and waiving the tak· ing of further evidence and all other intervening procedure, and the Commission having made its findings as to the facts and its conclusion that said 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 ordel·ed, That the respond!'nt, Pike-Hansen, Inc., a corpora· tion, its officers, representatives, agents, and employees, in connec· tion with the offering for sale, sale and distribution of clothing for llH'n in interstate commerce or in the District of Columbia, do forth· with cease and desist from representing:

1. That clothing sold by it is made-to-measure or tailor-made, un· less and until such clothing is actually and accurately made by com· petent tailors to fit the customer in accordance with his correct measurements taken by a person who is com]X"tent to take such measurements;

2. That it will make clothing from materials of the color weave and quality selected by customers from samples exhibited unless and until tlte clothing is made from material of the color 'wenve and quality selected; ' PIKE-HANSEN, INC. 829 820 Order 3. That customers will be afforded an opportunity to inspect clothing purchased prior to the time full payment for the clothing is ntade, unless and until such inspection is permitted. It is further ordered, That the respondent shall, within 60 days ~after service upon it of this order, file with the Commission a report In writing setting forth in detail the manner and form in which it has complied with this order.

Syllabus 24F.T.C·