United Factories, Ino

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IN THE MATTER OF UNITED FACTORIES, INC.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO 'fhe ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CO~GRESS APPROVED SEPT. 26, 1914 Docket 4379. Complaint, Nov. 16, 1940-Decision, Jan. 8, 1941 Where a corporation engaged In interstate sale and distribution of oil burners for installation and use in stoves and furnaces; in advertisements of lts said products with respect to nature and effectiveness thereof in magazines and newspapers and in circulars, folders, and sales literature circulated among prospective purchasers in the various States and in said district- ( a) Represented and implied that it had invented a new type oil burner which it was offering and that said burner furnished more heat at smaller cost than did others on the market and burned cheaper oil and was automatic and furnished quick heat at the turn of a valve; Facts being it was not a new type inYention or new type oil bumer and did not in its operation in any way Involve any new principle, did not furnish more heat at smaller cost or accomplish other results attributed to or claimed for it, was not automatic but needed to be lighted each time used and did not furnish quick heat at the turn of a valve;

(b) Represented and implied through use of word "guarantee" that if performance of its said product was not as indicated through representations made by it as above set forth defectiye parts would be replaced or purchase money refunded without cost and unconditionally;

Facts being it required purchaser to conduct experimental tests over a definite period of time after it had received notice from him that burner was not operating as represented or in a satisfactory manner, and time used to make tests required before it would refund purchase price and time consumed in exchange of correspondence in such a manner were usually so great that period of time fixed by it within which burner must be returned to. secure refund had expired and purchaser was not entitled thereto .under terms and conditions of said guaruntee, which was not, as represented, unconditional; and (c) Represented and implied through statement "Write Immediately for FREE BURNER OFFER TO AGENTS who will demonstrate and take orders," that agents would be furnished burners without cost to them for making demonstrations in connection with solicitation of orders therefor; racts being it did not supply agents with burner without cost and unconditionally for their use as aforesaid but furnished them burners for said purposes only upon payment to It of $15 regular retail price thereof or after agent had sold burners and such consideration either in services or money was required of each agent before burner was delivered to him; With effect through use of such acts, practices, and methods of misleading and deceiving substantial portions of purchasing public Into erroneous and mistaken belief that said statements and Implications were true and of caus- UNITED FACTORIES, INC. 341 340 Complaint 1ng members of the public because of such belief thus engendered to purchase its burners:

Held, That such acts and practices under the circumstances set forth were all to the prejudice and injury of the public and constituted unfair and deceptive acts and practices in commerce.

Mr. W. T. Ohan,tland for the Commission.

Mr.llenry Ju.nge, of Chic.ago, Ill., for respondent. Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by !'laid act, the Federal Trade Commission, having reason to believe that United F11ctories, Inc., hereinafter referred to as respondent, has violated the provisions of said act, and it appearing to the 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, United Factories, Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of :Missouri, with its principal office and place of business at Thirteenth and McGee Streets, Kansas City, Mo. Respondent is now, and for more than 2 years last past has been, eng9.ged in the sale and distribution o£ oil burners for installation and use in ~toves and furnaces.

In the course and conduct o£ its business, respondent causes its said products, when sold, to be transported from its phce of business in the State o£ Missouri to the purchasers thereof located in various other States of the United States and in the District of Columbia. Respondent maintains, and at all times mentioned herein has maintained, a course or trade in its said products in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of its said bu~i.ness and for the purpose of inducing the purchase of its said products, respondent has made false and misleading representations with respect to the nature and effectiveness in use of its said oil burners. Such representations have been, and are being, made by means of advertisements in magazines and newspapers, and in circulars, folders, and sales literature circulated among prospective purchasers located in the various States of the United States and in the District of Columbia. Among and typical of such false and misleading representations are the following: Complaint 32 F. T. C. New-TYPE Cheap OIL BURNER INVENTED Sweeping the Country! COOK and HEAT Without Coal or Wood In your Present Stove or Furnace-- HOTrKR-No Drudgery, Dirt or Ashes-More Heat Quick at SMAI.L COST.

OVER 40,000 BOLD GUARANTI'.."ED Beats any cheap burner ever gotten out for low cost, perfect performance. Burns cheap oil a new way, without pre-generating or clogging up. Quick intense heat b/! Simple Turn ot Valve.

• • • Quick HEAT At Turn of Valve! • • • Write Immediately for FREE BURNER OI'FER TO AGENTS who will demonstrate and take orders.

Through the use of the foregoing representations and others of similar import and meaning not set out herein, respondent represents and implies that it has invented a new-type oil burner and the burner offered for sale is this new-type invention; that said burner furnishes more heat at a smaller cost than do other burners on the market; that said burner burns cheap oil in a new way; that it performs perfectly, without pre-generating the oil and without clogging up; and that said burner furnishes quick heat at the turn of a valve. Through the use of the word "guaranteed," respondent represents and implies that, if the performance of said burners is not as indicated through the representations made by respondent, defective parts will be replaced, or purchase money refunded, without cost and unconditionally. Respondent represents and implies that agents will be furnished burners without any cost to them for use in making demonstrations in connection with solicitation of orders.

PAR. 3. The above and foregoing representations and implications are grossly exaggerated, false, and misleading. In truth and in fact, respondent's said burner is not a new-type invention, it is not a newtype oil burner, and its operation does not in any way involve any new principle. Respondent's said burner does not furnish more heat at a smaller cost than do any other burners on the market. It does not burn cheap oil in a new way nor does it perform perfectly and without clogging up. Respondent's said burner is not automatic, as implied through the representation that it furnishes quick heat at the turn of a valve, but must be relighted each time it is used. UNITED FACTORIES, INC. 343 340 Findings In truth and in fact, respondent's said burner is not unconditionally "guaranteed" as represented in said advertising matter, for respondent requires purchasers thereof to conduct experimental tests over a definite period of time after it has received notice from such purchasers that said burner is not operating in a satisfactory manner, and respondent places a time limit within which said burner must be returned to it before any refund will be made. The period of time used to make the tests required by respondent before refunding the purchase price for said burner and the time consumed in an exchange of correspondence between the purchaser and the respondent with regard to said burner are usually so great that the period of time fixed by respondent within which the burner must be returned to secure a refund has expired and the purchaser is not entitled to a refund under the terms and conditions of respondent's so-called "guarantee."

In truth and in fact, respondent does not supply to agents burners without cost and unconditionally for use in making demonstrations in connection with the solicitation of orders for said burners, but furnishes such agents a burner for demonstration purposes only upon payment of $15, the regular retail price of such burner, or after an agent has sold five of said burners. Each agent is required to pay for said burner before it is delivered to him either in money or in services. PAR. 4. The use by the respondent of the aforesaid acts, practices, and methods in connection \with the sale and distribution of its said burners in said commerce has the capacity and tendency to, and does, mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that said representations and implications are true, and c-auses many members of the purchasing public, because of said erroneous and mistaken ~lief engendered as aforesaid, to purchase respondent's said burners . . PAR. 5. The aforesaid acts and practices of respondent, as herein alleged, are all to the prejudice and injury of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on November 16, 1940, issued, and on November 18, 1940, served, its complaint in this proceeding upon respondent, United Factories, Inc., charging it with the use of unfair and deceptive acts and practices in commerce in violation of the provisions of said act. On December 6, 1940, the respondent filed its answer, in which answer it admitted all the material allegations of Findings 32F.T.C.

fact set forth in said complaint and waived all intervening procedure and further hearing as to said facts. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint and the answer thereto, and the Commission having duly considered the matter 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. FINDINGS .AS TO THE FACTS P.ARAGR.APII 1. The respondent, United Factories, Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Missouri, with its principal office and place of business at Thirteenth and :McGee Streets, Kansas City, :Mo. Respondent is now, and for more than two years last past has been, engaged in the sale and distribution of oil burners for installation and use in stoves and furnaces. In the course and conduct of its business, respondent causes its said product, when sold, to be transported from its place of business in the State of Missouri to the purchasers thereof located in various other States of the United States and in the District of Columbia. Respondent now maintains, and at all times mentioned herein has maintained, a course of trade in its said products in commerce among and between the various ~states of the United States and in the District of Columbia.

PAR. 2. The respondent, in the course and conduct of its said business and :for the purpose o£ inducing the purchase of its said products, has made false and misleading representations with respect to the nature and effectiveness in use o£ its said oil burners. Such representations have been, and are being, made by means of advertisements in magazines and newspapers, and in circulars, folders, and sales literature circulated among prospective purchasers located in the various States of the United States and in the District of Columbia. Among and typical of the false and misleading representations so made and circulated are. the following:

New-TYPE Cheap OIL BURNER INVENTED Sweeping the Country I COOK and HEAT Without Coal or Wood In Your Present Stove or Furnace- HOTTER-No Drudgery, Dirt or Ashes-More Heat Quick at SMALL cosr OVER 40,000 SOLD GUARANTEED UNITED FACTORIES, INC. 345 340 Findings Beats any cheap burner ever gotten out for low cost, perfect performance. Burns cheap oil a new way, • • •. Quick intense heat by Simple Turn of Valve. • • • Quick Heat At Turn of Valve! • • • Write Immediately for FREE BURNER OFFER TO AGENTS who will demonstrate and take orders.

PAR. 3. The respondent, through the use of the foregoing representations and others of similar import and meaning not set-out herein, represents and implies that it has invented a new-type oil burner; that the burner offered for sale is this new-type invention; that said burner furnishes more heat at a smaller cost than do other burners on the market; that said burner burns cheap oil in a new way; that it performs perfectly; and that said burner is automatic and furnishes quick heat at the turn of a valve. PAR. 4. The above and foregoing representations and implications are grossly exaggerated, false, and misleading. In truth and in fact, respondent's said burner is not a new-type invention or a new-type oil burner and its operation does not in any way involve any new principle. Respondent's said burner does not furnish more heat at a smaller cost than do any other burners on the market. It does not burn cheap oil in a new way nor does it perform perfectly. Respondent's said burner is not automatic nor does it furnish quick heat at the turn of a valve. It must be lighted each time it is used. PAR. 5. Respondent, through the use of the word "guaranteed," represents and implies that if the performance of said burner is not as indicated through the representations made and used by the respondent as hereinabove set forth, defective parts will be replaced or purchase money refunded without cost and unconditionally. In truth and in fact, respondent's said burner is not unconditionally "guaranteed" as represented by the respondent in its advertising matter, for respondent requires a purchaser thereof to conduct experimental tests over a definite period of time after respondent has received notice from such a purchaser that said burner is not operating as represented or in a satisfactory manner, and respondent places a time limit within which a burner must be returned to it before any refund will be made. The time used to make the tests require-d by respondent before it will refund the purchase price of a burner and the time consumed in an exchange of correspondence between the purchaser and the respondent with regard to an unsatisfactory Order 32F. T. C.

burner are usually so great that the period of time fixed by the respondent within which a burner must be returned to it in order to secure a refund has expired and the purchaser is not entitled to a refund under the terms and conditions of respondent's so-called ''guarantee."

PAR. 6. Through the use of the statement ""Write immediately for free burner offer to agents who will demonstrate and take orders," respondent represents and implies that agents will be furnished burners without any cost to them for use in making demonstrations in connection with the solicitation of orders for such burners. In truth and in fact, respondent does not supply agents with burners without cost and unconditionally for use in making demonstrations in connection with the solicitation of orders for said burners. Respondent furnishes agents a burner for demonstration purposes only upon the payment to it of the sum of $15, the regular retail price of a burner, or after an agent has sold five burners. Each agent is required to pay for the burner before it is delivered to him, either in services or in money.

PAR. 7. The use by the respondent of the aforesaid acts, practices and methods in connection with the sale and distribution of its said burners in said commerce has the capacity and tendency to, and does, mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that said representations and implications are true, and causes members of the purchasing public, because of said erroneous and mistaken belief, engendered as aforesaid, to purchase respondent's said burners. CONCLUSION The aforesaid acts and practices of the respondent as herein found are all to the prejudice and injury of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commis- !>ion upon the complaint of the Commission and the answer of re- Rpondent, in which answer respondent admits all the material allegations of fact set forth in said complaint, and states that it waives all intervening procedure and further hearing as to said facts, and the Commission having made its findings as to the facts and conclusion that said respondent has violated the provisions of the Federal Trade Commission Act.

UNITED FACTORIES, INC. 347 340 Order It is ordered, That the respondent, United Factories, Inc., its officers, representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, ~ale and distribution of its oil burners in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease nnd desist from:

1. Representing, in any manner, that its oil burner is a new type invention, or a new type oil burner, or that its operation involves any new principle or that it furnishes more heat at smaller cost than other similar burners on the market, or that it burns cheap oil in a new way, or that it performs perfectly, or that it is automatic, or that it furnishes quick, intense heat at the turn of a valve. 2. Representing, in any manner, that said burner is "guaranteed," unless the terms and conditions of such "guarantee" are set out in immediate conjunction with the word "guarantee'' or any reference to such "guarantee," and such terms and conditions are such that they may reasonably be complied with.

3. Representing, in any manner, that its said oil burners are furnished to agents without cost and unconditionally for use in making demonstrations in connection with the solicitation of orders therefor. 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 32F. T. C.