Louis Shapiro

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IN THE MATTER OF LOUIS SHAPIRO TRADING AS PURO COMPANY DECISION IN REGARD TO THE ALLEGED VIOLATION OF TIE FEDERAL TRDE COMMISSION ACT , Nov. 19, 1953 Docket 5710. Oomplaint, Nov. 10 , 1.949-Decision Where an individual engaged in the manufacture and in the interstate sale and distribution of a water softening cleanser designated "Puro; in promoting the sale of said product through (1) newspaper advertisements reading lwo 251 Packages-251"; the use of a BUY ONE-GET ONE FRIJJE " * * conpon included in the package of the product or loose in the grocers' cartons thereof, reading "FHEE COUPON-Take this Coupon to your dealer and he wil give you one 25 cent box of PUHO free with purchase of one box at the regular price. 251 * * * BUY ONE-GET ONE FREE" ; and the ; (2) placing upon the package the words "PURO-Free Coupon Inside the dropping of the word "free" from the phrase "BUY OKE-GET ONE FREE" in his aforesaid advertising, following an April 1948 conference with the Chicago Better Business Bureau; and (3) following an August 1948 conference with offcials of the Commission-outgrowth of earlier eommnnications going back to 1946 and the using up of his existing stock of couponsthe issuance of a new form of conpon in which the word "free" was deleted from the body thereof, but con tinned in the heading, or in which the word was entirely deleted and there was set forth the depiction of a box of the product, and the inscription "BUY ONE-GET ONE" and the words "More for Your MOIley- Packages for 251"; and legend on package reading BUY ONE- GFJT OKE", with no reference to "Free Coupon Inside (a) Representeel through the nse of the aforesaid statements that the. usual and customary retail price of his said product was 251 per package; notwithstanding the fact that said product was regularly sold in retail grocery stores at two packages for 251; there was no evidence that a single package was ever sold for 251; and certain ret.ail stores sold it at 131 for a single package and two packages for 251 (b) Represent.ed, as aforesaid, that. if one package was purchased at said 251 price, a second would be given "free, that is, as a gift or gratuity without cost. t.o the retail purchaser; not.withst.anding the fact. that it was not thus given wit.hont. cost to such purchaser, but was included in the regular retail sellng price of 251 for t.wo packages, as above not.ed: Held 'L' hat such acts and practices, under the circumstances set forth, were all to the prejudice and injury of t.he public and constituted unfair and deceptive acts and practices in COJ1nnerce.

Before lJir. John Lewis hearing examiner. . George M. Martin for the Commission. Mr. Ralph M. Snyder of Chicago, Ill., for respondent. PURO CO. 455 454 Findings DECISION OF THE COM nSSION AND ORD"ER TO l"ILFl REPORT OF CO~:IPLIANCE Pursuant to the provisions of the Federal Trade Commission Act the Commission, on November 10, 1949, issued and subsequently served its complaint in this proceeding upon Louis Shapiro, an individual trading as Puro Company, charging him with unfair and deceptive acts and practices in commerce in violation of the provisions of that Act. After the issuance of said complaint and the filing of respondent' s answer thereto, a hearing was held at which testimony and other evidence in support of and in opposition to the allegations of the complaint were introduced before a hearing examiner of the Commission theretofore duJy designated by it, and such testimony and other evidence were duly recorded and filed in the offce of the Commission. Thereafter, on ,June 13, 1952, the hearing examiner filed his initial decision herein which was duly served on the parties. On July 7, 1952, counsel for respondent filed with the Commission an appeal from said initial decision. Thereafter this proceeding regularly came on for consideration by the Commission upon the record herein, including briefs in support of and in opposition to said appeal (oral argument not baving been requested) and the Commission issued its order gnmtlng said appeal in part and denying it in part; and the Commission, being no'", fully ad vised in the premises finds that this proceeding is in the interest of the public and makes the following fmdings as to the facts, conclusion and order to cease and desist, the same to be in lieu of the initial decision of the hearing exannner.

FINDINGS AS TO THE FACTS P ARAGHAPH 1. Respondent, Louis Shapiro, is an individual doing business under the trade name of Puro Company with his principal offce and place of business located at 2GOO Divest Madison Street, in Chicago, Illinois.

PAR. 2. Respondent is now, and for several years last p lst has been engaged in the business of manufacturing and offering for sale and selling a water softening cleanser designated as "Puro. Respondent causes and has caused his said product, when sold, to be shipped from his place of business in the State of Illinois to purchasers thereof located in various other States of the United States. Respondent maintains, and at all times mentioned herein has maintained, a course of trade in said product in commerce between and among various States of the United States.

T' An. 3. In the course and conduct of his business and for the purpose of promoting the sale of said Puro, respondent, for more than two Findings 50 F. T. C.

years prior to 1949, made certain statements with respect to the price and method of sellng said product, in advertising matter in newspapers, upon coupons accompanying said product, and on the containers in which said product was packaged. Among and typical of statements appearing in newspaper advertisements, inserted either by respondent alone or in cooperative advertising with grocer customers, was the following:

BUY ONg-GET O E FREE PURO Cleans Everything Softens VVater--Saves Soap 'L' wo 25 Packages-25q.

A coupon, which was inclosed within the package of Puro or wa" placed loose in the cartons in which said product was shipped to the grocer, contained the following legend:

FREE COUPON Take this Coupon fo your dealer and he wil give you one 25 cent box of PURO free with purchase of one box at the regular price.

25$! BUY ONE--GET ONE FREE The box in which said product was packaged contained thereon the following statement:

PURO Free Coupon Inside Following a conference with -representatives of the Chicago Better Business Bureau, respondent, in April 1948, modified his newspaper advertising material somewhat. In such advertising he dropped the word "Free" from the phrase: "BUY ONE-GET ONE FR.EE said advertisement thereafter reading typically as follows: BUY ONE-GET ONE puno Two 25 Packages-25q.

However, respondent continued to use the same form of coupon and box until after a conference with offcials of the Commission in August 1948, said conference being an outgrowth of earlier communications going back to 1946. Several months following the August 1948 conference, and after using up his existing stock of coupons, respondent issued a new form of coupon in which the word "Free" was deleted from the body of the coupon but continued to be used in the heading thereof, said coupon reading as follows:

PURO co. 457 454 Findings FHEE COUPON Take this Coupon to your dealer and he wi:' give you one box of PUIW at no extra cost with thc purchase of one box for 25' BUY ON GET ONE Respondent has continued to use this form of coupon since the latter part of 1948. As an alternate form, respondent has also used another coupon in which the word "Free" has been entirely deleted and which contains a picture of a box of respondent' s product with the inscription thereon:

RUY m,E-GET ONI,) and the words:

More for Your Money Packages for 25q The box in which respondent's product is packaged no longer contains any reference to "Free Coupon Inside" but since the latter part of 1948 has contained the inscription:

BUY ONE-GET ONE PAR. 4. Through the use of the aforesaid statements, respondent has represented and now represents: (a) that the usual and customary retail price of his said product is 25 cents per package, and (b) that if one package is purchased at said price, a second wil be given "Free " that is, as a gift or gratuity without cost to the retail purchaser. Respondent claims that it discontinued the latter representation in 1948 after objection was raised by the Commission and the Chicago Better Business Bureau. However, the record discloses that respondent has continued to use a coupon entitled "Free Coupon and that the box in which the said product is packaged contains the inscription: "BUY ONE-GET ONE." From the entire context of his advertising, it is clear that respondent has continued to represent that a second package of his product is given as a gift or gratuity without cost to the purchaser.

PAR. 5. The foregoing representations are false, misleading, and deceptive.

(a) The record discloses that respondent' s product, Puro, is regularly sold in retail grocery stores at two packages for 25 cents. There is no evidence in the record that a single package was ever sold for 25 cents. Certain retail stores have sold it at 13 cents for a single package and two packages for 25 cents.

Findings 50 F. T. C.

Puro as a 25-cent Respondent contends that his representation of item is true because he so designated it in his advertising material and because and in shelf markers distributed to his grocer customers, he suggested to the grocers in promotional material accompanying to sell Puro is: "Two 2M the shelf markers that the "best way" Packages for 251:. " Respondent's contention cannot be accepted in the face of the affrmative evidence that retail purchasers customarily received two packages upon payment of the sum of 25 cents, and in the absence of any evidence in the record that a customer ever received only a single package upon payment of that sum. Although respond- 1'01' two ent claims that the retail customer was not paying 25 cents packages but was only paying for one package and receiving the other one free this self-serving claim has no support in th6 record but merely reflects the false illusion which respondent sought to maintain in his advertising. It is significant that while respondent, in an effort to maintain the fiction that he was selling a 25-cent item, at one time purported to require the purchaser to present a "Free Coupon in order to get the second package (a requirement which was widely ignored by the grocer customers) , even this pose was dropped in 1949 when respondent advised his grocer customers in a promotional notice issued by him that a purchaser was to receive two packages for 25 cents "with or without a coupon" (albeit respondent still asserted in the notice that "Puro sells at Two 251: Packages for 259\" agree- Respondent also relies .on the fact that he had a "fair trade" ment with one of his customers in Illinois providing for a minimum retail price of 25 cents for a single package. The agreement, however consumer an also provided that the custouwr could distribute to the ;additional package, supplied by respondent, for the same price. / Thus, even under this agreement, it is clear that the usi1:lLanc1cus- : tomary retail price at which respondent' s product is actually sold \ is not 25 cents per package but is two packages 1'01' 25 cents. Thus the fact that respondent's "fair trade" agreement set the price of a single package at 25 cents is not controlling. (b) The second package of respondent's product is not "Free is not a gift or gratuity, and is not given without cost to the retail purchaser as the purchaser pays 25 cents, which is the regular retail selling price for two packages.

PAn. G. The use by the respondent of the foregoing false and misleading statements and representations has had, and now has, the tendency and capacity to mislead and deceive a substantial portion of the purchasing public into the mistaken and erroneous belief that such statements and representations are true and to cause the purchase of substantial quantities of respondent's said product because of such mistaken and erroneous belief.

PURO CO.

454 Order CONCLUSION The aforesaid acts and practices of the respondent, as herein found are all of 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 It is ordered That respondent, Louis Shapiro, individually and trading and doing business as Puro Company or under any other name, and his agents, representatives, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution in commerce, as "commerce" is defined in the Federal Trade Commission Act, of "Puro " or any other merchandise, do forthwith cease and desist from representing, directly or by implication:

(1) That a price which is in excess of the price at which said merchandise is regularly sold is the customary or usual price of said merchandise.

(2) That any article of merchandise is being given free or as a gift or without cost where some or all of the cost of said article has been added to the regular price of other merchandise, the purchase of whioh is required as a condition for receiving said article. It is further ordered That respondent, Louis Shapiro, shall, within sixty (60) days after service upon him of this order, file with the Commission a report in writing setting forth in detail the manner and form in which he has complied with this order. Commissioner Mead concurs except he would issue a broader order regarding use of the word "free. (See Mead dissent in Walter J. Black, Inc., et aI., Docket 5571.) "lou FEDERAL TRADE COMMISSION DECISIONS Syllabus 50 F. T.