Couristan, Incorporated

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IN THE 1\fatter OF CODRISTAN, INCORPORATED, ET AL.

CONSENT . ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 7853. Complaint, Ma1". 30, 1960-Decisi,on; Sept. 1960 Consent order requiring New York City distributors to cease representing falsely in advertising and on labels that certain of their rugs were composed entirely of wool and compared to domestic all-wool rugs retailing for twice the price and more; representing the size of rugs falsely in advertising as "9 x 12", and misleadingly in invoices as "9 x 12 (103 x 139)" selling rugs under distinctively American names without revealing their Japanese origin; and advertising tubular rugs falsely as the more desirable braided" t~'pe.

COJ\.IPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission having re,ason to believe that Couristan, Incorporated, a corporation, a.nd Basil J. Court George J. Court a.nd David E. 1\lura.d, individual.lly and as officers of said corporation and as copartners tra.ding as Court, 1\lurad & Co., hereinafter refen' ed to as respondents, have 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, sta.ting its charges in that respect as follows: PARAGRAPH 1. Respondent Couristan, Incorporated, is .a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its office and place of business located at 300 Fifth Avenue, New York, N.Y. Individual respondents Basil J. Court, George J. Court and David E. 1\furad are officers of said corporation. They formulate, direct and control the policies of the corporate respondent. The address of the individual respondents is the same as that of the corporate respondent. The individual respondents also trade and do business as Court :Murad & Co., with their office a.nd place of business located at the same address as that of the corporate respondent. PAR. 2. The corporate and individual respondents are now, and for some time. last past have been, engaged in the sale and distribution of rugs and floor coverings, some of which ate imported by Comi, l\lurad &. Co. from foreign countries. In regard to said imported rugs and floor coverings Court, 1\lurad & Co. is the importer a.nd the corporate respondent is the sa.les and distributing agent. Such imported rugs are labeled a.nd a.advertised under such names as . . . . . COURISTAN) INCORPORATED) ET AL. 795 794 ;Complaint Bunker Hill, :Maple Glen, Valley Forge, and Stoney Creek. Respondents sell and have sold said rugs and floor coverings to retailers for resale to the public. Respondents import rugs and floor coverings not. only for their own sale but also as agents for others including retailers.

PAll. 3. In the course and conduct of their business respondents cause and have caused said rugs and floor coverings, when sold, to be shipped from their place of business in the State of New York to purchasers thereof located in various other States, and maintain and h:1. ve maintained, a substantial course of trade in said products in commerce, as "commerce" is defined in the Federal Trade Com- Inission Act..

PAR. 4. Respondents, in the conduct of their business, have been and are engaged in substantial competition, in commerce, with corporations firms and individuals engaged in the sale and distribution of rugs and floor coverings.

PAIL 5, In the COllrse and conduct of their business and for the pllrpm~e of inducing the purchase of their rugs and floor coverings respondents have ma.de certain statements with respect to the fiber eolltent of said rugs and floor coverings by means of labels attached thereto. an(l by desc-ription of said rugs in brochures, and in price: lists and other sales literature. Respondents have also made representations as to prices of said rugs in their advertising. Typical and nmollg such representations, but not limited thereto, are the folJO\ring:

I:K ADVEIlTISING: "Bunker Hill . . . only Couristan can give you An All- Wool Braided Rug.

O?\ PRICE LISTS: "Bunker Hill Wool Braided Rug (2) O='i LABEL: "All Wool Valley Forge, 0::'\ PRICE LISTS: " All Wool Braided Rug Prices: Valley Forge. . , (3) 0::'\ LABEL: " Stoney Creek Wool Blend. I?\ ADVERTISIXG: " Stoney Creel;: , . . Only Couristan can give you a wool lJlellll multi-color braide(l rug, . Wool Blend Stoney Creek Braided Hug", ()?\ PHICE L1S'1'S: "Stoney Creek-Wool Blend Braided Rugs. (4) ON LABEL: "~laple Glen: 'Vool Blend Tubular Rug u?\ PHICE LISTS: "::\Japle Glen Wool Blend Braided Rug. \: Statements.As To .Wool Content:

(1) 0).' L.\BEL: "AJJ Wool Bunkej" Hill." B: Statements .:\s To Prices:

l:\' .\DYERT1SI::\'G: "Bunl,er HiJL Only Couristan can gi,e you an A11 001 Brain(led Hug availnbJe in multi-tones with the ne\\! and exclusive reverse cunstruction with the hidden stitch. a x 12 , in 6 exciting patterns, and compares with domestic a11-wool braided rugs retniJing for more than $159, OO! HetaiJs For $G9, OO, Stoney Creek. Only Couristan can give you a Wool BJend Multi-color Rug made with the new reverse construction, 9 :x 12 , in 6 ; ; Complaint 57 F.

exciting patterns. Here you have the greatest excitement in the industry, the finest quality rugs that compare with domestic rugs retailing for twice the price . . . Retails for $39.00.

PAR. 6. By use of the statements appearing in the aforesaid advertisements and on said labels and others of the same import not herein set forth, respondents represented, directly or by implication: 1. That respondents Bunker Hill" and "Valley Forge" rugs are composed entirely of wool.

2. That respondents Stoney Creek" and "l\iaple Glen " rugs are composed entirely of wool.

3. That respondents Bunker Hill" rug retailing for $69.00 is comparable in quality or value to domestic all wool rugs retailing at more than $159.00.

4. That respondents Stoney Creek" rug retailing for $59.00 is comparable in quality or value to domestic rugs retailing for twice said price.

PAR. 7. The aforesaid statements were, and are, false, mislead-ding and deceptive. In truth and in fact:

1. Respondents Bunker I-rill" and "Valley Forge" rugs are not composed entirely of wool but contain a substantial quantity of fibers other than wool.

2. Respondents Stoney Creek" and "1\1aple Glen" rugs are not composed entirely of wool but contain a substantial quantity of fibers other than wool.

3. Respondents Bunker I-will" rugs do not compare, either in quality or value, to domestic all-wool rugs retailing for more than $159.00.

4. R.respondents Stoney Creek" rugs retailing for $59.00 do not compare, either in quality or value, to domestic rugs retailing for twice said price.

PAR. 8. Respondents engage in the practice of setting out the size.s of their various rugs in advertising and price lists. For example, the following has appeared:

(1) IN ADVERTISING: "Bunker Hill-9 x 12 in 6 exciting patterns Stoney Creek-9 x 12 in 6 exciting patterns. (2) IN IKVOICES: "Stoney Creek-9 x 12 (103 x 139)" :i\Iaple Glen- 9 x 12 (103 x 139)" Valley Forge-9 x 12 (103 x 139). In truth and in fact said rugs are not 9 x 12 feet in size but are approximately 103 inches by 139 inches.

The use of the !:J x 12 description of the "Bunker I-rill" and Stoney Creek" rugs in advertising is, therefore, false. and misleading. The practice of setting out two sizes on invoices, one incorrect and the other approxinlately correct, is confusing and mislead- , , CODRISTAN, INCORPORATED, ET AL. 797 794 .complaint ing and has the tendency to cause dealers to misrepresent the size of respondents' rugs sold by them.

PAR. 9. Respondents' practice of designating their rugs, made in foreign countries, including Japan, and imported into the Unirod States with names of American connotation such as "Bunker Hill" Stoney Creek" M:aple Glen" and "Valley Forge" has the tendency and capacity to induce the mistaken and erroneous belief in the minds of the public that the rugs so designated were made in the United States, and constitutes an unfair and deceptive practice. PAR. 10. There are among the members of the purchasing public a substantial number who have a preference for products originating in the United States over products originating in Japan, including rugs, and who are willing to pay higher prices to obtain such products of domestic origin when such domestic. articles command higher prices.

PAR. 11. In the course and conduct of their business and for the purpose of inducing the purchase of their rugs and floor coverings respondents, through advertisements appearing in trade papers of genera.! c.irculation and upon price lists and other sales literature have referred, and now refer, to their "Bunker t1ill " Stoney Creek" and ":Maple Glen" rugs as braided rugs. By such reference respondents have represented, and now represent, that such rugs are true braided rugs as "braided rugs" are known in the rug industry. In truth and in fact, the aforementioned rugs of the respondents are not true braided rugs as known in the rug industry, but are known as tubular rugs and are constructed by a process of strands of material being wrapped around and sewn to a core or tube. The said core or tube is filled with waste and other shoddy material. The true brajc1ed rug, on the other hand, is made by the process of strands of material being braided around a single or double core sa,id core being composed of small cotton string. The braided rug is considered in the rug industry as being superior to the tubular rug in regard to construction and wearing qualities. PAR. 12. The use by respondents of the false, misleading and deceptive statements, representations and practices has had, and now has, the tendency and capacity to mislead and deceive a. substantial portion of the purchasing public into the erroneous belief that such statements and representations were and are true, and into the purchase of substantial quantities of respondents' products because of sllch erroneous a11(1 mistaken belief. As a result thereof su bstantial trade in commerce has been unfairly directed to respondents from their competitors and substantial injury has been done to competition in commerce..

Decision :)7 r" PAR. 13. The aforesaid acts and practices of the responde.nts, as of theherein alleged, were, and are, all to the prejudice and injury public and of respondents' competitors, and constituted, and now constitute, unfair and deceptive acts and practices and unfair methods of competition in commerce, within the intent and me.aning the Federal Trade Commission Act.

Afr. Garland S. Ferguson for the COlmnission. M ehl.er, Goldsborough Ives, of "\Vashington, D. by 1111'. George S. Ives for respondents.

INITIAL DECISION BY "\VILLIAl\f L. PACK , I-IEARING EXAMINER The complaint in this matter charges the respondents with misby the. , in vio-representing certa-in rugs and floor coverings sold lation of the Federal Trade Commission Act.. An agreement. has now been entered into by respondents and counsel supporting the complaint which provides among other things, that respondents admit .all of the jurisdictional allegations in the complaint; that. the of the Com-record on which the. ini tial decision and the decision mission shall be based shall consist solely of the complaint and agreeof fact. and conclusions of la \yment; that the inclusion of findings in the decision disposing of this matter is waived, together with any further procedural steps before the hearing examiner and the Commission; that the order hereinafter set forth may be entered in disposition of the proceeding, such orc1f::r to have the same force and effect as if entered after a full hearing\ respondents specifically waiving any and all rights to challenge or contest the validity such order; that the order may be altered, modified, or set aside in orders of the Commission; that thethe manner provided for other of tl~e order; andcomplaint may be used in construing the ~terms that the agreement is fur settlement purposes only and does not constitute an admission by respondents that they have violated the la:w as alleged in the complaint.

The hearing examiner having considered the agreement and proposed order and being of the opinion that they prm'ide an adequate basis for appropriate disposition of the proceeding, the agreement is hereby accepted, the following jurisdictional findings made, and the following order issued:

1. Respondent Couristan, Incorporated is a New York corporaof business located at 300 Fifth A \'1:;- tion with its office and place nue, Ne.w Yor1\:, N.Y. Individual respondents Basil J. Conri, George J. Court and David E. l\furnd are oflicers of said corporation and of said corporate re- formulate, direct and control the practices of the corporate re- spondent, with their address the same as that \\ COURISTAN, INCORPORATED, ET AL. 799 794 Order spondent. Said individual respondents are also copartners trading as Court, :Murad &; Co., with their office and place of business located at the same address as said corporate respondent. 2. The Federal Trade Comlnission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It i8 ordered That respondents Couristan, Incorporated, a corporation, and its officers, and Basil J. Court George J. Court and David E. :Muracl, individual11y and as officers of said corporation and trading under.r the name of Court, J\lurad & Co. , or under' any other name, and respondents' representatives, agents and employees directly or through any corporate or other device, in connection with the oflering for sale, sale and distribution of rugs find floor coverings, or any other products, in commerce, as "commerce" is defined in illB Fe.deral Trade Commission Act, do forthwith cease and desist from:

1. Using the term " \"'\"001" or any other word or term indicative of wool to designate or describe any product or portion thereof which is not composed wholly of wool, the fiber from the fleeee of the sheep or lamb, or hair of the angora or cashmere goat, or hair of the camel, alpaca., llama or vicuna, which has never been l'e.claimed,cl from any woven or felted product; provided that in the case of products or portions thereof which are composed in substantial part of "'\'"001 and in part of other fibers or materials, the tenn "wool" may be used as descriptive of the wool content of the product or portion thereof if there are used in immediate connection or conjunction therewith, in letters of at least equal size and conspicuousness, words truthfully designated each constituent fiber or material thereof in the arch~T of its predominance by weight, provided further that if any fiber or materia'! so designated is not present in a quantity of five percentum or more of the total fiber ",eight of the product, the percentage thereof shall be stated. N othing herein shall prohibit. the use of the terms "reprocessed wool" or "reused wool" when the products or those portions thereof referred to are composed of such fibers. The terms "reprocessed 001" and "reused wool" as herein used are to be defined as in Sechon 2 (c) and (d) of the 'V 001 Products Labeling Act. 2. :JUisrepresenting the constituent fibers of which their products are composed, or the percentages or amounts thereof, on labels, in advertising, or ln a.ny other manner. Provided, hmvever, that nothing herpinabove contained in paragraphs 1 and 2 hereof shall re- , , Order 57 F.

lieve the respondents from their obligation to comply with the requirements of the Textile Fiber Products Identification Act, which became effective :March 3, 1960, or forbid the respondents thereafter from labeling and otherwise offering products subject to that Act in the manner prescribed thereby and rules and regulations promulgated thereunder by the Commission. 3. Using two or more sets of figures to represent the size of their products which are at variance, or in conflict, or representing directlyor indirectly the size of said products to be of larger dimensions than is the fact.

4. Using the words "Bunker 1-lill" Stoney Creeh: ::\1aple Glen or "Va.1ley Forge, or any other distinctly ..American name in advertising or in labeling to designate or describe the aforesaid products which are not. in fact made in the United States, or using any other word or term in advertising or in labeling as descTiptiye of the aforesaid products which represents, directly or indirectly, that said products are made. in a country other than the one in which they are in fact made, without clearly and conspicuously revealing in immediate connection with each of the aforesaid names, words or terms the actual country of origin of such products. 5. Using the term "braided" to describe or designate any rug which is not constructed by a braiding process, or misrepresenting in ,any manner the manner of maufactnre of their rugs. 6. Representing in any manner that. their products are of a quality comparable to domestic rugs, floor coverings, or other products unless such is the fact.

7. Hepresenting in any manner that their products are of a value comparable to domestic rugs or floor coverings retailing at a higher price unless the. merchandise to which the advertised products are compared is of a like grade and quality in all material respects and is generally available for purchase at the comparative price in the same trade a.rea, or areas, where the claim is made; or if not available, such fact shall be clearly disclosed. And, it appcarin that said agreement further provides for amending the complaint in the manner hereinafter set forth It is further ordered That the complaint be, and it hereby is amended by deleting from lines 19- , in paragraph 11 the words said core being composed of slnall cotton string," so that, as amended, the sentence of which such words now form a part shall read "The true braided rug, on the other hand, is made, by the process of strands of material being bra,ided a rounel a single or double core.

&.

STARDAY RECORDING & PUBLISHING CO., INC. , ET AL. 801 794 Complaint DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to Section 3.21 of the Coll1l11ission s Rules of Practice the initial decision of the hearing examiner shall, on the 29th day of September 1960 become the decision of the Commission; andaccordingly: It is ordered That respondents herein shall, within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with the order to cease. and desist.