Missouri-Kansas Furnace Company et al.

Text (OCR of the scan at left; may contain errors)

IN THE ~IATTER OF ~fissouri-I(ANSAS FURNACE CO~IPANY ET AL.

CONSENT ORDER, ETC., IN REGARD TO TI-IE ALLEGED VIOLATION OF THE FEDERAL TRADE coj.\Ii\nSSION ACT Docket 83.1/'/, CO1/1.1JlaJnt, Apr. 1961-Decision, Scpt. gO 196. Consent order requiring a Kansas City firm to cease using scare tactics and other unfair means to sell its furnaces, heating equipment and parts and to get repair jobs, including deceptive offers of free inspection and low-cost cleaning services, representing its sales and service men falsely as engineers, misinforming the home owner that his furnace is defective or dangerous, dismantling furnaces and refusing to reassemble them, etc. COMPLAINT Pursuant to the provisions of the Federal Tracie Commission Act and by virtue of the authority yested in it by said Act, the Federal Trado Commission, having reason to believe that the~Iissouri- Kansas Furn:lee Company, a c-orporation, and I-Inrley 1-1. Pruitt, individually and as an oflic.er of said corpornUon, hereinafter referred to as responci:ents, have violated the provisions of the said Act, and it appearing to the Commission that a proceeding by it in respect thereof 'would :MISSOURI-KANSAS FURNACE CO. , ET AL. 533 532 Complaint be in the pubJjc interest, hereby is~;lles its complaint, stating its charges in that respect as follo,,' PARAGRAPH 1. H.esponclent i'1missouri- I\:ansas Furnace Company is a corporation organized, existing and doing business under and by virtue of the laws of the State of :Missouri, with its principal office.e and place of business located at. 429 Enst. 6th Street, Trafficway, Kansas City, :Missouri.

Respondent. l-1:arley H. Pruitt is an officer of the corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent., including the acts and practices hereinafter set forth. l-1:is address is the same as that of the corporate respondent. PAR. 2. Respondents are now, and for some time last past have been engaged in the sale and distribution of furnaces, heating equipment and parts therefor to the purchnsing public, and in the repair and servicing of heating equipment.

PAR. 3, In the course and conduct of their business, respondents now cause, and for some time last past have caused, their products when sold, to be shipped from their principal place of business in the State of :Nlissouri to purchasers thereof located in the States of the United States other than the State in which the shipments originated. In the course of the repairing of furnaces, heating equipment or the parts thereof. respondents have sent their employees to repair and service such furnaces, heating equipment and the parts thereof at the homes of customers Jocated in States of the United States other than the State in which the principal office and place of business of the corporate respondent wns located, and at all times mentioned herein respondents have maintained a substantial course of trade in commerce, as "commerce" is defined in the Federal Trade Commission Act. PAR. 4. In the course and c.ondllct. of their business, as aforesaid and for the purpose of selling their prodllets or services, respondents directly and through representatives, employ many unfair and deceptive practices. Among find typical of such practices are the following: (1) Responde,nts through phone solicitations and otherwise offer flf'-(' inspection Beryiees or low cost cleaning services, thereby gaining nee-ess to home myners' heating plants or equipment. (2) Respondents' salesmen and servieemen fnlseJy represent t 11emselves or each other to be engineers.

(3) R.respondents' salesmen and servicemen falsely represent. to the. owner of a furnace or heating equipment that the. said furnace or heating equipment is defective, is not reparable, or is dangerous to use, to the extent that continued use \\-i11 result in nsphyxiation, carbon monoxjc1e. poisoning, fires or other (bmage. (4) Respondents' employees have. refw,ed to reassemble furnaces which they ha.ve. cljsmnntled or lli\\'e left them unassemhled for long 534 FEDERAL TRADE CO~Ll\IISSION DECISIONS Decision 59 F.

periods of time and have misrepresented the condition of such furnaces, and have stated to the owners of such furnaces and heating equipment that reassembling and continued use of the equipn1ent will result in gas poisoning, asphyxiation, or fires, when such is not the fact. In this connection, the employees of respondents have misre.prese.ntecl the condition of the furnaces and asserted, contrary to the fact that the con6nued use thereof would be dangerous, thereby causing the mvners of said furnaces to purchase furnaces or parts the-reof from respondents, which they would not have otherwise purchased. PAIL 5. In the course and conduct of their business at all times mentioned herein, respondents have been in substantial competition in commerce with corporations, firms and individuals in the sale, repair and servicing of furnaces, heating equipment and the parts thereof of the same general kind and nature as sold, repaired or serviced by responde.nts.

PAR. 6. The use by respondents of the aforesaid acts nnd practices in connection with the conduct of their business has had, and now has, the capacity and te,ndency to mislead and dece.ive a substantial number of the public, to cause many owners of furnaces and heating equipment, through fear of continuing to use such equipment, to discard such furnaces and heating equipment before the completion of the useful life of such products and to purchase furnaces, heating equipment and parts thereof sold by respondents, or to contract for extensive! but unnecessary repairs of existing furnaces and henting equipment.. As a result theereof, trade has been unfairly diyertecl to l'e. spondents from their competitors and substantial injury has thereby been, and is being, done to competition in commerce. PAR. 7. The aforesaid acts and practices of respondents, as herein alleged, were, and are, all to the prejudice and injury of the 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 nnd meaning of the Federal Trade Commission Act.

Ai?. Ja.?i7J38 A. B TO addzr.8. ansas City~ :JIo. ~ for respondents. and 11I1'. John lV. B'i'ookfield: JI Mr. Anthony J. l(ennedy, Jr. supporting the complaint.

INITIAL DECISION BY LEON R. GROSS, HEARING EXAl\IINEH The complaint in this proceeding issued against the above-nanwd respondents on April 5, 1961. It charges respondents with violation of the Federal Trade Commission Act by making false, misleading, and decept:lve representations in selling their furnaces, heating equipment and parts therefor, in commerce, as "commerce" is defined in tlle Fecl- MISSOURI-KANSAS FURNACE CO., ET AL. 535 532 Decision eral Trade Commission Act. copy of the complaint was served upon respondents as required by law; respondents answered the complaint; and the cause was set down for a hearing which was convened. Thereafter, respondents, through their counsel, entered into an agreement dated July 25 , 1961, which purports to dispose of all of this proceeding as to all parties without the necessity of conducting a hearing. The agre.ement has been signed by the respondents, their counsel and by counsel supporting the complaint; and has been approved by the Acting Chief, Division of General Advertising, and the Director Bureau of Deceptive Practices. Said agreement contains the form of a consent cease. and desist order which the parties have agreed is dispositive of the issues involved in this proceeding. The agreement was submitted to the undersigned hearing examiner on August 2, 1961, for his consideration, in accordance with 9 3.25 of the Commission s Hules of Practice for Adjudicative Proceedings.

Hespondents, pursuant to the aforesaid agreeme. , have admitted all the jurisdictional facts alleged in the. complaint and agreed that the record may be taken as if findings of jurisdictional facts had been duly made in accordance with such allegations. Said agreement further provides that respondents waive any further procedural steps before the hearing examiner and the Commission, the making of findings of fact or conclusions of law, and all of the rights they may have to challenge or contest the validity of the order to cease and desist. entered in accordance with such agreement. It has been agreed that the order to cease and desist issued in accordance with said agreement shall have the same force and euect as if entered after a full hearing and that the complaint may be used in construing the terms of said order. It has also been agreed that the record herein shall consist solely of the complaint and said agreement, and that said agree.ment. is for settlement purposes only nnd does not constitute an admission by respondents that they have violated the law as alleged in the complaint, This proc.eeding having now come on for final consideration on the complaint and the aforesaid agreement containing consent order, and it appearing that the order provided for in said agreement covers all of the allegations of the complaint and provides for an appropriate disposition of this proceeding as to all parties, said agreement is hereby accepted and is ordered filed upon this decision becoming the decision of the Commission pUrSHfll1t to 88 3.21 and 3.25 of the Commission Hules of Practice for Adjudicative Proceedings, and the hearing examiner, accordingly, makes the following jurisdictional findings nnd order:

1. The Federal Trade Commission has jurisdiction over the parties and the subject matter of this proceeding;

Decision 59 F.

. Respondent :Missouri-Kansas Furance Company is a corporation existing and doing business under and by virtue of the laws of the State of ~1missouri, with its office and principal place of business located at 429 1Vest 6th Street (erroneously designated in complaint as 429 East 6th Street), Trafficway, H.:ansas City, ~1missouri; 3. Respondent 1-larley 11. Pruitt. is an officer of the said corporation. He formulates, directs and controls the acts and practices of the corporate respondent. His address is the same as that of the corporate respondent;

4. Respondents are engaged in commerce as "commerce" is defined in the Federal Trade Commission Act;

5. The complaint filed herein states a cause of action against the respondents under the Federal Trade Commission Act; and this proceeding is in the public interest. Now, therefore It is fYl'de'l'ed That the :Missouri-Kansas Furnace Company, a corporation, its officers a.nd Harley H. Pruitt, individually and as an officer of the said corporation, and respondents' agents, representatives and employees., directly or through any corporate device, in connection with the sale, repair or servicing of furnnces, heating equipment or the parts thereof, or any other product, in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist 1. Representing, directly or by implication, that:from: (a) Respondents will inspect ,,-i thout charge or clenl1 a prospeetiye customer s furnace 01' heating equipment for a nominal fee unless as a matter of fact., such offer is a bona. fiele ofl'e!' to inspect or to clean such furnace or heating equipment;

(b) Respondents salesmen or servicemen are engineers; (c) .Any furnace heating equipment or parts thereof are defective not repairable or repnjrable only at extensive cost, unless such are the fa.ets ;

(d) The continued use of nny furnace, henting equipment or parts thereof is dangerous or hazardous to the health of the owner thereof or his family, due. to escaping carbon monoxide, fire 01' other cn uses unless ~mch are the facts;

(e) A furnace which has been chsmant led by respondents~ employees cannot. be reassembled and used without danger of asphyxiation, g:lS poisonjng, fires or other damage. when such is not a fad; 2. Re.fusing to immediate.Jy re.nsse.mble, at. the request of the owner any furnace which has been c1isl11nntlec1 by respollc1ents employees: 3. :L\1:isrepresenting in nny manner the condition of any furnace heating equipment" 01' the parts thereof ,,-high l1n"e been inspected by respondents 01' their employees.

HOFFMANN 'TRUSS CORP. ET AL, 537 537 Complaint DECISION OF THE COMi\IISSION AND ORDER TO FILE REPORT OF COJ\IPLIAN CE Pursuant to Section 3.21 of the Commission s Rules of Practice published Iday 6, 1955, as amended, the initial decision of the hearing examiner shall, on the 20th day of September 19H1, become the decision of the Commission; and, nccorclingly:

It is ordel' That the respondents herein shall within sixty (60) days after service upon them of this order, file with the Commission n, report in writing setting forth in detail the manner and form in