Alan Hofberg

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Ix THB AIATTER OF ALAN HOFBERG ET AL. DOING BUSINESS AS nOBAKr STEEL CO.vIPAKY, ETC.

CONSENT ORDER ETC., IN REGARD TO THE ALlJEGED v""OLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-S8. Complaint, Mar. 1902-Decision, Mar. , 1968 Consent order rClluiring a Korth Hollywood, Calif. , partnership to cease using false offers of eIlplo;yment, deceptive pricing and guarantee claims and other misrepreselitations to sell their waterless cool ware, in letters and other promotional material sent to prospective purchasers and in newspaper adver tisements.

COl\fPLAI Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Tmde Commission, having reason to believe that Alan Hofberg and Korman Best, as individuals and as copartners doing business as Hobart Steel Company and as Western StlLtes Claim Adjusters, hereinafter referred to as respondents, have violated the provisions of said Act, and it appearing to the C0l11nission that a proceeding by it in respect thereof would be in the public interest, hereby issue, its eomplajnt stating its cha.rges in that respect as follo\vs: PARAGRAPH 1. respondents Alan Hofberg llnd Norman Best are individuals and ate copartners doing bushless under various trade names including Hob"rt Steel Company and ,Vestern States Claim Adjusters. Their principal offce and place of business is located at 5653 Lankershim Boulevard, K orlh Hollywood, Calif. PAR. 2. Respondents are now, and for several years last past have been, engaged in the sale and distribution of a variety of products , , Complaint 60 F.

including waterless cook-ware, to retailers and others for resale to the public and to members of the purchasing public. PAR. 3. Respondents, in the course and conduct or their business ship their said products from their place of business in the State of California to purchasers thereof located in various other states of the United States. Respondents also ship their merchandise to public warehouses and storage companies located in various states other than the State of California for storage and sale to members of the purchasing public located in various other states of the United States. Respondents maintajn, and have maintained, a substantial course of trade in said products, in commerce, as "commerce:' is defined in the Federal Tra.de Commission Act.

PAR. 4. Respondents, in the course and conduct of their business are engaged in substa,ntial competition in COImnerce with corporations firms, and individuals engaged In the sale and distribution of waterless cookware and other products.

\R. 5. Respondents, in the course and conduct of their business and for the purpose of inducing the purchase of their said products advertise by means of form letters, circulars and promotional material, sent to prospective purchasers, and by me,ans of advertisements inserted ill ne\fspapers and other periodicals of general circulation. PAR. 6. Among and typical, but not a1l inclusiv81 of the statements and representat.ions a.appearing in said advertisements are the fol- 1o\fing:

In the Ardmore, Oklahoma DAILY ARDMOHEITE" issue of April 4, 1950, under the classified heading: "HELP-MALE & FE- MALE" :

COOK\VARE Waterless 17 pc. Set 3-ply Stainless. Sells for $199. Your snmple set $48.60 . . . .

In the Columbia, Missouri THIBUKE" issue of August 10, 1950 under the classified heading: "ARTICLES FOR SALE" ::IUST LIQUIDATE Brfnd new 17 piece stain1e:;s steel waterless cookware sets. Sells for $200, take $45.00. See at Benton ::Io,jng & Storage. PAR. 7. Among and typical, but not all inclusive, of the statements and representation set forth in respondents' form letters circulars and promotionuJ material, are the following: HE: UNCLAIMED FREIGHT Dear Sir: This letter is being sent to you in regards to an unclaimed shipment of stainless steel waterless coolnvare sets now being held at C ame of local warehouse) . . . this shipment can be released to you for the C. D. balance only. These sets are sold exclusively on The-Ilome-Dinner-Party- Plan for $199.50 . . . This entire shipment has been released as UNCLAIMED FREIGHT for $45.00 per set. . . . HOBART STEEL CO. , ETC. 461 4S9 Complaint CLAIM #574036 ACCO\J).T: HOBART STEEL Camp ANY Gentlemen: We have on hand at our Los Angeles ,varehouse 2 J78, cartons of stainless steel waterless cooJnvare . . . These sets must be disposed of immediately to settle a claim against Hobart Steel Co. In the past, unclaimed sets. . . were dig. posed of through transfer and storage houses by placing a small ad in the classified section of their local newspaper . . . (There is set forth \vhat purports to be a suggested form of advertisement, under the classified heading: FREIGHT DISPOSAL. . . Sells for $200. Sacrifice for S65 . . . ) This is Hobart Steel Company s finest. . . and carry a full guarantee from the manufacturer. 'these sets are available for immediate delivery at $35.00 per set. (Signed) Arnold Whittaker 'VESTERK STATES CLAIM ADJUSTERS. PAll. 8. Through the usc and by means of the foregoing statements and others of similar import not specifically set forth herein, respondents represented, and now represent, dire,ctly or by implication: (a) That respondents were soliciting for prospective employees. (b) That said products are distress merchandise and must be sold and were from a business in the state of liquidation. (c) That said products were unclaimed freight and would be sold for the balance club for freight or storage charges thereon. (d) That said products are usually and customarily sold by respondents for $199. 50 (or $200.00).

(e) That said products were being offered at a special reduced price of$"J5.00 (orof$35. , or$48.60).

u:. 9. The aforesaid statements and representations atc false misleading, and deceptive. In truth and in fact: (a) Hespondents were not soliciting for prospective employees and hA.ve not employed persons responding to said advertisements. To the contrary respondents \'\ere soliciting for sales of thclr said products.

(b) The said products were not distress merchandise and respondents did not have to sell them, nor were such products from a business in the state of liquidation. To the contrary, respondents sold substantial quantities of such products in this manner. (c) The price at which respondents offered such sets of cookware did not constitute only the balance dne for freight and storage charges on each set. To t.he contrary, such sets were being offered at prices in excess of respondents' freight and storage costs. (d) Said products have never been sold by respondents for $199. (or for $200.00). To the contrary, the said prices are greatly in excess of the prices usually and customa.rily charged by respondents for such products in the usual course of their business. (e) Said products were not being offered for sale by respondents at spec.in.l or reduced prices. '10 the contrary, the said prices were 462 FEDERAL TRADE COMMISSION DECISIO:\TS Complaint 60 F.

thoso usually and customarily charged by respondents in the usual course of their business.

PAR. 10. Respondents, in the course and conduct of their business as afore,said, sent brochures and other promotional material to prospective purchasers of their said products. Among and including, but not limited to, the said material sent by respondent.s is a brochurewhich illustrates and describes their waterless cookware. Said brochure purports to depict respondents' guarantee form, utilizing such type and format that the only conspicuous word in tJ1e said brochure is the word "GUARANTEE". Said brochure also cont.ains thc statement: "FACTORY GUARANTEE and full color recipe and instruction book included." Furthermore, certa.in of respondents' fann letters, as aforesaid, contain reference to a "full guarantee from the manufacturer The actual guarantee form or document included with the sets of watcrle,ss cookware, when sold and distributed by respondents as aforesaid, sets forth under the word "GL:ARAKTEE" the following: This Vlaterless Cookware set is hJLlaranteed to be free of manufacturing defects. one of the other matter set forth in the said form or otherwise provided to purchasers of said products, sets forth the provisions, terms, conditions or limitations of such guarantee. PAR. 11. The said statements, representations, and depicdons COll- CCI'Filing respondents ' guarant.ee are false, misleading, and decept.ive. The guarantee form or document furnished to purchasers of respondents' said products docs not set forth the nature or extent of any guarantee nor of any limitations or conditions upon such guarant.ee. Furthermore, neither the name of the guarantor nor the manner in which the guarantor undertakes to perform under said guarantee are disclosed therein.

PAR. 12. By the aforesaid practices, respondents place in the hands of retailers and others means and instrumentalities by and through which they may mislead the public as to the nature of and the usual and customary prices of the said products. PAR. 13. The use by respondents of the foregoing false and misleading statements, representations and practices has had, and now bas, the capacity and tendency to mislead and deceive a substantial portion of the purchasing public into the mistaken and erroneous belief that such statements and representations were, and are, tnm and to induce a suhstantial portion of the purchasing public, because of such mistaken and erroneous beliefs, to purchase such products. PAR. H. The aforesaid acts and practices of respondents, as herein alleged, were, and are, a11 to the prejudice and injury of the public HOBAHT STEEL CO., ETC. 463 459 Decision and Order and of respondents' competitors and constituted, and now constitute unfair methods of competition, in commerce, and unfair acts and practices, in commerce, in violation of Section 5 (a) (1) of the Federal Trade CQmmission Act.

DECISION AND ORDER The Commission having heretofore determined to issue its complaint charging the respondents named in the caption hereof with violation of the Federal Trade Commission Act, and the respondents having been served with notice of said determination and with a copy of the complaint the Commission imended to issue, together with a proposed form of order; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by respondents of alj the jurisdictional facts set forth in the complaint to issue herein, a statcment that the signing of said agreement is for settlement purposes only and docs not constitute an admission by respondent.s that the law has been violated as set forth in such complaint, and waivers and provisions as required by the Commission s rules; and The Commission, having considered the agreement, hereby accepts same, issues its complaint in the fonll contemplated by said agreement makes the following jurisdictional findings, and enters the following order:

1. Respondents Alan Hofberg and Norman Best are individuals and are copartners doing business under various trade na,roes including HoblLl't Steel Company and Western States Claim Adjusters. Their principal ollice and place of business is located at 5653 Lankershim Boulevard, Korth Hollywood, Calif.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered That respondents AJan Hofberg and Norman Best as individuals or as copartners doing business as Hobart Steel Company, Western Slates Claim Adjusters, or under any other trade name or names, and respondents' representatives, agents, and employees, directly or through any corponlte or other device, in con. nection with the ofiering for sale, sale, or distribution of waterless cookware or any other products, in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication: 464 FEDERAL TRADE CO:iLVIISSIQN DECISIOKS Complaint 60 F.

1. (a) That employment is being offered, when in fact the purpose or effect of such representation is the solicitation of sales of such products.

(b) Tlmt such products are distress merchandise, or must be sold or arc from the stock of a business in the state of liquidation. (c) That such products are unclaimed freight, or that they are being o:1Icrecl for the balance due for freight, storage, or other charges thereon.

(d) That any amount is respondents' usual and customary price of Inerchandise when it is in excess of the price at which the merchandise has been usually and customarily sold by respondents in the recent, regular course of business.

(e) That any price is a reduced price unless it constitutes a reduction from the price at which respondents have usually and customarily sold such merchandise in the recent regulnr course of their business. (f) That such products arc guaranteed, unless the nature, extent terms, and conditions of such guarantee, the name of the guarantor and the manner and form in which the guarantor will perform thereunder, are clearly set forth.

2. Placing in the hands of others the means and instrumentalities by and through which they may mislead the public as to any of the matters set forth in paragra ph 1 above.

It is That the respondents herein shall, within further ordered sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner