House of Good Foods, Inc.

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in which they have complied with this order. IN "'HE MATTER OF HOUSE OF GOOD FOODS, INC., ET AL.

CONSENT ORDER, ETC., IK REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL 'trde CDMMISSIOX ACT Docket 0-186'. CQmplaint, July 19G2-Decisioll, JulylS, 19G2 Consent order requiring t\VO affliated sellers of freezers and foods by lieallS of a "freezer food plan, located in Pennsanken, X.J. and Philadelphia, Pa., to cease making false claims in advertising in newspnpcl' , circulars, by lacto broadcasts, etc. , to sell their products. as set ont in the order bel my. COMPLAINT Pursuant t.o the provisjolJs of tlle Federal Trade Commi sion Act and by virtue of the authority vested in it by said Act, the Federal Trade COlnnlission, having reason to believe that House of Good Foods, Inc., a corporation, House of Gooel Foods or Pennsylvania Inc. a corporation, find I\iorris J. Sa1is, individual.lly and as an offcer HoeSE OF GOOD FOODS,. INC.,. ET AL. 143 142 Complaint ()f said corporations, hereinafter referred 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. sulting its charges in that re.!;pect fis foJ1ows:

PAnAGUAPH 1. HespoudenL IIouse of Good Foods, Inc., is a corporation organized, existing and doing business under and by the virtue of the hws of the State of New .Jersey with its principal offce and place of business located at Haute 73 and Haute 130, Pennsauken, N. He,spondent lion,Se of Gooel Foods of Pellnsylyania, Inc., is a corporation organized, existing fmd doing business under and by virtue of the laws of the State of Pennsylvania with its principal offce and phce of business loc"ted at 5210 Penuway Street, Philadelphia 24, Pa. Respondent Morris J. Salis is an ollcer of said corporations. He part.icipates in the formubtion, direction, and control of the policies acts and practices of the said corporate respondents. His address is the- same, ns t.hat of respon(lent lIonsE'. of Good Foods of Pennsylvania Inc..

PAR. ::" Hespoudents are, and for some bmc last past have been engaged in the advertising, offering for sale, sale and distribution of free,zers and food by means of a so-cal1eel freezer food plan. PAR. 3. Hesponelcnts cause. t,he. said freezers and food, \Vhen sold, to be. transpolied fron') wa.rehouses in the State of Pennsylvania to purchasers Ioeated in t.he Stat.e of Kew Jersey. R-respondents maintain and at all t.times mentioned herein have maintained, a course of trade in said freezers and food in commerce, as "commerce" is defined in the Federal Tra,c1e Commission Act. Their volume of business in such 'commerce is, a.nc1 has been, subst.antial. PAR. 4. In the eOlll'Se and conduct of their business, at all times mentioned he.rein, respondents have been in substantial competition, in commerce \With corporations, firms and individual.ls in the sale of freezers, food and freezer food plans, PAR, 5, In the course an(l conduct of their business, respondents have disseminated and ea,nsec1 the dissemination of cmtain advertisements conceming tho said food and freezer food plan, by the United States ma,ils and bv -various me Hils in eOHnnel'Ce, as "commerce" is defined in t.he Federai' Trade Commission Act, including but not limited to ac1vm1jsements inserted in newspa.pers, brochures, circulars and let ters and by radio broadcasts by stations having suffcient power to carry such broadcasts across st.ate lines, for the purpose of inducing and "which were likely to induce, directly or indirectly, the purchase of food ns the term " fo()d' is defined in the Federa.l Trade Commission Complaint 61 F.

Act; and have disseminated and caused the dissemination of advertisements by various means, including those aforesaid, for the purpose of inducing and which were likely to induce, directly or indirectly, the purchase of food and freezers in commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 6. By means of advertisements clisse1ninated as aforesaid and by the oral statements of sales representatives, respondents have represented, directly or by implication:

1. That "Home Economists ' or trained food consultants will assist purchasers of the aforesaid freezer food plan in planning their food orders.

2. That purchasers receive a free "Breadwinner Life Insurance policy for the duration of their contract.

3. That because purchasers of their freezer food plan can buy their food from respondents at wholesale or reduced prices, such purchasers can purchase their food requirements and a freezer for the same or less money than they have been paying for food alone. 4. That purchasers of respondents' freezer food plan wil save enough money on the purchase of their food to pay for the freezer. 5. That the contracts of purchasers of the aforesaid freezer food plan wiJ be fmanced through banks.

6. That purchasers of the aforesaid freezer food plan are required to pay only the price of the frcezer, food, and the tax. 7. That the freezer and the food represent the total security required under the contract.

8. That purchasers of the aforesaid freezer food plan can purchase their note in advance at a substantial reduction in price. 9. That respondents wiJJ erect metal shelves for storing of food. 10. That the freezer and food are funy and unconditionally guaranteed or insured under the contract.

11. That the terms and conditions of the sale are as agreed upon and and as disclosed at the time of the sale.

PAR. 7. In truth and in fact:

I. The individuals sent to help purchasers of the aforesaid freezer food plan in planning their food orders arc not "flame Economists" or trained food consultants. They have not had suffcient or proper trajning to warrant ealling theil "110me Economists" or trained food consultants;

. Purchasers of the aforesaid freezer food p) an do not receive a free Life insurance policy;

3. The prices charged for food by respondents ocre not wholesale prices, nor are respondents' prices reduced to such an extent that pur- , HOUSE OF GOOD FOODS , INC. , ET AL. 145 142 Complaint chasers of their freezer food plan can purchase their food requirements and a freezer for the same or less money than such purchasers have been paying for food alone;

4. Purchasers of respondents' freezer food plan do not save enough money on the purchase of their food to pay for the freezer; 5. In many instances the contracts of purchasers of the aforesaid freezer food plan are financed through financial institutions other than banks;

6. Purchasers of the aforementioned freezer food plan are required to pay interest or finance charges in addition to the price of the freczer food and tax;

7. The freezer and the food do not represent the total security required under the contract. The purchasers of the aforesaid food plan are often required, lmlrnown to them at the time, to subj ect their homes to mortgage liens;

8. Purchasers are not allowed to purchase their note in Ldvance at a substantial reduction in price;

9. Respondents do not erect metal shelves for the storig of foods but merely supply the shelves for erection by the purchasers of the aforesaid freezer food plan;

10. The freezer and the food are not indy or unconditionally guaranteed or insured under the contract;

11. All of the terms and conclltious of the sale are not always disclosed at the time of the sale, and in many instances contracts are not completely filled in at the time of a side and when later filled in the terms or conditions are not the same as previously agreed to by the purchaser.

Therefore, the iLdvcrtisements referred to in paragraph 5 \were and are, misleading in material respects and constituted, and now constitute false advertisements" as that term is defined in the Federal Trade Commission Act, and the statements and representations referred to in paragraph 6 were, and now are, false, misleading and deceptive.

PAR. 8. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had, and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statement.s and representations were and are true and into the purchase of substantial quantities of freezcrs, food and freezer food plans from the respondents by rea,son of said erroneous and mistaken belief. PAR. 9. Thc aforesaid acts and practices of respondents, as herein alleged, including the dissemination by respondents of false aclvcl'- Decision and Order HI J?T. C.. tisements as aforesaid, were, and are, all to the prejudice and injury of the public and of respondents' competitors and constituted, and now constitute, unfair methods of competition in commerce and unfair" and deceptive acts and practices, in commerce" within the intent and meaning of the, Federal Trade Commission Act, and in violation of Sections 5 and 12 of said Act.

DECISION AXD OllDIm 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 intended to issue, together with a proposed form of order; and The respondents and counsel for the Commission having there,after executed an agreement containing a consent order, an a.admission by respondents of all the jurisdictional facts set forth in thc complaint to issue herein, a tatement that the signing of said agreement is for settlement purposes only and does not const.it.ute an admission by respondents that the law has been violated as set forth in such complaint, and waivers and provisions as required by the Commission rules; and The Commission, having considered the agree-me-nt., hereby ;:lccepis same, issues its complaint in the form contemplated by sa.id agreement, makes the following jurisdictional findings, and enters the following order:

1. Respondent, IIouse of Good Foods, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of New Jersey with its offce and principal place of business located at Route 73 and Houte 130 in the city of Pennsauken, State of Kew Jersey.

Respondent, House of Good Foods of Pennsylvania, Inc., is a corporation organized, existing and doing business under and by virtue of the Jaws of the State of Pennslyvani" with its offce and principal phce of business located at 5210 Pennway Street, in the city of Philadelphia, State of Pennsylvania.

Respondent lorris J. Salis is an offcer of said corpora"tions, and his address is thc same as that of corporate respondent House of Good Foods of Pennsylvania, Inc.

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.

HOUSE OF GOOD FOODS INC. , ET AL. 147 142 Decision and Order ORDER PART I It is ordered That respondents House of Good Foods, Inc., a corporation, House of Good Foods of Pennsylvania, Inc., a corporation and their offcers and Morris J. Salis, individually and as an offcer of said corporations, and respondents' agents representativ employees, directly or through any corporate or other device in connection with the offering for sale, sale or distribution of freezers, food or a freezer food plan in commerce, as "commerce" is defined in the Federal Trade Commission Act., do forthwith cease and desist from: 1. Representing directly or by implication that: (a) Such products or any part.s t.hereof are guaranteed in any manner unless the nature and extent of the guarantee and the manner in which t.hc guarantor will perform thereunder are clearly and conspicuously disclosed in immediate conjunction with any such representation;

(b) "Home Economists, trained food consultants or other qualified individuals wil assist purchasers of the aforesaid freezer food plan in planning their food orders; (c) Purchasers receive a free life insurance policy; ( d) Purchasers of a freezer food plan will receive the same or any amount of food, and 11 freezer for the same or Jess money than they have been paying for the food alone; (e) Purchasers of t.their freezer food plan can save enough money on the purchase of their food to pay for the freezer; (f) Purchasers of a freezer food plan wil have their contracis fmanced through banks unless such contracts are in fact financcd through banks.

(g) Certain charges constitute the total amount purchasers are required to pay when such amount is not the total amount purchasers are required to pay;

(h) Certain items constitute t.he total security required under a contract when in fact other security is required; (i) Purchasers of the aforesaid freezcr food plan can purchase their note in advance at a reduction in price; (j) Respondents will erect shelves or other facilities for st.oring food;

(k) The freezer or food arc fully insured 01' fully or unconditionally guaranteed under the contract. (1) Respondents sell food at wholesale prices. 148 FEDERAL TRADE COMMISSIOK DECISIO Decision and Order Gl F.

2. Obtaining purchasers' signatures on sales contracts, negoti able or non-negotiable notes or other instruments or mortgage agreements or any other type of agreements unless said contracts notes or agreements contain at that time all of the terms and conditions of said contracts, notes or agreements and unless such purchasers are fully apprised of the nature and contents of the contracts, notes or agreements.

3. Misrepresenting in any manner the extent to which respondents' prices are reduced prices or the savings realized by purchasers of a freezer food plan.

PART II It is That respondents House of Good Foods, Inc. f"rther ordered a corporation, 11ou88 of Good Foods of Pennsylvania, Inc., a corporation, and their offcers and :Morris J. Salis, individually and as an offcer of said corporations and responde.nt.s' agents, representatives and employees, directly or through any corporate or other device in connection with the offering for sale, sale, or distribution of any food or any purchasing plan involving food, do forthwith cease and desist from:

1. D,isseminating or causing to be disseminated any advertise ment by means of the united States mails or by any means in commerce, a.s "commerce" is defined in the Federal Trade Commission Act, which advertisement contains any of the representa tions or misrepresentations prohibited .in paragraphs 1 and 3 of Part I of this Order.

2. Disseminating or causing the dissemination of any advertise ment by any means for the purpose of inducing or which is likely to induce, directly or indirectly the purchase of any food, or any purchasing pla.n involving food in commerce, as "commerce" is defined in the Federal Trade Commission Act, which advertisement contains any of the representations or misrepresentations prohibited in pam graphs 1 and 3 of Part I of this Order. It is further ordered That the respondents herein sha.!l, within sixty (60) days after service upon them of this order, fiJe with the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order. , , PYRAMID PUBLICATIONS, INC. 149 Complaint