Model Home Furniture Corporation

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IN THE l\1.ATTER OF MODEL HOME F'LRNITURE CORPORATION ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 0-580. Oompla.int, Sept. 11, 1963-Decisfon, Sept. , 1963 Consent order requiring retail furniture dealers in 'Washington, D. C., to cease representing :falsely, through me of their corporate name and in ad Tertising, that their principal business was that of decorating and furnish. 612 FEDERAL TRADE CO:',Jl\lls' SIO?\T DECISIONS ComplailJt 63 F.'LC.

iug model homes and apartments and that furniture offered for sale had been obtained from model bomes; and to cease representing falsely in newspaper advertising that excessive amounts were regular retail prices or original cost" , that certain furniture was " ISH" and "completely guaranteed", and that merchandise was limited in quantity and as to time all sale.

CO::IPI,AIXT 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 reason to believe that Model Home Furniture Corporation, a corporation, and Evan Sax and Audrey Sax, individually and as officers of s8id corporation, hereinafter referred to as respondents, have violated the provisions of said Act, and it appearing to t.he Commission that a proceeding by it in respect. thereof would he in the public interest, hereby issues its complaint stating its charges in tlmt respect as follows:

PARAGRAPH 1. Respondent Model Home Furniture Corporation is 11 corporation organized, existing and doing business under and by virtue of the laws of the District of Columbia, with its principal offce and place of business located at 907 Seventh Street, N. W., in the city of 'Washington, District of Columbia. Respondents Evan Sax and Audrey Sax are offcers of the corporate respondent. They formulate, direct and control the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. Their address is the same as that of the corpm' ate respondent.

PAR. 2. Respondents are now, and for some time last past have been, engaged in the advertising, offering for sale, sale and distribution of fnl'nitul'e heme. fllrlli hing and other products to the public. PAR. 3. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their said merchandise, when sold, to be shipped from their place of business in the city of '" ashington, in the District of Columbia, to purchasers thereof located in various States of the United States and in the District of Columbia, and maintain, and at an times mentioned herein have maintained, a, substantial course of trade in said merchandise in comme.rce, as .'commerce.e:: is defined in the Federal Trade Commission Act.

PAn. 4. In the course and conduct of their aforesaid business, and for the purpose of inducing the purchase of their furniture, home furnishings and merchandise, the responc1€mts have made numerous stateme,nts in advertisements insertec1 in newspapers having a wide circulation in the District of Colmnh;a, the States of Maryland and ..

MODEL HO IE FURXITlTRE CORP. ET AL. 613 611 Complaint Virginia, and the various other States of the United States and in advertising materials disseminated and distributed by and through the United States mail.

Among and typical, but not all inclusive, of said statements are the following:

DAXISH A D MODERN FURNI'l' VRE PURCHASED FOR MODEL HOME DISPLAY Never Been Used Completely Guaranteed (Compare with Groups Sold in Stores for $1500) DECORATOR WILL Sghp FOR $799 '" * '" Interior Decorator for St:oneridge Estate, Winslow Hils, Indian Spring Homes and Kingswood, liquidating these exclusi,e styles at a fraction of their value. ISH MODERN FUHNITVRE Purchased by Decorator for Model Horne Xever Been used - Completely Guaranteed -Worth About $1500 Sell For $799 '" '" * Stored in Furniture '\Yarehouse.

We are removing the furniture of a housing project display borne in your area.

.. '" '" complete living room bedroom, and dinette suites for 399, The original cost was $700. You save over $300! * * * call me before next week since we must remove it from the home by tben "' '" * Audrey Sax, Interior Decorator )'Iodel Home Furniture Corp.

Several of tbe housing project sample homes and apartments which I have decorated are being closed. The luxurious furnishings are for sale at about half the p,rice you would have to pay in stores. * * '" Stores sell this group for about $700. I wil give you a $300 disc0'U1t! You enn have everything for $399 '" '" '" I want you to come in to see this furniture now. I have just 8 groups and I know they wil be sold by next week because the builders who own them are going to run large ads in newspapers * * * Audrey Sax Interior Decorator.

DAXISH :.10DER:\T FUR:\ITVRE Compare to Styles Offered by Stores for $1500 * * *. SALE PRICE $799.

PAR. 5. Through the use of the corporate name "Model Home Furniture Corporation" standing alone or through the use of the aforesaid statements and representations, and others similar thereto separately, or in connection 1dth said corporate name, respondents represent and have represented directly or by implication that their principal business is that of decorating and furnishing model homes and apartments.

PAR. 6. In truth and in fact:

Respondents' principal business is not that of decorating and furnishing model homes and apartments. Respondents ' principal bus4 iness is that of advertising, offering for sale and selling furniture and home furnishings at retail to the general public. Therefore, the use of the corporate name "I\Ioclel Home Furniture Corporation, standing alone, or in connection with the statements and representations set out in Paragraph 4: hereof ancl referreel to in 750-018--08-- Complaint 63 F.

Paragraph 5 hereor, and the aroresaid statements and representations alone, were and are false, misleading and deceptive. PAR. 7. Through the use of the statements and representations set ont in I\uagraph -4 hereof und otllel'S similar thereto, but. not included herein, respondents represent and hn,ve represented directly or by implication that:

(a) Furniture and home furnishings ouered for sale by respondents have been withdnuY11 or obtained from model homes or apart. ments.

(b) The higher stated price set out in said advertisements in connection with the words ;;Compare wit.h groups sold in stores for is the price at '\vhieh furniture and home furnishing groups of like grade and quality 'mre and are nsnaJJy sold at retail in the trade are,as where the representation is made, and that purch Lsers of respondent.s' mercha, nelise would realize a saving of the difference between the represent.ed $1 500 price and respondents' price of $799. (c) The higher stat.ed price set out in said advertisements in connection with the words "original cost" was the price at which the advertised merchandise had been usually and customarily sold by respondents at retail in the recent, regular course of business and that the difference bet'iycen the higher and lower price represented savings to purchasers from respondents' usual and customary retail price. (d) The higher st.ated prices set out in said advertisement.s in connection with the terms ;' worth about" and "Stores sell this group for were the prices at which the merchandise referred.d to was usually and customarily sold at ret.ail in the traue area where the representatiens were and are made, and, through the use of said amounts and the 1c3861' amounts: that the, difl'erence between said amounts repre sents a saving to the purchaser from the prices at which said merchanuise was usually and customarily sold in said trade area. (eJ Certain furniture was manufactured in the country or Denmark.

(f) Merchandise offered ror sale was unconditionally guaranteed for rm unlirnited period of time.

(g) The quantity or certain merchandise was limited and that purcha.sers Inust order immediately to obtain said merchandise. PAR. 8. In truth and in fact:

(a) Furniture and home iurnishings offered for sale have not been withdrawn or obt.ained from model homes or apartments. Such fur nitu!'€- and home furnishings have been procured from normal supply s:)Ul'ce,s such as furniture manufa,cture.rs. (b) 'The higher stated price set out in said advertisements in connection with the words cCompare with groups sold in stores for MODEL HOME FUR ITURE CORP. ET AL. 615 Complaint611not the urice at which furniture and home furnishing groups of like grade a;,d quality were and are usually sold at retail in the trade area where the representation was made, and purchasers of respondents' merchandise would not realize a saving of the difference between the represented $1 500 price and respondents' price of $7gg. (cJ The higher stated price set out in said advertisements in connedion with the words "original cost" was in excess of the price at which the advertised merchandise had been usually and customarily sold by respondents at retail in the recent, regular course of busines and the difference between the higher and lower prices did not represent savings to purchasers from respondents' usual and customary retail price.

(d) The higher stat.ed amounts set out in cOlmection with t.he words worth about" and "Stores sell this group for, were not the prices at which t.he merchandise referred to was usually and customarily sold at retail in respondents' trade area, but were in excess of the price or prices at which the merchandise was generally sold in said trade area, and purchasers of respondents' nlerchandise did not realize a saving of the difference bet.ween the said higher and lower amounts.

(e J The furnit.ure and home fUl'ishings described in said advertise,ments as "DANISH" and "DANISH :\iodern" Ivere not manufactured in the country of Denmark.

(f) The merchandise advertised as "completely guaranteed" was not. so guaranteed, and the advertisements failed to set forth the nature and extent of the guarantee and the manner in which the guarantor will perform.

(g) The quantity of merchandise for sale was not limit.ed and the oilers or said merchandise did not. have to be accepted within a limited time as adequate quantities were a\ ailable. Therefore, the statements and representations referred to in Paragra.phs 4 and 7 hereof, were and are iaJse, misleading and deceptive. PAR. 9. In the conduct of their business, and at aU times mentioned herein, respondents have been in substantial competition, in commerce with corporations, firms and individuals in the sale of furniture and home furnishings of the same general kind and character as those sold by respondent.s.

PAIL 10. Th.c use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has Iud, and now has, the capacity and tenclency to mislead members of the purchasing public into the e,floneous and mistaken belief that said statements and represen.tations ViTel'e and are true and into the purchas of sllbstantia.l quant.ities of respondents merchandise by re.n,son of sfl.id errone', OUS nncllni.stal;:e.n belief. 616 FEDERAL TRADE CO:\.f lIS'SIOK DECISIOXS Decbion and Order 63 F.

PAR. 11. The aforesaid acts and practices of respondents, as here in alleged, were and are al1 to the prejudice and injury of the public and of respondents' competitors and constituted, and now constitute unfair methods of competition in conmlcrce and unfair and deceptive acts and practices in commerce, in violation of Section fj of the Federal Trade Commission Act.

DECISION AKD 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 not.ice of said dete.rmination 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 thereafter executed an agreement containing a consent ordet, an admission by respondents of a11the jurisdictional facts set forth in the complaint to issue herein, a statement that the signing of sa.id agreement is for settlement purposes only and does not constitute an admission by respondents that the Jaw has be€n violated as set forth in such complaint, and waivers and provisions as required by the Commission rules j and The COlnmission, having considered the agreement, hereby accepts same, issues its complaint in t.he form contemplated by said agre.ement, makes the following jurisdictional findings, and enters the following order:

1. Respondent Model II-orne Furniture Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the District of Columbia, with its offce and principal place of business located at 907 7th Street, N. 'IV. , in the city of 'IV ashington, District of Columbia.

Respondents Evan Sax and Audrey Sax are offcers of said corporation, and their address is the srune as that of said corporation. Z. The Feeleral Trade Commission has jurisdiction of the subject matl.r of this proceeding and of the respondents, and the proceecling is in the public inl.rPBt.

ORDER It is ordered That respondents Cllodel Home Furniture Corporatjon, a corporation, and its offcers, and Evan Sax and Audrey Sax individually and as offcers of said corporation, and respondents agents, repl'esentatives and employees, directly or through any corpo_tate 01' other device, ill connection with the offering for sale, sale or distribution of furniture, home furnishings or othet merchandise 1\10DF:I HeJ:iE FLJTL\ nTRE CORP. ET AL. 617 611 Decision and Order to persons or firms other than hona fide exhibitors of model homes or apartments, in commerce as "conunerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: a. Using the words "Mode! Home Furniture" or any other word or words of similar import or meaning as a part of respondents' trade or corporate name.

b. R,epresenti.ng in any other manner, that respondents principa! business is that of deeorating and furnishing mode! homes and apartments.

It i8 fllrtheT oTdcTed That respondents !\fode! Home Furniture Corporation, a eorpol'fltioll, and its offcers, and Evan Sax and Audrey Sax. inc1iYiduaJ1y a.nd as offcers of said corporation, and respondents agents, repi'8sentatin:s and pmployees, directly or through any corporate or other device, in connection with the onering for sale, sale or distribution of furniture" home furnishings or other merchandise in commerce, as "commerce: is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

a. Representing, directly or by implication, that furniture or home furnishings offered for sale have been withdraw,wn or obta.ined from model homes or apartments; provided, however, that it. shan be a defense, hereunder, for respondents to establish the truth of such representations.

b. Representing, directly or by implication, through the use of the words "Compare with groups sold in stores for:: or other words or terms of similar import or mea,ning, or in any other manner: that. responde,nts merchandise is of a value comparable t.o any 'Other merchandise retailing at a higher price unless 1'e. spondents' merchandise is at least of like grade and quality in an material respects as the merchandise wit.h which it is compared and such other merchandise is generally available for purchase at. the comparative price in the SfUl1e trade area or areas where the representation is made.

c. Representing, directly or by implication, that. any saving is fLfforc1ed in tho purchase or respondents' merchandise, as compared to the purchase or another s mcrchanc1ise unless respondents' merchandise is at Jeast of Jike grade and quality in all materbl respr.ct.s as the merchandise with which it is compared and such other merchandise is generally available for purchase at. the comparative price in the same trl1cle area 'Or areas in which t.he representation is made.

0.. Dsing fhe \Words " origino.l cost" or any other words of similar import or me,aning, to refer t.o any amount which.h IS in \, 618 FEDERAL TIMDE co nn&SIOK DECISIONS Decision and Ordel' 63 F.

excess or the price at which such merchandise has been usually and regularly sold by respondents at retail in the recent, regular course 'Of their business; or otherwise misrepresenting the; respondents' lisna.! and customa.ry rcta.i selling price of EHch merchandise.

e. Using the words "worth" Stores sell this group for" or any other words of similar import or meaning, to refer to any a.mount which is in excess of the price or prices at which such merchandise is usually and. cllstomo.,rily sold in the tra,de area where the representation is made; or otherwise misrepresenting the usual and custom uy reta.il selling price or prices of such merchandise in the trade area.

f. Representing in any manner that, by purchasing any of their merchandise, customers are afforded savings amounting to the difference between respondents' stated selling pdce and any oth!:x price used for comparison with their sening price) unless the comparative price used represents the price at which,h the mcrcha.ndise is usually and customarily sold at retail in the trade area. involved, or is the price at which such merchanl1ise h,:.,;; been usually and regulnrly sold by respondents at ret.ail in the, recent regular course or their business.

g. Representing, directly or by implication, through the use of the ,,-orc1s "DANISH :lIODERN DANISH" or any other' terms Ol' words or 81111ilar import or l1eftning or in nny other ma.nner, tlmt domest.ically manufactured furniture is Hl8nnfacture,d in the count.ry of Denmark; or Inisrepresenting in any ot her manner the country of origin of respondents' merchandise. h. R.representing, directly or by implication, that merchandise is guaranteed unless the nature and extent of the guarantee, the identity of the guarantor, and the manner in which the guarantor will perform thereunder are clearly Rnd c.onspicuously disclosed. i. Representing, directly or by implication, that the quantity 01 any merchandise is limited or that said mercha,ndise must be purchased within a limited time, where an adequate supply is available.

j. Misrepresenting in any manner the source, price, value, or availability of any item of merchandise or the savings resulting to purchasers thereor.

It is further ordered That the responde.nts 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 thema.nner and form in which they have complied with this order. , ESSERMAN CO. 619 619 Complaint