Halsam Products Company

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IN THE J\IATTER OF HALSA I PRODUCTS CO IP AXY CONSENT ORDER, ETC. , IX REG..\RD TO THE ALLEGED VIOL.-\TION OF THE FEDERAL TRADE CO::DIISSIQX ACT Docket C-690. Complaint, Jan. 1964-Dccision, Jan. 1964 COIlf'ent order requiring a Cbicngo distributor of toys find rel:lted prodnrts, to cease misrepresenting the compoIlent parts in its toy construction set American Log. " in victorial representations, lalJeling, aud nc1yertisemrnts in catalogs.

COMPLAI;\"- 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 IIalsnm Products Company, a corporation, hereinafter referred to as respondenl has violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof ,,' ould be in the public interest, hereby issues its complaint stating its charges in that respect as follows:

PAR"\GRAPH 1. H.respondent Halsam Products Company 1S a corporation, organized, existing and doing business under and by virtue of the laws of the State of Illinois, with its principal oflce and place of business located at 3610 Touhy A venue, in the city of Chicago, State of Illinois.

PAR. 2. Respondent is now, and for some time last past has been engaged in the advertising, offering for sale, sale and distribution of toys and related products, including a toy designated " \.me.rican Logs, to dist.ributors and retailers for resale to the public. PAR. 3. In the. course and conduct of its business, respondent now causes, and for some time last past has caused, its said toy an(l related products, illcluding its said "American Logs . "ben sold to be shipped from its place of business in the State of Illinois to purchasers thereof located in various other Stat.es of the lTllited Comvlain t U4 F.

States and ill the District of Columbia, an(l maintain, and at all times ment.ioned herein has mainta.ined, a substantial cour :e of trade ill said products in commerce, as "commerce" is defined ill the Federal Trade C01nmi.ssion Act.

PAR. 4. In the course and conduct of its business, and for the purpose of inducing the purchase of its product designated "American Logs, respondent has made certain pictorial representations with respect thereto in labeling and ill advertisements published in catalogs of interstate circulation. Typical, but nol all iuclusi \' , of such representations is the use of a picture of a western cabin in the labeling on the containers and the USe of a picture of said western cabin in advertisements in catalogs. (See exhibits A and D. -\H. 5. Through the use of the aforesaid pictorial representations awl others of similar' lrnpol't but not specifica1Jy 1'c1C1Ted to herein, respondents have represented, directly or by implication: (1) That the component parts in the containers of said "American Logs" include a ridge pole a:1cl include roof planks which are grooved.

(2) That from the component parts in thc conte.iners of said American Logs:: there may be made a 1\estern cabin as picturcd on the containers and in the advertisements, PAR. 6. In truth and in fact:

(1) The component parts in the containers of said "American Logs" do not include a ridge pole nor do the,y include roof phmks which are grooved.

(2) In certain sized containers of said "American Logs:' there are not suffcient or adequate parts to make the \'estern cabin as pictured on the containers and in the advertisements. Therefore, the representations re.ferred to in Paragraphs 4 and hereof are false, misleading and deceptive. PAR. 7. In the eon duct of its business at all times mentioned herein, re ,pondent I-Ialsam Products Company has been in substantia.l competition, in commerce, "\with corporations, firms and incliyidnals in the sale of toys and related products of the same general kind and nature as that sold by respondent.

PAR. 8. The use by respondent of the aforesaid false, misleading and deceptive representations and practices has had, and no1\ has the capa,city and tendency to Inisleacl members of the purchasing public into the erroneous and mistaken belief that said representations were, and are, true and into the purchase of substantial quantities of the aforesaid product by reason of said erroneous and mistaken bcJief.

" Pktoria. f'xhilJits A Dn(1 n are omittCll in prlr.ting. HALSAM PRODl:CTS CO. 351 Order PAn. 9. The aforesaid acts and practices of respondent, as herein o1Jeaed were and are. all to the udice and in urv of the public . 0 and of the respondent's competitors and constituted, and now constitute, unfair methods of competition ill commerce R,nd unfair and deceptive acts and practices in commerce, in violation of Section 5 of the Federal Trade Commission Act.

DECISIO)1 AXD ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter "ith a copy of a draft of complaint which the Bureau of Deceptive Pra.ctices proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent "ith violation of the Federal Trade Commission Act; and The respondent and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of a1J the jurisdictional facts set forth in the aforesaid draft of complaint, a. statement tllat the signing of said agrcement is for settlement purposes only and does not constitute an admission by the respondent that the law has been violated a.s alleged in such complaint: and waivers and provisions as required by the Commission s rules; and The Commission, having reason to believe that the respondent has violated the Federal Trade Commission Act, and having determined that complaint should issue stating its charges in that respect, hereby issues its complaint, accepts said agreement, makes the following jurisdictional findings and enters the follo"ing order: 1. Respondent Halsam Products Company, is a corporation organized, existing and doing business under and by virtue of the laws of the State of Illinois, with its offce and principal place of business located at 3610 Touhy Avenue, in the city of Chicago, State of Illnois.

2. The Federal Trade Commission has jurisdiction of the sub ject matter of this proceeding and of the re,spondent, and the pro ceeding is in the public interest.

ORDER It i8 ordered That respondent Hal sam Products Company, a corporation, and its offcers, representatives, agents and employcBs directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of toys or related products 352 FEDERAL TRADE COMMISSION DECISIOKS Complaint 64 P.

in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: Representing, by use of any illustration or depiction purporting to ilustrate, depict or demonstrate any toy or related product or the performance thereof, or representing in any other manner, directly or by implication, that any toy or related product contains a component or performs in any manner not in accordance with fact.

It is furthe1' ordered That the respondent herein shall, within thesixty (60) days after service upon it of this order, file ,,-ith Commission a report ill writing setting forth in detail the manner and form in which it has complied with this order. IN Tile l\ATIER OF ASSOCIATED SEWnG SUPPLY CO. ET AL.

SEXT ORDER , ETC.! I REGARD TO THE ALL:EGED VIOLATION OF THE FEDERAL TRADE CQJ,DIISSIOX ACT Docket C 6S1J. COlJjJ/(tfnl, Ja.n. 1964-Dccision1 , Jan. 19G!/' Consent order requiring retailers of sewing macbines in St. Paul, :'Iinn. , to cease using bait ad,ertising, false pricing and savings claims and other decep tive practices to sell their sewing macbines. IPLAINT Pursuant to the provisions of the Federal Trade Commission Act the Federaland by virtue of the authority vested in it by said Act, Trade Commission, having reason to believe th tt Associated Sew"ing Supply Co., a corporation, and Russell Hamilton, individually and as an offcer of said corporation, hereinafter referred to as respondand it appearing to ents, have violated the provisions of said Act, the Commission that a proceeding by it in respect thereof w' ould be in the public interest, hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent Associated Sewing Supply Co. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Minnesota, with its principal offce and place of business located at 139 North Concord Street in the city of South St. Paul, State of Minnesota. R.respondent, Russell Hamilton, is an offcer of the corporate respondent. He formulates, directs and controls the acts and prac- ASSOCIATED SEWING SUPPLY CO. ET AL. 353 352 Complaint tices of the corporate respondent, including the acts and practices hereinafter set forth. His address is the same as that of the corporate respondent.

la.st past have PAR. 2. Respondents are now, and for some time been: engaged in the advertising, offering for sale, sa.le and distribution of sewing machines 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 saiel prodbusiness in theuct, when sold, to be shipped from their place of State of J\Iinnesota to purchasers thereof located in various other States of the 1Jnited States, a,nd maintain, and at all times mentioned herein hate maintained, a substrmtial course of trade in said product in commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 4. In the course and cond UDt. of their busine, and for the purpose of inducing the purchase 01 their product, respondents haxe made statements and representations with respect thereto in direct mail advertising and through other advertising media. By and through the use of such statem nts and representations, and others of similar import but not specifically set forth herein, and through oral statements made by their salesmen, respondents ha.ve represented, directly or by implication:

(1) That tl1ey were making a bona fide oller to sell repossessed sewing machines at the prices and on the terms stated. (2) That sewing machines or other product or products would be awarded as prizes to persons declared winners in contests conducted by respondents and described on cards sent through the mails. (3) That a 1962 Heavy Duty Sewing Machine would be given to a person selected to receive such machine, and that the machine would cost such person absolutely nothing, with the condition that the person must purchase a cabinet for it at respondents wholesale price in order to receive said mae-hine free. (4) That sewing machines offered for sale by respondents were made and manufactured by the IIamilton Sewing ::iachine Company. (5) That the said Hamilton Sewing Iachinc Company was affliated and associated with the Hamilton Beach Appliance Co" thereby representing and implying that such affliation and assoeiation 'vas with a )\ell-known, reputa,ble company of hi.gh standing in the business community.

(6) That the prices they represented to be retail prices were the prices at which the sewing machines had been usually and customarily sold by respondents at retail ill the recent regular course of business and that the differences between said prices and the 354 FEDERAL TRADE cO:\I:,nSSION DECISION"S C0U11Jlaiut G4 F, lower prices at ,,-which such sewing machines were sold b r respondents represented savings to purchasers from respondents usual and customary retail prices.

(7) That Associated Sewing Supply Co. had 3'2 years of sc,,-ing machine history\ thereby representing that respondents had been in the sewing machine business for thirty-two years. PAR. 5. The aforesaid representations are false misleading and decept.ive. In truth and in fact:

(1) The offers to sell repossessed se"\\ing machines at the prices and on the terms stated in said statements and representations were not genuine or bona fide offers but were made for the purpose of obtaining leads to persons interested ill purchasing said products. Aft.er obtaining such leads, respondents or their salesmen called upon such persons at their homes, and then aad there disparaged the advertised product and instead attempted lo sell and did sell dHferent and more expensi\'e sewing machines. (2) Respondents did not conduct contests or award prizes to persons decla.red winners in contests conducted by respondents. Such contests were merely schemes to obtain leads. Almost everyone entering such contests was awarded a discount on the purchase of a new se-wing machine. These discounts were 1alueless as the recipients were charged the usual and regular price by the respondent for any sewing machine they may have purchased. In fact, in many instances the salesman calling 1\ould notify such persons they had "won" a prize in order to gain entry but would subsequently notify them that they had merely won a discount off the purchase priG3 of a new sewing machine.

(3) Respondents did not offer to give, or give., a. se ing machine to a person select.ed to receive such machine 50 as to cost absolutely nothing, with the condition that th person must purchase a cabinet for it to receive said machine free. Respondents made such Oller only to secure leads. Upon exhibiting the machine to be given on condition that a cabinet be purcllased, respondents' salesmen disparaged such machine, and attempted to and did sell difi'erel1t and more expensive sewing machines.

(4) Se,ving lnac-hlues offered for sale by respondents "\were not made and manufa.etured by the Hamilton Sewing l\lachille Company. (5) The Hamilton Sewing Machine Company which was represented to be the maker or manufacturer of sewing ma.chines o:Jered for sale by responde-nts is nonexistent, and therefore was not, and could not be, aEsoeiated or affliated with Hamilton Beach A ppliance Co., or any other compa.ny.

(6) The prices represented to be retail prices were in exceEE of the prices at which the sewing machines had been usually and cus- ASSOCIA'I' ED SE ;VIXG SrpPLY co. ET AL. 355 352 Derision tOlnarily sold by respondents in the recent regular course of business and the differences between the prices represented to be retail prices ancl the lo"\yer prices flt which such sewing machines "\were sold by respondents did not represent savings to purchasers from re?ponclents' usual ancl customary retail prices. (7) Associat.ed Sewing Supply Co. did not have 32 years of sewing machine history, and respondents have not been in the sewing machine business for thirty-tlyo years. Respondents had not been in business for more than seven years in 1962. Therefore, the statements and representations referred to and set forth in Paragra.ph 4 were and are false, misleading and deceptive. PAIL 6. In the conduct of their business, at all times mentioned herein, respondents have been in sul tant.ial competition in commerce, with corporations, firms find individual.1s ill the sale of products of the same general kind andnat.ure as those sold be respondents. 7. The use by respondents of the aforementioned false misleading and deceptive statements, representations and practices has had, and now has, the capacity and tendency to misJeacl members of the purchasing public into the erroneous and mistaken belief that said statements and representations were and are true and into the purchase of substantial quantities of respondents' products by reason of said erroneous and mistaken belief. PAR. 8. The aforesaid acts a.nd practices of respondents. ns herein alleged, were and are all to the prejudice and injury of the public find of respondents' competitors and constituted, and now constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce, in violation of Section 5 of the Federal Trade Commission 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 1with 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- Riter executed an agreement containing a consent order, an admission by respondents of all the jurisdictional facts set forth in the complaint to issue herein, a statement that the signing of said agree. ment is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as set forth 356 FEDERAL TRADE COMMISSIO DECISIOKS Order 6.4 F. in such complaint, and waivers and prOVJSlOllS as required by the Commission s rules; and The Commission, having considered the agreement, hereby accepts same, issues its complaint in the form contemplated by said agreement, makes the following jurisdictional findings, and enters the following order:

1. Respondent Associated Sewing Supply Co. is a corporation organized, existing a.nd doing business under and by virtue of the laws of the State of Minnesota, with its offce and principal place of business located at 139 Korth Concord Street in the city of South St. Paul, State of :.Iinnesota.

Respondent Russell I-Iamilton is an offcer of said corporation and his address is the same as that of said corporation. 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.

oHDEn It is ordered That Associated Sewing Supply Co., a corporation and its offcers, and Russell I-Iml1ilton, individually and as an offcer of said corporation, and respondents' agp,nts, representatives and employees, directly or through any corpora,te or other device, in connection with the offering for sale, sale or distribut)on of sewing machines or other products, 1n commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cea:'e and desist from:

1. Using in any manner, a sales plan, scheme or device wherein false, misleading or deceptive statements or representations are made in order to obtain leads or prospects for the sale of merchandise or services.

2. Discouraging the purchase of, or c1ispa.raging, any merchandise or services which are advertised or offered for sale. 3. Representing, directly or indirectly, that any merchandise or services arc offered for sale when such offer is not a bona fide offer to sell said mercl)andjse or services. 4. Representing, directly or indirectly, that se"\ving mac11ines offered for sale by respondents arc made or manufactured by any persons, firm or corporation other than the true manufacturer.

5. Representing directly or indirectly, that responde,nts, or any business company 01' organization owned or controlled bv them, is affhatcd or associated wit.h any other business con 357 THE TOW HOUSE ) IXC. ) ET AL. 352 Complaint pany or organizat.ion with which the respondents are not actl1ally associated or affliated.

6. Representing, directly or indirectly, that: (a) Any amount is respondents' usual and customary retail price of merchandise when it is in excess of the price or prices at which such merchandise is usually and cust0111regular arily sold by respondent at retail in the recent, course of their business.

(b) Any saving from respondents' usual and customary retail price is afforded to the purchasers of respondents merchandise unless the price at which it is offered constitutes a reduction from the price or prices at which said merchandise has been usually and customarily sold by rcspondents in the recent, regular course of their business. 7. :Misrepresenting, by means of comparative prices, or ill any other manner, the savings available to purchasers of respondents, merchandise.

8. Representing, directly or indirectly, that respondents had been in the sewing machine business prior to the year 1955. It is furthe1' ordered That the 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 compJicd with this order.