Retailers Marketing Guild, Inc.

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IN THE MATTER OF RETAILERS )IARKETIKG GUILD, INC., ET AL.

CONSEKT ORDER , ETC" IN REGARD TO THE ALLEGED VIOLATIO OF THE FEDERAL TRADE COMMISSION ACT Docket 0-704. Complaint, Feb. 1964-Decision, Feb. 5, 1964 Consent order requiring three associated Chicago distributors of various articles of merchandise to cease such unfair practices as supplying credit furniture and jewelry stores with "traffc builders -consisting of adver. , 518 FEDERAL TRADE CO IMISSIOX DECISIONS Complaint 64 F.

tising brochures and proofs thereof, layouts and other advertising mate. rials-to encournge ('nstollers to open and use credit accounts, falsely representing l xcesi,iyp amounts to be the usual retail prices and their "Sale prices to be l'erlllctilllS therefrom, and making various other misrepresentations Concerning the cOllparatiye merits of their product.' free" gifts C1lhl guarantees.

CO)fPLAD,TT 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 Retailers IVCarketing Guild, Inc." Hetailers Advert.ising Se.rvice Inc., and :Mayfair lll'chasing, Incorporated, each a corporation, and )Jauriec D. Cramer, Alvin Lev)\ and George Ross, individually and as officers of saiel corporations, hereinafter referred to as respondents, ha\' 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, st::ting its charges in that respect as follows:

PARAGRAPH 1. Respondents Retailers :VIarketing Guild, Inc., Retailers Advertisi.ng Service, Inc" and l\Iayfair Purchasing, Incorporated. are corporations organized, existing and doing business under and by virtue of the laws of the State of Illinois, with their principal offces and places of business located at the :Vlerchandise :\lart, Merchanrhse Mart Plaza, in the city of Chicago, State of Illinois. Hespondents I\Iaurice D. Cramer, Alvin Levy, and George Hoss are omceTs and directors of each of the respondent corporations. They formulate, direct and control the policies, acts, and practices of the said corporate re,spondents, including the acts and practices hereinafter set forth. Their address is the same as that of thc corporate respondents.

PAR. 2. Respondents are now, and for some time la.st past lmve been, engaged in the offering for sale, sale and distribution of various articles of merchandi.se, such as furniture, home furnishings, electrical and other household appEances, je,,'elry, watches, clocks, cookware, dinnerware, tableware, and luggage to retailers and dealers for resale to the pubhc.

Respondents are also now, and for some time last past have been engaged in the composing, or causing to be composed, of advertising broc.hures, proofs of the foregoing, la.youts, other advertising materials and the offering for sale, sale and distribution of said advertising materials to the said retailers and dealers for t.their nse in pro oting the sa)e of t.he aforesaid merchandise in their respective . . .

RETAILERS ?"lAHKETIKG Gl, lld, INC. ) ET AL, 519 517 Complaint trade areas, The said aclyertising materials offered for sale, sold and dlstributed by respondents are published and circulated by the said retail dealers, with the retail dealers' name and address imprinted thereon, and are primarily designed and utilized as " traffc builders to encourage cust.omers to visit credit furniture and jewelry stores and to open and use credit accounts, PAR. :,. In the course and conduct of their business, the respondents now cause, and for some time last past have caused, their said merchandise and adveTt1sing materials, when sold, to be shipped from their place of business in the State of Illinois and from other sources of supply in various States of the United States to purcha,sers thereof located in "'trious other States of the United States other than the State in which the shipment originated, and maintain, and at all times D1entioned herein, have maintained, a substantial course of trade in sajc1 merchandise and advertising materials in commerce as \;commerce" is defined in the Federal Trade Commission Act. PAR. 4, Respondents, in the course and conduct of their business and for the purpose of inducing the sale of their merchandise, have engaged in the practice of supplying their customers, who are retail deajers with advertising material, proofs, Jayouts, and other printed matter, containing various statements and representations. Typical but not all inclusive, of the said statements and representations, are the following:

Save % Enjoy deluxe sleeping comfort! Englander Air conditioned mattress Regular $59.

X 0\'" only $39. H5 '" '" * Xever before at this low price '" '" '" $19, 95: Decorated Melmac service for 8 '" * ..

Unbreakable heavy quality Sale price $19.

Regular $29.95 " '" '"

1f3 011 during this, ale These Imperial Watches. . .

$24.88 .. .. '" Yes! '" '" '" Hi- poster Te:"ter bed ,,,ith Canopy top Specially priced! $69.

. . . ., .. ..

520 FEDERAL TRADE COML\fISSIOK DECISIO Complaint 64 F.

Special $179 pc. walnut dining room By famous Stanley'" '" '"

At this special group-saving low price! Kl'oehler nylon and foam pc. sectional or deluxe 2-pc, suite Your choice $199 :F'arnous Kroehler now at special sale prices '" Decorator cabinet Sale priced $14.88' K ew all steel cabinets'" '" '"

Xevcr before at this low price! ! ! .. '" '" $29, 95 '" '" '"

Sale! Beveled edge Venetian mirrors liDconditionally guaranteed for 10 years '" " .. 30" X 2011 $7,99 .. '" '" * '" "'Mirror automatic electric percolator '" '" "'Only during this sale so low priced'" '" '" $8.88 '" * "'Fully guaranteed" '" '"

Complete 50-pc. dinnerware 11.. '" $19.88 '" '" '" :\Iade to sell for $39.88! Save $15.00! Free bonllS! This exquisite coffee-tea pot included at no extra cost! '" '" '" "- Tree and * '" '" pole lamps ::ot $30 Ii '" '" Not $25 '" '" '"

But only $19.

)"lovie outfit'" '" ..

Xe"ler before at this low price * '" ..

$119.95 '" '" '" Compare with ensemble sellng at $179, 95 '" '" '" 2 years free film developing 7 added free bonus gifts'" '" '"

Including instruction books add guarantee (Illmtration of tables, commode, and chest) Luxurious imported marble- Yout' choice'" .. . Any piece * * '" $39.88 '" "' * Compare at $79.

'" '" '" Two for one Super bonus offer! . ..

50-pc, stainless tableware .

RETAILERS MAHKETr: ,W GUILD , r: TC' ET AI, ;j:!J 517 Complaint Melmac 47-pc. .. .. II Dinner service '" '" ..

All 97 pieces sale priced $29.88 '" '" '"

Lifetime guarantee 2 years free film developing'" '" ..

7 added free bonus gifts'" .. '"

Including instruction books and guarantee $8.88 * '" '" Fully guaranteed AU 97 pieces sale priced $29.88 .. .. ..

Lifetime guarantee 25 jewels'" '" ..

What a buy! .. .. .

25 jc\vel genuine Swiss movement Imperial'" '" '" with reservoil A " '" '" waterproof, dustproof, shockproof and'" '" '" guarantee! Imperial Watch and our store Guarantee these watches against Manufacturers s defects'" '" '"

'" '" '" Bulova Surf King'" .. ..

Your choice $24,75 . . '"

Waterproof* , unbreakable mainspring, shock resistant" . .. .When case, crystal and crown afe intact.

'Vater resistant watches P AH. 5. Through the use of the a.foresaid practices, respondents have represented, and have placed in the hands of retailers thc means and instrumentalities of representing, directly or by implication that:

1. The higher stated amounts in connection with thc representations "save I/.'3 * * * Regular $59, , N mv Only $38,95 for Eng- Jander mattresscs': and " Never Before at this Lmv Price * * * S19. , ,were * '" * Sale Price, 819.95 R.regular 829.95:' for I\1elmac Service the prices at which the said articles had been usually and customarily sold at retail by :mid retailers in the recent regular course of their business and in connection with tile representation 1j3 OJ) During This Sale * * * $24,88'1 for I1nperial watches, the usual and regulrll 224-069-- , , , ,, Complaint 64 F.

price of said watches of said retailers in the recent rco-ula-r course of their business had been reduced by one-third, and that the differences between the higher and lower prices or said "% off" represented savings to purchasers from the respective retailers' usual and CllStomary prices at retail for said articles. 2. The price amounts set forth in said advertising material in connection with the representation "Special11y pric,ed $69.00" for Tester Beds Special $179 for 'Walnut Dining Room Suites Yom Choice $199 * * * Now at Special Sales Price" for Kroehler Sectionals Sale Priced 814.88" for Decorated' Cabinets Xe\' Before at This Low Price! * * * $29.95" for Steel cabinets Sale 99" for Venetian Iirrors and "Only During this Sale So Low Priced $8,88" for percolators, constituted actual and signiiicant reductions from respondents' retailers usual.l and customary selling prices at retail of the said merchandise in the recent regular course of their business and that said recluc60ns represented savings to the purchasers of said merchandise.

3. The higher stat.ed amounts set forth in said adve.rtising material in connection with the representation "$19. 88 * * * fade to sell for 839, 88 for Dinnerware and " Not S30 Not $25 But Only $19.95" for tree and pole lamps represented the general prevailing prices in the trade areas where the representations were made and the dif!'erences between the higher and lower prices represented savings to purchasers from said trade armL prices, 4. The marble top tables, chest and commode advertised at $39. are comparable in value to products of a like grade and quality in an material respects usually and regularly sold at a, retail price of $79.50 in the trade area or areas where the representation is made and that purchasers of said merchandise from respondents' retail dealers would realize a saving of the difference bet\\een the represented $79.50 price and said retail dealers ' price of $39.88- The movie outfit advertised at a price of $119.95 is compara.bie in value to ensembles of like grade and quality in an material respects usual11y and regularly sold at a retail price of S179.95 in the trade area where the representation is made and that purchasers of said merchandise from re,sponclents' retail dealers would realize 1 saving of the difference between the represented $179.9;') price und said dealer s price of $119.95.

5. In connection with the sale of t11e movie outfit: that seYE:Tl (7) added bonus gifts win be given "free, that 1S , as a gift 01' grat.uity without cost to the purchaser.

, , , , RETAILERS MARKETING GUILD , I:\C. , ET AL. 523 517 Complain.t 6. The 47 piece set of Melmac dishes and the 50 piece set of stainless steel tableware are being offered for sale for the usual price of one of the sets of said merchandise.

7. Certain merchandise is " fully guaranteed", that is, without limitation, condition or quaEfication for an unlimited period of time. Uther merchandise is offered for sale with a "lifetime guarantee unconditionally guaranteed for 10 years, that is, the merchandise so described was guaranteed for a lifetime or a definite period of time without any limitation, condition or qualification, other than that indicated in the advertisement.

8. Certain watches are waterproof water resistant, shockproof, or shock resistant in every respect, without qualification or limitation. 9. Imperial watches advertised at $24.88 are equipped with a device called "Reservoil" and contain 25 jewels, each of which jewel is functional and protects against wear and friction by providing a mechanical contact with a moving part at a point of wear. PAR. 6. In truth and in fact:

1. The higher amounts set out in connection with the word "Regular, were in excess of the prices at which the respondents' retail dealers customarily and usual11y sold the articles of advertised merchandise in the recent regular course of business a,nd the differences between the said higher amounts and the lesser prices at which the articles were offered for sale do not represent savings over the prices at which said retailers had usual11y and customarily sold said articles of merchandise.

2. The price amounts at which said merchandise is being offered for sale in connection with the words "Special" Now at Special Sales Price Never Before at This Low Price Sale Only During this Sale So Low Priced" are not sale or special prices they are not reductions from or lower than the prices at which said merchandise was sold at retail by the respondents' retail dealers in the recent regular course of their business and do not constitute savings to the purchasers of said merchandise. 3. The higher stated amounts set out in juxtaposition with the lower prices in connection with the words 1:ade To Sen For II at $30, Not $25, But Only 819.95" are not the generally prevaiJjng prices at which the merchandise is sold at retail in the trade area or areas where the representations are made but were in excess of the prices at which the merchandise was geneta11y sold in said trade area or areas and the difference between the higher and lower prices do not represent savings to the purchasers thereof from the generally prevailing price in the tra.de area where the representation is made, 524 FEDERAL TRADE CO:\L\fI8SIO),T DECISIONS Complaint A4 F.

4. The marble top tables, chest and commode advertised at $39. do not have a v,due comparable to other products of like grade and quality in aU material respects retailing at $79. , and are not generally available for purchase at the higher comparable price in the same trade area or areas where the representation is made. The movie outfit. advertised at $119.95 cloes not. have a value comparable to ensembles of like grade and quality in an material respects retailing at $179.95 and are not generally available for purchase at t.he higher comparable price in the same t.trade area or areas where the representation is made, 5. 1-urcbasers of the movie outft advertised at $119.95 do not receiye seven (7) bonus gifts free or without cost because the price cbarged for the merchandise purchased includes the price of the said bonus gifts.

6. Two sets of merchandise are not being offered for the usual price of one set of merchandise.

7. The guarantees for the said advertised merchandise are not fully guaranteed lifetime guarantee" nor "unconditional" for anv definite period of time, but are subject to limitations and conditio s not disclosed in the advertisements, 8. Some of the advertised watches are not waterproof, water resistant, shockproof, and shock resistant in every respect as represented, without qualification or limitation, and qualifying language regarding preservation of the waterproof quality is not set forth clearly and conspicuously in immediate conjunction with the term waterproof.

9. The Imperial watches do not have 25 jewels that are functional and protect against wear and friction by providing a mechanical contact with a moving part at a point of wear. Therefore, the statements and representations referred to in Para graphs Four and Five hereof were and are false, misleading and deceptive.

PAR. 7. The respondents by and through the, use of thc aforesaid acts and practices place in the hands of retailers the means and instrumentalities whereby said retailers may mislead and deceive the public in the manner herein alleged.

1- AR. 8. In the conduct of their business at all times mentioned in substantial competition, in com-herein, respondents have been merce, with corporations, firms, and individuals in the sale of mercbandise of the same general kind and nature as that sold by respondent 1- AR. 9. The use by respondents of the aforesaid false, misleading, and deceptive statements, representations, and practices has had, and RETAILERS MARKETING GUILD , INC. ) ET AL. 525 51i Decision now has, the capacity and tendency to mislead members of the purchasing public into the erroneous a.nd mistaken belief that said statements and representations were and are true, and into the purchase of subst.antial quantities of respondents' merchandise by reason of such erroneous and mistaken belief.

l' AR. 10, The aforesaid acts and practices of respondents, as herein alleged, were and are a1l to the prejudice of the public and respondents' competitors and constitute, , a.nd now constitute, unfair methods of competition in commerce and unfair and decepti,-e acts and practices in commerce, in violation of Section 5 of the Federal Trade Commission Act, DECISION AND ORDER The Federal Trade Commission having initiat an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thermtfter with a copy of a draft of complaint which the Bureau of Deceptive Practices proposed to present to the Commission for its consideration and which, if issued by the Connnission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter xeeuted an agreement containing a consent order, an admission by the respondents of a11 the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agree ment is for settlement purposes only and does not constitute an admission by the respondents that the law has been violated as alleged in such complaint, and waivers and provisions as required by the Commission s rules; and The Commission, having reason to be1ieyc that the respondents have 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, follow- I1g jurisdictional findings and enters the following order: 1. Retailers Marketing Guild, Inc" Retailers Advertising Service Ine" and l\fayfair Purchasing, Incorporated, are corpurations organized, existing and doing business under and by virtue of the laws of the State of Illinois, with their offces and principal1 places of business 11t the Ierchandise J\iart, l\lerclundise )Iart Plaza, Chicago, Illinois. Ilbnois.

Maurice D. Cramer is the president and a director of each of the said corporations; Alvin Levy is the secretary and a director of each of the said corporations; and George Ross is a vice esident and a $ 526 FEDERAL TRADE COMMISSIO;; DECISIO Order 64 F.

director of each of the said corporations and their address is the same as t.hat of the corporate respondents.

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 int.erest.

ORDER It i8 ordered That. respondent.s Retailers Marketing Guild, Inc. Retailers Advertising Service, Inc. , :Mayfair Purchasing, Incorporated, each a corporation, and their offces, and l\fallrice D. Cramer Alvin Levy, and George Ross, individual1Jy and as offcers of said corporate respondents, and respondents' representatives, agents and employees, directly or through any corporate or other device, in connection with the, promotion or offering for sale sale or distribution of any merchandise in commerce, as "comme.rcc: is defined in the Federal Trade Commission Act, do forth,,-ith cease and desist from:

A. Representing, directly or indirectly, that: or words of (l) Any amount described as "Regular" similar import is the usual and customary price of merchandise when it is in excess of the price at wl1ich said mprchandise was sold at retail by respondents' dealers in I recent regular course of their business, (2) Any amount described as "made to sell For", "/lot Not $-- Bnt Only $-- , * * *" or words of similar import, is the usual and customary retail price of merchandise when it is in excess of the generally prevailing price or prices at which the, merchandise is sold at retail in the trade area or areas where the represent:tion is made.

(3) Any savings are afi' orded in the purchase of respoll(lents' merchanelise from respondents ' retail dealers amounting to the difference between the stated retail selling pri and any other price used for comparison "ith that selling price, unless the comparative price usedl'represents the p)Oice at which such merchandise has been usually and regularly sold at retail by respondents' retail dealers in the recent regular course of their business or tl1€, price at which the merchandise is usually and customarily sold at retail in the trade area. or areas where the representation is made. (4) Any product of respondents is of a yalue comparable to any other product retailing at a higher price unless , ..\ RETAILERS 1MARKETING GUILD , IKC. , ET AL. 527 517 Order respondents' product is at le, ast of like grade and quality in all material respects as t.he product with which it is compared and such other product is generally available for purchase at retail at the comparable price in t.,he same trade area or areas where the representation is made. (5) Any saving is afforded in the purchase of respondents: product as compared to the purchase of another produuct unless respondents' product is at least of like grade and quality in a11 material respects as the product with ,which it is compared and such other proc111et is usna1Jy and customarily sold at retail at t.he comparable price in the same trade area or areas in ,,,which the representat.ion is made, (6) Any price is a sale or speci,tl price unless such price is a reduction from or lower than the price at which said merchandise was sold at retail by the respondents ' retail dealers in the recent regular course of their business. (7) Two sets of any merchandise arc being offered for the usual price of one set unless the sc,lling price for the two sets js the usual and eustoma.ry retail price of respondents retail dealers for the single set in the recent, regular course of their business, (8) J\1erchandise is given free or without charge in connection with the purchase of other merchandise when the price charged for the merchandise purchased includes the price of the so-ca.ned fre,e merchandjse.

(9) Any merchandise offered for sale. is guaranteed unless the nature and extent of the guarantee, the identity of the gua.rantor and the manner in which the guarantor will perform thereunder are clearly and conspicuously disclosed, (10) Any watches are waterproof, water resistant, shoc.kproof or shock resistant unless said watches are waterproof 1Vatcr resistant, shockproof or shock resistant in every respect without qualification or limitation. (11) Any watches are waterproof, "a.tel' resistant shockproof or shock resistant under certain conditions or with certain qualifications or limitations unless such aforesaid conditions: qualifications, or limitations are clearly and conspicuously set forth in immediate conjunction with the terms \aterproof:' after resistant shockproof" or shock resista.nt"

(12) Any watches contain a designated number of jewels unless said watches actually contain the stated number of 528 FEDERAL TRADE CO:\IMISSIO:\T DECISIONS Syllabus 64 F.

jewels, each and everyone of which serves a purpose of protecting against wear from friction by providing a mechanical contact with a moving part at a point of wear. E, 1:srepresenting in any manner, directly or indirectly, the quantity, quality, or usual price of any merchandisc. C. Misrepresenting in any manner, directly or indirectly, the savings available to purchasers of respondents' me.rchandise or the amount by which the price of such merchandise has been reduced from the price at which it is usual11y and customarily sold at retail by respondents' retail dealers in the recent regular course of their business or from the generally pre\7ailing price areas in the sa,me trade area or areas in which the. representation is made, D. Furnishing or otherwise placing in the hands of distributors or dealers in said products the means and instrumentalities by and through which they may mislead or deceive the public in the manner or as to the things hereinabove prohibited. It is further ordered That the respondents herein slmn, 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 complied with this order.