Francis E. Mastbrook doing business as; Edison Sewing Machine and Vacuum Cleaner Co.,; Etc.

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF FRANCIS E. MASTBROOK DOING B1!SI:-ESS AS EDISON SEWING MACHINE AND VACUUM CLEANER CO., ETC.

CONSENT ORDER, ETC. , 1:- REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 8710. Complaint, Sept. 14, 19G6-Decision, Mar. 1.1, 1967 Consent. order requiring a Washington, D.C., retailer of sewing machines and vacuum cleaners to cease using deceptive means to 5eJl his merchandise, such as alleging certain items were repossessed and purchasers would save paid-in amount, making false guarantee offers, using bait and switch tactics, using contests, prizes, and certificates in a deceptive manner, fictitiously pricing merchandise, and falsely implying that he was conducting a survey for appliance manufacturers. COMPLAINT 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 Francis E. Mastbrook, doing business as Edison Sewing Machine and Vacuum Cleaner Co. , Edison Sewing Machine Co. , Sewing Machine Exchange, Coles Adj ustment Service, Edison Sales, and Consumer Advertising and Research Service, hereinafter referred to as respondent has violated the provisions of said Act, and it appearing to the Commission that a proceeding by in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent Francis E. Mastbrook is an individual doing business as Edison Sewing IVlachlne and Vacuum Cleaner Co. , Edison Sewing Machine Co., Sewing Machine Exchange, Coles Adj ustment Service, Edison Sales, and Consumer Advertising and Research Service, with his offce and principal place of business located at 2626 Bladensburg Hoad, NE., Washington, D. , 20710.

PAR. 2. Respondent is now, and for some time last past has been, engaged in the advertising, offering for sale, sale and distribution of sewing machines and vacuum cleaners and other appliances at retail to the public.

PAR, 3. In the course and c.conduct of his business respondent maintains his principal place of business within the District of Columbia, and nmv CRuses, and for some time last past has caused Complaint 71 F.

his said products, when sold, to be shipped from his place of business to purchasers thereof within the District of Columbia and in various States of the Gnited States, and maintains, and at all times mentioned herein has maintained, a substantial course of trade in said products in commerce, as dcommerce " is defined in the Federal Trade Commission Act. PAR. 4. In the course and conduct of his business and for the purpose of inducing the purchase of his products, respondent now makes, and has made, certain statements and representations in advertisements in nClvspapers of general circulation respecting the price, savings, guarantee, nature of his products and the status of his business.

Among and typical, but not all inclusive of such statements and representations, are the folluwing: SEWI!\TG :MACH. Auto. zig-zag, repass., take over JJayments, $5 mo. EXCH Crcdit Dcpt 526-6951.

SEWING )IACHL\T Singer zig-zag, 2 mos. old, like new, bal. only $62 Pay $5 pcr mo. , Call Credit Mgr., Cole Adj., 526-1852. SEWING MACH. Singer slant needle, like new, repossessed, bal. $58 $5 mo. Coles Adj. Serv. 526-1852.

SEWING MACH. Recond., guar, $14.5 up. SEW. MACH. EXCH. 2626 Bladensburg I'd. ne. LA- 6950.

PAR. G. By and through the use of said statements and representations, and others of similar import and meaning but not specifically set out herein, separately and in connectiun \with the oral statements of salesmen, respondent represents and has represented, directly or by implication:

1. Through the use of the statements "repass. take over payments repussessed, bal. $58" and words or statements of similar import, that sewing machines, partially paid for by a previous purchaser, are being offered for the unpaid balance of the purchase price, affording savings to purchasers. 2. Through the use of the names and designations "EXCH. Credit Dept. Credit l\gr. Cole Adj. Coles Adj. Serv. " and other names and designations of similar import, that his principal business is that of lending money and settling and collecting accounts.

3. That in the guise of such names ann designations referred to in 2 above that he is making a bona fide offer 'La sell repossessed sewing machines for reason of default in payments by the previous purchaser, and on the terms and conditions stated. EDISON SEWI:-G MACHINE AND VACUUM CLEANER CO , ETC. 321 319 Complaint 4. That sewing machines are guaranteed without conditions or limitations.

PAR. 6. In truth and in fact:

1. Said sewing machines are not being offered for the unpaid balance of the purchase price, and the represented savings were not afforded purchasers.

2. Respondent is not engaged in the business of lcnding money or of collecting and settling accounts but is engaged in the business of the retail sale of TIe\\! and used sc\ving machines, vacuum cleaners and other appliances to the public. 3. Respondent is not making bona fide offers to sell the said sewing machines and on the terms and conditions stated but said offers to sell are made for the purpose of obtaining leads as to persons interested in the purchase of such machines. After obtaining leads through response to said advertisements, respondent or his salesmen call upon such persons in their homes or wait upon them in the store, but make no effort to sell the advertised machines. Instead, they exhibited sewing machines which were in such poor condition as to be unusable, and disparaged the adverlised product lo discourage its purchase, and attempted to and frequently did, sell much higher price sewing machines.

4. The guarantee of said s€\ving machine contains numerous conditions and limitations which are not disclosed in the advertising.

Therefore, the statements and representations as set forth in Paragraphs Four and Five hereof were, and are, 1'a188, misleading and deceptive.

PAR. 7. In the course and conduct of his business and for the purpose of inducing the purchase of his sewing machines respondent periodically conducts a contest in which persons are invited to encircle misspelled words appearing in a newspaper advertisement, the winners to be determined on the basis of most misspelled words found, neatness, and promptness of reply. The grand prize is an Edison sewing machine or a Morse Console Stereo and 25 second prizes of $50 merchandise certificates and 35 third prizes of S40 merchandise certificates. Participants in these contests then receive a " gift certificate " by mail. Typical but not all inclusive of the statements and representations made in said advertisement and follow-up malerial, are the following: Complaint 71 F.

The newspaper advertisement (spelling corrected) : EDISON SEWING MACHINE WIN new OR MORSE STEREO! ! ! ! FR EE! (picture of Edison Sewing Machine model 142B and Morse Stereo Console phonograph) GRAND P RIZ E 25-2nd prizes $50 mdse certiflcates Machine list (Se"wmatic No. 82) $99. Cel,tificate .. 50. Balance 49. 35-3rd Prizes $40 mdRe certificates Machine Price (Sewmatic No. 82) $99. Certificate 40. Balance $59. IT' S F1:N! YOU CAN BE A WINNER Follow these Rules NAME - - PHONE - ADDRESS NO. MISSPELLED WORDS Contest Closes Midnight Kav. 28, 1965 Mail Today c/o Edison Contest The follow-up material (on bank check paper): EDISON SEWING MACHINE CO. NO 3428 2626 Bladensburg Road, Northeast Washington 18 C. 526-5950 NOT NEGOTIABLE Date - Expires 30 d2.Ys from date PAY Edison Sewing Machine Co.

As a credit to be deducted from (H. A. Bell) initial purchase of merchan.

dise as indicated by attached Authorized Signature letter EDISON SEWING MACHINE AND VACUUM CLEANER CO., ETC. 323 319 Complaint (Perforation Line) EDISON SEWING MACHINE CO.

2626 Bladensburg Road, Northeast Washington 18, D.C. 526-5950 Congratulations:

You '.were OJle of the Gift Certificate Winners in the recent Edison Sewing Machine Contest. Enclosed you wil find your Gift Certificate. Your Certificate may be applied at its full value on the purchase of any New Edison Automatic Zig-Zag Sewing Machine either Portable or Cabinet ::ade!.

PAR. 8. By and through the use of the aforementioned statements and representations, by oral statements of respondent or his saiesmen, and by other written statements and representations of similar import and meaning not specifically set out herein respondent represents and has represented, directly or by implication:

1. That he conducts bona fide contests and that recipients of said gift certificates have won a valuable prize through their participation in said contests entitling them to a discount in the amount stated on the certificate, as a reduction from the price at which such products are usually and customarily sold by respondent.

2. That the higher stated price from which the amount of the gift certificate is deducted is respondent' s usual and customary price of the designated sewing machine and that purchasers are afforded savings of the difference between that price and the price at which the sewing machine is being offered. PAR. 9. In truth ai'd in fact:

1. Respondent does not conduct bona fide contests. His purpose in having persons enter said contests is to obtain leads to prospective purchasers of his sewing machines. And, the purchaser does not receive a prize since the amount of the gift certificate is deducted not from respondent' s usual and customary price of the product but frolll a higher price, and therefore the prize is ilusory.

2. The higher stated price is not respondent's usual and customary price of the desigflateo s€,ving machine and purchasers are not afforded savings of the difference between that price and the price at which the machine is being offered. Therefore, the statements and representations as set forth in Complaint 71 F.

Paragraphs Seven and Eight hereof were, and are, false, misleading and deceptive.

PAR. 10. In the course and conduct of his business and for the purpose of inducing the purchase of his sewing machines respondent conducts a door-to-door canvass under the name of Consumer Advertising and Research Sel Vlee, 4221 71st Avenue Hyattsville, Maryland. Respondent uses a questionnaire seeking information regarding the appliances presently in the home and those wished to be acquired. Persons contacted are told that their participation entitles them to a chance in a drawing being held by Consumer Advertising and Research Service and they are given a stub of the questionnaire with a corresponding number which states thereon "Retain this stub. It may be valuable to you. " Next, the participant receives the following letter: CONSU !ER 'ADVERTISING A!\D RESEARCH SERVICE 4221 71st Avenue Hyattsville, MaJ'yland XATIONAL SURVEY (:Kame and address of participant) (date) Dca r Customer:

Recently we conducted a survey in your area. Through onc of the manufadUl' ers we represent, your name has oeen selected to receive one of their products as a free gift.

Take this letter and your yellmv stub given to you at the time of the survey, to Edison Sales, 2626 Bladensburg Road, X. , Washington, D. and l'cccive your gift.

This valuable GIFT LETTER is not transferable and must be -presented in person within ten days upon receipt of this lcttcr. PAR. 11. By and through the use of the aforementioned statements and representations, by oral statements of respondent or his salesmen, and by other written statements and representations of similar import and meaning not specifically set out herein respondent represents and has represented, directly or by implication:

Through the use of the name Consumer Advertising and Research Service and in connection with other statements and representations and activities in conducting- ostensible surveys, that it is an independent agency representing manufadurers in making surveys to deiermine ,,,whether certain appJic;anc;cs are beingused in the home and if not whether they will be acquired in future and that names would be dnnvn from those interviewed to determine the winners of prizes given by the manufacturer. In truth and in fact respondent is solely a retailer of sewing , EDISON SEWING MACHINE AND VACUUM CLEANER CO. , ETC. 325 319 Decision and Order machines, vacuum cleaners and other appliances and uses the name Consumer Advertising and Research Service, makes other statements and representations, and conducts the purported surveys merely as an artifice to ohtain names and addresses of prospective purchasers of his products. The names of prize-winners are not drawn but are selected by respondent and a Jeiter is sent to them announcing that they are winners to lure t.hem into the store so that respondent can attempt to sell sewing machines or other appliances to said persons.

Therefore, the statements and representations as set forth in Paragraphs Ten and Eleven hereof were, and are, false, misleading and deceptive.

PAR. 12. In the conduct of his business, and at all times mentioned herein, the respondent has been in substantial competition in commerce with corporations, firms and individuals engaged in the sale of sewing machines, vacuum cleaners and other appliances of the same general kind and nature as those sold by respondent.

P AI(, 13. The use by the respondent 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 statements and representations were, and are true and into the purchase of substantial quantities of respondent s products by reason of said erroneous and mistaken belief. PAR. 14. The aforesaid acts and practices of the respondent as herein alleged were, and are, all to the prejudice and injury of the public and of respondent's 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 issued its complaint in this proceeding on September 11 , 1966, charging respondent named in the caption hereof with violation of the Federal Trade Commission Act, and the respondent having been served with a copy of that complaint; and The respondent having thereafter filed with the hearing examiner a motion requesting waiver of Rule 2.4 (d) of the Commission s Rules, to which motion was attached a consent agreement executed by respondent: and Decision and Order 71 F. The hearing examiner having certified to the Commission the said motion, with agreement, along with the answer thereto by counsel supporting complaint joining in said motion and requesting counsel's opportunity to execute the agreement as certified; and The Commission, by order of December 20, 1966, having granted said motion and having thereby afforded counsel supporting complaint opportunity to execute the said agreement; and The Commission now having considered the aforesaid agreement which has been executed by all the parties, and now having determined that the agreement constitutes an adequate basis for appropriate disposition of this proceeding, the agreement is hereby accepted, the following jurisdictional findings are made, and the following order is entered: 1. Respondent Francis E. Mastbrook is an individual doing business as Edison Sewing Machine and Vacuum Cleaner Co., Edison Sewing Machine Co. , Sewing Machine Exchange, Coles Adjustment Service, Edison Sales, and Consumer Advertising and Research Service, with his offee and principal place of business located at 2626 Bladensburg Road, NE., Washington, D. 20710.

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

ORDER It is ordered That respondent Franeis E. Mastbrook, an individual, doing business as Edison Sewing Machine and Vacuum Cleaner Co. , Edison Sewing Machine Co., Sewing Machine Exchange, Coles Adjustment Service, Edison Sales, and Consumer Advertising and Research Service, or under any other name or names, and respondent's agents, representatives and employees directly or through any corporate or other device, in connection with the advertising, offering for sale, sale or distribution of sewing machines, vacuum cleaners, or any other products in commerce, as comm rce is defined in the Federal Trade Commission Act, do forthv,rith cease and desist from: 1. Representing, directly or by implication, that merchandise has been repossessed or that it is being offered for the balance of the purchase price unpaid by a previous pur- EDISON SEWING MACHINE AND VACUUM CLEANER CO., ETC. 327 319 Decision and Order chaser; or misrepresenting, in any manner, the status, kind quality or price of the merchandise being offered. 2. Using the names or designations "EXCH. Credit Dept. Credit Mgr. Cole Adj. " or " Coles Adj. Serv. " or other names or designations of similar import or meaning to designate or refer to respondent's enterprise, or otherwise representing, directly or by implication, that respondent is engaged in the business of collecting debts or of adj usting or settling accounts; or misrepresenting in any manner the nature or status of respondent's business. 3. Representing, directly or by implication, that purchasers save the paid-in amount on repossessed merchandise; or misrepresenting in any manner the savings afforded purchasers of respondent's products.

4. Hepresenting, directly or by implication, that products are guaranteed, unless the nature, conditions and extent of the guarantee and the manner in which the guarantor will perform thereunder are clearly and conspicuously disclosed. 5. Hepresenting, directly or by implication, that any products or services are offered for sale when such offer is not a bona fide offer to sell said products or services on the terms and conditions stated; or using any advertising, sales plan or procedure involving the use of false, deceptive or misleading statements to obtain leads or prospects for the sale of other merchandise.

6. Disparaging in any manner or discouraging the purchase of any products advertised.

7. Hepresenting, directly or by implication, that contests are being conducted to determine \vinners of a prize; or misrepresenting in any manner the way in which names of prospective purchasers are selected.

8. Representing, directly or by implication, that awards or merchandise certificates are of a certain value or worth when recipients thereof are not in fact benefited by or do not save the amount of the represented value thereof. 9. Representing, directly or by implication, that any savings, discount or allowance is given purchasers from respondent' s selling price for specified merchandise unless said selling price is the amount at which such merchandise has been sold or offered for sale in good faith by respondent for a reasonably substantial period of time in the recent regular course of his business.

10. Using the name "Consumer Advertising and Research 328 FEDERAL TRADE COYIMISSION DECISIONS Complaint 71 F.

Service " to designate or refer to respondent' s enterprise or representing that he or his representative is conducting a survey; or using any scheme or device, involving the use of false, deceptive or misleading statements, representations or practices by which the names or addresses of prospective purchasers are obtained or by which they are enticed to place themselves in a position where respondent can attempt to sell them merchandise It is f1i,ther ordered That the respondent herein shall, within sixty (60) days after service upon him of this order, fie with the Commission a report in writing setting forth in detail the manner and form in which he has complied with this order.