General Transmissions Corporation of Washington et al.

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

Ix TI-IE )1:\ ITER OF GEXER.AL TR~\.XS~II~~IOX~ (,ORPOR~\.TION OF ,VASHIXGTOX ET ~~L.

ORDER , OPIXIOX , ETC.. IX HEG.\RD TO THE .-\ALLEGED YIOL\TION OF THE FEDERAL TRADE CO::\I::'IIISSIOX ACT Docket Sil.), Complaint, :-::C))t. ;?G. 1,966-Dccision, Fell. l!JGS Order re(jl1iring n. ,Vn:::l1ington, D,C.. nntollwhile ti';111:'1~li8~inn repair garflge to eense J)Jj:;;relwesenting the nntnre and cost of its Ben-ices, deceptively (juoting prices before all facts are );:nown. neglecting to disclose thfl t an OYerh:1nl" does not inclucle reh:::s('mt:l~, fnlsel~- claiming that its transmissions fire fflctor~-rebuilt. making false gu;lrnnties. misusing the terms free, no money clown," ancl " en s~- cle~lit. " n nel 8~'Btemn tically defra ncling its customers.

Complain t 73 F:T.

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 General Transmissions Corporation of ,Vashington, a corporation, ,Valter Dlutz, individually and as an officer of said corporation, and ,Villiam J. Greene * individually and as an agent of said corporation, hereina,after 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 \Vould be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent General Transmissions Corporation of "\Vashington is a corporation organized, existing and doing business under and by virtue of the laws of the District of Columbia, with its principal office alid place of business located at 2912 Blac1ensburg Road NE. , in the city of ,Vashington, District of Columbia. Respondent "\Valter DI utz is an officer of the corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. I-lis principal business address is 5818 Torresdale Avenue, in the city of Philadelphia, State of Pennsylv'Rl1ia. Respondent ,Villiam J. Greene is general manager of the corporate respondent. He formulntes, directs and controls the acts and practices of said corporate respodent, including the acts and practices hereinafter set forth. His address is the same at that of the. corporate respondent.

. PAR. 2. Respondents are no\" and for some time last past have been engaged in the advertising, repair, overhauling, rebuilding, offering for 8aJe, sale and distribution of automobile transmissions to the public v..-within the District of Columbia. Respondents maintain, and at all times mentioned herein have maintained, a substantial course of trade in said products and services in commerce, as "commerce" is defined in the Federal Trade Commission Act.

\R. 3. In the course and conduct of their business as aforesaid and for the purpose of inducing the. purchase. ~f their said transmissions and transmission repair service, respondents have made and are now making many statements and representations about their products and se1"nces.

Typical, but not all inclusive, of saiel statements andrepl'esentations appearing in respondents' advertising are the following: "'Re~'pol1dent' 8 Collect name i8 "" JlliflJ1l .T. Grren, Jl'., as noted in the initial decision. GENERAL TRANSMISSIONS CORP. OF 'V ASHINGTON ET AL. 401 399 Complaint TRANS~lISSIONS AND MOTORS LABOR CHARGES FOR REMOVAL. DIS~IANTLING, AND THO~OUGH INSPECTION Overhaul $22 RESEAL Plus Necessary Parts Factory Rebuilt Trans. $99, (Most cars) One Day Service! No Money Down; E-Z Terms; Free Towing Available lifetime warranty; written guarantee on all work It- 'VB CAN SAVE YOu ~IO~EY Modern Shop Equipment Assures Low Cost to You Servicing your transmission is our only business AVAILABLE LIFETDIE WARRANTY Written Guarantee on All Work TRANSMISSIONS One day OU?' prices the lowest OVERHAUL ----------- $60service a.re----------------- $25RESEA,L ---------- -------- --- REBUILTS ------------------------------ complete from -------------- $89 OPEN 24 HOURS A DAY-SF~,DA.YS 10- Come in Today for a Free Checkup No MONEY Dow:\T ; E-Z TERMS; FREE TOWING ASK ABOUT OUR LIFETIME GUARANTEE:BJ OVERHAUL OF CLUTCHES, BANDS , SEALS, GASKETS, STEEL SEALING, RINGS AND LABOR PAR. 4. By means of the statements and representations in their advertisements, as set forth in Paragraph Three hereof, and others similar thereto but not specifically referred to herein, respondents hay6 represented directly or by implication that: 1. Respondents will remove, dismantle, thoroughly inspect, areassemble and reinstall a transmission for $22. 2. Respondents are making a bona fide offer to overhaul any transmission for $60 and reseal any transmission for $2. 3. Respondents' offer to overhaul or reseal transmissions for $22 plus parts is a bona fide offer.

4. Respondents' offer to overhaul a transmission incl udes removal disa.ssembly and replacement of aU 'worn parts and the reassembly and reinstallation 'Of the traJ1smission in the vehicle. 5. Respondents' offer to sell and insta.ll rebuilt translllissiollS for as little as $89 is a bona fide offer.

402 FEDERAL TRADE CO::',nIISSIO~ DECISIONS Complaint 73 F. T, 6. Respondents \"ill overh~ul or rese~l a transmission or install a rebuilt tr~nsmission in one Cb~T 7. Respondents grant. credit to their cm:tomers on a no money clown easy terms basis.

8. Respondents pl'oyic1e free to,ying service. 9. Respondents unconditionally gu~rantee all \york done by them in \,writing:.

10. Respondents s211 and install ractory relmilt transmissions for most cars for $99.50.

11. Respondents are expert in the repair oT automotive transmissions and can be. relied UDon to repair them in such a manner that they ,vill function properly.

\.r.. 5. In truth and in fact.:

1. In mally instances a Iter removin0: and di:=:mantlin~:t a transmission respond~nt5 refuse to reassemble ~~nc1 reinstall it fo~' $:2:2 price. erh:-llll tran::;- 2. Respondents are not. making: a bona llc1e ofrer to Q\' missions for $()O or reseal all transmissions for $:25, but are engaged in the practice of "lo-baning.' "'herein the customer is attracted into respondents' establishment by their adn' rtised low prices for automobile components or transmission senices, then induced into expensiYB additional repairs ,,-hen raced \with respondents' refusal to reassemble. unless the said repairs are effected. 3. Respondents' offer to m'erhaul or reseal transmissions for $22 plus parts is not a bona fide otter but is made for the plupo:;:e of attracting customers to their place or business ,,-here respondents can convince them that they need more costly repairs. 4. Respondents' offer tn overhaul a transmission does not include replace.ment or all \yorn parts.

5. Respondents' offer to install rebuilt transmissions for as little as $89 is not a bona fide ofler but is made for the purpose of attrnctin~~: prospecti\' e customers to respondents' phce or business ,,-here an attempt is made. and frequently \"ith success, to sell a more expensive rebuilt trnnsmission.

6. Respondents usually~- take more than one day to overhaul or re~eal a transmission or to insta 11 a. rebult transmission or to ot hen"ise repair a transmission.

7. Respondents do not extend credit. to any customer but require. cash payment. or payment throu,!l' :1 limited number of credit cards. A customer not having the limited credit cards or ca~h is denied possession or his car until financing is obtained from a finance comp;ln~to \which the customer is referred b~1- respondents. 8. Respondents' offer or free. toy';ing selTice is not unconditional, hut is limited in certain respects, \"hic11 limitations are not c1isclosecl in GENERAL TRANSMISSIONS CORP. OF ,VASHIXGTON ET AL. 403 399 Complaint respondents: advertising or mac1n known to the. customer prior to the rendering of service.

D. Respondents do not pro\"ide an unconditional guarantee on ,,-ork performed by them. Such guarantee. as they give is limited, "which limitations are not eonta.ined in respondents. adn~rtising or made knmYll to the customer nrior to sa Ie.

10. Respondents do not sell factory rebuilt transmissions for most cars for $99.50. The rebnilt transmissions sold by them have been rebuilt bv them and cost substantiallv more than 899.;30. 11. Respondents, either through negligence or inability~ on n1llnerous occasions repair transmissions in sneh a. manner that they do not damage of an extensi ,-function properly and often cause further nature.

Therefore, the. statements and representations as set forth in Paragraphs Three and Four hereof "-ere and are false, misleading and deceptive.

\R. G. In the further course. and conduct of their said business responden ts engage in the. follo,Ying unfair or deccpti '-e acts and practices:

to respondents ~ place 1. ,Vhen a customer brings his automobile business for transmission repairs he is usually told that the problem nominal sum of money andis slight and can be repaired for a small or thereb~- ob-that all 'york is unconditionally guaranteed. Respondents tain authorization to do limited repair ,,-ork y;which is described in g2neral terms. ,Yhen the customer retnl'llS to pick up his automobile. he is almost invariably told that he needs a. major repair job: or a rebuilt transmission, costing fl, substantial snm of money. Ofte-n the customer is tolcl the transmission has been remo,-ec1 from his car Hnd disassembled yrhereupon respondents refuse to perform the originally authorized repair ,york or restore the vchic 1e to its pre,-ions condition and represent that the transmission cannot be renssemblec1 or that the previously reinstallationagreed upon price does not include re.assembl~- and his transmission. Hespondents thereby obtain further authorization to do the additional repair ,york or install a rebuilt transmission. 2. l-;-pon completion of a transmission repair job respondents guarantee the job for a certain number of days nnc1er normal driving connumber of days or miles, whicheverditions, and for an additional occurs first, on a f-fifty-fHty parts pins labor basis. If the transmission has problems or malfunctions during the period of respondents guaranteeor ,,-alTnnty, the customer is told that they are minor, self-adjusting and will disappear with continued driving, thus respondents a,-oic1 or seek to avoid honoring their guarantee or "tUTanty. Initial Decision 73 F.

3. Respondents refuse to give their customers itemized bills for parts and repairs for which they are charged. PAR. 7. In the conduct of their business and at. all times mentioned herein, respondents have been in substantial competition in commerce with corporations, firms, and individuals in the sale of automotive parts and services of the same general kind and nature as those sold by respondents.

PAR. 8. The use by the respondents of the aforesaid false misleading and deceptive statements, and representations and unfair or deceptive acts and practices has hacLand now has, the capacity and tendency to lnislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations w~re and are true and into the purchase of substantial quantities of respondents products and services by reason of said erroneous and mistaken belief and by reason of said unfair or deceptive acts and practices. PAR. 9. The aforesaid acts and practices of respondents, as he.rein alleged, 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 or deceptive acts and practices in commerce, in violation of Section 5 of the Federal Trade Commission Act.

illi'. RooeJ't E. FJ' eeJ' , J1' and Afr. Anthony I. Ja1?;uZe.wwz supporting the complaint.

flat'. Bu1,ton Caine, lVolf, Block, Schon' and Solis-Cohen Philadelphia, Pa., for respondents.

INITIAL DECISION BY ELDON P. SCHRUP. HK\RING EXAl\II:NER MARCH 14 , 1 9 6 i STATE~IENT OF PROCEEDINGS The Federal Trade Commission complaint in this proceeding issued September 26 , 1066, charging the corporate and individual respondents with violation of Section 5 of the Federal Trade Comnlission Act. through the alleged use of unfair or deceptive acts and practices and unfair methods of competition in commerce 111 the sale and repair of automotive transmissions within the District of Columbia. Respondents General Transmissions Corporation of ,Yashington "'\"'7il-and \Yilliam J. Green, Jr. (incorreetly n::uned in the complaint limn J. Greene), and respondent ,Yalter Dlutz on October 31 , 1966 filed answers denying the charges of the complaint and affirmatiYE'ly a.lleo'inO' that if res )ondents' acts and wactices are unlawful~ the. GENERAL TRANSMISSIONS CORP. OF WASHINGTON ET AL. 405 399 Initial Decision claimed existing similar acts and practices of respondents' eompetitors within the District of Columbia are equally unlawful, and further that if respondents were to be subjected to an order to cease and desist and their competitors are simultaneously not so restricted that respondents will be seriously injured and may be forced out of business. Respondents on :K oyember 14, 1966, filed motion to suspend proceedings supported by affidavit of "\Villiam J. Green, Jr., as to the claimed existing similar acts and practices of respondents' competitors. Said motion to suspend 'was certified to the Commission on N vember 17, 1966, "ith the recommendation that it be denied and the Commission order denying the same ,,-as entered December 1 , 1966. Respondents' application of December 3 , 1966, to the hearing examiner for order to take depositions and the issuance of supporting subpoenas duces tecum was denied by the hearing examiner December 6 , 1966. Respondents' request of December 9 , 1966, to the Commission for permission to file interlocutory appeal from the hearing examiner s aforesaid order of December 6 1966, was denied by order of the Commission on December 28 , 1966, for reasons as stated in the said Commission order.

Respondents' accompanying motion of December 9, 1966, to the hearing examiner to suspend hearings in the interim pending Commission action on respondents' aforesaid requested permission to appeal to the Commission ,vas denied bv the 'hearing examiner on the record and the. hearing on the merits commenced December 13 , 1966, and concluded December 19, 1966. At the close, of the presentation of the case-in-chief respondents elected not. to call the individual respondents 01' any other defense \vitnesses andl'ested their C'ase. Respective counsel were afforded full opportunity to be heard, to examine and cross-examine all "witnesses and to introduce such evidence ~s is pro\'ided for under Section 3.14(b) of the Commission Rules of Practice for ~\..djudicative Proceedings. Proposed findings of fact, conclusions, and supporting briefs were filed by respective counsel. Counsel for respondents filed a reply to the proposed findings of, fact, conclusions of la ,,- and order of counsel supporting the complaint. Con::plaint counsel ",waived the filing of a reply to the proposed findings of fact. conclusions of law and brief of counsel for the respondents. Proposed findings of fact and conclusions submitted and not adopted in substance or form as herein found and concluded ' are 1 Tr. 150, 2 TT, 914. See In this connection the above Commission order of December 28, 1966 (70 T.I.' :~-f~l. ,jud 1','n"'Oil" :!i"I'n T!j"llin fill' (ll'lJ~. in:! 1'I'"I\()jHlf'nt",' l'f'qnf""t fnr l1E'rmi"sion to file interlocutory appeal from the hearing examiner s order of December 6 , 1966, 406 FEDERAL TRADE CO:\E\lISSIOK DECISIONS Findings 73 F. T.

hereby rejected. After carefully re,-ie\ying the entire record in this proceeding as hereinbefore described, and based on such record and the obseTyation of the \vitnesses testifying herein the following Findings of Fact and Conclusions therefrom are made, and the following Order issued:

FINDINGS OF FACT' 1. Respondent General Transmissions Corporation of ,Vashing-ton is a corporation organized, existing and doing business under and by virtue. of the laws of the District of Columbia, with its principal office and pblce of business located at 2912 Blac1ensburg Road, XE., in the city of ,Vashington, District of Colmnbia.

2. Respondent ,Valtel' Dlutz is an officer of the corporate respondent. He formulates, directs and controls the acts and practices of the COI'pol' ate respondent, including the acts and practices hereinafter set forth. His principal business address is 5818 Torresdale .A. venue, in the. citv of Philadel1)hia. State of Pe1ll1SV Ivania. 3. Respondentu ~,Villiam J. Green, Jr. (incorrectly named in the complaint ,Villiam ,J. Greene), ,yas general manager of the corporate respondent. He also formulated, directed and controlled the acts and practices of said corporate respondent, including the acts and practices 3 Ohf;f'l' va.tion by the hearing examiner of the customer-witnesses while te!':tifying herein left no doubt as to the truthfulness of their expressed beliefs that they had bf'en unfairly victimized in their business dealings with the respondent;;, Further. SOIllP testified to having taken recourse to lawsuits which "' ere either settled hdore trial or ,vent to tinl and judgment against the respondents (customer-,Yitnes;: ~IcDonnld at Tr, 54::1: customerwitness ~Ion tgomerr at 592-593; customer-witness Shanldin at 901-904). In the words of customer-witness Stiles at Tr. 31D :

It )Jre~'ecl on my mind for a while, for about n month and n half, So 1 finall~- decidNl that I could not get it out of mr system, so I wrote to the Better Bminess Bill'eau. I made three copif"'.

The Better Business Bureau-well, the~' sent me a lettf'r a couple of dn~' 8 la tel' ,Which 1 hnye. which told me for furthe.r satisfaction to go to Small Claims Court, which I diel. 1 11IH1 a marshal deliver some kind of order from the court for the manager to alJpear with me. He did not show tip. I won the case, 1 took the judge s ,erdict lmck to the transmi;:sion company. He !':aid just present it to him and cash on demand, ~' ou will get your moDl'Y, So I went back in thpre and I wasat this time, 1 met ::'III'. Green. He said. just take ~' our pft.per onr tlwre and drop it down find get the 'H' out of here. I thought I ,,"as-well, I am not going to say anything about his manner anymore.

J Admitted in both answers, 5 Comm. Ex, XCIS. 1 , 2, 63-B, See also testimony of witness Dlutz at Tr. 151-163, 207- 209, 211, 214-216, 240; customer-witness Stiles at Tr. 320: customer-witness Hayes at Tr. 4:81'-4-40 457-46:2; customer-~.itnes;,: KJein at Tr. 490, 502; customer-witness McDonald at Tr, 543;: customer-witness Briscoe at Tr, 887, 890. , .

GENERAL TRANSMISSIONS CORP. OF 'WASHINGTON ET AL. 407 399 Findings hereinafter set forth. Iris business address "'as the same as that of the corporate respondent.

4. Respondents ,were and are no,,~ engaged in the achertising, repair, overhauling, rebuilding, offering for sale, sale. and distribution of automobile transmissions to the public ,within the District of Columbia. Respondents at all times mentioned herein have maintained a substantial course of trade in said products and sel'\~ices in commerce as "'commerce~' is defined in the Federal Trade Commission Act. Responde.nts in the course and conduct. of t.lwir aforesaid business have been and are in com petition ,,- h corporations, firms and incli yidua Is similarlv so enQ' aQ'ecl in such sales and services. 5. In the course and conduct of their business as aforesaid and for the purpose of inducing the purchase of their sn.id transmissions and transmission repair selTice, respondents have. made and are nOlY making many statements and representations about their products and services such as the follo,ving, among others:

TRA);"S~IISSIO);"S O=,"E-IU,Y SER'"ICE ULY: :?4 HO1."R SERVICE Our Prices Are TJJe Lo\Ye:"t"

HOllI':": Sun. 10- OYERHA t-L -_-__-n -___------ _nn_____n______-- _n ______------n- $60 RI':SE.~L -- --- ~2:) HEBCILTS __n___n_-_nn__-n_-_n__-n______-- ----- Cumvlete from $8\) ='"0 ~IO);"Er DO,,":.\; EZ TEH~\lS; FREE TO'VING Come' In Tudny For.-\. Free C11eeku1l GE=,"ERAL .-\.:-:1;: about 0111' JifetiIlJP guarantee: oyer11nnl of C'lntehe:". b,1n(18 , :,;ent~, gaskets, sif.'t'l spnting- lin?:~ anc11nbol'. :2UH) Blaclensburg Rd. 83:2-3700, 0 ~\(lmjttpd in an8,ver 1'01' the corporate respondent and indiviclnal rp;:pol1l1ent \\' ilJjam .T, Green. .Jl'. See also, testimony of witness Green at Tr, 177~18G Hlll of tlJe various customerwitnpsse,.; following. Respondent Green to:; now in charge of a Dlutz 1'ranel1ised operation :\Iilwall!,pe, 'Visconsin.

\clmitted in answer for corporation as to the corpora te respondent. See also, footnotes 5 an(l 6 above, S Comm, Ex. ::\0. 9 inserted by the respondents in TIle Wnshington Po;::t on October 24 1965, For the evolution in style and content of re8ponden1:;;' newspaper advertising and that payments 1'01' the same were is811ed in Philadelphia. Penn8~'I\'ania, spe the testimony~' of the clai'sinecl advertising representative of this newspaper at Tl', 522- 537 and Corum. Ex. ::\08, 40, 41. This w-itness also testified that the daily circulation of the newspaper approximated 457.000 copies;:, the greater majority of which was in the metropolitan area of ""asbington, Virginia and Maryland.

Findings 73 F.

TRANS:\IISSIONS & MOTORS Labor Charges for Removal, Dism:1l1tling and thorough inspection OVERHAUL RESEAL (Central Charge Service) $22 Ills NECESSARY PARTS FACTORY REBUILT TRA~S.

(~lost Cars) -------------- ----------- - -------- $99. A V AILABLE LIFETDIE WARRANTY ,WRITTEN GUARANTEE OX ALL WORK ONE DAY SERVICE : NO 1roney DO,V~: EZ TERMS; FREE TO,YIXG OPE),T DAILY 7 A,:\l. to 7 P.:\I.

2H12 BLADENSBURG RD., NORTHEAST, WASH. , D.

832-3700 GENERAL TRASS. INC.

GENERAL TRANSl\IISSIOK COAST TO COAST WHILE YOU WAIT OVERHAUL $65 ANY CAR 1 YEAR W ARRAKTY INCLVDED AS REQUIRED . Sea Is . Clutches . Bands . Gaskets . Fluid . La bar NO :\IONEY DOWN-uP TO 2 YRS. TO PAY UP TO 2 YRS. TO PAY FREE TOWING ~'O SHOP DAILY, 8 to 7 . . . . SUNDAY, 10 to 2 2912 Blac1ensburg Rd. , N.

. 832-3700 1327 S, Capitol St. , S, 547 -:l-! 77 Foot S. Capitol St. Bridge 6. An examination by the hearing examiner 11 of respondents ne'vspaper advertisements in evidence shows their meaning to be plainly susceptible of be.ing interpreted and understood by a. prospective C'us- 9 Compli. Ex. No. 50 inserted by the respondents in The Washington Dally Xe,ys on April 4. 1966. Payments for these adyertisemen ts were also Issued from the office of the Individual respondent Dlutz in Philadelphia, Pennsylvania, See testimony of the witness from this newspaper at Tr. 759-773 and Comm. Ex, Nos. 16, 52, 53, 54. According to this witness the newspaper had a dan;\"' circulation of approximately 225,000 copies in the District of Columbia, Virginia and :Maryland, 10 Comm. Ex. No. 24 inserted by the respondents in The Washington Post on November 7, 1966.

U As to the propriety of a finding based on such an examination, see April 8. 1966, opinion of the Commission in Docl,et No. 8635, Merck Ii Co., Inc" et al. f69 F, C. 526), and cases therein cited.

.

GENERAL TRANSMISSIONS CORP. OF 'WASHINGTON ET AL. 409 399 Findings 12 as representing, directly or impliedly, that:tomer of the respondents (1) Respondents will give the prospective customer a free checkup and will remove, reseal or overhaul find reinstall the customer s transmission or a. factory or other.r rebuilt transmission at the advertised price.

(2) Respondents will furnish the prospective customer free tmying and one-day service with no down payment and easy credit terms. (3) Hesponclents are transmission specialists and ,will furnish the prospective customer a lifetime guarantee, or a 1 year warranty or a written guarantee of their ,,'or1\:.

(4) Respondents' entire charge to the prospectiye customer for each of the above will be its achertised price.

The record testimony in this proceeding shows a substantial number of instances wherein the respondents' methods of business operation conflict with and belie the meaning of their adverti:::.ing as it is herein found susceptible of being; interpreted andunclerstoocl by the public. The record testimony herein also discloses respondents to have fldopted a more or less common pattern in clear11ng ,,-ith various of the testifying custoll1el'-\yjtnesses: lipon first contact \with the prospective customer the automobile ,,-as usually subjected to a short road test follo\\"ing \which I'll\" prosrwctin\ ('m~tOJlWl' il' ~, ()l1le insi"illlcPs \yould ach-isecl that only a minor transmission r('pair 01' Sl'lTlcing at a sll18ll charge appeared indicated.

Upon authorizing the ,york and leaving the premises the customer "as later telephoned, 01' upon returning for his automobile ,yas told that the transmission had been removed and dismantled and allegedly shows the need for further ,,"ork and additional replacement parts to be properly operable upon reinstallation in the flntomobile. The customer ,,"as thus confronted by the respondents ,with an unexpected substantially higher price than the nominal price ,,"which the respondents first led the customer to believe would only be necessary of payment.

:u! In Aronberg v. Federal Trade Corn7nission, 132 F. 2d 165, at 167, the appellate court weigh each word in aDadmonishes:'" '" * the buying public does not ordinarily carefully study or advertisement. The ultimate impression upon the mind of the reader arises from the sum total of not only what is said but also of all that is reasonably implied. * 0:0 * The law is not made for experts but to protect the public-that vast multitude which includes the ignorant, the until1inking, and the credulous, who, in making purchases, do not stop to analyze but too often are governed by appearances and general impressions 13 That the customer-witnesses testifying herein likewise so interpreted and understood the respondents' advertising is clear on the record in this proceeding, For example, see the testimony, among others, of customer-witness Stiles at Tr. 321-324, 327-331; customerwitness Somers at Tr. 725-726 730-731 ; customer-witness Schneider at Tr. 775-77D, 418-345-72---- 410 FEDERAL TRADE COLE\IISSION DECISIONS Findings 73 F:.r. C..

If the customer balked at paying this substantially ach-ancec1 price as one customer-witness put it, the respondents had him ;;o\'e1' a. barrel." The customer ,,-as told, for example, that to reassemble and reinstall the transmission without repair would require Rn additional charge over the. adyertised price, or that the transmission could not be. reassembled for installation -without the alleged necessary f:.1lther work and parts. It ,,-as thus made exceedingly clear to the customer that he ,,-ould either be spending more money to reassemble and reinstall a still faulty transmission in the automobile, or if the transmission "Was not capable of being reassembled and reinstalled without repair' as the respondents alleged, that the customer \yould be unable to c1ri,the automobile from the respondents: premises unless consenting to the proposed new transaction.

7. In truth and in fact, the respondents in their hereinbefore described advertising are not making a bona fide offe-r to perform in the. manner and at the prices therein stated, but are engaged in the practice of "lo-balling" wherein theprospectiye customer is enticed into the respondents' business establishment by their advertised low prices for automobile transmission sales and repairs, one-day service and other advertised inducements, and then inyeigled by the respondents into the outlay of further substantial amounts of money when faced with the respondents' business tactics as hereinbefore and hereinafter related.

Only one of the many testifying customet-\witnesses who WeJlt into the respondents' place of business and were- assured that the ad vertised low price- transmission sale, repair or serviee would solve their particular problem \yas able to repossess the automobile without paying more tha,n the 'adve-rtised price-. In this one instance, customer-wit-, ne-ss Kle-ill te-stified that he was able to obtain the requested transmission work only after-r a lengthy discussion and steadfast refusal authorize- more to be done by the respondents to the- automobile. :311'. Kle-in further testified to writing complaining letters to the "'\V ashington, D. , Better Busine-ss Bureau, the responde-nt corporation at its local address and to the. individual respondent Dlutz, plus a personal telephone call to the respondent Dlutz, in Philadelphia, Pennsylmoney-y which respondents' aforedescribeclvania.15The snbsta,ntial amount of business tactics fnrthe-r extracted from customer-witnesses in the face- H For example, see among others, the testimony of customer-witness Jacobs at Tr. 248- 252. 257-260; customer-witness Stiles at Tr. 310-313, 319-320; customer-witnei's Hayes at Tr. 438-444, 451, 458, 461; customer-witness Montgomery at Tr, 582-586, 592-593; customer-witness Briscoe at Tr. 870-878.

15 Customer-witness Klein s testimony and complaining letters are at Tr. 471-472. 490- 4!H, 501-503, and marked Comm. Ex. Nos. 38 .A- , 39. ,, GENERAL TRANSMISSIONS CORP, OF ,VASHINGTON ET AL. 411 399 Findings of respondents: nchertised 10\\" prices te~;riH('s to the e1Iecti n)nes~~ of CO111-their methods of doing bl1s1ne38 challenged in the compJnintY mission Exhibit. No. 17 sho\ys the respondents to have colic'ctecl ~,US. 811.0\\'Sfrom customer-\witness Jacob::;; Commission E~:hibit X o. 18 the respondents to Late collected $:231.'15 from customer-\vitness .Johnson; Commission Exhibit X o. :20 sho\ys the respondents to han: collected $245. 94 from customer-witness lIoH: Commission Exhibit X o. 25 sh0'.YS the respondents to h:1\-e collected Sl;~1:).90 from customeritness Stile3; Commission Exhibit X o. 3,,) S110\\ 8 the respondents to have collected $:289..-.1::3 from customer'- \witness Sollers; Commi~:8ioll collected $15-1.30 fromExhibit 1\0. gG shOlYS the respondent::; to ha \-e c.ustomel'- \witness I-Iaves: Commission Exhibit K o. 4::2 sho\ys the respondents to ha,-e collected $19D.82 from c1l3tcmer- witness I\lontgomery; Commi~sion Exhibit X o. 4-:1: sho\ys the re:sponclents to hate collected $281.27 from customer-witness Sattertield; Commission Exhibit K o. 57 sho\ys the respondents to have collected 8:210.20 from customervdtness Smith; Commis:sion Exhibit X o. 58 sho\ys the r6::iponclents to have. collected $348. 14 from customer-\witness Briscce. 8. The hearing examiner on the record before him in this proceeding can make 110 finding other thml that the aforedescribed achertising representations and accompanying acts allcl practices of the respondents ate false, misleading find deceptive to the injury and prejuelice of the public and of respondents' competitors: and constitute unfair methods of competition and unfair and deceptive acts and pr.1Ctires in commerce in violation of Section ;) of the Federal Trade Commission A.et as charged in the eomplnint in this matter. X othing in the record validly supports respondents ' ad w'rtising representations to a prospective customer that they will remove, reseal or overhaul and reinstall the customer' s transmission or a factory 1~ 01' other rebuilt trans111ission at the advertised price. "\With reference to the respondents' advertising representations to the prospective customer of free towing,I8 one-day service 19 with no down payment and J6 As set forth herein in preceding Paragraph 5, respondents ' advertised price on October 24, IH65. for an overhaul was $60, a reseal $25 and for rehuilts complete from ~':n: on April 4 , 1966, re~pol1dents' advertised price for an overhaul and reseal, pins necessary parts was $2:2, and for a factory rebuilt transmission for most cars *99, 50; on Xon'l11ber 7 1966, respondents' advertised price for an overhaul for any car 'Wa;; $65. including parts, fluid and labor a s required.

J7 Witner.:s Dlutz at Tr, 208 testified that respondents do not sell factory rebuilt transmj~sions in the respondents' Washington operation. J6 See testimony of customer-'Witness Stiles as to ton-jug conditions imposed by re- ('pondents and not disclosed in respondents' advertising at Tr. 318. 320, 322. 19 See the testimony relating to respondents' failure to supply this ad,ertised one-day 8!'T\,ice inducement to customer-~dtne~s Jacobs at Tr. 248-252: to customer-witness .Johmon at Tr. 278-279; to customer-witness Stiles at Tr. 31:2-313; and to customerwitne~s Satterfield at Tr. 681, 683-684. Customer-witness;; Klej!J s experience is set forth in footnote 15, supra.

;::, 412 FEDERAL TRADE COM~nSSION DECISIONS ,Findings 73 F. T.

easy credit terms 20 the record discloses these representations also to be illusory. Further, the respondents do not disclose certain limitations in their advertised guarantees or warranties of their automobile transmission sa.les, repairs and services and such are not unconditional as represented to the prospective customer.

Illustrative of a prospectiye customer s reaction to the respondents advertising is the following at Tr. 775 :

Q. I now SllO'IY ~'ou Commission s Exhibit 30 and ask :roll to identify that. It is a COIL:- of an ad"ertisement, is it not? A, Yes, from one of the local newspapers, Also one that I responded to with regard to ha ving my transmission resealed.

Q. Did you later include the original of this in a illes~age to the Better Busine~s Bureau? A. Yl~ '" I did.

Q, ,,\Y1Jrlt is particularly important to you about that adyerthelllent? ,Vhat fl ttrn ('ted you to that company first? A. '\Y ell, a number of things. One was the co:-::t, the location of the comrlany on ,Visconsin Avenue, which is about four miles from home, a written warranty on the work, or n written guarantee on tile' ',ork. and the daiiy, one- clay service. Q. H (lW did you interpret that one-day service? A, ,Yell, bring it in in the morning and take it home at night. I was so informed .by the lllnnag:er of the ,Visconsin Annue branch that that \yould be it, if I bl"Jught it ill uy ,::30 in the 1l10~nillg I ',"auld ha Ye it by 4 :30 in the nfternoon, Typical of the other customer-witnesses subjected to respondents business tactics is the further experience of this customer-witness accordill O'to his testimonv at Tr. 776-7T7:

Q. ,Yas there .any question that anything else might be wrong with the automobile? A. ?\o, I didn t anticipate anything wrong. The car was functioning perfectly when I took it in there.

Q, ,"fila t did you tell them? A. I wanted a reseal job to correct the oil leakage. Q, That is all you told them you '\\antec1 to do? A. That's right.

~O See te!;:timony as to the experience of customer-witness Jacobs at Tr. 258-259; customer-witness JolJDson at Tr. 283, 300; customer-witness Holt at Tr. 3i8 and Comm. Ex. ::\05. 21, 22, 23; customer-witness Hayes at Tr. 444; customer-witness Briscoe at Tr. 8i9:"'SS3, and Comm. Ex, Nos. 59, 60.

.21 See testimony of customer-witness Johnson at Tr. 282-285; customer-witness Holt at Tr. 389-392 ; customer-witness Briscoe at Tr. 883-885. ; ; GENERAL TRANSMISSIONS CORP. OF WASHINGTON ET AL. 413 399 Findings Q. "What ~as your next contact with the company? A. ,Veil, when I took the car in, they said the $22 on here covered labor only and there ~'a8 another $12 and something for the reseal kit, which were the parts, "\Vell, it said parts extra on there, so I told them to go ahead and reseal it. ..'\..about 4 :15 the same day, I went back and they had a transmission laying on a \vork bench, and said, this is your transmission and here are some parts of metal that were found in it and the pump is completely shot and needs replacing, So I tnl1i::ec1 to the m~;lllager and said, ~hat ~il1 that cost? He said, well it would cost about another $42, which raised the cost of the job to about $76. So I told him to go ahead with it, take the thing that was torn down, if they needed fl new pump, to put it in. He said it would be ready the next afternoon. Well, I called the next morning to find out if the car would be ready and he examined it further and said, "All the bushings are shot and needed replacing. I said, what is that going to cost? He said, well, the total job is now $107. I said, forget it, reseal it the ~ay I originally requested, and I'll pick it up tonight. So that, as far as I know, it was only resealed and I paid $48 and something for the reseal job.

Q. This is different from the additional $12 to the $22. Why was it more? A. Well, they said that the additional resealing parts were necessary due to the additional inspection that they had made to find then that the bearings were shot.

Finally and as did other of the c.ust()mer~witnesses, this witness testified at Tr. 778-779 :

Q, I ask yon f!.'; n CO!1~l1mer. holy (1 0 ~" G \1 c1efhll~ tJ1e term d ovE'l'hn nl" ? ,Vb;l t (!oes it mean to yon? A. ,Yell, if I took an automobile in for an onrhaul, if I told them to oye~'haul it completely, I Iyoulcl expect them to examine every part and relJlace all worn parts, broken parts. etc.

Q. I notice tl1nt ~-ou used the term "completely." Just to make it straight, if you jn:::t f.:flll tlle term "oyerhaul" without any e:s:planation, 110 limitation on it, just the term ';oyerha nl " what ~ould you make of it? HEAHI~G EXA::.\lIXER SCHRUP: Mr. Freel', you are confining yourself to transmission:::, are you? l\1R. 1!"'REER: Yes, sir, I am.

THE 'VIT::~ESS: I would imagine they would take the transmission out of the car, open it up, inspect it, and replace all used or worn parts to put it back in complete operating: condition again.

22 See also the testimony of customer-witness Soller;; at Tr. 725-726 and mechanicwitnpss Bail' at Tr. 812. Respondents would argue that their advertising representations of "factory rebuilt" and "o'\el'baul" are a correct usage of trade terminology. As noted in footnote 17 supra, respondents do not sen "factory rebuilt" transmissions and the record dispute(,,: the trade meaning: (if " cn-erhaul" as contended for by l'e:"ponc1ents. See. testimony of meehanic-witness Bail' at Tr. 834-839. Further, the pertinent issue in this proceeding is the meaning to the prospective customer of the respondents' ad'\ertising representations, See Tr. 819, 827-839.

Findings 73 F.

9. TJle preceding customer-witness further testified at Tr. 777 and 779-780 as follo\Y~ :

Q. I would like to direct your attention back to the advertisement again. I .believe you mentioned that there was available a lifetime warranty and written guarantee on all work.

A. Tba t' s right.

Q, Did you expect to receive some sort of guarantee on the work clone on your automobile? A, On the rese.al job, yes.

Q. I now show you a copy of what purports to be a contract between :.\11'. J, . Schneider and the General Transmissions Corporation and ask you if you recognize that.

A. Yes, I do. It is a copy of my bill and a work sheet, a repair sheet. Q. You say copy. "'hat clo you mean by copy? Is it a Xerox or a yellow carbon 01'- A. It is a yellow carbon of the original. This is the copy they returned to me stamped "Paid.

Q, Wba t is this down here? A, " Xot guaranteed"

Q. Yes.

A. Well, I c1isco,' ered that the next day.

Q. You dic1n 't ~ee it at the time you paid? A. Xo, I didn t. It was close to 5 :30 in the evening and they were rushing around and I had to wait for them to put the transmission back in the car. didn t notice it because it was stamped dO,Vll at the bottom. 'When I got home, I found out that the job ,\"asn t guaranteed, bee-a use the car wR' t functioning llropel"ly on the way home.

Q, Did you have any discussion with them about this? A. When I got horne, I called, The manager of the shop was out and I talked to one of the mechanics. He said, "I told the manager the transmission needed a ne,\" pump nncl he \\"talked away from it, and that was it." I just got the car and left.

Q. Was the automobile still leaking? \. It \YHS still lealdng, and when you would stop for a traffic light and go to start up. it wouldn t go. It ,,'ould all of a sudden leap out. HEARING EXAMINER SCHRUP: Did it have that trouble when you took it in? THE WITXESS: No. it didn t. It was functioning perfectly when I took it in except for the little oil that was leaking.

The refusal of the respondents to give the customer-witness the. expected advertised guarmitee or "warranty of the respondents' work requires a further word.23 The testimony of other customer-witnesses 23 The renewed motion of respondents ' counsel to strike the testimony of this customerwitness is herein denied. See the testimony of this customer-witness at Tr. 775 and that of witness Dlutz at Tr. 240. .Also see the colloquy between the hearing examiner and counsel at Tr. 78J.-782, 784-787. Respondents' further contention that this particular transaction was purely an intrastate phase of respondents' business and not subject to tile C'.-,mmission s jl1l'bdie:tion if! without merit. See, C. E, Yie71O fj d:' Co. 51 F. C. Decisions at 1143.

, ? GENERAL TRANSMISSIONS CORP. OF WASHINGTON ET AL. 415 '399 Findings herein disclosed the refusal of the respondents to furnish an itemized statement 2,1 of the labor done and the parts installed 25 in the face or the respondents' guarantee 'Or warranty limitations undisclosed in advance to prospeeti ve customers that they are for a limited time only and on a 50-50~' basis, that is, the customer pays fifty percent of both the cost of the labor and the retail price of the parts installed.26 This serves the purpose of not only facilitating the respondents ' "lo-balling" techniques but also places the customer at an unexpected and unfair disadvantage in attempting to establish the validity of bills later tendered 27 by the respondents f0'r guarantee or warranty work. the foregoing tn,ke.s 'on 'added weight in the light or the record facts in this proceeding in that various of the customer-witnesses relying on respondents ' acl- 2~ For E'example, the testimony of customer-witness Jacobs at Tr. 259 : So I went out to Langley Park in company with this fine young gentleman, and I went in and I got $400 cash and he carried me bac!;: to the General Transmission Company and I gave the man tlle $400, I says, 'Now, will you please give me an itemized statement of what work was done here.' I says, ' I would like to know what I'm paying for.' He says, We do not give itemized statements.' I says, 'I never heard of that.' He says, ' I'm sorry, but we don t give itemized statements.' I says, ' Why not' Well ' he says, ' in the first place be says, 'we have secret methods of doing our work here and,' he says, ' we don t like to itemize them so other companies will know exactly the way we fix transmissions.' He says. ' This is our business.' He says The only thing we can do ' he says, ' we can give you a receipt for your money, and we will give you our regular standard guarantee.' I says, What is this guarantee ? He says, I think it was either four months or 90 days or 4. 000 miles, Well, at that stage I was pretty disgusted, and I says, Well, all right.' I had no alternative. In other words, unless I complied with what he told me to do, no car, 25 Cnlllp,ue testimony~' of mechanic-,vitness Bail' as to bis customary method of itemizing trammission repairs at Tr. 839 and see Comm. Ex. No. 46. 20 See testimony of witness Dlutz at Tr. 202-203, See also the testimony of customerwitness Johnson at Tr. 282; customer-witness Briscoe at Tr. 883-885, 27 See the testimony of customer-witness .Johnson at Tr. 283-285, 287-288, 291-295. This witness testified with relation to his knowledge of the respondents ' repair bills on his automobile transmission:

Q, I am asking you do you know what he did the second time? 2... No, you never know. You don t know what they did the first time, actually. Customer-witness Satterfield at Tr. 666 testified as to his experience with the respondents as follows:

Q. How did you select the garage that you went to? A. This selection is made by the way that I do a lot of things. I got an accumulation of estimates and AAMCO, as previously mentioned-I am familiar with the outlet-gave me an estimate. :Mr. Green, whom is in the courtroom right here, gave me an estimate after a road test of approximately $75,00. The nomenclature of the repair, it was some type of an overhaul or repair kit.

I am a layman in this sense and I do not recall the nomenclature. Q, You mentioned that you are familiar-well, strike that. You stated that Mr. Green gave you a quotation of- A, Verbally only.

Q, Thi s was on the telephone? A, No, this was not. This was at the location on Bladensburg Road, Northeast, Wasblngton, D,C., after a test drive.

Q. Do you recall the amount of that? A. As vaguely-it is vague in my mind. because the amount has gone into excess of $400. 00 at this time, Eut the original estimate-well, the original estimate was less than $100. 00. I believe it was $75.00. I cannot say exactly $75,00, but I will swear to God that it was less tl1an $100. 00. " See also this customer-witnesses' further testimony at Tr. 667-670, 683-685, \ 416 FEDERAL TRADE COl\:G.IISSION DECISIONS iFindings 73 F.

~S have. testi- ertising representations as being transmission specialists fied to both the uncorrected as \\ell as the further automobile transmission troubles they encountered follo\\ing the respondents unswtisfactory ,york or servicing, 10. In the conduct of their business and at all times mentioned here- , respondents have been in substantial competition in commerce, with corporations, firms and individuals in the sale of automotive parts and services of the same general kind and nature as those sold bv responclents. Respondents herein would argue that the. instituting of these proceedings was an abuse of discretion by the Commission and not in the public interest. This contention ,,-as rejected by the Commission in its order and opinion herein of December 28, 19G6. This statement in the foregoing Commission opinion of December 28 1966 (70 F. C. 1848, 1850), is further noted by the hearing examiner: Respondents rely upon the Commission s order of December 1 , 1966 (70 C. 1833), as an invitation for them to produce direct evidence as to the practices of their competitors. They bate misconstrued the Commission s order, If anything. the language relied upon indicates that the Commission intends to rely upon its o,vn in'lestiga tion of the llla tters alleged by respondents. Tbe Commission s order or December 1 made it clear that it \\"ould take respondents allegation~ lJ;Hler C'onsi(lE'ration lij1(1 take ,,"hatewl' action is appropriate. 'Ibis it intends to do, 11. Re;;;ponc1ents would further flrp:lle that any cease nml desist order to be is:3lleLt in this proceeding should not include the individual respondent Dlutz. The \Vashington based corporate. respondent herein is but the cl'eatureol the individual respondent Dlutz \\ho in turn is engaged in "\Tarious other automobile transmission sales: repair and service enterprises else" here. 30 Commission E:s:hibit X o. 1, the annual report of General Transl11issions Corporation of \Vashington, as received and filed April 7 1966, in the Office of the Recorder or Deeds, Corporation Diyision \Vashington, D. , lists the. follo"ing:

Director-\Yalter Dlutz, 5818 Torresdale Ave., Phila. , Fa. Director-Virginia E, Dlutz, 5818 Torresdale Ave., Pbila. , Fa. Director-Stanton S. Oswald, 12th Floor Packard Bldg., Pbila., Fa. President- V\'alter Dlutz, same as above Secretary-Virginia E. Dlutz, same as above Treasurer-\Yalter Dlutz, same as above 25 See testimony of customer-witness Jacobs at Tr. 248; customer-witness Satterfield at Tr, 679-681 ; customer-witness Briscoe at Tr. 870-871. 29 The testimony of customer-witness Johnson at Tr. 289 appears to sum up the pre- ,ailing situation:

Q. Wh:- didn t you take it back to the respondents? A, Well, because I figured they had two cracks at it and they couldn t fix it, so what' the use of going back and keep getting taken. " See also testimony of customer-witness :\Iont~omery at 'fr. 588- 591 : custOJJ1pl'-\\"itnes" S'attel'fi0l(1at 1.'1'.(jS5. 30 See testimony of the witness Dlutz at Tr. 215-217, 227-228, 234. 240 , and see also footnote 5, supra.

GENERAL 'TRANSMISSIONS CORP. OF WASHINGTON ET AL. 417 399 Findings ,Valter Dlutz O\"Vns all the corporation s stock; Virginia E. Dlutz is his \Vife (Tr. 154). Stanton S. Oswald is a law partner of the respondents' counsel in this proceeding (Tr. 521). The corporation has but 10 shares of common stock of $100 par value per share. The individual respondent Green, one of a changing number of managers of the ,Yashington based corporate respondent herein formerly \\-worked as a manager of a. Dlutz automobile transmission sales, repair or service enterprise in ,Vilmington, Delaware, and is no\\' the franchised operator of a Dlntz automobile transmission sales, repair or service enterprise in NIilwaukee, \Yisconsin. Any order to cease and desist herein not encompassing the respondent Dlutz both individually and as an officer of the corporate respondent would appear both improvident and futile. The record herein discloses many facts which contradict the self-serving testimony of the witness Dlutz as to claimed lack of knowledge and responsibility on his part for the advertising representations and accompanying acts and practices challenged in the complaint.

The self-serving denials of knowledge, responsibility or control by officer-owners of the acts and practices of a corporation has been held insufficient to reverse a finding that the officer should be named individrecently as .June S, 1966, the Eighth Circuitually in an order. ~L~S affirmed the Commission in naming .J ohn ..:-L Guziak individually in an order. G1.lziak v. 361 F. 2d 700, 704 (1966). As in the insta,nt proceeding Guziak \Vas the O\vner of several.l corporations engaged in the same business. On the issue of personal liability the court sflid : In attacking the findings, the petitioner has relied he;n-i1:- l11JOn his O,\Y11 te~timany a11(l the fact that !llall~- of tht' fi1lCli1!~,':-:: \Lllp h~i:-::i:'ll l1)1'-'n actiyitips of rhe corporations rather" than on his p0r:-::oral acti-dries. These contentions are not com-incing. As the moti,-ating and controlling force behind the col'lJOl'atiol1S , the petitioner was responsible for their acti,ities. The Commission was fully justified in finding the petitioner responsible for the corporate activities and in enjoining him from engaging in similar activities in the future. Dei//'us Watch CO. Y. C" 332 F. 2d 313 (8th Cir, ID63), 32-4:-23; C. v. Standard, Ed'/Icatiol/. Society, 302 U. S. 112, 119 (1937). Furthermore, the mere fact that some of the findings of fact were in conflict with petitioner testimony does not render them erroneous, Tbe fil1lling' s of fact in this case were supported by substantial evidence, SllCl1 findings are therefore collclnsiye and binding upon this court.

~1 See testimony of the witness Green at footnote 6, supra, and testimony of the customerwitness dealing 'with this indi,idnal respondent cited supra. .. .

418 FEDERAL TRADE CO=\DIISfnO::-.J DECISIOI\S Order. 73 F. T.

COXCL"(78IOX8 1. The Federal Tl'llcle Commission hrt s inri::;c1ictiol1 of the subiect matter nnd of the respondents in this proceed1inp:. 2. The complaint hc:rein states a cause of action, and this proceeding is in the public. interest.

3. The use by respondents or the Ltlse, misleading: and deceptive representations, statements and accompanying' ads and practices as found herein has had, and now has, the capacity and tendency to mislead members of the purchasing public. into the erroneous and mistaken belief that the said representations and statements '~ ere and are true and into substantial purchases of the respondel1ts products and services by reason of such erroneous and mistaken belier. 4. The nets and practices of the respondents, as herein found1~ ,were a:ad are all to the prejudice and injury of the public and of the respondents' competitors illld constituted ancl now constitute unfair ll1ethods of competition in commerce and unfair nncl deceptive, nets and practices in commerce in violation of Section 5 of the Federal Trade Comnlission Act.

5. The follo,ying order to cease and desist should be and is herein issued.

ORDER TO CEASE AND DESIST It is once?'ed. That. respondents General Transmissions Corporation of \Vashington, a corporation, and its officers, and \~Valter Dlntz. indivicll1ftlly and as an officer of said corporation, and \Villiam .J. Green Jr., individually and as an agent of said corporation, an.c1 their agents representatives and employees, directly or through any corporate or other device ~ in connection with the advertising, offering for sale and sale, repair and servicing of automobile transmissions and related parts in commerce, as "commerce" is defined in the Federal Trade Coil1l11ission Act, do forthwith cease and desist from: 1. Falsely representing, in any manner, that the low prices guarantees and warranties, one-day service., no down payment, free; towing and easy credit terms advertised and set forth in the respondents' sales, repair and service offers to customers are available and obtained by all customers of the respondents. 2. Falsely representing, in any manner, the low prices advertised and set forth in the respondents' sale, repair and service offers to be the entire charge to customers, including all labor GENERAL TRANSMISSIONS CORP. OF WASHINGTON ET AL. 419 899 Order and necessary parts, for which the respondents will remove, reseal or overhaul and reinstall a customer s transmission or remove and reinstall a ractory or other rebuilt transmission. 3. Using in any maniler the above representations to attract customers to the respondents' place of business for the purpose of inducting customers to enter into sale, repair or service transactions more extensive or at higher prices.

4. Failing to disclose to customers in advance that the respondents' guarantees and warranties contain conditions and limitations including a charge to customers of 50 percent or the price of the parts and the labor supplied by the respondents under the guarantees and warranties.

5. Failing to furnish customers itemized stateIl1ents of the parts and labor paid ror and subject to the respondents' guarantees and warranties and itemized statements of the parts and labor thel' eafter paid for by customers under the respondents' guarantees and warranties.

6. Falsely representing, in any manner, that transmissions rebuilt by the respondents are factory rebuilt; that transmissions rebuilt other than in a factory generally engaged in such rebuilding are factory rebuilt; that the respondents offer for sale factory rebuilt transmissions.

7. Failing to disclose to customers in advance that to remove disassemble, reassemble and reinstall a transmission without repair by the respondents will result in an aclditionallabor charge to customers.

8. Falsely representing, in any manner, the need by customers for a transmission adjustment, servicing, reseal, overhaul, rebuilding, or the replacement of any transmission or other part required to the operation of the transmission.

9. Falsely representing, in any manner, the type and number of parts and the amount or labor necessary to or supplied to customers to adjust, service, reseal, overhaul, rebuild, or make the transmission operable.

10. Falsely representing, in any manner, the nature, extent and quality of a.ny offered or consummated transmission sale, re.pair or service by the respondents.

420 FEDERAL TRADE CO:\DIISSION DECISIONS Opinion 73 F.

OPI::\'IOX OF TI-IE CO)DUSSIOX FEBRU.'\.RY :2 3 : 1 D G S By EL3IAN Oom/lnissionel':

The complaint in this proceeding, issued Se,ptember 26 , 1966 charged that the corporate and individual respondents have violated Section 5 of the Federal Trade Commission Act, 15 D. C. S 45 by engaging in various unfair or deceptive acts and practices Rnd unfair methods of competition in commerce in the sale and repair of automotive transmissions in the District of Columbia. Bv answers dated October 28 , 1966, the respondents denied the allegations' of the complaint and affirmatively alleged that' their acts and practices are the same in nlJ material respects as those used by their competitors, that if respondents' acts and practices are unlawful, those of their competitors are equally unlaw.ful, and that entry of an order against respondents without simultaneously restricting the similar practices of their competitors would seriously injure respondents and might 'force them out of business.

Before any hearings "ere held, on N m-member 14~ 1966. respondents filed a motion requesting; that proceedings be ~nspenc1ed until the Commission acted to proscribe the allegedly similar acti,-ities of their competitors. That motion ,"Ias denied b~- the Commission on December 1 1966 (70 F. C. 1833J. Respondents then applied to the hearing examiner for an order to take depositions nnd for the issuance of supporting subpoenas (1ucrs tccum directed to their competitors. The examiner denied the application on December l:;~ and the Commission by order dated December 2.8 1066 Cia F. T.C 18-iSJ, c1eniec1respollc1ents request for permission to file an interlocutory appea.l. After full evidentiary hearings, at ,,-which respondents elected not to call any defense "witnesses, instead resting their case after presentatioll of the. . case-in-c.chief~ the examiner issued an initial decision in which he upheld most of the charges in the complaint but entered an order different from that proposed h:v compla.int counsel. The case is before us on the cross-appe'lls or respondents and complaint counsel. Respondents contend primarily that the examiner erred in not clismissing the complaint ngaint the incli,-ic111al respondent, \YalteT Dlutz; that the evidence is insufficient to support the char:';!:es of violation of Section 5; and that entry of an order ,1against. respondents ,",without proceeding against their competitors ',yonlclnot be in the public interest. Complaint counsel argue that the order entered by the examiner is too narrow and \\ould not effectively terminate the violations found to have occurred.

GENERAL TRANSMISSIONS CORP. OF '\VASHINGTON ET AL. 421 399 Opinion The facts are adequately set out in the initial decision and need not be repeated at length hel e. To the extent they are not inconsistent with findings made in this opinion, the examiner s findings are hereby adopted as those of the Commission.

General Transmissions Corporation of ",Vashington is a corporation organized and doing business untler the hLws of \Vashington, D. ,with its principal place of business at 2912 Bladensburg Road in ,Yashington. Respondent ,Yilliam ,J. Green, Jr., was at all relevant times the corporation s general manager, "while respondent ,Yalter Dlutz is president of the corporation, one of its three directors, and its sole stockholder. I Respondents are engaged generally in the business of repairing, overhauling, rebuilding, and selling automotive transmissions.

The complaint a-alleges, and the examiner found, that respondents through their ach-ertising and by means of oral representations, had made. a variety of false and misleading statements concerning the pricr and rluality of their selTices and the conditions upon which those selTlces would be performed. :.\101'8 import;lnt, respondents'. whole method or operc1t icn \rn~ found to be unfair and deceptive, disclosing a common pattern by \\"which a customer was induced to authorize respondents to repair his vehicle by representations as to the lmv cost of repairs, \yas later informed or the need for much more extensive repairs than those originally anticipated, and was told that to reassemble and reinstall the tran3mission \without repair would require an additional charge over the achertised price or would be impossible \without the SU J1)osedlv necessarv additional \york and )arts.~ Thismethod or operation.lis described by the shol'thandlabel " lo-balling" inthe initial decision. \Ye ha~ e rend the record and find that the evidence amply supports the examiner s findings in this regard. In addition to testimony cited in the. initial decision, it is pertinent to note here the testimony of seye.ral witnesses, all or Iyho111 were credited by the examiner, indica-ring the flagrant nature of the violations here round. For example, the customer-witness James T. Smith testified that after test. driving his car respondent Green informed him that the transmission needed new clutches, new sea 18 and n, general on~l'hanl and that the cost. of these 1 Hesponclent Dlutz s wife is the only other officer of the corporation and is also a director.

Cj, Holland Furnace Co. v. Federal Trade Commission 285 F. 2d 302 (7th Cir. 1961), atj'inning, 55 F. C. 55 (1958); see also Hollancl Funzace Coo v. Federal 'l' ade Comm-issian 269 F. 2d 203 (7th Cir. 1959), cert. den-ied, 361 U. S. 932 (1960), g., , 422 FEDERAL TRADE C0111vHSSION DECISIONS Opinion 73 Y.

repairs \\ould be low. (R. 851.) jHr. Smith authorized the repairs. After the alleged overhaul, he encountered 1l10l'C~ cliHiculties with tlle transmission and brought the car back to respondents' place of business. J-Iov:ever, he did not identify himself nor did he show his guarantee. After a test drive he "as informed that the transmission needed an overhaul new elutches and seals, anc1new bands-the same identical thing he told me the first time. So that is when I sprung the guarantee on him. So, then, he wanted to know \\hy, why I did not sho\\ him the guarantee, you k110\"-, the warranty, in the first place. * * *" (R. 852. Virtually all the other customer-witnesses testified to similar re.presentations by respondents as to the minor nature of the repairs needed and the low cost of their services, designed to obtain the eustomer s authorization to work on the car, at which point the cost of repairs represented to be necessary would be sharply inflated, but this testimony of ~lr. Smith makes clear the systematic nature of these practices. Seen in ,the context of the pattern established by the testimony of all these witnesses, respondents' dealings with Mr. Smith negate their protestations that all that has been shown is an occasional underestimate of the cost of their services and that there is insufficient evidence to support the examiner s findings that they systematically inveigled customers into authorizing repairs by deliberately misrepresenting the nature and extent of the required repairs and that they 'had no intention of providing the advertised services at the low advertised prices.

In any event, seemingly conc.lusive evidence of the fraud here involved is to be found in the testimony of ~lr. Smith, and other witnesses familiar with transmissions, who disassembled transmissions on which extensive repairs had allegedly been made by respondents and found that no such repairs had been made. On :r,lr. Smith' s second trip to respondents' establishment, they represented to him that the transmission would have to be rebuilt. After they had allegedly performed these services, the transmission, while operable, continued to perform inadequately. He and .a friend who works as a repairman" taking apart and rebuilding transmissions (R. 855 861), disassembled 3 In this connection it is worth noting, in addition to the evidence cited in the initial decision, that many of the customer-witnesses experiencing minor difficulty with their automobiles were told an identical story by respondents, that after the transmission had been disassembled it was discovered to contain metal filings which had ruined important parts of the transmission necessitating extensive, and expensive, additional repairs, See, R. 492 (customer-witness Klein); 776 (customer-witness Schneider); 878, SH6 (customer-witness Briscoe) ; ct. R. 588, where the witness Montgomery, who was f:lmiliar with transmissions, testified that "an automatic transmission will not operate with any dirt at aU on it.

(g :

GENERAL TRANSMISSIONS CORP. OF WASHINGTON ET AL. 423 399 Opinion :&11'. Smith's transmission 4 and found that repairs alleged to have been made by respondents had not been made and discovered in particular that a major part alleged to have been put in the transmission, a new reverse cone, had not been put in. (R. 855-58. Similarly, another customer, vVilliam E. Shanklin, testified that respondents 'had allegedly replaced his torque converter, but that in fact the old converter was never taken off his car and a washer that he had placed on the converter two years before when doing some ,york on it had not been touched. (H 807-98. ) I-Ie ,lent on to explain that he later went to court and obtained a decree requiring respondents to place a new factory rebuilt transmission in his ear. Respondents purported to perform their obligation under the decree but apparently did not replace the old transmission-a fact that became evident since the supposedly new transmission had the same unpainted generally dirty appearance of the old one, contained 'an unusual clamp, not ordinarily found on a transmission, that had been installed by respondents on the old transmission to hold the emergency brake cable 5 and exhibited in place after respondents had damaged the old ca;ble the same defects in performance as did the former transmission. R. 897-904.

"'\Ve note also the testimony of the expert witness, Eugene Bair, who epaired the transmission of the witness George E. Sollers less than two months after respondents had allegedly installed a rebuilt transmission. (R. 719, CX 35.) He testified that in his opinion the transmission had not been rebuilt in any recent time and that certain of the hard" parts 6 were worn and torn up in a way that would have taken n. considerable amount of time to do." He stated that "some ears can run :30 000 miles and never bother" the part of the transmission that he found to be worn and that it would take "quite a bit longer" than 30 days to do the kind of damage that he found. (R 794-97. "\Vithout belaboring the point and without burdening this opinion withfllrther examples of respondents' practices, some of which are also set out in the initial decision, we think it clear from the record 4 l\Ir. Smith had himself taken apart several transmissions and was well qualified to tenify to what he observed when he and his friend worked on the transmission prel"iously rebuilt" (CX 57) by respondents. R. 856-60.

5 That respondents damaged the car in working on it was not unusual. Several witnesses testified to the generally sloppy work done by respondents. See, ,f!. R. 444ease all over car, speedometer unhooked), R. 315-16 (car returned without dip stick for testing transmission fluid level) ; R. 285-87 (car left on the street in a snow storm l'e~polldents later unable to find it after snow stopped). 13In the trade the words "soft service, " or "friction " parts are used to describe parts such as clutches and seals, while the term "hard" parts refers to items like the pump, pump cover. valve body and gears, (R. 813-14, g Opinion 73 F.

that respondents' entire method of operation is tainted by deception and illegality. This is not merely a case of fake or bait advertising, inadequate disclosure of the terms of a guarantee and deceptive use of trade terms, although those elements are indeed present. The record discloses a systematic method of luring customers into authorizing respondents to repair their cars, the transmissions of which, for the most part, exhibited minor defects in performance, by giving low estimates of the cost of the work to be clone, follo'.,ecl by the supposed discon~.ry after disassembling the transmission of unexpected defeets necessitating much more costly repairs, and a refusal, based on the a leged impossibility of reassembling the transmission, to reinstall the transmission in its original condition. The customer was then confronted "ith the I-Iobson s choice of paying a much higher price than had been anticipated, or losing his automobile. Almost invariably the result was that respondents were authorized to do the additional "Work-which "as usually unnecessary and \'\as often not performedand any repairs made were usually unsatisfactory. In short, the evidence supports the conclusion that respondents engaged in the worst kind of II'aud, taklng ad' antagc of their O,\Yll apparent expertise which their Cllstomers lacked.; and tlult in many cases they clic1not make the expensive repairs that they claimed to have made. In these circumstances respondents' contention that the evidence in the record is insufficient, since. there is no eyiclence as to the volume their business and the transactions here involved may arguably represent only a small percentage of their sales, is unpel'suasi,- . The present. record discloses several cases of willful fraud, embodied in the deliberate nonperformance or se,rvices for w hic.h payment was received. Even in the unlikely event that the:se instance.es represent a small fraction of the total sales made by respondents or e\-en if the bilked customers l'eDresent only a. small );lrt of the total number of theircustomers,.J.an order to cease and desist would be justified.. ~Ioreover, the testimony of all the customer-witnesses establishes dear pattern and reveals a method of doing business so permeated by deception as to negate respondents' contention that there are plausible innocent expl anations for the dissatisfaction of their customers and th:1t ,,-hat is involved here is an occasional mistaken analysis of the ~ III this connection we note that there is evidence indicating that when respondents' showed their customers mangled parts of transmissions alleged to have come from their a utoll1obiles, at least: in some cases, the worn parts shown to customers c1f1:l not come from the C\l;.:tomel"s own car, See, R. 587- , 606-08 (customer-witness Montgomery) ; R. 874-76, 890-91 (customer-witness Briscoe), Cf. Coro, Ino. v, Pedera.l T,'ade Commission 338 F. 2d 149, 154-55 (1st Cir, 1964), Ccrt. denied, 380 U,S. 954 (1965).

,. \. GENERAL TRANSMISSIONS CORP. OF vVASHINGTON ET AL. 425 399 Opinion defects in a customer s transmission ,,-ith a resulting underestimate of the. cost of the parts and services necessary to make tbc required re- 9 Hesponde.nts cite Globe Reade7'8 Sef' vice Inc. v. Federal Tradepairs. Com.mission 285 F. 2d 692 (7th Gir. 1961), to support their position. "\Vhile the proposition of la"- for which tl1nt case is cited is far from settlec1 lo it does not, in any event, control the insta.nt proceeding. The record in that case was barren of any e\-ic1ence that respondents had encouraged or tacitly approved the action of their solicitors f~ol1ncl to be unlaw' ful by the Commission-in fact the only available evidence Ivas to the contrary-and there ,vas no e,-iclence of deliberate fl'nncl. It ,yas in that conte.xt that. failure to introduce evidence as to the percentage of respondents' sales tainted by the. deceptive practice Ivas held to nmdel' the Commission s finding that respondents had engaged in "bait and s\\itch:~ practices defective. In the instant case, hmTeTcr, there is both direct evidence of fraud and ample testimony Innking deal' that the deceptions charged are a basic part of l'e,sponclents' way of doing business.

For similar reasons we reject re.spondents contention that this proceeding should be suspended until an investigation of respondents competitors is completed and proceedings are brought against them. In declining to hear an appeal from the denial of a discoyC'ry motion by respondents lllade on the same ground, I\e stated: An unfair trade practice does not cease to be so beea use competitors engage in identical practices, Federal Trade Commission 1Yinsted J-Josiei' !J Co" :?5'3 r.S, 483, 493-9-:1: (1022), The wide~.pread 1Jj'e,alence nf an unfair trf1l1e practicl:' neither constitutes a legal defense OIl the merits to the allegations of a complaint nor provides any l'E'ascn for the Commis:~ion to withhold remeclial or COl'l'PCtiH:' action. As pre\iousl:;- indicated, the extent tc, iyhich the alle'6e(11~ illeg' al pr:1cticps are also follo'\"'.'ed by competi tors "ill be considered by the Commi;3:::ion in exercising its discret.ionlll" pO\YE'1'8 to ra8hion appropria.te relk!'.l" Consideration of respondents: llnfa,ir and decepti..-e business practices, the facts of which are now before us in an adjudicative record D See initial decision pp, 40D-411 and eyjclence tJJere cited. In pal'ticnln1' OOm11:11'P tllc~ fl-uctuating, but consistently low prices ad,erti!"ed by respondents for Pill'ticl1Jflr services v;ith the actual prices paid by the customer-witnesses. Initial decision p, 411, 10 See National Tra.de Pu,bUca.Uo"/ts Serv., Inc. Fedel.a! 'Trade Commi,osion 300 F. 2d 790 (8th Cir, 1962), reaching a contrary result on ,irtually identical fa cts; of, 8t(/ ndard Distributors, IHC, v. Federa.l Trade Commission 211 F, 2d 7. 12 (2nd Cir. 195'1). 1.1 See, g., Sta,nda.rd Distri.butors, 11Ic. v. Federal Trade Collnni..'si')ii. 211 F, 2c1 7 (2nd Cir. 1954) ; Consumer Sales Corp. v, Fedeml Trade Commission 198 F, 2d 404, 407 (2nd Cil', 1952), cert, den-fed, 344 U. S, 912. (1953) ; Steelco Sta.iniess Stee!, IIlC, Fedei' al Trade Commission 187 F. 2d 693, 696-97 (7th Cir, 1951). 1" In addition to the Wfnsted Hosi.e:rll case. see, Federal Trade Com lilissioi~ Y. R. P. Keppel Bro., Inc" 291 U. S, 304, 312-13 (1934) ; Independent Directo1.y Corp, v, Federal Tra.de Commissi.on, 188 F, 2d 468. 471 (2nd Cir, 195:L) Permaiicilte Ce/llent Co" DocJ.;et 2\0. 7G~~9 (April 24, 1964) (65 F. 'l', C, .nO). 418-3145-7'2- 426 FEDERAL TRADE CO:YE/IISSION DECISIONS Opinion 73 F.

made after a full and fair hearing, compels the conclusion that to delay the issuance of a cease and desist order against these practices would be harmful to the public interest.13 Respondents' plea that their competitors are engaged in similar practices is based entirely on nmyspaper advertisements of their competitors that are somewhat similar in content to respondents' advertisements. But, as we have noteel, deceptive advertising constitutes only one element of the charges against respondents and the present record discloses an unfair method of operation, and a number of violations of law, the illegality of which does not depend on advertising. The bi1re citation of similar advertising claims made by respondents' competitors does not show that their competitors fail to perform in accordance with those claims and certainly does not establish that the fraudulent course of conduct shown in this record reflects a broader industrywide pattern. Nor has there been any showing that requiring respondents to advertise and perform their services honestly, fairly and in accordance with the law will adversely affect their business or place them at a competitive disadvantage. Especially where an industry is rife with fraud, an honest seller should have no trouble attracting-and keeping-customers. In view of the injury to the consuming public that would occur were respondents permitted to continue their illegal activities, ,ye think that the sooner an appropriate order is issued, the better it will be for the public.

III The order entered by the examiner is not completely adequate. to eliminate many of respondents' illegal practices 'and therefore it must be modified in certain respects. ~lore specifically, the exa.miner linllted his order to prohibit dec.eptive practices only "in connection with the advertising, offering for sale and sale, repair and servicing of automobile transmissions and related parts. * * *" No reason is given for so limiting the order. It is true that the practices giving rise to this proceeding concern the sale and repa.ir of transmissions but it ,yonld be relatively easy for respondents to utilize their present illegal.l tactics in 13 In . this regard we note that among respondents' customers are the poor and the uneducated on whom the burden of paying respondents' inflated charges weighs most heavily and who are least equipped to seek redress from respondents either informally or by resort to the courts.

14 See, g.) Federal Trade Commission v. Universal-Runclle Corp,) 387 U. S. 244 (1967) ; J1 oog Inclust'l"'iesv. Federal Trade Commission) 355 U. S. 411 (1958), afti1"1lling inter alia O. E. Niehoff re Co.) 51 F. C. 1114 , 1153 (1955) Benrus Watch Co. '1' Federal Trade Commission 352 F. 2d 313, 321 (8th Cir. 1965), cert. dented 384 U. S. 939 (1966); Clinton Watch Co. v. Federal Trade Commission 291 F. 2d 838. 840-41 (7th Clr. 1961), C6/"t, denied 368 U. S. 952 (1962) ; see also p.authorities cited supra note 12. ), GENERAL TRANSMISSIONS CORP. OF WASHINGTON ET AL. 42' 399 .opinion connection \', ith the sale and repair of other automobile parts-for example, mniflel's. brakes, or even l"ngjne tune ups and overhauls 15_01' in c.only.lection \~'it.h the sale and reprtir or radios, television sets, home appliances nncl a lli.1mber of other products. Nor is it unrealistic to rear that respondent::; might s\\itch to one of these related fields in an effort to evade. the Commis~jon 's order. In view of the ease with ,which respondents deceptive practices could be adapted to other fields and in view of the magnitude of the c1ecepti ye practices here found and their effect. on consume-rs, we think respondents should be prevented from engaging in their deceptive and fraudulent pTflctices in connection with the sale or any other product or services. HI \;Ve are therefore modifying the. order to give it broader flpplic.ability thus preventing evasion of the order or recurrence in any other guise of the fraudulent activities revealed in this record. Should respondents in fact discontinue their transmission business at some future time to enter a wholly different form of business as to which the operation of the Commission order may prove unduly burdensome, Section 3.72 (b) (2) the Commi~sion s Rules provides a procedure by which respondents can move to reopen and to modify the order in light of such changedconditions.liOur order is intended to eliminate each of the deceptive activities disclosed in this record, and to require respondents to perrOI'm their sen-ices honestly and fairly without misrepresenting the cost to their customers. It proseribes the practice of attracting customers by advertising low prices for serdces or giving low estimates of the cost oJ nec.essary repairs when in fact respondents do not intend to perform the advertised selTice at the advertised price or when the estimate is eit hft deliberately understated or is inaecurate because of the impossibiJjty of analyzing the defec.t without disassembling the transmission. Also prohibited is respondents' practice, once having obtained authori- 15 See, CX 50, an advertisement of respondents which indicates that they repair trau8missions and motors.

1G See g" Fedeml Trade Commission v. Colgate-Pabnolive Co., 380 V, S. 374, 394-95 (1965) ; FeclCl' a/. Trade Com.mission v. National Lead Co. 352 V. S. 419, 428-31 (1957); Federal Tmde Commission v. Ruberoid Co., 343 V,S. 470, 473-75 (1952); Benrtls Watch Co. v. Federal Trade Commission 352 F. 2.d 313, 324 (8th Cir. 1965), cert. de/vied, 384 CS, 939 (1966): Niresk Indll.stries, Inc. v. Federal T,-ade Commission, 278 F. 2d 337 342-4::: (7th Cir, cert. denied, 364 V, S. 883 (1960); P. Lo1'i/.lard Co. v. Federal Tracie Co/11.mission 186 F. 2c1 52. 58-59 (4th Cir. 1950) cf. Gulf Coast .Alwrninwn Supply, Inc., Docket No. 8662 (l\Iarch 25, 1967) (71 F. C. 339) ; The Empeco Corp., Docket No. 8702 (February 14, 1967) (71 F. C. 158) ; Panat Jewelry Co., Inc., Docket No. 8660 (February 8. 1967) (71 F. C. 99).

17 Cf. Cons1lI11e;- Sales Corp. v, Federal Trade Commission, 198 F. 2d 404, 408-09 (2nd Cir. 1952), cert. dcn.ied, 344 V,S, 912 (lD53); see also Section 3,61(c) of the Rules, which pro"ides an expeditious method for a respondent to secure advice from the Commission as to whether a proposed course of action complies with an outstanding order. g, .

Opinion 73 F.

zation to repair n,n automobile, of inflating the cost of repairs and refusing to replac.e the transmission in its original condition, leaving the cn:~tomer no real choice but to authorize the more expensive repairs. The evidence establishes that another integral element in respondents illegal course of dealing is their refusal to provide their customers with itemized statements of the parts and labor required to repair the transmissions.Is Since others in this trade routinely provide such statements I9 requiring respondents to do so will not put them at any competitive disac1yantage.

These provisions of the order, together \\-ith a provision obligating' respondents not to misrepresent the services actually performed and permitting them to charge only for services that hayc. in fad been performed, strike at the heart of respondents deceptive practices. They are not inte.nde.cl to put respondents out of business or to make it impossible for them to compete, nor should they hn.yc. this effect. All that is required is that respondents earry on their business hone~tly, free of fraud and deception. Our order I"\lll not prevent respondents from gi ving potential customers an estimate as to the cost of repair's in cases where externa.l obseIT~1.tion and/or a test .dri'- e permit a reasonably accurate diag"nosis of the defects in a car. I-IO'iH'w' L in cases Iyhere an accurate e;;;timate is inl1JOssible. none mnv be. g:iyell. and. if the orjginal analysis. although bona fide, proves faulty, respondents must promptly 20 inform the customer and must stand ready in every case to replace the transmission in its original condition at a specific price clearlv stated to the c.customer befo?' his transmission is c1isflssembled. \Ve recognize. that. our .order may create problems of proof in any penalty proceecling that might. arise. iT which an order containing absolute proscriptions on the giving of estimr.tes or price advertising ".ould not.. bnt lye :lre reluctant at this stage to restrict respondents in the eoncluct or the.ir business any more than appears necess1lly to te1'1llinnte the fraud here found. 22 On the other hand1j any le~;s stringent order than that here entered iToulc1 create too many possibilities of evasion thus jeopardizing the public interest and rendering the proceeding a nullity. ",Vhile the order may limit responclents freedom of fiction, they 18 See initial decision PD. 414-415.

19 See R. 839 ; CX 46; ct. R. 259.

~(, Tlie record contains numerous e:s:n.mples of extended delays by re",pondent", in making re!',lil's 01' il1 contacting .customers to tell them of the need for further repairs, See R. 250-51 (customer-witness Jacobs) ; R. 312-13 (customer-witness Stiles). ~1 See R. 4-11-42.

~2 In 'liew of the difficulty of drafting orders in langun.ge so explicit tl1Ht it cannot e"l'"fu10d by ~l wily or cunning respondent '"I'"ho wants to do :00, and in "l'"Jew of tile Commission limited resources devoted to enforcement of. orders, we must rely, to a certain extent, on th", good faith of a respondent under almost any cease and desist order. g., ... GENERAL TRANSMISSIONS CORP. OF WASHINGTON ET AL. 429 299 rOpinion must remember that those caught violating the )lct must expect some " 23fencing in.

Similarly, advertising the price of particular se.rvic.es such as a reseal job or an inspection is nOit forbidden, although an absolute ban would be easier to enforce, but is permitted on condition that the advertisement also disclose that there are manv derects in transmissions \\which require additional parts and labor to repair and that such repairs cost substantially more than the advertised price..24 There is, of course, a possibility that advertising permitted by this prm'ision might used by respondents as a subterfuge to conceal their continuation of practices found to be illegal, but related provisions of the order barring the use of a scheme or device by which misleading statements are used to obtain leads and barring the use of represent-at-inns purporting to offer pariticulftr merchandise- or services for sale ~'hen the offer is not bona fide are intended to obyiate the risk that ach-ertising which seemingly complies with this provision in fact conceals conduct that the order is intended to stop. Since \\e think the order .,\'ill be effective dra \\11, we reject complaint connsers contention that a more stringent order is necessary.

The remaining paragraphs of the order are directed to the other decepti,-e practices here round. Use. or the. term ;;factory rebuilt" is forbidden except "here used to describe a. trallsmi~sion rebuilt in a ractory engaged in such rebuilding.25 Similarly, we. find suh~tantial support in the record for the. examiner s finding that re3pO~l(lents' aclyertisec1 representations as to free towing, one day service, ell-SY crf,dit terms and no dO-"Yll payment rue illm,:ory,~f ~ncl 0111' nrc1er pro'-:(,I'ibes an~, suc.h representations. ,Yea 1sn find that the e",,"iclellce establishes that customers were misled or under a misapprehension 8.3 to the meaning of the term " overhaul" used in respondents' advertisements, and ::LS to \\hat services would be performed as part of the aclyertised "overhaul" and what parts would be re,placec1.2i 1Ve do not find that respondents have established a trade use, of the term limiting it to replacement of soft parts ~S and in any event, such tracb use would not ~3 Peclernl Tra.de Commission v. National Leach 00" 352 u.S. 419, 431 (1957), citing UnitccZ States v, Crescent Amusement 00. 3231),8. 173, 187 (1944). ~,j See footnote 9, supra, ~5 Res!)onc1ent D!utz testified that respondents do not sell file-tory rebuilt transmisslon9 In their Washington opern.tion (R. 208) although the e,irJence estilblishes that they purported to sell and install such transmissions. See, ex 11; R. 257- , 263- (cn stoml.'r-witne:-s Jacobs).

~O Initial decision p, 411.

~7 See, R. 593. 637-40 (customer-witness ;\Iontgomel'Y) , R. 725-26 (customerwitness Sollers), R. 778-79 (customer-witness Schneider), R. 85S. 865-6'3 (customer-witness Smith) , 28 See RX 1 ; R, 194-95 (respondent Dlutz) , R. 810- , 818, 834-39 (mechanic-witness Bail') .

g Opinion 73 F, T.

require us to permit respondents to continue to use the term in a \':ay that deceived consumers. 29 The order therefore permits the use or this term only if in conjunction therewith full disclosure is T,tlade of the parts that will be replaced in connection with the overhaul, and their price if purchased separately, and disclosure is also made either of the parts that will not be replaced, as \\ell as their price or of the. fact that in many eases substantial additional costs will be incurre.d if parts other than those regularly included in the overhaul are needed to repair the transmission.

Finally, the order requires i'esponclents to reveal all the terms and conditions of any guarantee given, the manner in \'\which it n-ill be performed, and the identity of the guarantor. Respondents' failure. to make eat .0 lieu customers v le nature.LanCl uratlOn 0.1 the guarantee, and .e 1their apparently willful atte.mpts to avoid fulfilling the guarantee are set out at length in the record.3O OUI' order "\\ill prevent respondents from again engnging in these practices or otherwise using their guarantee. to deceive their customers. It imposes no greater obligation than elementary principles or fair dealing require. Respondent \Valter Dlutz contends that the eXr'tll11net erred in app lying the proscriptions of the order to him in his individual c.aDaeitv. There is overwhelminsz S1.ldl)Ort.J: ~ in the fee-ora for the exam- 2f) See, , DeGorter v, Federal. Trade Commi.ssion 244 F, 2d 270. 282 (9th Cir, 1957) ; see ::\lso cases cited.supra note 12.

~r See, R, 391-92 (customer-witness E, L, Boit); R. 589-90 (customer-witness Mon tg'omery): R. 681-82 (customer-witne~s Sa tterfield): R. 777, 779-80 (customerwitness Schneider) ; R. 852 (customer-witness Smith). We note that re;:pondents have renewed their motion to ha,e the teptimony of the witness, :\11'. Schneider. stricken on grounds of rele\'ancy and on the ground that his deaUngs were with respondents' short- Jived ~\Iaryland operation, not the Washington, D,C" outlet, and he is a :\1maryland resident. Respond2nts argue that this transaction wa.s intrastate and thus not subject to the Commission s jurisdiction. The e,idence clearly establishes the connection of the individual respondents with the Man'land operation which respondent Dlutz testified that he o,;-ned (R, 240; see also R, 775), and respondents advertised both ou tlets in newspa pens that. crossed State lines, See, CX 5a-f. While the complaint names only the Washington. D. C.. outlet in describing respondents' decevti,e practices, it does name both respondent Dlutz and respondent Green individually, E,irJence as to their related activities in :.1maryland was therefore plainly admissible. See, , Holland Furnace Co. Fedc,.ul Tra.de. Commission 269 F, 2d 203 (7th Cir, 19~9), cert. denied 361 D, S, 932 0960:1 ; Corisumcrs Home Eqll.ipment Co. v. Federal 'Trade Commission 164 F. 2d 972 973 (6th Cir, 1947); C. E, Niehoff 0: Co" 51 F, 1114, 1143 (1955), ~Ioreover, the fact that this outlet was ad\E'rtised in interstate commerce negates respondents' jurisdictional objection quite apart from the fact that the Maryland outlet was in competition with a number of businesses in interstate commerce (see fj., CX ;l8 , 49 ; oj. R. 861) and probably drew customers across State lines. See S. Klein, Inc. 57 F. 1543, 1544 (1960), complaint dismissed on other grounds, 60 F. C. 3SB (1962), 81 See, , Montgomery Ward 0: Co, v, Fed.eral Trade Comm.ission 379 F. 2d 666 (7th Cir. 1967) ; see generally Guides Against Deceptive Advertising of Guarantees. GENERAL TRANSMISSIONS CORP. OF WASHINGTON ET AL. 431 399 Opinion ine.r s finding and we adopt- it.. It is perhaps true that respondent Dlutz did not \\-ork regularly at the \Vashington, D. , outlet repairing transmissions dthough it seems clear from the testimony of customer-witness Alan I-Iayes (R. 438-40, 457-61) that 1\11'. Dlutz worked on his car in the spring of 1966 and made representations to him similar to those made to the other witnesses and fitting perfectly the pattern of deception here established. :Mr. Dlutz himself testified that he worked at the ,Yashington outlet for two weeks in July of 1960.

However, we need not rely on these indicia of respondent' s involvenlent, important though they be. Respondent. Dlutz is the sole stock.kholder of the c.corporate respondent, its president 'and one of its three directors. It is he who hired the manager and ordered the equipment for the "\Vashington, D. , place of business; he signed the lease for the corporation, and he ordered merchandise for it; 32 all records werer kept in his Philadelphia office, transmitted there daily from washington and all bookkeeping was done th61'e; 33 most bills were pa.id from that office, and only respondent Dlutz, his "life, and, for the past year, 1\11'. Green, had the authority to sign corporate checks. Despite respondents' contrary protestations, we think it is also clear thrct he had full knowledge of the "\\a.y in which the "\Vashington operation '~ a.s being run, quite apart. from his o\\'n partic.ipation in those activities noted above. The te,stimony of the witness Samuel Klein (E. 490, 502) and the letter he "\trote to respondent Dlutz (CX 39), negate responde.nt's contention that he never received any complaints from customer-rs of the "\Yashington operation (R.. 211) that he was only vaguely aware of what went on in "\Vashington (R,. 213), and that, apart from signing the checks, he was not involved in the settlement of claims against the \Vashington corporation. 35 His denials are also contradicted by the credited testimony of customer-witnesses who were informed by respondents in \Vashington that settlements had to be approved by the Philadelphia office or by the president who was in Philadelphia.36 The exalniner was not required to accept responde.nts rather flimsy denials of his c.ompIieityY "\Ve hold that on all the fads 8~ See. CX 16, 40, 41, 52a-54b, 63B, par. 3 ; R. 152-56, 230-31. S3 R. 159-61 ; 767.

~~ R. 215.

85 Respondent did admit, however, that he had been informed: (N) at ani;\' b~' management in Washington but al:;;o by various attorneys in 'Washington that the .Washington di~trict seems to be one of the areas that is more prone for lawsuits and I accepted this as such, This was brought to my attention by attorneys in \\~ashington and by management in Washington.

8~ See R. 320 (customer-witness Stiles) ; R. 543 (customer-witness ~fcDonald) ; R. 887 890 (cllstomer-witness Briscoe).

~7 See, , GlIziak v, Federal Trade Commissioll 361 F, 2d 700, 704 (8th Cir. 1966), ccrt. de1lied 385 D.S, 1007 (1967).

y. y, 432 FEDERAl; TRADE COM;\lission DECISIONS Opinion 73 F. T.

in this record, the exal1liller s conelusion that responc1e.nt Dlut.z formulates, directs, and controls the policies, acts, and practices of the corporate respondent is clearly COITect.

Respondent Dlutz cites COf'O ~ Inc. Fede),(Ll T1'((de 001nmission 338 F. 2d149 (lst Gir. 1964), cert. denied 380 U.S. 954 (1965), and Banl' CJ' ecupities Gmt. v. Federal Trade Commission, 29/ F. 2c1403 (;Jrcl Gir. 1961), as indicating that it. ,yould be error to join him in his il~dividual capacity. ,Ye do not agree. In both of those cases The reyim,ing court recognized that the proper scope. of a cease and desist order depends on the facts of each case. The 001'0 case involved a large, widely held public corporation, control of ,which \'i-as not vested in a single man: the violation of lftw there charged did not inyolve the kind or blatant fraud found in this ease, and the possibility that the indiyic1uall'esponclent might attempt to eyac1e the Commi;;;sion s order 3D In making it a DlllJity, \'i-as rat more' remote than it is here. that situation the fa,ilure. of complaint counsel to adduce evidence of some personal invoh-ement by the individual respondent in the unla,yful aetiyity charged, evidence that is not lacking in the, present case, was held to require dismi::-:sal of the complaint as to that incli,-idna1.4O Similarly, in the. Banh' ers A-tecll-lities c.ase the corporate respondent was engaged primarily in the real estate business, but operated as a single separate and distinct cli,-ision, a retail department store known as Snelle.nbergs. It also was a. stockholder in various corporations that . owned and operated retail stores, but there was no showing that responc1enfs stock ownership gave, it any control oyer the activities or those' corporations or tl1nt jt exercised or e,yen atternptecl to exercise any ;;authoriry onr management functions, particularly advertising practices and policies, or any such operating corporation." The order "Would have subjected respondent to the risk or '; a contempt citation if at any time in the future another corporation, in which it owns a substantial stock interest, does \'i-hat Snellenbergs has done ~' a risk that the court thought unjustifiable in view or the absence or any 38 See. , G-1I~'iak v. Federal Trade Commission 361 F. 2d 700, 704 (8th Cir. 1966), eert. !/rn;cd. 18;:1 1..' 8. 1007 (1f1r.7) ;Bcnrlls Tratcl/ CO. Y. Federal Trade Coli/lniSSIOII 3;:;2 F, 2d 313. 324-25 (8th Cir. 19()5). ce.rt. denied 384 D, S, 939 (1966) ; Fred Jleyer, Inc. Fedcl.nl Trade Commission 359 F, 2d 851 , 367-08 (9th Cir, 1966), appeal argued Novemher 0, 1PG7. 36 V. S. L. 'Veek 3201: Cons1lmer Sa.les Corp, v. Federal Trade Commission 198 F, 2c1 -404, 407-408 (2d Cir, 1D52), ('crt. rlc71ird 344 U. S. 912 (19:)8) ; Steeleo Stainless Stecl, Inl;, v. Federal 'Trade Commission 187 F. 2d 693. 1)97 (ith Cir. 1951) Sebrone CO, Frllc!"al Trade Cc'lilllli8Sir;i! 185 F. :!d 6i6, 67S (ith Cil'. 1!148). ;;:' 8ee, rI., Fe((eral Trade ColII, mission/t v. Standard Edue. Soc 302 U.s. 112. 119- (1!)~:7) :cf. Goodman v. Federal Trade Commission 244 F, :!d 584, 5G8-94 (8th Cir. 1957\. 4(' Cj. Bel/rU8 Watch Co, v, Federal Trade Commissioa 352 F, 2d 313. 324-25 (8th Cir. 1DG5), cert. dellicd, 384 D. S, 939 (1966), add Clinton Watch Co. v. F'ede7" al Trade Commission 291 F, 2d 838 , 841 (7th Cir. 1961), cert. delli-ed 368 V. 952 (1962), reaching 1111 opposite result to that reachpd in the Coro (:,lse 011 somewhat similar facts, , , ... . .

GENERAL TRANSMISSIONS CORP. OF WASHINGTON ET AL. 433 399 Final Order willful wrongdoing by respondent and the generally insubstantial nature of the violation charged. In the present case, respondent Dlutz is not a mere passive investor in the \Vashington operation, oblivious of the practices being follo"ec1 by his agents, although even in such circumstances he could be. subjected to a cease and desist order; 41 on the. contrary, his control of the corporation, its policies and practices his responsibility for the violations charged, as well as their fraudulent nature, have all been sho\\n. Failure to subject either the respondent Dlutz or the respondent Green to our order would eviscerate it and insure its ineffective.ness. ,Ye hold that the order "as properly directed against respondent Dlntz in his inc1iyidual capacity. ,Ve have considered the other objections raised by respondents and find them to be without merit. The findings and conclusions of the hearing examiner, except to the extent they are inconsistent with tills opinion, are adopted as the findings and conclusions of the Comnlission. The examiner s order is modified and an appropriate order will entered in aecordance with this opinion.

Commissioner Xicholson did not participate for the reason oral argmnent was heard prior to his appointment to the Conllnission. FIX AL ORDER This matter has been heard by the Commission on the cl'm;s-anDeals of complaint counsel and respondents from the initial decision of tlle hearina: examiner filed on :l\Inrch 1G. 1967. The Commission has rellderec1 its decision denying respondents' appeals in all respects, granting complaint counsels in part, and adopting the findings of the hparing examiner to the extent they are consistent \with the opinion accompanying this order. Other findings of fact and conclusions of law made by the Commission are contained in that opinion. For the reasons therein stated, the Commission has determined that the order entered b~. the hearing examiner should be modified and, as 1ll0c1iHecL:. ac10ptec1 and issued bv the Commission as its final order. According.!!.:lv. I t is ol'(le1' That respondents, General Transmissions Corporation of ,Yashington, a. corporation, and its officers, and \Yalter Dlntz individually and as a.n office.r of said corporation, and vVilliam J. Green Jr., individually and as an agent of said corporation, and their agents 01.'representatives and employees, directly or through any corporate , O\'f'Thauling,other device, in connection \with the adwrtising, repair rebuilding, offering for sale, mle or distribution of any transmis::;ion '1 Cf, Fred Meyer, lnc, Y. Federal Trade Commission 359 F. 2d 351. 3138 (9th Cir. 1966). appeal argue(1 Xonmber 6, 1967. 36 U.S. L. Week 3201; Consumers Home Equip' mc1lt Co., 164 F. 2d 972, 973 (6th Cir. 1947). Final Order 73 F.

motor, or other automotive component, or ,any other product or service in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. ~1isrepresenting, in any matter, the nature, extent or quality of any mechanical adjustment, replacement of parts or components, or any other repairs performed on any automobile transmission, other automotive component, or any other product; 2. :Misrepresenting, in any manner, the nature, cost or extent of any services rendered or parts used in repairing any automobile transmission, other automotive component, or any other product or charging for any services not in fact performed or parts not in fact used;

3. Representing, in any manner, that removal, dismantling, inspection, or any similar service will be performed on an automobile transmission other automotive component, or any other product or component thereof, ,,-hen the estimate quoted or price 'advertised for such service does not include reassembly and replacement of the component in the car, or other product, in its former condition; 4. Quoting or estimating a price for repairing an flutomobile transmission, other automotive component, or any other product before determining by inspection, or by some other reasonable method, the nature and extent of the repairs needed so that the quoted or estimuted price accurately reflects the actual price the needed repairs;

5. Advertising the price of particular services such as an overhaul, inspection, or reseal job, unless in conjunction therewith disclosure is made, in a prominent place and in a type size that is easily legilile, that there are many possible defects in an automobile transmission, other automotive c.omponent, or other product, for \\"which the achertised services are ineffective and which require additional parts and labor to repair and that such repairs will cost substantially more than the advertised price; 6. Represe:nting, directly or by implication, that any merchandise or service is offered for sale when such offer is not a bona fide offer to sell said merchandise or service;

7. Representing, directly Or by implication, that any merchandise or service is offered for sale when the purpose of the representation is to 0011 the offered merchandise or service only in connec.tion with the sale of other merchandise or services; 8. Using, in any manner, a sales plan, scheme or device wherein false, misleading or deceptive representations are made in order GENERAL TRANSMISSIONS CORP. OF "\\T ASHINGTON ET AL. 435 399 Final Order to obtain leads or prospects for the sale of merchandise or services or to induce sales of any merchandise or services: 9. Obtaining any agreement or authorization from any customer to repair or other"\ise service any automobile or other produet without:

(a) Specifically listing in such agreement or authorization the extent, nature, and actual cost of the repairs to be performed;

(b) Promptly disclosing to the customer the precise extent, nature and cost of such repairs prior to performanctl thereof, if, despite respondents' best efforts accurately to estimate the cost of repairs in advance, the extent, nature, or cost of the needed repairs differs in any degree from what was set out in such agreement or authorization;

(e) Performing according to such agreeme.nt or authorization or returning said vehicle in its original condition at a specific price agreed to in advance and fully set out in said authorization;

10. Failing to prm"ic1e. a 11 customers, at the time they are billed -with an itemized list of parts and labor including in the repair, erhanl, reseal, rebuilding or other service performed on all automobile transmission, other automotive component, or other product, repaired or serviced by respondents or anyone 'Of them; 11. Falsely representing, in any manner, that transmissions rebuilt. by the respondents are factory rebuilt; that transmissions rebuilt. other than in a factory generally eng~Jged in such rebuilding ate factory rebuilt: that the respondents oiler for sale factory rebuilt transmissions;

12. rsing the term ;;ove.rhaul" to refer to any transmission servic.e which does not include, the removal, disassembly, and replacement of all "\,01'11 parts, hard or soft, and the reassembly in l'einstaJlation of the transmission in the vehicle, unless in conjunction with the use of the. term ';overhaul " in a prominent place and in type. tha,t is easily legible, disclosure is made of: (a) The parts that. will be replaced in connection with the overhaul" and are included in the overhaul price, as well as their price if purchased separately, and (b) The parts that will not be replaced as part of the overhaul and their price, and/or (c) The fact that in many cases substantial additional costs will be incurred if parts other than those regularly in- 436 FEDERAL TRADE CO:\DIISSION DECISIONS Complaint 73 F.

duded in the m-erhaul must be replaced in order TO repair the transmission;

13. Representing that any article of merchandise or service is guaranteed. unle~s all of the terms and conditions of the Q1.Ul.rantee, the identity of the guaralltor~ and the manner in which the guarantor will in good faith perform thereunder are clearly and conspicuously disclosed, and, further, unless all such guarantees are in fact fully honored and a.lJ the terms thereof fulfilled; 14. Using.' the Vlord "free:: or any other word or ,words of simil1l' import, as descriptive of an article of merchandise or service: P,' ovided: hoi.ce"i.:e?" That it shall be a defense in any enforcement proceeding herel.U1der for respondentsto establish that in fact 110 clulrge of any kind, directly or indirectly, is made for such article of merchandise or sen-ice;

15. Using the tenns ';no money do\'\11," " Z Credit or "easy credit :' or any "\Torcl or \\ords of similar import, in connection with respondents' offer to sell any merc.hanclise or services. I t is fu1'ther ordered That the respondents herein shall, within sixty (60) days after service upon them of this order, file \\ith the Commission a report in writing setting forth in detail the manner and form of their compliance with this order. Commissioner ~Iicholson not participating for the reason oral arg1.1li1cnt. ' ;L; he~l1'c1 prior to hjs appointment to the Commission. Ix THE ~iA TTER OF DIRECTIONAL CONTE-ACT FUR.NITURE CORP.

CONSENT ORDER. ETC.. IX REG.\P..D TO THE ALLEGED VIOL-\TION OF SECTIOX :2 (a) OF THE CLA 'YTOX ACT Docket Si-j1. Complaint, JIIly 196i-Dec:ision, Feb 28, 1968* Consent order requiring a New York City wholesaler of furniture to cease discriminating in price among competing resellers of its furniture in violation of Section 2 (a) of the Clayton Act, withholding date of compliance. CO::\IPLAIXT The Federal Trade Commission, having reason to believe. that Directional Contract Furniture Corp., the party re;:pondent named in the caption hereof and hereinafter more particularly designated and described, has violated and is now violating the provisions of subsection *Anel' iietting date of compliance dated Dec. S, ID6H, ::! 436 FEDERAL TRADE CO=\DIISSION DECISIONS Colllplni 11 73 F.

eluded in the, m-erhaul must be repbced in order to repair the transmission;

13. Representing that any article of merchandise or service is Q'ual'anteec1. unle28 all of the terms Rnc1 conditions of the 2.11ara11tee, the identity of the guarantor, and the manne1' in ,,-which the guarantor "ill in good faith perform thereunder are clearly find conspicuously disclosed, and, further, unless all such guarantees are in fact fully honored and a.lJ the terms thereof fu1il11ed; 14. Using the "VIorc1 "free" or any other word or ,,' ords of similar import, as descriptive of an article of merchandise or senice: P,' vided, hO1.ceive?' That it. shall be a defense in any enforcement proceeding herelmder for respondentsto establish that in fact. 110 charge of any kind, directly or indirectly, is made for such article of merchandise or sen-ice;

15. Using' the tern1S '; 110 monev do"n~ 2 Credie or "efisv credit " or any "\Torcl or "ords of similar import, in c.connection with respondents ' offer to sell any merehanc1ise or services. t is fui,ther orde' /ed That the respondents herein shall, within sixty (60) days after service upon them of this ordet, file "ith the Commission a re,port in writing setting forth in detail the manner and form of their compliance with this order. Commissioner ~ichoJson not participating for the reason oral argument. li';t:) he,i.l'(l prior to hjs ,1ppointment to the Commission.