David & David, Inc.

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

pliance with the order to cease and desist. Ix THE ::\i.-\TTER OF DAVID & DAVID, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDER:\.L TRADE COl\Il\IISSION AND THE FLXl\1l\IABLE FABRICS ACTS Docket C-1321. Complaint, April 15, 1968-Decision, April 15, 1968 Consent order requiring a Long Island City, X. Y., manufacturer of ladies' hair pieces to cease importing or selling any dangerously flammable article of wearing apparel.

CO:;.\:I:PLAINT Pursuant to the provisions of the Federal Trade Commission Act and the Flammable Fabries Act, and by virtue of the authority vested in it by sa,id Acts, the Federal Trade Commission, having reason to believe that David & David, Ine., a corporation, and Stanley Dombroff, indiyidl1ally and as an officer of said corporation, hereinafter referred to as respondents, lulve violated the provisions of said Acts and the R,ules and R.eg1.11ations promulgated under the Flammable Fabrics Act, and it appearing to the Commission that fl., procee.ding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

..

DAYID & Dand. INC.. ET AL. 697 696 Dpci:-;ion and Order PARAGR~PH 1. Respondent David &, Da,~id, Inc. , is a. corporation organized, existing and doing business under and by virtue or the la "s or the State. OT X ew Yor1\:. Indi vidual respondent Stanley Dombroff is officer of the corporate respondent and formulates, directs and controls the ads, practices and policies or the corporate respondent. The corporate respolldent and individual respondent Stanley Doll1broff are manufacturers or articles of ,yearing apparel including ladies' hair pieces, and have their office and principal place of business at J'i- f)l Thirty- thircl Street, Long: Island City, Ne,y York. \R. 2. Subsequent to .July 1 , 19t54, the efIeetiye date of the Flamma ble Fabrics Act, respondents ha Ye manufactured for sale, sold and oflered for sale in commerce: have imported into the United States: and have introduced, cleliyered for introduction, transported and ea llsed to be transported, in commerce: ami have transported and caused to be transported for the purpose of sille or dc1in~r Y after sale in commerce: as "commerce" is defined in the Flammable Fabrics Act Hl'tieles of \yearin~' apparel, as the term ;;nl'ticle or ,ycaring apparel" is r1eJined therein, which articles of ,yearing apparel ,were undet the pro- Y1sio11s of Section "* of the Fhmmable Fabrics ~'"\ct, as amended, so 1 \i~' h I\' fkmmable as to be da ll~!'erous ,,- hen wor11 by individuals. \mol1g such articles of '"en ring appnl'el mentioned above were b dies ~ 11 air pieces.

\R. :3. The nets and practices of respondents herein alleged1 '"ere ;11"1(1 ;11'e inyiolntioll of the Flammable. Fabrics Act and of the Rules and ReguInbons promulgated thereunder and as such constitute unfair fmd cIecPDti ' e nets nnctl)raetices within n the intent and meanin!?' of the FeclC'l'al Trade Commission A.ct.

DECISION .,\Xl) Onder The. Federal Trade Commission 11a ,-in&, initinted an iln-estigation of certain ,lets and practices of the respondents named in the caption hereof. and the respondents having: been furnished thereafter \with a copy of a chart of complaint "which the Bureau of Textiles and Furs proposed to present to the Commission for its consideration and ,yhieh if issued by the Commission, ',"auld charge respondents with violation OT the Federal Trade Commission ..:\..ct and the Flnmmable FabricsAct;The respondents nndnndcounsel for the Commission having thereafter c:xecut.ed an agreement containing a consent order nn admission by the. H'::,;om1ents of an the jurisdictional facts set forth in the aforesaid draft ():f complaint, n. stnlement that. the signing: of said agreement is for set- .:f",,- :.:-i.)-7~--' ,.

Decision and Order 73 F.

tlement purposes only and does not constitute an admission by respondents that the law has been violated. as alleged in such complaint and waivers and other provisions as required by the Commission Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Acts, and that complaint should issue stating its charges in that respect and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of thirty (30) days now in further conformity "ith the procedure prescribed in S :2. 34 (b) of its Rules. the Commission hereby issues its complaint, makes the follo\ying jurisdictional findings, and enters the follo\ying order:

1. Respondent. David &: David, Inc., is a corporation organized existing and doing: business under and bv virtue. of the laws of the State of N e,y York, with its office and principal place of business loc.ated at 47-51 Thirty-third Street, Long Island City, N e'y York. Respondent Stanle~7 Dombro:ff is an officer of said corporation and his address is the. same as that of said c.orporation. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the. respondents. and the proceeding is in the public interest.

OIWER It is ordered That respondents David &: Dayid, Inc., a corporation and its officers. and Stanley Dombroff. indiyiduallv and as an officer of said c.orporation, and respondents' representatives, agents and employees, directly or t hrollgh an~- c.corporate or other device. do fortll\with cease and desist from:

1. (a) Importing into the rnitecl States: or (b) )Ianllfacturing for sale, selling, offering for sale, introducing, delil-ering for introduction, transporting or causing to be. transported, in commerce ~ as "commerce" is defined in the Flammable Fabrics .. ct; or (c) Transporting or causing to be transported, for the purpose of sale or delivery after sale in commerce any article. of wearing apparel which, under the provisions of Section 4 of the. Flammnble Fabrics Act, as amended, is so highly flammable as to be dangerous when ,yorn by individuals. It is fui'their' oi'rlcl'ecl That the respondents herein shall, within sixty (60) dRYs Rfter se.rvice upon them of this order file, with the. Commission a report in "Titing setting forth in detail the manner and form in which they lul\-e complied ,with this order. , ,, UNITED EQUITABLE LIFE INSURANCE CO. 699 IComplaint Ix THE ::\IATTER OF TTNITED EQ-CITABLE LIFE INSURANCE CO1\IP ANY CONSENT ORDER , ETc.~ IN REGARD TO THE .\ALLEGED VIOLATION OF THE FEDERAL TRADE CO:;.\Ll\IISSION ..\CT Docket 0-1:322. Oo1HjJla.4nt, A.prillS, 1.%8-Dcci8io' , A.prillS 1968 Consent order requiring a Chicago, Ill. , insurance company to cease the deceptive use in its advertising and insurance policies of the terms " no eXCelJtions non-cancellable prompt payment, no medic-al examination, tlodily infirmity 01' disease " and "hospital" ; and neglecting to disdose any limitation, condition 01' exception to the stated terms of its policies. COl\IPLAINT Pursuant to the provisions of the Federal Trade Commi~~ion ..Act as that Act is applicable to the business of insurance under the proyisions of Public La,," 1;'5, 70th Congress (Title 15, U. S. Code, Section~ 1011 to 1015 , inc.lusi,-e), and by virtue of the authority vested in it by said Act, the Federal Trade Commission~ having reason to believe that United Equitable Insurance Company. a recently dissolved corporation, predecessor of and assignor to LTnitec1 Equitable Life Insurance Company, a corporation which successor corporation is hereinafter referred to as respondenl has violated the provisions of said Act, and it appealing to the Commission that a. proceeding by it respect thereof ,,"ould be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PAR..\GRAPH 1. Respondent United Equitable Life Insurance Company is a corporation organized, existing and doing business under and by virtue of the laws of the State of Illinois with its principal office and plac.e, of business located at +55-:1: N orth Bloo(hYay~ in the city of Chicago State of Illinois, premises formerly occupied by Linited Eqllitnble Insurance Company, an Illinois corporation, no,," dissolved. Shortly prior to issuance of this complaint l-united Equitable Life Insurance Company acquired substantially all the assets and assumed substantially all the liabilities of United Equitable Insurance Company, to the business of W' which it succeeded. Respondent hns the snme officers and directors as its predecessor. References he-reinafter in this complaint to "respondent" include respondent's predecessor, United Equitable Insurance Company.

PAR. 2. Respondent is no,,", and for some time last past has been engaged as insurer in the business of insurance in commerce, as "commerce'~ is defined in the Federal Trade Commission ~'-\ct. As a pad of ICompIaint 73 F. T, said business in commerce, said respondent enters into insurance contracts ,yitll insureds located in yarious States of the lTnited States othet' than the State of Illinois in "which States the business of insurto the extent of regulating the prac-ance is not regulated by State la", tices of said respondent alleged in this complaint to be illegal. \R. 3. Respondent, in conducting the bmdness aforesaid, has sent and transmitted and has caused to be sent and transmitted, by means of the rnited States mails and by nuious other means, letters, application forms, contracts, checks and other papers and documents of a eomll1ercialnature from its place of business in the State of Illinois to purchasers and prospective purchasers located in various other States and has thus maintained a substantial course of trade in said insunmce contracts, pol icies and other papers and documents of omn1(~rcial nature in commerce behyeen all(l among the severn 1 Shtes of the rlllted States.

C'Cll- \n, -1. Respondent is licensed a~ prm-ided by ~tate Jal\", to duct the business of insurance only in the State of Illinois. Saidrespondent is not nO\v, and for some time In~t past has not been, licensed as provided by State la\,' to conduct the business of insurance in any State other than the State of III inois.

PM:. ;J. Respondent sol ieits business direct l~' b~' mail and b~- and tln' oUf!:h yarious publications. such as magazines, in various States of the rnited States in addition to the State named in Paragraph Foul' above'. ~\.s result thereof. it has entered into insurance contracts licensedwith insurcds located in many States in which it is not do business. Said respondent:s business practices are: therefore, not regulated by State la" in any of those States in which said respondent is not licensed to do business as it is not subject to the jurisdiction of such States.

:\R. 6. In the course and conduct of said business, and for the purpose of inducing the purchase of policies of insurance: respondent has Il1nde ~ and is now making, numerous statements and representations concerning the premiums: coverage, benefits, effective dates of coverb~" age. renewal of eoyerage, and other provisions of said policies means of letters. magazine advertisements and other printed nchertising material disseminated throughout the United States. Typical and illustrative: but not all inclusive, of such statements and representations are the following:

sale an inducement to the A. In connection ,,"ith the offering for retention of Policy Form 210 C.

This " 000.00 a month" policy protects you from the very first day '" '" ", yes. accident the very even if you a re hospitalized due to bodily injury from any :::; :: .,.,; .. . ....,. ; ::: :;: ...... UNITED EQUITABLE LIFE INSURANCE CO. 701 u9H 'Complaint first day, you will be paid at the rate of $1 000.00 a month for the total period you are hospitalized :~ '" ::' whether for a month * * * a year * * ~: even for 100 months or $100,000.00-01' for the rest of your life, if necessary. You get cash starting the 'I.'ery first day * * * at tbe rate of $1,000.00 a month * '" '" if you are hospitalized for only one day or for life. Other than a rest home, rehabilitation center or gm"ernment hospital. There are absolutely no exceptions as to the kind of accidents you are protptted by this policy. 'With OUR POLICY A.NY .-inn A.LL A. CCIDE:.\- TS are inrluded Benefits will SETTER be reduced. Tbe poliry wii) XEFER be terminated by our company regardless of yo11r age, or number of claims you make. 01' the amount of money paid to you on your claims. It is your option to renew 01' cancel at any time. It is yours for life.

'Yhen you have this policy you know you will recei,e CASH at the rate of )i;1.000,OO a month during your entire stay in the hospital, month after month Errs FOR LIFE.

XON-CAi\CELLABLE AND GUARANTEED RENEWABLE FOR LIFE. 'Ye will send your non-cancellable, guaranteed renewable policy immediately and include a special coin envelope for your convenience for sending only 25q which pays for a full month's protection. No agent or salesmrm will call. No olJligntion.

Xow. OSLY 25(: puts this policy in force giving you this protection for the first full month .

?\ 0 ~Iedical Examina tion To Qualify '" there is no medical examination required. Our policy is to tU' OLA.IM8 PROMPTLY BENEFITS CHECK PAY::\IENTS Dear Policyholder:

Here are only a few of the many United Equitable Insurance Company policyholders who have received cash benefit checks recently. Keep your policy in force and keep protected so there will be no cause for regrets. Your policy pays at the 1':1 te of $1.000.00 cash (one tbousand dollars) a mont11 for a clay or for life and is guaranteed renewable regardless of how many claims you make .\...., .,. ....,. .,. ICompIain t 73 F.

Policyholder s name and address Cau~e of hospitalization Claim Benefit No, paid Mrs. Catherine Hall Low back a,nd neck strain - - - 1222 $266. 67 Fort. Pierce, Fla.

William Carlisle Slipped on steps 1.544 333. 33 Providence, Ky. Lumbar strain.

B. In c.onneetion "\with the offering for sale of Policy Form 610. Stuv \yorrying' n bont money to pay doctor s and llOspital bills when you are hospitalized due to either sickness or accident. rl1is DXITED EQUITABLE PREFERRED Insurance Pa;yment Plan Policy guarantees to make these cash payments direct to you- $600.00 CASH FOR O~E :\IO~TH $1200.00 CASH FOR 'nvo :\IO~THS $1800,00 CASH FOR THREE :\IONTHS (OR EYE:\' $600. 00 .-\. :\IONTH FOR A LIFETDIE if XECESSARY). -I/O medical c.ra1l1il/atiou.

Allsieknesses and cliseases coyerec1 are full~' sllt'cifie(l in tile' IJolicy. Eacb insured child (under age 18) is full~' covered under all i!enetits specified in the policy for the amount of $600,00 a month while hospitalized for accident or sickness.

Cllecks 10r 8600. 00 II month st(llid lilly,' of .11011rcady to flo into the mail imll/clliatdy, direct to Vall in accordance 'Ieith the prof is ions 01 this fine jJolicy-ecel'Y month eeen 10r a litctimc.

C. In connection "\with the offering for sale of Policy Form 200 C. PA YS YOT..:' $150.00 n month IJeginning the first day you are injured. The policy vroYides that jf you h~1\"e an automobile accident while driving or riding in any automobile, truck or bus and you are confined at home or in the hosl1ital under medical care, you will be I1nid a t the rate of $150.00 a month from the first day of injl1l'~. e,en for life, PAYS YOU $500,00 for llo~pital expenses in any hospital in the U. S, or Canada. $10,00 per da~. from the very first day of hospitalization up to $500. 00. Y8 $2, 500.00 to ~'our iJeneficiaries in case of a(:cidental loss of Hfe while driving or riding in any autollloiJile, truck or bus. .,.

U::-.JITED EQUITABLE LIFE INSURAXCE CO. 703 6nD ,Complaint PRO::\IP'l' P A Y~IEX'l' CLADIS you can depend the company responsibili ty.

I-IO'Y GLADIS ARE PAID:

1. Xotify us promptly of automobile accident. No details are necessary. 2. 'Ve will send you by return mail an automobile accident claim form. 3. Return form properly filled out togetber with licensed physician report of injury, 4. Our check ,,-ill he mailed to you l1promptly on approYfll of your claim. 500.00 LOSS OF LIFE for your beneficiaries in case of accidental loss of life while riding or driving in any automobile, truck or bus; or as a fare-paying pnssenger within a surface or elevated train, streetcar, or passenger boat; as a passenger in a passenger eleyator; as a passenger during a regularly scheduled trip in a licensed pn:;:senger aircraft operated by a licensed pilot. No :\Iedical Examination.

PAR. 7. By and through the use of the aforementioned sta.tements and others of similar import and meaning not specifically set out herein, respondent has represented directly or by implication: A. In connection "ith Policy Form 210 1. That the respondent issues an insurance policy "which prm-ides and pursuant to "which, it "ill pay benefits at the rate of 8LOOO a mont h for hospitalization resulting from any accident without exception.

;) That the respondent "illneyer cancel the policy. 3. That the respondent pays claims promptly. 4. That the furnishing of benefits under the policy is not or may not be contingent upon a medical examination under' any condition. B. In connection ,,-ith Policy Form 610.

1. That the respondent issues an insurance policy "which provides and pursuant to ,,-which, it ",ill pay 8600 a month for hospitalization clue to sickness or ncC'ident "without further exception or limitation. 2. That each child under age 18 is fully C'Oyeredllnder tJlP policy. 3. That the furnishing of benefits under the policy is not or may not be eontingent upon a medical examination under flllY condition. 4. That the respondent pays claims promptly. C. In connection "ith Policy Form 200 C.

1. That the respondent issues an insurance policy "which pro"ides and pursuant to which it ",ill pay:

a. $150 a month from the first day of injury, ete.n for life, for confinement at home or in the hospital under medical care if tlw insured ,Complain t 73 F.

is involved in an automobile accident while driving or riding in any automobile truck or bus without further condition 01' exception. b. $10 pel' day, up to $;500 for hospita 1 expenses in connection ",ith hospitalization in any hospital in the U.S. or Canada if the insured is injured in an automobile accident while driving or riding in any automobile, truck or bus, ",without further condition or exception. c. $:2500 for accidental loss of life ",while riding or dri 1,"ing in any automobile, truck or bus; as a fare-paying passenger within a surface 01' elevated train, streetcar, or passenger boat; ,1S a passenge,r in a P,15fienger elevator; as a passenger during a regularly scheduled trip in a. licensed passenger aircrnft operated by a licensed pilot: all without further conditioll or exception.

2. That the respondent pays claims promptly. :3. That the furnishing of benefits under the policy is not or may not be contingent upon a medical examination under any condition. P .m. 8. In truth and in fact:

\... In connection ",ith Policy Form ::210 1. The respondent does not issue an insurance policy which provides, and pursuant to which, it ",ill pay benefits at the rate of $1 000 a, month for hospitalization resulting from any accident. without exception. On the contrary, said policy provides that the respondent ",ill pay benefits in the event of hospital residence occuring solely as the consequence of direct bodily injury resulbng from an accident and independent of all other causes while the policy is in force. Fllrther said policy pro\-ides that benefits ",ill be paid beginning ,with the first clay that injury shall continually confine the insured to a hospital and detines a hospital as a legally constituted institution ",which is open at all times and is operated primarily for the care and treatment of sick and injured persons as in-patients, ",which has a staff of one or more licensed physicians available at all times, which continuously provides twentyfour hour nursing service by graduate registered nurses, which provides organized facilities for diagl10sis and major surgery, and "which is not primarily a clinic, nursing, rest or conyalescent home, l'elwbilitntion center or similar establishment. Further, the respondent relies on these provisions in denying and reducing claims. :2. The respondent has cancelled policies.

:3. The respondent does not pay claims promptly. -4:. The respondent reselTes the right to examine theperSoll of the insured ",hen and as often as it may reasonably require during the pendency of a claim and to make an autop8Y in case of death. ,, U~ITED EQUITABLE LIFE IXSURAKCE CO. 705 GO~) ICompla in t D. In connection with Policy Form 610.

1. The l' respondent does not issue an insurance policy -.;which proyides, and pursuant to ,which, it yrill pay $600 a month for hospitalization clue to sickness or accident without further exception or limitation. On the contrary, said policy includes the following exception::: \which are stated in responclenfs advertising in small print at some distance from the general statement of benefits: a. Only sickness or disease contracted and commencing ,yhile the policy is in force and causing loss commencing not less than thirty days after the ef1:'ectiye date of the policy is cO\-erec1. b. The policy does not cover any hospital confinement from pregnancy, childbirth or miscarriage; mental disorders; dec.lared or undeclared ,,:,11' or any act thereof; sen-ice in the ar111ed forces of any country; diagnostic \york or rest cure, any treatment or sen-ice rendered in any sanitarium, sanitorium, rest home, Yetel'ans Administratioll or other Federal Government hospital; and, any loss resulting from tuberculosis, cancer, cardio-vascl1lar disease, hernia (from any cflnse), 01' any disease or disorder of orgt1nS "which are peculiar to women, or any sickness resulting in a surgical operation is covered only if such loss occurs more than six months after the effective date of the policy. Also, payments do not begin until the fourth day of hospital confinement.

Further, said policy includes the following limitations "which are not stated in the responclenfs advertising. fl. The policy is renewable only at the option of the company. b. ,Vithill three years from the effective date of the policy the company C,1n use misstatements made by the applicant in the application for the policy to void the policy or to deny a claim for hospital confinement.

c. The company can reduce or deny a claim for hospital confinement commencing \within three years from the, effective date of the policy on the ground that a disease or physical condition had existed prior to the eflective date or coverage of the policy. d. The \', olc1 , "Hospital " is defined as a legally constituted institution ,,-hieh is open at all times and is operated primarily for the eare, a11(l treatnH:!nt of sick nnd injured persons as in-patients, "which has staff of one or more licensed physicians available at all times, which eontinuou:;Jy provides twenty-four hour nursing sen-ice by graduate reg-istered nurses, ,which provides organized facilities for diagnosis and major surgery, "which is not primarily a clinic, nursing, rest or conyalescenr home. rehabilitation center or similar establishment. , rCompIaint 73 F.

Further, the respondent relies on many of the abm"e exceptions and limitations in denying and reducing claims. :2. Each child under age 18 is not fully covered under the policy. 3. The respondent reserves the right to examine the person of the insured "hen and as often as it may reasonably require during the pendency of a claim and to make an autopsy in ease of deflth. 4. The respondent does not pay claims promptly. C. In connection "ith Policy Form 200 C.

1. The respondent does not issue flll insurance policy ,which provides and pursuant to ,which it will pay ivithout further condition or exception the benefits set forth in Paragraph Seven C , 1 , a, b, and c. On the contrary, said policy includes the follo\\ing conditions and exceptions:

a, The policy insures the, O\,ner against loss from accidental bodily injury sustflined iyhile driving or riding in or entering- Ol' lea ,"ing an automobile, truck or bus for business or pleasure during: the term of the policy, provided such bodily injury is caused solely by reason of an automobile, truck or bus accident.

b. In order for tlle total confinement benefit to be payable the injury must, immediately after the accident. ivholly and continuously disable and prevent the insured from performing any and eyer)" duty pertaining to any business 01' occup,ltion, and the insured must be confined thereby ,,-jthin doors and require regular yisits therein by a legally licensed :\Iedical or Osteopathic physician or surgeon. In order for the additional hospital benefib to be payable the insured must be confined in a Iniyfully operated hospital as a result injury (as defined in the policy) and be regularly attended by a legally licensed ?\Iec1ica 1 or Osteopathic physician or surgeon. Fur", her, the company s obligation is to pay the expenses actually incurred for hospital selTice but not to exceed Ten Dollars a clay on account of anyone nccident.

c. In order for the, payment for loss of life to be pa~'able the jnsurec1 must suft'er loss from accidental bodily injm' ~' snstnined while driving 01' riding,' in 01' entering,' or lenvinQ' any automobile. truck or bus fol:business,-or pleasurecduring the term of the policy: and such bodily injury must, be ca used solely by reason of an a automobile truck 01' bus accident. Further, such injury must directly and independently of all other causes result in death y,within sixty days from the date of accident. Further, there are other conditions OllreeOyery foy injury sustained as a passenger ,which also are not revealed in the achertising. The policy provides for coyer-age for accidental bodily injuries sustained: UXITED EQUITABLE LIFE INSURANCE CO. 707 699 IComplain t ,Vhile actually riding as a fare-paying passenger in a place regularly provided for the transportation of passengers by a common catrier ,within a surface or elevated train, streetcar, or passenger boat; or while actually riding as a passenger in a passenger elevator used for passenger service "within a building only, awl in a place regularly proyicled for the sole use of passengers; or "while riding as a farepaying passenger during a, regularly scheduled trip in a licensed passenger aircraft. provided by an incorporated common carrier of passengers while operntecl by a licen~ed pilot upon a regular pnssenger route uehyeen (letinitely established airports. lso, the policy (loes not coyer any disability or loss unless sustained in the TJnited States or Cnnada (a provision not clearly stated in the adrertising) nor ,yhile participating in or attempting' to commit a felony, or to ,which a contributing cause ,,' as the insureerg being engaged in an inega 1 Occup11tion. nor resu iting from :Military or Naval Service. Fnl'thel' ~ the policy is rene\"able only at the option of the C'ompnny.

Further, the respondent relies on many of the above conditions and exceptions in denying and reducing claims.

2. The respondent does not pay claims promptly. 3. The respondent reseryes the right to examine the person of the insured ,yhen and ns often as it may reasonably require during the pendency of a claim and to make an autopsy in case of death. Therefore, the statements and representations as set forth in Paragrnphs Six and Seren he,reof "'ere and are false. misleading and c1eceptiye.

'l.n. 9. In connection ,with the offering of Policy Form 210 C and Policy Form 610 the respondent sets forth an introductory premium for the first month of coyerag:e without disclosini!.o or "without disclosing dearly and in close, conjunction ",ith the statement of the introductory L- 'premium the amount of the lIsual premium. PAn. 10. In truth and in fact the 11usual premium is substantially higher than the introductory premium and in addition Policy Form 210 C nnd Policy Form GIO proyicle that the company mny assess the policy from time to time. Thus prospectjye pllrrhfisers are not clearly informed of the nctllal cost of the policies and that they are subject to nssessrnent.

Therefore the statements and representations as set forth in Paragraph Nine hereof "ere and are :J'i1lse, mislencling nnd deceptive. m. 11. In connection ",ith the offering of Policy F'orn1 200 C the respondent sets forth the premium ",jrh no disclosure that. any other charges may be made for the policy.

Decision and Order 73 F.

m. 12. In truth and in fact Policy.y Form 200 C provides that the company may assess the policy from time to time. Thus prospectiye purchasers are not informed that the policy is subject to assessment. Therefore, the statements and representations as set forth in Paragraph Eleven hereof were and are false, misleading and deceptive. PAR. 13. In connection ,,'itIi claims made under Policy Form, 210 C the respondent has refused to pay on the grounds that the accident from ,which the claimed inj uries resulteel "'as caused by the insurecFs negligence or intoxication and that the policy provides that such grounds ,11'e a bar to l'ecoyery under the policy. P.:\.R. 1:1:. In truth and in fact Policy Form 210 C does not provide that insureds may not recover for injuries resulting from accidents caused by their negligence or intoxication. Therefore, the statements and representations as set forth in Paragraph Thirteen hereof were and are false, misleading and deceptive. P.:\.R. 15. In the conduct. of its business, at all times mentioned herein respondent has been in substantial competition, in COllll11erce with corporations, firms and individuals in the sale of insurance of the same general kind and nature as that sold by the respondent. PAI~. 10. The use by respondent of the aforesaid false, misleading and deceptive statements, representations and practices has had, and nO\\- has, the capacity and tendency to mislead members of the purchasing public. into the erroneous and mistaken belief that said statements and representations "'ere and are true and into the purchase of substnlltinl quantities of respondents policies by reason of said erroneous andl1listaken belief.

.\.H. 17. The aforesaid acts and practices of respondent, as herein nl1eged, were and are all to the prejudice and injury of the public and of respondent's competitors and constituted, and now constitute, unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce, in violation of Section 5 of the Federal Trade Commission Act.

Deli~lox .. .-\.XD OmmH The Commission having heretofore determined to issue its complaint charging the respondent named in the caption hereof with vio; lation of the Federal Trade Commission Act, and the respondent ha ving been served with notice of said determination and ,with a copy of the complaint the Commission intended to issue, together ",ith a proposed form of order; and , UNITED EQUITABLE LIFE INSURANCE CO. 709 699 Decision and Order The respondent and counsel for the Commission having thereafter executed an agreement containing a, consent order, an admission by the respondent of all the jurisdictional facts set forth in the complaint issue herein, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such eompla int, and \Vaiyers and other provisions as ref111irecl by the Commission s Rules; and The Commission having considered the agreement and 1111 ying accepted same, and the agreement containing consent order having thcl' upon been pI aced on the public record for a peri od of 30 da ys now in further conformity with the procedure prescribed in 8 2)34 (b) of its ules, the Commission hereby issues its complaint in the forlll contemplated by said agreement, makes the follmving jurisdictional iindings and enters the follo",ing order:

1. Respondent United Equitable Life Insurance Company is a corporation organized, existing and doing business under and by virtue of th(~ In,' s of the State of Illinois, ",ith its principal office and place of lmsiness located at l:j;j4 Xorth Broachvay~ in the city of Chicago State of Illinois.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent: and the proceeding is in the public intere~t.

nmn:n It is oJ'(lei'ed That respondent United Equitable Life Insur:ince Company and respondent's officers, agents, representatives, and employees, and its successors and nssigns, directly or through ftn~' corporate or other device, in connection \With the advertising, offering for sale, sale and distribution of any insurance policy or policies, in commerce, as "commerce is defined ill the Federal Trade Commission ~-\..ct except. in those States ,,-here respondent is licensed and regulated by State la,,- to conduct the business of insurance, do fortlnyith eense and desist from:

1. Using the terms There are absolutely no exceptions any and all aceidents are included ': or any other words, terms 01' phrases of similar import.

2. Representing directly or by implication that any policy pro- "ides insurance coverage broader than that \V which is actually prm-ided.

3. Unilateral11y cancelling any policy ",hieh is stated in the policy to be noncnncellnble 01' guaranteed rene\yable for life, ex- ,, , ;

Decision :l nd Order 73 F. T. ccpt for nonpayment of premium ~ on f\ny ground other than nonpayment of premium.

4. Unilaterally cancelling any policy ,which is ad vertised as noncancellable or guaranteed rene,,-able for life, except for nonpayment of premium, on any ground other than nonpayment of premll1m.

5. 'C"sing the terms Our Policy is to pay claims promptly ~ Prompt payment of c.laimst or any other words, terms or phrase of similar import: Pro deled, hO1CeVei\ That it shall be a defense in any enforcement proceeding instituted hereunder for respondent to establish that all valid elaims are paid promptly. 6. Using the terms no medical examination to qualify, and no medical examination/~ or any other words, terms or phrases of similar import to describe a policy in ,which the respondent reseryes the right to examine the person of the insured. This provision shall11ot, hmyeyer, ple\-ent the truthful and noncleceptiye use of the statement "K 0 medical examination necessary to apply for the issuance of this policy; medical examination may be required only in connection \with a c.claim.

7. Representing that any policy provides for indemnification against ac.eident, in any amount or for any period of time, unless a clear definition of the vi-ord accident " in language understandable to persons not familiar with insurance law, and unless the phrase "except losses resulting directly or indirectly from bodily infirmity or disease. are conspicuously and prominently set forth in dose conjunction \with the representation. S. Representing that any policy provides for indemnification against disability or loss due to sickness, disease, accident or death policy pro- in any amount or for any period of time, "hen the yides any limitation on coverage of a loss resulting from accident sickness or disease because of a prior existing condition, unless a clear disclosure of the exact nature of such limitation, in language understandable to persons not familial' with insurance law, is conspicuously and prominently set forth in close conj function with the representation.

D. Representing that any policy provides for indemnification for hospital residence as a result of accident or sickness, unless a clear definition of the word "hospital " in language understandable to persons not familiar with insurance la,y, is conspicuously and prominently set forth in close conjunction with the representation or unless the phrase "duly licensed hospital' is used in making such ... .

CONSOLIDATED :MORTGAGE CO. ET AL. 711 690 Order representation and the insurer does in fact. indemnify for resldence in such a hospi ta l.

10. Representing to insured individuals who file claims that the. policy under ,,-which they claim does not. cover injuries if the acc.ident from \vhic.h the injuries resulted was caused by the insured~ negligence or intoxication unless the policy is in fact so limited and such limitations are clearly and conspicuously disclosed in the advertising material for the policy.

11. Representing that any policy provides for indemnification against disability or loss due to sickness~ disease, aeeic1ent or death. in any amount or for any period of time~ unless a statement of all the conditions~ exceptions~ restrictions, limitations costs and possible additional nssessments afl'acting the indemnification actually provided is set forth c.onspieuousl:v~ pl'olllinentl~' and in sufficiently close conjunction ,\ith the representation 01' representations as will fn 11y relieve it of all capacity to deceive. 1:2. Omitting any material limitations in the coverage of any policy in nll~' advertising which purports to describe the co'" erage in the policy.

It is fuJ'tllei' oiYlei' That the respondent herein shall. w.within sixty (60) days after selTice upon it of this order. file with the Commission a report in writing setting forth in detail the manner and form in