Carpet Bazaar, Inc

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

IN THE MATTER OF CARPET BAZAAR, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-2498. Complaint, Mar. 20, 19%4—Decision, Mar. 20, 1974 _, Consent order requiring a Berwyn, IIl., retailer and installer of home carpeting, among other things to cease misrepresenting the price at which it will carpet a home and the prices of carpet remnants; that its prices are sale or reduced or that savings will be afforded to purchasers; and to cease its failure to maintain adequate records to support savings claims.

CARPET BAZAAR, INC., ET AL. 1450 1484 Complaint Appearances For the Commission: Douglas P. Wilson.

For the respondents: Alton, Jurlander & Wise, Chicago, Ill. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Carpet Bazaar, Inc., a corration, and Allen R. Greenberg, individually and as an officer of said corporation, hereinafter 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 would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent Carpet Bazaar, Inc., 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 place of business located at 7050 West Cermak Road, Berwyn, III. Respondent Allen R. Greenberg is an individual and is the principal officer of the corporate respondents. He formulates, directs and controls the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. His business address is the same as that of the corporate respondent.

PAR. 2. Respondents are now, and for some time last past have been, “engaged in the advertising, offering for sale, sale, distribution and installation of carpeting and floor coverings to the public. PAR. 3. In the course and conduct of their aforesaid business, and for the purpose of inducing the purchase of their carpeting and floor coverings, respondents have made, and are now making, numerous statements and representations by repeated advertisements inserted in newspapers of interstate circulation, and by oral statements and representations of their salesmen to prospective purchasers with respect to their products and services.

Typical and illustrative of said statements and representations, but not all inclusive thereof, are the following: CARPET YOUR ENTIRE HOME REGARDLESS OF THE NUMBER OF ROOMS $549 BUYS IT ALL * * * * * * * JANUARY CARPET CLEARANCE IT’S A SALE! THOUSANDS OF REMNANTS AND WALL TO WALL TO SAVE 30 to 60% ON LUXURIOUS BROADLOOM CARPETING WHILE OUR JANUARY SALE LASTS.

* * * * * * * Complaint 83 F.T.C.

SAVE 29% to 57% TODAY ON 3,000 Ist QUALITY REMNANTS. * * * * * * REG. $219.00—$88 12 x 13 to 12 x 15 REG. $118.00—$59 7 x 12 to 9 x 12 * * * * * * * * INDOOR OUTDOOR HERCULON REG. $4.95 NOW $2.39 SQ. YD. * * * * * * * PAR. 4. By and through the use of the above-quoted statements and representations, and others of similar import and meaning but not expressly set out herein, respondents have represented, and are now representing, directly or by implication, that: 1. Respondents will carpet an entire home, regardless of the number of rooms, for $549.

2. By and through the use of the word “sale,” and other words of similar import and meaning not set out specifically herein, that said carpeting and floor covering may be purchased at special or reduced prices, and purchases are thereby afforded savings from respondents’ regular selling prices.

3. Purchasers of respondents’ floor coverings are afforded savings of 30 to 60 percent and 29 to 57 percent of the prices at which such floor coverings are usually and customarily sold at retail. PAR. 5. In truth and in fact: , 1. Respondents will not carpet an entire home, regardless of the number of rooms, for $549. To the contrary, respondents impose limitations on the amount of carpeting they will sell and install for the advertised price.

2. Respondents’ merchandise is not being offered for sale at special or reduced prices. To the contrary, the price respondents regularly advertise and their so-called advertised “sale” price are identical and are used to mislead prospective customers into believing there is a saving from a bona fide regular selling price.

8. Purchasers of respondents’ carpet remnants and rugs are not afforded savings of 30 to 60 percent or 29 to 57 percent of the prices at which such carpet remnants and rugs are usually and customarily sold at retail. To the contrary, the percentage price comparison is based on prices for quantities of carpeting required for wall-to-wall installation rather than the advertised carpet remnants or rugs which are usually sold for less than wall-to-wall prices.

Therefore, the statements and representations as set ofrth in Paragraphs Three and Four, hereof, were and are false, misleading and deceptive.

CARPET BAZAAR, INC., ET AL. 1487 1434 Decision and Order , PAR. 6. In the course and conduct of their aforesaid business, and at all times mentioned herein, respondents have been, and now are, in substantial competition in commerce, with corporations, firms and individuals in the sale and distribution of rugs, carpeting and floor coverings of the same general kind and nature as those sold by respondents. PAR. 7. The use by respondents of the aforesaid false, misleading and deceptive statements, representations, acts and practices, has had, and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations were and are true and complete, and into the purchase of substantial quantities of respondents’ products and services by reason of said erroneous and mistaken belief. PAR. 8. The aforesaid acts and practices of respondents, as herein alleged, were and are all to the prejudice and injury of the public and of respondents’ competitors and constituted, and now constitute, unfair and deceptive acts and practices in commerce in violation of Section 5 of the Federal Trade Commission Act.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof and the respondents having been furnished thereafter with a copy of a draft of complaint which the Chicago Regional Office proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement 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’s 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 Act, 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 with the procedure prescribed in Section 2.34(b) of its rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order:

ce / CARPET BAZAAR, INC., ET AL. 1439 ©1484" eee: pean Decision ‘and Order: — dents’ advertised sale price and a regular price for said mer- --chandise in respondents’ trade. area unless .a substantial number of the principal retail outlets ‘in the trade area regu: larly. sell said: merchandise at such regular price. (c) Representing, directly or indirectly, orally or in writing, - that by purchasing any of said merchandise, customers are afforded: savings amounting to the difference between re- ~ ~ spondents’ advertised sale price and a regular selling price for. = comparable merchandise, unless substantial sales of merchan- - dise of like grade and quality are being made in the trade area at. the stated. regular price or a higher price and unless rea spondents have in: good faith conducted a market survey or obtained a similar representative sample of prices in their. trade area which establishes the validity of said regular price ~vand- itis clearly and conspicuously disclosed that the regular price is applicable to merchandise of like grade and quality. 4. Advertising or otherwise representing a regular price or compared value price for carpet remnants or rugs (a) unless the carpet remnants or rugs being advertised are of the same grade and quality as the carpets with which such advertised prices are compared; and (b) without disclosing i in-immediate conjunction therewith that the regular selling price or compared value price is based : ont the wall-to-wall price of carpeting of the same grade and quality. - 5, Representing, directly or by implication, orally or in writing, that purchasers of respondents’ merchandise will save any stated ‘dollar or percentage amount without fully and conspicuously disclosing i in immediate conjunction therewith, the basis for such savings representations. =.

6. Failing to maintain and produce for inspection or copying for a period of three (8) years, adequate records (a) which disclose the facts upon which any savings claims, sales claims and other similar representations as set forth in Paragraphs One, Two and Four of this order are based, and (b) from which the validity of any savings: claims, sale claims and similar representations can be determined. It is further ordered, That respondents shall maintain for at least a one (1) year period, following the effective date of this order, copies of all advertisements, including. newspaper, radio and television advertisements, direct mail and in-store solicitation literature, and any other ~ such promotional material utilized for the purpose of obtaining leads for . the sale of carpeting or floor coverings, or utilized in the advertising, promotion or sale of carpeting or floor coverings and other merchandise. It is further ordered, That respondents, for.a period of one (1) year from the effective date of this order, shall provide each advertising 1440 FEDERAL TRADE COMMISSION DECISIONS _ Decisions 1 1 1 2 2 1195 299 66 47 80.608803 and.5 1 1 1 2 3 1259 302 97 66 79.525146 Orders 1 1 1 2 4 1463 326 44 5 45.552326 a5 1 1 1 2 5 1703 303 59 53 45.689510 835 1 1 1 2 6 1771 314 32 26 41.644043 F,5 1 1 1 2 7 1800 287 38 53 33.889557 1.5 1 1 1 2 8 1843 287 45 69 42.005569 Ge2 1 2 0 0 0 535 395 1453 81 -1 3 1 2 1 0 0 535 395 1453 81 -1 4 1 2 1 1 0 535 395 1453 81 -1 5 1 2 1 1 1 535 413 132 63 96.803452 agency5 1 2 1 1 2 687 420 137 38 96.931305 utilized5 1 2 1 1 3 844 413 54 54 56.936226 by,5 1 2 1 1 4 905 395 245 75 92.209824 respondents5 1 2 1 1 5 1154 401 72 53 95.898651 ands 1 2 1 1 6 1241 395 88 72 73.311920 each5 1 2 1 1 7 1351 413 207 48 96.767265 newspapers 1 2 1 1 8 1576 395 207 71 96.202728 publishing5 1 2 1 1 9 1792 420 85 44 92.195747 com-5 1 2 1 1 10 1890 405 98 35 27.801132 ae2 1 3 0 0 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0 0 0 657 1716 1117 111 -1 3 1 4 1 0 0 657 1716 1117 111 -1 4 1 4 1 1 0 1015 1716 403 33 -1 5 1 4 1 1 1 1015 1717 45 32 95.241165 IN5 1 4 1 1 2 1077 1722 82 26 95.241165 THES 1 4 1 1 3 1175 1716 174 31 96.227127 MATTERS 1 4 1 1 4 1366 1720 52 26 96.244049 OF4 1 4 1 2 0 657 1783 1117 44 -1 5 1 4 1 2 1 657 1794 234 33 95.344749 ATLANTIC5 1 4 1 2 2 908 1791 356 35 93.271004 CONSTRUCTION5 1 4 1 2 3 1283 1791 27 32 93.175735 &5 1 4 1 2 4 1329 1783 178 38 91.795959 SUPPLY5 1 4 1 2 5 1524 1788 83 39 89.249397 CO.,5 1 4 1 2 6 1628 1787 58 31 96.006607 ET5 1 4 1 2 7 1702 1787 72 31 96.143242 AL.2 1 5 0 0 0 548 1863 1338 86 -1 3 1 5 1 0 0 548 1863 1338 86 -1 4 1 5 1 1 0 548 1863 1338 42 -1 5 1 5 1 1 1 548 1873 192 28 95.013458 CONSENTS 1 5 1 1 2 755 1872 149 33 93.302307 ORDER,5 1 5 1 1 3 923 1872 102 32 91.315765 ETC.,5 1 5 1 1 4 1043 1871 44 25 30.684158 IN5 1 5 1 1 5 1102 1869 171 27 30.684158 REGARDS 1 5 1 1 6 1288 1869 52 26 95.608521 TO5 1 5 1 1 7 1356 1868 82 25 96.175865 THES 1 5 1 1 8 1455 1866 193 27 96.856331 ALLEGED5 1 5 1 1 9 1661 1863 225 28 96.846031 VIOLATION4 1 5 1 2 0 778 1916 881 33 -1 5 1 5 1 2 1 778 1923 51 26 95.462181 OF5 1 5 1 2 2 845 1923 82 25 95.462181 THES 1 5 1 2 3 943 1921 193 27 96.019417 FEDERAL5 1 5 1 2 4 1150 1920 139 26 96.207352 TRADES 1 5 1 2 5 1306 1917 256 28 96.032829 COMMISSIONS 1 5 1 2 6 1578 1916 81 26 96.257088 ACT2 1 6 0 0 0 696 1983 1040 38 -1 3 1 6 1 0 0 696 1983 1040 38 -1 4 1 6 1 1 0 696 1983 1040 38 -1 5 1 6 1 1 1 696 1990 104 26 93.139664 Dockets 1 6 1 1 2 812 1989 114 28 91.125786 C-2499.5 1 6 1 1 3 943 1988 168 33 96.463600 Complaint,5 1 6 1 1 4 1127 1987 73 26 95.691566 Mar.5 1 6 1 1 5 1214 1989 42 28 92.514671 20,5 1 6 1 1 6 1271 1985 240 29 83.118134 1974—Decision,5 1 6 1 1 7 1527 1983 73 26 96.428848 Mar.5 1 6 1 1 8 1615 1985 41 28 96.428848 20,5 1 6 1 1 9 1672 1985 64 26 96.211716 19742 1 7 0 0 0 550 2049 1389 497 -1 3 1 7 1 0 0 550 2049 1389 497 -1 4 1 7 1 1 0 550 2049 1339 39 -1 5 1 7 1 1 1 550 2057 122 26 96.765190 Consents 1 7 1 1 2 685 2056 81 27 96.088860 orders 1 7 1 1 3 776 2056 139 32 96.088860 requiring5 1 7 1 1 4 928 2063 15 17 96.996689 a5 1 7 1 1 5 953 2055 50 25 93.301643 Mt.5 1 7 1 1 6 1018 2053 200 32 89.349396 Rainier,.Md.,5 1 7 1 1 7 1231 2052 82 27 95.727524 sellers 1 7 1 1 8 1323 2052 53 25 96.692421 ands 1 7 1 1 9 1387 2050 163 27 96.692421 distributors 1 7 1 1 10 1561 2049 31 26 96.785812 of5 1 7 1 1 11 1598 2049 81 26 96.785812 homes 1 7 1 1 12 1689 2049 200 32 96.115097 improvement4 1 7 1 2 0 626 2089 1263 42 -1 5 1 7 1 2 1 626 2099 129 32 96.844780 products5 1 7 1 2 2 772 2097 51 26 96.999672 ands 1 7 1 2 3 838 2097 130 37 96.999672 services,5 1 7 1 2 4 985 2103 99 25 96.452690 among5 1 7 1 2 5 1098 2095 80 26 96.982697 others 1 7 1 2 6 1193 2094 92 32 96.948532 things5 1 7 1 2 7 1300 2095 28 24 96.982536 to5 1 7 1 2 8 1345 2100 78 19 96.394951 ceases 1 7 1 2 9 1438 2090 245 34 96.011185 misrepresenting5 1 7 1 2 10 1698 2089 89 33 95.823181 prices5 1 7 1 2 11 1803 2097 29 18 92.941605 as5 1 7 1 2 12 1848 2096 41 18 89.260551 re-4 1 7 1 3 0 625 2128 1264 52 -1 5 1 7 1 3 1 625 2139 88 27 96.345055 duced5 1 7 1 3 2 723 2147 32 18 96.948273 or5 1 7 1 3 3 763 2128 108 52 96.826622 special,5 1 7 1 3 4 883 2138 47 26 96.871635 thes 1 7 1 3 5 940 2137 110 33 96.829697 savings5 1 7 1 3 6 1060 2136 123 27 96.593575 afforded5 1 7 1 3 7 1193 2135 172 34 96.742821 purchasers,5 1 7 1 3 8 1378 2134 84 26 96.951469 offers5 1 7 1 3 9 1472 2141 30 19 96.669640 as5 1 7 1 3 10 1512 2132 104 27 96.942406 limited5 1 7 1 3 11 1626 2140 30 18 96.950150 or5 1 7 1 3 12 1665 2131 146 27 96.849693 restricted5 1 7 1 3 13 1822 2138 29 18 96.960052 as5 1 7 1 3 14 1861 2132 28 23 96.832222 to4 1 7 1 4 0 626 2173 1262 41 -1 5 1 7 1 4 1 626 2181 74 31 96.923943 time;5 1 7 1 4 2 713 2181 175 33 96.400414 disparaging5 1 7 1 4 3 900 2188 31 18 95.688316 or5 1 7 1 4 4 942 2179 121 33 96.972275 refusing5 1 7 1 4 5 1075 2180 28 24 96.850639 to5 1 7 1 4 6 1115 2178 48 27 96.356735 sells 1 7 1 4 7 1175 2186 53 24 96.356735 any5 1 7 1 4 8 1239 2177 116 33 96.448776 products 1 7 1 4 9 1365 2184 32 18 96.448776 or5 1 7 1 4 10 1407 2175 105 27 96.985390 services 1 7 1 4 11 1525 2173 166 31 96.303085 advertised;5 1 7 1 4 12 1703 2173 80 32 93.255493 using5 1 7 1 4 13 1795 2173 93 31 92.770599 decep-4 1 7 1 5 0 626 2213 1264 57 -1 5 1 7 1 5 1 626 2223 57 25 96.554321 tives 1 7 1 5 2 693 2230 31 18 96.985031 or5 1 7 1 5 3 732 2222 160 32 96.203270 misleading5 1 7 1 5 4 900 2215 234 55 96.914238 representations5 1 7 1 5 5 1143 2222 28 23 96.783600 to5 1 7 1 5 6 1180 2219 93 26 96.953857 obtains 1 7 1 5 7 1281 2217 173 34 96.506287 prospective5 1 7 1 5 8 1462 2216 174 34 96.684242 purchasers;5 1 7 1 5 9 1646 2213 244 34 96.652657 misrepresenting4 1 7 1 6 0 626 2255 1265 42 -1 5 1 7 1 6 1 626 2264 48 26 96.968498 thes 1 7 1 6 2 684 2264 74 33 96.971565 prices 1 7 1 6 3 767 2263 28 26 96.885475 of5 1 7 1 6 4 802 2262 128 34 95.725403 products5 1 7 1 6 5 942 2270 30 18 97.014214 or5 1 7 1 6 6 979 2261 129 31 96.876282 services;5 1 7 1 6 7 1118 2259 192 34 96.871048 representing5 1 7 1 6 8 1318 2259 88 33 96.753708 prices5 1 7 1 6 9 1416 2259 43 25 96.816757 for5 1 7 1 6 10 1466 2257 131 33 96.597931 products5 1 7 1 6 11 1607 2265 30 18 96.827812 or5 1 7 1 6 12 1646 2256 120 26 96.839424 services5 1 7 1 6 13 1776 2255 115 26 96.384911 without4 1 7 1 7 0 627 2297 1312 40 -1 5 1 7 1 7 1 627 2303 142 34 96.438293 showings 1 7 1 7 2 763 2311 27 18 96.756462 in5 1 7 1 7 3 802 2311 33 18 96.756462 an5 1 7 1 7 4 849 2302 128 27 96.549461 estimates 1 7 1 7 5 990 2310 31 18 97.003281 or5 1 7 1 7 6 1033 2304 122 24 96.412964 contracts 1 7 1 7 7 1168 2301 64 26 96.638466 each5 1 7 1 7 8 1247 2301 127 31 96.895058 separates 1 7 1 7 9 1387 2299 67 26 96.885056 items 1 7 1 7 10 1466 2297 144 27 96.764778 included5 1 7 1 7 11 1603 2305 28 18 96.231308 in5 1 7 1 7 12 1644 2297 46 26 96.280357 thes 1 7 1 7 13 1702 2296 82 33 92.916054 price;5 1 7 1 7 14 1798 2304 92 24 60.201828 repre-4 1 7 1 8 0 627 2332 1294 47 -1 5 1 7 1 8 1 627 2346 110 32 97.004364 senting5 1 7 1 8 2 752 2345 87 34 96.979797 prices5 1 7 1 8 3 854 2346 44 25 96.643532 for5 1 7 1 8 4 912 2352 16 18 92.328926 a5 1 7 1 8 5 943 2344 131 33 96.935158 completes 1 7 1 8 6 1090 2343 168 32 96.688507 remodeling5 1 7 1 8 7 1272 2342 105 26 96.743767 services 1 7 1 8 8 1393 2341 115 26 96.988014 without5 1 7 1 8 9 1522 2340 146 32 96.988014 disclosing5 1 7 1 8 10 1682 2339 47 26 96.935265 thes 1 7 1 8 11 1744 2337 147 27 96.808578 additional5 1 7 1 8 12 1919 2332 2 2 0.000000 ,4 1 7 1 9 0 628 2379 1262 40 -1 5 1 7 1 9 1 628 2391 73 22 94.578598 costs5 1 7 1 9 2 712 2390 28 23 96.249046 to5 1 7 1 9 3 751 2386 133 33 96.249046 completes 1 7 1 9 4 893 2387 48 25 96.900993 thes 1 7 1 9 5 952 2386 168 32 96.964676 remodeling5 1 7 1 9 6 1129 2385 113 31 96.515709 service;5 1 7 1 9 7 1253 2383 136 33 96.625000 including5 1 7 1 9 8 1400 2382 159 33 96.735420 misleading5 1 7 1 9 9 1569 2380 179 27 96.738968 illustrations5 1 7 1 9 10 1759 2380 26 25 93.262787 in5 1 7 1 9 11 1795 2379 95 26 92.888641 adver-4 1 7 1 10 0 628 2421 1264 40 -1 5 1 7 1 10 1 628 2430 153 31 93.221474 tisements;5 1 7 1 10 2 796 2428 168 33 96.133339 contracting5 1 7 1 10 3 974 2427 43 27 96.133339 for5 1 7 1 10 4 1028 2435 53 25 97.010117 any5 1 7 1 10 5 1095 2427 55 26 96.797699 sales 1 7 1 10 6 1162 2426 26 26 96.975311 in5 1 7 1 10 7 1202 2427 46 25 96.784279 thes 1 7 1 10 8 1261 2426 70 26 96.776794 forms 1 7 1 10 9 1343 2425 30 26 95.875504 of5 1 7 1 10 10 1381 2424 70 34 95.875504 legal5 1 7 1 10 11 1464 2432 99 26 96.841034 papers5 1 7 1 10 12 1575 2423 113 32 96.898346 bindings 1 7 1 10 13 1700 2430 33 18 96.945175 on5 1 7 1 10 14 1745 2422 48 26 97.006737 thes 1 7 1 10 15 1805 2421 87 32 97.009735 buyer4 1 7 1 11 0 627 2463 1265 41 -1 5 1 7 1 11 1 627 2472 76 32 96.958755 prior5 1 7 1 11 2 712 2474 29 23 96.984955 to5 1 7 1 11 3 751 2470 134 33 96.775452 midnight5 1 7 1 11 4 895 2471 30 25 96.568260 of5 1 7 1 11 5 932 2470 48 26 96.921799 thes 1 7 1 11 6 990 2470 49 25 88.054321 3rd5 1 7 1 11 7 1049 2470 60 32 94.547653 day;5 1 7 1 11 8 1122 2469 92 32 94.547653 failing5 1 7 1 11 9 1225 2471 29 23 93.444290 to5 1 7 1 11 10 1263 2467 107 27 93.444290 furnish5 1 7 1 11 11 1379 2467 102 33 96.973251 buyers5 1 7 1 11 12 1492 2466 65 26 96.862717 with5 1 7 1 11 13 1570 2464 151 33 96.940727 completed5 1 7 1 11 14 1732 2463 118 33 95.197685 receipts5 1 7 1 11 15 1862 2470 30 18 96.982224 or4 1 7 1 12 0 629 2506 1263 40 -1 5 1 7 1 12 1 629 2513 90 33 97.005890 copies5 1 7 1 12 2 732 2513 29 26 96.703201 of5 1 7 1 12 3 772 2514 135 25 96.875557 contracts5 1 7 1 12 4 919 2508 32 30 96.958755 or5 1 7 1 12 5 962 2512 102 26 96.659569 notices5 1 7 1 12 6 1077 2511 29 26 95.275421 of5 1 7 1 12 7 1117 2510 174 27 95.275421 cancellations 1 7 1 12 8 1301 2510 27 25 96.818886 in5 1 7 1 12 9 1341 2509 47 26 96.716026 thes 1 7 1 12 10 1400 2516 75 19 96.792023 same5 1 7 1 12 11 1488 2509 134 32 96.469627 languages 1 7 1 12 12 1634 2506 66 27 96.469627 used5 1 7 1 12 13 1713 2506 26 26 96.400421 in5 1 7 1 12 14 1753 2506 56 26 96.940063 oral5 1 7 1 12 15 1819 2506 73 25 96.245270 sales ATLANTIC CONSTRUCTION & SUPPLY CO., ET AL. 1441 1440 : Complaint presentation; failing to inform buyers orally of or misrepresenting their right to cancel and to honor valid notices of cancellation; transferring customers’ notes to other parties prior to midnight of the fifth day following the day the contract was signed; and failing to keep for two years copies of advertisements or promotional material.

Appearances For the Commission: David W. Bushong.

For the respondents: Pro se.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Atlantic Construction & Supply Co., a corporation, and Norman Glaser and Stuart Schulman, individually and as officers of said corporation, hereinafter sometimes 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 would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent Atlantic Construction & Supply Co. 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 place of business 207 Varnum Street, Mt. Rainier, Md. Respondents Norman Glaser and Stuart Schulman are officers of the corporate respondent. They formulate, direct and control the acts and practices of the corporate respondent including the acts and practices hereinafter set forth. Their business addresses are the same as that of the corporate respondent.

The respondents cooperate and act together in carrying out the acts and practices hereinafter set forth. , PAR. 2. Respondents are now, and for some time last past have been, engaged in the advertising, offering for sale, sale and distribution of home improvement products and services to the general public. PAR. 8. In the course and conduct of their aforesaid business, respondents now cause, and for some time last past have caused, their said products, when sold, to be shipped from their place of business in the State of Maryland to purchasers thereof located in various other States of the United States and in the District of Columbia, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in said products in commerce, as “commerce” is defined in the Federal Trade Commission Act.

PAR. 4. In the course and conduct of their aforesaid business, and for the purpose of inducing the purchase of their home improvement Complaint 83 F.T.C.

products and services, respondents and their salespersons or representatives have made, and are now making, numerous statements and representations in advertising and promotional material and through oral statements and representations with respect to their prices and their purchasers’ savings.

Typical and illustrative of said statements and representations, but not all inclusive thereof, are the following: After Holiday Event All Prices Reduced We must keep our craftsmen busy for the winter season REC. ROOM SPECIAL $588 CASH PRICE 12 x 15 Includes Tile Floor, Acoustic Ceiling, Georgia Pacific Paneling, Closed Under Stairway, All Necessary Trim, Larger Size Rooms Proportionally Higher Depending on Materials Selected ADDITIONS NOW $588 CASH PRICE 10’ x 12’ FOR GROUND LEVEL EXTRA BEDROOM, GAME ROOM or REC. ROOM SIZE 10 x 12 Plate over existing Masonry Wall~Sheathing for the Walls-Studding for the Walls—Rafters for the Roof—-Sheathing for the Roof—All carpentry, labor and materials—furnished for the above work. BAR INCLUDED WITH DE LUX REC. ROOM PAR. 5. By and through the use of the aforesaid statements and representations, and others of similar import and meaning but not specifically set out herein, separately and in connection with oral statements and representations of their salespersons or representatives, respondents have represented, and are now representing, directly or by implication, that:

1. Their home improvement products and services are being offered for sale at special or reduced prices, and savings are thereby afforded purchasers because of reductions from respondents’ regular selling prices.

2. Their offer is made for a limited time only. 3. A bona fide offer is being made to sell the advertised products and services at the prices, or proportionate prices, and on the terms and conditions specified in the advertisements. 4. They are offering complete basement recreation room and room addition remodeling services for the prices shown in the advertisements for those remodeling services.

5. A bar is included in the basement recreation room remodeling service for the price shown in the advertisement for that service. PAR. 6. In truth and in fact:

1. Respondents’ products and services are not being offered for sale at special or reduced prices, and savings are not thereby afforded purchasers because of reductions from respondents’ regular selling prices. In fact, respondents do not have regular selling prices but the ATLANTIC CONSTRUCTION & SUPPLY CO., ETAL. 1443 1440 Complaint prices at which respondents’ products are sold vary from customer to customer depending on the resistance of the prospective purchaser. 2. Respondents’ advertised offer is not made for a limited time only. Said products and services are advertised regularly at the represented prices and on the terms and conditions therein stated. 3. The offers made in respondents’ advertisements are not bona fide offers to sell the advertised products and services at the prices, or proportionate prices, and on the terms and conditions specified in the advertisements in that:

a. Respondents’ offers are made for the purpose of obtaining leads to persons interested in the purchase of respondents’ products and services. After obtaining ‘such leads, respondents’ salespersons or representatives call upon such persons at their homes and, according to their established mode of operation, respondents’ salespersons or representatives disparage the advertised product or service and otherwise discourage the purchase thereof and attempt to sell, and frequently do sell, a different and more expensive product or service instead of the advertised product or service for which the customer was originally solicited.

b. In many cases, the prices charged for respondents’ products and services exceed the advertised prices, or proportionate prices. ce. Remodeling products and services are sold at a single contract price which includes all material, labor and other costs. Since no itemized estimate or contract is provided, persons who respond to the advertisements and purchase remodeling products and services have absolutely no means of knowing what price they are paying for the advertised items.

4, The respondents do not offer complete basement recreation room and room addition remodeling services for the prices shown in the advertisements for those remodeling services. The format of respondents’ advertisements, and the prominent manner in which the prices are set forth, leads a substantial number of prospective purchasers to the impression that the prices shown are the full prices for complete remodeling services. This mistaken impression is enhanced by the fact that in many instances homeowners are not aware of the quantity and cost of the additional material and labor necessary for a complete remodeling service. Respondents’ failure to disclose in their advertisements the quantity and cost of such additional material and labor as is normally necessary for a complete remodeling service further enhances the capacity and tendency of said advertisements to lead prospective purchasers to believe that a complete remodeling service is being offered. 5. A bar is not included in the basement recreation room remodeling service for the price shown in the advertisement for that service. Complaint 83 F.T.C.

Therefore, the statements and representations set forth in Paragraphs Four and Five hereof were, and are, false, misleading and deceptive.

PAR. 7. In the further course and conduct of their business and in furtherance of a sales program for inducing the purchase of their home remodeling and expansion services, respondents and their salesmen or representatives have engaged in the following additional unfair, false, misleading and deceptive acts and practices: In a substantial number of instances, through the use of the false, misleading and deceptive statements, representations and practices set forth in Paragraphs Four through Six, above, respondents or their representatives have been able to induce customers into signing a contract upon initial contact without giving the customer sufficient time to carefully consider the purchase and consequences thereof. PAR. 8. In the course and conduct of their aforesaid business, and at all times mentioned herein, respondents have been, and now are, in substantial competition, in commerce, with corporations, firms and ' Individuals engaged in the sale of home improvement products and services of the same general kind and nature as those sold by respondents.

PAR. 9. The use by respondents of the aforesaid false, misleading and deceptive statements, representations, acts and practices has had, and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations were and are true and accurate and into the purchase of substantial quantities of respondents’ home improvement products and services by reason of said erroneous and mistaken belief. PAR. 10. The aforesaid acts and practices of respondents, as herein alleged, were, and are, ail 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 and deceptive acts and practices in commerce. in violation of Section 5 of the Federal Trade Commission Act.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Washington, D.C. Regional Office proposed to present to the Commission for its consideration and which, ' if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter 1440 Decision and Order executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement 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’s rules; and The Commission having thereafter considered the matter and having determined that it had to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted thé executed consent agreement and placed such agreement on the public record for a period of thirty (80) days, now in further conformity with the procedure prescribed in Section 2.34(b) of its rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order: 7 1. Respondent Atlantic Construction & Supply Co. is a corporation organized, existing and doing business under and by virtue of the laws of the District of Columbia, with its office and principal place of business located at 2207 Varnum Street, Mt. Rainier, Md. Respondent Norman Glaser and Stuart Schulman are officers of said corporation. They formulate, direct and control the policies, acts and practices of said corporation, and their principal office and place of business is located at the above stated address. 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.

ORDER It is ordered, That respondents Atlantic Construction & Supply Co., a corporation, its successors and assigns and its officers, and Norman Glaser and Stuart Schulman, individually and as officers of said corporation, and respondents’ agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection with the advertising, offering for sale, sale or distribution of home improvement products and services, 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. Using the words “All Prices Reduced” or “Special” or any other word or words of similar import or meaning not set forth specifically herein, unless the price of such product or service being offered for sale constitutes a reduction, in an amount not so insignificant as to be meaningless, from the actual bona fide price at Decision and Order 83 F.T.C.

which such product or service was sold or offered for sale to the public on a regular basis by respondents for a reasonably substantial period of time in the recent regular course of their business. 2.

(a) Representing, orally or in writing, directly or by implication, that by purchasing any of said products or services customers are afforded savings amounting to the difference between respondents’ stated price and respondents’ former price, unless such products or services have been sold or offered for sale in good faith at the former price by respondents for a reasonably substantial period of time in the recent, regular course of their business.

(b) Representing, orally or in writing, directly or-by implication, that by purchasing any of said products or services customers are afforded savings amounting to the difference between respondents’ stated price and a compared price for said products or services in respondents’ trade area unless a substantial number of the principal retail outlets in the trade area regularly sell said products or services at the compared price or some higher price.

(ec) Representing, orally or in writing, directly or by implication, that by purchasing any of said products or services customers are afforded savings amounting to the difference between respondents’ stated price and a compared value price for comparable products or services, unless substantial sales of products or services of like grade and quality are being made in the trade area at the compared price or a higher price and unless respondents have in good faith conducted a market survey or obtained a similar representative sample of prices in their trade area which establishes the validity of said compared price and it is clearly and conspicuously disclosed that the comparison is with merchandise of like grade and quality. 3. Representing, orally or in writing, directly or by implication, that any offer to sell a product or service is limited or restricted as to time or is limited or restricted in any other manner, unless the represented limitation or restriction is imposed and adhered to in good faith by the respondents.

_ 4, Advertising, or offering for sale, any product or service for the purpose of obtaining leads to potential purchasers of different products or services, unless the advertised, or offered, product or service is capable of adequately performing its intended function and respondents maintain an adequate and readily available stock of said product and are willing and able to perform said service. — ATLANTIC CONSTRUCTION & SUPPLY CO., HT AL. 1441 1440 Decision and Order 5. Disparaging in any manner, or refusing to sell, any advertised product or service.

6. Using any advertisement, sales plan or procedure which involves the use of any false, misleading or deceptive statement, representation or illustration designed to obtain leads to potential purchasers of respondents’ products or services. 7. Representing, orally or in writing, directly or by implication, that any product or service is offered for sale when such is not a bona fide offer to sell said product or service. 8. Misrepresenting, orally or in writing, directly or by implication, the price, or proportionate price, of any of their products or services.

9. Representing, orally or in writing, directly or by implication, a price for any product or service unless the charge for such product or service, the quantity of material upon which such charge is based and a description of the type and grade of such material is shown as a separate item on an estimate and contract provided the purchaser.

10. Representing, orally or in writing, directly or by implication, prices for selected items of material, fixtures and labor which are available only as part of a complete remodeling service without disclosing an accurate estimate of the cost of such additional items of material, fixtures and labor normally necessary to complete the represented remodeling service.

11. Including illustrations in advertisements, unless such illustrations accurately depict the product being advertised and the quantity of the product available for the advertised price. 12. Contracting for any sale whether in the form of trade acceptance, conditional sales contract, promissory note, or otherwise which shall become binding on the buyer prior to midnight of the third day, excluding Sundays and legal holidays, after the date of execution.

13. Failing to furnish the buyer with a fully completed receipt or copy of any contract pertaining to such sale at the time of its execution, which is in the same language, e.g., Spanish, as that principally used in the oral sales presentation and which shows the date of the transaction and contains the name and address of the seller, and in immediate proximity to the space reserved in the contract for the signature of the buyer or on the front page of the receipt if a contract is not used and in bold face type of a minimum size of 10 points, a statement in substantially the following form: YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS Decision and Order 83 F.T.C.

TRANSACTION. SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT.

14. Failing, in those transactions in which a security interest in the buyer’s principal residence is not or will not be retained, to furnish each buyer, at the time he signs the sales contract or otherwise agrees to buy consumer goods or services from the seller, a completed form in duplicate, captioned “NOTICE OF CANCELLATION,” which shall be attached to the contract or receipt and easily detachable, and which shall contain in ten point bold face type the following information and statements in the same language, e.g., Spanish, as that used in the contract: NOTICE OF CANCELLATION {enter date of transaction] (Date) YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY PENALTY OR OBLI- GATION, WITHIN THREE BUSINESS DAYS FROM THE ABOVE DATE. IF YOU CANCEL, ANY PROPERTY TRADED IN, ANY PAYMENTS MADE BY YOU UNDER THE CONTRACT OR SALE, AND ANY NEGOTIABLE INSTRU- MENT EXECUTED BY YOU WILL BE RETURNED WITHIN 10 BUSINESS DAYS FOLLOWING RECEIPT BY THE SELLER OF YOUR CANCELLATION NOTICE, AND ANY SECURITY INTEREST ARISING OUT OF THE TRANSACTION WILL BE CANCELLED. ;

IF YOU CANCEL, YOU MUST MAKE AVAILABLE TO THE SELLER AT YOUR RESIDENCE, IN SUBSTANTIALLY AS GOOD CONDITION AS WHEN RE- CEIVED, ANY GOODS DELIVERED TO YOU UNDER THIS CONTRACT OR SALE; OR YOU MAY IF YOU WISH, COMPLY WITH THE INSTRUCTIONS OF THE SELLER REGARDING THE RETURN SHIPMENT OF THE GOODS AT THE SELLER’S EXPENSE AND RISK. :

IF YOU DO MAKE THE GOODS AVAILABLE TO THE SELLER AND THE SEL- LER DOES NOT PICK THEM UP WITHIN 20 DAYS OF THE DATE OF YOUR NOTICE OF CANCELLATION, YOU MAY RETAIN OR DISPOSE OF THE GOODS WITHOUT ANY FURTHER OBLIGATION.

TO CANCEL THIS TRANSACTION, MAIL OR DELIVER A SIGNED AND DATED COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE, OR SEND A TELEGRAM, TO [Name of seller], AT [address of seller’s place of business], NOT LATER THAN MIDNICHT OF ; (date) I HEREBY CANCEL THIS TRANSACTION.

(Date) (Buyer’s signature) 15. Failing, in those transactions in which a security interest in ATLANTIC CONSTRUCTION & SUPPLY CO., ETAL. 1449 1440 Decision and Order :

the buyer’s principal residence is not or will not be retained, before furnishing copies of the “Notice of Cancellation” to the buyer, to complete both copies by entering the name of the seller, the address of the seller’s place of business, the date of the transaction, and the date, not earlier than the third business day following the date of the transaction, by which the buyer may give notice of cancellation.

16. Including in any sales contract or receipt any confession of judgment of any waiver of any of the rights to which the buyer is entitled under this order including specifically his right to cancel the sale in accordance with the provisions of this order. 17. Failing to inform each buyer orally, at the time he signs the contract or purchases the goods or services, of his right to cancel. 18. Misreprsenting, directly or indirectly, orally or in writing, the buyer’s right to cancel.

19. Failing or refusing to honor any valid notice of cancellation by a buyer and within 10 business days after the receipt of such notice, to (i) refund all payments made under the contract or sale; (ii) return any goods or property traded in, in substantially as good condition as when received by the seller; (iii) cancel and return any negotiable instrument executed by the buyer in connection with the contract or sale and take any action necessary or appropriate to terminate promptly any security interest created in the transaction.

20. Negotiating, transferring, selling, or assigning any note or other evidence of indebtedness to a finance company or other third party prior to midnight of the fifth business day following the day the contract was signed or the goods or services were purchased. 21. Failing, within 10 business days of receipt of the buyers’s notice of cancellation, to notify him whether the seller intends to repossess or to abandon any shipped or delivered goods. 22. Failing to retain, for a period of not less than two (2) years from the date of their last use, a copy of each advertisement and item of promotional material, including, but not limited to, each newspaper advertisement, radio or television script, direct mail advertisement and product brochure, used for the purpose of obtaining leads to prospective purchasers of respondents’ products and services or in promoting the sale of respondents’ products and services and a record of the number of copies disseminated and the dates and means of dissemination.

23. Failing to retain, for a period of not less than two (2) years following each price reduction or savings claim, including, but not limited to, each claim of the types. described in Paragraphs 1 Decision and Order 83 F.T.C.

through 8 of this order, adequate records to substantiate each such claim. 7 24. Failing to produce, for the purpose of examination and copying by representatives of the Federal Trade Commission, those records required to be retained by this order. Provided, however, That nothing contained in this order shall relieve respondents of any additional obligations respecting contracts required by Federal law or the law of the state in which the contract is made. When such obligations are inconsistent, respondents can apply to the , Commission for relief from this provision with respect to contracts executed in the state in which such different obligations are required, the Commission, upon showing, shall make such modifications as may be warranted in the premises.

It is further ordered, That respondents shall forthwith deliver a copy of this order to cease and desist, and a copy of the Commission’s news release setting forth the terms of the order, to each advertising agency and advertising medium, such as newspaper publishing company, radio station or television station, presently utilized in the course of their business, and that respondents shall, immediately upon opening an account, deliver a copy of such order and news release to any such agency or medium with which they subsequently open an account. It is further ordered, That respondents shall forthwith deliver a copy of this order to cease and desist to each of their agents, representatives and employees engaged in the offering for sale or sale of respondents’: products or services, in the consummation of any extension of consumer credit or in any aspect of the creation, preparation or placing of repondents’ advertisements and that respondents shall deliver a copy of such order to each such person whom they subsequently employ, immediately upon employing each such person, and that respondents shall secure from each such person a signed statement acknowledging receipt of said order.

It is further ordered, That respondent corporation shall forthwith deliver a copy of this order to each of its operating divisions. It is further ordered, That respondents shall notify the Commission at least thirty (30) days prior to any proposed change in a corporate respondent, such as dissolution, assignment or sale resulting in the emergence ‘of a successor corporation, the creation or dissolution of subsidiaries or any other change in the corporation which may affect compliance obligations arising out of the order. It is further ordered, That the individual respondents named herein promptly notify the Commission of the discontinuance of their present business or employment and of their affiliation with any other home improvement business or employment. Such notice shall include re- Ta a NR ee ewe mare ey Bae, od Shh LOE 1451 Complaint spondents’ current business address and a statement as to the nature of the business or employment in which they are engaged as well as a description of their duties and responsibilities. It is further ordered, That the respondents herein shall within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form of their compliance with this order.