Bernard Licht

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IN THE MATTER OF llERNARD LICHT, TRADING AS LICHT'S FUR FACTORY COMPLAINT, FINDING'S; AND DllDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2787. Complaint, Apr. 2-5, 193G-Decisiorn-, May 21, 19~1 Where an iuuividual eugageu in the sale of furs and fur garments, and owner of all the outstanding stock of a corvomte manufacturer, wholesaler, and retailer of such garments, located at same address; in advertising, in nn adjoining State, his said furs and fur garments through radio broadcasts over a station, wavt>length of which was of such character that it could (u) he heard by people in States other than such adjoining State of originltepreseuted that he owned the building in which his business was carried on, anu that he possessed, or was in a position to offer for sale, thousa.nd8 of fur coats in tile newest styles and models, etc., and that by purchasing from him, the customer could save the middleman's profit and that the saving thereby ell'ected amounted to as much as fifty percent of the price of :hnilar garments sold through the usual retail channels, facts being 11either te 11 01' aforesaid corporation owlted saiu building, bnt he was only a tenant aud occupied and paid rent for the srcond floor thereof, be was not in a position to offer "thousands" of fur coat!J and other garments, but number thereof on hand and available for sale at any other time was substantially less than stated and represented over such broadcast, he maue use ot fur sewing machines not owned by him in manufacture of such garments made by him, purchased many of his fur garments from aforesaid corporation and other fur manufacturers, coats auvertlsed hy him as ~foresaid at varying prices wpre purchasable from other huge retail estabt:lllmwuts in the same city for substantially smaller amounts, those adver- S{'(\ for $39 were "rebuilt" or "renovated" coats, and customers or Pro!<pective customers could not and did not e1rect any such saving as above (b) set fortt l th rough purchase from him; 1;~'llresented that nil r!'pairs for furs or fur garments were furnishrd free ~ {'barge, Rlld that storage for such products was likewise thus furnished, acts being amount of free repairs furnished by him was limited and did not lnclud f f · lldd' e use o material necessary to make repairs involved, or which Itional amount of money was charged, and he did not give "free stor- age" t 0 .. his customers, as understoou among members of tratle as incluuing Proper refrigerated space where the garment is hung, and adequate lnsur- ~nce to cover the garment in the event of loss that would be sustained," tlutleftchargedon f IIIs said customers for insurance against fire, burglary, and(c) n. urs anu fur garments stored by them; and t eJ")re~<entcd that customers or prospective customers could purchase new g ur garments consisting of genuine Hudson seal, raccoons, and other fur ('armeuts, at the low price of $45 for each coat, and that purchases of fur oats c ld d ou be effected by them through turning in their old coats in trade 0 n n having allowance made therefor to apply on the purchase price of the 0;w coat offered by him; facts being that he did not disclose that many fr the coats which be oll'ered at low prices were made from old skins taken Oil! coats previously worn, repaired and made over, and he did not sell 1348 FEDERAL TRADE COMl\IISSION DECISIONS Complaint 24 F.1'. C. garments at low price quoted in broadcast, but asked substantially more therefor;

With tendency and capacity to mislead and deceive a substantial portion of the purchasing public into the erroneous belief that all said representatidiiS were true, and with the result that a number of the consuming public, ns 0 direct consequence of the mistaken and erroneous beliefs induced us ufol'&' said, pUI'chased substantial volume of his said furs and fur garments, nnll trade was unfairly diverted to him from those likewise engaged In sale of such products between and among the various States and who truthfully auverth<e the same; to the substantial injury of competition iu commerce: Held, That snell acts antl, practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Before Mr. Edward M. Averill, trial examiner. JJ!r. George Foulkes for the Commission.

Rathlcopf & Rathkopf, of New York City, for respondent. COMPLAINT Pursuant to the provisions of an Act of Congress approved Sep· tember 26, 1914, entitled "An Act to create a Federal Trade Commis· sion, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that Bernard Licht, trading as Licht's Fur Factory, hereinafter referred to as r.e· spondent, has been and is. using unfair methods of competition 111 commerce as "commerce" is defined in said act, and it appearing to the said Commission that a proceeding by it in respect thereof wou_ld be in the public interest, hereby issues its complaint stating 1ts charges in that respect as follows:

PARAonArn 1. Respondent, Dernard Licht, is an individual trading umlcr the name and style of Licht's Fur Factory, with his principal place of business located at 102 West 2!lth Street, in the city of Ne\\' York, State of New York. Respond£>nt is now and for several months last past has been engagt>d in the business of selling furs and fllr garments at retail, which he distributes to purchasers, many of whoJll reside in States other than the State of New York, and when orders are received therefor, they are filled by respondent by shipping th~ same from the said city of New York, State of New York, into n.n through other States of the United States, and in the District of Co· lumbia, to the re..o;;pective places of business or residences of such pllr· chasers. In the course and conduct of his business said respondent was and is in substantial competition with other individuals, firn~s, partnerships, and corporations likewise enO'aO'ed in the sale and dis· t n'b ution. of f urs and fur garments between"" ""and among the var1o' lls States of the United States and in the District of Columbia. . 111 PAn. 2. In the course and conduct of his business as set forth paragraph 1 hereof, respondent in soliciting the sale of said prod· LICHT'S FUR FACTORY 1349 1347 Complaint Uct · · b s In mterstate commerce advertised and now advertises the same Y lneans of radio broadcasts over a station having a wide interstate reception. Induced by the statements and representations which respontlent makes or causes to be made over said radio broadcasts, per- ~ons residing in various States have purchased furs and fur garments rom said respondent, in some cases for shipment to them at their respective places of rl'sidence and in other cases to be immediately carried by such purchasers into other States. P.-~.n. 3. In the radio broadcasts, described in paragraph 2 hereof, ~espo~dent represents and has represented that he owns the factory 1~lldmg2 in which he carries on his business and which is located at, West 29th Strl'et, New York, N.Y. In truth and in fact, respond- ~~t has not owned nor does he own the building in which he conducts 118 said business, but occupied and now occupies a small space on one of the floors of the building where his business has been and is carried on.

b P,\R, 4. Respondent further states and represents in his radio r~'ldcasts as aforesaid and also by means of advertising literature an cards that respondent is a manufacturer of the furs and fur f"ar1 .~ 1lents winch respon<lent offers for sale and sells, and that by !'tlrc} · .p Iasmg from respondent the customer can save the middleman's 5~ofit, and that the saving thereby effected amounts to as much as h% of the price of similar garments sold through the usual retail ct annels. In truth and in fact, said respondent is not a manufac- Urer f f . t' <1 ° ur garmt>nts but purchases the fimshed garments advertise and sold by him from jobbers, wholesalers, and other manufacof Uret·s1': • N or can custonwrs or prospective· customers e ff ect a savmg· ~y purchasing furs or fur garments from respondent. ,;tlo St there 1s a preference on the part of certain customers in different d' ates of the United States for furs and fur garments purchased a 1 ~ctly. from the manufacturer ther('of, and there is an impression d~ belief existing among certain of said customers that by dealing ~;~~tly with the manufacturer they can eliminate the profit of the 1 tn c leman, and that they can buy goods at a cheaper price and on pore favorable terms than they can from jobbers or corporatioms, ""artnerships, firms, or persons not manufacturing furs or fur gar-... ents t1 t p la sell to such customers. sp AR. 5. In the course and conduct of such radio broadcasts, rete ondent made or caused to be made the following statements and Presentations:

Licht' 8lnuu offer thousands of beautiful fur coats In the newest styles and models e frou 1 I . on Y the finest furs consisting of Seal, Persian Lamb, 1\Imk, Cnracul, Complaint UF. T.C.

Raccoon and many others, in all sizes, and prices as low as $35.00 and up to $1,000.00 Licht's Fur Factory are now displaying thousands of beautiful fur coats such as Seal, Caracul, Marmlnk, Raccoon, 1\Iuskrat-plain or trimmed with Fitch, Raccoon or Beaver, for only $3!).00! Just Imagine, a beautiful fur coat for only $39.00.

In truth and in fact, respondent at no time had on hand or was in the position to offer for sale "thousands" of fur coats or other garments, but the number of such garments on hand and available for sale at any one time was substantially less than stated and represented, nor did respondent have on hand furs consisting of seal, Persian lamb, mink, caracul, and raccoon for sale at the low prices mentioned over said radio broadcasts.

PAR. 6. Respondent further states and represents by the media of radio broadcasts that customers who would purchase furs or fur gar· ments from respondent would receive free repairs and that respond· ent offers with the purchase of furs or fur garments free storage for the same. In truth and in fact, the amount of "free" repairs fnr· nished by respondent was and is very limited, and does not include the use of materials necessary to make said repairs; but respondent charges an additional amount of money for the materials necessary to make said repairs. In truth and in fact, the respondent does not give free storage to his customers but charges said customers for jn· surance against fire, burglary and theft on furs and fur garments stored by such customers.

PAn. 7. Respondent by the media of radio broadcasts further repre· sented that customers or prospective customers could purchase furs consisting of genuine Hudson seals, raccoons, black Russian ponies, marminks, muskrats, brown, black or gray caraculs at the price of $!5.00 for each coat, and that purchases of fur coats could be effect~d by customers or prospective customers turning in their old coats lil tratle for which an ·allowance would be made by respondent to apply to the purchase price of said new coats offered by respondent. In truth and in fact, many of the coats offered by respondent at ]o\\' prices were and are "rebuilt" or "renovated" coats, that is, coats made from old skins taken from coats which had been previously worn, then repaired and made over, and respondent did not sell the furs at the low prices quoted in said radio broadcasts but on the contract:J asked prices substantially higher than those stated over the radio broadcasts.

PAR. 8. The false and rn)sleading statements and representation:, as aforesaid, have the capacity and tendency to divert and have dt· verted to said respondent trade from his competitors, both those who LICHT'S FUR FACTORY 1351 1347 Findings are in truth manufacturers of fur garments and represent themselves as such, and those who do not manufacture the garments they sell, but who resell them on the same basis as this respondent but do not misrepresent their status, and from those competitors who do not misrepresent the value or usual selling price of the garments sold by them. Such statements and misrepresentations have the tendency and capacity to deceive and mislead and do deceive and mislead the purchasing· public into the belief that respondent is a manufacturer, and that the garments sold by respondent are manufactured by him, and that by reason of respondent's being a manufacturer, respondent's customers can acquire greater value by purchasing furs and fur garments from respondent than by purchasing such garments from re- . tailers, and that by purchasing from respondent a saving of 50% of the real value and usual retail selling value can be effected, and that expensive furs can be acquired from respondent at nominal or low prices, and that all the furs and fur garments advertised and sold by respondent are new fur garments and not "rebuilt" or "renovated" garments or garments previously worn and repaired, then renovated, and that the purchase of a garment or garments from respondent entitles a purchaser or purchasers to free repairs, and to free storage, and that such free storage includes payment by respondent of all insurance charges against burglary, theft, and fire. The acts and practices of respondent as hereinbefore set forth are calculated to and tend to and do unfairly divert trade to respondent from said competitors, and by the acts and practices of respondent hereinbefore described substantial injury is done by respondent to competition in interstate commerce.

PAR. 9. The above alleged acts and practices of respondent are each and all of them to the prejudice of the public and respondent's competitors, and constitute unfair methods of competition in interstate commerce within the meaning of Section 5 of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other Purposes."

REPORT, FINDINGS AS TO Tile FACTS, AND ORDER Pursuant to the provisions of an Act of Congress approved Sept:mber 26, 1914, entitled "An Act to create a Federal Trade Commis- ~on, to define its powers and duties, and for other purposes," the ederal Trade Commission, on April 25, 1936, issued and served its complaint in this proceeding upon respondent, Bernard Licht, doing business as Licht's Fur Factory, charging him with the use of unfair 1352 FEDERAL TRADE COl\IMISSION DECISIONS Findings 24 F.T.C.

methods of competition in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondent's answer thereto, testimony and other evidence in support of the allegations of said complaint were introduced by George Foulkes, attorney for the Commission, before Edward M. Averill, an examiner of the Commission, theretofore duly designated by it, and in opposition to the allegations of the complaint, by Charles Rath· kopf, attorney for the respondent, and said testimony and other evidence were fully recorded and filed in the office of the Commission. Thereafter the proceeding regularly came on for final hearing before the Commission on the said complaint, the answer thereto, testimony and other evidence, briefs in support of the complaint and in oppo· sition thereto; and the Commission having duly considered the same, and being now fully advised in the premises, finds that this proceed· ing is in the interest of the public, and makes this its findings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FACTS PARAGRAPH 1. The respondent Bernard Licht is an individual trad· ing under the name and style of Licht's Fur Factory. Respondent has his principal place of business at 102 'Vest 29th Street, in the city of New York, State of New York.

Respondent is now and since the month of June 1935, has been, t-ngaged in the business of selling furs and fur garments. 'Vhen said fur garments are sold by respondent, he causes them to be shipped from his place IJf business in the city of New York, State of New York, to purchasers located in the various States of the United States.

In the course and conduct of his business, respondent was and is in substantial competition with other individuals, firms, partnerships, nnd corporations likewise engaged in the sale and distribution of furs nnd fur garments between and among the various Stutes of the United Stutes.

There is also locateu at 102 'Vest 2Dth Street, New York City, State of New York, Harry Licht and Sons, Inc., a corporation organized under the laws of the, State of New York in April 1933. Harry Licht is the father of the respondent Bernard Licht, and nt one time a manager of the corporation Harry Licht & Sons, Inc. Harry Licht & Sons, Inc., is a manufacturer, wholesaler, and re· tailer of furs and fur garments.

Responucnt Bernard Licht owns all of the outstanding stock of Harry Licht & Sons, Inc., 19 shares in all, which have a. par value uf $100 per share.

LICHT'S FUR FACTORY 1353 1347 .l!'finding!l Harry Licht, father of the respondent Bernard Licht, often acted as a salesman in the place of business of Bernard Licht, trading as Licht's Fur Factory.

PAn. 2. In the course and conduct of his business, respondent Bernard Licht, trading as Licht's Fur Factory, in soliciting the sale and sale of furs and fur garments, advertised by means of radio broad· casts over Station W AAT, which is located in Jersey City, State of New Jersey.

The wave length of Station ·wAAT, is of such character that it tan be heard by people in States other than the State of New Jersey. Respondent represented over radio Station "\VAAT by means of radio broadcast that he owned the factory building in which he carries on his business and which is located at 102 "\Vest 29th Street, New York City, N. Y. During the months of September, October, November, and December, in the year 1935, respondent caused the following state- :rnents to be made over radio Station "\V AAT: This is the address of Licht's Fur Company-spelled L-l·C·H-T'S which is <•Pen week days from 9: 00 A. M. to 9 : 00 P. M. and Sundays from 10 : 00 A. M. to 5: 00 P. M.-remember-don't lool{ for a retail store-Licht's occupy their nwn factory building at this address-which is one door from Sixth Avenue In New York City- In fact, respondent has not owned nor does he own the building in Which Licht's Fur Factory has been and is located. Respondent is a tenant in said building and pays rent for his occupancy of the second floor thereof. Neither does Harry Licht & Sons, Inc., own said building.

Harry Licht & Sons, Inc. has the use of space rented by Bernard Licht, doing business as Licht's Fur Factory. PAn. 3. Respondent further represented over said radio broadcast that Licht's Fur Factory was and is a manufacturer of the furs and fur garments which respondent offers for sale and sells, and that by Purchasing from respondent the customer can save the middleman's Profit, and that the saving thereby effected amounts to as much as fifty percent of the price of similar garments sold through the usual retail channels .

. During the month of November 1935, respondent caused the follow- Ing announcement to be broadcast over radio Station 'VAAT: Why not purchase your Fur Coat from a Manufacturer this year-Lieht's have been manufacturing furriers for over twenty-eight years-and are now Selling direct to you from their own fur factory at manufacturer's prices-and You save up to fifty percent-don't let warm weather fool you-prepare for \\'Inter now-at Licht's Fur Factory.

Respondent further represented over said radio broadcast that fine fur garments could be purchased at very low prices. Findings 24F.T.C.

During the month of October 1935, respondent caused the following announcement to be broadcast over Station W AA T: Licht's offer thousands of beautiful fur coats in the newest styles and models made from only the finest furs consisting of Seal, Persian Lamb, 1\Iink, Caracul, Itaccoon and many others, In all sizes, and priced as low as $35 and up to $1000 dollars • • •- In fact during the year 1935, respondent Bernard Licht, doing business as Licht's Fur Factory, operated several fur sewing machines with which he manufactured fur garments.

The fur sewing machines used by respondent, while operated by him, were owned by his father Harry Licht, doing business as Harry Licht & Sons, Inc.

Respondent purchased many of his fur garments from Harry Licht & Sons, Inc., and from other fur manufacturers. In fact customers, or prospective customers could not, nor can they -effect a saving of fifty percent by purchasing furs or fur garments from respondent. · Coats advertised by respondent over said radio broadcasts at $110 and $135 could be purchased from other large retail fur establishments in New York City for $98.

Coats of similar quality and for which respondent charged $139 could during the time of said radio broadcast be purchased in other retail stores for $119.

The coats which respondent advertised for $39 were "rebuilt coats" or "renovated coats," that is, coats made up from skins which had been previously worn.

Respondent further causetl to be represented over said radio broad· ('ast that he had on hand at his factory, located at 102 'Vest 29th Street, New York City, N. Y., "thousands" of fur garments, and that he was in the position to ofler for sale thousands of fur garments to the purchasing public.

During the month of November in the year 1935 respondent caused the following aunouncenwnt to be broadcast over radio Station WAAT:

Licht's fur factory-Located at 102 West 2!lth St., one door from (ltb Avenue In New Yorlt-kept right on manufacturing fur coats and are no~ displaying thousands of beautiful fur coats, such as seal, caracul, marmink. raccoon, beaver and mink-priced as low as $39 and up to $1000. In fact, respondent at no time had on hand or was in the position to otter for sale "thousands" of fur coats or other garments, but the number of such garments on hand and available for sale at any one time was substantially less than stated and represented over said rarlio boadcn.st.

LICHT'S FUR FACTORY 1355 1347 Findings PAn. 4. Respondent caused to be represented over said radio broadcast that customers who would purchase furs or fur garments from respondent would receive free repairs, and that respondent offers with the purchase of furs or fur garments, free storage for the same.

During the months of September and October in the year 1935, respondent caused the following announcements to be broadcast over radio Station 'VAAT:

• • "' Your old coat will be accepted as cash against the purchase of any ;ew coat-and with every purchase--you are given free repair service and ree storage for three years "' • •. f • • • Every coat is guaranteed with free storage and repair service or three years .

. During the month of November 1935 respondent caused the followlug announcement to be made over radio Station "\V AA T: Hepair senice and storage for three years absolutely free. In fact, the amount of free repairs furnished by respondent was and is limited, and docs not inclmle the use of material necessary to lnake said repairs; but respondent charges an additional amount of lnoney for the materials necessary to make said repairs. !Vhen a customer purchased a fur garment said customer reeelved a certificate from respondent, which contained the following Provision:

(l ~-In !Hlditiou to our Free Storage we will repair all ripe, sew up seams. l.tze your Garment free of charge for the period of this guarantee. . 2-Should your garment need repairings, whereas we will have to use material of any kind, there will be n charge to you on same at actual cost of labor and material.

In truth and in fact respondent docs not give free storage to his ~Ustorners but charges said customers for insurance against fire, urglary and theft on furs and fur garments stored by such eustorners.

The guarantee certificate which respondent gives to a customer who }JUrchases a fur coat also contains the following provision: '!' 3· We will insure your Furs, rrotecti11g them against Fire, Burglary and heft at a ~;mall minimum per cent charge on valuation placed thereon. In accordance with the provisions of said guarantee certificate, respondent charged customers a fee, which fee represented an insurance charge for protection of the fur garment from loss sustained by reason of fire, burglary and theft while placed in storage by l·e spondent.

f The words "free storage" are understood, among members of the llr trade, to include "proper refrigerated space where the garment Conclusion 24F.T.0· is hung, and adequate insurance to cover the garment in the event of loss that would be sustained.'' PAR. 5. Respondent, by the media of said radio broadcasts, further represented that customers or prospective customers could purchase new fur garments consisting of genuine Hudson seals, raccoons, and other fur garments at the low price of $45 for each coat. Respondent further represented that purchases of fur coats could be effected by customers or prospective customers turning in their old coats in trade, for which an allowance would be made by respondent to apply to the purchase price of said new coat offered by respondent. In fact, many of the coats offered by respondent at low prices we~e coats made from old skins taken from coats which had been previously worn, then repaired and made over, which fact respondent failed to disclose over said radio broadcasts, and respondent did not sell the garments at the low price quoted in said radio broadcast& but asked prices substantially higher.

PAR. 6. Each and all of the false and misleading statements made by respondent as hereinabove set forth, in offering for sale and selling his furs and fur garments, had and now has a tendency and capacity to mislead and deceive a substantial portion of the purchasing public into the erroneous belief that all of said representations nre true.

Further, as a direct consequence of the mistaken and erroneous beliefs induced by the false and misleading statements of respondent as hereinabove enumerated, a number of the consuming public purchased a substantial volume of respondent's furs and fur garments, with the result that trade has been unfairly diverted to respondent from individuals, firms, and corporations likewise engaged in the business of selling furs and fur garments, between and among the various States of the United States, and who truthfully advertise their products.

As n, result thereof, substantial injury has been done and is no''' being done by respondent to competition in commerce among nnd between the various States of the United States. CONCLUSION The aforesaid acts and practices of respondent, Bernard Licht• doing business as Licht's Fur Factory, are to the prejudice of t~e public and of respondent's competitors, and constitute unfair Joethods of competition in commerce within the intent and meaninl! of Section 5 of an Act of Congress approved SPptember 2(), 1914-, entitled "An Act to create n FP<leral Trade Commission, to drfine it" powprs and duties, and for other purposes." LICHT'S FUR FACTORY 1357 1347 Order ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respondent, testimony and other evidence taken before Edward M. Averill, an examiner of the Commission theretofore duly designated by it, in support of the allegations of said complaint and in opposition thereto, briefs filed herein, (oral argument having been waived) by George Foulkes, counsel for the Commission, and by Chas. Rathkopf, counsel for the respondent, and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the provisions of an Act of Congress approved September 2G, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes." It is ordered, That the respondent, Bemard Licht, doing business as Light's Fur Factory, or under any other trade name, his representatives, agents, and employees, in connection with the offering for sale, sale, and distribution of furs and fur garments in interstate commerce, do forthwith cease and desist from representing: 1. That he owns the building in which his business is carried on; 2. That he possesses or is in the position to offer for sale "thousands" or any other number of furs and fur garments substantially in excess of the amount that he actually has on hand; 3. That a saving of 50 percent or any saving can be effected by purchasing furs or fur garments from him;

4. That all repairs for furs or fur garments are furnished free of charge;

5. Ti1at storage for furs or fur garments is furnished free of charge, unless and until said free storage includes the placing of the garment in properly refrigerated space, and adequate insurance for protection of the garment from loss sustained by fire, burglary and theft; 6. That all the furs and fur garments sold by him are made from new skins not previously used or worn.

It is further ordered, That the respondent above named shall, within 30 days after the service upon him of this order, file with the Commission a report in writing setting forth in detail the manner in which he has complied with this order. · 146756m-3!J-vol. 24-88 Syllabus 24 F. T. C.