Reliable Typewriter and Adding Maciiine Co

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IN THE MA'ITER OF RELIABLE TYPEWRITER AND ADDING MACHINE COMPANY COMPLAD1T, FINDINGS, AND ORDER Dl REGARD TO 'tiie ALLEGED VIOLATION OF SEC. II OF AN ACT OF CONGRESS APPROVED SJi:PT. 26, 1914 Docl.:et 3110. Complaint, Apr. :1?.1, 1937-Decision, Aug. 6, 1931 Where a corporation engaged in sale and distribution, to retailers and direct to consuming public, of its "VE-PO-AD," so-called vest-pocket type of lidding machine, in substnntlal competition with others engaged in manufacture, sale, and distribution of like and similar products in commerce and in tile District of Columbia; In advertising It~ said product through newto;paper and magazine advertising and other trade llterature-- (a) lllade such stat(•ments as "I! there Is a Ve-Po-Ad on e,·ery desk, no one ever need worry about using the big muehine and Ve-Po-Ad is every bit us fust and as capable as any adding machine you ever saw," and "Store-1\ePpPrs cannot always atrord a large adding machine. Ve-Po-Ad wm take its place," and "Doe~ exnetly the same work as that done by big, exppnslve machine," etc., facts being such representa tlons were deceptive and mh;ieadlng in that said machine would not do the work of llulking pt•rmancnt recorus or giving sub-totals as would certain types of much more costly or substantially more costly machines, and its said Produ<·t did not possess many of the ft•atures of the more expensive adding machines, such as permanent records, sub-totals, or release teaturps !or con·ectlon of errors, and would not, therefore, accomplish certain of the work done by the more costly products, and also was not, iu respect to cprtain ft-utures RUth as permanent records, sub-total!! and relense features, the equal of such more <·ostly machines in perforn.unce or any other chnraeterlstlc;

(b) Mi~Tl'lll'el'entt•d Its business stu tus through use of words ''Manufactured by Uellahle Tn1ewr1ter a11<l Adding l\Inehine Company" upon Its finished Product, facts being It did not manufacture same, but said machine · nctuully wus made by others for It; and (c) Misrept·esente<l, In advertis<•ments aud sale! literature, wholesale price of Its said machine, whleh It, In fnet, hnd Rold In wholesale quantities for \V !SUm suhstantlalty less than usual purported wholeRole price that·pof; lth efrt•ct of misleading customers and prosvectlve customers Into erroneous find miBtoken belief that sold product would take place of, or do same Work as, large and expt-nsive adding machhw, and that It was the equal of products having such ft>otures as permanent records, sub-totals, Bnd relca.o;e feutures, and that it was the manufacturer thereof, and that its purported wholesale price was the actual and true prlrP, and ot inducing snhstantlal nnmhers of retallprs, as well as consumerllurehnser~o~ of l'!uid vroduct, to buy the snme on account of aforesaid erroneous and mlstuken bt•llefs, and of unfairly diverting trade to It from competitors engaged In slrullar businesses, who do not misrepresent the ~hnractpr and natm·e of their respt'<'tive products or tht•lr business status; 0 the substantial injury of compPtltors In commerce: FEDERAL TRADE COl\Il\IISSION DECISIONS 714 Complaint 25F.T.C.

Ileld, That such acts and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. llfr. S. Brogdyne Teu II, for the Commission. lVetten, Pegler & Dale, of Chicago, Ill., for respondent. CmrrLAINT Pursuant to the provisions 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," the Federal Trade Commission having reason to believe that Reliable Typewriter and Adding Machine Company, a corporation, hereafter referred to as respondent, has been and is now using unfair methods of competition in commerce as "commerce" is defined in said act, and it appearing to said 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: · PAR.\GHAPII 1. Respondent, Reliable Typewriter and Adding l\Iachine Company, is a corporation organized and doing business under the laws of the State of Illinois, having its principal place of business at 303 W. l\Ionroe Street, in the city of Chicago, State of Illinois. It is now, and for more than one year last past has been, engag<'d in the sale and distribution of adding machines, typewriters, and other business machines in commerce between and among the various States of the United States and in the District of Columbia. PAu. 2. When said products are sold, respondent transports or causes the same to be transported from its principal place of business in the State of Illinois to purchasers thereof located in States of the United States other than the State of Illinois and in the District of Columbia. There is now, and has been for more than one year last past, a constant current of trade and commerce in said products so sold nnd distributed by respondent between and among the varioll5 States of the United States and in the District of Columbia. PAn. 3. Respondent is now, and has been for more than one year last past, engaged in substantial competition with other indivitluals, partnerships, firms and corporations engaged in the manufacture and in the sale and distribution of adding machinrs, typewriters, nnd other business machines in commerce between and among the various States of the United States and in the District of Columbia. PAn. 4. In the course and conduct of its business, the respondent has caused and still causes to bo inserted in newspapers and maga· zines having a general interstate circulation and in its othH adver· tising literature statements purporting to be descripth·e of its prod· RELIABLE TYPEWRITER AND ADDING MACHINE CO. 715 713 Complaint ucts. The following is representative of such statements appearing in advertisements inserted by respondent in newspapers and maga.zines and in the advertising literature published and distributed by respondents:

Just look at the number of people right in your own locality and neighboring communities who need just this kind of a handy machine. Store-keepers, housewives, •.doctors, dentists, e\·ery office, eYcry place where business is transacted. . Think of a small adding machine tllat adds with the accuracy of a machine costing $100.00 to $300.00 • • • , If there is a Ve-Po-Ad on e>ery desk, no one ever need worry about using the big machine and Ve-Po-Ad is e\·ery Lit as fast and as capable as any adding DJUcbine you ever saw.

Store-keepers cannot always afford a large adding machine. Ve-Po-Ad will take its place.

Does exactly the same work as that done by big, expensive machine. And You can depend upon Its accuracy-€\'ery time I It's so simple to operate-unybody can master it in a jiffy. Pick out your figures as you would on any adding machine, glide Into position and zip!there's the sum total as sure and accurate as n bank statement. PAn. 5. Through use of tlle foregoing statements and others similar thereto, the respondent repres<'nts that said adding machine is con- Parable to and equivalent to adding machines costing greatly in excess of or substantially more than respondent's and will always accom- Plish the same work as done by such other machines with equal speed and accuracy; that there is a substantial demand among storekeepers, housewives, doctors, dentists, and offices generally for respondent's lnachine; and that everyone can easily learn how to accurately operate said machine.

PAn. 6. In truth and in fact, the respondent's machine will not do the Work of adding machines costing greatly in excess or substantially lnore than respondent's. It will not accomplish the same work as done by machines costing greatly in excess of or substantially more than respondent's with equal speed and accuracy. There is not a Substantial demand among storekeepers, housewives, doctors, dentists, nnd offices generally for the respondent's machine. Not all persons can easily learn how to operate said machine. Respondent's machine does not possess many of the features of more expensive adding (achines; such as, permanent records, totals, subtotals, or release eatures for the correction of errors, and is therefore not to be chnsidered the equal of such machines in performance or any other c a racteristic.

PAn, 7. In the course and conduct of its business as described in ~~tagrnph 1 hereof, respondent represents by use of the words Ianufuctured by Reliable Typewriter and Adding Machine Com- 716 FEDERAL TRADE COM:l\IISSION DECISIONS Findings 25F.T.C.

pany" and in its advertisements, sales literature and upon its finished product, that it is a manufacturer of the products which it sells. In truth and in fact, the respondent does not own, operate, or directly control a manufacturing establishment wherein it manufactures the products sold and distributed by it in any manner or form whatsoever. In fact, the respondent has the Ve-Po-Ad manufactured by an independent manufacturing establishment. PAR. 8. In the course and conduct of its business, respondent through its advertisements and sales literature, represents that the wholesale price of the Ve-Po-Ad is $1.95 per unit. In truth and in fact, $1.95 is not the wholesale price of the Ve- Po-Ad. Said machine is generally sold in wholesale quantities for sums substantially lower than $1.95 per unit. The respondent has on numerous and divers occasions quoted a wholesale price lower than the amount of $1.95.

PAR. 9. For many years a substantial part of the consuming public. has expressed and has had a marked preference for products sold and distributed to the public by the manufacturer of the same. A substantial part of the consumin~ public is aware of the prevailing economies that are reflected in the price to the ultimate consumer when as many middle men's profits as is possible are eliminated. The public genemlly understands how these economies are brought about. It places confidence in the manufacturers of such products and as a result of such knowledge, purchases a substantial volume of merchandise i'n reliance upon this aforesaid practice. PAR. 10. The above statements made by the respondent in its adver· tising literature and advertisements and upon its finished products have the capacity and tendency to and do mislead customers and prospective customers into the erroneous and mistaken beliefs that the product of the respondents will take the place of the large and expensive adding machine; that it is accurate; that tho operation of same is easy to master; that it is simple to operate; and that an~­ body can operate it; that the sum total of the machine's work IS accurate; that the responuent is a mtmufacturer of said product; that there is a great demand for said product among storekeepers, housewives, doctors, dentists, and office workers; and that the whole· sale price of the respondetit's product is $1.95; and into the purchase of respondent's product on account of such beliefs. PAR. 11. As a result of the use of the aforesaid advertising and the claims made therein, trade has been unfairly diverted to the respondent from its competitors who sell and distribute adding l11~­ chines, typewriters, and other business machines to the buying public and who truthfully represent, advertise and sell their products, who RELIABLE TYPEWRITER AND ADDING MACHINE CO. 717 713 Findings -correctly represent the wholesale price of their products and who further truthfully represent to the purchasing public their business status.

PAR. 12. The above acts and practices of the respondent are all to the prejudice of the public and the respondent's competitors and constitute unfair methods of competition in commerce with the intent and 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." REronT, FINDINGs AS TO THE Facts, AND Onder Pursuant to the provisions 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," the Federal Trade Commission, on April 26, Hl37 issued and served its complaint in this proceeding upon respondent, Reliable Typewriter nnd Adding l\Iuchine Company, a corporation, charging it with the tlse of unfair 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, a stipulation as to the facts Was entered into between Richard P. Whiteley, Acting Chief Counsel of the Commission, and 'Vetten, Pegler & Dale, counsel for respondent. Said stipulation was thereafter approved by the Commission and duly 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 and answer thereto and the stipulation as to the facts (the filing of briefs_ having been \rai\'ed); and the Commission having duly considered the same and being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom:

FINDINGS AS TO Tile FACTS PARAGRAPII 1. Respondent, Reliable Typewriter and Adding 1\Ia- ·chine Company, is a corporation with its principal place of business at 303 'Vest l\Ionroe Street, in the city of Chicago, State of Illinois. PAn. 2. The respondent is now, and has been for more than one }ear last past, engaged in the business of selling and distributing a ~Jnall so-culled vest pocket type of adding machine, under the trade name of VE-PO-AD, to retailers and direct to the consuming public. PAn. 3. In the sale of said product respondent has transported or ·caused the same to be transported from its principal place of business 718 FEDERAL TRADE COl\I:MISSION DECISIONS Findings 25F. T. C.

in the State of Illinois to purchasers thereof located in the States of the United States other than the State from which shipment originated and in the District of Columbia.

There has been for more than one year last past, and still is, a constant current of trade and commerce in said product so sold and distributed by respondent between and among the various States of the United States and in the District of Columbia. PAR. 4. For more than one year last past the respondent has been engaged in substantial competition with other individuals, and with partnerships, firms, and corporations engaged in the manufacture, sale, and distribution of like and similar products and in the sale thereof in commerce between and among the various States of the United States and in the District of Columbia. PAR. 5. In the course and conduct of its business as aforesaid respondent, in soliciting the sale, and in the selling, of its product, and for the purpose of creating a demand on the part of the consuming public for said product, causes, anu for more than one year last past has caused, its prouuct to he advertised through the medi<\ of newspaper and magazine advertisements anu other auvertising literature. In said ways and hy said means respondent has made to the general public false and misleading statements with reference to the commouity offered for sale by it.

PAR. G. The following statements are representative of the statements anu claims made by respondent in its advertisements and auvertising literature:

Just look at the number ot tJeople right in your own locality and neighboring communities who need just this kind of a handy machine. Store-keepers, housewives, doctors, dentists, every office, every place where business Is transacted • • •.

Think of a small adding machine that ndd~ with the accuracy of a madJinecosting $100.00 to $300.00 • • •.

If there is a Ve-l'o-Ad on every dc~Sk, no one ever need worry about using the big machine and Ve-ro-Ad is every bit as fast and as capable as any adding machine you e;er saw.

Store-keepers cannot always afford a large adding machine. Ve-ro-Ad will take its place.

Does exactly the some work as that done by big, expensh·e machine. And you can depend upon its accuracy-every time! It's so simple to operate-anybody can master it in a ji!Ty. Pick out your figures as you would on any adding mnchinl', glide into position and zip!-there's the sum total as sure and accurate as a bank stnt£>mrnt. PAR. 7. The statements and representations made by rc:.pondcnt with respect to the commodity described in the above quoteu excerpts from advertisements and sold by it were, and are, deceptive and misleading in the following respects:

RELIABLE TYPEWRITER AND ADDING 1\IACHINE CO. 719 713 Findings The respondent's machine will not do the work of making permanent records or giving subtotals as will certain types of adding machines costing greatly in excess of or substantially more than respondent's.

The respondent's machine does not possess many of the features of more expensive ad.d.ing machines such as permanent records, subtotals, or release. features for the correction of errors, and therefore will not accomplish certain of the work done by adding machines costing greatly in excess of or more than respondent's, and is not in respect to certain features such as permanent records, subtotals, and release features to be considered the equal of such machines in performance or any other characteristic.

J>An. 8. In the course and conduct of its business the respondent has misrepresented its business status by the use of the words "Manufactured by Reliable Typewriter and Adding Machine Company" upon its finished product. The respondent docs not manufacture the machine sold by it, said machine actually being manufa~tured by others for the respondent.

PAn. 9. The respondent in the course and conduct of its business has, through its auvertisements and sales literature, misrepresented the wholesale price of the VE-PO-AD machine. In fact, the respondent has sold the VE-PO-AD machine in wholesale quantities for a sum substantially lower than the usual purported wholesale Price of the machine.

l>AR. 10. For many years a substantial part of the consuming Public has had, and. has so expressed, a marked preference for the Products sold and distributed to the public by the manufacturer of the same. A substantial part of the consuming public is aware of the prevailing economies that are reflected in the price to the ultimate consumer when as many midulemen's profits as possible are eliminated. The public generally understands how these economies are brought about and places its confidence in the manufacturer of said Products, and as a result of such knowledge purchases a substantial Volume of merchandise in reliance upon this aforesaid practice. PAn. 11. The statements made by respondent in its advertising literature and adnrtisements, and. upon its finished product known ns the VE-PO-AD, have the capacity and tendency to and do mislead customers and prospective customers into the erroneous and mistaken belief that the product of the respondent will take the place of, or do the same work us, a large and expensive adding machine; t.hat the product of respondent is the equal of machines hadng such features as permanent records, subtotals, and release features; that 158!21"'-:.10-:iS 720 FEDERAL TRADE. COl\IMISSION DECISIONS Order 25F. T. C.

the respondent is the manufacturer of said product; that the purported wholesale price of respondent's product is the actual and true wholesale price.

PAR. 12. The foregoing false and misleading statements and representations have induced and still induce a substantial number of retailers as well as consumer purchasers of said product to buy the product offered for sale, sold, and distributed by the respondent on account of the aforesaid erroneous and mistaken beliefs. PAR. 13. As a result thereof trade has been unfairly diverted to respondent from those competitors of respondent engaged in similar businesses who do not misrepresent the character anJ nature of their respective products or their business status. As a consequence thereof substantial injury has been and is being done by respondent to competition in commerce between and among the various States of the United States anJ in the District of Columbia. CONCLUSION The aforementioned acts anJ practices of the respondent, Reliable Typewriter and Adding Machine Company, are to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress, approved September 2G, HJ14, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes." ORDER TO CEASE ANO DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respondent, and the stipulation as to the facts entered into between Richard P. Whiteley, Acting Chief Counsel of the Commission, and \Vetten, Pegler & Dale, counsel for 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, npprowd September 2G, 1914, entitled "An Act to create a Feueral Trade Commission, to define its powers and duties, and for other purposes", It is ordered, That the respondent, Reliable Typewriter anJ Adding Machine Company, a corporation, its repr£>sentatives, agents, and employes, in connection with the offerin•.,. for sale sale and distributwn. of a small size vest pocket adding"" machine ' now ' known as t l1e Ve-Po-Ad Aduing Machine in commerce among(l' and between the . "' .vanous States of the United States and in the District of Colu111bHt, RELIABLE TYPEWRITER AND ADDING MACHINE CO. 721 713 Order do forthwith cease and desist from representing, directly or indi~ rectly, through adve1tisements, price lists, circulars, labels, contain~ ers, or any other form of printed matter, or by radio broadcasting, or in any other manner:

(1) That its said adding machines will do the same work as add~ ing machines possessing features which its machines do not possess; (2) that said adding machines possess many features of more expensive adding machines, such as permanent records, subtotals, or release features for correction of errors, or are to be considered the equal of machines having such features; (3) that it is a manufacturer of adding machines; (4) that the wholesale price of its adding machines is other than the true wholesale price at which said machines are sold in the regular course of trade.

It is further ordered, That the respondent shall, within 60 days after service upon it of this order, file with the Commission 11 report in writing setting forth in detail the manner and form in which it has complied with this order.

Syllabus 25F. T. C.