Sussman, Elmer

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IN THE MA'ITER OF ELMER SUSSMAN, TRADING AS DIAMOND BROKERAGE COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3272. (Jomplaint, Nov. 23, 1937-Decision, Feb. 16, 1938 "-There an individual engaged in sale anrl distribution of diamond>!, diamond rings, watches, and other jewelry, in commerce among the various States and in the District of Columbia; in advertising his said products through price lists, catalogs, and other advertising material published, issued, and circulated through the mails to his customers and prospective customers in the ''arious States and in said District- ( a) Represented that said products were composed of a grade and quality superior to grade and quality possessed by them, and their prices us bf'iug in excess of the customary retail prices at which said products HRually sold, through such statements, among others of similar tencr, as $!JOO.OO LADIES DI.AMOND soLIT.AIRE, 2 carats, 98% perfect blue white set in all platinum • • • specially prieed ______ $4G0," "$700.00 MAN'S (GElNTLEMEN'B) DIA· MOND SOLITAIRE, 2% carats, exceptionally brilliant ami perfect • • • now ______ $330," etc., facts being such and other articles and items of merchandi:<<' thus listed(l and tlescribPrl did not po,.;;ess retail VAlues or pric<'s repretseutecl, or clo:>ely approxinmting those represented, and were not of the carat, weight, or degree of perfection thus held out; (b) Represented that he was liquidating a stock of merchaudise sccurPd from bankrupt sales, banks, estates, and individuals at a fraction of the original cost, through such statements as "Now liquidating a distressed stock of diamond rings at a fraction of their original cost," and "* * * the greatest diam,ond values ever offered in the northwest • • •," and "These bargains are made possible through our constant effort to secure fine quality diamond jewelry from bankrupt stocks, indidduals, bunks, estates, and distressed sources," facts being he was not liquidating a distressed stock, as aforesaid· set forth, at a fraction of the original cost of such rings, nor did his stock represent greatest value ever offered in northwest; and so-called bargains offered were not purchased from bankrupt stocks, etc., from which he obtained only an infinitesimal part of his stock, with balance purch:Jsed in usual channels from which competitors secured their mercha ndiF~e ;

(c) Represented that various well-known makes of w·atebes, "Value up to ~GO. OtTR PRICI':S $10 to $30," were "latest round, square or rectangular styles in Yl'llow or white gold, 9, 15, 17, and 21 jewels," etc., and "fully guaranteed," facts being watches offert>d and described by him as above indicated were not newest style, as represented, but were, in most instances, second-hand and obsolete models; and (d) Rf'JH'esented, through letterheads, circulars, order blanks, and gc•neral business stationery, and through newspaver and magazine advertisements, that he was a diamond broker, facts being he was not such a broker, but merely a dealer in diamond~, diamond rings, watches and other jewelry; 768 FEDERAL TRADE CO:\LMISSION DECISIONS Complaint 2G F. T. C. 1With l'ffect of mij;<Jeading substantial number of purchasers and prol'<pective purchasl'rs into etToneous and mistaken beliefs that his said product~ were composed of superior materials and were of superior value, or were products which ordinarily retail, in the usual course of trade, for prices closely approximating tho!"e listed as being usual retail value or price of Sllid merchandise, that he was liquidating a distressed stock of dfamoud rings and other merchandise at a fraction of the original cost, that tbe products were secured from bankrupt stocks, individuals, banks, e>;states, and distrl's:;ed som·ces, and that watclles sold were latest models and new merchandise, and of the value represented, and that the diamonds !'old were 100 pereC'Ilt perfect and or the full carat weight rPpresl'nted, a11d that he was a diamond broker, aud with result, as conseqnPnce of erroneous and mistaken beliefs induced by his said acts, that a sub· stantial part of the purchasing public bought substantial quantity of llis products, and of thereby unfairly diverting trade to him from competitors engaged In like and similar bm;inesses and who truthfully repre~>ent their products and business status; to the sub:stantial Injury of competition In commerce :

JlcTd, That su~h ads and practices were to the prejudice of the puhllc and competitors and constituted unfair methods of competition. Mr. S. Brogdy-ne Teu,, II for the Commission. Stinchfield, Mackall, Crounse, McNally & ilfoore, of :Minneapolis, )finn., for respondent.

Col\rl'LAINT 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 Elmer Sussman, an individual trading as Diamond Brokerage Company, hereinafter referred to as respondent, has been and is using unfair methods of competition in commerce, as "commerce" is defined in said Act of Congress, and it appearing to said Commission that n 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, Elmer Sussman, is an individual trad· ing as Diamond Brokerage Company, and having his principal place of business in the city of Minneapolis, State of Minnesota. He is now, and for more than 1 year last past has been, engaged in the sale and distribution of diamonds, diamond rings, watches, and other jewelry in commerce between and among the various States of the United States and in the District of Columbia. PAR. 2. 'Vhen said products are sold respondent transports or causes the same to be transported from his principal place of business in the city of Minneapolis, State of Minnesota, to purchasers thereof DIAMOND BROKERAGE CO. 769 767 Complaint located in other States of the United States and in the District of Columbia.

There is now and has been at all times mentioned herein a constant cunent of trade and commerce in said above described products sold by respondent between aw.l among the various States of the United States and in the District of Columbia.

PAR. 3. In the course and conduct of his said business respondent is now, and has been, in substantial competition with other individuals, partnerships, firms, and corporations engaged in the business of manufacturing, selling, and distributing diamond rings, pins, Watcltes, anJ other jewelry, and likewise engaged in competition with distributors of diamond rings and pins, watches and other jewelry in commerce between and among the various States of the United States and in the District of Columbia.

Respondent, in soliciting the sale, and in the selling, of said products, and for the purpose of creating a demand on the part of the consuming public therefor, has advertised through the media of price lists, catalogs and other advertising matter published, issued, and circulated through the United States mails to his customers and Prospective customers in the various States of the United States and in the District of Columbia.

In the aforesaid ways and by the aforesaid means respondent makes, and has made, to the general public false and misleading statements with reference to the commodities offered for sale by him. PAR. 4. l\Iany articles and items of merchandise listed in said price lists, catalogs, and other advertising matter published and distributed by respondent are described and represented as pos.c;essing retail Values or prices, carat weight, and degrees of perfection which they uo pot possess.

PAR. 5. Representative of the advertisements wherein respondent's Products are described as possessing retail values or prices, carat Weight, and degrees of perfection whirh they· do not possess are the following:

1. $900.00 LADIES' DIAMOND Solitaire, 2 carats, 98o/o perfect blue white set In all platinum distinctively paved with 14 large diamonds, specially llriced ______ $450.

2. $700.00 MAN'S (GENTLEMEN'S) DIAMOND SOLITAIRE, 2% carats, exceptionally brilliant and perfect, set in heavy handsome 14 K yellow gold Retting, now ------$350.

8. $250.00 LADY'S DIAMOND SOLITAIRE, 1 carat blue white sli~htly imllertect, set in attractive 14 K white or yellow gold, 6 blue white side diamonds, now ______ $125.

In truth and in fact, said articles and items of merchandise listed in said price lists, catalogs, and other advertising matter, including 770 FEDERAL TRADE CO:Ml\riSSION DECISIONS Complaint 26 F. T. C. the articles referred to in subdivisions (1), (2), and (3) hereinabove do not possess retail values or prices described or represented and do not possess retail prices or values closely approximating said represented prices. Said articles and items of merchandise are not of the carat weight or degree of perfection represented in respondent's price lists, catalogs, and other advertising matter and are not substantially of the quality and character therein represented. PAR. 6. The catalogs, price lists, newspaper and magazine articles, and other printed matter of respondent, and herein referred to, contain other misleading and false statements nnd representations, of which the following is representative:

Now liquidating a distressed stock of diamond rings at a fraction of their original cost.

In this column you will find the greatest diamond values ever offered in the northwest. These bargains are made possible through our constant eft'ort to !'ecure fine quality diamond jewelry from bankrupt stocks, individuals, banks, estates, and distressed sources.

WALTHAM, HAMILTON, BULOVA, ELGIN, GRUEN WATCHES FOR LA· DIES and MEN; latest round, square, or rectangular styles in yellow or white gold, 9-15-17 and 21 jewels; also pocket watches In 17 and 21 jewel railroad watches. All watches fully gunranteed. Values up to $60. OUR PRICES $10 to $30.

In truth and in fact, respondent was not, and is not, liquidating a distressed stock of diamond rings at a fraction of their original cost. His stock does not represent and has not represented the greatest values ever offered in the northwest. The alleged bargains offered by respondent were not purchased from bankrupt stocks, individuals, banks, estat~s, and distressed sources. Further, in truth and in fact, the respondent obtains only an infinitesimal part of his stock from the above enumerated sources. The remainder of respondent's stock is purchased in the usual channels from whence his competitors secure their stock of merchandise.

The watches offered for sale by respondent and de::;cribed above are not the newest style as represented by respondent, but iu most instances are second-hand and obsolete models o£ watches. PAR. 7. The respondent, in soliciting the sale of, and in selling, his commodities, and for the purpose of creating a demand on the part of the consuming public for said commodities, now causes, and for more than 1 year has caused, himself to be represented through his letterheads, circulars, order blanks, and general business stationery as well as newspaper and magazine advertisements as a diamond broker.

DIAMOND BROKERAGE CO. 771 767 Complaint Iu truth and in fact the respondent is not a diamond broker, but merely a dealer in diamonds, diamond rings, watches, and other jewelry.

PAR. 8. There are among the eompetitors of respondent manufacturers and distributors of like and similar products who refrain from advertising or representing through their catalogs and other advertising media, and through fictitiously advertised prices, or in any other manner, that the merchandise offered for sale by them has a merit, origin, and value that it does not have, or that they have a business status which they do not have.

PAR. 9. The foregoing false and misleading statements and representations on the part of the respondent have a tendency and capacity to, and do, mislead a substantial number of purchasers and prospective purchasers into the erroneous beliefs that: 1. The. said products are composed of superior materials, and are of superior value, and are products which ordinarily retail in the usual course of trade for prices closely approximating the prices represented as being the usual retail value or price of said merchandise;

2. Respondent is liquidating a distressed stock of diamond rings and other merchandise at a fraction of their original cost; 3. The said products were secured from bankrupt stocks, individuals, banks, estates, and distressed sources; 4. The watches sold by respondent are the latest models and new merchandise, and possess the values represented; 5. Dinmonds sold by regpomlent are 100 JX>recent perfect, and are the full carat weight represented; and 6. Respondent is a diamond broker.

As a result of such erroneous and mistaken beliefs induced by the aforesaid misrepresentations on the part of the respondent, a substantial portion of the purchasing public has purchased a substantial quantity of respondent's products, thereby unfairly diverting trade to the respondent from those competitors engaged in like and similar businesses referred to. 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 and in the District of Columbia.

PAn. 10. The aforementioned methods, acts, and practices of respondent are all to the prejudice of the public and of respondent's competitors as hereinaboye alleged. Said methods, acts, and practices constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress, entitled "An Act to create a Federal Trade Commission, to define its powers :tnd duties, and for other purposes," approved September 26, 1914. Findings 26F.T.C.

REPORT, FINDINGS AS 1.'0 THE FACTS, AND 0RDEU 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 November 23, 1937, issued, and on November 26, 1937, served its complaint in this proceeding upon respondent, Elmer Sussman, an individual trading as Diamond Brokerage Company, charging him with the use of unfair method~ of competition in commerce in violation of the provi::>ion~ of 1-'aid ad. On January 13, 1938, respondent filed his answer to the Commission's complaint, in which answer he admitted all the material allega,tions of the complaint to be true and stated that he waived hearing on the charges set forth in the said complaint and tluit without further evidence or intervening procedure the Commission may issue and serve upon him findings as to the facts and conclusion and an order to cease and desist from the violations of law charged in tho complaint.

Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint and the answer thereto, 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 conclusion drawn therefrom:

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Elmer Sussman, is an individual trnding as Diamond Brokerage Company, and has his principal place of business in the city of Minneapolis, State of Minnesota. He is now, and for more than 1 year last past has been, engaged in the sale and distribution of diamonds, diamond rings, watches and other jewelry in commerce between and among the various States of the United States and in th~ District of Columbia.

PAR. 2. 'Vhen respondent sells his products, he transports or causes them to be transported lrom his place of business in the city of Minneapolis, State of Minnesota, to purchasers thereof located in the various States of the United States and in the District of Columbia. There is now and has been at all times mentioned herein a constant current of trade and commerce in said above-described products sold by respondent between and among the various States of the United States and in the District o£ Columbia.

PAR. 3. The respondent, in the conduct of his business, is now and has been, in substantial competition with other individuals, and with DIAMOND BROKERAGE CO. 773 ~67 l!'indings partnerships, firms, and corporations engaged in the sale and distribution, or in the manufacture, sale, and distribution of diamond rings, watches and other jewelry.

PAR. 4. The respondent, in soliciting the sale, and in the selling ·of his products, and for the purpose of creating a demand on the part of the consuming public therefor, has advertised through the media of price lists catalogs and other advertising matter published, issued, and circulated through the United States mails to his customers and prospectiye customers in the various States of the United States and in the District of Columbia.

In the ways and means aforesaid, respondent makes, and has made, to the general public false and misleading statements with reference to the commodities offered for sale by him. Many articles and items of merchandise. listerl in respondent's price lists, catalogs and other advertising matter published and distributed by him are described and represented as possessing retail values or prices, carat weight, and degrees of perfection which they do not possess. Representative of the claims and representations made in respondent:s ad- Y('rtisements wherein his products are described as possessing retail Yalues or prices, carat weight, and degree of perfection which they <lo not possess are the following:

$000.00 LADIES DIAMOND SOLITAIRE, 2 carats, 08% perfect blue white set in all platinum distinctively JlUVed with 14 large diamonds specially priced------$450.

$700.00 MAN'S (GENTLEMEN'S) DIAMOND SOLITAIRE, 2% carats, ex- ~eptionally brilliant and perfect, set in heavy handsome 14 K yellow gold tietting, now------$350.

$250 LADY'S DIAMOND SOLITAIRE, 1 carat blue white slightly imperfect, ~et in attractive 14 K white or yellow gold, 6 blue white side diamonds, now--$125.

The articles and hems of merchandise listed in the price lists, ~atalogs and other advertising matter do not possess retail values or prices described or represented and do not possess retail prices or values closely approximating the represented prices. The articles and items of merchandise are not of the carat, weight, or degree of perfection represented in respondent's price lists, catalogs and other advertising matter and are not substantially of the quality and character therein represented.

PAn. 5. The respondent has made other misleading and false claims and representations in his catalogs, price lists, newspaper and magazine advertisements and other printed matter, of which the following is representative:

Now liquidating a distressed stock of diamond rings at a fraction of their <>rlginal cost.

774 FEDERAL TRADE COl\IMISSION DECISIONS Findings 26 F. T. C. In this column you will find the greatest diamond values ever oftered in the northwest. These bargains are made possible through our constant pfl'ort to secure fine quality diamond jewelry from bankrupt stocks, individuals, bank,:, estates, and distressed sources.

WALTHAM, HAMILTON, BULOVA, ELGIN, GRUEN WATCHES FOR LADIES and MEN; latest round, square or rectangular styles in yellow or white gold, ~-15--17 and 21 jewels; also pocket watches in 17 and 21 j~:>wel railroad watches. All watches fully guaranteed. Value up to $60. OUR PRICES $10 to $30 The respondent was not, and is not, liquidating a distressed stock of diamond rings at a fraction of their original co!:>t. IIi,; 8stock doe,; not represent, and has not represented, the greatest value eyer offered in the northwest. The so-called bargains offered by respondent were not purchased from bankrupt stocks, individuals, banks, estates, and distressed sources. The respondent obtains only an infinitesimal part of his stock from the above sources. The remainder of respondent's stock is purchased in the usual channels from which his competitors secure their stock of merchandise. The watches offered for sale by respondent and described supra are not the newest style as represented by respondent. In most instances, they are second-hand and obsolete models of watches. PAR. 6. In soliciting the sale of, and in selling his commodities and for the purpose of creating a demand on the part of the purchasing public for his commodities, the respondent now causes, and for more than 1 year has caused, himself to be represented through his letterheads, circulars, order blanks and general business stationery, as well as newspaper and magazine advertisements as a diamond broker.

The respondent is not a diamond broker, but merely a d(:'aler in diamonds, diamond rings, watches, and other jewelry. PAR. 7. The use by the respondent of the false and misleading statements and representations set out herein has a tendency and capacity to, and does mislead a substantial number of purchasers and prospective purchasers into the erroneous and mistaken beliefs that the products are composed of superior materials and are of superior value, or are products which ordinarily retail in the usual course of trade for prices closely approximating the prices listed as being the usual retail value or price of said merchandise; that respondent is liquidating a distressed stock of diamond rings and other merchandise at a fraction of their original cost; that the products were secured from bankrupt stocks, individuals, banks, estates, and distressed sources; that the watches sold by respondent are the latest models and new merchandise, and possess the values represented; that diamonds sold by respondent are 100 percent perfect and are the DIAliiOND BROKERAGE CO. 775 767 Order full carat weight represented; and that the respondent is a diamond broker.

PAR. 8. As a result of the erroneous and mistaken beliefs induced by the acts of the respondent, a substantial part of the purchasing public has purchaseu a substantial quantity of respondent's products, thereby unfairly diverting trade to the respondent from those competitors engaged in like and similar businesses and who truthfully represent thp products offered for sale and SOld by them, anJ 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 variow; States of the United States and in the District of Columbia.

CONCLUSION The aforesaid acts and practices of the respondent, Elmer Sussman, an individual trading as Diamond Brokerage Company, are to the prejudice of the public and the respondent's competitors, imd constitute unfair methods of competition in commerce within the intent a.nd meaning of Section 5 of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to clefhte its powers and duties, and for other purposes." ORDER TO CEASE AND DESIST This proct•ediug haring been he:trd by the Federal Trade Commission upon the complaint of the Commission and the answer of respondent, in which answer respondent admits all the material allegations of the complaint to be true and states that he waives hearing on the charges set forth in the said complaint and that, without further evidence or other intervening procedure, the Commission may issue and serve upon him findings as to the facts and its conclusion and an order to cease and desist from the violations of law charged in the complaint, andt.he Commission having made its findings as to the facts and conclusion that said respondent has violated the provisions of an Act of Congress 8approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to d!'fine its Powers and duties, and for other purposes." It is ordered, That the respondent, Elmer Sussman, an individual trading as Diamond Brokerage Company, or under any other trade name, his representatives, agents and employees, in connection with the offering for sale, sale, and distribution of diamonds, diamond rings, watches, and other je,velry in interstate commerce or in the FEDERAL TRADE COMMISSION Tlf.CTSIONS776 Order 2flf.T.O.

District of Columbia, do forthwith cease and desist from, directly or indirectly:

1. Representing that said pruducts of respondent are composed o£ materials of a grade and quality superior to that actually contained; 2. Representing that fictitious prices in excess of the customary retail prices at which said products of respondent are customarily sold are the usual and customary retail prices for said products; 3. Representing that respondent is liquidating a stock of merchan· dise secured from bankrupt sales, banks, estates, and individuals at a fraction of the original cost, when said merchandise was purchased in the usual merchandise marts in the usual course of tmde; 4. Representing that respondent's watches are the latest models, unless this is a fact;

5. Representing that respondent's diamonds posspss a greater de· gree of perfection or a greater carat weight than they actually possess;

6. Representing that respondent is a diamond broker when such is not the fact.

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