Barnett C. Helzberg, trading as Helzberg's Diamond Shop

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IN THE MATTER OF BARNETT C. IIELZBERG, TRADING AS HELZBERG'S DIAMOND SHOP COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3295. Complaint, Jan. ~. 1938-Decision, Mar. 8, 1938 Where an Individual engaged as sole owner and general manager of retail jewelry stores in five midwestern cities; in advertising certain diamonds and diamond rings in newspapers of interstate circulation- (a) Represented ''They are perfect according to the specifications of the United States Federal Trade Commission of Washington, D. C.," and "Certified perfect diamonds. Certified perfect diamonds are 'perfect' according t~ the specifications approved by the Federal Trade Commlssion of Washington, D. C."; and (b) Furnished to purchasers of said diamonds and diamond rings certificates containing, among other things, statements and representations to same effect as those used in aforesaid advertisements in regard to said diamonds being perfect according to specifications of, or approved by, said commission;

Facts being it had neither fixed nor promulgated any standard of perfect or other diamonds, nor inspected, found or certified said or any other diamonds as perfect;

With effect of misleading and deceiving dealers and substantial portion of purchasing public into erroneous belief that said representations were true, and Into purchase of said articles on account of such erroneous and mistaken beliefs thus induced, and with result that substantial trade In said commerce was unfairly diverted to him from competitors who do not misrepresent and guarantee their diamonds and diamond rings, and with capacity and tendency so to mislead, deceive, and divert to said competitors' substantial injury :

Held, That such acts and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Mr. lVm. T. Ohantland for the Commission.

Mr. Joseph. Oohen, of Kansas City, Kans., for respondent. Complaint Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Com· :mission, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that Barnett C. lielzberg, trading under the name IIelzberg's Diamond Shop, hereinafter referred to as respondent, has been and is 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 Complaint 26 F.T. C. respect thereof would be in the public interest, hereby issues its complaint and states its charges in that respect as follows: PARAGRAPH 1. Responuent1 Barnett C. Helzberg, trading under the name Helzberg's Diamond Shop, is the sole owner and general manager of five retail jewelry stores located in Kansas City, Kans.; Kansas City, :Mo.; Wichita, Kans.; Topeka, Kans., and Des Moines, Iowa. His business includes the sale and distribution of diamonds and diamond rings. His principal place of business is at 612 Minnesota Avenue, Kansas City, Kans. Respondent in the course and conduct of his business sells and distributes his diamonds and diamond rings to purchasers and members of the public and causes said wares when sold, to be transported from the State of Kansas and the other States of origin of his shipments, to purchasers thereof located at points in the various States of the United States other than the State of origin of such shipments. There· is now, and has been during all the times herein mentioned, a course of trade in commerce in diamonds and diamond rings between and among the various States of the United States.

PAR. 2. In the course and conduct of his business, respondent is now, and has been during all the times herein mentioned, engaged in substantial competition with various other individuals, firms, and corporations engaged in offering for sale and selling diamonds and diamond rings to purehasers and members of the general public in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 3. In the course and conduct of his business of selling diamonds and diamond rings in interstate commerce, and to induce the purchase of certain of its said Jiamonds and diamond rings, respond· tnt caused advertisements to be inse,rted in newspapers having an interstate circulation, containing, among other matter, the following statements and representations, and others of similar sub~tance and import, as to the diamonds and diamond rings offered for sale and ~;old by him:

(a) They are perfect according to the specifications of the United States Federal Trade Commlssion at Washington, D. C. (b) Certified Perfect Diamonds. Certified Perfect Diamonds are •·perfect" :1ccordlng to the Specifications approved by the Federal Trade Commli!l'lion at Washington, D. C.

P..respondent furnishes to purchasers of said diamonds and diamond rings certificates containing, among other things, statements and representations to the same effect as those used in said advertisements 1n 1·egard to said diamonds being perfect according to the specifications of, or approved by, the Federal Trade Commission. HELZBERG'S DIAMOND SHOP 897 Complaint The said advertisements and the certificates furnished in accordance therewith to purchasers of his diamonds and diamond rings c?nstitute and are representations by respondent that the diamond rings sold by him, when accompanied by such certificates, are in fact Perfect in accordance with a standard and specifications required by the Federal Trade Commission. The intent of respondent in so representing and certifying his said diamonds and diamond rings, and the effect thereof, is to mislead and deceive purchasers of such dia• l1lond rings into the erroneous belief that the Federal Trade Coml1lission has in fact fixed and promulgated specifications and a required standard for perfect diamonds, and that these diamonds of respondent meet those requirements.

In truth and in fact the Federal Trade Commission has neither fi~ed specifications nor promulgated nny standard for perfect dia:rnonds.

Said advertisements and certificates are also intended by l:espondent to imply, and they do imply, that the diamonds sold with such certificates have been inspected, found, and certified by a United States Government agency, to wit, the Federal Trade Commission, ~0 be perfect diamonds, in accord with certain specifications mad~ by It. In truth and in fact the Federal Trade Commission has neither Pro1_nulgated any such specifications, nor inspected nor found nor cerhfied said diamonds to be perfect diamonds. :All of said advertisements, statements, representations, and im- Plications are deceptive, misleading, and false, and tend to and do de:eive and mislead purchasers into the purchase of respondent's said diamonds and diamond rings in the erroneous belief that said representations and implications are true. P.m. 4. There are among the competitors of respondent many who ~0 _not so misrepresent their diamonds and diamond rings, and the asis of their certificates. · • par. 5. The acts and practices of the respondent as above allege({ In the course of selling and offering for sale his diamonds and diahlond rings in commerce as described herein have the capacity and tendency to, and do, mislead and deceive a substantial portion of the Purchasing public into the erroneous belief that said representations are true, and into the purchase of respondent's diamonds and dialllond rings on account o£ the erroneous and mistaken beliefs induced as aforesaid. As a result thereof, trade in said commerce has been llnfairly diverted to the respondent from those of his competitors refe:red to in paragraph 4 hereof who do not so misrepresent their ce~bficates and diamonds and diamond rings. In consequence thereof, su stantial injury has been, and is being, done to respondent's com- Findings 26 F. T. 0. petitors in commerce among and between the various States of the United States.

PAR. 6. The above and foregoing acts and practices have been and are all to the prejudice of the public and the respondent's competitors and constitute unfair methods of competition in interstate commerce within the meaning and intent of Section 5 of "An Act to create a. Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914. REPORT, FINDINGS AS TO THE FACTS, AND ORDER 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 Fed· eral Trade Commission on January 4, 1938, issued, and on January 8, 1938, served, its complaint in this proceeding upon respondent Barnett C. Helzberg charging him with the use of unfair methods of compe· tition in commerce in violation of the provisions of said act. After the issuance of said complaint, respondent on February 10, 1938, filed an answer to said complaint, admitting all the material allegations of the complaint to be true and waiving the taking of further evidence and all other intervening procedure. Thereafter this proceeding regu· larly came on for final hearing before the Commission on the said complaint and said answer! and the Commission having duly consid· ered the same and being now fully advised in the premises, makes this its findings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FACTS PARAGRAPH 1. Said respondent Barnett C. Helzberg, trading wider the name of Helzberg's Diamond Shop, is the sole owner and general manager of five retail jewelry stores located in Kansas City, Kans.; Kansas City, Mo.; "Wichita, Kans.; Topeka, Kans.; and Des Moines, Iowa. His business includes the sale and distribution of diamonds and diamond rings. His principal place of business is at 612 Minnesota. Avenue, Kansas City, Kans. In the course and conduct of his business respondent sold and distributed his diamonds and diamond rings to purchasers and members of the general public and caused said wares, when solei, to be transported from his places of business in the States of Kansas, Missouri, ancl Iowa to the purchasers thereof located at Yarious points in the several States of the United States other than the States of origin of said shipments.

PAR. 2. Respondent is engaged in substantial competition with vari· ous other individuals, and with firms and corporations engaged in offering for sale and selling diamonds and diamond rings to pur· HELZBERG'S DIAMOND SHOP 899 Findings chasers and. members of the general public in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 3. The respondent, in the course and conduct of his business, in order to induce the purchase of certain of his said diamonds and diamond rings, inserted in newspapers having an interstate circulation, advertisements containing, among other matters, the following statements and representations, and others of similar substance and import, as to the diamonds and diamond rings offered for sale and sold. by him:

(a) Tlwy are perfect according to the f'pecitications of the United States F'e(leral Trnue Commission of Washington, D. C. (b) Certlti<>d perfect diamonds. Certified perfect diamonds are "perft>ct" according to the specifications approved by the Federal Trade Commission of Washington, D. C.

PAn. 4. In the course and conduct of his business of selling diamonds and diamond rings in interstate commerce, and to induce the purchase of his said diamonds and diamond rings, respondent furnished to purchasers of said diamonds and diamond rings, certificates contain- Ing, among other things, statements and representations to the same efiect as those used in said advertisements in regard to said diamonds being perfect according to the specifications of, or approved by, the Pederal Trade Commission.

Par. 5. Respondent's said advertisements and the certificates iurn~shed in accordance therewith to purchasers of his diamonds and dtarnond rings constitute and are representations by respondent that the diamonds and diamond rings sold by him, when accompanied by said certificates, are in fact perfect in accordance with standards and specifications required by the Federal Trade Commission. The effect ()f so representing and certifying his diamonds and diamond rings was ~0 mislead and deceive purchasers of said diamonds and diamond rin¥s lllto the erroneous belief that the Federal Trade Commission had m fact fixed and promulgated a required standard for perfect diamonds and that these diamonds of respondent met that requirement. The general form, arrangement, and text of said certificates implied that the diamonds sold with such certificates had been inspected, found, and certified by a United States Government agency, to wit, the Federal Trade Commission, to be perfect diamonds. . PAR. 6. All of said statements, advertisements, representations, and ltnplications are deceptive misleadino- and false in that the Federal Trade Commission has nei~her fixed n~~ promulgated any sta_ndard ?f P~rfect or other diamonds, nor inspected, nor found, nor certified sald diamonds, or any other diamonds, to be perfect. Order 26F. T. C.

PAR. 7. There are among the competitors of respondent many who do not misrepresent their diamonds and diamond rin~s and the ba~is of their guarantees.

PAR. 8. The acts and practices of respond.ent as above set out in the course of selling and offering for sale his diamonds and diamond rings in commerce, as described herein, have a capacity and tendency to, and do, mislead. and deceive dealers and a substantial portion of the purchasing public into the erroneous belief that said representations are true, and into the purchase of respondent's diamonds and diamond rings on account of the erroneous and mistaken belieti!l induced as aforesaid. As a result thereof substantial trade in said commerce has been unfairly diverted to the respondent from those of his competitors who do not misrepresent their guarantees or their diamonds and diamond rings. In consequence thereof, substantial injury has been, and is being done to respondent's competitors in commerce among and between the various States of the United States and in the District of Columbia.

CONCLUSION The aforesaid acts and practices of respondent Barnett C. Helzberg 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, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

ORDER TO CEA.SE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer filed herein on February 10, 1938, by respondent admitting all the roa· terial allegations of the complaint to be true and waiving the taking of further evidence and all other intervening procedure, 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, Hll4, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

It is m·dered, That respondent, Barnett C. Ilelzberg, trading under the name of Helzberg's Diamond Shop, or unclf:'r any other trade name, his representatives, agents, and employees, in connection' with the oflering for sale, sale, and distribution of diamonds and diamond rmgs in interstate commerce or in the District of Columbi:J. do HELZBERG'S DIAl\IOND STIOP 901 Order forthwith cease and desist in any manner directly or indirectly from representing:

1. That the diamonds and diamond rings offered for sale and sold by respondent are perfect, "according to the specifications of the Dnited States Federal Trade Commission at ·washington, D. C." or "according to the specifications approved by the Federal Trade Commission at ·washington, D. C.";

2. That the Federal Trade Commission has fixed or promulgated any standard for perfect or other diamonds; 3. That the Federal Trade Commission has inspected said dia- J:nonds or that it has found and certified them to be perfect diamonds; 4. That any agency of the United States Government has fixed or Promulgated any standard for perfect or other diamonds, until and llnless a standard has been fixed and promulgated by such an agency; 5. That an agency of the United States Government has inspected said diamonds, or that it has found and certified them to be perfect diamonds, until and unless such an agency has inspected said diamond sand found and certified them to be perfect. It is further ordered, That said respondent Darnett C. Helzberg shall within 60 days after service upon him of this order, file with the Commission a report in writing, setting forth in ~tail the manner and form in which he has complied with this order. 902 FEDERAL TRADF. COMMISSION DECISIONS Syllabus 261''. T. C.