Standard Toykraft Products, Inc

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IN THE MATTER OF STANDARD TOYKRAFT PRODUCTS, INC.

CO:IIPLAINT, FINDINGS, AND CmDER I~ REGARD TO THE ALLEGE!} VIOLATIO~ OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 20, 1914 Docket 3876. Complaint, Aug. 25, 1939-Decision, Nov. 15, 1939 Where a corporation engaged in sale and distribution of toys and plaything~ to retailers and other purchasers for resale to members of purchasing public- Represented to members of purchasing public situated in various States and in the District of Columbia, that its toy sets were wholly made in the United States, through inserting on containers thereof such legends as "Toykraft Knitting Spool Set, Copyright 1930 and Made by Standard Toykraft Products, Inc., New York, U. S. A.," and through use of other representations of similar import and meaning, notwithstanding fact its said toy sets were not toys· or playthings wholly made in the United States, such as purchased to the exclusion of those made in whole or in part in foreign countries by substantial number of members of purchasing public, by reason of their preference for many years for toys and playthings wholly made in the United States over those made in whole or in part in foreign country, but substantial portion of units comprising said sets had been made in Japan and purchased by it from importers and thereafter assenibletl into sets and sold and distributed as aforesaid: With effect of misleading and deceiving substantial portion of purchasing public into ertoneous and mistaken belief that such toys and playthings thus represented were wholly manufactured in the United States, and of thereby causing said portion of such public, to purchase substantial quantities thereof:

Held, That such acts and practices, under the circumstances set forth, were all to the prejudice and injury of the public and constituted unfair and deceptive acts and practices in commerce.

JJ! r. J. 'W. Brookfield, Jr. for the Commission. JJ!r. Milton Strasburger, of Washington, D. C., for respondent. COl\( PLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said act, the Federal Trade Commission having reason to believe that Standard Toykraft Products, Inc., a corporation, hereinafter referred to as respondent, has violated the provisions of the said act, and it appearing to the Commission, that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

DECISIO~S 1370 FEDERAL TRADE CO::\E\IISSION Complaint :!fif.T.C. PARAGRAPH 1. Respondent, Standard Toykraft Products, Inc., is a corporation, organized, existing, and doing business under the laws of the State of New York, with its principal place of business and factory located at 319-327 McKibbin Street, Brooklyn, N. Y. Respondent is now, and has been for several years last past, engaged in the sale and distribution of toys and playthings. Re~pondent sells and distributes such merchandise to retailers and other pnrchasers thereof for resale to members of the purchasing public. In the course and conduct of its business respondent causes said toys and playthings, when sold, to be transported from its place of business in the State of New York, to purchasers thereof at theh· respective points of location in nrious States of the United States, other than in the State of New York, and in the District of Columbia. Respondent maintains, and at all times mentioned herein has maintained, a course of trade in commerce in said merchandise among and between the various States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of its said business, the respondent causes, and has caused, to be inserted on the containers of certain of its toy sets the following statement and representation: "Toy kraft Knitting Spool Set, Copyright 1936 and Made by Standard Toykrnft Products, Inc., New York, U. S. A." Through the use of the. aforer>aid statement and representation and others of similar import or meaning not herein set out, the respondent represents to members of the purchasing public situated in various States of the United States and in the District of Columbia that the aforesaid toy sets are wholly manufactured in the United States.

· PAR. 3. In truth and in fact said toy sets are not wholly manufactured in the United States. A substantial portion o:f the units comprising said toy sets are manufactured in Japan· and are purchased by the respondent from importers. Subsequent to the purchase by the respondent of said units, made in Japan, the respondent assembles the units into toy sets and sells and distributes such sets as aforesaid.

PAR. 4. A substantial number of members of the purchasing public have had for many years, and now have, a preference for toys and playthings which are wholly manufactured in the United States over toys and playthings which are manufactured in whole or in part in a foreign country. As a result of this preference a substantial number of the purchasing public have purchased substantial quantities of toys and playthings wholly manufactured in the United States and have refrained from purchasing toys and playthings manu~ :factured in whole or in part in :foreign countries. STANDARD TOYKRAFT PRODUCTS, INC. 1371 13G!) Findings PAR. 5. The use by the respondent of the foregoing false and misleading statements and representations has had, and now has, the capacity and tendency to, and does, mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that the said toys represented as aforesaid by respondent, were wholly manufactured in the United States and causes a substantial portion of the purchasing public, because of said erroneous and mistaken belief, to purchase substantial quantities of respondent's said toys.

PAR. 6. The aforesaid acts and practices of respondent as herein alleged, are all to the prejudice and injury of the public and con- . stitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act the Commission on August 25, 1939, issued and served its complaint in this proceeding upon the respondent, Standard Toykraft Products, Inc., charging it with the use of unfair and deceptive acts or practices in commerce in violation of the provisions of the said act. After the issuance of said complaint and the filing of respondent's answer, the Commission, by order entered herein, granted respondent's motion for permission to withdraw said answer and to substitute therefor an answer admitting all the material allegations of fact set forth in said complaint and waiving all intervening procedure and further hearing as to said facts, which substitute answer was duly filed in the office of the Commission. Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and ·substitute answer, and the Commission, having duly considered the matter 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 PARAGRAPH 1. Respondent, Standard Toykraft Products, Inc., is a corporation, organized, existing, and doing business under the laws of the State of New York, with its principal place of business and factory located at 319-327 McKibbin Street, Brooklyn, N. Y. Respondent is now, and has been for several years last past eno-acred in the sale and distribution of toys and playthings. Respondent' " " sells and distributes such merchandise to retailers and other purchasers thereof for resale to members of the purchasing public. In Findings ~9F. T. C.

the course and conduct of its business respondent causes said toys and playthings, when sold, to be transported from its place of business in the State of New York, to purchasers thereof at their respective points of location in various States of the United States, other than in the State of New York, and in the District of Columbia. Respondent maintains, and at all times mentioned herein has maintained, a course of trade in commerce in said merchandise among and between the various States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of its said business, the respondent causes, and has caused, to be inserted on the containers of certain of its toy sets the following statement and respresentation: "Toykraft Knitting Spool Set, Copyright 1936 and 1\Iade by Standard Toykraft Products, Inc., New York, U.S. A." Through the use of the aforesaid statement and representation land others of similar import or meaning not herein set out, the respondent represents to members of the purchasing public situated in various States of the United States and in the District o£ Columbia that the aforesaid toy sets are wholly manufactured in the United States. PAR. 3. In truth and in fact said toy sets are not wholly manufactured in the United States. A substantial portion of the units comprising said toy sets are manufactured in Japan and are purchased by the respondent from importers. Subsequent to the purchase by the respondent of said units, made in ,Japan, the respondent assembles the units into toy sets and sells and distributes such sets as aforesaid. PAR. 4. A substantial number of members of the purchasing public have had for many years, and now have, a preferenc;e for toys and playthings which are wholly manufactured in the United States over toys and playthings which are manufactured in whole or in part in a foreign country. As a result of this preference a substantial number of the purchasing public have purchased substantial quantities of toys and playthings wholly manufactured in the United States and have refrained from purchasing toys and playthings manufactured in whole or in part in foreign countries.

PAR. 5. The use by the respondent of the foregoing false and misleading statements and representations has had, and now has, the capacity and tendency to, and does, mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that the said toys represented as aforesaid by respondent, were wholly manufactured in the United States and causes a substantial portion of the purchasing public, because of said erroneous and mistaken belief, to purchase substantial quantities of respondent's said toys.

STANDARD TOYKRAFT PRODUCTS, INC. 1373 13G!.l Order CONCLUSION The aforesaid acts and practices of respondent as herein found, are all to the prejudice and injury of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER TO CEASE AND DESIST This proceeding having been heard 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 fact set forth in said complaint, and states that it waives all intervening procedure and further hearing as to said facts, and the Commission having made its fi.ndings as to the facts and conclusion that said respondent has violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondent, Standard Toykraft Products, Inc., its officers~ represenatives, agents, and employees,· directly or through any corporate or other device, in connection with the offering for sale, and sale and distribution of toys and playthings in interstate commerce or in the District of Columbia, do forthwith cease and desist from:

Representing that any toys, any substantial or marerial part or portion of which are manufactured in Japan or any other foreign country, are manufactured in the United States. It is further ordered, That the respondent shall, within 60 days after service upon it o£ this order, file with the Commission a report in writing, setting forth in detail the maimer and £orm in which it has complied with this order.

213i06'"-40-VOL.2D-89 l •. FEDERAL TRADE COl\Il\USSION DECISIO~S1374 Syllabus .29F. T. C.