Folding Furniture 'Vorks, Inc.

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IN THE MA'ITER OF FOLDING FURNITURE 'VORKS, INC., ALSO DOING BUSI- NESS AS COAST TO COAST DISTRIBUTORS AND MANU- FACTURERS AND NATIONAL MERCANTILE REPORT- ERS COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF ~EC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 4611. Complaint, Oct. 9, 1941-Decision, Mar. M, 191,! Where a corporation, engaged In manufacture o! children's cribs and bas- • sinets; tables, and other furniture, and in interstate sale and distribution thereof from Its factory and place of business in Wisconsin, and maintaining an address in Chicago for the receipt and dispatch of mall under the trade names "Coast to Coast Distributors and Manufacturers" and "National Mercantile Reporters"- (a) Made such typical statements In circulars and by its salesmen as "An Annual Production Capacity of One-Hundred-Thousand Children's Cribs," "The largest manufacturer of low price children's cribs In the world," and the "Largest exdusive manufacturers of children's cribs and beds in the world"; and (b) Represented that its business was so large and the quantity of its production such as to require warehouses and branch offices which it maintained at convenient locations throughout the United States; The facts being that its annual production capacity was substantially Jess than that claimed above, it did not maintain omces at any other place than Its \Visconsin place of business, and other representations, above set out, were false;

(c) Represented that "Coast to Coast Distributors and Manufacturers" was separate and distinct from, and in nowise connected with, the business conducted by It under Its corporate name; and (d) Represented that "National Mercantile Reporters" maintained an omce and place of business In Chicago, Ill., and branch omces at various other points, preparing accurate reports on paying ability, unpaid accounts, and trade e:xpet·ience', and making collections of mercantile accounts for various manufacturers, and was an Independent bona fide collection business In nowise connected with Its business;

The !acts being that said supposed separate businesses were, as noted above, mere trade names employed by It, the latter, l. e., National Mercantile Reporters, being used by it to force collection on accounts of merchandise shipped on "padded" orders;

(e) Made ufle of said latter trade name to collect from customers, through use of threats to sue and other intimidation, price of unordered goods which it shipped to them under Its practice of "padding" orders by shipping to customet·s goods greatly in excess ot the quantity ordered; advising said customers "under no circumstances to return the shipment or any part thereof as that would only mean an unnecessary expense and which you probably then would not care to assume"; and Complaint 34F.T. C.

{f) Made use of Its trade name "Coast to Coast Distl"ibutors & Manufacturers" in securing repeat orders from customers who had had unsatisfactory dealings with it under its corporate name without disclosing to them its identity there\-rith;

With effect of causing· a substantial portion of the purchasing public to believe that such representations wet·e true, and, as a result of such mistaken belief, to purchase its said products; to their injury and that of the publlc:

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

Before Mr. John P. Bramhall, trial examiner. ilfr. J. R. Phillips, Jr., for the Commission. 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 Folding Furniture 1Vorks, Inc., a corporation, also trading as Coast to Coast Distributors and l\Ianufacturers and National l\Iercantile Reporters, hereinafter referred to as respondent, has violated the provisions of 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: PARAGRAPH 1. Uespondent, Folding Furniture 'Vorks, Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Wisconsin, with its offices, factory, and • I principal place of business located at Portage and First Streets, Stevens Point, "Wis. It also does business under the style and trade name of "Coast to Coast Distributors & 1\Ianufacturers," maintaining an address for the receipt and despatch of mail under this name in the Transportation Building, Chicago, Ill., and under the name "National Mercantile Reporters." Respondent is now, and has been for more than 2 years last past, engaged in the manufacture, sale, and distribution of children's cribs and bassinets, tables, and other furniture. Respondent causl.'s, and at all times mentioned herein has caused, its said products, when sold, to be transported from its factory and place of businl.'ss in Stevens Point, 'Vis., to purchasers thereof and dealers therein located in various States of the United States nnd in the District of Columbia.

Respondent maintains, and at all times mentioned herein has maintained, a course of trade in said products in commerce among and between the various States of the United States and in the District of Columbia.

FOLDING FURNITURE WORKS, INC., 'E.TC. 923 921 Complaint PAR. 2. In the course llnd conduct of its business in said commerce as aforesaid, and for the purpose of inducing the purchase of its said products, respondent has circulated among prospective purchas:ers circulars containing representations as to the quality of its said products and the size of its plant and factory. Typical o£ the statements and representations made by respondent in said circulars and by its salesmen are the following:

LOW-PRICED CHILDREN'S CRIBS Low-Priced Children's Cribs-Is the cry of today. In response to meet the natural demand for QUALITY LOW-PRICED CHILDREN'S CRIBS we especially have built a MODERN NEW FACTORY equipped with Up-to-Date 1\Iachiuery, etc.-The r.ARGEST of its kind in the world- With an Annulll Production Capacity of over One-IIundred-Thousand Chlldren 's Cribs A Lot of Cribs, Isn't It'/ The largest manufacturers of low-price children's cribs in the world. Largest exclusi>e manufacturers of children's cribs and beds in the world. Largest exclusive manufacturers of this line in the world. The largest crib manufacturers in the world. On its letterheads and stationery the respondent has represented that it maintains offices and warehouses in the following cities: New York, N. Y.; Buffalo, N. Y.; St. Louis, 1\Io.; Dallas, Tex.; anJ San Francisco, Calif.; and under its trade name "Coast to Coast Distributors & Manufacturers" it has represented that it maintains offices and warehouses in New York, N. Y., and San Francisco, Calif. Respondent, in doing business under the name o£ "National 1\Iercantile Reporters," represents that National Mercantile Reporters is located in Consumers Building, 220 South State Street, Chicago, Ill. On a typical letterhead used by respondent under said name appears the following:

National :Mercantile Reporters, Consumers Building, 2!?0 South State Street, Chicago, Illinois Accurate rt>ports on Branch Offices Paying Ability, Unpaid Accounts Please directly reply Trade Experience, Etc. to office from which receiveu.

Collection~.

924 FEDERAL TRADE COl\:IM:ISSION DEqSIONS Complaint 34 F. T. 0. PAR. 3. In the manner and by the means aforesaid, respondent represents and implies that it has an annual production capacity of' over 100,000 cribs; that it is the largest manufacturer of low-priced children's cribs in the world, the largest exclusive manufacturer of children's cribs and beds in the world, the largest exclusive manufacturer of this line in the world, and the largest crib manufacturer in the world; that its business is so large and the quantity of its production such as to require and justify warehouses and bra~ch offices which it maintains ,at convenient locations throughout the United States; that Coast to Coa~t Distributors and Manufacturers is separate and distinct from and in nowise connected with the business conducted by respondent under its corporate name; that National Mercantile Reporters maintains an office and place of business in Chicago, Ill., and branch offices at various other points, prepares accurate reports on paying ability, unpaid accounts, and trade experience, and makes collections of mercantile accounts for various manufacturers; and that National Mercantile Reporters is an independent bona fide collection business in nowise connected with the business of respondent.

PAn. 4. In truth and in fact, the respondent does not have an annual production capacity of over 100,000 cribs, but its annual production capacity is substantially less than that number; it is not the largest manufacturer of low-priced children's cribs in the world, nor the largest exclusive manufacturer of children's cribs and beds in the world, nor the largest exclusive manufacturer of this line in the world, nor is it the largest crib manufacturer in the world; and it does not maintain branch offices or warehouses in New York, N. Y.; Buffalo, N. Y.; St. Louis, Mo.; Da_llas, Tex.; or San Francisco, Calif.; or at any place other than Stevens Point, Wis. National Mercantile Reporters is not an independent bona fide collection business with a place of business in Chicago, Ill., and branch offices at other points throughout the United States, which prepares accurate reports on paying ability, unpaid accounts, and trade experience, and which makes commercial collections for manufacturers, but is simply a trade name used by respondent in the manner described in paragraph 5 hereof to force collection on accounts of merchandise shipped on "paddE>d" orders.

PAR. 5. The respondent, both under its name Fol<ling Furniture Works, Inc., and under its name Coast to Coast Distributors & Manufacturers, has accepted the practice of "padding" orders received from customers by shipping to such customers goods greatly in excess of the quantity ordered. Respondent attempts to, and does, under FOLDIXG FGRNITURE WORKS, IXC., ETC, 925 i)21 Findings the name National Mercantile lteportcrs, collect from such customers the price of the unordered goods. In attempting to make and in making such collections, respondent uses threats to sue and other forms of intimidation, advising such customers to retain such unordered goods and "under no circumstances return the shipment or any part thereof, as that would only mean an unnecessary expense aml which you probably then would not care to assume." Respondent has also used its trade name Coast to Coast Distributors & Manufacturers in securing repeat orders from customers who have had unsatisfactory dealings with respondent under its 'corporate name, without disclosing to such customers the identity of corporate respondent and Coast to Coast Distributors & Manufacturers. PAR. 6. The use by the respondent of the aforesaid acts, practices, and methods is deceptive and misleading and causes a substantial portion of the purchasing public erroneously to believe that said statements and representations are true, and that respondent's business and the quantity of its production are much larger than they are iri fact; that it maintains and operates branch offices or warehouses at various convenient points throughout the United States; that Coast to Coast Distributors & Manufacturers is in nowise connected with the business of respondent; that National Mercantile Reporters is an independent bona fide collection agency in nowise connected with the business of respondent; that National Mercantile Reporters has a place of business in Chicago, Ill., and maintains branch offices at various other points, prepares accurate reports on paying ability, unpaid accounts, and trade experience1 and makes collections of mercantile accounts for various manufacturers. As a result of the aforesaid mistaken beliefs, engendered as aforesaid, many members of the purchasing public have purchased respondent's said prouucts in said co111merce to their injury and to the injury of the public.

PAR 7. The aforesaid acts and practices of respondent, as herein alleged, 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. REPORT, FINDINGs As ro THE FAcrs, A:ro.-n ORDER Pursuant to the provisions of the Federal Trade Commission Act, ilie Federal Trade Commission, on October 9, 1941, issued and sub· sequently servl'd its complaint in this proceeding upon respondent Foluing Furnitme 'Yorks, Inc., a corporation, also doing business COMMISSIO~ DECISIOXS 926 FEDERAL TRADE Findings 34 F. '1'. C. as Coast to Coast Distributors & Manufacturers and N" ational Mercantile Reporters, charging it with the use of tmf1tir and deceptive acts and practices in commerce in violation of the provisions of said act. On February 17, 1942, the respondent filed its answer in which answer it admitted all the material allegations of fart set forth in said complaint and waived all intervening procedure and further hearing as to said facts. 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 matter, and being now fully advised in the premises, finds that this proceeding is in the interest of the public, 3,nd makes this its findings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FACTS PARAGRAPH 1. Respomlent; Folding Furniture "\Yorks, Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of "\Visconsin, with its offices, factory, and principal place of business located at Portag~ an•i First Streets, Stevens Point, "\Vis. It also does business under the style and trade name of Coast to Coast Distributors and l\fanufacturets, maintaining an address for the receipt and dispatch of mail under this name in the Transportation Building, Chicago, Ill., nnd under the name National Mercantile Reporters. Respondent is now, and has been for more than 2 years last past, engaged in the manufacture, sale, and distribution of children's cribs and bassinets, tables, and other furniture. Respondent causes, and at all times mrntioned herein has caused, its said products, when sold, to be transported from its. factory and place of business in Stevens Point, "\Vis., to purchasers thereof and dealers therein located in various States of the United States and in the District of Columbia.

Respondent maintains, and at all times mentioned herein has maintained, a course of trade in said products in commerce among and between the various States of the United States and in the District <•f Columbia.

PAR. 2. In the com·se and conduct of its business in said com~ merce as aforesaid, and for the purpose of inducing the purchase of its said products, respondent has circulated among prospective purl'hasers circulars containing representations ns to the quality of its said products and the size of its plant and factory. Typical of the FOLDING FURNITURE WORKS, INC., ETC. 927 921 lflll!lings statements and repres~ntutions made by respondent in said circulars and by its salesmen are the following:

LOW-PRICED CHILDHEN'S CRIBS Low-Priced Children's Cribs-is the cry of today. In response to meet the natural f.lemand fot• QUALITY LOW-PRICED CHILDREN'S Clubs We especially have huilt a MODERN NEW FACTORY equipped with Up-to-Date Machinery, etc.-The LARGEST of its kind in the World-With an Annual Production Capacity of over One-Hundred-Thousand Children's Cribs A Lot of Cribs, Isn't It? The lat·gest manufacturers of low price children's cribs in the world. Largest exclusive manufacturers of children's cribs and beds In the world, Largest exclusive manufacturers of this line In the world. The largest crib manufacturers In the world. On its letterheads and stationery the respondent has represented that it maintains offices and warehouses in the following cities: New York, N.Y.; Buiialo, N.Y.; St. Louis, Mo.; Dallas, Tex.; and San Francisco, Calif.; and under its trade name, Coast to Coast Distributors & Manufacturers, it has represented that it maintains offices and warehouses in New York, N.Y., and Sttn Francisco, Calif. Respondent, in doing business under the name of National Mercan~ 'tile Reporters, represents that National Mercantile Reporters is located in Consumers Building, 220 South State Street, Chicago, Ill. On a typical letterhead used by respondent under said name appears the following:

National 1\Iercantlle Reporters, Consumers Building, 220 South State Street, Chicago, Illinois Collections.

Accut·ate reports on Paying abil- Branch Offices ity, Unpaid Accounts, Tr·alle I' lease directly reply to oftice- Expet·ience, Etc. from which receh·ed.. PAR. 3. ln the m~nner nnd by the means afor£'said, respondent r('presents and implies that it has nn annual production capacity of onr 100,000 cribs; that it is the largest manufacturer of low-priced ('hildren's cribs in the world, the largest exclusive manufacturer of children's cribs and beds in the world, the largest exclusive manu ... Findings 34F. T. C.

facturer of this line in the world, and the largest crib manufacturer in the world; that its business is so large and the quantity of its production such as to require and justify warehouses and branch offices which it maintains at convenient locations throughout the United States; that Coast to Coast Distributors and Manufacturers is separate and distinct from and in nowise connected with the business conducted by respondent under its corporate name; that N a tiona! Mercantile Reporters maintains an office and place of business in Chicago, Ill., and branch offices at various other points, prepares accurate reports on paying ability, unpaid accounts, and trade experience, and makes collections of mercantile accounts for various manufacturers; and that National Mercantile Reporters is an independent bona fide collection business in nowise connected with the business of respondent.

PAn. 4. In truth and in fact, the respondent does not have an annual production capacity of over 100,000 cribs, but its annual production capacity is substantially less than that number; it is not the largest manufacturer of low-priced children's cribs in the world, nor the largest exclusive manufacturer of children's cribs and beds in the world, nor the largest exclusive manufacturer of this line in the world, nor is it the largest crib manufacturer in the world; and it does not maintain branch offices or warehouses in New York, N. Y.; Buffalo, N. Y.; St. Louis, Mo.; Dallas, Tex.; or San Francisco, Calif.; or at any place other than Stevens Point, Wis. National Mercantile Reporters !s not an independent bona fide collection business with a place of business in Chicago, Ill., and branch offices at other points throughout the United States, which prepares accurate reports on paying ability, unpaid accounts, and trade experience, and which makes commercial collections for manufacturers, but is simply a trade name used by respondent in the manner described in paragraph 5 hereof to force collection on accounts of merchandise shipped on "padded" orders.

PAR. 5. The respondent, both under its name Folding Furniture 'Vorks, Inc., and under its name Coa!:lt to Coast Distributors & Manufacturers, has adopted the practice of "padding" orders received from customers by shipping to such customers goods greatly in excess of the quantity ordered. Respondent attempts to, and docs, under the name National Mercantile Reporters, collect from such customers the price of the unordered goods. In attempting to make and in making such collections, respondent uses threats to sue and other forms of intimidation, advising such customers to retain such unordered goods FOLDING FURNITURE WORKS, INC., ETC. 929. 921 Ord~r and "under no circumstances return the shipment or any part thereof, as that would only mean an unnecessary expense and which you probably then, would not care to assume."

Respondent has also used its trade name Coast to Coast Distributors and Manufacturers' in securing repeat orders from customers who have had unsatisfactory dealings with respondent under its corporate name, without disclosing to such customers the identity of corporate respondent and Coast to Coast Distributors and Manufacturers. PAR. 6. The use by the respondent of the aforesaid arts, practices, and methods is deceptive and misleading and causes a substantial portion of the purchasing public erroneously to believe that said statements and representations are true, and that respondent's busi· ness and the quantity of its production are much larger than they are in fact; that it maintains and operates branch offices or warehouses at various convenient points throughout the United States; that Coast to Coast Distributors & Manufacturers is in nowise connected with the business of respondent; that National Mercantile Reporters is !Ill independent bona fide collection agency in nowise connected with the business of respondent; that National Mercantile Reporters has a place of business in Chicago, Ill., and maintains branch offices at various other points, prepares accurate reports on paying ability, unpaid accounts, and trade experience, and makes collections of mer· cantile accounts for various manufacturers. As a result of the aforesaid mistaken beliefs, engendered as afore· said, many members of the purchasing public have purchased respondent's said products in said commerce to their injury and to the injury of the public.

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. OllDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer of r<'spondent, in which answer respondent ndm:tts all the material allegations of fact set forth in said complaint, and states that it waives all intervening procedure and further hearing as to S'lid facts, and the Commission having ma~e its findings as to the farts and conclu- Order 34F. T.C.

sion that said respondent has violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondent, Folding Furniture Works, Inc., a corporation, also doing business as Coast to Coast Distributors & :Manufacturers and as N ationall\fercantile Reporters, aJ1d its officers, representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution of its children's cribs and bassinets, tables, and other furniture in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from. 1. Representing that it is the largest manufacturer of low-priced children's cribs in the world, or the largest exclusive manufacturer of children's cribs and beds in the world, or the largest crib manufacturers in the world, or the largest exclusive manufacturer of this line in the world, or that it has an annual production C!lpacity of over 100,000 cribs, or any other quantity of cribs in exc~ss of its actual annual production capacity.

2. Representing that its business is so large and the quantity of its production such as to require and justify warehouses and branch offices, or that it maintains warehouses and branch office~s, at various points throughout the United States.

3. Representing that it maintains branch offices or warehouses in New York, N.Y.; Buffalo, N.Y.; St. Louis, Mo.; Dallas, Tex.; or San Francisco, Calif.; or at any other point, unless such warehouses and branch offices are actually maintained by respondent. 4. Representing that the business conducted under the name Coast to Coast Distributors & Manufacturers is separate and distinct from and not connected with the business conducted under respondent's corporate name, Folding Furniture 'Vorks, Inc., or dealing with customers under two or more names without disclosing to such customers that the business operated under the several names used is one and the same.

5. Representing that National Mercantile Reporters is an independent, bona fide collection agency not connected with the business of respondent or that it has a business in Chicago, Ill., which maintains branch offices at various other points, and prepares accurate reports on paying ability, unpaid accounts, and trade experience, and makes collections of mercantile accounts for Yarious manufacturers. 6. Engaging in the practice of "padding" orders received from cns· tomers by shipping goods to such customers in excess of the quantity ordered or attempting to collect the price of such unordered goods by threats of suit or other forms of intimidation; or of advising such FOLDING FURNITCRE WORKS, INC., E·TC. 931 \)21 Order customers to retain such unordered goods because the return thereof will mean unnecessary expense to such customers. It is further ordered, That the respondent shall, within 60 days after service upon it of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which it has complied with this order.

Syllabus 841!'. T. C.