Bega Sewing Machine, Inc.

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IN THE MATTER OF BEGA SEWING MACHINE, INC. ET AL.

DECISION IN REGARD TO TH J ALLEGED VIOLATION OF TH FEERL TRE. COMMISSION ACT , 1958 Docket 5898. Complaint, June 1951-Decision, Sept. Whereas corporation and three offcers thereof, engaged in the competitive interstate sale and distribution of completed sewing machiues, and of imported sewing machine heads, on the back of the vertical arm of, which the :w()rd ilotor thereto, and on the Japan" became covered by the attachment of a' front of some of which abronze'colored metal medallon displayed the in such words "Made in Japan Made in Occupied Japan, or "Japan" small and indistinct fashion as not to be legible to those who bought the product or to the public- (a) Failed adequately to disclose on the said sewing machine heads imported by them that they were manufactured in Japan; With thc result of placing in the hands of dealers in their said products a means and instrumentality whereby they might mislead and deceive the purchasing public as to the piace of origin thereof, and with tendency and capacity to lead members of the purchasing public into the erroneous belief that said machines were of domestic origin and thereby induce their pur chase of such products; whereby trade was unfairly diverted to them from their competitors, including manufacturers and sellers of the domestic product and sellers also of the imported machines; and (b) Represented through the use of the phrase "Warranty Certified" in advertising brochures sent to dealers for use by them as a resale sales aid, and so implied, that they were guaranteeing their said sewing machines without limitation;

The facts being they did not guarantee the same to the purchasing public, but furnished dealers with an unsigned "20.Year Guarantee" certificate with each machine sold, for the use and signature of the dealer, if, he so desired; terms of the guarantee certificate limited it to one year for the motor and accessories; and the certificate, as to the rest of the machine, limited the guarantee to the replacement of defective parts; With tendency and capacity to mislead members of the purchasing public into the erroneous and mistaken belief that they were absolutely guaranteeing their said sewing machines and thereby induce members of the public to purchase the same:

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

Before M1'. E' verett F. Haycraft hearing examiner. Mr. William L. Taggart anda11r. J. O. Williams for the Commission. Goldberg Kelter of New York City, for respondents. 40344 57 -- Findings 50 F.

DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on June 27, 1951, issued and subse- .qucntly served its complaint in this proceeding upon the respondents named in the captioIl hereof, charging them with unfair methods of Dompetition and unfair and deceptive acts and practices, in commerce in violation of the provisions of said Act. After the issuance of said complaint and the fiing of respondents' answer thereto, hearings were. held, at which testimony and other evidence in support of the allegations of said complaint were introduced before a hearing examiner of the Commission theretofore duly designated by it, no testimony being offered by respondents in opposition to the allegations of the complaint, and said testinlony and other evidence were duly recorded and fied in thc offce of the Commission. Thereafter on May 26, 1952 thc hearing examiner fied his initial decision which was duly served on the partics.

Within the time permitted by the Commission s Rules of Practice, counsel supporting the complaint filed an appeal from said initial decision. Thereafter this proceeding regularly came on for ,consideration by the Commission upon the record herein, including briefs in :support of and in opposition to said appeal (oral argument not having been requested) and the Commission issued its order granting said appeal; and the Commission, being now fully advised in the premiscs finds that this proceeding is in the interest of the public and makes the following findings as to the mcts, conclusion and order to cease and desist, the same to bc in lieu of the initial decision of the hearing ,examiner.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent Bcga Sewing Machine Corporation (erroneously named in the complaint as Bega Sewing Machine, Inc. is a corporation organized and existing under and by virtue of the laws of the State of New York with its offce and principal place of :business located at 26 West 22d Street, New York, New York. Respondents Tola Bega, Sarah Saul, and Rosc Saltio are Prcsident Secretary and Treasurer, respectively, of corporate respondent and acting as such offcers, formulate, direct and control the policies, acts and practices of said corporation. The address of said respondents is thc same as that of corporate respondent.

PAR. 2. Respondents are now, and have been for several years last past, engaged in the sale of scwing machine heads imported by them from Japan, and of completed sewing nmchincs of which such im- BEGA SEWING Machine, INC., ETAL. 25!J 257 Findings ported heads are a part, to distributors and also to retailers who in turnsell to the purchasing public. In the course and conduct of their business respondents cause their said products, when sold, to be transported ,from their place of business in the State of New York to the purchasers thereof located in various other States and maintain and at all times mentioned herein have maintained a course Of hade said products in commerce among and between the various States Of the United States. Their volume of trade in said commerce has been and is now substantial.

PAR. 3. When the sewing machine heads were first imported from Japan by respondents, the words "Made in Japan" usually were printed or stenciled on the back of the vertical arm. Before the heads were sold to the purchasing public as a part of a complete sewing lnachine respondents attached a motor to the head on the back of the vertical arm so that the aforesaid words "Made in Japan" were covered by the motor and were not visible. In some instances said sewing machine heads, when reeeivcd by respondents, were also marked with a bronze-colored metal medallion attached to the front of the vertical arm upon which the words "Made in Japan Made in Occupied Japan" or "Japan" appeared. These words were, however, so small and indistinct that they were :hot legible to those who bought them from the respondents or to the public.

PAR, 4. When respondents advertised said sewing machines of which sewing machine heads importd from Japan are a part, in brochures or catalogs that were issued to the retail dealer trade, they displayed a picture of the sewing machine head equipped with accessories including the motor featuring the name "Bega" with the following printed matter in connection therewith: (Picture of Bega Sewing Machine Head) NEW "BEGA" SEWING MACHINE (Picture of mechanism of sewing machine) This style machine is better known as "The World's Finest" Also available with name SEWMASTER"

. TheHingedd'eeimble Presserqualities of thisFootmachine. are:Forward and Reverse ..InterchangeableLock withStitch15-83 parts ' SelfWarrantyReleasingCertificateBobbin Winder . Sews over pins The picture of the sewing machine had a medallion on the. large vertical arm but the insignia thereon is not legible. In billing said Findings 50 F. T.

sewing machines under the trade name "Bega" and "Sewmaster respondents, prior to ,January 1951, did not indicate on invoices that. any part thereof was manufactured in .Japan. Beginning on or about November 1950 some of the invoices contained the abbreviation "Imp. which, it was asserted by respondents, meant "imported " but was, not so understood by a dealer who testified. Beginning in August 1951 respondents in their invoices to dealers described said sewing machines as "Made in .Japan." The retail dealers, in turn, in their invoices to the public, described said sewing machines as "Sewmaster without indicating their origin.

PAR. 5. When sewing machines are exhibited and offered for sale to the,purchasing publi a:nd such products are not adequately marked to show that they are manufactured in .Japan, or if marked and the markings are covered or otherwise conccaled, the purchasing publi understands and believes such products to be wholly or substantially of domestic origin. There arc among the members of the purchasing public a substantial number who have a decided prcference for sewing machines which are manufactured in the United States over sewing machines originating in whole or in substantial part in .Japan, where other considerations such as style and quality are equal. PAR. 6. Respondents by placing in the hands of dealers their said sewing Imwhinc heads and completed sewing machines, as hereinabove described, provide said dealers a means and instrumentality whereby they may mislead and deceive the purcbasing public as to the place of origin of said sewing machines.

PAR. 7. Respondents in the course and conduct of their said business are in substantial competition in commerce with the manufacturers and sellers of domestic sewing machines and also sellers of imported sewing machines.

PAR. 8. The failure of respondents adequately to disclose on the scwing machine heads, imported by them as aforesaid, that they are manufactured in .Japan has the tendeney and capacity to lead members of the purchasing public int.o the erroneous and mistaken belief that the said sewing machi 1es are of domestic origin, and to induce' members of the purchasing public to purchase said sewing machines because of such erroneous and mistaken belief. As a result thereof trade has been unfairly diverted to respondents from their said competitors and snbst.antial injury has been done to competition in COlnmcrce.

PAR. 9. By the use of the phrase "vVarranty Certificate" in their advcrtiscment set out in Paragraph 4 of these findings, respondents: represented that they were guarantecing their "Bega" and "Sewmaster" smying machines without limitation. Respondents' brochures: BEGA SEWING MACHINE , INC., ET AL; :CU.l :257 Order containing said advertisements, although sent by respondents only to dealers, were designed rhy respondents and were used by their dealers as a retail sales aid. Said brochures were shown to prospective rchasersby retailers of re;;pondents' products tD assist them in sellng said products.

. PAR. 10. In fact, respondents did not guarantee said sewing ma- .chincs to thc purchasing public. Respondents furnished the dealers an unsigned "20 Year Guarantee" certificate with each sewing ma- .chine sold. These certificates were never signed by respondents but were intended for thc use of the dealer, if he so desired, and were to be signed by him. Further, the terms of the guarantee certificate limited it to one year for the motor and acccssories. As to the rest -of the sewing machine, the certificate limited the guarantee to the replacement of defective parts.

PAR. 11. Thc use by respondents of the misleading and deceptive representations as found in Paragraphs 9 and 10 hereof has the tend- -cncy and capacity to mislead members of the purchasing public into the erroneous and mistaken belief that thc respondents are absolutely guaranteeing their said sewing machines and to induce members of the public to purchase said sewing machines because of such erroneous ;and mistaken belief.

CONCLUSION The aforesaid acts and practices of respondents, as hereinabove set -out, are all cO the prejudice of the public and constitute unfair and deccptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. The acts and practices Df respondents hereinabove set out in Paragraphs 3 through 8 also ,constitute unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Act. ORDER It is ordered That the respondents, Bega Sewing Machine Corporation, a corporation, and its offcers, and Tola Bega, Sarah Saul and Rose Saltio, as offccrs of said corporation, and their representatives agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of sewing machine heads or sewing machines in commerce, as "commerce is defined in the Federal Trade Commission Act, do forthwith cease :and desist from:

1. Offering for sale, selling or distributing foreign made sewing machine heads, or sewing machines of which foreign made heads are (j.

;lo FEDERAL TRADE. COMMISSION DECISIONS. . Order 50 F. T.

a part, without clearly and conspicuously. disclosing onthe.heads such a manner that it wil not be hidden or obliterated, the country or origin thereof.

. Representing, directly or by implication, that their sewing mamachine heads or sewing machines are warranted, unless the nature and extent of the warranty and the manner in which the seller will perform thereunder are clearly and conspicuously disclosed. Itis further ordered, Thatrespondents Bega Sewing Machine Corporation, Tola Bega, Sarah Saul, and Rose Saltio shall, within sixty (60) days after service upon them of this order, fie with the Commission a report in writing setting forth in detail the manner and form in which they have complied with the order to cease and desist. DOUBLEDAY AND CO. , INC. 263 Interlocutory Order