Richard C. Pratt, Inc., doing business as Pratt Furniture Company et al.

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in \yhicb he has complied ,, ith the order to cease and desist. I N THE 1\1.-\ TTER OF RICHARD C. PRATT, IKC., DOnfG I3l:SIKESS AS PRATT Fl:RXI'TRE COMP A Y ET AL.

COX SENT OIWER, ETC" IX REG.\Im TO 'rile ALLEGED VIOLATION OF THE PEOF-HAL TRADE COllBIISSION ACT Docket 8829, Complaint, Ma,r. 1961-Decision, June 15, 1961 Consent order requiring a Spokane, Wash. , furniture dealer to cease advertising falsely in newspapers and on attached labels that excessive amounts were their mmal retail prices and the customary prices in their trade area for mattresses find that the sale price afforded substantial savings; tllat the matt.rl's es were gUfil'anteed for 13 years, and were "Custom crafted"

Complaint 58 F, COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Aet, the Federal Trade Commission, having rea,son to believe that Richa.rd C. Pratt Inc., a corporation, doing business as Pratt Furniture Company, and Richard C. Pratt, individually and as an offcer of said eorporation, hereinafter referred to as respondents, have 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. Respondent Richard C. Pratt, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of .Washington. Respondent Richard C. Pratt is an individual and is President of said corporation. Said individual formulates, directs and controls the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. Both respondents ' principal offce anel place of business is located at 215 North Post Street, Spokane, ",'lashingtoll. J? All. 2. Respondents arc now, and for some time last past have been, engaged in advertising, oUering for sale, selling and distribut ing furniture products, including mattresses and bedding, at retail to members of the purchasing public. Their volume of business is substantial.

PAH. 3. In the course and conduct of their business, respondents nm\' cause, and for some time last. past have caused, their said products, including mattresses and bedding, \\-hen sold, to be shipped from their place of business in the State of IVashington to purchasers thereof located in various other States of the United States and maintain, and at a.n times mentioned herein have maintained, a substantial course of trade in said products in commerce, as "commerce" is defined in the Federal Trade Commission Act. PAR. 4. At an times mentioned herein respondents have been, and are now, in direct and substantial competition with ot.her corporations, firms and individuals engaged in the offering for sale, saJe and distribution of like merchandise in commerce, as "commerce is defined in the Federal Trade Commission Act. PAR. D. In the course ancl conduct of their business, as aforesaid and for the purpose of inducing the purchase of their merchandise by members of the purchasing public, responde.nts have made various statements in newspapers of general interstate circulation. PRATT FURNITURE COMPM'Y ET AL. 1125 1123 Complaint Among and typical of such statements, but not limited thereto, are the following:

In the Spokane "Spokesman-Review" issue of April 26, 1959: A famous maker! A sensational purchase! 600 pieces at terrific reductions for Pratt's bedding spectacular. .. (Followed by depictions of four mattresses and springs, with the following amplifying statements:) $20 saving on The Duchess. . . $29.98. (This mattress and spring as depicted bears a label showing a pre-ticketed price that is partly obliterated,) $25 saved on Contour Sleeper. , . , 39.98. (This mattress and spring as depicted also bears a Iabel setting forth a partially obliterated pre-ticketed price.

$33 saved on Sleeping Beauty. . . $49.98. (This mattress and spring as depicted bears a label setting forth the name Sleeping Beauty and a preticketed price of $99.50.

:t39 saved on Super Rest Deluxe. . . $59.98. (This mattress and spring as depicted bears a label setting forth: "Super Rest Deluxe $119.50", and also bears a ribbon or streamer setting forth: "15 year guarantee Sleep twice as well-for half the price. Four all-time favorites J Custom crafted! . . .

In the Spokane "Spokesman-Review" issue of Kovember 8 , 1959: Your old bedding is worth plenty to us. Spectacular trade-in sale! Pratt' give $30 for your old mattress & spring regardless of condition. (There is also set forth a depiction of a mattress and spring bearing a ribbon or streamer containing the following: 15 year guarantee. Said advertisement also sets forth what purports to be a manufacturer s label with the following:

Englander $108.

Sleep Products Deluxe Your old set makes full rIown payment.

$79.95.

PAll. 6. Through use of the aforesaid statement.s and others of similar import not specifically set forth herein respondents represented, directly or indirectly, that:

(a) The specified amounts set forth in such advertisements are the usual and customary retail prices charged by respondents for such mattresses in the recent regular course of their business. (b) Certain specified savings wil be afforded to purchasers of such mattresses.

(c) Such mattresses are fully and unconditionally guaranteed for 15 years (or for other designated periods of time). (d) Such mattresses were custom crafted or were manufactured pursuant to specifications and designs furnished to the manufacturers thereof by respondents or their customers. (e) The amounts set fort.h in such advertisements are the usual and customary prices at w hieh said merchandise is usually and 1126 FEDERAL TRADE COM:lnSSION DECISIONS Complaint 58 F.

customarily sold at retail in the trade area or a.areas where such representations arc made.

PAR. 7. The aforesaid statements and representations Jlereinabove set forth, as well as others of similar import. not specifically referred to herein, are false, misleading and deceptive. In truth and in fact:

(a) The amounts set forth in such advertisements were in excess of the price at which respondents usually and customarily sold such mattresses in the recent regular c.oursc of their business. (b) The specified savings win not be afforded to purchasers of re,spondents' mattresses since the price at which such mattresses were offered did not constitute a reduction, to the extent indicated from the price at which respondents usually and customarily sold such mattresses in the recent regular course of their business. (c.) Hesponclents' guarantees are limited and condi60ned in several respects, which limits and conditions are not set forth in respondents' said statements and represent.ations. Furthermore, neither the name of the guarantor nor the manner in which he "Will perform under such guarantee is set forth in such statements. (d) Respondents' mattresses were not custom crflftecl for many, if not aU, of such mattresses were from the regular stock of certain manufacturers and suppliers and were not. manufactured pursuant to specifications and designs furnished to said manufacturers and suppliers by respondents or their cllstomers. (0) The amounts set forth in such advertisements were substantially in excess of the. prices at which the ac1vertise.d products were usually and custornarily sold in retail in the trade area, or areas where the. representations \Were made.

PAR. 8. III the course and conduct of thetr business as aforesaid respondents have offered for sale and soldlnattresses to which \Ycle affxed woven labels which set forth certain amounts or prices thereby representing that such amounts and prices were the usual and customa.ry prices charged by respondents for such mattresses in the recent regular course of their business. PAn. 9. In truth and in fact, the amounts and prices set forth on such woven labels affxed to many of the said mattresses offered for sale and sold by respondents were greatly in excess of the 11811aJ and customary prices charged hy respondents for such mattresses in the recent regular course of their business. PAR. 10. The use by respondents 01 the aforesaid false, misleading and deceptive stateme.nts, representations and practices has had and now has, the tendency and capacity to mlsJead and deceive members of the purchasing public into the erroneous and mjstaken PRATT FL HNITURE COMPANY ET AL. 1127 1123 Decision belief that said statements and representations were and are true a.nd into the purchase of substantial quantities of respondents' products inc1uuing mattresses and bedding by reason of such erroneous a.nd mistaken belief. As a consequence thereof, substantial trade in commerce has been, and is being, unfa.irly diverted to respondents from their competitors and substantial injury has thereby be. , and is being", clone to competition in commerce. PAR. 11. The aforesaid acts and practices of respondents, as herein alleged, were and are all to the prejudice and injury of the public and of respondents' competitors and constituted, and now consbtute unfair and deceptive acts and practices and unfair methods of competition, in commerce, \vithin the intent and meaning of the Federal Trade Commission Act.

J.fr. John J. J.1ciVaUy supporting the complaint. No appearance for the respondents.

ltl\L DECISION BY ,VALTEI K. BEXXETT: HEAnTKG EX.\1IINER The complaint in this lnattel' ",yas issued by the. Federal Trade Commission on 1\farch 16. 1961 and duly served on respondents. charged respondents, a corporation and its president, with unfair and deceptive acts and practices and unfair methods of competition in commerce in the advertising, of Ie ring for sale, selling and distributing of furniture products including mattresses and bedding. The alleged practices included advertising of fictitious prices and savings and the issuance of misleading guarantees. On April 14 , 19()l, Counsel supporting the complaint presented an agreement ,lated April 10, 1961 and executed by Richard C. Pratt Inc., Richard C. Prac individually and hilnself \which would dispose of this matter by the entry of a consent order to cea.se and desist the practices alleged. Said agreement and order were duly approved by the Director and the Assistant Director of the Bureau of Litigat.ion.

The hearing examiner linds that saiel agreement includes all of the provisions required by Section 3.25 (b) of the Hules of the Commission, that is:

A. An admission by an the respondent parties thereto of juris. dictional facts;

B. Provisions that:

1) The. complaint may be used in construing the terms of the order;

2) The order shall have the same force and effect as if entered after a full hearing;

1128 FEDERAL TRADE CO::L\IISSION DECISIONS Order 58 F.

3) The agreement sha.n not become a part of the offcial record of the proceeding unless and until it becomes a part of the decision of the Commission;

4) The entire record on which any cease and desist order may he based shall consist solely of the complaint and the agreement; 5) The order may be altered, modified, 01' set aside in the manner provided by statute for other orders; C. IVllivers of:

1) The requirement that the decision must contain a ::tatemcnt of findings of fact and conclusions of 1a"\y: 2) Further procedural steps before the hearing eXiUnincl' and the Commissioll.

3) Any right to challenge or con1es! the validity of the order entered in accordance ,,,ith the agreement. In addition the agrccrnent contains the :follo\Ying permisslye provision: A statement that the signing of saiel agreement is for scti1ement purposes only and does not constitute an (lc1mis oll by respondents that they have violated the law as alleged in the complaint. IIa ving considered saiel agreement jncl11l11ng the proposed order and being of the opinion that they provide an appropri:lte basis -rol' settlement and disposition of this proceeding; the hearing eXilminer hereby accepts the agreement but orders that it shall not become a part of the offcial record unless and until it becomes a p,lrt of the decision of the Commission.

The folio-wing jurisdictional findings are made and the following order issued:

1. Respondent Richard C. Pratt; Inc.., is a corporation organized existing and doing business under and by virtue of the laws of the State of I,Vashington, trading and doing business as Pratt Furniture Company. Itespondent Hic1mrd C. Pratt is an individual and is President of said corporation. Both respondents' principal offce and place of business is located at 215 North Post Street in the City of Spokane, State of IVashington.

2. The Federa.l Trade Commission has jurisdiction of the subject matter of this proc.eeding and of the respondents. ORDER 1 t i/5 ordered That Richard C. Pratt, Inc., a corporation, and its offcers, doing business as Pratt :Furniture Company or under any other trade name or names, and Richard C. Pratt, individually or as an offcer of said corporation, and respondents ' representatives agents or employees, directly or through any corporate or other device, jn connection with the offering for sale, sale or distribution PRATT FcRNITURE COMPANY ET AL. 1129 1I23 Decision in commerce, as "commerce" is defined in the Federal Trade Commission Act, or furniture products including mattresses and bedding, do rorthwith cease and desist from: 1. Representing, directly or by implication, that: (a) Any amount is respondents' usual or regular retail price of merchandise when it is in excess of the price at which said merchandise has been usually or regularly sold by respondents in the recent regular course of their business.

(b) Any amount is the price of merchandise in respondents' trade area when it is in excess of the price at which said merchandise has been usually or regularly sold in said trade area. (c) Any amount set forth in labels or price tickets attached to merchandise, or in depictions of such merchandise, or set forth in any other manner, is the usual or regular retail price of such merchandise, when such amount is in excess of the price at which such merchandise has been usually or regularly sold at retail in the trade area or areas where the representations are made. (d) Any savings will be afforded, to purchasers of such merchandise, from TBspondents' advertised price unless such price constitutes a reduction from the price at which such merchandise has been usually or regularly sold by respondents in the recent regular course of their business.

(e) Any saving is afforded in the purchase of merchandise from the price in respondents' trade area unless the price at which such merchandise is offered constitutes a reduction from the price which such merchandise has been usually or regular sold in said trade area.

2. Representing, directly or by implication, that guarantees are unlimited or unconditional, or from u6Iizing the term "guarantee or words of similar import, unless there are set forth conspicuously and in immediate conjunctlon t.herewith the nature and extent of the gurantee, the name of the guarantor, and the manner of the guarantor s perfonnance thereunder.

3. Representing, through the use of the term "custom crafted" or other t.terms of simjlar import, that such products were manufactured pursuant to specifications and desigus furnished by respondents or their customers to the manufacturer thereof prior to manuracture.

DECISION OF TIIE COl\UnSSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to Section 3.21 of the Commission s Rules of Practice the initial decision of the hearing examiner shall, on the 15th day 1130 FEDERAL TRADE CQ::IMISSIOX DECISIONS Complaint 58 F.

of June, 1961 , become the decision of the Commission; anel, accordingly:

It orde,' That. the respondents herein shall within sixty (60) days after service upon them of this order, file 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.