Neiman-Marcus Company

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IN THE MATTER NEIMAN - MARCUS CO1\fP ANY CONSEN'l' ORDER , ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FED- ERAL TRADE COMMISSION AND THE FUR PRODUCTS LABELING ACTS Docket 8249. Complaint, Dec. 1960-Decision, Sept. 28, 1961 Consent order requiring a Dallas, Tex., department store to cease violating the Fur Products Labeling Act by advertising fictitious amounts as the usual prices for fur products in newspapers, through use of the term "comparable value" or the word "originally" with a larger figure followed by a purportedly reduced sale price; by representing prices falsely as "40% off" and reductions. . . 1h to Y2 off" and by failing to keep adequate records as a basis for pricing claims.

COMPLAINT Pursuant to the provisions or the Federal Trade Commission Act and the Fur Products Labeling Act, and by virtue or the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Neiman-:Nlarcus Company, a corporation, hereinafter referred to as respondent, has violated the provisions of said Acts and the Hules and Hegulations promulgated under the l, Products Labeling Act, and it appe:l,ring to the Commission that a proceeding by it in respect thereof 'would be in the public interest hereby issues its complaint stating its chn,rges in that respect as follows:

PARAGRAPH 1. Neiman-l\iarcus Company is a corporation organized, existing and doing business under and by virtue of the laws or the State of Texas ,vit11 its oflice and principal place of business located at l\Iain and Ervay Streets, Dallas, Texas. It does business under the name of Neiman -l\iarcus.

PAR. 2. Subsequent to the effective date of the :Fur Products Labeling Act on August 9 , 195:2, respondent has been and is now engaged in the introduction into commerce and in the sale, advertising, and offering for sale, in coramerce, and in the transportation and distribution, in COl11l11erce, of fur products; and has sold, advertised, otrerecl for sale, transporteel and distributed fur products yrhich have been made in whole or in part of fur which had been shipped and received in COlllil1erce, as the terms "commerce fur" and "fur product" are defined in the Fur Products Labeling Act.

PAR. 3. Certain of said fur products were falsely and deceptively advertised in violation of the Fur Products La,belincr Act in that responclent caused the dissemination in commerce, as "commerce" is defined in said Act, or certain newspaper advertisements, concerning : : \. Complaint 59 F.

said products, which "-ere not in accordance. ,,-ith the provisions of Section 5 (a) of the sa id Act. and the. Hules and Regulations promulgated thereunder; and ,,-which advertisements ,were intended to aid promote and assist, directly or indirectly, in the sale and offering for sale of said fur products.

PAR. 4. . among and ineluc1ed in the advertisements as aforesairl but not limited thereto, were advertisements of respondent which appeared in the January 18, In60 and February 3, 196'J issues of the Dallas :1\Iorning News, a newspaper published in Dallas, Te.xas~ and havin!! a "ide circulation in said State and various other State~ of the United States.

By means of said adve.rtisements and others of sil11iJa I' import. and meaning, not specifically referred to herein, respondent falsely and deceptively arhertisec1 fur products in that said advert.isements : (a) Represented, directly or by implicntion, through such state- '" :1: * "ments as "An N-l\i Coup! Special purchase sale 40% ort on l\f J\fink jackets and coats because ,,-hen '1'('. say sale., we mean saJe, and our prominent position in the fur world commands the greatest values the market. has to offer" followed b~. two coln111ns of figures, the one column containing a. higher.r price and designated by the term "comparable value" and the other eolumn containing fl, lo\yer price and designated by the term "now, that the. higher prices designated by the term "comparable value " were respondent's regular and usual prices for the mink products in the re.cent. regular course of business, and that purchases at the )O\yer prices ,yauld result in satings of the diiTel'enees between the higher prices and the lower prices. In truth and in fact, the higher price.s designated by the term (;comparable value" ,were not respondent's regular or usual prices in the l'H' ent. regular course of business for the proc1uc.!"s ncheTtisec1, but were fictitious prices, and the purchase of said products at the lower prices would not. result. in savings to pure-hasers of the differences between the higher prices and the. loy'- er prices, an in viob Lion of Section !'I (a) (5) of the Fnr Products Labeling ~L~ct and Rule -i-1:(a) of said Hules and Hegulations.

(b) Hepresente. , directly or by i111)11i('ntio11. through such tern)s as 1/~ to 112 off' follo\yecl by two col- further reductions in our fur sale umns of figures, the one column containing a higher price :1n() dpsignatec1 by the term "originally and the other ('olun111 containing ter11:. ;;no"- , that respondents reg-)olyer price add designated by the ular or usual prices h:1(l been reduced \yhen such \\-ns not the fact in violation of Section ;) (a) (f)) of the Fur Products Labeling .. ct and Hu Ie 44- (n) of said Rules and Hegn lations. (c) Represented, directly 01' by implication, through the ll::;e. of percentage savings claims such as "40% oil' on X- ::\I Alink jackets (lnd NEIMAN-MARCUS CO. 719 717 Decision coats" and "further reductions in our fur sale,! 113 to .112 off", that respondent' s regular or usual prices of fur products were reduced in direct proportion to the percentage of savings stated, when such was not the fact, in violation of Section 5 (a) (5) of the Fur Products Labeling Act.

PAR. 5. Respondent in a,advertising fur products for sale as aforesaid made claims and representations respecting the prices and values of fur products. Respondent in making such claims and representations failed to maintain full and adequate re.cords disclosing the facts upon which such claims and representations were based, in violation of Rule 44 ( e) of said Rules and Regulations. PAR. 6. The aforesaid acts and practices of respondent, as herein alleged, are in violation of the Fur Products Labeling Act and the Rules and Regulations promulgated thereunder and constitute unfair and dec.eptive acts and practices in commerce under the Federal Trade Commission Act.

11th,. Charles TV. Connell for the Conllnission. 1'1'wld F O1'tas & PO1'ter by illi'. N 01'17Wn D-ianwnd, lVashington for respondents.

INITIAL DECISION BY I-IERl\IAN Tacker, HEARING EXAl\II~ER The respondent, Neiman-J\larcus Company, is a corporation organized under the laws of the State of Texas and has its office and principal place of business at :Main and Ervay Streets, Dallas, Texas. In a complaint issued December 28, 1960, the Fe.deral Trade Commission charged that the respondent had violated both the; Federal Trade Commission Act and the Fur Products Labeling Act by misrepresenting that prices at \vhieh it advertised fur produds for sale in commerce would result in savings to customers and by failing to maintain records of the facts upon which such claims were based. On August 2, 1961 , the respondent (by and with the advice of its attorneys) entered into an agreement with counsel supporting the complaint wherein it is provided, in accordance with Section 3.25 of the Rules of Practice applien.ble to this ease for the entry of a. consent order to cease and desist. The proposed order \\ould dispose of all the issues herein.

In the agreement it is expressly provided that. the signing thereof is for settlement purposes only and does not constitute an admission by the respondent that it has violated the law as in the complaint alleged. By the terms of the agreement, the respondent admits all the jurisdictional facts alleged in the complaint and agrees that the record herein may be taken as if the Commission had made fij1dings of jurisdictional facts in ac.cordance with the allegations. , .order 59 F.

By the agreement, the respondent expressly waives any further procedural steps before the J-Iearing Examiner and the Commission the making of findings of fact or conclusions of Jaw, and all rights it may have to challenge or contest the validity of the order to cease and desist to be entered in accordance therewith. Hesponclent further agrees that the order to cease and desist, to be issued in accordance with the agreement, shall have the same force and effect as if made after a full hearing.

It is further provided in said agreement that the same, together with the complaint, shall constitute the entire record herein and that he complaint herein may be used in eollstruing the terms of the order to be issued pursuant to sajd agreement and that such order may be nltered, modified or set aside in the manner prescribed by the statute for orders of the Commission.

The :Hearing Examiner has considered the agreement and the order therein contained, and, it appearing that said agreement and order provide for an appropriate disposition of this proceeding, the same is 'hereby accepted and shall be il1ed UpOll becoming part of the Commission s decision in accordance with Sections' 3, 21 and 3.25 of the Rules of Practice.

N ow, in consonance with the terms thereof, the I-Iearing Examiner finds that the Federal Trade Commission has jurisdiction of the subject. matter of this proceeding and of the respondent named herein, and that this proceeding is in the interest of the public, and issues the following order:

ORDER It is ordered That Reiman-~Iarcus Company, a corporation, and its oflicers, and respondent's representr!.ti'.' , agents and employees directly or through ~my corporate or other device, in connection with the introduction into c.commerce, or the sale, advertising, or offering for sale in commerce, or the transportation or distribution in commerce, of fur products, or in connection ,with the sale, (lc1vertising, oH'ering for sale, transportation or distribution in con1Jnerce, of fu!' products, or in connection 'with the sale, achertising, offering for sale, transportation or distribution of fur products Ivhich are made in whol"6 or in part of fur which 11.1S been shipped and received in con1Jneree, as "commerce fur" and " fur product" are defined in the Fur Products Labeling Act, do forthwith cease and desist from: A. Falsely or deceptively advertising fnr products through the use of a.ny advertisement, representation, public announcement or notice / / j NEIMA.L~-MARCUS CO. 721 7l7 Order which is intended to aid, promote or assist, directly or indirectly, in the sale, or the offering for sale, of fur products, and which: 1. Represents, directly or by implication, that any price is respondent's usual retail price when it is in excess of the price at which the merchandise has been usually and customarily sold by respondent at retail in the recent regular course of business. 2. Represents, directly or by implication, that the price at ",hieh respondent offers fur products affords a. savings to consumers unless such representation is true and the basis of sllch representation is truthfully stated.

3. USE'S the term "originalli' to designate prict's un J('SS they are the prices at which the mE'rchfll1dise has been usllally and customa-rily sold by respondent in the recent, regular course of business. 4. Designates prices of fur products by the. term "comparable of the same impol' , in connection with value, or any other term Imve.r prices, in such manner as to represent that. the prices so designated are. respondent' s usual and customary retail selling prices in th~ recent, regular course of business, unless they are such in fact. 5. Represents, directly or by implication, through percentage savings claims that the prices at which respondent hadllsually and customarily sold fur products in the recent, regular course of business "'ere reduced in direct proportion to the amollnt of savings stateel \Y hen contrary to the fact.

B, l\laking price claims or representations respecting prices or values of fur products unless respondent maintains full and adequate records disclosing the facts upon which such elaims or representations are based.

DECISION OF THE C03f:r.rISSION AND ORDER TO I~ILE Import OF COl\IPLIANCE of Practice Pursuant to Section 3.21 of the Commission s Rules published:i\la.y 6, 1955, as amended, the initial decision of the hearing examiner shall, on the 28th day of September 1961 , become the deeision of the Commission; and, accordingly:

J t is ordej' That respondent he-rein shall, within sixty (60) days after-r senrjce 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 the order to cease. and desist. fin::--'/ DO-- Complaint 59 F.