Carlson Pharmaceuticals, Inc.

Text (OCR of the scan at left; may contain errors)

In THE Marrer or CARLSON PHARMACEUTICALS, INC., ET AL.

ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF TITE FEDERAL TRADE COMMISSION ACT Docket 8432. Complaint, June 16, 1961—Decision. Nov. 16, 1961 Order issued in default requiring Detroit distributors to cease representing falsely in advertising that their drug preparation “ARTH-RITE” was an effective treatment and cure for all kinds of arthritis and rbeumatism and contained sleep-inducing ingredients. ComPLaINnT 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 Carlson Pharmaceuticals, Inc., a corporation, and Frank Handler, Jr., Eugene Graye and Frank Handler, Sr., individually and as officers of said corporation, 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: Paracrary 1. Respondent Carlson Pharmaceuticals, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Michigan, with its principal office and place of business located at 4121 Puritan Avenue, in the City of Detroit, State of Michigan.

Respondent Frank Handler, Jr., Eugene Graye and Frank Hander, Sr. are officers of the corporate respondent. They formulate, direct and control the acts and practices of the corporate respondent. including the acts and practices hereinafter set forth. Their address is the same as that of the corporate respondent. Par. 2. Respondents are now, and have been for more than one year last past, engaged in the sale and distribution of a preparation . . , .

Complaint. 59 F.

is the price at which reSPQndents have usually and customarily sold he merchandise in the recent regular course of business. It is further ordered 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 this order. IN Tile ~IA TTER OF CARLSON PHAR,l\1ACEUTICALS, INC., ET AL.

OJWER, ETC., IN REGARD TO THE ALLEGED YIOL.\TW1\ OF Tile FlmER. TR"\DE COl\Il\fISSION ACT Docket 1-)::. Coil/plaint TulIc Hi, lD61-Dcci8;o/l. Not'. 16. 19(11 Onlpl" i~SlH'c1 in default requiring Detroit distrill\ltors to ('ease representing falsely~- in advertising that their drug preparation "ARTH-RITE" was an effective treatment and cure for all kinds of arthritis and rheumatism and contained sleep-inducing ingredients. COMPLAINT 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 Carlson Pharmac.euticals, Inc., a corporation, and Frank I-Iandler, Jr., Eugene Graye fmd Frank Ilandler, Sr., individually and as officers of said corporation, hereinafter referred to as respondents, have violated the provi- ~ions 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 Carlson Pharmaceutieals, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of :Michigan, with its principal office and plnee of business located at 4121 Puritan A venue, in the City of Detroit, State of l\lichigan.

Respondent Frank Handler Jr., Eugene Graye and Frank Han- (lieu' , Sr. are officers of the corporate respondent. They formulate direct and control the acts and practices of the corporate respondent including the acts and practices hereinafter set. forth. Their address is the same as that of the corporate respondent. AH. 2. R.respondents are nm'\, and have been for more than one year last. past, engaged in the sale and clistributlon of a preparation CARLSON PHARMACEUTICALS, INC. , ET AL. 1157 1156 Complaint containing ingredients which come within the classification of drugs as the term "drug:: is defined in the Federal Trade Commission Act. The designation used by respondents for said preparation, the formula thereof and directions for use are as follows: Designation: ARTH-RITE Formula:

Salicylamide__-__n_n_----------_n----------- 324 mg. Vitamin A (Fish Liver Oil) --------------------- 100 USP Units Vitamin D (Irradiated Ergosterol) _n______----- 500 USP Units Thiamine Mononitrate (Vitamin Bd ------------- 2 mg. Ascorbic Acid (Vitamin C) ---------------------. 30 mg. Iron (from dessicated ferrous sulfate) ----------- 19 mg. Powdered Extract of Alfalfa-_____-------------- 130 mg. Directions: Take 1 or 2 Capsules before breakfast and at bedtime. Not more than 6 Capsules in one day.

IMPORTANT For more se'-ere or persistent conditions, consult your doctor. CONTENTS 00 CAPSULES PAn. 3. Respondents Ci.1USe the said preparation when sold, to be transported from their place of business in the State of :Michigan to purchasers thereof located in various other states of the United States. Respondents maintain, and at all times mentioned herein have maintained, a course of trade in said preparation in commerce as "commerce~~ is defined in the Federal Trade Commission Act. The volume of business in such commerce has been and su bstan ti al.

PAR. 4. In the course and conduct of their said business, respondents have disseminated and caused the dissemination of, certain advertisements concerning the said preparation by the United States mails and by various means in commerce, as "commerce is defined in the Federal Trade Commission Act, including, but not limited to, advertisem.ents inserted in magazines and other advertising media, for the purpose of inducing and which were likely to induce directly or indirectly, the purchase of said preparation; and have disseminated, and caused the dissemination of, advertisements concerning said preparation by various means, including but not limited to the aforesaid media, for the purpose of inducing and which were likely to induce, directly or indirectly, the purchase of said preparation in commerce, as "commerce" is defined in the Federal Trade Commission Act.

COml)laint 59 F.

PAR. 5. Among and typical of the statements and representations contained in said advertisements disseminated as hereinabove set forth are the following:

ARTH-RITE ARTH-RITE USE ARTH-RITE Get Blessed Relief From ARTHRITIS and RHEUMATISM Get PROMPT Relief Stop Suffering Start Sleeping Now Only $5.85 For A Full Months Supply of 60 Capsules Money Back Unconditional Contains No Opia tes, .Aspirins or Habit Forming Drugs Carlson Pharmaceuticals, Inc.

4121 Puritan Dept. P10 Detroit 21 . ::\iich. (Picturization of an ARTH-RITE bottle to the right of the printed material and the word "ALFALFA" prominently featured on the bottle label with the legend "VIT. A, B, C, D &. Extract of Alfalfa " printed above the top of the bottle. ) \R. 6. Through the use of said advertisements, and others similar thereto not specifically set out herein, respondents have represented, and are now representing, directly and by implication: 1. That ARTI- RITE is a,n adequate, effective and reliable treatment for all kinds of arthritis and rheumatism; 2. That ARTI-I-RITE will arrest the progress correct the underlying causes and cure all kinds of arthritis and rheumatism; 3. That ARTI-I-WHITE is an adequate eflective and reliable treatment for the symptoms and manifestations of all kinds of arthritis and rheumatism, and ",ill afl'ol'd immediate. , complete and permanent relief of the symptoms and manifestations thereof: 4. That the vitamins, minerals and extract of alfalfa in said product are of therapeutic value in the treatment of all kinds of arthritis and rheumatism, and for the. symptoms and manifestations thereof: 5. That said product contains sleep-inducing ingrpdients. PAR. 7. The said advertisements "ere and are misleading in materia 1 respects and constituted and 11m\' c.onstitllte false. advertisp- CARLSON PHARMACEUTICALS, INC. , ET AL. 1159 1156 Decision ments'~ as that term is defined in the Federal Trade Commission Act. In truth and in fact:

1. ARTH-RITE is not an adequate, effective or reliable treatment for any kind of arthritis or rheumatism;

2. ARTH-RITE will not arrest the progress of, correct the underlying causes of or cure any kind of arthritis or rheumatism; 3. ARTI-I-RITE is not an adequate, effective or reliable treatment for the symptoms and manifestations of any kind of arthritis or rheumatism, and will not afford immediate, complete or permanent relief from any of the symptoms or manifestations thereof or have any therapeutic effect upon any of the symptoms or manifestations of any such conditions in excess of affording temporary relief of the minor aches or pains thereof;

4. The vitamins, minerals and extract of alfalfa in said preparation are of no therapeutic value in the treatment of any kind of arthritis or rheumatism or for any of the symptoms or manifestations thereof;

5. ARTII-RITE does not contain any sleep-inducing ingredients. PAR. 8. The dissemination by the respondents of the false advertisements, as aforesaid, constitutes, and now constitutes, unfair and deceptive acts and practic.es, in c.commerce, within the intent anel meaning of the Federal Trade Commission Act. 111'J'. jJf1' chael.l, Vi;tale for the Commission. No appearance.e for the respondents.

INITIAL DECISION BY AnNEn. E. LIPSCO1\1B HEARING EXA1\finer The complaint herein was issued on June 16 , 1961, charging Respondents .with violation of the Federal Trade Commission Act by the dissemination in commerce, as "commerce:: is defined in said Act, of false advertisements concerning their drug preparation designated "Arth-Rite.

Thereafter, on ~Tune 30, 1961 , R,respondents were duly served with a copy of the complaint. herein, and failed to submit. any answer or make any reply thereto. Accordingly, on August 9, 1961 , notice "issued of n. hearing to be held in the Federal Trade Commission Building, ,Vashington, D. , and was duly served upon Respondents on August 14 1961.

Thereafter a hearing was held in accordance with the aforesaid notice, whereat. Hepsondents failed to appear, either in person or by c.ounsel; ,,-hereupon counsel supporting the complaint moved that the R.respondents be held in default, and submitted to the Hearing Examiner a proposed order to cease and desist. The motion was duly granted on the rec.ord.

1160 FEDERAL TRADE COfiiIMISSION DECISIONS Findings 59 F.

The Hearing Examiner, exercising the authority conferred upon him by ~ 4.5 (c) of the Commission s R.ules Of Practice For Adjudieati ve Proceedings, now linds the facts to be as alleged in the complaint herein, and issues his initial decision, containing such findings appropriate conclusions drawn therefrom, order to cease find desist as follows:

FINDINGS AS TO THE FACTS 1. Respondent Carlson Pharmaceuticals, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of ~fichigan, ",ith its principal office and place of business located at 4121 Puritan A venue, in the City of Detroit State of :Michigan.

Respondents Frank I-Iandler, Jr., Eugene Graye and Frank Handler, Sr. are officers of the corporate respondent. They fol1uulate direct and control the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. Their address is the same as that of the corporate respondent. 2. Respondents are no,,-, and have been for more than one year hst past, engaged in the sale and distribution of a preparation containing ingredients which come ",it-hin the classification of drugs, as the term "drug:' is defined in the Federal Trade Commission Act.

The designation used by respondents for said preparation, the formula thereof and directions for use are as follows: Designation: AHTH-RITE Formula:

Salicylamide-------__------------------------ 324 mg. Vitamin A (Fish Liver Oil) -------------------. 10010 USP Units Vitamin D (Irradiated Ergosterol) ------------ 500 USP Units Thiamine ::\lononitrate (Vitamin Bt )--__------- 2 mg. Ascorbic Acid (Vitamin C) -------------------- 30 mg. Iron (from desiccated ferrous sulfate.) --------- 19 mg. Powdered Extract of Alfalfa_____------------- 130 mg. Directions: Take 1 or 2 ('apsulps before breakfast and at bedtime. Not more than 6 Capsules in one day.

IMPORT ANT For more severe or persistent conditions, consult your doctor. CONTENTS 60 CAPSULES 3. Respondents cause the said preparation, when sold, to be transported from their place of business in the State of :l\Iichigan to purchasers thereof located in various other states of the United States. Respondents maintain, and at all times mentioned herein have maintained, a course of t.trade in said preparation in commerce, as "com- CARLSON PHARMACEUTICALS, INC., ET AL. 1161 1156 Findings merce~~ is defined in the Federal Trade Commission Act. The volume of business in such commerce has been and is substantial. 4. In the course and conduct of their said business, Respondents have disseminated and caused the dissemination of certain advertisements concerning the said preparation by the United States mails and by various means in commerce, as "commerce is defined in the Federal Trade Commission Act, including, but not limited to advertisements inserted in magazines and other advertising media for the purpose of induc.ing and which ,were likely to induce, direc.tIJ or indirectly, the purchase of said preparation; and have disseminated, and caused the dissemination of, advertisements concerning said preparation by various means, including but not limited to the aforesaid media, for the purpose of inducing and which were likely to indnee, directly or indirectly, the purchase of said preparation in commerce, as "eommerc.e ': is defined in the Federal Trade Commission Act.

5. Among and typical of the statements and representations contained in said advertisements disseminated as hereinabove set forth the following:

ARTH-RITE ARTH-RITE (;Pt. Blesse(l Belief From ARTHRITIS and RHEU~lATISM Get PRO~lPT Relief Stop Suffering Start Sleeping Now Only $5.85 For A Full ~Ionths Supply of 60 Capsules ~loney Rack Unconditional Contaill~ ?\o Opiatps, Aspirins or Habit Forming Drugs Carlson Pharmaceuticals. Inc.

4121 Puritan Dept. 1'10 Detroit 21 . Mich. (Picturization of an AR'l' RITE bottle to the right of the printed material and the word "ALFALFA" prominently featlupd 011 the bottle label with the legencl "vrr. A . B , C, n & Extraet of Alfalfa " printed above the top of the bottle.

n. Through the use of said advertisements, and others similar thereto not. specifically set out herein, Respondents have represented, and are now representing, directly and by implication: 1. That AR.TI-I-RITE is an adequate, eflective and reliable treatment for all kinds of art hl'itis and rhenmatism ; 2. That ARTH-RITE "ill arre.st the progress of, correct the underlying eauses of, a11(1 enre all kinds of ali.hritis and rheumatism; 3. That ARTH-RITE is an adequate, effective and reliable treatment for the symptoms nnd manifestations of all kinds of arthritis , .

Conclusions 59 F.

and rheumatism, and will afford immediate, complete and permanent relief of the symptoms and manifestations thereof; -1. That the vitamins, minerals and extract of alfalfa in said product are of therapeutic value in the treatment of all kinds of arthritis and rheumatism, and for the symptoms and manifestations thereof; f). That said product contains sleep-inducing ingredients. 7. The said advertisments were and are misleading in material respects and constituted and now constitute " false advertisements Act..as that term. is defined in the Federal Trade Commission In truth and in fact:

1. ARTII-RITE is not an adequate, eflective or reliable treatment for any kind of art hritis 01' rheumatism; 2. ARTH-RJTE will not arrest the progress of, correct the underlying causes of, 01' cure any kind of arthritis or rheumatism; 3. ARTl-I-RITE is not an adequate, effective or reliable treatment for the symptoms and manifestations of any kind of arthritis or rheumatism, and will not afi'ord immediate, complete or permanent relief from any of the symptoms or manifestations thereof or have any the.rapeutic effect upon any of the symptoms or manifestations of any such conditions in excess of afl'ording temporary relief of the minor aches or pains thereof; 1. The vitamins, minerals and extract of alfalfa in said preparation are of no therapeutic value in the treatment of any kind of art.Juitis or rheumatism or for any of the symptoms or manifestations thereof;

5. i\RTI-I-RITE does not contain any sleep-inducing ingredients. CONCLUSIONS false advertise- 1. The dissemination by the. Respondents of the unfair andments, as aforesaid, constituted, and now constitutes, deceptive acts and praetiees in commerce, within the intent and meaning of the Federal Trade Commission Ad. 2. The Commission has jurisdiction over the Respondents herein :1l1d over their ads and practices as alleged in the complaint and hereinabove found.

3. This proceeding is in the public interest. Accordingly, 1 t is o'l'(lered That Respondents Carlson Pharmaceuticals, Inc. a. corporation, and its ofhcers, and Frank I-Tanc1ler Jr., Eugene Graye and Frank I-Jandler, Sr., individually and as ofllcers of said corporation, and Respondents' representatives, agents and employees, directly or through any corporate or other device, in connection "with the offering for sale, sale or distribution of the preparation ,, CARLSON' PHARMACEUTICALS , INC. , ET AL. 1163 11 :)() Decision desig-nated ARTJ-I-RITE, or any other preparation of substantially similar c.composition or possessing substantially similar properties lwtlwr sold under the same nanw. or any other name, do forthwith erase and desist from, directly or indirectly: J. Disseminnting or causing to be disseminated, by means the United States mnils or by any means in commerce, as "eomn1('Tee ~~ is defined in the Federal Trade Commission Act, any :1advertisement which represents, directly or indirectly: (a) That. said preparation is an adequate, effective or reliable trpatnw,nt. for any kind of arthritis or rheumatism; (h) That ~;nid prei)aration will arrest the progress of, correct the . underlying causes of, or cure any ' kind of ali,hritis or rJ1P.umatism:

(e) That said preparation is an adequate, effective or reliable t rer tment. for the. symptoms and manifestations of any kind of :1 rt hri tis or rheumatism, or win afl'orci immediate, complete or permanent. relief of the. symptoms or manifestations of such conditions in excess of a tl'orcling temporary relief of the minor aches or pains thereof:

(cl) That the yitamins, minerals or extract of alfalfa contained in ::::1icl preparation will relieve pain, or have :ll1Y other therapeutic ynl11e. for the relie.f of any kind of arthritis or rheumatism, or for the symptoms or manifestations thereof;

(e. ) That. said pl'eparatiol1 contains any sleep- inducing ingredients; 2. Disseminntlng or causing the dissemination by any means lor the purpose of inducing or which is likely to induce, directly or indirectly, the. pure-hase, of said preparation in commerce, as "commf',I"er:~ is deRnea in the Federal Trade Commission Act, of any advf'.rtlsement which contains any of the representations prohibited in paragraph 1 hereof.

rn:CT~ION 01' THE CO:.'1::.\lis~ION x!\;m ORDER TO FILE REPORT OF CO:;\IPLHNCE Pnrsunnt to Section 4.19 of the Commission s Rules of Practice 1'11('. initial decision of the hearing examiner sha, , on the 16th day of Xoyember, 1 f)61 become the decision of the Commission; and f1rcorrlingly :

It is ordered That the nboye-named respondents shall within sixty (60) days after selTice upon them of this order, file ,with the Commission a report. in writing, setting forth in detail the manner and fonn in ,,' hieh they hate C'0111pliec1 with the order to cease and rlesist.

Complaint 59 F.

IN THE l\L-\TTER OF KR.oy"TEN COATS, INC., ET AL.

CON' SENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TIL\DE COl\Il\IISSION AND TI-IE WOOL PRODUCTS LABELING ACTS Docket (.'-;ZS. Co/1/plaint, XO"L'. 1f). 1!J(j1-Decision. Xov. 1961 Consent order requiring two associated manufacturers in New York City to cease Yiolating the Wool Products Laheling Act by labeling as "100% Cashmere" and "100% Pure Cashmere, ladies' coats which contained a substantial quantity of other fibers; by labeling such coats falsely with respect to the manufacturer or supplier; and by failing to disclose the the true generic names of fibers present and the percentage thereof. COl\-IPLAINT Pursuant to the provisions of the Federal Trade Commission Act n.nd the ,Vool Products Labeling Act of . 1939, and by virtue of the authority vested in it by said Acts, the Federal Trade. Commission having reason to believe that Kroywen Coats, Inc., a corporation Luxury Coats, Inc., a corporation, Ralph l\1iller, individually and as an officer of Kl'oywen Coats, Inc. and Luxury Coats, Inc., and Sidney Goldman, individually and as an officer of Kroywen Coats Inc., hereinafter referred to as respondents, ha. ve violated the provisions of said Acts and the Rilles and Regulations promulgated under the 'V 001 Products Labeling Ac.t.~ 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:

P .-\JL\GRAPH 1. Respondents Kroywen Coats, Inc.. and Luxury Coats, Inc. are corporations organized, existing and doing business under and by virtue of the laws of the State of New York, with their oflice and principal place of business located at 251 \Vest. 39th. Street New York, N.

Individual respondent R.alph :Millel' is president of corporate respondent Kroywen Coats, Inc. and secretary of corporate. respondent Luxury Coats Inc.. Individual respondent Sidney Goldman is secretary-treasurer of corporate respondent Kroywen Coats In('" Individually'respondents Halph ~liller and Sidney Goldman formulate. direct and control the. acts, practic.es and policies of the corporate l"respondent Kro:V'yen Coats, Ing., inclnd ing tho~f'. he.rpinaf1-.el' set forth. Indiyidl1al respondent Rn.Jph :Miller formnlate8~ directs and controls the acts, practices and policies of corporate. respondent, Luxury Coats, Inc., inelnding those hereinafter set. forth. The acl- KROYWEN COATS, INC. , ET AL. 1165 1164 Decision dress and principal place-e. of business of the individual respondents is the same as that of the corporate respondents. PAR. 2. Subsequent to the effective date of the ",Vool Products Labeling Act of 1939 and more especially since 1948, respondents have manufactured for introduction into commerce, introduced int.o commerce, sold, transported, distributed, delivered for shipment and offered for sale in commerce, as "commerce is defined in said Act, wool products as "wool products" are defined therein. PAR. 3. Certain of said wool products were misbranded by the respondents within the intent and meaning of Section 4 (a) (1) of the vV 001 Products Labeling Act and the Rules and Regulations promulgated thereunder, in that they "ere falsely and deceptively labeled tagged or otherwise identified.

Among such misbranded wool products were ladies coats labeled or tagged by respondents as "100% Cashmere" and "100% Pure Cashmere" whereas, in truth and in fact, said products contained a substantial quantity of fibers other than the hair or fleece of the Cashmere goat.

In addition, certain "' 001 products, namely, ladies coats, were misbrrmded in that they were falsely or de.eeptively stamped, tagged labeled or otherwise identified in such a mamler as to misrepresent the name or identity of the manufacturer, supplier or source of fabric used in the manufacture of such ladies coats. PAR. 4. Certain of said wool products were further misbranded Ly respondents in that they were not stamped, tagged or labeled as required under the provisions of Seetion 4 (a) (2) of the ",Vool Products Labeling Act and in the manner and form as prescribed by the Rules and Regulations promulgated under said Act. Among such misbranded wool products, but not limited thereto were ladies coats with labels which failed: (1) to disclose the true generic naines of the fibers present and (2) to disclose the percentage of such fibers.

P..-m. 5. The acts and practices of the respondents as set forth :l have were, and are, in violation of the ",V 001 Products Labeling Act of 1939 and the Rules and Regulations promulgated thereunder, and constituted, and now constitute, unfair and deceptive acts and practices and unfair methods of competition in commerce, within f intent and meaning of the Federal Trade Commission Act. DECISION AND ORDER The Commission having heretofore determined to issue its complaint charging the respondents named in the caption hereof with violation of the Federal Trade Commission Act and the ",Vool Prod- 1166 FEDERAL TRADE COMMISSION DECISIOXS Order 59 F.

ucts Labeling Act of 193U, and the respondents haxing been served with notice of said determination and with a copy of the complaint. the Commission intended to issue, together ,,-ith a proposed form of order; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set fortJl in the complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission 'by respondents that the In,,- has been violated as set forth in the complain,and ,,-ni yers and pro,'isions as required by the Commission s I'll It's; and The. Commission, IUl.ying considered the agreement, hereby accepts same, issues its complaint in the form contemplated by said agreement, makes the follmying jurisdictional findings, and enters the fonow-iug order:

1. Hespondents Kroywen Coats, Inc. and Luxury Coats, Inc. are corpora tions orga nized, existing and doing business under and virtue of the laws of the State of New York ,with their office and principal place of business located at 251 ,Vest 39th Street, X t'w )~ ork, X ew York.

Respondent Halph ~IiJler is an oliice.!' oJ Kroywen Coats, Inc. and Luxury Coats, Inc. and his address is the same as that of ~H corporate respondents.

Respondent Sidney Goldman is an officer of Kroy\"e.n Coats, Inc. and his address is the same as that of said corpomte respondt'Jlt. :L The Federal Trade. Commission has jllrisdid ion of the subject" matter of this proceeding and of the respondents, and the. proceeding i~ ill the publ ic interest.

ORDER Iti..;; o;'d('.I'ed. That respondents, Kroy,yen Coats~ Inc., a corporation, nnd its officers, and Ralph ~IilJer and Sidney Goldmnll~ indiyjfllln1Jy and as officers of said corporatio1l, and Lnxnry Coats, Inc., a corporation, and its ofii.cprs and Ralph ~Iiller, indiyiclllally Hllll as an oflieer of said corporation, and respondents ' reprpsent;Hin)~. a~:ents alld employees, (lirpctly 01' thl'onglL any corporate or uther device, in connection ",ith the introduction or manufacture toi' illll'Odllctioll into commerce', or the. otrering for sale.. sale, tran~pOl'lHtioll or distrilHltion in Commel'(' , of ladies' ('oah 01' ot- Jwr \\'001 pJ'Oduds, as ;' colIllnerce" and "\Yool proclll('t". are defined in till' ool Produc(sLabe.ling' _Act of In:w, do foJ'tlt\yitJl ('('lISP and (h'~i. frnlll mishranding such proclncts by:

.,, STEWART AUTO UPHOLSTERING CO. , ET AL. 1167 1164 Complaint 1. Falsely 01' deceptively stamping, tagging, labeling or otherwise identifying such products as to the character or amount of the constituent fibers contained therein.

2. Falsely or deceptively stamping, tagging, labeling or otherwise identifying such products as to name or identity of the manufacturer supplier or source of the fabric used in such products. 3. Failing to securely affix to or place on each product, a stamp, tag, label or other means of identification sho,ying in a clear and conspicuous manner, each element of information required to be disclosed by Section 4 (a) (2) of the ,V 001 Products Labeling Act of 1939.

4. Falsely or deceptively stamping, tagging, hbe1ing or otherwise identifying such products as to the character or amount of fibers from the hair or fleece of the Cashmere goat. , within 1 t is further o1'(leJ' That. the respondents herein shall sixty (60) days after service upon them of this order, file ,,-ith the Commission a report in writing setting forth in detail the manner and form in which they have complied ,,' ith this order. Ix THE )l.\TTEH or IIYl\lan KAPLAX ET AL. TR~\DIKG ~-\S STE,Y ART AUTO UPHOLSTERIKG COl\iPAKY ET AI..

OHDEH , ETC. , IX REG,\HD TO THE "\ALLEGED VIOLNrIOX OF THE FEDERAL TRADE co~r:~nSSIOX "\CT Docket 8222. Complaint. Dec. j(j 1!J(jO-J)ccisioll, NO'I:. 21 1961 Order requiring Washington, D. , distributors of antolllobile sent covers, eonvel'tihlp tops, and finoI' 11111 ts among otlwr items, to consumers and other I'etHil('r~, to Cf-\I!!-;e repn'sl'ntillg f'.x('es~iye priel's as their usual retail prices through such practices as setting forth such pritt's after the designation " Heg." Regular 01' " List", foll()\\"ed by a lower sale IH'iee: and relJre~f'njjllg certain of their cony(~rtiblt' tops as offered "with written gul1l'Hntt'(' lwn tlwir gn:lrnntees eontaine(l limitations not set forth.

CO:.'\U' L\JST Pursuant. to the pn)vlsions of the Federal Trade Commission Act and by virtue of the authority vested iJ) it by said Act, the Federal Trade Commi~sioll, having reason to believe that Hyman I\:aplan and :Morris Knp1an, iJl(livic1l1al1y a1\(1 as copartners trading as Stewart Auto t~pholstering Company, and Henry Kaplan, an individual, here, innftel' referred to as respondents, have violated the plo\' isions of said :

Complaint 59 F.

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. Respondents I-Iyman Kaplan and 1\forris Kaplan are individuals and copartners trading as Stewart Auto Upholstering Company, with their office and principal place of business located at 2525 :M Street, N"\V., in the City of "\Vashington, District of Columbia. Respondent Henry Kaplan is manager of the partnership business. His address is the same as that of the partners. PAR. 2. Respondents are HOW, and for some time last past have been engaged in advertising, other,ring for sale, sale and distribution among other things, of automobile seat covers, convertible tops, and floor mats to the public and to retailers for resale to the public in the District of Columbia. and maintain and at all times mentioned herein have maintained, a substantial course of trade in said merchandise in commerce, as "commerce': is defined in the Federal Trade Commission Act.

PAR. 3. In the course and conduct of their business, and for the purpose of inducing the sale of their merchandise, respondents have made certain statements concerning said merchandise in newspapers of general circulation. Among and typical, but not all inclusive of such statements are the following:

Diplomat" Plastiseal Seat Cc)\"ers Reg. :j;18.95. $13.77 Full set-Front and Rear.

Diplomat" Plastiseal Auto Seat Covers--Regular $18.9;:), $13.95 with trade. Country Club" Nyspun Auto Seat Covers-Regular $22.95, $17.95 with trade. Sensational Savings on Genuine " Rocket" Saran Seat Covers-Reg. $16.95- $12.77.

Rocket" Saran Seat Covers Regular $16.95-Today & Sat. $12.87. Two Day Super Special! Amazing Low Price! "Atlas" Saran Seat Covers Regular $17.95-$13.87.

Specially Priced! Deluxe 3-Ply convertible tops Yat Dyed Black or 'lan- $29.95 ".ith written guarantee.

Less than % price! Front and Rear 4-Pc. Floor Mat Set First time ever at this low price! Reg. $9.95-Monday Only $4.87. (List for $7.95) Cushion Cap Cover $2.72. PAR. 4. By means of the aforesaid statements, and others of the same import but not speeifica11y set out, respondents have represented, directly or by implication:

1. That the higher prices listed under the designation "Heg. Regular:' and " List" were the prices at which the advertised merchandise had been usually and c.customarily sold hy respondents at retail in the recent regular course of business nnd that savings amounting to the cliflerences between these higher prices and the lower sales price would result to purchasers.

, STEWART AUTO UPHOLSTERING CO. , ET AL. 1169 1167 Decision 2. Through the use of the terms "\with written guarantee" that certain of their convertible tops are fully guaranteed. PAR. 5. The aforesaid statements and representations were and are false, misleading and deceptive. In truth and in fact: 1. The higher prices listed under the designation "Reg. Regular" or "List" were not the prices at which the advertised merchandise had been usually and customarily sold by respondents at retail in the recent regular course of business but ,were in excess of such prices, and savings amounting to the differences bebveen such higher prices and the lower sales prices \yould not result to purchasers.

2. Respondents' convertible tops are not. fully guaranteed but such guarantees contain terms and conditions not set forth in the ad q'rtisements.

PAR. 6. In the conduct of their business, at all times mentioned herein, respondents have been in substantial competition, in commerce, with corporations, firms and individuals in the sale of automobiles seat coyrrs, convertible tops and floor mats of the same general kind and nature as those sold by respondents. PAR. 7. The use by respondents of the aforesaid false, deceptive and misleading statements and representations has had and now has the tendency and capacity to mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that said statements and represe.ntations were and are true, and to . induce the purchase of substantial quantities of respondents' merchandise because of such erroneous and mistaken belief. As a result thereof, trade in commerce has been unfairly diverted to respondents from their competitors and injury has been done thereby to competition in commerce.

PAR. 8. The aforesaid acts and practices of respondents, as herein alleged, ,were and are a.ll to the prejud.ice and injury of the public and of respondents' competitors and constituted, and now constitute, unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of the Federal Trade Commission Act..

~fT. Charles lV. Connell for the Commission. 1111'. Ben h' ((.n 111 elnJcoff: 'Vashington, D. , for respondents (until September 8, 1961).

ill essTS. I-lyman fiapZan: 1I101Tis liaplan and H enrJj l(aplan, pm Be. INITL\.L DECISION BY l\lA URICE S. BUSH HEARING EXAMINER The issue is whether the respondents have been engaged in unfair or deceptive acts or practices in commerce in violation of the pro- 693-490--64---- Decision 59 F.

visions of Section 5 of the Federal Trade Act Commission Act (a) through the listing of fictitious "regular" and "list" prices as former prices on merchandise in advertisements offering the merchandise for sale at sale prices, (b) through the advertisement of written guarantee" on certain merchandise when a full guarantee thereon was never intended to be made by respondents. The proceeding was initiated by a complaint issued December 16 1960, and was reassigned to the present examiner July 19, 1961, for hearing and the issuance of an initial decision therein. Hearing was held on July 25 to 1961, inclusive, at 'Vashington, D.C. On September 1, 1961, counsel for respondents, with due notice to respondents, filed a motion to withdraw his appearance in behalf of the respondents, which was granted. On September 15, 1961, respondents moved to withdraw their original answer to the complaint in the proceeding and to substitute therefor a " Substitute Answer. The concluding statement of the motion reads as follows: "Respondents further state that no successor attorney has been or will be appointed by them and that they now appear in this proceeding in their own behalf and without counsel." By order of the examiner dated October 2, 1961, a respondents' motion to withdraw their original answer and file a substitute answer was granted. Under the substitute answer, the respondents elect not to further contest the allegations set forth in the complaint, and, in accordance with Section 4. 5 (b) (2) of the Commission s revised rules of practice, admit all material allegations of the complaint to be true. By stipulation filed September 15 , 1961, the parties submitted a proposed order, which they deem appropriate in the premises, for the consideration of the examiner. The proposed order is adopted and set forth below.

The facts in this matter, as adduced by the pleadings, the testimony, and the documentary evidence, are these. I-Iyman Kaplan and :Morris Kaplan, two of the three respondents, are individuals and copartners trading as Stewart Auto Upholstering Company, with office and principal place of business at 2525 :M Street, N.'V. , in 1Vashington C. The third respondent, Henry Kaplan of the same address, is manager of the partnership business. Respondents have at all times here pertinent bee.n engaged in the sale and distribution of automobile seat covers, convertible tops, and floor mats among other items, to consumers and other retailers in the District of Columbia in a substantial course of trade in "commerce" within the meaning of the Federal Trade Commission Act, and have been and are in substantial competition with other firms in the same Jines of business in the same sales area.

STEWART AUTO UPHOLSTERING CO. , ET AL. 1171 1167 Decision From time to time in recent years, respondents ran advertisements on their merchandise in newspapers of general circulation in the area in which they operate. These advertisements, for the purpose of inducing purchases, contained certain statements with reference to the merchandise offered for sale, of which the following are typical:

Full set-Front (a) "Diplomat" Plastiseal Seat Covers Reg. $18.95. $13.77 and Rear.

(b) "Diplomat" Plastiseal Auto Seat Covers-Regular $18.95-$13.95 with trade.

(c) "Country Club" Nyspun Auto Seat Covers-Regular $22.95--$17.95 with trade.

(d) Sensational Savings on Genuine "Rocket" Saran Seat Covers Reg. ~16.95-$12.77.

(e) "Rocket" Saran Seat Covers Regular $16.95-Today & Sat. $12.87. Saran Seat (f) Two Day Super Special! Amazing Low Price! "Atlas" Covers Regular $17.95-$13.87.

(g) Specially Priced! Deluxe 3-Ply convertible tops Vat Dyed Black or Tan-$29.95 with written guarantee.

(h) Less than price! Front and Rear 4-Pc. Floor Mat Set First time ever at this low price! Reg. $9.95-Monday Only $4.87. (i) (List for $7.95) Cushion Cap Cover $2.72. By means of the above-described newspaper advertisements and others of a similar or identical nature, respondents, directly or by implication, made certain representations which were in fact false misleading and deceptive, to wit:

(1) That the higher prices listed under the designation "Reg. "Regular" and "List" were the; prices at which the advertised merchandise had been usually and customarily sold by respondents at retail in the recent regular course of business and that savings amounting to the differenees between these higher prices and the lower sales price would result to purchasers. written guarantee" that (2) Through the use of the term "with certain of their convertible tops are fully guaranteed. '\Thereas in truth and fact:

(1) The higher prices listed under the designation "Reg. Regular" or "List" were not the prices at which the advertised merchandise had been usually and customarily "sold by respondents at retail in the recent regular course of business but were in excess of such prices, and savings amounting to the differences between such higher prices and the lower sales prices would not result to purchasers.

(2) Respondents' convertible tops are not fully guaranteed, but such guarantees contain terms and conditions not set forth in the advertisements.

Concl usiol1s 59 F.

CONCLUSION~S On the basis of the foregoing evidentiary findings of fact, the examiner conc.l udes :

(1) That the use of the aforesaid false, deceptive and misleading statements and representations has had and now has the tendency and capacity to mislead and dec.eive a substantial portion of the purchasing public into the erroneous and mistaken belief that said statements and representations \\~ere and are true, and to induce the purchase of substantial quantities of respondents' merchandise because of such erroneous and mistaken belief. As a result thereof trade in commerce has been unfairly eli-verted to respondents from their competitors, and injury has been done thereby to competition In commerce.

. (2) That the above-described acts and practices of the respondent were and are all to the prejudice and injury of the public a.nd of respondents' eompetitors, and constituted, and now constitute, unfair and deceptive acts and prnct.ices and unfair methods of competition, in commerce within the intent alld meaning and in violation of the Federal Trade Commission Act.

ORDER I tis onlered That respondents I-Iyman Kaplan and 1\lorris Kaplan individual1Jy and as copartners trading as Stewart Auto Upholstering Company, or any other name, and I-Ienry Kaplan, an individual, and respondents' representntiyes, agents and employees directly or through any corporate or other device, in connection \,'ith the offering for sale, sale or distriblJtion of automobile seat coyers, convertible tops, automobile fioor mats or any other merckmdise, in commerce, as "commerce is defined in the Federal Trade Commission Act., do forthwith cease and desist from: 1. Repre~,enting, directly or by implication: (a) That any price is respondents' usual retail price when it is in excess of the price at which the merchandise has been usually and customarily sold by respondents at retail in the recent, regular course of business.

. (b) That-the price at which respondents owner merchandise affords a savings to purchasers from the price at which said merchandise has been usually and customarily sold by respondents in the recent regular course of business unless such representation is true. 2. 1\lisrepresenting in any mannner the amount of savings avnilble to purchasers of respondents' merchandise, or the amount by which the price of said merchandise is reduced from the price at. THE VANDEVER CO. , INC. 1173 1167 Complaint which it is usually and customarily sold by respondents in the normal course of business.

3. Using the words "Reg. Regular" or "List " or any other word of the same or similar import to designate prices unless they are the prices at which the merchandise has been usually and customarily sold by respondents in the recent, regular course of business.

4. Representing, directly or by implication, that any of their products are guaranteed unless the nature and extent of the guarantee and the manner in which the guarantor will perform are clearly disclosed.

DECISION OF THE COl\DIISSION AND ORDER TO FILE REPORT OF COl\IPLL\NCE Pursuant to Section 4.19 of the Commission s Rules of Practice, the initial decision of the heating examiner shall on the 21st day of November 1961, become the decision of the Commission; and, accord- ingly: It t'.s o?Ylel' 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.