Lec Electric Company, Inc.

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IN THE MATTER OF LEC ELECTRIC COMPANY, INC., ET AL.

CONSER'!' ORDER , ETC. , IN REGARD TO TJ-Uj ALLEGED VlOLA'lON OP THE FED- ERAL TR.\DE co::nIISSION ACT Docket C-92. C01npla' int, Ma?' 1D6:2-Decision, Mar. 19G2 Consent order requiring Dallas, Tex., distributors of automobile parts to jobbers and retailers for resale to cease sellng- automobile parts which they had re built or reconc1itioned without any marking or other disdosnre to show their used nature, a1Hl with only small inconspicnons notice, if any, on cartons, far removed from the name of the parts; advertising such products without such disdOSl1re as they did in "The Independent Garageman, a trade paper of wide circnlatioI1; and failng to make disclosure of used nature in invoices listing rebuilt parts.

CO:ifPLAINT 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 reason to believe that Lec Electric Conlpan)', Inc. , a corponltion, and Lec Albert ,Yens, inc1ividualJy and as an offcer of said corpora.tion hereinl1after 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 int.erest, hereby issues its complaint stating jtg charges in that respect as follo1;S:

PARAGRAPH 1. TIespondent Lec Electric Company, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Texas, v,ith its principal office and place of business locat.ed at 2615 Good-Latimer Expressway, P. O. Box 9067 in the city of Dalias, State of Texas.

Respondent Lee Albert "'Veils is an ofleer of the corporate respondent. lie formulates the policies and directs and controls the acts and practices of the corporate respondent, including the acts and practices hereinaft.er set forth. Iris address is the same as that of the corporate respondent.

PAn. 2. Hespondcnts are nmy, and for some time last pa.st Imve been engaged in tho advertising, offering 1'01' sale, sale and distribution of automobile parts to distributors and jobbers and to retailers for resale to the public.

PAR. 3. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their sa.id products when sold, to be shipped from their p1aec of business in the State of Texas to purchasers thereof located in various other S t.at.es of the 492 FEDERAL TRADE com nSSION DECISIOKS Complaint GO F.

United States, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in said products ill commerce, as "commerce" is defined in the Federal Trade Commission Act. PAR. 4. In the course and conduct of their said business, respondents purchase used automobile parts which they rebuild or recondition and sen thenl to various dealers. ViThen said parts are offered for sale and sold to dealers for resale to the ultimate purchaser they have the appearance of being 11mv and unused. Some of said pnxt-s when offered for sale and sold as aforesflic1 bear no label, marking or other disclosure stamped thereon or attached thereto to show that they ate jn fact rebuilt or reconditioned parts. The cartons or packa.ges in which said parts are offered for sale and sold feature in bold print the name of the parts contained therein. The fret that said parls are rebuilt or reconditioned, if disclosed at all, appears in small inconspicuous print far removed from the name of the parts involved. \R. 5. "\Vhen articles which are assembled or mrmufactul'cc1 in whole or in part from previously used materials in such a manner that they have the appearance of being assembled or rnannfacturec1 from new and previously unused materials ate oflerec1 to the purchasing p11blic, and such articles are not clearly and conspicuously marked or Jabeled as having been assembled or manufactured from previously used materials, they are readily accepted by members of the purchasing public as having been assembled or manufactured entirely from new and previously unused materials.

PAR. 6. Respondents advertise their business and products in a trade paper of wide circulation called "The Independent Gamgeman . Some of respondents' said advertisements contain no reference to the fact that said parts are rebuilt or reconditioned part.s. Paint. 7. The invoices used by respondents in connection with the sale of their said parts contain the statement "Automotive Parts Hebuilders" and a reproduction of the Automotive P,uts Rebuilding Association s membership symbol. Jlowever, no disclosure appears in the bodies of said invoices that the parts listed therein are rebuilt or reconditjoned parts.

PAR. 8. By the aforesaid acts and practices, the respondents place in the hands of dealers and others the means and instrumentalities whereby said persons may deceive or mislead members of the purchasing public into the erroneous and mistaken belief that. they are purchasing automobile p ltt.s manufactured entirely from new and previously unused component parts, ,vhen in fact said parts are composed wholly or in part of old or previously used component parts. PAR. 9. In the conduct of their business, at. all times mentioned LEG ELECTRIC CO., INC. , ET AL. 493 491 Decision and Order herein, respondents have been in substantial competition, in commerce ,with corporations, firms and individuals engaged in the business of manufacturing and selling automobile parts of the same general kind and nature as those sold by respondents.

PAR. 10. The failure of respondents to disclose in a clear, permanent (l,nd conspicuous manner in their advertising, on their invoices and cartons, and on the parts themselves that their said automobile parts are rebuilt or reconditioned parts, when such is the fa, , has had and now has the capacity and tendency to mislead and deceive a subst.antial portion of the purcha.sing public into the erroneous and mistaken belief that said parts sold by thenl were, and are, new parts assembled or manufactured entirely from new and previously unused paris, and to induce a substantial portion of the purchasing public to purchase substantial quantities of respondents' said parts because of such erroneous and mistaJ;.:en belief.

PAH. 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 constitute unfair methods of competition in commerce and unfair a,nd deceptive acts and practices in commerce, in violation of Section 5(a) (1) of the ederal Trade Commission Act.

DECISIQX AXD ORDER he Commission having hereto010re determined to issue its compla.int charging the respondents named in the caption hereof with violation of the Federal Trade Commission Act, and the respondents having been served with notice of said determination and ,with a copy of the complaint the Conunission intended to issue, together with 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 forth in the complaint to issue herein, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as set forth in such complaint, and waivers and provisions as required by the Commission rules; and The Commission, having considered the agreement, hereby accepts same, issues its complaint in the form contemplated by said agreement makes the following jurisdictional findings, and enters the following order:

494 FEDERAL CfRADE COMMISSIO DECISIONS Decision and Order 60 F.

1. Respondent, Lee Electric Company, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Texas, with its oITce and principal place of business located at 2615 Good-Latimer Expressway, P.O. Box 9067, in the city of Dallas, State of Texas.

Respondent Lee Albert "IV sells is an offcer of said corporation. His address is the same as that of said corporation. 2. The Federal Trade Commission has j urisdietion of the sllbj eet matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is O1'dered That Lee Electric Company, Inc., a corporation, and its offcers, and Lee Albert "IV sells, individually and as an ollieer of said corporation Lnd respondents' representatives, agents and ellployees directly or through any corporate.e or other device, in connection with the oiIeTing for sale, sale and distribution of aut.omobile parts ill commerce, as "comlllerce" is defined in the Fede-ral Trade Comnlission Act do forthwith cease and desist from:

1. Offering for sale, selling or delivering to others for sale to the public, any used automobile part or any automobile part containing a used eomponent part or parts, unless a clear and conspicuous disclosure of such prior use is made on the product in a location most readily noticeable to tho purchaser and "\ith suffcient pennanency to rClmlll1 thereon after installation for a reasonable period of time under ordinary conditions of use, and in such mamler that said disclosure cannot be easily removed or oblite,rated; and unless there is clearly and conspicuously printed or nIfrked on the box, carton wrapper or other container ill Ivhich said product is sold or offered for sale., It notice that said autOll1obile part is a used part or contains it used component part or parts.

2. Representing that any used automobile part, or any aut.omobilo part containing a used component part or parts, is ncw by failing clearly and conspicuously to disclose such prior use in invoices, and in all advertising and sales promotional material disseminated therefor.

3. Furnishing moans or instnunenbllities to others by and through which they may mislead the public as to any of the matters and things prohihited in paragra phs 1 and 2 hereof.

It is f'twther ordered That the respondents herein shall, Ivithln 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 forrll in which they have complied with this order. MANCO \VATCII STRAP CO. , INC. , ET AL. 495 Complaint