Diana Stores Corporation

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IN THE lia TTER OF DIAXA STORES COIlPORATIOX CUX.-.EXT nHDER ETC. , IN HEG"\TID TO THE _\LLua:D YIOL..\.TWX OF THE FEnER. L TR. DE COl\DIISSIO:rT .ACT Docket 0-744. Complaint, May 1.964-Deoision, May, 1964 Cun:,ent order requiring a Kew York Cit.y corporate openHor of numerous department stores in various States under the trade name " Great Eastern Mills to cease representing falsely that it manufactured the clothing and other merchandise it sold, by use of the word ":Mils" in its corporate or trade Dame or in any other manner.

C01\PLAI Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Tra,de Commission, having reason to believe that Dia.na. Stores Corporation, a corporation, hereinafter referred to as respondent, has 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 Issue3 its complaint stating its charges in that respect as follows:

P ARAGlL'.1'H 1. Respondent Diana Stores Corporahon is a corpora tion organized, existing and doing business under and by virtue of the lavi' s of the State of New Yark, with its principal oftce and place of business located at 450 Vest 41st Street, New York 36, New York. PAR. 2. Respondent is now, and for several years last past has been engaged in t.he operation, in various States of the -United States, of numerous department stores using " Great Eastern lil1s" as a trade name.

Said Great Eastern :Mms stores are operated as a division of Diana Stores Corporation. They are self-service operations which include the use of shopping carts and central check-out systems. Through said stores respondent sells clothing and other merchandise t.o the purchasing public PAR. 3. In the course and conduct of it.s business, respondent now causes, and for some time last. past has caused, its said merchandise to be shipped from its headquarters in ew York to its several stores in various other States of the United States, for sale to the purchasing public. In such instances shipme.nts are made to respondent's stores in States other' than that in which such shipments have originated, and respondent maintains and at all times mentioned herein has main- DIANA STORES CORPORATION 641 640 Complaint tained, a substantial course of trade in said merchandise, in commerce as "commerce is defined in the Federal Trade Commission Act. Respondent also causes advertisements and other promotional material to be shipped from its place of business in the State of New York to its stotes in various other States and lnaintains a substantial commercial intercourse between its headquarters in e1V York and its stores in other States consisting of the transmissi.on and receipt of numerous commercial documents, reports and information. Respondent s buying, merchandising and advertising departments, warehousing operations and receiving inspecting, packing and shipping depart ments, serving all of its stores, are located at its headquarters. PAn. 4. In the course and conduct of its business, as aforesaid, and and for the pur.pose of inducing the ,purchase of its merchandise which had been shipped and received in commerce, as "commerce" is defined in the Federal Trade Commission Act, respondent has used the name Great Eastern :Mills" in advertisements of its merchandise in ne\vspapers having general circulation in various States of the United States.

PAR. 5. Through the use of the word "mills" as part of the respondcnt' s rtrade name, respondent represents that it owns or operates R mill or factory in which.h the clothing and other merchandise sold by it are manufactured.

PAR. u. Said representation is false, misleading and deceptive. In truth and in fact respondent does not own or operate the lnill or factory in which :the clothing and other merchandise sold by it are manufactured but buys from manufacturers and others for resale to the purchasing public.

PAR. 7. There is a preference on the part of many members of the purchasing public to buy merchandise, inc.11ding clothing, direct from factories or mills, believing that by so doing lower price'-S and other advantages thereby accrue to them, a fact of which the Commission takes offcial notice.

PAR. 8. In the conduct of its business, at all times mentioned herein respondent has been in substantial competition, in commerce, 1With corporations, iirms and individuals in the sale of clothing and other merchandise of the same general kind and nature as that sold by respondent.

PAR. 9. The use by respondent of the aforesaid false, misleading and deceptive statements, representations and practices has had, and now has, the cfLpacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief t.hat said statements fl1d representations were and are true ancl into the purchase of substantial 642 FEDERAL TRADE COi\LMISSION DEClSIO Dedsiol1 and .order 65 F.

quantities of respondf',nt' s products by reason of said erroneous and mistaken belief.

PAR. 10. The aforesaid acts and practices of respondent, as herein alleged, were and are all to the prejudice and injury of the public and of respondent's competitors and constituted, and now constitute, unfair methods of competition in commerce and unfair and dec.eptive acts and practices in commerce in violation of Section 5 of the Federal Trade Commission Act.

DECISION AXD ORDER The Commission having heretofore determined to issue its complaint charging the respondent ll:uuec1 in the caption hereof with -violation of the Federal, Trade Commission Act, and the. respondent hav ing been served with notice of said determinat.ion a,uel "with a copy of the complaint the Commission intended to issue, together with a proposed form of order; and The respondent and counsel for the Commission having therca Iter executed an agreement containing a consent order, an admission by respondent of all the jurisdictional facts set forth in the complaint to issue herein, n .statcment that. the signing of said agreement i for ;settlement purposes only a.nd does not constitute an admission by respondent that the law has been violated as set forth in such complaint a.nd waivers and provisions as required by the Commission s 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 fol. lowing order:

1. Respondent Diana Stores Corporation is a corporation organized existing and doing business under and by virtue of the la,,"s of the State of N ew York with its offce ancl principal place of business located at 450 West 41st Street in the city of New York, State of Xew l( ork.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the pllblic interest.

OHDEn It 1:8 01Ylered That respondent Diana Ston$ Corporate,ioll, a corporation, and its officers and respondent's represent 1tives, agcnts and employees, directly or through any corporate or other device, in connection with t.he offering for sale, sale or distribution of clothing or any other merchandise in commerce, as "comnlerce" is defined in the Fed- , .

AMERICAN FOODS, I:\TC" ET AI.., 643 640 Complaint eral Trade Commission Act, do forthwith cease and desist from using the word "11111s" or any other word of similar import or meaning in or as a part of respondent's corporate or trade. name or representing in any manner that respondent is a manufacturer of the clothing and other merchandise sold by it unless and until respondent owns and operates or directly and absolutely controls a manufacturing plant wherein such clothing or other merchandise is made; provided, however, that should respondent so desire Tor reasons of continuity, it may use the identifying phrase "formerly Great Eastern l\1:i11s ' or words of similar import in its advertising for a period not to exceed six months from the effective date of this order. It i8 furthe?' mylered That the respondent herein shall, within sixty (60) days after service 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 this order.

Ix THE j\1A Tl"ER A)1ERICAN FOODS, INC., ET AL.

CONSENT ORDER ETC. , r::-r REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE CQ::B;nSSION ACT Docket C-71,:;. OOllplaint, JIa.y 9G4-Deoision, May 1." 1964 Consent order requiring three associated corporations witll headquarters in St. Paul Minn., and operating in :\'Iinnesota, Iowa, and :!orth Dakota, respec. tiyely, to cease llilking false representations in advertising by radio in cODnectioll with their sale of freezers and foods by lleans of a "Freezer-Food Plan " including claims of savings to purchasers, wholesale prices for their food, griarantees, assistance of "food consultants" in planning food orders, financing find size of operations.

COMPLAINT Pursua.nt to the provisions of rhe Federal Trade Commission Act and by virt.ue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that American Foods Inc., ,1, corporation of St. P Llll, l\linnesota (formerly American Food Plant of .ilinncsota, Inc. ), American Food Plan of IOIva, Inc., a. cor poration, Anlerican Foods of Korth Dakota, Inc., a corporation, and "\Valter L. Lange, individually a.nd as an oificer of said corporations tradjng and doing business as A.american Foods, Inc., American Foods Americ.an Food Plan, A.lTIerican Foods Plan, Inc. , a,nd American Foods Service, Inc., here.inafter referred to as respondents, have via. 644 FEDERAL TRADE CO)'L\nSSIO DE CISIONS Complaint 65 F.

lated the pl'wisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof \rollld be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

PARAGRA.Pl- 1. Respondent American Foods, Inc., is a corporation organized, existing flnd doing business under and by virtue of the la\\' of the State of Minnesota, with its principal offcc and place of business located at 1255 East I-lighway 36, St. Paul, l\finnesota., which corporation was formerly known as Anlcrican Fooel Plan of l\finncsota. Inc.

Respondent American Food Plan of Iowa" Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Iowa, with its principal place of business located at ;:W7 University A yeUllG, Des :Moines, Imva. Respondent American Foods of North Dakota, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of :I orth Dakota, with its principal offce and place of husiuess loc'Rted at 7:7 20th St. :I., Flu' , Korth Dakota. Respondent "Talter L. Lange is the chief exeeutiye ollcer of all the corporate respondents a,nel he formulates, directs and controls the acts and practices of said respondents induc1ing the acts and practices hereina-ftca set forth. In addition, in his individual capacity from time to time, he has trnded and clone business as American Foods Tnc., American Foods, American Food Plan, American Food Plan Inc., and American Foods Service, Inc. His business address is the same as t.hat of the corporate re,spondents. His home address is 1282 Sherlmrne A venuc, St. Paul 4, JIinnesota.

PAn. 2. Respondents are now and for some time last past., have been engaged in the advertising, offering for sale., sale and distribution of freezers and foods by means of R so-mlled Freezer-Food Plan. P "\R. 3. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their freezers and food when sold, to be shipped from their places of business respectively in the States of Minnesota, Iowa and Korth Dakota to purchasers thereof located in various other States of the Gnited States, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in said freezers and food in commerce as " cOmInBrCC is defined in the Federal Trade Commission Act. PAR. 4. In the course and conduct of their business, at all t.times mentioned herein, respondents have been in substantial-competition, in comm2rce wit.h corporations, firms and inchviduals in the sale of freezers, food and freezer-food plans.

PAR. 5. In the COUTse and conduct of their business: respondents have diss2minated, and caused the disseminat.ion of, certain ad \'crtisements ;

AMERICAN :FOODS, INC. , ET AL. 645 643 Complaint concerning the said food and freezer- food plan 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 adve.rtisements by means or circulars, brochures, and by radio broadcasts, by stations having suffcient pmver to carry such broadcasts across state 1inps, ror the purpose or inducing, and which ,,,ere likely to induce, directly or indirectly: the purchase of food, as the term food" is defined in the Federal Trade Commission Act; and have disseminated lind ca.used the dissemination of advertiscments by various means, including those aforesaid, for the purpose of inducing, nnd which were likely to induce, directly or indirectly, the purchase of food and freezers in commerce, as "commerce" is defined in the Fcde.ra.l Trade Commission Act.

PAR. o. By means of advertisements disseminated, as aforesaid and by the oral statements of sales representatives, respondents have represented, directly or by implicntion:

1. That "food counselors" or "consultants" ,,,ill assist purchasers of the aforesaid freezer-food plan in planning t.their food orders; 2. Thilt the freezer or any part thereof and the food arc fully and uncondit.ionally glla-ranteed under the contract; 3. That purchasers of the aforesaid freezer- food plan will receive their food requirements and a freezer for the same or Jess money that they have been paying for food alone;

4. That purchasers can save enough on the purchase of food to pay for the freezer;

5. That purchasers can become a member of a freezer-food plan on a trial basis;

6. That respondents sell their food at wholesale prices; 7. That respondents are the oldest and largest food service in the 1:fidwest serving more than 18 000 families in :Minnesota, 'Visean sin Iowa a.nd North Dakota;

8. That purchasers participation in the aforesaid freezer-food plan will continue for a "lifetime 9. That respondents have established a reserve fund or posted bond, the benefits of which are available to purchasers as a guarantee of continuous service;

10. That purchasers will realize savings in their food purchase,s of 25 to 40% on food purchases under the aforesaid freezer-food plan; 11. That installment contracts for the purchase of the aforesaid reezer-Food Plan, freezers or food, are financed or carried by corporato respondents and win not be sold or discounted to others; 12. That sales contracts offered to purchasers for signature contain all the terms or conditions of sale.

646 FEDERAL TRADE CO::I lission DECISIOXS Complaint 6:: F. PAR. i. In tmth and in fact:

1. The individuals sent to help purchasers of the aforesaid freezeror:food plan in planning their food orders are not "food counselors" consultants . They have not had suffcient or proper training or experience t.o warrant being referred to as "food counselors': or "consulta,nts:' or any other llame \dTich would imply special qualifications in the field of home economics.

2. The freezer or any patt thereof and the food are not fully or unconditionally guaranteed under the contract. 3. Purchaers of the aforesaid freezer-food piau do not receive a freezer and their food requirements for the same or less money than they had been I"'ying for food alone.

.,. Purchasers of the afore::aid freezer-food plan cannot save enough mOlWY on the pl1rehHs of food to pay for the freezer. J. Purchase:'s of the aforesaid freezer-food plan will not be able to enter the plan on a trial basis, but they arb bound by the original provjsions of the contract.

6. Respondents do not sell their food to purchasers of the "Joresaid freeze1' food plan at wholesale prices.

7. The respondents are not the oldest or the largest foon service in the :Miclwest, moreover, respondents do not serve 1nore than 18 000 falnilies in ::linnesota, vVisconsin, Iowa and N orih Dakota. 8. Purchasers are not assured that they will be able to purchase food From the aforesaid freezer- food plan Tor a "lifetime 9. Respondents have not established a reserve fund or posted a bond t.he benefits or proceeds of which are available to purchasers as guarantee or continuous service.

10. Purchasers of the aforesaid freezer-food plan do not realize savings of 25 to 40% on their food bils.

11. Respondents have solei or discounted purchasers' installment contracts to others despite their representation to the contrary. 12. All of t.he terms and conditions of sale are not always disclosed at the time of a sale, and in many instances contracts are not completely filled in at the time of a sale and wl,en later filed in and sent t.0 PUl'Chil.sers, the. terms or conditions thereot are not the same as prc'iionsly agreed to hy t.he purchasers.

Therefore, the advertisements referred to in P:ll'ftgraph Five were Hnd are misleading in material respccts and constituted, and now constitute "false advertisements" as that. term is defilled in the Federal Trade Commission Act, flnd the stat.ement.s flnd representations rcferred to in Pa:'agraph Six IYere, flnd nOlY are, false, misleading and deceptive.

Pall S. The use by respondents of the aforesaid false, misleading and deceptive state.me.nts, representaiinlls a.nd practices has l1ac1, and no" , , A:\IERICA FOODS, I ":C. , ET AL. 647 643 Derision ':l1l Onkr , t.he c.apacity and tendency to mislead members of the purchasing pubhc into the erroneous and misbken belief that said statements and representations were and are true and int.o the purchase of substantial quantities of freezers, food and freezer-food plans from respondents by reason of said BlToncons and mistaken belief. P .AR. 9. The aforesaid acts and practices of respondents, as herein alleged, including the disseminabon by respondents of false advertisements as aforesaid were, and are, all to the prejudice and injury of t.he public. and of respondent.s' competitors and constituted, and now constit.ute, unfair methods of competition in commerce and unfair and c1ecBpt.ive acts and practices, in conunerce within the intent and meaning of the Federal Trade Commission Act, and in violation of Sections 5 and 12 of said Act.

DECISION AXD OnDEH The Federal Trade Commission having initiated an investigation of ce,rta.in acts and prac.tices of the respondents named in the caption hereof, and the respondents ha:ving been furnished thereafter with a copy of a draft of complaint which the Bureau of Deceptive Practices proposed to present to the Commission for its consideration and which if j sued by the Commission would charge respondents with violation of t.he Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter C'uted an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid dra.it, of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by the respondents that the law has been 'Fiolatecl as alleged in such complaint, a.nd waivers and provisions as require.d by the Commission rules: flnd The Commission, having reason to believe thflt the respondents han') violated the Federal Trade Commission Act., and having determined that cOlnplaint should issue stating its charges in that respect he.reby issues its complaint, accepts said agreement, makes the following jurisdictional findings, and enters the follmving order: 1. Respondent American Foods, Inc., formerly known as American Food Plan of )1inllesota, Inc.., is a corporation orgnnjzed: existing a.nd doing busjness unrle.r and by virtue of the laws of the State of :Minnesota, with its offce and principal place of business locH/ell at 1263 East :Highway 36, St. Paul, l\linnesota. Respondent American Food Plan of Iowa, Inc., is a corporate.ion ol'~ ganized, existing and doing business under and by virtue of the laws of the. State of IO\va, ,with it.s offce and principal place of Dusine,s8 located at 3:37lTniversity L\. venue, Des :Jloines lowa. 648 FEDEllAL TllADE CO:vMISSIO DECISIONS Decision find Orde- 6;; F. Hespondcnt American Foods of )forth Dakota, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Korth Dakota, veith its principal phce of business located at 737 20th Street Fargo, Xorth Dakota. Respondent 'Walter L. Lange is the chief executive offcer of all of the corporate respondents. The business address of the said 'Valter L. Lange is the same as the corporate address of _ meriean Foods, Inc. and his home address is 1282 She-rbul'n8 Avenue, St. Paul 4, :Minncsota. 2. The Federal Trado Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proc.eecling is in the public interest.

ORDER PAHT I It is o-rdered That respondents American Foods, Inc., a corporation American Food Plan of Iowa, Inc., a corporation, American Foods of N orih Dakota, Inc., a corporation and their offcers, and "TaIteI' L. Lange individually and as an offcer of said corporations, and respondents' agents, representat.ives and mnployees, directly or through any corporate or other device in or in connection with the offering for sale, sale or distribution of freezers, food or freezer-food plans, or other merchandise, in commerce as "COllllnel'c.e " is defined in too Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing, directly or by lmplication that: (a) A "food counselor" consultant or other formally trained jndividual will assist purchasers of the aforesaid Freezer-Food Plan in planning their food orders; (b) The freezer or any part thereof or the food are guaranteed in any manner, unless the nature and extent of the guarantee, and the manner :in which the guarantor win perfornl thereunder are clearly and conspicuously disclosed in immediate conjunction with a,ny such representat.ion; (c) By purchasing their Freezer-Food plan purchasers can purchase their food requirements and a freezer for the same or less money than they have been paying for food alone; (d) Purchasers of their freezer-food plan can save enough money on the purchase of food to pay for a freezer; (c) Purchasers can enter the Freezer-Food Plan on a trial basis;

(f) Purchasers of a freezer-food plan can buy their food from respondents at wholesale prices.

, ,, AMERICAN J. OODS INC. , ET AL. 649 643 Decision and Order 2. Representing that respondents arc the oldest food service in the Midwest.

3. Representing that respondents are the largest food service in the )fidwest.

4. Representing that purchasers a.re entitled to participate in the freezp,r-food plan for a "lifetime.

5. Representing that respondents selTe any stated number of families unless re.spondents actually serve the number represented. 6. Representing that respondents have established a reserve fund or posted a bond the benefits of which are available to purehasers as a guarantee to continuous service unless respondents do in fact have such a fund or bond available and unless the said fund or bond is made available all purchasers of respondents product as a guarantee to continuous service. 7. Representing, directly or by iInpJication, that purchasers contracts: (a) Are fina.need or carried by corporate respondents and (b) wiJj not be sold or discounted to others unless respondents establish in every instance here the re,presentation has boon made that the installment contract has been earried by corporate respondent.s and has not been sold or discounted to others 8. l\'Iisrcprcsenting in any manner the savings realized by the purehasc of the freezer- food plan.

D. Obtaining purcha.sers' signatures on sa.les contrac.ts which contracts do not at that time c.contain an of the tenllS or conditions of sale.

r ART II , a 1 t is lU/f'ther o7'dered That respondents American Foods, Inc. corporation, American Food Plan of Iowa, Inc., a corporation, Ameriea.n Foods of X orth Dakota, Inc., a corporation, and their offcers, and \Valter L. Lange individually and as an offcer of said corporations a.nd respondents' agents, representatives and employees, directly or through any corporate or other device. in or in COl1w.ction with the offering for sale, sale or distribution of any food or purchasing plan involving food, do forthwith cease and desist from: 1. Disseminating or causing to be disseminated, any advertisement by means of the LTnited St.ftcs mails or by any means in commerce, as "commerce" is defined in the Federal Trade Commission Act, which advertisement contains any representation or misrepresentation prohibited in Paragmphs 1 through 8 of Part I of this order.

2. Disseminating or causing the dissemination of any advertisen1ent by any Inea,ns for the purpose of inducing or which is 313-121--70-- , .

650 FEDERAL TRADE COll'MlSSION DECISIONS Complaint 63 F.

likely to induce, directly or indirectly, the purchase of ally food or any purchasing pla.n involving food in commerce, as "com merce" is defined ill the Federal Trade Connnission Act, which advertise,ment contains any of the representations or misrepresentations prohibited in Paragra phs 1 through 8 of Part I of tills order. It w fnr-thel' ordered That the respondents herein shall, within sixty (60) days ,deter service upon them of this order, ile with the Commission a report in writing setting forth in detail t.he manner and form in which they have complied with this order.