Aluminum Shingle Company, Inc.

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

IN THE MATTER OF ALL.MINUM SHINGLE COMPANY, INC., ET AL.

CONSENT ORDER, ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-l()74. Complaint, Jv"ne 14, 1966-Decision, June 14, 1966 Consent order requiring a Great Bend, Kansas, home improvement firm, to cease using deceptive pricing and savings claims and other misrepresentations to sell its residential siding, roofing, and other products to the public.

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 Aluminum Shingle Company, Inc., a corporation, and Robert K. Marmie and John R. Soden, individually and as offcers 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:

PARAGRAPH 1. Aluminum Shingle Company, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Kansas, with its principal offce and place of business located at 1013. McKinley Street, in the city of Great Bend, State of Kansas.

Respondents Robert K. Marmie and John R. Soden are offcers 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 for some time last past have been, engaged in the advertising, offering for sale, sale and distribution of residential siding, roofing and other products 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 said products, when sold, to be shipped from their place of business in the State of Kansas to purcbasers thereof located in various other 31. FEDERAL TRADE COMMISSION DECISIONS Complaint 69 F.

Stutes of the United States, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in is defined in thesaid products in commerce, as "commerce'1 Federal Trade Commission Act.

PAR. 4. In the course and conduct of their business, and for the purpose of inducing the purchase of their products, respondents have, by statements and representations in advertisements in various publications, in direct mail advertising, and by direct oral solicitations made by respondents or their salesmen or representatives, represented, directly or by implication, that: (1) Respondents' products are being offered for sale at special or reduced prices, and that savings are thereby afforded purchasers from respondents' regular seJJng price. (2) Purchasers of respondents' products wi1 receive enough bonuses or commissions under the terms of respondents' supplemental contract to obtain respondents' products at little or no cost.

(3) Homes of prospective purchasers had been specially selected as model homes for the installation of respondents' products; after installation, such homes would be used as points of reference or demonstration by respondents; and, as a result of allowing' their homes to be used as models, purchasers would be granted reduced prices or would receive allowances, discounts or commissions.

(4) Respondents' products wil last a lifetime and wi1 not require repainting or repairs.

(5) Respondents' salesmen or representatives are special representatives from the Kaiser Aluminum and Chemical Corporation thereby implying that purchasers would be dealing directly with the manufacturer.

PAR. 5. In truth and in fact:

(i) Respondents' products are not being offered at a special or reduced price and savings are not granted respondents' customers because of a reduction from respondents' regular sellng price; in fact, respondents do not have a regular selling price but the price at which respondents' products are sold vary from customer to customer depending on the resistence of the prospective customer. (2) Few, if any, of respondents' customers receive enough bonuses or commissions under the terms of respondents' supplemental contract to obtain respondents' products at little or no cost. (3) Homes of prospective purchasers are not specially selected as model homes for the installation of respondents ' products; ALUMINUM SHINGLE CO. , INC., ET AL. 813 811 Decision and Order after instanation, such homes are not used for demonstration or advertising purposes by respondents; and purchasers, as a result of anowing their homes to be used as models, were not granted reduced prices, nor did they receive anowances, discounts or commissions.

(4) Respondents' products wil not last a lifetime and wil require repainting and repairs.

(5) Respondents' salesmen or representatives are not representatives of the Kaiser Aluminum and Chemical Corporation and purcliasers do not deal directly with the manufacturer of such products but with respondents.

Therefore, the statements and representations as set forth in Paragraph Four hereof were, and are, false, misleading' and deceptive.

PAR. 6. In the conduct of their business, and at all times mentioned herein, respondents have been in competition, in com.. merce, with corporations, firms and individuals in the sale of resi,. dential siding, roofing and other products, of the same general kind and nature as that sold by respondents. PAR. 7. The use by the respondents of the aforesaid false, misleading and deceptive statements, representations and practices had, and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations were and are true and into the purchase of substantial quantities of respondents' products by reason of said erroneous and mistaken belief. PAR. 8. The aforesaid acts and practices of respondents, as here.. in 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 and deceptive acts and practices in commerce, in violation of Section 5 of the Federal Trade Commission Act. DECISION AND ORDER Tbe Federal Trade Commission having initiated an invest;ga.. tion of certain acts and practices of the respondents named i" the caption hereof, and the respondents having 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 issued by the Commission, would charge respondents vdth violation of the Federal Trade Com j8.sion Act; and 814 FEDERAL TRADE CO !MISSION DECISIONS Order 69 F. T.

The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of a1J the jurisdictional facts set forth in the aforesaid draft 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 violated as a1Jeged in such complaint, and waivers and provisions as required by the Commission s rules; and The Commission, having reason to believe that the respondents have violated the Federal Trade Commission Act, and having determined that complaint should issue stating its charges in that respect, hereby issues its complaint, accepts said agreement makes the fo1Jowing jurisdictional findings and enters the fo1Jowing order:

I. Respondent Aluminum Shingle Company, Inc. , is a corporation organized, existing and doing business under and by virtue of the laws of the State of Kansas, with its offce and principal place of business located at 1013 McKinJey Street, city of Great Bend, State of Kansas.

Respondents Robert K. Marmie and John R. Soden are offcers of said corporation and their address is the same as that of said corporation.

2. The Federal Trade Commission has .i jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the puhlic interest.

ORDER It is ordered That respondents Aluminum Shingle Company, Inc. , a corporation, and its offcers, and Robert K. Marmie and John R, Soden, individual1Jy and as offcers of said corporation and respondents' representatives, agents, and employees, directly or through any corporate or other device, in connection with the advertising, offering for sale, sale or distribution of residential siding, roofing, or other products and services, in commerce, as commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from, representing, directly or by implication, that:

1. Any price for respondents' products is a special or reduced price, unless such price constitutes a significant reduction from an established se1Jing price at which such products ALUMINUM SHINGLE CO. , INC. , ET AL. 815 811 Order have been sold in substantial quantities by respondents in the recent, regular course of their business or misrepresenting, in any manner the savings available to purchasers. 2. Respondents ' customers, under the terms of respondents' supplemental contract or by any other means, are able to obtain respondents' products at little or no cost. 3. Respondents' customers will receive bonuses or commissions or compensation in any amount: Provided, however That it sha1J be a defense in any enforcement proceeding instituted hereunder, for respondents to establish that said customers have regularly and consistently received earnings or compensations in such amount in the regular course of respondents' business.

4. The home of any of respondents' customers or prospective customers has been selected to be used or wil be used as a model home or otherwise for advertising purposes. 5. Any a1Jowance, discount or commission is granted by respondents to purchasers in return for permitting the premises in which respondents' products are to be installed to be used for model homes or demonstration purposes. 6. The products sold by respondents wil last a lifetime or will never require repainbng or repairs; or misrepresenting, in any manner, the effcacy, durability or effciency of respondents' products.

7. Respondents' salesmen or representatives are representatives of the Kaiser Aluminum and Chemical Corporation or that purchasers are or wi1J be dealing directly with the manufacturer; or misrepresenting, in any manner, the status or affliation of respondents' salesmen or the manufacturer or the source of any of respondents' products. It is furthe1' ordered That the respondents herein sha1J, 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. Complaint 69 F. T.