Sunflower Chinchilla Company

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IN THE MATTER OF SUNFLOWER CHINCHILLA COMPANY ET AL.

CONSENT ORDER, ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-l100. Complaint, Aug. 1966-Decision, Aug. 29 1966 Consent order requiring copartners of Great Bend, Kansas, operators of a chinchila breeding ranch to cease misrepresenting the production and quality of their chinchila breeding stock and exaggerating the earnings purchasers can expect.

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 Sunflower Chinchila Company, a partnership, and Alvin Gerstner and Robert K. Marmie, individual11y and as copartners, trading and doing business as the above partnership, 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. Respondents Alvin Gerstner and Robert K. Marmie are individuals and copartners trading as Sunflower Chinchila Company, with their principal offce and place of business located at 1013 McKinley Street, Great Bend, Kansas 67530. PAR. 2. Respondents are now, and for some time last past have been, engaged in the advertising, offering for sale, sale and distribution of chinchila breeding stock to the public. PAR. 3. In the course and conduct of their business, respondents Complaint 70 F.

now cause, and for some time have caused, their said chinchilas when sold, to be shipped from their place of business in the State of Kansas to purchasers thereof located in various other States of the United States, and maintain, and at all times mentioned herein have maintained, a substantial course of trade of said chinchillas in commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 4. In the course and conduct of their business, and for the purpose of inducing the sale of their chinchilas, the respondents make numerous statements and representations in television and direct mail advertising and through the oral statements and representations of salesmen to prospective purchasers of chinchilas with respect to the breeding, pelting and profits from the sale of said chinchilas.

Typical and ilustrative, but not all inclusive of the statements made in respondents' direct mail and television advertising, are the following:

Many ranchers start successfully in their own basements, garages, and even the spare bedroom, the only requirement being that the temperature be held at a fairly constant level and fairly cool. That is why the basement is such an ideal place.

All of Sunflower chinchila breeding stock have been prejudged and sem lected to insure that all of our new ranchers are getting quality stock to start off their new business.

People who have purchased chinchilas in the past and had DO experience with chinchilas have made a great success. We feel that there is no other known industry which would show such tre mendous and continued earning power with equal maximum of safety than raising chinchilas of a superior quality and under the proper management. We consider chinchila farming as safe or safer and far more profitable when properly conducted than most investiments or other lines of business. There is no experience needed in order to succeed. PAR. 5. Through the use of the above quoted . statements and representations, and others of similar import and meaning but not expressly set out herein, separately and in connection with oral statements and representations made by respondents' salesmen and other representatives in direct sales presentations to prospective purchasers, respondents represent, and have represented, directly or by implication, that: 1. It is practicable to raise chinchillas in the home and large profits can be made in this manner.

2. The breeding of chinchilas for profit requires no previous knowledge or experience.

SUNFLOWER CHINCHILLA CO. ET AL. 539 537 Complaint 3. Chinchila breeding stock sold by respondents is select or choice quality.

4. The breeding stock of five female chinchilas and one male chinchila purchased from respondents wil result in live offspring as follows:

20 the first year 60 the second year 180 the third year 540 the fourth year 5. All of the offspring referred to in the salesmen s representations wil have good quality pelts bringing an average net profit of $25 per pelt.

6. A purchaser starting with five females and one male of respondents' chinchila breeding stock wil have a net income in excess of $10 000 at the end of the fourth year. 7. Each female chinchila purchased from respondents and each female offspring thereafter wil produce at least four live young per year.

PAR. 6. In truth and in fact:

1. It is not practicable to raise chinchilas in the home and large profits cannot be made in such manner. 2. The breeding of chinchilas for profit requires specialized knowledge in the feeding, care and breeding of said animal1s much of which must be acquired through actual experience. 3. Chinchila breeding stock sold by respondents is not select or choice quality.

4. The initial chinchila breeding stock of five females and one male purchased from respondents wil not result in the number of live offspring specified since these figures do not allow for deaths at delivery, miscarriages, sterile animals, and other causes. 5. All of the offspring produced by respondents' chinchila breeding units wil not produce good qualiy pelts nor wil the average net profit be $25 per pelt, but substantially less than that amount.

6. A purchaser starting with five females and one male of respondents' breeding stock wil not have a gross income of $10,000 from the sale of pelts in the fourth year, but substantially less than that amount.

7. Female chinchilas purchased from respondents and female offspring thereafter wil not produce, on the average, four live young per year, but generally less than that number. Therefore, the statements and representations as set forth in Decision and Order 70 F.

Paragraphs Four and Five hereof were and are false, misleading and deceptive.

PAR. 7. In the course and conduct of their business, at a11 times mentioned herein, respondents have been in substantial competition in commerce, with corporations, firms and individuals in the sale of chinchila breeding stock.

PAR. 8. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had, and now has, the tendency and capacity 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 ' chinchilas by reason of said erroneous and mistaken belief. PAR. 9. The aforesaid acts and practices of the respondents, as herein alleged, were and are a11 to the prejudice and injury of the pnbnc 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 The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in 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 with violation of the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of a11 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 alleged 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 SUNFLOWER CHINCHILLA CO. ET. AL. 541 537 Decision and Order makes the following jurisdictional findings, and enters the following order:

1. Respondent Sunflower Chinchila Company is a copartnership with its offce and principal place of business located at 1013 McKinley Street, Great Bend, Kansas 67530. Respondents Alvin Gerstner and Robert K. Marmie are individuals and copartners trading and doing business as Sunflower Chinchila Company and their offce and principal place of business is located at 1013 McKinley Street, Great Bend, Kansas. 2. The Federal Trade Commission has jurisdiction of the sub- .i ect matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered That respondents Sunflower Chinchila Company, a partnership, and Alvin Gerstner and Robert K. Marmie, individually and as copartners trading and doing business as Sunflower Chinchila Company, or under any other name, and respondents agents, representatives and employees, directly or through any corporate or other device, in connection with the advertising, offering for sale, sale or distribution of chinchila breeding stock 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. It is practicable to raise chinchilas in the home or that large profits can be made in this manner. 2. Breeding chinchilas for profit can be achieved without previous knowledge or experience in the feeding, care and breeding of such animals.

3. Chinchila breeding stock sold by respondents is select or choice quality, or otherwise misrepresenting the quality of respondents' chinchila breeding stock.

4. The initial chinchila breeding stock of five females and one male purchased from respondents wi1 produce Jive offspring of 20 the first year, 60 the second year, 180 the third year or 540 the fourth year; or that they wi1 prodnce live offspring in any number in excess of the number of live offspring generally produced by chinchila breeding stock, or their offspring, when such breeding stock is purchased from respondents.

5. All of the offspring of chinchila breeding stock purchased from respondents wi1 produce good quality pelts; or Complaint 70 F.

that the average net profit is $25 per pelt; or that a purchaser of respondents' breeding stock wil receive for chinchila pelts any net profits in excess of that usual1ly received for pelts of offspring produced by respondents' breeding stock.

6. A purchaser starting with five females and one male of respondents' breeding stock wil have an income of $10 000 from the sale of pelts in the fourth year after purchase, or that the earnings or profits from the sale of pelts is any amount in excess -of the amount generally earned by purchasers of respondents' chinchila breeding stock. 7. Each female chinchila purchased from respondents and each female offspring thereof wil produce at least four Jive young per year; or that the number of Jive offspring produced by each of such female chinchilas is any number in excess of the number generally produced.

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.