Titus Pacific Corporation

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IN THE MATTER OF TITUS PACIFIC CORPORATION ET AL.

CONSENT ORDER, ETC., I); REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION AND THE WOOL PRODUCTS LABELING ACTS Docket C-l1.50. Complnil1J , Dec. )6' (i-Decision, Dec. , 1,966 Crmsent order requiring a San Francisco, Calif., importer and wholesaler of wool products, including wool hlankets, to cease misrepresenting the fiber content of its merchandise.

COMPLAI"T Pursuant to the provisions of the Federal Trade Commission Act and 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 Titus Pacific Corporation, a corporation, and Lothar Steinberg, individually and as an offcer of said corporation, hereinafter referred to as respondents, have violated the provisions of the said Acs and the Rules and Regulations promulgated under the Wool Products Labeling Act of 1939 and it appearing to the Commission that a proceeding b r it in respect thereof "vauJd be in the public interest, hereby issues its complajnt stating its charges in that respect as follows: PARAGRAPH 1. Respondent Titus Pacific Corporation is a COl' POration organized, existing and doing business under and by virtue of the laws of the State of California.

Individual respondent Lothar Steinberg is an offcer of said COlpo rate respondent and participants in the formulation, direction and control of the acts, policies and practices of said corporation including the acts and practices hereinafter referred to. Respondents are importers and wholesalers of wool products with their offce and principal place of business Jocated at 9 First Street, San Francisco, California.

PAR. 2. Subsequent to the efiective date of the Wool Products Labeling Act of 1939 , respondents have introduced into commerce, sold, transported, distributed, delivered for shipment and offered for sale in commerce, as "commerce " is defined in said Act, wool pl'ducts as "wool product" is defined therein. PAR. 3. Certain of said wool products were misbranded within the intent and meaning of Section 4(a) (1) of the Wool Products Complaint 70 F.

Labeling Act of 1939 and the Rules and Regulations promulgated thereunder, in that they were falsely and deceptively stamped tagged, labeled, or otherwise identified with respect to the character and amount of the constituent fibers contained therein. Among such misbranded wool products, but not limited thereto were certain blankets stamped, tagged or labeled as containing either "7 % new cotton, 15 % reprocessed cotton 1870 reused cotton, 17 'Yo reprocessed rayon 1570 reprocessed wool, 25 reused wool and 3% other unknown reclaimed fibers" or "40% reprocessed and reused wool and 6070 cotton and other fibers, " where in truth and in fact, said blankets contained substantially Jess woolen fibers than represented.

PAR. 4. Certain of said wool products were further misbranded in that they were not stamped, tagged, labeled or otherwise identified as required under the provisions of Section 4 (a) (2) of the Wool Products Labeling Act of 1939 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 certain blankets with labels on or affxed thereto which failed to disclose the percentage of the total fiber weight of the wool product, exclusive of ornamentation not exceeding 5 per centum of said total fiber weight of (1) wooJen fibers; (2) each fiber other than wool if said percentage by weight of such fiber is 5 per centum or more; and (3) the aggregate of alj other fibers. PAR. 5. The acts and practices of the respondents as set forth above were, and are in violation of the Wool 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 the intent and meaning of the Federal Trade Commission Act.

PAR. 6. In the course and conduct of their business, respondents now cause and for some time last past, have caused their said products to be sold in the United States after importation into the United States from foreign countries and have maintained a substantial course of trade in said products in commerce, as "commerce" is defined in the Federal Trade Commission Act. PAR. 7. Respondents in the course and conduct of their business as aforesaid, have made statements on invoices and shipping memoranda to their customers misrepresenting the fiber content of certain of their said products.

TITUS PACIFIC CORPORATION ET AL. 1699 1697 Decision and Order Among such misrepresentations, but not limited thereto, were statements representing the fiber content thereof as "40 % Re- Used and Repr. Wool, 60% Cotton and other fibers " whereas, in truth and in fact, said blankets contained substantially less wooJen fibers than represented.

PAR. 8. The acts and practices set out in Paragraph Seven have had and now have the tendency and capacity to mislead and deceive the purchasers of said products as to the true content thereof and to cause them to misbrand products sold by them in which said materials were used.

PAR. 9. The aforesaid acts and practices of respondents as herein alleged were and are all to the prejudice and injury of the public and constituted, and now constitute unfair and deceptive acts and practices in commerce, within the intent and meaning 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 Textiles and Furs proposed to present to the COI:mission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act and the Wool Products Labeling Act of 1939; 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 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 said Acts, and having determined that complaint should issue stating its charges in that respect, hereby issues its complaint, accepts said agreement, makes the following jurisdictional findings, and enters the following order: 1. Respondent Titus Pacific Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of California, with its offce and principal place of Order 70 F.

business located at 9 First Street, in the city of San Francisco State of California.

Respondent Lothar Steinberg is an offcer of said corporation and his address is the same as that of said corporation. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered That respondents Titus Pacific Corporation, a corporation, and its offcers, and Lothar Steinberg, individually and as an offcer of said corporation, and respondents' representatives agents and employees, directly or through any corporate or other device, do forthwith cease and desist from introducing into commerce, or offering for sale, selling, transporting, distributing or delivering for shipment in commerce wool blankets or any other wool products, as "commerce " and "wool product" are defined in the Wool Products Labeling Act of 1939:

1. Which are falsely and deceptively stamped, tagged, labeled, or otherwise identified as to the character or amount of the constituent fibers contained therein. 2. Unless each such product has securely affxed thereto or placed thereon a stamp, tag, label or other means of identification correctly showing in a clear and conspicuous manner each element of information required to be disclosed by Section 4 (a) (2) of the Wool Products Labeling Act of 1939. It is further orde,' That respondents Titus Pacific Corporation, a corporation, and its offcers, and Lothar Steinberg, individual1ly and as an offcer 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 blankets or any other textile products in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from misrepresenting the character or amount of constituent fibers contained in blankets or any other textile products on invoices or shipping memoranda applicable thereto or in any other manner. It is further o,'dered 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. YOUKGSTOWN CARPET GUILD DISTRIBUTORS CO. ET AL. 1701 Complaint I:- THE :VIATTER OF YOUNGSTOWN CARPET GUILD DISTRIBUTORS CO. ET AL CONSENT ORDER , ETC. , IX REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 8719. C01iiplu'int, Oct. Juris-Decision, Dec. 20, 1966 Consent order requiring a Hyatisville, Md" distributor oJ carpets to cease using bait advertising and other pricing misl'elJJcscntations in selling its products, COMPLAIJ\T Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of t.he authority.y vested in it by said Act, the Federal Trade Commission, having reason to believe that Youngstown Carpet Guild Distributors Co. , a corporation, and Paul Kahn and :Vlorton S. Falkaw, 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 t.hat a proceeding by it. in respect thereot would be in the public interest, hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent Youngstown Carpet Guild Distl"butors Co. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Pennsylvania with its principal offce and place of business located at 4806 Rhode Island A venue, in the city of Hyattsville, State of Maryland.

Respondents Paul Kahn and Morton S. FaJkaw are offcers of the corpoJ'ate respondent. They formulate, direct and control the acts and practices of the eorpol'Dte respondent, including the acts and practic( s hereinafter set forth. Theil' business address is the same as that of the corporate l' cspondeni. PAR. 2. Hespondents arc now, Hnd for some time last past have been, engaged in thc advertising, oftel'ing- for sale, sale and Clistribution of floor covering products to ihe public. Respondents also do business as Youngstown Carpet Guild, Inc' and as Youngslown Carpet Distributors.

PAR. 3. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their said Complaint 70 F.

products, when sold, to be shippped from their place of business in the State of Maryland to purchasers theeof located in various other States of the United States and in the District of Columbia and maintain, and at all times mentioned herein have maintained a substantial course of trade in said products in commerce, as commerce" is defined in the Federal Trade Commission Act. PAR. 4. In the course and conduct of their aforesaid business and for the purpose of inducing the purchase of their carpeting, the respondents have made numerous statements and representations in advertisements appearing in newspapers of general circulation, respecting the character of their offer to sell and the merchandise included in such offer.

Typical and illustrative, but not all inclusive, of the aforesaid statements and representations are the following: 3 DAYS ONLY! WALL. TO-WALL DUPONT NYLOX CARPET SALE! 3 COMPLETE ROOMS 100% CONTINUOUS F1LAMEKT DUPONT NYLON $119 270 Square feet Padding and Installation Optional Dupont $159 270 Sq. ft.

Padding & Installation Optional FREE WITH PURCHASE SUNBEA:I ELECTRIC VACUUM)! SWEEPER PAR. 5. By and through the use of the above-quoted statements and representations, and others of similar import and meaning, but not specifically set out herein, the respondents have represented, directly or by implication, that they were making a bona fide offer to sell the advertised carpeting at the price and on the terms and conditions specified in the advertisement. PAR. 6. In truth and fact, respondents' offers were not bona fide offers to sell the said carpeting at the afore stated advertised prices and on the terms and conehtions therein stated but were made for the purpose of obtaining leads and information as to persons interested in the purchase of carpeting. After obtaining leads through response to said advertisements, respondents' representatives called upon such persons but made no effort to sell the carpeting at the aforesaid advertised prices, Instead, respond- YOUNGSTOWN CARPET GUILD DISTRIBUTORS CO. ET AL. 1703 1701 Complaint ents' representatives attempted to and frequently did sell carpeting at much higher prices. In addition, on occasions when the carpeting was requested without installation or padding pursuant to the advertised offer, respondents failed or refused to furnish the carpeting under such condHions. Further, in some instances respondents failed or refused to furnish the free merchandise offered in their advertisements.

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

PAR. 7. By and through the use of phrases such as "3 Days Only, 3 Day Sale!" and other statements and representations of similar import and meaning but not specifically set out herein respondents represent and have represented, directly or by implication, that the availability of respondents' advertised offer is limited to 3 days only, and that respondents' carpeting is being offered for sale at special or reduced prices, and purchasers are thereby afforded savings from respondents' regular selling prices. PAR. 8. In truth and in fact the availability of respondents' advertised offer is not limited to 3 days only, and respondents' carpeting is not being offered for sale at special or reduced prices and purchasers are not thereby af!orded savings from respondents' regular selling prices. In fact, respondents do not have a regular selling price but the prices at which respondents' carpeting is sold varies from customer to customer depending on the resistance of the prospective purchaser.

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

PAR. 9. 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 floor covering products of the same general kind and nature as those sold by respondents.

PAR. 10. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had. and now has, the capacity and tendency to mislead members of the purchasing public into the el'oneous and mistaken belief that said statements and representations were and arc true and into the purchase of substantial quantities of respondents' products by reason of said erroneous and mistaken belief. PAR. 11. The afOlesaid acts and practices of respondents, as 1704 FEDERAL TRADE eO IMISSION DECISIOCoS Decision and Order 70 F. T, herein alleged, were and are alj 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 The Commission having issued its complaint in this proceeding on October 24 , 1.966, charging respondents Youngstown Carpet Guild Distributors Co., a corporation, and Paul Kahn and Morton S, Falkow (erroneously designated in the complaint as Morton S. Falkaw), individually and as offcers of said corporation, with violation of the Federal Trade Commission Act, and the respondents having been served with a copy of that complaint; and The respondents having thereafter filed with the hearing examiner a motion requesting waiver of Rule 2.4 (d) of the Commist:ion s Rules, to which motion was attached an executed consent agreement entered into behveen respondents and counsel supporting the complaint; and The hearing examiner having certified to the Commission the said motion, with attached agreement, \which agreement contains inter alia a consent order, an admission by respondents of all the jurisdictional facts alleged in the complaint, a statement that the signing of said agrecment is for settlement purposes only and does not constitute an admission by respondents t.hat t.he law has been violated as alleg-ed in the complaint., and \vaivel's and provisions as required by the Commission s rules; and The Commission having determined t.hat in the circumst.ances the public interest would be served by waiving, and hereby having waived, the provision of Rule 2.4 (d) that the consent procedure shall not be available after issuance of complaint.; and The Commission having considered the aforesaid executed agreement, and having no\v det.ermined that said agreement constitute.es an adequate basis for appropriate disposition of this proceeding, the agreement is hereby accepted, the following j urisdictional findings ale made, and the following order is entered: I, Respondent Youngstown Carpet Guild Distributors Co. is a corporate.ion organized, existing and doing business under' and by virtue of the laws of the State of Pennsylvania, with its principal offce and place of business located at 4806 Rhode bland A venue in the city of Hyattsville, State of Maryland. Respondents Paul Kahn and Morton S, Falkow are offcers of YOUNGSTOWN CARPET GUILD DISTRIBUTORS CO. ET AL. 1705 1701 Order the corporate respondent and their offce and principal place of business is the same as that of the corporate respondent. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is onlered That respondents Youngstown Carpet Guild Distributors Co., a corporation, and its offcers, and respondents Paul Kahn and Morton S. Falkow, individually and as offcers of said corporation, and respondents ' agents, representatives and employees, directly 01' through any corporate or other device, in connection with the advertising, offering for sale, sale or distribution of floor covering products, or any other products, in commerce, as commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Dsing, in any manner, a sales plan, scheme or device wherein false, misleading or deceptive statements or representations are made in order to obtain leads or prospects for the sale of merchandise or services, 2. l\1aking representations purporting to offer merchandise for sale when the purpose of the representation is not to sell the altered merchandise but to obtain leads or prospects for the sale of other merchandise at hig-hel' prices.

3. Representing, directly or by implication, that any merchandise 01' sel' vices are offered for sale when such offer is not a bona fide offer to sell said merchandise or services.

4. Failing or refusing to furnish ordered merchandise or services to purchasers in accordance with the terms and conditions of any advertised offer, 5. Failing 01' refusing to furnish free merchandise to purchasers, irrespective of a prior request therefor upon fulfillment of the terms and conditions of any advertised offer, 6. Representing-, directly or by implication, that the availability of any offer of products or services is Jimitcd to three days only, 01' js limited in any othc)' manner: Provided, however That it shall be a defense in any enforcement proceeding instituted hereunder for respondents to establish that any represented limitation was %(;

Complaint 70 F, actual1ly imposed and in good faith adhered to by respondents.

7. Representing, directly or by implication, that any price for respondents' products or services is a special or saJe price, unless such price constitutes a significant reduction from an established selling price at which such products or services have been sold in substantial quantities by respondents in the recent rcguJar course of their business; or misrepresenting in any manner the savings available to purchasers or prospective purchasers of respondents' products or services.

It is furthe?' Q1'dered 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.