Center Motors, Inc., et al.

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IN THE f.1.ATTER OF CENTER :MOTORS, INC. ET AL.

COX SENT ORDER, ETC" IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL Tfu\.DE CO:l\DIISSION ACT Docket 0-1291. Oomplalnt fan, 23, 19G8-Decision lan. 1D68 Consent order requiring n \Vashington, D. , used car dealer to cease using bait advertising and deceptive financing.

COll:IPLAINT Pnrsua,nt to the provisions of the Federal Trade C01l11nission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Center 1\iotors, Inc. a corporation, and Bernard L. Gordon, individually and as an officer of said corporation, hereinafter referred to as respondents, 11a VB 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. Respondent Center l\lotors, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the District of Columbia, with its principal office and place of business located at 1333 Rhode Island A yenue, N\Y., in the city of ",Vashington, D. C.

Respondent Bernard L. Gordon is an individual and is an olllcer of the corporate respondent. 1-Ie formulates, directs and controls the a0ts and practices of the corporate respondent, including the acts and actices hereinafter set forth. His address is the same as that of the corporate respondent.

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CENTER MOTORS, INC. , ET AL. 117 116 Complaint PAR. 2. Respondents are now, and for some tune last past have been engaged in the advertising, offering for sale, sale and distribution or used autOlnobiles to the public.

PAR. 3. In the course and conduct of their business as aforesaid Tesponclents now ca,use, and for some time last past have caused, their said product, when sold, to be transported from their place of business in the District or Columbia to purchasers thereof located in the District of ColUlnbia, and maintain, and at all times mentioned herein have maintained, a substa.ntial course of trade in said product in commerce as "commerce,:' is defined in the Federal Trade Comlnission Act. PAR. 4. In the course and conduct of their aforesaid business, and for the purpose of inducing the purchase of their used automobiles respondents have made, and are now making, numerous statelnents and representations in advertisements inserted in newspapers or interstate circulation, of which the following are typical and illustrative, but not all inclusive thereof:

$85 DO'iVll '64 Chevy $1185 S, S. Cony.

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ONLY $95 DO\VN! '63 OLDS STARFIRE COUPE $1095 $85 Down DELIVERS '64 OLDS $1295 98 Convert. im. 5. By and through the use or the above-quoted statemmits and representations, and others of similar import and meaning but not expressly set out herein, the respondents have represented, and are now representing, directly or by 1. The offers set forth in saidimplication,advertisementsthat:are bona fide offers to sell the advertised automobiles at the prices and on the terms and conditiolls stateel.

2. The advertised automobiles will be financed on offer of the down l)ayment. stated.

PAR. G. In truth and in fact:

1. The offers set forth in said advertiseme.nts were not bona fide offers to sell the advertised automobiles at the prices and on the terms and conditions stated, but were made for the purpose of obtaining leads to prospective customers. In a number of instances, the automobiles advertised were not in respondents' possession at the time they were advertised and were not available for purchase. Respondents salesmen informed prospective customers who responded to the ad. vel t.isements that the automobiles advertised had been sold and di- 118 FEDERAL TRADE COlVINnSSION DECISIONS: Decision and Order 73 F.

rected the customers' attention to automobiles selling at a higher price. By these tactics, respondents and their salesmen attempted to and frequently did sell higher priced automobiles. 2. The advertised automobiles ,,-ere not financed on offer of the clown payment stated. Frequently the amount of down payment advertised as insufficient and the customer was required to obtain a small loan to make up the deficiency or balance between the amount advertised and the amount actually required as down payment. Therefore, the statements and representations as set forth in Paragraphs Foul' and Five hereof 'were and are false, misleading and decepti ve.

PAR. 7. In the course and conduct of their aforesaid business, and at all times mentioned herein, respondents have been, and now are, in substantial competition, in commerce, with corporations, firms and individuals in the sale of used automobiles of the same general kind and nature as that sold by respondents.

PAR. 8. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and pra.ctices has 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' product by reason of said erroneous and mistaken belief.

PAR. 9. The aforesaid acts and practice.s 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 and deeepti ve acts and practices in commerce in violation of Section 5 of the Federal Trade Commission...:\.ct.

DECISION AND ORDER The Commission having heretofore determined to issue its complaint 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 Commission 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 isslle herein, a statement that the signing of said agreement CENTER :MOTORS, INC. , ET AL. 119 116 Order is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the COJllmlssion s Rules; and The Commission, having considered the agreement and having accepted same, Rlld the agreement containing consent order having thereupon been placed on the public record for a period of 30 days, nmv in further conformity with the procedure prescribed in S 2.34 (b) of its Rules, the Commission hereby issues its complaint in the fornl contemplated by said agreement, makes the following jurisdictional findings, and enters the following order:

1. Respondent Center ~iotors, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the District of Columbia, with its office and principal place of business located at 1333 Rhode Island Avenue, N\V., in the city of \Yashington, D. Respondent Bernard L. Gordon is an officer 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 1 t is ordered That respondents Center :Motors, Inc.., a c.orporation and its officers, and Bernard L. Gordon, individually and as an officer of said corporation, 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 bfused a.utomobiles or other products, in eoml11erce, as "commerce" is defined in the Federal TradeCol11mission Act, do forthwith cease and desist from:

1. Representing, directly 01' by implication, that any products are oflered for sale when such offer is not a bona fide offer to sell such products.

2. l\laking representations purporting to offer merchandise for sale when the purpose of therepresentatioll is not to sell the offered merchandise but to obtain leads or prospects lor the sale of other merchandise at higher prices.

3. Representing, directly or by implication, that a product is oflered for sale whensuc.h product is not in respondents' possession and available for purchase at the time of the offer. 120 FEDERAL TRADE COl\J.ivIISSION DECISIONS; Complaint 73 F.

4. J.\IIisrepresenting, in any manner, the amount which will be accepted as down pa:yment.

5. Using any advertising, sales plan or procedure involving the use of false, misleading or deceptive statements or representations. It is further ordered That the respondent corporation shall forthwith distribute a copy of this order to each of its operating divisions. 1 t 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.