Washington Gas & Electric Appliance Company, Inc

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IN THE MATTER OF W ASHlNGTON GAS & ELECTRIC APPLIANCE COMPANY INC., ET AL.

CONSENT ORDER, ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THI FEDERAL TRADE COMMISSION ACT Docket C-1518. Complaint, Apr. 1969-Decision, Apr. 1969 Consent order requiring three affliated Washington, D. , distributors of ai: conditioning and heating units to cease using or simulating the trad names of any public utility or competitors, using dummy addresse: to falsify the size of their operations, and disparaging the installe( equipment of competitors.

COMPLAINT Pursuant to the provisions of the Federal Trade Commissior Act, and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Washington Gas & Electric Appliance Company, Inc. and Allison Air Conditioning & Heating Service, corporations, and Sidney Grossman, individually and as an offcer of said corporations, and Abat1 Air Conditioning & Heating Company, Inc., a corporation, here. inafter referred to as respondents, have violated the provisiom of said Act, and it appearing to the Commission that a proceed. ing 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 Washington Gas & Electric Appliance Company, Inc. , is a corporation organized, existing and doing business under and by virtue of the laws of the District of Columbia, with its principal offce and place of business located at 2206 14th Street, NW., Washington, D.

Respondent Allison Air Conditioning & Heating Service is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal offce and place of business located at 2212 14th Street, NW. Washington, D.

Respondent Abatt Air Conditioning & Heating Company, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the District of Columbia, with its WASHINGTON GAS & ELEC. APPLIANCE CO., INC., ET AL. 541 540 Complaint principal office and place of business located at 2206 14th Street, NW., Washington, D.C.

Respondent Sidney Grossman is an individual and is an officer of corporate respondents Washington Gas & Electric Appliance Company, Inc., and Allison Air Conditioning & Heating Service, and he owns the stock and manages the business of corporate respondent Abatt Air Conditioning & Heating Company, Inc. He formulates, directs and controls the acts and practices of the aforesaid corporate respondents, including the acts and practices hereinafter set forth. His business address is 2206 14th Street, NW., Washington, D.C.

Par. 2. Respondents are now, and for some time last past have been, engaged in the advertising, offering for sale, sale, distribution, installation and service of air conditioning and heating units to and for the public.

Par. 8. In the course and conduct of their business as aforesaid, 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 District of Columbia to purchasers thereof located in various 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 business as aforesaid, and for the purpose of inducing the purchase of their heating and air conditioning units, or their services, respondents have made, and are now making, numerous statements and representations in newspaper advertisements and telephone directories, as well as through oral statements and representations by their employees, of which the following are typical and illustrative, but not all inclusive thereof:

1. Respondents have placed listings for the Washington Gas & Electric Appliance Company, Inc., in telephone directories and yellow pages, immediately preceding the listing for the Washington Gas Light Company, the public gas utility company for the Washington, D.C., metropolitan area, and respondents have made other representations, in a manner which had the tendency and capacity to lead the public to believe that respondent corporation is the same as, or is affiliated with the Washington Gas Light Company.

2. Respondents have placed listings for the Cream Air Condi- . . .

Complaint 75 F.

tioning; Company in the yellow pages of telephone directories preceding listing;s for factory authorized "Rheem" air conditioning and furnace dealers and have advertised the aforesaid company in newspapers in a manner which had the tendency and capacity to lead the public to believe that respondents regularly sell "Rheem" air conditioning and heating units. 3. Respondents have placed multiple listings for the following companies in telephone directories and under various classifications throughout the yellow pages and have placed advertisements for these companies in newspapers representing that these companies had offces, branch offces or dispatch offces at various locations in the Washington, D. , metropolitan area, including Virginia and Maryland, which had the tendency and capacity to lead the public to believe that respondents operate sales and service facilities in their neighborhood or vicinity: Washington Gas & Electric Appliance Company, Inc. 1835 K NW 483-4900 BarrBG 483-4900 3801 N Fairfax Dr Ar! 528-6488 Allison Air Conditioning & Heating Service 2212 14thNW . AD 4- 4206 911 N Highland Ad J A 5-1448 3801 N. FairfxDr Ari 525- 1448 2112 Ellis SilSpg 589-4851 6800 20th A v Hyatts 422-2207 Ahatt Air Conditioning & Heating Company, Inc. 2206 14thNW 265-0405 6900 WisA v Beth 656- 3665 8634 ColsvUtd SilSpg 587-6463 4100 Stamped SilHil 423-0333 200 Wash Alex 548-2844 1207 King Alex KI 8-2844 2S23 Wils!! Blvd Arl 522-1006 3801 N Faidx Dr Arl - 522-1006 Lennard Air Conditioning & Heating Company, 6800 20th Av Hyatts 422- 2207 2112 Ellis SilSpg 589-4851 J A 141\8 941 N Highland Ar! - 2212 14thNW WashDC AD 4-4206 Charter Air Conditioning & Heating Company, 6800 20th Av Hyatts 422-2207 2112 EJlis SilSpg- 589--4851 1448 941 N Highland Arl JA 5- AD 4-4206 2212 14thNW WashDC -- General Air Conditioning & Electric: Company, 6ROO 20thev Hyatts 422-2207 540 Complaint 2112 Ellis SilSpg 589-4851 941 N Rig-hland Arl JA 5-1448 2212 HthNW WashDC u AD 4-4206 Cream Air Conditioning Company, 2212 14thNW - -- - -- -- AD 4-4206 AAA Air Conditioning & Heating Co. Inc 2206 14thKW - -- -- 265-0405 ABACa Air Conditioning & Heating Co. Iue. 2206 14thNW 265-0405 PAR. 5. In truth and in fact:

1. Respondents are not the same as nor are they affliated with the Washington Gas Light Company, but use the similarity of the corporate names to obtain leads to prospective customers. Respondents and their employees fail to disclose to prospective customers that they are not the same as or affliated with the Washington Gas Light Company and take advantage of the customer s misunderstanding as to respondents' identity to .induce the purchase of products and services. air conditioning 2. Respondents do not regularly sell "Rheem" or heating units. The Cream Air Conditioning Equipment Company is a bogus company conceived by respondents to capitalize upon the goodwil of "Rheem" equipment and the dealers of Rheem" equipment and to divert customers from these dealers. 3. Respondents do not operate offces, branch offces or dispatch offces at various locations in the Washington, D. , metropolitan area or in Virginia or Maryland. The corporations named as respondents operate at two adjacent locations under the management, control and ownership of the individual respondent. The companies listed and advertised by respondents, except those named in the complaint, are nonexistent bogus companies. Therefore, the statements, representations and practices set forth in Paragraph Four hereof were and are unfair, false, misleading and deceptive.

PAR. 6. In the course and conduct of their business, as aforesaid, respondents' employees have on occasions made oral and written representations to prospective customers that the customer s air conditioning or heating unit was materially defective, not repairable or in a condition which might endanger life or property when such representations were contrary to the fact. In some instances, these misrepresentations were made to prospective customers who believed that respondents' employees were representatives of a gas or utility company. Such misrepresentations had the effect of inducing prospective customers to Decision and Order 75 F.

purchase new air conditioning or heating units from respondents or to authorize extensive and unneeded repairs. Therefore, such statements, representations and practices were and are unfair, false, misleading and deceptive. 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 and service of air conditioning and heating units of the same general kind and nature as those sold and serviced by respondents. PAR. 8. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had, and now has, the capacity and iendency 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 and services by reason of said erroneous and mistaken belief.

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 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 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 issue herein, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission hy respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having considered the agreement and having accepted same, and having thereupon placed such agreement on WASHINGTON GAS & ELEC. APPLIANCE CO., INC., ET AL. 545 540 Decision and Order the public record and having duly considered the comment filed thereafter pursuant to § 2.34(b) of its Rules, now, in further conformity with the procedure prescribed in § 2.34(b) of its Rules, the Commission hereby issues its complaint in the form contemplated by said agreement, makes the following jurisdictional findings, and enters the following order: 1. Respondent Washington Gas & Electric Appliance Company, 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 2206 14th Street, NW., Washington, D.C.

Respondent Allison Air Conditioning & Heating Service is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 2212 14th Street, NW., Washington, D.C.

Respondent Abatt Air Conditioning & Heating Company, 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 2206 14th Street, NW., Washington, D.C.

Respondent Sidney Grossman is an officer of Washington Gas & Electric Appliance Company, Inc., and Allison Air Conditioning & Heating Service, and he owns the stock and manages the business of Abatt Air Conditioning & Heating Company, Inc. His business address is 2206 14th Street, NW., Washington, D.C. 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 Washington Gas & Electric Appliance Company, Inc., and Allison Air Conditioning & Heating Service, corporations, and their officers, and Sidney Grossman, individually and as an officer of said corporations, and respondent Abatt Air Conditioning & Heating Company, Inc., a corporation, and its officers, and respondents’ agents, representatives and employees, directly or through any corporate or other device, in connection with the advertising, offering for sale, sale, distribution or service of air conditioning or heating units or other products, in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from: Decision and Order 75 F.

1. Using, in any manner, a sales plan, scheme or devic( wherein false, misleading or deceptive representations an made in order to obtain leads or prospects for the sale oj merchandise or services or to induce sales of any merchan. dise or services.

2. Using the name Washington Gas & Electric Appliance Company, Inc. , or any variation thereof, or any substanti. any similar name or designation in the greater Washington , metropolitan area: Provided, however That nothin herein shall be construed to prohibit respondents from us. ing the name Washington Electric & Gas Furnace and Ail Conditioning Company, Inc.

3. Representing, directly or indirectly, that respondents employees are in the employ of any gas or utiity company. 4. Misrepresenting, in any manner, the nature of respondents' business, or affliations or connections with any public utility or publicly franchised company, or any other organi. zation.

5. Using the name "Hearn" or any substantially similar name or designation in any telephone directory listing, or advertising of any nature.

6. The adoption, advertising, or listing in telephone directories of any trade or corporate name which simulates the trade or corporate name of an established competitor or the product sold by an established competitor of respondents.

7. Representing, directly or indirectly, that respondents regularly sen any trade name product unless respondents regularly sen said products in the course of their business. 8. Listing in telephone directories, or advertising, in any manner, a sales, service, dispatch or other facility, at various addresses unless they, in fact, maintain either sales, service dispatch or other facilities at the addresses advertised and listed and truthfully so designate the nature of such facilities at each address in any such advertising and listing. 9. Listing in telephone directories, or advertising, in any manner, a corporation, company. or other business concern unless such corporation, company or other business concern is a viable business entity, which maintains books and records and has a full time force of personnel which conduct business on a daily basis.

10. Listing in telephone directories, or advertising, in any 540 Decision and Order manner, the same company or corporation under more than one name.

11. Misrepresenting, in any manner, the location or extent of the sales or services facilities operated by respondents. 12. Representing, directly or by implication, that any furnace or air conditioning unit is defective in any manner not repairable, or in a condition which may endanger life or property: Provided, however That it shall be a defense in any enforcement proceeding instituted hereunder for respondents to establish that such representation or representations were based upon adequate inspection or analysis of the unit and respondents thereby knew or had valid reason to believe in good faith that said representation or representations were true.

with 13. Making any representations, in any manner, respect to the condition of any air conditioning or heating unit; Provided, however That it shall be a defense in any enforcement proceeding instituted hereunder for respondents to establish that such representation or representations were based upon adequate inspection or analysis of the unit and respondents thereby knew or had valid reason to believe in good faith that said representation or representations were true.

14. Failing to deliver a copy of this order to cease and desist to all present and future salesmen or other persons engaged in the sale of respondents' products or services and failing to secure from each such salesman or other person a signed statemcnt acknowledging receipt of said order.

It is further ordered That respondent corporations shall forthwith distribute a copy of this order to each of their operating divisions.

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. Complaint 75 F.