Greater United Steel, Inc

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

IN THE MATTER OF GREATER UNITED STEEL, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-1532. Complaint, May 14, 1969—Decision, May 14, 1969 Consent order requiring two affiliated Kansas City, Mo., home improvement companies to cease falsely representing that prospective purchasers’ homes have been selected as “model homes” and after installation of their products such. homes will be. used for demonstration purposes and purchasers will receive a reduced price or discount, misrepresenting that their products are reduced in price, indestructible, and fully guaranteed, and falsely claiming business connections with United States Steel Co. ;

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 Greater United Steel, Inc., a corporation, and Interstate Aluminum, Inc., a corporation, and Joseph P. Simon, individually and as an officer of said corporations, 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. Respondent Greater United Steel, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Missouri, with its principal office and place of business located at Suite 220, 424 Nichols Road, Kansas City, Missouri 64112.

Respondent Interstate Aluminum, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Missouri, with its principal office and place of business located at Suite 220, 424 Nichols Road, Kansas City, Missouri 64112.

Respondent Joseph P. Simon is an officer of each of the corporate respondents. He formulates, directs and controls the acts and practices of the corporate respondents, including the acts and practices hereinafter set forth. His business address is the same as that of the corporate respondents. GREATER UNITED STEEL, INC., ET AL. 799 798 Complaint The aforementioned respondents cooperate and act together in carrying out the acts and practices hereinafter set forth. Par. 2. Respondents are now, and for some time last past have been, engaged in the advertising, offering for sale, sale and distribution of various items of home improvements, including residential siding products to the general public and the installation thereof.

PAR. 3. 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 State of Missouri 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 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 products, respondents and their salesmen or representatives have represented and now represent directly or by implication, in advertising and promotional material and in direct oral solicitations to prospective purchasers, that:

1. Homes of prospective purchasers have been specially selected as model homes for the installation of respondents’ products; that after installation such homes will be used for demonstration and advertising purposes by respondents; and, that as a result of allowing their homes to be used as models, purchasers will be granted reduced prices or will receive allowances, discounts or commissions.

2. Respondents’ products are being offered for sale at special or reduced prices, and that savings are thereby afforded purchasers from respondents’ regular selling prices. 3. Respondents or their salesmen are connected or affiliated with the United States Steel Company.

4. Products sold by respondents will never require repainting or repairing.

5. Respondents’ products are everlasting and are made of indestructible materials, being impervious to storm, hail, fire and other elements.

6. Respondents’ products and installations are fully guaranteed in every respect, without condition or limitation, for the lifetime of the house on which they are installed. Par. 5. In truth and in fact:

Complaint 75 F.T.C.

1. Homes of prospective purchasers are not specially selected as model homes for the installation of respondents’ products; after installations such homes are not used for demonstration and advertising purposes by respondents; and purchasers as a result of allowing or agreeing. to allow their homes to be used as models are not granted reduced prices nor do they receive allowances, discounts or commissions.

2. Respondents’ products are not. being offered for sale at special or reduced prices, and savings are not thereby afforded respondents’ customers because of a reduction from respondents’ regular selling prices. In fact, respondents do not have a regular selling price but the prices at which respondents’ said products are sold vary from customer to customer depending on the resistance of the prospective purchasers. 3. Neither respondents nor their salesmen are connected or affiliated with the United States Steel Company. 4. Products sold by respondents will require repainting or repairing. .

5. Respondents’ products are not everlasting and can be destroyed. They are not impervious to storm, hail, fire and other elements.

6. Respondents’ siding materials and installations are not unconditionally guaranteed in every respect without condition or limitation for an unlimited period of time or for any other period of time. Such guarantee as may be provided is subject to numerous terms, conditions and limitations, and fails to set forth the nature and extent of the guarantee, the identity of the guarantor and the manner in which the guarantor will perform thereunder. Therefore, the statements and representations as set forth in Paragraph Four hereof were and are false, misleading and deceptive.

Par. 6. 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 siding materials 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 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 GREATER UNITED STEEL, INC., ET AL. 801 7198 Decision and Order 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 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 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 Tyade 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 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 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 thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of thirty (30) days, now in further conformity with the procedure prescribed in § 2.34(b) of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order: , 1. Respondent Greater United Steel, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Missouri,. with its office and principal place of business located at Suite 220, 424 Nichols Road, Kansas City, Missouri 64112. , Respondent Interstate Aluminum, Inc., is a corporation orga- Decision and Order 75 F.T.C.

nized, existing and doing business under and by virtue of the laws of the State of Missouri, with its office and principal place of business located at Suite 220, 424 Nichols Road, Kansas City, Missouri 64112.

Respondent Joseph P. Simon is an individual and an officer of said corporations and his address is the same as that of said corporations. =.

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 Greater United Steel, Inc., a corporation, and Interstate Aluminum, Inc., a corporation, and their officers, and Joseph P. Simon, individually and as an officer of said corporations, 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 or installation, of residential siding, or other home improvement products or service.or any other products, in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Representing, directly or by implication, that the home of any of respondents’ customers or prospective customers has been selected to be used or will be used as a model home, or otherwise, for advertising purposes. 2. Representing, directly or by implication, that any reduced price, allowance, discount, commission or other compensation is granted by respondents to purchasers in return for permitting or agreeing to allow the premises on which respondents’ products are installed to be used for model homes or demonstration purposes.

3. Representing, directly or by implication, that any price for respondents’ products is a special or reduced price, unless such price constitutes a significant reduction from an established selling price at which such products 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. 4. Representing, directly or by implication, that respondents or their salesmen are connected or affiliated with the United States Steel Company; or misrepresenting, in any SEYMOUR FELDMAN, INC., ET AL. 803 7198 Syllabus 75 F.T.C.

manner, the identity of the manufacturer or the source of any of respondents’ products or the business connections or affiliations of respondents or their salesmen. 5. Representing, directly or by implication, that respondents’ products will never require painting or repair; or misrepresenting, in any manner, the efficacy, durability, efficiency, composition, or quality of respondents’ products. 6. Representing, directly or by implication, that respondents’ products are everlasting or are made of indestructible materials.

7. Representing, directly or by implication, that storms, hail, fire or other elements will not damage respondents’ products.

8. Representing, directly or by implication, that any of respondents’ products are guaranteed, unless the nature and extent of the guarantee, the identity of the guarantor and the manner in. which the guarantor will perform thereunder are clearly and conspicuously disclosed. * 9. 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 statement acknowledging receipt of said order.

It is further ordered, That the 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.