Holiday Carpets, Inc

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IN THE MATTER OF HOLIDA Y CARPETS, INC., ET AL.

ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION AND THE TEXTILE FIBER PRODUCTS IDENTIFICATION ACTS Docket 8784. Complaint, June 1969-Deci,cion, November 20, 1969 Order requiring a \Vheaton, Md. , seller and installer of custom-fitted home carpeting to cease misbranding and falsely advertising its textile fiber products, using bait tactics, false pricing and savings claims, failng to maintain adequate records, using deceptive guarantees, misrepresenting that it usually negotiates its sales contracts to a bank, misrepresenting the terms and conditions of its sales, and failng to include the right to cancel the sale within 3 days in its sales contracts. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and the Textile Fiber Products Identification Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Holiday Carpets, Inc., a corporation, and Robert M. Siegel, individually and as an offcer of said corporation, hereinafter referred to as respondents, have violated the provisions of said Acts and the Rules and Regulations promulgated under the Textile Fiber Products Identification 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 Holiday Carpets, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Maryland, with its principal offce and place of business located at 11035 Viers Mil Road in the city of Wheaton, State of Maryland.

Respondent Robert M. Siegel is an individual and is an offcer of the corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. His business address is the same as that of the corporate respondent. PAR. 2. Respondents are now, and for some time last past have been, engaged in the introduction, delivery for introduction, sale advertising, and offering for sale, in commerce, and in the trans- Complaint 76 F.

portation or causing to be transported in commerce, and in the importation into the United States, of textile fiber products; and have sold, offered for sale, advertised, delivered, transported and caused to be transported, textile fiber products, which have been advertised, 01' offered for sale in commerce; and have sold, offered for sale, advertised, delivered, transported and caused to be transported, after shipment in commerce, textile fiber products either in their original state 01' contained in other textile fiber products; as the terms "commerce" and "textile fiber product" are defined in the Textile Fiber Products Identification Act. PAR. 3. Certain of said textie fiber products were misbranded by respondents within the intent and meaning of Section 4 (a) of the Textile Fiber Products Identification Act and the Rules and Regulations promulgated thereunder, in that they were falsely and deceptively stamped, tagged, labeled, invoiced, advertised, or otherwise identified as to the name or amount of constituent fibers contained therein.

Among such misbranded textile fiber products, but not limited thereto, were floor coverings which were falsely and deceptively advertised in The Washington Post, The Evening Star and The Washington Daily News, newspapers published in the District of Columbia, and having a wide circulation in the District of Columbia and various other States of the United States, in that the respondents in disclosing the fiber content information as to floor coverings containing exempted backings, fillings, or paddings failed to set forth such fiber content information in such a manner as to indicate that it applied only to the face, pile, or outer surface of the floor coverings and not to the exempted backings fillngs, or paddings.

PAR. 4. By means of the aforesaid advertisements and others of similar import and meaning not specifically referred to herein respondents falsely and deceptively advertised textile fiber products in violation of the Textile Fiber Products Identification Act in that said textile fiber products were not advertised in,.accordance with the Rules and Regulations promulgated thereunder in that in disclosing the required fiber content information as to floor coverings containing exempted backings, fillings, or paddings, such disclosure was not made in such a manner as to indicate that such required content information related only to the face, pile, or outer surface of the floor covering and not to the backing, filling, or padding in violation of Rule 11 of the aforesaid Rules and Regulations.

HOLIDAY CARPETS, INC. , ET AL. 675 673 Complaint PAR. 5. Certain of said textile fiber products were misbranded in that they were not stamped, tagged, labeled or otherwise identified with any of the information required under the provisions of Section 4 (b) of the Textie Fiber Products Identification Act. PAR. 6. The acts and practices of respondents as set forth above were, and are, in violation of the Textile Fiber Products Identification Act and the Rules and Regulations promulgated thereunder, and constituted, and now constitute, unfair methods of competition in commerce and unfair and deceptive acts and practices, in commerce, under the Federal Trade Commission Act. PAR. 7. Respondents are now, and for some time last past have been, engaged in the advertising, offering for sale, sale, distribution and installation of carpeting and floor coverings to 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 merchandise, when sold, to be shipped from their places of business located in the District of Columbia and in the States of Maryland and Virginia, to purchasers thereof located in various other States of the United States and the District of Columbia, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in said merchandise in commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 9. In the course and conduct of their aforesaid business and for the purpose of inducing the purchase of their carpeting and floor coverings, the respondents have made, and are now making, numerous statements and representations by advertisements inserted in newspapers and by oral statements and representations of their salesmen to prospective purchasers with respect to their products and services.

Typical and ilustrative of said statements and representations but not all inclusive thereof, are the following: 100% CONTINmn:s FILAMENT NVLO:X 272 Sq.WALL-TO-WALLFt. IncludesCARPET SALESPECIAL! Padding & Installation usually enough to carpet FHA Approved Dupont 501 Living Room, Dining Room Hall or Steps 35 Decorators Colors $119 KO MOi\EY DOWN 24- Hm:R ANS\VERI:XG SERVICE As Low As $5 MOI\TH NO PAY:'lents 'TIL MAY 949-1188 Complaint 76 F.

HOLIDAY CARPET, INC.

11212 Grandview Avenue, Wheaton, Maryland We Service and Guarantee What We Sell VISIT OUR SHOWROO::1:

The Sunday Star TV Magazine, Washington, D. C., Mareh 5, 1967 F ALL SALE WALL TO WALL CARPET NYLON DUPONT " 501" AT SPECIAL SALE PRICE LOOK! FREE VACATION for 2 at the Fabulous AMBASSADOR HOTEL In Atlantic City Dancing Pool Sauna Entertainment 2 NITES 3 DAYS Offer Good Until June, 1968 Each Customer Purchasing Our Dupont 501 , 10 Yr. Guar. Carpet NO MONEY DOWN as low as $5 a month K FINANCING No Payment ' tit Dec. , 1967 Usually enough to carpet Living Room, Dining Room Hall or Steps.

100% COKTINU01.S FILAMEKT 272 SQ. FT.

INCLUDES PADDING & INSTALLATIOK SHOP AT HOME"

SERVICE Let our trained decorator help you select the carpet that fits your decor. NO OBLIGATION $119 CALL NOW 24 HR. SERVICE 933-7700 VISIT OUR SHOWROOM Deal with an established finn. Member Wash. Board of Trade, etc. See our ad in YeHow Pages.

HOLIDAY CARPETS INC.

11212 GRANDVIE\V AVE. WHEATON , MD.

We Service and Gua1'antee What We Sell The Sunday Star TV Magazine, Washington, D. C., October 15, 1967 HOLIDAY CARPETS, INC. , ET AL. 677 673 Complaint FALL DISCOUNTS WALL TO WALL CARPET 100% COKTI:\UOUS FILAMENT NYWN Visit Our Showroom 272 SQ. FT.

USUALLY ENOL"GH TO CARPET LIVING ROOM, DINING ROOM HALL OR STEPS! INCLUDES PADDING & INSTALLATION FREE VACATION FOR TWO 4 DAYS & 3 NIGHTS IN MIAMI BEACH, ATLANTIS OR SEA ISLE HOTEL OR LAS VEGAS, LA HACIENDA HOTEL . 1st 100 Customers Purchasing our Special Dupont Wall to Wall Carpet . 272 Sq. Ft. or More SHop-Ar-Home SERVICE Let our trained decorator help you select the carpet that fits your decor. NO OBLIGATION! CALL NOW 24-HR. SERVICE 933-7700 Deal with an established firm. Member Wash. Board of Trade, etc. See our ad in Yellow Pages! Bank Financing $119 272 sQ. FT. INCLUDES PADDING & INSTALLATION NO DOWN PAYMENT As Low AS 2.00 A WEEK :Ko PAYMENT ' 1'11, MAY HOLIDAY CARPETS INC.

11212 GRANDVIEW AVE., WHEATON, MARYLA1\D We Service and Guarantee What We Selll! PAR. 10. By and through the use of the above reproduced statements 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 implication: 1. That respondents are making a bona fide offer to sell the advertised carpeting and floor coverings at the price and on the terms and conditions stated in the advertisement. 2. By and through the use of the words "SALE SPECIAL SALE PRICE" and other words of similar import and meaning, that respondents ' carpeting and floor coverings are being offered for sale at special or reduced prices, and purchasers are thereby afforded savings from respondents' regular sellng prices. Complaint 76 F.

3. That purchasers of the advertised merchandise receive without any additional cost or obligation a "free" vacation for two in Atlantic City, Miami or Las Vegas.

4. That respondents' products are unconditionally guaranteed for a specified period of time.

5. By and through the used of the words "ALL BANK FINANC- ING BANK FINANCING" and words of similar import and meaning, that no finance company is involved in the financing of the customer s purchase and that the customer s account is discounted, negotiated or assigned to a bank. 6. By and through the statements "NO MONEY DOWN AS LOW AS $5 A MONTH NO MONEY DOWN AS LOW AS $2 A WEEK" and other similar statements and representations, that respondents regularly arrange financing of purchasers for no down payment and on the weekiy and monthly terms stated.

7. By and through the use of the words "INCLUDES PADDING & INSTALLATION " and words of similar import and meaning, that all of the carpeting mentioned in such advertisements is installed with separate padding included at the advertised price. 8. By and through the use of the words "35 DECORATORS COL- ORS" and other words of similar import and meaning, that the advertised carpeting is available in thirty-five different colors from which the prospective purchasers may choose. PAR. 11. In truth and in fact:

1. Respondents' offers were not bona fide offers to sell said carpeting and floor coverings at the price and on the terms and conditions stated in the advertisement, but were made for the purpose of obtaining leads to persons interested in the purchase of carpeting. After obtaining such leads through response to said advertisements, respondents or their salesmen caned upon such persons, but made no effort to sell the advertised carpeting. Instead, they exhibited what they represented to be the advertised carpeting which, because of its poor appearance and condition was usually rej ected on sight by the prospective purchaser. In some instances, respondents or their salesmen failed to have available or failed to show the advertised carpeting. Concurrently, higher priced carpeting or floor coverings of superior quality and texture were presented, which by comparison disparaged and demeaned the advertised carpeting. By these and other tactics, purchase of the advertised carpeting was discouraged and respondents through their salesmen attempted to and frequently did sell the higher priced carpeting. HOLIDAY CARPETS, INC. , ET AL. 679 673 Complaint 2. Respondents' products were not being offered for sale at special or reduced prices, and purchasers were not thereby afforded savings from respondents ' regular selling prices. In fact respondents do not have a regular sellng price. 3. Purchasers of the advertised merchandise did not receive without any additional cost or obligation a "free" vacation for two in Atlantic City, Miami or Las Vegas. Transportation and meals were not included with the "free" vacation and during certain months of the year, the recipient of the "free" vacation had to pay a portion of the daily room rent. Among other conditions and obligations, in some instances after commencing the vacation the recipient was required to attend lectures of two to three hours duration about investment opportunities in land. 4. Respondents ' carpets and floor coverings are not unconditionally guaranteed for the period of time specified. Such guarantees as they may have provided customers were subject to conditions and limitations not disclosed in respondents' advertising. 5. A finance company was involved in many instances in the financing of the customer s purchase and the customer s account was not customariiy and usually discounted, negotiated or assigned to a bank.

6. Respondents did not regularly arrange financing of purchases for which no down payment was required or on the weekly and monthly terms stated.

7. Some of the carpeting mentioned in such advertisements had a rubberized backing and was not installed with separate padding included at the advertised price.

8. The advertised carpeting was not avaiiable in thirty-five different colors from which the prospective purchaser might choose. Therefore, the statements and representations as set forth in Paragraphs Nine and Ten hereof were and are false, misleading and deceptive.

PAR. 12. In the course and conduct of their aforesaid business, and at a11 times mentioned herein, respondents have been, and now are, in substantial competition, in commerce, with corporations, firms and individuals in the sale and distribution of rugs carpets and floor covering products and services of the same general kind and nature as those sold by respondents. PAR. 13. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices Complaint 76 F.

has had, and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken be- Jief 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. 14. The aforesaid acts and practices of respondents, as herein alleged, were and are a1l 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. Mr. Donald L . Bachman and Mr. Edward D. Steinman for the Commission.

Mr. Benjamin R. Civiletti Washington, D. , for respondents. INITIAL DECISION BY WALTER R. JOHNSON, HEAING EXAMINER OCTOBER 17, 1969 In the complaint which was issued on June 25, 1969, the respondents were charged with violating provisions of the Federal Trade Commission Act, the Textile Fiber Products Identification Act and the Rules and Regulations promulgated under the latter Act. Thereafter, the respondents filed their answer denying the allegations of the complaint in a1l material respects. On September 9 , 1969, complaint counsel and counsel for the respondents met with the hearing examiner in a reported prehearing conference. As a result thereof, an agreed order was issued which would aid in the disposition of the case. On September 26, 1969, counsel for both parties, for the purpose of effecting a settlement of the action pursuant to Section 34 (d) of the Commission s Rules of Practice and Procedure entered into an agreement containing a stipulation of facts and an agreed order wherein it was agreed that the hearing examiner and the Federal Trade Commission shan make findings of facts and conclusions of law on the basis of the stipulation and the record on which the decision shall be based shall consist solely of the Complaint and the Agreement. In the stipulation, respondents waive (a) any further procedural steps before the hearing examiner and the Commission; and (b) a1l rights to seek judicial re- HOLIDAY CARPETS, INC. , ET AL. 681 673 Initial Decision view or otherwise to challenge or contest the validity of the order entered pursuant to the agreement.

Upon consideration of the record herein, the hearing examiner makes the following findings of fact and conclusions: Respondent Holiday Carpets, Inc. , is a corporation organized existing and doing busine s under and by virtue of the laws of the State of Maryland, with its offce and principal place of business located at 11035 Viers MiJ Road in the city of Wheaton State of Maryland.

Respondent Robert M. Siegel is the principal offcer of said corporation. He formulates, directs and controls the acts and practices of the corporate respondent, including the acts and practices set forth in said complaint.

Respondents sell the majority of their carpets and floor coverings to customers who demand immediate delivery and installation. Said customers of respondents purchase carpeting and floor coverings custom fitted to their dwelling rooms which requires measurement, pre cutting and pre seaming of al1 carpeting and floor coverings. Respondents require both spouses to sign al1 documents necessary to the credit transaction when a married person purchases respondents' carpet and floor coverings on credit terms and conditions.

Respondents are now, and for some time last past have been engaged in the introduction, delivery for introduction, sale, advertising, and offering for sale, in commerce, and in the transportation or causing to be transported in commerce, and in the importation into the United States, of textile fiber products; and have sold, offered for sale, advertised, delivered, transported and caused to be transported, textile fiber products, which have been advertised, or offered for sale in commerce; and have sold, offered for sale, advertised, delivered, transported and caused to be transported, after shipment in commerce, textile fiber products either in their original state or contained in other textile fiber products; as the terms "commerce" and "textile fiber product" are defined in the Textile Fiber Products Identification Act. Certain of said textile fiber products were misbranded by respondents within the intent and meaning of Section 4 (a) of the Textile Fiber Products Identification Act and the Rules and Regulations promulgated thereunder, in that they were falsely and deceptively stamped, tagged, labeled, invoiced, advertised, or otherwise identified as to the name or amount of constituent fibers contained therein.

Initial Dccision 76 F.

Among such misbranded textile fiber products, but not limited thereto, were floor coverings which were falsely and deceptively advertised in The Washington Post, The Evening Star and The Washington Daily News, newspapers published in the District of Columbia, and having a wide circulation in the District of Columbia and various other States of the United States, in that the respondents in disclosing the fiber content information as to floor coverings containing exempted backings, fillings, or paddings failed to set forth such fiber content information in such a manner as to indicate that it applied only to the face, pile, or outer surface of the floor coverings and not to the exempted backings, fillings, or pad dings.

By means of the aforesaid advertisements and others of similar import and meaning not specifically referred to herein, respondents falsely and deceptively advertised textile fiber products in violation of the Textile Fiber Products Identification Act in that said textile fiber products were not advertised in accordance with the Rules and Regulations promulgated thereunder in that in disclosing the required fiber content information as to floor coverings containing exempted backings, filings, or paddings, such disclosure was not made in such a manner as to indicate that such required content information related only to the face, pile, or outer surface of the floor covering and not to the backing, filling, or padding in violation of Rule 11 of the aforesaid Rules and Regulations.

Certain of said textile fiber products were misbranded in that they were not stamped, tagged, labeled or otherwise identified with any of the information required under the provisions of Section 4 (b) of the Textile Fiber Products Identification Act. The acts and practices of respondents as set forth above were and are, in violation of the Textile Fiber Products Identification Act and the Rules and Regulations promulgated thereunder, and constituted, and now constitute, unfair methods of competition in commerce and unfair and deceptive acts and practices, in commerce, under the Federal Trade Commission Act. Respondents are now, and for some time last past have been engaged in the advertising, offering for sale, sale, distribution and installation of carpeting and floor coverings to the public. In the course and conduct of their business as aforesaid, respondents TInv cause, and for some time last past have caused their said merchandise, when sold, to be shipped from their places of business located in the District of Columbia and in the HOLIDAY CARPETS, INC. , E'l AL. 683 673 Initial Decision States of Maryland and Vriginia, to purchasers thereof located in various other States of the United States and the District of Columbia, and maintain, and at an times mentioned herein have maintained, a substantial course of trade in said merchandise in commerce as HCOTI1merce " is defined in the Federal Trade Commission Act.

In the course and conduct of their aforesaid business, and for the purpose of inducing the purchase of their carpeting and floor coverings, the respondents have made, and are now making, numerous statements and representations by advertisements inserted in newspapers and by oral statements and representations of their salesmen to prospective purchasers with respect to their products and services. Typical and illustrative of said statements and representations, but not an inclusive thereof, are the advertisements hereto attached and identified as "Appendix A. By and through the use of the aforementioned statements and representations, and others of similar import and meaning but not expressly set out herein, the respondents have represented, and are nO\v representing, directly or by implication: 1. That respondents are making a bona fide offer to sell the advertised carpeting and floor coverings at the price and on the terms and conditions stated in the advertisement. 2. By and through the use of the words "SALE SPECIAL SALE PRICE" and other words of similar import and meaning, that respondents' carpeting and floor coverings are being offered for sale at special or reduced prices, and purchasers are thereby afforded savings from respondents' regular selling prices. 3. That purchasers of the advertised merchandise receive without any additional cost or obligation a Hfree" vacation for two in Atlantic City, Miami or Las Vegas.

4. That respondents ' products are unconditionally guaranteed for a specified period of time.

5. By and through the use of the words "ALL BANK FINANC- ING BANK FINANCING" and words of similar import and meaning, that no finance company is involved in the financing of the customer s purchase and that the customer s account is discounted, negotiated or assigned to a bank. 6. By and through the statements "NO MONEY DOWN AS LOW AS S5 A MONTH NO MONEY DOW", AS LOW AS $2 A WEEK" and other similar statements and representations, that respondents regularly arrange financing of purchasers for no down payment and , Appendix A omitted in printing Initial Decision 76 F.

on the weekly and monthly terms stated.

7. By and through the use of the words "INCLUDES PADDING & INSTALLATION " and words of similar import and meaning, that aU of the carpeting mentioned in such advertisements is instaUed with separate padding included at the advertised price. 8. By and through the Use of the words "35 DECORATORS COL- ORS" and other words of similar import and meaning, that the advertised carpeting is available in thirty-five different colors from which the prospective purchasers may choose. In truth and in fact:

I. Respondents' offers were not bona fide offers to sell said carpeting and floor coverings at the price and on the terms and conditions stated in the advertisement, but were made for the purpose of obtaining leads to persons interested in the purchase of carpeting. After obtaining such leads through response to said advertisements, respondents or their salesmen called upon such persons, but made no effort to sell the advertised carpeting. Instead, they exhibited what they represented to be the advertised carpeting which, because of its poor appearance and condition was usually rejected on sight by the prospective purchaser. In some instances, respondents or their salesmen failed to have available or failed to show the advertised carpeting. Concurrently, higher priced carpeting or floor coverings of superior quality and texture were presented, which by comparison disparaged and demeaned the advertised carpeting. By these and other tactics, purchase of the advertised carpeting was discouraged and respondents through their salesmen attempted to and frequently did sell the higher priced carpeting. 2. Respondents' products were not being offered for sale at special or reduced prices, and purchasers were not thereby afforded savings from respondents ' regular sellng prices. In fact respondents do not have a regular selling price. 3. Purchasers of the advertised merchandise did not receive without any additional cost or obligation a "free" vacation for two in Atlantic City, Miami or Las Vegas. Transportation and meals were not included with the "free" vacation and during certain months of the year, the recipient of the "free" vacation had to pay a portion of the daily room rent. Among other conditions and obligations, in some instances after commencing the vacation the recipient was required to attend lectures of two to three hours duration about investment opportunities in land. 4. Respondents' carpets and floor coverings are not uncondi- HOLIDAY CARPETS, INC. , ET AL. 685 673 Initial Decision tionany guaranteed for the period of time specified. Such guarantees as they may have provided customers were subject to condilions and Jimitations not disclosed in respondents' advertising. Ii. A finance company was involved in many instances in the financing of the customer s purchase and the customer s account was not customarily and usually discountcd, negotiated or assigned to a bank.

6. Respondents did not regularly arrange financing of purchases for which no down payment was required or on the weekly and monthly terms stated.

7. Some of the carpeting mentioned in such advertisements had a rubberized backing and was not installed with separate padding included at the advertised price.

8. The advertised carpeting was not available in thirty-five different colors from which the prospective purchaser might choose. Therefore, the statements and representations as set forth hereinabove were and are false, misleading and deceptive. In the course and conduct of their aforesaid business, and at an times mentioned herein, respondents have been, and now are, in substantial competition, in commerce, with corporations, firms and individuals in the sale and distribution of rugs, carpets and floor covering products and services of the same general kind and nature as those sold by respondents.

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 erroneous and mistaken belief that said statements and representations were and are true and into the purchase of wbstantial quantities of respondents' products and services by reason of said erroneous and mistaken belief. 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.

ORDER It is ordered That respondents Holiday Carpets, Inc., a corpo- 686 FEDERAL TRADE CO:VIIVIISSION DECISIONS Initial Decision 76 F.

ration, and its offcers, and Robert M. Siegel, individual11y 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 introduction, sale, advertising, or offering for sale, in commerce, or the transportation or causing to be transported in commerce, or the importation into the United States of any textile fiber product; or in connection with the sale offering for sale, advertising, delivery, transportation or causing to be transported, of any textie fiber product which has been advertised or offered for sale, in commerce; or in connection with the sale, offering for sale, advertising, delivery, transportation, or causing to be transported, after shipment in commerce, of any textile fiber product, whether in its original state or contained in other textile libel' products, as the terms "commerce" and "textile fiber product" are defined in the Textile Fiber Products Identification Act, do forthwith cease and desist from: A. :\1isbranding textile fiber products by; 1. Falsely or deceptively stamping, tagging, labeling, invoicing, advertising, or otherwise identifying such products as to the name or amount of constituent fibers contained therein.

2. Failing to set forth that the required disclosure as to the fiber content of floor coverings relates only to the face, pile, 01' outer surface of such products and not to exempted backing, filling 01' padding, when such is the case.

B. Falsely and deceptively advertising textie fiber products by failing to set forth in disclosing the required fiber content information as to floor coverings containing exempted backings, mlings, 01' paddings, that such disclosure relates only to the face, pile or outer surface of such textile fiber products and not to the exempted backings, fillings or paddings.

It is fn?'the?' o?'dered That respondents Holiday Carpets, Inc. , a corporation, and its omcers, and Robert IVI. Siegel, individual11y and as an offcer of said corporation, and respondents' agents representatives and employees, directly or through any corporate 01' other device, in connection with the advertising, offering for sale, sale 01' distribution of carpeting and floor coverings, or any other articles of merchandise, in commerce, as "commerce" is de- HOLIDAY CARPETS, INC. , ET AL. 687 673 Initial Decision do forthwith ceasefined in the Federal Trade Commission Act, and desist from:

scheme or device 1. Using, in any manner, a sales plan, wherein false, misleading or deceptive statemcnts or representations are made in order to obtain leads or prospects for the sale of other merchandise or services. 2. Advertising or offering merchandise for sale for the purpose of obtaining leads or prospects for the sale of different merchandise when the advertised merchandise is inadequate to perform the functions for which it is offered and respondents do not maintain a reasonably adequate and readily available stock of said advertised merchandise. 3. Discouraging the purchase of or disparaging any merchandise or services 'which are advertised or offered for sale.

4. Representing, directly or by implication, that any merchandise or services are offered for sale when such offer is not a bona fide offer to sell such merchandise or services. 5. Representing, directly or by implication, that any price for respondents' products or services is a special or sale price, when such price does not constitute 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, regular course of their business. 6. (a) Representing in any manner, that by purchasing any of said merchandise, customers are afforded savings amounting to the difference between respondents' stated price and respondents' former price unless such merchandise has been sold or offered for sale in good faith at the former price by respondents for a reasonably substantial period of time in the recent, regular course of their business.

(b) Representing, in any manner, that by purchasing any of said merchandise, cllstomers are afforded savings amounting to the difference between respondents' stated price and a compared price for said merchandise in respondents ' trade area unless a substantial number of the principal retail outlets in the trade area regularly sell said merchandise at the compared price or some higher price.

(c) Representing, in any manner, that by purchasing any of said merchandise, customers are afforded savings Initial Decision 76 F.

amounting to the difference between respondents' stated price and a compared value price for comparable merchandise, unless substantial sales of merchandise of Jike grade and quality are being made in the trade area at the compared price or a higher price and unless respondents have in good faith conducted a market survey or obtained a simiiar representative sample of prices in their trade area which establishes the validity of said compared price and it is clearly and conspicuously disclosed that the comparison is with merchandise of Jike grade and quality.

7. Failng to maintain adequate records (a) which disclose the facts upon which any savings claims, including former pricing claims and comparative value claims and similar representations of the type described in paragraphs 5, 6(a)- (c) and 7 of this order are based, and (b) from which the validity of any savings claims, including former pricing claims and comparative value claims, and similar representations of the type described in paragraphs 5, 6(a)- (c) and 7 of this order can be determined.

8. Representing, directly or by implication, that a purchaser of respondents' products or services will receive a free" vacation or any other prize or award unless all conditions, obligations or other prerequisites to the receipt of such vacation, prize, or award are clearly and conspicuously disclosed.

9. Representing, directly or by implication, that any product or service is guaranteed, unless the nature and extent of the guarantee, the identity of the guarantor and the manner in which the guarantor wi1' perform thereunder are clearly and conspicuously disclosed. 10. Misrepresenting, through the use of words such as ALL BANK FINANCING " or "BANK FINANCING " or in any other manner, that respondents usually and customariiy discount, negotiate, or assign customers' conditional sale contracts, promissory notes or other instruments of indebtedness to a bank, rather than to a finance company or other third party unless respondents do in fact usually and customarily assign such customers' instruments of indebtedness to a bank.

HOLIDAY CARPETS, INC. , ET AL. 689 673 Initial Decision 11. Representing, directly or by implication, that respondents sell their products for "NO MONEY DOWN " or that respondents sell their merchandise without requiring a down payment, unless such is the fact. 12. Misrepresenting, in any manner, the credit arrangements made by respondents, or the amount or number of periodic credit installment payments necessary to pay the balance due on products or services purchased from respondents.

13. Representing, in any manner, that a stated price for floor covering includes the cost of a separate padding and the installation thereof, unless in every instance where it is so represented, the stated price for floor covering does in fact include the cost of such separate padding and installation thereof.

14. Misrepresenting, in any manner, the prices, terms or conditions under which respondents supply separate padding in connection with the sale of floor covering products.

15. Misrepresenting the number of colors available of the advertised carpeting.

16. Failing to deliver a copy of this order to cease and desist to a1l 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 fUTtheT ordered That the respondents herein shall, in connection with the offering for sale, sale or distribution of carpeting and floor coverings, or any other articles of merchandise when the offer for sale or sale is made in the buyer s home, forthwith cease and desist from:

1. Contracting for any sale whether in the form of trade acceptance, conditional sales contract, promissory note, or otherwise which shall become binding on the buyer prior to midnight of the third day, excluding Sundays and legal hoJidays, after date of execution.

2. Failing to disclose, orally prior to the time of sale and in writing on any trade acceptance, conditional sales con- 690 FEDERAL TRADE CO:VIMISSION DECISIONS Initial Decision 76 F.

tract, promissory note or other instrument executed by the buyer with such conspicuousness and clarity as Jikely to be observed and read by such buyer, that the buyer may rescind or cancel the sale by directing or mailing a notice of cancellation to respondents' address prior to midnight of the third day, excluding Sundays and legal holidays, after the date of the sale. Upon such cancellation the burden shan be on respondents to collect any goods left in buyer s home and return any payments received from the buyer. Nothing contained in this right-to-cancel provision shall relieve buyers of the responsibility for taking reasonable care of the goods prior to cancellation and during a reasonable period following cancellation.

3. Failng to provide a separate and clearly understandable form which the buyer may use as a notice of cancellation. 4. Negotiating any trade acceptance, conditional sales contract, promissory note, or other instrument of indebtedness to a finance company or other third party prior to midnight of the flfth day, excluding Sundays and legal holidays, after the date of execution by the buyer. This provision wi1 not be applicable when there has been a waiver or modification of the customer s right to rescind the transaction and such waiver or modification was made pursuant to Paragraph 6 of Part lit hereof.

5. P1'v-ided, however That nothing contained in Part III of this order shall relieve respondents of any additional obligations respecting contracts made in the home required by federal law or the law of the state in which the contract is made. When such obligations are inconsistent respondents can apply to the Commission for relief from this provision with respect to contracts executed in the state in which such different obligations are required. The Commission, upon proper showing, shall make such modifications as may be warranted in the premises.

6. P'/'ovided, how",uer That nothing contained in Part III of this order to the contrary, a customer may modify or waive his right to rescind a transaction if the customer furnishes the seller with a scparate dated and signed personal statement demanding immediate delivery and installation and ordering measurement, precutting and preseaming of carpeting or floor covering to the specifications of his dwe11ing. The use of printed forms for this purpose is prohibited. HOLIDAY CARPETS, INC. , ET AL. 691 673 Initial Decision It is further ordered That the respondent corporation shall forthwith distribute a copy of this order to each of its operating divisions.

It is further ordel' That respondents notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or any other change in the corporation which may affect compliance obligations arising out of the order. It is furthe1' 01'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 of their compliance with this order. FII\AL ORDER No appeal from the initial decision of the hearing examiner having been filed, and the Commission having determined that the case should not be placed on its own docket for review and that pursuant to Section 3.51 of the Commission s Rules of Practice (effective July 1 , 1967), the initial decision should be adopted and issued as the decision of the Commission: It is ordered That the initial decision of the hearing examiner shall, on the 20th day of November, 1969 , become the decision of the Commission.

It is fU1'that o'/'dered That Holiday Carpets, Inc. , a corporation and Robert :VI. Siegel, individually and as an offcer of said corporation, shall, within sixty (60) days after service of this order upon them, file with the Commission a report in writing, signed by the respondent named in this order, setting forth in detail the manner and form of their compliance with the order to cease and desist.

Complaint 76 F.