Love Television & Stereo Rental, Inc

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Ly tee Marre: OF “LOVE TELEVISION & STEREO RENTAL, ING, ET AL. “CONSENT ORDER, 3 ETC, IN REGARD ‘To THE ‘ALLEGED vroLamr0N or THe ' FEDERAL TRADE COMMISSION Act’ Docket C-2245: Complaint, July 14, 1972—Decision, Tuy 11, 1972. Conseiit order requiring three ‘firms, ‘located. in Atlanta’ “Georgia, Jacksonville, : , Florida, and Houston,’ Texas, engaged i in the sale and rental'of television sets * ‘and steréo equipment to cease, among.other:things, : misrepresenting, the cost! and selling terms and conditions of.their merchandise... wep “Comerainr *”

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) Love ‘Television & Stereo Rental, Inc.; Love Television & Stereo: Rental of Jacksonville, : Inc., Love Television. & Stereo’ Rental of Houston; Inc:, Gates Rental, Ine., anid Babcock Management: Corporation, corporations, and Melvin ‘ D: Babeoek and Galen’ E. Gates, individually ‘and ‘as officers 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: Paracrapy 1. Respondent Love Television & Stereo Rental, Inc., is a corporation organized, existing and doing business under and by» virtue of the laws of the State of Kansas, with its principal office and place of business located at 493 Peachtree Street, Atlanta, Georgia. Respondent Love Television & Stereo Rental of J: acksonville, Inc:, is a corporation organized, existing and doing business under and by virtue of the laws of the State of Georgia, with its principal office and place of business located at 1876 West 45th Street, J acksonville,. Florida.

Respondent Love Television & Stereo Rental of Houston, Inc, is a corporation organized, existing and doing business under and by virtue of the laws.of the State of Georgia, with its principal office and place of business located at 4826 Almeda Road, Houston, Texas. ’ Respondent Gates Rental, Inc., is a: corporation organized, existing’ and doing business under and: by virtue of the laws of the State of - Georgia, with its principal office and place of business located at 9221 Jensén Drive, Houston, Texas.

Respondent Babcock Management Corporsition i isa corporation: organized, existing and doing business: under and by virtue of the laws: LOVE TELEVISION & STEREO RENTAL, ‘INC., ET AL, 87- 86 Complaint of ‘thé State of’ Georgia, ‘with its priticipal ‘office and place of business’ located at 3355 Lénox Road, Suite 226, Atlanta, Georgia. ‘Respondent: Babcock Management Corporation owns and controls all the shares of the other corporate respondents...

. Respondents Melvin. D.. Babcock and Galen E. Gates are officers of. said corporations.’They formulate, direct and-control the policies, acts and’ practices of ‘said corporations and. their address is 8355 ‘Lenox: Road, Suite 226, Atlanta; Georgia. © Par. 2. Respondents are now, and for some time in the past have been, engaged in the advertising for’sale and rental, sale and rental of televisions and stereophonic equipment to the public i in the states of Georgia, Florida and Texas. :

COUNT I -Alleging a violation ofthe Federal ‘Trade Commission Act, the allegations: of Paragraphs One.and 'T-wo:above:are incorporated by refer: ence as if fully set forth herein verbatim. chal Par. 3. In the-ordinary ‘course and’ conduct of: their business,‘ as” aforesaid, respondents now cause and for some time in ‘the past havé’ caused. their merchandise to be:advertised, rented, sold and distributed from their home office in Atlanta, Georgia to consumers in several other States of the United States, 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. 4. In the ordinary course and conduct of their aforesaid business and for the purpose of promoting the sale or rental of their merchandise, respondents have made and are now making statements and. representations in oral sales presentations to prospective customers, and in advertisements transmitted by radio, newspaper and other media with respect to the cost and terms of sale of their merchandise. | Typical and illustrative of said statements and representations, but not all inclusive thereof, are the following: We guarantee to you—our customer—the best Christmas present at the lowest price in town. Everything we have in stock is going for 1% to \% off the original price. Yes, now you can open your account with Love T.Y. for less. than. what you would pay for a child’s toy. * * * We do not check your credit. We have no down: payment, All. the rent goes’ toward the purchase *:* *° Ea /* * . 7 oe, * * Yes, it’s really ‘trué now: you can have a wooden cabinet console color TV with 23 inch square picture tube delivered to your home just by ealling Love 876-1561. 88. 1, FEDERAL TRADE ‘COMMISSION .DECISIONS: Complaint | ‘ 81 F.T.C..

*.* * You can’t, beat their low,.low rates. You can. have a, TV, and Stereo for only. $9. per week. That’s LOVE TV AND STEREO where. there are no credit checks, no credit delays orred tape. * eo :

* * eo en eo * * * Are you worried about your credit? Don’t be * *_* Love rentals doesn’t check your credit. ** * And Love ‘has free delivery within the Hour, If: your V7, or Stereo should evér ‘break:down' Love will fix it free: *.* * never a service” charge. *-* * You:can still open:your:account with us for: just ¢ one dollar and remember all the rent you pay goes toward the purchase, ; ; : That’s right. * * * For only.$2; you. get delivered right to. your home a brand new 1972 Model color Television. * * * Ask the man from Love just how easy it is. tiadied No red tape, no credit check, free delivery, and never. * * *T said} héver a repair bill to pay at Love TV and Stereo Rental. * * * Brand new merchandise delivered to your home for only $2. down.

* * * ee * * * - Par. 5. By and through the use of the above-quoted statements and representations, and others of similar import and meaning not: expressly set out herein, both separately and in conjunction with the oral statements and representations of their employees made to: prospective purchasers, respondents have represented, a and are now representing, directly or by implication, that:: : 1. Respondents’ “rent-to-buy plan” is an \ easy, inexpensive way to purchase a television or stereo.

2. Respondents will deliver a brand new television or stereo to a customer’s home without obligating the customer to pay more than an initial $2.

8. Respondents will deliver and repair all merchandise free of charge.

Par. 6. In truth and in fact: :

1. The purchase price of a television or stereo under respondents’: plan i is in virtually all instances far in excess of the generally prevailing trade area price of the merchandise.

2. Customers are obligated for the downpayment plus the charge for the first rental period at the time the merchandise is: delivered to their home.

38. Customers. pay a highly inflated rental charge which includes the charge for delivery and repairs.

Therefore, the statements and representations set t forth j in Paragraphs Four and Five hereof were, and are, 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 LOVE TELEVISION &: STEREO. RENTAL, INC., ET AL. 89: 86. 0° ©. Decision and Order:

individuals, engaged in the sale and rental of,merchandise of the samp, general kind and nature as that sold by the respondents. . : ing and ‘deceptive. statements, representations and, “practioas 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 and. rental of: substantial quantities. of. respondents’ merchandise by: reason of said erroneous.and mistaken belief. . 3... ma, Par. 9. The aforesaid acts and practices of respondents, as, s herein. alleged; were and are all to the prejudice.and.injury of. the public and of respondents’ competitors and, constituted, and now constitute, unfair acts and. practices,in commerce, in violation. of Section, 5 of the Federal Trade Commission ‘Act, n COUNT IL Alleging violation of Section 5 of the Federal Trade: ‘Commission Act, the allegations of Paragraphs One, Two and Three ‘are incorporated by reference as if fully set forth herein verbatim. | o : Par. 10. In the ordinary course and conduct of their aforesaid business respondents cause and for some time in the past have caused their customers to execute a document designated as a rental agreement, hereinafter referred to as the contract. In addition to the terms of the contract set forth in writing, respondents make oral representations to their customers which they incorporate by reference into the contract. Illustrative but not inclusive of these oral terms is respondents’ promise to relinquish all their rights to the leased merchandise after the customer has made a specified number of rental payments. Par. 11. By and through the practice of disclosing some terms of the contract in writing and others orally respondents deprive their customers of full knowledge of their rights and obligations under the contract and deny them the means of enforcing those terms of the contract most favorable to the purchaser. Therefore, the aforesaid method of contracting constitutes an unfair act or practice 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 hereto 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 494-841—73——_-7 90 - * “FEDERAL TRADE’ COMMISSION ‘DECISIONS °°. Décision:and Order: 81 F.T.C.

coniplaint the Commission intended’ toi ‘issue, together with: a ‘proposed form of orders aiid" ane “The yespondents- and éoutisél fort the’ ‘Commission: having thereafter executed an’'dgreement containing a consent: order, an’ admission by the respondents of all the’ ‘jurisdictional. facts ‘set’ forth:in the com~ plaint to isstie herein; a staténient that the signing of ‘said agreement! is for settlement’ purposes: only: and does’ not constitute ‘an admission: by réspondents that the-law has been’ violated: as'alléged in such’ com-: plaint, and waivers Sand, other: provisions: as Fequined by the Commis: sion’s rulés; and! \: :

“The. Commission Hii ving: coitsldeied the sigirseintatt! and having: provisionally accepted ‘samé,- anid’ the: ‘agreenient’ containing consent. order’ having thereupon’ been! placed on’ the public record: for a period: of thirty (30) days, now in further conformity with the proéedure pre+ scribed in Section 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 Love Television & Stereo. Rental,. Inc,, is a corpora~ tion organized, existing and doing business under and by, virtue of the laws of the. State of Kansas,, with its. office and principal place of business located at 605 Ashby. Street, in the city of Atlanta, State of Georgia.

Respondent Love Television & Stereo Rental of Jacksonville, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Georgia, with its office and principal. place of business located at 5412 Norwood Avenue, in the city of Jack-. sonville, State of Florida..

Respondent Love Television & Stereo Rental of Houston, Tne, isa corporation organized, existing and doing business under and by virtue of the laws of the State of-Georgia, with its office and principal place of business located at 4826 Almeda-Road, in the city of Houston, State of Texas.

Respondent Gates Rental, Ine., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Georgia, swith its office and principal place of business located at 9221 Jensen Drive, in the city of Houston, State of Texas. Respondent Babcock Management Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of Georgia, with its office and principal place of business located at 2030 Pernoshal Court, DeKalb County, State of Georgia. Respondent Babcock Management Corporation owns and controls all the shares of the other corporate respondents. LOVE TELEVISION: &°STEREO! RENTAL, INGijiET AL. 91: 8650 Decision :and. Order.

Respondents. Melvin: D. -Babcock:and ‘Galen: E. Gates: are officers of. said corporations. They formulate, direct:and control'the policies, acts and practices of said:corporations, and their principal office and place of business is located at’ 2030: ‘Fernoshal Court, ‘DeKalb County, State of Georgia::

2. The. Federal: Trade: Commission: has. jurisdiction of the subject matter of this proceeding and of the xe respondents, ¢ and the proceeding: isin the public interest. Pe pote ee Jap cuba Oe ; mo ier 3 | ORDER 2 bs sido:

dt ts ordered, That: respondents Love. Television & Stereo Rental, Inc, Love, Television. & Stereo. Rental. ‘of, Jacksonville, Ine., Love Television & Stereo Rental of Houston, Inc., Gates. Rental, Inc..and Babcock Management Corporation, corporations, and their officers, and Melvin D. Babcock and Galen E, Gates, individually. and as officers of said corporations, and their. ‘successors ;or assigns, and respondents’ agents, representatives. and employees, directly or through any corporate or other device, in. connection. with the 0 advertising, equipment o or any other merchandise, i in ‘cominerce, as.‘ “commerce” is defined in the Federal Trade Conimission Act, do forthwith cease and desist from :

1. Representing 1 in any advertisement, directly or by implication, or in any oral statements made to a customer, that an individual can rent or purchase any of respondents’ merchandise at a discount price, or an inexpensive price, or. an advantageous price, or for any specified amount, payment or period of time without disclosing in every instance in a clear and meaningful way, the average prevailing retail price of the merchandise or comparable merchandise using the term “average retail price” together with either :

(a) the total dollar cost to the individual of purchasing the same merchandise under respondents’ “rent-to-buy” plan, using the term “our total purchase price;” or. (b) the total charge for renting the same merchandise for twelve months, using the term “rent for one year.” _. In determining average retail price respondents shall conduct a statistical ¢ survey of ten principal retail establishments. in their trade area to establish the average retail price of the same or comparable merchandise, and obtain and maintain for at least two years all documents establishing the manner in which the survey was conducted, including: 92 wit, CEKEDERAL “TRADE! COMMISSION. DECISIONS :. Decision and Order. 81 F.T.€:

(2): the name(s) of respondents’ representatives wha 0 performed the survey 3. :

- (ID). the names of the retail establishments surveyed; - (I). the date(s):of the'survey;)- Penta (IV) identification (including name of manufacturer: and ‘> serial mmumnber): lof the: same; or comparable merchandise : surveyed; Se li ba Es er a al aPhae (V) price at which the same or comparable ierchaindise was offered for: sale by the retail establishments 7 surveyed. _ 9, “Representiiig, ‘di rectly” or. ‘by, ‘iinplication, that’ respondents : ill ‘perform ally: ervice or offer any merchandise free of, char ge vs to any customer." * nan 8, Engaging in thé sale or rental of their merchandise without “ fiirnishing each customer with a document whichi may be retained at the outset of the transaction, setting forth in writing every ‘term os and conditioti' of said sale or’ rental transaction ina clear, ‘Con spicuous and meaningful 1 manner. :

“4, Misrepreseiting, i in any mazinér, the advantages, arnouirits; rates, terms or conditions of respondents’ sale or-rental plans. Tt is further ordered, That the individual respondents named herein promptly notify the Commission of the discontinuance of their present business or employment and of their affiliation with a new business or employment. Such notice shall include respondents’ current business or employment in which they are engaged as well as a description of their duties and responsibilities.

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 respondents notify the Commission at least 30 days prior to any proposed change in the corporate respondents 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 corporations which may affect compliance obligations arising out of the order.

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. NEIGHBORHOOD : PERIODICAL. :CLUB,: INC. 93 Complaint