Sir Carpet, Inc

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

IN THE MATTER OF SIR CARPET, INC., ET AL.

ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF' THE FEDERAL TRADE COMMISSION ACT Docket 8981. Complaint, July, 1974 - Deciion, Feb- 197.'i Order requiring a Takoma Park, Md., cart retaler and installer, among other things to cease using bait and switch tactics and other deceptive saes practices. Appearances For the Commission: Everette E. Thomas, Alice C. Kelleher and Gary M. Laen.

Order 85 F.

ing to hinder, suppress or eliminate competition between or among distributors or between or among retailers bandling Coors beer. It is further ordered That respondent corporation shall forthwith distribute of copy of this order to each of its operating divisions, to its present and future sales representatives, to its present and future distributors.

It is further ordered That respondent notify the Commssion 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 subsidiares or any other change in the corporation which may affect compliance obligations arising out of the order. In the event that respondent proposes a change in the corporate respondent, as set forth above, respondent shall require said successor or transferee to fie, with the Commission, at the time of respondent' notification, a wrtten agreement to be bound by the terms of this order; Provided That if respondent wishes to present to the Commission any reasons why said order should not apply in its present form to said successor or transferee, respondent shall submit to the Commission a wrtten statement setting forth said reasons at least sixty (60) days prior to the consummation of said succession or transfer. It is further ordered That respondent herein shall, within sixty (60) days after service upon it of this order, fie with the Commssion a report, in writing, setting forth in detail the manner and form in which it has complied with this order.

Commissioner Thompson did not participate.

IN Tile MA'IR SIR CARPET, INC., ET AI,.

ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE I"EDERAL TRADE COMMISSION ACT Dot;ket 8981. Complaint, July, 197.4 - Decision, Feb. , 1975 Order requiriqg a Takoma Park, Md., carpt retaler and installer, among other things to cease using bait and switch tactics and other deceptive sales practices. Appearances C. Kelleher and Gary For the Commission: Everette E. Thoma, Alice M. Laen.

SIR CAH.t", l1' L..u h_.

190 Complaint For the respondents: John Ii Harm.an, Coggin.", Fireison & Harmn Wash. D. C.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virture of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Sir Caret, Inc., a corporation and Bennett Weiner, individually and as an offcer of said corporation, hereinafter sometimes 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 Sir Caret, Inc. is a corporation organized, existing and doing business under and by virue of the laws of the State of Marland with its principal offce and place of business located at 6836 New Hampshire Ave., Takoma Park, Md. Respondent Bennett Weiner 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 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 advertising, offering for sale, sale, distribution and installation of careting and floor coverings to the public. PAR. 3. In the course and conduct of their business as aforesaid respondents now cause, and for some time la.c;t pa.,;t have caused, their said merchandise, when sold, to be shipped from their place of business located in the State of Maryland, to purchasers thereof located in varous other States of the United States and the District of Columbia and maintain and at all times mentioned herein have maintained, a substantial coure of trade in said merchandise in commerce, as commerce" is defined in the Federal Trde Commission Act. PAR. 4. In the course and conduct of their aforesaid business, and for the purose of inducing the purhase of their careting and floor coverings, respondents have made, and are now making, numerous statementf. and representations by repeated advertisements inserted in newspapers of interstate circulation, and by oral statements and representations of respondents' salesmen to prospective purchasers with respect to their products and servces. Typical and illustrative of said statements and representations, but not all inclusive thereof, are the following: QUALITY WALL-TO-WALL a Rooms !OO'! NYLON PILE CARPET $109 Complaint 85 F.T.C.

includes carpet, bonded padding and installation up to 270 sq. feet FREE VACUUM CLEANER with the purchase of Our Deluxe 501 :36 sq. yd. minimum PAR. 5. By and through the use of the above quoted statements and representations, and others of similar import and meaning but not expressly set fortb herein, separately and in connection with the oral statements and representations of respondents' salesmen to customers and prospective customers, respondents have represented, and are now representing directly or by implication, that: I. 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 advertisements.

2. Purchasers of the said Dupont 501 Caret receive a "free vacuum cleaner.

PAR. 6. In truth and in fact:

I. Respondents' offers are not bona fide offers to sell carting and floor coverings at the price and on the terms and conditions stated in the advertisements. To the contrary, said offers are made for the purose of obtaining leads to persons interested in the purchase of carpeting. Members of the purchasing public who respond to said advertisements are called upon in their homes by respondents salesmen, who make no effort to sell to the prospective customer the advertised carpeting. Instead, they exhibit what they represent to be the advertised carpeting which, because of its poor appearance and condition, is frequently rejected on sight by the prospective customer. Higher priced carpeting or floor coverings of superior quality and texture are thereupon exhibited, which by comparison disparges and demeans the advertised carpeting. By these and other tactics, purchase of the advertised carpeting is discouraged, and respondents' salesmen attempt to sell and frequently do sell the higher priced careting. 2. Purchasers of. respondents' Dupont 501 Caret do not receive a free vacuum cleaner. To the contrary, the cost of the " free" git is added to and regularly included in the selling price of the merchandise sold to the customer.

Therefore, the statements and representations as set forth in SIR CARPET, INC., ET AI,. 193 190 Complaint Paragraphs Four and Five hereof were and are false, misleading and deceptive.

PAR. 7. In the further course and conduct of their business, and in furherance of a sales program for inducing the purchase of their careting and floor coverings, respondents' salesmen or representatives have engaged in the following additional unfair, false, misleading and deceptive acts and practices:

In a substantial number of instances, through the use of the false misleading and deceptive statements, representations and practices set forth in Paragraphs Four through Six above, respondents or the representatives have been able to induce customers into signing a contract upon initial contact without giving the custolTer suffcient time to carefully consider the purchase and consequences thereof. Therefore, the acts and practices as set forth in Paragraph Seven hereof were and are unfair and false, misleading and deceptive acts and practices.

PAR. 8. In the furher course and conduct of their aforesaid business and in connection with the representations set forth in Paragrph Four above, respondents offer caret with padding and installation included at a price based upon specified areas of coverage. In making such offer respondents have failed to disclose the material fact that the prices stated for such specifed areas of coverage are not applied at the same rate for additional quantities of caret needed, but are priced substantially higher.

The aforesaid failure of respondents to disclose said material facts to purchasers has the tendency and capacity to lead and induce a substantial number of such persons into the understanding and belief that the prices charged for quantities of caret needed in excess of the specifed areas of coverage will not be substantially higher than the rate indicated by the initial offer.

Therefore, respondents' failure to disclose such material facts wa.r; and is, unfair, false, misleading and deceptive. PAR. 9. In the further coure and conduct of their business, and for the purpose of inducing the purchase of their products, respondents use the term "up to 270 sq. ft." to indicate the quantity of carting available at the advertised price.

PAR. 10. The unit of measurement usually and customarly employed in the retail advertising of cart is square yards. Consumers are accustomed to comparing the price of in tenns of price per cart square yard, therefore respondents' use of the square foot unit of measurement confuses consumers who compare respondents' prices with competitors' prices advertised on a square yard basis. Furhermore, respondents' use of square foot measurements exag- 194 Em;RAL TRADE COMMISSION DECISIONS Initial Decision 85 F.

gerates the size or quantity of carpeting being offered, and therefore has the capacity and tendency to mislead consumers into the mistaken belief they are being offered a greater quantity of carpet than is the fact.

Therefore, the acts and practices as set forth in Paragraph Nine hereof were and are unfair, false misleading and deceptive. PAR. 11. In the further 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 corprations firms and individuals in the sale and distribution of rugs, carpting and floor coverings and services of the same general kind and nature as those sold by respondents.

PAR. 12. The use by respondents of the aforesaid false, misleading and deceptive statements, representations, acts and practices, and their failure to disclose material facts, as aforesaid, 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 complete and into the purchase of substantial quantities of respondents' products and services by . reason of said erroneous and mistaken belief. PAR. 13. The aforesaid acts and practices of respondents, as herein alleged, were and are all to the prejudice and injur of the public and of respondents' competitors and consitututed, 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 Trde Commission Act.

INITIAL DECISION BY JOSEPH P. DU RESNE, ADMINISTRATIVE LAW JUDGE NOVEMBER 12, 1974 PRELIMINARY STATEMENT In a complaint issued on July 8 1974, in accord with its Rule 3. , the Federal Trade Commission instituted a proceeding charging responc dents with unfair and deceptive representations and unfai acts and practices. Specifcally, respondents were charged with advertising, offering for sale, sale, distribution and installation of carting and floor coverings to the public in violation of Section 5 of the Federa Trade Commission Act (15 D. C. 945). Pror to issuance of the formal complaint, unsuccessful attempts to sette the matter were made. In their answer to complaint, respondents admitted each material allegation, count and paragraph in the complaint, without prejudice. SIR CARPET, INC., F.T AL. 195 190 Initial Decision They specifically objected to those provisions in the proposed order accompanying the complaint calling for the inclusion in each advertisement by respondents of a notice set off from the text by a black border which would read as follows:

The Federal Trade Commission has found that we engage in bait and switch advertising; that is, the salesman makes it diffcult to buy the advertised product and he attempts to switch you to a higher priced item. Below, this is referred to as the black border provision. Commission Rule 3.I2(b)(2) provides that when respondent' s answer contains an admission of the allegations made in the complaint, the answer constitutes a waiver of hearings. The rule permits respondents to submit proposed findings, conclusions and order, together with reasons therefor and supporting briefs, in accord with Rule 3.46. Pursuant to these rules, the undersigned ordered both parties to submit such proposed findings of fact, conclusions of law and order together with reasons and briefs. In their submittal, respondents again admitted the material allegations of the complaint but took exception to the black border provision in the proposed order. THE BLACK BORDER PROVISION The provision appears to the undersigned to be more a punishment of respondents than an action oriented toward putting a stop to and preventing recurence in the future of acts and practices violative of Section 5 of the Federal Trade Commission Act. Rather than being corrective in the traditional sense or callng for affirmative disclosure related to the careting sold, the black border provision smacks of a personal requirement that a scarlet letter is to be worn on respondents chests or that a tattooed number is to be placed on their ars or that a placard is to be hung about their necks proclaiming their having been found guilty of a "crime." To my way of thinking, a requirement of this sort is more a punishment than a corrective action and it is well settled that the Commission may not punish respondents. Coro, Inc., et al. Federal Trade Commission 338 F.2d 149, 153 (1st Cir. 196), cert. denied 380 U.S. 954 (1965). The purpse of the Federa Trade Commission Act is protection of the public, not punishment of a Commission. 116 F.wrongdoer. Gimbel Bros. Inc. v. Federal Tra 578 (2d Cir. 1941).

It also is well setted, however, that the Commission may order both affrmative acts and affirmative disclosures and that it has broad discretion in determning the typ of order necessar to insur discontinuance of the unlawful practices found. The basic requirement is that the corrective action ordered must be reasonably related to the Initial Decision 85 F.

unlawful practices found to exist. Corrective Advertising Orrs of the Fedeml Trade Commission " 85 Harvard Law Review 477, 498. There are many decisions by the courts in which Commission orders callng for mandatory acts or disclosures by respondents were upheld. But, in each I have read, the orders were designed to bring an end to the offensive practice directly or to apprise consumers of factual information regarding a product, rather than by requiring respondents to publicize the fact in all of their advertisements that they have been found to have engaged in bait and switch tactics or some other specific unlawful trade practice. Some examples of the typical "coITective order cases are: mandatory patent licensing under Section 5 of the C. Act. American Cyanamid Co. v. Fedeml Trad Commission 363 F.2d 757 (6th Cir. 1966); requiring a disclosure that most states do not accept correspondence courses for admission to the bar. La Salle Exlension University, 78 F. C. 1272 (1971), affd. No. 71-1648 (7th Cir. Oct. 23, 1973 (unreported)); requiring the makers of "Geritol" to disclose that most persons do not have deficiencies in vitamins the product contains. The J. B. Williams Co. Inc. and Parkson Advertising Agency, Inc. v. Fedeml Trade Commission 381 F.2d 88 (6th Cir. 1967); requiring a disclosure that eating thinly sliced "Profie" bread is not as effective as represented for weight reduction ITT Continental Baking Co. Docket No. C-2015. 79 F. C. 248 (1971); requiring a disclosure that most baldness is of the male pattern type which is not helped by administering respondents' preparation Keele Ilair Scalp Specialists, Inc., et al. v. Fedeml Trad Commission 275 F.2d 18 (5th Cir. 1960), and numerous others.

Going beyond such requirements are those in which the Commission has required respondents to post a cease and desist order in their place of business and to furish a copy of the order to consumers on request or to media in which respondents advertise. Arthur Murry Studio of Washington, Inc., et al. v. Fedeml Trad Commission, 458 F.2d 622 (5th Cir. 1972), 78 F. C. 401 (1971); Robert W. Ricklefs, tja Cortland Music Co., F. C. File No. 702 3348, 1970- 1973 Transfer Binder, Trade Reg. Rep. 6.'j2 at p. 21681 (1971); Nelson James In"., et aI. File No. 712 3184, 1970-1973 Transfer Binder, Trde Reg. Rep. 629, at p. 21681 (1971). The requirements of the orders in the Arthur MUIdY, Ricklefs, and James cases, however, were the genesis of the add-to-thecontract-and - Iirovide-the-order-to--onsumers-on-request provision added to the order herein in substitution for the black border provision (Par. 16, order below).

There has been a consent order recently accepted by the Commission in which respondents agreed to a consent order containing a black border provision. William D. Campbell, Jr. and Jack S. Owens 190 Initial Decision individually, trading and doing business as Rhode Island Carpets Docket No 8946, Oct. 1, 1974 (84 F. C. 555). Most recently, however the Commission, in otherwse affirming the administrative law judges initial decisions, deleted black border provisions from cease and desist orders in the matters of Wilbanlcs Carpet Specialists, et al. Docket No. 8933 (Sept. 24, 1974 (84 F. C. 510)) and Tri-State Carpets, Inc., et at. Docket No. 8945 (Oct. 15, 1974 (84 F. C. 1078)). Both of those matters were litigated.

In my view, the black border provision called for in the proposed order does not bear a reasonable relationship to the unlawful practices admitted by respondents. Those practices are addressed in other provisions of the proposed order in that it contains anti-bait and switch provisions, cancellation provisions, a requirement that copies of the order are to be sent to the advertising media which respondents use and to sales personnel, etc. Nireslc Industries, Inc., et al. \C. Federal Trade Commission 278 F.2d 337 (7th Cir. 1960); Federal Tra Commission v. National Lead Co. et al. 352 U.S. 419 (1957); Federal Trae Comm.ission v. Ruberoid Co. 343 U.S. 470 (1952). These order provisions should bring an end to the bait and switch tactics in which respondents have been engaging and should provide for u* disclosure of informative facts in the interest of truth. Maurice J. Feil, et al., traing as Enurtone Com.pany v. Federal Trad Commission 285 F.2d 879, 899 (9th Cir. 1960). If they do not and respondents persist in their unlawful practices, they will be risking a District Cour awarding $10 00 per violation as a penalty for each violation of the final order (15 U. C. !145(l)). Therefore, having reviewed the complaint, answer, and the briefs submitted, the undersigned, in accord with Commssion Rule 3.I2(b)(2), makes the following findings of fact, conclusions and order comprising his initial decision.

FINDINGS OF FACT Respondent Sir Carpet, Inc. is a corporation organied, existing and doing business under and by viue of the laws of the State of Maryland with its principal offce and place of business located at 686 New Hampshire Ave., Takoma Park, Md.

Respondent Bennett Weiner is an officer 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 address is the same as that of the corporate respondent. 2. Respondents are now, and for some time last past have been engaged in the advertising, offering for sale, sale, distribution and installation of careting and floor coverings to the public. I nitial Decision S5 F.

3. 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 place of business located in the State of Maryland, to purchasers thereof located in varous 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. 4. In the course and conduct of their aforesaid business, and for the purpose of inducing the purchase of their carpeting and floor covering, respondents have made, and are now making, numerous statements and representations by repeated advertisements inserted in newspapers of interstate circulation, and by oral statements and repre15entations of respondents' salesmen to prospective purchasers with respect to their products and services.

Typical and ilustrative of said statements and representations, hut not all inclusive thereof, are the following: QUALITY WALL-TO-WALL 3 Rooms 100% NYLON PILE CARPET $109 includes caret, bonded padding and installation up to 270 sq. feet FREE VACUUM CLEANER with the purchase of Our Deluxe 501 36 sq- yd. minimum 5. By and through the use of the above-quoted statements and representations, and others of similar import and meaning hut not expressly set forth herein, separately and in connection with the oral statements and representation of respondents' salesmen to customers and prospective customers, respondents have represented, and are now representing directly or by implication, that: a. 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 advertisements.

b. Purchasers of the said Dupont 501 Carpt received a "free vacuum cleaner.

6. In truth and in fact:

a. Respondents' offers are not bona fide offers to sell carpeting and floor coverings at the price and on the terms and conditions stated in , SIH. L;J\!irJ" , U"- 190 Initial Decision the advertisements. To the contrary, said offers are made for the purose of obtaining leads to persons interested in the purchase of careting. Members of the purchasing public who respond to said advertisements are called upon in their homes by respondents salesmen, who make no effort to sell to the prospective customer the advertised carpeting. Instead, they exhibit what they represent to be the advertised carpeting which, because of its poor appearance and condition, is frequently rejected on sight by the prospective customer. Higher priced carpeting or floor coverings of superior quality and texture are thereupon exhibited, which by comparison disparages and demeans the advertised carpting. By these and other tactics, purchase of the advertised carpeting is discouraged, and respondents' salesmen attempt to sell and frequently do sell the higber priced carting. b. Purchasers of respondents' Dupont 501 Carpet do not receive a free vacuum cleaner. To the contrary, the cost of the "free" git is added to and regularly included in the selling price of the merchandise sold to the customer.

Therefore, the statements and representations a..: set forth in Paragraphs 4 and 5 hereof were and are false, misleading and deceptive.

7. In the furher course and conduct of their business, and in furherance of a sales program for inducing the purchase of their careting and floor coverings, respondents' salesmen or representatives have engaged in the following additional unfair, false, misleading and deceptive acts and practices:

In a substantial number of instaces, through the use of the false, misleading and deceptive statements, representations and pratices set forth in Pargrphs 4 through 6 above, respondents or their representatives have been able to induce customers into signing a contract upon initial contact without giving the customer sufficient time to carefully consider the purchase and consequences thereof. Therefore, the acts and practices as set forth in Paragraph 7 hereof were and are unfai and false, misleading and deceptive acts and practices.

8. In the further coure and conduct of their aforesaid business, and in connection with the representations set forth in Pargraph 4 above respondents offer caret with padding and installation included at a price based upon specifed area.c; of coverage. In making such offer respondents have failed to disclose the material fact that the prices stated for such specifed areas of coverage are not applied at the same rate for additional quantities of cart needed, but are priced substantially higher.

The aforesaid failure of respondents to disclose said material facts to purchasers has tbe tendency and capacity to lead and induce a substantial number of such persons into the understanding and belief Initial Decision 85 F.

that the prices charged for quantities of carpet needed in excess of the specified areas of coverage will not be substantially higher than the rate indicated by the initial offer.

Therefore, respondents' failure to disclose such material facts was and is, unfair, false, misleading and deceptive. 9. In the further course and conduct of their business, and for the purose of inducing the purchase of their products, respondents use the term "up to 270 sq. ft." to indicate the quantity of careting available at the advertised price.

10. The unit of measurement usually and customarly employed in the retail advertising of carpet is square yards. Consumers are accustomed to comparing the price of caret in terms of price per square yard, therefore respondents' use of the square foot unit of measurement confuses consumers who compare respondents' prices with competitors' prices advertised on a square yard basis. Furhermore, respondents' use of square foot measurements exaggerates the size or quantity of carpeting being offered, and therefore has the capacity and tendency to mislead consumers into the mistaken belief they are being offered a greater quantity of cart than is the fact.

Therefore, the acts and practices as set forth in Paragraph 9 hereof were and are unfair, false, misleading and deceptive. I L In the further 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 distribution of rugs, careting and floor coverings and servces of the same general kind and nature as those sold by respondents.

12. The use by respondents of the aforesaid false, misleading and deceptive statements, representations, acts and practices, and their failure to disclose material facts, as aforesaid, 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 complete and into the purchase of substantial quantities of respondents' products and servces by reason of said erroneous and mistaken belief. 13. The aforesaid acts and practices of respondents 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 Trde Commission Act.

SIR CARPET, INC., ET AI.. 201 190 Initial Decision CONCLUSIONS L The Federal Trade Commission has jurisdiction of and over respondents and the subject matter of this proceeding. 2. The Complaint herein states a cause of action, and this proceeding is in the public interest.

3. Respondents have committed unfair and deceptive acts and practices in commerce and have engaged in unfair methods of competition in commerce in violation of Section 5 of the Federal Trade Commission Act.

ORDER It is ordered That respondents Sir Caret, Inc., a corpration, its successors and assigns, and its officers, and Bennett Weiner, individually and as an officer of said corporation respondents' agents representatives, and employees, directly or through any corporation subsidiary, division or other device, in connection with the advertising, offering; for sale, sale, distribution and installation of carpting and floor coverings, or any other article of merchandise, in commerce, as commerce" is defined in the Federal Trade Commssion Act, do forthwith cease and desist from:

Using, in any manner, a sales plan, scheme, or device wherein false, misleading, or deceptive statements or representations are made in order to obtain leads or prospects for the sale of carting or other merchandise or servces.

2. Making representations, directly or indirectly, orally or in wrting, purporting to offer merchandise for sale when the purpose of the representation is not to sell the offered merchandise but to obtain leads or prospects for the sale of other merchandise at higher prices. 3. Disparaging in any manner, or discouraging the purchase of any merchandise or services which are advertised or offered for sale. 4. Representing, directly or indirectly, orally or in wrting, that any merchandise or services are offered for sale when such offer is not a bona fide offer to sell such merchandise or servces. 5. Failing to maintain and produce for inspection and copying for a period of three years following the date of publication of any advertisement, adequate records to document for the entire period during which each advertisement was run and for a period of six weeks after the termination of its publication in press or broadcast media: a. the cost of publishing each advertisement including the prepartion and dissemination thereof;

b. the volume of sales made of the advertised product or service at the advertised price; and Initial Decision 85 F.

c. a computation of the net profit from the sales of each advertised product or service at the advertised price. 6. Representing, directly or indirectly, orally or in wrting, that any price amount is respondents' regular price for any article of merchandise or service unless said amount is the price at which such merchandise or service has been sold or offered for sale by respondents for a reasonably substantial period of time in the recent, regular course of their business and not for the purose of establishing fictitious higher prices upon which a deceptive comparison or a "free" or similar offer might be based.

7. Representing, directly or indirectly, orally or in wrting, that a purchaser of respondents' merchandise or servces will ceive a free vacuum cleaner or any other "free" merchandise, servce, prize or award unless all conditions, obligations, or other prerequisites to the receipt and retention of such merchandise, services, gits, prizes or awards are clearly and conspicuously disclosed at the outset in close conjunction with the word "free" wherever it first appears in each advertisement or offer.

8. Representing, directly or indirectly, orally or in wrting, that any merchandise or service is furished "free" or at no cost to the purchaser of advertised merchandise or servces, when, in fact, the cost of such merchandise or service is regularly included in the sellng price of the advertised merchandise or servce.

9. Representing, directly or indirectly, orally or in wrting, that a free" offer is being made in connection with the introduction of new merchandise or services offered for sale at a specifed price unless the respondents expect, in good faith, to discontinue the offer after a limited time and commence selling such merchandise or service separately, at the same price at which it was sold with a "free " offer. 10. Hepresenting, directly or indirectly, orally or in wrting, that merchandise or service is being offered "free" with the sale of merchandise or service which is usually sold at a price arved at through bargaining, rather than at a regular price, or where there may be a regular price, but where other material factors such as quantity, quality, or size are arrved at through bargaining. 11. Representing, directly or indirectly, orally or in wrting, that a free" offer is available in a trade area for more than six (6) months in any twelve (12) month period. At least thiry (30) days shall elapse before another such "free" offer is made in the same trade area. more than three such "free" offers shall be made in the same area in any twelve (12) month period. In such period, respondents' sale in that area of the product or servce in the amount, sv.e or quality promoted with the "free" offer shall not exceed 50 percent of the total volume of 190 Initial Decision its sales of the product or service, in the same amount, size or quality, in the area.

12. Representing, directly or indirectly, orally or in writing, that a product or service is being offered as a "gift without charge bonus " or by other words or term which tend to convey the impression to the consuming public that the article of merchandise or service is free, when the use of the term "free" in relation thereto is prohibited by the provisions of this order. 13. Advertising the price of cart, either separately or with padding and installation included, for specifed areas of coverage without disclosing in immediate conjunction and with equal prominence the square yard price for additional quantities of such carpet with padding and installation needed.

14. Advertising any carpeting or floor covering using a unit of measurement not usually and customarly employed in the retail advertising of carpet or which tends to exaggerate the size or quantity of carpeting or floor covering being offered at the advertised price. 15. 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 holidays, after the date of execution. 16. Failing to furnish the buyer with a fully completed receipt or copy of any contract pertaining to such sale at the time of its execution which is in the same language Spanish, as that principally used in tbe oral sales presentation and which shows the date of the transaction and contains the name and address of the seller, and in immediate proximity to the space reserved in the contract for the signature of the buyer or on the front page of the receipt if a contract is not used and in bold face type of a minimum size of 10 points, a statement in substantially the following form:

YOU, THE BUYF;R, MAY CANCEL TilS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF TIlS TRANSACTION. SEE Til: ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OF TilS RIGHT. ALSO, SINCE WE ARE SUBJECT TO A CEASE AND DESIST ORDER OF THE FEDERAL TRADE COMMISSION IN DOCKET NO. 8981 FOR HAVING F;NGAGED IN BAIT AND SWITCH TACTICS, YOU MAY EXAMINE OR HAVE A COPY OF THE COM- PLAINT AND ORDER BY ASKING THE SALESMAN SERVING YOU TO PROVIDE IT.

17. Failing to furnsh each buyer, at the time he signs the sales contract or otherwse agrees to buy consumer goods or servces from the seller, a completed form in duplicate, captioned "NOTICE OF CANCELLATION," which shall be attached to the contract or receipt and easily detachable, and which shall contain in ten point bold face Initial Dp.cision 85 FT.

type the following information and statements in the same language Spanish, as that used in the contract:

NOTICE OF CANCELLATION renter date of tran,saction) YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY PENALTY OR OBLIGATION, WITlIN THREE BUSINESS DAYS FROM THE ABOVE DATE. IF YOU CANCEL, ANY PROPERTY TRADED IN. ANY PAYMENTS MADE BY YOU UNImR THE CONTRACT OR SALE. AND ANY NEGOTIABLE INSTRU- MENT EXECUTED BY YOU WILL BE RETURNED WITHIN 10 BUSINESS DAYS FOLLOWING RECEIPT BY THE SELLER OF YOUR CANCELLATION TIONNOTICE, ANDWILLANY S.:CURITYBE INTERESTCANCELLED.ARISING OUT OF THE TRANSAC- IF YOU CANCEL, YOU MUST MAKE AVAILABLE TO THE SELLER AT YOUR RESIm:NCE, IN SUBSTANTIALLY AS GOOD CONDITION AS WHEN RECEIVED, ANY GOODS DELIVERED TO YOU UNDER THIS CONTRACT OR SALE; OR YOU MAY IF YOU WISH. COMPLY WITH THE INSTRUCTIONS OF THE SELLER REGARDING THE RETURN SHIPMENT OF THE GOODS AT THE SELU:R' S EXPENSE AND RISK IF YOU DO MAKE THE GOODS AVAILABLE TO THE SELLER AND THE SELLER DOES NOT PICK THEM UP WITHIN 20 DA YS OF THE DATE OF YOUR NOTICE OF CANCELLATION. YOU MAY RETAIN OR DISPOSE OFTHE GOODS WITHOUT ANY FURTHF:R OBLIGATION. IF YOU FAIL TO MAKE THE GOODS AVAILABLE TO THF: SELLER, OR U' YOU AGRF:E TO RETURN THF: GOODS TO THE SELLF:R AND FAIL TO DO SO, THF:N YOU REMAIN LIABLE FOR PERFORMANCE OF ALL OBLIGATIONS UNDER THE CONTRACT. TO CANCEji THIS TRANSACTION, MAIL OR DELIVER A SIGNED AND DATED COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTF:N NOTICE, OR SEND A TEI..EGRAM, TO rNarne ofsellerJ. AT ladress afsellers place afbusiness) NOT LATER THAN MIDNIGHT OF (daf,e). I HERF:BY CANCEL THIS TRANSACTION.

(DalR) (Buyers signature) 18. Failing before furishing copies of the "Notice of Cancellation to the buyer, to complete both copies by entering the name of the seller the address of the seller s place of business, the date of the transaction and the date, not earlier than the third business day following the date of the transaction, by which the buyer may give notice of cancellation. 19. Including in any sales contrd.ct or receipt any confession of judgment or any waiver of any of the rights to which the buyer is entitled under this order including specifically his right to cancel the sale in accordance with the provisions of this order. 20. Failing to inform each buyer orally, at the time he signs the contract or purchases the goods or services, of his right to cancel. .

L:11\, d1.n :'.1 , L.

190 Initial Decision 21. Misrepresenting, directly or indirectly, orally or in wrting, the buyer s right to cancel 22. Failing or refusing to honor any valid notice of cancellation by a buyer and within 10 business days after the receipt of such notice, to (i) refund all payments made under the contract or sale; (ii) return any goods or property traded in, in substantially as good condition as when received by the seller; (iii) cancel and return any negotiable instrument executed by the buyer in connection with the contract or sale and take any action necessary or appropriate to termnate promptly any securty interest created in the transaction.

23. Negotiating, transferrng, selling, or assignng any note or other evidence of indebtedness to a finance company or other third pary prior to midnight of the fifth business day following the day the contract was signed or the goods or services were purchased. 24. Failing, within 10 business days of receipt of the buyer's notice of cancellation, to notify him whether the seller intends to repossess or to abandon any shipped or delivered goods.

Provided, however That nothing contained in this order shall relieve respondents of any additional obligations respecting contracts 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 showing, shall make such modifications as may be waranted in the premises.

It is further ordered That respondents shall maintain for at least a one (1) year period, following the effective date of this order, copies of all advertisements, including newspaper, radio and television advertisements, direct mail and in-store solicitation literature, and any other such promotional material utilized for the purpose of ohtaning leads for the sale of carpeting or floor coverings, or utilized in the advertising, promotion or sale of careting or floor coverings and other merchandise.

It is further ordered That respondents, for a period of one (1) year from the effective date of this order, shall provide each advertising agency utilized by respondents and each newspaper publishing company, television or radio station or other advertising media which is utiized by the respondents to obtain leads for the sale of cating or floor coverings and other merchandise, with a copy of the Commission news release setting forth the terms of this order. It is further ordered That respondents deliver a copy of this order to cease and desist to all present and future personnel of respondents engaged in the offering for sale, sale of any product, consummation of Order 85 F.

any extension of consumer credit or in any aspect of preparation creation, or placing of advertising, and that respondents secure a signed statement acknowledging receipt of said order from each such person. It is fi"rther ordered That the respondent corporation shall forthwith distribute a copy of this order to each of its operating divisions. It is further ordered That respondents notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent such as dissolution, assignent 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 further ordered That the respondent Bennett Weiner, promptly notify the Commission of the discontinuance of his present business or employment and of his affiiations with a new business or employment. Such notice shall include respondent' s curent business address and a statement as to the nature of the business or employment in which he is engaged as well as a description of his duties and responsibilities. It iB further ordered That the said respondents herein shall within sixty (60) days after service upon them of this order, fie with the Commission a report, in wrting, settng forth in detail the manner and form in which they have complied with this order. ORDER PLACING MATTER ON DOCKET FOR REVIEW AND FINAL ORDER An initial decision by the administrative law judge having been issued in this matter on Nov. 13, 1974, containing a provision that would require respondents' contracts to include a statement that they are subject to a cease and desist order of the Federal Tre Commission for having engaged in bait and switch tactics" and that the consumer can examine a copy of the complaint and order on request; And the Commission having determined that this initial decision should be placed on its own docket for review sua sponte puruant to Section 3.53 of its Rules of Prctice and modified in accordance with its decision in Wilbanks Carpet Specialists, Inc. Docket 8933 (Sept. 24 1974) (84 F. C. 670), and Tri-State Carpts Inc. Docket 8945 (Oct. 15 1974) (84 F. C. 1078);

Now therefore it is ordered That the initial decision in this matter be and it hereby is, placed on the Commission s docket for review; and It is further ordered That the said initial decision be, and it hereby is modified by deleting the portion of the initial decision under the caption The Black Border Provision" and by striking from paragraph 16 of the order the following sentence: "Also, since we are subject to a cease and desist order of the Federal Trade Commssion in Docket No. 8981 for .L"--U '-''P 207 Complaint having engaged in bait and switch tactics, you may examine or have a copy of the complaint and order by asking the salesman serving you to provide it;" and It is further ordered That, as so modified, the initial decision and order be, and they hereby are, adopted as the decision and order of the Commission.