Walker-Thomas Furniture Co., Inc

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II' THE :VIA TTER OF WALKER-THOMAS FURNITURE CO., INC., ET AL.

SENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSIOI\ ACT Docket C-2ii.'L Complain Jan. 1.9i(j- Decisioll, Jan. 1.9i6 Consent order requiring a Washington, D. , retailer of furniture, appliances, and housewares, among other things to cease offering merchandise without disclosing prior use; failing to honor guaranties and warranties; failing to disclose cost terms; failing to deliver ordered merchandise; harassing delinquent debtors; failing to maintain adequate records; and failing to make disclosures concerning the extension of consumer credit required by Rcgul3tion Z of the Truth in Lending Act.

Appearances For the Commission: Gary M. Laden, Alan L. Cohen and Robe;' t L. Patterson.

For the respondents: Earl W. Kintner, Daniel C. 8rnith and Ruth P. Roland, A1'ent, Fox, Kintner, Plotkin Kahn Washington, D. Ha1TY Pro las, Prolas, Kay, Goldberg, Spivok P1'tas Bethesda, Md. COMPLAIKT Pursuant to the provisions of the Federal Trade Commission Act, as amended, and by virtue of the authority vested in it by said Act, the Federal Trade Commission having reason to believe that Walker- Thomas Furniture Co. Inc., a corporation, and Ilobert Walker Thomas and Percy Weinberg, individually and as officers 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 L Respondent Walker-Thomas Furniture Co. Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the District of Columbia with its principal offce and place of business located at 102:),31 7th St., N. , Washington, D. Hespondents Robert Walker Thomas and Percy Weinberg are individuals and officers of the corporate respondent. They formulate direct and control the acts and practices of the corporate respondent including the acts and practices hereinafter set forth. Their address is the same as that of the corporate respondent. WALKER-THOMAS FUR1'ITUHB CO. , INC., ET AL. Complaint The aforesaid respondents cooperate and act together in carrying out the acts and practices hereinafter set forth. PAR, 2. Respondents are now, ano for some time last past have been engaged in the offering for sale, sale, distribution and repairing of furniture, appliances, housewares, and related products to the pu bue at retail. In the course and conduct of their business, respondents have engaged in the extension of credit to customers through retail installment contracts for the financing of items solo and repair services rendered by respondents.

In the course and conduct of their business, respondents have also engaged in the collection of debts incurred by respondents' customers in connection with said customers' use of credit for the financing of items sold and repaired by respondents.

Respondents maintain a group of salesmen who travel door-to-door to the homes of respondents' customers to sell furniture, appliances house\vares, and related products. Respondents' salesmen also function as bil collectors, traveling door-to-door to the homes of respondents customers to collect periodic payments due to respondents under retail installment contracts executed between respondents and respondents customers.

PAR. 3. In the course and conduct of their business, as aforesaid respondents now cause, and for some time last past have caused, their said merchandise, when sold, to be shipped from their place of business in the District of Columbia to purchasers thereof located in various States of the Cnited States and in the District of Columbia, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in said merchandise in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, as amended.

PAR. 4. In the course and conduct of their business, as aforesaid respondents receive periodic payments from customers who have purchased merchandise from them under retail installment contracts. In many instances, respondents' customers make payments to respondents \which are insufficient, untimely or not otherwise fully in compliance with the payments calJcd for by their retail installment contracts. Respondents, through their salesmen and employees, accept these partial payments, thereby representing, directly or by implication, that such payments \viii be cn dited to the customer s account. Respondents then attempt to reject these payments by issuing a check to the customer for the amount of his payment, the check made payable to the customer and \V alker- Thomas as co-payees. This practice makes it impossible for the customer to negotiate the check without \Valker- Thomas' endorsement. Respondents, therefore, attempt to both reject FEDERAL TRADE CO"IMISSION DECISIO:-S Complaint H7 F.

these payments and simultaneously retain use of the funds paid to them by the customers \vithout crediting the customers' account with such payments. Such representations \were false and misleading and such a practice was and is confusing and misleading to respondents customers and constitutes an unfair and deceptive act and practice. PAR. 5. In the course and conduct of their business, as aforesaid respondents receive periodic cash or money order payments from customers \vho have purchased merchandise from them pursuant to retail installment contracts. In many instances, respondents do not provide customers with a payment card or other record of the customer s payments received by respondents, nor do they issue receipts for these payments. The failure of respondents to issue such payment cards or receipts denies the customers proof that such payments were made, causes respondents' customers to be unaware of the status of their account at any given time, and prevents the customers from keeping an accurate record of' their account \with respondents. Such a practice was and is confusing and misleading to respondents' customers, and constitutes an unfair and deceptive act and practice.

PAR. G. In the course and conduct of their business, as aforesaid respondents sell and deliver merchandise to their customers. In many instances, this merchandise is returned to respondents, for various reasons, after said merchandise has been left in the homes of customers sale. Suchfor periods up to as much as several weeks after the merchandise, in many instances, is returned to respondents' inventory and is intermingled with new merchandise in respondents' inventory. In intermingling respondents' merchandise as aforesaid, said merchandise cannot thereafter accurately be identified or discerned as having been previously sold to, left in the possession of, or used by previous customers, and is sold as new merchandise \vithout any disclosure that such merchandise has been or may have been previously sold to, left in the possession of, or used by previous customers. The acts and practices of respondents as alleged herein, including respondents failure to disclose the material fact to prospective customers that merchandise from such inventory has been, previously sold to, left in the possession of, or used by previous customers, has the tendency and capacity to mislead a substantial portion of respondents' customers into the erroneous and mistaken belief that such merchandise is new, and into the purchase of said merchandise by reason of such erroneous and mistaken belief. Therefore, these acts and practices of respondents including respondents ' failure to disclose material facts as alleged herein, \'were and are unfair, false, misleading and deceptive. PAR. 7. In the course and conduct of their business, as aforesaid \VALKEH-THOi\'1AS FU NITURE CO., INC., ET AI. 2(- Complaint respondents guarantee their merchandise, in writing, in the following manner:

Televisions . lli-Fis, Stereos, Radios, Record Players; 1vl'sceUaneous Electrical AppUa'nces NE\V - Guarantee Picture Tube - 1 year All other parts ,* .. 90 days All Plus gO day Free Service USED - Overall guarantee-gO days Washers, Refl'igeTatol's, Freezers:

NEW - Washer Motor-I year Icebox Motor - 5 years All Plus :30 day Free Service All Parts - 90 days CSED - Overall guarantee - 90 days Fn:rnduJ' , I1on ejici' n1:sh7.:ng." etc: EW - Free from all manufacturers defects and delivery damage. USED - As is only ALL GVARA TEES INVALID IK CASE OF ABUSE OR DA:\IAGE BY CCSTO:\IER In many instances, respondents' customers request respondents to repair merchandise stil under respondents' guarantee. Respondents however, do not acknowledge many of these requests until after the guarantee has expired. As a result, respondents effectuate the requested repairs after the guarantee has expired and charge customers for repairs which should have been covered by the guarantee. Such practices \were and are unfair, false, misleading and deceptive.

PAR. 8. In the course and conduct of their business, as aforesaid respondents guarantee their merchandise in the manner described in Paragraph Seven of this complaint. Respondents, in many instances, do not inform their customers of the existence of said guarantee. Respondents' customers, in many instances, are therefore unable to assert their contractual rights pursuant to said guarantee. Thus, said practice was and is unfair, misleading and deceptive, and respondents failure to inform their customers of the existence of said guarantee constitutes an omission of material fact.

PAR. 9. In the course and conduct of their business and for the purpose of indudng the sale of their merchandise, respondents, through oral sales presentations by their salesmen to prospective purchasers represent, directly or by implication, that: 1. Merchandise sold by respondents wil be delivered to the :10 FEDERAL TRADE COMMISSION DECISIOr\S Complaint Wi FTC.

customer free from damages or defects, or merchandise which delivered to customers with damages or defects wil be repaired or replaced to the satisfaction of the purchaser. 2. Merchandise which is delivered to customers \',rith damages or defects \vi1 be repaired or replaced within a reasonable time. PAR. 10. In truth and in fact, in many instances: 1. Merchandise sold by respondents is delivered to customers with damages and/or defects, and said merchandise is not repaired or replaced to the satisfaction of the customers. 2. Merchandise which is delivered to customers with damages and/or defects is not repaired or replaced within a reasonable time. Therefore, the statements and representations as set forth in Paragraph Nine were, and are, false, misleading and deceptive. PAR. 11. In the course and conduct of their business, as aforesaid respondents' salesmen and employees solicit orders for merchandise in the homes of respondents' customers. In many instances, customers order merchandise from respondents without knowing the exact cost of the merchandise or the cost of the financing of said merchandise, or the customers rely on the salesman s general representations as to price and financing. In many instances, respondents do not inform the customer of the exact cost of the merchandise or the cost of the financing of said merchandise until after the merchandise is delivered. These practices result in customers having merchandise delivered to and placed within their homes, while subsequently discovering that the prices and financing terms of said merchandise are more costly than \vhat the customer had either reasonably anticipated or the salesmen had represented. Thus, said practices were and are unfair, false misleading and deceptive and the failure of respondents to inform their customers of the cost of ordered merchandise and the financing terms at the time that the merchandise is ordered constitutes an omission of material facts.

PAR. 12. In the course and conduct of their business, as aforesaid respondents solicit orders for merchandise in the homes of respondents' customers. In the course of such solicitation, respondents salesmen and employees make representations to customers about various fea ures and characteristics of merchandise which the customer orders. In many instances, the actual merchandise delivered to the customer by respondents does not contain the features and characteristics \which were represented by respondents' salesmen and employees at the time of the purchase. Therefore, such representations were and are false, misleading, and deceptive.

PAR. 1:3. In the course and conduct of their business, as aforesaid respondents knowingly extend credit through retail installment W ALKER-THO:\IAS FlJRNITUHE co. . I , ET AL. 2(i Complaint contracts to many low income customers who are living on fixed incomes. In many instances, respondents' customers do not fulfil their contractual obligations to respondents because of, among other reasons the failure of the merchandise purchased from respondents to properly perform for the purpose for which the merchandise was intended to be used, or the changing of circumstances affecting the customer s fixed income which render him economically unable to meet the periodic payments called for by the retail installment contract. In many of these instances, respondents utilize self-help repossession to take back the merchandise, or coerce the customer into "voluntarily" turning in the merchandise in exchange for respondents canceling the balance due on the customer s account. Respondents repossess this merchandise, in many instances, by removing the merchandise from a customer s home when no adult is present, or intimidating the customer into believing that the customer s only alternatives are to pay the full amount due on his account or give up the merchandise without judicial process. Respondents normally resell the merchandise which they pick up in the manner described in the above paragraph. In many instances customers who have had their merchandise repossessed or who voluntarily" turn in their merchandise have paid a substantial amount to respondents for the merchandise, and receive no benefit or refund for the payments they have made when the merchandise is turned in. In addition, any valid reason the customers have for nonpayment under their retail installment contract can no longer be raised when the merchandise is given up. Thus, the practices as alleged herein, and the failure of respondents to give their customers a chance to raise valid defenses or reasons for nonpayment, as well as the failure of respondents to give their customers any credit or refund for equity built up by their customers in the returned or repossessed merchandise, was and is an unfair practice.

PAR. 14. In the course and conduct of their business, as aforesaid respondents engage in the collection of payments pursuant to debts owed on retail installment contracts between respondents and their customers. In the course and conduct of such collection, respondents contact third parties, including but not limited to the employers friends, and relatives of their customers. Such practices have the capacity and tendency to coerce, pressure, and embarrass respondents customers, thereby inducing them in many instances to make payments to respondents. Therefore, the use by respondents of such acts and practices was and is an unfair practice.

PAR. 15. In the course and conduct of their business, as aforesaid respondents engage in the collection of payments pursuant to debts on retail installment contracts between respondents and their customers. ;j2 FEDERAL TRADE C01\nI'IISSIO DECISlO Complaint 87 FTC.

In the course and conduct of such collection, respondents :mlesmen and employees harass customers owing money to respondents by repeated phone calls and visits, often made early in the morning and late at night. Such practices have the capacity and tendency to coerce embarrass, pressure and inconvenience respondents' customers, thereby inducing them in many instances to make payments to respondents. Therefore, the use by respondents of such practices was and is an unfair practice.

PAR. 16. The Federal Trade Commission, pursuant to the Federal Trade Commission Act, as amended, 15 U. C. 941 et seq. and the provisions of Subpart B , Part 1 of the Commission s Procedures and Rules of Practice, 16 CF.R. 9LII et se'!. has conducted a proceeding for the promulgation of a trade regulation rule pertaining to a coolingoff period for door-to-door sales. Notice of this proceeding, including a proposed rule, was published in the Federal Register on September 29 1970 (35 F.R. 15164). Interested parties were thereafter afforded opportunity to participate in the proceeding through the submission of written data, views, and arguments, and to appear and express their views orally and to suggest amendments, revisions, and additions to the proposed rule.

After it had considered suggestions, criticisms, objections, and other pertinent information in the record, the Commission on February 17 1972 , published a revised proposed rule in a notice in the Federal Register (37 F.R. 3551) extending an opportunity to interested parties to submit data. views or arguments regarding the revised proposed rule. A period of 30 days was allowed for the submission of written statements.

The Commission considered all matters of fact, la\v, policy and discretion, including the data, views and arguments presented on the record by interested parties in response to the notices, as prescribed by law, and determined that the adoption of the trade regulation rule and its statement of basis and purpose was in the public interest, and accordingly promulgated the Trade Regulation Rule Concerning a Cooling-Off Period for Door-To- Door Sales on October 18 , 1972 effective June 7 1974 (16 CYK 9429.1).

PAR. 17. In the course of their business, as aforesaid, respondents engage in door-to-door sales, as "c1oor-to-door sales" is defined in the Federal Trade Commission Trade Regulation Rule entitled Cooling-Off Period for Door-To-Door Sales, effective June 7, 1974. In the course of these door-to-door sales, subsequent to June 7, 1974, respondents do not give their customers proper notice, as required by Sections (a) and (b) of the rule, of their right to rescind the contract within three business days after the date of the transaction.

W ALKF:R-THOMAS FERNITURE CO. , IT\C., ET At. :13 2(; Decision anrl Order PAR. 18. Respondents' aforesaid violations of the Trade Regulation Rule Concerning a Cooling-Off Period for Door-To-Door Sales constitutes a violation of Sedion 5 of the Federal Trade Commission Act.

PAR. 19. In the course and conduct of their aforesaid business and at a1l times mentioned herein, respondents have been, and now are, in ubstantial competition, in commerce, with corporations, firms and individuals engaged in the sale of merchandise of the same general kind and nature as the aforesaid merchandise sold by the respondents. PAR. 20. The use by respondents of the aforesaid unfair, false misleading and cleceptive statements, representations, acts and practices, and their failure to disclose material fads, 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 into the purchase of substantial quantities of respondents' products and services by reason of said erroneous and mistaken belief. These unfair acts and practices also have the capacity and tendency to coerce respondents customers into making payments of money to respondents.

PAR. 21. 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 or affecting commerce and unfair and deceptive acts and practices in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act, as amended. DECISION AKD ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Washington, D.C. Regional Office proposed to present to the Commission for its consideration and which, if issued by the Commission, v,,ould charge respondents with violation of the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the Jaw has been violated as alleged in such complaint and \vaivers and other provisions as required by the Commission Rules; and :i4 FEDEIIAL Ttiade COMMISSJO'O DF:CISIOJ\S Decision and Order oS? FTC. The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further eonJ'ormity with the procedure prescribed in Section 2.34 of its I ules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent alker-Thomas Furniture Co., Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the District of Columbia with its principal office and place of business located at 102:1-31 7th St., XW., Washin6rton, D. Respondents Robert Walker-Thomas and Percy Weinberg are individuals and officers of the corporate respondent. They formulate dirert and control the acts and practices of the corporate respondent including the acts and practices hereinafter set forth. Their address is the same as that of the corporate respondent. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER For the purpose of this Order the following definitions shall apply: RETAIL I STALLMENT CONTRACT - is a written agreement A. between respondents and a customer under \which respondents sell merchandise to a customer while extending credit to said customer for the purchase of said merchandise and retaining a security interest in the merchandise. Such credit is extended on an installment basis whereby respondents' customers agree to make a specified number of payments to respondents at specifiect time intervals to satisfy the obligation.

B. P A YMEr-T - is a periodic or installment payment due on a retail installment contract. The term "payment" shall also include the tender of a payment of money to respondents by a customer to satisfy a periodic or installment payment due under a retail installment contract said tender of payment being insufficient, untimely or not otherwise fully in compliance with the payments called for by said retail installment contract.

is a ledger or record of payments made to C" Pi\ Y::EI\"T CARD respondents by respondents' customers which is given by respondents W ALKEI1-THOMAS FURNITr:RE CO., INC., ET AL. :3G Decision and Order to their customers. This record of payments reflects both all payments made to respondents by respondents' customers as well as a running balance of the customer s account revealing descending balances after all customer payments and ascending balances after all customer purchases from respondents.

D. SELF- HELP REPOSSESSION refers to respondents' efforts to retake merchandise sold to customers \vithout the use of judicial process.

E. DEBT COLLECTION - refers to any activity other than use of the judicial process which is intended to bring about or does bring about repayment of all or part of a consumer debt, except: a. inquiry to locate a consumer whose whereabouts are genuinely unknown to the respondents; and/or b. inquiry to determine the nature and extent of a consumer \vages or property;

PTovided That, in these two instances, no specific mention is made of the alleged indebtedness.

USED MERCHANDISE - is any merchandise which has been F. previously left in a customer s home or in a customer s possession or is any merchandise that is not usedhasG.beenFLOORpreviouslySAMPLEused for- the purposes for which it was intended. merchandise and has been displayed for inspection by prospective purchasers at respondents' retail outlets.

It 'is ordered That respondents Walker-Thomas Furniture Co., Inc., a corporation, its successors and assigns, and its officers, and Robert Walkcr Thomas and Percy Weinberg, individually and as offcers of said corporation, and respondents' representatives, agents and employees, directly or through any corporation, subsidiary, division or any other device in connection with the repairing, offering for sale, sale and distribution of furniture and appliances, or any other products or services, and in connection with the collecting, attempting to collect, or assisting in the collection of debts, or inducing, or attempting to induce the payment of accounts, in or affecting commerce, as "commerce " is defined in the Federal Trade Commission Act, as amended, do forthwith cease and desist from:

1. Receiving any payment from a customer and returning said payment to the customer in either the form of a check payable to the customer and \V a1ker- Thomas as co-payees, or in any form which does not give the customer full use of the rejected funds. 2. Failing to either clearly accept or reject any payment tendered by a customer to respondents.

)Ij FEDERAL TRADE C01\IMISSIO:' DECISIQ:'S Deci ion ar.d Onler S7 FTC. 3. Failing to credit customer accounts, within three ( i) business c1a:ys after its receipt, with any payment tendered by a customer to respondents, if that payment is accepted by the respondents. 4. Failing to give a written receipt for any payment \\' which is tendered by a customer to respondents in a form other than a personal check, if that payment is accepted by respondents. Such receipts shall include the amount of the payment and must be given to the customer at the time the payment is made to the respondents; pro/;ided, however that respondents may send such receipts by first class mail if the payment is made by mail.

5. a. Failing to deliver or mail, within three (; ) business clays of the date of sale, a payment card to all customers who initially finance their purchases from respondents under' a retail installment contract, anel failing to record each subsequent purchase, along with the current status of that account, on that payment card or a new payment card; b. Failing to record on such payment card the amount of each payment received from respondents' customers at the time the payment is made by the customers; pj'ovided, hO"vever that if respondents' customers do not make their payment card available upon request at the time of each payment, or if respondents' customers mail in their payment without enclosing their payment card, respondents do not have to record the amount of the payment on the customer payment canl if they issue a receipt for that payment indicating the amount of the payment and showing the current balance on that customer s account after the payment.

6. a. Sellng any used merchandise without first clearly and conspicuously disclosing that such merchandise is "used" to any prospective customer orally, on any contract for the subsequent sale of that merchandise, and in a writing conspicuously attached to the merchandise when it is displayed in respondents' store. \vithout clearly and conspicuously b. Selling any floor sample disclosing that such merchandise is a floor sample to any prospective customer orally, on any contract for the subsequent sale of that merchandise, and in a writing conspicuously attached to the merchandise \vhen it is displayed in respondents' store. The oral disclosures required by this Paragraph 11(6) must be made prior to the prospective customer s signing a retail installment contract for the merchandise.

7. Representing that any used merchandise or floor sample is nev.l or misrepresenting, in any manner, the nature, extent or rlegree of prior use of any merchandise offered for sale or sold by respondents. 8. Failing to maintain records \which wil sho'.\! the disposition of any used merchandise or floor sample after said used merchandise has been );), \VALKEE-THO:\IAS FCR:-lTURE CO., INC., ET AL. :17 2(i Decision and Onlel' previously left in a customer s home or in a customer s possession, or said floor sample has been displayed for inspection at respondents retail outlets. These records shall include complete records of any subsequent sale of said merchandise.

9. Failing to promptly honor the terms of any guarantee or warranty, both express and implied, given by respondents to their customers, if respondents' customers request service or repairs at any time prior to the expiration of the \varranty or guarantee. The failure of respondents to effectuate repairs or services prior to the expiration of any warranty or guarantee shall not relieve the respondents of the responsibility of honoring any request for such repairs or services made prior to the expiration of said warranty or guarantee. 10. Failing to issue a copy of any guarantee or warranty given by respondents to their customers at the time of each purchase by a customer.

11. Failing to maintain adequate records of any inquiry, either written or oral, made by respondents' customers to any of respondents agents or employees requesting repairs to merchandise sold by respondents while such merchandise is still under respondents \varranty or guarantee. Such records shall indicate the date on which the request was made, the nature of the complaint and repair work involved, and the date on which the repair \vas effectuated. 12. Accepting orders from customers for merchandise or arranging delivery of merchandise to customers unless respondents first disclose to the customer the following in writing:

a. the cash price of the merchandise, as "cash price" is defined in Regulation Z (12 CF.R. 9226) of the Truth in Lending Act (Pub. L. 90- :J21 , 15 U. C 91601 et seq.

b. the amount of downpayment required;

c. the number, amount and due date or period of payments scheduled to repay the indebtedness;

d. the amount of the finance charge, as "finance charge" is defined in j(egulation Z (12 CF.R. 9226) of the Truth in Lending Act (Pub. L. 90-321 15 U. C 91601 et seq.

e. the amount of the finance charge expressed as an annual percentage rate, as "finance charge" and "annual percentage rate" arc defined in Regulation Z (12 C. R. 9226) of the Truth in Lending Aet (Pub. L. 90-321 15 u.S. C. 91601 et seq. and f. the deferred payment price, as "deferred payment price " is defined in Hegulation Z (12 C. R. 9226) of the Truth in Lending Act (Pub. L. 90-321 15 USe. 91601 et seq. or the sum of aJl tbe payments. . Delivering any merchandise to customers which is not what the customer ordered or does not conform to the representations made by :i8 FEDERAL TI1ADE COyIMISSIO" DECISIONS Decision ami Ordel' H7 F.T. respondents' salesmen and employees concerning said merchandise; promded, hmvcuer that any nonconforming delivery of merchandise which is made through mistake or inadvertence wil not be a violation of this Paragraph 11(13) if respondents correct the mistake and deliver conforming merchandise within seven (7) days after respondents are notified by any customer of such nonconforming delivery. 14. Failing to comply with any and all provisions of the Federal Trade Commission s Trade Regulation Rule concerning a Cooling-Off Periodfo)' Door- ta- Door Sales (16 CF. R. 9429.1), which are in effect on the date this order becomes effective, and with any modifications or changes in the aforesaid rule which may be made from time to time. A copy of said rule shall be made a part of this order for purposes of complying with Part IV of this order.

Provided, howe'uer That nothing contained in this order shall relieve respondents of any contractual obligations respecting contracts required by Federal law or the law of the jurisdiction in which the contract is negotiated. When such obligations are inconsistent, respondents may apply to tbe Commission for relief from Paragraph II (14) of this order with respect to contracts executed in the State in which such different obligations are required.

15. Utilizing any self-help repossession of merchandise sold to any of respondents' customers unless respondents: a. Orally tell that customer who has purchased the merchandise (i. the person who has signed the contract for that merchandise), that the merchandise cannot be taken back without the customer permission; and b. Immediately preceding any attempt to repossess merchandise furnish that customer \v' ho has purchased the merchandise with a document containing only the following language appearing in the following manner:

NOTICE - RI:AD THIS By order of the Federal Trade Commission, Walker-Thomas Furniture Company cannot take back any merchandise from you \vithout your written consent. If you wish to have Walker-Thomas furniture Company take back any merchandise you have bought from it, you mu;:t sign this paper. YOl: DO NOT HAVE TO SIGN THIS PAPER A:sLJ YOU DO OT ITA VE TO CO!\' SENT TO THE RETUIC, OF YOUR :V1MERCHAN- DISE. If you have any problem with defective or damaged merchandise you have bought from Walker-Thoma;: Furniture Company, call the Better Business Bureau of :\Ietropolitan Washington, D. , 1111 E Street Washington, D. , at :193-8017. They can help you solve your problem. If you have a dispute with Walker-Thomas cOTlcerning defective or damaged merchandise, you have a right to submit your dispute for settlement (arbitl.ation) to the l3e:ter Business Bureau within one year from the date your merchandise \\' as delivered WALKER-THOMAS FCRNITCRE co. lng. ET AL. ;19 2() Decision and Order I consent to have Walker-Thomas Furniture Company take back merchandise I have bought from it. I CNDERSTAKD THAT THEY CA;-NOT TAKE BACK THIS MERCHMIDISE UNLESS I CONSENT TO IT.

(date) (UQ1Iie) c. Obtain tbe signature of that customer who has purchased the merchandise from respondents on the document described in Para graph II (l5)(b) of this order; and d. iViaintain adequate records to indicate compliance with Paragraph II (l5)(c) of this order.

16. Utilizing any self-help repossession or any attempt without judicial process to take back merchandise sold to any of respondents customers when such repossession or taking back is accomplished or attempted through the use of any intimidation, deception, coercion threats of any nature or any statements or conduct which give the customer the impression that the merchandise can be repossessed without the full consent of the customer.

17. a. Communicating or threatening to communicate, in the course and conduct of debt collection, with the consumer s employer or any agent of the employer or any other person not liable for the debt other than the customer s spouse or attorney, except as permitted by order of court.

b. Failing lo provide on the face of ajj of its retail installment eon tracts, with such conspicuousness and clarity as is likely to be read and understood by customers, that:

In the course of collecting a debt, Walker-Thomas Furniture Company wi! not communicate with or threaten to communicate with a customer s employer or any agent of the employer or any other person not liable for the debt other than a customer s spouse or attorney, except as permitted hy oroer of a court. PTovided, howc-vcr That should the Federal Trade Commission promulgate a Trade Regulation Rule or Industry Guide concerning Unfair Credit or Debt Collection Practices, then any pertinent less comprehensive or less restrictive provisions of such Rule or Guide shall automatically replace any comparable provisions of Paragraph II (17) of this order when that rule or guide becomes final and effective. 1S. Communicating, in the course and conduct of debt collection \with any of respondents' customers before 7:30 a. m. or after 9:00 p. or making any visits or phone calls of a harassing nature including, but not Ijmit d to, repeated visits or phone calls over unreasonably short periods of time.

FEDERAL TRADE Cmn!ISSION DECISIONS DeLlslon and Order H7 F.

A. It i8 further ordered That in addition to other rights given to a customer pursuant to this order, if respondents and a customer are unable to agree upon a settlement of any controversy involving the deliver:y or repair of any damaged or defective merchandise, or the failure to replace or repair damaged or defective merchandise, then, at the option of the customer, such customer shall have the right to submit that controversy to an impartial arbitration procedure entailing no mandatory administrative cost or filing fee to the customer, which shall be conducted in accordance with the arbitration procedures annexed to this order, as Appendix " " and the procedures for arbitration adopted in Appendix "A" are to be considered as incorporateo within the terms of this order.

B. It is furthe)' ordrn' That respondents comply \with and abide by any award or decision rendered pursuant to the arbitration procedures of Paragraph III (A) of this order.

Furthermore, respondents shall not be entitled to prevent arbitration pursuant to any provision of this order by reason of having obtained a default judgment against any customer in any action for money or property allegedly due the respondents or their assignees. C. It is further ordered That at the time a controversy arises involving the delivery or repair of any damaged or defective merchandise, or the failure to replace or repair damaged or defective merchandise, respondents shall provide adequate notification to customers of their right to submit such controversy to arbitration and that respondents also incorporate the following statement on the face of all retail installment contracts with such conspicuousness and clarity as is likely to be read and understood by customers: Any right or claim which you may have involving damaged or defective merchandise you have bought from W alker Thomas Furniture Company may be settled, at your option, by arbitration conducted by the Better Business Bureau and monitored by the Federal Trade Commission. YOU HAVE THIS RIGHT TO ARBITRATIO:' ONLY IF YOU REQCEST ARBITRATION WITHIN Q)JE YEAR FROM THE DATE THE MERCHANDISE IS DELIVERED TO YOU. If you have any claims which you want to be arbitrated or any questions about arbitration, call the Better C. at ;39:J-8017. Business Bureau, 1111 E Street, N. , Washington, D. D. It is furth.er ordered That whenever respondents are required s right pursuant to the terms of this order to give Notice of a customer to arbitration, the notice must set forth the name, address and telephone number of the arbitration tribunal and the manner in \vhjeh WALK TJ!()MAS FUIINITUIIE co., INC., ET AL. Appendix "

irbitration can be obtained. Respondents are authorized and directed 0 change the instructions, contained in the Notice set forth above in "ragrapb III(C) of this order, as to how to secure arbitration if ;circumstances require.

E. It ( s further ordered That one year after the service of this Jrder upon respondents, respondents may petition the Federal Trade ommission to reopen these proceedings, pursuant to Section 72 of he Commission s Rules of Practice, for the purpose of reviewing the ffectiveness and/or fairness of the operation of Part III of this order. F. It is further QI'dered That Part III of this order shall not apply to sales made by respondents prior to the date this order becomes final and effective.

A. It is further ordered That respondents deliver a copy of this order to cease and desist to all present and future employees or other persons engaged in the debt collection of respondents' accounts and the offering for sale, or sale, of respondents' products, and secure from each such employee or other person a signed statement acknowledging receipt of said order.

B. It is In tthet OIdered That the respondent corporation shall forthwith distribute a copy of this order to each of its operating divisions.

C. It is furthwr ordn' That respondents notify the Commission at least thirty (:,0) 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 affed compliance obligations arising out of the order. D. It 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 address and a statement as to the nature of the business or employment in which they are engaged as well as a description of their duties and responsibilities.

E. It is Intther otdered 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. APPE:SOIX "

AGR.EEMENT OF PAR.TIES - The parties shall be dppmcd to have made these rules set 215- 969 O- L': - 77 - 4 FEDERAL THADi' COMMISSIO:- DECISIONS Appendix " H7 F.TC. forth herein in Appendix A a pal"t of their arbitration agreement. These ules and any amendment thereof shall apply in the form obtaining :ot the time the arbitration is initiated.

lNFOR).ial MEDIATION PERHJD At its discretion the Better Business Bureau of Metropolitan \Vashington, D-C. (hereinafter I'eferred to as the BBB), may attempt to info I'm ally mediate any dispute between a customer and the respondents for a period of not more than 10 business days after the customer initially request.s the BBB t.o arbitrate a dispute. If, after this 10 clay period, the dispute has not been resolved to the satisfaction of both the respondents and the customer, the dispute wil be submitted to arbitration at the ojJtion of the customer. The BBB is the t.ribunal which shall administer the arbitration pmcess under these rules.

DEnNITJOKS - A. Arbitration is the process by which two or more parties authorize an impartial party or panel to resolve their dispute.

B. Consumer disputes ("dispute ) are any disagreement.s between respondents and their customers involving the delivery 01' repair of any damaged or defective merchandise, or the failure to replace or repair damaged 01' defective merchandise. These disputes do not include fraud, criminal violations, demands for attorney fees, damages from personal injury or other claims which go beyond the actual product or service involved. Excluded also an' disputes which may not be arbitrated under the law. If during the cours of any proceeding conducted pursuant to these rules, it appears to the Arbitrat.or t.hat. the issues before him do not coincide wit.h t.his definition, he is authorized to suspend the hearing permanently, narrow the issues to those which fall within this definition, or take \vhatever other action is deemed necessary. C. Parties to arbitration are those persons necessary to resolve a dispute, usually the respondents and their customers.

Arbitrator is the individual or panel which makes the final decision or award. APPUCABLE LA W - Hule 701 of the Civil Rules of the Superior Court of t.he District of Columbia and other applicable iaws of the District of Columbia shall govern these rules.

JNITIATJ:-G ARBITRATION - If a customer notifies the BBB of an intention to submit a dispute t.o arbitrat.ion, the BBB will send the customer a copy of these rules and will obtain the customer s signature on an agreement, designated as an "Arbitration Agreement " binding the customer to arbitrat.ion. The BBB will also obtain the respondents' signature (or the signature of their designated agent) on an agreement designated as an "Arbitration Agreement," binding the respondents to arbitration. The customer s request for arbitration shall include a statement setting forth the nature of the dispute, the approximate amount involved, if any, and the remedy sougnt. The BBB will t.hen transmit to the respondents the information summarizing the nature of t.he dispute, the amount involved and the remedy sought. The respondf'nts will then have S days to file an answering st.at.ement with the BBB. Failure of respondents to file an answer or submit a signed " Arbitration Agreement" shall not operate to delay the arbitration. L; por, receipt of a iOigned arbitrat.ion agreement from thf' customer, the BBB shall commence procedures to arbitrate the dispute pursuant to these Rules. CHANGE OF CLAL\! - After filing or making a request for arbitration, if eit.her party desires to make any new or different. claim, such claim shall be made in writing and filed \with the BBB , and a (:opy thereof snail be mailed to the other party who shall have a period of seven days from the date of such mailing within which to file an answer with the BBR. However, aft.el' the Arbitrator is appointed no ne\',-' or different claim may be submitted to him except with his consent APPOL\' TME;'T Of ARBITH.ATOH. - The BBB sha;l maintain a pool of volunteers from WALKEH-THO:\las FUR 'ITURE CJ. , INC., ET AL. Appendix which the Arbit!'tor shall be ,;elected . This pool of volunteen; should 1'el1e('t membership of the total community. In all cases the Arbitrator or Arbitrators will be appointed directly by the BBB no later than 7 days after the date upon which the customer submits his signed Arbitration Agreement.

DISCLOSURE BY ARBJTRATORS; F'ILLI::G VACA::Cles - Any per.son selected to sel' ve a.s an Arbitrator shall divulge, in his signed acceptance of appointment, any financial competitive, profes;;lonal, family, Of social relationship, i1Owevu' remote, with the Parties to the dispute or disputes he is assigned to arbitrate. All doubts should be resolved in favor of disclosure. Any such disclosures shall be transmitted to the BBB which shall provide them to the Parties with a waiver/objection form. If a Party objects 01' if an Arbitrator is unable or unwilling to serve, the HHB may in its discretion select or appoint a replacement. In any event, no person shall sel've as an Arbitratm' in any 8l'bitration if he has any financial or personal interest in the result of the arbitration, unless;; the parties in writing, waive such disqualification.

NUMBER OF ARBITRATORS - In all ca;;es there shall be one Arbitrator unless;; both parties or the BEE specify three Arbitrators. If the arbitration agreements submitted by both parties do not both specify three Arbitrators, the dispute shall be heard and determineci by one Arbitrator, unless the BBB, in its discretion, directs that a greate!" number of Arbitrators be appointed, in which case, the BBB shall appoint the additional arbitrators.

VACANCIES - If any Arbitrators should resign, die, withdraw, refuse, be disqualified or be unable to perform the duties of his office, the BBB may, on proof satisfactory to it declare the offce vacant. Vacancies shall be filled in accordance with the applicable provisions of these rules and the matter shall be reheard unless the parties shall agree otherwise.

FACILITIES AND COSTS - Facilities for the holding of hearings and maintenance of records shall be provided by the BBR. All normal and reasonable co.sts of obtaining services of expert witnesses and testing laboratories are to be borne by the BBB, with extraordinary costs, as determined by the Arbitrator, assessed equitably between the Parties. Costs of stenographic services, record of proceedings, anci individual witnesses shall be borne by the requesting Party.

COMMCNICATION A:\D SERVI:"' G OF NOTICES -- All correspondence should be sent by certified mail to the BBB. There shall be no direct communication between the Parties and the Arbitrator regarding the di"pute, except at the hearing and in the presence of the other Party, or with the other Party s written permission. All correspondence from the Parties to the Arbitrator and vice-versa shall be sent through the BBB. Any Party agreeing to arbitration pursuant to these rules shall be deemed to have consented that any notices or other' communication relevant to arbitration proceedings may be served by registered mail addressed to the Party or his attorney at his last known address NOTICE OF APPOJNTME:\T - :\notice of Appointment shall be mailed to the Arbitrator by the BBB along with a copy of these rules. The signed appointment form together with disclosures of any relationships to Parties shall be filed with the BBB prior to the opening of the fir;;t hearing REPRESENTATIO:"' BY COUNSEL A Party may represent himself or name any persall not necessarily an attorney, to act as his spokesman at an arbitration hearing. Choosing a non-lawyer does not constitute waiver of right to legal coun;;el. If an attorney is selected however. the RBB should be furnished his name and address at least 5 days prior to the date of the proceeding so that this information can be forv.' aned to the opposing Party. IJEARI:"' G DATES: NOTICE; V.' AIVF:R OF NOTICE - Upon appointment of an Arbitrator the BBR shall, within three days, establish a date, time and place fof the oral hearing, with due reg-ard for the convenience of the Parties and with the agreement of the Arbitrator. This hearing, if at all possible, shall be held v,'within ten (10) days of the FEDt:HAL TRADE CO?vL\HSSION DECISIONS Appendix " H7 F.TC appointment of the arbitrator. Once deter' mined . this information shall be communicate(: to the Parties ' " legi.stered mail at least seven (7) days in advance of the date set for th" hearing, utilizing the :\ ot.ice of Hearing Form. Parties objecting to the date, time 01 location designated sna;; within three (;-3) da)' s of receipt of notice. notify the BBB orally or in writing or otherwise be deemed to have waiver! such ohjections. Appearance of the Party at hearings shall automat.ic8Ly constitute wain')' of notice. 1:-' SPFCTlON BY ARHITRATOH. -- At any time prior to the close of the healing, the Arbitnitor "hall. if at. all possible, arrange for the inspection of the merchandise involvNJ ;1t ,be l' quest of either party. If the inspection is to 'oe conducted separately from the euir:g, the 13BR shell pro\'ic1e notice to tr. (' Parties and invite their presence. If a Party cannot attend the inspection, the Arbitrator shall make a \written or vel' bal report to the ;)arties and shall afford t.hem the opportunity to comment upon the ob ervations made therein. The BBB shall also arrange for the presence uf a tecnnical expert at the inspection at the discretion of the Arbitrator If possible. inspections should be conducted prior to t)w hearing LABORATORY TESTS , EXPF:RT OPIJ\IONS - The Arbitrator may require the submission of any al,tide in dispute to an independent testing laboratory for examination and analysis or may engage the service; of an independent. impartia: expert to inspect and analyze the al,tide or premises in question. The reasonable and ordinary costs. if any, of such services are to be borne by the 138B , which will transmit the opinions rendered by the lahorat.ory or expert to the Arbitrator. with a copy to the parties, as soon as practicable. Such opinions shall be part of t.he evidence given at the hearing or providt'j to the Parties as soon as possible prior to the close of the hearing ami prior to any Av.' an! ATTL\' DA:-CE AT PROCEEDIJ\GS - Unless otherwise agreed by the Parties in writing, only th() e persons party to or having a direct interest in the dispute al' e entitled to attend hearings. TrlC Arbit.lator shall have the discretion to require any witness to absent himself from the hearing room when t.he Arbitrator deems his presence to be unnecessary or undt'sirablc. Represent.atives of the Council of Detter Business Bureaus Inc., BBB of T\letropolitan Washing' , D. , and of the Fedt'ral Trade Commission shall be permitted to attend selected arbitration proceedings for the purposes of monitoring ,ne administration of the program set forth herein, provided that th,' se represent.atives shali preserve the confidentiality of the proceedings. ABSENCE OF A PARTY - Arbitrat.ion hr,arings may proceed in the absel1re of any Party who, after due notice of the hearing. fails to appear. but such absence shall not be the basis fo!' a default judgment. Rather. the attending Party shall submit evidence and the Arbitrator may n:nder an Award based thereon. The non-attending Part.y shall have the right to uumit t'vidence in writing wit.hin a reasonable time, to be set by the Arbitrator. TRA?\SCRIPT OF IJEARI?\G - The BBB shall provide stenographic services or otherwise record tne proceedings upon the request of any Party; fJ),I.'lded, however that the co t of such services be borne by the requesting Party and that all Parties be provided :-ctCSS to such record. A tapc recording of the hearing or any portion thereof may be equired by the Arbitrator and any (' ost. thereof shall be horne by the BBB. If any Party brings his own means of recording the proceedings to the hearing. the HBB shall record the proceedings for its files. In all cast' , thc Arbitrator shall see tnat a Record of Hearing Form i" completed at tilt dose of each hearing I?\TERPH.ETERS - The BBB shall provide witnout cost an interpreter when any Part) expresses the need for such and when t.he Aroitrator dt-'ems its necessary. OATHS - The Arbit.rator, the Parties. anti any witnesses at a hearing shall be placed under oath ORDER or PH.OCF.F:DI?\GS AT Tin: HEARING - A. After t e oaths al' C admin:s,ered, the customer shall summarize his position or the WALKER-THOMAS FCRNITCRE CO., INC., ET AI.

Ap)Jfndix "

lispu':e, stating- briefly what I'did he is seeking. The respondents shall then present a ;;ummary of theil' position and relief sought. B. The customer shall next present his claim, evidence and witnesses, if any, anrl ,submit to questions from the Arbitrator. The respondents shall then do likewise. Parties may cross-examine C. Following the presentation of e\'idence, each Party shan briefly summarize his position, relating his daims to the proofs and test.ilr. ony presented. D. Tr.e order of proceedings mol:;, vary at the discretion of the AI'bitl'ator in order to Hs"ure that full opportunity is given each Party to present all evidence necessarj' for a (lecision E. The Arbitrator shall declare the hem'ir:gs closed if no Party hai: further evidence to offer 01' \vitnesses t.o pl" esent. However', before closing the hearing the Arbitrator shall specifically inquire of all the part.ies whether they have further proofs to offer or witnesses to be heard. Upon receiving negative replies, the Arbitrators shall declare the hearings closed.

F. Exhibits, when offered by either party, may be received in evidence by the Arbitrator.

The name:, and addresses of all witnesses and exhibit.' in order received shall be entered into a " Record of Hearing" form and thereby made a part of the reconl. A OJ\ 1 SSIO;- OF EVInF:;.CE - The Arbitrator shall judge the relevancy of the evidence and may I'equest additional evidence from eit.her Party. He may refuse to admit evidence deemed irrelevant, stating reasons therefor. Conformity to leg-al rules of evidence shall not be necessary. All evidence shall be taken in the presence of aU the Arbitrators and of all the parties, except. whel' e any of the parties is absent. in default or has waived his right to be present.

ADDlTlO;-AL PARTIES - In resolving- any consumer dispute where someone other than the respondents and customer is necess:Hy to resolve all issues, and where such person has agreed to the issues presented and to be bound by arbitration, the Arbitrator shall came him a Party to the dispute and have complete discretion to include such Party in the pl"oceedings.

ADJOURNMENTS - The Arbitrator may adjourn the prol:eedings upon the request of a Party or his own mot.ion.

MI:TIIOD (H' DECI::ION - All matters of concern submitted to an arbitration panel shan be settled by a majority vote, including procedural questions and isslles relating to the A ward. The decision of the majority shall be deemed to be the decision of all members of the panel, and no dissenting opinion shall be issued. REOPF.NI:\G Of I!EAHISG - At the discretion of the Arbitrator, a hearing may be reopf ned upon his motion or the motion of a Party. If a hearing is reopened, the time within which an A ward must be made is measured from the closing of the last hearing. ;-o hearing srJalJ 012 reopf'ned after an Av.'anj has been made except as provided by la\\. CONSERVATIO ' OF PROPF:RTY - The Arbitrator may issue such orders a:: necessary to safeguard property which is the subject matter of arbitration or the position of tlw Parties SC13POEi\A POWERS; DEPOSITION:: The Arbitrator may compel the attendance of witne,ses and the productiop. of relevant documents according to procedures established by law. The Arbitrator ma y authorize the taking of depositions of witnesses who are unable to attend the hearing-.

AFFIDAVITS - Vv' written affida\' its if properly sworn to and notari;ced will be admissible in lieu of oral testimony, at the discretion of he Arbitrator. The Arbitrator may give s\Jen evidence by affidavit only such weight as he deems it is entitled to after consideration of an2-' objections made to its admissioTl A:l documen:s not filed with the Arbitrator at the hearing, but arranged for at the