Jay Norris Corporation

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

IN THE MATTER OF JAY NORRIS CORP., ET AL.

ORDER, OPINION, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 9054. Complaint, Sept. 3, 1975—Final Order, May 2, 1978 This order, among other things, requires a Freeport, L.I., N.Y. mail-order house to cease misrepresenting, in the advertising and sale of consumer products, that dissatisfied customers will receive prompt refunds; and that exchanges and refunds are expeditiously processed; that all parcels are insured against loss or damage; and that non-delivery is caused by the United States Postal Service. The order requires that purchases be shipped within time periods specified, and in the event of shipping delays, customers must be offered the option of consenting to the delays or cancelling their transactions. The firm is further obligated to honor such cancellations and to make proper refunds in a - timely manner. The order further prohibits the company from making false or unsubstantiated claims regarding the characteristics, efficacy, performance, safety, and value of its consumer products. Additionally, the order requires the corporation and the Pan-Am Car Distributors Corp., both engaged in the advertising and sale of used motor vehicles, to cease misrepresenting that their vehicles have been inspected and repaired in preparation for delivery to purchasers; or that they are in a safe mechanical and operation condition and will render normal, adequate and satisfactory service.

Allegations of the complaint are dismissed as to Federated Nationwide Wholesalers Service, Garydean Corp., t/a Nationwide Wholesalers Service, and P-N Publishing Company, Inc.

Appearances For the Commission: Irving C. Koch and Sol Grand. For the respondent: Robert Ullman, Bass, Ullman & Lustigman, New York City.

Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Jay Norris Corp., Federated Nationwide Wholesalers Service, Garydean Corp., a corporation trading as Nationwide Wholesalers Service, P-N Publishing Company, Inc., a corporation, Pan-Am Car Distributors Corp., a corporation and Joel Jacobs, Mortimer Williams and Kenneth Mann, individually and as officers of said corporations, hereinafter referred to as the respondents, have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in Complaint 91 FTC.

respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows: I. RESPONDENTS PARAGRAPH 1. Respondents Jay Norris Corp., Federated Nationwide Wholesalers Service, Garydean Corp., trading as Nationwide Wholesalers Service, [2] P-N Publishing Company, Inc., and Pan- Am Car Distributors Corp. are corporations organized, existing and doing business under and by virtue of the laws of the State of New York, with their principal offices and place of business located at 31 Hanse Ave., Freeport, Long Island, New York. Individual respondents Joel Jacobs and Mortimer Williams are officers of said corporations. Kenneth Mann is an officer of Pan-Am Car Distributors Corp. They formulate, direct and control the acts and practices of the corporate respondents including the acts and practices hereinafter set forth. Their business addresses are the same as that of the corporate respondents. Il. NATURE OF RESPONDENTS’ BUSINESS Par. 2. Respondents are engaged in the advertising, offering for sale, sale and distribution of numerous articles of merchandise by mail order which they offer through newspaper, magazine, and catalog advertisements, including roach powder, TV antennas, socks, flashlights, flame guns, jewelry, books, girdles, watches, home furnishings, cheeses, ex-taxis sold as used cars and numerous other articles of merchandise.

Par. 3. Respondents in the course and conduct of their business have been and are now engaged in the advertising, offering for sale, sale and distribution of merchandise which they ship or cause to be shipped when sold, from the State of New York to purchasers located in various other States of the United States or directly from manufacturers and distributors located in various other States to purchasers located throughout the nation, and have maintained a substantial course of trade in said merchandise in or affecting commerce as “commerce” is defined in the Federal Trade Commission Act.

Par. 4. Respondents are now, and at all times mentioned herein have been, in substantial competition in commerce with other corporations, [3] firms and individuals engaged in the sale and distribution of products of the same general kind and nature as those JAY NORRIS CORP., ET AL. 153 751 Complaint Ill. ACTS AND PRACTICES — REPRESENTATIONS Par. 5. In the course and conduct of their business, and for the purpose of inducing the purchase of their products, respondents have made statements and representations in the advertising, offering for sale, sale and distribution of their products through flyers, catalogs, brochures and advertisements published in mail order catalogs and national newspapers and magazines.

Par. 6. The statements and representations made as alleged in Paragraph Five hereof, include statements regarding respondent’s guarantees, deliveries and refunds. Typical and illustrative, but not all inclusive, of statements and representations with respect to their guarantees, deliveries and refunds, are the following: 30-DAY MONEY-BACK GUARANTEE Mail No-Risk Coupon Now ORDER BY MAIL WITH CONFIDENCE 30-DAY MONEY-BACK GUARANTEE 80-DAY MONEY-BACK GUARANTEE ON ALL PURCHASES 30-DAY MONEY-BACK GUARANTEE ON ALL PURCHASES CHRISTMAS DELIV- ERY GUARANTEED IF YOU ORDER NOW BUY WITH CONFIDENCE! If not delighted, return your order within 30 days for refund of full purchase price MONEY-BACK IF NOT DELIGHTED-SEND CHECK OR MONEY ORDER ORDER NOW PROMPT DELIVERY GUARANTEED “PERSONAL CHECKS” To insure immediate shipment of your order, please have your check certified. [4] Otherwise, allow about 2 weeks until your check clears your bank ;

Satisfaction quaranteed or money refunded YOUR GUARANTEE OF SATISFACTION. . .Everything you buy from JAY NORRIS CORP. is ALWAYS FIRST QUALITY. Any item not up to your expectations return in 30 days for full refund.

Unless item is marked express collect, use this easy chart to figure postage insurance, shipping and handling charges. It’s only part of the delivery cost-we pay the rest. ~If Your Order Is- up to $15.00 add $1.70 $15.01 to $20.00 add $2.20 $20.01 to $30.00 add $3.20 $30.01 to $40.00 add $4.20 $40.01 to $50.00 add $5.20 $50.01 to $60.00 add $6.00 over $60.00 ' add $7.20 Complaint 91 F.T.C.

DIRECT FACTORY SHIPMENT:

Some items in this catalog are shipped direct from the factory. Such shipments are sent to you Parcel Post, Express Collect or Freight Collect, depending on weights REFUND: If for any reason, there is a refund due you after your order has been filled, we will send you such refund promptly.

SHIPPING INFORMATION:

Orders are usually filled within 24 hours of receipt (with the exception of factory shipments). . .Allow 1 to 3 weeks for factory shipments to reach you. . . Dear Customer:

Because you did not receive your order, we must assume that it was lost in the mails. [5] .

If you will be kind enough and return all these papers together with the original or photostatic copy of your check or money order, showing that it was cashed by us, a tracer will be placed and if necessary, a duplicate shipment will be made. Please give us full details and information pertaining to the merchandise, such as size, color, price, style number, etc.

We regret any inconvenience we may have caused you. Thank you for your cooperation.

Very truly yours, JAY NORRIS CORP.

Par. 7. Through the use of the statements and representations alleged in Paragraph Six hereof, and others of similar import and meaning, respondents have represented, and are now representing, directly or by implication, that:

1. Merchandise paid for by a certified check is shipped to purchasers immediately.

2. Merchandise paid for by a non-certified check is shipped to _ purchasers about two weeks after said check has been approved for payment at the purchaser’s bank.

3. The full purchase price of the product plus all additional charges paid by the purchaser in connection with said purchase are refunded by respondents if the purchaser is dissatisfied for any reason.

4. A sum of money in the form of cash, check, money order or other negotiable currency is refunded to purchasers if they are dissatisfied for any reason.

5. Pursuant to respondents’ 30-day money back guarantee, purchasers will receive a full refund if the merchandise is returned to respondents within 30 days from the date of the purchaser’s receint. of said merchandise. [61 JAY NORRIS CORP., ET AL. 755 751 Complaint purchaser’s order, is caused by the loss of the merchandise by the United States Postal Service.

7. Purchasers of respondents’ products pay only part of the delivery cost and the respondents absorb the remaining portion of said cost.

8. Exchanges or refunds are expeditiously processed by respondents.

9. All parcels shipped to purchasers, except those items marked express collect, are insured against loss, damage or other casualty by respondents.

Pak. 8. In truth and in fact:

1. In numerous instances, merchandise paid for by a certified check is not shipped to purchasers immediately. Delays of as long as one month to one year have been encountered. 2. In numerous instances, merchandise paid for by a noncertified check is not shipped to purchasers about two weeks after said check has been approved for payment at the purchaser’s bank. Delays of as long as one month to one year have been encountered. 3. The full purchase price of the product, plus all additional charges paid by the purchaser in connection with said purchase, are not refunded by respondents if the purchaser is dissatisfied. Postage, handling, shipping and insurance claims are deducted by respondents from the full purchase price.

4. A sum of money in the form of cash, check, money order or other negotiable currency is not refunded to purchasers if they are dissatisfied for any reason. Respondents [7] give purchasers a credit certificate which must be used to purchase merchandise from the respondents or be returned to the respondents in order to receive a cash refund.

5. Pursuant to respondents’ 30-day money back guarantee purchasers do not receive a full refund if the merchandise is returned to respondents within 30 days from the date of the purchaser’s receipt of said merchandise.

6. In numerous instances, the non-delivery of the purchaser’s order is not caused by the loss of the merchandise by the United States Postal Service. Rather, respondents have failed to ship the ordered merchandise. | 7. In numerous instances, the respondents do not absorb a portion of the delivery cost. Purchasers of respondents’ merchandise pay the full cost of delivery.

8. In numerous instances, exchanges or refunds are not expeditiously processed by respondents. Delays of many months have been Complaint 91 F.T.C.

encountered and only after purchasers write to the respondents and to governmental authorities are refunds received. 9. All parcels shipped to purchasers except those items marked express collect, are not insured against loss, damage or other casualty by respondents.

Therefore, the statements and representations, alleged in Paragraph Six hereof, were, and are, unfair or deceptive. Par. 9. The statements and representations made as alleged in Paragraph Five hereof include statements and representations regarding the performance, efficacy and other characteristics of respondents’ products. Typical and illustrative, [8] but not allinclusive, of the statements and representations with respect to product performance, efficacy and other characteristics are the following:

FLAME GUN NEW JN INSTA-JET PROPANE FLAME GUN THE WORK-SAVER THE HEART-SAVER LIGHTWEIGHT, EASY-HANDLING FASTEST WAY WE KNOW TO CLEAR AWAY ICE AND SNOW! . .. . Whips through even the heaviest drifts. Clears walks and driveways. Routs Clogged gutters of ice and old leaves.

Thaws frozen pipes . . . . Produces a clean hot flame for up to 14 hours on a single propane cylinder-easily obtainable at hardware, paint and department stores...

Just aim The Flame Gun and watch it dissolve the heaviest snow drifts, whip right through the thickest ice. . . in seconds! SOCKS YOU’LL NEVER NEED TO BUY ANOTHER PAIR OF SOCKS AGAIN FOR THE REST OF YOUR LIFE. (unless your laundry loses them) ... IMMEDIATE DELIVERY GUARANTEED indestructible nylon socks. . .

Guaranteed to wear forever in normal use - that “normal use” simply means don’t burn holes in them deliberately, or try to cut them with scissors or razor. . . These revolutionary 8-ply nylon socks are made of yarn so indestructible we unconditionally guarantee to give you FREE replacement pair for pair - for any you ever wear a hole in! 6 pair only $7.98 12 pair for $14.98 [9] ROACH POWDER Get rid of roaches ONCE AND FOR ALL! SURE-KILL WIPES OUT ROACH NESTS OP VNTT DAV NOTHING Raashaos can't raociot Guvre Will Thaw dawns tta ndawlane JAY NORRIS CORP., ET AL. 157 751 Complaint starts, that wipes out every roach and every egg in the nest. Sure-Kill is safe to use, and never loses its killing power-even after years. A single can cleans out 6 to 8 rooms GUARANTEED ROACH-FREE FOR 5 YEARS. Sure-Kill roach killer is guaranteed by the manufacturer to prevent reinfestation for up to 5 years when used as directed and left in place.

UNCONDITIONAL GUARANTEE Our roach killer is guaranteed by the manufacturer to prevent reinfestation when used as directed and left in place or your money back Completely safe to use, and never loses its killing power-even after years. . . TV ANTENNA ELECTRONIC MIRACLE TURNS YOUR HOUSE WIRING INTO JUMBO TV ANTENNA. . .ONLY $1.99 - 2 for $3.65 now you can bring in every channel in your area sharp and clear without installing an expensive outdoor antenna or using unsightly rabbit ears. This simple little invention does the trick. You attach it easily and quickly to your TV set, then plug it into wall outlet. . makes your home wiring a huge antenna for super reception. . .

Every home a super receiver ELECTRONIC MIRACLE [10] TURNS YOUR HOUSE WIRING INTO A JUMBO TV ANTENNA... .

. . .Do you know that you have one of the greatest TV antennas ever constructed? It’s better than any set of rabbit ears, more efficient than complicated external antennas. It’s your house. Yes, the wiring in your home constitutes a great antenna that acts as a super receiver for TV, FM, all kinds of difficult reception. . . . FLASHLIGHT NEW! 5 - YEAR FLASHLIGHT USED ON THE APOLLO MISSIONS DEVELOPED FOR AMERICA’S ASTRONAUTS Totally new and revolutionary power cell (developed and used by the government in manned moon flights) keeps this flashlight shining bright for at least 5 years with 10 times the staying power of an ordinary flashlight. No external switch to corrode or break. (NASA wanted a fool-proof switch for their flashlight going to the moon). Now you can have it for your car or home - YOUR COST $7.99, 2 for $14.99 ABSOLUTE 5 - YEAR GUARANTEE Every command modual flashlight carries this absolute 5 - year guarantee. Carry your flashlight with you, keep it at home. It must work even if you haven’t touched it for 5 years or your money back. So don’t be another minute without the one safety element every car, every family needs. CARS BUY CHOICE. . . NOT CHANCE Buy direct and get the carefully maintained car of your choice below wholesale price. All cars are standard four door, six passenger sedans equipped with automatic transmissions, heater, defroster and feature durable vinyl interiors. They have been in regularly maintained fleet use and serviced far . more frequently than the average car owner can afford to do. Each car has been thoroughly serviced by our mechanics [11] to put it in good operating condition and passes careful inspection before being released for delivery. These top-quality ex-taxis Complaint 91 F.T.C.

have been carefully selected for best value . . . We offer these fine cars at the prices shown (F.0.B., N.Y.) There are no hidden costs. . . . IDEAL FOR PERSONAL USE OR TO RESELL AT A PROFIT! 1970 DODGE CORONET, AUTOMATIC TRANSMISSION $999. 1969 FORD CUSTOM DODGE CORONET, AUTOMATIC TRANSMISSION $799. 1969 CHEVROLET BISCAYNE, AUTOMATIC TRANSMISSION, $899. Only Pan Am gives you this 100% o.k. checkout certificate. Dependable Pan Am gives you a good car at a low price. Our highly trained mechanics double-check each car for all the terms below. When a car leaves our premises it is checked out as follows: Brakes Fan Belt Starter Plugs Spare Tire Water Pump Points Jack Fuel Pump Lights Transmission Block Battery Heater Color Generator Defroster MAIL THIS COUPON WITH YOUR DEPOSIT - ORDER AS MANY AS YOU WANT. ALL CARS ARE SOLD ON AN AS IS FIRST ORDER FIRST SERVE BASIS. LINCOLN - KENNEDY PENNY NOW AVAILABLE THE ONLY LINCOLN-KENNEDY PENNY EVER MINTED UNCIRCULATED COMMEMORATIVE LINCOLN HEAD PENNY WITH KENNE- DY PROFILE Here’s unusual news for collectors and anyone interested in unique commemorative issues. . .issues that may never be repeated again. A new uncirculated Lincoln Head penny is now available. This [12] unique coin shows the profile of President Kennedy stamped on the surface looking at President Lincoln. The relationship is uncanny. Never released for ordinary use, the coin is perfectly legal tender and is sanctioned by Section 332 of the U.S. Code. As a coin of both historical and numismatic significance it is certain to become a collector’s item that will grow and grow in value. Because, however, this coin is not in circulation, you may obtain it only through an offering of this sort, and we urge you to order now, avoid disappointment. And if you order right away, you will also receive the Plaque of Coincidences showing the startling parallels in the career of these two tragic figures. These and many more astonishing coincidences are yours in your Free Plaque of Coincidential Facts when you order The Lincoln-Kennedy Commemorative Penny. Par. 10. Through the use of the statements and representations alleged in Paragraph Nine hereof, and others of similar import and meaning, respondents have represented and are now representing, directly or by implication that:

FLAME GUN JAY NORRIS CORP., ET AL. : 159 751 Complaint the heaviest snow drifts and the thickest ice in seconds and is effective and efficient in clearing walks and driveways of ice and snow.

SOCKS Respondents’ nylon socks are indestructible. Respondents’ nylon socks last forever.

go be ROACH POWDER 4. Respondents’ roach powder is safe to use. | 5. Respondents’ roach powder gets rid of roaches once and for all. [13] , 6. Respondents’ roach powder creates a deadly chain reaction which eliminates and kills roaches and eggs. 7. The manufacturer has unconditionally guaranteed that respondents’ roach powder prevents reinfestation when used as directed and left in place or it will refund money. — 8. Respondents’ roach powder does not lose its capacity to kill under any conditions of use.

TV ANTENNA 9. Respondents’ TV antenna will bring sharp and clear reception even in difficult areas.

10. The performance of respondents’ TV antenna is superior to any rabbit ear antenna or outdoor antenna. 11. Respondents’ TV antenna will turn all types of house wiring into a TV antenna.

12. Respondents’ TV antenna is an electronic miracle. FLASHLIGHT 18. Respondents’ “FIVE YEAR FLASHLIGHT” carries an absolute 5year guarantee.

CARS 14. Cars delivered to purchasers are in good mechanical and physical condition.

15. Cars delivered to purchasers are in safe operating condition. 16. Cars delivered to purchasers are finished and look as pictured and described in respondents’ advertising materials. [14] 17. Cars are checked by expert mechanics and necessary repairs are made prior to release for delivery.

Complaint 91 F.T.C.

18. Cars delivered to purchasers are in sound condition and repair and render normal, adequate and satisfactory service. 19. Respondents’ cars may be readily resold by the purchasers at a profit.

20.. Cars are regularly ordered and received in advance of their being offered for sale and are held in stock until purchase orders are received.

21. Respondents’ cars have undergone thorough and complete servicing and inspection before being released and approved for delivery.

22. Each price quoted for respondents’ motor vehicles is the full price and there are no hidden costs.

23. Respondents bear the liability and responsibility of delivery of cars to purchasers at any destination in the United States where such purchasers may reside.

LINCOLN-KENNEDY PENNY 24. Respondents’ Lincoln-Kennedy penny was minted by the United States Treasury Department.

25. Respondents’ Lincoln-Kennedy penny is a coin of historical and numismatic significance which is certain to grow in value. 26. The issuance of respondents’ Lincoln-Kennedy penny was sanctioned by Section 332, Title 18, U.S. Code. 27. A free plaque containing historical coincidences between the lives of President Lincoln and President Kennedy is provided to purchasers with each coin order. [15] Par. 11. In truth and in fact:

FLAME GUN 1. The “JN INSTA-JET PROPANE FLAME GUN” is not able to whip through the heaviest snow drifts and the thickest ice in seconds and is not effective and efficient in clearing walks and driveways of ice and snow.

SOCKS 2. Respondents’ nylon socks are not indestructible. 3. Respondents’ nylon socks do not last forever. ROACH POWDER 4. Respondents’ roach powder is not safe to use. Ingestion of the powder may cause sickness or death.

JAY NORRIS CORP., ET AL. 761 751 Complaint and for all. The roach powder is a formulation of boric acid which works slowly. In many residential buildings cockroaches can reinfest before they are eliminated.

6. Respondents’ roach powder does not create a deadly chain reaction which eliminates and kills roach and eggs. Each cockroach must contact the insecticide to be killed. Respondents’ roach powder will not kill roach eggs.

7. The manufacturer has not unconditionally guaranteed that respondents’ roach powder prevents reinfestation when used as directed and left in place or it will refund money. 8. Respondents’ roach powder loses its capacity to kill under certain conditions of use. If wet, it cakes and does not adhere to the insects. If covered by grease or food deposits or non-insecticidal dusts, it becomes ineffective. [16] TV ANTENNA 9. Respondents’ TV antenna will not bring sharp and clear reception in difficult areas.

10. The performance of respondents’ TV antenna is not superior to rabbit ear antennas or to outdoor antennas. 11. Respondents’ TV antenna will not turn all types of house wiring into a TV antenna. If house wiring is encased in metal, it is shielded from the reception of any TV signals. 12. Respondents’ TV antenna is not an electronic miracle. FLASHLIGHT 13. Respondents’ “FIVE YEAR FLASHLIGHT” does not carry an absolute 5-year guarantee. The flashlight is guaranteed by the manufacturer to store and remain usable for 5 years or to operate for a total of 10 hours, which ever comes first. The manufacturer further clearly states in its guarantee that the light will not stay “on” continuously for 5 years.

CARS 14. Ina number of instances, cars delivered to purchasers are not in good mechanical and physical condition. 15. In a number of instances, cars delivered to purchasers are not in safe operating condition.

16. In a number of instances, cars delivered to purchasers are not finished and do not look as pictured and described in respondents’ advertising materials. [17] 17. In a number of instances, cars are not checked by expert Complaint 91 F-.T.C.

mechanics and necessary repairs are not made prior to release for delivery.

18. Cars delivered to purchasers are not in sound condition and repair and do not render normal, adequate and satisfactory service. 19. Respondents’ cars may not be readily resold by the purchasers at a profit.

20. In a number of instances, cars are not regularly ordered and received in advance of their being offered for sale and are not held in stock until purchase orders are received. ‘ 21. In a number of instances, respondents’ cars have not undergone thorough and complete servicing and inspection before being released and approved for delivery. 22. In numerous instances, each price quoted for respondents’ motor vehicles is not the full price and there are hidden costs. Purchasers are often required to expend large sums of money for the delivery of the cars or to enable cars to pass state motor vehicle registration safety or inspection requirements or to put cars into safe . operating condition.

23. Respondents do not bear the liability or responsibility for delivery of cars to purchasers at any destination in the United States where such purchasers may reside.

LINCOLN-KENNEDY PENNY 24. Respondents’ Lincoln-Kennedy penny was not minted by the United States Treasury Department. No branch of the United States Government had anything to do with the production of this coin. [18] 25. Respondents’ Lincoln-Kennedy penny is not a coin of historical and numismatic significance which is certain to grow in value. It is a privately produced novelty item using an ordinary penny. 26. The issuance of respondents’ Lincoln-Kennedy penny was not sanctioned by Section 332, Title 18, U.S. Code. Section 332 refers to the debasement of gold and silver coins by the physical removal or dimunition of the gold or silver content. , 27. A free plaque containing historical coincidences between the lives of President Lincoln and President Kennedy is not provided to purchasers with each coin order. The ordinary paper card upon which the Lincoln-Kennedy penny is pasted is neither “free” nor is it a “plaque.” Said card was never offered for sale by respondents at a regular price but was always offered for sale in conjunction with the penny.

Therefore, the statements and representations as alleged in JAY NORRIS CORP., ET AL. 763 151 Complaint TV. Acts or Practices - Faiture To Disclose MATERIAL Facts Par. 12. In the further course and conduct of their business, as aforesaid, respondents have made statements and representations as aforesaid, without disclosing material facts. Such material facts include, but are not limited to, the following: FLAME GUN Initial purchase of respondents’ flame gun does not include the propane cylinder mentioned in respondents’ advertisements of its flame gun. The propane cylinder, which is an essential component of the flame gun, must be purchased at an additional cost. [19] Respondents’ flame gun is not assembled when delivered but rather must be assembled by purchasers after delivery. ROACH POWDER Respondents’ roach powder is 50% boric acid and 50% inert ingredients.

Respondents’ roach powder is hazardous. The product may be harmful to human beings and pets. Special precautions should be taken in the use of this product.

FLASHLIGHT Respondents’ flashlight has an on life of 10 to 20 hours. Manufacturer’s guarantee of respondents’ flashlight is not absolute. The manufacturer guarantees that the light can be stored and remain usable for 5 years or operate for a total of ten hours, whichever comes first.

CARS Respondents’ cars are ex-New York City taxicabs. Respondents’ advertise that the cars are “FOB New. York” and “As Is” without disclosing the import or meaning of those terms. Respondents’ cars are not inspected for compliance with any state motor vehicle inspection law.

Interiors of motor vehicles have not been cleaned or reconditioned by respondents prior to their being offered for sale. Drivers hired to deliver cars to purchasers are independent contractors and are not respondents’ agents, servants or employees. The aforesaid material facts, if known to consumers would be likely to affect their consideration of whether or not to purchase Complaint 91 FTC.

respondents’ products. Therefore, the advertisements, acts or practices, which fail to disclose the aforesaid material facts are unfair or deceptive. [20] V. OTHER ACTS AND PRACTICES Par. 13. In the further course and conduct of their business as aforesaid respondents have:

(a) Deposited purchasers’ checks and money orders into their bank accounts within three days to one week from receipt of such checks and money orders and have failed to either ship the merchandise ordered or to refund money for one month to one year; (b) Failed to answer letters of inquiry from consumers or have made inadequate responses which have thereby delayed or prevented purchasers, seeking deliveries of merchandise or refunds of their money, from obtaining same;

(c) Failed to provide a business telephone listing in the official telephone directory for its location or in any published telephone directory and have maintained an unlisted business telephone number;

(d) Placed the burden of record keeping upon the purchasers who, upon seeking a refund, exchange, or delivery of the advertised merchandise ordered and paid for by them, have been required by respondents to provide copies of their cancelled checks, original order blanks or various correspondence received from respondents, as well as the full details pertaining to the merchandise ordered such as the size, color, price, style number and the date the order was placed;

(e) Utilized numerous corporate and business names such as Jay Norris Corporation, P.N. Publishing Corporation, Norris Nutrition, Garydean Corp., Federated Nationwide Wholesalers Service, Federated Wholesalers Service, Nationwide Service, Cheese[21 Jlovers International, Pan American Car Distributors Corporation, Associated Auto Wholesalers Corporation, American Value Corporation, and various other corporate and business names, post office box numbers and addresses, in such manner as to create confusion in the minds of purchasers who are unable to relate all the names used to the Jay Norris Corporation or to its principal owners. Such business practices by respondents constitute unfair or deceptive acts or practices and unfair methods of competition in commerce in violation of Section 5 of the Federal Trade Commission Act.

Par. 15. The use by respondents of the aforesaid unfair or JAY NORRIS CORP., ET AL. 765 151 Initial Decision 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 a substantial volume of respondents’ products. Par. 16. The aforesaid acts and practices of respondents as herein alleged are all to the prejudice and injury of the public and of respondents’ competitors, constitute unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in violation of Section 5 of the Federal Trade Commission Act.

INITIAL DECISION BY Miles J. BROWN, ADMINISTRATIVE LAW JUDGE AucustT 31, 1977 * PRELIMINARY STATEMENT The Federal Trade Commission issued its complaint in this matter on September 3, 1975 (mailed October 3, 1975), charging respondents with unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act, as amended, (15 U.S.C. 45). [2] In their answer, respondents denied that they had violated the Federal Trade Commission Act as alleged in the complaint. They asserted that the individual respondents acted only in their capacity as corporate officers. They further asserted that the respondent corporations, other than J. Norris Corp. (“Norris”) and Pan-Am Car Distributors Corp. (“Pan-Am”), had nothing to do with the matters which were the subject of the complaint.

Thereafter, for approximately ten months, there was sporadic pretrial discovery occasioned by several long continuances prompted by the fact that the complaint counsel originally assigned to this matter was concurrently handling another adjudicative matter on which she was the only Federal Trade Commission counsel of record. On July 6, 1976, complaint counsel filed a list of witnesses containing 140 names. On August 2, 1976, complaint counsel filed her 219 page list of Commission exhibits identifying 4236 numbered documents (many multi-paged) and not cross-referenced to the allegations of the complaint. Whereupon respondents’ counsel moved for an extension of time until December 30, 1976, in which to file their witness and document lists, on the grounds that the “overwhelming volume of complaint counsel’s avalanche of documents (not to mention the list Initial Decision 91 F.T.C.

of 140 witnesses) represents extraordinary cause for this request.” (Motion for Rescheduling of Dates. . ., dated August 17, 1976.) On September 9, 1976, the administrative law judge issued an order requiring complaint counsel to file amended lists of proposed exhibits and proposed witnesses and otherwise vacated all other pretrial requirements therefore imposed on counsel. Shortly thereafter, other complaint counsel were assigned to this matter. On November 30, 1976, substitute complaint counsel filed their amended and abbreviated lists.

Adjudicative hearings commenced on January 11, 1977. Complaint counsel concluded their case-in-chief on February 1, 1977, utilizing 14 trial days. Respondents’ answering case commenced February 28, 1977. On March 2, 1977, after three days of hearings, respondents’ counsel advised that respondent Joel Jacobs, the only remaining witness for respondents, was incapaciated and he requested a continuance of the hearings. After several hearing dates were postponed, due to the continuing incapacity of Mr. Jacobs, the parties, on April 21, 1977, filed a stipulation consenting to the written testimony of Joel Jacobs, including questions and answers on direct examination, as well as on cross-examination. On April 28, 1977, [3] the administrative law judge approved the stipulation and directed that Mr. Jacob’s written testimony be incorporated into the record.

On May 23, 1977, the administrative law judge was notified that the exhibits, which had remained in the New York Regional Office since the last hearing date of March 2, 1977, pending further hearings for presentation of Mr. Jacob’s testimony, had been delivered to the Secretary’s office. On June 1, 1977, the administrative law judge issued his order making certain corrections to the record, closing the record for receipt of evidence, and establishing due dates for filing of proposed findings and reply briefs. Any motions appearing on the record not heretofore or hereby specifically ruled upon either directly or by the necessary effect of the conclusions in this initial decision are hereby denied. The proposed findings and conclusions submitted by counsel supporting the complaint (“CSCPF”) and counsel for respondents (“Resp. PF”) have been given careful consideration and to the extent not adopted by this decision, in the form proposed or in substance, are rejected as not supported by the evidence or as immaterial. This case deals with certain matters relating to the business of selling, by mail-order, through advertisements disseminated by * On August 16, 1977, the administrative law judge requested an extension of time until September 13, 1977, in JAY NORRIS CORP., ET AL. 167 751 Initial Decision catalogs and newspapers or magazines. Certain challenged acts and practices relate to the handling of orders and shipments and, in addition, to respondents’ handling of consumers’ inquiries and complaints relative to non-delivery, money-back guarantees and refunds. Other matters relate to certain advertising representations concerning the efficacy, performance and characteristics of specific products and the truth or falsity of such representations. Allegations relating to the failure to disclose material facts were also included in the complaint.

Having reviewed the entire record in this proceeding, and having considered the demeanor of the witnesses? [4] together with the pleadings, the proposed findings, conclusions, and arguments submitted by counsel supporting the complaint and counsel for respondents, I make the following findings of fact based on the record considered as a whole:

FINDINGS AS TO THE FACTS About the respondents.

1. Respondents Norris, Pan-Am, Federated Nationwide Wholesalers - Garydean Corp.‘ (“Federated”) and P-N Publishing Company, Inc. (“P-N”) are all New York corporations with their principal offices located at 31 Hanse Ave., Freeport, Long Island, New York (Compl. Par. 1; Ans. Par. 1).

2. Respondents Joel Jacobs (“Jacobs”) and Mortimer Williams (“Williams”) are the sole shareholders, officers and directors of Norris, Federated and P-N (Compl. Par. 1; Ans. Par. 1; Jacobs Wr. D6A‘). Jacobs is president of Norris (Jacobs 120). Williams is vice president and secretary-treasurer of Norris (Jacobs 122; Williams 162). Williams is president of P-N (Williams 162) and secretarytreasurer of Federated (Williams 162).

3. Respondents Jacobs, Williams and Kenneth Mann (“Mann”) are the shareholders and officers and directors of Pan-Am (Compl. Par. 1; Ans. Par. 1). Williams is treasurer of Pan-Am (Williams 163). Mann is vice president of Pan-Am (Mann 213). In addition, Mann is Service Director of Future Motors, a new car franchise dealer in Long Island City, New York, selling Dodge taxicabs and other make Dodge vehicles (Mann 212).

Thes 1 4 4 7 2 648 2327 89 53 96.735863 contents 1 4 4 7 3 741 2352 23 19 96.787933 of5 1 4 4 7 4 769 2351 40 20 93.263191 Mr.5 1 4 4 7 5 816 2351 82 20 92.841850 Jacob’s5 1 4 4 7 6 905 2352 84 19 97.001091 written5 1 4 4 7 7 997 2351 112 24 95.908913 testimony5 1 4 4 7 8 1117 2357 26 14 96.467377 on5 1 4 4 7 9 1150 2351 74 20 96.467377 behalf5 1 4 4 7 10 1228 2351 24 20 96.969162 of5 1 4 4 7 11 1256 2351 137 25 96.786789 respondents5 1 4 4 7 12 1400 2351 18 20 96.889336 is5 1 4 4 7 13 1425 2353 37 18 96.353340 not5 1 4 4 7 14 1468 2351 36 20 97.006165 thes 1 4 4 7 15 1510 2351 81 24 96.981407 subjects 1 4 4 7 16 1597 2350 24 21 95.804291 of5 1 4 4 7 17 1624 2350 122 25 96.555222 significant5 1 4 4 7 18 1753 2350 88 24 96.830925 dispute.4 1 4 4 8 0 535 2383 1306 26 -1 5 1 4 4 8 1 535 2384 19 20 96.950340 It5 1 4 4 8 2 562 2384 76 21 96.596985 should5 1 4 4 8 3 647 2384 26 20 96.961365 be5 1 4 4 8 4 682 2385 63 19 96.267471 noted5 1 4 4 8 5 754 2385 49 19 96.941093 that5 1 4 4 8 6 811 2384 142 25 96.510201 respondents’5 1 4 4 8 7 964 2383 84 21 96.759354 counsels 1 4 4 8 8 1057 2383 94 21 96.930634 deferred5 1 4 4 8 9 1162 2384 33 20 93.290253 his5 1 4 4 8 10 1203 2385 208 19 92.575668 cross-examinations 1 4 4 8 11 1421 2384 23 20 95.932869 of5 1 4 4 8 12 1451 2385 39 19 96.968948 Mr.5 1 4 4 8 13 1499 2384 77 20 96.995819 Jacobs5 1 4 4 8 14 1585 2384 55 20 96.920967 after5 1 4 4 8 15 1650 2383 32 21 96.678261 his5 1 4 4 8 16 1692 2383 114 25 40.357910 testimony5 1 4 4 8 17 1814 2389 27 14 96.798645 on4 1 4 4 9 0 534 2417 378 25 -1 5 1 4 4 9 1 534 2417 74 21 96.222519 behalf5 1 4 4 9 2 613 2419 23 19 96.222519 of5 1 4 4 9 3 640 2418 115 24 96.425064 complaints 1 4 4 9 4 761 2419 84 18 96.513817 counsels 1 4 4 9 5 853 2417 59 25 95.551926 (160).3 1 4 5 0 0 575 2450 852 25 -1 4 1 4 5 1 0 575 2450 852 25 -1 5 1 4 5 1 1 575 2454 8 10 21.323051 +5 1 4 5 1 2 597 2451 20 19 95.608719 It5 1 4 5 1 3 623 2452 18 19 96.658142 is5 1 4 5 1 4 648 2454 37 17 96.964912 not5 1 4 5 1 5 691 2451 57 20 96.656540 clears 1 4 5 1 6 754 2451 95 20 93.276802 whether5 1 4 5 1 7 856 2451 136 23 74.285324 “Garydean”5 1 4 5 1 8 1000 2451 17 19 96.933449 is5 1 4 5 1 9 1025 2450 69 24 93.606316 “Gary5 1 4 5 1 10 1100 2451 72 19 96.413200 Dean”5 1 4 5 1 11 1179 2451 48 23 96.413200 (Sees 1 4 5 1 12 1233 2451 75 19 96.454720 Jacobs5 1 4 5 1 13 1315 2451 41 20 93.044724 Wr.5 1 4 5 1 14 1364 2452 63 23 87.688362 D4A).2 1 5 0 0 0 535 2483 1307 58 -1 3 1 5 1 0 0 535 2483 1307 58 -1 4 1 5 1 1 0 575 2483 1267 25 -1 5 1 5 1 1 1 575 2488 8 9 46.899612 *5 1 5 1 1 2 598 2484 61 19 92.674164 “Wr”5 1 5 1 1 3 667 2485 67 19 96.351196 refers5 1 5 1 1 4 742 2486 22 18 96.921677 to5 1 5 1 1 5 771 2484 81 19 96.629478 Jacobs’5 1 5 1 1 6 862 2485 83 18 95.888313 written5 1 5 1 1 7 954 2484 118 24 93.228302 testimony.5 1 5 1 1 8 1082 2483 74 20 88.547974 “D6A”5 1 5 1 1 9 1165 2484 67 19 96.302422 refers5 1 5 1 1 10 1240 2486 22 17 96.495987 to5 1 5 1 1 11 1270 2483 33 20 96.964569 his5 1 5 1 1 12 1311 2491 82 12 96.738220 answers 1 5 1 1 13 1400 2487 23 16 96.767578 to5 1 5 1 1 14 1430 2485 95 22 96.542465 questions 1 5 1 1 15 1534 2484 13 19 96.533920 65 1 5 1 1 16 1554 2490 27 13 96.685081 on5 1 5 1 1 17 1589 2484 67 19 96.340279 directs 1 5 1 1 18 1663 2483 144 20 96.287270 examinations 1 5 1 1 19 1815 2483 27 24 97.015297 by4 1 5 1 2 0 535 2518 241 23 -1 5 1 5 1 2 1 535 2518 143 23 94.866844 respondents’5 1 5 1 2 2 685 2518 91 19 96.046478 counsel. 768 . FEDERAL TRADE COMMISSION DECISIONS Initial Decision 91 F.T-C.

4. Norris is a “gift and novelty” mail-order company selling general merchandise to the consumer (CX 405-7, 409-10). It has been engaged in this business since 1953 (Jacobs 120-1). 5. Pan-Am was in the business of selling cars to consumers by mail (Jacobs 126). It became inactive in 1975 (Jacobs 128; Mann 218). [5] 6. Federated Wholesalers Service - Garydean trading as Nationwide Wholesalers Service was incorporated as one name (Jacobs 128). It was in the business of operating consumer buying clubs, i.e. finding persons who were interested in buying merchandise at lower prices, and introducing consumers to mail-order companies located | throughout the country (Jacobs 129; see CX 741). Nationwide ceased to operate in 1973; Federated ceased to be active in 1974; and Garydean ceased to operate in 1972 (Jacobs 128-9; Wr. D4A). On several occasions respondents used the name “Nationwide” in “price testing” advertisements in connection with the Norris business (Wr. D12A; D314; Williams 172).

7, P-N, inactive for the last ten years, was set up to publish a sales opportunity magazine. For a short time it also engaged in the mail-order sale of higher priced general merchandise (Jacobs 127; Wr. D16A). On several occasions respondents have used the name “P.N. Publications” in connection with advertising under their master contract with TV Guide Magazine (see Jacobs Wr. D21A; D24A; see Finding 38).

8. Respondents Jacobs and Williams formulate, direct and control the policies of the respondent corporations Norris, Federated and P-N (Compl. Par. 1; Ans. Par. 1).

9. Respondents Jacobs, Williams and Mann formulate, direct and control the policies of the respondent corporation Pan-Am (Compl. Par. 1; Ans. Par. 1).

10. Respondents Jacobs and Williams, along with others not respondents herein, also have business interests in other mail-order corporations not named as respondents in this proceeding, such as Cheeselovers International, Inc. (Jacobs Wr. D34-44A; see CX 2065) and Overseas Discount Shopping Services, Ltd. (Jacobs Wr. D51- 538A).

About commerce and competition.

11. In the course and conduct of its business, Norris causes to be published and mails its catalog to prospective consumers located throughout the United States. In addition, it does substantial national advertising in such magazines as TV Guide and places advertisements i MN nauronenows wedel 2~4---4-4- -* we JAY NORRIS CORP., ET AL. 769 151 ; Initial Decision Jacobs 123). Also, in the course and conduct of its business, Norris mails or otherwise causes the distribution of merchandise to purchasers located throughout the United States. [6] 12. In the course and conduct of its business, Pan-Am causes to be published in the Norris catalog advertisements for its cars. Also in the course and conduct of its business, Pan-Am delivers cars to purchasers thereof located outside the State of New York (see Finding 49).

13. Respondents Norris, Pan-Am and Jacobs, Williams and Mann are engaged “in commerce” as “commerce” is defined in the Federal Trade Commission Act, and business practices relating to the — matters alleged in the complaint are “in commerce” and “affect commerce” within the meaning of such terms as set forth in the Federal Trade Commission Act.

14. Respondents Norris, Pan-Am and Jacobs, Williams and Mann are in substantial competition in commerce with others engaged in mail-order businesses distributing and selling various products in commerce (see Jacobs 124).

(NOTE: The term “respondents,” as it may appear hereinafter in Findings Nos. 15-48, refers to the Jay Norris Corporation, Joel Jacobs and Mortimer Williams, only (see Discussion, p. 58).] About guarantees, deliveries, and refunds — Advertising 15. In the Norris catalogs (see CXs 405, 406, 407, 409, 410) certain statements are made concerning guarantees, deliveries and refunds. For example, the phrase “30 DAY MONEY-BACK GUARANTEE ON ALL PURCHASES” appears prominently on the front cover (CX 409). It is also stated: “Personal Checks: to insure immediate shipment of your order, please have your check certified. Otherwise allow about 2 weeks until your check clears the bank.” (CX 409, order blank). On page 33 of CX 409 the following phrase appears: “30 day money back guarantee on all items in this catalog.” , Other statements include:

Your guarantee of satisfaction . . . Everything you buy from Jay Norris Corp. is always first quality. Every item is exactly as described and illustrated. Any item not up to your expectations return in 30 days for full refund (CXs 57, 409). [7] Unless item is marked express collect, use this easy chart to figure postage insurance, shipping and handling charges. It’s only part of the delivery cost - we pay the rest. If your order is up to:

T10 FEDERAL TRADE COMMISSION DECISIONS Initial Decision 91 F.T.C.

GIS.00 occ cecececcccecececcectccnceceeeseeesesecseeseeeeseceeees add $1.70 $15.01 to $20.00 ... 0... cece ecceceececectecescecesceseesesseeeees add $2.20 $20.01 to $30.00 ........c ccc cceccecesceceecececseceeceaceseeeeees add $3.20 $30.01 to $40.00 2.0... ccc cece cece cece nce eeteeeeeeeeeeeeeeeees add $4.20 $40.01 to $50.00 0... ccc cece cece ee eee eee eneeeeeeeteeuessseaes add $5.20 $50.01 to $60.00 00.0... eee e ccc ee cece ec cc cee eetereeseeneenensnees add $6.00 Over $60.00 2... ccc eee c ccc n cee ee ce sceetecceeeteceeneeseeeeseeees add $7.20 (CX407, p. 52).

16. In the Norris newspaper and magazine advertisements similar statements are made concerning guarantees, deliveries and refunds.

Order now. Christmas Delivery Guaranteed. Mail no risk coupon now. . . . only $9.99 plus $1.00 each for shipping and handling, under your money back guarantee. . . 30day money back guarantee (CX 2, Flame Gun, Parade Magazine, November 28, 1971). (See also CX 3261.) ;

30-day money-back guarantee! Mail no-risk coupon now!. . . only 7.99 plus $1.00 each for shipping and handling, under your money-back guarantee . . . prompt delivery guaranteed (CX 4, Flame Gun, Parade Magazine, November 5, 1972.) Mail no-risk coupon today for a lifetime supply of socks . . . immediate delivery guaranteed (CX 8, Parade Magazine, January 4, 1970.) Buy with confidence - 30-day Money-Back Guarantee (CX 17, N.Y. Times, October 24, 1971). (See also CXs 20, 24, 25, 44, 67.) Buy with confidence - Money-Back Guaranteed (CX 28 California Living Magazine, _ January 7, 1973.) Use this Jumbo TV Antenna for 30 days at our risk if not completely satisfied return for prompt refund . . . only $1.99 plus 60¢ shipping and handling under your money back guarantee (CX 886, 1-46 Jay Norris, 1975.) {8] Order by mail with confidence - 30 day money back guarantee (CX 62, Parade Magazine, August 12, 1973 Lincoln-Kennedy Penny.) Use these products 30 days at our risk. If not completely satisfied, return for refund. (CX 96A-D, Parade Magazine, February 9, 1975.) 90 Day Money Back Guarantee . . . you may return within 30 [90] days for prompt refund of purchase price (CX 117 A, H, Parade Magazine, March 14, 1976.) Try this bait oil 30 days at our risk, if not completely satisfied, return for prompt ' refund (CX 386, New York City Metro T.V. Guide, February 15-21, 1975). Representations 17. It is found that, through the printed statements contained in respondents’ catalogs, newspaper and magazine advertisements, as wenll oan eenaianee a -—------ JAY NORRIS CORP., ET AL. 771 751 Initial Decision merchandise, respondents have, as alleged in the complaint, represented directly or indirectly, that: a. merchandise paid for by a certified check is shipped to purchasers immediately;

b. merchandise paid for by a non-certified check is shipped to purchasers about two weeks after said check has been approved for payment at the purchaser’s bank;

c. the full purchase price of the product plus all additional charges paid by the purchaser in connection with said purchase are refunded by respondents if the purchaser is dissatisfied for any reason;

d. a sum of money in the form of cash, check, money order or other negotiable currency is refunded to purchasers if they are dissatisfied for any reason; [9] e. pursuant to respondents’ 30-day money back guarantee, purchasers will receive a full refund if the merchandise is returned to respondents within 30 days from the date of the purchaser’s receipt of said merchandise;

f. in a substantial number of cases, the non-delivery of the purchaser’s order, is caused by the loss of the merchandise by the United States Postal Service;

g. purchasers of respondents’ products pay only part of the delivery cost and the respondents absorb the remaining portion of said cost;

h. exchanges or refunds are expeditiously processed by respondents; and i. all parcels shipped to purchasers, except those items marked express collect, are insured against loss, damage or other casualty by respondents.

Consumer testimony 18. Complaint counsel presented consumer witnesses who testified about their prepaid mail-orders from respondent Norris and problems concerning delayed delivery or non-delivery of the merchandise ordered.

On January 8, 1973, Andrew Littlejohn ordered a flame gun from Norris by mail, paying for the merchandise by postal money order. A month later, having not received the ordered merchandise, Mr. Littlejohn wrote to Norris, but received no reply. Receiving no reply to subsequent letters, he contacted the Post Office Department and the Better Business Bureau. On May 8, 1973, he received the flame gun (337-339; see CX 3233).

Frank Trupia ordered a TV Antenna by mail from Norris on April Initial Decision 91 F.T.C.

10, 1973 (332; CX 4251E). Not having received the merchandise by June 1, Mr. Trupia wrote to Norris. Receiving no response, Mr. Trupia, at the end of June, wrote to Norris again, threatening to take the matter to the Better Business Bureau. Norris responded to the second letter and in August Mr. Trupia received the ordered merchandise (332-334). [10] In early 1973 Lester Colodny ordered a two drawer file from Norris, by mail (see CX 3091). After he wrote several letters, he received a form notice two months later and sometime after that received the merchandise (347-349).

Lois Johnson ordered a tool set from Norris by mail. She paid by certified check (3188). When she did not receive the merchandise ‘after 4-6 weeks, she wrote to them. Norris sent her a post card response (CX 3190A, B dated August 27, 1975). When she still did not receive the merchandise she wrote again and received another post card response requesting information about the order (CX 3190C, D dated January 2, 1976). Miss Johnson did not answer the second card and never received the ordered merchandise (411-419). Jeffrey Feldman ordered a socket wrench and tool set from Norris by mail on March 16, 1973 (CXs 3129AB, 3130). When he received his bank statement he noticed that his check had been cashed by Norris. Not having received the ordered merchandise, he wrote to Norris, but received no response. He wrote several more letters to Norris and received no reply. He then wrote to the Federal Trade Commission and, thereafter, received the ordered merchandise in the first week of June 1973 (424-429).

On March 24, 1974, Richard Waysse ordered a tube of glue from Norris by mail (CX 3320AB). On April 24, 1974, not having received the ordered merchandise, he wrote to Norris requesting the merchandise or a refund. He received a post card from Norris advising him to wait four weeks after the original order (CX 3321C). On May 24, 1974, Mr. Waysse requested Norris to send him a refund (CX 3328). He refused to accept the package from Norris when it was delivered in the latter part of June 1974 (435-439; see CX 3330). He subsequently received a refund on July 22, 1974 (CX 3334). On November 5, 1973, Mr. White ordered a wrench and tool set from Norris by mail. After he inquired about delivery, Norris advised him that they were out of stock (453-456; see CXs 3358, 3359AB). He never received the merchandise (456, 459). [11] On December 4, 1973, Mr. Henick ordered two sets of “Everything Organizers” from Norris by mail (488; CX 3173). He never received the merchandise although Norris was advised of the failure of Bie ee AO A RT NAO NN JAY NORRIS CORP., ET AL. 173 751 Initial Decision Clara Zappa ordered a “five-year” flashlight from Norris by mail in January 29, 1973, and when she did not receive the merchandise by May 1, 1973, she contacted the Better Business Bureau. She received the flashlight in May 1973 (529, 531-3; CX 3365, 3366). Angela Martone ordered “Spanish Fly” fishing lure bait from American Value in February 1975, and after writing four letters to American Value‘ requesting shipment or a refund, she contacted the Better Business Bureau and in September 1975 received the merchandise (543-47, 549; CX 3256AB).

Allen Carreau ordered a solar blanket in April 1973. Norris requested he remit an additional 50¢, which he did (CX 3074). He did not receive the merchandise until December 1973 or January 1974 after he had contacted Norris in June, and, receiving no reply, the Better Business Bureau in October (551-556; CX 3078). Charles Silverman ordered a tool set from Norris by mail early in November 1973. In January 1974 he wrote to Norris twice advising that he had not received the merchandise, and receiving no response to either letter, contacted the Better Business Bureau on January 8, 1974. He then received a communication from Norris and received the merchandise in May 1974.

Leslie Gordon ordered a book from Norris by mail in February 1978 (CX 3168). When he did not receive the merchandise he wrote to Norris in March, but received no reply (570-1). After he wrote to the Attorney General of New York, he received a post card from Norris in April or May advising that they were going to ship the book, but he never received either the merchandise or a refund (572, 574). In November 1971, responding to an advertisement that guaranteed delivery by Christmas, Frank Matullo ordered a [12] flame gun by mail from Norris (CX 3060B, 3261). When he did not receive it, he wrote to Norris, but received no response. After he complained to the Better Business Bureau in March 1972, he received a card from Norris, and a few weeks later received the flame gun (576-586). On March 29, 1974, Catherine Cunningham. ordered a socket wrench tool set from American Value by mail (CX 3095-6). In two weeks she received a card from Norris advising that there would be a delay in shipment. When six months passed and she still had not received the ordered merchandise, Mrs. Cunningham, in November, wrote to Norris, but received no response. Again in January she wrote to Norris but received no answer. After contacting the Better Business Bureau, she received a letter from Norris (CX 3098). She ® For findings on “American Value,” a trade name used by Norris when advertising in TV Guide, see Finding 37, infra.

TT4 FEDERAL TRADE COMMISSION DECISIONS Initial Decision 91 FTC.

supplied the information requested and in three or four weeks (in February or March of 1975) received the tool set (617-621). Andrea Discepolo, in May of 1974, ordered a “moon mission” blanket from American Value by mail. Not receiving the ordered merchandise after ten months she wrote to American Value, but received no response. She wrote again a month later, but received no response. Four to six weeks after contacting the Better Business Bureau she received the product (629-637; CXs 3114, 3115). In March 1973, Arthur Fink ordered some “miracle cement” from Norris, by mail. He wrote to Norris in May advising that he had not received the ordered merchandise, but received no response. He wrote again and received a letter from Norris asking for details about his order. Not receiving the merchandise by June, he wrote again requesting a refund. In July he contacted the New York Times, the newspaper in which the Norris advertisement appeared, and thereafter he received the merchandise (657-660). At the end of January 1973, Henry Flury ordered two sets of tools from Norris by mail, responding to an advertisement in the New York Times (668). He received the merchandise in the beginning of April after he had cancelled his order and requested a refund (670). ‘On January 15, 1975, Jeffrey Simkowitz ordered “a couple of stainless steel [measuring] tapes” from Norris by mail (see CX 3305A). Three months later, not having received the ordered merchandise, he wrote to Norris. They responded by card telling him to wait four weeks from the time he sent in the order (CX 3305B). On May 30, 1975, [13] he contacted the Better Business Bureau and in June received a communication from Norris stating that if he wanted a refund he should send them the cancelled check but if he received the tapes in the meanwhile to disregard their letter. He received the tapes in the middle of June (677-683). In 1975, John Clampet ordered an “Aztex Pendant” from American Value by mail (685-6; see CX 3080). When he did not receive the ordered merchandise and could not contact “American Consumer” by telephone, he contacted the Better Business Bureau. Thereafter Norris contacted him and advised that the product had been reshipped. Mr. Clampet never received it (688-689; CX 3084). On April 24, 1974, John Amato ordered a pair of “Swedish scissors” from Norris by mail. After not receiving the ordered merchandise for three weeks, Mr. Amato wrote Norris and received a reply that there was a delay due to a strike. He sent two other letters and received other “excuses” (693-694, 697; CX 3041, 3042). In June, he finally received a pair of scissors (695). Mr. Taweene-- 90 10790 Wrest Tred 2-H RL wk Lk 1 © JAY NORRIS CORP., ET AL. T15 751 Initial Decision _ Norris by mail (708; CX 3318). Not receiving the ordered merchandise in four or five weeks, Mr. Veale wrote to Norris, but received no reply. He again wrote to Norris two or three weeks later, but received no answer (705). He thereafter secured a refund after contacting the Consumer Affairs Office, State of New York (705-6; see CX 3319).

In February 1975, Gloria Gebel ordered a Monaco shaver from Norris, by mail (776-7). In March, having not received the razorshaver, she tried to contact Norris by telephone and when that proved unsuccessful she complained to the Better Business Bureau (779). The merchandise was delivered at the end of March or early April (779).

On October 1, 1975, Peter Sanchez sent his check for $21.49 to Norris, ordering a shaver-razor by mail (789-90; see CX 3288). When Mr. Sanchez had not received the ordered merchandise by October 30, 1975, he wrote to Norris on that date demanding a refund (791). He received the shaver two or three days later (792). [14] On June 10, 1975, Bethuel Webster sent his check for $14.99, and on June 24 a check for an additional 70¢, to Norris, ordering a pair of sunglasses by mail (CX 3337). On July 30, Mr. Webster wrote to Norris advising that he had not received the ordered merchandise (1192). On August 19, 1975, having not received a response to his July 30th letter, he sent to Norris a copy of that letter. Norris responded by post card, received by Mr. Webster August 20, advising that the sunglasses should be received shortly. Having not received the ordered merchandise by September 3, 1975, Mr. Webster requested a refund or the ordered product (CX 3342). On September 10, 1975, Norris requested verification of the purchase (CX 3339). Mr. Webster responded and received the merchandise about October 10, 1975.

In November 1974, Francisco DeLima ordered from Norris by mail a refrigerator defroster and some pairs of socks (1205). Having not received the ordered merchandise Mr. DeLima contacted the Consumer Affairs Office (New York City) in January 1975 and the Consumer Affairs Office (Nassau County) six months after placing. his order. Norris then communicated with him asking whether to still ship the merchandise. He responded “no” and advised them that he.wanted his money back.

19. Respondents also presented a number of consumer witnesses. They testified that in response to advertisements in newspapers, and in two instances, catalogs (see Nierenberg 1792; Trial 1794), they had ordered various items of merchandise by mail from Norris and had received the ordered merchandise anywhere from a week to four Initial Decision 91 F.T.C.

weeks, but in most instances from 10 days to two weeks (Horn 1623- 5: in 1974 or 1975, “wall plaque,” “plastic container for milk carton,” “artificial flowers;’ Burns 1632-33: in 1974 or 1975, “graffiti remover,” “rust buster;”’ Curley 1641-2: in 1975, “hose connection;” Nelson 1647-8: in 1976, “magic window cloth;” Calderaro 1649-50: in 1969, 1972 and 1978, “weather zone,” “opera glasses,” “clip-on glasses;” Dulsky 1658-9: in 1972, 1974 and 1976; “framed pictures,” graffiti remover,” “rust buster;” Ferrari 1668: in 1973, “heating pad;” Shands 1674-76: in 1973 or 1974, “book;” Vercy 1680-2: in 1974, “hose nozzle;” Brown 1685: in 1976, “graffiti remover;” Kefer 1785- 87: from 1972 to 1976, “hose nozzle,” ‘adhesive,’ ‘wall duster;” Nierenberg 1791-3; in 1974 or 1975, “happy home recipe;” Trial 1793-4: in 1974, “wall hanging;” Lengyel 1796-7: in 1975, “carving knives;” Lowery 1797-8: in 1974, “graffiti remover;’ Edwardson 1813-4: in 1975, “Make-A-Log;” Sabatino 1814-5 in 1975, “sissors;” Dyer 1816-8: in 1974 and 1976, “vegetable slicer,” “car brushes”). These consumer witnesses were [15] satisfied with the delivery of their orders. To the same effect see affidavits of 21 other consumer witnesses (RX 11-31).

Consumer Agency evidence 20. Several “Consumer Agency” witnesses testified as to the nature of complaints lodged against Norris. Mr. Vincent, account executive for TV Guide, testified that over the two-month period that TV Guide analyzed customer inquiries on Norris advertising, they received 50 complaints almost all (98%) of which related to “late delivery” (837).

Evelyn Vargas, an employee of Parade Publication, a Sunday supplement distributed in newspapers throughout the United States, testified that she handled letters of complaint received by Parade (905). Her tabulation of complaints relating to Norris, compiled at the request of the Federal Trade Commission, indicated that most of the complaints related to failure to deliver merchandise (CX 2484; see also CX 2485).

Ruth Ann Marsden, an investigator with the Nassau County Office of Consumer Affairs (927) testified she handled all Norris complaints and in 1975 wrote a report concerning such complaints (938-9; CX 2495). Many of those complaints related to nondelivery or late delivery and failure of Norris to respond to letters sent to them by customers inquiring about their orders (949, 966, 988; CX 2495 C~-E). Jean Bozek, an employee of the Long Island Better Business JAY NORRIS CORP., ET AL. TTT 751 Initial Decision testified that she tabulated complaints relating to Norris concerning nonreceipt of merchandise and nonreceipt of refunds (999, 1014). About respondents’ handling of mail orders 21. The day the mail is received it is opened. If the order is in response to a “space advertisement,” that is an advertisement placed in a magazine or newspaper instead of the Norris catalog, it is sorted by department number. The orders are also separated according to products and are sent to “key punch” that same evening (Jacobs 135-6). On the second day the order is “key punched,” ie, certain information is encoded onto a computer card (136). On the third day the order goes to the computer service, Harbor Computer Systems, located in Hicksville, New York. On the [16] third or fourth day the computer service returns a shipping label to Norris. Most orders on “space advertisements” are shipped on the fourth day (Williams 181). A computer memory record is kept of the customer’s name, address and the product purchased (136).

In the case of catalog orders, only the customers’ name and address, the date received and the amount of money remitted are put in the computer memory (182). Catalog orders, which are handled manually, are given to the personnel in the warehouse as soon as the order is opened and the information to be sent to the computer service has been recorded on the envelope (183). A record is made in the “cash book” of all orders as to the date received and the amount of money sent in by the customer(184~186). Although separate records are kept in the cash book for “space” sales and “catalog” sales, all monies received are deposited to the same bank account (184).

Otherwise, Norris does not keep actual records of the customers’ orders (186). In most instances (perhaps 80%) shipments to the customers are made through the United States Postal Service, the rest being shipped by United Parcel Service, when it is more economical to do so (Williams 185).

Respondents are self-insured; that is, instead of paying for public insurance on shipments, they make shipments at their own risk. Because they cannot trace shipments, they make all necessary replacements at their own expense and at no charge to the customer (Jacobs 146-7; Williams 200).

About respondents’ handling of customer inquiries about nondelivery 22, Respondent Jacobs testified as follows regarding Norris’ Initial Decision 91 F.T.C.

response to customer inquiries relating to nondelivery of merchandise (140-1):

. The mail arrives. The girl opens it. She looks at it and she reads the customer’s complaint. Assuming that there is a date on which the customer says she ordered, the girl checks the records and determines whether or not that order should have been shipped.

If sufficient time has-elapsed for the . . . order to have been shipped, assuming that the customer hasn’t complained too quickly before she would have had a chance to receive it, the girl will send a delay notice saying that if we received your order, it should have [17] arrived by the time you receive this notice or it will be arriving soon. Please allow another few days. If you still don’t have it, let us know, so we can trace it. Mr. Jacobs added that if respondents become aware of a delay in delivery of merchandise by a manufacturer to Norris, they “notify the customer that there is going to be a delay and tell her we expect to ship within a matter of time” (142).

In this respect, in the course and conduct of their business, respondents use form notices printed on post cards by which they make various responses to customers inquiries about delivery (see Williams 195, et seg.) One such card reads as follows (CX 4246; see also CXs 3305B, 3321C, 3338A-D):

Dear Customer:

Your order should have arrived by this time. However, actual delivery time varies tremendously and, unfortunately, is entirely out of our control once the shipment leaves our warehouse. It is possible that it is still enroute to you. Please bear in mind that it often takes the best part of a week after mailing before an order reaches us. Then it takes a few days to process it. Since shipments are made via Parcel Post or where possible, United Parcel Service, delivery might take as long as another two weeks.

We suggest you allow a total of at least four weeks from the time you mail us your ' order until you receive it. By now, we feel confident your shipment is either in your hands, or will be within the next few days. We are sorry for the inconvenience and appreciate your patience and understanding.

Sincerely, /s/ Rhea Nichols Customer Service [18] Another form post card used by Norris in response to a complaint of nondelivery of merchandise reads as follows (CX 4245): Dear Customer:

JAY NORRIS CORP., ET AL. 119 751 : Initial Decision the information we needed to check your order. Please supply us with the following information.

Date you mailed order Merchandise ordered Amount of your check or money order This matter will be given our immediate attention. Thank you /s/ Rita Andrews Customer Relations Another form post card used by Norris where shipment might have been delayed is CX 4243:

Re:

Dear Customer:

We are sorry there was a delay in shipping your order. It was caused by circumstances beyond our control. If you have not yet received the merchandise, please wait another week. If by that time you still have not gotten it, please indicate so below and return this card to us. We will then place a tracer with the Postal Authorities and a duplicate shipment will be made. Thank you /s/ Claris Walters Customer Relations [19] Another form post card used by Norris where nondelivery is involved is CX 4248:

This Card is Worth $1.00 to you! See Below! Dear Customer:

We are sorry that you did not receive the merchandise you ordered. It obviously was lost in transit.

We are sending a duplicate shipment at once. You should be receiving it within the next 2 or 3 weeks or sooner.

Thank you.

/s/ Evelyn Barnes Customer Relations P.S. If you return this card with your next order you may deduct $1.00. Nondelivery was sometimes due to the ordered item not being in Initial Decision 91 F.T.C.

stock. An example of a post card used in such circumstances reads as follows (CX 3041a): .

Dear Customer:

Thank you for your recent order.

Due to unusually heavy demand, the item you ordered is temporarily out of stock. More is expected soon. Just as soon as the new shipment arrives, your order will be rushed to you.

I’m sure that when it arrives, you'll be delighted with it and you will find it was well worth waiting for.

Thank you.

/8/ Rhea Nichols Customer Service Dept.

[20] Another form post card used by Norris in 1973 reads as follows (CX 3092):

Dear Customer:

Thank you for your recent order.

Due to unusual circumstances beyond our control, there will be a short delay in shipping your recent order of our product. We appreciate your patronage and consider you a valued customer.

We will do everything possible to expedite your current order. Please do not write. We will ship your order in two weeks or write to you again. Respondents do not check the customers order against the information stored in the computer which they use. (see Williams 201). About the number of customer complaints 23. Norris’ annual volume of sales is approximately $13,000,000 (Jacobs 123). This involves the processing of approximately 2,000,000 orders a year. In 1976, the number of complaints received from customers was about 2% of the total orders (Jacobs 148). In 1975, the number of complaints was approximately 2-1/2% of a total of 2,000,000 orders and in 1974 the number of complaints was approximately 3% of a total of 1,500,000 orders (WJacobs 149). Generally, Norris does not retain copies of customers’ letters of complaint (Williams 189).

Unfair and deceptive practices 24. During the period of time relevant to this matter, respon- _dents on numerous occasions have deposited customers’ checks or cashed money orders, and have not shipped the ordered merchandise JAY NORRIS CORP., ET AL. 781 151 Initial Decision (Johnson 411, 418; Feldman 427; Waysse 437, 489, 442-8, 446; White 455-6; Henick 485-87, 491-2; Littlejohn 337-9; Colodny 349-50; Zappa 532; Martone 548, 545-6; Carreau 554-5; Silverman 566-7; Gordon 571; Matullo 577-9; Cunningham 620; Discepolo 633-5; Turk 658-60; Simkowitz 678-9, 682; Gebel 777-9; Sanchez 789-92; Clampet 687-9; Amato 693-5; Veale 704-5; Webster 1187, 1190-4, 1196; Delima 1205-6, 1211). [21] Respondents’ representations that they ship merchandise “immediately” or in about “two weeks” are false and misleading. Moreover, receipt and retention of monies for merchandise not promptly shipped, is an unfair act or practice (see Feldman 427; Waysse 440; White 453; Henick 486; Littlejohn 338; Zappa 531; Martone 545; Silverman 567; Gordon 571; Matullo 577). About refunds Consumer testimony 25. Complaint counsel presented several witnesses who had requested refunds from Norris either because they were dissatisfied with the merchandise and had returned it or because they had not received the merchandise ordered.

Lester Colodny returned, by mail, the files he had ordered from Norris, requesting his money back (851; see CX 3091). Not hearing from Norris after writing “letter after letter” he wrote to the New York Times (CX 3090). Nine months after requesting the refund, Mr. Colodny received it (354). The amount of the refund was the amount he sent to Norris with his order (359).

Ralph Marino ordered and paid $19.99 plus tax, sales tax, postage and handling for a shaver from Norris in June 1975 (362, 364). Being dissatisfied, he returned it by mail to Norris (366). He received a partial refund of $19.99 in about four weeks (367, 385; CX 3249). Later he received an additional $3.10, the amount of taxes and handling charges (390-2; CX 3248A).

In July 1974 Alfred Langella ordered from Norris, and paid $7.21 for an orthopedic driver’s seat for an automobile. Not being satisfied, he returned it promptly, requesting a refund (897-98). Failing to hear from Norris, he telephoned them (398-9). Getting no satisfaction from that contact, Mr. Langella contacted the Long Island Better Business Bureau, the New York Times and the Federal Trade Commission requesting help in securing his $7.21 plus shipping charges for the return of the merchandise (399; see CX 3206). Thereafter, in late October, he received a refund from Norris in the amount of $7.21 which was the amount that he had requested from Norris (401). [22] Initial Decision 91 F.T.C When Jeffrey Feldman did not receive the tool set that he hac ordered from Norris and paid $14.98, he wrote to Norris in May requesting delivery or a refund. Not receiving any reply from Norris he contacted the Federal Trade Commission (428). In the first week of June he received the tool set (429). Being dissatisfied with the product, Mr. Jeffrey returned it to Norris, requesting a refund (433). _ He again wrote to Norris in July requesting his money back (430). He finally received the amount that he had sent to Norris at the end of July or early in August (430, 434).

Richard Waysse testified that he refused to accept packages from Norris after he had demanded a refund of $2.57. Eventually, he received a refund after writing to many consumer agencies (444; see CX 3334).

John White testified that after he was notified by Norris that they did not have the tool set he had ordered in stock, he requested a refund. He never received either the merchandise or the refund (456, 458).

Bernard Henick testified that he requested a refund because the merchandise he ordered was never delivered to him, but he never received the refund (498).

Bruce Peters returned certain merchandise to Norris he had ordered in January 1974 (516; CX 3267). Not receiving the refund after three weeks, he wrote to several consumer agencies (518). In August 1976, at the suggestion of the attorney who was complaint counsel in this matter at that time, Mr. Peters wrote to respondent Joel Jacobs and promptly received a refund of the amount he had paid to Norris ($23.58) (519).

Angela Martone testified that she wrote to Norris in March 1975 about nondelivery of merchandise and requested a refund if they did not have the merchandise. She received the merchandise in September 1975, after contacting the Better Business Bureau (545- 46,549).

Arthur Fink testified that he received the ordered merchandise after he had requested that Norris make a refund (659-62). [23] Henry Flury testified that he received the merchandise he ordered from Norris after he had requested a refund, having not received the merchandise within a reasonable time (669-70). He returned the merchandise to Norris and received a partial refund ($25.00) after contacting the New York Times and the Better Business Bureau (670). Later he received the balance of the refund ($5.98) (673). Jeffrey Simkowitz testified that he received the merchandise ordered after he had requested a refund from Norris because of JAY NORRIS CORP., ET AL. 783 151 Initial Decision John Amato testified that he returned certain merchandise to Norris for a refund of $4.93 (693). About two months later Norris advised they would make a refund, and sent a money order for $2.00 and stamps, which amounted to 18¢ less than the total amount he had paid to Norris (696).

William Veale testified that upon nondelivery of merchandise he secured a refund of $12.00, $2.00 less than the amount he paid Norris, after contacting the Consumer Affairs Office (705-6). Gloria Gebel returned a shaver-razor to Norris at the end of March or early April. After contacting the Nassau Consumer Affairs Office towards the end of April, in about two weeks she received the refund ($19.95) which was less than the amount she had paid Norris ($22.89) (782). She did not pursue the matter further (784). Peter Sanchez testified that he received the ordered merchandise from Norris after he had requested a refund because of nondelivery (791-2). Being dissatisfied with the product, he returned it in early November to Norris and demanded a refund (793-4). After complaining to the Postal Authorities he received a refund check dated November 24, 1975 ($21.49) (795).

Francisco DeLima received a refund from Norris upon request after the merchandise he ordered was not delivered and after he had contacted the Nassau Consumer Affairs Office (1208). John Dierenger returned a product to Norris with which he was dissatisfied and received what he considered to be a partial refund. After writing to the Better Business Bureau, Norris refunded the balance of 47¢ plus 1¢, in the form of postage stamps (1229), which represented the amount of postage he had paid to return the product to Norris (1233; see CX 3111). [24] Richard Scully returned a damaged kite that he had ordered in April 1973 from Norris three or four days after receipt (506-7). He received a second kite in November after contacting the Better Business Bureau, Long Island (508; CXs 3299, 3300, 3301). About respondents’ handling of customers’ requests for refunds 26. Respondent Jacobs testified that, generally, returns are opened within a matter of two or three days after the parcel arrives (at most seven days during “peak season’’). The parcel is opened and duly recorded at which time the girl is actually writing the customer’s refund check and an apology.

If a complaint comes in on a refund, the girl would write the customer and state that if Norris received the returned package the refund was made promptly and the customer should be receiving it soon (141-2; Wr. C2A).

Initial Decision 91 F.T.C.

The form post card used for the purpose of responding to complaints on refunds is CX 4247:

Dear Customer:

We are most anxious to clear up the inquiry about the merchandise you returned to us. If we received it, a refund or exchange was made as you requested. If you did not receive a refund or exchange, we must assume that we never got your package. We suggest you contact the postal authorities and place a tracer on this shipment. Thank you.

/3/ Re: Mrs. B. Marks Jacobs testified that it is respondents’ policy to refund the sales tax along with the price paid for the merchandise and any instance where this was not done might be attributed to human error (Wr. D1A, D2A). He further testified that stamps have been sent as a refund “on rare occasions when the amount being sent is under $1.” Credit certificates are issued only on catalog orders for multiple products when respondents are out of stock on a particular item. The customer is given the option of returning the certificate for cash or using it toward future purchases (Wr. C1A). [25] Jacobs testified that Norris processed about 800 requests for refunds every week in 1976, and that before that, during the 1970s, the total may have been around 1000 requests for refunds per week (Wr. C8A).

Jacobs testified that respondents’ policy is to handle these refund requests promptly, in a matter of days (Wr. C4A, C5A). Respondents do not check the customers order with the information stored in the computer that they use (see Williams 202). Unfair and deceptive practices 27. Respondents do not always refund the full purchase price of the- product plus all additional charges paid by the purchaser in connection with said purchase (Marino 367, 385; Veale 705-6). In many instances respondents deduct the “handling and delivery” charge (Marino 377-8; Flury 670-5; Gebel 782-4; Veale 706; Dieringer 1229-30). Accordingly, respondents’ representation that the full purchase price of the product plus all additional charges paid by the customer in connection with said purchase are refunded by respondents, if the purchaser is dissatisfied for any reason, is false and misleading.

292 Reenondents do not. alwavs refund the sum of monev in cash. JAY NORRIS CORP., ET AL. 785 751 Initial Decision certificates or enclose stamps in connection with certain refunds (Amato 696-701; see Jacobs Wr. C1A; Resp. PF pp. 12-13). Accordingly, respondents’ representation that they make refunds in cash or check or other negotiable currency is false and misleading. 29. Respondents do not always make a full refund, and sometimes have failed to make any refund, to purchasers who have returned the products within 30. days of their receipt thereof (Colodny 351-4; Marino 367, 385; Langella 397-401; Feldman 428-34; White 456-8; Henick 498; Peters 516-9; Sanchez 791-5). Accordingly, respondents’ representation that they give a “30-day money back guarantee” is false and misleading. [26] 30. In several communications with customers respondents have requested that nondelivery of the customers’ orders is due to the loss of the merchandise by the United States Postal Service (see CX 4248; Finding 22, supra). However, respondents, before making such a representation, do not ascertain whether such product has been shipped, but merely assume that it has (see Findings 21, 22, supra). In many instances the ordered merchandise has not been shipped. Accordingly, respondents’ representation that nondelivery is due to the fault of the United States Postal Service is false and misleading. 81. There is no evidence of record to show what share of the cost of delivery is paid by respondents or their customers. Thus it cannot be determined whether respondents’ representation that they absorb a portion of the delivery charges is true or false. 82. In some instances refunds are not expeditiously processed by respondents. Many purchasers have encountered long delays, sometimes constituting many months before receiving their refunds. Many purchasers’ refunds have been secured only after they sought assistance from consumer protection agencies or local, state, and federal government agencies (Waysse 444; Peters 516-9; White 456, 458; Henick 492; Colodny 351, 354; Marino 377-8; Scully 507; Fink 659; Flury 669-70; Langella 398-400; Sanchez 791; Amato 696; Veale 706; DeLima 1207; Dieringer 1229).

83. Respondents are self-insured. Their representation that the purchasers merchandise will be shipped insured is false and misleading.

About respondents not answering customers’ inquiries and complaints 34. Respondents, on numerous occasions, have failed to answer customers who have written to them complaining of nondelivery of merchandise ordered and paid for (Trupia 333; Littlejohn 337; Jeffrey 427-8; White 463; Henick 487, 492; Martone 545-6; Carreau Initial Decision 91 F.T.C.

554; Silverman 566; Matullo 579; Discepolo 634; Clampet 687-8; Veale 705; DeLima 1206). In other instances respondents’ replies have not responded to the customers’ complaint, but have tended to delay and prevent customers from seeking delivery of merchandise or refund of money (Johnson 412-6; Waysse 437-43; White 455-6; . Henick 487, 492; Colodny 351; Martone 545-6; Carreau 554; Silverman 566; Gordon 571-2; Matullo 579; Cunningham 620; Discepolo 634-6; Fink 659; Flury 671; Simkowitz 679, 683; Langella 398-9; Sanchez 795; Clampet 689; Amato 694; Veale 705; Webster 1193-5; DeLima 1206-7, 1211). [27] About respondents not listing their telephone number 35. Respondents do not have the Norris telephone number listed in the Nassau County telephone directory, and many. customers who have attempted to contact Norris by telephone have been unable to do so (Trupia 332; Feldman 427; White 456, 459; Scully 506; Peters 515, 525-6; Zappa 531; Carreau 559, 568; Silverman 568; Matullo 579; Discepolo 634; Clampet 687-8; Amato 695, 699; Gebel 778, 785; Sanchez 790; Dierenger 1228). Some customers were able to reach Norris by telephone (Langella 400; Henick 501; Gebel 782). About respondents requiring customers to make proof of purchase 86. In certain instances, in response to complaints by purchasers about nondelivery of merchandise or failure of respondents to make refunds, respondents have required the purchaser to submit details concerning the transaction (see Williams 189). In cases of nondelivery, respondents request the cancelled checks, order blanks and a full description of the merchandise ordered (see CX 4245; Finding 22, supra). In cases involving demands for refunds, respondents require the purchaser to submit proof of purchase and proof of the return shipment to Norris, namely the insurance receipt (see Williams 201; see CX 4247).

About respondents’ advertising in TV Guide 37. The J. Morton Williams Advertising, Inc., (“Morton”) is the “in-house” advertising agency of Norris (Jacobs Wr. D22A). Its officers are Jacobs and Williams (Malfitano 234). Before 1975, Norris advertised in TV Guide under the name “American Value.” Actually Norris placed this advertising through “American Consumer,” a competing mail-order business (Jacobs 124; Malfitano 243, 269; CXs 386, 389, 1808D), in order to take advantage JAY NORRIS CORP., ET AL. 187 151 Initial Decision part of its master advertising contract with TV Guide (Jacobs Wr. D13A, D14A).

In 1975, Norris entered into its own master contract with TV Guide. Morton placed not only Norris advertisements to be published in TV Guide, but also handled insertion orders for other sellers (Malfitano 238, 267). In this [28] respect, it notified TV Guide, as it was required to do, of the various names under which advertising would be placed under the contract (Jacobs 134, 1388; Wr. D23A; Williams 167, 170; Malfitano 261). These names included Value House (CX 645, 646, 649); Fashion Scene (CX 667); Unique Ideas (CX 669); Deter Stop Smoking Plan (CX 694, 867); House of Values (CX 699, 868, 2754); and Fashion Scene & Value Corner (CX 706, 868). (See also Jacobs Wr. D24A, D25A). Morton bills these other advertisers (Malfitano 248). The merchandise ordered under these names by purchasers were shipped by the other sellers, not Norris, the address on the coupons not being that of Norris (Malfitano 247; see CXs 2783-90, 2792-3, 2795-2801, 2804-5). Norris never used these names in advertising its own products (Jacobs Wr. D26A, D274A). On July 30, 1975, Roslyn Malfitano, an employee of Norris who _described her duties as Advertising Director (233) wrote the following message to TV Guide from Morton (CX 866): This is to advise you that the following companies all divisions of the Jay Norris Corp., are entitled to be covered under the Jay Norris Master contract: P.N. PUBLISHING, J. MORTON WILLIAMS ADVERTISING INC., FEDERATED WHOLESALERS, VALUE HOUSE, UNIQUE IDEAS, AGGRESSI VESTOR, FASH- ION SCENE, CHEESELOVER’S INTERNATIONAL.

Subsequently, on February 17, 1976, she wrote the following message to TV Guide (CX 869):

Please be advised that Jay Norris Corp. has a major interest in the Adventurers & Radio Club.

Apparently Miss Malfitano’s description of the relationship between Norris and the named organizations was to qualify them as advertisers, and was not intended to reflect a legal relationship (Malfitano 244, 263; Jacobs D28A, D29A, D32A). About respondents’ other advertising 88. Occasionally, Norris will advertise under another name. “Nationwide Wholesalers Service” was used to test a price (Williams 172). However, “P.N. Publication” was used in connection with another seller’s advertising via the Norris-TV Guide contract (Jacobs Wr. D214). [29] Initial Decision 91 F.T.C.

J. Norris advertisements were run by out-of-state publishers, contracted by an agency to supply such advertising to publications of limited circulation. Sometimes, a local address would be used and the publisher or the agency would send the orders in bulk to Norris for filling (Jacobs 139). This did not constitute over 2% of Norris’ business (Williams 176).

About Cheeselovers International 39. Cheeselovers International is a separate corporation. For a short time it had offices in the Norris Building, but has since “moved” to Westbury, Long Island, where it maintains a separate mailing address (Wr. D41A). During the time it was located in the Norris Building, Cheeselovers International had its own employees and paid all of its own bills (Wr. D42A, C14A, C15A, C16A; see CX 2065).

About respondents’ mailing addresses 40. Respondents do not use post office box numbers; in fact now they have their own zip code, and the United States Postal Service provides a portable trailer substation for the handling of Norris mail (Williams 174-75).

Some of the mailing addresses used by Norris on the coupons which appeared in the various advertisements for Norris’ products follow: American Value, Norris Bldg. 25 W. Merrick Rd., Freeport, N.Y. 11521 [February 1975] (CX 386); Jay Norris Corp., 31 Hanse Ave., Freeport, N.Y. 11520 [November 1971] (CX 2); [November 1972] (CX 4); [January 1970] (CX 8); Jay Norris Corp., 85 Henry St., Freeport, N.Y. [October 1971] (CX 17); Jay Norris Corp., 25 W. Merrick Rd., Freeport, N.Y. 11520 [1972] (CX 24); [1974] (CX 25); American Value, 25 W. Merrick Rd., Freeport, N.Y. 11520 [June 1973] (CX 26); Jay Norris Corp., 25 W. Merrick Rd., Freeport, N.Y. 11521 [1975] (CX 886). , In 1973, Norris’ business mailing address was 31 Hanse Ave., Freeport, N.Y. 11520 (see CX 3301) and in 1976 it was 31 Hanse Ave., Freeport, N.Y. 11521 (see CX 3190C).

About respondents’ various business styles 41. In the complaint it is alleged that respondents used numerous corporate names and various post office box numbers and addresses in such a manner as to create confusion in the minds of purchasers ' who are unable to relate all the names used to Norris or to its JAY NORRIS CORP., ET AL. 7189 151 ; Initial Decision The names listed in the complaint are Jay Norris Corporation, P.N. Publishing Corporation, Norris Nutrition, Garydean Corp., Federated Nationwide Wholesalers Service, Federated Wholesalers Service, Nationwide Service, Cheeselovers International, Pan American Car Distributors Corporation, Associated Auto Wholesalers Corporation.

This charge is not sustained by the record in this case. It does not appear that respondents tried any subterfuge in the use thereof. The only confusion of record arose from the use of “American Value” by Norris during the time when Norris was advertising under the American Consumer master contract with TV Guide. Several consumers testified that they did not know they were dealing with Norris (White 456-9; Martone 544; Cunningham 617, 622-5; Discepolo 629, 635, 639; Clampet 684-91). In my opinion this does not amount to an unfair or deceptive practice within the meaning of the Federal Trade Commission Act. Moreover, there is nothing unlawful about a company offering reduced advertising rates through its master contract. In any event, the complaint does not charge that respondents have hidden the identity of other sellers by use of respondents’ various trade names.

About respondents’ representations as to the performance, efficacy or characteristics of their products 42. In their catalogs and in their newspaper and magazine advertisements, respondents have made statements and representations about the performance, efficacy and other characteristics of respondents’ products. Seven products were specifically named in the complaint and allegations relating to false and deceptive representations were set forth in said complaint. During the discovery phase of this matter, complaint counsel attempted to use pretrial procedures to look into the efficacy of additional products. Respondents’ objection to expanding this case in this manner was sustained and the issues on product performance, efficacy and other characteristics were limited to the seven products and the matters raised in the complaint.

JN INSTA-JET PROPANE FLAME GUN 43. In advertising their flame gun, respondents make the following representations (see CX 4 [1972]; CX 2 [1971]. Fastest Way We Know To Clear Away Ice and Snow THE WORK-SAVER, THE HEART SAVER Lightweight, Easy-Handling New JN INSTA-JET PROPANE FLAME GUN [31] Initial Decision 91 F.T.C.

This new JN Insta-Jet Propane Flame Gun takes the work right out of dozens of clean-up chores. In winter, the adjustable instant-action flame clears away ice and snow faster than you’d believe possible. Whips through even the heaviest drifts. Clears walks and driveways. . .

Produces a clean, hot flame for up to 14 hours on a single propane cylinder — easily obtainable at hardware, paint and department stores. . . . The advertisements include a picture of a woman using the flame gun to clear a front walk from what appears to be a significant snow accumulation (see CXs 2,4).

In the complaint, it is alleged that respondents have represented that “The ‘J-N INSTA-JET PROPANE FLAME GUN’ is able to whip through the heaviest snow drifts and the thickest ice in seconds and is effective and efficient in clearing walks and driveways of ice and snow.”

It is found that respondents have, in fact, directly or indirectly, made the representation as alleged in the complaint. John Lomash, Sales Manager for the Engineering Division of the United States Testing Company (not affiliated with the United States Government) testified that when he was a Project Engineer he performed certain tests on aflame gun supplied by Gem Products Corporation (1238-9). At the time the test results were disclosed to the Federal Trade Commission, the consent of General Fabricators, parent company of Gem Products Corporation, was sought (1240). General Fabricators supplied flame guns to Norris in 1971-1972 (Stip. 38).¢ On the basis of the tests, Mr. Lomash was of the opinion that the flame gun was not very effective in the removal of ice. The test revealed that it took 6.5 minutes to melt 1/8 inch of ice 1 square foot at zero degrees Fahrenheit, and 11 minutes to melt a 1/4 inch thick patch of ice one [32] square foot at zero degrees Fahrenheit (1251). In addition, they tested the maximum duration of the flame and found it would burn continuously at minimum length for 32 1/2 hours (CX 2481A, B).

Andrew Littlejohn testified that the flame gun he purchased from Norris in early 1973 was not effective in removing snow about 18 inches deep. He used it for about 45 minutes and “finally I got a hole down there where I could put my arms in” (342, 344). “It is no good for burning snow” (344).

Elliot Burger testified that when he received the flame gun from Norris, he purchased a propane cylinder and he assembled it. He tried to melt ice for ten minutes without success (603-4). He testified JAY NORRIS CORP., ET AL. 791 751 Initial Decision that the flame was not coming out of the end of the nozzle but out of the sides of the nozzle (614).

Frank Savoca purchased a flame gun from Norris in December 1971 (1492-3). He “received a long length of metal tubing, hollow tubing with a nozzle attachment at the bottom, with written instructions to obtain a propane tank at any hardware store” (1493). He further testified that the “ad gave the impression that the item was complete and ready for use” (ibid.).

He tried to melt off an “icy patch in front of the house” trying the gun on about “a square foot” patch for fifteen minutes. The result was “absolutely negative” (1494).

Respondents’ representations as to the performance characteristics of their flame gun are total exaggerations. The flame gun will not “whip through even the heaviest drifts” of snow and is not “the fastest way . . . to clear away ice and snow.” Moreover, it is not effective and efficient in “clearing walks and driveways of ice and snow.” Respondents’ representations are false and misleading. The complaint further alleges that respondents have failed to disclose in their advertisements that the customer must purchase a propane gas cylinder and assemble the flame gun before it can be used. It is alleged that such facts are material to the consumers’ choice of whether to purchase the product and that failure to disclose such facts constitutes a violation of the Federal Trade Commission Act. [33] It is found that failure to reveal that the propane cylinder is not included, considered with the other representations in the advertisement (especially the picture of the person using a flame gun with a cylinder attached), is withholding a material fact. The record is not clear whether the parts shipped do in fact come unassembled. Anyway, while it would be nice for everyone to know this fact, failure to disclose it is not, in the circumstances of the flame gun advertisement, a nondisclosure that would constitute an unfair or deceptive act or practice in violation of the Federal Trade Commission Act.

SURE-KILL ROACH POWDER 44. Respondents’ advertisements on roach powder read, in pertinent part, (see CXs 17, 20, 23, 24, 25, 26; see also CX 117): Get Rid Of Roaches ONCE AND FOR ALL SURE-KILL WIPES OUT ROACH NESTS OR YOU PAY NOTHING Roaches can’t resist Sure-Kill. They devour its odorless white powder and crawl to their nests, where they die. Then, a deadly chain reaction starts, that wipes out every Initial Decision 91 F.T.C.

roach and every egg in the nest. Sure-Kill is safe to use, and never loses its killing power - even after years. A single can cleans out 6 to 8 rooms. GUARANTEED ROACH-FREE FOR 5 YEARS Sure-Kill roach killer is guaranteed by the manufacturer to prevent reinfestation for up to 5 years when used as directed and left in place.

In the complaint it is alleged that through their advertisements on roach powder, respondents represent (Par. 10. (4-8)): Respondents’ roach powder is safe to use. Respondents’ roach powder gets rid of roaches once and for all. [34] Respondents’ roach powder creates a deadly chain reaction which eliminates and kills roaches and eggs. The manufacturer has unconditionally guaranteed that respondents’ roach powder prevents reinfestation when used as directed and left in place or it will refund money. Respondents’ roach powder does not lose its capacity to kill under any conditions of use.

It is.clear from merely reading the advertisements that respondents have made the representations alleged in the complaint. Dr. Charles Mampe, Entomologist (relating to the “study of insects”), an employee of Western Industries, an “exterminating company,” testified that he was employed for 10 years between 1964 and 1974 by the National Pest Control Association (1347-8). He testified that boric acid is toxic to warm blooded animals, and used as a roach powder for the control of roaches in the home, it would represent a hazard (1351-2), if not used as directed (1890). He further testified that it was less effective than other products used, because it works much more slowly, approximately four days (1355, 1400). He added that he was not aware that any “chain reaction” occurs when boric acid is used as a roach control because the roach, to be killed, must contact and ingest the boric acid directly (1356). Although boric acid never loses its “killing power,” for practical purposes, it loses its effectiveness if covered by dust or grease or becomes damp (1357). Boric acid will not be effective for five years under practical conditions (1359).

Dr. Mampe testified that, in his opinion, use of boric acid as a roach powder would not prevent “reinfestation,” in the eyes of the homeowner (1365); that is because the presence of roaches moving JAY NORRIS CORP., ET AL. 193 151 Initial Decision and that the same is true for all roach controls (1410). He added that he was not aware of any information “that indicates that boric acid will kill roach eggs or in any way affect the eggs” 1366, 1380-1). Boric acid has been used as a roach control since 1900 and it is effective in killing roaches (1352, 1391). It is not repellant to roaches (1401). [35] Thomas Williams, inventor and manufacturer of Sure-Kill Roach Killer, testified that his product has been sold to Norris (1412, 1419). He testified that although he gives a money-back guarantee that the product will get rid of roaches, he does not use the words “wipe out” or “forever riddance” because roaches move around (1416-17; see 1428). He added that generally the product is effective for approximately six months (1423). He also testified that the “chain reaction” does not always happen and it is not the primary way of killing roaches. (1424). He did not think that one application would be effective for 5 years (1425).

Mr. Williams testified that Sure-Kill was 50% boric acid, 50% inert materials (1435), was a good product’ and that his money-back guarantee is unlimited as to time (1437). He also testified that, in his opinion, Sure-Kill was a safe product (1445). ' Meyer Biddleman, President of Hye Test 303 Corporation, a manufacturer of chemical specialty products (1449), testified that his corporation compounds a roach powder for Valley Research Systems under the name High Action (1450). He drop-shipped this product directly to Norris between 1971 and 1975 (1450-1). This product is made of 50% boric acid and 50% inert ingredients (1451). He added that his customers like the product, “it does a terrific job” (1457, 1460). He guaranteed that the product would be effective and perhaps notified respondents that this guarantee was for a 5-year period (1463).

Edwin Meyer, President of Heddy Corporation, a manufacturer of chemical specialities, has sold a roach powder to Norris from 1973 (1475, 1479; see CX 2507). He never supplied Norris with any information about the efficacy of the product and has never discussed Norris’ advertising with Norris (1484-5). Emily Urf, the only consumer witness who testified about Norris’ roach powder product, said that she ordered a can of that product in 1972, and that, after using it for [36] two months, she still had roaches (641-7, 654-5). She added that if she had known that the product was 50% boric acid and 50% inert ingredients she would not have bought it at the price she did pay (647-8, 653). 7 “It sure will kill the roaches if you put it in your home according to directions” (1441). Initial Decision 91 F.T.C.

It is found that respondents’ roach powder is relatively safe to use, if it is applied according to instructions (CX 2493C). The question is whether respondents’ advertisements represent that the product is absolutely safe, ie, non-hazardous, and whether, as further alleged in the complaint, respondents’ failure to disclose (1) that the product is hazardous, (2) that it may be harmful to human beings and pets, and (3) that special precautions should be taken in its use, constitutes misrepresentation in that such is a failure to disclose material facts to the potential consumer (see CX 4060, 4186). In my opinion any overt representation that a potentially hazardous product is “safe’ must be accompanied by a true statement as to the conditions under which it can be used “safely” (see CX 3020). Accordingly, respondents’ unqualified representation that the product is “safe,” is misleading, deceptive and unfair. Respondents’ roach powder is a formulation of boric acid which works slowly (CX 2493C). If used properly it will control and prevent reinfestation in treated areas. In many residential buildings cockroaches can move into the treated areas before those located there are completely eliminated. Accordingly, respondents’ product may not get rid of roaches “once and for all,” and respondents’ unqualified representation that it does, is misleading and deceptive. Respondents’ roach powder will not kill roach eggs. Moreover, it does not create a deadly chain reaction which eliminates and kills roaches and eggs. Each cockroach must contact the boric acid to be killed. Accordingly, respondents’ representations that the product creates a chain reaction and kills roach eggs are false and misleading. a, Respondents’ roach powder loses its capacity to kill roaches under certain conditions of use. If wet, it cakes and does not adhere to the roaches although upon drying it becomes an effective control once more (see CX 2493F). [37] If covered by grease or food deposits or dust, it becomes ineffective. Accordingly, respondents’ representations that the roach powder does not lose its capacity to kill is false and misleading.

The record shows that the suppliers-manufacturers of the roach powder sold by Norris from 1970 to 1975 did unconditionally guarantee the product. There is no evidence that they did not honor this guarantee. The question is whether respondents’ statement of the guarantee is, in effect, a representation that the product gets rid of roaches once and for all and does not lose its capacity to kill under any conditions. In my opinion, respondents’ statement has the capacity to make such a false representation. JAY NORRIS CORP., ET AL. 195 751 Initial Decision ingredients (i.e., 50% boric acid; 50% inert ingredients) is a failure to disclose a material fact. Boric acid is a well-known ingredient for roach killers. The consumer, who is ordering by mail, does not know what the ingredients are until receipt of the product. She is not in a position to make an informed judgment as to the nature of her purchase. Accordingly, facts as to the ingredients are material facts and failure to disclose them is failure to disclose material facts. FOREVER SOCKS 45. Respondents’ advertisements on socks read, in pertinent part, as follows (see CX 8, see CX 14):

YOU'LL NEVER NEED TO BUY ANOTHER PAIR OF SOCKS AGAIN - FOR THE REST OF YOUR LIFE! (unless your laundry loses them). , These revolutionary 8-ply socks are so indestructable ... you can order Free replacements - pair for pair - for any you ever wear out. . . anytime! . Guaranteed to wear forever, in normal use. That “normal use” simply means don’t burn holes in them deliberately, or try to cut them with scissors or razor. . . “forever socks” .. .

. “lifetime supply of socks”

The complaint alleges that by the above statements in advertisements respondents represented that their “Nylon socks” are “indestructable” and they “last forever” (Par. 10 (2, 3)). [38] It is clear from merely reading the advertisements that respondents did not make the representations alleged in the complaint. What is represented is that these socks are practically indestructible and, if they wear out, the customer may order a free replacement from Norris. Accordingly, the advertisements present a “forever” guarantee, not an indestructible sock.

Robert Sharp, President of Sox Unlimited, selling agents for various Southern mills, testified that his company has been one of the suppliers of “hosiery to Norris for approximately ten years, off and on” (1504, 1515). He considered that the product “for wearability was a high quality sock, it is a heavy nylon sock” (1508). Neither the Southern mills (manufacturers) nor Sox Unlimited, guarantees the product (1511).

Mr. Sharp was of the opinion that the socks would not wear forever, and did not think “anything” was indestructible. However, he added that “they are good socks and they will last an awful long time” (1515), unless they are worn by a person with an oversized foot (1517, 1519-20).

Initial Decision 91 F.T.C.

Salvatore Marsala, the only consumer witness to testify about respondents’ socks, said that he was attracted by respondents’ statement in advertising that “you'll never need to buy another pair of socks again.” He ordered a dozen pair, wore one pair a short time (one hour (595) or twelve hours (599)), and it developed a hole in the toe (595). They were returned to Norris (595). Mr. Marsala testified that he had a shoesize of thirteen. As explained by Mr. Sharp, a shoe size of thirteen was actually an oversized foot for a thirteen sock size (see Sharp 1516-7; 1521-2). Certain indirect representations not challenged by the complaint are that the manufacturers unconditionally guarantee the socks (see CXs 8, 14). In truth and fact, the manufacturers do not guarantee the socks. In any event, this area is outside the scope of the complaint and, in my opinion, it would be unfair to amend the complaint at this time to encompass these representations. The administrative law judge sustained respondents’ objection to any further testimony relating to Mr. Marsala’s return of the socks and any subsequent replacement or refund, as not being relevant to the matters for which the witness had been noticed to testify (595-7). There is no evidence that respondents do not live up to their own guarantee on the socks. [39] FIVE YEAR FLASHLIGHT 46. Respondents’ advertising on the “Five Year Flashlight” in pertinent part reads (CXs 44, 46; see CX 45, 2132): THE FIVE YEAR FLASHLIGHT Guaranteed Storage Capacity for 5 years or Your Money Back. 10 Times the Staying Power of an Ordinary Flashlight * . * * * * * . The completely new, Command Module 5 Yr. Flashlight * * * * * s * From the company that made flashlights for every manned Moon mission . . . Command Module Lighting . . . the flashlight with proved storage capacity for its power cell for AT LEAST FIVE YEARS combined with 10 TIMES THE STAYING POWER of any ordinary flashlight. Yours in a handsome Command Module case with no external switch to corrode or break. . . * » * * * * * ABSOLUTE 5-YEAR GUARANTEE JAY NORRIS CORP., ET AL. 197 751 Initial Decision your flashlight with you, keep it at home. It must work even if you haven’t touched it for 5 years or your money back. So don’t be another minute without the one safety element every car, every family needs.

It is alleged that through their advertising respondents represented that their “five year flashlight” carries an absolute 5-year guarantee (Par. 10 (13)). From a reading of the text of the advertisement, including the “guarantee”. as described in the advertisement, it is clear that Norris did make the representation alleged in the complaint.

Chromalloy Electronics supplies the battery to Norris (RX 7, 8). Its guarantee to the consumer reads as follows (CX 2044B; Stip. 811-12): Your 5 Year light is guaranteed against defects in materials and workmanship for a period of 30 days. [40] If, during the 30 day period, your light fails to operate . . . return it to the dealer for an immediate exchange.

Your light is also guaranteed to remain usable for a period of five years providing it has not been used more than 10 hours. Specifically, the light is guaranteed to store and remain useable for 5 years or operate for a total of 10 hours, which ever comes first.

In the event that the light does not work and has been used for less than 10 hours and is less than 5 years old, return the light (prepaid) with proof of purchase and date of purchase to the address below for battery analysis and replacement. Proof of date of purchase is considered to be the burden of the consumer and each proof must be supplied when applying for guarantee replacement. Guarantee valid only during normal care and use at ambient temperatures. Abuse of the light or tampering with the case voids the guarantee. The foregoing is in lieu of all other guarantees, expressed, implied or statutory and Chromalloy Electronics neither assumes or authorizes any person to assume for it any other obligation or liability in connection with the sale of this product. Counsel also stipulated, and David Rush, President of ACR Electronics, Inc. (formerly Chromalloy) (811), agreed that if he testified he would state that “the average amount of time that the ordinary person would normally use or generally use a flashlight, any flashlight, would not generally exceed two hours per year” (Stip. 818).

In the instructions to the consumer, Chromalloy advises in pertinent part (CX 2044A):

This unique light was designed primarily for emergency use. It is the only light that can be left in your kitchen drawer or car glove compartment for a period of 5 years and still operate.

Initial Decision 91 F.T.C.

Of course the light will not stay “on” continuously for 5 years but with normal emergency type use, it will retain its power for the full 5 year period. The total ‘‘on” time of 10 to 20 hours means a minimum of 4 half hour emergency uses each year for 5 years. [41] .

Simply stated, the light will not self destruct like all other lights. Clara Zappa, the only consumer witness who testified about the Norris flashlight stated that after three months, during which she checked to make sure it was in working order, “it was not a flashlight any longer. . . [i]t seemed to be dead” (533). Norris’ “Five Year Flashlight” is guaranteed by the manufacturer to store and remain usable for 5 years or to operate for a total of 10 _ hours, whichever comes first. The manufacturer further clearly states in its guarantee that the light will not stay “on” continuously for 5 years. Respondents’ representation that the flashlight carried an absolute 5 year guarantee is false and misleading. It is further alleged in the complaint that the facts that (1) the flashlight has an ‘“‘on” life of 10 to 20 hours, and (2) the manufacturer guaranteed that the light can be stored and remain usable for 5 years or operate for a total of 10 hours, whichever comes first, are material facts and that respondents’ failure to disclose those facts was a violation of the Federal Trade Commission Act (Par. 12). Considering the content of respondents’ advertisements, it is found that the facts alleged to be material are important to the consumers’ decision as to whether to purchase the product, and that respondents’ failure to disclose that information is unfair and has the tendency and capacity to mislead the purchasing public. LINCOLN-KENNEDY PENNY 47. In their advertisements for the “Lincoln-Kennedy Penny” respondents state in pertinent part (CX 69, see CXs 62, 66, 275): Now Available WORLD’S FIRST LINCOLN-KENNEDY PENNY - UNCIRCULATED COMMEMORATIVE LINCOLN HEAD PENNY WITH KENNE- DY PROFILE * » * * * * * Here’s unusual news for collectors and anyone interested in unique commemorative issues... . issues that may never be repeated again. A new, uncirculated Lincoln Head penny is now available. [42] This unique coin shows the profile of President Kennedy stamped on the surface, looking at President Lincoln. The relationship is uncanny. Never released through ordinary channels, the coin is perfectly legal tender, acceptable under section 33[1], JAY NORRIS CORP., ET AL. 799 1 Initial Decision might well become a sought-after collector’s item that could grow and grow in value. Because, however, this coin is not in circulation, you may obtain it only through an offering of this sort, and we urge you to order now, avoid disappointment. And if you order right away, you will also receive The Plaque of Coincidences, showing the startling parallels in the careers of these two tragic figures. . . FREE WITH EACH COIN ORDER HISTORICAL RESUME OF ASTONISHING COINCIDENCES BETWEEN LINCOLN & KENNEDY * * * * * * * These and many more astonishing coincidences are yours in your Free Plaque of Coincidental Facts when you order the Lincoln Kennedy Commemorative Penny. The complaint alleges that through such advertisements respondents represent that (Par. 10 (24, 25, 26, 27)): “1. Respondents’ Lincoln-Kennedy penny was minted by the United States Treasury Department;

2. Respondents’ Lincoln-Kennedy penny is a coin of historical and numismatic significance which is certain to grow in value; 8. The issuance of respondents’ Lincoln-Kennedy penny was sanctioned by Section [831], Title 18 U.S. Code; and 4. A free plaque containing historical coincidences between the lives of President Lincoln and President Kennedy is provided to purchasers with each coin.

From a reading of the advertisement as a whole, and with special attention to the statements quoted above, it is clear that respondents made the representations as alleged in the complaint. [43] Norman Stack, a rare coin dealer with 30-years experience, testified that a “Lincoln-Kennedy Penny does not exist as struck by the United States Government,” and that its existence is not unusual news for collectors (1322). He was of the opinion that altering an already minted coin does not increase its numismatic value, which is determined because of a shortage of the coin, by attrition or by the quantity struck (1326, 1331, 1341-2, 1344). He added that the Lincoln-Kennedy Penny, because it was not struck by the United States Mint was of no historical significance, was not of numismatic significance, was not a “commemorative coin” and was never “minted” (1332).

Henry Weissblatt, former President of Federal Coin and Currency, a gold coin wholesaler, and a coin dealer on his own, testified that the so-called Lincoln-Kennedy penny shown to him was not “unique,” was not minted by the United States, was not unusual news for collectors, was not of numismatic significance, and was not a commemorative coin (1468-9). He added that, in his opinion, the coin would not be of value to coin dealers (1470). 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1341 28 38 96.649727 1,5 1 3 6 4 5 1286 1341 30 38 96.649727 3,5 1 3 6 4 6 1331 1341 70 33 96.766182 ands 1 3 6 4 7 1416 1342 20 32 96.950424 45 1 3 6 4 8 1450 1352 91 22 96.606201 were5 1 3 6 4 9 1555 1342 98 38 96.360558 false,5 1 3 6 4 10 1669 1343 64 32 96.988731 but5 1 3 6 4 11 1747 1344 109 31 96.418213 found5 1 3 6 4 12 1871 1344 80 32 96.371307 that5 1 3 6 4 13 1964 1344 62 33 96.664764 thea 1 3 6 5 0 712 1389 1313 44 -1 5 1 3 6 5 1 712 1389 127 34 96.307220 seconds 1 3 6 5 2 873 1391 290 39 96.291565 representation,5 1 3 6 5 3 1197 1391 170 40 95.381340 although5 1 3 6 5 4 1401 1392 212 41 95.351318 technically5 1 3 6 5 5 1646 1393 98 38 96.118721 false,5 1 3 6 5 6 1779 1404 73 22 96.275597 was5 1 3 6 5 7 1886 1398 63 29 96.275597 not5 1 3 6 5 8 1984 1398 41 30 96.194290 “a4 1 3 6 6 0 712 1440 746 43 -1 5 1 3 6 6 1 712 1440 163 33 93.300194 materials 1 3 6 6 2 887 1441 369 40 91.919113 misrepresentation”5 1 3 6 6 3 1267 1442 73 40 96.698830 (CX5 1 3 6 6 4 1351 1442 107 41 84.874237 3080).3 1 3 7 0 0 752 1491 1270 43 -1 4 1 3 7 1 0 752 1491 1270 43 -1 5 1 3 7 1 1 752 1491 74 33 96.586357 Thes 1 3 7 1 2 859 1491 118 33 95.835503 Postal5 1 3 7 1 3 1010 1491 147 39 96.475220 Service,5 1 3 7 1 4 1191 1492 37 32 96.384918 in5 1 3 7 1 5 1261 1492 46 32 96.901535 its5 1 3 7 1 6 1339 1493 142 40 96.303894 opinions 1 3 7 1 7 1513 1493 85 33 96.303894 filed5 1 3 7 1 8 1630 1494 180 40 96.363327 February5 1 3 7 1 9 1843 1495 51 37 95.629723 27,5 1 3 7 1 10 1931 1496 91 37 95.629723 1974,3 1 3 8 0 0 698 1541 1329 541 -1 4 1 3 8 1 0 698 1541 1325 42 -1 5 1 3 8 1 1 698 1541 194 33 88.718040 ‘sustained5 1 3 8 1 2 907 1541 62 32 96.905464 thes 1 3 8 1 3 984 1541 280 34 96.035980 administrative5 1 3 8 1 4 1279 1542 68 33 93.300026 laws 1 3 8 1 5 1358 1542 135 41 91.085327 judge’s5 1 3 8 1 6 1508 1543 154 40 96.388695 findings5 1 3 8 1 7 1678 1554 39 22 96.576080 as5 1 3 8 1 8 1732 1547 37 29 96.149895 to5 1 3 8 1 9 1786 1545 16 30 95.945435 15 1 3 8 1 10 1820 1545 71 32 96.748985 ands 1 3 8 1 11 1906 1545 30 38 96.535522 4,5 1 3 8 1 12 1953 1546 70 32 96.584625 anda 1 3 8 2 0 711 1590 1316 38 -1 5 1 3 8 2 1 711 1590 175 33 96.768326 indicated5 1 3 8 2 2 899 1590 81 33 96.556503 that5 1 3 8 2 3 993 1591 29 32 96.993027 it5 1 3 8 2 4 1035 1590 155 34 96.165886 believed5 1 3 8 2 5 1204 1591 271 35 96.732513 determinations 1 3 8 2 6 1489 1603 40 23 96.402779 as5 1 3 8 2 7 1542 1596 36 30 96.402779 to5 1 3 8 2 8 1591 1593 62 33 96.456421 thes 1 3 8 2 9 1667 1594 165 32 96.897446 materials 1 3 8 2 10 1846 1597 129 30 96.366013 nature5 1 3 8 2 11 1988 1596 39 32 96.625343 of4 1 3 8 3 0 710 1641 1311 43 -1 5 1 3 8 3 1 710 1641 280 39 96.332680 representations 1 3 8 3 2 1005 1641 20 33 96.666183 35 1 3 8 3 3 1039 1652 72 22 96.757820 was5 1 3 8 3 4 1124 1642 144 33 96.508934 covered5 1 3 8 3 5 1282 1642 112 33 96.890060 under5 1 3 8 3 6 1408 1643 46 33 96.542732 its5 1 3 8 3 7 1468 1643 154 40 96.399857 findings5 1 3 8 3 8 1636 1654 39 22 96.771179 as5 1 3 8 3 9 1689 1647 36 29 96.388687 to5 1 3 8 3 10 1741 1646 280 38 96.218956 representation4 1 3 8 4 0 712 1690 1309 44 -1 5 1 3 8 4 1 712 1690 16 32 96.526077 15 1 3 8 4 2 746 1690 72 40 94.908432 (CX5 1 3 8 4 3 835 1691 107 40 73.932678 3082).5 1 3 8 4 4 960 1691 74 33 96.900574 Thes 1 3 8 4 5 1050 1692 117 32 96.891479 Postal5 1 3 8 4 6 1183 1691 138 34 96.762360 Services 1 3 8 4 7 1337 1692 218 34 96.621391 determined5 1 3 8 4 8 1571 1693 81 33 96.412231 that5 1 3 8 4 9 1668 1695 214 39 95.992844 respondents 1 3 8 4 10 1897 1695 124 33 95.992844 Norris4 1 3 8 5 0 708 1737 1313 48 -1 5 1 3 8 5 1 708 1750 72 23 96.596283 was5 1 3 8 5 2 795 1740 155 40 96.229500 engaged5 1 3 8 5 3 965 1741 39 32 96.229500 in5 1 3 8 5 4 1018 1752 22 21 96.016747 a5 1 3 8 5 5 1055 1741 139 33 96.016747 schemes 1 3 8 5 6 1208 1752 40 22 96.306145 or5 1 3 8 5 7 1262 1742 117 33 96.783112 devices 1 3 8 5 8 1394 1743 54 32 96.786705 for5 1 3 8 5 9 1463 1743 182 40 96.162247 obtaining5 1 3 8 5 10 1660 1737 127 47 96.762779 moneys 1 3 8 5 11 1801 1755 40 21 96.717865 or5 1 3 8 5 12 1855 1748 166 37 96.495537 property4 1 3 8 6 0 708 1790 1312 44 -1 5 1 3 8 6 1 708 1790 154 40 96.207649 through5 1 3 8 6 2 877 1791 61 33 96.751846 thes 1 3 8 6 3 955 1791 85 33 96.450302 mails 1 3 8 6 4 1056 1791 45 41 96.666649 by5 1 3 8 6 5 1117 1802 121 22 96.462242 means5 1 3 8 6 6 1253 1792 39 32 96.462242 of5 1 3 8 6 7 1304 1794 200 40 96.547432 materially5 1 3 8 6 8 1519 1793 88 34 96.487534 false5 1 3 8 6 9 1623 1795 309 38 96.211349 representations,5 1 3 8 6 10 1950 1796 70 31 96.993820 anda 1 3 8 7 0 708 1840 1311 43 -1 5 1 3 8 7 1 708 1840 125 38 96.390152 issued,5 1 3 8 7 2 852 1851 45 22 96.687347 on5 1 3 8 7 3 914 1841 180 41 96.599861 February5 1 3 8 7 4 1111 1842 49 38 96.579208 27,5 1 3 8 7 5 1181 1842 91 38 96.818222 1974,5 1 3 8 7 6 1290 1842 153 41 96.568054 through5 1 3 8 7 7 1461 1844 45 32 96.565369 its5 1 3 8 7 8 1522 1844 153 32 95.905304 Judicial5 1 3 8 7 9 1693 1845 141 37 95.735329 Officer,5 1 3 8 7 10 1853 1856 47 21 95.735329 an5 1 3 8 7 11 1918 1846 101 32 96.611511 order4 1 3 8 8 0 707 1890 1309 42 -1 5 1 3 8 8 1 707 1890 153 41 96.641464 relating5 1 3 8 8 2 873 1893 36 30 96.967102 to5 1 3 8 8 3 923 1890 61 33 96.683960 thes 1 3 8 8 4 999 1891 136 33 96.400253 limited5 1 3 8 8 5 1148 1892 112 40 96.341026 postal5 1 3 8 8 6 1274 1893 150 33 96.869270 services5 1 3 8 8 7 1437 1893 194 33 96.759888 thereafter5 1 3 8 8 8 1645 1895 174 32 96.371712 available5 1 3 8 8 9 1834 1897 37 30 97.015717 to5 1 3 8 8 10 1884 1896 132 32 96.140343 Norris.4 1 3 8 9 0 706 1939 1311 46 -1 5 1 3 8 9 1 706 1939 265 43 96.400604 Subsequently,5 1 3 8 9 2 994 1941 61 33 96.954529 thes 1 3 8 9 3 1076 1942 131 40 96.872444 parties5 1 3 8 9 4 1227 1943 190 40 96.197037 stipulated5 1 3 8 9 5 1438 1954 39 23 96.714737 as5 1 3 8 9 6 1497 1947 37 30 96.970512 to5 1 3 8 9 7 1554 1944 61 33 96.735931 thes 1 3 8 9 8 1636 1945 172 40 96.712250 handling5 1 3 8 9 9 1828 1946 39 31 96.487961 of5 1 3 8 9 10 1884 1945 133 33 96.394356 Norris’4 1 3 8 10 0 706 1989 1312 46 -1 5 1 3 8 10 1 706 1989 85 34 96.070992 mails 1 3 8 10 2 805 1990 115 34 96.654541 which5 1 3 8 10 3 934 2001 73 23 96.956573 was5 1 3 8 10 4 1021 1992 174 40 96.472122 approved5 1 3 8 10 5 1209 2003 45 22 96.563927 on5 1 3 8 10 6 1268 1992 125 34 96.395950 March5 1 3 8 10 7 1409 1994 49 38 96.395950 12,5 1 3 8 10 8 1476 1995 92 37 96.738060 1974,5 1 3 8 10 9 1583 1994 46 41 96.971283 by5 1 3 8 10 10 1642 1995 61 32 96.708839 thes 1 3 8 10 11 1717 1990 154 38 96.582550 Judicial5 1 3 8 10 12 1886 1995 132 34 96.618011 Officer4 1 3 8 11 0 706 2040 190 42 -1 5 1 3 8 11 1 706 2040 72 41 95.802734 (CX5 1 3 8 11 2 790 2040 106 42 85.189476 3034).3 1 3 9 0 0 702 2090 1315 188 -1 4 1 3 9 1 0 745 2090 1272 44 -1 5 1 3 9 1 1 745 2090 73 33 96.788536 Thes 1 3 9 1 2 839 2091 195 40 96.526245 particulars 1 3 9 1 3 1054 2093 295 39 96.428177 representations5 1 3 9 1 4 1370 2094 206 40 96.550461 challenged5 1 3 9 1 5 1596 2094 37 33 96.397652 in5 1 3 9 1 6 1654 2095 62 33 96.733261 thes 1 3 9 1 7 1736 2095 147 33 96.778214 Federal5 1 3 9 1 8 1904 2096 113 32 96.732979 Trade4 1 3 9 2 0 704 2140 1312 47 -1 5 1 3 9 2 1 704 2140 230 35 96.577103 Commissions 1 3 9 2 2 951 2141 207 41 96.404465 proceedings 1 3 9 2 3 1174 2153 130 30 96.604385 appears 1 3 9 2 4 1319 2146 36 30 96.414085 to5 1 3 9 2 5 1371 2144 43 33 96.995598 be5 1 3 9 2 6 1429 2145 137 32 96.482895 similar5 1 3 9 2 7 1582 2147 37 30 96.854469 to5 1 3 9 2 8 1634 2145 101 33 96.880051 those5 1 3 9 2 9 1752 2146 203 33 96.358765 considered5 1 3 9 2 10 1967 2146 49 41 97.000984 by4 1 3 9 3 0 703 2190 1312 40 -1 5 1 3 9 3 1 703 2190 61 34 96.361450 thes 1 3 9 3 2 793 2190 117 34 96.361450 Postal5 1 3 9 3 3 938 2190 138 35 96.430992 Services 1 3 9 3 4 1104 2193 70 33 96.030235 ands 1 3 9 3 5 1201 2193 99 34 96.030235 those5 1 3 9 3 6 1327 2193 291 35 96.337936 advertisements5 1 3 9 3 7 1645 2206 91 22 96.912254 were5 1 3 9 3 8 1764 2196 251 34 96.168503 disseminated4 1 3 9 4 0 702 2241 935 37 -1 5 1 3 9 4 1 702 2241 118 33 96.959320 before5 1 3 9 4 2 831 2241 62 34 96.714737 thes 1 3 9 4 3 904 2242 162 33 96.853279 issuance5 1 3 9 4 4 1077 2243 39 32 96.853279 of5 1 3 9 4 5 1123 2242 60 34 96.991508 thes 1 3 9 4 6 1194 2243 117 33 96.834511 Postal5 1 3 9 4 7 1323 2243 165 35 93.296852 Services’5 1 3 9 4 8 1501 2245 136 33 68.612122 Order.®3 1 3 10 0 0 742 2291 1278 47 -1 4 1 3 10 1 0 742 2291 1278 47 -1 5 1 3 10 1 1 742 2291 33 33 96.935875 It5 1 3 10 1 2 793 2291 29 33 96.210777 is5 1 3 10 1 3 840 2291 95 34 96.210777 clears 1 3 10 1 4 952 2292 81 33 96.432068 that5 1 3 10 1 5 1050 2292 62 34 93.292152 thes 1 3 10 1 6 1129 2293 328 42 91.641449 Lincoln-Kennedy5 1 3 10 1 7 1475 2305 117 31 96.459625 penny5 1 3 10 1 8 1609 2306 71 22 95.881432 was5 1 3 10 1 9 1699 2299 61 30 96.604057 not5 1 3 10 1 10 1779 2297 177 32 96.370514 “minted”5 1 3 10 1 11 1974 2298 46 40 96.746178 by3 1 3 11 0 0 673 2341 1340 39 -1 4 1 3 11 1 0 673 2341 1340 39 -1 5 1 3 11 1 1 673 2373 2 2 47.165436 _5 1 3 11 1 2 701 2341 62 33 96.782913 thes 1 3 11 1 3 785 2341 132 34 95.791733 United5 1 3 11 1 4 940 2341 117 35 96.271255 States5 1 3 11 1 5 1079 2343 237 34 96.271255 Governments 1 3 11 1 6 1338 2345 70 32 96.666862 ands 1 3 11 1 7 1429 2345 81 33 95.600388 that5 1 3 11 1 8 1531 2346 161 33 96.444199 issuance5 1 3 11 1 9 1715 2346 39 33 95.766190 of5 1 3 11 1 10 1771 2347 62 33 93.283600 thes 1 3 11 1 11 1855 2347 158 33 92.415810 Lincoln-3 1 3 12 0 0 700 2392 1315 44 -1 4 1 3 12 1 0 700 2392 1315 44 -1 5 1 3 12 1 1 700 2392 172 42 96.589722 Kennedy5 1 3 12 1 2 892 2403 120 31 96.452583 penny5 1 3 12 1 3 1031 2404 72 22 96.213852 was5 1 3 12 1 4 1125 2397 61 30 96.213852 not5 1 3 12 1 5 1207 2395 202 33 96.366928 sanctioned5 1 3 12 1 6 1429 2395 46 41 95.786888 by5 1 3 12 1 7 1496 2395 138 34 96.493431 Sections 1 3 12 1 8 1657 2397 72 37 96.788673 331,5 1 3 12 1 9 1752 2397 91 33 96.686028 Titles 1 3 12 1 10 1867 2398 49 37 96.411758 18,5 1 3 12 1 11 1939 2398 76 33 93.636108 U.S.3 1 3 13 0 0 700 2442 1317 46 -1 4 1 3 13 1 0 700 2442 1317 46 -1 5 1 3 13 1 1 700 2442 100 34 96.830055 Code.5 1 3 13 1 2 827 2443 93 41 96.771400 Only5 1 3 13 1 3 943 2443 63 33 96.818260 thes 1 3 13 1 4 1030 2443 144 33 96.394562 Lincoln5 1 3 13 1 5 1198 2455 125 30 96.484940 penny,5 1 3 13 1 6 1348 2456 46 22 96.781792 on5 1 3 13 1 7 1417 2446 115 33 96.681328 which5 1 3 13 1 8 1556 2446 61 33 96.918739 thes 1 3 13 1 9 1642 2447 172 41 96.408775 Kennedy5 1 3 13 1 10 1838 2448 126 40 96.257362 profiles 1 3 13 1 11 1988 2449 29 32 96.257362 is3 1 3 14 0 0 699 2493 1313 93 -1 4 1 3 14 1 0 699 2493 1313 46 -1 5 1 3 14 1 1 699 2493 272 41 96.472229 superimposed,5 1 3 14 1 2 989 2504 72 23 96.651703 was5 1 3 14 1 3 1079 2494 134 33 96.636780 minted5 1 3 14 1 4 1230 2495 70 33 96.237762 ands 1 3 14 1 5 1318 2497 212 38 96.799385 sanctioned,5 1 3 14 1 6 1549 2497 70 33 96.724045 ands 1 3 14 1 7 1637 2498 241 39 93.292137 respondents’5 1 3 14 1 8 1897 2509 115 30 92.491943 repre-4 1 3 14 2 0 699 2544 1198 42 -1 5 1 3 14 2 1 699 2544 195 33 91.710228 sentations5 1 3 14 2 2 906 2554 62 23 96.738022 ares 1 3 14 2 3 979 2545 89 32 96.923683 false5 1 3 14 2 4 1079 2545 70 33 96.956230 ands 1 3 14 2 5 1160 2545 216 41 96.512856 misleading.2 1 4 0 0 0 697 2602 1313 42 -1 3 1 4 1 0 0 697 2602 1313 42 -1 4 1 4 1 1 0 697 2602 199 8 -1 5 1 4 1 1 1 697 2602 199 8 19.395935 Ee4 1 4 1 2 0 739 2623 1271 21 -1 5 1 4 1 2 1 739 2625 7 10 85.050217 *5 1 4 1 2 2 760 2623 181 21 96.307312 Advertisements5 1 4 1 2 3 952 2623 150 20 96.710754 disseminated5 1 4 1 2 4 1113 2624 55 19 96.169197 after5 1 4 1 2 5 1177 2625 37 18 96.829628 thes 1 4 1 2 6 1224 2625 69 18 93.925064 Postal5 1 4 1 2 7 1304 2625 84 18 96.345100 Services 1 4 1 2 8 1397 2626 62 16 62.126583 orders 1 4 1 2 9 1468 2632 37 10 88.287567 ara5 1 4 1 2 10 1515 2626 34 16 85.331558 CX5 1 4 1 2 11 1561 2626 37 16 30.816185 976%5 1 4 1 2 12 1608 2627 116 15 54.718201 (Rehrnary5 1 4 1 2 13 1734 2627 13 14 1.460991 Q5 1 4 1 2 14 1765 2628 58 13 72.055580 1074)5 1 4 1 2 15 1834 2628 40 13 95.676147 ands 1 4 1 2 16 1886 2628 34 13 66.832367 CY5 1 4 1 2 17 1933 2629 37 12 65.435036 ANK5 1 4 1 2 18 1980 2630 30 11 63.040310 fot JAY NORRIS CORP., ET AL. 801 751 Initial Decision The Lincoln-Kennedy penny is of no historical and numismatic significance and there is no indication that it is certain to grow in value. Respondents’ representations in this respect are false and misleading.

Finally, respondents offer of a FREE plaque (see CX 3027) is actually not an offer of a “free” item. The plaque is part of the [45] regular offer at the price of the coins and plaque, and accordingly the use of the word “Free” is unfair and deceptive. TV ANTENNA 48. In advertisements for their “JUMBO TV ANTENNA,” respondents make the following statements (CXs 28, 886 (p. 46)): Every home a super receiver ELECTRONIC MIRACLE TURN YOUR HOUSE WIRING INTO A JUMBO TV ANTENNA Do you know that you have one of the greatest TV antennas ever constructed? It’s better than any set cf rabbit ears, more efficient than complicated external antennas. It’s your house. Yes, the wiring in your home constitutes a giant antenna that acts as a super receiver for TV, FM, all kinds of difficult reception. And the secret to using all this reception potential is an amazing little plug-in attachment that utilized the receptivity of your house wiring without using a single bit of electrical power. Yes, you simply attach the adapter easily & quickly to your set . .. plug it in to any wall outlet and immediately your entire electrical system is working for you. No ugly looking rabbit ears, no difficult, dangerous to maintain external antennas, and reception so sharp and clear it will amaze you even in the more difficult areas.

In the complaint it is alleged that through their advertisements respondents represented that (1) the TV antenna will bring sharp and clear reception even in difficult areas; (2) the performance of respondents’ TV antenna is superior to any rabbit ear antenna or outdoor antenna; (3) respondents’ TV antenna will turn all types of house wiring into a TV antenna; and (4) respondents’ TV antenna is an electronic miracle (Par. 10 (9, 10, 11, 12)). [46] From merely reading the advertisements, especially the portions quoted above, it is clear that respondents made the representations set forth in the complaint.

Frank Triolo, an electronics engineer employed by the United States Electronic Command in Fort Monmouth, New Jersey, testified that he conducted tests on the Norris TV antenna (“C-M Antenna’’) in December 1973, at the request of the Federal Trade Commission (272-3). From a comparison of the actual pictures received on television sets as well as an electronic measurement of the “received voltage” at the television sets, Mr. Triolo concluded that the Norris Initial Decision 91 F.T.C.

antenna was “definitely inferior to all the other antennas that we used for comparison” (275; CX 2704).® Mr. Triolo was of the opinion that the performance of respondents’ TV antenna was not superior to any rabbit ear antenna or outdoor antenna and that it was not an electronic miracle (327-8). He testified further that house wiring can be turned into a TV antenna, although a poor one (828).

Frank Trupia testified that he purchased a TV antenna from Norris in 1973, and that the picture he received with that antenna was inferior to the picture received with the antenna he already had. He added that the television picture with the Norris antenna “was not even good” (332, 335).

Leonard Scrudato testified that he purchased a Norris antenna and “wired it up as I was instructed, and the performance was nonexistent” (469).

Respondents’ presented an affidavit and it was stipulated that they had received a communication from a customer expressing satisfaction with the performance of Norris’ TV antenna that they had purchased (RX 9AB; Stip. 1821-2).

It is found that respondents’ TV antenna will not in all instances bring sharp and clear reception in difficult [47] areas and is not superior to rabbit ear antennas and outdoor antennas and respondents’ representations in this respect are false and misleading. Respondents’ antenna is not an “electronic miracle” and respondents’ representation that it is, is false and misleading. Respondents’ representation that their TV antenna turns the house wiring into an antenna is true. There is nothing in the record to demonstrate under what conditions, if any, utilization of house wiring is ineffective and accordingly respondents’ representation has not been shown to be false and untrue.

EX-TAXICABS 49. In their advertisements for cars, respondents’? made the following statements (see CXs 53, 58; see CX 50, 51, 56): BUY CHOICE . . . NOT CHANCE Buy direct and get the carefully maintained car of your choice below wholesale price . ;

All cars are standard four door, six passenger sedans equipped with automatic * CX 2704, p. 4: “CONCLUSIONS”: The C-M Antenna is definitely inferior to the conventional home and “rabbit-ears” antennas used in these tests. It does not serve as an effective TV antenna system in the suburban and fringe areas in which it was tested.

JAY NORRIS CORP., ET AL. 803 751 Initial. Decision transmissions, heater, defroster and feature durable vinyl interiors. They have been in regularly maintained fleet use and serviced far more frequently than the average car owner can afford to do. Each car has been thoroughly serviced by our mechanics to put it in good operating condition and passes careful inspection before being released for delivery. These top-quality ex-taxis have been carefully selected for best value We offer these fine cars at the prices shown (F.O.B., N.Y.). There are no hidden costs! . . -(CX 58).

IDEAL FOR PERSONAL USE OR TO RESELL AT A PROFIT ONLY PAN AM GIVES YOU THIS 100% O.K.

Dependable PAN AM gives you a good car at a low price. Our highly trained mechanics double-check each car for all the items below. When a car leaves our premises it is checked out as follows: [48] Brakes Fan Belt Heater Water Pump Plugs Spare Tire Defroster Fuel Pump Points Jack Generator Block Lights Transmission Starter Color Battery MAIL THIS COUPON WITH YOUR DEPOSIT — ORDER AS MANY AS YOU WANT ALL CARS ARE SOLD ON AN AS IS FIRST ORDER — FIRST SERVE BASIS In the complaint it is alleged that through their advertisements, especially the statements quoted above, respondents have represented that (Par. 10 (14-23):

1. cars delivered to purchasers are in good mechanical and physical condition;

2. cars delivered to purchasers are in safe operating condition; 3. cars delivered to purchasers are finished and look as pictured and described in respondents’ advertising; 4. cars are checked by expert mechanics and necessary repairs are made prior to release for delivery;

5. cars delivered to purchasers are in sound condition and repair and render normal, adequate and satisfactory service; 6. respondents’ cars may be readily resold by the purchasers at a profit;

7. cars are regularly ordered and received in advance of their being offered for sale and are held in stock until purchasers’ orders are received;

8. respondents’ cars have undergone thorough and complete servicing and inspection before being released and approved for delivery;

Initial Decision 91 F.T.C.

9. each price quoted for respondents’ motor vehicles is the full price and there are no hidden costs; and 10. respondents bear the liability and responsibility of delivery of cars to purchasers at any destination in the United States where such purchasers may reside. [49] From a reading of the advertisements in their entirety with special attention to the excerpts set forth above, it is found that respondents do make the representations alleged in the complaint. Almost all, if not all, of the cars sold by mail-order by Pan-Am were supplied to it by Future Motors. These cars were trade-in taxis from some twenty taxi fleets located in the New York City area. . Respondent Mann testified that between 1969 and 1974, Future Motors sold a total of approximately 700 to 800 ex-taxis to Pan-Am, (Mann 214)?! After the cars were sold to Pan-Am, Future Motor’s personnel serviced them. The service ordered by Pan-Am appeared on service order forms (see RX 32A-D. After such services were performed, the ex-taxis were painted, and “new” tires were installed by Future Motors. These services by Future Motors were performed either before or after the customer-purchaser was known to Pan-Am. For consumers located in New York State, a State Inspection Certificate was required in order to secure State License application forms.

Ten consumers who had purchased cars from Pan-Am testified about their ordering and the delivery as well as their experience with their cars.

Patricia Berardi, a New York State resident, testified that in 1972 her husband purchased a 1970 Dodge Coronet for $700, ordering by mail from Pan-Am (1181-4). They knew that it was an ex-taxi (1135, 1139). In describing the appearance of the car that she received, Mrs. Berardi said:

The car looked good. Mine happened to be a turquoise color, a nice color green. The tires looked fine. The car was clean on the outside. It was very dirty in the inside . . . (1188).

She further testified that she had the car ten months. About three months after her car was delivered she had trouble with a loose bolt on the steering box. She returned to Future Motors (at College Point) about four months after she picked it up to have the steering box repaired and, although the [50] personnel there worked on the car, JAY NORRIS CORP., ET AL. 805 751 . Initial Decision the problem was not solved. She had it repaired at a neighborhood station.

Six months later she experienced trouble starting the car, and a neighbor replaced a “solonoid switch” inside the starter (1141). She also installed a muffler (1141). Thereafter she experienced difficulty with the transmission, “it just wouldn’t go into reverse.” She gave “it to some friends of my husband for the parts.” Catherine Dyshuk, resident of Scranton, Pennsylvania, testified that in 1972 she and her husband, responding to an advertisement in the Norris catalog (1221), ordered a 1971 Dodge Coronet by mail from Pan-Am for $999 (1214). Her husband, beginning in August, made three trips to New York to pick up the car. He was not successful. On December 17, 1972, the car was delivered to the Dyshuk home (1215). Mr. Dyshuk signed a receipt stating that it was received “in good condition” (1227).

Concerning the appearance of the car, she testified that the paint was already coming off. They did not know they were getting a taxi (1216), but thought they were getting a “fleet car” (1223). The next day they took it to a mechanic who showed them the bent frame of the car and some “dents in the side” (1217-8). She did not drive the car more than twice. Her husband drove the car to work for six ‘months (1219). Then they sold it for $100 (1220). In early 1972, when Steven Fuchs was a resident of Demarest, New Jersey, he purchased a 1969 Dodge Coronet for $599 from Pan-Am, responding to an advertisement in a Norris catalog (750-1, 755). From his interpretation of the advertisement he thought he would get a “reconditioned fleet car or taxi.” “The advertisement portrayed a car which looked to be brand new, and I assumed the car would be reasonably well restored, and it said it did have new parts, and I remember it saying new tires, which is important, and a new paint job as another thing” (752).!2 Mr. Fuchs picked up the car at College Point, after paying for it at the Norris office in Freeport (753).1* He test drove the car and told the personnel at College Point that the “brakes barely worked” (753). The car [51] was serviced and “the brakes were a little better but they weren’t what I considered safe, but I took the car.” (758). “(T]he paint job was totally inadequate.” “I noticed that the headlights were not focused. One was facing up and one was facing down, it was loose. The emergency brake didn’t work”. . . (753). He 12 Mr. Fuchs understood the phrase “as is” to mean “the way you receive it” (759). 1° The invoice signed by Mr. Fuchs reads: “Above car approved and accepted. No warranty expressed or. implied” (CX 42 32).

Initial Decision 91 F.T.C.

was of the opinion that the tires, which looked new, were “retrea (769-70).

He kept the car for a couple of weeks and then returned it to Pan- Am and received his money back (755, 758). John Kurimski, a resident of Stratford, Connecticut, purchased a Dodge car by mail-order in 1971 from Pan-Am for $1000 (1173-4). About six months later the car was delivered to the Kurimski residence in Stratford (1178). He paid the driver $50 (1178). He signed a statement that it was in “good condition” (1186). Mr. Kurimski had the car for “approximately a year or so, but that thing just stayed in the driveway” (1183). “I don’t think I had gone more than a hundred miles” (1183). © As to the kind of car he expected to receive, Mr. Kurimski testified as follows (1183):

Paint color you wanted, blue or red I think it was, something like that. It sounded good, that’s why I got it, but I also expected to be able to make repairs on the car because when you get a used car, naturally there is always some work to be done. You don’t get in a condition that good, but not to the extent that when I looked at this thing, what it was going to cost me. This was a piece of junk, period. He further testified that although the paint job was pretty good, the interior was “a mess” (1178). “The engine was bad, all rusted out.” He “tried to get the car going. It wouldn’t go, kept stalling.” He had it towed to a garage. They “found that the main bearings were gone.” They got it going and then on the eight-mile trip home it stalled about ten times (1179).

He and a friend, who was a mechanic, replaced one bearing and found the frame broken and welded. “[T]Jhe [52] weld job was terrible” (1180).1* In addition he replaced the points, plugs, condenser and timed it, replaced the front ball joints, muffler and carburetor (1182). The total cost of repairs was approximately $300 to $400 (1181).

Mrs. Truus M. Lamanna, a resident of East Norwich, New York, testified that in 1972 they purchased a 1970 four door [Dodge] Coronet from Pan-Am for $700, responding to a catalog advertisement (1098-9; see RX 4). From the ad, they thought a 1970 car should be a pretty good car, being a fleet car which would be constantly serviced, it should be in good condition (1100).15 She paid for the car in Freeport and picked it up at College Point at Future [Motors]. She had to go to College Point twice because on « Mr. Kurimski is a welder (1181).

5’ The Lamanna, Lo Motto and Berardi cars were bought as part of one transaction (see 1107, ). Down payment with the order was made on April 12. 1972. the balance paid July 13, 1972, and the cars were picked up on July 27, JAY NORRIS CORP., ET AL. 807 151 Initial Decision the first visit the car “hadn’t been inspected yet” (1102). “It had a new paint job, only the outside, because when you opened the trunk it was still all yellow, and the upholstery was taped up where the mechanism for the cab had been attached” (1102). “The inside was very dirty” (1102).

From the following day she had trouble starting the car, the “starter solonoid” being defective (1102). Within three months “the tires were completely shot, the front” (1104). “One day my whole front went, the whole “A” frame [“K”; see 1109-10] collapsed” (1104). They had it towed back to College Point, and after two months she got her car back (1105). Six months after picking up the car the first time (late August) she gave the car to some kids “experimenting how to fix cars” (1105).

Upon receipt of the car she signed a statement: “Above car approved and accepted. No warranty express or implied. Any major thing go wrong, may be brought back, repaired at Pan-Am expense” (111)). [53] Willie Lewis, a resident of Capitol Heights, Maryland, ordered two cars from Pan-Am by mail (1022). In March 1972, he ordered a Dodge Coronet for $699, receiving delivery in June at College Point (1024; see CX 3211). In June he ordered a blue 1970 Dodge Coronet for his wife and picked it up in October (1037). He signed a statement: “Above car approved and accepted. No warranty express or implied” (1052).

In his view the advertisement (CX 55A) to which he responded represented that the cars were “inspected, they were in condition, . .. and guaranteed for thirty days . . . they were very reliable” (1023, 1047). He “expected to receive a car which had been used, but I expected to receive a car that would give me service, adequate service, for a certain length of time without any trouble.” Although he knew they were “used” “fleet cars,” he didn’t see anything in the advertisements about ex-taxis (1044).

While he was driving the first car home, the “lights went out.” In July he replaced the “disc brakes” (CX 3212) and later the power ’ steering failed (1030-1). Pan-Am reimbursed him $50 of the $150 cost of repairing the power steering (1032).

In the spring of 1973, the motor blew up and he had that replaced for approximately $300 (1033). He further testified that on the first day he noticed that the voltage regulator was defective (1034). Thereafter he carried a spare generator in his car (1035), and replaced the generator every six months (1035). In the latter part of 1973, he junked that car.

He had to replace the front end of the second car (CX 3218) and Initial Decision, 91 F.T.C.

sometime later “one night I was driving it home and, all of a sudden, whoof, the whole dashboard caught fire” (1039). He had other “troubles, minor, but I was able to repair them myself” (1048). Frank LaManto, a resident of South Farmingdale, Long Island, New York, picked up a 1970 Dodge Coronet in late September 1972 (1118). It was “in a condition of a brand new painted car, a brand new-looking painted car from the outside.” The interior “was a little disappointment, but it was still satisfactory” (1118-9). The car had an inspection sticker on it (1119). He signed an invoice dated August 1, 1972, which stated: “Above car approved and accepted. No warranty express or implied” (1129). [54] He drove it home and noticed a problem with the transmission. The next day he returned it to College Point, where a used transmission from another cab was installed (1120). Approximately four months later the “engine seized” (1121).1* He replaced the motor four months later at a cost of approximately $600 (1123). Three months later the car developed trouble in the drive train. They sold it for $700 in July 1976 (1125). The car was driven 6000 miles during the seven months it was in running condition (1125). Carol Orkin, a resident of North Babylon, New York, purchased a 1970 Ford for $700, responding to an advertisement in the Norris Catalog (1059-61). She ordered it in July 1972 and picked it up in February 1973 (1063). From the advertisement “it was reasonable and it was a new car, comparatively. It was only two years old, and I thought it would be a good buy” (1061). “I knew IJ was buying a fleet car from the advertisement, but I assumed that since it was a fleet car it would be kept up properly . . .” (1062, see 1086).17 When Mr. and Mrs. Orkin picked up the car it had an inspection sticker on it (1065). On the way home they stopped at a gas station because there were “no brakes on the car.” A “master cylinder” was put in the car by the station attendant (1066). She requested a refund on that bill from Norris, but never got a response from them (1072). They kept the car for about a year and finally “resold it to a junkyard for $35.00” (1072).

Charles Weyland, a resident of Freeville, New York, purchased a 1972 used Dodge Coronet from Pan-Am for $999 plus tax (1155-7). He picked up the car at College Point in March 1974. It had an inspection sticker on it (1157). To the best of his recollection he did not see “ex-taxis” in the advertisement (1166). He drove the car from College Point to a nearby gasoline station to 18 “It's a condition that happens when the engine runs completely out of oil and there is nothing to indicate JAY NORRIS CORP., ET AL. 809 751 Initial Decision get gasoline. The car failed to restart. The gas station secured the positive terminal of the battery (1158). Shortly after he continued his trip home, the brakes on the right front “seized” (1158). He returned to College Point, [55 | The service people at College Point replaced the battery and the front brakes and bearings, obtaining parts from other cabs, as well as a hanger on the exhaust pipe or muffler (1159). On the way home the car overheated. The radiator had to be flushed out and the anti-freeze replaced (1160). Shortly thereafter they discovered a hole in the floor board (1160). He had further front brake trouble and had to have the “spider gears” replaced (1161). The paint started to peel in 1975 (1163). They gave it to a dealer to resell (1168).

George Roberts, a resident of Springfield Gardens, New York, ordered a car by mail from the Norris catalog for $795 (713-4). He picked it up in May 1970 (715). He testified that if he had known it had been a “taxi,” he would never have invested or decided to buy it (7160). The service people attached an inspection sticker to the car while Mr. Roberts was signing papers (717). Upon driving it away, Mr. Roberts discovered that the brakes didn’t work. He backed it to the College Point service area and they adjusted the brakes (718).

Two and a half months later he was stopped by a policeman for having an invalid inspection sticker on the car. Because it would require $300 repairs to get a valid inspection sticker, Mr. Roberts sold the car to the mechanic at the inspection station for $75 (721). In a number of instances, cars delivered to purchasers are not in good mechanical condition and respondents’ unqualified representation that they are, is false and misleading. In a number of instances, cars delivered to purchasers are not in safe operating condition, and respondents’ unqualified representation that they are, is false and misleading. In a number of instances, it appears that the cars have not been serviced and necessary repairs had not been performed before release for delivery and respondents’ unqualified representation that inspection, service, and repairs are performed in advance of delivery is false and misleading. [56] In a number of instances, cars delivered to purchasers are not in sound condition and repair and have not rendered normal, adequate and satisfactory service. Respondents’ representations as to the condition of the cars they sell is false and misleading. In a number of instances respondents’ cars have not undergone thorough and complete servicing and inspection before being Initial Decision 91 F.T.C.

released for delivery and respondents’ representation that such servicing and inspection is always performed is false and deceptive. It appears that in many instances the cars ordered by customers by mail are not in stock, but are obtained as available to fill orders. Respondents’ representation that they are offering for sale cars that are in stock is false and misleading.

It appears that all of respondents’ cars are not in such condition that they may be sold at a profit by the purchaser. In many instances purchaser had to expend substantial sums of money in repair costs. ’ Respondents’ unqualified representation that such profit may be realized is false and misleading.

Respondents’ cars are repainted on the exterior before they are delivered to purchasers. Generally, the appearance of the cars was as pictured in the catalog advertisements. However, the interiors are not refinished. There is no overt representation that they have been so serviced. Respondents’ have not misrepresented the appearance of the cars which they sell.

Each price quoted for respondents’ cars is the full purchase price except for the tax (for New York residents). The delivery charge for delivery to the purchasers’ home is stated in the advertisements. Except for the necessary repairs that a customer might be required to make, there are no hidden costs. In my opinion, the “hidden costs” refer to the original price and not to subsequent repair costs, and respondents have not misrepresented the purchase price of their cars. , There is no evidence as to who bears the liability and responsibility of delivery and accordingly there is no proof that respondents’ representations that they do, is actually false. [57] It is further alleged in the complaint that respondents have failed to make known to the prospective purchaser certain material facts about their cars.

First, it is alleged that respondents do not disclose that the cars are “ex-New York City taxicabs.” In their advertisements, respondents do state that their “fleet cars” are “ex-taxis.” The additional disclosure that they are ex-New York City taxicabs is a material fact and failure to make this disclosure is unfair and has a tendency and capacity to mislead the prospective consumer. Second, it is alleged that respondents advertise that their cars are sold “FOB New York” and “As is,” without disclosing the meaning of those terms. There is no evidence that respondents have made any representation that their cars are sold on other terms. Absent some ambiguity. sellers are not required to define words that have well- JAY NORRIS CORP.; ET AL. 811 751 Initial Decision Third, the complaint alleges that respondents do not disclose that the cars are not inspected for compliance with any state motor vehicle inspection law. The record discloses that the cars sold to New York State residents have inspection stickers attached thereto. There is some ambiquity in the advertisements as to what “inspection” is represented as having been performed. It would appear that state law covers the inspection requirements and to require further disclosure in advertisements would create more confusion as to what is actually a fact.

Fourth, the complaint alleges that the interiors of respondents’ cars have not been cleaned or reconditioned prior to being delivered to the purchaser. In fact, it appears that the interiors are not reconditioned. This is a material fact and failure to disclose it, especially in view of the other representations relating to the condition of the cars, is unfair and had a tendency and capacity to deceive.

Finally, the complaint alleges that respondents have failed to disclose that the drivers hired to deliver cars to purchasers are independent contractors and are not respondents’ agents, servants or employees. The record does not demonstrate that failure to make this disclosure is important. There does not appear to be any serious ambiguity in the advertisement that would require this disclosure, and it is found that any such fact is not material to the purchasers’ choice of whether to buy respondents’ cars. [58] Discussion About respondents’ liability The acts and practices challenged in this proceeding are primarily the acts and practices arising from the business operations of corporate respondent Norris. It is clear that respondents Jacobs and Williams are responsible for these acts and practices in their individual capacities, as well as corporate officials, for purposes of enforcement of Section 5 of the Federal Trade Commission Act. They control the policies of the corporation and direct its operations. See Standard Educators, Inc. v. Federal Trade Commission, 475 F.2d 401 (D.C. Cir. 1973), cert. denied, 414 U.S. 828; Guziak v. Federal Trade Commission, 361 F.2d 700, 704 (8th Cir. 1966), cert. denied, 387 U.S. 1007 (1965).

None of these general practices are attributable to Pan-Am or Kenneth Mann. The only business that they are engaged in is the mail-order business of selling used cars. Of course, respondents Jacobs, Williams and Mann are responsible individually and as Initial Decision 91 F.T.C.

corporate officers for the acts and practices of Pan-Am. Federal Trade Commission v. Standard Education Society, 302 U.S. 112 (1937).

The other two corporate respondents. had nothing to do with the challenged practices. Complaint counsel concede as much (CSC PF pp. 47-48). Without further discussion, the complaint . will be dismissed as to the two corporate respondents Federated Nationwide Wholesalers Service, Garydean Corp., t/a Nationwide Wholesaler Service, and P-N Publishing Company, Inc. The only remaining question as to respondents’ responsibility for the challenged acts and practices is the relationship between Norris and Pan-Am. Although it was conceded that Norris was not in the business of selling cars (see tr. 66), the advertisements of Pan-Am appeared regularly in the Norris catalog and Pan-Am’s business was conducted by Norris personnel at the Norris place of business (see Cxs 752-54, 756). In the circumstances, the practices of Pan-Am which arose out of advertisements in the Norris catalog (see CXs 57, 409, 410) are found also to be the responsibility of Norris, for purposes of enforcement of the Federal Trade Commission Act. See Sunshine Art Studios, Inc. v. Federal Trade Commission, 481 F.2d 1171 (1st Cir. 1978). [59] About the Commission’s jurisdiction There is no dispute that the Federal Trade Commission has jurisdiction over the respondents Norris, Pan-Am, Jacobs, Williams and Mann. They are engaged in commerce within the meaning of the Federal Trade Commission Act, and the challenged acts and practices are in commerce and affect commerce within the meaning of that Act.

Meaning of the advertisements With several exceptions, it has been found that the advertisements conveyed the meanings set forth in the complaint. This determination has been made from carefully considering the advertisements, including the format and the emphasis placed on certain words and phrases contained therein. It is well established that the meaning of an advertisement may be determined by an examination of the advertisement itself. Carter Products, Inc. v. Federal Trade Commission, 323 F.2d 523 (5th Cir. 1963); J. B. Williams Co., Inc. v. Federal Trade Commission, 381 F.2d 884 (6th Cir. 1967). Such a determination may be made notwithstanding that the JAY NORRIS CORP., ET AL. 813 751 Initial Decision ences may be made from statements actually made as well as from information not set forth therein, if the excluded facts are material, ie, facts considered to be material to the customers’ choice whether to purchase the product advertised. Chrysler Corp. v. Federal Trade Commission, D.C. Cir. decided July 6, 1977 slip opinion at p. 12; Federal Trade Commission v. Colgate-Palmolive Co., 380 U.S. 374 (1965).

Respondents do not seriously contest the issues as to whether the challenged advertisements conveyed the alleged meanings. They do point out that with respect to the FLAME GUN advertisements the words “in seconds” do not appear therein, and argue that the alleged meaning which contains “in seconds” should not be interpolated from the advertisement (Resp. PF pp. 27-28). This advertisement uses such phrases as “fastest way we know” and “faster than you’d believe possible.” Speed of performance is the theme. That is close enough.

About the performance characteristics of products Respondents argue that complaint counsel have not proved that the performance characteristics of the products [60] are not as represented so as to render the challenged advertising false, deceptive or misleading in violation of the Federal Trade Commission Act.

With respect to the FLAME GUN, respondents argue that the test conducted by Mr. Lomash was limited to two one foot square sections of ice at zero degrees (0°) and that his test did not duplicate the environment or conditions which an ordinary consumer might encounter (Resp. PF pp. 30-32). In respondents’ view the testimony of the three consumer witnesses should be disregarded because they were not competent to testify as to the technical or scientific validity of the claims made for the product and that they had no way of knowing whether the units they were using were not defective (Resp. PF pp. 28-29).

In my opinion the evidence of record is competent to support the finding that the FLAME GUN could not perform as represented in the advertisement. The burden shifted to respondents to come forth with some information in support of their claims. They did not do so. The same situation exists with respect to the TV antenna. The test - conducted by Mr. Tripolo at least demonstrated that the TV antenna did not produce the results as represented in respondents’ unqualified advertisements. The fact that the TV antenna may have worked, as promised, in certain other areas of use, does not make the unqualified representation truthful as to all possible consumers. Initial Decision 91 F.T.C.

As shown by the findings on the other products’ performance characteristics, respondents’ representations were to a great extent exaggerations or statements of true facts in a way that they had a tendency and capacity to mislead. In my opinion complaint counsel have sustained their burden of proof and without rebuttal evidence the record is sufficient to support these findings. About general practices relating to the mail-order business One of respondents’ principal defenses to the allegations relating to nondelivery of merchandise and their failure to make prompt refunds centers around the relatively few complaints attributed to them compared to the great number of orders they process every year. Contending that the [61] complaints are inconsequential. in terms of respondents’ overall volume and operation of its business, respondents assert that the evidence offered herein by complaint counsel, involving a relatively minute percentage of the consumers which the company must deal with on a day-to-day basis, does not rebut the evidence of respondent Norris and its officers as to the policies, practices and procedures of the company to filling orders and making refunds promptly. Respondents concede that there are bound to be some mistakes which is part of the nature of the mailorder business (Resp. PF p. 21), but contend that Norris did not have such an unusual complaint record (Resp. PF p. 19) that would warrant a finding that they violated the provisions of the Federal Trade Commission Act.

In my opinion, it is respondents’ regular business policies, practices and procedures that engender the basic “unfairness” in certain practices found in this matter. Respondents candidly admit that they cannot trace their shipments and accordingly cannot ascertain whether delivery of merchandise has been made. In response to complaints or inquiries about delivery they regularly make the assumption that the merchandise has been shipped and will be delivered soon. They do not check their records to see if _ shipment was actually made. They do not follow up to see if delivery was in fact subsequently accomplished. They assume that if nothing. further is heard from the consumer, delivery was accomplished. With respect to refunds, respondents take the position that if they received the returned merchandise, a refund was made, and conversely, if they did not send a refund, they did not receive the returned merchandise. They apparently make no automatic refunds on complaints that merchandise was not delivered, but eventually make a reshinment. or refund after subseauent complaints are JAY NORRIS CORP., ET AL. 815 151 Initial Decision The inherent unfairness in these procedures is that although the prospective customer is promised in respondents’ advertisements that (1) they order at “no risk,” (2) that delivery is “guaranteed” and (3) that the customer must be satisfied or his money will be refunded, respondents do not take the initiative in living up to these promises. If something goes amiss, the customer may be placed in a position where he must “hassle” respondents for the merchandise or the refund. In the circumstances, the incidents of complaints, [62] although perhaps relatively few in number as compared to the orders handled, cannot be termed “inconsequential.” If any customer is placed in a position where he must “fight” for delivery or a refund, it is no excuse for respondents to say that the problems are part of the nature of the mail-order business. The answer is, and the Federal Trade Commission is mandated, to put a stop to the unfair practices. Weight to be given testimony by consumer agency witnesses Respondents contend that the testimony of the consumer agency witnesses must be afforded no weight and disregarded because it was founded on rank hearsay and cannot be relied upon as to the validity of the complaints reported (see Resp. PF p. 18). This testimony was not received for the truth of the complaints themselves, but for the fact that Norris’ practices, the ones challenged in this proceeding, had often come to the attention of the consumer agencies. This merely tends to establish that the problem was more consequential than as established by the number of consumer witnesses who testified.

Except for the fact that the New York Attorney General’s Office and the “Metropolitan Better Business Bureau” had forwarded consumer’s letters of complaint to the Federal Trade Commission, no reliance was given to the testimony of Ms. Susan Metzger, Consumer Protection Specialist, Federal Trade Commission. The charts that she prepared were at the direction of complaint counsel for purposes of determining what possible allegations were to be included in a complaint, at that time still to be drafted. As demonstrated during cross-examination, it was difficult if not impossible for her to decipher the specifics of the consumer’s complaint from the information on the charts. The degree of reliability of these exhibits was not such as to justify inclusion of them as evidence of record in this proceeding (see ALJ 1601-2).

About violations of the Federal Trade Commission Act It is well settled that any advertising representation that has the Initial Decision 91 F.T.

tendency and capacity to mislead or deceive a prospective purchase is an unfair and deceptive act and practice which violates th Federal Trade Commission Act. Chrysler Corp. v. Federal Traa Commission, D.C. Cir. No. 76-1586, decided July 6, 1977 at slip op. 1: Charles of the Ritz Dist. Corp. v. Federal Trade Commission, 143 F.2 | 676, 679-80 (2d Cir. 1944). [63] It is also a violation of the Federal Trade Commission Act to fail t disclose facts relevant to the advertising representation that, . known to the prospective purchaser, might affect his decision as t whether to purchase the advertised product. Colgate-Palmolive Ca supra.

The Federal Trade Commission may determine that certain practices are “unfair” when a seller does not live up to certain representations as to his performance in filling orders. See Federc Trade Commission v. Sperry & Hutchinson 405 U.S. 233 (1972). It : an unfair trade practice to retain moneys of consumers wher performance on the transaction is not accomplished. Windsc Distributing Co., 17 F.T.C. 204, aff'd, Windsor Distributing Co. ‘ Federal Trade Commission, 437 F.2d 448 (3d Cir. 1971). In addition to the above type of “unfair” practices, complair counsel contend that it is “unfair” for respondents not to maintain telephone listing in a local telephone directory. They argue thz consumers should be able to reach respondents by telephone in orde to make complaints as to delivery or refunds. I am not aware of any prior case, adjudicative or non-adjudicativ: wherein respondent was held to have engaged in an unfair practic by not maintaining a public listing of its telephone or was ordered t maintain a public listing of its telephone number. Although appears that the Commission’s staff was concerned about thi problem when it drafted the statement of basis and purpose of th Proposed Trade Regulation Rule on Mail Order Merchandising, th promulgated Rule does not contain any such requirement. The Commission’s promulgation of the Rule does not control thi adjudicative proceeding, wherein determinations as to illege conduct and appropriate remedies are made on the adjudicativ record.

It certainly would be unfair for a seller to isolate himself from th consumer after the consumer has ordered and paid for a product an where the seller has guaranteed certain performance on the seller’ part. But I do not think it is unfair merely to maintain an unliste telephone, where other means of communication are availabk Considering [64] the testimony of Mr. Fenvessey, as well a JAY NORRIS CORP., ET AL. 817 51 Initials 1 1 1 2 3 1138 347 127 26 91.922256 Decision2 1 2 0 0 0 503 430 1303 2155 -1 3 1 2 1 0 0 513 430 1286 198 -1 4 1 2 1 1 0 514 430 1285 45 -1 5 1 2 1 1 1 514 436 99 32 92.307083 rders5 1 2 1 1 2 628 435 70 33 96.678246 ands 1 2 1 1 3 714 434 218 41 96.245834 complaints,5 1 2 1 1 4 949 434 29 32 96.833755 it5 1 2 1 1 5 993 433 114 33 96.495422 would5 1 2 1 1 6 1123 435 62 30 96.338379 not5 1 2 1 1 7 1201 443 130 29 96.726593 appears 1 2 1 1 8 1346 441 85 30 96.537445 very5 1 2 1 1 9 1446 430 115 33 96.792290 useful5 1 2 1 1 10 1578 432 36 30 96.970207 to5 1 2 1 1 11 1629 430 132 40 95.285126 requires 1 2 1 1 12 1776 439 23 22 96.189339 a4 1 2 1 2 0 513 479 1286 47 -1 5 1 2 1 2 1 513 486 122 33 92.394882 general5 1 2 1 2 2 667 486 120 40 96.203545 listings 1 2 1 2 3 817 485 38 33 96.714622 of5 1 2 1 2 4 882 485 95 33 96.440277 theirs 1 2 1 2 5 1006 484 187 40 96.563461 telephones 1 2 1 2 6 1223 482 158 33 96.423920 number.5 1 2 1 2 7 1413 481 73 32 96.666145 Thes 1 2 1 2 8 1516 481 182 32 93.587051 confusion5 1 2 1 2 9 1729 479 70 33 93.587051 anda 1 2 1 3 0 513 530 1286 45 -1 5 1 2 1 3 1 513 537 188 32 92.327766 rustration5 1 2 1 3 2 731 536 81 33 96.875854 that5 1 2 1 3 3 841 547 23 22 95.546021 a5 1 2 1 3 4 894 538 101 37 95.629593 great5 1 2 1 3 5 1024 534 150 33 95.306961 numbers 1 2 1 3 6 1204 533 39 33 95.306961 of5 1 2 1 3 7 1269 532 186 40 96.243057 telephones 1 2 1 3 8 1486 532 168 39 95.896172 inquiries5 1 2 1 3 9 1685 530 114 33 96.637970 would4 1 2 1 4 0 514 582 1149 46 -1 5 1 2 1 4 1 514 587 164 41 93.006615 ngender,5 1 2 1 4 2 690 587 32 32 96.862968 if5 1 2 1 4 3 728 590 62 30 96.862968 not5 1 2 1 4 4 801 586 181 40 96.433296 processed5 1 2 1 4 5 993 584 171 42 96.380402 properly,5 1 2 1 4 6 1177 585 102 32 96.305351 isnot5 1 2 1 4 7 1289 583 90 33 92.979950 hard5 1 2 1 4 8 1390 582 210 40 91.709732 toimagine.5 1 2 1 4 9 1661 582 2 2 41.446224 _3 1 2 2 0 0 509 631 1294 800 -1 4 1 2 2 1 0 535 631 1268 47 -1 5 1 2 2 1 1 535 638 153 40 96.281281 Coupled5 1 2 2 1 2 700 638 86 32 96.757706 with5 1 2 2 1 3 798 637 61 32 96.924789 thes 1 2 2 1 4 873 636 226 40 94.400803 “telephone”5 1 2 2 1 5 1113 636 101 36 96.806206 issue,5 1 2 2 1 6 1228 635 30 32 96.721153 is5 1 2 2 1 7 1270 635 62 31 96.721153 thes 1 2 2 1 8 1344 633 160 40 96.338089 questions 1 2 2 1 9 1516 632 39 33 96.938217 of5 1 2 2 1 10 1563 632 95 33 97.012405 what5 1 2 2 1 11 1670 635 82 37 96.646530 types 1 2 2 1 12 1764 631 39 32 96.646530 of4 1 2 2 2 0 513 682 1286 48 -1 5 1 2 2 2 1 513 699 145 31 91.917274 responses 1 2 2 2 2 691 688 229 40 96.157661 respondents5 1 2 2 2 3 953 686 125 33 96.157661 should5 1 2 2 2 4 1112 686 103 33 96.528305 makes 1 2 2 2 5 1248 689 36 29 96.775429 to5 1 2 2 2 6 1318 683 169 41 96.268127 inquiries5 1 2 2 2 7 1519 694 40 22 96.534241 or5 1 2 2 2 8 1591 682 208 40 96.490158 complaints4 1 2 2 3 0 513 733 1286 46 -1 5 1 2 2 3 1 513 740 133 39 92.355621 relating5 1 2 2 3 2 662 742 37 30 96.959740 to5 1 2 2 3 3 716 739 155 40 96.802223 delivery5 1 2 2 3 4 887 749 39 21 96.843536 or5 1 2 2 3 5 944 737 153 33 96.634544 refunds.5 1 2 2 3 6 1117 737 40 32 96.992256 In5 1 2 2 3 7 1174 736 71 32 96.674767 this5 1 2 2 3 8 1262 737 145 38 96.442543 respect,5 1 2 2 3 9 1425 734 151 33 96.345245 another5 1 2 2 3 10 1592 734 159 39 96.567268 questions 1 2 2 3 11 1769 733 30 32 96.810745 is4 1 2 2 4 0 511 783 1289 46 -1 5 1 2 2 4 1 511 790 79 33 93.096901 vhat5 1 2 2 4 2 604 790 136 32 96.793831 records5 1 2 2 4 3 754 788 229 41 95.986237 respondents5 1 2 2 4 4 996 788 126 33 95.986237 should5 1 2 2 4 5 1135 787 174 32 96.829735 maintains 1 2 2 4 6 1323 786 37 32 95.773773 in5 1 2 2 4 7 1374 785 101 32 96.425865 orders 1 2 2 4 8 1489 787 37 29 96.425865 to5 1 2 2 4 9 1539 784 155 40 96.758736 upgrades 1 2 2 4 10 1706 783 94 32 96.631760 their4 1 2 2 5 0 511 833 1288 45 -1 5 1 2 2 5 1 511 840 190 33 9.093407 wrocedures5 1 2 2 5 2 726 839 54 33 95.863976 for5 1 2 2 5 3 805 839 171 39 95.702988 handling5 1 2 2 5 4 999 838 208 40 96.250084 complaints5 1 2 2 5 5 1232 836 70 33 96.987305 ands 1 2 2 5 6 1327 838 141 37 96.287209 requests 1 2 2 5 7 1492 835 55 31 96.909431 for5 1 2 2 5 8 1572 834 152 33 96.755165 refunds.5 1 2 2 5 9 1750 833 49 33 96.914597 As4 1 2 2 6 0 511 884 1287 46 -1 5 1 2 2 6 1 511 891 126 33 91.298218 winted5 1 2 2 6 2 660 893 62 30 96.837021 outs 1 2 2 6 3 745 890 109 33 96.895500 above5 1 2 2 6 4 878 891 72 39 96.465691 (sees 1 2 2 6 5 973 889 154 39 96.241882 findings5 1 2 2 6 6 1153 887 49 38 96.492813 22,5 1 2 2 6 7 1228 887 51 39 96.754189 26;5 1 2 2 6 8 1305 887 80 32 93.286781 disc.5 1 2 2 6 9 1412 896 31 30 92.229034 p.5 1 2 2 6 10 1470 885 64 41 96.842430 61),5 1 2 2 6 11 1561 884 237 41 96.480782 respondents,4 1 2 2 7 0 511 935 1289 46 -1 5 1 2 2 7 1 511 941 154 40 69.590149 though5 1 2 2 7 2 690 941 85 40 96.983299 they5 1 2 2 7 3 799 941 175 32 95.519112 maintains 1 2 2 7 4 999 941 180 38 95.519112 computers 1 2 2 7 5 1204 937 237 37 96.119728 information,5 1 2 2 7 6 1467 936 44 32 96.842331 do5 1 2 2 7 7 1536 938 63 30 95.537590 not5 1 2 2 7 8 1623 945 62 22 96.551292 uses 1 2 2 7 9 1711 935 28 32 96.725380 it5 1 2 2 7 10 1763 937 37 30 96.921341 to4 1 2 2 8 0 511 986 1289 40 -1 5 1 2 2 8 1 511 992 158 33 91.453583 iscertain5 1 2 2 8 2 682 992 61 32 96.747581 thes 1 2 2 8 3 755 994 114 30 96.747581 status5 1 2 2 8 4 882 991 38 32 96.690811 of5 1 2 2 8 5 928 990 61 33 96.600204 thes 1 2 2 8 6 1001 989 217 34 96.553963 transactions 1 2 2 8 7 1231 988 80 32 96.538834 that5 1 2 2 8 8 1322 988 30 32 96.538834 is5 1 2 2 8 9 1365 986 133 40 96.892883 subjects 1 2 2 8 10 1509 989 37 29 96.760307 to5 1 2 2 8 11 1559 986 190 40 96.340836 complaints 1 2 2 8 12 1760 995 40 22 96.471077 or4 1 2 2 9 0 511 1035 1289 48 -1 5 1 2 2 9 1 511 1043 133 40 90.987671 nquiry.5 1 2 2 9 2 668 1042 74 32 96.674690 Thes 1 2 2 9 3 766 1041 112 33 96.786835 Trades 1 2 2 9 4 903 1040 209 40 96.142036 Regulations 1 2 2 9 5 1135 1039 88 32 96.754829 Rules 1 2 2 9 6 1247 1039 81 32 96.559898 does5 1 2 2 9 7 1353 1037 139 40 96.784760 requires 1 2 2 9 8 1516 1037 139 40 96.492882 specifics 1 2 2 9 9 1680 1035 120 33 96.492882 record4 1 2 2 10 0 510 1086 1289 47 -1 5 1 2 2 10 1 510 1094 135 39 14.764664 ceeping5 1 2 2 10 2 655 1093 79 32 96.309296 that5 1 2 2 10 3 745 1091 114 34 96.309296 would5 1 2 2 10 4 871 1091 144 33 96.943100 discloses 1 2 2 10 5 1026 1090 87 33 96.414917 such5 1 2 2 10 6 1124 1090 88 32 96.384026 facts5 1 2 2 10 7 1224 1100 39 22 96.634766 as5 1 2 2 10 8 1273 1088 80 33 96.634766 wells 1 2 2 10 9 1364 1098 40 23 96.900467 as5 1 2 2 10 10 1415 1088 238 40 96.271965 respondents’5 1 2 2 10 11 1666 1086 133 33 96.619606 actions4 1 2 2 11 0 510 1136 1291 47 -1 5 1 2 2 11 1 510 1154 31 22 92.929802 m5 1 2 2 11 2 553 1143 61 33 96.976494 thes 1 2 2 11 3 626 1142 207 41 96.399818 complaints5 1 2 2 11 4 846 1142 70 32 96.700668 ands 1 2 2 11 5 928 1142 178 40 96.929367 inquiries.5 1 2 2 11 6 1120 1141 31 32 96.688202 It5 1 2 2 11 7 1162 1151 82 29 96.946716 may5 1 2 2 11 8 1255 1139 43 33 96.884308 be5 1 2 2 11 9 1309 1139 81 32 96.724464 that5 1 2 2 11 10 1402 1138 237 40 96.696022 respondents,5 1 2 2 11 11 1651 1136 150 33 96.343727 without4 1 2 2 12 0 510 1187 1290 46 -1 5 1 2 2 12 1 510 1193 91 33 92.915100 nuch5 1 2 2 12 2 614 1193 183 40 96.991325 difficulty,5 1 2 2 12 3 812 1192 100 33 96.821564 could5 1 2 2 12 4 927 1192 91 33 96.915703 alter5 1 2 2 12 5 1031 1191 95 33 96.557526 theirs 1 2 2 12 6 1139 1193 180 37 96.448296 computers 1 2 2 12 7 1332 1188 189 41 96.893494 capability5 1 2 2 12 8 1534 1190 37 30 97.009987 to5 1 2 2 12 9 1585 1187 141 41 96.502556 provides 1 2 2 12 10 1738 1187 62 32 96.959183 thea 1 2 2 13 0 510 1238 1290 43 -1 5 1 2 2 13 1 510 1244 212 33 91.072678 nformation5 1 2 2 13 2 742 1243 165 32 96.595665 retrieval5 1 2 2 13 3 928 1252 184 29 96.538239 necessary5 1 2 2 13 4 1131 1241 54 32 95.900024 for5 1 2 2 13 5 1204 1240 213 40 96.472542 compliance5 1 2 2 13 6 1437 1238 86 33 96.665649 with5 1 2 2 13 7 1543 1238 86 33 93.285812 such5 1 2 2 13 8 1648 1238 152 40 92.069817 require-4 1 2 2 14 0 509 1288 1292 44 -1 5 1 2 2 14 1 509 1297 111 30 96.460831 nents.5 1 2 2 14 2 646 1294 113 32 96.760345 There5 1 2 2 14 3 784 1294 30 32 96.372208 is5 1 2 2 14 4 838 1304 46 22 96.673271 no5 1 2 2 14 5 909 1293 107 32 96.266022 doubts 1 2 2 14 6 1040 1292 81 32 96.176559 that5 1 2 2 14 7 1146 1291 83 41 96.317085 they5 1 2 2 14 8 1254 1293 95 30 96.357407 must5 1 2 2 14 9 1374 1290 43 32 96.357407 do5 1 2 2 14 10 1442 1289 198 40 96.667091 something5 1 2 2 14 11 1665 1288 31 32 96.209648 if5 1 2 2 14 12 1717 1288 84 40 96.630760 they4 1 2 2 15 0 509 1338 1292 45 -1 5 1 2 2 15 1 509 1345 150 32 0.000000 ‘continues 1 2 2 15 2 671 1347 37 30 96.782021 to5 1 2 2 15 3 720 1344 103 32 96.701149 makes 1 2 2 15 4 834 1343 62 32 96.866653 thes 1 2 2 15 5 908 1342 296 41 96.355103 representations5 1 2 2 15 6 1215 1341 81 32 96.565971 that5 1 2 2 15 7 1306 1339 220 40 96.849091 engendered5 1 2 2 15 8 1537 1339 62 32 96.545593 thes 1 2 2 15 9 1610 1338 191 39 96.545593 complaint4 1 2 2 16 0 509 1395 640 36 -1 5 1 2 2 16 1 509 1406 25 21 92.827637 n5 1 2 2 16 2 544 1395 72 32 96.131882 this5 1 2 2 16 3 628 1397 138 30 96.967331 matter.3 1 2 3 0 0 506 1439 1300 644 -1 4 1 2 3 1 0 538 1439 1263 45 -1 5 1 2 3 1 1 538 1444 238 40 96.701576 Respondents5 1 2 3 1 2 804 1443 149 33 96.275780 contends 1 2 3 1 3 981 1443 80 32 96.275780 that5 1 2 3 1 4 1088 1442 94 32 96.776199 theirs 1 2 3 1 5 1210 1440 151 40 96.435356 practices 1 2 3 1 6 1390 1439 37 32 96.711327 of5 1 2 3 1 7 1450 1439 133 40 96.497238 having5 1 2 3 1 8 1609 1441 192 30 96.143127 customers4 1 2 3 2 0 508 1488 1292 45 -1 5 1 2 3 2 1 508 1495 174 32 83.057892 locument5 1 2 3 2 2 695 1494 93 32 96.288223 theirs 1 2 3 2 3 801 1493 171 40 96.553665 purchases 1 2 3 2 4 984 1492 119 32 96.553665 before5 1 2 3 2 5 1116 1491 227 39 96.371826 respondents5 1 2 3 2 6 1356 1489 71 32 96.710007 will5 1 2 3 2 7 1441 1499 137 30 96.604691 process5 1 2 3 2 8 1591 1488 94 33 96.782509 theirs 1 2 3 2 9 1697 1488 103 33 96.727890 claim4 1 2 3 3 0 508 1539 1293 43 -1 5 1 2 3 3 1 508 1545 42 32 94.647705 or5 1 2 3 3 2 571 1544 125 32 95.914688 refunds 1 2 3 3 3 717 1554 39 22 93.254539 or5 1 2 3 3 4 776 1543 217 39 92.229774 reshipment5 1 2 3 3 5 1013 1542 30 33 96.190582 is5 1 2 3 3 6 1064 1545 63 29 96.190582 not5 1 2 3 3 7 1147 1541 127 37 96.530785 unfair,5 1 2 3 3 8 1296 1541 37 31 96.329742 in5 1 2 3 3 9 1354 1539 80 33 96.686211 that5 1 2 3 3 10 1454 1541 92 30 96.144478 most5 1 2 3 3 11 1566 1539 104 32 95.943573 retails 1 2 3 3 12 1690 1540 111 30 96.779785 stores4 1 2 3 4 0 508 1588 1293 46 -1 5 1 2 3 4 1 508 1594 127 40 91.818100 ‘equire5 1 2 3 4 2 657 1593 239 41 96.322998 presentations 1 2 3 4 3 919 1593 39 32 96.355049 of5 1 2 3 4 4 976 1592 62 32 96.355049 thes 1 2 3 4 5 1061 1591 92 33 96.794167 sales5 1 2 3 4 6 1175 1591 84 39 96.834404 slips5 1 2 3 4 7 1281 1590 118 33 96.846504 before5 1 2 3 4 8 1422 1589 145 39 96.317642 making5 1 2 3 4 9 1589 1588 144 32 96.265388 refunds5 1 2 3 4 10 1756 1598 45 22 96.650818 on4 1 2 3 5 0 508 1638 1294 46 -1 5 1 2 3 5 1 508 1644 91 40 80.356239 roods5 1 2 3 5 2 616 1643 175 33 96.402649 returned.5 1 2 3 5 3 809 1643 69 32 95.987915 But5 1 2 3 5 4 894 1653 22 22 95.987915 a5 1 2 3 5 5 932 1642 104 32 96.524475 retails 1 2 3 5 6 1052 1644 93 30 96.839287 stores 1 2 3 5 7 1161 1641 113 32 96.837173 which5 1 2 3 5 8 1291 1639 158 41 96.787796 provides5 1 2 3 5 9 1466 1650 22 21 95.464127 a5 1 2 3 5 10 1504 1639 91 32 96.628716 sales5 1 2 3 5 11 1611 1638 68 40 96.786179 slips 1 2 3 5 12 1694 1638 70 32 96.112762 ands 1 2 3 5 13 1780 1648 22 22 96.840210 a4 1 2 3 6 0 508 1688 1293 39 -1 5 1 2 3 6 1 508 1694 203 33 59.651165 ‘ace-to-faces 1 2 3 6 2 725 1693 258 32 96.583611 confrontation5 1 2 3 6 3 996 1692 158 33 96.809547 between5 1 2 3 6 4 1168 1691 61 32 96.740982 thes 1 2 3 6 5 1243 1693 174 30 96.955345 customers 1 2 3 6 6 1431 1689 71 33 96.421028 ands 1 2 3 6 7 1515 1689 63 32 96.421028 thes 1 2 3 6 8 1591 1688 114 37 97.003700 seller,5 1 2 3 6 9 1720 1688 30 32 96.495491 is5 1 2 3 6 10 1764 1688 37 31 96.495491 in4 1 2 3 7 0 508 1738 1293 38 -1 5 1 2 3 7 1 508 1755 11 21 77.227493 i5 1 2 3 7 2 534 1743 165 33 96.366882 different5 1 2 3 7 3 714 1743 168 33 96.238342 situations 1 2 3 7 4 898 1743 88 32 96.731308 than5 1 2 3 7 5 1002 1752 22 22 96.813622 a5 1 2 3 7 6 1039 1741 201 32 96.759850 mail-orders 1 2 3 7 7 1253 1740 160 33 96.806229 business5 1 2 3 7 8 1429 1740 80 32 96.834015 that5 1 2 3 7 9 1523 1739 82 32 93.299973 sells5 1 2 3 7 10 1620 1738 181 32 93.158234 merchan-4 1 2 3 8 0 507 1788 1295 45 -1 5 1 2 3 8 1 507 1794 64 33 91.515755 lise5 1 2 3 8 2 584 1804 142 26 96.814774 unseen,5 1 2 3 8 3 742 1793 152 40 96.343155 prepaid,5 1 2 3 8 4 908 1793 47 40 96.476768 by5 1 2 3 8 5 967 1791 94 33 96.476768 mail.5 1 2 3 8 6 1077 1791 50 33 96.906555 As5 1 2 3 8 7 1140 1791 80 40 96.359886 long5 1 2 3 8 8 1233 1801 39 23 96.359886 as5 1 2 3 8 9 1286 1789 228 41 96.815628 respondents5 1 2 3 8 10 1528 1791 182 38 96.403885 represents 1 2 3 8 11 1723 1788 79 32 96.403885 that4 1 2 3 9 0 507 1838 1295 44 -1 5 1 2 3 9 1 507 1844 51 32 82.264008 she5 1 2 3 9 2 575 1846 174 30 96.321938 customers 1 2 3 9 3 764 1843 71 32 96.587227 will5 1 2 3 9 4 851 1845 59 37 96.763535 gets 1 2 3 9 5 926 1854 22 21 96.727081 a5 1 2 3 9 6 964 1842 127 33 96.650856 refunds 1 2 3 9 7 1108 1852 39 22 97.007011 or5 1 2 3 9 8 1162 1842 80 32 96.360954 that5 1 2 3 9 9 1258 1840 154 40 96.360954 delivery5 1 2 3 9 10 1429 1840 29 32 96.874718 is5 1 2 3 9 11 1474 1839 226 40 96.375557 guaranteed,5 1 2 3 9 12 1718 1838 84 40 96.862511 they4 1 2 3 10 0 507 1887 1299 46 -1 5 1 2 3 10 1 507 1896 119 30 53.606682 ‘cannot5 1 2 3 10 2 640 1894 138 39 96.364517 requires 1 2 3 10 3 792 1893 61 33 96.680893 thes 1 2 3 10 4 868 1896 124 30 96.901993 returns 1 2 3 10 5 1006 1893 39 32 97.005775 of5 1 2 3 10 6 1055 1891 176 33 96.143883 cancelled5 1 2 3 10 7 1245 1890 126 33 96.426674 checks5 1 2 3 10 8 1386 1900 39 22 96.655312 or5 1 2 3 10 9 1438 1890 103 32 96.615997 others 1 2 3 10 10 1555 1889 85 32 96.846878 such5 1 2 3 10 11 1655 1888 102 40 96.747940 proofs 1 2 3 10 12 1768 1887 38 33 96.836052 of4 1 2 3 11 0 506 1938 1296 46 -1 5 1 2 3 11 1 506 1946 166 38 51.054386 yayment,5 1 2 3 11 2 688 1953 40 23 96.648102 as5 1 2 3 11 3 742 1953 22 22 96.648102 a5 1 2 3 11 4 778 1943 175 32 96.684189 conditions 1 2 3 11 5 968 1943 54 31 96.679779 for5 1 2 3 11 6 1036 1942 94 32 96.939804 theirs 1 2 3 11 7 1144 1942 117 38 96.477036 acting5 1 2 3 11 8 1274 1951 45 22 95.336670 on5 1 2 3 11 9 1334 1951 22 22 95.336670 a5 1 2 3 11 10 1370 1940 200 39 96.330368 complaint,5 1 2 3 11 11 1585 1938 120 33 96.610397 unless5 1 2 3 11 12 1719 1938 83 39 96.610397 they4 1 2 3 12 0 506 1988 1295 44 -1 5 1 2 3 12 1 506 1994 135 32 91.921150 lisclose5 1 2 3 12 2 656 1996 37 30 96.972656 to5 1 2 3 12 3 708 1993 62 33 96.639877 thes 1 2 3 12 4 785 1995 174 31 96.653107 customers 1 2 3 12 5 974 1992 38 33 96.712906 in5 1 2 3 12 6 1027 1992 63 33 96.732666 thes 1 2 3 12 7 1105 1991 148 41 96.523582 originals 1 2 3 12 8 1268 1992 139 31 96.655533 contacts 1 2 3 12 9 1422 1989 80 33 96.568321 that5 1 2 3 12 10 1516 1989 86 33 96.565796 such5 1 2 3 12 11 1618 1989 103 40 96.565796 proofs 1 2 3 12 12 1731 1988 70 32 96.707893 will4 1 2 3 13 0 506 2040 912 43 -1 5 1 2 3 13 1 506 2055 33 22 44.222874 ye5 1 2 3 13 2 550 2043 161 40 96.199791 required5 1 2 3 13 3 721 2043 118 33 93.295242 before5 1 2 3 13 4 850 2043 218 40 91.117966 reshipment5 1 2 3 13 5 1079 2052 40 22 96.495735 or5 1 2 3 13 6 1129 2041 126 33 96.495735 refunds 1 2 3 13 7 1267 2041 29 32 96.927933 is5 1 2 3 13 8 1308 2040 110 33 96.768311 made.3 1 2 4 0 0 505 2088 1297 196 -1 4 1 2 4 1 0 538 2088 1264 45 -1 5 1 2 4 1 1 538 2094 103 37 96.869682 Thus,5 1 2 4 1 2 658 2094 127 32 95.603218 failures 1 2 4 1 3 799 2096 37 29 96.402817 to5 1 2 4 1 4 851 2093 88 40 96.778915 keeps 1 2 4 1 5 954 2093 173 39 96.235947 adequate5 1 2 4 1 6 1141 2091 138 33 96.652710 records5 1 2 4 1 7 1293 2091 39 32 96.464851 of5 1 2 4 1 8 1343 2090 85 32 96.291634 mails 1 2 4 1 9 1443 2090 119 32 96.618896 orders5 1 2 4 1 10 1578 2090 29 32 96.793625 is5 1 2 4 1 11 1621 2100 49 22 96.338272 an5 1 2 4 1 12 1684 2088 118 33 96.338272 unfair4 1 2 4 2 0 505 2137 1296 47 -1 5 1 2 4 2 1 505 2144 91 32 64.872795 crade5 1 2 4 2 2 610 2144 151 40 96.189453 practices 1 2 4 2 3 772 2143 71 33 96.913300 ands 1 2 4 2 4 855 2154 23 22 96.095810 a5 1 2 4 2 5 889 2142 203 34 96.095810 mail-orders 1 2 4 2 6 1102 2142 160 32 96.722404 business5 1 2 4 2 7 1273 2151 67 22 96.292198 cans 1 2 4 2 8 1351 2140 43 33 96.292198 be5 1 2 4 2 9 1406 2139 162 40 96.767448 required5 1 2 4 2 10 1579 2142 37 30 96.957458 to5 1 2 4 2 11 1627 2137 174 34 96.334557 maintain4 1 2 4 3 0 505 2189 1297 41 -1 5 1 2 4 3 1 505 2193 78 34 84.316734 such5 1 2 4 3 2 596 2194 147 33 95.885025 records.5 1 2 4 3 3 758 2193 40 32 96.285538 In5 1 2 4 3 4 811 2193 61 32 96.285538 thes 1 2 4 3 5 886 2193 270 33 96.511841 circumstances5 1 2 4 3 6 1169 2192 39 32 96.979980 of5 1 2 4 3 7 1216 2191 73 33 96.829849 this5 1 2 4 3 8 1301 2200 89 28 96.835777 case,5 1 2 4 3 9 1404 2190 128 32 96.559166 failures 1 2 4 3 10 1544 2192 37 30 96.974152 to5 1 2 4 3 11 1594 2189 174 41 95.084679 maintains 1 2 4 3 12 1780 2199 22 22 95.084679 a4 1 2 4 4 0 505 2239 1030 45 -1 5 1 2 4 4 1 505 2244 177 40 0.000000 selephone5 1 2 4 4 2 694 2244 120 40 96.922867 listings 1 2 4 4 3 824 2244 30 32 96.831589 is5 1 2 4 4 4 865 2245 63 30 97.006638 not5 1 2 4 4 5 937 2243 46 41 96.265732 by5 1 2 4 4 6 994 2242 99 33 96.265732 itself5 1 2 4 4 7 1100 2253 47 22 96.758041 an5 1 2 4 4 8 1158 2241 119 33 96.550270 unfair5 1 2 4 4 9 1288 2241 160 40 96.440269 practice.5 1 2 4 4 10 1462 2239 73 40 96.144600 [65]3 1 2 5 0 0 503 2290 1300 295 -1 4 1 2 5 1 0 537 2290 1265 44 -1 5 1 2 5 1 1 537 2294 73 33 96.829758 Thes 1 2 5 1 2 628 2294 226 40 95.208328 “telephone”5 1 2 5 1 3 871 2294 94 32 96.359344 issues 1 2 5 1 4 981 2293 65 33 96.617691 has5 1 2 5 1 5 1063 2302 66 23 96.731819 ones 1 2 5 1 6 1145 2302 96 22 96.565659 more5 1 2 5 1 7 1257 2291 204 33 96.696541 dimension.5 1 2 5 1 8 1479 2290 96 33 96.818954 Once5 1 2 5 1 9 1591 2301 21 21 95.707077 a5 1 2 5 1 10 1628 2292 174 30 96.364944 customer4 1 2 5 2 0 505 2339 1297 45 -1 5 1 2 5 2 1 505 2345 73 32 84.496468 joes5 1 2 5 2 2 592 2344 174 40 96.449280 complains 1 2 5 2 3 781 2344 106 32 91.728729 about5 1 2 5 2 4 902 2343 227 40 91.728729 nondelivery5 1 2 5 2 5 1143 2352 38 22 96.686508 or5 1 2 5 2 6 1195 2341 128 33 96.648170 failures 1 2 5 2 7 1337 2340 39 33 97.005417 of5 1 2 5 2 8 1386 2340 135 37 96.853333 refund,5 1 2 5 2 9 1537 2340 29 32 96.853333 it5 1 2 5 2 10 1579 2340 30 32 95.272972 is5 1 2 5 2 11 1622 2350 48 22 95.272972 an5 1 2 5 2 12 1685 2339 117 32 96.095749 unfair4 1 2 5 3 0 504 2389 1298 46 -1 5 1 2 5 3 1 504 2395 144 40 96.187988 practices 1 2 5 3 2 669 2397 62 29 96.601738 not5 1 2 5 3 3 751 2396 36 30 96.601738 to5 1 2 5 3 4 808 2394 142 40 96.434052 provides 1 2 5 3 5 969 2393 99 32 96.334671 them5 1 2 5 3 6 1088 2392 86 33 96.117188 with5 1 2 5 3 7 1193 2403 23 22 96.117188 a5 1 2 5 3 8 1235 2391 186 40 96.292702 telephones 1 2 5 3 9 1441 2390 149 32 96.517212 numbers 1 2 5 3 10 1610 2390 54 32 96.639122 for5 1 2 5 3 11 1685 2389 117 32 96.864761 future4 1 2 5 4 0 504 2439 1298 44 -1 5 1 2 5 4 1 504 2447 157 31 41.776093 2ontacts.5 1 2 5 4 2 674 2444 15 32 96.451965 I5 1 2 5 4 3 701 2444 105 32 96.657745 thinks 1 2 5 4 4 817 2444 80 32 96.833664 that5 1 2 5 4 5 908 2446 39 30 96.446899 at5 1 2 5 4 6 957 2453 96 23 96.802780 some5 1 2 5 4 7 1065 2446 141 37 96.162193 posture5 1 2 5 4 8 1217 2442 39 32 96.979683 of5 1 2 5 4 9 1263 2441 62 32 96.991791 thes 1 2 5 4 10 1336 2441 226 37 96.464569 transaction,5 1 2 5 4 11 1574 2439 228 40 96.588409 respondents4 1 2 5 5 0 503 2489 1300 44 -1 5 1 2 5 5 1 503 2495 118 33 96.648468 should5 1 2 5 5 2 644 2494 145 33 96.320076 discloses 1 2 5 5 3 812 2494 94 33 96.730843 theirs 1 2 5 5 4 929 2494 187 39 96.685822 telephones 1 2 5 5 5 1138 2492 158 32 95.346336 number.5 1 2 5 5 6 1321 2491 83 33 96.504692 This5 1 2 5 5 7 1426 2491 30 32 96.876724 is5 1 2 5 5 8 1479 2491 109 32 96.008484 taken5 1 2 5 5 9 1611 2500 48 30 96.008484 up5 1 2 5 5 10 1683 2491 37 31 95.701462 in5 1 2 5 5 11 1742 2489 61 32 95.701462 thea 1 2 5 6 0 503 2542 750 43 -1 5 1 2 5 6 1 503 2545 136 40 96.307358 remedy5 1 2 5 6 2 649 2545 133 33 96.850471 sections 1 2 5 6 3 792 2544 115 33 96.465462 which5 1 2 5 6 4 918 2544 132 32 96.476334 follows5 1 2 5 6 5 1062 2545 72 38 91.832520 (sees 1 2 5 6 6 1145 2553 30 30 91.832520 p.5 1 2 5 6 7 1189 2542 64 40 95.996185 73). Initial Decision 91 F.T CONCLUSIONS 1. The Federal Trade Commission has jurisdiction of the subje matter of this proceeding and of respondents Norris, Pan-A1 Jacobs, Williams and Mann.

2. This proceeding is in the public interest. The Commission : determined upon the assumption of jurisdiction through the issuan:’ of the complaint. American Airlines, Inc. v. North American Airline Inc., 351 U.S. 79, 83 (1956). Nothing in the record or findings requir: a different determination. See Federal Trade Commission v. Klesne 280 U.S. 19 (1929).

3. The individual respondents formulated, directed and co trolled the acts and practices of the corporate respondents of which they were officers, including the acts and practices found herei 4. Respondents Norris, Jacobs and Williams engaged in tk following acts and practices as alleged in the complaint. The misrepresented that — a. merchandise paid for by a certified check is always shipped { purchasers immediately;

b. merchandise paid for by a non-certified check is always shipped to purchasers about two weeks after said check has bee approved for payment at the purchaser’s bank; c. the full purchase price of the product plus all addition: charges paid by the purchaser in connection with said purchase ar refunded by respondents if the purchaser is dissatisfied for an reason;

d. a sum of money in the form of cash, check, money order o other negotiable currency is always refunded to purchasers if the are dissatisfied for any reason; [66] e. pursuant to respondents’ 30-day money back guarantee purchasers will always receive a full refund if the merchandise i returned to respondents within 30 days from the date of th purchaser’s receipt of said merchandise;

f. in a substantial number of cases, the non-delivery of th purchaser’s order, is caused by the United States Postal Service; g. exchanges or refunds are always expeditiously processed b: respondents;

h. all parcels shipped to purchasers, except those items marke: express collect, are insured against loss, damage or other casualty b: respondents.

In addition, these three respondents misrepresented that— a. the “JN INSTA-JET PROPANE FLAME GUN” is able to whip throusgt JAY NORRIS CORP., ET AL. 819 751 Initial Decision effective and efficient in clearing walks and driveways of ice and snow;

b. respondents’ roach powder is safe to use; c. respondents’ roach powder gets rid of roaches once and for all; d. respondents’ roach powder creates a deadly chain reaction which eliminates and kills roaches and eggs; e. the manufacturer has unconditionally guaranteed that respondents’ roach powder prevents reinfestation when used as directed and left in place or it will refund money; f. respondents’ roach powder does not lose its capacity to kill under any conditions of use;

g. respondents’ TV antenna will bring sharp and clear reception even in difficult areas;

h. the performance of respondents’ TV antenna is superior to any rabbit ear antenna or outdoor antenna; [67] i. respondents’ TV antenna is an electronic miracle; j. respondents’ “FIVE YEAR FLASHLIGHT” carries an absolute 5year guarantee;

k. respondents’ Lincoln-Kennedy penny was minted by the United States Treasury Department;

l. respondents’ Lincoln-Kennedy penny is a coin of historical and numismatic significance which is certain to grow in value; m. the issuance of respondents’ Lincoln-Kennedy penny was sanctioned by Section 331, Title 18, U.S. Code; n. a free plaque containing historical coincidence between the lives of President Lincoln and President Kennedy is provided to purchasers with each coin order.

In addition, these three respondents have failed to disclose the following material facts in their advertising that — a. initial purchase of respondents’ flame gun does not include the propane cylinder mentioned in respondents’ advertisements of its flame gun. The propane cylinder, which is an essential component of the flame gun, must be purchased at an additional cost; b. respondents’ roach powder is 50% boric acid and 50% inert ingredients; .

c. respondents’ roach powder is hazardous. The product may be harmful to human beings and pets. Special precautions should be taken in the use of this product;

d. respondents’ flashlight has an on life of 10 to 20 hours; e. the manufacturer’s guarantee of respondents’ flashlight is not absolute. The manufacturer guarantees that the light can be stored and remain usable for 5 years or operate for a total of ten hours whichever comes first. [68] 820 FEDERAL TRADE‘ COMMISSION DECISIONS M Initial Decision 91 F.T.C.

In addition, these three respondents engaged in the following acts and practices — a. deposited purchasers’ checks and money orders into their bank accounts within three days to one week from receipt of such checks and money orders and have failed to either ship the merchandise ordered or to refund money for one month to one year; b. failed to answer letters of inquiry from consumers or have made inadequate responses which have thereby delayed or prevented purchasers, seeking deliveries of merchandise or refunds of their money, from obtaining same;

c. placing the burden of record keeping upon the purchasers who, upon seeking a refund, exchange, or delivery of the advertised merchandise ordered and paid for by them, have been required by respondents to provide copies of their cancelled checks, original order blanks or various correspondence received from respondents as well as the full details pertaining to the merchandise ordered such as the size, color, price, style number and the date the order was placed. 5. Respondents Norris, Jacobs, Williams, Pan-Am and Mann engaged in the following acts and practices as alleged in the complaint. They misrepresented that — a. cars delivered to purchasers are in good mechanical and physical condition;

b. cars delivered to purchasers are in safe operating condition; c. cars are checked by expert mechanics and necessary repairs are made prior to release for delivery;

d. cars delivered to purchasers are in sound condition and repair and render normal, adequate and satisfactory service; [69] e. respondents’ cars may be readily resold by the purchasers at a profit;

f. cars are regularly ordered and received in advance of their being offered for sale and are held in stock until purchaser orders are received;

g. respondents’ cars have undergone thorough and complete servicing and inspection before being released and approved for delivery. , In addition, these five respondents have failed to disclose that — a. respondents’ cars are ex-New York City taxicabs; b. interiors of motor vehicles have not been cleaned or reconditioned by respondents prior to their being offered for sale. 6. The aforesaid acts and practices of respondents have the tendency and capacity to mislead and deceive the public and JAY NORRIS CORP., ET AL. 821 151 Initial Decision acts and practices in commerce or affecting commerce in violation of the Federal Trade Commission Act.

7. In all other respects the allegation of the complaint as ‘to violation of the Federal Trade Commission Act have not been sustained by the evidence or as a matter of law. REMEDY The Commission is vested with broad discretion in determining the type of order necessary to insure discontinuance of the unlawful practices found. Federal Trade Commission v. Colgate-Palmolive Co., 380 U.S. 374, 392 (1965). The Commission’s discretion is limited only by the requirement that the remedy be reasonably related to the unlawful practices found. Jacob Siegel Co. v. Federal Trade Commission, 327 U.S. 608, 613 (1946); Warner Lambert Co. v. Federal Trade Commission, D.C. Cir. No. 76-1138 (decided August 2, 1977) (slip opinion at page 24); Niresk Industries Inc. v. Federal Trade Commission, 278 F.2d 387, 348 (7th Cir. 1960), cert. denied, 364 U.S. 883. [70] The Commission is not limited to prohibiting the illegal practices in the exact form in which they were found to have been employed in the past and may close all roads to the prohibited goal. Federal Trade Commission v. Ruberoid Co., 343 U.S. 470, 473 (1952); Federal Trade Commission v. National Lead Co., 352 U.S. 419 (1957). Counsel supporting the complaint have proposed an order to cease and desist that is somewhat narrower than the proposed order that accompanied the complaint (CSC PF pp. 81-96). Respondents in their proposed findings, although objecting to any order on the grounds of failure of proof, have specifically challenged certain features of the originally proposed order (Resp. PF pp. 101-117; see Resp. Ans. Par. 16, items a-r).

In the following discussion the new order proposed by complaint counsel will be used as a frame of reference. However, because many changes are required to conform the order to the findings in this decision as well as the requirements of law, the proposed order that follows is substantially different in format and content. Pan-Am and Mann were not found to have been engaged in the general business practices attributable to Norris, Jacobs and Williams and which were found to be in violation of the Federal Trade Commission Act. Accordingly, the preamble to the principal portion of the order to cease and desist (Part I) relating to such practices will not include Pan-Am and Mann. On the other hand, those paragraphs of the order relating to practices in the sale of used cars by mail order (Part IJ) will run to Norris, Jacobs, Williams, Pan- Initial Decision 91 F.T.( Am and Mann. All the above respondents will be subject to th ‘general requirements of Part III of this order. Respondent Mann contends that nothing in any order issue should relate to his business as an officer of Future Motors. It doe not appear that Future Motors is engaged in a mail-order business With the order limited to “mail-order sales” Mr. Mann’s complianc should not involve him in his other capacity, unless Future Motor enters the mail-order business. Of course, Mr. Mann’s futur involvement in any mail-order business must be subject to th limited requirements of the order as it relates to him. [71] Some of the prohibitions of complaint counsel’s proposed orde create absolute requirements on respondents irrespective of an: representation they might make in their advertisements in thi future. Such subjects as refunds and affirmative disclosures o1 respondents’ flashlights and roach powder fall into this category The requirements as to what makes up the refund total, ie everything tendered at the time of the order, is proper only wher: respondents make a general money back guarantee. If they stat exactly what will be refunded, they should not be required to refunc more. Requirements as to disclosure of the “on time” life of the flashlight should be required only if respondents represent in an} way the life expectancy of a battery or power source. Requirement: in advertising as to the hazards of roach powder should be requirec only if respondents represent in any way that the product is safe (Compare CXSC Proposed Order Pars. 1, 3, 11, 12, 18; I.D. Order Par 1, 3, 12, 18, 15).

Respondents object to paragraphs 4, 5 and 6 of counsel’s proposec order on the grounds that those paragraphs are almost exactly the requirements of the Commission’s Trade Regulation Rule for Mail. Order Merchandising, and that they are already required to comply _with those requirements. They contend that they should not be subjected also to possible enforcement sanctions of a cease and desist order.

The illegal practices in which respondents were found to have engaged support these order provisions. It is proper for the Commission to include them in an order. They are reasonably related to the practices and close all roads to the prohibited goal. In effect, using the exact language insures that, except for a different enforcement posture, all members of the industry are subject to the same requirements.

In my opinion the “reasonable basis” reauirement of Par. 4 JAY NORRIS CORP., ET AL. 823 I Initial Decision wroper, and the requirement that respondent document this “reasonible basis” is not onerous.

Complaint counsel propose a paragraph that requires respondents o have a “reasonable basis” to support any advertising claim they nay make for the safety, efficacy, performance, content or any characteristic of any product. Respondents claim that the Commistion does not have the power to issue such a prohibition in that it vould penalize them for statements which were in fact true, and that n any event such a requirement is so vague and burdensome that it ‘cannot be justified in this case. [72] There is no doubt that the Commission has the power to require an advertiser to have a reasonable basis at the time claims are made ‘oncerning the technical attributes of any product. See Firestone Tire & Rubber Co. v. Federal Trade Commission, 481 F.2d 246 (6th Yir. 1973); Fedders Corp. v. Federal Trade Commission, 529 F.2d 1398, [400-1 (2d Cir. 1976). However, as a practical matter, those cases ‘where the Commission has applied the so-called “reasonable basis” substantiation involved complicated scientific data. The proposed yaragraph requires a mail-order business to have “competent icientific tests” or “competent objective material” as a reasonable yasis for all advertising claims for all products that it offers for sale. While it is true that respondents were found to have made claims for some of their products which were found to be false and misleading, she “reasonable basis” requirement of the order is too broad. In my »ypinion that paragraph should be modified to limit “reasonable yasis” documentation to possession of and reliance on “competent »bjective material”. In other words, respondents must rely upon something objective before making any product claims. See Fedders, supra, 529 F.2d at 1403-4.

Complaint counsel also include a paragraph that would require respondents to disclose the actual shipper of the merchandise, when they are not the shipper. The record in this case does not establish that failure to make this disclosure is “unfair.” Clearly the other paragraphs of the order should eliminate any problem purchasers might encounter where goods are not shipped by respondents. Respondents deal with customers, will be the subject of the sustomer’s complaint, and will be responsible for delivery or refund. Paragraph 8 of the proposed order will be deleted. Respondents point out that the Commission’s challenge to their Lincoln-Kennedy penny advertising duplicates, in all major respects, the issues raised in the proceeding brought by the United States Postal Service against them before the issuance of the complaint in this matter. (Resp. PF at pp. 61-63; see Finding 47, supra). They Initial Decision 91 F.T.C.

argue that the Commission’s entry of an order to cease and desist as to their Lincoln-Kennedy penny advertisements is improper and unnecessary.

There is nothing improper in the Commission’s proceeding under Section 5 of the Federal Trade Commission Act in areas already covered by Postal Service orders. There are many basic and material differences in the laws administered by the two public agencies. See Reilly v. Pinkus, 338 U.S. 269, 277 (1949); Damar Products, Inc., 59 F.T.C. 1263 (1961), affd, Damar Products, Inc. v. Federal Trade Commission, 309 F.2d.323 (8d Cir. 1962). [73] Respondents also argue that certain challenged practices should not be the subject of adjudication because they will be the only mailorder company subject to specific regulation. These areas, argue respondents, must be the subject of Rule Making Procedures (Resp. PF pp. 12, 82, 106-7, 115). The Commission is not estopped from proceeding by way of adjudication because a matter may also be the proper subject of Rule Making. Such a decision is for the Commission as a matter of policy. Insofar as respondents may be disadvantaged competitively from the strictures of an order to cease and desist, those caught violating the Federal Trade Commission Act must expect some fencing in. It should be pointed out, however, that the Commission, under the amendments contained in the Federal Trade Commission Improvement Act, may extend some proscriptions of the order issued against respondents to other mail-order businesses. See 15 U.S.C. 45¢m)(1)B).

In my opinion, complaint counsel’s proposed order does not adequately cover the substantive unfair and deceptive advertising practices in which respondents were found to be engaged in connection with the offering for sale, sale and distribution of their FLAME GUN, LINCOLN-KENNEDY PENNY, TV ANTENNA, ROACH POWDER, and used automobiles. Paragraphs have been added which prohibit these specific practices.

Complaint counsel’s proposed order does not prohibit misrepresentations that the consumer will receive something “free” in connection with the purchase of a product. A paragraph will be added covering this practice.

Respondents have been found to have misrepresented that they insure the shipments to customers. Complaint counsel recommend dropping the paragraph in the notice order (Par. 8) which relates to this practice. It will be retained in part. The record-keeping requirements of the order are proper and the record in this case clearly demonstrates the need for such reauire- JAY NORRIS CORP., ET AL. 825 151 Initial Decision As found above, respondents did not violate the Federal Trade Commission Act by using different corporate names, and in my opinion they are not required to “list” their telephone number in a local telephone directory. However in all correspondence relating to complaints they should disclose their telephone number, if, in fact, they do have a telephone. The order will be modified accordingly. Finally, there is nothing improper or burdensome about the 30-day prior notice requirement as to any proposed change in the status of any respondent. [74] ORDER I It is ordered, That Jay Norris Corp., a corporation, its successors and assigns, and Joel Jacobs and Mortimer Williams individually and as officers of said corporation, and respondents’ officers, agents, representatives and employees directly or through any corporation, subsidiary, division, trade style, or other device, in connection with the advertising, offering for sale, sale and distribution of general mail-order merchandise in or affecting commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Failing to refund the amount required by paragraph 3, infra, in connection with the purchase of respondents’ merchandise within the time specified in respondents’ advertisements. If no time is specified, such refund must be made promptly. 2. Failing to disclose clearly and conspicuously in all advertisements or other promotional material, any charges to be paid by the purchaser for postage, insurance or for any other purpose in connection with the shipment or the return of merchandise. [75] 3. Failing to refund the full purchase price, of merchandise including postage, insurance, handling, shipping, or any other fee or charge paid by the purchaser any time refund is made to purchaser, unless respondents clearly state in their advertisement the exact nature of the refund including any items of the purchaser’s expense that will not be refunded.

4. (A) Soliciting any order for the sale of merchandise to be ordered by the buyer through the mail unless, at the time of the solicitation, respondents have a reasonable basis to expect that they will be able to ship any ordered merchandise to the buyer: (1) within the time clearly and conspicuously stated in any such solicitation, or (2) if no time is clearly and conspicuously stated, within thirty (30) days after receipt of a properly completed order from the buyer; and Initial Decision 91 F.T.C.

(B) Providing any buyer with any revised shipping date, as provided in paragraph 5 of this order unless, at the time any such revised shipping date is provided, respondents have a reasonable basis for making such representation regarding a definite revised shipping date; or [76] (C) Informing any buyer that they are unable to make any representation regarding the length of any delay unless (1) respondents have a reasonable basis for so informing the buyer and (2) respondents inform the buyer of the reason or reasons for the delay. A reasonable basis, for the purpose of this section, shall consist of records or other documentary proof establishing the use of systems and procedures which assure the shipment of merchandise in the ordinary course of business within any applicable time set forth in this order.

5.- (A) Where respondents are unable to ship merchandise within the applicable time set forth in paragraph 4(A) above, failing to offer to the buyer, clearly and conspicuously and without prior demand, an option either to consent to a delay in shipping or to cancel his order and receive a prompt refund. Said offer shall be made within a reasonable time after respondents first become aware of their inability to ship within the applicable time set forth in paragraph 4(A), but in no event later than said applicable time. - (1) Any offer to the buyer of such an option shall fully inform the buyer regarding his right to cancel the order and to obtain [77] a prompt refund and shall provide a definite revised shipping date, but where respondents lack a reasonable basis for providing a definite revised shipping date the notice shall inform the buyer that respondents are unable to make any representation regarding the length of the delay.

(2) Where respondents have provided a definite revised shipping date which is thirty (30) days or less later than the applicable time set forth in paragraph 4(A), the offer of said option shall expressly inform the buyer that, unless respondents receive, prior to shipment and prior to expiration of the definite revised shipping date, a response from the buyer rejecting the delay and cancelling the order, the buyer will be deemed to have consented to a delayed shipment on or before the definite revised shipping date. (3) Where the respondents have provided a definite revised shipping date which is more than thirty (80) days later than the applicable time set forth in paragraph 4(A), or where the respondents are unable to provide [78] a definite revised shipping date and therefore inform the buyer that they are unable to make any representation regarding the length of the delay, the offer of said JAY NORRIS CORP., ET AL. 827 i1 Initial Decision ption shall also expressly inform the buyer that his order will utomatically be deemed to have been cancelled unless (a) responents have shipped the merchandise within thirty (30) days of the applicable time set forth in paragraph 4(A) above, and have received. o cancellation prior to such shipment, or (b) respondents have eceived from the buyer within thirty (30) days of said applicable ime, a response specifically consenting to said shipping delay. Vhere the respondents inform the buyer that they are unable to iake any representation regarding the length of the.delay, the uyer shall be expressly informed that, should he consent to an adefinite delay, he will have a continuing right to cancel his order t any time after the applicable time set forth in paragraph 4(A) by o notifying respondents prior to actual shipment. (4) Nothing in this paragraph shall prohibit respondents when hey furnish a definite revised shipping date to paragraph 5(A)(1) bove, [79] from requesting, simultaneously with or at any time ubsequent to the offer of an option pursuant to paragraph 5(A), the uyer’s express consent to a further unanticipated delay beyond the efinite revised shipping date. Provided, however, that where respondents solicit consent to an unanticipated indefinite delay the olicitation shall expressly inform the buyer that, should he so onsent to an indefinite delay, he shall have a continuing right to ancel his order at any time after the definite revised shipping date 'y so notifying respondents prior to actual shipment. (B) Where respondents are unable to ship merchandise on or refore the definite revised shipping date provided under paragraph (A)(1), and consented to by the buyer pursuant to paragraphs (A)(2) and 5(A)(8), failing to offer to the buyer, clearly and onspicuously and without prior demand, a renewed option either to consent to a further delay or to cancel the order and to receive a wrompt refund. Said offer shall be made within a reasonable time ifter respondents first become aware of their inability to ship before he said definite revised date, but in no event later than the xpiration of the definite revised shipping date. Provided, however, 80] that where respondents previously have obtained the buyer’s ‘xpress consent to an unanticipated delay until a specific date veyond the definite shipping date, pursuant to paragraph 5(A)(4) or o a further delay until a specific date beyond the definite revised ihipping date pursuant to paragraph 5(B), that date to which the yuyer has expressly consented shall supersede the definite revised thipping date for purposes of paragraph 5(B). (1) Any offer to the buyer of said renewed option shall provide the yuyer with a new definite revised shipping date, but where Initial Decision 91 F.T.

respondents lack a reasonable basis for providing a new definite revised shipping date, the notice shall inform the buyer tha respondents are unable to make any representation regarding th length of the further delay.

(2) The offer of a renewed option shall expressly inform the buyer that, unless respondents receive, prior to the expiration of the ol: definite revised shipping date or any date superseding the ol: definite revised shipping date, notification from the buyer [81 specifically consenting to the further delay, the buyer will be deeme to have rejected any further delay, and to have cancelled the order i - respondents are in fact unable to ship prior to the expiration of th old definite revised shipping date or any date superseding the ol definite revised shipping date. Provided, however, that wher respondents offer the buyer the option to consent to an indefinit delay the offer shall expressly inform the buyer that, should he s consent to an indefinite delay, he shall have a continuing right t cancel his order at any time after the old definite revised shipping; date or any date superseding the old definite revised shipping date (3) Paragraph 5(B) shall not apply to any situation wher respondents, pursuant to the provisions of paragraph 5(A)(4), hav previously obtained consent from the buyer to an _ indefinit extension beyond the first revised shipping date. [82] (C) Whenever a buyer has the right to exercise any option under this order or to cancel an order by so notifying respondents prior t shipment, failing to furnish the buyer with adequate means, a respondents’ expense, to exercise such option or to notify respon dents regarding cancellation. For the purpose of this order “adequate means” requires respondents to: (1) Provide any offer, notice or action required by this order ii writing and by first class mail;

(2) Provide the buyer with the means in writing (by business rep]: mail or with postage prepaid by respondent) to exercise any option o: to notify respondents regarding a decision to cancel. Nothing in paragraph 5 of this order shall prevent respondent: where they are unable to make shipment within the time set forth in paragraph 4(A) or within a delay period consented to by the buyer from deciding to consider the order cancelled and providing thi buyer with notice of said decision within a reasonable time after the: become aware of said inability to ship, together with a promp refund. [83] 6. Failing to deem an order cancelled and to make a promp refund to the buyer whenever:

- JAY NORRIS CORP. ET AL. 829 51 Initial Decision ‘rom the buyer cancelling the order pursuant to any option, renewed yption or continuing option under this order; (B) Respondents have pursuant to paragraph 5(A)(3), provided the guyer with a definite revised shipping date which is more than thirty (30) days later than the applicable time set forth in paragraph 4 (A) or have notified the buyer that respondents are unable to make any representation regarding the length of the delay and respondents (1) have not shipped the merchandise within thirty (30) days of the applicable time set forth in paragraph 4(A), and (2) have not received the buyer’s express consent to said shipping delay within said thirty (30) days.

(C) Respondents are unable to ship within the applicable time set forth in paragraph 5(B) and have not received, within the said applicable time, the buyer’s consent to any further delay; (D) Respondents have notified the buyer of their inability to make shipment and have indicated their decision not to ship the merchandise; or [84] (E) Respondents fail to offer the option prescribed in paragraph _ (A) and have not shipped the merchandise within the applicable time set forth in paragraph 4(A).

For purposes of this order:

(1) “Shipment” shall mean the act by which the merchandise is physically placed in the possession of the carrier. (2) “Receipt of a properly completed order” shall mean the time at which respondents receive an order from the buyer containing all the information requested by respondents and accompanied, where required, by the proper amount of money in the form of cash, check or money order. Provided, however, that where respondents receive notice that the check or money order tendered by the buyer has been dishonored or that the buyer does not qualify for a credit sale, “receipt of a properly completed order” shall mean the time at which (a) respondents receive notice that a check or money order for the proper amount tendered by the buyer has been honored, (b) the buyer tenders cash in the proper amount or (c) the seller receives notice that the buyer qualifies for a credit sale. (8) “Refund” shall mean:

(a) Where the buyer tendered full payment for the unshipped merchandise in the form of cash, check or money order, a return of the full amount tendered in the form of cash, check, or money order; (b) Where there is a credit sale:

(i) and the seller is a creditor, a copy of a credit memorandum of the like or an account statement reflecting the removal or absence of 830 FEDERAL TRADE: COMMISSION DECISIONS Initial Decision 91 F.T.C.

any remaining charge incurred as a result of the sale from the buyer’s account;

' (ii) and a third party is the creditor, a copy of an appropriate credit memorandum or the like to the third party creditor which will remove the charge from the buyer’s account or a statement from the seller acknowledging the cancellation of the order and representing that he has not taken any action regarding the order which will result in a charge to the buyer’s account with the third party; (iii) and the buyer tendered partial payment for the unshipped merchandise in the form of cash, check or money order, a return [86] of the amount tendered in the form of cash, check or money order. (4) “Prompt refund” shall mean:

(a) Where a refund is made pursuant to definition (3)(a) or (8)(b)(iii) a refund sent to the buyer by first class mail within seven (1 working days of the date on which the buyer’s right to a refund vests under the provisions of this order. (5) The “time of solicitation” of an order shall mean that time when respondents have:

(a) Mailed or otherwise disseminated solicitation to a prospective purchaser;

(b) Made arrangements for an advertisement containing the solicitation to appear in a newspaper, magazine or the like or on radio or television which cainot be changed or cancelled without incurring substantial expense, or (c) Made arrangements for the printing of a catalog, brochure or the like which cannot be changed without incurring substantial expense, in which the solicitation in question forms an insubstantial part.

7. Representing the safety, efficacy, performance, content or any other characteristic of any product unless [87] such claims are fully and completely substantiated by a reasonable basis which shall consist of competent objective material and such substantiative material is available to the public.

8. Misrepresenting that the nondelivery of merchandise ordered and paid for by a customer is caused by loss of the merchandise by the United States Postal Service.

9. Misrepresenting, directly or indirectly, the time or manner in which respondents’ flame gun, or any other product used for the removal of snow or ice, will perform in the removal of snow or ice. 10. Failing to disclose, clearly and conspicuously, in all advertisements or other promotional material that the purchase price of respondents’ flame gun or any other product does not include all JAY NORRIS CORP., ET AL. 831 751 Initial Decision component(s) which are not included in the purchase price, if such is the fact.

11. Misrepresenting, directly or indirectly, the time in which or the manner by which respondents’ roach powder, or any other pesticide product, will kill or eliminate roaches. 12. Making any representation as to the safety of respondent’s roach powder or any other pesticide [88] product without failing to disclose, clearly and conspicuously, in all advertisements or other promotional material for said products, the exact ingredients and percentage(s) of such ingredients contained therein. 18. Making any representation as to the safety of respondents’ roach powder or other pesticide product without failing to clearly and conspicuously include the following statement in all advertisements and other promotional material for said products: “This product may be hazardous to your health and the environment. Read the label and use only as directed.” .

14. Misrepresenting, directly or indirectly, that respondents’ TV antenna or any TV antenna will bring in sharp and clear reception and is superior to any other antenna.

15. Making any representation as to the life expectancy of flashlights or other similar battery operated product without failing to disclose, clearly and conspicuously in all advertisements and other promotional material for such products (a) the expected “on” life of the product; and (b) any limitations on the warranty of such product. [89] 16. Representing, directly or indirectly, that the Lincoln-Kennedy penny was minted by the United States Treasury Department. 17. Representing, directly or indirectly, that the Lincoln-Kennedy penny is a coin of historical and numismatic significance which is certain to grow in value.

18. Representing, directly or indirectly, in connection with the sale of any product that another product is given “free” or as a gift or without cost or charge in connection with: a. any offer which runs for an indefinite term or continuously for a period in excess of one (1) year;

b. any offer not covered by (a) above, excluding introductory offers, unless as to such limited offer:

(1) a regular bona fide retail price is established for the product without the “free” product;

(2) a regular bona fide retail price is established for the “free” product, or in the absence of such price a determination is made of the cost to respondents of such other product; and [90] Initial Decision 91 F.T.C.

c. the price of the product is reduced at least. as much as the price or cost of the “free” product.

19. Failing to include the name “Jay Norris” or “Jay Norris Corporation” and an address and telephone number to which consumer complaints may be addressed in all correspondence relating to customer complaints.

20. Failing to maintain records of all orders, payments and shipments made by or received by respondents, including, but not limited to the following information:

a. Name and address of the customer;

b. Color, size, quantity, price, style number of merchandise ordered;

c. Date of receipt of the order;

d. The form of payment (check, cash, money order, credit sale); e. Date and method of shipment of merchandise, including whether or not the shipment was insured and the amount of insurance, if any;

f. Date and form of refund, if any, and reason for such refund. 21. Failing to maintain records of all consumer complaints for a period of three years after such complaint is received, including, but not limited [91] to the following information: a. Name and address of the consumer;

b. Date of receipt of the complaint;

c. Transaction about which complaint is received; d. Nature of the complaint;

e. Date and disposition of the complaint. II It is further ordered, That Jay Norris Corp., and Pan-Am Car Distributors Corp., corporations, their successors and assigns, and Joel Jacobs, Mortimer Williams and Kenneth Mann, individually and as officers of said corporations, and respondents’ officers, agents, representatives and employees directly or through any corporation, subsidiary, division, trade style, or other device, in connection with the advertising, offering for sale, sale and distribution of used automobiles by mail-order in or affecting commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Failing to disclose, clearly and conspicuously in all advertisements, correspondence, or other promotional material for automobiles that:

JAY NORRIS CORP., ET AL. 833 751 Initial Decision tioned by respondents prior to their being offered for sale, if such is the fact. [92] (b) The used motor vehicles offered for sale by the respondents are ex-New York City taxicabs, if such is the fact. 2. Representing, directly or by implication, the ease or profit with which purchasers can resell respondents’ automobiles. 3. Shipping, or causing to be shipped, any automobile which does not comply with all motor vehicle registration, safety and inspection standards of the state within which the automobile is being shipped or sold.

4. Misrepresenting the mechanical and physical condition of said automobiles;

5. Misrepresenting that said automobiles are in safe mechanical and operating condition;

6. Misrepresenting the extent to which said automobiles have been inspected and repaired in preparation for sale and delivery to customers; and 7. Misrepresenting that said automobiles are in sound condition and repair and will render normal, adequate and satisfactory service. — Tl It is further ordered, That:

1. Respondents shall notify the Commission at least thirty (30) days prior to any proposed changes [93] in the corporate respondents such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or any other changes in the corporation which may affect compliance obligations arising out of the order.

2. The individual respondents named herein, shall 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.

3. Respondents shall deliver a copy of this order to cease and desist to all personnel or agents of respondents responsible for the preparation, creation, production or publication of the advertising of all products covered by this order.

4. No provision of this order shall be construed in any way to annul, invalidate, repeal, terminate, modify or exempt respondents from complying [94] with agreements, orders or directives of any Opinion 91 FTC.

kind obtained by any other agency or act as a defense to actions instituted by municipal or state regulatory agencies. No provision of this order shall be construed to imply that any past or future conduct of respondents complies with the rules and regulations of, or the statutes administered by the Federal Trade Commission. IV It is further ordered, That the allegations of the complaint are dismissed as to FEDERATED NATIONWIDE WHOLESALERS SERVICE, GARYDEAN Corp., t/a Nationwide Wholesalers Service, and p-N PUBLISHING COMPANY, INC.

OPINION OF THE COMMISSION By CLANTON, Commissioner:

This proceeding challenges the lawfulness of a variety of claims made in connection with the advertising of mail [2] order products. Respondents, since 1953, have advertised and sold through the mails a wide range of generally low-cost consumer products.’ [3] The complaint alleges, and the administrative law judge (“ALJ”) found, that respondents, among other things, failed to live up to advertised promises of immediate delivery and prompt refunds and misrepresented the performance or characteristics of six specific products. In their appeal from the ALJ’s initial decision, respondents not only attack the factual and legal bases of the proposed findings but also vigorously challenge the breadth and stringency of the recommended order.? Our consideration of these issues follows: ! The respondents in this pr ding are Jay Norris, Inc.; Joel Jacobs and Mortimer Williams, who are the sole shareholders, officers and directors of Norris (ID 2), Pan Am, which was in the business of advertising and selling cars to consumers by mail (ID 5, 12); and Kenneth Mann, who together with Jacobs and Williams are the shareholders, officers and directors of Pan Am (ID 3). The ALJ dismissed the plaint as to Fed d Nationwide Wholesalers Service, Garydean Corp., t/a Nationwide Wholesaler Service, and P-N Publishing Company, Inc. (ID p. 58). The term “respondents” hereinafter refers to the Jay Norris Corp., Joel Jacobs, and Mortimer Williams (and includes Pan Am and Kenneth Mann only as to ex-taxis). The following abbreviations are used in this opinion: :

ID — Initial Decision, Finding No.

ID p. — Initial Decision, Page No.

CX —Complaint Counsel Exhibit No.

RX — Respondents’ Exhibit No.

Tr. — Transcript of Testimony, Page No.

RAB — Respondents’ Appeal Brief, Page No. CAB — Complaint Counsel's Answering Brief, Page No. RRB — Respondents’ Reply Brief, Page No.

CPF — Complaint Counsel’s Proposed Finding, Page No. RPF — Respondents’ Proposed Finding, Page No. TROA — Transcript of Oral Argument, Page No. 2 Respondents do not appeal from the ALJ's finding that the individual respondents Jacobs and Williams are properly held responsible for wrongdoing by the corporate respondent Jay Norris. Similarly, complaint counsel have nat eantactad anw af tha elanntinnn dinwinnnd be. sh. 1-—- :--4-- JAY NORRIS CORP., ET AL. 835 751 Opinion I. Immediate Delivery and Prompt Refund Claims The record quite clearly discloses that respondents made frequent statements in their catalogs and advertisements emphasizing the timeliness with which they effect delivery and issue refunds. These include representations such as “prompt delivery guaranteed,” (CX 4) “immediate delivery guaranteed,” (CX 8) or “to insure immediate delivery . . . please have check certified.” (CX 409) For non-certified checks, respondents asked customers to “allow about 2 weeks until your check clears the bank.” (/d.) Similar claims, of “prompt refund(s)” were made in connection with respondents’ promises of money back guarantees for unsatisfied purchasers. (ID 17) These and other representations were found to be deceptive by the law judge who noted, for example, that with respect to respondents’ delivery claims they have “on numerous occasions deposited customers’ checks or cashed money orders, and have not shipped the ordered merchandise for many months after receipt of the order and payment.” (ID 24) The ALJ also found that many purchasers had encountered long delays in getting refunds and in some instances no refund was ever received. (ID 29, 32) [4] Respondents do not deny making claims of “immediate delivery” or “prompt refunds,” or even failing to fulfill such promises on occasion. Rather, they assert that the key issue is what consumers are reasonably entitled to expect in terms of the reliability of those promises. Every performance claim whether it be fuel economy in a car, durability in a toaster, or prompt service by a mail order company, expressly or impliedly represents how often that level of performance can be expected. Here, though their promises are unqualified, respondents nevertheless contend that the failure to make prompt deliveries and refunds 100 percent of the time does not necessarily compel the conclusion that their claims are false. Indeed, respondents argue that the magnitude of untimely deliveries and refunds—compared to their total sales—is relatively insignificant. To recharacterize this issue; when consumers read respondents’ advertisements do they believe the statements implicitly represent, for example, that “all,” “nearly all” or “most” purchasers would receive prompt delivery and refunds? The record contains little direct evidence as to what degree of reliability the consuming public expected when it read these ads.° It > In examining this issue, it is useful to note that a principal factor underlying promulgation of the Mail Order Merchandise TRR, 16 C.F.R. 435 (1975), was the frequent failure of mail order com panies to deliver ordered goods within a reasonable time. As we noted there, the regulation of delivery procedures was called for in view of evidence “that sub tial bers of 8 are not getting mail order merchandise shipped within that time which consumers had been led to believe shipment would be made.” 40 F. R. 51582, 51587 (1975). Much the same question is involved here.

Opinion 91 F.T.C.

is well established, however, that the Commission may determine the meaning of an ad without the aid of consumer testimony as to how the advertisement is perceived by the public. E.g., Chrysler Corp. v. FTC, 561 F.2d 357, 363 (D.C. Cir. 1977). Nor can it be doubted “that where an advertisement conveys more than one meaning, one of which is false, the advertiser is liable for the misleading variation. . . .” National Commission on Egg Nutrition, 88 F.T.C. 89, 186 (1976), enforced in part, 570 F.2d 157 (7th Cir. 1977), petition for cert. filed, 46 USLW 3694 (April 28, 1978). [5] After examining respondents’ ads in their overall context, we believe the evidence is clear that they represented that timely deliveries and refunds would be effected virtually without exception. Common sense suggests that a person reading an ad promising “immediate delivery” would be entitled to rely upon that claim with a fairly high degree of confidence that it would be. fulfilled. Respondents’ ads go even further. For example, their claims guaranteeing prompt delivery (CX 2, 4, 8) indicate to consumers that respondents take extraordinary precautions to insure speedy deliveries.‘ Similarly, respondents make unqualified claims of prompt refunds. (CX 386) Moreover, these refund claims are placed amidst claims of “your guarantee of satisfaction” (CX 57, 409), “no risk coupon” (CX 2, 4, 8) and “use. . . at our risk” (CX 96A-D, 886). Indeed, respondents’ ads abound with claims that imply a purchaser cannot lose. We believe the rather unequivocal message conveyed by these ads is that respondents not only afforded their customers the opportunity to return any and all merchandise but also promised that such refunds would be made in a timely fashion in virtually every instance. Even if consumers might not expect absolute perfection, they could reasonably anticipate from reading respondents’ ads that a far more reliable level of performance would be forthcoming than actually occurred. [6] We find persuasive record support from which to conclude that respondents failed to make timely deliveries and refunds to numerous customers and that respondents’ representations to the contrary were misleading and deceptive. The record is replete with ‘ Respondents argue that guaranteed should not be interpreted to represent greater reliability. Indeed, in another context they argue that “a money back guarantee carries with it a representation that the product might not effectively treat all cases” (RAB n. 37). In the case of deliveries this contention is clearly without merit. When delivery is late, respondents do not offer p ‘y Pp n. The is afforded no additional recourse. Given this context, if “guaranteed” is to have any meaning at all, it is that respondents’ claim of prompt delivery is extremely reliable. See F.T.C. Guide Against Deceptive Advertising of Guarantees, 16 C.F.R. 239.7; All State Industries of North Carolina, Inc., 75 F.T.C. 465, 488-89 (1969), affd, 423 F.2d 423 (4th Cir.), cert. denied, 400 U.S. JAY NORRIS CORP., ET AL. 837 751 Opinion testimony of consumers who experienced delivery or refund difficulties with respondents. (ID 18)* Abundant evidence also exists that many customers took the time to write their complaints to respondents, government agencies, consumer protection groups and magazines (ID pp. 9-15, 21-24).¢ These efforts are particularly noteworthy since most of the respondents’ products are low price items for which many consumers are not likely to incur the trouble and expense of complaining. (CX 405-409) Thus, contrary to respondents’ assertions, the testimony supplied by the 30 consumer witnesses, supplemented by the other evidence of consumer complaints, undoubtedly reflects the proverbial “tip of the iceberg.” Moreover, we agree with the ALJ that the procedures employed by respondents for recording, tracking, and responding to orders, complaints, and requests for refunds provide little solace to respondents in attempting to demonstrate the veracity of their claims. As the law judge observed: [7] Respondents candidly admit that they cannot trace their shipments and accordingly cannot ascertain whether delivery of merchandise has been made. In response to complaints or inquiries about delivery they regularly make the assumption that the merchandise has been shipped and will be delivered soon. They do not check their records to see if shipment was actually made. They do not follow up to see if delivery was in fact subsequently accomplished. They assume that if nothing further is heard from the consumer, delivery was accomplished. With respect to refunds, respondents take the position that if they received the returned merchandise, a refund was made, and conversely, if they did not send a refund, they did not receive the returned merchandise. They apparently make no automatic refunds on complaints that merchandise was not delivered, but eventually make a reshipment or refund after subsequent complaints are received. (ID p. 61) Notwithstanding these meager recordkeeping efforts and their demonstrated effect on delays in delivery and refunds, respondents contend that their performance relative to total sales is good.’ The basis of this claim is respondents’ colorfully described but rather simplistic “bucket method” of measuring complaints. Mr. Jacobs described this method when he explained how respondents calculated the ratio of complaints to sales: [8] A. Ican tell you this. They [complaints] are going down percentage-wise because we measure by buckets. It’s unusual. But our mail arrives and is kept in buckets. And we know that whereas years back we used to get “X” amount of buckets on a Monday and * Although respondents question the probity of some of this testimony (RAB at 16-17), our review of the record convinces us of its reliability. (See also CAB at 11-13) * As the ALJ correctly noted, this testimony by so-called “consumer experts” need not be discounted as being hearsay, since it was received not for the truth of the complaints, but rather to show that consumer dissatisfaction extended beyond the consumer witnesses who testified. 7 Similarly, respondents claim their performance compared with competing mail order companies is good (RAB at 20-22; RPF at 22-25). These comparisons to the performance of other mail order companies are largely irrelevant. The issue here is whether respondents’ practices render their claims of prompt performance deceptive. Consequently, we are concerned with what consumers expect and whether respondents met those expectations. Opinion; 91 F.T.C.

“X” amount on any other given day, that with each succeeding year, the number of . buckets coming in each year is less. — As far as the amount is concerned, percentage-wise again, I would estimate that it probably is running now about 2% . . . of orders received. . . (Tr. 147) This measuring rod is far too susceptible to error for us to place much confidence in these figures.* Clearly it does not indicate that respondents’ failure to back up their claims was a rare occurrence. To the contrary, the evidence suggests that respondents had no basis for making the sweeping claims about delivery and refunds set forth in their advertisements.

Thus, in view of the record, respondents’ representations of immediate delivery and prompt refunds were false and deceptive. [9] II. Miscellaneous Delivery and Refund Claims Respondents also made a variety of other delivery and refund claims in their advertising which the ALJ found to be deceptive. These ads represented that (1) the full purchase price, plus all additional charges, would be refunded to dissatisfied purchasers (ID 15, 16); (2) refunds would be made in negotiable currency (ID 15, 16); (8) nondelivery was frequently the fault in the Postal Service (ID 22); and (4) all shipments were insured against loss or damage (ID 15).° We agree with the ALJ’s determinations concerning each of the first three claims but disagree as to the fourth. Respondents boldly make claims of “no risk” and “full refund” but candidly concede that they normally did not return the full amount tendered in payment by consumers (RAB at 52). Though some consumers may not have expected to be reimbursed for postage and handling charges (Id.), other consumers took a different view and demanded and received a refund for these additional charges (ID 27). In the face of express statements that purchasers incur “no risk,” there is little doubt in our view that many, if not most, consumers ‘would expect a full refund of the amount tendered. Similarly, in connection with the second claim, respondents also admit that for small amounts and under other circumstances they did not send the refund in a negotiable currency (ID 28). No such limitation can be read into respondents’ advertising and in the absence of qualifying language we suspect that consumers would normally anticipate * Apart from this testimony, nowhere in the record do we find systematic evidence of respondents’ overall delivery and refund performance. Absent these more revealing measures, we are not left impotent. Even rougher measures of consumer dissatisfaction when coupled with our previous experience with consumer complaints reveal the significant failings that plagued respondents’ operations. * A separate allegation that respondents misrepr d the extent to which they would absorb part of the JAY NORRIS CORP., ET AL. 839 751 Opinion payment of a promised refund to be in the form of cash or its equivalent. [10] As for the third claim, respondents repeatedly represented that poor mail service was the cause of a delayed delivery or refund, rather than admitting that they were frequently to blame. (ID pp. 21, 22, 30) The prospect of losing customers to competitors is an important check on deceptive or just plain inefficient business practices. To avoid such competitive consequences, however, respondents attempt to mollify understandably upset customers by indiscriminately placing the blame on the U.S. Postal Service. Such efforts to hold onto consumers’ business and induce repeat purchases are themselves deceptive.

Finally, we find respondents’ claim that parcels shipped to purchasers are insured to be misleading. In reaching the same | conclusion, the ALJ noted that:

Respondents are self-insured; that is, instead of paying for public insurance on shipments, they make shipments at their own risk. Because they can not trace shipments, they make all necessary replacements at their own expense and at no charge to the customer (Jacobs 146-147; Williams 200). (ID 21) Undoubtedly, most consumers would probably assume that reference to insurance means third-party insurance, and accord greater significance to the protective value of such insurance than to selfinsurance. Nevertheless, respondents’ use of the term “insurance” appears only in that part of their catalogs which sets out the additional charges for such items as handling and shipment. See e.g., CX 407 p. 52. While technically deceptive, this brief mention of insurance at a point where most consumers would have already decided whether to purchase merchandise is not likely to have more than a de minimis effect. Given this situation and the limited frequency with which the reference appeared after Jay Norris stopped carrying insurance for its shipments, we see no need for an order provision addressing this issue. In any event, it is quite apparent that consumer dissatisfaction with respondents’ delivery and refund practices stems from reliance upon overblown claims of timely service and full refunds rather than unfulfilled promises about insurance. [11] _ Il. Performance Claims for Specific Products Apart from their more general mail order claims, the ALJ further determined that respondents deceptively advertised six specific products: (1) a propane flame gun, (2) a roach insecticide, (8) a Opinion 91 F.T.C.

flashlight, (4) a collector’s coin, (5) a television antenna, and (6) extaxicabs.’° A. dJ-N Insta-Jet Propane Flame Gun The complaint alleged and the ALJ found that respondents represented that “THE J-N INSTA-JET PROPANE FLAME GUN” is able to whip through the heaviest snow drifts and the thickest ice in seconds and is effective and efficient in clearing walks and driveways of ice and snow.” !5 1 3 2 5 10 1659 842 61 40 96.651123 (ID5 1 3 2 5 11 1731 842 56 40 82.250443 43)3 1 3 3 0 0 721 891 1318 696 -1 4 1 3 3 1 0 764 891 1275 42 -1 5 1 3 3 1 1 764 891 74 33 96.579094 Thes 1 3 3 1 2 855 892 120 32 95.868446 records 1 3 3 1 3 992 892 161 32 96.182388 contains5 1 3 3 1 4 1170 891 117 40 96.570190 ample5 1 3 3 1 5 1303 892 165 33 96.304062 evidences 1 3 3 1 6 1484 892 39 33 96.462700 of5 1 3 3 1 7 1535 892 62 32 96.829613 thes 1 3 3 1 8 1613 893 108 32 93.301483 flames 1 3 3 1 9 1736 895 102 38 92.832932 gun’s5 1 3 3 1 10 1855 893 184 40 96.407608 inefficacy4 1 3 3 2 0 724 942 1313 41 -1 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3 5 8 1484 1094 156 33 96.905022 minutes5 1 3 3 5 9 1656 1097 37 30 95.973022 to5 1 3 3 5 10 1710 1094 87 32 95.999092 melt5 1 3 3 5 11 1813 1105 22 22 96.246468 a5 1 3 3 5 12 1852 1094 106 40 96.463036 patch5 1 3 3 5 13 1976 1094 60 35 96.389015 1/84 1 3 3 6 0 723 1143 1311 42 -1 5 1 3 3 6 1 723 1143 83 33 96.839371 inch5 1 3 3 6 2 820 1143 97 33 96.229355 thick5 1 3 3 6 3 931 1144 71 32 96.258713 ands 1 3 3 6 4 1019 1144 38 32 95.668617 115 1 3 3 6 5 1074 1144 155 32 95.668617 minutes5 1 3 3 6 6 1244 1146 36 30 96.768669 to5 1 3 3 6 7 1295 1143 86 33 96.596138 melt5 1 3 3 6 8 1395 1154 22 22 95.414192 a5 1 3 3 6 9 1431 1144 107 40 96.459923 patch5 1 3 3 6 10 1555 1144 59 35 95.862343 1/45 1 3 3 6 11 1629 1144 83 33 95.862343 inch5 1 3 3 6 12 1726 1144 98 32 96.393219 thick5 1 3 3 6 13 1838 1145 62 40 49.106834 (ID5 1 3 3 6 14 1913 1145 51 39 65.837677 48;5 1 3 3 6 15 1979 1145 55 32 96.652878 Tr.4 1 3 3 7 0 725 1193 1311 41 -1 5 1 3 3 7 1 725 1194 168 40 94.919899 1249-53).5 1 3 3 7 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33 96.062454 fails5 1 3 3 9 5 1195 1298 37 29 96.847343 to5 1 3 3 9 6 1248 1295 116 33 96.122528 reveals 1 3 3 9 7 1380 1295 62 33 96.966667 thes 1 3 3 9 8 1457 1296 130 39 96.352119 typical5 1 3 3 9 9 1603 1296 196 32 96.329559 conditions5 1 3 3 9 10 1813 1296 223 40 96.332687 confronting4 1 3 3 10 0 721 1345 1314 41 -1 5 1 3 3 10 1 721 1356 48 22 96.648659 an5 1 3 3 10 2 784 1345 165 41 96.019501 ordinary5 1 3 3 10 3 964 1356 91 27 96.472702 user,5 1 3 3 10 4 1070 1345 63 32 96.684303 thes 1 3 3 10 5 1147 1348 70 29 96.133514 tests 1 3 3 10 6 1231 1346 129 31 96.116364 results5 1 3 3 10 7 1373 1346 44 32 95.913834 do5 1 3 3 10 8 1431 1348 62 30 96.152931 not5 1 3 3 10 9 1507 1356 106 30 96.229103 proves 1 3 3 10 10 1627 1346 81 32 96.658569 that5 1 3 3 10 11 1721 1346 62 32 96.801392 thes 1 3 3 10 12 1797 1347 109 32 96.655769 flames 1 3 3 10 13 1918 1356 73 30 95.813255 guns 1 3 3 10 14 2005 1347 30 32 96.702469 is4 1 3 3 11 0 722 1395 1312 42 -1 5 1 3 3 11 1 722 1396 207 32 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3 3 13 3 1099 1497 240 39 96.236900 respondents’5 1 3 3 13 4 1356 1497 109 32 96.228714 broad5 1 3 3 13 5 1481 1497 300 39 96.370247 representations5 1 3 3 13 6 1797 1500 141 37 94.437355 suggests 1 3 3 13 7 1954 1498 81 32 96.444237 that4 1 3 3 14 0 721 1547 1312 40 -1 5 1 3 3 14 1 721 1547 61 32 96.505760 thes 1 3 3 14 2 796 1557 184 22 96.505760 consumers 1 3 3 14 3 991 1547 73 32 96.257889 will5 1 3 3 14 4 1078 1550 94 29 96.510796 meets 1 3 3 14 5 1184 1547 87 31 96.510796 with5 1 3 3 14 6 1284 1557 135 22 96.578339 success5 1 3 3 14 7 1432 1557 89 22 96.601601 even5 1 3 3 14 8 1534 1548 38 31 96.591415 in5 1 3 3 14 9 1586 1548 61 31 96.857681 thes 1 3 3 14 10 1660 1550 107 30 96.845757 worst5 1 3 3 14 11 1779 1548 166 32 96.582993 weather:5 1 3 3 14 12 1960 1548 73 39 96.410629 [12]2 1 4 0 0 0 721 1619 786 43 -1 3 1 4 1 0 0 721 1619 786 43 -1 4 1 4 1 1 0 721 1619 786 43 -1 5 1 4 1 1 1 721 1629 109 26 96.626701 Fastest5 1 4 1 1 2 839 1629 69 32 96.449875 Ways 1 4 1 1 3 916 1629 49 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39 32 96.094444 of5 1 6 1 1 10 1519 1826 61 32 96.094444 thes 1 6 1 1 11 1593 1836 203 23 96.203362 consumers5 1 6 1 1 12 1808 1827 175 32 96.203362 attracted5 1 6 1 1 13 1995 1829 37 30 97.016869 to4 1 6 1 2 0 718 1875 1313 41 -1 5 1 6 1 2 1 718 1875 73 33 96.576622 this5 1 6 1 2 2 807 1875 134 40 96.399879 alleged5 1 6 1 2 3 958 1876 224 39 93.261124 time-savings 1 6 1 2 4 1198 1876 264 32 91.716431 snow-removal5 1 6 1 2 5 1479 1877 147 39 96.586700 products 1 6 1 2 6 1641 1877 115 32 96.740860 would5 1 6 1 2 7 1772 1877 75 32 96.740860 hail5 1 6 1 2 8 1863 1877 90 32 96.063972 from5 1 6 1 2 9 1969 1878 62 32 96.238922 thea 1 6 1 3 0 719 1926 1312 42 -1 5 1 6 1 3 1 719 1926 171 33 96.662270 northern5 1 6 1 3 2 902 1926 144 38 96.160316 reaches5 1 6 1 3 3 1058 1926 39 33 96.615219 of5 1 6 1 3 4 1105 1926 61 33 96.729675 thes 1 6 1 3 5 1178 1929 149 38 96.305878 country5 1 6 1 3 6 1337 1926 117 33 96.791100 where5 1 6 1 3 7 1467 1927 85 41 96.922073 they5 1 6 1 3 8 1563 1927 114 32 96.523209 would5 1 6 1 3 9 1689 1927 44 32 96.794762 be5 1 6 1 3 10 1744 1927 49 32 96.282440 all5 1 6 1 3 11 1805 1930 58 30 96.936386 too5 1 6 1 3 12 1876 1927 107 41 96.679535 likely5 1 6 1 3 13 1994 1930 37 30 96.679535 to4 1 6 1 4 0 718 1977 1009 39 -1 5 1 6 1 4 1 718 1979 192 31 96.290657 encounters 1 6 1 4 2 921 1977 66 32 90.789101 Mr.5 1 6 1 4 3 1000 1977 180 33 90.789101 Lomash’s5 1 6 1 4 4 1193 1979 90 31 96.459869 “tests 1 6 1 4 5 1294 1977 214 39 95.812836 conditions”5 1 6 1 4 6 1521 1978 37 32 96.256943 in5 1 6 1 4 7 1570 1978 75 33 96.248489 real5 1 6 1 4 8 1657 1978 70 33 96.723846 life.3 1 6 2 0 0 716 2027 1314 397 -1 4 1 6 2 1 0 760 2027 1270 41 -1 5 1 6 2 1 1 760 2027 190 38 96.485039 Moreover,5 1 6 2 1 2 974 2028 62 31 96.716827 thes 1 6 2 1 3 1059 2028 205 40 96.467804 experiences 1 6 2 1 4 1287 2028 39 32 96.978027 of5 1 6 2 1 5 1342 2028 62 32 96.336807 thes 1 6 2 1 6 1426 2028 102 33 96.561150 three5 1 6 2 1 7 1551 2039 203 22 96.411995 consumers5 1 6 2 1 8 1776 2029 78 33 96.491455 who5 1 6 2 1 9 1876 2029 154 33 96.832542 testified4 1 6 2 2 0 718 2078 1312 41 -1 5 1 6 2 2 1 718 2078 107 32 96.390350 about5 1 6 2 2 2 842 2078 61 32 96.775871 thes 1 6 2 2 3 922 2088 154 30 96.126488 propane5 1 6 2 2 4 1093 2078 109 32 96.192062 flames 1 6 2 2 5 1219 2088 73 30 96.592972 guns 1 6 2 2 6 1310 2079 29 32 96.276184 is5 1 6 2 2 7 1357 2079 141 40 96.781982 equally5 1 6 2 2 8 1515 2080 203 39 96.609337 persuasive5 1 6 2 2 9 1735 2079 165 33 96.239944 evidences 1 6 2 2 10 1917 2079 39 33 96.824944 of5 1 6 2 2 11 1969 2079 61 33 96.815681 thea 1 6 2 3 0 717 2128 1313 42 -1 5 1 6 2 3 1 717 2131 101 37 93.155998 gun’s5 1 6 2 3 2 838 2128 162 41 96.559784 inability5 1 6 2 3 3 1019 2131 38 30 96.563049 to5 1 6 2 3 4 1076 2129 87 32 96.423805 melt5 1 6 2 3 5 1183 2139 97 22 96.679977 snow5 1 6 2 3 6 1300 2129 68 32 96.946205 ands 1 6 2 3 7 1389 2130 52 31 96.490143 ices 1 6 2 3 8 1461 2129 149 41 96.066551 quickly.5 1 6 2 3 9 1633 2130 60 40 95.066757 (ID5 1 6 2 3 10 1713 2130 56 40 96.155701 43)5 1 6 2 3 11 1789 2130 241 40 96.301056 Respondents4 1 6 2 4 0 717 2178 1313 43 -1 5 1 6 2 4 1 717 2178 182 41 96.052368 challenges 1 6 2 4 2 915 2179 61 33 96.779922 thes 1 6 2 4 3 992 2178 198 42 96.600266 credibility5 1 6 2 4 4 1204 2179 40 33 96.637482 of5 1 6 2 4 5 1255 2179 72 33 96.637482 this5 1 6 2 4 6 1342 2180 190 41 96.440910 testimony5 1 6 2 4 7 1546 2180 149 33 96.825920 because5 1 6 2 4 8 1711 2180 100 33 96.675797 these5 1 6 2 4 9 1827 2190 203 24 96.646210 consumers4 1 6 2 5 0 717 2229 1313 43 -1 5 1 6 2 5 1 717 2240 91 22 96.367432 were5 1 6 2 5 2 821 2229 129 33 95.925858 unable5 1 6 2 5 3 962 2232 37 30 95.925858 to5 1 6 2 5 4 1012 2240 123 22 96.618034 assures 1 6 2 5 5 1147 2230 239 39 96.144043 respondents’5 1 6 2 5 6 1400 2231 142 32 90.427864 counsels 1 6 2 5 7 1555 2231 81 32 96.277122 that5 1 6 2 5 8 1648 2231 62 32 96.486488 thes 1 6 2 5 9 1723 2231 108 32 96.209328 flames 1 6 2 5 10 1843 2241 89 30 96.581024 guns5 1 6 2 5 11 1945 2232 85 40 96.774780 they4 1 6 2 6 0 717 2280 1312 43 -1 5 1 6 2 6 1 717 2280 85 33 96.046745 used5 1 6 2 6 2 817 2290 91 23 96.915199 were5 1 6 2 6 3 923 2280 37 32 95.918404 in5 1 6 2 6 4 976 2280 163 40 96.946907 operable5 1 6 2 6 5 1154 2280 185 33 96.430878 condition.5 1 6 2 6 6 1356 2281 73 32 96.180450 Thes 1 6 2 6 7 1445 2281 120 33 96.180450 records 1 6 2 6 8 1580 2284 168 37 96.459564 suggests,5 1 6 2 6 9 1764 2281 169 38 96.446938 however,5 1 6 2 6 10 1949 2282 80 41 96.542915 that4 1 6 2 7 0 716 2331 1312 41 -1 5 1 6 2 7 1 716 2331 61 32 96.344139 thes 1 6 2 7 2 803 2340 90 31 96.382446 guns5 1 6 2 7 3 919 2331 58 32 96.669571 did5 1 6 2 7 4 1004 2331 151 40 96.540993 produces 1 6 2 7 5 1181 2331 126 33 96.233185 flames5 1 6 2 7 6 1333 2331 67 40 96.682709 (Tr.5 1 6 2 7 7 1429 2331 158 38 83.976852 342-348,5 1 6 2 7 8 1615 2332 73 37 89.132057 603,5 1 6 2 7 9 1718 2332 96 40 96.882568 1494)5 1 6 2 7 10 1841 2332 70 33 96.555908 ands 1 6 2 7 11 1936 2343 92 22 96.357925 were4 1 6 2 8 0 716 2381 1310 43 -1 5 1 6 2 8 1 716 2381 209 40 95.918266 apparently5 1 6 2 8 2 935 2382 105 39 96.398384 beings 1 6 2 8 3 1051 2382 86 32 96.622581 used5 1 6 2 8 4 1148 2382 54 31 96.436676 for5 1 6 2 8 5 1213 2382 61 32 96.898880 thes 1 6 2 8 6 1285 2382 80 32 97.008926 firsts 1 6 2 8 7 1375 2382 87 32 96.568184 times 1 6 2 8 8 1474 2382 67 40 96.336922 (Tr.5 1 6 2 8 9 1555 2382 73 38 96.336922 342,5 1 6 2 8 10 1642 2382 157 38 95.938469 603-604,5 1 6 2 8 11 1814 2383 212 41 92.660263 1493-1494).2 1 7 0 0 0 898 2463 534 12 -1 3 1 7 1 0 0 898 2463 534 12 -1 4 1 7 1 1 0 898 2463 534 12 -1 5 1 7 1 1 1 898 2463 534 12 95.000000 2 1 8 0 0 0 1282 2534 304 14 -1 3 1 8 1 0 0 1282 2534 304 14 -1 4 1 8 1 1 0 1282 2534 304 14 -1 5 1 8 1 1 1 1282 2534 304 14 95.000000 2 1 9 0 0 0 715 2567 334 14 -1 3 1 9 1 0 0 715 2567 334 14 -1 4 1 9 1 1 0 715 2567 334 14 -1 5 1 9 1 1 1 715 2567 334 14 95.000000 2 1 10 0 0 0 715 2461 1313 158 -1 3 1 10 1 0 0 758 2461 1270 26 -1 4 1 10 1 1 0 758 2461 1270 26 -1 5 1 10 1 1 1 758 2464 15 9 38.920586 15 1 10 1 1 2 786 2461 44 19 96.351791 Thes 1 10 1 1 3 839 2461 48 19 96.762833 ALJ5 1 10 1 1 4 896 2461 109 16 96.396263 dismissed5 1 10 1 1 5 1058 2461 21 8 96.757149 ther5 1 10 1 1 6 1116 2461 83 14 96.863235 allegations 1 10 1 1 7 1238 2461 48 20 96.690262 that5 1 10 1 1 8 1295 2461 124 24 96.469917 respondents5 1 10 1 1 9 1441 2462 175 24 96.180298 misrepresented5 1 10 1 1 10 1627 2469 27 13 96.512383 an5 1 10 1 1 11 1663 2462 104 24 94.290817 allegedly5 1 10 1 1 12 1777 2462 148 25 96.686844 long-wearing5 1 10 1 1 13 1933 2462 49 20 96.503647 socks 1 10 1 1 14 1991 2463 37 24 88.969421 (ID3 1 10 2 0 0 715 2494 1313 125 -1 4 1 10 2 1 0 715 2494 39 24 -1 5 1 10 2 1 1 715 2494 39 24 93.872673 45).4 1 10 2 2 0 758 2527 1269 26 -1 5 1 10 2 2 1 758 2530 12 9 61.904594 15 1 10 2 2 2 786 2527 143 24 92.293648 Respondents5 1 10 2 2 3 938 2527 67 24 97.004356 objects 1 10 2 2 4 1014 2529 22 18 96.389824 to5 1 10 2 2 5 1045 2527 37 20 96.389824 thes 1 10 2 2 6 1090 2527 108 20 96.477928 references 1 10 2 2 7 1207 2529 22 18 96.477928 to5 1 10 2 2 8 1238 2528 35 19 93.689621 “in5 1 10 2 2 9 1346 2528 34 8 95.178535 ds”5 1 10 2 2 10 1390 2528 21 20 95.644150 in5 1 10 2 2 11 1420 2528 37 19 96.654457 thes 1 10 2 2 12 1513 2528 66 25 91.969299 plaint.5 1 10 2 2 13 1596 2529 19 19 96.222435 It5 1 10 2 2 14 1623 2535 68 13 96.661079 seems5 1 10 2 2 15 1699 2529 44 19 96.939171 this5 1 10 2 2 16 1751 2529 77 23 96.602097 phrases 1 10 2 2 17 1837 2535 43 13 96.066849 was5 1 10 2 2 18 1888 2529 50 19 96.622665 used5 1 10 2 2 19 1947 2529 49 24 96.445679 only5 1 10 2 2 20 2005 2530 22 18 96.981018 in4 1 10 2 3 0 794 2560 1234 26 -1 5 1 10 2 3 1 794 2561 43 14 94.959030 tions 1 10 2 3 2 853 2560 51 20 94.843048 with5 1 10 2 3 3 919 2567 13 13 94.843048 a5 1 10 2 3 4 948 2560 5 8 59.512363 |}5 1 10 2 3 5 1064 2561 66 19 96.395226 flames 1 10 2 3 6 1144 2566 48 18 96.623283 gun.5 1 10 2 3 7 1209 2560 37 24 95.983368 (ID5 1 10 2 3 8 1260 2561 34 24 95.983368 43)5 1 10 2 3 9 1309 2561 154 23 96.570923 Nevertheless,5 1 10 2 3 10 1478 2568 32 13 96.543289 we5 1 10 2 3 11 1525 2561 80 20 96.280647 believes 1 10 2 3 12 1620 2562 37 19 96.804794 thes 1 10 2 3 13 1672 2562 49 19 96.178215 ALJ5 1 10 2 3 14 1736 2562 102 24 96.178215 correctly5 1 10 2 3 15 1852 2562 112 20 96.396774 concluded5 1 10 2 3 16 1980 2563 48 19 96.700424 that4 1 10 2 4 0 793 2593 1235 26 -1 5 1 10 2 4 1 793 2593 65 9 88.752724 dents’5 1 10 2 4 2 868 2594 80 20 92.407074 advertis 1 10 2 4 3 1024 2596 8 6 95.619186 ts5 1 10 2 4 4 1051 2594 105 24 96.569710 conveyed5 1 10 2 4 5 1166 2594 37 20 96.364380 thes 1 10 2 4 6 1212 2594 123 24 96.974716 impressions 1 10 2 4 7 1345 2594 47 20 96.737328 that5 1 10 2 4 8 1401 2594 56 20 96.397972 theirs 1 10 2 4 9 1466 2595 88 24 96.401291 products 1 10 2 4 10 1563 2595 68 19 96.774094 would5 1 10 2 4 11 1640 2595 83 24 96.813148 rapidly5 1 10 2 4 12 1732 2602 84 12 96.758377 removes 1 10 2 4 13 1824 2602 58 12 96.840103 snow5 1 10 2 4 14 1890 2596 42 19 95.716499 ands 1 10 2 4 15 1942 2596 35 19 95.716499 ice.5 1 10 2 4 16 1987 2596 41 19 97.003891 For2 1 11 0 0 0 715 2592 328 13 -1 3 1 11 1 0 0 715 2592 328 13 -1 4 1 11 1 1 0 715 2592 328 13 -1 5 1 11 1 1 1 715 2592 328 13 95.000000 2 1 12 0 0 0 714 2605 1313 40 -1 3 1 12 1 0 0 714 2605 1313 40 -1 4 1 12 1 1 0 715 2605 7 8 -1 5 1 12 1 1 1 715 2605 7 8 79.324577 r4 1 12 1 2 0 714 2627 1313 18 -1 5 1 12 1 2 1 714 2627 102 18 72.675873 example.5 1 12 1 2 2 827 2627 137 18 74.506851 resvondents5 1 12 1 2 3 973 2627 62 18 96.139915 claims 1 12 1 2 4 1045 2627 49 18 95.255554 that5 1 12 1 2 5 1103 2627 37 18 95.255554 thes 1 12 1 2 6 1149 2627 65 18 96.604080 flames 1 12 1 2 7 1223 2633 42 12 95.348488 guns 1 12 1 2 8 1276 2627 40 18 92.807526 will5 1 12 1 2 9 1328 2628 68 16 90.903503 “whin5 1 12 1 2 10 1405 2628 91 16 33.226868 throuch5 1 12 1 2 11 1506 2634 52 10 96.596680 even5 1 12 1 2 12 1568 2628 37 16 96.653572 thes 1 12 1 2 13 1615 2629 96 15 63.819016 heaviest.5 1 12 1 2 14 1719 2628 74 16 87.372467 drifta”5 1 12 1 2 15 1802 2629 24 15 80.657593 af5 1 12 1 2 16 1833 2635 57 9 79.251312 annw5 1 12 1 2 17 1900 2629 40 15 96.034691 ands 1 12 1 2 18 1951 2629 17 15 84.377609 ia5 1 12 1 2 19 1978 2629 49 15 91.778915 “the JAY NORRIS CORP., ET AL. 841 751 Opinion Further, we note that the assembly process involves only three parts (Tr. 603) and is relatively uncomplicated. (Tr. 618) More importantly, we reject respondents’ supposed rule that would virtually eliminate the utility of consumer testimony except in the rare case where a consumer could assure with certainty that the product used was functioning properly. While the credibility of such testimony is always a relevant issue, there is nothing here to suggest that it should be discounted. Indeed, we find the similar experience of these three consumers strong evidence that respondents’ performance claims greatly exaggerate the flame gun’s ability to melt snow and ice quickly.1? [13] B. Sure Kill Roach Powder Respondents sell a product composed of equal parts boric acid and inert ingredients whose purpose is the elimination of the ubiquitous household pest — the cockroach. In their advertising respondents represented, inter alia, that their roach powder:

... issafe to use;

. gets rid of roaches once and for all;

. creates a deadly chain reaction which eliminates roaches and eggs; . 4s guaranteed to prevent reinfestation for up to 5 years; and does not lose its capacity to kill under any conditions of use. (ID 44) In ‘addition to finding that these claims were not supportable, the law judge also concluded that respondents failed to disclose a material fact by not specifying in their advertising the chemical ingredients of the insecticide. Respondents, not surprisingly, disagree with these findings.

(1) Safety. No one disputes that boric acid, a main component of respondents’ roach powder, is toxic to warm blooded animals if taken internally (Tr. 1351-1352). At the same time, complaint counsel’s primary witness, Dr. Charles Mampe, acknowledged “that respondents’ roach powder is relatively safe to use if applied according to instructions” (CX 2493C). Because respondents’ roach powder is onehalf boric acid, however, it is virtually no less lethal than the less concentrated but more toxic chlorinated hydrocarbon insecticides (compare Tr. 1391; CX 2493C with CX 2493D). Indeed, roughly four tablespoons of this roach powder could kill a grown man (Tr. 1353; CX 2493D). Given such hazards, it is clearly deceptive to make an unqualified representation of safety for this product. Respondents cannot simply advertise as “safe” this noxious insecticide and hope mail order consumers will read the label and use the product as directed. [14] (2) Efficacy. The record, particularly Dr. Mampe’s testimony, ** We also leave intact the ALJ's ruling, which respondents do not chall requiring disclosure that the flame gun does not come equipped initially with a propane cylinder. Opinion 91 F.T.C.

a amply supports the ALJ’s findings that respondents misrepresented that this roach powder will kill roach eggs (Tr. 1866, 1880-1381) and will create a deadly chain reaction (Tr. 1356, 1424). Respondents also claim their product will provide long-term, if not permanent, relief from cockroaches and will retain its effectiveness under varying conditions of use. While we are confident that few consumers would believe anything short of divine intervention could afford them eternal relief from this troublesome pest, respondents’ ads are sufficiently specific (eg., Sure-Kill “never loses its killing power—even after years.”) to impart a degree of believability to these claims that consumers might reasonably rely upon. A review of the testimony, including that given by the inventor and manufacturer of this product, Mr. Williams, thoroughly demonstrates the falsity of such claims. (Tr. 1857-1359; 1423) [15] (8) Advertising Disclosure of Ingredients. Noting that boric acid is a well-known roach killer, the ALJ concluded that respondents’ advertising should disclose the fact that their roach powder is 50 percent boric acid. We are not convinced, however, that this disclosure is of material benefit to consumers. The proposed disclosure, for example, provides consumers no basis for determining the importance of the other ingredients in respondents’ product. Indeed, there is some suggestion that these inert ingredients significantly improve the effectiveness of the powder by making it more attractive to roaches. (RAB at 37) Complaint counsel counter by contending that respondents could inform consumers that these inert ingredients are significant. (TROA at 41) This argument misses the mark. If respondents’ product significantly surpasses boric acid at killing roaches, it may be of little consequence to consumers that the powder is half boric acid.

Even if this information might be helpful to some consumers, that is not sufficient to render its nondisclosure deceptive. To the extent consumers have been misled by respondents’ advertising into believing that the roach powder has special properties or .capabilities, it is due to the exaggerated claims made in those ads. Requiring prior substantiation for future claims should serve as an adequate 2 We are unimpressed with respondents’ argument that a residue of the powder on roach eggs will kill the roaches when they hatch. (RAB at 36) The label directions instruct the consumer to place the powder in small trays (CX 3020, 4060) or to dust in cracks, crevices and building voids (CX 4186). The accumulation of powder on roach eggs could occur only if the dusting happened to reach eggs or if a contaminated roach returns to the next and transfers sufficient quantities of the powder to eggs and other roaches to start a “chain reaction.” Mr. Williams, inventor of this roach powder, testified that he has p lly observed contaminated cockroaches return to the nest and transfer the insecticide to eggs and other roaches (Tr. 1424). He conceded, however, that the chain reaction does not always occur and is not the primary way of killing roaches (Id.). Moreover, Dr. Mampe seriously questioned whether the powder would be transferred to other roaches in sufficient amounts to kill them (Tr. 1393- JAY NORRIS CORP., ET AL. 843 751 Opinion remedy to eliminate these misrepresentations. Without a stronger showing of materiality we see no justification for requiring disclosure of the ingredients in advertising. [16] C. Flashlight In their advertising for this product, respondents refer to it as “The Five-Year Flashlight” and represent that it carries an “Absolute Five-Year Guarantee.” (CX 46) In finding this advertising deceptive, the ALJ looked to the underlying manufacturer’s guarantee which clearly states:

Your light is also guaranteed to remain usable for a period of five years providing it has not been used for more than 10 hours. (CX 2044B)* Neither this limitation nor the fact that the flashlight has an “onlife” of 10-20 hours were disclosed in respondents’ advertisements. By not doing so, the ALJ determined that respondents failed to disclose material facts necessary to prevent the ads from being misleading. (ID 46) Respondents, while not disputing the terms of the guarantee, argue that the ads must be read in their total context. When the ads are so viewed, they contend, it is clear that the fiveyear claim refers to the storage capacity of the flashlight, not its ontime life.

There is no doubt that the ads emphasize the unique capability of the flashlight to retain its power over long periods of time. Nevertheless, we decline to graft, by implication, a normal use (i.e, 10 hours) limitation onto an absolute guarantee claim, particularly where, as here, the ads make no mention of any condition on actual use. Indeed, the ads stress the fact that the flashlight works “when you need it.” Even if few consumers would believe the light could stay on continuously for five years—an assumption that stretches credulity—they might well conclude that it should work under abnormal as well as normal patterns of usage. Consequently, we concur with the ALJ that, absent disclosure of the “on-life” conditions, respondents’ claims for their flashlight had the capacity to mislead purchasers. [17] , D. Lincoln Penny Respondents also sell a collector’s Lincoln penny bearing the likeness of former President Kennedy. The ALJ found that respondents misrepresented that: Their Lincoln-Kennedy penny was minted by the United States Treasury Department; Their Lincoln-Kennedy penny is a coin of historical and numismatic significance which is certain to grow in value;

*« Based on evidence stipulated to at trial, normal usage of a flashlight is about two hours per year, or 10 hours over a five-year period. (ID 46) Opinion 91 F.T.C.

The issuance of their Lincoln-Kennedy penny was sanctioned by Section [831], Title 18 US. Code; and ;

A free plaque containing historical coincidences between the lives of President Lincoln and President Kennedy is provided to purchasers with each coin. (ID 47) On February 27, 1974, prior to issuance of the instant complaint, the United States Postal Service ruled that respondents had made misrepresentations similar to those set forth above in connection with the advertising of the Lincoln-Kennedy penny and issued an order limiting the postal services thereafter available to respondents. (ID 47) Respondents have not sought to relitigate the substantive issues in this matter. Rather they urge on appeal that the allegations should be dismissed as not being in the public interest because the Postal ’ Service decision adequately addresses the deception found in their advertising of the so-called “Lincoln-Kennedy” penny. Indeed, respondents argue that the challenged advertising was terminated even before the Postal Service issued its order. Abandonment of the practices, however, is no defense here. As complaint counsel point out, the present action involves claims made after as well as before issuance of the 1974 Postal Service order. (CAB at 35-36; CX 275, 405 at 11) A review of these later ads reveals that respondents have continued to misrepresent the source and value of the Lincoln- Kennedy penny. [18] Furthermore, we reject respondents’ contention that this case against the Lincoln-Kennedy penny lacks public interest. We note that the complaint issued in this case on September 3, 1975—well after the Postal Service issued its order against respondents. Recently, this Commission faced a similar contention that an already litigated case lacked public interest. See Porter & Dietsch, Dkt. 9047, slip op. at 32, 90 F.T.C. 770, (1977). There we noted that respondents’ contention of a failure for want of public interest implicitly rests on “the wisdom of using limited public resources to correct particular law violations, a decision committed to the Commission’s discretion.” id. Our response in that case applies with equal force here, “that bridge was crossed for the last time over two years ago when the Commission issued the complaint in this case.” Jd. Finally, we concur with the ALJ’s determination concerning respondents’ offer of a “free” plaque (or resume) of historical coincidences.’ The evidence indicates that over a period of years the ‘* There is no merit in respondents’ contention that they lacked proper notice of this issue. Paragraphs 9-11 of the complaint clearly refer to the claims at stake here. There is alan no faundation for reannndente’ accartinn that JAY NORRIS CORP., ET AL. 845 751 Opinion plaque and coins were never offered at‘a different price. (CX 62, 66, 69, 275)1*° By advertising a “free” plaque, Jay Norris presumably hoped to convince consumers that the package deal was a bargain, [19] ie, that the penny was competitively priced and for a limited time the plaque would be tossed in for no additional charge. The deceptive potential of a “free” offer which is not bona fide is well established. See FTC v. Mary Carter Paint Co., 382 U.S. 46 (1965); Kalwajtys v. FTC, 237 F.2d 654 (7th Cir. 1956), cert. denied, 352 U.S. 1025 (1957). See also F.T.C. Guide Concerning Use of Word “Free” and Similar Representations, 16 C.F.R. 251 (1971). While the consumer injury here may not be great, we find the inclusion of such a representation in respondents’ ads to be false and misleading, absent any evidence that the plaque was genuinely offered at no charge.

E. Antenna In connection with their advertisements for this product, respondents were found to have represented that: (1) the TV antenna will bring sharp and clear reception even in difficult areas; (2) the performance of the antenna is superior to any rabbit ear antenna or outdoor antenna; (3) the device will turn all types of house wiring into a TV antenna; and (4) their antenna is an electronic miracle (ID p. 45). Upon reviewing the evidence (CX 28, 886) we believe there can be little doubt that respondents’ advertisements make these representations. For example, a typical ad (CX 886) includes the following assertions:

every home a super receiver, one of the greatest TV antennas ever constructed, a super receiver for black and white TV, FM, all kinds of difficult reception, electronic miracle, better than any set of rabbit ears, more efficient than complicated external antennas, reception so sharp and clear it will amaze you even in more difficult areas. [20] Though they did not contest having made such claims, respondents contend that the evidence adduced is insufficient: to establish the falsity of these representations. Respondents again question the probative value of the consumer testimony elicited here, observing that these consumers are neither television nor antenna experts and, therefore, might not know when a television or antenna earlier Postal Service action. Neither the circumstances of this case nor the decision in Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381 (1940), which respondents cite, provides any basis for such an argument. ‘¢ Since the two items apparently were never sold separately, the only issue is whether they were ever sold ata higher, or regular price.

Opinion 91 F.T.C.

installation was defective (RAB at 39-40). Yet, the consumers expressing dissatisfaction with the Jumbo Antenna had working television sets which operated well before and after the use of respondents’ product (Tr. 334-335, 469). While it is possible these consumers improperly installed the Jumbo Antenna, this possibility appears remote. (Tr. 468-469)?’ In our view, this consumer testimony is persuasive evidence of the falsity of respondents’ representations.'* Additionally, we find that witness Triolo’s tests of respondents’ product and other antennae provide convincing independent evidence that the expansive representations for the Jumbo TV Antenna are false. Mr. Triolo, who has thirty years’ experience with technical antennae (Tr. 271), tested each of three types of antennae: an outdoor antenna, rabbit ears, and respondents’ product (Tr. 273-274). At each of the two test sites, both the outdoor antenna and rabbit ears produced significantly better pictures than did the Jumbo TV Antenna (CX 2704). [21] Respondents challenge Mr. Triolo’s expertise, the reliability of his methods, and his impartiality. First, we find it irrelevant whether Mr. Triolo is a television expert. As we have already observed, even a layman can determine whether the TV picture is relatively the same before and after the installation of different antennae. Further, Mr. Triolo has the relevant expertise required in these tests: the ability to connect and disconnect the various antennae properly (Tr. 271). Respondents also attempt at length to discredit Mr. Triolo’s tests as unscientific or inconclusive for purposes of this proceeding. They fail. Respondents claim amazing performance even under the most difficult conditions; they also assert that their product is better than any set of rabbit ears and more efficient than complicated outdoor antennae. Jt is clear from an examination of the pictures taken in the course of the tests that respondents’ product consistently produced substantially inferior television receptions compared to those produced by the other antennae. (CX 2704L-X) Respondents on the other hand have offered no substantial evidence to back up their claims.

Finally, respondents challenge Mr. Triolo’s impartiality because he conducted the tests at the behest of Mrs. Mulhern, a Commission employee (Tr. 272-275), The record contains no evidence that would 7 One of the witnesses was an experienced electronics design engineer. (Tr. 468-469) Moreover, respondents tout the ease of installation in their ads, advisi ‘8 that “no special tools or additi 1 material [is] required” and “you simply attach the > adapter easily and quickly to your set. . . . (CX 886) iP place id Li. on the testimony of Mrs. Theodora Pierce who expressed faction with r dents’ 2 RK 9A, B). While such testimony tends to Prove that respondents’ product fe Penk wee naee -e ee ene mak Hebe AL ----Ut-- - JAY NORRIS CORP., ET AL. 847 751 ; Opinion suggest that Mr. Triolo was anything but objective (Jd.). Certainly the mere fact that the Commission staff has contracted for a study does not undermine the study’s conclusions. Although Mr. Triolo’s tests were limited in nature,'® we believe they adequately demonstrate the falsity of respondents’ broad claims.” [22] F. £x-Taxis For approximately five years from 1969 to 1974, respondent Pan Am engaged in the rather creative venture of selling through the mails used New York City taxicabs. Some 700-800 cars were sold during this period. As the ALJ found, respondent’s advertising contained a host of misrepresentations concerning the mechanical and physical condition of these cars as well as their availability. In addition, the ALJ determined that the failure to disclose where the taxis came from and that the interiors of the cars were not reconditioned had the tendency and capacity to deceive prospective customers.2? Respondents take issue only with the findings of non-disclosure.?? Undoubtedly, anyone who has had the scintillating experience of riding in a New York City taxicab — and presumably many who haven’t but who have heard the tales related by others — will realize that these cars frequently do not receive the most delicate treatment. Nevertheless, we are reluctant to single New York out for special mention as the locale where these taxis saw service. While the trials and tribulations may be greater there, we suspect that conditions are not so different elsewhere that mere disclosure of the fact that the cars being offered for sale were once driven as taxis should suffice to alert would-be purchasers to the risks involved. Since respondent’s ads disclosed that the used cars were ex-taxis, we decline to go further. [23] Nor are we persuaded that this record adequately demonstrates the need for disclosing whether the car interiors have been cleaned or reconditioned. The ALJ did not find that respondent misrepresented the interior condition of the cars (ID pp. 56-57); neither do we. Although a mail order purchaser might reasonably expect that the 1° Respondents also object to a ber of other methodological factors (RAB at 42-43), but we believe they do not undercut the essential validity of the results. * Respondents also urge that their use of the phrase “Electronic Miracle” is mere puffery. Although not itive to respond 5 1 2 7 1 5 843 2200 89 19 96.503044 concerns 1 2 7 1 6 939 2199 47 20 96.909332 that5 1 2 7 1 7 992 2200 37 20 96.993477 thes 1 2 7 1 8 1036 2202 54 18 96.849007 terms 1 2 7 1 9 1098 2201 136 20 96.629143 “miracle”5 1 2 7 1 10 1212 2195 25 33 96.784554 is5 1 2 7 1 11 1338 2202 18 23 96.452034 ly5 1 2 7 1 12 1366 2202 79 23 96.901443 used5 1 2 7 1 13 1419 2198 23 33 96.617950 in5 1 2 7 1 14 1452 2202 71 15 96.070473 situations5 1 2 7 1 15 1570 2203 59 20 96.070473 short5 1 2 7 1 16 1636 2203 22 20 96.895264 of5 1 2 7 1 17 1675 2204 62 8 96.354706 changing5 1 2 7 1 18 1774 2206 66 18 96.932701 water4 1 2 7 2 0 535 2230 1303 31 -1 5 1 2 7 2 1 535 2230 44 20 96.935356 into5 1 2 7 2 2 586 2231 60 23 96.958435 wine,5 1 2 7 2 3 655 2237 31 14 96.941277 we5 1 2 7 2 4 694 2233 57 18 96.800095 must5 1 2 7 2 5 757 2232 100 20 96.800095 concludes 1 2 7 2 6 864 2232 48 20 95.200310 that5 1 2 7 2 7 919 2232 36 20 95.200310 thes 1 2 7 2 8 963 2239 36 14 95.647949 uses 1 2 7 2 9 1006 2233 23 20 95.647949 of5 1 2 7 2 10 1035 2233 123 21 96.349106 “electronics 1 2 7 2 11 1165 2234 100 20 94.462280 miracle”5 1 2 7 2 12 1272 2234 22 20 96.430489 in5 1 2 7 2 13 1302 2234 37 20 96.931274 thes 1 2 7 2 14 1345 2236 85 18 96.831985 contexts 1 2 7 2 15 1437 2235 23 19 96.553833 of5 1 2 7 2 16 1465 2235 142 25 94.172523 respondents’5 1 2 7 2 17 1614 2237 79 24 96.135429 grossly5 1 2 7 2 18 1700 2238 138 23 96.642899 exaggerated4 1 2 7 3 0 534 2263 1305 31 -1 5 1 2 7 3 1 534 2263 72 21 96.968819 claims5 1 2 7 3 2 615 2264 69 20 96.914650 would5 1 2 7 3 3 694 2264 46 20 96.978722 leads 1 2 7 3 4 749 2270 120 15 96.880806 consumers5 1 2 7 3 5 878 2267 23 18 96.901512 to5 1 2 7 3 6 909 2266 46 24 96.859566 gives 1 2 7 3 7 963 2272 57 14 96.861992 some5 1 2 7 3 8 1029 2266 66 20 96.970215 added5 1 2 7 3 9 1105 2267 99 20 96.741608 credence5 1 2 7 3 10 1213 2268 22 19 96.953529 to5 1 2 7 3 11 1243 2267 37 20 93.299713 thes 1 2 7 3 12 1288 2268 79 19 86.247452 overal!5 1 2 7 3 13 1375 2268 118 24 96.967705 suggestions 1 2 7 3 14 1502 2268 48 20 96.844040 that5 1 2 7 3 15 1558 2269 43 20 96.190475 this5 1 2 7 3 16 1609 2269 70 21 97.003647 devices 1 2 7 3 17 1688 2270 18 20 96.903633 is5 1 2 7 3 18 1714 2271 95 23 95.946259 superiors 1 2 7 3 19 1817 2272 22 18 96.582748 to4 1 2 7 4 0 533 2296 785 25 -1 5 1 2 7 4 1 533 2296 60 21 96.556236 others 1 2 7 4 2 600 2299 61 22 96.969490 types5 1 2 7 4 3 667 2297 24 20 97.007225 of5 1 2 7 4 4 695 2300 111 18 96.551926 antennae.5 1 2 7 4 5 1316 2314 2 2 24.424164 :3 1 2 8 0 0 532 2330 1306 159 -1 4 1 2 8 1 0 574 2330 1264 31 -1 5 1 2 8 1 1 574 2332 14 10 76.869141 ™5 1 2 8 1 2 603 2330 91 25 95.680580 Findings 1 2 8 1 3 709 2331 130 20 96.461159 insufficient5 1 2 8 1 4 855 2332 71 20 96.543625 records 1 2 8 1 5 942 2334 92 22 96.329147 support,5 1 2 8 1 6 1051 2333 36 20 96.984840 thes 1 2 8 1 7 1102 2333 49 20 96.677032 ALJ5 1 2 8 1 8 1166 2333 109 20 96.548096 dismissed5 1 2 8 1 9 1291 2334 125 24 96.865746 allegations5 1 2 8 1 10 1431 2336 124 23 96.494736 concerning5 1 2 8 1 11 1570 2336 74 20 96.835693 claims5 1 2 8 1 12 1660 2336 89 25 96.545074 relating5 1 2 8 1 13 1764 2339 22 17 96.424713 to5 1 2 8 1 14 1802 2337 36 19 96.867027 thea 1 2 8 2 0 533 2364 1305 30 -1 5 1 2 8 2 1 533 2369 132 18 96.921577 appearances 1 2 8 2 2 674 2364 42 19 96.883240 ands 1 2 8 2 3 727 2364 55 24 96.810570 prices 1 2 8 2 4 791 2364 24 20 96.896042 of5 1 2 8 2 5 821 2364 38 20 96.992111 thes 1 2 8 2 6 868 2371 47 14 96.847603 cars5 1 2 8 2 7 925 2365 40 20 96.940186 ands 1 2 8 2 8 976 2365 36 20 96.897377 thes 1 2 8 2 9 1022 2367 154 23 96.864319 responsibility5 1 2 8 2 10 1186 2367 32 19 96.588974 for5 1 2 8 2 11 1228 2367 99 24 96.844536 effecting5 1 2 8 2 12 1336 2367 97 25 96.707008 delivery.5 1 2 8 2 13 1443 2367 36 24 93.076996 (ID5 1 2 8 2 14 1488 2374 18 18 93.076996 p.5 1 2 8 2 15 1517 2368 33 24 96.982170 56)5 1 2 8 2 16 1559 2368 112 25 96.958092 Similarly,5 1 2 8 2 17 1681 2370 37 19 96.687469 thes 1 2 8 2 18 1728 2370 39 19 96.687469 laws 1 2 8 2 19 1774 2370 64 24 97.011902 judge4 1 2 8 3 0 532 2396 1306 28 -1 5 1 2 8 3 1 532 2396 109 20 96.218788 dismissed5 1 2 8 3 2 654 2396 125 25 96.672508 allegations5 1 2 8 3 3 790 2398 49 19 96.521500 that5 1 2 8 3 4 850 2398 137 24 96.641228 respondents5 1 2 8 3 5 999 2399 64 20 96.918106 failed5 1 2 8 3 6 1075 2401 22 18 96.171410 to5 1 2 8 3 7 1109 2400 87 19 96.171410 discloses 1 2 8 3 8 1207 2400 37 19 96.657333 thes 1 2 8 3 9 1256 2400 99 24 96.625092 meanings 1 2 8 3 10 1366 2400 24 19 96.030701 of5 1 2 8 3 11 1399 2400 76 20 83.893051 “FOB”5 1 2 8 3 12 1487 2401 41 20 96.215012 ands 1 2 8 3 13 1541 2404 36 18 91.427948 “as5 1 2 8 3 14 1589 2403 36 21 96.077805 is,”5 1 2 8 3 15 1637 2403 95 19 96.311554 whether5 1 2 8 3 16 1744 2403 36 19 96.597061 thes 1 2 8 3 17 1792 2410 46 13 96.333214 cars4 1 2 8 4 0 532 2429 1306 31 -1 5 1 2 8 4 1 532 2429 102 25 96.318146 complied5 1 2 8 4 2 643 2430 51 19 96.395622 with5 1 2 8 4 3 703 2437 42 18 96.658562 any5 1 2 8 4 4 753 2432 54 18 96.720978 states 1 2 8 4 5 816 2433 68 18 96.694412 motors 1 2 8 4 6 892 2431 80 21 95.673477 vehicles 1 2 8 4 7 981 2432 115 24 95.673477 inspections 1 2 8 4 8 1105 2433 46 22 96.532814 law,5 1 2 8 4 9 1160 2433 42 19 96.746605 ands 1 2 8 4 10 1210 2433 96 19 96.916069 whether5 1 2 8 4 11 1314 2433 36 19 96.916069 thes 1 2 8 4 12 1358 2434 81 19 96.742393 drivers5 1 2 8 4 13 1447 2434 58 20 96.610687 hired5 1 2 8 4 14 1513 2437 22 17 96.988472 to5 1 2 8 4 15 1542 2435 80 20 96.625481 delivers 1 2 8 4 16 1629 2442 47 13 96.563461 cars5 1 2 8 4 17 1684 2438 21 17 96.563461 to5 1 2 8 4 18 1713 2437 125 23 96.443405 purchasers4 1 2 8 5 0 532 2463 453 26 -1 5 1 2 8 5 1 532 2468 53 14 96.949722 were5 1 2 8 5 2 592 2463 145 24 96.303009 independents 1 2 8 5 3 742 2466 129 18 96.555412 contractors5 1 2 8 5 4 877 2465 37 23 93.247360 (ID5 1 2 8 5 5 921 2471 18 18 93.232979 p.5 1 2 8 5 6 947 2465 38 24 96.815178 57).2 1 3 0 0 0 531 2496 1307 58 -1 3 1 3 1 0 0 531 2496 1307 58 -1 4 1 3 1 1 0 572 2496 1266 28 -1 5 1 3 1 1 1 572 2497 15 11 10.813148 *5 1 3 1 1 2 601 2496 151 25 95.813766 Respondents’5 1 3 1 1 3 763 2497 61 20 96.251717 others 1 3 1 1 4 848 2497 60 8 96.296295 objections 1 3 1 1 5 948 2504 100 14 96.580589 concerns5 1 3 1 1 6 1059 2499 118 24 96.722305 paragraphs 1 3 1 1 7 1188 2500 9 18 96.893143 I5 1 3 1 1 8 1208 2499 18 22 96.700623 3,5 1 3 1 1 9 1238 2500 68 19 96.386131 which5 1 3 1 1 10 1317 2500 68 19 96.987076 would5 1 3 1 1 11 1396 2500 82 24 96.998039 requires 1 3 1 1 12 1489 2501 55 20 96.562721 theirs 1 3 1 1 13 1555 2502 137 19 96.682495 automobiles5 1 3 1 1 14 1702 2504 22 17 92.089478 to5 1 3 1 1 15 1735 2505 55 17 92.089478 meets 1 3 1 1 16 1801 2503 37 19 96.637115 thea 1 3 1 2 0 531 2529 931 25 -1 5 1 3 1 2 1 531 2529 84 19 96.924698 various5 1 3 1 2 2 621 2531 57 18 96.537621 states 1 3 1 2 3 686 2530 113 24 93.275604 inspections 1 3 1 2 4 808 2531 58 23 93.248131 requi5 1 3 1 2 5 941 2533 8 7 50.007343 ts5 1 3 1 2 6 967 2532 41 19 95.666328 ands 1 3 1 2 7 1016 2532 18 19 96.835602 is5 1 3 1 2 8 1092 2532 19 8 88.412079 idered5 1 3 1 2 9 1168 2533 22 18 96.852058 in5 1 3 1 2 10 1198 2532 37 19 96.796165 thes 1 3 1 2 11 1244 2533 17 7 79.464890 di5 1 3 1 2 12 1323 2533 4 4 92.146759 ions 1 3 1 2 13 1363 2539 27 13 96.617065 on5 1 3 1 2 14 1397 2533 65 20 96.179199 relief.2 1 4 0 0 0 937 2107 366 15 -1 3 1 4 1 0 0 937 2107 366 15 -1 4 1 4 1 1 0 937 2107 366 15 -1 5 1 4 1 1 1 937 2107 366 15 95.000000 2 1 5 0 0 0 535 2202 300 14 -1 3 1 5 1 0 0 535 2202 300 14 -1 4 1 5 1 1 0 535 2202 300 14 -1 5 1 5 1 1 1 535 2202 300 14 95.000000 2 1 6 0 0 0 1242 2213 524 10 -1 3 1 6 1 0 0 1242 2213 524 10 -1 4 1 6 1 1 0 1242 2213 524 10 -1 5 1 6 1 1 1 1242 2213 524 10 95.000000 2 1 7 0 0 0 1452 2212 314 12 -1 3 1 7 1 0 0 1452 2212 314 12 -1 4 1 7 1 1 0 1452 2212 314 12 -1 5 1 7 1 1 1 1452 2212 314 12 95.000000 2 1 8 0 0 0 601 2506 336 11 -1 3 1 8 1 0 0 601 2506 336 11 -1 4 1 8 1 1 0 601 2506 336 11 -1 5 1 8 1 1 1 601 2506 336 11 95.000000 2 1 9 0 0 0 685 2531 670 21 -1 3 1 9 1 0 0 685 2531 670 21 -1 4 1 9 1 1 0 685 2531 670 21 -1 5 1 9 1 1 1 685 2531 670 21 95.000000 Opinion 91 F.T.C.

car interiors were in presentable shape, it is also likely that most consumers would expect a used car, particularly a used taxi, to show signs of wear. Beyond that, the record is inadequate to establish that the interiors were generally in such poor condition that disclosure of that fact in respondent’s advertising should be required.” Moreover, aside from proscribing future misrepresentations, neither the notice order nor the order proposed by the law judge would require respondents to disclose the mechanical condition of their cars. The record reveals, however, that this attribute of the cars caused consumers the most trouble. We are reluctant to require the more intrusive remedy of affirmatively disclosing the condition of the car interior where the evidence of materiality is much less compelling. However, should respondents be induced to get into the used car business again, we believe the order provisions appropriately fence-in respondents with respect to misleading claims concerning a car’s physical condition (both exterior and interior) as well as its mechanical condition. [24] IV. Unfair Business Practices The complaint alleged several additional unfair practices, including retention by respondents of monies for merchandise not shipped promptly, maintaining an unlisted telephone number and requiring proof of purchase and/or proof of return shipment in cases of nondelivery and demands for refunds.** There is no dispute with the ALJ’s determination that respondents committed an unfair practice in retaining customer payments while not fulfilling their end of the bargain by making prompt deliveries and refunds as promised. It is no less unfair for a firm to keep the benefits of unlawful acts than it is to have engaged in those acts in the first place. See Koscot Interplanetary, Inc., 86 F.T.C. 1106, 1157, 1184-85 (1975); Universal Credit Acceptance Corp., 82 F.T.C. 570, 647- 54 (1978), rev'd in part sub nom. Heater v. FTC (refund provisions set aside), 503 F.2d 321 (9th Cir. 1974); cf: Windsor Distributing Co., 77 F.T.C. 204, 222-23 (1969), aff'd, 487 F.2d 448 (3d Cir. 1971). As for the unlisted telephone, the ALJ found that it was not unfair for respondents ‘vu close off this form of communication since other means were available. (ID p. 63) But once a customer complains about nondelivery or a failure to refund, the ALJ held it to be an = What consumer testimony the record contains on this point sheds little light as to what consumers expected. One consumer, although disappointed, found the interior satisfactory (Tr. 1118-1119). Two others objected to the interior being dirty (Tr. 1102, 1138), but it is not clear whether this dirt would be easily removed. And another consumer objected to the fact that the dash was taped where the taxi equipment had been removed (Tr. 1178). JAY NORRIS CORP., ET AL. 849 751 Opinion unfair practice for respondents not to provide the customer with a telephone number for future contacts. (ID p. 65) We sympathize with the plight of consumers who have been frustrated in their attempts to obtain satisfaction from respondents. Similar problems were extensively documented during the Commission’s consideration of the mail order rule. (See 40 F.R. 51582-86 (1975)) Nevertheless, we agree with the ALJ that many of the same difficulties encountered by purchasers in communicating with respondents by writing are likely to crop up in telephone contacts. (See ID p. 64) By correcting the central problem surrounding respondents’ operations, namely their failure to perform as promised, many of the difficulties involved in [25] resolving complaints can be cleared up. That is the objective of our order as well as the mail order TRR (which also contains no telephone disclosure requirement). Moreover, for many customers of Jay Norris, telephone access would be of little value since the low price of many of the items purchased would not justify the cost of a long-distance call to the company’s New York offices.

Thus, we concur in the law judge’s refusal to require respondents to list their telephone number. For similar reasons, we decline to follow the ALJ’s ruling concerning respondents’ failure to disclose their phone number when responding to complaints. The ALJ further concluded that in certain cases respondents unfairly required customers to submit proof of purchase before complaints were acted upon. This allegedly was necessitated by respondents’ failure to keep better records. (ID p. 64) In reaching this decision the law judge rejected respondents’ attempt to analogize their practice to the requirements customarily imposed by retail stores. He noted that a retail store which provides a sales slip and a face to face confrontation between the customer and the seller. . . is in a different situation than a mail-order business that sells merchandise unseen, prepaid, by mail. As long as respondents represent that the customer will get a refund or that delivery is guaranteed, they cannot require proof of payment, as a condition for their acting on a complaint, unless they disclose to the customer in the original contact that such proof will be required before reshipment or refund is made. (Id.) ;

However, the ALJ’s finding of unfairness appears to be based on respondents’ recordkeeping deficiencies, rather than the fact that they demanded proof of payment before making a refund or reshipment.

We agree with the law judge that customers ordering by mail should be able to expect that their orders could be satisfactorily processed by respondents in the ordinary course of business without f 850 FEDERAL TRADE.COMMISSION DECISIONS Opinion 91 F.T.C.

the need for further documentation. But the record here clearly does not support the charge that respondents systematically demanded proof of purchase before granting a refund or reshipping the ordered merchandise. To [26] be sure, respondents at one time used a form letter in responding to complaints which requested further information, such as the date of original order, the product ordered and the amount of the check. (CX 4245) Mr. Williams, vice-president and treasurer of Jay Norris, testified, however, that this form was employed only in those instances in which the customer didn’t provide sufficient information for respondents to “check it back.” (Tr. 196) Moreover, at some indeterminate time in the past respondents even stopped requesting this kind of information and simply shipped the customer duplicate merchandise where sufficient time had elapsed for delivery. (Tr. 196; CX 4248) In view of this evidence we cannot sustain the law judge’s finding that respondents’ practices were unfair. Nor do we retain the recordkeeping provisions in paragraph 20 of the ALJ’s order designed to remedy these alleged practices. To the extent better records are required, we believe the provisions of the mail order rule (which we incorporate in this order), together with the requirement for retention of complaint correspondence, satisfactorily address the shortcomings in respondents’ recordkeeping procedures. V. Relief The order proposed by the ALJ differs in a number of respects from the original notice order. As discussed more fully below, we adopt with revisions the basic approach reflected in the law judge’s recommended order.

A. Delivery and Refund Practices Both the notice order and the ALJ’s proposed order rely primarily on provisions drawn from the Mail Order Merchandise TRR to remedy the violations uncovered in connection with respondents’ delivery and refund practices.* Though the findings made in a specific case may justify harsher or milder remedies than those applied industrywide, we are persuaded that the law judge properly incorporated large portions of the mail order rule in his order. That is because many of the [27] problems encountered by consumers in this case are similar to those which led to issuance of the Rule and because we are challenging largely pre- TRR practices. Thus, in the absence of any particularly unique 2 The corresponding provisions in the order we issue are Paragravhs 3-5 of Part I. Paragranh 1. as modified. JAY NORRIS CORP., ET AL. 851 151 Opinion conditions in this proceeding, we are reluctant to stray from the guidance provided by the Rule.

Indeed, in view of this situation, we believe it is appropriate to reinstate in our order the rebuttable presumptions contained in the TRR but deleted from paragraphs 4(c) and 5(c) of the order recommended by the ALJ. Under the Rule mail order sellers without documentary proof are presumed to lack a reasonable basis for their delivery claims. (16 C.F.R. 435.1(a)(4)) Similarly, sellers are presumed to have failed to provide buyers with an adequate opportunity to exercise their rights in the event of a delayed delivery by not providing written notification or the means to reply in writing. (dd. 435.1(b)(8)) However, the Commission permitted mail order firms to overcome these presumptions by demonstrating that equally effective means were used to meet the TRR’s objectives.° We see no compelling basis to depart from that scheme here. To be sure, respondents’ meager recordkeeping contributed to our finding that they failed to live up to the performance claims in their advertising. Respondents clearly will have to limit their claims to the performance they can deliver. Moreover, it appears obvious that they will have to improve their procedures in order to conform with the requirements of this order and the Rule. For example, respondents will have to show that ordered merchandise is shipped routinely within the time promised (or if no time is specified within 30 days) and that procedures are in place which assure that purchasers are properly notified of shipping delays. Respondents’ present inability to ascertain [28] when, or whether, shipment has been made following receipt of an order cannot continue.?’ Nevertheless, we are not disposed to foreclose alternative means of compliance so long as they satisfy the standards of conduct set forth in the order. In short, we believe reliance on the mail order rule as a basis for this part of the order provides a fair and effective means for dealing with the practices found unlawful in this proceeding.”* B. Substantiation Requirements Respondents challenge virtually every provision in the ALJ’s proposed order, but nowhere is their opposition more vehement than that directed against order para- graph I 7 which prohibits them from:

* As the Cr ission recognized in that pr ding, care must be taken not to unduly restrict the ability of i pting to deliver goods to 8 in the most cost-effective manner. [See, e.g. 40 F.R. at 51588 ial cost of r keeping), Id. at 51589 (flexible requir ts on seller depending on ber of delays), Id. at 51590 (30-day grace period to obtain buyer’s consent).} We appreciate the fact that some improvements in the reliability of performance may exact too high a cost in reduced efficiency and higher prices. ™ The only records kept were the (1) customers’ names and addresses, (2) the date the order was received, (3) the amount of money remitted, and (4) for noncatalog orders, the product purchased. (ID 21) No records are kept showing shipment dates for specific orders. % ‘Another advantage of incorporating the mail order rule provisions in this order is that the explanations and interpretations associated with the Rule will facilitate compliance with the order. Opinion 91 F.T.C.

Representing the safety, efficacy, performance, content, or any other characteristic of any product unless such claims are fully and completely substantiated by a reasonable basis which shall consist of competent objective material and substantiative material is available to the public. (ID pp. 86-87) Respondents contend that paragraph I 7 infringes on their First Amendment rights, exceeds the Commission’s statutory authority, and fails for lack of public interest. We consider each of these contentions in turn. [29] It is beyond dispute that commercial speech is protected by the First Amendment. See Bates v. Arizona, 433 U.S. 350 (1977); Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976); and Bigelow v. Virginia, 421 U.S. 809 (1975). It is equally clear, however, that commercial speech does not enjoy the same unfettered protection as political speech. In particular, deceptive or misleading commercial speech is properly subject to government regulation. For example, as the Court observed in Virginia Pharmacy, much commercial speech is not provably false, or even wholly false, but only deceptive or misleading. We see no obstacle to a State’s dealing effectively with this problem. (Id. at 178; see also, Bates, 433 U.S. at 383-84) More recently, in Ohralick v. Ohio State Bar Association, the Supreme Court explained why commercial speech is differentiable from other protected speech:

To require a parity of constitutional protection for commercial and noncommercial speech alike could invite dilution, simply by a leveling process, of the force of the Amendment’s guarantee with respect to the latter kind of speech. Rather than subject the First Amendment to such a devitalization, we instead have afforded commercial speech a limited measure of protection, commensurate with its subordinate position in the scale of First Amendment values, while allowing modes of regulation that might be impermissible in the realm of noncommercial expression. [46 USLW 4511, 4513-14 (1978)] Respondents contend, though, that this order prohibits them from making representations for which they have no reasonable basis but which are nonetheless true. (RAB at 4-10) Complaint counsel counter by arguing that the order constitutes a reasonable deterrent to future deceptive advertising by proven violators of the FTC Act. (CAB at 7) [30] In the first place, there is nothing S-- att ~..4- a novel about the substantiation ee ene a ane | JAY NORRIS CORP., ET AL. 853 751 Opinion able basis for their claims have been included in numerous Commission orders.”° Moreover, while we are sensitive to Constitutional implications in fashioning a proper remedy for deceptive advertising, where the Commission merely orders violators to reasonably substantiate their performance claims, as it does here, such a requirement furthers rather than impairs First Amendment objectives. As the Seventh Circuit explained in National Commission on Egg Nutrition, et al., 5170 F.2d 157, 162 (7th Cir. 1977), petition for cert. filed, 446 USLW 3694 (April 28, 1978), the First Amendment interest in commercial speech also embraces the interests of the prospective audience consumers. The consumers’ interest in product information “is served by insuring that the information is not false or deceptive, and in fact, coincides with the public interest served by the regulation.” (ID.) (emphasis added) The Supreme Court has also recognized the importance in insuring that commercial speech flows cleanly, commenting in Bates that the public and private benefits from commercial speech drive from confidence in its accuracy and reliability. Thus the leeway for untruthful or misleading expression that has been allowed in other contexts has little force in the commercial arena. (433 U.S. at 383-84) Of course, concern for accuracy in commercial speech is not a new one for this Commission. In Porter & Dietsch, we recently considered how our statutory obligations to prohibit deceptive commercial speech mesh with the objectives of the First Amendment: [31] Deceptive commercial speech does not aid consumers in making their purchasing decisions and may cause economic injury to those consumers who purchase the advertised product because of the deception. It also reduces the effectiveness of all advertising by casting doubt on its reliability. Therefore, although sensitive to the public interest in the free flow of commercial speech, we serve the same public goals when we meet our statutory obligations by prohibiting deceptive advertising. (Slip op. at 5) Similarly, in Egg Nutrition, we stated:

Neither the objectives of the First Amendment, nor of the FTC Act are well-served, , however, by commercial speech which is deceptive As Justice Stewart noted in concurring with the majority in Virginia Pharmacy Board, “ the elimination of false and deceptive claims serves to promote the one facet of commercial price and product advertising that warrants First Amendment protection — its contribution to 2 See e.g. Porter & Dietsch, slip op. at order paragraphs I. A and I. B. [90 F.T.C. 770}; Fedders Corp., 85 F.T.C. 38, 69 (1975), aff'd, 529 F.2d 1398 (2d Cir. 1976), cert. denied, 429 U.S. 818 (1976); National Dynamics Corp., 82 F.T.C. 488, 569 (1973), ded for other r 492 F.2d 1833 (2d Cir. 1974), cert. denied, 419 U.S. 993 (1974); Firestone Tire & Rubber Co., 81 F.T.C. 398, 475 (1972), 481 F.2d 246 (6th Cir. 1973), cert. denied, 414 U.S. 1112 (1978). 854 . FEDERAL TRADE COMMISSION DECISIONS Opinion 91 F.T.C.

the flow of accurate and reliable information relevant to public and private ' decisionmaking.” [425 U.S. at 781] (88 F.T.C. at 196) (emphasis added) ~ Respondents’ argument appears to stem from the fear that the cost of acquiring a reasonable basis which they feel confident meets the order’s requirements will chill their dissemination of truthful advertising claims. Yet, as the previously cited decisions emphasize, more reliable information enhances the flow of truthful advertising and furthers First Amendment interests. Since advertisers are in a far better position than consumers to verify the accuracy of their claims, it is only reasonable that they bear the burden of such verification.

Moreover, as the Commission has held on prior occasions, representations of objective product characteristics made without substantiation are, for that reason, deceptive, National Dynamics Corp., et al., 82 F.T.C. 488, 559-60 (1973); aff'd, 492 F.2d 1888 (2d Cir.), cert. denied, 419 U.S. 993 (1974). Accordingly, when it forbids unsubstantiated performance claims by way of fencing in, the Commission is doing no more than proscribing a class of deceptive claims—indisputably permissible action under the First Amendment, Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771 n. 24 (1976). [32] In Egg Nutrition, the Commission observed that Many consumers are likely to assume that when a product claim is advanced which is in theory subject to objective verification, the party making it possesses a reasonable basis for so doing, and that the assertion does not constitute mere surmise or wishful thinking on the advertiser’s part. As a result, the rendition of a claim based upon inadequate or nonexistent substantiation violates Section 5 for failure to state a highly material fact, whose omission is deceptive. (88 F.T.C. at 191) Although the complaint did not include such a charge, as respondents point out (RRB at 4), requiring them to have substantiation for their claims is clearly an appropriate remedial device for preventing recurrences of deceptive advertising.*° [33] As the Supreme Court has pointed out, the hardiness and objectivity of commercial speech make the prospects of its being °° We also note that it appears the Commission would be fully justified under the circumstances of this case in imposing upon respondents a broad requirement that they not misrepresent the safety or performance of any of the products they sell. For example, the Commission has entered, and courts have sustained, orders forbidding broad t ies of misrepr tations with respect to the sale of “all products,” see American Aluminum Corporation, et al, 84 F.T.C. 21 (1974), aff'd, 522 F.2d 1278 (5th Cir. 1975); All State Industries of North Carolina, Inc., 15 F.T.C. 465, 495 (1969), aff'd, 423 F.2d 423 (4th Cir.), cert. denied, 400 U.S. 828 (1970); Mutual Construction Ca., Inc. et al, 87 F.T.C. 621 (1976). We choose here not to enter an order prohibiting misrepresentations of various facets of all respondents’ products; respondents will not be held to account for the absolute truth of their claims. Thus we . impose a lesser remedy by requiring that respondents not make a safety or performance claim for any product without a reasonable basis. Rather respondents must simply substantiate these claims, and this will absolve them JAY NORRIS CORP., ET AL. 855 151 , Opinion chilled by proper regulation unlikely. Bates, 433 U.S. at 383-84; Virginia Pharmacy, 425 U.S. n. 24 at 171-72’ These attributes led the court in Virginia Pharmacy to indicate that earlier cases approving the reasonableness of regulatory prior restraints on commercial speech have continuing validity. E.g., Donaldson v. Read Magazine, 333 U.S. 178, 189-191 (1948); FTC v. Standard Education Society, 302 US. 112 (1937); E. F. Drew & Co. v. FTC, 235 F.2d 735, 739-740 (2d Cir. 1956), cert. denied, 352 U.S. 969 (1957).3: And elsewhere the Supreme Court has noted as well established the Commission’s power to restrain misleading statements in labels and advertisements. See Young v. American Mini Theatres, Inc., 427 U.S. 50, 69 n. 81 (1976).32 See also Ohralick, 46 USLW at 4513-14. Undoubtedly, many advertisers, irrespective of a substantiation requirement, would take steps to document their claims as a matter of good business practice or possibly out of fear of a subsequent false advertising challenge. To that extent, truthful advertising will not be chilled. Though substantiation increases the risk that some truthful, as well as false, claims may be challenged, it is a small price to pay to insure greater confidence in all [34] advertising. Whatever incremental reduction in advertising, attributable to a substantiation order, beyond that which would result if advertisers only disseminated nondeceptive claims “may well be necessary if the interest of consumers in truthful information is to be served at all.” Warner Lambert v. FTC, supp. op. 1977-2 Trade Cases p. 61,646 at 72,653 (September 14, 1977), cert. denied, 46 USLW 3613 (April 4, 1978). See also National Society of Professional Engineers v. U.S., 98 S. Ct. 1855, 1865-68 (1978).

Respondents also advance several additional arguments to the effect that paragraph I 7 of the ALJ’s order exceeds the scope of the Commission’s authority: (1) the coverage of all products and any ' advertisement is too broad, (2) the standard of “full,” “complete” and “competent” substantiation is too vague, and (3) the requirement of making substantiative material generally available to the public is unwarranted.

Regarding the “all products - any advertisement coverage,” respondents stress that the proposed order is overly broad and S Virginia Pharmacy and Bates also leave intact other Commission cases holding that the government can restrict commercial speech to prevent deception to consumers, citing Tashof v. FTC, 437 F.2d 707 (D.C. Cir. 1970); Murray Space Shoe Corp. v. FTC, 304 F.2d 270 (8rd Cir. 1962); American Medicinal Prods. Inc. v. FTC, 136 F.2d 426 (9th Cir. 1943). In Tashof, the court upheld a Commission order prohibiting a retailer from advertising discount prices without first conducting a “statistically significant survey” of competing stores to establish the accuracy of its claims. Even though the court conceded that advertised prices might otherwise be truthful, it found the requirement of a prior survey to be a reasonable deterrent to future violations. (347 F.2d at 715) %* The Court relied on Jacob Siegel Co. v. FTC, 327 U.S. 608 (1946); FTC v. National Commission on Egg Nutrition, 517 F.2d 485 (7th Cir. 1975); E. F. Drew & Co. v. FTC, 235 F.2d 735, 740 (2d Cir. 1956). Opinion 91 F.T.C.

unduly burdensome. Respondents, however, have previously been subjected to orders of the Commission, the U.S. Postal Service and the New York State Attorney General for claims for three different products.** Moreover, in this case we have found that respondents misrepresented the performance of six products of widely varying cost and use. [35] The Commission has authority to fashion broad relief where necessary to deal effectively with wrongdoers. See Firestone Tire & Rubber Co., 81 F.T.C. 398, 468 (1972), 481 F.2d 246 (6th Cir. 1973), cert. denied, 414 U.S. 1112 (1973) and cases cited therein.** The Commission’s order must, or course, be tailored in some measure to the violations found. But where, as here, the violations involve a wide variety of products and a wide variety of deceptive claims an effective order must necessarily be very broad. That is particularly true in light of the history of prior proceedings undertaken to prevent deceptive claims by respondents. Precisely because they sell so many products, with no one category being substantially more important than any other, it seems likely that an order which did not apply to all products would do very little to protect the public. Rather than eliminating future deception, it would merely shift its locus to a different part of respondents’ catalog.

Although the order is broad, we note that respondents’ troubles stemmed in large measure from making unqualified claims which, at least in the case of the flashlight and roach powder, overstated the manufacturers’ claims for the products. By exercising a little more care in preparing their ads, respondents’ compliance burdens under this order will be greatly reduced. Moreover, we have modified the substantiation provision in Part I of our order to limit its coverage to safety and performance claims, thereby [36] deleting reference to content or other product characteristics.** This change appropriately narrows the scope of the provision to those kinds of deceptive claims 33 The order issued by the Commission in this matter will be the third imposed by the C ission upon these respondents within the past 15 years. The first order, a consent settlement, forbade various misrepresentations concerning the nutritional characteristics of vitamins and vitamin-mineral preparations, Jay Norris Company Trading as Norris Nutritions, et al., 68 F.T.C. 702 (1965). The second order was entered after litigation and involved misrepresentations by respondents regarding their trade status and deceptive pricing, Federated Nationwide Wholesalers, et al. v. Federal Trade Commission, 398 F.2d 253 (2d Cir. 1968. See also U.S. Postal Service proceeding as referred to in ID 47; and Assurance of Discontinuance Pursuant to Executive Law Section 63, Subdivision 15, Attorney General of the State of New York Bureau of Consumer Frauds and Protection, dated June 30, 1976. % See also FTC v. Colgate Palmolive Co., 380 U.S. 374, 392 (1965); Jacob Siegel Co. v. FTC, 327 U.S. 608, 618 (1946); Warner Lambert Co. v. FTC, 562 F.2d 749, 762 (7th Cir. 1977), cert. denied, 46 USLW 3613 (April 4, 1978), Niresk Industries, Inc. v. FTC, 218 F.2d 837, 348 (7th Cir. 1960), cert, denied, 364 U.S. 883, cases which limit the Commission’s discretion only by requiring that the remedy be reasonably related to the unlawful practice. 3 No logical sub-grouping of respondents’ products is suggested as a basis for limiting product coverage and there appears to be none. Respondents’ products generally, like the ones involved in this case, vary tremendously dente’ h in price and use. In any event, this record demonstrates that resp P it for misrepr tation of dane.

nawfarmanan ia ant ane Bae JAY NORRIS CORP., ET AL. 857 751 Opinion which predominate in this case. Additionally, we have clarified the order to provide that substantiation must be available in written form. For example, that does not preclude respondents from relying, where appropriate, upon the technical advice of qualified persons for substantiation of product claims. It only means that such advice must be reduced to writing.

A separate substantiation provision has been inserted in Part II of the order to avoid any suggestion that the reference to “any product” in paragraph 6 of Part I does not include products covered by Part II. Part II coverage also has been expanded to include all used motor vehicles, rather than just automobiles, Given the variety and seriousness of the misrepresentations which occurred in connection with respondents’ sale of used cars, it seems appropriate to fence in respondents as to future mail order sales of other types of vehicles, such as trucks, motorcycles, campers and the like. Respondents further contend that the broad standards provided by the words “full,” “complete” and “competent” are unduly vague and illegal as a matter of law. We note that similar language has been used in other substantiation orders. See n. 29, supra. These cases provide ample guidance to respondents in construing these terms, and more generally, the concept of reasonable basis. Moreover, we believe that the general meaning of these terms is readily understood.

Respondents next question the legal basis for requiring substantiation to be generally available to the public. We do not reach this question because we find there has been no showing that this is necessary to cure the violations found to exist. In this context it is sufficient that consumers are in a position to rely on the advertising claims without the trouble and expense of investigating the substantiation for themselves. See Porter & Dietsch, slip op. at 38. [37] Finally, relying on NLRB v. Wyman Gordon Co., 394 U.S. 759 (1969), respondents contend that prior substantiation requirements should be addressed in a rule forum. We recently rejected “this variation on the old theme of selective enforcement.” Porter & Dietsch, slip op. at 32. We reject it again. We do not believe the public good would be well served if the Commission, in dealing with proven violators of Section 5, refrained from meeting out in administrative proceedings remedies appropriate to the violations found. Moreover, under 15 U.S.C. 45(m), the Commission is free to hold other concerns to the same standards we are imposing on these respondents, when the order we will enter becomes final.

Thus, having rejected respondents’ challenges to the propriety of Opinion 91 F.T.C.

requiring them to substantiate their claims, the final order will include such a provision.

C. Other Provisions After excising those order provisions for which corresponding violations were not found,>’ we adopt with some revisions the ALJ’s order as it applies to the specific misrepresentations involving the six products.

In addition, we delete paragraph I 3 of the law judge’s order which would prohibit respondents from shipping to any state any car which fails to meet the motor vehicle registration, safety and inspection standards of that state. The ALJ retained this provision in the order without explanation after dismissing the complaint charge that respondents failed to disclose a material fact by not revealing whether their cars were inspected for compliance with state law. [38] (ID p. 57) The record sheds little light on respondents’ obligations under state inspection laws, the extent of their compliance with such laws, or whether state law is adequate to deal with the kind of distribution scheme engaged in by respondents. Thus, absent deception, we find little basis for imposing this requirement. We also believe paragraph I 13 of the proposed order is somewhat overbroad. Our determination that respondents deceptively advertised their roach powder as safe is based on the failure to qualify such claims by noting that the product could be used safely only in accordance with the instructions on the label. A more appropriate disclosure requirement is to require respondents to condition any claim of safety in ads for pesticides by including the following language: “To Use This Product Safely, You Must Follow The Instructions On The Label.”

Lastly, we agree that the ALJ properly included Jay Norris, Jacobs, and Williams within the scope of Part II of the order.*® The law judge’s discussion of this issue is persuasive (ID p. 58). Jacobs and Williams were stockholders and corporate officers of Pan Am (id.; Tr. 163). Though these individual respondents may not have taken an active role in the day to day business of Pan Am (Tr. 155, 167), they clearly were aware of its operations (Tr. 159, 167). See Standard Educators, Inc. v. FTC, 415 F.2d 401 (D.C. Cir. 1978), cert. denied, 414 U.S. 828 (1973). Furthermore, Pan Am’s business was 3 Those provisions dropped include (1) disclosure of the roach powder ingredients, (2) disclosure of the interior condition of respondents’ used cars, and (3) disclosure that the taxis were from New York. ** Respondents’ ads do assert that “[e Jach car has been thoroughly serviced by our mechanics to put it in good operating condition and passes careful inspection before being released for delivery.” See, e.g., CX 51A. Although, as the ALJ noted (ID p. 57), it is not entirely clear what this “inspection” refers to, we are reluctant to construe it as meaning that respondents’ cars conform to the inspection requirements of all 51 jurisdictions. Nor does the complaint allege such a claim. (Cf. complaint para. 9(21)) 7° With respect to Part II of the ALJ’s order, respondents contend and the plai | agree that the first word of paragraph 2 should be “misrepresenting” rather than “representing” (RAB at 50; CAB at 39). We have retained this provision in the final order as so modified. JAY NORRIS CORP., ET AL. 859 751 Final Order conducted by Norris personnel at the Norris place of business (Id.,; CX 752-754, 756). [39] For reasons already articulated, the final order will not include provisions requiring respondents to disclose the Norris telephone number in response to complaints and imposing on them specific recordkeeping responsibilities. (See paragraphs I 19 and I 20 of the ALJ’s order) We have kept in the final order, however, the provision obligating respondents to maintain records of consumer complaints, including the disposition of such complaints, for three years. This information is necessary to assist the Commission in ascertaining compliance with the order. To the same end, we have also inserted a requirement similar to that contained in other orders that respondents submit a detailed compliance report within 60 days and annually thereafter for five years.

FINAL ORDER This matter having been heard by the Commission upon the appeal of respondents from the initial decision, and upon briefs and oral argument in support thereof and opposition thereto, and the Commission for the reasons stated in the accompanying Opinion having determined to sustain the initial decision with certain modifications: [2] It is ordered, That the initial decision of the administrative law judge, pages 1-73, be adopted as the Findings of Fact and Conclu- . sions of Law of the Commission, except to the extent modified or otherwise indicated in the accompanying Opinion. Other Findings of Fact and Conclusions of Law of the Commission are contained in the accompanying Opinion. It is further ordered, That the following order to cease and desist be, and it hereby is, entered:

ORDER I It is ordered, That Jay Norris Corp., a corporation, its successors and assigns, and Joel Jacobs and Mortimer Williams individually and as officers of said corporation, and respondents’ officers, agents, representatives and employees directly or through any corporation, subsidiary, division, trade style, or other device, in connection with the advertising, offering for sale, sale and distribution of general mail-order merchandise in or affecting commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

u Final Order 91 F.T.C.

1. Failing to refund the amount required by Paragraph 2, in connection with the return of merchandise purchased from respondents, within the time specified in respondents’ advertisements. If no time is specified, such refund must be made within the time specified in Paragraph 5(E)(4) of this Part. [3] 2. Failing to refund the full purchase price of merchandise including postage, insurance, handling, shipping, or any other fee or charge paid by the purchaser any time a refund is made to such purchaser, unless respondents clearly state in their advertisement the exact nature of the refund including any items of the purchaser’s expense that will not be refunded.

8. (A) Soliciting any order for the sale of merchandise to be ordered by the buyer through the mails unless, at the time of the . solicitation, respondents have a reasonable basis to expect that they will be able to ship any ordered merchandise to the buyer: (1) within the time clearly and conspicuously stated in any such solicitation, or (2) if no time is clearly and conspicuously stated, within thirty (30) days after receipt of a properly completed order from the buyer; and (B) Providing any buyer with any revised shipping date, as provided in Paragraph 4 of this Part unless, at the time any such revised shipping date is provided, respondents have a reasonable basis for making such representation regarding a definite revised shipping date; or (C) Informing any buyer that they are unable to make any representation regarding the length of any delay unless (1) respondents have a reasonable basis for so informing the buyer and (2) respondents inform the buyer of the reason or reasons for the delay. For purposes of this order, the failure of respondents to have records or other documentary proof establishing their use of systems and procedures which assure the shipment of merchandise in the ordinary course of business within any applicable time set forth in this order will create a rebuttable presumption that the respondents lacked a reasonable basis for any expectation of shipment within said applicable time. [4] 4. (A) Where respondents are unable to ship merchandise within the applicable time set forth in Paragraph 3(A) above, failing to offer to the buyer, clearly and conspicuously and without prior demand, an option either to consent to a delay in shipping or to cancel his order and receive a prompt refund. Said offer shall be made within a reasonable time after respondents first become aware of their inability to ship within the applicable time set forth in Paragraph 3(A), but in no event later than said applicable time. stn ia JAY NORRIS CORP., ET AL. 861 151 Final Order buyer regarding his right to cancel the order and to obtain a prompt refund and shall provide a definite revised shipping date, but where respondents Jack a reasonable basis for providing a definite revised shipping date the notice shall inform the buyer that respondents are unable to make any representation regarding the length of the delay. (2) Where respondents have provided a definite revised shipping date which is thirty (30) days or less later than the applicable time set forth in Paragraph 3(A), the offer of said option shall expressly inform the buyer that, unless respondents receive, prior to shipment and prior to expiration of the definite revised shipping date, a response from the buyer rejecting the delay and cancelling the order, the buyer will be deemed to have consented to a delayed shipment on or before the definite revised shipping date. (8) Where the respondents have provided a definite revised shipping date which is more than thirty (30) days later than the applicable time set forth in Paragraph 3(A), or where the respondents are unable to provide a definite revised shipping date and therefore inform the buyer that they are unable to make any representation regarding the length of the [5] delay, the offer of said option shall also expressly inform the buyer that his order will automatically be deemed to have been cancelled unless (a) respondents have shipped the merchandise within thirty (30) days of the applicable time set forth in Paragraph 3(A) above, and have received no cancellation prior to such shipment, or (b) respondents have received from the buyer within thirty (30) days of said applicable time, a response specifically consenting to said shipping delay. Where the respondents inform the buyer that they are unable to make any representation regarding the length of the delay, the buyer shall be expressly informed that, should he consent to an indefinite delay, he will have a continuing right to cancel his order at any time after the applicable time set forth in Paragraph 3(A) by so notifying respondents prior to actual shipment. (4) Nothing in this paragraph shall prohibit respondents when they furnish a definite revised shipping date to Paragraph 4(A)(1) above, from requesting, simultaneously with or at any time subsequent to the offer of an option pursuant to Paragraph 4(A), the buyer’s express consent to a further unanticipated delay beyond the definite revised shipping date. Provided, however, that where respondents solicit consent to an unanticipated indefinite delay the solicitation shall expressly inform the buyer that, should he so consent to an indefinite delay, he shall have a continuing right to cancel his order at any time after the definite revised shipping date by so notifying respondents prior to actual shipment. 862 _ FEDERAL TRADE COMMISSION DECISIONS Final Order 91 F.T.C.

(B) Where respondents are unable to ship merchandise on or before the definite revised shipping date provided under Paragraph 4(A)(1), and consented to by the buyer pursuant to Paragraphs 4(A)(2) and 4(A)(8), failing to offer to the buyer, clearly and conspicuously and without prior demand, a renewed option either to consent to a further [6] delay or to cancel the order and to receive a prompt refund. Said offer shall be made within a reasonable time after respondents first become aware of their inability to ship before the said definite revised date, but in no event later than the expiration of the definite revised shipping date. Provided, however, that where respondents previously have obtained the buyer’s express consent to an unanticipated delay until a specific 4(A)(4) definite shipping date, pursuant to Paragraph 4 (A) (4) or to a further delay until a specific date beyond the definite revised shipping date pursuant to Paragraph 4(B), that date to which the buyer has expressly consented shall supersede the definite revised shipping date for purposes of Paragraph 4(B).

(1) Any offer to the buyer of said renewed option shall provide the buyer with a new definite revised shipping date, but where respondents lack a reasonable basis for providing a new definite revised shipping date, the notice shall inform the buyer that respondents are unable to make any representation regarding the length of the further delay.

(2) The offer of a renewed option shall expressly inform the buyer that, unless respondents receive, prior to the expiration of the old definite revised shipping date or any date superseding the old definite revised shipping date, notification from the buyer specifically consenting to the further delay, the buyer will be deemed to have rejected any further delay, and to have cancelled the order if respondents are in fact unable to ship prior to the expiration of the old definite revised shipping date or any date superseding the old definite. revised shipping date. Provided, however, that where respondents offer the buyer the option to consent to an indefinite delay the offer shall expressly inform the buyer that, should he so consent to an indefinite delay, he shall have a continuing right to cancel his order at any time after the old definite revised shipping date or any date superseding the old definite revised shipping date. [7] (3) Paragraph 4(B) shall not apply to any situation where respondents, pursuant to the provisions of Paragraph 4(A)(4), have previously obtained consent from the buyer to an _ indefinite extension beyond the first revised shipping date. JAY NORRIS CORP., ET AL. 863 751 Final Order this order or to cancel an order by so notifying respondents prior to shipment, failing to furnish the buyer with adequate means, at respondents’ expense, to exercise such option or to notify respondents regarding cancellation. For the purposes of this order, the failure of respondents:

(1) To provide any offer, notice or action required by this order in writing and by first class mail will create a rebuttable presumption that the respondents failed to offer a clear and conspicuous offer, notice or option;

(2) To provide the buyer with the means in writing (by business reply mail or with postage prepaid by respondents) to exercise any option or to notify respondents regarding a decision to cancel, will create a rebuttable presumption that the respondents did not provide the buyer with adequate means pursuant to this Paragraph 4(C). , Nothing in Paragraph 4 of this Part shall prevent respondents where they are unable to make shipment within the time set forth in Paragraph 3(A) or within a delay period consented to by the buyer, from deciding to consider the order cancelled and providing the buyer with notice of said decision within a reasonable time after they become aware of said inability to ship, together with a prompt refund.

5. Failing to deem an order cancelled and to make a prompt refund to the buyer whenever:

(A) Respondents receive, prior to the time of shipment, notification from the buyer cancelling the order pursuant to any option, renewed option or continuing option under this order; [8] (B) Respondents have pursuant to Paragraph 4(A)(8), provided the buyer with a definite revised shipping date which is more than thirty (30) days later than the applicable time set forth in Paragraph 3(A) or have notified the buyer that respondents are unable to make any representation regarding the length of the delay and respondents (1) have not shipped the merchandise within thirty (30) days of the applicable time set forth in Paragraph 3(A), and (2) have not received the buyer’s express consent to said shipping delay within said thirty (30) days;

(C) Respondents are unable to ship within the applicable time set forth in Paragraph 4(B) and have not received, within the said applicable time, the buyer’s consent to any further delay; (D) Respondents have notified the buyer of their inability to make shipment and have indicated their decision not to ship the merchandise; or (E) Respondents fail to offer the option prescribed in Paragraph Final Order 91 FTC.

4(A) and have not shipped the merchandise within the applicable time set forth in Paragraph 3(A).

For purposes of this Part:

(1) “Shipment” shall mean the act by which the merchandise is physically placed in the possession of the carrier. (2) “Receipt of a properly completed order” shall mean the time at which respondents receive an order from the buyer containing all the information requested by respondents and accompanied, where required, by the proper amount of money in the form of cash, check or money order. Provided, however, that where respondents receive notice that the check or money order tendered by the buyer has been dishonored or that the buyer does not qualify for a credit sale, “receipt of a properly completed order” shall mean the time at which (a) respondents receive notice that a check or money order for the proper amount tendered by the buyer has been honored, (b) the buyer tenders cash in the proper amount or (c) the seller receives notice that the buyer qualifies for a credit sale. [9] (8) “Refund” shall mean:

(a) Where the buyer tendered full payment for the unshipped merchandise in the form of cash, check or money order, a return of the full amount tendered in the form of cash, check, or money order; (b) Where there is a credit sale:

(i) and the seller is a creditor, a copy of a credit memorandum or the like or an account statement reflecting the removal or absence of any remaining charge incurred as a result of the sale from the buyer’s account;

(ii) and a third party is the creditor, a copy of an appropriate credit memorandum or the like to the third party creditor which will remove the charge from the buyer’s account or a statement from the seller acknowledging the cancellation of the order and representing that he has not taken any action regarding the order which will result in a charge to the buyer’s account with the third party; (iii) and the buyer tendered partial payment for the unshipped merchandise in the form of cash, check or money order, a return of the amount tendered in the form of cash, check or money order. (4) “Prompt refund” shall mean:

(a) Where a refund is made pursuant to definition (3)(a) or (8)(b)(iii) a refund sent to the buyer by first class mail within seven (7) working days of the date on which the buyer’s right to a refund vests under the provisions of this order. (5) The “time of solicitation” of an order shall mean that time JAY NORRIS CORP., ET AL. 865 751 Final Order (a) Mailed or otherwise disseminated solicitation to a prospective purchaser; [10] ‘ (b) Made arrangements for an advertisement containing the solicitation to appear in a newspaper, magazine or the like or on radio or television which cannot be changed or cancelled without incurring substantial expense; or (c) Made arrangements for the printing of a catalog, brochure or the like which cannot be changed without incurring substantial expense, in which the solicitation in question forms an insubstantial part.

6. Representing the safety or performance of any product unless such claims are fully and completely substantiated by a reasonable basis which shall consist of competent and objective material available in written form.

7. Misrepresenting that the nondelivery of merchandise ordered and paid for by a customer is caused by loss of the merchandise by the United States Postal Service.

8. Misrepresenting, directly or indirectly, the time or manner in which respondents’ flame gun, or any other product used for the removal of snow or ice, will perform in the removal of snow or ice. 9. Misrepresenting, directly or indirectly, the time in which or the manner by which respondents’ roach powder, or any other pesticide product, will kill or eliminate roaches. 10. Making any representation as to the safety of respondents’ roach powder or other pesticide product without failing to clearly and conspicuously include the following statement in all advertisements and other promotional material for said products: “‘To use this product safely, you must follow the instructions on the label.” 11. Misrepresenting, directly or indirectly, that respondents’ TV antenna or any TV antennna will bring in sharp and clear reception and is superior to any other antenna. [11] 12. Making any representation as to the life expectancy of flashlights or other battery operated product without failing to disclose, clearly and conspicuously in all advertisements and other promotional material for such products (a) the expected “on” life of the product; and (b) any limitations on the warranty of such product. 13. Representing, directly or indirectly, that the Lincoln-Kennedy penny was minted by the United States Treasury Department. 14. Representing, directly or indirectly, that the Lincoln-Kennedy penny is a coin of historical and numismatic significance which is likely to increase in value.

15. Representing, directly or indirectly, in connection with the Final Order 91 F.T.C.

sale of any product that another product is given “free” or as a gift without cost or charge in connection with: a. any offer which runs for an indefinite term or continuously for a period in excess of one (1) year; or b. any offer not covered by (a) above, excluding introductory offers, unless as to such limited offer:

(1) a regular bona fide retail price is established for the product without the “free” product;

(2) a regular bona fide retail price is established for the “free” product, or in the absence of such price a determination is made of the cost to respondents of such other product; and (8) the price of the product is reduced at least as much as the price or cost of the “free” product. [12] Il Jt is further ordered, That Jay Norris Corp., and Pan-Am Car Distributors Corp., corporations, their successors and assigns, and Joel Jacobs, Mortimer Williams and Kenneth Mann, individually and as officers of said corporations, and respondents’ officers, agents, representatives and employees directly or through any corporation, subsidiary, division, trade style, or other device, in connection with the advertising, offering for sale, sale and distribution of used motor vehicles by mail-order in or affecting commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Misrepresenting, directly or by implication, the ease or profit with which purchasers can resell respondents’ motor vehicles; 2. Misrepresentating the mechanical and physical condition of said motor vehicles;

3. Misrepresenting that said motor vehicles are in safe mechanical and operating condition;

4. Misrepresenting the extent to which said motor vehicles have been inspected and repaired in preparation for sale and delivery to customers;

5. Misrepresenting that said motor vehicles are in sound condition and repair and will render normal, adequate and satisfactory service; and 6. Representing the safety or performance of said motor vehicles unless such claims are fully and completely substantiated by a reasonable basis which shall consist of competent and objective material available in written form.

JAY NORRIS CORP., ET AL. 867 751 Final Order III It is further ordered, That:

1. Respondents shall maintain records of all consumer complaints for a period of three years after such complaint is received, including, but not limited to the following information: [13] Name and address of the consumer;

Date of receipt of the complaint;

Transaction about which complaint is received; Nature of the complaint; and Date and disposition of the complaint.

Respondents shall notify the Commission at least thirty (30) days prior to any proposed changes in the corporate respondents such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or any other changes in the corporation which may affect compliance obligations arising out of the order.

8. The individual respondents named herein, shall 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.

4. Respondents shall deliver a copy of this order to cease and desist to all personnel or agents of respondents responsible for the preparation, creation, production or publication of the advertising of all products covered by this order.

5. No provision of this order shall be construed in any way to annul, invalidate, repeal, terminate, modify or exempt respondents from complying with agreements, orders or directives of any kind obtained by any other agency or act as a defense to actions instituted by municipal or state regulatory agencies. No provision of this order shall be construed to imply that any past or future conduct of respondents complies with the rules and regulations of, or the statutes administered by the Federal Trade Commission. [14] 6. Respondents herein shall, within sixty (60) days after service of this order, and annually for five (5) years thereafter, file with the Commission a written report setting forth in detail the manner and form of their compliance with this order. The expiration of the obligation to file such reports shall not affect any other obligation arising under this order.

Po Ao op Final Order 91 FTC.

IV It is further ordered, That the allegations of the complaint are dismissed as to FEDERATED NATIONWIDE WHOLESALERS SERVICE, GARYDEAN coors., t/a Nationwide Wholesalers Service, and p-N PUBLISHING COMPANY, INC.

PERFORMANCE SAILCRAFT INC. . 869 869 : Complaint