Montgomery Ward & Co., Incorporated

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IN THE MA TTER OF MONTGOMERY WARD & CO. , INCORPORATED CONSENT ORDER, ETe.. IN REGARD TO ALLEGED VIOLA non OF THE MAGNUSON-MOSS WARRANTY ACT AND SEe. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket 3528, Complaint, Sept, 1994--Decision, Sept. , 1994 This consent order requires, among other things, the Ilinois-based retail deparment store to comply with the Pre-Sale Availability Rule under the Magnuson-Moss Warranty Act, to deliver a copy of the consent order to retail store managers involved in consumer sales, to inform their retail store managers of their compliance responsibilities, and to develop and implement a program for instrcting their sales personnel about the availability and location of manufacturers' warranty information.

Appearances For the Commission: Jeffrey Klurfeld, Gerald Wright and Christian White.

For the respondent: Philip Delk in-house counsel, Chicago, IL. COMPLAINT Pursuant to the provisions of the Magnuson-Moss Warranty Act 15 U. e. 2301 et seq. and Rule 702, 16 CFR Part 702, promulgated thereunder, and the Federal Trade Commission Act, 15 use. 41 seq. and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Montgomery Ward & Co., Incorporated, a corporation ("respondent ), has violated the provisions of said Acts and Rule 702 promulgated under the Magnuson-Moss Warranty Act, and it appearing to the Commission that a proceeding by it would be in the public interest, alleges: PARAGRAPH I. The definitions of terms contained in Section 101 of the Magnuson-Moss Warranty Act, 15 U. e. 2301 , and in Rule 702 16 CFR 702. 1 promulgated thereunder, shall apply to the terms used in this complaint.

Complaint 118 F.TC. PAR. 2. Respondent Montgomery Ward & Co. , Incorporated is a corporation organized, existing and doing business under and by virtue of the laws of the State of Ilinois, with its principal offce and place of business located at One Montgomery Ward Plaza, Chicago Ilinois.

PAR. 3. Respondent is now and has been engaged in the operation of a chain of retail department stores throughout the United States. In the operation of its retail stores, respondent is now and has been distributing, advertising, offering for sale and selling, among other items, wearing apparel, watches, consumer electronics, home furnishings, major and small appliances, power tools, auto parts and accessories, and lawn and garden equipment, all of which are consumer products. Therefore, respondent is both a supplier and seller of consumer products.

PAR. 4. The acts and practices of respondent alleged in this complaint have been in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act. PAR. 5. In the ordinary course and conduct of its aforesaid business, respondent regularly sells or offers for sale consumer products for purposes other than resale or use in the ordinary course of the buyer s business. Therefore, respondent is a seller of consumer products.

PAR. 6. On or after March 12, 1987, respondent, in the ordinary course of its business as a seller of consumer products actually costing more than $15 and manufactured on or after January I , 1977 has failed to make the texts of written warranties readily available for examination by prospective buyers prior to sale through utilization of one or both of the following methods required by 16 CFR 702.3(a), as amended:

I. Displaying the text of the warranty in close proximity to the warranted product;

2. Furnishing the text of the warranty upon request prior to sale and placing signs reasonably calculated to elicit the prospective buyer s attention in prominent locations in the store or department advising such prospective buyers of the availability of warranties upon request.

MONTGOMERY WARD & CO., INCORPORATED 651 649 Decision and Order PAR. 7. Respondent's failure to comply with the provisions of 16 CFR Part 702, as amended, constituted and now constitutes a violation of the Magnuson-Moss Warranty Act and, pursuant to Section I lO(b) thereof, an unfair or deceptive practice under Section 5(a)(I) of the Federal Trade Commission Act, 15 U. e. 45(a)(I). DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft of complaint which the San Francisco Regional Offce proposed to present to the Commission for its consideration and which, if issued by the Commission would charge respondent with violation of the Federal Trade Commission Act; and The respondent, its attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a stalement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondent has violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, and no comments having been filed thereafter by interested parties pursuant to Section 2.34 of its Rules now in further conformity with the procedure prescribed in Section 34 of its Rules, the Commission hereby makes the following jurisdictional findings and enters the following order; I. Respondent Montgomery Ward & Co" Incorporated is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Ilinois, with its principal office and place of business located at One Montgomery Ward Plaza, Chicago Ilinois.

Decision and Order lis FTC. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER The definitions of terms contained in Section 101 of the Magnuson-Moss Warranty Act, 15 U. e. 2301, and in Rule 702 16 CFR 702. . promulgated thereunder, shall apply to the terms of this order. It is ordered, That respondent Montgomery Ward & Co., Incorporated, a corporation, its successors and assigns, and its officers representatives, agents and employees, directly or through any corporation, subsidiar, division or other device in connection with the sale or offering for sale of any consumer product in or affecting commerce, do forthwith cease and desist from failing to make a text of any written warranty on a consumer product actually costing more than $15 readily available for examination by prospective buyers prior to sale through utilization of one or more means specified in 16 CFR 702. 3(a), as amended, II.

It is further ordered That respondent shall, within thirty (30) days of the date of service of this order, deliver to each current retail store manager engaged in the sale of consumer products on behalf of respondent, a copy of this order to cease and desist. It is further ordered That respondent shall, within thirty (30) days of the date of service of this order, instruct all current retail store managers engaged in the sale of consumer products on behalf of respondent as to their specific obligations and duties under the Magnuson-Moss Warranty Act (15 U. e. 2301) and this order. MONTGOMERY WARD & CO,. fNCORPORA TED 653 649 Decision and Order IV.

It is further ordered That respondent shall, for a period of not less than four (4) years from the date of service of this order, instruct all future retail store mangers who will be engaged in the sale of consumer products on behalf of respondent, before they assume said responsibilities for respondent, as to their specific obligations and duties under the Magnuson- Moss Warranty Act (15 USe. 2301) and this order.

It is further ordered That respondent shall, within thirty (30) days of the date of service of this order, develop and implement a program to instruct its sales personnel about the availability and location of warranty information.

VI.

It is further ordered, That respondent shall, for a period of not less than five (5) years from the date of service of the order, maintain and upon request make available to the Federal Trade Commission for inspection and copying (i) copies of all written instructions provided by respondent to its retail store managers and sales personnel regarding their obligations and duties under the Magnuson-Moss Warranty Act (15 U. c. 2301) and this order; (ii) copies of signs posted by respondent in its retail store outlets designed to elicit prospective buyers' attention to the availability of the text of written warranties for review upon request; and (iii) copies of the text of written warranties made readily available by respondent's retail store outlets for examination by prospective buyers on rcquest. VII.

It is further ordered That respondent, for a period of six (6) years from the date of service of this order, shall notify the Commission at least thirty (30) days prior to any dissolution, assignment, or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporation that may affect compliance obligations arising out of the order. Decision and Order 118 P. VII It is further ordered, That respondent shall, within sixty (60) days after service of this order on it, fie with the Commission a report in writing, setting forth in detail the manner and form in which it has complied with this order.

SEARS, ROEBUCK AND CO. 655 655 Complaint