11. National Consumer Protection. The Commission's Hearing on this subject was concluded in December 1968 but the project has generated much work and possible recommendations which are discussed under new projects. Additionally the Hearings will result in a FTC report on the subject of consumer protection.

B. New projects

1. Affirmative disclosure. The Cabinet Committee on Price Stability has suggested that the FTC should "compel affirmative disclosures of strategic product information that is inherently deceptive when omitted from advertising." This project should be undertaken by the FTC leading to Trade Regulation Rule proceedings and likely a few carefully chosen litigated cases. 2. Voluntary industry standards. This is a proposal to analyze each of the voluntary industry standards presently enforced from the viewpoint of possible consumer deception. Due to the large number of such standards, the program proposed will require the utilization of considerable manpower.

3. Consumer education and the clearinghouse function. The purpose of this program is to publish and circulate consumer information concerning wise buying and warnings of the principle sharp practices extant in the marketplace and to get this material into the hands of consumers especially to those most exposed to such practices. The plans also entail the maintenance of a comprehensive bibliography of consumer materials to be maintained in addition to news of consumer actions involving questions and issues at the local, state, and Federal levels, before the courts, and before the state and Federal administrative agencies.

4. Consumer liaison. It is contemplated that one of the functions of this Division will be to maintain contact with consumer groups and organizations interested in or active in consumer affairs.

A. Continuing projects

VI. TRUTH-IN-LENDING SECTION

1. Creditor education.

2. Planning work on consumer education.

B. New projects

1. The basic approach for FY 1971 will be one of continuing involvement with consumer education, and

2. Considerably increased emphasis upon enforcement techniques.

MEMORANDUM

APRIL 25, 1969. Subject: Ideas and basic plans for the fiscal year 1971 budget for the Bureau of Textiles and Furs.

To: Paul Rand Dixon, Chairman, via John W. Wheelock, Executive Director. From: Henry D. Stringer, Director, Bureau of Textiles and Furs.

The following plans are based on the assumption that Congress will approve the recommendations of the Bureau of the Budget for additional staff and funds for the Bureau of Textiles and Furs as presently set forth in the Fiscal Year 1970 Budget:

1. By July 1, 1970, the beginning of fiscal year 1971, or during the following 12 months, it is anticipated that the Secretary of Commerce under the amendment to the Flammable Fabrics Act will have designated certain categories of textile products which are hazardous and that the Department of Commerce will have provided tests for such products. It is expected that among the first such categories designated by the Secretary of Commerce will be bedding and upholstered furniture, and probably rugs, draperies, and certain other interior furnishings and decorations.

Such action by the Secretary of Commerce and the Commerce Department will call for inspection of several segments of industry that heretofore the Bureau of Textiles and Furs has not had occasion to call upon, such as mattress manufacturers, box spring manufacturers, and upholstered furniture manufacturers. In addition, the plans of the Bureau of Textiles and Furs for the enforcement of this statute are to contact and work closely with state and local fire marshals and fire chiefs so that, when fires involving fabrics occur in the categories specified by the Secretary of Commerce, the Bureau's investigators will be called in to determine if the Flammable Fabrics Act has been violated. Such a program, we believe, is what Congress and President Johnson expected when this amendment to the Flammable Fabrics Act was passed and signed.

2. Rule 36 under the Wool Products Labeling Act is no longer effective, but the problem that gave rise to this regulation is still with us and probably will become more pressing rather than less. Those importers who might be a little bit short on principles will, no doubt, read the Court's decision as a license to bring in goods from abroad with little or no concern for the fiber content set forth on the labels. Further, with imports increasing in an ever greater volume, there will, without question, be more and more misbranded goods included.

The Bureau of Textiles and Furs plans to assign resident investigators to the New York Customs' office in Manhattan and at the Customs' office at Kennedy Airport with the consent of the Bureau of Customs, to peruse entry papers of imported fabrics and textile products under the Wool Act, the Textile Act. and the Flammable Fabrics Act. Investigators at other ports of entry will check imports at the respective Customs' offices on a daily or weekly basis as appears to be necessary. Questionable entries will be sampled at Customs or at the place of business of the importer and later tested.

In this manner it is hoped to overcome the failure of Rule 36 and to stem the influx of misbranded merchandise from abroad.

3. Despite the continuing emphasis on the proper labeling of artificially-colored mink, misbranding is rampant in the fur industry. There are large profits to be made in misbranding fur products as natural when, in fact, they are dyed or color altered. The Bureau is presently working on this matter and will continue to throughout fiscal year 1970. However, in all probability, the problem will still be prevalent in fiscal year 1971.

The Bureau's enforcement plans in this matter are to examine the records of the mink dressers periodically to ascertain how they are dressing mink skins that lend themselves to dyeing, then check the invoices of the dressers to determine their customers. The customers will then be inspected and the lots of skins noted at the dressers checked to ascertain if the fur garment manufacturers are labeling their fur products correctly. This is a time-consuming process but it has been successful in the past in uncovering much misbranding.

Passing off dyed mink garments as natural is a serious fraud on the consumer, as the selling price of a natural mink garment is one-third to one-half higher than a similar dyed garment. Further, mink garments that are dyed will oxidize in time and will lose their rich dark color, to the damage of the purchaser. By such actions the unscrupulous manufacturer is unjustly enriched and his lawabiding competitor is subjected to unfair competition.

4. Another area of fraud in the fur trade, but one the Bureau has not had the personnel to date to cover, is the passing off as new, used fur garments or garments manufactured from used fur. It is hoped that a drive may be made on this problem in fiscal year 1971.

Many women trade in used fur coats when purchasing new ones. If the coats are in good or fair condition they are sold to dealers who purchase used garments. It is believed by the Bureau that in many cases a new lining is put into the garment and any obvious repairs made, and the secondhand product is then sold as new. Also along this same line, used fur in fair condition taken from old garments is remade into garments, which should, under the Fur Act, be labeled, invoiced, and advertised as "used fur", but the Bureau suspects large numbers of such garments are sold as new.

Many of the men engaged in this type of fraud conduct auctions or run special sales in local stores for a few days at a time and then move on. The nature of the problem makes it difficult to police and takes much more time to investigate than legitimate furriers located at fixed addresses. The investigation of this fraud requires a check of the used fur dealers' records and the tracing down of recent shipments of known used garments to retailers to determine how they are represented and sold to unsuspecting consumers.

5. The Fur Products Labeling Act requires the country of origin of imported furs to be shown on the labels attached to fur products and also on invoices covering such products. Large quantities of ranch mink are imported into the United States each year from Canada, Norway, Sweden, Denmark, Finland, Poland, and Japan. Many of these skins are inferior to the ranch mink bred in this country, as mink ranching is a much older industry here than in the foreign countries and over the years our ranchers have developed finer strains of mink. Also, the feed of the animals in the United States is better than in most foreign countries, resulting in finer fur pelts.

Although the number of imported mink skins is high, it is seldom that mink trim on fabric coats and suits show a foreign country of origin; and it is rare, if ever, that a full fur garment is found with a tag showing a foreign country of origin. A start was made this year on correcting this problem, but it was halted shortly after it started when the investigators were needed on the more pressing matter of the passing off of dyed mink as “natural”. In the short time devoted to the program, several cases were developed against fur manufacturers engaged in this fraud.

Passing off foreign ranch mink as domestic is unfair to the consumer and definitely injures the domestic mink rancher who usually has a better product and whose labor and overhead is much higher than his foreign competitor's. It is hoped that by fiscal year 1971 the Bureau will have the personnel and time to concentrate on this type of misrepresentation.

6. Several years ago, when PPB was initiated, the Bureau of Textiles and Furs spent a great deal of time and energy in developing a long-range inspection program. It was determined that with a moderate increase in personnel each year the Bureau could eventually cut down the average periods of time between inspections of manufacturers and wholesalers to once in every five years, and retailers to once in every eight to ten years. Each year since the start of PPB the Bureau has requested the necessary people and money to put this program into operation, but each year this plan has been cut at the Bureau of the Budget or in Congress.

However, with the increase in personnel expected from Congress in fiscal year 1970, for the Wool and Flammable Fabrics programs, it is felt, as a side effect, that the Bureau will get additional coverage on its inspection work in fiscal year 1971.

7. If a 20 percent increase in the budget for the Bureau of Textiles and Furs is approved in fiscal year 1971, greater emphasis will be put on the inspection program mentioned above. This program has been outlined in detail in the budget requests for fiscal years 1968, 1969, and 1970. Inspection work is the basis of the Bureau's enforcement of the four Acts administered by it. Constant checking of importers, manufacturers, wholesalers, and retailers is necessary as the fiber content of fabrics in garments changes from season to season. A manufacturer who is properly labeling his spring wear may misbrand his winter garments six months later. A retail store which is scrupulous in seeing its merchandise is properly labeled and truthfully advertised next year may have a new manager who is trying to outdo his predecessor and who, in his enthusiasm for additional sales, is not careful of the store's labeling and advertising policies. The Bureau has been successful in its formal investigation work only because of the efforts of its field investigators in pursuing their inspection work. Over 90 per cent of the Bureau's formal cases are initiated through the Bureau's inspection program.

Respectfully submitted,

HENRY D. STRINGER, Director, Bureau of Textiles and Furs.

PROGRAM MEMORANDUM-BUREAU OF INDUSTRY GUIDANCE-FISCAL YEAR 1971 During Fiscal Year 1971, the Bureau of Industry Guidance will continue to intensify its efforts to inform and guide the business community as to legal requirements pertaining to specific practices, thereby enhancing the Commission's efforts both in the field of consumer protection and maintaining competition.

In planning its programs for Fiscal Year 1970, the Bureau attempted to I achieve a balance between the new major programs in the areas of consumer protection and maintenance of competition. However, no attempt to accomplish a similar balancing in Fiscal Year 1971 is contemplated. Instead, because of the demonstrated need for continued efforts by the Commission to develop new consumer protection programs, it is felt that the Bureau is justified in placing added emphasis on the formulation and implementation of such new programs. To be sure, some new programs to further assist the Commission's efforts in maintaining competition will be developed. In addition, programs scheduled to be inaugurated in this field in FY 1970 will also be carried forward to the following year.

In connection with programs to maintain competition, it should be noted that the Commission, in issuing the revised Guides affecting promotional assistance programs, indicated that it would review the effectiveness of the Guides 18 months after promulgation. Inasmuch as future Industry Guidance activity involving Sections 2 (d) and (e) of the amended Clayton Act may well be dictated by the results of the Commission's review, it is not felt that the planning of far reaching and ambitious new programs in this area is warranted at the present time.

In establishing programs within the Bureau, full consideration has been given to two problems which appear to be closely interrelated, i.e., reasonable allocation of manpower and financial resources versus expeditious handling of existing and future workloads within a minimal amount of time. Because of the fact that the annual programs of the Bureau are to some extent subject to change as a result of instructions received from the Commission from time-to-time, the programs set forth below have been developed with due consideration to the manpower resources available through the program year, bearing in mind the possibility for a need to shift a portion of available manpower from planned programs to others, unplanned for, but brought to the attention of the Bureau by the Commission with instructions to take action.

Accordingly, the following are the major specific project recommendations of this Bureau for Fiscal Year 1970:

NEW PROGRAMS AT CURRENT MANPOWER LEVELS

1. Goal: To regulate and clarify price advertising of automobiles. (Consumer Protection)

The purchase of an automobile constitutes a substantial outlay of funds on the part of the average American consumer. In many respects, the consumer is entirely at the mercy of the manufacturer and the automobile dealer in attempting to make a meaningful price comparison when shopping for either differing makes of automobiles or for the same automobile sold by competing distributors. In addition, the cost of an automobile has become one of the major factors in automobile advertising both at the manufacturing and distributing levels. Many purchasers, it is believed, make their selection of an automobile as much on the basis of price as on performance, style, available accessories, etc.

Strategy: Following extensive studies of a number and variety of pricing practices which have been brought to the attention of the Commission in preliminary form, a formal proceeding will be initiated in areas requiring specific attention. Preliminary information indicates the existence of many areas apparently requiring attention, namely, announcements of new car prices which make comparison to previous year corresponding models without disclosure of changes in standard or optional equipment; pricing advertisements that conceal actual price in creases by reduction in warranty coverage; failure to reveal in new car price advertising charges imposed for accessories depicted or described but not included in delivery; and using the preticketed price of new automobiles which is required under the Automobile Information Disclosure Act as a means of misrepresenting actual prices in a trade area and as a means of deceiving customers on price savings. Thus, new car pricing has become a veritable jungle of meaningless phrases to the purchasing public, and the study and subsequent proceeding will attempt to bring some order out of the present chaos.