9623118

B218607

UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS: Robert Pitofsky, Chairman

Mary L. Azcuenaga

Janet D. Steiger

Roscoe B. Starek, III

Christine A. Varney

 

In the Matter of )

) DOCKET NO. C-3738

ZALE CORPORATION, )

a corporation. ) 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 the complaint that

the San Francisco Regional Office proposed to present to the

Commission for its consideration and which, if issued by the

Commission, would charge the Respondent with violation of the

Federal Trade Commission Act, and

The respondent, its attorneys, 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 statement that the signing of said agreement is for

settlement purposes only and does not constitute an admission by

the Respondent that the law has been violated as alleged in such

complaint, or that the facts as alleged in such complaint, other

than jurisdictional facts, are true, 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 a complaint should

issue stating its charges in that respect, and having thereupon

accepted the executed consent agreement and placed such agreement

on the public record for a period of sixty (60) days, now in

further conformity with the procedure prescribed in Section 2.34

of its Rules, the Commission hereby issues its complaint, makes
the following jurisdictional findings and enters the following

order:

1. Respondent Zale Corporation is a Delaware corporation with

its principal office or place of business at 901 W. Walnut Hill

Lane, Irving, Texas 75038-1003.

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

DEFINITIONS

For the purposes of this order, the following definitions

shall apply:

1. "Clearly and prominently" shall mean as follows:

A. In a television or video advertisement, the disclosure

shall be presented simultaneously in both the audio and

video portions of the advertisement. The audio

disclosure shall be delivered in a volume and cadence

sufficient for an ordinary consumer to hear and

comprehend it. The video disclosure shall be of a size

and shade, and shall appear on the screen for a

duration, sufficient for an ordinary consumer to read

and comprehend it.

B. In a radio advertisement, the disclosure shall be

delivered in a volume and cadence sufficient for an

ordinary consumer to hear and comprehend it.

C. In a print advertisement, or on any in-store si gn or

display, the disclosure shall be in a type size, and in

a location, that are sufficiently noticeable so that an

ordinary consumer will see and read it, in print that

contrasts with the background against which it appears.

 In multipage documents, the disclosure shall appear on

the cover or first page.

D. On a product label, the disclosure shall be in a type

size, and in a location on the principal display panel,

that are sufficiently noticeable so that an ordinary

consumer will see and read it, in print that contrasts

with the background against which it appears.
3

Nothing contrary to, inconsistent with, or in mitigation of the

disclosure shall be used in any advertisement or on any label.

2. Natural Pearl shall mean a calcareous concretion

consisting essentially of alternating concentric layers of

carbonate of lime and organic material formed within the body of

certain mollusks, the result of an abnormal secretory process

caused by an irritation of the mantle of the mollusk following

the intrusion of some foreign body inside the shell of the

mollusk, or due to some abnormal physiological condition in the

mollusk, neither of which has in any way been caused or induced

by humans.

3. Cultured Pearl shall mean the composite product created

when a nucleus (usually a sphere of calcareous mollusk shell)

planted by humans inside the shell or in the mantle of a mollusk

is coated with nacre by the mollusk.

4. Imitation Pearl shall mean a manufactured product composed

of any material or materials that simulate in appearance a

natural pearl or cultured pearl.

5. Unless otherwise specified, "Respondent shall mean Zale

Corporation, a corporation, its successors and assigns, and its

officers, agents, representatives and employees.

6. Commerce shall mean as defined in Section 4 of the Federal

Trade Commission Act, 15 U.S.C. 44.

I.

IT IS ORDERED that respondent, directly or through any

corporation, subsidiary, division, or other device, in connection

with the manufacturing, labeling, advertising, promotion,

offering for sale, sale, or distribution of imitation pearl

jewelry, in or affecting commerce, shall not represent that

imitation pearls are cultured pearls.

II.

IT IS FURTHER ORDERED that respondent, directly or through

any corporation, subsidiary, division, or other device, in

connection with the manufacturing, labeling, advertising,

promotion, offering for sale, sale, or distribution of imitation

pearl jewelry, in or affecting commerce, shall not represent that

such product is or contains one or more pearls unless respondent

discloses, clearly and prominently, and in close proximity to

such representation, that the product is comprised of one or more
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imitation pearls, by describing such product as artificial,

imitation, or simulated, or with another word or phrase of

like meaning.

III.

IT IS FURTHER ORDERED that respondent, directly or through

any corporation, subsidiary, division, or other device, in

connection with the manufacturing, labeling, advertising,

promotion, offering for sale, sale, or distribution of cultured

pearl jewelry, in or affecting commerce, shall not represent that

such product is or contains one or more pearls unless respondent

discloses, clearly and prominently, and in close proximity to

such representation, that the product is comprised of one or more

cultured pearls, by describing such product as cultured or

cultivated, or with another word or phrase of like meaning.

IV.

IT IS FURTHER ORDERED that respondent, directly or through

any corporation, subsidiary, division, or other device, in

connection with the manufacturing, labeling, advertising,

promotion, offering for sale, sale, or distribution of any

jewelry product composed partially or entirely of natural pearls,

cultured pearls, or imitation pearls, shall not misrepresent the

composition or origin of such product.

V.

IT IS FURTHER ORDERED that, for a period of three (3) years

from the date of service of this order, respondent, directly or

through any corporation, subsidiary, division, or other device,

shall make available, in a place and manner calculated to attract

the attention of consumers, an information sheet in the form set

forth in Appendix A to this order at each store that offers for

sale any jewelry product composed partially or entirely of

natural pearls, cultured pearls, or imitation pearls.

VI.

IT IS FURTHER ORDERED that respondent, and its successors

and assigns, shall, for five (5) years after the date of issuance

of this order, maintain and upon request make available to the

Federal Trade Commission for inspection and copying, business

records demonstrating its compliance with the terms and

provisions of this order, including but not limited to:
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A. All advertisements and promotional materials for

jewelry containing one or more natural pearls, cultured

pearls, or imitation pearls;

B. All brochures, hang tags or other in-store displays

relating to jewelry containing one or more natural

pearls, cultured pearls, or imitation pearls; and

C. All invoices and order forms relating to jewelry

containing one or more natural pearls, cultured pearls,

or imitation pearls.
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VII.

IT IS FURTHER ORDERED that respondent, and its successors

and assigns, shall deliver a copy of this order, or a summary in

the form set forth as Appendix B to this order, to all current

and future principals and directors; to all current and future

officers and managers with responsibilities or duties affecting

compliance with the terms of this order; and to all current and

future employees, agents, and representatives having

responsibilities with respect to the subject matter of this

order. Respondent shall deliver this order, or a summary in the

form set forth as Appendix B to this order, to current personnel

within thirty (30) days after the date of service of this order,

and to future personnel within thirty (30) days after the person

assumes such position or responsibilities.

VIII.

IT IS FURTHER ORDERED that respondent, and its successors

and assigns, shall notify the Commission at least thirty (30)

days prior to any change in the corporation that may affect

compliance obligations arising under this order, including but

not limited to a dissolution, assignment, sale, merger, or other

action that would result in the emergence of a successor

corporation; the creation or dissolution of a subsidiary, parent

or affiliate that engages in any acts or practices subject to

this order; the proposed filing of a bankruptcy petition; or a

change in the corporate name or address. Provided, however ,

that, with respect to any proposed change in the corporation

about which respondent learns less than thirty (30) days prior to

the date such action is to take place, respondent shall notify

the Commission as soon as is practicable after obtaining such

knowledge. All notices required by this Part shall be sent by

certified mail to the Associate Director, Division of

Enforcement, Bureau of Consumer Protection, Federal Trade

Commission, Washington, D.C. 20580.

IX.

IT IS FURTHER ORDERED that respondent shall, within sixty

(60) days after the date of service of this order, and at such

other times as the Federal Trade Commission may require, file

with the Commission a report, in writing, setting forth in detail

the manner and form in which it has complied with this order.

X.
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This order will terminate on April 28, 2017, or twenty (20)

years from the most recent date that the United States or the

Federal Trade Commission files a complaint (with or without an

accompanying consent decree) in federal court alleging any

violation of the order, whichever comes later; provided, however ,

that the filing of such a complaint will not affect the duration

of:

A. Any Part in this order that terminates in less than

twenty (20) years;

B. This order's application to any respondent that is not

named as a defendant in such complaint; and

C. This order if such complaint is filed after the order

has terminated pursuant to this Part.

Provided further , that if such complaint is dismissed or a

federal court rules that the respondent did not violate any

provision of the order, and the dismissal or ruling is either not

appealed or upheld on appeal, then the order will terminate

according to this Part as though the complaint had never been

filed, except that the order will not terminate between the date

such complaint is filed and the later of the deadline for

appealing such dismissal or ruling and the date such dismissal or

ruling is upheld on appeal.

By the Commission.

Donald S. Clark

Secretary

SEAL

ISSUED: April 28, 1997
APPENDIX A

Your Guide to

 Pearls 

 

Natural Pearls

A pearl formed in the wild by the random intrusion

of a natural irritant into a mollusk s shell, without

the intervention of man. There are few natural

pearls on the general consumer jewelry market

today.

Cultured Pearls

A cultured pearl is also grown by nature but with the

assistance of man. This patented process involves

the insertion of a "nucleus" into the oyster. The

oyster is then carefully nurtured for the desired type

of pearl. The quality of cultured pearls varies and is

judged by the pearl s lustre, surface, shape, color

and size.

 

Imitation Pearls

A manufactured product composed of any material

or materials that simulate in appearance a natural

pearl or cultured pearl.
APPENDIX B

[To be printed on Zale Corporation letterhead]

[date]

Dear Zale employee:

This letter is to inform you that Zale Corporation recently

settled a civil dispute with the Federal Trade Commission ("FTC")

regarding certain alleged claims for our "Ocean Treasures" line

of imitation pearl jewelry. We deny the FTC s allegations, but

in order to avoid protracted litigation we have entered into a

settlement agreement. As part of that settlement, we are

required to summarize the requirements of the settlement for our

directors and officers, and for employees and others who sell our

products to consumers.

The FTC alleged that Zale advertisements falsely claimed,

expressly or by implication, that Ocean Treasures jewelry was

composed of cultured pearls. Our settlement with the FTC

contains the following requirements:

1. Zale may not repres ent that imitation pearls are

cultured pearls. 

2. Zale may not represent that imitation pearl jewelry

contains pearls unless we specifically describe the

jewelry as "artificial," "imitation," "simulated," or

with another word or phrase of like meaning.

3. Zale may not represent that cultured pearl jewelry

contains pearls unless we specifically describe the

jewelry as "cultured" "cultivated," or with another

word or phrase of like meaning.

4. Zale may not misrepresent the composition or origin of

any jewelry product composed partially or entirely of

natural pearls, cultured pearls, or imitation pearls.

5. Zale must make available to consumers for a period of

three years, in each store that offers for sale natural

pearl, cultured pearl, or imitation pearl jewelry, an

information sheet that describes the difference among

natural pearls, cultured pearls, and imitation pearls.

 This information sheet, which we are providing to each

store, must be made available in a place and manner

that is calculated to attract the attention of

consumers.
Requirements 1-4, above, apply to all representations made

in advertising, labeling, promotion, offering for sale, sale and

distribution, including individual sales transactions.

Thank you for your assistance. If you have any questions

about the requirements contained in this letter, please call 

 .

Sincerely,

[Zale Official]

[Title]