Zale Corporation; Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 962-3118]

Zale Corporation; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violation of federal law prohibiting

unfair or deceptive acts or practices and unfair methods of

competition, this consent agreement, accepted subject to final

Commission approval, would require, among other things, the Irving,

Texas-based jewelry retailer to disclose, clearly and prominently, the

nature of the pearl jewelry it sells and would mandate that company

stores display consumer information about the definition of natural,

cultured, imitation pearls. The complaint accompanying the consent

agreement alleges that Zale deceptively advertised its ``Ocean

Treasures'' line of limitation pearl jewelry as composed of cultured

pearls.

DATES: Comments must be received on or before April 21, 1997.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: Jeffrey Klurfeld, Federal Trade

Commission, San Francisco Regional Office, 901 Market Street, Suite

570, San Francisco, CA 94103. (415) 356-5275.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), notice is hereby

given that the above-captioned consent agreement containing a consent

order to cease and desist, having been filed with and accepted, subject

to final approval, by the Commission, has been placed on the public

record for a period of sixty (60) days. The following Analysis to Aid

Public Comment describes the terms of the consent agreement, and the

allegations in the accompanying complaint. An electronic copy of the

full text of the consent agreement package can be obtained from the

Commission Actions section of the FTC Home Page (for February 10,

1997), on the world Wide Web, at ``http://www.ftc.gov/os/actions/htm.''

A paper copy can be obtained from the FTC Public Reference Room, Room

H-130, Sixth Street and Pennsylvania Avenue, N.W., Washington, D.C.

20580, either in person or by calling (202) 326-3627. Public comment is

invited. Such comments or views will be considered by the Commission

and will be available for inspection and copying at its principal

office in accordance with Section 4.9(b)(6)(ii) of the Commission's

Rules of Practice (16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted an agreement, subject to

final approval, to a proposed consent order from Zale Corporation,

(hereinafter ``Zale''). Zale is the largest retailer of fine jewelry

products in the United States.

The proposed consent order has been placed on the public record for

sixty (60) days for the reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and any comments received and will decide whether it should

withdraw from the agreement and take other appropriate action or make

final the agreement's proposed order.

The proposed complaint alleges violations of Section 5 of the

Federal Trade Commission Act. This matter focused on Zale's

advertisements for the ``Ocean Treasures'' line of imitation pearl

jewelry. The advertisements depicted Ocean Treasures earrings,

necklaces, rings and pendants, and described them as follows: ``Ocean

Treasures Fine Jewelry. Created by nature, enhanced by man.'' The

advertisements also included the following statement: ``Zales. The

Diamond, semi-precious and pearl store.'' The proposed complaint

alleges that, through these depictions and statements, Zale violated

Section 5 of the Federal Trade Commission Act by falsely claiming that

the Ocean Treasures line of jewelry is composed of cultured pearls.

The Federal Trade Commission recently revised its Guides for the

Jewelry, Precious Metals, and Pewter Industries, 16 C.F.R. Part 23, 61

F.R. 27212 (May 30, 1996) (the ``Jewelry Guides''). The previous

version of the Guides as well as the revised Guides address various

advertising practices in the jewelry industry, including those employed

by Zale. See, e.g., Sec. 23.2 (Misleading Illustrations); Sec. 23.20

(Misuse of terms such as ``cultured pearl,'' ``seed pearl,'' ``Oriental

pearl,'' ``natura,'' ``kultured,'' ``real,'' ``gem,'' ``synthetic,''

and regional designations); Sec. 23.19 (Misuse of the word ``pearl'');

and Sec. 23.18 (Definitions of various pearls). These industry guides

are administrative interpretations of laws administered by the

Commission for the guidance of the public in conducting its affairs in

conformity with legal requirements. While the Guides are referenced in

the complaint, they do not create a separate cause of action.

Part I of the proposed order would require that Zale not represent

that imitation pearls are cultured pearls. Part II would prevent Zale

from representing that imitation pearl jewelry is or contains one or

more pearls unless Zale designates the jewelry as ``artificial,''

``imitation,'' ``simulated,'' or by some other word or phrase of like

meaning. Part III would prevent Zale from representing that cultured

pearl jewelry is or contains one or more pearls unless Zale designates

the jewelry as ``cultured'' or ``cultivated,'' or by some other word or

phrase of like meaning. Part IV would prohibit the company from

misrepresenting the composition or origin of any jewelry product

composed partially or entirely of natural pearls, cultured pearls, or

imitation pearls.

Part V of the proposed order would require Zale, for a period of

three years, to make available, at each of its stores that sells

natural, cultured or imitation pearls, a brief fact sheet entitled

``Your Guide to Pearls.'' This fact sheet briefly defines the

differences among the three general categories of pearls.

The proposed order also would require Zale to maintain materials

related to its advertising of pearl, cultured pearl, and imitation

pearl jewelry. The proposed order would also require Zale to provide a

copy of the consent agreement to all employees or representatives with

duties affecting compliance with the terms of the order; to notify the

Commission of any changes in corporate structure that might affect

compliance with the order; and to file one or more reports detailing

compliance with the order.

The purpose of this analysis is to facilitate public comment on the

proposed order, and it is not intended to constitute an official

interpretation of

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the agreement and proposed order, or to modify in any way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 97-4146 Filed 2-19-97; 8:45 am]

BILLING CODE 6750-01-M