WELCOME WAGON -- INC -- WASHINGTON FAIR TRADE PRACTICES ACT

WELCOME WAGON -- INC -- WASHINGTON FAIR TRADE PRACTICES ACT

The activities of Welcome Wagon, Inc., do not violate the Washington Fair Trade Practices Act.

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                                                                   May 26, 1955

Honorable Charles O. Carroll
Prosecuting Attorney
King County
County City Building
Seattle 4, Washington                                                                                                                Cite as:  AGO 55-57 No. 83

Attention:  !ttMr. K. G. Smiles

            Deputy

Dear Sir:

            You have requested our opinion as to whether the activities of Welcome Wagon, Inc., as presently carried on in the State of Washington, are in violation of the Washington Fair Trade Practices Act (chapter 19.88 RCW; chapter 221, Laws of 1939).  The facts given are as follows:

            Welcome Wagon, Inc., a Delaware corporation, with headquarters in Memphis, Tennessee, is engaged in business in nineteen counties of the state of Washington.  Its method of operation is to solicit local merchants in residential communities to sponsor a Welcome Wagon whose local representative then calls upon new residents of the area for the purpose of welcoming the family into the community and establishing a friendly relationship with the various sponsors.  As a part of the Welcome Wagon program each new family is given a small gift from each of the sponsors, together with a card welcoming the family and stating the business in which each sponsor is engaged.  The gifts average about twenty cents in value and are not an item sold by the sponsors, but usually a gift which has a logical connection with the sponsors' business.  The giving and receiving of the gifts are in no way conditioned upon doing business with the sponsors and cannot in any way be regarded as a discount connected with any purchase.  No coupons or credits are distributed as gifts which would be conditional upon doing business with the sponsors in order  [[Orig. Op. Page 2]] to receive the benefit thereof.  The charge made to the sponsors is based on the number of visits made by the Welcome Wagon representative, who receives a percentage of that charge as his compensation.

            In our opinion, Welcome Wagon activities as described above do not offend chapter 19.88 RCW.

                                                                     ANALYSIS

            Chapter 19.88 RCW is entitled "Unfair Competition‑-Fair Trade", and the section possibly contravened by Welcome Wagon activities reads as follows:

            "19.88.040 Price Cutting practices forbidden‑- Generally.  No person engaged in business within this state shall sell any article or product at less than the cost thereof to him, or give away any article or product, for the purpose of injuring competitors or destroying competition, or use any article or product as a 'loss leader,' or in connection with any sale make or give, or offer to make or give, any special or secret rebate, payment, allowance, refund, commission or unearned discount, whether in the form of money or otherwise, or secretly extend to certain purchasers special services or privileges not extended to all purchasers purchasing upon like terms and conditions, or make or enter into any collateral contract or device of any nature, whereby a sale below cost is effected, to the injury of a competitor, if it destroys or tends to destroy competition."

            The first thing to be considered is whether the giving of the gifts by the Welcome Wagon representative in the manner described above is for the purpose of injuring competitors or of destroying competition.  It would not appear from the facts presented that this could be the case, judging from the"modus operandi" described herein.  There is no question of a "loss leader" involved here, as there is actually no sales transaction present in the visit of the Welcome Wagon representative.

             [[Orig. Op. Page 3]]

            The gift is not conditioned upon any sale by or purchase from the merchant sponsors, nor are there any premiums, discounts or rebates offered.

            The Welcome Wagon activities would fall wholly within the confines of a purely "good will" gesture by the sponsoring merchants and the recipients of the gifts are under no compulsion to trade with the sponsoring merchants.

            Chapter 19.88 RCW with the exception of the section (19.88.040) considered here deals wholly with the various illegal forms of price‑cutting arrangements, discounts and preferential treatment offered to the public as inducements to buy, and where none of these elements is present, we fail to see any possible application of this law to the activities of Welcome Wagon, Inc., as currently carried on in the state of Washington:

            We hope the foregoing analysis will prove helpful.

Very truly yours,

DON EASTVOLD
Attorney General

ROBERT G. BOYD
Assistant Attorney General