Gibson, L. W

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IN THE MATTER OF L. W. GIBSON COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF flEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2766. Complaint, Apr. 15, 1936-Decision Sept. 22, 1936 Where an individual engaged in sale and distribution of formulae and specifications for purpose of producing various products, such as cosmetics, toothpaste, hair tonic, etc., in commet·ce between and among the various States- { a) Falsely represented that he was educated in science of chemistry and had had several deeades of experience In its commercial application and had devoted several years to collecting, studying, devising, and perfecting practical working formulae and processes for manufacture of his products, and had expended large sums of money in purchase of modern moneymaking formulae and expended large sums annually in obtaining and perfecting same and had been employed as consultant chemist and advisor to manufacturing trade for several years;

~b) Falsely represented that he hnd a staff of associates who were graduates of leading American col!rges and universities and possessed degrees from high institutions of learning and had bad a great deal of practice and successful experience in devising formulae and manufacturing products and commodities, and had· be<'n employed because of their sound and thorough knowledge of chemistry and because Uwy bad demonstrated their ability to manufacture products successfully and teach other manufacturers every Jlhase of successful and profttnble production; {c) Falsely repre~ented that he had In his establishment various drpartmcnts consisting of laboratories especially equipped with modern apparatus, and that be WIIS equipped to make analyses or develop special formulae, con- ~uct chemical res!'arcb investigations, and determine methods of salvag- Ing waste materials· .( d) ' Falsely represent('d that l1e was prppared to offer assistance to customers In securing patents on chemical proc('ssrs or other subjects and had sue· ceede(} in helping exaggerated numbers of customers to establish profitable businesses, and guarantc<'ll that his customers would make profits of $::iO, ~e) or oth<'r exaggerated sums, per wePk; nnd . Falsely reprPsentcd that he would give free, with orders in certam amounts, Various books and pamphlets, sePmlngly products of establishment or of his mind, and that he had received a degree in philosophy nnd chemistr.y entitling him to use abbreviation ''Ph. D." or word "Chemist" after hts name, and that address "4700-4 N. Rncine Avenue" was street address of :Is place of business, and that various tel('phone numbers were those of 1~ Is ('stabllshment · - llcts being addressed In question was that of hotel in wl!lch be lived In a single room, and numbers listed were those of said hotel, and he had not DECISIO~S 502 FEDERAL TRADE COl\11\HSSION Complaint 23F.'l'.C. received any such degree, been educated in chemistry, etc., and various statements and repre!'entations hercinl!efore set forth were false; With tendency and capacity to mislead and deceiye substantial portions of purchasing public into erroneous belief that said representations were true, and with result that consuming public purchased substantial volume of his commodity,_ and trade was unfairly diverted to him from competitors engaged in sale of commodities of snme kind and nature, and who truthfully advertised and represented character, quality, and results to be obtained from use thereof; to their substantial injury: llcld, That such acts and practices, under the conditions and circumstances set forth, were to the prejudice of the public and competitors and constituted unfair methods of competition.

Before Mr. lV. lV. Sheppard, trial examiner. Mr. John Darsey for the Commission.

Na11h & Donnelly, of ·washington, D. C., for respondent. Complaint Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled, "An Act to create a Federal Trade Commis- &ion, to define its powers ami duties, and for other purposes," the Federal Trade Commission, having reason to believe that L. ,V. Gibsonr an individual, hereinafter referred to as re~pomlent, has been and now is using unfair methods of competition in commerce as "commerce'r is defined in said actr ancl it appearing to the Commission that a proceeding by it in respect thereof would he in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent L. ,V. Gibson, an individual having his place of business at 4i00 North Racine Avenue, Chicago, Ill., is now and for several years last past has been engaged in the sale and distribution of formulae and specifications for the purpose of producing or manufacturing various products, such us cosmetics, toothpaste, hair tonics, cleaning and polishing compounds, soap, food products, adhesives, rat exterminators, etc., in commerce between and among the various States of the United States, and in the course of sale and dis~ tribution of the aforesaid commodities causes the same to be trans~ ported to the purchasers thereof from his place of business in the city of Chicago, State of Illinois, into and through the various States of the United States other than the State of Illinois. PAR. 2. Respondent in the sale and distribution of the aforesaid commodities has bc<'n and is now in competition with other individualsr firms, partnerships, and corpomtions engaged in the sale and distribu~ tion in commerce as herein stt out of similar and like commodities, or commodities to be used for the same and similar purposes. L. W. GIBSON 503 501 Complaint PAn. 3. In the course of his offerin(}' for sale and sale of his commodities as aforesaid, the respondent h~s caused and causes statements und representations to be made in advertisements, pamphlets, circulars, catalogues, and other printed matter, and on envelopes, published or distributed in the various States of the United States, to the following f!ffect, gist, or meaning: · (a) That the respondent 'vas educated in the science of chemistry; (b) That he has had several decades of experience in its commercial upplication;

-(c) That he has devoted several years to collecting, studying, devising, and perfecting practical working formulno and processes for the manufacture of his products;

(d) That respondent has been employed as a consultant chemist and advisor to the manufacturing trade for several years; . (e) That respondent has expended large sums of money m the purchase of modern money-making formulae, and that he expends large sums annually in obtaining and perfl"acting the same; . (f) That respondent has a staff of associates and that satd associates are ~crraduates of leadinrr0 American colleO'es0 and uniwrsities, Possessing degrees from hio-h institutions of learning, and that they have had a great deal of ~practice and successful experience in the formation of formulae and the manufacture of products and commodities· (g) That' said assistants have been employed because of their sound anu thorough knowledge of chemistry, and for the reason that they llave demonstrated their ability to manufacture products successfully and to teach other manufacturers every phase of successful and Profitable production.

(k) That respondent has in his establishment various departments <"on~isting of laboratories especially equipped with modern apparatus; (t) That respondent is equipped to make analytical analyses or to \le l · · t' ve 0P special formulae, to conduct chemical research mvestlga wns ~nd. to determine methods of salvaging waste materials; . . (J) That he is prepared to offer assistance to customers Ill securmg }!a tents on chemical processes or other subjects; Q[ (lc) That respondent lias succeeded in helping exaggerated numbers customers to establish profitable businesses; ~ ( l) That he guarantees that his customers will make profits of <P5ooo · or other exa rro"erated sums per week; (~) That respo~dent will (live free with orders in certain amounts Various books and l)amphlets ~which are seeminO'ly the products of the establ' "' Ishment or mind of respondent; FEDERAL TRADE COMMISSION DECISIONS50.

Complaint 23F.T.O.

(n) That respondent has received a degree in philosophy and chemistry entitling him to use the abbreviation Ph. D., or the word "Chemist" after his name;

(o) That the address "4700-4 N. Racine Avenue" is the street address of his place of business and that various telephone numbers arenumbers of his establishment.

P .AR. 4. All of the representations and statements made by the respondent in the manner indicated in paragraph 3 hereof are false and untrue and have no foundation in fact. The respondent is not educated in the science of chemistry and has not had long experience in its commercial application; he has not devoted years to collecting, studying, devising, and perfecting practical working formulae and processes for products; he has not been employed as a consultant chemist and advisor to the manufacturing trade for many years; he has not expended large sums of money in the purchase of modern money-making formulae and has not expended large sums annually in developing and perfecting the same; he has had no associates "ho have taken an active part in his business and who are graduates of leading American colleges or universities or who hold degrees from high institutions of learning, and who have had practical business experience; he has had no chemists associated with him, nor any departments equipped with modern apparatus; he is not equipped to make analytical analyses or to conduct research investigations for the formulation and standardization of commercial products; he has not helped an exaggerated number of customers to realize upward of $50.00 per week in their businesses, and he has no means of knowing or learning how much such customers make, if anything; he does not give free will~ purchases pamphlets or books which have been prepared by him or his establishment, but rather sends to customers pamphlets or books which have been prepared by other associations or governmental agencies, and which are available to customers for nominal prices; 4700-4 N. Hacine A venue, Chicago, Ill., is not the address of any establishment or laboratory maintained by respondent but rather it is the address of a hotel in Chicago wherein respondent lives in a single room, and the telephone numbers listed are not the telephone numbers of the place of business of respondent, but are the telephone numbers of said hotel; respondent has not received any degree which would entitle him to nse the abbreviation "Ph. D.", or "Chemist'', in connection with his name; respondent is not pre· pared to offer assistance to customers in securing patents on chemic:I processes or any other subjects; he is not equipped to conduct invest!· gations which would reveal methods of salvaging waste maUlrial; he does not maintain an establishment having various departments and L. \V. GIBSON 505 501 Findings laboratories equipped with modern apparatus, but rather, his entire· business is conducted from a single room in a hotel in Chicago which is not equipped with any modern apparatus, not even a test tube. PAR. 5. Each and all of the false and misleading statements and representations made by the respondent in the manner hereinabove set out, were and are calculated to and have had and now have the· tendency and capacity to mislead and deceive substantial portions of the purchasing public into the erroneous belief that said representations aro true. As a direct consequence of the mistaken and erroneous helie~s induced thereby, the consuming public bas purchased a substantw.l volume of respondent's commodities, with the result that trade has been unfairly diverted to the respondent from competitors engaged in selling commodities of the same kind and nature in comlherce as hereinabove set out, and \vho truthfully advertise and represen~ the character, quality, and results to be obtained from the use of their said commodities. As a result thereof substantial injury has been and is being done by respondent to co~npetitors in commerce, as hereinabove set forth.

PAR. 6. The above acts and practices of respondent are to the injury and prejudice of the public and to competitors of respondent in interstate commerce within the meaning and intent of Section 5 of an Act of Congress, approyed September 26, 1914, entitled, "An Act to create a Federal Trad.e Commission, to define its powers and duties, and for other purposes."

REPORT, FINDINGS AS TO THE FACTS, AND ORDER t Pursuant to the provisions of an Act of Congress approved Sepmember 26 1914 entitled "An Act t.o create a Federal Trade Com- 16rn··18Sl0n, to' define' its powers and duties and for other purposes, "1t 1936, issued and served itsFederal Trade Commission on April l5c ' ' . ~mplu.int in this proceeding upon respondent, L. W. Gibson, charg1~g 11 ~lh with the use of unfair methods of competition in commerce _m ~lolation of the provisions of said act. On August 24, 1936, the resrondent filed its answer in which answer it admitted all the mate- ~~'tl ~llegations of the complaint to be tru~ and stat~d th·1t it wai,,ed anng on the charges set forth in the said complamt and consented that, without further evidence or otller interyening procedure, tho Colhrnission mi(l"ht issue and serve upon it findings as to the facts .and con I · "" · 1 c usion and an order to cease and desist from the VlO a t'wns 0 f1 ttw charged. in the complaint. Thereafter, the proceeding regularly c~~e on for final hearing before the Commission on the said comp Ulllt nnd the nnswer thereto, and the Commission having duly con- .506 FEDERAL TRADE COl\Il\HSSION DECISIONS Findings 23F.T.C.

sidered the same, and being now fully advised in the premises, finds that this proceeding is in the interest of the public, and makes this its findings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FACTS PARAGRAPH 1. The respondent, L. ,V, Gibson, for scYeral years last past has been engaged in the sale and distribution of formulae all(l specifications for the purpose of producing or manufactui'ing various products, such as cosmetics, tooth paste, hair tonics, etc., in commerce between and among the various States of the United States. His principal place of business is located at 4700 N orl h Racine A vernte, Chicago, Ill. In the course of sale anJ distribution of the aforesaid commodities he causes the same when bold to be transported from the State of Illinois to purchasers thereof located in the various Stales of the United States.

PAR. 2. He has been and is in competition ''"ith other individuals, firms, partnerships, and corporations engaged in the sale and distri· bution in commerce, as herein set out, of similar and like commodities, or commodities to be used for the same similar purposes. PAR. 3. In the offering for sale allll sale of his commodities as aforesaid, the respondent has causetl and causes statements and representations to be made in advertist>ments, pamphlets, circulars, catalogues, and other printed matt!.'r, published or distrilmted in the various States of the United Statf's, to the following effect, gist, or meaning: (a) That the respondent was educated in the science of chemistry i (b) That he has lwd sev!.'ml decades of experience in its commercial application;

(c) That he has devoted se,·eral years to collecting, studyinf(', devising, and perfecting practical working formulae and processes for the manufacture of his products;

(d) That respondent has been employc1l as a consultant chemist and advisor to the manufacturing tnule for several years; (e) That respondent has expentled large sums of money jn the purchase of modem moiH'y-making formulae, and that he expend.; large sums annually in obtaining and perfecting the same; . (/) That respondent has a staff of associates and that said associ· ut es are graduates of leading American coll!.'ges and uniwrsities, possessing degrees flom high institutions of ]earning, and that they have had a great deal of practice and successful experiei1ce in the formation of formulae and the manu facture of products and ~~m~W~; t (g) That said assistants have l1een employed because of their sound( nnd thorough knowledge of chemistry, and for the reason that they L. W. GIBSON' 507 501 Findings have demonstrated their ability to manufacture products successfully· and to teach other manufacturers every phase of successful and profitable production;

(A) That respondent has in his establishment various departments consisting of laboratories especially equipped with modern apparatus; (i) That respondent is equipped to make analytical analyses or to derelop special formulae, to conduct chemical research investigations,. and to determine methods of salvao-itw0 0 waste materials,· (j) That he is prepared to offer assistance to customers in securing· Patents on chemical processes or other subjects; (k) That respondent has succeeded in helping exaggerated numbers· of customers to establish profitable businesses; (l) That he guarantees that his customers will make profits of $!'10.00 or other exaggerated sums per week: (m) That respondent will give free with orders in certain amounts. various books and pamphlets which are seemingly the products of the establishment or mind of respondent ;

(n) That respondent has received a degree in philosophy and chemistry entitlino- him to use the abbreviation Ph. D., or the word"C o hemist," after his name; ( 0 ) That the address "4700-4 N. Racine Avenue" is the street address of his place of business and that various telephone numbers: are numbers of his establishment.

PAn. 4. The representations and statements made by the respondent as set forth in parao-raph0 3 supra are false and untrue and have 110 foundation in fact. The respondent is not educated in science and C~temistry and has not had }on ('I' experience in its commercial applico.hon h o d · d · · J ; e has not devoted years to collecting, stu ymg, ev1smg, an 1erfecting practical working formulae and processes for products i e has not been employed as a consultant chemist and advisor to the manufacturing trade for many years; he has not expended large Stnns of money in the purchase of modern, money-making formulae ~ncl has not expendecl larcre sums annually in developing and perfect- In()' th b • • • , • t· "" e same· he has had no associates who have tal"en an actn e par In ~is busine;s and who are graduates of leading American colleges oruniversities or who hold de<Yrecs from hicrh institutions of learning, and, "' · "' I d l who have had practical business experience; he has la no c lemist associated with him nor any departments equipped with llj.ode ' 1 · 1 1 orto rn apparatus; he is not equipped to make ana yt1ca ana yses · c?nduct research investicrations for the formulation and standardus f d btIZahol 1 0 f commercial products· o he has not helped a num er 0 c - OllJ.ers to realize upwarus of $50 a week in their business and he has 110 lheans of knowincr or learnin('l' how much such customers make, 0 "' .508 FEDERAL TRADE COMMISSION DECISIONS Order 23F.T.C.

if anything; he does not give free with purchases, pamphlets or books which have been prepared by him or his establishment; 4700 Racine A venue, Chicago, Ill., is not the address of any establishment or laboratory maintained by respondent, but is the address of a hotel in Chicago wherein the respondent lives in a single room; the telephone numbers listed are not the telephone numbers of the place of business of respondent but are the telephone numbers of said hotel; respondent has not received any degree which would entitle him to use the abbreviation "Ph. D.," or "Chemist," in connection with his name; respondent is not prepared to offer assistance to customers in securing patents on chemical processes or any other subjects; he is not equipped to conduct investigations which would reveal methods of salvaging waste materials; he does not maintain an establishment having various departments and laboratories equipped with modern apparatus, but rather his entire business is conducted from a single room in a hotel in Chicago which is not equipped with any modern apparatus, not even a test tube.

PAn. 5. All of the statements and representations made by the respondent in the manner hereinabove set out are calculated to and have had and now have the tendency and capacity to mislead and Jeceive substantial portions of the purchasing ·public into the erroneous belief that said representations are true. As the consequence of the mistaken and erroneous beliefs induced, the consuming public has purchased a substantial volume of the respondent's commodity, with the result that trade has been unfairly diverted to the respondent from competitors engaged in selling commodities of the same kind and nature in commerce, as hereinabove set out, and who truthfully advertise and represent the character, the quality, and results to be obtained from the use of their said commodities. Substantial injury thereby has been and is being done by respondent to competitors in commerce as hereinabove set forth.

CONCLUSION The aforesaid acts and practices of the respondent, L. ,V. Gibson, are to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in commerce, within the intent and meaning of Section 5 of an Act of Congress, approyed SeptPmher 26, l!H4, entitled "An Act to cr<>ate a Federal Trade Cornmission, to define its powers and duties, and for other purposes." Onder TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Cornrnission upon the complaint of the Commission and the answer of L. W. GillSO~ 509 001 Order respondent, in which answer respondent admits all the material allegations of the complaint to be true and states that it waives h~aring on the charges set forth in said ;complaint and consents that, W~th?ut further evidence or other intervening procedure, the Com· lnission may issue and serve upon it findings as to the facts and conclusion and an order to cease and desist from the violations of law ~charged in the complaint, and the Commission hn,ving made its find- Ings as to the facts and conclusion that said respondent has violated the. provisions of an Act of Congress, approved September 26, 1914, ~ntitled "An Act to create a Federal Trade Commission, to define Its powers and duties, and for other purposes." It is ordered, That the respondent, L. ,V. Gibson, its officers, representatives, agents, and employees, in connection with the offering for sale, sale, and distribution of its formulae and specifications for the purpose of producing or manufacturing various products in interstate commerce or in the District of Columbia, do forthwith cease and desist from representing:

That the respondent is educated in the science of chemistry; that he has had several decades of experience in its commercial applic~t~on; that he has devoted sereral years to collflcting, studying, de- VIsmg, and perfecting' practical workin(J' formulae and processes for ~ e manufacture of hisb products; that respondentb has been employed as a consultant chemist an<.l advisor to the manufacturing trade for sevtl era 1 years; that respondent has expended large sums of money Ill· le Purchase of modern money-making formulae, an<.l that he expends 1 arge sums annually in obtaining(J' and perfectinrr the same; that re-s 0 • ~ • Pondent has a staff of associates and that said r.ssoc1ates are grad- Uates of leading' American colle(J'es and universities, possessing de-g o eo rees from hi(J'h institutions of learnin(J' and that they have had agre t b o' . ff a deal of practice and successful experience in the formation o 0;tnulae and the manu facture of products anti commodities; that :~Id assistants have been employed because of their sound and q orough lrnowledge of chemistry, and for the reason that they have t emonf.itrated their ability to manufacture products successfully and 0 teach other manufacturers every phase of successful and profitable Production; that respondent has in his establishment various depart- :ents consisting of laboratories especially equipped '~ith modern PParatus; that respondent is equip ned to make analytical analyses or t d ~ . t' .0 evelop special formulae, to conduct chemical research mves lfat!ons, and to determine methods of salvaging waste materials; that chels prepared to offer assistance to customers in securing patents on · nuca} processes or other subjects· that respondent has succeeded ln helping exaggerated numbers of ~customers to establish profitable 510 FEDERAL TRADE CO:Ml\IISSION DECISIONS Order 23 F.T. C.

businesses; that he guarantees that his customers will make profits of $50.00 or other exaggerated sums per week; that respondent will give free with orders in certain amounts various books and pamphlets which are seemingly the products of the establishment or mind of respondent; that respondent has received a degree in philosophy and chemistry entitling him to use the abbreviation Ph. D., or the word "Chemist" after his name; that the address "4700-4 N. Racine Avenue" is the street address of his place of business and that various telephone numbers are numbers of his establishment, unless and until such are the facts.

It i8 further ordm·ed, That the respondent shall, within GO days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with this order.

GARTEN TABLE PAD CO. 511 Complaint