Jack Decker

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J IN THE MATTER OF I JACK DECKER, INDIVIDUALLY AND TRADING AS l TRU-VALU HOME SUPPLY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, lfl14 Docket 3582. Complaint, sept. 12, 1938-Decision, Feb, .f. 1939 'Where an individual engaged In sale and distribution of aluminum ware, table ware, lamps, beauty kits, jewelry, and a variety of other articles of mer· chandlse, in commerce among the States and in the District of Columbia- Sold and distributed said articles by means of game of chance, gift enterprise or lottery scheme, in accordance with which it distributed to representatives and prospective representatives sales circulars and pull cards designating number of Items of merchandise and prices thereof, for use 1n sale and distribution of said products under plan in accordance with which item and price disclosed by legends variously displayed by removal of card's tabs by purchaser of chances thereon determined by chance which article of merchandise purchaser was to receive, price to be paid, and value be was thus to secure, and under which operator was compensated by premium for operation of card and sale of merchandise, and thereby supplied to and placed in the hands of others means of conducting lotteries in the sale of his merchandise in accordance with ·sales plan above set forth, involving game of chance or sale of chance to procure article of merchandise at a price much less than apparent normal retail price .thereof, contrary to an established public policy of the United States Government and in violation of criminal laws, and in competltion.wlth many who are unwllllng to adopt and u,se said or any method involving game of chance or sale of a chance to secure something by chance, or any method contrary to public pollcy, and refrain therefrom;

'With result that many persons were attracted by said method and by element of chance involved in sale of such merchandise as above set forth, and were thereby induced to buy and sell his said goods in preference to those offered and sold by competitors aforesaid .who do not use such or equivalent methods, and with effect, by reason of use of such method, of unfairly diverting trade and custom to him from his competitors aforesaid; to the substantial injury of competition in commerce: lleld, That such acts and practices were all to the hijnry and prejudice of the public and competitors and constituted unfair methods of competition and unfair and deceptive acts and practices.

Before Mr. Randolph Preston, trial examiner. Mr. D. 0, Daniel for the Commission.

Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said act, the Federal Trade Commission, having reason to believe that Jack Becker, 290 FEDERAL TRADE COl\11\IISSION DECISIONS Complaint 28 F. T. C. individually and trading as Tru-Valu Home Supply, hereinafter referred to as respondent, has violated the provisions of said act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows: PARAGRAPH 1. Respondent, Jack Becker, is an individual trading under the name of Tru-Valu Home Supply, with his principal office and place of business located at 611 Broadway, New York, N. Y'. Respondent is now and for some time last past has been engaged in the sale and distribution of aluminum ware, tableware, dresser sets, dinner sets, doll sets, lamps, ash trays, cigarette lighters and cases, beauty kits, dresser sets, salt and pepper sets with trays, watches, clocks, cameras, carving sets, bedding, clothing, jewelry, cosmetics, bill folds, suit cases, carpet sweepers, toasters, waffie irons, electric grills, and other articles of merchandise in commerce between and among· the various States of the United States and in the District of Columbia. Respondent 1causes and has caused said products, when sold, to be shipped or transported from his aforesaid place of business in the State of New York to the purchasers thereof in tho .various other States of the United States and in the District of Columbia, at their respective points of location. There is now, and has been for some time last past, a course of trade by said respondent in such merchandise in commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of his said business respondent is in competition with other individuals and with partnerships and corporate1ons engaged in the sale and distribution of like or similar products in commerce between and among the various States of the United States and in the District of Columbia. PAR. 2. In the course and conduct of his business, as described in paragraph 1 hereof, respondent sells and distributes, and has sold and distributed, said articles of merchandise by means of a game of chance, gift enterprise, or lottery scheme. The respondent distributes or causes to be distributed to representatives and prospective representatives certain advertising literature, including a sales circular. Respondent's merchandise is distributed to the purchasing public in the following manner:

A portion of said sales circular consists of a list on which there are designated a number of items of merchandise and the prices thereof. Adjacent to the list is printed and set out a device commonly called a pull card. Said pull card consists of a number of tabs, under each of which is concealed the name of an article of merchandise and the price thereof. The name of the article of merchandise and the price TRU-VALU HOME SUPPLY 291 289 Complaint thereof are so concealed that purchasers or prospective purchasers of the tabs or chances are unable to ascertain which article o£ merchandise they are to receive or the price which they are to pay until after the tab is separated from the card. "When a purchaser has detached a tab and learned what article of merchandise he is to receive I and the price thereof, his name is written on the list opposite the I I named article of merchandise. Some of said articles of merchandise '-1 have purported and represented retail )Values and regular prices greater than the prices designated for them, but are distributed to the consumer for the price designated on the tab which he pulls. The apparent greater values and regular prices of some of said articles of merchandise, as compared to the price the prospective purchaser will be required to pay in the event he secures one of said articles, induces members of the purchasing public to purchase the tabs or chances in the hope that they will receive articles of merchandise of far greater value than the designated prices to be paid for same. The facts as to whether a purchaser of one of said pull card tabs receives an article which has apparent greater value and higher regular price than the price designated for same on such tab, which of said articles of merchandise a purchaser is to receive, and the amount of money which a purchaser is required to pay, are determined 'Wholly by lot or chance.

\Vhen the person or representative operating the pull card has succeeded in selling all of the tabs or chances, collected the amounts called for, and remitted the said sums to the respondent, said respondent thereupon ships to said representative the merchandise designated on said card, together with a premium for the representative as compensation for operating the pull card and selling the said merchandise. Said operator delivers the merchandise to the purchasers of tabs from said pull card in accordance with the list filled out when the tabs were detached from the pull card.

Respondent sells and distributes and has sold and distributed various assortments of said merchandise and furnishes and has furnished '\'arious pull cards for use in the sale and distribution of such merchandise by means of a game of chance, gift enterprise, or lottery scheme. Such plan or method varies in detail but the above-described plan or method is illustrative of the principle involved. PAR. 3. The persons to whom respondent furnishes and has furnished the said pull cards use and have used the same in purchasing, selling, and distributing respondent's merchandise in accordance with the aforesaid sales plan. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of his merchandise in accordance with the sales plan hereinabove set Findings 28 F.T. C. forth. The use by respondent of said method in the sale of his mer· chandise and the . sale of such merchandise by and through the ?sa thereof and by the aid of said method is a practice of the sort which is contrary to an established public policy of the Government of the United States and in violation of criminal laws. PAR. 4. The sale of merchandise to the purchasing public in the manner above alleged involves a game of chance or the sale of a chance to procure an article of merchandise at a price much less than the apparent normal retail price thereof. Many persons, firms, and cor· porations who sell or distribute merchandise in competition with t~e respondent, as above alleged, are unwilling to adopt and use said method, or any method involving a game of chance or the sale of a chance to win something by chance, or any method which is contrary to public policy and such competitors refrain therefrom. Many per· sons are attracted by respondent's said method and by the element of chance involved in the sale of such merchandise in the manner above'8 described, and are thereby induced to buy and sell respondent's mer· . chandise in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the same or an equivalent method. The use of said method by respondent, because of said game of chance, has the capacity and tendency to, and does, unfairly divert trade and custom to respondent from his said competitors who do not use the same ot an equivalent method and, as a result thereof, sub· stantial injury is being and has been done by respondent to competi· tion in commerce between and among the various States of the United States and in the District of Columbia.

PAR, 5'. The aforesaid acts and practices of respondent as herein alleged are all to the prejudice of the public and of respondent's competitors and constitute unfair methods of competition in com· merce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provi~ions of the Federal Trade Commission Act, the Federal Trade Commission on September 12, 1938, issued, and on September 13, 1938, served, its complaint in this proceeding upon respondent Jack Becker, individually and trading as Tru-Valu Home Supply, charging him with the use of unfair methods of competition in commerce and unfair and deceptive acts and practices in corn· merce in violation of the provisions of said act. On January 13, 1939, the respondent filed his answer, in which answer he admitted all the material allegations of fact set forth in said complaint and waived TRU-VALU HOME SUPPLY 293 289 Findings aU intervening procedure and further hearing as to said facts. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint and the answer thereto, and the Commission having duly considered the matter 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. Respondent, Jack Becker, is an individual trading under the name of Tru-Valu Home Supply, with his principal office and place of business located at 611 Broadway, New York, N. Y. Respondent is now and for some time last past has been engaged in the sale and distribution of aluminum ware, tableware, dresser sets, dinner sets, doll sets, lamps, ash trays, cigarette lighters and cases, beauty kits, salt and pepper sets with trays, watches, clocks, cameras, carving sets, bedding, clothing, jewelry, cosmetics, bill folds, suit cases, carpet sweepers, toasters, waffie irons, electric grills, and other articles of merchandise in commerce between and among the various States of the United States and in the District of Columbia. Respondent causes and has caused said products, when sold, to be shipped or transported from his aforesaid place of business in the State of New York to the purchasers thereof in the various other States of the United States and in the District of Columbia, at their respective points of location. There is now, and has been for some time last past, a course of trade by said respondent in such merchandise in commerce between and among the various States of the United States and in the District of Columbia. f In the course and conduct of his said business, respondent is in ! ' competition with other individuals and with partnerships and cor- Porations engaged in the sale and distribution of like or similar prod- Ucts in commerce between and among the various States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of his business, as described in Paragraph 1 hereof, respondent sells and distributes, and has sold and distributed, said articles of merchandise by means of a game of chance, gift enterprise, or lottery scheme. The respondent distributes · or causes to be distributed to representatives and prospective representatives certain advertising literature, including a sales circular. Respondent's merchandise is distributed to the purchasing public in the following manner :

A portion of said sales circular consists of a list on which there are designated a number of items of merchandise and the prices thereof. Findings 28F.T.C· Adjacent to the list is printed and set out a device commonly called a pull card. Said pull card consists of a number of tabs, under each of which is concealed the name of an article of merchandise and the price thereof. The name of the article of merchandise and the price thereof are so concealed that purchasers or prospective purchasers of the tabs or chances are unable to ascertain which article of merchan· dise they are to receive or the price which they are to pay until after the tab is separated from the card. 'When a purchaser has detached a tab and learned what article of merchandise he is to receive and the price thereof, his name is written on the list opposite the named ar· ticle of merchandise. Some of said articles of merchandise hav"e purported and represented retail values and regular prices greater than the prices designated for them, but are distributed to the con· sumer for the price designated on the tab which he pulls. The ap· parent greater values and regular prices of some of said articles of merchandise, as compared to the price the prospective purchaser will be required to pay in the event he secures one of said articles, induces members of the purchasing public to pmchase the tabs or chances in the hope that they will receive articles of merchandise of far greater value than the designated prices to be paid for same. The facts as to whether a purchaser of one of said pull card tabs receives an article which has apparent greater value and higher regular price than the price designated for same on such tab, which of said articles of merchandise a purchaser is to receive, and the amount of money which a purchaser is required to pay, are determined wholly by lot or chance.

'Vhen· the person or representative operating the pull card has succeeded in selling all of the tabs or chances, collected the amounts called for, and remitted the said sums to the respondent, said re· spondent thereupon ships to said representative the merchandise designated on said card, together with a premium for the represent· ative as compensation for operating the pull card and selling the said merchandise. Said operator delivers the merchandise to the pur· chasers of tabs from said pull card in accordance with the list filled out when the tabs were detached from the pull card. Respondent sells and distributes, and has sold and distributed, va.ri· ous assortments of said merchandise and furnishes, and has furnished, · various pull cards for use in the sale and distribution of such mer· chandise by means of a game of chance, gift enterprise, or lottery scheme. Such plan or method varies in detail but the above-described plan or method is illustrative of the principle involved. PAR. 3. The persons to whom respondent furnishes, and has fur· nished, the said pull cards use the same, and have used the same, iti TRU-VALU HOME SUPPLY 295 289 Order Purchasing, selling, and· distributing respondent's merchandise in accordance with the aforesaid sales plan. Respondent thus supplies ~0 and places in the hands of others the means of conducting lotteries ~n the sale of his merchandise in accordance with the sales plan here- Inabove set forth. The use by respondent of said method in the sale of his merchandise, and the sale of such merchandise by and through the use thereof and by the aid of said method, is a practice of the sort which is contrary to an established public policy of the Governtnent of the United States and in violation of criminal laws. PAn. 4. The sale of merchandise to the purchasing public in the tnanner above found involves a game of chance or the sale of a chance to procure an article of merchandise at a price much less than the apparent normal retail price thereof. Many persons, firms, and corporations who sell or distribute merchandise in competition with the respondent as above found are unwilling to adopt and use said method or any method involving a game of chance or the sale of a chance to "'in something by chance, or any method which is contrary to public Policy, and such competitors refrain therefrom. Many persons are ~ttracted by respondent's said method and by the element of chance Involved in the sale of such merchandise in the manner above found ~nd are thereby induced to buy and sell respondent's merchandise In preference to merchandise offered for sale and sold by said com- Petitors of respondent who do not use the same or an equivalent tnethod. The use of said method by respondent, because of said g~me of chance, has the capacity and tendency to, and does, unfairly divert trade and custom to respondent from his said competitors who do not use the same or an equivalent method, and as a result thereof SUbstantial injury is being, and has been, done by respondent to com- Petition in commerce between and among the various States of the lJnited States and in the District of Columbia. CONCLUSION The aforesaid acts and practices of respondent as herein found are an to the the injury and prejudice of the public and of respondent's competitors and constitute unfair methods of competition in comlb.erce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Com- Inission upon the complaint of the Commission and the answer of :respondent, in which answer respondent admits all the material aile- Order 2s'F.T.C.

gations of facts set forth in said complaint and states that he waives all intervening procedure and further hearing as to said facts, and· the Commission having made its findings as to the facts and its con· elusion that said respondent has violated the provisions of the Federal Trade Commission Act.

It iB ordered, That the respondent, Jack Becker, individually and trading as Tru-Valu Home Supply, his representatives, agents a~d employees, directly or through any corporate or other device, 1l1 connection with the offering for sale, sale, and distribution of aluminum ware, tableware, dresser sets, dinner sets, doll sets, lamps, ash trays, cigarette lighters and cases, beauty kits, salt and pepper sets with trays, watches, clocks, cameras, carving sets, bedding, cloth· · ing, jewelry, cosmetics, bill folds, suit cases, carpet sweepers, toaste~s, waffle irons, electric grills, or any other articles of merchandise 1n commerce as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Supplying to or placing in the hands of others pull cards or circulars having pull tabs thereon or other lottery devices for the purpose of enabling such persons to dispose of or sell any merchandise by the use thereof;

2. Mailing, shipping, or transporting to his agents or distributors or to members of the public pull cards or circulars having pull tabs thereon or other lottery devices so prepared or printed as to enable said persons to sell or distribute any merchandise by the use thereof; 3. Selling or otherwise disposing of any merchandise by the use of pull cards or circulars having pull tabs thereon or any other lottery device."

It iB further ordered, That the respondent shall, within 60 days af· ter service upon him of this order, file with the Commission a report in writing setting forth in detail the manner and form in which be has complied with this order.

.MORETRENCH CORP. 297 Syllabus