Charles Atlas, LTD

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF CHARLES ATLAS, LTD.

COl\IPLAI::-<T, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CO)IGRESS APPROVED SEPT. 26, 1914 Docket 3308. Complatnt, Jan. 22, 1938-Decision, Feb. 25, 1939 Where a corporation engaged in sale of a course of training in physical culture featuring dynamic tension by eorre:;pond!.'uee, as successor to a business theretofore Cllrried on uy an iudividual who was its treasurer and owner of one-half of its outstanding capital stocl;:, and, as thus engaged, in advertising its said cour~e or system through its booklet entitled "Everlasting Health and Strength" which it sent, along with circular letter aud circular, to those applying then•for in response to its invitation so to do in advertisements in magazines and other periodicals of general circulation in tbe various States, and in which it set forth, among other things, purported faesimile of certificate of award to aforesaid individual as "America's Most Perfectly Developed 1\Ian," together with what was represented as an actual photograph showing his >ery remarkallle muscular development, and with statements as to his height, weight, and body measurements, and also with representation, among otl1ers in his advertisements published as above described, to the effect that before l1e disco,·ered the system of training in physical culture now offered and sold, he wus "a physical wreck, a sickly half-pint runt, a 97 pound weakling, fiat chest<'d, spindly legs and with arms like pipe stems," and with representatious in his various advertisements as aforesaid, along with such photographs, to the effect that the remarlmL:e physical development made by him was due to his use of >Ouid course- (a) Represented, in sni<l nd,·ertisements and advertising matter, that users of its course of training could thereby ac·qulre a muscular uevelopmeut similar to that of said indiviuual, including brand, powerful shoulders, biCPlJS th:1t bulge with smashing strength, chest wllich would stand out soliu and mus· cular, and an evenly developed body that would make others look like dwarfs in comptu·ison, and that it ('OUld prove in 7 days to an~·one that he could have such 11 muscular development, facts \wing, while sneh cours~ of training might be generally beneficial to users thereof, it would not accomplish results claimed therefor as above set out, muscular development of anyone is limited by the bony structure and other characteristics of his body, and it is impossible for persons of only average physical development, or IC'SS than a\·emge, to acquire muscular development approximating that depicted in its advertisements or advertising matter; ('b) Represented that use of said course would bring about a healthy condition, and that constipation, pimples, skin blotches, and similar ailments would be banished, facts being that use thereof would not, in all cases, bring about a healthy condition or bani><h coustipa tion, pimpl<'s, skin blotches, aml. similar ailment!', and would not affl'ct all u;:ers alike, and that, while such use might be benpfteiul to some, others would rec·Pive very little benefit or none at nil, nnu snell use on still others might have Injurious, rather than bP1wficial, effect; and Complaint 28 F. T. C. (c) l\Iade so-called ''extraordinary offer" to prospective purchasers offering, along with course for sum of $5 as special reduced price, said entire course, together with "free" "Outline Course" on Jiu-Jitsu, wrestling, boxing, feats of strength, and hand-balancing, and so-called 150-page book on sex, and represented that supply of said "Outline Course" and book were limited, facts being said price was not special or extraordinary, but usual and customary price charged by it for said course, including such so-called free items, and such offer of free goods was one of long standing and constituted its permanent method of doing business, and price of such free items was included in that of course· of training which had to be purchased in order to obtain such items ;

With capacity and tendency to induce members of purchasing public to buy its said course in erroneous belief that such statements and representations were true, and to divert trade unfairly to it from competitors eugaged in sale in commerce among the Yarious States and in the District of Columbia of similar courses of trainiug by correspondence, and who do not Jllisrepresent the conditions or terms upon which their courses are sold, and the results that may be expected to be obtained from use thereof; to the iujurY of competition in commerce: · Held, That such acts and practices were all to the prejudice and injury of the public and competitors and com;tituted unfair methods of competition. Before Air. lVilliam 0. Reeves, trial examiner. 111r. lV illiam L. Peneke for the Commission. Mr. Daniel R. Forbes, 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 Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that Charles Atlas, Ltd., a corporation, hereinafter referred to as the rpspondent, has been, and is, using unfair methods of competition in commerce, as "commerce" is defined in said act, and it appear· ing to said 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. Charles Atlas, Ltd., is a corporation organized, existing, and doing business under the laws o£ the State of New York, with its principal office and place o£ business located at 115 East Twenty-third Street in the city and State of New York. Said re· spondent is now, and for many years immediately last past has been, engaged in the business of offering for sale and selling a course of instruction by correspondence in the science and art of physical culture to persons residing in various States of the United States CHARLES ATLAS, LTD. 787 785 Complaint and in the District of Columbia. In the course and conduct of said business, respondent causes its said course of instruction to be sent through the United States mails from its said place of business in the city and State of New York to purchasers thereof lol'ated in a State or States of the United States other that the State of New York. There is now, and has been at all times hereinafter mentioned, a course of trade and commerce in said courses of instruction so sold and distributed by the respondent between and among the various States of the United States and in the District of Columbia. PAR. 2. In the course and conduct of its business, as aforesaid, respondent is now, and for many years last past has been, in substantial competition with other corporations, individuals, partnerships, and firms engaged in the sale and distribution of correspondence courses of instruction in the science and art of physical culture in commerce between and among the various States of the United States and in the District of Columbia.

PAR. 3. In the course and conduct of its business as aforesaid, and for the purpose of inducing the purchase of its courses, the respondent offers its said course of instruction to the purchasing public in advertisements in, magazines, newspapers, and elsewhere, and in letters and printed circulars which are sent out by it through the mail and otherwise. Respondent publishes, among others, advertisements in magazines having a national circulation, containing statements and claims of which the following are typical examples: Atlas makes muscles grow like magic. Five inches of new muscle after one week. l\Iy arms increased 1% inches, chest 2% inches, forearms %" and I have gained 4 pounds. I have no use for aprmratus. Dynamic Teusion-ALOKE-right in your own home. Will start new inches of massive power pushing out ~·our chest. Build up your shoulders to c-ham- Pion huskiness. Put regular mountains of mnscle under your biceps. Free you ot constipation, pimples, makes those stomaeh muscles of yours hard ridges! 1"11 prove in the first 7 days YOU cnn h:we a body like mine. No other physical instructor in the world has ever dared to make such an offer. Don't get the idea that it takes a lot of time and hard work for you to get amazing Hrength and powerful museles. And don't think you need a room full of eontraptions.

All I want to know is where do rou want big, powerful zm,sdes. How lllany pounds of 1l1·m flesh do you want distributed over your body to fill you out. Where do yon lack vltnlity, pep and robust health. Where do you Want to take off flabby surplus fat. Just tell me. Give me u week and I'll !'how you that I can make a new man of you, gin• you bodily 11ower and drive and put yon in that mngniflcent physical condition which wins you the etwy and re~p<'ct of any man uud the admiration of any woman. Gh·e me your measure aud I'll prove in the first 7 days yon (·an have a body like mine. I'll give you proof or-In 7 days that I ean turn you into 788 FEDERAL TRADE COl\Il\IISSION DECISIONS Cumplaint 2SF. T. C.

a man of might and muscle. And I'll also gi,·e you a rugged health that banishes constipation, pimples, skin blotches aud similar conditions that rob ~·ou of the good things of life.

PAR. 4. The said advertisements and others of like and similar import are false, misleading, and deceptive in that respondent represents that the use of the instructions and the practice of the physical €exercises comprising respondent's course will in all cases- ( a) Build big powerful muscles on the body wherever they look best.

(b) Gh·e vitality, pep, and strength to the systt>m. (c) Banish constipation, poor digestion, pimples, skin blotches, and other diseases and imperfections.

(d) Build a new body and make a new man.

(e) Transfonn the pupil, regardless of age or condition, into a person of superb strength and physical appearance. In truth and in fact, said instructions and the practice of said physical exercises constituting respondent's course will not build big, powerful muscles on the body wherever they look best, nor will they give vitality, pep, and strength to the system, nor will tlwy banish constipation, poor digestion, pimples, and other diseases and imperfections. Such instructions and the practice of respondent's physical exercises will not build a new body and make a new man, and will not transform th~ pupil, regardless of age or condition, into a person of superb strength or physical appearance in the manner set forth in said advertisements.

PAR. 5. Rt>spondent, upon the receipt o£ letters from persons answering the said advertisements, mails to such persons the book or pamphlet entitled "Everlasting Health and Strength" and forth letters, together with enrollment blanks. The book or pamphlet and the form letters above mentioned contain, in varying phraseology, the statements and representations set forth in the advertisements recited in paragraph 3 of this complaint and are misleading and deceptive in the particulars and for the reasons mentioned in paragraph 4 as to the false, misleading, and deceptive character of said advertisements.

PAR. 6. The final letter in the series o£ form letters above referred to and mailed to prospective purchasers of respondent is entitled: "Extraordinary Offer! !" and in substance offers to such prospective purchaser the entire course of physical iristruction, together with an assortment o£ books containing sex information and various outline courses on sports for the sum of $5, with a statement that the former price of the Dynamic Tension course was $35. Said letter also contains the statement that the supply of said courses is limited and CHARLES ATLAS, LTD. 789 '785 Complaint suggests an enrollment by return mail in order to be sure of receiving -said course.

The representations in said letter are false, misleading, and deceptive in that the so-called "Extraordinary Offer" does not bring about any saving to the pupil or any reduction from the price at which the course is regularly sold by the respondent so that the pupil, while offered the course at a purported saving or reduction of $30, pays, in fact, the usual and ordinary price received by the respondent for its course.

The free offers of the said book on Sexual Education and Outline Courses, made in said letter, are false, misleading, and deceptive in that the said book and courses referred to are not furnished the pupil free but the price thereof is included in the price charged for the (;Course of instruction.

The representation that the supply of said courses is limited and that the prospectiye purchaser should enroll by return m::til to bo sure of getting said course is false and misleading in that the supply is not limited ancl in that the said offer is not in any sense extraor- 1:linary, but is the oi1'er made by respondent in the regular course of its business.

PAn. 7. The statements and representations so made by respondent in the ways and manners above alleged have the tendency and capacity to mislead aml dpceiYe pupils and prospective pupils into the erroneous and mistaken belief that such representations are true JJnd to indute them to act on such belief and to enroll as pupils of 1·espm1dent and thus cause patronage to be diverted unfairly to respondent from respondent's competitors in commerce among and bebwen the various States of the United States. P.\R. 8. In the course and conduct of its business as hereinabove Qescribed, respondent is, and has been, in competition with corporations, partnerships, firms, and individuals engaged in the sale and {iistribution of courses of physical instruction in commerce between the. several States of the United States and the District of Columbia, 1\'which said competitors do not misrepresent, and have not misrepresented, their said courses in ad,·ertisements and otherwise. P.m. 9. The above-alleged acts and practices of respondent are all to the prejudice ·of the public and of the competitors of respondent, Charles Atlas, Ltd., and constitute unfair methods in competition in i11terstate commerce within the intent and meaning of Section 5 of an Act of Congress entitled "An Act to create a Federal Trade Comlhission, to define its powers and duties,· and for other purposes:" approyed September 26, 1914.

790 :FEDERAL TRADE COMMISSION DECISIONS Findings 28F. T.C.

REPORT, FINDINGS AS TO THE FACTS, AND Onder Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on January 22, 1938, issued its complaint in the above-entitled proceeding and caused same to be served on the respondent, Charles Atlas, Ltd., a corporation, charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act. The respondent entered its appearance herein and filed an answer to said complaint on March 5, 1938: and thereafter, at the instance of "\Villiam I.... Pencke, counsel for the Commission, testimony was introduced and evidence received in support of the charges stated in the complaint and in opposition thereto by Daniel R. Forbes, counsel for the respondent, before "\Villiam C. Ueeves, an examiner of the Commission duly designated by it, and said testimony and other evidence were reduced to writing and fih•fl in the office of the Commission. Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and answer thereto, testimony, and other evidence, briefs of the respective counsel, and the Commission having duly considered the matter and being fully advised in the premises, finds that this proceeding is in the interest of the publio and makes this its findings as to the facts and its conclusion drawn therefrom. FINDINGS AS TO THE FACTS PARAGRAPH 1. The respondent Charles Atlas, Ltd., is a corporation organized in February 1929, under the laws of the State of New York, with its principal place of business in New York City in sairl State. It is engaged in the business of selling a course of training in physical culture featuring dynamic tension by conespondence. The course so sold consists of 13 multigraphed lessons. The respond· ent upon its organization succeeded to the business theretofore carried on by Charles Atlas who is now treasurer of the respondent corporation and the owner of one-half of its outstanding capital stock. Uespondent causes copies of the lessons which constitute the course of training sold by it, to be sent by the United States mails from its office in the State of New York to purchasers thereof located in Yarious States of the United States other than the State of New York, and in the course and conduct of its said busines,, respondent has been and is now in active competition with yarions persons and partnerships and other corporations also engaged in the sale of courses in physical culture, by correspondence, in cmnmerce among several of the States of the United States. CHARLES ATLAS, LTD. 791 785 Findings PAR. 2. The respondent in the course of its business, as set out in paragraph 1 hereof, has caused advertisements to be published in h1magazines and other periodicals having general circulation in various States of the United States. Each of these advertisements contained an invitation to members of the public to send to respondent for a copy of a free 48-page book entitled "Everlasting Health and Strength," and when responses to such advertisements were received by respondent, it then sent to each of the persons so responding a copy of the book together with a circular letter and circular. This book had on its front inside cover page what purported to be a facsimile of a certificate of award to Charles Atlas of the title "America's :Most Perfectly Developed 1\Ian," with the statement that such award was made in October 1922, at Madison Square Garden in a physical-culture exhibition and on pages 24 and 25 of the book was What 'vus represented to be an actual photograph of Charles Atlas together with a statement of his height, weight, and bodily measureh1ents which were as follows: Height, 5 feet, 10 inches; weight, 180 pounds; chest, normal, 4 7 inches; waist, 32 inches; neck, 17 inches; biceps, 17 inches; forearm, 14% inches; thigh, 23% inches; calf, 161.4 inches. Among the representations in the ad\<·ertisements which respondent caused to be published as stated, were representations to the effect that before Charles Atlas discovered the system of training in physical culture now offered for sale and so]d by respondent, that he was "a physical wreck, a sickly half-pint runt, a 97-pound Weakling, flat chested, spindly legs and with arms like pipe stems." Each of the advertisements which respondent has caused to be Published, as stated, was illustrated by what was represented as a reproduction of a recent photograph of Charles Atlas showing his Very remarkable muscular development and throughout such advertisements there were representations to the effect that the remarkable Physical development made by Charles Atlas was due to the use by him of the course of training now offered for sale and sold by respondent.

PAR. 3. In the advertisements and advertising matter referred to in Paragraph 2 hereof the respondent made many false, misleading, and e~aggerated representations concerning the course of training in Physical culture offered for sale and sold by it and the benefits that n1ight be derived from such course by the users thereof. Among and typical of such false, misleading, and exaggerated claims were those to the effect that by the use of respondent's course of training anyone could acquire a muscular development similar to that of Charles Atlas; that by the use of such course anyone could acquire broad, flowedul shoulders, biceps that bulge with smashing strength, a 792 FEDERAL TRADE COl\IMISSION DECISIOXS Fill(]ings 28F. T. C. chest which would stand out solid and muscular nnd an evenly developed body that would make others look like dwarfs in comparison; that respondent in 7 days could prove to anyone that he could have a muscular development like that of Charles Atlas; that the use of such course would bring about such a healthy condition that constipation, pimples, skin blotches, and similar ailments would be banished. Other claims and representations of similar import concerning.g the benefits which would be offered for sale by respondent were contained in such advertisements and advertising matter. PAR. 4. In truth and in fact while the c·course of training by cor· respondence sold by the respondent may be generally beneficial to the users thereof such course of training will not accomplish the results claimed for it by respondents as set out above. The muscular development of anyone is limited by the bony structure and other characteristics of his body and it is impossible for persons of only average physical development, or less than average, to acquire a muscular development approximating that depicted in the advertise· ment or advertising matter of the respondent. Furthermore, the use of such course of training would not, in all cases, bring about a healthy condition or banish constipation, pimples, skin blotches, and similar ailments. The use of such course will not affect all users alike, and while its use may be beneficial to some users, other users will receive very ]jttle benefit or none at all, and the use of such course might have an injurious effect rather than a beneficial effect on others.

PAR. 5. In truth and in fact the representations made by the re· spondent in connection with its so-called "extraordinary offer" are false, misleading, and deceptive in that the supply of the so-called "Outline Course" on Jiu-Jitsu, wrestling, boxing, feats of strength, and hand-balancing, and the so-called 150-page book on sex were not limited and were not given free to the purchasers of said course of training, but instead the price of $5 is the usual and customary price charged by the respondent for such course of training including the so-called free items. Furthermore, this offer of free goods is one of long standing and constitutes respondent's permanent method of doing business, and the price of "free" items is included in the price of the course of training which must be purchased in order to obtain the so-called "free" items.

PAR. 6. The statements and representations made by the respond· ent in its advertisements and advertising matter, as hereinbefoi·e set out, have had and do have the capacity and tendency to induce members of the purchasing public to buy respondent's course of training in the erroneous belief that such statements and representa· CHARLES ATLAS, LTD. 793 785 Order tions are true and to divert trade unfairly to respondent from competitors engaged in the sale in commerce bet,veen and among the various States of the United States and the District of Columbia of similar courses of training by correspondence who do not misrepresent the conditions or terms upon which their courses of training are sold and who do not misrepresent the results that may be expected to be obtained upon a use of such courses. As a result injury is being done by respondent to competition in commerce among and between the various States of the United States and the District of Columbia. CONCLUSION The aforesaid acts and practices of the respondent as hereinbefore found are all to the prejudice and injury of the public, and to competitors of respondent, and constitute unfair methods of competition in commerce within the intent and meaning of the provisions of the Federal Trade Commission Act.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of the respon.-1ent, test.imony, and other evidence taken before "\Vm. C. Reeves, an examiner of the Commission, theretofore duly designated by it in support of the allegations of said complaint and in opposition thereto, and briefs filed herein by William L. Pencke, counsel for the Commission, and by Daniel R. Forbes, counsel for the respondent, and the Commission having made its findings as to the facts and its conclusion that said respondent has Violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondent, Charles Atlas, Ltd., a corpora· tion, its officers, representatiws, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of its course of training in physical culture by correspondence in commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Representing that users of its course of training could thereby acquire a muscular dewlopment similar to that of Charles Atlas, or any other person of similar physique and appearance. 2. Representing that respondent in 7 days, or any other specified Period of time could prow to anyone that he could have a muscular development like that of Charles Atlas, or any other person of similar Physique and appearance.

Order 28 F. T. C. 3. Representing that the use of respondent's course of training will cure, relieve, or benefit constipation, pimples, skin blotches, and similar ailments.

4. Representing that any price is a special or extraordinary price for respondent's course of training or publications when said price is the usual and customary price charged by the respondent under similar circumstances.

5. Using the term "free" or any other term of similar import or meaning to designate or describe articles of merchandise regularly included in a combination offer with identical, similar, or other articles of merchandise.

It is further ordered, That the respondent shall, within 60 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.

J. D. DRUSHELL CO. ET AL. 795 Syllabus