Rubenstein, Philip F

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IN THE MATTER OF PHILIP F. RUBENSTEIN, TRADING AS ASSOCIATED SALES COl\fP ANY COliiPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION 01!' SEC. r:; OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3496. Compla.int, July 16, 1938-Decision, June 20, 1939 Where an individual engaged, as partner and through corporation, of which he was president and principal !<tockholder, in sale of various articles of merchandise, including clothing, clocks, glassware, and other items- Furnished to his customers various devices and plans for selling his said merchandise, which involved operation of games of chance, for distribution thereof to ultimate consumer wholly by lot or chance, and the furnishing to customers of push cards, order blanlts, and circulars explaining his plan of selling same and allotting premiums or prizes to patrons of said push cards, in accordance with plan by which amount paid for chance was determined by number pushed by chance, and person securing certain number received "Solid Copper Nip Cup," and person selecting from list of feminine names on card name corresponding to that concealed under card's master seal receh·ed choice;! of man's or woman's "Elkskein" jacket or "Roxboro" pendulum clock, and operator of card received from said individual, when pushes had all been sold, one of jackets aforesaid; and Supplied thereby to and placed in the hands of others means of conducting lotteries in the sale of his said merchandise through sale thereof by cards substantially similar to those above described, contrary to the established public policy of the United States Government, and in violation of the criminal law, and in competition with many who do not use same or similar methods of distribution as contrary to public policy; With result that many persons were attracted by his said plan or method of distribution of his merchandise, by element of chance involved therein, and were thereby induced to buy and sell same in preference to that offered by his competitors aforesaid, and trade was thereby diverted unfairly to him from such competitors:

Held, That such practices, as above set forth, were to the prejudice of the public and competitors und constituted unfair methods of competition. Defore Mr. Oha:rules F. Diggs, trial examiner. Mr. D. 0. Daniel and :Afr. P. 0. Kolinski for the Commission. N (J;Sh & Donnelly, of Chicago, Ill., for respondent. 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 Philip F. Rubenstein, individually and trading as Associated Sales Co., has violated the provisions of said act, and it appearing to said Commission that ASSOCIATED SALES CO. 171..

170 Complaint 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, Philip F. Rubenstein, is an individual doing business under the trade name and style of Associated Sales Co., with his principal office and place' of business located at 605 South First Street, Mil waukee, 'Vis. He is now and for some time last past lias been, engaged in the sale and distribution of clothing, glassware, humidors, trays, lamps, kitchenware, clocks, and other articles of merchandise in commerce between and among the various States of the United States and in the District of Columbia. Respondent <!auses, and has caused, said products, when sold, to be transported from his principal place of business aforesaid to purchasers thereof located in the various States of the United States and in the District of Columbia. There is now, and for some time last past has been, 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 business, respondent is in competition with other individuals and with partnerships and corporations engaged in the sale and distribution of like or similar articles of merchandise 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, in soliciting the sale of and in selling and distributing his merchandise in commerce, furnishes and has furnished various devices and plans of merchandising which involve the operation of games of chance, gift enterprises, or lottery schemes by which said merchandise is distributed to the ultimate consumers thereof wholly by lot or chance. The method and sales plan adopted and used by respondent was and is substantially as follows: Respondent distributes, and has distributed, to the purchasing public in commerce certain literature and instructions including, among other things, push cards, order blanks, pamphlets containing illustrations of his said products, and circulars explaining respondent's plan of selling merchandise and of allotting it as premiums or prizes to the operators of said push cards. One of respondent's push cards bears 24 feminine names with ruled columns on the reverse side thereof for recording the. name of the customer opposite the feminine name selected. Said push card has 24 small partially perforated disks marked "Push," below each of which is printed one of the feminine ]lames printed alphabetically on the reverse side of the card. Con- Complaint 29F. T. C.

cealed within each disk is a number which is disclosed when the disk is pushed or separated from the card. The push card also has a large master seal concealed within which is 1 of the feminine names appearing on the reverse side of said card. The push card bears printed legends or instructions as follows :

Seller and Winner Each Receive Choice of MEN'S "ELKSKEIN" JACKET LADIES' "ELKSKEIN" JACKET ROXBORO PENDULUM CLOCK 4-EXTRA WINNERS--4 All numbers ending in 5 each win a beautiful Solid Copper NipCup.- Numbers under 29paywbat SEAL you draw. Write your Numbers over name opposite 29pay only name you 29¢. No higher. select on reverse side.

Total $6.50 Respondent furnishes, and has furnished, his representatives with additional printed instructions or suggestions for using said push card which are as follows:

What to do: There is nothing complicated about it. You merely show the jacket mustrations to your friends, neighbors, co-workers in the omce, shop, etc.-explain to them bow they may obtain a beautiful jacket for the small sum' of 1¢ up to 2!.l¢. The enclosed salescard bas 24 girls' names and under each is a concealed number. Persons selecting numbers 1 to 29 pay amount they draw, all numbers over 29 pay only 2D¢ • • • no higher. "When all the names are sold, the amount collected will be $6.50. Hold sulescard for your record, do not return to us.

Fill out the order blank. Send the order blank to us together with a money order or bank draft for $6.50. Payment of this amount entitles you to. any two garments, one for you and one for the fortunate person who selected the name under the seal. Tbe two garments and other gifts will be shipped to you prepaid. We will include an extra bonus gift if we receive your order in ten days.

Sales of respondent's products by means of said push card are made in accordance with the above-described legends or instructions. Said prizes or premiums ar~ allotted to the customers or purchasers in accordance with the above legends. The said articles of merchandise are thus distributed to the purchasing public wholly by lot or ASSOCIATED SALES CO. 173 170 Complaint chance. Respondent furnishes, and has furnished, various push cards accompanied by a set of order blanks, instructions, and other printed matter for use in the sale and distribution of his merchandise by means of a game of chance, gift enterprise, or lottery scheme. Such push cards are similar to the push card hereinabove described and vary only in detail.

PAR. 3. The persons to whom respondent furnishes, and has furnished, said push 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 a means of conducting lotteries in the sale of his merchandise in accordance with the sales plan hereinabove 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 Government of the United States and in violation of the criminal laws. PAR. 4. The sale of merchandise to the purchasing public in the manner 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 normal retail price thereof. Many persons, firms, and corporations who sell and distribute merchandise in competition with the 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 other method that is contrary to public policy, and such competitors refrain therefrom .. Many persons are attracted by said sales plan or method employed by respondent in the sale and distribution of his merchandise and the element of chance involved therein and are thereby' induced to buy and sell respondent's merchandise 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 a tendency and capacity to, and does, unfairly divert trade to the respondent from his said competitors who do not use the same or an equivalent method. PAR. 5. The aforesaid acts and practices of the respondent, as alleged herein, are all 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 the Federal Trade Commission Act.

213700m--4o--vol.29----14 DECISIO~S 174 FEDERAL TRADE COMMISSION Findings 2()F. T.C. Report, FINDINGs As TO THE F Acrs, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on July 16 A. D. 1938, issued and -served its complaint in this proceeding upon the respondent, Philip F. Rubenstein, individually and trading as "Associated Sales Company," charging him with the use of unfair methods of competition in .commerce in violation of the provisions -of said act. After the issuance of said complaint, no answer being filed by the respondent, testimony and other evidence in support of the allegations of the ceomplaint were introduced by D. C. Daniel and P. C. Kolinski, nttorneys for the Commission, before Charles F. Diggs, an examiner of the Commission theretofore duly appointed by it. John A. Nash appeared as attorney for the respondent but introduced no testimony or other evidence in opposition to the complaint. Said testimony :and other evidence were duly recorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final hearing on the said complaint, testimony and other evidence, and brief in support of the complaint; no brief being filed in opposition thereto. And the Commission, having duly considered the matter and being now fully advised in the premises, finds that this proce~d­ ing is in the public interest and makes this its findings as to the facts _and its conclusion drawn therefrom:

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Philip F. Rubenstein, from about No- ·vember 1936, to April 1, 1938, was engaged in the business of selling merchandise under the trade name, "Associated Sales Company," his principal place of business being located at 605 South First Street, Milwaukee, Wis. Said articles of merchandise included clothing, -glassware, humidors, trays, lamps, kitchenware, and clocks, which . merchandise was sold and shipped by respondent to purchasers in .States other than the State in which respondent's place of business was located and from which said shipments were made. In the course and conduct of his business, respondent was in competition with other individuals, partnerships, and corporations engaged in the sale and distribution of like or similar articles of merchandise in -interstate commerce.

PAR. 2. The respondent, on April1, 1938, caused to be incorporated ·under the laws of the State of ·wisconsin, the Associated Sales and :Bag Co., and on that date the respondent and his partner (whose name does not appear in the record) sold the aforesaid business to :said corporation, since which time the corporation has owned and .conducted the business at the same place and under the same. trade ASSOCIATED SALES CO. 175 170 ]'in dings name, "Associated Sales Company." The respondent is president of said corporation and its principal stockholder. PAR. 3. The respondent, in the course and conduct of his business, furnished to his customers various devices and plans for selling his merchandise which involved the operation of games of chance, by which said merchandise was distributed to the ultimate consumers thereof wholly ·by lot or chance. The method, or sales plan, adopted .and used by respondent is as follows:

Respondent furnished his customers with push cards, order blanks, and circulars explaining his plan of selling merchandise and allotting premiums or prizes to patrons of said push cards. On one of the .said push cards appear 24 partially perforated tlisks marked "Push," ubove each of which is printed 1 of a number of feminine names shown in alphabetical order on the reverse of the card. Concealed within each disk is a number which is not disclosed until the disk is pushed or separated from the card. The card also bears a large master seal, concealed within which is 1 of the said feminine names. The consumer customer pushes 1 of the disks and the number disclosed determines the amount to be paid in cents, but the maximum amount to be paid is not to exceed 29 cents. In the event the number disclosed ends in a "5,'' the customer receives a "Solid Copper Nip Cup," and the one who pushes the disk over which appears the feminine name concealed within the master seal receives choice of a man's or lady's "Elkskein" jacket, or a "Roxboro" pendulum clock. The person who purchased the merchandise and push card from respondent received from respondent 1 of the "Elkskein" jackets when all the pushes had been sold.

PAR. 4. The various other articles of merchandise which were sold and distributed by respondent were sold by means of push cards :similar to that described in paragraph 3 hereof except in minor details, and all of respondent's merchandise was sold and distributed .solely by lot or chance.

PAR. 5. The respondent, by the sales method hereinbefore described, placed in the hands of others the means of conducting lotteries in the sale of his said merchandise, and the said method of sale and ·distribution of his merchandise was contrary to the established public policy of the Government of the United States and in violation of the criminal law.

PAR. 6. Many persons were attracted by the respondent's sales plan ·or method of distribution of his merchandise by the element of chance involved therein, and were thereby induced to buy and sell respond- ·ent's merch.andise in preference to merchandise offered for sale by :his competitors, many of whom do not use the same or similar Order 29F.T.C.

methods of distribution, because such method is contrary to public policy; and as a result, trade has been unfairly diverted from such competitors to the respondent.

CONCLUSION The practices of the respondent, as set forth in the foregoing findings as to the facts were to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in commerce, in violation 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 (respondent having filed no answer), testimony and other evidence taken before Charles F. Diggs, an examiner of the Commission theretofore duly designated by it, in support of the allegations of said complaint, brief filed herein by counsel for the Commission (respondent having offered no proof, filed no brief, and oral argument not having been requested), 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, Philip F. Rubenstein, individually and trading as Associated Sales Co., or under any other name or names, his representatives, agents, and employees, directly or through any corporate or other device, in connection with the offer· ing :for sale, sale and distribution of clothing, glassware, humidors, trays, lamps, kitchenware, clocks, or any other merchandise, in com· merce, 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 push or pull cards, punchboards, 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 agents, or to distributors, or to members of the public, push or pull cards, punchboards, 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 push or pull cards, punchboards; or other lottery devices. It i8 fwrther ordered, That the respondent shall, within 60 days after service upon him of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which he has complied with this order.

THE IWLYNOS CO, 177 Syllabus