Ravid, Samuel

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

IN THE MATTER OF SAMUEL RA VID, INDIVIDUALLY, AND TRADING AS OHIO NOVELTY COMPANY COJIIPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT Ol<' CONGRESS APPROVED SEPT. 26, 1914 Docket 3594. Complaint, Sept. 17, 1938-Dcci!Jion, Aug. 11,, 1939 Where an individual engaged in sale and distribution of dresser sets, cigarette cases and lighters, table and kitchen ware, pen and pencil sets, dolls, watches, and numerous other articles of merchandise, to purchasers in various other States and in the District of Columbia- Sold and distributed said articles by means of a game of chance, gift enterprise, or lottery scheme under which he distributed to representatives and prospective t•representatives certain advertising literature including a sales circular listing number of Items of merchandise and prices thereof, and including pull card for use in sale and distribution of products in question under a plan in accordance with which particular item of merchandise secured and price paid therefor, and purported and represented retail value secured, were determined by chance in accordance with item and price disclosed by separation of particular tab selected from said card, and person operating card was compensated after sale of all tabs or chances and remission of amounts thus secured, by premium; anu Supplied thereby and placed in the hands of others means of conducting lotteries in the sale of his merchandise in accordance with aforesaid or similar sales plans varying therefrom in detail only, and under which members of purchasing public were induced by apparent greater values and regular prices of some of said articles of merchandise as compared to price prospective purchaser would be required to pay in event of securing one of saill articles, to purchase tabs or chances in hope of receiving article of mer- ,, ~ ; chandise of far greater value than designated price to be paid therefor, and under which fact as to whether purchaser of one of said tabs received '• article of greater value and higher regular price than price designated therefor on such tab, and which of said articles purchaser was to receive, and amount of money which purchaser was to pay, was determined wholly _,,: by lot or chance, and there was 1nvolveu game of chance or sule of a chance to procure an article of merchandise at price much less than apparent normal retail price thereof; contrary to the· established public policy of the United States Government and in violation of criminal laws, and in competition with many who are unwilling to adopt and use said method or any method involving game of chance or sale of a chance to wiu ,1:,, something by chance, or any method contrary to public policy, and refrain therefrom;

With result that many persons were attracted by his said method and by element of chances involved in sale of said merchandise as above described, and were thereby induced to buy and sell his said products In preference to merchandise oflered and sold by his said competitors who do not use such or equivalent method, and with eflect, through use of said method and because of said game of chance, of unfairly diverting trade and cu~tom to him from his competitors aforesaid who do not use said or equivalent method: 628 FEDERAL TRADE COI\fl\IISSION DECISIONS Complaint 29F. T. C.

Ileld, That such acts and practices, under the circumstances set forth, were all to the prejudice awl injury of the public and competitors, and constituted unfair methods of competition antl unfair and deceptive acts and practices in commerce.

Defore llfr. jJfile8 J. Fumas, trial examiner. Mr. D. 0. Daniel for the Commission.

II arri.Y, Sacks & Sub1'in, of Akron, Ohio, for rpspondent. Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said n,ct, the Federal Trade Commission, having reason to believe that Samuel Ravid, individually and trading as Ohio Novelty Co., 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, Samuel Ravid, is an individual trading under the name of Ohio Novelty Co., with his principal office and place of business located at 107 "\Vestmoreland Terrace, Akron, Ohio. Respondent is now and for some time last past has been engaged in the sale and distribution of dresser sets, cigarette cases and lighters, tableware, kitchen ware, pen and pencil sets, dolls, clocks, watches, blankets, bedspreads, tablecloths, wearing apparel, cosmetics, jewelry, razors,· razor blades, thermometers, electric lamps, suitcases, cameras, beauty sets, billfolds, tool sets, 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 Ohio to purchasers thereof located 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. In the course and conduct of said business respondent is and has been in competition with individuals and with partnerships and corporations engaged in the sale and distribution of like or similar articles of merchandise in commPI"ce 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 OHIO NOVELTY CO. 629 . ' 027 Complaint 'I:

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. Respondent1s merchandise is and has been 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 mechandise 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 merchandise they are to receive or the price which they are to pay until after the tab is separated from the card. 'Vhen 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 article of merchandise. Some of said articles of merchandise 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 .1• be required to pay in the event he secures one of said articles, induce members of the purchasing public to purchase the tabs or chances in the hope that they will receive articles of merchandise of far greater mlue than the designated prices to be paid for same. The fact as to whether a purchaser of one of said pull card tabs receives an article which has greater value and a 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 represen~~tive 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 nnd has fur- 630 :FEDERAL TRADE COl\Il\IISSION DECISIONS Findings 29F. T.C.

nished various 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 abovetlescribed 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 forth. The use by respondent of said method in the sale of his merchandise and the sales 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 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 corporations who sell or 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 method which is contrary to public policy, an'd such competitors refrain therefrom. Many persons are attracted by respondent's said method and by the element of chance involved in the sale of such merchandise in the manner . above described, 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 any 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 or an equivalent method. PAR. 5. The aforesaid acts and practices of respondent as herein alleged are all to the prejudice and injury of the public and of respondent's competitors, and constitute unfair methods of competition 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 F AOI'S, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on September 17,1938, issued and thereafter served its complaint in this proceeding upon respondent, Samuel OHIO NOVELTY CO. 631 627 Findings Ravid, individually and trading as Ohio Novelty Co., charging him with the use of unfair methods of competition and unfair and deceptiye acts and practices in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of ·, respondent's answer, the Commission, by order entered herein, granted respondent's motion for permission to withdraw said answer and to substitute therefor an answer admitting all the material allegations of fact set forth in said complaint and waiving all intervening procedure and further hearing as to said facts, which substitute answer was duly filed in the office of the Commission. Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and substitute answer, and the Commission, having duly considered the matter and beil1g 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 Tile FACTS PARAGRAPH 1. Respondent, Samuel Ravid, is an individual trading under the name of Ohio Novelty Co., with his principal office and place of business located at 107 ·westmoreland Terrace, Akron, Ohio. Respondent is now and for some time last past has been engaged in the sale and distribution of dresser sets, cigarette cases and lighters, tableware, _kitchen ware, pen and pencil sets, dolls, clocks, watches, blankets, bedspreads, tablecloths, wearing apparel, cosmetics, jewelry, ,. razors, razor blades, thermometers, electric lamps, suitcases, cameras, beauty sets, billfolds, tool sets, 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 Ohio to purchasers thereof located in the various other States of the United States and in the District o:f iColumbia at their respective points of location. There is now and •' has been for some time last past a course o:f 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 o:f said business respondent is and has been in competition with individuals and with partnerships and corporations engaged in the sale and distribution o:f 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 hereoft respondent sells and distributes and has seld and Findings 29F.T.C.

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 and has been 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 thereof are so concealed that purchasers or prospective purchasers of the tabs or chances are unable to ascertain which article of 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 and the price thereof, his name is written on the list opposite the named article of merchandise. Some of said articles of merchandise 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, induce 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 fact as to whether a purchaser of one of said pull card tabs receives an article which has greater value and a 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.

"I' OHIO NOVELTY CO. 633 <627 Conclusion Respondent sells and distributes and has sold and distributed vari- ()US assortments of said merchandise and furnishes and has furnished various 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 fu·rnished 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, h1 accordance with the sales plan hereinabove set forth. The use by respondent of said method in the sale of his merchandise and the sales 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 criminal laws.

I>AR. 4. The sale of merchandise to the purchasing public in the manner above described 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 win something by chance, or any method which is contrary to public policy, and such competitors refrain therefrom . .l\Iany persons are attracted by respondent's said method and by the element of chance iJwolved in the sale of such merchandise in the manner above described, 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 any equivalent method. The use .of said method by respondent, because of said game of chance, has the capacity and tendency to, ,. 1land does, unfairly divert trade and custom to respondent from his said competitors who do not use the same or an equivalent method. 't CONCLUSION :! The aforesaid acts and practices of respondent, as herein found, :· are aU to the prejudice and injury of the public and of respondent's competitors, and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

634 FEDERAL TRADE COl\fl\IISSION DECISIONS Order 29F. T. C.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer of respondent, in which answer respondent admits all the material allegations of fact set forth in said complaint, and states that he waiws all· intervening procedure and further hearing as to said facts, and the Commission having made its findings as to the facts and conclusion that said respondent has violated the provisions of the Federal Trade Commission Act.

It w oraered, That the respondent, Samuel Ravid, individually and trading as Ohio Novelty Co., or trading wider any other name or names, his representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of dresser sets, cigarette cases and lighters, tableware, kitchen ware., pen and pencil sets, dolls, clocks, watches, blankets, bedspreads, tablecloths, wearing apparel, cosmetics, jewelry, razors, razor blades, thermometers, electric lamps, suitcases, cameras, beauty sets, billfolds, tool sets, or any other articles of merchandise in 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 canls or circulars having pull tabs thereon, or any other lottery devices, so as to enable 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 any 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 or devices.

It i.rJ further 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.

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McDOW.ELL, PYLE & CO., INC. 635 Syllabus