Friedman, Isaacs

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IN THE .].fatter OF ISAAC S. FRIEDMAN, AN INDIVIDUAL TRADING AS WRIGHT PRODUCTS COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 8806. Complaint, June S, 1989--Decision, Sept. 7, 1939 Where an individual engaged in sale and distribution of hosiery, clocks, pen and pencil sets, manicure sets and other articles of merclwndise to purchasers in various other States and In the District of Columbia, In soliciting, selling and distributing his merchandise- Furnished various devices and plans of merchandising which Involved operation of games of chance, gift enterprises, or lottery schemes for sale and distribution thereof to purchasing public, and distribution to said public of certain literature and instructions, Including push curds, order blanks and depictions of merchandise In question in circulars explaining his plan of selling same, under which person selecting by chance from 35 feminine names displayed on card, name corresponding with name concealed under curd's large seal received spinning-wheel clock of asserted $5 value, and person receiving certain number received De Luxe Combination Pen and Pencil of asserted $2 value, and amount paid by customer, if any, was contingent upon number selected by chance as determined by disk of card pushed, and operator of card was comp!'nsated by pr!'mium or prize; and Supplied thereby to 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 in detail only therefrom, and under which fact as to whether purchaser received an article of merchnndi!<e or nothing for amount of money paid, or article of merchandise free, and which article of merchandise purchasf'r was to receive, if any, was determined wholly by lot or chance, and involving game of chance or sale of a chance t(_) procure an article of merchandise at price much less than 11ormal retail price thereof, contrary to an established public policy of the United States government and in violation of the criminal laws, and in competition with many who are unwilling to adopt and use said or any method involving game of chance or sale of a chance to win something by chance, or any other method contrary to public policy, and refrain therefrom;

With result that many persons were attracted by his said sales plan or method employed In sale and distribution of his merchandise and by element of chance involved therein and were th!'reby induced to buy and sell such merchandise in preference to that offered and sold by competitors aforesaid who do not use such or equivalent method and with effect through use of such method and because of said game of chance of diverting trade unfairly to him from his competitors aforesaid who do not use such or equivaleut method: Held, That such acts and practices under the circumstances set forth were all to the prejudice and Injury of the public and competitors and constituted unfair methods of competition.

824 FEDERAL TRADE COl\IMISSION DECISIONS Complaint 29 F. T.ll. Before Mr. Miles J. Furnm1, trial examiner. Mr. L. P. Allen, Jr. for the Corrunission. 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 Isaac S. Friedman, an individual trading as \Vright Products 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 interest of the public, hereby issues its complaint, stating its charges in that respect as follows: PARAGRAPH 1. Respondent, Isaac S. Friedman, is an individual trading as \Vright Products Co. His principal office and place of business is located at 4303 North Keeler Avenue, Chicago, Ill. Respondent is now and for some time last past has been engaged in the sale and distribution of hosiery, clocks, pen and pencil sets, manicure 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 merchandise, when sold, to be transported from his aforesaid place of business in the State of Illinois to purchasers thereof at their respective points of location in the-various other States of the United States and in the District of Columbia. There is now, and has been for some time last past, a course of trade by 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 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 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 sold and distributed to the ultimate consumers thereof wholly by lot or chance. The method or sales plan adopted and used by respondent was and is substantially as follows: Respondent distributes and has distributed to the purchasing public certain literature and instructions, including, among other things, push cards, order blanks, illustrations of his said merchandise and WRIGHT PRODUCTS CO. 825 823 Complaint circulars explaining respondent's plan of selling merchandise and of allotting it as premiums or prizes to the operators of said push cards and to the purchasing and consuming public. One of respondent's push cards bears thirty-five (35) feminine names with ruled columns on the reverse side thereof for writing in the name of the customer opposite the feminine name selected. Said push card has thirty-five (35) small, partially perforated disks on the face of which is printed the word "push." Concealed within each disk is a number which is disclosed when the ·disk is pul:'hed or separated from the card. The push card also has a large master seal, and concealed within the master seal is one of the feminine names appearing on the reverse side of said card. The push card bears legends or instructions as follows:

Name under LARGE SEAL recei>es an ANIMATED SPINNING WHEEL CLOCK The New Sensational Time Piece $5.00 VALUE Nttmber 20 Receives De Luxe Combination Pen and Pencfl-Value $2.00 Numbers 1 to 19 Pay Only AMOUNT YOU DRAW Any Number Over 19 Pays Only 19¢ FREE-4 Numbers are FREE 10-11-12-16 Do not remove seal You Pay nothing if you draw until entire these numbers, yet have an card is sold equal chance WRITE YOUR NAME OPPOSITE · NAME YOU SELECT ON REVERSE SIDE Sales of respondent's merchandise by means of said push cards are made in accordance with the above-described legends and instructions. Said prizes or premiums are allotted to the customers or purchasers in accordance with the above legends and instructions. The fact as to whethet a purchaser receives an article of merchandise or nothing for the amount of money paid or an article of merchandise free, and which of said articles of merchandise the purchaser is to receive, if any, is thus determined wholly by lot or chance. Respondent furnishes, and has furnished, various push cards accompanied by said 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. The sales 826 FEDETIAL TRADE COl\HUSSION DECISIONS Complaint 29F.T.C.

plan or method involved in connection with the sale of all of said merchandise by means of said push card is the same as that hereinabove described, varying only in detail.

PAR. 3. The persons to whom respondent furnishes, and has furnished, the said push cards use 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 j':ales plan or method in the sale of his merchandise and the sale of said merchandise by and through the use thereof and by the aid of said sales plan or method is a practice of a 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 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 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 methou 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. l\Iany persons are attracted by saiu sales plan or method employed by respondent in the sale and distribution of his merchandise anu the element of chance involved therein, and are thereby induced to buy and sell respondent's merchandise in preference to merchandise offered for sale anu solu by saiu 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 in commerce between and among the various States of the United States anu in the District of Columbia 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 competition 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 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.

WRIGHT PllODUCTS CO. 827 823 Findings RErouT, FINDINGS AS TO THE FACTs, AND Onder Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on June 3, 1939, issued and served its complaint in this proceeding upon respondent, Isaac S. Friedman, an individual trading as ·wright Products Co., charging him with the use of unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of the provisions of said act. On July 31, 1939, the respondent filed his answer, in which answer he admitted all the material allegations of fact set forth in said. complaint, and waived all 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, Isaac S. Friedman, is an individual trading as Wright Products Co. His principal office and place of business is located at 4303 North Keeler Avenue, Chicago, Ill. Respondent is now and ·for some time last past has been engaged in the sale and distribution of hosiery, clocks, pen and pencil sets, manicure 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 merchandise, when sold, to be transported from his aforesaid place of business in the State of Illinois to purchasers thereof at their respective points of location in the various other States of lthe United States and in the District of Columbia. There is now, and has been for some time last past, a course of trade by respondent in such merchandise in commerce between anu 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 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 Uniteu States anu 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 mechandise furnishes, and has furnished, 828 FEDERAL TRADE COl\:Il\HSSION DECISIONS Findings 29F. T. C.

various devices and plans of merchandising which involve the operation of games of chance, gift enterprises or lottery schemes by which said merchandise is sold and distributed to the ultimate consumers thereof wholly by lot or chance. The method or sales plan adopted and used by respondent was and is substantially as follows: Respondent distributes and has distributed to the purchasing public certain literature and instructions, including, among other things, push cards, order blanks, illustrations of his said merchandise and circulars explaining respondent's plan of selling merchandise and of allotting it as premiums or prizes to the operators of said push carded and to the purchasing and consuming public. One of respondent's push cards bears thirty-five ( 35) feminine names with ruled columns on the reverse side thereof for writing in the name of the customer opposite the feminine name selected. Said push card has thirty-five (35) small, partially perforated disks on the face of which is printed the word "push." Concealed 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, and concealed within the master seal is one of the feminine names appearing on the reverse side of said card. The push card bears legends or instructions as follows: Name under LARGE SEAL receives an ANIMATED SPINNING WHEEL CLOCK The New Sensational Time Piece $5.00 VALUE Number 20 Receives De Luxe Combination Pen and Pencil-Value $2.00 Numbers 1 to 19 Pay Only Al\IOUNT YOU DRAW ' Any Number Over 19 Pays Only 19¢ Do not FREE--4 Numbers are FREE remove seal 10-11-12-16 until en tire card Is sold You Pay nothing if you draw these numbers, yet have an equal chance WRITE YOUR NAl\IE OPPOSITE NAl\IE YOU SELECT ON HEVEHSE SIDE Sales of respondent's merchandise by means of said push cards are made in accordance with the above-described legends and instructions. WRIGHT PRODUCTS CO. 829 823 Findings Said prizes or premiums are allott~d to the customers or purchasers in accordance with the above legends and instructions. The fact as to whether a purchaser receives an article of merchandise or nothing for the amount of money paid or an article of merchandise free, and which of said articles of merchandise the purchaser is to receive, if any, is thus determined wholly by lot or chance. Respondent furnishes, and has furnished, various push cards accompanied by said 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. The sales plan or method involved in connection with the sale of all of said merchandise by means of said push cards is the same as that hereinabove described, varying only in detail.

PAR. 3. The persons to whom respondent furnishes, and has furnished, the said push cards use 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 sales plan or method in the sale of his merchandise and the sale of said merchandise by and through the nse thereof and by the aid of said sales plan or method is a practice of a sort which is contrary to an established public policy of the Government of the United States and in violation of the criminal laws.

PAn. 4. The sale of merchandise to the purchasing public in the manner 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 normal retail price thereof. l\fany 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 other method that is contrary to public policy, and such competitors refrain therefrom. l\fany 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 in commerce between 213706m-4Q-VOL.2!)-ti5 830~ FEDERAL TRADE COJI.IMISSION DECISIO:NS Order"' 29F.T:U~ and among the various States of the United States and in the District of Columbia to respondent from his said competitors who do not' 7use "the 'same or an equivalent method. . . CONCLUSION The aforesaid acts and practices of respondent, as herein found, are all to the prejudice and injury 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: 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 waives all intenening procedure and further hearing as to said facts and the Commission having, made its findings as to the facts and conclusion that said respondent lias violated the provisions of the· Federal Trade Commission Act.

It is ordered, That the respondent, Isaac S. Friedman, an individual trading as 'Vright Products Company, or trading under 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 hosiery, clocks, pen aml pencil sets, manicure sets, or any other articles of merchandif:e 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 push or pull cards, punchboards, or 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 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 is.further ordered, That within 60 days from the date of the service of this order upon the said respondent, he shall file with the Commission a report in writing, setting forth in detail the manner and form in which he has complied with this order. G. BERNARDI 83~ Syllabus1