Max Levin, trading as Western Novelty Company

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IN THE MATTER OF MAX LEVIN, TRADING AS WESTERN NOVELTY COl\lPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO TDE .ALLEGED VIOL.\TIO:S OI!' SEC. r; OF A:'< ACT Qlj' CONGRESS APPROVED SEPT. !.!G, 1914 Docket 4055. Complaint, J.far. 11, 1!)40-Deciaion, May 1, 19-W Where an individual engaged in the sale and distribution of knives, cameras, razors, and various other articles of merchandise to dealer purchasers in various other States and in the District of Columbia- Sold and distributed certain assortments thereof which were so packed and assembled as to Involve the use of game of chance, gift enterprise, or lottery scheme, when sold and distributed to consumeri thereof and included (1) in the case of one such assortment, along with other articles of merchandise involved, a punchboard for use in sale and distribution of such articles under a plan and in accordance with said board's explanatory legend, by which those securing for the 5 cents paid certain numbers became entitled to $2.50 in cash, others became thus entitled to $1.00, still others became thus entitled to 25 cents in trade, while holders of certain other specified numbers wet·e entitled to receive articles of merchandise attached to board, and purchasers wllo did not qualify by obtaining one of the numbers thus specified received nothing for their money, and (2) various other assortments, together with various push cards and punchboard devices tor use in sale and distribution of merchandise concerned to the purchasing public by means of game of chance, gift enterprise or lottery scheme, and involving sales plans or methods sullstantially the same as those above described and varying therefrom in detail only; and Supplied thereby to and placed in the hands of others means of condueting lotteries in sale of his m~rchandise to purchasing public by dealer purchasers thereof who used !mch punchboard and push card devices In sale and distribution of its said product in accordance with the aforesaid sales plan or methods involving games of chance or sale of a chance to procure an article of merchandise, a sum of money or a credit in tmde of much greater value than price to be paid therefor, contrary to an ('Stablished policy of the United States Government and In violation of the criminal laws, and in competition with many who are unwilling to adopt said or any method involving use of game of chance or sale of 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 said method and by element of chance Involved in sale of said merchandise as above described, and were thereby induced to buy and sell his said goods in preference to those offered and sold by said competitors who did not use same and equivalent methods, and with effect through use of such method and because of said game of chance of unfairly diverting trade in commerce to him from his competitors aforesaid who do not use such or equivalent method, to the substantial injury of competition in commerce:

WESIJ.'Efu.~ NOVELTY CO. 11UG 1164 Complaint llclrl, That such acts nml practices, under the circumstauces set forth, were all to the prejudice and injury of the public an<l competitors and constituted unfair methods of competition in commerce nntl unfair nntl deceptive acts and practices therein.

;J,fr. D. 0. Daniel for the Commission.

rjr. Sauvuel D. Alcnin, of Denver, Colo., for respondent. CmiPL.\INT 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 Max Levin, individually and trading under the name of 'Vestern 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 folfows: PARAGRAPH 1. Respondent, l\fax Levin, is an individual doing business under the name of Western Novelty Co., with his principal office and place of business located at 1729 Lawrence Street, Denver, Colo. Respondent is now, and for more than 1 year last past has been, engaged in the sale and distribution of knives, cameras, razors, pens, pencils, cigarette lighters, and various other articles of merchandise to dealers. He causes, and has caused, said products, when sold, to be shipped or transported from his aforesaid place of business in the State of Colorado to purchasers thereof in the various other States of the United States and in the District of Columbia at their respecth·e points of location. There is now, and for more than 1 year 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 ]ike or similar 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 sells and has sold to dealers certain assortments of said merchandise so packed and assembled as to invo]ve the use of a game of chance, gift enterprise, or lottery scheme, when said merchandise is sold and distributed to the consumers thereof. One of said assortments is sold and distributed to· the purchasing public in the following manner: This assortment consists of a device commonly known as a pnnchboard, with a number of articles of 1166 :FEDERAL TRADE COl\Il\IISS[OK DECISIOKIS Complaint 30F. T. C.

merchandise attached thereto. Said punchboard colltains a number of small sealed tubes, each of which tubes contains a small slip of paper with a number printed thereon. Sales are 5 cents each. The board bears statements or legends informing purchasers and prospective purchasers that the holders of certain specified numbers are entitled to and receive $2.50 in cash; that the holders of certain other specified numbers are entitled to and receive $1 in cash; that the holders of certain other specified numbers are entitled to and receive 25 cents "in trade"; that the holders of certain other specified numbers are entitled to and receive the said articles of merchandise attached to said board. A purchaser who does not qualify by obtaining one of the specified numbers receives nothing for his money. The numbers are effectively concealed from purchasers and prospective purchasers until a punch has been made and the number punched separated or removed from said board. The said sums of money, the amounts "in trade" and the said articles of merchandise are thus distributed to the purchasing public wholly by lot or chance. Respondent sells and distributes various assortments of his mer· chandise and sells and furnishes various push card and punchboard devices for use ip. the sale and distribution of such merchandise to the purchasing public by means of a game of chance, gift enterprise, or lottery scheme. The sales plans or methods employed in connection with each of said assortments are substantially the same as the sales plans or methods hereinabove described varying only in detail. PAR. 3. The dealers to whom respondent sells and furnishes said punchboard and push card devices, use the same in selling and distributing respondent's merchandise in accordance with the aforesaid sales plans or methods. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of his)llerchanJise in accordance with the sales plans or methods hereinabove described. The use by respondent of said methods in the sale of such 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 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, a sum of money or a credit "in trade" of much greater value than the price to be paid therefor. Many persons, firms, and corporations who sell or distribute merchandise in competition with the respondent, as above alleged, are unwilling to WESTERN NOVELTY 00. 1Hi7 llg·i Findings adopt and use said methods or any method involving the use of a game of chance or a 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 respondent's said methods and by the element of chance involved in the sale of said merchandise in the manner above alleged and are thereby induced to buy and sell respondent's merchandise in preference to the merchandise offered for sale and sold by said competitors of respondent who do not use the same or equivalent methods. The use of said methods by the respondent because of said game of chance has a tendency and capacity to and does unfairly divert trade in commerce between n.nd among the various States of the United States and in the District of Columbia to respondent from his said competitors who do not use the same or equivalent methods. .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 the 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.

REPORT, FINDINGS AS TO THE FACTs, A~D Onder Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on the 11th day of March 1940, issued and on the 13th day of March 1940, ser:ved its complaint in this proceeding upon respondent, Max Levin, individually and trading under the name of Western Novelty 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 April18, 1940, 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.

llGS FEDERAL TIL\DE COl\Il\II~SJ.ON DECISIONS Findings 30 F. 1'. C. l'INDINGS AS 'IO 'lhi·l FACTS PARAGRAI'II 1. l{p;;pondent, Max Levin, is an incli vidual who for some time last past did business under the name of ·western Novelty Co., with his principal office and place of business located. at 1729 Lawrence Strt>et, Denver, Colo. Respondent was engaged in the sale and distrilmtion of knives, cameras, razors, pens, pencils, cigarette lighters, and various other articles of merchandise to dealers. He caused said products, when sold, to be shipped or transported from his aforesaid place of business in the State of Colorado to purchasers thereof in the various other States of the United States and in the District of Columbia at their respective points of location. There was 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 was in competition with other individuals and with partnerships and corporations engaged in the sale and distribution of like or similar 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 sold and distributed certain assortments of said merchandise so packed and assembled as to involve the use of !1 game of chance, gift enterprise, or lottery scheme, when said merchandise was sold and distributed to the consumers thereof. One of said assortments was sold and distributed to the purchasing public in the following manner: This assortment consisted of a device commonly known as a punch board, with a number of articles of merchandise attached thereto. Said pnnchboard contained a number of small sealed tubes, each of which tubes contained a small slip of paper with a number printed thereon. Sales were 5 cents each. The board bears statements or legends informing purchasers and prospective purchasers that the holders of certain specified numbers are entitled to and receive $2.50 in cash; tlut,t the holders of certain other specified numbers are entitled to and receive $1 in cnsh; that the holders of certain other specified numbers are entitled to and receive 25 cents "in trade"; that ihe holders of certain other specified numbers are entitled to and receive the said articles of merchandise attached to said board. A purchaser who did not qualify by obtaining one of the specified numbers received nothing for his money. The numbers were effectively concealed from purchasers and prospective purchasers until a punch had been made and the number punched separated or removed from said board. The said sums of money, the amounts "in trade" and tllP said articles of merchandise werf' thus distributed to the purchasing public wholly by lot or chance.

WESTERN NOVELTY 00. llG!J 1164 Findings Respondent sold and distributed various assortments of his merchandise and furnished various push card and punchboard devices for use in the sale and distribution of such merchandise to the purchasing public by means of a game of chance, gift enterprise, or lottery scheme. The sales plans or methods employed in connection with each of said assortments were substantially the same as the sales plans or methods hereinabove described, varying only in detail.

PAR. 3. The dealers to whom respondent sold and furnished said punchboard and push card devices, used the same in selling and distributing respondent's merchandise in accordance with the aforesaid sales plans or methods. Respondent thus supplied to and placed in the hands of others the means of conducting lotteries in the sale of his merchandise in accordance with the sales plans or methods hereinabove described. The use by respondent of said methods in the sale of such merchandise and the sale of such merchandise by and through the use thereof and by the aid of said methods is a practice of the sort which was and 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 described involves a game of chance or the sale of a chance to procure an article of merchandise, a sum of money or a credit "in trade" of much greater value than the price to be paid therefor. Many persons, firms, and corporations who sell or distribute and have sold and distributed merchandise in competition with the respondent, as above found, were and are unwilling to adopt and use said methods or any method involving the use of a game of chance or a sale of a chance to win something by chance, or any other method that is contrary to public policy, and such competitiors did and do refrain therefrom. l\Iany persons were attracted by respondent's said methods and by the element of chance involved in the sale of said merchandise in the manner above described and were thereby induced to buy and sell respondent's merchandise in preference to the merchandise offered for. sale. and sold by said competitors of respondent who did not and do not use the same or equivalent methods. The use of said methods by the respondent, because of said game of chance, had a tendency a.nd capacity to, and did, unfairly divert traoo in commerce between and among the various States of the United States and in the District of Columbia to respondent from his said competitors who did not and do not use the same or equivalent methods. As a result thereof, substantial injury was done by respondent to competition in commerce between and among the various States.of the U pi ted States and in the District of Columbia.

1170 FEDERAL TRADE COl\I.MISSION DECISIOKS Order 30l!'.T. C. CONCLUSION The aforesaid acts and practices of the 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 commerce 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 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 is ordered, That the n•spondent, Max Levin, individually and trading under th~ name of 'Western Novelty Co., 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 knives, cameras, razors, pens, pencils, cigarette lighters, 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. Selling or distributing said merchandise or any other merchandise so packed and assembled that sales of said merchandise or any other merchandise to the general public are to be made or may be made by means of a lottery, gaming device or gift enterprise. 2. Supplying to or placing in the hands of others, said merchandise or any other merchandise, together with push cards, punchboards, or any other lottery devices, which said push cards, punchboards, or other lottery devices are to be used or may be used in selling or distributing said merchandise or any other merchandise to the general public.

3. Supplying to or placing in the hands of others, push cards, punchboards, or any other lottery devices, either with assortments of said merchandise or any other merchandise, or separately, which said push cards, punchboards, or other lottery devices are to be used or may be used in selling or distributing said merchandise or any other ml'rrhandisc to the general public.

'.VESTEH~ NOVELTY 00. 1171 116·1 Order 4. Sl'lliug or otlwrwi~c uistributing uuy merchandi~e Ly ml'ans of a game of chance, gift enterprise, or lottery scheme. It is 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.

1172 FEDERAL TRADE 001\IMISS:ION DE.C/IS'IONS: Syllabus 30F.T.C.