Wallace, D. Victor

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

IN THE .MATTER OF D. VICTOR WALLACE, TRADING AS PARAMOUNT INSTITUTE CO~IPL.\lnt, FL\'DIJiiGS, AIID ORDER 1!11 REG.\RD TO TUB ALLEGED VIOLATIO!II OF SEC. ;:; OF AN ACT OF C'ONGRF.SS APPROVED SEPT. 2G, 1914 Docket -~00!1. Complaint, Feb. 1, 1.9W-Ded8iou, Jwt1e 26, 1940 Where an indiYidnal engaged iu sale and distribution, in commerce nmong the various Stutes, of correspondence course of study through the mails to prepare students fot· various civil sen·iee exuminations for positions under' the United Stutes Government- ( a) Represented, through use of advertising folder employed in personal solicitation and solicitation by hls agents of pt·ospective students, that under normal and ordinary conditions and circumstances most persons de!'iriug to obtain civil servic·e status by ('examination must have sp{'Cial coaching of the kind of. fet·ed by him, and that he was In constant touch with the United States Civil Service Commil'<sion and its exmniners and had advance and inside information concerning civil service examinations, and that he was a specialist in matters relating to the civil service of the Unit•E'd States Government and had a backgrouud of civil service experience therein, facts being, under conditions and circumstances referred to, persons wishing to pass such examination and qualified b.r prior general education and experien<.>e for particular positions desired do not requit·e such coaching, very small percentage ot thosepassing such examinations have had such coaching for examinations passed, his instruction is not of kind to prepare students for positions sought and is of little value to them unless otherwise qualified by prior education and experience, and, except as casual correspondent, he was not constantly or otherwise in touch with said commission or Its examiners and had no advance infonnation concerning its examinations, and was not such a specialist and. had not had background of expet·ienee claimed as hereinabove set forth;

(b) Represented, a" nforesaid, that commission t•eferred to holds examinations for all types of positions at frequent intervals from yE>ar to year, and especially fot· those for which he offers instruction, and that civil servi<·e pmployees are never discharged ot· deprived of their various positions with the Government except for misconduct or fTOSS inpfficiency, and that such employees, if efficient, are certain to obtain promotion in position and ad· vancPment in salary, and that persons passing civil service examination with high rating are cet·tain of obtaining position with the Government and of doing so within a short time after passing such exumiuation, facts being that·e are iilan~· trpes of positions, including some of those with respect to which he offers instruction, for which examinations are held only at infrequent intervals, with many years elapsing between them sometimes, many employees are discharged for reasons other than those above set forth, including such matter~ as insufficient aptll'oprlations, efficient employees of said character are not cettain to obtain promotion us above set forth, and IWrf'ons passing sudt an examination with high rating are not <'ertaln ot ohtnining position at Parly date or at all; 300 FEDERAL TRADE COMMISSION DECISIOXS Syllabus 31 I<'. T. C. (c) Rl'prl'sented, as »foresaid, that persons bt•twePH ngl's of 23 and ·1G might become inspectors of customs if otherwise qualified, and that appointments to position of immigmnt inspector were ot·dinarily gh·l'n to those wlw had passed civil Hervice l'xamilmtions appropriate for such position, facts being age limits for customs inspectors wet·e not as given, and appointml'nts to position of immigrant insppctor were, and had been for number of years, made on other tests and qualifieation>J than pa,;~ing of eivil service examination, and such examinations for sud1 position had not been givpn for more than 6 years, and positions in qnPstion lind been filled by appointment and by promotion within departnwnts; (d) Rl'presented, as aforesnid, that persons who paSSPd such Pxaminatiou ns po>~t office clerks and city mail caniers were eligible for uvvoiutment to t·regular po3itions vaying $l,i00 a year, with incrPnl'es of $100 a year fo1· 5 years, without first st>rvil1g as substitutes, and that employees of said tll'partment entered upon their duties in >;uch JlOsitions at salaries of $1,700, $1,800, $1,£00, and $2,GOO, facts being postal derk nnd mail carrier salaries first ttbore indiea ted were paid only n !tt>t" such Pmployees had served as substitutes and, in mm1y instmJCes, for a llllmber of years, appointments to positions in department in qtwstion being made ut ~salary of $1,700 only after employee hns sen-ed as f,;\lbstitute and no nppointnwnts being made at higher salaries referred to, which nre result of promotion; (e) Represented, as afore;;aid, that some employel's of the United States Gor· ernment working in eiril service po,;itions are allowed 30 days annual leave and no employee is required to work more than 8 hours a day, facts being Rome employees are rpquired to work in excp;;s of said amount, and 26, and not 30, days is maximum annual lea re granted to such employees; (f) Made use of trade name including wonl "Institute" for conduct of his ~<aid business, and implied and represented thereby to prospective student!! that he conducted an institution of learning with staff of competent, experienced and qualifif'd f'ducators, and that his school was a large and extensive institution offering training and instntction in philosophy, art, science, and other learned subjects, facts being he offered only one course of study and instruction which was substantially same, rt>gardless of civil service examination for which students wished to prep:ll"P, his said school was not a large or f'Xtensive institution and he had ns only employee, a stenogmpher, in addition to limited numlier of saler,<men employed in pust 11s above set forth, he did not offer, in conduct of his said school, training or instruction in philo,.;ophy, nrt, sc·ience, or other leartwd subjects, neither he nor any of his employel's was a competent, experienced, or qualified educator or teacher, and no basic or thorough ot· complete instruction was gh·en in any subject of lt>llt"ning, his said school was not 1111 institution of learning in any accurate sense, and mt>thod of im;trnctiou consisted in mere mailing out of previously prepared mimeogt·nphed or printed sheets and the gradiJ1g of papers by a key or prepared answer !>heets; (g) Represented and Implied, through statement "OpEc-rated In strict ('ompliance with the Laws and Regulations of the FNlernl Trade Commission" in advertising folders above referred to and circulated to proopective students, that the methods used lu sale c,f said cour~s of study and Instruction, and repr!'Sl'ntations made In connection therewith, were all In ronformity to tlif' Ff'det·ul Tt·ade Commls!-lion Aet and the dt>clsions of the courts and the Ol"tl!'rs of the Jot>tlt>rnl Trutle Commission thereunder, PARAMOUNT INSTITUTE 301 299 Complaint and that such meth01ls and rrpregpntations made in connection therewith conformed to the trade practice rules of the Commisson relating to line of businr~s of which his said school was a part, and also that Commission had npp1·ovet1 his methods and representations u:>ed in com1ection therewith, :md that he had permission of Commis><ion to use said statement In promoting ~ale of sa:d course of study and Instruction, facts being such methods and representations used by him In conduct of his said business as Above set forth, were JJot in conformity with said act or dedsions of courts and orders of Commission thereunder, nor in conformity with said tl'IHle pr·nctice rule;;, and Commssion had not approved his methods or repre!:wntation~ m;ed in l'<>nneetion with his bul"iness, and he did not have its pPrmlssion to use said or aur other statement in connection with promotion of sale of his sai<l ('onrse of study an <I instruction; and (h) Represrnted to prospect:ve purcha~ers that the pric·e of $19.GO cash, or $:-.9.50 on clefened payment,., at which his said c·course wns and hnd been offerlo'd, was n spedal prke for the cour·se, and that t11e regula!' one ther·efor had hern $125, nnd made many of such "special" offers to recent high school graduates, to whom it was further represented that such "~<pecial" prire 'l'l'llS being offered to them hrcause of high scholastic standing or because of !l(lne other ml'ans of determining their seleetion us recipients of llnc:h "svecial offer," facts being regula!' and mmal prices were amounts first stnt!'d aml, with few exceptions, nll people enrolled in his said school c:ontraeted for the course at not to E'exceed such prices, higher pri<:e mentioned 11·as purrly fi<'titious and no studeut wns then required to contract for such course at said price, and only a few lmd been enrolled at said price during entire time in which!J he conducted his business, and prices referred to, actually gh·en, were not becnuse of high scholarship or other merit or "'pecial se!PC"tion, but were gi¥en to nil who could be induced to contract for com·se, regardless of such qualifications or selection; With tendenl'y and capudty to ml~lead pureha"frs and prospective purchasers of his said course of study and instruction Into erroneous and mh;tal;:pn belief that such rrpresentations, as above set forth, were true, and to induce them to purchase bls saw com·se of study and in~truetion on account of sueb bE> lief:

Held, That such acts and practices, under1· the cirtumstances set forth, WE're all to the prt:>judire of the public and constituted unfair nnd <lett:>ptive 1wts and practices in commerce.

Before Mr. William C. Reel•es, trial examiner. Mr. Dono,Pan R. Dh•et for the Commission.

CmiPL.\IXT 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 D. Victor 'Vallace, an individual, trading as Paramount Institute, hereinafter referred to as respondent, has violated the prodsions of said act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issue~ its complaint stating its charges in that respect as follows:

Complaint 31 F. 1'. C. PARAGRAPH 1. The respondent, D. Victor 'Vallace, is an individual trading as Paramount Institute and having his office and principal place of business at 1095 Market Street, San Francisco, Calif. PAR. 2. Said respondent, D. Victor 'Vallace, is now and for more than 3 years last past has been engaged, under the name and style of Paramount Institute, in the sale and distribution in commerce among and between the various States of the United States, of a course of study and instruction intended for preparing students thereof for examinations for various civil service positions under the United States Government, which said course of study and instruction is pursued by correspondence through the medium of the United States mails. Respondent, in the course and conduct of said business, caused and does now cause said course of study and instruction to be transported from his said place of business in California to the purchasers thereof located in various States of the United States other than the State of California.

PAR. 3. Uesponclent, in the course and conduct of said business as aforesaid, through personal solicitation and through the solicitation of agents employed by him for that purpose, has made and does make many misleading representations concerning his said course of study and instruction to prospective students located in various States of the United States. As a part of said solicitation, whether made by respondent or his said agents, respondent has distributed and does distribute to said prospective students in various States of the United States a certain advertising folder or pamphlet designed and intended to induce said prospective students to purchase his said course of study and instruction, which said folder or pamphlet contains misleading representations and statements concerning said course of study and instruction, concerning respondent's said business, and concerning the civil service of the Government of the United States. Among and typical of said representations and statements are the following: 1. Examinlltions are held at frequent intervals from year to year. 2. Regardless of outside conditions, the Civil Service emploype's po;;ition is absolutely sure and certain. Downright inefficil.'ucy or gross misconduct are the only things that can bring about his uischarge. 3. Under the Civil Service system, effidency soon makes its llll.':>enc·e felt !lnd attracts the attention of the men "higher up." Promotion in po>:ition and ad- Yancement in salary are the inevitable results. 4. To pass a Civil Service examination, one should he coaclwtl along the proper lines.

5. A high rating means an early appointment. 6. Our coaching courses are kept parallel with recent examinations and !Ire at all tinws up-to-date, giving the stntknt jn>:t what is required, nnd in tlh' manner it Is prt?<:euted by the examiners.

PARAl\IOr-:\'T INSTITUTE 303 2fl0 C'omplaiut 7. Our ::;tudents are notified by us just as soon ll8 an examination is unnom1ced, as we are in constant touch with the Civil Servic~> Commission. 8. Inspector of Customs-Age limits 23 to 43. Starting salary $173.00 per month.

9. Immigrant InslX'etor-Age limits 21 to 45. Starting salary $175.00 per month. Applicnuts must be in good health und free from color blindness or other serious defects.

10. Post Office Clerk-City l\lail Carrier . . . Salari{'S for clerks and carriers, $1,70011 ye11r the first year ($1H.83 11 mouth), with increases of $100 a yffir tor th·e years.

11. The lnited States Go,·et·nmeut is liheml with its emp!oyeeR. In the lost Offi,·e D<>pnl'tment under which cmue Rneh dPSirnble po.~itious as elerk, carrier, railway postal tlerk, etc., appointments are made at $1,700, $1,800, $1,900, and $2,GOO with opportunities for promotion to salaries of $4,900 or more. 12. Vacation allowances are liberal, 30 full working days with pay being given in some branches of the sen-lee; and, in addition, 30 days' sick leave, if needed; • • • 13. Congenial hours are the lot of the government employees, nowhere more than eight hours a day being required.

14. Paramount Institute-Civil Service Specinlists. PAR. 4. Through the use of the aforesaid statements and representations and others of similar import and meaning not herein set out the respondent represents:

1. That the Civil Service Commission holds examinations for all types o! positions at frequent intervals from year to year, and especially tor those for which respondent offers instruction.

2. That Civil Service employees are never discharged or deprived of their various positions with the Government of the United States except tor misconduct or gross inefficiency.

3. That efficient Civil Service employees of the Government ot the United States are certain to obtain promotion in position and advancement in salary.

4. That under normal and ordinary conditions and circumstances most persons desirous of obtaining a Civil Service status by examination must have special coaching for said examination of the kind offered by respondent. 5. That persons passing a Civil Service examination with a high rating are certain of obtaining a position with the Government ot the United States and at·e certain of obtaining such a position within a short time after passing said examination.

6. That respondent in the conduct ot his said business is in constant touch with said Civil Sen·ice Commission and its examiners, and has advance and inside information concerning Civil Service e~aminations. 7. That persons between the ages of 23 and 45 years may become inspectors of customs if otherwise qualified.

8. That appointments. to the position ot Immigrant Inspector with the United States Government are ordinarily given to persons who have passed Civil Service examinations appropriate for that position. {), That persons who pass a Civil Service examination as Post Office clerks and city mail carriers are eligible for appointment to regular positions paying $1,700 a year with increases ot $100 a year for 5 years without first serving as substitutes. I 304 FEDERAL TRADE COMMISSION DECISIOXS Complaint 31 F. T. C. 10. That employees of the Post Office Dep:u·tment enter upon their duties in such positions at salaries of $1,700, $1,800, $1,900, and $2,600. 11. That some employees of the United States Government working in Civil positions are allowed 30 days annual leave. 12. That no employees of the United States Government are required to work more than eight hours a day.

·13. That respondent is a specialist in matters relating to the Civil Service of the Government of the United States, and that be has a backgt•otmd of Civil Service experience in the United States Government. r AR. 5. In truth and in fact there are many types of positions, including some of those in regard to which respondent offers instruction, for which civil service {'Xaminations are held only at infrequent intervals, many years sometimes elapsing between such examinations; many civil service employees are discharged for reasons other than inefficiency or misconduct, as for example, insufficient appropriations; efficient civil service employees of the United States Government are not certain to obtain promotion in position or advancement in salary; under normal and ordinary conditions and circumstances persons wishing to pass civil service examinations, and who are qualified by prior general education and experience for the particular positions desired, do not require special coaching of the kind offered by respondent; a very small percentage of persons passing civil service examinations have had such special coaching for the examinations passed; the instruction offered by respondent is not of the kind to prepare students for the positions sought and it is of little value to them unless they are otherwise qualified by prior education and experience; persons passing a civil service cxami11ation with a high rating are not certain of obtaining a position at an early date or at all; the respondent is not constantly or otherwise in touch with the Civil Service Commission or its examiners, except as a casual correspondent, and has no advance information concerning civil service examinations; the age limits for inspectors of customs are 21 and 36 years; appointments to the position of immigrant inspector are and have been for a number of years made on other tests and qualifications than the passing of a civil service examination; civil service examinations for the position of immigration inspector have not been given for more than 6 years, and such positions have been filled by appointment and by promotion within the department; the salaries indicated by respondent for post office clerks and city m:til carriers are those which are paid only after said employees have served as substitutes, in many instances for a number of years; appointments to positions in the Post Office Department are made at a salary of $1,700 only after the {'employee has served as a substitute, and no appointments PARAMOUNT INSTITUTE 305 "299 Complaint are made at salaries of $1,800, $1,900, or $2,600, such salaries being the result of promotion; 26 days is the maximum annual leave granted to civil service employees of the United States Government; some employees of the Government of the United States are required to work more than 8 hours a day; respondent is not a specialist in matters relating to the civil service of the United States and has not had a background of civil service experience in the United States Government.

PAR. 6. The name, Paramount Institute, under which respondent conducts Ius said business, is misleading in that it implies and serves as a representation to prospective students that respondent conducts an institution of learning with a staff of competent, experienced and qualified educators and that his school is a large and extensive institution offering training and instruction in philosophy, art, science, and other learned subjects. In truth and in fact respondent offers only one course of study and instruction which is substantially the same regardless of the civil service examination for which his said students wish to prepare; respondent's said school is not a large or extensive institution. Respondent has only one employee, a stenographer, in addition to a limited number of salesmen employed in the past as heretofore alleged; respondent in the conduct of his said school does not offer training or instruction in philosophy, art, science, or other learned subjects. Neither respondent nor any of his employees is a competent, experienced or qualified educator or teacher. No basic or thorough or complete instruction is given in any subject of learning. Respondent's school is not an institution of learning in any accurate Eense. The method of instruction consists in the mere mailing out of previously prepared mimeographed or printed sheets and the grading of papers by means of a key or prepared answer sheets. PAB. 7. In the course and conduct of his said business as aforesaid, respondent, in the advertising folder circulated to prospective students as previously referred to, has made and now makes the following statement and representation:

Operated in strict compliance with the Laws and Regulations or the Federal Trade Commission.

Through said statement respondent represents or implies that the method used in the sale of said course of study and instruction and the representations made in connection therewith are all in conformity to the Federal Trade Commission Act and the decisions of the courts aiel the orders of the Federal Trade Commission thereunder, and that such methods and representations made in connection therewith conform to the Trade Practice Rules of the Federal Trade Commission relating to the line of business of which re~pondent's said school is a part. I DECISIO~S306 FEDERAL TRADE CO!IIMISSION Complaint 31 F. r. c. Through said statement it is further represented or implied that the Federal Trade Commission has approved respondent's methods and the representations used in connection therewith and that the respondent has permission of the Federal Trade Commission to use said statement in promoting the sale of said course of study and instruction. In truth and in fact the methods and representations used by respondent in the conduct of said business as specified herein are not in conformity to the Federal Trade Commission Act or the decisions of the courts and the orders of said Commission thereunder nor are they in conformity to the Trade Practice Rules of the line of business of "·which respondent's school is a part. The Federal Tralle Commission has not approved respondent's methods or the representations used in connection with such business, and respondent does not have the Commission's permission to use said statement or any other statement in connection with the promotion of the sale of his said course of study and instruction.

PAR. 8. In the course ami conduct of his said business as aforesaid, respondent has represented and now represents to prospective purchasers of his said course of study and instruction that the p~ice at which said course is and has been offered to wit, $49.50 cash or $59.50 on deferred payments is a special price for the course and that the regular price thereof has been $125. Many of such special price offers have been made to recent high school graduates to whom the further representation has been made that said special price has been offered to them because of high scholarship standing or because of some other means of determining their selection as recipients of such special offer. In truth and in fact, the regular and usual price of respondent's said course of study and instruction is and has been $49.50 cash or $59.50 on deferred payments. 'With but few exceptions, all persons who have enrolled for instruction in respondent's said school have contracted for the course at not to exceed $49.50 cash or $59.50 on the deferred payment plan. The price of $125 for said course is purely fictitious and no student is now required to contract for the course at that price. During the entire time respondent has conducted said business only a few students have been enrolled at that price. Said price of $49.50 cash or $59.50 on the deferred-payment plan is notl ginn nor has it been given because of high scholarship or other mark of merit or because of special selection, but has been ginn to all who could be induced to contract for the course regardless of such ~pecial qualifications or selection.

PAR. 9. The aforesaid acts and practices used by respondent in connection with the offering for !'ale and sale of his saill course of study and instruction has had, and now has, the tendency and capacity to mislead purchasers and prospecth·e purchasers t hen•of into the PARAMOUXT IKSTITCTE 307 2DD Findings erroneous and mistakrn belief that such representations, as herein alleged, are true, and to induce tlwm to purchase respondent's said course of study and instruction on account thereof. PAR. 10. The aforesaid acts alll practices of the re;.;pondent as herein alleged are all to the prejudice of the public and constitute unfair and deceptive acts and practices in commerce \Within the intent and meaning of the Federal Trade Commission Act.

REI'OHT, FINDINGS AS TO THE FACTS, A~D ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on the ht day of February 1940, issuPtl and on the 16th day of April Hl-!0, sen·ed its complaint in this proceeding upon respondent D. Victor 'Vallace, an individual trading as Paramount Institute, charging him with the use of unfair and deceptive acts and practices in commerce, as commet·ce is defined in the Federal Trade Commission Act, in violation of the provisions of said act. On :May 29, 1940, the respondent filed his answer, in which answer he admitted all the material allegations of fact set forth in said c.complaint and waived all intervening procedure and further hearing as to saitl facts. Thereafter the proceding regularly came on for final !waring before the Commission on the said complaint and answer that·eto, and the Commission having duly considered the mat ter and being now fully advised in the premises, finds that this pro· ceeding is in the interest of the public and makes this its finding~ as to the facts and its conclusion dmwn therefrom. FINDINGS .AS TO THE FACTS P ARAGR.HH 1. The respondent, D. Victor \Vallace, is an individual trading as Paramount Institute and having his cffi.ce and principal place of business at 1095 :Market Street, San Francisco, Calif. PAR. 2. Said 1•respondent, D. Victor ""allace, is now and for more than 3 years last past has been engaged, under the name and style of Paramount Institut£>, in the sale and distribution in commerce among and bet\wen the ntrious States of the United States of a course of study and instruction intended for preparing students thereof for examinations for various civil service pvsitions under the United States Government, which said course of study and instruction is pmsued · by correspondence through the medium of the United States mails. Respondent, in the course and conduct of said business, caused and does now cause said course of study and instruction to be transported from his said place ot business in California to the purchasers thereof located in n~tlious States of the United Statps other than the state of California.

Findings 31 F. T. C. PAn. 3. Respondent, in the course and conduct of said business as aforesaid, through personal solicitation and through the solicitation of agents employed by him for that purpose, has made and does make many misleading representations concerning his said course of study and instruction to prospective students located in various States of the United States. As a part of said solicitation, whether made by re.<>pondent or his said agents, respondent has distributed and does distribute to said prospective students in various States of the United States a certain advertising folder or pamphlet designed and intended to induce said prospective students to purchase his said course of study and instruction, which said folder or pamphlet contains misleading representations and statements concerning said course of study and instruction, concerning respondent's said business, and concerning the civil service of the Govemment of the United States. Among and typical of said representations and statements nre the following: 1. Examinations are held at frequent intervals from year to year. 2. Regardless of outside conditions, the Civil Service employee's position is absolutely sure and certain. Downright lnefliciency or gross misconduct are the only things that can bring about his discharge. 3. Under the Civll Service system, efficien<"y soon main's lts presence felt and attracts the 11ttent!on of the men ''higher up." Promotion in poHitionand adv11nce· ment in salary are the inevitable results.

4. To p:-tss a Civil Servic·e examination, one should be eonched along thp propm lines.

~. A high rating means an early appointment. 6. Our eoaching courses lire kept parallel with recent examinations and are at ull times up-to-date, gh·ing the student just what Is required, and in the manner It is presented by the examiners.

7. Our students are notified by us just as soon as an examination is Hnnotmced, as we are in constant toueh with the Civil Service Commission. 8. In~pector of Customs-Age limits 23 to 4i'i. Starting salary $175.00 per month. 9. Immigrant Inspector-Age limits 21 to 4fi. Starting salary $175.00 per month. Applicants must be in good health and free from color blindness or other serious defpcts.

10. Post Office Clerk--city Mail C11rrier • • * Snlarles for clerks and carrier~. $1,700 a year the first year ($141.83 a month), with increases of $100 a year for five years.

11. The United States Government ls liberal with its employees. In the Post Office Department under which come such desirable positions Rs clerk, carrier, railway postal clerk, etc., !lppolutments lire made at $1,700, $1,800, $1,DOO, and $2,600 with opportunities for promotion to salaries of $4,900 or more. 12. Vacation allowauces are liberal, 30 full working days with pay being given in some branches of the sen·lce; and, ln addition, 30 !lays' sick leave, if needed; • * • 13. <'ougeninl hours are thp lot of the government em}lloyPPS, nowhere more tl1an Pight hour>~ a day being required.

14. Pnl'llmount Instltntf'-f'ivll SPni<"e SpeciHil:'lts. PARAMOUNT INSTITUTE 309 2H!) Findings PAn. 4. Through the use of the aforesaid statements and representations and others of similar import and meaning not herein set out, the respondent represents:

1. That the Civil Service Commission lJOlds examinations for all types of positions at frequent intervals from ;rear to year, and especially for those for which respondent offers instruction.

2. That Civil Service employees are ne,·er discharged or deprived of their various positions with the Government of the United States except for misconduct or gl"Oss inefficiency.

3. That rflicient Civil Sen-ice emvloyees of the Goyernment of the United States are certain to obtain promotion in position and advancement in salary. 4. That under normal and ordinary conditions and circumstances most persons desirous of obtaining a Civil Sen-ice status by examination must have special coaching for said examination of the kind offered by respondent. 5. Tllllt persons passing a Civil Sen·ice examination with a high rating 1\t"e certain of obtaining a position with the Government of the United States and are certain of obtaining such a position within a short time after passing said examination.

6. That respondent in the romlnct of his said business Is in constant toueh with said Civil Service Commission and its examiners, and has advance and Inside information concf'rning Civil Service examiuatious. 7. That persons betw~>en the ages of 23 and 4;:; years may become inspectors of customs if otherwise qualified.

8. That appointments to the position of Immigrant Inspector with the United States Government are ordinarily given to persons who have passed Civil Service examinations appropriate for that position. 9. That persons who pass a Ciyil Service examination as Post Office clerks and city mail earriers are eligitole for appointment to regular positions paying $1,700 a year wlth inerPa>"e~ of $100 a year for 1h·e years without first serving as snbstitutes.

10. That f'lllllloyees of the Post Office Department enter upon their duties in !'ueh positions at salaries of $1,700, $1,800, $1,900, and $2,600. 11. That some employees of the United States Government working in Civil Sen-ice positions are allowed 30 days annual nave. 12. That no employees of the United ~states Gowrnnwnt are required to work more than eight hours a day.

13. That re,.,poudeut is a sp!'rinllst in matters r!'lnting to the Civil Service of t!JP Governmf'nt of the United States, and that he has a background of Civil Sen-i(•e t>xperi!'nC'e in th!' Unit!'d ~tals Governnwnt. PAn. 5. In truth and in fact there are many types of positions, including some of those in regard to which respondent offers instruction, for which civil service examinations are held only at infrequent intervals, many years sometimes elapsing bet,wen such examinations; many civil service employees are discharged for reasons other than inefficiency or misconduct as, for example, insufficient appropriations; <>fficient civil senice employees of the. United States Government are not certain to obtain promotion in position or advancement in salary; 310 FEDERAL TRADE COMMISSION DECISIOXS Findings 31F. T. C.

under normal and ordinary conditions and circumstances persons wishing to pass civil service examinations, and who are qualified by prior general education and experience for the particular positions desired, do not require special coaching of the kind offered by respondent; a very small percentage of persons passing civil service examinations have had such special coaching for the examinations opassed; the instruction offered by respondent is not of the kind to prepare students for the positions sought and it is of little value to them unless they are otherwise qualified by prior education and experience; persons passing a civil service examination with a high rating are not certain of obtaining a position at an early date or at all; the respondent is not constantly or otherwise in touch with the Civil Service Commission or its examiners, except as a casual correspondent, and has no advance information concerning civil service examinations; the age limits for inspectors of customs nre 21 and 36 years; appointments to the position of immigrant inspector are and have been for a number of years made on other tests and qualifications than the passing of a civil service examination; civil service examinations for the position of immigration inspector have not been given for more than 6 years, and such positions have been filled by appointment and Ly opromotion within the departments; the salaries indicated by respondent for po-=t cfl:ice clerks and city mail carriers are those which are paid only after said employees have served as substitutes, in many instances for a number of years; appointments to positions in the Post Offil'e Department are made at a salary of $1,700 only after the employee has served as a substitute, and no appointments are made at salaries of $1,800, $1,900, or $2,600, such salaries being the result of promotion; 26 days is the maximum annual leave granted to civil service employees of the United States Government; some employees of the Government of the United States are required to work more than 8 hours a day; respondent is not a specialist in matters relating to the civil service of the United States and has not had a background of civil service experience in the United States Government.

P.\R. G. The name, Paramount Institute, under which respondent conducts his said business, is misleading in that it implies and serves as a representation to prospective students that respondent conducts an institution of learning with a staff of competent, experienced and qualified educators and that his school is a large and extensive institution offerin~ training and instruction in philosophy, art, science, and other learned subjects. In truth and in fact respondent vffers only one course of study and instruction which is substantially the same regard- PARAMOUNT INSTITUTE 311 2DD Findings less of the civil service examination for which his said students wish to prepare; respondPnt's said school is not a large or extensive institution. Respondent has only one Pmployee, a stenographer, in addition to a limited numbt>r of salesmen Pmployed in the past as heretofore a alleged; rpspondent in the conduct of his said school does not offer training or instruction in philosophy, art, science, or other learned subjects. Neither respondpnt nor any of his employees is a competent, experienced or qualified educator or teacher. No basic or thorough or complete instruction is given in any subject of learning. Respondent's school is not an institution of learning in any accurate sense. The method of instruction consists in the mere mailing out of previously prepared mimeographed or printed sheets and the grading of papers by means of a key or prepared answer sheets. PAR. 7. In the course and conduct of his srdd business as aforesaid, 1·respondent, in the adrertising folder circulated to prospective students as previously referred to, has made and now makes the following statment and representation:

Operated in stri('t compliance with the Laws and Re~:ulations of the Fedeml Trade Commission.

Through said statenwnt rl:'spondent represents or implies that the method used in the sale of said course of study and instruction and the nprPsPntations made in connec-tion therewith are all in conformity to the FPllPral Trade Commission .Act and the deeisions of the Courts and the orders of tlw F{'deral Trade Commission thereunder, and that such methods and representations made in comwction therewith conform to the Trade Practice Rulps of the Federal Trade Commission relating to the line of business of which respondent's said school is a part. Through said statement it is further represented or implied that the Federal Trade Commission has approved respondent's metl"ood.s aud the representations used in comwction therewith and that the respondent has pt'rmission of thp Federal Trade Commission to use said statement in promoting the sale of said course of study and inst ruet ion.

In truth nnd in fact the nwthods and representations used by respondent in the conduct of said business as specific.d herein are not in conformity to the FPllPral Trade Commission Act or the deeisions of thp Courts and the orders of said Commission thereunder nor are they in conformity to the Trade Practice Rules of the line of business of which respondent's school is a part. The Federal Trade Commission has not approved respondent's methods or the representations used in comwetion with such business, and respondent does not have the Commission's pennission to use said statement or any other statement 2!llli16'" 41 VOL. 31-23 Conclusion 31 F. T. C. in connection with the promotion of the sale of his said course of study and instruction.

PAR. 8. In the course and conduct of his said business as aforesaid, respondent has represented and now represents to prospective purchasers of his said course of study and instruction that the price at which said course is and has been offered, to wit, $49.50 cash or $59.50 on deferred payments is a special price for the course and that the regular price thereof has been $125. Many of such special price offers have been made to recent high school graduates to whom the further representation has been made that said special price has been offered to them because of high scholarship standing or because of some other means of determining their selection as recipients of such special offer.

In truth and in fact, the regular and usual price of respondent's said course of study and instruction is and has been $49.50 or $59.50 on deferred payments. 'With but few exceptions, all persons who have enrolled for instruction in respondent's said school have contracted for the course at not to exceed $49.50 cash or $59.50 on tlw deferred payment plan. The price of $125 for said course is purely fictitous and no student is now required to contract for the course at that price. During the entire time respondent has conducted said business only a few students have been enrolled at that price. Said price of $49.50 cash or $59.50 on the deferred payment plan is not given nor has it been given because of high scholarship or other mark of merit or because of special selection, but has been given to all who could be induced to contract for the course regardless of such special qualifications or selection.

PAR. 9. The aforesaid acts and practices used by respondent in connection with the offering for sale and sale of his said course of study and instruction has had, and now has, the tendency and capacity to mislead purchasers and prospective purchasers thereof into the erroneous and mistaken belief that such representations, as herein alleged, are true, and to induce them to purchase respondent's said course of study and instruction on account thereof.

CONCLUSION The aforesaid acts and practices of the respondent as herein found are all to the prejudice of the public and constitute unfair and deceptive acts and practices in commerce, as commerce is defined in the Federal Trade Commission Act within the intent and meaning- of the Federal Trade Commission Act.

PARAMOUNT INSTITUTE 313 209 Order ORDER TO CEASE AND DESIS'll This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer of the 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 o1•dered, That respondent, D. Victor "\Vallace, his repre::;entatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, or distribution of courses of study and instruction intended for preparing students thereof for examinations for various civil service positions under the United States Government, and in connection with the offering for sale, sale, and distribution of any other course or courses of instruction in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing that success in a civil service examination requin•s spec-ial coaching.

2. Representing that respomleut has any opportunity for contact, not available to any member of the public, with the United States Civil Service Commission or its employees, or that respondent has advance or "inside" information concerning civil service examinations, or that respondent offers any preparation for civil service examinations other than a coaching service.

3. Representing that respondent is a specialist in matters relating to the civil service of the United States Government, or that he has special qualifications in relation to the civil servioe or examinations therefor.

4. Representing that respondent's geJ!eral business or sales methods have the approval of the Federal Trade Commission or are in conformity with any rules or regulations issued by such Commission. 5. Representing that the price regularly and customarily charged for respondent's courses of study and instruction is a special or reduced price, or is anything other than the regular price for such CQUrses.

6. Representing that respondent's courses of study are being offered t9 a particular prospect at a special or reduced price because of the prospect's high scholastic standing or for any other purported reason when such price is in fact the regular and customary price for such courses.

Order 31 F. T. C.

7. Representing that persons who pass the civil service examination for post office clerks or city mail carriers are eligible for appointment without previously serving aP substitutes for a period of time. 8. .Misrepresenting the frequency with which, or the time at which, the United States Civil Service Commission holds, or will hold, examinations.

9. Misrepresenting the prospects for obtaining a position und{': civil service after having passed an examination, or the salary at which appointees enter into their positions, or the age limits for employees in civil service positions, or the prospects for promotion or advancement in salary of civll service employees, or the permanency of civil service positions.

10. Misrepresenting the number or classification of positions in the United States Government service which are ordinarily filled through civil service examinations.

11. Misrepresenting the number of working hours required of employees of the Government or the length of the period of annual leave :rranted such employees.

12. Using the term "Institute" as part of the trade or corporate name under which respondent's business of selling courses of instruction is conducted, or using the term "Institute" to in any way describe or refer to respondent's business.

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 man,ner an,d form in which he has complied with this order.

GREAT BUCKEYE CANDIES, INC. 315 Syllabus