Haylings, George W

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IN THE ~U'ITER OF GEORGE W. HAYLINGS, TRADING AS NATIONAL FOLIO SERVICE COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THEl ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 4008. Complaint, Feb. 1, 1940-Decision, June 29, 1940 Where an individual engaged in sale and distribution of books and pamphlets, containing so-called treatises purporting to disclose and portray Ullusual business opportunities, to purchasers in various other States and In the District of Columbia; in advertising his said treatises through advertisements disseminated through newspapers and other periodicals, and through letters and circulars sent through the mails to prospective purchasers- ( a) Represented directly and by Inference that his so-called treatises presented business opportunities which possessed exceptional merit and offered prospects of high earnings and profits with expenditure of little or no effort, and that operation of businesses concerned involved no peddling or canvassing, and that the plans were original and new and in many cases included valuable formulas which had been acquired by him at grellt expenses and which he owned exclusively ;

Facts being many plans set forth were without any substantial merit, and earn- Ings and profits which he represented as obtainable from operation of businesses concerned were far in excess of any amounts which had been or might be earned therefrom, and many of his said plans did require peddling and house to house convassing, and plans referred to by him were in many cases neither original nor new and did not include formulas which had any substantial value or which were owned exclusively by him; and (b) Represented that he was able to grant purchasers of such treatises exclusive rights to operate businesses concerned within certain territories, and that such treatises were offered for sale for a limited time only, and that be issued at regular Intervals supplements thereto ; Facts being he was unable to grant purchaset·s any rights with respect to operation of such businesses In any specific territories, the time within which such plans might be obtained from him were not limited, but they were subject to purchase at any time, and he did not issue any supplements as set forth above;

With efiect of misleading and deceiving substantial portion of purchasing public into erroneous and mistaken belief that such false statements and representations were true, and of inducing substantial portion of such public, because of such belief, to purchase a substantial number of such books and pamphlets:

Held, That such acts and practices, under the circumstances set forth, were all to the prejudice and injury of the public and constituted unfair and deceptive acts and practices In commerce.

.1/r. Lynn 0. Paulson for the Commission.

NATIONAL FOLIO SERVICE 397 396 Complaint 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 George tV. Hay lings, an individual, trading and doing business lmder the name and style of National Folio Service, hereinafter referred to as respondent, has violated the provisions of the 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:

PA&-\GRAPH 1. The said respondent, George W. Haylings, is an individual trading and doing business under the name and style of National Folio Service, with his office and principal place of business at 1071 'Vest Thirtieth Street, Los Angeles, Calif. PAR. 2. Respondent is now, and for more than 2 years last past has been, engaged in the sale and distribution of books and pamphlets containing so-called treatises purporting to disclose and portray unusual business opportunities.

Respondent causes said books and pamphlets, when sold, to be transported from his place of business in the State of California to purchasers thereof located in various other States of the United States and in the District of Columbia. Respondent maintains and at all times mentioned herein has maintained a course of trade in said books and pamphlets in commerce, among and between the various States of the United States and in the District of Columbia. PAR. 3. In the course and conduct of his said business, and for the purpose of inducing the purchase of his said treatises, the respondent has made and now makes false and misleading representations with respect to his said treatises, such representations being disseminated by means of advertisements inserted in newspapers and other periodicals, and by means of letters and circulars sent through the United States mails to prospective purchasers of such treatises. Among and typical of such representations are the following: .Afternoons free for outdoors, shows, $340 month home. Unique plans. No canvassing. Prepare for surprise.

$50,000.00-No CANVASSING • • • in orders-reports Mr. S. D. (full time and Exceptional). Smaller possibilities half days. Unusual Business Plan (Treatise 11-B) AFTERNOONs FREE for life's pleasures. Drive into the country or go to the movies afternoons. Work each morning until noon at HOME! Right now in time for a happy Autumn. Prppare for surprise! New supplemental pages being lssuPd r£'gularly. We are withdrawing this formula from our treatise next spring for our personal use.

Complaint 311!'. T. C. We will grant you territorial rights under a binding contract. We are the sole owners of this plan and formula. We went to considerable trouble and expense purchasing this unusual plan from a gentleman 6,000 miles away in Australia. Here is something new I We have just purchased this formula. "Special offer," limited by time.

Our Treatise No.2, a workable "business plan" that tells you How the originator earned a remarkable wage "every month" the year round, no slack seasons. And-from a heretofore "hidden source" that will surprise, fascinate and Delight sou !-there are few business worries-no long waits for the money-no long hours of unpleasant wot·king-no similar competition-no office or store over· bead-and no equipment needed In such a service of this kind-a service needed badly in this modern age.

PAR. 4. Through the use of the foregoing representations and others of similar import not specifically set out herein, respondent represents, directly and by inference, that his so-called treatises present business opportunities which possess exceptional merit and which offer prospects of high earnings and profits, with the expenditure of little or no effort; that the operation of such businesses involves no peddling or canvassing; that such plans are. original and new and in many cases include valuable formulas which have been acquired by respondent at great expense and which are owned exclusively by respondent; that respondent is able to grant to purchasers of such treatises exclusive rights to operate such businesses within certain territories; that such treatises are offered for sale for a limited time only; that the respondent issues at regular intervals supplements to said treatises.

PAR. 5. The aforesaid representations are grossly exaggerated, false, and misleading. In truth and in fact, many of the plans set forth in respondent's treatises are without any substantial merit. The earnings and profits which respondent represents may be obtained from the operation of such businesses are far in excess of any amounts which have been or may be earned therefrom. Many of such plans do require peddling and house-to-house canvassing. Such plans are in many cases neither original nor new, nor do they include formulas which have any substantial value or which are owned 9Xclusively by respondent. The respondent is unable to grant to purchasers any rights with respect to the operation of such businesses in any specific territories. The time within which such plans may be obtained from respondent is not limited, but such plans are subject to purchase at any time. The respondent does not issue any supplements to such treatises.

PAR. 6. The use by respondent of the foregoing false, deceptive, and misleading statements and representations has had, and now has, the capacity and tenuency to, and does, mislead and deceive a substantial NATIONAL FOLIO SERVICE 399 306 Findings portion of the purchasing public into the erroneous and mistaken belief that such false statements and representations are true, and induces. a substantial portion of the purchasing public, because of such erroneous ttnd mistaken belief, to purchase a substantial number of respondent's books and pamphlets.

PAR. 7. The aforesaid acts and practices of respondent as herein alleged are all to the prejudice and injury of the public and constitute 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, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on February 1, 1940, issued, and thereafter served, its complaint in this proceeding upon respondent, George "\V. Hay lings, trading as National Folio Service, charging him with the use of unfair and deceptive acts and practices in commerce in violation of the provisions of said act. On 1\Iarch 25, 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 bein~ now fully advised in the premises, finds that this proceeding is in the mterest of the public, and makes this its findings as to the facts and its conclusion drawn therefrom. FINDINGS AS TO THE Facts PARAGRAPH 1. The said respondent, George "\V. Hay lings, is an individual trading and doing business under the name and style of N ationai Folio Service, with his office and principal place of business at 1071 West Thirtieth Street, Los Angeles, Calif.

PAR. 2. Respondent is now, and for more than 2 years last past hasbeen, engaged in the sale and distribution of books and pamphlets containing so-called treatises purporting to disclose and portray unusual business opportunities.

Respondent causes said books and pamphlets, when sold, to be transported from his place of business in the State of California to purchasers thereof located 1n various other States of the United States and in the District of Columbia. Respondent maintains, and at all times mentioned herein has maintained, a course of trade in said books and pamphlets in commerce among and between the various States of the United States and in the District of Columbia. Findings 311!~. T. C. PAR;>3J In the course and conduct of his said business, and for the purpose of inducing the purchase of his said treatises, the respondent has made and now makes false and misleading representations with respect to his said tn•atises, such representations being disseminated by means of advertisements inserted in newspapers and other period. icals and by means of letters and circulars sent through the United States mails to prospective purchasers of such treatises. Among and typical of such representations are the following: Afternoons free for outdoors, shows, $340 month home. Unique plans. No <!anvasslng. Prepare for surprise.

$50,000.00-No CANVASSING • • • in orders-reports Mr. S. D. (full time und Exceptional). Smaller possibilities half days. Unusual Business Plan (Treatise 11-B). AFTERNOONS FREE for life's pleasures. Drive into the country or go to the movies afternoons.

Work each morning until noon at HOME! Right now in time for a happy Autumn. Prepare for surprise! New supplemental pages being issued regularly, 'Ve are withdrawing this formula from our treati~e next spring for our personal use.

We will grant you territorial rights under a binding contract. We are the sole owners of this plan and formula. We went to considerable trouble and expense purchasing thi~ unusual plan from a gentleman 6,000 miles away in Australia. Here is something new! We have just purchased this formula. "Special offer". limited by time.

"Our Treatise No. 2, a workable "business plan" that tells you How the orig. inator earned a remarkable wage "every month" the year round, no slack seasons. And-from a heretofore "hidden source" that wlll surprise, fascinate and Delight you !-There are few busi11ess worries-no long waits for the money -no long hours of unpleasant working-no similar competition-no office or store overhead-and no equipment needed in such a service of this kind-a service needed badly in this modern age.

PAR. 4. Through the use of the foregoing representations and others of similar import not specifically ~et out herein, respondent represents and has represented, directly and by inference, that his so-called treatises present business opportunities which possess ex· ceptional merit and which offer prospect,s of high earnings and profits, with the expenditure of little or no effort; that the operation of such businesses involves no peddling or canvassing; that such plans are original and new and in many cases include valuable formulas which have been acquired by respondent at great expense and which are owned exclusively by respondent; that respondent is able to grant purchasers of such treatises exclusive rights to operate such businesses within certain t€rritories; that such treatises are offered for sale for a limited time only; that the respondent issues at regular intervals supplements to said treatises.

NATIONAL FOLIO SERVICE 401 .396 Order Paint 5. The aforesaid representations are grossly exaggerated, fal,se, and misleading. Many of the plans set forth in respondent's treatises are without any substantial merit. The earnings and profits which respondent represents may be obtained from the operation of such businesses are far in excess of any amounts which have been or may be earned therefrom. Many of such plans do require peddling and house-to-hou,ge canvassing. Such plans are in many cases neither original nor new, nor do they include formulas which have any substantial value or which are owned exclusively by respondent. The respondent is unable to grant to purchasers any rights with respect to the operation of such businesses in any specific territories. The time within which such plan,s may be obtained from respondent is not limited, but such plans are subject to purchase at any time. The respondent does not issue any supplements to such treatises. PAR. 6. The use by respondent of the foregoing false, deceptive, and misleading statements and representations has had, and now has, the capacity and tendency to, and does, mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that such false statements and representations are true, and induces, and has induced, a substantial portion of the purchasing public, because of such erroneous and mistaken belief, to purchase a substantial number of respondent's books and pamphlets. CONCLUSION The aforesaid acts and practices of the respondent as herein foullll are all to the prejudice and injury of the public and constitute 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 Commis- ~ion 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 its conclulsion that said respondent has violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondent, George ,V. Ilaylings, trading as National Folio Service, or trading under any other name or names, his agents, representatives, and employe{'s, directly or through any corporate or other device, in connection with the offering for sale, Order 31 F. T. C.

sale and distribution in commerce, as "commerce" is defined jn the Federal Trade Commission Act, of books or pamphlet,s containing treatises with respect to purported business opportunities, do forthwith cease and desist from:

1. Representing as earnings or profits from the operation of the businesse,s described in said treatises, any amounts in excess of those which have in fact been regularly and customarily earned by persons operating such businesses under normal conditions. 2. Representing that the businesses described in said treatises involve no peddling or house-to-house canvassing, when in fact such businesses do require such activities.

3. Representing a.s original or new any plan or business which is not such in fact.

4. Representing that the formulas involved in the plans or business described in said treatises possess any substantial value, or that such formulas are owned exclusively by respondent. 5. Representing that respondent is able to grant to purchasers of said treatises or business plans any rights with respect to the operation of such businesses in any specific territory. 6. Representing that the period of time within which said treatises or business plans may be obtained from respondent is limited. 7. Representing that respondent issues any supplements to said treatises.

It i8 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 mam~er and form in which he has complied with this order.

AL VIOLA PRODUCTS 403 Complaint