American Plierench Corp

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IN THE MATTER OF AMERICAN PLIERENCH COUPORATION COMPLAINT, FINDINGS, AND ORDER IN REGARD TO TI-lE ALLEGED VIOLATION 01~ SEC. 5 01!' AN ACT OF CONGRESS APPROVED SEPT. 26, 19H Docket ;'1853. Complaint, Nov. 22, 1939 1-Decision, Apr. 90, 19-U Where a corporation engaged in the manufacture of a patent combination plier and wrench designated by it tis "The Eifel-Geared l'lieReuch Kit,'' and In competitive Interstate sale and distribution thereof; In advertisements ot its said kits in periodicals, booklets, pamphlets, letters, and other printed matter- Repref>ented that earnings to be made In the re~;;nle of ,;;aid products by purchasers ranged from $35 to $125 a week and that purchasers who devoted their entire time to such sale made as much as from $1,500 to $4,000 a year; farts being that earnings by purchasers of said kits did not under any circumstances approach such amounts;

With effect of misleading a substantial portion of thp purchasing public into the erroneous belief that said representations were 1rue and of inducing a substantial number thereof to part·hase kits In question and thus unfairly divert trade to it from competitors who do not misrepresent earnings resulting from resale of their products:

Held, That such acts and pruct!ces, under the circumstances set forth, were all to the prejudice of the public and competitors, und constituted unfair methods of competition in commerce aiel unfair and df'ceptive acts anll practlce!l therein.

Before ;Jfr. Edward E. Reardon, trial examiner. Mr. lVilbur N. Baughman and Mr. James I. Rooney for the Commission. ' AMENDED 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 American Plierench Corporation, a corporation, hereinafter referred to as respondent, has v-iolated 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 amended complaint stating its charges in that respect as follows :

PARAORAPII 1. Respondent, American Plierench Corporation, is a. corporation organized, existing and doing business under and by virtue of the laws of the State of Illinois, with its principal office 1 Amended.

COMMISSIO~ DECISIONS 1352 FEDERAL 'TRADE Complaint' 32 F. T. C. and place of business at 4611 Ravenswood A venue, Chicago, Ill. It is now, and for more than 1 year last past has been, engaged in the manufacture of a combination plier and wrench kit, designated "The Eifel-Geared Plierench Kit," and in the sale and distrbution of said kits in commerce bebveen and among the various States of the United States and in the District of Columbia. Respondent causes said kits, when sold, to be transported from its place of business in Chicago, Ill., to the purchasers thereof, some located in the State of Illinois, and others located in various other States of the United States and in the District of Columbia. There is now, and has been for more than 1 year last past, a course of trade by respondent in said kits in commerce between and among the various States of the United States and in the District of Columbia. In the course and ·conduct of its business, respondent is now, and for more than 1 year last past has been, in substantial competition with other corporations and with persons, firms, and partnerships in the sale and distribution in commerce between and among the various States of the United States and in t:P.e District of Columbia of similar articles or of other articles used for the same and similar purposes. There. are among such competitors those who do not misrepresent the earning capacity of their salesmen or representatives or the terms and conditions upon which their respective products may be obtained. PAR. 2. Respondent, in the course and conduct of its business in commerce, as herein described, distributes said kits through agents, representatives, or salesmen to whom said kits are distributed by the respondent :for resale to the ultimate users thereof. To induce the purchase of said kits, respondent advertises said kits by means of booklets, pamphlets, letters, and other printed matter distributed among prospective representatives, and by means of advertisements placed in magazines and other periodicals circulated generally in the various States of the United States and in the District of Columbia. All of said advertisements contain many statements and representations with respect to the earnings made by representatives selling said kits and with respect to certain so-called "free" goods delivered to such representatives in connection with the sale and distribution of said kits. Among, and typical of, the statements and representations so made by the respondent are the following : Be a PlleRench Man, They're making $35 to $85 Weekly! It Takes 7 SQ. FT. OF SPACE and 101 Pictures to show the astounding Working Power, Speed, nnd Efficiency, and the AMAZING MONEY-MAKING Power • • • AMERICAN. PLIERENCH CORP. 1353 1351 Complaint $35to $100 Weekly * * * of this Greatest Hand Tool Invention of ALL Time. Be a Plierench 1\fan, They're making $35 to $125 Weekly. Free kit offers. ' The EIFEL-GEARED Plierench KIT is A GUARANTEED SUPER-QUALITY Gripping Machine that Out-Works, Out-Speeds and Out-Wears ALL other Tools. I predict that within Six 1\Ionths the top Pllerench Profits of Best former Years • • * $205 in one day, and $379 in one week * * * will be beaten, because Plierench Men's Profits have been growing fast, with one of them making $308 in one week lately • * •. OFFER No. 11,4 (6 KITS in all) includes One Kit "' "' • ENTIRELY FREE * • * Yes siree, $308 in ONE WEEK! • • • ~'his same Plierench l\Ian made $685 on the KITS he got from us in that one month! HOW OAN IT m: DONEl? 0, there's ".Magic" in it all right * * * the MAGIC Of a Pair of Plierench KITS in ACTION * * * in the Hands of a l\Ian who knows how to make the "l\Iagic" Demonstration shown in the SALES MANUAL which you get with your First Selling Order. It takes but 6 Minutes, but Prospects SEEING • • * How * * • and * • * Buy * * * IN BUNCHES ! Realize that there are HUNDREDs OF MILLIONs of Pliers and \Vrenches In use in the United States alone, and TENS OF MILLIONS are bought yearly • • • Now, since the Plierench KIT is the Sl.:PER-PLIER-WRENCH VISE, in the Bulk and Weight, and at the Cost of Ol"'F. Good Tool-it cannot help but Replace and Supersede these Millions of Inferior tools as fast as it can be produced • * • • as it is Actually doing.

Tell me • • • In Whnt OTHER BUSINESS can you start yourself with $5 to $10 that offers any such possibiliti{'S? And, our new best men started in that Sinall Way, and, those DE:IlONSTRATING OUTFITS which they got FREE have been Worth their weight in GOLD to many of them * • • some making as much as $20,000 to $40,000 Profit each, over a period of years! DO You KNOW What the average STORE DEALER makes on his Jm-estment of from $15,000 to $30,000 • • • not to mention his lifetime of experience? Actual Records show that he is lucky to make from $1,200 to $2,u00 per Year in Salary and Divid('nds Combined: Now, It's a Poor Plierench l\lun who can't make as much and more on an investment that runs between $25 a"nd $100 1 Get FREE-"7 Edge end-&-angle screwdriver."

Full-time men making $1,500 to $4,000 yearly • • * part-timers in pro- }Jortion.

Through use of the aforesaid representations and others of similar import and effect, not herein set out in full, respondent represents that representatives engag.ed in the sale and distribution of said Plierench kits earn profits of from $35 per week up to $125 per week and even up to as much as $300 or more per week, and that representatives devoting full time to the sale of respondent's Plierench kits earn profits of from $1,500 to $4,000 a year, and that rpspondent gives to such representatives or to anyone upon request one of the afore- !:'aid Plierench kits and a 7-edge end-&-angle screwdriwr free without cost or without condition.

Complaint 32F.T. C.

PAR. 3. The representations so made and used by the respondent, as aforesaid, as to the earnings of representatives are grossly exaggerated, false, and misleading. In truth and in fact representatives engaged in the sale and distribution of respondent's Plierench kits do not earn profits of from $35 to $125 per week and do not earn profits of as much as $300 a week or more. Fulltime representative do not earn profits of from $1,500 to $4,000 per year or any sums approaching such amounts. The various sums set out in the advertisements. appearing in paragraph 2 hereof, which sums are represented by the respondent as representing the earnings that may be reasonably expected to be earned by respondent's representatives under normal conditions and circumstances, are in fact greatly in excess of the sums actually earned by such representatives in the ordinary and regular course of business. Respondent's representatives whether devoting full time or only part time in the sale of respondent's Plierench kits do not under any circumstances or conditions earn sums reasonably approaching the sums representing the earnings set out in the aforesaid advertisements. Respondent does not f~rnish representatives or anyone else upon request with free kits, or "7-Edge end-&-angle screwdrivers" "Free," without cost or condition. In fact respondent requires the purchase of a designated number of said kits, before furnishing the so-called free items, which fact is not disclosed to the prospective representatives until after inquiry has been made and respondent has established contact with such persons. The so-called free Plie- Rench kits can be obtained only upon the purchase of a number of other Plierench kits and the offer of such so-called Plierench kits is nothing more than the offer of a quantity discount. PAR. 4. The use by the respondent of the aforesaid acts and practices in connection with the offering for sale, sale, and distribution of said kits in commerce among and between the various States of the United States and in the District of Columbia has the tendency and capacity to, and does, mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that said representations are true, and that rl>presentatives can earn the sums indicated in said advertising matter in selling said kits, and that a wrench kit and a "7-Edge end-&-angle screwdriver" ·will be furnished such representatives or anyone else upon request entirely free and without cost or condition, and causes a substantial number of members of the purchasing public, because o£ said erroneous and mistaken belief, to purchase respondent's said kits, thereby unfairly diverting trade in said commerce to the respondent from its aforesaid competitors who do not misrepre!'ent the eamings of their repre- AMERICAN PLIERENCH CORP. 1355 1351 Findings Rentatives or the terms and conditions under which goods may be obtained. In consequence thereof injury has been done, and is being clone, to competition in commerce between and among the various States of the United States and in the District of Columbia. PAn. 5. The aforesaid acts and practices of the respondent as herein alleged are all to the prejudice 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, AND ORDER Pursuant to the provisions of the Fed~ral Trade Commission Act, the Federal Trade Commission on November 22, 1939, issued and thereafter served its amended complaint on the respondent American Plierench Corporation, charging it with the use of unfair methods of competition in commerce and with the use of unfair and deceptive acts and practices in commerce in violation of the provisions of said Act. After the issuance of said amended complaint and the filing of respondent's answer thereto, testimony, ami other evidence in support of the allegations of said amended complaint were introduced by John M. Russell, attorney for the Commission, and in opposition . to the allegations of the amended complaint by Joseph Eifel, President of the respondent corporation, before Edward E. Reardon, an examiner of the Commission theretofore duly designated by it, and said testimony and other evidence were duly recorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said amended complaint, the answer thereto, testimony and other evidence, and upon brief in support of the complaint (the respondent not having filed brl.ef or requested oral argument), 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 nncl makes this its findings as to the facts and its conclusion drawn therefrom.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, American Plierench Corporation, is a corporation organized 11nd existing under and by virtue of the laws of the State of Illinois, with its place of business at No. 4611 N. Havenfo;wood Avenue, Chicago, Ill. Said respondent corporation is Findings 32 F. 'f. C. now, and since its incorporation in 1933 has been, engaged in the manufacture and in the sale of a patent tool which is a combination plier and wrench and which is designated as "The Eifel-Geared Plie- Rench Kit," in commerce between and among the various States of the United States and in the District of Columbia. Respondent causes said kits when sold to be transported from its place of business in Chicago, Ill., to the purchasers thereof some of whom are located in the State of Illinois and others located in various other States of the United States and in the District of Columbia. There is now and has been for more than 1 year last past a course of trade by respondent in said kits in commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of its business respondent is now and for more than 1 year last past has been in substantial competition with other corporations in the sale and distribution in commerce between and among the various States of the United States and in the District of Columbia of similar articles used for the same and similar purposes. There are among such competitors those who do not misrepresent the earnings resulting from the resale of said products by the purchasers thereof.

PAR. 2. Respondent, American Plierench Corporation, in the course and conduct of its business as herein described, to induce the purchase of said kits advertises the same by means of booklets, pamphlets, l~tters, and other printed matter distributed among prospective purchasers and by m~ans of advertisements inserted in magazines and other periodicals circulated generally throughout various States of the United States and in the District of Columbia. Said advertisements, in addition to statements concerning the merits of respondent's product, contain many statements and representations with respect to the earnings made in the resale of said kits by the purchasers thereof. Among and typical of the statements and representations so made by the respondent concerning the earnings made in the resale of said kits by the purchasers thereof, are the following: Be a Plierench Man, They're making $:15 to $85 Weekly. • • • • • • • * • * AMAZING MONEY-MAKING POWF.R * * * $35 to $100 Weekly. * * * I predict that within Six Months the top Plierench Profits of Dest Former Years • • • $205 in one day, and $379 in one werk • • • will be bPatPn, becau!'e Pliereuch Man's Prc:fits ha'"e been growing fast, with one of them making $308 in one week lately • • • Yes siree, $308 in ONE WEEK!! Full-time men making $1,500 to $4,000 yearly • • • part-timers in proportion.

AMERICAN PLIEFRENCH CORP. 1357 1351: ,. Order • , • • this same P!ierench Man made $685 on the KITS he got from us in that one .J:t19nth ! * * • ~>ome making as much as $20,000 to $!0,000 Profit each, ove1· a period of rears!! Through the use of the aforesaid representations and others of similar import, the, respondent represents that the earnings resulting from the sale of said kits by the purchasers thereof range from $35 per :week up to $125 per week and that such purchasers who devote their entire time to the sale of said kits make as much as from $1,500 to $4,000 a year .

. PAR. 3. The representations made by the respondent as to the earnings resulting from the resale of said kits by the purchasers thereof are grossly exaggerated, false and misleading. The evidence shows conclusively that the earnings resulting from the resale of said kits by those who purchased the same, relying upon the statements made by the respondent as to the earnings that ·would result from the resale thereof, do not under any circumstances or conditions approach the earnings as represented by the respondent.

PAR. 4. The use by the respondent of the aforesaid statements and representations has the tendency and the capacity to, and does, mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that said representations are true, and cause a substantial number of the members of the purchasing public because of said erroneous and mistaken belief to purchase respondent's kits, and trade is thereby diverted unfairly in said commerce to the resp()!)d(lnt from its aforesaid competitors .. CONCLUSION The acts and practices of the respondent, as herein found, are all to the prejudice of the public and the respondent's competitors and constitute unfair methods of competition and unfair and deceptive acts anu 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, the answer of respondent, testimony and other evidence taken before E<lward E. Reardon, an examiner of the Commission theretofore duly designated by it, in support of the allegations of said complaint and in opposition thereto, brief in support of the complaint (respondent not having filed brief, 3226D::i'"-41-YOL.3:?-86 Oruer 32F. T. C.

and oral argument not having been requested), and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the provisions of the Federal Trade Commission Act;

It is ordered, That the respondent, American Plierench Corpora- . tion, its officers, representatives, agents, and· employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution of a combination plier and wrench, designated as The Eifel-Geared Plierench Kit, whether sold under the same name or under any other name, in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from :

1. Representing any specified sum of money as possible earnings or profits of salespersons· for any stated period which is not a true representation of the earnings or profits which have been made for such stated period of ti~e by a substantial number of respondent's active salespersons in the ordinary course of hu.siness under normal conditions and circumstances.

2. Representing any specified sum of money as earnings or profits ·of any specified salesperson for any stated period of time unless such sum of money has in fact been earned net by such salesperson in said period of time in the ordinary course of business and under normal conditions.

It is further ordered, That the respondent shall, within 60 days after service upon it of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which it has complied with this order.

JACOB HOLTZ, ETC. 1359 Complaint