Cameron, Ewen

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IN THE MATTER OF EWEN CAMERON, TRADING AS MERCHANDISE SALES SYNDICATE COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 20, 1914 Docket Hli. Complaint, Dec. 14, 19-W-Decision, "fav. 14, 1941 Where an inuiviuual engaged in competitive interstate sale and distribution of billfolds, cameras, cosmetics, fountain pens, jeweh·y, smoking pipes, wearing apparel, and other articles, including a,:sortments thereof which consisted 'of a large carton enclosing 80 or 81 srna 11 boxes, each holding an article of merchandise costing said individual from less than 1 to 6 cE.'nts each, and customarily retailing for from 2 to 25 cents each; with front of said cm·ton constituting a pull card for use in sale and distribution of said ::;mall boxes under a plan by which the ultlmute purchaser: for the 10 cents paid, secured tllat lJox, m1mllet' of which COITespouded to that secure.'d lJy chance ft•om card, alll depicting thereon articles usually rE.'tailing at more than 10 cents E.'ach, purportedly contain<'d there.'in,- Sold such assortmE.'nts, through brokers, to distributors or wholesale.'rs, i·etail purel!asE.'rs from whom expose.'d and sold them to the purchasing public in accordance with aforesaid sales plan, involving n gnme of chance, in that the facts as to which of a nnmhet· of different ~'ll'ticles purchaser woul<l receive and whether or not the article ~ecured was of less or greater value than the purchase price, were determined wholly by lot or chance, not- Withstanding legend "Box may be opened and cont<'nts examined before purchasing," printer at the bottom of one side of the large carton iu type so small and inconspicuously place.'d as to be visilJie and legible only upon the most minute E.'examination, ·and which, it was evident, was not . intended to, and did not, come to the attention of the purchasing public; said dealer thereby supplying to and placing in the hands of others· the menus of eonducting lotteries in the sale of merchandise in accordance with aforpsald plan or method, in competition with others who, unwilling to adopt and use such or other sail's method contrary to public policy, refru in then•from;

With the.' result 'that many dealers in and ultimate consunwrs of such merchandise wpre attrnctPd by !'aid sales plan and the elemE.'nt of chance involved tllf'rein, and were the.'reby induced to buy his said merchandise in prefE.'r- E.'nce to that of his said competitors, and with E.'ffE.'ct of unfairly diverting trade to him from them; to the suiJstnntial injury of competition In commerce:

lieu, That stwh arts and practices wet·e all to the prP.Indica.' nnd injury of the public and <'OlllJWtitors, and constituted unfair mt'thods of competition fn <'omnlf'rce nrulnnfair nets and practices therein. Defore Mr. lV. lV. Sheppard, trial examiner . .llfr. D. C. Daniel for the Commission.

llfr. Abram Z. Zietlein~ of Chicago, Ill., for respondent FEDE,RAL TRADE COMMI'5STON' DEICISIIONS126 Complaint 34F. T. C.

Col\IPLAINT 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 Ewen Cameron, individually, and trading as Merchandise. Sales Syndicate, hereinafter referred to as respondent, has violated the provisions of said act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the interest of the public hereby issues its complaint, stating its charges in that respect as follows: PARAGRAPH 1. Respondent, Ewen Cameron, is an individual trading under the name of Merchandise Sales Syndicate, with his principal office and place of business located at 2738 North Sheffield Avenue, Chicago, Ill. Respondent is now and for more than three years last past has been engaged in the sale and distribution of smoking pipes, jewelry, fountain pens, billfolds, knives, cosmetics, cameras, wearing apparel, and other articles of merchandise to dealers. Respondent causes, and has caused, said merchandise when sold to be transported from his aforesaid place of business in the State of Illinois to purchasers thereof at their respective points of location in the various States of the United States and in the District of Columbia. There is now and for more than three years 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, and has been, 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 sells and has sold to Qealers certain assortments of said merchandise so packed and assembled as to involve 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, and has been, sold and distributed to the purchasing public in substantially the following manner: This assortment consists of a large cardboard carton in which is contained a number of smaller cartons, each of which smaller cartons contains an article of merchandise and on the end of each of said smaller cartons there appears a number. One t>nd of said Iarg~ carton is so constructed as to constitute a device commonly known as a pull card. Such pull card contains a number of partiaUy per- MERCHANDISE SALES SYNDICATE 127 125 Complaint £orated pull tabs and on the reverse side of each of said tabs there appears a number which corresponds to the number appearing on the end of one of said smaller cartons. Sales are 10 cents each and each purchaser pulls one of said tabs from the pull card. The purchaser is entitled to and receives the smaller carton bearing the number which corresponds to the number appearing on the reverse side of the tab pulled by such purchaser. The numbers on the reverse sides of said tabs are effectively concealed from purchasers and the prospective purchasers until selections have been made and the tabs have been separated or removed :from the said card. Many of the· said articles of merchandise contained in this assortment have a normal retail value greater than 10 cents. The :fact as to which of said articles of merchandise a purchaser is to receive and whether or not he receives an article of merchandise of greater retail value than the amount to be paid therefor are thus determined wholly by lot or chance.

Respondent sells and distributes, and has sold and distributed, various assortments of his merchandise, together with devices for Use in the sale or distribution of such merchandise, to the purchasing public by means of a game of chance, gift enterprise, or lottery scheme but the sales plans or methods employed in connection with each of said assortments are substantially the same as the sales plans o~ methods hereinabove described, varying only in detail. PAR. 3. Retail dealers who purchase respondent's said assortments of merchandise, either directly or indirectly, expose for sale and sell the same to the purchasing public 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 ami distribution of his merchandise in accordance with the sales plans or Inethocls hereinabove described. The use by respondent of said sales Plans or method in the sale of his merchandise, and the sale of said tnerchandise by and through the use thereof and by the aid of said sales plans or methods, is a practice of a sort which is contrary to an established public policy of the Government of the United States and in violation of criminal laws.

PAn. 4. The sale of merchandise to the purchasing public in the Inanner above alleged involves a game of chance or the sale of a chance to procure an article of merchandise at a price much less than t~e normal retail price thereof. Many persons, firms, and corporahans who sell and distribute merchandise in competition with respondent, as above alleged, nre unwilling to adopt and use said sales Plans or methods or any sales plans or methods involving a game of chance or the sale of a chance to win something by chance or any 128 FEDERAL TRADE COM~SION' DECISIONS Findings 34F.T.C.

other sales plans or methods that are contrary to public policy and such competitors refrain therefrOJn. Many dealers in and ultimate consumers of said merchandise are attracted by said sales plans or methods employed by respondent in the sale and distribution of his merchandise and the element of chance involved therein .and are thereby induced to buy respondent's merchandise in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the same or equivalent sales plans or methods. The use of ~aid sales plans or methods by respondent because of said game of chance has a tendency and capacity to and does unfairly divert' trade to respondent from his said competitors who do not use the same or equivalent sales plans or methods and as a .result thereof substantia] injury is being and has been done by respondent to competition in commerce between and among the vari· ous States of the United States and in the District of Columbia. PAn. 5. The aforesaid acts and practices of respondent, as herein alleged, are all to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER ' Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on December 14, 1940, issued and subsequently served its complaint in this proceeding upon respondent Ewen Cameron, individually and trading as Merchandise Sales Syndicate, 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. After the issuance of said complaint and the filing of respondent's answer thereto, testimony and other evidence in support of the allegations of the complaint were introduced by an attorney for the Commission and in opposition to the allegations of the complaint by attorneys for the respondent before a·n examiner of the Commission theretofore duly designated by it, and said testimony and other evidence were duly recorded and fih.>d in the office of the Commission. Thereafter the proceeding regularly came on for final hearing before the Commission on said complaint, the answer thereto, testimony and other evidence, report of the trial examiner and exceptions thereto, briefs in support of the complaint and in opposition thereto, and oral arguments of counsel; and the Commission, having duly considered the matter MERCHANDISE SALES SYNDICATE 129 125 Findings and being now fully advised in the premises, finds that this pro~ ceeding is in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO Tile FACTS PARAGRAPH 1. Respondent, Ewen Cameron, is an individual trad~ ing under the name .Merchandise Sales Syndicate, with his principal office and place of business located at 2738 North Sheffield A venue, Chicago, Ill. Respondent is now and has been since about 1936, engaged in the sale and distribution of billfolds, cameras, cosmetics, fountain pens, jewelry, smoking pipes, wearing apparel, and other articles of merchandise. . PAR. 2. In the course and conduct of his business as aforesaid re~ spondent causes, and has caused, said merchandise, when sold, to be transported from his place of business in the State of Illinois to Purchasers thereof at their respective points of location in various States of the United States and in the District of Columbia. There is now, and for several years 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.

PAR. 3. Respondent sells and distributes assortments of merchan~ dise consisting of novelties and notions such as those mentioned in Paragraph 1 hereof. He sells his assortments of merchandise through brokers to distributors or wholesale dealers who resell to retail dealers ~ho, in turn, sell to consumers. During the approximately 4 years ln which he has been engaged in his present business his ·volume of ~ales has increased from about $20,000 the first year to about $70,000 ln the last year. The contents of the assortments of merchandise sold vary somewhat from time to time, but the method of sale of all such assortments is substantially the same and is as follows: The assortment consists of a large carton containing a number of small boxes in each o:f which is packed an article o:f merchandise. The front of the large carton is so constructed as to constitute a device eotnmonly known as a pull card. This pull card has a number of llartially perforated pull tabs and on the back of each such tab a nutnber appears which corresponds to a number appearing on one of the smaller boxes contained in the large carton. Sales are 10 ~ents each, and a purchaser detaches one of the partially perforated tabs from the pull card and receives the small box bearing the num~ her corresponding to the number appearing on the reverse side of the tab pulled by such purchaser. This number on the reverse side 46G50G10-42-vol. 34-9 130 FEDERAL 'trade COMMT5.S10N' DEICISIIONS Findings 34FT. C.

of the tab is effectively concealed from view until the tab is separated and removed from the pull card.

Each assortment of merchandise usually consists of 80 or 81 articles, and in case the assortments have 81 articles the purchaser who pulls • the last of the 80 tabs on the pull card receives, in addition to the article of merchandise called for by the number on the reverse side of that tab, one additional article of merchandise without further charge. Respondent occasionally purchases job lots of merchandise and the individual items packed in assortments vary according to the marchandise he has available at any given time. The cost to respondent of the individual articles in said assortments also varies from time to time. As of July 1940 the cost of the individual items in one. such assortment ri:mged from slightly less than 1 cent each to 6 cents each. The usual and customary retail prices of the articles included in assortments sold by the respondent range from 2 or 3 cents each to approximately 25 cents each.

PAR. 4. Retail dealers who purchase respondent's assortments of merchandise expose for sale and sell the same to the purchasing pub· lie in accordance with the aforesaidsales plan or method. Respondent testified that any purchaser is free to examine the merchandise drawn and decline to accept and pay for it if he so desires, and that the retail dealer is informed that unsold merchan· dise may be returned. However, the only notice to the purchasing public is the legend "Box may be opened and contents examined before purchasin"g" printed at the bottom of one side of the large carton in type so small and so inconspicuously placed as to be visible and legible only upon the most careful and minute examination. The conclusion is drawn from the size and placing of this notice that it is not intended to, and does not, come to the attep.tion of the purchasing public.

The large carton has on its front beside the pull card pictures of articles of merchandise which usually and customarily retail at more than 10 cents each and which are purportedly contained in the assortment. Among the articles so pictured are a pipe, a necktie, a billfold, a razor, and a cigarette lig~iter. These pictorial representa· tions have the capacity and tendency, when taken in connection with the method of sale used, to create in the minds of members of the purchasing public the belief that among the articles of merchandise in the assortment there are some of a value greater than 10 cents. The sale of merchandise to the purchasing public in the aforesaid manner involves a game of chance in that the fact as to which of. 11 number of different articles of merchandise the purchaser will MERCHANDISE SALES SYNDICATE 131 125 Order receive, and whether or not he receives an article o:f merchandise of less or greater value than the purchase price, is determined wholly by lot or chance. Respondent thus supplies to and places in the hands of others the means o:f conducting lotteries in the sale of merchandise in accordance with the aforesaid plan or method. PAR. 5. In the conduct of his business respondent is in competition With other sellers of like .articles of merchandise who do not use, and are unwilling to adopt and use, any sales plan or method involving a garne of chance or any other sales plan or method contrary to public Policy, and such competitors refrain therefrom. :Many dealers in and ultimate consumers of such merchandise are attracted by the· sales plan or method employed by respondent in the sale and distribution of his merchandise and the element of chance involved therein, and are thereby induced to buy respondent's merch<mdise in preference to merchandise offered for sale by said competitors of respondent who do not use the same or equivalent sales plans or methods. The use of said sale"s plan or method by respondent, because of said g?l11e of chrm,ce, has a tendency and capacity to, and does, unfairly thvert trade to respondent from competitors who do not use the same or equivalent methods of sale, and as a result thereof substantial ~njury is being done, and has been done, by respondent to competition 111 commerce between and among the various States and in the District of Columbia.

CONCLUSION The aforesaid acts and practices of respondent are all to the Prejudice and injury of the public and of respondents' competitors and constitute unfair methods of competition in commerce and unfair 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 Comlnlssion upon the complaint of the Commission, the answer of r~~pondent, testimony and other evidence in support of the allegations of said complaint and in opposition thereto taken before an e:J~:aminer of the Commission theretofore duly designated by it, · report of the trial examiner and exceptions thereto, briefs in support of the complaint and in opposition thereto, and oral arguments of counsel, 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:

132 FEDERAL TRADE CO.MMTSiSI'ON' DECISIONS Order 84F.T. C.

It is ordered, That the respondent Ewen Cameron, an individual, trading as Merchandise Sales Syndicate, or under any other name, his representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution o£ novelties and other merchandise in com· merce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from- 1. Selling or distributing novelties, or any merchandise, so packed or assembled that sales of such novelties or other merchandise to the public are to be made, or may be made, by means of a game of chance, gift enterprise, or lottery scheme.

2. Supplying to or placing in the hands of others push- or pull· cards, punchboards, or other lottery devices, either with assortments of novelties or other merchandise or separately, which said push· or pull-cards, punchboards, or other lottery devices are to be used, or may be used, in selling or distributing said novelties or other mer· chandise to the public. · · 3. Selling or otherwise disposing of any novelties or other mer· chandise by means 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.

MINERAL WELLS CRYSTAL PRODUCERS, INC. 133 Syllabus