John J. Schocket

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IN THE MATTER OF JOHN J. SCHOCKET, TRADING AS CONSU:l\IERS MERCANTILE SERVICE ~O~IPLAINT, FI~DINGS, AND ORDim IN REGARD TO THE ALLEGED VIOLATION OF SEC. ti OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 12-~2. Complaint, Aug. 20, 1940-Deoision, Feb. 16, 1912 \Vhere an lndiv1dual, engaged in competith·e lntet·state sale and distribution of cameras, silverware, broilers, fishing tnckle, nnd other merchandise- Furnished \'llrious devices and plans of merchandising which involnd the operation of games of chance, gift enterprises or lottt>ry schemes in sale and distribution of snell met·chanrlise to ultimate consumers, all(l distribution to agents or operators and purchasing public of push cards nnd circulars explaining his plan of selling such merchandise and allotting it as premiums or prizes to the opt>rntors of the eards nnd tht> public, a typit'nl plan providing that the pet·son Sf'lt>acting that one of 79 feminine numps tli><pluyed on cat·d corre>:ponding with name conceah'<l undt>r mastf'r Sf'al received choice of certain articles of merdwndi:se illnstratt>d on attadwd or accompanying folder, and amount of money paid, if any, for chance was dt>pendent upon number coneealed by the disk, upon while·h appt>nred the name s~lected; and thereby Supplied to and placed in the hands of others means of conducting lotteries in the sale of his merchandise in accordance with such sale~ plans, im·olving chance to pt·ocnre artiele at much les;;; than not·mal retail price, and undet• whldt fact as to whetllf't' lllll'dwst>r t·eceire<l an article of merehandisp or uotl1ing for amount of money paid, or lll'ticle ft·ee, was determined wholly by lot, contrary to the established pnhlic JJO!icy of the Go,·ernment of the T;united States and in violation of critninal laws, nnd iu eompt>tilion with many who, unwilling to ule Ully method hn-oldng ganw of chance or contrary to pnhlic policy, refrain therefrom;

'With the result that many IJf'l'SliiiS were atlrncted hy said sales plan nnd the elPiltt•nt of ch:wee im·ol\'f'd therein, and wet·e t!Jerehy induced to huy and sell his nterchnnlli~e in prl'fPrPnce to that of hi>~ said compl'titors, whert>hy trade wns unfait·ly diyertPd to hlm from them: Heltl. That sul'11 nets and Jlractlces, undt>r the cit·eumstan('t>S set forth, were ull to thf' Jlll.'jmli<'P nnd injnrr of the Jlllhlic nnd <'OillJtPtitnr·s, and con:o<tltute<l unfair mt>thods of cmnpf'tition in commt>rce nnd unfait· n<'ts nnd vr·acti<"cs tiiPrei n.

Before Mr. lV. lV. Slteppard aml .llr. Andrew B. D·ut·all, trial examint'rs.

Air. L. J>. Allen, Jr., llfr. J. V .•lii:!lwu, ami Mr. J. lV. Rtool.fidd, J;·. for the Commission.

Mr. Arthur II. Schu·ab of Nn!'-h & Domwlly of Chicago, Iil., for re~pJndent.

Complaint 3-lF. T. C. Co:ur~INT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said act, the Federal Trade Commission, having reason to believe that John J. Schocket, individually and trading as Consumers Mercantile Service, 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, John J. Schocket, is an individual trading as Consumers Mercantile Service, with his principal office and: place of business located at 64: ·1Vest Randolph Street, Chicago, Ill The respondent is now and for more than 1 year last past has been engaged in the sale and distribution of cameras, silverware, broilers,. fishing tackle, clocks, pens, pencils, and other articles of merchandise. 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 various States of the United States other than Illinois and in the District of Columbia. There is now and for more than 1 year last )Jast has been a course of trade by the respondent in such. merchandise in commerce between and among the various States of the United States and in the District of Columbia. In the cour~e 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 articles of 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, in soliciting the sale of, and in selling and distributing his merchandise, furnishes and has furnished vari- . 'ous d ev1ces and plans of merchandising which involve the operation of games of chance, gift enterprises, or lottery schemes, when said merchandise is sold and distributed to the ultimate consumer thereof. The method or sales plan adopted and used by respondent was and is substantially as follows:

Respondent distributes and has distributed to agents, operators, and the purchasing. public certain '1 literature and instructions, including among other thmgs push cards, illustrations of his said merchandise and circulars explaining resrondent's plan of selling merchandise and of allotting it as premiums or prizes to the operators of said push cards CONSUMERS MERCANTILE SERVICE 637 '635 Complaint and to the purchasing and consuming public. One of respondent's push cards bears 79 feminine names with ruled columns on the reserve side thereof for writing in the name of the customer opposite the feminine name selected. Said push card has 79 small partially perforated disks on the face of ~ach of which is printed the word "push." Each of such disks is set over one of the aforesaid feminine names. Concealed within each disk is a number which is disclosed only when the disk is pushed or separated from the card. The push card also has a large master seal and concealed within the master seal is 1 of the feminine names appearing on the face of said card. The person selecting the feminine name corresponding to the one under the master seal receives 1 of the articles of merchandise illustrated on an attached or accompanying folder. The push card bears a legend or instructions as follows:

10 Do Not Remove LUCKY Seal WIN NEBS Person selecting name under seal receives choice Until of Entire Card is ONE of the articles shown on pages Sold 1-2-5 or 7 1 Cent to 25 Cents-Pay What You Draw. No Higher. Those Drawing Numbers Over 25 Pay Only 25¢-No 1\Iore.

These Numbers Are· ALL FREE 1-3-5-7-9-10 11-12-13-14 Back EXTRA PRIZES I' . agl! Sales of respondent's merchandise by means of said push card are made in accordance with the above-described legend or instructions. Said prizes or premiums are :tllotted to the customers or purchasers in accordance with the above-described legend or instructions. The fact as to whether a purchaser receives an article of merchandise or nothing for the amount of money paid or an article of merchandise free is thus determined wholly by lot or chance.

Respondent furnishes, and has furnished, various other push cards accompanied by instructions !Jnd other printed matter for use in the sale and distribution of his merchandise by means of a game of chance, Complaint 3-lF.T.C.

gift enterprise, or lottery scht:me. The sales plan or method involved in connection with the sale of t~ll of said merchandise by means of said other push cards is the sam~ as that hereinabove described, varying only in detail.

PAR. 3. The persons to whom i·respondent furnishes, and has furnished, the same push cards use the same in purchasing, selling and distributing respondent's merchandise in accoruance with the aforesaid sales plan. Respondent thus supplies to, and places in the hands of others the means of conducting lotteries in the sale of his merchan- ' .dise in accordance with the sales plan hereinabove set forth. The use by respondent of said sales plan or method in the sale of his merchandise and the sale of said merchandise by and through the use thereof and by the aid of said sales plan or method is a practice of a sort which is contrary to an established public policy of the Go\·ernment of the United States ttJl(l in violation of the criminal laws. PAR. 4. The sale of merchandise to the purchasing public in the manner above alleged involved a game of chance or the sale of a chance to procure an article of merchandise at a price much less than the normal retail price thereof. l\Iany persons, firms, and corporations, who sell or distribute merchandise in competition with the respondent, as above alleged, are unwilling to adopt and use said method or any method involving a game of chance or the sale of a chance to win something by chance, or any other method that is contrary to public policy, and such competitors refrain therefrom. l\Iany persons are attracted by said 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 and sell respondent's merchandise in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the same or an equiva· lent method. The use of said method by respondent, because of said game of chance, has a tendency and capacity to, and does, unfairly divert trade in commerce between and among the various States of the United S.states and in the District of Columbia to respondent from his said competitors who do not use the same or an equivalent method, and as a result thereof substantial injury is being, and has been, done by respondent to competition in commerce between and amo11g the various States of the United States and in the District of Columbia. PAR. 5. The aforesaid nets and practices of respomlent, ns 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 .\ct. CONSUMERS MERCANTILE SERVICE 639 Findings REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on August 20 A. D. 1940, issued and subsequently served its complaint upon the respondent, John J. Schocket, an individual, trading as Consumers Mercantile Service, charging him with the use of unfair methods of competition in commerce and unfair and deceptive acts and practices' in conunerce in violation of the provisions of said act. After the issuance of said complaint, testimony and other evidence in support of said complaint Were introduced by L. P. Allen, Jr., J. V. 1\Iishou, and J. W. Brookfield, attorneys for the Commission, and in opposition to the allegations of the complaint by Arthur H. Scln'lah, attorney for the respondent, before W. 1V. Sheppard and A. B. Duvall, trial examiners 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, this proceeding regularly came on for final hearing before the Commission upon said complaint, testimony and other evidence, report of the trial examiners upon the evidence and exceptions filed thereto, and briefs in support of the complaint and in opposition t~ereto (oral argument not having been requested) ; and the Commis- ~Ion having duly considered the matter and being now fully advised In the premises, finds that this proceeding is in the interest of the PUblic and makes this its findings as to the facts and its conclusion drawn therefrom:

FINDINGS AS TO THE FACTS . PARAGRAPH 1. Respondent, John J. Schocket, is an individual, tradll1g as Consumers Mercantile Service, with his principal office and Place of business located at ,64 ·west Randolph Street, Chicago, Ill. Respowlent is now, and for more than 2 years last past has been, engaged in the sale and distribution of cameras, silverware, broilers, fishing tackle, clocks, pens, pencils, and other articles of merchandise. :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 located in various other States of the tinite<l States. Respondent maintains, and at all times mentioned h(>rein has maintained, a course of trade in said merchandise in comlrl.erce among(}' and betwt>en the ,-arious States of the United States. PAR. 2. It~ the course and conduct of his business, respondent is now, and has been, in competition with other individuals and with partnerships and corporations engaged in the sale and distribution of like or similar articles of merchandise in. commerce between and among the various States of the United States and in the District of Columbia. Findings 34F.T.C.

PAR. 3. In the course and .conduct of his business, respondent, in soliciting the sale of, and in selling and distributing, his merchandise, furnishes, and has furnished, various devices and plans of merchandising which involve the operation of games of chance, gift enterprises, or lottery schemes when said merchandise is sold and distributed to ultimate consumers thereof. The method or sales plan adopted and used by respondent was, and is, substantially as follows: Respondent distributes, and has distributed, to agents, operators, and to the purchasing public, certain literature and instructions including, among other things, push cards, illustrations of his said merchandise, and circulars explaining respondent's plan of selling merchandise and of allotting it a~ premiums or prizes to the operators of said push cards and to the purchasing and consuming public. One of respondent's push cards bears 79 feminine names, with ruled columns on the reverse side thereof for writing in the name of the customer opposite the feminine name selected. Said push card lias 79 small, partially perforated disks, on the face of each of which is printed the word "push." Each of such disks is set over one of the aforesaid feminine names. Concealed within each disk is a number which is disclosed only when the disk is pushed or separated from the card. The push card also has a large master seal, and concealed within the master seal is one of the feminine names appearing on the face of said card. The person selecting the feminine name corresponding to the one under the master seal receives one of the articles of merchandise illustrated on an attached or accompanying folder. The push card bears a legend or instructions as follows: 10 r-------------------1 LUCKY LUCKY WINNERS Do NotPerson selecting name under seal receives choice.e Remove of Seal ONE Until of the articles shown on pages Entire 1-2-5 or 7 Card is Sold1 Cent to 25 Cents-Pay What You Draw. No Illgber. Thm;e Drawing Numbers O\·er 25 Pay Only 25¢-No 1\!ore.

These Numbers .Are ALL FREE 1-3-5--7-9--10 11-12-13-14 Back Ex'l'BA PRIZES Page CONSUMERS MERCANTILE SERVICE • 641 63:; Findings Sales of respondent's merchandise by means of said push card are lnade in accordance with the above-described legend or instructions. Said prizes or premiums are allotted to the customers or purchasers in accordance with the above-described legend or instructions. The fact as to whether a ·purchaser receives an article or merchandise or nothing for the amount of money paid, or an article of merchandise free, is thus determined wholly by lot or chance. Respondent furnishes, and has furnished, various other push cards accompanied by instructions and other printed matter for use in the sale and distribution of his merchandise by means of a game of chance, gift enterprise, or lottery scheme. The sales plan or method involved in connection with the sale of all of said merchandise by means of said other push cards, is the same as that hereinabove described, Varying only in detail. · PAR, 4. The persons to whom respondent furnishes, and has furnished, said push cards, use the same in purchasing, selling, and distributing respondent's merchandise in accordance with the aforesaid sales plan; Respondent thus supplies to, and places in the ha_pds of, others, the meallS of conducting lotteries in the sale of his merchandise in accordance with the sales plan hereinabove set forth. The use by respondent of said sales plan or method in the sale of his merchandise, and the sale of said merchandise by and through the use thereof and by the aid of said sales plan or method, is a practice of a sort which is contrary to the established public policy of the Government of the United States and in violation of the criminal laws. PAR. 5. The sale of said merchandise t,o the purchasing public in the manner above-described, involves a game of chance or the sale of a chance to procure an article cf merchandise at a price much less than the normal retail price thereof. Many persons, firms, and corporations Who sell or distribute merchandise in competition with the respondent, as above-described, are unwilling to adopt and use said method or any :method involving a game of chance or the sale of a chance to win SOmething by chance, or any other method that is contrary to public policy, and such competitors refrain therefrom. Many persons are attracted by said 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 and sell respondent's lll~rchandise in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the same or an equivalent lhethod. The use of srud method by respondent, because of said game of chance, has a tendency and capacity to, and does, unfairly divert hade in commerce between and among the various States of the U11ited 4C05QOm-42-\'ol. 3-l-41 Order 3-!F.T. C.

States and in the District of Columbia, to respondent from his said competitors who do not use the same or an equivalent method. CONCLUSION The aforesaid acts and practices of the respondent, as herein found1 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 acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, testimony and other evidence taken before W. ,V. Sheppard and A. B. Duvall, trial examiners of the Commission theretofore duly designated by it, in support of the allegations of said complaint and in opposition thereto, report of the trial examiners upon the: evidence and exceptions filed thereto1 and briefs filed in support of the complaint and in opposition thereto; 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, John J. Schocket, an individual1 trading as Consumers :Mercantile Service, his representatives, agents, and employees, directly or through any corporate or other device, iu connection with the offering for sale, sale, and distribution of cameras, silverware, broilers, fishing tackle, clocks, pens, pencils, and other articles of merchandise in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Supplying, or placing in the hands of, others, push cards or other devices which are to be used, or may be used, in the sale or distribution of said merchandise to the public by means of a game of chance, gift enterprise, or lottery scheme.

2. Shipping, mailing, or transporting to agents of to distributors or to members of the purchasing public, push cards or other devices which are to be used or may be used in the sale and distribution of said merchandise to the public by means of a game of chance, gift enterprise, or lottery scheme. , 3. Selling, or otherwise disposing of, any merchandise by means of a game of chance, gift enterprise, or lottery scheme. It is further ordered, That the respondent shall, within CO days after service upon him of this ordt-r, file with the Commission a report in writing, setting forth in detml the manner and form in which he has complied with this order.

PINK OINTl\IENT CO. 643 Complaint