Eugene Russell Jaffe (Alias E. J. Russell), trading as Sterling Sales Company and Craftsman Sales Company

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IN THE MATTER OF EUGENE RUSSELL JAFFE (ALIAS E. J. RUSSEL~), TRAD· ING AS STERLING SALES COMPANY AND CRAFTSMA:rf SALES COMPANY COMPLAINT, FINDINGS, AND OllDE•R IN REGARD TO THE ALLEGED VIOLATIO~ · ' OF SEC, IS OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 1,656. Complaint, Dec. 9, 191,1-Decision, Nov. 13, 1942 Where an individual, ~ngaged in competitive interstate sale and distribution o! numerous articles of merchandise, ·including cameru.s, radios, comforters, and electric clocks-- Furnished various devlces and plans of merchandising which involved the oper· atlon of games of chance, gift enterprises, or lottery schemes through in· eluding in circular letters sent to numerous people throughout the United States soliciting their aid In sale of hH! said goods, push cards and circulars arplalnlng ·his merchandising plan, under which the number concealed ill disk under feminine name selected by a customer detli!rmlned the amount he paid, the person selecting feminine name corresponding with that con·· cealed under card's large master seal received an electric clock, the three persons pushing certain ·"lucky numbers" received automatic pencils, and others received nothing; and the operator, responsible for sale of such chances, remission of proceeds, and distribution of merchandise to the will•. ners, was compensated by an electric lamp; and thereby . Supplied to and placed in the hands of agents or distributors thus secured b1 him the means of conducting lotteries in the sale of his merchandise iO accordance with such plans, under which the amount of money paid and the particular article, if any, received were determined wholly by lot or . chance: contrary . to an established public policy of the United States Government and in competition with those who were not willing to use any method of chance ;

With result that many members of the public were attracted by said individuals sales plan and by the element of chance involved therein, and were thereby · induced to buy and sell said merchandise in preference to that of said competitors: and with tendency and capacity to divert substantial trade unfairly to him from them: . Held, That such acts and practices, under the circumstances set forth, were ali to the prejudice of the public and competitors, and constituted unfair methods of competition in commerce and unfair acts and practices therein. Before Mr. John W. Addison, trial examiner. Mr. J. V. Mishou and Mr. J. 1V. Brookfield, Jr. for the Commission. Mr. Henry Junge and Mr. Benjamin F. Morrison, of Chicago, Ill., for respondent.

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 · I STERLING SALES CO., ETC. 703 702 Complaint Trade Commission, having ~reason to believe that Eugene Russell Jaffe, alias E. J. Russell, an individual, tradipg as Sterling Sales Co. and Craftsman Sales Co., hereinafter referred to as respondent, ha~ \'iolated the provisions of said act, and it appearing to the Commission ~hat a proceeding by it in respect thereof would be to the public lllterest, hereby issues its complaint, stating its charges in that respect as follows:

PARAGRAPH 1. Respondent, Eugene Russell Jaffe, alias E. J. Russell, is an individual, trading and doing business under the names of Sterling Sales Co. and Craftsman Sales Co., with his office and principal. Place of business located at 775 ·west Jackson Boulevard, Chicago, lU. Respondent, is now, and has been for several years last past, engaged in the sale and distribution of cameras, radios, comforters, and bedspreads; loungettes, sports jackets, and other men's and women's wearing apparel; floor and table lamps, pens and pencils, electric time tellers, clocks and watches; bill folds and carrying cases; table- 'Ware, kitchenware, ~lectrical appliances, and other merchandise, 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 the various States of the. United States other than Illinois, and in the District of Columbia. There is now, and has been for several years last past, a course of trade by respondent in such merchandise in commerce between and among the "nrious 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 substantial 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 sell- Ing and distributing his merchandise, furnishes and has fLirnished "~rious devices and plans of merchandising which involve the operah~n of games of chance, gift enterprises, or lottery schemes wheiJ. E>a1d merchandise is sold and distributed to the ultimate consumers ~hereof. The method ov sales plan adopted and used by respondent ll:l substantially as follows:

Respondent distributes and has distributed to operators and to the Puchasing public certain literature and instructions, including among other things, push cards, order blanks, illustrations of his ~aid merchandise, and circulars explaining respondent's plan of selllng merchandise and of alloting it as premiums or prizes to the Operators of said push cards and to, the purchasing f:lnd consu_ming 704 FEDERAL TRADE CO:MMISS'ION DECISIONS Complaint 3.':i F. T. C. public. One of respondent's push cards bears 30 feminine names and 30 masculine names and, on the reverse side thereof, there appears ruled columns for writing in the name of the customer opposite the feminine or masculine name selected. Said push card has 60 partly perforated disks underneath which. appears the printed~ ·. words ''push out with pencil." Printed upon each of said disks appears one of the aforesaid feminine or masculine names and concealed within each disk is a number which is disclosed only when the disk is pushed out or separated from the card. The push card also bears a large master seal and concealed within the master seal is one of the aforesaid feminine or masculine names appearing on the face of said card. The person selecting the feminine or masculine name corresponding to the one under the master seal receives his choice of a table or floor lamp. Three Eversharp pencils are also awarded as prizes in connection with the aforesaid push card. The push card bears the following legend or instructions : (SEAL) Holder of Lucky Name Under Large :qed Seal Receives Choice of Any TABLE or FLOOR LAMP Shown On Circular Numbers 1 to 29 Pay Only Amount You Draw Any Number Over 29 Pay Only 29¢ Write Your Xarue Opposite Xame You Select On Back Of Card 3 EXTRA WINNERS Numbers 22--33-44 Each Receives • • • - A Genuine EVERSIIARP $1.00 PENCIL Another of respondent's sales plans consists of circulars, letters, advertising statements, and a push card. This push card is similar to one above described and it bears the following legend or instructions: • SONORA Lucky Name Under Large Red Seal Receives Choice of -SONORA or AIRMASTER RADIO Numbers 1 to 3::> Pay Amount You Dl"aw Numbers Over 35 Pay Only 35c 3 EXTRA WINNERS Numbers 22 33 44 Each Receive A $1.00 Wahl Eversharp Pencil (SEAL) STE'RULING SALES CO., ETC. 705 702 Complaint Sales of respondent's merchandise by means of said push cards are made in accordance with the above-described legends or instructions. Said prizes or premiums are alloted to the customers or purchasers in accordance with the above-described legends or instructions. "Whether . a purchaser receives an article of merchandise or nothing for the amount of money paid, and the amount to be paid for any merchandise received, are thus determined wholly by lot or chance. · Respondent furnishes and has furnished various other push cards accompanied by order blanks, 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 pl3:n or metpod involved in the sale of all of sai<l merchandise by means of . said other push cards is the same as that hereinabove described, varying only in detail.

PAR. 3. The persons to whom respondent furnishes ap.d has furnished the 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 hands of, others the means 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 an established public policy of the Government of the United States.

PAR. 4. The sale of merchandise to the purchasing public, in the manner above alleged, involves a game of chance or the sale of a chance to procure one of the said articles of 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 alleged, do not 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 thereby are induced to buy and sell respond.ent's merchandise in preference to merchandise offered. for sale and sold by said competitors of respond~nt who do not use the same or an equivalent method. The use of said method by ~esp~ndent, because of said game o£ chance, has a tendency and capac- .Ity to unfairly divert substantial trade in commerce between and 706 FEDERAL TRADE COMMISSTON DECISIONS Findings 35F.T.C.

among the various States of the United States and in the District of Columbia to respondent from his said competitors who do not use the . same or an equivalent method.

PAR. 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 acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. REPOnT, Frli.'DINGs As To THE Facts, AND Onder • Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on December 9, 194:1, issued and subsequently served its complaint in this proceeding upon the respondent, Eugene Russell Jaffe, alias E. J. Russell, an individual, trading as Sterling Sales Co. and as Craftsman Sales Co., charging him with the use of unfair methods of competition in commerce and unfair acts and practices in commerce in violation of the provisions of that act. After the filing of respondent's answer, testimony, and other evidence in support of the allegations of the complaint were introduced by the attorney for the Commission, and in opposition thereto by the attorney for the respondent, before a trial examiner of the Commission theretofore duly designated by it, and such 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 complaint, the answer thereto, testimony, and other evidence, report of the trial examiner upon the evidence and the exceptions to such report, briefs in support of and in opposition to the complaint, and oral arguments; 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·and makes tlus its findings as to the facts and its conclusion drawn therefrom. Flll.'l)INGS AS TO TIIE F AC"rS PARAGRAPH 1. The respondent, Eugene Russell.J affe, who has also used the name E. J. Russell, is an individual, trading and doing business under the names Sterling Sales Co. and Craftsman Sales Co., with his office and principal place of business located at 775 'Vest Jackson Boulevard, Chicago, Ill. Respondent is now and since February 1941, has been engaged in the sale and distribution of numerous articles of m~rchandise, including, among others, cameras, radios, comforters, bedspreads, lamps, pens, pencils, electric clocks and qther electrical appliances, billfolds, tableware, kitchenware, and various articles of men's and women's wearing apparel. STERL.ING SALES CO., ETC. 707 702 Findings PAR. 2. In the course and conduct of his business respondent causes and has caused his merchandise, when sold, to be transported from his place of business in the State of Illinois to purchasers thereof located in various other States of the United States and in the District of Columbia. Respondent maintains and has maintained a course of trade in his merchandise in commerce among and between the various States of the United States and in the" District of Columbia. PAR. 3. Respondent is and at all times mentioned herein has been in substantial competition with other individuals, and with partnerships and corporations, engaged in the sale and distribution of similar articles of merchandise in commerce among. and between the various States of the United States and in the District of Columbia. PAR. 4. In the sale and distribution of his merchandise respondent furnishes to his agents and distributors various devices and plans of merchandising which involve the operation of games of chance, gift enterprises, or lottery schemes when such merchandise is sold and distributed to the ultimate consumers thereof. The method or sales plan u·sed by respondent is substantially as follows: Respondent addresses to numerous members of the public located throughout the United States circular letters explaining respondent's plan of merchandising and soliciting the aid of suc4 persons in selling merchandise, the names of the addressees being taken from general mailing lists. The volume of letters distributed by respondent is large, some six million letters having been distributed by him during the year 1941. Enclosed in each letter is an order blank, a circular illustrating certain articles of merchandise, and a device commonly known as a push card.

The push card contains 60 partially perforated ,disks, on the face of ~ach of which is a feminine or masculine name. Concealed under each disk is a number. The card also bears a large master seal, and con- (!ealed under this master seal is a name which corresponds with one of the names appearing on the perforated disks. Persons pushing the disks pay varying amounts, the exact amount paid being determined by the number concealed under the particular disk pushed. For example, a person pushing a disk revealing the number "10'' pays 10 cents. The maximum amount paid by anyone, however, is 29 cents. After all of the disks on the card have been pushed, the master seal is removed and the person wl1o pushed the disk bearing the name eorresponding with the name under the master seal receives an electric floor or table lamp. Persons pushing certain "lucky numbers," three in number, recei~e automatic pencils. The other persons pushing disks ?n the card receive nothing for their money. "Whether persons push- Ing the disks receive an article of merchandise or nothing for the 708 FEDERAL TRADE CO.MMISSION DECISIONS Findings 35F. T. C.

amount of money paid, aild the particular article received, is thus determined wholly by lot or chance.

The push card bears the following legend explaining how the card is operated:

(SEAL) Holder of Lucky Name Under Large Red Seal Receives Choice of Any TABLE or FLOOR LAMP • Sho.wn On Circular Numbers 1 to 29 Pay Only Amount You Draw Any Number Over 29 Pay Only 29¢ Write Your Name Opposite Name You Select On Back Of Card 3 EXTRA WINNERS Numbers 22-33-44 Each Receives • • • A Genuine EVERSHARP $1.00 PENCIL The total amount of money collected by the agent or distributor operating the card is $14.95, which is remitted to respondent. The articles of merchandise to be awarded as prizes are then shipped by respondent to the agent, along with an additional electric lamp which is retained by the agent as his compensation for operating the card. Respondent supplies to his agents and distributors various other push cards for use in the sale and distribution of his mercehandise, but the sales plans or methods involved in the use of all of the cards are substantially the same as that described above, varying only in detail. · PAR. 5. The persons to whom respondent furnishes his push cards use such cards in selling and distributing respondent's merchandise in accordance with the sales plan described. Respondent thus supplies to and places in. the hands of others the means of conducting lotteries in the sale of his merchandise. The use by respondent of such sales plan or method in the sale of his merchandise and the sale of such merchandise by and through the use of such method is a practice of a sort which is contrary to an established public policy of the Government of the United States:

P.AR. G. The sale of merchandise to the purchasirig public in the manner herein described involves a game of chance or the sale of a STE'RULING SALES CO., ETC. 709 702 Order chance to procure an order of merchandise at a price much less than the norinal retail price thereof. Among the competitors of respondent referred to in paragraph 3 hereof are those who are unwilling to use the sales method herein described, or any method involving a game of chance or the sale of a chance to win something by chance, or any other·method which is contrary to public policy, and such competitors refrain therefrom. Many members of the public are attracted by the sales plan or method employed by respondent and by the element of chance involved therein, and such persons are induced to buy and sell respondent's merchandise in preference to · merchandise offered for sale and sold by those competitors of respondent who do not use such methodg, Because of the element of chance invoived in such method, the use thereof by respondent has the tendency and capacity to i:livert and has diverted substantial trade unfairly to respondent from his said competitors. CONCLUSION The acts and practices of the respondent as herein found are all to the prejudice 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, the answer of respondent, testimony and other evidence in support of and in opposition to the allegations of the complaint taken before a trial examiner of the Comlnission theretofor~ duly designated by it, report of the trial examiner Upon the evidence and the exceptions to such report, briefs in support • of and in opposition to the complaint, and oral argument; and the ~commis~n having made its findings as to the facts and its conclu- SIOn that the respondent has violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondent, Eugene Russell Jaffe, alias E. J. Russell, individually, and trading as Sterling Sales Co. and as Craftsman Sales Co., or trading under any other name, and his representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution in commerce, as "commerce" is defined in the Federal Trade Commission Act, of cameras, radios, comforters, bedspreads, lamps, pens, pencils, electric clocks or other electrical appliances, billfolds, 710 FEDERAL TRADE COMMISSION DECISI:ONS Order 35F.T.C tableware, kitchenware, men's or women's wearing apparel, or any other merchandise, do forthwith cease and desist from: 1. Supplying to or placing in the hands of agents, distributors, dealers, members of the public, or others, push cards, pull cards, punchbol).rds, or any other devices which are to be used or may be used in the sale or distribution of respondent's merchandise or any merchandise to the public by means of a game of chance, gift enter· price, or lottery scherrie.

2. 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 60 days· after service upon him of this order, file with the Commis~ion a report in w:~;iting, setting forth in detail the manner and form in which he has complied with this order. · • CONSUMER'S RESEARCH SERVICE, ETC. 711 Syllabus