Jerrold A. Rowley

Text (OCR of the scan at left; may contain errors)

. IN THE MATTER OF JERROLD A, RO"\VLEY AND STANLEY EISENBERG' TRAD- ING AS RICHAE,D DONIGAN AND DISCOUNT SALESCOMPANYCOMPLAINT, DECISION, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT, 26, 1914 Docket 5726. CO1nlJla-int, Dec, 20, 1949-Decision, 1Jla. , 10, 1952 Where an individual engaged in the interstate sale and distribution of radios, fountain IJenS ' and other m;ticles- (a) Made use of sales promotion plans pursuant to which he mailed to large numbers of prospective purchasers throughOlit the United States, advertisements of a table radio, order. blanks, explanatory letters and push cards . ~or ~lse in accordance with a scheme whereby the cost of a "push" was determined by the chance number secured, persons selecting by chance the feminine name corresponding with that concealed in the card' s master seal received one of the ' radios, persons securing t\\'o specified numbers received ~all point pens, others received nothing, and the purchaser of the assortment for the approximate amount realized from the sale of the punches became entitled, upon the rewission thereof, to the second radio included therewith; and.(b) Shipped and delivered, in response to hundreds of orders received as a result of the aforesaid mailing, radios and ball points to purchasers located throughout the United States; and Thereby supplied to and placed in the hands of purchasers of his mercl~andise the means of conducting lotteries or games of chance in connection with the resale or distribution thereof, in contravention' 6fan established ,pl.1blic policy of the United States Government; in the violation of which he thus assisted and participated:

Held., That such acts and practices, under the circumstances set forth, were all to the prejudice and injury of the public and constituted unfair acts and practices, Before M1'. Clyde AI, Hadley, hearing examiner. Mr. J. W. B1'ookfield, J1'. for the Commission. Nash Donnelly, of "\Vashington, D. C., for respondents. 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 Jerrold A. Rowley and Stanley Eisenberg, individuals and co-partners trading as Richard Donigan and Discount Sales Company, hereinafter referred to as respondents, have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereto RICHARD DONIGAN, ETC. 949 948 Complaint wouldchargesbe in the inpublicthatinterest,respecthereby issuesasits complaint,follows:stating its PARAGRAPH 1. Respondents Jerrold A. Rowley and Stanley Eisenberg are individuals and co-partnerstrading and doing business under the trade names, Richard Donigan and Discount Sales Company, with their office and principal place of business located at 110 West ij.2nd Street in the city of New York, New York. ' RespOlidents are now, and for more than two years last past have been, engaged in the sale and distribution of radios, fountain pens and other articles of merchandise and have caused said merchandise w hen sold, to be transported from their places of business in the city of New York, New York to purchasers thereof at their respective points of location in the various States of the United States other than New York and in the District of Columbia. There is now, and has been for more than two years last past, a course of trade in such merchandise in commerce as "commerce" is defined in the Federal Trade Commission Act between and among the various States of the United States and in the District of Columbia. PAR. 2. In the course and conduct of their business as described in Paragraph One hereof respondents in soliciting the sale of and selling and distributing their merchandise furnish and have furnished various 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 purchasing and consuming public. One method or sales plan adopted and used by respondents is substantially as follows:

Respondents distribute and have distributed to operators and to 1nembers of the public certain literature and instructions including among other things push cards, order blanks, circulars including thereon illustrations and descriptions of said merchandise and a circular explaining respondents' plan of selling and distributing their merchandise and of allotting it as premiums or prizes to the operators of said push cards and to members of the purchasing and consuming public. One of the respondents' said push cards bears 80 feminine names with ruled columns on the back of said card for writ~ ing in the name selected, Said push carel has 80 partially pel~forated discs, Each of said discs bears one of the feminine names corresponding to those on the list, Concealed within each disc is a number which is disclosed only "chen the customer pushes or separates a disc from the card, The push card also has a larger master seal and concealed within the master seal is one of the feminine names appearing on the elise, The person selecting the. name corresponding 950 FEDERAL TRADE . COMMISSION DECISIONS Comply.int 48 F, T, c, to the one under the master seal receives a camera. The push card bears the following legend or instruction: NAME UNDER SEAL RECEIVES A BEAUTIFUL SHERATON RADIO NEW Amazing Performance-Beautiful Appearance RCA licensed superheterodj"ne radio Nos. 22 & 33 each receice a Multi-power tubes, including beam power handsome ALAl\IAC BALIl POINT PEN. output tube Permanentcent tonemagnetic andspeaker volumewith magnifi- 1~NOtoHIGHER30~ Durable plastic cabinet of modern design Nos, 1 to 39 Pay What is Plays anywhere 011 AC Drawn. or DC Nos. oyer 3D pay only 39~, PUSH OUT WITH PENCIL Sales of respondents' merchandise by means of said push cards are made in accordance with the above-described legend or instructions and said prizes or premiums are allotted to the customer or purchaser from said card in accordance with the above legend 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 the merchandise or the chance to receive said merchandise are thus determined wholly by lot or chance.

Respondents furnish and have furnished various other push cards accompanied by order blanks, instructions and other printed matter for use in the sale and distribution of their merchandise by means of a game of chance, gift enterprise 01' lottery scheme. The sales plans or methods involved in 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. 3. The persons to whom respondents furnish and have furnished said push cards use the same in selling and distributing respondents' merchandise in accordance with the aforesaid sales plans, Respondents thus supply to and place in the hands of others the means of conducting games of chance, gift enterprises or lottery schemes in the sale of their merchandise in accordance with the sales plan hereinabove set forth, The use by respondents of said sales plans or methods in the sale of their merchandise and the sale of said merchandise by and through the use thereof and by the aid of said sales plans or methods is a practice which is contrary to an established public policy of the Government of the United States, RICHARD DONIGAN, ETC, 951 948 Decision 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 are attracted by said sales plans or methods used by respondents and the element of chance involved therein and thereby are induced to buy and sell respondents' merchandise.

The use by respondents of a sales plan or method involving distribution of merchandise by means of chance, lottery or gift enterprise is contrary to the publicinterest and constitutes unfair acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

PAR. 5. The aforesaid acts and practices of respondents as herein alleged are all to the prejudice and injury of the public and constitute unfair acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to the provisions of the Federal Trade Comn'iission Act the Federal Trade Commission, on December 20, 1949, issued and subsequently served its complaint in this proceeding upon the respondents Jerrold A, Rowley and Stanley Eisenberg charging said respondents with violation of the provisions of that Act. An answer to said complaint was filed by respondent Jerrold A. Rowley but no answer was filed by respondent Stanley Eisenberg. Testimony and other evidence in support of the complaint were then introduced be- Store a hearing 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 consideration by the said hearing examiner upon the complaint, the answer thereto, testimony and other evidence proposed findings as to the facts and conclusions presented by counsel and the hearing examiner having duly considered the record, on theDecember 28, 1950 filed his initial decision herein with Commission, within the time permitted by the Commission s Rules of Practice counsel for respondent Jerrold A, Rowley filed with the Commission an appeal from said initial decision, and thereafter this proceeding regularly came on for final consideration by the Commission upon the reeorcl herein, including briefs in support of and in opposition to the Findings 48 F, T, C.

appeal and oral argument of counsel; and the Commission, having issued its. order granting said appeal in part and denying it in part and beingnow fully advised in the premises, finds that this proceeding is in the interest of the public andmakes this its findings as to the facts and its conclusion drawn therefrom and order, the same to be in lieu or the initial decision of the hearing examiner. FINDINGS AS TO THE FACTS . PARAGRAPH 1. Respondent Jerrold A, Rowley is an individual, with his office and principal place of business at 110 \Yest 42nd Street, New York, New York. Prior to October 31 1947, respondents Jerrold A. Rowley and Stanley Eisenberg were partners trading as Richard Donigan and Discount Sales Company, with their office and principal place of business at the same address. This partnership was cliscontinued as of October 31, 1947. Respondent Stanley Eisenberg has had no connection with the acts and practices alleged in the complaint herein.

PAR; 2. Respondent Jerrold A, Row ley, trading under the name Richard Donigan, in the latter part of 1947 and the early part of 1948 engaged in the sale of radios, fountain pens and other articles of merchandise and caused said merchandise, when sold, to be transported from his place of business in the State or New York to purchasers thereof in other States of the United States, maintaining a course of trade in such merchandise between the State. of New York and the various other States of the United States. Since that time respondent Jerrold A, Rowley has engaged in the manufacture and sale of novelty merchandise under the name of Discount Sales Company. PAR. 3. In the course and conduct of his said business or selling merchandise in commerce under the. name Richard Donigan, respondent Jerrold A. Row ley on two separate occasions mailed lottery devices designed for use in the resale of his merchandise to a large number of prospective purchasers located throughout the United States. On one of these occasions he mailed to 50 000 such prospective purchasers sales promotional literature consisting of a push card, a circular advertising atable model radio, an order blank and a form letter describing respondent' s sales promotional scheme. This form letter stated that by purchasing two radios and two ball point pens from said respondent ror $29, , selling all of the chances on the enclosed push card and distributing one of the radios and both of the ball point pens to the persons selecting the winning punches in accordance with the instructions on the push card, the purchaser could keep the second radio at practically no cost to himself. The total amount received from the , .

RICHARD DONIGAN ETC. 953:- 948 . Findings sale of punches approximately equalled the total purchase price of the merchandise of The push cards which were enclosed in the "letters carried the follow- $29,95. ing legend and instructions:

NAME UNDER SEAL RECEIVES A BEAUTIFUL SHERATON RADIO NEW Amazing Performance-Beautiful Appearance RCA licensed superheterodyne radio Nos, 22 & 23 Multi-power tubes, including beam power each receive output tube a handsome Permanent magnetic speaker with magnifi- ALAMAC BALL cent tone and volume POINT PEN. Durable plastic cabinet of modern design 1~ to 39~- Plays anywhere on AC or DC NO HIGHER Nos. l to 39 Pay What Is Drawn.

N os. over 39 pay only 39~, PUSH OUT WITH PENCIL Write your name on the reverse side opposite the name you select. Each card contained eighty sqllares which were each inset with small round detachable disc bearing a feminine ilame clearly displayed. In addition it contained the large red seal referred to in the legend' above, which concealed the winning feminine name. Additional in. structions are set out on the reverse side of the card. If the push card is operated in accordance with these instructions, a purchaser of a chance selects and punches out one of the small discs, He then writes his own name on the reverse side of the card opposite the feminine name on the disc he selected, The amount he pays for the chance is' determined by the figure"e concealed under the disc he punched out. If that number is either 2201' 23, he wins one of the ball point peils. After all of the punches have been sold, the radio is. received by the person who punched out the disc containing the feminine name concealed under the large seal. whether a purchaser of a chance receives one of the articles of merchandise or receives nothing for the amount' paid, and the amount he pays for the chance itself, are both deter~' mined purely by lot orcllance.

Respondent Jerrold A. 'Rowley received between 400 and 500 orde:rs for radios and ballpoint pens in response to the above-described mailing. This merchandise,. sold upon these orders was shipped and:delivered from the State of New York to the purchasers thereof located Order 48 F, T, C.

throughout the other States of the United States. The other mailing of lottery devices by this respondent to other prospective purchasers was made in a substantially similar manner as the nlailing above described, varying from it only in minor details. Respondent Jerl old A. Rowley, trading under the name Discount Sales Company, is presently engaged in the sale or novelty merchandise in connection with the sale of some of which he gives lottery devices to the purchasers thereof.

PAR. 4. Respondent Jerrold A. Rowley, trading as Richard Donigan in the manner above described, supplied to and placed in the hands of purchasers of his merchandise the means of conducting lotteries or games of chance in connection with the resale or distribution of such merchandise. The sale of merchandise by and through such means is a practice which is in contravention of an established public policy of the Government of the United States and this respondent, through the supplying of such means, in commerce, assisted and participated in the violation of such policy.

CONCLUSION The acts and practices of respondent Jerrold A. Row ley, trading under the name of Richard Donigan, as hereinabove found, were all to the prejudice and injury of the public and constituted unfair acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER I t is ordered That the respondent Jerrold A. Row ley, trading as Richard Donigan, or Discount Sales Company, or under any other name or designation, and his agents, representatives and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of merchandise in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Supplying to or placing in the hands of others push cards or other lottery 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. 2. Selling, or otherwise disposing of, any merchandise by means of a game of chance, gift enterprise or lottery scheme. I tis further' O1?dered That the complaint herein be, and it hereby is dismissed as to respondent Stanley Eisenberg. RICHARD DONIGAN, ETC. 955 948 Order It is furthe1' ordered That respondent Jerrold A. Rowley, an individual, shall, within sixty (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. Commissioner :Mason concurring in the. findings as to the facts and conclusion, but not concurring in theforll1 of order to cea~e and desist for the reasons stated in his opinion in Docket No. 5203, Worthmore Sales Company, 1 46 F. T. C. 606.

. .

956 FEDERAL TRADE COMMIS$ION DECISIONS Syllabus 48 Ii', T, C.