Pam Co, Inc.

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

IN THE MATTER OF PAM CO, INC. ; AND MAX CHISSIK AND ARTHUR FOYEH DOING BUSINESS AS SEWING MACHINE FACTOIlS DECISION IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COJ\IMISSION ACT Docket 6012. Complaint, July 1952-Deeision, Feb. 17, 1954 'Vhere two partners engaged, in substantial competition in (;ommeree with lllakcrs and sellers of domestic sewing machines and with seHers of imported sewing machines, some of \vbom adequately disclosed to the public the foreign origin of their Inachines or parts thereof, in processing and asselubling into sewing machines, heads imported from Japan, upon the back of the vertical arm of which the word " Japan" became covered by the motor attached to the head and on some of which a medallon, readily removable, placed 011 the front of said arm disclosed the \vord "Japan" in such small and indistinct fashion as not to constitute adcquate notice to tile public that said heads were imported- (a) Ojj'ered and sold sewinp; machines thus completed with no mark on the heads or on the complete 1113cl1incs of \which said heads \"ere a part .showing foreign origin, and without otherwise informing the public of the foreign origin of said bcads before the offer for sale to the public of the machines in question; and \ l1) Falsely represented that their machines were manufactured by or connected in some \vay with the American firm or firms with whieb the name " Chanlpion" bad long been associated, through printing or embossing on the front horizontal arm of the head the trade or brand name "Cbampion, and use thereof in their advertising matter ;

\e) Falsely represented, dircetly or by implication, through the depidion of a portable electric se\ving machine in their advertising and the figure "$HW.H5" that the machines in question were customarily sold to member,"s of thc public for said sum;

\Vhen in fact said price ,vas wholly fictitious and greatly in excess of the amount usually charged tlh:refol' ; and d) 1\lisleadingly used the \words "unconditionally guaranteed" in said advertising tl1rough failure to disclose the tenns and conditions of such guarantee: Reld That such acts and practices constituted unfair and deceptive ads and practices in COillnel'Ce and unfair methods of competition therein. Before Mr. John Lewis hearing examiner.

Mr. William L. Taggart for the Commission. Mr. IT1Jing Schoenfeld of San Francisco, Calif. , for Pam co, Inc. Arthur Foyer and.J uJius Foyer.

Mr. BeTtmnd F. LU7"ie of San Francisco, Calif., for Edward Sas ,oon and H. P. Ilaslclmrst.

Mr. Alfred M. lJiUer of San Francisco, Calif. , for Max Chissik lJd Arthur Foyer.

708 FEDERAL TRADle COMMISSlOK DF CISIONS ,,0 F, T, C. Findings DECISION OY Tlle CO:lBJISSION AND ORDER TO FILE IIEPORT OF CO:ltPLL\NCE Pursuant to the provisions of the Federal Trade Commission Act the Commission, on .July 18, 1952, issued and subsequently served its complaint in this proceeding upon the respondents named in the caption hereof except Edward Sassoon and H. P. Haslehurst (upon whom service of the complaint was not made), charging them with the use of unfair methods of competition and unfair :Lnd deceptive acts and practices in commerce in violation of the provisions of said Act. After the issuance of said complaint and the filing of respondents' answers thereto a hearing was held bcfOl'c a hearing examiner of the Commission theretofore duly designat ed by it, at which testimony and other evidence, ine)1HJing two written stipnlations as to the facts entered into by and bet\yeen counsel supporting the complaint md counsel for tbe respondents, in support 01' and in opposition to the allegations of the complaint were introduced. Such testimony and other evidence were duly rec orde,d and filed in the offce of Ole Commission, and the hearing examiner, on Febl'ary 25 , 1 D53 , filed his initial decision. Within tbe time permitted by the Connnission s Rules of Practice. counsel supporting the complaint filed w.ith the Commission an appeal fl'm said initial decision ancl thereafter this proceeding came on for final consideration by the Commission upon the record, including briefs of counsel in support of and in opposition to the said appeal (oral argument not l1aving been requested) ; and the Commission hflving entered its order granting in lJ'd't and denying in part said appeal and being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes ihe following findings as to the facts, conclusion dnnyn therefrom, and order, the same to be in lieu of theini1ial decision of tlle hearing esaminer. YJNDINGS AS TO THE Y,\Cls AGRAPl- 1. Hespcl1dent Pamco, Inc., is a corporation organized laws of the State of California. and existilw under and bv virtue of thf with its office and principal plaec of business lo( ated at 510 Dattery St.red, San Fraucisco, Ca lii'01nia. Hl'spondents Arthnr Foyer awl .Tulius Foyer, whose address is the same as Olat of the corporate respondent, are president and vice president and treasurer, respectively, of said respondcut, anrl acting as such offcers, formuhtte, direct, and control the policies, acts. and practices of said corporation. Respondents Ed,vard Sassoon and 1-1. P. Haslehurst were at one time second yice president and secretary, respectively, of the corporate respolHltml : howcwer, t their connection with said respondent ceased prior to the commel1cement of this proc.ceding and, they not Jl:ning been served SEWING MACHINE :FACTORS 709 707 Findings in this proceeding and no proof having been oifered with respect to them, the complaint wiJJ be dismissed as to them. Hespondents Max Chissik and Arthur Foyer are copartners doing business under the name of Sewing Machine Factors, with their offce and principal place of business located at 366 Golden Gate Avenue San Francisco, California.

PAR. 2. Ilespondent Pameo, Inc., purchases sewing machine heads from various firms in apan and imports the same into the State of California. The sewing machine heads so imported were and are sold and delivered within the State of California to Max Chissik and Arthur Foyer, copartners doing business as Sewing Machine Factors. The sewing machine heads are processed and assembled into sewing machines by Sewing Machine Factors and the completed sewing machines are then sold to distributors and retailers who in turn seJJ the sewing machines to the purchasing public.

The hearing examiner in his initial decision in this matter concluded that the stipulated facts failed to show that respondent Pamco, Inc., its offcers, and Julius Foyer individually, have committed any unfair or deceptive acts or practices or engaged in any unfair methods of competition in commerce, and dismissed the complaint as to said respondents. Notwithstanding the fact that respondent Arthur Foyer is president of respondent Pam co, Inc., and also a partner in the partnership of Sewing Machine Factors, there is no showing that the relationship between Pamco, Inc., and the partnership is other than that of seller and buyer. The Commission, therefore, agrees with the hearing examiner s conclusion with respect to respondents Pamco Inc., its offcers, and Julius Foyer individually, and the complaint wjJ be dismissed as to them.

PAR. 3. Hespondents Max Chissik and Arthur Foyer, in the course and conduct of their business, caused some of their said sewing machines, when sold, to be transported from their place of business in the State of California to purchasers thereof located in various other States of the United States, and maintain and at ajj times mentioned herein have maintained a course of trade in said products in commerce among and between the various States of the United States. PAR. 4. when the sewing machine heads are received by respondents Max Chissik and Arthur Foyer, the word "Japan" appears on the back of the vertical arm. Before the heads are sold to the purchasing public as a part of a complete sewing machine, it is necessary to attach a motor to the head, in the process of which the aforesaid word is covered by the motor so that it is not visible. In some instances, said heads, when received by said respondents, are marked with a medallion, placed on the front of the vertical arm, upon which the word Findings 50 F. T.

J apan" appears. This word is, however, so small and indistinct that it does not constitute adequate notice to the public that the heads are imported. Furthermore, said medaDion can be readily removed and when the medaDion is so removed, no visible mark of origin appears on the machine.

Said respondents place no other mark on the imported sewing machine heads or on the complete sewing machines, of which said heads are a part, showing foreign origin, or otherwise inform the public that the heads are of foreign origin, before they arc offered for sale to the public.

PAR. 5. IVhen articles of merchandise, including sewing machines are exhibited and offered for sale by retailers to the purchasing publ i" and such articles are not marked or are not adequately marked showing that they are of foreign origin, or if marked and the markings are covered or otherwise concealed, such purchasing public understands and believes such articles to be whoDy of domestic origin. PAR. 6. The respondents Max Chissik and Arthur Foyer use the word "Champion" as a trade or brand name for their sewing machine heads and complete sewing machines, which word is printed or embossed on the front horizontal arm of the head in large, eonspicuolls letters, and use said trade or brand name in their advertisting matter. The word "Champion" is the name or part of the name of, or used as a trade name, mark, or brand by, one or more business organi ations transacting and doing busjnes in the United States and which are and have been wed and favorably known to the purchasing public and wed and long established in various industries. PAR. 7. A number of the witnesses who testified in this proceeding said that they associated the word "Champion" with wen and favorably known American firms or products with which the name "Champion" has long been associated. For example, one witness testified that he associated the word with "Champion spark plug or Studebaker Champion or something like that." Another testified that he would connect a machine bearing the word "Champion" with a standard trade name of American built products. StiD another testified that she usuaDy made purchases by the brand name of the products and that it was her impression that "the name 'Champion' implies that it is an American name. It is associated with an American expression American products, or trade name like Champion spark plugs or IVheaties 'the Food of Champions' and so on." She would assume that a sewing machine with the word "Champion" on it was made by one of the American firms using said word as a trade name. Based upon the record as a whole, the Commission eoneJudes and therefore, finds that by using the word "Champion" as a trade or SEWING MACHINE FACTORS 707 Findings brand name for their sewing machines in the manner hereinabove found, respondents Max Chissik and Arthur Foyer have represented contrary to fact, that their sewing machines are manufactured by, or connected in some way with, the American firm or firms with which the name "champion" has long been associated. Said respondents use of the word "Champion" has also enhanced the erroneous and mistaken belief on the part of the purchasing public that the sewing machines are of domestic origin.

PAR. 8. There are among the members of the purchasing public a substantial number who have a decided preference for products manufactured in the United States over products manufactured in whole or in part in foreign countries, and this preference extends to sewing machines. There are also many members of the purchasing public who prefer to purchase products, including sewing machines which are manufactured by, or connected in some way with, weJJ and favorably known American firms rather than products manufactured by a firm or firms which are not we1J known to the purchasing public. PAR. 9. The respondents Max Chissik and Arthur Foyer, in their advertising, make the following statements (Picturization of a portable electric sewing machine) $169.

Unconditionally Guaranteed By and through the use of the aforementioned statements, respondents represented, directly or by implication, that the portable electric sewing machines were customarily sold to members of the purchasing public for the sum of $169.95.

The aforesaid representations were false, misleading, and deceptive. In truth and in fact, the sum of $169. 95 is greatly in excess of the amount usually and ordinarily charged for the said sewing machines by respondents and is a wholly fictitious price. The use of the words UneonditionaJJy Guaranteed" in said advertising, without disclosing the terms and conditions of the guarantee, is confusing and misleading and constitutes an unfair and deceptive act and practice. PAR. 10. The use by respondents Max Chissik and Arthur Foyer of the foregoing false, misleading, and deceptive statements and representations has had, and now has, the tendency and capacity to mislead or deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that ajj such statements and representations were and are true and to induce the purchase of substantial quantities of said machines because of such erroneous and mistakel belief.

PAR. 11. Respondents Max Chissik and Arthur Foyer, by supplying the complete sewing machines, of which the aforesaid imported head .' .bvJ;Ital TRADE COMMISSION DECISIO::S Conclusion 50 F. T. C.

are a part, to dealers, provide said dealers a means and instrumentality whereby they may mislead and deceive the purchasing public as to the place of origin of said heads and as to the manufacturer thereof. PAR. 12. Hespondents Max Chissik and Arthur Foyer, in the course and conduct Of their business, are in substantial competition in commerce with the makers and sellers of domestic sewingmllchines and also the sellers of imported sewing machines, some of whom adequately disclose to the public that their machines or parts thereof are of foreign ongm.

PAR. 13. The failure of respondents Max Chissik and Arthur Foyer to adequately disclose on the sewing machine heads, in such a manuer that it cannot be readily removed, hidden, or ouliterated, that they are manufactured in Japan, and also the use of the trade or urand name "Champion " have the tendency and capacity to lead members of the purchasing puulic into the erroneous and mistaken belief that their said product is of domestic origin and is manufactured by, or connected in some way with, weJJ and favorably known American firms with which the word "Champion" has long been associated, and to induce members of the purchasing public to purchase sewing machines of which said heads are a part uecause of this elToneous and mistaken belief.

As a result thereof, substantial trade in commerce has been unfairly diverted to respondents M tx Chissik and Arthur Foyer from their competitors and substantial injury has been and is being done to COllpetition in commerce.

TCL1TSION Hespondents Max Chissik and Arthur Foyer. copartners doing business as Sewing :Machinc Factors, purchase sewing machine heads which have been imported from Japan. In the assembling and processing of the imported sewing machine heads into completed sewing machines, whatever markings there were on the heads showing the country of origin are, for ajj practical purposes, effectively concealed from the ordinary user or purchaser. These respondents use the word Champion" as a trade or brand name for their eOllpleted sewing naehines. The word "Champion" appears on the front horizontal \rm of the sewing machines and is used in the respondents' advertising iterature. As a result of the :f"failure to adequately disclose on the owing machine heads that they are imported from Japan and the use f the brand or trade name "Champion " purchasers and prospective lirehasers are led to believe that the sewing machines are of domestic 'igin, and are manufactured by, or connected in some way with, weJJ td favorably known American firms with which the word "Cham- SEWING MACHINE FACTORS 713 707 Order pion" has long been associated. Many members of the purelmsing public have a decided preference for sewing machines manufactured in the United States over sewing machines manufactured in whole or in part in Japan. There are also many persons who prefer to purchase sewing machines which are manufactured by, or connected jn some way with, weJJ and favorably known American firms rather than sewing machines manufactured hy a firm or finns which are not weJJ known to the purchasing public. These respondents have also made false, misleading, and deceptive statements and representations in their advertising of their sewing machines. The Commission, therefore, concludes that the ads and practices the respondents Max Chissik and Arthur Foyer, doing business as Sewing Machine Factors, as hereinabovc found, are all to the prejudiec and injury of the public and of said respondents' competitors and constitute unfair and deceptive acts and practices and unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Ad.

ORDER It i8 ordc1'd That respondents Max Chissik and Arthur Foyer individually and as copartners doing business as Sewing Machine Factors, or doing business under any other name, and tlJeir representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, or distribution of sewing machine heads or sewing machines in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith ecase and desist from:

1. Offering for sale, seJJing, or distributing foreign-made sewing machine heads, or sewing machines of which foreign-made heads are a part, without clearly and conspicuously disclosing on the heads the country of origin then,of, in such a manner that it cannot readily be hidden or obliterated.

2. lising the word "champion" or any simulation thereof as a brand or trade name to designate, dcseribe, or refer to t11eir sewing machines or sewing machine heads; or representing, through the use of any other word or in any other manner, that the sewing machines or sewing machine heads are manufadured by anyone other than the actual manufacturer.

3. Hepresenting, directly or by implication, that certain amounts are the prices of their sewing machines when such amounts arc in excess of the prices at ,which their said sewing machines are ordinarily sold in the usual and regular course of business. 714 FEm;RAL TRADE COMMISSION DECISIONS Order 50 :B'. T. C. 4. Representing, directly or by implication, that their sewing machine heads or sewing machines are guaranteed, unless the nature and extent of the guarantee and the manner in which the seller will perform thereunder are clearly and conspicllollsly disclosed. It is further ordend That the complaint be, and it hereby is, dismissed as to respondent Pam co, Inc., and its offcers, and respondents Julius Foyer, .Edward Sassoon, and H. P. l-aslehurst, individuaHy and as offcers of said corporation.

It is further ordered That respondents .Max Chissik and Arthur Foyer shall, within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with the order to cease and desist.

Commissioner Carretta not participating.

, . , INSTITUTE OF APPLIED HYP""OLOGY ET AL. 715 Syllabus IN THE MATTER m' CLARK R. BELLOWS JR., TRADING AS INSTITUTE OF APPLIED HYPNOLOGY, AND CLARK R. BELLOWS, SR. DECISION IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COJIMISSION ACT Feb. 1954 Docket !i14Z. Complaint, Nov. 1955-Decision, "'There two individuals engagccl in the interstate sale and distribution of a correspondence COlll'.se in hYPIlotism, in advertjsing in periodicals and advertisinp; material mailed to prospective purchasers- (a) Represented that hypnotism could be Jearned hy anyone of average intellgence by taking their said course by correspondence, \vhen in fact many persons of a rage or above-average intelligence could not do so ; (b) J, falsely represented that one practicing hypnotism as thus taught would develop \villpov;rer, self-confidence, self-control, conrage, poise, polish, and personal force, and that such a person could overcome an - inferiority complex through hypnotism;

'(e) Falsely represented that through the practice of autosuggestion as taught thereby a person was enabled to remake, rebuild, and reconstruct his life and that through study of th(, course one could become a mental giant; '(d) Represented that said course was not an ordinary mail order course of instruction but consisted of actual extension work in which resident training methods and principles were applied and taught by an experienced faculty, notwithstanding the fact it was an ordinary correspondence course and in no sense extension work;

(e) Represented that hypnotism and aut.osuggestion as thus taught 0; them offered real opportunities for money-making, when in fact they offered little opportunities therefor in excess of some opportunities for spare-time earnings in the entertainment field;

(f) Falsely represented there was a scarcity of, and a big demand for, rypnotists in this country;

,(g) Falsely represented that persons completing their course of instruction were properly qualified to treat numerous specified diseases, habits, and abnormal conditions of the body by hypnotism, includinp; therein diseases and conditions ranging from amnesia, complexes, and constipation, to morphia and other drug habits, stammering, stuttering, and obesity; (h) Represented through the use of the words "Institute faculty, and Institution of learning" in the operation of the business concerned that such business was an institution of higher learning with a staff of competent experienccd, and qualified educatol's offering resident training and instruction in philosophy, art, science, or other subjccts of higher education; Notwithstanding the fact there was no adcquate equipment in the form of classrooms, laboratories, and librarics, nor a competent faclIlty of learned persons for the instruction of resident students in subjects of higher education; they did not operate an institute or institution of learning as, understood hy the geneml puhlic and in the field of education; and the business consisted of sellng for profit a COllrse of instruction in hypnotism, in the con- 716 "FEDERAL TRADE COMMISSION DECISIONS Findings 50 F. T. C.

duct of which said first-named individual was on occasion assisted by the other; and or its abbreviation "Dr." in re- (I) Hepresented through the title "Doctor" ferring to said second individual who had prepared the course that the degree had been conferred upon him by an accrcdited and recognized college or university;

When in fact the title or degree of "Doctor" used hy said individual was' not conferred by any such college, university, or institution of hip;her learning, and was not recognized or accredited by such an institution or by reputahl.c scientists or educators:

Held That such acts and practices constituted unfair and deceptive acts and practices in commerce.

Before llfr. Abner E. Lipscomb hearing examiner. 111'. William L. Pencke for the Commission. DECISION OF THE COJ\BfISSlON Pursuant to Rule XXII of the Commission s Rules of Practice, and as set forth in the Commission s "Decision of the Commission and Order to File Heport of Compliance, dated Febnmry 19, 1934, the initial decision in the instant matter of hearing examiner Abner E. Lipscomb, as set out as follows, became on that dlLte the decision of the Commission.

INITIAL DECISroI- BY ABI-ER E. L1PSCOJ\1D, HEAIUXG EXA II:NEH Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on November 13 , 1933, issued and subsequently served its complaint in this proceeding upon respondents Clark H. BeJJows, Jr., an individual, trading under the name of Institute of Applied Hypnology, and Clark R. BeJJows, Sr., charging them with the use of unfair and dceeptive acts Hnd practices in commerce in violation of the provisions of said Act. On .January 5, 1954 respondents fied their answer admitting ajj the material aJJegatjons of fact set forth in said complaint and waiving aU intervening procedure and further hearing as to the said facts. Thereafter, the proceeding regularly came on for iinal consideration by the above-named hearing examiner theretofore duly designated by the Commission upon said complaint aild answer thereto, and said hearing examiner having duly considered the record herein, finds that this proceeding is in the intcrcst of the public and makes the following findings as to the facts, conclusion drawn therefrom, and ordcr: FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent Clark R. Benco"ys, Jr., is an individual trading under the firm name of Institute of Applied Hypnology; Institute OF' APPLIED HYPNOLOGY ET AL. 717 715 Findings respondent Clark R. BeJJows, Sr., RJI individual, prepares aU adverrespondent Clark R. BeJJows, Jr.tising matter in conjunction with and participates in the net profits of the business of the Institute of offce and place of business ofApplied Hypnology. The principal said respondents is at 120 Central Park South, in the City and State of New York.

, and has been PAR. 2. Respondent Clark R. BeJJows, Jr., is now for more than two years last past, engaged in the sale and distribution the Unitedin commerce between and among the various states of which was preparedStates of a course of instruction in hypnotism and compiled by respondent Clark H. BeJJows, S1', and which is purthe United Statessued by correspondence through the medium of mails. Respondent Clark R. BeUows, J1', causes said course of instruction and other documents to be transported from his said place purchasers thereof located in theof business in New York to the various states of the United States other than the State of New York. PAR. 3. There is now, and has been at all times hereinafter meninstruction so sold and distrib- tioned, a course of trade in said course of uted by respondents in commerce between the various states of the United States.

PAll. 4. In the course and conduct of their business, as aforesaid respondents, by means of advertisements placed in magazines having a national circulation and circulars and other advertising material mailed to purclmsers and prospective purchasers of their said course of instruction, have made and are making representations w"th respect to the merit of said course and the powers, achievements and accomplishments in the field of hypnotism and autosuggestion which may be attained and acquired through the study and completion of said course of instruction, in substance as follows: 1. That hypnotism can be learned by anyone of average intelligence by taking respondents' COllrse by correspondence. 2. That one practicing hypnotism as taught by said course will develop wiJJ power, self-confidence, self-control, courage, poise, polish and personal force and can overcome an inferiority complex through hypnotism.

3. That, through the practice of autosuggestion as taught by means of said course, a person is enabled to remake, rebuild and reconstruct his life.

4. That, by studying respondents' course, one can become a mental giant.

5. That said course is not an ordinary mail order course of instruction but consists of actual extension work in which resident training methods and principles are applied and tanght by an experienced 718 FEDERAL TRADE COMMISSIOJ\ DECISIOXS Findings 50 F. T. C.

6. That hypnotism and autosuggestion, as taught by respondents offer real opportunities for money-making.

7. That there is a scarcity of, and a big demand for, hypnotists in this country.

8. That persons completing respondents' course of instruction are properly qualified to treat diseases, habits and abnormal conditions of the human body by hypnotism and that such diseases or conditions which they can cure, or substantia1Jy benefit, include: amnesia (Joss of memory), complexes (almost aU types), constipation, contraetures and paralyses resulting from gross lesion of the brain, dyspepsia enuresis nocturnia (bed-wetting), epilepsy, excesses (alcoholism, tobaeeo), facial and other twitchings, hysterias (almost aU types), insomnia, masturbation, menstrual irregularities, morphia and other drug habits, nail-biting, neuralgia, neurasthenia, pain used as anesthesia in operations and post operative (including labor pains), stammering, stuttering and obesity.

PAR. 5. The aforesaid claims, statements and representations are false, deceptive and misleading. In truth and in fact: 1. l\iany persons of average or above-average inteUigence cannot learn hypnotism through respondents' correspondence course. 2. The practice of hypnotism, as taught by respondents' course, wiJ not develop wiu power, self-confidence, self-control, courage, poise polish, personal force or overcome an inferiority complex. 3. The practice of autosuggestion, as taught by said course, wiJ not enable a person to remake, rebuild, or reconstruct his life. 4. The study of respondents' course wiu not increase one s mental powers to any significant degree.

5. Respondents' course of instruction is an ordinary correspondence course and is in no sense extension work.

6. Hypnotism and autosuggestion, as taught by respondents' course offer little opportunity for money-making in excess of some opportunities for spare-time earnings in the entertainment field. 7. There is neitller a big demand for, nor a scarcity of, hypnotists in this country.

8. Persons completing respondents' course are not qualified to treat diseases, habits and abnormal conditions of the human body by hypnotism and cannot cure or substantially benefit or change any of the diseases, conditions or habits enumerated in Paragraph Four (8). PAR. 6. Respondent Clark R. BeJJows, Jr., operates his business under the name of Institute of Applied Hypnology and makes frequent reference in his advertising matter to "Institute faculty, Institution of learning," and the title "Doctor" or its abbreviation "Dr. in referring to respondent Clark R. DeJJows, Sr. INSTITUTE OF APPLIED HYPNOLOGY ET AL. 719 715 Order Through the use of the words "Institute faculty" and "Institution of learning," respondents represent that the business is an institution of higher learning with a staff of competent, experienced and qualified educators offering resident training and instruction in philosophy, art, science or other subjects of higher education. The title or degree of "Doctor" used by respondent Clark H. BeJJows, Sr., implies that the degree "Doctor" has been conferred upon said respondent by an accredited and recognized college or university. Said representations are false and misleading. In truth and in fact respondents do not operate an institute or institution of learning, as that term is understood by the general public and in the field of education. There is no adequate equipment in the form of classrooms laboratories, and libraries, nor a competent faculty of learned persons for the instruction of resident students in subjects of higher education. Respondent Clark R. BeJJows, Jr., is engaged in the business of seJJing for profit a course of instruction in hypnotism, and on occasion is assisted by respondent Clark R. BeJJows, Sr., who prepared said course. The title or degree of doctor used by said respondent Clark H. BeJJows, Sr., was not issued or conferred by any recognized eoJJege university or institution of higher learning and is not recognized or accredited by such institutions or by reputable scientists or educators. PAR. 7. The use by respondents of the false, misleading and deceptive statements and representations aforesaid has the tendency and capacity to confuse, mislead and deceive members of the public into the belief that such statements and representatio!l are true and to induce them to purchase respondents' course of instruction in said commerce on account thereof.

CONCLUSION The aforesaid acts and practices of respondents, as herein found, are ajj to the prejudice and injury of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER It is ordered That the respondent Clark R. DeJJows, Jr., trading as Institute of Applied Hypnology, or trading under any other name, the respondent Clark R. Bellows, Sr., and their agents, representatives and employees, directly or through any corporate or other device, in connection with the oflering for sale, sale or distribution in commerce as "commerce" is defined in the Federal Trade Commission Act, of their courses of instruction in hypnotism, do forthwith cease and desist from:

Order "OF. '!'. C.

1. Representing, directly or by implication: (a) That anyone of average inteUigence can learn hypnotism by taking respondents' course of instruction by correspondence; (b) That a person practicing hypnotism, as taught by respondents course, wiu develop wiUpower, self-confidence, self-control, courage poise, polish or personal force, or can overcome an inferiority complex;

(e) That a person practicing autosuggestion, as taught by respondents' course, is enabled to remake, rebuild or reconstruct his life; (d) That by studying respondents' course one can become a mental O"iant.

(e) That respondents' course is not a mail order course or is an extension course applying resident training methods and principles; (f) That there is a big demand for, or a scarcity of, hypnotists in this country;

(g) That persons completing respondents' course are qualified to treat diseases, habits or abnormal conditions of the human body by hypnotism or can cure or substantially benefit amnesia, complexes constipation, eontraetures or paralyses resulting from gross lesion of the brain, dyspepsia, enuresis nocturnia, epilepsy, excesses, facial and other twitchings, hysterias, insomnia, masturbation, menstrual irregularities, morphia or other drug habits, nail-biting, neuralgia, neurasthenia, pains, stammering, stuttering or obesity; 2. Misrepresenting the money-making opportunities of persons completing respondents' course;

3. Using the word "Institute" in t.their trade name or otherwise representing that their business is other than a commercial enterprise ()pera ted for profit.

4. Using the words "faculty, institution of learning" or similar words or phrases representing that. their business is other than a commercial enterprise operated for profit;

5. Using the title "doctor" or any abbreviation thereof to designate any person identified with respondents' enterprises unless such t.title has been duly conferred by an accredited educational institution of higher learning.

onder TO FILE REPORT 01 COMPLIANCE It is ordered That the respondents herein shall, within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with the order to cease and desist (as required by said declaratory decision and order of February 19, 1954). , , HAIR & SCALP CLINIC, INC., ET AL. 721 Decision IN THE MATTER OF HAIR & SCALP CLINIC, INC., ET AL.

DECISION IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT eb. 195.1 Docket Ii Ii. Complaint, May 195. Deeision, /i' Where a c01')oration and its two offcers, engaged in the sale and distribution of various cosrnetie and medicinal preparations for external use in the treatment ot' conditions of the hair and scalp designated as "Dioxynol" with various nUlnerieal and other similar designations such HS " #'20" #57" Spec. #HD" , and as "Special Formula Shampoo Hydrosol" (a detergent), and "Sehol" (a hair dressing creanl oil) ; in advertising, fJrincipally in nev.rspapers-- (a) Hepresented falsely that through the use of said preparations in treatmems in their vlace of business by their operators, and by purchasers in their homes, baldness and hail' loss would lJe vrevented and overcome. (b) Fnls"l,' rej11'i'oented that the hair would take on new life, that new hair and stl1uted hail' would he induceu to grow, that itching of the scalp, dandruff, exeessive dryness and oijiness of the "ealp would he permanently anel over- elirninated, and that other scalp disorders \vauld be prevented come, and that an individual \vauld be able to l1Hintain a thick, healthy growth of hall';

(c) Falsely represented that their said preparations were newly diseovered seientifie formulas;

(d) Represented falsely, through the use of the word "Trichologist", and hy other means in their said advertising, that one of the aforesaid officers and certain of their employees had had compel!:nt training in dermatology and other branches of n1f dicine having to do whh the diagnosis and tl'eatInent of scalp disorders affee!:ng the hair:

Held That such acts and practices, lUHler the circumstances set forth, were an to the pl'ejuc1iee of the pul1lie and constitute(J unfair and deceptive ads and practices in commerce.

Before 1111'. Wiliam L. Pack hearing examiner. Mr. J oseph Callaway for the Commission. Mr. Clarence AI. Dinkins and Mr. Jacob Gordon of \Vashington D. for respondents.

JhCISroX OF THE COMJ\IISSION Pursmmt to Rule XXII of the Commission s Rules of Practice and as set forth in the Commission s "Decision of the Commission and Order to File Jleport of Compliance, dated February 21, 1054 the initial decision in the instant matter of hearing examiner TVilliam L. Pack, as set out as follows, became on that date the decision of the Commission.

4U3J4 57--- - 47 Findings 50 F. T. C.

INITIAL DECISION BY WILLIAM L. PACK, HEARING EXAMINER Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on May 6, 1953, issued and subsequently served its complaint in this proceeding upon the respondents named in the caption hereof, charging them with the use of unfair and deceptive acts and practices in commerce in violation of the provisions of that Act. After the fiing by respondents of their answer to the complaint a stipulation was entered into whereby it was stipulated and agreed that a statement of facts executed by counsel supporting the complaint and counsel for respondents might be taken as the facts in this proceeding and in lieu of evidence in support of and in opposition to the charges stated in the complaint, and that the hearing examiner might proceed upon such statement of facts to make his initial decision, stating his findings as to the facts, including inferences which he might draw from the stipulated facts, and his conclusion based thereon and enter his order disposing of the proceeding without the filing of proposed findings and conclusions. Hespondents, however, reserved the right to present oral argument. It was further stipulated that if the proceeding should come before the Commission upon appeal from the initial decision of the hearing examiner or by review upon the Commission s own motion, the Commission might, if it so desired, set aside the stipulation and remand the case to the hearing examiner for further proceedings under the complaint. Thereafter, a hearing was held before the hearing examiner, theretofore duly designated by the Commission, at which counsel were heard in oral argument and certain documentary evidence made a part of the record. Subsequently, the proceeding regularly came on for final consideration by the hearing examiner upon the complaint, answer, stipulation (the stipulation having been approved by the hearing examiner), documentary evidence and oral argument of counsel, and the hearing examiner, after duly onsidering the matter, finds that this proceeding is in the interest of the public and makes the following findings as to the facts, conclusion drawn therefrom, and order.

FINDINGS AS TO THE l"ACTS PARAGRAPH 1. Respondent Hair & Scalp Clinic, Inc., is a corporation organized and doing business under and by virtue of the laws of the State of Delaware, with its offce and principal place of business located at 606 Bond Duilding, Fourteenth Street and New York Avenue NvV., Washington, D. C.

The individual respondents Ray W. Plasterer and Virginia E. Plasterer are respectively the president and secretary of the corporate HAIR & SCALP CLIT\lC , INC. , ET AL. 723 721 Findings respondent. The individuals have their offce at the same address as the corporate respondent and llt ajj times hereinafter mentioned have formulated, directed, and controlled its acts, policies, and business affairs.

PAR. 2. Respondents are now and for the past several years have been engaged in the business of seJJing and distributing various cosmetic and medicinal preparations for external use in the treatment of conditions of the hair and scalp, including sales of such preparations through use of them in connection with treatments administered in the offce of respondents. Hespondents have their preparations compounded for them by others in the District of Columbia, and cause the preparations to be transported from the place of their manufacture to respondents' offce in the District of Columbia and also from respondents' offce in the District of Columbia to individual purchasers of the preparations located in the District of Columbia and in various States of the United St.ates. Hespondents maintain and at ajj times mentioned herein have maintained a substantial course of trade in their preparations in commerce in the District of Columbia and between the District of Columbia and various States of the United States.

PAR. 3. Respondents, through advertisements, invite persons to come to their place or business for diagnosis and treatment, whereupon certain series of treatments are recommended. If such treatments are agreed to, certain of respondents' cosrY1etie and medicinal preparations arc sold to such persons and used II the process of such treatments. Respondents alsoseJJ to those induced to visit their offce by their advertisements, certain of their preparations for home use in the treatment of the hair and scalp, and in many instances ship the preparations to such pm'sons at their homes in the District of Columbia and in various States of the Upited States. PAn. 4. In the e011rse and cond nct of their business, respondents have disseminated and arc now disseminating and have caused and ate now causing the dissemination of advertisements concerning their preparations by the United States mails and by various other means in commerce, as "commerce" is defined in the Federal Trade Commission Act, for the purpose of indneing and which are likely to induce directly or indirectly, the pnrehase of their preparations; and respondents have also disseminated and are now disseminating and have caused and are now causing the dissemimltion of advertisements concenting their preparations by various means for the purpose of inducing and which are likely to induce, directly or indirectly, the purchase of their preparations in commerce, as "commerce" is defined in the Federal Trade Commission Act.

_____ _ ___ __ Findings 50 F. T. C.

Among and typical of the statements and representations contained in such advertisements, principally in newspapers, disseminated and caused to be disseminated as hereinabove set forth, until the date of August 1, 1953, are the following:

Stop Hair Fall Excessive hair fall, dandruff, itching and dry lifeless hair are the first symptoms of approaching baldness, Hair and Scalp Clinic s thorough pleasant treatment, adapted to the needs of each scalp problem, penetrates into the scalp, removes the causes of these symptoms, thereby permitting stunted hair to grow and obtain nourishment from a healthy scalp. If you are accepted for trcatmcnt, modern scientific methods wil eliminate the cause of your hair loss, your hair wil thickcn, your scalp wil feel healthy and alive. The appearance of your hair wil improve and you will learn how to keep it healthy and strong.

Your hair wil fall out as IOIlP; as you neglect it . . . as long as you ignore he canRe of hail' loss. It couhl be infectlo1l8 dandruff or anyone of many scalp disorders. That's why we urge you to consult us to determine the exact means to end your hair worries.

Ray Plasterer says:

My ncwly discovered scientific formula may prevent future loss of hair. Your hair and scalp problems are our life s work and our new discovcries are at your disposal.

Consult Ray W. Plasterer Washington s Leading TricllOlogist.

If your case is accepted Hesults arc p;uarantced.

PAIL 5. The formulas for respondents' preparations are as follows: Dio:cynol Oxyq uinoline sulfa te- y, oz esnrcj n - - - - - - - - - - - - - - 1 oz. Glycerine ---- 2 oz. 'Vater q. S_--- __----_n--_-- 32 oz. #ZIi Oleorescin Capsicum-- - - -- 2 gms. Neobase B. W. Co 100 gms. #57 Eurosol__ - - 10 CC Salicylic acld- 10 gnl. Precipitated sulfur -- n---- 20 gil. Anhydrous lanolin - n - --- 50 gil. Neobase B. W. Co-- 500 gil. #S07 Salicylic acid- ------- 4% Precivitated sulful'____-- 11 Anhydrous lanolin_ --------------- G% Keobase D. W. Co_- --- 100% ______ _ . .. HAIR & SCALP CLINIC, INC., ET AL. 725 721 Findings #40 PixaboI_---_- - 4 drams Eurosol______-- --- 4 drams Salicylic acid_-- ---- 4 grams ------- 12 oz. per 1 gal. Glycerine_ Alkolave q. s-------- ----- 1 qt. #70 Tinc. cinchona- 60 CC G ly eerine - 60 CO Alkola ve- - - - - - - - - -- - - - -- - - - - 500 CC VVater q. s---- 000 CC Spec. #99 Tine. cantharides_- - 2 drams Resorcin - -- 2 drams G lycerine------- --------- 2 drams Equal parts bay rum and alcohol to make quart. Tinc. cantharides-- ----- 20 CC Tine. eapsicum------ --- 20 70% alcohol q. s----- ------ 1 000 CO Special #100 Boric acid- ---- 1 dram Zinc oxide---- ---- 1 dram Stareh_---- ---- 1 dram Pllenol- -- 112 Neobase B. VV. Co. q. s_ --- 2 oz. Glycerine- 2 drams Resorcin- 4 drams Tine. eantharidcs- 4 drams Alcohol q. s._--- 32 ft. oz. #11 1 oz. Oxyquinolinc sulfa tc- Tine. can tl1arides--- --------- 1 oz. Alcohol q. s._----- 1 gal. lh% Salicylic acid_- -- Also "Special Formula Shampoo " said to be a coconut oil shampoo Hydrosol " a detergent, and "Sebol " a hair dressing cream oil PAR. 6. Through the use of the aforestLid sttltements and representations and others similar thereto, respondents have represented directly or by implication, that by the use of such preparations, methods, and treatments in their place of business by their operators and by purchasers of such preparations in their homes, baldness and lmir loss wiJ be prevented and overcome; that the hair wiJJ take on new induced to grow; that life; that new hair and stunted hair wiu be itching of the scalp, dandruff, excessive dryness and oiliness of the Findings 50 F. T. C.

cscalp wiJ be permanently eliminated; and that other scalp disorders wiJJ be prevented and overcome; that an individual wiJJ be able to maintain a thick healthy growth of hair; that respondents' preparations are newly discovered scientific formulas. By referring to respondent Ray VV. Plasterer as a "Triehologist " and by other means in such advertising respondents have represented, directly or by implication, that respondent Ray \iV. Plasterer and certain of respondents' employees have had competent training in dermatology and other branches of medicine having to do with the diagnosis and treatment of scalp disorders afI'acting the hair.

PAR. 7. These representations are erroneous and misleading. Regardless of the exact formulas or methods of application and whether used alone or in conjunction with massage, heat, combing, brushing, shampooing, or any other manner of treatment of the hair and scalp, respondents' preparations wiJJ not prevent or overcome baldness or hair loss, or correct these conditions, or have any favorable influence on their underlying causes; wiJJ not cause the hair to take on new life; wiJJ not induce the growth of new hair or stunted hair; wiJJ not permanently eliminate itching of the scalp, dandrufl' or dryness or oiliness of the scalp or prevent, correct, or overcome any other disorder of the adult scalp. Regardless of the formulas or however used, the preparations wiJj not cause an indi vidual to maintain a thick or healthy growth of hair. Respondents' formulas or preparations are not new or the result of new discoveries. N either respondent Hay W. Plasterer nor any of respondents' employees has undergone competent training in dermatology or any other branch of medicine pertaining to diagnosis or treatment of scalp disorders affecting the hair and respondents are not operating an institution for the diagnosis and treatment of diseases of the scalp by dermatologists. PAR. 8. The complaint also raises an issue as to the corporate mune Hair & Scalp Clinic, Inc., charging that through the use of the word "Clinic" in the name respondents "have represented directly and by implication, contrary to the fact, that they arc operating an institution for the diagnosis and treatment of diseases of the scalp by dermatologists." The issue thus presents the question of the meaning of the word clinic.

Among the definitions of the word found in 'Webster s New International Dictionary, SeconcJ Edition, is the following: "An institution, usually connected with a school, court, or settlement, in which concrete cases or problems of a special type are studied, and expert advice or treatment given; as, a vocational, child-guidance, OT DSYchiatric clinic." The record also indicates that during recent years the use of the word clinic has broadened considerably, such expressions HAIR & SCALP CLINIC , INC. , ET AL. 727 721 Findings as "housing clinic child welfare clinic marketing clinic sales clinic baseball clinic " etc., being encountered frequently in modernday language.

In view of the dictionary definition quoted above and the rather common use of the word to refer to organizations and activities having no connection with medical science, it is concluded that the use of the word in respondents' corporate name is incapable of misleading any substantial portion of thc public, and that this charge in the complaint has not been sustained.

Substantia! amounts (a total of some $50 000 during the past six years) have been expended by respondents in advertising the corporate name, and obviously they should not be deprived of its use except upon clearly adequate grounds. Such grounds appear to be lacking here. In its recent decision in the ease of Country Tweeds Incorporated, Docket No. 5957, issued November 25, 1953, the Commission recognized that trade names are valuable business assets and should not be prohibited unless such action is clearly necessary for the protection of the public.

PAR. 9. The record indicates that the representations ehaJJenged by the complaint have already been diseontinucd by respondents (except the use of the corporate name). It is urged by counsel for respondents that there is no likelihood that the representations wiJJ be resumed in the future, and that therefore the proceeding should be dismissed for want of present public interest. It appears, however that this matter has, in eril:5t, already been determined by the Commission and adversely to respondents' contention the Commission having recently declined to permit respondents to dispose of the proceeding by the execution of an informal stipulation and agreement to cease and desist. The grounds urged by respondents at that time in support of their application to dispose of the ease by stipulation being essentially the same as those now urged in support of their contention that the complaint should be dismissed, it is concluded that the Commission has already determined that the proceeding should not be dismissed but should proceed to final decision on the merits.

PAR. 10. The use by respondents of the erroneous and misleading representations referred to above has the tendency and capacity to mislead and deceive a substantial portion of the public with respect to respondents' preparations and treatments, and the tendency and capacity to cause such portion of the public to purchase such preparations and treatments as a result of the erroneous and mistaken belief so engendered.

Order 50 I. . T. C. CONCLUSION The acts and practices of the respondents as hereinabove set forth are an to the prejudice of the public, and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

onder It is ordered That the respondents, Hair & Scalp Clinic, Inc., a corporation, and its offcers, and Hay "V. Plasterer and Virginia E. Plasterer, individually and as offcers of said corporation, and respondents representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale or sale of treatments of the hair and scalp in which the various cosmetic and medicinal preparations set out in the findings herein are used; or in connection with the offering for sale, sale or distribution of the various cosmetic and mcdieinal preparations set out in the findings herein for use in the treatment of conditions of the hair and scalp, or any other preparations of substantially similar composition or possessing substantially similar properties, do forthwith cease and desist from: I. Disseminating or causing to be disseminated by means of the United States mails or by any means in commerce, as "commerce" is defined in the Federal Trade Commission Act, any advertisement which represents, directly or by implication: (a) That treatments of the hair or scalp by respondents or their mployces, in which the various cosmetic and medicinal preparations set forth in the findings are used, or in which any other preparations of substantially similar composition or posscssing substantially similar properties are used, or that the usc of said preparations by purchasers in their homes, wiJJ :

(1) Have any effect in preventing or overcoming baldness or loss of hair.

(2) Cause the hair to take on new life.

(3) Induce the growth of new hair or stunted hair. (4) Cause tho permanent elimination of itching of the scalp, dandruff, dryness, or oiliness of the scalp, or prevent or cure other scalp disorders.

(b) That respondents' formulas or prepm'ations or any of them are new or the result of new discoveries.

(e) That respondents or any of their employees have had competent training in dermatology or other branches of medicine pertaining to diagnosis or treatment of scalp disorders affecting the hair, or that respondents or any of their employees are triehologists. HAIR & SCALP CLINIC, INC., ET AL. , L,'; 721 Order II. Disseminating or causing to be disseminated by any means any advertisement for the purpose of inducing or which is likely to induce directly or indirectly, the purchase of said preparations in commerce as "commerce" is defined in the Federal Trade Commission Act, which advertisement contains any representation prohibited in Paragraph I hereof.

ORDER TO FILE Rerort OF COMl'LIANCE It is ordered That the respondents herein shall within sixty (60) days after service upon them of this order, fie with the Commission a report in writing setting forth in detail the manner and form in which they have complied with the order to cease and desist (as required by said declaratory decision and order of February 21, 1954 J. Decision 50 F. T. C.