The Capitol Service, Inc.

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IN THE J\fatter OF THE CAPITOL SERVICE, lng, ET AL.

ORDER ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COl\DnSSIOX ACT Docket 616-4. Complaint, Feb, 195-4-))ecision, Ang. 195- Olc1el' requiring the corporate operator of a rorreslJOnclence COllrse of study for "Cuited States Civil Service examinations find its president-manager in Lansing, 1\ich ., to cease representing- falsely, through postal canis, circulars nnrl other arlyel'tising matter, and statements of sales agents, that they were connected with th U. S. Civil Service Commission and their sales agents were employees thereof; that many thousawls of civil Beniee positions, near their homes and at high starting salaries, were available and guaranteed to students completing the course but that taking: the course was the only way to obhJin a Government job; that purchasers of the course would receive specialized training for specitc positions and were specially selected, among other things.

Before JIr. lVillhnn L. Pac1c hearing examiner. ilfr. William L. Pencke for the Commission. Robbins&' lVechsle1' of Detroit, Mich., for respondents. DECISlO OF 'HIE COThDIISSION 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 Report of Compliance, dated August :J1 , 1954, the initial decision in the instant matter of hearing examiner \Villiam Pack, as set ont as follows, became on that date the decision of the Commission.

INITIAL DEcrsrox TIY 'YILLLUI L. pc\cn: , JIE.\TUXG EX.&.II)ieh The complaint in this matter charges respondents with the use of certain unfair and deceptive acts and practices in violation of the Federal Tmdc Commission Act. After hearings had been held flt which certain evidence in support of and in opposition to the complaint was received, a stipulation of facts "'as entered into by counsel which provided, among other things, that the record might be closed insofar as the reception of evidence was concerned and the case submitted to the hearing examiner for final consideration upon the record as made up to that time including the slipnhtion, the filing of proposed findjngs and conclusions and oral argument being waived. The matter THE CAPITOL SERVICE , INC. , ET AL. 199 19R Decision is therefore now before the hearing examiner for final consideration on the merits.

Respondent The Capitol Service, Inc., is a corporation organized and existing under the laws of the State of Michigan, with its principaj offce and place of business at 2019 South Cedar Street, Lansing, l\liehigan. Respondent Robert Ie. Smith is President and a director of the corporation, and formulates an of its policies and controls and Inanagcs all of its affairs.

Respondents arc engaged in the sale of a course of study or instruction intended for preparing students thereof for examination for certain Civil Service positions in the lTnited States Government, the course being pursued by correspondence through the United States mails. The business is interstate in cJlaracter, the course of study being sold by respondents to numerous persons located in various states of the United States other than :Michigan. Hespondents are thus engaged in commerce as that term is defined in the Federal Trade Commission Act. A mailing address in V ashillgton D. C. was formerly maintained by respondents and much or the advertising inaterial which was distributed among prospective purchasers of the course, of study was mailed from the \Vashington address. The use or this address, however, has been discontinued a,nel now all of t.he business j transacted from Lansing, Michigan In soliciting sales of their course or study respondents use postal cards, circular letters and other a.cvertising material, which is distributed among prospecti,-e purchasers through the mail. Typical of the statements appearing in such advertising material are t,he following:

WANTED:

(l'icturization ::lE 'YOMEK (married or single)of Capitol Dome) Ages 18 to 50 Preparatory Training for CIVIL SERVICr;

xow IS THE GET A U GOVEWOJE:'T JOB TD:IE' 1I1any Tbonsands of Opportunities GOYER:-)lE:''l JOBS )IEN and IVO::lex " AGES 18-50 " Good Steady Pay (To $4479 yearly to start) (To $H79 yearly to start) . . . . . . Decision 51 F. T. C.

HERE IS YOUR Ol'PORTVNI'l' Civil Service positions offer chances for advancement and increased earnings in Grade Pay Raises, Liberal Pensions, Sick Lea\'e with pay and Paid Vacations. Instructions now being given if you qualify. Postmaster Asst. ?lfcat 2nd, 3rd or 4th Class :Mail attached Card Today! Inspector Rural )'Jail Carriers POR Fell I NFOR:\U..'l' IO:\T Cl€rk. pjst Postal Clerks Railway::lau )fail Clerk:; A:\TD FREE LIST OF POSITIOXS Clerk Customs Service Storekeepers Many Jobs High School Education not Govt. Guards Required e. S. Jobs in Foreign Countries The Capitol Service, Inc.

P. O. Box 1537 "Vashin ton 13, D. C.

There are nmv many more than a milion pen;oils employed in the Civil Service 1'0 maintain this enormOllS staff of fc(lcral employees, the civil ser,ice placements have been estimatell to total many tbousands of persons annually. Each year thousands of men and women from every 'salk of life, \vise enough to realize the wonderful opportunities awaiting them, step from insecure, poorly-paid jobs into well-paid, lifetime government positons. A personal appointment is Ilecessary in order to determine what field you may be best qualified in, before competing in your Civil Service Examination. A few days may lapse before a field man ,vil call on you. Check two positions on the reverse side you are interested in, keep this letter and give it to the field man so that he may return it to this offce explaining why you were accepted or rejected.

Select 1 or 2 positions that interest YOll. Perhaps you may have the propel' qualifications. Our field miln \vil help .you when he calls. Positions for "\Vomen! Positions for men! The respective lists of positions set forth under the foregoing headings include various positions in the postal service; positions for meat and live stock inspectors, customs, border and patrol inspectors; storekee.per-gHuger; revenue agent; criminal investigat.or in the foreign service; accountant; social worker; bookkeeping machine operator and a number of service posit.ions of lower grade. questionnaire clistr'ibutec1 to prospective purchasers, entitled Personal Information- , is headed "The information here furnished ,\"i11 aid us in determining best your qualifications so we may help you in your Civil Service career.

On respondents' postal cards, circular letters and other printed material there is prominently c1ispJayed a picturization oT the dome of the United States Capitol.

THE CAPITOL SERVICE , INC., ET AL. 201 198 Decision Through the use of this advertising mat.erial respondents have represented, directly or by implication:

1. That their business is a branch of or is connected with the United States Government or the United States Civil Service Commission. 2. That many thousands of positions are open in the -United States 'Civil Service, including those specifically listed on such postal cards and circular letters.

3. That many thousands of persons are appointed annually, and that thousands of men and 'women change from poorly paid and insecure jobs to well-paid life-time appointmcnts in the United States Civil Service.

1. That the information given on respondents' "PersOJud Informa.tion-7" blank enables them to qualify applicants for Civil Service positions.

5. That it is necessary that applicants be interviewed by respondents' field agents to determine their qualifications for civil service positions, that respondents and their agents are qualified to make such determinations, and t.hllt such positions may be obt.ained t.through respondents ' school.

6. That the starting salaries for the positions listed by respondents are up to $4479 pci' year.

Accompanying respondents' postal cardi!: a return card for use by prospective purchasers in indicating their interest in the course of stuely. Upon receiving this retnll1 postal care1responc1ents have their sales agents call upon the prospect and endeavor to sell him the COU1'se. In a, substantial number of inst.ances the follmving oral representations have been made to prospects by the saies agents: 1. That The Capitol Service., Inc.., is connected with or is a branch of the ITnited States Civil Service or some other agency of the United States Government.

2. That respondents' sales agents are representatives or employees of the United States Civil Service -or have some connection therewith. 3. That the to.king of respondents' course of study is the only way to obtain a Government job.

4. That completion of respondents' course of study assures students of positions in the Unjtccl States Civil Service or makes them eligible for appointment to such positions.

5. That purchasers of the course ,, ould receive special.lized training for specific positions.

6. That prospective purchasers of respondents' course of study are ,especially selected.

202 FEDERAL TRADE CO:vl\lISSIOK DECISIONS Decision 51 F. T. C.

7. That enrollees may obtain employment at or Ileal' their place of residence.

8. That enrollment contra,ds may be caneened by enrolleE'B at any time they desire to do so.

These representations made through respondents' printed advertising material or orally through their sales agents are false and misleading. Actually, neither respondents nor any of their agents are connected in any manller 'whatever with the United States Civil Service or any other agency of the United States Government. :Most of the positions listed in respondents' advertising material as being available arc not open to applicants generally, but ate either restricted to persons of veteran status or require special physical and educational qualifications and practical experien e. Positions in the postal service are restricted to persons living within the area of the particular post offce. Positions in the Customs Service are restricted to men and most of the positions are open to veterans only. Positions in the Im migration, Border, Port and Patrol Services are restncted to veterans and require special training. 1\ a examination has been announced for the position at storekeeper gauger tor a number of years. Examinations for the position of Verifier, Opener and Packer and Forest and Field Clerk have not been announced for many years. The representation that many thousands are appointed to Civil Service positions every year is highly exaggerated.

It is unnecessary that persons desiring to prepare for Civil Service examinations be. interviewed by respondents' sales agents in order to enable them to do so. Applicants for Civil Service examinations arc not required to take respondents' course of study in order to qualify for such examinations, nor does completion of such course make applicants eligible for Civil Service exmninations or assure them positions in Civil Service. Generany speaking, the starting salaries for the positions Ested by respondents are not as high as those stated and implied. Respondents do not oirer specialized training for specific positions but sell only one counie of study, this course being intended only to prepare students for basic Civil Service examinations. Students or enrollees are not especially selected by respondents; on the contrary, it is respondents: practice to accept all persons willing and able to pay the purchase price of the course. Respondents are unable to obtain positions for their students in localities selected by the student. Enrollment contracts are not subject to cancellation, respondents usuany demanding payment of the full purchase price ot the course regarclless of whether t11e course is completed by the stuclent. THE CAPITOL SERVICE, INC., ET AL. 203 198 Order Hespondents' former practice of mailing advertising material from an address in 'Vashington, D. C. , \Vas also misleading in that it furthered the impression of prospective students that respondents were connected with the United States Civil Service Commission or some other agency of the United States Government. It further appears that while the oral misrepresentations of respondents: sales agents referred to above were lnacle during the regular ,course of their employment, such representations were made without the knowledge, consent or authority of respondents; that persons applying to respondents for employ1nent as sales agents are investigated to determine their fitness for such employment; that all sales agents employed by respondents are required to enter into a written contract \\"which includes, among other things, specific provisions with respect to misrepresentations; and that when it is found that sales agents have been guilty of misrepresentations in the sale or attempted sale of the course of study, such agents are discharged by repondents. The complaint also raises the issue of the use by respondents on their advertising material of the picturization of the dome of the United States Capitol It appears from the testimony that the nse of the picture serves to further the impression of prospective purchasers of the course that there is some connection between respondents and the LTnited States Government. It is therefore concluded that the picture as presently used is misleacbng. 110weve1', an absolute prohibition against the use of the picture does not appeal' to be ,va-rranted. An that \Vould seem to be necessary to prevent sneh erroneous impression is that where the picture is used, it be accompanied by words clearly stating that respondents' business is a private '::correspondence school.

CONCL 17SIONS The proceeding is in the public interest. The acts and practices of respondents as set forth above have the tendency and capacity t.o mislead and deceive a substantial portion of the public with respect to respondents and their course of study, and the tendency and capacty to cause such members of the public to purchase respondents course of study as a result of the erroneous and mistaken belief so engendered. Such acts and practices are to the prejudice of the nublie. and constitute unfair and deceptive acts and practices in coml1eree ',\"within the intent and meaning of the Federal Trade Commission Act.

ORDER It is O1Ylered that respondent The Capitol Service, Inc., a corporalion, and jts officers, and respondent Hobert 1\:. Smith, inc1ivichlally, Order 51 F. T. C.

and respondents' agents, representatives 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 a course of study and instruction intended for preparing students thereof for examination for civil service positions under the lJnited States Government, or any Fdmilar course of study, do forthwith cease and desist from:, 1. Ileprescnting, directly or by implication: (a) That respondents or their school have any connection with the TJnited States Civil Service Commission or any other agency of the United States Government.

(b) That respondents' sales agents are representatives or employees of the -United States Civil Service Commission or any other government agency or have any connection therewith. (c) Tha.t the completion of respondents' course of study assures students of positions in the L'united Stat, cs Civil Service or makes them eligible for appointment to such positions. (d) That it is necessary for pe.rsons seeking Civil Service positions to take respondents' course of study in order to qualify for or obtain such positions.

(e) That any Civil Service position which requires appointees to have veteran s status or special physical, mental, educational or experiental qualifications is generally available. (f) That it is necessary that persons desiring to prepare for civil service examinations be intcrvie"ec1 personally by respondents salesmen.

(g) That vacancies exist in any Civil Service position contra.ry to the fact; or that the number of positions available or vacn.nt in said service or any branch thereof is greater than is actually the fact. (h) That the starting salary for any United States Civil Service position is greater than it is in fact.

(i) That respondents offer any specialized training or sen any course of instruction other than a basic course for lower grade positions.

(j) That positions obtained in the United States Civil Service wii be at or near the place of residence of the employee. (k) That prospective purchasers of respondents' course of instruction arc especially selected.

(I) That enrollees may cancel their enrollment contract at any time without liability for the balance of the purchase price of said course.

THE CAPITOL SERVICE INC. J ET AL. 205 198 Order 2. l)sing any picturization resembling or simulating the dome of the United States Capitol unless in immediate conjunction therewith it is clearly set forth that respondents' business is a private correspondence school.

ORDER TO FILE REPORT OF 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 August 31, 1954j.