Joseph Saladoff trading as Bonded Thrift Stamp Co. and Crown Trading Stamp Co.

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IN THE ::IATTER OF JOSEPH SALADOFF TRADING AS BOC'DED THRIFT STAMP CO. AND CnOWN TRADING STAMP CO.

CONSENT Order. 1:K REGARD TO THE ALLEGED VIOLATION OF THE FEUEHAL TRADE COl\DIlSSION ACT !Jocket 6201. Complaint, A_ 195- Decision, Oct. , 1954 Consent Ordp.l' requiring a PhilacleJphia seller of a sales promotional plan consisting of the sale of trading stamps to retail men:hants for distribution to their customers and the redemption of the stamler by him in the form of various articles of merchandise, to cease representing falsely that his lmsiners was bonded, that merchants purchasing his plan would be assured of increased business, etc, Before Jjfj'. James t. PU1'cell hearing examiner, Mr. J. W. Brook;field, JT. for the Commission. lift. Ha-l"I'Y A1'1Onion and 111T, Leon Edelson of Philadelphia, P for respondent.

CO::\lplaint Pursuant to the provisions of the Federal Trade Commission Act RIHl by virtue of the authority vested in it by said Act, the Federal Trade Commission( having reason to believe that .Joseph SaladoiI an individual, trading as Bonded Thrift Stamp Co. and Crown Trading Stamp Co., hereinafter referred to as t.he respondent, has violated the prmrisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest hereby issues its complaint, stating its cha.rges in that respect follows:

PARAGRAPH 1. Respondent Joseph Saladoff is an individual, trading and doing business as Bonded Thrift Stamp Co. and Crown Trading Stamp Co, with his offce and principal place of business located at 136-138 North Fifth Street in the City of Philadelphia, Pennsylvania.

PAR. 2, Respondent is now and has been for more than two years last past engaged in the sale and distribution of a sales promotion plan which consists of the sale of trading stamps to retail merchants for distribution to their customers and the redemption of the trading stamps by respondent with premiums in the form of various articles of merchandise. In connection with the sales promotion plan respondent furnishes to his customers various advertising folders, booklets and display sheets advertising and explaining the plan. 388 FEDERAL 1'TRADE COMMISSION DECISIONS Complaint 51 F, T, C.

Respondent causes and has caused said stamps to be transported from his place of business in the State of Pennsylvania to purchasers thereof at their points of location in the various States of the United States other than Pennsylvania. Respondent also causes and has caused the premiums to be shipped and transported from his place of business in the State of Pennsylvania to the merchant retailers who purchase his sales promotion plan and also in many instances to the customer of said merchant retailer "ho has accumulated the Dumber of trading stamps listed for said premium; both the merchant ret.ailer and his customers are located in States of the United States other than Pennsylvania.

There is now, and has been for more than t'yo years last past" a course of trad.e in said stamps and premiums by said respondent in eommcrce between and among the various States of the United States. PAR. 3. In connection "ith and in furthering the sale of his stamps and premiums, respondent has furnished to his salesman for use in soliciting orders a sales contract or orde.r blank in which it is stated: Bu"ines:s Builder fol' retail stores All Vl'l'lliUllSfol' filled booklets wi1 be sUlJv1ied bY' the compi1ny without any ath1itional cost.

Been LESS I:\CREASE GCARA:\TEED PAR. 4. Through representations made in fl(hertising, contracts forms circula.rs and form letters distributed by respondent, and through oral representations made by his salesllwn, respondent has represented that his business is bonded or that. compliance \"\ith t.he sales contract is assured by a bond; t.hat the sales promotion plan, including the trading stamps and premill11S, will assure and can be' de.pended upon to afford an increase in sales on the part. of merchants subscribing to or purchasing the same; that he supplies premiums to his customers for display purposes which bee-ome t.their property without cost; and that. he will redeem all the stamps deliyerecl by the mer chants to their customers and alj such premiums ,dll be delivered without additional cost to the merchant or the merchant' s customers. R.respondent' s agents have also represented to merchants that only a selected few in each trade area will be sold the t.trade, promotion pla, inc1ucling the stamps and premiums.

PAR. 5. The aforesaid representations Hre fn1se, rnislending and deceptive, In truth and in fad, respondent is not bonclednor has any bond been obtained to assure compliance with the terms of the contract or sales agreement between respondent an(l his merchant customers nor to assure delivery of the premiums to the customers or the merchant. The use or said promotional plan will not increase the sales BONDED THRIFT STAMP CO., ETC. 389 :J87 Decision of the merchant customers in many instances. Respondent has in many instances attempted to collect for the premiums supplied to the merchant customer for display purposes or attempted to recover the merchandise, In many instances respondent has failed to deliver the premiums offered for the redemption of the stamps and in other instances has demanded a fee for delivery of the premiums. Respondent does not sell to selected customers but, on the contrary, oUers to sell and sells his sales plan to any merchant who will purchase same without regard to geographic location or vdlethcr other merchants in the community have purchased the plan, PAR. 6. Through the use of the word "Bonded" in his trade name respondent has further falsely l'€"presented that he is bonded or under.r bond to assure compliance with the terms of his sales agreement and to assure delivery of the premiums for which his t.trading stamps arc to be redeemed, PAR. 7. The use by respondent of the false, misleading and deceptive statements and representations with respect to his trading stamps and promotion plans has had and now has the c.apacity and tendency t.o mislead purchasers of said sUnnps and promotional plans into the erroneous and mistaken belief that such s1atements and representations are and \'-erc true and to induce the Pll' c.hase of said stamps and promotional,l plans and to induce members of thc public. to pat.ronhe the dealers \''ho purchase said stamps and promotional plans because. of such erroneous and mistaken belief. PAR. 8. The ads and practices of respondent, as hereinabove set forth, are all to the injury of the publie and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

DECJSIOX OF Tile COl\DfISSION Pursuant to Rule XXII of the Connnission s H.uses of Practice, and as set forth in the Commission s "Decision of the Commission and Order to File Report of Compliance, dated October :3, 1954, the initial decision in the instant matter of hearing examiner James A. Purcell, as. set out as follows, became on that date t.he decision of the Commission.

INITIAL DECISION 13Y ,TA::IFS A. pcnCELL HEARING EXA:MIKEH Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on April 8, ID54, issued and subse quently served its complaint upon the respondent, Joseph Saladoff an individual trading as Bonded Thrift Stamp Co., and Crown Trad- 390 FEDERAL TRADE CO:VBnSSIOX DECISIONS Order 51 F, T. C, ing Stamp Co., \"h088 offce and principal place of business is located at Nos. 136-138 :'orth Fifth Street, Philadelphia, Pennsylvania. H.esponclent is engaged in the sale and distribution of sales promotional plans involving the use or trading stamps, ,which plans and stamps he 8e118 to retail merchants ror their use in promoting sales a.nd, on the basis or the stmnps distributed by the retail merchants to customers awards premiums in the form or various articles of Inerchanclise. Thrcafter there was filed with the Federal Trade Commission a stipulation between t.he parties related August 2, ID54, providing for entry against respondent or a consent order, which said stipulation appears or record in this Tormal proceeding. By the terms thereof the parties agree that the complaint and said stipulation shall consbtl1te the entire record herein, withdrawal of the answer heretofore filed by respondent on fay 17, 1U54, being moved and hereby granted; that respondent admits all of the jurisdictional allega.tions set forth in the complaint; that the parties waiye hearing before a hearing examiner or the C ommission fis also the making of findings of fact and conclusions of law by the hearing examiner or by the Commission; that respondent "aiyes the right io file exceptions or to demand oral argument before the Commission as also all further and other procedure before the heflring examiner or the Commission to which, but for the execution and filing of the aforesaid stipulation, the respondent might be entitled under the Federal Trade Commission Act or the rules of prl\ctice of the Commission. Said stipulftion specifically waives any and all right, power or privilege to challenge or contest the validity of the order hereinafter made and further provides that the complaint forming the basis of this proceeding may be used in construing the terms of the saiel order ,,,which order may be altered, modified or set aside in the manner provided by l l',y for other orders of the Commission \\"here such action is sought.

On the basis of the foregoing, the undersigned Hearing Examiner conellides that this proceeding is in the public interest and, in conformity with the action in said stipulation contcmp1atec1 and agreed upon, rnakes the fono,, ing order:

ORDER It is ordered that the respondent J oseph Salacloff an incli vidual now trading as Bonded Thrift Stamp Co. Cro\Yll Trading Stamp Co. under any other name or names, and his agents, representatives and employees, directly or through any corporate or other device, in COTlnection with the oH'ering for sale, sale or distribution in c.commerce as " commerce ' is de.fnecl in the Federal Trade Commission Act, of B01\ DED THRIFT STA IP CO, ) Efe. 391 387 Order sales promotional plans, trading stamps or prenuums, do forthwith cease and desist from:

1. Representing, directly or by implication: (a) That his business is bonded, or that. any bond or other assurance has been given to proyicle compliance wit.h his sales agreement. (b) That merchants subscribing to or purchasing respondent 8elles promotion plan, including trading stamps and premiums, will be assured of inc.rensed business.

(c) That premiums which are to become the property of the merchant customer subseribing to or purchasing respondent's plan, will be supplied to his merchant customers for display or other purposes unless such pl'erniums are in fact so furnished and supplied on such basis, and no attempt is 01' will be made to collect for 01' to recover said premiums.

(d) That premiums "\\ill be delivered by l'e,spondent. fmd without. additional cost or charge to the merchant, or the rnerchanfs custo11rers who send in respondents stamps for redemption, unless respondent in all instances delivers all premiums, and without imposing OJ' attempting to ('oUeco a, charge or fee therefor; or misrepresenting in any other manner the terms or conditions uucler which premiums are to be delivered or supplied by respondent in connection ,yjth the redemption of stamps purchased from respondent. (e) That the sale of responclenfs plan or stamps \will be restricted to only a, few or to a limited number of selected merchants in eflch trade area, unless such sales thereof are so limited. 2. 1)sing the ",yord "Bondedt or any ,yard or "'on15 of similar import or meaning, as a part of a trade nmne under which respondent does business.

ORDER TO FILE REPORT OF COl'IPLIAXCE It i8 ordered that the respondent herein shall within sixty (60) clays after seryiee upon him of this ordel\ file with the Commission a report in "Titing setting forth in detail the manner and form in which he has complied with the order to cease and desist (as requjred by said declaratory decision and order of October 3, 1954J. Decision 51 F, T, C.

IN THE :\V. later OF EDIVARD L. YrILLEN COMPANY ORDER, ETC., IK REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COllG\HSSIOX ACT Docket 6193. COJnjJlaint, J1ar. .1D' Dccisioll, Oct. 5 1.954 Order requiring a Brookline, ::Iass" seller of insecticides designated "Cedar 'Vall" and " Cedar 'Vall \Tith DDT" to cease ad\"ertising falsely that " Cellar Wall" contained DD'l', that the two products repelled moths and carpet beetles and prevented damage to clothes and fabrics and that "Cedar Wall" was fully guaranteed, Before Mr. L01'en H. LWllghUn hearing examiner. 111'1. Edward F, Downs for the Commission. Jh. Ezekiel TV olf, of Boston, Mass., for respondent. DECISION OF THE CO::DIISSIOX Pursuant to Rule XXII of the Commission '8 Rules of Practice, and as set forth in the Commission s "Decision of the Commission and Order to File Report of Compliance, dated October 5 , 1954, the initial decision in the instant matter of hearing examiner Loren H. Laughlin, as set out as follows, became on that elate the decision of the Commission.

ITL\L DECISION BY LOHEN H. LAUGIILIX, I-IEARIXG EXXl\IlNER The Federal Trade Commission (hereinafter referred to as the Commission) on 1\larch 12, 1954, issued its complaint herein under the Federal Trade Commission .Act and thereafter duly served said complaint upon the above-named and styled respondent, This complaint alleges in substance that the respondent for more than one year last past has been engaged in the business of selling and distributing certain products in commerce.e and has sent certrl1n false and misleading advertising to his der1Jers for display and distribution to the purchasing public in which respondent c.airnec1 concerning his produets, designated as "Cedar IYal!" and "Cedar ,V,tlt ,With DDT " that when such products were applied to closet walls or to clothes, as the case might be, they ,,,onld repel moths and other insects and would prevent insect damage to clothes and other fabrics. It is further alleged that during this period respondent has made representations that his said products were either fully or nllconclitionally guaranteed by him. The foregoing alleged acts, practices and representations ED'V ARD L. :\lILLEK CO. 393 392 Decision of the respondent, subsequently particularized in the Findings of Fact he.rein, if true, were and are unfair methods of competition and unfair and deceptive acts and practices in commerce and constitute violations of Section 5 (a) of the Federal Trade Commission Act, as amended 52 Stat. 111-112; 15 U. S. C. A., See. 45 (a). ' Use of the words guarantee" and "guaranteed" in advertising, without clear.r and unequivocal disclosure of the actual security afforded to the buyer has been repeatedly prohibited by the Commission and such rulings have been susblined by the courts. The numerous CRses are digested in C. C. II. Trade Hegnlntion Reports, 10th Ed. , Par. 50GG. 30. On August 9 , lB54, the respondent in due course filed his ans-wel' , denominated as his "Admission " which admits all the material allegations o:f the complaint and :further, without any reservation, waives all intervening procedures in :further proceedings as to the saiel :facts alleged in the complaint.

The undersigned Hearing Examiner on August. 15 , 19,14, was duly designated by the Commission to hear this proceeding and perform other duties herein according to law, in t.he place and stead of Frank Hier, the Hearing Examiner theretofore appointed by the Commission for such purposes, -CpOll the \whole record the Hearing Examiner finds that the respondent has been fully afforded due process of hnv in all particulars and that by his said answer the respondent has elected not to contest the facts but to submit this matter for decision upon the pleadings by waiving hearing and all other intervening procedures, as fully provided for in Rule VIU of the C\lrrent Rules of Practice of thc Commission, effective c\august 3 1951, of \,hieh respondent hlld due legal notice as \yell as specific. notice in the complaint itself of the efleet o:f his answer prior to t.he filing thel'8of.

l.:1isrepresentation of the effectiveness of Insecticides has been repeatedly found to lJe l1IlllWful Ilnd ordered discontinued by the Commission. The cases lie digested in C, C. H, 'l' r!!(le Regulation Reports, 10th Ed" Par, ,JOR1.35S. See Gl1/f OIL OrJ) poration v. F, T. 0" (C. C, A, 5 , 1945), 150 F. 2d 10C, 1944-1945 Trade Cases, Par. 57 , 382 , affrming 38 F, 'T, C, 242 (1fJ44).

Rule \'III (a) insofllr as pertinent here provides: If respondent desires to waive hearing on the allegations of fact set forth In the complaint and not to contest the facts, the answer may consist of 11 statement that respOllrlent admits aU material allegations of fact charged in the complaint to be true, Such answer wiJ constitute H waiver of any hearing' as to the facts Illleg-ed in the complaint and findings as to the facts and conclusions based upon sucll answer shrill be made and order entered disposing of the matter ,vithout any intervening procedure. The respondent may, however, reserve in such answer the right to submit proposed fin(Jings and conclusions of fact or law .. .. Ilnd the right to appeal" .. "' And Rule \'111 (c) provides:

Admission in the answer" .. .. of un the material allegations of fact contained in the complaint shall constitute a waiver of hearing. Upon such admission the " '" .. (bearing) examiner :\1Hl the Commission shall be deemed 1ll1thorizecl, without fUJ.ther JJDticc to _ _______ /:. % Findings 51 F. T. C.

Therefore the undersigned I-Iearing Examiner now finds that this proceeding is substantially in t.he public interest, and upon the ,\'101e record, including the material facts alleged in the complaint, all of which are admitted in the answer, makes the following Findings of Fact and Conclusions of Law:

FlNDIXGS OF FACT 1. Respondent Edward L. :.Iillen is an individual doing business as Edward L. Millen Company with his offce and principal place of business located at Brookline lassachusetts, 2. Respondent is now and for 11101'e than one year last past has been engaged in the business of ofi' ering for sale, selling and distributing a product designated "Cedar-,Valr' and t product clesjgnatecl " Cedar ,Vall With DDT. " The formulas and directions for use of these products are as follows:

Formulas:

Cedar Wall-Active: Cedar Wood Oil-- n_--____--------- -- 3Y: % Inert: GellUillc Ground Red Cedar '''ood, Cement and Plastic Binders - 8GY: % Cedar Wall with DDT Active: Cedar '""ood Oil-- _--n 3%% Dichloro Diphenyi Trichlorethane___ -- 2% lucrt: Genuine Ground Rell Cedar '\'000, Cemcnt and Plastic Binders -- Directions:

Cedar Wall: (for brush application) to a 5 lb. bag add 3 to 3112 qts. of water in a clc ll Vflil. To a 10 lh. bag add G to 7 qts, of water in a clean pail. Stir to uniform consistency of heavy whipped cream. Allow to stand for ten minutes before applying, For application with a trowel use le s water and mix to trowel consisteney. APPLICA'l'IOX- Clean closet thoroughly and spread old newspapers on the floor. "Cse a 2% to 3 inch fiat vaint brnsh. Scoop up a quantity of Cedar-"\VaJI on the side of tbe brush and daub on to surface to the thiclmess of a penny (about i(j inch). Don t apply any thinner coat and not too thick in the ('orners, respondent, to find tbe facts, to draw conclusions therefrom, and to enter an appropriate oTdf'r. (Parenthetical word after omission accords to present. offcial title. The Commission s e!Jrlier rule to like effect was sustained in Hill, et aI" v. F, T, C. (C. C. A. 5, 1941). 124 F. 2d 104, log, wherein It wa held treat an order of tlh' Curnmission based upon pleaded and admitted facts was yaJid without a hearing and the pl'esf'ntation of evidf'nce. 'l' be Court said that e\":n without tlJf Commission s rule: "* * .. it is fundamental that judicial admissions are proof po sessjyJg the higbest possible probative ,'value, Indeed, facts judicially admitted are facts established not only beyond the need of evidence to prove thew, liut beyond the power of evidence to contronrt them. A fact admitted b ' answer is no longer a fact in Issue. EDWARD L, 1-,TILLE CO. 395 392 Findings Cedar-coat the entire in1;ide of closet hut not the floor, doors or wood trim. Clean up floor and wood trim with a wet rag or sponge. Brush ami pail can be cleaned easily with water. Cedar-Wall with DDT: Same as above but add: Closet walls should be lightly sprayed once a year with fi% DD'l solution. Clothes should be sprayed with an approved insecticide spray, being careful to treat all seams and folds of garments before storage.

Respondent causes his products "when sold to be transported from within the Commornvealth of Jassachusetts to purchasers thereof located in various other States of the united States and maintains and at all times mentioned herein has maintained, a course of trade in said products in commerce among and between the various States of the United States, l-Iis volume of trade in such commerce has been and is substantial.

3. Respondent is now, and at all times hereinafter me,ntionecl has been, in substantial competition with other individuals and \\- ith co1'porations, partnerships and firms engaged in the sale in commerce of insecticides.

4. In the course ancl conduct of his business and for the purpose of inducing the purchase of his said products in commerce, as "commerce," is defined in tbe Federal Trade Commission Act, respondent in circulars, pamphlets and banners, sent by him to dealers for display and distribution to the purchasing public, has made certain claims with respect to his said products. Among and typical, but not all jnclusive, of such claims are the following: CEDAR WALL ;your closet with a Brush! Repels :Moths-Contains DDT, CEDAR \VALL with DD'!, repels and resists moths and carpet heetlE's. It is 1/oth-1'cpc17ant and will prevent jJoth clamnge to clothes and fabrics. 1t has beell laboratory tested, Just Brush On l\otl1-HE'pellant CEDAR WALL, Fragrant enduring-contains DDT.

CEDAR WALL with DDT repels ::\I()THS. When applied to walls CED.-\R WALL pren,nts l\lOTE damage, Its FULLY GUARANTEED.

5. Through the use of the statements and representations hereinabove set forth, and others similar thereto not specifically set out herein, respondent has represented, directly or by implication, as follows:

(a) That the product designated "CEDAR ,VALL" conbins DDT. (b) That the products designated "CEDAR ,VALL" and b:.v CEDAR ,VALL \"ith DDT" repel moths and prevent damage moths.

396 FEDERAL TRADE COMMISSION DECISIOKS Conclusion 31 F. T. C. (c) That "CEDAR ,VALL with DDT" repels carpet. beetles, resists moths and ca.rpet beetles and prevents damage to clothe.s and iabriesby moths.

(d) That. "CEDAR ,VALL" is fully or uueonditional1y guar. anteed.

6. The aforesaid statements and representations used and disse,mi. nated by respondent a.s hereinabove set forth, are false, misleading and deceptive. In truth and in fact:

(a) Ilespondent.'s product. desiguated "CEDAR ,VALL" does not contain DDT.

(b) Respondent.'s products designated "CEDAR ,VALL" and CEDAR ,VALL with DDT" wil not. repel moths or prevent damage by mot.hs.

(c) "CEDAH WALL wit.h DDT" will not. repel carpet beetles resist moths or carpet beetles nor win it prevent danwge to dot-hes 01' fabrics by mot.hs.

(d) TIle "guarantee" furnished by respondent does not in any manner relate to the effectiveness of "CEDAR ,VALL" as an insecticide. The guarantee furnished by respondent is only against cracking ","hen penetrated by a nail or screw, 7. The use by respondent of the foregoing false misleading and deceptive statements and represent.ations, and ot.hers similar thereto has the tendency and capacity.y to mislead a substantial portion of the purchasing public into erroneous and mistaken belief that, such statements and representations are true, and to induce a. substantial portion of the purchasing public, because of such mistaken and erroneous belief, to purchase respondent's said products. As a direct result of the practices of respondent, as aforesaid, substantial t.trade in commerce is and ha,8 been diverted to respondent from his said competitors and injury has been and is done to competition in commerce between and among the va.rious States of the nitcd States, CONCLUSJO S OF LAW 1. The Federa.l Trade Commission has jurisdiction over the subject matter of this proceeding and over the respondent herein. 2. The aforesaid acts and practices of respondent, as hereinbefore found, are ajj to the prejudice and injury of the pnbJie and of tho competitors of respondent and constitute unfair methods of competition and unfair and deceptive acts and practices in commerce within the intent and mraning of the Federal Trade Commission Act. EDWARD L. MILLEX CO. 397 392 Order onm:n It is ordered that Edward L. Millen, an individual doing business as Edward L. Millen Company, or doing business under any other name, his representatives, agents and employees, directly or through any corporate or other device, in connection ".. itll the offering for sale sale or distribution in commerce, as "commerce" is defined in the Federal Trade Commission Act, of the products designated "CEDAR WALL" and "CEDAR ,VALL with DDT" or any other product or products of substantially similar composition or possessing substantially similar properties, whether sold under these names or under any other name or names, forthwith cease and desist from representing directly or by implication:

(1) That the product designated "CEDAR ,VALL" contains DDT. (2) That said products repel moths or prevent damage by moths. (3) That the product designated "CEDAR WALL with DDT" repens carpet beetles, resists moths or carpet beetles or prevents damage to clothes or fabrics by moths.

(4) That "CEDAR .VALL" is fully guaranteed unless such guarantee is unconditional, or that sa,id product is guaranteed in any way unless the terms and conditions of the actual guarantee arc disclosed in immediate conj function therewith.

ORDER TO FILE REPORT OF CO:1IPLIAXCE It i8 ordered that the respondent herein shall within sixty (60) days after service upon him of this order, me with the Commission a report in writing setting forth in detail the manner and form in which he has complied ","jth the order to cease and desist (as required by said declaratory decision and order of October 5, 1954). 398 FEDERAL TRADE CO).L\IISSIOX DECISIOKS Order Gl F, T. C.