Collins Hair and Scalp Experts, Inc.

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IN THE ~fatter OF COLLINS HAIR AND SCALP EXPERTS, INC., ET AL. ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE CO:l\BIISSION ACT Docket 6"/07. Complaint Jail 9 195,' Decl..,:;i.on, Nov. 11" 1!157 Order requiring three associated corporations in Oklnhoma City, Okla. , along with their advertising agency, to cease representing falsely in advertising in newspapers, periodicals, leaflets, etc., that b~' use of their hair and scalp preparations, thinning hair would be checked. an types of hnldness would be prevented and overcome, new hair would be induced to gI'OW, nnd tlle' hair would become thicker, unless such advertisements were expressly limited to cases other than "male-pattern baldness" and clearly revealed that: the great majority of cases of thinning hair nnd bnldness wel'eof sud1! male-pattern type and would not be favorably influenced by respondents preparations; and to cease representing falsely by use of the terIl1 "'lrichologist" that individual respondents find theil' employees had had competent medical training in the diagnosis and treatmellt of scalp disorders. llarold A. lienneely, Esq. for the Commission. John A. Green, Jr. , Esq. of Oklahoma City, Okla., for respondents. INITIAL DECISION BY JAMES A. PURCELL, I-IEAIUXG EXAMINER PRELIl\IINARY STATEMENT 1. Pursuant to the provisions of the Fedt'ral Trade Commission Act, the Federal Trade Commission on ~January 9, 1957, issued and subsequently served its complaint in this proceeding upon the above-named respondents Conins I-Iair and Scalp Experts, Inc. , a corporation; Carey Hair & Scalp Experts, Inc., a corporation; ,Vinston Ltd., a corporation; David R.. Collins, ~I. ,V. Collins, Hex ,iV. Ochs and John A. Green, Jr., individuaDy and as officers of the next. foregoing-named corporations; and Philip J. Keough, Jr., individually and doing business as Phil Keough and Associates Advertising Agency. Said complaint charges that respondents, who are engaged in the business of selling- and distributing- various cosmetic and drug preparations for externa.l use in the treatment. of the hair and scalp, have disseminated or caused the dissemination of false and Inisleading advertisements concerning said preparations for the purpose of inducing, and which are likely to induce, the sale of said prepnratio11s. 2. On February 18, 1957, respondents filef1 their joint and several a11S',er in the form of a. genera 1 denial of all of the material allepltio11S of the complaint, and, subsequent to the fi xi 11!2' of a date for the initial hearing for reception of testimony respondents, on ::'.1ay Hi , .

Findings 54 F. 1957, moved to "withdraw their answer and, on the same date order granting the requesteel "withdrawal was passed by this I-Iearing Examiner. Further, in the aforesaid motion respondents stated they had no objection to the cancellation of the hearing then scheduled to take place in Oklahoma City, Oklahoma, and resetting same in the City of ,Vashington, D. , pursuant to which a hearing was thereupon scheduled for the latter plac.e on )Iay 23, 1957. At the appointed time and place the said hearing "as duly convened, as the transcript thereof, duly filed in the office of the Commission ,Vashington, D. , according to la", "ill reveal. At said hearing counsel in support of the c.complaint appeared and announced his readiness to proceed but so it is that respondents did not appear in person or by representative "hereupon, and because of the ,,-ithdrawal of their ans"er as aforesaid, and further by reason of the nonappearance of respondents, or any of them, the I-Iearing Examiner, pursuant to motion of Commission s counsel, declared the matter to be in default under the provisions of R.ule No. 3.7 (:2) (b) , notice of the provisions and effects of said rule having been served upon all respondents under the "K notice :: portion of the complaint. 3. Prior to the date of hearing there were filed of record four afildavits signed by respondents 1\1. ,V. Collins ohn A. Green J r. R.ex ,V. Ochs and David R. Collins, the tenor of all of such being that respondents JU. ,V. Conins and .J ohn A. Green, Jr. served only as officers of certain of the corporate respondents in a purely nominal capacity; that neither had any voice in policy making or conducting the businesses of the corporate respondents, nor do either have any financial interest in any of the corporate respondents, "here fore, as to them, the complaint should be dismissed. To this request for dismissal the attorney in support of the complaint accede. , as ,viii appear from the transcript, and confirmed his nonopposition in his submitted proposed findings, conclusions and order. 4. Default having occurred, and pursuant to the express provisions of the aforementioned Rule, the I-Iearing Examiner now proceeds with the making of his findings of facts: appropriate conclusions and order, such being based upon the complaint and proposed findings, conclusions and order submitted by the attorney in support of the complaint, no proposed findings having been submitted by the respondents.

FIXDIXGS OF FACT 1. Respondents Collins Hair and Scalp Experts, Inc., Carey I-Iair 8: Scalp Experts, Inc., and ,Vinston, Ltd., are corporations organized and existing under and by virtue of the b.ws of the State. of Oklahoma, with their offices and princi pal places of business at 4G21 COLLINS HAIR AND SCALP EXPERTS, INC.,. ET AL. 601 599. Findings N. E. 13th Street, Oklahoma City, Oklahoma. The individual respondents David R. Collins, ~L 'V. Collins, Rex 'V. Ochs and John A. Green, Jr., are the officers of the above named corporations. Their addresses are as follows: David R. Collins, 4621 N. E. 13th Street, Oklahoma City, Oklahoma; :M. 'V. Collins, Hartley, Iowa; Rex 'V. Ochs 18281j:? N. 'V. 23rd Street, Oklahoma City, Oklahoma; and John A. Green, Jr., 1701 N. Broadway, Oklahoma City, Oklahoma. The individual respondents David R.. Collins and Rex 'V. Ochs control and have controlled the policies, acts and practices of the said corporate respondents, including the acts and practices herein found as facts.

2. Respondent Philip J. I~eough, Jr. , doing business as Phil Keough and Associates Advertising Agency, an individual proprietorship, maintains and has maintained an office at 810 Leonhardt Building, Oklahoma City, Oklahoma. This individual respondent controls and hns controlled the policies, acts and practices of the sai d Phil Keough and Associates Advertising Agency, including the acts and practices herein found as facts.

3. R.respondents are now, and have been for more than one year last pnst, engaged in the business of selling and distributing various cosmetic" and " ch' " preparations, as those terms are defined in the Federal Trade Commission Act, for external use in the treatment of conditions of the hair and scalp. Respondents cause said preparations, in many instances ",hen sold, to be transported from their places of business in the State of Oklahoma to purchasers thereof located in various other states of the United States and in Canada. Respondents maintain, and at all times mentioned herein have maintained, a course of trade in said preparations between and among the various states of the United States and between the State of Oklahoma and Canada.

4. Respondents have acted in conjunction and cooperation with ach other in the performance of the acts and practices hereinafter found as facts.

5. The principal method of operating the business of said respondents is as follows: Employees of respondents, and also Dayid . Collins, travel a about this country and Canada, stopping at various cities. Through extensive achertising, respondents invite persons in in a hoteleach locality to visit tl temporary oflice, usual11y set up room in that locality, for diagnosis and advice as to hair and sealp 0l11-conditions; whereupon the use of certain preparations is rC' mended. If agreed to, said preparations are sold to such persons to be used at home and, together with instructions for their use are shipped from the place of business of the corporate respondents to the purchasers thereof.

602 FEDERAL T~ADE COMMISSION DECISIONS Findings 54 F. 6. The ingredients in said preparations are taken from the following list and are in various combinations: Boric Acid Castor Oil # 77 Detergent (a general household and industrial cleaner made by Peck' Products Co.

Dyes Emcol 5130 (an alkanolamine condensate detergent made by Emulsol Chemical Co.

Hyamine 1622 (di-isobutyl phenoxy etho:s:y ethyl dimenthyl benzyl ammonium chloride made by The Hohm & Haas Co.

Isopropyl Alcohol Lanolin Methylcellulose 1\1 mineral Oil Nopco 1034 (a sulfonated oil made by l\OPCO Chemical Co. Oil Bay Terpeneless Perfumes Phenol Propylene Glycol Resorcinol Sulfonated Castor Oil Tincture Capsicum Tween 60 (polyo:s:ethylene sorbitan monostearate made by Atlas Powder Co. Yeegnm (colloidal magnesium aluminum stem'Me made by R. T. Vnnderbilt Co. Inc. ) Water Glycerol 40% Liquid Soap 7. Respondent Philip J. Keough, Jr., doing business as Phil Keough and Associates Advertising Agency, has been and is engaged in the business of conducting an advertising agency. In operating such advertising agency he has prepared, participated in the dissemination of and the causing of the dissemination of advertising of the respondents herein, including the advertising hereinafter set forth and found as a fact to have been used by the respondents in the furtherance of their business enterprises. 8. Among and typical of the statements and representations eontained in said advertisements, principally in newspapers and other periodicals, booklets, leaflets and otherwise, disseminated and caused to be disseminated in interstate commerce, as "commerce" is defined in the J?ederal Trade Commission Act, are the following: Waders Largest Home Treatment Firm 'Tens Truth About Hair nnd Scalp. nl110I1s Trichologist Tells Truth About Saving And Improving Hair. This lieu method of home treatment for sa,ing anci growing hail' will be demonstrated in (name of city and date).

In an interview here today D. Hussell Collins, internationally famous trichologist and director of the Collins Hair and Scalp E:q1erts, Inc., said "TIJere are 18 different scalp disorders that cause most men ancl women to lose hair. Using ..

COLLINS HAIR AND SCALP EXPERTS, INC., ET AL. 603 599 Findings common sense, a person must realize no one tonic or so-called cure-all could correct all the disorders " he explained.

The Collins (or Carey) firm, recognizing that most people are skeptical of claims that hail' can be grown on balcling heads, offers a guarantee " Collins (or Carey) said.

GUARANTEED Once a person a"ails themselves of the Collins treatment his skepticism immedinteJy disappears.

* * * 1f there is fuzz, no matter how light, thin, or colorless, the Collins (or Carey) firm can perform wonders.

* * * This examination is "ery thorough and highly technical * * * WorJ(l's Largest Home Treatment Firm Offers Lifetime Gunrantee to Prevent Baldness.

"Tinston s ~ew :Method Offers Lifetime Satisfaction to :Men and Women with Hail' and Scalp Problems * * * * * * In an inteniew here today R. 'V. Ochs who heads the House of Winston, the Jargest Hair and Scalp Home Treat1l1ent firm in the 'Vorld, stood before us and in plain, simple lnng-uage, set forth a new realm of hope with an entirely new concept of thinking regnl'ding the Hair and Scalp, and its troubles. * * * 9. Through the use of the aforesaid statements and representations respondents have represented, directly and by implication, that the use of said preparations:

(1) Thinning hair will be checked;

(2) All types of baldness will be prevented and overcome; (3) New hair will be induced to grow; and (4) I-Iair will become thicker.

By use of the word "Trichologist :' respondents have represented that respondents David H. Collins and Hex ,V. Ochs, and employees of the respondents, have had competent training in dermatology and other branches of medicine having to do with the diagnosis and treatment of scalp disorders afl'acting the hair. 10. The said advertisements are misleading in material respects and constitute "false advertisements " as that term is defined in the Federal Trade Commission Act. In truth and in fact, regardless of the exact formula or combination of the ingredients of the preparations or the method of application, the use of said preparations, in the type of baldness knmrn as male pattern baldness, which type accounts for the great majority of cases of all baldness, "ill not check thinning hair, prevent or overcome baldness or have any favorable influence on its underlying cause, induce new hair to grat or cause the hair to become thicker.

N either respondent David R. Collins, respondent Rex ,V. Ochs nor any of respondents' employees, have undergone competent trainin(r in dermatoloQ'v or ant other branch of medicine having to do h ~. or treatment of scalp disorders afl'acting the hair.with the dif1gnosis 52S5T7-60---40 Conclusions 54 F.

Furthermore, the statements and representations in said advertisements have the capacity and tendency.y to suggest and do suggest to persons who have thinning hair, or who are bald, that there is a reasonable probability they are threatened with or have a type of baldness which will be prevented or overcome by the use of said preparations. In the light of such statements and representations said advertisements are misleading in a material respect and, therefore, constitute "false advertisements " as that term is defined in the Federal Trade Commission Act, because they fail to reveal the material facts that the great majority of cases of thinning hair and baldness are the beginning and more fully developed stages of that type of baldness known as male pattern baldness, and that in cases of that type the said preparations will not check thinning hair prevent. or overcome baldness, have any favorable influence on the underlying cause of ba.1dness, induce new hair to gro\v or cause hair to become thicker.

11. The use by respondents of the foregoing false and misleading statements and representations, disseminated as aforesaid, and their failure to reveal pertinent and material facts, have had, and noy have, the capacity and tendency to mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that such statements and misrepresentations are true and into the purchase of said preparations.

CONCLUSIONS 1. The Federa.I Trade Commission has jurisdiction over the named respondents and over the subject matter hereinabove set forth. 2. The respondents are engaged in interstate commerce as such commerce is def-ined in Section 4 of the Federal Trade Commission Act..

3. The respondents 1\1. 'V. Collins and John ~:-\.-' Green, Jr., in their capacities as nominal corporate oflicers of the named corporate respondents, having no f-inancia.I interest in the corporate businesses above delineated, nor participating in the formulating, exercising or practicing of the false and misleading aefs hereinabove found to exist, the complaint, as to them, will be dismissed in the hereinafter appended order.

4. The aforegoing acts and practices of the respondents as herein found, are all to the prejudice and injury of the public and constitute unfair and deceptive acts and practices within the intent and meaning of the Federal Trade Commission Act. COLLINS HAIR AND SCALP EXPERTS, INC., ET AL. 605 599 Order ORDER 1 t is oTde'J'ed That respondents Collins Hair and Scalp Experts Inc. , a corporation, and its officers; Carey Hair & Scalp Experts Inc., a corporation, and its officers; ,Vinston, Ltd., a corporation, and its oftieers; David R. Collins and Rex 'V. Ochs, individually and as officers of said corporations; and Philip J. Keough, Jr., an individual doing business as Phil Keough and Associates Advertising Agency, or under any other name or names, and said respondents' represelltatives, agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or clistribution of the various cosmetic and drug preparations set out in the findings herein, or any preparation of substantially similar composition, or possessing substantially similar properties, do forthwith cease and desist from:

1. Disseminating or causing to be disseminated by means of the United States ma.ils, or by any me.ans in commerce, as " commerce is defined in the Federal Trade Commission Act, any ach-ertisement ,which represents, directly or by implication, that the use of said preparations:

(f\) ,Viii check thinning hair, prevent or overcome baldness, or have any favorable influence on the underlying cause of baldness unless such representations be expressly limited to cases other than those l;:nO\vn as male-pattern baldness, nnd unless the ndyertisement clearly and conspicuously reveals the fact that the great majority of cases of thinning hair and baldness fire the beginning and more fully developed stages of said male-pattern baldness, and that said preparations will not in such cases check thinning hair, prevent or overcome baldness or have any favorable influence on its underlying cause.

(b) ,Vill induce ne"- hair to gro\\ or cause the hair to become thicker or otherwise. grow hair in cases of impaired hair gro\\th unless such representations be expressly limited to cases other than those arising by reason of male-pattern baldness and unless the adyertisement clearly and conspicuously revenls the fact that the grent majority of all cases of thinning hair and baldness are the beginning nnd more fully developed stnges of said male-pattern bal(lness and that saiel preparations will not in such cases induce the growth hair or thicker hair.

2. Disseminating or causing to be disseminated by any means any aehertisement for the. purpose of inducing, or ,,-which is likely to induce, (lired ly or indirectly, the purchase of said preparations in 606 FEDERAL TRADE COlVlMISSION DECISIONS Opinion 54 F.

commerce, as "commerce" is defined in the Federal Trade Commission Act, which advertisement fails to comply with the requirements set forth in Paragraph 1 hereof, or which advertisement uses the "ord trichologist" or any other terms or words of similar import and meaning to designate, describe or refer to the respondents David H. Collins or He.x W. Ochs, or said respondents' representatives, or representatives of the respondents Collins Hair and Scalp Experts Inc., Carey Iiair &, Scalp Experts, Inc., or ,Vinston, Ltd., who have not had competent training in dermatology or other branches of medicine having to do with the diagnosis and treatment of scalp conditions affecting the hair.

1 t is further ordered, That the complaint be, and it hereby is dismissed as to the respondents M. ,V. Collins and John A. Green, Jr. OPINION OF TI-IE COl\IMISSION By ICERN, Commissioner:

Counsel supporting the complaint has appealed from an initial decision which would dismiss the complaint as to two nominal corporate officers therein named as respondents but found not to have participated in the illegal acts alleged and order the remaining respondents to cease and desist from disseminating false advertisements in violation of the Federal Trade Commission Act. The appeal is directed solely to the form of the proposed order. The complaint charged that respondents were disseminating false advertisements for the purpose of inducing the sale of certain preparations for use in the home treatment of thinning hair and baldness. The hearing examiner found that the "great majority of cases of thinning hair and baldness are the beginning and more fully developed stage.s of that type of baldness known as male pattern baldness " and that in cases of that type respondents' preparations " will not check thinning hair, prevent or overcome baldness, have any favorable influence on the underlying cause of baldness, induce new hair to grow or cause hair to bec.ome thicker." He further held that statements and re.presentations in respondents' advertisements have served, contrary to the facts~ to suggest to persons who have thinning hair or are bald that " there is a reasonable probability that they are threatened with or have a type of baldness "which will be prevented or overcome by the use of said preparations. Paragraph 1 (a) of the proposed order forbids advertisell1e.nts of the sort aforementioned unless such representation be expressly limited to cases other than those known as male pattern baldness and unless the advertisement clearly and conspic.uously reveals the fact that the majority of cases of exeessive hair thinning and baldness COLLINS HAIR AND SCALP EXPERTS, INC., ET AL. 607 5g9 Order are the beginning and more fully developed stages of said male pattern baldness which type represents the majority of all cases of baldness.

Counsel supporting the complaint argues that the above-quoted requirement that respondents disclose merely that a "majority" of such cases of hair trouble are due to male-pattern baldness is inadequate to correct the misrepresentation here involved and is not fully consistent with the finding that the "great majority" of cases of baldness are of the male-pattern type. "'\Ve agree with that con- "'\Ve further believe that this provision of the order is additionallytention.deficient in that it fails to require respondents to reveal that their preparations will not, in cases of male-pattern baldness, check thinning hair or baldness or have any favorable influence on the underlying cause of baldness. Paragraph 1 (b) of the proposed order providing for a revealing statement in regard to certain other representations that respondents' products are of value in inducing the growth of new or thicker hair, is similarly deficient. For reasons stated in our dec.ision in the matter of Loesch Hair Experts et a1. Docket. No. 6305 (decided today) we are of the opinion that our determinations respecting the form of order appropriate there and here have sound support in law and public policy. The appeal is granted and the order to cease and desist proposed in the initial decision will be modified in accordance ,,'ith the views herein stated. As thus amended, the initial decision will be adopted as the decision of the Commission.

FIN AL ORDER This matter having been heard by the Commission upon the appeal of counsel supporting the complaint from the initial decision of the hearing examiner and upon the brief in support thereof, no answerinfo brief having' been filed by the res ondents . and the Commission having determined, for reasons stated in its accompanying opinion that said initial decision should be modified: 1 t ir;; O1'dered That the following order be, and it hereby is, substituted for the order contained in the initial decision: ORDER It is 01yleJ'ed That respondents Collins Hair and Scalp Experts Inc. , a corporation, and its officers; Carey Hair & Scalp Experts Inc., a corporation, and its officers; ,Yinston, Ltd., a corporation, and its ofIlcers; David R. Collins and Rex ,V. Ochs, individually and as .

608 FEDERAL TRADE COl\L.\IISSION DECISIONS Order 54 F.

officers of said corporations; and Philip J. Keough, Jr., an individual doing business as Phil Keough and Associates Advertising Agency, or under any other name or names, and said respondents representatives, agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of the various cosmetic and drug preparations set out in the findings herein, or any preparation of substantially similar composition, or possessing substantially similar properties, do forthwith cease and desist from:

1. 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, that the use of said preparations:

(a) ",'Till check thinning hair, prevent or overcome baldness, or have any favorable influence on the underlying cause of baldness unless such representations be expressly limited to eases other than those known as male-pattern baldness, and unless the advertisement clearly and conspicuously reveals the fact that the great majority of cases of thinning hair and baldness are the beginning and more fully developed stages of said male-pattern baldness, and that said preparations will not in such cases eheck thinning hair, prevent or overcome baldness or have any favorable influence on its underlying cause.

(b) "'Viii induce new hair to grow or cause the hair to become thicker or otherwise grow hair in cases of impaired hair growth, unless such representations be expressly limited to eases other than those arising by reason of mah~-pattern baldness and unless the advertisement clearly and conspicuously reveals the fact that the great majority of all eases of thinning hair and baldness are the beginning and more fully developed stages of said male-pattern baldness and that said preparations will not in such cases induce the growth of hair or thicker hair.

2. Disseminating" or causing to be disseminated bv anv means any advertisement for the purpose of inducing, or ",hieh is likely to induce, directly or indirectly, the purchase of said preparations in commerce, as "commerce" is defined in the Federal Trade Commission . , which advertisement fails to comply "With the requirements set forth in Paragraph 1 hereof, or ,,-which advertisement. uses the "Word "trichologisf' or any other terms or "Words of similar import and meaning to designate, describe or refer to the respondents David R. Conins or Rex ",V. Ochs, or said respondents' representatives, or representatives of the respondents Collins Hair and Scalp Experts COLLINS HAIR AND SCALP EXPERTS, INC. ET AL. 609 599 Order Inc., Carey I-lair & Scalp Experts, Inc. , or "\Vinston, Ltd., who have not had competent training in dermatology or other branches of medicine having to do with the diagnosis and treatment of scalp conditions affecting the hair.

1 t is further o'J'de?' That the complaint be, and it hereby is, dismissed as to the respondents :M. "\V. Collins and John A. Green, Jr. 1 t is further ordered That the respondents, save those dismissed hereinabove, shall, within sixty (60) days after service upon them of this order, file \\'ith the Comnlission a report in writing setting forth in detail the manner and form in which they have complied "ith the order to cease and desist.

1 t is further ordered That the initial decision of the hearing examiner, as modified hereby, be, and the saIlle hereby is adopted as the decision of the Commission.

610 FEDERAL 'I'TRADE COMMISSION DECISIONS Decision 54 F.