Hoffmann Aircraft Company

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IN Tile NUTTR OF HOFFMANN AIRCRAFT COMPANY ET AL.

CONSENT ORDER, ETC., IN lum \RD TO Tile ALLEGED VIOLATION OF THE FEDERAL TRADE CO::DfISSION ACT Docket 8136. Complaint, Oct. 7, 1960-Decision, May 1S, 1961 Consent order requiring seHers of home study courses in Overland Park, Kans. to cease using false employment offers and other deception to sell their correspondence courses on jet gas turbine and turbo-prop engine mechanics, as in the order below set out.

CO:\IPLA IN' Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Hoffmann ircraft Company, a corporation, nncl George R. l-Ionmann, Royce George Hoffmann and Emma F. I-IofImann, individually and as offcents of said corporation, hereinafter referred to as respondents have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby is ues its complaint stating its charges in that rcspcct as follows:

PARAGRAPH 1. Respondent Hoffmann Aircraft Company is a corporation organized, existing and doing business under and by virtue of the laws of the State of Kansas, with its principal offce and place of business located at 8201 Craig, Overland Park, Kansas. ___ _._ HOFFMAN AIRCRAFT COMPANY ET AL. 731 730 Complaint Individual respondents George R. Hoffmann, Royce George Hoffmann and Emma F. Hoffmann aTB offcers of said corporation. They formulate, direct and control the acts and practices of the corporatc respondent. Their address is the same as that of the corporate respondent.

PAIL 2. Respondents are now and for some time last past have been, engaged in the business of advert.ising, offering for sale, selling and distributing various home study and correspondence courses including those on jet-gas turbine and turbo-prop engine mechanics and for positions in the airline and aircraft industries. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their said course of study, ,,,hen sold, to be transporteel from their place of business located in the State of Kansas to purchasers thereof located in various other States of the United States. Respondents maintain, and at an times mentioned herein have maintained, a course of trade in said courses in commerce" as "commerce" is defined in thb Federal Trade Commission Act.

PAR. 3. In the course. and conduct of their business, respondents employ sales representatives or agents to sen said courses of study. .Respondents can sed advertisements concerning said study courses to be, placed in newspapers and in other media, a typical example of which is the following:

NEW JET INDUSTRY Men and Women WANTED TO TRAIK FOR PERMAKE:-T POSITIONS WITH SECURITY AKD LUCRATIVE PAY AS JET-GAS TURBI:-E AND TURBO-PROP EN- GINE mCHANICS AND SPECIALISTS SPECIALIZING IN ANY ONE OF THE FOLLOWING:

AIRLINE, AIRCRAFT, AUTO)!OLIVE TRUCKING, OR MARINE INDUS- TRIES, IN ADDITIO:' TO ROCKETS AND GUIDED MISSILES. TRAIKED MEN EAR:- AS MUCH OR MORE $150 PER WEEK FREE LIFETnIE PLACEME:-T SERVICE H.S. DIPLOMA NOT :-NECESSARY SHOI\T TI\AINING PEI\IOD WILL KOT I:-TERFERE WITH PRESENT EMPLOYMENT, S11ALL BUDGET TERMS CAN BE ARRANGED. AGES 17-55. SEE IF YOU CAN QUALIFY! SEND COGPON, POSTCARD. 01\ LETTER WITH SAME INFORMATION TODAY TO HOFFMANN AIRCRAFT CO.. BOX DA-187 c/o DAILY AMER- ICA:- REPUBLIC arne- -- Street_____ City -------- State___ Pbone------------- Hours a t home______- 732 FEDERAL TRADE COMMISSION DECISIO Opinion 58 F. T.

Persons responding to said advertisements were sent various form letters and later called upon by said sales representatives or agents of respondents and the purchase of said courses was solicited. PAR. 4. Through the use of the statements appearing in the advertisement hereinabove set out, and others similar thereto but not specifically set out herein, pictorially, by form letters and by oral statements made by respondents' said sales representatives or agents respondents have represented, directly or by implication, that: 1. The offer made in the advertisements is an offer of employment. 2. Respondents will only sell their courses to those who have special qualifications.

3. Respondents are an aircraft manufacturing or airline company. 4. Purchasers of respondents' courses will receive on- thc-job training in the corporate respondent's plant.

5. Persons who complete and pass respondents " courses are in great demand in the aerodynamics and aeronautics fields and wil receive larger salaries than are generally obtainable. 6. Respondents guarantee positions with aircraft and airline companies to persons who satisfactorily complete their courses. 7. Respondents have succeeded in placing persons who have satisfactorily completed their courses in positions with aircraft and airline companies at high salaries.

8. Persons taking respondents' courses wil receive actual training at their homes through visits of the respondents' instructors and teachers.

9. Respondents will employ in their plant persons who have completed and passed their courses.

10. Persons who take and fail to pass respondents' courses wil be refunded the money they paid for same. 11. Pictures of buildings in advertisements are those occupied by the corporate respondent.

misleading and deceptive. PAR. 5. Said representations were false, In truth and in fact:

1. The advertisements are not offers of employment. 2. Respondents do not require special qualifications of persons financial ability to pay taking their courses other than to have thc the price asked for the course.

airline 3. Responde.nts are not an aircraft manufa,cturing or company.

4. Purchasers of respondents' courses do not receive on-the-job training at respondent's plant as they do not own or operate such a plant.

HOFFMAN AIRCRAFT CO:v A.'I ET AL. 733 730 Opinion 5. Persons \vho satisfactorily complete respondents' courses are not in demand by those in the aerodynamics and aeronautics fields at any salary as respondents had not graduated any person at the time the statement was made.

6. Respondents do not guarantee or obtain positions for persons who have satisfactorily completed their courses with aircraft and airline companies, or with any other companies. 7. Respondents have not placed persons who have satisfactorily completed their courses in positions wit.h aircraft and airline companies, or with any other companies.

8. Respondents do not furnish instructors or teachers to give actual training in the homes of persons t.aking their courses. 9. Respondents do not employ persons who have satisfactorily completed their courses in their plant as respondents do not own a plant.

10. RrspoJ1(lents do nol refund the money paid by pU1'chasers if they fail the course.

11. Pictures of buildings in adver6sements were not buildings occupied by the corporate respondent at the time the advertisements were published and used.

PAR. 6. Respondents through the use of the corporate name "I-Ioffmann Aircraft Company" represent that they are engaged in the a.ircraft industry, when in truth and in :fact the.y are not so engaged. The use of said corporate name enhances and confirms the representation set out in Paragraph Four that respondents are in the aircraft industry.

PAR. 7. In the course fmd conduct of their business respondentsa.rc in substantial compctibon, in commerce, with corporations, firms and individun,ls engaged in the sale of correspondence courses covering the same subjects as those of respondents. PAR. 8. The use by respondents of the foregoing false, deceptive and misleading statements, representat.ions and practices had the tendency and capacity to mislcac1 a substantial portion of the public into the erroneous and mistaken belief that sllch statements and representations were true and into the purchase of subsbmtJal quantities of respondents' said courses by reason of such erroneous find mistaken belief. As a consequence t.hereof, trade. in commerce has been unfairly diverted to respondents from t11eir competitors and injury has thereby been done to competition in commerce. P.-\R. 9. The aforesaid acts and practices of respondents, as herejn a.alleged, were and are a.ll to the prejudice and injury of the public and of Tespondents' competitors and constituted and now constitute Decision 58 F.

unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of the Federal Trade Commission Act.

Mr. William A. Somers supporting the complaint. Mr. Donald E. Willson of Popham, Thompson, Poph"m Trusty & Oonway, of Kansas City, Mo., for respondents. INITIAL DECISION BY \V ALTER Ie. BEXNETT, HEARING EX_DfINER 1 The complaint in this proceeding was issued October 7, 1960 charging respondents with violation of the Federal Trade Commission Act by the use of false, deceptive and misleading statements, representations and practices, including the use of a misleading cm'porate name, in the sale or offering for sale of home study and correspondence courses. It 'vas twice amended by orders dat.ed November 18 1060 and January 30, 1961. The iirst amendment corrected an error in paragraph seven in the description of the courses offered and the second amendment corrected the name of respondent Hoyce George Hoffmann.

On :March 20 , 1961, counsel presented an agreement dated yfarch , 1961, among counsel supporting the complaint, each of the respondents and counsel for respondents, containing a consent order to cease and desist. Said agreement was duly approved by the Director, the Associate Director and the Assistant Director of the Bureau of Litigation.

The hearing examiner finds that said agreement includes all of the provisions required by Section 3.25(b) of the Rules of the Commission, that is:

A. An admission by all the respondent parties thereto of jurisdictional facts;

B. Provisions that:

1) The complaint, as amended, may be used in construing the terms of the order;

2) The order shah have the same force and effect as if entered after a full hearing;

3) The agreement shall not become a part of the offcial record of the proceeding unless and until it becomes a part of the decision of the Commission;

4) The entire record on which any cease and desist order be based shall consist solely of the complaint, as amended, and the agreement;

1 Title changed pursuant to order dated January 30, 1961 amending the complaint lis amended Kovcrnber 18, 1960 to use correct name of respondent Royce George Hoffmann. HOFFMM, AIRCRAFT COJ'IPA-'I ET AL. 735 730 Order 5) The order may be altered, modified, or set aside in the manner provided by statute for other orders; C. 'Waivers of:

1) the requirement that the decision must contain a statemcnt of findings of fact and conclusion of law;

2) Further procedural steps before the hearing examiner and the Commission.

In addition the agreement contains the following permissive provisions: A waiver by the respondents of any right to challenge or contest the validity of the order entered in accordance with the agreement, and a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the complaint s amended.

I-Iaving considered said agreement, including the proposed order and being of the opinion that it provides an appropriate basis for settlement and disposition of this proceeding; the hearing examiner hereby accepts the agreement but orders that it shall not become a part of the offcial record unless and until it becomes a part of the decision of the Commission.

The following jurisdictional findings are made and the following order issued:

1. Respondent IIoffmann Aircraft Company is a corporation existing and doing business under and by virtue of the la WB of the State of Kansas. Respondents George R. Hoffmann, Royce George Hoffmann, erroneously referred to in the complaint as Roger George Hoffmann, and Emma F. Hoffmann are individuals and offcers of said corporate respondent. The offce and principal place of business of said respondents is located at 8201 Craig, Overland Park Kansas.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of tbe respondents. ORDER It is ordered That respondents Hoffmann Aircraft Company, a corporation, and its ofiicers, and George R. Hoffmann, Royce George Hoffmann and Emma F. Hoffmann, individual.ly and as offcers of said corporation and respondents' represent.atives, agents and Nnployees, directly or through any corporate or other device, in connection with t.he offering for sale sale or distribution of home study and correspondence courses, in commerce, as "commerce" is 736 FEDERAL TRADE COMMSSION DECISIONS Order 58 F.

defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing, directly or by implication, that: (a) Respondents offer employment when, in fact, employment is not offered.

(b) Respondents win son their course only to those who have special qualifications.

(c) Respondents are an aircraft. manufacturing or airline company.

(d) Respondents give purchasers of their courses on-the-job training in an aircraft or airline plant.

(e) Persons who satisfactorily complete respondents' courses are in demand in the aerodynamics and aeronautics fields, unless such is a fact.

(f) Respondents guarantee employment with aircraft and airline companies to those that satisfactorily complete their courses. (g) Respondents have placed persons "ho have satisfactorily completed their courses in positions with aircraft or airline companies.

(h) Respondents give actual.l training by visits of their instructors or teachers to the homes of persons purchasing the courses. (i) Respondents wil employ persons who have satisfactorily completed the respondents' courses in their plant. (j) Respondents refund the purchase price of their courses to persons who take a.nd fail to pa,ss t.he same: unless such refnnds are actually ma.de.

2. Lsing pictures of plants or other facilities, in eonnection with the soEcitation of the sale of their courses, which they do not own or misrepresenting in any mallner the plant or other facilties which they may O'vn.

3. Using the words "Aircraft Company" as a part of any trade or corporate name under \which they do business. DECISION OF THE COllD\IISSION AXD ORDER TO FILE REPORT OF CO IPLIA The Commission having considered the initial decision of the hearing examiner filed April 5, 1961, wherein he accepted an agreement containing a consent order to cease and desist executed by the respondents and ('ounsel in support of the complaint; and It appearing that the ini6al decision erroneously characterizes one of the provisions of the consent agreement which is made mandatory by Section 3.25 of the Commission s Rules of Practice as "permissive; and the Commission being of the opinion that this error should be corrected:

UNITED STATES PLYWOOD CORPORATION ET AL. 737 730 Complaint It is o dered That the initial decision bc, and it hereby is, modified by striking therefrom the word "permissive" which appears in the first line of the last paragraph on page 2. It is further ordered That the initial decision as so modified shall on the 13th day of May 1961, become the decision of the Commission.

It is f"rther 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.