National Albums, Inc.

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

IN Tile l\fATTF:II OF NATIONAL ALBUMS. I:'C., ET AL.

cox SENT ORDER. :ETC. , I:N HGEARD TO THE ALLEGED YlOL\TION o.F nie FEDER"\L TR"\DE CO r:MISSION ACT Docket 7860. Compla,int, Apr. 8, 1960-Decision, May 16. 1961 Consent order requiring Los Angeles sellers of photograph albums together with certificates for photographs to be taken at independent affliated studios through salesmen who called upon mothers of newborn children particularly, to cease making such false representations as that persons solicited were specially selected, were to receive free a photograph album worth $49.95 and Up, and that the value of the album and photographs provided by the certificate was approximately $165.85. C01l(PLAINT Pnrsnant to the provisions of the Federal Trade Commission Act and by v;rtue of the authority vested in it by said Act, the Federal NATIONAL ALBl, , INC. , ET AL. 743 742 Complaint Trade Commission, having reason to believe that National Albums Inc., a corporation, and Harry Fracter, Harry A. Goldman, Albert Parvin and Rudy Haber, individually and as offcers 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 issues its complaint, stating its charges in that respect as foil ows :

PARAGRAPH 1. Respondent, N ationa.l Albums, Inc. , is a corporation organized, existing and doing business under and by virtue of the laws of the State of California, with its offce and principal place of business located at 8755 Colgate Avenue, Los Angeles California.

Respondents Harry Fracter, Harry A. Goldman, Albert Parvin and Rudy Haber are offcers of the corporate respondent. These individuals formulate, direct and control the policies, acts and practices of the corporate respondent and their address is the same as that of the corporate respondent.

PAR. 2. R.respondents are now, and for marc than one year last past have been, engaged in the sale and distribution of photograph albums, together '\vjth cer6ficates Tor photographs to be taken at independent affliated studios. In the course and conduct of their business, respondents either have caused their photograph albums when sold, and the aforesaid certificates, 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, or have shipped said albums across state lines to their salesmen who deliver albums to the purchasers upon thc execution of contracts of purchase. Respondents, subsequent to the purchase of albums, have engaged jn an extensive course of commercial intercourse in commerce with the purchasers. They maintain, and. at all times mentioned herein have maintajned, a course of trade in said albums and certificates in commerce, as "commerce" is defined in the Federal Trade Commission Act. Their volume of trade in said commerce js and has been substantial. Respondents further engage in commerce in that they transmit various jnstruments of a commercial TIftture to their customers located in states other than the State of California and rec.eive from said customers instruments of the same nature.

\lL 3. At all times men boned herein, respondents have been and are now, in direct and substantjal competition with other corporations, firms and indivjduaJs engaged in the sa.le and distribu- Complaint 58 F.

tion of photograph albums, together with certificates for photographs to be taken at independent studios. PAR. 4. Respondents, in connection with and as a part of their business, have entered into agreements or understandings with a number of photographic studios located in the various States of the United States, whereby said studios have agreed to honor certificates for photographs delivered to the purchasers of respondents' albums. These certificates provide that the holders are entitled to receive fourteen 8 x 10 photographs of any member of the family at the rate of two a year at intervals of not less than ninety days. In the course and conduct of their business, salesmen employed by responde,nts call upon individuals, usual,l1y mothers of newborn children, in their homes, whose names arc usually obtained from newspapers, hospitals, maternity lists, baby lists or by referrals, and solicit the sale of the aforesaid albums and certificates at a price of $19. 95.

PAR. 5. Respondents, in the course and conduct of their business by means of oral statements made by their sales representatives and by means of statements in the purchase cont.racts, have represented, directly or by implication:

1. That the persons solicited have been especially selected. 2. That the persons solicited were to receive a photograph a.lbum free.

3. That respondents' album was worth various amounts ranging from $49.95 upwards.

4. That the value of the album and the photographs provided by the certificate was approximately $165.85. PAR. o. The aforesaid representations were false, misleading and deceptive. In truth and in fact:

1. The persons solicited by respondents' salesmen are not espe- -eialJy selected.

2. The persons solicited do not receive an album free for the reason that they are required to pay $49. , which amount is a charge for the album.

3. Respondents' album is not worth or of a value of $49.95; that , its usual and customary selling price at retail is not $49.95. 4. The value of the album and the photographs provided by the certificate is substantially less than $165.85 in many areas where respondents have offered for sale and sold said combination. PAR. 7. The use by respondents of the foregoing false, misleading and deceptive statements and representations has ha,d and now has the tendency and capacity to mislead and deceive a substantial portion of the purchasing public into the error)eous and mistaken , ,, KATIONAL ALBUMS , INC., ET AL. 745 742 Decision belief that such statements and representations were true and to induce the purchasing public to purchase substantial quantities of respondents' albums as a result of such erroneous and mistaken belief. As a result thereof, trade has been unfairly diverted to respondents from their competitors and injury has thereby been done to competition in commerce.

PAR. 8. The aforesaid acts and practices of respondents, as herein alleged, were and are all to the prejudice and injury of thc public and of respondents' competitors and constituted and now constitute unfair and deceptive acts and practices in commerce and unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Act.

Mr. John J. McNally and july. E(l1vard F. Downs for the Commission.

Mindlin and Levy, by ,lit. VietoT L. Mindlin of Los Angeles Calif. , for respondents.

INITIAL DECISION BY LOREX 1-1. LA DGllLIN, I-IEARING EXA)f!XER The Federal Trade Commission (sometimes also hereinafter rererred to as the Commission), on April 8 , 1960, issued its complaint herein, charging the respondents National Albums, Inc. , a corporation, and flarry Fractcr, Harry A. Goldman, Albert Parvin and Rudy Haber, individually and as offcers of said corporation with having violated the provisions of the Federal Trade Commission Act, and respondents were duly served with process. On farch 21 , 1961 , there was submitted to the undersigned hearing examiner of the Commission for his consideration and approval an "Agreement Containing Consent Order To Cease And Desist" , which had been entered into by and between respondents theirKational Albums, Inc., Harry Fracter and Rudy I-laber, counsel and counsel supporting the comploint, under date of February 13, 1961, subject to the approval of the Bureau of Litigation of the Commission which had subsequently duly approved the same.

finds that said After clue consideration, the hearing examiner agreement, both in form and in content, is in accord with 83.25 of the Commission s Rules of Practice for Adjudicative Proceedings and that by said agreement the parties signatory thereto have specifically agreed to the following matters: 1. Respondent National Albums, Inc. is a corporation existing and doing business under and by vii"tue of the laws of the State California, with its offce and principal place of business located Decision 58 If.

at 8755 Colgate A venue, Los Angeles, California. Respondents Harry Fracter and Rudy Haber arc offcers of the corporate respondent. The said respondents formulate, direct and control the acts and practices of the corporate respondent and their address is the same as that of the corporate respondent. 2. The said respondents admit a11 the jurisdictional facts alleged in the complaint and agree that the record may be taken as if findings of jurisdictional facts had been duly made in accordance with such allegations.

3. This agreement disposes of all of this proceeding as to all parties and provides for dismissal of the charges of the complaint against respondents Harry A. Goldman and Albert Parvin, as indi yic1uals and as offcers of respondent corporation, on the basis of matter set forth in affdavits of Harry Fracter, Harry A. Goldman and Albert Panrin which are incorporated into this agreement by Tcfercnce.

4. Hesponclents a60nal Albums, Inc., a corporation, and Harry Fracter and Rudy :Haber, as individuals and as offcers of said corporation, waive:

(a) Any further procedural steps before the hearing examiner and the Commission;

(b) The making of findings of fact or conclusions of law; and (c) AI1 of the rights (hey may have to challenge or contest the validity of the order io cease and desist entered in accordance with this agreement.

5. The record on which the initial decision and the decision of the Commission shall be based shall consist solely of the complaint and this agreement.

o. This agreement shall not become a, part of the offcial record unless and until it. becomes a part of the decision of the Commission. 7. This agreement is for settlement purposes only and does not constitute an admission by the said respondents that they have violated the 1a w as alleged in the complaint. 8. The fol1moving order to cease and desist may be entered in this proceeding by t.he Commission without further notice to the said respondents. ,Vhen so entered it shall have the same force and effect as if ent.ered after a full hearing. It may be altered, modified or set aside in the manner provided for other orders. The complaint may be used in construing the terms of the order. Upon clue consideration of said complaint and agreement, the hearing examiner approves and accepts the sflid "Agreement Containing Consent Order To Cease And Desise' ; finds that the Commission has jurisdiction of the subject matter of this pro- NATIO AL ALBU:-iS , INC. , ET AL. 747 742 Decision ceeding and of the respondents herein; that the complaint states a legal cause for complaint under the Federal Trade Commission Act against respondents National Albums, Inc., a corporation, and IIarry Fracter and Hudy Haber, individually and as offcers of said corporation, both generally and in each of the particulars a11cged therein; that this proceeding is in the interest of the public; and that the following order to cease and desist, as proposed in said agreement, is appropriate for the just disposition of a1l the issues in this proceeding as to the corporate respondent and individual respondents Harry Fracter and Rudy Haber, as is the dismissal of the complaint herein, as provided for in the agreement, with respect. to respondents I-Iarry A. Goldman and Albert Parvin. Therefore It is G"dered That respondents National Albums, Inc. , a corporation, and its offcers, and IIany Fracter and Rudy Haber, as individuals or 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, sale or distribution of photograph albums or certificates for photographs in commerce, as "commerce" is defined in the Federal Trade Commission Act, do fortlnvith cease and desist from representing, directly or by implication:

(a) That persons solicited arc individually selected, or that they sell only to selected persons;

(b) That their album is given free or without cost; (c) That the value of the albums is any amount which is in excess of the price at "which such albums are usually and customarily sold at retail;

(c1) That the value of the photographs is 'my amount which is in excess of the price at which such pl1Otographs are usually and customarily sold at retail;

(e) That the value of the albums and the photographs, sold together, is any amount which is in excess of the price at which said albums and the photographs are usually and customarily sold, as separateIt 'is furtheritems, ato'l'deredretail. That the complaint herein, insofar as it concerns respondents I-Iarry A. Goldman and Albert Parvin, as individuals and as offcers of respondent corporation, be, and the same hereby is, dismissed.

DECISION OF THE COl\IlIISSION AND ORDER TO FILE REPORT OF C'ol\IPLIANC:J Pursuant to Section 3.'21 or the Commission s Rules of Practice the initial decision of the hearing examiner shall, on the 16th day of Complaint 58 F.

l\Iay 1961, become t.he decision of the Commission; and, accordingly: It is ordered That respondents National Albums, Inc., a corporation, and Harry Fracter and Rudy Haber, individual11y and as offcers of said corporation, 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.