Union Circulation Company et al.

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IN THE :M\ TTR OF 1.UNION CIRCULATIOX COMPANY ET AL.

cox SENT DIllER, ETC. , IN REGARD ' 0 THE ALLEGED VIOLATION OF THE FED- ER. L TRADE COjIlIISSIQN ACT Docket 0-725. Complaint, Jlar. 20, 1964-Decision, Mar. 20, 1964 Consent order requiring publishers' agents in Atlanta, Ga., engaged in the sale of magazine subscriptions to the public by door-to-door solicitors whom they provided with order and receipt forms and identification cards bearing their name, to cease representing falsely, throug-h statements of t.their salesmen fl1(l in printed matter, that their salesmen were selected young people '''OJ'king for cash a wards and competing for college scholarships, that they were authorized to take subscriptions for numerous magazines which they had no authority to sell, and that refunds were not available for subscriptions to magazines not on their authorized list but that subscribers must accept substitutes.

COMPLAINT ursuant to the provisions of the Federal 'Trade Commission \.ct flJjd by virtue of the authority vested in it by said ..\('t, the Federal Tnt-de Commission, having reason to believe that 1Jnion Circu1ntion Company, a corporation, and Cl1arles E. Reinhardt, Elmer Loftin lhny C. Jolly, R. L. Reinhardt William Brady, Laura C. plrs. Lenis "'V. ) Spiritc, and Lester T. Gay individually and as oficel's of said corporation, and Lovel L. )'la Jel's, inc1ivichmlly and as SHle L;nagel' or said corporation, hereinafter referred to as respondents violated the p1'o\'i510318 of 3a.icl Act: and it a.appearing to the 1382 FEDERAL TRADE COM:vrSSIOK DECrSIO:\S Complaint 64 F.

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 follows:

PARAGRAPH 1. Respondent Union Circulation Company is a corporation organized, existing and doing business under and by virtue of the laws of the State of Georgia, with its principal offce and piace of business located at 830 IV est Peachtree Street, N.IV. , Atlanta S Georgia.

Respondent Charles E. Reinhardt, Elmer Loftin, Harry C. Joll)', R. L. Reinhardt, William Brady, Laura C. (:lirs. Louis W. ) Spirite and Lester T. Gay are officers and directors of the corporate respondent. Lovel L. :\asters is Sales :lIanager of the corporate respondent. They formulate, direct and control its acts and practices including the acts and practices hereinafter set forth. Their address is tile same as that of the corporate respondent. PAR. 2. Respondents, as agents for "nrions publishers ftnrl rlis. tributors, are now, and for some time last pftst have been eng::1.ged in the sale of lllagazinc subscriptions to the public. Respondents are only authorized to sell certain magazines which are set out. 011 a list supplied to salesmen, fls set ont below . .He pondents rtid bue:ine conducted by solicitors or salesmen ,yho move from door-to-door ma,king direct solicitations for the sale of such subscriptions, r;lany of whom work under the supervision of independent contractors and some of whom are independent contractors for the clistributi0rt said magazines. Respondents provide such salesmen with order and receipt forms and identification cards bearing respondents: name and address and various other indicia identifying and having the ttfect of holding ant such salesmen as the respmJdents' duly autlwrLzed agents.

PAR. 3. In the course and conduct of their business, as afore aic1 respondents now sell, and for some time last past have sold, maga.zine subscriptions to customers located throughout the continental urcited t5states, Puerto Rico, Hawaii and parts of Cana,da. Said subscripticns along with other contracts, agreements and commercial paper, are forwarded to magazine publishers or distributors located in \"arious states other than those in which respondents: customers are locateo. for the purpose of fulfillng the subscription contracts. Respondents thereby engage in extensive commercial intercourse among and between the several states and maintain, and at aU 6mes ment.ioned herein have ma-intained, a substantial course of trade in said m gazinc subscriptions in commerce, as "commerce" is defined in the Federal Trade Commission Act.

UNION CIRCr;LATJON CO. ET AL. 1383 1381 Complaint PAR. 4. In the course and conduct of their business, as aforesaid and for the purpose of inducing the purchase of said magazine subscriptions, respondents, through the statements of their solicitors and in said printed material now make, and have made, numerous statements and representations to prospective subscribers. Among and typical of such statements and representations, but not all inclusive thereof, are the following:

A. That respondents are authorized to solicit and accept subscriptions, and do in fact solicit and accept subscriptions, to numerous magazines such as Vogue, The Sporting News, Living and others for which no such authorization in fact exists. B. That individual solicitors are among a group of young people carefully selected to work for individual cash awards. C. That said solicitors are competing for college. scholarship awards.

D. That a refund is not available to subscribers \,ho hrn-e. been induced to purchase maga.zines which respondents \Were not authorized to sell, and that such persons must accept a substitute subscription from respondents' authorized list.

PAR. 5. In truth and in fact:

A. Hespondents are not authorized to solicit and accept subscriptions to many magazines such as Vogue, The Sporting N e'\s and Living for which respondent.s in fact solicit and accept subscriptions. B. Individual solicitors are not among a. group of young people carefuHy selected to work for individual cash a\Yards. C. The solicitors are not competing for college scholarship nYarcl but arc merely commissioned sales agents, and no scholarship of any type is offered for such sales.

D. Hefunds are available to subscribers who have Pllrc1msecl rnagazines which respondents were not authorized to seh, but only after they have been subjected to coercion to accept a substitute from respondents' authorized list and have resist.ed such coercion. Therefore, the st.atements and representations as set forth in Paragraph Four were, and are, false, misleading and deceptive. PAR. 6. In the conduct of their business, and at all times mentioned herein, respondents have been in substantial competition in commcree, with corporations, firms and individuals engaged in the sale of magazine subscriptions of th€ same genera.l kind and nature as those sold by respondents.

PAR. 7. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had, and 224-069--70-- 1384 FEDERAL TRADE COMMISSION DBCISIONS Decision and Onder 64 F.

liOW has, the capacity and tendency to mislead members of the pur- "hasing public into the erroneous and mistaken belief that said statements and representations were, and are, true and into the purchase of a substantial number of subscriptions for magazines from the respondents by means of said erroneous and mistaken belief. PAll. 8. The aforesaid acts and practices of the respondents, as herein alleged, were, and are, all to the prejudice and injury of the public and of respondents' competitors and constituted, and now constitute, unfair methods of competition in commerce and unbir and deceptive acts and practices in commerce, in violation of Sootion 6 of the Federal Trade Commission Act.

DECISION AXD ORDER The Commission having heretofore determined to issue its complaint charging the respondents named in the caption hereof with violation of the Federal Trade Commission Act, and the respondents having been served with notice of sa-id determination and with a copy of the complaint the Commission intended to issue, together with a proposed form of order; and The responde,nts and counsel for the Commission having thereafter executed an agreement conta-ining a consent order, an admission by respondents of all the jurisdictional facts set forth in the complaint to issue herein, a statement that the signing of said agreement is for settlement purposes only and does not constitute an ad mission by respondents that the law has been violated as set forth in such complaint, and ,vaivers and provisions as required by the Commission s rules; and The Commission, having considered the agreement, hereby accepts same, issues its complaint in tl1c form contemplated by said agreement, makes tho following jurisdictional findings, and enters the following order:

1. R.esponclcnt -Union Circulation Company is a corporation organized, existing and doing business under and by virtue of the la"\ys of the State of Georgia, with its offce and principal place of business located at 830 West Peachtree Street, N.1Y. , in the city of A atlanta, State of Georgia.

Respondents Charles E. Reinlmrdt, Elmer Loftin, Harry C. Jolly, H. L. TIcinharc1L ,Villiam Brady, L.mra C. lrs. Louis IV. ) Spirite and Lester T. Gay are offcers of said corporation, and Lovel L. l\Iflstcrs is Sales :Manager of said corporation, and their address is 1!J. ::,lme fls that of said corporation.

, l)l\ ION CIRC(jLATION CO. ET AL. 1385 1381 Decision and Order 2," The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of t.he respondents, and the proceeding )s in the public intel'e,st.

ORDBR It is olde1' That respondent Union Circulation Company, a corporLltioll, and jt offcers, ,wd Charles E. Reinhardt, Elmer Loftin Hany C. Jolly, R. L. Reinhardt William Bmdy, Laura C. (Mrs. Louis ,V. ) Spirite, and Lester T. Gay, individually and as offcers of said corporation, and 1.o1'eJ L. :Ia,stcrs, individually and as Sales L1.Hlger of said corporation, and respondents' representatives a.gents nncl employees, directly or through any corporate or other device, in connection with the oft'erjng for sa.le, sale or distribution oJ Ilmgllzine subscriptions, periodicals, books or other publications in commerce, as "commerce:' is dcfmec1 in the Federal Trade Commission Act, do fortlndth cease and desist from: 1. R,representing, direct.ly or by ilnplication, that they are authorized to solieit. or accept subscriptions to, or to sell any of 1he aforesaid products other than those for which they are lctna11y nllthoriz('cl to 80Jicit or sell. :2. Accepting or taking subseriptions to, or selling any of, the ,do resaid products other than those for which they are actually authorized to solicit or sell.

3. Heprescnting, directly 01' by imphcation, that respondents olicitors or agents are carefully selected from a group of young people to ,york Jor individual cash awa.nls. J. Represent.ing, directly or by implication, that respon(l(,l1t8 :'olicitors or agents are competing for scholarship awards. 5. Representing, directly or by implication, that refunds are not available to purchasers of the aforesaid subscriptions for articles which respondents had no authorization to sell. 6. Seeking\ in any manner, to induce purchasers of any of the aforesaid subscriptions or a1'6cles which respondents had no authority to sell to a.accept in lieu thereof any other subscriptions 01' articles.

7. Furnishing, or otherwise placing in the hands of others the means and instl'umentfl1it.ies by and through which they may mislead or deceive the public in the manner or as to the tl1ings here.inabove prohibited.

I t is f1!.Jther oJ'de-Jecl. That the respondents l1e.rein s11a,11, within Ly (60) days after service upon them of this onler, file with the Commission a report in \'rit.ing setting forth in det.ail the manner and form in wl1ich they have complied \'ith this order. 1386 FEDERAL TRADE CO IMISSION DECISIONS Complaint 64 F.