Book Club Guild, Inc.

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IN THE :Mi TIR OF nook CLUB GUILD, INC., ET AL.

CONSENT ORDER, ETC. , IN RECL\Iil TO THE ALLE(;ED VIOLATION OF THE FEDERAL Trial.DE CO).G\rISSIOX ACT Docket C- Complaint, JJa1l2? , 1961,-Decfsio/1 May27, 1964 Consent order requiring a corporate book seller and its subsidiaries in Manhflsset, N. , operating under a variety of trade names such as ":\iinisters Rook Service Pastoral Psycholog 7 Book Club" , etc.. to cease representing fabely through their various letterheads and other materials. that delinquent customers' namps have been transmitted to a bona fide credit reporting agel1:,''' and that their credit rating wil he adversely affected. Couplaint Pursua,nt to It.he provisions of the Fedcra.l Trade Commission Act and by virtue of the a,llthority vested in it by aid Act, the Frc1era 1 Trade Commissio111 having reason to believe that Book Club Guild Inc., Evangelical Books, Inc. , :Jfedic-\Va,y, Inc. , and R,e.ligious Book , , 786 FEDERAL TRADE CO:-L\IISSIOK DECISIO \TS Complaint 65 .r Club, Ine., corporations, and Lester L. Doniger, Halph R.ullghley j\nd Jonathan Springer, as offc.ers of each of said corporations, hereinafter referred to as respondents, have violated the provisions of said Act and it appearing to the Commission that" procecding 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 Book Club Guild, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York with its principal offce and place of business located at 400 Community Drive, in the Village of Manhasset, Stat" of ="ew York.

Jiespondents Evangelical Books, Inc., Medic-'Vay, Inc. , and Religions Book Club, Inc., are corporations organized, existing and doing business under and by virtue ofthe la"s ofthe State of New York with their prinicpal of!ices lmd places of business located l1t 400 Community Drive in the Village of Manhasset, State of ="ew York. 'Respondents Evangeliea.! Books, Ine. re.dic- Vay, Inc., and Religious Book Club Inc.., are wholly o\\"ncd subsidiaries of respondent Book Cllib Guild Inc.

Respondents Lester L. Doniger, Ilalph Ilaughley and Jonathan SpringcI' are offcers of each of said corporate respondents. They as corporate ofiicers, formulate! direct and control the acts and practices of t,he said corporate respondents including the ads and practices hereinn.after set forth. Their nrldre:-:: 1:: t 1e same as that of the corporate respondents.

\R. 2,. Respondents are now, and for some time last past have been engaged in the advertising, offering for sale, sale and distribution of hooks, publications and other merchandise to the general public. Respondent Book Club Guild, Inc., engages in the aforesaid activity under the names Iinisters Book Service The linister s Dollar Book Club" and the "Pastoral Psychology Book Club". Respondent Evangelica.l Books, Inc., engages in the aforesaid activity Imder the name "Evangelical Books . Respondent ledic-'Vay, Inc. , engages in the aforesaid activity under the name "CIHU Club of Inspirational Books . Respondent Ileligions Book Club, Inc., engages in the llforesaid nctivity under the name "Religious Book Club", All of the aforesaid activities ate eonducte.d as one business operation under the direction, control and supervision aT the individual respondents. The books, publications and other merchandise are advertised, offered for sale, sold and payment made therefor through the United States mails.

PAR. 3. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their said books, pub- BOOK CLUB GUILD ) IXC. , ET AL. 787 785 Complaint. lieations and other merchandise when sold to be shipped from their place of business in the State of N e\',' York to purchasers thereof located in the various other States of the United States and in the District of Columbia, and maintain, and at a,n times mentioned herein have maintained, a substantial course of trade in said books, publications and other merchandise in commerce, as "commerce" is defined in the Federal Trade COl1llnission Act.

PAR. 4. In the course and conduct of their business and for the purpose of inducing the payment of purportedly delinquent accounts, respondents hate made certclill statements and representations through letter's and materials sent through the -United States 'mails to purportedly delinquent customers who have purchased books, publications or other merchandise.

Typical, but not all inclusive of said statements and represent.atives are the follo\\ing:

a. On the letterhead of the Pastoral Psychology Book Club and the Hcligious Book Club:

PLEASE XO' g! I have intervened temporarily to prevent your accuunt from guing to a collection agency because I am sure YOIl intclJlcd to pay this \Jill. * * " b. On the letterhead of the Pastoral Psycholog" Book Club, Religious Beok Club, The Minister s Dollar Book Club, and the CIHU Club of Inspirat.ional Books and Evangelic.al Books: .. * ,. As members of the :\Iail Order Credit Reporting Association, we are obliged to l"eport from time to time, for the benefit of other mCllbers, all nmne:: of o;nb. scribers who have failed to pay as they have agreed. I llotice that your name appears on a list which is ready to be forwarded in such a report. . . .

.. '" '" I am equally sure that you wil waut to help us protect your credit standing b)' t.aking care of your a('(' ol1nt at once. c. On the letterhead of Evangelical Books:

'Tre are going to have to turn your account over to a collection agency. d. On the letterhead of CIHU Club of Inspirational Books: * '" * The amount is quite small, and I am sure you would like to clean it up once and for all. Then both of us wil have it out of the way, and we can avoid the more formal and less pleasant ' procedures which must be taken. e. On t.he. following letterhead:

The :\iail Order Credit Reporting Association, Inc. Credit Reports Collections New York 18, X.

.ATTE;\TTIOX PLEASE Our client has asked us to write to you in hope that we can help bring about a frit'ndly settlement of your long overdue account. '" .. ,. )._ : . :, 788 FEDERAL TRADE COMl\IISSION DECISIONS Complaint 65 F.

IMMEDIATE ACTION:' L'IPERATIVE! Again we bring up the matter or your past due account. We are stil hopeful that this matter can be settled on a friendly basis. Which wil it be? * * '"

TAKE ?\NOTICE THAT-- We have been authorized by onr clients to collect tlle amount yon OWP them for books they c1eliverec1 to yon at your spcciflc instance and request. Prompt payment wil clear the slate without any unpleasantness. '" * . URGE:'T! Your failure to settle your account leaves our client no choice but to n. as follows :

, within fifteen days fl"Om this date, settlement in fuji is not in om lanc1s. our client has stated that they willlllconr1itionalJy turn your account over' to a regional collection agency.

PAn. 5, By and through the use of the aforesaid statements, representations and practices: a,nd others of similar import not specifically set out herein, respondents represent and have represented that.: a.. If payment is not made, the delinquent customer s name. i transmitted to a bona. fide credit reporting agency. b. If pa.yment is not made, the customer s general or publi :" credit rating will be adycl'sely affected.

c. If payment is not made. respondents are required to l'eft'l' the information of such c1elinquerwy to The ::Uail Order Cle,cL, As: oci(ttion, Inc.

el. If payment, is not made the delinquent custollel' s c1CCC. l\lt is turned over to ft sBparatc, bona fide collection agency. 8. The I\Iail Order Credit Reporting Asso('iation Inc. , if: a sepann bona fide collection and credit reporting agency located in :: L \"I York City.

f. Respondents have turned oyer to said The l\Iail Order Cre(l1t Reporting Association, Inc., t.he 'delinquent aCUJlllt of the' ':;v, t(m18l' for collection and other purpose.

g. The letters and notices on the Jetterhead of the said Th' \Iajl Order Credit Reporting .sociation Inc. hate been prep" ed and mailed by said organization.

PAR. 6. In truth and in fact:

a. If payment is not made, the delinquent customer s name is not tra.nsmHted to a. bona fide crcdit reporting agency. b. If payment is 110t made, the customer s general or pubic credit rating will not bc adversely affected.

c. If payment is not made, respondent.s atp not required to refer the information of such delinquency to The :Mail Order Credit. Reporting Association, Inc., or any otller organization or age.ncy. d. If pa,yment is not milde, the delinquent customer s acc.count is not turned over to a separate, bonn, fide collection agency. BOOK CLUB Guild, L , ET AL. 789 785 Decision and Order e. The Iail Order Credit Reporting Assoeiation, Inc.., is not a separa.te. bona fide collection or credit reporting agency. Said organization is a name utilized by respondents and others for purposes of dissemina6ng collection letters.

f. Respondents have not turned over to said The Mail Credit Reporting Association: Inc., the delinquent account. of the customerOrder for c.ollection or any other purpose.

g. The letters and notices on the letterhead of the said The Mail Order Credit Reporting Association, Inc., ha,ye not been prepared or mailed by said organization. Said letters and not.ices have been prepared and mailed by respondents. Replies in response to said letters and notices are forwarded unopened to respondents. Therefore, the statements and rcpr,esentatjons as set forth in Pa.ragraphs Four a.nd Five hereof were and are false, misleading and deceptive.

PAR. I. The use by respondents of the aforesaid false, misleading and deceptive statem.ents, representations and practices lias had, and now has the capacity.y a.nd tendency to mislead members of the purchasing public into the erroneous and ll1mistaken belief t.hat said statements nnd representations were and are true and into the payment of subst.antial nms of money to respondents by reason of said erroneous and IT' isto.ken belief.

PAR. 8. The aforesaid acts and practices of respondents, as herein 2Jlegec1 \There and are aU to the prejudice and injury of the public and ccn5t,1t,utec1 and now constitute, unfair and deceptive acts and practices jn cmnmerce in -violation of Section 5 of t.he Federal Trade Conlmission Act.

DECISIO),T AND Order The, Commission having heretofore determined to Issue its complaint. charging the respondents named in t11c caption hereof with viol tion1 of the Federal Trade Comnlisslon Act: and the respondents lUli-ing been served -r"ith notice of said determination and ,,-ith a copy of t.he c.complaint the Commission intended to issue: together \with a. p r'oposed form of order; and The respondents and counsel for the Commission having thereafter executed an agreement conta.ining a consent order, an admission by respondents of aU the jurisdictional facts set fort.h in the complaint to issue lwrein, a stat.ement that the signing of said agreement is for se.then:Jent purposes only and does not constitute an achnission by re spondent.s t.1at the law has been violated as se.t forth in such complajnt and lsaiv('rs and provisions a.s required by th8 Commission s rules; and 790 FEDERAL TRADE CO:\HlISSION DECISIONS Decisiull and Order 65 l! , hereby accepts The Commission, having considered the agreement same, issues its complaint in the form contemplated by saiel agreement makes the following jurisdictional findings, and enters the following order:

, Inc., Eyange1ical Books, Inc. 1. Respondents Book Club Guild , Inc. , are corporations Medic- ay, Inc. and Religions Book Club organized, existing and doing business nuder and by virtue of the laws of the State of J\ ew York, with their principal oflices and place of in the Village of J.fanhasset business located at 400 Community Drive, State of N cw York.

Respondents Lester L. Doniger, Ralph Ranghley and Jonathan Springer are offcers of each of said corporate respondents a.nd their Rddress is the same as that of said corporate respondents. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents and the proceeding is in the public interest.

ORDER It is ordered That respondents Book Club Guilc1, Inc., Evangelical Books, Inc., Medic-1Vay, Inc., and Religious Book Club, Inc. , cm.porations and their respective offcers, and Lester L. Doniger, Ralph Raughley, and Jonathan Springer, as offcers of each of said corpodi. rations, and respondents agents, representatives and employees, in conneC'ion with the rectly or through any corporate or other device, publications or other offering for snJe, sale or distribution of books, 1 is defined in the Federal nlerchandise in commerce.e as "commerce Trade Commission Act, do forthwith cease and desist from represent.ng, directly or by implication that;

1. A customer s name has been turned over to a bona fide cre,dit reporting agency or that a customer s general or public credit rating will be adversely affected unless respondents establish that where payment is not received, the information of said delinquency is referred to "hat respondent.s in good faith believe to be a separate, bona fide credit report.ng agency; 2. R.respondents are required to refer information of a customer delinquency to The Mail Credit Reporting Association, Inc. or any other agency or bureau;Order 3. Delinquent accounts will be or have been turned over to bona fide, separate collection agency unless respondents in fact turn over such accounts to such agencies;

4. Delinquent accounts have been or "iJ be turned over to The yIail Order Credit Reporting Association, Inc., for collection or any other purpose;

, , BELGARD & FRANK, INC" ET AL. 791 785 CtHll!11aint 5. The J.Iail Orde.r Credit Reporting Association, Inc. , a.ny fictitjous name, or any tra,de name owned in whole or in part by respondents or over "which respondents exercise ally direction or c.control, is an independent bona fide c.olle,ction or credit reporting agency;

G. Notices or other communications which respondents have, or have caused to be prepared, written or mailed in connection with the collection of respondents' accounts, have been sent by The l\lail Order Crcdit Reporting Association, Inc., or any other fictitious person, firm or agency.

It V, further O?'dered That the respondents herein shall, "itmn sixty (60) days after service upon them of this order, file with the Commission a report in writing setting :forth in detail the ma.nner and :form in which they ha,ve complied with this order