Credit Card Service Corporation

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

IN THE MATTER OF CREDIT CARD SERVICE CORPORATION, ET AL. *.5 1 4 1 1 2 656 545 123 51 87.303848 ORDER,5 1 4 1 1 3 792 563 90 33 92.487663 ETC.,5 1 4 1 1 4 897 563 41 24 96.209129 IN5 1 4 1 1 5 952 562 138 25 93.288528 REGARDS 1 4 1 1 6 1104 557 136 30 91.849823 TO-THES 1 4 1 1 7 1248 563 161 24 96.388557 ALLEGED5 1 4 1 1 8 1420 546 200 41 96.566971 VIOLATIONS 1 4 1 1 9 1635 563 45 24 96.551056 OF5 1 4 1 1 10 1693 562 76 25 96.578278 THEA 1 4 1 2 0 898 614 628 25 -1 5 1 4 1 2 1 898 614 161 24 96.949028 FEDERAL5 1 4 1 2 2 1074 614 114 24 96.041656 TRADES 1 4 1 2 3 1204 614 238 25 96.041656 COMMISSIONS 1 4 1 2 4 1457 614 69 25 95.999809 ACT2 1 5 0 0 0 680 684 1067 32 -1 3 1 5 1 0 0 680 684 1067 32 -1 4 1 5 1 1 0 680 684 1067 32 -1 5 1 5 1 1 1 680 685 112 25 96.268173 Dockets 1 5 1 1 2 806 687 83 23 95.905609 8861.5 1 5 1 1 3 904 685 178 31 96.301277 Complaint,5 1 5 1 1 4 1094 685 79 31 95.628349 Aug.5 1 5 1 1 5 1187 688 46 28 93.300598 24,5 1 5 1 1 6 1247 684 260 32 88.647293 1971—Decision,5 1 5 1 1 7 1519 686 70 25 95.292175 Jan.5 1 5 1 1 8 1604 687 45 29 95.292175 19,5 1 5 1 1 9 1664 687 83 23 83.698181 1973.2 1 6 0 0 0 553 752 1318 498 -1 3 1 6 1 0 0 553 752 1318 498 -1 4 1 6 1 1 0 553 752 1316 33 -1 5 1 6 1 1 1 553 753 97 26 96.635780 Orders 1 6 1 1 2 669 753 155 32 96.501747 requiring5 1 6 1 1 3 844 761 39 18 96.616859 an5 1 6 1 1 4 903 752 194 33 96.258606 Alexandria,5 1 6 1 1 5 1117 752 150 33 95.780952 Virginia,5 1 6 1 1 6 1288 752 88 27 96.220871 sellers 1 6 1 1 7 1395 752 33 27 96.446136 of5 1 6 1 1 8 1446 752 216 33 96.439781 memberships5 1 6 1 1 9 1682 752 32 26 96.350594 in5 1 6 1 1 10 1735 760 17 18 95.980103 a5 1 6 1 1 11 1772 752 97 26 96.123566 credit4 1 6 1 2 0 630 794 1241 33 -1 5 1 6 1 2 1 630 796 70 26 96.654808 cards 1 6 1 2 2 718 795 194 32 96.759850 registrations 1 6 1 2 3 931 795 122 32 96.578690 service,5 1 6 1 2 4 1072 803 108 24 96.334854 among5 1 6 1 2 5 1198 794 85 26 96.287804 others 1 6 1 2 6 1300 795 103 32 96.271141 things5 1 6 1 2 7 1421 796 30 25 95.912102 to5 1 6 1 2 8 1470 803 84 18 95.912102 ceases 1 6 1 2 9 1572 794 212 32 96.265953 representing5 1 6 1 2 10 1801 794 70 26 96.366165 that4 1 6 1 3 0 631 836 1240 33 -1 5 1 6 1 3 1 631 845 17 18 96.339478 a5 1 6 1 3 2 666 838 95 26 96.339478 credits 1 6 1 3 3 778 836 176 27 96.395470 cardholders 1 6 1 3 4 973 837 25 26 96.480385 is5 1 6 1 3 5 1015 836 184 33 95.749702 responsible5 1 6 1 3 6 1216 837 51 26 96.542328 for5 1 6 1 3 7 1283 839 142 30 96.816750 payments 1 6 1 3 8 1443 837 32 26 96.597733 of5 1 6 1 3 9 1494 837 40 26 96.023720 all5 1 6 1 3 10 1552 836 91 33 96.038002 goods5 1 6 1 3 11 1662 836 60 26 96.267525 ands 1 6 1 3 12 1740 836 131 26 96.945297 services4 1 6 1 4 0 630 878 1241 34 -1 5 1 6 1 4 1 630 879 137 27 96.347282 obtained5 1 6 1 4 2 794 880 39 31 96.347282 by5 1 6 1 4 3 859 879 216 26 96.430191 unauthorized5 1 6 1 4 4 1102 887 52 18 96.321503 uses 1 6 1 4 5 1179 879 32 26 96.083511 of5 1 6 1 4 6 1237 879 48 26 96.519951 his5 1 6 1 4 7 1312 878 95 27 96.292137 credits 1 6 1 4 8 1433 878 101 34 96.352486 cards;5 1 6 1 4 9 1564 878 211 33 96.281281 representing5 1 6 1 4 10 1801 878 70 26 96.443771 that4 1 6 1 5 0 630 921 1241 33 -1 5 1 6 1 5 1 630 922 144 32 96.159813 potential5 1 6 1 5 2 797 921 130 32 96.159813 liability5 1 6 1 5 3 950 921 138 27 96.402550 incurred5 1 6 1 5 4 1111 921 132 32 96.282532 through5 1 6 1 5 5 1266 921 215 26 95.976730 unauthorized5 1 6 1 5 6 1505 929 52 19 96.544571 uses 1 6 1 5 7 1580 921 34 26 95.630264 of5 1 6 1 5 8 1634 921 48 26 96.774300 his5 1 6 1 5 9 1705 921 72 26 95.371727 cards 1 6 1 5 10 1799 929 72 23 96.217972 may4 1 6 1 6 0 630 963 1241 33 -1 5 1 6 1 6 1 630 966 122 24 96.698174 amounts 1 6 1 6 2 775 966 31 24 96.798599 to5 1 6 1 6 3 829 972 82 18 96.009773 sums5 1 6 1 6 4 934 963 85 33 93.255447 large5 1 6 1 6 5 1042 964 172 32 89.273239 enough.to5 1 6 1 6 6 1239 972 87 18 96.603699 causes 1 6 1 6 7 1350 964 140 26 96.090866 financial5 1 6 1 6 8 1515 964 59 26 96.389076 loss5 1 6 1 6 9 1599 972 35 18 96.798195 or5 1 6 1 6 10 1657 963 84 32 93.235703 ruin;5 1 6 1 6 11 1768 971 103 24 91.550400 repre-4 1 6 1 7 0 630 1005 1240 33 -1 5 1 6 1 7 1 630 1007 119 31 95.822296 senting5 1 6 1 7 2 772 1007 68 25 96.336250 that5 1 6 1 7 3 865 1007 205 31 96.736526 respondents’5 1 6 1 7 4 1096 1006 112 26 96.520248 services 1 6 1 7 5 1232 1014 54 18 96.643837 cans 1 6 1 7 6 1312 1007 117 31 96.076088 protects 1 6 1 7 7 1453 1006 94 26 96.076088 credits 1 6 1 7 8 1572 1005 191 32 96.435493 cardholders5 1 6 1 7 9 1789 1005 81 27 96.261795 from4 1 6 1 8 0 630 1047 1240 33 -1 5 1 6 1 8 1 630 1049 180 26 96.554626 substantial5 1 6 1 8 2 830 1049 141 25 96.286026 financial5 1 6 1 8 3 990 1049 59 25 96.543251 loss5 1 6 1 8 4 1069 1056 36 18 95.637634 or5 1 6 1 8 5 1120 1048 83 32 96.026993 ruin;5 1 6 1 8 6 1225 1049 112 31 96.296463 failing5 1 6 1 8 7 1355 1050 32 24 96.614204 to5 1 6 1 8 8 1405 1049 190 31 95.964996 incorporates 1 6 1 8 9 1615 1049 30 25 96.133972 in5 1 6 1 8 10 1664 1047 124 27 93.177383 written5 1 6 1 8 11 1807 1055 63 18 90.997337 ma-4 1 6 1 9 0 630 1090 1240 28 -1 5 1 6 1 9 1 630 1092 88 25 96.183044 terials 1 6 1 9 2 736 1100 33 17 96.183044 or5 1 6 1 9 3 786 1091 85 26 96.347191 radios 1 6 1 9 4 887 1099 34 18 95.999184 or5 1 6 1 9 5 937 1090 157 27 95.279678 televisions 1 6 1 9 6 1111 1091 202 27 95.279678 commercials5 1 6 1 9 7 1329 1099 18 17 96.291283 a5 1 6 1 9 8 1365 1092 161 24 95.827888 statements 1 6 1 9 9 1543 1093 31 24 95.827888 to5 1 6 1 9 10 1591 1091 51 25 96.851906 thes 1 6 1 9 11 1660 1090 89 26 96.582726 effects 1 6 1 9 12 1765 1090 69 26 96.185028 that5 1 6 1 9 13 1852 1097 18 18 96.084526 a4 1 6 1 10 0 628 1132 1242 35 -1 5 1 6 1 10 1 628 1134 139 32 96.366196 January5 1 6 1 10 2 787 1135 82 30 96.461853 1971,5 1 6 1 10 3 891 1133 125 26 96.410065 Federal5 1 6 1 10 4 1038 1133 56 25 96.271584 laws 1 6 1 10 5 1116 1133 93 34 95.998169 limits5 1 6 1 10 6 1230 1133 129 31 96.460548 liability5 1 6 1 10 7 1381 1134 30 25 96.780319 to5 1 6 1 10 8 1434 1133 52 31 96.613655 $505 1 6 1 10 9 1507 1133 49 26 96.240570 for5 1 6 1 10 10 1577 1132 217 27 96.171242 unauthorized5 1 6 1 10 11 1816 1140 54 18 96.395317 use4 1 6 1 11 0 629 1174 1241 34 -1 5 1 6 1 11 1 629 1176 33 26 96.694626 of5 1 6 1 11 2 682 1176 94 27 96.053032 credits 1 6 1 11 3 796 1175 103 33 96.248344 cards;5 1 6 1 11 4 923 1175 58 26 96.248344 ands 1 6 1 11 5 1002 1175 110 32 95.867485 failing5 1 6 1 11 6 1132 1177 31 25 96.478394 to5 1 6 1 11 7 1183 1175 123 32 96.828789 provides 1 6 1 11 8 1328 1175 186 32 95.868439 prospective5 1 6 1 11 9 1536 1177 166 24 96.720177 customers5 1 6 1 11 10 1723 1175 72 25 96.850708 with5 1 6 1 11 11 1818 1174 52 26 96.817970 thea 1 6 1 12 0 629 1217 463 33 -1 5 1 6 1 12 1 629 1218 243 32 93.002747 above-required5 1 6 1 12 2 889 1217 203 27 96.154350 information.2 1 7 0 0 0 1100 1310 224 31 -1 3 1 7 1 0 0 1100 1310 224 31 -1 4 1 7 1 1 0 1100 1310 224 31 -1 5 1 7 1 1 1 1100 1310 224 31 89.403999 COMPLAINT2 1 8 0 0 0 552 1384 1318 397 -1 3 1 8 1 0 0 552 1384 1318 397 -1 4 1 8 1 1 0 598 1384 1270 41 -1 5 1 8 1 1 1 598 1387 183 32 96.538124 Pursuant5 1 8 1 1 2 804 1389 36 29 96.538124 to5 1 8 1 1 3 864 1386 59 31 96.830292 thes 1 8 1 1 4 949 1386 199 39 96.100662 provisions5 1 8 1 1 5 1173 1386 38 31 96.679794 of5 1 8 1 1 6 1234 1386 61 32 95.846046 thes 1 8 1 1 7 1320 1386 147 31 95.958008 Federal5 1 8 1 1 8 1492 1386 115 31 96.164230 Trades 1 8 1 1 9 1633 1384 235 32 96.478554 Commission4 1 8 1 2 0 553 1435 1316 41 -1 5 1 8 1 2 1 553 1437 80 39 96.468506 Act,5 1 8 1 2 2 655 1438 69 32 95.691910 ands 1 8 1 2 3 745 1437 46 39 96.016846 by5 1 8 1 2 4 811 1437 118 32 96.490494 virtues 1 8 1 2 5 949 1437 40 31 96.017731 of5 1 8 1 2 6 1008 1437 60 33 96.671547 thes 1 8 1 2 7 1089 1437 184 37 96.267601 authority5 1 8 1 2 8 1294 1437 121 31 96.248360 vested5 1 8 1 2 9 1436 1437 36 30 96.567039 in5 1 8 1 2 10 1495 1437 27 30 96.053558 it5 1 8 1 2 11 1543 1437 45 37 96.164955 by5 1 8 1 2 12 1610 1436 78 32 96.394127 said5 1 8 1 2 13 1708 1436 79 37 96.774872 Act,5 1 8 1 2 14 1807 1435 62 32 96.369423 thea 1 8 1 3 0 553 1486 1317 46 -1 5 1 8 1 3 1 553 1489 148 31 96.832886 Federal5 1 8 1 3 2 724 1488 115 32 96.497803 Trades 1 8 1 3 3 862 1488 244 38 96.181335 Commission,5 1 8 1 3 4 1129 1488 141 39 78.392288 having:5 1 8 1 3 5 1283 1497 128 33 93.864868 reasons 1 8 1 3 6 1430 1490 36 42 96.837990 to5 1 8 1 3 7 1489 1488 133 31 95.802666 believes 1 8 1 3 8 1643 1487 80 31 96.494034 that5 1 8 1 3 9 1746 1486 124 32 96.831299 Credit4 1 8 1 4 0 554 1537 1315 41 -1 5 1 8 1 4 1 554 1539 93 32 96.419876 Cards 1 8 1 4 2 666 1539 143 33 96.678520 Services 1 8 1 4 3 826 1539 245 39 96.408569 Corporation,5 1 8 1 4 4 1090 1548 21 22 96.631561 a5 1 8 1 4 5 1129 1539 236 39 96.191406 corporation,5 1 8 1 4 6 1384 1539 107 38 96.359024 doing5 1 8 1 4 7 1507 1539 164 31 96.343842 business5 1 8 1 4 8 1689 1548 39 21 96.626938 as5 1 8 1 4 9 1746 1537 123 32 96.757774 Credit4 1 8 1 5 0 554 1589 1315 40 -1 5 1 8 1 5 1 554 1590 93 32 96.717636 Cards 1 8 1 5 2 669 1590 141 32 95.599075 Services 1 8 1 5 3 831 1590 152 38 95.599075 Bureau,5 1 8 1 5 4 1005 1590 68 31 95.128830 ands 1 8 1 5 5 1095 1590 92 31 93.121231 Johns 1 8 1 5 6 1208 1590 39 31 91.943527 P.5 1 8 1 5 7 1270 1590 123 39 96.469139 Ferry,5 1 8 1 5 8 1417 1590 231 36 96.462868 individually5 1 8 1 5 9 1670 1589 69 31 95.888702 ands 1 8 1 5 10 1761 1599 39 21 96.954819 as5 1 8 1 5 11 1822 1598 47 21 96.048805 an4 1 8 1 6 0 553 1640 1315 39 -1 5 1 8 1 6 1 553 1640 117 32 96.497971 officers 1 8 1 6 2 687 1641 38 32 96.170242 of5 1 8 1 6 3 742 1641 77 32 96.170242 said5 1 8 1 6 4 837 1641 235 38 96.574219 corporation,5 1 8 1 6 5 1091 1641 222 30 96.625908 hereinafter5 1 8 1 6 6 1331 1640 162 32 96.148842 referred5 1 8 1 6 7 1510 1642 36 29 96.148842 to5 1 8 1 6 8 1564 1650 39 21 96.270561 as5 1 8 1 6 9 1622 1640 246 38 95.993599 respondents,4 1 8 1 7 0 552 1690 1317 40 -1 5 1 8 1 7 1 552 1691 91 33 96.433769 have5 1 8 1 7 2 663 1692 152 31 96.958023 violated5 1 8 1 7 3 836 1692 60 31 96.984543 thes 1 8 1 7 4 915 1692 200 38 96.195480 provisions5 1 8 1 7 5 1136 1692 38 30 96.941444 of5 1 8 1 7 6 1195 1691 76 31 96.463120 said5 1 8 1 7 7 1293 1692 77 36 96.169182 Act,5 1 8 1 7 8 1393 1692 69 30 96.169182 ands 1 8 1 7 9 1484 1692 28 30 95.869324 it5 1 8 1 7 10 1533 1690 198 40 95.869324 appearing5 1 8 1 7 11 1750 1692 37 29 96.125717 to5 1 8 1 7 12 1808 1690 61 31 96.252258 thea 1 8 1 8 0 553 1740 1315 41 -1 5 1 8 1 8 1 553 1742 235 32 94.353378 Commissions 1 8 1 8 2 809 1743 81 30 95.941628 that5 1 8 1 8 3 912 1752 20 21 95.941628 a5 1 8 1 8 4 955 1743 211 38 96.042274 proceedings 1 8 1 8 5 1186 1742 46 37 96.673050 by5 1 8 1 8 6 1255 1743 28 30 95.439308 it5 1 8 1 8 7 1306 1743 35 30 96.316696 in5 1 8 1 8 8 1365 1743 138 37 96.691574 respects 1 8 1 8 9 1524 1742 143 31 96.628174 thereof5 1 8 1 8 10 1687 1741 115 31 96.181923 would5 1 8 1 8 11 1825 1740 43 31 96.893135 be2 1 9 0 0 0 553 1788 1377 58 -1 3 1 9 1 0 0 553 1788 1377 58 -1 4 1 9 1 1 0 553 1788 1377 58 -1 5 1 9 1 1 1 553 1793 36 31 96.861687 in5 1 9 1 1 2 619 1794 61 31 96.694389 thes 1 9 1 1 3 709 1794 116 39 96.319336 public5 1 9 1 1 4 856 1793 159 43 96.311607 interest,5 1 9 1 1 5 1047 1793 129 37 96.099976 hereby5 1 9 1 1 6 1208 1793 113 31 95.889511 issues5 1 9 1 1 7 1352 1794 47 30 95.889511 its5 1 9 1 1 8 1429 1788 195 58 56.137665 complaints 1 9 1 1 9 1647 1792 143 50 56.137665 stating5 1 9 1 1 10 1821 1791 62 38 57.882748 its2 1 10 0 0 0 550 1844 1320 651 -1 3 1 10 1 0 0 552 1844 671 39 -1 4 1 10 1 1 0 552 1844 671 39 -1 5 1 10 1 1 1 552 1844 149 39 96.316978 charges5 1 10 1 1 2 717 1845 35 30 96.501419 in5 1 10 1 1 3 767 1845 79 31 96.501419 that5 1 10 1 1 4 861 1846 138 36 96.429123 respects 1 10 1 1 5 1014 1854 38 22 96.441910 as5 1 10 1 1 6 1066 1844 157 31 96.441910 follows:3 1 10 2 0 0 551 1894 1318 294 -1 4 1 10 2 1 0 598 1894 1270 39 -1 5 1 10 2 1 1 598 1895 225 32 96.418526 PARAGRAPHS 1 10 2 1 2 852 1896 29 31 94.030540 1.5 1 10 2 1 3 920 1894 122 33 96.286148 Credits 1 10 2 1 4 1073 1895 92 32 96.889626 Cards 1 10 2 1 5 1196 1895 141 32 96.786118 Services 1 10 2 1 6 1369 1895 235 38 95.996155 Corporations 1 10 2 1 7 1636 1894 30 32 96.315826 is5 1 10 2 1 8 1696 1904 22 21 93.080719 a5 1 10 2 1 9 1746 1903 122 29 92.545547 corpo-4 1 10 2 2 0 552 1945 1317 40 -1 5 1 10 2 2 1 552 1946 119 32 96.671532 rations 1 10 2 2 2 690 1947 107 38 96.315559 doing5 1 10 2 2 3 814 1946 163 32 96.315559 business5 1 10 2 2 4 995 1956 39 22 96.952049 as5 1 10 2 2 5 1054 1946 121 32 95.170860 Credits 1 10 2 2 6 1194 1946 93 32 95.170860 Cards 1 10 2 2 7 1307 1946 141 32 96.034203 Services 1 10 2 2 8 1467 1946 152 32 96.552917 Bureau.5 1 10 2 2 9 1639 1946 34 31 95.924194 It5 1 10 2 2 10 1691 1945 30 32 93.275604 is5 1 10 2 2 11 1740 1954 129 28 92.187744 organ-4 1 10 2 3 0 553 1996 1315 40 -1 5 1 10 2 3 1 553 1996 85 39 96.036438 ized,5 1 10 2 3 2 658 1997 157 39 96.349998 existing5 1 10 2 3 3 832 1997 69 39 95.916557 ands 1 10 2 3 4 920 1997 108 38 96.853683 doing5 1 10 2 3 5 1044 1997 163 32 96.516983 business5 1 10 2 3 6 1226 1998 112 31 96.905205 under5 1 10 2 3 7 1357 1998 69 31 96.100113 ands 1 10 2 3 8 1443 1997 46 38 96.522385 by5 1 10 2 3 9 1507 1997 118 32 95.912964 virtues 1 10 2 3 10 1645 1996 39 32 96.664482 of5 1 10 2 3 11 1702 1996 60 32 96.715240 thes 1 10 2 3 12 1781 1996 87 31 96.715240 laws4 1 10 2 4 0 552 2046 1317 41 -1 5 1 10 2 4 1 552 2047 39 32 96.613068 of5 1 10 2 4 2 614 2048 62 32 96.613068 thes 1 10 2 4 3 699 2048 100 33 96.803802 States 1 10 2 4 4 823 2048 40 32 96.683212 of5 1 10 2 4 5 886 2048 194 38 95.928116 Delaware,5 1 10 2 4 6 1105 2048 88 31 96.303520 with5 1 10 2 4 7 1217 2048 48 32 96.570946 its5 1 10 2 4 8 1289 2048 175 39 96.680267 principals 1 10 2 4 9 1490 2047 96 32 96.136574 offices 1 10 2 4 10 1611 2048 69 31 96.388496 ands 1 10 2 4 11 1706 2047 99 39 96.388496 places 1 10 2 4 12 1830 2046 39 32 96.714569 of4 1 10 2 5 0 551 2097 1318 40 -1 5 1 10 2 5 1 551 2098 164 33 96.147179 business5 1 10 2 5 2 741 2099 134 32 96.214493 located5 1 10 2 5 3 901 2100 37 31 96.886749 at5 1 10 2 5 4 964 2100 88 31 96.709320 46605 1 10 2 5 5 1078 2098 178 33 96.499359 Kenmore5 1 10 2 5 6 1280 2099 147 32 96.192787 Avenues 1 10 2 5 7 1452 2099 36 32 95.535194 in5 1 10 2 5 8 1513 2099 61 32 96.733658 thes 1 10 2 5 9 1600 2099 73 38 96.427246 city5 1 10 2 5 10 1699 2097 39 32 93.122353 of5 1 10 2 5 11 1763 2098 106 31 91.254227 Alex-4 1 10 2 6 0 552 2150 498 38 -1 5 1 10 2 6 1 552 2150 137 38 92.392143 andria,5 1 10 2 6 2 706 2150 100 32 96.404640 States 1 10 2 6 3 821 2150 39 32 96.404640 of5 1 10 2 6 4 875 2150 175 38 96.395836 Virginia.3 1 10 3 0 0 550 2199 1319 244 -1 4 1 10 3 1 0 598 2199 1271 40 -1 5 1 10 3 1 1 598 2200 228 39 96.261047 Respondents 1 10 3 1 2 846 2201 93 32 93.295143 Johns 1 10 3 1 3 960 2201 38 32 90.765274 P.5 1 10 3 1 4 1019 2201 113 38 96.566566 Ferry5 1 10 3 1 5 1153 2201 29 32 96.554756 is5 1 10 3 1 6 1203 2211 45 21 96.854996 an5 1 10 3 1 7 1270 2200 195 33 96.581070 individuals 1 10 3 1 8 1486 2202 69 31 95.351753 ands 1 10 3 1 9 1576 2201 31 32 96.086693 is5 1 10 3 1 10 1627 2210 46 22 96.628937 an5 1 10 3 1 11 1693 2200 117 32 95.855835 officers 1 10 3 1 12 1830 2199 39 31 96.403297 of4 1 10 3 2 0 552 2250 1317 47 -1 5 1 10 3 2 1 552 2251 60 32 96.686523 thes 1 10 3 2 2 629 2253 186 38 96.265900 corporate5 1 10 3 2 3 832 2252 224 45 96.143929 respondent.5 1 10 3 2 4 1075 2251 54 33 96.143929 He5 1 10 3 2 5 1144 2251 223 40 96.496536 formulates,5 1 10 3 2 6 1386 2252 141 38 96.579597 directs,5 1 10 3 2 7 1546 2253 70 31 96.638260 ands 1 10 3 2 8 1635 2251 155 32 96.494080 controls5 1 10 3 2 9 1808 2250 61 32 96.739784 thea 1 10 3 3 0 552 2297 1316 45 -1 5 1 10 3 3 1 552 2303 76 32 96.740097 acts5 1 10 3 3 2 647 2304 69 31 96.219032 ands 1 10 3 3 3 735 2297 232 44 96.596794 practices5 1 10 3 3 4 927 2293 41 53 95.906212 of5 1 10 3 3 5 984 2303 60 32 96.950226 thes 1 10 3 3 6 1062 2304 187 37 96.371033 corporate5 1 10 3 3 7 1267 2304 224 38 96.262573 respondent,5 1 10 3 3 8 1512 2302 184 39 96.639610 including5 1 10 3 3 9 1714 2302 60 33 96.706795 thes 1 10 3 3 10 1792 2303 76 31 96.763367 acts4 1 10 3 4 0 551 2353 1317 39 -1 5 1 10 3 4 1 551 2353 71 33 96.846313 ands 1 10 3 4 2 646 2354 175 38 95.980247 practices5 1 10 3 4 3 843 2354 222 32 96.461090 hereinafter5 1 10 3 4 4 1089 2355 54 31 95.604134 sets 1 10 3 4 5 1165 2354 112 32 95.604134 forth.5 1 10 3 4 6 1303 2354 67 32 96.086342 His5 1 10 3 4 7 1394 2354 147 32 96.109695 address5 1 10 3 4 8 1567 2354 30 32 96.181816 is5 1 10 3 4 9 1621 2354 61 32 96.790657 thes 1 10 3 4 10 1708 2363 97 22 96.865341 same5 1 10 3 4 11 1829 2362 39 22 96.975159 as4 1 10 3 5 0 550 2404 684 39 -1 5 1 10 3 5 1 550 2404 82 32 95.303688 that5 1 10 3 5 2 655 2405 39 32 95.515816 of5 1 10 3 5 3 718 2405 58 32 95.733635 thes 1 10 3 5 4 787 2406 199 37 95.733635 corporate5 1 10 3 5 5 1011 2405 223 38 96.352287 respondent.3 1 10 4 0 0 598 2455 1272 40 -1 4 1 10 4 1 0 598 2455 1272 40 -1 5 1 10 4 1 1 598 2455 86 33 95.062668 Par.5 1 10 4 1 2 712 2457 30 30 95.963631 2.5 1 10 4 1 3 780 2456 245 39 95.963631 Respondents5 1 10 4 1 4 1054 2466 61 22 96.806335 ares 1 10 4 1 5 1143 2466 89 28 96.648865 now,5 1 10 4 1 6 1263 2456 68 32 96.741913 ands 1 10 4 1 7 1361 2456 59 32 96.654167 for5 1 10 4 1 8 1449 2466 95 22 96.509445 some5 1 10 4 1 9 1573 2456 87 32 96.445717 times 1 10 4 1 10 1688 2456 71 32 96.195724 lasts 1 10 4 1 11 1786 2457 84 37 96.032661 past Complaint 82 F.T.C.

have been engaged in the advertising, offering for sale, sale and distribution to the public of memberships in a credit card registration service.

Par. 3. In the course and conduct of their business as aforesaid, respondents now cause, and for some time last past have caused, their said credit card registration service memberships to be sold from their place of business in Virginia to purchasers thereof located in various other States of the United States, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in said service in commerce, as “commerce’ is defined in the Federal Trade Commission Act. Par. 4. In the course and conduct of their aforesaid business, and for the purpose of inducing the purchase of memberships in their credit card registration service, the respondents have made after January 24, 1971, and are now making, numerous statements and representations in advertisements inserted in newspapers and in direct mail and other promotional material with respect to the potential liability of a credit card holder if his credit cards are used by a person or persons not authorized to engage in such use.

Typical and illustrative of said statements and representations, but not all inclusive thereof, are the following: You’ve seen the newspaper reports. Smart cautious business men, after a brief moment of carelessness, find themselves liable for thousands. A few hundred if you’re lucky. Or as much (in one case) as $175,000. But legally they are stuck. They have to pay credit card charges” they knew nothing about. Car rentals. Round-the-world cruises. Luxury motel bills. Lavish entertaining. Dinner parties in expensive restaurants. Tailored clothing. Furs, jewels, rare perfumes for girl friends. Chartered: planes. A clever thief may be scheming to lift your wallet, containing your credit cards. Your charge plates. Your bank book. Some blank checks. And anything else that lets you charge goods or services, instead of paying cash. Once he gets his hands on them HE will do the charging—and YOU WILL HAVE TO PAY.

This is legal. It is the law.

No matter where you are, pick up a phone and make a TOLL-FREE phone call te Credit Card Service Bureau—800-336-0220. Our trained staff will instantly swing into action to legally protect you against any and all loss from unlawful use of your credit cards * * * your charge plates. No need to wait. CCSB’s phones are ALWAYS monitored. You can eliminate all this risk for as little as 12 cents a week. BUT YOU MUST ACT AT ONCE. Simply fill in and mail the enclosed Application, together with your check for the $9.

P.S. Save $8 more. Make your order for $19, FULL 3-YEAR CCSB WAVE A WU ERANY WEAVE AWE WAU oy 44d dane ae 191 Complaint Membership. It’s worth our while because we save on administrative costs. Our way of saying “thank you” is to pass some of this savings on to you. And, remember, whether you elect the 1-year or 8-year membership, you ~ can charge. the low cost to your Bank Americard or. Master Charge card. PAR. 5 By and through the use of the above-quoted statements and representations, and others of similar import and meaning but not expressly set out herein, the respondents have represented and are now representing directly or by implication that:

1. A credit card holder who suffers a loss or theft of credit cards is legally responsible and will have to pay for all goods and services obtained by unauthorized use of his credit cards. 2. The potential liability which a card holder may incur through the unauthorized use of his credit cards may amount to sums large enough to cause the card holder financial ruin. 3. Respondents’ services can protect a credit card holder from large financial loss or financial ruin resulting from unauthorized use of his credit cards.

Par. 6. In truth and in fact:

1. A credit card holder who suffers a loss or theft of credit cards is not legally responsible and will not have to pay for all goods and services obtained by unauthorized use of his credit cards. : - 2. The potential liability which a credit card holder may incur through the unauthorized use of his credit cards may not amount to sums large enough to cause the card holder financial ruin. 3. Respondents’ services cannot protect a credit card holder from large financial loss or ruin resulting from unauthorized use of his credit cards, because the credit card holder’s financial lossis limited by Section 183 of Public Law 91-508 to fifty dollars ($50), and in some events to no liability, as set forth hereinafter. Section 133 of Public Law 91-508 (effective January 24, 1971) provides that if a card issuer wishes to hold a card holder liable, he can do so only if:

a. the card has been accepted (is not unsolicited) ; b. the liability does not exceed $50;

c. adequate notice of potential liability was furnished to the card holder;

d. the card issuer has provided an addressed notification statement which the card holder may return in the event of loss or theft of a credit card;

Complaint 82 F.T.C.

e, the unauthorized use occurs before the card holder has notified the card issuer of the loss, theft or other occurrence; and f. for cards issued after January 24, 1971—-and after January 24, 1972 for all cards no matter when issued—a card holder is liable for unauthorized use only if the card issuer has provided a method by which the user of a card can be identified as the person authorized to use it.

Therefore, the statements and representations as set forth in Paragraphs Four and Five hereof were and are false, misleading and deceptive. < Par. 7. In the course and conduct of their aforesaid business, and at all times mentioned herein, respondents have been, and now are, in substantial competition, in commerce, with corporations, firms and individuals in the sale of services of the same general kind and nature as those sold by respondents. Par. 8. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had, and now has, the capacity and tendency to mislead members of the purchasing public inte the erroneous and mistaken belief that said statements and representations were and are true and into the purchase of substantial numbers of respondents’ credit card registration service memberships by reason of said erroneous and mistaken belief. Under the foregoing circumstances, the retention by respondents of funds obtained as a result of the sale of credit card registration-service memberships is unfair.

Par. 9. The aforesaid acts and practices of 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 unfair and deceptive acts and practices in commerce in violation of Section 5 of the Federal Trade Commission Act. Mr. Michael J. Carson and Mr. James L. Fletcher supporting the complaint.

Steptoe & Johnson, Washington, D.C., by Mr. Richard A. Whiting, Mr. Michael D. Campbell for respondents. 191 Initial Decision INITIAL DECISION By ANDREW C. GOODHOPE, HEARING EXAMINER APRIL 4, 1972 PRELIMINARY STATEMENT On August 24, 1971, the Federal Trade Commission issued the complaint in this proceeding charging respondent Credit Card Service Corporation (“Credit Card’) and respondent John P. Ferry (“Ferry”) with the violation of Section 5 of the Federal Trade Commission Act by making, after January 24, 1971, false, misleading and deceptive statements and by engaging, after January 24, 1971, in unfair methods of competition and in unfair or deceptive acts or practices by misrepresenting in their-advertising material, soliciting subscriptions to their credit card protection service, the potential liability of a cardholder in the event his credit cards are used by a person or persons not authorized to engage in such use.

Respondents filed their answer on October 4, 1971, specifically denying the making of any false, misleading or deceptive statements after January 24, 1971, and also denying that they had engaged in any unfair method of competition or unfair or deceptive act or practice. .

After a prehearing conference and a number of meetings, counsel in support of the complaint and counsel for the respondents entered into stipulations (CX 14, 15) and on January 5, 1972, a hearing was held at which time the stipulations and supporting documents for both parties were received in the record. Thereafter, counsel in support of the complaint and counsel for respondents filed proposed findings “of facts andbriefs in support thereof. Any proposed findings of fact or conclusions not found herein either specifically or by implication are rejected and the hearing examiner, having considered the entire record, including proposed findings of fact and conclusions and memoranda filed by both parties, makes the following findings of fact:

m. . 2 FINDINGS OF FACT 1. Respondent Credit Card Service Corporation is a corporation doing business as Credit Card Service Bureau. It is organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal office and place of Initial Decision 82 F.T.C.

business located at 4660 Kenmore Avenue in the city of Alexandria, State of Virginia. | 3. Respondent John P. Ferry is an individual and is the president of the corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent, including the acts and practices of the corporate respondent set forth in the complaint. His address is the same as that of the corporate respondent.

8. Respondents are now, and for sometime last past, have been engaged in the advertising, offering for sale, sale and distribution to the public of memberships in a credit card registration service.

For a charge of $9 per year or $19 for three years, the respondents provide the following services, among others, to their subscribers: rapid notification on behalf of the subscriber to credit card companies of the fact that a subscriber’s credit cards have been lost or stolen; assisting subscribers in resolving alleged billing errors of credit card companies; assisting subscribers in changing of addresses on credit cards and in obtaining new cards. (CX 1 C, 2 C, 3 C, 3 D through E, 4 B and D, 6 and 9; RX 4 and 5) A, In the course and conduct “of respondents’ business, respondents now cause, and for sometime last past, have caused their credit card registration service memberships to be sold from their place of business in Virginia to purchasers thereof located in various other States of the United States, and maintain, and at all times mentioned herein. have maintained, a, substantial course of trade in their service in commerce, as “commerce” is defined in the Federal Trade Commission Act. 5. The charge of violation of Section 5 of the Federal Trade Commission Act involves that portion of respondents’ advertising after January 24, 1971, which includes references to the possibility of credit card holder liability for the unauthorized use of such cards but which allegedly does not adequately disclose the existence or substance of the limitations on such liability provided for in Public Law 91-508. 6. Public Law 91-508 was enacted by Congress on October 26, 1970, as an amendment to the Truth in Lending Act (15 U.S.C. § 1601, ef seq.). (CX 14) Section 502 (15 U.S.C. § 1643) of that law, which became effective on January 24, 1971, provides as follows:

Section 1648. Liability of holder of credit card—Limits on Liability (a) A cardholder shall be liable for the unauthorized use of a credit card UPDDVLL UAW DistwV suis Uae oy wen one 191 . Initial Decision only if the card is an accepted credit card, the liability is not in excess of $50, the card issuer gives adequate notice to the cardholder of the potential liability, the card issuer has provided the cardholder with a self-addressed, . ._prestamped envelope to be mailed by the cardholder in the event of the loss or theft of-tke credit card, and the unauthorized use occurs before the cardholder has notified the card issuer that an unauthorized use of the credit card has occurred or may occur as the result of loss, theft, or otherwise. Notwithstanding the foregoing, no cardholder shall be liable for the unauthorized use of any credit card which was issued on or after the effective date of this section, and, after the expiration of twelve months following such effective date, no cardholder shall be liable for the unauthorized use of any credit card regardless of the date of its issuance, unless (1) the conditions of liability specified in the preceding sentence are met, and (2) the card issuer has provided a method whereby the user of such card can be identified as the person authorized to use it. For the purposes of this section, a cardholder notifies a card issuer by taking such steps as may be reasonably required in the ordinary course of business to provide the card issuer with the pertinent information whether or not any particular officer, employee, or agent of the card issuer does in fact receive such information.

(b) In any action by a card issuer to enforce liability for the use of a credit card, the burden of proof is upon the card issuer to show that the use was authorized, or, if the use was unauthorized, then the burden of | proof is upon the card issuer to show that the conditions of liability for the unauthorized use of a credit card, as set forth in subsection (a), have been met.

(c) Nothing in this section imposes liability upon a cardholder for the unauthorized use of a credit card in excess of~his liability for such use under other applicable law or under any agreement with the card issuer. (d) Except as provided in this section, a cardholder incurs no liability from the unauthorized use of a credit card. 7. Respondents, before January 24, 1971, knew of the existence of Pub.L. 91-508 and of its effective date. (RX 14, { 8). 8. On December 29, 1970, respondents directed -Credit. Card’s two mailing houses to mail 700,000 copies of the Ferry letter (CX 1-A through D) by January 18, 1971. (CX 14, 7.4) This letter, which contains several references to the virtually unlimited potential liability of a credit card holder resulting from unauthorized. use of his credit cards, makes no reference to Pub.L. 91-508. (CX 14, 18; see App. A attached hereto for a copy of this letter) * 9. Due to administrative delays within the mailing houses, copies of the Ferry letter were mailed after January 24, 1971, the last mailing having occurred on February 4, 1971. (RX 14, *Appendices A and B not reported.

Initial Decision 82 F.T.C.

17) No mailings of this material have been made since that date. (RX 14, 7 9) 10. There is no evidence that respondents caused the delays at the mailing houses or even knew of their existence. 11. Respondents. have, since January 24, 1971, made four direct mail solicitations, two additional mailings and have run four separate newspaper advertisements. (RX 14, 99 10, 11 and 14; see App. B attached hereto* for copies of such solicitations and mailings) 12. In the mailings, solicitations and newspaper advertisements described above [a representative number of Such mailings and solicitations appear in Appendixes A and B attached hereto and made a part hereof], respondents represented that: a credit card holder who suffers the loss or theft of his credit cards is legally responsible and will have to pay for all goods and services obtained by such unauthorized use of his credit cards; the potential liability which a card holder may incur through the unauthorized use of his credit card may amount to sums large enough to cause the card holder financial ruin; respondents’ services can protect a credit card holder from large financial loss or financial ruin resulting from unauthorized use of his credit card. 13. In fact, as a result of the passage of Public Law 91-508 as an amendment to the Truth in Lending Act, the pertinent portions of which are quoted above, a credit card holder who suffers the loss or theft of his credit cards is not legally responsible and will not have to pay for all goods and services obtained by unauthorized use of his credit cards; thé potential liability which a credit card holder may incur through the unauthorized use of his credit cards may not amount to sums large enough to cause the card holder financial ruin; respondents’ services cannot protect a credit card holder from large financial loss or ruin resulting from unauthorized use of his credit cards. 14. The amendment to the Truth in Lending Act provides that a card holder is not liable for any unauthorized use of his credit card unless the following conditions have been met: the card has been accepted (is not unsolicited) ; liability in any event cannot exceed $50; adequate notice of potential liability was furnished to the card holder; the card issuer has provided a pre-stamped, addressed notification statement which the card holder may return *Appendices A and B not reported.

191 Initial Decision in the event of a loss or theft of a credit card; the unauthorized use occurs before the card holder has notified the card issuer of the loss, theft or other occurrence; and for cards issued after ~January 24, 1971—and after January 24, 1972 for all cards no matter when issued—a card holder is liable for unauthorized use only if the card issuer has provided a method by which the user of a card can be identified as the person authorized to use it. Consequently, any advertisements of the services which the respondents provide which do not fully and explicitly set forth the limitations of liability provided in the amendment to the Truth in Lending Act must be considered deceptive. 15. Respondents urge that in view of the allegations of Paragraph Four of the complaint that respondents made deceptive mailings after January 24, 1971, no finding of violation “can be based upon the so-called “Ferry” letter (CX 1 A-D) since the respondents directed their mailings of this letter prior to January 24, 1971. Further, they urge that the fact that some of the mailings of this letter occurred after January 24, 1971, cannot be charged to them since they were not responsible for the delay in the mailings. The fact remains, however, that the amendments to the Truth in Lending Act actually were enacted by Congress on October 26, 1970, and that the respondents were aware of the existence of this Act before January. 24, 1971, and of its effective date.

16. The best that the examiner can find in the respondents’ favor was that they were cutting a very fine line by putting 700,000 copies of this Ferry letter in the mail after the Act was passed but before it became effective. The fact that some of the mailings occurred subsequent to the effective date of the Act, January 24, 1971, must also be attributed to respondents since their agents were doing the mailing and respondents set no cutoff date beyond which mailings should stop. The examiner finds that under the circumstances, the respondents must be held accountable for this letter and for the completely unqualified and misleading statements in the letter in the face of the amendment to the Truth in Lending Act, of which they were aware. 17. The respondents further urge that their mailings, solicitations and other advertising were improved subsequent to January 24, 1971, the effective date of the amendment, to give subscribers to its services notice of the amendment to the Truth in Lending Act. The contention must be rejected. The next mailing Initial Decision 82 F.T.C.

was in March 1971 of the. so-called “George Baine” letter. (CX 2 A through 2 E; App. B) This letter describes a mythical George Baine who had his wallet containing from 10 to 20 credit cards stolen. The letter in lurid detail describes poor Mr. Baine’s predicament. There is no indication in this letter that the amendment’ to the Truth in Lending Act existed except for a vague reference to the fact that respondents’ service “reduces your liability below the legal limit established by current state and federal laws.” The next mailing in June 1971 (CX 3 B; App. B) is another letter similar to the George Baine letter, except this one involves “Mr. Hammette” who lost his wallet containing credit cards. This letter does contain a reference to the amendment to the Truth in Lending Act. setting forth in an incomplete fashion the liability provisions for unauthorized use provided by that Act. The letter goes on to the effect that the mythical Mr. Hammette could be liable for $174,000 for unauthorized use of his credit cards under the Act. In additional mailings made in June 1971 (RX 4 and 5; App. B), respondents do refer to the amendment to the Truth in Lending Act, but again in an incomplete and confusing fashion, stating that. anyone could be held liable up to $50 for unauthorized use of his credit card. As found above the amendment to the Truth in Lending Act has a number of conditions which must be fulfilled before any credit card issuer can hold anyone liable for unauthorized use of the credit card in any amount.

As a result, it is found that even in their: solicitations, mailings and other advertisements subsequent to the effective date of the amendment to the Truth in Lending Act, the respondents have failed to adequately set forth the provisions of that Act. 18. In addition, respondents urge that the statements made in their mailings, solicitations and other advertisements are true since a substantial number of credit cards are issued to the users or the users’ employers solely for business purposes. The argument is that Section 104 of the Truth in Lending Act provides that such Act shall not apply to “Credit transactions involving extensions of credit for business or commercial purposes, or to government or governmental agencies or instrumentalities, or to organizations.” And that since Public Law 91-508 is inserted into the Truth in Lending Act as an amendment following Section 131 of that Act, the exemption provided in Section 104 of the Truth in Lending Act applies to the amendment pertaining to the lia- WAVER L UERAUY WAUAU TAU Es UUAVE oy 244 chase paar 191 : Initial Decision bility of holders of credit cards. Consequently, respondents urge that the services which they supply and the claims that they make are accurate insofar as they pertain to holders of credit éards used-for business or commercial purposes. To support this argument, the respondents cite three informal staff opinions. The first two of these are respondents’ Exhibits 9 and 10 which are letters to unknown addressees signed by Griffith L. Garwood, an attorney in the Truth in Lending Section of the Federal Reserve Board. He states that the Truth in Lending Act’s exclusion of extensions of credit for business and commercial purposes from coverage by that Act leads him to believe that the amendment to the Truth in Lending Act involving credit cards likewise does not apply to credit cards used for commercial purposes. The third such letter is respondents’ Exhibit 11, in which counsel in support of the complaint repeats that it is his opinion that credit cards used for commercial purposes are not protected by the amendment to the Truth in Lending Act limiting a card holder’s liability for unauthorized use of a credit card which has been issued or used for business or commercial uses. These are apparently the only opinions on this subject in existence at this time.

19. The examiner cannot concur_in these opinions. It is quite obvious that the credit card provisions were inserted by Congress as an amendment to the Truth in Lending Act merely as a convenient place to insert such provisions for efficient administration by the Federal Reserve Board and the Federal Trade Commis- - sion. Anyone seeking to borrow money for a business or commercial reason can safely be assumed to be sufficiently knowledgeable or to have the advice of an accountant or attorfiey; in seeking such a loan and would therefore be fully apprised as to the entire matter including interest and any other charges involved and would not need the protection provided by the Truth in Lending Act. This, however, has nothing to do with the protection given to credit cards by the credit card amendment. The examiner is unable to subscribe to the theory that a truck driver, taxi driver, traveling salesman or even a business executive would not have their credit cards protected against unauthorized use by the credit card provisions to the same extent as any other citizen. It would require a strained interpretation of the credit card provisions of the Truth in Lending Act to construe them as providing that a person traveling on business and purchasing Initial Decision — 82 F.T.C.

gas with a credit card for an automobile used in such business would not be protected while the same person’s wife or family could have and use a credit card, possibly from the same card issuer, to purchase gasoline for the family automobile and have that card protected. No person should lose his status as a consumer simply because he is engaging in business or working. It is concluded, therefore, that the credit card amendment to the Truth in Lending Act is intended to protect all credit cards. 20. As of September 30, 1971, respondents had approximately 48,000 subscribers to their credit card registration service. Approximately 26,855 of these subscribed to respondents’ credit card registration service during the period January 1, 1971 to September 30, 1971.

21. In the course and conduct of their business, and at all times mentioned herein, respondents have been, and now are, in substantial competition, in commerce, with corporations, firms and individuals in the sale of services of the same general kind and nature as those sold by respondents. CONCLUSIONS 1. Statements and representations made by the respondents in direct mail and other advertising material promoting the sale of respondents’ credit card registration service regarding the potential liability of a credit card holder if his credit cards are used by a person not authorized to engage in such use are false, mis- | leading and deceptive. The respondents have failed to set forth in their advertising material the existence of the credit card amendment to the Truth in Lending Act and the provisions of that Act as they pertain to the liability of a credit card holder for unauthorized use of his credit card. 2. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had, and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations were and are true and irito the purchase of substantial numbers of respondents’ credit card registration memberships by reason of said erroneous and mistaken belief. Under the foregoing circumstances, the retention by respondents of funds obtained as a result of the sale of credit card registration service memberships is unfair. 191 Initial Decision 3. The aforesaid acts and practices of respondents 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 unfair and deceptive acts and’ practices in commerce in Violation of Section 5 of the Federal Trade Commission Act.

ORDER It is ordered, That respondents Credit Card Service Corporation, a corporation, its successors and assigns, doing business as Credit Card Service Bureau or under any other name, and its officers, and John P. Ferry, individually and as an officer of said corporation, and respondents’ agents, representatives and employees, directly or through any corporate or other device, in connection with the advertising, offering for sale or sale of their credit card registration service, through the sale of memberships or by any other device, in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing, directly or by implication, that a credit card holder who suffers a loss or theft of credit cards is legally responsible and will have to pay for all goods and services obtained by unauthorized use of his credit cards. 2. Representing, directly or by implication, that the potential liability which a card holder may incur through the unauthorized use of his credit cards may amount to sums large enough to cause large financial loss or financial ruin. 3. Representing, directly or by implication, that respondents’ services can protect a credit card holder from large financial loss or financial ruin resulting from unauthorized -use of his credit cards.

4. Representing, directly or by implication, that a credit card holder can incur any liability resulting from the unauthorized use of his credit cards, except to the extent expressly provided for in Public Law 91-508. 5. Failing to incorporate the following notice clearly and conspicuously in any written material offering the sale of respondents’ credit card registration service to the public: IMPORTANT NOTICE Effective January 24, 1971, a Federal law provides that a cardholder has no liability for unauthorized use of his credit card unless all of the fol- Initial Decision 82 F.T.C.

lowing four conditions are met. If the card issuing company (1) has notified, you of your new limited liability, (2) has: provided you with a prestamped envelope by which to notify them of a loss, (3) the card contains an approved method of identification, and (4) the use occurred before the card issuer is notified, then your liability is limited to $50 per card. 6. Failing to incorporate the following notice clearly and conspicuously in any radio or television commercial offering the sale of respondents’ credit card registration service to the public:

A Federal law limiting to a maximum of $50 per card protects you from charges on lost or stolen credit cards. Along with your membership application Credit Card Service Corporation will give you details concerning this _law.

7. Failing to provide each prospective customer who responds to a radio or television commercial offering the sale of respondents’ credit card registration service with the notice required by order Paragraph 5.

8. Failing to provide each of its customers who have subscribed to respondents’ credit card registration service on or after January 24, 1971, the effective date of Public Law .91-508, and who did so-.as. a consequence of receiving the advertising material cited in the complaint or advertising containing representations substantially similar to those alleged by the complaint to be deceptive irrespective of when such advertising was received with a copy of the following notice, and a self-addressed envelope or card by which the customer may notify respondents of his desire — for a refund, such notice to be accompanied by a letter from Mr. John P. Ferry which shall be approved by the staff of the Commission.

IMPORTANT NOTICE Effective January 24, 1971, an amendment to the Federal Truth in Lending Act limits a cardholder’s liability for unauthorized use of his card. IF, BECAUSE OF THIS LAW, YOU DO NOT WISH TO CON- TINUE YOUR MEMBERSHIP, YOU ARE ENTITLED TO A REFUND. THIS OFFER OF REFUND SHALL REMAIN EFFECTIVE FOR A PERIOD OF 30 DAYS. This law provides that a cardholder has no liability unless:

(a) the card has been accepted (was not unsolicited) ; (b) the liability does not exceed $50; (c) adequate notice of potential liability was furnished to the cardholder; (d) the card issuer has provided an address notification statement which the cardholder may return in the 191 Opinion event of a loss or theft of a credit card; (e) the unauthorized use occurs before the cardholder has notified the card issuer of the loss or other occurrence; and (f) for cards issued after January 24, 1971—and after January 24, 1972, for all cards no matter when issued—a cardholder is liable for unauthorized use only if the card issuer has provided a method by which the user of a card ean be identified as the person identified to use it. 9. Failing to refund all monies requested by customers in accordance with the notice required by order Paragraph 8 above.* It is further ordered, That respondents shall forthwith deliver a copy of this order to cease and desist to all present and future personnel of respondents or other persons engaged in the offering for sale, or sale of respondents’ services or in any aspect of preparation, creation, or planning of advertising, and that respondents obtain a signed statement acknowledging receipt of said order by each such person.

It is further ordered, That respondents notify the Commission at least thirty (30) days prior to any proposed change within the corporate respondent, such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporation which may affect compliance obligations arising out of this order. ; .

It is further 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 this order. OPINION OF THE COMMISSION By DIXON, Commissioner:

On August 24, 1971, the Commission issued a complaint charging respondents with making false, misleading and deceptive representations concerning their credit card registration service. The underlying facts are stipulated. Corporate respondent, Credit Card Service Corporation, for a fee of $9 a year or $19 for three years, provides, as its principal service, notification on behalf of.the subscriber to credit card companies of the fact that a subscriber’s credit cards have been lost or stolen. It also offers assistance to the subscriber in resolving billing errors *Reported as amended by hearing examiner’s order April 13, 1972. Opinion 82 F.T.C.

of. credit card companies and in obtaining new cards when the subscriber’s cards have been lost or stolen, or the subscriber’s address has changed. Respondents, in the advertisements challenged by the complaint, represented that their service was valuable for the reason that a credit card holder is liable for the full amount charged to a lost or stolen credit card, and, as a result, credit card holders might “find themselves liable for thousands * * * or as much (in one case) as $175,000.” (CX 1B) It is alleged that this representation as to the value of the service is deceptive because, with the enactment of Public Law 91-508, potential liability for a lost or stolen credit card cannot exceed $50 per credit card. Specifically, under Pub.L. 91-508 liability will only reach $50 if (a) the card has been accepted by the credit card holder, (b) the card issuer provides an addressed notification statement which the card holder can return in the event of the loss or theft of the credit card, (c) adequate notice of potential liability is provided to the card holder, and (d) the card issuer provides a method by which the user of the credit card can be identified as the person authorized to use it. Also of: importance, Pub.L. 91-508 provides that the card holder | will not be liable for any charges made after the card issuer has been notified of the loss or theft of the card. Pub.L. 91-508 went into effect on January 24, 1971, as to credit cards issued after that date. After January 24, 1972, it applied to all credit cards, no matter when they were issued. In sum, since the effective date of Pub.L. 91-508, a credit, card holder’s liability, in no circumstance, can exceed $50 per credit card, and his liability will reach $50 only if the card issuer fulfills certain requirements, and the card holder fails to notify the card issuer of the loss or theft of the card. The administrative law judge held that, because respondents represented that liability was unlimited after the effective date of Pub.L. 91-508, respondents had made the deceptive representations as alleged in the complaint. Respondents’ appeal does not extend to this holding or any of the administrative law judge’s Findings of Fact except “to the extent that * * * errors [in these findings] served or may have served as a predicate for certain paragraphs of the proposed order.” (Respondents’ Appeal Brief, pages 4, 5.) It is from the scope of the proposed order that respondents appeal.

By the proposed order, respondents are proscribed from repre- 191. Opinion senting that a credit card holder is “legally responsible and will have to pay for all goods and services obtained by unauthorized use,” that liability for unauthorized use “may amount to sums - —large enough to cause large financial loss or financial ruin,” that a credit Gard holder may incur any liability resulting from the unauthorized use of his credit cards except to the extent expressly provided for in Public Law 91-508. Further, respondents, by the order, are required to provide, in any written material, or in any radio or television commercial, offering the sale of respondents’ credit card service, a clear and conspicuous disclosure describing the protection afforded by Pub.L. 91-508. Of principal concern to respondents, the order in addition . requires that respondents provide a refund to “each of its customers who have subscribed to respondents’ credit card registration service on or after January 24, 1971 * * * and who did sO as a consequence of receiving the advertising material cited in the complaint or advertising containing representations substantially similar to those alleged by the complaint to be deceptive, irrespective of when such advertising was received.” Together with their objection to this restitution provision, respondents contend that the order fosters inaccurate disclosures. I, RESTITUTION - - .

The Commission held in Curtis Publishing Co., 3 Trade Reg. Rep. $19,719 (1971) [78 F.T.C. 1472], that restitution is an appropriate order when respondent’s retention of funds is unfair in and of itself, for in such a case restitution is the only effective remedy. The touchstone of any order is, of course, the determination of what remedy is necessary to cure the unfair acts and practices supported by the record. In this matter, then, we must look beyond the challenged deceptive practices (they, after all, can be effectively remedied by proscribing specifically-described representations and by requiring affirmative disclosures) to whether, as alleged in the complaint, the retention by respondents “of funds obtained as the result of the sale of credit card registration service membership is unfair.” The determination of unfairness in this regard, we held in Curtis, supra, depends upon finding that respondent has unfairly retained funds secured as a consequence of his illegal activities under certain types of circumstances, as for example; ‘‘where the Opinion 82 F.T.C.

consumer, as a result of deception or fraud on the part of the seller, pays for a product or ‘service but receives nothing of value in return or receives something that is either worthless or of only token value.”

It is noted, first of all, that respondents are not charged with failing to perform as promised, i.e., notifying credit card issuers that a card has been lost or stolen, but with exaggerating the value of the service offered. But it should be pointed out, in this connection, that a respondent’s performance will not necessarily preclude restitution when it knows or has reason to know that its performance is of no value and the customer “does not have this knowledge. Performance, under such circumstances, will not have enhanced the value of the service or lessened the unfairness inherent in a respondent’s retention of funds. Therefore, the question of whether retention of subscription fees was unfair is not resolved by the fact that corporate respondent here may have contacted credit card issuers. Respondents’ retention of funds will be unfair, as we stated above, if the service is “either worthless or of only token value.” It is respondents’ contention, in this regard, that their service is valuable. Because a credit card holder, even with the limited liability protection of Pub.L. 91-508, may be liable for $50 per credit card, potential liability remains significant, particularly for those credit card holders carrying numerous credit cards. Inasmuch as respondents’ service can protect card holders from this liability, respondents argue that their service is of more than token value. Complaint counsel contend that the consumer “actually received a service which is of no value,” because the service does not protect respondents’ card holders “from the crushing liability described by respondents.” (Complaint Counsel’s Brief, page 21.) But, of course, demonstrating that the value of respondents’ service is grossly exaggerated is not the same as showing that it is of no value. Under Pub.L. 91-508, a person can be liable up to $50 on each credit card he possesses under certain circumstances. Respondents’ service, if properly fulfilled, could relieve a person of this liability. Moreover, as previously noted, respondents’ service included the resolving of billing errors of credit card issuers and the obtaining of new cards for persons whose cards had been lost or stolen. There is no evidence that respondents did not perform these services, although they misrepresented the value thereof with respect to the card holder’s liability. This mis- UNDVIL UAW SERNVIUL vuuLr., it AL. 4VUd 191 Opinion representation can be prevented by order provisions barring future use and requiring appropriate disclosures. We find that respondents grossly overstated the value of their ’ “services but that the record does-not support complaint counsel’s contention that the services were worthless or of only token value. The restitution provision in the initial decision’s proposed order will be set aside.

Il. APPLICABILITY OF THE BUSINESS EXCEPTION Respondents contend that the administrative law judge’s proposed order will foster “incomplete and, therefore, inaccurate disclosures,” as it would disallow representations, either in the required affirmative disclosure or elsewhere, that credit” card lability is unlimited for a business card holder. It is respondents’ position that the Truth in Lending Act exemption as to business transactions is applicable to Pub.L. 91-508. We agree that if this is the case, the order is deficient.

It is not disputed that Pub.L. 91-508 was enacted as an amendment to the Truth in Lending Act, and that the unamended Act excepts, inter alia, “credit transactions involving extensions of credit for business or commercial purposes, or to government or governmental agencies or instrumentalities, or to organizations.” We must determine, of course, whether Congress intended to exclude the business card holder from the limited liability protection of Pub.L. 91-508. In this regard, the amendmemnts, to the extent that they are unambiguous, will be controlling. They are the latest, if not the only, direct expression of the Congressional will on the question of the substantive coverage of Pub.L. 91-508. The unamended Truth in Lending Act is not likely to be very helpful. The express purpose of the Truth in Lending Act is “to insure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit” (Truth in Lending Act Section 102, 15 U.S.C. 1601), while Pub.L. 91-508 is designed to protect “cardholders” from the “unauthorized use” of credit cards. Thus it is clear that the Truth in 1 Because of our disposition of this issue, we need not reach complaint counsel’s contentions that even if the business exception is applicable to Pub.L. 91-508, respondents should be preeluded from utilizing this exception as (a) their sales have been designed solely to reach nonbusiness subscribers who would not qualify under the exception, and (b) the respondents would use the exception to circumvent the order. Opinion 82 F.T.C.

Lending Act and the subject amendments are at best loosely related (both deal with the broad field of credit). And that, only insofar as definitions are concerned, can it be confidently said that the Act and the subject amendments are interconnected. Significantly, in this connection, the first section of Pub.L. 91-508 contains definitions which were made part of the Definitions Section (Truth in Lending Act Section 103, 15 U.S.C. 1602). On the other hand, the substantive sections of Pub.L. 91-508 follow the last section of the Credit Transaction Chapter of the Truth in Lending Act. .

We turn then to Section 103 of the Truth in Lending Act to determine the definition of “cardholder,” both because it is the definition of this word that determines the scope of the coverage of the Act, and because it is in the Definitions Section of Pub.L. 91-508 that we are likely to find the Congressional intent. “Cardholder’’ is defined, in the amendments, as “any person to whom a credit card is issued” (Section 103(m)). The Truth in Lending Act defines “person” to mean a “natural person or an organization” (Section 103(d)), and “organization” to mean “corporation, government or governmental subdivision or agency, trust, estate, partnership, cooperative, or association” (Section 103 (c) ).

Thus Congress specifically included credit cards used for business purposes in setting forth the definitions which determine the scope of Pub.L. 91-508. We cannot agree with respondents that what Congress so deliberately included.it intended to exclude. through the subject exception, particularly since (a) the Exceptions Section of the unamended Truth in Lending Act is otherwise entirely unrelated to the purpose and substance of Pub.L. 91-508, and (b) Congress had the term “natural person” at hand ‘(in Truth in Lending Act Section 103(d)), a term that would have directly and unequivocally brought about the limitation on - the scope of Pub.L. 91-508 urged by respondents, but chose not to use it.

If the unamended Truth in Lending Act had even tangentially dealt with unauthorized use of credit cards (for then the Exceptions Section might have been conceived with the unauthorized use of credit cards in mind), respondents might have made a reasonable argument that the Congress intended that the exception should apply to the amendments. Such, of course, is not the case here.

CREDIT CARD SERVICE CORP., ET AL. 211 191 Final Order We, therefore, reject respondents’ contention that the business exception applies to Pub.L. 91-508, and affirm the administrative law judge’s order in this respect. Respondents appeal will be grajited “in part and denied in’ part: An appropriate order will be issued.

, FINAL ORDER This matter having been heard by the Commission upon respondents’ appeal from the administrative law judge’s initial decision, and upon briefs and oral argument in support thereof and in opposition thereto; and The Commission having determined for the reasons set forth in the accompanying opinion that respondents’ appeal should be granted in part and that the initial decision should be modified to conform with the views set forth in the opinion: It is ordered, That the initial decision be modified by striking therefrom the last sentence of Conclusion 2 on page 11 [p. 202 herein], and substituting therefor the findings and conclusions contained in the accompanying opinion.

It is further ordered, That the findings and conclusions contained in the initial decision, as so modified, be, and they hereby are, adopted as the decision of the Commission. It is further ordered, That the following order, be, and it hereby is, substituted for the order contained in the initial decision :

It is ordered, That respondents Credit Card Service Corporation, a corporation, its successors and assigns, doing business as Credit Card Service Bureau or under any other name, and its officers, and John P. Ferry, individually and as an officer of said corporation, and respondents’ agents, representatives and employees, directly or through any corporate or other device, in connection with the advertising, offering for sale or sale of their credit card registration service,' through .the sale of memberships or by any other device, in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from: , 1. Representing, directly or by implication, that a credit card holder who suffers a loss or theft of credit cards is legally responsible and will have to pay for all Final Order 82 F.T.C.

goods and services obtained by unauthorized use of his credit cards.

2. Representing, directly or by implication, that the potential liability which a card holder may incur through the unauthorized use of his credit cards may amount to sums large enough to cause large financial loss or financial ruin.

3. Representing, directly or by implication, that rerespondents’ services can protect a credit card holder from large financial loss or financial ruin resulting from unauthorized use of his credit cards.

4. Representing, directly or by implication, that a credit card holder can incur any liability resulting from the unauthorized use of his credit cards, except to the extent expressly provided for in Public Law 91-508. 5. Failing to incorporate the following notice clearly and conspicuously in any written material offering the sale of respondents’ credit card registration service to the public: 7 IMPORTANT NOTICE Effective January 24, 1971, a Federal law provides that a cardholder has no liability for unauthorized use of his credit card unless all of the following four conditions are met. If the card issuing company (1) has notified you of your new limited liability, (2) has provided you’with a-pre-stamped envelope by which to notify them of a loss, (3) the card contains an approved method of identification, and (4) the use occurred before the card issuer is notified, then your liability is limited to $50 per card. 6. Failing to incorporate the following notice clearly and conspicuously in any radio or television commercial offering the sale of respondents’ credit card registration service to the public:

A Federal law limiting liability to a maximum of $50 per card protects you from charges on lost or stolen credit cards. Along with your membership application Credit Card Service Corporation will give you details concerning this law.

7. Failing to provide each prospective customer who responds to a radio or television commercial offering the sale of respondents’ credit card registration service with the notice required by Paragraph 5.

i GREAT ATLANTIC & PACIFIC CO., ET AL. 213 191 Final Order It is further ordered, That respondents shall forthwith deliver a copy of this order to cease and desist to all present and future : personnel of respondents or other. _persons engaged.in the offering for sale, or sale of respondents’ services or in any aspect of preparation, creation, or planning of advertising, and that respondents obtain a signed statement acknowledging receipt of said order by each such person.

It is further ordered, That respondents notify the Commission at least thirty (30) days prior to any proposed change within the corporate respondent, such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporation which may affect compliance obligations arising out of this order.

It is further 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 this order. Commissioners Kirkpatrick and MacIntyre not participating.