Lincoln Extension University, Inc.

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

IN THE MATTER OF LINCOLN EXTENSION UNIVERSITY, INC.

COMPLAINT .AND ORDER IN REGARD TO Tl:IE ALLEGED VIOLATION OF SEC. 5 01.<' AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2185. Complaint, May 22, 1934-order, July 20, 193q Consent order requiring respondent, its officers, etc., in connection with the sale, offer and advertisement of its course in factory management and salesmanship in interstate commerce and the District of Columbia, to cease and desist from- ( a) Using or causing to be used, directly or indirectly, the word or words "University " or "Extension University" as part of its corporate name, or in connection with any other corporate or trade name; (b) Representing, directly or by impllcation, that prospective student purchasers, after completion of its course, would be college or university graduates, and that it was equivalent to what was commonly known and understood by the public as a university, or an extension thereof; (c) Representing, directly or by implication, to prospective student purchasers that their names bad been given to it by the management of a factory or other place of employment, or that if they would purchase its said course and make sufficiently good grades, they would be promoted at an increase in compensation, or, failing so to do, would not be considered in this connection; and (d) Representing the financial value of its course In words or figures wblch are fictitious, or grossly exaggerate the true worth thereof, directly or by implication, to prospective student purchasers. Mr. Morton Nesmith for the Commission.

Mr. Sylvan E. Hess, of St. Paul, Minn., for respondent. COMPLAINT Pursuant to the provisions of an Act o£ Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes", the Federal Trade Commission, having reason to believe that Lincoln Extension University, Inc., a corporation, has been and is using unfair methods of competition in commerce, as " commerce " is defined in said net, and it appearing to said Commission that a proceeding- by it in respect thereof would be in th~ public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPII 1. Lincoln Extension University, Inc., is a corporation formerly organized, existing, and doing business under and by virtue ?f the laws of the State of Delaware, but later reincorporated, existmg and doing business under the laws of the State of Ohio, with its offices and principal place of business in the city of Cleveland, State Complaint l::l F. T. C. of Ohio. It is now, and for more than two years last past has been engaged in the sale and distribution of books, pamphlets, and other printed and written matter by it alleged to comprise courses of instruction in factory management and salesmanship, causing the same when sold to be shipped from its principal place of business aforesaid through and into various other States of the United States to purchasers thereof. In the course and conduct of its business as aforesaid, respondent is and has been in competition with other individuals, partnerships, and corporations engaged in the sale and distribution in interstate commerce of other books, pamphlets, and other written and printed matter comprising kindred courses of instruction, by the general public commonly known as correspondence schools.

PAR. 2. In the course and conduct of its business as aforesaid, respondent, through its salesmen, by direct mail advertising, and by newspaper advertising solicits prospective student purchasers to buy its said books, pamphlets, and other printed and written matter, distributed and sold to them either over a period of five years for a cash price of $78-for a price of $93.60 if paid within one year and for a price of $104 if paid for otherwise; or over a period of two years (by respondent described as its short course) for a price of $45 if paid within 90 days-$55 if paid within one year and $60 if paid in $2 monthly installments. During the course of such solicitations respondent, through the use of the words "university" and "university extension" falsely represents and has falsely represented to the prospective student purchasers that after completing the alleged course of instruction they would become and be college or university graduates; and that said respondent corporation is the equivalent of what is commonly known and by the public generally understood to be a university or an extension thereof-an educational institution organized for teaching and study in the higher branches of learning, conferring degrees in such departments as theology, law, medicine, and the arts and sciences; and that the particular books, pamphlets, and other written and printed data compri,sing the course of instruction offered for sale to the prospective student purchasers constitute an extension or home-study department of such an institution in the subjects of factory manage· ment and salesmanship; for example, respondent includes· in its inducements held out to such prospective student purchasers the following specific false representation:

An ordinary common school education is absolutely all one needs to tatkle this training service, but at the end of it (referring to the aforesaid course uf instruction) a Lincoln 1\Ian can rub shoulders with colle~:e gralluates and be accepted as one of them.

LINCOLN EXTENSION UNIVERSITY, INC. 147 145 Complaint As a matter of fact respondent corporation is not the equivalent of what is known as a university nor do the books, pamphlets, and other printed and written data offered by it for sale and sold, comprise an extension of any university; and it is not and has not been the equivalent of an educational institution organized for teaching and study in the higher branches of learning. It does not and has not conferred degrees in such departments as theology, law, medicine, the arts and sciences or any of them, and the books, pamphlets and other written and printed data aforesaid do not constitute an extension or home-study department of any such an institution in the subjects of factory management and salesmanship; and student purchasers upon completion of the said courses of instruction do not become nor have ever been generally accepted as college or university graduates.

Upon completion of the course a student purchaser receives a "certificate of graduation" reading as. follows: Lincoln Extension University, Inc., Clevelan<1, Ohio, U. S. A.

This cert11les that -------------------- has satisfactorily completed the subjects taught in our course of ---------- ---------- and in evidence thereof Is awarded this CERTIFICATE OF GRADUATION Given under the seal of the University In the city of Cleveland, Oblo, this 25th day April, A. D., 1929. --------------· ___ secretary [SEAL] --------------------Pres-ident -------------------Di1·ector of Instruct £on PAn. 3. In the course and conduct of its business as aforesaid, respondent by its agents and salesmen has falsely represented to prospective student purchasers that the names of such prospective student purchasers had been given it by the management of a factory or other place of employment, thereby causing the said prospective student purchaser to believe that if he were to purchase the books, Pamphlets, and other written and printed data comprising the alleged courses of instruction as aforesaid, his prospects for either employlnent or promotion would be bettered; that the respondent had comlnunicated with companies by whom the prospective student purchasers were employed and that if they would make said purchase and make sufficiently good grades, they would be promoted and Order 19F. T. C.

receive increased pay; and that if they did not do so, their employers would not consider them for promotion and as a result of such statements and representations many prospects were enrolled as students, when in truth and in fact no such statements and representations had been made by such companies to the respondent or its salesmen. PAR. 4. In the course and conduct of its business as aforesaid, respondent falsely represented and grossly exaggerated to prospective student purchasers the value of the course in the words and figures following:

Could uot ;you too Iuanu~e to sp~1·e just u few dt1lars for ju"t a few weeks with that same rert:lint~· that it will add $10, then $25, then $50, eventually $100 a month and ruore to your regular eaming power'/ . The knowledge and power you will get from this traliling service should certainly add at least an nverage of $100 a month to your earnings for the rest of your working life. lu only twenty years this will amount to *24,000 which yon would not have earne(l without the trniuing serviee.

when in truth and in fact there was no such ce1tainty, and all this respondent well knows.

PAR. 5. Each and all of the representations :;et forth in paragt"aphs 2, 3, and 4 hereof are false and misleading, have the tendency and capacity to deceive prospective student purchasers and to induce them to buy respondent's said books, pamphlets, and other written and printed matter comprising the so-called courses of instruction in and on account of a belief that said representations are true; and in that manner tends to divert trade from and otherwise injure competitors of respondent.

PAR. G. The acts und pl'Uctices of the respondent are all to the prejudice of the public and of competitors of respondent, and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress entitled "An Act to create a F(•deral Trade Commission, to define its powers and duties, and for other purposes".

ORDER TO CEASE AND DESIST This proceeding coming on for final hearing by the Federal Trade Commission upon the record including the complaint of the Commission and respondent's answer thereto, that it waives hearing on the charges set forth in the complaint, refrains from contesting the proceeding and pursuant to Rule III of the Commission's Rules of Pructice, as amended and revised to June 1, 1932, consents that the Commission may make, enter, and serve upon respondent, without evidence and without findings as to the facts or other intervening procedure, an order to cease and desist from the method or methods LINCOLN EXTENSION UNIVERSITY, INC. 149 145 Order of competition alleged in the complaint; and the Commission having duly considered the matter and being fully advised in the premises- It is now ordered, That respondent, Lincoln Extension University, Inc., its officers, directors, agents, representatives, servants and employees, in connection with the sale, offering for sale, and advertisement of its course of instruction in factory management and salesmanship, in interstate commerce and in the District of Columbia, cease and desist from :

(1) Directly or indirectly using or causing to be used the word or words " University" or "Extension University" as a part of its corporate name, or in connection with any other corporate or trade name.

(2) Directly or by implication representing that prospective student purchasers, after the completion of its course of instruction, would become or be college or university graduates, and that respondent is the equivalent of what is commonly known, and by the public generally understood, to be a university, or extension thereof. (3) (a )-Directly or by implication representing to prospective student purchasers that their names had been given respondent by the management of a factory or other place of employment, leading said prospective student purchasers to believe that if they purchased respondent's course of instruction their prospect of promotion or employment would be better.

(b)-Directly or by implication representing to prospective student purchasers that if they would purchase respondent's said course of instruction and make sufficiently good grades, they would be promoted and receive increased pay, and, in the event they did not do so, their employers would not consider them for promotion. · ( 4) Directly or by implication representing to prospective student purchasers the monetary or financial value of its course of instruction in words or figures which are fictitious or which grossly exaggerate its true worth.

It is further ordered, That the respondent, Lincoln Extension University, Inc., shall, within 30 days after the service upon it of a copy of this order, file with the Federal Trade Commission a report in writing, setting forth in detail the manner and form in which it has complied with the order to cease and desist, hereinabove set forth.

Syllabus 19F. T. C.