Worthmore Sales Promotion Service, Inc

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IN THE MATI'ER OF WORTHMORE SALES PROMOTION SERVICE, INC.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. II 01•' AN ACT OF CONGRESS APPROVED SIWT. 26, 1914 Docket -4430. Com.pla·itlt, Dec. 20, 1940-Dcclsion, Feb. 27, 1941 Where a cot·poration engaged in manufacture of its Rap-A-Pak device or novelty holder for cigarette packages, and in competitive interstate sale and . distribution thereof- Falsely represented in advertisements in various magazines and other periodicals of interstate circulation and through circulars and letters sent to prospective or potential representatives, that "A man should make $TG to $100 commission weekly" and "Earn $75 to $100 commission weekly" selling Its .device, when in fact it was impossible for such persons thus to earn in usual or normal course of business any amount approximating either of such figures, and average earnings of its said representatives were but a small percentage of those so represented;

With effect of misleading and deceiving a substantial number of pt·ospective agents and salesmen into mistaken and erroneous belief that earnings to be achieved through sale of its device were far in excess of those possible in fact, and with result that substantial number of such persons were induced to ac~ept employment from him rather than his competitors, many of whom do not falsely represent amounts which representati\·es thereof may thus earn :

Hc1d, That such acts and practices, under the circumstances set forth, were all to tbe prejudice and injury of the public and competitors, and constituted unfair methods of competition in commerce and unfair and deceptive acts and practices therein.

lfh. Randolph lV. Brand for the Commission. Complaint Pursuant to the provisions of the Federal Trade Commission Act and·by virtue of the authority vested in it by said act, the Federal Trade Commission, having reason to believe that '\Vortlmwre Sales Promotion Service, Inc., a corporation, hereinafter referred to as respondent, has violated the provisions of said act, and it appearing to the Commission that a proceeding by it in respect thereof would ba in the public interest, hereby issues its complaint, stating its charges in that respect as follows :

PARAGRAPH 1. Respondent is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Illinois and has its principal office and place of business at 221 East Twentieth Street, Chicago, Ill. Respondent for more than 1 year last past has Complaint 82F.T.C.

been engaged in the manufacture and sale of a device called "Rap-A- Pak," which is a novelty holder for cigarette packages. In the course and conduct of its business respondent causes said device, when sold, to be transported from its place of business in the State of Illinois to purchasers thereof located in various other States of the United States and in the District of Columbia. Respondent maintains and at all times mentioned herein has maintained a course of trade in said device in commerce among and between the various States of the United States and in the District of Columbia. PAR. 2. Respondent is now, and at all times mentioned herein has been, in substantial competition with other corporations and with individuals and firms engaged in the sale and distribution, in commerce among and between the various States of the United States and in the District of Columbia, of articles of merchandise intended for the same purpose as that for which respondent's product is intended.

PAR. 3. For the purpose of inducing persons to agre.e to represent respondent in the sale of its product throughout the various States, and thus to further the sale of its product, the respondent advertises in various magazines and other periodicals having an interstate circulation, and respondent has also forwarded to prospective or potential representatives of the respon.dent throughout the various States of the United States and in the District of Columbia circulars and letters. Among and typical of the statements and representations contained in the aforesaid advertisements, circulars, and letters are the following :

A man should make $75 to $100 commission weekly. Earn $75 to $100 commission weekly.

Through the use of the foregoing statements and representations and others of similar import not specifically set out herein, the re! spondent represents and has represented that agents and salesmen selling respondent's device customarily earn from $75 to $100 per week in the usual and normal course of business. PAR. 4. The foregoing representations are grossly exaggerated, false, and misleading. In truth and in fact, it is impossible for agents und salesmen selling respondent's device to earn in the usual and normal course of business $75 to $100 per week or any amount approximating either of such figures. The average earnings of the vgents and salesmen representing the respondent in the sale of its device have been and are but a small percentage of the aforesaid earnings represented by the respondent.

WORTHMORE SALES PROMOTION SERVICE, INC. . 785 783 Findings PAR. 5. The aforesaid acts and practices of the respondent have the tendency and capacity to and do mislead and deceive a substantial number of prospective agents and salesmen into the mistaken and erroneous belie£ that the earnings to be arhieved through the sale of respondent's device are far in excess of the earnings which are in fact possible for such agents and salesmen to achieve. As a result of such erroneous and mistaken belief, a substantial number of agents and salesmen have been induced to accept employment from respondent rather than from respondent's competitors, many of whom do not falsely represent the amounts to be earned from the sale of their products. In consequence substantial injury has been done and is being done by respondent to competition in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 6. The aforesaid acts and practices of the respondent as herein alleged are all to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

REPORT, FINDINGS AS TO THE Facts, AND Onder Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commis.sion, on December 20, 1940, issued and subsequently served its complaint in this proceeding upon respondent, 'Vorthmore Sales Promotion Service, Inc., charging it with the use of unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of the provisions of said act. On January 23, 1941, the respondent filed its answer, in which answer it admitted all the material allegations of fact set forth in said complaint and waived all intervening procedure and further hearing as to said facts. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint and a,nswer thereto, and the Commission, having duly considered the matter, and being now fully advised in the premises, finds that this proceeding is in the interest of the public, and makes this its findings ns to the facts and its conclusion drawn therefrom. FINDINGS AS TO THE FACTS PARAGRAPII 1. Respondent is a. corporation organized, existing, and doing business under and by virtue of the laws of the State of Illinois and has its principal office and place of business at 221 East Twentieth Findings 32F.T.O.

Street, Chicago, Ill. Respondent for more than 1 year last past has been engaged in the manufacture and sale. of a device called "Rap-A- Pak," which is a novelty holder for cigarette packages. In the course and conduct of its business respondent causes said device, when sold, to be transported from its place of business in the State of Illinois to purchasers thereof located in various other States of the United States and in the District of Columbia. Respondent maintains and at all times mentioned herein has maintained a course of trade in said device in commerce among and between the various States of the United States and in the District of Columbia. PAn. 2. Respondent is now, and at all times mentioned herein has been, in substantial competition with other corporations and with individuals and firms engaged in the sale and distribution, in commerce among and between the various States of the United States and in the District of Columbia, of articles of merchandise intended for the same purpose as that for which respondent's product is intended. PAR. 3. For the purpose of inducing persons to agree to represent respondent in the sale of its product throughout the various States, and thus to further the sale of its product, the respondent advertise.s in various magazines and other periodicals having an interstate circulation, and respondent has also forwarded to prospective or potential representatives of the respondent throughout the various States of the United States and in the District of Columbia circulars and letters. Among and typical of the statements and representations contained in the aforesaid advertisements, circulars and letters are the following:

A man should make $75 to $100 commis!>ion weekly. Earn $75 to $100 commission weekly.

Through the use of the foregoing statements and representations and others of similar import not specifically set-out herein, the respondent represents and has represented that agents and salesmen selling respondent's device customarily earn from $75 to $100 per week in the usual and normal course of business. PAR. 4. The foregoing representations are grossly exaggerated, false, and misleading. In truth and in fact, it is impossible for agents and salesmen selling respondent's device to earn in the. usual and normal course of business $75 to $100 per week or any amount approximating either of such figures. The average earnings of the agents and salesmen representing the respondent in the sale of its device have been and are but a small percentage of the aforesaid earnings represented by the respondent.

WORTHMORE SALES PROMOTION <';ERVICE, INC. . 787 783 Order PAR. 5. The aforesaid acts and practices of the respondent have the tendency and capacity to and do mislead and deceive a substantial number of prospective agents and salesmen into the mistaken and erroneous belief that the earnings to be achieved through the sale of respondent's device are far in excess of the earnings which are in fact possible for such agents and salesmen to achieve. As a result of such erroneous and mistaken belief, a substantial number of agents and salesmen have been induced to accept employment from responde.nt rather than from respondent's competitors, many of whom do not falsely represent the amounts to be earned from the sale of their products.

CONCLUSION The aforesaid acts and practices of the respondent as herein found are all to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Fedrral Trade Commission Act. ORDER TO CEASE AND DESIST This prod'eding having bren heard by the Federal Trade Commis- >;ion upon the complaint of the Commission and the answer of the respondent, in which answer respondent admits all the material allegations of fact set forth in said complaint, and states that it waives all intervening procedure and further hearing as to said facts, and the Commission having made its findings as to the facts and conclusion that said respondent has violated the provisions of the Federal Trade Commission Act.

It i.~ ordered, That the respondent, 'V orthmore Sales Promotion Service, Inc., a corporation, its officers, representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution of cigarette package holders or other merchandise in commerce, as "commerce" is defined in the Fecleml Trade Commission Act, do forthwith cease and desist from :

Representing as earni.ngs or profits of agents, salesmen, or distributors selling respondent's products any amount in excess of the average net earnings or profits regularly and customarily made by respondent's agents, salesmen, or distributors in the normal and usual course of business.

It is further ordeJ'ed, That the respondent shall, within 60 days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with this order.

Complaint 32F.T.C.