Chicago Technical College

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

CHICAGO TECHNICAL COLLEGE COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATfON OF SIW. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket .t,089. Compl-aint, Apt·. 13, 191,0-Decision, Oct. 1~, 19.t,ie Whet·e a cot·pot·ation, engage<!, in addition to conduct of day and evening classes, in competitive interstate sale and distribution of corre~pondence courses in drafting, building, air-conditioning and refrigeration; iu soliciting sale thereof. through advertisements in news11papers, pet·iodicals of gener~l circulation· and radio broadcasts-sending to those replying thereto various forms, contracts and advertising material, and in some instances calling upon prospective purchasers through lts agents- (a) Hepreseuted that the employment and consultation set·vices which It offered to its students and graduates were free, and that Its home stuuy courses were available ton limited number of students only; 'lhe facts being that the cost of lts featured employment and consultation service through which it aided students completing its courses in securin·:; employ· ment, was included h:i the amount paid for the course and was therefore not ''free"; and the 'only limit on the number of Its students was the number which could l)ft induced to enroll;

(b) RPpresented that it was a "recognized" or "accredited" school, implying thereby that credits for work done In lts courses were transfet'able to otht>r schools;

'lhe facts being that while it had received rf'cognitlon ft·om the Illinois Surlerlntenr1ent of Public Instruction, the Chicago Board of Education, and the Illinois State Examining Board for Teachers Certificates, such recognition !!i<l not mP-an that other in~titutions had agref'd to or would give transferring sturlPnts credit for work done at its said school: and few, If any, colleges would accf'pt credits for home study courses given by other Institutions;

(c) Repre~ented that individuals completing Its, home study cout·ses were thereby immred of employment, promotion, and success; 'lllp. facts being that ~uch results were necessarily dependent upon many factot·s beyond Its control;

(fi) Falsely repre~ented that individuals completing its home study training In drafting would that·eby be qualified to do expert dt•aftlng work flnd fot• the top-ranking positions in drafting: and that its home study trainln'g in airconditioning anu refriget·ation would qualify students for top-muklng 'I' Positions in those fields; ''he facts being said courses would not thus qualify the typical ot• average Indi- Vidual fm· the top,ranklng or,more difficult anu Intricate work in the fields w· In qUPl'ltiOn ;

tth tendent"y and cflpaclty to mislead pros1wctive pm·chnst>r>J into the mlst11ken bP]ief ·that SUI'h rept·esentatlons were tt·ue, therehy Inducing tht>m to purchase mHl pursue such courses; whereby trade was unfairly uivet·ted to said corvomtion from competitors, to the injury of competition in commet·ce: Complaint 35 F. T. C. Held, That such acts· and practices, under the circumstances set forth, wet·e all to the prejudice and injury of the public and competitors, and constituted unfair methods of competition in commerce and unfair and deceptive actr. and :vractices therein. . Before lllr. Miles J. Furnas and lllr. Lewi.9 0. Russell, trial exammers.

Mr. R. A.llfcOuat and Mr. William L. Pencke for the Commission. lllr. Harry lll. Ehrlich, of Chicago, Ill., for respondent. Coli PLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said act, th~ Federal Trade Commission having 1~reason to believe that Chicago Technical College, a corporation, hereinafter referred to as respondent, has vio· lated the provisions of said act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public inter·. , est, hereby issues its complaint stating its charges in that respect as follows: · PARAGRAPH 1. Respondent, Chicago Technical College, is a corpora· tion organized, existing and doing business under and by virtue of th.e laws of the State of Illinois, with its office and principal place of busi· ness at 118 East Tw_entry-sixth Street, in the city of Chicago, Sta~e of Illinois.

PAR. 2. Said respondent is now and has been engaged in the s1\le and distribution in commerce of home-study courses in drafting, Ul air-conditioning and refrigeration, and in building; with said courses of study and instruction being pursued by correspondence through the medium of the United States mail. It causes said courses, together with books and material connected therewith, when sold, to be trans· ported from its aforesaid place Qf busin~ss in the State of Illinois to the purchasers thereof located in various other States of the United Stn tes and in the District of Columbia. · Said respondents maintain, and at all times mentioned herein have maintained, a course of trade in said courses in commerce among and between the various States of the United States and in the District of Columbia. . PAR. 3. Said respondent is now, and during all the times menti.oned l1erein has been, in substantial competition with other corporations, and with firms, partnerships and individuals also engaged in the S<lle and distribution in commerce among and between the various States of the United States and in the District of Columbia of similar homel study courses in drafting, in air-conditioning and refrigeration, anc in building, which are likewise pursued by correspondence through the medium of the United States mail.

CHICAGO TECHNICAL COLLEGE 571 Complaint PAn, 4. Said respondent, in soliciting the sale of and in selling its ~aid courses of study and instruction, and in the distribution thereof In commerce, has made numerous misleading statements and repre~ ~entations by one or more of the following methods, to wit: through Its representatives engaged in soliciting the sale of such courses; in advertising matter caused by respondent to be published in newspapers and magazines circulated among the general public, including pros~ Pective students, in Yarious States of the United States; in printed matter circulated by respondent by mail or otherwise to prospective students, enrolled students, and others in various States of the United States; in radio broadcasts to members of the public generally. A.rnong and typical of such misleading statements and representations lllade by or through one or more of the said methods are the following: 1. That; "Only through Chicago Tech. can you obtain 'college training nt home.' 'lhe swift, sure way to succeed in drafting." 2. That, "1\ly correspondence course from Chicago Tceh. has equipped me for Illy work as well as a similar four-year university course would have done." 3. That, "This certificate Is issued to ------------------------------ aud 'Wlll be accepted by the Chicago Technical College as payment in full for the colllplete course, 'Inside Facts on Drafting', prm·ided that this certificate Is llceompani~d by this enrollment for the college home-study courses in drafting." 4. That, "This certificate is Issued to -----------·------------------- and will be accepted by the Chicago Technical College as payment In fu~l for the com- Jllete course, 'Inside Facts on the Business of Building', provided that this cel"titlcate Is accompanied by his enrollment for the college home-study builder's course." · 5. That, "Now given to you free of extra cost • • • 'The Inside Facts Of Dt·aftlng' • • • Learning the facts about bow 'to sell your services qulekly • • • 'Inside Facts of Drnftlng' shows you how, yet it doesn't co!<t yon one penny extra If you·just decide to use the enclosed certificate at once aud !let today. This amazing offer Is yours today." 6. That the employment and consultation services which It offers to Its Students and graduates are free. . · 7. That its home-study courses are available to only a limited number of Hndents. .

8. That Chicago Technical Coll£>ge ls an accredited school. 0. Tba t Chicago Technical College Is the leading school for builders. f 10. That the tuition charges for its various· home-study courses wlll in the lltUI·e be Increased.

b 11. That individuals completing its home-study courses in ·building are there- ~ Insured of employment, of promotions nnd of success. , . 12. That its home-study course in drafting is. recognized by employers of dt·artsmen generally.

·t 13. That Individuals using the Chicago Technical College plan of home-stud~r ara.inlng in drafting and those completing such tra.lning will thereby be qualified h8 e:rperlenced draftsmen, will be qualified to do expert drafting work and will e qualified for the top-ranking positions in drafting. Complaint 35F.'f.C. 14. That the Chicago Technical College home-study courses in drafting and in · air conditioning and refrigeration cost less than half that of other well-knmvn courses in the same subjects.

15. That Chicago Technical College home-study training in air conditioning and refrigemtion will qualify one for the top-ranking positions in the air conditioning and refrigeration field.

16. That the uemand for draftsmen far exceeds the supply. 17. That positions open and available in the air conditioning and refrigeration field are plentiful and that properly trained applicants may have their choice of such poi<itions.

PAR. 5. The foregoing statements and rept~esentations are false, misleading, and deceptive. In truth and in fact, the Chicago Tech· nical College is not the only way to obtain college training at home or is it a swift, sure way to succeed in drafting and a c.correspondence course from the Chicago Technical College is not equivalent to a 4-year university course. The certificate referred to will not be accept~d bY respondent as full payment for a course in drafting or in buildin~, nor will "The Inside Facts of Drafting" be furnished free and without cost to· those presenting such certificates. Employment and consultation services are not furnished free to its students by respondent, nor are the home-study courses advertised available only to a limited number of students but they are sold generally to all applicants. The Chicago Technical Cqllege is not an accredited school, nor is it the leading school for builders, nor is it recognized as such by employers of drafts· men generally. Individuals completing respondent's home-study cou~;ses in building are not insured or assured of employment, prom?· tions, or success, nor are they able to secure top-ranking positions 111 the air-conditioning and refrigeration industry. The demand for employees in this field is not far in excess of the supply but, on the contrary, the field is crowded and many well-trained applicants ai;e available for p<;>sitions that are not open. The cost of respondents home-study courses is not less than one-half the cost ·of other well· known courses in the same subjects., , · PAn. 6. The foregoing acts and practices used by respondent in connection with the offering for sale and distribution of its said courses of study and instruction, as hereinbefore set out, have had, and n?"" have, the tendency and capacity to mislead purchasers and prospect 1~ 8 purchasers thereof into the erroneous and mistaken belief that such representations, as herein alleged, are true, and to indtice them to pnr· chase and pursue such courses of study and instruction on account thereof. Thereby trade is unfairly diverted ~o respondent from cotnpetitors engaged in the sale and distribution in commerce between an~ among the various States of the United States and in the District 0 Columbia of-correspondence courses in drafting, in air conditionit~g' and refrigeration, and in building, as well as from those· engaged 111 CHICAGO TECHNICAL COLLEGE! 573 Findings such sale of correspondence courses in subjects pertaining to various trades, callings, and pursuits and in preparation for work and positions of various kinds. There are among the competitors of respondent those who, in the sale of their respective courses of study and instruction, do not similarly or in any manner misrepresent the same or matters pertaining thereto. As a result of respondent's said practices, as herein set out, substantial injury has been and is now being done by respondent to competition in commerce between and among the various States of the United States.

PAn.7. The aforesaid acts and practices of the respondent as herein alleged are all to the prejudice and injury of the public and of respond- . ent's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce, '\Vlthin the intent and meaning of the Federal Trade Commission Act. ' Rl!lPORT, FINDINGS AS TO THE FAurS, AND Onder Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on April 13, 1940, issued and subsequently served its complaint in this proceeding upon respondent, Chicago Technical College, a corporation, charging it with the use of unfair methods of competition in commerce and unfair and deceptive acts and pr,actices in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondent's answer thereto, testimony and other evidence in support of and in opposition to the allegations of said complaint were introduced before an examiner of the Commission theretofore duly designated by it, and said testimony and other evidence were duly recorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint, the answer thereto, testimony and other evidence, report of the trial examiner, and briefs in support of and in opposition to the complaint (oral argument not having been requested): and to the Commission, having duly considered the matter ~nd being noy fully advised in the premises, finds that this proceeding ls in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Chicago Technical College, is a corporation, organized, existing, and doing business under and by virtue of the laws of the State of_Illinois, with its office and principal place of business located at 2000 South Michigan Boulevard, Chicago, Ill. 509749m--43--vol.35----39 574 FEDERAL TRADE COMMISSIION DECISIONS Findings · 35F. T.C. : . Respondent" was organized in 1904 as an evening school and in 1906 day classes were added. In 1911 home study or correspondence courses were added and have been continued since that time .. Re· ~pondent has gradually increased its enrollment until it now has, in addition to those students taking correspondence courses, sorn,e 1,400 to 1;500 students attending classes conducted at respondent & place of bus"iness in Chicago. · : PAR. 2. In the course and conduct of the aforesaid business respond· ent is now, and has been, engaged in the sale and distribution of correspondence courses in drafting, building, and air conditionin!r and refrigeration. It causes said courses, together with books and material connected therewith, when sold, to be transported from its place of business in Chicago, In.,· to the put·chasers thereof located· in various· other States of the United States and in the District of Columbia, and maintains, and has maintained, a course of trade in said courses of study and instruction in commerce among and between • the . various St~tes . of. the United States . and in the District of Columbia. · · . . ·. -';p 4n. 3:. tri carryi~g on its said business respondent has been, and is, nFslibstantiai corn petition· with. other corporations and with partner· H'hipso'lmd. .individuals engaged 'in the sale and distribution, in corn· mere~' betweer1 .and among the various States of the United States qn'd. in the District of Columbia, of correspondence courses· in drafting, building, and air conditioning and refrigeration. ' PAn. 4. Respondent's method of soliciting the sale of its said home ~ludy courses is to place advertisements in newspapers, magazines, ~nd other p€riodicals having genera~ circulation throughout' the United States and to cause such advertisements to be broacast by radio. When inquiries are received in response to such advertise· ments, various forms, contracts, and advertising material are sent to prospective purchasers, and in some instances agents and representa·. tives of respondent call upon such prospective purchasers and endeavor to complete the sale of respondent's correspondence courses . . In the solicitation of the sale of its said home study or correspond· ence courses of instruction respondent, through the advertising ma.tt~r caused to be published and circulated as aforesaid, through radio · • broadcasts, through its agents and representatives, and in the forms, contracts, and advertising material sent to prospective students and others, has made various statements and rep.resentations, including the following: . . That the employment and consultation services which it offers to its student& and grndua tes are free;

• • • . ;

CHICAGO TECHNICAL COLLEGE• 575 569 .. Findings 'that its home study courses are available to only a limited number of students:. * * • 'I'hat respondent is an ac~redited school;

• * • That individuals completing its home study courses in building are thereby Insured of employment, of promotions, and of success; * • • 'that individuals using respondent's plan of. home study training in drafting, 110d those completing such training, will thereby be qualified as experienced draftsmen, will be qualified to do expert drafting work, and will be qualified for the top-ranking positions in drafting;

* • • 'that respondent's home study training, ln air-conditioning and refrigeration \\>Ill Qualify those completing such training for the top-ranking positions In the , lllr-condltioning and refrigeration field.

· Pan. 5. Respondent maintains an employment and consultation ~rvice through which it aids numerous of the students completing lts courses of study in securing employment. This assistance is feat~red and emphasized by respondent in its advertising an,d,promo- ~tonal material as an inducement to prospective students to enroll in lts courses. This assistance, however, is obviously not "free," as represented by ·respondent, since the cost thereof is included in the amount !laid by a student for the course taken.

The representation by respondent that its home study courses are available to only a limited number of students is not supported by the facts. There is no limitation placed by respondent upon the number of students which it will enroll in home study courses. Such courses are offered generally and the only limit to the number of home study students is the number which can be induced to enroll. • Respondent represents that it is a "recognized'' or "accredited'r. ~chool. To many students or prospective students these terms. signify or mean that credits earned for work done a~e transferable to and ll.accepted and recognized by other schools, thus permitting the transfer ofa student from respondent's school to another without the necessity 0 ~ examination or loss of time through the refusal of a school to recog- ~tze the work done by a transferring student in respondent's school. n the case of colleges and· other higher institutions such transfers of credits are facilitated through agreements by such institutions, which a.r~ members of various voluntary associations. Respondent is not a ln.member of any such association. It has received from the Superl.nt~lldent of Public Instruction of the State of Illinois "official recog- 111tion as a ~pecial school of technology," and the Board of Education ~! the city of Chicago recognizes work done at respondent's school for promotional credit for the teachers of the Chicago public schools,'t a.nd it is authorized by the I~linois State Examining Board for Teach; : 576· FEDERAL TRADE COMMISSION DECISIONS · Findings . 35F. T. C. ers Certificates to say that "It is recognized by the State Superintend· ent of Public Instruction and the State Examining Board for Teachers Certificates of Illino~s as a fully recognized special school of tech· nology." The recognition thus accorded respondent does not, how· ever, mean that other institutions have agreed to or will give trans-~ £erring students credit for work done at r~spondent's school. This fact is emphasized in a letter from the Board of Education of the city of Ol,li~ago to respondent which states in part: Of course, the fact that we accredit the school does not mean that we can in any way guarantee that the work will be recognized as college credit bY the various universities. This determination must be left to the individual colleges and universities themselves.

Although respondent will accept in its resident school credits earn~d by students in its home study or correspondence courses, few, 1f any, colleges will accept credits for home study courses given by any other institution. In the absence of any qualification or explana· tion, the representation by respondent that it is a recognized or accredited school has the capacity and tendency to mislead students and prospective students as to the tran~ferability of credits earned for·work done in respondont's courses.

It is not a fact that individuals completing respondent's hoJll6 study courses are thereby insured of employment, of promotions, a?d of success. Employment, promotions, and success are necessarll~ dependent upon many factors which are not within the control 0 respondent. N ~ither is it a fact that individuals completing respon~· ent's home study courses in drafting are thereby qualified as experd ericed or expert draftsmen, or to do expert drafting work, or qualified for the top-ranking or more intricate and difficult drafting work. d The home study course in air-conditioning and refrigeration sol . by respondent will not qualify the typical or average individual co~· pleting such course for the top-ranking or more difficult and intrl· cate work in the air-conditioning and' refrigeration field. PAR. 6. The foregoing statements and representations made b! respondent in connection with the offering for sale, sale, and distrl· bution of its courses of study and instruction have had, and ha;e, the tendency and capacity to mislead purchasers and prospectr\"e puJ:chasers thereof into the erroneous and mistaken belief that such representations are true, and to induce them to purchase and pursue such courses of study and instruction. Thereby trade is unfairl~ diverted to respondent from competitors engaged in the sale a~ distribution in commerce of correspondence courses in drafting, alr· conditioning and refrigeration, and building. As a result of re· spondents' said practices substantial injury has been done, and is noll' CHICAGO TECHNICAL COLLEGE 577 569 Order being done, by respondent to competiti~n in commerce. bet~een and ·a:among various States of the United States. COlWLUSION The aforesaid acts and practices of respondent 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 lneaning of the Federal Trade Commission Act. ORDER TO CEASE AND DESIST This proceeding having b~en heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respondent, testimony, and other evidence taken before an examiner of the Commission theretofore duly designated by it, and briefs filed herein, and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the provisions· of the Federal Trade Commission Act.

It is ordered, That respondent, Chicago Technical College, its officers, representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for ~ale, sale, and distribution of correspondence courses of study and lnstruction in commerce, as "commerce" is defined in the Federal 'trade Commission Act, do forthwith cease "and desist from representing, directly or by inference:

1. That any service or commodity, the cost of which is included in ~he purchase price of any other service or commodity, is "free," either . Y the use of the term stated or any other term or terms of similar 1lllport or meaning. · .

~· That respondent's correspond~nce courses are offered to only bh:rnited number of persons, or that the number of persons who will e enrolled for such courses is limitEl,d.

d' 3. That respondent is a recognized or accredited school, without 1~closing in immediate connection therewith, in a clear and con- 8Plcuous manner, the nature and extent of such recognition or accreditation, and the application thereof to its correspondence courses. 4. That upon completion of its correspondence courses individuals . are insured or otherwis·e made certain of employment, promotion, or success. • d 5. That upon completion of respondent's correspondence course in rafting individuals will be qualified thereby as experienced or expert 578 FEDERAL TRADE COMMISSIION DECISIONS Order 35F. T.C.

draftsmen, o.r qualified for top-ranking drafting positions handling the more intricate or difficult drafting work. . . 6. That upon completion of respondent's correspondence course 1n air-conditioning and refrigeration . individuals will be qualified thereby for top-ranking positions in air-conditioning and refrigeration handling the more intricate and difficult air-conditioning or re· • • I kf r1gerat10n wor . . It is further ordered, That respondent shall, within 60 days after the service upon it of this order, file with the Commission a repo~ in writing setting forth in detail the manner and form in which 1t has complied with this order.

ZENITH RADIO CORP •. ' 579 Syllabus