D. Stack Hubbard

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IN THE MATTER OF D. STACI( HUBBARD TRADING AS HALL-~fARI( STUDIOS CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 6395. Gomplct'int, Aug. 1955-Decision, Dec. 1955 Consent order requiring a photographer in New York City to cease advertising on post cards a sham "Cutest Child Contest," with prizes, free portraits, etc., sponsored by "Mother and Child Magazine " in order to sell photograi)hs to the children s parents.

Before ilar. J. Earl Cow hearing examiner. Jl i'. lYUliam R. Tinchel' for the Commission. Jh' (/h(('I'les r';old of New York City, for respondent. 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 Comnlission, having reason to believe that D. Stack Hubbard an individual trading as I-Iall-:Mark Studios, hereinafter referred to as l'espondent, has violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in tilt' public interest, hereby issues its complaint, stating its chaTges in that respect as follows:

ULH;H.\PJ l 1. Hesponclent D. Stack I-Iubbard, is an individual tla(ling as I-Ial1-iUark Studios. Respondent is now, and for more than one year last past has been, engaged in the promotion, sale and distribution of photographs. Respondent's office and principal place of business is located at 1947 Broadway, New York, New York. Said photographs are sold directly to purchasers by the respondent and by his agents in various States of the United States. \R. 2. In the eonrse and conduct of his business, respondent causes and has caused said photographs, when sold, to be transported frolll his pI ace of business in the State of N my York to purchasers thereof located in nlrious other States of the United States. Respondent mainta ins, and at all times mentioned herein has maintained, a substantia 1 course of trade in commerce in said photographs. PAR. 3. Respondent at all times mentioned herein has been in substantial competition, in comllleree, with other persons and with corporations, firms and partnerships engaged in the sale of photographs. .

Corn plain t 52 F. T. c.. PAR. 4. Respondent's method of interesting members of the public' in the purchase of his photographs is by the mailing of permit postoffice.s in various States of the-cards to patrons of certain local post United States. A typical card used for this purpose is as follows: Dear Mother; * * ~~ 56 Valuable Prizes You are cordially invited to bring your Child to HOTEL HAi\lIL'l'ON'. in HAGERSTOWN, Md. on THURSDAY, or FRIDAY, Oct. 15th. &. 16th. 10 :AM till 7 :PM. To be photographed in TRUE-COLOR. For our " OVTEST CHILn CONTEST." $1 275.00 in Prizes Sponsored by MOTHER & OHILD MAGAZINE. There'is no charge for this service. Each entrant will receive a beautiful Transparency PORTRAIT FREE. Courtesy of HALL-MARK STUDIOS. OUR COLOR CAMERA takes pictures in NATURAL COLOR. Photographing every cute smile and expression. All Children are eligible 2 months to 12 years. Tell your Friends to come. IT'S FREE. Come early. IMPORTANT: These are taken in TRUE-COLOR If possible dress children in BRIGHT COLORS.

PAR. 5. By means of the statements appearing on said postcards respondent represented, directly or by ilnplieation, that: (1) Respondent is and has been conducting a photographic contest the sole and exclusive purpose of which is to select winners for a contest sponsored by a magazine published under the name of "1fother and Child Magazine; that the designated winning children will receive valuable prizes.

(2) Parents allowing their children to pose for respondent or entrant" will receive a free portrait.

(3) Parents may enter their children in the contest free of charge. ( 4) :nIother and Child :Magazine is a recognized and established magazine, independent of respondent, which is sponsoring the contest. (5) Pictures taken will be in true and natural colors. PAR. 6. The foregoing representations and implications are grossly exaggerated, false and misleading. In truth and in fact: (1) Respondent has not been and is not. now conducting a photographic contest to select winners for a contest sponsored by the j\Iother and Child :nfagazine." Respondents only objective in preparing and disseminating the postcards aforementioned, and subsequently as a direct result of that literature in having children pose for him, was and is to sell photographs to the parents. Such children as may be designated by respondent as a "winner" do not receive valuable prizes but, on the eontrary, receive trivial toys of little 01' no value.

(2) No parent whose child posed for respondent or ~;entrant receives or has received a free portrait. Some of said parents reeei,'ecl n small free film slide or transparency, but not a portrait. (g) Parents may not enter their children in the alleged eonte:;;t free of charge. As a condition precedent to entering their children in the , , , HALL-MARK STUDIOS 577 .57, Complaint allep-ed contest, parents must first pay for a year s subscription to the 1\Jot.her and Childl\fagazine.

(~r) :Mother and Child ~Iagazine is not a recognized or established magazine. On the contrary, it is a one page circular, folded over t\vice, containing information of little or no value and it was not t-stablished until 1950 when respondent commenced selling photographs. The magazine is owned and published solely by respondent. natural color (fj) Pictures taken by respondent are not in true and but are faded and of unnatural and inferior color. P .\R. 7". ,Yhe.n parents, in response to the aforementioned postal case1s, bring their children to the location respondent has designated and at subsequent times thereafter, they have been told in certain inst.Rnces~ or it has been implied in other instances, by respondent or his aQ:ents that:

(1) Hall-:Mark Studios is an affiliate of the Hall-l\1:ark Greeting Card Company.

(:2) Respondent will refund the purchase price of photographs to dissf!tisn.ec1 purchasers.

(;-)) Photographs purchased by the parents will be in true and natural color, and will be similar in quality to photographs exhibited to the patents.

(4) Photographs purchased by parents will be delivered promptly and according to the spe.cifications and agreements contained on the purchase order.

( Ij) :Mother and Child l\1:agazine is a recognized and established magazine similar to Look :Magazine and is published monthly and the subscriber will receive the new issue each month during his subscription period.

\R. 8. The foregoing representations and implications are grossly exaggerated, false and misleading. In truth and in fact: ( 1) Hall- :Mark Studios is not an affiliate of or otherwise connected with the Hall-:Mark Greeting Card Company.

(2) Respondent does not refund the purchase price of photographs to dissatisfied purchasers.

( 3) Photographs sold by respondent are not in true and natural color but are faded rtnd of unnatural and inferior color. Said photographs are greatly inferior in quality to the photographs which are exhibited to the parents at the tin1e they place their orders. (4) In some instances photographs ordered by parents are never delivered. In other instances the photographs are delivered only after extended delays and repeated requests for delivery. In many instances said photographs are not as specified in the order blank signed by .. \ Decision 52 F. T. C~, the parents in that blemishes, defects and objectionable backgrounds have not been eliminated or retouched as promised; the number and size of the photographs have not been as promised; and the poses, selected by the parents have not been sent to them. ( 5) l\10ther and Child l\1agazine is not similar to Look l\lagazine in form, composition or appearance. It is a one page circular, folde, over twice, and contains little or no information of interest or value to parents. Said alleged magazine is not published monthly but is published quarterly. In most instances the subscribing parent does not receive any issues of the alleged magazine and many parents ,,' 110' do receive issues receive a copy of the same issue several times. PAR. 9. The use by the respondent and his agents of the foregoingfalse, deceptive and misleading statements, representations and practices in connection with the sale and distribution in commerce of his photographs has had and now has the tendency and capacity to mislead and deceive a substantial portion of the purchasers and prospective purchasers of said photographs into the erroneous and mistaken belief that such statements and representations were and are true and into the purchase of substantial quantities of photographs. As a result thereof trade in commerce has been unfairly diverted to respondent from his competitors and injury has been done to competition in commerce.

PAR. 10. The aforesaid acts and practices of respondeilt, as herein alleged, are all to the prejudice and injury of the public and of respondents competitors and constitute unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of the Federal Trade Commission Act. INITIAL DECISION BY J. EARL cox, I-IEARING EXAl\HNER The complaint charges that respondent D. Stack I-Iubbard, an indi-, vidual trading as Hall-l\lark Studios, with his office and principal place of business located at 1947 Broadway, New York, New York is now, and for more than one year last past has been, competitively engaged with other persons, corporations, firms and partnerships, in the promotion, sale and distribution of photographs in commerce; and that he and his agents have falsely and deceptively misrepresented his photographs and business methods, to the prejudice and injury of the public and of respondents competitors, in violation of the Federal Tracie Commif.ision Act.. After the issuance of the complaint, to which no answer was filed, respondent, his counsel, and counsel supporting the complaint, on October 28 , 1955, entered into an Agreement Containing Consent Order To Cease And Desist, which HALL-MARK STUDIOS 579 575 Order was approved by the Director, Bureau of Litigation of the Commission, and thereafter transmitted to the hearing examiner for conbideration.

The agreement provides among other things, that respondent admits all the jurisdictional facts alleged in the complaint and that the record herein may be taken as if findings of jurisdictional facts had been made in accordance with such allegations; that the record on which the initial decision and the decision of the Commission shall be based shall consist solely of the complaint and this agreement; that the agreement shall not become a part of the official record unless and until it beeomes a part of the decision of the Commission; that the complaint may be used in construing the terms of the order agreed upon, which may be altered, modified, or set aside in the manner provided for other orders; that the agreement is for settlement purposes only and does not constitute an admission by respondent that he has violated the Jaw as alleged in the complaint; and that the order set forth in the agreement and hereinafter included in this decision shall have the same foree and effect as if entered after a full hearing. Respondent waives an)' further procedural steps before the hearing examiner and the Commission, the making of findings of fact or conclusions of la,,\", and all rights he may have to challenge or c.contest the validity of the order to cease and desist entered in accordance with the agreement.

The order agreed upon fully covers all the issues raised in the complaint, and adequately prohibits the acts and practices charged therein as being in violation of the Federal Trade Commission Act. Accordingly, the hearing examiner finds this proceeding to be in the public interest and accepts the Agreement Containing Consent Order To Cease And Desist as part of the record upon "which this decision is based. Therefore It is o1Yle'l' That respondent, D. Stack Hubbard, an individual trading as Hall-~lark Studios, or trading under any other name, and his agents, representa;tives and employees, directly or through any corporate or other device, in connection with the offering for sale sale or distribution of photographs, in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forth"with cease and desist from representing, directly or by implication, that: (1) Respondent is c.onducting a photographic contest the purpose of which is to select winners for a contest sponsored by a magazine or for any other purpose; or that designated winners will receive val uable prizes;

(2) R,respondent will give free portraits to parents of children who pose for respondent;

Deeisioll 52 F. T. C.

(3) Parents may enter their children in the contest free of charge; (4) llf6ther and Child i"l-1 agazine or any other publication owned by respondent, is a recognized or established magazine; or is independent of respondent; or is similar to Look ill agazine or any other nationally known magazine; or is published monthly; or that the subscriber to said magazine will receive a new issue each month during his subscription period;

, (5) Pictures taken by respondent or his agents will be in true or natural color;

(6) Hall-l\lark Studios is an affiliate of, or is otherwise connected with, the Hall-l\1ark Greeting Card Company; (7) Respondent will refund the purchase price of photographs to 'dissatisfied customers;

(8) Photographs purchased from respondent will be similar in quality to demonstration photographs;

(9) Photographs purchased from respondent will be delivered promptly or according to the specifications and agreements contained on the. purchase order, unless such is the fact. DECISION OF THE CO:i\Il\IISSION AND ORDER TO FILE REPORT OF CO::M:PLIANCE Pursuant to Section 3.21 of the Commission s Rules of Practice, the initial decision of the hearing examiner shall, on the 21st day of December, 1955, become the decision of the Commission; andaccordingly:It is ordej' That respondent D. Stack Hubbard, an individual trading as Hall-~lark Studios, shall, within sixty (60) days after service upon him of this order, file with the Commission a report writing setting forth in detail the manner and form in which he has complied with the order to cease and desist. TROPIC IKDl'STRIES ) IXC. , ET AL. 581 Complaint Ix THE l\Lo\TTER OF TROPIC IXDlTSTRIES, INC., ET AL.

CONSENT ORDER, ETC.: IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE cO:;\I:i\rrSSION ACT Docket 6397. Com,plnint, AI/fl. 23. 1955-Decision, Dec. , 1955 Consent order requiring two associated firms in Chicago and their two common officers to cease falsely advertising' in newspapers for employees when actually seeking customers to buy their food vending machines, heating and cooking equipment and supplies, including such representations as. that a purchaser of their products would service established food distribution accounts owned by respondents: must have a car and good references; and would not have to engage in canvassing or selling; would earn each month 20% of the amount invested and from $6 000 to $12 000 annually; would receive from respondents liberal financial assistance if he desired to expand, and would be given exclusive territory. Before 11/r. J. Ea1'l Ooie hearing examiner. 11/7' Williarn R. Tincher for the Commission. i'. Cecil W. Weiss of Chicago, Ill., for respondents. CO:i\IPLAINT 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 Tropic Industries Inc., a corporation, and Tropical Trading Company, a corporation and Gilbert Courshon, G. C. Burd and Cecil vVeiss, individually and as officers of said corporations, hereinafter referred to as respondents have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

PARAGRAPH 1. Respondents Tropic Industries, Inc., and Tropical Trading Company are corporations duly organized, existing and doing business under the laws of the State of Illinois, with their principal office and place of business at 5 SouthvV abash, Chicago Illinois. Gilbert Courshon, G. C. Burd and Cecil Weiss are President~ Vice President and Secretary-Treasurer, respectively, of said corporate respondents and these individuals formulate, control and manage the policies of said corporate respondents. Their principal office and place of business is the same as that of the said corporate respondents. Respondents are now, and for more than one year last , Complaint 52 F. T. C.

past have been, engaged in the promotion, sale and distribution of vending machines, vending machine supplies and heating and cooking equipment and supplies.

PAR. 2. In the course and conduct of their business respondents now cause and have caused said products, when sold, to be transported from their place of business in the State of Illinois to purchasers thereof located in various other States of the United States. Respondents maintain, and at all times mentioned herein have maintained, a substantial course of trade, in commerce, in said products. PAR. 3. Respondents at all times mentioned herein have been in substantial competition, in commerce, with other persons and with corporations, firms and partnerships engaged in the sale of similar products.

PAR. 4. In the course and conduct of said business and for the purpose of inducing the purchase of said products, respondents have made various statements and representations concerning their said products and business methods through their salesmen and through advertisements inserted in newspapers, periodicals, letters, and other advertising literature circulated generally among the purchasing public. Typical newspaper ach~ertisements, but not all inclusive, are as follows:

MANAGER W'ANTED MALE OR FEMALE Spare time or full time. Not Vending machines. Excellent income, national concern with reference from bank and Chamber of Commerce will hire 1 man or woman to supervise this sensational business. 'There is no selling or experience necessary. Income to start immediately-. Qualifications as follows: 1. Good character.

2. Spare a minimum of 14 hours a week.

3. $1990.00 investment fully secured.

This is a food route. If you can meet these qualifications and desire an interview with Factory Representative, then answer this ad immediately. Please do not answer this advertisement unless you have the necessary capital available, and are a person who can make a definite deeision after you know the facts, as those selected will be hired immediately WANTED Distributor of nationally advertised products has immediate Ol)ening for man and wife or individuals who would be interested in entering the wholesale distributing field in a small way. Pre-established accounts. Part or full time to start.

Possible to earn $1,000 monthly. No sales work, not Vending. Applicants must have car, good references and $2 175 to cover inventory, equipment, etc. Our plan is new and growing by leaps and bounds. We help finance you after you start. No high pressure people wanted as no selling required. If you can qualify, please write to District Manager, giving history, '" 0((phone and address so that personal interview may be arranged * TROPIC INDUSTRIES, INC., ET AL. 583 581 Complaint OPPORTUNITY THIS AREA National company has immediate openings for ambitious man to manage local business; can be handled in spare hours at start if desired; honesty and dependability more important than past experience. Our liberal financial assistance enables rigid expansion. This is a business operated on a very high plane for high type men of character only.

APPLICANT MUST HAVE $1200.

(which is secured); good references and car. This opening will pay you exceptionally high weekly income immediately, and rapidly increase as business expands. Prefer applicant aspiring earnings from $6 000 to $11,000 yearly. No high pressure men wanted as no selling required. If you can qualify and have necessary cash, please write today RESIDENT MANAGERS NATJ(ORALLY ADVERTISED PRODUCTS Persons who would be interested entering the wholesale distributing field in a small way. No sales work or solicitation. Pre-established accounts. Need local parties to act as resident managers. Opportunity for excellent returns for time involved. Requires about $2 250.00 to cover inventory, display units, etc. * * * Only part time, but owner can expand to full time. Requires no selling. Should net $500 a month. Will assist. $2175.00 investment required. ASSOCIATE INVESTORS Finance equipment for chain of restaurants and other eating places. Should earn around 20% monthly with small amount of personal attention. No risk. Solid Business. $2200 to $6600.00 required * * * PAR. 5. ':fhrough the use of the statements set forth in Paragraph 4 and others similar thereto but not specifically set out therein, respondents have represented and do now represent, directly or by implication: to a substantial portion of the purchasing public, that: L Respondents offer employment to certain selected persons. 2. Persons selected 'will service established and existing food distribution accounts owned by respondents.

3. Persons selected must have a car, good references, and a specified sum of money.

4. Persons selected will invest a stated amount and said amount will be secured by an inventory of merchandise worth the amount invested and there will be no risk involved to the investor. 5. Persons selected will not be required to engage in any selling. 6. Persons selected will earn each month 20% of the amount they jnvested.

7. Persons seleeted will earn from $6 000 to $12 000 annually. 8. If the persons selected desire to expand, respondents will give them liberal financial assistance.

Complaint 52 F. T. C. 9. The persons selected will be given an exclusive territory in '\vhieh to operate.

PAR. G. The foregoing representations and implications are grossly exaggerated, false, and misleading. In truth and in fact: 1. Respondents are not offering employment to persons reading their advertisements.

2. Respondents are not seeking e,mployees to service established and existing food distribution accounts owned by respondents. Respondents are seeking purchasers of said food distribution equipment. The food distribution aeeounts are not established and existing at the time the advertisement is placed or at the time the food distribution equipment is sold to the persons ",ho have previously read and answered the advertisement.

3. The only qualification necessary to participate in respondents proposals is to possess the amount of cash stated in the advertisement the purchaser reads. Respondents do not req~lire that the purchaser possess a car and good references.

4. The amount of cash required is a purchase price for said machines or food distribution equipment and is not secured by an inventory of merchandise worth a major or reasonable portion of that amount. The purchaser undertakes a considerable risk as his success or failure is determined by factors many of which are not subject to his control. His risk is further increased by the fact that the merchandise he purchases from respondents has little or no resale value if the purchaser finds it necessary to, or is forced to, terminate the venture.

5. Purchasers of respondents' products are required to engage in extensive canvassing and selling.

6. Purchasers of respondents' products do not earn 20% of their purchase price each Inonth or even a major or reasonable portion of that amount. Said purchasers' earnings are very small, and, in many cases, non -existent.

7. Purchasers of respondents' products do not earn $6 000 to $12 000 a year. The quoted figures are a theoretical possibility under perfect conditions. Even these theoretical amounts could be earned only if the purchasers invested sums considerably larger than the advertisements specify.

8. Respondents do not give financial assistance to purchasers of their products desiring to expand their operations. Such persons ean expand only by purchasing more merchandise from respondents. 9. Respondents do not give purchasers of their products an exclusive territory in which to operate.

TROPIC INDUSTRIES) INC. ) ET AL. 58, 581 Complaint PAR. 7. In the course and conduct of their said business, respolldents mploy salesmen who conduct and solicit business for respondents in various States of the United States other than Illinois. Respondents supply these salesmen with sales aids and literature and direct them to call upon those members of the general public who request an interview as a result of reading respondents' aforesaid advertisements. ",Vllen making such calls, respondents' salesmen orally make many stat~~ments, among and typical of which are the following: 1. No selling will be required of purchasers of respondents products.

2. Persons purchasing respondents' products may earn 20% of their purchase price in one month or will earn $6 000 to $12 000 annually. 3. Respondents have established or will establish locations for vending machines or accounts for food distribution equipment sold to their purchasers. Said locations will be in first-class cafes and restaurants, department stores or other desirable commercial establishments. A list of said locations containing the signature of the owners or operators of the locations authorizing the location shall be furnished to the purchasers. Said locations shall be subject to approval by the purchaser and, if the purchaser does not approve of the loeat.ions, replacement locations which do meet the purchaser s approynl will be obtained by respondents' representatives. 4. R.respondents or their representatives will dispose of or assist in the disposal of, or refund the purchase price of, products purchased from respondents in the event the venture is not profitable or if the nurehaser is otherwise dissatisfied.

r~. Purchasers of respondents' products will be given an exclusive territory in which to operate.

6. Purchasers of respondents' products will be able to repair said products at a local repair service through arrangements made by respondents.

7. Purchasers of respondents' food distribution equipment will be able to purchase food supplies for said equipment directly from a lCieal food broker through arrangements made by respondents. 8. Respondents are endorsed by the Chicago Better Business Bureau.

PAR. 8. The statements set. out in Paragraph Seven are false misleading, and deceptive. In truth and in fact: 1. Extensive selling is required to conduct the intended business. 2. Purchasers of respondents' products do not earn 20% of their 1111rehase price in one month or $6 000 to $12 000 a year. Said purchn~rr~ ' earnings are very small and, in many cases, nonexistent. The Complaint 52 F. T. C.

quoted figures are a theoretical possibility under perfect conditions and even these figures, in the case of the $6 000 to $12 000 profit would be possible only if the purchaser invested a sum considerably larger than the advertisements specify.

3. Respondellts have not established locations or accounts for purchasers of their products prior to the sale thereof. Said locations or accounts, if obtained by respondents at all, are obta~ned only after the purchasers pay respondents for the products. In most instances, locations or accounts furnished the purchasers are in undesirable, unprofitable and otherwise inferior establishments. In many instances, the list of locations or accounts given to the purchasers contains fictitious or residential addresses. In many instances, the signatures appearing on the lists, and represented by respondents' representatives as being the signatures of the owners or operators of said establishments, are forgeries or signatures of an employee .without authority to grant said location or account. In most instances, the purchaser is not given the opportunity to inspect or to approve the locations or accounts as respondents' representatives will not allow him to hftve the list until he has signed a statement that the locations or accounts are acceptable. If the purchaser refuses to sign the statement or if he does sign and subsequently finds the locations or accounts unsatisfactory, respondents do not, in most instances, obtain satisfactory replacement locations or accounts.

4. Respondents, 01' their representatives, do not dispose of or aid the purchaser in the disposal of or refund the purchase price of products purchased from respondents if the venture is not profitable or the purchaser is otherwise dissatisfied. 5. Respondents do not grant to purchasers an exclusive territory in which to operate.

6. Respondents do not arrange for laeal repair services to repair products purchased from them. The purchasers must locate their own local repair service or send the products back to the factory when they need to be repaired.

7. Respondents do not arrange for local food brokers to sell food supplies to be used by purchasers of respondents' products. Said purchasers must make their own local arrangements, if possible, or purchase their food supplies from Illinois sources recommended by respondents.

8. Respondents have not been and are not now recommended or endorsed by the Chicago Better Business Bureau. , PAR. 9. The use by the respondents of the foregoing false, deceptive, and misleading statements, representations and practices, dis- TROPIC INDUSTRIES, INC. , ET AL. 587 581 Decision seminated as aforesaid, in connection with the sale and distribution in commerce of said products has had and now has the tendency and capacity to and does mislead and deceive a substantial portion of the purchasers and prospective purchasers of said products into the erroneous and mistaken belief that such statements and representations are true and to the purchase of substantial quantities of the products offered for sale in commerce by respondents. PAR. 10. The aforesaid acts and practices of respondents, as herein alleged, are all to the prejudice and injury of the public and of respondents' competitors and constitute unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of the Federal Trade Commission Act. INITIAL DECISION BY J. EARL COX, HEARING EXAMINER The complaint alleges that respondents Tropic Industries, Inc., and Tropical Trading Company, Illinois corpol'fttions with their principal office and place of business at 5 South ,Ya basil Chicago, Illinois and Gilbert Courshorl, G. C. Burel anc~ Cecil ,Yeiss, President, Vice President and Secretary-Treasurer, respectively, of said corporate respondents, who control and manage the policies of said corporate respondents and have the same address, are now, and for more than one year last past have been, competitively engaged with other persons, corporations, firms and partnerships, in commerce, in the promotion, sale and distribution of vending machines, vending machine supplies and heating and cooking equipment and supplies; and charges that they have falsely and deceptively advertised their said products and business methods, in violation of the Federal Trade Commission Act. After the issuance of the complaint, to which no answer was filed, respondents, their counsel, and counsel supporting the complaint, on October 5, 1955, entered into an Agreement Containing Consent Order To Cease And Desist, which was approved by the Director, Bureau of Litigation of the Commission, and thereafter transmitted to the hearing examiner for consideration. The agreement provides among other things, that respondents admit all the jurisdictional facts alleged in the complaint and that the record herein may be taken as if findings of jurisdictional facts had been made in accordance with such allegations; that the record on which the initial decision and the decision of the Commission shall be based shall consist solely of the complaint and this agreement; that the agreement shall not become a part of the official record unless and until it becomes a part of the decision of the Commission; that the complaint may be used in construing the terms of the order agreed upon, which may be altered, modified, or set 588 FEDERAL TRADE COl\BUSSIOX DECISIOXS Order :I:!. F. T. U. aside in the manner provided for other orders; that the agreement is for settlement purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the complaint; and that the order set forth in the agreement and hereinafter included in this same force and effect as if entered after decision shalla havefullthe hearing. Respondents waive any further procedural steps before the hearing examiner and the Commission, the making of findings of fact or conclusions of law, and all rights they may have to challenge or contest the validity of the order to cease and desist entered in accordance with the agreement.

The order agreed upon fully covers all the issues raised in the complaint, and adequately prohibits the acts and practices charged therein as being in violation of the Federal Trade Commission Act. Accordingly, the hearing examiner finds this proceeding to be in the public interest and accepts the Agreement Containing Consent Order To Cease And Desist as part of the record upon which this decision is based. Therefore, J t is onlered That respondents Tropic Industries, Inc., a corpora tion, Tropical Trading Company, a corporation, Gilbert Courshon U. C. Burel, and Cecil 1Veiss, individually and as officers of said corporations, and their agents, representatives and employees directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of vending machines, vending machine supplies, heating and cooking equipment and supplies, in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication, that:

1. Respondents are seeking employees when in fact they are seeking purehasers for their products;

2. Persons purchasing respondents' products will service established and existing food distribution accounts owned by respondents; 3. Persons purchasing respondents' products must have good references or any other requirements other than the amounts respondents charge for their products;

4. The cash required to purchase respondents' products is secured either bv an inventory of merehnudise or otherwise, or that there is ne/ financial risk involved to the purehasel' of respondents ' products; 5. Purchasers of respondents' products will not be required to engage in selling;

6. Pnrchnsers of re~po1Hlents~ products will earn 01' realize an:y amount jn excess of that "which hn~ in fact been customarily and H.::'gubrly Pill'nec1 by pl' E'yioll~ plln':ln~:~'l' ~ of IT:,;p:mc1ent::; ' pl'()clncts; TROPIC INDUSTRIES) INC. , ET AL. 589 581 Decision 7. Respondents will give financial assistance to their purchasers for expansion purposes;

8. The territory allotted purchasers of respondents' products is exclusive, unless respondents do in fact refrain from selling said products to other purchasers for operation in such designated territory ;

9. Respondents will obtain satisfactory locations in which their purchasers may sell respondents' products unless locations are in fact obtained by respondents which are acceptable and satisfactory to said purchasers;

10. Respondents will refund the purchase money to any dissatisfied purchaser of respondents' products, or will dispose of or assist in disposing of such products in the event the venture is not profitable;

11. Purchasers of respondents' products will be able to obtain repairs for, or purchase supplies for, such products at a local repair shop or a local supply house through arrangements made by respondents ;

12. Respondents are or have been endorsed by the Chicago, Illinois Better Business Bureau.

DECISION OF THE COl\Il\IISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to Section 3.21 of the Commission s Rules of Practice the initial decision of the hearing examiner shall, on the 21st day of December, 1955 become the decision of the Commission; and, accordingly :

It is O1'dered That respondents Tropic Industries, Inc., a corporation, and Tropical Trading Company, a corporation, and Gilbert Courshon, G. C. Burd, and Cecil ",Veiss, individually and as officers of said corporations, 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 Inanner and form in which they have complied with the order to cease and desist. 451524-59-- Complaint 52 F. T. C.