Continental Schools, Inc.

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

complied with the order to cease and desist. I N THE 1\iA TTER OF CONTINENTAL SCHOOLS , INC., ET AL.

SENT ORDER, ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL '1 ADF. CO::1IlSSION ACT Docket 7873. Complaint, Ap1". 20, 196U-Decision, July 1960 Consent order requiring operators of a correspondence school in Vancouver \VHSI1., seJJing a cour p. on jet engine mechanics, among others, to cease 254 FEDERAL TRADE COMMISSION DECISION& Complaint 57 F.

using misleading claims in newspaper arlvertising, form letters, salesrnpn statements, etc., concerning employment and earning prosperts in the air. plane industry, opportunities therein for students completing their course, etc.

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 beheve that Continental Schools, Inc., a corporation, and Leroy '\Vllite, Ralph J. Merris and Ralph D. Lingenfelter, as individuals and as officers of said corporation, and l\Iax l\ioore, an individual, hereinafter referred to as respondents, l1ave violated the provisions of said Act, and it nppenring 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:

PATIACm,\PH 1. Continental Schools, Inc., is a corpor8.tion organized, existing, and doing business under' and by virtue of the laws of the Slat.e of \Vashington, with its offces and TJrincipal place of business located at 114 West Sixth Street in the City of Vancouver State of \Vashington. Prior to January 12 , 185D , or thereabouts its corporate n une ,,us Continental ,Jet Training, Inc. The said change of corporate name was aceomp1ishecl by amendment to the charter of Continental Jet Training, Inc., pursuant to the la'ivs of the Stale of Washington.

Individual respondents Leroy '\Vhite, Ralph J. Ierris and Ralph D. Ling-enfclter, are offcers of the said corporate respondent. Their offce addresses are the same as that of the corporate respondent. Inclivjdual respondent 1\fax 1\loorc was President of the corporate respondent prior to the said amendment, and \fas for a time Secretary of the corporate respondent subsec1uent thereto. Individual respondent 1\fax 1\100re also served for n, time as Sales 1\Ianager of t.he corporate respondent and has a substantial interest in its mYl1Crship. His principal offce and phce of business is located at 1528 E. J-Iol!!'ate, Portland, Oreg.

The said individual respondents formulated and now formulate direct, aIlcl control the acts and practices of the corporate respondent, including tlle acts and practices hereinafter set forth. PAIL 2. Respondents are now, and for some time last past have been, engaged in the business of advertising, offering for sale, selling and distributing various types of home study courses. Among said courses is a course on jet engine mechanics. PAR. 3. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their said course , .

CONTINENTAL SCHOOLS , INC., ET AL. 255 253 Complaint of study, when sold, to be transported from their place of business located in Vaneouver Wash. , to the purchasers thereof located in various other States of the United States. Respondents maintain and at all 6mes mentioned herein have maintained, a substantial course of trade in said courses in commerce, as "commerce" is defined in the Federal Trade Commission Act. PAR. 4. In the course and conduct of their business and for the purpose of inducing the sale of their said course on jet engine mechanics, respondents have made, published, and caused to be published, a variety of statements concerning said course in newspapers and other publications, in brochures displayed to prospective purchasers by respondents or their salesmen, ano in post cnrcls and form letters sent by means of the Unjted States mails to prospective purehasers by the respondents.

Among and including, but not limited to, such statements are the following; :

(a) Please band this letter and the el1closeclreference form to O1H representnti,c when lie calls, as be must return them with his report HlH1 reasons for acceptance or rejectioll (Jonn letter) I am here for one purpose ooly; to see if there is a student here that \vil qualify for our let Training Program. (S.'lesman s guide) (b) We sincerely hope your qualifications are such that ,ve may serve as your guide to success in this profitable, wide-open. loew field. (form letter) If you can qualify you can earn more! (brochure) WE: !\EED l\E T . . . who can qualify for training. (newspaper advertisement) (c) ivc at the school wnnt to help you make this change by offering you the opportunity to equip yourself with the necessary knowledge that wi1 enable you to demand a good position and provide a secured income for you and your family. (form letter) Prepare yourseH-train nmv. . .. (newspaper ad,ertisernent) (d) Trained men by the thonsanus are needed to help keep these planes flying. . . service. . . overhaul. (form letter) . . . train during spare time for jet aircraft mechanics, jet specialist. engine buildup, engine overhaul, inspectors, instructors, maintenance and service. (post card) . . . Trouble shooters, maintenaoce, overhaul inspectors, instructors. . . . (newspaper ad'Vertispment) (e) Look to an assured future. (brochure) Jet (gas turbine) opens endless new positions (brochure) Indicating The L'nlimited Future of Jet Aviation. . . . Followed by a montage of newspaper articles and Help .Wanted advertisements, including: Line inspectors wanted for expanding jet engine plant. We seek men with A & E experience. . . General Elertric; Aircraft mechanics needed immediately. Airframe mechanics, . . . (name of prospective employer partially covered); Eastern Air to build plant in Miami to overhaul jets. . . ; Continental Airlines . . . to build 2 h millon dollar overhaul and maintenance base for turbine engioes . . . ; .JoUIneymen. . . . (brochure) Complaint 57 F.

PAR, 5. By means of the statements appearing ill such rLcherbsements, brochures, postcards and form letters, and others of the same import and meaning not set forth herein, and through the oral statements of their sales representatives, respondents represent, directly or by implication:

(a) That their sales representatives are primarily concerned with determining the qualifications of prospective purchasers of such courses.

(b) That respondents wiJJ accept as students only those who can learn the principles and practical aspects of jet engine mechanics including the repair, maintenance and overhauling of jet engines hy means of a course of home study without personal instruction or supervlslO11.

(c) That such course of study is so prepared and presented that the prospect who qualifies and is accepted for enrollment wiJJ be able to complete it without personal instruction or supervision. (d) That if the prospect is accepted and completes such course with passing grades he will become a trained jet engine mechanic or technician qualified to repair, maintain and overhaul jet engines. (e) That those completing such course with passing grades are assured employment as jet mechanics or technicians in the repair maintenance, and overhauling of jet engines. PAR. 6. The said statements and representations of respondents are false, misleading and deceptive. In truth and in fact: (a) Respondents' sales representatives depend upon commissions earned from selling such course as a means of livelihood. Their sales presentation is primarily concerned with effectuating sales. They give little or no consideration to determining the qualifica. tions of prospective purchasers of the said course. (b) Respondents accept virtually a11 students who are willing to enroll and make the down payment. Re.spondents have accepted and enrolled a great number of purchasers who could not learn the principles and practical aspects of jet engine mechanics by means of such written home study course without personal instruction or supervision.

(c) Few, if any, of respondents' customers have continued on with the course after having received several lessons. The overwhelming majority of such customers have been unwilling or unable to complete the said course. A major portion of the income of respondents and of their sales representatives in the usual course of business is derived from payments lor mcelled or uncompleted courses.

(d) Upon the comp1ction of such course with passing grades the prospect could in no sense be considered a trained jet engme CONTINE:-TAL SCHOOLS , INC., ET AL. 257 253 Complaint mechanic or technician nor will he be qualified to repair, maintain or overhaul jet engines.

(e) Few, if any, of those who enrolled for respondents' said course have completed it. Even were they to complete the said course with passing grades there is Ette if any prospect of their employment as jet engine mechanics or technicians by industry. PAR. 7. In the course and conduct of their business, respondents have made further statements through newspaper advertisements brochures, form letters, and through oral statements of the respondents or their sales representatives. Among and including, but not limited to, such statements are the following: . . . flight line trouble shooting, engine buildup.. . instructor. . . test operations. . . . (brochure) With its critical shortage of maintenance men, SAC is obliged to hire technical representatives from industry to help out. . . the civilians are earning up to $1 200 a month. (brochure) If you are not making better than 8J25 a week (depiction of silhouette of airplane) . . . Turbojet offers ground tioor opportunities for better jobs, future more pay and security. Train now and be a top man in the multmiJion dollar jet industry. (post card) PAR. 8. By means of the statements set forth in paragraph 7 above, in conjunction with those set forth in paragraph 4 above and through others of the same import and meaning not set forth herein including the oral statements of respondents and their sales representatives, respondent.s represent directly or by implication that there is no bar or impediment which would operate to prevent those who successfully complete such course in jet engine mechanics from earning the prevalent wage sca1cs of highly skilled mechanics or technicians on airplane engines. PAll 9. Ordinarily mechanical .work on jet aircraft engines is performed by skilled personnel who are capable of working on a11 types of power plants, which includes reciprocating as well as jet engines. Much of this work, particularly above the repetitive and routine levels in the repair, overhaul and maintenance of aircraft engines, can only be performed by personnel who have been examined and certified by the Federal Aviation Agency. Examination for certification by said agency will only be given upon the successiul completion of a course of study including supervised practical shop and bench work, at cither a duly luthorjzec1 school or under an approved apprenticeship training program, in lieu of specified practical experience requirements. Certification for airframe and power plant work is known in the trade as an "A & P Ticket" (and was formerly designated "A & E Tickee' for airframe and engine work).

640968-63- 258 FEDERAL TRADE COMMSSION DECISIONS Complaint 57 F.

PAn. 10. Respondents, their school, and their uIlsupervised home study course in jet engine mechanics have not been approved by the Federal Aviation Agency. Students who successfully complete such course with passing grades would not meet the prcrequisHes for taking an examination for certification for aircraft Of power plant work on airplane engines, and as a consequence, would not earn the prevailing wages earned by skilled aircraft mechanics or technicians.

PAR. 11. The failure of respondents t.of\ffrmatively disclose to prospective purchasers of such course of home study for jet engine mechanics, in connection with statements and representations concerning employment and earning prospects in the aircraft industry, that such prospective purchasers cannot I on the strength of such study alone qualify for such certification as is necessary for performing skilled work and for earning the prevalent "'ages of skilled jet engine mechanics or technicians, is false, misleading and deceptive.

PAn. 12. In t.he course and conduct of their business, at an times mentioned herein, respondents have been in substantial competition, ill commerce, with corporations, firms, and individuals in the sale of correspondence', courses of the same general kind and nature as those sold by respondents.

AH. 13. The use by respondents of the aforesaid false, misleading and cleccptive statplrlp.nts, representations and practices anrl their failure to affrmatively disclose the existing lim itations as to the employment and earning prospects of their prospective purchasers, has had, and now has, a capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations were true ana complete, and into the purchase of substantial quantities of respondents' said correspondence course by reason of such erroneous and mistaken beliefs. As a consequence thereof, substantial trade in commerce has been, and is being, unfairly diverted to respondents from their competitors and substantial injury has thereby been and is being done to competition in commerce. PAn. 14. The aforesaid acts and practices of respondents, as herein alleged, were and are al1 to the prejudice and injury of the public and of respondents' competitors and constituted, and now constitute, unfair and deceptive acts and practices and unfair methods of competjtion, in commerce'" within the intent and meaning of the Federal Trade Commission Act.

Nr. John J. McNally for tho Commission. Respondents, for themselves.

CONTINENTAL SCHOOLS, INC., ET AL. 259 2G3 Decision INITIAl.. DECISION BY LOREK H. LAUGHLIK, HEARING EXAMINER The Federal Trade Commission (sometimes also hereinafter referred to as the Commission) on April 20, 1960, issued its complaint herein, charging the respondents Continental Schools, Inc. a corporation; Leroy vVhite, Ralph J. Merris and Ralph D. Lingenfelter, as individuals and as offcers of said corporation; and l\1ax l\1oorc, as an individual, with having violated the provisions of the Federal Trade Commission Act, and respondents were duly served with process.

On June 1 , 1960, there was submitted to the undersigned hearing examiner of the Commission for his consideration and approval an "Agreement Containing Consent Order To Cease And Desist; ,which had been entered into by and between respondents and the attorney supporting the complaint, under date of lay 27 1960, subject to the approval of thc Bureau of Litigation of the Commission, which had subsequently duly approved the same. On due consideration of such agreement, the hearing examiner finds that said agreement, both in form and in content, is in accord with 83.25 of the Commission s Hules 01 Practice for Adjudicative Proceeding' , and that by said agrecment the parties have specifically agreed to the following matters:

1. nespondent Continental Schools, Inc., is a corporation orgrmized, existing, and doing business under and by virtue of the laws of the State of vVashington, with its offces and principal plnce of business located. at 514 Ford Building in the City of Vancouver State of \Vashingion. Prior to January 12, 1959 , or thereabouts its corporate, name was Continental .J et Training, Inc. The said change 01 COrpOTftte name was accomplished by amendment to the charter of Continental Jet Training, Inc., pursuant to the laws of the State of 'Vashington. Individual respondents Leroy 'Vhite, oflicers of the snicl Ralph .J. :Jlerris nnd Halph D. Lingfe1ter are corporate respondent, their offce addresses being the same as that of the corporate respondent. Individual respondent Max Moore was President of the corporate respondent prior to the said amendment, and was for a time Secretary of the corporate respondent subsequent thereto. I-Ie also served for a time as Sales Manager of the corporate Tcspondent and has a substantjal interest in its ownership. His principal offee and place of business is located at 1528 S.E. Holgate, Portland, Oreg.

2. Respondents admit a11 of the jurisdictional facts alleged in the complaint and agree that the record may he taken as if findings of jurisdictional facts had been duly made in accordance with such allegations.

260 FEDERAl, TRADE COMJISSION DECISIONS Order 57 3. This agreement disposes of aU of this proceeding as to aU parties.

4. Respondents waive:

(a) Any further procedural steps before the hearing exammer and the Commission;

(b) The making of findings of fact or conclusions of law; and (e) AU of the rights they may have to chaUenge or contest the validity of the order to cease and desist entered in accordance with this agreement.

5. The record on which the initial decision and the decision of the Commission shan be based shan consist solely of the complaint and this agreement.

6. This agreement shaU not become a part of the offcial record unless and until it becomes a part of the decision of the Commission. 7. This agreement is for settlement purposes only and docs not constitute an admission by respondents that they have violated the law as aUeged in the complaint.

8. The fonowing order to cease and desist may be entered in this proceeding by the Commission without further notice to respondents. When so entered it shaU have the same foree and effect as if entered after a fuU hearing. It may be aHered, modified or set aside in the manner provided for other orders. The complaint may be used in construing the terms of t11C order. Upon due consideration of the complaint filed herein and the said "Agreement Containing Consent Order To Cease And Desist" this agreement is hereby approved, accepted and ordered filed. The hearing examiner finds from the complaint and t.he aforesaid "Agreement Containing Consent Order To Cease And Desist" that the Commission has jurisdiction of the subject-matter of this proceeding and of the respondents herein; that the complaint states a legal cane for complaint under the Federal Trade Commission Act against the respondents, both generally and in each of tlle particu- Jars alleged therein; that this proceeding is in the interest of the public; that the fonowing order as proposed in said agreement is appropriate for the just disposition of aJ1 of the issues jn this proceeding as to an of the parties hereto; and that said order therdore should be, and hereby is, entered as fonows: It i8 o1'dered That respondents Continental Schools, Inc. , a corporation, and its offcers; and Leroy .White, Ralph J. Merris and Ralph D. LingenfeJter individuaUy and as offccrs of said corporation; and :Max 1:oore individually, and respondents' representa- CONTINENTAL SCHOOLS INC., ET AL. 261 253 Decision tives, agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distri bution in commerce, as "commerce is defined in the Federal Trade Commission Act, of courses of study or instruction, do forthwith cease and desist from:

1. Representing, directly or by implication: (a) That. their sales representatives are primarily concerned with determining the qualifications of prospective purchasers of courses when their purpose is t.o sell courses of instruction; (b) That they arc scleetive to tJw extent of enrolling only tbose who possess the aptitude for successful completion of such courses of study, or that they atc selective to any other extent that is contrnry to the facts;

(c) That the jet engine mechanic course is so prepared and presented that the prospect can successful11y complete it without personal instruction or supervision;

(d) That a person upon completion of such jet engine mechanic course will be a trained jet mechanic or technician or will be qualified to repair, maintain or overhaul jet engines; (e) That a person upon complction of such jet engine mechanic course win be able to get employment as a jet mecl anic or technician, or in the repair, maintenance or overhaul of jet engines; 2. :Making any representations concerning employment or earning prospects in the aircraft inclnstry, without affrmatively and conspicuously disclosing:

(a) That certification by the Federal Aviation Agency is required for employment as L skilled jet mechanic or technician in the repair maintenance or overhauling of aircraft engines; (b) That completion of such course of study does not meet the prerequisites for certification by such agency. DECISION OF THE COl\nnSSION AXD OlilER TO FILE REPORT OF COMPLIANCE Pursuant to Section 3.21 of the Commission s Rules of Practice the initial decision of the hearing examiner shan, on the 19th day of .July 1860, become the decision of the Commission; and, accordingly:

It is ordered That the above-named respondents shall, within sixty (60) days after service upon them of this order, file with the Commission L report in writing, sett.ing forth in detail the manner and iorm in which they have complied with the order to cease and desist.

262 FEDERAL TRADE COMMSSION DECISIONS Complaint 57 F-