Bernard W. Coates

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

Ix true Marrer or BERNARD W. COATES DOING BUSINESS AS NATIONAL MAIL MERCHANDISERS CONSENT ORDER. ETC.. IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 8198. Complaint. Nov. 28, 1960—Decision, Aug. 28, 1961 Consent order requiring a Dorchester, Mass.. concern to cease selling mail order dealerships through deceptive claims in advertising, as in the order below specified.

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 Bernard W. Coates, an individual trading and doing business as National 693-490—G4——21 Complaint 59 F.T.C.

Mail Merchandisers, 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 be in the public interest, hereby issues its complaint stating its charges in that respect as follows:

Paracrary 1. Respondent Bernard W. Coates is an individual trading and doing business as National Mail Merchandisers, with his office and principal place of business located at 85 Pleasant Street, Dorchester, Massachusetts. Respondent uses various mailing addresses for National Mail Merchandisers, among such addresses is 618 Washington Street, Boston, Massachusetts. Par. 2. Respondent is now, and for some time last past has been, engaged in the sale of mail order dealerships. In connection with the same he sells and distributes to his purchasers catalogs and sales literature, and various supplies.and equipment. Respondent causes, and has caused, said products when sold to be shipped from his place of business in Massachusetts to purchasers thereof at their respective residences and places of business located in various other states of the United States. Respondent maintains, and at all times mentioned herein has maintained, a course of trade in said dealerships, and catalogs, sales literature and supplies in commerce as “commerce” is defined in the Federal Trade Commission Act. Respondent’s volume of business in such commerce is, and has been, substantial. Par. 8. Respondent in the course and conduct of his business is, and has been, engaged in substantial competition with other persons, firms and corporations engaged in the sale of dealerships, supplies and equipment used in, and necessary for, the operation of a mail order merchandising business. “ Par. 4. Respondent in the course and conduct of his said business, and for the purpose of inducing the sale of his said dealerships and accompanying material, advertises the same by mailings sent through the United States mails to prospective customers, and by advertisements placed in specialty magazines. Among and typical but not inclusive of the statements appearing in said advertisements are the following:

NOW THE OPPORTUNITY OF A LIFETIME IS YOURS! WE SET YOU UP IN A MAIL-ORDER BUSINESS OF YOUR OWN ... RIGHT IN YOUR OWN HOME.

YOU NEED NO INVENTORY YOU DO NO SHIPPING Our plan is simple. We supply you with attractively printed catalogue folders with your name and address on them. These catalogue folders are NATIONAL MAIL MERCHANDISERS 307 305 Complaint “self-mailers”. That means that all you hare to do is fold them, paste a label on them that has the name and address of a mail order customer, stamp and Grop them in the mail. Soon the mail man will be bringing you envelopes containing orders with checks, cash and money orders. Then, all you do is take out your generous profit, send us the name and address of the customer and WE SHIP THE ITEMS DIRECT TO YOUR CUSTOMER FOR YOU under your own label so that you get al] the re-orders. That’s all there is to it. One of the most exciting features of our dealership plan is our amazing $25.00 DEALER’S ALL PROFIT PLAN. This exclusive feature has been known to bring letters with $25.00 in every mail. The best part about this plan is that you keep every cent ... and we ship the orders for you FREE. If you are really interested in making money at home, you can't afford to overlook this amazing money maker.

What does a dealership cost? Well you'll agree it is worth a fortune but actually it can cost you nothing because as explained in the folder, the $25.00 you send is actually nothing more than a “good faith” DEPOSIT WHICH IS REBATED TO YOU WITH YOUR FIRST ORDER OF SUPPLIES. WAIT .. . that’s not all, we also have an AMAZING MONEY BACK GUARANTEE, {If your mailings are not successful, we'll refund your Dealership DEPOSIT WITHOUT ANY QUESTION. That's how sure we are that you will make a profit.

DON’T BE SORRY LATER. THIS COULD BE YOUR BIG CHANCE. TAKE YOUR FIRST STEP FORWARD TO A SECURE FUTURE BY MAILING THE $25.00 DEPOSIT.

YOURS FOR MAIL ORDER SUCCESS B. W. COATES DIRECTOR.

xX x x THIS MAY BE YOUR CHANCE OF A LIFETIME! JUST THINK of trying to get started in any other business. Even the smallest retail store means an investment of $10,000 to $25,000 for rent, fixtures, stock, printing etc. Then you sit and wait for customers to come in... BUT NOT IN MAIL ORDER. You can start small as you want. Without investing one cent for merchandise. No inventory. No shipping. After you've mailed the catalog, and the orders start coming, you forward the orders to us and we ship direct to your customer with YOUR SHIPPING LABEL. You keep the profit of 100 per cent or more. You get the re-orders. You have no money invested in stock, you have no wrapping, shipping or storage problems because we do it all for you. ALL you do is keep the profit! ADVICE AND CONSULTATION SERVICE FOR a full year. Your dealership entitles you to help and advice through correspondence. If you have any questions our experts are ready to help you. REBATE COUPON. We send you a valid REBATE COUPON—This entitles you to a $25.00 rebate on your very first order for supplies. This means: that actually you are getting the entire mail order dealership, offers and all absolutely FREE! .

OUR GUARANTEE—You take no risk in accepting this offer as it is made through the United States Mails by the National Mail Merchandisers, an affiliate of a firm with over 20 years faithful service to MAIL ORDER DEALERS AND MAIL ORDER Beginners... We guarantee you profitable Complaint 59 F.T.C.

results as an authorized dealer and operator of one or more of our complete Ready to Go Offers, or your dealership deposit will be refunded without further question.

RUSH THIS ORDER FORM TODAY—We need a limited number of reliable persons to participate in our unique Dealership Plan. x = x x MAIL ORDER EXPERTS SHOW HOW TO REACH THOUSANDS OF PROVEN MAIL ORDER BUYERS.

NATURALLY, in order for this to be successful to you, we must limit the number of men and women we allow to participate in this operation. Par. 5. Persons who write respondents in regard to the advertising appearing in magazines are sent sales literature, similar to the advertising sent directly through the mails to prospective customers, and are sént, similar application forms. The said application forms contain the following statements: APPLICATION FOR MAIL ORDER DEALERSHIP NATIONAL MAIL MERCHANDISERS 618 WASHINGTON STREET BOSTON 24, MASSACHUSETTS Dear Sirs, I certainly want to get your wonderful Mail Order Dealership. Here's my full payment of $25.00 for which you are to send me EVERYTHING as offered —your complete 7 Point Program including the €25 rebate coupon and the sensational $25 ALL PROFIT OFFER—-ALL BY RETURN FIRST CLASS MAIL.

Date Name Address City Zone __—s State Signed Par. 6. By the use of the aforesaid advertisements, sales literature and application forms, and by other advertisements of the same import not herein set forth, respondent has represented and now represents directly or by implication: 1. That to become an active participating mail order dealer it will cost. the purchaser of the dealership as little as $25.00 and can cost him nothing.

2. That the $25.00 “good faith deposit” is returned to the purchaser of the dealership with his first order of supplies. 3. That one wishing to withdraw as a dealer will get his $25.00 deposit back with no questions asked.

4. That respondent’s offer of mail order dealerships is restricted to a limited number of people.

NATIONAL MAIL MERCHANDISERS 309 305 Complaint 5. That National Mail Merchandisers is a large organization composed of more than one person.

6. That the “$25.00 ALL PROFIT PLAN” is all profit to the subscriber and that it can readily bring in $25.00 orders in every mail, 7. That National Mail Merchandisers is an affiliate of a mail order firm with over twenty years experience in the mail order business. 8. That National Mail Merchandisers guarantees successful operation of a mail order dealership to a purchaser or will refund the $25.00 dealership deposit without question. Par. 7. The aforesaid statements, representations and implications arising therefrom, were and are false, misleading and deceptive. In truth and in fact:

1. $25.00 is not the sole cost to open a mail order business as the dealer must purchase at least one mailing offer or promotion from respondent at a cost of $80.00 and pay the cost of stamps for mailing. 2. The $25.00 “good faith deposit” is not returned to the dealer but is credited against his first order to respondent for sales literature of $80.00 or more.

3. The $25.00 deposit is not returned to the prospective dealer if he decides not to become a mail order dealer unless he actually orders respondent’s sales literature, mails the same and can show the respondent that he has been unsuccessful. 4. Respondent’s offers of mail order dealerships are not limited to any definite number of people but are open to all who will send respondent a $25.00 “good faith deposit.” 5. National Mail Merchandisers is not a large organization as it is composed solely of the respondent.

6. The $25.00 “ALL PROFIT PLAN” is not all profit as it involves an outlay of money on the part of the deaiers for mailing lists, self-mailing folders, and “sales-making folders” from respondent. All of such costs reflect on any money made by a dealer in undertaking such plan. Dealers undertaking such plan have little or no chance of realizing $25.00 orders in every mail. 7. Nationa] Mail Merchandisers is not an affiliate of any firm. 8. There are numerous conditions under respondent’s guarantee of the refund of the $25.00 deposit which are not set forth in connection with the guarantee.

Par. 8. The use by the respondent of the aforementioned false, misleading and deceptive statements, representations and practices has had, and now has, the capacity and the tendency to mislead and deceive a substantial. portion of the purchasing public into the erroneous and mistaken belief that such statements and representa- Decision 59 FLTC.

tions were and are true and into the purchase of substantial quantities of aforesaid products because of said mistaken and erroneous belief. As a result thereof, trade in commerce has been unfairly diverted to respondent from his competitors and injury thereby has been done to competition in commerce. Par. 9. The aforesaid acts and practices of the respondent, as herein alleged, were, and are, all to the prejudice and injury of the public and of respondent’s competitors, and constituted, and now 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.

Mr. Garland S. Ferquson.supporting the complaint. Mr, Milton M. Mokotoff, of New York, N.Y., for respondent. Inirta Decision py Jonn Lewis, Heartne ExsMINneER The Federal Trade Commission issued its complaint against the above-named respondent on November 28, 1960, charging him with the use of unfair and deceptive acts and practices and unfair methods of competition, in commerce, in violation of the Federal Trade Commission Act, by the use of false, deceptive and misleading statements in connection with the sale of mail order dealerships. After being served with said complaint, respondent appeared by counsel and entered into an agreement dated June 9, 1961, containing a consent order to cease and desist purporting to dispose of all this proceeding as to all parties. Said agreement, which has been signed by the respondent, and by counsel supporting the complaint, and approved by the Director and Assistant Director of the Commission’s Bureau of Litigation, has been submitted to the above-named hearing examiner for his consideration, in accordance with Section 3.25 of the Commission’s Rules of Practice for Adjudicative Proceedings.

Respondent, pursuant to the aforesaid agreement, lias admitted all the jurisdictional facts alleged in the complaint and agreed that the record may be taken as if findings of jurisdictional facts had been duly made in accordance with such allegations. Said agreement further provides that respondent waives any further procedural steps before the hearing examiner and the Commission, the making of findings of fact or conclusions of law and all of the rights he may have to challenge or contest the validity of the order to cease and desist entered in accordance with such agreement. It has been agreed that the order to cease and desist. issued in accordance with said agreement shall have the same force and effect as NATIONAL MAIL MERCHANDISERS 3811 305 Order if entered after a full hearing and that the complaint may be used in construing the terms of said order. It has also been agreed that the record herein shall consist solely of the complaint and said agreement, and that said agreement is for settlement purposes only and does not constitute an admission by respondent that he has violated the law as alleged in the complaint. This proceeding having now come on for final consideration on the complaint and the aforesaid agreement containing consent order, and it appearing that the order provided for in said agreement covers all of the allegations of the complaint and provides for an appropriate disposition of this proceeding as to all parties, said agreement is hereby accepted and is ordered filed upon this decision’s becoming the decision of the Commission pursuant to Sections 3.21 and 3.25 of the Commission’s Rules of Practice for Adjudicative Proceedings, and the hearing examiner, accordingly, makes the following jurisdictional findings and order: 1. Bernard W. Coates is an individual trading and doing business as National Mail Merchandisers, with his office and principal place of business located at 35 Pleasant Street, Dorchester, Massachusetts. Respondent uses various mailing addresses for National Mail Merchandisers and among such addresses is 618 Washington Street, Boston, Massachusetts.

9. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent hereinabove named. The complaint states a cause of action against said respondent under the Federal Trade Commission Act, and this proceeding is in the interest of the public. ORDER It és ordered, That respondent Bernard W. Coates, an individual trading and doing business as National Mail Merchandisers, or under any other name, his representatives, agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of mail order dealerships, and sales literature and other materials to be used in connection with said dealerships, in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or indirectly that: 1. A mail order dealership can be acquired under respondent’s dealership plan at no cost to the purchaser; or misrepresenting in any manner the actual amount of money required to be paid to obtain a dealership.

Syllabus 59 F.T.C.

2. The $25.00 “good faith deposit”, or any other sum of money, is refunded to the purchaser of one of respondent’s dealerships with his first order of supplies from respondent. 3. The $25.00 deposit, cr any other sum cf money, paid to respondent will be returned in case the person making the payment decides not to become a dealer.

4. The offer of mail order dealerships is restricted to a limited number of people, or is restricted, or limited, in any manner which is not in accordance with the facts.

5. National Mail Merchandisers is a large organization or that it consists of persons other than respondent. 6. Respondent’s $25.00 “ALL PROFIT PLAN” is all profit to the purchaser, or that dealers will receive $25.00 in every mail; or will receive any amount in excess of the amount that is usually received by such dealers.

7. National Mail Merchandisers is affiliated with any firm or person other than the respondent.

8. Successful operation of dealerships is guaranteed, or that a refund of any money paid to respondent is guaranteed unless the nature and extent of such guarantee and the manner in which the guarantor will perform are clearly disclosed. DECISION OF THE COMMISSION 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 shal], on the 22d day of August 1961, become the decision of the Commission; and, accordingly:

Zt ts ordered, That the respondent herein shall within sixty (60) days after service upon him of this order, file with the Commission a report in writing setting forth in detail the manner and form in which he has complied with the order to cease and desist.