Universal Interchakge, Inc.

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IN TlnJ :MATTER OF UNIVERSAL INTERCHAKGE, IKC., ET AL.

OIlDER, ETC., IN REGARD TO THE .ALLEGED VIOLATION OF 'fhe FEDERAL TRA.DE COl\DfISSIO:N ACT Docket 6938. Complaint, Nov. 1957-Decision, Aug. 19G3 Order requiring eigbt ('orpor::tions-with respective offces in Los Angeles, Chicago, Dallas, Kew York, Boston, Seattle and Denver-jointly engaged in sellng advertising in tbe " S. Buyers Digest", published by the first named respollrlent, and other ad,ertising media. and other servkes in connection with the sale and purchase of farm and business properties, to ceasesoliciting and collecting substantial sums of money as fees for, the listing of pr-operty for sale and advertisements therefor to be published in said bulletin-making false representations concerning clients ' opportunities for sales and profils, services afforded, affliates, success, refunds, terms, etc., as ill the order below set out.

COl\IPL.\I 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 belie\ e that the corporations and individuals named in the caption hereof, 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. Universal Interchange, Inc., is a corporation organized, existing and doing business under and by virtue of the laws place of busi-of the State of California, with its offce and principal ness Jocated at 4477 IIoJJywood Boulevard, Los Angeles, California. Respondent Theodore M. Bernardi, whose address is 114 East 32nd Street, 1\ e York, New York, is president; respondent )1:aurice , is Salomon, whose address is 8556 Trumbull Street, Skokie, Illinois vice president, and respondent Paul 11. Guyer, whose address is , is secretary-treas- 2412 N. Commonwealth, Los Angeles, California urer of respondent corporation Universal Interchange, Inc. ; respond ent ljnit.ed Interchange, Inc., of Illinois is a corporfttion organized exist.ing a,nn doing business under and by virtue of the Jaws of Ilinois with its offce and principal place of business located at 1 )forth LfLSaJle Street, Chicago, Illinois: respondent United Interehrmge. Inc., of Texas is a corporation, organized, existinf( and doing busine.ss under a.nd bv virtue of the laws of Texfts, with its offce and principal place of business 10catccl at 4232 Hersche.l Avenue IVEHSAL INTERCHAX"GE INC. Err AL. 351 Complaint Dallas, Texas. Respondents Maurice Salomon and Lipman Salomon are individuals and offcers of said corporate respondents United Interchange, Inc., of Illinois and United Interchange, Inc., of Texas. Their address is 8556 TrumbuJ1 Street, Skokie, Illinois. Respondent United Interchange, Inc., of K ew York is a corporation organized, existing and doing business under and by virtue of the laws of the State of Kew York with its principal place of business located at 114 E. 32nd Street in the city of New York, New York.

Respondent United Interchange, Inc. , of ::iassachusetts, is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Iassachusetts with its offce and principal place of business located at 80 Boylston Street, Boston Hassaehusetts.

Respondents Theodore :\f. Bernardi and Pauline B. Bernardi are individuals and officers of said 1\ ew York and JYlassachusetts corpomtions. Their address is 114 E. 32nd Street, New York, New York.

R.cspondent Union Interchange, Inc. , of vVashington is a corporation organi:-;ed, existing and doing business under and by "Virtue of the State of Washington with its offce and princip,d place of business located at 821 Securities Building in the city of Seattle "lVashingtoll.

Respondent Union Interchange, Inc., of California is a corporation organized, existing and doing business under and by virtue of the laws of the State of California with its offce and principal place of business located at 4477 Iron1ywood Boule\'ard in the city of Los Angeles, California.

R.respondent Union Interchange, Inc. of Colorado is a corporation organized existing and doing business under and by -virtue, of the laws of the State of Colomdo with its offee and principal place of business located at Guard,nty Bank Building in the city of Denver Colorado.

Hespondents Paul M. Guyer and Francelene A. Guyer are individuals and offcers of the afOlesaid 'Washington, California and Colonulo corporations. Their address is 2412 Korth ComnlOn\Tcalth Los Angeles 27 j California.

The individuals named as offcers of the aforesaid corpoTfttions formulate, ctirod and control the ads and practices of the em'porations of "Thich they are offcers. All of the respondents have cooperated and acted together in the performance of the acts and pra,dices hereinafter set forth.

352 FEDERAL TRADE CO:.u\IISSIOK DECISIONS Complaint 63 F.

PAR. 2. Respondents are now and for more than one year last past have jointly been engaged in the operation in commerce of business enterprises which offer advertising for sale in bulletins published by Universal Interchange, Inc., and other advertising media and other services and faciJitie,s in connection with the offering for sale, selling, buying and exchanging of farm and business properties. In connection thcl'c'ivith, the respondents lun e been and are now tnLnsmitting and receiving through the United States InaiI and otherwise disseminating in commerce, feh-ertis1ug matter, pamphlets, circulars, letters, contracts, cheeks, money orders, and other printed or "written instruments "hieh are sent and received between respondent.3 places of Imsiness in the States of California, Colorado ",Va.shingt.on, Texas, Tl1inois, :K e,,- York and M:fLssachnset ts, n,nd sent to and received from persons, firms and corporations located in yarious St.ates of the United States thereby engaging in extensive commercial intercourse in commerce, as "connnen_ is deiined in the Federal Trade Commission .Act.

The volume of the aforesaid business conducted by respondents has been and is substantial.

Pall 3. Hesponclents' said businc3s enterprise is conducted in the follmying mn-1llBr: Universal Interehange, Inc., publishes and distribute-s, at inten'als, a pulJ1ication designated as "1J.1. Buyers Digest/ in ,,'which various properties are listed for sale. The other corporate respondents act as soliciting agents for l--;universal Interchange Tnc., and solicit. the sale of advertising and the listing of propert.y owne,d by others in said publication. They pay a portion uf the cust. of publislling and distributing said publication. PAR. 4. In the course and conduct of their business, respondents through post cards, eirculars, contract furms and other written instrume,nta1itie.s, and through oral representations made by their salesmen, solicitors, or representatives for the purpose of obtaining list.ngs of property for sale flH1 advertiseme.nts of such to be published in "'C. T. Buyers Digest ' and col1acting substantial sums of money,y as fees for the listing and advertising of property, have represented c1ired-Iy and by implication, to persons ,,'ho had propert,y for sale, that they have ailable prospective buyers ,yho arc interested in the purchase of their specific properties; that the property is underpriced and the price should be increased; that the Jistin!! wiJJ rosn)1 in the saJe of the property within 30 to 90 days or a short. time, or else the :fee ,,'ill be refunded, or the customer will not be charged for the service: that the property wijJ be nationally n.c1vertiscd in newspnpers and periodicals: that they maint.ain a. list of prospective buyers of such property; that others who have used ,TVERISAL INTERCHA.VGE , I::C. , E.T AL. 353 ComplaintSUO their listing sold their propcrty within a short time as a result of said listing; that over 1 000 reaJ estate brokers are affliated with respondents; that State and other offcia.1s endorse respondents' activities and publication; and that if the Jisted property were sold through their Jisting, the payment of broker s commission would be avoided PAR. 5. The aforesaid representations were and are false, misleading and deceptive. In truth and in fact, respondents do not and have not had prospective buyers interested in and available to purchase the specific properties listed. The purpose and effect increasing the owner s asking price for the property was not that it was undervalued, but, on the cont.rary, to increase the fee to be collected by respondents. Respondents do not and have not refunded any fees coJJected from the property owners when the property is not sold within 30 to 90 days or at any other time; on the contrary, respondents attempt to coned any unpaid balance claimed frolll the property owners for thejr scn;jce whether or not the property is sold. Respondents do not nnd have not used national advertising to seJJ the specific listed property. Respondents do not maintain or circulate a list of prospective buyers of listed or other property. Purchasel's of respondents services have not. generally or usually sold their property in a short time and the great majority of such purclmsers have not been able to seJJ their property by purchasing respondents' advertising. Respondents are not affliated with 1 000 or any other number of real estate brokers. Respondents' activities and publications are not and have not been endorsed by state or other offcials. Pnrc1Hlscrs of respondents' advertising or services do not avoid payment of real estate broker s commissions when the property is sold through a broker.

PAR. 6. Thc use by respondents of the aforesaid unfair and deceptive acts and practices in connection with the conduct of their fol'csaid business, has had and now has the capacity and tendency to mislead and deccive a substantial portion of the public and to induce many owners of property, because of said false, deceptive and misleading representations, to enter into contracts respecting the sale of their properties, and to pay substantial sums of money to respondents.

PAR. 7. The acts and practices of respondents, as herein alleged were and are all (0 the prejudice and injury of the public and constituted, and nmv constitute, unfair and deceptive acts and practices in commerce wit 1in the intent and meaning of the Federal Trade Commission Act.

, 354 FEDERAL TgADE COil'IMISSIO DECISIO Initial Decision 63 F.

Mr. John W. Brookfield, Jr. and Mr. Berryman Davis for the Commission.

llh. Arthur Lit. of New York, X. , for respondents United Interc.change, Inc., of Ne\v York, l,Tnited Intcrcha,nge, Inc. , of l\1assachusetts, and 1Ir. Theodore M. Bernardi, individuany, as an offcer of said corporations, and as an offcer of Universal Interchange Inc., and Mrs. PanJine 11. Bernardi, individuany and I1S an offcer of United Interchange, Inc., of New York, and United Interchange Inc., of Massachusetts.

llh. Al,.n G. GTeenwald of Los AngcJes, Calif. , for an other respondents.

ntial DEClSJOX BY ROHERI' L. . PIPEH, J-IEARING EXAMINER PRF.LBI1NARY STAT1DrEXT On November 8 , HJ57, the Federal Trade Commission issued its complaint against Universal Interchange, Inc., a corporation (hereinafter caned Universal), Theodore 1. Bernardi, Maurice Salomon and Paull\I. Guyer, inc1ividually and as offcers of L-enlyersal; rnited Interchange, Tnc., of Ininois, a corporation, 1Jnited Interchange Inc., of Texas, a corporabon Maurice and Lillian Salomon, incliviclually and as officers of said corporatjons; "'united Interchange Inc. , of Nevl' York, a corporation, l-;united Interchange, Inc. , of Massachusetts, a coporation, Theodore and P,mline B. Bernardi, individually and as offcers of said corporations; ljnion Interchange, Inc., of 1Vashington, a corporation, Union lnterchange Inc. , of Colorado, a corporation, Union Interchange, Inc.., of Cali fornia, a corporation, and Paul L and Francelene A. Guyer, individuallv and as offcers of said corporations (all of said corporations except "'Universal being hereinafter collectively called the selling corporations; and all of said corporations and individuals being hereinaftercol1ectively called respondents). The complaint cha.rges respondents with false, misleading and decept.ive representations constituting unfair and deceptive acts and pnlctices in commerce in violation of 5 of the Federal Trade Commission Ac.t (hereinafter caned the Aet), 15 U. C. 41 et seq. Copies of said complaint toget.her with a notice of hearing nere duly served on respondpl1ts. Respondents appeared by counsel and filed a.nS'Ters admit.ting the corporate and commerce.e allegations of the c.omph,int., denyjng an of the representations alleged therein, and in some insta,nces admitting, and in others denying, that such alleged nipresC'ntatiolls "ere', not true in fact. Pursuant to notice, hearings were therea Her held , UNIVERSAL IKTERCH,,"GE , INC. , Erial. 355 Initial. Decision 1958 to October 1, 1958at350various times and places from March 3, before Hearing Examiner Joseph Callaway, since deceased. On April 7, 1959, because of Mr. Callaway's physical incapacity and because additional extensive hearings had already been scheduled, the undersigned was designated by the Commission to succeed Mr. Callaway. Thereafter hearings were held at various tirrles and places from April 21, 1959 to December 2, 1960, before the undersigned. In general, Mr. Callaway heard all of the witnesses called in support of the complaint against the 'Western respondents: Universal, the va,riousUnions, and their respective offcers anc1individnals, and the Eastern respondents: United of New York, United of Massachusetts and their respective offcers and individuals. The undersigned heard all of the witnesses called in support of the complaint against the Midwestern respondents: l:united of Illinois United of and all of theTexas and their respective offcers and individuals, defense proffered by all of the respondents.' During the hearings before the undersigned, a 'minor amendment to t.he third sentence of paragraph 5 of the complaint was granted by the undersigned. All parties were represented by counsel, participated in the hearings, and afforded full opportunity to be heard ' to examine and cross-examine the witnesses, to introduce evidence pertinent to the issues, to argue orally upon the record, and to fiJe proposed findings of fact, conclusions of ' law, and orders together with reasons in support thereof and replies thereto. All parties filed such proposed findings of fact, conclusions of law, and orders togethcT ' with reasons in support thereof and replies thereto. All such findings of fact and conclusions of law proposed by the parties respectively not hereinafter specifically found or concluded are herewith specifically rejected. All motions to dismiss, not ruled upon on the record, are disposed of herein by the following findings of fact and concJuslons of law.

Upon the entire record in the case and from his observation of the witnesses, the undersigned makes the following: FINDINGS OF FACT 1. Corporate Organization Unive:rsal is a corporation organized, existing and doing business under and by virtue of the laws of the State of California, with its offce and principal place of business Jocatcd at 4477 HoJJy,,:ood Boulevard, Los Angeles, California. Respondents Theodore M. Ber- 1 'The record herein consists of o\"er 8,300 pages of testlmuny and 736 exhibits. :'Ir. Callaway heard the firf1t 2 216 pages of testimony and the 1J!1dersigned the remainder. (' V. C. l007(b).

356 FEDERAL TR,ADE. COMMISSION DECISIO JnWal Dedsion 63 F.

nardi, Maurice Salomon, and Paul M. Guyer are the some sroekhoJders and president, vice president. and secretary-treasurer, respectively, of Universal. The aforesaid individuals, acting in cooperation with each other, formulate, direct and control the policies, acts and prac tices of Universal.

United of Illinois Rnd United of Texa.s are corporations organized existing and doing business under and by virt.ue of the laws of illinois and Texas, respec6vcly, with their ofIees and principal places of business located in Chicago, Illinois, and Dallas, Texas respectively. Respondents j\Jaurice Salomon and Lillian Salomon are offcers, and l\Iaurice Salomon, a director and stockholder, of said corporations. Respondent :Manrice Salomon as an individual aetively mn,nages and fot1nulates, directs and controls the policies acts, and practices of United of IJ1inois and United of Texas. United of Xew York and United of .Massachusetts are corporations organized, existing, a.nd doing business under and by virtue of the laws of Xew York and :Massftchl1setts, respectively, with tl1eir offces and principal places of business located in ew York City and Boston fassac.husetts, respec.ively. Respondents Theodore 1'1. Bernardi and Pauline B. Bernardi are offcers and Theodore L Bernardi, a director and stockholder, of said corporations. Respondent Theodore 1\1. Bernardi as an individual actively manages and formulates, directs nnd cont.rolls the policies, acts and practices of United of New York and rnited of :\Iassachl1setts. Union of CaJjfornia, Union of "' ashington, and Union of Colorado are corporations orga.nized, exjsting a11l doing business under' a.nd by virtue of the la,\ys of California, \Vashington, and Colorado respectively, with their offces and principal places of business located in Los Angeles, California, Seattle, 'Vashington, and DenVe1' Colorado, respec.tively. Respondents Paul )'1. Guyer and Fnllcelene Ad Guyer ate offcers, f\Jrl Paul )1. Guyer, a director and stockholder of said corporations. Respondent Paul 1\1. Guyer as an individuf11 actively manf1ges and formulates, directs and controls the policies acts and practices of 'Union of California, 17union of \Vashington and Union of CoJomdo.

Motions to dismiss 1\1rs. Salomon, 1\11'5. Bel'mtrdi and 1\11'8. Guyer as individuals "ere granted. The record estab1ishecl that they did noi as individuals, formuJHtc direct. or control the policies, acts nnd practices of the respective corporations of "which they 'were off eel's. A motion to dismiss the aJ1cgalions of the complaint that the se.lling corporations and their offcers and individuals \ve.re jointly Jiable- for the acti\'ities of each other was ,fl'anted. There is l O su1;- U?nVERiSAL IXTERCHL'1GE , INC. , ET AL. 357 350 Initial Decision stantial proof in the record that anyone sellng corporation was liable or responsible for the activities of any other selling corporation. This tioes not apply to Universal II. Corporate Business Universal is engaged in the publishing business and publishes and distributes, among other things, a monthly periodical or catalogue known as the "17.1. Buyers Digest :' and a "Brokers Bullet.in." The Buyers Digest is comprised of approximately 30 percent editorial matter and 70 percent advertisements of real estate and business properties for sale, lease or exchange, not including non-income producing reaJ property such as homes and lots. The Buyers Digest is published in t.three editions, Eastern States, Central Sta.t, , and lVestern States, and is distributed throughout the l:united States. The Buyers Digest is a Jimited or controlled, rather than paid eirenlat10n publication, in that it is distributed free to "qualified" applicants. Universal advertises the Digest nationally in newspapers, magazines and radio broadcasts, describing it and request.ing persons interested in purchasing a business or property to writ.e for the Digest. A person who does so, stat.ing the kind of business or property and general location desired, is "qualified as a potential buyer ' and is sent the appropriate current regional Digest. In addition to such applicants, the Digest is also sent, on a request basis only, to banks, libraries, and chambers of commerce. Necessarilysuch circulation, while national, is quite limited in number. The Brokers Bulletin is published six or more times a month, and is a pamphlet containing advance releases of the advertisements to be published in the Buyers Digest. The Brokers BuDetin is distributed free of charge to more than 1 000 real estate and business opportunity brokers throughout the United States, who have subscribed in writ.ing therefor and agreed to present the advertised information to their prospective buyer clients.

Prior to 1955, Universal solicited aD of the advertisements pub- Jished in the Buyers Digest and the Brokers BuDehn. Since 1955, tile other corporate respondents a,ct as soliciting or selling agents for "l-:universal, and are engaged in the business of selling such advertisements in sa,jd publications at fixed rates dependent upon the amount of space in the Buyers Digest contracted for by the advertiser. The selling corporations pay to Universal the cost of t.he respe( tive advertisement.s supplied by them fmcl published by Universal In general, 1Jnion of California, -Cnion of \Vashingt-on. and Union of Colorado engage in such business in the \Vestern States 7S0-018 6Q-- 358 FEDERAL TRADE C01\'C\IISSION DEClSIO Initial Decision 63 F.

United of IJJinois and United of Texas in the Central States; and United of New York and United of Massachusetts in the Eastern States.

Leads to prospective purcha.sers of advertisements in the Digest are secured by the mailing of "lead" cards throughout the nation, by a.ll of the seIJing corporations, inquiring of the recipient if he is interested in selling his business or property, advising him that the sender has many inquiries from prospective buyers, and reque.sting the return of an attached postage-prepaid card if interested. Salesmen of the respective selling corporations subsequently eau upon all \\ho mail in such cards. If a sale is made, a written contract is signed, subject to acceptance by the selling corporation. The salesmen work on straight commission. X 0 advance fee or payment is collected. The contract specifies the amount of advertising space and its cost and an attachment recites the general advertising copy. After receipt of the signed contracts, the seUing corporations send the signer a letter of acceptance, accompanied by a return card which incJuc1es form of request for copies of the published advertisements, if desired, as well as question boxes concerning the performance of the salesman. Universal then publishes the advertisement once in the next Brokers Bulletin and Buyers Digest. If the property remains unsold, it is again published in the Buyers Digest. Under the contract, the amount specified is payable in 90 days or when the property is sold, whichever occurs first. A "guarantee " in the contract form further provides for an additional three months of publication in the Buyers Digest at no extra charge if the property remains unsold. The corporate respondents carried out the advertising requirements of an contracts. From tirnc-to-t.ime Universal sends its advertisers names and addresses of persons who write for the Digest and express an interest in property of the type and general Jocation advertised by them. After the 90-day period, the selling corporations demand payment and if not forthcoming, institute local collection suits on the contracts.

Universal furnishes some lc, the contract and lead forms, and other advertising and promotional literature used by the sellng corporations. AJI such material is subject to the approval and regulation of Universal and its offcers. At times all of the sellng corporations used the same promotional pieces. All of the advertisements secured by the sa-lesmen of the selling corporations are edited and reviewed by -Universal before publicat.ion. The advertising copy in the Brokers Bulletin is prepared by "Cniversal. UJoaVEHISAL L'\TERCHA- INC. , EIT AL. 359 350 Initial Decision III. Interstate Commerce In the course and conduct of such businesses, the corporate respondents have been and are now transmitting and receiving through the United States mails, and otherwise disseminating in commerce advertising matter, pamphlets circulars, letters contracts, checks nloney orders, said publications, and other printed or written instru ments which arc sent and received between respondents' places of business: in t.he States of California, Colorado, 'Vashington, Te:xfls IJJinois ew York and Massachusetts, and sent to and received from persons, firms, and corporations located in various States of the "Gnited States, thereby engaging in interstate cunlmerce within the intent and meaning of the Act. The volume of business conducted by the corporate respondents has been and is substantial. IV. The Unlawful Practices A. The Issues Thc complaint contains nine representations, alleged to have been made both orally through salesmen and by means of written instrumentalities, and further alleged to be false, misleading and deceptive. Respondents denied making any of the alleged representations and as to some, if made, admitted they were not true, and as to others, if made, alleged that they were in fact true. In addition to these basic,,issues, an additional issue was raised by reason of the fact that a substantial number of the witnesses called in support of the complaint were heard by the prior hearing examiner. The under' signed heard the t.testimony proffered by t.he respondents, which in general denied and refuted the t.testimony of those witnesses heard by the prior hearing ,examiner. Both sides concede that as a result substantial issues of eredibiJity are raised. The Court of Appeals and the Commission have passed upon this problem in other cases w hjch win be considered hereinafter in more detail. B. The False Representations The nine oral and written representations alleged to be false, mis- Jeading and deceptive are:

1. Respondents have available prospective buyers who are interested in the purchase of the advertiser s specific property; 2. The propcrty is undcrpriced and the price should be increased; 3. The "Jisting" wiJ result in the saJe of the property within thirt.y to ninety days or a short time, or the fee win be refunded or the customer win not be charged for the service; 360 FEDERAL TRADE CO:\lMISSIOX DECISIONS Initial Ded:-ion 63 F.

4. The property wiJJ be nationally advertised in newspapers and periodicals;

5. R.respondents maintain a list of prospective buyers of such property;

6. Others who have used respondents listing" sold their property within a short time as a result of said "listing 7. Over 1 000 real estate brokers are affliated with respondents; 8. State and other offc.ials endorse respondents' activities and publication; and 9. If the "listed' propert.y ,,-ere sold through respOJldents listing, ' the payment of a. broker s commission would be avoided. The evidence in support of the complaint c.onsistcd primarily of the testimony of numerous customers and prospects called upon by respondents' salesmen, and the various written instrumentalities used by respondents, including, Inter alia their lead pieces, contract forms. advertising circulars, the Buyers Digest and Brokers Bulletin, and various brochure,s. In the interest of clarity, the proof concerning the written represe,ntations is considered separately from that concerning the oral representations. There is no dispute with respect to the authenticity and authorship of t.he "Titten instrumentalitie, and hence there is no credibility problem wit.h respect thereto be- CRuse of the substitution of hearing examiners. At the conclusion of the case-in-chief, motions by respondents to dismiss the complaint for -want of proof were granted with respect to fiye of the alleged written representations, and denied as to the other four alleged written representations and as to ajj of the alleged oral representations. Specifically, such motions were granted with respect to "'1itten representations 2 , 3 , 5 , 6, and 9 set forth above because there was no proof in the record that respondents had made such alleged representations by means of any written instrumentalities. In addition, as will be developed more fully hereinafter, the record establishes t.hat represent.ations 6 and 9, even if made, were in fact true and correct.

All of the alleged representations are considered seriatim: 1. Respondents haxe available prospective buyers who are interested in the, purchase of the advertiser s specific property. R. ,Written Instrumentalities.

A number of \"risen instrumentalities llsed by respondents in con nection with the sale of their advertjsing to customers reveal that many such customers and prospects could have been led to believe that respondents were engaged jn the business of selling property, rather than advertising, a,nel had numerous prospective buyers in UNIVER'SAL INTERCHA."lge, INC. , Eit AL. 361 350 Initial Decision rested in the purchase of the customer s property. The lead piec used by respondents in their initial contact with prospective custOlnrs referred only to a sale of property and the availability of many prospective buyers, and made no reference to the fact that respondents ,were engaged only in the business of advertising. It is, of ,course, well established that if t.he initial contact is secured by deception, such deception is not overcome by sebsequent truthful disclosures and the Commission may prevent it. The lead pieces in general asked the recipient if he "-as interested in selling his property, advised him that the sender had available numerous persons interested in the purchase of such property, and requested the return of a postage prepaid reply card if the recipient was interested. To indicate the need for speed and urgency, such lead pieces were frequently printed on yellmv paper in the general format of a telegram. .In this manner, respondents secured the na.mes of owners interested in selling their businesses. Respondents then dispat.ched their salesmen to call upon such persons. In addition to the obvious dece.ptiveness of such lead pie,ces, the record contains the testimony of many ,,-witnesses who answered such initial inquiries, that thBY were not interested in respondents' proposition after they ascertained that the service was advertising only, estabishing beyond dispute that they vmre misled by the original inquiry. In addition to the lead pieces, Commission s Exhibit 90 , an adycrt.ising circular used by respondents, is composed in a manner indicating past sales rather than advertisements, is couched in terms of selling rather than advertising and, among other things in t.he largest print used, asks the recipient: "'Vhat ,,' ould you spend to put your place in the hands of a buyer 1" b. Ora1Jy.

The testimony of many customers and prospects called in support of the comphint, as wen as witnesses caned by respondents themselves, establishes that such a representation frequent.1y was made by salesmen in their oral presentation to their prospects. As noted above, the undersigned heard such testimony with respect to the I1Jinois (inel Texas corpomtions. In addition, the undersigned also heard a portion of such testimony with respect to the Colorado corporation, and it is unclisputed that :11:1'. Guyer operated the Colorado, \Yashington, and California selling corporations in the same manner. \Vhile the undersigned did not heal' any of the testimony in support of the compbint with respect to the Eastern seHing corporations, one of the East.ern salesmen, Pollard, who was he.ard by the undersigned, in effect admitted making such a repre- 362 FEDERAL TR'. DE CO::fMISSION DECISIONS Initial Decision 63 F.

sentation to his prospects. Accordingly, although most of the testimony with respect to the oral representations made by the salesmen of the Eastern and Western corporations was not heard by the undersigned, the foregoing, pins the above proof concerning the written representation, is suffcient to obviate the credibility problem. In addition, Commission Exhibit 51, concerning which there is no creditibility problem, consists of a set of instructions to salesmen used by respondents. vVhiJe this was not shown to prospects it demonstrates the type of representations and statements respondents instructed their salesmen to make. They were instructed to emphasize to prospccts that the company had "inquiries on hand now " for the purchase of such a business. This was the first subject the salesman was to take up after introducing himself. Rcspondents did not in fact have inquiries on hand for the purchase of any particular property, but only requests for the Digcst. Coupled with the Jead pieccs, this approach definitcly would Jcad prospects to believe respondents had persons available interested in the purcha,sc of their businesses. Numerous witnesses testified that some salesmen actually told them that they had available one or mOTC purchasers desirous of purchasing exactly the type of business involved. The salesmen also were instructed to advise the prospects that the company had contacts with about 1 000 brokers many of whom had immediatc prospects for their type of business when in fact the company had no way of knowing whether this was true.

Respondents admitted that thc aforesaid representation, if made was not true in fact and that they did not have available prospective buyers interested in the purchase of the customer s property. In fact, all that respondents ever had was inquiries from the public for copies of the Buyers Digest, stating a.n interest in the purchase of a given type of proper.rty in a given locality. Such inquirers may or may not actually be interested in the purchase of anything. In addition, the circumstances a.nd inte.rest of all but the most current of such inquirers might change substantially with the passage of time, and as a result they could hardly be characterized as prospective buyers. It is conduct1ed and found that respondents, by means of ,written instrumentalitie,s and oral statements of sfi.1esmen, made the aforesrtid representation, and that said representation was false misleading, and deCPTJtive.

Inasmuch as exn.cl:v the Sfime order would be issued whether the representation "-ere made orally or in 1'Titillg, bec8.use such onkrs prohibit the proven false Te,presentn.tion in any manner IVER'SAL IJ\TERCHAl\T INC. , ErTAL. 363 313 Initial Decision proof of such a misrepresentation in either form is suffcient. This of course, applies to all of the other alleged misrepresentations well. Nevertheless, the written and oral proof with respect to each alleged representation wil be considered separately. 2. The property is underpriced and the price should be increased. As noted above, this allegation with respect to written instruthe recordmentalities was dismissed for want of proof. However, establishes that such representations were made by the salesmen orally. Numerous prospects and customers called in support of the complaint testified before the undersigued that such a representation was made to them by salesmen of the Illnois and Texas selling corporations. In addition, several such witnesses testified before the undersigned with Tespect to the Colorado and Washington selling corporations.

The undersigned heard no such proof with respect to the Eastern corporations. Respondents called all of the salesmen concerned with the exception of a few who were unavailable because of death or could not be located. In general, such salesmen uniformly denied making any such representation. Thus, with respect to the Eastern corporations, the crcdibility problem to be considered hereinafter is present. IIowever, it makes little or no practical difference in this case because Universal is responsible for the activities of its agents, the seiling corporations, and in turn for the activities of their salesmen, and the individuals who own and control all of the sellng corporations are responsible for the activities of Universal, because they formulate, direct and control them. Hence any order to be issued wil run against them in their individual capacities and thus prevent such misrepresentations by means of the selling corporations which they respectively control individually. Respondents admitted that if such a representation was made it was not true in fact. Respondents conceded that their salesmen were not qualified as appraisers. The record contains considerable evidence pro and can concerning the purpose of such a representation, if made, which purpose is immaterial inasmuch as the representation was in fact false. It is concluded and found that all of the respondents, except United of K ew York ani! United of J\1assachusctts and their offcers, made the aforesaid representation by means of oral statements of salesmen, and that said representation was false, misleading, and de,ceptive. 3. The "listing" wil result in the sale of the property within 30 to 90 days or a short time, 01' else the fee wil be refuni!ed or the customer will not be charged for the se.rviee. ,, 364 FEDERAL Tn,ADE COMi'IISSION DECISIONS Initial Decision 63 F.

In their proposed findings counsel supporting the complaint elimiml.te the phrase " or the fee will be refunded': fronl the aforesaid representation. The record establishes that respondents did not charge or collect advance fees and hence nothing could refunded. ",With respect to the terms "list" and "listing" used in the complaint, it was agreed at. the hearings that the terms "advertising" and "advertisement" should be substituted, inasrnuch as the terms "list" and "listing" connote n, brokern.ge function and do not accurately describe the service sold by respondents, \which "a advertising. This resulted in expedition of the basic issues instead of begging the question and prolonging the hearings by J itigat.ion of a collateral issue. Thus, in effect the alleged represent.at.ion is: the advertisement. will result in the sale of the property ,yit..hin a short time or the customer will not be charged for the service. Fundmnenta1Jy, the representat.ion was that t.he customer did not have t.o pay unless and until the property was sold, just ns in the ease of a brokerage arrangement.

This allegation with respect to "Titten instrmnenta1ities was dismissed for "Tant of proof. 1-1mye1'er, the record established.s through numerous "witnesses that such it representation "Tas made orally by some of the salesmen. Again the undersigned heard none of such proof ,,,ith respect to the Eastern corporations nnd only a small portion with respect to the Colorarlo corporation, and on the con triuy heard the denials t.hereof by the salesmen of all of the selling corporations. However, ns ,yns t.he case with respect to the first representation considered above, Commission s Exhibit 51 (the set of instructions to salesmen concerning which there is no credibility prohlcm) revenls that respondents instructed their salesmen to make representat.iolls t.o sllch general effect. The salesmen ,were instructed to emphasize the brokerage coverage provided by respondents which ,yould nec.essarily lead many people to belieye that they ,yould not. have to pay t.he, fee unless the property ,vas sold stftnc1arc1 pl'aeticp, "ith respect to brokers. The salesmen ,were also instrllcted, ,yhen a prospect said that he did not ,want to pay unless his business was sold, to meet: this objection by firstly, referring to the "six months c.ose hic.h had reference to the additional three months of ac1vcl'tisinp: provided ,without charge in 1.11( event t.he property "Tas not sold after the first three months, seeonc11y, emphasizing the assurance of coverage, and thirdly, changing the subject. 1J " digression nncl then using any of the "closes. It, will he noted that none of these recommendations include arJ\"ising the prospect that he would have to pay after ninety days whether or not. his business was sold.

UNIVERSAL INTERCHANGE , INC. ) Err AL. 365 350 Inital Decision AO"abl in addition to the self-evident deceptiveness of such re- b, prescntations a.nd statemcnts, the record contains the testimony of numerous customers that they were of the belief that they were contracting for a sening service and not advertising, and hence would not have to pay unless the property was sold. Respondents admitted that the aforesaid representation, if made was not true in fact. Respondents conceded that they always charged the fee or price set forth in the contract whether or not the property was sold. This clearly was provided by the terms of the contract itself. It is concluded and found that respondents made the aforesa,id representation by means of oral statements of their salesmen and that said representation was false, misleading, and deceptive. 4. The property wiJJ be natiolUtJJy advertised in newspapers. and periodicals.

a. ",Written Instrumentalities.

As hereinabove found, respondents' method of operation was to advert.ise the Digest nationally in newspapers, magazines, and radio broadcasts, but the advertjsemellts Pllrcha.sed by cnst.omers were published in the Digest and were not nationa.1ly advertised in newspapers and periodicals. Several of the ,yriUen instrllnen talities employed by respondents might \\ eli learl a prospective customer to believe that his property "as going to be advertised nati01ut1Iy in such manner. The form of contract used by respondents consisted of four pages, of which the first or front page actually was the cont.ract executed by the customer, the two inside pa,ges contained representations and explanations of the service offered as well as a form of guarantee, and the fourth or back page was used to list data concerning the business for sale which would result in the advertising copy. The inside pages contained in bold print four boxes, one of which was headed "National Advertising. " Only t careful reading of the smflJler print would indicate t.hat the national advertising wns of the Digest fl,nc1 not the property for sale.

fore significantly, Commission Exhibit. 26, an adverHsing brochure employed by respondents, entitled: "The Most Complete Advertising Coverage of its Kind " conta.ined a list. of the newspapers, magazines, and radio stations used hy respondents throughout the United States and Canada. A Jegend on its cover stated that it contained the names of newspapers, magazines and rftdio stations used to advertise the Buyers Digcst to prospective buyers. Inside in large print it contained the legend: " advertising fr01n CORst to coast rea.ching an audience of 90 million potential buyers everywhere seeking all types of businesses." It is clear that this 366 FEDERAL TRADE CO::vimission DECISIONS Initial Decision 63 F.

pamphlct, unless very carefully analyzed, might well Jead a prospect to believe thas his business was going to be advertised nationally in newspapers and periodicals.

In addition, Commission s Exhibit 63, a letter of acceptance used by all respondents to notify the customer that his contract was accepted, easily could lead thc customer to believe that his property was going to be nationally advertised in media other than the Buyers Digest. The second paragraph thereof reads as follows: Onr entire facilties are now at your command. The processing and distribution of your sales informatiQIl bas already begun. It is being sent to hundreds of brokers and wi1 also be made available to the thousands of potential buyers reached through nationwfde advert-isiny campaigns. YOur copy has been prepared for 1mblication in both the " I. Brokers Bulletin " and the I. Buyers Digest. (Emphasis supplied.

Commission s Exhibit 90, a sales brochure used by respondents previously referred to, also advised prospects as follows: "' like you to see for yourself how you can reach hundreds of qualified potential buyers through a uniqne but tested network of ne,,'spapers radio, and magazines.

h. Orally.

In addition to the aforesaid written instrumentalities, the testimony of many customers and prospects caJJed in support of the complaint, as well as witnesses called by respondents, established that such a representation frequently was made by salesmen in their oral presentation. Such testimony was heard by the undersigned with respect to the Illinois, Texas, Colorado, California, and Washton seIJing corporations, but none with respect to the Eastern corporations. Inasmuch as this representation also has been established by means of written instrumentalities, concerning which there , of course, no creditibiJity problem, the failure to hear any of the Eastern witnesses ,YQuld in no event alter or obviate an appropriate order.

Respondents admitted that the aforesaid representation, if made was not true in fact. It is undisputed that respondents did not nationally advertise the customer s property in newspapers and periodicals. It is concluded and found that respondents, by means of written instrumentalities and oral statements of salesmen, made the aforesaid representation and that said representation was false misleading and deceptive.

5. Respondents maintain a Jist of prospective buyers of such property.

As noted above, this allegation with respect to written instru. mentalitie.s was dismissed for want of prool. However, the record l'UVER:SAL I:-ERCH IXC. , Err AL. 367 350 Initial Dedsion establishes that such representation was made orally by the salesmen. Numerous prospects and customers caJJed in support of the complaint testified that such a representation was made to them by salesmen. Such testimony was heard by the undersigned with respect to the IJJinois, Texas and Colorado sellng corporations but none with respect to the Eastern corporations. Respondents admitted that the aforesaid representation, if made was not true in fact, because they do not maintain any Jists of prospective buyers of such property. It is concluded and fouud that all respondents, except United of '" ew York, United of Massachusetts, and their offcers, made the aforesaid representation by means of oral statements of salesmen, and that said representation was false, misleading, and deceptive.

6. Others who have used respondents' "listing " sold their property within a short thne as a result of said "listing. As noted above, the term "advertisement" was substituted for the term "listing" to obviate collateral litigation, and this allegation with respect to written instrun1Emtalities was dismissed for want of proof. The record establishes that such a represeutation was made orally by respondents' salesmen, but it also establishes that it was in fact true. There is substantial, reliable and probative evidence in the record, unrerut.ed, t.hat some persons who used respondents' advertising did in fact selJ their property within a short" time as a result thereor. Accordingly, it is concluded and found that such representation was not false, misleading, or deceptive.

7. Over 1 000 reaJ estate brokers are affliated with respondents. a. .Written Instrumentalities.

Several different written instrumentalities used by respondents and their saJesmeu clearly reveal that many prospects and customers could have been Jed to believe that over 1 000 or a large number of reaJ estate brokers "-ere affliated with respondents and would handle and attempt to sell the customer s business. In nearly all H not all, instances the salesman used a copy of the Buyers Digest in conjunction with his sales presentation. . Commission s Exhibit 1 is such a Buyers Digest. On pages 49 to 58 thereof, after preceding editorial matter, appears a long list of brokers entitled "Brokers Roster " with the rollowing subcaption appearing on eftch page: The following nation-wide Brokers Roster contains licensed brokerage firms who may be of service in selecting the types of businesses and property in which you are interested." Each Digest contained such a roster. This list, coupled with the oral prescntation here- 368 FEDERAL TRADE co :CnSSIO?\T DECISIONS. Initial Dedsiol1 63 "' in after considered, could well have Jec! a prospect to believe that such brokers ,vcre actually affliated \\-ith respondents and would handle the sale of the property. Of course, as noted above, such a representation would enhance ihe prospect's belief that he would not hate to pay any charge unless his business was sold. In fact however, as found above, such brokers merely subscribed in writing to receive the Brokers Bulletin free of charge, and agreed to present the advertised information to any clients ,,,ho might be interested. It will be noted that throughout the Brokers Roster no reference.e is made to the fact that they are merely subscribers to the Brokers Bulletin.

The contract forms and letters of acceptance further enhflnced this representation. COl1l1ission s Exhibit ,J, R typical form of contract, contains (L large block on the inside pages captioned "Brokerage Coverage Throughout America. :' The legend thereafter contains no indication that such brokers are nol afIliatecl ,,,ith respondents. Al1 letters of acceptance, of -which Commission s Exhibit 63 is typical, contain the following: "The processing a,nd distribution of your sales information has already begun. It is being 8en,t to hundl' eds of bJ'oJl'ers and -will also be mnc1e available to the t.thousands of potential buyers reachml in nation"Iide a.advertising campaigns. (Emphasis added. ) Commission s Exhibit 88, n form of leael piece used by respondents, states: "lTundreds of independent brokers who are themselves in touch ,with a great number of prospecti,buyers can have the information on your business placed in then' hanr18. (Emph8 is added.

b. Ol'aJJy.

In addition to the foregoing, numerous prospects and customers testified that the salesmen made such a representation orally. The undersigned heard such testimony with respect to the Illinois Texas, Colol'ftdo and l\Iassachusetts selling corporations. In addition, Commission s Exhibit 51 , the respondents inst.ructions to salesmen, advises them to tell prospects that "sOlnething" (whether or not it is the business 01' the advertisement is not designat-ed) wiJJ be: "p1acec1 in (thej hands of nearly 1 000 brokers throughout the nation :: and further: " o exclusives. " Such statements clearly carry a connotation of ha,nc11ing by brokers, since there is no element, of exclusivity about an advertisement. The same inst.ructions flch,-ise the salesmen t.o meet prospects' objections by tening them: (:Ad- YH,ntage of r. 1. , Inc. : 1 ono brokers. JIany with prospect rjght now for businesses of your type;' and also: " Ads alone won t se 11 your business.

, UNIVERSAL I:\TERCHA."GE , INC. , ET AL. 369 Jnitial Decision Because of Commission s Exhibit 51 and the making of this representation by means of written instrumentalities, as found above there is no credibility problem with respect to this representation. Respondents admitted that no real estate brokers were "affliated" with them and hence that, if such a representation was made it was not true. In addition, the Commission s decisions in T1' ans- Continental and Nichols d' Associates establish that such subscribing brokers are not "afflja.ted or associated" brokers. It is concluded and found that respondents, by means of written instrumcnta1ities and oral statements of salesmen, made the aforesaid representation and that said representation was false, 111misleading, and deceptive.

8. State and other offcials endorse respondents' activities and publication.

a. '''written Instrumentalities.

There is no reliable, probative and substfmt,ial evidence in the record that respondents made any such represent.ation by means of written instrumentalities. In the forepart of the editorial section of each Buyers Digest appears H, special feature concerning t.he advantages, desirabilities, etc. , of a particular State, accompanied by a letter of enclorsemen t of the article by t.he Governor of the State. There is no dispute concerning the authenticity and accurateness of such material In addition, the record contains evidence of letters of commendation and awards presented to .Universal or the Buyers Digest by governors of other States. In the 11ftnner published, it would appear and is found that State officials have endorsed such activities and publications of respondents. b. Orally.

Counsel supporting t.he complaint cite no testimony that such representation "as made orally by the salesmen. I-Iowever, to some 'extent. it appears that a few of the salesmen occasionally made reference to such articles and reproduced letters in the Buyers Digest. As found above, such a limit.ed representation or use, if inade, was in fact true. It is concluded and found that such representation "as not false, misleading or deceptive. 9. If the "list.ed" property were sold through respondents ' "listing," the payment of a broker s commission would be avoided. As noted above advert1secF and "advertisement" were substituted for the terms " ljstecP and listing,': and this representation ,,dismissed for "ant of proof with respect to written inst.rumentali- 3 Trans-Continental Clearing- HO\1 e. Ine.. et aI., 56 F. C. 390 (1959) ; and Nichols & .Associates. Inc., et al., 56 F. C. 426 (1!J59). . .

370 FEDERAL TRADE cmL'IISSION DECISIONS Initial Decision 63 F.

t.ies. There is no dispute that. such a representation was made by some of respondents' salesmen and that it was in fact true. As clearly set forth in respondents' contracts, and as is evident from the nature of the arrangement and the testimony in the record if a customer s property was sold as a result of the advertising, the payment of a broker s commission was avoided. The adve.rtising fee set forth in the contract was the only fee charged any customet. It is concluded and found tllat while such representation was made by respondents, it was in fact true a.nd i-ras not false, misleading or deceptive.

The Credibility Problem As previously indicated, the prior hearing examiner, since deceased, heard substantially al1 of the case- in-chief against the Eastern and "Testern selling corporations, "while the undersigned heard the case-in-chief against the Midwestern respondents, a small part of the case against the 'Western respondents, and aJl of the defense. The parties concede that substantial issues of credibility are involved because the alleged oral representations of ale mCJl were refuted and denied by them before the undersigned. Section 5 (c) of the Administrative Procedure Act provides as follows: Separation of Functions. The same offcers who preside at the reception of e,idence pursuant to section 7 shall make the recommended decision or initial decision requirert by section 8 except where such offcers become unavailable to the agency Because of the circumstances present herein, this Section \\'Quld appear clearly applicable.

However, the Court of AppeaJs and the Commission have held that where cre(libility is involved, due process requires that the sa,me hearing examiner see and hea.r the conflicting witnesses in order to properJy evaluate their credibility. In the Gamble-Skogmo case 4 where the COlmnission substituted another hearing examiner for one who had been retired compulsorily, and the substituted hearing e,examiner did not see or hear the witnesses, the Court of ''-appeals held that the Commission s order could not stand where a credibility evaluation was necessary unless the subs6tutc examiner h8.,d been given the opportunity of seeing and heating the c-onflicting witnesses test.ify. The Court described the presence of such a credibility conflict in the following manner:

, in 8rrh'ing at some material fact or facts, either as a matter of direct determination or predicated inference, it is necessary to choose, -or a choire is- 'GamlJle- Sko(Jma v. FTC 211 F. 2d 106 (8th Clr. 1954) (5 S. & D. 603)- \ .

TVERSAL INTERCIIAKGE , IXC. , E:T AL. 371 350 Initial Decision undertaken to be made, on a personal basis, between things, which some witnesses assert and other witnesses deny, neither of which is inherently incredible, and such a choice is acceptingly or rejectingly capable of affecting the result proper credibilty evaluation is inescapably invol ed as a salient processive factor.

As indicated, exactly this situation is present herein to the extent that it has not been obviated with respect to certain of the representations, as found above.

Substantially the same views were expressed by the Commission in three subsequently decided cases: McKibben, Browning King and Art National Manufacturen Distributing 00. The Commission held that when credibility evaluation is a materia! factor thc substitute hearing examiner must have seen and heard such wit ncssess testify. In conformity with these holdings, no finding has been made herein based upon the testimony of witnesses not seen and heard by the undersigned, which testimony was refuted and contradicted by witnesses heard by the undersigned. However, as noted above, it makes JittJe if any practical difference in tbc outcome because of the responsibility of Universa! for thc activities of aJl of its agents, including the selling corporations and their salesn1en, the concomitant responsibiljty of respondents Guyer Bernardi and Salomon because of their individual formulation direction and control of the policies, acts and practices of lTniversal and the fact that each of them operates and controls his respective selling corporations.

D. Respondents' Other Oontentions Respondents' contention that as a matter of Jaw their subscribing brokers might be consjdered as "affiiated" has previously been considered and found to be without merit. Respondents also contend that UnivcrsaJ is not JiabJe for any misrepresentations of the salesmen of the seJJing corporations. It is undisputed that the seJJing corporations were the sides agents of 'Cniversal and hence this contention is without merit. Respondents raise the question of responsibi1it.y of the selling corporations for the misrepresentations of their salesmen, beea.use it is undisputed that their written contracts prohibited any misrepresentat.ion and provided penalties therefor. It is well settled that even under such circumstances the employing corporation is responsible for such misrepresentations, Ge01"ve ,lyfcKibben d' Son 56 P, C. 164:1 (1050); Br01/nilltl Kfn fJ d' ComtwI1)!, Inc. 59 F 'l' C. 155 , Docket o. 70GO (.August 2 , 1961); nnd Art Natio11al JIanujactllren DistribuUng Co., Inc. 58 F C. 719, Docl,:et o. 7286 (May 10, 19(1). Intenwtiolwl Art Co. v. FTC 109 F 2d .')93 (7th Clr. 1940) (3 S. & D. 1I' 8J : StrrndarrJDistributors, Inc'. PTC 211 F. 2ri 7 r2no Cir. 1054) (5 S, & D. 619J ; find Nati01wl TmtlcPublication, Sert)icc, Inc. PTC, 300 F. 2d T\)O (8th Clr., !lfllI"ch 2\1, 1962), (7 S. & D. 455). 372 FEDERALTHADE COl\imission DECISIONS Initial Dl"dsion 63 F.

As was stated by the Court of AppeaJs for the Second Circuit in the Standard Distributors case: Thus there is presented a situation where the salesmen did include sales, to the extent and effect as found, by misrepresentations which were made in violation of their instructions and despite honest efforts by the petitioners \'d.lich were well cakulated to prevent that.

They were llevertbeless the authorized agents of the corporate petitioner J:hough not of petitioner Bimstein, to sell the books. The misrepresentations they made were at least within the apparent scope of their authority and part of the inducement by which 'Ycle made sales that inured to the benefit of the corporate petitioner. Unsuccessful efforts by the l)rindpal (0 prevent such misrepresentations by agents wil not pnt the principal beyond the reach of the Federal Trade Commission Act '" * " . (Citations omitted. Respondents also question the responsibility of the individual respondents for the activities of the corporate respondents and their salesmen, but where such individuals actively control, formulate. manage and direct the policies, acts, and practices of such cor porations, the contrary is too well established to require exte,ndecl discussion.

E. The Effect of the UnZ",vf"Z Praotices The acts and practices of respondents, as hereinabove found, have had and now have the tendency and capacity to mislead and deceive a substantial portion of the purchasing public with respect to such representations and thereby induce the purchase in commerce of a substantial quantity of respondents ' services. CONCLUSION S OF LAW 1. Respondents are engaged in commerce and engaged in the above-found acts and practices in the course and conduct of their business in commerce, as "commerce" is defined in the Act. . The acts and practices of respondents hereinabove found arc all to the prejudice and injury of the public and constitute Unfair and deceptive ads and pract.ices in commerce within t.he intent and meaning of the Aet.

3. This proceeding is in the public interest and a.n order to cea.se and desist the above-found unla.\yful practices should issue aga.inst respondents.

ORDER It is ordered That respondents Universal Interehangc, Inc., a corporation, its offcers, Theodore 1\1. Bernardi 1a.nriee Salomon FTC Y. Stnnri(lf(/. Fr/uc(ltioll Society. :=02 r. B. 112 (1937) (2 S. & D. 429j: Strltdu," Distl"lbu.tubs, Inc P'l' 2111 F.2d 7 (2nd Cir. 1954) (5 S. & D. 6,l!JJ: find' TrGHS- C011tjl1f:mtol Clrnl"i'/g HOl/se hic. , 5(j F. C. 3UO (lD59) : find CfigeS cited therein. lJNIVEH,SAL IKTERCHA. IXC. , Err AL. 373 350 Initial Decision and Paul 1\1: Guyer, individually and as offcers of said corporation; "Cnitcd Interchange, Inc., of Illinois and United Interchange, Inc. 1aurice Salomon, individual.llyof Texas, corporations, their offcers and as an offcer of saiel corporations, and Lillian Salomon as an offcer of said corporations; United Interchange, Inc., ofN ew York andUnit.ed Interehange, Inc. , of l\iassachusetts, corporations, their offcers, Theodore M. Bernardi, individual1Jy and as an offcer of said corporations and Pauline B. Bernardi as an offcer of said corporations; Union Interchange, Inc. , of "\Yashington, Union , of Caltcrchange, Inc., of Colorado, and Union Interchange, Inc. Hornia, corporations, their offcers, Paula\I. Guyer, individuallyancl as an offcer of said corporations, and Francelene A. Guyer as an offcer of said corporate.ions, and their agents, representatives, and employees, directly or through any corporate or other device, in connection with the solicitation, offering for sale or sale of the advertising of business or other properties, 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 have available prospective buyers who are interested in the purchase of specific properties; 2. The customer wiJ not be charged for the service unless the advertising results in the saJe of the property; 3. Property sought to be advertised wiJ be nationally advertised in newspapers, radio broadcasts, or periodicals or publications other than respondents' own; and 4. Over 1 000 or any other number of real estate brokers are aflJiated with respondents.

It is further ordered That respondents Universal Interchange Inc., a corporation, its offcers, Theodore I. Bernardi, Maurice Salomon, and Paul M. Guyer, individually and as oflcers of said corporation; lnited Interchange, Inc., of IJJnois and United Interchange, Inc., of Texas, corporations, their offcers iaurice Salomon individually and as an offcer of said corporations, and LiJian Salomon as an offcer of said corporations; Union Interchange, Inc. of .Washington, Union Interchange, Inc. , of Colorado, and "Cnion Interchange, Inc., of California, corporations, their offcers, Paul M. Guyer, individually and as an offcer of said corporations, and France1ene A . Guyer as an offcer of said corporations, and their agents, representatives, and elnployees, directly or through any corporate or other device, in connection with the solicitation. offer- 780-0'18-69- 374 FEDERAL TRADE CONLvII's'SION DECISIO)lS Syllabus 63 iT.

ing for sale, or sale of the advertising of business or other properties, in commerce, as "commerce" is defined in the Federal 'It"ade Commission Act, do forthwith cease and desist from representing, directly or by implication, that:

1. Property sought to be advertised is underpriced ane! thc asking price should be increased; and 2. Respondents maintain a list of prospective buyers of such property.

It is further ordered TIUtt the allegations of the complaint with respect to representations 6 , 8 , and g set forth hereinabove be and hereby are dismissed.

DECISION OF THE COMJIlSSIOX AXD ORDER TO FILE REPORT OF COJIPLIANCE This matter having been heard by the Commission upon respondents tppenl from the initial decision and upon briefs in support thereof and in opposition thereto; and The Commission having determined that the hearing exal1iner findings and conclusions are fully substantiated on the record and that the order contained in the initial decision is appropriate in alj respects to dispose of this matter:

It is ordered That respondents' appeal be, and :it hereby is denied.

It is .hwthe1' onlered That the hearing exa,miner\;; initial dec.ision filed July i'\1 lnn:2, be, a,nd it hereby is, adopted as the dee-ision of the Commission.

It is fw,thel' ordered. \t n sponclents shall. \within sixty (60) days nJtcl' service 11pon theul of this order. file \\"1th the Cmnmission a report, ill wl'itillg, Sl'Jt illg forrh in detail llw manner 8.11(1 forn in which t.hey have eOlll)lied \vltll the order to cease and desist.