Parents' Magazine Enterprises, Inc.

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IN THE MA'IR OF PARENTS' MAGAZINE ENTERPRISES, INC., ET AL. COKSENT Onder, ETC. , 1:: REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE CQ)'!J\ISSION ACT Docket 0-617. Complaint, Nov. 1965-Decision, Nov. , 1963 Consent order requiring J\ew York City seHers of encyclopedia sets, research services, other books and magazines, to cease representing falsely, through their salesmen making house-to-house calls on prospective purchasers and using printed Questionnaires, that such salesmen were teachers making educational surveys; that they offered encyclopedia sets at a. special introductory price for a limited time; that the encyclopedia was offered to selected persons for a testimonial and a small introductory price and that if the customer bought now he would receive additional items free; and through use of demonstration books with soft pliable backs, that books purchased would be bound accordingly.

:IPLAI Pursuant to the provsions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having re.ason to believe that Parents I\fagazine Enterprises, Ine' a corporation, and Patents J\lagazine s Cultural Institute., Inc., a corporation, heTcinafteT referTec1 to as Tcspondent.s have violated the provisions of said Act, and it appearing to the Qommissioll that a proceeding bJ7 it in respect theTeo WQuld be jn the pubiic interest, hereby Issues Its complaint stating its charge in that respect as follows:

P ARAGRAPII 1. Respondent Parents fagazine Enterprises, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York with its principal offce and place of business located at 52 V anderbilt Avenue in the City of New York, State of New York. Prior to July 1962, when its name was changed, said respondent was known as The Parents' Institute Inc.

Respondent Parents' :Magazine s Cultural Institute, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its offce and principal place of business located at 52 Vanderbilt Avenue in the city of New York, Slate of New York. It is a wholly owned subsidiary of respondent Parents' Jfagazine Enterprises, Inc., and since its organization in August 1962, has carried on and is still PARENTS' ).AGAZIl'E ENTERPRISES , IKC' ET AL. 1119 1118 Complaint carrying on the agency for sales formerly conducted by a pre- Inc. viously existing division of Parents' :Magazine Enterprises, namely, The Kew 'Wonder 'World, and conducted stin prior thereto by The New ,Vonder ,Vorld, Inc., a previously existing and whony owned corporate subsidiary of the corporation then known as The Parents' Institute, Inc., and now known as Parents' Enterprises Inc.

PAR. 2. In the course and conduct of their business, as aforesaid respondents are now, and fat some time last past have been, engaged in the offering fat sale, sale and distribution of encyclopedia sets research services, other books and various magazines through the medium of house-to-house salesmen to the public. PAR. 3. In the course and conduct of their business, as aforesaid respondents now cause, and for some time last past have caused their said products, when sold to be shipped from tlleir said place of business in the State of New York or from their plant in the State or New ersey, to purchasers thereof located in various other states or the United States, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in said products in commerce, as "commerce" is defined in the Federal Trade Commission Act.

P AU. 4. In the course and conduct of their business as aforesaid and for the purpose of inducing the purchase of their said products and services, respondents, through their salesmen and/or representative-s, have made many statements and representations and employed various tactics concerning respondents' business methods and other matters. Among and typical of the tactics employed and the statements and representations made are the fonowing: 1. That respondents encyclopedia salesmen were engaged in conducting surveys for educational and other purposes; 2. Respondents used a printed questionnaire, purportedly in connection with their "surveys " in such a manner as to gain entrance into the prospe.tive customer s home;

3. That tho aforesaid salesmen or representatives were teachers or had some connection with a school or educational system and that his or her visit was being made in that ca.pacity; 4. That the price at which certain encyclopedia sets were being offered was an introductory or reduced price and that in the near future the set could be purchased only at a greatly increased price;

5. That the New ,Vonder ,Vorld encyclopedia set of books could be had by prospective customers in exchange for a testimonial and a small introductory price of the set;

, 1120 FEDERAL TRADE CO:\l:vIISSIO DECISIO Complahlt G3 F.'l' 6. That special offe.s wore being made to certain selected persons; 7, That if the prospective customer l'm111cl buy the encyclopedia set no' such purc.haser would receive certain additional items free; 8. Esed books with soft pliable, backs for demonstration and sales purposes, implying thereby that the books received by the purchaser would be bound accordingly.

PAR. 5. In truth and in fact:

1. Responclents encyclopedia alesmen are. not now nor have they ever been engaged in making surveys of any kind. 2. The aforementioned prinied questionnaire T\8.S not used llsed solely for the purposeHUlking a surYE Y of any kind but was of gaining entrance into prospects: homes with the ultimate. objediv8 of milking 8, sale of respondents' Illlb1icn. ions and ::ervices. 3. The a.fore,sa1.cl salesmen and/or rellresentatives were not necessarily tca.chers or reprcsentatiyes of a school or educ.ational system but '\ ere essentially and primarilji salesmEll whose sale objective was to sell re3pondent ' publications and servic.es. 4. Tho price of said encydopedia sets: quoted to prospective purchasers -was not an introductory or reduced price but was tho price at ,which such sets had been regularly and customarily sold; 5. The Xew ,Vonder ,World encyclopedia sets of books were not plusobta.inable in exchange for :1, testimonial in regard thereto, a small introductory price of the set, but were in fact obtainable only for the Tegular price thereof;

6. Special offers WCTe not made to selected persons. On the contrary, the offers were made to all prospects indiscriminately; 7. The "free" it.ems offered to prospective pnrclwsers who would buy now were not free but '\- e1'e inclucle(l in the purchase price of the publications and services offered. s. The books purchased and received from respondents were not bound ith soft pliable backs as were the samples used .in making sales but were bound with rigid covers.

Therefore the statements, representations and tactics e.mployed by respondents, 1\8 set forth in Paragraph J' our hereof were and are false, misleading and dcceptive.

\1r. G. In the conduct of Oleir businc, at. all times mentioned herein, respondents h lve been jn substantial competition in commerce \with corporations, firms anel individuals in the sale of publiciLtions find services of the same general kind r"l11l nature as that sold by respondents.

PAIL 7. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had and now hns, the capacity find tend1€llcy to Tnisleac1 members or the PAREKTS' MAGAZINE EKTEHPRISES INC. , E'l A-L. 1121 Jl1S De(:i ion am! 01'ller purchasing public into the erroneous and mistaken belief that said statements and representations \were and are true and into the purchase of substantial quantities of respondents' products by reason of said erroneous and mistaken belief.

\R. 8. The aforesaid acts and practice.s of respondents, as herein alleged, were and are a11 to the prejudice and injury of the public and of respondents competitors and constituted, and now constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce, in violation of Section 5 of the Federal Trade Commission Act.

DEGISTOX AKD Onder its com- The Conllnission having heretofore determined to issue plaint charging the respondents named in the caption hereof with violation of the Federal Trade Commission _i\.ct, and the respondents having been served ",ith notice of said determination and with a copy of the complaint. the Commission intended to issue, together "jtlt a prcpo ed form of order; and The respondents and eonnsel for the Commission ha \ ing thereafter exccntcd an agreement containing fL consent order, an admission by Tespondents of all the jurisdi.cti.oral facts set forth in th8 complaint to iss1l8 herein: a statement that the signing of said agreempnt is for settlement purposes only and does not constitute an admission by responclents that the law has been violated as set forth jn "nch complaint, and ",'waivers and provisions as required by the, Commission s rl11e U1d The Commission having considered the agreement, hereby accepts sunc, issues its complaint in the iOl'n contemplated by said agreenwnt, makcf, the following jurisdictional finding21 and enters the folloy ing order:

1. Respondent, Parents Iagazinc Enterprises, Inc., is a corporation orgunizec1, existing and doing business under and by virtue of the Jay,S of the State of Sew York with its principal oflice and place OT business located at 52. Vanderbilt 1\-Ienue in the city of York, State of Sew York.

Respondent, Pllrents l\lagazinc s Cuhura) Institute, Inc. , is a corporfttion organ zed, existing and doing business under and by yi1'tue of the laws of the State of Dela"arc, with its office and principn.l place of business located nt 52 Vanderbilt Avenue in the city of Sew York, State of New York. It is a wholly owned subsic1inry of re2ponclent Patents lagazine Enterprises, Inc. 1122 FEDERAL TRADE CO:\IMISSION DECISIONS Decision and Order 63 p.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

under It is ordered That respondent Parents' :Magazine Enterprises Inc., a corporation, and its offcers, and respondent Parents' l\lagazinc s Cultural Institute, Inc. , a corporation, and its offcers, and respondents' agents, representatives and employees, directly or through any corporate or other device in connection with the offering for sale, sale or distribution of publications and services, or any other merchandise in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Representing, directly or by implication; (a) That respondents' encyclopedia sales representatives are engaged in making surveys for any purpose or that the purpose of the call or interview by respondents' encyclopedia sales representatives relates to other than the sale of books, other merchandise or services; or that any other of respondents' sales representatives are engaged in making a survey for any purpose unless respondents esta,blish that such is the fact;

(b) That respondents' salesmen or representatives are teachers or have any connection with a school or educational institution or systcm, when such is not the fact; (c) That the price at which any of their merchandise or services is offered for sale or sold is an introductory price or offer;

(d) That the price at which respondents' merchandise or services are offered for sale is a reduced priCB unless such price is based on and is Jess than the price at which such books, merchandise or services are reguarly and usually sold by respondents;

(e) That any of their merchandise or services are available in exchange for an endorsement, or for an endorsement plus some other consideration, unless such merchandise or service is in every instance furnished or made available as represented;

(f) That prospective purchasers of any merchandise or service sold by respondents are especially selected; (g) That any item of merchandise or service is awarded or given free to purchasers.

, ,, TERNATIONAL MILLING CO. 1123 1118 Complaint 2. Using fictitious questionnaires in connection with the sale of their publications and services.

3. Using book samples for demonstration purposes, the covers of which are unlike and superior to the books actually sold without clearly disclosing such fact to the purchasers of the publications and services.

It i8 further ordered That the respondents herein shall, within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order.