Simon & Schuster, Inc.

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IN THE MATTER OF snWN & SCHUSTER INC.

CONSE ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDER. TRADE BnssTON ACT Docket 0-755. Complcdnt, J1/ne 196.4-JJecision, June 1!J64 Consent order requiring a New York City distributor of books and other publica. tions to cease representing falsely ollietterbeads of the fictitious "THE :\IAIL ORD:BR CREDIT REPORTI:\G ASSOCIATION, INC. , that a bona fide collection agency of that name had delinquent accounts for collection and that, if payment "as not made, the customer s credit rating would be adversely affected.

Co:nrLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal . .. , , .. SIMON & SCHUSTER, INC. 911 910 Complaint Trade Commission, having reason to believe that Simon & Schuster Inc., a corporation, 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:

PARAGRAPH 1. Respondent Simon & Schuster, 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 630 Fifth Avenue, in the city of New York, State of Kew York.

PAil. 2. Respondent is now, and for some time last past has been engaged in the advertising, offering for sale, sale and distribution publications, books and other merchandise to the general public directly through the United States mails and through distributors, jobbers and dealers.

PAil. 3. In the course and conduct of its business, respondent now causes and for some time last past has caused its said publications books and other merchandise, when sold, to be shipped from its place of business in the State of New York to purchasers thereof located in the various other states of the United States and in the District of Columbia., and maintains, and at an times mentioned herein ha.s maintained, a. subst.antial course of trade in said publieatjons, books, and other merchandise in commerce, as ((commerce 'J is defined in the Federal Trade Commission Act.

PAil. 4. In the course and conduct of its business and for the purpose of inducing the payment of purportedly delinquent. accounts that have arisen from the mail sale of certain publications, books and other merchandise, respondent has engaged in the practice of disseminatingorder certain correspondence on the letterhead of "THE ftIAIL ORDER CnED1T RE- PORTING ASSOCIATION, 1KO. " of )Tew York. In said correspondence, respondent has made certain statements and representations for the purpose of inducing payment of the ,purportedly delinquent accounts. Typical, but not all inclusive, of the statement.s and representations are the following:

TEE :\IAIL ORDER CREDIT REPORTJNG ASSOCIATION, INC. CREDIT REPOHTS-COLLECTIONS NEW YORK 18 EW YORK Re: Claim of:

SIMON AND SCHUSTER, INC.

Your past due account has been turned OYer to us for collection by our client. With credit assuming an ever increasing:Irole in :four er:onomy, tbe jmportance of 'lood CredU record. cannot be stressed 1"00 strongl 912 FEDERAL TRADE COMMISSION DECISIOXS Complaint 65 F.

PAR. 5. By and through the use of the aforesaid statements, representations and practices, and others of similar import not specific.ally set out herein, respondent represents and has represented, directly and by implication that:

a. "THE )IAIL ORDER CREDIT REPOHTI G ASSOCIATION, INC. " is a separate, bona fide collection and credit reporting agency located in New York City.

RJ::- b. Respondent has turned over to said " THE fail onder CREDIT PORTING ASSOCIATION, INC." the delinquent account of the customer for collection and other purposes.

c. If payment is not made, the customer s general or public credit rating wil be adversely affected.

cl. The letters on the letterheads of the said "THE :\fail onder CREDIT REPORTING ASSOCIATION, INC." have been prepared and mailed by said organization.

PAR. 6. In truth and in fact:

a. "Tile l\fail ORDER CREDIT REPORTING ASSOCIATION, I :' is not a separate, bona fide col1ec6on agency or credit reporting agency. Said organization is a fictitious name utilized by respondent and others for the purpose of disseminating collection letters. b. Respondent has not turned over to said "THE :.rail ORDER CREDIT REPORTING ASSOCIATION, INC." the delinquent account of the customer for collection or any other purpose.

c. If payment is not made, the customer s g-general or public credit rating is not adversely affected.

d. The letters on the letterhead of the said "THE :MAIL ORDER CREDIT' REPORTING ASSOCIATION , INC." have not been prepared and mailed by mailecl or said organization. Said letters have been prepared and caused to be mailed by respondent. Replies in response to said letters and notices are forwarded unopened to respondent. Therefore, the statements, representations and practices as set forth in Paragraphs Four and Five hereof were and are false, misleading and deceptive.

PAR. 7. The use by respondent of the aforesaid false, misleading and deceptive stateme.nts, representations and practices has had, and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations ,,erg and are true and into the payment of substantial sums of money to respondent by reason of said erroneous and mistaken belief.

PAR. 8. The aforesf1id acts and practices of respondent, as herein alleged, were and are all to the prejudice and injury of the public and constituted, and now constitute, unfair a.nd deceptive acts and prac- SIMON & SCHUSTER , INC. 913 910 Decision and Order tices in commerce, in violation of Section 5 of the Federal Trade Commission Act.

DECISION AXD ORDER The Commission hav"'ng heretofore determined to issue its complaint cha.rging the respondent named in tlle caption hereof with violation of the Federal Trade C01nmission Act, and the respondent having been served with notice of said determination and with a. copy of the complaint the Commission intended to issue, together with a proposed fOrIll of order; and The respondent and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by respondent of all the jurisdictional facts set forth in the complaint to issue herein, a st.atement that the signing of said agreenlent is for settlement purposes only and does not constitute an admission by respondent that the law has bee.n violated as set forth in such complaint, and waive.rs and provisions as required by the Commission s rules; and The Commission, having considered the agreement, hereby accepts same, issues its complaint in the fornl contemplated by said agreement makes the fo1Jowing jurisdictional findings, and enters the following order:

1. Respondent Simon & Schuster, Inc., is a corporation organized exist.ing and doing business under' and by. virtue of the laws of t.he State of New York, with its offce fmd principal place of business Jocated at 630 Fifth Ayenne, in the city of New York, State of New York.

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

ORDER 1 t ordered That respondent Simon & Schuster, Inc., a corporation, and its ofiicers, and respondent's agents, representatives and employe. , directly or t.through any corporate or other device, in connection with the offering for sale, sale or distribution of publications or books in commerce, as "conllnercc" is defined in the Federal Trade Commission Act, do fortJnvith cease and desist from representing directly or by implication t.hat:

1. "THE )IAIL ORDER CREDIT REPORTING ASSOCIATlOK , 11\C. , any other fietitions nalne, or any trade name mvncd in \,"hole or in part by respondent or over which respondent exercises direction or control, is an independent, bona fide co1Jection or credit reporting agency;

914 FEDERAL TRADE COMMSSION DECISIONS Complaint 65 F.

2. Delinquent accounts have been or wil be turned over to "Til :MAIL ORDER CREDIT REPORTING ASSOCIATION, INC. " for collection or any other purpose;

3. .A... customer s na.me has been turned over to a bona fide credit reporting agency or that a customer s general or public credit rating wil be adversely affected unless respondent establishes that where payment is not received the information of said delinquency is referred to a separate, bona fide credit reporting agency; 4. Delinquent accounts have been turned over to a bona fide separate collection agency for collection unless respondent in fact has turned such accounts over to such agency; 5. Letters, notices or other COlllU1ications in connection with the collection of respondent' s accounts which have been prepared or origiated by respondent hl1ve been prepared or originated by any other person, firm or corporation.

It is further ordered That the respondent herein shall, within sixty (60) days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with this order. IN TUB :i1ATTER OF TIMED ENERGY, INC., ET AI,.

CONSENT ORDER : ETC., IN REGARD TO THE ALLGED VIOLATION OF FEDERAL 'trade COMMISSION ACT Dooket 0-756. Complaint June 11, 1964 Dedsion June, 1964 Consent order requiring Bellmore, Long Island, Y., distributors to the general public of vitamis and other merchandise to cease representing falsely that deliquent customers' accounts were transmitted to an independent collection agency and, through the use on letterheads of the fictitious name "THE MAIL ORDER CREDIT REPORTING ASSOCIATION, INC. . or "John J. Murphy, ATTORNEY AT LAW", that a bona fide collection agency or an outside attorney was handling the account and that the customer s credit ratig would suffer if payment was not made. COl\fPLAINT 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 Timed Energy, Inc. a corporation, and James E. True, Patricia M. Gallehr and Leon .. ..

TIMED ENERGY, INC.) ET AL. 915 914 Complaint Weiss, individuany and as officers of said curporation, 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: PARGRAH 1. JWspondents Tied Energy, 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 2750 Mcrrick Road, Bellmore, Long Island, in the State of New York.

Respondents James E. True, Patricia M. Gallehr and Leon 'Weiss are individuals and offcers of said corporate respondent. They formulate, direct and control the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. Thciraddres is the same as that of the corporate respondent. PAR. 2. Respondents are lWW, and for some time last past have been engaged in the advertising, offering for sale, sale and distribution of vitamins and other merchandise to the general public. Said vitamins and merchandise are advertised, sold and payment made therefor through the United Statss mails.

PAR. 3. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their said merchandise when sold, to be shipped from their place of business in the State of N ew York to purchasers thereof located in various other States of the United States and in the District of Columbia, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in said merchandise in commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 4. In the course and conduct of their business and for the purpose of inducing the payment of purportedly delinquent accounts, respondents have made certain statements and representations through letters and materials sent through the United States ,yIails to purportedly delinquent customers who have purchased vitamins or other merchandise.

Typical, but not all inclusive of said statements and representations are the following:

(aJ On the letterhead of "TIMED EXERGY, 419 Park Ave. South, N. , N.

Dear Friend:

Is there some reason why you have Dot paid the enclosed bil? Please don consider this a "collection letter," but rather a friendly note to find out if there is some reason why you have not paid the enclosed statement. Dear Member:

916 FEDERAL TRADE CO:YL\lISSIQN DECISIO Complaint 65 F.

When we wrote to you a few weeks ago we asked you to please pay our bil in the hat" because our bil was long over due. So far \ve have not heard from you, DOl' have we received your payment'" '" * Dear Friend:

Before sending your file to a professional collection agent \-.ho may call on you personally to collect this long past due account, I have instructed our Credit .Manager to let me appeal to you once more. I,et' s face the facts. It ",vil be embarrassing to you, and this method of collecting is expensive.

From your standpoint the bil must be paid eventually, so why delay and risk this embarrassment and expense? * '" '"

(b) On the follo"ing letterhead:

THE IAIL ORDER CREDIT REPORTI:"G ASSOCIATION, I:"C. CREDIT REPORTS-COLLECTION NEW YORK 18 Dear Friend:

We have been notified by one of our members, Timed Energy, Inc" of your failure to pay a past due account A duplicate of O1eir statement is enclosed. Tl1ey have engaged us to collect this balance due. .. t' :t SECO'\'D NOTICE A duplicate statement of your account with Timed Energy Inc. is enclosed herewith.

Our client states that )' OU have been given every opportunity to pay this honest debt, and we have already offered ;you this same opportunity. Please be advised that we are giving you another chance to make payment. Although the sum involved is small, it is our business to collect our clients' delinquent accounts regardless of size, and we are organized for this purpose. '" '" '"

(c) On the following letterhead:

John .J. Murphy ATTOR:"EY AT LAW 15 Wl,ST 38TH ST. EW YORK 18, N. TAKE NOTICE THAT:

I have been consulted by my client in connection with their claim against you for goods sold and delivered, in the amount shown on the enclosed statement. .:fy client advises that this claim arises from an order placed by you, shipped to you, but not paid for despite several demands by my client. I have been requested to write you to offer One final opportunity to pay this bill. May I strongly urge you to pay this outstanding obligation immediately. '" '" '"

PAR. 5. By and through the use of the aforesaid st.at.ements, representations and practices, and others of similar import not specifica.lly set out herein, respondents represent aud hate represented directly or by implication that:

(a) If payment is not made, the delinquent cllstomer s name is transmitted to. a bona fide independent collection agency. TI:ED ENERGY , INC. , ET AL. 917 914 Complaint (b) "THE J\IAIL ORDER CREDIT REPORTING ASSOCIATION, IXC. , is a sep arate, bona fide collection and credit reporting agency located in N York City.

(c) Respondents have turned over to "THE )fail ORDBR CREDIT RE- POR'rING ASSOCL TION, INC." the delinquent account of the customer for conection lind other purposes.

(d) If payment is not made, the customer s general or public credit rating wil be adversely affected.

(e) Mr. John J. Murphy is an outside attorney at law, located in New York City, to whom the delinquent customer s account has been transferred for collection.

(f) Letters and notices on the letterheads of "Tile "AIL ORDE" CREDIT RF..ORTING ASSOCIATION INC. , and "John J. :Murphy Attorney at Law have been prepared and mailed by said organization or named attorney. PAR. 6. In truth and in fact:

(a) If payment is not made, the dclinquent customer s name is not transmitted to a bona fide independent collection agency. (b) "Tile l\fail ORDER CREDIT REPORTING ASSOCIATION, INC." is not a separate, bona fide collection or credit reporting agency. Said organization is a fictitious name utilized by respondents and others for ' purpose of disseminating collection letters.

(c) R.respondents have not turned over to "THE UAIL ORDER CREDIT REPORTING ASSOCIATION, INC. " the delinquent account of the customer for collection or any other purpose.

(d) If payment is not made, the customer s general 01' public credit rating is not adversely affected.

(e) The delinquent customer s account has not been transferred to Mr. John J. Murphy for collection or for any other purpose. (f) The letters and notices on the letterheads of " THE L\IL ORDER CREDIT REPORTING ASSOCL\TION, INC." and "Jolm J. ::furphy, Attorney at Law" have not ,been prepared or mailed by said organization or named attorney. Said letters and notices have been prepared and mailed or caused to be mailed by respondents. Replies in response to said letters and notices are fonvarded unopened to respondents. Therefore, ithe stateme,nts and representations as set forth in Pa.ra graphs Four and Five hereof were and are false, misleading and deceptive.

PAR. 7. The use by respondents of the aforesaid false, misleading , ancland deceptive statements, representations ancl practices has had now has the capacity and tendency to mislead members of the purehasing public into the erroneous and mistaken belief that said statements and representations were and are true and into the payment of 918 FEDERAL TRADE COM.\HSSION DECISIONS Decision and Order 65 F.

substantial sums of money to respondents by reason of said erroneous and mistaken belief.

PAR. 8. The aforesaid acts and practices of respondents, as herein alleged, were and are an to the prejudice and injury of the public and constituted, and now constitute, unfair and deceptive acts and practices in commerce, in violation of Section 5 of the Federal Trade Commission Act.

DECISION ORDER The Commission having heretofore determined to issue its complaint chargig the respondents named in tbe caption hereof with violation of the Federal Trade Commission Act, and the respondents having been served with notice of said determination and with a copy of the complaint the Commission intended to issue, togethcrwith a proposed form of order; and The respondents and counsel for the Commission having thereaftr executed an agreement containing a consent order, an admission by respondents of all the jurisdictional facts set forth in the complaint to issue herein, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as set forth in such complaint, and waivers and provisions as required by the Commission rules; and The Comnlission, having considered the agreement, hereby accepts same, issues its complaint in the form contemplated by said agreement makes the following jurisdictional findings and enters the following order:

1. Respondent Timed Energy, 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 2750 Merrick Road, Belhnore, Long Island, in the State of New York. Respondents James E. True, Patricia :'1. GalJehr, and Leon Weiss are offcers of said corporation, and their address is the same as that of said corporation.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the '1roeeeding is in the public interest.

orner It is ordel' That respondents Timed Energy:r, Inc., a corporation and its offcers, and James E. True, Patricia M. GalJehr and Leon Weiss, individually and as offcers of said corporation, arid respondents' agents, representatives and employees, directly Or through any , .

TIMED ENERGY, INC. , ET AL. 919 "914 Decision and Order corporate or other device, in connection with the offering for sale, sale and distribution of vitamins or other merchandise, in commerce commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing directly or by implication .that:

(1) a. Delinquent accounts wil be turned over to a bona fide separate collection agency or attorney for collection unless respondents establish that a prior determination had been made in good faith to make such referral;

b. Delinquent accounts have been turned over to a bona fide, separate conection agency or attorney for collection unless respondents establish that such is the fact; (2) Delinquent accounts have been or will be turned over to THE MAIL ORDER cru.:IT REPORTDTG ASSOCIATION, INC." for collection or any other purpose;

(3) "THE l\IAIL ORDER CREDIT REPORTING ASSOCIATION, INC. , any other fictitious name, or any trade name owned in whole or in part by respondents or over which respondents exercise any direction or control is an independent, bona fide collection or credit reporting agency;

( 4) A customer s name will be or has been turned over to a bona fide credit reporting agency or that a customer s general or public credit rating wil be adversely affected unless respondents establish that where payment is not received, the information of said delinquency is referred to a scpaxate bona fide credit reporting agency;

(5) "John J. ::lurphy" or any other person or firm is an outside, independent attorney at law or firm of attorneys representing respondents for collection of past due accounts unless respondents establish that a bona fide attorney client relationship exists between respondents and said attorney or attorneys, for purposes of collecting such accounts;

(6) Letters, notices or other communications which have been prepared or originated by respondents have been prepared or orjginated by any other person, firm or corporation. It is further ordered That the respondents herein shan, 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. 920 FEDERAL TRADE CO IMISSION DECISIOjXS Complaint 65 F.