Credit Bureau, Inc. of Washington, D.C

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In ran Matter or THE CREDIT BUREAU, INC. OF WASHINGTON, D.C., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-2113. Complaint, Dec. 7, 1971—Decision, Dec. 7, 1971 Consent order requiring a credit reporting service of Washington, D.C., which includes the operation of a new resident information-reporting service under the franchised name of Welcome Newcomer, to cease securing persénal and financial information from new area residents through subterfuge and selling it without their knowledge.

ComMPpLaInT 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 The Credit Bureau, Inc. of Washington, D.C., a corporation, and Edward F. Garretson, individually, and as manager of The Credit Bureau, Inc. of Washington, D.C., 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:

Paracraru 1. Respondent The Credit Bureau, Inc. of Washington, D.C. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Georgia, with its principal 470-888—73 59 ;

‘Complaint 79 EVT.C.

office located at 1600 Peachtree Street, Northwest, Atlanta, Georgia, and its principal place of business located at 222 Sixth Street, N.W., Washington, D.C.

On. or about October 28, 1970, said respondent, The Credit Bureau, Inc. of Washington, D.C., acquired The Credit Bureau, Inc., which was a corporation organized, existing and doing business under and by virtue of the laws of the District of Columbia, with its principal office and place of business located at 222 Sixth Street, N.W., Washington, D.C., and controled and dominated its acts and practices until it was dissolved on or about November 18, 1970. The business operations of The Credit Bureau, Inc. were thereafter continued at 222 Sixth Street, N.W., Washington, D.C., by The Credit Bureau, Inc. of Washington, D.C.

Respondent Edward F. Garretson is an individual and was an officer of The Credit Bureau, Inc., and is manager of its corporate successor, respondent The Credit Bureau, Inc. of Washington, D.C. The said individual respondent formulated, directed and controlled the acts and practices of The Credit Bureau, Inc., including the acts and practices hereinafter set forth. He now is primarily responsible for formulating, directing and controlling the acts and practices of the corporate respondent, including those hereinafter set forth. The aforementioned respondents cooperated and acted together in the carrying out of the acts and practices hereinafter set. forth. Par. 2. Respondents are now, and for some time last past have been, among other things, engaged in the business operation of a credit “reporting service, which business operation includes the gathering, dissemination and sale of personal and financial information from residents newly located in the Washington, D.C. metropolitan area. In the course and conduct of their business aforesaid, respondents use the trade name Welcome Newcomer. Individuals designated by respondents as Welcome Newcomer Hostesses make visits to new residents to the area, purportedly to dispense free gifts, familiarize them with areca businesses, and make application for charge accounts with firms which do business in the community.

Par. 3. In the course and conduct of their business, as aforesaid, respondents now cause, and for some time last past have caused, materials relating to newcomers to be delivered to newcomers who are located in Washington, D.C. and in various States of the United States, and information received from said newcomers to be transmitted from their place of business in Washington, D.C. to persons and businesses located in various other States of the United States and Washington, D.C.

919 Complaint Respondents, therefore, maintain, and at all times mentioned herein have maintained, a substantial course of trade in the aforesaid. products and services in commerce, as “commerce” is defined in the Federal Trade Commission Act.

Par. 4. In the course and conduct of their business, as aforesaid, and for the purpose of inducing newcomers to supply personal and financial information, respondents employ and engage persons (called hostesses) who call on the newcomers in their homes, and through their hostesses respondents have made, and are now making, to newcomers various statements and representations, directly or by implication, of which the following are typical and illustrative, but not all inclusive thereof :

1. The personal data obtained by the hostess will be used only as proof that the hostess has called upon the newcomer or to make application for charge accounts with firms which do business in the community.

2. The information will be available only to a limited number of persons.

Par. 5. In truth and in fact :

1. The personal data obtained by the hostess is used for purposes in addition to proof that the hostess has called upon the newcomer or to make application for charge accounts with firms which do business in the community, which purpose is not disclosed to the newcomer. 2. The information is not available only to a limited number of persons, but is generally available to an unlimited number of persons. The information is relayed by the hostesses to respondents, who place the information in their files for use in making credit reports throughout the United States. Furthermore, the personal information is compiled on lists which are available to anyone desiring to purchase this information, which fact is not disclosed to the newcomer. Therefore, the statements and representations as set forth in Paragraph Four hereof were, and are, false, misleading and deceptive. Par. 6. Furthermore, it was and is an unfair practice and a false, misleading and deceptive act and practice for respondents to induce persons new to the Washington, D.C. metropolitan area to provide them with personal and financial information which would not have been otherwise revealed by such persons had they been informed of the purpose for which the information was being sought. Respondents’ subterfuge and failure to disclose the actual purpose for obtaining such information and failure to adequately disclose that the trade name Welcome Newcomer identifies a credit bureau or a service or activity of a credit bureau, constitute a scheme to obtain personal and financial information through deception and misrepresentation. Complaint 79 ETC.

Therefore, the respondents’ methods, as set forth herein, of obtaining personal and financial information were and are unfair acts and practices.and were and are false, misleading and deceptive. Par. 7. In the course and conduct of their aforesaid business, and at all times mentioned herein, respondents have been, and now are, in substantial competition, in commerce, with corporations, firms and individuals gathering personal information of the same general kind and nature as that obtained and used by respondents. Par. 8. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices and the failure to disclose the true nature, purpose and use of the information obtained through said visits, has had, and now has, the capacity and tendency to mislead members of the public into the erroneous and mistaken belief that said statements and representations were and are true, and in making contributions of personal and financial information to the respondents by reason of said erroneous and mistaken belief. Par. 9. The aforesaid acts and practices of respondents, as herein alleged, were and are all 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.

DercIsIon AND ORrpDER The Federal Trade Commission, having heretofore determined to issue its complaint charging the respondents named in the caption hereof with viclation 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, together with a proposed form of order; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the 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 alleged in such complaint, and waivers and other provisions as required by the Commission’s rules; and The Commission, having considered the agreement and having accepted same, and the Agreement Containing Consent Order having thereupon been placed upon public record for a period of thirty (30) days, now in further conformity with the procedure prescribed in THE CREDIT BUREAU, INC., WASH., D.C., ET AL. 923 919 Decision and Order Section 2.34(b) of its rules, the Commission hereby issues its complaint in the form contemplated by said agreement, makes the following jurisdictional findings, and enters the following order: 1. Respondent The Credit Bureau, {nc. of Washington, D.C. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Georgia, with its principal office located at 1600 Peachtree Street, Northwest, Atlanta, Georgia, and its principal place of business located at 222 Sixth Street, N.W., Washington, D.C.

Respondent Edward F. Garretson is an individual and manager of the said corporate respondent, The Credit Bureau, Inc. of Washington, D.C. His address is 222 Sixth Street, N.W., Washington, D.C. 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.

ORDER It is ordered, That respondents The Credit Bureau, Inc. of Washington, D.C., a corporation, and its officers, and Edward F. Garretson, individually, and as manager of The Credit Bureau, Inc. of Washington, D.C., and each of said respondents trading as Welcome Newcomer or under any other trade name or names, and respondents’ agents, employees and representatives, directly or through any corporate, subsidiary, division or other device, in connection with the solicitation, compilation, use, sale or distribution of personal, financial or other information or debt collections or other service in “commerce” as defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing, directly or by implication, that the personal and financial information obtained by the hostess making the visit for Welcome Newcomer will be used only as proof that the hostess has called upon the newcomer or to make application for charge accounts with firms which do business in the community; or misrepresenting, in any manner, the purposes for obtaining any information from whatever source, or how or the manner in which the information is to be used or revealed to third parties. 2. Obtaining personal and financial information without clearly and conspicuously disclosing at the outset, in each introduction or presentation by hostesses or other representatives of respondents to newcomers that such information, in addition to being submitted in connection with any credit applications signed by the newcomer, will be available to specifically identified organizations Decision and Order 79 F.T.C.

which subscribe to the Welcome Newcomer service and may solicit the newcomer’s patronage. :

3. Disclosing any ‘personal or financial information furnished by a newcomer for any purposes other than those described in Paragraph 2 without clearly and conspicuously disclosing to the newcomer, prior to obtaining such information, the exact information which will be used, the particular use which will be made of such information, and the parties or entities to whom the information will be made available.

4. Using the trade name “Welcome Newcomer” or any other trade name of substantially similar import or meaning, either orally or in writing, in connection with the collection of personal or financial information for credit rating, debt collection or other purposes without clearly and conspicuously revealing in immediate connection therewith that the name identifies a credit bureau or a service or activity of a credit bureau.

It is further ordered, That respondents shall deliver a copy of this order to cease and desist to all present and future hostesses or other representatives engaged in securing personal and financial information from newcomers, and shall obtain a signed statement acknowledging receipt of said order from each said agent, representative or person receiving a copy of said order.

Lt is further ordered, That respondents notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or any change in the corporation which may affect compliance obligations arising out of this order.

It is 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 of their compliance with this order.