Cencor, Inc

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Iw. THE » Marre OF ~ CENCOR, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE. : TFEDERAL TRADE COMMISSION ACT Docket O-2265. Complaint, Aug. 3, 1972—Decision, Aug. 3, 1972. Consent order requiring, among other things, a Kansas City, Mo., company engaged in advertising and selling personal income tax preparation services to cease failing to disclose conditions of its guarantees, misrepresenting that it will reimburse customers for all payments they may be required to make over their initial tax payment, failing to disclose that respondent will not. assume liability for additional taxes levied against the taxpayer, misrepresenting that legal representation will be provided to customers whose tax returns are audited, misrepresenting the magnitude or frequency of refunds received by its customers, and misrepresenting that respondent’s personnel are tax experts. Respondent is further required to deliver a copy of the order and a returnable form of intention to each of its franchisees. Complaint Pursuant tothe 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 Cencor, Inc., and Cencor Services; Inc., corporations, hereinafter referred to as respondents, have violated the provisions of said Act, and it appearing 232. FEDERAL TRADE COMMISSION:DECISIONS Complaint. 81.F.T.C:

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: :

Paracrapu 1. Respondent Cencor, Ine. is @ “corporation organized, existing and doing business under. and by virtue of the laws of the State.of Delaware, with its principal office and place of business located: at 1008 Walnut Street, inthe city of Kansas City, State of Missouri. . Respondent: Cencor Services, Inc., is a. corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal office-and place: of business located at 1003 Walnut Street, in the city of Kansas City,: State of. Missouri: Par. 2.. Respondent Cencor Services, Inc., is now, and for some time last past has been, engaged in the advértising, offering for: sale and sale of persorinel income tax: preparation Services. : Respondent Cencor Services, Inc., is. a: wholly-owned subsidiary of; and is managed, directed and controlled by, respondent: Cencor, Inc. Respondents sell their aforesaid products and services directly and through various corporate subsidiaries, . affiliates, and franchisees hereinafter referred to for convenience as respondents’ representatives. Par. 3. In the course and conduct of their business as aforesaid, respondents now cause, and for some time last past have caused, monies, contracts, business forms and other commercial paper and printed materials in connection with said income tax preparation services, to be sent. by United States mail from respondents’ place of business in the State of Missouri to their local offices and franchises and purchasers of respondents’ products and services located in various other States of the United States, and maintain and at all times mentioned herein have maintained a substantial course of trade in said services in commerce, as “commerce” is defined in the Federal Trade Commission Act.

Par. 4. In the course and conduct of its business, respondents and their representatives have disseminated, and caused the dissemination of, certain advertisements concerning the said income tax preparation services by various means in commerce, as “commerce” is defined in the Federal Trade Commission Act for the purpose of inducing and which were likely to induce, directly or indirectly, the purchase of said income tax preparation services.

Par. 5. For the purpose of disseminating such advertisements, respondents and their representatives have employed television and radio commercial broadcasts, newspaper and periodical insertions, direct mail literature and point of sale promotional materials. \ CENCOR, INC., ET.AL: 233 231... |: Complaint “Typical of ‘the statements and representations’ in said advertisements, but not all inclusive thereof, are‘the following: 1. Radio and Television :

- Personal attention ‘is more important than ever * * * Attention that you will get from the ‘well-trained, ‘friendly ‘people at Cencor. And Cencor guarantees that they’ll go with: :you in case of a government audit. and ‘pay any penalties resulting from an éerror they.may make.

With all the changes in tax forms and regulations, you need the personal attention of Cencor’s well trained staff * * * * and the assurance of the Cencor guarantee.

At Cencor, they check’ and recheck every ‘return they prepare & * # yes, Cencor takes-the-time: to do: your return right and for as little as $5 and up. CenCor’s accuracy assures: that: you'll. get every allowable deduetion’ and that you’ll pay no more than you should.

Jack. Linkletter for Cencor, the Income Tax Service that takes-the-time to assure accuracy ee * last year 60% of Cencor’ s customers got r refunds. . 2. Newspaper. and direct Mail.

Cencor has the knowledge of all changes in tax. forms and: regulations— Cencor will.accompany you} in case of audit : we “CENCOR GUARANTEE If. we ‘make any,, errors in . the. preparation of your return ‘that result in any penalty or interest, we will pay that penalty or interest. CENCOR TAX SERVICE “Where accuracy is Guaranteed”

CENCOR INCOME TAX takes the time Last year OVER 60% of CENCOR’s customers received refunds. Where you have your income tax prepared does make a difference. : Cencor accuracy means you get every allowable deduction and pay no more than you should.

100% Guaranteed Accuracy by our Experienced staff. Our guarantee of accuracy, up-to-date knowledge of the latest changes in all Federal and State forms and regulations, plus our assistance in the event your return is selected for an audit, provides you with the finest personal Income Tax Service available.

Our guarantee of accuracy is your assurance of the best work. If we should make an error in the preparation of your return, Cencor will pay any resulting penalty or interest and will accompany you in the event of an audit. Last year over.60% of CenCor’s Tax Service customers received a refund and this year, with all of the complex changes, it is even more important that you seek professional help. All of our well-trained tax people are courteous professionals.

Just one of the many advantages is that from NOW UNTIL APRIL IST, CENCOR WILL PREPARE YOUR TAX RETURNS Right in your own Home. All it takes is a telephone call to your Century Finance office or to the nearest Cencor Tax office, and a specially-trained tax expert will be on his way to see you.

With all these changes, you will want more than ever, the security of Cencor’s Guarantee of Accuracy and our special year around service at no extra cost, 494-841—73—16 234 FEDERAL TRADE. COMMISSION: DECISIONS . Complaint 81 FEC;

this includes preparation and revision of estimates.and: our offer to: appear with . you at Internal Revenue Service in the event your return.is selected for an audit. Over 60% of CenCor’s tax clients received tax refunds last year, Par. 6. By and through the use of the above-quoted statements and representations, ‘and. others of. similar. import and meaning, but: not expressly set out herein, respondents and their representatives have represented, and are now _Tepresenting,” directly or: by: implication, that a “LL. Respondents ' will reimburse the taxpayer for any payments the taxpayer may be required to make in addition to his initial tax payment, if such additional payments result:from an.error made by:respondents ‘and their representatives in the Preparation: of the’ tax return.

2. If the’ customers’ ‘tax return. is audited, ‘respondents and their . representatives will provide representation, without charge, by. per- Internal Revenue Service.

3. The percentage of respondent?’ ts tax preparation customers who receive refunds is demonstrably. greater than the percentage of the tax paying public at large who receive refunds. 4, Respondents’ and their representatives’ tax preparation’ personnel are tax experts or professionals or unusually competent in the preparation of tax returns and the rendering of tax advice. Par. 7. In truth and in fact:

1. Respondent and their representatives do not reimburse the taxpayer for all payments he is required to make in addition to his initial tax payment if such additional payments result from an error made by respondents and their representatives in the preparation of the tax return.

2. Respondents and its representatives do not provide representation by persons qualified and certified by, and enrolled to practice before, the Internal Revenue Service to their customers, in instances where the customer’s tax return is audited.

3. The percentage of respondents’ tax preparation customers who receive refunds is not demonstrably greater than the percentage of the taxpaying public at large who receive refunds. 4. Respondents’ and their representatives’ tax preparing personnel are not tax experts or professionals or unusually competent in the preparation of tax returns and the rendering of tax advice. Therefore, the statements and representations set forth in Paragraphs Five and Six hereof were, and are, false, misleading and deceptive.

CENCOR, INC, ET An 0. 235 10 Decision and Order .

Par. 10. In the course; of conduct oftheir business, and-at all times mentioned herein, respondents and their representatives. have been.in substantial competition, in commerce, with corporations, firms and individuals in the sale of income tax preparation services.of the same general kind andnature. ~ “Par. 11..The use by: respondents and their representatives. of. the aforesaid false, misleading’ and. deceptive statements and representa-_ tions, and unfair acts and practices, 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 into the. purchase of respondents’ and their representatives’ income tax préparation services by reason of said erroneous and mistaken belief.:... -. :

Par. 12. The aforesaid acts and practices of respondents and their representatives as herein alleged-were and are all to the prejudice and . injury. of the public and of respondents’ and their representatives’ competitors and constituted and now constitute unfair methods of competition. in commerce and unfair and deceptive: acts and practices in commerce, in n. Violation of Section 5 of the Federal Trade Commission Act. o - Decision And ORDER - The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; 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 aforesaid draft of complaint, 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 thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record . for a period of thirty (30) days, now in further conformity with the 236: | FEDERAL TRADE COMMISSION’ DECISIONS Decision:.and ‘Order 81 F.T.C.

procedure prescribed i in: Section 2. 34(b)i of: its rules, the Commission hereby: issues its complaint; makes 'the- following Jurisdictional findings, and enters the following order: hd 4. Respondent Cencor, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of. Delaware, with its office and principal ‘place: of business located ati 1003 Walnut Street, city of Kansas City, State of Missouri. Respondent Cencor Services; Inc., is a corporation organized, exist “ing and doing business under and by virtue of the-laws of the State.of Delaware, with its office and principal place of business located at:1003 Walnut Street, city of Kansas City, State of Missouri. Q. 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. ene oe TL 7 as. s ordered, ‘That respondents Cencor, Ine. and Cencor Services, Inc., -corporations, and. their officers, and respondents’ agents, representatives,. employees. and, suecessors and ‘assigns. directly or through ‘any corporate or other device, or through their franchisees or any other person, partnership. or corporation authorized by respondents to engage in the commercial preparation of income tax returns in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from :

1. Using any guarantee without clearly and conspicuously disclosing the terms, conditions and limitations of any such guarantee; or misrepresenting, in any manner, the terms and conditions of any guarantee.

2. Representing, directly or by implication, that respondents will reimburse their customers for all payments the customer may be required to make in addition to his initial tax payment, in instances where such additional payments result from an error by respondents in the preparation of the tax return; Provided, however, nothing herein shall prevent truthful representations that: respondents will reimburse their customers for interest or penalty payments resulting from respondents’ errors. 3. Failing to disclose, clearly and conspicuously, whenever respondents make any representation, directly or by implication, as to their responsibility for, or obligation resulting from, errors attributable to respondents in the preparation of tax returns, that respondents will not assume the liability for additional taxes assessed against the taxpayer.

231. .

-CENCOR, INC., ET: AL. 9 5. * 237 Decision and..Order _ 4, Representing, directly or by implication, that respondent will provide legal representation to customers whose tax.returns are audited; or misrepresenting, in any.manner, the type or manner of assistance provided by respondent to: customers whose returns may be audited: : a 5. Representing; directly or by implication, that the percentage ‘of respondents? 'customers who receive - tax - refunds is demonstrably greater than the percentage of the tax. paying public at large who receive:-refunds;-or misrepresenting, in. any. manner, the magnitude or frequency of refunds ‘received: by respondents’ -. tax preparation: : customers.

6. Representing, directly or by implication, that respondents? tax preparation personnel are-tax experts or professionals or: unusually competent in the preparation of tax returns and the rendering of tax advice; or misrepresenting, in any manner, the com- -petence or ability. of respondents’ tax preparation personnel... It ts further ordered, That: ~~. * (a) respondents ‘herein deliver, by registered mail, a copy. of _this decision and order to each of their present, and. future fran- _chisees and any other persons, partnerships or corporations. authorized by the respondents to engage in the commercial prepara- tion of income tax returns.

(b) respondents provide each person so described in Paragraph (a) above with a form returnable to the respondents clearly stating his intention to be bound by and to conform his business practices to the requirements of this order;

(c) respondents inform each person so described in Paragraph (a) above that the respondents shall not authorize, grant a fran- _chise to, or continue the authorization or franchise of, any third party to engage in the commercial] preparation of income tax returns, unless such third party agrees to and does file notice with the respondents that it will be bound by the provisions contained in this order;

(d) if such third party will not agree to so file notice with the respondents and be bound by the provisions of the order, the respondents shall not authorize, grant a franchise to, or continue the authorization or franchise of, such third party to engage in the commercial preparation of income tax returns; (6) respondents inform the persons described in Paragraph (a) above that the respondents are obligated by this order to discontinue the authorization, or terminate the franchise, of persons who continue on their own the deceptive acts or practices prohibited by this order;

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221 33 96.926353 subsidiaries5 1 5 1 2 5 1271 1651 39 21 96.817009 or5 1 5 1 2 6 1324 1647 68 34 96.817009 any5 1 5 1 2 7 1408 1641 104 30 96.650383 others 1 5 1 2 8 1520 1638 156 43 96.650383 changes 1 5 1 2 9 1667 1650 36 20 96.961006 in5 1 5 1 2 10 1719 1638 59 32 96.961006 thes 1 5 1 2 11 1795 1629 206 49 93.306152 respondents 1 5 1 2 12 2017 1647 72 21 62.618973 cor-2 1 6 0 0 0 760 1686 1330 401 -1 3 1 6 1 0 0 761 1686 1329 87 -1 4 1 6 1 1 0 761 1686 1329 47 -1 5 1 6 1 1 1 761 1691 160 40 96.304131 porations 1 6 1 1 2 939 1691 112 32 96.676147 which5 1 6 1 1 3 1068 1702 80 31 96.769585 may5 1 6 1 1 4 1165 1691 100 32 96.764084 affects 1 6 1 1 5 1283 1689 209 44 96.463196 compliance5 1 6 1 1 6 1508 1689 208 42 96.961746 obligations5 1 6 1 1 7 1735 1688 133 42 96.794914 arising5 1 6 1 1 8 1885 1690 61 29 96.460953 outs 1 6 1 1 9 1964 1687 38 32 96.963600 of5 1 6 1 1 10 2019 1686 71 33 96.738449 this4 1 6 1 2 0 763 1741 109 32 -1 5 1 6 1 2 1 763 1741 109 32 95.378426 order.3 1 6 2 0 0 762 1787 1328 98 -1 4 1 6 2 1 0 805 1787 1285 46 -1 5 1 6 2 1 1 805 1791 37 32 86.933220 It5 1 6 2 1 2 855 1792 29 32 86.933220 is5 1 6 2 1 3 899 1791 140 42 96.376839 furthers 1 6 2 1 4 1052 1791 155 42 96.944374 ordered,5 1 6 2 1 5 1220 1791 93 33 96.857933 That5 1 6 2 1 6 1327 1791 59 32 96.673332 thes 1 6 2 1 7 1402 1791 205 41 96.574791 respondents 1 6 2 1 8 1621 1788 238 42 96.574791 corporations5 1 6 2 1 9 1873 1788 88 32 93.204414 shall5 1 6 2 1 10 1978 1782 112 37 93.112503 forth-4 1 6 2 2 0 762 1839 1327 46 -1 5 1 6 2 2 1 762 1842 84 32 96.925255 with5 1 6 2 2 2 862 1842 183 33 96.146225 distributes 1 6 2 2 3 1059 1854 20 20 96.906136 a5 1 6 2 2 4 1093 1853 88 32 96.737869 copy5 1 6 2 2 5 1195 1843 40 32 96.415535 of5 1 6 2 2 6 1249 1843 70 32 96.839844 this5 1 6 2 2 7 1333 1842 102 33 96.385437 orders 1 6 2 2 8 1449 1845 36 29 96.163391 to5 1 6 2 2 9 1501 1842 82 32 96.724968 each5 1 6 2 2 10 1598 1841 39 32 96.535645 of5 1 6 2 2 11 1652 1841 46 31 96.879700 its5 1 6 2 2 12 1714 1839 183 43 96.661285 operating5 1 6 2 2 13 1912 1832 177 40 96.677223 divisions.3 1 6 3 0 0 760 1889 1330 198 -1 4 1 6 3 1 0 802 1889 1288 46 -1 5 1 6 3 1 1 802 1893 38 31 94.241432 It5 1 6 3 1 2 855 1893 29 32 94.241432 is5 1 6 3 1 3 901 1893 140 42 96.460426 furthers 1 6 3 1 4 1059 1893 153 41 95.867439 ordered,5 1 6 3 1 5 1230 1893 93 32 95.867439 That5 1 6 3 1 6 1341 1893 59 32 96.540749 thes 1 6 3 1 7 1418 1892 223 42 96.505264 respondents5 1 6 3 1 8 1660 1891 118 33 96.095444 herein5 1 6 3 1 9 1797 1890 89 33 95.254631 shall5 1 6 3 1 10 1906 1889 122 32 96.322113 within5 1 6 3 1 11 2048 1890 42 31 96.322113 604 1 6 3 2 0 766 1941 1323 43 -1 5 1 6 3 2 1 766 1943 85 41 96.766541 days5 1 6 3 2 2 863 1943 95 32 96.486923 after5 1 6 3 2 3 972 1943 127 32 96.778717 services 1 6 3 2 4 1113 1953 93 31 96.302315 upon5 1 6 3 2 5 1219 1944 94 31 96.881790 them5 1 6 3 2 6 1327 1943 38 32 96.014038 of5 1 6 3 2 7 1380 1942 69 33 97.015114 this5 1 6 3 2 8 1463 1943 111 40 96.976402 order,5 1 6 3 2 9 1587 1941 57 33 96.454124 files 1 6 3 2 10 1655 1941 87 33 67.092964 with5 1 6 3 2 11 1754 1941 60 32 96.818039 thes 1 6 3 2 12 1827 1939 226 35 92.168747 Commissions 1 6 3 2 13 2069 1950 20 21 96.983109 a4 1 6 3 3 0 763 1990 1327 47 -1 5 1 6 3 3 1 763 1998 125 38 96.967064 report,5 1 6 3 3 2 900 1994 35 32 96.967064 in5 1 6 3 3 3 947 1994 152 43 96.568787 writing,5 1 6 3 3 4 1109 1995 129 42 96.568787 settings 1 6 3 3 5 1249 1994 115 33 96.954369 forth5 1 6 3 3 6 1356 2005 37 21 96.565445 in5 1 6 3 3 7 1405 1993 105 34 96.565445 details 1 6 3 3 8 1521 1994 59 32 96.715111 thes 1 6 3 3 9 1590 2004 143 22 96.266045 manners 1 6 3 3 10 1744 1992 69 33 96.686630 ands 1 6 3 3 11 1825 1991 113 33 96.237114 forms 1 6 3 3 12 1930 2002 35 21 96.928436 in5 1 6 3 3 13 1979 1990 111 33 96.588097 which4 1 6 3 4 0 760 2037 988 50 -1 5 1 6 3 4 1 760 2042 82 44 96.329224 they5 1 6 3 4 2 856 2045 87 32 95.888908 have5 1 6 3 4 3 958 2042 169 45 95.888908 complied5 1 6 3 4 4 1144 2045 85 32 96.905991 with5 1 6 3 4 5 1243 2045 70 32 96.988777 this5 1 6 3 4 6 1329 2045 110 32 96.421562 order.5 1 6 3 4 7 1746 2037 2 2 0.000000 .2 1 7 0 0 0 1240 2194 367 35 -1 3 1 7 1 0 0 1240 2194 367 35 -1 4 1 7 1 1 0 1240 2194 367 35 -1 5 1 7 1 1 1 1240 2197 47 32 94.587769 In5 1 7 1 1 2 1308 2208 71 21 55.861340 tees 1 7 1 1 3 1399 2194 146 35 86.926300 Marrer5 1 7 1 1 4 1567 2207 40 22 96.377525 or2 1 8 0 0 0 883 2286 1081 43 -1 3 1 8 1 0 0 883 2286 1081 43 -1 4 1 8 1 1 0 883 2286 1081 43 -1 5 1 8 1 1 1 883 2289 101 32 96.167015 THES 1 8 1 1 2 1007 2289 33 32 88.401520 J.5 1 8 1 1 3 1065 2289 40 32 88.401520 B.5 1 8 1 1 4 1129 2289 249 34 78.666412 WILLIAMS.5 1 8 1 1 5 1403 2289 249 40 92.517616 COMPANY,5 1 8 1 1 6 1676 2287 104 42 90.006638 INC.,5 1 8 1 1 7 1805 2287 62 32 95.231819 ET5 1 8 1 1 8 1890 2286 74 33 90.640205 AL.2 1 9 0 0 0 804 2369 1242 89 -1 3 1 9 1 0 0 804 2369 1242 89 -1 4 1 9 1 1 0 804 2369 1242 47 -1 5 1 9 1 1 1 804 2384 156 25 96.285889 CONSENTS 1 9 1 1 2 976 2384 112 31 93.277817 ORDER,5 1 9 1 1 3 1105 2384 82 32 85.093437 ETC.,5 1 9 1 1 4 1204 2385 42 21 95.752075 IN5 1 9 1 1 5 1262 2385 127 22 95.752075 REGARDS 1 9 1 1 6 1405 2385 41 21 96.989571 TO5 1 9 1 1 7 1462 2384 73 22 96.370956 THES 1 9 1 1 8 1551 2383 148 22 94.550179 ALLEGED5 1 9 1 1 9 1716 2369 184 35 96.351013 VIOLATIONS 1 9 1 1 10 1918 2382 43 21 96.800224 OF5 1 9 1 1 11 1978 2382 68 21 96.877281 THEA 1 9 1 2 0 1123 2434 601 24 -1 5 1 9 1 2 1 1123 2435 149 22 96.184540 FEDERAL5 1 9 1 2 2 1292 2435 106 22 96.184479 TRADES 1 9 1 2 3 1419 2435 220 23 95.888443 COMMISSIONS 1 9 1 2 4 1658 2434 66 23 96.774139 ACT2 1 10 0 0 0 887 2506 1079 49 -1 3 1 10 1 0 0 887 2506 1079 49 -1 4 1 10 1 1 0 887 2506 1079 49 -1 5 1 10 1 1 1 887 2511 113 25 96.409691 Dockets 1 10 1 1 2 1019 2506 117 49 88.510422 C-2266.5 1 10 1 1 3 1158 2512 171 27 95.367920 Complaint,5 1 10 1 1 4 1351 2512 69 27 95.618767 Aug.5 1 10 1 1 5 1440 2512 23 27 79.690857 38,5 1 10 1 1 6 1482 2511 251 26 90.943520 1972—Decision,5 1 10 1 1 7 1753 2509 73 27 95.413422 Aug.5 1 10 1 1 8 1846 2509 23 28 87.156441 8,5 1 10 1 1 9 1887 2509 79 24 95.250610 1972.2 1 11 0 0 0 761 2585 1329 204 -1 3 1 11 1 0 0 761 2585 1329 201 -1 4 1 11 1 1 0 761 2585 1329 32 -1 5 1 11 1 1 1 761 2586 127 25 96.499535 Consents 1 11 1 1 2 904 2588 86 24 96.832870 orders 1 11 1 1 3 1005 2587 152 30 96.364594 requiring5 1 11 1 1 4 1172 2595 18 17 96.936974 a5 1 11 1 1 5 1207 2587 71 25 94.574852 News 1 11 1 1 6 1295 2588 79 24 96.767067 Yorks 1 11 1 1 7 1391 2587 67 30 96.804718 City5 1 11 1 1 8 1476 2588 87 24 95.916885 sellers 1 11 1 1 9 1580 2587 59 25 96.686783 ands 1 11 1 1 10 1656 2586 177 25 95.673592 distributors 1 11 1 1 11 1850 2586 31 24 95.876305 of5 1 11 1 1 12 1897 2592 18 18 96.701797 a5 1 11 1 1 13 1933 2585 157 26 96.701797 stimulant4 1 11 1 2 0 830 2628 1260 37 -1 5 1 11 1 2 1 830 2630 69 35 96.518356 types 1 11 1 2 2 913 2630 131 29 96.151802 product,5 1 11 1 2 3 1059 2631 59 23 96.151802 ands 1 11 1 2 4 1132 2631 41 24 96.075638 its5 1 11 1 2 5 1188 2630 182 29 96.834740 advertising5 1 11 1 2 6 1383 2631 143 28 96.674393 agencies,5 1 11 1 2 7 1543 2635 106 24 96.699043 among5 1 11 1 2 8 1663 2629 84 24 96.464928 others 1 11 1 2 9 1762 2628 109 29 96.032784 things,5 1 11 1 2 10 1888 2628 29 24 96.762489 to5 1 11 1 2 11 1933 2633 84 20 93.302475 ceases 1 11 1 2 12 2032 2628 58 24 93.033928 dis-4 1 11 1 3 0 831 2670 1258 31 -1 5 1 11 1 3 1 831 2671 178 30 91.601967 seminating5 1 11 1 3 2 1023 2678 55 23 96.013741 any5 1 11 1 3 3 1084 2673 237 28 96.110176 advertisements 1 11 1 3 4 1332 2672 96 25 96.394173 which5 1 11 1 3 5 1442 2672 165 29 96.187088 represents5 1 11 1 3 6 1621 2671 49 30 96.476570 thes 1 11 1 3 7 1684 2677 52 18 96.541740 uses 1 11 1 3 8 1749 2670 31 24 96.447601 of5 1 11 1 3 9 1792 2676 61 23 96.451576 any5 1 11 1 3 10 1865 2671 71 24 96.451576 such5 1 11 1 3 11 1951 2671 138 28 95.898483 products4 1 11 1 4 0 831 2707 1259 37 -1 5 1 11 1 4 1 831 2713 61 25 96.018112 will5 1 11 1 4 2 910 2714 79 25 92.904312 solve5 1 11 1 4 3 1005 2720 41 19 93.277283 an5 1 11 1 4 4 1064 2714 190 26 91.292130 individual’s5 1 11 1 4 5 1273 2715 110 29 96.598412 sexual,5 1 11 1 4 6 1403 2710 129 33 96.657242 marital,5 1 11 1 4 7 1558 2720 28 19 93.504745 or5 1 11 1 4 8 1596 2710 191 33 95.908951 personality5 1 11 1 4 9 1805 2707 169 35 93.148140 problems;5 1 11 1 4 10 1989 2713 101 24 92.547508 adver-4 1 11 1 5 0 831 2743 1259 46 -1 5 1 11 1 5 1 831 2756 91 29 91.868340 tising5 1 11 1 5 2 933 2763 34 18 96.233826 as5 1 11 1 5 3 978 2763 19 18 96.662094 a5 1 11 1 5 4 1009 2757 163 29 96.083420 stimulant,5 1 11 1 5 5 1186 2763 58 23 96.529022 any5 1 11 1 5 6 1257 2757 123 29 95.879051 products 1 11 1 5 7 1392 2757 96 25 96.947136 which5 1 11 1 5 8 1501 2756 134 25 96.650818 contains5 1 11 1 5 9 1648 2755 125 26 96.307014 caffeine5 1 11 1 5 10 1786 2755 100 24 96.401337 unless5 1 11 1 5 11 1900 2755 52 24 96.488945 thes 1 11 1 5 12 1963 2743 127 46 86.619194 caffeine “J.B? SWEELIAMS -CO:, INC., ET AL. 239 238 - Complaint .

- content is. expressed::in terms of the number of average cups of: ordinary coffee, clearly and conspicuously, in immediate conjunction with a statement of active ingredients; representing any non- prescription drug. as new when : such “product has been distributed for six < months or more. Comprar ‘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 J. B. Williams Company, Inc., a corporation, Della Femina, Travisano & Partners, Ine., 2 corporation, and Parkson. Advertising Agency, Inc.; a.corpora- . tion, hereinafter referred to as-respondents, have -violated: the provisions of said Act, and it appearing to the: Commission that. a proceeding by it im_respect:.thereof would be in the public. interest, liereby issues its complaint stating its charges in that respect. as follows:

Paracrary 1. Respondent the J. B. Williams Company, 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 office and place . of business located at 767 Fifth. ‘Avenue i in the city of New York, State of New. York.

Respondent Della Femina, Travisano & Partners, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal office and place of business located at 625 Madison Avenue in the city of New York, State of New York.

Respondent Parkson Advertising Agency, 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 office and place of business located at 767 Fifth Avenue j in the city of New York, State of New York.

Par. 2. Respondent the J. B. Williams Company, Inc., is now, and for some time last past has been engaged in the sale and distribution of a stimulant type product designated “Vivarin” which falls within the classification of “drug,” as said term is defined in the Federal Trade Commission Act. Each tablet of said product consists of 200 mg of caffeine alkaloid and 150 mg of dextrose in a base containing various excipients. The dosage recommended on the product package is 1 tablet every 4 hours as needed.

Respondent Della Femina, Travisano & Partners, Inc., was the advertising agency of the J. B. Williams Company, Inc., that prepared and created the print advertisement referred to herein to promote the sale of the said “Vivarin.”

240 FEDERAL.: TRADE COMMISSION *DECISIONS Complaint 81 F.TC. .

_ Respondent Parkson Advertising: Agency, Inc:; is now and for some time last past has been the advertising agency of the J.‘B: Williams Company, Inc. arid now and for some time last past has prepared the television commercials, and placed for publication, and caused the dissemination of advertising material, including but not limited to the advertising referred to herein, to promote the sale of the said “Vivarin? 8 60 Pee Ds et ss ter et! Par. 3. Respondent the J.’ B.’ Williams Company; ‘Ine.; causes:the said product when sold, to be transported from ‘its place of businéss in one State of the United ‘States to purchasers located in various other States of the United States and in the District of Columbia: Respond: ent the J. B. Williams Compaiy, Ine.) maintains, and at all times mentioned herein has maintained, a course of trade in said product’in commerceé, as “commerce” is defined in the Federal Trade Commission . Act. The’ volume: of -business in such commerce has’ been and::is substantial. iG Par. 4, In the course and conduct of their-said businesses, respondents' the J. B. Williams Company, Inc:,’ and .Parkson Advertising Agency, Inc., have disseminated, ‘and ‘caused “the dissemination ‘of; certain advertisements concerning the. said “Vivarin” by the United States mails and by various means in commerce, as “commerce” is defined in the Federal Trade Commission Act, including but not limited to, advertisements inserted in magazines and other advertising media, and by means of television broadcasts transmitted by television stations located in various States of the United States, and in the District of Columbia, having sufficient power to carry such broadcasts across state lines, for the purpose of inducing and which were likely to induce, directly or indirectly, the purchase of said product; and have disseminated, and caused the dissemination of, advertisements concerning said product by various means, including but not limited to the aforesaid media, for the purpose of inducing and which were likely to induce, directly or indirectly, the purchase of said product in commerce as “commerce” is defined in the Federal Trade Commission Act. ° _ Par. 5. Typical of the advertisements and the statements and representations set forth therein, disseminated as aforesaid, but not all inclusive thereof, are the following :

242 FEDERAL TRADE COMMISSION:DECISIONS Complaint; SL FTC. | “Vivarin” will make one more exciting .and.attractive,,improve one’s personality, marriage and sex life, and will solve marital and. other personal problems.. :

sentations. set, fc rth i in Pa: graphs Five and Six hereof were, and ire false, misleading and dece ‘ive. : ;

Par. 8. Further, certain of said advertisements describe Vivarin’s as “new” and/or “brand new.” The use of the terms “new” and/or “brand new” to describe a stimulant product containing as its stimulative ingredient caffeine, an ingredient previously widely available in many forms, including tablet form and such familiar beverages as coffee, was and is false, misleading and deceptive. Par. 9. The use by respondents of the aforesaid false, misleading and deceptive statements, representations, and practices, and the dissemination of the aforesaid “false advertisements” by respondents the J. B. Williams Company, Inc., and Parkson Advertising Agency has had, and now has, the capacity and tendency to mislead members of the consuming public into erroneous and mistaken beliefs about the nature and effeetiveness of said products and that said statements and representations were, and are true, and into the purchase of substantial quantities of the product of respondent the J. B. Williams Company, Inc., by reason of said erroneous and mistaken beliefs. Par. 10. The aforesaid acts and practices of respondents, including the dissemination of “false advertisements” by respondents the J. B. Williams Company, Inc., and Parkson Advertising Agency, Inc., as herein alleged, were, and are, all to the prejudice and injury of the public and constituted and now constitute, unfair and deceptive acts and practices in commerce in violation of Sections 5 and 12 of the Federal Trade Commission Act.

_ Ale, ,B. WILLIAMS CO, INC.,-ET AL. 243 238 Decision and Order Decision. AND ORDER The Commission having heretofore determined to issue its complaint charging the respondents named in the 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, 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 1 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 sand other provisions as required by the Commission’s rules; and * .

The Commission abing’ considered the agreement and having accepted same, and the agreement. containing consent order having thereupon been placed on the public record for a period of thirty (30) days, now in further conformity with the procedure prescribed in Section 2.34(b) of its rules, the Commission hereby issues its complaint in the form contemplated by said agreement, makes the following juris-. dictional findings, and enters the following order: 1. Respondent the J. B. Williams Company, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of t the State of New York, with its principal office and place of business located at 767 Fifth Avenue i in the city of New York, State of New York.

Respondent Della Femina, Travisano & Partners, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal office and place of business located at 625 Madison Avenue in the city of New York, State of New York.

Respondent Parkson Advertising Agency, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of t the State of New York, with its principal office and place of business located at 767 Fifth Avenue 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 respondents, and the proceeding is in the public interest.

244 - FEDERAL TRADE COMMISSION DECISIONS Dédision’ atid Order 81 FTC.

ORDER2 1 2 0 0 0 1652 701 106 40 -1 3 1 2 1 0 0 1652 701 106 40 -1 4 1 2 1 1 0 1652 701 106 40 -1 5 1 2 1 1 1 1652 701 106 40 95.000000 2 1 3 0 0 0 787 723 1340 1558 -1 3 1 3 1 0 0 789 723 1339 1558 -1 4 1 3 1 1 0 823 723 1294 98 -1 5 1 3 1 1 1 823 752 31 54 66.616035 I5 1 3 1 1 2 854 759 16 46 89.341263 t5 1 3 1 1 3 881 767 31 50 89.997353 is5 1 3 1 1 4 921 746 162 70 93.744919 ordered,5 1 3 1 1 5 1094 745 95 58 93.653458 That5 1 3 1 1 6 1168 731 266 90 2.300873 respondents,5 1 3 1 1 7 1441 740 72 71 91.963615 ‘thes 1 3 1 1 8 1525 764 38 49 68.972389 J.5 1 3 1 1 9 1562 759 57 48 38.910820 B.5 1 3 1 1 10 1626 737 189 73 87.180832 Williams5 1 3 1 1 11 1820 729 192 79 81.812714 Company,5 1 3 1 1 12 2027 723 11 71 81.812714 15 1 3 1 1 13 2029 740 88 66 74.443306 Inc,4 1 3 1 2 0 790 804 1325 71 -1 5 1 3 1 2 1 790 835 20 22 92.372826 a5 1 3 1 2 2 820 811 223 64 21.316376 corporation,5 1 3 1 2 3 1050 848 11 19 21.316376 .5 1 3 1 2 4 1052 821 110 34 78.330482 Della5 1 3 1 2 5 1172 817 153 54 96.956345 Femina,5 1 3 1 2 6 1335 817 193 52 90.091698 Travisano5 1 3 1 2 7 1537 805 28 63 92.927902 &5 1 3 1 2 8 1571 804 182 64 96.567551 Partners,5 1 3 1 2 9 1759 811 83 49 87.580963 Inc.,5 1 3 1 2 10 1859 827 15 32 96.246307 a5 1 3 1 2 11 1885 815 230 45 96.246307 corporation,4 1 3 1 3 0 789 842 1328 80 -1 5 1 3 1 3 1 789 875 71 40 93.259644 ands 1 3 1 3 2 873 869 166 52 83.993782 Parkson.5 1 3 1 3 3 1039 865 232 57 96.114937 Advertising5 1 3 1 3 4 1281 858 162 64 16.806068 Agency,5 1 3 1 3 5 1446 860 88 54 62.590569 Ine.,5 1 3 1 3 6 1548 865 22 46 96.085602 a5 1 3 1 3 7 1573 857 238 60 40.759853 ‘corporation,5 1 3 1 3 8 1825 842 90 60 96.904388 theirs 1 3 1 3 9 1930 875 187 36 96.785217 successors4 1 3 1 4 0 790 891 1328 77 -1 5 1 3 1 4 1 790 919 81 38 96.803635 ands 1 3 1 4 2 878 917 134 50 96.562317 assigns5 1 3 1 4 3 1019 918 81 39 96.604218 ands 1 3 1 4 4 1114 918 238 48 95.894936 respondents’5 1 3 1 4 5 1372 891 295 77 96.599426 representatives,5 1 3 1 4 6 1687 920 120 44 96.494476 agents5 1 3 1 4 7 1827 909 78 49 90.882927 and:5 1 3 1 4 8 1914 907 204 52 95.863289 employees,4 1 3 1 5 0 787 966 1330 70 -1 5 1 3 1 5 1 787 971 158 65 94.394386 directly5 1 3 1 5 2 961 986 39 31 95.728424 or5 1 3 1 5 3 1021 975 169 49 3.016319 through.5 1 3 1 5 4 1201 984 72 34 3.016319 any.5 1 3 1 5 5 1283 971 252 50 26.874542 corporation,5 1 3 1 5 6 1526 967 11 61 26.874542 ;5 1 3 1 5 7 1541 968 201 52 82.924797 subsidiary,5 1 3 1 5 8 1777 960 151 47 93.926208 divisions 1 3 1 5 9 1954 979 40 22 93.926208 or5 1 3 1 5 10 2017 966 100 45 94.991409 other4 1 3 1 6 0 791 1007 1327 65 -1 5 1 3 1 6 1 791 1021 154 54 76.607552 device,5 1 3 1 6 2 936 1027 39 31 76.607552 in5 1 3 1 6 3 993 1018 201 49 95.347404 connections 1 3 1 6 4 1213 1014 85 48 95.347404 with5 1 3 1 6 5 1316 1018 60 46 96.975525 thes 1 3 1 6 6 1395 1015 224 51 96.331635 advertising,5 1 3 1 6 7 1636 1019 151 48 96.331635 offerings 1 3 1 6 8 1807 1012 58 40 96.941978 for5 1 3 1 6 9 1885 1016 82 44 96.708115 sale,5 1 3 1 6 10 1987 1007 69 59 94.777359 sales 1 3 1 6 11 2077 1028 41 30 96.954712 or4 1 3 1 7 0 791 1060 1326 68 -1 5 1 3 1 7 1 791 1064 236 56 58.782486 distribution’5 1 3 1 7 2 1034 1076 39 37 96.811401 of5 1 3 1 7 3 1086 1074 63 39 96.645515 thes 1 3 1 7 4 1166 1071 157 57 83.064087 product.5 1 3 1 7 5 1331 1060 194 64 76.288452 designated5 1 3 1 7 6 1550 1063 197 50 90.542061 “Vivarin”5 1 3 1 7 7 1755 1080 150 32 91.752380 or-any5 1 3 1 7 8 1904 1060 106 45 69.467255 other.5 1 3 1 7 9 2021 1059 96 42 75.533752 stim-4 1 3 1 8 0 792 1109 1325 67 -1 5 1 3 1 8 1 792 1118 103 48 16.002640 ulant5 1 3 1 8 2 907 1116 93 57 96.307365 drugs 1 3 1 8 3 1010 1120 168 56 62.910408 products 1 3 1 8 4 1182 1136 42 31 95.252769 or.5 1 3 1 8 5 1236 1126 77 48 57.329163 any5 1 3 1 8 6 1327 1120 185 49 50.257473 calmative5 1 3 1 8 7 1525 1111 103 60 84.686111 drug.5 1 3 1 8 8 1634 1114 166 55 61.097065 product,,5 1 3 1 8 9 1811 1109 181 58 93.996475 including5 1 3 1 8 10 2011 1119 106 42 91.727783 sleep-4 1 3 1 9 0 791 1164 984 67 -1 5 1 3 1 9 1 791 1176 169 55 96.605980 inducers,5 1 3 1 9 2 982 1177 45 32 96.986061 do5 1 3 1 9 3 1049 1164 191 55 85.092552 forthwith5 1 3 1 9 4 1266 1168 101 56 86.949036 cease:5 1 3 1 9 5 1365 1165 86 53 92.626396 “ands 1 3 1 9 6 1461 1166 118 48 91.274162 ‘desist5 1 3 1 9 7 1600 1167 109 43 9.328674 from:4 1 3 1 10 0 914 1191 1205 100 -1 5 1 3 1 10 1 914 1230 33 31 50.037571 1.5 1 3 1 10 2 969 1217 281 58 93.035431 Disseminating5 1 3 1 10 3 1256 1237 41 31 94.623344 or5 1 3 1 10 4 1299 1224 152 51 94.623344 causing5 1 3 1 10 5 1456 1220 48 53 71.239143 to,5 1 3 1 10 6 1507 1223 55 42 71.239143 be,5 1 3 1 10 7 1562 1209 246 62 92.181847 disseminated5 1 3 1 10 8 1820 1210 48 58 86.109619 by.5 1 3 1 10 9 1878 1208 118 83 95.094429 means5 1 3 1 10 10 2006 1191 39 62 96.767502 of5 1 3 1 10 11 2052 1196 67 90 96.529594 thea 1 3 1 11 0 855 1269 1263 59 -1 5 1 3 1 11 1 855 1274 154 49 26.877579 United States mails or by any means in commerce, as “commerce” is defined in the-Federal Trade Commission Act, any advertisement which represents directly or by, implication that: (a) The. use of. any, such. product; will solve an individual’s marital, sexual « or personality. problems. (b) The use of. any. -such - pi duct, will improve: an individual’s personality. or make. it more exciting or will improve an individual’s physical: appearance, marriage or sex life. Provided however, That in advertisements of sleep inducers this paragraph shall not prohibit representations that, by providing the user with a good night’s sleep, such products can help the user to feel rested and look better, This paragraph shall not preclude the Commission from challenging these representations as unlawful in a future proceeding under Section 5(b) of the Federal Trade Commission Act. 2. Disseminating, or causing the dissemination of, any advertisement by any means, for the purpose of inducing, or which is likely to induce, directly or indirectly, the purchase of any such product, in commerce, as “commerce” is defined in the Federal Trade Commission Act, which contains any of the representations prohibited in Paragraph 1 above.

Wr i It is further ordered, That respondents, the J. B. Williams Company, Inc., a corporation, Della Femina, Travisano & Partners, Inc., a corporation, and Parkson Advertising Agency, Inc., a corporation, their successors and assigns and respondents’ officers, representatives, agents and employees, directly or through any corporation, subsidiary, division or other device, do forthwith cease and desist from: 1. Advertising, as a stimulant, “Vivarin” or any other drug product which contains caffeine ‘unless the caffeine content, ex- J,.,.By, WILLIAMS, 00. INC. BT Ale: 245, 238. Decision and Order pressed i in terms of the number. of average size cups of ordinary coffee, is clearly. and conspicuously disclosed with a statement in immediate conjunction therewith that, caffeine is the primary active ingredient, or one of the primary active ingredients if such product contains more than one active ingredient. 9. Disseminating, or causing the dissemination of, any advertisement by means of the United States mails or by any means in commerce, as “commerce” is defined in the Federal Trade Commission Act, which contains statements which are inconsistent with, negate or contradict the affirmative disclosure required by Paragraph 1 above, or which i in any way obscures t the meaning of such disclosure.

rr It is further ordered, That respondents, the J.B. Williams Company, Inc., a corporation, and Parkson Advertising Agency, Inc., acorporation, their. successors and-assigns and respondents’ officers, agents, representatives and employees directly or through any corporation, subsidiary, division or other device, do forthwith cease and desist from representing, directly or by implication, that any nonprescription drug product is-new, has new ingredients or is new in its therapeutic effectiveness when such product has been distributed for six months or more or when it is substantially similar in composition and therapeutic effectiveness to another product advertised for the same therapeutic effect which has been distributed for at least six months. (For the purpose of this provision “distributed” shall not include distribution in areas representing not more than 15% of the population.) Provided however, Respondents may represent that any such product has not been previously sold, advertised or manufactured by respondent the J. B. Williams Company, Inc., if such is the case. IV It is further ordered, That respondents shall forthwith distribute a copy of this order to each of their operating divisions. It-is further ordered, That respondents notify the Commission at least thirty (80) days prior to any proposed change in the corporate ‘respondents such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or any other change in the corporation which may affect compliance obligations arising out of the order. 246 | -PEDERAL ‘TRADE COMMISSION DECISIONS Gomiplaint 81 EEC.

Ttis further ordered, That respondents shall, within sixty (60) days after service of this order upon’ ‘them, éach file with the Commission a réport i in writing setting’ forth i in detail then manner and form of their compliance with this order. ‘