Encyclopaedia Britannica, Inc

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IN THE MA TI'ER OF ENCYCLOPAEDIA BRITANNICA, INC., ET AL.

MODIFYING ORDER IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 8908. Decision, March 9. 1976-Modifying Order, Oct. 28, 1980 This order modjfies Paragraphs II(A), (B), (D) and (E) of the original Commission order issued March 9, 1976 (41 FH 19301, 87 F. G 421) against respondents. The modifications permit respondents, for a one-year period, to use alternative means of making prescribed disclosures regarding their sales solicitation activities. This action affords respondents further opportunity to propose provisions that wil lessen any undue financial impact on them and to demonstrate to the Commission that these provisions wil effectively communicate to prospective customers, the disclosures required by the previous order, ORDER MODIFYING CEASE AND DESIST ORDER On March 9, 1976, the Commission issued an Order in this docket against Encyclopaedia Britannica, Inc., a corporation, and Britanni- 'a Home Library Services, Inc., a corporation. The Order includes, nter alia, provisions (Paragraphs II(A) and II(B)) requiring responlent, Encyclopaedia Britannica, Inc., to disclose in certain advertisng and in a specified manner that persons who reply as requested lay be contacted by a salesperson for the purpose of selling ,spondent' s products. Furthermore, the Order (Paragraphs II(D) "d lice)) requires that when a sales representative of the responmt visits the home or place of business of potential purchasers of spondent' s products, such representatives shall, at the time :.mission is sought, present a ;) by 5 card which identifies the sales presentative and discloses that the purpose of the visit is to sell ;pondent' s products.

)n August 2, 1979, the United States Court of Appeals for the renth Circuit affrmed and enforced the Commission Order in this ,keto On March 17, 1980, the Supreme Court of the United States tied respondents' petition for certiorari. Accordingly, pursuant to tion 5(g)(3) of the Federal Trade Commission Act, as amended Order ofthe Commission in this docket is now final. uring the time their certiorari petition was pending in the reme Court, respondents initiated discussion with the staff of the mission concerning possible modifications of Paragraphs II(A), , II(D) and II(E) of the Commission s Order. On March 18, 1980, graphs II(A), (B), (D), and (E) of the Commission s Order were __ .IH...

778 Modifying Order stayed until further notice in order to permit the Commission to consider proposed modifications. On March 26, 1980, respondents fied their "Request to Reopen Proceedings and Modify Order. Respondents fied a memorandum in support of this request on May , 1980. In their petition and supporting memorandum, respondents asserted that, without such modifications, they would be placed at a competitive disadvantage, resulting in substantial financial harm to their business operations. Respondents also asserted that they have adopted in the last several years new sales procedures, including disclosures in advertising and in business callng cards presented by salespersons at the door of prospective customers, which effectively disclose to prospective customers the direct sales solicitation purpose and nature of such sales activities.

Pursuant to Section 2.51 of its Rules of Practice, the Commission invited public comment on respondents' petition to modify the Order. Having considered respondents petition and supporting memorandum, and the comments received, the Commission has determined that it would be appropriate to provide respondents further opportunity to (1) propose provisions that would lessen any undue financial impact on them and (2) present evidence demonstrating that such provisions will effectively communicate the information required by the original Order. Furthermore, with respect to the advertising disclosures required by Paragraphs Il(A) and Il(B), the Commission has determined that, without necessity of further evidence, certain modifications of the advertising disclosures can be ordered which wil communicate effectively while allowing respondents alternative methods of making the disclosures. Therefore. it is ordered. That Paragraphs Il(A), (B), (D) and (E) of the Order issued in this docket on March 9, 1976 shall be modifed as follows:

Paragraph Il(A) shall read:

A. Disseminating or causing to be disseminated any advertisement or promotion al material which solicits participation in any contest, drawing or sweepstakes, 0 solicits any response to any offer of merchandise, service or information, unless such solicitation clearly and conspicuously discloses that a person who replies a requested may be contacted directly by a salesperson for the purpose of sellin respondent' s products, using one of the fonowing disclosures: IMPORTANT: This card wil let you know of my interest and enable your (locatic designation if appropriate) sales representative to ( contact me at home) (information) call or visit me with ( details) (contact me in person) ( facts Modifying Order 96 F.

on how I may (purchase) (applicable productj. ( buy) IMPORTANT; Returning this card allows me to have your (location designation, if appropriate) sales representative ( contact me at home) (information) call or visit me with ( details) (contact me in person) ( facts on how I may (purchase) (applicable product). ( buy) IMPORTANT; Returning this card will enable your (location designation, if appropriatel sales representative to ( contact me at home) (information) call or visit me with ( details) (contact me in person) facts ) on how I may (purchase) (applicable product). ( buy) Upon prior approval in writing of the Assistant Director of the Division of Compliance of the Bureau of Consumer Protection, or his designee, respondent may use any other disclosure that clearly and conspicuously discloses that a person who replies requested may be contacted directly by a salesperson for the purpose of sellng respondent' s products. A request for approval shall be in writing and shall be deemed granted if not disapproved within 30 days after receipt by the Assistant Director of the Division of Compliance of the Bureau of Consumer Protection. Paragraph lI(B) shall read:

B. Providing any return card, coupon or other device which is used to respond to any advertisement or promotional material covered by Paragraph Il(A) above, unless one of the disclosures set forth in such Paragraph, or a disclosure approved by the Assistant Director of the Division of Compliance or his designee as satisfying the requirements of Paragraph II(A), clearly and conspicuously appears in immediate proximity to the space provided for a signature or other identification of the responding party. During the one (1) year period from the date this Order become final, respondent may submit a request to reopen these proceedings pursuant to 3ection 2.51 of the Commission s Rules of Practice. Such petition shall contain nformation demonstrating that any proposed modifications of Paragraphs II(A) and I(B) will clearly and conspicuously disclose to potential purchasers of respondent' Iroducts that a person who replies as requested may be contacted directly by a ales person for the purpose of selling respondent' s products. The foregoing sentence hall not be construed as a limitation on respondent's submission of additional lformation regarding the request to reopen, including information relating to the nancial impact of Paragraphs Il(A) and II(B) on respondent. Should a request be Ihmitted, the Commission shall determine whether to reopen these proceedings within one hundred-twenty (120) days of receipt of such request. The procedure to 'open the proceedings as set forth herein is in addition to, and not in lieu of, any .., .. ., =J. V"V.UV.. ""-'""H """u uu.- 778 Modifying Order other procedure (or time period with respect to such procedure) permitted by law or the Commission s Rules of Practice.

3. Paragraph II(D) shall be amended by adding the following proviso at the end thereof:

Provided, however that for one (1) year from the date this Order becomes final respondent may, in lieu of the card required by this Paragraph of the Order substitute a business card of at least 2 inches by 3-1/2 inches containing only the following information:

(1) the name of the corporation (2) the name of the salesperson (3) the term "sales representative (4) An address and telephone number at which the corporation or salesperson may be contacted (5) the product or the corporation Ie-go or identifying mark. During this one (1) year period, respondent shall comply in all other respects with the requirements of Paragraph II(D) above. Prior to the expiration of the aforesaid time period, respondent may submit a request to reopen these proceedings pursuant to Section 2. 51 of the Commission s Rules of Practice. Such petition shall contain information demonstrating that the business card required in Paragraph II(D), as modified above, is effective in communicating to potential purchasers, prior to the entry into their homes or places of business by any of respondent's sales representatives, that the purpose of the sales representative s call is to solicit the sale of respondent' s products. The foregoing sentence shall not be construed as a limitation on respondent' s submission of additional information regarding the request to reopen including information on the financial impact of Paragraph II(D) on respondent. Should a request be submitted, the Commission shall determine whether to reopen these proceedings within one hundred-twenty (120) days of receipt of such request. Respondent may continue to use the business card, as described by this proviso, during the time that a request to reopen these proceedings pursuant to this Paragraph is pending, and, if such proceedings are reopened, until the Commission determination of the matter has become final. The procedure to reopen the proceedings as set forth herein is in addition to, and not in lieu of, any other procedure (or time period with respect to such procedure) permitted by law or the Commission s Rules of Practice. 4. Paragraph II(E) shall be amended by striking the words " direct each such person to read the information contained on such card." The amended Paragraph shall read:

E. Failing to give the card, required by Paragraph II(D) above, to each person and to provide each such person with an adequate opportunity to read the card before engaging any such person in any sales solicitation. It is further ordered, That the foregoing modifications shall become effective upon service of this Order. _.._ ._ , .. ........ .

H"'-' Modifying Order 96 F.

It is further ordered, That the stay issued on March 18, 1980 shan be vacated and Paragraphs Il(A), (B), (D) and (E), as modified by this Order, shan have fun force and effect upon service of this Order. Commissioner Pitofsky did not participate.

783 Complaint