In the Matter of the Complaint Against: DANCO, DANZIG, KINGS, KINGS ENTERPRISES, Post Office Box 21487, Post Office Box 21517 at Ft. Lauderdale, FL 33316 P.S. Docket No. 5/15 08/19/76 Grant, Quentin E.; Administrative Law Judge Thomas A. Ziebarth, Esq. Law Department United States Postal Service Washington, D. C., for Complainant Robert L. Beals, Esq. Ft. Lauderdale, Florida, for Respondents Before: Quentin E. Grant, Administrative Law Judge
This proceeding was initiated on May 27, 1976 with the filing of a complaint alleging that respondents, doing business under the names set forth in the caption hereof, are engaged in a scheme or device for obtaining money or property through the mails by means of false representations, in violation of 39 U.S.C. 3005.
Complainant alleges that respondents attract attention to said scheme by means of advertisements in response to which inquirers receive a circular inviting them to remit money to respondents for a home envelope stuffing kit. Complainant specifically alleges, referring to one of such circulars a copy of which is attached to the complaint, that by means of such circulars, respondents represent, directly or indirectly, in substance and effect, whether by affirmative statements, omissions or implication, that:
"(a) They are offering employment stuffing their circulars into envelopes and mailing them to any person who remits six dollars for a 'Beginners Kit';
"(b) The six-dollar charge for the 'Beginners Kit' is the only investment the homeworker will ever have to make;
"(c) Respondents' mailing program involves nothing other than a few hours work weekly at home stuffing and mailing circulars; and
"(d) The homeworker will earn a net profit of $250.00 per thousand circulars mailed, possibly more."
Finally, the complainant alleges that such representations are materially false as a matter of fact.
Respondents filed an answer to the complaint substantially denying the allegations thereof.
A hearing was held at Ft. Lauderdale, Florida at which both parties introduced evidence. Both parties have submitted proposed findings of fact and conclusions of law.
1. Respondents seek the remittance of money or property through the mails in two stages. In the first stage, by means of advertisements such as the following appearing in publications of general circulation, respondents ask interested persons to send a stamped, self-addressed envelope to one of the post office boxes specified:
"STUFF - MAIL Envelopes] $250 + profit per thousand possible. Offer - details - stamped addressed envelope: Danco - MST B 21517, Southside Station, FL. 33316." (CX-2c)
"AMAZING INCOME, proven moneymaker] Offer, details: Danzig Box 21517 A - NE Southside Station, FL. 33316." (CX-1a)
"$250.00 + PROFIT per thousand possible stuffing, mailing envelopes. Offer - details - stamped addressed envelope: KINGS - KST B 21487, Ft. Lauderdale, Florida 33316." (CX-3c)
"100% PROFIT sales circulars. Outstanding Earnings] Offer, Details: stamped, addressed envelope. Danco Box 21517 M-N Southside Station, FL 33316." (CX-2a)
"FANTASTIC PROFITS mailing our commission sales circulars] Offer, details: Stamped addressed envelope. Kings, Box 24487 K-NE, Ft. Lauderdale, FL 33316." (CX-3a)
"MAIL COMMISSION circulars distributing manuals] 100% profit] Offer: Stamped envelope, Kings - KNE, Box 21487, Ft. Lauderdale, FL 33316" (CX-3b)
2. In the second stage, persons responding to the advertisements are sent circulars. Persons responding to the DANZIG advertisement (CX-1a) were formerly sent a direct mail brochure offering an "instruction folio" on addressing envelopes at home or a "Directory" of firms offering homework. These items were priced at $3.00 each, or two for $5.00 (CX-1b). Mrs. Sheila Danzig testified, however, that the DANZIG promotion has been discontinued and that only a few inquiries in connection with that promotion are currently being received. Persons making such inquiries are now sent a copy of the blue circular in the DANCO "Mailer's Kit" (CX-2f). This circular is an advertisement for a booklet entitled "Cash in on News Clippings", and a directory of firms seeking homeworkers, each priced at $3.00.
Persons responding to the DANCO advertisements (CX-2a, 2b and 2c) are sent a one-page circular and a return envelope. This circular advertises a "Mailer's Kit" priced at $3.00 (CX-2d).
Persons responding to the KINGS advertisements (CX-3a, 3b and 3c) receive a one-page circular and a return envelope addressed to KINGS ENTERPRISES. This circular advertises mailing supplies consisting of "complete beginners kit of commission circulars, instructions and registration form" for $6.00 (CX-3d).
3. The representation that respondents offer employment stuffing and mailing circulars alleged in paragraph 3(a) of the complaint is found in the following wording appearing in the DANCO circular (CX-2d):
"CASH can be coming your way every day as a Danco Mailer *** MAILERS NEEDED *** We are currently expanding our mailing program and need people - like you - who can stuff and mail commission circulars for us."
The same representation is found in the following wording of the KINGS circular (CX-3d):
"MAIL FOR KINGS *** WE TREAT YOU ROYALLY *** We are currently expanding our mailing program and need people who can work a few hours weekly at home stuffing and mailing commission circulars.
The circular now being mailed to the few persons responding to the discontinued DANZIG advertisement, unlike the DANCO and KINGS circulars, contains wording clearly indicating that DANZIG is not making an offer of employment. Therefore, I find that DANZIG does not represent that it is offering employment.
4. The representation that the only investment the homeworker will have to make is the cost of the "Beginners Kit" or "Mailers Kit" is found in the statement in the Danco circular (CX-2d) that "NO FURTHER INVESTMENT IS REQUIRED" and in the KINGS circular (CX-3d) that "NO FURTHER INVESTMENT IS NEEDED."
5. The representation that respondents' mailing programs involve nothing more than a few hours work weekly at home stuffing and mailing circulars (Cplt. par. 3(c)) is found in the following wording of the DANCO circular (CX-2d):
"*** a few spare hours weekly *** stuff and mail commission circulars *** Work in the comfort of your home *** No experience is needed. No special skills required."
The representation is also found in the following wording of the KINGS circular (CX-3d):
"*** a few hours weekly at home stuffing and mailing commission circulars *** only a few hours weekly *** No experience is needed ***"
6. The representation that the homeworker will earn a net profit of $250.00 per thousand circulars possibly more (Complt par. 3(d)) is found in the statement in the DANCO circular (CX-2(d)) that "YOU CAN EARN PROFITS OF UP TO $250.00 PER 1,000 CIRCULARS, and MORE" and the statement in the KINGS circular (CX-3(d)) that "*** you should easily receive a net profit of $250.00 per 1000 circulars mailed. Possibly more."
7. Contrary to the representation found in Finding of Fact No. 3, supra, respondents do not employ mailers. Instead of having envelopes already stamped and addressed supplied to them by respondents as an ordinary reader might well understand, homeworkers discover on receipt of their kits, following payment of $3.00 or $6.00, that they must generate the stamped, addressed envelopes through their own efforts and expense.
8. Contrary to the representation found in Finding of Fact No. 4, supra, following payment for, and receipt of, their kits, homeworkers discovery that respondents recommend investment in classified advertising in local newspapers in order to reach an audience from which income may be derived. Respondents also suggest to purchasers of the kits a so-called "no investment" plan in which the homeworker may reach an audience by means of advertisements placed on bulletin boards in supermarkets and laundries. However, even this method which would appear to be ill-suited to producing income approaching the magnitude suggested by respondents' advertisements, involves expenditure of time, effort and expense to locate bulletin boards and to replace advertisements which have been removed.
Also, under both plans, homeworkers must pay respondents for additional copies of the circulars, or must pay for having the circular reproduced, when the initially furnished supply is exhausted. It is noted that respondents' literature suggests the seemingly impractical typing of additional circulars when needed.
9. It is possible that a homeworker might earn profits up to $250.00 as the ultimate result of mailing 1000 circulars (for which inquirers have sent $ .25 and a stamped envelope) but considering the investment probably required in advertising, obtaining additional circulars, etc., net profit in that amount could be attained only through sales of directories or instructions to inquirers. However, on the evidence in this record, I am unable to find that the representation as to possible profits is materially false.
10. On the whole record, I find that the representations made by respondents as found in Findings of Fact numbered 3, 4, and 5, supra, are materially false in fact.
1. Respondents are engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations within the meaning of 39 U.S.C. 3005.
2. Except with respect to the allegations of representation of offer of employment in the DANZIG promotion and as to net profits homeworkers may realize in the programs of all respondents, I find that respondents make the materially false allegations alleged in the complaint and will be so understood by the ordinary reader. The meaning of advertising representations is to be judged from a consideration of the advertisement in its totality and the impression it will most probably create in ordinary minds. See Donaldson v. Read Magazine, 333 U.S. 178 (1948). As the Court said in G. J. Howard Co. v. Cassidy, 162 F. Supp. 568 (USDC ED NY 1958):
"It is the net impression which the advertisement is likely to make upon purchasers to whom it is directed which is important, and even if an advertisement is so worded as not to make an express misrepresentation, if it is artfully designed to mislead those responding to it the mail fraud statutes are applicable."
The illegal taint of respondents' representations is not removed by the inclusion of a money back guarantee (see Howard v. Cassidy, supra) nor by the inclusion in its advertisements of words, or phrases, such as "mail commission circulars," "receive your money on the basis of completed returns," "no contracts to sign," "stop at any time".
3. The motion to dismiss the complaint as to respondent DANZIG is denied because testimony indicated that occasional responses to its now discontinued advertising are still being received.
4. Proposed findings of fact and conclusions of law submitted by the parties have been carefully considered. To the extent indicated herein they have been adopted; otherwise they have been rejected for reasons stated, or because they are contrary to or unsupported by the evidence, or because they are immaterial.
5. An order pursuant to 39, or. 3005 in the form attached should issue against respondents.