In the Matter of the Complaint Against NATIONAL MARKETING COMPANY, 127 Main Street and P. O. Box 244 at Dundee, IL 60118 P.S. Docket No. 7/46 November 28, 1979 William A. Duvall Chief Administrative Law Judge H. Richard Hefner, Esq., Law Department United States Postal Service Washington, D.C. 20260, for Complainant Willard B. Widerberg, Esq., 6 North State Street, Elgin, IL 60120, for Respondent Before: William A. Duvall, Chief Administrative Law Judge
In a Complaint filed on April 6, 1979, the Consumer Protection Office, Law Department United States Postal Service (Complainant), charged that National Marketing Company, 127 Main Street and P. O. Box 244, at Dundee, Illinois (Respondent) was engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations in violation of 3005 of Title 39, United States Code.
Attached to the Complaint are copies of advertisements allegedly used by Respondent in conducting the enterprise which is the subject of this proceeding. Copies of these advertisements are attached to this decision as Appendices A, B and B-1.
In the Complaint it is alleged that by means of the aforementioned advertisements Respondent expressly or impliedly represents to the public in substance and effect as follows:
"(a) Respondent has available employment which will enable readers of his advertisements to 'EARN up to $200 weekly part time, typing or addressing envelopes, ...'.
"(b) Respondent has developed a program by which persons are assured they will '... earn $500.00 to $1000.00 per week, starting anytime in the near future?'
"(c) Purchasers of Respondent's program will earn the income referred to in subparagraph (b) while putting in '... approximately 2 hours work per day ]'
"(d) The 'Manual' being sold by Respondent will assure the purchaser of substantial financial returns from conducting a mail order business. (e.g., 'I can show you how to earn $50,000 next year, and only work 2 hours per day]' 'I believe before you can make $500,000, you must learn how to make $100,000, and before you can make $100,000, you must learn how to make $50,000.' etc.)"
In its Answer, Respondent denies the existence of a scheme calculated and intended to induce the readers of its advertisements to remit money through the mail to Respondent, but Respondent states that it is engaged in selling a product through said advertising.
Respondent admits the use of Appendices A, B and B-1 in connection with its mail-order sales.
The remainder of Respondent's Answer to the Complaint is perhaps most succinctly stated in the Answer, as follows:
"3. Respondent denies allegation III (a) of Plaintiff's Complaint and further states that the ad was under Business Opportunities and is not an employment solicitation. Respondent further denies III (b) of said Complaint as to the assurance that people can earn $500 to $1,000.00 per week starting any time in the near future, and would like to find where any such statement is made by Respondent. Respondent, in answer to III (c) of said Complaint, denies that there is anything improper contained in his ads as to the possibility of working only 2 hours per day. In answer to III (d) of the Complaint, Respondent states that he does not assure the Purchaser of his manual of anything, but merely affords them an opportunity to develop their own business.
"4. The Respondent further states that the representations made in Exhibits 'A', 'B', and 'B-1' are not materially false as a matter of fact, as they are true."
At the hearing, the following exhibits were among those received in evidence:
Comp. Ex. 1 - Respondent's advertisement as it appeared in
the January 22, 1979, issue of The Sioux Falls,
South Dakota, Argus-Leader (App. A).
Comp. Ex. 2 - Letter, dated December 28, 1978, written by
Postal Inspector Robert J. Wise to Respondent
referring to Comp. Ex. 1 and asking for more
information.
Comp. Ex. 3 - Two-page circular received January 24, 1979, by
Inspector Wise in response to the inquiry which
is Comp. Ex. 2, above. (This exhibit is the
original, less the order form on page 2, from
which Appendices B and B-1 were made.)
Comp. Ex. 4 - Customer's receipt for money order number
23980914180, issued January 25, 1979, in the
amount of $11.00, payable to Respondent and
shown to have been purchased by Inspector Wise.
Comp. Ex. 5 - An eight-page, stapled pamphlet entitled "Mail
Order for Fun and Profit" received February 7,
1979, from Respondent by Inspector Wise in
response to his order. There are five pages of
text in this pamphlet.
Comp. Ex. 6 - An advertisement of Respondent's which appeared
in the July 2, 1979, issue of The Yakima
Herald-Republic, Yakima, Washington. This
advertisement is similar in its language, and
identical in its import, to Comp. Ex. 1.
Resp. Ex. 1 - A six-page pamphlet containing general advice
not related to any particular business.
Resp. Ex. 2 - A revision of Complainant's Ex. No. 5 in which
the textual material is increased to eight
pages.
Resp. Ex. 3 - A Stock Purchase Agreement relating to the sale
by Ronald C. Edin, a partner in the Respondent
business, of certain shares of stock owned by
Mr. Edin in the World Wide Publishing and
Marketing Co., Inc. to Wm. S. Janney of
Palatine, Illinois.
The products being sold by Respondent have previously been described in the identifications of Complainant's Exhibit No. 5 and Respondent's Exhibit Nos. 1 and 2. Complainant's Exhibit No. 5 is the one which was sent to Inspector Wise for which he paid $10.00. Respondent's Exhibit No. 2 is the later revision of Complainant's Exhibit No. 5. The "plan" advocated by Respondent is mail order marketing and a brief statement of Respondent's advice on the way one should enter this business is contained in the following excerpt found near the center of the first full page of Complainant's Exhibit No. 5:
"How much will it cost to get started ? An ad under 'misc. for sale' in many large newspapers can cost as little as $10.00] If after successfully selling an item through one newspaper, there is no reason why that same ad would not be equally successful in every newspaper in the country. In addition, if an ad is placed in a newspaper, or magazine that is out-of-state, they may even bill you with 30 day terms] Therefore, if you have any money at all, you have enough money to start a mail order business] As your business grows, your working capital will increase to the point where you can afford to advertise in any publication in the country."
Starting near the bottom of the first full page of Respondent's Exhibit 2 and continuing on the next page is a paragraph that is identical with the one appearing above except that the next to the last sentence starting with "Therefore" is omitted from the revision (Resp. Ex. 2). Another bit of advice is found in the fourth paragraph from the bottom of the second full page of Complainant's Exhibit No. 5, as follows:
"The real key to success in mail order marketing is testing, testing, and more testing. Test until you find an ad that works] If you can make a profit from just one ad, that same ad inserted in many different publications can literally make you thousands and thousands with very little effort on your part."
Respondent's Exhibit No. 2, among other things, elaborates considerably on the theme of testing, which it says should be carried out with respect to the product or products, the classified advertisements and the sales letters.
The foregoing description of Respondent's plan is not exhaustively complete, but it is sufficient to convey the essentials of the "product".
The last two pages of text of Complainant's Exhibit No. 5, and of Respondent's Exhibit No. 2, contain titles and authors of "Additional Reference Material" and substantially identical lists of seventy (70) "Proven Successful Mail Order Products" from which Respondent's customers choose one or more to promote.
Based upon (1) the statements made in Respondent's Answer to the Complaint; (2) Appendices A, B and B-1; and (3) the evidence comprising the record of the test purchase (Tr. 4-15; Comp. Ex. 2, 3, 4 and 5), I find that Respondent is engaged in conducting a scheme or device for obtaining remittances of money through the mail.
In considering whether the Respondent in the advertising of its business makes the representations set forth in paragraph III of the Complaint, the following criteria are to be applied: (1) advertisements are to be interpreted in the light of the effect they most probably would produce on the ordinary reader ( Donaldson v. Read Magazine , 333 U.S. 178); (2) in ascertaining the meaning of an advertisement, that which is implied must be considered as well as that which is expressly stated ( Aaronberg v. F.T.C. , 132 F.2d 165 (7th Cir. 1943); Cates v. Haderlein , 189 F.2d 369 (7th Cir. 1951); and (3) the purpose of the postal "misrepresentation" statute and its predecessors is the protection of the public, including "the unwary and unsuspecting as well as the knowledgeable and worldly wise, those who are trusting as well as the suspicious" ( Gottlieb v. Schaffer , 141 F. Supp. 7 (D.C.N.Y. (1956)).
With respect to the representation alleged in paragraph III (a), Respondent's newspaper advertisement (App. A) offers "up to $200 weekly part time typing or addressing envelopes". Persons interested in such work are asked to "Write National Marketing Company". The language used in this advertisement naturally and logically leads the reader to believe that Respondent is offering employment of the type and for the pay advertised. The fact that this advertisement appears in the Business Opportunities classification does not decrease its impact and effect as an offer of employment, or a "business opportunity" to the ordinary reader.
Respondent makes, in the following excerpts from Appendix B, the representation set forth in paragraph III (b) of the Complaint:
"Would you like to earn $500.00 to $1000.00 per week, starting anytime in the near future?" (App. B, 1st par.)
* * *
"National Marketing Company also has but one product. A manual outlining specifically how you may accomplish the exact same goal] ' $500.00 to $1000.00 per week while working only 2 hours per day .'" (App. B, 6th par.; see, also, 5th par.)
The representation set forth in paragraph III (c) of the Complaint is made, among perhaps other places, in the 2nd, 5th and 6th paragraphs of Appendix A in the repeated references to the necessity to work "only", or "approximately" 2 hours per day.
In the first and second complete paragraphs appearing on Appendix B-1, Respondent makes in the following language the representation charged in paragraph III (d) of the Complaint:
"I believe before you can make $500,000, you must learn how to make $100,000, and before you can make $100,000, you must learn how to make $50,000. I can show you how to earn $50,000 next year, and only work 2 hours per day]
"I've done it, and so can you with the instructions we provide]"
At the hearing Complainant called as a witness, in addition to Inspector Wise, Mr. Robert Bobowski, Associate Creative Director, Rogers Merchandising, 20 North Wacker Drive, Chicago, Illinois. Rogers Merchandising is a firm in the advertising and direct marketing business which specializes in response and promotion programs. In his present capacity with that company, Mr. Bobowski helps to originate programs that produce responses in the form of store traffic or some other response depending on whether the client is promoting something that requires a mailed response or some one coming into the store. (Tr. 15-16, 25-26)
Mr. Bobowski has been in the advertising business for approximately thirty years having entered this type of work with Sears, Roebuck and Company directly from high school. He has worked for major advertising agencies including J. Walter Thompson, N. W. Ayer, and Ken Erickson. He is the chairman of the Direct Mail Marketing Association's award competition, which judges direct marketing advertising. He gives an annual course of lectures as an adjunct professor at Roosevelt University in the undergraduate and masters direct marketing courses. He has lectured before the student body in courses in direct marketing at Minnesota State University and Illinois State University. He has lectured, also, at the University of Wisconsin and to the American Management Association. (Tr. 16)
Mr. Bobowski's classified advertising experience is in retail sales lines as well as direct mail response lines, and most of his experience has been in activities involving a direct mail approach coupled with an advertising plan or program. Depending upon the nature of the business, the client stipulates the classification under which a newspaper or magazine advertisement should appear. Mr. Bobowski, in the course of his experience, has advertised in the Business Opportunities section and in the Help Wanted section as well. Generally speaking, most of the classified advertisements with which he has been involved have not appeared in newspapers having large circulation. (Tr. 31-33)
Most of Mr. Bobowski's clients are among the larger corporations. Therefore, the market tests performed for these clients are very sophisticated and extensive compared to the requirements of a small business. On the other hand, whether a business is large or small the same principles and techniques of market testing hold true. There is not one set of standards in use for smaller clients and another standard in use for larger clients. (Tr. 28) The witness supported the last statement by citing examples from his experience. (Tr. 29-30)
In the opinion of Mr. Bobowski a person could not make "$200.00 weekly part time, stuffing envelopes" (Tr. 71), although he expressed the view that Respondent's advertisement (App. A) appeared to be offering that amount of pay for that type of work. (Tr. 36) In the first place in sending out solicitation mailings, envelopes are not being stuffed manually, and they have not been for the past 20 years. Furthermore, labels no longer are typed because for the past 15 to 20 years that has been done by computer. (Tr. 70, 71)
In direct marketing for a major corporation, advertising is an on-going program with a great deal of testing at the beginning because of the high risk nature of the business. In order to minimize that risk in an on-going program, a great deal of planning and testing has to go on ahead of time which consumes a fair amount of time and money. (Tr. 18)
A product generally will be selected after some preliminary research to determine (1) its acceptability in the market place and (2) whether it is being offered by anyone or in stores or through some other means. The objective of the research is to provide a product that is somewhat unique in its nature and would, therefore, have little competition in the market place were it offered on a direct basis. After that, the product's features and benefits are evaluated so as to determine the number of methods that can be used as either copy or graphic approaches to put forth those features in benefits to the consumer or the ultimate buyer. These then are isolated into individual instances of testing so that each isolated benefit or value is portrayed on a grid so that each can be looked at and evaluated as to which produced the greatest response. Then the medium or list is developed so that it can be tested to determine which would be the lowest cost medium or list in which to advertise that product. This process can extend over many lists or quite a number of various media, mixes or individually (Tr. 19) A matrix is developed and the number of the intersections of the media and the offers of the program, and in some cases even the creative approaches, are determined. These intersections are called "splits". In some cases it can extend to 30 or 40 different "splits," as they are called, and the more such "splits" there are, the higher, obviously, the test budget because each one of these splits is trying to predetermine what would motivate the consumer and thereby minimize the risks of further such advertising. After this advertising is run for a period of from perhaps a month to three months, depending on the medium or the response rate and the cycle, the advertising is analyzed and a projection is made as to which of the media or the offers in the advertising would present the least risk from the basis of what the test reports provide. Additionally, those test reports must have a basis of viability so that they do represent a substantial and qualified amount of the audience. (Tr. 20)
After the material just described is evaluated, it is then determined whether to proceed with a particular project, to abandon it, or to reduce it. (Tr. 20) However, if the research on the product has been well done, it can be assumed that there should be a way to market the product and, in some cases, if the tests do not provide any real answers the tests may be done again. In most cases one or more of those splits should show some answers and there is then conducted a program called a confirming test. This test consists of taking those areas or splits that produce the greatest response, combining those and hopefully then raising the response rate to minimize the risk and produce a viable program. (Tr. 20-21)
Mr. Bobowski has date which represent the equivalent of a small advertiser because, depending on the size and budget of the business, one tries to afford as many tests as he can. A small advertiser, one who would have a few thousand dollars to spend and could not afford many tests, would be advised to try to afford as many as he can, but, realistically, it might come out to only two or three test splits. But the larger advertiser who conducts these test splits does microcosms very much like the smaller advertiser would - he simply can afford more splits. Each one of those splits is identical to the split that the smaller marketer would use. (Tr. 29)
With respect to the viability of Respondent's product, the witness stated that the manual (Compl. Ex. 5) does not really set forth "Step-by-step instructions on how to earn as much as $1000.00 per week with as little as 2 hours work per day]" The reason for the witness's opinion on this point is that in order to earn that amount of money with as little as two hours work per day a person would have to be fairly well versed in the sophistication of direct marketing as a small or a large advertiser. The requirements for such a person would include a product that would be, in an exclusive way, useful and would provide the performance of a direct market product. (Tr. 39) Furthermore, it was the view of Mr. Bobowski that the manual purchased by the Inspector did not contain either adequate specific details on how to operate a mail order business or questions and answers to cover any inquiry the purchaser may have concerning the business, procedures, profits, etc.
Concerning the suggested list of items to be sold, it contains a wide variety of items for largely consumer purchase, some of which are of a novelty nature and some are of a more practical nature, but it is hard to classify them other than as a wide variety. (Tr. 40) A novice would have a hard time selling some of these items because a novice would have a hard time selling virtually anything. The direct marketing business is not a simple business. (Tr. 41)
Based upon his knowledge, experience and his examination of Respondent's material, it is Mr. Bobowski's opinion that Respondent has not developed a program by which (1) persons are assured they will "earn $500.000 to $1000.00 per week, starting anytime in the near future"; or (2) purchasers of the program would be able to earn the sums mentioned in (1), above, and elsewhere in Respondent's literature, while putting in " approximately 2 hours work per day " except, perhaps in the far distant future. Similarly, purchasers are not specifically shown a technique of conducting a mail order business which will assure them of substantial financial returns. (Tr. 41-42)
Commenting, generally, the witness stated in response to a question that, obviously, the marketing of a product can make one greater or lesser sums of money depending on the amount of sales and the price of the product. In this case there is an offer for the reader to sell the suggested items in the market place and thereby make such money. However, specifically, Respondent's pamphlet is deficient because the techniques by which one would do this, which are quite detailed, and the specifics of conducting a mail order business (Tr. 74) are not outlined here. The Direct Mail Marketing Association, which is really the spokesman association for the direct marketing and the direct mail industries, publishes a guide, or a manual, to borrow Respondent's terminology. That manual is over three inches thick and it is continually being updated. Even that guide does not contain all of the information that one should really know about direct marketing. Respondent's manual pales by comparison to the DMMA guide in that the techniques, the specific techniques of direct marketing, are not indicated. (Tr. 43)
On cross-examination, Mr. Bobowski was asked if it would be possible for a person using Respondent's plan to make as much as $20,000 per year. In response, the witness said that he could not answer the question because of the lack of adequate data in the question on which to project an answer. He stated, however, that from a statistical point of view having nothing to do with the product, if 60,000,000 people should see Respondent's advertisement (Comp. Ex. 1), perhaps as many as 18,000 would respond. Then, in response to the advertising circular (Comp. Ex. 3) it is possible that one out of every four people, or 4,500, would send in the $10.00 purchase price, the income would be about $45,000.00. The witness stressed the fact that his estimate was made without benefit of information as to the nature of the product offered for sale, the costs to the seller of such product, the size of the market and other factors having a bearing on the result. (Tr. 63-64)
Mr. Bobowski's opinions as expressed in his testimony reflect, and are in conformity with, the consensus of the current opinions of informed persons in the direct mail advertising, marketing and merchandising industry. (Tr. 46, 47)
The first witness for Respondent was Mr. Ronald C. Edin, one of the partners in National Marketing Company. The other partner in the business, who testified also, is Mr. Wayne Wickvoldt, also of West Dundee, Illinois. Mr. Edin acknowledged that Respondent placed the advertisement which is Complainant's Exhibit 1 in the Sioux Falls, South Dakota, Argus-Leader. According to Mr. Edin, approximately 15 per cent of the time invested in the business is related to placing advertisements and the remaining 85 per cent is consumed in typing, addressing and stuffing envelopes, paying bills, and handling the checkbook. (Tr. 82, 83)
It is not known whether Complainant's Exhibit 1 is the first advertisement placed by Respondent, but it is known that this advertisement appeared on January 22, 1979. Mr. Edin tabulated the responses to this advertisement. He determined that there was a sufficient number of responses from people asking for more information to warrant his writing the sales letter. (Comp. Ex. 3) Mr. Edin began to mail the sales letter, according to the recollection of the witness, in January, 1979. It was also in that month that Complainant's Exhibit 5 was sent to persons who sent $10.00 to Respondent. It is possible that several hundred of these pamphlets were printed and mailed, but the original form of the booklet was used only during the market test period. Complainant's Exhibit 5 was supplanted by Respondent's Exhibit 2 in what probably was February 1979. (Tr. 85-86) According to Mr. Edin, and examination of the exhibits bears out his testimony, the contents of Complainant's Exhibit 5 and of Respondent's Exhibit 2 are essentially the same. (Tr. 87)
At the time of the hearing, Respondent was spending about $600.00 per week on advertising on a nationwide basis in as many columns as Respondent can find. Respondent receives approximately 2000 inquiries a week. There is one employee who handles the placement of advertisements. Mr. Edin did not know how much time this duty requires, but "it is not all that much." The bulk of the remainder of the time of this employee is spent in typing, addressing and stuffing envelopes. (Tr. 89) There is a Certified Public Accountant who keeps track of Respondent's business records, but he is not an employee of Respondent's. The accountant stops in Respondent's office once each month and picks up whatever records belonging to Respondent he needs. (Tr. 104)
Respondent makes full refunds upon request and Mr. Edin estimated that the refunds run about two (2) per cent per week. (Tr. 90)
The information in Comp. Ex. 5, and, hence, in Resp. Ex. 2, includes information concerning the mail order business that Mr. Edin gained from personal experience in another enterprise he started earlier and operated under the name World Wide Publishing and Marketing Company. (Tr. 92, 94). Respondent's business is run on the basis of the information set forth in those pamphlets. (Tr. 90)
Respondent has no computers in its operation -- all the typing, folding, stuffing, addressing, and the like being performed by Respondent's employees. (Tr. 92) The information as to the number of Respondent's employees is indefinite, but it appears that in addition to the owning partners, there are from three to five with duties as follows:
A. Based on testimony by Mr. Edin (Tr. 89):
1 - advertising and mailing (the latter activity being performed in spare time from the primary advertising and other duties);
2 - typists;
B. Based on testimony by Mr. Wickvoldt (Tr. 105):
3 - full time office employees;
2 - work-at-home employees, typists, of whom one recently was dismissed, but for whom a replacement is soon to be hired, so that the actual complement is 5 employees.
Respondent's advertising costs amount to about $600.00 per week and from this amount of advertising it receives approximately 2000 inquiries a week. (Tr. 97; 106) From that number of inquiries Respondent receives about 300 orders per week, or at the rate of 15 per cent of the inquiries. A refund rate of about 2 per cent reduces the net orders to approximately 294 per week. (Tr. 90)
The weekly income derived by each of the partners in Respondent is about $400.00 (Tr. 90) In addition, each partner receives a bonus of approximately $100.00 every two weeks. (Tr. 104-105) Mr. Edin devotes 30 to 45 minutes per week to Respondent's business, to which Mr. Wickvoldt devotes about 45 minutes a day.
At the conclusion of the testimony of Messrs. Edin and Wickvoldt, Respondent rested. Complainant offered no rebuttal testimony.
As to the falsity of the representations found to have been made by Respondent, there was no claim made by any of its witnesses that Respondent does or will employ people who respond to their initial advertisement. Hence, the representation stated in paragraph III (a) is false.
In the trial of this case, Complainant produced a witness who is an expert in the mail marketing business. His qualifications in terms of his background, his experience, his occupation, the companies of which he has been both an employee and an officer, and his recognition by the members of his profession as evidence by the positions he has held in various professional associations all attest to his expertise in the area of direct mail marketing.
The witness just described gave it as his expert opinion that the pamphlets being sold by Respondent do not contain information which will enable purchasers to realize the financial results held out in Respondent's advertisements as being obtainable. Complainant's witness supported his opinions with cogent, persuasive reasoning and with concrete examples from his own knowledge and experience.
Through this expert witness Complainant established a solid prima facie case. Therefore, if Respondent was to prevail, it was incumbent upon Respondent to go forward with sufficient competent, credible evidence to overcome the Complainant's case. This the Respondent failed to do.
The testimony of the co-partners who own Respondent is deficient in a number of respects which require some discussion.
First, the partners discussed their business operation to some extent. From their testimony it is apparent that these two young men are innovative, aggressive, energetic and that they have a certain amount of experience in marketing by mail. That the co-owners of Respondent report that they are financially successful in their operation is no assurance that the average person who buys Respondent's product is going to be financially successful in the mail order sale of such items as blackhead removers, shoes, special fabrics, animal traps, architect plans and other items from the list in Complainant's Exhibit 5 and Respondent's Exhibit 2.
Second, Respondent holds out to its prospective customers that the latter can make large sums of money ($1000 a week; $50,000, $100,000, or $500,000 a year) while working only 2 hours a day. Respondent's business, which is run in accordance with the instructions in Respondent's pamphlet, on the other hand returns to each of its co-owners only $23,400 per year, according to their own testimony.
At the same time the operation of this business requires, at least briefly, the managerial skills of the two partners, plus the clerical skills of three full-time and two part-time employees. If the people who write, and follow, Respondent's instructions must devote, or cause to be devoted, this much time to running the business, it is gross misrepresentation to suggest that a novice could, by following the same instructions, begin "starting any time in the near future" to "earn $500.00 to $1000.00 per week."
A review of some of the income/expense testimony of Respondent's owners, supplemented in one instance with information from an official publication of the United States Government Bureau of Labor Statistics, produces the following tabulation:
Salaries - $400 per week x 52 wks x 2 partners $ 41,600
Bonus $100 every other wk - $2600 x 2 5,200
Advertising $600.00 per wk 31,200
Rent at $125.00 per month 1,500
Office and Part-Time staff (3 full-time,
2 part-time typists): 1/
41,600
(The Bu. of Lab. Statistics, Dep't. of
Labor, reported in the Area Wage Survey
for Chicago, Illinois, for May, 1979, in
GLS Bulletin #2050-21 that the average
weekly salary of a female stenographer
for a 38 1/2 hour week in the Chicago
Standard Metropolitan Statistical Area,
which includes Dundee, IL, where Respondent
is located, was $238.50. 2/ Assuming that
Respondent does not pay the average, but pays
$200.00 per week; and assuming that the 2 part-
time workers are paid 1 full time worker's
salary, the result will be $200 per week x 4
workers x 52 weeks, for a total of $41,600
salaries for office staff.
Total $121,100
(It will be noted that no attempt has been made to
include the expenses for the accountant's fee, printing,
postage, taxes and others.)
The income is not so difficult to compute. The testimony showed that Respondent receives about 2000 inquiries per week. These inquiries produce approximately 300 orders which are offset by about 6 refunds (2%) producing gross revenue in the approximately amount of $2,940.00 per week.
On the foregoing basis, the Respondent's yearly gross income is $154,880 and a partial listing of its expenses totals $121,100. There remains a balance of $33,780 from which to pay such business expenses as the accountant's fee, income and other taxes, printing, stationery, postage, and others. Respondent's promises of annual income of $50,000, $100,000 and $500,000 for only about 2 hours of work a day simply can not be realized. They and all of Respondent's representations set forth in paragraph III of the Complaint are false.
This decision is based upon the testimony of Complainant's expert witness which, as previously pointed out, firmly established a prima facie case. The evidence adduced by Respondent tended more to support rather than to overcome Complainant's evidence.
On the basis of the entire record, as indicated above, the following facts are found:
1. Respondent is engaged in a scheme or device for obtaining money or property through the mails.
2. In the conduct of this scheme or device, Respondent advertises in newspapers and by means of circular matter distributed through the mail.
3. In its advertising material Respondent makes in substance and effect, expressly and impliedly, the representations set forth in paragraph III of the Complaint.
4. The representations found to have been made by Respondent are material representations because by their character they induce persons to remit money to Respondent for that which Respondent sells.
5. The representations heretofore found to have been made by Respondent are false as to material matters of fact.
1. The Respondent, National Marketing Company, 127 Main Street and P. O. Box 244, Dundee, IL 60118, is engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representation within the meaning of Section 3005 of Title 39, United States Code.
Proposed findings of fact and conclusions of law submitted by the parties have been fully considered. To the extent herein indicated those proposed findings of fact and conclusions of law are adopted. Otherwise, those proposed findings of fact and conclusions of law are rejected because they are either unsupported by or contrary to the evidence or because of their immateriality.
An order of the type provided in 39 U. S. Code 3005, in substantially the form attached, should be issued against this Respondent.