In the Matter of the Complaint Against PAUL HARVEY 515 N. Hunter and 540 N. California at Stockton, CA 95202 P.S. Docket No. 8/10; 06/19/80 Grant, Quentin E. APPEARANCES FOR COMPLAINANT: NormanMenegat, Esq. Assistant Regional Counsel Western Regional Headquarters United States Postal Service San Bruno, CA 94099 Sandra McFeeley, Esq. Consumer Protection Division Law Department, U.S. Postal Service Washington, DC 20260 APPEARANCE FOR RESPONDENT: Lee H. Harter, Esq. 2256 Van Ness Avenue San Francisco, CA 94109
This proceeding was initiated on March 20, 1980, with the filing of a Complaint alleging that Respondent is engaged in conducting schemes or devices to obtain money or property through the mails by means of false representations in violation of 39 U.S.C. § 3005.
By order dated May 6, 1980, an amendment of the Complaint was allowed.
The Amended Complaint alleges, specifically, as Count I that by means of advertisements and direct mail circulars, all calculated to induce readers or recipients thereof to remit money or property through the mails, Respondent falsely and materially represents:
"a. That Respondent is offering at-home employment addressing and stuffing envelopes.
b. That the work offered 'consists mainly of addressing envelopes and inserting circulars into them.'
c. That a homeworker who addresses and stuffs envelopes for Respondent or for other companies will earn at least $180 per week.
d. That the program participant will earn $60 for every 100 envelopes he or she is able to address and stuff for Respondent or for other companies.
e. That the participant will not have to expend additional money to commence operations. Exhibit 2 only.
f. That the participant need expend no more than $17 in order to realize the earnings promised. Exhibit 3 only.
g. That this envelope stuffing program is part of an expansion of Respondent's advertising program. Exhibit 2 only. "
The exhibits referred to in the quoted allegations are exhibits attached to the Amended Complaint.
By Count II to the Amended Complaint, Complainant alleges that through his promotion and scheme Respondent urges and causes participants to make the above representations to third parties, and knowingly seeks money or property through the mails to finance distribution of false advertisements of the type alleged in Count I.
On Respondent's motion the place of hearing was changed to San Francisco, California. The hearing was held on May 21, 1980, before the undersigned who, by order of the Judicial Officer, dated May 5, 1980, was designated Acting Judicial Officer to hear and finally decide the matter for the Postal Service.
At the hearing the parties entered into a stipulation for entry of an order pursuant to 39 U.S.C. § 3005, without admission of liability by Respondent, covering orders and remittances generated by Complainant's Exhibit CX-12, such order to be stayed pending decision on the balance of the allegations of the Complaint. It was also stipulated that inquiry mail responding to Respondent's classified ad marked CX-18 would not be covered by the consent order but would fall within the ambit of any order issued as to the balance of the matter.
All proposed findings of fact, conclusions of law, and argument submitted by the parties have been considered. They are found to the extent indicated and are otherwise denied.
1. Complainant's Ex. CX-12 is a circular with the following words appearing in bold face type at the top:
"EARN $180 A WEEK
ADDRESSING ENVELOPES
IN THE COMFORT OF YOUR OWN HOME"
This circular has been sent in the past by Respondent to persons making inquiry based on Respondent's classified advertisements received as Exhibits CX-1 and CX-18.
Persons who mail the coupon appearing on the reverse side of CX-12 have received a booklet entitled "MAKING MONEY IN MAIL ORDER" (CX-16).
By stipulation placed on the record at the hearing, Respondent, without admitting liability, has consented to the entry of an order pursuant to 39 U.S.C. § 3005 covering orders and remittances based on CX-12. Such consent order would not cover inquiry mail coming to Respondent in response to CX-1 and CX-18 (Tr. 3-8).
2. The parties join in asking for a decision whether or not the allegations of the Complaint are established by Exhibits CX-1 and 18 (classified advertisements attached hereto as Exhibits 1 and 2); CX-17a and 17b (a new circular and separate order form currently used by Respondent (Tr. 9) attached hereto as Exhibits 3 and 4); and CX-16, the booklet entitled "MAKING MONEY IN MAIL ORDER," furnished by Respondent to persons responding to the new circular and order form, CX-17a and 17b (Tr. 9, 11).
3. Complainant in gathering evidence for the hearing did not follow any of the instructions, suggestions, or opportunities for making money in mail order set forth in Respondent's booklet, CX-16 (Tr. 9, 10).
4. Respondent seeks remittances of money or property through the mails for the booklet, "MAKING MONEY IN MAIL ORDER" at both addresses set forth in the caption of the Complaint (CX-16, 17a, 17b).
5. In response to orders to Respondent made on the order form CX-17b, interested persons receive Respondent's booklet, "MAKING MONEY IN MAIL ORDER." (Tr. 9, CX-16), hereinafter referred to as the booklet or CX-16.
6. Applying the standard of interpretation of advertising matter in proceedings of this kind (see Conclusions of Law, below) I find that:
(a) Respondent's advertisements, circular, and order form (CX-1 & 18, CX-17a and 17b) make the representation that Respondent is offering at-home employment addressing and stuffing envelopes ("employment" in the sense of work, occupation, or business, but not in the sense of being placed on Respondent's payroll) and that such work consists mainly of addressing envelopes and stuffing circulars into them. The total explicit thrust of the classified advertisements and the circular is that persons responding to the circular with a money remittance will be primarily engaged in addressing and stuffing envelopes.
(b) Respondent's classified advertisements (CX-1, CX-18) make the explicit representation that a participant in Respondent's envelope addressing program will earn at least $180 per week.
(c) Respondent's circular (CX-17a) in the third and fourth paragraphs of the text thereof makes the representation that a program participant will earn $60 for every 100 envelopes addressed and stuffed for Respondent or for other companies.
(d) Respondent's circular (CX-17a) in the first paragraph on the second page thereof makes the representation that a person need expend no more than $17 ($2 for copies plus an additional $10.00 - $15.00) in order to realize the earnings promised.
7. The case, as narrowed by the stipulation for the consent mail stop order, does not require findings as to the allegations made in paragraph 3e and 3g of the Complaint.
8. A person who has ordered Respondent's "starter kit" receives a booklet entitled "MAKING MONEY IN MAIL ORDER." None of the several programs outlined therein involves simply addressing and stuffing envelopes. The mail order schemes involve, primarily, product development, securing mailing lists, developing and placing advertising, and keeping records. Addressing and stuffing envelopes are activities merely incidental to these other efforts. The number of envelopes to be addressed and stuffed is entirely dependent on the number of responses received to advertising which, in turn, obviously depends on the number of advertisements placed and the effectiveness thereof. There is no assurance that a participant will earn $180 per week or $60 per hundred envelopes or any other minimum amount of money.
It is abundantly clear from the booklet that to start earning $180 a week in nearly any of the programs set forth in the booklet or to start receiving hundreds of inquiries to advertising requires investment in advertising, mailing lists, printing, postage, and record keeping supplies far in excess of the $17.00 represented by Respondent in the circular (CX-17a).
Accordingly, the representations made by Respondent as alleged in paragraphs 3a, b, c, d, and f under Count I are found to be false in fact and materially so since their natural tendency is to cause readers to respond to the advertisements and circular.
9. Although Respondent's booklet encourages participants to engage in promotions similar to that involved in this proceeding, it is not clear from the evidence that he urges them to make to third parties the same representations alleged under Count I, above, or that he knowingly seeks money or property through the mails to finance distribution of advertisements of the type involved in this proceeding.
1. The meaning of advertising representations is to be considered in light of the probable impact of the entire advertisement on the person of ordinary mind. Donaldson v. Read Magazine, 333 U.S. 178, 189 (1948); Peak Laboratories, Inc. v. United States Postal Service, 556 F.2d 1387, 1389 (5th Cir. 1977); Unique Ideas, Inc. v. United States Postal Service, 416 F. Supp. 1141, 1145 (S.D. N.Y. 1976).
2. Persons of ordinary mind reading Respondent's classified advertisements and circulars would interpret them substantially as characterized in paragraphs 3a, b, c, d, and f of the Complaint.
3. As found above, these representations are materially false in fact.
4. Actual participation by Complainant's investigators in the programs set forth in Respondent's booklet, "MAKING MONEY IN MAIL ORDER," was not required to establish the falsity of the representations. Falsity is abundantly apparent in simple comparison of the representations with the contents of the booklet. It permeats the entire promotion, including all the plans suggested in the booklet.
5. Complainant's evidence falls short of sustaining the allegations of Count II of the Complaint. It is obvious that Respondent's promotion encourages participants to make misrepresentations to third parties and, thereby, secure remittances of money through the mails. However, Count IV alleges that Respondent urges and causes participants to make to third parties the same misrepresentations made by Respondent. Complainant has not persuaded me that exactly the same misrepresentations are involved in this aspect of the promotion. Count II is therefore dismissed.
6. Respondent's consent to issuance of a mail stop order in connection with the earlier circular, CX-12, renders unnecessary any Conclusions of Law with respect thereto.
7. Respondent is engaged in the conduct of a scheme for obtaining remittances of money through the mails by means of materially false representations in violation of 39 U.S.C. § 3005.
An appropriate remedial order under 39 U.S.C. § 3005 is being issued forthwith.