In the Matter of the Complaint Against

 WORLD WIDE LEISURE, INC.,
 1881 N.E. 164th Street and
 1891 N.E. 164th Street,
 North Miami Beach, FL 33162

 P.S. Docket No. 10/26
 
 May 21, 1981
 
 William A. Duvall Chief Administrative Law Judge

 APPEARANCE FOR COMPLAINANT:
 Sandra C. McFeeley, Esq.
 Consumer Protection Division
 Law Department
 United States Postal Service
 Washington, DC 20260

 APPEARANCE FOR RESPONDENT:
 Joel A. Savitt, Esq.
 Savitt, Kotzen & France, P.A.
 2040 N.E. 163rd St., Suite 302
 P.O. Box 60-1114
 North Miami Beach, FL 33160

This proceeding was initiated on December 10, 1980, with the filing of a complaint alleging that Respondent, World Wide Leisure, Inc., North Miami Beach, Florida, 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.

The complaint, as amended January 13, 1981, alleges that Respondent, soliciting principally by telephone, induces members of the public to agree to accept a 3-day Las Vegas vacation package for a price of about $35. The vacation is described as free and including free lodging, meals, gambling benefits and in some cases transportation. The complaint charges that respondent's telephone and chance coupon solicitations represent that recipients of the phone call have won a free vacation for two in Las Vegas, that, apart from a $35 "service fee," there will be no cost to the consumer for some or all of such benefits as meals, lodging, shows, transportation and gambling.

Respondent filed a timely Answer denying the allegations of the complaint, stating that because of the distance and expense involved it would not be able to appear in person or by counsel at the hearing in Washington, D.C., and requesting the matter be submitted for ruling pursuant to 39 C.F.R. 952.11(b). Respondent did not request that the hearing be held in some place other than Washington. Complainant moved on January 5, 1981, to submit the case by affidavits and written argument. The request was granted by order of January 13, 1981, which also required submission of the evidence in conformity with 39 C.F.R. 952.9 by January 30, 1981.

With its proposed Findings of Fact and Conclusion of Law there was no submission of evidence by Respondent. Complainant moved to withdraw the allegation that respondent makes the representation stated at paragraph II(a) of the complaint. That Motion is granted.

Respondent filed a Reply to Proposed Findings of Fact and Conclusions. This document will be discussed later in a separate section of this decision.

The Complainant's Proposed Findings of Fact, Conclusions of Law, and the reasons in support thereof have been carefully considered. Since the Administrative Law Judge agrees with the Complainant's proposed findings, conclusions and supporting arguments, with the exception of proposed Conclusion of Law No. 4, which exception is discussed later herein, the Complainant's proposals are hereby adopted, with minor changes, as the basis for this Initial Decision.

The evidence in this case consists of the affidavits of (1) Postal Inspector Edward Mackin, complainant's principal investigator in this matter, (2) Kenneth Towne, who was solicited by respondent in late Spring 1980 to purchase a vacation certificate; (3) Alonzo W. Cansler and his wife Mae Cansler, who were solicited in December 1979 to purchase a vacation. Accompanying each affidavit are numerous documents identified in the sworn statements.

Inspector Mackin describes the conduct of respondent's activities to obtain money or property by mail for the sale of Las Vegas vacation certificates. His information is based on 81 consumer complaints verified in seven cases by telephone interviews with the consumer. The invariable pattern is that respondent telephones individual consumers to say they have won a free vacation for two to Las Vegas. The only cost identified to the consumer during the solicitation call is a "service fee" of about $35. Although apparently many consumers paid for their vacation certificates by credit card authorization, some remitted postal C.O.D. payment and some mailed checks to the respondent. ( See Mackin, 4; A. Cansler, 3; M. Cansler, 2.)

Inspector Mackin reviewed his complaint file for evidence of the specific misrepresentations alleged in the administrative complaint:

1. Respondent did not advise several customers of the required $10 deposit ( 6).

2. Seven persons over age 55 were not advised that they were ineligible to use the certificate because it is limited to persons between 21 and 55 ( 7).

3. Twenty-four consumer complainants were not advised that they would be required to attend a "vacation concept presentation" in order to be able to use the certificates at all ( 8, 11, 12).

4. Respondent told prospective buyers that free meals were part of their vacation. More than half of those complaining to Inspector Mackin found that the certificate expressly excludes meals from the "free" vacation ( 9).

5. Among the vacation benefits promised by respondent in its telephone solicitation were coupons, cash or tokens for use in gambling. Recipients of the certificate found that some coupons required a redemption fee at the cashier's cage in the casino, and that use of gambling coupons required remaining in a single casino for many hours or use of the vacationer's own money ( 10).

Mr. Mackin's deposition described and attached as exhibits the C.O.D. receipt and money order payment of Kenneth Towne to respondent at 1891 N.E. 164th Street, North Miami Beach, Florida 33162.

Kenneth Towne's affidavit recounts his experiences with respondent. Mr. Towne filled in a chance coupon at a truck show for a free vacation in Las Vegas including lodging, transportation, meals and show tickets, or a lesser prize of the vacation minus the free transportation (Towne Ex. 1). He was telephoned by respondent and told he had won an all-expense paid vacation for two in Las Vegas. There was no mention of conditions to be imposed on the receipt or use of the vacation benefits. Mr. Towne purchased his certificate through postal C.O.D. (Towne Ex. 2; and attachments to Mackin affidavit). The page of "general information" (Towne Ex. 7) requires a $10 room deposit; expressly excludes transportation, meals and beverages; and requires attendance at a "vacation concept presentation." The last "is required to make this accommodation certificate valid." The gambling coupons Mr. Towne received with the certificate indicate that a $1 purchase is required to use the Vegas World package and that the package is distributed at hourly intervals over three consecutive days (Towne Ex. 5 and 5a); that the Jolly Trolley Casino coupon requires hourly use over 18 to 72 hours.

Mr. Towne's belief, based on the coupon information and the telephone call from respondent, was that he would receive 18 free meals at the Grand Flamingo Hotel, that he would receive $49 in gambling tokens and that no expense in time or money would b required beyond the $34.95 service charge.

Alonzo and Mae Cansler's affidavits describe Mr. Cansler's filling in a coupon for a chance to win a vacation at the Knoxville Fair followed by a telephone call from "Marlena," respondent's representative, offering a free vacation to Las Vegas. After two conversations with Mr. and Mrs. Cansler, they agreed to send a check for $34.95 and accept the vacation (Ex. 1). When the package of vacation information arrived, the Canslers found they were ineligible because of their age to use the vacation offer and, in addition, the benefits had many conditions and restrictions attached to their receipt and use (A. Cansler, 4, Ex. 3-6).

Complainant must show by competent, credible, preponderant evidence that respondent conducts a scheme by which it solicits money or property by mail, that respondent makes certain material representations to members of the public as part of its scheme, and that the representations are false.

1. Respondent is engage in a Scheme to Solicit Money or Property by Mail

Mr. Towne and Mr. Cansler testified to the receipt of telephone calls from persons stating they represented World Wide Leisure (Towne, 2; A. Cansler, 2, 3). Mr. Towne's caller stated he had won a "free trip to Las Vegas" for which he was "required to pay "$34.95" as "a service charge," and that the vacation package could be sent through the mail C.O.D. (Towne, 2). The caller to the Cansler residence said the Canslers had won a free vacation trip to Las Vegas, at a cost of $34.95 "to insure [they] would accept the vacation package." The payment was made by personal check to World Wide Leisure, Inc. at 1881 N.E. 164th Street, North Miami Beach, Florida 33162 ( See A. Cansler, 2, 3, and Ex. 1). The solicitation made to the Canslers and to Mr. Towne was repeated to the 81 consumer complaints whose letters Inspector Mackin reviewed. Although most of the consumers charged the cost of the trip on a credit card, four had the vacation packages sent C.O.D. (Mackin, 4).

Prior to receipt of the telephone calls, Mr. Towne and Mr. Cansler had each filled in a coupon that offered a chance to win a vacation trip for two to Las Vegas. The receipt portion of Mr. Towne's coupon is exhibit 1 of his affidavit. It bears the name World Wide Leisure as "sponsor" and promises that the winner of the trip will receive deluxe accommodations, free transportation, meals and show tickets.

Thus, the telephone solicitations from respondent, coupled in some instances with a "chance" to "win" a free $34.95 vacation, demonstrate the conduct of a scheme to solicit money or property by mail.

2. Respondent makes the representations alleged in Paragraph II(b), (c) and (d) of the complaint.

(b) Recipients of respondent's telephone solicitation have won a free vacation for two persons at Las Vegas, Nevada.

Mr. Towne describes the message from the World Wide Leisure caller as follows. "She said I had won a free trip to Las Vegas. She also said it was an all-expense paid vacation for two people...." (Towne, 2). Mr. Cansler's caller "said my name had been drawn as the winner of a free vacation trip to Las Vegas." (A. Cansler, 2). Mrs. Cansler also spoke to the caller "and asked how we had won this trip. She stated that my husband's name had been selected in a drawing, and that he had probably entered the drawing at a fair or an organizational meeting." (M. Cansler, 2). The majority of complaints reported by Inspector Mackin related "that the representative of World Wide Leisure, Inc. advised them that they had won a free vacation trip for two persons to Las Vegas, Nevada" (Mackin, 4). The representation alleged was in fact made by respondent to both victim witnesses and, according to Inspector Mackin, to some 81 other individuals.

(c) There will be no charge to the winners of the [free] vacation [for two persons at Las Vegas, Nevada] for one or more of the following items:

1. meals

2. hotel rooms

3. admission fees at entertainment facilities

4. transportation

5. gambling.

All of these representations were made initially on the coupon receipt that Mr. Towne received at the New England Truck Show (Towne, 1, Ex. 1). Items 1, 2, 3 and 5, above, were expressly repeated by the telephone solicitation to Mr. Towne. Item 4 was repeated by implication in the statement that the vacation he had "won" was "all expense paid" (Towne, 2). In respondent's telephone solicitation to the Canslers, they were told they had won a free trip the cost of which was solely to insure acceptance of the package (A. Cansler, 2). That cost would be returned in the form of free lodging, meals, and free admission to shows (M. Cansler, 2). Again the representation of free transportation was made by implication in the promise of a "free trip." More than half of Inspector Mackin's 81 complainants were told that the vacation package included free meals (Mackin, 9) and nearly half were told that they would receive free coupons, cash or tokens for gambling (Mackin, 10). The sworn statements of the Canslers and Kenneth Towne indicate that respondent told them that lodging, meals, shows, and gambling would be free and that, in the promise of a free, all-expense paid trip promise of free transportation. In the case of Mr. Towne, that promise is supported by the coupon receipt shown at Ex. 1 to his affidavit.

(d) The only expense to be paid by the winner of the vacation referred to above is an initial service charge of approximately $35.

This representation was made expressly to Kenneth Towne on the coupon receipt (Towne, Ex. 1). It was made orally to him and to the Canslers by respondent's telephone solicitor (Towne, 2; M. Cansler, 2; A. Cansler, 2), who stated the cost to be $34.95 and further identified a number of free benefits as part of the vacation. Respondent's failure to state any other cost under the circumstances impliedly represents that the $34.95 is, in fact, the only cost to be borne by the customer. Inspector Mackin's complainants reported similar experiences: "The representative usually told the consumer that a charge, ranging in price from $35.00 to $40.00 per package, would be required. This charge was described at various times as a bookkeeping charge, tax, processing fee, or service charge." (Mackin, 4). All four affidavits and Ex. 1 to Mr. Towne's support a finding that the representation at paragraph II(c) of the complaint was made.

3. The representations alleged at paragraph II(b), (c), and (d) of the complaint are materially false.

There are numerous elements of falsity in these representa- tions. Initially there is the issue of eligibility to receive the vacation. The Canslers and seven of Inspector Mackin's other complainants were over age 55 (age 65 in the case of the Canslers) at the time of the solicitation call from respondent. None was told that the vacations are only available to persons between ages 21 and 55 or 65 depending upon the "authorization," until they had parted with their money (A. Cansler, 1, 4; Mackin, 7). Inspector Mackin also stated that respondent had requested consumers to purchase more than one package, but failed to state, as the Resort Accommodations Authorization does, that two packages cannot be used by a person or a group simultaneously (Mackin, 11; See Towne, Ex. 7, 10 and 11).

Respondent's telephone solicitation to Mr. Towne, the Canslers, and several of Inspector Mackin's complainants did not mention a required $10 room deposit payable in advance. This charge is revealed for the first time in item 6 of the General Information portion of the vacation certificate. See Towne, 8 and Ex. 7; A. Cansler, 4; and Mackin, 6).

Respondent imposes a further condition on the use of its "free" vacation, which its customers discover only after paying the service charge. According to item 15 of the General Information portion of the certificate ( see Towne, Ex. 7), the vacationer must attend "a unique new vacation concept presentation." Attendance is required not only to obtain a refund of the reservation deposit but to make the accommodation certificate valid at all. See Towne, 6; A. Cansler, page 2; and Mackin, 8.

Respondent's customer are promised free gambling money and that the $35 service charge will be the sole expense of the vacation. In his vacation package, Kenneth Towne received coupon books and certificates for gambling-related benefits. See Towne, Ex. 3-6. The gambling coupons in Ex. 3 (Mr. Sy's Funbook) require the purchase of nickels or quarters before any additional money is received. The Vegas World certificate (Ex. 5) requires the initial purchase of $1 in nickels and states "the complete package is distributed on hourly intervals over three consecutive days...." Exhibit 6, the Jolly Trolley Casino coupon, states on its face that a $1, non-refundable registration fee is required and that the benefits are redeemable hourly over an 18 to 72 hour period. The Canslers received a virtually identical set of coupons and certificates (Cansler Ex. 3-5). Inspector Mackin stated that nearly half the consumer complainants received gambling "benefits," but that they are not free (Mackin, 10).

Eighteen free meals were promised by respondent as part of the vacation. However, the vacation certificate states that the vacationer is responsible for all meals and beverages (Towne, Ex. 7, #8). Nor do the coupons and certificates offer meals that are free, because of the prerequisite registration fee, the 2-for-1 nature of some meals, and the hourly redemption condition.

Respondent's representations about free lodging, meals, gambling, and generally a free vacation are the primary basis of the bargain it hopes to strike with prospective buyers. They are the major inducements for the buyers to part with their money and accept the vacation offer. Thus, each of the representations is material, and their falsity is material to respondent's schemes to defraud the public.

By the affidavits and exhibits discussed above, complainant has shown that respondent, World Wide Leisure, Inc., is conducting a scheme whereby it solicits money or property by mail for so-called free vacations; that respondent makes certain material representa- tions as part of its solicitation; and that those representations are false.

Complainant proposed the following conclusions of law to support the relief sought by the complaint in this matter.

1. It is the impact of Respondent's promotional material upon those to whom it is directed, the totality of its stated and implied content, and the impression of the entire oral and written solicitation upon the general public that determines whether the material contains a false representation within the meaning of 39 U.S.C. 3005. N. Van Dyne Advertising Agency v. United States Postal Service , 371 F. Supp. 1373, 1376 (S.D.N.Y. 1974); Vibra-Brush Corp. v. Schaffer , 152 F. Supp. 461, 465 (S.D.N.Y. 1957), vacated on other grounds , 256 F.2d 681 (2d Cir. 1958); Donaldson v. Read Magazine , 333 U.S. 178 (1948); Borg-Johnson Electronics v. Christenberry , 169 F. Supp. 746 (S.D.N.Y. 1959); United States v. Outpost Development Corp. , 369 F. Supp. 399 (C.D. Cal. 1973); aff'd. , 414 U.S. 1105 (1973); Baslee Products Corp. v. United States Postal Service , 356 F. Supp. 841, 844-45 (D.N.J. 1973).

2. The average person who receives a telephone call telling of winning a Las Vegas vacation, especially one who recalled filling in a chance coupon for such a vacation, would interpret the written and oral solicitation material substantially as characterized in paragraph II b - d of the complaint.

3. In this case, the unrebutted testimony and document evidence draws an accurate picture of respondent's promotion. In at least some cases, respondent obtains names of sales prospects from chance coupons distributed at fairs and shows. Respondent telephones those prospects offering a free vacation, with free lodging, meals, gambling, transportation and show tickets--if they will pay a service charge of about $35. Upon making the required payment, by check of C.O.D. for purposes of this proceeding, the consumer receives the package and learns for the first time that there are numerous conditions, deposits, required payments, and other restrictions on the receipt and use of the vacation benefits.

4. Respondent's determination not to appear and present evidence at the hearing of this case permits the inference that it lacks any defense to the charges and the further inference that complainant's evidence, unless wholly lacking in credibility, is substantial and probative.

Subsequent to the filing by Complainant of its proposed Findings of Fact and Conclusions of Law, Respondent filed a Reply thereto in which Respondent stated the following points:

1. That Complainant has failed to include that the $35.95 service charge is completely refundable for any reason if requested within five (5) days from the date that the recipient receives the vacation package.

2. That the Complainant has failed to include that the $10.00 payment is a deposit to cover the hotel reservation dates and is refunded to the recipient upon arrival at the vacation hotel.

3. That Respondent's inability to appear and present evidence at the hearing of this case does not infer that it lacks any defense to the charges or that Complainant's evidence is substantive and probative.

4. That the Complainant's allegation that certain customers were ineligible to use the certificate because it is limited to persons between 21 and 55 is false because Paragraph 2 of the Resorts Accommodations Authorization states that it is valid for persons between the ages 21 to 65.

5. That Respondent denies that the Proposed Findings of Fact and Conclusions of Law are sufficient to permit the issuance of a remedial order against the Respondent.

These points are disposed of in the order stated above as follows:

Points 1 and 2. These arguments are rejected for the reason that the initial solicitation and offer, which is a misrepresenta- tion, has been made by Respondent and accepted by the prospective victim before the second phase of the scheme occurs--namely, the receipt of the "Resort Accommodations Authorization." What has been a relatively simple, forthright offer thus becomes complicated by terms and requirements, some of which require rather careful reading and analysis for clear understanding. Points 1 and 2 are without merit.

Point 3 of the Reply is, of course addressed to Complainant's Conclusion of Law Number 4, which speaks of "Respondent's determina- tion not to appear and present evidence at the hearing. ***." The word "determination" in the context of this proposed Conclusion of Law has at least two connotations: one, a decision or the exercise of a choice; and two, resoluteness or an obstinacy of purpose.

If Complainant intended to suggest that "determination" was to be understood in the first of the above connotations, it is possible that the decision or choice not to appear was freely made but was forced upon Respondent by circumstances of distance and expense, as asserted by Respondent. There is no evidence confirming or negating this possibility. If Complainant suggested or intended the second of the two connotations, some factual evidence would have to be adduced to establish the attitude of Respondent. No such evidence was produced or offered.

In view of the foregoing circumstances, Respondent's proposed Conclusion of Law number 4 is hereby rejected.

Point 4 of Respondent's Reply is, itself, composed in part of false statements and in part of statements that are immaterial. Paragraph 2 of the General Information section of the Resort Accommodations Authorization in the Towne case limits the validity of the Authorization to certain persons between the ages of 21 and 55. To this extent the statement in Point 4 is false. Paragraph 2 of the General Information section of the Resort Accommodations Authorization in the Cansler case limits the validity of the Authorization to certain persons between the ages of 21 and 65. Both Mr. and Mrs. Cansler are 72 years of age. Hence, at the time the offer was misrepresented to them by the telephone solicitors and by the time they received the volume of paper connected with the proposed vacation, both of them were well beyond the upper age limit of eligibility. At such time, any offer of a vacation under Respondent's plan to Mr. and Mrs. Cansler was a misrepresentation. The misrepresentations specified in Points 1, 2, and 4, together with the false representations elsewhere discussed in this decision, require the rejection of Point 5 in Respondent's Reply.

The Findings of Fact proposed by the Complainant are hereby adopted.

Except for proposed Conclusion of Law Number 4, which is rejected, the Conclusions of Law proposed by the Complainant are hereby adopted.

It is also concluded as a matter of law that Respondent is engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations within the meaning of 39 U.S.C. 3005.

An order of the type authorized by 39 U.S.C. 3005, substantially in the form attached, should be issued against this Respondent.