In the Matter of the Complaint Against

 CONTINENTAL VACATIONS, INC.

 and

 14753 Ventura Boulevard at
 Sherman Oaks, CA 91403

 P.S. Docket No. 11/2;
 
 09/25/81
 
 Grant, Quentin E.

 APPEARANCES FOR COMPLAINANT:
 Sand ra C. McFeeley, Esq.

 Consumer Protection Division
 Law Department
 U.S. Postal Service
 Washington, DC 20260
 James Harbin, Esq.
 Office of the Regional Chief Inspector
 U. S. Postal Service
 850 Cherry Avenue
 San Bruno, CA 94098

 APPEARANCE FOR RESPONDENT:
 Martin Radoff, Esq.
 12155 Riverside Drive
 North Hollywood, CA 91607

Complainant has alleged in a Complaint filed on March 27, 1981, that Respondent, under the names set forth in the caption hereof, is engaged in a scheme to obtain money or property through the mails in violation of 39 U.S.C. § 3005 by means of false representations concerning Las Vegas vacation offers.

The Complaint was on April 10, 1981, ordered amended to add a further allegation of misrepresentation.

Respondent's Answer denies that it is in violation of the false representation statute but contains admissions of certain allegations of the Complaint.

A hearing was held in Los Angeles, California, on July 8, 9 and 10. Complainant's evidence was received. Respondent offered no evidence (Tr. 824, 836). Complainant has filed proposed findings of fact and conclusions of law, and written argument. Respondent has not done so but through its counsel made oral argument on the record at the hearing. To the extent indicated, proposed findings and conclusions have been adopted. Otherwise they have been rejected as irrelevant, immaterial or contrary to the evidence.

Witnesses testifying for Complainant were Postal Inspectors Christine Macho and Wayne Gray, and Mrs. Mary Frake and Mrs. Phyllis Wagner. Respondent called no witnesses.

1. Continental Vacations, Inc. is a California corporation whose principal place of business is or was 14753 Ventura Boulevard, Sherman Oaks, California 91403 (Admission of Facts No. 2).

2. Continental Travel is a trade name used by Continental Vacations, Inc. (A of F No. 1).

3. Respondent maintains or has maintained telephone service using telephone number (213) 986-5181 (A of F No. 3).

4. Both names set forth in the caption hereof are used by Respondent in the conduct of restaurant and hotel promotion plans offering "3-day & 2-night" vacations in Las Vegas, Nevada (E-1 through E-7).

The Complaint alleges that by means of false representations made in postcards containing a solicitation headed by the words "IMPORTANT NOTICE," telephonic presentations to persons responding to the postcard solicitations, and vacation certificates Respondent obtains money or property through the mails in violation of 39 U.S.C. § 3005. The several alleged false representations are quoted and discussed in the Findings of Fact below.

Following are the standards of interpretation of advertising applicable in this kind of proceeding and applied by the presiding Administrative Law Judge:

The meaning of advertising representations is to be judged from a consideration of an advertisement in its totality and the impression it would most probably create in ordinary minds. Donaldson v. Read Magazine, 333 U.S. 178 (1948); Vibra-Brush Corp. v. Schaffer, 152 F. Supp. 461 (S.D.N.Y., 1957); Borg-Johnson Electronics v. Christenberry, 169 F. Supp. 746 (S.D.N.Y., 1959). Express representations are not required. 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 representation, if it is artfully designed to mislead those responding to it the mail fraud statutes are applicable. G. J. Howard v. Cassidy, 162 F. Supp. 568. See also Virginia State Board of Pharmacy v. Virginia Citizens Council, 425 U.S. 748 (1976).

5. Respondent has mailed or caused to be mailed postcards which state:

"Your name was obtained from the List Clearing House entitling you to receive an exciting 3-day and 2-night vacation offer in fabulous Las Vegas, Nevada".

These cards direct recipients to call (213) 986-5181 for complete information (A of F No. 4).

6. Persons who call (213) 986-5181 are requested by telephone solicitors to purchase a vacation certificate from Respondent (A of F No. 5).

7. Respondent's telephone solicitors tell persons calling (213) 986-5181 substantially the following:

Because your name was selected you and your guest will vacation in Las Vegas, Nevada for three days and two nights with first-class room accommodations. Along with the hotel, you and your guest will be presented with breakfast, lunch and dinner each day, cocktails for two at each meal. you'll also receive $50 in cash nickels, $120 in tokens for the slot machines, and two passes to a show--for a total value of over $500. The only thing we do not provide is transportation, but if I add your name to our list today, you and your guest may go anytime between now and the Christmas season in 1981. If you take advantage of our offer, I have to arrange that you receive your vacation certificate in the mail. You simply fill it out and send it in two weeks before you plan to go. Continental Travel does require a service fee of $42.50. That's to cover the processing, mailing and handling for you.

After the caller agrees to accept and pay for the certificate, the Continental Travel representative states,

There's a room deposit required by the hotels. That's to guarantee your arrival. That's stipulated on your certificate....And that's given back to you through the use of the vouchers we're giving.

(E-4, I-2)

8. After paying by credit card or check the $42.50 service fee, purchasers receive two vacation certificates (E-6, H-5, I-5).

9. Attached to the vacation certificate is a Reservation Request Form which purchasers are required to mail to Respondent together with a check or money order payable to Respondent in the amount of $50.00 (or more) in order to reserve a room in a motel, condominium, or hotel at Las Vegas.

In Findings of Fact Nos. 10 through 20, below, the underscored initial sentence is a representation alleged in paragraph III of the Complaint to be false and made by Respondent in soliciting remittances for the vacation packages Respondent sells.

10. Each purchaser of the Las Vegas vacation package will receive free lodging for three days and two nights.

This representation is implied in Respondent's solicitation postcard in the advice that the recipient is " entitled to receive an exciting 3-DAY & 2-NIGHT vacation offer" (E-1) coupled with that part of the telephonic solicitation (E-3, 4; I-2) which says that "you and your guest will vacation ... with first-class room accommodations. Along with the hotel, you and your guest will be presented with breakfast, lunch etc. ... You will also receive $50 in cash etc. ... Along with all of this you will receive two passes etc. underscoring supplied .

This pitch is loaded with words giving the impression that the hotel accommodations are part of the "give-away," to be had at no cost to the lucky selectees. The mention later in the solicitation of a required deposit to guarantee arrival is artfully positioned and phrased to convey the impression that it is only a temporary inconvenience to the purchaser, to be rectified promptly on arrival in Las Vegas through conveniently redeemable vouchers.

This representation is false. The hotel accommodations are not free. The issuance of vouchers redeemable for drinks and "stuff" does not constitute a return of the deposit, as promised by Respondent.

11. Room deposits will be fully refunded to the vacationer.

The facts cited in 10, above, and the reasoning applied thereto support the finding of this representation and its falsity.

12. Breakfast, lunch and dinner for three days will be furnished free as part of the accommodations to the vacationer.

This representation is found in that part of the telephonic solicitation (E-4, I-2) which says, "Along with the hotel, you and your guest will be presented with breakfast, lunch and dinner each day..."

The meal coupons provided a free breakfast (mostly between 11 P.M. and 6 A.M.), but the lunch and dinner coupons gave only a discount or price reduction of the regular cost of a meal (E-39).

This representation is false.

13. Each purchaser of respondent's Las Vegas vacation package will receive unconditionally and without additional expenditure of funds $50 in cash nickels.

This representation is made expressly and impliedly in the telephonic solicitation "You'll also receive $50 in cash nickels ..." (E-4, I-2).

There is a minimal effort toward disclaimer in the Vacation Certificate (E-6) where mention is made that some casinos require that you buy a certain amount of nickels to receive some free. But this is inadequate to alter the impression given in the telephonic solicitation.

Purchasers do not receive $50 in cash nickels unconditionally and without additional expenditure.

This representation is false.

14. Respondent requires room reservation deposits solely for the purpose of guaranteeing the vacationer's arrival at a designated lodging.

This representation is explicit in the telephonic solicitation (E-4, p. 7; I-2). It is false for the same reasons given in 10 supra. It is evident that Respondent uses the "guarantee" deposits (or part thereof) to pay for the rooms reserved for purchasers (E-10, I-10). The confirmation notices sent to purchasers state that "all hotels are prepaid."

15. Each purchaser of respondent's Las Vegas vacation package will receive unconditionally and without additional expenditure of funds passes to four main shows.

Complainant's proposed findings of fact point to Respondent's telephonic solicitation (E-4, I-2) as the source of this representa- tion. The solicitation promises "two passes to a show."

The representation alleged is not made in the telephonic solicitation.

16. The gambling, food and drink benefits furnished with respondent's vacation package are fully and conveniently usable by each customer over the three-day vacation period.

Respondent admits the making of this representation (Ans. Par. III).

This representation is false. The record is replete with testimony and other evidence showing that for many, if not most, purchasers redemption of the vouchers and coupons contained in the vacation package could be accomplished only with great difficulty and inconvenience in terms of traveling considerable distances from hotel to casinos, casino to casino, spending an inordinate number of hours because of time restrictions on the use of vouchers and coupons, and spending sizable amounts of cash (E-38, 39, 40; Tr. 424-427, 441, 443, 494, 495, 600).

17. Respondent's customer will receive and be able reasonably to use, within a three-day vacation, benefits totalling over $500.

This representation is made in Respondent's telephonic solicitation (E-4, p. 1) and the vacation certificate (Enjoy over $500.00 in Benefits in Las Vegas]]]) (E-6).

Most of this $500.00 value is in tokens to be used in a token slot machine. Respondent assigns a $1.00 value to each token (E-23). The number of tokens promised in the vacation certificate (E-6) is 480 per couple, having a value of $480.00 using the $1.00 valuation. However, the token machines at the Ambassador Casino, whose gambling package is furnished by Respondent to purchasers, pays off in quarters (Tr. 537). Standard slot machines pay off in coins of the value inserted in the slot. Moreover, the Ambassador token machine rarely pays off (Tr. 498).

I find that $1.00 is a gross overvaluation of the tokens. Twenty-five cents would be a generous valuation. Thus 480 tokens would have a true value not exceeding $120. An additional $380 in benefits, to make a total of $500, would be realizable only with great difficulty and inconvenience, if at all. For instance, the vouchers usable at The Castaways (E-24) and the Silver Slipper (E-25) have a total value not exceeding $25 (Tr. 719-724).

This representation is false.

18. Respondent will secure lodging for purchasers of its vacation certificates at safe, reasonably sanitary establishments that meet the ordinary standards of overnight accommodation for families on vacation in a resort area.

Respondent's telephonic solicitation makes this representation in its assurance of "first-class room accommodations" (E-4, p. 1).

The representation is false. Inspector Macho was placed in the Sutton Place Motel in a room that was dirty, insecure, and without heat (Tr. 491). The manager of the motel acknowledged that it was not a first-class establishment. Based on Inspector Macho's experience it is fair to assume that other purchasers of Respondent's package are put up in similar, sub-first-class lodgings.

19. Each person whom respondent solicits to purchase its vacation certificate will be entitled to receive all the benefits offered.

This representation is clearly and fairly implied in the telephonic solicitation (E-4) and the vacation certificate (E-6).

Based on 10 through 18, above, I find that this representation is false.

20. Each purchaser of respondent's vacation certificate will receive, upon request made within 20 days of receipt of the certificate and accompanied by it, a full refund of the purchase price of the certificate.

This representation is explicitly made in the vacation certificate (H-5). It is false. There are cases in which Respondent does not make a full refund on return of the vacation certificate by a dissatisfied purchaser (Tr. 663, 664).

21. The representations found above are material in that their natural tendency is to induce purchases of Respondent's vacation package.

1. Respondent, under the names and at the address contained in the caption hereof, is engaged in a scheme to obtain money or property through the mails by means of false representations concerning its "3-DAY & 2-NIGHT vacation offer in Las Vegas, NV for 2 adults."

2. Such representations are substantially as characterized in paragraph III of the Complaint, except for that alleged in subparagraph f. (F. of F. #15, supra), and would be so understood by persons of ordinary mind.

3. The number of complaints, if any, received from the public is not of importance in cases under the false representation statute. See Farley v. Heininger, 105 F.2d 79, 84 (D.C. Cir. 1939).

4. Disclaimers are ineffective to rebut misrepresentations. Gottlieb v. Schaffer, 141 F. Supp. 7 (1956); Cates v. Haderlein, 189 F.2d 369 (1951).

5. A money-back guarantee is no defense to this kind of proceeding. G. R. Paro, P.S. 6/111 (P.S. Dec. 1979).

6. Respondent advances as a defense to the Complaint the assertion that everyone going to Las Vegas expects everything to be complimentary (free). I find that such expectations are encouraged by the misrepresentations made by Respondent in its solicitation and vacation certificate.

7. Respondent is in violation of 39 U.S.C. § 3005. Accordingly, a mail stop order in the form attached should be issued against Respondent.