In the Matter of the Complaint Against

 MICHAEL NARCUM,
 doing business under the names
 CMONA and CMIA,
 P.O. Box 464 at
 Woodstock, IL 60098

 P.S. Docket No. 11/26
 
 October 16, 1981
 
 Edwin S. Bernstein Administrative Law Judge

 APPEARANCES FOR COMPLAINANT:
 Steven B. Caver, Esq.
 H. Richard Hefner, Esq.
 
 Consumer Protection Division
 Law Department
 U.S. Postal Service
 Washington, DC 20260-1100

 APPEARANCE FOR RESPONDENT:
 Joseph P. Condon, Esq.
 Condon and Zopp 
 550 Barley Road, Suite 210
 Crystal Lake, IL 60014

 BEFORE: Judge Edwin S. Bernstein

Complainant alleged and Respondent denied that Respondent is conducting a scheme to obtain money through the mails by means of false representations in violation of 39 United States Code 3005. I held a hearing in Chicago, Illinois, on September 9, 1981. Robert F. Bobowski, Dorothy Ann Frye, and Isiah Paul Ward testified for Complainant while Respondent, Michael Narcum, testified on his own behalf. At the hearing, the caption of the case was amended (Tr. 48).

I find that Respondent solicits money through the mails in connection with his subject business. In Paragraph I of his Answer, Respondent admitted that persons responding to his advertisements receive a direct mail circular. Furthermore, the testimony of Inspector Ward (Tr. 51-59) and Ms. Frye (Tr. 37-38), as well as all of Complainant's exhibits, support this finding.

The legal test to be applied to interpretation of advertising representations is the probable impact of the advertisement, taken as a whole, upon ordinary minds. An advertisement may be deceptive because its statements are untrue or because statements which should be contained are omitted. The total impression of an advertisement may be false although each word individually is true. Donaldson v. Read Magazine, Inc. , 333 U.S. 178 (1948); Vibra-Brush Corp. v. Schaffer, 152 F. Supp. 461 (S.D.N.Y. 1956).

Representations are material if their natural effect is to induce readers of the advertising to purchase the advertiser's program or product. See F.T.C. v. Colgate-Palmolive Co., 380 U.S. 374, 387 (1965).

False advertising representations are not protected by the freedom of speech guarantees of the First Amendment to the Constitution. Lynch v. Blount , 330 F. Supp. 689 (S.D.N.Y. 1971), aff'd 404 U.S. 1007 (1972); Hollywood House International v. Klassen, 508 F.2d 1276 (9th Cir. 1975); and Virginia State Board of Pharmacy, et al. v. Virginia Citizens Consumer Council, Inc. et al. , 420 U.S. 971 (1976). Nor is the effect of false advertisements dispelled by a money back guarantee or an offer to refund payment in the event of customer dissatisfaction. G. J. Howard v. Cassidy , 162 F. Supp 568 (E.D. N.Y. 1958); Farley v. Heininger , 105 F.2d 79 (D.C. Cir. 1939); and Borg-Johnson Electronics v. Christenberry , 169 F. Supp. 746 (S.D. N.Y. 1959).

Applying these principles, I find that Respondent has made the following representations, as alleged in Paragraph 3 of the Complaint, for the following reasons.

In his Answer, Respondent admitted the truth of Subparagraphs 3(a), (b), and (c). These allegations are:

(a) Persons responding to the initial circulars (Exhibits Two and Three) will receive a "Beginner's package" which will enable them to start making hundreds of dollars weekly;

(b) Materials required for participation in the program will be furnished by Respondent;

(c) The work performed consists principally of stuffing envelopes. Subparagraph 3(d) states "The only cost to the participant is the initial fee for the program." The last paragraph of page two of CX-2 states "This fee pays for your Association participation, your processing, Starting Kit and Instructions, and no other fee will be required from us." The third paragraph of both CX-2 and CX-3 states "you get free circulars and postage."

Subparagraph 3(e) states "Participants will earn $60.00 for every one hundred envelopes they stuff and mail." One of the classified advertisements in CX-1 states "$60/100 STUFFING envelopes]" The third paragraphs of CX-2 and CX-3 are headed "$60 per 100 circulars you mail."

Subparagraph 3(f) states "Participants can earn hundreds of dollars weekly stuffing envelopes." Several of the classified advertisements used by Respondent state "HUNDREDS WEEKLY stuffing envelopes]" The third paragraph of CX-2 and CX-3 states "earning several hundred dollars per week and more."

Subparagraph 3(g) states "The only limit on income potential is the amount of time the participant wishes to spend on the program." One of the classified advertisements used by Respondent states "Unlimited quantity]" The third paragraph of both CX-2 and CX-3 states:

"You can mail as many as you have time for, and you can quit any time you like. There is no set minimum on how many you do. You can do as many as you want. This way, how much money you earn is up to you."

Additionally, the last sentence in paragraph four of CX-2 reads "There simply is no limit on how few or how many you do." I further find that all of these representations are materially false.

The representation that "Persons responding to the initial circular (Exhibits Two and Three) will receive a 'Beginner's Package' which will enable them to start making hundreds of dollars weekly" was proven false by the testimony of Mr. Bobowski (Tr. 12 and 13) and Respondent himself (Tr. 77). Mr. Bobowski, an expert on direct mail marketing, testified that many factors are involved in direct marketing and it takes time, money and knowledge to be a success. When Respondent was asked if any individuals other than one person have made several hundred dollars weekly he responded "I think not." (Tr. 77).

The representation that "Materials required for participation in the program will be furnished by Respondent" was proven false by the instruction booklet furnished to participants by Respondent (CX-5). The instructions inform the participant that he is to purchase circulars, envelopes and postage (CX-5 at 6-8). Also, the testimony of Inspector Ward and Ms. Frye add further evidence that all materials are not provided by Respondent.

The Representation that "The work performed consists principally of stuffing envelopes" was proven false by the testimony of Mr. Bobowski and also by the instruction materials provided by Respondent. Mr. Bobowski testified that "The envelope stuffing is merely a response made after the labor intensive part has been accomplished." (Tr. 14.) Also, a review of Respondent's instruction booklet (CX-5) discloses that the actual stuffing of envelopes is a minor part of Respondent's program.

The representation that "The only cost to the participant is the initial fee for the program" is proven false by the testimony of all the witnesses, including Respondent. On page six of Respondent's instruction booklet (CX-5), under the heading "KEEP CORRECT RECORDS," advertising costs and postage costs are mentioned as expenses. On the same page, under the heading "IMPORTANT SOURCES," there is a discussion of mail order supplies and printing. On page eight, under the heading "THE ROAD TO PROFITS," Respondent recommends the mailing of at least 500 circulars to start with. These 500 circulars are to be purchased by the participant, along with 500 printed envelopes. Postage costs are also to be paid by the participant. When Respondent was asked if additional expenses are involved for a person who participates in his program other than the initial fee that he charges them, he stated "In some cases, yes," (Tr. 81). Mr. Bobowski testified that the advertising involved in Respondent's program would be very expensive (Tr. 15).

The representation that "Participants will earn $60.00 for every one hundred envelopes they stuff and mail" is false based on the instruction booklet provided by Respondent. Respondent does not pay individuals $60.00 for every one hundred envelopes they stuff and mail. The income is based on sales or responses, not merely on the number of envelopes stuffed by the participant.

The representation that "Participants can earn hundreds of dollars weekly stuffing envelopes" was proven false by the testimony of Mr. Bobowski and Respondent and the materials provided by Respondent. Mr. Bobowski testified that this program does not consist primarily of stuffing envelopes. He stated "The envelope stuffing is merely a response made after the labor intensive part has been accomplished." (Tr. 14.) When Respondent was asked if anyone other than Paul Simmons had made several hundred weekly, he responded with "I think not." (Tr. 77.) Respondent testified that in 1980 he paid out $29,250.27 to fifty individuals in his program (Tr. 65). That would be an average of $585 each for the year, or $11.25 per week. Respondent also testified he received 2,776 orders in 1980 (Tr. 67). Of 2,776 individuals that paid money to Respondent for his program, only fifty (1.8%) actually participated after purchasing the program.

The representation that "The only limit on income potential is the amount of time the participant wishes to spend on the program" is false based on Mr. Bobowski's testimony and Respondent's materials. The limit on income potential is the number of inquiries a participant receives in response to his advertising. The participant is not provided with hundreds of circulars to stuff for $60.00 per hundred. He must spend time purchasing materials and advertising at his expense. His income potential is then dependent on whether or not he receives any responses.

Therefore, I find that Respondent is engaged in conducting a scheme for obtaining money through the mails by false representations in violation of 39 U.S. Code 3005. Accordingly, a mail stop order, substantially similar to the form attached should be issued against Respondent.