In the Matter of the Complaint Against CLASSIFIED REPORTS P. O. Box 570 Lynbrook, NY 11563 and 581 West Merrick Road Valley Stream, NY 11580 and 500 Market Street Perth Amboy, NJ 08861 P.S. Docket No. 12/178; 04/28/82 Bernstein, Edwin S. APPEARANCE FOR COMPLAINANT: Hilda Rosenberg, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260 APPEARANCE FOR RESPONDENT: Richard Kurnit, Esq. Frankfurt, Garbus, Klein & Selz 485 Madison Avenue New York, NY 10022 BEFORE: Judge Edwin S. Bernstein
Complainant alleged and Respondent denied that Respondent is engaged in conducting a scheme to obtain money through the mail by means of false representations in violation of 39 United States Code § 3005 in connection with Respondent's sale of its publications, 1981 Government Giveaway Guide and 1982 Government Giveaway Guide.
A hearing was held in Washington, D.C. on February 8 and 9, l982. By order dated April 21, l982, I permitted Complainant to file a Supplemental Complaint dated March 26, l982 and I received into evidence Complainant's Exhibits 12 through 20. All of the parties' proposed findings of fact, proposed conclusions of law, and arguments have been considered. To the extent indicated, they have been adopted. Otherwise they have been rejected as irrelevant, immaterial, or not supported by the evidence.
Respondent solicits remittances of money through the mail in connection with its sale of its 1981 Government Giveaway Guide and its 1982 Government Giveaway Guide. Except for the fact that the same copyright information appears in different locations, the 1981 and 1982 Guides are identical. They are hereinafter collectively referred to as "the Guide." Except for change in prices, Respondent used the same advertisement for the 1981 (CX-1 and CX-3) and 1982 (CX-8 and CX-12) guide. These advertisements are hereinafter collectively referred to as "Respondent's advertisement" or "the advertisement."
III. The Advertising Representations
At the hearing (Tr. 206), Paragraph III, subparagraph B of the Complaint was amended to read:
"B. The 1981 Government Giveaway Guide will enable anyone to obtain a minimum of $500.00 in free cash from sources in the United States Government of which he/she was previously unaware."
Except for the use of "1982" instead of "1981" the Supplemental Complaint is identical to the original Complaint, as amended. I find that Respondent's advertisement for its 1981 and 1982 Govern ment Giveaway Guide makes the representations alleged in Paragraph III, subparagraphs A. through F. of the Complaint and Supplemental Complaint. My reasons with respect to each combined subparagraph are as follows:
A. The United States Government has free money readily available for everyone who asks for it, without regard to age, need or any other qualification.
This representation is conveyed to the reader many times throughout Respondent's advertisement. This message is initially conveyed by the boldly printed heading "How to Collect Free Money From Uncle Sam...Whether You Need It Or Not." The subheading which follows emphasizes the general applicability of the Government's "Giveaway Program" by stating "Whether You're Under 18, Over 65, Or Somewhere In Between, Uncle Sam's Instant Free Cash Giveaway Program Could Solve All Your Money Problems Forever]" The advertisement not only dismisses need and age as factors in securing Federal aid, but goes on to suggest that one need not meet any eligibility require ments at all. For example, the advertisement states:
"It doesn't matter who you are...how old or young you are...whether you're a man or woman, black or white] Uncle Sam has giveaway programs for everyone..." (paragraph 5)
This idea is, further, reinforced as follows:
(a) "Yes, Uncle Sam has just set aside over ONE MILLION DOLLARS for Americans who need (orjust want) EXTRA MONEY" (paragraph 2) underlining added
(b) "Anyone can apply for as much money as they can reasonably spend --or even more] (paragraph 2) underlining added
(c) "Uncle Sam is waiting to hand over his money to you] Yes he has instant free case for thousands and thousands of people...to be spent for almost anything you could possibly need]" (paragraph 4)
The impression that the Federal Government is overflowing with money just waiting to be spent by the American public is strongly suggested by the following phrases:
(a) " F latten up your budget instantly... reverse the sting of inflation ... and treat yourself to the best of everything on Uncle Sam..." (paragraph 1)
(b) "And it's even possible to receive a guaranteed millionaire's income for life] (paragraph 2)
(c) "Uncle Sam's BILLION DOLLAR FREE CASH GIVEAWAY]" (paragraph 3)
(d) "One Simple Letter to Uncle Sam Could Bring You a Whopping Big Check]" (Bold letters, middle of column)
(e) "There is only one way to cash in on these programs that have been set up to give away millions of dollars in FREE MONEY. You must write Uncle Sam and give him your name and tell him where to send the money]" (paragraph 2, column 2)
B. The 1981 and 1982 Government Giveaway Guide will enable anyone to obtain a minimum of $500.00 in free cash from sources in the United States Government of which he/she was previously unaware.
Respondent specifically makes this promise in its statement of guarantee. The following pertinent language is found in the last paragraph of the advertisement and in the order coupon:
(a) "Guaranteed--At Least $500 In Government Cash In Your Pocket...Or Your Money Back]"
(b) "Classified Reports guarantees that this exclusive undercover report will get you at least $500 in free cash from the U. S. Government or your money will be refunded]
(c) They believe that with all this free government money gone begging, the average person can claim at least $500 in extra benefits that he or she doesn't even know about now...and some people will do a whole lot better]" (last paragraph)
(d) "I understand that it must make me at least $500 in free government cash from sources I am not aware of now or you will refund my money." (order coupon)
The fact that Respondent states that it will guarantee this result and will refund a customer's money should it not occur, greatly increases the credibility of this claim. Other indications in the advertisement of the vast sums of Federal monies available to the public, for example, Respondent's claim that "it's even possible to receive a guaranteed millionaires' income for life," make the receipt of $500 seem like a very conservative estimate.
C. To collect free cash from the United States Government, you need only write one simple letter requesting cash to the addresses listed in the 1981 and 1982 Government Giveaway Guide.
The representation that one need only write one simple letter requesting cash to take advantage of "Uncle Sam's Instant Free Cash Giveaway Program" contributes to the idea that Federal money is easily obtainable by almost anyone. This letter is referred to in Respondent's advertisement as follows:
(a) "Thanks To This Year's New Rules That Do Away With Crazy Paperwork, One Simple Letter to Uncle Sam Could Bring You a Whopping Big Check]" (middle of column 1, bold print heading)
(b) "Uncle Sam has giveaway programs for everyone...but you have to write Uncle Sam a letter before you can get the money]" (paragraph 5)
(c) "Uncle Sam wants you to have this money. In fact, he has hired professional people who do nothing all day but sit and wait for your letter to come in, asking for some of this money...and they are supposed to write as many checks as possible]" (paragraph 9)
(d) "Your letter must reach Uncle Sam before the time runs out. Then he can send you the biggest check you are entitled to by return mail]" (paragraph 1, column 2)
D. The 1981 and 1982 Government Giveaway Guide will provide the addresses of all Federal programs from which persons may collect free money.
Respondent's advertisement also claims that the Guide will advise people where to send their letters. Respondent states:
"There is only one way to cash in on these programs that have been set up to give away millions of dollars in FREE MONEY. You must write Uncle Sam and give him your name and tell him where to send the money]
But where do you send your letters? That's what everybody would like to know] And--believe it or not --while Uncle Sam has hired hundreds of people to give this money away, he hasn't hired anyone yet to tell people where to send their letters]
But now something has been done about this situation. . . A special insider's report that tells you how to start claiming this easy money right away has just been released by Classified Reports called 'How To Collect Free Money from Uncle Sam...Whether You Need it Or Not.'" (column 2, paragraphs 2, 3 and 4)
E. The book entitled "How to Get Uncle Sam to Buy you a New Car - Free" will enable you to obtain a free car from the United States Government.
In the order coupon, Respondent informs customers ordering the "full package" that they will receive a book entitled "How to Get Uncle Sam to Buy you a New Car --Free." The title of what is actually a one page pamphlet, and not a book at all, (CX-7) clearly represents that this publication will enable one to obtain a free car from the Federal government. Slumber-Shapers, Inc., P.S. Docket No. 2/20, Postal Service Decision at 4-5 (l973), held that a descriptive product name is in itself a representation of the qualities of the product.
F. Information on how to claim Federal monies from government programs is not made available to the public by the United States Government.
Respondent criticizes the Federal government for its failure to provide the public information on its benefits programs in contrast to Respondent's own "incredible, step-by-step grab the money guide." Respondent claims: "Uncle Sam won't tell you about a single one of these programs unless you ask]" (paragraph 5, column 1) It adds: "And --believe it or not --while Uncle Sam has hired hundreds of people to give this money away, he hasn't hired anyone yet to tell people where to send their letters] (paragraph 3, column 2)
Respondent strongly implies that a publication as informative as its own is simply not published by the Federal government. It refers to its report as "exclusive" and states: "You won't find this goldmine guide to government free money programs on your news stand or in any store. And you can't buy it from Uncle Sam himself] In fact, the only way to obtain this incredible, step-by-step 'grab the money' guide is direct from the source, Classified Reports . . .." (paragraphs 5 and 6, column 2)
III. The Truth or Falsity of The Representation
The representations made by Respondent's advertisements as charged in paragraph III, subparagraph A. through F. of the Com plaint and Supplemental Complaint are materially false as a matter of fact, for the reasons indicated under combined subparagraphs A. through F. below.
At the hearing, Complainant called nine witnesses, all employ ees of the Federal government, to testify as to the veracity of Respondent's claims. Through his work at the Office of Management and Budget ("OMB") in the Executive Office of the President, Mr. James Adams, has developed an overall view of the Federal benefits programs. Mr. Adams serves as a Computer Systems Analyst in the Federal Program Information Branch, the branch responsible for collecting, analyzing and maintaining data on the Federal government's domestic assistance programs (Tr. 77). As mandated by Congress, this branch maintains a data base on such programs, publishes a catalog on federal domestic assistance programs (Tr. 77). As mandated by Congress, this branch maintains a data base on such programs, publishes a catalog on federal domestic assistance programs and manages a computerized information system, called FAPRS --the Federal Assistance Program Retrieval System (Tr. 17-18). 31 U.S.C. ?? 1702 - 1705. The 1981 Catalog of Federal Domestic Assistance and its November 1981 Update were admitted into evidence as CX-9 and CX-19 (Tr. 23). Mr. Adams manages the computer systems which support both the production of the catalog and FAPRS and the maintenance of the data base (Tr. 18). No only does Mr. Adams have extensive work experience and training in computer sciences, but he also has specific expertise in the area of Federal information systems (Tr. 176-177; 22).
Complainant also called two spokespeople who represented the two largest Federal benefits programs, Mr. Gilbert Fisher of the Social Security Administration and Mr. David Brigham of the Veterans Administration ("VA") (Tr. 146; 118). As Director of Public Infor mation at Social Security's headquarters, Mr. Fisher coordinates the agency's public information efforts and prepares informational materials for its field offices and the public, generally (Tr. 142-143; 146). Mr. Brigham, for the last four years has managed the public service arm of the VA's regional office in Washington, DC and his division of 75 people is responsible for public contact on the local level (Tr. 15-116). Both gentlemen are thoroughly steeped in the substantive aspects of their agency's benefit programs. (Tr. 125-129, 133, 155-156.) Mr. Brigham has been with the D.C. regional office of the VA for 11 years (Tr. 115). Mr. Fisher has spent 17 years with the Social Security Administration, over 10 of which were in the area of legislation involving all aspects of Social Security's programs (Tr. 141-142).
To demonstrate that Respondent's pamphlet entitled "How to Get Uncle Sam to Buy You a New Car, Free]" does not, in fact, enable an individual to obtain a free car from the Federal government, Complainant called six witnesses, one from each of the Federal programs the pamphlet names as providers of such automobiles.
Respondent presented no witnesses and no evidence whatsoever to substantiate the claims made in its advertisements.
A. The United States Government has free money readily available for everyone who asks for it, without regard to age, need or any other qualification.
Mr. James Adams of the Federal Program Information Branch of the Office of Management and Budget testified that of the Federal programs providing financial assistance, none allows an individual without qualifications to obtain Federal funds (Tr. 27). Mr. Adams' experience qualifies him to draw this conclusion. Providing him with a keen general perspective of the Federal domestic assistance area, his job responsibilities include the management of the computer systems supporting the Federal Domestic Assistance Catalog, FAPRS and the data base; serving as Branch Chief in his superior's absence; and responding to both general and specific questions from varied sources on Federal benefit programs (Tr. 18-19). Mr. Adams described his day-to-day routine:
"Much of my work entails extensive review of parts of the catalog or aspects of the catalog information that cut across program boundaries. I spend a good deal of time looking at the quantity and quality of information, for instance, under applicant eligibility, to determine whether or not program descriptions are relatively consistent in terms of level of information and the phrasing of information." (Tr. 31-32)
Mr. Adams also develops and researches coding schemes used for the preparation of indexes (Tr. 28, 32). These codes represent information on Federal programs. For example, there are 20 codes identifying the kind of applicant qualifying for a program, such as an individual or a state agency (Tr. 28, 32). There are also codes representing the 15 types of assistance provided by the government (Tr. 28).
To verify his conclusion that Federal financial assistance programs have definite eligibility requirements, Mr. Adams used these coding schemes to conduct a computer search (Tr. 27-28). Mr. Adams found 31 financial assistance programs for which any individual may apply; however, when he looked at the program descriptions, he found further qualifications for eligibility for all 31 programs (Tr. 28).
Mr. Adams' general background in computer science and Federal information systems, as well as his expertise in OMB's specific Federal Information System make him well qualified to design a means to test his conclusions regarding eligibility for Federal programs as well as to carry out that test on the computer. He has worked as a computer systems analyst since 1969 and has taken all sorts of courses on data processing topics (Tr. 177). From 1969 through 1971, Mr. Adams was employed by a private company developing computer support for various Federal information system (Tr. 33).
During 1978, he was asked by OMB to participate in the Federal Information Systems Study mandated by Congress (Tr. 33).
OMB's Federal information system, upon which Mr. Adams relied in forming his conclusion, is comprehensive. Careful efforts are taken by the Branch staff to ensure that program information is both current and complete. Following detailed OMB instructions, agencies regularly submit program information to the information analysts on the Branch staff responsible for that agency (Tr. 24, 192). The six analysts, in Mr. Adams' words, read "voraciously" (Tr. 193). They read the Federal Register daily for new program announcements (Tr. 192). They review the Federal Budget to ensure all Federal domestic assistance programs listed in the Budget appear in the Catalog (Tr. 192). Analysts also follow developments through trade publications in specific areas and through publications of the agency and keep in close contact with the Congressional staff persons (Tr. 193). Additionally, Mr. Fisher of Social Security and Mr. Brigham of VA indicated that the Catalog included all of their agency's benefits programs (Tr. 134, 167).
The representatives of the two largest Federal benefits pro grams --both in terms of beneficiaries and funds --confirmed Mr. Adams' conclusion with respect to their individual programs (Tr. 118, 146). Mr. Brigham of the VA testified that all VA programs have eligibility requirements (Tr. 119). Some of the factors taken into account are: (1) service in regular, active duty with the armed forces, (2) length of service, (3) character and nature of discharge and for some programs, (4) level, severity and type of disability, and (5) income level (Tr. 119). Mr. Fisher of the Social Security Administration testified that the basic social security programs --Retirement, Disability and Survivors Programs --have a work requirement and the Aid to Families with Dependent Children and Supplemental Security Income programs each have a needs test (Tr. 147-148). In addition, age, relationship to worker and disability are important factors in determining eligibility for the basic Social Security benefits (Tr. 148).
Respondent's publications themselves demonstrate that one needs to meet certain eligibility requirements to qualify for the receipt of Federal funds. These publications consist of three pamphlets designated as reports. In addition to Social Security and Veterans' Benefits, Report No. 1 refers to the following benefits programs, aimed at the individual, and lists eligibility requirements for each (CX-4):
(1) Medicare must be 65 or disabled or
(p. 5) receive dialysis
(2) Unemployment quit last job because it
(p. 5-6) endangered your health
(3) Food Stamps income restrictions
(p. 7)
(4) Medicaid income restrictions
(5) Education Grants proper financial need
(p. 9-10)
(6) Housing Money income restrictions
(p. 11) handicap
(7) Rural Housing income restrictions
(p. 12)
This Report also cites various loan programs (e.g., Educational Loans). Report No. 2, directed at businesses, community and non-profit groups, refers primarily to loan programs and Federal assistance in the form of advice and informational services (CX-5). The few grants cited must be used for specific purposes such as "energy-related, small scale technology" and, therefore, require an individual to be involved in a specialized area of work (CX-5, p. 6). Report No. 3 indicates services provided by the Federal government, not financial assistance, and is therefore not relevant to this issue (CX-6).
Although persons have been known to receive Federal funds to which they were not entitled, as exemplified by overpayments in the SSI program and under the GI Bill, the Federal government makes efforts to recover these funds and to prevent future occurences (Tr. 137-140, 169-173). Occasional fraudulent practices by individual applicants and errors by the Federal government in distributing benefits do not, however, substantiate Respondent's representations of free cash for the asking. The advertisement assures its readers that the giveaway programs it describes are entirely "lawful" and that funds are distributed to everyone on a routine basis (e.g., "Uncle Sam Wants to Send You All The Money That Is Lawfully Yours in These Special Giveaway Programs," (caption of bottom paragraphs, column 1; also see, bottom paragraphs, column 1; caption, column 2, and first paragraph, column 2).
B. The 1981 and 1982 Government Giveaway Guide will enable anyone to obtain a minimum of $500.00 in free cash from sources in the United States Government of which he/she was previously unaware.
Since the Federal government, does not provide funds to just anyone, it follows that, with or without the Respondent's Guide, anyone will not obtain a miminum of $500.00 in free cash. As dis cussed above, Federal benefits programs including those named in the Guide have eligibility requirements. This alone makes represen tation B. false. In addition, as Complainant has shown, the Federal government goes to great efforts to inform the public of its programs. The Catalog of Federal Domestic Assistance is compehen sive and includes all programs found in the Respondent's Guide. Two of the largest benefits programs affecting a great number of people, VA and Social Security, underake substantial outreach and public information campaigns. Mr. Fisher of Social Security stated that the Social Security Administration reaches most members of the public through its public information activities (Tr. 156). He added that most people are not surprised when they receive their checks for they are well aware beforehand of their potential eligi- bility (Tr. 156). Mr. Fisher emphasized that members of the public are constantly made aware of Social Security programs because of the Social Security taxes deducted from their pay checks (Tr. 162). He added that since Survivors benefits have been payable since 1940 and Disability since 1957, there is general knowledge of the avail ability of these benefits (Tr. 162). It is, therefore, unlikely that Respondent's publications provide any more information to the public than is already available.
C. To Collect free cash from the United States Government, you need only write one simple letter requesting cash to the addresses listed in the 1981 and 1982 Government Giveaway Guide.
Mr. Adams of OMB testified that a letter merely requesting cash is an insufficient means to collect benefits from Federal programs (Tr. 31). OMB's information system does include information on applications, as exemplified by the heading "Application Pro cedures," found in the Catalog (Tr. 29-20). The category is specified for each and every program (Tr. 25). Mr. Adams based his testimony on the extensive work he does with OMB's information system (Tr. 31-32). He testified that he specifically tried to find programs where a letter was sufficient, but could not (Tr. 31).
Mr. Fisher confirmed Mr. Adams' conclusion in regard to Social Security programs. He testified that if a person wrote a letter requesting benefits, Social Security would not send him a check in the mail (Tr. 148). Mr. Brigham of the VA explained that a letter merely requesting cash is not a sufficient application for benefits because all VA programs have application procedures and eligibility requirements (Tr. 120). Both VA and Social Security programs require that an application be submitted, along with pertinent documentation (Tr. 119-120; 149). Mr. Fisher explained that although a letter might serve to protect a filing date, an "applica tion is the requirement" (Tr. 149). Mr. Brigham and Mr. Fisher also noted the efforts made by their agencies to assist individuals with filling out their application and the gathering of supporting documentation (Tr. 116, 158-160). These witnesses outlined the pro cessing procedures for benefits applications before a claim is adjudicated and the appeals processes available to the disgruntled applicant (Tr. 120-122, 149-151). Average processing times for VA and Social Security programs range from one to four months (Tr. 121-122, 151). Contrary to Respondent's representation, a letter asking for cash, does not bring a check from the Federal government in the return mail. An application form must be filled out, documentation provided, where necessary, and the claim must be processed before benefits are paid to the applicant.
In addition, Respondent's publication generally, fails to provide addresses for the Federal benefit programs to which these letters were supposed to be sent. Finally, the publication itself, does not advocate sending a bare letter requesting money as a way of securing Federal funds. For example, to apply for Medicaid, Respon dent's booklet advises the individual to go to his nearest state social services office and bring with him proof of income, bank books, rent receipts, etc. (CX-4, p. 8).
D. The 1981 and 1982 Government Giveaway Guide will provide the addresses of all Federal programs from which persons may collect free money.
Not only is Respondent's advertisement full of misconceptions on the workings of the Federal benefits program, but it is also very misleading as to the quality and nature of the publication it offers for sale. Implicating the Federal government as the cause, the advertisement emphasizes the public's ignorance as the where persons should send their letters requesting Federal monies. However, the Guide itself fails to provide addresses for most Federal benefit programs. Under its description of Social Security's basic benefit programs, S.S.I., and Medicare Report No. 1 merely advises the individual to contact the local Social Security office (CX-4, p. 5). The Report fails to contain any directory listing the addresses of these offices or how to find them.
Information contacts for other programs listed in Report No. 1 (CX-4) are described as follows:
1. AFDC "call the Federal Infor-
(p. 6-7) mation Center nearest you and they will steer you to the nearest state social services office"
2. Food Stamps "find your nearest state
(p. 7) social services office through the Federal Information center nearest you"
3. Medicaid "To apply for Medicaid, go
(p. 7-8) to your nearest state social services office"
4. Veteran's Benefits "Contact your nearest VA
(p. 8-9) office"
5. Housing "go to your nearest HUD
(p. 11) office. The Federal Information Center near your home should be able to direct you to it"
6. Rural Housing "Call the FmHA office nearest
(p. 12) you. These can be found through your nearby Federal Information Center."
Only two addresses are provided in this Report, both under the section entitled "Educational Money" (CX-4, p. 9-10).
The second report deals primarily with loan programs and advisory services offered by the Federal Government to businesses, community and nonprofit groups (CX-5). In the few instances where grants are discussed, information as to whom to contact tends to be more complete than in the first booklet. See, e.g., CX-5, p. 12 (Grants to set up programs for alcohol abusers and alcoholics). Report No. 3 deals entirely with services offered by the government and is therefore, not relevant to the veracity of representations D (CX-6). Similarly, the pamphlet, which purports to enable one to obtain a free car, is not pertinent to this issue (CX-7).
E. The book entitled "How to Get Uncle Sam to Buy you a New Car - Free" will enable you to obtain a free car from the United States Government.
The pamphlet "How to Get Uncle Sam To Buy You A New Car, Free]" lists six Federal programs which purportedly provide free cars to the public (CX-7). Six witnesses, one from each of these programs, testified at the hearing. The witnesses were:
1. Mr. Leslie Fredrickson, Deputy Director, Cotton, Grain and Rice Price Support Division, United States Department of Agriculture, Agricultural Stabilization and Conservation Service (Tr. 106);
2. Mr. Douglas Howard, Supervisor, Fishing Vessel and Gear Damage Compensation Fund, Department of Commerce, National Marine Fisheries Service (Tr. 92);
3. Mr. David Rogers, General Counsel, Foreign Claims Settlement Commission (Tr. 40);
4. Mr. Barry Rubin, Assistant General Counsel for Legal Counsel, Federal Trade Commission (Tr. 72);
5. Mrs. Betty Brake, Director, Older American Volunteers Programs, ACTION (Tr. 55); and
6. Mr. Harold DeVoe, Senior Program Manager, Energy-Related Inventions Program, Department of Energy (Tr. 84).
Each witness testified that his/her program does not give out free cars to either program participants or anyone at all (Fred rickson - Tr. 111, Howard - Tr. 96; Rogers - Tr. 48-49; Rubin - Tr. 77, 82; Brake - Tr. 59-60; DeVoe - Tr. 86).
The first three "free car" programs listed in the pamphlet --the commodity loan program, the program providing compensation for damaged or lost finding gear, and the program compensating Vietnam prisoners of war or their survivors --place no restrictions as to how the funds are to be used (Tr. 113, 98, 53). The pamphlet insinuates that these are "free car" programs because one may put the loan money or compensation received towards the purchase of a car. This is not, however, what the average consumer would expect from a pamphlet advertised to show him how to get Uncle Sam to buy him a new car, free. The 75 or so letters and many phone calls received by the Older American Volunteers Programs from persons who had purchased the Guide indicated that consumers actually expected to receive car from the Federal government (CX-11A-G, Tr. 60-65).
The first program is the commodity loan program for farmers. Contrary to Respondent's pamphlet, one either has to pay back the loan in 9 months or forfeit the commodity or harvested crop (Tr.108). One of the purposes of the program is to provide the farmer with interim financing so that he may pay his bills at harvest time, without selling his crop at a time when market prices are most depressed (Tr. 110-111). Mr. Frederickson, Deputy Director of the division responsible for this program, testified that the farmers receive no free cars from this program.
The second program, the Fishing Vessel and Gear Damage Compensa tion Fund or section 10 program, compensates a fisherman for a loss experienced due to damage or lost gear and vessels (Tr. 92). Mr. Howard described the program he has supervised for the past year, as follows:
"Most fishermen look at the program as a kind of a way of making a disaster a near hardship. I mean some of them could be completely wiped out. They could be put completely out of business if it were not for this program, but they lose money as a result of having lost their gear." (Tr. 101)
Similarly, Vietnam prisons of war or their survivors are compensated for inhumane treatment and inadequate food provided at the hands of the enemy (Tr. 41-42). No free cars are distributed under this program. Moreover, the bulk of payments under the latter program was made in 1973 when all live prisoners of war were released (Tr. 43-44). After 1975, only survivors of deceased persons received compensation (Tr. 46). Mr. Rogers, General Counsel of the Foreign Claims Settlement Commission, stated that only survivors of two prisoners of war remain eligible to file for compensation (Tr. 48, 51).
The final three programs named in the pamphlet place restric tions on the use of the Federal funds. The Federal Trade Commission provided funds to enable, generally, organizations to participate in its rulemaking proceedings (Tr. 72). One aspect of rulemaking for which an organization might be reimbursed would be cross-examination of witnesses by an attorney (Tr. 76). FTC would pay the attorney's fees (Tr. 76). In any event, this program has been effectively eliminated, since no funds have been allocated for the program for fiscal year 1982 (October 1981 - September 1982) (Tr. 78).
The Older American Volunteers Program awards grants to non-profit organizations to help establish volunteer programs. Vol unteers must be over 60 in all programs and they help disadvantaged children or the elderly, depending on the program (Tr. 56-57). The organizations chosen as sponsors for example, churches or chambers of commerce, hire a project staff to manage the particular program (Tr. 58). Grant money is used for administrative costs such as staff salaries and to provide stipends to volunteers (Tr. 5*). Funds may be authorized for staff travel expenses incurred in routine manage- ment of the project or necessary to attend training sessions (Tr. 58). Some projects have budgeted allowances to reimburse volunteers (Tr. 58). Some own vans to transport volunteers, although OAVP currently disfavors this utilization of funds for its new projects (Tr. 60, 69). This is the closest OAVP grant funds come to a motor vehicle, and it is a far cry from providing free cars to members of the public.
The sixth program listed, the Energy-Related Inventions Program, provides both financial and non-financial assistance to inventors with energy related inventions (Tr. 84). In one instance (1978), grant funds were used to purchase a car which was necessary to test the invention, an exhaust gas turbine (Tr. 86-87). As is the case with other items purchased with grant funds, the car is the property of the U. S. Government, not the inventor (Tr. 87). Currently, the Department of Energy favors leasing over purchasing of property necessary to carry out a research project (Tr. 87).
All three of these letter programs employ various devices to ensure that funds are spent only for authorized purposes and not, for example, to purchase an automobile. These devices include the submission of an itemized budget proposal in advance of funding (Tr. 76, 58, 68, 85-86, 90), regular reports or requests for reimburse ment (Tr. 77, 59, 86), audits (Tr. 77, 90), and site monitoring visits (Tr. 59).
Finally, all six programs have substantial eligibility require ments, e.g., Tr. 57, 74, 85, and only apply to a limited portion of the population.
F. Information on how to claim Federal monies from government programs is not made available to the public by the United States Government.
The Federal Government has made significant efforts to inform the public of its benefits program. It publicizes its various programs on radio and TV programs; in newspapers, and in local post offices, banks, and places of employment. Mr. Gilbert Fisher, Director of Social Security's central public information office, has proposed a budget of seven million dollars for fiscal 1982 (Tr. 163). His office has published fifty basic information pamphlets on Social Security's programs (Tr. 143-144). In l981, 120 million copies were printed and distributed nationally (Tr. 144). A monthly newsletter is sent to 5,000 national organizations, and state and local groups (Tr. 144). Field offices receive a monthly package of materials such as news releases, speeches, and newspaper columns for local use (Tr. 144-146). Each of the 1,340 field offices located nationwide conducts a substantial outreach program into the local community (Tr. 146, 141). A claims representative may even visit an individual's home to assist him in preparing an application for benefits (Tr. 158).
Mr. Brigham, responsible for the public contact work at VA's regional office in Washington, described the purpose of the inter views his staff conducts as providing information to the potential applicant on benefits programs, generally, and on the particular individual's potential for eligibility (Tr. 116). The Washington regional office conducts an average of 3,00-3,200 personal inter views and 20,000 phone interviews monthly (Tr. 117). VA head quarters and the VA hospital conduct another 1,00 interviews each month (Tr. 117). Mr. Brigham's staff answers an average of 6,500 general information letters monthly, as well (Tr. 117). VA's other 57 regional offices offer these same services (Tr. 117).
Mr. Brigham explained that briefings on VA benefits are pro vided to active duty personnel before separation from the armed services (Tr. 122). In addition over the nine months after his discharge, every veteran receives by mail benefits information including pamphlets on specific benefit areas and application forms (Tr. 122).
VA headquarters produces approximately 100 brochures and pamphlets, news releases, public service spots for television and radio and other materials and generally coordinates the VA's public information efforts (Tr. 124). The regional office informs the public of VA benefits programs through the public media and by outreach to veterans groups, civic organizations and other entities (Tr. 123-124).
The Director of OMB is under a legislative mandate to "identify all existing Federal Domestic Assistance programs and provide information on each such program to the general public through electronic media . . . and through a printed catalog . . ." 31 U.S.C. § 1702. The Catalog of Federal Domestic Assistance published by OMB provides information on all Federal assistance programs. 31 U.S.C. ??1702, 1705. OMB prints 34,000 copies for distribution to Congress, Federal, state and local agencies and the Government Printing Office prints an additional 15,000 copies annually for sale to the public at government bookstores (Tr. 24). 31 U.S.C. § 1705(e)(2). The primary purpose of the catalog is to "assist users in identifying programs which meet specific objectives of the potential applicant and to obtain general information on Federal assistance programs." Catalog, p. VI, Introduction. Information may also be obtained from FAPRS, the computerized system for retrieval of information on Federal programs, at contact points located in each state (Tr. 19, 21). 31 U.S.C. § 1704.
Forty-one Federal Information Centers located nationwide assist individuals with questions on Federal benefit programs. CX-10, Update to the Catalog of Federal Domestic Assistance, Appendix V, p. EE-1 - EE-3. Information specialist either answer telephone or writteninquiries directly or refer the individual to someone who can. In addition, individuals may contact the particular agency responsible for implementing the program or consult the program's literature, guidelines and/or regulations (in the Federal Register or Code of Federal Regulations). Update, p. XXII; Appendix IV, p. DD-1.
1. Since Respondent has sought remittances of money through the mail, the jurisdictional requirement of 39 U.S.C. § 3005 has been fulfilled.
2. The representations made by an advertisement are considered to be those that the purchaser to whom it was directed, presumed to be of ordinary intelligence, would understand from viewing the advertisement as a whole. Donaldson v. Read Magazine, Inc., 333 U. S. 178, 189 (1948); G. J. Howard Co. v. Cassidy, 162 F. Supp. 568, 572 (E.D.N.Y. 1958). What has been omitted and what may be reasonably implied from the advertisement are considered in assessing its meaning. 333 U. S. at 188; Spiegal, Inc. v. F.T.C., 411 F.2d 481, 483 (7the Cir, l969).
3. A descriptive product name is itself a representation of the product. Slumber-Shapers, Inc., P.S. Docket No. 2/20, Postal Service Decision at 4-5 (l973).
4. The average person reading Respondent's advertisements, would interpret them substantially as characterized in Paragraph III, subparagraphs A. through F. of the Complaint and Supplemental Complaint.
5. It is materially misleading to represent that Respondent's publication will enable one to receive "free" money from the Federal government when eligibility requirements exist for the receipt of such funds and restrictions may be placed on their use. Cf. Federal Trade Commission Guide concerning use of the word "free" when making offers of "free" merchandise or services, 15 C.F.R. § 251.1(c), and section 1 of the 1953 Trade Practice Conference Rule which the Guide supersedes, 2 TRADE REG. REP. (CCH) paragraph 7695. Not only has Respondent failed to disclose the existence of these conditions, but it has affirmatively represented that, without qualifications, anyone will receive "free" cash from the Federal Government. See pages 4-5, supra.
6. A discrepancy between what the advertisement claims and the contents of Respondent's publication substantiates the falsity of
Respondent's representation. Grapefruit Diet, P.O.D. Docket No. 3/77, Initial Decision (1972).
7. The representations specified in Paragraph III, subparagraphs A. through F. of the Complaint and Supplemental Complaint are materially false.
8. Complainant has established its case by a preponderance of the reliable and probative evidence of record. S.E.C. v. Savoy Industries, 587 F.2d 1149, 1168 (D.C. Cir. l978); S.E.C. v. National Student Marketing, 457 F. Supp. 682, 701 n. 43 (D.C. l978); Wilmont Products, P.S. Docket No. 6/46, Postal Service Decision at 7 (l979). Respondent did not go forward with any proof to overcome that of Complainant.
Therefore, I conclude that Respondent is engaged in conducting a scheme for obtaining money through the mail by false representations in violation of 39 U.S.C. § 3005 and that a False Representation Order, substantially in the form attached, should be issued against Respondent.