In the Matter of the Complaint Against SARID MARKETING, INC., d/b/a REFUND CENTER OF AMERICA and REFUND CENTER, 56 Willow Park Center at Farmingdale, NY 11735-1001 and Suite 1201, 30 East 60th Street at New York, NY 10022-1008 P.S. Docket No. 23/190 November 5, 1986 Quentin E. Grant Chief Administrative Law Judge APPEARANCES FOR COMPLAINANT: H. Richard Hefner, Esq. Walter P. Kenney, Jr., Esq. Consumer Protection Division United States Postal Service Law Department Washington, DC 20260-1112 APPEARANCE FOR RESPONDENT: Lester Cherubin, General Manager Sarid Marketing, Inc. Suite 1201 30 East 60th Street New York, NY 10022-1008
This proceeding was initiated on April 15, 1986, by the filing of a Complaint in which the General Counsel of the Postal Service alleged that Respondent is engaged in conducting a scheme or schemes for obtaining money through the mails by means of false representa- tions in violation of 39 U.S.C. 3005. Specifically, the Complaint (Par. 4) alleges that Respondent seeks remittances of money through the mails by means of direct mail solicitations containing the following materially false representations:
"(a) Respondent has information concerning an existing fund of money which belongs to the addressee as a matter of right or entitlement.
(b) Respondent has information concerning a particular designated amount of cash to which the addressee is solely entitled.
(c) The money to which the addressee is entitled has been specifically set aside in the account designated by the notification number set forth on the printed postcard.
(d) Persons responding to the solicitation will receive a negotiable instrument which can be immediately converted into cash."
Respondent's Answer to the Complaint denied the making of any false representations in its advertising materials.
A hearing was held in Washington, D.C., on July 23, l986. Postal Inspector John A. Klempa and consumer witnesses Patricia Ann Duncan and Richard Schaefer testified for Complainant. Respondent's general manager, Lester Cherubin, presented Respondent's case and was its only witness. The parties have filed proposed findings of fact and conclusions of law. To the extent indicated they have been adopted; otherwise, they have been rejected as irrelevant or contrary to the evidence.
1. Sarid Marketing, Inc. is a New York Corporation with its principal office and place of business located at Suite 1201, 30 East 60th Street, New York, NY 10022-1008. It does business under the names Refund Center of America and Refund Center. Paul Michael is President and Lester Cherubin is General Manager of the corpora- tion. They formulate and direct the activities of the corporation relating to the promotion involved in this proceeding. (39 CFR 952.10(b)).
2. By means of direct mail solicitations in the form of postcards, Respondent seeks remittances of money through the mails to Refund Center of America and Refund Center at 56 Willow Park Center, Farmingdale, NY 11735 (CX-1, 4, 11 and 13; Tr. 10). A copy of such a solicitation is attached hereto as Exhibit A (CX-1).
3. Viewed from the standpoint of the representations alleged in the Complaint, the critical parts of the solicitation are the hand- written 6-digit "Notification Number," the handwritten dollars and odd cents amount in the first paragraph, and the assurance in that paragraph that the addressee can have that sum coming to him "at this moment" upon submitting a claim. These elements convey by strong implication the representations alleged in subparagraphs (a), (b), (c), and (d) of paragraph 4 of the Complaint, supra . They were so understood by Complainant's consumer witnesses, Patricia Duncan and Richard Schaefer (Tr. 49, 50, 52-Duncan; Tr. 55, 57, 62, 63-Schaefer). These representations are material in that they tend to persuade recipients to remit to Respondent the amount specified in the solicitation (Tr. 48-50, 62, 63).
4. Although the solicitation speaks in terms of furnishing facts to make a claim to those remitting the requested amount, it implies, in the elements listed in FOF 3, supra , that upon making the claim remitters will receive a check in the amount of $47.64.
5. Remitters actually receive a listing of refunds and discounts which can be obtained through the purchase of certain products. The total of such refunds and discounts is approximately the amount specified in the solicitation (CX-7, 17). Postal Inspector John Klempa testified that a pricing of the products on the list received by him in a test purchase totaled $202.73, includ- ing postage required for mailing the claims for the refunds and discounts (Tr. 19, 20; CX-10, 10A).
6. The representations made by Respondent, as found above, are false in fact.
(a). Respondent argues that Complainant has failed to prove violation of the statute because only two of the 250 to 300 consumer communications received by the Postal Inspection Service about the instant promotion were actual complaints.
The Postal false representation statute does not require proof of consumer complaints in order to protect the public from false advertising. Standard Research Laboratories , P.S. Docket No. 7/48 (P.S.D. April 4, l980); the presence or absence of such complaints is not determinative of the false representation issue. The Robertson-Taylor Company , P.S. Docket Nos. 16/98, et al. (P.S.D. March 31, l986).
(b). Respondent asserts that the solicitation expressly negates representation (d), supra , in that it states that the remittance will bring "all the facts you need to claim" the $47.64, rather than a check in that amount. According to the testimony of Complainant's consumer witnesses, they read the solicitation to promise a check, not just facts as to how discounts and refunds could be obtained through the purchase of numerous products. I found their testimony to be credible and consistent with my finding that the elements of the solicitation described in FOF No. 3, supra , imply all four alleged representations. It is possible that persons familiar with the refund and discount industry will not be deceived by the solicitation. But a violation of the statute occurs when the gullible, naive, and less critical reader is deceived, no matter that the more sophisticated, wary reader may not be fooled. See cases cited in Conclusions of Law, below.
(c). Contrary to Respondent's argument, violation of the statute is not avoided by its furnishing "updates" of new refund and discount offers without charge to persons responding to the solici- tation. Such updates were not mentioned in the solicitation and, therefore, have no relevance to the misrepresentation issues.
(d). Respondent correctly states that consumer witness Schaefer and his wife, to whom a solicitation was addressed, believed that it referred to a refund due Mrs. Schaefer from Gloria Marshall Salons. Respondent is not correct, however, in its argument that this confusion makes Mr. Schaefer's testimony irrelevant. The Schaefers read the solicitation as promising them a check for $47.64 in return for the remittance of $4.79. Their misunderstanding as to the exact source of the $47.64 does not alter the fact that they were deceived by the representations implicit in the solicitation.
Respondent's solicitation must be considered as a whole and the meaning determined in light of its probable impact on a person of ordinary mind. Donaldson v. Read Magazine , 333 U.S. 178, 189 (1948); Peak Laboratories, Inc. v. U. S. Postal Serv. , 556 F.2d 1387, 1389 (5th Cir. l977). The statute is intended to protect the gullible, naive, and less critical reader, as well as the more sophisticated, wary reader. Fields v. Hannegan , 162 F.2d 17 (D.C. Cir. l947), cert . denied , 332 U. S. 773 (1947); M.K.S. Enterprises, Inc. v. United States Postal Service , 459 F. Supp. 1180, 1184 (E.D.N.Y. 1978); Gottlieb v. Schaffer , 141 F. Supp. 7 (S.D.N.Y. 1956); Leo Daboub , P. S. Docket No. 19/185 (P.S.D. July 10, l986).
Express representations are not required. It is the net impres- sion which the advertisement is likely to make upon individuals 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 false representation statute is applicable. G. J. Howard Co. v. Cassidy , 162 F. Supp. 568 (E.D.N.Y. 1958); See also , Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council , 425 U. S. 748 (1976). Where an advertisement is ambiguous or capable of more than one meaning, if one of those meanings is false, the advertisement will be held to be misleading. Rhodes Pharmacal Co. v. F.T.C. , 208 F.2d 382, 387 (7th Cir. l953); Ralph J. Galliano , P.S. Docket No. 19/15 (P.S.D. May 2, l985 at p. 9). In addition, inconspicuous disclaimers are not sufficient to dispel the effect of false repre- sentations. Leo Daboub , supra ; Gottlieb v. Schaffer , supra . I have applied the foregoing principles in determining that Respondent's solicitations make the representations alleged in the Complaint.
Respondent is engaged in a scheme to obtain money through the mails by means of false representations. Accordingly, the attached False Representation Order and Cease and Desist Order should be issued.