Appeal of P.S. Docket No. 30/22 -- JULIE CHAIKEN d/b/a, NATIONAL MAIL ORDER COMPANY


 In the Matter of the Complaint Against

 JULIE CHAIKEN d/b/a,
 NATIONAL MAIL ORDER COMPANY,
 P. O. Box 13640,
 St. Petersburg, FL 33733-3640

 and

 6925 Orkney Ave., No. 
 St. Petersburg, FL 33709-1447

 P.S. Docket No. 30/22

 07/07/88

 Grant, Quentin E.  Chief Administrative Law Judge

 APPEARANCE FOR COMPLAINANT:
 Thomas A. Ziebarth, Esq.
 Consumer Protection Division
 Law Department
 U. S. Postal Service 
 Washington, DC 20260-1112 

 APPEARANCE FOR RESPONDENT:
 None

INITIAL DECISION

A complaint filed by the General Counsel of the Postal Service on April 6, 1988, alleges that Respondent is violating 39 U.S.C. 3005 by engaging in a scheme to obtain money or property through the mail by means of false representations. Specifically, the complaint alleges that in a direct mail circular Respondent solicits remittances of money for participation in a homemailer's program and makes the following materially false representations relating thereto:

(a) Persons sending the required remittance through the mails to Respondent will typically earn large sums of money in a relatively short period of time.

(b) The initial remittance required to enter Respondent's program is the total amount of money to be expended by the participant.

(d) The work to be performed by the participant consists primarily of preparing and assembling mailers.

Respondent, by letter dated April 22, 1988, answered the complaint, denying the illegality of the promotion but stating that she would be terminating the business on May 24, 1988. She also stated that she would be unable to attend the hearing due to her schedule.

The hearing was held on June 14, 1988. There was no appearance by or on behalf of Respondent. Complainant presented its evidence consisting of exhibits CX-1 through CX-8 and the testimony of Regional Inspector/Attorney Kenneth F. Innes whose appearance as co-counsel for Complainant was withdrawn before he testified.

FINDINGS OF FACT

1. Respondent Julie Chaiken is an individual who resides at 6925 Orkney Ave. No., St. Petersburg, FL 33709-1447. She does business as National Mail Order Company at P. O. Box 13640, St. Petersburg, FL 33733-3640 (CX-6).

2. Respondent has caused to be published in publications of general circulation a classified advertisement reading as follows:

$1000's weekly mailing letters. Free Details National Mailorder Company, Box 13640, St. Petersburg, FL 33733

(CX-1)

3. Respondent mails to persons responding to the classified advertisements a direct mail circular which solicits recipients to become participants in Respondent's home mailing association by remitting to the same address the amount of $9.00 for the Complete Homemailer's Program (CX-2, 3). A copy of this circular is attached hereto as Exhibit 1.

4. In the use of the words "1000's weekly" and "Help solve your money problems. No more worries over inflation, recession, bills, rising gasoline and other costs" and the statement that participants can "begin receiving money within two weeks," Respondent's circular makes the representation that person sending the required remittance will typically earn large sums of money in a relatively short period of time.

5. On the second page of the circular in the sentences "you will be supplied with the materials to be stuffed. Envelopes will be already stamped and addressed" and in the paragraph commencing with the words "In order to get you started immediately," Respondent clearly implies that the $9.00 remittance to enter the program is the total amount of money to be expended by the participant. The reference to securing classified ads at the bottom of the box on page 1 is insufficient to overcome the implied representation found above.

6. The representation that the amount of income earned by a participant is limited only by the time and effort invested is found in the following portions of the circular:

"You receive cash daily for the envelopes you stuff. There is no limit. You stuff as many as you wish *** you can take on whatever amount of business that fits your schedule ..."

7. The representation that the work to be performed by the participant consists primarily of preparing and assembling mailers is made expressly and impliedly in the following portions of the circular:

"Would you Stuff Envelopes for $1,000's Weekly $2 for Each Envelope You Stuff . . . You receive cash daily for the envelopes you stuff . . . You serve a company that pays good commissions to have their circulars mailed . . . This work consists mainly of the securing of envelopes . . . and simple stuffing"

8. Persons who remit $9.00 to Respondent in response to the circular receive Respondent's 7-page "Complete Homemailers Program" (CX-4, 5). This handbook describes two programs in which they may participate. The first program is one in which participants may embark on a promotion duplicating Respondent's by choosing a business name, purchasing rubber stamps for addressing, investing in classified ads such as that set forth in FOF 2, supra, buying mailing lists, setting up a record system, mailing circulars like Respondent's to persons responding to the classified ads, and selling the Complete Homemailer's Program to persons ordering it. The second program, called the "$2.00 per envelope program," requires participants to place and pay for classified ads inviting inquiries about an envelope stuffing program accompanied by $1.00 and a self-addressed, stamped envelope; to stuff Respondent's circular into the envelopes received (keeping the $1.00); and forwarding the stuffed envelopes to Respondent who pays $1.00 for each stuffed envelope received from the participant.

9. Complainant has not established the falsity of representation (a), supra. Contrary to counsel's assertion at the hearing in this connection, failure of a respondent to comply with a discovery request made pursuant to 952.21 of the Rules of Practice, as distinguished from failure to comply with a discovery order, does not authorize the inference, under 952.21(j), that the facts to which the request related would, if produced or admitted, be adverse to respondent's interest.

10. The facts set forth under FOF 8, supra, demonstrate the falsity of representations (b), (c), and (d). Both programs require the expenditure of considerable amounts of money over and above the initial remittance. In both programs the amount of income earned is primarily dependent on responses to classified advertisements. In the first program described in the handbook, the work to be performed by a participant goes far beyond the preparation and assembly of mailers.

CONCLUSIONS OF LAW

1. An advertisement must be considered as a whole and its meaning determined in the light of its probable effect on persons of ordinary minds. Donaldson v. Read Magazine, Inc., 333 U. S. 178 (1948); Vibra-Brush Corp. v. Schaffer, 152 F. Supp. 461 (S.D.N.Y. 1957), rev'd on other grounds, 256 F.2d 681 (2nd Cir. 1958).

Express misrepresentations are not required. It is the net impression that the advertisement as a whole is likely to make upon individuals to whom it is directed that is important. Even if a solicitation is so worded as to not make an express representation, but 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., Inc. v. F.T.C., 209 F.2d 382, 387 (7th Cir. 1953); Ralph J. Galliano, P.S. Docket No. 19/15 (P.S.D. May 2, 1985).

2. Applying the foregoing rules of interpretation to Respondent's direct mail circular, I find that Respondent makes the representations alleged in paragraph 5 of the complaint.

3. As found above, the representations lettered (b), (c), and (d) are false in fact. Complainant has not proved the falsity of representation (a).

4. The false representations found are material because they tend to induce a reader to part with money in order to participate in the homemailer's program.

5. Respondent is engaged in the conduct of a scheme for obtaining money or property through the mails by means of false representations in violation of 39 U.S.C. 3005.

6. The attached orders should be issued against Respondent.