In the Matter of the Complaint Against: CARD REDEMPTION CENTER, 805 Third Avenue, New York, NY 10022-7513 and INTERSTATE DISTRIBUTION CENTER, Dept. 190, 805 Third Avenue Building, New York, NY 10022-7513 and PORT OF ENTRY GOODS, 805 Third Avenue Building, Suite 190, New York, NY 10022-7513 and SELECT DIRECT, INC., 126 Fifth Avenue, Suite 8C, New York, NY 10011-5606 and DAVID SCHWARTZ, 126 Fifth Avenue, Suite 8C, New York, NY 10011-5606 P.S. Docket No. 30/35 09/13/88 Grant, Quentin E.; Chief Administrative Law Judge APPEARANCE FOR COMPLAINANT: Jerry Belenker, Esq.; Jeff Kahn, Esq., Consumer Protection Division, Law Department, United States Postal Service, Washington, DC 20260-1144 APPEARANCE FOR RESPONDENT: Robert Ullman, Esq., Bass & Ullman, 747 Third Avenue, New York, NY 10017-2873
In a complaint filed April 13, 1988, Complainant alleged that Respondents are engaged in violation of 39 U.S.C. 3005 in that they solicit money or property through the mails by means of express or implied false representations, made in direct mail post cards, concerning a product called Brentwood XII Grandfather Clock. Specifically, the false representations alleged in the complaint as amended at the hearing (Tr. 3) are as follows (Cplt. par. 7):
(a) the recipient is entitled to receive the product based on the results of a contest, sweepstakes or drawing;
(b) the product is worth substantially more than the payment required to receive it;
(c) the remittance required to receive the product is for incidental costs of transporting the product to the recipient;
(d) the payment required to receive the product is something other than its purchase price, with or without postage;
(e) the product has been set aside specifically for the recipient of the post card;
(f) the product has been ordered and received through customs in the recipient's name;
(g) the advertisement is other than an offer to sell the product;
(h) the product is available to the recipient for only a limited time;
Respondents' answer to the complaint admitted the use of the advertising materials annexed to the complaint but denied the making of the false representations alleged in the complaint.
At the hearing held in New York, NY on June 21, 1988, both sides presented evidence. Complainant's only witness was USPS employee, Jose Lopez, a superintendent of window service. David Schwartz, president of Select Direct, Inc., was Respondents' sole witness. The parties have filed proposed findings of fact, conclusions of law and written argument all of which have been considered. To the extent indicated they have been adopted. Otherwise they have been rejected as irrelevant or contrary to the evidence.
1. Respondent Select Direct, Inc. is a Delaware corporation registered to do business in the State of New York (Cplt. 2, not denied, deemed admitted).
2. Respondent David Schwartz is president of Select Direct, Inc. and is intimately involved in the promotional activities of that corporation which are the subject of this proceeding (Tr. 46-50, 57, 58).
3. Select Direct, Inc. does business under the fictitious names Interstate Distribution Center, Port of Entry Goods, and Card Redemption Center (Tr. 46).
4. By means of direct mail postcards Respondents solicit recipients thereof to remit money through the mails to the following addresses in order to receive a product called "Brentwood XII or Bentley IX Grandfather Clock":
Card Redemption Center,
805 Third Avenue, Suite 190,
New York, NY 10022
(CX-3, 4, 5, 6)
Port of Entry Goods,
805 Third Avenue Building,
Suite 190,
New York, NY 10022
(CX-2)
Interstate Distribution Center,
Dept. 190,
805 Third Avenue Building,
New York, NY 10022
(CX-1)
Copies of such postcards (CX-1 through 6) are annexed hereto as Exhibit A.
5. (Complaint, parag. 7(a)).
"The recipient is entitled to receive the product based on the results of a contest, sweepstakes or drawing."
Complainant asserts that this representation is made in the following language on the postcards:
IMPORTANT NOTICE CONGRATULATIONS YOU'VE DONE IT] (CX-1)
.....YOUR LUCKY NAME APPEARS AMONG A LIST OF PEOPLE ELIGIBLE TO RECEIVE THIS NOTICE (CX-2)
.....YOUR LUCKY NAME APPEARS AMONG A COMPUTERIZED LIST OF PEOPLE RECEIVING THIS NOTICE (CX-3)
Complainant says that the representation is enhanced by language such as "our central dispatch center" and "print control no." and the handwritten appearance of the name of the product and the amount to be remitted.
6. (Complaint, parag. 7(b)).
"The product is worth substantially more than the payment required to receive it."
Admitting that CX-1 through CX-6 advise the recipient that the amount to be remitted covers the "product" or the "product cost," Complainant argues that these words are concealed in references to "shipping," "services," "handling for release" and "insured motor delivery," thus obscuring the fact that remittance is the full price of the product.
7. (Complaint, parag. 7(c)).
"The remittance required to receive the product is for incidental costs of transporting the product to the recipient."
Complainant asserts the same arguments in support of this representation as set forth in FOF 6, supra, with the addition of the contention that the representation is strengthened by the checkmark in the box on CX-2 and 3 headed "Import Goods Shipped Via."
8. (Complaint, parag. 7(d)).
"The payment required to receive the product is something other than its purchase price, with or without postage."
In support of this alleged representation Complainant makes the same arguments set forth in FOF 6 and 7, supra.
9. (Complaint, parag. 7(e)).
"The product has been set aside specifically for the recipient of the postcard."
Complainant argues that this representation is found in the following: (a) the name of the merchandise is inserted in a manner which appears to be handwritten (implying that a special clerical notation has been made with respect to the recipient and the merchandise in question); (b) the inclusion of an expiration date for the availability of the merchandise; (c) the inclusion of the word NOTICE in the caption of the card; (d) the phrase YOU CAN NOW DEFINITELY OBTAIN: (e) and the box captioned "carrier." In addition, Complainant argues, the phrase that the recipient's lucky name appears among a list of people who are eligible to receive this notice (CX-2 and CX-3) suggests that only a small number of people have been sent the notice, thereby augmenting the impression of uniqueness.
10. (Complaint, parag. 7(f)).
"The product has been ordered and received through customs in the recipient's name."
Complainant bases this allegation on the statement in CX-2 and 3 that "all items have passed customs in New York and are available for direct delivery to the recipient of this notice." Complainant acknowledges that the product has "passed customs" but argues that so stating in a sentence which goes on to say "available for direct delivery" suggests that the merchandise has been imported for the direct and intended benefit of the recipient of the solicitation.
11. (Complaint, parag. 7(g)).
"The advertisement is other than an offer to sell the product."
Complainant's argument for finding this representation is that the postcards suggest in various ways that the merchandise is reserved for the recipient, that the costs are incidental in nature and not the actual price; and that the recipient is one of only a few people receiving the card.
12. (Complaint, parag. 7(h)).
"The product is available to recipient for only a limited time."
All the postcards have a cut-off date or period for remittance of the specified payment. Thus, I find that this representation is made. However, Complainant has failed to prove its falsity. The only evidence on the falsity issue is the testimony of Respondent David Schwartz to the effect that the ordering deadlines set forth in the postcards are adhered to by Respondents (Tr. 48, 49).
Applying the standards of advertising interpretation set forth below in the conclusions of law, I do not find that Respondents' postcard solicitations make the representations alleged in the complaint except for that in paragraph 7(h) relating to cut-off dates for receipt of orders the falsity of which Complainant has failed to establish.
(a) The language relied on by Complainant to support the alleged representation that the recipient is entitled to receive the product based on the result of a contest, sweepstakes or drawing (FOF 5, supra) is nothing more than attention-grabbing hype which I believe would be recognized as such by the ordinary recipient. There is no direct or indirect reference to a contest or drawing of any sort. Rather, recipients are told that they are receiving the offer because their names have appeared on a computer print-out or computerized list, a common source of potential mail-order customers and actually used by Respondents as this promotion (Stip. at Tr. 6, 7).
(b) The postcards convey the impressions that recipients are being offered a bargain but do not, I think, make the representations that the product is worth substantially more than the payment required to receive it (FOF 6, supra). The postcards are clearly identified as solicitations or offers to sell. Except for CX-2, they disclose that the $69.27 covers the product as well as shipping, handling, etc. If the representation were found to be made, Complainant has offered no evidence of the value of the product on which to base a finding of falsity.
(c) For the reasons stated in (b), supra, I also find that Complainant has not proved the representations alleged in paragraphs 7(c) and (d) of the Complaint (FOF 7 and 8, supra).
(d) The elements of the solicitations on which Complainant urges the finding of the representations alleged in paragraphs 7(e) and (f) of the complaint are present, all or in part, in each postcard. I do not believe, however, that the average recipient would pay particular attention to them or, if he did, would regard them as anything more than promotional hype. Further, I would not be able to find materiality in such representations if they were made, absent other representations such as those alleged in subparagraphs (a), (b), or (c) of paragraph 7.
(e) I am also unable to find the alleged representation that the ads contained in the postcards are something other than an offer to sell. As noted above, they are all identified as solicitations to purchase at a price which covers the product and incidental shipping, handling, and insurance charges.
Supporting my findings that Respondent's solicitations do not make the representations alleged (except for 7(g) which is not false) are the complaints received by the Postal Service and Respondents from the public concerning the promotion (RX-1, 2 in P.S. 30/35). While the complaints reflect certain other problems with the promotion and the product, they fail to show persuasive indication of deception in the ways encompassed by the alleged misrepresentations. Furthermore, the revisions of the solicitations made by Respondents (CX-4, 5 and 6) remove any doubt about the making of the representations.
1. 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, Inc., 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 that the advertisement is likely to make upon purchasers to whom it is directed that is important. 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 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). Vibra-Brush Corp. v. Schaffer, supra; Aronberg v. Federal Trade Commission, 132 F.2d 165, 167 (7th Cir. 1942).
2. An advertisement as a whole may be completely misleading although every sentence separately considered is literally true. This may be because things are omitted that should be said, or because the advertisement is composed or purposefully printed in such a way as to mislead. Donaldson v. Read Magazine, Inc., supra.
3. It is not each separate word or clause here and there of an advertisement that determines its force, but the totality of its contents and the impression of the entire advertisement upon the general populace. Donaldson v. Read Magazine, Inc., supra, at 185-86 (1948); Gottlieb v. Schaffer, 141 F. Supp. 7, 17 (S.D.N.Y. 1956).
4. Applying the foregoing standards of interpretation to Respondents' solicitations I do not find in them the representations alleged in the complaint except that alleged in paragraph 7(g) which Complainant has not proved false. While parts of them may offend the sensibilities of a recipient, suggesting a scam, considering each ad as a whole, I find they are no more than extravagant types of advertising which fall short of the misrepresentations alleged.
5. Complainant has failed to sustain its burden of proof as to the alleged representations with the limited exception noted above.
6. The complaint is dismissed.