In the Matter of the Complaint Against: CARD REDEMPTION CENTER, 805 Third Avenue, Suite 190, New York, NY 10022-7513 and GIVEAWAY PROCESSING CENTER, Dept. 190, 805 3rd Avenue Bldg., New York, NY 10022-7513 and at S. Cobb Industrial Blvd., P.O. Box 1227, Smyrna, GA 30081-1227 and SELECT DIRECT, INC., 126 5th Avenue, Suite 8C, New York, NY 10011-5606 and DAVID SCHWARTZ, 126 5th Avenue, Suite 8C, New York, NY 10011-5606 P.S. Docket No. 30/36 09/23/88 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 postcards with respect to certain vouchers (product) advertised therein. Specifically, the false representations alleged in the complaint (P7) are as follows:
(a) the product is a prize the recipient has won in a contest or sweepstakes s/he previously entered;
(b) the postcard is a delivery notice from the Postal Service, UPS or another common carrier;
(c) recipients can obtain merchandise with the "voucher" without spending any additional money;
(d) the "voucher" is something other than a discount, coupon, or discount coupon;
(e) the recipient may use the "voucher" to purchase a wide selection of nationally sold merchandise;
(f) the product is available for only a limited time;
Respondents' answer admitted the use of the postcards annexed to the complaint but denied that they contain false representations as alleged therein. At the hearing 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. P2, not denied, deemed admitted).
2. Respondent David Schwartz is president of Select Direct, Inc. and controls and directs the activities of that corporation which are the subject of this proceeding (Cplt. P3, not denied, deemed admitted; Tr. 45, 46, 48, 49).
3. Select Direct, Inc. does business under the fictitious names Giveaway Processing Center 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 "voucher bills toward purchase of nationally sold merchandise":
Giveaway Processing Center 805 Third Avenue Building Suite 190 New York, NY 10022 (CX-1)Copies of such postcards (CX-1, 2 and 3) are annexed hereto as Exhibit A.Giveaway Processing Cntr S. Cobb Industrial Blvd. P. O. Box 1227 Smyrna, GA 30081-1227 (CX-2)
Card Redemption Center 805 Third Avenue Suite 190 New York, NY 10022 (CX-3)
5. Persons making the required payment of $2.00 to Respondents through the mails receive six "Home Shopping Sweepstakes" vouchers bearing a face value of 50 dollars each which may be applied to the regular price of "HHS Merchandise" (CX-2a; RX-1). The accompanying "Congratulations" letter calls the vouchers a "giveaway prize" but disclaims the promotion as a contest or sweepstakes. (CX-2d) The Alleged Representations and the Falsity Issue
6. "(a) the product is a prize the recipient has won in a contest or sweepstakes s/he previously entered."
I find this representation in CX-1 and CX-2 . The language "AWARD NOTICE," "AWARDED ITEM," "VERIFICATION: Giveaway awards are held no longer than 15 days pending address verification by returning this notice to sender," and "SPECIAL NOTICE: The sender is not required to notify recipients by Final Notice. This is the only notice you will receive. Unclaimed awards are forfeited after 15 days" conveys the impression that the vouchers have been won by the recipient in some form of contest or sweepstakes in which he or she has been entered. Respondents' intention to make the representations is evidenced by the words "Home Shopping Sweepstakes" on the vouchers (CX-2a, p. 2, 3) and the disclaimers of contest or sweepstakes at the botton of the letter transmitting the vouchers. Such a disclaimer would be unnecessary if the promoter believed that the direct mail postcard had not contained this representation. The revised postcard (CX-3) omits the language making the representation.
The representation is false. Recipients of the postcards have not been selected in a contest or sweepstakes. As stipulated at the hearing, their names come from rented computer-generated lists of mail order purchasers (Tr. 6, 7). 7."(b) the postcard is a delivery notice from the Postal Service, UPS or another common carrier."
Although, as argued by Complainant, Respondents' postcards (CX-1, 2) are similar in appearance to P.S. Form 3849 (Delivery Notice or Receipt) (CX-5), the differences are substantial. The postcards prominently display the words "AWARD" and "AWARDED ITEM" which, of course, are not present in the Postal Service form. Also, unlike the Postal Service form, which requires the addressee to pick up an item at the post office, the postcards direct the recipient to send money to an address obviously not a post office. Consequently, I am unable to find that the ordinary recipient of Respondents' postcards would be deceived by the similarity in appearance and would view them as making this representation.
8."(c) recipients can obtain merchandise with the 'voucher' without spending any additional money"
Many recipients of the postcards typified by CX-1 and CX-2 would believe they can use the vouchers to purchase merchandise priced at up to $225.00 without spending additional money. Nowhere do these cards clearly advise recipients of the fact, revealed after payment on receipt of the vouchers and accompanying literature, that each of the six vouchers may be used toward the purchase of only one item (as stated on the vouchers) or that all six vouchers, totaling $300.00 can be applied only to the purchase of a Norwegian Blue Fox Fur Jacket priced at $584.85, Pierre Cardin luggage priced at $395.95, or that vouchers totaling $100.00 to $300.00 may be applied toward prices of certain jewelry items exceeding those amounts (RX-1f), leaving the user to pay, in all cases, a substantial balance over the amount of the vouchers. Respondent argues that all three cards say that the vouchers are usable "towards the purchase" of merchandise and that product costs over the voucher amount must be paid by the user, thereby negating the alleged representation. CX-1 does not contain the language concerning user payment. The language cited by Respondents is ambiguous and is not sufficient to avoid the representation in the total context of CX-1 and CX-2 which stresses the prize nature of the vouchers and identifies the $2.00 remittance as a fee for delivery thereof, tending to negate the idea that additional money must be spent in order to use the vouchers.
Respondents placed in evidence to support their argument a dictionary definition of voucher, i.e., "a form of check indicating a credit against future purchases or expenditures" (RX-2; Webster's Ninth New Collegiate Dictionary (1984)). In the total context of the postcards, this definition, were it known by a recipient, would not alert him or her to the fact that Respondents' vouchers can never be used to cover the full cost of an item of merchandise.
Representation 7(c) is made in CX-1 and CX-2 but not in CX-3 because of significant differences in CX-3. These differences are the change in the identification of the card as a notice of solicitation making it an offer instead of an award notice, the elimination of all other references to an award, the change in the description of the product by adding the words "AT A SIGNIFICANT DISCOUNT," in the advice of refundability if the vouchers are not used, and in the address of the sender as Card Redemption Center rather than Giveaway Processing Center.
9."(d) the 'voucher' is something other than a discount, coupon, or discount coupon"
For the reasons set forth in FOF 8, supra, I find this representation is made in CX-1 and CX-2 and that it is false. I do not find the representation in CX-3. 10."(e) the recipient may use the 'voucher' to purchase a wide selection of nationally sold merchandise"
Given the hyped appearance of the "AWARD NOTICE" or "NOTICE OF SOLICITATION", in the absence of a much less ambiguous limitation than the word "selected," the reference to nationally sold merchandise from HHS or Carriage House catalogs (or product sheets) implies to the average recipient the availability of a more extensive selection of items than disclosed in the literature received after payment of the $2.00 delivery fee (FOF 8, supra). This representation is made in CX-1, 2, and 3 and is false.
11."(f) The product is available for only a limited time"
This representation is found in the notice that the award is invalid after 21 days (CX-1, 2) and the 15-day limitation on address verification by return of the notice (CX-1, 2 and 3). Complainant has not produced evidence refuting Respondent Schwartz's testimony that orders received after the time limited are not honored. Falsity of the representation has, therefore, not been established.
12. The representations found above are material because they tend to induce recipients to take advantage of the award or solicitation by remitting the required $2.00 delivery fee.
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 to mislead. Donaldson v. Read Magazine, Inc., supra.
3. It is not each separate word or a 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; Gottlieb v. Schaffer, 141 F. Supp. 7, 17 (S.D.N.Y. 1956).
4. I have applied the foregoing standards to Respondents' postcards in finding that they make the representations alleged in paragraphs 7(a), (c), (d), (e), and (f) of the complaint. For the reasons stated in FOF 6, 8, 9, and 10, I find the first four to be false. Complainant has failed to prove the falsity of 7(f).
5. I find the false representations to be material because their natural tendency is to induce recipients to mail the $2.00 delivery fee.
6. Complainant has established its case by a preponderance of the reliable and probative evidence.
7. Respondents are 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.
8. The attached orders should be issued against Respondents.