In the Matter of the Complaint Against: DANIEL L. SOYKE at 11 Vine Street, Binghamton, NY 13903-1816 and at P. O. Box 245 SV, Binghamton, NY 13903-0245 and GLOBAL, Box 341, Vestal, NY 13851-0341 and "TRP", P. O. Box 245 SV, Binghamton, NY 13903-0245 P.S. Docket No. 34/158 10/05/89 Mason, Randolph D., Administrative Law Judge APPEARANCE FOR COMPLAINANT: Jennifer Yopes Angelo, Esq., Consumer Protection Division, Law Department, United States Postal Service, Washington, DC 20260-1144APPEARANCE FOR RESPONDENTS: Daniel L. Soyke, pro se, 11 Vine Street, Binghamton, NY 13903-1816
This proceeding was initiated on July 14, 1989, when the Postal Service filed a Complaint alleging that Respondents Daniel L. Soyke and Global are engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations in violation of 39 U.S.C. § 3005. At the hearing on August 16, 1989, the Complaint was amended adding Respondent "TRP." Specifically, the Complaint alleges in paragraph 6 that Respondents falsely represent, directly or indirectly, in substance and effect, whether by affirmative statement, implication or omission, that:
(a) Respondents will obtain a loan for persons who buy their service;
(b) Respondents will obtain a major credit card for persons who buy their service;
(c) Respondents will provide the names of lending institutions which are likely to provide loans and/or credit cards by mail to persons who have difficulty obtaining credit;
(d) Respondents will provide the names and addresses of persons or institutions which directly make loans and/or provide credit cards;1/
(e) Respondents will perform a service beyond the provision of printed information to consumers; and
(f) Respondents have a relationship with lenders which they will use to benefit persons responding to their advertisement.
In their Answer, Respondents have denied that they have made the above false representations or that they have otherwise violated the statute.
A hearing was held by the undersigned Administrative Law Judge on August 16, 1989, in Washington, D.C. All parties were afforded full opportunity to be heard, adduce relevant evidence, and examine and cross-examine witnesses. Complainant presented the testimony of Postal Inspector Ronald L. Snyder and introduced documentary evidence; Respondents did not appear or present evidence. On September 8, 1989, the parties filed proposed findings of fact and conclusions of law which have been duly considered. To the extent indicated below, proposed findings and conclusions have been adopted; otherwise, they have been rejected as irrelevant or contrary to the evidence. Based on the entire record herein, including my observation of the witness and his demeanor, the exhibits, and other relevant evidence adduced at the hearing, I make the following findings of fact and conclusions of law:
1. Respondent Daniel L. Soyke is an individual who resides at 11 Vine Street, Binghamton, NY 13903-1816 (Tr. 10). He does business under his own name and the names Global and TRP, and is responsible for the activities and practices undertaken under those names in connection with a loan-by-mail program (Tr. 11-14; CX-2; CX-5, p. 40; CX-6, p. 34; CX-7).
2. Respondents attract attention to their business by means of the following classified advertisement offering loans by mail which appears in the "Financial Opportunities" section of publications of general circulation (CX-5, 6):
LOANS, FAST, confidential. Any amount/ purpose. Refused elsewhere? Try Us: [Global or TRP, address].
3. Persons responding to the classified advertisement receive a solicitation directing payment of $25.00 for a "Loan By Mail Information Service" to Respondent Daniel L. Soyke at P. O. Box 245 SV, Binghamton, NY 13903 (Answer, CX-7; Tr. 14-15).
4. In exchange for $25.00 respondent provides four publications: The Complete Loan By Mail Request Package (CX-8, pp. 1-9); a booklet entitled "Financing Sources" (CX-8, p. 10-28); a paper entitled "How to Get the Loan You Require and How to Get the Highest Possible Amount" (CX-8, pp. 39-44); and a four-page publication called "Building Credit: Banks Offering 'Secured' Credit Cards" (CX-1, p. 3 P5; CX-2, p. 2. P5; Tr. 15-16; CX-8).
5. As alleged in paragraphs 6(a) and (b) of the Complaint, Respondents represent that they will obtain a loan for persons who buy their service and that Respondents will obtain a major credit card for persons who buy their service. These representations are made by the overall impression of the classified advertisement and the circulars mailed to persons who respond to that ad (CX-5-7).
As indicated by the above-quoted language of the classified advertisement, Respondents create the initial impression that a customer will obtain a loan from Global or TRP, because the company named in the ad appears to be offering loans, guaranteeing confi- dentiality, speed and special consideration for those who have trouble obtaining credit. These factors imply that Respondents control the decision whether or not to grant a loan, or have such control over the loan process that they can guarantee results and confidentiality. These words indicate that loan services will be rendered.
The classified ad, when read in conjunction with Respondents' credit card offer (CX-7, p. 3), also gives the impression that Respondents will obtain credit cards for customers.
The above findings are corroborated by letters from people who responded to Respondents' classified ad (CX-56-59).
The circular (CX-7) that Respondents send to persons responding to the classified ad furthers the impression that Respondents will obtain a loan or credit card for customers. The letterhead states that "All types of loans" are available, including "Signature Loans to $20,000 . . . Major Bank Cards, Personal Loans, . . . Real Estate Loans." The circular is addressed to "Preferred Applicant." It guarantees confidentiality, and promises that the loan will be arranged entirely by mail. It discusses interest rates as if Respondents have some specific knowledge of what rate will be available to the applicant. It says, "To Start the Application Procedures, please fill out the enclosed yellow questionnaire 2/ and return it [to] our office." The cover letter also guarantees that "You will get your loan or your entire service fee will be refunded." Thus, the ordinary consumer would believe that the fee is for the service of obtaining a loan.
6. With respect to credit cards, the circular includes a flyer entitled "Instant Credit" (CX-7, p. 3) which states that Respondents will obtain a credit card for applicants. 3/ Respondents "guarantee" this result several times, making it appear that they control whether an applicant will receive a credit card. For example, the circular states:
DO YOU WANT VISA AND MASTERCARD CREDIT CARDS?
Now you can have the two most recognized credit cards in the world, VISA and MASTERCARD. Even if you are new in credit or have been turned down before, WE GUARANTEE IT] We can help you get the credit card you deserve and need for IDENTIFICATION, CHECK CASHING, ENTERTAINMENT . . . This is one of the credit card programs you've been hearing about on national TV and RADIO as well as in magazines and newspapers coast to coast.
The statement that Respondents will "help you get" a credit card, also gives the impression that the card is obtained through Respondents.
7. As alleged in P6(c) of the Complaint, Respondents represent that they will provide the names of lending institutions likely to provide loans or credit cards by mail to persons who have difficulty obtaining credit.
The first part of this representation, that Respondents will provide the names of lending institutions, is made by the guarantees throughout the circular. For example, the circular states (CX-7, p. 1B):
GUARANTEE OF SATISFACTION
We hereby guarantee in writing that you will receive a signature loan-by-mail from at least one or more of the list of 5 or more lending institutions we recommend you apply to. In the unlikely event that your applications are rejected by all of these lenders, simply send us a copy of only two rejection letters, and we will rush you back a refund of your service fee in full . . .
Page two also includes the same statement, and the less conspicuous statement that applicants will receive "Complete information and materials on 5 or more reputable loan companies most likely to approve my SIGNATURE-LOAN-BY-MAIL request." Thus, Respondents expressly state that their loan sources are likely to make loans to persons remitting $25.00 for Respondents' "service." The circular also answers the question, "Who loans the money -- are they reputable?" by stating:
Some of the largest corporations in the United States have subsidiary companies that grant this type of financing. Many have been involved with loans by mail for decades. All of the lending institutions are licensed and regulated by the state and federal government. You are protected by law, and can borrow by mail from these lenders with confidence.
With respect to credit cards, the circular similarly mentions lending institutions, stating that the time it will take to receive the credit cards "varies depending on the selected banks. But most banks issue credit cards within about two to four weeks" (CX-7, p. 3).
Respondents also represent that their lenders will loan to applicants who have had difficulty obtaining credit. The classified ad is aimed at those who have been "refused elsewhere" (CX-5, CX-6). The first line of the circular states: "STOP BEING PRESSED FOR MONEY] Don't let opportunities slip by because of no funds] Regardless of your present financial situation." The ad emphasizes that no collateral will be required for a signature loan, and that only income will be considered.
The credit card flyer (CX-7, p. 3) expressly states that persons who have had difficulty obtaining credit will succeed through Respondents' services:
"Now you can obtain a VISA or MASTERCARD credit card . . . Regardless of your current income or previous credit history . . . . Even if you have declared bankruptcy, just moved, are divorced, on welfare, have poor credit or no credit at all . . ."
The ad guarantees that the recipient will get a credit card. The overall impression is that Respondents can provide credit card sources to persons who have had difficulty getting credit cards in the past.
8. As alleged in P6(d), Respondents represent that they will provide the names and addresses of persons or institutions which directly make loans and/or provide credit cards.
This representation is made by the guarantees throughout CX-7 that customers will obtain a loan or credit card from one of the lending institutions recommended by Respondents. Furthermore, as quoted above, Respondents describe their loan sources as "subsidiary companies" of large corporations "that grant this type of financing." It refers to "lending institutions" in several places in its circular.
9. As alleged in P6(e) of the Complaint, Respondents represent that they will perform a service beyond the provision of printed information to consumers. Throughout their advertisements Respondents give the impression that they provide a "service," i.e. direct assistance to people who want loans and credit cards. The consumer is directed to return an application to Respondents which includes a space for "Amount [of loan] Needed", "Profession or Occupation," "Yearly Income" and "Purpose of Loan." This indicates that Respondents need this information in order to tailor their service to a customer's situation. Persons are promised a refund of their "service fee" if not satisfied, implying that some service will be forthcoming. In addition, as described below under Representation (f), the circular gives the impression that Respondents are connected with lenders and will be using that connection for the benefit of the prospective borrower.
10. As alleged in P6(f) of the Complaint, Respondents represent that they have a relationship with lenders which they will use to benefit persons responding to their advertisement. For the reasons stated above, Respondents represent that they will provide a service to customers beyond printed information. Part of the represented "service" includes using Respondents' relationship with lenders to obtain loans for customers. This representation is made by the guarantee that customers will receive a loan "from at least one or more of the list of 5 or more lending institutions we recommend you apply to" (CX-7, pp. 1B & 2). This implies that Respondents have knowledge of, and influence with, particular lenders, which they use to decide where applicants should apply.
This representation is also made by the information provided in Respondents' circular about their lenders. It states (CX-7, p. 1A):
Completely Confidential way to borrow money, with the loan arranged by mail. No mortgages . . . No co-signers . . . No personal interviews, now or ever . . . No inquiries are made of business associates, and no public filings are made. The information you supply on the application forms the basis for the decision to make a loan.
The ad also contains questions and answers indicating inside information from lenders (CX-7, p. 1B).
11. As previously found, Respondents provide only a printed information package to their customers (CX-8; CX-2, p. 2 #6). No other "service" is provided. Accordingly, Representations (a), (b), (e) and (f) are false. Also, Representation (f) is false since Respondents admit they have no affiliation with lenders (CX-2, p. 2, Question 7).
12. Representation (c) is false to the extent that Respondents represent they will provide the names of lending institutions which are likely to provide loans by mail to persons who have difficulty obtaining credit.
In March of 1989, Postal Inspector Ron Snyder sent loan applications to 132 of the 135 loan sources listed in the "Financing Sources" booklet (CX-8, pp. 10-28) sent to customers by Respondents (CX-9; Tr. 16-19). 4/ Eighty-eight of the 132 did not respond and twelve were returned as undeliverable (Tr. 19; CX-11-22). Of the remaining 32 which responded, it is possible that two make loans directly to applicants (CX-28; CX-41), but only one of these (CX-41) purported to make loans to persons who have difficulty obtaining credit. However, even the latter is not the kind of fast and confidential loan advertised by Respondents because the applicant must first join a business club and complete a four-step program. 5/
Representation (d) is false to the extent Respondents represent that they will provide the names and addresses of persons or institutions which directly make loans. Respondents promised to provide the names of five or more reputable loan companies. Instead they provide a list of 135 sources, of which only two may be valid. Even if those two sources are valid, it is unlikely that many ordinary consumers would discover them in view of the large number of invalid choices. Accordingly, Representation (d) is false to the extent it alleges that the names and addresses of direct loan sources will be provided.
As partially alleged in Representation (d), Respondents represent that they will provide the names and addresses of persons or institutions which directly provide credit cards. Complainant concedes, and I find, that Representation (d) is true to that extent.
Also, as partially alleged in Representation (c), Respondents represent that they will provide the names of lending institutions which are likely to provide credit cards by mail to persons who have difficulty obtaining credit. Representation (c) is true to that extent. Respondents' booklet "Building Credit: Banks Across the Nation Offering 'Secured' Credit Cards" lists about 12 banks which offer credit cards to persons with bad credit histories (CX-8, pp. 35-38).
1. (a) Each of Respondents' advertisements must be considered as a whole and the meaning is to be determined in light of the probable impact of this material 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. 1977). 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. 1947), 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, 1986). Express misrepresentations are not required. It is the net impression which the advertisement is likely to make upon individuals to whom it is directed which is important, and even if an advertise- ment 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).
(b) 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. 1953); Ralph J. Galliano, P.S. Docket No. 19/15 (P.S.D. May 2, 1985 at p. 9). It is not difficult to select words that will not deceive. See, United States v. 95 Barrels of Vinegar, 265 U.S. 438 (1924).
(c) An inconspicuous disclaimer is not sufficient to dispel the effect of false representations. Leo Daboub, supra; Gottlieb v. Schaffer, supra.
(d) The Administrative Law Judge can determine whether the representations are made, their effect on the ordinary mind, and materiality without the assistance of lay or expert testimony. Standard Research Labs, P.S. Docket No. 7/78 (P.S.D. Oct. 27, 1980); The Robertson-Taylor Company, P.S. Docket Nos. 16/98-102, 16/120-121, (P.S.D. March 31, 1986, at page 29); Vibra-Brush v. Schaffer, 152 F. Supp. 461 (S.D.N.Y. 1957), rev'd on other grounds, 256 F.2d 681 (2nd Cir. 1958).
2. Applying the foregoing standards, I find that Respondents' advertisements make the representations alleged in P6(a)-(f) of the Complaint. The language contained in the advertisements, when read in context, which directly or impliedly makes these representations is set forth in the findings of fact.
3. As set forth in the findings of fact, with the exception of certain portions of Representations (c) and (d) pertaining to credit cards discussed below, the representations set forth in paragraph 6 of the Complaint are materially false. Since it is found that Respondents provide the names of lending institutions which are likely to provide credit cards by mail to persons who have difficulty obtaining credit, that portion of P6(c) is dismissed.
Similarly, since Complainant concedes that Respondents provide the names and addresses of persons or institutions which directly provide credit cards, that portion of P6(d) is dismissed.
4. Complainant has established its case by a preponderance of the reliable and probative evidence of record. S.E.C. v. Savoy Industries, Inc., 587 F.2d 1149, 1168 (D.C. Cir. 1978).
5. The false representations made by Respondents are material because they have a tendency to persuade readers to order and pay for Respondents' product.
6. Respondents are engaged in the conduct of a scheme for obtaining remittances of money through the mail by means of materially false representations in violation of 39 U.S.C. § 3005.
7. The attached False Representation Order and Cease and Desist Order should be issued.
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1/ On brief, Complainant conceded that credit cards are offered by some of the sources provided.
2/
The application asks for the customer's occupation,
yearly income, and the purpose of the loan.
3/
Although called "free," the credit card information can
be received only if a customer pays the $25.00 for the loan-by-mail
information.