In the Matter of the Complaint Against:

FEDERAL CURRENCY CORP.,
1000 Connecticut Avenue, N.W., Room 407 at
Washington, D.C. 20036

P.S. Docket No. 5/31

Duvall, William A.; Chief Administrative Law Judge

Thomas A. Ziebarth, Esq.
Law Department
United States Postal Service
Washington, D. C., for Complainant

Thomas W. Holland, Esq.
5530 Wisconsin Avenue, Suite 1630,
Chevy Chase, Maryland, for Respondent

Before: William A. Duvall, Chief Administrative Law Judge

INITIAL DECISION^1/

This case was initiated on July 9, 1976, by the filing by the United States Postal Service, the Complainant, of a complaint in which it is charged that Federal Currency Corporation, Washington, D. C., is engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations contrary to the provisions of Section 3005, Title 39, United States Code.

In its answer, Federal Currency Corporation, the Respondent, admitted the use of the advertisement, a copy of which is attached to the Complaint as Exhibit 1 thereto; it admitted that such advertisements were drafted and composed for the purpose of causing the readers to remit money through the mails; and it admitted that Exhibit 1 to the Complaint is typical of those used by the Respondent. The Respondent denied the making of the representations which are set forth in paragraph 3 of the Complaint. And the Respondent further denied that those representations, if found to be made, are materially false as a matter of fact.

In addition to the answer, the substance of what has just been stated was incorporated in a stipulation which was signed by counsel for both parties and was made a matter of record at the outset of the hearing.

It, therefore, has been established that the Respondent does use the advertisement which is attached to the Complaint and that it does seek remittances of money through the mails for the product which it is selling, which in this case is a copper penny which is one of the items of currency of the United States. Thus it must be determined whether the Respondent does make the representations which are set forth in the Complaint and whether those representations, if made, are true or false.

The precise representations attributed to the Respondent are these:

"(a) The copper cent featured in FEDERAL CURRENCY CORPORATION'S advertising is a special bicentennial issue of the United States Mint;

"(b) The copper cent featured in FEDERAL CURRENCY CORPORATION'S advertising is unique or different from ordinary one cent coins which have been regularly minted since 1959; and

"(c) This '1976 Bicentennial Penny' can be obtained only through a special offering of this type."

A copy of the advertisement on which these charges are predicated is attached to this decision as Appendix A.

Representation (a) above is in substance that the coin being offered for sale by the Respondent is a special bicentennial issue of the United States Mint. The language of the advertisement on which this charge is based is found, among other places, in Appendix A in the first three lines of the advertisement, to wit:

"1776

YEARS OF THE BICENTENNIAL

UNITED STATES MINT

STRIKES

1976

COPPER CENT"

Slightly lower on the advertisement and on the righthand side thereof is the language: "SPECIAL LIMITED OFFER $1.00 UNCIRCULATED SPECIMEN." To the left of the advertisement opposite the portion just quoted is this language: "ORDER TODAY - WE CAN SHIP IMMEDIATELY FROM AVAILABLE SUPPLY. *** Limit 6 Coins Per Order."

In the second paragraph under the illustration, there is the following language: "This is the only penny that the United States Mint will strike during the Bicentennial Year that is dated 1976 ***." This is not the end of that paragraph but, for present purposes, the quotation will end at this point.

This language is more than adequate to create in the mind of the average reader that what the Respondent is offering for sale in this advertisement is a special bicentennial issue of the United States one-cent piece, and that it is being issued by the United States Mint in some distinctive way in celebration of the fact that this is the bicentennial year of the United States of America.

Passing now to charge (b) quoted above from the Complaint, the substance of this charge is that the coin being offered for sale by Respondent is unique or different from ordinary one-cent coins which have been regularly minted since 1959.

The language quoted above with respect to charge (a) in the Complaint also supports the proposition that the Respondent is offering for sale something that is unique or different from ordinary one-cent coins of the United States. In addition to the language just referred to, the language appearing on the lower lefthand side of the advertisement, Appendix A, advises the prospective purchasers to tell the Respondent to rush whatever number of coins they want, as if some shortage might, or were about to, develop in the number of coins available. This ties in particularly with the so-called "Special Limited Offer" which the REspondent represents it is making with respect to these coins.

With respect to charge (c) of the Complaint, the essence of this charge is that the coin being offered for sale by the Respondent can be obtained only through a special offering of this type.

The language which has been quoted above with respect to support for the proposition that Respondent makes representations (a) and (b) is also applicable with respect to the proposition that Respondent makes representation (c). In addition to that language there is, as the third paragraph under the illustration on the advertisement, the following language:

"This uncirculated Specimen Beautifully Mounted in a clear acrylic case along with a copy of The Gettysburg Address on parchment paper, suitable for framing or decoupaging can be obtained only through a special offering of this type."

s can be seen, some of the very language which is incorporated in charge (c) of the Complaint is lifted verbatim from the language quoted from the Respondent's advertisement. It would appear, therefore, that there can be no gainsaying the fact that this representation is made by the Respondent.

There remains for consideration the question as to whether the representations found to have been made by the Respondent are materially false as a matter of fact.

The Respondent takes the position that every single statement set forth in its advertisement is literally true and, as a matter of fact, Complainant's Counsel has substantially conceded that that is correct. In addition, Respondent's Counsel states that the product which Respondent is offering for sale is, in fact, a special bicentennial issue of the United States Mint by reason of the fact that this is the year 1976, and the coins being minted this year bear the year designation 1976. Further and finally, REspondent's Counsel asserts that after the bicentennial year 1976 there will be no coins minted which bear the year designation 1976.

All of these things, in the view of the Respondent, support the proposition that its product is in fact a special bicentennial issue of the United States Mint. This position of the Respondent is appreciably weakened, if not devastated, by the fact agreed to in the stipulation that thus far in the year 1976 there have been minted in the Denver and Philadelphia Mints a total of 3,200,000,000 of coins of the type being offered for sale by the Respondent. Therefore, there is no reasonable ground that can be asserted as a basis for making the statement that the product being sold by the Respondent is a special bicentennial issue of the United States Mint, or that it differs from other one-cent coins minted by the United States since 1959.

It has been asserted by Complainant, and it has not been controverted by the REspondent, that the coins do not differ in any respect, save one, from similar coins which have been regularly minted since 1959. That respect in which the difference exists is simply the year of issuance. Since there have been thus far this year 3,2000,000,000 1976 pennies minted, there certainly are many, many ways in which the product being offered for sale can be obtained other than through the special offering of the type presented by the Respondent.

In support of its position in respect to this matter, Complainant has relied on the decision of the Supreme Court in Donaldson v. Read Magazine, 333 U.S. 178, at pages 188, 189. The language from the decision of the Court in that case is so appropriate that it is further appropriate to quote it at this point. The Court said:

"Advertisements 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 advertisements are composed or purposefully printed in such way as to mislead. *** That exceptionally acute and sophisticated readers might have been able by penetrating analysis to have deciphered the true nature of the contest's terms is not sufficient to bar findings of fraud by a fact-finding tribunal. The Court was then discussing the type of enterprise that was under consideration by it in that case, but the language is no less appropriate and applicable to this case. Questions of fraud may be determined in the light of the effect advertisements would most probably produce on ordinary minds. (citing cases) People have a right to assume that fraudulent advertising traps will not be laid to ensnare them. 'Laws are made to protect the trusting as well as the suspicious.' Federal Trade Commission v. Standard Education Society, 302 U.S. 112, 116."

There is one other case, among many others, which it is believed is worth quoting here, and this is the case of Vibra Brush Corp. v. Schaffer, decided by the United States District Court for the Southern District of New York, reported at 152 F. Supp. 461, at page 465, wherein that Court said:

"It is not each separate word or a clause here and there of an advertisement which determines its force, but the totality of its contents and the impression of the entire advertisement upon the general populace." Continuing, the Court said, "The ultimate impression upon the reader results not only from the total of what is stated but also from what is reasonably implied."

Applying to this proceeding the holdings from which excerpts have just been quoted, I make the following findings of fact and conclusions of law:

Finding of Fact No. 1 is, as stipulated by the parties, that the Respondent does utilize advertisements of the type appended to this decision as Appendix A in seeking remittances of money through the mail from its prospective customers or from the readers of such an advertisement.

Two, the Respondent does make the representations which are expressed in paragraph 3 of the Complaint. Those representations do express the impression that would be created in the mind of the average reader upon reading the advertisement employed by the Respondent in the conduct of its business.

Three, the representations found to have been made by the Respondent are materially false as a matter of fact.

The Respondent took the position that if the representations are found to have been made and found to be false, that they are not materially false as to matters of fact. But it seems to me that when a Respondent offers for sale a product which costs the Respondent one cent; and with that product he offers a piece of printed matter which could not possibly cost one cent per sheet; and for that product, consisting of the two items, charges one dollar; that fact within itself causes the representation to be a material misrepresentation as a matter of fact. That is not the only feature that I regard as classifying these misrepresentations as being material, but that is an additional feature which causes one to conclude that the misrepresentation is a material misrepresentation as a matter of fact.

Upon the basis of the foregoing findings of fact it is concluded as a matter of law that the Respondent is engaged, as charged, in conducting a scheme or device for obtaining money or property through the mail by means of false representations within the meaning of Section 3005 of Title 39, United States Code.

Proposed findings of fact and conclusions of law submitted by the parties have been considered and they are adopted to the extent heretofore indicated. Otherwise, such proposed findings of fact and conclusions of law are rejected because they are contrary to or unsupported by the evidence or because of their immateriality.

It follows from all of the foregoing considerations that an order of the type provided for by 39 U. S. Code 3005 should be issued against this Respondent.

___________________

1/ Transcribed from oral decision as rendered at close of hearing held August 9, 1976. Minor language changes have been made, but the substance of the decision is unchanged.