In the Matter of the Complaint Against

R. P. SALES
Post Office Box 8327 at
Merrillville, Indiana 46410

P.S. Docket No. 6/1;

08/24/77

Lussier, Edward F.

APPEARANCES FOR COMPLAINANT:
ThomasA. Ziebarth, Esq.
Law Department
United States Postal Service
Washington, DC

APPEARANCES FOR RESPONDENT:
Gregory J. Sarkisian, Esq.
Milan D. Tesanovich, Sr., Esq.
Portage, Indiana

POSTAL SERVICE DECISION

This proceeding was initiated by the Consumer Protection Office of the Postal Service Law Department filing a Complaint alleging that Respondent is engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations. The Complaint requested the issuance of a mail stop order against this enterprise under the provisions of 39 United States Code § 3005. The matter, for good cause shown, was set down for expedited hearing under 39 CFR § 952.17(a) of the applicable Rules of Practice in such proceedings.

The Complaint alleges that Respondent attracts attention to the alleged scheme by means of advertisements which represent, directly or indirectly, in substance and effect, by affirmative statements, omissions, or implication that:

"(a) He is offering work at home stuffing envelopes to any person sending a stamped, self-addressed envelope;

(b) The envelope-stuffing programs require specific training which is contained in the so-called 'training manual';

(c) The prospective homeworker is not required to buy stamps, envelopes, mailing lists or circulars because these supplies are furnished;

(d) There are no further costs or investments required of the prospective homeworker other than the price of the so-called 'training manual';

(e) Nothing is required of the homeworker under 'PROGRAM ONE' except to stuff and mail the furnished sales material;

(f) Under 'PROGRAM ONE' the homeworker will receive stamps, envelopes, circulars and names free and $250 per 1,000 envelopes;

(g) As a result of mailings made under 'PROGRAM ONE' the homeworker will receive between 200 and 350 orders which will yield additional commission earnings of $600 and $1,050 for each 1,000 envelopes stuffed; and

(h) Under 'PROGRAM THREE' the homeworker will be paid $0.50 per envelope even if no one buys anything."

Lastly, the Complaint alleges that these representations are materially false as a matter of fact.

Although Respondent's formal answer denied that it makes the alleged representations its position at the hearing of this case was that it intended this as a denial inhaecverbal, i.e. a denial that the representations were made in the same words, but it does not dispute that the representations are made inferentially (Tr. 52, 53).

Findings of Fact

1. Respondent admits, and Complainant's Exhibit 1 establishes, that attention is invited to the alleged scheme and

Respondent seeks money through the mail by means of advertisements in "Help Wanted" columns of newspapers reading:

"WORK at home in spare time. Earn $250.00 per 1000 stuffing envelopes. Send stamped self-addressed envelope to: R. P. Sales, P.O. Box 8327 Merrillville, Indiana 46410" (Complainant's Exhibit 1)

2. Respondent admits that persons responding to such advertisements are sent a circular asking the recipient to remit the sum of $10.00 through the mail for a "Training Manual" and other materials. A copy of this circular is attached to this decision for ready reference, as Attachment No. 1.

3. The circular references the Training Manual (Complainant's Exhibit 3) and two other manuals, one entitled "Cash for Clippings Manual" (Complainant's Exhibit 5) and one entitled "Homework Profits Manual," (Complainant's Exhibit 6). The Training Manual which spells out the work at home plan refers to a "Cash for Clippings" circular which is a one page circular (Complainant's Exhibit 4). Respondent introduced what it represented as updated copies of the referenced exhibits with certain corrections and changes. It does not contend and I do not find that these later versions affect or alter the representations which are the subject of this proceeding.

4. Based upon Complainant's Exhibits 1 and 2 and Respondent's concession at the hearing I find that the Respondent makes the representations charged in the Complaint.

5. As can be readily seen from the circular which the Respondent sends to those who respond to the newspaper advertisement the recipient is being asked to purchase a Training Manual for $10.00 which contains the details of the envelope stuffing program which is described in the circular principally in terms of the profits to be expected.

6. The circular references two separate programs. ^1/ The first program mentioned clearly conveys the impression that the person purchasing the Training Manual will receive $250 for stuffing 1000 envelopes which will be received with stamps, envelopes, circulars and names free of cost and that all that need be done is to stuff and mail the 1000 envelopes to receive $250. He is further led to believe that as a result of these mailings he will receive orders which will give him additional earnings of $600 to $1050 ^2/ for simple processing to Respondent. The second program, he is told, eliminates the orders coming through him but nevertheless insures he will be paid 50c / per envelope.

7. After remitting his $10.00 the eight-page, double-spaced "Training Manual" (Complainant's Exhibit 3) is received and for the first time the details of the "envelope stuffing programs" come to light. What the individual is told to do is to place an advertisement reading as follows:

"Clip Newspaper Articles

Get $1.00 to $5.00 each

Details Send 25c / and Stamped

Self-addressed envelope to

Your name and address".

The promised $250 profit for stuffing 1000 envelopes is thus seen to be totally dependent upon the individual receiving 1000 responses to the quoted advertisement.

8. The additional promised commission of $600 to $1,050 comes only if, as a result of his mailing a one-page circular (Complainant's Exhibit 4) to those who respond to the advertisement, a sufficient number elect to purchase a "Cash for Clippings Manual" for $9.50. On the basis of a 50% commission a minimum of 127 out of 1000 would have to order the manual for the commission of $600 to be earned. The circular to be stuffed is obtainable from Respondent at a charge of $1.75 per hundred "to partially cover the cost of shipping and handling". Thus to fully engage in the "envelope stuffing program" the individual learns he must now invest $17.50 for 1000 circulars or have them printed himself.

9. The alternate program offered is the same as the first with the exception that after receiving responses to the advertisement the individual removes the quarter and sends the self-addressed enclosed envelope which came with it to Respondent for further handling, receiving 25c / for each. Again the promise that the individual will receive $500 for stuffing 1000 envelopes while literally true in one respect presumes his success in getting 1000 people to reply to however many advertisements that takes at whatever additional effort and cost is entailed.

10. The gist of the scheme here is the inducement of high profits for what is made to appear on the surface as the simple act of stuffing envelopes. The clear inference to be drawn is that the envelopes will be made available routinely and that all individual must do is stuff them. That this inducement is false is clear from the documents in evidence. That it is material is obvious from the documents and needs no supporting testimony.

11. Respondent contends that Complainant has not carried the burden of proof in showing material falsity. In so doing its written brief concentrates on the testimony of Complainant's expert witness, Mr. Carlton Bender who is vice president of Dependable Mailing Lists, Incorporated, as well as president of the Chicago Association of Direct Marketing. The apparent sole purpose for calling Mr. Bender was to elicit his opinion on the response to be expected from the "Money from Newspaper Clippings" circular (Complainant's Exhibit 4) which circular is the sales pitch for the $9.50 manual from which commissions are to be earned. Mr. Bender's opinion was that the range of response would probably be in the area of three or four per cent and certainly would not exceed ten per cent (Tr. 16). This testimony affects only the representation set forth in subparagraph (g), quoted above, of Complaint paragraph 3.

12. Subparagraph (g) deals with the promised commission of "$600 to $1,050" ^3/ and response of 200 to 350 orders from a field of 1000 mailings. Mr. Bender explained hi opinion by stating that:

"Because of the deceptive appearance, in my opinion, I would feel that they would be very lucky if they received three to five percent; but, I give them the benefit of the doubt and say that they certainly would not receive in excess of ten percent" (Tr. 16).

The deceptive appearance he had reference to was the fact that in his opinion the average person responding to the newspaper advertisement and remitting 25c / would expect to receive details and not advice through a circular that he could get the details by sending $9.50 (Tr. 19-20). Mr. Bender's testimony on expected order response is uncontradicted by other testimony or documentary evidence.

13. The fact that Mr. Bender "scanned" the circular rather than reading it completely takes on less significance than Respondent would have since his opinion was based not on any particular wording of the circular but rather upon an accurate understanding of what the circular is selling in relation to the newspaper advertisement. Nor, as Respondent contends, must the witness' testimony be disregarded on the basis that the hypothetical question posed to him was based upon a mailing of ten thousand circulars (Tr. 13). This was later clarified (Tr. 15-16). His qualifications to offer expert testimony in the area are clear from the record and his opinion is accepted as reasonably establishing the expected response as much lower than Respondent's representation holds out as an inducement.

14. In its oral argument Respondent's defense to the charge of falsity of the remaining representations was one of the literal truth of each representation. As to the representation, in subparagraph (c), that the prospective homeworker is not required to buy stamps, envelopes, mailing lists or circulars its defense, repeated in its Brief, is that the charge for circulars is insignificant.

15. The charges in the Compliant fairly highlight the major inducements being held out to the prospective homeworker. The falsity of the commission representation found in subparagraph (g) has been discussed above. The falsity of each of the remaining representations becomes clear when they are viewed in the entire context.

16. Basically the falsity of all of Respondent's representations derives from the fact that it advertises a high return for the simple work of stuffing envelopes when in fact it is dependent entirely upon further undisclosed effort, expenditures, and development of a substantial public response to additional advertisements. Respondent is not offering a simple envelope-stuffing program but rather a program of income-earning possibilities which might result from placement to advertisements requesting people to send 25c / and a stamped self-addressed envelope for information. There are in fact other costs and investments required of the prospective homeworker beyond the price of the so-called "Training Manual". The returns are entirely dependent upon further third party response. The materially misleading aspects are not known until the victim purchases the "Training Manual" which presents such a completely different picture that the materiality of the false representations is beyond question. The overall deception seriously infects each of the above referenced representations which Respondent's advertising makes in this case.

"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 a way as to mislead." (Donaldson v. Read Magazine, 333 U.S. 178 (1948) at 188)

The representations charged in the Complaint when viewed in light of the record are all materially false.

Conclusion of Law

Respondent is engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations within the meaning of 39 U.S.C. § 3005.

Accordingly a mail stop order under the provisions of 39 U.S.C. § 3005 is being issued contemporaneously with this decision.

1/ Although referred to in the circular as Programs I and III the Training Manual refers to them as Programs II and IV. This correction of this obvious discrepancy was one of the charges made in Respondent's revised "Training Manual" (Respondent's Exhibit 1).

2/ Respondent's revised circular raises the figures to "$1,000 to $1,750" (Respondent's Exhibit 2).

3/ Respondent's revised circular (Respondent's Exhibit 2) maintains the claim of 200 to 350 orders per 1000 circulars, a 20-35% response, and changes the dollar figures from $1,000 to $1,750 to conform them to the number of orders.