In the Matter of the Complaint Against

UNITED STATES/GREAT LAKES FEDERAL SURPLUS DEPOSITORY
Post Office Box 807 at
Marshfield, WI 54449

P.S. Docket No. 7/136

Grant, Quentin E.

APPEARANCE FOR COMPLAINANT:
Thomas A. Ziebarth, Esq.
Consumer Protection Division,
Law Department
United States Postal Service
Washington, D.C. 20260

APPEARANCE FOR RESPONDENT:
James J. Natwick, Esq.
Trembath, Hess, Miller & Seidl, S.C,
605 Scott Street,
Wausau, WI 54401

INITIAL DECISION

On January 16, 1980, Complainant filed a Complaint alleging that Respondent is engaged in conducting a scheme for obtaining money or property through the mails by means of false representations in violation of 39 U.S.C. § 3005.

Respondent filed an Answer denying each of the above allegations.

At Respondent's request a hearing in the matter was held in Madison, Wisconsin.

The parties have filed proposed findings of fact and conclusions of law which have been adopted to the extent indicated and otherwise denied.

FINDINGS OF FACT

1. United States/Great Lakes Federal Surplus Depository is a trade style under which Mailmart, Inc., a Wisconsin corporation, does business (Tr. 54, 55).

2. The officers of Mailmart, Inc. are Lawrence E. Kult, president (Tr. 57, 58) and Wayne L. Hamlin, vice-president (Tr. 47).

3. Respondent is engaged in the mail order sale of a pamphlet entitled, Official United States Government Surplus Directory (CX-8, 9). This publication is sold by means of classified advertisements placed in various magazines and newspapers (CX-1 through 5).

4. The text of these classified advertisements typically reads:

O-F-F-I-C-I-A-L U.S.A.

DIRECTORY]] - J-e-e-p-s . . . **$37.22]]**

Area]] . . . UNEQUALLED] $2.00 . . .

Unconditionally Guaranteed]] . . . United States/Great Lakes Federal Surplus Depository . . . P. O. Box 807, Marshfield, Wisconsin 54449. (COPYRIGHT 1978.)

5. Five examples of Respondent's advertisements were received in evidence (CX-1 through 5). Respondent admits that these advertisements were placed by it (Tr. 47).

6. The Complaint alleges that Respondent's advertisements falsely represent that:

(a) THE UNITED STATES/GREAT LAKES FEDERAL SURPLUS DEPOSITORY is affiliated with or is an agency of the government of the United States; and

(b) Persons remitting money in response to Respondent's advertisements will receive an "Official United States Surplus Directory" containing "400,000 listings" including such items as jeeps for $37.22 and cars for $22.50 which are available in the purchaser's immediate area.

7. Commercial enterprises frequently employ names including the words "United States" or "Federal." This is not prohibited and probably very few people believe that the use of one or the other indicates an affiliation or agency relationship with the Government. However, Respondent combines the two and adds the words "official" and "depository" and does not include "Company" or "Inc." to reflect its commercial nature. The result is the conveyance of a strong impression to the ordinary mind that Respondent is affiliated with, or an agency of, the government of the United States.

8. The words, ". . . Jeeps - $37.22, 400,000 Listings, Your Immediate Area" create the impression in the ordinary mind that Respondent's "Official United States Surplus Directory" will contain 400,000 listings including such items as jeeps for $37.22.

9. The representations alleged in paragraph 3 of the Complaint are made in Respondent's advertising. These representations are false in fact. Respondent is not affiliated with, or an agency of, the government of the United States. Respondent does not furnish persons responding to its ads with an official directory published by the U. S. Government. Rather, it furnishes purchasers a 14-page booklet (CX-8b), four pages of which identify government offices to which they may write for listings or catalogs of surplus property for sale. The booklet contains not one listing, to say nothing of 400,000 listings, of specific items of surplus property actually for sale. It simply lists classes of surplus property sold by the Department of Defense.

10. These false representations are material in that their natural tendency is to induce readers of Respondent's ads to remit money for Respondent's publications.

CONCLUSIONS OF LAW

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 an ordinary minds. Donaldson v. Read Magazine, 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).

2. An advertisement may be literally true when each word is considered separately and still make a false representation. Donaldson v. Read Magazine, supra; Koch v. F.T.C., 206 F.2d 311 (6th Cir. 1953); Kalwajtys v. F.T.C., 237 F.2d 654 (7th Cir. 1956).

3. Whether anyone actually complains or has been deceived by Respondent's advertisements is irrelevant on the issue of false representation. Farley v. Heininger, 105 F.2d 79 (D.C. Cir. 1939); Fairfield Floral Co. v. Bradbury, 89 Fed. 393 (1898); Charles of the Ritz Corp. v. F.T.C., 143 F.2d 676 (2d Cir. 1944).

4. The effect of false representations is not dispelled by a money-back guarantee. Borg-Johnson Electronics v. Christenberry, supra.

5. The average person reading Respondent's advertisements would interpret them substantially as characterized in paragraph (3) of the Complaint.

6. Respondent is engaged in the conduct of a scheme for obtaining remittances of money through the mail by means of false representations in violation of 39 U.S.C. § 3005.

7. An order pursuant to 39.U.S.C. § 3005 in the form attached should be issued against Respondent.