In the Matter of the Complaint Against

DIRECT MAILING SYSTEMS
and D.M.I.,
P. O. Box 395,
Welsh, LA 70591-0395

D. M. INDUSTRIES, DIRECT MAILING SYSTEM
and D.M.I.,
P. O. Box 46058,
Baton Rouge, LA 70895-6058

and

DENNIS LELEUX,
155 Marilyn Drive,
Building 52, Unit D,
Baton Rouge, LA 70815-5606

P.S. Docket No. 27/133

Edwin S. Bernstein Administrative Law Judge

APPEARANCE FOR COMPLAINANT:
Geoffrey A. Drucker, Esq.
Consumer Protection Division
Law Department
United States Postal Service
Washington, DC 20260-1112

APPEARANCE FOR RESPONDENT:
Dennis Leleux, Pro Se
155 Marilyn Drive Building 52, Unit D
Baton Rouge, LA 70815-5606

BEFORE: Judge Edwin S. Bernstein

INITIAL DECISION

Complainant alleged and Respondent denied that Respondent is engaged in a scheme to obtain money through the mail by false representations in connection with a circular mailing venture.

Complainant's Second Amended Complaint alleged in Paragraph 7 that Respondent falsely represents:

(1) Respondent is providing at-home employment consisting principally of inserting materials into envelopes.

(2) A participant in Respondent's homemailer's program will receive $2.00 per envelope from Respondent for doing no more than inserting materials into envelopes.

(3) Participants in Respondent's homemailer's program typically earn large sums of money--at least $500 per month--through work that mainly consists of inserting materials into envelopes.

(4) Respondent will assist participants in its homemailer's program in obtaining from manufacturers profitable at-home employment consisting of inserting materials into envelopes.

A hearing was held in New Orleans, Louisiana on July 14, l987. Postal Inspector Melanie Whitney testified for Complainant. Dennis Leleux testified for Respondent. Complainant filed proposed findings of fact and proposed conclusions of law and memoranda. Respondent elected not to file a post-hearing submission.

FINDINGS OF FACT

1. Preliminary Findings

Respondent Dennis Leleux is the applicant for P. O. Box 395, Welsh, LA 70591-0395, and P. O. Box 46,058, Baton Rouge, LA 70895-6058. (CX-2, 7) Using the trade name D.M.I., he solicits self-addressed, stamped envelopes to both of these addresses. (CX-1, 6) To solicit orders for The Complete Homemailer's Program ("The Plan") to Box 395 in Welsh, he uses the trade name Direct Mailing Systems, and to solicit orders for this program to Box 46,058 in Baton Rouge, he uses the trade name D. M. Industries. (CX-3, 8; Tr. 31-34)

Mr. Leleux places classified advertisements in newspapers. These advertisements request persons who are interested in earning a high income through work done in the home to send a self-addressed, stamped envelope to "D.M.I." at a post office box controlled by Mr. Leleux. Persons who send self-addressed, stamped envelopes to Mr. Leleux receive a circular. (CX-3) The circular contains an application form that invites those who desire The Complete Homemailer's Program to send $9.00 to either Direct Mailing System or D. M. Industries at a post office box controlled by Mr. Leleux. Members of the public who send their $9.00 to Mr. Leleux receive a document entitled "The Plan (Complete Homemailer's Program)."

2. The Use Of The Mail

The circulars for The Plan contain an application form that lists the name and address of either Direct Mailing System or D. M. Industries. The form also states: "Send CASH Check or Money Order" and: "ENCLOSED IS $9.00 FOR THE COMPLETE HOMEMAILER'S PROGRAM." (CX-3, 8) Clearly, this form solicits the remittance of $9.00 through the mail for The Plan.

3. The Advertising Representations

Respondent's advertising materials make the representations alleged in Paragraph 7 of the Complaint for the following reasons:

Representation 1: Respondent is providing at-home employment consisting principally of inserting materials into envelopes.

At the top of the circulars, (CX-3, 8) in very large print, the following question appears: "Would you stuff envelopes for $1000's Weekly." Directly below is the promise: "$2 For Each Envelope You Stuff." The second paragraph asserts: "You receive cash daily for the envelopes you stuff." This language represents an offer to the ordinary reader of money in exchange for simple work - inserting materials into mailing envelopes.

This representation is not overcome by a small, well-hidden disclaimer. A box at the bottom of page one of the circulars carries the misleading headline: "Why is this possible?" Inside the box are three long paragraphs in print that is far smaller than the print used in the rest of the circular. The last sentence in the third paragraph states: "This work mainly consists of the securing of envelopes through classified ads and simple stuffing." Because of its size and location, the disclaimer is likely to escape the attention of the ordinary reader.

In addition, this disclaimer is negated by the text of the circulars, which reads: "You will be supplied with the materials to be stuffed, envelopes will be already stamped and addressed." An extremely careful reader might recognize that the circulars do not actually promise to supply envelopes; they promise only that the envelopes will arrive in a particular form. The ordinary reader, however, probably will interpret this sentence to mean that if he participates in The Plan, he will receive envelopes as well as materials.

The circulars fail to make clear that a participant must secure the envelopes through his own efforts. Therefore, they convey the overall impression that a participant will receive envelopes and materials, and that his work will consist principally of stuffing the latter into the former.

Representation 2: A participant in Respondent's homemailer's program will receive $2.00 per envelope from Respondent for doing no more than inserting materials into envelopes.

The circulars state: "$2 For Each Envelope You Stuff." This is an explicit promise that a participant will receive two dollars from Mr. Leleux in exchange for the participant's labor in inserting materials into an envelope. (CX-3, 8)

Representation 3: Participants in Respondent's homemailer's program typically earn large sums of money--at least $500 per month-- through work that mainly consists of inserting materials into envelopes .

One classified advertisement states: "NO GIMMICK, EARN $500 - $1,500 monthly at home mailing our circulars in pre-addressed, pre-stamped envelopes," while the other states: $500 weekly possible at home." (CX-1, 6) Persons who respond to these advertisements receive circulars that promise: "$1000's Weekly," and "$2 For Each Envelope You Stuff." To the ordinary reader, the classified advertisements, read in conjunction with the circulars, represent that he can expect to earn at least $500 per month through work that consists mainly of inserting materials into envelopes.

Representation 4: Respondent will assist participants in its homemailer's program in obtaining from manufacturers profitable at-home employment consisting of inserting materials into envelopes.

The circulars make this representation explicitly. They state, "In addition to mailing our salesletter, we will help you reap huge profits from manufacturers anxious to use your services, at no extra cost to yourself]" The words "your services" are on a page that emphasizes at-home employment; therefore, they convey the meaning "at-home employment" to the ordinary reader.

4. The Truth or Falsity of the Representations

I find that all of the above representations are false for the following reasons:

Representation 1: Respondent is providing at-home employment consisting principally of inserting materials into envelopes.

Mr. Leleux admitted that this representation is false. (Tr. 36) Other evidence also supports a finding of falsity. The Plan makes clear that a principal element of the work is obtaining the names and addresses of persons who are likely to be interested in purchasing information on a work-at-home plan. Participants are instructed to obtain these names and addresses by: (l) placing a classified advertisement in a magazine that is similar to the advertisement to which the participant himself responded; or (2) acquiring a mailing list of "opportunity seekers" from a broker.

The Plan tells participants who choose Method One that the first magazine they choose may pull few inquiries, so it may be necessary to "change magazines and try again." The Plan thus admits that there is no guarantee that the classified advertisements will pull inquiries. The Plan also points out that classified advertisements cost money. Therefore, participants who choose Method One to obtain envelopes must spend time placing advertisements and risk a portion of their savings on a venture that might lose money.

The Plan implies that participants who choose Method Two will have to address and send circulars to persons listed on mailing lists. Addressing envelopes will probably take at least as long as stuffing them. Furthermore, participants will have to spend money for postage on the envelopes, thereby running the risk that they will lose money on the venture.

Under either Method One or Two, participants must reproduce the circulars at a cost estimated in The Plan as $25 to $40 per thousand. Like the costs that participants must bear in placing advertisements or mailing circulars, the cost of reproducing circulars will not necessarily be recovered.

Representation 2: A participant in Respondent's homemailer's program will receive $2.00 per envelope from Respondent for doing no more than inserting materials into envelopes.

Mr. Leleux admitted that this representation is false. (Tr. 36) Other evidence also supports a finding of falsity. Although the circulars appear to offer two dollars per envelope to all participants, The Plan treats the two dollar offer as a separate program. This program is one in which "failure to follow [instructions] will nullify the agreement."

The first instruction is to place an advertisement in a local newspaper or magazine soliciting one dollar and self-addressed, stamped envelopes. "[Y]ou always pay the costs of the ads yourself," state the circulars.

In short, a participant must spend a significant amount of time placing classified advertisements, and he must take a financial risk in so doing. Therefore, the representation that a participant can earn two dollars by doing no more than stuffing envelopes is false.

Representation 3: Participants in Respondent's homemailer's program typically earn large sums of money--at least $500 per month--through work that mainly consists of inserting materials into envelopes .

Mr. Leleux admitted that this representation is false. (Tr. 36) Other evidence also supports a finding of falsity. As was discussed above with reference to Representation 1, the work required of participants in The Plan does not consist principally of inserting materials into envelopes. Thus, the representation that The Plan provides a means of earning $500 or more per month through work that mainly consists of envelope-stuffing is false.

Representation 4: Respondent will assist participants in its homemailer's program in obtaining from manufacturers profitable at-home employment consisting of inserting materials into envelopes.

Mr. Leleux admitted that this representation is false. (Tr. 36) Other evidence also supports a finding of falsity. The Plan does not tell participants how to find work with manufacturers who are willing to provide at-home employment. Rather, it lets participants know that they can expect no further assistance. " CONGRATULATIONS. Your success is now entirely dependent upon your efforts."

CONCLUSIONS OF LAW

1. Postal Service False Representation Orders to not violate the First Amendment of the Constitution. Donaldson v. Read Magazine, Inc. , 333 U. S. 178 (1948); Lynch v. Blount , 330 F. Supp. 689 (S.D.N.Y. 1971); Hollywood House International, Inc. v. Klassen , 508 F.2d 1276 (9th Cir. l974); and United States Postal Service v. Beamish , 466 F.2d 804 (3d Cir. 1972). In the latter case, the Court held, "Advertisers possess no constitutional right to disseminate false or misleading materials. Therefore, Congress has the power to prohibit such deceptions through appropriate legislation." p. 807. See also ; Bolger v. Young's Drug Products Corp. , 463 U. S. 60 (1983).

2. An advertisement must be considered as a whole and its meaning will be determined in the light of its probable effect on persons of ordinary minds. Donaldson v. Read Magazine, Inc. , supra ; Vibra-Brush Corp. v. Schaffer , 152 F. Supp. 461 (S.D.N.Y. 1957). Rev'd on other grounds , 256 F.2d 681 (2nd Cir. 1958).

3. Express misrepresentations are not required. It is the net impression that the advertisement as a whole is likely to make upon individuals to whom it is directed that is important. Even if a solicitation is so worded as to not make an express representation, but 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 (l976), quoting United States v. 95 Barrels of Vinegar , 265 U. S. 438, 443 (1924): "It is not difficult to choose statements, designs and devices which will not deceive." In Vibra-Brush Corp. v. Schaffer , supra , the Court stated:

It is not each separate word or 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. p. 465.

Similarly, in American Image Corp. v. United States Postal Service , 370 F. Supp. 964 (S.D.N.Y. 1974) the Court held: "The cases are clear that such advertisements are to be viewed not with a lawyer's eye to 'fine spun distinctions' but with an eye to their over-all effect on the average reader."

4. 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., Inc. v. F.T.C. , 209 F.2d 382, 387 (7th Cir. l953); Ralph J. Galliano , P.S. Docket No. 19/15 (P.S.D. May 2, l985); Bruce Roberts Co. , P.O.D. Docket No. 3/78 (I.D., August 16, l971); Moneymakers, et al. , P.S. Docket No. 16/1 (I.D., June 20, l983).

5. Although an astute person might not be deceived by an advertisement, this does not detract from the solicitation's tendency to "deceive the ignorant, gullible and less experienced." Gottlieb v. Schaffer , 141 F. Supp. 7, 16 (S.D.N.Y. 1956). The false representation statute was intended to protect such persons as well. Donaldson v. Read Magazine, Inc. , supra .

6. Applying the foregoing standards, the average person who reads Respondent's advertisements would interpret them substantially as characterized in Paragraph 7 of the Complaint. These represen- tations are false.

7. As expressed in Chaachou v. American Central Insurance Co. , 241 F.2d 889, 893 (5th Cir. l957), a representation is material if it would ". . .cause the [other party] to do other than that which would have been done had the truth been told." Applying the Chaachou test, Respondent's representations are material because they have the effect of inducing individuals to remit money through the mail to enroll in his program.

8. A promise to refund if a customer is dissatisfied will not dispel the effect of false advertisements. Farley v. Heininger , 105 F.2d 79, 84 (D.C. Cir. l939); Borg-Johnson Electronics, Inc. v. Christenberry , 169 F. Supp. 746, 751 (S.D.N.Y. 1959). Similarly, a small inconspicious disclaimer will not cure the falsity of a representation Vibra-Brush Corp. v. Schaffer , supra .

9. Therefore, Respondent is engaged in the conduct of a scheme for obtaining the remittance of money through the mail by means of false representations in violation of 39 U.S.C. 3005. Accordingly, a False Representation Order and a Cease and Desist Order in the form attached should be issued against Respondent.