In the Matter of the Complaint Against:

CREDIT CARD AUTHORIZATIONS CTR. (C.C.A.C.),
P. O. Box 627, Springfield, VA 22150-0627;

CREDIT CARD AUTHORIZATIONS CTR. (C.C.A.C.),
P.O. Box 1200, Bowie, MD 20715-0000;

A.S.C. LTD.,
P.O. Box 001, Hanover, MD 21076-0000;

N.C.C.A. SERVICES CO.,
P.O. Box 1, Annapolis, MD 21401-0000;

CREDIT CARD AUTHORIZATIONS CTR. (C.C.A.C.),
P.O. Box 96581, Washington, DC 20066-1989;

CREDIT CARD AUTHORIZATIONS CTR. (C.C.A.C.),
P.O. Box 2012, Jessup, MD 20794-2012;

CREDIT CARD AUTHORIZATIONS CTR. (C.C.A.C.),
P.O. Box 1989, Hanover, MD 21076-1989;

MARKETING SPECIALISTS, INC.,
747 Route 3 North, Gambrills, MD 21054-1303;

CREDIT CARD AUTHORIZATIONS CENTER, INC.,
747 Route 3 North, Gambrills, MD 21054-1303;

and

SANTO VICTOR RIGATUSO, aka BOB HARRIS,
747 Route 3 North, Gambrills, MD 21054-1303

P.S. Docket No. 30/77

Grant, Quentin E.; Chief Administrative Law Judge

APPEARANCES FOR COMPLAINANT:
Thomas A. Ziebarth, Esq.;
Timothy J. Mahoney, Esq.;
Consumer Protection Division;
Law Department;
United States Postal Service;
Washington, DC 20260-1144

APPEARANCE FOR RESPONDENTS:
Alan B. Niedermayer, Esq.;
206 E. 25th Street;
Baltimore, MD 21218-5216

INITIAL DECISION

In a complaint filed on April 25, 1988, the General Counsel of the Postal Service alleged that Respondents are in violation of 39 U.S.C. 3005 in connection with a promotion involving credit cards. Specifically, the complaint alleges that in direct mail advertisements Respondents solicit remittances of money through the mails by means of the following materially false representations:

"(a) the sender of such an advertisement is affiliated with or acting in concert with or on behalf of a financial institution or other entity which issues national credit cards such as VISA or MasterCard;

(b) credit up to a certain amount for the recipient of such advertisement has already been approved by the issuer of more than one national credit card such as VISA or MasterCard; and

(c) a recipient of such an advertisement who mails a completed form with payment to the sender as directed will within a few days receive national credit cards such as VISA or MasterCard with a total credit limit in an amount specified in the advertisement."

Respondents' answer to the complaint admitted the use of the advertisements alleged therein but denied making the representations set forth above.

A hearing at which both sides presented evidence was held in Washington, DC, on May 27, l988. Complainant's witnesses were Larry Pullen, Vice President of Associated Computer Services, Inc.; Katherine Brown, a consumer; and Fred W. Addison, a postal inspector. Santo Victor Rigatuso was Respondents' sole witness.

The parties have filed proposed findings of fact, conclusions of law and written argument all of which have been fully considered. To the extent indicated they have been adopted. Otherwise, they have been rejected as irrelevant or contrary to the evidence.

At the hearing, without objection by Respondents, Complainant's May 24, l988 motion to amend the complaint was granted. The amended complaint adds as a respondent Credit Card Authorization Center, Inc. and makes certain minor changes and corrections in the original complaint.

Following the hearing, on June 16, l988, Complainant moved to amend the amended complaint in certain respects to conform to the proof adduced at the hearing. By order dated June 20, Respondents were given to June 27 to file objections to this motion. No objections have been filed. Accordingly, the motion is granted. The second amended complaint is substituted for the amended complaint. The changes made by this amendment are the substitution of Marketing Specialists, Inc. for Marketing Specialist International, Inc. (at the same address) as a respondent and the addition of the following respondents:

CREDIT CARD AUTHORIZATIONS CTR (C.C.A.C.)
P. O. Box 96581
Washington, DC 20066-6581

CREDIT CARD AUTHORIZATIONS CTR (C.C.A.C.)
P. O. Box 2012
Jessup, MD 20794-2012

CREDIT CARD AUTHORIZATIONS CTR (C.C.A.C.)
P. O. Box 1989
Hanover, MD 21076-1989

FINDINGS OF FACT

1. Marketing Specialists, Inc. (MSI) and Credit Card Authorizations Center (C.C.A.C.) are Maryland corporations. Santo Victor Rigatuso, also known as Bob Harris, is president of MSI and vice president of C.C.A.C. The address of these Respondents is 747 Route 3 North, Gambrills, Maryland 21054 (CX-18, 19; Tr. 54, 68, 69).

2. Respondent Rigatuso directed and oversaw the entire promotion involved herein including the drafting of the several versions of the direct mail advertisements, arranging for the printing and mailing of hundreds of thousands thereof through Associated Computer Services, Inc. (ACSI), of Springfield, Virginia, setting up the various addresses and post office boxes for receipt of remittances, and creating the kit sent to remitters of the solicited fee (Tr. 10, 13, 16, 17, 69, 70).

3. By means of the direct mail advertisements referred to above (CX-1, 2, 3, 5 and 6; RX-1) Respondents have solicited remittances of fees ranging from $15.00 to $25.00 for charge cards to the following addresses:

a. Credit Card Authorizations Ctr. (C.C.A.C.)
Box 627
Springfield, VA 22150 (CX-1)

b. A.S.C. Ltd.
Box 001
Hanover, MD 21076 (CX-2)

c. N.C.C.A. Services Co.
Box #1
Annapolis, MD 21401 (CX-3)

d. Credit Card Authorizations Ctr. (C.C.A.C.)
Box 1200
Bowie, MD 20715 CX-5)

e. Credit Card Authorizations Ctr. (C.C.A.C.)
Box 96581
Washington, DC 20066 (CX-6)

f. Credit Card Authorizations Ctr. (C.C.A.C.)
Box 2012
Jessup, MD 20794 (RX-1)

g. Credit Card Authorizations Ctr. (C.C.A.C.)
Box 1989
Hanover, MD 21076 (RX-1)

4. Annexed hereto as Exhibit A are copies of two of such direct mail advertisements (CX-1, 6).

5. Persons who remit the required fee are sent a "kit" (CX-4) containing two paper credit cards, one called National City and the other Gold Card 2500, and a letter addressed "Dear Customer" stating that the enclosed cards are two of the "mentioned cards as promised," the charge limit with the Gold Card 2500 being $1,500.00 and with the National City $1,000.00. The letter also states that in approximately 45-60 days the customer will be given an opportunity to acquire a VISA and MASTER CARD regardless of past credit history providing "that you're current with current obligations, have not filed bankruptcy in the last 30 months, and you have no outstanding judgments and are willing to keep a certain balance in a certain savings and loan institution which is a member of F.S.L.I.C. Your must also have a steady income of at least $185.00 per week or more."

The letter goes on to state that C.C.A.C., Inc. is a service center to help acquire certain charge cards and in no way "implies" any affiliation or liability to any charge card company.

6. The kit also reveals that the Gold 2500 card may be used only to purchase items of designer jewelry from the Santo Gold-Forever Gold catalog and that the National City Card may be used only to make purchases from the National City catalog, or listing, of electronic and other items enclosed with the kit. The merchandise offered for sale with both cards is owned by MSI but is being purchased by C.C.A.C. (Tr. 72). MSI and C.C.A.C. are closely related (Tr. 75, 76).

7. Some of Respondent Rigatuso's testimony relative to CX-6, a revised advertisement of the credit card promotion, implied that the ad as revised complied with an interim agreement reached by Rigatuso with regional inspector attorney Timothy J. Mahoney (Tr. 101-102). Complainant introduced as CX-24 the letter sent customers, who had already paid the fee for credit cards, pursuant to the interim agreement (Tr. 103, 104). This letter set forth the conditions customers would have to satisfy in order to obtain VISA or MasterCard credit cards (see FOF 5, supra) and offered a refund to customers who had misunderstood the advertisement. These conditions were not set forth in Respondents' revised ad (CX-6) or in any of the earlier ads (CX-1, 2, 3, 4 and 5).

8. Complainant's consumer witness, Katherine Brown, needed a major credit card, had experienced trouble in obtaining one, and interpreted Respondents' advertisement (CX-22, identical in content to CX-5) as promising her two major credit cards on her payment of the $15.00 service charge. She thought the name Credit Card Authorizations Center signified that Respondents were connected with VISA, Mastercharge, American Express and Choice because those credit cards were mentioned in the ad and the ad said that C.C.A.C. had thousands of transactions a year with those companies (Tr. 22-32).

DISCUSSION

Applying the standards of interpretation set forth in the Conclusions of Law, below, I find that Respondents' advertisements (CX-1, 2, 3 and 5) make expressly and by implication the representations alleged in the complaint. The name Credit Card Authorizations Center clearly conveys the impression that Respondents are engaged in the business of issuing, or arranging for the issuance, of credit cards. The listing of the names Visa, MasterCard, American Express, and Carte Blanche with whom C.C.A.C. says it handles thousands of transactions a year, conveys the impression that the credit cards issued will be major, national credit cards. The inclusion of the names Gold Card 2500 and National City does not detract from this impression. It is well known that several of the major credit card companies issue gold cards. National City has the ring of a major financial institution like Citicorp which promotes major credit cards. Those two names, therefore, are not obviously inconsistent with the real major cards listed.

The statement that a charge limit of $2500 has been approved and guaranteed, in context with the major credit cards listed, implies that such limit has already been approved for the recipient of the ad by the issuer of more than one of such cards.

The total thrust of the ads is that a recipient who mails the signed agreement form and the amount of the service charge will shortly receive two major credit cards, such as those listed, with a total credit limit of $2500.

The latest version of the ad, CX-6, corrects the misimpression created by the earlier ads that the two cards to be issued immediately will be major credit cards but continues the implication that C.C.A.C. is acting in concert with or on behalf of the issuers of such major cards.

The representations alleged in the complaint as found in advertisements CX-1, 2, 3, and 5 are false. In connection with the promotion involved in this proceeding, Respondents are not acting in concert with or on behalf of entities issuing major credit cards such as Visa or Mastercharge. Remitters of the service charge receive only the kit described in FOF 5 and 6. They do not receive major credit cards with approved credit totaling $2500.

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 in ordinary minds. Donaldson v. Read Magazine, Inc., 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). Express representations are not required. It is the net impression that the advertisement is likely to make upon purchasers to whom it is directed that is important. Even if an advertisement 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 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). Vibra-Brush Corp. v. Schaffer, supra; Aronberg v. Federal Trade Commission, 132 F.2d 165, 167 (7th Cir. 1942).

2. An advertisement 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 the advertisement is composed or purposefully printed in such a way as to mislead. Donaldson v. Read Magazine, Inc., supra.

3. It is not each separate word or a clause here and there of an advertisement that determines its force, but the totality of its contents and the impression of the entire advertisement upon the general populace. Donaldson v. Read Magazine, Inc., supra, at 185-86; Gottlieb v. Schaffer, 141 F. Supp. 7, 17 (S.D.N.Y. 1956).

4. Applying the foregoing standards of interpretations, for the reasons stated in the discussion, supra, I conclude that Respondents' advertisements received in evidence as CX-1, 2, 3, and 5 and RX-1 make the representations alleged in the complaint.

5. Such representations are false and materially so because their tendency is to persuade recipients of the advertisements to remit to Respondents the specified service charge.

6. Respondents are engaged in the conduct of a scheme for obtaining money or property through the mails by means of false representations in violation of 39 U.S.C. 3005.

7. Respondent Santo Victor Rigatuso, aka Bob Harris, is actively engaged in the scheme involved in this proceeding. Therefore, he should be included in the cease and desist order. "Fencing-in" provisions are appropriate because of the repeated and large scale mailings of false advertising even after interim agreement was reached with the Postal Service inspector/attorney.

8. The attached orders should be issued against Respondents.