Commercial Pen Company. He is engaged in the business of selling and distributing in interstate commerce post cards designed and intended for use by creditors and collection agencies in obtaining by subterfuge information concerning debtors. Petitioner characterizes his business in advertisements to prospective customers as "Locations by Subterfuge," "a new and unique method of locating 'skips"" by "a cleverly-planned means of reaching these 'debt-evaders' in so subtle a manner that they do not know they are being traced," and the information which petitioner endeavors to obtain for his customers is the address, and the name of the employer, the bank and a friend, of their delinquent debtors. Petitioner's "system," as he calls it, of obtaining such information consists of the use of one or more of three post cards, two sold and distributed under the name General Forwarding System and one under the name Commercial Pen Company. The cards are the type commonly referred to as "double post cards." One part of the card is addressed to and contains a message for the debtor. The other, or "reply," part is addressed to petitioner under one of his trade names and is intended to be detached, filled out, and mailed by the debtor. Some of the General Forwarding System cards are addressed to a friend or relative of the debtor, rather than to the debtor himself, and the attached reply cards in such [752] cases are intended to be filled out and mailed by such friend or relative. The cards are sold and shipped by petitioner to some 1,800 merchants and collection agencies "throughout the United States" who address them to debtors or others, attach the required postage to both parts of the cards, and return them in bulk to petitioner. Petitioner then mails the individual cards, and upon his receipt of the reply cards filled out by the addressees, petitioner sends them to his customers, whom he identifies by means of code numbers stamped on the cards. For the purpose of "eliminating any suspicion" on the part of the debtors and to prevent them from knowing that the cards "emanate" from their creditors, petitioner mails the cards from San Francisco, and the names of creditors or other purchasers of the cards do not appear on them. The General Forwarding System cards addressed to debtors read as follows: "FINAL NOTICE We have on hand a PREPAID package for party whose name appears on reverse side of this card. Due to change or error of address and lack of identification, we cannot make delivery. We will hold same at your risk, subject to your forwarding directions and FULL and PROPER identification as indicated. GENERAL FORWARDING SYSTEM 821 Market Street San Francisco, Calif. No Postage required on the attached Attached to this is the following reply card addressed to General Forwarding System, 821 Market Street, San Francisco, Calif.: Please send package (Fully Prepaid, with NO CHARGES) to me. My address and correct identification is as follows: Consignee must be Identified OR PACKAGE WILL NOT BE DELIVERED The Commercial Pen Company cards read as follows: OUR PENS We will mail you one of them In order to avoid duplica- You must act promptly, as only a limited number of pens will be distributed in this manner. Yours will be sent as soon as this request card is returned." Attached to this is the following reply card addressed to "Commercial Pen Company, 866 Pacific Building, San Francisco, Calif.": "FREE COUPON This certifies that..... No. AB1572X is entitled to one pen FREE OF CHARGE AND On the basis of these facts the Commission concluded that petitioner had violated the Federal Trade Commission Act and ordered him, in connection with the sale [753] and distribution in interstate commerce of "cards designed for use in obtaining information concerning debtors," to cease and desist (1) Using the name "General Forwarding System," or any other name of similar import, to designate, describe, or refer to [petitioner's] business; or otherwise representing, directly or by implication, that [petitioner] is connected in any way with the movement or transportation of goods or shipments, or with the delivery of goods or shipments to the consignees thereof. (2) Representing, directly or by implication, that persons concerning whom information is sought through [petitioner's] post cards or other ma terial are, or may be, consignees of goods or packages in the hands [of petitioner], or that the information sought through such means is for the purpose of enabling [petitioner] to make delivery of goods or packages to such persons. (3) Using the name "Commercial Pen Co.," or any other name of similar import, to designate, describe, or refer to [petitioner's] business; or otherwise representing, directly or by implication, that [petitioner] is engaged in the business of selling or distributing pens or other merchandise. (4) Using, or supplying to others for use, post cards or other material which represents, directly or by implication, that such cards or other material are for the purpose of introducing pens or any other merchandise to the public. (5) Using, or supplying to others for use, post cards or other material which represents, directly or by implication, that [petitioner's] business is other than that of obtaining information for use in the collection of debts, or that the information sought through such cards or other material is for any purpose other than for use in the collection of debts. These facts so clearly warrant the inferences of unfairness and deceptive practices upon which the five sections of the cease and desist order are based, that the petition for review well could be dismissed as frivolous. Petitioner had no "PREPAID package" on hand in his "General Forwarding System" of which he "cannot make delivery" for any reason, much less because of "change or error of address and lack of identification." Petitioner admitted he had no specific package which he was holding for anyone. There was no "Commercial Pen Company" which was seeking "TO INTRODUCE OUR PENS" to anyone as that phrase would be and was intended to be understood. Petitioner admitted he had nothing more than a "stock of pen points" (meaning pen points and not assembled stocks and pen points) which he kept "for the purpose of being able to send something" to the persons named on the reply cards, and until he received the reply cards he did not even know the name of any person to whom he was to send a "package." Petitioner's scheme is a cheap swindle and the argument that it is less so because it may in certain cases trap swindling debtors is not one pleasing to entertain. Nor is there any support for petitioner's contention that it is not a matter of the Commission's concern because the swindled person suffers no pecuniary damage. Federal Trade Commission v. Algoma Lumber Co., 291 U. S. 67, 78 [18 F. T. C. 669; 2 S. & D. 247]. Nor is there any merit in petitioner's contention that it is not to the public interest to prevent the perversion of interstate commerce with such swindling. As stated by the Supreme Court in Federal Trade Commission v. Keppel & Brother, 291 U. S. 304, 308 [18 F. T. C. 684; 2 S. & D. 259], "Upon the record it is not open to question that the practice complained of is a method of competition in interstate commerce and that it is successful in diverting trade from competitors who do not employ it. If the practice is unfair within the meaning of the Act, it is equally clear that the present proceeding, aimed at suppressing it, is brought, as § 5 of the Act requires, 'to the interest of the public.' The cease and desist order is sustained and the petition to set it aside is denied. Affirmed. MODERNISTIC CANDIES, INC., ET AL. v. FEDERAL No. 8356-F. T. C. Dock. 4605 (Circuit Court of Appeals, Seventh Circuit. Nov. 15, 1944) PUBLIC POLICY-AS EXPRESSED IN CONSTITUTION, STATUTES, AND DECISIONS OF THE COURTS. The State's public policy is embodied in its Constitution and statutes and, when they are silent on subject, in its courts' decisions. CEASE AND DESIST ORDERS-METHODS, ACTS AND PRACTICES-LOTTERY MERCHANDISING PUNCH BOARDS. The marketing of chewing gum by means of "Ballgum" boards is an "unfair trade practice," contrary to public policy, and within Federal Trade Commission's power to prohibit by cease and desist order, as devised to encourage and induce merchandising by gambling. Federal Trade Commission Act, sec. 5(a), 15 U. S. C. A. sec. 45(a). METHODS, ACTS AND PRACTICES-LOTTERY MERCHANDISING AND AIDING AND ABETTING-DEVICES IN AID OF. The Federal Trade Commission has power to eradicate merchandising by gambling in interstate commerce and to prohibit distribution in such commerce of devices intended to aid and encourage such merchandising. (The syllabus, with substituted captions, is taken from 145 F. (2d) 454) On petition for review of order of Commission, petition denied. Mr. Irvin H. Fathchild, of Chicago, Ill., for petitioners. Mr. Joseph J. Smith, Jr., Mr. W. T. Kelley, Chief Counsel, and Mr. Eugene W. Burr, Sp. Atty., all of Washington, D. C., for respondent. Before EVANS, KERNER, and MINTON, Circuit Judges. MINTON, Circuit Judge. On July 16, 1943, the petitioners filed in this court a petition to review a cease and desist order issued by the Federal Trade Commission on May 25, 1943, in proceedings instituted by the Commission pursuant to section 5 (a) of the Federal Trade Commission Act, 15 U. S. C. A. § 45 (a). The petitioners market chewing gum in various flavors by means of a "Ballgum" board. This is a punch board with pockets for 150 small balls of gum. The holes in which the gum balls are placed are pasted over with sheets of paper so that the customer, punching out one of these little balls of gum, does not know what flavor or color of gum he is going to receive. Of the 150 balls of gum on the board, 20 or 24 are of one color, and the balance are of a different color. The merchant may, of course, if he so desires, merely sell these gum balls to his customers at a penny a piece. My colleagues and I experimented with one of the exhibits to the extent of several punches. Two of us punched out white balls, but Judge Evans punched out a red ball. The gum ball was palatable but seemed to contain less gum than the ordinary stick. There would seem to be no par 1 Reported in 145 F. (2d) 454. For case before Commission, see 36 F. T. C. 822. |