Opinion ID: 242260
Heading Depth: 1
Heading Rank: 6

Heading: Promise of Refund.

Text: 142 The Commission found that representations were made that the petitioner would make full refund of moneys paid on the contracts if the purchasers were unable to complete the course. There is evidence in the record that such representations were made and that the petitioner refused such refunds when demanded. There is a letter signed by the petitioner as 'Director' of Weavers. Guild on April 20, 1954, at a time when, as he now contends, he was no longer connected with the business, addressed to the Better Business Bureau of Los Angeles, who had evidently sought the cancellation of the contract of a dissatisfied purchaser from Waterbury, Connecticut, in which he states: 143 'There were no special circumstances in this case to make us desist from our usual policy of non-cancellable enrollments, which was clearly printed on the order form signed by Mrs. Hine.' Granted that these representations may have been made in derogation of the terms of the written contract and that they were unauthorized or condemned after they occurred, the Commission, in view of the entire pattern of the venture, was authorized in holding the petitioner responsible for them and in ordering that no such representations be made in the future unless refunds are actually made upon demand by the purchaser. 144 J. Representations as to Approval of the Course for Veterans' Training. 145 The Examiner found that there was no evidence that petitioner's correspondence course was represented to prospective purchasers as having been approved for training by the Bureau of Education of the State of California and the United States Veterans' Administration. On appeal, the Commission disapproved the finding and instead of it substituted the following: 146 'The Commission finds that the respondent has falsely represented that his course of instruction has been approved for training by the Bureau of Education of the State of California and the United States Veterans Administration.' 147 The petitioner insists that the Examiner was correct and that the evidence supports his conclusion and not that of the Commission. 148 The Findings of the Examiner are entitled to weight and consideration by the Commission. But there is no mandate that it accept them. The reviewing court should 149 'accord the findings of the trial examiner the relevance that they reasonably command in answering the comprehensive question whether the evidence supporting the Board's order is substantial.' 36 150 We are of the view that the Commission properly rejected this Finding of the Examiner. In considering the evidence in this case, the pattern and frame-work of the whole enterprise must be taken into consideration. 151 The representations already discussed and the implications they carried are of the very type most likely to deceive. 37 In the petitioner's instructions to the salesmen, in telling them what line or 'pitch' to use, fact and fancy, past and present activities are so intermingled that the salesmen were justified in applying to the present course official approval of a resident course formerly taught by the petitioner. 152 In forwarding the material as to the approval of that course by the Bureau of Education of the State of California and the United States Veterans Administration, instructions were given to refer to the fact in selling the present course. But nowhere was the dissimilarity between the two courses pointed out. The rider which accompanied the materials relating to the approval was equivocal. It read: 153 'The V.A. and State Approvals 154 'It is easy to get a letter of recommendation but it is something else when a public body actually sends their 'charges' to your for instructions and Pays the tuition fee. 155 'You can imagine with what keen study they scrutinize our operations, what an acid test they used to evaluate the worth of our course. 156 'These photostats are Cynamite. If used effectively, think what confidence it must generate in your prospect. There are very many deals that would give their right eye to have a wallop like this in their kits. All right. You've got it-- Use it-- Use it effectively-- Use it to engender confidence.' 157 And there is a letter addressed to one of the prospective salesmen under the date of January 28, 1952, which states: 158 'The fact that our course was accepted and successfully used in the training of C.I.s is certainly one of the highest recommendations we could submit.' 159 The home study course was never so approved. One of the objects of the Federal Trade Commission Act is to eradicate business methods having a capacity to deceive. 38 This accords with the policy of the Act to stop unfair methods of competition in their inception. 39 In the light of these objectives, the facts just referred to warranted the Commission in making a Finding contrary to that of the Examiner and adding to the Order a provision commanding the petitioner to desist from representing that his course of instruction had been approved for training by the Bureau of Education of the State of California or the United States Veterans Administration. 160 Summary and Conclusion. 161 In what precedes we have considered the objections, legal and factual, urged against the Order of the Commission. This has required the examination of a very voluminous record. No attempt has been made to summarize all the evidence relating to each of the facts bearing upon the specific Findings under attack. Some only were given but all facts relating to a particular subject appearing in the record, favorable or unfavorable to the particular findings, were considered, in obedience to the mandate to determine the correctness of the Conclusions on the factual issues before the Commission on the record as a whole. 40 162 Much is made in the argument of the fact that a large portion of the practices found by the Commission to exist related to one region-- the New Orleans Region. But they are not confined entirely to that area. The advertisements were published in trade magazines of national circulation and the various circulars to salesmen had wide, interstate distribution. 163 More, it is quite customary to find a particular territory fertile ground for the type of shrewd misrepresentation and equivocal advertising with which the record in this case is replete. The Commission by taking action when these practices are called to its attention, prevents their spread elsewhere, which is in true keeping with the object of the Commission to cause the discontinuance of unfair and receptive practices at their inception. And courts, on review, may infer the existence of practices other than those proved. 41 164 One other observation is in order. It is argued earnestly that some of the representations, such as those relating to the character of the course, and the ease with which it may be learned, are nothing more than the 'puffing' which is tolerated in modern commerce and may, in certain instances, be considered innocuous even in cases under the Federal Trade Commission Act. However, an examination of the cases referred to as countenancing this shows that in the particular instances, the 'superlative' words were used in a context which negatived the idea that they were 'calculated to deceive'. In one of the cases cited, the Court remarked upon the characterization of a product as a 'perfect' lubrication: 165 'So far as we know, there is nothing 'perfect' in this world, but still it is a common term, which undoubtedly means nothing more than that the product is good or of high quality. We can conceive of situations where the use of such words might be deceptive and even fraudulent.' 42 (Emphasis added.) 166 In another cited case, the use of superlatives in an advertisement relating to a modern course in reducing was held, in the circumstances, to contain 'nothing deceptive.' 43 However, this is not the situation here. Here, we have statements made to salesmen with the intention that they be conveyed by them to prospective purchasers and which are aimed to induce the purchase of a course of study. As to a similar situation, the same court which decided the two cases just referred to, said: 167 'Neither are we impressed with the suggestion that representations relied upon can be excused on the basis that they are only 'puffing', as that expression is sometimes used. It seems plain that the representations were made in order to induce the purchase of petitioners' products, and those contained in printed matter as well as the false statements by the salesmen were made with that end in view. Statements made for the purpose of deceiving prospective purchasers and particularly those designed to consummate the sale of products by fright cannot properly be characterized as mere 'puffing'.' 44 (Emphasis added.) 168 It should be added that we are not in the realm of civil torts. Even in that realm the old rule of caveat emptor has been abandoned, in favor of the more ethical attitude that one dealing with another in business had the right to rely upon representations of facts as the truth. 45 And the Supreme Court has applied with great consistency this approach in dealing with the Federal Trade Commission by stating, in a leading case: 169 'The fact that a false statement may be obviously false to those who are trained and experienced does not change its character, nor take away its power to deceive others less experienced. There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious. The best element of business has long since decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception.' 46 (Emphasis added.)In sum, capacity to deceive and not actual deception is the criterion by which practices are tested under the Federal Trade Commission Act. The record in this case shows a series of acts which were calculated to deceive, some practiced directly by the petitioner, others by salesmen encouraged by him to practice them and for which he should be held responsible, because done within the actual and apparent scope of their authority. 170 The Order of the Commission is affirmed.