# Spiegel, Inc. v. Federal Trade Commission > Court of Appeals for the Seventh Circuit · March 18, 1974 · 494 F.2d 59 URL: https://www.frixlaw.com/law-library/cases/9460451 ## Case - **Full name:** SPIEGEL, INC., Petitioner, v. FEDERAL TRADE COMMISSION, Respondent - **Court:** Court of Appeals for the Seventh Circuit - **Decided:** March 18, 1974 - **Citations:** 494 F.2d 59; 26 A.L.R. Fed. 783; 1974 Trade Cas. (CCH) 74,971; 1974 U.S. App. LEXIS 9626 - **Precedential status:** Published - **Opinion:** Dissent by Pell - **Judges:** Pell, Kiley, Sprecher - **Cited by:** 10 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9460451 ## How later opinions describe it (automated extraction) - holding that, while "[p]rotection of the public is essential to justify filing a Section 5 complaint[,] ... proof of actual injury is unnecessary to support a Commission cease and desist order" - holding that, while “[protection of the public is essential to justify filing a Section 5 complaint[,] ... proof of actual injury is unnecessary to support a Commission cease and desist order” ## Opinion text PELL, Circuit Judge (dissenting). If for no other reason, the order of the FTC should be set aside by this court because of the utter triviality of the matter involved. I therefore respectfully dissent. The FTC conceded the correctness of the general rule that detriment to the public interest must be shown. Here, by issuing its order, the FTC has in effect found there was detriment to the public interest in the situation of deadbeats being deceived into thinking that they are going to receive a free trial of, or a discount on, merchandise which they could not realistically purchase on either a cash or a deferred basis. It is difficult to imagine a less egregious affront to the public interest. As early as 1924, only nine years after the FTC had begun to operate, it was stated that “[t]he Commission is handling too many cases, and that it should exercise a greater discretion in selecting those cases which involve questions of public importance. It does not seem necessary that public funds should be’ employed to prosecute cases . involving trivial or merely technical offenses, in which the public interest is not always easy to discern.” G. Henderson, The Federal Trade Commission 337 (3d ed. 1927). Similarly, the Hoover Commission noted in 1949 that “in the selection of cases for its formal dockets, the Commission has long been guilty of prosecuting trivial and technical offenses and of failing to confine these dockets to cases of public importance.” Commission on the Organization of the Executive Branch of the Government, 81st Cong., 2d Sess., Task Force Report on Regulatory Commissions, app. N, 128 (Comm, Print 1949). Most recently, The President’s Advisory Council on Executive Organization, in its report entitled “A New Regulatory Framework” (January 1971), stated: “Much of the criticism of the FTC is aimed at its disproportionate attention to comparatively trivial matters — resulting largely from the breadth of its mandate and compounded by inherent deficiencies of the collegial form of organization. Preoccupation with minutiae over the years has created a ‘jack of all trades — master of none’ profile for the FTC.” Id. at 87. In S. Buchsbaum & Co. v. Federal Trade Commission, 160 F.2d 121 (7th Cir. 1947), this court, in holding that the findings and conclusion of the Commission that the petitioner had been guilty of deceptive acts was not supported by substantial evidence, made the following pertinent comment, at 123-124: “[E]ven though there be no proof of actual deception required, there must be a showing that the acts and, practices sought to be proscribed are detrimental to the public interest in order to satisfy the statutory requirement that the proceeding be in the public interest. 15 U.S.C.A. § 45 (b). Here the Commission made no finding that the deception, if any, had ever resulted in or had any tendency to result in detriment to the purchasing public. We find nothing in the findings to support the conclusion that the acts and practices are ‘all to the prejudice and injury of the public.’ ” (Emphasis added.) Putting the most blatant possible interpretation on the advertising material of Spiegel, and assuming, arguendo, that the most astute and sophisticated reader would be unable to find any clue in the material that would impose any qualification or condition on the enjoyment of *66 a free trial or a discount, whether that reader be an adult or a child, financially responsible or irresponsible, honest or dishonest, I cannot conceive that the public would be misled into thinking that these merchandising gimmicks were intended for any persons except a member of the prospective and potential purchasing public under circumstances in which Spiegel expected eventually either to receive the purchase price or the return of the merchandise. The inference that Spiegel intended to deal with financially irresponsible persons is scarcely supportable from the bare fact of a free trial offer or a discount possibility. This is not a case where we are deal-' ing with hidden charges which would vitiate the supposed discount, nor one where the applicant was supposedly getting a free trial but was actually re-, quired to keep the goods once they reached his possession. In fact, the parties stipulated that credit approval was the only restriction or condition qualifying these offers. However, it is not necessary to decide the case on the above hypotheses. The basic evidence does not seem to be in dispute here, and that evidence in my opinion is totally lacking in substantiality to support a finding of deceptive advertising detrimental to the public. It is true that the statements that “All orders are subject to Spiegel Credit Approval” appeared on the catalogue rather than in equal size type with the reference to discounts and free trials. However, I know of no prohibition of the use of an eyecatcher as long as the rest of the advertising material puts the eye-catcher in proper perspective. Under any interpretation of the advertising material, it is clear that one cannot partake either of the free trial period or the discount without filling out and signing the order form. It is necessary for the prospective free trial user or discount applicant, if a new customer, to give detailed information about marital status, income, financial obligations, nature of employment, and similar factual data for credit evaluation. In varying language, the order form makes it clear that all orders are subject to acceptance by Spiegel. As to established credit customers, I cannot conceive that they were not already aware of the fact that a favorable credit rating is required and that if they are delinquent they will not be the beneficiary of further unpaid-for utilization of Spiegel merchandise. In his conclusion, the trial examiner stated that the practices had the capacity to mislead members of the purchasing public into the purchase of substantial quantities of Spiegel products. I wholly fail to comprehend this, as the only ones who received the products were those who passed muster on credit. It is not an uncommon trait for people to overextend themselves in credit purchasing, but there is nothing about this advertising to cause this natural human tendency to exceed its present liberal boundaries. Protection against our human frailties may be arguably a worthwhile object of civilization, but in this country, absent deception or misleading representations, we are still free to determine such matters for ourselves. The trial examiner emphasized that advertising must be truthful, but again I fail to find that, reasonably construed, the advertising in question is otherwise. Also, the trial examiner specifically stated in reaching his conclusion that the advertising was deceptive and unfair that he did not do so on a basis of demonstrated injury to purchasers. The Chairman of the Federal Trade Commission viewed this case, and its in-consequentiality, as I do, and I adopt and agree with his statement in dissent as being the proper dispositive basis of the case: “I cannot agree that consumers would fail to appreciate that Spiegel’s free-trial offers necessarily were sub *67 ject to acceptance by Spiegel. The nature and amount of information obtained by Spiegel on its application forms, in my opinion, puts the consumer on notice that Spiegel has established criteria which prospective customers must meet prior to receiving the merchandise on a free-trial basis. It seems to me unlikely that a consumer would conclude that the information provided on the application form was irrelevant to Spiegel in deciding whether or not to provide the consumer with the offered merchandise. “Of course, it is arguable that some few prospective customers who sent in filled-in application forms may not have fully understood the conditional nature of the offer. Also, I appreciate that economic injury is not always a condition precedent to an order under Section 5. However, in the circumstances of this ease where no economic loss of any consequence appears and where no testimony was received with respect to consumers’ understanding of the import of the application forms or whether Spiegel’s disclosures were in fact sufficient, the entry of an order is not warranted.” Finally, and in any event, the order entered by the Commission is far too broad and is unjustified by this particular velitation. 1 For the reasons set out in this dissent, I would set aside the order of the Commission. . I do not dissent from that portion of the majority opinion dealing with Spiegel’s inability to demonstrate that other mail order houses engage in the same type of inducement advertising but with less candor than Spiegel does. If a law violation exists, securing compliance with the law often follows selective prosecution of one among many violators. There is no indication here of other than a normal process of selectivity. This phase of the case was again brought to my attention after the compilation of the dissent by the receipt by my wife of a mailed offer from a nationally known merchandiser. On the envelope was the word in one inch letters, “FREE!” Inside, also in large letters, was reference to a free 14 day home trial of kitchen equipment. At the bottom of the backside of the “Free Trial Certificate,” and nowhere else in the several sheets extolling the merchandise and referring to the privilege of free trial, small type stated, “All orders subject to credit acceptance or request for prepayment by our National Sales Office.” • I read the challenged order in this case as relating only to the consuming public and not as being based upon injury to competitors, although that was also charged in the complaint. If this latter aspect had been involved, it would appear that the Subpoenas Duces Tecum should not have been quashed. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9460451. Public record. Not legal advice.