Trans World Accounts, Inc., a California Corporation, and Floyd T. Watkins v. Federal Trade Commission

(concurring and dissenting):

I concur in Judge Kelleher’s opinion, except for that part of it which remands paragraph 3 of the Commission’s order for further consideration. I think that paragraph 3 is well within the powers of the Commission. In response to Trans World’s complaints about the vagueness of paragraph 3, the Commission has included guidelines in its opinion. 1 I submit that *218 they give Trans World more freedom to deceive than it is entitled to demand. Trans World’s series of letters would be misleading and deceptive even if it could demonstrate that “suit in more than half the instances of nonpayment” would occur. Its series of communications is artfully phrased to instill in the debtor a belief, indeed, a fear, that if he does not promptly respond, legal action against him will follow immediately, with dire consequences to him. It is true that the papers do not flatly or literally say so, but that is the strong impression that they are intended to convey, and do convey. The Supreme Court has more than once recognized that “. much commercial speech is not provably false, or even wholly false, but only deceptive or misleading.” Friedman v. Rogers, 1979, -U.S.-,…

Trans World Accounts, Inc., a debt collection agency operating in a number of western states, and its president, Floyd T. Watkins, appeal from a FTC order prohibiting certain practices used in their collection operations.

The Commission challenges Trans World’s “flat rate” collection service. Under the flat rate service, Trans World mails out a series of five or six form letters to delin *214 quent debtors, encouraging prompt payment to the creditor. The letters are sent at prearranged intervals of ten to fourteen days. The letters state that legal action may be initiated immediately against the debtor if payment is not made within a specified period. If an alleged debtor does not respond to one letter in the series, the next letter is automatically sent until the series of five or six letters has run its course. If the flat rate series is concluded without payment or contact by the recipient, the account may be transferred to Trans World’s percentage collection division, at which time Trans World examines the details of the particular account to determine whether or not further action should be taken. Thus, from the date of receipt of the first letter, it is usually about 90…

(concurring):

I concur in Judge Kelleher’s opinion. With respect to the content of the letters (Paragraph 3) I wish to add these comments. To refer to the possibility of litigation, when at the time such possibility exists, is not, I believe, a deceptive practice. To suggest that it is, except when the chance of litigation is slightly better than even, is to circumscribe truth unreasonably rather than to extirpate falsehood. I am not convinced that Congress so intended to censor truth in legislation designed to protect the consumer from falsehood. To bar from the eyes of consumers certain truths because of their supposed intimidatory potential underestimates the consumers’ fortitude and demeans their intelligence.

594 F.2d 212 1979-1 Trade Cases 62,583 TRANS WORLD ACCOUNTS, INC., a California Corporation, and Floyd T. Watkins, Appellants, v. FEDERAL TRADE COMMISSION, Appellee. No. 78-1398. United States Court of Appeals, Ninth Circuit. March 29, 1979. 1 Kirt Zeigler (argued), Robert Disharoon, of Santa Rosa, Cal., for appellants. 2 Alfred Lindeman, San Francisco, Cal., Ernest J. Isenstadt (argued), San Francisco, Cal., for appellee. 3 Appeal from the Order of the Federal Trade Commission. 4 Before DUNIWAY and SNEED, Circuit Judges, and KELLEHER, * District Judge. KELLEHER, District Judge: 5 Trans World Accounts, Inc., a debt collection agency operating in a number of western states, and its president, Floyd T. Watkins, appeal from a FTC order prohibiting certain practices used in their collection operations. 6 The Commission challenges Trans World's "flat rate" collection service. Under the flat rate service, Trans World mails out a series of five or six form letters to delinquent debtors, encouraging prompt payment to the creditor. The letters are sent at prearranged intervals of ten to fourteen days. The letters state that legal action may be initiated immediately against the debtor if…