The Federal Trade Commission yesterday charged Joseph Sugarman, an outspoken critic of the FTC, and his Illinois mail-order company with massive violations of federal consumer-protection laws.
In a complaint filed in Chicago by the Justice Department on behalf of the FTC, Sugarman and his Northbrook, Ill., company -- JS&A Group Inc. -- were charged with a series of violations of the FTC's six-year-old mail-order regulations, including failure to ship items to purchasers within required time in at least 22,000 of 50,000 cases between February 1976 and December 1978.
The case is particularly noteworthy because Sugarman has made a cause ce'le bre out of the FTC's investigation of his successful mail-order business, which had sales of $11.4 million in 1979.
He has spent at least $250,000 challenging the case through conventional negotiations with the FTC staff and in purchasing advertisements in national publications criticizing the FTC in particular and big government in general. Sugarman's most recent attack on the FTC came in a widely distributed comic book entitled "The Monster That Eats Business."
"Sometime, somewhere a small company must stand up to this bureaucratic tyranny," the book states.
Sugarman was traveling yesterday and could not be reached for comment on the court action.
Sugarman has accused the FTC of harassing him by using heavy-handed tactics and has labeled the FTC's handling of the matter as a "smear." A House Energy and Commerce investigations subcommitee, chaired by Rep. John Dingell (D-Mich.), has been investigating the controversey between Sugarman and the FTC and has scheduled a hearing for Sept. 18 to air the issue. The investigation has generated about 3,000 letters, primarily from Sugarman sympathizers.
The basis for the complaint is the FTC's Mail Order Rule, which was issued in February 1976 and states that mail-order sellers cannot seek orders without expecting to ship the merchandise in question within 30 days if the solicitation is not specific. Secondly, merchants must tell customers of delays and offer the option of canceling the order.
The government, in its action, charged that the company's violations of the act have not been isolated and involve violations of virtually every section of the rule, including charges that the company marketed products it knew it would not deliver. Sugarman and the company are liable for civil penalties of up $10,000 per violation. The FTC said JS&A was formally notified of the rule in July 1976.