Caveat Emptor

It seems an irresistible bargain. The folder that arrives in the mail offers to sell a $41.50 transistor radio for only $12.50, or perhaps a blender worth $49.50 for only $19.50. The notice is on official-looking paper of the kind that is usually sent out by claims adjusting firms assigned to liquidate the stock of a bankrupt company at distress prices. Every week more than a million similar notices, offering everything from Bibles to binoculars, go into mailboxes across the U.S.--and every week thousands of people bite at the bait.

The trouble is that the bargains usually turn out to be something quite different. That transistor radio not only did not cost $41.50, but can actually be bought at retail for less than $10; though the ads make the blenders out to be a high-quality product, they are inferior models retailing for $12. By taking on names and trappings that made them sound like legitimate liquidators (who often do sell at distress prices), a new breed of mail order firm has made pseudo liquidating one of the nation's most successful selling rackets, condemned by the Federal Trade Commission as "the hottest method of merchandising" around.

Too Hot. Last week the bogus liquidators were hotter than they wanted to be. New York State's attorney general won a court order dissolving a Manhattan firm with the impressive name of U.S. Liquidators Inc., which had sold 16,000 cheap transistor radios that it claimed were drastically marked down for liquidation; the company was fined $500 and forced to refund the price of all its unfilled orders. And more action is on the way. The F.T.C. plans to take steps against another operator next month, and the' U.S. Post Office is seeking indictments of two others for fraud and misrepresentation.

About a dozen such firms are now in operation, most of them clustered around Los Angeles and bearing imposing names. Last year they grossed $11 million, and one firm alone sent out 10 million brochures. To get names, they at one time or another have rented the mailing lists of the major U.S. credit card companies.

Soapy Come-On. They buy much of their cheap merchandise from Japan, and imply that it is a name brand by advertising the items as, say, Norelco-type shavers or Remington electric can openers. When they actually offer something like an RCA TV set, they never have enough in stock, merely take a customer's deposit and bury him in an avalanche of form letters until he tires of trying to retrieve his payment. Some have offered a come-on of ten boxes of Tide detergent for $1.97; what often arrives is an unknown soap brand and an additional unrequested item with a C.O.D. bill.

The idea of setting up such mail order firms is the brainchild of George Campion, 37, now the president of California's American Claims Adjusters. Campion has worked through several differently named liquidator firms since he began several years ago, has a long string of arrests for petty crimes and fraud. Investigators suspect some kind of informal link between Campion and his many copiers.

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