Traveling Sales Crews
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Slaves To The Sale
Nancy Stancill

The following articles represent an excellent history of the traveling door-to-door-sales industry. Although the company names cited in this series have changed over the years, and some of the individuals are out of the business, a number of their managers have gone on to become the new industry "elite" whose companies are being named today in national news stories of labor abuse and criminal activity. Stancill's award-winning series in the Houston Chronicle illustrates how the industry's second generation organized itself and operated. Today, there is a third generation that has sprung directly from the companies named here. Each generation has passed its illegal methods down from one to the next, and thus is a self-perpetuating enterprise.

Nancy Stancill has received the Southern Journalism Award for separate reports on workplace dangers. Nancy has also received an honorable mention for two series -- "Slaves to the Sale" in 1992 and "Kids on the Job" which examined the exploitation and dangers that plague working teen-agers. "Slaves to the Sale" received earlier awards from the Press Club of Houston and the Sidney Hillman Foundation.


Article List:

Slaves to the sale
Friend's vicious slaying spurred second thoughts about job
Aug 19, 1992
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Slaves to the sale
Life on the road/Traveling sales agents found it led nowhere/Ambitious teen quickly fell into a deep rut
Aug 19, 1992
Read This Story

Slaves to the sale
Many former workers left with vivid nightmares, expert says
Aug 19, 1992
Read This Story

Slaves to the sale
Life on the road/Traveling sales agents found it led nowhere
Aug 19, 1992
Read This Story

SLAVES TO THE SALE
Traveling sales jobs exploit young people/Thousands left broke, disillusioned as lucrative industry goes unchecked
Aug 19, 1992
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Slaves to the sale
Young crew members' inexperience can lead to tragedy
Aug 19, 1992
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SLAVES TO THE SALE
Sales helped owners afford "the good life'/But crews not so well off, officials say
Aug 20, 1992
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SLAVES TO THE SALE
"I never knew she even existed'/Death of a traveling sales agent is blamed on exploitation
Aug 21, 1992
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SLAVES TO THE SALE
State probes "Texas trio' clearinghouses
Sep 02, 1992
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SLAVES TO THE SALE
Magazine industry proposes guidelines against sales fraud
November 12, 1992
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FTC probes door-to-door sales abuses/Deceptive hiring raises concerns
December 19, 1992
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Door-to-door firm hit with $50,000 penalty
January 28, 1993
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Chronicle reports on hazards at work earn awards
November 7, 1993
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_______________________________________

Reproduction Or Distribution Is Prohibited Without Permission.
Permission To Post Granted By Nancy Stancill August 05, 2004
Copyright Houston Chronicle Publishing Company Division,
The Hearst Corporation (the "Houston Chronicle")
Dedicated Memorial Parents Group
Copyright (c) 2000 - 2004
November 20, 2004


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Slaves to the sale
Friend's vicious slaying spurred second thoughts about job
Nancy Stancill


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Aug 19, 1992

Here are the stories of five former traveling sales agents whose experiences include work with crews
under contract to the "Texas trio " of clearinghouses that are among the industry leaders.
The clearinghouses maintain that they are not responsible for and usually not aware of
conditions on work crews, because they are contractors and not employees.

Craig Larsen thought about leaving his job many times during the 4 1/2 years he crisscrossed the country selling cleaning products door-to-door.

But it wasn't until he saw his best friend and fellow sales crew member gunned down by drug dealers last December that he decided enough was enough.

Larsen, 24, sold cleaning products for three different companies during his years on the road, including Hy-Pro Chemical Products Inc. of Fort Worth.

Hy-Pro Chemical is owned by Joseph Edge and is a subsidiary of the Fort Worth businessman's Mecca Enterprises. Larsen sold Hy-Pro, a household cleaner, during 1989-90.

By the time the shooting occurred last December, Larsen had moved on to another company, American Safety Industries.

Larsen said he and two other crew members were traveling in a car through East Palo Alto, Calif., when they saw several men who appeared to be selling drugs on the side of the road.

Larsen, who was sitting in the back seat, said the sales agent in the passenger seat called one of the men over and said he wanted to purchase cocaine. But when the man handed over the cocaine, the sales agent told the driver to speed away.

"He was trying to rip off the drug dealer and they came after us with 9-millimeters and .45s. The driver was hit in the head twice by gunfire and died right there. A bullet went over my right ear and I flew from the back seat into the dashboard.''

Larsen said the incident scared him into taking a critical look at the life he was leading. Since he began selling door-to-door at 18, he had become a heavy drinker and had experimented with drugs.

He quit sales and went home to his parents in Minnesota, where for the last seven months he's tried to straighten out his life.

Larsen said he moved from Hy-Pro to another company because of difficulties getting paid his full commissions.

"You never really got paid in full, you never really received all of your money. They never gave us a record of how much we made."

He estimates that he was owed $500 when he finally left the company.

But Larsen said his worst boss during those years was Bobby Unger, a well-known traveling sales operator whose violent death in June 1991 shook the industry.

Unger, a 33-year-old high-roller whose Jaguar vanity plates said YRUPOOR, was shot to death in a robbery as he left a California racetrack with $72,000 in winnings.

Larsen said Unger fired him because Larsen was going out with a young woman the crew manager liked.

"He dropped me off at the bus station in Orange County, Calif., with no money and said if he wasn't such a sweet guy, he would have sent some guys to beat me up.''

Looking back, Larsen wonders why he stayed in the business so long.

"Sometimes, of course, it's exciting, living on the edge a little bit. During my four years, I probably saw thousands of agents come and go. The attrition rate is real high."


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Slaves to the sale
Life on the road/Traveling sales agents found it led nowhere/Ambitious teen quickly fell into a deep rut
NANCY STANCILL


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Aug 19, 1992

Here are the stories of five former traveling sales agents whose experiences include work with crews under contract to the "Texas trio" of clearinghouses that are among the industry leaders. The clearinghouses maintain that they are not responsible for and usually not aware of conditions on work crews, because they are contractors and not employees.

Darrell Rundus at 17 was rebellious, rambunctious and wanted to experience new things.''

So when the Ticoa Corp. of San Antonio advertised for recruits in his hometown of Redding, Calif., Rundus eagerly joined the traveling magazine sales crew.

He hit the road the same day he was interviewed, leaving his worried parents to wonder and wait.

"They take you away from your home and your identity. It's like the military, but instead of making you a soldier, they make you a salesman.''

Rundus missed his family and a year later, looked forward to the crew's stop in Redding. They got to town, his crew manager wanted to take a nap, so Rundus called and invited his mother to come and have lunch with him. But just as she arrived, the crew manager woke up and ordered the sales agents back in the cars.

Rundus' mother pleaded with the crew manager to let her visit briefly with her son.

She was crying and begging them to take five minutes and let her talk with me. But he wasn't going to give in. He said, "Look, bitch, move out of the way or I'll run you over."'

Rundus said he was shaken by the incident, but did not want to lose his job so he departed with the crew. He stayed another year before he got out of the business in 1989. After working for several years in Houston, he recently moved to California to take a job in newspaper subscription sales.

Rundus said his days on the road began with an 8 a.m. sales meeting, followed by breakfast if he had enough money, and five drops'' by car handlers in neighborhoods where he sold magazines door-to-door until 8 or 9 p.m. Then he would be taken back to the motel, where agents would line up to turn in their sales orders to the manager.

By the time you got out, it would be 10 or 11 and if you had sold less than seven subscriptions, you would have to sit through a sales meeting,'' he said.

Agents who weren't selling well also were subjected to punishments, like having to walk back to the motel or having to sit in the pit'' of the van and listen to crew songs ridiculing their performance.

Also, he said, agents who sold poorly would not get enough daily expense money to buy meals and sometimes had to beg food from sales prospects.

Rundus said he was good at sales, but could not get his full commissions from the company. He said he left with the company owing him $4,000 and later rejoined briefly to get some of the money he was owed up front. Then he quit for good.

Rundus said he also won a trip to Europe but never received it.

"The worst is telling them you want to quit. They'd always talk you into staying. At some point in time, I realized I would never get my money so I got a girl in Amarillo to help me do a disappearing act.''


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Slaves to the sale
Many former workers left with vivid nightmares, expert says
Nancy Stancill


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Aug 19, 1992

How many young people have been exploited while working in traveling sales crews?

No one knows for sure, but complaints have been registered with 10 states, three federal agencies and numerous consumer organizations surveyed by the Houston Chronicle.

And when a New York City family counselor recently sought volunteers for a research project on the psychological effects of such work, he was deluged with responses from former magazine and household cleaner sales agents.

Mark Spellmann, a counselor at Pace University and a doctoral student in psychology at Yeshiva University, advertised in USA Today recently seeking 200 former salespeople who had traumatic experiences in traveling sales crews.

"I've had no trouble finding my 200. I could easily find 1,000 volunteers,'' Spellman said.

Spellmann first completed a pilot study last year based on detailed records of the experiences of 26 former sales agents. He found that after they left the crews, they suffered symptoms of post-traumatic stress disorder -- a condition often associated with Vietnam veterans.

Spellmann said symptoms included flashbacks, persistently troubling thoughts and memories, emotional numbness, distrustfulness, fears of being exploited again and guilt at leaving friends on the crews.

Spellmann said his research subjects reported being hit or kicked, sexually abused and, most commonly, verbally abused. He said that being aware of the abuse of other crew members seemed to inflict the heaviest psychological damage.

"I think that just being in a fearful environment over time is the most corrosive thing of all,'' said Spellman. "Most kids in my sample were afraid almost all of the time.''

Spellmann is interviewing the larger sample of former agents for a research study he hopes to complete as his doctoral dissertation and publish next year.

Henry Hales, operations manager for the National Field Selling Association, said the industry group receives relatively few complaints from former agents, but has a disciplinary process it can invoke against companies that mistreat sales agents. So far, it has not had to do so, he said.

"When we do hear of people who are lying and who do not treat young people properly on crew, nine out of 10 of those companies are not members of our association,'' Hales said.


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Slaves to the sale
Life on the road/Traveling sales agents found it led nowhere
Nancy Stancill


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Aug 19, 1992

Here are the stories of five former traveling sales agents whose experiences include work with crews under contract to the "Texas trio'' of clearinghouses that are among the industry leaders. The clearinghouses maintain that they are not responsible for and usually not aware of conditions on work crews, because they are contractors and not employees.

Mark Sawyer, Brandi Kuykendall and Lisa Bray landed in Dallas in May -- broke, angry and disheartened by their experiences selling magazines for Summit Publishers Service Co.

The three young people were hired as independent contractors by Kevin Mooney, a longtime crew manager for the Houston-based magazine clearinghouse.

Sawyer, 20, had sold magazines for Summit for more than two years when he met Kuykendall, 19, in February.

"I stopped her in a mall to sell her a magazine subscription,'' Sawyer said.

The two fell in love and Kuykendall quickly joined the crew as a sales agent and nanny for Mooney's child. In March, 18-year-old Bray was recruited as a sales agent when the traveling crew stopped in Jacksonville, Fla.

Bray said she was attracted by a newspaper advertisement that promised glamorous travel and good commissions. She was supposed to receive $15 a day in expense money for the first two weeks of her training.

But the petite teen-ager said the money dwindled to $4 and $5 a day once the crew left Jacksonville. Soon Bray was accepting whatever refreshments were offered when she sold door-to-door in strange neighborhoods.

"I went without food for two days,'' said Bray.

Bray said she found door-to-door selling difficult and dangerous because some men tried to molest her. She said the crew manager would not permit the female agents to work in pairs.

Hampered by inexperience, the two women drew criticism for slow sales. On May 7, Mooney fired Kuykendall and Bray and "verbally annihilated'' Sawyer, one of his top sales agents. Sawyer said he was also leaving.

The trio headed to Dallas, where Kuykendall's mother helped them sublet an apartment. "I quit my job in Jacksonville because I was so gung ho to join the sales crew,'' Bray said recently in an interview at the bare Dallas apartment.

Sawyer said all he had to show for nearly three years in the business is a string of arrests for soliciting without a permit and tax liability on commissions he never got.

"I don't think any sales agent has ever saved or made anything,'' said Sawyer.

"Everyone we sold magazines to, we lied to. You tell them that you're college students, that you're trying to win a trip to Europe or that you're doing this for a marketing class. But it's all a big lie.''

The three young people now have left the Dallas area. Bray went back to her family in Jacksonville and Kuykendall and Sawyer moved to Kansas.

Sawyer, who filed complaints with the Texas Employment Commission and other agencies, has yet to receive any responses. He said he has left many messages for Summit President Robert L. Pennington, who has not returned his telephone calls.

Pennington said he is not aware of any complaints about Mooney, who could not be reached by the Chronicle.

[Illustration]
Mugs: 1. Mark Sawyer; 2. Lisa Bray; Photo: 3. Former door-to-door sales agent Brandi Kuykendall demonstrates her sales technique on a neighbor at her apartment in Dallas. Kuykendall worked as an independent contractor selling magazines for Houston-based Summit Publishers Service Co.; Credit: 3. Carlos Antonio Rios/Chronicle

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SLAVES TO THE SALE
Traveling sales jobs exploit young people/Thousands left broke, disillusioned as lucrative industry goes unchecked
Nancy Stancill


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Aug 19, 1992

Victor Barnett's traveling sales job ended in disaster when a company van accident left him brain-damaged and partially paralyzed.

Nadine DuVal's two months with a traveling magazine sales crew cost her a year in casts and crutches.

Another young woman fled from a sales crew after the manager raped her.

Barnett and DuVal were 18, the rape victim was 23. They were crisscrossing the country selling magazines door-to-door for Texas subscription clearinghouse businesses when their lives shattered. They are victims of a dangerous industry that exploits thousands of young people each year and often leaves them broke, disillusioned and sometimes maimed for life.

Traveling sales crew operators recruit about 150,000 young people annually to find the one in 100 who will be working after a year. On the road, they become slaves to the sale, driven to produce big results for managers who offer few rewards.

Like the magazines and cleaning products they sell, most of the sales agents are quickly used up and tossed aside.

The salespeople form the bottom layer of a little-known but lucrative industry led largely by Texans.

At the top are three businessmen who operate magazine subscription clearinghouses in Houston, Fort Worth and San Antonio. The three Texas clearinghouses -- among the nation's largest -- put sales crews in motion by contracting with magazine publishers to process subscription orders. The clearinghouses contract with crew managers who recruit young people to sell door-to-door.

Nationally, about 10,000 sales agents hit the streets every day selling magazine subscriptions or less often, cleaning products, for at least 12 clearinghouses and 200 crew managers.

The Magazine Publishers of America, a trade association, estimates that traveling sales crews account for only about 1 percent of total U.S. magazine circulation. But Parent Watch, a New York-based watchdog group, estimates traveling crews gross $150 million in sales for the clearinghouses.

Parent Watch charges that circulation generated this way is important enough to publishers that they haven't looked too closely for abuses.

And while the clearinghouse industry's top layer prospers, it routinely cheats young salespeople out of their earnings and skimps on their health and safety, a Houston Chronicle investigation shows. Some of the findings:

At least 14 sales agents have died in recent years in accidents where basic safety precautions were neglected. Many others have been injured, but because the salespeople are considered independent contractors, no government agency keeps records of injuries or forces accountability from the companies that reap the profits.

The industry targets young people ages 18-25 and sometimes recruits underage teens through misleading advertisements that promise exciting travel and high commissions. In reality, the workers are paid little money and sometimes end up indebted to the companies because of sometimes-illegal deductions from their commissions.

Crew managers verbally and physically abuse sales agents and use what experts call "cultlike'' psychological techniques to keep the salespeople working under almost intolerable conditions.

Clearinghouse owners who try to distance themselves from the sales crews are often calling the shots, particularly in financing their operations.

Despite periodic attention focused on abuses in traveling sales crews, federal agencies like the U.S. Labor Department and the Federal Trade Commission have failed to monitor the industry. And while other states have periodically tried to prosecute Texas companies, Texas has done nothing.

The "Texas trio'

The traveling sales industry flourished after World War II. And in the 1970s and 1980s, the large-scale hiring of people in their late teens and early 20s to crisscross the country in crews of 20 to 40 led the way to huge profits for a few businessmen.

In Texas, Robert L. Pennington of Houston's Summit Publishers Service Co., Joseph Edge of Fort Worth's Mecca Enterprises and Mike Furman of San Antonio's Ticoa Corp. became known as the "Texas trio.'' Those men and others connected with their companies hold five of 10 board positions on the National Field Selling Association, the industry's trade group.

The Texas attorney general has received 250 complaints against Summit and 138 against a Mecca subsidiary in the last several years, said spokesman Ron Dusek. The complaints have mostly centered on poor subscription processing, he said, and have simply been referred to the companies for handling.

Other states, including New York, Pennsylvania and Minnesota, have been far more aggressive in investigating the Texas trio's role in recruiting and operating traveling sales crews.

On Friday, the Pennsylvania attorney general sued the Ticoa Corp. alleging a variety of deceptive business practices. Criminal misdemeanor charges also were filed by a Lancaster County township against two Ticoa crew leaders accused of soliciting door-to-door without a license. Pennsylvania Assistant Attorney General Margaret Stuski said she is also investigating the business practices of Summit and Mecca subsidiaries.

The Texas trio companies also grabbed the attention of the U.S. Senate's Permanent Subcommittee on Investigations, which held a hearing in April 1987 on the exploitation of young adults in door-to-door sales. Edge was questioned, Pennington was deposed and a former Ticoa agent testified about problems in the industry.

Presiding Sen. William V. Roth, R-Del., slammed the industry as "profiteering on the part of a few on the slave labor of the young'' and called abusive crew managers "merchants of venom.''

Dan Rinzel, a staffer who assisted in the Senate investigation, said, "These kids have their wages stolen from them. That's a fraud, an interstate fraud, but typically the amount is not sufficient to meet the statute for prosecution.''

Today, Rinzel concedes that the investigation produced little reform. The industry reacted to the Senate investigation by chartering the Field Selling Association to protect its interests.

Incompetent complainers?

Edge, who founded and leads the industry group, said, "I don't think the hearing hurt us. It was a little group of senators who were there to belittle, degrade and begrudge. Most complaints about this industry come from people who are not capable of being good salespeople.''

If so, at least 90 percent of the salespeople are potential complainers. Henry Hales, the Field Selling Association's operations manager, said nine of 10 new recruits fail at door-to-door selling. Hales estimates that only one in 100 people hired will still be working after a year on the road.

Hales acknowledges occasional complaints of abusive treatment but said turnover is high because agents don't realize door-to-door selling is so difficult.

Under pressure to meet daily sales quotas, some agents use deceptive pitches such as claiming they are raising money for charity or working their way through college, former agents said.

Rep. Ron Wyden, D-Ore., whose office has investigated sales crew abuses, has estimated that 150,000 young people are recruited for sales agent jobs each year.

Jan Ellis, a public affairs official in the U.S. Labor Department's Wage and Hour Division, said the department is aware of continuing complaints but can do nothing because the wages and hours of salespeople are exempt from federal regulation.

"We have no authority to investigate those types of issues,'' said Ellis. "They probably fall through the cracks, unfortunately.''

Falling through the cracks

Victor Barnett of Clearfield, Utah, was one who fell through the cracks. After selling magazines for Edge's now-defunct United Subscription Service for nearly a year, Barnett suffered massive head injuries in a crew van accident in November 1989 near Merced, Calif.

The van, being driven by a 19-year-old crew member at 6 a.m., struck a shoulder, rolled over eight times and threw Barnett out. Barnett was not wearing a seat belt because it did not work and the van was in poor mechanical condition, said his mother, Leona Barnett.

"Nothing was done right with these people,'' she said. "None of the bosses were in the van. They just put kids in the vans and let them take turns driving around.''

A similar van accident in Iowa involving another traveling sales crew killed five young people and injured six others in May. The sales agent driving at the time had only a learner's permit.

Several former crew managers said sales agents are often transported in poorly maintained vehicles by other agents who are inexperienced drivers. Some crew leaders intentionally leave driving to the agents because the leaders have so many citations and lack proper insurance, said a former manager who declined to be identified.

Mrs. Barnett said her son was in critical condition for more than three months after the accident. One-third of his brain was removed and he had six operations. She said the crew quickly departed after the accident and the company never responded to her request for his personal effects.

After a protracted legal fight, Mrs. Barnett last year won a small settlement from the United Subscription Service insurer. The settlement was enough to pay his hospital bills, but Mrs. Barnett works two jobs to support her disabled son.

"Safety not a big concern'

Nadine DuVal, 23, of Los Angeles also won a settlement last year against USS and two former crew leaders after a four-year legal fight stemming from her August 1987 accident.

The accident occurred when a crew member dropped her off in the middle of a busy street to sell magazines at an apartment complex. DuVal did not see another car that hit her, injuring both legs, pelvis and fracturing her skull.

"He shouldn't have dropped me off in the middle of the street, but safety was not a real big concern,'' said DuVal.

DuVal said a crew leader came by the hospital initially but she never heard from the company after that. She sued Circulation Builders of America a year later and shortly after she filed her suit, Edge's company filed bankruptcy in October 1988.

DuVal said she had to establish that United Subscription Service was the successor company to CBA, a process that took years. She said she settled only after a company representative threatened to file bankruptcy again. The terms of the settlement remain secret.

"I thought they were trying to circumvent the labor laws,'' said Susie Injijian, whose law firm pressed DuVal's case for years.

Edge's United Subscription Service filed bankruptcy in April in Dallas.

Edge declined comment on the legal proceedings and said the accidents were "unfortunate.''

Rape victim was misled

The 23-year-old crew member who was raped in a crew manager's motel room, said she believed she had no legal recourse. So she never reported it or even discussed it before she left the business three years ago.

The woman, who sold magazines for two of the Texas clearinghouses, said her manager asked her to stop by his room to discuss her sales. "On the road, your office is your motel room,'' she said. But instead, he raped her.

"The next day, he tried to act like it was business as usual,'' she said bitterly. Repelled by the episode, she and her husband left the crew.

A 35-year-old former crew manager said some crew leaders seduce female recruits as a way of controlling them and quelling romances among agents that might divert them from selling.

Earlene Williams, a New York City mother of five who founded the watchdog group Parent Watch in 1983 after a son worked briefly in a crew, has talked to hundreds of former crew members who've been physically, mentally or emotionally abused.

"I have heard stories of kids who have been beaten and who have been raped; who have carried serious physical problems on the job without realizing that there would be no medical treatment for them,'' Williams said in a statement submitted to the 1987 Senate investigators.

"I have heard stories of drugs offered by management to kids and of prostitution by girls afraid to return at night without their quota. I have even talked to one 18-year-old who saw her crew chief shoot and kill another crew chief.''

Slave labor and cult methods

Williams said that even discounting extreme cases of abuse, traveling sales crews resemble slave labor.

"It is virtually always the case that the salesperson works a 60- to 80-hour work week with inadequate food and sleep, little or no medical care and no control over his or her personal life. And the kids are almost always cheated out of their earnings.''

Cynthia Kisser, director of the Chicago-based Cult Awareness Network, said traveling sales crews often "use cultic techniques to keep these young people in place.''

Kisser, whose organization files information on "magazine cults,'' said the travel and separation from family and friends often leads young people to believe they are obligated to the sales companies "in ways they don't understand.''

Many former sales agents told the Chronicle they were "brainwashed'' by the crew leaders and disoriented by a schedule that subjected them to long hours selling door-to-door and sales drills in the morning and evening.

Tina Patterson, who formerly recruited and helped manage crews for Summit, said many sales agents were at odds with their families, a situation that crew management was quick to exploit.

"You start brainwashing them when you first get them. You'll tell them that if they had anything at home, they wouldn't be here. You beat them down mentally, get them up early in the morning and back for a sales meeting at the end of the day. You have your informers who know who's talking negative. You try to keep those people around positive people all the time.''

But the most common tactic in the industry is to keep them broke so they won't leave, she said.

Starvation wages

The magazine and cleaning products salespeople are generally paid a commission, usually 20 percent to 25 percent, on each sale. But the agents usually receive only a small amount each day for food. The cost of their motel room, generally shared with two or three other agents, is subtracted from their commission totals kept in running accounts "on the books.''

Nearly all the former agents interviewed by the Chronicle said their companies never paid them what they were owed and often fined them for bad attitudes or made other deductions that are illegal under Texas law.

"It's always on the books, because you don't want them to have too much money on them,'' said Patterson. Patterson, 31, now lives in another state under another name.

Those practices have caught the attention of attorneys general in several states, including New York and Pennsylvania.

Jane Barker, a New York assistant attorney general, said the state investigated Edge two years ago on complaints that he violated the state's labor law. Edge subsequently signed an agreement with the state that sales agents would be paid at least once a month and that deductions from commissions would be sharply limited.

"There would be these running accounts but workers wouldn't receive their money,'' said Barker. "Deductions would be made for such things as not attending sales meetings.''

Stuski, deputy director of the Pennsylvania attorney general's Bureau of Consumer Protection, began investigating the "Texas trio'' companies this spring after unregistered sales agents showed up at her door twice. Her suit against Ticoa alleges deceptive sales practices and charges that sales agents are not paid the wages they are owed.

"They perpetually keep the kids in a negative balance so that if they go to leave, they're told they owe money to the company. They simply dock them for things the kids don't know about, Stuski said.''

Stuski said she expects to sue Summit and Mecca subsidiaries shortly.

"I don't know what goes on'

Clearinghouse operators Edge and Pennington said commission "draw'' arrangements are common to all sales jobs and that often, the agents simply don't realize how much they're spending on the road.

"Ninety-five percent of the complaints come from salespeople who worked, got disgruntled, decided to leave and thought they had money coming or had created an impression at home about how well they were doing. But they spend the money, they don't save it,'' said Edge.

Both men emphasized that since the crew managers and the sales agents are independent contractors, the clearinghouses have no responsibility to become involved in wage disputes or working conditions.

"I don't go out in the field,'' said Pennington. "I don't know what goes on. They pretty much run it the way they want to.''

But former crew chiefs said the clearinghouse owners have considerable control over the crew operations, that they contract with their longtime associates to lead crews and usually finance the expenses in the field.

"If Bob Pennington doesn't want a crew to go to a city, they don't go,'' said a former crew leader.

But Pennington said sales agents who are being mistreated in the field should not complain to him.

"Certainly not to me, because I don't even know them. They're just names to me that come in on magazine orders.''

.........................................................

The sales chain

Here's how a $20 magazine subscription sold through a clearinghouse typically is disbursed among the links in the distribution chain, according to sources inside and outside the industry:

$4 goes to the sales agent who sells the subscription, although many claim they seldom see their share of the money after crew chiefs withhold expenses and penalties for infractions of crew rules.

$1 goes to the car handler, who drops sales agents off in designated neighborhoods and picks them up at prearranged times. He usually makes five or six drops a day before taking the agents back to their motel.

$9 goes to the crew chief, who hires junior managers, trainers, car handlers and sales agents. Crews can include as few as 10 or as many as 100 people who travel continuously across the country. They stay in inexpensive motels and usually ride in vans or station wagons. Sometimes they join up with other crews or divide up into "spur crews.''

$4 goes to the clearinghouse, which processes subscriptions under contract to magazine publishers. The clearinghouse contracts with hand-picked crew managers, helps finance the day-to-day operations of the crews and often finances the vehicles.

$2 goes to the magazine publisher. The Magazine Publishers of America, a trade group representing 720 magazines, says only about 1 percent of its members' total circulation is obtained through traveling sales crews, though the percentage is much higher for some publications. Arrangements with clearinghouses vary, but generally the clearinghouse charges more than most other subscription offers and pays the publisher 10 percent of the order. Sometimes the magazine publisher is so eager for additional circulation that the clearinghouse is not required to pay anything.

[Illustration]
Photo: 1. Victor Barnett's job with a Texas-based magazine sales crew ended with an accident in November 1989 that left him partially paralyzed. (color); 2. Victor Barnett, who suffered brain damage and partial paralysis in the crash of a sales crew van, gets help from his mother, Leona Barnett, at their home in Clearfield, Utah. (b/w); 3. Nadine DuVal, whose legs still bear the scars of injuries suffered when she was hit by a car while working on a sales crew, holds some of the paperwork from legal claims that took four years to settle. (b/w); Graph: 4. The sales chain (text) (p. 11); Credit: 1.Tim Kelly/Special to the Chronicle, 2. Tim Kelly/Special to the Chronicle, 3. Tonya Evatt/Special to the Chronicle, 4. Chronicle

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Slaves to the sale
Young crew members' inexperience can lead to tragedy
Nancy Stancill


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Aug 19, 1992

Here are the stories of five former sales agents whose experiences include work with crews under contract to the "Texas trio" of clearinghouses that are among the industry leaders. The clearinghouses maintain that they are not responsible for and usually not aware of conditions on work crews, because they are contractors and not employees. ............

The sales agent had only a learner's permit and had never driven a large van.

But inexperience didn't disqualify her from driving the sales crew van that went out of control, hit a median, rolled over and ejected nine of the 11 passengers on Interstate 80 in Iowa.

Five were killed and six others were injured in the May 3 crash, said Iowa State Patrol Sgt. Ron Turner. The accident is still under investigation.

The 11 sales agents sold magazines under contract with American Community Services Inc. of Michigan City, Ind., one of the nation's largest clearinghouses. Company officials did not return Chronicle calls.

The circumstances that led to the fatal Iowa accident are not unusual among traveling sales crews. The young crew members get into situations that can quickly escalate beyond their experience and control.

The results usually aren't as tragic as the Iowa crash, although those fatalities were among at least 14 to strike working sales crews in recent years. And it's impossible to determine how often less serious accidents and injuries occur, because no agency collects such information or monitors safety practices in the industry.

A former crew manager said many crew leaders have such poor driving records that they prefer to let new recruits with less-tarnished records take their chances on the highways.

"Why would they allow an inexperienced driver to drive all these people around?'' Patricia Batchman of Chicago wondered after hearing about the accident in May. It killed her nephew, Edward Gooden, 20, of Chicago, just two months after he and a cousin, Kali Gooden, had joined the crew called "Total Dedication.''

Batchman said she was stunned to learn later that Kali, 19, was driving another crew van following the one in which Edward was killed.

She said Kali is too young and untried on the highway to drive a large vehicle filled with people.

Starretha Ball, 29, of Chicago was charged after the accident with failure to maintain control of a vehicle. Technically she could drive with a learner's permit because a licensed driver, another sales agent, was seated beside her.

Turner said Ball "had very seldom driven on the Interstate system and had never driven a van of this size. She went to pass another vehicle and started back to the right too soon. The van started rocking and went into the median and overturned.''

Mark Campbell, 26, of Chesapeake, Va., was another casualty of the accident. His mother, Geraldine Campbell of Brooklyn, N.Y., said she and Mark had made plans to meet in Chicago the next weekend to celebrate Mother's Day.

Mrs. Campbell said she has hired a lawyer to investigate the circumstances of the accident.

Another mother who is still grieving a child's death in the traveling sales industry is Elizabeth Green of Panama City, Fla.

Green's youngest child, 16-year-old Valerie Bagwell, was killed June 21, 1983, in the crash of a private plane, along with five other young people who had been recruited that day to travel door-to-door selling chemical products for Holiday Chemical Co. The company was a subsidiary of Galaxy Enterprises, owned by Paul Ramage.

Ramage of Memphis, Tenn., still uses crews who travel to sell his cleaning products. He could not be reached.

Valerie, 16, was looking for a summer job to save money for a car, when she answered a newspaper ad that read, "Fun in the sun. $10,000 a month traveling around resort, vacation places.''

Green, who operates a small business with her husband, was working that day and did not know that Valerie had been offered a traveling sales job. She said Valerie came to tell her she was going out and would be back later.

"I patted her on the butt and told her to hurry back home.''

Instead Valerie drove to the local airport to catch the company operator's private plane, telling a friend she would call her parents and break the news about her new job when she got to St. Louis. The plane crashed that night near Atmore, Ala.

A subsequent investigation showed that Mason Odom Jr., the pilot of the Cessna 421, had hired the young people to sell cleaning products for his new company, Holiday Chemical.

Authorities said Odom's plane was overloaded and poorly maintained and that he had filed false flight information.

Green and parents of the other young victims later won undisclosed settlements from Ramage.

Green said she still wonders why papers recovered from the wreckage included contracts for dancers in nightclubs and accommodations in foreign countries.

"I feel like they didn't mean any good for them,'' she said of the young people recruited for the sales crew.

Other deaths of traveling sales crew members in recent years have included an 18-year-old woman who died of an asthma attack while selling door-to-door, a 21-year-old agent killed while working on a company car, and a 23-year-old man caught in gunfire from a botched drug deal. ................................... Valerie Bagwell, 16, was one of six young sales crew recruits who died in the June 1983 crash of a private plane. Eager to earn money at a summer job, Valerie answered an ad offering travel and $10,000 a month. Along with the other recruits, she boarded the plane in Panama City, Fla., for a trip to St. Louis to sell cleaning products for the pilot, Mason Odom Jr. The aircraft crashed near Atmore, Ala. Authorities said Odom's plane was overloaded and poorly maintained.

[Illustration]
Mug: Valerie Bagwell

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SLAVES TO THE SALE
Sales helped owners afford "the good life'/But crews not so well off, officials say
Nancy Stancill


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Aug 20, 1992

Joe Edge's $2 million ranch near Denton was built on the sweat of thousands of young people selling door-to-door.

For 20 years, crews have traveled coast-to-coast selling magazine subscriptions and cleaning products for Edge's Mecca Enterprises of Fort Worth.

Edge, 50, a soft-spoken man who dropped out of high school at 15 to sell magazines, acknowledges that door-to-door sales have "afforded me a good life.''

The good life for Edge includes the 130-acre ranch where his 80 quarter horses are stabled. It is the nation's largest breeding farm for quarter horses. Edge also owns the $1.1 million office building in nearby Fort Worth where Mecca is headquartered.

But life isn't nearly so good for the legions of young people who travel selling Edge's products, say authorities who have investigated Mecca and its subsidiaries.

Margaret Stuski, deputy director of the bureau of consumer protection for the Pennsylvania attorney general, subpoenaed a United Subscription Service magazine sales crew in April for an investigation of possible consumer violations. USS is a Mecca subsidiary.

"When we brought the crew in, we fed them. It was eight or nine young people, and they were hungry,'' said Stuski.

Stuski is preparing a lawsuit against USS, contending that it has used deceptive business practices in door-to-door sales and has misrepresented the job and earning potential in hiring sales agents.

Last week, the state of Pennsylvania filed a similar lawsuit against Ticoa Corp. of San Antonio. Stuski said she began investigating Ticoa and USS in the spring after unregistered crew members solicited twice at her door. She said she is also investigating Summit Publishers Service Co. of Houston, the third member of the "Texas trio'' clearinghouse businesses that lead the U.S. door-to-door magazine subscription sales industry.

The state of Pennsylvania requires registration to keep crew members with criminal histories from selling door-to-door. Stuski said she recently worked with police in the York Township to locate an 18-year-old sales agent from a Ticoa crew who was charged Aug. 3 with raping a mentally retarded customer.

Stuski said local authorities are often hampered in their investigations of sales crew problems because they don't know who is responsible for the crews and their operation. The blurring of accountability works to the benefit of the clearinghouses when problems arise.

"There's an elaborate network from where they just create corporations overnight,'' she said.

Corporations can also disappear overnight, she noted. Edge on April 23 sought Chapter 11 bankruptcy protection for United Subscription Service, and the Pennsylvania authorities now will have to pursue their case against USS in the bankruptcy courts.

Edge refused to discuss the bankruptcy proceedings. He said USS will not be reorganized. He said Mecca will continue clearing about 250,000 magazine subscriptions yearly for crew managers who oversee about 250 magazine salespeople. An additional 100 agents sell Edge's Hy-Pro cleaner door-to-door.

The recent filing marked the second time in four years that Edge has placed a magazine sales company in bankruptcy. In October 1988, Circulation Builders of America filed bankruptcy amid legal troubles, including a lawsuit by an injured former sales agent and a tax debt owed the state of Texas.

Jim Teaver, chief of the enforcement division of the Texas comptroller's office, said CBA, though legally dissolved, technically owes the state $134,365 in sales tax penalties and interest. However, he said, the state can't collect from Edge.

"These were unreported sales,'' he said of the tax debt. "He didn't collect taxes. He didn't report taxes. He didn't do anything. He made believe they didn't exist.''

Edge has chartered 11 corporations with the state in the last two decades, but said the clearinghouse and the cleaning products company are the only ones still active.

Several states have sued Edge over the years, alleging deceptive recruiting practices and poor working conditions in the sales crews, but the Texas multimillionaire maintains he's not responsible for abuses in the field.

"What it boils down to is that they are independent contractors. The distributors that clear through me can go anywhere they want and can do their business any way they want. No clearinghouse has control over the distributor, and the distributor really has no control over a salesperson.''

Robert L. Pennington, 70, president of Summit Publishers Service Co. of Houston, echoes that viewpoint with vehemence.

"I don't have any crews. We're a clearinghouse. The crew managers run their own business; they hire their own people. They send their orders to me. I have contracts with the publishers, and I forward them on to the publishers.''

Pennington, who began in door-to-door sales at 16, reorganized Summit after the death of a business partner, Peter Wiegandt, in May 1982. Wiegandt, who had founded Summit Clearinghouse a few years previously, died of a gunshot wound to the head that was initially investigated as a murder but later ruled a suicide.

"That's what they said, but I don't really know how it happened,'' said Pennington -- a crew manager for Summit until he left the road after reorganizing the business.

Despite his insistence that he merely processes magazine orders, Pennington is far more involved in the business, said former associates. The Summit president said as many as 10 of the crew managers are former agents who once sold for him.

Pennington also operates Spring Motor Co., which has supplied many crew vehicles for Summit crews.

A former manager said the car business was nicknamed "Flood Motors'' because it provided used vehicles salvaged from floods and other accidents.

Pennington's clearinghouse is a modest building in Spring. In a large back room, about 20 young employees process subscription orders in computers, sort incoming mail and perform other tasks.

Pennington said he clears about 500,000 magazine subscriptions yearly, making him one of the largest clearinghouse operators in the country. He estimates that generally about 350 agents at a time are in the field selling orders for Summit.

In April, the Federal Trade Commission filed a lawsuit charging that Jonathan Tork, a former crew manager who cleared through Summit, had violated the FTC "cooling-off rule,'' which provides consumers the right to cancel door-to-door sales purchases.

"Mr. Tork hasn't worked here for over a year, and that's one of the reasons,'' said Pennington of the FTC case. "He just wasn't conducting his business right, and I was tired of doing business with him.''

The FTC declined to comment, indicating that its investigation continues.

The Pennington and Edge clearinghouses have generated record numbers of complaints with Better Business Bureaus, mostly about subscription processing.

Officials with the Houston BBB said Summit has received 540 complaints since 1989 and Fort Worth BBB said Edge's USS received 835 during the last three years. Officials with both bureaus said they could not recall any other businesses that have drawn more complaints during comparable time periods.

Ticoa Corp. of San Antonio keeps the lowest profile of the "Texas trio'' clearinghouse companies. Its president, Michael Furman, did not return repeated Chronicle calls seeking information about the company.

Ticoa clears magazines for eight crew managers who each have about 20 young people selling magazines for them across the country, said office manager Cindy Gonzalez.

The San Antonio Better Business Bureau said Ticoa has been the object of consumer complaints but declined to reveal the numbers.

In the mid-1980s, Ticoa was a target of an FBI investigation into allegations that young people were being held in involuntary servitude. The probe stemmed from complaints from former sales agents and was short-lived.

"The kids were working for commissions against room, board and transportation charges,'' said FBI special agent Joseph Hanley of San Antonio. "When they advised the company that they wanted to leave, there were some hard feelings on both sides. We found no violations of federal law. Involuntary servitude is hard to prove.''



[Illustration]
Photo: 1. Summit Publishers Service Co. employee Tonya Phillips looks over magazine orders at the Houston office. The company is one of the ""Texas trio'' that lead the door-to-door subscription sales industry. (color); Mug: 2. Joe Edge (b/w, p. 22); Credit: 1. Ben DeSoto/Chronicle.

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SLAVES TO THE SALE
"I never knew she even existed'/Death of a traveling sales agent is blamed on exploitation;
Nancy Stancill


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Aug 21, 1992

Cathy Munn left two baby daughters with Bossier City, La., relatives when she joined a Houston-based traveling sales crew.

The 18-year-old wanted to make some quick Christmas money, but she never saw another Christmas. Within two weeks, she was dead in San Antonio.

Munn died Dec. 2, 1984, after suffering an asthma attack while selling magazine subscriptions for Summit Publishers Service Co. of Houston -- one of three major Texas-based clearinghouses known in the industry as the "Texas Trio.''

Mariita Munn, her mother-in-law, said Cathy died because she was abandoned by the magazine crew leaders and misdiagnosed after she was taken to a San Antonio hospital without identification or medical information.

For years, Mrs. Munn wrote to authorities, including then-Attorney General Jim Mattox, seeking an investigation of the death. The state did not pursue it, and Munn finally gave up after compiling a thick stack of correspondence from uninterested public officials.

Mrs. Munn's experience illustrates the obstacles to taking action against abuses in the traveling sales industry. Few state or federal authorities want to investigate because of the difficulties in establishing culpability and finding witnesses among principals who are highly mobile. And complaints seldom take priority because of the small amounts of money involved.

Moreover, the operators of the clearinghouse businesses that organize the sales operations have usually been successful in insulating themselves from the industry's problems by contending that they merely process orders for magazine subscriptions or wholesale cleaning products sold by independent contractors in the field.

Summit President Robert L. Pennington exemplifies that viewpoint, saying that Munn was hired by crew manager Diane Tork and her death is not his responsibility. He says he barely recalls being told that "a girl joined the group and had an attack in someone's house.

"I never knew the girl. I never knew she even existed.''

Mrs. Tork, her husband Jonathan and at least one other family member operated crews under contract with Summit for years. Public records show that Pennington sold them a Houston house and at one time was an officer in the Torks' sales company, Aristocrat Sales. But Pennington said he parted company with the Torks last year when he learned that the Torks' sales operations were being investigated by the Federal Trade Commission.

In April, the FTC filed a lawsuit in Houston against Tork and Associates, contending that the Torks had violated the federal agency's "cooling-off rule'' by making it too difficult for consumers to cancel magazine subscriptions.

By then, the Torks had set up a clearinghouse in Atlanta, which has drawn numerous consumer complaints since January, according to the Atlanta Better Business Bureau. The Torks maintain an Atlanta listing that receives telephone messages but federal officials have been unable to ascertain Tork's whereabouts to serve the lawsuit. Mrs. Tork is not named in the lawsuit.

Mrs. Munn said Mrs. Tork persuaded her son's wife to join the magazine sales crew during a stop in Shreveport, La., in November 1984. Cathy Munn had married young, had two baby girls and had recently separated from Mrs. Munn's son. But the couple was trying to reconcile, shared the raising of the children and lived near each other in Bossier City.

"She was very young, 18 years old at the time, and was a very, very nice girl,'' said Mrs. Munn.

She said Cathy answered the Torks' newspaper ad seeking "10 sharp boys and girls'' and was hired the same day. Her mother-in-law and estranged husband tried to dissuade her from leaving.

"I think this was foolish for her to join this thing, but she wanted to make some extra money. They painted her a picture of money rolling in.''

Over the next two weeks, however, Cathy called her husband twice from Texas, saying that the job was not what she thought it would be. She said she wanted to come home, but that Mrs. Tork had told her it would be easier to send her back from Tucson.

Mrs. Munn said that on the day Cathy died, she was selling door-to-door with a partner in a San Antonio neighborhood when she complained of shortness of breath. Cathy and the other sales agent asked to sit down in a woman's apartment and the woman called an ambulance.

The other sales agent then left, taking Cathy's purse, which contained her identification and medical information and the inhalator that helped her breathe during infrequent asthma attacks.

Mrs. Munn said she was told that the sales agent sped away with Mrs. Tork in a nearby van, following an unwritten rule among traveling sales crews to leave at the first sign of trouble.

As a result, said Mrs. Munn, Cathy was taken to a charity hospital 35 minutes away and initially treated for a drug overdose instead of an asthma attack. She was admitted as Jane Doe until Mrs. Tork called the hospital later in the day. By the time the Munn family was called, Cathy was close to death. By the time they raced to San Antonio, she was dead.

The autopsy report released by the Bexar County medical examiner said the young woman's cause of death was an acute bronchial asthma attack that plugged her airway and resulted in brain injury.

Chief Medical Examiner Vincent Di Maio said hospital records indicate that Cathy Munn was admitted to Medical Center Hospital as an unknown female nearly one hour after she complained of shortness of breath during a sales call. The records show that she lacked vital signs when she was admitted. He said the hospital was able to get her heart beating briefly but that it was probably too late for her by then.

Di Maio said the records do not contain enough detail to determine whether Cathy might have survived if she had gotten medical attention sooner.

Two former sales agents who were traveling with the crew said Mrs. Tork told crew members that Cathy had become ill on the job, but provided no details. It was only after they reached Arizona and received a call from the family that Mrs. Tork told the crew that the young woman was dead.

Mrs. Munn views her daughter-in-law's death as a tragic symptom of exploitation in the industry.

"To me, these kids are like missing children. The way they prey on them is very sad, and I wish I could make a crusade out of it.''

Earlene Williams, the founder of the New York-based Parent Watch, has crusaded against traveling sales crew abuses for nine years. She is convinced that because the industry falls through the regulatory cracks, abuses will continue unless new laws are passed.

She said the best hope is a proposal that surfaced from the office of Rep. Ron Wyden, D-Ore., a few years ago for a new law that would treat the young sales agents like migrant workers.

The federal Migrant and Seasonal Agricultural Worker Protect Act requires contractors or crew leaders to register, and regulates the recruiting, transporting and working conditions of itinerant farm workers. Such a law might help to make the lives of traveling salespeople better and safer, said Williams.

And though the state of Texas has done little except compile consumer complaints against the "Texas trio'' clearinghouses, other states have periodically taken one or more of them to court.

Last week, Pennsylvania Attorney General Ernest D. Preate Jr. sued the Ticoa Corp. of San Antonio, alleging deceptive business practices. Officials in that state are preparing similar lawsuits against Summit and a Mecca Enterprises subsidiary.

In 1990, Mecca Enterprises' Joe Edge signed an agreement with the state of New York that said Edge's distributors would be paid timely commissions and receive regular statements of income and would be required to work no more than eight hours a day.

The state found in its investigation that Edge should be held accountable because he and his companies were the employers of the young people and their crew leaders, said New York Assistant Attorney General Jane Barker. The findings rejected the industry's contention that the crew leaders and sales agents are merely independent contractors.

And though Edge signed the agreement without conceding that legal point, it appeared to be a significant step forward in advancing the sales agents' rights.

Williams and other advocates for reform also have pushed newspapers not to accept advertisements that recruit young people for traveling sales crews and magazines not to use such circulation techniques. The Houston Chronicle's classified advertising policy excludes "ads for magazine sales crews that require travel out of the Houston area.''

Michael Pashby, senior vice president of the Magazine Publishers of America, said traveling sales crews account for less than 1 percent of total U.S. magazine circulation and that often publishers are not aware that their magazines are being sold in this fashion because the deals are brokered through agents.

But because allegations of abuse have continued, the publishers' association is drawing up new guidelines that would address how circulation can be sold and who can sell it.

"It's certainly in response to problems with traveling crews,'' said Pashby. "Even one instance of abuse is one too many.''



[Illustration] Photo: Earlene Williams of New York City founded Parent Watch to help young people extricate themselves from traveling sales crews (p. 12); Credit: D. Fahleson/Chronicle

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SLAVES TO THE SALE
State probes "Texas trio' clearinghouses
Nancy Stancill


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Sep 2, 1992

CLARIFICATION: The Texas Employment Commission has found a tax account for Summit Publishers Service Co. of Houston. In this story, the Chronicle quoted TEC Commissioner Mary Scott Nabers as saying an initial inquiry had failed to show a TEC account for Summit, a magazine subscription clearinghouse that employs office workers at its Houston headquarters. Nabers said Friday that subsequent investigation has turned up a Summit account. TEC collects taxes to fund unemployment and other benefits for Texas workers. Nabers declined comment on TEC's continuing investigation into whether Summit and two other Texas clearinghouses should pay unemployment taxes for traveling agents whose sales are processed through the clearinghouses. Clarification published 9/22/92.

The Texas Employment Commission is investigating whether three magazine clearinghouses should pay unemployment taxes for hundreds of sales agents who travel door-to-door selling subscriptions processed by the companies.

Mary Scott Nabers, TEC commissioner representing employers, said she has launched a tax investigation of Summit Publishers Service Co. of Houston, Ticoa Corp. of San Antonio and Mecca Enterprises of Fort Worth, nationally prominent clearinghouses known in the industry as the "Texas trio.''

The clearinghouse industry contends that sales agents and the crew managers who hire them are independent contractors and not clearinghouse employees.

Nabers said she began questioning whether the clearinghouses should pay taxes for the agents and crew managers after reading recent Houston Chronicle stories about abuses in the industry. The articles, which ran Aug. 19-21, detailed the role of clearinghouses in organizing sales operations that sometimes attract young sales agents with promises of travel and high earnings, then subject them to harsh working conditions for little pay.

Nabers said she ordered the investigation Tuesday after her preliminary inquiry indicated that Summit "hasn't opened an account with us and isn't paying any TEC taxes.'' (SEE CORRECTION)

TEC taxes employers in the state, and uses the proceeds to fund unemployment benefits.

"It's highly improbable that they don't have some employees somewhere,'' Nabers said of Summit, "which means that when those people lose their jobs they're not entitled to any employee benefits.''

Summit President Robert L. Pennington Tuesday declined to discuss in detail the TEC investigation of whether the mobile sales force should be eligible for unemployment benefits.

"I'm sure that's been looked at many times,'' he said before hanging up the phone. Efforts to reach his office again later drew a recording.

Executives of Mecca and Ticoa could not be reached for comment.

Nabers said she does not yet know whether Ticoa or Mecca are making state unemployment contributions. She said she inquired about Summit first because a former sales agent who sold for Summit complained in a letter to TEC about working conditions.

Earlene Williams of New York, founder of the sales crew watchdog group Parent Watch, lauded the TEC investigation.

"Texas is coming on board with other hub states that are moving in the direction of clarifying the independent contractor status of the sales agents. They are employees. There is absolutely no doubt that they do not have control over where and when they work,'' Williams said of the traveling sales force.

Pennington and Mecca President Joe Edge have contended that the sales agents and crew managers are all independent contractors and that the clearinghouses merely process subscription orders. But former workers in the industry said the sales operations are generally organized, directed and financed through the clearinghouse operators.

"In Texas, our laws say a person is your employee if you direct and control their activities on your behalf,'' said Nabers.

"If they are telling them who to see, what to say and how to conduct their activities on behalf of that company, they most likely are going to be considered employees,'' she said.

Pennington said in a Chronicle interview several months ago that he had 23 workers at the Summit headquarters, 20301 Rhodes Road, and estimated that 350 sales agents were in the field selling magazine subscriptions to be cleared by Summit. He said as many as 10 of his current crew managers worked for him when he was a crew chief.

Pennington has operated Summit for nine years.

Nabers said several days of searching by TEC employees failed to turn up any evidence that Summit has ever made unemployment contributions.

"If you find a company that has secretaries and someone there to set their priorities, that's an employer,'' she said.

Violations of the state requirement to participate in the unemployment program can carry substantial penalties, back taxes and interest, she said.

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SLAVES TO THE SALE
Magazine industry proposes guidelines against sales fraud
Nancy Stancill


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Nov 12, 1992

The nation's largest magazine industry trade group has issued guidelines aimed at discouraging deceptive practices by businesses that organize traveling magazine sales crews or telephone soliciting for magazine subscriptions.

Michael Pashby, senior vice president of the New York-based Magazine Publishers of America, said the newly released "ethical guidelines'' are the association's first formal effort to monitor sales made through independent subscription agents.

He said the association, which represents publishers of more than 700 U.S. magazines, is concerned about reports of exploitation of young people who travel in sales crews and complaints of deceptive telephone soliciting practices. Both types of businesses are operated through independent field agents.

"No one likes bad publicity and no one likes a lack of control over their business,'' he said.

Houston Chronicle stories in August detailed allegations that youthful sales agents worked under harsh conditions for little pay under crew leaders who contracted with subscription clearinghouses in Texas and elsewhere. The clearinghouses in turn contract with publishers hoping to boost circulation through door-to-door or telephone subscription sales.

Pashby said those and other recent reports publicizing a crackdown by Pennsylvania state authorities on unlicensed sales crews have spurred renewed concern about accountability in the field sales business.

But he said that despite evidence of extensive field operations of Texas clearinghouses, the association believes that the widespread use of traveling crews to sell magazines is waning. "Most of the business is sold over the telephone,'' he said.

"The crews were a standard way of selling magazines years ago,'' he said, adding that publishers often do not know their magazines are being peddled door-to-door.

The guidelines specify that businesses that contract to sell magazines will "monitor the activities of the solicitors, employees or independent representatives that they use for solicitation and that they will prevent the use of any false or deceptive selling methods or techniques.''

Sales agents should be supervised to ensure that they "not falsely represent the purpose and intent of their solicitation and do not falsely state or represent the terms and conditions of the subscription being sold,'' the guidelines say.

Magazine salespeople should not "characterize their solicitation as a market survey'' nor use tactics that would violate the rules of the Federal Trade Commission or other federal agencies, according to the guidelines.

Pashby said the guidelines emphasize publishers' responsibility to be aware of who is selling their products and how they're being sold. "They really must look at this business very, very carefully,'' he said.

Although the guidelines deal primarily with consumer issues such as deceptive sales practices, the association will continue to monitor reports of working conditions of field sales agents, he noted.

"If there's abuse in the field, we're concerned about it,'' he said.


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FTC probes door-to-door sales abuses/Deceptive hiring raises concerns
Nancy Stancill


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Dec 19, 1992

The Federal Trade Commission is stepping up efforts to investigate deceptive recruitment practices used in hiring young adults to sell magazines or household products door-to-door.

FTC Chairman Janet Steiger's 19-page report describing the agency's efforts to curb abuses in the door-to-door sales industry was released this week by the Washington office of U.S. Sen. William V. Roth Jr, R-Del.

Roth, the highest-ranking Republican on the investigations panel of the Senate Governmental Affairs Committee, wrote the FTC in October, citing an August series of articles in the Houston Chronicle that described exploitative hiring practices and working conditions in the industry.

Roth said after receiving the agency's report that he is "hopeful that the FTC will focus even greater attention on the problem of deceptive recruitment practices as it conducts its investigations into questionable door-to-door sales industries.''

In his letter to the FTC, Roth noted that the Senate subcommittee had investigated the door-to-door sales industry in 1987, including three magazine clearinghouses based in Texas that process subscriptions sold by the traveling agents.

"I am most concerned by the fact that many of the problems which concerned the subcommittee at that time seem to still exist,'' Roth said in referring to the newspaper articles.

"Particularly distressing are the misleading advertising and recruitment tactics which some companies in the industry apparently employ, and the unsafe and unsavory treatment which they dole out to young people once they have been recruited.

"At the time of our hearings, I called on the Federal Trade Commission to assess its role in this area, and to actively involve itself in seeking to address the abuses in the door-to-door sales industry which were uncovered in the hearings,'' he said.

In the FTC's lengthy report to Roth, Steiger outlined three enforcement actions obtained since 1987 against door-to-door sales businesses that violated the agency's "cooling-off rule.'' The rule requires sellers of door-to-door products to take certain steps to advise consumers of their right to cancel purchases within three days.

"Since the subcommittee's hearings, the commission has actively continued to monitor deceptive practices within the door-to-door sales industry and to bring enforcement actions,'' the report says.

The FTC currently is litigating two "cooling-off rule'' cases involving magazine sales companies, including a sales business called Tork and Associates that formerly was based in Houston, according to the report. Other ongoing investigations have not been made public, the agency noted.

"At the time these cases were being investigated, deceptive recruitment techniques were not an apparent issue or the source of a significant number of complaints,'' Steiger said.

"However, because deceptive recruitment practices now seem to be a significant issue, in future cooling-off rule investigations the staff will more systematically include a review of the company's recruitment advertisements.''

The report said that at the time of the Senate investigation, the FTC believed that the door-to-door sales industry would decline because increasing numbers of two-income households would mean fewer people at home during the day.

"Although door-to-door sales industry problems are apparently still significant, telemarketing fraud has unfortunately proven to be the boom area for scam artists,'' Steiger said.

The FTC chairman also said that the agency "has continued to supplement its formal enforcement actions with consumer education about job hunting generally.''

Many former sales agents told the Chronicle that they did not receive the wages promised when they responded to advertisements and interviewed for positions. Some said they were given little money for food and other necessities while they were traveling to sell door-to-door. Some former agents also revealedpoor safety practices and abusive treatment from sales managers.

"As long as there are unscrupulous door-to-door sales companies who take advantage of unsuspecting young people, deceptive recruitment practices and abuses will continue to be a problem,'' Roth said.

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Door-to-door firm hit with $50,000 penalty
Nancy Stancill


Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Jan 28, 1993

A federal judge has assessed a $50,000 civil penalty against a door-to-door magazine sales company after finding that it handed out fraudulent receipts to discourage customers from canceling orders.

U.S. District Judge David Hittner ordered Jonathan Tork, owner of the former Houston-based Tork & Associates, to pay the penalty, after Tork failed to respond to a lawsuit filed last April by the Federal Trade Commission.

The federal lawsuit alleged that Tork's sales crews had sold 150,000 magazine subscriptions in 1988 and 1989 using receipts that violated the FTC's "cooling-off rule,'' which gives consumers who purchase products sold door-to-door three days to cancel their orders.

During that period, Tork's Houston-based magazine sales operation generated $2 million, according to court records.

Jonathan L. Kessler, a Denver attorney with the FTC, said that during the past year Tork continued to manage sales crews and process their door-to-door sales orders through a clearinghouse he and his former wife, Diane, set up in Atlanta.

Kessler said the Torks, who have worked for many years in the door-to-door sales business, filed for divorce soon after the lawsuit was filed in April and reached a settlement in June.

Court papers filed in the FTC lawsuit said that in the divorce settlement, Mrs. Tork received two rental properties, a piece of land, art works, jewelry, furs, household goods and $5,000 a month alimony. Tork received a luxury car and the clearinghouse's field operations.

"The division of assets indicates that either the field operation is highly valuable or that the divorce and property settlement was used to transfer assets out of John Tork's name in anticipation of this litigation,'' said a memorandum filed by Assistant U.S. Attorney Samuel Longoria.

Kessler said federal authorities have not decided how to attempt to collect the judgment, but did serve Tork with the court papers last week before he was released from the Harris County jail after pleading guilty on an unrelated state charge of theft by check.

In that case, Tork was sentenced to five years' probation with deferred adjudication -- meaning that his record will be erased if he successfully completes probation.

During 1988-89, Tork's operations included three employees, 50 independent contractors, and hair salon and health club businesses in California, according to the court documents.

The court judgment said customers who purchased magazine subscriptions from Tork's crews were given receipts that misrepresented the customers' right to cancel. Part of the receipt was missing and the receipt indicated that a customer wishing to cancel had to submit a copy of the receipt, the canceled check, the salesperson's name, the magazine name, date of transaction and total cost.

The FTC rule gives customers the right to cancel by submitting only a written request to the seller.

A Houston Chronicle series on the clearinghouse industry, published last summer, detailed incidents of consumer deception and grueling work conditions faced by young sales workers -- including an 18-year-old sales agent who suffered an asthma attack and died while working in the Tork sales organization in 1984.

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Chronicle reports on hazards at work earn awards

Copyright Houston Chronicle Publishing Company Division, The Hearst Corporation (the "Houston Chronicle") Nov 7, 1993

Houston Chronicle reporter Jim Morris and former staffer Nancy Stancill have received Southern Journalism Awards for separate reports on workplace dangers.

The awards, presented by the Institute for Southern Studies in Durham, N.C., recognize investigative and environmental reporting by southern newspapers.

Morris won third place in the investigative category for large newspapers for his 1992 series, "Silicosis: A Slow Death,'' which explained how a deadly occupational lung disease has been allowed to linger in American workplaces through ignorance and neglect. The series previously has been honored by the Headliners Foundation of Texas; the Associated Press Managing Editors of Texas; the Press Club of Houston; the Harris County Medical Society; and the Texas Public Health Association.

Stancill received an honorable mention for two series -- "Slaves to the Sale'' in 1992 and "Kids on the Job'' this year -- which examined the exploitation and dangers that plague working teen-agers. "Slaves to the Sale'' received earlier awards from the Press Club of Houston and the Sidney Hillman Foundation.

Morris has been with the Chronicle for three years and recently was assigned to the special projects desk. He previously worked for the Dallas Times Herald, the Sacramento Bee and the Fort Worth Star-Telegram.

Stancill, who worked on the Chronicle special projects desk, recently joined the staff of the Charlotte Observer in North Carolina.

The only other Texas paper receiving a Southern Journalism Award this year was the Dallas Morning News, which took first place in environmental reporting for its series on a federal plan to build public housing in the city's most polluted neighborhood.

Awards are given in three circulation divisions -- 100,000 and higher; 30,000 to 100,000; and less than 30,000.





"I never knew she even existed"/Death of a traveling sales agent is blamed on exploitation, American Community Services, American Safety Industries, Aristocrat Sales, Bobby Unger, Cathy Munn, child exploitation, child labor abuse, Circulation Builders of America, consumers beware, crimes against children, crimes against consumers, crimes against homeowners, dangerous teen job, deceptive recruitment practices, Diane Tork, Edward Gooden, exploited teens, Friend's vicious slaying spurred second thoughts about job, FTC probes door-to-door sales abuses/Deceptive hiring raises concerns, Galaxy Enterprises, Henry Hales, Holiday Chemical Co, Hy-Pro Chemical, illegal business practice, illegal employment of minors, immoral business practice, indentured servant, independent contractor, involuntary servitude, involuntary servitude, itinerant sales crew, Jo edge, Joseph Edge, Kevin Mooney, Life on the road/Traveling sales agents found it led nowhere, magazine clearinghouse, magazine fraud, Magazine industry proposes guidelines against sales fraud, magazine publisher, Magazine Publishers of America, magazine sales company, magazine sales crews, magazine sales fraud, magazine scam, Many former workers left with vivid nightmares expert says, Mark Campbell, Mason Odom Jr., Mecca Enterprises, Michael Pashby, Mike Furman, Mike Furman, Nadine DuVal, Nancy Stancill, National Field Selling Association, Paul Ramage, Peter Wiegandt, Robert L. Pennington, Ron Wyden, sales fraud, Sales helped owners afford "the good life"/But crews not so well off officials say, selling cleaner door to door, selling magazines door to door, slavery, Slaves to the sale, Social Injustice, soliciting magazines, Starretha Ball, starvation wages, Summit Publishers Service Co., sweatshop on wheels, Texas trio, Ticoa Corp, Tina Patterson, Total Dedication, traveling magazine sales crews, Traveling sales jobs exploit young people/Thousands left broke disillusioned as lucrative industry goes unchecked, unethical business practice, United Subscription Service, Valerie Bagwell, Victor Barnett, warn your children, William V. Roth, Young crew members' inexperience can lead to tragedy, State probes "Texas trio' clearinghouses, Door-to-door firm hit with $50,000 penalty, Jonathan Tork

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