## Facts

- Joseph Jayko operated a Massachusetts business known as the “Cramwell Institute.”
- The Cramwell Institute sold written examinations to the public and graded the completed exams after purchasers returned them.
- If a purchaser “passed” an exam, Cramwell Institute issued the purchaser an “equivalency diploma.”
- Cramwell Institute provided no educational instruction; it operated as an exam-and-diploma service rather than a teaching institution.
- Jayko represented, directly or by implication, that the examinations could measure an individual’s knowledge in a given subject and that earning the equivalency diploma showed the recipient had the knowledge and intelligence of someone who had completed a college degree.
- Jayko also advertised to consumers and made statements suggesting the diploma would lead to workplace economic benefits such as increased pay or job advancement.
- The Federal Trade Commission filed an administrative complaint alleging Jayko violated § 5 of the Federal Trade Commission Act by making false representations about the diplomas and the nature and value of what Cramwell Institute offered.
- After an administrative hearing, an FTC hearing examiner found Jayko had made false and deceptive statements, including through use of the term “institute,” and entered a cease-and-desist order.
- Jayko moved the Commission to set aside the hearing examiner’s order.

## Issues

1. Whether Jayko’s representations that Cramwell Institute’s examinations and “equivalency diplomas” demonstrated knowledge and intelligence equivalent to completion of a college degree constituted deceptive acts or practices under § 5 of the FTC Act.
2. Whether claims or suggestions that obtaining the equivalency diploma would result in increased pay or other job-related economic benefits were deceptive under § 5.
3. Whether using the name “Cramwell Institute,” in the context of an operation that offered no instruction, contributed to a deceptive overall impression and supported entry of cease-and-desist relief.

## Decision

- The Commission denied Jayko’s request to set aside the hearing examiner’s decision.
- The Commission sustained the determination that Jayko’s advertising and related representations concerning the claimed college-level equivalence of the diploma were false and deceptive.
- The Commission sustained the determination that statements implying the diploma would yield job-related economic gains (such as higher pay or advancement) were deceptive when made without an adequate factual basis.
- The Commission agreed that the business name and presentation—including use of “Institute”—could mislead consumers into believing they were dealing with a bona fide instructional school.
- The Commission affirmed the cease-and-desist order requiring Jayko to stop the challenged misrepresentations.

## Legal Principles

- Under § 5 of the Federal Trade Commission Act, advertising is deceptive if it is likely to mislead reasonable consumers and the misrepresentation is material to their decision to purchase.
- A seller may not represent that a privately issued credential is equivalent in academic standing, knowledge level, or intellectual attainment to completion of an accredited or recognized college degree absent a sound factual basis.
- Claims that a purchased exam and resulting diploma will produce specific economic or employment benefits (such as increased pay or improved job status) are deceptive when they are not supported by reliable evidence.
- The overall net impression of an advertisement or sales pitch controls; an advertiser can violate § 5 through implications and context, not only through explicit statements.
- Use of institutional terms (such as “Institute”) may be deceptive when it implies organized instruction or operation as a legitimate educational institution and that implication is false.
- When the record supports findings of deception, the FTC may issue cease-and-desist relief to prevent continuation or recurrence of the unlawful practices.

## Conclusion

In *In the Matter of Joseph Jayko Trading*, the FTC upheld a cease-and-desist order against Joseph Jayko’s Cramwell Institute for marketing mail-order examinations and “equivalency diplomas” in a manner that misrepresented the credential as comparable to completion of a college degree, suggested unsupported job-related financial benefits, and used “Institute” to imply an instructional educational institution despite providing no instruction.


In the Matter of Joseph Jayko Trading, 55 F.T.C. 242 (1958)