Below are excerpts from a New York Times article describing the unsavory business practices Steve Brown’s company Raffoler / Direct Marketing Enterprises engaged in.
Mail-Order House of a Hundred Names
By MICHAEL DECOURCY HINDS
The New York Times
Published: May 7, 1988
If you’ve ever been intrigued by an advertisement for a startlingly cheap watch, toy, perfume or pearl necklace, you may have been looking at the handiwork of Raffoler Ltd.
Not that you’d know. Raffoler, also known as Direct Marketing Enterprises Ltd., uses different business names for most of its 100 product lines. That practice has helped turn Raffoler into a $200-million-a-year mail order powerhouse, with a trail of legal trouble decades long.
Raffoler, in Westbury, L.I., is one of the largest direct mail companies. It sends out 300 million advertisements a year and has more than 500 employees. Its owners, Stephen Brown and Jerry S. Williams, each received a salary of $500,000 and had dividends of up to $13 million, according to public documents filed in 1986.
Raffoler’s success says a lot about the wide-open world of mail order, a $50-billion-a-year business with a level of consumer complaints matched only by the car repair industry, according to Raymond L. Rhine, program coordinator for mail order at the Federal Trade Commission.
The name it uses most is Carter & Van Peel. It also does business as Abernathy & Closther, RBM, ADV, GHR, Trends-Action Marketing, National Historic Mint, Gem Collectors International, Chrystie & Sprynghe Ltd., Knoxx & Londonderry, Flexner & Kirby Ltd., A. M. Fisk Ltd., North American Minerals Ltd. and J. A. Bornschaft, to name a few.
To Raffoler, a business name is simply advertising copy. ”We could call Carter & Van Peel perfumes John’s Perfumes by Mail, but you want to position your product in the best way possible,” said Mr. Williams, the chief executive.
The practice is legal, but raises red flags. ”Their trade names have a ring to them of other well known, very reputable firms,” said Rhonda Klein Singer, vice president and general counsel to the Better Business Bureau of Metropolitan New York. Further, when problems arise, consumers discover that the names are not in telephone directories and may be unknown to consumer agencies.
Raffoler and its business names regularly appear on the bureau’s list of most-complained-about companies. Ms. Klein said the company relies on the bureau and government agencies to fulfill its customer service obligation. It acts promptly on referred complaints without addressing underlying problems, she said.
”Would they deliver if we did not get involved, or would they continue to stonewall these complaints?” asked James E. Picken, commissioner of consumer affairs for Nassau County, where the company is based.
Raffoler has had many brushes with the law. Attorneys General in Minnesota, Kansas, Illinois, Massachusetts, Michigan and Ohio have investigated, filed suit or forced the company to halt various business practices in recent years. The F.T.C. in 1986 issued a consent decree under which Raffoler, without admitting guilt, paid a $150,000 penalty and agreed not to violate mail order rules. F.T.C. officials said they monitor compliance with all consent decrees; they would not comment further.
New York Moves to End Business
The New York State Attorney General is trying to put Raffoler out of business. Elizabeth Bradford, an assistant attorney general, said last summer in a complaint filed in State Supreme Court, ”Having shown themselves incapable of making an honest sale or a consistently timely delivery, they should not be permitted to conduct any further mail order business in the state of New York.”
The complaint accuses Raffoler of deceptive advertising, selling shoddy merchandise, misrepresenting merchandise, running illegal lotteries disguised as sweepstakes and violating mail order rules for the timely shipment of goods.
In court papers, Mr. Williams said the charges were ”unsupported by facts or evidence,” and added, ”To put it bluntly, the company knows what will sell in Peoria and is not ashamed of it.”
Copyright 2006 The New York Times Company