[Federal Register Volume 60, Number 111 (Friday, June 9, 1995)]
[Notices]
[Pages 30546-30549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14138]
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FEDERAL TRADE COMMISSION
[File No. 932-3340]
Jerry's Ford Sales, Inc., et al.; Proposed Consent Agreement With
Analysis to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair and deceptive acts and practices and unfair methods of
competition, this consent agreement, accepted subject to final
Commission approval, would require, among other things, three
corporations in Annandale, Virginia and Leesburg, Virginia and their
President and CEO, individually and as an officer of the three
corporations, in any advertisement to promote any extension of consumer
credit, to cease and desist from misrepresenting the terms of financing
the purchase of a vehicle, including whether there may be a balloon
payment and the amount of any balloon payment. The order would also
require the respondents, in any advertisement to promote any extension
of consumer credit, to cease and desist from failing to state all terms
required by Sections 226.24(b) and 226.24(c) of Regulation Z. The order
would also require the respondents, in any advertisement to aid,
promote or assist any consumer lease, to cease and desist from failing
to state all terms required by Section 213.5(c) of Regulation M.
DATES: Comments must be received on or before August 8, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.
FOR FURTHER INFORMATION CONTACT: Carole Reynolds, FTC/S-4429,
Washington, D.C. 20580. (202) 326-3230.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the following consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of sixty (60) days. Public comment is invited. Such
comments or views will be considered by the Commission and will be
available for inspection and copying of its principal office in
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii).
Agreement Containing Consent Order to Cease and Desist
In The Matter of Jerry's Ford Sales, Inc.: John's Ford Inc. dba
Jerry's Leesburg Ford; Jerry's Chevrolet Geo Oldsmobile, Inc.;
corporations, and Jerry C. Cohen, individually and as an officer of
the corporations.
[Docket No. 932-3340]
The agreement herein, by and between Jerry's Ford Sales, Inc.,
John's Ford, Inc. dba Jerry's Leesburg Ford, and Jerry's Chevrolet Geo
Oldsmobile, Inc., corporations, by their duly authorized officer, and
Jerry C. Cohen, individually and as an officer of the corporations
(hereinafter sometimes referred to as ``proposed respondents'' or
``respondents''), and counsel for the Federal Trade Commission, is
entered into in accordance with the Commission's Rule governing consent
order procedures. In accordance therewith the parties hereby agree
that:
1. Jerry's Ford Sales, Inc. is a corporation organized, existing,
and doing business under and by virtue of the laws of the State of
Delaware, with its principal office and place of business located at
6510 Little River Turnpike, Annandale, Virginia 22003. Proposed
respondent admits all the jurisdictional facts set forth in the draft
complaint.
2. John's Ford, Inc. dba Jerry's Leesburg Ford is a corporation
organized, existing, and doing business under and by virtue of the laws
of the Commonwealth of Virginia, with its principal office and place of
business located at 847 East Market Street, Leesburg, Virginia 22075.
Proposed respondent admits all the jurisdictional facts set forth in
the draft complaint.
3. Jerry's Chevrolet Geo Oldsmobile, Inc., is a corporation
organized, existing, and doing business under and by virtue of the laws
of the Commonwealth of Virginia, with its principal office and place of
business located at 325 East Market Street, Leesburg, Virginia 22075.
Proposed respondent admits all the jurisdictional facts set forth in
the draft complaint.
4. Jerry C. Cohen is an individual and an officer and director of
the aforenamed corporate respondents. He formulates, directs and
controls the acts and practices of the aforenamed corporate
respondents, including the acts and practices hereinafter set forth.
His business address is 6510 Little River Turnpike, Annandale, Virginia
22003. Proposed respondent admits all the jurisdictional facts set
forth in the draft complaint.
5. Proposed respondents waive:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement;
and
d. All claims under the Equal Access to Justice Act.
6. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission, it, together with the draft of
the complaint contemplated thereby, will be placed on the public record
for a period of sixty (60) days and information in respect thereto
publicly released. The Commission thereafter may either withdraw its
acceptance of this agreement and so notify the proposed respondents, in
which event it will take such action as it may consider appropriate, or
issue and serve its complaint (in such form as the circumstances may
require) and decision, in disposition of the proceeding.
7. This agreement is for settlement purposes only and does not
constitute [[Page 30547]] an admission by proposed respondents that the
law has been violated as alleged in the draft of the complaint or that
the facts alleged in the draft complaint, other than the jurisdictional
facts, are true.
8. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission's Rules, the Commission may, without further notice to the
proposed respondents, (a) issue its complaint corresponding in form and
substance with the draft of the complaint and its decision containing
the following order to cease and desist in disposition of the
proceeding and (b) make information public in respect thereto. When so
entered, the order to cease and desist shall have the same force and
effect and may be altered, modified, or set aside in the same manner
and within the same time provided by statute for other orders. The
order shall become final upon service. Delivery by the U.S. Postal
Service of the complaint and decision containing the agreed-to order to
proposed respondents' addresses as stated in this agreement shall
constitute service. Proposed respondents waive any right they may have
to any other manner of service. The complaint may be used in construing
the terms of the order, and no agreement, understanding,
representation, or interpretation not contained in the order or the
agreement may be used to vary or contradict the terms of the order.
9. Proposed respondents have read the proposed complaint and order
contemplated hereby. Proposed respondents understand that once the
order has been issued, they will be required to file one or more
compliance reports showing that they have fully complied with the
order. Proposed respondents further understand that they may be liable
for civil penalties in the amount provided by law for each violation of
the order after it becomes final.
Order
I
It is ordered that respondent Jerry's Ford Sales, Inc., John's
Ford, Inc. dba Jerry's Leesburg Ford, Jerry's Chevrolet Geo Oldsmobile
Inc., corporations, their successors and assigns and their officers,
and Jerry C. Cohen, individually and as an officer of the corporate
respondents, and respondents' agents, representatives, and employees,
directly or through any corporation, subsidiary, division, or any other
device, in connection with any advertisement to promote directly or
indirectly any extension of consumer credit, as ``advertisement,'' and
``consumer credit'' are defined in the TILA and Regulation Z, do
forthwith cease and desist from:
A. Misrepresenting in any manner, directly or by implication, the
terms of financing the purchase of a vehicle, including but not limited
to whether there may be a balloon payment and the amount of any balloon
payment.
B. Stating a rate of finance charge without stating the rate as an
``annual percentage rate'' or the abbreviation ``APR,'' using that
term, and failing to calculate the rate in accordance with Regulation
Z. If the annual percentage rate may be increased after consummation,
the advertisement shall state that fact. The advertisement shall not
state any other rate, except that a simple annual rate or periodic rate
that is applied to an unpaid balance may be stated in conjunction with,
but not more conspicuously than, the annual percentage rate.
(Sections 144 and 107 of the TILA, 15 U.S.C. 1664 and 1606, and
Sections 226.24(b) and 226.22 of Regulation Z, 12 CFR 226.24(b) and
226.22, as more fully set out in Sections 226.24(b) and 226.22 of
the Federal Reserve Board's Official Staff Commentary to Regulation
Z, 12 CFR 226.24(b) and 226.22, respectively.)
C. Stating any number or amount of payment(s) required to repay the
debt, without stating accurately, clearly and conspicuously, all of the
terms required by Regulation Z, as follows:
(1) The amount or percentage of the downpayment;
(2) The terms of repayment, including the amount of any balloon
payment, and
(3) The annual percentage rate, using that term or the abbreviation
``APR.'' If the annual percentage rate may be increased after
consummation of the credit transaction, that fact must also be
disclosed.
Section 144 of the TILA, 15 U.S.C. 1664, and Section 226.24(c) of
Regulation Z, 12 CFR 226.24(c), as more fully set out in Section
226.24(c) of the Federal Reserve Board's Official Staff Commentary
to Regulation Z, 12 CFR 226.24(c).)
D. Stating the amount or percentage of any downpayment, the number
of payments or period of repayment, the amount of any payment, or the
amount of any finance charge, without stating, clearly and
conspicuously, all of the terms required by Regulation Z, as follows:
(1) The amount or percentage of the downpayment;
(2) The terms of repayment, and
(3) The annual percentage rate, using that term or the abbreviation
``APR.'' If the annual percentage rate may be increased after
consummation of the credit transaction, that fact must also be
disclosed.
(Section 144 of the TILA, 15 U.S.C. 1664, and Section 226.24(c) of
Regulation Z, 12 CFR 226.24(c).)
E. Failing to state only those terms that actually are or will be
arranged or offered by the creditor, in any advertisement for credit
that states specific credit terms, as required by Regulation Z.
(Section 144 of the TILA, 15 U.S.C. 1664, and Section 226.24(a) of
Regulation Z, 12 CFR 226.24(a).)
F. Failing to comply in any other respect with Regulation Z and the
TILA.
(Regulation Z, 12 C.F.R. 226, as amended, and the TILA, 15 U.S.C.
1601-1667, as amended.)
II
It is ordered that respondents Jerry's Ford Sales, Inc., John's
Ford, Inc. dba Jerry's Leesburg Ford, Jerry's Chevrolet Geo Oldsmobile,
Inc., corporations, their successors and assigns and their officers,
and Jerry C. Cohen, individually and as an officer of the corporate
respondents, and respondents' agents, representatives, and employees,
directly or through any corporation, subsidiary, division, or any other
device, in connection with any advertisement to aid, promote or assist
directly or indirectly any consumer lease, as ``advertisement,'' and
``consumer lease'' are defined in the CLA and Regulation M, do
forthwith cease and desist from:
A. Stating the amount of any payment, the number of required
payments, or that any or no downpayment or other payment is required at
consummation of the lease, unless all of the following items are
disclosed, clearly and conspicuously, as applicable, as required by
Regulation M:
(1) That the transaction advertised is a lease;
(2) The total amount of any payment such as a security deposit or
capitalized cost reduction required at the consummation of the lease,
or that no such payments are required;
(3) The number, amounts, due dates or periods of scheduled
payments, and the total of such payments under the lease;
(4) A statement of whether or not the lessee has the option to
purchase the leased property and at what price and time (the method of
determining the price may be substituted for disclosure of the price),
and
(5) A statement of the amount or method of determining the amount
of [[Page 30548]] any liabilities the lease imposes upon the lessee at
the end of the term and a statement that the lessee shall be liable for
the difference, if any, between the estimated value of the leased
property and its realized value at the end of the lease term, if the
lessee has such liability.
(Section 184 of the CLA, 15 U.S.C. 1667c, and Section 213.5(c) of
Regulation M, 12 CFR 213.5(c).)
B. Stating that a specific lease of any property at specific
amounts or terms is available unless the lessor usually and customarily
leases or will lease such property at those amounts or terms, as
required by Regulation M.
(Section 184 of the CLA, 15 U.S.C. 1667c, and Section 213.5(a) of
Regulation M, 12 CFR 213.5(a).)
C. Failing to comply in any other respect with Regulation M and the
CLA.
(Regulation M, 12 CFR 213, and the CLA, 15 U.S.C. 1667-1667e, as
amended.)
III
It is further ordered that respondents, their successors and
assigns shall distribute a copy of this order to any present or future
officers, agents, representatives, and employees having responsibility
with respect to the subject matter of this order and that respondents,
their successors and assigns shall secure from each such person a
signed statement acknowledging receipt of said order.
IV
It is further ordered that respondents, their successors and
assigns shall promptly notify the Commission at least thirty (30) days
prior to any proposed change in the corporate entity such as
dissolution, assignment, or sale resulting in the emergence of a
successor corporation, the creation or dissolution of subsidiaries, or
any other change in the corporation which may affect compliance
obligations arising out of the order.
V
It is further ordered that for five years after the date of service
of this order respondents, their successors and assigns shall maintain
and upon request make available all records that will demonstrate
compliance with the requirements of this order.
VI
It is further ordered that respondents, their successors and
assigns shall, within sixty days (60) days of the date of service of
this order, file with the Commission a report, in writing, setting
forth in detail the manner and form in which they have complied with
this order.
Analysis of Proposed Consent Order to Aid Public Comment
The Federal Trade Commission has accepted an agreement to a
proposed consent order from respondents Jerry's Ford Sales, Inc.,
John's Ford, Inc. dba Jerry's Leesburg Ford, Jerry's Chevrolet Geo
Oldsmobile, Inc., and Jerry C. Cohen, individually and as an officer of
the corporations.\1\
\1\ In this Analysis to Aid Public Comment, Jerry's Ford Sales,
Inc. and John's Ford, Inc. dba Jerry's Leesburg Ford are referred to
collectively as ``respondent Jerry's Ford.'' Jerry's Chevrolet Geo
Oldsmobile, Inc. is referred to as ``respondent Jerry's Chevy.''
Jerry C. Cohen is referred to as ``respondent Cohen.''
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The proposed consent order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement or make final the agreement's proposed
order.
The complaint alleges that respondents Jerry's Ford and Cohen have
disseminated or caused to be disseminated advertisement that state an
initial low monthly payment and in fine print, inter alia, state an
initial number of payments and another amount variously described as
``optional final payment,'' ``optional final price,'' of ``COP.'' The
complaint alleges that these advertisements misrepresent that the
remaining obligation is optional and fail to disclose that the
financing to be signed at purchase requires the consumer to make a
substantial balloon payment at the conclusion of the initial payments,
which is a mandatory obligation, and have therefore engaged in an
unfair and deceptive act or practice, in violation of Section 5(a) of
the Federal Trade Commission Act. The complaint also alleges that these
advertisements state an initial number and amount of payments required
to repay the indebtedness and another amount variously described as
``optional final payment,'' ``optional final price,'' or ``COP,'' but
fail to accurately state the terms of repayment, by failing to disclose
that the additional amount required is a final payment and by
inaccurately stating that the final amount is optional when, in fact,
it is mandatory based on the financing to be signed at purchase, in
violation of the TILA and Section 226.24(c) of Regulation Z.
The complaint also alleges that respondents Jerry's Ford and Cohen
have disseminated or caused to be disseminated advertisements that
state a rate of finance charge without stating that rate as an ``annual
percentage rate,'' using that term or the abbreviation ``APR,'' and
have failed to calculate that rate in accordance with Regulation Z, in
violation of the TILA and Sections 226.22 and 226.24(b) of Regulation
Z, and have also engaged in an unfair and deceptive act or practice, in
violation of Section 5(a) of the FTC Act.
The complaint also alleges that respondents Jerry's Chevy and Cohen
have disseminated or caused to be disseminated advertisements that
state an initial, low monthly payment and an initial number of payments
but fail to disclose that the financing to be signed at purchase
requires the consumer to make a substantial final balloon payment, and
have therefore engaged in an unfair and deceptive act or practice, in
violation of Section 5(a) of the FTC Act. The complaint also alleges
that these advertisements state an initial number and amount of
payments required to repay the indebtedness, but fail to accurately
state the terms of repayment, by failing to disclose the amount of the
final balloon payment required at the end of the initial payments,
based on the financing to be signed at purchase, in violation of the
TILA and Section 226.24(c) of Regulation Z.
The complaint also alleges that respondents Jerry's Ford, Jerry's
Chevy and Cohen have disseminated or caused to be disseminated
advertisements that state the amount of percentage of any downpayment,
the number of payments of period of repayment, or the amount of any
payment, but fail to state all of the terms required by Regulation Z,
as follows: The amount or percentage of the downpayment, the terms of
repayment, and the annual percentage rate, using that term or the
abbreviation ``APR,'' in violation of the TILA and Section 226.24(c) of
Regulation Z.
The complaint also alleges that respondents Jerry's Ford, Jerry's
Chevy and Cohen have disseminated or caused to be disseminated
advertisements that state the amount of any payment, the number of
required payments, or that any or no downpayment or other payment is
required at consummation of the lease, but fail to state all of the
terms required by Regulation M, as applicable and as follows: That the
transaction advertised is a lease; the total amount of any payment such
as a security deposit or capitalized cost reduction required at the
consummation of the lease or that no such payments are required; the
[[Page 30549]] number, amount, due dates or periods of scheduled
payments, and the total of such payments under the lease; and a
statement of whether or not the lessee has the option to purchase the
leased property and at what price and time (the method of determining
the price may be substituted for disclosure of the price), in violation
of the CLA and Section 213.5(c) of Regulation M.
The proposed order prohibits respondents Jerry's Ford, Jerry's
Chevy and Cohen, in any advertisement to promote any extension of
consumer credit, from misrepresenting in any manner, directly or by
implication, the terms of financing the purchase of a vehicle,
including but not limited to whether there may be a balloon payment and
the amount of any balloon payment.
The proposed order also prohibits respondents Jerry's Ford, Jerry's
Chevy and Cohen, in any advertisement to promote any extension of
consumer credit, from stating a rate of finance charge without stating
the rate as an ``annual percentage rate,'' using that term or the
abbreviation ``APR,'' and from failing to calculate the rate in
accordance with Regulation Z.
The proposed order also requires respondents Jerry's Ford, Jerry's
Chevy and Cohen, in any advertisement to promote any extension of
consumer credit, whenever the number or amount of payments required to
repay the debt are stated, to accurately, clear and conspicuously,
state all of the terms required by Regulation Z, as follows: the amount
or percentage of the downpayment; the terms of repayment, including the
amount of any balloon payment, and the annual percentage rate.
The proposed order also requires respondents Jerry's Ford, Jerry's
Chevy and Cohen, in any advertisement to promote any extension of
consumer credit, whenever the number or amount of payments required to
repay the debt are stated, to accurately, clearly and conspicuously,
state all of the terms required by Regulation Z, as follows: The amount
or percentage of the downpayment, the terms of repayment, and the
annual percentage rate. The proposed order also requires respondents
Jerry's Ford, Jerry's Chevy and Cohen to state only those terms that
actually are or will be arranged or offered by the creditor, in any
credit advertisement.
The proposed order also requires respondents Jerry's Ford, Jerry's
Chevy and Cohen, in any advertisement to aid, promote or assist any
consumer lease, whenever the amount of any payment, the number of
required payments, or that any or no downpayment or other payment is
required at consummation of the lease is stated, to state, clearly and
conspicuously, all of the terms required by Regulation M, as applicable
and as follows: That the transaction advertised is a lease; the total
amount of any payment such as a security deposit or capitalized cost
reduction required at the consummation of the lease, or that no such
payments are required; the number, amounts, due dates or periods of
scheduled payments, and the total of such payments under the lease; a
statement of whether or not the lessee has the option to purchase the
leased property and at what price and time (the method of determining
the price may be substituted for disclosure of the price), and a
statement of the amount or method of determining the amount of any
liabilities the lease imposes upon the lessee at the end of the term
and a statement that the lessee shall be liable for the difference, if
any, between the estimated value of the leased property and its
realized value at the end of the lease term if the lessee has such
liability. The proposed order also requires respondents in any lease
advertisement to state that a specific lease of any property at
specific amounts or terms is available only if the lessor usually and
customarily leases or will lease such property at those amounts or
terms.
The purpose of this analysis is to facilitate public comment on the
proposed order. It is not intended to constitute an official
interpretation of the agreement and proposed order or to modify in an
way their terms.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 95-14138 Filed 6-8-95; 8:45 am]
BILLING CODE 6750-01-M
