[Title 32 CFR E]
[Code of Federal Regulations (annual edition) - July 1, 2002 Edition]
[Title 32 - NATIONAL DEFENSE]
[Chapter V - DEPARTMENT OF THE ARMY]
[Subchapter D - MILITARY RESERVATIONS AND NATIONAL CEMETERIES]
[Part 552 - REGULATIONS AFFECTING MILITARY RESERVATIONS]
[Subpart E - Solicitation on Military Reservations]
[From the U.S. Government Printing Office]
32NATIONAL DEFENSE32002-07-012002-07-01falseSolicitation on Military ReservationsESubpart ENATIONAL DEFENSEDEPARTMENT OF THE ARMYMILITARY RESERVATIONS AND NATIONAL CEMETERIESREGULATIONS AFFECTING MILITARY RESERVATIONS
Subpart E--Solicitation on Military Reservations
Authority: Sections 552.50 through 552.83 issued under 15 U.S.C.
1601.
Source: 45 FR 73037, Nov. 4, 1980, unless otherwise noted.
Sec. 552.50 Purpose.
This regulation--
(a) Prescribes general policy on the solicitation and sale of all
goods, services, and commodities, including all types of insurance, on
military installations. These are sold or solicited by dealers,
tradesmen, and their agents.
(b) Prescribes procedures for suspension of solicitation privileges.
(c) Prescribes policies and procedures for investigative and
enforcement actions.
[[Page 303]]
(d) Permits representatives of credit unions, banks, and approved
non-profit associations to conduct national educational programs on--
(1) Insurance, estate planning, savings, and budgeting, and
(2) The protection and remedies afforded consumers under the Truth-
in-Lending Act.
Sec. 552.51 Applicability.
(a) This regulation applies to--
(1) All Department of the Army military and civilian personnel,
including Army National Guard and Army Reserve personnel on active duty
or annual training.
(2) Individuals seeking to conduct commercial solicitation on
military installations, including controlled housing areas. They will
also be governed by regulations and controls of the local commander and,
in overseas areas, by regulations of the unified or specified commander.
They must also observe applicable laws, regulations, and agreements of
the host country.
(b) The provisions of this regulation do not apply to--
(1) Commercial companies that furnish services to military
installations (such as deliveries of milk, bread, and laundry) when they
are authorized by the installation commander.
(2) An individual who sells his own personal property or privately
owned dwelling.
Sec. 552.52 Explanation of terms.
(a) Agent. Anyone who solicits the ordering or purchasing of goods,
services, or commodities in exchange for money. ``Agent'' includes an
individual who receives remuneration as a salesman for an insurer or
whose remuneration is dependent on volume of sales or the making of
sales.
(b) Solicitation. The conduct of any private business, including the
offering and sale of insurance on a military installation, whether
initiated by the seller or the buyer. (Solicitation on installations is
a privilege as distinguished from a right, and its control is a
responsibility vested in the installation commander, subject to
compliance with applicable regulations.)
(c) Door-to-door solicitation. A sales method whereby an agent
proceeds randomly or selectively from household to household without
specific prior appointments or invitations. Door-to-door solicitation is
not permitted on Army installations.
(d) Specific appointment. A prearranged appointment that has been
agreed upon by both parties and is definite as to place and time.
(e) Insurer. Any company or association engaged in the business of
selling insurance policies to Department of Defense (DOD) personnel.
(f) Insurance carrier. An insurance company issuing insurance
through an association or reinsuring or coinsuring such insurance.
(g) Insurance policy. A policy or certificate of insurance issued by
an insurer or evidence of insurance coverage issued by a self-insured
association.
(h) DOD personnel. Unless stated otherwise, such personnel means all
active duty officer and enlisted members, and civilian employees of the
Armed Forces. This includes Government employees of all the offices,
agencies, and departments carrying on functions on a Defense
installation, including non-appropriated fund instrumentalities.
Sec. 552.53 Regulatory requirements.
Commanders may issue regulations governing solicitation within their
commands and on their installations. These regulations will avoid
discriminatory requirements which could eliminate or restrict
competition. When there is a clear need to prescribe more restrictive
requirements for solicitation than those in this regulation or the
regulations of the major commander, these additional requirements or
restrictions must first be reviewed and confirmed by The Adjutant
General Center (DAAG-PSI), or by the overseas commander.
Sec. 552.54 Solicitation.
The installation commanders may permit solicitation and transaction
of commercial business on military installations. These solicitations
and transactions must conform to installation regulations (CONUS and
overseas) and must not interfere with military activities. No person may
enter an installation and transact commercial business as a matter of
right.
[[Page 304]]
Sec. 552.55 Restrictions.
To maintain discipline; protect property; and safeguard the health,
morale, and welfare of his personnel, the installation commander may
impose reasonable restrictions on the character and conduct of
commercial activities. Members of the Armed Forces must not be subjected
to fraudulent, usurious, or unethical business practices. Reasonable and
consistent standards must be applied to each company and its agents in
their conduct of commercial transactions on the installation.
Sec. 552.56 Licensing requirements.
To transact personal commercial business on military installations
in the United States, its territories, and the Commonwealth of Puerto
Rico, individuals must present, on demand, to the installation
commander, or his designee, documentary evidence that the company and
its agents meet the licensing requirements of the State in which the
installation is located. They must also meet any other applicable
regulatory requirements imposed by civil authorities (Federal, State,
county, or municipality). For ease of administration, the installation
commander will issue a temporary permit to agents who meet these
requirements.
Sec. 552.57 Authorization to solicit.
(a) Solicitation must be authorized by the installation commander. A
specific appointment must be made with the individual and must be
conducted in family quarters or in other areas designated by the
installation commander. Before issuing a permit to solicit, the
commander will require and review a statement of past employment. The
commander will also determine, if practicable, whether the agent is
employed by a reputable firm.
(b) Certain companies seeking solicitation privileges on military
installations may arrange personal demonstrations of their products at
social gatherings and advise potential customers on their use. If these
added services are provided, even though the merchandise sold by these
companies is similar to that stocked by the post exchange, the
installation commander may authorize solicitation privileges. Requests
for this type of solicitation privilege will be coordinated with the
local Army and Air Force Exchange Service representative. See paragraph
3-2, Army Regulation 60-10.
Sec. 552.58 Other transactions.
Commercial transactions with other than individuals (such as
nonappropriated fund activities) are restricted to the office of the
custodian of the specific fund activity. Business will be conducted
during normal duty hours.
Sec. 552.59 Granting solicitation privileges.
(a) Authorizations (permits) to solicit on Army installations will
be in writing and will be valid for periods of 1 year or less.
(b) Particular caution must be taken when granting solicitation
permission. The impression that permission is official indorsement or
that the Department of the Army favors, sponsors, or recommends the
companies, agents, or the policies offered for sale must not be
conveyed. As continuing policy, the Department of the Army does not
indorse any seller or product.
Sec. 552.60 Supervision of on-post commercial activities.
(a) General. (1) Installation commanders will ensure that all agents
are given equal opportunity for interviews, by appointment, at the
designated areas.
(2) DOD personnel will not act in any official or business capacity,
either directly or indirectly, as liaison with agents to arrange
appointments.
(3) Home address of members of the command or unit will not be given
to commercial enterprises or individuals engaged in commercial
solicitation, except when required by Army Regulation 340-17 and Army
Regulation 340-21. The written consent of the individual must be
obtained first.
(b) Hours and location for solicitation. (1) Military personnel and
their dependents will be solicited individually, by specific
appointment, and at hours designated by the installation commander or
his designee. Appointments will not interfere with any military duty.
Door-to-door solicitation without
[[Page 305]]
a prior appointment, including solicitation by personnel whose ultimate
purpose is to obtain sales (e.g., soliciting future appointments), is
prohibited. Solicitors may contact prospective clients initially by
methods such as advertising, direct mail, and telephone.
(2) Commanders will provide one or more appropriate locations on the
installation where agents may interview prospective purchasers. If space
and other factors dictate limiting the number of agents who may use
designated interviewing areas, the installation commander may publish
policy covering this matter.
(c) Regulations to be read by solicitors. A conspicuous notice of
installation regulations will be posted in a form and a place easily
accessible to all those conducting on-post commercial activities. Each
agent authorized to solicit must read this notice and appropriate
installation regulations. Copies will be made available on
installations. When practicable, as determined by the installation
commander, persons conducting on-base commercial activities will be
furnished a copy of the applicable regulations. Each agent seeking a
permit must acknowledge, in writing, that he has read the regulations,
understands them, and further understands that any violation or
noncompliance may result in suspension of the solicitation privilege for
himself, his employer, or both.
(d) Forbidden solicitation practices. Installation commanders will
prohibit the following:
(1) Solicitation during enlistment or induction processing or during
basic combat training, and within the first half of the one station unit
training cycle.
(2) Solicitation of ``mass,'' group, or ``captive'' audiences.
(3) Making appointments with or soliciting of military personnel who
are in an ``on-duty'' status.
(4) Soliciting without an appointment in areas used for housing or
processing transient personnel, or soliciting in barracks areas used as
quarters.
(5) Use of official identification cards by retired or Reserve
members of the Armed Forces to gain access to military installations to
solicit.
(6) Offering of false, unfair, improper, or deceptive inducements to
purchase or trade.
(7) Offering rebates to promote transaction or to eliminate
competition. (Credit union interest refunds to borrowers are not
considered a prohibited rebate.)
(8) Use of any manipulative, deceptive, or fraudulent device,
scheme, or artifice, including misleading advertising and sales
literature.
(9) Any oral or written representations which suggest or appear that
the Department of the Army sponsors or endorses the company or its
agents, or the goods, services, and commodities offered for sale.
(10) Commercial solicitation by an active duty member of the Armed
Forces of another member who is junior in rank or grade, at any time, on
or off the military installation (Army Regulation 600-50).
(11) Entry into any unauthorized or restricted area.
(12) Assignment of desk space for interviews, except for specific
prearranged appointments. During appointments, the agent must not
display desk or other signs announcing the name of the company or
product affiliation.
(13) Use of the ``Daily Bulletin'' or any other notice, official, or
unofficial, announcing the presence of an agent and his availability.
(14) Distribution of literature other than to the person being
interviewed.
(15) Wearing of name tags that include the name of the company or
product that the agent represents.
(16) Offering of financial benefit or other valuable or desirable
favors to military or civilian personnel to help or encourage sales
transactions. This does not include advertising material for prospective
purchasers (such as pens, pencils, wallets, and notebooks, normally with
a value of $1 or less).
(17) Use of any portion of installation facilities, to include
quarters, as a showroom or store for the sale of goods or services,
except as specifically authorized by regulations governing the
operations of exchanges, commissaries,
[[Page 306]]
non-appropriated fund instrumentalities, and private organizations. This
is not intended to preclude normal home enterprises, providing State and
local laws are complied with.
(18) Advertisements citing addresses or telephone numbers of
commercial sales activities conducted on the installation.
(e) Business reply system. Agents who desire to use a business reply
card system will include the information on the card which a military
member can complete to indicate where and when the member can meet the
agent to discuss the subject. The meeting place should be that
established in accordance with paragraph (b)(2) of this section, if the
meeting is to be on the installation. This procedure should assist in
removing any impression that the agent or his company are approved by
the Department of the Army. It should further prevent an undesirable
situation (e.g., military personnel paged on a public address system or
called by a unit runner to report to the orderly room).
Sec. 552.61 Products and services offered in solicitation.
Products and services, including life insurance, offered and sold on
Army installations must comply with the laws of the States (and other
civil jurisdictions) in which the installations are located. If a
dispute or complaint arises, the applicable State will make the
determination (Sec. 552.56).
Sec. 552.62 Advertising rules and educational programs.
(a) The Department of the Army expects that commercial enterprises
soliciting military personnel through advertisements appearing in
unofficial military publications will voluntarily observe the highest
business ethics in describing both the goods, services, and commodities
and the terms of the sale (such as guarantees and warranties). If not,
the publisher of the military publication will request the advertiser to
observe them. The advertising of credit will conform to the provisions
of the Truth-in-Lending Act, as implemented by Regulation Z, published
by the Federal Reserve Board (12 CFR part 226).
(b) Commanders will provide appropriate information and educational
programs to provide members of the Army with information pertaining to
the conduct of their personal commercial affairs (e.g., the protections
and remedies offered consumers under the Truth-in-Lending Act,
insurance, Government benefits, savings, estate planning, and
budgeting). The services or representatives of credit unions, banks, and
nonprofit military associations approved by HQDA may be used for this
purpose provided their programs are entirely educational. Under no
circumstances will the services of commercial agents, including loan or
finance companies and their associations, be used for this purpose.
Educational materials prepared or used by outside organizations or
experts in this field may be adapted or used with applicable permission,
provided the material is entirely educational and does not contain
applications or contract forms.
Sec. 552.63 ``Cooling off'' period for door-to-door sales.
The Federal Trade Commission Rule, 16 CFR part 429, p. 233,
effective 7 June 1974, pertains to a cooling off period for door-to-door
sales. The rule applies to any sale, lease, or rental of consumer goods
or services with a purchase price of $25 or more, whether under single
or multiple contracts, in which the seller or business representative
personally solicits the sale, including those in response to or
following an invitation by the buyer, and the buyer's agreement or offer
to purchase is made at a place other than the place of business of the
seller. The purpose of the law is to allow the consumer the right to
cancel a transaction at any time prior to midnight of the third business
day after the date of the transaction. When any door-to-door sale or
transaction takes place anywhere on or off the installation (other than
the seller's place of business) the consumer must be provided with a
full and complete receipt or copy of a contract pertaining to the sale
at the time of its execution which shall include the ``cancellation
statements'' as required by the FTC rule.
[[Page 307]]
Sec. 552.64 Sound insurance underwriting and programing.
The Department of the Army encourages the acquisition of a sound
insurance program that is suitably underwritten to meet the varying
needs of the individual and is within his financial means. Accordingly,
insurance agents may conduct personal business on an installation, when
feasible, with disinterested third-party counseling provided,
interviewing hours set aside, and facilities supplied. However, the
privilege of insurance solicitation on installations is conditioned on
full compliance with this regulation and on the clear understanding that
permission is not indorsement of the company or the policies offered for
sale.
Sec. 552.65 Command supervision.
(a) All insurance business conducted on Army installation will be by
appointment. When setting up the appointment, insurance agents must
identify themselves to the prospective purchaser as an agent for a
specific insurance company.
(b) Department of Defense personnel are expressly prohibited from
representing any insurance company or dealing either directly or
indirectly with any insurance company or any recognized representative
of an insurance company as an agent or in any official or business
capacity for the solicitation of insurance to personnel on a military
installation with or without compensation.
(c) In addition to the forbidden practices, installation commanders
will prohibit the following:
(1) The use of a commercial insurance agent as a participant in any
military-sponsored education or orientation program.
(2) The designation or announcement of any agent as ``Battalion
Insurance Advisor,'' ``Unit Insurance Counselor,'' ``SGLI Conversion
Consultant,'' or similar quasi-official titles.
Sec. 552.66 Actions required by agents.
(a) The agent must know that--
(1) Soldiers to be solicited are in grades E-1, E-2, or E-3, and
(2) The solicitation of these members is restricted to specified
times and locations designated by the installation commander.
(b) Agents must leave information on the policy applied for with
each member in grades E-1, E-2, and E-3 who applies for insurance and
the unit insurance officer or counselor. Agents must complete DA Form
2056 (Commercial Insurance Solicitation Record). Blank DA Forms 2056
(not allotment forms) will be available to insurance agents on request.
In the ``Remarks'' section of DA Form 2056, agents will include all
pertinent information and a clear statement that dividends are not
guaranteed if the presentation refers to dividends.
Sec. 552.67 Life insurance policy content.
Insurance policies offered and sold on Army installations must--
(a) Comply with the insurance laws of the States or country in which
the installations are located. The applicable State insurance
commissioner will determine such compliance if there is a dispute or
complaint.
(b) Contain no restrictions because of military service or military
occupational specialty of the insured, unless restrictions are clearly
indicated on the face of the policy.
(c) Plainly indicate any extra premium charges imposed because of
military service or military occupational specialty.
(d) Not vary in the amount of death benefit or premium based on the
length of time the policy has been in force, unless it is clearly
described therein.
(e) For purposes of paragraphs (b) through (d) of this section, be
stamped with an appropriate reference on the face of the policy to focus
attention on any extra premium charges imposed and on any variations in
the amount of death benefit or premium based on the length of time the
policy has been in force.
(f) Variable life insurance policies may be offered provided they
meet the criteria of the appropriate insurance regulatory agency and the
Securities and Exchange Commission.
(g) Show only the actual premiums payable for life insurance
coverage.
[[Page 308]]
Sec. 552.68 Minimum requirements for agents.
(a) In the United States, its territories, and the Commonwealth of
Puerto Rico, agents may be authorized to solicit on an installation
provided--
(1) Both the company and its agents are licensed in the State in
which the installation is located. ``State'' as it pertains to political
jurisdictions includes the 50 States, territories, and the Commonwealth
of Puerto Rico.
(2) The application to solicit is made by an accredited company
(Sec. 552.69).
(b) On Army military installation in foreign areas.
(1) An agent may solicit business on U.S. military installations in
foreign areas if--
(i) The company he represents has been accredited by DOD;
(ii) His name is on the official list of accredited agents
maintained by the applicable major command;
(iii) His employer, the company, has obtained clearance for him from
the appropriate overseas commanders; and
(iv) The commanding officer of the military installation on which he
desires to solicit has granted him permission.
(2) To be employed for overseas solicitation and designated as an
accredited agent, agents must have at least 1 year of successful life
insurance underwriting in the United States or its territories.
Generally, this is within the 5 years preceding the date of application.
(3) General agents and agents will represent only one accredited
commercial insurance company. The overseas commander may waive this
requirement if multiple representation can be proven to be in the best
interest of DOD personnel.
(4) An agent must possess a current State license. The overseas
commander may waive this requirement on behalf of an accredited agent
who has been continuously residing and successfully selling life
insurance in foreign areas and forfeits his eligibility for a State
license, through no fault of his own, due to the operation of State law
or regulation governing domicile requirements, or requiring that the
agent's company be licensed to do business in that State. The request
for a waiver will contain the name of the State and jurisdiction, which
would not renew the agent's license.
(5) An agent, once accredited in an overseas area, may not change
his affiliation from the staff of one general agent to another, unless
the losing company certifies, in writing, that the release is without
justifiable prejudice. Unified commanders will have final authority to
determine justifiable prejudice.
(6) Where the accredited insurer's policy permits, an overseas
accredited life insurance agent, if duly qualified to engage in security
activities either as a registered representative of a member of the
National Association of Securities Dealers or an associated person of a
broker/dealer registered with the Securities and Exchange Commission
only, may offer life insurance and securities for sale simultaneously.
In cases of commingled sales, the allotment of pay for the purchase of
securities cannot be made to the insurer.
(7) Overseas commanders will exercise further agent control
procedures as necessary.
Sec. 552.69 Application by companies to solicit on military installations in the United States, its territories, or the Commonwealth of Puerto Rico.
Before a company may be accredited to solicit on a military
installation, the commander must receive a letter of application, signed
by the company's president or vice president. It must be understood that
a knowing and willful false statement is punishable by fine or
imprisonment (18 U.S.C. 1001). The letter of application will--
(a) Report the States in which the company is qualified and licensed
to sell insurance.
(b) Give the name, complete address, and telephone number of each
agent who will solicit on the installation if approval is granted; the
State in which licensed; the date of licensing and the expiration date;
and a statement of agreement to report all future additions and
separations of agents employed for solicitation on the installation.
(c) List all policies and their form numbers that are to be offered
for purchase on the installation. Application will be offered for
purchase and that
[[Page 309]]
these policies meet the requirements of Sec. 552.67(d).
Attest that--
(1) The privilege of soliciting the purchase of life insurance is
not currently suspended or withdrawn from the company by any of the
military departments.
(2) The privilege of soliciting the purchase of life insurance is
not currently suspended or withdrawn by any Armed Forces installations
from any of the agents named.
(3) The company and the agent named have proper and currently
validated licenses as required by Sec. 552.68.
(4) The company assumes full responsibility for its agents complying
with this regulation and with any regulations published by the
installation commander.
Sec. 552.70 Applications by companies to solicit on installations in foreign countries.
(a) Each May and June only, DOD accepts applications from commercial
life insurance companies for accreditation to solicit the purchase of
commercial life insurance on installations in foreign countries for the
fiscal year beginning the following October.
(b) Information about permission to solicit on installations outside
the United States (exclusive of its territories and the Commonwealth of
Puerto Rico) is contained in instructions issued by DOD. Applications
and any correspondence relating thereto should be addressed to Assistant
Secretary of Defense (Manpower, Reserve Affairs, and Logistics), ATTN:
Directorate, Personnel Services, ODASD(MPP), WASH DC 20301.
(c) Advice of action taken by DOD is announced annually by letters
sent to overseas commanders as soon as practicable after 15 September.
The list of companies and agents may vary from year to year.
Sec. 552.71 Associations--general.
The recent growth of quasi-military associations offering various
insurance plans to military personnel is recognized. Some associations
are not organized within the supervision of insurance laws of either the
Federal or State Government. While some are organized for profit, others
function as nonprofit associations under Internal Revenue Service
regulations. Regardless of how insurance plans are offered to members,
the management of the association is responsible for assuring that all
aspects of its insurance programs comply fully with the instructions of
this regulation.
Sec. 552.72 Use of the allotment of pay system.
(a) Allotments of military pay will be made in accordance with Army
Regulation 37-104-3. Allotments will not be made to an insurer for the
purchase of a commingled sale (e.g., retirement plans, securities).
(b) Under no circumstances will agents have allotment forms in their
possession or attempt to assist or coordinate the administrative
processing of such forms.
(c) For personnel in grades E-1, E-2, and E-3, at least 7 days
should elapse between the signing of a life insurance application or
contract and the certification of an allotment. The purchaser's
commanding officer may grant a waiver of this requirement for good
cause, such as the purchaser's imminent permanent change of station.
Sec. 552.73 Minimum requirements for automobile insurance policies.
Policies sold on installations by both accepted and accredited
insurers will meet all statutory and regulatory requirements of the
State or host nation in which the installation is located. Policies will
not be issued in amounts lower than the minimum limits prescribed by
these authorities. In addition, policies will--
(a) Clearly identify the name of the insurer and the full address.
(1) Applications without the name and address of the insurer
underwriting the insurance may be used; the names of sales or
underwriting agents alone is not sufficient.
(2) Post office box addresses are not an acceptable address.
(b) Provide bodily injury and property damage liability coverage for
all drivers authorized by the named insured to operate the vehicle.
Military indorsements, excluding persons other
[[Page 310]]
than the named insured, whether in the military or not, are not
acceptable.
(c) Not contain unusual limitations or restrictions, including, but
not limited to, the following:
(1) Limitations specifying that coverage is afforded only when the
insured vehicle is operated in the designated geographic areas in the
United States (e.g., coverage applicable only on a military
reservation). If the installation is located within the United States,
the standard provision limiting coverage to the United States and Canada
is acceptable.
(2) Coverage limited to exclude liability for bodily injury to
passengers and guests if such a liability exists as a matter of law.
Sec. 552.74 Grounds for suspension.
The installation commander will deny or revoke permission of a
company and its agents to conduct commercial activities on the
installation if it is in the best interests of the command. The grounds
for taking this action will include, but will not be limited to, the
following:
(a) Failure of company to meet the licensing and other regulatory
requirements prescribed in Sec. 552.56.
(b) An agent or representative engaged in any of the solicitation
practices prohibited by this regulation.
(c) Substantiated adverse complaints or reports about the quality of
the goods, services, or commodities and the manner in which they are
offered for sale.
(d) Personal misconduct by agents or representatives while on the
military installation.
(e) The possession of or any attempt to obtain allotment forms, or
to assist or coordinate the administrative processing of such forms.
(f) Knowing and willful violation of the Truth-in-Lending Act or
Federal Regulation Z.
(g) Failure to incorporate and abide by the Standards of Fairness
policies. (See Sec. 552.83.)
Sec. 552.75 Factors in suspending solicitation privileges.
In suspending privileges for cause, the installation commander will
determine whether to limit suspension to the agent alone or to extent it
to the company he represents. This decision will be based on the
circumstances of the particular case. Included are--
(a) The nature of the violations and their frequencies;
(b) The extent to which other agents of the company have engaged in
these practices;
(c) Previous warnings or suspensions; and
(d) Other matters that show the company's guilt or failure to take
reasonable corrective or remedial action.
Sec. 552.76 Preliminary investigation.
When unauthorized solicitation practices have apparently occurred,
an investigating officer will be appointed (Army Regulation 15-6). The
investigating officer will gather sworn statements from all interested
parties who have any knowledge of the alleged violations.
Sec. 552.77 Suspension approval.
The installation commander will personally approve all cases in
which solicitation privileges have been denied or suspended for cause.
This includes agents, companies, or other commercial enterprises.
Authority to temporarily suspend solicitation privileges for 30 days or
less while an investigation is conducted may be delegated by the
commander to the installation solicitation officer or other designee.
Exception to this time frame must be approved by The Adjutant General
(DAAG-PSI) or by the overseas commander. The commander will make the
final determination.
Sec. 552.78 ``Show cause'' hearing.
Before suspending the solicitation privilege, the company and the
agent will have a chance to show cause why the action should not be
taken. ``Show cause'' is an opportunity for the company, the agent, or
both to present facts informally on their behalf. The company and agent
will be notified, by letter, far in advance of the pending hearing. If
unable to notify the agent directly or indirectly of the hearing, then
the hearing may proceed.
[[Page 311]]
Sec. 552.79 Suspension action.
(a) When suspended for cause, immediately notify the company and the
agent, in writing, of the reason. When the installation commander
determines that suspension should be extended throughout the Department
of the Army (whether for the agent or his company), send the case to
HQDA (DAAGPSI) WASH DC 20314. Provide all factors on which the commander
based his decision concerning the agent or company (exempt report, para
7-2o, Army Regulation 335-15). This notification should include--
(1) Copies of the ``show cause'' hearing record or summary,
(2) The installation regulations or extract,
(3) The investigation report with sworn statements by all personnel
affected by or having knowledge of the violations,
(4) The statement signed by the agent as required in Sec. 552.60(c).
(5) Notification letters sent to the company and the agent advising
of suspension of installation solicitation privileges, and
(6) If the agent failed to respond to notification of the hearing, a
copy of the letters sent to him and the company offering them the
opportunity to be heard.
(b) If the grounds for suspension bear significantly on the
eligibility of the agent or company to hold a State license or to meet
other regulatory requirements, notify the appropriate State or local
civil authorities.
Sec. 552.80 Suspension period.
All solicitation privileges suspended by installation commanders
will be for a specific time. Normally, it will not exceed 2 years. When
the suspension period expires, the agent may reapply for permission to
solicit at the installation authorizing the denial or suspension.
Requests for suspension periods in excess of 2 years will be sent with
the complete case to HQDA (DAAG-PSI) WASH DC 20314, for approval. Lesser
suspension may be imposed pending decision.
Sec. 552.81 Agents or companies with suspended solicitation privileges.
Quarterly, HQDA will publish the names of agents and companies whose
solicitation privileges have been suspended throughout the Department of
the Army. If no change has occurred in the latest quarter, no list will
be published.
Sec. 552.82 Exercise of ``off limits'' authority.
(a) In appropriate cases, installation commanders may have the Armed
Forces Disciplinary Control Board investigate reports that cash or
consumer credit transactions offered military personnel by a business
establishment off post are usurious, fraudulent, misleading, or
deceptive. If it is found that the commercial establishment engages in
such practices; that it has not taken corrective action on being duly
notified; and that the health, morale, and welfare of military personnel
would be served, the Armed Forces Disciplinary Control Board may
recommend that the offending business establishment be declared ``off
limits'' to all military personnel. The procedures for making these
determinations are in Army Regulation 190.24.
(b) On finding that a company transacting cash or consumer credit
with members of the Armed Forces, nationwide or internationally, is
engaged in widespread usurious, fraudulent, or deceptive practices, the
Secretary of the Army may direct Armed Forces Disciplinary Control
Boards in all geographical areas where this occurred to investigate the
charges and take appropriate action.
Sec. 552.83 Standards of fairness.
(a) No finance charge contracted for, made, or received under any
contract shall be in excess of the charge which could be made for such
contract under the law of the place in which the contract is signed in
the United States by the serviceman. In the event a contract is signed
with a United States company in a foreign country, the lowest interest
rate of the state or states in which the company is chartered or does
business shall apply.
(b) No contract or loan agreement shall provide for an attorney's
fee in
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the event of default unless suit is filed in which event the fee
provided in the contract shall not exceed 20 percent of the obligation
found due. No attorney's fees shall be authorized if he is a salaried
employee of the holder.
(c) In loan transactions, defenses which the debtor may have against
the original lender or its agent shall be good against any subsequent
holder of the obligation. In credit transactions, defenses against the
seller or its agent shall be good against any subsequent holder of the
obligation provided that the holder had actual knowledge of the defense
or under condition where reasonable inquiry would have apprised him of
this fact.
(d) The debtor shall have the right to remove any security for the
obligation beyond State or national boundaries if he or his family moves
beyond such boundaries under military orders and notifies the creditor,
in advance of the removal, of the new address where the security will be
located. Removal of the security shall not accelerate payment of the
obligation.
(e) No late charge shall be made in excess of 5 percent of the late
payment, or $5 whichever is the lesser amount. Only one late charge may
be made for any tardy installment. Late charges will not be levied where
an allotment has been timely filed, but payment of the allotment has
been delayed.
(f) The obligation may be paid in full at any time or through
accelerated payments of any amount. There shall be no penalty for
prepayment and in the event of prepayment, that portion of the finance
charges which have insured to the benefit of the seller or creditor
shall be prorated on the basis of the charges which would have been
ratably payable had finance charges been calculated and payable as equal
periodic payments over the term of the contract, and only the prorated
amount to the date of prepayment shall be due. As an alternative, the
``Rule of 78'' may be applied, in which case its operation shall be
explained in the contract.
(g) No charge shall be made for an insurance premium or for finance
charges for such premium unless satisfactory evidence of a policy, or
insurance certificate where State insurance laws or regulations permit
such certificates to be issued in lieu of a policy, reflecting such
coverage has been delivered to the debtor within 30 days after the
specified date of delivery of the item purchased or the signing of a
cash loan agreement.
(h) If the loan or contract agreement provides for payments in
installments, each payment, other than the down payment, shall be in
equal or substantially equal amounts, and installments shall be
successive and of equal or substantially equal duration.
(i) If the security for the debt is repossessed and sold in order to
satisfy or reduce the debt, the repossession and resale will meet the
following conditions:
(1) The defaulting purchaser will be given advance written notice of
the intention to repossess;
(2) Following repossession, the defaulting purchaser will be served
a complete statement of his obligations and adequate advance notice of
the sale;
(3) He will be permitted to redeem the item by payment of the amount
due before the sale, or in lieu thereof submit a bid at the sale;
(4) There will be a solicitation for a minimum of three sealed bids
unless sold at auction;
(5) The party holding the security, and all agents thereof are
ineligible to bid;
(6) The defaulting purchaser will be charged only those charges
which are reasonably necessary for storage, reconditioning, and resale;
and
(7) He shall be provided a written detailed statement of his
obligations, if any, following the resale and promptly refunded any
credit balance due him, if any.
(j) A contract for personal goods and services may be terminated at
any time before delivery of the goods or services without charge to the
purchaser. However, if goods made to the special order of the purchaser
result in preproduction costs, or require preparation for delivery, such
additional costs will be listed in the order form or contract. No
termination charge will be made in excess of this amount. Contracts for
delivery at future intervals
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may be terminated as to the undelivered portion, and the purchaser shall
be chargeable only for that proportion of the total cost which the goods
or services delivered bear to the total goods called for by the
contract. (This is in addition to the right to rescind certain credit
transactions involving a security interest in real estate provided by
section 125 of the Truth-in-Lending Act, Pub. L. 90-321 (15 U.S.C. 1601)
and Sec. 226.9 of Regulation Z (12 CFR part 226).