[Federal Register Volume 62, Number 24 (Wednesday, February 5, 1997)]
[Notices]
[Pages 5416-5417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2806]


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FEDERAL TRADE COMMISSION
[File No. 952-3009]


Huling Bros. Chevrolet, Inc.; Huling Buick, Inc.; Huling Bros. 
Chrysler/Plymouth, Inc.; 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 or deceptive acts or practices and unfair methods of 
competition, this consent agreement, accepted subject to final 
Commission approval, would prohibit, among other things, the Seattle-
based automobile dealerships from misrepresenting financing terms and 
would require them to comply with federal laws mandating accurate 
disclosure of the annual percentage rate and monthly payments in 
financed offers and clear and conspicuous disclosure of major 
automobile deal terms. They also agreed not to advertise terms that are 
not actually available to consumers. The Commission had alleged that 
Huling Bros.' advertising understated the true annual percentage rate 
(``APR'') for their financed purchase deals or failed to state the APR 
at all, even though a triggering term appeared in the ads, defeating 
the purpose of the APR as a means for assisting consumers in comparison 
shopping.

DATES: Comments must be received on or before April 7, 1997.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
Charles Harwood, Federal Trade Commission, Seattle Regional Office, 
2896 Federal Building, 915 Second Ave., Seattle, WA 98174 (206) 220-
6350.
George Zweibel, Federal Trade Commission, Seattle Regional Office, 2896 
Federal Building, 915 Second Ave., Seattle, WA 98174. (206) 220-4485

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Sec. 2.34 of the 
Commission's rules of practice (16 CFR 2.34), notice is hereby given 
that the above-captioned 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. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the accompanying complaint. An electronic copy of the 
full text of the consent agreement package can be obtained from the 
Commission Actions section of the FTC Home Page (for January 23, 1997), 
on the World Wide Web, at ``http://www.ftc.gov/os/actions/htm.'' A 
paper copy can be obtained from the FTC Public Reference Room, Room H-
130, Sixth Street and Pennsylvania Avenue, NW., Washington, DC 20580, 
either in person or by calling (202) 326-3627. Public comment is 
invited. Such comments or views will be considered by the Commission 
and will be available for inspection and copying at its principal 
office in accordance with Sec. 4.9(b)(6)(ii) of the Commission's rules 
of practice (16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted an agreement to a 
proposed consent order from respondents Huling Bros. Chevrolet, Inc., 
Huling Buick, Inc., and Huling Bros. Chrysler/Plymouth, Inc.
    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 respondent Huling Bros. Chevrolet has 
disseminated, or caused to be disseminated, advertisements that state 
annual percentage rates as well as monthly payment amounts and vehicle 
sales prices, but in many instances understate the annual percentage 
rates by more than 1/4 of 1 percentage point, in violation of the Truth 
in Lending Act (``TILA'') and Secs. 226.22(a) and 226.24(b) and (c) of 
Regulation Z, and have also engaged in an unfair or deceptive act or 
practice, in violation of section 5(a) of the Federal Trade Commission 
Act (``FTC Act'').
    The complaint also alleges that respondents Huling Bros. Chevrolet, 
Huling Buick, and Huling Bros. Chrysler/Plymouth have disseminated, or 
caused to be disseminated, advertisements that state the amount or 
percentage of any downpayment, the number of payments or period of 
repayment, or the amount of any payment, but fail to state the annual 
percentage rate, in violation of the TILA and Sec. 226.24(c) of 
Regulation Z.
    The complaint also alleges that respondents Huling Bros. Chevrolet 
and Huling Buick have disseminated, or

[[Page 5417]]

caused to be disseminated, advertisements that state conflicting 
monthly payment amounts for the same transaction, thereby failing to 
disclose accurately the terms of repayment, in violation of the TILA 
and Sec. 226.24(c) of Regulation Z, and have also engaged in an unfair 
or deceptive act or practice, in violation of section 5(a) of the FTC 
Act.
    The complaint also alleges that respondents Huling Bros. Chevrolet, 
Huling Buick, and Huling Bros. Chrysler/Plymouth have disseminated, or 
caused to be disseminated, advertisements that state terms of repayment 
(such as monthly payment amounts) or annual percentage rates that are 
not actually arranged or offered by respondents, in violation of the 
TILA and Sec. 226.24(a) of Regulation Z, and have also engaged in an 
unfair or deceptive act or practice, in violation of section 5(a) of 
the FTC Act.
    The complaint also alleges that the respondents have disseminated, 
or caused to be disseminated, advertisements offering new motor 
vehicles that state monthly payment amounts, sale prices, and rebates, 
and which represent that ``College Graduate'' or ``1st Time Buyer'' 
rebates are available in conjunction with a payment plan in which 
monthly payments are at one amount for the first 12 months and are 
approximately double that amount thereafter (``Half Payment Program'). 
According to the complaint, College Graduate and 1st Time Buyer rebates 
are not available to purchasers who choose the Half Payment Program, 
and the respondents have therefore engaged in an unfair or deceptive 
act or practice, in violation of section 5(a) of the FTC Act.
    The complaint also alleges that respondent Huling Buick has 
disseminated, or caused to be disseminated, advertisements that state a 
rate of a finance charge without stating that rate as an ``annual 
percentage rate,'' using that term or the abbreviation ``APR,'' in 
violation of the TILA and Sec. 226.24(b) of Regulation Z.
    The proposed order prohibits respondents Huling Bros. Chevrolet, 
Huling Buick, and Huling Bros. Chrysler/Plymouth, 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 the annual 
percentage rate, the amount of any periodic payment amount, or the 
availability of any advertised credit term; the sale price; or the 
availability of any advertised rebate.
    The proposed order also prohibits the respondents, 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 the respondents, in any 
advertisement to promote any extension of consumer credit, whenever 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 is 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 the 
respondents 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 the respondents, in any 
advertisement to promote any extension of consumer credit, to comply in 
every other respect with the TILA, as amended, and with Regulation Z, 
as amended.
    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 any 
way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 97-2806 Filed 2-4-97; 8:45 am]
BILLING CODE 6750-01-P