[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