[Federal Register Volume 62, Number 32 (Tuesday, February 18, 1997)]
[Notices]
[Pages 7232-7233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3911]
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FEDERAL TRADE COMMISSION
[File No. 932-3023]
The Money Tree, Inc.; Vance R. Martin; 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 require, among other things, the Georgia-
based money lender and its president to send a notice to all of its
current customers offering them the opportunity to cancel the credit-
life, credit-disability, and accidental death and disbursement
insurance coverages written on their loans, and to receive cash refunds
or credits. The agreement also prohibits Money Tree and Martin from
requiring consumers to sign statements that credit-related insurance or
auto club memberships are voluntarily purchased if these extras are, in
fact, required to obtain the loan. The complaint accompanying the
consent agreement alleges that Money Tree required consumers to
purchase credit-related insurance and auto club memberships (thus
substantially increasing the cost of their loans) but failed to
disclose to consumers the true cost of their credit, in violation of
the Truth in Lending Act and the Federal Trade Commission Act.
DATES: Comments must be received on or before April 21, 1997.
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:
David Medicine, Federal Trade Commission, S-4429, 6th and Pennsylvania
Ave, NW, Washington, DC 20580. (202) 326-3025.
Rolando Berrele, Federal Trade Commission, S-4429, 6th and Pennsylvania
Ave, NW, Washington, DC 20580. (202) 326-3211.
Thomas Kane, Federal Trade Commission, S-4429, 6th and Pennsylvania
Ave, NW, Washington, DC 20580. (202) 326-2304.
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 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 compliant. 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 February 4, 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, N.W., Washington, D.C.
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 Section 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, subject to
final
[[Page 7233]]
approval, to a proposed consent order from The Money Tree, Inc.
(``Money Tree''), and Vance R. Martin, individually and as an officer
of Money Tree (collectively referred to as ``respondents'').
The proposed order would settle charges that Money Tree, which also
does business as Money To Lend, Inc. and Money To Lend, violated the
Truth in Lending Act (``TILA'') and its implementing Regulation Z. The
proposed order would also resolve allegations that Money Tree and Vance
R. Martin violated the Federal Trade Commission Act (``FTC Act'') and
the Fair Credit Reporting Act (``FCRA''). The TILA and Regulation Z
require creditors to provide consumers with written disclosures of the
costs and credit terms associated with loans. Section 5 of the FTC Act
prohibits unfair or deceptive acts or practices in or affecting
commerce. The FCRA requires creditors to provide applicants who are
denied credit due to information contained in a credit report with a
notice containing the name and address of the credit reporting agency
that supplied the report.
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 Money Tree required consumers to
purchase credit-life insurance, credit-disability insurance, accidental
death and dismemberment insurance and/or an auto club membership
(collectively referred to as ``extras'') in connection with its loans,
but (1) failed to include the costs of these extras in the finance
charge and annual percentage rate (``APR'') disclosed to consumers, and
(2) wrongfully included the premiums and fees in the amount financed,
causing customers to pay interest on the premiums and fees for these
extras. These practices, according to the complaint, violate sections
106, 107, and 128 of the Truth in Lending Act (``TILA''), 15 U.S.C.
Secs. 1605, 1606, and 1638, as amended, respectively, and sections
226.4, 226.4(d), 226.22, and 226.18 (b), (d), and (e) of Regulation Z,
12 C.F.R. Secs. 226.4, 226.4(d), 226.22, and 226.18(b), (d) and (e),
respectively.
The complaint further alleges that respondents violated section 5
of the FTC Act, 15 U.S.C. Sec. 45(a), by inducing consumers to execute
documents stating that they voluntarily chose the extras when, in fact,
the extras were mandatory to obtain a loan. Finally, the complaint
alleges that respondents violated section 615(a) of the FCRA, 15 U.S.C.
Sec. 1681m(a), by denying credit to consumers either wholly or partly
because of information in a report from a consumer reporting agency but
failing to: (a) advise the applicant, at the time the applicant was
informed of such adverse action, that the adverse action was based in
whole or in part on information contained in a consumer report; and (b)
supply the applicant with the name and address of the consumer
reporting agency making the report.
The proposed order contains injunctive provisions designed to
remedy the violations charged and to prevent respondents from engaging
in similar acts and practices in the future. Specifically, the order
would require that Money Tree: (1) make all disclosures in accordance
with the TILA; (2) include in the finance charge and the APR disclosed
to consumers the costs of extras that consumers are required to
purchase in connection with their loans; and (3) exclude from the
amount financed disclosed to consumers the costs of extras that
consumers are required to purchase in connection with their loans.
The proposed order would also prohibit respondents from referring
to the availability of any extra without at the same time disclosing
orally: (1) that the consumer has already been approved for the loan,
(2) the amount of the loan, (3) that the extras are optional, (4) that
the consumer's decision about the extras does not affect the amount of
their loan or whether the consumer will receive a loan, (5) the amount
of the premium or fee for each extra, and (6) that Money Tree will add
premiums and fees for the extras to the consumer's loan amount. The
proposed order would further require respondents to provide future
customers with a separate document that states, inter alia, that the
consumer has already been approved for the loan and that the consumer
should not sign the form unless they want to buy one of the extras. The
proposed order would also require that respondents: (a) advise rejected
applicants that they have been denied credit in whole or in part
because of information in a consumer report; and (b) give rejected
applicants the name and address of the consumer reporting agency making
the report.
The proposed order would provide Money Tree customers with an
opportunity to receive refunds. Under the proposed order, Money Tree
must offer its customers an opportunity to cancel the credit-life
insurance, credit-disability insurance, and accidental death and
dismemberment insurance written on their loans and obtain cash refunds
or credits to their accounts.
The purpose of this analysis is to facilitate public comment on the
proposed order, and it is not intended to constitute an official
interpretation of the agreement and proposed order or to modify in any
way its terms.
Donald S. Clark,
Secretary.
[FR Doc. 97-3911 Filed 2-14-97; 8:45 am]
BILLING CODE 6750-01-M