[Federal Register Volume 65, Number 164 (Wednesday, August 23, 2000)]
[Notices]
[Pages 51321-51322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-21471]


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FEDERAL TRADE COMMISSION

[File No. 992 3121]


FirstPlus Financial Group, Inc.; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before September 18, 2000.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 600 Pennsylvania Ave., NW, Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: William Haynes, FTC/S-4429, 600 
Pennsylvania Ave., NW, Washington, D.C. 20580. (202) 326-3107.

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

[[Page 51322]]

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 thirty (30) days. The following Analysis to Aid 
Public Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for August 17, 2000), on the World Wide Web, at ``http://www.ftc.gov/
ftc/formal.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, 600 Pennsylvania Avenue, NW, Washington, 
D.C. 20580, either in person or by calling (202) 326-3627.
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW, 
Washington, D.C. 20580. Two paper copies of each comment should be 
filed, and should be accompanied, if possible, by a 3\1/2\ inch 
diskette containing an electronic copy of the comment. 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 to a 
proposed consent order from FirstPlus Financial Group, Inc. 
(``FirstPlus'').
    The proposed consent order has been placed on the public record for 
thirty (30) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) 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.
    Through direct mail, television, and online advertisement, 
FirstPlus has disseminated information promoting high loan-to-value 
(``HLTV'') loans, home equity loans, and other types of consumer credit 
transactions. The complaint alleges that many of these advertisements 
are deceptive and misleading, and violate various provisions of the 
.Federal Trade Commission Act (``FTC. Act''), the Truth in Lending Act 
(``TILA''), and Regulation Z. Specifically, the complaint alleges that 
FirstPlus: (1) Falsely represented in its advertising that consumers 
would save money when consolidating existing debts in a FirstPlus loan 
and that the examples shown in FirstPlus's advertising accurately 
illustrate potential monthly savings; (2) falsely represented that each 
consumer receiving a solicitation from the company would actually 
receive a loan; (3) misrepresented that consumers would receive loans 
for the full amount states in the company's advertisement; (4) failed 
to adequately disclose credit terms for its loan products; and (5) 
failed to disclose clearly and conspicuously key information about the 
terms of its credit offers as required by the TILA and Regulation Z.
    The proposed consent order (1) prohibits FirstPlus from 
misrepresenting the comparative or absolute savings or benefits of 
consolidating debt, including misrepresenting the circumstances under 
which consumers can save money when consolidating, and misrepresenting 
the monthly savings consumers will realize over the extended life of 
the FirstPlus loan; (2) prohibits FirstPlus from misrepresenting an 
individual's eligibility to receive a loan; (3) prohibits FirstPlus 
from misrepresenting the amount of loan proceeds to be disbursed to 
consumers, or misrepresenting the amount of proceeds to be disbursed on 
consumers' behalf to third parties; (4) prohibits FirstPlus from 
stating the savings or benefits of a FirstPlus loan, as compared to 
other consumer credit transactions, without disclosing accurately, 
clearly, and conspicuously all material information needed by consumers 
to evaluate the comparison; (5) prohibits FirstPlus from using an 
example of the cost savings or benefits of a FirstPlus loan, as 
compared to other consumer credit transactions, without basing the 
example on reasonable assumptions regarding average annual percentage 
rates and repayment terms for comparable credit transactions; and (6) 
requires FirstPlus to comply with the disclosure requirements of the 
TILA and Regulation Z when stating the amount or percentage of any down 
payment, the number of payments or period of repayment, the amount of 
any payment, or the amount of any finance charge.
    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 their terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.

Statement of Chairman Robert Pitofsky and Commissioner Mozelle W. 
Thompson

    This matter is the Commission's first action brought against a 
consumer finance company for misrepresenting the savings that consumers 
would gain by consolidating their debts into a high loan-to-value 
(HLTV) loan. Accordingly, this case sends an important law enforcement 
message to companies engaged in this multi-billion dollar financial 
market that the Commission will look closely at HLTV transactions and 
take appropriate action when consumers are victimized by those who omit 
or misrepresent material facts relating to such loans.
    Because this principle is so important, we also note that this case 
does not necessarily establish the full scope of relief that the 
Commission may seek in future cases. While the Commission's order--by 
providing for strong injunctive relief--supplies the full dose of all 
relief feasible in light of this particular respondent's weak financial 
situation, we believe that the Commission may consider pursuing 
additional relief in future cases involving deceptive HLTV loan 
advertising. Specifically, we expect that the Commission, in 
appropriate circumstances, would seek consumer redress or other 
monetary relief.

[FR Doc. 00-21471 Filed 8-22-00; 8:45 am]
BILLING CODE 6750-01-M