[Federal Register Volume 74, Number 10 (Thursday, January 15, 2009)]
[Notices]
[Pages 2594-2595]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-838]


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FEDERAL TRADE COMMISSION

[File No. 082 3034]


Michael Gendrolis dba Good Life Funding.; Analysis of Proposed 
Consent Order 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 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 February 9, 2009.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Good Life Funding, File No. 082 3034,'' to 
facilitate the organization of comments. A comment filed in paper form 
should include this reference both in the text and on the envelope, and 
should be mailed or delivered to the following address: Federal Trade 
Commission/Office of the Secretary, Room 135-H, 600 Pennsylvania 
Avenue, N.W., Washington, D.C. 20580. Comments containing confidential 
material must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with Commission Rule 4.9(c). 16 CFR 
4.9(c) (2005).\1\ The FTC is requesting that any comment filed in paper 
form be sent by courier or overnight service, if possible, because U.S. 
postal mail in the Washington area and at the Commission is subject to 
delay due to heightened security precautions. Comments that do not 
contain any nonpublic information may instead be filed in electronic 
form by following the instructions on the web-based form at (http://secure.commentworks.com/ftc-GoodLifeFunding). To ensure that the 
Commission consider an electronic comment, you must file it on that 
web-based form.
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
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    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC website, to the extent 
practicable, at www.ftc.gov. As a matter of discretion, the FTC makes 
every effort to remove home contact information for individuals from 
the public comments it receives before placing those comments on the 
FTC website. More information, including routine uses permitted by the 
Privacy Act, may be found in the FTC's privacy policy, at (http://www.ftc.gov/ftc/privacy.shtm).

FOR FURTHER INFORMATION CONTACT: Carole Reynolds, Bureau of Consumer 
Protection, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580, (202) 
326-3230.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 of 
the Commission 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 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 January 8, 2009), on the World Wide Web, at (http://www.ftc.gov/os/2009/01/index.htm). A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, Washington, 
D.C. 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order to Aid Public Comment

    The Federal Trade Commission (``FTC'') has accepted, subject to 
final approval, an agreement containing a consent order from Michael 
Gendrolis dba Good Life Funding (``respondent'').
    The proposed consent order has been placed on the public record for 
thirty (30) days for the receipt of comments by interested persons. 
Comments received during this period will become part of

[[Page 2595]]

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.
    The complaint alleges that respondent engaged in practices that 
violate Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. 
Sec.  45(a), Section 144 of the Truth in Lending Act (``TILA''), 15 
U.S.C. Sec.  1664, and Section 226.24 of Regulation Z, 12 C.F.R. Sec.  
226.24.
    Section 5(a) of the FTC Act prohibits unfair or deceptive acts or 
practices. Respondent violated Section 5(a) of the FTC Act, because it 
disseminated or has caused to be disseminated home loan advertisements 
which offer a low monthly payment amount and/or payment rate, but fail 
to disclose, or fail to disclose adequately, that this monthly payment 
amount and/or payment rate: (1) apply only for a limited period of 
time, after which they will increase; (2) do not include the amount of 
interest that the consumer owes each month; and (3) are less than the 
monthly payment amount (including interest) and/or the interest rate 
that the consumer owes, with the difference added to the total amount 
due from the consumer or total loan balance. This information would be 
material to consumers shopping for a mortgage loan and the failure to 
disclose, or failure to disclose adequately, this information is a 
deceptive practice.
    TILA and Regulation Z require that closed-end credit advertisers 
who state a periodic payment amount must also provide additional 
information in the advertisement, including the terms of repayment; the 
annual percentage rate (``APR''); and if the APR may be increased after 
consummation, that fact. TILA and Regulation Z also require that if an 
advertisement states a rate of finance charge it must state the rate as 
an APR. Currently, Regulation Z also requires that if the advertisement 
states a payment rate, it must include additional disclosures. 
Respondent's advertisements failed to disclose, or failed to disclose 
clearly and conspicuously, this information required by TILA and 
Regulation Z. Respondent's failure to disclose this information 
undermined consumers' ability to compare these offers to others in the 
marketplace. Through its law enforcement actions, the Commission 
intends to promote compliance with the disclosure requirements of TILA 
and Regulation Z, and to foster comparison shopping for mortgage loans.
    The proposed consent order contains provisions designed to prevent 
respondent from violating the FTC Act or failing to make clear and 
conspicuous disclosures required by TILA and Regulation Z, as has been 
amended, see 73 Fed. Reg. 44,522 (July 30, 2008), and as may be further 
amended in the future.
    Part I of the proposed order prohibits respondent, in connection 
with closed-end credit, from advertising a monthly payment amount 
unless respondent discloses, clearly and conspicuously and in close 
proximity to those representations, as applicable, that the advertised 
monthly payment amount: (1) applies only for a limited period of time, 
after which it will increase; (2) does not include the amount of 
interest that the consumer owes each month; and (3) is less than the 
monthly payment amount (including interest) that the consumer owes, 
with the difference added to the total amount due from the consumer or 
total loan balance.
    Part II of the proposed order prohibits respondent, in connection 
with closed-end credit, from advertising a rate lower than the rate at 
which interest is accruing, regardless of whether the rate is referred 
to as an ``effective rate,'' a ``payment rate,'' a ``qualifying rate,'' 
or any other term, provided that this provision does not prohibit 
advertisement of the ``annual percentage rate'' or ``APR.'' In light of 
respondent's deceptive use of payment rates in its advertisements, and 
the Federal Reserve Board's amendments to Regulation Z banning the use 
of such rates effective October 1, 2009, the proposed order prohibits 
respondent from advertising any such rate, to ensure that respondent's 
advertisements do not deceive consumers. See 73 Fed. Reg. at 44,608.
    Part III of the proposed order prohibits respondent, in connection 
with consumer credit, from making representations about the consumer's 
current lender unless respondent adequately discloses respondent's name 
and identity as the entity offering the loan.
    Part IV of the proposed order prohibits respondent, in connection 
with closed-end credit, from advertising the amount of any payment, the 
number of payments or the period of repayment, or the amount of any 
finance charge, without disclosing, clearly and conspicuously, all of 
the terms required by TILA and Regulation Z, including the terms of 
repayment; the APR; and if the APR may be increased after consummation, 
that fact.
    Part V of the proposed order prohibits respondent, in connection 
with closed-end credit, from stating a rate of finance charge without 
stating the rate as an APR, as required by TILA and Regulation Z.
    Part VI of the proposed order prohibits respondent from failing to 
comply in any respect with TILA or Regulation Z.
    Part VII of the proposed order contains a document retention 
requirement, the purpose of which is to ensure compliance with the 
proposed order. It requires that respondent maintain all records that 
will demonstrate compliance with the proposed order.
    Part VIII of the proposed order requires respondent to distribute 
copies of the order to various principals, officers, directors, and 
managers, and all current and future employees, agents and 
representatives having responsibilities with respect to the subject 
matter of the order.
    Part IX of the proposed order requires respondent to notify the 
Commission of any changes in its corporate structure that might affect 
compliance with this order.
    Part X of the proposed order requires respondent to file with the 
Commission one or more reports detailing compliance with the order.
    Part XI of the proposed order is a ``sunset'' provision, dictating 
the conditions under which the order will terminate twenty years from 
the date it is issued or twenty years after a complaint is filed in 
federal court, by either the United States or the FTC, alleging any 
violations of the order.
    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.
[FR Doc. E9-838 Filed 1-14-09: 8:45 am]
BILLING CODE 6750-01-S