Midwestern Construction and Supply Company

Text (OCR of the scan at left; may contain errors)

In THe Matter oF EVERETT EUGENE MILLER rravine 4s MIDWESTERN CONSTRUCTION AND SUPPLY COMPANY CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL COMMISSION AND THE TRUTH IN LENDING ACTS Docket C-1920. Complaint, May 18, 1971—Decision, May 13, 1971 a Tulsa, Okla., individual engaged in the sale and ‘Consent order requiring ng to cease misrepresenting that the distribution of residential aluminum sidi price of his products is special or reduced, failing to disclose the details of his guarantees, misrepresenting certain of his customers’ homes as model homes, failing to disclose to purchasers that their notes may be negotiated to third parties, and failing to make certain disclosures required by Regulation Z of the Truth in Lending Act.

Complaint Pursuant to the provisions of the Federal Trade Commission Act, and of the Truth in Lending Act and the regulations promulgated thereunder, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Everett Eugene Miller, an individual trading as Midwestern Construction and Supply Company, hereinafter referred to as respondent, has violated the provisions of said Acts, and of the regulations promulgated under the Truth in Lending Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows:

Paracrapn 1. Respondent Everett Eugene Miller is an individual trading as Midwestern Construction and Supply Company, with his office and principal place of business located at 2323 East 71st Street, Tulsa, Oklahoma. ;

Par. 2. Respondent is now, and for some time last past has been, engaged in the advertising, offering for sale, sale and distribution of residential aluminum siding products to the general public and in the installation thereof.

COUNT I Alleging violations of Section 5 of the Federal Trade Commission Act, the allegations of Paragraphs One and Two hereof are incorporated by reference in Count I as if fully set forth verbatim. Par. 3. In the course and conduct of his business as aforesaid, MIDWESTERN CONSTRUCTION AND SUPPLY CO. 1017 1016 . Complaint respondent now causes, and for some time last past has caused, his said products, when sold, to be shipped from his place of business in the State of Oklahoma to purchasers thereof located in various other States of the United States, and maintains, and at all times mentioned herein has maintained, a substantial course of trade in said products in commerce, as “commerce” is defined in the Federal Trade Commission Act.

Par. 4. In the course and conduct of his aforesaid business, and for the purpose of inducing the purchase of his products, respondent and his salesmen or representatives have represented, and now represent, directly or by implication, in advertising and promotional material and in oral solicitations to prospective customers that: 1. Respondent's siding materials and/or installations are being offered for sale at special or reduced prices. 2. Respondent’s siding materials and/or installations are wnconditionally guaranteed in every respect without condition or limitation for a lifetime. ;

3. Homes of prospective purchasers have been specially selected as model homes for the installation of the respondent’s products; that after installation such homes will be used for demonstration and advertising purposes by respondent; and, that as a result of allowing their homes to be used as models, purchasers will be granted reduced prices or will receive allowances, discounts or commissions. 4. Respondent’s salesmen are connected or affiliated with the manufacturer of respondent’s products and in many cases specifically deny that they are salesmen or sales representatives of respondent. Par. 5. In truth and in fact: _ 1. Respondent’s siding materials and/or installations are not being offered for sale at special or reduced prices and savings are not thereby afforded respondent’s customers because of a reduction from respondent’s regular selling prices. In fact, respondent does not have a regular selling price but the prices at which respondent's said products and/or installations are sold vary from customer to customer depending on the resistance of the prospective purchasers. 2. Respondent’s siding materials and/or installations are not unconditionally guaranteed in every respect without conditions or limitations for a lifetime or for any other period of time. Such guarantee as may be provided is subject to numerous terms, conditions and limitations, and fails to set forth the nature and extent of the guarantee, the identity of the guarantor and the manner in which the guarantor will perform thereunder. Furthermore, in a substantial number of cases, respondent or his salesmen fail to furnish any written guarantee to the customer.

Complaint 78% F.T.C.

3. Homes of prospective purchasers are not specially selected as model homes for the installation of respondent’s products, after installations such homes are not used for demonstration and advertising purposes by respondent; and purchasers as a result of allowing or agreeing to allow their homes to be used as models are not granted reduced prices nor do they receive allowances, discounts or commissions.

4. Respondent’s salesmen are not connected or affiliated with the manufacturer of respondent’s products and are in fact sales representatives for respondent.

Therefore, the statements and representations as set forth in Paragraph Four hereof were and are false, misleading and deceptive. Par. 6. In the further course and conduct of his business, and in furtherance of a sales program for inducing the purchase of his residential siding materials, respondent and his salesmen or representatives have engaged in the following additional unfair and false, misleading and deceptive acts and practices: 1. In a. substantial number of instances and in the usual course of his business, respondent sells and transfers his customers’ obligations, procured by the aforesaid unfair, false, misleading and deceptive. means, to various financial institutions. In any subsequent legal action to. collect on. such obligations, these financial institutions or other third parties, as a general rule, have available and can interpose various defenses which may cut off certain valid claims customers may have against respondent for his failure to perform or for certain other unfair, false, misleading or deceptive acts and practices.

Therefore, the acts and practices as set forth in Paragraph Six hereof, were and are unfair and false, misleading and deceptive acts and practices.

Par.,7. In the course and conduct of his aforesaid business, and at all times mentioned herein, respondent has been, and now is, in substantial competition, in commerce, with corporations, firms and individuals engaged in the sale of products of the same general kind and nature as those sold by respondent.

Pan. 8, The use by respondent of the aforesaid false, misleading and deceptive statements, representations and practices has had, and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that such statements.and representations were and are true, and into the purchase of substantial quantities of respondent’s products by reason of said erroneous and mistaken belief.

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Par. 18. By and throug oh ‘the use of respondent’s | contract t per form various home impr nents, a security interest, as: “securit: terest”? 1s: defined in Section. 926.2(z) of Regulation Z, is.or Wi retained or. acquired in real property which is used or “expected ' to be. used as the: principal residence of: ‘the: yespondent’s customers. Re- -spondent’s ‘retention. or acquisition of such security interest: in’ said - real: “property. thereby. entitles his credit customers to. ‘be given the: right to rescind that trans nt of the. third business. — a action. until: midnigl ae ae day. following the: ‘consummation een ce the transaction or the dan of - delivery ofall: the disclosates required by: Regulation: 2 ever is later. AEG:

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88.892960 contract.5 1 34 1 1 2 1536 1438 29 13 15.215775 os5 1 34 1 1 3 1674 1409 57 42 1.363770 Ena4 1 34 1 2 0 1250 1403 515 101 -1 5 1 34 1 2 1 1250 1464 41 40 94.708870 se5 1 34 1 2 2 1302 1457 33 56 96.082596 of5 1 34 1 2 3 1353 1457 52 56 94.549751 thes 1 34 1 2 4 1405 1461 174 42 94.549751 contract,5 1 34 1 2 5 1574 1403 191 92 22.781319 ae2 1 35 0 0 0 1249 1497 720 130 -1 3 1 35 1 0 0 1249 1497 747 101 -1 4 1 35 1 1 0 1249 1497 534 71 -1 5 1 35 1 1 1 1249 1518 98 50 75.683609 fails5 1 35 1 1 2 1352 1515 39 45 96.206398 to5 1 35 1 1 3 1401 1509 150 50 60.368908 discloses 1 35 1 1 4 1568 1507 69 34 96.899414 thes 1 35 1 1 5 1642 1497 141 47 57.002556 annual.4 1 35 1 2 0 1372 1542 597 85 -1 5 1 35 1 2 1 1372 1554 141 73 13.795479 yercents,5 1 35 1 2 2 1509 1557 47 34 79.253662 “as5 1 35 1 2 3 1574 1542 161 84 90.191940 required5 1 35 1 2 4 1737 1550 61 70 70.663300 by5 1 35 1 2 5 1802 1542 142 64 94.757782 Sections 1 35 1 2 6 1953 1549 43 31 21.500717 ae2 1 36 0 0 0 1257 1451 177 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1769 120 79 -1 5 1 41 1 3 1 1940 1769 120 79 95.000000 4 1 41 1 4 0 1866 1851 127 65 -1 5 1 41 1 4 1 1866 1851 127 65 95.000000 2 1 42 0 0 0 1544 1749 36 2 -1 3 1 42 1 0 0 1544 1749 36 2 -1 4 1 42 1 1 0 1544 1749 36 2 -1 5 1 42 1 1 1 1544 1749 36 2 95.000000 2 1 43 0 0 0 1154 1862 70 12 -1 3 1 43 1 0 0 1154 1862 70 12 -1 4 1 43 1 1 0 1154 1862 70 12 -1 5 1 43 1 1 1 1154 1862 70 12 95.000000 2 1 44 0 0 0 641 1875 548 37 -1 3 1 44 1 0 0 641 1875 548 37 -1 4 1 44 1 1 0 641 1875 548 37 -1 5 1 44 1 1 1 641 1906 4 2 95.000000 5 1 44 1 1 2 1108 1875 81 37 95.000000 2 1 45 0 0 0 621 1913 24 2 -1 3 1 45 1 0 0 621 1913 24 2 -1 4 1 45 1 1 0 621 1913 24 2 -1 5 1 45 1 1 1 621 1913 24 2 95.000000 2 1 46 0 0 0 639 1925 6 2 -1 3 1 46 1 0 0 639 1925 6 2 -1 4 1 46 1 1 0 639 1925 6 2 -1 5 1 46 1 1 1 639 1925 6 2 95.000000 2 1 47 0 0 0 612 1932 1246 73 -1 3 1 47 1 0 0 612 1932 1246 73 -1 4 1 47 1 1 0 612 1932 1246 73 -1 5 1 47 1 1 1 612 1934 35 71 95.000000 5 1 47 1 1 2 1806 1932 52 3 95.000000 2 1 48 0 0 0 1768 2175 271 310 -1 3 1 48 1 0 0 1768 2175 271 310 -1 4 1 48 1 1 0 1867 2175 108 72 -1 5 1 48 1 1 1 1867 2175 108 72 95.000000 4 1 48 1 2 0 1768 2247 207 72 -1 5 1 48 1 2 1 1768 2247 207 72 95.000000 4 1 48 1 3 0 1827 2319 144 57 -1 5 1 48 1 3 1 1827 2319 144 57 95.000000 4 1 48 1 4 0 1827 2379 212 68 -1 5 1 48 1 4 1 1827 2379 212 68 95.000000 4 1 48 1 5 0 1900 2447 135 38 -1 5 1 48 1 5 1 1900 2447 135 38 95.000000 2 1 49 0 0 0 1739 2212 35 36 -1 3 1 49 1 0 0 1739 2212 35 36 -1 4 1 49 1 1 0 1742 2212 32 14 -1 5 1 49 1 1 1 1742 2212 32 14 95.000000 4 1 49 1 2 0 1739 2226 35 22 -1 5 1 49 1 2 1 1739 2226 35 22 95.000000 2 1 50 0 0 0 1492 2307 72 42 -1 3 1 50 1 0 0 1492 2307 72 42 -1 4 1 50 1 1 0 1492 2307 72 42 -1 5 1 50 1 1 1 1492 2307 72 42 95.000000 2 1 51 0 0 0 1136 2426 44 10 -1 3 1 51 1 0 0 1136 2426 44 10 -1 4 1 51 1 1 0 1136 2426 44 10 -1 5 1 51 1 1 1 1136 2426 44 10 95.000000 2 1 52 0 0 0 1129 2443 809 196 -1 3 1 52 1 0 0 1129 2443 809 196 -1 4 1 52 1 1 0 1129 2443 809 196 -1 5 1 52 1 1 1 1129 2443 809 196 95.000000 Decision and Order 78 F.T.C.

customer the date by which the customer may give notice of cancellation, as required by Section 226.9(b) of Regulation Z. Respondent has caused the following additional information and clause to appear in the contract :

Owners agree(s) that in the event of cancellation of this contract by owner (s) before work is Started, owner(s) shall pay to contractor on demand twenty five (25%) of the contract price as its stipulated damages for the breach.

By and through the use of the above-quoted additional information and clause, respondent has and is representing to his customers that they are liable for damages in the event. that these customers exercise their right to rescind, thereby violating Section 296.9 (d) of Regulation Z. And, said additional information is stated and utilized So as to mislead or confuse the customer and contradicts, obscures and detracts attention from the information required by Regulation Z to be disclosed, thereby violating Section 226.6(c) of Regulation Z. Par. 14.-Pursuant to Section 105 of the Truth in Lending Act, respondent's aforesaid failure to comply with the provisions of Regulation Z constitute violations of that Act, and, pursuant to Section 108 thereof, respondent thereby violated the Federal Trade Commission Act.

Decision anv Orper The Commission having heretofore determined to issue its complaint charging the respondent named in the caption hereof with violation of the Federal Trade Commission Act, and the respondent having been served with notice of said determination and with a copy of the complaint the Commission intended to issue, together with a proposed form of order; and The respondent and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all the jurisdictional facts set forth in the complaint to issue herein, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission’s Rules; and The Commission having considered the agreement and having accepted same, and the agreement containing consent order having thereupon been placed on the public record for a. period of thirty (30) days, now in further conformity with the procedure prescribed in § 2.84(b) of its Rules, the Commission hereby issues its complaint in the form contemplated by said agreement, makes the following jurisdictional findings, and enters the following order: MIDWESTERN CONSTRUCTION AND SUPPLY CO. 1021 1016 Decision and Order 1. Respondent, Everett Eugene Miller, is an individual trading as Midwestern Construction and ‘Supply Company, with his office and principal place of business located at 2328 East 71st Street, Tulsa, Oklahoma.

Respondent Everett Eugene Miller formulates, directs and controls the policies, acts and practices of said company. 9. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER It is ordered, That Everett Eugene Miller, an individual trading as Midwestern Construction and Supply Company, or under any other name or names, and respondent’s representatives, agents and employees, directly or through any corporate or other device, in connection with the advertising, offering for sale, sale, distribution or installation of residential aluminum siding or other home improvement products or services or any other products, in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing, directly or by implication, that any price for respondent’s products and/or installations is a special or reduced price, unless such price constitutes.a significant reduction from an established selling price at which such products and/or installations have been sold in substantial quantities by respondent in the recent regular course of his business; or misrepresenting, in any manner, the savings available to purchasers. 2. Representing, directly or by implication, that any: of respondent’s products and/or installations are guaranteed, unless the nature and extent of the guarantee, the identity of the guarantor and the manner in which the guarantor will perform thereunder are clearly and conspicuously disclosed; or making any direct or implied representations that any of respondent’s products and/or installations are guaranteed unless in each instance a written guarantee is given to the purchaser containing provisions fully equivalent to those contained in such representations.

3. Representing, directly or by implication, that the home of any of respondent’s customers or prospective customers has been selected to be used or will be used as a model home, or otherwise, for advertising purposes.

4, Representing, directly or by implication, that any reduced price, allowance, discount, commission or other compensation is Decision and Order 78 E.T.C.

granted by respondent to purchasers in return for permitting or agreeing to allow the premises on which respondent’s products are installed to be used for model homes or demonstration purposes.

5. Representing, directly or by implication, that respondent’s salesmen or sales representatives are connected or affiliated with the manufacturer of respondent’s products, or misrepresenting the business connections or affiliations of respondent or his salesmen or sales representatives.

6. Failing to disclose prior to the time of sale in writing on ary conditional sales contract or other similar instrument executed by a purchaser, and with such conspicuousness and clarity as is likely to be observed and read by such purchaser, that: “Any such instrument, at respondent’s option and without notice to the purchaser, may be discounted, negotiated or assigned to a finance company or other third party to whom the purchaser will thereafter be indebted and against whom the purchaser’s claims or defenses will not be available.” I It is further ordered, That respondent Everett Eugene Miller, an individual trading as Midwestern Construction and Supply Company, or trading or doing business under any other name or names, and respondent’s representatives, agents and employees, directly or through any corporate or other device, in connection with the consumer credit sale of home improvement products or services, or any other products or services, as “credit sale” is defined in Regulation Z (12.CFR Part 226) of the Truth in Lending Act (Public Law 90-391, 15 U.S.C. 1601 e¢ seq.), forthwith cease and desist from: 1. Failing to disclose the annual percentage rate, where and when required by Regulation Z to be used, to the nearest quarter of one percent, in accordance with Section 226.5(b) (1) of Regulation Z.

2. Failing to disclose the date on which the finance charge begins to accrue when that date is different from the date of the transaction, as required by Section 226.8(b)(1) of Regulation Z.

3. Failing to disclose to the customer the date by which the customer may give notice of cancellation of the transaction, that date being not earlier than the third business day following the date of the transaction, in accordance with Section 226.9(b) of Regulation Z.

a ee Ty ata LULO 1016 Complaint 4. Representing, directly or by implication, on retail installment contracts, promissory notes, or on any written document, or orally, that customers. will or may be liable for damages, penalties or any other charges for exercising their right to rescind that is provided by Section 226.9 of Regulation Z. 5. Supplying any additional information, contract clause or other statement about the customer’s liability or obligations in the event that the customer exercises his right to rescind except that information furnished in accordance with Section 226.9 of Regulation Z.

6. Supplying any. additional information, in writing or orally, that is stated, utilized or placed so as to mislead or confuse the customer or that contradicts, obscures or detracts attention from the information that is required to be disclosed by Regulation Z. 7. Engaging in any consumer credit transaction within the meaning of Regulation Z of the Truth in Lending Act without making all disclosures that are required by Sections 226.8 and 226.9 of Regulation Z in the amount, manner and form therein specified.

IIT lt ts further ordered, That respondent shall forthwith deliver a copy of this order to cease and desist to all present and future salesmen or other persons engaged in the sale of respondent’s products or services, and shail secure from each such salesman or other person a signed statement acknowledging receipt of said order. It is further ordered, That. the respondent herein’ shall, within sixty (60) days after service upon him of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which he has complied with this order.