Happy Motors, Inc

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

In toe Marrer or HAPPY MOTORS, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF 'TH BE TRUTIL IN LENDING AND THE FEDERAL TRADE COMMISSION ACT Docket C-2111. Complaint, Dee. 2, 191—Decision, Dee. 1971 Consent order requiring a used car dealer of Miami, Fla., to cease violating the Truth in Lending Act by failing, in consumer credit transactions, to make all disclosures on the “Order Contract” in the form, manner, and amount. required by Regulation Z of the Act.

G ‘Complaint 79 F.T.C.

Complaint Pursuant to the provisions of the Truth in Lending Act and the implementing regulation promulgated thereunder, and the Federal Trade Commission Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Happy Motors, Inc., a corporation, and Ray B. Hoadley, individually and as an officer of said corporation, hereinafter referred to as respondents, have violated the provisions of said Acts and implementing regulation, 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: Paracrapy 1. Respondent Happy Motors, Inc., is a corporation organized, existing and doing business under and by" virtue of the laws of the State “of Florida, with its principal office and place of business located at 1068 N.W. 36th Street, Miami, Florida. Respondent Ray B. Hoadley is an officer of the corporate respondent. He formulates, directs and controls the policies, acts and practices of the corporation, including the acts and practices hereinafter.set forth. | Tlis address is the same as that of the corporate respondent. Par. 2. Respondents are now, and for some time last past have been, engaged in the offering for sale and retail sale and distribution of used cars to the public.

Pir. 3..In.the ordinary course and conduct of their business as aforesaid, respondents regularly extend consumer credit, as “consumer credit” is defined in Regulation Z, the implementing regulation of the Truth in Lending Act, duly promulgated by the Board of Governors of the Federal Reserve: ‘Sy stem.

Par. 4. Subsequent to July 1, 1969, respondents, in ‘the ordinary course of: business as aforesaid, ‘and in connection with their credit sales, as “credit sale” is defined in Regulation Z, have caused and are causing customers to execute a binding Used Car Order Contract, hereinafter referred to as the “Order Contract.” Respondents do not provide these customers with any other consumer credit cost disclosures.

By and through the use of the Order Contract, respondents: 1. Fail to nse the term “cash price,” as defined in Section 226.2(i) of Xegulation Z, to describe the purchase price of the automobile, as reqiured by Section 226.8 (c) (1) of Regulation Z 2, Fail to use the term “cash downpayment” to describe the downpayment in money made in connection with the credit sale, as required by Section 226.8(c) (2) of Regulation Z.

G 845 Complaint 3. Fail to use the term “trade-in” to describe the dow vnpayment in property made in connection with the credit sale, as require ed iby Section 226.8 (c) (2) of Regulation Z.

4, Fail to use the term “total dow npayment” to describe the sum of the “cash price” and “trade-in,” as required by Section 226. S(e) (2) of Regulation Z. :

5. Fail to use the term “unpaid balance of cash price” to describe the difference between the cash price and the total downpayment as required by Section 226.8 (c) (3) of Regulation Z. : 6. Fail to use the term “amount financed” to describe the amount of credit extended as required by Section 226.8(c) (7) of Regulation Z. 7. Fail to use the term “finance charge” to describe the sum of all charges ‘required by Section 226.4 of Regulation Z to be included therein, as required by Section 226.8(c) (8) (1) of Regulation Z. 8. Fail to disclose the sum of the cash price, all charges which are included in the amount financed but which are not part of the finance charge, and the finance charge, and to describe that sum as the “deferred payment prices,” as required by Section 226.8(c) (8) (ii) of Regulation Z.

9. Fail to disclose the annual percentage rate, computed in accordance with Section 226.5 of Regulation Z, as required by Section 226.8(b) (2) of Regulation Z.

10. Fail in some instances to disclose the number of payments scheduled to repay the indebtedness, as required by Section 226.8 (b) (3) of Regulation Z. :

11. Fail to use the term “total of payments” to describe the sum of the payments scheduled to repay the indebtedness, as required by Section 226.8 (b) (3) of Regulation Z.

12. Fail to identify the amount or the method of computing the amount of any default, delinquency or similar charge payable in the event of late payments, as required by Section 226.8 (b) (4) of Regulation Z.

13. Fail to describe the type of any security interest held or to be retained or acquired by the creditor in connection with the extension of credit, as required by Section 226.8(b) (5) of Regulation Z. 14. Fail to identify the method of computing any unearned portion of the finance charge in the event of prepayment of the obligation, as required by Section: 226.8(b) (7) of Regulation Z. Par. 5. Pursuant to Section 103(q) of the Truth in Lending Act, respondents’ aforesaid failures to comply with the provisions of Regulation Z constitute violations of that Act and, pursuant to Section 108 thereof, respondents have thereby violated the Federal Trade Commission Act.

Decision and Order 79 F.T.C.

Decision AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the. respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Atlanta Regional Office proposed to present to the Commission for its consideration. and which, it issued by the Commission, would charge respondents with violation of the Truth in Lending Act and the implementing regulation promulgated thereunder, and the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is ‘for settlement. purposes only and does not constitute an admission by respondents 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 thereafter considered the matter and having determined that it had reason to believe that the respondents have violated. the said Acts, and that complaint should issue.stating its charges in that respect, and having thereupon accepted the executed consent.agreement and placed such agreement on the public record for a period. of thirty (80) days, now in further conformity with the procedure prescribed in Section 2.34(b) of the rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the folowing order:

1. Respondent Happy Motors, Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Florida, with its office and principal place of business located at 1068 N.W. 36th Street, Miami, Florida.

Respondent Ray B. Hoadley is an individual and is president of Happy Motors, Inc. He directs, formulates, and controls the acts and practices of the respondent corporation including the acts and practices under investigation.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

‘ ORDER [t is ordered, That respondents Happy Motors, Inc., a corporation, and its officers, and Ray B. Hoadley, individually and as an officer of said corporation, and respondents’ agents, representatives and em- G 845 Decision and Order ployees, directly or through any corporate or other device, in connection with any extension of consumer credit or advertisement to aid, promote or assist directly or indirectly any extension of ‘consumer credit, as “consumer credit,” and “advertisement” are defined in Regulation Z (12 CFR § 226) of the Truth in Lending Act (Public Law 90-321, 15 U.S.C. 1601 et. seq.), do forthwith cease and desist from: 1. Failing to use the term “cash price,” as defined in Section 226.2(1), to describe the purchase price of the automobile, as required by Section 226.8 (c) (1) of Regulation Z. moe . Failing to use the term “cash downpay ment” to describe the downpayment im money made in connection with the credit sale, as required by Section 226.8 (c) (2) of Regulation Z. 3. Failing to use the term “trade-in” to describe the: downpayment in property made in connection with the credit’ sale, as required by Section 226.8 (c) (2) of Regulation Z. 9 4. Failing to use the term “total downpay ment” to describe the sum of the “eash price” and the “trade-in,” as required by Section 226.8(c) (2) of Regulation Z. , oe 5. Failing to use the term “anpaid balance of cash “price” to describe the difference between the cash price and the total downpayment, as required by Section 226.8(c)(3) of Regulation Z. 6. Failing to use the term “amount financed” to describe the amount of credit extended as required by Section 226. 8(c) (7) of Regulation Z.

_ 1%. Failing to use the term “finance charge” to describe the sum of all charges required by Section 226.4 of. Regulation'Z to be included therein, as required by Section 226. 8(c) (8) (i) of Regulation Z.

8. Failing to disclose the sum of the cash price, all charges which are included i in the amount financed but which are not part of the finance charge, and the finance charge, and to déseribe that sum as “deferred payment price” as required by Section 226.8 (c) (8) (31) of Regulation Z.

9. Failing to disclose the annual percentage rate, computed in accordance with Section 226.5 of Regulation Z, as required by Section 226.8(b) (2) of Regulation Z.

10. Failing to disclose the number of payments scheduled to repay the’ indebtedness, as required by Section 226.8(b) (3) of Regulation Z.

11. Failing to use the term “total of payments” to describe the sum of the payments scheduled to repay the indebtedness, as required by Section 226.8(b) (3) of Regulation Z. ae Decision and Order 9 ELC.

12. Failing to identify the amount or the method of computing the amount of any default, delinquency or similar charge payable in the event of late payments, as required by Section 226.8 (b) (4) of Regulation Z.

13. Failing to describe the type of any security interest held or to be retained or acquired by the creditor in connection with the extension of credit, as required by Section 226.8(b) (5) of Regulation Z. , 14, Failing to identify the method of computing any unearned . portion of the finance charge in the event of prepayment of the obligation as required by Section 226.8(b) (7) of Regulation Z. 15. Failing in any consumer credit transaction or advertising .to.make all disclosures determined in accordance with Sections | 226.4 and 226.5 of Regulation Z at the time and in the manner, form, and amount required by Sections 226.6, 226.8 and 226.10 of Regulation Z.

[t is, further ordered, That respondents deliver a copy of this order to cease and desist to each operating division and to all present and future personnel of respondents engaged in the consummation of any extension,.of consumer credit, and that respondents secure a signed statement acknowledging receipt of said order from each such person. It is. further ordered, That respondents notify the Commission at least thirty (80) days prior to any proposed change in the corporate respondent, such as dissolution; assignment or sale, resultant in the emergence of a successor corporation; the creation or dissolution of subsidiaries; or any other change in the corporation which may affect compliance obligations arising out of the order. Tt is further ordered, That respondents shall, within sixty (60) days after service upon them of this order, file with the Commission a report. in writing, setting forth in detail the manner and form in which they have complied with this order.