Bob Hiam Dodge, Inc

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In THE Marrer OF BOB HIAM DODGE, INC, ET AL. :

CONSENT ORDER, BTO., IN REGARD TO THE: ALLEGED VIOLATION OF THE. -FED- » RAL. TRADE COMMISSION AND: THE TRUTH IN LENDING ACTS | Docket 02258. Complaint, July 19, 1972—Deeision, July 19, 1972-: - Consent order requiring a San Jose, California, new. and used car: dealer to cease violating the Truth in Lending Act by failing to disélose to’ customers the annual percentage: ‘rate accurately; to cease advertising a specific downpayment unless downpayments in that amount are usually and customarily accepted and a specific amount of credit or installment amount unless respondent usually and customarily arranges that credit and installment amount; and by failing to make any other disclosures required by Regulation Z of the said Act.

Complaint Pursuant to the provisions of the Federal Trade Commission Act, and of the Truth in Lending Act and the implementing regulation promulgated thereunder, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Bob Hiam Dodge, Inc., a corporation, and Robert J. Hiam, individually and as an officer of said corporation, hereinafter sometimes referred to as respondents, have violated the provisions of said Acts, and the implementing regulation 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: Paracrapy 1. Respondent Bob Hiam Dodge, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of California with its principal office and place of business located at 1611 North First Street, San Jose, California. Respondent Robert J. Hiam is an officer of the corporate respondent. He formulates, directs and controls the acts and practices of the cor- 146 FEDERAL, TRADE COMMISSION. DECISIONS Complaint 81 F.T.C.

porate .respondent including the acts and practices hereinafter set forth. His address is the same as that of the.corporate respondent. Par. 2. Respondents are now, and for some time last past have been, engaged i in the offering for. sale, sale and distribution of new and used carstothe public...

Par. 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 System.

Par. 4. Subsequent! to July.:1; 1969,: resporidents, in the ordinary course of their business as aforesaid, and in connection with their credit sales, as “credit sale” is defined in’Rebiilation Zi; have caised and are causing customers to execute binding céntracts for the sale of their products. On. these contracts, hereinafter referred to as “the contract,” respondents provide. certain consumer credit cost information. Respondents. do. not. ‘provide | these stomers ‘with | any. other consumer credit cost, . disclosures, By:, and. through se,.of thé - contract, respondents: pes iw eo ‘1s Fail'to disclose’ ‘the'annual percentage rate” accuratély to the aia quarter ‘of"one ‘percent, in accordance with Section 226.5 of Regulation Z, as required by Section 226.8(b) (2) of Regulation Z. 2. Fail to disclose the “annual percentage rate” before the transaction is consummated as required by Section 226.8(a) of Regulation Z. ~ Par. 5. In the ordinary course of their business as aforesaid, respondents cause to be published advertisements of their products as “advertisement” is defined in Regulation Z. These advertisements aid, promote, or assist directly or indirectly extensions of consumer credit in connection with the sale of these products. By and through the use of the advertisements, respondents:

1. State that specific credit amounts and monthly installment amounts can be arranged, when in truth and in fact respondents do not customarily arrange for and will not arrange for credit and monthly installments in the advertised amounts, thereby violating Section 226.- 10(a) (1) of Regulation Z.

2. State that .a specified downpayment will be accepted i in connection with extensions of credit, when in truth and in fact respondents do not customarily accept and will not accept downpayments in the advertised amounts, thereby violating Section 226.10(a) (2) of Regulation Z.

Par. 6. Pursuant to Section 103(q) of the Truth in Lending Act, respondents’ aforesaid failures to comply with the provisions of Regu- ‘ BOB HIAM DODGE, INC., ET. AL. 147 445 , Decision and Order lation Z constitute violations of that Act and, pursuant to Section 108 thereof, respondents have thereby violated the Federal Trade Commission Act.

Decision, AND Onper- - The Federal Trade Commission having initiated an investigation of certain acts:and practices of the respondents named-in the caption hereof, andthe respondents having: been furnished thereafter with a copy. of a draft of complaint which the San Francisco Regional Office ‘proposed to present td the Commission for its consideration and which, if issued: by-the‘Commission; would charge respondents with violation of the Federal Trade Comimission: ‘Act’ and the Truth i in \ Lending Act and the regulations promulgated thereunder; and ©) 0": : “The: ‘réspondents' ‘and counsel for the: Commission’ having thereafter executed’ an agreément’ 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 (380) days, now in further conformity with the procedures prescribed in Section 2.34(b) of its rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order:

1. Respondent Bob Hiam Dodge, Inc., is a corporation organizeu, existing and doing business under and by virtue of the laws of the State of California, with its office and principal place of business located at 1611 North First Street, city of San Jose, State of California.

Respondent Robert J. Hiam is an officer of said corporation, He formulates, directs and controls the policies, acts and practices of said corporation, and his principal office and place of business is located at the above stated address.

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.

‘148 FEDERAL TRADE COMMISSION DECISIONS Decision and Order 81 F.T.C.

. ORDER It is ordered, That respondents Bob Hiam Dodge, Inc., a corporation, its successors and assigns, and its officers, and Robert J. ‘Hiam, individually and as an officer of said corporation, and respondents’ agents, representatives and employees, directly or through any corporation, subsidiary, division 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 - C.F.R. § 226) of the Truth in Lending Act (Pub. L. 90-821, 15 U.S.C. 1601 e¢ seg.) , do forthwith cease and desist from: _ ‘ ot 1. Failing to disclose the “annual percentage rate” accurately to the nearest quarter of one percent, in accordance with Section 226.5 of Regulation Z, as required by Section 226.8(b) (2) of Regulation Z. ., Bate 2. Failing to disclose the “annual percentage rate” before the transaction is consummated, as required by Section 226.8 (a). of Regulation Z. , SO 3. Stating, in any advertisement, that a specific amount of credit and installment amount can be arranged, unless respondents usually and customarily arrange or will arrange credit and © installments in that amount, as required by Section 226.10(a) (1) of Regulation Z.

4. Stating, in any advertisement, that a specified downpayment will be accepted in connection with any extension of credit, unless respondents usually and customarily accept or will accept downpayments in that amount, as required by Section. 226.10(a) (2) of Regulation Z.

5. 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.

It 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 as further ordered, That respondents notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of “* GIOZIS IMPORTS, ‘INC:, ET AL.. :* 149 145 -- '- ‘Complaint:

subsidiaries or any other change i in the corporation which may affect compliance obligations arising out of the order.:: It is further ordered, That the individual respondents named herein promptly notify the: Commission of the discontinuance of his present business or employment ‘and of his affiliation with a new business or employment. Such notice shall include respondent’s current business or employment i in which he is engaged. as well asa ‘description of his * It is further ordered, That the 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 maniier: and form in which they have ® complied with this order. bok. os