Sharpe'S Appliance Store, Inc

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IN THE MATTER OF SHARPE’S APPLIANCE STORE, INC., ET AL. CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION AND THE TRUTH IN LENDING ACTS Docket C-2335. Complaint Jan. 4, 1973—Decision, Jan. 4, 1973. Consent order requiring an Atlanta, Georgia, retailer and distributor of furniture and appliances, among other things to cease violating the Truth in Lending Act by failing to disclose to consumers, in connection with the extension of consumer credit, such information as required by Regulation Z of the said Act.

COMPLAINT Pursuant to the provisions of the Truth in Lending Act and the 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 Sharpe’s Appliance Store, Inc., a corporation, and William H. Sharpe, individually and as an officer of said corporation, hereinafter referred to as respondents have violated the provisions of said Acts and 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:

PARAGRAPH 1. Respondent Sharpe’s Appliance Store, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Georgia, with its principal offices and place of business located at 457 Moreland Avenue, N. E., Atlanta, Georgia.

Respondent William H. Sharpe is an officer of the corporate respondent. He formulates, directs and controls the policy, acts and practices of the corporation, 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 Complaint 82 F.T.C.

have been engaged in the advertising, offering for sale and retail sale and distribution of furniture and appliances to the public. Par. 3. In the ordinary course and conduct of their business as aforesaid, respondents regularly extend, and for some time last past have regularly extended, 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, respondents, in the ordinary course and conduct of business and in connection with their credit sales, as “credit sale” is defined in the aforesaid Regulation Z, have caused and are causing customers to execute retail installment contracts, hereinafter referred to as the “contract.” Respondents make no consumer credit cost disclosures other than on the contract.

Par. 5. By and through the use of the contract respondents: 1. Fail, in some instances, to furnish customers with a duplicate of the contract or a statement by which the disclosures are made and the creditor is identified, as required by Section 226.8 (a) of Regulation Z.

2. Fail, in some instances, to disclose the “annual percentage rate,” and fail in some instances 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.

8. Fail, in some instances, to disclose accurately the “total of payments” as the sum of the payments scheduled to repay the indebtedness, as required by Section 226.8(b) (3) of Regulation Z. 4, Failed to disclose the type of security interest on the face of the contract, as required by Section 226.8(a) (1) and (b) (5) of Regulation Z.

5. Fail to identify the “certain conditions’ under which the respondents will rebate the 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.

6. Failed to disclose the “unpaid balance” to describe the sum of the unpaid balance of the cash price and all other charges which are included in the amount financed but which are not part of the finance charge, as required by Section 226.8(c) (5) of Regulation Z.

7. Failed to use the term “finance charge” to describe the sum SHARPE’S APPLIANCE STORE, INC., ET AL. 8 1 Complaint of all charges required by Section 226.4 of Regulation Z to be included therein, as required by Section 226.8(c) (8) (i). 8. Fail, in some instances, to accurately disclose the “deferred payment price” as 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, as required by Section 226.8 (c) (8) (ii) of Regulation Z.

9. Fail, in some credit transactions in which the charge for credit life insurance is included in the “amount financed,” to secure a signed and dated credit life insurance authorization, as required by Section 226.4(a) (5) of Regulation Z. Par. 6. In the ordinary course of their business as aforesaid, respondents have caused to be published advertisements of their goods and services, 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 goods and services. By and through the use of the advertisements, respondents state the period of payment which can be arranged in connection with a consumer credit transaction, without also stating all of the following items in terminology prescribed under Section 226.8 of Regulation Z, as required by Section 226.10(d) (2) thereof:

(i) The cash price;

(ii) The amount of the downpayment required or that no downpayment is required as applicable; (iii) The number, amount and due dates or period of payments scheduled to repay the indebtedness if credit is extended; (iv) The amount of the finance charge expressed as an annual percentage rate;

(v) The deferred payment price.

Par. 7. 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(c) thereof, respondents have thereby violated the Federal Trade Commission Act.

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 Decision and Order 82 F.T.C.

consideration and which, if 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 (30) days, now in further conformity with the procedure described in Section 2.34(b) of the rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order: 1. Respondent Sharpe’s Appliance Store, Inc., is a corporation organized, existing, and doing business under and by virtue and principal place of business located at 437 Moreland Avenue, N. E., Atlanta, Georgia.

Respondent William H. Sharpe is an individual and is a corporate officer of Sharpe’s Appliance Store, 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 It ts ordered, That respondents Sharpe’s Appliance Store, Inc., a corporation, its successors and assigns, and its officers, and William H. Sharpe, individually and as an officer of said corporation, and respondents’ agents, representatives, employees, successors and assigns, directly or through any corporation, subsidiary, division or other device, in connection with any extension of consumer credit or any advertisement to aid, promote or assist SHARPE’S APPLIANCE STORE, INC., ET AL. 5 1 Decision and Order 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. 90-321, 15 U.S.C. 1601, et seqg.), do forthwith cease and desist from: 1. Failing to furnish customers with a duplicate of the contract or a statement by which the disclosures are made and the creditor is identified, as required by Section 226.8 (a) of Regulation Z.

2. Failing to disclose the annual percentage rate, and failing to disclose that rate accurate to the nearest quarter of one percent computed in accordance with Section 226.5 of Regulation Z, as required by Section 226.8(b) (2) of Regulation Z.

3. Failing to disclose accurately the “total of payments” as the sum of the payments scheduled to repay the indebtedness, as required by Section 226.8(b) (3) of Regulation Z. 4. Failing to disclose the type of security interest on the face of the contract, as required by Section 226.8(a) (1) and (b) (5) of Regulation Z.

5. Failing to identify the “certain conditions” under which the respondents will rebate the unearned finance charge in event of prepayment of the obligation, as required by Section 226.8(b) (7) of Regulation Z.

6. Failing to disclose the “unpaid balance” to describe the sum of the unpaid balance of the cash price and all other charges which are included in the amount financed but which are not part of the finance charge as required by Section 226.8(c) of Regulation Z.

7. 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 accurately disclose the “deferred payment price” as 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, as required by Section 226.8(c) (8) (ii) of Regulation Z. 9. Failing, in any credit transaction in which the charge for credit life insurance is included in the “amount financed,” to secure a signed and dated credit life insurance authorization, as required by Section 226.4(a) (5) of Regulation Z. Decision and Order 82 F.T.C.

10. Stating the period of payments which can be arranged in connection with a consumer credit transaction, without also stating all of the following items, in terminology prescribed under Section 226.8 of Regulation Z, as required by Section 226.10 (d) (2) thereof :

(i) The cash price;

(ii) The amount of the downpayment required or that no downpayment is required, as applicable; (iii) The number, amount, and due dates or period of payments scheduled to repay the indebtedness if credit is extended;

(iv) The amount of the finance charge expressed as an annual percentage rate; and (v) The deferred payment price.

11. 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, 226.7, 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 all present and future personnel of respondents engaged in the consummation of any extension of consumer credit or in any aspect of preparation, creation, or placing of advertising, 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 (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 subsidiaries; or any other change in the corporation which may affect compliance obligations arising out of the order.

It is further ordered, That the individual respondent 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 in which he is engaged as well as a description of his duties and responsibilities. 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 manner and form in which they have complied with this order. SCOTT CARPET MILLS, INC., ET AL. 7 Complaint