Imperial of Ohio, Inc

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

IN THE MATTER OF IMPERIAL OF OHIO, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATIONS OF THE FEDERAL TRADE COMMISSION AND TRUTH IN LENDING ACTS :

Docket 8906. Complaint, Dec. 11, 1972—Decision, Jan. 22, 1974 Consent order requiring. two affiliated Cleveland, Ohio, firms engaged in the retail sales of wall-to-wall carpeting and home improvements, 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 83 F.T.C.

Appearances For the Commission: Vivian L. Solganik and Philip R. Fine. For the respondents: Leonard T. Gilbert, Cleveland, Ohio. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and 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 Imperial of Ohio, Inc., a corporation, and Imperial Aluminum, Inc., a corporation, and Albert Scholz, individually and as an officer of said corporations, hereinafter referred to as respondents, have violated the provisions of said Acts and 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: PARAGRAPH 1. Respondents Imperial of Ohio, Inc. and Imperial Aluminum, Inc., are corporations organized, existing and doing business under and by virtue of the laws of the State of Ohio, with their principal offices and places of business located at 9300 Midwest Avenue, Cleveland, Ohio.

Respondent Albert Scholz is an individual and is the President of each of the corporate respondents. He formulates, directs and controls the acts and practices of the corporate respondents, including the acts and practices hereinafter set forth. His address is the same as that of the corporate respondents.

PAR. 2. Imperial of Ohio, Inc., is now, and for some time last past has been, engaged in the offering for sale, sale, delivery and installation of wall-to-wall carpeting to the public at retail. Imperial Aluminum, Inc., is now, and for some time last past has been, engaged in the offering for sale, sale, delivery and installation of residential home improvements including, but not limited to, siding materials, storm windows and gutters to the public at retail.

PAR. 3. In the ordinary course and conduct of their business as aforesaid, respondents arrange for the extension of consumer credit, or offer to extend or arrange for the extension of such 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 their business, and in connection with credit sales, as the term “credit sale” is defined in Regulation Z, are now engaged, IMPERIAL OF OHIO, INC., ET AL. 1Z(o 1273 Complaint and for some time last past have been engaged, in the extension of credit, as the term “credit” is defined in Regulation Z. Respondents many times have caused, and are now causing, their customers to execute a document entitled “Offer of Purchase Subject to Consumer Credit Protection Act of 1968,” referred to herein as “the sales contract,” and one or more confession of judgment (cognovit) notes for the purchase and installation of home improvements to the residence of the customer.

PAR. 5. Respondents many times, in the ordinary course of their business, negotiate to third parties the sales contracts or other instru-’ ments of indebtedness executed in connection with credit purchases. By and through the use of both the sales contract and the cognovit note, respondents:

1. Have failed to accurately disclose the date on which the finance charge begins to accrue, as prescribed by Section 226.8(b)(1) of Regulation Z.

2. Have failed to accurately state the “annual percentage rate,” as prescribed by Section 226.8(b)(2) of Regulation Z. 3. Have failed to disclose the “total of payments,” as prescribed by Section 226.8(b)(3) of Regulation Z.

4. Have failed to accurately disclose the number, amount and due dates, or periods of payments, scheduled to repay the indebtedness, as prescribed by Section 226.8(b)(8) of Regulation Z. 5. Have failed to state the “unpaid balance of cash price,” as prescribed by Section 226.8(c)(3) of Regulation Z. 6. Have failed to use the term “unpaid balance of cash price” to describe the difference between the cash price and the total downpayment, as prescribed by Section 226.8(c)(3) of Regulation Z 7. Have failed to disclose the “deferred payment price,” as prescribed by Section 226.8(c)(8)(ii) of Regulation Z. PAR. 6. In a number of instances, respondents have sold, and continue to sell, credit life, accident or health insurance to their customers as part of consumer credit transactions, and such insurance is not mandatory, thus making the cost of such insurance part of the amount financed, as “amount financed” is defined in Section 226.2(d) of Regulation Z. Respondents have caused the following terminology to be used in their sales contract with regard to such insurance: 4. Life Insurance ___--_.____.---_-_------------------------- $ Accident and Health Insurance ._------------------------- $ a By and through the use of the aforementioned sales contract and terminology with regard to credit life, health or accident insurance, respondents:

Complaint 83 F.T.C.

1. Have failed to disclose, in writing, to the customer that insurance coverage is not required by the creditor, as prescribed by Section 226.4(a)(5)(i) of Regulation Z.

2. Have failed to obtain specific, dated, and separately signed, affirmative written indication from customers of the desire to have insurance coverage, as prescribed by Section 226.4(a)(5)(@i) of Regulation Z. PAR. 7. By and through the use and acceptance of the sales contract and the cognovit note, and by virtue of the work performed by respondents’ employees on a customer’s residence, respondents have retained or acquired, or will retain or acquire, a “security interest,” as “security interest” is defined in Section 226.2(z) of Regulation Z, in real property which is used, or which is expected to be used, as the principal residence of the customer. Respondents’ retention or acquisition of such security interest in said real property gives their customrs, who are extended consumer credit, as “consumer credit” is defined in Section 226.2(k) of Regulation Z, the right to rescind the transaction until midnight of the third business day following the date of consummation of the transaction or the date of delivery of all the disclosures required by Regulation Z, whichever is later, as prescribed by Section 226.9 of Regulation Z.

By and through the use of the aforementioned sales contract and cognovit note, respondents:

1. Have failed to provide the “notice to customer required by federal law” to the customer on one side of a separate statement which identifies the transaction to which it relates and in the form prescribed by Section 226.9(b) of Regulation Z.

2. Have failed to set out the “effect of rescission” required by Section 226.9(d) of Regulation Z, in the manner and form prescribed by Section 226.9(b) of Regulation Z.

3. Have failed to furnish two copies of the “notice to customer required by federal law,” as prescribed by Section 226.9(b) of Regulation Z.

PAR. 8. Respondents have caused additional information and provisions to appear in the various versions of the sales contracts used by both corporate respondents. Typical and illustrative examples of such additional information and provisions, but not all inclusive thereof, are the following:

NOTICE It is agreed and understood that cancellation of this agreement at any time after and for any reason whatsoever shall constitute a breach thereof, and the cancelling party shall pay to the other party, as and for liquidated damages, a sum of money equal to thirty per cent of the cash price hereinafter set forth. However, it is further understood and agreed that the title or property in any of the material or items which are to be delivered IMPERIAL UL NYA saree, 1273.- a oS a Complaint “to the purchaser shall pass.and bé transferred to the purchaser immediately upon comple- ~ tion of the manufacturing process, if any, or if no manufacturing process is required, then upon. delivery: to said purchaser, or upon the date following the time during which the. - purchaser shall: have: been: able. to: rescind: this..contract. without. penalty therefor, -- whichever event, Jast. occurs, property in said material or items shall thereupon pass and ~ be'transferred to the purchaser without any:further notice thereof, and irrespective of the date of delivery as-set forth herein, t ;

In the event, however, that the purchasers cancel. this order at any time prior to its ~ completion as relates to the manufacture of merchandise, furnishing of labor or delivery. of -materials,. and subsequent to the date set forth: for cancellation’ and: rescission herein _ Without penalty, then in such event the purchasers, and each of them, acknowledge that “they have executed a promissory note, in blank, containing a, Warrant of. Attorney; and do hereby authorize the Company to fill in and reduce that note to judgment against them or ~ to any one of them, in an amount equal to thirty per cent of the purchase price as hereinafter appears, and levy execution thereon, and‘such amount shall be regarded as payment in full of liquidated: damages for cancellation after the:time herein provided by law, Should,: however, the purchaser cancel this order subsequent. to the manufacture of merchandise, if required, or subsequent to delivery of the materials, but prior to installations 1 2 8 1 2 706 1025 29 25 96.964455 of5 1 2 8 1 3 748 1025 59 25 90.985283 thes 1 2 8 1 4 807 1025 192 29 90.985283 merchandise5 1 2 8 1 5 1016 1034 32 17 96.131462 or5 1 2 8 1 6 1063 1026 137 27 96.181877 materials5 1 2 8 1 7 1217 1035 72 24 94.599930 upon5 1 2 8 1 8 1305 1028 48 32 93.284805 thes 1 2 8 1 9 1369 1027 142 35 90.072639 prémises,5 1 2 8 1 10 1528 1022 23 33 58.414501 if.5 1 2 8 1 11 1566 1021 65 34 87.580635 such5 1 2 8 1 12 1649 1030 164 35 95.876961 installations 1 2 8 1 13 1830 1031 118 26 95.876961 herein5 1 2 8 1 14 1942 1040 21 17 96.745598 is3 1 2 9 0 0 603 1063 1393 403 -1 4 1 2 9 1 0 603 1063 1393 45 -1 5 1 2 9 1 1 603 1082 2 2 58.711807 -5 1 2 9 1 2 632 1066 135 34 86.543884 required,5 1 2 9 1 3 783 1067 51 25 95.721588 ands 1 2 9 1 4 847 1067 95 33 95.721588 should5 1 2 9 1 5 955 1067 65 25 96.993797 such5 1 2 9 1 6 1033 1068 173 26 96.798309 cancellations 1 2 9 1 7 1219 1076 79 19 94.245590 occurs 1 2 9 1 8 1309 1069 168 39 96.912796 subsequent5 1 2 9 1 9 1489 1073 28 24 96.909218 to5 1 2 9 1 10 1530 1071 47 26 91.088249 thes 1 2 9 1 11 1589 1072 66 26 93.458763 times 1 2 9 1 12 1668 1063 131 45 96.949417 provided5 1 2 9 1 13 1810 1071 37 35 96.997345 by5 1 2 9 1 14 1858 1073 58 33 95.045418 laws 1 2 9 1 15 1921 1066 75 33 64.356514 for...4 1 2 9 2 0 632 1098 1332 55 -1 5 1 2 9 2 1 632 1106 36 25 96.789490 its5 1 2 9 2 2 679 1114 158 18 83.795235 occurrences 1 2 9 2 3 842 1098 120 43 83.285942 ‘without5 1 2 9 2 4 970 1107 120 35 96.593628 penalty,5 1 2 9 2 5 1100 1109 81 25 96.174515 then5 1 2 9 2 6 1175 1117 27 29 96.174515 in5 1 2 9 2 7 1211 1109 61 26 96.836693 that5 1 2 9 2 8 1282 1113 91 28 96.923149 event,5 1 2 9 2 9 1385 1111 45 26 96.931030 thes 1 2 9 2 10 1439 1112 164 31 96.965294 purchasers5 1 2 9 2 11 1611 1110 35 28 96.590523 do5 1 2 9 2 12 1657 1112 102 32 96.824135 hereby5 1 2 9 2 13 1768 1106 139 47 95.501442 authorizes 1 2 9 2 14 1914 1103 50 37 96.996605 thea 1 2 9 3 0 634 1138 1329 54 -1 5 1 2 9 3 1 634 1147 138 33 96.736366 Company5 1 2 9 3 2 784 1151 28 23 96.883415 to5 1 2 9 3 3 825 1138 102 42 94.921539 reduces 1 2 9 3 4 937 1142 55 32 97.007103 thes 1 2 9 3 5 996 1150 133 26 96.857567 aforesaid5 1 2 9 3 6 1141 1147 166 36 93.268730 promissory5 1 2 9 3 7 1321 1152 124 33 92.492744 cognovit5 1 2 9 3 8 1458 1155 63 24 96.087318 notes 1 2 9 3 9 1534 1156 29 23 96.402878 to5 1 2 9 3 10 1573 1154 145 32 93.988014 judgments 1 2 9 3 11 1730 1154 113 38 91.035454 against5 1 2 9 3 12 1849 1147 95 34 96.175499 them5 1 2 9 3 13 1937 1163 26 18 96.944054 in4 1 2 9 4 0 632 1190 1331 40 -1 5 1 2 9 4 1 632 1197 33 18 96.881462 an5 1 2 9 4 2 679 1191 109 25 96.602371 amounts 1 2 9 4 3 801 1191 83 32 96.731178 equals 1 2 9 4 4 890 1193 30 23 96.196289 to5 1 2 9 4 5 932 1190 47 26 96.196289 thes 1 2 9 4 6 991 1191 63 26 96.978111 cash5 1 2 9 4 7 1067 1192 132 32 96.914536 purchases 1 2 9 4 8 1211 1193 73 32 96.248581 prices 1 2 9 4 9 1297 1201 29 18 96.300117 as5 1 2 9 4 10 1338 1193 167 28 96.300117 hereinafter5 1 2 9 4 11 1517 1191 47 39 96.999039 sets 1 2 9 4 12 1571 1195 84 31 96.605247 forth,5 1 2 9 4 13 1668 1196 56 25 96.858131 less5 1 2 9 4 14 1736 1203 16 18 96.947533 a5 1 2 9 4 15 1764 1190 86 32 62.425358 credit’5 1 2 9 4 16 1863 1197 42 26 62.425358 for5 1 2 9 4 17 1916 1197 47 26 97.013855 thea 1 2 9 5 0 632 1231 1346 36 -1 5 1 2 9 5 1 632 1239 59 18 95.899719 sums 1 2 9 5 2 702 1232 84 25 96.356094 which5 1 2 9 5 3 798 1232 47 26 96.551414 thes 1 2 9 5 4 856 1232 138 36 96.840111 Company5 1 2 9 5 5 1003 1231 90 28 96.883141 would5 1 2 9 5 6 1103 1234 70 26 96.977097 have5 1 2 9 5 7 1184 1237 81 30 97.005554 spent5 1 2 9 5 8 1275 1235 43 26 96.279846 for5 1 2 9 5 9 1327 1236 76 31 96.279846 labor5 1 2 9 5 10 1411 1233 27 29 96.994324 in5 1 2 9 5 11 1449 1237 46 26 96.971329 thes 1 2 9 5 12 1505 1237 166 35 96.619240 installations 1 2 9 5 13 1681 1238 29 25 97.001328 of5 1 2 9 5 14 1718 1238 48 25 95.341675 thes 1 2 9 5 15 1777 1234 185 30 91.860588 merchandise5 1 2 9 5 16 1976 1236 2 2 33.324516 .4 1 2 9 6 0 631 1274 1331 37 -1 5 1 2 9 6 1 631 1274 51 25 96.900566 ands 1 2 9 6 2 703 1274 145 31 84.541374 materials,5 1 2 9 6 3 869 1274 53 25 93.585991 had5 1 2 9 6 4 941 1274 57 26 93.585991 thes 1 2 9 6 5 1007 1274 138 34 95.934586 Company5 1 2 9 6 6 1165 1276 69 26 95.841583 been5 1 2 9 6 7 1249 1275 151 34 96.420555 permitted5 1 2 9 6 8 1419 1274 29 30 96.420555 to5 1 2 9 6 9 1466 1279 120 32 94.106979 performs 1 2 9 6 10 1605 1280 26 24 94.106979 in5 1 2 9 6 11 1650 1279 168 27 95.119926 accordance5 1 2 9 6 12 1831 1280 65 26 95.802986 with5 1 2 9 6 13 1916 1281 46 25 94.038521 thea 1 2 9 7 0 631 1305 1331 50 -1 5 1 2 9 7 1 631 1308 109 34 96.089348 written5 1 2 9 7 2 757 1313 151 33 96.089348 provisions5 1 2 9 7 3 920 1305 144 45 93.725197 contained5 1 2 9 7 4 1080 1315 103 32 96.562866 herein,5 1 2 9 7 5 1201 1317 52 26 96.375694 ands 1 2 9 7 6 1269 1317 62 33 96.514107 levy5 1 2 9 7 7 1347 1319 143 25 96.494370 execution5 1 2 9 7 8 1504 1315 122 29 67.750839 thereon.5 1 2 9 7 9 1636 1313 70 42 91.540970 “Any5 1 2 9 7 10 1720 1317 145 35 91.820328 judgments 1 2 9 7 11 1881 1320 81 26 91.820328 taken4 1 2 9 8 0 631 1349 1332 52 -1 5 1 2 9 8 1 631 1362 71 25 89.393951 upon5 1 2 9 8 2 720 1356 47 30 89.393951 thes 1 2 9 8 3 785 1347 137 36 96.783737 aforesaid5 1 2 9 8 4 937 1357 166 32 96.760674 promissory5 1 2 9 8 5 1121 1354 74 35 94.699646 note,5 1 2 9 8 6 1215 1367 29 17 96.939247 as5 1 2 9 8 7 1264 1360 52 25 96.722931 ands 1 2 9 8 8 1334 1360 42 25 96.813828 for5 1 2 9 8 9 1394 1361 147 31 96.396828 liquidated5 1 2 9 8 10 1560 1349 138 52 96.748711 damages,5 1 2 9 8 11 1719 1361 67 26 96.071831 shall5 1 2 9 8 12 1804 1357 34 39 59.934921 be5 1 2 9 8 13 1856 1363 43 25 94.980141 for5 1 2 9 8 14 1916 1362 47 26 90.369484 thea 1 2 9 9 0 630 1397 1332 39 -1 5 1 2 9 9 1 630 1397 129 33 96.843742 principals 1 2 9 9 2 772 1401 109 32 96.929123 amounts 1 2 9 9 3 892 1398 128 33 96.842453 together5 1 2 9 9 4 1032 1395 64 30 96.695938 with5 1 2 9 9 5 1107 1400 116 26 96.944870 interests 1 2 9 9 6 1235 1403 28 24 94.634224 at5 1 2 9 9 7 1275 1401 48 26 94.634224 thes 1 2 9 9 8 1333 1404 60 24 94.837601 rates 1 2 9 9 9 1405 1403 29 25 95.836388 of5 1 2 9 9 10 1443 1403 82 32 69.485191 eight’5 1 2 9 9 11 1528 1407 60 36 96.906509 pers 1 2 9 9 12 1591 1402 61 26 96.592949 cents 1 2 9 9 13 1663 1405 52 31 78.147728 per.5 1 2 9 9 14 1725 1411 98 18 86.787735 annum5 1 2 9 9 15 1835 1403 70 26 96.944122 from5 1 2 9 9 16 1915 1404 47 25 96.952911 thea 1 2 9 10 0 631 1439 296 27 -1 5 1 2 9 10 1 631 1439 63 25 96.325493 dates 1 2 9 10 2 708 1440 27 25 96.325493 of5 1 2 9 10 3 746 1431 181 35 94.830574 cancellation.3 1 2 10 0 0 596 1467 1400 590 -1 4 1 2 10 1 0 650 1467 1346 60 -1 5 1 2 10 1 1 650 1489 74 31 53.812630 It-is5 1 2 10 1 2 731 1488 173 38 94.655029 specifically.5 1 2 10 1 3 922 1482 163 33 96.312019 understood5 1 2 10 1 4 1102 1478 52 37 96.698746 ands 1 2 10 1 5 1172 1486 78 41 96.795097 again5 1 2 10 1 6 1267 1467 67 48 96.935516 here5 1 2 10 1 7 1351 1491 148 26 94.594734 reiterated5 1 2 10 1 8 1516 1491 61 25 94.594734 that5 1 2 10 1 9 1594 1491 24 29 94.533516 if5 1 2 10 1 10 1630 1491 47 25 94.533516 thes 1 2 10 1 11 1695 1483 137 33 96.070862 customers 1 2 10 1 12 1849 1499 30 17 92.946793 or5 1 2 10 1 13 1894 1499 102 24 0.000000 pur-_—4 1 2 10 2 0 625 1524 1365 41 -1 5 1 2 10 2 1 625 1524 96 38 96.493500 chasers 1 2 10 2 2 730 1530 104 37 96.488335 cancels5 1 2 10 2 3 846 1530 55 32 96.204666 this5 1 2 10 2 4 913 1531 67 25 42.461456 offers 1 2 10 2 5 991 1538 32 18 42.461456 or5 1 2 10 2 6 1033 1533 121 24 96.901733 contracts 1 2 10 2 7 1164 1539 34 18 96.418098 on5 1 2 10 2 8 1209 1539 31 18 96.418098 or5 1 2 10 2 9 1249 1532 94 25 96.803345 before5 1 2 10 2 10 1353 1533 47 25 93.052124 thes 1 2 10 2 11 1408 1548 35 3 93.052124 —5 1 2 10 2 12 1453 1533 52 32 96.994446 days 1 2 10 2 13 1516 1533 29 25 96.994446 of5 1 2 10 2 14 1640 1554 6 9 48.857895 ,5 1 2 10 2 15 1660 1524 82 39 48.857895 19—,5 1 2 10 2 16 1755 1533 78 25 96.879112 there5 1 2 10 2 17 1845 1533 66 25 96.667854 shall5 1 2 10 2 18 1923 1533 33 26 74.476089 be5 1 2 10 2 19 1977 1530 13 8 0.000000 ~4 1 2 10 3 0 596 1554 1362 53 -1 5 1 2 10 3 1 625 1563 150 39 96.288834 absolutely5 1 2 10 3 2 791 1578 33 18 95.502769 no5 1 2 10 3 3 839 1569 112 32 78.225708 liability5 1 2 10 3 4 966 1570 43 34 95.880798 for5 1 2 10 3 5 1022 1578 54 24 96.524635 any5 1 2 10 3 6 1089 1563 149 44 96.862480 liquidated5 1 2 10 3 7 1252 1570 139 33 96.832848 damages;5 1 2 10 3 8 1407 1566 110 38 96.869316 penalty5 1 2 10 3 9 1533 1580 31 17 96.651573 or5 1 2 10 3 10 1579 1554 79 43 96.708374 others 1 2 10 3 11 1672 1572 137 32 96.902687 provisions 1 2 10 3 12 1824 1567 134 38 96.040756 resulting4 1 2 10 4 0 624 1610 1332 34 -1 5 1 2 10 4 1 624 1611 68 25 95.448730 from5 1 2 10 4 2 710 1611 65 25 77.494186 such:5 1 2 10 4 3 792 1610 180 26 85.539459 cancellation.5 1 2 10 4 4 992 1611 196 31 96.230751 HOWEVER,5 1 2 10 4 5 1206 1612 109 32 94.578033 specifics 1 2 10 4 6 1330 1613 136 31 51.522099 provisions 1 2 10 4 7 1482 1613 22 25 51.522099 is5 1 2 10 4 8 1521 1614 94 24 23.416145 herein:5 1 2 10 4 9 1632 1606 77 32 23.416145 made5 1 2 10 4 10 1726 1614 42 24 96.359108 for5 1 2 10 4 11 1783 1613 173 25 96.359108 cancellation4 1 2 10 5 0 624 1651 1347 37 -1 5 1 2 10 5 1 624 1659 71 24 96.326950 upon5 1 2 10 5 2 706 1654 128 30 96.442123 payments 1 2 10 5 3 844 1652 29 25 96.331390 of5 1 2 10 5 4 880 1651 147 32 96.331390 liquidated5 1 2 10 5 5 1038 1653 126 31 96.872063 damages5 1 2 10 5 6 1174 1653 87 25 96.582893 under5 1 2 10 5 7 1270 1653 47 25 96.744438 thes 1 2 10 5 8 1327 1654 134 32 97.010666 following5 1 2 10 5 9 1471 1653 218 35 95.913216 circumstances,5 1 2 10 5 10 1702 1655 51 24 96.994888 ands 1 2 10 5 11 1763 1654 43 25 96.932709 for5 1 2 10 5 12 1813 1654 87 25 96.707436 which5 1 2 10 5 13 1910 1654 61 25 59.090427 the’4 1 2 10 6 0 625 1685 1331 41 -1 5 1 2 10 6 1 625 1695 137 23 96.307655 customers 1 2 10 6 2 778 1692 48 26 96.213753 has5 1 2 10 6 3 842 1685 132 34 91.786530 executed5 1 2 10 6 4 991 1700 16 18 91.786530 a5 1 2 10 6 5 1022 1693 166 32 93.271698 promissory5 1 2 10 6 6 1206 1694 124 32 93.108017 cognovit5 1 2 10 6 7 1347 1697 63 23 92.961266 notes 1 2 10 6 8 1426 1695 26 24 92.961266 in5 1 2 10 6 9 1470 1695 80 25 95.045944 blanks 1 2 10 6 10 1562 1695 57 25 96.933792 ands 1 2 10 6 11 1636 1695 157 25 96.815910 authorized5 1 2 10 6 12 1809 1695 36 25 96.872726 its5 1 2 10 6 13 1862 1702 49 18 96.908516 uses 1 2 10 6 14 1927 1702 29 18 96.908516 as4 1 2 10 7 0 625 1734 1331 38 -1 5 1 2 10 7 1 625 1737 129 30 96.779404 payments 1 2 10 7 2 763 1735 45 32 92.680305 for5 1 2 10 7 3 819 1734 65 26 92.680305 such5 1 2 10 7 4 897 1734 136 33 73.640938 damages;5 1 2 10 7 5 1048 1736 21 24 45.100323 1.5 1 2 10 7 6 1084 1734 183 27 89.597160 Cancellation:5 1 2 10 7 7 1279 1736 74 32 89.597160 prior5 1 2 10 7 8 1364 1740 29 21 96.572243 to5 1 2 10 7 9 1404 1735 187 27 96.368492 manufactures 1 2 10 7 10 1605 1744 31 17 96.368492 or5 1 2 10 7 11 1647 1736 121 31 96.796677 delivery5 1 2 10 7 12 1780 1736 28 26 93.218765 of5 1 2 10 7 13 1819 1737 137 35 92.497421 merchan-4 1 2 10 8 0 625 1766 1331 53 -1 5 1 2 10 8 1 625 1776 64 31 90.095428 dise;.5 1 2 10 8 2 709 1777 23 25 93.435432 2.5 1 2 10 8 3 754 1766 187 49 87.635086 Cancellations 1 2 10 8 4 952 1777 167 32 96.000427 subsequent5 1 2 10 8 5 1134 1780 31 23 96.310867 to5 1 2 10 8 6 1183 1777 186 27 80.060028 manufacture:5 1 2 10 8 7 1387 1779 28 25 84.778336 of5 1 2 10 8 8 1430 1772 187 47 95.530861 merchandise5 1 2 10 8 9 1635 1779 48 29 95.851860 but5 1 2 10 8 10 1699 1779 78 31 93.817200 prior5 1 2 10 8 11 1790 1781 28 22 93.817200 to5 1 2 10 8 12 1836 1778 120 37 96.593704 delivery4 1 2 10 9 0 624 1818 1331 35 -1 5 1 2 10 9 1 624 1818 129 31 84.850739 therefor;5 1 2 10 9 2 768 1819 23 24 84.850739 3..5 1 2 10 9 3 809 1818 182 26 96.136139 Cancellations 1 2 10 9 4 1002 1818 170 35 96.153374 subsequent5 1 2 10 9 5 1185 1822 28 23 96.153374 to5 1 2 10 9 6 1227 1820 121 31 39.381504 delivery.5 1 2 10 9 7 1363 1820 28 25 39.381504 of5 1 2 10 9 8 1402 1820 187 25 94.022903 merchandise5 1 2 10 9 9 1603 1821 48 24 94.022903 but5 1 2 10 9 10 1664 1820 75 32 96.834679 prior5 1 2 10 9 11 1751 1823 28 22 96.998497 to5 1 2 10 9 12 1793 1820 162 25 96.473602 installation4 1 2 10 10 0 625 1854 1363 41 -1 5 1 2 10 10 1 625 1860 114 25 96.688423 thereof.5 1 2 10 10 2 754 1855 64 30 95.421997 This5 1 2 10 10 3 832 1858 157 34 95.421997 agreements 1 2 10 10 4 1004 1860 65 25 92.686096 shall5 1 2 10 10 5 1084 1854 146 33 96.833359 constitutes 1 2 10 10 6 1243 1861 48 26 93.294334 thes 1 2 10 10 7 1304 1862 87 26 72.746315 entireé5 1 2 10 10 8 1403 1862 216 33 96.445389 understandings 1 2 10 10 9 1633 1862 28 25 96.910637 of5 1 2 10 10 10 1670 1862 48 26 96.984154 thes 1 2 10 10 11 1731 1862 112 32 96.392311 parties,5 1 2 10 10 12 1858 1862 51 26 47.727722 ands 1 2 10 10 13 1919 1863 69 25 42.276031 no’4 1 2 10 11 0 624 1901 1363 36 -1 5 1 2 10 11 1 624 1901 79 26 96.924782 others 1 2 10 11 2 713 1902 216 31 96.183365 understandings 1 2 10 11 3 941 1902 135 25 93.081108 collateral5 1 2 10 11 4 1087 1907 33 20 89.102943 or5 1 2 10 11 5 1129 1903 147 26 96.316757 otherwise5 1 2 10 11 6 1288 1904 66 25 96.441811 shall5 1 2 10 11 7 1366 1904 34 26 96.928429 be5 1 2 10 11 8 1414 1903 110 34 96.451912 bindings 1 2 10 11 9 1534 1904 94 26 96.923859 unless5 1 2 10 11 10 1638 1904 27 25 96.879692 in5 1 2 10 11 11 1678 1903 109 33 96.803963 writings 1 2 10 11 12 1798 1904 51 26 85.732666 ands 1 2 10 11 13 1861 1904 96 32 0.000000 signed4 1 2 10 12 0 625 1941 1329 34 -1 5 1 2 10 12 1 625 1941 34 32 62.459358 by5 1 2 10 12 2 676 1941 34 25 62.459358 all5 1 2 10 12 3 727 1941 102 33 96.945152 parties5 1 2 10 12 4 846 1941 104 25 92.284271 hereto.5 1 2 10 12 5 957 1941 70 25 92.284271 Thes 1 2 10 12 6 1043 1941 161 33 97.012184 purchasers5 1 2 10 12 7 1222 1950 82 25 96.200493 agrees 1 2 10 12 8 1322 1945 27 23 96.752319 to5 1 2 10 12 9 1366 1943 62 39 95.856499 holds 1 2 10 12 10 1445 1942 193 31 67.081467 IMPERIAL.5 1 2 10 12 11 1645 1943 216 30 17.101524 ALUMINUM,5 1 2 10 12 12 1881 1943 73 25 87.660439 INC.4 1 2 10 13 0 623 1979 1335 54 -1 5 1 2 10 13 1 623 1983 133 35 93.654808 harmless5 1 2 10 13 2 770 1983 41 26 92.254959 for5 1 2 10 13 3 823 1991 63 17 91.931297 non-5 1 2 10 13 4 877 1983 132 42 89.084854 -delivery5 1 2 10 13 5 1022 1983 96 32 74.240685 caused5 1 2 10 13 6 1132 1984 36 32 96.571709 by5 1 2 10 13 7 1179 1983 60 32 96.352112 fire,5 1 2 10 13 8 1253 1984 111 49 96.242676 strikes,5 1 2 10 13 9 1378 1980 65 36 96.679276 war,5 1 2 10 13 10 1457 1985 225 32 96.686554 transportation,5 1 2 10 13 11 1696 1992 34 18 81.144371 an5 1 2 10 13 12 1744 1985 52 25 61.106457 Acts 1 2 10 13 13 1808 1984 28 26 65.985764 of5 1 2 10 13 14 1846 1979 67 46 96.713684 God,5 1 2 10 13 15 1927 1992 31 18 96.882950 or4 1 2 10 14 0 623 2012 430 49 -1 5 1 2 10 14 1 623 2012 123 49 96.491859 inability5 1 2 10 14 2 758 2028 28 22 96.923958 to5 1 2 10 14 3 799 2023 96 28 45.731300 secures 1 2 10 14 4 907 2025 146 26 96.905853 materials.2 1 3 0 0 0 1552 1547 85 6 -1 3 1 3 1 0 0 1552 1547 85 6 -1 4 1 3 1 1 0 1552 1547 85 6 -1 5 1 3 1 1 1 1552 1547 85 6 95.000000 2 1 4 0 0 0 1228 2093 123 26 -1 3 1 4 1 0 0 1228 2093 123 26 -1 4 1 4 1 1 0 1228 2093 123 26 -1 5 1 4 1 1 1 1228 2093 123 26 96.287926 TERMS2 1 5 0 0 0 626 2150 1342 259 -1 3 1 5 1 0 0 626 2150 1338 86 -1 4 1 5 1 1 0 627 2150 1337 62 -1 5 1 5 1 1 1 627 2162 98 26 38.999630 OCash5 1 5 1 1 2 737 2155 123 33 91.755890 Sale—A5 1 5 1 1 3 874 2162 161 25 96.485252 transactions 1 5 1 1 4 1048 2158 126 36 96.814041 whereby5 1 5 1 1 5 1187 2162 46 25 96.726753 thes 1 5 1 1 6 1246 2162 130 32 96.942329 purchases 1 5 1 1 7 1389 2163 71 31 96.686157 prices 1 5 1 1 8 1473 2163 23 37 96.991882 is5 1 5 1 1 9 1509 2162 131 32 96.540833 payable5 1 5 1 1 10 1633 2169 27 18 96.977524 in5 1 5 1 1 11 1672 2150 61 56 96.876358 four5 1 5 1 1 12 1744 2161 177 51 94.938141 installments5 1 5 1 1 13 1933 2168 31 17 96.922791 or4 1 5 1 2 0 626 2203 987 33 -1 5 1 5 1 2 1 626 2204 129 26 92.447495 less—No5 1 5 1 2 2 767 2203 147 33 95.616158 disclosures 1 5 1 2 3 926 2206 149 30 96.710083 statements 1 5 1 2 4 1079 2200 131 36 96.718193 required,5 1 5 1 2 5 1225 2205 55 25 96.771194 ands 1 5 1 2 6 1292 2212 36 18 96.771194 no5 1 5 1 2 7 1339 2204 71 32 96.163933 rights 1 5 1 2 8 1423 2206 25 23 96.286057 to5 1 5 1 2 9 1460 2198 153 31 96.505409 rescission.3 1 5 2 0 0 627 2235 1341 174 -1 4 1 5 2 1 0 656 2235 1312 70 -1 5 1 5 2 1 1 656 2240 124 41 75.487427 OCredit5 1 5 2 1 2 790 2235 124 50 91.572372 Sale—A5 1 5 2 1 3 925 2245 160 32 96.587334 transactions 1 5 2 1 4 1098 2244 126 33 96.333199 whereby5 1 5 2 1 5 1235 2245 47 25 96.817886 thes 1 5 2 1 6 1293 2245 130 32 96.465469 purchases 1 5 2 1 7 1435 2245 71 32 96.593765 prices 1 5 2 1 8 1518 2245 23 25 97.001984 is5 1 5 2 1 9 1552 2247 28 23 96.518852 to5 1 5 2 1 10 1592 2244 33 26 96.518852 be5 1 5 2 1 11 1637 2240 56 65 95.900749 paid5 1 5 2 1 12 1709 2244 7 57 13.423752 35 1 5 2 1 13 1709 2252 26 17 95.439377 in5 1 5 2 1 14 1747 2251 73 18 95.439377 more5 1 5 2 1 15 1833 2244 64 25 96.828026 than5 1 5 2 1 16 1908 2243 60 46 96.772583 four4 1 5 2 2 0 627 2272 659 53 -1 5 1 5 2 2 1 627 2272 363 53 88.888115 installments—Disclosures 1 5 2 2 2 1003 2289 140 30 95.981842 statements 1 5 2 2 3 1156 2286 130 32 95.647491 required.4 1 5 2 3 0 628 2311 1337 48 -1 5 1 5 2 3 1 628 2319 117 35 39.041897 CCredit5 1 5 2 3 2 760 2328 62 26 96.979790 Sales 1 5 2 3 3 838 2320 63 33 95.880760 with5 1 5 2 3 4 916 2328 81 31 96.304108 Rights 1 5 2 3 5 1013 2330 24 23 93.110535 to5 1 5 2 3 6 1053 2328 206 25 80.462189 Rescind—Thes 1 5 2 3 7 1276 2331 134 23 96.268250 customers 1 5 2 3 8 1425 2328 74 31 96.406540 shall,5 1 5 2 3 9 1516 2329 28 25 96.257896 in5 1 5 2 3 10 1559 2328 45 25 96.554214 thes 1 5 2 3 11 1621 2331 80 22 96.593468 events 1 5 2 3 12 1717 2311 59 48 96.988731 that5 1 5 2 3 13 1792 2328 52 25 93.609192 this5 1 5 2 3 14 1861 2319 67 34 93.609192 offers 1 5 2 3 15 1942 2326 23 26 96.137207 is4 1 5 2 4 0 627 2367 1338 42 -1 5 1 5 2 4 1 627 2370 134 32 95.925102 accepted,5 1 5 2 4 2 772 2370 68 25 96.903168 have5 1 5 2 4 3 850 2370 46 25 97.012749 thes 1 5 2 4 4 905 2370 71 31 96.993423 rights 1 5 2 4 5 985 2373 28 22 96.993423 to5 1 5 2 4 6 1022 2367 102 28 96.852051 rescind5 1 5 2 4 7 1134 2370 45 25 96.968834 thes 1 5 2 4 8 1189 2370 130 33 96.968834 resulting5 1 5 2 4 9 1327 2373 119 23 96.731789 contracts 1 5 2 4 10 1455 2370 94 25 96.944862 within5 1 5 2 4 11 1557 2370 45 25 96.968590 thes 1 5 2 4 12 1612 2370 64 25 96.671120 times 1 5 2 4 13 1685 2377 30 18 96.817680 so5 1 5 2 4 14 1723 2366 154 35 96.817680 provided,5 1 5 2 4 15 1871 2377 26 17 96.971001 in5 1 5 2 4 16 1906 2369 59 40 96.943390 that Decision and Order 83 F.T.C.

this transaction is one in which a security interest is or will be or may be retained or acquired in real property which is used or expected to be used as the principal residence of the customer.

OCredit Sale with No Right to Rescind—The customer shall not, in the event this offer is accepted, have the right to rescind the resulting contract. in that this transaction is one in which a security interest is or will be or may be retained or acquired in real property which is not used or expected to be used as the principal residence of the customer. Said additional information has been stated, utilized or placed by the respondents so as to mislead or confuse the customer and contradicts, obscures and detracts attention from the information required to be disclosed by Regulation Z, thereby violating Section 226.6(c) of Regulation Z.

PAR. 9. Respondents have caused the following additional information and clause to appear in their contract under the heading “Waiver of Right to Rescission:”

WAIVER OF RIGHT TO RESCISSION ONot applicable Other customer does hereby waive his right to rescission for the following reasons: 1. The extension of credit is needed in order to meet a bona fide immediate personal financial urgency of the customer.

2. The customer has determined that a delay of three (3) business days in performance of the creditor's obligation under the transaction will jeopardize the welfare, health or safety of natural persons or endanger property which the customer owns or for which he is responsible, and as more fully set forth below: By and through the use of the above-quoted provision, respondents have, in a number of instances, provided their customers with a printed form to use for the purpose of modifying or waiving his right to rescind a transaction subject to the provisions of Section 226.9 of Regulation Z, thereby violating the provisions of Section 226.9(e)(3) of Regulation Z. PAR. 10. By the aforesaid failure to make disclosures, respondents have failed to comply with the requirements of Regulation Z, the implementing regulation of the Truth in Lending Act duly promulgated by the Board of Governors of the Federal Reserve System. Pursuant to Section 103(q) of the Truth in Lending Act, respondents’ aforesaid failure to comply with Regulation Z constitutes violations of that Act and, pursuant to Section 108 thereof, respondents have thereby violated the Federal Trade Commission Act.

DECISION AND ORDER The Federal Trade Commission having initiated a complaint charging that respondents named in the caption hereof have violated provisions of the Truth in Lending Act, 15 U.S.C. 1601, et seq., and the inplementing regulation promulgated thereunder, 12 C.F.R. Section 226; and Respondents, while this matter was pending before the administra- IMPERIAL OF OHIO, INC., ET AL. 1279 1273 Decision and Order tive law judge, having voluntarily entered into an agreement containing consent order to cease and desist dated May 3, 1973; and The Commission, by order issued Sept. 18, 1973, having withdrawn this matter from adjudication pursuant to Rule 3.22(a) and Rule 2.34(d) of the Commission’s Rules of Practice; and The executed agreement containing a consent order, an admission by respondents of all the jurisdictional facts set forth in the complaint which the Commission issued, 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 Commision’s rules; and The Commission having thereafter considered the agreement containing consent order to cease and desist and having provisionally accepted the same, and the agreement having thereupon been placed on the public record for a period of thirty (30) days, and having duly considered the comments filed thereafter pursuant to Section 2.34(b) of its rules, now in further conformity with the procedure prescribed in Section 2.34(b) of its rules, the Commission hereby makes the following jurisdictional findings and enters the following order: 1. Respondents Imperial of Ohio, Inc. and Imperial Aluminum, Inc., are corporations organized, existing and doing business under and by virtue of the laws of the State of Ohio, with their principal offices and places of business located at 9300 Midwest Avenue, Cleveland, Ohio. Respondent Albert Scholz is an individual and is the President of each of the corporate respondents. He formulates, directs and controls the acts and practices of the corporate respondents, including the acts and practices hereinafter set forth, and his address is the same as that of the corporate respondents.

2. The Federal Trade Commission has jurisdiction of this proceeding and of the respondents and the proceeding is in the public interest. ORDER It is ordered, That respondents Imperial of Ohio, Inc., a corporation, and Imperial Aluminum, Inc., a corporation, their respective successors and assigns, and their respective officers, agents, representatives, and employees, directly or through any corporation, subsidiary, division or other device, and. respondent Albert Scholz, individually and as an officer of said corporations, in connection with the extension of consumer credit or advertisments to aid, promote or assist, directly or indirectly, in the extension of consumer credit, as “consumer credit” and “advertisement” are defined in Regulation Z (12 C.F.R. Section 226) of Decision and Order 83 F.T.C.

the Truth in Lending Act (Pub.L. 90-321, 15 U.S.C. 1601, et seg.), do forthwith cease and desist from:

1. Failing to accurately disclose the date on which the finance charge begins to accrue, as prescribed by Section 226.8(b)(1) of Regulation Z.

2. Failing to accurately state the “annual percentage rate,” as prescribed by Section 226.8(b)(2) of Regulation Z. 3. Failing to disclose the “total of payments,” as prescribed by Section 226.8(b)(3) of Regulation Z.

4. Failing to accurately disclose the number, amount, and due dates, or periods of payment, scheduled to repay the indebtedness, as prescribed by Section 226.8(b)(3) of Regulation Z, 5. Failing to state the “unpaid balance of cash price,” as prescribed by Section 226.8(c)(3) of Regulation Z. 6. Failing to use the term “unpaid balance of cash price” to describe the difference between the cash price and the total downpayment, as prescribed by Section 226.8(c)(3) of Regulation Z. 7. Failing to disclose the “deferred payment price,” as prescribed by Section 226.8(c)(8)(ii) of Regulation Z. 8. Failing to disclose, in writing, to the customer that insurance coverage is not required by the creditor, as prescribed by Section 226.4(a)(5)(i) of Regulation Z.

9. Failing to obtain specific, dated and separately signed, affirmative written indication from the customer of the desire to have insurance coverage, as prescribed by Section 226.4(a)(5)(ii) of Regulation Z.

10. Failing to provide the “notice to customer required by federal law” to the customer on one side of a separate statement which identifies the transaction to which it relates, and in the form prescribed by Section 226.9(b) of Regulation Z. 11. Failing to set out the “effect of rescission,” required by Section 226.9(d) of Regulation Z, in the manner and form prescribed by Section 226.9(b) of Regulation Z. 12. Failing to furnish two copies of the “notice to customer required by federal law,” as prescribed by Section 226.9(b) of Regulation Z.

13. Supplying any additional information, contract clause, or other statement pertaining to a transaction generally, unless such additional information, contract clause or other statement is provided in a fashion which complies with Section 226.6(c) of Regulation Z.

14. Providing their customers with any kind of printed form by which the customer may modify or waive his right to rescind a HOLIDAY MAGIC, INC., ET AL. 1281 Order transaction, as prescribed by Section 226.9(e)(8) of Regulation Z. 15. Failing, in any consumer credit transaction or advertisement, to make all disclosure determined in accordance with Sections 226.4 and 226.5 of Regulation Z, in the manner form and amount required by Sections 226.6, 226.7, 226.8, 226.9, 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 repondents secure a signed statement acknowledging receipt of said order from each such person.

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 respondents notify the Commission at least thirty (30) days prior to any proposed changes in the corporate respondents such as dissolution, assignment or sale resultant in the emergence of a successor corporation, the creation or dissolution of subsidiaries, which may affect compliance obligations arising out of the order, or any other changes in the corporations which may affect compliance obligations arising out of the order. It 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.