Dillingham Development Company

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

IN THE MATTER OF ;

DILLINGHAM DEVELOPMENT COMPANY CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION AND THE TRUTH IN LENDING ACTS Docket C-2601. Complaint, Nov. 19, 1974 - Decision, Nov. 19, 1974 Consent order requiring a Los Angeles, Calif., developer and seller of recreational land in Calif., and Nev., 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. Appearances For the Commission: Jon R. Calhoun.

For the respondent: Pro se.

DILLINGHAM DEVELOPMENT CO. 1333 1332 Complaint 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 Dillingham Development Company, 4 corporation, hereinafter sometimes referred to as respondent, has 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: . PARAGRAPH 1. Respondent Dillingham Development Company is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Nevada with its principal office and place of business located at 10850 Wilshire Boulevard, Suite 800, Los Angeles, Calif.

Par. 2. Respondent is now, and for some time last past has been, engaged in the development and sale of recreational land in California and Nevada.

Par. 3. In the regular course and conduct of its business as aforesaid respondent regularly arranges for the extension of consumer credit or offers to extend or arrange for the extension of such credit as “eonsumer 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, in extending or arranging for such consumer credit, respondent made certain cost of credit disclosures, including the actual interest rate to be charged, but failed to comply with the disclosure requirements of the Truth in Lending Act as defined and set forth in Regulation Z, in that respondent: a) Failed to make the required disclosures clearly, conspicuously, and in meaningful sequence, as prescribed by Section 926.6(a) of Regulation Z.

b) Failed, in the course of disclosing the cost of credit expressed as a percentage rate, to use the term “annual percentage rate,” as prescribed by Section 226.8(b)(2) of Regulation Z.

c) Failed to set forth the number, amount, due dates or periods of payments scheduled to repay the indebtedness and the sum of such payments using the term, “total of payments,” and to identify the amount of any “balloon payment” and state the conditions, if any, under Complaint 84 F.T.C, which a “balloon payment” may be refinanced if not paid when due, as prescribed by Section 226.8(b)(3) of Regulation Z. d) Failed to describe the method of computing unearned portions of customer of such charges in the event of prepayment of the obligation, as prescribed in Section 226.8(b)(7) of Regulation Z. e) Failed, in the course of disclosing the sales price to use the term “eash price,” as prescribed by Section 226.8(¢)(1) of Regulation Z. f) Failed to use the term “unpaid balance of cash price” to describe the difference between the cash price and the total down payment, as prescribed by Section 226.8(c)(3) of Regulation Z. g) Failed to disclose and itemize on a timely basis all other charges included in the amount financed, but which are not part of the finance charge, as prescribed by Section 226.8(c)(4) of Regulation Z. the amount financed but which are not part of the finance charge, as prescribed by Section 226.8(c)(5) of Regulation Z. i) Failed to use the term “amount financed” to describe the difference between the unpaid balance and any amounts required to be deducted under Paragraph (e) of Section 226.8 of Regulation Z, as prescribed by Section 226.8(c)(7) of Regulation Z.

j) Failed to disclose and itemize the total amount of the finance charge using the term “finance charge,” as prescribed by Section 226.8(¢)(8)(i) of Regulation Z.

k) Failed to use the term “deferred Payment price” to describe the sum of the cash price, all other charges which are included in the amount financed but which are not part of the finance charge, and the finance charge as prescribed by Section 226.8(c)(8)(ii) of Regulation Z. ]) Failed, in any consumer credit transaction to make all disclosures, determined in accordance with Sections 226.4 and 226.5 of Regulation Z, and 226.10 of Regulation Z.

Par. 5. By the aforesaid failure to make disclosures, respondent has pursuant to Section 108 thereof, respondent has thereby violated the Federal Trade Commission Act.

me te Ue 1vvu 1332 : Decision and Order DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft of complaint which the Los Angeles Regional Office proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act and of the Truth in Lending Act; 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 aforesaid draft of complaint, 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 thereafter considered the matter and having determined that it had reason to believe that the respondent has 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 sixty (60) days, now in further conformity with the procedure 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 Dillingham Development Company is a corporation organized, existing and doing business under and by virtue of the laws of the State of Nevada, with its office and principal place of business located at 10850 Wilshire Boulevard, Suite 800, Los Angeles, Calif. 2. 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 respondent, Dillingham Development Company, a corporation, its successors and assigns, and respondent’s officers, agents, representatives, and employees, directly or through any corporation, subsidiary, division or other device, in connection with any extension or arrangement for the extension of consumer credit, or any advertisement to aid, promote or assist, directly or indirectly, any 575-956 O-LT - 76 - 85 Decision and Order 84 F.T.C.

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 seq.), do forthwith cease and desist from:

1. Failing to make the required disclosures clearly, conspicuously, and in meaningful sequence, as prescribed by Section 226.6(a) of Regulation Z.

2. Failing to set forth the finance charge expressed as an annual percentage rate, using the term “annual percentage rate,” as prescribed by Section 226.8(b)(2) of Regulation Z. 3. Failing to set forth the number, amount, due dates or periods _ of payments scheduled to repay the indebtedness and the sum of such payments using the term, “total of payments,” and to identify the amount of any “balloon payment” and state the conditions, if any, under which a “balloon payment” may be refinanced if not paid when due, as prescribed by Section 226.8(b)(3) of Regulation Z. 4. Failing to describe the method of computing unearned portions of finance charges and amounts deducted from any rebate or credit to the customer of such charges in the event of prepayment of the obligation, as prescribed in Section 226 .8(b)(7) of Regulation Z.

5. Failing to use the term “cash price” to describe the cash price of the property purchased, as prescribed by Section 226.8(c)(1) 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 and itemize on a timely basis. all other charges included in the amount financed, but which are not part of the finance charge, as prescribed by Section 226.8(c)(4) of Regulation Z.

8. Failing to use the term “unpaid balance” to describe the sum of the unpaid balance of cash price and all other charges which are included in the amount financed but which are not part of the finance charge, as prescribed by Section 226.8(c)(5) of Regulation Z. 9. Failing to use the term “amount financed” to describe the difference between the unpaid balance and any amounts required to be deducted under Paragraph (e) of Section 226.8 of Regulation Z, as prescribed by Section 226.8(c)(7) of Regulation Z. 10. Failing to disclose and itemize the total amount of the finance charge using the term “finance charge,” as prescribed by Section 226.8(c)(8)(i) of Regulation Z.

auus 1337 Complaint 11. Failing to use the term “deferred payment price” to describe the sum of the cash price, all other charges which are included in the amount financed but which are not part of the finance charge, and the finance charge as prescribed by Section 226.8(c)(8)(ii) of Regulation Z.

12. Failing, in any consumer credit transaction to make all disclosures, determined in accordance with Sections 226.4 and 226.5 of Regulation Z, in the manner, form and amount required by Sections 226.6, 226.8, 226.9, and 226.10 of Regulation Z. It is further ordered, That the respondent corporation shall establish and maintain at its offices copies of relevant executed documents for all future and post-January 1, 1973, sales of real property for inspection and review upon request by the Federal Trade Commission. Such documents shall include, where appropriate, copies of the initial Purchase Agreement, Note Secured by Deed of Trust, Deed of Trust and Truth in Lending Disclosure Form.

It is further ordered, That the respondent corporation shall forthwith distribute a copy of this order to each of its operating divisions. It is further ordered, That respondent 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 respondent herein shall within sixty (60) days after service upon it of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order.