Town Finance Corp

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IN THE MATTER OF TOWN FINANCE; CORP., ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION AND TRUTH IN LENDING ACTS Docket 2628. Complaint, Jan. , 197,) - /Jecio;ion, Ja.n. , 1975 Consent order requiring a Bristol, R.I., moneylender in connection with financing insurance premiums, among other things to cease violating the Trth Lending Act by failing to disclose to consumers, in connection with the ..UU'V .-_u.. . ..u.

1a8 Complaint extension of consumer credit, such infonnation as required by Regulation Z of the said Act.

Appearames For the Commission: Wilham P. McDonough. For the respondents: Levy, Good'Ynan, Serrnoff & Gorin Provi dence, R.

COMPI..AINT Pursuant to the provisions of the Trth In Lending Act and the implementing regulation promulgated thereunder, and the Federal Trade Commission Act, and by virue of the authority vested in it by said Acts, the Federal Trade Commission having reason to believe that Town Finance Corp., a corporation, and John Andrade, individually and as an officer of said corporation, hereinafter referred to a.'1 respondents have violated the provisions of said Acts and the implementing regulation promulgated under the Trth in Lending Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the puhlic interest, hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent Town Finance Corp. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Rhode Island and Providence Plantations, with its principal offce and place of business located at 557 Hope St., Bristol R.I.

Respondent John Andrade is an officer of the corporate respondent. He fonnulates, directs and controls the policies, 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 have been engaged in the business of lending money to the public in connection with the financing of insurance premiums.

PAR. 3. In the ordinary course ahd 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 coure of business as aforesaid, have caused and are causing to be extended consumer credit, as "consumer credit" is defined in Regulation Z, and have caused and are causing customers to execute a binding insurance premium financing contract, hereinafter referred to a.';; the Decision and Order 85 F.

contract." Respondents do not provide these customers with any other consumer credit cost disclosures.

By and through the use of the "contract" respondents: 1. Failed to use the term "cash price" as defined in Section 226.2(i) of Regulation Z, to describe the purchase price of the transaction, as required by Section 226.8(c)(I) of Regulation Z. 2. Failed 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. 3. Failed 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)(8) of Regulation Z. 4. Failed to use the term "amount financed" to describe the amount of credit extended, as required by Section 226.3(c)(7) of Regulation Z. 5. Failed 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.

6. Failed to disclose the sum of the cash price, all charges which are included in the amount financed but which are not par of the finance charge, and the finance charge, and to describe that sum as the deferred payment price," as required by Section 226.8(c)(8)(ii) of Regulation Z.

7. Failed to print the terms "annual percentage rate" and "finance charge" more conspicuously than other required termnology as required by Section 226.6(a) of Regulation Z. PAR. 5. Pursuant to Section 103(q) of the Trth 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 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 furished thereafter with a copy of a draft of complaint which the Boston Regional Offce proposed to present to' the Commission for its 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 violation of the Federal Trde 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 said ), 138 Decision and Order draft of complaint, a statement that the signing of such 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 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 sixty (60) days, now in further conformty 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 Town Finance Corp. is a corporation organized existing and doing business under and by virue of the laws of the State of Rhode Island and Providence Plantations, with its principal offce at 557 Hope St., Bristol, R.I.

Respondent John Andrade is an officer of said corporation. He formulates, directs and controls the policies, acts and practices of said corporation, including the acts and practices hereinafter set forth. His address is the same as that of said corporation. 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 is ordered That respondents Town Finance Corp., a corporation its successors and assigns, and its officers, and John Andrade 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 'Iconsumer credit" and Hadvertisement" are defined in Regulation Z (12 C. 9226) of the Trth in Lending Act (Pub. L. 90-321, 15 U. C 1601 seq. do forthwith cease and desist from:

1. Failng to use the term ucash price " as defined in Section 226.2(i) of Regulation Z, to describe the purchase price of the transaction, as required by Section 226.8(c)(l) of Regulation Z. 2. Failing to use the tenn Ilcash downpayment" to describe" the downpayment in money made in connection with the credit sale, a.c; required by Section 226.8 (c) (2) of Regulation Z. Decision and Order 85 F. 3. Failng 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. 4. Failng to use the term "amount financed" to describe the amount of credit extended, as required by Section 226.8(c)(7) of Regulation Z. 5. Failng 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.

6. Failng to disclose the sum of the ca.,h price, all charges which are included in the amount financed but which are not par of the finance charge, and the finance charge, and to describe that sum as the deferred payment price," as required by Section 226.8 (c)(8)(ii) of Regulation Z.

7. Failng to print the terms "annual percentage rate" and "finance charge" more conspicuously than other required termnology, as required by Section 226.6(a) of Regulation Z. 8. Failing in any consumer credit transaction or advertisement 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. , 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 now or hereafter engaged in the consummation of any extension of consumer credit or in any aspect of the 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 Commssion at lea.,t thirty (30) days prior to any proposed change in the corporate respondent, such as dissolution, assigment 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 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 address and a statement as to the nature of the 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 herein shall, within sixty (60) days after service upon them of this order, file with the Commission a report, in wrting, setting forth in detail the manner and form in which they have complied with this order. Vft1.Ld'..l I\l',LYllUlYl r1.ftl'1 , lJ.l 111.. 143 Complaint