Melmar Industries, Inc

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IN THE MATTER OF MELMAR INDUSTRIES, INC., ET AL.

CONSENT ORDF,R, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION AND TRUTH IN LENDING ACTS Dockel C-2719. Complaint, Anq. 1975-Deeision, Aug- , 1975 Consent order requiring four affiiated swimming pool firms located in Chf'rr mH N.J., and Philadelphia, Pa., among other things to cease using bait and switch tactics, misleading pricing elaims and other deceptive sellng practices; and 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: John A. Crowley and Phytlis L. Kaye. For the respondents: Joseph H. Weiss, Fetl, Spalding, Goff Rubin Philadelphia, Pa. and Timothy J. Waters, Peabody, Rivtin, Lam.bert & Dennison Wash., D.

Complaint 86 FTC.

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 Melmar Industries, Inc., a New Jersey cOIlJOration, Melmar Industries, Inc., a Pennsylvania corporation, Prestige Industries Incorporated, a corporation, Gold Bond Industries, Inc., a corporation, and Marc Wolf individually and as an officer of said corporations, hereinafter referred to as respondents, have violated the provisions of said Acts and implementing 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 Melmar Industries, Inc., a New Jersey corporation, is a corporation organized, existing and doing business under and by virtue of the laws of the State of New Jersey, with its office and principal place of business located at 1 Martin Ave., Cherr Hil, N.

Respondent Melmar Industries, Inc., a Pennsylvania corporation, is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Pennsylvania with its office and principal place of business located at 2555 Welsh Rd., Philadelphia, Pa. Respondent Prestige Industries Incorporated is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Pennsylvania with an office at 396 Rodi Rd. Pittsburgh, Pa. and its general office at 1 Martin Ave., Cherr Hil, N.J. Respondent Gold Bond Industries, Inc. is a corporation organized existing and doing business under and by virtue of the laws of the Commonwealth of Pennsylvania with an offce at 1 Uam Square Springdale, Pa. and its main office and principal place of business located at 1 Martin Ave., Cherry Hill, N.J. Respondent Marc Wolf, 1216 Cardinal Lake Dr., Cherry Hill, N.J., is an individual and is the president of Melmar Industries, Inc., anew Jersey corporation; is the secretary-treasurer of Melmar Industries Inc., a Pennsylvania corporation; is the president of Prestige Industries Incorporated, a corporation; and is vice president of Gold Bond Industries, Inc., a corporation. Respondent Marc Wolf is responsible for formulating, controlling and directing the policies, acts and practices of the corporate respondents.

PAR. 2. Respondents are now and have been, for some time last past engaged in the advertising, offering for sale, sale and distribution of 47:3 Complaint. swimming pools and other merchandise and home improvement products. In the course and conduct of their business as aforesaid respondents negotiate to third parties conditional sales contracts promissory notes or other instruments of indebtedness executed in connection with credit purchase agreements. COUNT I Alleging violation of Section 5 of the "' ederal Trade Commission Act the allegations of Paragraphs One and Two above are incorporated by reference in Count I as if fully set forth verhatim. PAR. ;J. In the course and conduct of their business as aforesaid respondents cause advertisements designed to secure leads to potential purchasers of swimming pools and other merchandise and home improvement products to be placed in various newspapers and other publications. The respondents are responsible for the content of said advertisements.

PAR. 4. In the further course and conduct of their business as aforesaid, respondents sell and distribute the aforementioned swimming pools and other merchandise and home improvement products by causing said swimming pools and other merchandise and home improvement products to be shipped from the places of business of their various suppliers in the United States to purchasers at retail in States other than the States from which such shipments originate. There is now, and has been, at all times mentioned herein, a substantial and continuous course of trade in said swimming pools and other merchandise and home improvement products in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 5. In the course and conduct of their business, and for the purpose of inducing the purchase of their products, respondents have made statements and representations with respect thereto in adver- , of' tisements inserted in newspapers of general interstate circulation which the following are typical and ilustrative, but not all inclusive: INTRODUCTORY OFFER! ALUMINUM POOLS CONVENIENT CREDIT TERMS ARRANGED 21' x 21' COMPLF,TELY INSTALLED OUTSIDE DIMENSION $499 IG' x 16' SWIM ARF,A WOOD POOL SAMF, 4' CONSTANT AS ABOVF, $444 2!J' x 21' COMPLETELY INSTALLED OUTSIDE DIMF,NSION $699 47fi FEDERAL TRADE COMMISSION DECISIONS Complaint H6 F.

24' x Hi' SWIM A HEA WOOD POOL SAMF, 4' CONSTANT AS ABOVF, $644 Pre Season Offer days Only Swimming Pools! Sun. - Mon. Tuesday Deluxe Aluminum Family Pool Ali Pools Include:

Filter and Pump Pool Ladder Steel Bracing Sun Decks Vacuum Cleaner Set-In Vinyl Liner Safety Fence and Stairs Huge Family Size NO MONEY DOWN 29' x 21' Outside Dimensions 24' x 16' x 4' Low Budget Swim Area Terms Arranged Your Choice $400 No Extras Delivered and Completely Installed Pick a Pool Pick a Prize Huge Family Size 29' x 21' Outside Dimensions Deluxe Wood Family Pool ree Portable TV Yours Free With Your Purchase No Money Down Low, Low Terms Completely Installed $400 Deluxe Aluminum Family Pool Free Huge 21" Cabana Deck With Your Purchase No Money Down Low, Low Terms Completely Installed $400 New Dupont Tedlar Family Pool Free Complete Stock of Summer Furniture No Money Down Low, Low Terms Completely Installed $400 Guaranteed! Not Just A Word, But Our Way Of Doing Business Guaranteed 72-hour delivery upon offce receipt of your order Wanted! 5 Residential Home Sites to display Our New Advanced Swimming Pool Giant Family Size 27' x Hi' x 6' Outside Dimensions 21' x 15' x 4' Swim Area $66G Completely Installed MELMAR INDUSTRIES, INC., F,T AI,. 477 47:3 Complaint PAR. 6. By and throu;;h the use of the aforesaid statements and representations and others of similar import and meaning, but not specifically set out herein, separately and in connection with oral statements and representations of their salesmen or representatives respondents have represented, and are now representing, directly or by implication, that:

1. The offers set out in their advertisements are bona fide offers to sell swimming pools of the kind therein described and on the terms and conditions stated.

2. A prospective customer is able to obtain a " free" portable television set, or a "free" set of summer furniture with the purchase of an ad vertised pool.

t The prices shown in advertisements are "Introductory" or "Pre- Season" prices and that said prices are offered only on an introductory or pre-season basis or are effective during a limited period of time and said reduced prices wil be returned to respondents' pre-sale bona fide offering price or to some other substantially higher amount immediately after the sale has terminated.

4. The advertised pools are unconditionally "Guaranteed. 5. The advertised pool will be delivered within 72 hours of receipt of the customer s order.

6. Pools are sold with "No Money Down.

7. After the installation of respondents' swimming pools is complet- , the purchasers' pools wil be used for demonstration and advertising purposes by respondents, and, as a result of allowing or agreeing- to allow their pools to be used as models, purchasers wil be granted reduced prices or wil receive allowances, discounts, commissions or referral fees.

PAR. 7. In truth and in fact:

1. The offers set out in respondents' advertisements are not bona fide offers to sell swimming pools of the kind therein described at the prices or on the terms and conditions stated but are made for the purpose of obtaining leads to persons interested in the purchase thereof. After obtaining such leads, the individually named respondent or respondents' salesmen or representatives call upon such persons but make no effort to sell the advertised products at the advertised prices but instead disparage the advertised products in such a manner as to discourage their purchase and attempt to sell and frequently do sell different and more expensive swimming pool products. 2. A prospective purchaser is unable, in a substantial number of instances, to obtain a "free" portable television set, a "free" cabana deck, or a "free" set of summer furniture since the receipt of the aforesaid "free" item is conditioned on the purchase of an advertised 478 FEDERAL TRAIJF, COMMISSION DECISIONS Complaint 86 F.

pool which the prospective purchaser is generally unable to purchase for the aforesaid reasons. Additionally, where the advertisement offers a "free" item conditioned on the purchase of any pool without further specification, said "free" item is not, in a substantial number of instances, provided to said purchaser.

3. Respondents' advertised offers of swimming pools at the prices stated are not made only for a limited period of time. Said products are advertised regularly at the represented price and on the terms and conditions therein stated. Also, the swimming pools advertised and sold are not being offered for sale at special or reduced prices, and savings are not thereby afforded to their purchasers because of reductions from respondents' regular sellng prices. In fact, respondents do not have regular selling prices, but the prices at which respondents products are sold vary from purchaser to purchaser depending upon the resistance of the particular purchaser. 4. Respondents' swimming pools are not warranted in every respect without conditions or limitations for a period of ten years or any other period of time. Such warranty or guarantee as may be provided by respondents is subject to numerous terms, conditions and limitations with respect to the duration of the warranty or guarantee and fails to set forth the nature ar.d extent of the warranty or guarantee, the identity of the warrantor or guarantor and the manner in which the warrantor or guarantor wil perform thereunder. 5. In a substantial number of instances, the advertised pools are not delivered to the customer within 72 hours of receipt of the customer order.

6. In a substantial number of instances, the advertised pools are not sold on a "No Money Down" basis.

7. After the installation of respondents' swimming pools are completed, the pools of respondents' purchasers will not, in a substantial number of instances, be used for demonstration or advertising purposes by respondents and as a result of allowing, or agreeing tJ allow their pools to be used as models, purchasers are not granted reduced prices, nor do they receive allowances, discounts commission or referral fees.

Therefore, the statements and representations, as set forth in Paragraphs Five and Six hereof, were, and are false, misleading and deceptive.

\' AR. 8. In the further course and conduct of their business, and in furtherance of a sales program to induce the purchase of their swimming pools and other merchandise and home improvement products, respondents and their salesmen or representatives have MELMAR INDUSTRmS, INC., F,T AL. 479 47:J Complaint engaged in the following additional unfair, false, misleading and deceptive acts and practices:

In a substantial number of instances, through the use of the false misleading and deceptive statements, representations and practices set forth in Paragraphs Five through Seven, above, respondents or their representatives have been able to induce customers into signing a contract upon initial contact without giving the customer sufficient time to carefully consider the purchase and consequences thereof. PAR. 9. In many instances, in the usual course of their business respondents sell and transfer said customers' contracts, procured by the aforesaid false, misleading and deceptive means, to various third parties including banks. In any subsequent actiqn to collect monies from said customers pursuant to said contracts, certain valid legal defenses and claims which said customers may have against respondents upon said contracts are unavailable as against said third parties. PAR. 10. In the course and conduct of their business, and at all times mentioned herein, respondents have been in substantial competition, in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, with corporations, firms and individuals engaged in the sale of swimming pools and other merchandise and home improvement products of the same general kind and nature as sold by respondents.

PAR. 11. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had, and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that such statements were and are true and into the purchase of substantial quantities of respondents' swimming pools and other merchandise and home improvement products by reason of said erroneous and mistaken belief.

PAR. 12. The aforesaid acts and practices of the respondents were and are to the prejudice and injury of the public and of respondents competitors and constituted, and now constitute, unfair methods of competition in or affecting commerce, and unfair and deceptive acts and practices in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act.

COUNT II Alleging violations of the Truth in Lending Act and the implementing regulation promulgated thereunder, and of the Federal Trade Commission Act, the allegations of Paragraphs One and Two hereof are incorporated by reference in Count II as if fully set forth verbatim. PAR. 13. In the course and conduct of their business as aforesaid 4RO FEDERAL TRADE COMMISSION DECISIONS Complaint 86 FTC.

respondents have caused, and are now causing, advertisements, as advertisement" is defined in Section 226.2(b) of Regulation Z, the implementing regulation of the Truth in Lending Act duly promulgated by the Board of Governors of the Federal Reserve System, to be placed in various media for the purposes of aiding, promoting or assisting, directly or indirectly, in the credit sales, as "credit sale" is defined in Section 226.2(n) of Regulation Z, of respondents' swimming pools and other merchandise and home improvement products. Said advertisements make use of terms such as "No Money Down, Low, Low Terms without stating all of the following items, prescribed under Section 226.8 of Regulation Z, in the manner and form required by Section 226. 1O(d)(2) thereof:

1. The cash price or the amount ofthe loan, as applicable; 2. The amount of the down payment required or that no down payment is required, as applicable;

3. The number, amount and due dates or period of payments scheduled to repay the indebtedness if the credit is extended; 4. The amount of the finance charge expressed as an annual percentage rate; and 5. The deferred payment price.

PAR. 14. In the further course of their business as aforesaid and in order to facilitate the sale of their swimming pools and other merchandise and home improvement products, respondents, or any of them, regularly extend, and for some time last past have regularly extended C011sumer credit as "consumer credit" is defined in Section 226.2(k) of Regulation Z.

PAR. 15. Subsequent to July 1, 1969, in the ordinary course of their business as aforesaid, and in connection with their credit sales, as credit sale" is defined in Section 226.2(n) of Regulation Z, respondents have caused and are causing their customers to enter into retail installment contracts, hereinafter referred to as the contract. On the contract respondents provide certain consumer credit cost information. Respondents do not provide any other consumer credit information. PAR. 16. By and through the use of the contract referred to in Paragraph Fifteen, respondents:

1. In some instances fail to employ the term "annual percentage rate" as required hy Section 226.8(b)(2) of Regulation Z. 2. Fail to disclose the terms "annual percentage rate" and "finance charge" more conspicuously than other required terminology, as required by Section 226.6(a) of Regulation Z. 3. Include the amount of the finance charge in the computation of the amount financed contrary to the requirements of Section 226.8(c)(7) of Regulation Z.

47:1 Decision and Order 4. In making the charge for credit life insurance optional to the customer, fail to include such charge in the amount financed, as required by Sections 226.4(a)(5) and 226.8(c)(4) of Regulation Z. 5. Fail to disclose the annual percentage rate with an accuracy to the nearest quarter of one percent, as required by Section 226.5(b)(I) of Regulation Z.

6. Fail to use the term "cash down payment" when the down payment is in money, as required by Section 226.8(c)(2) of Regulation Z. 7. F'ail to use the term "unpaid balance of cash price" to describe the difference between the cash price and the casb down payment, as required by Section 226.8(c)(3) of Regulation Z. 8. Fail to identify the property in which a security interest is obtained and held, as required by Section 226.8(b)(5) of Regulation Z. 9. Fail to notify the buyer of said buyer s right to rescind the contract, as provided for by Section 226.9(a) of Regulation Z. 10. Fail to provide each buyer who has tbe right to rescind with two copies of the notice prescribed by Section 226.9(b) of Regulation Z, as required by that Section.

PAR. 17. Pursuant to Section 103(q) of the Truth in Lending Act respondents' aforesaid failure to comply with the provisions of Regulation Z constitutes a violation of that Act, and, pursuant to Section 108 thereof, respondents have thereby violated the Federal Trade Commission Act.

DECISION AND ORDER The Commission having heretofore determined to issue its complaint charging the respondents named in the caption hereto with violation of the Federal Trade Commission Act, and the respondents having been served with notice of said determination and with a copy of the complaint the Commission intended to issue, together with a proposed form of order; 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 complaint to issue herein, a statement that the signing of said agreement is for settement 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 considered the agreement and having provisionally accepted same, and the agreement containing consent order having thereupon been placed on the public record for a period of sixty (60) days now in further conformity with the procedure Decision and Order 86 F.TC. prescrib"d in Section 2.34(b) of its rules, the Commission h"rehy issues its complaint in the form contemplated by said agre"ment, makes the following jurisdictional findings, and enters the following order: 1. Respondent Melmar Industries, Inc., a New Jersey corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of New .Jersey, with its office and principal place of business located at 1 Martin Ave., Cherry Hil, N.J. Respondent Melmar Industri( Inc., a Pennsylvania corporation, is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Pennsylvania with its office and principal place of business located at 2555 Welsh Rd., Philadelphia, Pa. Respondent Prestige Jndustries Incorporated is a corporation organized, existing and doing business under and by virtu" of the laws of the Commonwealth of Pennsylvania with an office at 396 Rodi Rd. Pittsburgh, Pa. and its general office at 1 Martin Ave., Cherry Hill, N.J. Respondent Gold Bond Industries, Inc. is a corporation organized existing and doing business under and by virtue of the laws of the Commonwealth of Pennsylvania with an office at 1 Uam Square Springdale, Pa. and its main office and principal place of business located at 1 Martin Ave., Cherry Hil, N.J. Respondent Marc Wolf, 1216 Cardinal Lake Dr., Cherry Hil, N.J., is an individual and is the president of Melmar Industries, Inc., a New Jersey corporation; is the secretary-treasurer of Melmar Industries Inc., a Pennsylvania corporation; is the president of Prestige Industries Incorporated, a corporation; and is vice president of Gold Bond Industries, Inc., a corporation. Respondent Marc Wolf is responsible for formulating, controlling and directing the policies, acts and practic"s of the corporate respondents.

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 Melmar Industries, Inc., a New J ersey corporation, Melmar Industries, Inc., a Pennsylvania corporation, Prestige Jndustries Incorporated, a corporation, Gold Bond Industries, Inc., a corporation, their successors and assigns, and their officers, and Marc Wolf, individually and as an officer of the aforesaid corporations, and any subsidiary or affiiated company, and respondents' agents, representatives and employees, directly or through any corporation, subsidiary, division or any other device, in connection with the advertising, offering for sale, sale or distribution of swimming pools, swimming pool accessories or any other home improvement MELMAR INDUSTRIES, INC., ET AL. 48CJ 17: Decision and Order products, at retail, in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Using any advertising, sales plan, scheme or device wherein false, misleading or deceptive statements or representations are made in order to obtain leads or prospects for the purchase of swimming pools, swimming pool accessories or any other home improvement products at retail from respondents or any of them. 2. Making representations purporting to offer swimming pools swimming pool accessories or any other home improvement products for sale at retail when the purpose of the representation is not to sell the advertised products but to obtain leads or prospects for the sale of other such products at higher prices.

:1. Disparaging in any manner, or refusing to sell any swimming pool, swimming pool accessory or any other home improvement product which is offered for sale at retail.

4. Representing, directly or by implication, that any swimming pool swimming pool accessory or any other home improvement product is offered for sale when such offer is not a bona fide offer to sell such product at retail.

5. Representing, directly or by implication, that the price for any swimming pool, swimming pool accessory or any other home improvement product sold by respondents at retail is a special or sale price when such price does not constitute a signficant reduction from an established sellng price at which such product has been sold in substantial quantities by respondents in the recent, regular course of their retail business.

6(a) Representing that by purchasing any of said swimming pools swimming pool accessories or other home improvement products customers are afforded savings amounting to the difference between respondents' stated price and respondents ' former price unless such swimming pools, swimming pool accessories or other home improvement products have been sold or offered for sale at retail in good faith at the former price by respondents for a reasonably substantial period of time in the recent, regular course of business. (b) Representing that by purchasing any of said swimming pools swimming pool accessories or other home improvement products customers are afforded savings amounting to the difference between respondents' stated price and a compared price for said swimming pools, swimming pod) accessories or other home improvement products at retail in respondents' trade area unless a substantial number of the principal retaij outlets in the trade area regularly sell said swimming 484 FEDERAL TRADE COMMISSION m;CISIONS Decision and Order 86 F.T. pools, swimming pool accessories or other home improvement products at the compared price or some higher price. (c) Representing that by purchasing any of said swimming pools swimming pool accessories or other home improvement products, at retail, customers are afforded savings amounting to the difference between respondents' stated price and a compared value price for comparable products unless substantial sales of such products of like grade and quality are being made at retail in the trade area at the compared price or a higher price and unless respondents have in good faith conducted a market surveyor obtained representative samples of prices in their trade area which establishes the validity of said compared price and it is clearly and conspicuously disclosed that the comparison is with swimming pools, swimming pool accessories or other home improvement products of like grade and quality. 7. Misrepresenting, in any manner, the amount of savings available to purchasers or prospective purchasers of swimming pools, swimming pool accessories or any other home improvement products sold at retail by respondents.

8. Failing to maintain adequate records (a) which disclose the facts upon which any savings claim, including former pricing claims and comparative value claims and similar representations of the type described in Paragraphs 5, 6(a)-(c) and 7 of this order are based, and (b) from which the validity of any savings claim, including former pricing claims and comparative value claims and similar representations of the type described in paragraphs 5 , 6(a)-(c) and 7 of this order may be determined.

9. Representing, directly or by implication, that a purchaser of products sold by respondents at retail wil receive a "free" television set, pool furniture or any other prize or award unless aU conditions obligations or other prerequisites to the receipt of such television set pool furniture or other prize or award are clearly and conspicuously disclosed.

10. Representing, directly or by implication, that any swimming pool, swimming pool accessory or any other home improvement product is guaranteed, unless the nature and extent of the guarantee, the identity of the guarantor, and the manner in which the guarantor will perform thereunder are clearly and conspicuously disclosed. 11. Failing to incorporate the fonowing statement on the face of aU sales contracts, all notes or other instruments of indebtedness executed by or on behalf of respondents' customers with such conspicuousness and clarity as is likely to be read and understood by the purchaser: 473 Decision and Order NOTICE If you are obtaining eredit in connection with this purchase, you wiIJ be required to 8ib'1 a promissory note, a sales contract or other instrument of indebtedness which may be purchased from the seller by a hank, finance company or any other third party. If such is the case, you wil he required to make your payments to someone other than the seHer. You should be aware that if this happens you may have to pay the note, contract or other instrument of indebtedness in full to its new owner even if your purchase contract is not fulfilled.

12. Misrepresenting, directly or indirectly, that the swimmng pools of any of respondents' purchasers or prospective purchasers will be used for any type of advertising or demonstration purpose or as a model pool or that as a result of such use, respondents' purchasers will be granted reduced prices or wil receive discounts, referral fees or allowances of any type.

13. Contracting for any retail sale whether in the form of trade acceptance, conditional sales contract, promissory note, or otherwise which shall become binding on the buyer prior to midnight of the third day, excluding Sundays and legal holidays, after the date of execution. 14. Failing to furnish the buyer with a fully completed receipt or copy of any contract pertaining to such sale at the time of its execution which is in the same language Spanish, as that principally used in the oral sales presentation and which shows the date of the transaction and contains the name and address of the seller, and in immediate proximity to the space reserved in the contract for the signature of the buyer or on the front page of the receipt if a contract is not used and in bold face type of a minimum size of 10 points, a statement in substantially the following form:

YOU, THE BUYF,R, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DA Y AFTER THE DATE OF THIS TRANSACTION. SEE THE ATTACHED NOTICE OF CANCELLATION form for an explanation of this right.

15. Failing to furnish each buyer, at the time he signs the sales contract or otherwise agrees to buy consumer goods or services from the seHer, a completed form in duplicate, captioned "Notice of Cancellation " which shah be attached to the contract or receipt and easily detachable, and which shah contain in ten point bold face type the following information and statements in the same language Spanish, as that used in the contract:

NOTICE OF CANCELLATION (enter date of transaction) YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY PENALTY OR OBLIGATION, WITHIN THREE BUSINESS DAYS FROM THE ABOVE DATE. IF YOU CANCEL, ANY PROPF,RTYTRADF,D IN, ANY PAYMF,NTS MADE BY 486 FEDERAL TRADF, COMMISSION DF,CISIONS Decision and Order 8G F.

YOU UNDER THF, CONTRACT OR SALE, AND ANY NEGOTlABLE INSTRU- MENT EXECUTED BY YOU WILL BE RETURNED WITHIN 10 BUSINESS DAYS FOLLOWING RECEIPT BY THE SELLER OF YOUR CANCF,LLATION NOTICE, AND ANY SF,CUHITY INTEREST ARISING OUT OF THE TRANSAC- TION WILL BE CANCF,LLF,D.

IF YOU CANCEL, YOU MUST MAKF, AVAILABLE TO THF, SELLEH AT YOUR RESIDENCF" IN SUBSTANTIALLY AS GOOD CONDITION AS WHEN RECEIVF,D, ANY GOODS DELIVERED TO YOU UNDEH THIS CONTRACT OR SALE: OR YOU MAY IF YOU WISH, COMPLY WITH Tile INSTRUCTIONS OF THE SELLF,R RF,GARDING THE RF,TURN SI!PMENT OF THE GOODS AT THF, SELLER' S F,XPENSE AND RISK.

IF YOU DO MAKE THE GOODS AVAILABLF, TO THE SELLER AND THE SF,LLER DOES NOT PICK THEM UP WITHIN 20 DAYS OFTHE DATE OF YOUR NOTICE OF CANCF,LLATION, YOU MAY RETAIN OR DISPOSE OF THE GOODS WITHOUT ANY FURTHER OBLIGATION.

IF YOU FAIL TO MAKE THF, GOODS AVAILABLF, TO THE SELLEH, OH W YOU AGREE TO RETURN THE GOODS TO THF, SELLF,H AND FAIL TO DO SO THEN YOU REMAIN LIABLF, FOR PERFORMANCF, OF ALL OBLIGATIONS UNDER THE CONTRACT.

TO CANCEL THIS TRANSACTION, MAIL OH DELIVER A SIGNED AND DATED COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE OR SEND A TELEGRAM, TO (Name of "dleT). (addre,cs of sellers place of Im.sines:;) NOT LATER THAN MIDNIGHT 01-' (Date).

I HEREBY CANCEL THIS TRANSACTION.

(Date) (Buyer s signature) P-rvided, however That the "N notice of Cancellation" required by this paragraph need not be furnished in those transactions in which respondents have timely furnished the buyer with the notice of the right of rescission required by Paragraph 11 of Part II of this order. 16. Failing, before furnishing copies of the "Notice of Cancellation to the buyer, to complete both copies by entering the name of the seller the address of the seller s place of business, the date of the transaction and the date, not earlier than the third business day following the date of the transaction, by which the buyer may give notice of cancellation. 17. Including in any sales contract or receipt any confession of judgment or any waiver of any of the rights to which the buyer is entitled under this order including specifically his right to cancel the sale in accordance with the provisions of this order. 18. Failing to inform each buyer orally, at the time he signs the contract or purchases the goods or services, of his right to cancel 19. Misrepresenting in any manner the buyer s right to cancel 20. ailing or refusing to honor any valid notice of cancellation by a buyer and within 10 business days afe, receipt of such notice, to (i) refund all payments made under the contract or sale; (i;) return any ), 473 Decision and Order goods or property traded in, in substantially as good condition as when received by the seller; (iii) cancel and return any negotiable instrument executed by the huyer in connection with the contract or sale and take any action necessary or appropriate to terminate promptly any security interest created in the transaction.

21. Negotiating, transferring, selling or assigning any note or other evidence of indebtedness to a finance company or other third party prior to midnight of the fifth business day following the day the contract was signed or the goods or services were purchased. 22. Failing, within 10 business days of receipt of the buyer s notice of cancellation, to notify him whether the seller intends to repossess or abandon any shipped or delivered goods.

Provided, however That nothing contained in this order shall relieve respondents of any additional obligations respecting contracts required by federal law or the law of the Stecte in which the contract is made. When such obligations are inconsistent, respondents can apply to the Commission for relief from this provision with respect to contracts executed in the State in which such different obligations are required. The Commission, upon showing, shall make such modifications as may be warranted in the premises.

PART II It is further ordered That respondents Melmar Industries, Inc., a New Jersey corporation, Melmar Industries, Inc., a Pennsylvania corporation, Prestige Industries Incorporated, a corporation, Gold Bond Industries, Inc., a corporation, their successors and assigns, and their officers, and Marc Wolf, individually and as an officer of the aforesaid corporations, and any subsidiary or affiliated company, and respondents' agents, representatives and employees, directly or through any corporation, subsidiary, division or any other device, in connection with the arrangement, extension or advertisement of consumer credit in connection with the retail sale of swimming pools, swimming pool accessories or any other home improvement products, as advertisement" and Hconsumer credit" are defined in Section 226.2(b) and Section 226.2(k), respectively, of Regulation Z (12 CF'R 9226) of the Truth in Lending Act (15 U. C. 911iol et seq. do forthwith cease and desist from:

1. Causing to be disseminated to the public in any manner whatsoever, any advertisement, for the purposes of aiding, promoting or assisting, directly or indirectly, any extension of consumer credit unless such advertisement states all of the following items prescribed under Section 226.8 of Regulation Z, in the manner and form required by Section 226.10(d)(2) of Regulation Z:

217- 1B4 0 - 7G - 32 Decision and Order 86 F. (a) The cash price or the amount of the loan, as applicable; (b) The amount of the downpayment required or that no downpayment is required, as applicable;

(c) The number, amount, and due dates or period of payments scheduled to repay the indebtedness if the credit is extended; (d) The amount of the finance charge expressed as an annual percentage rate; and (e) The deferred payment price.

2. Failing to employ the term "annual percentage rate" as required by Section 226.8(b )(2) of Regulation Z.

3. Failing to disclose the terms "annual percentage rate" and finance charge" more conspicuously than other required terminology, as required by Section 226.6(a) of Regulation Z. 4. Including the amount of the finance charge in the computation of the amount financed, contrary to the requirements of Section 226.8(c)(7) of Regulation Z.

5. Failing to include the charge for credit life insurance, when not required to be placed within the finance charge, within the amount financed, as required by Sections 226.4(a)(5) a'1d 226.8(c)(4) of Regulation Z.

6. aiJing to disclose the annual percentage rate with an accuracy to the nearest quarter of one percent, as required by Section 226.5(b)(I) of Regulation Z.

7. Failing to employ the term "eash downpayment" to describe the downpayment in money, as required by Section 226.8(c)(2) of Regulation Z.

8. Failing to employ the term "unpaid balance of cash price " to describe the difference between the cash price and the cash downpayment, as required by Section 226.8(c)(3) of Regulation Z. 9. Failing to make a clear identification of the property in which a security interest is obtained and held as required by Section 226.8(b)(5) of Regulation Z.

10. Failing to notify the buyer of said buyer s right to rescind the contract, as provided for by Section 226.9 of Regulation Z. 11. Failing to provide each buyer who has the right to rescind with two copies of the notice prescribed by Section 226.9(b) of Regulation Z as required by that Section.

12. Failing, in any consumer credit transaction or advertisement, to make all the 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. , 226. , 226.9 and 226.10 of Regulation Z.

EPSHTF,IN TRADING COHP., ET AL. 489 489 Decision and Order PART II It is further ordered That respondents distribute a copy of this order to an operating divisions of said corporations and also distribute a copy of this order to an personnel, agents or representatives concerned with the promotion, sale and distribution of swimming pools, swimming pool accessories or any other home improvement products at retail and secure from each such person a signed statement acknowledging receipt of said order.

It is further ordered That respondents notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondents, or any of them, 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 corporations which may affect compliance obligations arising out of this 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 affliation 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, fie with the Commission a report, in writing, setting forth in detail the manner and