Collins Buick, Inc

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IN THE MATTER OF COLLINS BUICK, INC., ET AL.

CONSENT ORDER, ETC., INREGARD TO ALLEGED VIOLATION OF THE TRUTH IN LENDING ACT, THE CONSUMER LEASING ACT, REGULATION Z AND THE FEDERAL TRADE COMMISSION ACT Docket C-3426. Complaint, May 10, 1993--Decision, May 10, 1993 This consent order prohibits, among other things, a Kentucky auto dealership and its principal operating officer from misrepresenting -- in advertising any extension of consumer credit or any consumer lease -- the financing or other terms of the advertised transaction, and from violating certain provisions of the Truth in Lending Act or the Consumer Leasing Act. Appearances For the Commission: David Medine, Carole L. Reynolds and Beverly R. Childs.

For the respondents: Randall Gardner, Barowitz & Goldsmith, Louisville, KY.

COMPLAINT The Federal Trade Commission, having reason to believe that Collins Buick, Inc., a corporation, and William Kevin Collins, individually and as an officer of the corporation, hereinafter sometimes referred to as respondents, have violated the Truth in Lending Act (“TILA”), 15 U.S.C. 1601-1661, as amended, and its implementing Regulation Z, 12 CFR 226, the Consumer Leasing Act (“CLA”), 15 U.S.C. 1667-1667e, as amended, and _ its implementing Regulation M, 12 CFR 213, and the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. 45-58, as amended, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues this complaint and alleges:

COLLINS BUICK, INC. , ET AL. 321 320 Complaint PARAGRAPH |. Collins Buick, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Kentucky, with its principal place of business located at 4120 Bardstown Road, Louisville, Kentucky. PAR. 2. William Kevin Collins is an individual and an officer and director of the corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. His business address is 4120 Bardstown Road, Louisville, Kentucky. PAR. 3. In the ordinary course and conduct of their business, and at least since January 1, 1991, respondents have been engaged in the dissemination of advertisements that promote, directly or indirectly, credit sales and other extensions of other than open end credit in consumer credit transactions, as the terms “‘advertisement,” “credit sale,” and “consumer credit,” are defined in the TILA and Regulation Z. In the ordinary course and conduct of their business, and at least since January 1, 1991, respondents have been engaged in the dissemination of advertisements that promote, directly or indirectly, consumer leases, as the terms “advertisement,” and “consumer lease,” are defined in the CLA and Regulation M. PAR. 4. The acts and practices of respondents alleged in this complaint have been and are in or affecting commerce, as “commerce” is defined in the FTC Act.

COUNT I PAR. 5. Respondents, in the course and conduct of their business, in numerous instances including but not limited to Exhibits A and B, have disseminated or caused to be disseminated advertisements that state an initial, low monthly payment and an initial number of payments. Respondents’ advertisements fail to disclose that the financing to be signed at purchase requires the consumer to make a substantial balloon payment, or a second series of installment payments, at the conclusion of the initial payments. Complaint 116 F.T.C.

PAR. 6. Respondents’ aforesaid practice constitutes a deceptive act or practice, in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

COUNT II PAR. 7. Respondents, in the course and conduct of their business, on numerous occasions have disseminated, or caused to be disseminated, advertisements that state an initial number and amount of payments required to reply the indebtedness, but fail to state the terms of repayment, by failing to disclose the amount of the final, balloon payment, or the number and amount of the second series of installment payments, required at the end of the initial payments, based on the financing to be signed at purchase. PAR. 8. Respondents’ aforesaid practice violates Section 144 of the TILA, 15 U.S.C. 1664, and Section 226.24(c) of Regulation Z, 12 CFR 226.24(c).

COUNT III PAR. 9. Respondents, in the course and conduct of their business, on numerous occasions have disseminated, or caused to be disseminated, advertisements that state the amount or percentage of any down payment, the number of payments or period of repayment, or the amount of any payment, but fail to state all of the terms required by Regulation Z, as follows: the amount or percentage of the down payment, the terms of repayment, and the annual percentage rate, using that term or the abbreviation “APR.” PAR. 10. Respondents’ aforesaid practice violates Section 144 of the TILA, 15 U.S.C. 1664, and Section 226.24(c) of Regulation Z, 12 CFR 226.24(c).

COUNT IV PAR. 11. Respondents, in the course and conduct of their business, on numerous occasions have disseminated, or caused to be COLLINS BUICK, INC., ET AL. 323 320 Complaint disseminated, advertisements that state the amount of any payment, the number of required payments, or that any or no down payment or other payment is required at consummation of the lease, but fail to state all of the terms required by Regulation M, as applicable and as follows: that the transaction advertised is a lease; the total amount of any payment such as a security deposit or capitalized cost reduction required at the consummation of the lease or that no such payments are required; the number, amount, due dates or periods of scheduled payments and the total of such payments under the lease; and a statement of whether or not the lessee has the option to purchase the leased property and at what price and time (the method of determining the price may be substituted for disclosure of the price).

PAR. 12. Respondents’ aforesaid practice violates Section 184 of the CLA, 15 U.S.C. 1667c, and Section 213.5(c) of Regulation M, 12 CFR 213.5(c).

Complaint 116 F.T.C.

EXHIBIT A Goins BUICK ||.

“LOWERS YOUR COST || OF OWNING A NEW BUICK”

& } i All New Buicks In Stock $125 Down & te, A Month . aa a, : powr . ee ae A monte EE. cote, ee . BUICK = oan on ¢ oe e COLLINS BUICK, INC., ET AL. 325 320 Complaint EXHIBIT B MORE THAN YOU EXPECT! MORE.THAN-YOU EXPECT!. __ MORE THAN YOU EXPECT!) N YOU EXPECT!, @ Kentucky Fairgrounds 1991 PARK AVE.

April 4-7 NOW WAS °26.000.00 $21,900 9 To Quin From Enjoy a week on the beach ai” Used Car In Stock \ BY in beautiful Jamaica. Airfare ‘Over 200 Cary Te Chowse Erom from Atlanta & accommo- . . 1986-1991 Motels dations included with any :

= new car purchase.

_MORE THA Hurry For Best Selection, 1990 REGAL LTD.

Demo 10%5 1 17 1 2 2 1104 1826 30 10 96.124420 downs 1 17 1 2 3 1141 1824 38 12 96.819260 CASH5 1 17 1 2 4 1187 1828 11 8 90.330353 or5 1 17 1 2 5 1206 1825 53 11 85.943878 TRADE.5 1 17 1 2 6 1267 1828 15 11 96.212959 up5 1 17 1 2 7 1289 1827 11 9 77.820122 to5 1 17 1 2 8 1307 1826 14 10 88.733727 605 1 17 1 2 9 1328 1828 71 11 45.583111 prvments5 1 17 1 2 10 1389 1817 14 26 83.167084 a4 1 17 1 3 0 1144 1840 21 11 -1 5 1 17 1 3 1 1144 1840 21 11 80.545807 Last2 1 18 0 0 0 1066 1838 779 45 -1 3 1 18 1 0 0 1066 1838 779 45 -1 4 1 18 1 1 0 1066 1838 779 45 -1 5 1 18 1 1 1 1066 1839 332 26 0.000000 =n SAVE THOUSANDS 1990 SKYLARKS "

Loaded 8To - in $ Choose ee feconos | ! From wu ‘cove fd i : 2 Mies from the Open Daily Watterson on Reo 9AM to 8PM Bardstown Road Dr run Saturday 9AM to 6PM . and § mules (rom - 7 Sunday Noon 10 6PM = |_BUICK the Snyder Freeway MORE THAN YOU EXPECT! .._MORE.TJIAN:YOU-EXPECT! ~--MORE THAN TOT EXPECT EXPEC Decision and Order 116 F.T.C.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft complaint that the Bureau of Consumer Protection proposed to present to the Commission for its consideration and that, if issued by the Commission, would charge the respondents with violation of the Truth in Lending Act, 15 U.S.C. 1601 et seg. and its implementing Regulation Z, 12 CFR 226, the Consumer Leasing Act, 15 U.S.C. 1667 et seq. and its implementing Regulation M, 12 CFR 213 and the Federal Trade Commission Act, 15 U.S.C. 45 et seq.; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission's Rules; and The Commission having considered the matter and having determined that it had reason to believe that the respondents have violated the said Acts and Regulation, 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 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order: 1. Respondent Collins Buick, Inc. is a corporation organized, existing, and doing business under and by virtue of the laws of the Commonwealth of Kentucky, with its principal office and place of business located at 4120 Bardstown Road, Louisville, Kentucky. COLLINS BUICK, INC., ET AL. 327 320 Decision and Order 2. Respondent William Kevin Collins is an individual and officer and director of the corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. His business address is 4120 Bardstown Road, Louisville, Kentucky. 3. The Federal Trade Commission has jurisdiction over the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered, That respondent Collins Buick, Inc., a corporation, its successors and assigns and its officers, and William Kevin Collins, individually and as an officer of the corporate respondent, and respondents’ agents, representatives, and employees, directly or through any corporation, subsidiary, division, or any other device, in connection with any advertisement to promote directly or indirectly any extension of consumer credit, as “advertisement,” and “consumer credit” are defined in the TILA and Regulation Z, do forthwith cease and desist from:

A. Misrepresenting in any manner, directly or by implication, the terms of financing the purchase of a vehicle, including but not limited to whether there may be a balloon payment or second series of installment payments, and the amount of any balloon payment or the number and amount of any second series of installment payments.

B. Stating any number or amount of payment(s) required to repay the debt, without stating accurately, clearly and conspicuously, all of the terms required by Regulation Z, as follows: (1) The amount or percentage of the down payment; Decision and Order H16F.T.C.

(2) The terms of repayment, including the amount of any balloon payment, or the number and amount of any second series of installment payments, and (3) The annual percentage rate, using that term or the abbreviation “APR.” If the annual percentage rate may be increased after consummation of the credit transaction, that fact must also be disclosed.

(Section 144 of the TILA, 15 U.S.C. 1664, and Section 226.24(c) of Regulation Z, 12 CFR 226.24(c), as more fully set out in Section 226.24(c) of the Federal Reserve Board’s Official Staff Commentary to Regulation Z, 12 CFR 226.24(c)).

C. Stating the amount or percentage of any down payment, the number of payments or period of repayment, the amount of any payment, or the amount of any finance charge, without stating, clearly and conspicuously, all of the terms required by Regulation Z, as follows:

(1) The amount or percentage of the down payment; (2) The terms of repayment, and (3) The annual percentage rate, using that term or the abbreviation “APR.” If the annual percentage rate may be increased after consummation of the credit transaction, that fact must also be disclosed.

(Section 144 of the TILA, 15 U.S.C. 1664, and Section 226.24(c) of Regulation Z, 12 CFR 226.24(c)).

D. Stating a rate of finance charge without stating the rate as an “annual percentage rate” using that term or the abbreviation “APR,” as required by Regulation Z. If the annual percentage rate may be increased after consummation, the advertisement shall state that fact. The advertisement shall not state any other rate, except that a simple annual rate or periodic rate that is applied to an unpaid balance may be stated in conjunction with, but not more conspicuously than, the annual percentage rate.

COLLINS BUICK, INC., ET AL. 329 320 Decision and Order (Section 144 of the TILA, 15 U.S.C. 1664, and Section 226.24(b) of Regulation Z, 12 CFR 226.24(b)).

E. Failing to state only those terms that actually are or will be arranged or offered by the creditor, in any advertisement for credit that states specific credit terms, as required by Regulation Z. (Section 144 of the TILA, 15 U.S.C. 1664, and Section 226.24(a) of Regulation Z, 12 CFR 226.24(a)).

Il.

It is ordered, That respondent Collins Buick, Inc., a corporation, its successors and assigns and its officers, and William Kevin Collins, individually and as an officer of the corporate respondent, and respondents’ agents, representatives, and employees, directly or through any corporation, subsidiary, division, or any other device, in connection with any advertisement to aid, promote or assist directly or indirectly any consumer lease, as “advertisement,” and “consumer lease” are defined in the CLA and Regulation M, do forthwith cease and desist from:

A. Stating the amount of any payment, the number of required payments, or that any or no down payment or other payment is required at consummation of the lease, unless all of the following items are disclosed, clearly and conspicuously, as applicable, as required by Regulation M:

(1) That the transaction advertised is a lease; (2) The total amount of any payment such as a security deposit or capitalized cost reduction required at the consummation of the lease, or that no such payments are required; (3) The number, amounts, due dates or periods of scheduled payments, and the total of such payments under the lease; (4) A statement of whether or not the lessee has the option to purchase the leased property and at what price and time (the method of determining the price may be substituted for disclosure of the price), and Decision and Order 116 F.T.C.

(5) A statement of the amount or method of determining the amount of any liabilities the lease imposes upon the lessee at the end of the term and a statement that the lessee shall be liable for the difference, if any, between the estimated value of the leased property and its realized value at the end of the lease term, if the lessee has such liability.

(Section 184 of the CLA, 15 U.S.C. 1667c, and Section 213.5(c) of Regulation M, 12 CFR 213.5(c)).

B. Stating that a specific lease of any property at specific amounts or terms is available unless the lessor usually and customarily leases or will lease such property at those amounts or terms, as required by Regulation M.

(Section 184 of the CLA, 15 U.S.C. 1667c, and Section 213.5(a) of Regulation M, 12 CFR 213.5(a)).

II.

It is further ordered, That respondents, their successors and assigns shall distribute a copy of this order to any present or future officers, agents, representatives, and employees having responsibility with respect to the subject matter of this order and that respondents, their successors and assigns shall secure from each such person a signed statement acknowledging receipt of said order. IV.

It is further ordered, That respondents, their successors and assigns shall promptly notify the Commission at least thirty (30) days prior to any proposed change in the corporate entity 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.

COLLINS BUICK, INC., ET AL. 331 320 Decision and Order V.

It is further ordered, That for five years after the date of service of this order respondents, their successors and assigns shall maintain and upon request make available all records that will demonstrate compliance with the requirements of this order. VI.

It is further ordered, That respondents, their successors and assigns shall, within sixty days (60) days of the date of service 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.

Interlocutory Order 116 F.T.C.