Herb Gordon Auto World, Inc.

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

IN THE MATTER OF HERB GORDON AUTO WORLD, INC., ET AL.

CONSENT ORDER, ETC., INREGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT, THE TRUTH IN LENDING ACT, - REGULATION Z, THE CONSUMER LEASING ACT AND REGULATION M Docket C-3734. Complaint, April 15, 1997--Decision, April 15, 1997 This consent order prohibits, among other things, the Maryland company and its seven dealerships from obscuring important cost information in fine or unreadable print, from advertising financed purchase or leasing terms that are not available to consumers, and from misrepresenting the terms of financing or leasing any vehicle, the existence of the amount of any balloon payment, or the existence, number or amount of payments for financed purchases. The consent order requires the respondents to make all the disclosures required by the Truth in Lending Act, Regulation Z, Consumer Leasing Act, and Regulation M, and to ensure that the disclosures are noticeable, readable, and comprehensible to an ordinary customer.

Appearances For the Commission: Carole L. Reynolds.

For the respondents: Charles M. English, Jr., Ober, Kaler, Grimes & Shriver, Washington, D.C.

COMPLAINT The Federal Trade Commission, having reason to believe that Herb Gordon Auto World, Inc. dba Herb Gordon Auto World, Herb Gordon Dodge, Herb Gordon Mercedes-Benz, Herb Gordon Nissan, Herb Gordon Oldsmobile, Herb Gordon Volvo, and Herb Gordon Used Cars, a corporation, ("respondent") has violated the Truth in Lending Act ("TILA"), 15 U.S.C. 1601-1667, as amended, and its implementing Regulation Z, 12 CFR 226, as amended, the Consumer Leasing Act ("CLA"), 15 U.S.C. 1667-1667e, as amended, and its implementing Regulation M, 12 CFR 213, as amended, 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:

PARAGRAPH 1. Herb Gordon Auto World, Inc. dba Herb Gordon Auto World, Herb Gordon Dodge, Herb Gordon Mercedes- Benz, Herb Gordon Nissan, Herb Gordon Oldsmobile, Herb Gordon HERB GORDON AUTO WORLD, INC., ET AL. 1173 1172 Complaint Volvo, and Herb Gordon Used Cars, is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its principal office and place of business located at 3121-3161 Automobile Blvd., Silver Spring, Maryland. PAR. 2. In the ordinary course and conduct of its business, and at least since January 1, 1994, respondent has 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, credit4 1 3 2 6 0 467 991 1642 60 -1 5 1 3 2 6 1 467 997 125 52 67.341743 sale,”5 1 3 2 6 2 612 997 84 43 96.777130 ands 1 3 2 6 3 713 999 253 42 95.872009 consumer credit," are defined in the TILA and Regulation Z. In the ordinary course and conduct of its business, and at least since January 1, 1994, respondent has been engaged in the dissemination of advertisements that promote, directly or indirectly, consumer leases, as the terms advertisement, and consumers 1 3 2 10 9 1952 1270 153 52 96.171349 lease, are defined in the CLA and Regulation M. PAR. 3. The acts and practices of respondent alleged in this complaint have been and are in or affecting commerce, as commerce is defined in the FTC Act.

COUNT ONE PAR. 4. Respondent, in the course and conduct of its business, in numerous instances including but not limited to Exhibit A, has disseminated or caused to be disseminated print advertisements that state initial, low monthly payment amounts, such as $163 per month, and promote the luxury5 1 5 1 5 6 1259 2078 57 43 96.288734 of5 1 5 1 5 7 1325 2077 90 44 96.805244 lows 1 5 1 5 8 1431 2077 258 55 85.859642 payments ("Gold Key Plus advertisements"). In fine print, respondent's Gold Key Plus advertisements, inter alia, state an initial number of payments, a downpayment and another amount described as a purchases 1 5 1 8 9 1919 2283 192 56 91.587944 option. Respondent's Gold Key Plus advertisements misrepresent that the additional amount is optional and fail to disclose that the financing to be signed at purchase requires the consumer to make a substantial balloon payment at the conclusion of the initial payments, which is a mandatory obligation.

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

Complaint 123 F.T.C.

COUNT TWO PAR. 6. Respondent, in the course and conduct of its business, in numerous instances including but not limited to Exhibit A, has disseminated or caused to be disseminated Gold Key Plus advertisements that state initial, low monthly payment amounts and promote the luxury5 1 3 1 5 4 964 777 55 44 95.948181 of5 1 3 1 5 5 1032 778 89 44 96.622429 lows 1 3 1 5 6 1140 777 270 57 95.984154 payments. In fine print, respondent's Gold Key Plus advertisements, inter alia, state an initial number of payments, a downpayment and another amount described as a purchases 1 3 1 8 2 702 984 191 57 90.391571 option. Respondent's Gold Key Plus advertisements fail to accurately state the terms of repayment, by failing to disclose that the additional amount is a final payment and by inaccurately stating that the amount is optional when, in fact, it is mandatory, based on the financing to be signed at purchase.

PAR. 7. Respondent's aforesaid practice violates Section 144(d) of the TILA, 15 U.S.C. 1664(d), and Section 226.24(c) of Regulation Z, 12 CFR 226.24(c).

COUNT THREE PAR. 8. Respondent, in the course and conduct of its business, in numerous instances including but not limited to Exhibit A, has disseminated or caused to be disseminated Gold Key Plus , advertisements, inter alia, that state initial, low monthly payment amounts and promote the luxury5 1 5 1 5 6 1295 2001 57 44 96.568932 of5 1 5 1 5 7 1366 2000 89 43 96.751892 lows 1 5 1 5 8 1474 1998 269 57 95.235069 payments. Respondent's Gold Key Plus advertisements fail to disclose the annual percentage rate for the financing, using that term or the abbreviation APR. PAR. 9. Respondent's aforesaid practice constitutes a deceptive act or practice, in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a), and a violation of Section 144(d) of the TILA, 15 U.S.C. 1664(d) and Section 226.24(c) of Regulation Z, 12 CFR 226.24(c). COUNT FOUR PAR. 10. Respondent, in the course and conduct of its business, in numerous instances including but not limited to Exhibit A, has disseminated or caused to be disseminated Gold Key Plus advertisements that state initial, low monthly payment amounts and boldly promote the luxury5 1 7 1 5 5 1202 2950 56 43 96.179214 of5 1 7 1 5 6 1287 2949 90 43 96.214417 lows 1 7 1 5 7 1410 2947 270 56 74.775589 payments. In fine print, respondent's Gold Key Plus advertisements, inter alia, state an in‘tial number of payments, a downpayment and another amount described as a purchases 1 7 1 8 4 888 3156 174 56 95.027382 option (the disclaimer). The disclaimer in HERB GORDON AUTO WORLD, INC., ET AL. 1175 1172 Complaint respondent's Gold Key Plus advertisements is virtually unreadable and incomprehensible to ordinary consumers because of the extremely small typesize and is not clear and conspicuous. PAR. 11. Respondent's aforesaid practice constitutes a deceptive act or practice, in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a) and a violation of Section 226.24 of Regulation Z, 12 CFR 226.24, as more fully set out in Section 226.24-1 of the Federal Reserve Board's Official Staff Commentary to Regulation Z ("Commentary"), 12 CFR 226.24-1, Supp. 1. COUNT FIVE PAR. 12. Respondent, in the course and conduct of its business, in numerous instances including but not limited to Exhibits B-1, B-2 and B-3, has disseminated or caused to be disseminated print advertisements that boldly state $955 1 5 1 4 6 1497 1389 134 44 96.729950 downs 1 5 1 4 7 1664 1386 108 45 96.095215 with5 1 5 1 4 8 1806 1386 90 44 96.095215 lows 1 5 1 4 9 1929 1384 204 56 96.189865 monthly4 1 5 1 5 0 491 1453 1642 64 -1 5 1 5 1 5 1 491 1465 234 52 96.929771 payments5 1 5 1 5 2 772 1461 70 42 96.943268 for5 1 5 1 5 3 884 1459 73 44 96.284286 thes 1 5 1 5 4 1001 1459 97 44 96.801720 firsts 1 5 1 5 5 1148 1461 50 41 96.750748 125 1 5 1 5 6 1242 1459 200 44 90.871399 months and radio and televised advertisements that boldly state $955 1 5 1 6 6 1409 1528 133 43 96.273026 downs 1 5 1 6 7 1559 1527 87 44 95.858955 ands 1 5 1 6 8 1661 1530 232 53 95.858955 payments5 1 5 1 6 9 1912 1537 48 31 96.545967 as5 1 5 1 6 10 1978 1524 88 44 96.807343 lows 1 5 1 6 11 2083 1537 49 30 96.839211 as4 1 5 1 7 0 494 1593 1636 57 -1 5 1 5 1 7 1 494 1598 117 49 95.434387 $1555 1 5 1 7 2 668 1612 25 31 95.434387 a5 1 5 1 7 3 742 1599 157 44 96.104301 months 1 5 1 7 4 951 1599 69 43 96.909576 for5 1 5 1 7 5 1071 1599 72 43 96.968071 thes 1 5 1 7 6 1195 1597 95 45 96.228760 firsts 1 5 1 7 7 1346 1599 52 42 96.523727 125 1 5 1 7 8 1450 1596 200 44 95.320343 months ("Drive For 95 advertisements"). Respondent's Drive For 95 print, radio and televised advertisements also state various initial, low monthly payment amounts, such as $155 a month. Thereafter, respondent's Drive For 95 print, radio and televised advertisements, inter alia, state balances 1 5 1 12 3 836 1947 56 44 96.308853 of5 1 5 1 12 4 900 1947 56 44 96.850021 485 1 5 1 12 5 972 1952 228 51 95.959328 payments5 1 5 1 12 6 1215 1945 90 45 95.126038 will5 1 5 1 12 7 1322 1945 55 44 96.272713 be5 1 5 1 12 8 1392 1944 152 56 96.318886 higher5 1 5 1 12 9 1557 1944 104 44 96.457283 than5 1 5 1 12 10 1682 1944 62 42 94.847511 ists 1 5 1 12 11 1765 1943 51 43 96.992249 125 1 5 1 12 12 1833 1941 197 45 94.385696 months and costs 1 5 1 13 2 644 2031 79 41 96.474106 pers 1 5 1 13 3 752 2016 166 53 96.632362 $1,0005 1 5 1 13 4 947 2016 233 44 96.047562 borrowed5 1 5 1 13 5 1210 2016 200 48 96.757011 $20.52. Respondent's Drive For 95 advertisements misrepresent and fail to accurately disclose the amount of the second series of installment payments required at the conclusion of the initial payments, based on the financing to be signed at purchase.

PAR. 13. Respondent's 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 SIX PAR. 14. Respondent, in the course and conduct of its business, in numerous instances including but not limited to Exhibits B-1, B-2 and B-3, has disseminated or caused to be disseminated Drive For 95 print advertisements that state $955 1 7 1 4 6 1338 2961 132 42 96.475349 downs 1 7 1 4 7 1481 2958 106 44 96.770432 with5 1 7 1 4 8 1602 2959 87 43 96.566261 lows 1 7 1 4 9 1701 2958 202 54 96.820984 monthly5 1 7 1 4 10 1915 2961 229 53 96.324615 payments4 1 7 1 5 0 497 3025 1649 52 -1 5 1 7 1 5 1 497 3033 69 44 96.868141 for5 1 7 1 5 2 598 3033 73 42 96.187508 thes 1 7 1 5 3 704 3032 96 44 96.187508 firsts 1 7 1 5 4 837 3034 54 41 96.530273 125 1 7 1 5 5 924 3032 202 43 95.794304 months and Drive For 95 radio and televised advertisements that state $955 1 7 1 6 5 1252 3100 112 43 96.911758 downs 1 7 1 6 6 1386 3099 83 44 96.674690 ands 1 7 1 6 7 1492 3103 233 51 96.553551 payments5 1 7 1 6 8 1745 3110 46 30 96.742729 as5 1 7 1 6 9 1809 3096 91 43 96.068687 lows 1 7 1 6 10 1919 3109 48 30 96.390778 as5 1 7 1 6 11 1985 3094 115 48 92.769867 $1555 1 7 1 6 12 2123 3108 25 30 92.769867 a4 1 7 1 7 0 497 3164 1649 61 -1 5 1 7 1 7 1 497 3171 153 45 96.695938 months 1 7 1 7 2 666 3172 68 43 96.798943 for5 1 7 1 7 3 748 3172 72 43 96.735359 thes 1 7 1 7 4 842 3173 64 42 72.188889 ists 1 7 1 7 5 927 3173 51 42 96.863014 125 1 7 1 7 6 993 3171 214 43 96.546806 months. Respondent's Drive For 95 print, radio Complaint 123 F.T.C.

and televised advertisements also state various initial, low monthly payment amounts, such as $155 a month. Thereafter, respondent's Drive For 95 print, radio and televised advertisements, inter alia, state balances 1 4 1 4 3 936 619 54 43 95.603043 of5 1 4 1 4 4 998 620 56 42 96.833290 485 1 4 1 4 5 1070 625 228 49 96.641075 payments5 1 4 1 4 6 1312 618 92 44 96.790436 will5 1 4 1 4 7 1419 618 56 43 96.631035 be5 1 4 1 4 8 1490 616 152 57 96.884651 higher5 1 4 1 4 9 1656 617 102 43 96.458908 than5 1 4 1 4 10 1778 618 63 42 95.692322 ists 1 4 1 4 11 1862 618 51 42 96.920288 125 1 4 1 4 12 1929 618 197 42 95.821526 months and costs 1 4 1 5 2 744 701 78 42 96.473244 pers 1 4 1 5 3 852 687 164 53 96.281754 $1,0005 1 4 1 5 4 1044 688 233 44 96.678276 borrowed5 1 4 1 5 5 1308 687 200 49 94.882950 $20.52. Respondent's Drive For 95 advertisements fail to accurately disclose the terms of repayment, by failing to accurately state the amount of the second series of installment payments required at the conclusion of the initial payments, based on the financing to be signed at purchase. PAR. 15. Respondent's aforesaid practice violates Section 144(d) of the TILA, 15 U.S.C. 1664(d), and Section 226.24(c) of Regulation Z, 12 CFR 226.24(c).

COUNT SEVEN PAR. 16. Respondent, in the course and conduct of its business, in numerous instances including but not limited to Exhibits B-1, B-2 and B-3, has disseminated or caused to be disseminated Drive For 95 print advertisements that state $955 1 6 1 4 6 1429 1630 131 43 96.584763 downs 1 6 1 4 7 1572 1629 106 44 96.331474 with5 1 6 1 4 8 1691 1630 87 43 96.443474 lows 1 6 1 4 9 1790 1629 199 56 96.681961 monthly5 1 6 1 4 10 2000 1634 227 51 96.527039 payments4 1 6 1 5 0 596 1698 1633 46 -1 5 1 6 1 5 1 596 1699 68 43 96.446289 for5 1 6 1 5 2 694 1699 73 43 96.384109 thes 1 6 1 5 3 800 1699 96 44 96.619896 firsts 1 6 1 5 4 932 1701 52 41 96.342880 125 1 6 1 5 5 1016 1700 201 44 94.045906 months and Drive For 95 radio and televised advertisements that state $955 1 6 1 6 5 1316 1770 132 42 95.661789 downs 1 6 1 6 6 1464 1769 83 43 95.661789 ands 1 6 1 6 7 1563 1767 114 49 96.087128 $1555 1 6 1 6 8 1697 1782 25 30 96.741577 a5 1 6 1 6 9 1737 1768 155 44 96.493362 months 1 6 1 6 10 1910 1768 69 44 96.560478 for5 1 6 1 6 11 1994 1768 72 44 96.996658 thes 1 6 1 6 12 2088 1770 65 42 93.782852 ists 1 6 1 6 13 2175 1769 51 42 95.779846 124 1 6 1 7 0 593 1837 1636 58 -1 5 1 6 1 7 1 593 1839 216 43 90.874039 months. Respondent's Drive For 95 print, radio and televised advertisements also state various initial, low monthly payment amounts. In fine print in the print advertisements, in fine print for a short duration in the televised advertisements, and orally for a short duration in the radio advertisements, respondent's Drive For 95 advertisements, inter alia, state balances 1 6 1 12 6 1639 2185 55 43 95.681587 of5 1 6 1 12 7 1713 2187 56 41 96.639259 485 1 6 1 12 8 1796 2192 232 48 96.522087 payments5 1 6 1 12 9 2054 2185 92 44 95.930817 will5 1 6 1 12 10 2172 2185 56 43 95.930817 be4 1 6 1 13 0 595 2254 1634 57 -1 5 1 6 1 13 1 595 2254 151 56 96.703857 higher5 1 6 1 13 2 760 2256 101 43 96.667625 than5 1 6 1 13 3 883 2257 62 42 89.147911 Ists 1 6 1 13 4 965 2258 51 41 95.758934 125 1 6 1 13 5 1034 2257 209 51 95.758934 months, costs 1 6 1 13 7 1400 2270 76 41 96.409920 pers 1 6 1 13 8 1494 2255 162 52 96.409920 $1,0005 1 6 1 13 9 1674 2256 231 42 96.902916 borrowed5 1 6 1 13 10 1922 2254 201 53 95.882751 $20.52, and an annual percentage rate (the disclaimer). The disclaimer in respondent's Drive For 95 advertisements is _ virtually incomprehensible to ordinary consumers and is not clear and conspicuous because of the small typesize in the print and televised advertisements and because of the short duration in the radio and televised advertisements.

PAR. 17. Respondent's aforesaid practice constitutes a deceptive act or practice, in violation of Section S(a) of the FTC Act, 15 U.S.C. 45(a), and a violation of Section 226.24 of Regulation Z, 12 CFR 226.24, as more fully set out in Section 226.24-1 of the Commentary, 12 CFR 226.24-1, Supp. 1.

HERB GORDON AUTO WORLD, INC., ET AL. iD wars 1172 Complaint COUNT EIGHT PAR. 18. Respondent, in the course and conduct of its business, in numerous instances has disseminated or caused to be disseminated advertisements that state the amount or percentage of any downpayment, 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 downpayment, the terms of repayment, and the annual percentage rate, using that term or the abbreviation APR. PAR. 19. Respondent's aforesaid practice violates Section’144(d) of the TILA, 15 U.S.C. 1664(d), and Section 226.24(c) of Regulation Z, 12 CFR 226.24(c).

COUNT NINE PAR. 20. Respondent, in the course and conduct of its business, in numerous instances has disseminated or caused to be disseminated advertisements that state the amount of any payment, the number of required payments, or that any or no downpayment 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; 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 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. PAR. 21. Respondent's 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 123 F.T.C.

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{ W98pta we ST ¢g ATqtyxd pue ‘edeq OTpne ue st zq at DO NOT WRITE.¢ RETURN IT WE Decision and Order 123 F.T.C, 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 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 respondent with violation of the Truth in Lending Act, 15 U.S.C. 1601 ef seq. 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 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 considered the matter and having determined that it had reason to believe that the respondent has 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 Herb Gordon Auto World, Inc. dba Herb Gordon Auto World, Herb Gordon Dodge, Herb Gordon Mercedes-Benz, Herb Gordon Nissan, Herb Gordon Oldsmobile, Herb Gordon Volvo, and Herb Gordon Used Cars, is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its principal office and place of business located at 3121-3161 Automobile Blvd., Silver Spring, Maryland. 2. The Federal Trade Commission has jurisdiction over the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

HERB GORDON AUTO WORLD, INC., ET AL. 1181 1172 Decision and Order ORDER DEFINITIONS Clearly5 1 2 1 3 2 823 626 92 43 96.925789 ands 1 2 1 3 3 929 624 340 57 96.295364 conspicuously as used herein shall mean: (a) In a television or videotaped advertisement, the required disclosures made in the audio portion of the advertisement shall be delivered in a volume, cadence and location, and for a duration, as to be readily noticeable, hearable and comprehensible to an ordinary consumer. The required disclosures made in the video portion of the advertisement shall appear on the screen in a size, shade, contrast, prominence and location, and for a duration, as to be readily noticeable, readable and comprehensible to an ordinary consumer. (b) In a radio advertisement, the required disclosures shall be delivered in a volume, cadence and location, and for a duration, as to be readily noticeable, hearable and comprehensible to an ordinary consumer.

(c) Ina print advertisement (including but not limited to mail solicitations), the required disclosures shall appear in a size, shade, contrast, prominence and location as to be readily noticeable, readable and comprehensible to an ordinary consumer. Nothing contrary to, inconsistent with or in mitigation of the required disclosures shall be used in any advertisement. L It is ordered, That respondent Herb Gordon Auto World, Inc. dba Herb Gordon Auto World, Herb Gordon Dodge, Herb Gordon Mercedes-Benz, Herb Gordon Nissan, Herb Gordon Oldsmobile, Herb Gordon Volvo, and Herb Gordon Used Cars, a corporation, its successors and assigns, and its officers, 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 consumers 1 6 1 9 4 1312 2788 158 44 96.131737 credit are defined in the Truth in Lending Act ("TILA"), 15 U.S.C. 1601-1667, as amended, and its implementing Regulation Z, 12 CFR 226, as amended, do forthwith cease and desist from:

Decision and Order 123 F.T.C.

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, and as amended: (1) The amount or percentage of the downpayment; (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(d) of the TILA, 15 U.S.C. 1664(d), as amended, and Section 226.24(c) of Regulation Z, 12 CFR 226.24(c), as amended, as more fully set out in Section 226.24(c) of the Federal Reserve Board's Official Staff Commentary to Regulation Z (hereinafter referred to as Commentary), 12 CFR 226.24(c), Supp. 1, as amended).

C. Stating the amount or percentage of any downpayment, 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, and as amended:

(1) The amount or percentage of the downpayment; (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(d) of the TILA, 15 U.S.C. 1664(d), as amended, and Section 226.24(c) of Regulation Z, 12 CFR 226.24(c)), as amended, as more fully set out in Section 226.24(c) of the Commentary, 12 CFR 226.24(c), Supp. 1, as amended).

HERB GORDON AUTO WORLD, INC., ET AL. 1183 1172 Decision and Order D. Stating a rate of finance charge without stating the rate as an annual5 1 3 2 1 2 679 400 260 49 95.786316 percentages 1 3 2 1 3 955 394 109 43 95.747734 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.

(Section 144(c) of the TILA, 15 U.S.C. 1664(c), as amended, and Section 226.24(b) of Regulation Z, 12 CFR 226.24(b), as amended, as more fully set out in Section 226.24(b) of the Commentary, 12 CFR 226.24(b), Supp. 1, as amended).

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 142 of the TILA, 15 U.S.C. 1662, as amended, and Section 226.24(a) of Regulation Z, 12 CFR 226.24(a), as amended). F, Failing to comply in any other respect with Regulation Z and the TILA.

(Regulation Z, 12 CFR 226, as amended, and the TILA, 15 U.S.C. 1601-1667, as amended).

II.

It is ordered, That respondent, its successors and assigns, and its officers, 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 consumer4 1 5 1 6 0 482 2308 1636 57 -1 5 1 5 1 6 1 482 2313 135 42 96.308678 lease are defined in the Consumer Leasing Act ("CLA"), 15 U.S.C. 1667-1667e, as amended, and its implementing Regulation M, 12 CFR 213, as amended, do forthwith cease and desist from: A. Misrepresenting in any manner, directly or by implication, the costs or terms of leasing a vehicle.

B. Stating the amount of any payment, the number of required payments, or that any or no downpayment 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, as amended:

(1) That the transaction advertised is a lease; Decision and Order 123 F.T.C.

(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 (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.

For all lease advertisements, respondent may comply with the requirements of this subparagraph by utilizing Section 184(a) of the CLA, 15 U.S.C. 1667c(a), as amended by Title II, Section 2605 of the Omnibus Consolidated Appropriations Act for Fiscal Year 1997 ("Omnibus Act"), Pub. L. No. 104-208, 110 Stat. 3009, 3009-473 (Sept. 30, 1996) (to be codified at 15 U.S.C. 1667c(a)) ("Section 184(a) of the revised CLA"), as amended, or by utilizing Section 213.7(d) of revised Regulation M, 61 Fed. Reg. 52246, 52261 (Oct. 7, 1996) (to be codified at 12 CFR 213.7(d)) ("revised Regulation M"), as amended. For radio lease advertisements, respondent may also comply with the requirements of this subparagraph by utilizing Section 184(b) of the CLA, 15 U.S.C. 1667c(b), as amended by Title II, Section 2605 of the Omnibus Act (to be codified at 15 U.S.C. 1667c(c)) ("Section 184(c) of the revised CLA"), as amended, or by utilizing Section 213.7(f) of revised Regulation M (to be codified at 12 CFR 213.7(f)), as amended. For television lease advertisements, respondent may also comply with the requirements of this subparagraph by utilizing Section 213.7(f) of revised Regulation M, as amended.

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

C. Stating that a specific lease of any property at specific amounts or terms is available unless the lessor usually and customarily leases HERB GORDON AUTO WORLD, INC., ET AL. 1185 1172 Decision and Order or will lease such property at those amounts or terms, as required by Regulation M. .

(Section 213.5(a) of Regulation M, 12 CFR 213.5(a), as amended). D. Failing to comply in any other respect with Regulation M and the CLA.

Respondent may comply with the requirements of this subparagraph by utilizing revised Regulation M, 61 Fed. Reg. 52246 (Oct. 7, 1996) (to be codified at 12 CFR 213), as amended. (Regulation M, 12 CFR 213, as amended, and the CLA, 15 U.S.C. 1667-1667e, as amended).

Ill.

It is further ordered, That respondent, its 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 secure from each such person a signed statement acknowledging receipt of said order. IV.

It is further ordered, That respondent, its 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.

V.

It is further ordered, That for five years after the date of service of this order respondent, its 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 respondent, its successors and assigns shall, within sixty (60) days of the date of service of this order, file Decision and Order 123 F.T.C.

with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order. VII.

It is further ordered, That this order will terminate on April 15, 2017, or twenty years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of: A. Any paragraph in this order that terminates in less than twenty years;

B. This order's application to any respondent that is not named as a defendant in such complaint; and C. This order if such complaint is filed after the order has terminated pursuant to this paragraph.

Provided further, that if such complaint is dismissed or a federal court rules that the respondent did not violate any provision of the order, and the dismissal or ruling is either not appealed or upheld on appeal, then the order will terminate according to this paragraph as though the complaint was never filed, except that the order will not terminate between the date such complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date such dismissal or ruling is upheld on appeal.

THE MONEY TREE, INC., ET AL. 1187 1187 Complaint