S. S. Kresge Company

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FEDERAL TRADE COMMISSION [ 16 CFR Part 13 ] [File No. 762 3094] S. S. KRESGE COMPANY Consent Agreement With Analysis To Aid Public Comment Correction In FR Doc. 77-19946, appearing at page 35858 in the issue for Tuesday, July 12, 1977, on page 35858, in the second col­ umn, the second line from the bottom of the page should read: “the institution of or instituting retail credit collec-” [ 16 CFR Part 441 ] MOBILE HOME SALES AND SERVICE Modification of Designated 'Issues Concern­ ing Proposed Trade Regulation Rule; Extension of Time for Comments; Dead­ line for Notifications of Interest AGENCY : Federal Trade Commission. ACTION: Modification of designated issues concerning proposed trade regula­ tion rule; extension of time for com­ ments; deadline for notifications of in­ terest.

FEDERAL REGISTER, VOL. 42. NO. 145— THURSDAY, JULY 28, 1977

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PROPOSED RULES 38391 SUMMARY: The Commission has con­ sidered several petitions for review of the Presiding Officer’s Final Notice in which certain issues were designated to be considered in accordance with the Commission’s Rules of Practice. After careful consideration of the matter, the Commission has decided to make certain additions and modifications to the desig­ nated issues which are contained herein and to briefly extend the deadline for written comments.

DATES: Deadline for written comments and available exhibits is August 29, 1977. Notifications of Interest regarding the additions and modifications of issues are due by August 12,1977.

ADDRESS: Send comments and notifica­ tions to Raymond L. Rhine, Presiding Officer, Federal Trade Commission, Washington, D.C. 20580.

FOR FURTHER INFORMATION CON­ TACT:

Charles A. Taylor HI (202-523-3660), Federal Trade Commission, Pennsyl­ vania Avenue at Sixth Street NW., Washington, D.C. 20580; or Fred C. Austin (415-556-1270), Room 12470, Federal Trade Commission, Federal Building, 450 Golden Gate Avenue, San Francisco, Calif. 94102. SUPPLEMENTARY INFORMATION:

On May 29, 1975, the Commission pub­ lished in the F ederal Register (40 FR 23334) an initial notice of a proposed trade regulation rule concerning mobile home sales and service, pursuant to the Federal Trade Commission Act, as amended, 15 U.S.C. 41, et seq., the pro­ visions of Part I, Subpart B of the Com­ mission’s Rules of Practice, 16 CFR 1.7- 1.20, and section 553 of Subpart n , Chapter 5, Title 5 of the U.S. Code (Ad­ ministrative Procedure). On May 23,1977, pursuant to the same authority and more specifically to the au­ thority of § 1.12 of the Rules of Practice, the duly appointee1 Presiding Officer for this proceeding published the final notice of proposed rulemaking in the Federal R egister (42 FR 26398). Included in the final notice were 19 Issues which the Presiding Officer deter­ mined to designate in his discretion pur­ suant to § 1.13(d)(1) of the Rules of Practice as issues to be considered in the proceedings in accordance with § 1.13(d) (5) and (6) of the Rules of Practice. Pursuant to § 1.13(c) (2) (ii) of the Rules of Practices, a number of appeals were filed challenging the Presiding Officer’s designation of issues..

After careful consideration of all the views and arguments set forth in this matter, the Commission has taken the following actions.

The Commission has decided to desig­ nate the following additional issues under § 1.13(d)(1) of the Rules of Practice as issues to be considered in accordance with § 1.13(d) (5) and (6) of the Rules of Practice.

Additional Issues 20.

Is proper “set up’’ (§ 441.1(1) ) of a mobile home critical to its performance as a satisfactory dwelling? 21. Have mobile home manufacturers, dealers, or independent contractors im­ properly performed “set up” (§ 441.1(1)) in a significant number of instances? 22. Have warrantors disseminated written warranties that exclude from coverage “defect(s)” (§ 441.1(c)) and other damage arisoing from improper “set up” (§441.1(1))? 23. Have warrantors disseminated written warranties that fail to fully and forcefully disclose the exclusion from coverage or “defect(s) ” (§ 441.1(c)) and other problems arising from improper “set up” (§441.1(1))? 24. Have mobile home dealers or others, acting in their capacity as warrantors (other than manufacturer/warrantors), also engaged in the acts and practices set forth in designated issues 2 to 10, 12, 13, and 16 above in the course of their dealings with independent con­ tractors who have agreed to perform set up (§441.1(1)) or warranty service on behalf of the warrantors (insofar as such acts and practices are applicable to dealers and others acting as warrantors of mobile homes rather than acting as “authorized dealers” (§441.1(1))? Also, references in designated issues 1, 11,14,15, and 17 to “manufacturer/warrantors” are amended to read “warran­ tors”. Finally, designated issue 18 is amended to read as follows: 18.

Have mobile home manufacturers and/or dealers represented in promo­ tional materials the length of their mo­ bile homes as a certain distance which includes the length of the tow hitch? Do such representations have the capacity or tendency to mislead consumers by in­ ducing them to believe that the repre­ sented length dimension is the total dis­ tance between the front and rear walls of the mobile home rather than the overall length of the mobile home includ­ ing the two hitch? For information purposes, the desig­ nated issues in the final notice, as modi­ fied by this action, appear below: Issues Designated Under § 1.13(d) (1) of the R ules of P ractice 1 WARRANTY PERFORMANCE SYSTEMS--- GENERAL 1. Have mobile home warrantors en­ gaged in acts and practices which have resulted in the failure to maintain regu­ lar and effective systems which assure that every “consumer” (§ 441.1(a)) of such warrantor’s mobile homes in fact receives full performance of warranty repairs in accordance with the terms of any applicable warranty within a rea­ sonable time? DISCLOSURE OF THE NATURE OF WARRANTY RIGHTS 2. Have manufacturer/warrantors dis­ seminated written warranties which fail i In this section bracketed citations refer to the Proposed Rule in the Initial Notice and Indicate that the preceding word or phrase enclosed In quotation marks Is used In this Section as It is vised or defined In the Proposed Rule.

to disclose the true nature and extent of consumers’ warranty rights as well as the manner in which such manufacturer/ warrantors perform warranty repairs in the “normal course of business (§441.l ( m ) ) ? (a) Have manufacturer/warrantors failed to disclose to prospective pur­ chasers the fact that those manufac­ turer/warrantors regard their “author­ ized dealer(s) ” (§ 441.1(1) ) as having ex­ clusive responsibility, at least in the first instance, to perform repairs and service for certain classes of defects covered by each manufacturer/war­ rantor’s warranty without compensation or reimbursement by such manufac­ turer/warrantors and without regular and effective action by such manufac­ turer/warrantors to determine whether such repairs and service are in fact fully performed within a reasonable time? (b) Have manufacturer/warrantors represented that their written warran­ ties are the sole legal warranties, that they legally exclude and disclaim all implied-in-law warranties, and that their written warranties set forth the sole legal remedy available to the con­ sumer and disseminated such written warranties to consumers in States where the applicable law renders such exclu­ sions, disclaimers, or limitations unen­ forceable? (c) Have manufacturer/warrantors represented that as a condition precedent to obtaining full performance by manu­ facturer/warrantors of warranty obliga­ tions, every consumer must properly complete and mail to such manufac­ turer/warrantors an owner’s registration card, or a similar card when in fact the manufacturer/warrantor’s practice has been to provide warranty performance regardless of whether the card has been returned? (d) Have manufacturer/warrantors represented that as a condition precedent to obtaining full performance by manu­ facturer/warrantors of warranty obliga­ tions every consumer must transport the defective part or, if necessary, the entire home to the manufacturer/warrantor’s manufacturing plant, when in fact it is the manufacturer/warrantor’s practice to provide such performance at the homesite? SELECTION AND MONITORING OF DEALERS 3.

Have such manufacturer/war­ rantors failed to scrutinize, adequately evaluate and assure that all prospective dealers, prior to their authorization, are capable of, and'Willing to perform war­ ranty service or that such dealers have made adequate arrangèments for per­ forming warranty service through inde­ pendent contractors? 4.

Have manufacturer/warrantors failed to scrutinize, adequately evaluate, and assure that all "authorized dealer(s)” (§441.(i)), either directly or by action through independent contractors, notify the manufacturer/warrantor of the existence of claims initiated by con­ sumers for warranty service or for re­ pairs of defects covered by the warranty? 5.

Have manufacturer/warrantors FEDERAL REGISTER, VOL. 42, NO. 145— THURSDAY, JULY 28, 1977

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38392 PROPOSED RULES failed to scrutinize, adequately evaluate, and assure that all “authorized dealer(s)” (§ 441.1(D), either directly or by action through independent contractors, in fact fully perform and complete within a reasonable time all warranty service and repairs to be performed on behalf of the manufacturer/warrantor? 6.

Have manufacturer/warrantors failed to scrutinize, adequately evaluate, and assure that all prospective dealers, prior to their authorization, either di­ rectly or by action through independent contractors, are capable and willing to perform an “inspection” (§ 441.2(e)) of a mobile home prior to its “tender of possession” (§ 441.1 (j)) to assure the detection of readily ascertainable de­ fects and to assure that the home is be­ ing delivered to the consumer free of all defects which affect the safety of the mobile home or render its substantially uninhabitable and to assure that it is properly “set up” (§ 441.1(1)) ? 7.

Have manufacturer/warrantors failed to scrutinize, adequately evaluate, and assure that all “authorized dealer(s) ” (§ 441.1 (i)), either directly or by action through independent con­ tractors, actually perform or assure the performance of, an “inspect (ion) ” (§ 441.2(e)) of each mobile home prior to its “tender of possession” (§ 441.(j)) to assure the detection of readily ascer­ tainable defects and to assure that the home is being delivered to the consumer free of all defects which affect the safety of the mobile home and render it sub­ stantially uninhabitable and to assure that it is properly “set up” (§ 441.(1))? 8.

Have manufacturer/warrantors failed to scrutinize, adequately evalu­ ate, and assure that all prospective dealers, prior to their authorization, either directly or by action through in­ dependent contractors, are capable and willing to competently “set up” (§ 441.1 (1)) the manufacturer/warrantors’ mo­ bile homes at the homesite selected by the consumers? 9.

Have manufacturer/warrantors failed to scrutinize, adequately evaluate, and assure that all “authorized dealer(s) ” (§ 441.1 (i)), either directly or by action through independent contrac­ tors, actually and competently perform the “set up”

(§441.1(1)) of all of the manufacturer/warrantors’ mobile homes? CONSUMER COMPLAINTS AND REQUESTS FOR SERVICE 10.

Have manufacturer/warrantors failed to establish and maintain an ef­ fective and regular program to ensure prompt action on and fair disposition of mobile home consumer complaints and requests for warranty service and repairs.

DISPUTES BETWEEN WARRANTORS AND DEALERS AND OTHERS 11. Have warrantors unreasonably de­ layed needed warranty service or repairs until after the settlement of disputes be­ tween themselves and their “authorized dealers(s)”

(§ 441.1(D) or between themselves and other parties as to which party is responsible for the service or re­ pairs in question? FACTORY SERVICE CAPABILITIES 12.

Have manufacturer/warrantors failed to maintain an adequate factory service capability, or to make other pro­ visions adequate to assure the full per­ formance within a reasonable time of the repair of defects which are covered by a warranty and which the manufacturer/ warrantor’s “authorized dealer(s) ”

(§ 441.1 (D) are unwilling or unable to perform? WARRANTY PERFORMANCE— CONCLUSIONS 13. Through the acts and practices decribed in designated issues 2 through 12, have such manufacturer/warrantors been, and are they now engaging in: '(a) The dissemination of warranties which fail to fully and completely in­ form actual or potential “consumer(s) ” (1441.1(a)) as to the actual warranty protection offered by manufacturer/ warrantors? (b) Acts and practices which have the tendency and capacity to result in and have resulted in the failure to establish or mantain regular and effective systems which assure that manufacturer/ warrantors will fully correct or repair all defects covered by their warranties within a reasonable time? ACTUAL PERFORMANCE 14. Have the warranty performance systems maintained by warrantors im­ peded or delayed warranty performance beyond a reasonable time in a significant number of instances? 15. Have the warranty performance systems maintained by warrantors pre­ vented the performance of warrantors’ warranty obligations in a significant number of instances? REASONABLE BASIS FOR WARRANTY. CLAIMS 16. Do the acts and practices, as de­ scribed in designated issues 2 through 12 above, if shown to exist, establish a lack of reasonable basis for those manu­ facturer/warrantors to believe that they can perform their warranty obligations within a reasonable time? 17. Does the dissemination of a war­ ranty to consumers by a warrantor have the capacity or tendency to lead con­ sumers to believe that the warrantor has a reasonable basis to believe that its warranty obligations can be fully per­ formed within a reasonable time? REPRESENTATIONS OF DIMENSIONS OF MOBILE HOMES 18. Have mobile home manufacturers and/or dealers represented in promo­ tional materials the length of their mobile homes as a certain distance which includes the length of the tow hitch? Do such representations have the capacity or tendency to mislead consumers by in­ ducing them to believe that the repre­ sented length dimension is the . total dis­ tance between the front and rear walls of the mobile home rather than the over­ all length of the mobile home including the tow hitch? ECONOMIC EFFECTS 19. With respect to the Proposed Rule, what would be the probable economic effect on the mobile home industry, on small businesses, and on consumers of the promulgation of such, provisions in a Pinal Rule? MOBILE HOME “SET UP”

20. Is proper “set up” (§ 441.1(1)) of a mobile home critical to its performance as a satisfactory dwelling? 21. Have mobile home manufacturers, dealers, or independent contractors im­ properly performed “set up” (§ 441.1(1) ) in a significant number of instances? 22. Have warrantors disseminated written warranties that exclude from coverage “defect(s)” ( 1441.1(c)) and other damage arising from improper “set up” (§441.1(1)) by dealers? 23. Have warrantors disseminated written warranties that fail to fully and forcefully disclose the exclusion from coverage of “defect(s)” (§ 441.1(c)) and other problems arising from improper “setup” (§441.1(1)) by dealers? WARRANTY AND SET UP; DEALERS AND THIRD PARTIES 24. Have mobile home dealers or others, acting in their capacity as war­ rantors (other than manufacturer/war­ rantors), also engaged in the acts and practices set forth in designated issues 2 to 10, 12, 13, and 16 above in the course of their dealings with independent con­ tractors who have agreed to perform set up (§441.1(1)) or warranty service on behalf of the warrantors (insofar as such acts and practices are applicable to dealers and others acting as warrantors of mobile homes rather than acting as “authorized dealers” (§ 441.1(1) ) ) ? The Commission also has determined not to designate, beyond the issues listed above, any additional issues pursuant to § 1.13(d) (1) of the Rules of Practice as issues for consideration in accordance with § 1.13(d) (5) and (6) of those Rules. In denying the remaining requests for additions or modifications of the initial designated issues, the Commission has determined that those issues raised are not issues which are required to be desig­ nated under § 1.13(d) (i) of the Rules of Practice. The Commission intends to fur­ ther explain its decision in this regard in the near future.

In making its determination to deny the remaining appeals, the Commission notes that it has found that the Presiding Officer did not abuse his discretion in designating issues under § 1.13 (c) and (d) (1) (ii) of the Rules of Practice. The Presiding Officer may, in his discretion, employ, in whole or in part, the proce­ dures of § 1.13(d) (5) and (6) during the proceeding for any other issues where appropriate as provided for in the Rules of Practice.

Written comments. In view of the above modifications and additions to the designated issues the Commission is ex- FEDERAL REGISTER, VOL. 42, NO. 145— THURSDAY, JULY 28, 1977

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PROPOSED RULES 38393 tending the general comment period. Therefore, all Interested persons may continue to submit written data, views or arguments on any issue of fact, law, pol­ icy or discretion which may have some bearing upon the Proposed Rule until no later than August 29,1977. Such written comments should be entitled “Mobile Home Comments” and be submitted to Raymond L. Rhine, Presiding Officer, Federal Trade Commission, Washington, ,DC 20580. For further information on this subject, see Section A of the Presid­ ing Officer’s Final Notice published in the Federal Register May 23, 1977, 42 FR 26398.

. .

, ' .

, Notification of interest rend requests for cross examination. See Section F in the Presiding Officer’s Final Notice pub­ lished in the F ederal R egister May 23, 1977, 42 FR 26398, for further require­ ments a n d information on this subject The Commission is allowing until no later than August 12,1977, for Interested persons to notify the Presiding Officer of their particular interest with respect to the above modifications and new desig­ nated issues, including a general brief statement of their position. Notifications will be accepted only on the modifica­ tions and the new designated issues herein. Such notifications should be en­ titled “Mobile Home Notification of in ­ terest—Additional Issues”. Issued: July 28,1977.

By direction of the Commission. Carol M. T homas, Secretary.

[PR Doc.77-21727 Filed 7-27-77;8:45 am]