Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Notices 26209

does NOT mean a safer cigarette.’’ (The

order requires a similar disclosure in

advertising for other tobacco products

Alternative Cigarettes advertises as

having no additives.) The disclosure

must be included in all tobacco

advertising that represents (through

such phrases as ‘‘no additives’’ or

‘‘100% tobacco’’) that the product has

no additives. Part I exempts Alternative

Cigarettes from the disclosure

requirement: (1) For cigarette

advertisements not required to bear the

Surgeon General’s health warning; and

(2) if Alternative Cigarettes possesses

scientific evidence demonstrating that

its ‘‘no additives’’ cigarette poses

materially lower health risks than other

cigarettes of the same type. In general,

the disclosure required by Part I must be

in the same type size and style as the

Surgeon General’s warning and must

appear within a rectangular box that is

no less than 40% of the size of the box

containing the Surgeon General’s

warning.

Part II of the order requires

Alternative Cigarettes to include the

following disclosure, clearly and

prominently, in advertising and on

packaging for herbal cigarettes: ‘‘Herbal

cigarettes are dangerous to your health.

They produce tar and carbon

monoxide.’’ (The order requires a

similar disclosure for other herbal

smoking products.) The disclosure must

be included in all advertising and on

packaging for herbal smoking products

that represent (through such phrases as

‘‘no tobacco,’’ ‘‘tobacco-free,’’ or

‘‘herbal’’) that the product has no

tobacco. Part II also contains an

exemption from the disclosure

requirement if Alternative Cigarettes

possesses scientific evidence

demonstrating that such herbal smoking

products do not pose any material

health risks. In general, the disclosure

required by Part II must be in the same

type size and style as the Surgeon

General’s warning and for

advertisements must appear within a

rectangular box that is the same size as

the box containing the Surgeon

General’s warning.

Part III of the order requires

Alternative Cigarettes to possess

competent and reliable scientific

evidence prior to: (1) Claiming that any

herbal smoking product does not

present the health risks associated with

smoking tobacco cigarettes; of (2)

making any claim about the health risks

associated with the use of any herbal

smoking product.

Part IV requires Alternative Cigarettes

to send a letter to its purchasers for

resale notifying them that they should

discontinue the use of certain existing

Alternative Cigarettes advertisements

and promotional materials and that

Alternative Cigarettes is required to stop

doing business with purchasers for

resale that do not comply with this

request.

Parts V–VIII of the order contain

requirements that Alternative Cigarettes

keep copies of relevant advertisements

and materials substantiating claims

made in the advertisements; provide

copies of the order to certain of its

current and future personnel; notify the

Commission of changes in the

composition or formula of its tobacco

products or herbal smoking products

that may affect compliance with the

order; and notify the Commission of any

changes in the corporate structure that

might affect compliance with the order.

Part IX requires that the individual

respondent notify the Commission of

changes in his employment status for a

period of ten years. Part X requires

Alternative Cigarettes to file one or more

reports detailing compliance with the

order. Part XI provides that the order

will terminate after twenty (20) years

under certain circumstances.

The purpose of this analysis is to

facilitate public comment on the

proposed order, and it is not intended

to constitute an official interpretation of

the agreement and proposed order or to

modify in any way their terms.

By Direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 00–11312 Filed 5–4–00; 8:45 am]

BILLING CODE 6750–01–M

FEDERAL TRADE COMMISSION

[File Nos. 992 3246 and 992 3247]

R.N. Motors, Inc., et al. and Simmons

Rockwell Ford Mercury, Inc., et al.;

Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreements.

SUMMARY: The consent agreements in

these two matters settle alleged

violations of federal law prohibiting

unfair or deceptive acts or practices or

unfair methods of competition. The

attached Analysis to Aid Public

Comment describes both the allegations

in the draft complaints that accompany

the consent agreements and the terms of

the consent orders—embodied in the

consent agreements—that would settle

these allegations.

DATES: Comments must be received on

or before May 30, 2000.

ADDRESSES: Comments should be

directed to: FTC/Office of the Secretary,

Room 159, 600 Pennsylvania Ave., NW,

Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Carole Reynolds or Michelle Chua, FTC/

S–4429, 600 Pennsylvania Ave., NW,

Washington, DC 20580. (202) 326–3230

or 326–3248.

SUPPLEMENTARY INFORMATION: Pursuant

to section 6(f) of the Federal Trade

Commission Act, 38 Stat. 721, 15 U.S.C.

46 and section 2.34 of the Commission’s

Rules of Practice (16 CFR 2.34), notice

is hereby given that the above-captioned

consent agreements containing consent

orders to cease and desist, having been

filed with and accepted, subject to final

approval, by the Commission, have been

placed on the public record for a period

of thirty (30) days. The following

Analysis to Aid Public Comment

describes the terms of the consent

agreements, and the allegations in the

complaints. An electronic copy of the

full text of the consent agreements

package can be obtained from the FTC

Home Page (for April 27, 2000), on the

World Wide Web, at ‘‘http://

www.ftc.gov/ftc/formal.htm.’’ A paper

copy can be obtained from the FTC

Public Reference Room, Room H–130,

600 Pennsylvania Avenue, NW,

Washington, DC 20580, either in person

or by calling (202) 326–3627.

Public comment is invited. Comments

should be directed to: FTC/Office of the

Secretary, Room 159, 600 Pennsylvania

Ave., NW, Washington, DC 20580. Two

paper copies of each comment should

be filed, and should be accompanied, if

possible, by a 31⁄2 inch diskette

containing an electronic copy of the

comment. Such comments or views will

be considered by the Commission and

will be available for inspection and

copying at its principal office in

accordance with section 4.9(b)(6)(ii) of

the Commission’s Rules of Practice (16

CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Orders

To Aid Public Comment

Summary

The Federal Trade Commission has

accepted separate agreements, subject to

final approval, to proposed consent

orders from respondents: (1) R.N.

Motors, Inc., Red Noland Cadillac, Inc.,

and Nelson B. Noland (‘‘Red Noland’’);

and (2) Simmons Rockwell Ford

Mercury, Inc., Simmons Rockwell

Autoplaza, Inc., Don Simmons, Inc., and

Donald M. Simmons, II and Richard L.

Rockwell (‘‘Simmons Rockwell’’). The

persons named in these actions are

named individually and as officers of

their respective corporations.

The proposed consent orders have

been placed on the public record for

26210 Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Notices

thirty (30) days for receipt of comments

by interested persons. Comments

received during this period will become

part of the public record. After thirty

(30) days, the Commission will again

review the agreements and the

comments received and will decide

whether it should withdraw from the

agreements or make final the

agreements’ proposed orders.

The Red Noland and Simmons

Rockwell complaints allege that these

respondents disseminated automobile

lease advertisements that violate the

Federal Trade Commission Act (‘‘FTC

Act’’), the Consumer Leasing Act

(‘‘CLA’’), and Regulation M. The

Simmons Rockwell complaint also

alleges that it disseminated automobile

credit advertisements that violate the

Truth in Lending Act (‘‘TILA’’) and

Regulation Z.

Section 5 of the FTC Act prohibits

false, misleading, or deceptive

representations or omissions of material

information in advertisements. In

addition, Congress established statutory

disclosure requirements for lease and

credit advertisements under the CLA

and the TILA, respectively, and directed

the Federal Reserve Board to promulgate

regulations implementing such

statutes—Regulations M and Z

respectively. See 15 U.S.C. 1667 et seq;

15 U.S.C. 1601 et seq; 12 CFR 213; 12

CFR 226.

I. The Complaints

A. FTC Act Violations

The Red Noland complaint alleges

that, based on the terms prominently

stated in their lease advertisements,

including but not necessarily limited to

the monthly payment amount, the

downpayment, and the security deposit,

respondent failed to disclose, and failed

to disclose adequately, additional terms

pertaining to the lease offer, such as the

total amount due at lease inception,

including but not limited to whether

third-party fees such as taxes, licenses,

and registration fees are required as part

of the total amount due at lease

inception. The Simmons Rockwell

complaint alleges that, based on the

terms prominently stated in their lease

advertisements, including but not

necessarily limited to the monthly

payment amount, respondent failed to

disclose, and/or failed to disclose

adequately, additional terms pertaining

to the lease offer, such as the total

amount due at lease inception,

including but not limited to whether

third-party fees, such as taxes, licenses,

and registration fees, are required as

part of the total amount due at lease

inception. The Red Noland and

Simmons Rockwell complaints allege

that the required information does not

appear at all or appears in fine print

and/or is illegible in the advertisements

and that this information would be

material to consumers in deciding

whether to visit respondents’

dealerships and/or whether to lease an

automobile from respondents. These

practices, according to both complaints,

constitute deceptive acts or practices in

violation of section 5(a) of the FTC Act.

B. CLA and Regulation M Violations

The Red Noland and Simmons

Rockwell complaints also allege that

respondents’ lease advertisements have

violated the CLA and Regulation M. The

Red Noland complaint alleges that

respondent’s ads state the monthly

payment amount, the downpayment,

and the security deposit; the Simmons

Rockwell complaint alleges that

respondent’s ads state the monthly

payment amount—all ‘‘triggering’’ terms

under these laws. The Red Noland and

Simmons Rockwell complaints allege

that respondents failed to disclose, and/

or fail to disclose clearly and

conspicuously, certain additional

‘‘triggered’’ terms, as applicable and as

follows: The total amount due prior to

or at consummation, or by delivery, if

delivery occurs after consummation,

and that such amount: (1) Excludes

third-party fees, such as taxes, licenses

and registration fees; and discloses that

fact; or (2) includes third-party fees

based on a particular state or locality

and discloses that fact and the fact that

such fees may vary by state or locality;

whether or not a security deposit is

required; and the number, amounts, and

timing of scheduled payments.

According to the complaints, Red

Noland’s lease disclosures are omitted

altogether and are not clear and

conspicuous. Simmons Rockwell’s lease

disclosures, if provided, are not clear

and conspicuous because they appear in

fine print and/or are illegible.

The Red Noland and Simmons

Rockwell complaints, therefore, allege

that these practices violate section 184

of the CLA, 15 U.S.C. 1667c, as

amended, and section 213.7 of

Regulation M, 12 CFR 213.7, as

amended.

In addition, the Red Noland

complaint alleges that respondent’s

lease advertisements state specific lease

rates for each of certain advertised

vehicles, but fail to disclose, and fail to

disclose clearly and conspicuously, the

following notice concerning lease rates

required by Regulation M: ‘‘This

percentage may not measure the overall

cost of financing this lease.’’

The Red Noland complaint, therefore,

alleges that this practice violates section

213.4(s) of Regulation M, 12 CFR

213.4(s).

C. TILA and Regulation Z Violations

The Simmons Rockwell complaint

alleges that respondent’s credit

advertisements have violated the TILA

and Regulation Z. It alleges that

respondent’s credit ads state the number

of payments required to finance the

transaction and an annual percentage

rate (expressed as an ‘‘APR’’), but failed

to disclose, and/or failed to disclose

clearly and conspicuously, certain

additional terms required by Regulation

Z, including the amount of the

downpayment and the full terms of

repayment, such as the amount of the

monthly payment.

According to the complaint, Simmons

Rockwell’s credit disclosures, if

provided, are not clear and conspicuous

because they appear in blurred print.

The Simmons Rockwell complaint,

therefore, alleges that these practices

violate section 144 of the TILA, 15

U.S.C. 1664, as amended, and section

226.24(c) of Regulation Z, 12 CFR

226.24(c), as amended.

II. Proposed Consent Orders

The Red Noland and Simmons

Rockwell proposed consent orders

contain provisions designed to remedy

the violations charged and to prevent

the respondents from engaging in

similar acts and practices in the future.

Specifically, Paragraph I.A. of the Red

Noland and Simmons Rockwell

proposed orders prohibit respondents,

in any lease advertisement, from

misrepresenting, in any manner,

directly or by implication, the costs or

terms of leasing a vehicle, including but

not limited to the total amount due at

lease signing or delivery.

Paragraph I.B. of the Red Noland and

Simmons Rockwell proposed orders

prohibit respondents, in any lease

advertisement, from making any

reference to any charge that is part of

the total amount due at lease signing or

delivery or that no such charge is

required, not including a statement of

the periodic payment, unless the

advertisement also states with ‘‘equal

prominence’’ the total amount due at

lease signing or delivery. The

‘‘prominence’’ requirement prohibits

respondents from running deceptive

advertisements that highlight low

amounts due at lease inception with

inadequate disclosure of the actual total

lease inception fees. This ‘‘prominence’’

requirement for lease inception fees is

also found in Regulation M.

Federal Register / Vol. 65, No. 88 / Friday, May 5, 2000 / Notices 26211

Paragraph I.C. of the Red Noland and

Simmons Rockwell proposed orders

prohibit respondents, in any lease, from

stating the amount of any payment or

that any or no initial payment is

required at lease signing or delivery,

unless the advertisement also states,

clearly and conspicuously, all of the

terms required by Regulation M, as

amended and as follows: (1) That the

transaction advertised is a lease; (2) the

total amount due at lease signing or

delivery; (3) whether or not a security

deposit is required; (4) the number,

amounts, and timing of scheduled

payments; and (5) that an extra charge

may be imposed at the end of the lease

term in a lease in which the liability of

the consumer at the end of the lease

term is based on the anticipated residual

value of the vehicle.

Furthermore, Paragraph I.D. of the

Red Noland proposed order prohibits

this respondent from stating a

percentage rate in an advertisement or

in documents evidencing the lease

transaction, unless respondent also

states the notice required by Regulation

M that ‘‘this percentage may not

measure the overall cost of financing

this lease.’’

Paragraph I.D. of the Simmons

Rockwell proposed order, and

paragraph I.E. of the Red Noland

proposed order, prohibit respondents

from engaging in any other violation of

Regulation M, as amended.

In addition, Paragraph II. A. of the

Simmons Rockwell proposed order

enjoins respondent, in any credit

advertisement, from 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 disclosing, clearly and

conspicuously, all of the terms required

by Regulation Z, as follows: (1) The

amount or percentage of the

downpayment; (2) the terms of

repayment; and (3) 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. Paragraph II.B. of this

proposed order also prohibits Simmons

Rockwell from stating a rate of finance

charge unless respondents state the rate

as an ‘‘annual percentage rate’’ or the

abbreviation ‘‘APR,’’ using that term.

Paragraph III.C. of this proposed order

also enjoins Simmons Rockwell from

engaging in any other violation of

Regulation Z, as amended.

The information required by

Paragraph I of the Red Noland proposed

order (lease advertisements), and

Paragraphs I and II of the Simmons

Rockwell proposed order (lease and

credit advertisements), must be

disclosed ‘‘clearly and conspicuously.’’

Both proposed orders define the term

‘‘clearly and conspicuously’’ for Red

Noland’s and Simmons Rockwell’s

advertisements in all media. In a

television, video, radio or Internet or

other electronic advertisement, the

required disclosures made in the audio

portion of the advertisement must be

delivered in a volume, cadence, and

location sufficient for an ordinary

consumer to hear and comprehend. The

required disclosures in the video

portion of the advertisement must be of

a size and shade, and must appear on

the screen for a duration and in a

location, sufficient for an ordinary

consumer to read and comprehend. In a

print advertisement, the required

disclosures must be in a type size and

location sufficient for an ordinary

consumer to read and comprehend, in

print that contrasts with the background

against which it appears. Additionally,

the required disclosures must be in

understandable language and syntax.

Further, nothing contrary to,

inconsistent with, or in mitigation of the

required disclosures shall be used in

any advertisement.

The purpose of this analysis is a

facilitate public comment on the

proposed orders. It is not intended to

constitute an official interpretation of

the agreements and proposed orders or

to modify in any way their terms.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 00–11311 Filed 5–4–00; 8:45 am]

BILLING CODE 6750–01–M

FEDERAL TRADE COMMISSION

[File No. 992 3026]

Santa Fe Natural Tobacco Company,

Inc.; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

SUMMARY: The consent agreement in this

matter settles alleged violations of

federal law prohibiting unfair or

deceptive acts or practices or unfair

methods of competition. The attached

Analysis to Aid Public Comment

describes both the allegations in the

draft complaint that accompanies the

consent agreement and the terms of the

consent order—embodied in the consent

agreement—that would settle these

allegations.

DATES: Comments must be received on

or before May 30, 2000.

ADDRESSES: Comments should be

directed to: FTC/Office of the Secretary,

Room 159, 600 Pennsylvania Ave., NW,

Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Michael Ostheimer, FTC/S–4002, 600

Pennsylvania Ave., NW, Washington,

DC 20580. (202) 326–2699.

SUPPLEMENTARY INFORMATION: Pursuant

to section 6(f) of the Federal Trade

Commission Act, 38 Stat. 721, 15 U.S.C.

46 and section 2.34 of the Commission’s

Rules of Practice (16 CFR 2.34), notice

is hereby given that the above-captioned

consent agreement containing a consent

order to cease and desist, having been

filed with and accepted, subject to final

approval, by the Commission, has been

placed on the public record for a period

of thirty (30) days. The following

Analysis to Aid Public Comment

describes the terms of the consent

agreement, and the allegations in the

complaint. An electronic copy of the

full text of the consent agreement

package can be obtained from the FTC

Home Page (for April 27, 2000), on the

World Wide Web, at ‘‘http://

www.ftc.gov/ftc/formal.htm.’’ A paper

copy can be obtained from the FTC

Public Reference Room, Room H–130,

600 Pennsylvania Avenue, NW,

Washington, DC 20580, either in person

or by calling (202) 326–3627.

Public comment is invited. Comments

should be directed to: FTC/Office of the

Secretary, Room 159, 600 Pennsylvania

Ave., NW, Washington, D.C. 20580. Two

paper copies of each comment should

be filed, and should be accompanied, if

possible, by a 31⁄2 inch diskette

containing an electronic copy of the

comment. Such comments or views will

be considered by the Commission and

will be available for inspection and

copying at its principal office in

accordance with section 4.9(b)(6)(ii) of

the Commission’s Rule of Practice (16

CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order to

Aid Public Comment

The Federal Trade Commission has

accepted, subject to final approval, an

agreement containing a consent order

from Santa Fe Natural Tobacco

Company, Inc. (‘‘Santa Fe’’).

The proposed consent order has been

placed on the public record for thirty

(30) days for receipt for comments by

interested persons. Comments received

during this period will become part of

the public record. After thirty (30) days,

the Commission will again review the

agreement and the comments received,

and will decide whether it should

withdraw from the agreement or make

final the agreement’s proposed order.