5414 Federal Register / Vol. 62, No. 24 / Wednesday, February 5, 1997 / Notices

1 In this Analysis to Aid Public Comment, Herb

Gordon Auto, 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 are

referred to collectively as ‘‘respondent Herb Gordon

Auto’’ or ‘‘respondent.’’

law has been violated as alleged in the

complaint.

Donald S. Clark,

Secretary.

[FR Doc. 97–2809 Filed 2–4–97; 8:45 am]

BILLING CODE 6750–01–P

[File No. 942–3114]

Herb Gordon Auto World, Inc. d/b/a

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; Analysis to

Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

SUMMARY: In settlement of alleged

violations of federal law prohibiting

unfair or deceptive acts or practices and

unfair methods of competition, this

consent agreement, accepted subject to

final Commission approval, would

prohibit, among other things, the Silver

Spring, Maryland-based automobile

dealerships from misrepresenting

financing terms and would require them

them to comply with federal laws

mandating accurate disclosure of the

annual percentage rate and monthly

payments in financed offers and clear

and conspicuous disclosure of major

automobile deal terms. They also agreed

not to advertise terms that are not

actually available to consumers. The

Commission had alleged that, in several

car leasing advertising campaigns, Herb

Gordon Auto had not included all of the

disclosures of lease costs and terms

required under the Consumer Leasing

Act.

DATES: Comments must be received on

or before April 7, 1997.

ADDRESSES: Comments should be

directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., NW,

Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

David Medine, Federal Trade

Commission, 6th and Pennsylvania Ave,

NW, Washington, DC 20580. (202) 326–

3224. Carole Reynolds, Federal Trade

Commission, 6th and Pennsylvania Ave,

NW, Washington, DC 20580. (202) 326–

3230.

SUPPLEMENTARY INFORMATION: Pursuant

to section 6(f) of the Federal Trade

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

46, and § 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 sixty (60) days. The following

Analysis to Aid Public Comment

describes the terms of the consent

agreement, and the allegations in the

accompanying complaint. An electronic

copy of the full text of the consent

agreement package can be obtained from

the Commission Actions section of the

FTC Home Page (for January 23, 1997),

on the World Wide Web, at ‘‘http://

www.ftc.gov/os/actions/htm.’’ A paper

copy can be obtained from the FTC

Public Reference Room, Room H–130,

Sixth Street and Pennsylvania Avenue,

NW, Washington, DC 20580, either in

person or by calling (202) 326–3627.

Public comment is invited. 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

§ 4.9(b)(6)(ii) of the Commission’s rules

of practice (16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order to

Aid Public Comment

The Federal Trade Commission has

accepted an agreement to a proposed

consent order from respondent Herb

Gordon Auto, 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.1

The proposed consent order has been

placed on the public record for sixty

(60) days for reception of comments by

interested persons. Comments received

during this period will become part of

the public record. After sixty (60) 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.

The complaint alleges that respondent

Herb Gordon Auto has disseminated or

caused to be disseminated

advertisements that state initial low

monthly payment amounts and promote

the ‘‘luxury of low payments’’ and in

fine print, inter alia, state an initial

number of payments, a downpayment

and another amount described as a

‘‘purchase option’’ (‘‘Gold Key Plus’’

advertisements). The complaint alleges

that the 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, and

that respondent, therefore, has engaged

in a deceptive act or practice in

violation of section 5(a) of the Federal

Trade Commission Act (‘‘FTC Act’). The

complaint also alleges that the 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,

in violation of the Truth in Lending Act

(‘‘TILA’’) and § 226.24(c) of Regulation

Z. The complaint also alleges that the

Gold Key Plus advertisements fail to

disclose the annual percentage rate for

the financing, using that term or the

abbreviation ‘‘APR,’’ in violation of the

TILA and § 226.24(c) of Regulation Z,

and that this is a deceptive act or

practice in violation of section 5(a) of

the FTC Act.

The complaint also alleges that

respondent Herb Gordon Auto has

disseminated or caused to be

disseminated advertisements that state a

low downpayment and initial low

monthly payment amounts and

thereafter, inter alia, state that the

‘‘balance of 48 payments will be higher

than 1st 12 months’’ and ‘‘cost per

$1,000 borrowed $20.52’’ (‘‘Drive for

95’’ advertisements). The complaint

alleges that the Drive for 95

advertisements misrepresent and fail to

accurately disclose the amount of the

second series of installment payments

required at conclusion of the initial

payments, based on the financing to be

signed at purchase, and that respondent,

therefore, has engaged in a deceptive act

or practice, in violation of section 5(a)

of the FTC Act. The complaint also

alleges that the Drive for 95

advertisements, inter alia, fail to

accurately state the terms of repayment,

by failing to accurately disclose the

amount of the second series of

installment payments required at

conclusion of the initial payments,

based on the financing to be signed at

purchase, in violation of the TILA and

§ 226.24(c) of Regulation Z.

The complaint also alleges that in fine

print in the Gold Key Plus

advertisements, respondent’s

advertisements state an initial number

of payments, a downpayment and

another amount described as a

‘‘purchase option’’ (the ‘‘disclaimer’’).

The complaint also alleges that in fine

print (print), in fine print for a short

duration (television) and orally for a

short duration (radio) in the Drive for 95
Federal Register / Vol. 62, No. 24 / Wednesday, February 5, 1997 / Notices 5415

2The Federal Reserve Board (‘‘Board’’), which

implements the CLA, recently issued revised

Regulation M, 61 FR 52246 (Oct. 7, 1996) (to be

codified at 12 CFR part 213). Revised Regulation M

is not mandatorily effective until Oct. 1, 1997;

compliance with revised Regulation M is optional

starting Oct. 1, 1996. 61 FR at 52246. In addition,

President Clinton recently signed the Omnibus

Consolidated Appropriations Act for Fiscal Year

1997 (‘‘Omnibus Act’), Pub. L. No. 104–208, 110

Stat. 3009 (Sept. 30, 1996). Title II, Section 2605 of

the Omnibus Act amends certain provisions of the

CLA (‘‘revised CLA’’) (to be codified at 15 U.S.C.

1667 et seq.); in the future, the Board will

implement the revised CLA. The revised CLA is

mandatorily effective on the first October 1 that

follows the Board’s promulgation of implementing

regulations, amendments or interpretations by not

less than six months; compliance with the revised

CLA is optional at any time before the mandatory

effective date. See Title II, section 2605(b)(2) of the

Omnibus Act.

Accordingly, the proposed order permits

respondent to comply with the lease advertising

‘‘triggering term’’ rules of existing Regulation M, 12

CFR 213.5(c), as amended, and the CLA, 15 U.S.C.

1667c(a)–(b), by utilizing applicable provisions of

the revised CLA and revised Regulation M. For all

lease advertisements, respondent may utilize

section 184(a) of the revised CLA (to be codified at

15 U.S.C. 1667c(a)), as amended, or utilize

§ 213.7(d) of revised Regulation M (to be codified

at 12 CFR 213.7(d)), as amended. For radio lease

advertisements, respondent may also utilize section

Continued

advertisements, respondent’s

advertisements, inter alia, state ‘‘balance

of 48 payments will be higher than 1st

12 months,’’ and ‘‘cost per $1,000

borrowed $20.52,’’ and an annual

percentage rate (the ‘‘disclaimer’’). The

complaint also alleges that the

disclaimer in respondent’s Gold Key

Plus advertisements is virtually

unreadable and incomprehensible to

ordinary consumers and is not clear and

conspicuous because of the small

typesize. The complaint also alleges that

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. The complaint further

alleges that respondent’s aforesaid

practices in connection with the

disclaimers in its Gold Key Plus and

Drive for 95 advertisements constitute

deceptive practices in violation of

section 5(a) of the FTC Act and

violations of the TILA and § 226.24(c) of

Regulation Z, as more fully set out in

226.24–1 of the Official Staff

Commentary to Regulation Z.

The complaint also alleges that

respondent Herb Gordon Auto 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,’’ in

violation of the TILA and § 226.24(c) of

Regulation Z.

The complaint also alleges that

respondent Herb Gordon Auto 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, in

violation of the Consumer Leasing Act

(‘‘CLA’’) and § 213.5(c) of Regulation M.

The proposed order prohibits

respondent Herb Gordon Auto, in

connection with any advertisement to

promote any extension of consumer

credit, from 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 second series of

installment payments.

The proposed order also requires

respondent Herb Gordon Auto, in any

advertisement to promote any extension

of consumer credit, whenever the

number or amount of payments required

to repay the debt are stated, to

accurately, clearly and conspicuously,

state all of the terms required by

Regulation Z, as follows: The amount or

percentage of the downpayment; the

terms of repayment, including the

amount of any balloon payment, or the

number and amount of any second

series of installment payments, and the

annual percentage rate, using that term

or the abbreviation ‘‘APR.’’

The proposed order further requires

respondent Herb Gordon Auto, in any

advertisement to promote any extension

of consumer credit, whenever 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 is stated, to clearly and

conspicuously 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.’’

The proposed order also prohibits

respondent Herb Gordon Auto, in any

advertisement to promote any extension

of consumer credit, from stating a rate

of finance charge without stating the

rate as an ‘‘annual percentage rate,’’

using that term or the abbreviation

‘‘APR,’’ and from failing to calculate the

rate in accordance with Regulation Z.

The proposed order also requires

respondent Herb Gordon Auto to state

only those terms that actually are or will

be arranged or offered by the creditor, in

any credit advertisement, as required by

Regulation Z.

The proposed order prohibits

respondent Herb Gordon Auto, in

connection with any advertisement to

aid, promote or assist any consumer

lease, from misrepresenting the costs or

terms of leasing a vehicle.

The proposed order also requires

respondent Herb Gordon Auto, in any

advertisement to aid, promote or assist

any consumer lease, whenever 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 is

stated, to state, clearly and

conspicuously, 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, amounts, 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 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.2 The proposed order also
5416 Federal Register / Vol. 62, No. 24 / Wednesday, February 5, 1997 / Notices

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 utilize § 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 utilize

§ 213.7(f) of revised Regulation M, as amended.

3The proposed order permits respondent to

comply with other requirements of existing

Regulation M, 12 CFR part 213, as amended, and

the CLA, 15 U.S.C. 1667–1667e, as amended, by

utilizing revised Regulation M, as amended.

requires respondent in any lease

advertisement to state that a specific

lease of any property at specific

amounts or terms is available only if the

lessor usually and customarily leases or

will lease such property at those

amounts or terms, as required by

Regulation M.

The proposed order also prohibits

respondent Herb Gordon Auto from

failing to comply in any other respect

with the TILA and Regulation Z and the

CLA and Regulation M.3

The proposed order defines the term

‘‘clearly and conspicuously’’ for

respondent’s advertisements in all

media. In a television or videotaped

advertisement, the required disclosures

made in the audio portion of the

advertisement must be 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 must 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. In a radio

advertisement, the required disclosures

must be delivered in a volume, cadence

and location, and for a duration, as to

be readily noticeable, hearable and

comprehensible to an ordinary

consumer. In a print advertisement

(including but not limited to mail

solicitations), the required disclosures

must appear in a size, shade, contrast,

prominence and location as to be

readily noticeable, readable and

comprehensible to an ordinary

consumer. Additionally, nothing

contrary to, inconsistent with or in

mitigation of the required disclosures

can be used in any advertisement.

The purpose of this analysis is to

facilitate public comment on the

proposed order. It is not intended to

constitute an official interpretation of

the agreement and proposed order or to

modify in any way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 97–2807 Filed 2–4–97; 8:45 am]

BILLING CODE 6750–01–P

[File No. 952–3009]

Huling Bros. Chevrolet, Inc.; Huling

Buick, Inc.; Huling Bros. Chrysler/

Plymouth, Inc.; Analysis to Aid Public

Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

SUMMARY: In settlement of alleged

violations of federal law prohibiting

unfair or deceptive acts or practices and

unfair methods of competition, this

consent agreement, accepted subject to

final Commission approval, would

prohibit, among other things, the

Seattle-based automobile dealerships

from misrepresenting financing terms

and would require them to comply with

federal laws mandating accurate

disclosure of the annual percentage rate

and monthly payments in financed

offers and clear and conspicuous

disclosure of major automobile deal

terms. They also agreed not to advertise

terms that are not actually available to

consumers. The Commission had

alleged that Huling Bros.’ advertising

understated the true annual percentage

rate (‘‘APR’’) for their financed purchase

deals or failed to state the APR at all,

even though a triggering term appeared

in the ads, defeating the purpose of the

APR as a means for assisting consumers

in comparison shopping.

DATES: Comments must be received on

or before April 7, 1997.

ADDRESSES: Comments should be

directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., NW.,

Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Charles Harwood, Federal Trade

Commission, Seattle Regional Office,

2896 Federal Building, 915 Second

Ave., Seattle, WA 98174 (206) 220–

6350.

George Zweibel, Federal Trade

Commission, Seattle Regional Office,

2896 Federal Building, 915 Second

Ave., Seattle, WA 98174. (206) 220–

4485

SUPPLEMENTARY INFORMATION: Pursuant

to section 6(f) of the Federal Trade

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

46, and § 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 sixty (60) days. The following

Analysis to Aid Public Comment

describes the terms of the consent

agreement, and the allegations in the

accompanying complaint. An electronic

copy of the full text of the consent

agreement package can be obtained from

the Commission Actions section of the

FTC Home Page (for January 23, 1997),

on the World Wide Web, at ‘‘http://

www.ftc.gov/os/actions/htm.’’ A paper

copy can be obtained from the FTC

Public Reference Room, Room H–130,

Sixth Street and Pennsylvania Avenue,

NW., Washington, DC 20580, either in

person or by calling (202) 326–3627.

Public comment is invited. 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

§ 4.9(b)(6)(ii) of the Commission’s rules

of practice (16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order to

Aid Public Comment

The Federal Trade Commission has

accepted an agreement to a proposed

consent order from respondents Huling

Bros. Chevrolet, Inc., Huling Buick, Inc.,

and Huling Bros. Chrysler/Plymouth,

Inc.

The proposed consent order has been

placed on the public record for sixty

(60) days for reception of comments by

interested persons. Comments received

during this period will become part of

the public record. After sixty (60) 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.

The complaint alleges that respondent

Huling Bros. Chevrolet has

disseminated, or caused to be

disseminated, advertisements that state

annual percentage rates as well as

monthly payment amounts and vehicle

sales prices, but in many instances

understate the annual percentage rates

by more than 1/4 of 1 percentage point,

in violation of the Truth in Lending Act

(‘‘TILA’’) and §§ 226.22(a) and 226.24(b)

and (c) of Regulation Z, and have also

engaged in an unfair or deceptive act or

practice, in violation of section 5(a) of

the Federal Trade Commission Act

(‘‘FTC Act’’).

The complaint also alleges that

respondents Huling Bros. Chevrolet,

Huling Buick, and Huling Bros.

Chrysler/Plymouth have 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 the annual

percentage rate, in violation of the TILA

and § 226.24(c) of Regulation Z.

The complaint also alleges that

respondents Huling Bros. Chevrolet and

Huling Buick have disseminated, or