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[Federal Register Volume 60, Number 39 (Tuesday, February 28, 1995)]
[Notices]
[Pages 10861-10864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4865]

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FEDERAL TRADE COMMISSION
[File No. 932 3286]

Felson Builders, Inc., et al.; Proposed Consent Agreement With 
Analysis to Aid Public Comment

agency: Federal Trade Commission.

action: Proposed consent agreement.

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summary: In settlement of alleged violations of federal law prohibiting 
unfair acts and practices and unfair methods of competition, this 
consent agreement, accepted subject to final Commission approval, would 
require, among other things, three California firms and an officer to 
comply with the full disclosure requirements of the Truth in Lending 
Act and Regulation Z, its implementing regulation, in advertising 
credit terms.

dates: Comments must be received on or before May 1, 1995.

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: Jeffrey Klurfeld, San Francisco 
Regional Office, Federal Trade Commission, 901 Market St., Suite 570, 
San Francisco, CA 94103. (415) 744-7920.

supplementary information: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the 
Commission rules of practice (16 CFR 2.34), notice is hereby given that 
the following 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. 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 
Sec. 4.9(b)(6)(ii) of the Commission's rules of practice (16 CFR 
4.9(b)(6)(ii)).

Agreement Containing Consent Order To Cease and Desist

    In the Matter of: Felson Builders, Inc., a corporation; Diamond 
Crossing Associates, L.P., a limited partnership, dba D.C. Funding; 
Elmhurst Partners, L.P., a limited partnership, dba Elmhurst 
Funding; and Joseph L. Felson, individually and as an officer of 
Felson Builders, Inc. File No. 932-3286.

    [[Page 10862]] The Federal Trade Commission having initiated an 
investigation of certain acts and practices of Felson Builders, Inc., a 
corporation; Diamond Crossing Associates, L.P., a limited partnership, 
dba D.C. Funding; Elmhurst Partners, L.P. a limited partnership, dba 
Elmhurst Funding; Joseph L. Felson, individually and as an officer of 
Felson Builders, Inc., and it now appearing that Felson Builders, Inc., 
a corporation; Diamond Crossing Associates, L.P., a limited 
partnership, dba D.C. Funding; Elmhurst Partners, L.P., a limited 
partnership, dba Elmhurst Funding; and Joseph L. Felson, individually 
and as an officer of Felson Builders, Inc., hereinafter sometimes 
referred to as proposed respondents, are willing to enter into an 
agreement containing an order to cease and desist from the use of the 
acts and practices being investigated,
    It is hereby agreed by and between Felson Builders, Inc., by its 
duly authorized officer; Diamond Crossing Associates, L.P., by its duly 
authorized officer; Elmhurst Partners, L.P., by its duly authorized 
officer; and Joseph L. Felson, individually and as an officer of Felson 
Builders, Inc., and their attorneys, and counsel for the Federal Trade 
Commission that:
    1. (a) Proposed respondent Felson Builders, Inc., is a corporation 
organized, existing and doing business under and by virtue of the laws 
of the State of California.
    (b) Proposed respondent Diamond Crossing Associates, L.P., is a 
limited partnership organized, existing and doing business under and by 
virtue of the laws of the State of California.
    (c) Proposed respondent Elmhurst Partners, L.P., is a limited 
partnership organized, existing and doing business under and by virtue 
of the laws of the State of California,.
    (d) Each of the above proposed respondents has its principal place 
of business at 1290 B Street, Suite 210, Hayward, California 94541.
    (e) Proposed respondent Joseph L. Felson is an officer of proposed 
respondents Felson Builders, Inc. He formulates, directs and controls 
the acts and practices of said proposed respondent, and his principal 
place of business is the same as that of said proposed respondent.
    2. Proposed respondents admit all the jurisdictional facts set 
forth in the draft of complaint here attached.
    3. Proposed respondents waive:
    (a) Any further procedural steps;
    (b) The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    (c) All rights to seek judicial review or otherwise to challenge or 
contest the validity of the order entered pursuant to this agreement; 
and
    (d) all claims under the Equal Access to Justice Act.
    4. This agreement shall not become a part of the public record of 
the proceeding unless and until it is accepted by the Commission. If 
this agreement is accepted by the Commission, it, together with the 
draft of the complaint contemplated thereby, will be placed on the 
public record for a period of sixty (60) days and information in 
respect thereto publicly released. The Commission thereafter may either 
withdraw its acceptance of this agreement and so notify the proposed 
respondents, in which event it will take such action as it may consider 
appropriate, or issue and serve its complaint (in such form as the 
circumstances may require) and decision, in disposition of the 
proceeding.
    5. This agreement is for settlement purposes only and does not 
constitute an admission by proposed respondents that the law has been 
violated as alleged in the draft of the complaint here attached, or 
that the facts as alleged in the draft complaint, other than 
jurisdictional facts, are true.
    6. This agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Sec. 2.34 of the Commission's 
rules, the Commission may, without further notice to proposed 
respondents, (1) issue its complaint corresponding in form and 
substance with the draft of complaint here attached and its decision 
containing the following order to cease and desist in disposition of 
the proceeding and (2) make information public in respect thereto. When 
so entered, the order to cease and desist shall have the same force and 
effect and may be altered, modified or set aside in the same manner and 
within the same time provided by statute for other orders. The order 
shall become final upon service. Delivery by the U.S. Postal Service of 
the complaint and decision containing the agreed-to order to proposed 
respondents' address as stated in this agreement shall constitute 
service. Proposed respondents waive any right they may have to any 
other manner of service. The complaint may be used in construing the 
terms of the order, and no agreement, understanding representation, or 
interpretation not contained in the order or the agreement may be used 
to vary or contradict the terms of the order.
    7. Proposed respondents have read the proposed complaint and order 
contemplated hereby. Proposed respondents understand that once the 
order has been issued they will be required to file one or more 
compliance reports showing that they have fully complied with the 
order. Proposed respondents further understand that they may be liable 
for civil penalties in the amount provided by law for each violation of 
the order after it becomes final.

Order

I

    It is ordered that respondents Felson Builders, Inc., a 
corporation, its successors and assigns, and its officers; Diamond 
Crossing Associates, L.P., a limited partnership, dba D.C. Funding, its 
successors and assigns, and its offices; Elmhurst Partners, L.P., a 
limited partnership, dba Elmhurst Funding, its successors and assigns, 
and its officers; and Joseph L. Felson, individually and as an officer 
of Felson Builders, Inc.; and respondents' agents, representatives and 
employees, directly or through any corporation, subsidiary, division , 
or other device, in connection with any extension of consumer credit, 
or in connection with any advertisement to aid, promote, or assist, 
directly or indirectly, any extension of consumer credit, as ``consumer 
credit'' and ``advertisement'' are defined in Regulation Z (12 CFR part 
226) to the Truth in Lending Act (``TILA'') (15 U.S.C. 1601-1667e, as 
amended) do forthwith cease and desist from:
    1. Failing to furnish consumers with the disclosures, as required 
by Section 128 of the TILA, 15 U.S.C. 1638, and by Secs. 226.17(a) and 
226.18 of Regulation Z, 12 CFR 226.17(a) and 226.18.
    2. Failing to furnish consumers prior to the consummation of a 
consumer credit transaction with the disclosures, as required by 
Section 128 of the TILA, 15 U.S.C. 1638, and by Secs. 226.17(b) and 
226.18 of Regulation Z, 12 CFR 226.17(b) and 226.18.
    3. 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:
    (1) The amount or percentage of the downpayment,
    (2) The terms of repayment, including the amount of any balloon 
payment, and
    (3) The ``annual percentage rate,'' using that term or the 
abbreviation ``APR.'' If the annual percentage rate [[Page 10863]] may 
be increased after consummation of the credit transaction, that fact 
must also be disclosed.

(Section 144 of the TILA, 15 U.S.C. 1664, and Sec. 236.24(c) of 
Regulation Z, 12 CFR 226.24(c))

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

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

    5. Failing to comply in any other respect with the Truth in Lending 
Act, 15 U.S.C. 1601-1667e, as amended, or its implementing regulation, 
Regulation Z, 12 CFR part 226, as amended.

II

    It is further ordered that respondents distribute a copy of this 
order to all their operating divisions, if any, and to all present or 
future personnel, agents or representatives having sales, advertising, 
or policy responsibilities with respect to the subject matter of this 
order, and that respondents secure from each such person a signed 
statement acknowledging receipt of said order.

III

    It is further ordered that respondents notify the Commission at 
least thirty (30) days prior to any proposed change in any respondent 
which is a corporation or limited partnership, such as dissolution, 
assignment or sale resulting in the emergence of a successor 
corporation or limited partnership, the creation or dissolution of 
subsidiaries, or any other change in the corporation or limited 
partnership which may affect compliance obligations arising out of the 
order.

IV

    It is further ordered that, for a period of five (5) years 
following service upon him of this order, the individual respondent 
named herein shall notify the Commission of the discontinuance of his 
present business or employment and of his affiliation with any new 
business or employment involved in the advertising and/or extension of 
``consumer credit,'' as that term is defined in the Truth in Lending 
Act and its implementing Regulation Z, no later than thirty (30) days 
after such discontinuance and affiliation has occurred. Such notice 
shall include the respondent's current business address and telephone 
number and a statement as to the nature of the business or employment 
in which he is engaged, as well as a description of his duties and 
responsibilities and financial interest in the business.

V

    It is further ordered that for five (5) years after the date of 
service of this order respondents, their successors and assigns shall 
maintain and upon request make available all records that will 
demonstrate compliance with the requirements of this order.

VI

    It is further ordered that the respondents herein shall within 
sixty (60) days after service upon them of this order, file with the 
Commission a report, in writing, setting forth in detail the manner and 
form in which they have complied with this order.

Analysis of Proposed Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted an agreement, subject to 
final approval, to a proposed consent order from respondents Felson 
Builders, Inc., a California corporation; Diamond Crossing Associates, 
L.P., a limited partnership, dba D.C. Funding; Elmhurst Partners, L.P., 
a limited partnership, dba Elmhurst Funding; and Joseph L. Felson, 
individually and as an officer of the corporation.
    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 and take other appropriate action or make 
final the agreement's proposed order.
    The complaint alleges that respondents Diamond Crossing Associates, 
L.P., and Elmhurst Partners, L.P. have failed to furnish consumers the 
disclosures required by Regulation Z, the implementing regulation of 
the Truth in Lending Act, in violation of Secs. 226.17(a) and 226.18 of 
Regulation Z, and that respondents' practice constitutes an unfair and 
deceptive act or practice in violation of section 5 of the Federal 
Trade Commission Act.
    The complaint also alleges that respondents Felson Builders, Inc., 
Diamond Crossing Associates, L.P., Elmhurst Partners, L.P., and Joseph 
L. Felson, individually and as an officer of Felson Builders, Inc., 
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, the amount of any payment, or the 
amount of any finance charge, 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, including the amount of any 
balloon payment, and the annual percentage rate, using that term or the 
abbreviation ``APR.'' The complaint alleges this practice to be in 
violation of Secs. 226.24(c) of Regulation Z, and that it constitutes 
an unfair and deceptive act or practice in violation of section 5 of 
the Federal Trade Commission Act.
    Finally, the complaint alleges that respondents Felson Builders, 
Inc., Diamond Crossing Associates, L.P., Elmhurst Partners, L.P., and 
Joseph L. Felson, individually and as an officer of Felson Builders, 
Inc., have disseminated or caused to be disseminated advertisements 
that failed to state the rate of a finance charge as an ``annual 
percentage rate,'' using that term or the abbreviation ``APR,'' as 
required by Regulation Z, in violation of Sec. 226.24(b) of Regulation 
Z.
    The proposed order requires respondents to furnish consumers with 
the disclosures required by Regulation Z, in connection with 
respondents' extension of consumer credit.
    The proposed order also requires respondents to furnish consumers, 
prior to the consummation of a consumer credit transaction, with the 
disclosures required by Regulation Z, in connection with respondents' 
extension of consumer credit.
    Finally, the proposed order requires respondents in any 
advertisements to promote any extension of consumer credit, whenever 
the amount or percentage of the downpayment, the number of payments or 
period of repayment, the amount of any payment, or the amount of any 
finance charge is stated, to state clearly and conspicuously, 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, and the ``annual percentage rate,'' 
using that term or the abbreviation ``APR.''
    The purpose of this analysis is to facilitate public comment on the 
proposed order. It is not intended to constitute an official 
interpretation of [[Page 10864]] the agreement and proposed order or to 
modify in any way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 95-4865 Filed 2-27-95; 8:45 am]
BILLING CODE 6750-01-M
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