# TRIAAC Enterprises, Inc.; Proposed Consent Agreement With Analysis To Aid Public Comment

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A95-13660

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** June 5, 1995
- **Citation:** 60 FR 29625

## Text

FEDERAL TRADE COMMISSION
[File No. 932 3040]

TRIAAC Enterprises, Inc.; Proposed Consent Agreement With
Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

-----------------------------------------------------------------------

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, a video dating service franchise to
properly and accurately disclose the annual percentage rate (APR) and
other credit terms of financed memberships, as required by the federal
Truth in Lending Act, and would require the franchise to make refunds
to consumers who were misled by the undisclosed finance charges and
APRs.

DATES: Comments must be received on or before August 4, 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:
Stephen Cohen, FTC/S-4429, Washington, DC 20580. (202) 326-3222.

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's 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
section 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 TRIAAC Enterprises, Inc., a corporation; File
No. 032 3040.

The Federal Trade Commission having initiated an investigation of
certain acts and practices of TRIAAC Enterprises, Inc., a corporation,
(hereinafter sometimes referred to as proposed respondent) and it now
appearing that proposed respondent is 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 proposed respondent and counsel
for the Federal Trade Commission that:
1. TRIAAC Enterprises, Inc., doing business as Great Expectations
of Sacramento (``GE Sacramento''), is a corporation organized,
existing, and doing business under and by virtue of the laws of the
state of California with its office and principal place of business
located at 2277 Fair Oaks Blvd., Suite 195, Sacramento, CA 95825.
2. Proposed respondent admits all the jurisdictional facts set
forth in the draft of complaint.
3. Proposed respondent waives:
(a) Any further procedural steps;
(b) The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law; and
(c) Any right to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement.
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 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 proposed
respondent, 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 respondent that the law has been
violated as alleged in the draft of complaint, or that the facts
alleged in the draft complaint, other than the 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
respondent, (1) issue its complaint corresponding in form and substance
with the draft of complaint 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 respondent's
address as stated in this agreement shall constitute service. Proposed
respondent waives any right it may have to any other manner of service.
The complaint may [[Page 29626]] 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 respondent has read the proposed complaint and order
contemplated hereby. It understands that once the order has been
issued, it will be required to file one or more compliance reports
showing that it has fully complied with the order. Proposed respondent
further understands that it 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:
A. Respondent GE Sacramento, its successors and assigns, and its
officers, agents, representatives, and employees, directly or through
any corporation, subsidiary, division, or other device, in connection
with the offering of credit, do forthwith cease and desist from failing
to accurately calculate and disclose the annual percentage rate, as
required by sections 107 (a) and (c) of the TILA, 15 U.S.C. 1606 (a)
and (c), and sections 226.18(e) and 226.22 of Regulation Z, 12 CFR
226.18(e) and 226.22;
B. Respondent GE Sacramento, its successors and assigns, and its
officers, agents, representatives, and employees, directly or through
any corporation, subsidiary, division, or other device, in connection
with the offering of credit, do forthwith cease and desist from failing
to accurately calculate and disclose the finance charge, as required by
section 106 of the TILA, 15 U.S.C. 1605, and sections 226.4 and
226.18(d) of Regulation Z, 12 CFR 226.4 and 226.18(d);
C. Respondent GE Sacramento, its successors and assigns, and its
officers, agents, representatives, and employees, directly or through
any corporation, subsidiary, division, or other device, in connection
with the offering of credit, do forthwith cease and desist from failing
to segregate the disclosures required by the TILA from all other
information provided in connection with the transaction, including from
the itemization of the amount financed, as required by section
128(b)(1) of the TILA, 15 U.S.C. 1638(b)(1), and section 226.17(a) of
Regulation Z, 12 CFR 226.17(a);
D. Respondent GE Sacramento, its successors and assigns, and its
officers, agents, representatives, and employees, directly or through
any corporation, subsidiary, division, or other device, in connection
with the offering of credit, do forthwith cease and desist from failing
to make all disclosures in the manner, form, and amount required by
sections 122 and 128(a) of the TILA, 15 U.S.C. 1632 and 1638(a), and
sections 226.17 and 226.18 of Regulation Z, 12 CFR 226.17 and 226.18;
E. Respondent GE Sacramento, its successors and assigns, and its
officers, agents, representatives, and employees, directly or through
any corporation, subsidiary, division, or other device, in connection
with the offering of credit, do forthwith cease and desist from failing
to comply with the TILA, 15 U.S.C. 1601 et seq., and Regulation Z, 12
CFR Part 226.

II

Refund Program
It is Further Ordered that:
A. Within thirty (30) days following the date of service of this
order, respondent shall:
1. Determine to whom respondent disclosed on the original TILA
disclosure an annual percentage rate that was miscalculated by more
than one quarter of one percentage point below the annual percentage
rate determined in accordance with section 226.22 of Regulation Z, 12
CFR 226.22, or that disclosed a finance charge that was miscalculated
by more than one dollar below the finance charge determined in
accordance with Sec. 226.4 of Regulation Z, 12 CFR 226.4, so that each
such person will not be required to pay a finance charge in excess of
the finance charge actually disclosed or the dollar equivalent of the
annual percentage rate actually disclosed, whichever is lower, plus a
tolerance of one quarter of one percentage point;
2. Calculate a lump sum refund and a monthly payment adjustment, if
applicable, in accordance with section 108(e) of the TILA, 15 U.S.C.
1604(e);
3. Mail a refund check to each eligible consumer in the amount
determined above, along with Attachment 1; and
4. Provide the Federal Trade Commission with a list of each such
consumer, the amount of the refund, the number of payments refunded,
the amount of adjustment for future payments and the number of future
payments to be adjusted;
B. No later than fifteen (15) days following the date of service of
this order, respondent shall provide the Federal Trade Commission with
the name and address of three independent accounting firms, with which
it, it officers, employees, attorneys, and agents, have no business
relationship. Staff for the Division of Credit Practices of the FTC
shall then have the sole discretion to choose one of the firms
(``independent agent'') and so advise respondent;
C. Within thirty (30) days following the date of adjustments made
pursuant to this section, respondent shall direct the independent agent
to review a statistically-valid sample of refunds. Respondent shall
provide the Federal Trade Commission with a certified letter from the
independent agent confirming that respondent has complied with Part II.
A. of this order;
D. All costs associated with the administration of the refund
program and payment of refunds shall be borne by the respondent.

III

It Is Further Ordered that respondent, its successors and assigns,
shall maintain for at least five (5) years from the date of service of
this order and, upon thirty (30) days advance written request, make
available to the Federal Trade Commission for inspection and copying
all documents and other records necessary to demonstrate fully its
compliance with this order.

IV

It Is Further Ordered that respondent, its successors and assigns,
shall distribute a copy of this order to any present or future officers
and managerial employees having responsibility with respect to the
subject matter of this order and that respondent, its successors and
assigns, shall secure from each such person a signed statement
acknowledging receipt of said order.

V

It Is Further Ordered that respondent, for a period of five (5)
years following the date of service of this order, shall promptly
notify the Commission at least thirty (30) days prior to any proposed
change in its corporate structure such as dissolution, assignment, or
sale resulting in the emergence of a successor corporation, the
creation or dissolution of subsidiaries or affiliates, or any other
change in the corporation that may affect compliance obligations
arising out of the order.

VI

It Is Further Ordered that respondent shall, within one hundred and
eighty (180) days of the date of service of this order, file with the
Commission a report, in writing, setting forth in detail the manner and
form in which it has complied with this order. [[Page 29627]]

Attachment 1

Dear Great Expectations Customer:
As part of our settlement with the Federal Trade Commission for
alleged violations of the Truth in Lending Act, we are sending you the
enclosed refund check in the amount of $______. The refund represents
the amount you were overcharged as a result of errors made by Great
Expectations in calculating or disclosing the annual percentage rate or
finance charge.
[In addition, your future monthly payments have been reduced.
Starting immediately, your monthly payments will be $______.]
We regret any inconvenience this may have caused you.
Great Expectations
Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement to a
proposed consent order from respondent TRIAAC Enterprises, Inc. (``GE
Sacramento'').
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 GE Sacramento, as a creditor under the
Truth in Lending Act (``TILA''), has violated the TILA and its
implementing Regulation Z. Specifically, the TILA requires creditors to
make clear and consistent disclosures of the credit terms in a financed
transaction. GE Sacramento failed to accurately calculate and disclose
the annual percentage rate (``APR'') and the finance charge, which
resulted in some consumers paying more in interest charges and finance
charges than the franchise disclosed. The complaint further alleges
that this practice is unfair or deceptive in violation of the Federal
Trade Commission Act.
Additionally, the complaint alleges that GE Sacramento failed to
accurately disclose the itemization of the amount financed, which
assists consumers in understanding whether they are being charged a
prepaid finance charge or whether any of the proceeds are being
distributed to third parties, and failed to separate the itemization
from all other information provided in connection with the transaction.
Also, GE Sacramento failed to provide a descriptive explanation of the
financing terms. For example, GE Sacramento failed to explain that the
APR is ``the cost of your credit as a yearly rate'' and that the
finance charge is ``the dollar amount the credit will cost you.'' GE
Sacramento also failed to provide a description of the amount financed,
the total of payments, and the total sales price.
Finally, the complaint alleges that GE Sacramento failed to
identify the creditor in each transaction.
The consent agreement would prohibit GE Sacramento from failing to
accurately calculate and disclose the APR and any other terms required
by the TILA.
The consent agreement includes a refund program requiring GE
Sacramento to make adjustments to the account of any consumer to whom
it disclosed an APR or finance charge that was lower than the amount
the consumer actually was required to pay.
The consent agreement would also require GE Sacramento to maintain
records of its compliance with the consent agreement, distribute copies
of the agreement to its employees, and advise the Federal Trade
Commission of any changes in its corporate structure.
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.
Donald S. Clark,
Secretary.
[FR Doc. 95-13660 Filed 6-2-95; 8:45 am]
BILLING CODE 6750-01-M

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A95-13660. Public record. Not legal advice.