Huling Bros. Chevrolet, Inc.; Huling Buick, Inc.; Huling Bros. Chrysler/Plymouth, Inc.; Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[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 Sec. 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 Sec. 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 Secs. 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 Sec. 226.24(c) of

Regulation Z.

The complaint also alleges that respondents Huling Bros. Chevrolet

and Huling Buick have disseminated, or

[[Page 5417]]

caused to be disseminated, advertisements that state conflicting

monthly payment amounts for the same transaction, thereby failing to

disclose accurately the terms of repayment, in violation of the TILA

and Sec. 226.24(c) of Regulation Z, and have also engaged in an unfair

or deceptive act or practice, in violation of section 5(a) of the 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 terms of repayment

(such as monthly payment amounts) or annual percentage rates that are

not actually arranged or offered by respondents, in violation of the

TILA and Sec. 226.24(a) of Regulation Z, and have also engaged in an

unfair or deceptive act or practice, in violation of section 5(a) of

the FTC Act.

The complaint also alleges that the respondents have disseminated,

or caused to be disseminated, advertisements offering new motor

vehicles that state monthly payment amounts, sale prices, and rebates,

and which represent that ``College Graduate'' or ``1st Time Buyer''

rebates are available in conjunction with a payment plan in which

monthly payments are at one amount for the first 12 months and are

approximately double that amount thereafter (``Half Payment Program').

According to the complaint, College Graduate and 1st Time Buyer rebates

are not available to purchasers who choose the Half Payment Program,

and the respondents have therefore engaged in an unfair or deceptive

act or practice, in violation of section 5(a) of the FTC Act.

The complaint also alleges that respondent Huling Buick has

disseminated, or caused to be disseminated, advertisements that state a

rate of a finance charge without stating that rate as an ``annual

percentage rate,'' using that term or the abbreviation ``APR,'' in

violation of the TILA and Sec. 226.24(b) of Regulation Z.

The proposed order prohibits respondents Huling Bros. Chevrolet,

Huling Buick, and Huling Bros. Chrysler/Plymouth, in 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 the annual

percentage rate, the amount of any periodic payment amount, or the

availability of any advertised credit term; the sale price; or the

availability of any advertised rebate.

The proposed order also prohibits the respondents, 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 the respondents, 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 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, and the

annual percentage rate. The proposed order also requires the

respondents to state only those terms that actually are or will be

arranged or offered by the creditor, in any credit advertisement.

The proposed order also requires the respondents, in any

advertisement to promote any extension of consumer credit, to comply in

every other respect with the TILA, as amended, and with Regulation Z,

as amended.

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. 97-2806 Filed 2-4-97; 8:45 am]

BILLING CODE 6750-01-P