The Administrative Co.; Michael P. McIntyre; Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 932-3019]

The Administrative Co.; Michael P. McIntyre; 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 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

Administrative Company and McIntyre from making misrepresentations

about living trusts, and would require them to make certain disclosures

with regard to legal challenges that can be made against living trusts,

the possibility of probate for certain estates regardless of whether

living trusts are used, and the transfer of consumers' assets into the

trusts. The agreement settles allegations that the respondents made

numerous false statements about the benefits and appropriateness of

living trusts, in general, and about living trusts they sold, in

particular.

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: Janice Charter, Federal Trade

Commission, Denver Regional Office, 1961 Stout Street, Suite 1523,

Denver, CO 80294. (303) 844-2272. Elizabeth Palmquist, Federal Trade

Commission, Denver Regional Office, 1961 Stout Street, Suite 1523,

Denver, CO 80294. (303) 844-2272.

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 16, 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 agreed to accept, subject to final

approval, a proposed consent order settling charges that Michael P.

McIntyre and The Administrative Company (``TAC'') violated Section 5 of

the Federal Trade Commission Act.

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.

This matter concerns the sale of living trusts to senior citizens

through membership in the American Association for Senior Citizens

(``AASC''). The respondents covered by the proposed order include The

Administrative Company, the company through which all of AASC's

business was conducted, and Michael P. McIntyre, the President of TAC.

The complaint alleges that the respondents violated section 5 of

the Federal Trade Commission Act by making numerous misrepresentations

about the advantages of living trusts over other forms of estate

planning. Specifically, the complaint alleges that respondents have

misrepresented that (1) the use of a living trust avoids all

administrative costs; (2) at death, a living trust ensures that assets

are distributed immediately or almost immediately; (3) a living trust

cannot be challenged; (4) living trusts are prepared by local

attorneys; (5) a living trust protects against catastrophic medical

costs; (6) a living trust is the appropriate estate planning device for

every consumer; and (7) there are no disadvantages to a living trust.

The proposed consent order contains provisions which are designed

to remedy the alleged violations and to prevent the respondents from

engaging in similar acts and practices in the future. The proposed

order would prohibit the respondents from making the misrepresentations

alleged in the complaint and set forth above. Additionally, the order

would require the respondents to disclose to prospective purchasers

that living trusts may be challenged on similar grounds as wills and

that they may not be appropriate in all instances.

Under the order, the respondents also would be required to provide

four affirmative disclosures in situations where the statements would

be true. (1) Some states have created a mechanism for ``informal

probate'' of an estate if the estate meets certain criteria, which

significantly reduces the time involved in probate. This disclosure

would be required in states where informal probate is available. (2) If

the transfer of an individual's assets into the living trust is not

included in the price of creating the living trust, that fact must be

disclosed. (3) If it is the sole responsibility of the purchaser of the

living trust to transfer assets into the trust, that fact must be

disclosed. (4) In some states, but not in others, creditors have a

longer period of time to file claims against a living trust than

against a probated estate. This fact would have to be disclosed in such

states.

The proposed order would require the respondents to distribute the

proposed order to their officers, agents, and all personnel who

participate in any way in respondents' sales activities relating to

living trusts. Additionally, the order would require TAC to notify the

Commission of any changes in its corporate structure, and Michael

McIntyre to notify the Commission of his affiliation with any new

business. The proposed order also requires the respondents to retain

for five years all materials that they rely upon in making

representations covered by the order. Finally, the respondents are

required to file one or more compliance reports detailing their

compliance with the order.

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, nor to modify in

any way their terms. The proposed consent order has been entered into

for settlement purposes only and does not constitute an admission by

the respondents that the

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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