Montgomery Ward Credit Corporation, et al.; Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 972-3188]

Montgomery Ward Credit Corporation, et al.; Analysis to Aid

Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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

SUMMARY: The consent agreement in this matter settles alleged

violations of federal law prohibiting unfair or deceptive acts or

practices or unfair methods of competition. The attached Analysis to

Aid Public Comment describes both the allegations in the draft

complaint that accompanies the consent agreement and the terms of the

consent order--embodied in the consent agreement--that would settle

these allegations.

DATES: Comments must be received on or before October 23, 1998.

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:

Russell Damtoft, Federal Trade Commission, Chicago Regional Office, 55

E. Monroe Street, Suite 1860, Chicago, IL 60603-5701. (312) 960-5634.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 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 complaint. An electronic copy of the full text of

the consent agreement package can be obtained from the FTC Home Page

(for August 7, 1998), on the world Wide Web, at ``http://www.ftc.gov/

os/actions97.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 Section 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 Montgomery Ward Credit Corporation and

General Electric Capital Corporation. The proposed respondent

Montgomery Ward Credit Corporation is a wholly owned subsidiary of

General Electric Capital Corporation that provides credit card services

for Montgomery Ward & Co., Inc., a large retailer. The proposed

respondent General Electric Credit Corporation provides credit card

services for a number of other businesses including several large

retailers.

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 Commission's complaint alleges several unfair or deceptive acts

or practices related to the proposed respondent's policy of inducing

consumers who have filed for bankruptcy protection to sign agreements

reaffirming debts owed to proposed respondent prior to the filing of

the bankruptcy petition. The complaint charges that the proposed

[[Page 45063]]

respondent: falsely represented to consumers that signed reaffirmation

agreements would be filed with the bankruptcy courts, as required by

the United States Bankruptcy Code; falsely represented to consumers

that debts associated with unfiled reaffirmation agreements, or

agreements that were filed but not approved by the bankruptcy courts,

were legally binding on the consumers; and unfairly collected debts

that it was not permitted by law to collect. The proposed consent order

contains provisions designed to remedy the violations charged and to

prevent the proposed respondent from engaging in similar acts in the

future.

The proposed consent order preserves the Commission's right to seek

consumer redress if the Commission determines that redress to consumers

provided through related named and unnamed legal actions is not

adequate.

Part I of the proposed order prohibits the proposed respondent from

misrepresenting to consumers who have filed petitions for bankruptcy

protection under the United States Bankruptcy Code that (A)

reaffirmation agreements will be filed in bankruptcy court; or (B) any

reaffirmation agreement is legally binding on the consumer. Part I.C of

the proposed order prohibits the proposed respondent from collecting

any debt (including any interest, fee, charge, or expense incidental to

the principal obligation) that has been legally discharged in

bankruptcy proceedings and that the proposed respondent is not

permitted by law to collect. Part II of the proposed order prohibits

the proposed respondent from making any misrepresentation in the

collection of any debt subject to a pending bankruptcy proceeding.

Part III of the proposed order contains record keeping requirements

for materials that demonstrate the compliance of the proposed

respondent with the proposed order. Part IV requires distribution of a

copy of the consent decree to certain current and future personnel who

have responsibilities related to collecting debts subject to bankruptcy

proceedings.

Part V provides for Commission notification upon any change in the

corporate respondent affecting compliance obligations arising under the

order. Part VI requires the proposed respondent to notify the

Commission of proposed settlement terms in related actions filed by

various named and unnamed parties. Part VII requires the filing of

compliance report(s). Finally, Part VIII provides for the termination

of the order after twenty years under certain circumstances.

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.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 98-22640 Filed 8-21-98; 8:45 am]

BILLING CODE 6750-01-M