[Federal Register: January 15, 2009 (Volume 74, Number 10)]
[Notices]
[Page 2594-2595]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ja09-106]
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FEDERAL TRADE COMMISSION
[File No. 082 3034]
Michael Gendrolis dba Good Life Funding.; Analysis of Proposed
Consent Order to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
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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 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 February 9, 2009.
ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``Good Life Funding, File No. 082 3034,'' to
facilitate the organization of comments. A comment filed in paper form
should include this reference both in the text and on the envelope, and
should be mailed or delivered to the following address: Federal Trade
Commission/Office of the Secretary, Room 135-H, 600 Pennsylvania
Avenue, N.W., Washington, D.C. 20580. Comments containing confidential
material must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with Commission Rule 4.9(c). 16 CFR
4.9(c) (2005).\1\ The FTC is requesting that any comment filed in paper
form be sent by courier or overnight service, if possible, because U.S.
postal mail in the Washington area and at the Commission is subject to
delay due to heightened security precautions. Comments that do not
contain any nonpublic information may instead be filed in electronic
form by following the instructions on the web-based form at (http://
secure.commentworks.com/ftc-GoodLifeFunding). To ensure that the
Commission consider an electronic comment, you must file it on that
web-based form.
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\1\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See Commission Rule 4.9(c),
16 CFR 4.9(c).
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The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC website, to the extent
practicable, at www.ftc.gov. As a matter of discretion, the FTC makes
every effort to remove home contact information for individuals from
the public comments it receives before placing those comments on the
FTC website. More information, including routine uses permitted by the
Privacy Act, may be found in the FTC's privacy policy, at (http://
www.ftc.gov/ftc/privacy.shtm).
FOR FURTHER INFORMATION CONTACT: Carole Reynolds, Bureau of Consumer
Protection, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580, (202)
326-3230.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec. 2.34 of
the Commission 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 thirty (30) 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 January 8, 2009), on the World Wide Web, at (http://www.ftc.gov/
os/2009/01/index.htm). A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, Washington,
D.C. 20580, either in person or by calling (202) 326-2222.
Public comments are invited, and may be filed with the Commission
in either paper or electronic form. All comments should be filed as
prescribed in the ADDRESSES section above, and must be received on or
before the date specified in the DATES section.
Analysis of Agreement Containing Consent Order to Aid Public Comment
The Federal Trade Commission (``FTC'') has accepted, subject to
final approval, an agreement containing a consent order from Michael
Gendrolis dba Good Life Funding (``respondent'').
The proposed consent order has been placed on the public record for
thirty (30) days for the receipt of comments by interested persons.
Comments received during this period will become part of
[[Page 2595]]
the public record. After thirty (30) 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 engaged in practices that
violate Section 5(a) of the Federal Trade Commission Act, 15 U.S.C.
Sec. 45(a), Section 144 of the Truth in Lending Act (``TILA''), 15
U.S.C. Sec. 1664, and Section 226.24 of Regulation Z, 12 C.F.R. Sec.
226.24.
Section 5(a) of the FTC Act prohibits unfair or deceptive acts or
practices. Respondent violated Section 5(a) of the FTC Act, because it
disseminated or has caused to be disseminated home loan advertisements
which offer a low monthly payment amount and/or payment rate, but fail
to disclose, or fail to disclose adequately, that this monthly payment
amount and/or payment rate: (1) apply only for a limited period of
time, after which they will increase; (2) do not include the amount of
interest that the consumer owes each month; and (3) are less than the
monthly payment amount (including interest) and/or the interest rate
that the consumer owes, with the difference added to the total amount
due from the consumer or total loan balance. This information would be
material to consumers shopping for a mortgage loan and the failure to
disclose, or failure to disclose adequately, this information is a
deceptive practice.
TILA and Regulation Z require that closed-end credit advertisers
who state a periodic payment amount must also provide additional
information in the advertisement, including the terms of repayment; the
annual percentage rate (``APR''); and if the APR may be increased after
consummation, that fact. TILA and Regulation Z also require that if an
advertisement states a rate of finance charge it must state the rate as
an APR. Currently, Regulation Z also requires that if the advertisement
states a payment rate, it must include additional disclosures.
Respondent's advertisements failed to disclose, or failed to disclose
clearly and conspicuously, this information required by TILA and
Regulation Z. Respondent's failure to disclose this information
undermined consumers' ability to compare these offers to others in the
marketplace. Through its law enforcement actions, the Commission
intends to promote compliance with the disclosure requirements of TILA
and Regulation Z, and to foster comparison shopping for mortgage loans.
The proposed consent order contains provisions designed to prevent
respondent from violating the FTC Act or failing to make clear and
conspicuous disclosures required by TILA and Regulation Z, as has been
amended, see 73 Fed. Reg. 44,522 (July 30, 2008), and as may be further
amended in the future.
Part I of the proposed order prohibits respondent, in connection
with closed-end credit, from advertising a monthly payment amount
unless respondent discloses, clearly and conspicuously and in close
proximity to those representations, as applicable, that the advertised
monthly payment amount: (1) applies only for a limited period of time,
after which it will increase; (2) does not include the amount of
interest that the consumer owes each month; and (3) is less than the
monthly payment amount (including interest) that the consumer owes,
with the difference added to the total amount due from the consumer or
total loan balance.
Part II of the proposed order prohibits respondent, in connection
with closed-end credit, from advertising a rate lower than the rate at
which interest is accruing, regardless of whether the rate is referred
to as an ``effective rate,'' a ``payment rate,'' a ``qualifying rate,''
or any other term, provided that this provision does not prohibit
advertisement of the ``annual percentage rate'' or ``APR.'' In light of
respondent's deceptive use of payment rates in its advertisements, and
the Federal Reserve Board's amendments to Regulation Z banning the use
of such rates effective October 1, 2009, the proposed order prohibits
respondent from advertising any such rate, to ensure that respondent's
advertisements do not deceive consumers. See 73 Fed. Reg. at 44,608.
Part III of the proposed order prohibits respondent, in connection
with consumer credit, from making representations about the consumer's
current lender unless respondent adequately discloses respondent's name
and identity as the entity offering the loan.
Part IV of the proposed order prohibits respondent, in connection
with closed-end credit, from advertising the amount of any payment, the
number of payments or the period of repayment, or the amount of any
finance charge, without disclosing, clearly and conspicuously, all of
the terms required by TILA and Regulation Z, including the terms of
repayment; the APR; and if the APR may be increased after consummation,
that fact.
Part V of the proposed order prohibits respondent, in connection
with closed-end credit, from stating a rate of finance charge without
stating the rate as an APR, as required by TILA and Regulation Z.
Part VI of the proposed order prohibits respondent from failing to
comply in any respect with TILA or Regulation Z.
Part VII of the proposed order contains a document retention
requirement, the purpose of which is to ensure compliance with the
proposed order. It requires that respondent maintain all records that
will demonstrate compliance with the proposed order.
Part VIII of the proposed order requires respondent to distribute
copies of the order to various principals, officers, directors, and
managers, and all current and future employees, agents and
representatives having responsibilities with respect to the subject
matter of the order.
Part IX of the proposed order requires respondent to notify the
Commission of any changes in its corporate structure that might affect
compliance with this order.
Part X of the proposed order requires respondent to file with the
Commission one or more reports detailing compliance with the order.
Part XI of the proposed order is a ``sunset'' provision, dictating
the conditions under which the order will terminate twenty years from
the date it is issued or twenty years after a complaint is filed in
federal court, by either the United States or the FTC, alleging any
violations of 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 or to modify in any
way their terms.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E9-838 Filed 1-14-09: 8:45 am]
BILLING CODE 6750-01-S