Riley Manufactured Homes, Inc., 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 July 13, 2000.

ADDRESSES:

Comments should be directed to: FTC/Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

John Hallerud or C. Steven Baker, Federal Trade Commission, Midwest Region, 55 E. Monroe St., Suite 1860, Chicago, IL 60603-5701. (312) 960-5633.

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 crease 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 June 13, 2000), on the World Wide Web, at “http://www.ftc.gov/ftc.formal.htm.” A paper copy can be obtained from the FTC Public Reference Room, Room H-130, 600 Pennsylvania Avenue, NW., Washington DC 20580, either in person or by calling (202) 326-3627.

Public comment is invited. Comments should be directed to: FTC/Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW., Washington, DC 20580. Two paper copies of each comment should be filed, and should be accompanied, if possible, by a 31/2 inch diskette containing an electronic copy of the comment. 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 Proposes Consent Order To Aid Public Comments

The Federal Trade Commssion has accepted an agreement to a proposed consent order from Riley Manufactured Homes, Inc., and its president, Dennis Ohnstad (“respondents”).

The proposed consent order has been placed on the public record for thirty (30) days for reception of comments by interested persons. Comments received during this period will become part of 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 and take other appropriate action or make final the agreement's proposed order.

The Commission's complaint alleges that respondents' credit advertisements violated section 144 of the Truth in Lending Act, (“TILA”), 15 U.S.C. 1664, and Section 226.24 of Regulation Z, 12 CFR 226.24. Congress established statutory disclosure requirements for credit advertising under the TILA and directed the Federal Reserve Board (“Board”) to promulgate a regulation implementing such statute—Regulation Z. See 15 U.S.C. 1601-1667e; 12 CFR part 226.

According to the complaint, respondents' advertisements stated a rate of finance charge for financing the pubchase of manufactured homes but did not properly disclose the rate as an annual percentage rate, as required by Regulation Z. The complaint also alleges that respondents' credit advertisements stated a monthly payment amount or other “triggering” terms (the amount or percentage of any downpayment; the number of payments or the period of repayment; the amount of any payment; or the amount of any finance charge), but failed to disclose the following information required by RegulationZ: the amount or percentage of the downpayment; the terms of repayment; and the annual percentage rate.

The proposed consent order contains provisions designed to remedy the violations charged and to prevent the proposed respondents from engaging in similar acts in the future. In particular, Part I of the proposed order prohibits respondents from: (A) Stating a rate of finance charge without disclosing the APR; (B) using triggering terms without providing the additional disclosures required by Regulation Z; and (C) failing to comply with TILA and Regulation Z. Part II of the proposed order requires respondents to maintain and make available records of compliance for five years. Part III requires respondents to distribute copies of the order to company personnel. Part IV requires respondents to notify the Commission of changes in corporate structure that may affect acompliance obligations under the proposed order. Part V requires the individual respondent to notify the Commission of changes in his employment status for three years. Part VI requires respondents to file compliance reports. Finally, Part VII sunsets the proposed order after twenty years.

The purpose of this analysis is to facilitate public comments 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.