Clayton Mobile Homes, Inc

Text (OCR of the scan at left; may contain errors)

Complaint SO F.T.C.

virtue of the laws of the State of Tennessee, with its principal place of business located at North 12th Street, Middlesboro, Kentucky and its office located at 4600 Clinton Highway, Knoxville, Tennessee.

Respondent James L. Clayton is the principal officer of the corporate respondents. He formulates, directs and controls the policies, acts and practices of the corporate respondents, including the acts and practices hereinafter set forth. His business address is the same as that of the corporate respondents.

Par. 2. Respondents are now, and for some time last past have been, engaged in the advertising, offering for sale, sale and distribution of new and used mobile homes and automobiles to the public. COUNT I Alleging violations of Section 5 of the Federal Trade Commission Act, the allegations of Paragraphs One and Two hereof are incorporated by reference in Count I as if fully set forth verbatim. Par. 3. In the course and conduct of their business as aforesaid. respondents now cause, and for sometime last past have caused, their said products, when sold, to be shipped from their places of business located as aforesaid in the States of Tennessee and Kentucky to purchasers thereof located in various other states, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in said products in commerce, as “commerce” is defined in the Federal Trade Commission Act.

Par. 4. In the course and conduct of their business as aforesaid, and for the purpose of inducing the purchase of their products, respondents have made certain. statements and representations with respect thereto in advertisements inserted in newspapers of general circulation, and through other advertising media, of which the following are typical and illustrative but not all inclusive: Full price just 5% over our cost #5061 Delray 64x12 with tip-out front den and free stereo unit cost $5730 5%—over our cost 5%—downpayment 5%—financing Pan. 5. By and through the use of the aforesaid statements and representations and others of similar import and meaning not specifically set forth herein, respondents have represented directly and by implication that:

1. Respondents’ selling prices for mobile homes and automobiles represent a 5 percent mark-up over wholesale cost. CLAYTON MOBILE HOMES, INC., ET AL. 647 645 Complaint 2. Amounts shown in advertisements for certain mcbile homes and automobiles represent respondents’ wholesale cost. 8. Respondents usually and customarily accept downpayments equal to 5 percent of their selling prices and that 5 percent add-on interest is usually and customarily arranged in financing credit sales.

Par. 6. In truth and in fact:

i. Respondents’ mobile homes and automobiles are not customarily sold at prices representing a 5 percent mark-up over wholesale cost. In fact, respondents’ mark-up over wholesale cost is substantially more than 5 percent.

2. Amounts advertised as wholesale cost for certain mobile homes and automobiles substantially exceed respondents’ actual wholesale cost for such products.

3. Respondents do not usually and customarily accept downpayments amounting to 5 percent of their selling prices and 5 percent add-on interest is not usually and customarily arranged for in financing credit sales. In most instances, downpayments and interest are substantially more than 5 percent.

Therefore the statements and representations set forth in Paragraph Five hereof were, and are, false, misleading and deceptive. Par. 7. In the course and conduct of their aforesaid business, and at all times mentioned herein, respondents have been, and now are. in substantial competition, in commerce, with corporations, firms and individuals in the sale of merchandise of the same general kind and nature as that sold by respondents.

Par. 8. The use by respondents of the aforesaid false, misleading and deceptive statements, representations, and practices has had, and now has the capacity and tendency to mislead numbers of the purchasing public into the erroneous and mistaken belief that said statements and representations were and are true and into the purchase of substantial quantities of respondents’ merchandise because of such erroneous and mistaken belief. Par. 9. The aforesaid acts and practices of respondents, as alleged herein, were and are all to the prejudice and injury of the public and of respondents’ competitors and constituted, and now constitute, unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of Section 5 of the Federal Trade Commission Act. COUNT II Alleging violations of the Truth in Lending Act, and the implementing regulation promulgated thereunder, and of the Federal 487-S83—73—__42 ao

Decision and Order 80 EVTIAC.

1. Respondents Clayton Mobile Homes, Inc.. Clayton Motors, Inc., Western Mobile Homes, Inc. and Factory Housing Associates, Inc. are corporations organized, existing and doing business under and by virtue of laws of the State of Tennessee, with their principal place of business and office located at 4600 Clinton Highway, Knoxville, Tennessee.

Respondent Clayton Lincoln/Mercury, Inc.. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal place of business and office located at 4600 Clinton Highway. Knoxville, Tennessee. Respondent Clayton Mobile Homes of Middlesboro. Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Tennessee, with its principal place of business located at North 12th Street, Middlesboro, Kentucky and its office located at 4600 Clinton Highway, Knoxville, Tennessee. Respondent James L. Clayton is the principal officer of said corporations. He formulates, directs and controls the policies, acts and practices of said corporations and his business address is the same as that of said corporations.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents and the proceeding is in the public interest.

ORDER It is ordered, That respondents Clayton Mobile Homes, Inc.. Clayton Motors, Inc., Western Mobile Homes, Inc.. Factory Housing Associates, Inc., Clayton Lincoln/Mercury, Inc., and Clayton Mobile Homes of Middlesboro, Tic., corporations, and their successors and assigns and their officers, and James L. Clayton, individually and as an officer of said corporations. and respondents’ agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection with the advertising, offering for sale, sale and delivery of mobile homes and automobiles or any other products in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Representing, directly or by implication, that any product or service mav be purchased for any dollar amount or percentage over wholesale cost unless substantial sales are made at the stated markup over respondents’ actual wholesale cost, or misrepresenting in any manner respondents’ selling prices and markups.

2. Representing, directly or by implication, that any price or amount for any product or service is respondents’ wholesale cost unless such price or amount accurately represents re- CLAYTON MOBILE HOMES, INC., ET AL. 651 645 Decision and Order spordents’ actual wholesale cost, or misrepresenting in any manner respondents’ wholesale costs.

3. Representing, directly or by implication, that in event of a credit. sale, downpayments of any dollar amount or percentage of the selling price wil] be accepted unless such downpayments are usually and customarily accepted.

4, Representing, directly or by implication, that in event of a credit sale credit terms of 5 percent add-on interest or any other percentage will be arranged unless such credit terms are usually and customarily made available and arranged. 5. Misrepresenting in any manner the downpayments required the interest rates arranged, or other terms and conditions incident to respondents’ credit sales. It is further ordered, That for a period of five (5) years respondents maintain records which disclose the factual basis for any representation of respondents’ cost or special prices for any products or services.

II It is further ordered, That respondents Clayton Mobile Homes, Ine., Clayton Motors, Inc.. Western Mobile Homes, Inc., Factory Housing Associates, Inc., Clayton Lincoln/Mercury, Inc. and Clayton Mobile Homes of Middlesboro, Inc., corporations. their successors and assigns and their officers, and James L. Clayton, individually and as an officer of said corporations, and respondents’ agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection with any extension of consumer credit or any advertisement to aid, promote or assist directly or indirectly any extension of consumer credit, as “consumer credit” and “advertisement” are defined in Regulation Z (12 CFR § 226) of the Truth in Lending Act (Pub.L. 90-821, 15 U.S.C. 1601 e¢ seg.), do forthwith cease and desist from: 1. Failing to disclose the amount of the “finance charge,” as required by Section 226.8(c) (1) of Regulation Z. 2, Failing to disclose accurately the “annual percentage rate,” as required by Section 226.8(b) (2) of Regulation Z. 3. Failing in any credit sale to disclose accurately the ferred payment price,” as required by Section 226.8(c) (8) (11) of Regulation Z.

4, Failing in any credit sale to describe payments which are more than twice the amount of an otherwise scheduled equal payment by the term “balloon” payment. as required by Section 226.8(b) (8) of Regulation Z.

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