Zodiac Construction, LTD

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IN THE MATTER OF ZODIAC CONSTRUCTION, LTD., ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE ,'EDERAL TRADE COMMISSION AND TRUTH IN LENDING ACTS Docket C-27lU. Complaint, July 197.5-Decision, July, 1975 Consent order requiring an Aurora, Colo., mortgage loan company, among other things to cease violating the Truth in Lending Act by failing to disclose to 217-184 0 - 76- 21 :112 FEDERAL TRADE COMMISSION DECISIONS Complaint R6 F.T.C.

eomnHners, in connection with the extension of consumer credit, such information as required by Regulation Z of the said Act. Appearances For the Commission: Tomm.ic W. Wakefield. For the respondents: Jesse N. Lipschuetz Hobbs aTul Waldbaum Denver, Colo.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and of the Truth in Lending Act and the implementing regulation promulgated thereunder, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Zodiac Construction, Ltd., a corporation, and Sol Dichter, individually and as an officer of said corporation, hereinafter sometimes referred to as respondents, have violated the provisions of said Acts, and the implementing regulation promulgated under the Trutb in Lending Act and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PAR. 1. Respondent Zodiac Construction, Ltd. is a corporation organized, existing and doing business under and by virtue of tbe laws of the State of Colorado, with its principal office and place of business located at 456 S. lronton #404, Aurora, Colo. Respondent Sol Dichter is an offcer of the corporate respondent. He formulates, directs and controls the acts and practices of the corporate respondent including the acts and practices hereinafter set forth. His address is the same as that of the corporate respondent. PAR. 2. Respondents are now, and for some time last past have been engaged in the advertising, offering for sale and sale of housing to the general public.

PAR. 3. In the ordinary course and conduct of their business as aforesaid, respondents regularly arrange for the extension of consumer credit or offer to extend or arrange for the extension of such credit, as arrange for the extension of credit" and consumer credit" are defined in Section 226.2 of Regulation Z, the implementing regulation of the Truth in Lending Act, duly promulgated by the Board of Governors of tbe Federal Reserve System.

PAR. 4. Subsequent to July I, 1969, respondents, in the ordinary course of business as aforesaid and in connection with credit sales, have caused, and are causing, to be published, advertisements, as "credit sale" and "advertisement" are defined in Section 226.2 of Regulation Z _ _..., , """L'u u "'n'--._ 311 Decision and Order which advertisements aid, promote or assist, directly or indirectly, the extension of other than open end credit.

PAR. 5. Respondents, in certain of the abovementioned advertisements, have stated and are stating the amount of the downpayment (in dollars or as a percentage of the sale price) and the period of repayment without also stating, as required by Section 226. 1O(d)(2) of Regulation Z, al1 the following terms:

(a) the casb price; I the amount of the loan; J (b) the amount of the down payment required or that no downpayment is required, as applicable;

(c) the number, amount and due dates or period of payments scheduled to repay tbe indebtedness if the credit is extended; and (d) tbe amount of the finance charge expressed as an annual percentage rate.

PAR. 6. Respondents, in certain of these advertisements, have stated and are stating, the rate of a finance charge, as "finance charge" is defined in Section 226.2 of Regulation Z, and have not expressed said rate as an "annual percentage rate " using the term "annual percentage rate " as "annual percentage rate" is defined in Section 226.2 of Regulation Z, in violation of Section 226.1O(d)(I) of Regulation Z. PAR. 7. Pursuant to Section 103(q) of the Trth in Lending Act respondents' aforesaid failures to comply with the provisions of Regulation Z constitute violations of that Act and, pursuant to Section 108 tbereof, respondents have thereby violated the Federal Trade Commission Act.

DF;CISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Kansas City Regional Offce proposed to present to the Commission for its consideration and which if issued by the Commission, would charge respondents with violation of the Truth in Lending Act and the implementing regulation promulgated thereunder, and the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of al1 the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint and waivers and other provisions as required by the Conuission rules; and ), :n4 FEDERAL TRADE COMMISSION DECISIONS Decision ami Order 86 F. The; Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further eonfonnity with the procedure prescribed in Section 2.34(b) of its rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

I. Respondent Zodiac Construction, Ltd. is a corporation organized existing and doing business under and by virtue of the laws of the State of Colorado, with its office and principal place of business located at 456 S. Ironton #404, City of Aurora, State of Colorado. Respondent Sol Dichter is an officer of said corporation. He formulates, directs and controls the policies, acts and practices of said corporation, and his principal office and place of business is located at the above-stated address.

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 Zodiae Construction, Ltd., a corporation, its successors and assigns, its officers, and Sol Dichter individually and as an officer of said corporation, and respondents agents, representatives, salesmen and employees, directly or through any corporation, subsidiary. division or other device, in connection with any advertisement to aid, promote or assist, directly or indirectly, any arrangement or extension of consumer credit as "consumer credit" and advertisement" are defined in Regulation Z (12 CFR !i226) of the Truth in Lending Act (Pub. L. 90-:J2I, 15 D. C. !i1601 et seq. forthwith cease and desist from:

I. Representing in any such advertisement, directly or by implication, that no downpayment is required, the amount of the downpayment or tbe amount of any instalment payment, either in dollars or as a percentage, the dollar amount of any finance charge, the number of instalments or the period of repayment, or that there is no cbarge for credit, unless all of the following items are clearly and conspieuously stated, in terminology prescribed under Section 226.8 of Regulation Z as required by Section 226.IO(d)(2) of Regulation Z: (a) the cash price; (the amount of the loan; (b) the amount of the downpayment required or that no downpayment is required, as applicable;

Decision and Order (c) the number, amount and due dates or period of payments seheduled to repay the indebtedness if the credit is extended; and (d) the amount of the finance charge expressed as an annual percentage rate.

2. Stating in any advertisement the rate of a finance charge unless said rate is expressed as an annual percentage rate, using the telT annual percentage rate " as "finance charge" and Hannual percentage rate" are defined in Section 226.2 and as required by Section 226.10(d)(I) of Regulation Z.

3. Failing, in any advertisement, to make all disclosures as required by Section 226.10 in the manner prescribed by Sections 226. , 226.8 and 226.10 of Regulation Z.

I T IS FURTHER ORDERED, That respondents notify the Commission at least thirty (30) days prior to any proposed change in any corporate respondent such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or any other change in the corporation which may affect compliance obligations arising out of the order. IT IS FURTHER ORDERED, That the individual respondent named herein promptly notify the Commission of the discontinuance of his present business or employment and of his affiiation with a new business or employment. Such notice shall include respondent's current business address and a statement as to tbe nature of the business or employment in which he is engaged as well as a description of his duties and responsibilities.

IT IS FURTHER ORDERED, That the respondent corporation shall forthwith distribute a copy of this order to each of its operating divisions.

IT IS FURTHER ORDERED, That the respondents herein shall within sixty (60) days after serviee upon them of this order, fie with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this order.