Colwell & Co.

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

IN THE MATTER OF COLWELL & CO. ;T AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION AND TRUTH IN LENDING ACTS Docket C-2768. Complaint, Dec. , 1975 - Decision, Dec. , 197.5 Consent order requiring a Denver, Colo., real estate company, among other things to cease violating the Truth in Lending- Act by failing to disclose to consumers, in connection with the extension of consumer credit, such information as required by Regulation Z of the said Act.

Appearances For the Commission: Tommie W. Wakefield. For the respondents: John Madden, Brownstein Hyatt, Farber & Madden 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 Colwell & Co., a corporation, and Thomas F. Colwell and Philip F. Foster, individually and as directors of said corporation, hereinafter referred to as respondents, have violated the provisions of said Acts and the implementing regulation promulgated under the Truth 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: PARAGRAPH 1. Respondent Colwell & Co. is a corporation organized existing and doing business under and by virtue of the laws of the State of Colorado with its principal office and place of business located at 789 Sherman St., Suite 640, Denver, Colo.

Respondents Thomas F. Colwell and Phillp F. Foster are directors of the corporate respondent. Respondent Thomas F. Colwell f rmulates, directs and controls the acts and practices of the corporate respondent including the acts and practices hereinafter set forth. Respondent Phillp F. oster formulates, directs and controls the acts and practices of one of the autonomous branch offces of the corporate respondent which participated in the acts and practices hereinafter set forth. Their address is the same as that of the corporate respondent. PAR. 2. Respondents are now, and for some time last past have been Decision and Order 86 F. 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 the Federal Reserve System.

PAR. 4. Subsequent to July 1 , 1969, respondents, in the ordinary course of their 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, which advertisements aid, promote or assist, directly or indirectly, the extension of other than open end credit. PAR. 5. Respondents, in certain of the above-mentioned advertisements, have stated and are stating the amount of downpayment (in dollars or as a percentage of the sale price) or the amount of an installment payment without also stating, as required by Section 226.10(d)(2) of Regulation Z, all the following terms: (a) the cash price; rthe amount of the loan; (b) the amount of the downpayment required or that no downpayment is required, as applieable;

(c) the number, amount and due dates or period of payments scheduled to repay the indebtedness if the credit is extended; and (d) the 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 Truth in Lending Act respondents' aforesaid failures to comply with the provisions of Regulation Z constitute violations of that Act and, pursuant to Section 108 thereof, respondents have thereby violated the Federal Trade Commission Act.

DECISION 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 152:) Decision and Order copy of a draft of complaint which the Kansas City Regional Office 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 ederal1'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 aU the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as aUeged in such complaint and waivers and other provisions as required by the Commission rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated said Acts, 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 conformity with the procedure prescribed in Section 2.34(b) of its rules, the Commission hereby issues its complaint, makes the fonowing jurisdictional findings, and enters the following order:

1. Respondent Colwell & Co. 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 789 Sherman St., Suite 640, city of Denver, State of Colorado. Respondents Thomas F. Colwell and Phillp F. Foster are directors of said corporation. Respondent Thomas F. Colwell formulates, directs and controls the acts and practices of the corporate respondent. Respondent Phillp F. Foster formulates, directs and controls the acts and practices of one of the autonomous branch offces of the corporate respondent. Their address is the same as that of said corporation. 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 Colwell & Co., a corporation, its successors and assigns, its officers, and Thomas F. Colwel1 and Philip F. Foster, individually and as directors 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 ), Decision and Order 86 F. indirectly, any arrangement or extension of consumer credit as consumer credit" and "advertisement" are defined in Regulation Z (12 R. 9226) of the Truth in Lending Act (Pub. Law 90-321, 15 D. 1601 et seq. do forthwith cease and desist from: 1. Representing in any such advertisement, directly or by implication, that no downpayment is required, the amount of the downpayment or the amount of any installment payment, either in dollars or as a percentage, the dollar amount of any finance charge, the number of installments or the period of repayment, or that there is no charge for credit, unless all of the following items are clearly and conspicuously stated, in terminology prescribed under Section 226.8 of Regulation Z as required by Section 226.1O(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;

(c) the number, amount and due dates or period of payments scheduled 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 term annual percentage rate " as "finance charge" and "annual percentage rate" are defined in Section 226.2 and as required by Section 226.1O(d)(1) 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.

It 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 respondents named herein promptly notify the Commission of the discontinuance of their present business or employment and of their affiliation with a new business or employment. Such notice shall include respondents' current business address and a statement as to the nature of the business or employment in which they are engaged as well as a description of their 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 1527 Complaint (60) days after service upon them of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this order. .