Rentex, Inc

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IN THE MAHER OF RENTEX, INC. T/A HOMEFINDERS OF AMERICA, ETC. ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Doket .9024. Complaint, Aprl 197i'i- Decwwn, May, 1976 Consent order reuiring a Denver, Colo., reaJ estate listing agency, among other things, to cease misrepresenting the availability of rental housing and failng to disclose relevant facts concerning said housing. Respondent is required to verify every 72 hours (in advertising, verification must be made every 24 hours) if rental housing is 8tiJ available or remove listing; post and present to customers prior to purcha.o;c of service, a statement containing a description and limitations of the offered services and advise whether rental housing currently available suits their needs. Further, the order requires repondents to disclose to purchasers the availability date, monthly rent, landlord restrictions, deposit requirements and other pertinent information. Appearances For the Commission: Barr E. Barns.

For the respondents: Paul A. Goin Seatte, Wash. Myers Wooford Hoper Denver, Colo.

COMPLAINT The Federal Trade Commission, having reason to believe that Rentex, Inc., a corporation now or previously doing business as Homefinders of America, HomeJocators of America, North American Homefinders, and various other names; Larry S. Glist and Larry Senderhauf, individually and as officers of said corporation; Homelocators, Inc., a corporation doing business as Rentex of Seattle and Rentex of Tacoma, and Rodney Molzahn, individually and as an officer of said corporation, hereinafter sometimes referred to as respondents, have violated Section 5 of the Federal Trade Commission Act and that a proceeding in respect thereof would be in the public interest, hereby issues this complaint, stating its charges as follows: PARAGRAPH 1. Rentex, Inc. is a Colorado corporation with its office and principal place of business located at 3321 East Colfax, Denver Colorado.

Larry S. Glist and Larry Senderhauf are individuals, officers and directors of Rentex, Inc. Together they formulate, direct and control the policies, acts and practices of Rentex, Inc., including the acts and practices hereinafter set forth. Their addresses arc the same as that of the corporate respondent.

1340 Complaint Homelocators, Inc. is a Washington corporation with its office and principal place of business located at 7712 Greenwood Ave. North Seatte, Washinbrton. Said corporation is a licensee of Rentex, Inc. and is doing business as Rentex of Seattle and Rentex of Tacoma. Rodney Molzahn is an individual, officer and director of Homelocators, Inc. and the holder of a license from Rentex, Inc. He formulates directs and controls the policies, acts and practices of Homelocators Inc., including the acts and practices hereinafter set forth. His address is the same as that of Homelocators, Inc.

The aforementioned respondents cooperate and act together in carrying out the acts and practices hereinafter set forth. PAR. 2. Unless otherwise required by context, the following definitions shad apply for purposes of this complaint and the accompanying order:

A. "Rental housing" means any housing accommodation, whether real or personal property and including apartment housing, which may be leased, subleased, or rented as a private dwellng, abode or place of residence.

B. j'Rental listing" means any list or other source of information concerning the location, availability and characteristics of rental housing.

C. "Landlord" means the person or persons legally empowered to lease, sublease or rent particular rental housing. PAR. 3. Respondents are now, and for some time last past, have been engaged in the advertising, offering for sale and sale of rental listings to consumers for fees of from $20 to $;)0. Respondents Rentex, Inc. and its officers named herein have also conducted said business through individuals who have entered into license agreements with them which grant said individuals the exclusive right to offer such listings in connection with the use of the trade name "Rentex" in designated territories surrounding various metropolitan areas in the United States and Canada.

Respondent Rentex, Inc. receives ten percent of each licensee s gross sales as royalty payments, an additional five percent of each licensee gross sales as a reserve account to ensure performance of the agreement until such account reaches $10 000, and other covenants from each licensee.

Respondents Rentex, Inc. and its officers named herein dominate control, furnish various means, instrumentalities, services and facilities for their licensees, and condone, approve, and accept pecuniary and other benefits flowing from the acts and practices hereinafter set forth of said respondents and their licensees.

PAR. 4. Respondents are engaged in business in or affecting 134 FgDERAL TRADE COMMISSION DECISIONS Decision and Order 87 F. commerce, as "commerce" is defit)ed in the Federal Trade Commission Act, as amended. Advertising "f particular rental housing and respondents' services appears in newspapers of interstate circulation and on television and radio broadcasts of interstate transmission. Personnel, monies, accounts, records, correspondence and other documents flow across State lines between Rentex, Inc. and its licensees, including respondent Homelocators, Inc., located in various States of the United States and various provinces in Canada and customers and landlords located throughout the United States and Canada. The volume of such business in or affecting commerce is and has been substantial.

PAR. 5. In the course and conduct of their aforesaid business respondentsA. Advertisedhave: and/or listed rental housing as available for rent when it was not in fact available for rent. E. Advertised and/or Jisted rental housing information which is inaccurate, including but not limited to information concerning rental price, location, rental terms and restrictions. C. Advertised and/or Jisted rental housing information which is incomplete since it fails to disclose material facts, including but not limited to information concerning damage deposits, security deposits clean-up fees, and other rental terms and restrictions. D. Represented, directly or by implication, that rental housing fitting a prospective customer s stated needs is currently available for rent in respondents' rental Jistings, when in fact no such rental housing was available for rent at that time.

The aforesaid acts and practices were and are false, misleading, deceptive, or unfair.

PAR. 6. In the course and conduct of their business, and at all times mentioned herein, respondents have been and now are in substantial competition, in or affecting commerce, with corporations, firms and individuals engaged in the sale and performance of services of the same general nature as those sold and performed by the respondents. PAR. 7. The aforesaid acts and practices of respondents, as herein alleged, were and are an to the prejudice and injury of the public and of respondents' competitors; and constituted, and now constitute unfair methods of competition in or affecting commerce and unfair and deceptive acts and practices in or affecting commerce, in violation of Section 5 of the Federal Trade Commission Act. DECISION AND ORDER The Commission having heretofore issued its complaint charging the respondents named in the caption hereto with violation of Section 5 of RENTgX, INC., ETC., ET AL.

1340 Decision and Order the Federal Trade Commission Act, and the respondents having been served with a copy of the complaint; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the 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 set forth in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having withdrawn the matter from adjudication for the purpose of considering the agreement containing consent order; and The Commission having considered the agreement and having provisionally accepted same, and the agreement containing consent order having thereupon been placed on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 8.25( d) of its Rules, the Commission hereby makes the following jurisdictional findings, and enters the following order: A. Respondent Rentex, Inc. is a Colorado corporation with its office and principal place of business located at 46.~3 East Colfax, Denver Colorado.

Respondents Larry S. Glist and Larry Senderhauf are individuals officers and directors of Rentex, Inc. Together they formulate, direct and control the policies, acts and practices of Rentex, Inc., including the acts and practices hereinafter set forth. Their addresses are the same as that of the corporate respondent.

Respondent Homelocators, Inc. is a Washington corporation with its office and principal place of business located at 7712 Greenwood Ave. North, Seatte, Washington. Said corporation is a licensee of Rentex Inc. and is doing business as Rentex of Seattle and Rentex of Tacoma. Respondent Rodney Molzahn is an individual, officer and director of Homelocators, Inc. and the holder of a license from Rentex, Inc. He formulates, directs and controls the policies, acts and practices of Homelocators, Inc., including the acts and practices hereinafter set forth. His address is the same as that of Homelocators, Inc. B. 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 Rentex, Inc. and Homelocators, Inc.. corporations, their successors and assigns, and their officers, Larry S .tL rrade COMMISSION DECISIONS Decision and Order 87 F. Glist and Larry Senderhauf, individually and as officers of Rentex Inc., and Rodney Molzahn, individual11y and as an officer of Homelocators, Inc., and respondents' agents, representatives and employees directly or through any corporation, subsidiary, division, franchisee licensee or other device, in connection with the advertising, offering for sale or sale of rental housing information or similar information services to consumers in or affecting commerce, as Hcommerce" is defined in the Federal Trade Commission Act, as amended, do forthwith cease and desist from:

A. Advertising or representing, directly or by implication, that: 1. Rental housing is available for lease, sublease or rent unwss a. A11 rental housing which is being advertised has been verified daily as actual11y available for rent and a11 rental housing which has not been verified as actual1Jy available for rent that day is cancelled the same day or promptly in the morning of the next business day if cancellation is not possible on the same day due to the business hours of the advertising medium involved;

b. In the case of a11 other representations, the rental housing has been verified as actual11y available for rent within the previous 72 hours or removed from the rental listings until so verified. 2. Rental housing is available for lease, sublease or rent unless the following information is fully and accurately and clearly and meaningfully disclosed:

a. The date of availability of the rental housing, if it is not currently available;

b. The monthly rent;

c. The fact that damage deposit, security deposit, clean-up fees rent prepayment, or any similar charges over and above the monthly rent are required, if applicable;

d. The number of bedrooms;

e. The fact that a lease is required, if applicable; f. Any landlord restrictions (such as no pets, no children, etc. except those prohibited by Federal, State, or local law; g. The type of neighborhood (residential, rural, commercial, high- 'ise or other similar description);

h. The type of dwelling (single family, apartment, duplex, houseoat, etc.

i. The location of the rental housing by appropriate reference to the asonably sma1Jest definable neighborhood (whether community ,trict, zip code district or otherwise) in which it is located; i. The utilities paid for, if any;

RENTgX, INC., ETC., ET AL.

1340 Decision and Order k. The telephone number of the landlord.

, b., and h. must be Provided that, in the case of advertising, only a. disclosed and provided further that respondents shall not be liable under this order provision where it neither knew nor upon reasonable inquiry could have known that the information was false. 3. Rental housing fitting a person s stated needs is currently listed as available for lease, sublease or rent unless such is the fact. B. Failing to disclose to each prospective customer of the service whether or not rental housing fitting a person s stated needs is currently listed as available for lease, sublease or rent prior to the time such person enters into any abrreement obligating him or her to undertake the service.

C. Failing to provide to each prospective customer of the service prior to the time such person enters into any agreement obligating him or her to undertake the service, in boldface capital letters of 14-point or larger type with no information to the contrary or in mitigation thereof, the following statement exactly as it appears below: NOTICE We are an informalion service only. We make no attempt to secure you housing. The service offers only compiled information concerning available rental housing units. No guarantee is made that you win find rental property by using this service (and no refund is offered.

.The material in brackets shall be included, if no refund is offered. D. F'ailing to post the notice statement required by paragraph I.C. of this order with nothing to the contrary or in mitigation thereof in a clear and conspicuous manner and in a location and print size easily viewable by the customer at respondents' place of business. which may be inspected by E. Failing to keep adequate records, Federal Trade Commission staff members upon reasonable notice, of the following:

1. Customer contracts including a complete and up-to-date description of the customer s needs for rental housing; 2. Information on rental housing obtained from the landlord including but not limited to the following: a. Name and telephone number of the landlord; b. Date or dates the information was received; c. All the information contained in paragraph I.A.2. of this order. 3. Information which will disclose the date and, in the case of verification of advertised rental housing, the time of day of each availability for rent of rental housing in respondents' rental listings. 4. A cross-reference system which wil enable a person to find in v,,"AL TRADE Commisslon DECISIONS Decision and Order 87 F. respondents' rental listings information concerning any specifically advertised rental housing.

Such records shall be retained by respondents for two years after such record is made.

It is furthe.r rYdered That: A. Respondent Rentex, Inc. deliver a copy of this order to each of its present or future franchise or license holders or to any other person or entity connected with said respondent who sells or promotes the sale of rental housing information to consumers; B. Respondent Rentex, Inc. provide each person or entity described in paragraph A above with a form, returnable to said respondent clearly stating his or her intention to be bound by and to conform his or her business practices to the requirements of this order; respondent Rentex, Inc. shall retain said statement during the period said person or entity is so engaged, and make said statement available to the Commission s staff for inspection and copying upon request; C. Respondent Rentex, Inc. inform each person or entity described in paragraph A above that respondent Rentex, Inc. shall not use or engage or shall terminate the use or engagement of any such person or entity, unless such person or entity agrees to and does file notice with said respondent that he or she will be bound by the provisions contained in this order; and that said respondent is obligated by this order to discontinue dealing with or to terminate the use engagement of those persons or entities who engage on their own in the acts or practices prohibited by this order; D. In the event such person or entity will not agree to file notice set forth in paragraph B above with respondent Rentex, I nc. and be bound by the provisions of this order, respondent Rentex, Inc. shall not use or engage or continue the use or engagement of such person or entity to sell or promote the sale of rental housing information to consumers;

E. Respondent Rentex, Inc. institute a program of continuing surveillance adequate to reveal whether the business practices of each of said persons or entities described in paragraph A above conform to the requirements of this order; and F. Respondent Rentex, Inc. discontinue dealing with or terminate the use or engagement of any person or entity described in paragraph A above, who continues on his or her own any act or practice prohibited by this order, as revealed by the aforesaid probrram of surveillance. It is fu-rther rYdC'red That respondents notify the Commission at least thirty (30) days prior to any proposed change in the corporate RENTEX, INC., ETC., ET AL.

l340 Decision and Order respondent, such as dissolution, assignment or sale resulting in the emergence of a successor corporation or corporations, the creation or dissolution of subsidiaries, or any other change in the corporation which may affect compliance obligations arising out of the order. In the event that either of the corporate respondents merges with another corporation or transfers all or a substantial part of its business or assets to any other corporation or to any other person, said respondent shall require said successor or transferee to file promptly with the Commission a written al,rreement to be bound by the terms of this order; praved that if respondent wishes to present to the Commission any reasons why said order should not apply in its present form to said successor or transferee, it shall submit to the Commission a written statement setting forth said reasons prior to the consummation of said succession or transfer.

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 in which (1) they are involved in a management, policymaking or ownership capacity, and (2) which involves the sale of information to consumers for a fee. 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 respondents herein shall within sixty (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. ,. ",v1'RAL TRAm; COMMISSION DECISIONS Complaint 87 F.