FTC has finalized a consent agreement with Riley Manufactured Homes, Inc. in a case involving credit advertising.

FTC's Complaint alleged that Riley Manufactured Homes, Inc., and Dennis Ohnstad, individually and as an officer of the corporation, violated the provisions of the Truth in Lending Act, 15 U.S.C. Sections 1601-1667e, as amended, and its implementing Regulation Z, 12 C.F.R. Section 226, as amended. FTC alleged that respondents disseminated advertisements for homes in the print media that promote extensions of closed-end credit in consumer credit transactions, as the terms "advertisement," and "consumer credit" are defined in Section 226.2 of Regulation Z, 12 C.F.R. Section 226.2, as amended.

According to FTC, these ads contain statements such as the following:

"Interest rates from 5.78%. $279 PER Month* * * * *based on $29,900 SP plus ST, less $1589 DP for 300 months at 10.25% VAR interest.

According to FTC, respondents stated a rate of finance charge for financing the purchase of the advertised homes. Said the Complaint:

"These advertisements, described in Paragraph 7, have failed to state the rate of finance charge as an annual percentage rate as required by Regulation Z, 12 C.F.R. Section 226.24(b). Respondents' failure to state the rate of finance charge as an annual percentage rate as set forth in Paragraph 8 violates Section 144 of the Truth in Lending Act, 15 U.S.C. Section 1664, as amended, and Section 226.24(b) of Regulation Z, 12 C.F.R. Section 226.24(b). In advertisements, including, but not necessarily limited to, Exhibit B, respondents have stated 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. These advertisements have failed to state the amount or percentage of the downpayment; the terms of repayment; and the "annual percentage rate," using that term or the abbreviation "APR," as required by Regulation Z, 12 C.F.R. Section 226.24(c). Respondents' failure to state the amount or percentage of the downpayment; the terms of repayment; and the "annual percentage rate," using that term or the abbreviation "APR," as set forth in Paragraph 11 violates Section 144 of the Truth in Lending Act, 15 U.S.C. Section 1664, as amended, and Section 226.24(c) of Regulation Z, 12 C.F.R. Section 226.24(c)."

(Riley Manufactured Homes, Inc. and Dennis Ohnstad, FTC Complaint #992-3202, FTC Dkt. No. C-3963, July 24, 2000; FTC Release, July 28, 2000.)

FTC has OK'd two amendments to the Care Labeling Rule, 16 C.F.R. Part 423 under its formal rulemaking process. These two amendments to the Rule concern:

• (1) clarification of the reasonable basis standard; and
• (2) an update of the water temperature definitions to ensure they conform to current industry standards.

Meanwhile, the agency did not adopt two other revisions that had been considered:

• (1) The first revision would have mandated that all garments that can be washed at home to be labeled for home washing. FTC said that the rulemaking record didn't support this proposed revision.
• (2) The second proposed amendment that was not adopted would have allowed a care label instruction for "professional wetcleaning." FTC concluded that there's no current agreement as to the appropriate definition of "professional wetcleaning."

("Final Amended Trade Regulation Rule on Care Labeling of Textile Wearing Apparel and Certain Piece Goods", 16 C.F.R. Part 423, July 26, 2000.)

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

INTERNET MATERIALS: Materials relating to these FTC matters are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.