The Federal Trade Commission today announced the following actions:
Following a public comment period, the Commission has made final a consent agreement with the following entities: Fleet Finance, Inc. (Fleet Finance) and Home Equity U.S.A. The action makes the consent order binding on the respondents. The consent order carries the force of law with respect to future actions. Each violation of the order may result in a civil penalty of $11,000.
The order settles charges that Fleet Finance failed to provide, or provide accurately, timely disclosures of the costs and terms of home equity loans to consumers and failed to provide, or provide accurately, information to consumers about their right to cancel their credit transaction. Fleet Finance's actions, the complaint charged, were deceptive and violated the Truth in Lending Act (TILA) and its implementing Regulation Z, as well as Section 5 of the Federal Trade Commission Act (FTC Act). The order requires Fleet Finance and its successor companies, Home Equity U.S.A. (incorporated in Rhode Island and Delaware), to pay $1.3 million in consumer redress and administrative costs, and prohibits the respondents from future violations of the TILA and from making various misrepresentations of credit costs and terms.
The redress program applies to certain consumers whose mortgage loans were originated or purchased by Fleet Finance (or a prior corporation incorporated in Rhode Island and also called Fleet Finance, Inc., "Fleet Finance (RI)") between January 1, 1990 and December 31, 1993, and whose loans were paid off to or written off by Fleet Finance, Fleet Finance (RI), or Fleet Financial Group, Inc. ("FFG"), a parent corporation, except by foreclosure ("eligible consumers" or "ECs"), or were paid off by foreclosure by Fleet Finance, Fleet Finance (RI), or FFG ("eligible foreclosed consumers" or "EFCs"). The program also covers consumers who contact the Commission's redress agent at a toll-free number set up under the order (1-877-800-7853) and provide information showing they are, in essence, ECs or EFCs ("qualified consumers" or "QCs").
The redress agent will mail claim forms to more than 30,000 ECs and EFCs, whose names were provided by Fleet Finance. Letters accompanying the forms will explain that the recipients will receive a redress payment if they sign and date the form and return it to the redress agent promptly.
Consumers who do not receive the forms but think they might fall within the definition of an EC or EFC can call the redress agent's toll-free number given above and receive information on which documents to provide to determine whether they fall within the redress group and can receive a redress payment. Consumers affected by the order may have had mortgage loans with Fleet Finance or any of the following Fleet Finance entities: Fleet Financenter, Fleet Consumer Discount Company, Fleet Industrial Loan Company or Fleet City Agency. The amount of the redress payment will be determined after consumers have had a chance to return their claim forms and after consumers who did not receive a form (but think they might qualify for a payment) have been given a chance to submit their documents to the redress agent for review. The Commission vote to finalize the consent agreement was 4-0. (FTC File No. 932-3074; see press release dated July 26, 1999; staff contact is Carole L. Reynolds, 202-326-3230.)
As part of its ongoing review of Commission rules and regulations, the FTC will publish shortly a Federal Register notice completing its review of the Guides for the Dog and Cat Food Industry, 16 C.F.R. Part 241, and rescinding the Guides. The Guides, promulgated by the Commission in 1969, provided for claims made in the labeling and advertising of dog and cat food. They prohibited misrepresentations about specified product characteristics such as composition or nutritional value.
On March 18, 1999, the Commission published a notice in the Federal Register initiating a regulatory review of these Guides and seeking comments about their overall costs and benefits, along with their continuing need. Based on the review, the Commission concluded that the Guides were no longer needed because Model Pet Food Regulations issued by the Association of American Feed Control Officials and regulations promulgated by the U.S. Food and Drug Administration provide specific guidance to industry members about claims regarding nutrition, ingredients, and product characteristics. The vote to publish the Federal Register notice was 4-0. (FTC File No. P994242; see press release dated March 15, 1999; staff contact is Jock Chung, 202-326-2984.)
The Commission has voted to join in the Court's motion (Order to Show Cause Why This Case Should Not Be Dismissed) to dismiss the case in the following matter: American Inventors Corporation (AIC). The case was originally brought in October 1995, and was stayed by the Court in March 1996 due to the pendency of an ongoing criminal investigation.
In May 1999, the United States Attorney in Massachusetts unsealed ten felony criminal indictments against the individual defendants and others in the case. AIC has been out of business since August 1995, and AIC's successor corporation, American Institute for Research and Development (AIRD), which also was a defendant in this case, has been out of business since February 1996.
The Commission vote to join in the Court's motion to dismiss this case was 4-0. (FTC File No. X9660028; see press release dated October 26, 1995; staff contact is Peter Lamberton, 202-326-3274.) Copies of the documents mentioned in this FYI are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580; 877-FTC Help (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.