January 6, 2000

Dolores S. Smith, Director
Division of Consumer and Community Affairs
Board of Governors of the Federal Reserve System
Washington, D.C. 20551

Dear Ms. Smith:

This letter responds to your request for information regarding the enforcement activities of the Federal Trade Commission ("Commission" or "FTC") under the Truth in Lending, Consumer Leasing, Equal Credit Opportunity, and Electronic Fund Transfer Acts ("Acts") during the past year for use in preparing the Federal Reserve Board's ("Board") Annual Report to Congress. You have asked for information regarding the Commission's enforcement activities pursuant to those Acts, including methods of enforcement and significant enforcement actions and the extent to which compliance is achieved by entities subject to the Commission's enforcement authority. Also, you have asked whether the Commission recommends any changes to these laws or their implementing regulations or wishes to provide any other comments or observations.

I. A DESCRIPTION OF THE COMMISSION'S ENFORCEMENT ACTIVITIES UNDER THE ACTS DURING THE PAST YEAR

Truth in Lending Act and Consumer Leasing Act

Since January 1999 up to the present, the Commission obtained consent judgments against seven subprime mortgage lenders and their owners for alleged violations of the Home Ownership and Equity Protection Act ("HOEPA"),⁽¹⁾ the Truth in Lending Act ("TILA"), Regulation Z, and/or the Federal Trade Commission Act ("FTC Act"). The Commission also issued a final decision and order against a nationwide mortgage company (and its successor entities) in connection with the company's alleged deceptive cost information and deceptive practices, in violation of the TILA and Regulation Z and the FTC Act. Litigation is also continuing in federal district court regarding a complaint charging a Washington, D.C. mortgage lender and its owner, inter alia, with violating the Truth in Lending Act ("TILA") and Regulation Z and the FTC Act, in connection with alleged deceptive and unfair practices in home mortgage lending. The Commission also issued one consent decree against a vehicle manufacturer, and one consent decree against two related vehicle dealerships and their owner, providing for civil penalties and other relief for alleged lease and/or credit advertising violations of defendants' prior FTC orders settling charges that the entities failed to disclose and/or failed to disclose clearly and conspicuously required lease and/or credit advertising cost information, in violation of the Consumer Leasing Act ("CLA") and Regulation M and/or the TILA and Regulation Z and the FTC Act. The Commission also issued two final decisions and orders, and accepted for public comment consent agreements in five other cases, involving lease and/or credit advertising. These cases alleged deceptive lease and/or credit advertising claims in violation of the FTC Act and failure to disclose and/or failure to disclose clearly and conspicuously important lease and/or credit cost terms, in violation of the CLA and Regulation M and/or the TILA and Regulation Z, in computer leases or vehicle leases. These cases are discussed below. Other investigations of potential TILA and/or CLA violations are ongoing.

A. Mortgage Cases Alleging HOEPA Violations

In 1999, consent judgments were entered in seven cases against subprime mortgage lenders around the country for alleged violations of the HOEPA, TILA and Regulation Z, and the FTC Act:⁽²⁾ Federal Trade Commission v. Cooper ("Cooper"),⁽³⁾ Federal Trade Commission v. Capitol Mortgage Corp. ("Capitol Mortgage"),⁽⁴⁾ Federal Trade Commission v. CLS Financial Services, Inc. ("CLS Financial"),⁽⁵⁾ Federal Trade Commission v. Granite Mortgage, LLC ("Granite Mortgage"),⁽⁶⁾ Federal Trade Commission v. Interstate Resource Corp. ("Interstate"),⁽⁷⁾ Federal Trade Commission v. LAP Financial Servs., Inc. ("LAP Financial"),⁽⁸⁾ and Federal Trade Commission v. Wasatch Credit Corp. ("Wasatch Credit").⁽⁹⁾ These cases were part of the Commission's "Operation Home Inequity," a law enforcement and consumer education campaign seeking to enforce HOEPA and curb abusive practices in subprime mortgage lending. All seven cases involve injunctive relief under HOEPA, the TILA, Regulation Z, and the FTC Act. In six cases, the defendants agreed to pay consumer redress totaling $572,500; in two cases, the companies must obtain performance bonds before they offer or extend specified credit in the future; and, in one case, defendants are banned from any future involvement with high-cost loans secured by consumers' homes.

In Cooper, the complaint alleged that Barry Cooper dba Barry Cooper Properties violated HOEPA, Regulation Z, and the FTC Act by including a prohibited prepayment penalty in its mortgage loans and by engaging in asset-based lending practices. As part of the settlement, Cooper agreed to pay $25,000 in consumer redress. The consent judgment, inter alia, also prohibits Cooper from offering or making any HOEPA loan for five years, unless he first obtains a $150,000 performance bond, and requires Cooper to reform consumers' contracts by nullifying the prohibited provisions.

In Capitol Mortgage, the complaint alleged that the company and its principal violated HOEPA, Regulation Z, and/or the FTC Act by failing to give consumers the required HOEPA notice and disclosure of terms and by improperly depriving consumers of the three-day waiting period created by HOEPA. The complaint also alleged that defendants included prohibited balloon payments, increased interest rate provisions, and prepayment penalties in loan documents. The complaint further alleged that the company violated TILA and Regulation Z, inter alia, by failing to make required disclosures and by engaging in practices that deprived consumers of the three-day right to rescind the loan. The consent judgment, inter alia, bars defendants from participating in any activity related to certain high-cost loans secured by consumers' principal dwellings and requires defendants to reform existing contracts to nullify prohibited provisions.

In CLS Financial, the complaint charged the company and its main principal with violating HOEPA, Regulation Z, and/or the FTC Act by failing to provide required HOEPA notices and disclosures and by using prohibited balloon payment and interest rate increase provisions. The complaint also charged that the company made loans involving asset-based lending in violation of HOEPA and that defendants allegedly falsely labeled loans as "open-end" credit in an attempt to evade HOEPA, in violation of the FTC Act. The consent judgment, inter alia, requires defendants to pay $60,000 in consumer redress and to reform open loans to nullify prohibited provisions.

In Granite Mortgage, the complaint alleged that the company, two other entities, and two principals violated HOEPA, Regulation Z, and/or the FTC Act by failing to provide required HOEPA notices and disclosures. The complaint also alleged that defendants violated HOEPA, Regulation Z, and/or the FTC Act by using prohibited prepayment penalty provisions and engaging in asset-based lending. The complaint also charged the company and other entities with failing to provide required TILA disclosures. The consent judgment, inter alia, requires defendants to pay $132,500 in consumer redress and to reform open loans to nullify prohibited provisions.

In Interstate, the complaint alleged that the company and two principals violated HOEPA, Regulation Z, and/or the FTC Act by failing to provide material credit information as required by HOEPA. Under the consent judgment, defendants are required, inter alia, to pay $50,000 in consumer redress.

In LAP Financial, the complaint charged the company and its principal with numerous violations of HOEPA, Regulation Z, and/or the FTC Act, including failure to provide required HOEPA notices and disclosures; asset-based lending; using prohibited prepayment penalties; and making direct payments to home improvement contractors. The complaint also alleged that the company violated TILA and Regulation Z by failing to provide required disclosures and engaging in rescission-related violations. The consent judgment, inter alia, requires defendants to pay $250,000 in consumer redress and to reform loans by nullifying prohibited provisions.

In Wasatch Credit, the complaint charged Wasatch Credit, related entities, and two principals with violating HOEPA, Regulation Z, and/or the FTC Act by failing to provide HOEPA notices and disclosures and/or by improperly depriving consumers of the three-day HOEPA waiting period. The complaint also alleged that defendants used prohibited balloon payment and increased interest rate provisions and engaged in asset-based lending, in violation of HOEPA, Regulation Z, and/or the FTC Act. It further alleged that defendants violated TILA, Regulation Z, and/or the FTC Act by failing to provide required disclosures and engaging in practices that deprived consumers of their right to rescind the loan. It also alleged that, in violation of the FTC Act, defendants directed borrowers to falsely characterize consumer loans as business loans (in an apparent attempt to evade HOEPA and the TILA) and that one entity falsely represented to consumers that the credit offered and extended was open-end when, in fact, it was closed-end. Under the consent judgment, defendants are required, inter alia, to pay $55,000 in consumer redress and to reform existing contracts to nullify prohibited provisions. Defendants are also prohibited from offering or extending consumer credit, unless they first obtain a $250,000 performance bond that would remain in effect for five years.

B. Other Mortgage Cases

In Fleet Finance, Inc. and Home Equity U.S.A., Inc. ("Fleet Finance"),⁽¹⁰⁾ the Commission issued a final decision and order settling charges that Fleet Finance violated the TILA and Regulation Z, and engaged in deceptive practices in violation of the FTC Act, by failing to provide accurate, timely disclosures of the costs and terms of home equity loans (and other consumer credit transactions) to consumers and by failing to provide or accurately provide consumers with information about their home equity rescission rights. More specifically, the complaint charged that Fleet Finance extended consumer credit transactions or purchased consumer credit transactions, in which Fleet Finance acquired or retained a security interest in the consumers' principal dwellings, and failed to provide the consumers with the right to rescind the credit transactions by, inter alia: 1) failing to provide consumers with notices of the right to rescind; and 2) waiving consumers' right to rescind, and disbursing funds, pursuant to oral and other insufficient waivers. The complaint also alleged that Fleet Finance in extending consumer credit transactions: 1) failed to provide consumers with all TILA-required disclosures of the costs and terms of credit and/or provide these disclosures prior to consummation of credit transactions; 2) failed to provide or accurately provide certain TILA disclosures, including the annual percentage rate. The complaint also alleged that Fleet Finance purchased consumer credit transactions that failed to provide or accurately provide required TILA disclosures. The complaint also alleged that Fleet Finance failed to retain, inter alia, TILA disclosures and rescission notices for two years, in violation of Regulation Z.

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 for consumer redress and administrative costs. The redress program applies to certain consumers whose mortgage loans were originated or purchased by Fleet Finance or a predecessor company (also named "Fleet Finance") between January 1, 1990 and December 31, 1993. The program covers certain consumers whose mortgage loans, inter alia, were paid off to or written off by Fleet Finance, the predecessor, or Fleet Financial Group, Inc., a parent corporation. The program also covers certain consumers who contact an 800-number set up under the proposed order and provide information showing they are eligible for consumer redress under the terms of the order. The order also prohibits Fleet Finance and its successor companies, inter alia, from future violations of the TILA and Regulation Z and from various misrepresentations of credit costs and terms.

In Federal Trade Commission v. Capital City Mortgage Corp. ("Capital City Mortgage"),⁽¹¹⁾ litigation continued against a Washington, D.C.-area mortgage company and its owner in this case alleging numerous violations of federal laws, inter alia, the TILA and Regulation Z and the FTC Act.⁽¹²⁾ The complaint alleges, inter alia, that defendants violated the TILA and Regulation, and engaged in unfair or deceptive acts or practices in violation of the FTC Act, by, inter alia: 1) understating the annual percentage rate and finance charge; 2) failing to disclose or accurately disclose the payment schedule (including failing to disclose a balloon payment); and 3) failing to provide disclosures that accurately reflect the legal obligation. The complaint also alleges that defendants engaged in other deceptive or unfair practices in offering and extending credit and throughout the loans, in violation of the FTC Act, with the result that a number of borrowers were overcharged on their loans, were defaulted, and had title to their homes or other property impaired or completely lost (along with the equity). The complaint asks the court to award, inter alia, the amount necessary to prevent unjust enrichment and consumer redress (including refunds of monies paid, disgorgement of ill-gotten gains, and rescission of contracts) and to permanently restrain defendants from future law violations. The discovery phase in the case ended on December 20, 1999; a trial date has not yet been set.⁽¹³⁾

C. Lease and Credit Advertising Cases

In United States v. Mazda Motor of America, Inc. ("Mazda"),⁽¹⁴⁾ a consent decree was entered against a vehicle manufacturer settling charges that it violated a 1997 FTC order ("FTC order")⁽¹⁵⁾ and various state orders in connection with its televised lease advertisements. Under the FTC order, Mazda was required, inter alia, to disclose important lease terms in advertisements clearly and conspicuously and as required by the CLA and Regulation M. According to the complaint, following issuance of the FTC order, Mazda ran important lease terms in televised advertisements in small and unreadable print, offset by distracting images or sounds, or that appeared on the screen for too short a time. Under the consent decree, Mazda is required to pay $5.25 million -- the largest civil penalty ever in a FTC consumer protection matter: $4.05 million in civil penalties for alleged violations of the FTC order and $1.2 million in fines and costs to 24 states as part of the settlement. Mazda is also required to provide its dealers with consumer education brochures on vehicle leasing for distribution to consumers for one year and to distribute, inter alia, copies of lease and credit regulations to its dealers. Under the consent decree, Mazda is also prohibited from violating the CLA and Regulation M.

In United States v. Suntrup Buick-Pontiac-GMC Truck, Inc., Suntrup Ford, and Thomas Suntrup ("Suntrup"),⁽¹⁶⁾ a consent decree was entered against two St. Louis vehicle dealerships and their chief executive officer ("CEO") settling charges that defendants violated a 1998 FTC order ("FTC order")⁽¹⁷⁾ in connection with their lease and credit advertisements. Under the FTC order, Suntrup was required to disclose important financial information in lease and credit advertisements "clearly and conspicuously" and as required by the CLA and Regulation M and the TILA and Regulation Z. According to the complaint, following issuance of the FTC order, Suntrup's vehicle leasing advertisements stated the amount of any payment or that any or no initial payment was required at lease inception but failed to disclose clearly and conspicuously required financial information, including the total amount due prior to lease inception, by, inter alia, using small type, short durations or distracting sounds or images, and also omitted certain required lease terms. In addition, the complaint alleged that Suntrup's vehicle credit advertisements offered just "$1 down" without disclosing required credit terms. Under the consent decree, Suntrup is required to pay a $40,000 civil penalty - the first ever collected by the Commission for such an order violation by a vehicle dealership or its CEO. Suntrup is also required for two years to make the brochure, "Keys to Vehicle Leasing,"⁽¹⁸⁾ available to consumers who visit the dealerships.

In Dell Computer Corp. ("Dell")⁽¹⁹⁾ and Micron Electronics, Inc. ("Micron"),⁽²⁰⁾ the Commission issued final decisions and orders against two computer leasing companies resolving charges that they violated the CLA and Regulation M and the FTC Act, by disseminating misleading advertisements for consumer leases primarily in Internet promotions. The complaints in these cases charged, inter alia, that the companies disseminated deceptive lease advertisements that offered low monthly payment amounts and placed material cost information in unreadable fine print or an inconspicuous location or omitted such information altogether -- including, inter alia, that the monthly payments are components of lease offers, whether or not a security deposit is required, and/or the number and timing of scheduled payments. Under the orders in these cases, respondents must, inter alia, provide all the disclosures required by the CLA and Regulation M for lease advertisements "clearly and conspicuously," that is, in a clear, readable (or audible), and understandable manner. The orders also prohibit the companies from running advertisements that highlight low monthly payments, unless the promotions also state, inter alia, clearly and conspicuously, that: 1) the transaction is a lease; 2) the total amount due at lease signing; 3) whether or not a security deposit is required; and 4) the number, amount, and timing of scheduled payments. The orders also prohibit the companies from making any reference to a charge that is part of the total amount due at lease signing or that no such amount is due, unless the promotion also states with equal prominence the total amount due at lease inception. In addition, the orders require respondents to comply with all requirements of the CLA and Regulation M.

The Commission also issued for public comment consent agreements with six Philadelphia, Pennsylvania-area vehicle dealerships and their CEOs for violations of the CLA and/or TILA and FTC Act pertaining to deceptive lease and/or credit advertisements:⁽²¹⁾ Northeast Auto Outlet, Inc. ("Northeast"),⁽²²⁾ Norristown Automobile Co. ("Norristown"),⁽²³⁾ Dunphy Nissan, Inc. ("Dunphy"),⁽²⁴⁾ Marty Sussman Organization, Inc. ("Marty Sussman"),⁽²⁵⁾ Pacifico Ford, Inc. ("Pacifico Ford"),⁽²⁶⁾ and Pacifico Ardmore, Inc. ("Pacifico Ardmore").⁽²⁷⁾ These cases involve actions for omitting or burying in fine print key cost information in advertised lease and/or credit deals.

In all six cases, the complaints alleged deceptive vehicle lease advertisements, in violation of the FTC Act, either by failing to disclose and/or failing to disclose adequately essential lease information. The six dealerships and their CEOs were charged with hiding many costs associated with the lease in fine-print disclosures located far from the more prominent claims of low monthly payments or with omitting these costs. The complaints also alleged, inter alia: 1) that Dunphy misrepresented the amount due at lease inception by promoting low down payments or "$0 down," when additional fees were due at lease signing; 2) that Dunphy and Northeast represented that consumers could buy the advertised vehicle for a low monthly charge, while the offer was for a lease; 3) that Northeast misrepresented that the dealer's "double your down payment"offer was available for the advertised vehicles when it was not. In all six cases, the complaints also alleged that the lease advertisements used triggering terms under the CLA and Regulation M, but failed to disclose or failed to disclose clearly and conspicuously other required information, such as the total amount due at leasing signing, and that the promotions stated a downpayment amount more prominently than the disclosure of the total amount due at lease signing.

In addition, the complaints charged that Dunphy, Norristown, Northeast and Pacifico Ardmore ran deceptive credit promotions in violation of the FTC Act, by failing to disclose and/or failing to disclose adequately critical credit terms, by omitting required terms or placing this information in fine-print disclosures located far from the more prominent low downpayment claims. The complaints against these four dealers also alleged that the credit advertisements used triggering under the TILA and Regulation Z, yet omitted or failed to disclose clearly and conspicuously required information. All six complaints also allege that the dealers' credit advertisements stated a rate of finance charge without stating that rate as an "APR," in violation of the TILA and Regulation Z.

The consent agreements in these six cases would require these dealerships and their CEOs, inter alia, to make clear and accurate cost disclosures in their lease and/or credit advertisements. In all six cases, the proposed orders would prohibit these entities from placing advertisements that state the amount of any payment due at lease inception (excluding the monthly payment) or the fact that any or no inception payment is due, without also disclosing with "equal prominence" the total amount due at lease inception. The proposed orders would also prohibit respondents from disseminating lease promotions that state the amount of any payment, or that any or no initial payment is required at lease inception, unless the advertisements also clearly and conspicuously disclose other required lease information, such as the total amount due at lease inception and whether or not the consumer must pay a security deposit. All respondents would also be required to comply with all provisions of the CLA and Regulation M. In addition: 1) Dunphy would be prohibited from misrepresenting the costs of leasing, including the amount due at lease inception; 2) Dunphy and Northeast would be prohibited from representing that the advertised terms apply to a cash or credit offer when, in fact, they apply only to lease a particular vehicle; and 3) Northeast would be prohibited from misrepresenting the availability of any advertised offer. All respondents would also be required to comply with all provisions of the TILA and Regulation Z.

D. Consumer and Business Education

The Commission continues to view consumer and business education efforts as important to its enforcement activities. In 1999, in connection with continuing concerns about possible home equity fraud, the Commission issued a consumer publication to provide information to consumers considering home equity loans, "Need a Loan? Think Twice About Using Your Home as Collateral." In addition, the federal Interagency Task Force on Fair Lending, of which the Commission is a member, issued a consumer brochure to facilitate shopping and negotiating for a home mortgage, "Looking for the Best Mortgage: Shop, Compare, Negotiate."⁽²⁸⁾ The Commission staff also continued to participate in the Board-sponsored "Lease Education Program Team," involving the Board, Commission staff, and a coalition of entities (including consumer groups, state attorneys general and industry representatives), which developed various online educational materials and a computer program to enhance awareness and understanding of leasing. The Commission's above consumer protection materials were also made available to the public through the Commission's website at "www.ftc.gov."⁽²⁹⁾

Equal Credit Opportunity Act

In 1999, the Commission obtained consent decrees against two vehicle finance companies for violations of the Equal Credit Opportunity Act ("ECOA") and its implementing Regulation B. Litigation continues in a case involving a subprime mortgage lender. Those three cases are discussed below. Other enforcement efforts continue.

In United States v. Franklin Acceptance Corporation ("Franklin"),⁽³⁰⁾ a consent decree was entered settling allegations that a vehicle finance company discriminated against applicants on the basis of sex, marital status and the fact that an applicant's income derived from public assistance sources, and when taking adverse action on an application, failed to provide notice as required under the ECOA and the Fair Credit Reporting Act ("FCRA"). The complaint alleged that Franklin discriminated against applicants on the basis of sex and marital status by discounting or excluding from consideration the income of an applicant who received payments of child support. The complaint alleged that Franklin discriminated against applicants on the basis of marital status by failing to aggregate the incomes of unmarried co-applicants while aggregating the income of married co-applicants. The complaint alleged that Franklin discriminated against applicants who derived their income from public assistance by discounting or refusing to consider such income. In addition, the complaint alleged that, when taking adverse action on an application, Franklin failed to provide the applicant with written notification of the action taken, failed to disclose the specific reasons for the action taken or to disclose the applicant's right to request such reasons, and, when adverse action was based on a report from a consumer reporting agency, failed to provide notice as required under the FCRA. Under the consent decree, defendants agreed to pay a civil penalty of $800,000 and to the entry of a permanent injunction.

In United States v. Ford Motor Credit Co.,⁽³¹⁾ a consent decree was entered resolving allegations that this vehicle finance company discriminated in the pricing of its credit products against applicants on the basis of marital status. The complaint alleged that the company failed to aggregate the incomes of unmarried co-applicants while aggregating the income of married co-applicants with the result that unmarried co-applicants often paid more for credit. Under the consent decree, defendants agreed to pay $650,000 to a consumer redress program and to the entry of a permanent injunction.

Litigation continued in Capital City Mortgage,⁽³²⁾ alleging that the company and its owner violated the ECOA and Regulation B by: failing to take written applications for mortgage loans; failing to collect required information about the race or national origin, sex, marital status, and age of applicants; failed to provide rejected applicants with written notice of adverse action; and, when providing notice of adverse action, failed to provide applicants with the correct principal reason for the action taken or the correct name and address of the Commission, the federal agency that administers compliance with the ECOA with respect to defendants. The complaint seeks civil penalties and injunctive relief for the alleged violations of the ECOA and Regulation B.

In November 1999, the Commission and other federal agencies submitted a joint comment to the Board about Regulation B.⁽³³⁾ The comment was submitted in response to the Board's notice of proposed rulemaking with respect to Regulation B. In their comment, the agencies urged the Board to amend Regulation B to allow lenders voluntarily to collect information about the race and gender of applicants for non-mortgage credit. According to the comment, the current prohibition of collecting such information "inhibits the ability of financial service providers to learn about and respond to market opportunities to provide credit to underserved communities. The prohibition makes it difficult for institutions to know whether products intended to expand access to credit, including to minorities, reach their intended customer base." The comment also urged the board to clarify that creditors may not discriminate on a prohibited basis in their preapplication marketing practices and to clarify how creditors may determine the need for special purpose credit programs.⁽³⁴⁾

The Commission continued its consumer and business education efforts. The staff worked with other governmental agencies and with creditor and consumer organizations to increase awareness of and compliance with the ECOA. The Commission also continued its active participation in the Interagency Task Force on Fair Lending.

Electronic Fund Transfer Act

In 1999, the Commission continued its consumer and business education efforts in this area. The Commission issued a brochure, "Guide to Online Payments," providing information to consumers about different types of online payment systems and security features.⁽³⁵⁾

II. AN ASSESSMENT OF THE EXTENT TO WHICH COMPLIANCE IS BEING ACHIEVED BY ENTITIES SUBJECT TO THE COMMISSION'S ENFORCEMENT AUTHORITY⁽³⁶⁾

Truth in Lending Act and Consumer Leasing Act

This year, the Commission received, inter alia, numerous inquiries concerning home equity lending, including concerning consumer rights under HOEPA. Many mortgage brokers, and some online mortgage entities, requested materials regarding the requirements of Regulation Z. Many credit and lease advertisers requested information regarding Regulations Z and M. Some consumers requested information regarding their TILA rights concerning unauthorized transactions and error resolution, including for online transactions.

Equal Credit Opportunity Act

The Commission received various inquiries about fair lending and predatory lending issues. The Commission also received requests for information about ECOA from mortgage brokers.

Electronic Fund Transfer Act

The Commission received some requests from consumers for information about EFTA protections pertaining to point-of-sale debit transactions, including for unauthorized use and error resolution. The Commission continues to receive a small number of inquiries about these requirements in comparison to those under the credit and lease area.

III. ANY SUGGESTIONS FOR CHANGES IN THE ACTS OR THEIR IMPLEMENTING REGULATIONS

The Commission supports the Board's regulatory review of Regulation B. The Commission understands that the Board may undertake a review of Regulation Z, following conclusion of its Regulation B review. In view of the diverse transactions and issues affected by Regulation Z, the Commission would also support any such effort in the future to update and clarify Regulation Z as well.

The Commission hopes that the information contained in this letter responds to your inquiry and will assist in preparation of the Board's Annual Report to Congress. If any other information would be useful or if you request additional assistance, please contact David Medine, Associate Director, Division of Financial Practices, at (202) 326-3025.

By direction of the Commission.

Robert Pitofsky
Chairman

Endnotes:

1. In this report, HOEPA, which amends the TILA and is implemented by Regulation Z, is referenced separately. HOEPA provides special protections for consumers who obtain high-rate or high-fee loans secured by their principal dwellings by requiring creditors to provide certain material information at least three days before the loan is consummated, prohibiting the use of certain loan terms, and barring specified practices.

2. The Commission voted 4-0 to approve the settlements, with Commissioner Swindle concurring in part and dissenting in part.

3. No. CV 99-07782 WDK (C.D.Cal. Aug. 2, 1999).

4. No. 2-99-CV580G (D. Utah Aug. 23, 1999).

5. No. C99-1215 Z (W.D. Wash. Jul. 30, 1999).

6. No. 99-289 (E.D. Ky. Aug. 12, 1999).

7. No. 99 Civ. 5988 (S.D. N.Y. Jul. 30, 1999).

8. No. 3:99 CV-496-H (W.D. Ky. Aug. 5, 1999).

9. No. 2-99CV579G (D. Utah Aug. 23, 1999).

10. FTC Docket No. C-3899 (Oct. 5, 1999).

11. No. 98CV00237 (D.D.C. filed Jan. 29, 1998).

12. The complaint in this matter also alleges, inter alia, violations of the Equal Credit Opportunity Act. See infra p.11.

13. The case is joined, for purposes of discovery, with a private lawsuit, Hargraves v. Capital City Mortgage Corp., No. 98CV1021 (D.D.C. filed Apr. 24, 1998).

14. No. SACV-99-1213 AHS (C.D. Cal. Oct. 7, 1999).

15. FTC Docket No. C-3714 (Feb. 6, 1997).

16. No. 4:99CV01746CEJ (E.D. Mo. Nov. 22, 1999).

17. FTC Docket No. C-3779 (Jan. 5, 1998).

18. This brochure was previously jointly developed by the FTC staff, Federal Reserve Board staff, and various industry representatives and consumer groups and explains, in simple terms, vehicle leasing transactions and costs.

19. FTC Docket No. C-3888 (July 28, 1999).

20. FTC Docket No. C-3887 (July 28, 1999).

21. The consent agreements were placed on the public record for public comment for sixty days, after which the Commission will decide whether to make them final. See 64 Fed. Reg. 68687 (Dec. 8, 1999).

22. FTC File No. 992 3080 (Dec. 2, 1999).

23. FTC File No. 992 3081 (Dec. 2, 1999).

24. FTC File No. 992 3082 (Dec. 2, 1999).

25. FTC File No. 992 3078 (Dec. 2, 1999).

26. FTC File No. 992 3079 (Dec. 2, 1999).

27. FTC File No. 992 3116 (Dec. 2, 1999).

28. The members of the Interagency Task Force include the: Department of Housing and Urban Development, Department of Justice, Department of the Treasury, Federal Deposit Insurance Corporation, Federal Housing Finance Board, Federal Reserve Board, Federal Trade Commission, National Credit Union Administration, Office of Federal Housing Enterprise Oversight, Office of the Comptroller of the Currency, and Office of Thrift Supervision.

29. Information concerning the Commission's enforcement actions and other activities discussed in this report are also available at this website.

30. No. 99-CV-2435 (E.D. Penn. May 14, 1999).

31. No. 99-75887 GEW (E.D. Mich. filed Dec. 9, 1999).

32. See supra note 11.

33. Letter from Commission, Department of Treasury, Department of Justice, Department of Housing and Urban Development, Office of the Comptroller of the Currency, Office of Thrift Supervision, Small Business Administration, and Office of Federal Housing Enterprise Oversight to Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System dated November 15, 1999.

34. The Commission voted 3-1 to file this comment with the Board, with Commissioner Swindle dissenting and issuing a separate statement.

35. This brochure was jointly developed by the Commission and America Online, Inc. ("AOL"). AOL was required to develop consumer education materials regarding online payment systems, pursuant to a final decision and order issued by the Commission (previously reported). See FTC Docket No. C-3787 (Mar. 24, 1998).