UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION

In The Matter of

FIRSTPLUS FINANCIAL GROUP, INC., a corporation.

DOCKET NO.

COMPLAINT

The Federal Trade Commission, having reason to believe that FirstPlus Financial Group, Inc.,a corporation (referred to as "respondent" or "FirstPlus"), has violated the provisions of the Federal Trade Commission Act, 15 U.S.C. 45-58, as amended, and the Truth in Lending Act, 15 U.S.C. 1601-1667, as amended, and its implementing Regulation Z, 12 C.F.R. 226, as amended, and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. Respondent FirstPlus Financial Group, Inc., is a Nevada corporation with its principal office or place of business at 1600 Viceroy Drive, Dallas, Texas 75235.

2. Respondent originates, purchases, services, and sells consumer finance transactions. FirstPlus's loan products include debt consolidation or home improvement loans secured by second liens on residential real property where the total outstanding debt on the dwelling exceeds the fair market value of the dwelling(known as "high loan-to-value" or "HLTV" loans), non-conforming home equity loans ("home equity loans"), and personal consumer loans.

3. Respondent has disseminated advertisements to the public that promote consumer credit transactions, as the terms "advertisement," and "consumer credit," are defined in Section 226.2 of Regulation Z, 12 C.F.R.  226.2, as amended.

4. The acts and practices of respondent alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. 44.

5. Respondent has disseminated, or has caused to be disseminated, advertisements in various media promoting HLTV loans, home equity loans, and other types of consumer credit transactions ("credit advertisements") including but not necessarily limited to the attached FirstPlus Exhibits A and B. FirstPlus Exhibits A and B are direct-mail advertisements. These credit advertisements contain the following statements:

A. [Exhibit A contains a non-negotiable coupon, which is similar in appearance to a check, in the amount of $34,980.]
 

Cash in on the savings with a FIRSTPLUS HOME EQUITY LOAN.
Pay off high-interest credit cards, eliminate personal loan payments or consolidate credit cards and other loans into one lower monthly payment. And SAVE money!

Here's an example of the savings you could realize.

Credit Card #1

Credit Card #2

Department Store Cards

Auto Loan

College Loan
______________________

TOTAL PAYMENTS

$245 Paid Off

$210 Paid Off

$125 Paid Off

$293 Paid Off

$110 Paid Off
________________

$983     $375

Your One Monthly Payment is now $608 Less!

B. [Exhibit B contains a non-negotiable coupon, which is similar in appearance to a check, in the amount of $42,800.00.]
 
"We are pleased to inform you that your home at [address] has recently been verified as eligible for a low interest 2nd trust deed in the amount shown above. If you would like this amount increased or decreased please contact your agent below."
 
"This program is offered to a very select group of individuals in your community of [city] on a limited basis. Your eligibility allows you to receive these funds in cash within 7-14 working days."

FEDERAL TRADE COMMISSION ACT VIOLATIONS

COUNT I: Misrepresentation of Cost Savings

6. In advertisements, including but not necessarily limited to FirstPlus Exhibit A, respondent has represented, expressly or by implication that:

A. Consumers, in general, will save money when consolidating existing debts into a FirstPlus home equity loan;
 
B. The examples shown in respondent's advertisements accurately illustrate the potential monthly savings of consolidating existing credit card balances and other loans into a FirstPlus home equity loan.

7. In truth and in fact,

A. Consumers, in many instances, will not save money when consolidating existing debts into a FirstPlus home equity loan. For many types of existing debts, depending on the interest rate and/or repayment terms of the existing debt, consumers will pay more per month and/or pay more over time when consolidating existing debts into a FirstPlus loan.
 
B. The examples shown in respondent's advertisements do not accurately illustrate the potential monthly savings of consolidating existing debts into a FirstPlus loan. Based on generally available interest rates and repayment terms on credit card balances and other loans, consumers would save far less than the illustrated savings, or pay more per month following the original expiration date of the existing debt.

Therefore, respondent's representations, as alleged in Paragraph 6, were, and are, false or misleading.

8. Respondent's practices constitute deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. 45(a).

COUNT II: Misrepresentation of Credit Approval

9. In advertisements, including but not necessarily limited to FirstPlus Exhibit B, respondent has represented, expressly or by implication, that each recipient of respondent's solicitations who applies for the loan advertised will receive such a loan.

10. In truth and in fact, not each recipient of respondent's solicitations who applies for the loan advertised will receive such a loan. Therefore, respondent's representation as alleged in Paragraph 9, was, and is, false or misleading.

11. Respondent's practices constitute deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. 45(a).

Count III: Misrepresentation of Loan Disbursement

12. In advertisements, including but not necessarily limited to FirstPlus Exhibits A and B, respondent has represented, expressly or by implication, that consumers will receive funds for the full loan amount stated in their advertisements (e.g., $34,980).

13. In truth and in fact, in many instances, consumers do not receive funds for the full loan amount stated in respondent's advertisements. In many instances, respondent deducts substantial origination fees and closing costs (e.g. 10.43%) from the advertised loan amount and disburses only the remaining amount to consumers. Therefore, respondent's representation as alleged in Paragraph 12, was, and is, false or misleading.

14. Respondent's practices constitute deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. 45(a).

COUNT IV: Failure to Disclose and Failure to Disclose Adequately Credit Terms

15. In advertisements, including but not necessarily limited to FirstPlus Exhibit A, respondent has represented, expressly or by implication, that consumers can obtain a loan at the terms stated in the advertisements, including but not necessarily limited to the monthly payment amount.

16. These advertisements fail to disclose, or fail to disclose adequately, additional terms pertaining to the credit offer, such as annual percentage rate and terms of repayment. This additional information, if provided, appears in fine print in the advertisements and would be material to consumers in deciding whether to apply for a loan from respondent. The failure to disclose, or failure to disclose adequately, this information, in light of the representation made, was, and is, a deceptive practice.

17. Respondent's practices constitute deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

TRUTH IN LENDING ACT AND REGULATION Z VIOLATIONS

Count V: Failure to Disclose Clearly and Conspicuously, Required Information

18. In advertisements, including but not necessarily limited to FirstPlus Exhibit A, respondent has stated a monthly payment amount required to repay a loan but has failed to disclose clearly and conspicuously, one or more of the following items of information required by Regulation Z: the annual percentage rate and/or the terms of repayment.

19. The credit disclosures required by Regulation Z, if provided, are not clear and conspicuous because they appear in fine print and/or in an inconspicuous location.

20. Respondent's practices violate Section 144 of the Truth in Lending Act, 15 U.S.C. 1664, and Section 226.24(c) of Regulation Z, 12 C.F.R. 226.24(c).

THEREFORE, the Federal Trade Commission this day of , 2000, has issued this complaint against respondent.

By the Commission.

Donald S. Clark
Secretary
SEAL: