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| Agency: Federal Trade Commission
Date: 11 February 1997 |
Consent agreements given final approval: Following a public comment period, the Commission has made final consent agreements with the following entities. The Commission action makes the consent orders binding on the respondents.
The Commission’s consent orders with five major automobile manufacturers -- General Motors Corporation, of Detroit, Michigan; American Honda Motor Co., Inc., of Torrance, California; American Isuzu Motors Inc., of Whittier, Califorinia; Mazda Motor of American, Inc., of Irvine, California; and Mitsubishi Motor Sales of America, Inc., of Cypress, California -- settle charges that the companies’ car lease advertising violated the Consumer Leasing Act, Regulation M and the FTC Act, in part, by inadequately disclosing significant fees and lease terms. The settlements with Mitsubishi and GM also resolve charges that these companies’ car financing ads violated the Truth in Lending Act, Regulation Z and the FTC Act, in part, by failing to adequately disclose balloon payments and the annual percentage rate (APR) for the loans. The final orders bar the companies from misrepresenting the total amount due at lease inception, require ads that highlight down payments or certain other amounts to give equal promi nence to a statement of the total amount due at lease inception, and require ads that reference an initial payment or state that no initial payment is due to clearly and con spicuously disclose, as applicable, that the deal is a lease; the total amount due at lease inception; that a security deposit is required; the number, amount and timing of scheduled payments; and the fact that an extra charge may be imposed at the end of the lease based on the residual value of the car. The GM and Mitsubishi settlements also bar these com panies from misrepresenting the existence or amount of any balloon payment or the APR for advertised loans, and require ads stating the amount of any payment to disclose prominently the amount of any balloon payment in close proximity to the most prominent of the payment statements. In addition, these two orders require that ads stating the down payment, the amount of any periodic payments, the period of repayment, or the amount of any finance charge to also disclose clearly and conspicuously the amount or percentage of the down payment, the terms of repayment, the amount of any balloon payment, and the correct APR for the loan. (See Nov. 21, 1996 news release for more details regarding these cases; Commission votes on Feb. 6 to issue the orders as final were all 5-0; Docket Nos. GM--C-3710; Mitsubishi--C-3713; Honda--C-3711; Isuzu--C-3712; Mazda--C- 3714.) Staff contact is David Medine, 202-326-3224.
Copies of the documents referenced above are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY 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.