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1
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DECISION & ORDER
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EXTRACTED KEY WORDS
COMMISSION CONSUMER COMPLAINT FEDERAL TRADE COMMISSION LOAN FIRSTPLUS LOAN CREDIT ACT DISCLOSURE VIOLATIONS ADVERTISEMENT SUCCESSORS AGREEMENT CONSENT JURISDICTION PROCEEDING MISREPRESENT AMOUNT TERMINATE REGULATION SAVINGS CREDIT TRANSACTIONS APPEALING CONSUMER PROTECTION CHARGE JURISDICTIONAL FACTS MATTER PURSUANT OFFICERS |
992 3121
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
COMMISSIONERS:
Robert Pitofsky, Chairman
Sheila F. Anthony
Mozelle W. Thompson
Orson Swindle
Thomas B. Leary
In The Matter of
FIRSTPLUS FINANCIAL GROUP,INC. a corporation.
Docket No. C-3984
Decision and Order
The Federal Trade Commission having initiated an investigation of
certain acts and practices of the respondent named in the caption
hereof, and the respondent having been furnished thereafter with a
copy of a draft of complaint which the Bureau of Consumer Protection
proposed to present to the Commission for its consideration and which,
if issued by the Commission, would charge respondent with violations
of the Federal Trade Commission Act and the Truth in Lending Act; and
The respondent, its attorney, and counsel for the Commission having
thereafter executed an agreement containing a consent order, an
admission by the respondent of all the jurisdictional facts set forth
in the aforesaid draft of complaint, a statement that the signing of
said agreement is for settlement purposes only and does not constitute
an admission by respondent that the law has been violated as alleged
in such complaint, or that the facts as alleged in such complaint,
other than jurisdictional facts, are true; and
The Commission having thereafter considered the matter and having
determined that it had reason to believe that the respondent has
violated the said Acts, and that a complaint should issue stating its
charges in that respect, and having thereupon accepted the executed
consent agreement and placed such agreement on the public record for a
period of thirty (30) days, and having duly considered the comment
filed by an interested person pursuant to § 2.34 of its Rules, now in
further conformity with the procedure prescribed in § 2.34 of its
Rules, the Commission hereby issues its complaint, makes the following
jurisdictional findings and enters the following order:
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2
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COMPLAINT
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EXTRACTED KEY WORDS
ADVERTISEMENTS FIRSTPLUS ACT RESPONDENT CONSUMERS CREDIT FEDERAL TRADE COMMISSION PRACTICES AMOUNT DEBTS HOME EQUITY FIRSTPLUS EXHIBIT DISCLOSE VIOLATION REPRESENTATION CONSOLIDATING CREDIT CARD TRUTH REGULATION AFFECTING COMMERCE SAVINGS MONTHLY PAYMENT ALLEGES PAID DECEPTIVE ACTS FAILURE IMPLICATION REPAYMENT MONEY |
992 3121
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
In The Matter of
FIRSTPLUS FINANCIAL GROUP,INC. a corporation.
DOCKET NO. C-3984
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
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3
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ANALYSIS
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EXTRACTED KEY WORDS
LOAN CONSUMERS MISREPRESENTING CREDIT TRANSACTIONS AMOUNT ADVERTISEMENTS SAVINGS PROPOSED CONSENT AGREEMENT DISCLOSE PAYMENT FEDERAL TRADE COMMISSION RECEIVING ACT REGULATION CONSOLIDATING REPAYMENT FINANCE PUBLIC RECORD COMPLAINT ALLEGES MONEY DEBTS MONTHLY SAVINGS TILA PROCEEDS STATING ELIGIBILITY THIRD PARTIES COST SAVINGS |
Analysis of Proposed Consent
Order to Aid Public Comment.
_________________________________________________________________
The Federal Trade Commission has accepted an agreement to a proposed
consent order from FirstPlus Financial Group, Inc. ("FirstPlus").
The proposed consent order has been placed on the public record for
thirty (30) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After thirty (30) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement or make final the agreement's proposed
order.
Through direct mail, television, and online advertisements, FirstPlus
has disseminated information promoting high loan-to-value ("HLTV")
loans, home equity loans, and other types of consumer credit
transactions. The complaint alleges that many of these advertisements
are deceptive and misleading, and violate various provisions of the
Federal Trade Commission Act ("FTC Act"), the Truth in Lending Act
("TILA"), and Regulation Z. Specifically, the complaint alleges that
FirstPlus: (1) falsely represented in its advertising that consumers
would save money when consolidating existing debts in a FirstPlus loan
and that the examples shown in FirstPlus's advertising accurately
illustrate potential monthly savings; (2) falsely represented that
each consumer receiving a solicitation from the company would actually
receive a loan; (3) misrepresented that consumers would receive loans
for the full amount stated in the company's advertisement; (4) failed
to adequately disclose credit terms for its loan products; and (5)
failed to disclose clearly and conspicuously key information about the
terms of its credit offers as required by the TILA and Regulation Z.
The proposed consent order (1) prohibits FirstPlus from
misrepresenting the comparative or absolute savings or benefits of
consolidating debt, including misrepresenting the circumstances under
which consumers can save money when consolidating, and misrepresenting
the monthly savings consumers will realize over the extended life of
the FirstPlus loan; (2) prohibits FirstPlus from misrepresenting an
individual's eligibility to receive a loan; (3) prohibits FirstPlus
from misrepresenting the amount of loan proceeds to be disbursed to
consumers, or misrepresenting the amount of proceeds to be disbursed
on consumers' behalf to third parties; (4) prohibits FirstPlus from
stating the savings or benefits of a FirstPlus loan, as compared to
other consumer credit transactions, without disclosing accurately,
clearly, and conspicuously all material information needed by
consumers to evaluate the comparison; (5) prohibits FirstPlus from
using an example of the cost savings or benefits of a FirstPlus loan,
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4
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AGREEMENT
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EXTRACTED KEY WORDS
COMMISSION COMPLAINT FEDERAL TRADE COMMISSION FIRSTPLUS CONSUMER LOAN AGREEMENT CREDIT FIRSTPLUS FINANCIAL GROUP DRAFT COMPLAINT ACT DISCLOSURE CONSENT ORDER OFFICERS PROCEEDING ACCEPTANCE VIOLATION AMOUNT SUCCESSORS PRACTICES REPRESENTATIVES COUNSEL FACTS LAW PURSUANT MATERIALS ADVERTISEMENT MISREPRESENT TERMINATE |
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
In The Matter of
FIRSTPLUS FINANCIAL GROUP, INC., a corporation.
FILE NO. 992 3121
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission") has conducted an
investigation of certain acts and practices of FirstPlus Financial
Group, Inc., a corporation (referred to as "respondent" or
"FirstPlus"). Respondent, having been represented by counsel, is
willing to enter into an agreement containing a consent order
resolving the allegations contained in the attached draft complaint.
Therefore,
IT IS HEREBY AGREED by and between FirstPlus Financial Group, Inc., by
its duly authorized officers, and counsel for the Federal Trade
Commission that:
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 admits all the jurisdictional facts set forth in
the draft complaint.
3. Respondent waives:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain
a statement of findings of fact and conclusions of law;
and
c. All rights to seek judicial review or otherwise to
challenge or contest the validity of the order entered
pursuant to this agreement.
4. This agreement shall not become part of the public record of
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5
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PITOFSKY STATEMENT
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EXTRACTED KEY WORDS
RELIEF FINANCE CONSUMER HLTV LOAN MISREPRESENTING FIRST ACTION SAVINGS GAIN CONSOLIDATING DEBTS HIGH LOAN-TO-VALUE LAW ENFORCEMENT MESSAGE DOLLAR FINANCIAL MARKET HLTV TRANSACTIONS OMIT MISREPRESENT MATERIAL FACTS MATERIAL FACTS RELATING PRINCIPLE SCOPE INJUNCTIVE RELIEF SUPPLIES DOSE WEAK FINANCIAL SITUATION PURSUING DECEPTIVE HLTV LOAN HLTV LOAN ADVERTISING CONSUMER REDRESS MONETARY RELIEF |
_________________________________________________________________
Statement of Chairman Robert Pitofsky and Commissioners Mozelle W.
Thompson and Thomas B. Leary
FirstPlus Financial Group, Inc.
Docket No. C-3984
_________________________________________________________________
This matter is the Commission's first action brought against a
consumer finance company for misrepresenting the savings that
consumers would gain by consolidating their debts into a high
loan-to-value (HLTV) loan. Accordingly, this case sends an important
law enforcement message to companies engaged in this multi-billion
dollar financial market that the Commission will look closely at HLTV
transactions and take appropriate action when consumers are victimized
by those who omit or misrepresent material facts relating to such
loans.
Because this principle is so important, we also note that this case
does not necessarily establish the full scope of relief that the
Commission may seek in future cases. While the Commission's order - by
providing for strong injunctive relief - supplies the full dose of all
relief feasible in light of this particular respondent's weak
financial situation, we believe that the Commission may consider
pursuing additional relief in future cases involving deceptive HLTV
loan advertising. Specifically, we expect that the Commission, in
appropriate circumstances, would seek consumer redress or other
monetary relief.
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