Mississippi Loan Company Agrees To Settle Charges of Violating Previous FTC Order; Will Pay $340,000 in Consumer Redress and Civil Penalty

Tower Loan of Mississippi, Inc., based in Jackson, has agreed to pay more than $300,000 as part of a proposed settlement of Federal Trade Commission charges that it violated a 1992 FTC order. The FTC alleged that Tower failed to make full redress payments to consumers as required by that order and incorrectly described how Tower calculated redress in a report it submitted to the FTC. The proposed settlement would require that Tower pay $240,000 to make full consumer redress and a civil penalty of $100,000.

In July 1990, the FTC charged that Tower -- a consumer loan and finance company -- violated the Truth in Lending Act (TILA) and Regulation Z, its implementing regulation, by failing to include the costs of mandatory credit-related insurance when making loan disclosures to consumers. In a settlement to these charges, in February 1992 the FTC issued an order that required Tower to offer to customers who had opened accounts during the previous two years the opportunity to obtain refunds or credits to their accounts if they chose to cancel the credit-related insurance written on their loans.

According to the complaint filed in Federal District Court, Tower was charged with incorrectly calculating the redress amounts, credits and payment reductions that it was required to offer and make to consumers. As a result of these miscalculations, according to the FTC’s complaint, Tower offered and made refunds, credits and payment reductions that were less than required under the 1992 order. In addition, the FTC charged that Tower filed with the FTC a compliance report that did not accurately describe the method of calculating the refunds, credits and payment reductions.

A proposed decree to settle these charges, filed in federal district court along with the complaint, would require Tower to provide redress to consumers in the amount of $240,000. The money is to be placed in an escrow account and Tower is required, within 30 days after entry by the court of the consent decree, to provide the FTC’s redress agent with the names, addresses and amounts due consumers who only received partial redress in 1992. Any unreturned funds will go to the U.S. Treasury. In addition, Tower would be required to pay a civil penalty in the amount of $100,000 to settle the alleged order violations.

The Department of Justice filed the complaint and proposed consent decree in the U.S. District Court for the Southern District of Mississippi, in Jackson, on February 5, on behalf of the FTC. The consent decree is subject to approval by the court.

The Commission vote to refer the complaint and proposed settlement to the Department of Justice for filing was 5-0.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the judge.

Copies of the complaint and proposed consent decree, as well as other document associated with this case, are available 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 202-326-2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov (no period)

(Civil Action No. 3:97-CV-62 WHB)
(FTC Docket No.: D-9241)