UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF PENNSYLVANIA

UNITED STATES OF AMERICA, Plaintiff,

v.

FRANKLIN ACCEPTANCE CORP., a Delaware corporation, Defendant.

Civil Action No.

CONSENT DECREE

WHEREAS: Plaintiff, the United States of America, has commenced this action by filing the Complaint herein; defendant has waived service of the Summons and Complaint; the parties have been represented by the attorneys whose names appear hereafter; and the parties have agreed to settlement of this action upon the following terms and conditions, without adjudication of any issue of fact or law and without defendant admitting liability for any of the matters alleged in the Complaint;

THEREFORE, on the joint motion of plaintiff and defendant, it is hereby ORDERED, ADJUDGED, AND DECREED as follows:

1. This Court has jurisdiction of the subject matter and of the parties.

2. The Complaint states a claim upon which relief may be granted against the defendant under Sections 5(a)(1), 5(m)(1)(A), 9, 13(b), and 16(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§  45(a)(1), 45(m)(1)(A), 49, 53(b) and 56(a), and under the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. §§  1691-1691(f), as amended, and under the Federal Reserve Board Regulation B ("Regulation B"), 12 C.F.R. Part 202, and under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681-1681t, as amended.

DEFINITIONS

3. As used in this Consent Decree:

a. the Equal Credit Opportunity Act or ECOA refers to 15 U.S.C. §§ 1691-1691f, as amended;

b. "Regulation B" refers to the Federal Reserve Board Regulation B, 12 C.F.R. § 202, as amended;

c. the terms "adverse action," "applicant," "application," and "credit" are defined as provided in Regulation B, 12 C.F.R. § 202.2;

d. the Fair Credit Reporting Act or FCRA refers to 15 U.S.C. §§ 1681-1681t, as amended; and

e. the terms "consumer," "consumer report," and "consumer reporting agency" are defined as provided in Sections 603(c), (d), and (f) respectively of the FCRA, 15 U.S.C. §§ 1681a(c), (d), and (f).

CIVIL PENALTY

4. Franklin Acceptance Corporation, its successors and assigns, shall pay to plaintiff a civil penalty, pursuant to Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A), in the amount of $800,000.

5. Franklin Acceptance Corporation, shall make the payment required by Paragraph 4 within five (5) days of the date of entry of this Consent Decree by electronic fund transfer in accordance with the instructions provided by the Office of Consumer Litigation, Civil Division, U.S. Department of Justice, Washington D.C. 20530.

6. In the event of any default in payment, which default continues for ten days beyond the due date of payment, the entire unpaid penalty, together with interest, as computed pursuant to 28 U.S.C. § 1961 from the date of default to the date of payment, shall immediately become due and payable.

INJUNCTION

7. Franklin Acceptance Corporation, a corporation, its successors and assigns, and any other corporation owned by Franklin Acceptance Corporation and/or its parent corporation, Copelco Financial Services Group, Inc., which is engaged in the purchase of retail automobile installment sales contracts, (hereinafter collectively "the companies"), and the companies' officers, agents, representatives, employees, and all persons in active concert or participation with any one or more of them who receive actual notice of this Consent Decree by personal service or otherwise, are hereby enjoined, directly or through any corporation, subsidiary, division or other device, from discriminating against an applicant because all or part of the applicant's income derives from a public assistance program, including but not limited to discounting or excluding from consideration the income of an applicant who received payments of public assistance in violation of Section 701(a) of the ECOA, 15 U.S.C. § 1691(a) and 202.6(b)(5) of Regulation B, 12 C.F.R. § 202.6(b)(5).

8. The companies and their officers, agents, representatives, employees and all persons in active concert or participation with any one or more of them who receive actual notice of this Consent Decree by personal service or otherwise, are hereby enjoined, directly or through any corporation, subsidiary, division or other device from discriminating against an applicant on the basis of sex and marital status, including but not limited to discounting or excluding from consideration the income of an applicant who received payments of child support, in violation of Section 701(a) of the ECOA, 15 U.S.C. § 1691(a) and Section 202.6(b)(5) of Regulation B, 12 C.F.R. § 202.6(b)(5).

9. The companies and their officers, agents, representatives, employees and all persons in active concert or participation with any one or more of them who receive actual notice of this Consent Decree by personal service or otherwise, are hereby enjoined, directly or through any corporation, subsidiary, division or other device from discriminating against an applicant on the basis of marital status, including but not limited to:

a. discounting or excluding from consideration the income of an applicant on the basis of marital status, in violation of Section 701(a) of the ECOA, 15 U.S.C. § 1691(a) and Sections 202.4 and 202.6(b)(5) of Regulation B, 12 C.F.R. §§ 202.4 and 202.6(b)(5).

b. requiring a married applicant to have his or her spouse and not any other person co-sign a loan where a co-signer was required, in violation of Section 701(a) of the ECOA, 15 U.S.C. § 1691(a) and Section 202.7(d)(5) of Regulation B of the ECOA, 12 C.F.R. § 202.7(d)(5).

10. The companies and their officers, agents, representatives, employees and all persons in active concert or participation with any one or more of them who receive actual notice of this Consent Decree by personal service or otherwise, are hereby enjoined directly or through any corporation, subsidiary, division or other device from:

a. failing to notify each applicant in writing within 30 days of adverse action taken on such person's application, in violation of Section 701(d) of the ECOA, 15 U.S.C. § 1691(d), and Sections 202.9(a) and (b) of Regulation B, 12 C.F.R. §§ 202.9(a) and (b).

b. failing to provide the applicant with the specific, principal reason(s) for adverse action or a disclosure of the applicant's right to a statement of such reason(s) within 30 days, if the statement is requested within 60 days of notification, in violation of Section 701(d) of the ECOA, 15 U.S.C. § 1691(d), and Sections §§ 202.9(a) and (b) of Regulation B, 12 C.F.R. § 202.9(a) and (b).

c. failing to retain copies of the notification of adverse action taken with respect to applicants, in violation of Section 202.12(b) of Regulation B, 12 C.F.R. § 202.12(b), in the event defendant has provided the applicant with notification of adverse action taken on an application submitted directly or through a third party.

11. The companies and their officers, agents, representatives, employees and all persons in active concert or participation with any one or more of them who receive actual notice of this Consent Decree by personal service or otherwise, are hereby enjoined, directly or through any corporation, subsidiary, division or other device from failing to comply in any other respect with the ECOA, 15 U.S.C. §§ 1691-1691f or Regulation B, 12 C.F.R. Part 202.

12. The companies and their officers, agents, representatives, employees and all persons in active concert or participation with any one or more of them who receive actual notice of this Consent Decree by personal service or otherwise, are hereby enjoined, directly or through any corporation, subsidiary, division or other device from:

a. failing to advise the consumer, at the time that adverse action is taken on an application, that the adverse action has been taken, in whole or in part, because of information contained in a consumer report from a consumer reporting agency, and to supply the applicant with the name and address of the consumer reporting agency making said report, as provided by Section 615 of the FCRA, 15 U.S.C. § 1681m(a).

b. failing to comply in any other respect with the FCRA, 15 U.S.C. §§ 1681-1681t.

13. The companies shall within thirty (30) days of the entry of this Consent Decree, provide a copy of this Consent Decree, the ECOA and Regulation B and the FCRA to each of its officers, agents, representatives, and employees having responsibilities with respect to the subject matter of this Order; secure from each such person a signed statement acknowledging receipt of a copy of this Consent Decree; and within ten (10) days of complying with this paragraph, file an affidavit with the Court and serve the Federal Trade Commission, by mailing a copy thereof to the Associate Director for Financial Practices, Bureau of Consumer Protection, Washington D.C. 20580, setting forth the fact and manner of their compliance, including the name and title of each person to whom a copy of the Consent Decree has been provided.

14. For a period of five (5) years from the date of entry of this Consent Decree, the companies shall maintain and make available to the Federal Trade Commission, within seven (7) days of the receipt of a written request, business records demonstrating compliance with the terms and provisions of this Consent Decree.

15. The companies shall notify the Associate Director for Financial Practices at least thirty (30) days prior to any change in their business, including, but not limited to, merger, incorporation, dissolution, assignment, sale which results in the emergence of a successor corporation, the creation or dissolution of a subsidiary or parent, or any other change which may affect the companies' obligations under this judgment.

16. Franklin Acceptance Corporation is hereby required, in accordance with 31 U.S.C. § 7701, to furnish to the Federal Trade Commission its taxpayer identifying numbers (social security number or employer identification number), which shall be used for purposes of collecting and reporting on any delinquent amount arising out of its relationship with the government.

17. This Court shall retain jurisdiction of this matter for the purposes of enabling any of the parties to this Consent Decree to apply to the Court at any time for such further order or directives as may be necessary or appropriate for the interpretation or modification of this Consent Decree, for the enforcement of compliance therewith, or for the punishment of violations thereof, or as justice may require.

JUDGMENT IS THEREFORE ENTERED in favor of plaintiff and against defendant, pursuant to all the terms and conditions recited above.

Dated this ______ day of ____________, 19__.

___________________________________

UNITED STATES DISTRICT JUDGE

The parties, by their respective counsel, hereby consent to the terms and conditions of the Consent Decree as set forth above and consent to the entry thereof. Defendant waives any rights that may arise under the Equal Access to Justice Act, 28 U.S.C. § 2412, amended by, Pub. L. 104-121, 110 Stat. 847, 863-864 (1996).