9923247

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In The Matter of
SIMMONS ROCKWELL FORD MERCURY, INC.,
SIMMONS ROCKWELL AUTOPLAZA, INC., and
DON SIMMONS, INC., corporations, and
DONALD M. SIMMONS, II and
RICHARD L. ROCKWELL, individually and as officers of the corporations.

DOCKET NO. C-3950

COMPLAINT

The Federal Trade Commission, having reason to believe that Simmons Rockwell Ford Mercury, Inc., Simmons Rockwell Autoplaza, Inc., and Don Simmons, Inc., corporations, and Donald M. Simmons, II and Richard L. Rockwell, individually and as officers of the corporations, ("respondents") have violated the provisions of the Federal Trade Commission Act, 15 U.S.C. §§ 45-58, as amended, the Consumer Leasing Act, 15 U.S.C. §§ 1667-1667f, as amended, and its implementing Regulation M, 12 C.F.R. § 213, 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 Simmons Rockwell Ford Mercury, Inc. is a New York corporation with its principal office or place of business at 105 Seneca Street, Hornell, New York 14843. Respondent offers automobiles for sale or lease to consumers.
  2. Respondent Simmons Rockwell Autoplaza, Inc. is a New York corporation with its principal office or place of business at 784 County Route 64, Elmira, New York 14903. Respondent offers automobiles for sale or lease to consumers.
  3. Respondent Don Simmons, Inc. is a Pennsylvania corporation with its principal office or place of business at 300 North Elmira Street, Sayre, Pennsylvania 18840, and 7327 Hammondsport Road, Bath, New York 14810. Respondent offers automobiles for sale or lease to consumers.
  4. Respondent Donald M. Simmons, II is an officer of the corporate respondents. Individually or in concert with others, he formulates, directs, controls, and participates in the policies, acts, or practices of the corporations, including the acts or practices alleged in this complaint. His principal office or place of business is the same as that of the corporate respondents.
  5. Respondent Richard L. Rockwell is an officer of the corporate respondents. Individually or in concert with others, he formulates, directs, controls, and participates in the policies, acts, or practices of the corporations, including the acts or practices alleged in this complaint. His principal office or place of business is the same as that of the corporate respondents.
  6. Respondents have disseminated advertisements to the public that promote consumer leases, as the terms "advertisement" and "consumer lease" are defined in Section 213.2 of Regulation M, 12 C.F.R. § 213.2, as amended.
  7. Respondents have disseminated advertisements to the public that promote credit sales and other extensions of closed-end credit in consumer credit transactions, as the terms "advertisement," "credit sale," and "consumer credit" are defined in Section 226.2 of Regulation Z, 12 C.F.R. § 226.2, as amended.
  8. The acts and practices of respondents 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.
  9. Respondents have disseminated or have caused to be disseminated consumer lease and/or credit advertisements ("lease and/or credit advertisements")for automobiles, including but not necessarily limited to the attached Simmons Rockwell Exhibits A and B. Simmons Rockwell Exhibit A is an electronic advertisement. Simmons Rockwell Exhibit B is a print advertisement. These lease and/or credit advertisements contain the following statements:

A.

[Simmons Rockwell Exhibit A states several lease offers, including:]

'99 SUBARU LEGACY
OUTBACK WAGON AWD

* * *

You Pay or Lease For
$22,399 $289*/mo.

[A fine print, illegible disclosure near the bottom of the advertisement states: "* 36 month lease . . . $1,000 down payment, 1st month payment, security deposit, acquisition, tax, and license fees due at delivery . . .*"]

* * *

"'99 FORD RANGER 4 DR.
EXT. CAB XLT 4X4 FLARESIDE

. . .

You pay  $19,999* or Lease for $325*/mo."

[A fine print, illegible disclosure near the bottom of the advertisement states: "*36 month lease, $1,000 cash or trade equity, 1st mo. security dep., acquisition fee, tax and license due at delivery . . . "]

(Simmons Rockwell Exhibit A)

B.

[Simmons Rockwell Exhibit B contains the following lease and credit offer:]

"99 FORD RANGER 4 DR.
EXT. CAB XLT 4X4 FLARESIDE

. . .

2.9%
APR up to
48 mo.

YOU PAY $18,999*
OR LEASE FOR$209*/MO."

[A fine print disclosure near the bottom of the advertisement states: "* 48 month lease, $1,000 cash or trade equity, 1st mo. security dep., acquisition fee, tax and license due at delivery . . ."]

(Simmons Rockwell Exhibit B)

FEDERAL TRADE COMMISSION ACT VIOLATIONS
COUNT I: Failure to Disclose, and/or Failure to Disclose Adequately, Lease Terms

10. In lease advertisements, including but not necessarily limited to Simmons Rockwell Exhibits A and B, respondents have represented, expressly or by implication, that consumers can lease the advertised vehicles at the terms prominently stated in the advertisements, including but not necessarily limited to the monthly payment amount.

11. These lease advertisements have failed to disclose, and/or failed to disclose adequately, additional terms pertaining to the lease offer, such as the total amount due at lease inception, including but not limited to whether third-party fees, such as taxes, licenses and registration fees, are required as part of the total amount due at lease inception. This information would be material to consumers in deciding whether to visit respondents' dealerships and/or whether to lease an automobile from respondents. The failure to disclose, and/or failure to disclose adequately, these additional terms, in light of the representation made, was, and is, a deceptive practice.

12. Respondents' 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).

CONSUMER LEASING ACT AND REGULATION M VIOLATIONS

COUNT II: Failure to Disclose, and/or Failure to Disclose Clearly and Conspicuously, Required Lease Information

13. Respondents' lease advertisements, including but not necessarily limited to Simmons Rockwell Exhibits A and B, state the monthly payment amount, but fail to disclose, and/or fail to disclose clearly and conspicuously, certain additional terms required by the Consumer Leasing Act and Regulation M, as amended, including one or more of the following terms:

a. that the transaction advertised is a lease;
b. the total amount due prior to or at consummation, or by delivery, if delivery occurs after consummation. This total amount may: (1) exclude third-party fees that vary by state or locality, such as taxes, licenses and registration fees, and disclose that fact, or (2) provide a total that includes third-party fees based on a particular state or locality as long as that fact and the fact that such fees may vary by state or locality are disclosed;
c. whether or not a security deposit is required;
d. the number, amounts, and timing of scheduled payments; and
e. that an extra charge may be imposed at the end of the lease term in a lease where the liability of the consumer is based on the difference between the residual value of the leased property and its realized value at the end of the lease term.

14. The lease disclosures required by Regulation M, if provided, are not clear and conspicuous because they appear in fine print and/or are illegible.

15. Respondents' practices have violated Section 184 of the Consumer Leasing Act, 15 U.S.C. § 1667c, and Section 213.7 of Regulation M, 12 C.F.R. § 213.7, as amended.

TRUTH IN LENDING ACT AND REGULATION Z VIOLATIONS
COUNT III: Failure to Disclose, and/or Failure to Disclose Clearly and Conspicuously, Required Credit Information

16. In credit advertisements, including but not necessarily limited to Simmons Rockwell Exhibit B, respondents have stated the number of payments required to finance the transaction and an annual percentage rate (expressed as an "APR"), but have failed to disclose, and/or have failed to disclose clearly and conspicuously, certain additional terms required by the Truth in Lending Act and Regulation Z, including the amount of the downpayment and the full terms of repayment, such as the amount of the monthly payment.

17. The credit disclosures required by Regulation Z, if provided, are not clear and conspicuous because they appear in blurred print.

18. Respondents' practices have violated Section 144 of the TILA, 15 U.S.C. §§ 1664, and Section 226.24(c) of Regulation Z, 12 C.F.R.§§ 226.24(c), as amended. 

THEREFORE, the Federal Trade Commission this sixth day of June, 2000, has issued this complaint against Respondents.

By the Commission.
Donald S. Clark
Secretary
SEAL: