992 3121 UNITED STATES OF AMERICA 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 statements:
FEDERAL TRADE COMMISSION ACT VIOLATIONS COUNT I: Misrepresentation of Cost Savings 6. In advertisements, including but not necessarily limited to FirstPlus Exhibit A, respondent has represented, expressly or by implication that:
7. In truth and in fact,
Therefore, respondent's representations, as alleged in Paragraph 6, were, and are, false or misleading. 8. Respondent's 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). COUNT II: Misrepresentation of Credit Approval 9. In advertisements, including but not necessarily limited to FirstPlus Exhibit B, respondent has represented, expressly or by implication, that each recipient of respondent's solicitations who applies for the loan advertised will receive such a loan. 10. In truth and in fact, not each recipient of respondent's solicitations who applies for the loan advertised will receive such a loan. Therefore, respondent's representation as alleged in Paragraph 9, was, and is, false or misleading. 11. Respondent's 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). Count III: Misrepresentation of Loan Disbursement 12. In advertisements, including but not necessarily limited to FirstPlus Exhibits A and B, respondent has represented, expressly or by implication, that consumers will receive funds for the full loan amount stated in their advertisements (e.g., $34,980). 13. In truth and in fact, in many instances, consumers do not receive funds for the full loan amount stated in respondent's advertisements. In many instances, respondent deducts substantial origination fees and closing costs (e.g. 10.43%) from the advertised loan amount and disburses only the remaining amount to consumers. Therefore, respondent's representation as alleged in Paragraph 12, was, and is, false or misleading. 14. Respondent's 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). COUNT IV: Failure to Disclose and Failure to Disclose Adequately Credit Terms 15. In advertisements, including but not necessarily limited to FirstPlus Exhibit A, respondent has represented, expressly or by implication, that consumers can obtain a loan at the terms stated in the advertisements, including but not necessarily limited to the monthly payment amount. 16. These advertisements fail to disclose, or fail to disclose adequately, additional terms pertaining to the credit offer, such as annual percentage rate and terms of repayment. This additional information, if provided, appears in fine print in the advertisements and would be material to consumers in deciding whether to apply for a loan from respondent. The failure to disclose, or failure to disclose adequately, this information, in light of the representation made, was, and is, a deceptive practice. 17. Respondent's practices constitute deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. TRUTH IN LENDING ACT AND REGULATION Z VIOLATIONS Count V: Failure to Disclose Clearly and Conspicuously, Required Information 18. In advertisements, including but not necessarily limited to FirstPlus Exhibit A, respondent has stated a monthly payment amount required to repay a loan but has failed to disclose clearly and conspicuously, one or more of the following items of information required by Regulation Z: the annual percentage rate and/or the terms of repayment. 19. The credit disclosures required by Regulation Z, if provided, are not clear and conspicuous because they appear in fine print and/or in an inconspicuous location. 20. Respondent's practices violate Section 144 of the Truth in Lending Act, 15 U.S.C. §1664, and Section 226.24(c) of Regulation Z, 12 C.F.R. § 226.24(c). THEREFORE, the Federal Trade Commission this twenty-eighth day of November, 2000, has issued this complaint against respondent. By the Commission. Donald S. Clark SEAL: |