On June 10, the Federal Trade Commission (“FTC”) announced that it unanimously approved consent orders with two Georgia car title lenders that the FTC charged had failed to disclose important conditions about financing for their title loans. In its complaint, the FTC alleged that the car title lenders violated the Federal Trade Commission Act (“FTC Act”) and the Truth in Lending Act (“TILA”), and its implementing Regulation Z, by failing to make adequate disclosures in connection with their advertisements and representations that they offered a 0% interest rate. Specifically, the FTC alleged that the car title lenders failed to disclose (i) the existence and amount of a finance charge that would be imposed on consumers both during and after the introductory 30 day period if certain terms and conditions are not met; and (ii) the conditions for obtaining a 0% interest rate. The terms of the consent orders prohibit the car title lenders from (i) failing to disclose all qualifying terms needed to obtain a loan at the advertised rate; (ii) not disclosing the finance charge that is imposed after the introductory period; and (iii) misrepresenting any material terms. The consent orders also require the title lenders to “clearly and conspicuously” state all terms required by TILA and Regulation Z in connection with any statement of the amount or percentage of the down payment, the terms of repayment, and the annual percentage rate. The consent orders are effective for 20 years, and the car title companies are required to provide records and advertisements to the FTC upon request for a five year period. The consent orders do not impose any penalties on the car title companies, but states that the FTC may impose penalties after the consent orders become final.
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