Word: ftc
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Dates: during 1970-1979
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...airports. Needing ground transport, plane passengers account for about 70% of the $700 million in annual auto rentals. Last year however, the Federal Trade Commission charged that 96% of all airport car-rental income went to the three largest companies-Hertz, Avis and National -so the FTC sued the Big Three, accusing them of conspiring to freeze competitors out of airports. The Commission claimed that their rates were 10% to 40% higher than smaller firms...
Last week the companies settled the case without admitting any guilt. Each signed an FTC consent order in which it agreed not to indulge in any of the alleged antitrust practices. One clause forbids the collusive setting of auto-rental rates. Another bars any effort to persuade airport authorities to write into concession contracts requirements that smaller companies cannot meet...
...Consumers may still be sued by holders in due course for payment, but they now have a legal basis for defending themselves. The move will not prevent shoddy merchandise from reaching the marketplace. But since no bank or finance company wants to hire auto mechanics or TV repairmen, the FTC's action should make lenders more wary about buying contracts from merchants who will not stand behind the goods they sell...
Lots of Loans. The FTC'S ruling does not apply to contracts already in effect. Nor does it cover credit-card purchases (consumers are already protected under the Fair Credit Billing Act) or loans that the buyer himself arranges from a third party (an auto loan, say, from a bank). Rather, the regulation is aimed at credit deals set up by the seller -even if the seller only steers the consumer to a certain finance company. That adds up to a lot of business, says the FTC-$122 billion last year alone...
While the rule should inspire consumers to buy with more confidence, it does not please most lenders. Some object to the sweeping language. In reply, the FTC notes that though 40 states have passed laws defining in detail the liability of the holder in due course, few of them were really effective because merchants and lenders found loopholes. Another complaint is that the rule will force small lending institutions to do costly additional work in screening contracts. That, in turn, could lead to higher interest rates and thus harm low-income people who most need installment credit. Perhaps...