Massachusetts Viewpoint; Retail Installment Sales Bill

Welcome again to Massachusetts viewpoint. At our session today we're going to take up a bill before the General Court of Massachusetts which is concerned with the whole matter of credit and retail installment in our commonwealth. I'm sure you're like myself in a good many other people have credit outstanding on consumer purchases. And one of the big issues before the General Court today and tomorrow is whether credit should be regulated and to what extent within the Commonwealth of Massachusetts. This is an issue that touches a great many homes in our state and I think a problem well worthy of our discussion at this time largely because we have a number of people with us on Massachusetts viewpoint who are deeply involved in the future of this bill. We have with us Representative Paul Menton Democrat from Watertown. He's an attorney and also vice chairman of the Joint Committee on banks and banking and the General Court. Mr. Dean Cushing is with us as well executive vice president of the retail trade board. Also Mr. John Sullivan of The Office of Attorney General he is assistant attorney general and also an attorney himself.

Finally representing the press we have Mr. Richard Daley who was a state house reporter and columnist for The Boston Herald. Representative met and I really haven't defined or articulated the nature of the retail installment sales bill 4 3 3 0 0 0 which is presently before the general Corp and I understand you have been deeply involved in the development of this bill and given your concern for credit installment buying in the Commonwealth I wonder whether you would enlighten us a little more about the purpose of the legislation before us. Thank you. The purpose of the legislation basically is to cover a field and messages consumer purchasing which has little or no legislative control in it now has a sense now in Massachusetts there is no limitation as the interest of carrying charges they can be challenged. There is very little disclosure to the consumer in retail financing retail purchasing on time. And this is the problem in many other states have gone into this area we have attacked this problem not in a small area bill is all inclusive it

covers the whole and so much retail sales feel with the exception of automobiles. What we have tried what we are trying to do here and as I see the problem here is to give the consumer the opportunity to make comparison to be informed as to what he is paying and how he is paying. This is the purpose of the legislation basically it sets out on the face sheet of every installment contract all the facts all the items it is being challenged and in the bill its own before the House now. It also sets before him. Two important aspects it set before him the actual dollar amount in interest to carry. He's going to pay and also the percentage amount that he is being charged for these finance charges. The important thing here and I think this is the crux of the problem between the retail people and the legislature in this particular bill is the disclosure aspect. I think basically we agree with the retail industry now agrees that there should be some control and some regulations in this area. And since early in

the year around February some time we have been working with the industry to effect a bill in my opinion I think we have perfected the bill in 43 30 which is before the House now in which I hope will be enacted. This week on next week the proxy the problem the basic problem as I see it between us and the industry is simple annual interest disclosure I think that we must have simple annual interest disclosure. This is the only way that the consumer in my opinion can truly compare his purchases compare his. I can truly go out and shop and find out what he is getting from one store as compared to another store. If you put it in dollar amounts. True he will have disclosure is what he's actually paying. But when people are buying today they are buying one product brand products from one store be it a refrigerator a TV washing machine or what have you when they go in one store they're looking at it and then the next they're looking at a Westinghouse and what have you and there is no uniformity in the price. There's no deal Harmy and what they're paying an actual dollars amount of interest. The only thing they can really compare us to what they're being charged above and beyond the actual price of the product

is if they can see it expressed by a formula or uniform formula in the area of simple annual interest. Well thank you very much Representative Martin I take it this parenthetically that automobile credit is regulated to some extent out of our bill is regulated some years ago a very fine piece of legislation went through and but there are some aspects in this bill which control a little bit in the field of automobile financing but not the doesn't change the act basically. Well no Mr Bean coaching I was executive vice president of retail trade board may well have some different views on this legislation just pushing what you just very briefly tell us the function of the retail trade board and then the views of the board with respect to the legislation on the retail installment sales bill. Well your first suggestion of what the retail trade board does or tries to do actually it's a very small trade association in Boston that is interested in working out ways of cutting costs of operation in the stores and protection of consumers we do some education we do training of sales people and that

kind of thing and occasionally we have to get into legislative fields when we feel it may be a problem to our industry and to our customers. Specifically on the legislation yes we have some disagreement with the contents of this bill for 4 3 3 0 but is Representative meant and said there is no difference between responsible retailers and representative met and other legislators who would like to have clear disclosure and clear understanding by the customers of what the content of. I don't mean installment sale contract but credit operations. Maybe the problem is representative said. Is the theory that there can be a uniform unit for. Measurement of different kinds of credit transactions whether they be the refrigerator the G or the Norge or the

automobile or the electric blanket. We feel that we have proved our case that there is no common denominator to ties all together. And I bet you Mark has been that in the case of revolving or option accounts that we do not have the information available at the time of sale to do this because we don't know what when you're going to return and when she's going to make your payments if we knew that why perhaps we could do it. But I have yet to find a woman yet when it was our man either. When he is going to plan to pay back at his option some of his obligations that really is the only area of basic differ great disagreement between us. There are some arguments which we will get into later that what is being attempted to be controlled. A loan agreement that is either we find them unworkable or

we frankly find them to be as written in 4 3 3 0 0 something different than what we understand specifically. I think there is an understanding on all parties that there should be a separate handling a revolving credit account. And we agree everyone of us I think that reasonable responsible ceilings should be placed on these accounts and other accounts. And furthermore that it seems that a fairly good low rate on these charges such as in other states would be a reasonable one to put into this bill and in the draftsmanship of 4 3 3 0 the words and the ceilings are clear it will be similar to an almost identical with New York rates which since we as a retailer say we're only interested really in selling the goods and not in trying to make money off the service charges. That seems reasonable. In the drafting of the bill however it is somewhat clearer and I will say somewhat but it isn't absolutely

clear that the method of computation would be such that you would in cent cut the New York rates and. The. The fact that you might figure it on the principal declining balance just about mathematically we do shouldn't and there's this kind and this is only one of several. It's this kind of content which I hope can be clarified for the benefit of the consumer. And then we can come back to that difference of opinion of whether in some instances we can use simply no interest in those areas where we cannot. We would be given the right to give an alternative. I think that's the basic difference between the two sides. Well thank you very much Mr. Cushing and I think you raised a number of points there that we certainly must come back to along with a definition of itself of what is a who is a responsible retailer because I gather from your remarks that there might be some irresponsible retailers who are misusing the credit provisions of any kind of purchase. Well the Commonwealth is involved in this not only through the legislature I

imagine but also through the law enforcement agencies and representing the office of the attorney general as assistant attorney general the Commonwealth. Mr John Sullivan Sullivan What is the interest of the office of the attorney general in the legislation. How is 4 3 3 0 on retail installment sales bill. Well thank you for asking me that question Mr. Gibson. Initially the attorney general's office got involved in this field. Well our criminal division. We received numerous complaints and also brought prosecutions on areas of abuses of Starman credit. Logically these areas were in the field of home improvements citing bookseller's other type of home movements where their response was salesman would go to a person's home and sell them on a bill of goods on a siding contract. It may be that they would deliver part of the material to be installed

on the home and it would be some weeks and perhaps months later before anything further would be done. In this regard we also found abuse of interest rates and high pressure tactics where the salesman would either sell directly to the wife and the husband would not be consulted or he would simply sit at the kitchen table for hours and until the homeowners in desperation signed an abusive contract to get rid of the individual involved. This of course took place early in the administration of the attorney general and resulted in our filing legislation on December 2nd of 1964. This bill was originally house 2 of 6 9. The present bill house 4 3 3 0 is a compilation of amendments and various suggestions that have been made in its passage through the legislative

process as representative Menton has correctly stated that his committee and we're particularly gratified with the serious consideration of the Committee on banks and banking gave this bill his committee has worked close in hand with the Department the attorney general myself and assistant attorney general Warren Kaplan have worked closely not only with the committee but as well with representatives of the retail banking and finance company industries. It is indeed a very comprehensive and technical act. It runs some thirty three sections. I think another point that we all ought to bear in mind is that it is a criminal act a violation of the proposed legislation can result in a fine or imprisonment. Therefore the act must be particularly and specifically drawn so that a citizen of the

Commonwealth will know whether or not he is violating a criminal statute. And if the legislation does get enacted in the session and I firmly believe that it well and I'm sure everyone here agrees that this is a much needed area to have legislation in it will obviously be subject to court scrutiny should a given defendant be brought before the bench of the Commonwealth. The court must have specific terms in the act so that there is no vagueness or ambiguity in respect to a defendant whose rights we do not want to prejudice as well. I think on behalf of the retail industry it seems as though I'm rather an avatar between Representative Matt and Mr Cushing this morning. Both sides of this question have worked literally hundreds of

hours. Initially when the attorney general filed this legislation we had several conferences with representatives of the retail finance company and banking interests along with representatives of labor the Consumer Council and various consumer agencies such as the Massachusetts Consumer Association Federated women's clubs associations who are interested in protecting the consumer as well as the other side of the issue. The responsible retail trade agencies I want to state that on behalf of both sides that everyone has effectively presented their views. We have been very thankful and gratified for their interest in many hours of long at work and we sincerely trust that this will.

Conclude in a good consumer protection bill for the Commonwealth of Massachusetts. Thank you very much Mr. Sullivan. Mr. Richard Daley of state house reporter and columnist for The Boston Herald is representing the press on Massachusetts viewpoint now. And today it looks like everything is peaches and cream at this point right. Yeah which often happens about the first 15 minutes of Massachusetts viewpoint and then you know we bring out the real problem so why don't you just address any question they have to the three panelists. Well if we could take the bull by the horns I guess the principle point of disagreement will be whether or not a true annual interest should be revealed and in fact whether it whether it can be determined. I like to ask both Mr. Cushing and representative men. We touched briefly on the matter of revolving credit accounts and there are there is some difficulty there are questions purchasers would be buying one and

one item and then paying back part of it buying another item paying back and so on gets involved but what about. A single item a sort of furniture or a fridge right or which a person buys for X number of dollars and is expected to pay for over a fixed period. I wouldn't would would it be possible there are two developers they draw your interest represent about. Yes well I may answer that I believe it is but before I go into that I just show what is happening this bill the original bill is filed by the attorney general and also has a companion bill filed by the messiest consumer's Council. And within both of these bills there was a disclosure principle in the end by simple annual interest with a formula set out by the Federal Reserve Bank as acceptable for me for divulging simple annual interest. This included revolving accounts and straight sales. After discussing with the industry and the involvement in the revolving account the committee and the attorney general's office

realized that possibly it would be too cumbersome possibly we couldn't work out. Simple when you know this formula in many multiple small purchases in a revolving account. So again as one of the many many many concessions we have made to the industry to the retail industry we agreed that this should be taken out so we have taken out simple annual interest disclosure in all revolving accounts. It's just a doll of the school should we set the rate at a percentage rate which is so much of the greatest stated by Mr. Cushing. By getting into the area of simple minded interest disclosure on a simple contract the ordinary purchase that you in some approaches you make the refrigerator the TV or what have you. We feel that this should be regular We feel it should be regulated and it should be there should be the disclosure simple annual interest. The bill does require and maybe this is another area that the industry isn't quite happy about. Simple language disclosure is based upon a formula equal payments maybe the industry doesn't like the idea of equal payments I personally do because we've had abuses and I would assume the

attorney general's office could talk about abuses. Well you had the so called the loan payments way you paid a small amount for a number of months and then all of a sudden at the end of the period you had to pay roughly half of the installment purchase to make simple annual interest work you have to do it on a known set of facts and own set of facts as to how many payments what the payments the payments must be equal. With the exception of the last payment the downpayment of course is not included. You figured with a set. Of periods of possible payments it was figured on a basis of 12 months or 52 weeks. That's part of the formula even though the period of payment may be less than the 12 months it still comes out and it still is a workable formula. It's a very simple formula and talking to the people who feel the formula should be applied then is workable. They feel that they own this type of a major purchase there isn't any problem I know that Mr. Cushing will talk about add ons and extension agreements which make it difficult at that time I will have further to say one last question what about the

simple way to increase disclosure. There are times when you can use simple annual interest as a yardstick. It is not true in a new interest I think we should keep the terms equal it is simple interest and it must have not a known set of facts but an assumed set of facts. Therefore you can see that there will be some variation between what you're telling the customer and what the facts may be in the future. Secondly I think it is important to get to the point. Why do we want simple annual interest in say one shot installment contracts. That's far the answer has been that is to give to credit purchasers a yardstick which he she can use in every credit transaction to compare it to. If you cannot include revolving accounts if you cannot include changing in the time or add on contract or

extension of time you have taken the largest percentage of credit transactions out of this yardstick that you want to use. So it is no longer. In my opinion a necessary theory to apply. If we do want a customer to compare we should give it to the customer agreed upon and a clear statement of fact in clear figures so that she can compare. In my opinion when you give her as prescribed in almost similar sections of the bill it had we had worked on for several months in this present draft of 4 3 3 0. You will give her a yardstick in dollars and cents that you can apply to her benefit. And that is the difference of opinion we have on simple new interest. Should I continue with some of the differences we have in the bill.

Well I don't know maybe Mr. Daley might want to sharpen the question on this already want them to go at it and talk about some differences which tell you what I just Gallivan missed a question that an cases of simple purchases One-Shot purchases whether the revolving account was not involved and whether there are no add ons or extension than a simple. You really might be a simple annual interest based on some assumptions you can see in retrospect I don't think it does anything for the consumer. And if it doesn't why should we have it in a consumer bill. If there was a way to disclose it you can use more generally and be clearer to each question on what she is buying and what is costing her. This is what we should work for. Yes to inform the consumer. I wonder though if there's any if there's any feeling that a dollar and cents explanation has no. Particular psychological impact where I was an interesting figure. People have preconceived ideas of what interest should or should not be and are and that all I think about as I have Bill 43

30 provides for both. It provides for the fact that you have a dollar disclosure which is important because this is what the person knows he's actually paying out of his pocket at for a comparison figure it sometimes is workable and other times it is not the only thing that is really workable in my opinion for comparison figure is simple annual interest in going to a farm you know with these assumptions. And I want to point out I don't want to mislead anyone. The bill includes and rightfully so in my opinion includes disclosure simple annual interest on multiple purchase on the so called add on sales on the inside on the extension agreements and the like it does include simple annual interest. And the opinion of myself and the members of the committee and the people the economists that we have talked to we feel it can be done and I'd like to just point out one important thing that I think is important here is that true throughout the nation there is no state that has supply us as disclosure as we are requiring the federal government has been trying to let some of the drug What's it been trying to go through the federal Congress for

years and it has not been done and I think again one of the things we're running into here in Massachusetts in this particular area are simple and you know this is closure is that. The industry people the people have been opposing it nationwide and with Congress of course would like to see the state of Massachusetts the first state to do it. I would like to see Massachusetts the first state to do it and I agree with what the industry people feel that if we do it in Massachusetts it's going to be followed in many other states and I think that we in Massachusetts have an opportunity here to be a leader in really passing some legislation which really does protect the consumer and one other point I'd like to make is that we're talking about legislation which will control an industry and of course we in the legislature I'm not a retailer. I don't know all the problems all the problems of the retail business. However I don't think it's logical or right that the retail industry should write completely the act which controls itself especially when we have the history of this Act where over the course of the years they've

been opposed to it. And in fact in the beginning of the session the retail industry was opposed to any legislation in this field. It was only when the legislature on the committee that we were on insisted and we were going to make some legislation ourselves or they came in to help us on that. Now they have been very helpful. And over the course of the many months that we've worked on this thing and the hours expressed by Mr. Sullivan and the attorney general's office and the Consumer Council in question. And the retail bought a trade in the Boston Chamber of Commerce and everyone else has been many many hours working on this and the bill that is now on the floor of the house 23:30 is in my opinion the result of many many hours of work many many compromises to industry many many many changes. And in my opinion I think the bill is and is at least 60 percent change from what it was when it was originally filed as 2 0 6 9. But Bill you want to carry on from there or do we want to let Mr. Sullivan get in the back of the Soviet isolationist as always.

Well of course the main bugaboo here is as you have reciting percentage disclosure simple annual interest disclosure. I have some sympathy for the retail people in this regard. Admittedly if you have what is called an add on contract that is a running account that the customer has where you might make two or three purchases in one week and wait a month before you make another purchase and get you your monthly statement. That means that in in that particular interest in your credit purchases credit crisis. Yeah and the retail retailer involved is going to have to make three separate computations because the one one section of the formula is based on the amount of time involved in the in the credit arrangement and that is one of the factors. Admittedly it's something that is a difficult thing for the

retailer to work out. However as representative madness adjusted in the field of comparative shopping in the field of what it's going to cost a consumer to carry a given. Purchase the figure it would be important on that basis. Now I don't think we've emphasized. Specifically enough some of the other provisions will represent a Met and touched on them briefly at the outset. Very mine we had setting an interest rate that. Has to be followed. We prohibit various abuses in the in the field of consumers giving away contract or rights appointing a given retailer or a seller their attorney and someone waiving their rights that they might have in court simply by signing a contract repossession matters where

the simplest default on the part of a consumer would entitle the seller to immediately repossessed the attic approaches. And when consumers as often happens need a little more time to pay for an item. They have gone to a salad and said Well give me another 30 days or forget my payment this month. In those instances the extension costs the refinancing cost of a contract already in existence have been excessive in many areas even in some instances the the buyer must pay attorney's fees of the seller in the event of litigation arising out of a contract. All these and many more types of abuses that are controlled by this legislation. Initially there must be a retail sales contract that the buyer and seller must both must execute. The there is some logic provided for

to advise the buyer of his rights and the contract is not complete. Under the act until the buyer in most instances has a copy of the contract. So in this field we are dealing with many more things besides disclosure of simple and interest. And while the attorney general has proposed and I'm sure the legislature will dispose and I trust that they will do the proper thing. Let's get back to Delhi. Well I wonder if there aren't If there are any other disagreements I'm out as a repossession you know We speak of repossession an extension charge abuses the fly by night door to door operator comes to mind I know they have the IT department stores generally have a pretty reasonable on these matters but I wonder if they if the legislation is suitable in your opinion in those areas. Just a question let me say that the thought

expressed by the assistant attorney general are sound and right and legislation should be passed this year which will take care of those abuses. You know I think there's another area where the theory is clear and in agreement and when you attempt to write legislation you find that what you have written me very well could be harmful to the consumer. And let's talk about extra excessive costs of extension. Because in every instance you shall have a written contract before you may proceed to give goods or services. This is a good assumption when you're talking about a one shot deal. The retailer cannot move or the Tele has a change contract in his hand for whatever reasons they may be good or bad. For example we talk about the abuse of people because they need to pay

or wait another month or so or make a partial payment at some time and have to pay excessive costs because the retailer must have written fully made out contract for each step that he may have with this customer relationship. He could not and still be able to recover the man refused to pay the rest of his money for any goods that he had outstanding. All for his original contract until he had another written document which would include calling on the time of him say sorry Mr retailer but I can't pay this month can you extend our attorneys we did we would have to legitimately I think would probably go ahead if the customers were in need a long while but under the law as written we would have to have an adjusted contract before we really could continue to keep our rights in the good. I just like to interrupt very briefly. This is John Gibson at the Lincoln filing center at Tufts University and on Massachusetts viewpoint we're concerned with the retail installment sales Bill Haus for 3 3 0

0 0 which is presently before the General Court. With us our Representative Paul Martin Democrat from Watertown the General Court also vice chairman of the Joint Committee on banks and banking and an attorney. Mr. Dean Cushing is executive vice president of the retail trade board. Also on our panel. And Mr. John Sullivan who is from the office of the attorney general and assistant attorney general in the Commonwealth and also an attorney I think we're getting a lot of commercials for the bar in here. And finally Mr. Richard Daley Statehouse reporter and columnist for The Boston Herald who is representing the press. Now Representative Matt and I think you were about ready to come back on some other aspects of the retail. Installment sales bill after Mr Cushing presented some other views while she wrote it. Yes well I like to just correct if I may what Mr. Cushing as data the generality has made. And I didn't make this crystal clear that this act does not involve any sale of any purchase. That is not

included within it. A finance Cha-Ching involved. So one of the extension agreement is Mr. Cushing was talking about a particular store wants to give an extension agreement to its customer. Obviously it has a right to. But if the store is going to charge an additional charge for this extension again I think this is the area of control regulation and before they be allowed to make such a challenge. I think that the consumer should be fully informed as to what the charge is. In one respect it may be like a new purchase. What has happened in some of the abuses that I have seen is on these extension agreements what you really have is you have the store charging interest on interest when they make an extension agreement. You're already paying interest on the original purchase and then they just figure the original purchase of the outstanding balance which includes interest and they make the extension agreement on that and they charge interest on interest. They do this on and on contract. Again they do this I don't think the legitimate stillest do this to gouge the consumer but I think some of the other

stores do I think the legitimate stores do this as a matter of facilitation a matter of ease a matter of. Yes decent procedure this is what they do and I'd like to make it crystal clear that the any extension agreement that Denny still wants to make they without making a service Gys they certainly can do it under this bill will mean to speak of interest on interest as if that were improper but because the original interest as well as the principle was is the store's money and the customer continues to have the use of it. You should know if I may say what you what you have here is when you're writing an extension agreement. In effect you're calling for a prepayment of the total thing so if you have an outstanding balance of $60 will say maybe four or five dollars of that is the interest to be paid for the next six months of the contract. So when you're refinancing the agreement again you go back to the original what the actual balance is of this old home payoff figure at the time of the extension agreement and

that should be the figure that you figure interest not the interest that you have for the whole 12 months if you paid for 6 months not the whole 12 months and you're paying interest on interest and I think this is improper and I know that some retail establishments do this as a matter of bringing in revenue when I do know and I would assume the attorney general would agree that in some retail establishments the idea of credit is used as a means of really making additional profit. Would it be possible to think if if we can agree that it will be at least inconvenient to negotiate a new contract in each case would it be possible either to legislate general guidelines or to cover the situation or to provide for them in each initial contract. I don't see how these are difficult to rewrite in a contract. If the store and I would assume again the legitimate stores the bigger retail outlets in Boston I don't think they would charge for an extension if you and I don't think they have the history that I know you do not know we were doing so there's no problem here with that with a large store the problem is again the store that

is trying to make an additional charge and make some additional profit on this. This is the area where it should be control that you are making a service charge to charging interest on the extension agreement. I think the consumer should be advised as to what this interest is and again for cumbersome nursing. They read something in the newspaper that the man would have to run all the way into Boston through his door again this could be done by mail as a result of a telephone call. True the consumer must sign it if as if there's going to be a charge and he should sign he should know before he accepts an additional charge. You make a comment. You can't sign a contract by telephone. Yes it can be said that we could not send out the agreement that is change until we have it back and here but let me just talk to the point of people charging interest in interest or service charging service showed we were not given the definitions. It is as we read 4 3 3 0. Those of us who are now when you call up and say I can't pay this month I'm going to wait another month and we usually would save say Why of course we asked can you pay part of it and so forth.

As we read the bill as written that when we went back to pick up the original cost of the goods and the services we have therefore no longer a valid agreement this is what we understand and needs are the minor points that no one of interest at least the people that I represent are interested in making an extra cost for this modified the way it is now done by legitimate stores on a consolidated agreement. It costs the cost of my last and when we do it by 4 3 3 0 and certain prescribed rules because if we were to cancel a contract and rewrite it we would do it on a not a rule of 78 something little more beneficial to the customer but when you write legislation you have to have some United stick in the Rule of 72 as you like to go back to one. The second part of Mr. Sullivan's comment about abuses is with the idea of repossessing the goods after you've made several payments.

This has been and if we do not get legislation this year I'm sure would continue to be an abuse that must be stopped by any. I mean a retailer or a legislator or an attorney general but for the public itself. For example what we're talking about here is a young couple married me by a bed in a chair and on time and then they decide that they now can afford a washing machine and six months later they decide to get a television set. And all of a sudden you find that they've lost the overtime. The girl is now pregnant she can't keep her job she's going to become a homemaker and they say well we can't pay for the television. Take it back. Some merchants and I wish I could use on the air what I really think of them. I don't consider the merchant. I would scoop the whole good take them or even know the bed had been paid for the chair have been paid for the washing machine had been almost paid for. Take it for the for the value they could get out of it. An example of why I maintain that 4 3 3 0 is

written cannot work. The original legislation filed include a three line section trying to handle this abuse. We looked at it and said that the unscrupulous merchant can still operate this way and we wrote a rather lengthy section. Which made it impossible so that if the bed cost $50 and the service charge was 250 as soon as Mr. and Mrs. Jones had paid 50 to 50 and she is they own that bed and they couldn't touch it. A fight for method. This is probably the only place that I know of that is in the country where or where this has been written it is the first in first out idea it's used by stores when they figure their income tax to Verrall government we figured if we used it it and a fair yardstick it should be in the bill for 3 3 0. Obviously drafted by people who didn't understand the technicalities have both provision for it. So you would break the law if you believed if you tried to do either one of the other and their in this bill is replete with this kind of thing and

this is why I'm saying it can't go through with it as a plan because it will be a tremendous burden to the consumer and so if the retailers cannot comply with it we can't give them credit if we can't give them credit. The economy of Massachusetts will suffer and suffer I think irreparably. I wonder Mr Solon my comment on the vide charge that there's been some sloppy drafting and 4 3 3 0 especially with respect I take it to the criminal provisions or to the whole of the tool that was the question. Referred particularly to the double double section with only two sections both intended to meet the same purpose and yet being different. Well I've had all of them they represented but I think that for the purposes of my listeners I'm coaching as mentioned fights all in the lower 78 that those terms are rather hard times for the average layman to understand five hours of cost just an abbreviation for the term first in first out so that if you

had an existing credit arrangement covering several items when you had made payments and nothing on that credit arrangement to pay for the first item purchased if later you should default. There should be subsequent repossession. The first item that you had completely paid for you could retain. And this we provided for in the bill. Secondly the rule of seventy eight is a rule for the computation of prepayment when an individual wishes to pay off his contract prior to its normal terminations date. He should be credited for the amount of interest not used for the term of the contract and the rule of 78 is simply a mathematical figure to determine what his credit interest should be for the balance of the contract.

Well that is certainly helpful because when these terms were used I didn't quite understand them myself I was going to raise a similar question but I think Representative mcm has some things on his mind that he yes well I take issue with the intent of the legislation is filed first by the attorney general and by the consumers Council and by us and I feel assured that it is a five fold role first in first out. And that doesn't allow the provision for the unscrupulous retailer to come in and take the whole situation as for the repossession aspect of the bill and I've only had a chance of looking over this so-call industry compromise bill that we're talking about the area repossession in the area reposition on the so-called industry compromise bill. They have a statement in there that if they deem any purchaser to be in secure and the would deem could mean almost anything that they have a right immediately without going to court without doing anything. To call for an acceleration of payment that means call for

all of payments to be made immediately and also that I did want to repossess without even a default. Now this is part of the language that the industry people have put in their so-called compromise bill in this repossession aspect. We have the fire for information vital has nothing to do with the rule 78 that two different sections two different problems involved and five always in 43 30 and the protection of the zone was positively there some of the language and just going over as I stated before the so-called compromise bill. I have found going half way through it 12 or 15 12 to 15 specific areas that I take shop disagreement with. Well I don't mind the sharp disagreement on what it does but when we get back this idea of what is in there and what it says if it's sloppy dress we ship. I think it should be cleared up just to clear the battlefield. I have prepared and when my attorney gets back to talk to these gentlemen I hope in the next few days we will.

We would have two pages who are that knowing full well what we are agreeing what we're trying to do. It just doesn't make sense is written for three Israel for a good idea or just one quick example here and this will be given in writing to you on line 4 3 6. It says How can it says something the fact that the computation of the charges will be done in the following form. And then they go and talk about dollars per thousand no formula. And from what we can see there at the end there were many of these it just was just completely left out. And incidentally we have not touched on this problem of balloon payments and I would hope that I would hope that we'll get on that before the end of the session. I would like to state however that on repossessions I will agree almost completely with Representative mention that we would like to make it difficult for a retail merchant to repossess unless the person were in default of payment. However the insistence on the banks and

banking department to include in this bill had a separate section the handling of automobile financing is the reason why according to representatives of that industry they need to make sure that they can frankly repossess an automobile before something goes across state lines. If the bill had only to do with our kind of retail operation and put any thing that handled the repossession of an automobile in the automobile section of the law I make it quite clear to you that we my people hardly ever repossess for the simple reason. The only time that I know of that we were prepared when the first advice is please come and take it I can no longer pay for it I don't want it. This is true that reposition section as it is we have done with the banks and banking committee but we have just asked other people to do if you are trying to legislate in this field. Listen to what is the now standard practice of regular merchants. If it is wrong show or so. But if your greed is right we should be allowed to continue it if its a benefit to the

consumer and the benefit to ourselves. I could back to Sullivan on this why Dinas missed a question and a very effective spokesman for the retail industry. I think for the benefit of the listeners we really ought to expand this somewhat beyond the retail industry. Obviously many other areas of the business commerce of the Commonwealth is involved here. For instance the finance companies are a lodger in large measure as part and parcel of this bill and one of the main purposes for the initial legislation. Again we have the banking industry. Now I'm sure many of you know of various automobile plans where. You simply go directly to the bank and you get a check from the bank and go to the automobile dealer involved and in substance you're paying cash for the car or whatever item you purchase.

You don't have any contract in that interest because because it's a cash payment and we've provided for that in this bill the bank knows full well that you are entering into a contract role or obligation with them when you get a check. And we are providing an instrument contract will cover in those instances. Again in the finance company area and we have no spokesman for these two additional areas I mentioned here today. We again are in an area where abuse of interest costs and excessive acquisition fees excessive insurance costs recording fees attorneys fees these are two other large areas other than the retail industry that are involved in this legislation. I might. I wonder and Mr. Daley you're supposed to be asking us questions I wonder if I might ask you a question that's a scandal that's just asked

us questions. Well the press is presumably a very responsible. I'm of our information to the citizens of the Commonwealth. In my way of thinking this particular legislation is in the House and in the Senate is perhaps the second most important issue before our General Clark. We won't ask what the first as we go all the way. I think Governor Volpi told you about four times and perhaps five times. And sadly in ways you talk about taxes of course go after. And and you know as a state house reporter know Mr. Daley I see you daily. Mr. Daley the attorney general generally knows where wherever he goes and you often stop into our office to see if the attorney general has been up to any newsworthy activities. He himself appeared before the committee

on banks and banking early this year. The process was present and any time the attorney general appears before a legislative committee it is news. Now I did not see one word written in the paper and it isn't until the last weekend that I have seen any newspaper coverage of this very important legislative proposal. Do you have any comment on The Price of Silence on this manifest issue. Well of course there's been a great deal of scuffling and maneuvering and committees and whatnot. Now the issue is clearly drawn the 4 3 3 0 0 0 the the so-called strong Bell is is out and is before the House. The interests and desires of the retail merchants have been well known and now they know the issue is that it is formally before the House the newspapers are on the news.

I recall I had a trial yesterday morning and my own paper and yesterday afternoon I have a political column in another paper. It is it is being discussed now that it's now that it's formally in public view. Well I'd like to press the point is a little further I might in this obviously all of Boston dailies somewhat dependent on retail and other type of commercial advertising but their financial existence in your experience as a reporter have you found this to be an effective lobby in this respect. While the great strength of this lobby has as reported in one Massachusetts paper was attributed by Representative you of your office to what Mr. Cushing I've never commented on that but I believe you you know the representative the attorney general's

office told the consumers council that a lobbyist could bring bring great great great pressure to bear. However Mr Mountain seems on a Quaalude and I'm sure that the legislators will will do it as I think it is their responsibility to do. I wasn't speaking of the law via respect to the the general caught and I and I agree with the other representative mental illness is not cowed by this issue. I admire him for his forthright position. I was speaking of the lobby and suppression of all news media on this question for the past 10 months. Well maybe Mr. Daley who is an outstanding reporter is not always in a position to make the decisions of the press with respect to Ataturk policies and to lobbying activities I'd like to come back. I don't want to

halt this question because I think with respect to any legislation the degree of influence brought to bear by interested parties is as obviously a part of our democratic society and maybe there are different weights of influences that don't always get proper credit in the press when the present self is intimately involved in some specific legislation and what all this is saying but it sounds good. And one question that was on my mind is the fact that as a representative and stated that this is of course the first such legislation that if passed would be in effect among the American states. You also said that there was some noise in the federal legislature in the United States Congress from time to time about legislation along the line of credit purchasing. Is this a matter. Properly for the states or for the federal Congress and I think we have two attorneys here and said that he's going to get a report from his attorney shortly but on this matter of responsibility for credit purchasing consumer credit in the United States the word is

for if you don't have a concern what is the responsibility really law at the state level the federal level. Well let me give you my in my opinion we can do it first and in the federal level let down in Congress. The defeat of the bottle neck in the tools in lending Douglas's bill and all the other consumer bills down there is a lobbyist in Washington say this is a state problem. Then we go back to Massachusetts and pushing and the retail Board of Trade and the Chamber of Commerce and everyone else in the beginning of the session said that this was a problem my federal problem a problem for uniform action throughout the states and that should be studied maybe five or six years from now we would come up with some uniform legislation. I get I think it's a it's a push around but I'd like to comment go back again I to one statement a little bit of legislative history if I may. And one of the one of the nicest ways and one of the cutest ways of. Be filing an issue before the legislature is by stating that sloppy Jacinth is a technical bill so full and so on and this is true this is very technical and I would

be less than honest if I stated that by the time this bill is voted by the members of the legislature that too many of the members really understand the full import and the complete technical workings of this bill so it's true that it is a technical subject but when you have a technical subject the lobbyist say it's poorly drafted it sloppily drafted and so forth and so on. I don't think this is so because in my opening remarks I think I made a statement that we've been working on this bill for 10 months. It was originally filed. We had sit downs with the business people we've had three new drafts three separate drafts of this thing. We went over this bill I myself went over this bill with the industry people in the Attorney-General's I was on three occasions making multiple multiple multiple changes in language and I think that the language every time we had finished we felt that we had to complete it. Completely perfected bill before us and then we would come up a few weeks later when the retail people would again come in to say they had other changes it was still

sloppy. Still this is still that and I think that trying to be thought of the whole issue and I think the basic issue here is disclosure are nothing more than simple and it's disclosure. And the other problems they bring up I think are minor in nature and I told the industry people that any problem on Rassmann Shipler a technical problem that they feel that they have it is unworkable will change. We've changed as I say the the bill 43 30 as compared with 20 69 is so completely different that you could barely say that they were watching the same thing. Well what it's all about Mr. Giffen You made the statement that Massachusetts would be the first to annex such legislation. That isn't the case. There are some I think 16 states and United States who have a consumer bill. Washington state of Washington and New York. The point

here that Massachusetts would be the leader in Massachusetts has long been the leader in many areas of citizen need and I and I trust that will always be the case. The point here would be that we would be the first to have a firm percentage disclosure provision in the other states the disclosure is either not there on simple annual interest or it is written in the alternative where the particular retailer may disclose by various alternative methods. Well I'm sure that this is a kind of a problem we could discuss at great length an even much greater length we have right now because we are concerned with this very important situation of the credit relationship between the consumer in our Commonwealth and the retailer. We have obviously been concerned with a bill before the General Court that seeks to look into this relationship very closely.

House Bill 4 3 3 0. It is a bill that has been subjected to a good deal of discussion that there's been also subjected to many compromises between those who represent the retailers and those who speak for some interest with respect to the consumers not to say that there is any real conflict here between consumer and retailer. But with respect to credit relationships many feel that the legislation before us needs to spell out this relationship much more closely. We're concerned with abuses in credit purchasing and also with the contractual relationship that should be spelled out some feel a little more clearly others say that there are real problems here and that the bill may well be unworkable. Nevertheless it does seem to me this is an item of legislation that people should be concerned with because each day we are before and under public policy of the Commonwealth and we have a far greater obligation to know more about the law that affects us and what we do every day and certainly credit purchasing is one of these laws or one of these areas that we must be mindful of in terms of our views toward what the Commonwealth does for us thank you all

gentlemen very much for joining us on this program.