Code of Massachusetts Regulations
940 CMR - OFFICE OF THE ATTORNEY GENERAL
Title 940 CMR 3.00 - General Regulations
Section 3.07 - Advertising or Offering to Sell on an "Easy Credit" Basis

Universal Citation: 940 MA Code of Regs 940.3

Current through Register 1531, September 27, 2024

(1) It is an unfair or deceptive act or practice for any seller to induce a buyer or prospective buyer to enter into a transaction by advertising or offering to sell to such buyer on easy or lenient credit terms, or words to similar effect or meaning, when the facts demonstrate that the credit or repayment terms of the credit arrangement are neither lenient nor easy. Factors indicating that the credit terms are neither lenient nor easy are:

(a) The seller does not in fact extend credit to persons whose ability to pay, or credit rating, is below generally prevailing standards of credit worthiness;

(b) The down payment and repayment periods are not as low as or are shorter than those extended to persons ordinarily determined to be credit worthy;

(c) The true cost of the credit being charged by the seller is in excess of the average cost being charged by other sellers in the same general merchandise retail market;

(d) The mark up over the seller's acquisition cost for the goods or services which are the subject of the transaction exceeds the average mark-up being charged for similar or comparable goods or services by sellers in the same general merchandise retail market;

(e) The seller pursues a policy of using rigorous collection practices against buyers who fall behind in their payments;

(f) The seller negotiates, sells, or discounts the instrument which is the evidence of the buyer's indebtedness to a third party without printing or stamping on the face "Consumer Note."

(2) A creditor in consumer loan transactions shall be subject to all of the defenses of the borrower arising from the consumer sale or lease for which the proceeds of the loan are used, if the creditor knowingly participated in or was directly connected with the consumer sale or lease transaction.

Without limiting the scope of the preceding paragraph, a creditor shall be deemed to have knowingly participated in or to have been directly connected with a consumer sale or lease transaction if:

(a) He was a person related to the seller or lessor;

(b) The seller or lessor prepared documents used in connection with the loan;

(c) The creditor supplied forms to the seller or lessor which were used by the consumer in obtaining the loan;

(d) The creditor was specifically recommended by the seller or lessor to the borrower, and made two or more loans in any calendar year, the proceeds of which are used in transactions with the same seller or lessor; or

(e) The creditor was the issuer of a credit card which may be used by the consumer in the sale or lease transaction as a result of a prior agreement between the issuer and the seller or lessor.

Any creditor who participates in a transaction which violates this rule, or knows or should have reason to know that a seller's practices may violate this rule, shall be deemed to be engaging in an unfair and deceptive trade practice. Any creditor who attempts to enforce a note, instrument, or other evidence of the buyer's indebtedness arising out of a transaction which violates this rule shall be deemed to be engaging in an unfair or deceptive trade practice.

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