Federal Trade Commission chairman Michael Pertschuk disclosed yesterday that the agency's staff is looking into the possibility of bringing some cases to challenge "redlining."
Redlining is the practice of denying loans altogether or making credit more difficult for persons living in particular geographic areas. While it has most often come up in connection with lenders' refusal to give mortgages in inner-city neigborhoods, the practice can and has crept up in the past in many other areas, such as in the granting of insurance and credit cards.
In a question-and-answer session yesterday with 20 black Baptist ministers from Detroit, pertschuk and FTC attorneys noted that a section of the Equal Credit Opportunity Act which became effective in March prohibits descrimination in any aspect of a credit transaction on the basis of race, national origin, religion, age, and receipt of public assistance, and that redlining on the basis of race would be a violation.
Although other federal agencies enforce the law when banks and savings and loan associations are involved, the FTC enforces it in connection with retail stores, small loan and finance compaines, gasoline, travel and other credit card companies, state chartered-credit unions and governmental lending programs.
The FTC could get involved in martgage redlining in cases where non-bank lenders are making real estate loans.
In a wide-ranging hour session, Pertschuk also:
Said a current investigation into auto repairs could well lead to the issuance of an industry-wide rule. Information collected so far suggests that 30 to 40 per cent of all repairs being done are unneeded, he said.
Revealed that Johnson products Co., a black-owned manufacturer of hair products and cosmetics geared to black consumers, has been invited to renegotiate the terms of a consent order it signed with the FTC. After the agency had accepted a consent significantly weaker order from Revlon Inc. on a similar case some suggested the tougher order against the smaller company was unfair. Pertschuk said yesterday he was satisfied there was no discrimination involved in the difference of the two orders but simply that different lawyers from different offices had negotiated them.
Promised to look into whether there is any deception involved when new car manufacturers substitute a device called "space saver" for a spare tire. The device is essentially a rim with a tire folded up to save space in a trunk, along with a can of pressurized air to blow it up in case of a flat tire. Its use is significantly more limited than a normal spare tire.