LDF Files Suit to Protect Consumers from Unfair Deals in City Ghettoes

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President 

Hon. Francis E. Rivers 
PRESS RELEASE Director Counsel 

egal ‘efense und tare Creenberk 
NAACP LEGAL DEFENSE AND EDUCATIONAL FUND, INC. teas = e laatavaste 10 Columbus Circle, New York, N.Y. 10019 * JUdson 6-8397 MARCH 1, 1968 NiGiT NuMBER 212-749-8487 ’ 

LDF FILES SUIT TO PROTECT CONSUMERS 
FROM UNFAIR DEALS IN CITY GHETTOES 

Major Finance Company Attacked for its Part in Consumer Fraud 

NEW YORK---A major attack on consumer frauds was made today by attorneys 
of the NAACP Legal Defense and Educational Fund, Inc. (LDF) with filing 
of a suit against the Coburn Credit Co., a major interstate financing 
company. 

The case was filed in the Supreme Court, State of New York, Bronx County, 

The Coburn Credit Co. is charged with buying a contract from a "“fly-by- 
night" carpeting firm, which sold wall-to-wall carpeting to poor tenants 
in low income housing projects at prices "so high in relation to the 
carpet as to render the contract unconscionable within the meaning of 
the Uniform Commercial Code." 

According to the LDF attorneys, on September 9, 1965 a salesman repre- 
senting himself as an agent of the Great Northern Carpet Corp. came to 
Marcel Hill, a tenant in a low rent public housing in Bronx County, and 
persuaded her to buy wall-to-wall carpeting for three small rooms of her 
apartment. 

“The salesman persuaded the plaintiff to sign a contract to purchase 
this carpeting at a price of $920.00, pius $237.57 service charge, plus 
$13.35 credit life insurance, plus $31.76 property insurance, for a 
total of $1,202.68, to be in equal monthly installments," said the LDF 
attorneys. 

Mrs. Hill lives with her daughter and has a yearly income of about 
$2,281.00 

"The salesman," continued the attorneys, “assured Mrs. Hill that as a 
term of this contract, the company would service her carpet for twenty- 
five years." 

However, the attorneys claim that within a year from the date of sale 
the carpeting company went out of business. 

Immediately after the sale to Mrs. Hill the carpet company assigned the 
contract to the Coburn Credit Co. This situation, argues LDF attorney 
Leroy Clark, leaves the credit company in a position of "enjoying all 
the privileges and none of the responsibilities that go with the 
contract." S

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Specific charges include: 

* before buying the contract the credit company did not ascertain 
that the seller was reputable, honest, and sufficiently capital- 
ized, and that it sold goods only on conscionable terms 

* the contract contained an insufficient description of goods sold q 

* not all the printed portion of the contract was in eight-point 
type 

* the contract did not contain all of the terms agreed to, in that 
it omitted the service company. 

Because of the close working relationship between the seller and the 
credit company with respect to this contract, the LDF attorneys argue 
that the defendant is responsible for the seller's contractual obliga- 
tions now that the seller has gone out of business. 

"If we win this case on the merits," asserts Attorney Clark, "credit 
companies will no longer be able to hide behind a mask of innocence, 
but will be required to investigate the companies they do business with 
and ascertain that those companies are dealing fairly with the public." 

Other LDF attorneys working on this case with Mr. Clark are Director- 
~~ §ounsel Jack Greenberg and Philip Schrag of New York City.