Mortgage Broker Targeting U.S. Service Members Will Pay Record $7.5 Million to Settle Alleged Telemarketing Violations

Mortgage Investors Corporation, one of the nation’s leading refinancers of veterans’ home loans, will pay a $7.5 million civil penalty, the largest fine the Federal Trade Commission (FTC) has ever collected for allegedly violating “Do Not Call” (DNC) provisions of the agency’s Telemarketing Sales Rule (TSR). This case also represents the first action brought by the FTC to enforce the Mortgage Acts and Practices Advertising Rule (MAP Rule), which allows the FTC to collect civil penalties for deceptive mortgage ads.

According to the FTC’s complaint, Mortgage Investors Corporation called consumers on the FTC’s National Do Not Call Registry, failed to remove consumers from its company call list upon demand, and misstated the terms of available loan products during telemarketing calls.

The settlement, announced on the 10-year anniversary of the Registry, marks the 105th enforcement action since staff began enforcing the Do Not Call provisions of the TSR in 2004. Consumers can opt-out of receiving telemarketing calls by registering their telephone numbers at DoNotCall.gov.

The FTC also announced the first settlements resulting from its 2012 joint law enforcement sweep against companies that made millions of illegal pre-recorded calls from “Cardholder Services,” designed to entice consumers to make up-front payments to lower their credit card interest rates.

“Since the advent of Do Not Call, the FTC has been aggressive in cracking down on violators and preventing annoying, illegal calls to consumers,” said FTC Chairwoman Edith Ramirez. “Today’s settlements leave no doubt that DNC enforcement remains a top priority. We’ve also encouraged industry to create a technical solution to unwanted calls through our Robocall Challenge.” 

“We created the National Do Not Call List to put consumers in charge and reduce unwanted and intrusive calls from telemarketers,” said Timothy J. Muris, the former FTC chairman who spearheaded the initiative. “Ten years later, with 221 million American consumers registered, it is one of the agency’s most recognized consumer protection achievements.”

For more information about the history of the Do Not Call Registry and the Commission’s ongoing enforcement of the TSR, see the FTC’s new infographic and Business Center Blog post: 10 Years of National Do Not Call: Looking back and looking ahead.

Consumers can also review the agency’s latest tips on what to do about robocalls.

According to the complaint, Mortgage Investors’ telemarketers called more than 5.4 million numbers listed on the National Do Not Call Registry to offer home loan refinancing services to current and former U.S. military consumers, in violation of the TSR Rule. The telemarketers also allegedly led service members to believe that low interest, fixed rate mortgages were available at no cost, often quoting rates that they implied would last the duration of their loan. In reality, Mortgage Investors only offered adjustable rate mortgages in which consumers’ payments would increase with rising interest rates and would require consumers to pay closing costs. In addition, Mortgage Investors allegedly misled consumers about their affiliation with the Department of Veterans Affairs (VA). The FTC charged Mortgage Investors with false and misleading acts or practices in violation of Section 5 of the FTC Act and the MAP Rule.

Under the settlement, the defendant is barred from denying consumers’ future requests to be placed on entity specific Do Not Call lists; calling consumers on the National Do Not Call Registry; misrepresenting any terms related to mortgage credit products including rates, closing costs, fees, interest, and savings; and misrepresenting its affiliation with any government entity or organization including the Veterans Administration (VA).

The Commission vote to authorize staff to refer the complaint to the Department of Justice, and to approve the proposed consent decree, was 4-0. The DOJ filed the complaint and proposed consent decree on behalf of the Commission in the U.S. District Court for the Middle District of Florida on June 25, 2013. The proposed consent decree is subject to court approval. Consentdecrees have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Advocacy News, Awards, Compliance, CUNA, MAXX Annual Convention, NWCUA.