By: Linda L. Goodman
Intermundo doing lead generation as Delta Prime Refinance used its Internet-based operation to drive potential borrowers for mortgage refinancing to lenders will pay a $500,000 civil penalty to settle Federal Trade Commission charges that it deceived consumers with ads that falsely claimed they could refinance their mortgages for “free.”
“An ad that says you can refinance your mortgage for free is clearly deceptive, if you have to pay money at some point before you sign on the dotted line,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Lead generators need to understand that federal laws governing truth in advertising apply to them as well as everybody else.”
According to the complaint, the company ran these ads on Google, Microsoft, AOL, and Yahoo, as well as on its own websites. When consumers clicked on the ads, they were sent to a landing page where they provided contact information, which was ultimately sold to providers of mortgage refinancing.
What was the false and deceptive about the ads? According to the complaint, Delta Prime Refinance made deceptive and unsupported claims that overstated how much consumers could reduce their payments if they refinanced their mortgages, how low their annual percentage rate would be, and how easy it would be for them to qualify for refinancing. In addition, ads falsely claimed there were no hidden fees, and that the mortgage refinancing was “free.” Other ads claimed that fixed interest rates were available, when in fact the rates and the amount consumers spent on interest were always variable.
The complaint charges Delta Prime Refinance with violating the Federal Trade Commission Act, the Mortgage Acts and Practices Advertising Rule or “MAP” Rule, Regulation N, the Truth in Lending Act, and Regulation Z.
Under the terms of the settlement, in addition to paying the $500,000 civil penalty, Intermundo Media is prohibited from:
- Misrepresenting the terms and conditions of any financial product or service, and any term or condition of a mortgage credit product,
- Disclosing, selling, or transferring the consumer data obtained through the Delta Prime Refinance lead generation service; and
- Violating the FTC Act; the MAP Rule and Regulation N; and the Truth in Lending Act and Regulation Z.
Finally, the terms of the settlement require Intermundo to report to the FTC for the next 10 years:
- All revenue derived from lead generation for refinance;
- Personnel records;
- Consumer complaints; and
- All advertisements or marketing material related to mortgage credit products.
What lead generators should take from this matter – is to make sure that your advertising matches the products and services provided by the lead buyer. In fact, you should be sure to investigate and obtain contractual representations and warranties from the lead buyer regarding the products and services they will provide to a lead you sell them. If a lead generator’s advertising does not match what the lead buyer is providing, then you can expect a lot more scrutiny and ultimately a FTC investigation and fine. Finally – again there is nothing “FREE.”
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This article is a publication of The Goodman Law Firm and is intended to provide information on recent legal developments. This article does not create an attorney-client relationship, nor should it be construed as legal advice or an opinion on specific situations. This may constitute “Attorney Advertising” under the Rules of Professional Conduct and under the law of other jurisdictions.
Linda L. Goodman is the founder of The Goodman Law Firm, concentrating its practice in internet business and law. Her firm’s clients include Advertisers, Affiliates, Affiliate Networks, and ISP’s.
© 2014 TGLF, A.P.C.