Regulators Warn on Misleading Ads Targeting Veterans, Older Americans

About a dozen mortgage lenders andrnbrokers have been put on notice about their potentially misleadingrnadvertisements, especially those aimed at veterans and senior citizens.  The ConsumerrnFinancial Protection Bureau (CFPB), in partnership with the Federal TradernCommission (FTC), sent warning letters to the lenders at the same time that thernCFPB announced it has begun formal investigations of six companies that itrnthinks may have committed more serious violations of the law.  The letters were sent after a joint “sweep”rnwas conducted by the two agencies of about 800 randomly selectedrnmortgage-related ads from newspapers, television, and direct mail.  Some of the ads were reviewed followingrncustomer complaints. </p

“Misrepresentations in mortgagernproducts can deprive consumers of important information while making one of thernbiggest financial decisions of their lives,” said CFPB Director RichardrnCordray. “Baiting consumers with false ads to buy into mortgage products wouldrnbe illegal. We will conduct a fair and rigorous investigation into these issuesrnand will take appropriate action for any violations we find.”</p

CFPBrnand FTC were looking for potential violations of the 2011 Mortgage Acts andrnPractices Advertising Rule which prohibits misleading advertising claims; the twornagencies share enforcement responsibility under the rule.  CFPB’s review generally focused on mortgagernadvertisements while the FTC examined ads by home builders, realtors, and leadrngenerators. The FTC is issuing their own warning letters to about a dozenrnadditional companies and continuing with their own investigations of even morerncompanies based on their findings. </p

Among the potential misrepresentations identified inrnthe sweep were ads that included official-looking seals orrnlogos or had other characteristics that may be interpreted as indicating arngovernment affiliation.  Some adsrnpromoted inaccurately low rates or may have misled consumers about the level ofrnpre-approval offered or the terms of the product.  One example cited by CFPB were ads that offeredrnreverse mortgage products and claimed consumers would have no mortgage paymentsrneven though these products commonly require monthly or other periodic tax orrninsurance payments and carry a risk of default if the payments aren’t made.</p

The warning letters will advise thernrecipients that their ads may violate federal laws, and that they should reviewrnall their advertising. CFPB said that beginning an investigation is not anrnaccusation of wrongdoing. Investigations are fair and reasonable inquiries intorna matter and may exonerate the subject of the investigation.

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