Financial Crisis News Center

FTC Dismisses Individual as “Making Home Affordable” Imposter

By Gregg D. Killoren, J.D., CCH State Banking Law Reporter, Bank Digest and Individual Retirement Plans Guide.

The Federal Trade Commission has voted to dismiss defendant Neil Sperry from FTC v. Cantkier, a law enforcement action against several defendants marketing homeowner relief programs. The FTC alleged the defendants misrepresented that they are affiliated with free federal government programs, such as Making Home Affordable, in marketing mortgage modification or foreclosure relief programs for a fee to consumers. After the FTC filed its complaint earlier this year, a federal court issued an order stopping the defendants from making deceptive claims pending trial. FTC staff later learned that Sperry had no part in the alleged deceptive practices, and that his identity was used by unnamed persons as part of the scheme. The FTC therefore recommended that Sperry be dismissed from the case.

Two Credit Repair Operations Agree to Settle FTC Charges

This story appeared in Bank Digest.

Two credit repair companies and their principals have agreed to settle Federal Trade Commission charges that they falsely claimed they could clean up consumers’ credit reports and collected up-front fees for their services in violation of federal law. In one case, the agency alleged that the defendants marketed their services via web sites and real estate investment seminars and falsely claimed that their special relationships with creditors, collection companies, public records providers and credit bureaus enabled them to remove derogatory information from consumers’ credit reports. In the other case, a husband-wife team allegedly falsely claimed, through the Internet and newspaper classified ads, that their expertise enabled them to achieve the same results, the agency said. The settlement orders bar the defendants from making false claims when marketing credit repair services or any other product or service and specifically prohibit them from misrepresenting material facts. They also impose judgments of about $10.75 million, but suspend payments due to the defendants' financial conditions.

News Release at http://ftc.gov/opa/2009/10/successcredit.shtm

FTC v. Strobel at http://ftc.gov/os/caselist/0823141/index.shtm

FTC v. Successful Credit Service Corporation at http://ftc.gov/os/caselist/0823233/index.shtm

FTC Sues Organizations for Alleged Foreclosure Rescue Fraud

This story appeared in Bank Digest.

The FTC has announced the filing of lawsuits against two different groups of companies and individuals that allegedly engaged in fraud while offering assistance to consumers who were seeking mortgage loan modifications. According to the agency, Nations Housing Modification Center and its principals violated the Federal Trade Commission Act and the Telemarketing Sales Rule by misrepresenting themselves as a federal government agency or affiliate and falsely claiming that they would obtain mortgage modifications that would make consumers' loan payments substantially more affordable in virtually every instance. The FTC charged that Infinity Group Services and its president violated the FTC Act by falsely representing that they would: obtain a loan modification in all, or virtually all, instances; give full refunds if they failed to do so; and obtain loan refinancing for an up-front fee of $995. The agency also described preliminary injunctions or amended charges in four earlier cases.

Federal, State Officials Discuss Housing Anti-Fraud Efforts

This story appeared in Bank Digest.

Treasury Secretary Timothy Geithner, Attorney General Eric Holder, Housing and Urban Development Secretary Shaun Donovan, Federal Trade Commission Chairman Jon Leibowitz, Financial Crimes Enforcement Network Director Jim Freis and attorneys general from 12 states met on Sept. 17, 2009, to discuss emerging trends and proactive strategies to combat fraud against consumers in the housing markets as well as best practices to bolster coordination across state and federal agencies. The federal agencies have committed to coordinating information and resources across agencies to maximize targeting and efficiency in fraud investigations. This includes alerting financial institutions to emerging schemes, stepping up enforcement actions and educating consumers to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.

FTC Proposes Rule on Debt Relief Service Telemarketing

This story appeared in Bank Digest.

The Federal Trade Commission has proposed rules intended to combat deceptive and abusive telemarketing of debt relief services that purport to reduce consumers’ credit card and other unsecured debt. The proposed rules would:

Foreclosure Rescue and Loan Modification Scams Targeted

This story appeared in Bank Digest.

Federal Trade Commission Chairman Jon Leibowitz, joined by California Attorney General Jerry Brown, has announced “Operation Loan Lies,” a coordinated national law enforcement effort to crack down on mortgage modification scams. The operation involves 189 actions by 25 federal and state agencies against defendants who deceptively marketed foreclosure rescue and mortgage modification services. The FTC actions, which affect consumers throughout the nation, are being announced in southern California, where the scams originated.

Early Consideration of Credit CARD Act Provisions Encouraged

This story appeared in Bank Digest.

The Office of Thrift Supervision has issued CEO Ltr 312 encouraging institutions under its supervision to consider provisions of the recently enacted Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) prior to their effective date of August 2010. The OTS memorandum to chief executive officers stated that, in addition to providing a number of other important protections for consumers, the Credit CARD Act will address changes in interest rates on open end consumer credit plans. The Act also expands the prohibition against certain practices determined by the OTS, Federal Reserve Board and National Credit Union Administration to be unfair under Section 5 of the Federal Trade Commission Act.

Defendants Named in Deceptive Mortgage Relief Internet Ads

This story appeared in Bank Digest.

U.S. district court has ordered newly named defendants to stop making deceptive claims that they are affiliated with free federal government programs, such as Making Home Affordable. On May 14, 2009, the Federal Trade Commission charged that Internet search ads were diverting homeowners from free counseling available through government-endorsed www.makinghomeaffordable.gov to websites that marketed loan modification services for a fee. The defendants’ identities were then unknown, and the district court on May 15, 2009, entered a temporary restraining order that barred the deceptive practices and authorized the FTC to identify the unknown defendants. The FTC has now identified several of the previously unknown parties in this case, and amended the complaint accordingly. At the FTC’s request, following a preliminary injunction hearing on June 25, 2009, the U.S. District Court for the District of Columbia entered orders barring eight of the defendants—four of whom agreed to the orders—from engaging in the allegedly illegal conduct.
Press release at http://ftc.gov/opa/2009/07/homeafford.shtm
Amended complaint at http://ftc.gov/os/caselist/0923147/090710homeaffordcmplt.pdf

Frank Introduces Consumer Financial Protection Agency Bill

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

House Financial Services Committee Chairman Barney Frank, D-Mass., has formally introduced legislation to establish the Consumer Financial Protection Agency (CFPA), a central element of the administration’s plan to overhaul financial regulation.

H.R. 3126 would create the CFPA, an independent agency tasked with protecting consumers who purchase financial products from banks and non-bank financial institutions.

CFPA Will Need to Act Vigorously, FTC Commissioner Testifies

This story appeared in Bank Digest.

In recent testimony before the House Subcommittee on Commerce, Trade, and Consumer Protection, Federal Trade Commissioner Chairman Jon Leibowitz  told panel that the FTC “will continue to vigorously enforce consumer protection laws” as Congress considers the Administration’s proposal to protect consumers of financial services, including the creation of a Consumer Financial Protection Agency (CFPA).