An Internet-based operation that finds potential borrowers for mortgage refinancing 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.”
The FTC charged that the Colorado-based Intermundo Media, LLC, using the name “Delta Prime Refinance,” designed and distributed the deceptive refinancing ads as a part of its lead generation service. 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 passed on to providers of mortgage refinancing.
Delta Prime Refinance made deceptive and unsupported claims in its advertisements 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, according to the complaint. Some ads falsely claimed there were no hidden fees, and that the mortgage refinancing was “free,” according to the FTC. Other ads claimed that fixed interest rates were available, when in fact the rates and the amount consumers spent on interest were variable.
The complaint charges Delta Prime Refinance with violating the Federal Trade Commission Act, the Mortgage Acts and Practices Advertising Rule, or “MAP” Rule and Regulation N, and 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.
For consumer information about mortgages, see Homes and Mortgages on the FTC’s website.
The Commission vote authorizing the staff to refer the complaint to the Department of Justice and to approve the proposed consent decree was 5-0. The DOJ filed the complaint and proposed consent decree on behalf of the Commission in U.S. District Court for the District of Colorado on September 12, 2014. The proposed consent decree is subject to court approval.
NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. Consent decrees have the force of law when 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. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.