Lead Generators: Regulators are Watching You Too

By davidmorganNovember 5, 2014

No longer “behind the scenes,” the FTC spotlight is shining on lead generators, with several public enforcement actions in the mortgage and debt relief space. Director of the FTC’s Bureau of Consumer Protection, Jessica Rich recently warned, “Lead generators need to understand that federal laws governing truth in advertising apply to them as well as everybody else.”

The FTC has put their foot down and is warning marketers that deceptive and unsupported claims in advertising violate several regulations including: Federal Trade Commission Act, “MAP” Rule, TILA, and Regulations N and Z. Violation of these rules can come with a hefty price tag.

In a recent settlement regarding deceptive advertising, the FTC forced internet-based lead generator Intermundo Media to pay a $500K civil prohibition for:

  • Misrepresenting terms and conditions of a product or service
  • Disclosing, selling, or transferring consumer data obtained through lead generation service
  • Violating the FTC Act, MAP Rule, Regulation N, TILA, and Regulation Z

When it comes to mortgage lead generation, the FTC’s message is crystal clear: “mortgage advertising must be truthful.” In May, mortgage lead generator, GoLoansOnline.com, paid a $225K settlement to the FTC for advertising adjustable-rate mortgages as low interest-rate loans that in truth became more expensive for borrowers over time. In addition, the ads were missing disclosures regarding APR, down payment amount, and repayment terms. The ad directly stated: “Low Rates. Free Quotes. No Hidden Costs!” when in fact these mortgages carried a fluctuating interest rate. GoLoansOnline.com is prohibited from further misrepresenting of terms and conditions of any financial product or service. The suit was referred to the Department of Justice whom filed the complaint and proposed consent decree.

Not to be forgotten, the CFPB has also made several enforcements against company’s deceiving customers like the “bait and switch” tactics admonished in the recent $19M enforcement against AmeriSave in August.

As the number of settlements is on the rise, marketers must know that their best offense in this situation is a strong defense. The CFPB issued a bulletin aboutResponsible Business Conductwhich states that “There are specific activities that marketers should engage in … including:

  • proactively self-monitor for potential violations
  • quickly and completely remediate the harm”
     

It is vital that marketers ensure their lead generators are following the rules, by monitoring everywhere they are being represented, and that affiliates and sub-affiliates are being truthful and accurate in their advertisements.

Many of the top marketers and lead generators in the consumer lending space have turned to the PerformMatch Compliance Platform to mitigate their risk of non-compliance. With over 23 billion compliance observations made to date for clients, PerformMatch empowers marketers with a comprehensive marketing oversight solution to monitor for regulatory adherence and to remediate possible misrepresentations. The FTC and the many recent lawsuits have made it clear that there’s no time like the present to implement a compliance program to keep your company out of the spotlight.

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