Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: GoLoansOnline.com settles FTC charges that it deceptively advertised mortgage rates, (May 8, 2014)

By Linda O’Brien, J.D., LL.M.

An Internet operation in the business of finding potential borrowers for mortgage companies has agreed to pay a $225,000 civil penalty and to refrain from challenged practices to settle FTC charges that the business deceived consumers about the terms of the mortgages, the agency announced today (U.S. v. GoLoansOnline.com, FTC File No. 122 3228; Case No. 4:14-cv-01262).

In the complaint, the government alleged that GoLoansOnline.com, a lead generator that operates several websites advertising mortgages, advertised low interest-rate loans as fixed-rate mortgages, when in fact they were adjustable-rate mortgages that could become more expensive for borrowers over time. The company also allegedly failed to include important disclosures, such as the annual percentage rate, amount of down payment, and repayment terms that figure into the advertised payment amounts and interest rate.

The complaint charges GoLoansOnline.com with violating the FTC Act and the Mortgage Acts and Practices Advertising Rule, or “MAP” Rule and Regulation N, by deceptively advertising variable interest rate mortgages as having fixed interest rates.

It also charges the company with violating the Truth in Lending Act and Regulation Z by advertising false credit terms; failing to disclose the annual percentage rate and whether it will increase after the loan is made; advertising variable-rate mortgages as fixed-rate mortgages; and stating a payment amount without making required disclosures. Under the Truth in Lending Act, when advertisers state a payment amount, they also are required to disclose the amount of the down payment or its percentage of the payment amount; the terms of the repayment, including repayment obligations over the full term and any required balloon payment; and the annual percentage rate.

Under the terms of the proposed consent decree, in addition to paying the $225,000 civil penalty, GoLoansOnline.com is prohibited from (1)misrepresenting the terms and conditions of any financial product or service, and any term or condition of a mortgage credit product; (2) assisting others to misrepresent any material fact about a mortgage credit product; disclosing, selling, or transferring consumer data; and (3) violating the FTC Act; the MAP Rule and Regulation N; and the Truth in Lending Act and Regulation Z.

The complaint and proposed consent decree was filed by the Department of Justice on behalf of the FTC in U.S. District Court for the Southern District of Texas on May 7, 2014.

Companies: GoLoansOnline.com, Inc.,

News: Advertising ConsumerProtection FederalTradeCommissionNews