Yesterday’s 10th anniversary of the National Do Not Call Registry was a good time to reflect on a decade of progress. But to paraphrase Thomas Jefferson (or Patrick Henry, Irish statesman John Philpot Curran, or whoever else said it), eternal vigilance is the price of an uninterrupted dinner hour. A record-setting $7.5 million settlement with a national mortgage broker demonstrates the FTC’s commitment to the fight against illegal telemarketing and offers insights for businesses on complying with the law.
Mortgage Investors Corporation is one of the nation’s largest refinancers of veterans’ home loans. According to the FTC, the company’s telemarketers called more than 5.4 million numbers on the Do Not Call Registry and used deceptive claims to pitch refinancing services to current and former members of the military. Following the company’s scripts, telemarketers tried to set up in-person sales meetings by asking consumers how much they borrowed to buy their home and then telling them the company could save them big bucks:
So, if you can give me an idea of what your original loan amount was, I can tell you what your savings will be ___?
It looks like we can save you approximately ___ a month, which is a substantial amount of money, ISN’T IT? Now most people tell me they can find a better use for this money than to give it to their current mortgage company. I imagine you could too, COULDN’T YOU?
According to the complaint, the telemarketers implied that the savings would last for the duration of a 30-year mortgage. But there was a big problem: The defendants offer only adjustable rate mortgages — meaning that homeowners’ monthly payments would increase if interest rates rise. And the promise that “One of the best parts is that with our programs, there is no money out of your pocket . . .”? False, says the FTC.
Furthermore, even when consumers reminded Mortgage Investors' telemarketers they were on the Do Not Call Registry or that they didn’t want to be called anymore, the company didn’t stop. According to the FTC, the telemarketers responded that they weren’t trying to sell anything and were just trying to save veterans money. (Yeah, right.)
What if consumers demanded that the company stop calling? Mortgage Investors’ training materials directed telemarketers to transfer the calls to a manager, who again tried to schedule appointments to pitch their refi services. Thousands of consumers filed complaints with the FTC and other agencies about unwanted and harassing telemarketing calls.
What can other companies learn from the $7.5 million settlement?
Putting MAP on the map. The FTC’s lawsuit alleges violations of the Mortgage Acts and Practices-Advertising Rule – the MAP Rule – in effect since August 2011. Enforced both by the FTC and the Consumer Financial Protection Bureau as Regulation N, the MAP Rule outlaws materially misleading representations in the marketing of mortgage credit products. (Pssst: As if companies need any additional compliance incentive, MAP Rule violations can result in hefty civil penalties.)
Holding the line against TSR violations. If 105 law enforcement actions, close to 300 injunctions against corporations and individuals, and millions in civil penalties have yet to convey the message, we’ll spell it out again: Fighting back against violations of the National Do Not Registry and other portions of the Telemarketing Sales Rule remains a top FTC priority – and non-compliance will be costly.
The specifics of entity-specific DNC. Under the Telemarketing Sale Rule, you must honor a consumer’s request to be on your entity-specific Do Not Call list. Consumers shouldn’t have to ask twice. Nor can companies require them to jump through hoops to vindicate their right. Make sure your employees and others who work on your behalf understand the significance of a consumer's entity-specific request and honor it.
InVAlid affiliations. The FTC’s complaint charges that Mortgage Investors sent marketing materials in envelopes that appeared to come from the government, including a Pennsylvania Avenue return address in Washington. The mailers also made references to the Veterans Administration, including “your Benefit Activation Code VA 9999999.” Adding to the misimpression, the FTC says, were two of the company’s assumed names: Veterans Information Department and Veterans Home Loans. The case serves as a reminder to avoid marketing methods that falsely convey a government affiliation either expressly or by implication.
Now for that candid suggestion. Many companies like to highlight their commitment to military families. It's a laudable sentiment, but if you're really interested in supporting our troops, here’s a simple way to start: Don’t target them with deceptive practices.
By the way, July 17th is Military Consumer Protection Day. Visit military.ncpw.gov for tips on how to get involved.