On July 28, the Consumer Financial Protection Board (CFPB) announced that it entered into consent orders with a mortgage payment processing company and servicer related to allegedly deceptive advertisements. The consent orders allege that the payment processer partnered with servicers to market and an provide electronic payment system that directly debited funds from consumers’ bank accounts. Consumers who enrolled in the program were charged fees for enrollment and per each transaction, a portion of which was remitted to servicers. The CFPB alleged that the payment processor made unsubstantiated claims in its advertisements that consumers would save tens of thousands of dollars through this program due to a more frequent payment schedule.
The CFPB claimed that the companies violated the Consumer Financial Protection Act, 12 U.S.C. § 5536(a), for misrepresenting consumers’ average interest savings and the loan payment schedules under the program.
Under its consent order, the payment processing company must return $33.4 million to consumers; cease unlawful advertising practices; and pay a $5 million civil penalty to the CFPB.
The servicer is required to cease unlawful advertising practices and pay a $100,000 civil penalty to the CFPB.
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