Alert July 10, 2012

FTC Obtains Judgment Against Mortgage Loan Modification Companies

The FTC announced that it has successfully litigated another loan modification scam case.  (see June 26, 2012 Alert) The U.S. District Court for the Middle District of Florida entered permanent injunctions and monetary damages against defendants alleged to have violated the Federal Trade Commission Act and Telemarketing Sales Rule.  According to the FTC, defendants’ wrongful conduct included collecting large upfront fees; misleading consumers to believe that they had already qualified and received loan modifications, when they had not; overstating both the efficacy of the service and the involvement of the attorney; and deceptively claiming that the defendants were affiliated with the U.S. government.  The Court entered a $2.6 million judgment against defendants and banned them for 10 years from telemarketing financial products or services, and from selling mortgage modification, foreclosure rescue, and debt-relief products and services. Notably, the Court also ordered defendants to destroy any consumer information they collected within 30 days after the order takes effect.