On May 11, the Consumer Financial Protection Bureau (“CFPB”) announced that it filed suit in the United States District Court for the Northern District of California against the provider of a mortgage payment liaison service for allegedly misleading customers about costs associated with its bi-weekly mortgage payment program and misrepresenting savings. The Bureau brought the action under the Consumer Financial Protection Act (“CFPA”), and the Telemarketing and Consumer Fraud and Abuse Prevention Act, and seeks permanent injunctive relief, restitituion to customers, and civil money penalties for defendants’ alleged deceptive misconduct. According to the CFPB’s complaint, the defendant used misleading marketing materials to enroll customers into an “Interest Minimizer” program whereby they would pay one half of their monthly mortgage payment to the defendant every two weeks, who would then transmit payments to the cusotomers’ mortgage servicer. The CFPB complaint alleges that this program effectively caused customers to pay thirteen monthly mortgage payments rather than twelve. The CFPB claims that the company inadequately communicated to customers that a set-up fee and payment processing fees would be charged. It also claims that the company falsely promised immediate savings to customers, when in fact it would take the average customer nine years to recoup her fees through savings associated with the program.
Blog Enforcement Watch May 12, 2015