Uncle Sam cracks down: Consumer privacy, Do-Not-Call violators hit for non-compliancemortgagepress.comconsumer protections laws, compliance, do-not-call lists
In a possible signal of increased government enforcement, the
Federal Communications Commission and Federal Trade Commission have
come down hard on two mortgage companies for failure to comply with
consumer protection laws. By conducting nationwide compliance
sweeps and responding to consumer complaints, these regulatory
organizations are pursuing maximum fines on companies found in
non-compliance.
On Feb. 22, the FCC proposed a $770,000 forfeiture against
Phoenix-based Dynasty Mortgage LLC for apparently violating the
National Do-Not-Call (DNC) Registry, rules designed to curb
telemarketing abuse. The FCC alleged that Dynasty Mortgage made 70
calls to 50 homes in Arizona and California that were registered on
the federal DNC list. The company continued its telemarketing
activity even after receiving a citation warning the company of its
potential penalties. In addition, Dynasty apparently misinformed
customers that it was exempt from the commission's rules. The FCC
lobbied for the maximum fine for each violation, $11,000, and the
five-member commission ruled in a unanimous decision.
Curtis White, the company's president, is expected to launch an
appeal, stating that Dynasty has systems in place to ensure that
those registered on the National DNC Registry are not called, and
while there may be a "flaw in the system," it was willing to work
on fixing the problem. According to the FCC forfeiture notice,
Dynasty obtained its leads from a lead broker, who claimed the list
had been "scrubbed" prior to Dynasty's purchase. However, the FCC
noted that purchasing a "scrubbed" list does not fulfill compliance
with the law.
To date, mortgage companies have been the leading industry named
in DNC citations issued by the federal government.
John Eubank, president of Fairfax, Va.-based Nationwide Mortgage
Group, has also felt the sting of non-compliance. The FTC charged
the 12-year-old firm with violating the Gramm-Leach-Bliley
Safeguards Rule, which requires institutions to implement security
policies and procedures for the protection of customers" personal
and financial information. Although the FCC did not cite any
specific incidents of lost or stolen information, it charged
Nationwide Mortgage with failure to assess the risks to sensitive
customer information, implement safeguards to control these risks,
train employees on information security issues, oversee loan
holders handling of customer information, or monitor its computer
network for vulnerabilities.
A number of conditions outline the settlement, including
periodic updates of Eubank's compliance activities over the next 10
years, but it's the price of security requirements that will close
Nationwide Mortgages five-person office. Eubank estimates that it
will cost $60,000 to meet the FCC demands, a fine that he cannot
afford.
For more information, visit www.ftc.gov or www.fcc.gov.
