Skip to main content

CFPB: Focus on Deceptive Advertising

Michael G. Barone
Feb 20, 2015

Question: I have heard of recent CFPB’s enforcement actions involving deceptive advertising claims. Can you provide me with more detail?

Answer: Recently, the CFPB (or Bureau) filed a lawsuit against one mortgage lender for false and misleading reverse mortgage advertisements. [United States District Court for the District of Maryland, Baltimore Division on February 12, 2015 (CFPB v. All Financial Services, Inc.)]

Two other mortgage lenders have consented to the issuance of a Consent Order which, among other things, obligates the lenders to file compliance plans with the CFPB, pay significant civil monetary penalties and report certain of their actions to the CFPB. [Administrative Proceeding File No. 2015-CFPB-0005 dated Feb. 10, 2015 (In the Matter of American Preferred Lending Inc.); Administrative Proceeding File No. 2015-CFPB-0006 dated February 11, 2015 (In the Matter of Flagship Financial Group, LLC)]

In the lawsuit against All Financial Services, the Bureau alleged, among other things, that the lender misrepresented the source of its advertisement by including an eagle resembling the Great Seal of the United States with the headers, “Government Lending Division” and “Housing and Recovery Act of 2008 Eligibility Notice.” Further, the Bureau claimed that the lender advertising a reverse mortgage payment as having “no monthly payments” is misleading, since a borrower is still responsible for taxes and insurance. 

In one of the Consent Orders (supra, Flagship Financial), the Bureau took issue with mailings that included the header, “Pursuant to the Federal Housing Administration (FHA) HUD No. 12-045” and that the mailer directed consumers to contact their “assigned FHA loan specialist.” In the other Consent Order (supra, American Preferred Lending), the CFPB objected to mailings that included the FHA-approved lending institution’s logo, along with reference to a FHA website, while obscuring the source of the advertisement. The CFPB deemed this to be misleading to a consumer as it provides the impression that the lender is in some way affiliated with the government.

Based on these recent enforcement actions, the Bureau is focusing attention on preventing not only false but also misleading advertisements. Residential mortgage loan originators must be particularly cautious in how they market their products and services. The lawsuit and Consent Orders referred to above make it clear that misleading claims of federal authority or affiliation will not be tolerated.



Michael G. Barone is director of legal and regulatory compliance at Lenders Compliance Group. He may be reached by e-mail at [email protected].

Published
Feb 20, 2015
'A Long Road To Normal'

Nominated again to lead The Fed, Powell tells Senate committee to expect three rate hikes, but 'if we have to raise interest rates more over time, we will.'

Regulation and Compliance
Jan 11, 2022
CFPB: Complaint Response Worsens At Big 3 Credit Bureaus

Report claims Equifax, Experian, and TransUnion routinely failed to fully respond to consumers with errors.

Regulation and Compliance
Jan 10, 2022
The Fed Names Chairs, Deputy Chairs For 12 Reserve Banks

In recent years, the Federal Reserve System has worked to increase the overall diversity of the Reserve Bank and branch boards of directors and continues to build on those efforts.

Regulation and Compliance
Jan 06, 2022
The Fed: Rate Hike Likely Coming in June

Federal Open Market Committee's December minutes reveal discussion of first hike in federal funds rate in 2Q of 2022, as well as of ending asset purchases by March.

Regulation and Compliance
Jan 05, 2022
AARMR No Protection For Savanah Scares

Conference provides opportunity for regulators to interact, discuss common topics

Regulation and Compliance
Jan 04, 2022
McCargo Sworn In As Ginnie Mae President

Former HUD official becomes the first female to lead the Government National Mortgage Association.

Regulation and Compliance
Jan 04, 2022