Magazine article American Banker

CFPB Hits Three Lenders as Part of False Ad 'Sweep'

Magazine article American Banker

CFPB Hits Three Lenders as Part of False Ad 'Sweep'

Article excerpt

Byline: Rachel Witkowski

WASHINGTON -- The Consumer Financial Protection Bureau took action Thursday against three mortgage companies that, authorities say, falsely implied affiliation with the U.S. government.

The CFPB filed a lawsuit against reverse mortgage lender All Financial Services and issued consent orders against Flagship Financial Group and American Preferred Lending. The companies are not affiliated, but the bureau says they all effectively deceived consumers by making false claims.

The allegations stem from a joint review with the Federal Trade Commission, which the CFPB called a "sweep," of false advertising. The agencies surveyed consumer complaints and 800 randomly selected mortgage ads to catch potential wrongdoing.

Flagship has agreed to pay a civil penalty of $225,000 while American Preferred will pay $85,000. The court will determine All Financial's fine at a later date.

"The U.S. government is very serious about stopping companies from falsely claiming federal authority, and we are particularly concerned about false or deceptive statements made in advertisements about reverse mortgages that target older Americans," CFPB Director Richard Cordray said in a press release.

The CFPB said the three companies "imitated U.S. government notices" in mailings to consumers. The complaint filed against All Financial in Maryland alleges that the company used deceptive advertising from November 2011 to December 2012. The bureau said the reverse lender sent mailings to nearly 200,000 people that had an eagle resembling the Great Seal of the United States. …

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