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Mortgage Brokers Benefited from "Spammer" Actions; Mortgage Services Company Violated TSR While Marketing Mortgage Products: Complaints
The following cases were examined in prior issues of Advertising Compliance Service and involved mortgage brokers who benefited from "spammer" actions and a Department of Justice (DOJ) Complaint that a mortgage services company violated FTC's Telemarketing Sales Rule (TSR) while they were marketing mortgage products and services.
Mortgage Brokers Benefited from
"Spammer" Actions: Complaint
Plaintiff sued multiple Defendant corporations and individuals, alleging that they had "directed, controlled and participated in 'spamming,' causing over 10,000 deceptive and unsolicited commercial electronic messages to be sent to Plaintiff's computer server" over a three-week period. Plaintiff alleged that the "header information" on the e-mails "was falsified, misrepresented or forged in a way that would mislead a reasonable recipient as to the contents and subject matter of the message." The complaint also alleged that certain defendant mortgage brokers had "conspired with and at all times supported," and benefited from, the "spammer" Defendants' actions.
The court granted the motion to dismiss in part and denied it in part. The court first determined that Federal Rule of Civil Procedure 9(b) applied to averments of fraud in Plaintiff's complaint under the federal CAN-SPAM Act, 15 U.S.C. Section 17529 et seq. and the California Business and Professions Code. The court further found that California law--
"extends liability to anyone who 'advertises' in a commercial e-mail containing a misleading header or subject line."
Plaintiff's complaint was found to have adequately pleaded the elements of the state anti-spamming statute, because it--
"include[d] examples and state[d] that the subject lines 'were clearly intended to get someone to open the email[s] by telling them that their loan was pre-approved..."
Accordingly, the court denied Defendant's motion to dismiss Plaintiff's claims brought under California law, and granted the motion as to Plaintiff's federal law claim."
However, because both claims were grounded upon the same facts, the court granted Plaintiff leave to amend its complaint to replead the federal claim with additional particularity.
In conclusion, the court noted that Plaintiff's complaint "need not plead with particularity facts surrounding the initiation of the [allegedly fraudulent] emails," because "[n]arrowing the allegations of fraud to those emails that were sent by three identified Spammer Defendants ..., together with the existing particularized statements regarding the content of the emails is sufficient to 'give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge as required by Rule 9(b).'" The court also found that, although the mortgage lenders whose services had been advertised in the emails "were not individually named in the email cited in the [complaint], their services [we]re clearly referenced" in such a way as to allow the conspiracy claim to go forward.
(ASIS Internet Services v. Optin Global, Inc., Civil No. C 05-5124 CW, United States District Court for the Northern District of California, 2006 U.S. Dist. LEXIS 73669, September 27, 2006; see also Advertising Compliance Service, Tab #2, General Articles, Article #552).
Mortgage Services Company Violated TSR While
Marketing Mortgage Products and Services: DOJ Complaint
Two companies and their principals agreed to settle FTC charges that they violated FTC's Telemarketing Sales Rule (TSR) by calling telephone numbers listed on the National Do Not Call Registry and failing to pay the required fee for access to numbers listed on the Registry.
At FTC's request, the Department of Justice (DOJ) filed a complaint in federal court, alleging that on or after October 17, 2003, USA Home Loans Inc., a mortgage services company, and telemarketer USA First Investment Group Inc., violated the TSR while marketing mortgage products and services, including originating and refinancing home loans. According to FTC's complaint, USA Home Loans made calls to consumers, and, on its behalf, USA First Investment Group made calls to pre-qualify consumers for USA Home Loans offerings.
The settlement includes a $426,782 civil penalty against USA Home Loans Inc. and its owner, David Vach. This civil penalty is suspended except for $35,000, contingent upon the accuracy and completeness of their financial statements. The settlement also includes an $85,356 civil penalty against USA First Investment Group Inc. and its principals, Richard Burnham and Vincent Piccione. This civil penalty is also suspended. In addition, the defendants are permanently barred from further TSR violations.
NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.
(USA (for FTC) v. USA Home Loans, Inc., et al., United States District Court for the District of Maryland, FTC File No. 042-3148, November 2, 2006; see also Advertising Compliance Service, Tab #2, General Articles, Article #549.)
Mortgages, Refinances - Cases and Articles
- Mortgage Brokers Benefited from Spammer Actions: Two cases that were examined in previous issues of Advertising Compliance Service. They involved mortgage brokers who benefited from "spammer" actions and a Department of Justice (DOJ) Complaint that a mortgage services company violated FTC's Telemarketing Sales Rule (TSR) while marketing mortgage products and services.
- Mortgage Loan Advertised: Was Really Adjustable Rate Mortgage. Full text of "FTC: Mortgage Broker’s Deceptive Claims Tricked Consumers Looking for a Good Rate," dated June 2, 2004. This FTC case involved issues concerning refinancing (i.e., loan refinance) and false advertising.
- Home Mortgage Refinance Services: Full text of FTC News Releases, "Colorado Mortgage Broker Barred from Making Deceptive Claims," dated March 28, 2005.
- Home Mortgage Refinance Services: Article adapted from an article appearing in Issue #568 of Advertising Compliance Service at Tab #2, General Articles, Article #512 as part of the "Washington Roundup: A Review of Ad Actions Involving FTC."
- Home Mortgage Company: Lawsuit Against Home Mortgage Company, Residential Refinancing Transaction, Operation Advertised 3.95% 30 Year Mortgages - Articles.
- Telemarketer Selling Mortgage Loans, Refinancing and Other Products; "Spam Merchants" Who Allegedly Sent E-Mails Hawking Mortgage Opportunities.
- Home Loans, Mortgage Loans, Refinance: Variety of Online Resources and Links.
- Mortgage and Refinance Resources: Online Mortgage and Refinance Resources.
Additional Resources
The following websites and web pages contain a great deal of information in the equity home loan, refinance, and mortgage areas:
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