The Federal Trade Commission (FTC) has brought enforcement action against a Colorado-based lead generation company that claimed in advertisements that consumers could refinance their mortgages for free.
Intermundo Media LLC, doing business as ‘Delta Prime Refinance,’ will pay a $500,000 civil penalty to settle FTC charges that it deceived consumers through online advertisements designed to generate leads for lenders.
‘An ad that says you can refinance your mortgage for free is clearly deceptive if you have to pay money at some point before you sign on the dotted line,’ says Jessica Rich, director of the FTC's Bureau of Consumer Protection, in a release. ‘Lead generators need to understand that federal laws governing truth in advertising apply to them as well as everybody else.’
According to the FTC, the ads were pervasive, having run on Google, Microsoft, AOL and Yahoo pages. When consumers clicked on the ads, they were sent to a landing page where they provided contact information, which was ultimately passed on to providers of mortgage refinancing.
In addition to claiming that mortgage refinancing would be offered for ‘free,’ in certain ads, Delta Prime Refinance also made deceptive claims as to how much consumers could reduce their payments if they refinanced their mortgages, how low their annual percentage rate would be and how easy it would be for them to qualify for refinancing, according to the FTC. Other ads claimed that fixed interest rates were available when, in fact, the rates and the amount consumers spent on interest were variable.
In addition to paying the $500,000 civil penalty, the FTC has prohibited Intermundo Media from misrepresenting the terms and conditions of any financial product or service; any term or condition of a mortgage credit product; disclosing, selling, or transferring the consumer data obtained through the Delta Prime Refinance lead generation service; and violating the FTC Act, the MAP Rule and Regulation N, and the Truth in Lending Act and Regulation Z.