The Federal Trade Commission has announced a civil penalty of $7.5 million, its largest fine for a violation of the "Do Not Call" telemarketing rule, on one of the country's biggest refinancers of veterans' home loans.
The FTC says that Mortgage Investors Corp., based in St. Petersburg, Fla., called consumers on the FTC's National Do Not Call Registry and misstated the terms of available loan products during telemarketing calls between 2009 and last year.
A Mortgage Investors spokesman said the company's policy is not to comment on pending litigation, which the FTC describes in this case as a "settlement." The company has not admitted to any wrongdoing.
"Since the advent of Do Not Call, the FTC has been aggressive in cracking down on violators and preventing annoying, illegal calls to consumers," FTC Chairwoman Edith Ramirez said in a statement Thursday.
The "Do Not Call List" was implemented to reduce unwanted calls to consumers from telemarketers. About 221 million U.S. consumers have registered since 2003, which the FTC calls one of the agency's "most recognized consumer protection achievements."
The Mortgage Investors case represents the FTC's first action to enforce the Mortgage Acts and Practices-Advertising Rule, which allows the commission to collect civil penalties for deceptive mortgage ads. Thursday was also the 10th anniversary of the National Do Not Call Registry.
Since the registry opened June 27, 2003, there have been $118 million in civil penalties and $737 million in other recovery ordered by courts.
The penalty against Mortgage Investors is the commission's 105th enforcement action for the Do Not Call provisions.
Mortgage Investors' telemarketers called more than 5.4 million numbers listed on the National Do Not Call Registry to offer home loan refinancing services to current and former U.S. military consumers, according to the FTC's complaint.
The telemarketers "allegedly led service members to believe that low interest, fixed rate mortgages were available at no cost, often quoting rates that they implied would last the duration of their loan," the FTC said.
"In reality, Mortgage Investors only offered adjustable rate mortgages in which consumers' payments would increase with rising interest rates and would require consumers to pay closing costs," the FTC said. "In addition, Mortgage Investors allegedly misled consumers about their affiliation with the Department of Veterans Affairs."
The FTC charged Mortgage Investors with false and misleading acts or practices in violation of Section 5 of the FTC Act and the MAP Rule.
As part of the settlement, the FTC said Mortgage Investors is barred from denying consumers' future requests to be placed on "Do Not Call lists", calling consumers on the National Do Not Call Registry, misrepresenting any terms related to mortgage credit products, including rates and closing costs, and misrepresenting its affiliation with any government entity or organization, including the Department of Veterans Affairs.