If there is one thing the Federal Trade Commission cannot abide, it is advertising that promises more than a product or service can deliver, and one of the industries it has had under close surveillance is the mortgage relief industry. FTC has a new set of guidelines detailing what it does not want to see in the marketing efforts of such firms, among other things.
“At a time when many Americans are struggling to pay their mortgages, peddlers of so-called mortgage relief services have taken hundreds of millions of dollars from hundreds of thousands of homeowners without ever delivering results,” FTC Chairman Jon Leibowitz said. “By banning providers of these services from collecting fees until the customer is satisfied with the results, this rule will protect consumers from being victimized by these scams.”
The package of FTC rules is know as the Mortgage Assistance Relief Services Rule, or MARS rule for short.
The most important part of the FTC ruling is a prohibition on collecting fees upfront. They must put down in writing how they are going to benefit the potential client, and inform the client of their right to reject the written offer without incurring charges of any kind.
Then there is the laundry list of advertising/marketing directives:
From the FTC, here is the pertinent information:
The MARS Rule prohibits mortgage relief companies from making any false or misleading claims about their services, including claims about:
* the likelihood of consumers getting the results they seek;
* the company’s affiliation with government or private entities;
* the consumer’s payment and other mortgage obligations;
* the company’s refund and cancellation policies;
* whether the company has performed the services it promised;
* whether the company will provide legal representation to consumers;
* the availability or cost of any alternative to for-profit mortgage assistance relief services;
* the amount of money a consumer will save by using their services; or the cost of the services.
FTC went on, saying, “In addition, the rule bars mortgage relief companies from telling consumers to stop communicating with their lenders or servicers. Companies also must have reliable evidence to back up any claims they make about the benefits, performance, or effectiveness of the services they provide.”
RBR-TVBR observation: Reputable mortgage assistance companies should welcome rules that put the heat on companies that bring disrepute to the business; and smart broadcasters will do their best to keep fictitious and/or misleading claims off of their airwaves.
Still, the good news is that it is the lookout of the FTC and other enforcement agencies to identify and prosecute bad seeds in the business world. The government is wise enough to realize that being in the business of selling advertising does not give a company the authority or expertise to police the claims of the advertisers.