Tuesday, August 11, 2015

Western Union Subsidiary Agrees To Fork Over $38M+ In Restitution, Penalties To Settle Charges That It Peddled Bi-Weekly Mortgage Payment Program That Deceptively Promised Homeowners Ten$ Of Thousand$ In Interest Savings Through Accelerated Loan Payments

From Public Citizen's Consumer Law & Policy Blog:

The Consumer Financial Protection Bureau acted [] against Paymap Inc.(1) and LoanCare, LLC for deceiving consumers with advertisements for a mortgage payment program that promised tens of thousands of dollars in interest savings from more frequent mortgage payments. Under the terms of the orders, Paymap will return $33.4 million in fees to consumers and pay a $5 million civil penalty to the CFPB, and LoanCare will pay a $100,000 civil penalty.

The CFPB found that Paymap and LoanCare violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition against deceptive acts and practices. Specifically, the Bureau found that consumers were:
  • Lured with deceptive promises of savings: Paymap made claims on its website such as, “The average customer will achieve over $33,000 in interest savings” using the Equity Accelerator Program. However, Paymap had no factual basis to support this claim. Moreover, only a tiny percentage, if any, of its customers achieved that amount of interest savings.
  • Misled about when their payments would be applied: Paymap and LoanCare told consumers in their direct mail solicitations that enrolling in the Equity Accelerator Program would change the consumers’ payoff schedule to “every 2 weeks.” Although Paymap makes more frequent withdrawals from consumers’ accounts in the Equity Accelerator Program, it does not actually make more frequent payments on consumers’ mortgages. Instead, Paymap holds the collected payments in custodial accounts, and then pays consumers’ mortgages on their original monthly schedule. Consumers are charged a transaction fee with every withdrawal. Any interest savings that consumers may achieve through the Equity Accelerator Program is because they make a higher annual mortgage payment in the Program, using the same payment schedule as before enrollment.
The CFPB press release is here. The consent orders are here and here.

Source: CFPB Acts Against Mortgage Payment Company For Deceptive Ads.
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(1) According to one of the consent orders, Paymap is a wholly-owned subsidiary of The Western Union Company, the financial services and communications company founded in the mid-19th century that originally made its name by peddling telegrams.

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