Recently, the Federal Trade Commission (FTC) issued a press release in which it announced that it will be mailing refund checks totaling more than $533,000 to consumers who fell victim to a mortgage relief assistance marketing scheme operated by several companies, including A to Z Marketing, Inc. (collectively, these defendant companies are referred to herein as “A to Z Marketing”). The average refund check will be approximately $613.
According to the FTC’s 2013 complaint, A to Z Marketing touted their mortgage relief services through misleading internet, television and radio advertisements as well as through telemarketing calls. See FTC v. A to Z Marketing, Inc. et al., Case No. 8:13-cv-00919-DOC-RNB (C.D. Cal. Dec. 16, 2013).
The FTC alleged that in connection with their interactions with consumers, A to Z wrongfully collected advance fee payments for their services, in violation of the FTC’s Mortgage Assistance Relief Services Rule, 16 CFR Part 322 (the “MARS Rule”). Among other things, the MARS Rule specifically prohibits mortgage relief service providers from requesting or receiving payment of any fee until the consumer has executed a written agreement between the consumer and the consumer's loan holder or servicer that incorporates the offer that the provider obtained from the loan holder or servicer. See 16 CFR 322.5(a).
Section 5(a) of the FTC Act, 15 USC 45(a), prohibits “unfair or deceptive acts or practices in or affecting commerce.” Misrepresentations or omissions of material fact that are likely to mislead consumers constitute deceptive acts or practices prohibited by Section 5(a) of the FTC Act.
According to the FTC’s 2013 complaint, A to Z Marketing also violated Section 5(a) of the FTC Act when it allegedly engaged in the following conduct through its various marketing conduits:
- Misrepresented the likelihood of obtaining a loan modification. According to the FTC, A to Z promised either expressly or impliedly to obtain for consumers mortgage loan modifications that would substantially lower the consumers’ mortgage payments, or would help the consumer avoid foreclosure. In actuality, A to Z Marketing was generally unable to provide these results.
- Misrepresentations regarding loan audits. A to Z made representations that it would be able to obtain loan modifications or assist consumers in avoiding foreclosure through conducting loan audits, including a forensic loan audit. However, according to the FTC, A to Z Marketing generally was unable to deliver the promised results.
- Failure to disclose material terms. The MARS Rule requires service providers to give consumers certain disclosures in connection with providing mortgage relief services, including statements that the provider is not affiliated with the government, that the consumer’s lender is not required to change the terms of the consumer’s loan, that the consumer has the right to stop doing business with the service provider at any time, and that if the consumer stops paying his/her mortgage, he/she could lose her home. According to the FTC, A to Z failed to provide consumers with these required disclosures.
In addition to ordering the refund of ill-gotten monies to harmed consumers, upon the FTC’s request, the US District Court for the Central District of California also issued a permanent injunction barring A to Z Marketing from engaging in further violations of the MARS Rule and Section 5(a) of the FTC Act. See FTC v. A to Z Marketing, Inc. et al., Case No. 8:13-cv-00919-DOC-RNB (C.D. Cal. Nov. 13, 2014).
According to the FTC’s press release, it is mailing out checks to 862 victims of A to Z Marketing. The checks must be cashed within 60 days of receipt.
The FTC’s press release may be viewed HERE.
This article was written by Tricia Engelhardt of Aldrich & Bonnefin, PLC