The Federal Trade Commission ("FTC") and Consumer Financial Protection Bureau ("CFPB") has issued warning letters to 32 companies warning them that their ads may be deceptive. The FTC sent letters to real estate agents, home builders, and lead generators, whereas the CFPB issued letters to mortgage brokers and lenders. According to the FTC's press release, both agencies have instituted non-public law enforcement investigations of other advertisers that may have violated federal law. The warning letters urge the companies to review their advertisements for compliance with the Mortgage Acts and Practices Advertising Rule, known as Regulation N. The rule prohibits material misrepresentations in advertising or any other commercial communication regarding consumer mortgages. After reviewing hundreds of ads, the agencies singled out a few examples of deceptive or misleading ad claims, such as: (1) ads for low "fixed" mortgage rates without an explanation of significant loan terms; (2) ads containing statement or images suggesting that the advertiser is affiliated with a government agency; and (3) ads "guaranteeing" approval and offering low monthly payments without explaining significant conditions on these offers. The agencies have released mock ads to demonstrate claims that may violate Regulation N.
TIP: Now that the agency has received Regulation N rulemaking authority from the FTC, mortgage lenders, brokers, servicers, and ad agencies should expect new enforcement rules from the CFPB and investigations and enforcement actions from either the FTC or CFPB.