Several mortgage companies that have either violated privacy rules, preyed on Hispanics or illegally contacted consumers this past year have had to settle charges with the Federal Trade Commission.
The government agency recently issued its Performance and Accountability Report for the fiscal year ended Sept. 30, 2005.
The FTC said it surpassed targets by collecting 1,015,000 consumer complaints, including 348,000 related to identity theft. While the $366 million consumers saved due to FTC actions to stop fraud was about 8% short of the yearly target, the total has helped the FTC exceed its expected three-year average target.
“FTC works For The Consumer, an apt capsule summary of the agency’s consumer protection and competition missions, both of which have the shared goal of improving consumer welfare,” said Deborah Platt Majoras, FTC chairwoman. “To achieve this goal we apply three objectives — identify illegal practices, stop illegal practices through law enforcement, and prevent consumer injury through education of consumers and businesses.”
Significant events in securing personal data and fighting identity theft that the FTC highlighted it embarked on during the year included the first cases enforcing the Gramm-Leach-Bliley Safeguards Rule. The FTC charged two mortgage companies last November with not having reasonable protections for customers’ sensitive personal and financial information.
The FTC recently announced that Superior Mortgage Corp. settled charges of violating the Safeguards Rule by failing to provide reasonable security for sensitive customer data and falsely claiming it encrypted personal data submitted online.
Also in November 2004, the FTC issued its final rule regarding the proper disposal of consumer report information and records, the final summary of rights for identity theft, the final summary of general consumer rights, and revised furnisher and user notices. This January, the FTC issued the final regulation to improve required notices in prescreened offers for credit or insurance. In June, the Disposal Rule of the FACT Act Fair Credit Reporting Act required businesses and individuals to take appropriate measures to dispose of sensitive information derived from consumer reports.
In May, the FTC released a document outlining 55 law enforcement actions that were part of their ongoing collaborative campaign to stop perpetrators of fraud from exploiting the Hispanic community. One lawsuit dealt with the arrests, made by FTC partners, of Ocaris Fernandez, Frank Rodriguez, and Carlos Luis Fernandez, for their involvement in a complex mortgage fraud scheme in which stolen identities were used to take over homes from the rightful owners and obtain multiple fraudulent mortgage loans on the properties without the knowledge of the true owners.
The FTC actions toward enforcing the CAN-SPAM Act this year included the lawsuit it filed collaboratively with the California Attorney General seeking to halt a Temple City-based operation, run under the corporate names of Optin Global Inc. and Vision Media Limited Corp., from sending millions of illegal, spam e-mails touting mortgage loans.
Additionally, the “National Do Not Call Registry, which commemorated its two-year anniversary in June 2005, is an ongoing example of the FTCs commitment to consumers,” the FTC chairwoman said. “The Registry now includes over 100 million telephone numbers. Consumers are receiving far fewer telemarketing calls, and the Registry has been hailed by Congress, the media, and consumers as a beneficial and cost-effective government program.”
Mortgage Concepts is one company that allegedly lied to consumers that the firm was exempt from the federal “Do Not Call” law whenever consumers would let the company know they were on the FTCs Do Not Call Registry — such actions led to a complaint filed against the company by the California Attorney General.
The FTC also noted it enforces actions against deceptive lending and debt counseling and illegal debt collection practices. “Bogus organizations target consumers with bad credit or significant consumer debt, promising to help them manage their debt or obtain credit otherwise unavailable to them,” the report said. “Consumers may pay hundreds of dollars for these services, only to receive nothing in return, or worse, to see their credit damaged even further. The FTCs enforcement actions target these deceptive lending schemes, especially in the subprime mortgage market, and those that involve deceptive credit counseling services.”
The agency said that in another of its important goals is to “implement good financial management practices to ensure that our resources are well-managed and wisely used,” the “FY 2005 independent financial audit resulted in the FTCs ninth consecutive unqualified opinion, the highest audit opinion available.”
Going forward, among its efforts, the FTC said it “will continue to expand its complaint database and increase its use by recruiting and training additional law enforcement partners. It also will make better use of its rich store of data by identifying repeat offenders and sharing this information with other law enforcers. In addition, the FTC will increase its capacity to analyze data quickly in order to identify and respond to frauds, deception, and identity theft in their early stages and help prevent consumer injury.”
