The Federal Trade Commission said June 4 that it has settled with a mortgage company it alleges mislead and overcharged homeowners in financial distress.
The FTC plans to announce on June 7 what it calls a major law enforcement action against the company, which it has not named. A source said TV, radio and online mortgage ads are all implictaed in the enforcement action.
That settlement would put a spotlight on the issue just as Congress is said to be ready to conference financial reform legislation that could give the FTC new power to crack down on financial services advertising. Some ad industry groups say that would give it too much power over commercial speech, including putting media companies at risk for liability for carrying ads the FTC concluded its rules against unfair and deceptive practices.
In a letter last fall to members of the House Energy & Commerce Committee, FTC Chairman Jon Leibowitz urged it to support the "expanded authority" given to the agency under the Consumer Financial Protection Act.
That act is a byproduct of the economic meltdown and the desire by the Obama administration to crack down on false and deceptive practices in the financial services sector. The bill could give the FTC more streamlined rulemaking authority; establish aiding and abetting liability for unfair or deceptive practices; and give it civil penalty authority. Advertisers are concerned that could be used as a wide net for an activist agency to cast over its ad practices.
The advertising industry has been fighting the expanded authority, saying the changes are actually removing "procedural safeguards" against an activist agency that could go after the media and ad agencies under the aiding and abetting provision and initiate rulemakings on issues like kids advertising, green marketing and online behavioral advertising, all without Congress having fully vetted the implications of the changes.