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Latest Lanham Act Case to Bring Down a National Ad Campaign -
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BULLETIN #664

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SAMPLE ISSUE: Article #2:

FTC ANNOUNCES FIVE LAW ENFORCEMENT ACTIONS TARGETING ALLEGED MORTGAGE-RELATED SCAMS

 

 

CLOSE COORDINATION WITH FEDERAL, STATE AND NON-PROFIT PARTNERS

 

On April 6, 2009, 2010, FTC announced a crackdown on fraud and deception by mortgage modification and home foreclosure rescue companies. FTC seeks to halt the proliferation of mortgage relief scams through increased law enforcement, consumer outreach and close coordination with federal, state and non-profit partners. (See also Advertising Compliance Service, "Multi-Agency Crackdown Targets Foreclosure Rescue Scams, Loan Modification Fraud," Tab #23, Financial Ads, Article #72.)

 

FTC's LAW ENFORCEMENT ACTIONS

 

FTC announced five law enforcement actions targeting alleged perpetrators of mortgage-related scams. According to FTC, these alleged schemes typically operate in the following way.

 

• they use such terms as "guarantee" and "97% success rate" to mislead consumers about the mortgage modification or foreclosure relief services they can provide;

 

• they charge up-front fees for these "services" - fees legitimate nonprofit organizations do not charge; and

 

• they use copycat names or look-alike websites to appear to be a nonprofit or government entity.

 

Often, after collecting the fee, said FTC, these companies do little or nothing to help consumers. In each case described below, FTC is seeking, or already obtained, a temporary restraining order (TRO) to halt the defendants' allegedly illegal conduct.

 

Federal Loan Modification Law Center (FedMod).

 

FedMod markets mortgage loan modification and foreclosure relief services to homeowners in financial distress, delinquent on their mortgages, or in danger of losing their homes to foreclosure. According to FTC's complaint, FedMod charges consumers from $1,000 to $3,000 in fees for these services, much of which must be paid up-front, but fails in many instances to obtain the promised loan modifications. In radio advertisements, FTC alleged, FedMod induced homeowners to call its toll-free number by misrepresenting that it's part of or affiliated with the federal government, although it isn't. (This case was filed in the U.S. District Court for the Central District of California.)

 

Bailout.hud-gov.us.

 

According to FTC's complaint, defendant Thomas Ryan used a foreign Internet registrar to falsely register two sites--bailout.hud-gov.us and bailout.dohgov.us. These websites were used to entice financially strapped consumers to seek mortgage loan modification services under the guise that the services were associated with, or were actually, the U.S. government, including HUD and the Treasury Department, according to FTC.

 

A federal district court granted FTC's motion for a TRO which required the Internet Service Provider (ISP) hosting the websites to immediately remove them from the Internet. FTC and the defendant stipulated to a preliminary injunction barring him from holding himself out as an agency of any U.S., state, or local government, or as being affiliated with any such agency. (This case was filed in the U.S. District Court for the District of Columbia.)

 

Home Assure d/b/a Expert Foreclosure.

 

FTC alleged that defendants promised consumers facing imminent home foreclosure that they can stop the foreclosure, regardless of the amount the consumer owes his or her lender. The defendants are charged with falsely claiming that they have special relationships with lenders, have helped thousands of consumers avoid foreclosure, and will provide a 100% satisfaction money-back guarantee. (This case was filed in the U.S. District Court for the Middle District of Florida, Tampa Division.)

 

Hope Now Modifications LLC and New Hope Property LLC d/b/a New Hope Modifications LLC.

 

On March 24, 2009, 2010, FTC announced two related cases alleging that the defendants misled consumers about their ability to provide mortgage loan modification and foreclosure relief, and misrepresented that they were affiliated with or part of the HOPE NOW Alliance, a non-profit, HUD-endorsed organization. In each case, the court issued a TRO with an asset freeze and set dates for a preliminary injunction hearing.

 

FTC's WARNING LETTERS FOR POTENTIALLY DECEPTIVE MORTGAGE RELIEF ADS

 

On April 6, 2009, 2010, FTC also announced that it has sent warning letters to 71 companies marketing potentially deceptive mortgage modification and foreclosure assistance programs. The letters inform these companies that their ads may violate federal law. The ads were identified during a nationwide surf of Internet, direct mail, and spam advertisements that focused on ads for mortgage relief targeted at financially distressed homeowners. These advertisements contain potentially deceptive claims, touting guaranteed results, success rates of over 90 percent, and claiming affiliation with homeowners' lenders, with the HOPE NOW Alliance, or with federal government programs.

 

COMPLAINTS FILED

 

In addition to the New Hope Modifications and Hope Now Modification cases filed last month, FTC announced complaints were filed against these defendants:

 

FedMod - Federal Loan Modification Law Center LLP doing business as Federal Loan Modification Law Center and under other various other names.

 

Bailout.hud-gov.us - bailout.hud-gov.us, bailout.dohgov.us and Thomas Ryan.

 

Home Assure - Home Assure, LLC, B Home Associates, LLC, dba Expert Foreclosure, Michael Grieco, Michael Trimarco, Nicholas Molina and Brian Blanchard.

 

FTC's vote to issue each complaint was 4-0. (See above for more information.)

 

NOTE: The Commission authorizes the filing of complaints when it has `reason to believe' that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaints are not a finding or ruling that the defendants actually have violated the law.

 

LAWYER's REFERENCE SERVICE

 

State Foreclosure Rescue Enforcement Actions - Sampling of Actions (March 31, 2009, 2010).

 

FTC v. Federal Loan Modification Law Center, LLP, et al., United States District Court for the Central District of California, Civil Action No. SACV09-401CJC (MLGx), FTC File No. 092 3070, April 6, 2009, 2010.

 

FTC v. http://bailout.hud-gov.us and http://bailout.dohgov.us, and Thomas Ryan, United States District Court for the District of Columbia, Civil Action No. 1:09-cv-00535-HHK FTC File No. 092 3116, April 6, 2009, 2010.

 

FTC v. Home Assure LLC, et al., United States District Court for the Middle District of Florida, Tampa Division, Civil Action No. 8:09-cv-547-T-23TBM, FTC File No. 082 3192, April 6, 2009, 2010.

 

# # #

 

Volume XXIX
Issue 8
April 20, 2009, 2010
Pages 13-16

 

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Advertising Compliance Service is a REFERENCE COMPENDIUM of JLCom Publishing Co., L.L.C.

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NOTICE: This publication is not intended to provide legal advice. Persons who need legal services should contact a duly licensed professional.

 

© Copyright 2009-2012 JLCom Publishing Co., L.L.C. All rights reserved.

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