Hoosiers benefit from state and federal consumer protection collaboration

Press release from Indiana Attorney General Greg Zoeller’s office:

Attorney General Greg Zoeller: Hoosiers benefit from state and federal consumer protection collaboration
Mortgage foreclosure scams and deceptive marketing practices target of joint enforcement efforts

(INDIANAPOLIS, November 19, 2010) – Attorney General Greg Zoeller welcomed the announcement from the Federal Trade Commission today of a new set of rules aimed at protecting homeowners from mortgage relief and foreclosure consultant scams. Under the new rules, mortgage relief companies can only collect fees after a homeowner has received and accepted a written offer for a loan modification from their lender. The FTC’s new regulations, dubbed the Mortgage Assistance Relief Services (MARS) Rule, will protect distressed homeowners from mortgage relief scams that have sprung up during the mortgage crisis. All provisions of MARS will take effect January 31, 2011.

“I applaud the FTC for taking these steps to protect consumers from deceptive marketing practices and foreclosure scams. Greater protections for consumers can be achieved through active collaboration among state and federal government agencies, which has been demonstrated today,” Zoeller said. “The FTC’s new regulations of mortgage rescue companies will enhance our own enforcement abilities as we continue to search for new and stronger tools to protect Hoosiers.”

So far this year, Zoeller’s office has filed enforcement actions against 32 mortgage relief or foreclosure consultant companies offering foreclosure rescue services. In the most recent legislative session, Zoeller supported a law requiring any company claiming to provide credit related services, including foreclosure consultants, to register a $25,000 surety bond with the attorney general’s office. This law took effect in July however so far no companies have registered a bond. Failure to have this bond is a red flag for consumers that the company is not operating legally in the state.

Under the new FTC rules, mortgage relief companies will be prohibited from telling consumers to stop communicating with their lenders and making any false or misleading claims about their services. Mortgage relief companies will be required to make certain disclosures in their advertising including that:

they are not associated with the government, and their services have not been approved by the government or the consumer’s lender;
the lender may not agree to change the consumer’s loan; and
if companies tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating.

In addition, it was announced today that 16,736 Indiana residents will each receive a check worth $10.87 as part of a settlement negotiated by 35 state attorneys general and the FTC with LifeLock, Inc. In March, LifeLock agreed to pay $11 million to the FTC and $1 million to the state attorneys general to resolve concerns that the company told consumers it could provide absolute protection from identity theft if they signed up for its identity protection service. Close to a million consumers nationwide who signed up for LifeLock’s services based on those false claims will receive a refund check.

All Indiana residents are eligible to perform a free credit freeze, also known as a security freeze, which is a consumer right provided by Indiana law. A security freeze can block an identity thief from opening a new account or obtaining credit and keeps new creditors from accessing a credit report without permission. A freeze also prevents an identity thief from taking out new credit in someone else’s name, even if the thief has a Social Security number or other personal information, because creditors cannot access the credit report. To perform a freeze, click here.

LifeLock refund checks will be mailed today to eligible Indiana residents. The distribution represents all eligible consumers and no further claims for refunds will be accepted. Consumers who have questions can call the settlement administrator’s toll-free number at 1-888-288-0783 or click here.

The Indiana Attorney General’s Consumer Protection Division investigates complaints against professionals in various fields to ensure safe and fair commerce. Its work protects Hoosiers from businesses, medical professionals, and other service providers who may fall short in their responsibilities to consumers. To sign up to receive alerts about potential frauds and scams, or to file a consumer complaint, visit www.IndianaConsumer.com.

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