Loan Modification Scams and Federal Trade Commission

Loan Modification Scams and Federal Trade Commission

The Federal Trade Commission Has Powerful Tools To Crack Down On Loan Modification Scams.The Federal Trade Commission (“FTC”) can take meaningful action to put loan modification scammers out of business. As with many regulatory bodies, the problem is not with the enforcement tools but rather the willingness to use them.

Crack Down on Rip Off Scams

The FTC is armed with several significant regulatory tools to crack down on rip off schemes. The Federal Trade Commission Act and the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”) allow for temporary, preliminary, and permanent injunctive relief, rescission and reformation of contracts, restitution, refund of monies paid, disgorgement, and other equitable relief. The FTC can use these acts to prevent the operation of, and obtain relief for consumers from, mortgage loan modification and foreclosure relief services. Such companies that sell or market such services across state lines are subject to the FTC’s jurisdiction.

FTC Act Prohibits Unfair or Deceptive Practices

The FTC is an independent agency of the United States government. It administers the FTC Act and the Telemarketing Act. The FTC Act prohibits unfair or deceptive practices affecting interstate commerce. The Telemarketing Act prohibits deceptive or abusive telemarketing acts or practices. The FTC can initiate federal district court actions to enforce the Acts it regulates. Those who use internet and direct mail marketing are subject to the FTC’s regulatory action.With weapons like this, why doesn’t the FTC act more? Like many government agencies, having the tools to do something isn’t enough. The Washington State Attorney General’s office and the Department of Financial Institutes also have significant regulatory tools and yet they do little more than issue consumer alerts. The problem is in the will and the resources to act. Where does this government inertia leave you the defrauded consumer? Luckily, we the people can use the same regulatory swords to obtain our own justice.

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