December 9, 2003
An Internet operation that advertised 3.95% 30 Year Mortgages to obtain sensitive financial information from consumers has reached a court settlement of charges that it violated federal lending and privacy laws.
The settlement requires the principals of 30 Minute Mortgage to post $1 million bonds before sending unsolicited commercial e-mail - spam - in the future. The settlements also bar further misrepresentations and prohibit the defendants from using or benefitting from personal information that was deceptively collected from consumers.
In January 2003, the FTC filed a complaint in U.S. District court charging that 30 Minute Mortgage Inc. sent spam and maintained Web sites where it advertised 3.95% 30 Year Mortgages and described itself as a national mortgage lender.
The FTC charged that the company urged potential customers to complete detailed online loan applications that included such information as social security numbers, income, and assets. The company assured consumers that their sensitive information would be protected because it would be transmitted using Secure Sockets Layer (SSL) technology.
The FTC alleged that 30 Minute Mortgage was not a national mortgage lender and did not offer 3.95% 30 year loans. Instead, the company allegedly sold or offered to sell thousands of completed applications to nonaffiliated third parties without consumers consent. The FTC also alleged that consumers sensitive personal and financial information was not protected in transmission because the Web sites at times did not use SSL or other encryption technology.
The FTC charged 30 Minute Mortgage, its president Gregory P. Roth, and its former national sales director Peter W. Stolz, with violating the FTC Act, the Truth in Lending Act, and the Gramm-Leach-Bliley Act.
The judgments require 30 Minute Mortgage, Roth, and Stolz to post $1 million bonds before sending unsolicited commercial e-mail or spam. The judgments also bar the defendants from:
- violating the Truth in Lending Act or its implementing Regulation Z,
- violating the financial privacy or pretexting provisions of the Gramm-Leach-Bliley Act or the Commissions Privacy Rule,
- misrepresenting mortgage terms, security protections, or other information conveyed through the Internet or that relates to residential mortgages, and
- using or benefitting from the personal information that 30 Minute Mortgage deceptively obtained from consumers.
Based on financial disclosures provided to the FTC, a $57,500 judgment against Roth has been suspended. Should the Court find any material misstatement or omission in these financial disclosures, the full amount of the judgment will be due.
