Internet lender hit with $19.3m fine for bait-and-switch scheme

by Ryan Smith13 Aug 2014
The Consumer Financial Protection Bureau has slapped an Atlanta-based mortgage company has been with a $19.3 million fine for running a bait-and-switch scheme.

According to the CFPB, Amerisave Mortgage Corp. advertised misleading interest rates to lure in customers, then locked them in with hefty up-front fees, refused to honor the advertised rates and illegally overcharged them for affiliated third-party services.

“Amerisave lured consumers in with deceptive advertising, trapped them with costly upfront fees, and then illegally overcharged them for services from an undisclosed affiliate,” said CFPB Director Richard Cordray. “By the time consumers could have discovered the advertised low rates were too good to be true, they had already committed to pay hundreds of dollars to Amerisave. Today’s action puts an end to Amerisave’s unacceptable bait-and-switch scheme and holds Patrick Markert personally responsible for his illegal actions.”

According to the CFPB, Amerisave advertised heavily using online banner ads on third-party websites. Amerisave allegedly posted inaccurate rates on these banner ads. When consumers were directed to Amerisave’s own site, the company showed them a rate based on an 800 FICO score even if the consumer had entered a FICO score below 800 on the original banner ad, the CFPB charged.

The company also required customers to provide payment authorization information for an appraisal before it would give a good faith estimate, and did not immediately inform customers that appraisals were referred to its own affiliated company, according to the CFPB.

Amerisave and its affiliate, Novo Appraisal Management Co., will pay $14.8 million in consumer relief and a $4.5 million penalty. The owner of the companies, Patrick Markert, will pay an additional $1.5 million penalty.
 

COMMENTS

  • by Ken Armstrong | 8/13/2014 1:18:15 PM

    it's about time, there are even more companies than Amerisave doing it, it's rampant out there. They got off cheap, they should have been fined about a year's profit, or had to refund every single customer on every mortgage generated via false ads a full refund of all appraisal and lender fees and fine a on top, that would stop the bait and switch. This kind of stuff is why our industry is going through all of the rules we now have. In another article this is why the mortgage industry is older people, no person with or without a college degree would want to step into an industry that is this heavily regulated.

  • by | 8/15/2014 11:11:24 AM

    Appraisers are dealt with severely for employing false or misleading verbiage on their reports, so, why not lenders?
    We also need the same enforcement regarding auto mechanics and dentists.

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