Distressed Mortgage Relief Services: Did Equifax Sell Your Data?
Since McGrath & Spielberger provides foreclosure and mortgage relief services as a legitimate and rule-abiding law firm, we are continuously interested in and make ourselves aware of others who allegedly provide such services but do not do so legally. Many of the non-law firms and fake law firms which have been prosecuted by the state and federal governments gained their clients – the very clients who were swindled – through either internet or US Mail advertising. In fact, individuals who fall behind on mortgage loans often receive a constant stream of solicitations by US Mail, often in very official looking envelopes which, when opened, suggest to the reader that the company offering services can do magical things. How do these non-law firms and fake law firms get your address, and know that you might be vulnerable to signing up for such services?
Of course, most mortgage loan servicers and mortgage loan lenders will report the loan status to the credit agencies, the largest of which of course are Equifax, Experian, and Transunion. Unbeknownst to many, Equifax, Experian, and Transunion sell data to those who wish to buy it. Thankfully, there are at least some legal restrictions on the credit bureaus’ ability to do so. The Federal Trade Commission charged Equifax with violating the FTC Act and the Fair Credit Reporting Act (FCRA) by improperly selling information relating to consumers who were in financial distress and behind on their mortgage loan payments.
Equifax and the other credit bureaus sell this data, which marketing companies then sell or put to use on behalf of law firms, non-law firms and fake law firms, so that they can solicit you. Obviously, the selling of this data is the first step in a cascade of events which leads many distressed homeowners coming under further financial strain when they pay a company to assist them in saving their home, and that company fails to make proper efforts and/or fails to follow the law.
Equifax has agreed to pay an approximately $1.6 million fine to resolve these charges, and the company that it improperly sold most of this data to, Direct Lending Source, will pay a $1.2 million penalty. Companies known as Bailey & Associates Advertising Inc. and Virtual Lending Source are affiliates of Direct Lending Source.
The Equifax Settlement. In addition to the financial penalty, the proposed settlement with Equifax prohibits the company from furnishing prescreened lists to anyone that it does not have reason to believe has a permissible purpose to receive them; from failing to maintain reasonable procedures to limit the furnishing of prescreened lists to anyone except those who have a permissible purpose to receive them; and from selling prescreened lists in connection with offers for debt relief products or services and mortgage assistance relief products and services, when advance fees are charged, with limited exceptions. (The charging of advanced fees for mortgage relief services is generally prohibited by non-lawyers.)
The Direct Lending Settlement. The court order settling the FTC’s charges against the Direct Lending defendants imposes a $1.2 million civil penalty and prohibits the company from using or obtaining consumer reports without a permissible purpose; from using or selling consumer reports in connection with solicitations for debt relief or mortgage assistance relief products or services offered by entities that charge advance fees; from failing to disclose to the consumer reporting agency that originally furnishes the report the identity of the end user of the report, and each permissible purpose for which the report is being provided to an end user; and from failing to establish and comply with reasonable procedures designed to ensure that a report is resold only for a purpose for which it has been furnished.
Hopefully this punishment will prevent Equifax from committing the same types of transgressions in the future, deter the other agencies from doing the same, and perhaps even reduce the number of distressed homeowners who are taken in by aggressive marketing schemes which eventually lead to them becoming the victims of fraud. Of course, $1.6 million dollars is a mere drop in the bucket for huge companies like Equifax, Experian, and Transunion.
McGrath & Spielberger, PLLC provides assistance to borrowers in need of mortgage relief and debt negotiation services, such as mortgage loan modification, foreclosure negotiation, refinancing, deed-in-lieu or other negotiated mortgage settlement resolutions, and debt settlement negotiations and debt defense.
McGrath & Spielberger, PLLC provides legal services in Florida, Georgia, North Carolina, Ohio, South Carolina, and Tennessee. The firm offers full scale representation, as well as limited scope services.