We all know that consumers use the Internet to conduct comparison shopping for a variety of products and services. Consumers want to get a combination of the best price and service for their money. This is especially true in the mortgage lending industry, where most people will be saddled with a home loan debt for decades. The best interest rate and financial package is a critical component to the purchase of a home or property. Comparison-shopping marketing is also a lucrative business for advertising companies. For those in the space, it is important to adhere to applicable comparison shopping regulations.
How Does the Advisory Opinion Impact Comparison Shopping Marketing?
The Consumer Financial Protection Bureau ("CFPB" or "Agency") is a U.S. government agency charged with ensuring that consumers are treated fairly by banks, lenders, and other financial institutions. The Agency recently issued guidance, in the form of an advisory opinion, to protect consumers in the digital mortgage comparison-shopping space. Specifically, the CFPB's Opinion concerns the way in which companies may attempt to influence consumers in violation of the Real Estate Settlement Procedures Act ("RESPA"). By way of background, RESPA provides protections for consumers that engage in: 1) the purchase of a home, 2) applying for or closing on a mortgage, 3) making escrow payments, or 4) purchasing other residential real estate products/services. The advisory opinionaddresses digital platforms that provide information or features that enable consumers to comparison shop for mortgage-related services. Such services include platforms that generate potential leads for lenders through consumer interactions with the platforms.
How to Comply with Comparison Shopping Marketing Guidelines
RESPA prohibits companies from receiving referral fees inconnection with residential mortgage transactions. One goal of the law is to foster a level playing field among lenders in orderto promote fair competition and legitimate, objective resourcesfor consumers. When comparison shopping for a mortgage, consumers are often required to submit personal data that should serve to help generate lending packages suitable to their circumstances. Consumers expect to find objectively curated information. According to the advisory opinion, marketing companies violate RESPA if they do the opposite, such as "coerce payments from mortgage professionals, unlawfully steer consumers, or engage in other illegal referral activities . . . ." Please note that the Advisory Opinion simply offers clarity to companies in the marketing industry, there are no new requirements under the law.
Marketing in the Comparison-Shopping Space: BEWARE
Marketing companies take heed: this advisory opinion is a strong warning to the industry. The marketing of products or services to consumers, especially in the mortgage lending space, must be carried out in accordance with applicable regulations. To that end, if your business is engaged in marketing that impacts consumer comparison-shopping, it is essential that you consult with a digital marketing attorney to help steer your business in the right direction.
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