Unfair and Deceptive Acts and Practices: 6.7.5.4.4 Other unfair loan modification practices
Other examples of unfair acts in the mortgage loan modification context include:
Other examples of unfair acts in the mortgage loan modification context include:
Most UDAP statutes allow consumers to sue only if the unfair or deceptive practice has caused the consumer a loss or injury, and some require that the consumer have lost money or property.429 In the loan modification context, some courts have required overly elaborate proof that the consumer has met this initial standing-type requirement, transforming it into a requirement of proof of damages.
A number of UDAP cases deal specifically with real property foreclosure practices.
Representing homeowners victimized by foreclosure rescue scams is discussed in detail in NCLC’s Home Foreclosures. This section focuses just on UDAP claims against foreclosure rescuers.
As discussed in the next subsections, foreclosure rescue scams fall into two basis types: “phantom help” scams and deed theft scams. In both cases, the rescuer usually starts by using public records to identify people whose homes are facing foreclosure. The scammer then approaches those people, and offers, for a fee, to help save their homes.
Phantom help scammers promise services such as refinancing, the preparation of pro se pleadings, or other techniques to stave off foreclosure. Instead, the company just provides generic advice, refers the consumer to a bankruptcy attorney, or files a bankruptcy petition for the homeowner. A poorly drafted bankruptcy petition that is dismissed will make matters worse because it will be more difficult for the homeowner to file a proper bankruptcy petition later.
An even more insidious form of “rescuer” claims to be able to save the home from foreclosure. The rescuer asks the consumer to sign a pile of papers whose import the consumer typically does not understand. Buried in the paperwork are contracts whereby the consumer conveys the home to the rescuer, who then leases it back to the consumer. Sometimes the sale and leaseback is disclosed to the consumer, but with the vague and generally false promise that the consumer can repurchase the home at a future date.480
The use of credit cards is pervasive in American society, and they have become an integral part of American lives. The rapid growth in credit card lending and debt during the 1990s and 2000s was accompanied by an increase in the variety of abuses and unfair practices involving credit card issuers.
Practitioners must be cautious of the myriad obstacles in bringing UDAP cases against credit card issuers.
The FTC’s telemarketing rule places special restrictions on sellers who market credit cards. The rule prohibits a telemarketer who represents a high likelihood of success in obtaining a credit card from seeking payment from the consumer before procuring the card.500
TILA also contains a number of protections regarding credit card advertising. These include:
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (hereinafter the Dodd-Frank Act) vested the Consumer Financial Protection Bureau (CFPB) with both supervisory and enforcement authority over the nation’s largest banks, which include most of the top ten credit card issuers.514 The CFPB’s first three enforcement actions were against credit card issuers and involved violations of the prohibition against unfair, deceptive, and abusive acts and practices under section 1036 of the Consumer Financial Protection Act (CFPA), 12 U.S
A number of abuses are found with credit card products targeting the “subprime market,” which generally means consumers with lower credit scores or impaired credit histories.532 Prior to the CFPB’s actions described in the preceding section, the limited number of consumer protection actions taken by federal banking regulators primarily focused on subprime credit cards.533
The Office of the Comptroller of the Currency (OCC), which until 2011 was the sole regulator of national banks,541 issued an advisory letter identifying a number of unfair and deceptive acts and practices in the marketing of subprime credit cards.542 The OCC letter characterized as possibly unfair and deceptive the promotion of credit cards with credit limits “up to” a specified dollar amount if the “up to” amount is essentially illusory.
Credit card finders offer to obtain credit cards for consumers. These offers are frequently illusory.
Failing to comply with the interest rate disclosure provisions of the Truth in Savings Act can be a UDAP violation.567 Misrepresentations regarding the interest that will be paid on a deposit account are also UDAP violations.568 It is deceptive for a bank to fail to pay interest on an interest-bearing account and then refuse, upon discovery, to correct the failure.569 A bank may also violate the UDAP statute by fail
A bank’s selective and wrongful dishonoring of checks is deceptive and unconscionable.572
A number of cases have addressed potential unfair or deceptive practices by banks in connection with consumer challenges to unauthorized charges or attempts to stop a payment.
Check cashing outlets are common in low-income urban areas. Some states have special laws regulating the fees that these businesses can charge.596 Even before Pennsylvania adopted such a statute, a court held that a check-cashing service engaged in a UDAP violation by charging $1156 to cash a $11,171 Social Security check.597
Check cashing practices are discussed in NCLC’s Consumer Banking and Payments Law.598
Scam artists and other unscrupulous actors may take advantage of loose definitions in the Uniform Commercial Code and weaker protections for checks compared to electronic payments to create instruments that can be used to take money out of consumer accounts.
Foreign-born workers in the United States often use remittances to transfer money to relatives back in their countries of origin. One decision deals with a money transfer service that disclosed a “net sale fee” of $12 and an exchange rate of 9.71 pesos to the dollar. In fact, it had purchased pesos at an exchange rate considerably more favorable to it, keeping the difference as additional profit.
Many consumers become obligated to pay for goods or services when they deposit or cash checks they receive in the mail from a business. The checks are payable to the consumer for a small amount of money, even though the business owes no money to the consumer. The business then takes the position that depositing or cashing the check constitutes an agreement by the consumer to enter into a contract to purchase goods or services or to take out a loan.
Many consumers become obligated to pay for goods or services when they deposit or cash checks they receive in the mail from a business that owes no money to the consumer. The checks are often for a small amount of money and may look like rebate checks. The business then takes the position that depositing or cashing the check constitutes an agreement by the consumer to enter into a contract to purchase goods or services.
The federal Fair Debt Collection Practices Act (FDCPA),633 other federal statutes, state debt collection acts, and common law tort theories provide a number of remedies for debt collection abuses. Another treatise in this series634 analyzes these remedies in detail and provides a host of sample pleadings. A private UDAP action provides yet another approach in those states where debt collection practices are within the UDAP statute’s scope.635
If debt collection practices are within the scope of a state’s UDAP statute, there are several important sources of precedent as to whether a particular practice is unfair or deceptive.
A debt collector commits a UDAP violation if it misrepresents its affiliation or connection with a court or other government agency.654 Nor can debt collection documents simulate legal process or other government documents.655 A collection agency engages in a deceptive practice when it misrepresents itself as a credit rating organization, thus falsely linking payment of the debt to the debtor’s credit rating.656