An Internet-based operation that finds potential borrowers for mortgage refinancing lenders will pay a $500,000 civil penalty to settle Federal Trade Commission charges that it deceived consumers with ads that falsely claimed they could refinance their mortgages for free.

The FTC charged that Colorado-based Intermundo Media LLC, using the name "Delta Prime Refinance" designed and distributed the deceptive ads as a part of its lead generation service. According to the complaint, the company ran the ads on Google, Microsoft, AOL and Yahoo, as well as on its own websites. When consumers clicked on the ads, they were directed to a landing page to provde contact information, which was ultimately passed on to providers of mortgage refinancing.

Delta Prime Refinance, according to the complaint, made deceptive and unsupported claims in advertisements that overstated how much consumers could reduce their payments if they refinanced their mortgages, how low their annual percentage rate would be and how easy it would be for them to qualify for refinancing. Some ads falsely claimed there were no hidden fees, and that the mortgage refinancing was "free," according to the FTC.

Other ads claimed that fixed interest rates were available, when in fact the rates and the amount consumers spent on interest were variable.

The complaint charges Delta Prime Refinance with violating the Federal Trade Commission Act, the Mortgage Acts and Practices Advertising Rule, or “MAP” Rule and Regulation N, and the Truth in Lending Act and Regulation Z.

Under settlement terms, along with paying the $500,000 civil penalty, Intermundo Media is prohibited from:
    
• misrepresenting the terms and conditions of any financial product or service, and any term or condition of a mortgage credit product,
    
• disclosing, selling or transferring the consumer data obtained through the Delta Prime Refinance lead generation service; and
    
• violating the FTC Act; the MAP Rule and Regulation N; and the Truth in Lending Act and Regulation Z.

"An ad that says you can refinance your mortgage for free is clearly deceptive if you have to pay money at some point before you sign on the dotted line," said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. "Lead generators need to understand that federal laws governing truth in advertising apply to them as well as everybody else."

A settlement in a similar case was reached in May when GoLoansOnline.com, a Houston-based lead generator that operates several sites advertising mortgages, agreed to pay a $225,000 penalty for deceiving people about mortgage terms.

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