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Zip, Zero, Nada…A Lesson in UDAAP!

The FTC came down hard on a builder in Pennsylvania for UDAAP (Unfair, Deceptive, or Abusive Acts or Practices) in the amount of $650,000. That is quite a hit for a small company, but one that should cause all of us to pause and take a look at our own marketing outreach.

Below, I’ve attached the article that Rob Chrisman refers to in his newsletter. In this article you can see a copy of the advertisement.

I also read the legal case to make sure I understood what we can all learn from this (You’re Welcome :))


• This builder constructed homes in mainly USDA areas. USDA allows for 100% financing.

• The builder also advertised that it would cost the consumer nothing.

• The builder advertised a monthly mortgage payment.

The Issue:

• So, one might conclude that you could get a 100% mortgage, however, not EVERYONE can get this.

• Also, you cannot advertise NOTHING as far as cost, and then ask for SOMETHING to secure the loan or get the loan.

• Finally, if you do disclose a payment make sure that you disclose the APR and other terms of the financing.

The Ruling:

• $650,000 fine

• Violation of FTC Act, the MAP Rule, Reg. N, TILA and Reg Z. All of these were separate violations which led to the total fine. Plop on top of that number, the attorney fees, court fees, reputational damage and consultants and I would predict that number is closer to $1 Million in real money.

Moral to the Ruling:

• When you are advertising or mailing people either in print or on the Internet, it is very easy for someone to pass this information to the regulators for further scrutiny. It is also very easy for them to re-capture this information to be used against you, even if you change it later!

• Our industry cannot promote programs like we used to in financing, which is due to the expansion of “abusive” in the UDAAP rule.

• So, as much as we all detest being told by compliance that we can’t do something, remember, they are only trying to keep money in your pocket.

To Read the Article Click Here!


Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

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