NovaStar, other Bankrate clients hit with $46 million judgment
In a June 27 judgment, Orange County Superior Court Judge Michael Brenner agreed with American Interbanc's claims that attempts by other lenders to prevent the company from using Bankrate.com amounted to an unlawful restraint of trade, subject to triple damages.
American Interbanc's lawsuit against several lenders who used Bankrate.com to drum up business was filed in March 2002. The lawsuit alleged that the lenders' failure to grant loans at the promised rates amounted to false advertising.
The lenders allegedly pressured Bankrate.com into barring American Interbanc from using the lead-generation site. American Interbanc added Bankrate Inc. as a defendant in November 2002, after it refused to renew the lender's contract to advertise on the site.
Flashback to pre-internet days of mortgage lead generation: You opened your hometown newspaper's weekly real estate section, and found a mortgage guide where several local lenders displayed rates, in a table or display ads, showing only rate and APR. The posted rates typically showed very low rates attainable only by paying a large amount of discount points, obscured but reflected in the APR. To make things even more opaque, publishing deadlines demand ad copy, and thus rates be delivered 2-3 days prior, rendering the advertising bait, relatively meaningless.
Circa 1996, Bankrate takes this game, and puts it on steroids by making rate-ad bait a national game, not a local one.
June 2007, over 10 years later, the successful litigation finally holds some of the bad-players accountable, but what is to come? The bad-actors here seemed to go beyond simply practicing false advertising and were convicted of conspiring to prevent another lender from doing business in good faith. This is simply not enough. BankRate's mystery shopping audits are not enough. Hopefully this press will get the attention of the regulators who need to start enforcing and hopefully even giving some more punitive muscle to Regulation Z. Doling out small fines and slaps on the wrists, like this will never change behavior.
4 comments:
This should have happened long ago. The bankrate platform has been gamed by many lenders for quite some time. Sercret shoppers, yeah right.
I agree, it's hard to compete with all the shops out there offering unreal and unproven rates and then sell around that. This truly is the uphill climb and one we've passed on for more traditional internet sources. Too bad for companies like Bankrate.
Dealing with Wachovia, I had a rate agreement verbal and in writing, just before signing they changed it. They are not the reputable company they once were.
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