Quicken Loans Settles with FTC

Online mortgage lender Quicken
Loans
has settled government charges it violated the Fair Credit
Reporting Act (FCRA) by failing to provide “adverse action” notices when
pre-approvals are denied because of bad credit reports.

The Federal Trade Commission (FTC) announced the settlement Tuesday that
mandates Quicken Loans to provide “a clear and conspicuous disclosure in
close proximity to the pre-approval offer that pre-approval may be granted
online or offline.”

If the Web-based lender determines it cannot grant pre-approval online
because it needs additional information, the settlement calls for Quicken
Loans to notify the consumer that the request for pre-approval has not been
denied, but that it needs additional information from the consumer. Also,
if the consumer submits the additional information, Quicken Loans will
decide whether to grant the request and inform the consumer of its decision,
according to the settlement.

There were no fines or penalties involved with the settlement.

The government’s case centered around complaints that online applicants
for pre-approval letters from the Michigan-based Quicken Loans who passed a
credit check would get e-mail replies that they were pre-approved for loans.
Consumers with poor credit ratings or other application problems would get
e-mails advising them to contact Quickens sales staff for more information,
instead of spelling out the reasons for the non pre-approval.

“Consumers who are denied credit or other benefits based on their credit
report have a right to know, and lenders have a legal responsibility to tell
them,” said FTC director J. Howard Beadles. “An ‘adverse action’ notice is
the key to maintaining the accuracy of sensitive personal information and
the signal to check your credit report for accuracy.”

The FTC’s complained that for a period of about one year, Quicken Loans
offered approximately 35 different mortgage loan products on its Web site
but violated the FCRA in many of its dealings with consumers. Quicken Loans
has discontinued the practice.

The company offers mortgage loans in all 50 states and allows consumers
to use the Internet to compare various home loan options as well as receive
pre-approval for and track the status of their online loan applications.

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