Online lead generation

Should You Stay Away From “Live Transfer” Leads?

Online Lead Generation Compliance

Should mortgage professionals avoid live transfer leads entirely?

A recent Law 360 article noted that regulators expect those involved in lead generation activities to keep an eye on each other, or they could “face liability for each other’s noncompliance.”

Lead Generation Live Transfer “Blindness”

The article goes on to say this expectation is particularly concerning, “given the level of ‘blindness’ that is characteristic in online lead generation — for example, end buyers often do not know the identity of the publishers and vice versa — this is a serious and potentially insurmountable development.”

ATS Secured hosted a webinar where this topic came up: “RESPA Section 8: Understanding Marketing and Advertising Regulations.”

Marx Sterbcow, the webinar presenter and an attorney specializing in mortgage regulations, mentioned that online lead generation can be dangerous and industry professionals would be wise to stay away from them. This statement generated concern during the webinar Q&A, and Sterbcow was asked to expand on it.

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Why “Live Handoffs” Can Be Dangerous:

Marx Sterbcow’s Answer:

Online lead generation companies where the lead generation company has spoken directly with the consumer and then transfers the “Live Handoff” over to the Lender or Loan Officer (especially if the Lead Generation company is not licensed under the Safe Act in their respective state) is a huge concern for regulators in today’s regulatory environment.

The regulators have indicated many of these companies are nothing more than unlicensed “mortgage brokers” who are operating in violation of the Loan Officer Compensation Rule that went into effect on Jan. 1, 2014 because the lead generation company is soliciting consumer information for loan products without a license.

The CFPB has publicly stated they are concerned with this type of lead generation marketing tactic because consumers are prone to give out sensitive personal and financial information. Additionally the CFPB has stated that “live transfers” confuse consumers into thinking they are dealing directly with a lender when in fact they are not.  

In addition to Loan Officer Compensation issues there are a myriad of other compliance headaches (Fair Lending Act, UDAAP, Fair Housing Act, Telephone Consumer Protection Act, Telemarketing Sales Rule, privacy issues, CAN Spam Act, etc.), which make these types of “Live transfer” lead generation companies fertile grounds for regulatory enforcement action. 

Interested in learning more from this webinar? Download the full webinar, complete with Q&As, today!

ATS Secured provides solutions to verify the identity and validity of anyone and everyone you do business with, to help you comply with mortgage industry regulations. Contact us today to find out how we can help.