[co-author: Stephanie Kozol]

Just before the new year, Maryland Attorney General Brian Frosh announced a $250,000 settlement with Caliber Homes, Inc. to resolve allegations that Caliber attempted to mislead approximately 220,000 consumers into thinking that its mailings actually came from the customers’ current mortgage companies by sending advertisements that displayed the name and mailing address of the consumers’ original mortgage company instead of Caliber’s. AG Frosh alleged that Caliber’s conduct violated Maryland law, which prohibits licensed lenders from advertising under any name or address that is not their own.

In a press release, AG Frosh emphasized that “[t]oday’s settlement sends a strong message to lenders who engage in illegal advertising: [I]t must stop. Consumers should not have to navigate through their mail to determine who their real lender is when they are considering responding to a loan offer.”

Why It Matters

Regulators often target deceptive advertising practices — no matter how small the deception may seem. The specific practice of mailing an envelope that appears to be sent from a consumer’s mortgage company but actually contains a solicitation from an unrelated third-party occurs in jurisdictions across the country despite being generally prohibited by state and federal laws. AGs looking to crack down on such practices will be encouraged by the Caliber settlement. Companies that employ similar tactics should survey the regulatory landscape in their jurisdictions to ensure that advertising practices do not generate additional regulatory risk.