Consumer Protection

Whistleblower to Receive US$14.5 Million in Mortgage Case

Former home appraiser Kyle Lagow will receive $14.5 million as part of a whistleblower lawsuit against Countrywide Financial (Countrywide). The suit accused Countrywide of inflating appraisals on government-issued loans. Lagow’s lawsuit caused an investigation that resulted in a $1 billion settlement between Bank of America, which bought Countrywide in 2008, and the Department of Justice regarding the allegations of mortgage fraud. Lagow was also one of five people to file whistleblower lawsuits, which were folded into the $25 billion national mortgage settlement state and federal officials reached with Bank of America and four other banks earlier this year. The whistleblower suits were brought under the whistleblower provisions in the U.S. False Claims Act. The provisions allow individuals to bring suits on behalf of the government and share in any settlements.

Yahoo! Finance: Bank of America whistleblower receives $14.5 million in mortgage case (29 May 2012)
(Source: Reuters)

Trolley Jack Supplier Pays AU$19,800 for Safety Breach
Asia Pacific

The Australian Competition and Consumer Commission (ACCC) has announced that TWM Imports Pty Ltd (TWM) has paid AU$19,800 in infringement notices and provided a court enforceable undertaking for supplying 271 hydraulic trolley jacks between February 2009 and July 2001 that did not meet the mandatory safety standard. According to the ACCC, the trolley jacks  “were not labelled with all the required warning and usage information and failed to pass a prescribed performance test”. However, the ACCC commended TWM on its prompt and cooperative action, noting that once aware of the safety breaches, it “ceased supply of the jacks and initiated a national voluntary product safety recall”.

ACCC’s media release (28 May 2012)

US Mortgage Lending Subsidiary Settles Race Discrimination Lawsuit

The United States (US) Department of Justice (DoJ) has announced that SunTrust Mortgage Inc (SunTrust), a subsidiary of SunTrust Bank has settled allegations that it discriminated against African-American or Hispanic borrowers between 2005-2009 by increasing their loan prices. SunTrust has agreed to pay US$21 million to resolve the allegations that it “violated the Fair Housing Act and the Equal Credit Opportunity Act by charging more than 20,000 African-American and Hispanic borrowers higher fees and interest rates than non-Hispanic white borrowers, not based on borrower risk, but because of their race or national origin”. The settlement also requires SunTrust to keep in place for at least three years policies “that substantially reduced the discretion of its loan officers and mortgage brokers to vary a loan’s interest rate and other fees from the price it set based on the borrower’s objective credit-related factors, and that required the reasons for variations to be documented and reviewed by a supervisor”.

DoJ’s media release (31 May 2012)
(Source: DoJ)

Channel Islands Regulatory Authority Warns Company About 4G Advertising
Europe, Middle East and Africa

The Channel Islands Competition and Regulatory Authorities (CICRA) has announced that it is concerned that communications company JT may be misleading consumers through its advertising of a 4G network by not making it “sufficiently clear that these services are only available in some areas of St Helier and St Peter Port and not across all, or even most parts, of Jersey or Guernsey”. CICRA noted that consumers should be aware that “only 15% of JT’s mobile masts in Jersey, and 11% of its mobile masts in Guernsey, offer the new service” and “[e]ven some of those masts will only offer potential download speeds of 21 Mbps”. JT’s advertisements may eventually be assessed by the Advertising Standards Authority in London for their potential to mislead consumers.

CICRA’s media release (23 May 2012)
(Source: CICRA)

Olive Oil Company Pays AU$13,200 for Mislabelling Products
Asia Pacific

The Australian Competition and Consumer Commission (ACCC) has announced that the Big Olive Company Pty Ltd has paid two infringement notices totalling AU$13,200 for misleading labelling on its products which indicated that they were “extra virgin olive oil” when they were not, “because [they] contained more free fatty acids than permitted by olive oil trade standards, including the voluntary Australian standard”. ACCC chairperson Rod Sims said that “[t]he term ‘extra virgin’ is widely understood by consumers to mean a premium product” and such labelling was therefore misleading.

ACCC’s media’s release (18 May 2012)
(Source: ACCC)