Triggers: A Legal Business

Triggers: A Legal Business

credit report

Despite many court challenges, buying and selling trigger leads remains a completely legal and highly profitable practice. Credit bureaus are profit making entities, after all. They sell information. When someone applies for a mortgage and has their credit pulled, the bureaus can sell that information to competing lenders. To say that it is a big business would be an understatement.

Supporters argue that trigger leads are good for consumers because they create more competition. This argument is backed by the Federal Trade Commission (FTC). They stand firm behind a federal law that allows companies “to identify potential customers for the products that they offer, and then market to them,” according to their website . Still, they admit that “creditors – including mortgage companies – are taking advantage” of this law. The lenders who exploit this law by routinely badgering consumers with unwanted “hard sell” telemarketing calls and mail pieces are the main reason why opposition to this practice has swelled.

Incredibly, opponents of trigger leads have had little legal success. While, they agree that competition is good, they feel that the consumer should be the one to choose which competitors to contact. Many state legislatures and consumer advocacy groups also take issue with the complete lack of privacy a consumer has after applying for a loan. They also claim that the trust built up between a consumer and their bank is undercut by trigger leads because it’s their bank that pulled the credit that triggered all of the unwanted offers.

Furthermore, some state legislatures have sided with mortgage companies who argue that trigger lead generation is simply an unfair business practice. For example, Minnesota passed a law in 2007 that basically banned the use of trigger leads altogether. However, in 2009, the Second Circuit Court of Appeals ruled against Minnesota’s law. The decision states that the credit bureaus who released trigger leads to a mortgage company’s competition, did not commit fraud. In other words, the credit bureaus can legally charge a lender for a credit report and then undercut that lender by selling their customer’s information to its competition.

After several court decisions and with the FTC’s position clearly defined, it appears that trigger leads are here to stay for the foreseeable future. Opponents, however, will continue to push for change as long as certain lenders continue to abuse trigger leads and prey on unknowing consumers.