New CFPB Consent Order with NewDay Financial

They’re at it again!

This week the CFPB announced a Consent Order with NewDay Financial for alleged RESPA violations and deceptive practices due to NewDay’s marketing and lead buying activities. The CFPB found that NewDay entered into a marketing arrangement with a veterans’ organization – paying a monthly licensing fee and lead generation fees. As part of the marketing agreement, the veterans’ organization named NewDay as its “exclusive lender” and endorsed NewDay in NewDay’s direct mail solicitations to its members.

The CPFB found that the direct mail containing a recommendation, along with other telephone and web-based referral activities, constituted a referral of settlement service business. Thus, NewDay’s payments to the veterans’ organization constituted illegal kickbacks in violation of RESPA. Additionally, the CFPB found that the failure to disclose the financial relationship between NewDay and the veterans’ organization while touting other reasons for its exclusive lender designation was a deceptive act or practice in violation of the Dodd-Frank Act.

The CFPB assessed a $2 million penalty and, among other things, prohibited NewDay from entering into any business relationships that would involve third party endorsements inconsistent with FTC guidance.

The NewDay Consent Order drives home the danger of endorsement deals with referral sources. It also reinforces the importance of disclosing financial arrangements in connection with marketing services even when not strictly required by law.

Please click here for a copy of the CFPB’s press release and the Consent Order, and don’t hesitate to contact Loretta Salzano at (770) 248-2881 or, or Jennifer Dozier at (770) 248-2885 ext. 241 or for help.



Posted in Announcements, Federal Highlights, Hot Topics


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