Nationwide Biweekly Administration, Inc., Loan Payment Administration LLC, and the company’s owner, Daniel Lipsky, are being sued by the Consumer Financial Protection Bureau (CFPB) in federal district court. The CFPB claims that Nationwide falsely advertises the interest savings consumers will achieve through a biweekly mortgage payment program called the “Interest Minimizer” and deceives consumers about the price of the program. The Bureau’s complaint is not a finding or ruling that the defendants have broken the law.
Program participants paid $49 million in fees for the misleading mortgage program between 2009 and 2014. The CFPB hopes to gain compensation for harmed participants, a civil penalty, and an injunction against the companies and their owner.
“These companies and their owner, Daniel Lipsky, took advantage of consumers with false promises of savings on their mortgage,” said Richard Cordray, CFPB Director. “Homeowners deserve accurate information in the financial marketplace. Today we are taking action to end these illegal and deceptive practices, and to hold these companies accountable for their actions.”
Daniel Lipsky serves as the founder, president, and sole owner of Ohio-based Nationwide Biweekly Administration. Nationwide Biweekly Administration is a liaison company that transfers funds from consumers to their mortgage servicers. Loan Payment Administration LLC is a wholly owned subsidiary of Nationwide. Lipsky assumes all managerial responsibility for both companies.
The “Interest Minimizer” program that’s currently under fire works as follows: when a consumer enrolls they are expected to send Nationwide half of their monthly mortgage payment every two weeks. This will allow them to make one extra mortgage payment every year. The company charges participants an initial setup fee of $995 and charges participants between $84 and $101 in payment processing fees for each year they stay enrolled. Nationwide promised consumers that the “Interest Minimizer” would save money with language such as “Am I guaranteed to save money? Yes!” Other documents contained statements like “soon you will be . . . saving thousands of dollars in unnecessary payments.”
Through this program the CFPB alleges that the defendants collected $49 million in setup fees between 2011 and 2014. In their suite the CFPB claims that the defendants are aware that consumers will pay more in fees than they save in interest for the first several years in the program. The CFPB alleges that these practices violate the Telemarketing Sales Rule and the Consumer Financial Protection Act’s prohibition against unfair, deceptive, or abusive acts or practices.
To view more information about the complaint visit: ConsumerFinance.gov.