The Federal Trade Commission (FTC) entered into a consent agreement with a website that compares student loans and other financial products.  The FTC alleges that while the Lender Comparison Website represented its product as an “objective” tool, the Lender Comparison Website was receiving direct compensation from lenders to emphasize some lenders over others, making the Lender Comparison Website’s acts deceptive under section 5(a) of the FTC Act.

The Lender Comparison Website promotes itself as a resource for consumers to find content on different financial products, notably student loans.  Consumers are shown rate tables, ratings, and star reviews that help them comparison-shop different lenders and products.  The consent agreement alleges that the Lender Comparison Website represented its product as an “honest,” and “unbiased” way for consumers to compare different offers for student loans and other products. 

However, the Lender Comparison Website received payments from lenders to improve their rankings, star ratings and positions on rate tables.  The FTC complaint documents numerous examples of the Lender Comparison Website’s co-founders and officers asking lenders to pay more for higher placement on the Lender Comparison Website’s ranking tables. In addition, the complaint documents that ratings for the Lender Comparison Website on third-party review platforms are disproportionately written by the Lender Comparison Website employees, or their family, friends and associates.

The settlement order requires that the Lender Comparison Website no longer make misrepresentations regarding the objectivity of its service, and that any endorsement of its service be a truthful endorsement by an actual or impartial user.  Furthermore, the order requires that the Lender Comparison Website proactively disclose “the influence of compensation” on any content they put forth and that any endorser of the product disclose any “material connection between the endorser and [the Lender Comparison Website].”  The Lender Comparison Website is required to pay the FTC $350,000 in monetary relief.

The implications for similar websites that rank and market consumer financial products and services are clear.  Such “pay-to-play” companies should clearly disclose the compensation they receive from lenders and avoid representing their rankings as neutral.  Further, financial services companies marketing their products with such companies may consider including compliance procedures ensuring these companies are disclosing any compensation from them.  Finally, the FTC is also clearly signaling that companies should ensure that public reviews of their products are truly independent and objective.

Garris Horn frequently provides guidance on FTC and other federal government regulatory matters, including claims of unfair, deceptive, or abusive practices.  For more information on this settlement, or to discuss related matters, contact Troy Garris directly at 301-461-8952 or troy@garrishorn.com.