Trigger Marketing - it’s legal but is it right? If you want to opt out, here’s how.

A new phenomenon in lending is called “trigger marketing”.  When you ask a lender to pull your credit, your information is then sold to many different lenders.  These lenders then call you to offer you a mortgage or to give you a second opinion.  Your information is sold without your knowledge or approval.  The credit bureaus claim this is legal, but is it right?  Do you want your personal information sold to people you don’t know?  This personal information includes your phone number so they can call you.

You can opt out of this by following the instruction in the article below.

Last update: January 28, 2007 – 7:32 AM

Loan applicants may borrow annoyance
along with the cash
Taking out a loan? You might want opt out of unwanted marketing pitches.
Jackie Crosby

When Martha Ortman and her husband decided to refinance their home last year, they agreed to have a mortgage company pull their credit report. Then came the surprise: Within hours, the Fridley couple had fielded eight calls from mortgage companies pitching them on lower rates, better terms or a faster turnaround. This went on for two weeks. “It was like vultures around a dying animal,” Ortman said. “They smelled blood and were drawn to it.”

Such uninvited pitches come as a shock to borrowers who assume their loan applications are private deals.

In fact, you’ve just become a prized “credit-active” customer in the eyes of hundreds of lenders.

They pay a premium to the three national credit bureaus for your name, address and other financial information — just as you’re ripe for a loan.

The practice is known in the industry as “trigger leads.” It’s legal so long as Equifax, Experian and TransUnion sell the data to lenders who present a “firm” offer of “pre-approved” credit. Trigger leads become illegal if the marketer engages in deceptive or unfair practices, such as pretending to be “taking over your loan” or working with the company that first sought your credit score.

November request still yields calls

Anne Carter of St. Louis Park received dozens of unwanted phone calls and letters after a loan officer requested her credit report in November. The calls still are coming.

“They were very misleading,” said Carter, who works at a mortgage company. “One guy never identified his company and said he just wanted ‘to go over some things with me’ on my application. Another guy tried to sell me on a really bad deal with an option ARM [adjustable-rate mortgage] with negative amortization. That would be terrible. I’m in the industry, so I know what’s out there. ”

While the pitches sometimes can bring competitive rates for borrowers, such aggressive tactics have gotten the attention of some state regulators and consumer advocates.

The Minnesota attorney general’s office doesn’t reveal information on complaints or possible actions, but a spokesman said Attorney General Lori Swanson is aware of the issue. Much of the concern nationwide surrounds the level of personal financial detail given out and the potential for unsavory marketers to misuse it.

In addition to your name, address, phone number and the kind of loan you’re seeking, companies can also purchase “profiles” of consumers in which they have a reasonable estimate of whether you have credit card debt, whether you pay your bills on time or how much you owe on your car or home.

The National Association of Mortgage Brokers and its Minnesota affiliate have stepped up efforts to try to curb or outlaw trigger-lead marketing tactics. They say it’s unethical and immoral for the national credit repositories to undermine their practices by selling information on their clients to their competitors.

“The loopholes in the law are tragically large and need to be fixed,” said Wade Abed, president of the Minnesota Association of Mortgage Brokers. “I personally think citizens are tired of all the telephone calls.”

Experian spokeswoman Susan Henson said consumers deserve to know all their options, especially when a better offer might save thousands of dollars over the life of a loan.

“If a mortgage broker, banker or lender knows that a consumer is shopping for a mortgage loan, that’s when they want to make the offer,” Henson said. “Not three or four weeks after the consumer has made their decision.”

Henson also said that Experian’s trademarked “Prospect Triggers” program, which it markets to mortgage and home-equity lenders, credit card companies, banks, retailers and car lenders, falls well within the bounds of the federal Fair Credit Reporting Act.

Opting out

Competition and more information is indeed good for consumers. And in financial matters, it can pay to shop around. But consumers should be wary of unsolicited calls from trigger leads just as they would be of any other calls they don’t initiate.

Ask for the caller’s name, the company and its location. Get written information on the company and its offer. Call the Better Business Bureau or Minnesota Department of Commerce to check the company’s record. Report deceptive pitches to the Minnesota attorney general’s office.

And if you want to block unwanted solicitations after your credit report has been pulled, you can “opt out” by calling 1-888-567-8688 or go to http://www.optoutprescreen.com/.

Got a tip for Consumer Lookout? Contact Jackie Crosby at lookout@startribune.com or 612-673-LOOK.

©2007 Star Tribune. All rights reserved.