PACB Letter to PA Attorney General Corbett

November 30, 2005

The Honorable Tom Corbett
Attorney General
Commonwealth of Pennsylvania
Office of Attorney General
Strawberry Square
Harrisburg, PA 17120

RE: Requested Enforcement Against Perpetrators of Deceptive Advertising Practices Who Impersonate Banks

Dear Attorney General Corbett:

This letter is addressed to you by the Pennsylvania Association of Community Bankers (“PACB”) on behalf of our member banking institutions to request enforcement by the Commonwealth of Pennsylvania Office of Attorney General (“PAOAG”) against deceptive insurance sales advertising practices and deceptive mortgage refinance advertising practices by third parties not affiliated with Pennsylvania banking institutions. These practices are harmful to consumers and to Pennsylvania’s banking institutions.

These deceptive sellers of alleged insurance products and alleged mortgage refinance products target mortgage loan customers of banking institutions in Pennsylvania by crafting their direct mail advertising materials to make it appear that they are affiliated with the banks. But they are not affiliated with the banks and they do not have the banks’ permission to use the banks’ name as an endorsement of their companies or product.

The deceptive insurance sales and mortgage refinance practices are potentially harmful to consumers because the direct mailings appear to be endorsed by the banks they know and do business with, thereby potentially drawing the customers into a transaction they otherwise would not pursue. In addition, these deceptive practices are potentially harmful to the banks because of reputation risk to the banks from the customers believing that their banks are selling or endorsing the company and the product, both of which could be illegitimate or a scam, depending on who really is selling the product, their license status, their operational practices, and the availability or non-availability of the product.

A detailed description of the deceptive insurance sales and mortgage refinance practices is provided at pages 1 – 2 of the enclosed memo. Also, samples of letters containing such deceptive practices and that actually have been sent to our banks’ customers are enclosed herein.

We believe that the PAOAG has the authority in the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTP Law”) to enforce against these and any similarly structured or conducted deceptive advertising practices. We believe that the UTP Law was broadly written to allow the PAOAG to enforce against such deceptive practices, and that therefore the UTP Law need not more specifically address such deceptive practices in order for the PAOAG to enforce against the perpetrators who are impersonating Pennsylvania banks and damaging our banks’ reputations. Also, the lack of more specific enumeration in the UTP Law regarding these exact deceptive advertising practices does not prevent the PAOAG from enforcement because the Pennsylvania General Assembly intended to allow the PAOAG to expand its interpretation of what is enforceable, based on the ongoing introduction of deceptive practices by present and future bad actors. Accordingly, PACB respectfully requests that the PAOAG enforce the Pennsylvania UTP Law as a matter of consumer protection against the above-described perpetrators of deceptive insurance sales advertising practices and deceptive mortgage refinance advertising practices.

In the alternative, if the PAOAG does not believe that it presently has the authority from the UTP Law to enforce against perpetrators of such advertising practices, then we request PAOAG support in obtaining legislation to amend the law in order to allow PAOAG enforcement specifically against deceptive insurance sales advertising practices and deceptive. mortgage refinance advertising practices

As previously noted, we have enclosed with this letter a legal memo from PACB’s counsel describing the PAOAG’s present authority to enforce the UTP Law against such deceptive advertising practices. Attached to the legal memo is a draft statutory amendment to the UTP Law that would allow for enforcement specifically against the deceptive advertising practices described above.

Finally, PACB requests a meeting with you and your staff experts in this area to discuss the entire deceptive insurance sales advertising practices and deceptive mortgage refinance advertising practices issue. I am copying the Honorable A. William Schenck and the Honorable Diane Koken on this letter so that they are made aware of the situation and can consider enforcement as well. Thank you for your time and attention to this request. We hope to hear from you soon.

Sincerely,

Ronald H. Frey
Chairman, Legislative Committee
Pennsylvania Association of Community Bankers

Enclosures

cc: The Honorable A. William Schenck
Secretary of Banking
Pennsylvania Department of Banking

The Honorable Diane Koken
Commissioner of Insurance
Pennsylvania Insurance Department

PACB Executive and Legislative Committees (w/o enclosures)