New federal restrictions to curb abusive trigger leads should reduce the volume of unwanted solicitations homebuyers receive, with research showing that the marketing practice does little to save consumers money, the Government Accountability Office said in a new report.
Congress last year passed the bipartisan Homebuyers Privacy Protection Act, which restricts credit reporting firms from selling mortgage applicant information to lenders and brokers who then barrage those same consumers with unwanted solicitations. The American Bankers Association supported the bill.
The new law requires the GAO to assess the value of trigger leads for homebuyers. GAO researchers noted that while industry stakeholders said trigger leads encourage homebuyers to comparison shop for loans, and therefore potentially save money, at least one study concluded that only 3.5% of homebuyers obtained a loan through competing offers based on trigger leads. And that small benefit had to be weighed against several negatives associated with the practice, such as high volumes of unwanted solicitations, misleading and deceptive marketing practices, consumer confusion, and exposing homebuyer information to actors who may engage in fraudulent activities.
Still, the GAO noted that the law only went into effect in March of this year, which is not enough time to determine its effectiveness. “If effectively implemented, these restrictions could limit access to trigger leads and reduce the volume of solicitations homebuyers receive while preserving opportunities to comparison shop,” the agency said.
