The Consumer Financial Protection Bureau (CFPB) recently entered into a consent order against International Land Consultants, Inc. (ILC), a real estate development company, and four of its employees involved in the marketing, development and sale of real property in Tennessee. The enforcement action was based upon violations of the Interstate Land Sales Full Disclosure Act, 15 U.S.C. §§ 1701 et seq. (ILSA), as a result of misrepresentations made by ILC in reports distributed to prospective and actual property purchasers.
ILSA, a federal law passed in the late 1960s, regulates the lease or sale of subdivided land through the use of interstate commerce. ILSA’s scope is expansive and includes advertising through paper and internet. ILSA authorizes civil monetary penalties up to $1 million during any one-year period, as well as additional remedies including the right of buyers to revoke contracts. Previously administered under the Department of Housing and Urban Development, ILSA now falls under the CFPB’s jurisdiction under pertinent Dodd-Frank Act provisions. The Dodd-Frank Act further authorizes the CFPB to seek additional penalties for knowing violations of ILSA under its “unfair, deceptive and abusive acts and practices” provision.
The consent order details specific misrepresentations made by ILC in its property reports and marketing materials regarding the ongoing maintenance of roads prior to their acceptance by the county authorities. The consent order does not assess monetary fines in this instance. ILC has agreed to submit a comprehensive compliance plan by June 30, 2015, which shall include engineering reports, steps for addressing required remediation, and a timeline for implementation of the compliance work.
This is not the CFPB’s first known action under ILSA. It filed a notice of charges against a property developer regarding misrepresentations in marketing materials and a failure to comply with ILSA registration and filing requirements in 2013. While amendments effective March 29, 2015, now exempt condominium developers from ILSA, this enforcement action provides another example of the CFPB’s expansive jurisdiction and intent to enforce a wide variety of consumer protection statutes—even those largely unknown.
Click here to read the consent order.