Bankrate Inc. has agreed to pay a former client $3 million to settle allegations the company did little to prevent lenders that advertised on its Web site from engaging in bait-and-switch tactics.
Bankrate officials say they admit no “fault or liability of any kind” in the settlement with American Interbanc LLC, a former — and apparently future — Bankrate customer.
The settlement contains “certain terms and conditions that permit American Interbanc to advertise on Bankrate.com,” Bankrate said in a press release.
Bankrate.com lets consumers compare mortgage rates offered by dozens of lenders. Advertisers on the site pay to have clickable hyperlinks embedded in rate tables that are custom-generated by visitors’ queries.
American Interbanc originally sued several lenders who advertised on Bankrate.com, claiming they engaged in false advertising by not granting loans at the rates promised on the site. Bankrate was named as a defendant in November 2002 after it refused to renew American Interbanc’s contract to advertise on its site. American Interbanc claimed Bankrate did little to address complaints by hundreds of consumers that they were unable to lock in the rates advertised by lenders.
American Interbanc founder Mike Dannelley declined to comment on the terms of the settlement with Bankrate, but told Inman News the company has not dropped its false-advertising claims against other lenders.
Defendants in the case include Novastar Home Mortgage Inc, Loan Emporium, The Credit People Co., BMI Financial Services, and Amerimax Realty Financial.
Bankrate said it racked up $675,000 in legal expenses defending itself from the lawsuit.
“While we believe that we have operated our business in an appropriate manner, we made a pragmatic business decision to settle this lawsuit,” Bankrate CEO Thomas R. Evans said in a statement. “The settlement allows us to contain our exposure and rid ourselves of the distraction and expense of defending the suit.”