May 22, 2012; Source: Courthouse News Service

A federal judge has ruled that home loan company First One Lending Corporation may not continue to present itself as affiliated with the Neighborhood Assistance Corporation of America (NACA), which describes itself as “a non-profit, community advocacy and homeownership organization.” NACA was granted a preliminary injunction by U.S. District Judge David Carter. According to the lawsuit filed by NACA, First One has been claiming that it is affiliated with the nonprofit in order to help it “cheat desperate homeowners facing foreclosure.” Neighborhood Assistance further alleges that:

“The purpose of defendants’ numerous misrepresentations, including misrepresentations about First One’s affiliation with NACA, is to gain the confidence of consumers so that defendants can accomplish their goal: taking hard-earned money from vulnerable homeowners who can ill afford to squander the $1,450 to $1,850 typically charged by First One for its purported services…The services that First One purports to provide are essentially worthless…For the $1,450 to $1,850 typically paid, First One does nothing more than submit financial information provided by the homeowner to NACA, which homeowners can do free of charge through NACA’s website. As discussed further below, through its Home Save Program, NACA provides homeowners assistance in assembling and submitting documentation to their mortgage servicers free of charge to the homeowner.”

Or, to put it succinctly, NACA alleges that First One is charging for a service that NACA provides for free while trying to benefit from the NACA name in the process. According to the injunction ruling, First One is now prohibited from “making a number of specific false or misleading statements it currently uses to perpetuate their deceptive scheme.”

We found this passage from Judge Carter’s ruling particularly interesting: “All too frequently, intellectual property disputes between two faceless entities can make the judiciary appear to the public like a mere handmaiden to corporate interests, blessing corporations’ efforts to commodify an ever-growing swath of the nation’s intellectual capital. This case is a refreshing reminder that the policy justification for trademark law is to protect human beings, not corporations.” It’s also a reminder to nonprofits to be on the lookout for those who might seek to use their good name for less than noble purposes. –Mike Keefe-Feldman