Remember that misleading mortgage loan letter that an 'Ewa Beach woman got? Turns out that kind of letter is now illegal in Hawai'i.

That's according to Nick Griffin, state Commissioner of the Division of Financial Institutions. He said the Hawaii Bankers Association and other financial institutions pushed for the new law because "people were using the names of the local banks in a way that was causing the customers to worry."

The Legislature passed the bill earlier this year, HB 2254 (Act 51), and Gov. Linda Lingle signed it into law on April 30, allowing it to take effect immediately.

Specifically, the new law prohibits the "use of the name or trademark of a financial institution or its affiliates or subsidiaries when marketing or soliciting existing or prospective customers if such marketing materials are used without written permission and in a manner that would lead a reasonable person to believe that the material or solicitation originated from a financial institution or its affiliates or subsidiaries."

Anyone caught violating this statute can face a civil fine of up to $10,000 for each violation.

Griffin said the problem was becoming more prevalent. "It was annoying before, now it's illegal," he said.

Central Pacific Bank's Roy Amemiya testified on behalf of the Hawaii Bankers Association. While existing contract law is intended to stop such deceptive practices, Amemiya said proving such a case was difficult.

He hopes that the new fine will help deter these practices.

"With increasing frequency, out-of-state lenders are sending direct mail solicitations for refinance opportunities that prominently list the existing lender in a manner that the recipient is led to erroneously believe that their lender is sending an important notice," Amemiya said.

As our reader mentioned last week, the letters include such phrases as: "Time Sensitive Materials" and "Payment Reduction Notice" that grab the attention.

Griffin suggested our 'Ewa Beach reader contact his office to file a complaint. Consumers can go to www.hawaii.gov/dcca/dfi to find the form, fill it out and mail it in with a signature.

If you get a letter like that, Griffin suggests you save it and the envelope it came in and make a complaint. If companies are fined for this, Griffin, Amemiya and the others believe it may discourage such deceptive practices — at least in Hawai'i.

The letter alarmed the reader because it included her mortgage company's name and suggested that she convert her current mortgage loan to a new loan. She first thought she was being required to change, which distressed her, especially in light of all the mortgage crisis news.

Griffin — who is pretty financially savvy by profession and training — said he's done a double-take when he's received similar letters. "You immediately react to it," he said.

He acknowledged that it may be difficult to track down these Mainland companies but wants consumers to help by reporting the letters.

"We have to start somewhere," Griffin said.

Are You Buying This? is a weekly consumer column. Curious about consumer issues or have a tip to share? Reach Robbie Dingeman at 535-2429 or rdingeman@honoluluadvertiser.com.

Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com or 535-2429.