Consumer Fraud/Consumer Protection

Chicago Federal District Court Strikes Down Mandatory Arbitration Clause

October 28, 2008 | Peter S. Lubin and Patrick Austermuehle

A consumer fraud case here in Chicago met an interesting end in late September. In Trujillo v. Apple Computer, No. 07 C 4946, 2008 WL 4368937 (N.D.Ill., Sept. 22, 2008) lead plaintiff Jose Trujillo filed a proposed class action against Apple and AT&T Mobility, the iPhone’s service provider. Trujillo contended that Apple and AT&T did not disclose a de facto service fee of $79 plus shipping for the iPhone’s battery, which must be replaced after 300 charges. That claim failed when the U.S. District Court for the Northern District of Illinois granted summary judgment to Apple and AT&T on Sept. 23 on the merits of Trujillo’s claims. However, as Chicago, Naperville and Oak Brook consumer rights and consumer fraud attorneys, we are very interested in a decision from the same court on the day before handing a victory to consumers. The court decided to not compel the mandatory binding arbitration required in Trujillo’s contract with AT&T, finding that contract procedurally unconscionable under Illinois state law.

According to court documents, AT&T was the only wireless phone carrier for the iPhone when Trujillo purchased the phone in 2007. (Without a service provider, the iPhone’s telephone function will not work.) Trujillo activated a service plan with AT&T online, through Apple’s iTunes software, which directs the user to AT&T’s Web site. In order to sign up, the user must click a box indicating that he or she has read and agrees to AT&T’s service agreement. The service agreement is many pages, and in fact, displays as multiple separate pages on AT&T’s Web site. If the user does not check the box indicating that he or she has read this agreement, that user cannot sign up and will not have access to all of the iPhone’s functions.

In court papers filed earlier in the case, AT&T argued that Trujillo had the opportunity to read the service agreement when he signed up for service through iTunes. It also said he had access to the service agreement before this, in two separate ways: in paper booklets at the Apple store and online, on the AT&T Wireless Web site. But in later supplementary papers, it admitted that neither of those statements was true. The paper booklets, it turned out, were not available in the Apple store, though they may have been available in an AT&T store that Trujillo later visited to have a credit check done. The court’s opinion also noted that a footnote in the new papers said the applicable terms of service were not available online after all, though an obsolete version was available through the Web site’s search function. The true terms of service were available when Trujillo signed up through iTunes, it said, but in a small window, with the language relevant to arbitration about two-thirds of the way through.

Class Certification Allowed Even in Cases With Small Damages

October 27, 2008 | Peter S. Lubin and Patrick Austermuehle

Chicago and Oak Brook-based Lubin Austermuehle has recently been working on a proposed class action consumer protection case with national reach, in tandem with colleagues in Maryland. Our case alleges violations of the Fair Credit Reporting Act, a federal law regulating when and how credit reporting agencies may provide information about consumers to third parties like marketing companies. The FCRA requires that credit agencies may only give out consumers’ information if they have written permission or to companies that will extend a “firm offer of credit” to the consumers.

Our proposed lead plaintiff received a flyer offering him an automotive loan from a company that turned out to allegedly have nothing to do with the offer. That is, there was no firm offer of credit, in violation of the FCRA. It’s important that our plaintiff suffered no actual financial damage due to this privacy violation, fortunately. However, under the FCRA, he doesn’t need to if the violation of the law was “willful.” Instead, he may sue for “statutory damages,” an amount of money set by law, as well as the cost of attorneys’ representation and any punitive damages the court decides to impose to punish illegal or very unethical behavior by the defendant.

The statutory damages authorized by the FCRA are very small by the standards of modern litigation — $100 to $1,000 per person. In fact, this amount is so small that it might discourage both plaintiffs and their lawyers from pursuing a case, given the small reward. However, a proposed class action changes that landscape dramatically. In a class action, plaintiffs with the same complaint share the same lawyers, in essence pooling their resources. In doing so, they also pool the money they stand to win, from which the lawyers are paid. This allows them to move forward with a claim they might otherwise have had to abandon — giving them greater access to justice.

Protect Yourself from Abusive Bill Collectors With the Fair Debt Collection Practices Act

October 14, 2008 | Peter S. Lubin and Patrick Austermuehle

We have watched with dismay as report after report rolls in with bad financial news. Just like other Americans, many individuals and families here in the Chicago area are having more trouble making ends meet right now and may be at risk of losing their homes. Because our consumer rights and debt collection abuse prevention lawyers handle consumer litigation in Chicago, Oak Brook, Naperville and other parts of Illinois, we are particularly concerned about unfair and abusive practices by bill collectors, who many people may be hearing from more and more these days. Many consumers don’t realize it, but we are actually protected under federal law from some of the worst excesses of collection agencies by the Fair Debt Collection Practices Act.

The FDCPA prohibits abusive and deceptive conduct by companies that collect debts. This covers a wide variety of practices, including misleading statements and outright lies, threats, abusive or foul language, attempts to embarrass the consumer publicly, bypassing the consumer’s lawyer and tacking on fees or interest the consumer never agreed to. Under the law, debt collectors may not harass you with repeated unnecessary phone calls, call you names, use a raised voice or curse words, or call you at work after you’ve explained in writing that your employer does not allow it. If they threaten lawsuits, wage garnishments or other legal actions, those actions must be possible and they must follow through.

In addition, the law requires debt collectors to follow certain rules, including:

Fallen Investment Bank Socked With Fair Debt Collection Practices Lawsuit

October 13, 2008 | Peter S. Lubin and Patrick Austermuehle

Given all of the more recent high-profile financial failures, it might be easy to forget the fall of Bear Stearns, the first investment bank to go down in our current economic downturn. But we were interested to read recently that the firm recently settled charges that it violated the Fair Debt Collection Practices Act, a federal law our Chicago, Naperville and Oak Brook debt collection abuse prevention lawyers work with often in our Chicago consumer rights litigation practice. According to the Chicago Tribune, Bear Stearns and its mortgage debt collection subsidiary, EMC Mortgage, settled multiple FDCPA charges with the Federal Trade Commission for $28 million in September, and also agreed to change its loan servicing policies.

As with so much other economic news in 2008, the problem started with subprime and other non-standard mortgages. Bear Stearns was heavily invested in these (by buying them from the original lenders), a choice that is largely blamed for its failure. EMC serviced those mortgages, and according to the FTC, committed multiple violations of the FDCPA in its dealings with mortgage holders. The FTC complaint charged EMC with failing to check into the information provided by the original lenders on the mortgages, which led to incorrect charges and incorrect reports to credit bureaus that hurt the homeowners’ credit. EMC was also charged with:

• Charging fees homeowners never authorized, including a $500 fee for “loan modification”

Our Chicago, Aurora and Joliet Class Action and Consumer Rights Attorneys Can File Suit to End Debt Collector Abuse

October 12, 2008 | Peter S. Lubin and Patrick Austermuehle

With our economy on the scids, debt collection abuse is on the rise. You can contact our Chicago area debt collection abuse prevention attorneys for a free consultation to advise you if you can stop debt collection abuse by filing suit. You can click here to see a copy of the Fair Debt Collection Practices Act, the federal law which prohibits debt collection abuse.

The FTC offers the following advice on preventing Debt Collector Harassment:

Fair Debt Collection

Marketing Fraud Costs Pharmaceutical Maker $62 Million for Settlement

October 10, 2008 | Peter S. Lubin and Patrick Austermuehle

Illinois Attorney General Lisa Madigan and 32 other states’ attorneys general scored a victory for consumers Oct. 7 when they reached a $62 million settlement with drug maker Eli Lilly over claims of unfair and deceptive marketing. The Associated Press reported that states sued Lilly for marketing its drug Zyprexa for off-label uses not approved by the Food and Drug Administration. They also alleged that Lilly failed to fully disclose the drug’s side effects to doctors and patients. In announcing the settlement, Madigan’s office reported that Illinois will receive about $3.6 million.

Zyprexa (olanzapine) is an antipsychotic approved for patients with schizophrenia and manic depression. The FDA gives doctors the discretion to prescribe drugs for off-label uses, but requires that drug makers market their drugs only for the approved uses. According to the multi-state lawsuit, Lilly actively promoted the drug’s use for dementia in elderly patients, in children and in high doses, even though none of those uses are FDA-approved. In fact, one side effect of Zyprexa is an increased risk of death in elderly patients with dementia — the drug’s label carries a “black box” warning, the strongest warning possible in the U.S. Other side effects of Zyprexa include weight gain, diabetes, hyperglycemia and cardiovascular problems. Some of these side effects are the subjects of separate consumer protection lawsuits around the United States.

As consumer lawyers who handle health care fraud and deceptive advertising cases throughout the Chicago area, we are extremely interested in this consumer protection litigation. The dollar amount in this case is very large — though it could be larger, especially if claims about Zyprexa’s side effects are true. But more important even than the money are the non-financial terms of the settlement. Eli Lilly agreed to stop all off-label promotions for Zyprexa and to give its medical staff — not its marketing department — the final decision on all medical references and letters about the drug. It also cannot give samples of the drug to doctors and other medical practitioners who do not handle schizophrenia or manic depression.

Chicago Consumer Attorneys From Lubin Austermuehle Win Precedent in Missouri Class Action

July 9, 2008 | Peter S. Lubin and Patrick Austermuehle

Our firm is proud to announce that name partner Peter Lubin won a victory for class-action plaintiffs in Missouri with Dale v. DaimlerChrysler Corp., 204 S.W.3d 151, 172 (Mo. App. 2006). Plaintiff Kevin Dale originally sued the auto manufacturer under the federal Magnuson-Moss Warranty Act, (MMWA) over a breach of warranty for defective power window regulators (the mechanism that raises and lowers the window) on Dodge Durangos. Despite eight repair attempts, Dale contended, Dodge had failed to repair or replace the defective power window regulator in his truck.

Dale’s suit asked the Circuit Court of Boone County, Missouri to certify a class of Dodge Durango owners who’d had similar problems. The court certified two classes: One national class that relied on the MMWA, and one limited to Durango owners in the State of Missouri, which relied on the Missouri Merchandising Practices Act (MMPA). DaimlerChrysler appealed the class certifications on multiple grounds under Missouri’s Rule 52.08, including numerosity and common-question-predominate requirements of the proposed class; typicality and adequacy of Dale as lead plaintiff; the implied definiteness of the class definition; and the superiority of a class action over other forms of adjudication.

The Missouri Court of Appeals for the Western District rejected all of these arguments, finding that the record was sufficient and DaimlerChrysler’s arguments insufficient to prove any of their claims. Two, however, were of interest to class-action attorneys. One had to do with Dale’s adequacy as a class plaintiff. Because Dale’s wife had worked for one of the law firms representing the class, defendants contended that he had an interest in maximizing attorney fees, a conflict of interests that should disqualify him. The judges disagreed, saying Dale’s wife didn’t necessarily stand to gain any extra pay from the case, and they declined to bar lead plaintiffs with such an indirect connection to the class attorneys. In fact, they wrote, “we believe that it should be a matter of discretion with the trial court, decided on a case-by-case basis.”

Our Chicago Consumer Attorneys Can Assist in Recovering Money Damages for Consumer Frauds– Federal Reserve Website Assists in Reporting Consumer Fraud to the Right Agency

May 31, 2008 | Peter S. Lubin and Patrick Austermuehle

Are you a consumer with questions or concerns related to potential fraud and do not know what government agency to contact? The Chicago Federal Reserve Bank provides a web page that allows you to link to government agencies that may help you. The web page has links to federal and state banking agencies, federal and state securities agencies, and state insurance agencies located in Illinois, Indiana, Iowa, Michigan, and Wisconsin. You can also link to various useful financial , insurance, and banking tools, and to lists of financial services regulators, and consumer complaint filing information. Click here to link to the Chicago Federal Reserve Fraud web page.

If you need legal assistance in pursuing a civil lawsuit because government regulators cannot help you in recovering money lost due to fraud, our private sector lawyers can assist you by clicking here to contact us.

How to Avoid RV and Auto-Fraud — Chicago Consumer Attorneys Who Can File Suit to Recover Damages for RV and Auto-Fraud and Lemon Automobiles

May 29, 2008 | Peter S. Lubin and Patrick Austermuehle

Our law firm helps Chicago area consumers who are victims of auto and RV fraud or who purchased vechicles that are lemons to pursue lawsuits to regain their lost investment. For more information about our Nationwide Consumer Rights lawyers click here.

There are many practical ways to protect yourself from auto and RV fraud or from purchasing a lemon vechicle.

The National Association of Consumer Advocates provides the following well thought out advice on how to avoid auto fraud:

Chicago Consumer Attorneys Who Assist in Stopping Debt Collector Abuse

May 29, 2008 | Peter S. Lubin and Patrick Austermuehle

The National Association of Consumer Advocates provides the following advice about Debt Collector Abuse:

Debt Collection Abuse (FDCPA)

In spite of federal and state legislation, debt collectors continue to abuse consumers in order to unfairly pressure them into paying debts. These abuse tactics are often intended to scare or intimidate consumers, sometime with threats of violence or arrest. Other debt collectors will try to pile on illegal interest or fees to make the debt seem larger that it actually is. In some instances, these debts are time-barred, discharged in bankruptcy, or not owed for other reasons.