Consumer Advocate Legal Update : Class Action Lawyers & Attorneys : Khorrami Pollard & Abir Law Firm : Mass Torts, Products Liability

Have you been allowed to continue charging to your bank debit card, even though insufficient funds were available in your account? After being able to make a charge with insufficient funds, have you found your bank has charged an overdraft fee upwards of $35? Overdraft charges can easily add up to hundreds of dollars without you knowing it!

If you have been INVOLUNTARILY enrolled in overdraft protection services, you may be eligible to seek compensation!

You may also be eligible to seek compensation if you enrolled in overdraft protection services and found the terms of your service to be false, misleading or deceptive.

If you have been the victim of deceptive bank overdraft protection practices, contact us here or by calling 213.596.6530.

This is not an issue of banks applying current debits to your account in reverse order of their value, and not the chronological order in which they were made, this is an instance of banks using deceptive practices to apply overdraft protection to your account.
 

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Kellogg, the nation’s largest cereal maker, recently slapped a label on its kid-friendly Rice Krispies and Cocoa Krispies cereal brands which tout that the product “Now Helps Support your Child’s Immunity.” While it’s true that Kellogg added some vitamin A, B, C and E to their cereal, health care professionals have been extremely critical of the leap Kellogg has made from the addition of certain vitamins to the claim that the product “helps support immunity.” One vocal critic is Kelly Brownell, director of Yale University’s Rudd Center for Food Policy who was quoted as saying “[b]y their logic, you can spray vitamins on a pile of leaves and it will boost immunity.”

Health care professionals aren’t the only consumer advocates who have taken issue with Kellogg’s claims. Shortly after the “immunity claim” plastered boxes hit shelves, , the city of San Francisco wrote a letter to Kellogg and the FDA asking Kellogg to prove its claim. “I am concerned the prominent use of the immunity claims to advertise sugar-laden chocolate cereal like Cocoa Krispies may mislead and deceive the parents of young children” said Dennis Herrera, San Francisco‘s City Attorney.

Following San Francisco’s efforts to demand substantiation of  Kellogg’s  claim, the Attorney General’s office of Oregon made a similar appeal to the company. Keith Dubanevich of the Oregon’s Attorney General’s office offered the following reasoning for seeking substantiation, “[t]he implied claim that if somebody ate Cocoa Krispies it might help them avoid getting swine flu, and given the season, that’s a pretty important claim to be making.”

It is telling that in response to the public pressure, rather than provide scientific data to support its claims, Kellogg has opted to remove the label from all cereal boxes by January 15, 2010. This response not only offers insight to the validity of Kellogg’s claims, but begs the broader questions:  to what degree should we accept manufacturer’s claims at face value, and how often are we, as consumers, unconsciously manipulated by deceitful advertising?

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In October 2009, shortly after TD Banknorth changed its name to TD Bank - "America’s Most Convenient Bank" - there were apparently some major IT glitches that resulted in many customers having difficulties with their direct deposits and viewing real-time account balances. As a result, many customers were charged overdraft fees through no fault of their own. It was at this time, while viewing numerous overdraft fees on their statements, that the public became more aware of a little known banking trick. When there are several current debits to an account, many banks, not just TD Bank, apply the debits in reverse order of their value and not the chronological order that they were posted to the account. Therefore, no matter the order received, the largest current debit is applied to the balance FIRST, then the second largest debit, third largest debit and so forth. This is important because, if for some reason that largest debit makes you go over your balance, you are then charged overdraft fees for every other debit – even if the remainder of the debits would have been covered by your initial balance. (read this customer's complaint.)

For example, on one date this past fall, a TD Bank customer had approximately $2500 in a checking account and had previously scheduled electronic payments in the amounts of $12, $300 and $2700. Additionally, on that day, two checks written for $20 were presented for payment and $200 in cash was withdrawn at an actual bank location. As bank policy is to apply the largest debits first, TD Bank applied the $2700 electronic payment first, thereby overdrafting the account of $2500. This resulted in the first of six $35 overdraft fees totaling $210 - only one of which was actually greater than the balance of $2500 and three of which were actually less than the $35 penalty. However, had TD Bank applied the lesser debits first, the account would only have been overdrawn for one transaction (notwithstanding the questionable banking practice of charging the $35 overdraft fee in the first place - without any consent from the customer to engage in this practice.)

Based on this system of accounting, excessive bank overdraft fee lawsuits have been filed against numerous banks, including Wells Fargo, Bank of America, M&T Bank and Wachovia. The lawsuits allege that these banks have used unethical practices to send bank accounts into overdraft mode. More specifically, the lawsuits allege that the reordering of credits and debits so that customers are forced into unwarranted overdraft fees is outrageous. Further complicating the issues with this practice is that bank customers have never actually requested any type of overdraft protection.

Legislation currently under consideration in Congress would prohibit banks from levying more than one overdraft fee per month or six per year. According to a Bill under consideration in the House, overdraft fees would be subject to the Truth in Lending Act, requiring consumers' permission before enrolling them. Further, it would prohibit rearranging the order in which transactions are posted, which can trigger an overdraft, and it would require fees to be in proportion to the amount overdrawn (i.e. a $5 purchase could not have a $35 fee).

This proposed legislation could save each bank customer hundreds of dollars, and prevent banks from preying on these unsuspecting customers to the tune of millions of dollars each year.

If you have been the victim of these deceptive bank practices, please do not hesitate to contact us.

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Consumers have paid upwards of $100 for cables whose performance is equal to a standard $10 six-foot HDMI cable. Many electronic stores and manufacturers have made claims that these “premium” cables outperform standard cables. However, many well respected third party reviewers, such as cnet.com contend that this isn’t necessarily the case. “Do you really need to spend that much money on a single HDMI cable? Absolutely not – those cables are a rip-off” says CNET. “And despite what salesman and manufacturers might tell you, there’s no meaningful difference between the $10 cable and the $50 cable.”

Cases where consumers have been mislead about the quality of the cables, and extreme up-selling has also been happening more frequently than not. According to engadgethd.com “Upon further inspection, he realized that the difference in picture quality wasn't due to the gold-plating or fancy braiding, but rather the use of composite cables on the non-Monster TV.” And according to gizmodo.com “While Monster cables are of good quality and engineering, when it comes to digital signals, specifically HDMI cables, we know that its a better idea to buy a $5 dollar HDMI cable today, and then when bandwidth requirements go up in future specs of HDMI, just buy another $5 cable then. It's a lot cheaper than $100 HDMI cables from Monster.”

If you have experienced any of these practices, contact us immediately. Practices such as these are misleading to consumers and are leaving them with no choice but to pay premium prices for unnecessary high-end cables.
 

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In a push to beat the new federal regulations, credit card companies across the nation are sending out notices to their customers that their interest rates will be increasing. The Credit Card Accountability, Responsibility and Disclosure Act, passed in May, takes full effect next year. One provision of this act prohibits credit card companies from increasing interest rates on fixed rate cards for reasons other than a cardholder being late 60 days or more on making a payment. To counter that restriction, many credit card companies are now sending out notices to their customers that their interest rates will be increased – often up to 30% - and without any late payments or negative history on the customer’s account. 

These interest rate increases directly contradict Congress’ explicit desire to end deceptive credit card practices. In a letter to the Chairman of the Senate Committee on Banking, Housing and Urban Affairs, Bank of America, pledged not to increase the interest rates of its customers prior to the effective date of the Act. Congress responded quickly, and issued a press release calling on all credit card companies to follow Bank of America’s example. “This Congress has made it clear that abusive credit card practices are no longer acceptable.” Clearly, not all credit card companies have heeded Congress’ request, as the Chairman recently introduced new legislature seeking to freeze rates on existing credit cards until the Act becomes effective. 

Under the Act, a consumer has the right to refuse such an increase, but exercising such a right may negatively impact their credit score. A portion of the Act went into effect in August, 2009, and requires the credit card companies to give 45 days notice of an increased rate, and provides the consumer the right to opt out of the rate increase. The problem with opting out of the interest rate increase, however, is that even though the consumer will be able to pay off the balance at the present interest rate, they are no longer able to use that credit card anymore for purchases or cash advances. This can affect the consumer’s credit score as they now appear to have more debt and less available credit. 

You can see a full discussion of the Credit Card Accountability, Responsibility and Disclosure Act.

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Between the period of October 16, 2009 and October 19, 2009, four separate publication requests were filed in Cohen v. DirecTV. The requests are contained here, here, here and here.

In Cohen, the Second District upheld denial of certification of a UCL class because the proposed class included persons who had not viewed alleged deceptive promotions by DirecTV. The Court reasoned predominance could not be met under circumstances, and in fact, went so far as to state that “we find Tobacco II to be irrelevant because the issue of ‘standing’ simply is not the same thing as the issue of “commonality.”

As discussed at the Bailey Class Action Daily in this previous post, Cohen's analysis conflicts with the California Supreme Court's decision in In Re Tobacco II Cases.

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In recent years, cellular telephone users have been increasingly subjected to a scheme known as “cramming,” which has been described by the Federal Trade Commission as “the placement of unauthorized charges on telephone bills.” Unscrupulous companies use a variety of methods to “cram” charges, such as deceptive promotions of free ringtones, game downloads, games, contests, jokes and sweepstakes bidding to entice consumers to provide their cell phone number so that monthly service fees may be charged to the consumer’s cellular phone bill.

If your cell phone bill has contained a charge for an unauthorized service, then please contact us to discuss your experience.

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On October 5, 2009, the FTC announced approval of final revisions to the guidance it gives to advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act.  The new guidelines, as explained in the official press release, require advertisers to affirmatively disclose when promotional claims regarding a product or service is not typical, and also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media. Perhaps the most significant revision, however, relates to the use of company sponsored research to promote a product or service. This practice has been a favorite tool of drug companies and the tobacco industry who seek to leverage sponsored research to promote the benefits of their products, or create the appearance of a scientific “debate” over risks. Under the new guidelines, the promotional reference to the findings of research sponsored by the company must be disclosed to the consumer.

A more detailed discussion of the New FTC Guidelines is addressed at the Bailey Class Action Daily at the link here.

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In Zaragoza v. Ibarra (2009) 174 Cal.App.4^th  1012, the Court clarified the issues of homeowner liability to workers hired by non-licensed contractors, and addressed the limitations on worker’s compensation as an exclusive remedy in cases dealing with employees in a residential setting.

Homeowner Maria Ibarra engaged Claudio Quiroz, an unlicensed contractor, to construct four room and two bathrooms on her premises. Quiroz hired Eliazar Zaragoza to assist him. Zaragosa was an employee of Taco Bell. Zaragoza was injured on his second day on the job. Zaragoza slipped off a ladder while trying to pull a nail out of the wall. He fell approximately nine feet and injured his knee. He sued Ibarra. The trial court granted Ibarra’s motion for summary judgment and the appellate court affirmed.

The Court held that Zaragoza’s claim qualified as “incidental to the ownership, maintenance or use” of a residential dwelling, despite the fact that the scope of the work comprised an extensive remodel. Zaragoza was classified as a residential employee under Labor Code Section 3351(d). When the worker has worked less than 52 hours in the 90 days prior to the accident, the law is clear that any claim the worker has against the homeowner for the injury is outside the ambit of the worker’s compensation system. Labor Code Section 3351(d). The worker may bring a claim against the homeowner for negligence.

The Court held that the provisions defining who qualified as a residential employee under Labor Code Section 3351(d) must be reconciled with the provisions of Insurance Code Section 11590, which requires that all personal liability policies provide worker’s compensation coverage. The Court further held that Cal-OSHA regulations did not apply to homeowners. Zaragoza could not rely on the doctrine of negligence per se (a violation of a statute) based on alleged Cal-OSHA violations.

Moreover, the Court concluded that as a matter of law there was no triable issue of fact concerning Ibarra’s negligence, since he positioned, adjusted, and climbed the ladder before he fell. There was nothing Ibarra could have done to prevent the accident. Zaragoza’s injury was entirely his own fault, and Ibarra exercised ordinary care under the circumstances.

Homeowners should be weary of non-licensed and day laborers who carry no worker’s compensation insurance. Whether it is a painter, gardener, landscaper, or handyman, ask yourself the question: Does the gardener carry his own liability and Workers' Compensation insurance? Otherwise anything that happens on your property is your responsibility. An insured gardener may charge a bit more, but is worth the peace of mind. Next time you hire anyone to perform services on your property, make sure that person is insured, something not many homeowners think or contemplate but merely roll the dice. Make the individual working on your home produce a copy of his liability insurance certificate, and make sure it is current.

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Many consumers have been faced with "low ink" or "change toner" warnings issued by their printers, even though they may be able to print hundreds of pages more.  Some printers even refuse to complete print jobs until the low ink cartridge is replaced - even though it may still have ink remaining!

If you have been forced to replace your ink or toner cartridge earlier than necessary-- and wasting precious money buying new cartridges--you need to read more about the unneccessary replacement of faulty ink and toner cartridges.

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In March 2007, Caremark Rx, Inc. completed its merger with CVS Corporation. This union has had a significant negative impact on patients’ access to the pharmacy of their choice as Caremark Rx, Inc. has been forcing its insured to get their prescriptions from out-of-state mail order warehouses and away from their local community pharmacist.  In addition, CVS pharmacy benefit managers have steered patients to their own drugstores by raising co-pays for drugs bought elsewhere or by requiring that they be purchased at CVS.  This has particularly been difficult for some patients who have been with the same pharmacy for literally decades. 

Eight members of Congress — four Democrats and four Republicans — have asked the Federal Trade Commission in a letter to reopen its investigation into the 2007 merger, citing concerns about competition and consumer privacy.  In a letter signed by Reps. Anthony Weiner, D-N.Y.; Marion Berry, D-Ark.; John Boozman, R-Ark.; Michael Acuri, D-N.Y.; Mike Rogers, R-Mich.; Walter Jones, R-N.C.; Robert Aderholt, R-Ala.; and Lloyd Doggett, D-Texas, the lawmakers said the merger created opportunities for the company to enrich itself at the expense of competition and consumers. 

Among the company’s practices have been putting consumers on a “maintenance choice” program, under which they can only get their prescriptions by mail or at CVS pharmacies, without their permission; charging lower co-pays to members who fill their prescriptions at CVS pharmacies; misusing information collected by Caremark to find out if customers are using non-CVS pharmacies, and then advising them not to; and co-branding its prescription drug card in a way that falsely suggests it can only be used at CVS pharmacies, the letter said. 

While the FTC is looking into the issues revolving around the merger, privately owned pharmacies continue to lose their patients and long time customers thanks to the company’s practices.  We can assist these pharmacies in protecting their rights against such practices.

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On August 13, 2009, Bank of America announced that it would be ending a requirement that consumer credit card disputes be settled through binding arbitration. This announcement followed the determination by two major arbitration forums, the American Arbitration Association and National Arbitration Forum that they would no longer accept consumer-debt-collection cases.  

Bank of America also announced that the change would cover auto, recreational vehicle and marine loans as well as the credit-card disputes. 

This decision is a major win for consumers. As detailed in my earlier post, arbitration is unfair to the consumers. Big companies prevail in a majority of arbitration cases, to the detriment of the consumer. Bank of America’s decision is a pivotal change in the way that consumer disputes are handled, and may greatly increase the consumer’s ability to challenge big business. 

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For years, companies, including credit card and cell phone companies, have included mandatory arbitration provisions in consumer contracts. However, a recent series of events has put the future of forced arbitration into question.

On July 14, Minnesota Attorney General Lori Swanson sued the National Arbitration Forum (NAF), one of the nation’s largest providers of arbitration services for the credit card industry, for consumer fraud, deceptive trade practices and false advertising. The complaint alleged that the company deceived consumers into thinking it was a neutral arbitrator in debt collection when, in reality, NAF worked behind the scenes with credit card companies and other creditors, such as cell phone providers, to write itself into small-print purchase agreements as the sole arbitrator consumers could use if they had problems with creditors. NAF quickly settled the lawsuit, agreeing not to take accept any new cases.

In the aftermath of the NAF lawsuit, the American Arbitration Association (AAA) has announced that it will also stop participating in consumer-debt-collection disputes until new guidelines are established. Additionally, JPMorgan Chase, one of the nation’s largest credit-card issuers, has announced it will no longer submit disputes to arbitration and is evaluating the inclusion of arbitration provisions in its consumer contracts.

As Ashby Jones wrote in a blog at the Wall Street Journal (7/22), “It’s too soon to say, in all likelihood, but we could be in the early stages of an arbitration revolution.” Consumer advocates are hopeful that the settlement reached between the Minnesota Attorney General and NAF, as well as AAA’s withdrawal from the consumer debt collection disputes, will lead to the end of mandatory arbitration. Consumer attorneys have argued that the recent chain of events shows a need for Congress to pass two bills currently before it, the Arbitration Fairness Act and the Fairness in Nursing Home Arbitration Act, which ban forced arbitration. Consumer attorneys have also responded by filing lawsuits seeking to set aside thousands of arbitration awards and judgments in consumer debt cases.

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