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Another Class Action Filed Against Wells Fargo

Thursday, January 04, 2018

The hits keep on coming insofar as accusations of unethical and, likely, illegal behavior that went on at Wells Fargo. A class action lawsuit has been filed that potentially may involve hundreds of thousands of customers who were given auto insurance policies by the giant financial institution that they did not want or need, often without their knowledge, along with auto loans, according to Bloomberg.

Apparently, Wells Fargo either did not check or ignored the fact that customers who took out auto loans already had car insurance. The company tacked on collateral protection insurance policies to the auto loan bills. As many as 500,000 customers were forced to pay the premiums for these insurance policies even though they already carried their own policies. Moreover, 250,000 customers were driven into default for failure to pay premiums on policies they were not aware they had. Almost 25,000 people had their cars repossessed for failure to pay for the bogus policies.

The lawsuit claims that Wells Fargo received kickbacks from the insurance carrier, National General Holdings Corp. The insurance carrier is not named in the lawsuit.

Wells Fargo is scrambling to make things right, pledging to pay as much as $80 million to affected customers as well as extra money to those who lost their vehicles as "an expression of regret." However, aside from monetary losses, the affected customers have likely taken a hit on their credit ratings that will be difficult to recover from and will have long-lasting deleterious effects on their finances. Wells Fargo may be paying out a lot more than $80 million.

The car insurance scandal comes on top of a separate class action brought by outraged customers who had checking and credit card accounts opened in their name without their knowledge or permission.

For more information contact us.



Consumer Financial Protection Bureau Introduces Rule to Help Consumers File Class Action Lawsuits

Thursday, December 07, 2017

Class action lawsuits are an important way consumers can protect themselves from big businesses and large corporations taking advantage of them. The amount awarded to each individual taking part in a class action lawsuit usually isn't that much. However, it forces corporations to think before they act and acts as a strong deterrent against unfair business practices.

Without class action lawsuits, the average consumer would not have the resources to go against a large corporation with a huge budget and an army of lawyers. The corporation would always have the upper hand.

In early July, the Consumer Financial Protection Bureau (CFPB) passed a rule that would prevent financial firms from including clauses in their contracts that would force consumers to waive their rights to join in a class action lawsuit should anything go wrong.

Financial firms, such as banks, would often hide language in their contracts that would prohibit consumers from banding together with others in a class action lawsuit. Instead, consumers would be forced to arbitrate directly with the bank.

As mentioned, this would place consumers in a tight spot, as large firms would always have the upper hand. Consumers would not be able to get the compensation they deserve. The rule prevented firms from including this condition in their contracts.

Unfortunately, in late July, the House introduced a bill that would strike down this rule. The bill passed; Democrats opposed the bill, saying that it would harm consumers by preventing them from filing class action lawsuits against firms who use unfair business practices. One Republican voted against the bill as well. The bill now must pass the Senate and go before the President. 

For help with class action lawsuits against any big business that wronged you, contact us today!



New Rule Makes Class Actions against Banks and Other Financial Institutions Easier

Thursday, November 02, 2017

Fortune Magazine notes that the Consumer Financial Protection Bureau has issued a new rule that will make it easier to launch class-action suits against banks and other financial institutions that issue credit cards. The new rule prohibits credit card issuers from including arbitration clauses in consumer contracts. The effect of these clauses was that consumers who believed they had been wronged by a bank or other financial institution would have to submit to an arbitration process rather than start or join in a class action. Most people who believed that they had been ripped off by a credit card company do not bother to go through the cumbersome process.

One extreme example of how a bank can abuse its customers was a practice followed by Wells Fargo that involved setting up accounts and charging fees to customers who did not ask for them or need them. In some cases, peoples’ credit ratings were severely impacted. Under pressure from Congress and the regulators, Wells Fargo eventually agreed to stop the practice and pay out $142 million in a class-action settlement.

The new rule means that all banks and other institutions will be subject to class actions when they decide to misbehave. In the old system, they might have to pay a few hundred here and a few thousand there to consumers who bothered with the arbitration process. Now, a class action of hundreds or even thousands of outraged customers would have the potential to cost credit card issuers dearly. The prospect may provide an incentive for these institutions not to be abusive. 

For more information contact us.



Supreme Court Ruling Could Make Some Class Actions More Difficult

Thursday, September 14, 2017

According to a recent article in the Washington Post, the Supreme Court has made a ruling that will tighten the rules on filing class action lawsuits. The case involved a civil action brought against Bristol-Myers Squibb that was brought by hundreds of plaintiff who claim that they were damaged by a blood thinner medication called Plavix. They claim that the company misrepresented the danger of strokes for those taking the drug. The suit was filed in a court in California, which proved to be a sticking point for eight out of the nine justices.

The Supreme Court ruled that the out-of-state plaintiffs had failed to prove that a connection existed between their alleged injuries and Bristol-Myers Squibb in California, in essence dismissing almost 600 out-of-state plaintiffs who live outside the state. Eighty-nine plaintiffs who live in California remain a party to the class action.

The reasoning behind the ruling is that none of the out-of-state plaintiffs bought, ingested, or were allegedly harmed by Plavix in California. Therefore a California state court does not have jurisdiction to rule on their cases. The plaintiffs will have to sue the company in their states of residence.

Justice Sonia Sotomayor provided the sole dissent to the ruling. She suggested that the Supreme Court’s decision will make it more difficult for a nationwide class action to be put together in a particular state court. As a result, lawsuits will have to be conducted piecemeal. The ruling leaves open two questions. What kind of connection has to exist between the claim and the place the class action is filed? Can a class action be filed in a court with jurisdiction over every member of the class?

For more information contact us.



Two Class Actions Filed in the Wake of the Fyre Festival Disaster

Thursday, June 08, 2017

The organizers of the now infamous Fyre Festival, which promised the luxury cultural event of the decade for the steep price of up to $100,000 each but instead turned into a disaster that closed on the first day, has attracted not one but two class action lawsuits.

The first class action is being filed in the Central District of California against concert organizers Ja Rule and Billy McFarland as well as FyreMedia. The suit alleges that lack of food, water, and adequate medical care placed the festival attendees in danger, stranding them on a remote Bahamian island. The suit also notes that participants were encouraged to upload money to digital wristbands, with the result that they had no cash for taxis and other services.

second class action was filed in Los Angeles claiming that the organizers of the festivals committed fraud by conducting a social media campaign with celebrity “influencers” that claimed the experience would be luxurious, with yachts and supermodels partying on the beach. The reality of the festival, which by all accounts consisted of all the worst aspects of a state of nature, was different than advertised.

The plaintiffs in the two class actions are going to have to prove that the organizers of the Fyre Festival deliberately misled the attendees about the experience that was in store for them. The defendants will claim that they were naïve about the scope of the event they proposed to put on and were so overwhelmed that they had no control over the disaster that resulted.

The festival organizers, by the way, are attempting to squash criticism of the festival on social media, claiming that not only it false, but it has the likelihood of inciting “violence, rioting, or civil unrest.” Sending cease and desist orders against aggrieved festival goers has every potential of backfiring, though.

For more information contact us.




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