Justia Consumer Law Opinion Summaries

In April 2014, two consumers filed a class action against BF Labs, asserting “deceptive and unconscionable business practices” in marketing and selling Bitcoin mining machines. Five months later, the Federal Trade Commission sued BF for unfair and deceptive acts, 15 U.S.C. 45(a). The court stayed pending suits and imposed a receivership. The stay was subsequently lifted. The two consumers were denied leave to intervene in the FTC action. The Eighth Circuit affirmed, agreeing that the interests of the consumers’ proposed class are subsumed within the public interest because the FTC, on behalf of consumers, sought relief for the same “deceptive and unconscionable business practices” alleged by the consumers. The consumers have not made the necessary “strong showing of inadequate representation.” View "Alexander v. Fed. Trade Comm'n" on Justia Law

Wyndham has licensed its brand name to approximately 90 independently owned hotels, each having a system that processes consumer information, including names, addresses, email addresses, telephone numbers, payment card account numbers, expiration dates, and security codes. Wyndham manages the systems and requires the hotels to configure them to its specifications to connect to Wyndham’s network. The FTC filed suit under 15 U.S.C. 45(a), alleging that Wyndham engaged in unfair cybersecurity practices that, unreasonably and unnecessarily exposed consumers’ personal data to unauthorized access and theft. The company: allowed Wyndham-branded hotels to store payment card information in clear readable text and allowed use of easily guessed passwords; failed to use “readily available security measures,” such as firewalls; allowed hotel systems to connect to its network without taking appropriate cybersecurity precautions; and did not follow “proper incident response procedures,” so that hackers used similar methods in three attacks, but has published a privacy policy on its website that overstates its cybersecurity. Hackers stole information for hundreds of thousands of consumers leading to $10.6 million in fraudulent charges. The district court denied Wyndham’s motion to dismiss. On interlocutory appeal, the Third Circuit agreed that the FTC has authority to regulate cybersecurity under the unfairness prong of section 45(a); and, that Wyndham had fair notice its specific practices could fall short of that provision. View "Fed. Trade Comm'n v. Wyndham Worldwide Corp" on Justia Law

Plaintiff filed suit on behalf of himself and a class of similarly situated individuals, alleging that Capital One violated certain provisions of the Federal Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692–1692p, by attempting to collect on defaulted or delinquent credit card accounts that Capital One had acquired from HSBC. The district court dismissed plaintiff's amended complaint. The court concluded that it need look no further than the statutory text to conclude that, under the plain language of the FDCPA, a bank (or any person or entity) does not qualify as a “debt collector” where the bank does not regularly collect or attempt to collect on debts “owed or due another” and where “the collection of any debts” is not “the principal purpose” of the bank’s business, even where the consumer’s debt was in default at the time the bank acquired it. In this case, the amended complaint’s factual matter establishes that Capital One’s collection efforts in this case related only to debts owed to it and that debt collection is only some part of, and not the principal purpose of, Capital One’s business. Therefore, Capital One's activity, as alleged by plaintiff, is not the activity of a “debt collector” under the FDCPA, and plaintiff cannot state a claim under the Act. Accordingly, the court affirmed the judgment. View "Davidson v. Capital One Bank (USA), N.A." on Justia Law

Plaintiff filed claims individually and on behalf of three putative classes against Defendant seeking damages and injunctive relief under the Telephone Consumer Protection Act. Prior to the parties’ agreed-upon deadline for the class certification motion that Plaintiff announced it would pursue, Defendant tendered to Plaintiff an offer for judgment under Fed. R. Civ. P. 68. Four days after receiving the offer, Plaintiff moved for class certification. The unaccepted offer was subsequently withdrawn due to Plaintiff’s failure to respond to the offer. Thereafter, Defendant moved to dismiss for lack of matter jurisdiction, arguing that its unaccepted and withdrawn Rule 68 offer resolved any case or controversy between the parties, thereby mooting Plaintiff’s claims. The district court denied the motion to dismiss. The First Circuit affirmed, holding that a rejected and withdrawn offer of settlement of the named plaintiff’s individual claims in a putative class action made before the named plaintiff moves to certify a class does not moot the named plaintiff’s claims and divest the court of subject matter jurisdiction. View "Bais Yaakov of Spring Valley v. ACT, Inc." on Justia Law

The Telephone Consumer Protection Act prohibits companies from making automated calls to a person’s cellphone without that person’s prior express consent, 47 U.S.C. 227(b)(1)(A)(iii). Hill claims he received more than 100 prohibited phone calls from his creditor, Homeward, in connection to a debt he owed. Hill had given the company his cell number and knew that this number would be used if Homeward needed to reach him about his mortgage. He also listed the number on a loan modification document. While behind on his payments, Hill told Homeward not to call him at work anymore, instructing Homeward to call his cellphone instead. He also provided express written consent for Homeward to call his cellphone. The district court rejected Hills’s claims under the Act. The Sixth Circuit affirmed. A person gives his “prior express consent” when he gives his creditor his cellphone number in connection with a debt he owes. View "Hill v. Homeward Residential, Inc." on Justia Law

Plaintiff filed a putative class action against DCI, alleging that DCI violated the Telephone Communications Practice Act, 47 U.S.C. 227, by sending plaintiff two text messages. The court concluded that plaintiff gave his prior express consent to be contacted by voluntarily providing his cell phone number to DCI. Accordingly, the court affirmed the district court's dismissal of plaintiff's claims because plaintiff’s complaint alleges, on its face, facts that demonstrate prior express consent. View "Murphy v. DCI Biologicals Orlando, LLC" on Justia Law

Rocio Trujillo's home loan was secured by a deed of trust encumbering the home. She defaulted, and Northwest Trustee Services Inc. (NWTS), the successor trustee, sent a notice of default and scheduled a trustee's sale of her property. NWTS had a beneficiary declaration from Wells Fargo Bank. RCW 61.24.030(7)(a) (part of the Deeds of Trust Act) required that a trustee not initiate such a nonjudicial foreclosure without "proof that the beneficiary [of the deed of trust] is the owner of any promissory note ... secured by the deed of trust," and must include "[a] declaration by the beneficiary made under the penalty of perjury stating that the beneficiary is the actual holder of the promissory note or other obligation secured by the deed of trust shall be sufficient proof as required under this subsection." NTWS' declaration did not contain that specific statutory language. Instead, it stated under penalty of perjury, "Wells Fargo Bank, NA is the actual holder of the promissory note . . . or has requisite authority under RCW 62A.3-301 to enforce said [note]" (This declaration language differed from the language of RCW 61.24.030(7)(a), by adding the "or" alternative). Following the Washington Supreme Court's decision in "Lyons v. U.S. Bank National Ass 'n," (336 P.3d 1142 (2014)), the Court held in this case that a trustee could not rely on a beneficiary declaration containing such ambiguous alternative language. The Court found that Trujillo alleged facts sufficient to show that NWTS breached the DTA and also to show that that breach could support the elements of a Consumer Protection Act (CPA) claim. However, her allegations did not support a claim for intentional infliction of emotional distress or criminal profiteering. The Court therefore reversed in part and remanded for trial. View "Trujillo v. Nw. Tr. Servs., Inc." on Justia Law

The named plaintiffs purchased Align, Procter & Gamble’s probiotic nutritional supplement, and found that the product did not work as advertised—that it did not promote their digestive health. Plaintiffs filed suit, alleging violations of state unfair or deceptive practices statutes because it has not been proven scientifically that Align promotes digestive health for anyone. The district court certified five single-state classes from California, Illinois, Florida, New Hampshire, and North Carolina under FRCP 23(b)(3) comprised of “[a]ll consumers who purchased Align . . . from March 1, 2009, until the date notice is first provided to the Class.” The Sixth Circuit affirmed class certification. The district court did not abuse its discretion in finding the proposed class to be sufficiently ascertainable; there is significant evidence that Plaintiffs could use traditional models and methods to identify class members. View "Rikos v. Procter & Gamble Co." on Justia Law

Bible defaulted on a loan under the Federal Family Education Loan Program, but entered into a rehabilitation agreement. She remains current on her reduced payments, but a guaranty agency assessed $4,500 in collection costs. Bible’s loan terms were governed by a Stafford Loan Master Promissory Note (MPN), approved by the Department of Education, incorporating the Higher Education Act, and providing for “reasonable collection fees and costs” in default, as defined by regulations promulgated under the Act. Bible sued, alleging breach of contract and violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961, arguing that federal regulations prohibit assessment of collection costs and that the guaranty agency committed mail fraud and wire fraud in assessing collection costs despite its representations that her “current collection cost balance” and “current other charges” were zero. The court dismissed, finding both claims “preempted” by the Higher Education Act, which permits collection costs and that Bible had not shown “a scheme to defraud; commission of an act with intent to defraud; or the use of mails or interstate wires in furtherance of a fraudulent scheme.” The Seventh Circuit reversed. The contract claim does not conflict with federal law. The Secretary of Education interprets the regulations to provide that a guaranty agency may not impose collection costs on a borrower who is in default for the first time and has complied with an alternative repayment agreement. Bible’s RICO claim is not preempted. View "Bible v. United Student Aid Funds, Inc." on Justia Law

The Investigative Consumer Reporting Agencies Act (ICRAA), Civ. Code,1 1786 et seq., and the Consumer Credit Reporting Agencies Act (CCRAA), Civ. Code 1785.1 et seq., regulate agencies that gather information on consumers to provide to employers, landlords, and others for use by those persons in making employment, rental, and other decisions. This appeal involves investigative consumer reports – background checks – made on employees of First by HireRight. Plaintiff filed suit against First alleging violations of the ICRAA and the trial court dismissed the suit after granting First's motion for summary judgment based on the holding of Ortiz v. Lyon Management Group, Inc. In Ortiz, the appellate court held that the ICRAA was unconstitutionally vague as applied to tenant screening reports containing unlawful detainer information because unlawful detainer information relates to both creditworthiness and character. The court disagreed with the analysis in Ortiz, concluding that there is nothing in either the ICRAA or the CCRAA that precludes application of both acts to information that relates to both character and creditworthiness. Therefore, the court concluded that the ICRAA is not unconstitutionally vague as applied to such information and reversed the summary judgment. View "Connor v. First Student, Inc." on Justia Law