Week Adjourned: 7.16.11

Top Class Actions

From small print to misprint? A consumer fraud class action lawsuit was filed this week against Genesis Financial Solutions, Inc.(GFS), NCO Portfolio Management Inc. and WebBank. What’s the problem?

Allegedly, the Defendants deceptively used an offer for a pre-approved Pearl Card® Gold MasterCard® to collect or receive payment for an alleged debt, when in fact the offer was a collection letter. Oops.

The lawsuit alleges multiple violations of the Fair Debt Collection Practices Act and the Texas Finance Code. According to court documents Plaintiff Mark Myers received a mailed communication on July 12, 2010 with an offer from NCO Financial Services and GFS Financial Solutions that stated in bold print at the top, “Transfer your debt to a Pre-Approved+ MasterCard®!”

The average consumer receives numerous credit card offers in the mail each month and may have perceived this offer, which was an attempt to collect a debt on behalf of the defendants, as a typical credit card application/offer, or junk mail and tossed it in the trash, and in the process, thrown away a communication that triggered specific rights under the Fair Debt Collection Practices Act.

Part and parcel of the FDCPA’s rights afforded to a debtor is what is commonly referred to as the “Mini-Miranda Warning”, a statement that identifies the name of the debt collector, the company they represent, and advises the debtor of his/her right to validate and dispute an alleged debt within 30 days. The Fair Debt Collection Practices Act mandates that each time a debtor is contacted by a debt collector via written communication, the “Mini-Miranda Warning” must be provided.

The complaint alleges that the communication received by Plaintiff Myers and others did not clearly display the “Mini-Miranda Warning” in its entirety where it could easily be viewed and read. This important information advising a debtor of his/her rights, appeared on the reverse side of the offer and thus could easily have been missed or overlooked and was overshadowed by the voluminous amount of fine print that has become standard in most credit card offers. A signature confirming acceptance of this new Pearl Card® Gold MasterCard® offer would validate the amount of the alleged debt and restart the clock on the statute of limitations, which may have already expired, unbeknownst to the debtor. By signing and agreeing to proceed with the credit card offer, the debtor has now waived his rights to validate and/or dispute the alleged debt.

The complaint also alleges that Defendant WebBank allowed GFS and NCO the use of its Utah banking charter for the credit card offer, though WebBank was not actually a party to the collection efforts. The communication itself states “GFS is not affiliated with WebBank…..” The Utah banking charter allows GFS and NCO, through alleged partnership, the opportunity to use Utah’s laws which allow for no caps on interest rates and fees for all 50 states other than what competition dictates, in the MasterCard® offer.

Okee Dokee! Go get’em!

Top Settlements

What part of ‘smoking causes chronic, debilitating illness including cancer’ is unclear? None apparently. RJ Reynolds recently settled a personal injury lawsuit brought by a woman who developed chronic obstructive pulmonary disease (COPD) and Stage II laryngeal cancer.

Julia Reese, a life-long smoker, was diagnosed with COPD and cancer at the age of 82. She required a full laryngectomy as treatment for her cancer.

Her story goes that she began smoking RJ Reynolds Tobacco Co. brand cigarettes when she was 10 years old and became addicted. Although she allegedly tried to quit smoking several times she was unsuccessful (what smoker doesn’t know how that works?), and still smokes despite her health status.

Interestingly, the jury hearing the case found Reese 70 percent liable and RJ Reynolds 30 percent liable. Consequently, the original settlement award was reduced from $3,551,277 to $1,065,383.

Blast those Blast faxes! But wait—good news! A settlement has been proposed in the class action Starkle Ventures, LLC v. United Artists Theatre Circuit, Inc. and American Blast Fax, Inc. Ringing bells? No?

Cast your mind back—way back—to September 1999 when United Artists Theatre Circuit, Inc. (“UA”) and American Blast Fax, Inc. (“ABF”) sent a fax advertising discount movie tickets to phone numbers in Maricopa County, Arizona. A class action lawsuit was subsequently filed against UA and ABF alleging the facsimile advertising violated the Telephone Consumer Protection Act,  U.S.C. section 227. Following certification of the class action, a tentative settlement was reached.

Plaintiff has entered into a (the “Settlement”). The settlement creates a fund in excess of $6.8 million to pay class members, costs of suit, attorneys’ fees and class representative incentive awards.

FYI—if you held (as of September 1999) one or more fax numbers on the list used to send the facsimile advertisement, you may be entitled to receive money pursuant to the settlement or, if the settlement is not approved by the Court, through continued litigation in the case. You could potentially receive as much as $500 per facsimile number that you held from the settlement.

OK. That’s it for this week. See you at the Bar.