Week Adjourned: 11.06.09

Home Appraisals anyone's guess with price fixingTop Class Actions

Business Ethics 2009: “Conspiring to Manipulate”—it’s sort of the theme in this week’s class actions…read on… 

Homeowners High-Jacked on Home Appraisals? A Central Florida homeowner forced into foreclosure has filed a class-action lawsuit against KB Home, Countrywide Financial and LandSafe Appraisal Services.

The allegations? Price-fixing, in a nutshell, or “conspiring to manipulate.” The suit claims that the three companies conspired to rig housing prices in Florida, South Carolina and North Carolina, costing home purchasers millions of dollars, and fueling the collapse of the region’s housing market. That’s no mean feat. 

The companies managed this, allegedly, by using a well-planned scheme to control the typically independent appraisal process, jacking up home values, which, in turn, were used to determine the value of other homes sold by KB, affecting thousands of homeowners. 

If you live in Florida, South Carolina or North Carolina and used Countrywide and LandSafe to finance a home purchase you may be eligible for this suit. If I had done business with these guys, I’d be signing up for the suit. 

Overdraft to the tune of $38M? A class action was launched against the East Florida bank BankAtlantic for allegedly manipulating the posting dates of consumer debit card and check transactions in order to maximize overdrafts on consumers’ accounts.  

Translation = conspiring to manipulate. 

According to the lawsuit, BankAtlantic not only failed to decline charges or warn about overdraftsa very hot topic right now, it also allegedly failed to give its customers the option of opting out of such an automatic overdraft protection program. By doing so, the Bank maximized its fees of $35 per overdraft plus an additional $7 sustained overdraft fee for every business day after the customer’s account remained negative for five calendar days. 

Wait—there’s more! 

The lawsuit goes on to state that BankAtlantic used sophisticated software to automate its overdrafts and manipulate debit card transactions by re-sequencing the charges’ posting dates and by posting the highest charges first, further maximizing its fees and profits. 

According to the lawyer representing the plaintiffs, the math is nothing short of ‘Shock and Awe’. BankAtlantic collected $38 million in fees in the first half of 2009. It appears that most of it was for overdraft fees, which means that at $35 per overdraft, the Bank imposed over one million separate overdraft fees in six months to thousands of Florida customers. Now that is creative accounting. 

Top Settlements       

PA DA via CA seeks cash for your bounced checks? Thousands of Pennsylvania residents got justice this week, when the California-based debt collection company American Corrective Counseling Services (ACCS) agreed to settle their lawsuit. 

The back story—ACCS sent out letters that claimed they came from various district attorneys’ offices, indicating that bouncing a check could lead to criminal charges, and that in order to avoid those charges the person to whom the letter was addressed would need to fork some money over. What a surprise.

According to a report by the Associated Press, one elderly woman who wrote a check for $27 to Kmart, which bounced, was informed in one of these letters that she would have to pay fees of $72 to clear the matter up, “plus another $170 for the accountability class.”

The settlement is $2.55 million. Let’s hope it’s enough.

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