Consumer Fraud Lawsuit News

February 7, 2004 - Stores Accused of Deceptive Credit Card Practices

These days there are few stores where consumers can make purchases without being asked if they would like to open up a store credit card. A store offers its own card in hopes of increasing the number of large purchases, and so the store can share in the interest generated by purchases on credit. Stores often try to attract people to these cards by advertising zero interest rates or low interest rates as promotions.

Home Depot, the world's largest home improvement store chain, offered its store Home Depot credit card customers a promotion with no interest and deferred payments on large purchases. The Home Depot credit card generated around 23% of the company's sales in the 2002 fiscal year according to regulatory filings. Three point three million customers opened Home Depot credit accounts in 2002, bringing the total number of Home Depot card carriers to 12 million.

Home Depot is now being sued over the credit card promotion, forcing all consumers to question what type of "deal" they are getting when signing up for retail credit cards. According to lawsuits filed against Home Depot for deceptive business practices, customers were attracted to the mega store promotion and made a large purchase with no interest under the belief that no interest would be accrued so long as the balance was paid prior to the end of the promotion.

Since smaller purchases made with the Home Depot card were subject to accruing interest and monthly payments, lawsuits were filed alleging that instead of applying the monthly payments to reducing high interest revolving balances, Home Depot applied the payments towards reducing the interest free balances. The interest on the non-promotional covered balances ran as high as 21%. Home Depot customers who believed they would receive interest free credit were accruing significant interest, lawsuit charges.

The Home Depot lawsuits may reveal other questionable credit card practices and force consumers to be more aware of "hidden terms" when responding to promotional offers or opening up new credit card accounts. If, as the suit claims, The Home Depot never disclosed the terms of interest to its customers, then the company is guilty of illegal practices. Consumers who suffered losses due to such a fraud are entitled to recover all associated funds, which may include punitive damages. For more information on consumer fraud, including credit card scams, please contact us.

Fleetwood Modular Homes

We are currently investigating several claims regarding manufactured modular homes from Fleetwood Enterprises. A number of persons have filed formal complaints alleging poor workmanship. The complaints range from loose doorknobs to buckling floors, with some problems potentially endangering the lives of occupants (such as leaks resulting in mold growth in the walls and ceiling).

Many customers claim that their warranties were violated by Fleetwood, who allegedly failed to make repairs, or performed cosmetic repairs without fixing the underlying problems. Customers frequently spent their own money making repairs necessary for the home to be habitable, and are seeking recovery for those expenses, in addition to medical bills resulting from exposure to mold, water damage to personal property in the home, and various non-economic damages.

If you or a loved one purchased a Fleetwood modular home and experienced problems relating to the quality of manufacturing/assembly, please contact us. We are particularly interested in investigating damage caused by leakage: water damage, mold, buckling floors, etc.

May 6, 2003- Be wary of new cellphone charges aimed to disguise rate increases

Cellphone competitors target consumers practically everywhere. Advertisements for cellphones appear on television, in magazines, newspapers, radio, billboards, bus benches, and many other areas with seemingly unbeatable deals, but a recent trend among cellular carriers has been making it increasingly hard for consumers to actually determine how much they will be paying in the end.

Cellular carriers have been adding on undecipherable fees to cellphone bills that make it very difficult for consumers to breakdown and compare prices. In addition to the wide array of minute classifications adding to the confusion, the companies are tacking on what appears to be government-imposed taxes, which in actuality are not. Many consumers may not realize the additional fees because wireless costs overall have decreased over the past year especially, however consumers often do not realize that these new fees are actually rate increases.

Cellphone carriers are claiming the additional fees are the company’s efforts to recover costs of fulfilling legal requirements, but according to Missouri Attorney General Jay Nixon, the companies are trying to blame the government for the fees by classifying them as “taxes” when they are not. Small fees when added together can begin to quickly add up.

Here are various fees that cellphone customers may have noticed was implemented to their recent bills:

“Regulatory Cost Recovery Fee”- Cingular Wireless began to charge as much as $1.25 a month for “regulatory cost recovery fee,” attributed to a legal requirement that cellular carriers be able to exact the location of callers that dial 911.

“Number Pooling”- Sprint Corp. began to charge $0.47 for “number pooling,” a way cellular carriers are able to decrease the need to create new numbers.

"911 Upgrade"- AT&T Wireless began to charge some customers an additional $1.75 a month for the 911 upgrade, as well as for the option for consumers to keep the same phone number if switching carriers.

Cellphone carriers will often put the new rate increases under sections of the bill that will make the charges appear mandatory. Sprint Corp. has disguised its’ fee by placing it under the “Taxes, Regulatory Related Charges and Surcharges and Fees”, Nextel placed its’ fee under “Federal Programs Cost Recovery”, and Cingular has placed its’ fee under “Regulatory Cost Recovery Fee”. Nixon has filed a complaint against Sprint Corporation and Nextel Communications with complaints that the cellular carriers are misleading consumers by making it appear that the new fees are due to government imposed taxes when they are not.

April 9, 2003, FBI Fraud Unit Reports 2002 Internet Fraud Complaints Tripled
The unit of the FBI dealing with Internet fraud complaints have reported that in 2002 the agency was referred had increased by three times as many as the previous year. The instances of Internet fraud cost the fraud victims triple the amount as previous year, going from $17 million to $54 million. The FBI’s Internet Fraud Complaint Center was launched in May 2000 and is partly managed by the National White Collar Crime Center. The majority of the Internet fraud instances were attributed to auction fraud. For more information on consumer fraud contact us.

February 10, 2003, Poor Consumer Discloser May Result In Hefty Visa, MasterCard Refund
A judge ruled against Visa International and MasterCard International in a preliminary decision at the start of February. The judge’s decision could result in the two credit card companies having to refund at least $500 million because of poorly disclosed fees to cardholders using the credit cards over seas. Consumers have been unaware of the currency-conversion fees because many claim these charges have not been adequately disclosed.

The decision, made in a California state court will mean that the two largest payment networks could have to make a refund on a 1% surcharge paid since 1996 by a high number of consumers that have made charges overseas. Visa and MasterCard have been charging a wholesale foreign-currency conversion rate plus 1% to the banks that issue credit cards and the banks pass the charge to cardholders. Some card issuers will make additional charges to as large as 2%. The California judge did not feel Visa and MasterCard sufficiently disclosed to cardholders the fee.

Visa and MasterCard had a combined total earning of at least $240 million last year from foreign-exchange fees from U.S. issued cards. Although card-issuing banks do include foreign-exchange fees in pamphlets that arrive with the issuance of new cards, when a cardholder receives a bill the card issuer often fails to make note that an automatic additional fee has been added. Consumers are often shocked when a long time later they realize the extra fees they have been paying.

The judge, in addition to ordering a refund, said that both Visa and MasterCard would have to mandate that banks that issue their cards disclose the fee clearly in statements in the future. If upheld, all Visa cardholders nationwide would apply to the ruling since the credit card company is based in California, however only MasterCard cardholders in California would apply since MasterCard is based in New York. This California decision may only be the start of many more problems for the credit cards companies that could face suits in other states as well.

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Paying For Non-Existent Insurance, June 4, 2002
Considered one of the biggest insurance fraud scams within the last ten years by James Quiggle of the Coalition Against Insurance Fraud, more and more Americans are finding they have been sold non-existent insurance plans. The insurance fraud plans are in operation in every state and leaves the victims with countless medical bills and debt. The insurance fraud is affecting more than individual patients, it also affects doctors and hospitals that are left in financial distress because state and federal authorities often do not discover that they are involved in a scam until it is too late.

Florida has been so badly affected by the insurance fraud the state has launched an ad campaign to warn people to check their insurance companies to make sure they are licensed. The fake insurance plans usually target the self-employed because they have the hardest time finding affordable health insurance, so the unlicensed companies can offer cheaper rates than the larger, well-known insurance companies. The insurance fraud victims do not find out they have been scammed until they need the insurance the most.

Contact us to confer with a fraud lawyer about lawsuit information.

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Government Creates Intentional Business Fraud As Warning, January 30, 2002
The government chose to educate the public by creating a fictitious company called McWhortle Enterprises by planting it on the Internet in order to teach consumers about the risks of investing online. The SEC planted the Internet with three Web sites in order to allow investors to learn that they could have easily been the victims of fraud. The SEC had issued fake news releases on behalf of McWhortle by saying that the company was going to go public, as well as held a news conference with the company’s “president”, Thomas McWhortle III. Within three days of the news release the McWhortle Web site had more than 150,000 visits. The government scam was inspired by real fraud cases that had figured out this approach long ago. The SEC advises everyone performs their own research to ensure they are not investing in a business fraud scam.

Contact us to confer with a fraud lawyer.

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Recognizing Instances of Fraud, December 19, 2001
Knowing the difference between legal and illegal mortgage fees can save you money. Even mortgage lenders and brokers who are knowledgeable can be mistaken about the law.

Test Your Knowledge
Guess which scenarios you think are legal and which are not to test your knowledge:

Question: A broker charges an application fee, and you pay the fee, apply for the mortgage and get the paperwork rolling, but keep looking. You ask for your money back when you find a better deal, but the broker refuses and keeps the money, saying the fee was nonrefundable.

Answer: Legal- the broker charging an application fee.

Question: A lender pays a total of $24 to pull credit reports on you from each of the big three credit bureaus. The lender charges you a $45 credit report fee.

Answer: Illegal- violation of the Real Estate Settlement Procedures Act (RESPA)

Question: You buy your house from a builder who happens to own a title agency. You want to use another title agency, one of your choosing, and the builder charges a $300 fee for the privilege.

Answer: Illegal- violation of the Real Estate Settlement Procedures Act (RESPA)

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Protecting Yourself From Fraud, December 19, 2001
Many lenders try to lend people money they do not need or at abusive costs. Different efforts exist to curb predatory lending and there are steps to help protect people. People find themselves paying thousands of dollars in fees and paying monthly payments much higher than expected and the loan agent claiming it is too late to undo the deal.

Regulators requested some of the fees be reversed, though the issue is really about lenders trying to lure borrowers into taking out loans with high interest rates and fees. A recent congressional hearing that involved dozens of consumers and consumer advocates testifying that elderly, poor, and unsophisticated borrowers are being victimized and losing their homes as a result. National, state, and local lawmakers have passed or have proposed law and rule changes that would outlaw the most abusive practices. Big lenders are revamping internal policies and dropping products considered to be abusive to consumers and attempting to be more responsive to complaints. Contact us to speak with a fraud lawyer.

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Recent Legislation Fighting Against Fraud

-April 5, 2002
In April 2002, US Senator Charles E. Schumer releases a study showing black homeowners are more than four times as likely as white homeowners to rely on home mortgage loans from expensive subprime lenders. The Senator, a group of the city’s leading ministers, and the New York Bankers Association launches a new citywide program to provide loan and credit counseling for black homeowners that are being led to much more costly financing than white homeowners with equal incomes. The new program is called the Home Equity Lending Project (HELP) and brings the banks and churches across the city together to increase access to conventional loans for residents and break down the distrust black homeowners have developed and resulted in obtaining loans from costly subprime lenders.

The study also found black applicants experience a much larger rejection rate than white applicants when seeking loans from conventional lenders. Even in instances where the black applicants has greater incomes they were more likely to be rejected for a home purchase or refinance mortgage than white applicants with lower incomes. For more information contact us to speak with a fraud lawyer.

-April 23, 2002
Predatory lenders normally target vulnerable people. Senator Paul S. Sarbanes, the Chairman of the Banking, Housing, and Urban Affairs Committee, announced he would hold a press conference on May 1, 2002 to outline predatory lending legislation he will introduce to the U.S. Senate. Unsuspecting victims of the fraud practices end up paying such high monthly payments that they can end up losing their home. Senator Sarbanes has made his focus eliminating predatory lending a large focus of his Chairmanship. For More Lawsuit Information CONTACT US to Confer With a Fraud Lawyer

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-May 1, 2002
Senator Sarbanes announced the legislation to battle against predatory lending practices. The legislation is made to restrict abusive and fraudulent practices by enhancing civil remedies and statutory penalties. The predatory lenders often underwrite the property without establishing a borrower’s ability to repay the loan. The fraud practices allow the brokers or lender to make money by charging very high points and origination fees by packing other products into the loan so they can collect on high commissions. Sarbanes stated that “these lenders target lower income, elderly, and often, uneducated homeowners for their abusive practices. They overwhelmingly target minorities, driving a wedge between these families and the hope of a productive life in the economic and financial mainstream of America.” For more information CONTACT US to speak with a fraud lawyer.

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