Articles Posted in Consumer Fraud/Consumer Protection

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Chicago Restore and Rust-Oleum Product Defect Attorneys and Lawyers near Wheaton and NapervilleCompanies often invest a lot of money in the products they sell, especially new products that have recently been released. They spend money on advertising and they sometimes train employees in retail stores to conduct demonstrations of their new product.

One company that recently launched a new product and talked it up in Home Depot stores is Rust-Oleum Corp. and their product was Restore. Restore was sold as a liquid armor coating that could be applied to wooden decks or room-swept concrete surfaces. According to a recent class action lawsuit though, Restore did not act as the protective coating it was advertised to be. Instead, the product allegedly peeled off surfaces, leaving them exposed.

The lawsuit was filed by Ulbardo Fernandez, who purchased the product at Home Depot. He alleges that Restore was advertised as being a “smart alternative” to replacing decks and concrete. Fernandez allegedly decided to purchase Restore as a result of the advertisement he saw for it in Home Depot. Continue reading

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Chicago's best consumer fraud class action lawyers and attorneysCompanies know the importance of advertising. Many people are attracted by a particular label or claims that a product is associated with a certain time in history or perceived social standing. This is especially true of alcohol where, aside from the taste, many people make their purchasing decisions based on a sense of prestige. Breweries and distilleries often try to given their brand a pretigious image and use that image in their advertising, including the producers of Templeton Rye Whiskey.

According to a recent class action lawsuit against the company, Templeton Rye allegedly violated consumer protection laws by allegedly misleading consumers with stories of the whiskey’s origins. Marketing material released by the company claims that its founders were inspired by the Prohibition-era recipe of Alphonse Kerkhoff, which was handed down through his family on a scrap of paper. The label on the whiskey bottle also bears an old black-and-white photo, which is reminiscent of America in the 1920s when Prohibition was in effect. The label matches the whiskey maker’s claims to a recipe that has been handed down through the generations, and reinforces the belief that the whiskey is made using a recipe that is almost 100 years old. Continue reading

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Top class action attorneys and lawyers near Chicago and NapervilleWhen a consumer feels she has been cheated by someone she bought a product or service from, the amount of her claim is often too small to warrant suing the seller. In that case, the consumer’s best bet is to collect a group of other consumers who have similarly been allegedly cheated and file a class action lawsuit. In order to successfully pursue a class action lawsuit though, a judge must grant the plaintiffs class action status, and in order for the judge to do that, the class of plaintiffs must fulfill certain requirements. These requirements include a class that is sufficiently large to warrant a class action, plaintiffs who can adequately represent the class, and complaints from class members that are sufficiently similar to warrant combining them into one action.

Another requirement that has caused much controversy in the courts lately is ascertainability, meaning there must be a way to identify all of the members of the class. This can be an issue in class actions filed against food producers or retailers, especially those who produce cheap food, for which consumers rarely keep their receipts. In Carrera v. Bayer, the plaintiff, Gabriel Carrera, sued Bayer on behalf of all consumers who had purchased Bayer’s One-A-Day WeightSmart diet supplement. According to the complaint, Bayer falsely advertised its diet supplement as having metabolism-boosting effects, based on the fact that it contained green tea extract. Continue reading

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Chicago class action lawyers near Schaumburg and ElginThe cost of everything goes up with inflation and insurance is no different. As the value of our things increases with time, it makes sense that people would want sufficient coverage for all of their belongings. This can become an issue though, when insurance companies insist on raising the limits on a plan (and thus raising the premiums) to levels that are much higher than the property can possibly be worth. Such is allegedly the case in a recent class action lawsuit against State Auto.

According to the complaint, the named plaintiffs, Mark and Andrea Schumacher, bought their home in 2001 for $234,000. They claim that they have made no improvements to the home since then, other than normal maintenance, and that its market value remains about the same. As evidence to support this assertion, the plaintiffs pointed out that the builder from whom they bought their home continues to construct homes in their neighborhood that are similar to the ones that they own, and sell them at a comparable price.

Despite that, State Auto, which has been insuring the Schumachers for years, allegedly increased their policy limit over the years until it stood at more than $500,000 as of 2013. According to the Schumachers, that is much more than what it would cost them to rebuild or replace their home, though it is important to note that there are two different ways of looking at that cost: 1) rebuilding from the ground up; and  2) buying a similar, older home. The cost of these two options can vary dramatically, depending on the market, and some people have a strong preference to buy insurance for one over the other. Continue reading

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Consumer Fraud attorneys near Chicago, Oak Brook and WheatonWhenever there are large loans, there are bound to be targets for debt settlement companies. These are companies that tell borrowers that they will negotiate lower monthly fees for the borrower in exchange for a hefty upfront fee. They convince borrowers to pay them hundreds, if not thousands, of dollars, then they leave the borrowers with the same debt they had to begin with. One such company, Broadsword Student Advantage of Carrollton, Texas, has a radio advertisement which claims “Your entire student loan can be forgiven.” In the past, these fraudulent companies targeted those with large credit card debt or mortgage loans. The recent economic downturn left those who owed more on their property than it was worth as prime targets for those companies, but now they have a new group of targets.

The amount that Americans currently owe in student loans has exceeded $1 trillion, and to make matters worse, a record number of college graduates entered the workforce just as the economy was taking a nosedive, resulting in high unemployment and underemployment rates. More than half of recent graduates are either unemployed or are working low-paying jobs that don’t require the expensive college degrees that they are still struggling to pay off. An estimated seven million Americans have already defaulted on a total of $100 billion in loans, with tens of thousands of more borrowers defaulting each month.

Illinois is now expected to become the first state to bring legal action against debt settlement companies in connection with student loans. The action consists of two separate lawsuits, one against Broadsword Student Advantage and one against First American Tax Defense, alleging that both companies convinced vulnerable borrowers to pay hundreds of dollars for services that the companies never provided. In the case of Broadsword, the company allegedly continued to charge borrowers $49.99 each month after they had paid an initial fee. Continue reading

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While the law has struggled to catch up with the swift progression of technology in recent years, particularly the increase in internet use, many companies have taken advantage of the ease of acquiring consumers’ information. It is easier than ever for companies to gain access to an individual’s credit card information. Many companies make deals with each other to share this information, despite the fact that such agreements are illegal.

Many laws, though, remain relevant regardless of whether the transaction took place online or in person. This was demonstrated in one recent class action lawsuit against an online marketing company. The named plaintiffs filed their class action lawsuit against a company which performs background checks. The plaintiffs noticed that regular monthly charges appeared on their credit card for a report which they allege they did not intend to buy. The company performing the background checks said that the consumers were misled into purchasing the subscription of the online marketing company. As a result, the marketing company was added as a third defendant.
The background check company provided space on its website for the marketing company and used a “data pass” method of sharing credit card information which is now illegal. The marketing company used that shared information to enroll customers in free trial subscription offers which were then converted into a monthly billed subscription.

The marketing company moved to force the lawsuit into arbitration.
The district court ruled that the consumers had entered into a contract with the marketing company, but the court denied the motion to force arbitration.

The plaintiffs appealed and the case went to the Ninth Circuit Court of Appeals. The appellate court noted that, under Washington law, a contract requires mutual assent to its essential terms in order to be considered legally binding. Those essential terms include the names of the parties involved in the contract. The appellate court found that the web page which the consumers used to buy the subscription service did not sufficiently identify the marketing company as the party making the contract with the consumers. The appellate court also remained skeptical as to whether providing an email address and clicking a “yes” button is sufficient to agree to a contract. Such clicks are still new enough that many courts don’t quite know how to handle them.
The appellate court also denied the marketing company’s motion to force the case into arbitration. The court decided that, since the arbitration provision was on another hyperlink which the consumers did not click on, no valid arbitration agreement took place.

Arbitration agreements have grown increasingly popular with companies in recent years. Consumers and employees alike are both being asked to sign more and more contracts containing arbitration agreements. These agreements tend to favor the company over the individual as they make class actions impossible and the arbitrator is often chosen and paid for by the company. The higher courts have upheld many arbitration agreements in recent years, but not all of the appellate courts have been as favorable to the agreements. Many have been found to be unenforceable and the likelihood of such a finding can only increase if the consumer never even saw the arbitration agreement.

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When a company is publicly owned, it needs to be aware that it has a responsibility, not only to its customers, but also to its shareholders. The recent class action lawsuits against Lumber Liquidators are good examples of this fact.

Shareholders filed a lawsuit against Lumber Liquidators when it came to light that the company had allegedly imported wood from the habitat of an endangered species and sold wood with elevated levels of formaldehyde. This lawsuit demonstrates the fact that selling unsafe materials has the potential to cause harm, not only to the customers who purchase the material, but also the people who have invested money in the company.

Shortly after the shareholders filed their lawsuit against Lumber Liquidators, customers who had purchased wood from the company filed a similar lawsuit.

Lumber Liquidators has been under investigation recently for importing wood from China which was allegedly harvested in Russia from the habitat of the endangered Siberian tiger. Taking lumber from the habitat of an endangered species is in direct violation of the Lacey Act, a conservation law which has been in existence in the United States since 1900. The Act was put in place to protect plants and wild animals from the hazards of industrialization. Among other things, the Act prohibits trading in wildlife, fish, and plants which have been illegally harvested, transported, or sold. In 2008, the Act was amended to include anti-illegal-logging provisions which makes it illegal to take wood from the habitat of an endangered species.
In addition to violating the Lacey Act, the lawsuits allege that Lumber Liquidators sold wood which contained unsafe levels of formaldehyde. According to the Environmental Protection Agency, formaldehyde is an important component in the production of processed wood products and other home goods. However, it has also “been shown to cause cancer in animals and may cause cancer in humans”. The gas also has the potential to cause other health problems, including eye, nose, and throat irritation, wheezing and coughing, fatigue, and severe allergic reactions. Because of these health concerns, the federal government has imposed limits on the amount of formaldehyde that it deems safe to use in wood products.

Needless to say, when consumers discovered that the wood they had purchased might not be safe, they expressed serious concerns regarding the matter. The consumers’ lawsuit was filed by three consumers who are petitioning the court to be named plaintiffs in the class action lawsuit against Lumber Liquidators. Each of these consumers purchased wood from Lumber Liquidators and had it installed in their homes. They all allege that, at the time that they bought the wood, it was represented as being in compliance with both the Lacey Act and formaldehyde standards. The three plaintiffs allege that they were entirely dependent upon Lumber Liquidators’s representation of the wood and that they would not have purchased it if they had known that the wood might contain unsafe levels of formaldehyde.

The consumers’ lawsuit has been filed on behalf of everyone in the United States “who purchased and installed wood flooring from Lumber Liquidators Holdings, Inc., either directly or through an agent, that was sourced, processed, or manufactured in China”.

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While lawsuits have become increasingly common in today’s society, they have grown no less costly. Because of the cost and time consuming nature of lawsuits, plaintiffs should be advised to thoroughly consider every line of their contracts, as well as the law, before taking a person or company to court. In a recent case handled by the Seventh Circuit Court of Appeals, Martha Schilke either failed to thoroughly read her mortgage contract, or she failed to fully understand it. Either way, the result was much time spent in court that could have been avoided.

Schilke purchased a town house in 2006 using a mortgage from Wachovia Mortgage, FSB. One of the conditions of her mortgage was that Schilke buy and maintain insurance on her property. If, at any point, she failed to do so, the contract stipulated that Wachovia had the right to purchase insurance on her behalf and charge her for the premium. The contract even went so far as to warn Schilke that, due to fewer insurance options, insurance coverage bought by them would likely be at a much higher premium and less coverage than insurance Schilke could buy on her own.

The contract further stated that “[i]f at any time during the life of the loan, a policy is cancelled or replaced or an insurance agent is substituted, we must receive written evidence of the insurance and written evidence of the substitution of the insurance agent. Written evidence of insurance is defined as: a copy of the reinstatement notice for the cancelled policy or a copy of the replacement policy. … If we do not receive such evidence prior to the termination date of the previous coverage, we may at our sole option, obtain an insurance policy for our benefit only, which would not protect your interest in the property or the contents. We would charge the premium due in under such a policy to your loan and the loan payment would increase accordingly.”

In January of 2008, Schilke purchased insurance for her property. In May of that same year, Wachovia sent her a notice that her policy had ended on April 8. The letter requested that Schilke provide proof of insurance within 14 days. She never replied. Wachovia sent Schilke another letter in June, once again requesting proof of insurance and notifying her that it had acquired temporary insurance coverage through American Security Insurance (ASI). Enclosed with the letter was an “Illinois Notice of Placement Insurance” in which Wachovia described the terms of the temporary insurance coverage and informed Schilke that she was responsible for the cost. The letter further stated that, if Schilke could provide proof of insurance, Wachovia would cancel the temporary insurance coverage and refund any premiums paid by Schilke. It also stated that, in the event that Schilke failed to provide proof of insurance in the next 30 days, Wachovia would cancel the temporary insurance and replace it with a 12-month insurance policy, for which Schilke would be charged.

In July 2008, Wachovia wrote to Schilke to inform her that it had purchased a 12-month insurance policy on her mortgaged property and of the cost of that coverage. One year later, Schilke filed a class action lawsuit, on behalf of herself and others similarly situated, against Wachovia and ASI for allegedly engaging in deceptive practices by failing to disclose that Wachovia was receiving “kickbacks” from ASI.

Wachovia and ASI moved to dismiss the motion and the district court granted it.
Schilke then sought leave to file an amended complaint in which she added claims for breach of contract against both Wachovia and ASI and “clarified” that her claim under the Consumer Fraud Act was based on allegations that Wachovia’s conduct was both “deceptive” and “unfair” as defined by the Act. The district court rejected the proposed amendment, concluding that Schilke’s “clarification” of her amendment did not change the fact that she did not have a claim under the Act.

Schilke then submitted another amended complaint. In this version, she proposed to add Assurant, Inc., ASI’s parent company, as a defendant. She also proposed to add claims for conspiracy, aiding and abetting, acting “in concert”, and “intentional interference”. The judge denied leave to amend the complaint, stating that none of the changes significantly changed the allegations in the complaint. Schilke appealed and the case moved to the Seventh Circuit Court of Appeals.

As to Schilke’s claims under the Consumer Fraud Act, the Act prohibits any “unfair” or “deceptive” business practices to be used by a person or entity in order to gain an unfair advantage. The Act defines these terms as including “the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression, or omission”. The court found that, due to the contract provided by Wachovia, as well as its notices and correspondence to Schilke, the company had provided sufficient evidence that it had not violated the Consumer Fraud Act.

Schilke tried to claim that, even if Wachovia’s business practices were not deceptive, they were unfair because they “coerced” her into buying insurance through them. She backed this statement by saying that, had she refused to pay for the insurance through Wachovia, or failed to make a payment on her mortgage, Wachovia would have cancelled her mortgage, therefore she was “coerced” into buying the more expensive insurance. The court, however, pointed out that Wachovia had provided plenty of chances for Schilke to purchase cheaper insurance and, since having insurance was always a part of the legal contract, the court denied these allegations.

Because Wachovia received a commission from ASI for purchasing insurance on one of its properties, Schilke called it a “kickback” and claimed that it was unlawful. However, a “kickback” is defined as a bribe or payment which might be used to divide loyalties. This was never the case because Wachovia was not acting on Schilke’s behalf. Instead, the bank was merely acting to protect its own interests in the property it had purchased, for which Schilke was paying them back. Such a commission is fully within the limits of the law.

The Seventh Circuit Court of Appeals therefore upheld the ruling of the district court and dismissed the case.

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