Government

Alabama Legislature Working Hard to Protect Scammers, Pyramid Schemes, and False Advertisers – Alabama Consumer Rights Lawyer Judson E. Crump

July 6, 2017 by Attorney Judson E Crump 1 Comment

Pyramid Schemes. False Advertising. Deceptive Sales Scams. This behavior has been officially protected by the Alabama Legislature.

In March of 2016, Mr. Phillip “Phil” Williams, an Alabama state Senator from Huntsville, offered a huge favor to fraudulent businesses: he proposed SB270. This was a law that amended the Alabama Deceptive Trade Practices Act. The ADTPA is Alabama’s version of what most states call a UDAP (Unfair and Deceptive Acts and Practices) statute. Every state has one. These statutes regulate things like false advertising, door-to-door or telephone sales, sweepstakes scams, pyramid schemes, bait-and-switch advertising, and outright deceit. Basically, really bad stuff that some businesses do in order to make mor emoney. The sort of stuff that everybody in their gut knows is just morally wrong.

The Alabama Deceptive Trade Practices Act is pretty weak compared to other states, because it requires a 15 day advance warning letter, it exempts insurance companies and financial institutions, and it bans class actions in state court.

But apparently it wasn’t weak enough for the big money lobby. See, federal courts follow their own rules of civil procedure, and therefore allow class actions in federal court, even where the state law may not allow that. When the Eleventh Circuit recently confirmed that principle in the case of Lisk v. Lumber One Wood Preserving. That case was a typical deceptive trade practices case. What happened was this: a man bought some “treated” wood to build a fence that was supposed to be, well, “treated.” Which means that it is supposed to be protected from rot and termites. Well, Lumber One didn’t treat the wood. And it rotted. So Mr. Lisk was left with a worthless, rotting fence. He sued for himself and for everyone else that Lumber One had ripped off. The Eleventh Circuit confirmed that yes, you can do that in federal court.

You wouldn’t think this would be a big deal, right? I mean, who wants to protect a corporation that sells people rotting wood? Senator Phil Williams and the rest of the Alabama Legislature, that’s who.

As they do for every lawsuit, big businesses all across the country threw a hissy fit. They saw signs of the apocalypse. “If we don’t protect businesses from scams that leave people with rotting fences, jobs will leave! The economy will crash!” The corporate lawyers that represent them echoed the party line:

Obviously, this is a load of crap. Lumber One didn’t face a class action because some judges in Atlanta went crazy. They faced a class action because they cheated hundreds of honest paying customers out of millions of dollars. That’s how it always is.

But even when they’ve genuinely done wrong, big businesses hate having to pay the consequences of their actions. They hate class actions because if they can shut down class actions, they can get away with millions of small frauds and ripoffs as long as they only swindle a hundred bucks or so from each customer. So when they wanted a get-out-of-jail free card, they went to Senator Phil Williams, and asked him to pass a bill they wrote.

And guess what? It passed. Nearly unanimously. The bill changes the label on the no-class-action provision in an attempt to circumvent the federal rules. In other words, they want the state court rules to apply in federal court too.

This bill was utterly unnecessary. The ADTPA was rarely used anyway, because of its preexisting limitations. Fortunately, the Alabama legislature doesn’t have power over the federal courts. So hopefully, this anti-consumer sellout of our legislature will be ingored by the federal courts.

Fine Print Explained: Car Sale Contracts, Part 2 – Alabama Consumer Rights Attorney Judson E. Crump

May 30, 2017 by Attorney Judson E Crump 2 Comments

Deciphering Car Sale Contracts, Continued.

If you haven’t read the first part of this article, you should read it here.

Today we look at all that fine print on the back side of your car sale contract, and figure out what it all means.

XI. Finance Charge and Payments. Ripoff Rating: 1/10. You promise to make your payments, they charge late fees, they credit your payments to interest first and then principal. What you’d expect. No big deal.

XII. Misc. Promises by You. Ripoff Rating: 2/10. You still have to pay if you crash, lose, or damage the car. You promise not to deliberately abuse the car. You promise not to drive it outside the US or Canada or sell or lease it to someone else. They get a lien on the vehicle and you have to keep it insured against damage – beyond your normal liability insurance. 2 Ripoff points for not letting you drive to Tijuana.

XIII. Default Remedies. Ripoff Rating: 6/10. If you miss a payment or let your insurance lapse, then they can do lots of bad things to you. They can take the car, they can sue you and demand attorneys’ fees as well, they will charge you storage fees for the stuff that was in the car when they repo’d it. They will charge you late fees, they will cancel your service contracts and keep the refund. What is not in here? A grace period. So if your payment is one day late, they can take the car, dump it at auction for a way-too-low price, and sue you for the balance plus court costs and lawyer fees.

XIV. Warranty Disclaimer. Ripoff Rating: 8/10. They do not stand behind their product. In the old days, it was assumed that if a product broke down or didn’t do what it was supposed to do, you could take it back for a refund or replacement. In fact, that’s just what happens if you buy a coffeemaker from Wal-Mart that is malfunctional. But car dealers don’t offer Wal-Mart’s level of customer service.

If the wheels fall off when you drive off the lot, you can’t do anything about it. Even if they swore to you that it was a 1-ton diesel capable of hauling a 36′ Contender to Miami and back. You’re stuck with the lemon. And the lemon law does not apply to used cars. This does not affect manufacturer’s warranties.

XV. Window Sticker Rule. Ripoff Rating: 0/10. The Federal Trade Commission requires all used cars to have a window sticker showing basic info about the vehicle and any warranties that go along with it. The law also requires that sticker’s terms to be part of the contract. Trust me, if it wasn’t required by Big Government Regulation, dealers wouldn’t do it, because that regulation is designed to help you, the buyer, not get screwed.

XVI. Robocall Consent. Ripoff Rating: 3/10. They can call you with robotic telephones to annoy you when they want some money.

XVII. Choice of Law Provision. Ripoff Rating: 0/10. Alabama law applies to contracts written in Alabama. Common sense.

XVIII. Holder Rule Notice. Ripoff Rating: 0/10. When the contract is sold to a finance company, you can sue that finance company for any fraud or breach of contract that the dealer committed. This is to defeat the old common law “holder in due course” doctrine, which was a legal loophole by which a scammer could deceive someone into signing a contract for money payments, then assign that contract and flee to Mexico. The finance company could then pretend to not know about the fraud and sue you for the payments on a fraudulently obtained contract. Today, you can’t do that because dealers have to include the Holder Rule Notice in these contracts. Like most other clauses that provide the buyer with some rights, this one is only in the contract because it is required by a Big Government federal regulation.

XIV. Arbitration Clause. Ripoff Rating: 10/10. This says that if they deceive you, sell a dangerous product, overcharge you, and steal your money, you can’t take them to court. Instead, you have to go through a private, pseudo-legal proceeding called Arbitration. Your case will be decided by a random corporate lawyer. There is a 90% chance the arbitrator will be an older white male who has spent the past 20 years defending corporations like the one that ripped you off. The rules of evidence don’t apply. You can’t compel them to produce documents or evidence that they don’t want to produce. You can’t make them sit down and tell you their side of the story. No jury. No judge. No appeal if the arbitrator sleeps through the proceeding and then issues a ruling against you that is utterly baseless in the law and ignores all of the evidence. You can’t join up with other people who’ve been similarly ripped off and file a joint lawsuit, or any sort of class action. In other words, no matter how bad or deceitful the dealer’s conduct, and no matter how much you were harmed, your legal remedies are cut in half, if that.

Forced Arbitration: The King of Bad Deals.

It’s unavoidable nowadays, because the U.S. Supreme Court (even “liberal” justices like Breyer) are mostly former corporate lawyers who’ve never represented an ordinary working person in their entire lives, and they live in a bubble that protects them from having any clue about what life is like for the 99% of us who live in the modern American economy. But that’s life. At least for now. Maybe Trump will lose in 2020 and we’ll have a good president who will get to appoint 3 justices who care about working folks.

As bad as some of these terms are for consumers like you and me, I hope this at least illuminates the nature of these contracts. The more you know, the more you can protect yourself.

Alabama Supreme Court Continues to Harm Working People for the Benefit of Wealthy Corporations – Alabama Consumer Rights Advocate Judson E. Crump

March 4, 2017 by Attorney Judson E Crump 1 Comment

The Alabama Supreme Court Hates Working People and Loves Big Corporations. Here’s Yet Another Example.

On June 26, 2015, the Alabama Supreme Court issued a decision in the case of American Bankers Insurance Company of Florida v. Gladys Tellis. Now, for those of us who have been living for a while under the extreme anti-consumer regime of the current Alabama Supreme Court, the outcome of such a case can be predicted just by its name. American Bankers Insurance Company (a huge and rich insurance company) against a lady named Gladys Tellis (an ordinary woman seeking justice after she’d been defrauded). Whenever a big company is sued by a worker or consumer or anyone who isn’t also a big powerful corporation, the Alabama Supreme Court, whose 9 Republican Justices were elected with millions of campaign dollars paid for by those very banks and insurance companies, is almost certain to find a way to rule against the working man. So this case was no exception: they handed down a decision that dealt yet another blow to regular people seeking justice.

In this case, the issue before the Court was whether the insurance company could enforce a mandatory arbitration agreement against the Plaintiffs in that case. Normally, arbitration agreements are enforced due to a federal law called the Federal Arbitration Act, which since a major US Supreme Court misreading of that statute in 1995, has basically been applied to every contract in the United States. Note here that though I’m complaining in this article about the extreme pro-corporation bias of the Republican Alabama Supreme Court, in the Allied Bruce Terminix case of 1995, the U.S. Supreme Court’s anti-consumer decision was a 7-2 decision, where the only justices who rightfully dissented were the most conservative members of the Court: Scalia and Thomas -both Republican appointees. So don’t think for a minute that I’m just against Republican judes. I’m not. I’m against judges who are biased against workers, the poor, and those who have been done wrong by the rich and the powerful

So enforcing mandatory arbitration agreements, no matter how Rumplestiltskinian they may be, is commonplace in the United States. Why does this matter? Because arbitration is a grossly unfair proceeding that deprives people of many, many rights that they are supposed to be guaranteed by the Constitution: the right to join together with other people in lawsuits (not just in class actions, but even cases where a handful of friends have been screwed in the same way by the same company), the right to a trial by jury, the right to obtain evidence in their favor that is held by the other side, and, most importantly, the right to appeal a decision that is flat-out wrong.

But in this case, the Plaintiffs had a solid defense to the arbitration agreement in question: they never signed it.

Now anybody with common sense can understand the issue: if you don’t sign it, it isn’t binding. That’s the normal rule. Certainly the opposite rule applies: if you sign a contract, it is binding, right? And of course, the latter rule has always been enforced by our courts. And what’s good for the goose is good for the gander, right?

Not in Alabama.

Somehow, the Alabama Supreme Court found a way around the common sense rule that only contracts you actually agree to can be held against you. They said that by paying premiums, the insurance company’s customers implicitly consented to the arbitration agreement. This is crazy. The only explanation, of course, is that these judges were just looking for any excuse to help out their corporate sponsors, and they did so at the expense of all of Alabama’s citizens.

This is what happens when we allow our highest court to be sold to the highest bidder. It is literally justice for sale. That is a very evil phenomenon, and the worst part of it is this: our voters don’t care. Because this is a conservative state, and the millions of dollars of insurance company money floods our televisions, radios, billboards, and emails with false messages that if we don’t elect these extreme Republican justices, then our state will descend into crime and chaos.

Until people start caring about protecting their rights, this is going to continue. We are going to keep losing, and our citizens are going to continue to be screwed by big out-of-state companies that don’t care about Alabama.

Finally, I’d like to mention one thing that should be remembered. There was, at that time, at least one ray of hope on the Supreme Court: Chief Justice Roy Moore. Many people criticize him for his popular image in the media of being a crazy conservative, but the truth is that while he was on the bench, he was the only justice that actually cared about doing justice for ordinary people who had been defrauded or harmed by the rich and the powerful. In the Tellis case, he wrote a powerful and eloquen dissent explaining just how important the right to trial by jury is, and he saw right through the majority opinion to show just what is happeneing in cases like this: the victims of fraud are excluded from the courthouse. They have lost their constitutional rights and are forced into an arbitration system that makes a mockery of justice.

Unfortunately, even that ray of hope has been extinguished, as Justice Moore was removed from the bench for his stance in defense of traditional marriage.

The full opinion in the Tellis case can be found here:

American Bankers Insurance v. Tellis

Scalia’s Last Betrayal: AT&T Mobility v. Concepcion – Brokenhearted Catholic Lawyer Judson E. Crump

February 27, 2017 by Attorney Judson E Crump 3 Comments

January 18, 1995:

JUSTICE THOMAS, with whom JUSTICE SCALIA joins, dissenting.

I disagree with the majority at the threshold of this case, and so I do not reach the question that it decides. In my view, the Federal Arbitration Act (FAA) does not apply in state courts. I respectfully dissent.

Allied Bruce Terminix v. Dobson.

April 28, 2011:

JUSTICE SCALIA delivered the opinion of the Court.

…

We have described this provision as reflecting both a “liberal federal policy favoring arbitration,” Moses H. Cone, supra, at 24, and the “fundamental principle that arbitration is a matter of contract.”

AT&T Mobility v. Concepcion.

One of these statements was made by an honest intellect dedicated to restraining federal power within its original constititutional limits. The other was made by a dishonest intellect searching for an excuse to rule for the side he liked the best.

Yet both statements were made, or at least agreed to, by the late Justice Antonin Scalia. What happened during those 16 intervening years? Did he change his mind? Did his brain wither and grow feeble? Was he just tired of fighting the overreach of federal power and decided that, “if you can’t beat ’em, join ’em?” Did he just have different clerks that ghostwrote his opinions for him?

Any of these things may be possible, but they’re all disturbing. And the result can’t be denied. The man who at one time stood constant as a stone for his originalist devotion to the founding fathers’ vision, became somehow more malleable, more willing to compromise his former values, and eventually able to completely reverse course and make a decision that would ultimately do great harm to millions of Americans.

Go ahead and read the actual opinions and you’ll see exactly what I’m talking about.

The Terminix decision is famous because it took the old Federal Arbitration Act (which had largely lain dormant from disuse for many years) and expanded it to say not only that arbitration agreements were enforceable like any other contract (which is what the FAA actually says), but also that it is illegal for any state to enact any law limiting arbitration. In politics, you often hear people talk about “states’ rights.” And at one time, Justice Antonin Scalia cared about “states’ rights.” Case in point: Allied-Bruce Terminix.

Though the SCOTUS wasn’t able to predict it at the time, their Terminix decision created a tidal wave of fine-print arbitration clauses being inserted into every business dealing that the average person enters into in their lives: Want to have internet? You’re stuck with arbitration. A car? Arbitration. Want to work for a large company? Arbitration. Want a bank account? Arbitration. Credit card? Arbitration.

Time would eventually teach us that this explosion of arbitration was really, really bad for ordinary people, because it allowed big businesses to get away with negligence, theft, or even outright fraud and never be taken to court over it. So the “liberal” justices later decided to change their tune on arbitration. Once they realized that it was being used to screw over ordinary people, they started ruling against it. Sure, that’s not intellectually consistent, but liberals justices tend to care a lot less about upsetting precedent. It’s what they’re all about, in fact. Judicial activism is the whole problem that most conservatives have with the Supreme Court’s democrat appointees.

But as with so many other things in American civics nowadays, what matters more than principle is what side you’re on. And so we came, eventually, down to AT&T Mobility v. Concepcion. In this case, the cell phone carrier falsely advertised free phones, but they were charging people sales taxes on a “free phone.” Since 5% of $0.00 is $0.00, I don’t understand how that’s possible, but hey, that was what they were doing. Naturally, they got sued in a class action.

But AT&T had slipped a no-class-action ban into its arbitration contract. Meaning that if you wanted to sue AT&T for its $5.00 overcharge, you’d have to hire a lawyer and make your own lawsuit.

Obviously, this is never going to happen, which means that enforcing such agreements is basically legalizing frauds that are too small to hire a lawyer for. 4 of the justices realized this and said “No, you can’t do that sort of Rumplestiltskin crap. This is America. If you rip 10,000 people off for $5.00 each, you can be taken to court for $50,000.”

But the 5 Republicans said otherwise. They couch it in much more elegant English and make a few excuses (“class arbitration greatly increases risks to defendants” etc.) but ultimately uphold the fantasy that arbitration is fair, even when it basically leaves consumers with no recourse whatsoever to small wrongdoings.

Of course, much has been written of the unfairness of arbitration elsewhere, so there’s no need to re-write those books here.

My concern here is with Scalia, and particularly how he slowly quit fighting federal power. How, when faced with cases where the litigants (big businesses) who supported his “team” (the Republican Party) found themselves asking for the expansion of federal power, he lost his principles. He just gave up. Unlike his friend, Justice Thomas.

When Scalia died, I heard a lot of mourning, especially from fellow Catholics, about how this justice was a principled, stoic man, a force for good, and a consistent defender of the rights of those fighting federal power. Maybe with cases involving religion or abortion, he was, even during the last decade of his life. But not when the power of Uncle Sam was stretched out to protect his favorites. The record is clear.

Congress Can’t Do Anything, But They Still Find Time to Protect Big Banks – Alabama Consumer Finance Attorney Judson E. Crump

July 11, 2016 by Attorney Judson E Crump Leave a Comment

The U.S. House of Representatives Recently Passed a Bill to Help Large Financial Institutions Get Away with Ripping Off Their Customers.

It’s called the “Financial Services and General Government Appropriations Act,” and its current bill number is H.R.5485. Why does it matter? A little backstory is needed. Back in 2009, before people had forgotten just how bad the Subprime Mortgage Meltdown was, Congress passed a law called the Dodd-Frank Wall Street Reform and Consumer Protection Act. Unlike a great many laws passed by Congress (like, for instance, the comically named “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005” which did nothing to either prevent bankruptcy abuse nor protect consumers), the Dodd-Frank Act really did try to reform Wall Street and protect consumers. Whether it succeeds will take some time to figure out.

One of the cornerstones of Dodd-Frank’s protections was the Consumer Financial Protection Bureau, which was authorized to regulate banks and financial institutions in certain ways. One of those authorized regulatory powers was the ability to restrict the use of forced arbitration.

As I and many others have explained before, forced arbitration sucks for a lot of reasons, because it is usually biased in favor of big corporations and if you get stuck with a bad or even a crazy decision, you cannot appeal it.

Of course, people who have done bad things generally don’t like having to pay for them, so big businesses who deal with lots of consumers love arbitration. Lots of corporations stick arbitration clauses in their massive 30 page contracts, even for things as seemingly minor as a cable subscription or cell phone purchase. Most arbitration clauses prohibit you from joining in or filing a class action lawsuit. So if a cable company overcharges 200,000 customers by $25 each, then they’ve stolen $5 Million, and they should have to pay it back, right? Most people believe so. But arbitration lets them get away with small frauds and ripoffs, because nobody is going to hire a lawyer and file a lawsuit for $25. Since the arbitration clause prevents these people from all joining together, the cable company just gets away. If a human steals $5 Million, you go to jail. If a big business steals $5,000,000, they just need to make sure they have an arbitration agreement with everyone they stole from.

This is ridiculous, so the CFPB recently issued a regulation to prohibit financial institutions from being able to do exactly that. Naturally, the banks kicked and screamed and called their pets in Congress to block the CFPB from implementing this common-sense rule. Unsurprisingly, the House of Representatives gave them exactly what they asked for. They passed this bill along party lines (Republicans mostly voted for the banks; Democrats mostly voted against them).

Hopefully, the bill will never get signed. Stay tuned.

A Microcosm of the Congressional Dysfunction Created by Industry Lobbyists – Two Letters to the CFPB

October 22, 2014 by Attorney Judson E Crump 1 Comment

Last year, the Consumer Financial Protection Bureau decided to finally get around to regulating sketchy car dealers and other non-bank arrangers of consumer financing.

Why? Because as everyone who deals with auto dealers and their financing partners knows, car dealers very often conceal important facts from the people they deal with. In this particular case, the CFPB was concerned with the way that dealers will hike up interest rates or other finance charges for borrowers who seem unsophisticated or ignorant, and lie about it. Here’s a great and common example: you go to a dealership and find a car you like. You’ve run your credit before, so you believe that you can be approved for about $18,000 of financing at 12% APR. After hours at the dealership going through paperwork and waiting while they make phone calls and work on computers, they present you with paperwork. But to your surprise, the price is $19,000 and the APR is 18%. You say “That seems a bit high!”

“That was all the bank would approve. We checked with 6 different finance companies, and that was the best deal we could find you.”

Of course, this is a lie. The truth is that they are trying to direct you to the finance company that provides the best deal for them – the one that will pay them the most for the contract. And since they pay more for contracts with higher rates relative to the creditworthiness of the buyer, they’re steering you to possibly the worst deal of the 6 companies, and they could have found you a 13% APR.

There is nothing illegal about making a profit. There is nothing wrong with not telling a buyer how much they paid for the car they’re selling you. That’s part of the deal. But there is something wrong with lying to people. When they say: “This is the best deal we could find” that should be the truth. If they want to profit, they should do it like the rest of us by buying things at a low value and selling them at a high value. So the CFPB wants to require them to be more honest.

Naturally, they don’t want to be more honest because that means they’ll be forced to – GASP! – give people fair deals! So they called their lobbyists in Washington and had them pester our Congressional representatives to try and stop the CFPB from helping out working folks. What happened?

13 House Democrats signed a letter demanding that the CFPB provide copies of all data used in determining that sketchy car dealers were lying to people about getting kickbacks from finance companies. Here is their letter:

Page 1. Even though their tone is nice, they still should be ashamed for obstructing a long-overdue effort to provide working people some relief from dishonest car dealers.

Page 2. There are 13 signatures in all.

By contrast, here are the letters from the Republicans.

Note how the CFPB's proposal to forbid dealers from concealing the amount of kickbacks they're getting from finance companies is characterized as "restricting consumer choice." This is how your party gets a reputation for hating poor people. — Page 1. Note how the CFPB’s proposal to forbid dealers from concealing the amount of kickbacks they’re getting from finance companies is characterized as “restricting consumer choice.”

Obviously, the Republican response was more pro-business and anti-consumer. No surprise there. And the way the Republican letter linguistically distorted the facts by using words like “control” and “restricting consumer choice” indicates that the letterw as probably written directly by the auto dealer lobbyists, not the Representatives themselves. That shows you just how much these 35 particular Congressmen are deeply in the pockets of the industry.

But the Democrat response is just as bad. Why? Because it shouldn’t have been written in the first place. There’s a reason only 6.5% of House Democrats signed on. Republicans make no secret of favoring businesses over people. It’s their raison d’etre.

Whose side are they on?

Pissed at a debt collector? File a Complaint with the CFPB – Alabama Consumer Credit Attorney Judson E Crump

February 28, 2014 by Attorney Judson E Crump 1 Comment

If you’ve read any of my blog posts, you know that the number one way to fight back against debt collectors is to document their harassment and find a lawyer to file a lawsuit under the Fair Debt Collection Practices Act. But maybe you’re not angry enough to file a lawsuit. Maybe you don’t care about getting a bit of extra cash and you just want to give them some of the trouble they’ve been giving you. Fortunately, there are other options. One of them is to file a complaint with the Consumer Financial Protection Bureau. It’s easy. Just go to http://www.consumerfinance.gov/complaintdatabase/ and follow the directions there.

What does this do? Well, it’s kinda like calling your local DA, but its more effective because 1) the District Attorneys in Alabama don’t care about ordinary people getting ripped off and 2) the CFPB works across the country and gathers the complaints of thousands of people like yourself. They keep records of all the complaints they get about each collector and when they get a lot of them or find some really nasty behavior, they’ll shut them down. Or hit them with massive penalties that can sometimes end up with the collection agencies sending you a check for your trouble.