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Class Actions & Consumer Rights

Class Action's

In certain types of cases, the law provides for a “class action.” A typical class action is a case in which many affected consumers have a claim, but the monetary value of each claim is relatively small. When a consumer has a claim but the monetary damage he or she has suffered is not large, it may be difficult or impossible for the consumer to obtain legal protection of his or her rights or to bring a lawsuit to enforce those rights, because the cost of pursuing the claim is greater than the value of the claim itself.

Consider the following hypothetical example:

A bank charges you a $50 late fee that you think is illegal. No lawyer will represent you to sue for just $50. Many other consumers might also have suffered the illegal $50 fee.

In this situation, with a class action, it might be possible to recover damages for a large group of consumers. Sometimes, without a class action there might be no practical way for any consumer to obtain a legal remedy. It might cost the attorney more money than it’s worth to do the necessary work. If the consumer attempts to proceed on his own without an attorney, he may have to spend many hours trying to figure out the legal system for himself. The result is that the consumer is not protected and has no legal remedy.

To cure this situation, the law allows for the bringing of class actions in certain situations.  In a typical class action, the group of damaged consumers, or “class,” will consist of hundreds or thousands of persons who all suffered a similar harm. Because there are so many individuals involved, it would be impractical to bring a separate lawsuit for every single person. In the imaginary bank scenario above, however, if thousands of bank customers were each legally owed $50, they might have the ability to obtain that legal relief through a class action. For a free consultation, give us a call 800.849.5291 or email us.

The Law Requires

For a class action to be brought, the law requires that all of the affected individuals have similar claims. For example, where the unfair and deceptive practices of a company affect a large number of consumers the same way, those practices might give rise to a class action.

Not every person in the “class” has to actually be listed in the lawsuit when it begins. The law allows class actions to be brought by one or more “class representatives” on behalf of the many other class members.

Our law firm has experience with participating in class actions, where appropriate, in order to fairly and adequately protect the rights of our clients. Our attorneys are experienced in the prosecution of class actions and multiple-victim claims involving consumer fraud and unfair and deceptive practices.

There has been significant class action litigation in recent years in the following areas:

  • Consumer products
  • Consumer electronics
  • Home appliances
  • Computers, DVD players, home electronics
  • Phone company bills
  • Cable TV bills
  • Predatory lending
  • Payday lenders
  • Internet lenders
  • Internet scams
  • Reductions in pension benefits
  • Reductions in medical benefits

The plaintiffs in a class action are known as “named plaintiffs” or “class representatives,” and they file a lawsuit on behalf of a larger class of people.

Consumer class actions may be filed, where appropriate, to recover damages for people who have been harmed in similar ways by product manufacturers, predatory lenders, or other kinds of defendants.

The requirements for a class action include the following:

  • The number of victims must be so numerous that a class action makes more sense than having each person file an individual claim.
  • There must be common issues regarding all of the victims in the class.
  • The claims of the named plaintiffs (aka the “class representatives”) must be like the claims of other affected victims; their claims must be typical of those of other people.
  • The class representatives must be able to fairly and properly represent the class. The representatives must pursue the interests of the class as a whole, not just their own interests.

If a class action proceeds and the court enters a final judgment or settlement, in that case, even persons who were not involved in the lawsuit (known as “absent class members”) may be bound by the judgment or settlement of the matter.

However, often, the absent class members are entitled to notice and an opportunity to opt out of the matter. If an affected individual receives a notice and decides to opt out, this means that he or she will not be bound by any judgment or settlement of the class action, and he or she may have the ability to bring his or her own claim for damages.

Examples of our firm’s current class actions include:

If you have any questions about class action issues, please feel free to contact our office at (800)849-5291 or send us an email

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What is arbitration?

Arbitration works like this: let's say your bank overcharges you $500.  If you have an arbitration contract, then you cannot sue and have your claim decided by a jury.  Instead, your claim will be heard by a single individual who will decide all issues of fact and law. 

Consumer rights advocates have claimed that often the arbitration agencies and arbitrators can be biased because they receive so much of their business from big companies.  Also, if the claim is for a small amount of money, it may cost more money to arbitrate the claim than the claim is worth.

Other problems that people have pointed out with arbitration include:

You have no jury in an arbitration.  The fate of your claim rests only with an arbitrator, and not with a jury of local citizens

The arbitrator may have a concern that if he rules against the company, the company may not hire the arbitrator for more cases in the future.  Often it is the company who pays the arbitrator for his time.

The company may have a lawyer to help it, but you may not be able to afford a lawyer if your claim is small.

The arbitrator's decision may not be explained or published. 

The arbitrator’s decision may only be overturned by the court if you can go to the time and expense of proving extreme misconduct on his part. 

Depending on the terms of the particular arbitration clause, there could be a risk that you may have to pay the arbitrator and the corporation's attorneys. 

See also this article in Bloomberg Businessweek.

In addition, virtually all arbitration clauses also include a ban on bringing or participating in any form of class action.  In the above example, it might be possible for you to get legal representation if you could show that many, many other people were also overcharged - the sum of all your claims together would be enough to warrant hiring an attorney.  Arbitration clauses with class bans take away this option, forcing individual customers who have been wronged to face behemoth companies alone.

Often, customers never even know these provisions exist because they do not read the agreements.  Customers are rarely asked to agree to all terms before opening their accounts, and the arbitration agreements are mailed later. 

Most people who do take the time to read their contracts lack the legal knowledge necessary to truly understand how arbitration works and what they are giving up.  Even attorneys with full knowledge of these clauses often agree to them, simply because they have no other choice.  Bank accounts, credit cards, and mobile phones are necessary in today's world, and you cannot get any of those without signing on the line and agreeing to the terms presented.

Also, many times a person may agree to a contract by clicking a button on an internet website.  By clicking the button they have agreed to be bound by a long list of terms and conditions that they have never read.  This could include an arbitration clause.

What is a payday loan?

A payday loan is a loan for typically between $100 and $5000 with a very high rate of interest or a high fee.  Under North Carolina law, it is illegal to make someone a personal loan of less than $25,000 at an interest rate greater than 16% per year.

What is an internet loan?

An internet loan is a small loan offered over the internet which comes with a high interest rate or a high fee.  North Carolina limits the amount of interest and fees that a lender can charge.   

Has arbitration worked?

Consumer groups have argued that the arbitration system is more prone to injustice than the system of judges and juries.  In fact, there is evidence to show that injustice has occurred.  The National Arbitration Forum (NAF), then one of the major arbitration companies in the U.S., was (Minnesota Attorney General lawsuit complaint against NAF) sued in 2009 by the Minnesota Attorney General on the grounds that it defrauded customers into believing that it was an impartial dispute resolution forum, when (National Arbitration Forum biased - Web article) in fact the NAF was biased heavily toward its corporate customers.   (See also this article in Bloomberg Businessweek.) 

One retired Chief Justice of the West Virginia Supreme Court, who worked briefly for the NAF as an arbitrator, was quoted as having described the company as "professionals in squeezing small sums of money out of desperately poor people."  Other former arbitrators have reported that they were no longer given cases if they rendered decisions against the corporations that hired NAF. 

Such abuses do not necessarily extend to all cases and all companies, of course, but the secrecy and structure of arbitration make injustice very difficult to detect.

In the NAF matter, the NAF agreed to shut down its consumer arbitration business as a result of the Attorney General’s lawsuit.

Is there any way to avoid arbitration?

Sometimes a good and knowledgeable attorney can successfully argue that an arbitration clause should not be enforced, or can make a deal with a defendant to arbitrate on favorable terms or before an arbitrator whom the attorney believes is fair.  From time to time, courts have refused to enforce an arbitration agreement.

In certain cases, a party can successfully argue that the agreement to arbitrate was invalid for different reasons. 

These could include:

The arbitration agreement has language in it that is very unfair to the consumer, for example by requiring the consumer to pay a heavy fee if they want to arbitrate.

The agreement is unfair because it says only the company gets to pick the arbitrator.

The agreement is unfair because it would make the consumer travel thousands of miles to the arbitration.

The agreement was never included in the contract but instead the company tried to add it later.

The customer never signed the agreement.

Sometimes, courts have found that an arbitration agreement was “unconscionable” -- so unfair to the consumer agreeing to it as to "shock the conscience." 

An experienced law firm is vital in pursuing any potential class claim against a corporate defendant.  The class action attorneys at Wallace & Graham have years of experience fighting arbitration clauses and many other issues involved in class actions, and have successfully obtained class action or class arbitration status for several cases that involved arbitration clauses. 

For free consultation call (800) 849 - 5291 or email us, today! 

I think I might have a claim. Can I call you and see what you think?

Of course!  If you think you might have a legal claim, one of our attorneys would be happy to talk to you, and there is no charge for the consultation. Please call Wallace & Graham at (800) 849 - 5291 or email us. 

If I call you, is it going to cost me anything?

The consultation is free.  During the call, we will try to determine whether you have a legal claim and whether you have the evidence to pursue it in court.  If you do, we will then talk to you about the next steps.

What can I expect if I hire you?

We always work on a contingent-fee basis.  We will go over the details of this arrangement before you hire us, but the main points are: you only owe us money if your case wins.  We front the expenses and put in all the time on your case.  If you win, we recover our expenses and a fee for our time from your judgment or settlement.  If you don't recover, you don't owe us anything.                            

Typical consumer protection cases are for relatively small amounts of money, which means they are only viable claims if they can be brought as a class action.  During a free consultation, our attorneys will be happy to explain the criteria for bringing a class action and help you determine whether you qualify.

I got a payday loan. How much do I have to pay back?

Nothing.  The law in North Carolina is that it is a crime for a payday lender to collect even the principal amount of the loan.  However, before you refuse to pay any asserted debt, it is a good idea to get an opinion from a lawyer about the legality of the debt.  You can always call Wallace & Graham’s predatory lending attorneys at (800) 849 - 5291 for a free consultation.  You can also contact the North Carolina Attorney General’s Consumer Protection Division at (877) 566-7226 or (919) 716-6000 to get a second opinion.

The lender says that the payday loan I got is legal because the lender is an Indian Tribe or is located in another state. Are they right?

Call Wallace & Graham for a free consultation and we can help you figure this out.  If the loan was made in North Carolina, it is not legal.  Some lenders claim to be immune from being sued for their criminal conduct because of Indian Tribal immunity, but that is not sufficient as an argument that the loan is legal.  You can always call Wallace & Graham’s predatory lending attorneys at (704) 633-5244 for a free consultation.  You can also contact the North Carolina Attorney General’s Consumer Protection Division at (877) 566-7226 or (919) 716-6000 to get a second opinion.

I got a payday loan, and then I couldn’t pay, and now I’m getting phone calls all the time from people threatening to sue me, have me arrested, and garnish my wages. What should I do?

It’s not a crime to just owe somebody money, so you can’t be arrested for it.

It is illegal for someone who is calling you to collect a debt to do any of the following:

  1. Harass, oppress, or abuse you by threatening violence, using foul language, or repeatedly using the phone to harass you such as by calling late at night or repeatedly during the same day
  2. Call you at work after you have informed the caller that you are not allowed to receive personal calls at work
  3. Claim to be an attorney or government representative (unless they are actually an attorney)
    • To our knowledge, the FBI and NSA never call anyone to collect a debt.  If someone calling you claims to be from the FBI or NSA trying to collect a debt, they are almost certainly lying.  Demand proof, and if you’re still not sure, call the North Carolina Attorney General’s Consumer Protection Division and the Federal Trade Commission.
  4. Falsely claim that you have committed a crime
  5. Tell you that they will garnish your wages or seize your property, unless they are allowed by law to do so and intend to do so (typically, this means only if they have already sued you and won)
  6. Other behaviors prohibited by the Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), or Telephone Consumer Protection Act (TCPA)

The laws prohibiting these behaviors are enforced by the Federal Trade Commission (FTC) and Federal Communications Commission (FCC).  If you are receiving harassing calls, report the callers to the FTC and the FCC.

Whenever you receive a debt collection phone call that you suspect may violate the FDCPA, FCRA, or TCPA, demand, write down, and refuse to identify yourself or answer any questions until the caller has given you the following information:

  1. the caller’s name or identification number,
  2. the physical location of the caller,
  3. the name of the company they work for and the state wherein it is incorporated
    • (note that all real company names end in something like LLC, Co., Inc., Ltd., or something along those lines – make the caller give you the real name of the company they work for),
  4. the name of the company on behalf of which they are calling and the state wherein it is incorporated,
  5. the address you would use to serve legal documents on the company making the call,
  6. the address you would use to serve legal documents on the company on behalf of which they are calling,
  7. the physical address of the company making the call,
  8. the physical address of the company on behalf of which they are calling, and
  9. their phone number.
  10. also, write down the date and time of the call, and anything the caller says during the call that you believe is illegal.

It’s just common courtesy for a caller to identify himself or herself first.  Insist on it, and do not let the caller weasel out by hiding behind fictitious names.  Get the full legal name of not only the caller, but the company the caller is calling on behalf of.

If you are experiencing illegal debt collection phone calls, and you can identify both the entity calling you and the creditor, please call the predatory lending attorneys at Wallace & Graham at (800) 849-5291 for a free consultation.  It may be possible to bring a class action lawsuit against the debt collector or the creditor for illegal debt collection practices.

I stopped making payments on a payday loan and now they’re reporting it on my credit. What can I do?

If the loan was a payday loan made in North Carolina, then it was illegal and there is no debt.  Therefore it does not belong on your credit report.  Ask the credit reporting agency about their dispute procedures.

If you need help determining whether the loan was legal, feel free to call Wallace & Graham at (704) 633-5244 for a free consultation.