Thursday, January 21, 2010

Northern District Certifies Credit Card Deceptive Advertising Class in Greenwood v. Compucredit Corp

On January 19, 2010, Northern District Judge Claudia Wilken granted plaintiffs’ motion to certify a California UCL class arising out of alleged deceptive promotion of a subprime credit card that was marketed to consumers with low or weak credit scores. See Greenwood v. Compucredit Corp., 2010 U.S. Dist. LEXIS 3839 (N.D. Cal. Jan. 19, 2010). The challenged marketing, which occurred through a massive direct-mail solicitations and the internet, represented to consumers that the card could be used to “rebuild your credit”, that there was “no deposit required,” and that consumers would immediately receive $300 in available credit when they received their credit card. See id., at 2-3. However, upon receipt the consumer was actually required to make a $20 purchase payment to activate the card, which then triggered $185.50 in fees and finance charges that were immediately assessed against the $300 credit limit. See id., at 3. While these facts were disclosed in the challenged advertisements, they were buried in fine print and not in proximity to the representations that no deposit was required. See id.

Defendants’ efforts to sway the Court that adjudication of claims under UCL would splinter into a multitude of individualized issues failed. As reasoned by the Court, the solicitation materials “all are alleged to contain the same, or almost the same, combination of deceptive features.” See id., at 10, 12. Moreover, defendants’ claim that individualized inquiry would be required to determine whether each class member’s credit score increased was also rejected, as the Court deemed that this fact bore no relation to the plaintiffs’ claimed misrepresentations. See id., at 10.  As reasoned by the Court, common issues predominated insfar as Defendants' liability would be adjudicated based on common proof without inquiry into the individual circumstances of each class member:
[I]n In re Tobacco II Cases, the California Supreme Court held that only the named plaintiff in a UCL class action need demonstrate injury and causation.
Here, Plaintiffs may prove with generalized evidence that Defendants' conduct was "likely to deceive" members of the public. The individual circumstances of each class member's credit card application need not be examined because the unnamed class members are not required to prove reliance and damage. Common issues will thus predominate on the UCL claim.
See Greenwood, 2010 U.S. Dist. LEXIS 3839, at 20-21.

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