As outlined by the Associated Press, a Wisconsin appeals court has ruled the Cash Store can’t use language in its loan contracts that bars customers from the right to be able to file or join class action lawsuits. The contracts LTD uses usually has this within the fine print of the contract. The court decided that the act was “unconscionable” and thinks it violates the Wisconsin Consumer Act.
Class action ban there to protect consumers
The statement about class action comes according to New Richmond, Wis., consumer rights attorney Eric Crandall. He told the AP that any kind of lender that is like the Cash Store might be “easily annihilated” by the damages awarded in such a class action. The Cash Store should change its contract language because of the class action ban. Considering the trouble the franchise has had in Georgia and New Hampshire over the past year, it seems unlikely the Cash Store will resist the ruling.
Governor Jim Doyle’s personal loan law will start in December
Dec. 1 in Wisconsin, personal cash loan will now be limited to $1,500 or 35 percent of a borrower’s income. Only one rollover per existing loan is going to be allowed. Doyle’s move also banned post-maturity interest on personal loans of 91 days or longer.
Darcie Estes began it all
Darcie Estes borrowed $1,400 from Hudson, Wis., Cash Store to pay her mortgage and other bills. She ended up owing a lot more money because she defaulted on her loan. Cottonwood Financial LTD took her to small claims court in 2007 to collect the balance owed, to which they had the legal right. Estes was represented by Eric Crandall, who helped her file a counterclaim regarding the anti-class action clause. They went for attorney’s fees and damages. The Pierce County judge ruled that Estes had waived her right to a jury trial based upon upon what was in the contract. The appeal overturned this ruling.
Class actions – are they that great to start with?
There are various theories concerning whether class actions actually help the class proponents (the parties that filed the suit). Cottonwood Financial LTD and the Cash Store were deemed to be in violation of the Wisconsin Consumer Act, hence there may are good reason for Darcie Estes and also the rest of the class to file against them. Nevertheless, as the legal blog Class Action Lawsuits: Putting People Together suggests, the claimants are rarely the people who end up getting probably the most benefit from a class action. Usually the lawyers end up with many of the money, a fact that has spawned a lifetime of resentful jokes on their behalf.
Read more on this topic here
Associated Press
http://www.businessweek.com/ap/financialnews/D9FU0BB80.htm
“Class Action Lawsuits – Putting People Together” (How they REALLY work)
http://www.web-access.net/|aclark/profit.htm
“Class Action Lawsuits – Putting People Together” (The squeaky wheel gets the grease)
http://www.web-access.net/|aclark/profit.htm
