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Nationwide Mutual Insurance CIPA Lawsuit

CIPA Lawsuit Against Nationwide Mutual Insurance

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Nationwide Mutual Insurance CIPA Lawsuit

A CIPA lawsuit was recently filed against Nationwide Mutual Insurance for illegal wiretapping and invasion of privacy, and now a federal judge in California has ruled that the case can proceed to trial. The U.S. District Court judge issued the ruling in response to a motion to dismiss the wiretapping claims under Section 631 of CIPA, or the California Invasion of Privacy Act. The civil suit alleges that Nationwide Mutual unlawfully allows a third party to eavesdrop on customer conversations on the insurance company’s website. Chat communications are allegedly monitored in real time, and the sensitive personal data from those conversations is allegedly stored and used for financial gain. These actions would constitute clear violations of California consumer privacy laws.

These days, it is common for many different types of businesses to violate the CIPA and other invasion of privacy laws. If you live in California and used the chat feature on a company’s website, you may be eligible to join a class action lawsuit for invasion of privacy. The Los Angeles consumer protection lawyers at Tauler Smith LLP can help you get financial compensation.

Nationwide Mutual Insurance Sued for Invasion of Privacy

The defendant in the recent invasion of privacy case is Nationwide Mutual Insurance Co., which is a corporation that offers insurance, retirement, investing, and other financial services and products to consumers in the United States, including residents of California. Nationwide operates a website: www.nationwide.com. The website has a chat feature, which customers can use to have online conversations with Nationwide. Sometimes, the customers who use the chat feature may share sensitive personal data with the company.

Third-Party Wiretapping of Customer Conversations

Nationwide Mutual Insurance has been accused of using a third-party company, Akamai or Kustomer, to embed code into the Nationwide website, which allows the third-party company to monitor and store transcripts of the conversations that occur through the chat feature. Akamai specializes in harvesting data from consumer conversations, which is believed to be the reason that Nationwide contracted with them in the first place.

Significantly, Nationwide does not inform customers who use the chat feature on the website that monitoring of conversations, storing of transcripts, or data harvesting occurs. Beyond that, Nationwide does not obtain customers’ consent for any of these activities.

Federal Judge Denies Motion to Dismiss Wiretapping Lawsuit Against Nationwide Mutual Insurance

The plaintiff in the consumer data privacy case is a California resident who used a smartphone to visit the Nationwide Mutual Insurance website and to communicate with Nationwide via the company’s website chat program. She filed her original legal complaint in Los Angeles County Superior Court, and the case was later removed to the U.S. District Court for the Central District of California.

Once the case arrived in federal court, Nationwide filed a motion to dismiss the complaint. The U.S. District Court recently held a hearing on the motion to dismiss. Although the Section 632.7 CIPA complaint was dismissed, the court ruled that the Section 631 CIPA complaint could move forward to trial. The court found that the plaintiff had stated a valid claim under § 631 of the CIPA because she plausibly alleged that Nationwide aided third-party Akamai in violating the consumer privacy statute.

What Are California’s Data Privacy Laws?

On top of having extremely strong consumer protection laws, California also has some of the strongest digital privacy laws in the country. The three most prominent statutes are the California Invasion of Privacy Act (CIPA), the California Consumer Privacy Act (CCPA), and the California Privacy Rights Act (CPRA). All of these data protection laws impose civil liability on companies that invade the privacy of customers. The CIPA imposes a requirement on businesses to obtain permission from customers before recording telephone and internet communications, including online chat conversations. The CCPA specifically prohibits businesses from sharing the personal information of customers with third parties, while the CPRA amended the law to increase the penalties for violating consumer privacy.

What Conduct Is Prohibited by the California Invasion of Privacy Act?

Although Section 631 of the California Invasion of Privacy Act (CIPA) is technically a criminal statute with criminal penalties, the Penal Code authorizes civil liability for violations of the law. This means that consumers whose confidentiality was invaded by a company doing business in California can potentially bring a civil lawsuit for monetary damages.

California courts ruling on CIPA claims have interpreted Section 631 to prohibit three types of conduct:

  1. Intentional wiretapping.
  2. Attempting to learn the contents of a communication in transit over a wire.
  3. Attempting to use information obtained as a result of wiretapping or monitoring of communications.

Additional requirements or elements of a CIPA violation include that the intentional wiretapping was done while the communication was in transit and that the communication was being sent from or received at a location within California. The prohibited conduct includes reading the contents of any message, report, or communication without the consent of all parties to that message, report, or communication. If one of the parties did not know that the chat or other type of communication was being monitored and/or wiretapped, then it would not be possible for them to provide consent or authorization. The bottom line is that eavesdropping on a conversation is a clear violation of Section 631 of the CIPA.

“Aiding” a Violation of the CIPA

Section 631 of the California Invasion of Privacy Act (CIPA) also imposes liability on any company that “aids” or assists another in violating the statute. The plaintiff in this case alleges that Nationwide Mutual Insurance “aided, abetted, and even paid third parties to eavesdrop” on her conversations. Moreover, she alleges that these privacy breaches happened not only with her communications, but also with other consumers’ communications on the Nationwide website.

Party Exception to § 631

There is a “party exception” to Section 631 of the CIPA. Courts have found that a party to a conversation cannot be liable for “eavesdropping” on that conversation. But this gets complicated when the conversation involves a third party. For example, if computer code on a website automatically directs a communication to a third party, the party exception won’t shield the third party from civil liability under the CIPA.

U.S. District Court: Nationwide Mutual Insurance May Have Violated California Invasion of Privacy Law

The plaintiff in the Nationwide Mutual Insurance data privacy case alleged that Nationwide violated the California Invasion of Privacy Act (CIPA) pursuant to California Penal Code § 631. Now, the U.S. District Court for the Central District of California has found that the plaintiff plausibly alleged that Akamai read the contents of her messages, which would constitute a violation of Section 631 by Nationwide for “aiding” in the wiretapping offense. Moreover, the court agreed that it is conceivable that Nationwide hired Akamai specifically to intercept messages and use them for Nationwide’s financial benefit. This would constitute “aiding” the illegal wiretapping by Akamai, which would lead to Nationwide itself being liable for violating the CIPA.

One theory put forward in the case is that Nationwide paid Akamai to “embed code” into the website that “enables Akamai to secretly intercept in real time, eavesdrop upon, and store transcripts” of messages sent via the website chat feature. In fact, it has been alleged that Akamai’s business model is to harvest data from transcripts of communications. Significantly, the federal court said that one inference from the plaintiff’s legal claim is that the personal information being harvested goes beyond mere “record information” like the consumer’s name, address, and subscriber number.

Akamai has been accused of intercepting customers’ messages as they are sent and received on the Nationwide website. The court found that these allegations are “plausible” based on Akamai’s public statements about their conduct. Additionally, the court said that the plaintiff clearly alleged that neither Akamai nor Nationwide Mutual Insurance had her consent to harvest personal data from communications on the Nationwide website.

Contact the California Consumer Protection Lawyers at Tauler Smith LLP

Anyone who used the chat feature on a company’s website may have been the victim of illegal wiretapping and privacy violations. If you are a California resident who visited a website, the Tauler Smith LLP legal team can help you. Contact our Los Angeles consumer fraud and false advertising attorneys today. You can call 310-590-3927 or email us.

NBC Bay Area News & California ARL

NBC Bay Area News Report on California Automatic Renewal Law

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NBC Bay Area News & California ARL

Companies that do business in California are legally required to disclose an automatic renewal policy to customers before auto-renewing their subscription. A recent NBC Bay Area News report on the California Automatic Renewal Law (ARL) details how Chegg, an education technology company, has been accused of deceptively renewing subscriptions to a textbook rental service and then making it difficult for customers to cancel the subscriptions. The plaintiff in the lawsuit is seeking $2,500 in damages, which is what the ARL allows the court to impose against companies that violate the statute.

The Los Angeles consumer fraud attorneys at Tauler Smith LLP are seeking additional plaintiffs to join a class action lawsuit for ARL violations by Chegg and other companies.

KNTV San Francisco Bay Area News: ARL Claim Against Textbook Company Chegg

Battling auto renewal? Can’t cancel? Can’t get a refund? You have rights!

[…]

In Washington, the Federal Trade Commission is currently looking to toughen federal rules that govern auto renewals – and give consumers more power. When the FTC asked for public comment this spring, it got more than a thousand of them. Some businesses and business groups bristled. For example, the U.S. Chamber of Commerce commented that the FTC was imposing “substantial and burdensome regulations on the business community.”

The federal auto-renew fight is just beginning. But it’s settled in California. A little-known law called the California “Auto Renewal Law” is already on the books. “The fundamental aspect of the law, the way it’s phrased and how it’s designed, is to make it as easy to get out of as it was to get into it,” said Doug Allen, Assistant District Attorney in the Santa Cruz County District Attorney’s Office.

[…]

“This isn’t the biggest case out there, but I think it’s an important case nonetheless,” said attorney Robert Tauler. He filed a federal suit in San Jose. Tauler argues Chegg did “not use bold, highlighted, all-capitalized, or different-colored text for the automatic renewal terms” when Sheri signed up. He’s asking the court to order Chegg to refund Sheri – plus any other auto-renewed customers like her. Tauler wants a class action – to set some precedent. “I’d like businesses to be on the lookout that they should comply – whether they are large or they are small,” he said.

You can see the entire report on the NBC Bay Area News website.

Textbook Company Chegg ARL Claim

Tauler Smith Files ARL Claim Against Textbook Company Chegg

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Textbook Company Chegg ARL Claim

Tauler Smith LLP filed an ARL claim against textbook company Chegg for allegedly renewing customer subscriptions without notice or authorization. KNTV, which serves as the NBC outlet for the San Francisco Bay Area, reported that the civil lawsuit was filed in federal court on behalf of a student who rented a book for her law school class. It is not uncommon for consumers who make what they thought was a one-time purchase online to later realize that they have been charged again – and again! – for an auto-renewing subscription. The California Automatic Renewal Law (ARL) makes it illegal for companies like Chegg to engage in this kind of deception. The statute also gives consumers the ability to pursue damages of up to $2,500 for each ARL violation. California false advertising attorney Robert Tauler is leading the fight for consumers against companies that violate the rights of customers with deceptive auto-renewal policies.

Click here to view the NBC Bay Area News report on the latest lawsuit filed under California’s ARL. To learn more about the Automatic Renewal Law claims against Chegg, keep reading this blog.

NBC Bay Area News Investigates Automatic Renewal Law Claim Against Chegg

A recent report by KNTV, the Bay Area affiliate of NBC, details the battle being fought by consumers who learn that they were automatically enrolled in a Chegg subscription service without their permission. The KNTV investigative team learned that many of these consumers have also found it nearly impossible to cancel the subscription and to get a refund for the unauthorized charges.

The plaintiff in the case is Sheri Moyer, a law student who needed a textbook for one of her law school classes. That book would have cost her upwards of $120, so instead she rented a digital textbook for $19.99 from Santa Clara-based Chegg. What is Chegg? Chegg markets itself as an education technology company that offers online tutoring, textbook sales, and both digital and physical textbook rentals to students in a variety of fields.

Moyer only needed the law school course book to complete a short class assignment, so it made sense for her to rent it instead of buying it. She paid for a 30-day subscription on Chegg and finished her assignment. But she was shocked when she checked her credit card statement the following month to see that Chegg charged her for another 30-day subscription. It turned out that the textbook rental company had auto billed her without authorization. To make matters worse, Chegg refused to refund Moyer’s money because “they had a zero-refund policy.”

Tauler Smith LLP Files Consumer Protection Lawsuit Against Chegg

Sheri Moyer has enlisted the Los Angeles law firm Tauler Smith LLP to help her file a civil suit against Chegg in the U.S. District Court for the Northern District of California. Chegg contested the lawsuit by getting the case moved to arbitration. Moyer wanted the case to go to trial so that she would have an opportunity to tell her story to a jury, but a federal judge ruled that the parties must first present their arguments to an arbitrator. The judge also ruled that the parties will need to provide the court with regular updates on the arbitration process.

Tauler Smith LLP frequently represents plaintiffs in consumer fraud actions and automatic renewal lawsuits filed in California courts. For example, our legal team recently filed an ARL claim against a casting company accused of deceptively renewing customer subscriptions to their service.

Consumer Class Action Lawsuit: Chegg Accused of Automatically Renewing Subscriptions Without Permission

In the Chegg textbook rental case, Sheri Moyer is suing for reimbursement of fraudulent charges, as well as statutory damages. That’s because the ARL allows consumers to recover $2,500 for each violation of the auto-renewal statute.

More than anything, Moyer wants to make sure that the online textbook rental company is held accountable for their deceptive actions, which allegedly included failing to disclose their auto-renewal policy. Moyer’s attorney, consumer advocate Robert Tauler, filed the suit in the federal court in San Jose because he wants to establish legal precedent throughout the state and send a strong message to other companies that trick customers into auto-renewing subscriptions. Tauler believes this is an important business fraud case that warrants class action status, which is why he is asking other consumers who have been charged for automatically renewing subscriptions to come forward. By exercising their legal rights, they can help put a stop to the fraud being committed by many online retailers that do business in California. Consumers who join the class action lawsuit can also recover statutory damages of $2,500 for every ARL violation committed by the company.

Contact the California Consumer Protection Attorneys at Tauler Smith LLP

The California consumer protection lawyers at Tauler Smith LLP regularly appear in both state and federal courts on behalf of consumers who were fraudulently charged for automatically renewing subscriptions. Our legal team is currently looking for plaintiffs in a class action lawsuit against the educational support services company Chegg. If you signed up for a textbook subscription with Chegg or any other type of subscription with an online retailer, we can help you file a civil suit for financial compensation.

Call 310-590-3927 or send an email today.

NBC Los Angeles News & California ARL

NBC Los Angeles News Report on California’s ARL

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NBC Los Angeles News & California ARL

 

When a customer uses the internet to sign up for a subscription service that automatically renews, there are rules that the subscription company needs to follow in order to comply with both federal and state consumer fraud laws. For example, the California Automatic Renewal Law (ARL) imposes disclosure requirements on businesses. The ARL also requires businesses to make it easy for consumers to cancel their subscriptions. An NBC Los Angeles News Report on California’s ARL details recent consumer lawsuits filed by Tauler Smith LLP against companies that have violated automatic subscription renewal laws.

KNBC Los Angeles Report on California Automatic Renewal Law Violations

Your automatic subscription renewal should be easy to cancel, but many aren’t, and it’s against the law. Companies are supposed to let you know how much they’ll charge you and when. If they don’t, you can take them to court and could be awarded $2,500.

[…]

Douglas Allen is an assistant district attorney in Santa Cruz County. He’s also a member of a state task force set up to enforce the automatic renewal law. “Frankly, we’ve seen some pretty egregious violations of the law,” he said. Allen said most companies comply with the law, but some make it especially difficult for customers to cancel their subscriptions. “There’s a lot of money to be made in the auto-renewing contracts. And the less savory companies expect to make their money because they deceive people into three or four auto-renewals before they realize what they’ve signed up for,” he said. In the past eight years, Allen said the task force has investigated 45 companies; 15 were found in violation of the law, resulting in $16 million in fines.

View the full report on the NBC Los Angeles website.

NBC News on Automatic Renewal Law

NBC News: Robert Tauler on California’s Automatic Renewal Law

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NBC News on Automatic Renewal Law

In a recent on-air report, NBC News spoke to attorney Robert Tauler about California’s Automatic Renewal Law (ARL). The impetus for the story was a lawsuit filed by Los Angeles law firm Tauler Smith LLP on behalf of a consumer who accused a casting company of automatically renewing his subscription to their service without notice or authorization. Many consumers find that it is incredibly difficult to cancel their subscriptions after they sign up for a service or make what they intended to be a one-time purchase online. Worse yet, a lot of companies will even go so far as to change the terms of the subscription and then renew it without informing the customer. The California Automatic Renewal Law, or ARL, makes it illegal for companies to use deceptive subscription methods. Under the ARL, a company that violates automatic subscription laws can be sued for $2,500 for each violation.

Click here to see the NBC Los Angeles report on subscription claims filed under California’s Automatic Renewal Law. To learn more about the ARL claims filed by Tauler Smith LLP, keep reading this blog.

NBC Los Angeles News Airs Report on ARL Claim Against Casting Company

NBC Los Angeles News recently aired a report on a lawsuit filed by Chris O’Brien, a Pasadena resident who is alleging that a casting website charged his credit card for a subscription renewal without permission. O’Brien is being represented by Tauler Smith LLP, a law firm which regularly represents consumers in automatic renewal claims filed in California courts and ARL claims filed in federal courts.

Casting Frontier is a talent agency that helps actors find auditions and casting calls through online searches on the company’s website. In a report on KNBC Channel 4, NBC Los Angeles detailed how Casting Frontier has been accused of charging customers’ credit cards and renewing annual memberships without authorization. In Chris O’Brien’s case, he didn’t realize that the talent agency had raised the cost of his membership until after they automatically renewed his online subscription. He told NBC News that he never received an email or any kind of notice from the casting website before the charges appeared on his credit card. The fee spike was noticeable because the membership cost went from $75 all the way up to $200, or more than double the original fee.

The NBCLA I-Team investigated the troubling allegations being made against Casting Frontier. The KNBC broadcast team later aired the results of the investigation and provided key details about the California Automatic Renewal Law (ARL), including information about how consumers can use the law to get substantial monetary compensation. If O’Brien wins his case against the casting company, he could be awarded $2,500 under the ARL.

How Consumers Can Get Compensated Under the California Automatic Renewal Law

The unfortunate reality is that Casting Frontier is far from the only company that has been accused of violating California’s automatic renewal laws. These days, it is common for people to use their cell phones and computers to quickly subscribe to different products and e-commerce services such as movie streaming platforms, music apps, food deliveries, and even pet supplies. A lot of these subscriptions renew automatically, which opens the door for unethical companies to use deceptive tactics on customers.

California has extremely strong consumer protection laws that explicitly prohibit companies that do business in the state from deceiving customers through fraud or false advertising. One of these consumer protection statutes is the Automatic Renewal Law (ARL), which imposes certain requirements on businesses that automatically renew subscriptions:

  • The company must clearly and conspicuously disclose any auto-renewal offer terms.
  • The company must obtain affirmative consent from consumers before charging their credit cards for an automatic renewal.
  • The company must allow customers to easily cancel their subscriptions.

In fact, the California statute is so strong that it has become the model for all other state automatic renewal laws, as well as federal law on auto-renewing contracts. The California ARL, which is codified in Cal. Bus. & Prof. Code §§ 17600, stipulates that consumers can’t be hit with new charges that they haven’t previously agreed to. This means that companies must inform consumers of exactly how much they will be charged for a subscription, as well as when those charges will be issued. The bottom line is that consumers must be made aware that a subscription will renew and that they are going to get a second charge.

California Auto-Renewal Task Force (CART)

The state of California has a task force dedicated to enforcing California’s Automatic Renewal Law. The California Auto-Renewal Task Force (CART) includes prosecutors from the district attorney’s offices in Los Angeles County, San Diego County, Santa Barbara County, Santa Clara County, and Santa Cruz County. CART has investigated dozens of companies over the years and imposed more than $16 million in fines against violators of both California state laws and federal laws.

Douglas Allen, an active member of CART, observed that many ARL violations are egregious, with companies intentionally making it difficult for customers to cancel subscriptions once they’ve signed up for a service. These companies count on customers allowing a subscription to auto-renew three or four times before they realize what’s happening.

ARL Statutory Damages

If your subscription was automatically renewed without your affirmative consent, you could be eligible to file a lawsuit and receive a minimum of $2,500 in statutory damages.

Consumers need to trust their gut when they think they might be dealing with a deceptive company. According to Los Angeles consumer protection lawyer Robert Tauler, “Anytime a consumer feels wrong about a situation or feels frustrated with a subscription service, that’s reason enough to know that something’s probably off.” Consumers who learn that they were billed for an automatically renewing subscription should speak with a California consumer fraud attorney immediately.

Contact the California Consumer Protection Lawyers at Tauler Smith LLP

The Los Angeles consumer protection lawyers at Tauler Smith LLP represent plaintiffs in cases against companies that violate California’s Automatic Renewal Law (ARL). If you signed up for a monthly or annual subscription that automatically renewed, our experienced attorneys can help you file a civil suit and get restitution of your expenses and financial compensation for any harm or losses you suffered. Call 310-590-3927 or email us.

Website Wiretapping & CIPA

California Invasion of Privacy Act & Website Wiretapping

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Website Wiretapping & CIPA

It is important for consumers who interact with businesses online to have a solid understanding of the California Invasion of Privacy Act (CIPA) and website wiretapping. When you have a conversation with someone on the phone or via the computer, there is usually a reasonable expectation that the conversation will remain between the two parties. But what happens when what you believed to be a private conversation was actually being wiretapped, surveilled, and/or recorded by the other party? If this happens in the context of a business transaction, sales call, or online chat, your information could be sold to other companies that profit from the data. This has become a very serious problem in the internet era when personal data can be transmitted and circulated at a rapid pace. It’s one reason that California consumer privacy laws like the CIPA have become so important as tools to protect consumers against unethical business practices.

To learn more about the consumer protections against website wiretapping afforded by the California Invasion of Privacy Act, keep reading this blog.

What Is Website Wiretapping?

Wiretapping is a term used to describe the act of connecting a listening or recording device to a telephone. Website wiretapping occurs when the chat communications on a website are unlawfully recorded, transcribed, or surveilled without permission. These days, wiretapping technology is commonly used to secretly record conversations on websites that were supposed to remain private. Some of the reasons that people might illegally wiretap a website chat include gaining information about a business competitor, learning the details of an opponent’s lawsuit, or acquiring valuable data about a customer that can be sold to others.

Illegal wiretaps are not just against the law; they can also cause significant harm to victims. That’s why California allows individuals to file civil lawsuits against anyone who records their online conversation without consent.

California’s Law on Website Wiretapping: Section 631 of the CIPA

California has a number of very strong consumer protection laws that prohibit companies from jeopardizing the digital privacy and security of customers. Any company that does business in California needs to be completely transparent in their data collection practices, which includes obtaining proper consent from customers and website visitors before any personal information is shared online.

For example, California courts have held that it is a violation of California’s Invasion of Privacy Act (CIPA) for companies to wiretap user chats and other communications on websites. It is specifically a violation of § 631(a) of the CIPA when the intercepted communications contain what might be considered more sensitive than “record information” such as the user’s name, address, email, etc.

Additionally, Section 631 of the CIPA gives consumers a legal right to know when their phone conversation is being recorded, or when their online chat conversation is being monitored and transcribed. That is why a lot of companies provide automated warnings at the beginning of calls to alert customers to the possibility that the call may be monitored or recorded, and privacy policies on websites that disclose the monitoring of website chat communications with session recording technology.

Wiretapping on Websites:

Customers have a reasonable expectation of privacy when they visit a company’s website and use the chat feature. Their privacy rights are violated when a company wiretaps the online conversations, and they are further violated when that company allows third-party entities to eavesdrop on the chat conversations.

In recent years, many companies doing business online have been accused of breaching the privacy of individuals who visit their websites. When those websites are accessible to customers in California, the companies may be violating California’s very robust consumer privacy laws. Companies violate the California Invasion of Privacy Act (CIPA) by illegally wiretapping the conversations of website visitors.

Winning a CIPA Claim for Illegal Wiretapping

The simple fact is that a lot of businesses fail to provide clear warnings about the nature of phone conversations, online chats, or other communications with customers. When a business secretly monitors or records a conversation, the customer whose privacy rights were violated by the illegal wiretapping may be able to take legal action by filing a CIPA claim.

One element of a successful CIPA claim that the plaintiff will need to prove is that they had a reasonable expectation of privacy. Generally, the content and circumstances of the conversation can be used to determine whether such an expectation existed. This is where the court will examine a number of case-specific factors, including:

  • The identity of the person who initiated the conversation.
  • The purpose of the communication.
  • The duration of the conversation.
  • Whether there were prior conversations between the parties.
  • The type of information that was communicated.
  • Whether the party recording the conversation provided a warning.

Section 632(c) of the CIPA clarifies that when the parties to a communication reasonably expect to be overheard or recorded, it does not qualify as a “confidential communication” under the law.

Civil Remedies Available to Consumers Under the CIPA

As mentioned above, the CIPA includes both civil and criminal penalties for companies that violate the statute by unlawfully accessing, maintaining, or sharing customer data. For consumers who have been victimized, the civil penalties can be a valuable tool to get some sort of justice. The CIPA allows consumers to file civil lawsuits in California state court to recover damages of up to $5,000 for each invasion of privacy violation. Additionally, in some cases, the court may order the defendant to pay treble damages that total three (3) times the economic harm suffered by the consumer.

Criminal Penalties for Wiretapping in California

Violations of the wiretapping law can also result in criminal penalties. On the criminal side, the CIPA gives courts the ability to impose penalties such as monetary fines and even jail time. A person charged with a crime for monitoring and recording a private communication could be sentenced to up to three (3) years in the county jail.

The decision about whether to bring criminal charges against a business or individual for breaching your privacy rights by recording a conversation will ultimately be made by prosecutors and other law enforcement authorities. If charges are filed against the defendant, the case will be heard in criminal court. A knowledgeable attorney can help victims start this process, as well as helping victims decide whether to file a civil lawsuit to recover money damages either before or after resolution of the criminal case.

Other Data Privacy Laws in California

Data privacy has been a major concern of California lawmakers for a while now, which is why the state has tended to lead the way with this kind of legislation. In fact, the California Invasion of Privacy Act (CIPA) is just one of the state’s extremely strong consumer fraud laws with a focus on data privacy. The California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA) are two other laws that explicitly protect customers against companies that overreach when it comes to sharing personal data. In fact, both the CCPA and the CPRA require companies doing business in the state to give customers the right to opt out of the sharing of their data.

Recently, plaintiffs have been relying on § 638.51 of the CIPA to file class actions against companies that use pen registers or trap and trace devices to acquire data from website visitors without permission.

Contact the Los Angeles Consumer Protection Lawyers at Tauler Smith LLP to File a Website Wiretapping Claim

Too often, companies doing business online choose to deliberately disregard the privacy concerns of customers who use their websites. Instead, these companies prioritize financial gains over consumer privacy and personal well-being. If you visited one of these websites and shared any information via a chat feature, you may be able to get statutory damages under the wiretapping provision of the CIPA.

The Los Angeles consumer protection lawyers at Tauler Smith LLP can help you file a website wiretapping claim. Call 310-590-3927 or email us to learn more.

Arlo Home Security Invasion of Privacy

Arlo Home Security System Sued for Invasion of Privacy

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Arlo Home Security Invasion of Privacy

Arlo Home Security System is being sued for invasion of privacy. The consumer protection attorneys at Tauler Smith LLP recently filed the lawsuit on behalf of a California resident who used the company’s website: www.arlo.com/. Specifically, Arlo is accused of engaging in the unauthorized collection, storage, and sharing of the personal information of its customers. Arlo has also been accused of allowing a third-party company to secretly intercept and monitor the online chat conversations of website visitors without their knowledge or consent. Arlo’s actions are alleged as clear violations of the California Invasion of Privacy Act (CIPA), which explicitly prohibits companies from engaging in behavior that violates certain privacy rights of customers.

We believe Arlo could be potentially violating other privacy rights of consumers based on our preliminary investigation. Keep reading this blog for more information.

Arlo Technologies Fails to Protect the Privacy Rights of Customers

Arlo is a home security company that sells doorbells and security cameras with wireless connections. Arlo Technologies, Inc. is the parent company that manufactures the wireless surveillance cameras and smart home security systems being marketed to consumers for both residential and small business use. Customers are able to use the Arlo.com website to purchase products, monitor their home security systems, and communicate with the company.

Arlo primarily manufactures and sells home security cameras, which means that it is absolutely imperative that the company complies with all applicable federal and California state laws and regulations concerning data privacy. Moreover, the nature of Arlo’s business of selling security cameras and recording devices means that the personal information being collected from customers is likely to be extremely sensitive. When Arlo fails to protect the privacy rights of customers, it exposes them to significant risks not just because the information shared typically goes beyond basic record information to include personally identifiable details, but also because users are able to transmit video files over the internet that make them vulnerable to serious abuses of their privacy.

Privacy Lawsuit Filed Against Arlo Home Security System in Los Angeles County Superior Court

The plaintiff in the current lawsuit against Arlo alleges that Arlo unlawfully collected data using a third-party service on its website. The lead attorney for the plaintiff is Betsy Tauler, a consumer protection attorney who focuses on privacy law. Tauler filed the lawsuit in the Los Angeles County Superior Court.

Arlo’s Chatbox:

A major issue has been raised about the digital privacy of consumers who use Arlo’s website and share their private information. When the plaintiff in this case browsed the site, the complaint alleges, she interacted with a chatbox function that used a third party to collect information about her without her consent. Additionally, the home security system company allegedly utilizes the third-party chatbox on the website to unlawfully transmit and store user data. Arlo does this by covertly embedding code into its online chat function that sends the chat to a third party who collects data from the chat without the user’s knowledge. This type of commercial surveillance is illegal in California and violates the California Invasion of Privacy Act (CIPA).

Arlo’s Privacy Policy:

Arlo has been accused of collecting data from many website visitors without providing any disclosures about how their private information is being used. Although the Arlo website has a privacy policy, the policy is easy to miss because it is not prominently displayed on the home page. In fact, the policy is buried deep within the website, making it difficult for users to read and understand its terms before they provide personal information when prompted to do so by the website chat bot. The complaint filed in the Los Angeles County Superior Court alleges that Arlo’s failure to make sure that website visitors are aware of the terms of the privacy policy constitutes a deliberate attempt to mislead them.

Arlo Sued for Violations of the California Invasion of Privacy Act (CIPA)

The California Invasion of Privacy Act (CIPA) prohibits companies from wiretapping and eavesdropping on the electronic communications of customers. The statute also specifically requires website operators to conspicuously warn visitors if their conversations are being recorded or if any third parties are eavesdropping on them.

The CIPA applies to conversations transmitted via a “cellular radio telephone” or a “landline telephone.” These categories have been found to include smartphones that enable web browsing, as well as desktop computers and laptop computers that utilize wi-fi. The plaintiff in this case accessed Arlo’s website using a smartphone.

Arlo Home Security System faces a civil suit for violating two sections of the California Invasion of Privacy Act:

  • Section 631
  • Section 632.7

§631 of the CIPA:

Section 631(a) of California’s Penal Code prohibits companies from using any machine, instrument, or contrivance to wiretap a conversation. The statute also forbids companies from reading the contents of any message or communication without the consent of all parties to the communication.

Section 631 applies not just to telephone conversations, but also to internet communications. This means that Arlo’s wiretapping of website chat communications would constitute a clear violation of the CIPA.

Additionally, Arlo allegedly embedded software on its website for the purpose of recording and eavesdropping on customer communications, which is also prohibited because this type of session recording software qualifies as a “machine, instrument, or contrivance” as defined by the statute.

§632.7 of the CIPA:

Arlo has also been accused of violating Section 632.7 of California’s Penal Code by intercepting and intentionally recording customer communications transmitted via telephone. The plaintiff in this case accessed Arlo’s website and used the chat feature with a smartphone, which qualifies as a sophisticated “cellular radio telephone” as defined by the law. Since the statute prohibits companies from recording telephony communications without the consent of all parties, Arlo’s actions would constitute a violation of Section 632.7.

According to the complaint, Arlo’s actions demonstrate that the company is more interested in profiting from its users’ personal information than it is in protecting users’ privacy rights.

Arlo Allegedly Surveils Customers

Arlo allegedly also allows ADA, a third-party company, to eavesdrop on customer conversations. ADA allegedly collects transcripts of these conversations and uses them for financial gain in unregulated dark data markets without any limitations. Additionally, ADA may be exposing Arlo customer data in international data transfers, which could involve foreign countries with different data protection laws.

Arlo allegedly pays substantial sums of money to ADA to embed code into the website chat feature. This is how ADA is able to allegedly intercept the chat communications in real time. The third-party company then eavesdrops on those conversations and stores transcripts. Website visitors have no way of knowing that this is being done. In fact, the complaint alleges that no one who uses the chatbox feature on the Arlo.com website is informed that they are being subjected to unlawful surveillance.

Do You Use Arlo for Home Security? Call the California Consumer Protection Attorneys at Tauler Smith LLP

Anyone within California who uses Arlo and believes they have been unlawfully collecting data may be eligible to file an invasion of privacy lawsuit to recover injunctive relief and statutory damages under the California Invasion of Privacy Act (CIPA) or other consumer protection laws.

The California consumer fraud lawyers at Tauler Smith LLP are representing plaintiffs in a class action lawsuit against Arlo Home Security System. For more information, call 310-590-3927 or send us an email.

Amazon Alexa and Ring Settlements

FTC Settlement: Amazon’s Alexa, Ring Security Cameras, and Privacy Laws

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Amazon Alexa and Ring Settlements

Amazon recently reached a settlement with the Federal Trade Commission (FTC) and the Department of Justice (DOJ), agreeing to pay $31 million in civil penalties for consumer privacy violations associated with the company’s Alexa voice assistant devices and Ring doorbell cameras. The DOJ alleged that Amazon engaged in a number of unreasonable privacy practices, ultimately resulting in an FTC settlement involving Amazon’s Alexa, Ring security cameras, and privacy laws.

The use of home security cameras and other internet-connected devices to spy on and illegally record customers has triggered several high-profile lawsuits, including a recent invasion of privacy claim against Arlo Home Security System in California. In the Amazon case, the tech behemoth was accused of violating federal laws by using Alexa voice devices and Ring doorbell cameras to unlawfully collect voice and video data, including data from children. The FTC and the DOJ said that Amazon illegally stored voice information, geolocation information, and video recordings without user permission. Moreover, the tech giant allegedly failed to delete kids’ Alexa recordings when those removals were requested by parents. The FTC and the DOJ filed complaints against Amazon in federal court, and now those cases have been settled: Amazon agreed to pay $25 million for its Alexa privacy violations that compromised children’s data and another $6 million for Ring privacy violations that exposed users to surveillance, threats, and harassment.

To learn more about the DOJ and FTC settlements reached with Amazon over the company’s Alexa voice service and home security cameras, keep reading this blog.

Federal Trade Commission Accuses Amazon of Invading Privacy of Alexa Users

The Amazon settlement resolved two separate claims filed against the tech company by the FTC:

  1. A claim that Amazon’s Alexa service was being used in violation of federal child privacy laws.
  2. A claim that the Ring doorbell cameras were being used to illegally spy on customers.

The FTC’s Alexa complaint was filed in the United States District Court for the Western District of Washington, and it alleged that Amazon violated both the Federal Trade Commission Act (FTC Act) and the Children’s Online Privacy Protection Act (COPPA) by deceiving parents about how data collected by the Alexa devices would be utilized. Specifically, the FTC alleged that Amazon unlawfully recorded children’s voices and maintained their geolocation data while telling parents that they could delete voice recordings and other data collected by the Alexa app.

What Is Amazon’s Alexa Service?

Amazon’s Alexa is a cloud-based voice assistant service that is used by millions of Americans. Alexa allows consumers to interact with technology designed to make their lives easier. For example, Alexa can be used to check the weather, learn the latest news developments, perform online searches for information, listen to music and audiobooks, play games, order products from Amazon.com, and stream content on smart TVs. Global sales of Alexa devices have topped more than half a billion, with use of the Alexa voice service increasing every year since it reached the market. This includes more than 800,000 children under the age of 13 who have their own Alexa profiles.

Alexa devices are made by both Amazon and third-party manufacturers, meaning that the technology is available on hundreds of millions of devices. Although Amazon’s marketing of its Alexa service and Echo devices claims that they are “designed to protect users’ privacy,” the fact that the Alexa mobile application is connected to the internet means that the data recorded by the device is accessible online and exposes users to scary breaches of their privacy.

Amazon Violations of the FTC Act

Section 5 of the Federal Trade Commission Act (FTC Act) prohibits companies from engaging in “unfair or deceptive acts or practices in or affecting commerce.” Amazon was accused of committing multiple violations of Section 5 of the FTC Act:

  • Falsely representing that users of the Alexa app could delete their geolocation data upon request.
  • Falsely representing that Alexa users could delete voice recordings, including voice recordings of their children.
  • Unfair privacy practices that caused substantial injury to users of the Alexa service.

Amazon Violations of the Children’s Online Privacy Protection Act (COPPA)

The Children’s Online Privacy Protection Act (COPPA) is a federal law that was passed by Congress in 1998, and it was intended to strengthen general privacy laws with specific protections for minors under the age of 13 who use the internet. The impetus for COPPA was a rise in websites that were secretly collecting the personal data of children. The COPPA Rule is codified in Section 1303(b) of COPPA, 15 U.S.C. § 6502(b), and Section 553 of the Administrative Procedure Act, 5 U.S.C. § 553. The COPPA Rule imposes strict requirements on the operators of commercial websites that target children: these websites must notify parents about the information collected. COPPA also requires website operators to give parents the option to delete their kids’ information at any time.

Although Amazon specifically promised Alexa users in a “Children’s Privacy Disclosure” that the company would delete their data upon request, the FTC alleged that Amazon continued to maintain children’s data long after such requests had been made. FTC consumer protection chief Samuel Levine observed that COPPA explicitly forbids companies “from keeping children’s data forever.”

Moreover, even in those instances when Amazon did erase the data, they reportedly retained written transcripts of the children’s recordings in a database that was accessible by employees. Amazon did not disclose to parents that the company was keeping the written transcripts and continuing to access them. FTC Commissioner Alvaro Bedoya said that Amazon deceived parents about its data deletion practices by failing to comply with parental requests to erase children’s voice data collected by Alexa. This was a violation of federal laws meant to protect children against online threats and privacy invasions.

Amazon tried to justify its actions by saying that it kept children’s voice information to improve the company’s voice recognition algorithm, to help the company better respond to voice commands, and to give parents enough time to review the information. According to Amazon, the algorithm is a form of artificial intelligence (AI) that learns and gains capabilities as it acquires more information. Artificial intelligence has become extremely controversial as an increasing number of tech companies have started to introduce AI products and applications into the marketplace. This is one reason that it was so important for the FTC to send a strong message to Amazon and others that using AI and other technologies to invade customer privacy will not be tolerated by the government. The Amazon Alexa settlement will bar the company from using children’s data to train the company’s algorithms.

Amazon Settles FTC Case Alleging Alexa Consumer Privacy Invasions

Samuel Levine, the FTC consumer protection chief, commented on the Amazon Alexa settlement and highlighted “Amazon’s history of misleading parents, keeping children’s recordings indefinitely, and flouting parents’ deletion requests.” All of these actions violated the Child Online Privacy Protection Act (COPPA) and “sacrificed privacy for profits.”

The Alexa settlement with the FTC includes a number of provisions:

  • Amazon must pay a $25 million civil penalty.
  • Amazon can no longer use children’s geolocation data or voice information for the purpose of creating or improving company products.
  • Amazon must delete any inactive Alexa accounts belonging to children.
  • Amazon must notify all users about the FTC action against the company, as well as the settlement.
  • Amazon is prohibited from misrepresenting its privacy policies in the future, especially as they pertain to geolocation data, voice recordings, and children’s voice information.
  • Amazon must create and strictly enforce a privacy program related to geolocation data.

As part of the Amazon Alexa settlement, the company will have to implement privacy safeguards for child users. The company will also have to make significant changes to the way it stores Alexa data: there will be a requirement that Amazon delete certain information right away so that underage children won’t have their information exposed. Amazon has also agreed to delete child accounts that are inactive, as well as voice data and geolocation data from active accounts.

In the wake of the Alexa settlement, FTC Commissioner Alvaro Bedoya warned companies “sprinting to do the same” thing as Amazon that they should think twice, especially if their products will be used by kids. Bedoya, who has two children of his own, said that “nothing is more visceral to a parent than the sound of their child’s voice.”

Department of Justice Files Complaint Against Amazon for Invading Privacy of Ring Home Security Camera Users

The Federal Trade Commission (FTC) doesn’t just protect children’s privacy; the agency is committed to protecting the privacy of all consumers. That’s why the FTC and the Department of Justice (DOJ) brought a second case against Amazon alleging that the tech giant violated federal law by allowing employees and contractors to access Ring doorbell cameras used by customers, with the access leading to illegal surveillance of the customers. Additionally, the FTC said that Ring did not take sufficient actions to stop hackers from accessing customer cameras.

Amazon Subsidiary Company Ring Sells Home Security Cameras

Ring is a subsidiary company of Amazon that primarily sells home security cameras, doorbells, and other accessories that are connected to the internet. Amazon has sold more than one million indoor cameras to customers in the United States and internationally. These cameras are typically used on the exterior entryways of a home, but they can also be used as indoor cameras to monitor private spaces such as bedrooms and bathrooms. It is these indoor cameras that were frequently targeted by Ring employees and hackers looking to spy on customers, with nearly 40% of all Ring devices that were compromised being either Stick Up Cams or Indoor Cams marketed primarily for indoor use.

Amazon bought Ring in 2018 for roughly $1 billion. Although most of the alleged privacy violations happened before Amazon acquired Ring, the parent company is still liable for any violations of federal law. Ring security cameras are marketed by Amazon as affordable cameras that can be attached to houses or, more commonly, to doors so that users can monitor entry into their homes. But while customers believed that they were securing their homes by using Ring cameras, they were actually exposing their homes to nefarious actors – many of whom were employed by Amazon.

DOJ Complaint Against Amazon for Ring Doorbell Cameras

The Justice Department filed its Ring complaint on behalf of the Federal Trade Commission (FTC) in the U.S. District Court for the District of Columbia. The complaint alleged that Amazon violated Section 5 of the FTC Act in connection with the company’s Ring cameras.

Ring Security Cameras Illegally Accessed by Company Employees

According to the DOJ complaint, Ring home security cameras were accessed by company workers who subsequently spied on and harassed customers. In fact, the workers who gained access to the devices were also able to communicate directly with customers and threaten them. There were documented instances of female customers being cursed at in their bedrooms, children being subjected to racist slurs, and a number of Ring customers receiving death threats. These same individuals harassing and terrorizing Ring customers also used the cameras to set off false alarms and to change home security settings.

The Ring home security videos were reportedly available to every employee, and this was true for all customer videos over a period of several years. The complaint filed by the Department of Justice in federal court stated that Ring “gave every employee…full access to every customer video.” Beyond allowing unauthorized access, Ring’s lapses when it came to customer security also meant that company employees were able to download customer videos and then share those videos freely with anyone. The videos could be downloaded, saved, and even transferred by both Ring employees and contractors based out of Ukraine.

Ring Employees Spied on Customers

One Ring employee allegedly accessed and viewed thousands of recordings from Ring security videos being used by female customers. According to the FTC, this employee targeted 81 different women who were using the Ring Stick Up Cams. The employee’s criminal actions included focusing searches on Ring cameras with names suggesting that they had been placed in customer bedrooms or bathrooms. The illegal spying reportedly continued for months before Ring took any action at all to stop it.

Another Ring employee was accused of accessing a camera belonging to a female employee and subsequently spying on her by watching video recordings stored on her account.

These privacy beaches continued for months and, in many cases, years before Ring finally took action to limit what the FTC called “dangerously overbroad access” and impose any kind of technical or procedural restrictions on employees who were trying to access customers’ home security videos. Additionally, the FTC complaint stated that Ring did not obtain consent for human review of video recordings, and that the company “buried information in its Terms of Service and Privacy Policy.” This meant that consumers had no way of knowing that Ring employees had access to their stored videos.

Ring Exposed Consumers to Cyberattacks by Hackers

Ring also had insufficient security measures to protect customer information against hacking, which led to some customer accounts being compromised via credential stuffing and brute force attacks. The FTC alleged that the doorbell company’s failure to fix “bugs in the system” allowed hackers to access customer cameras and, in some cases, to harass and frighten customers. This stemmed from “system vulnerabilities,” which Ring failed to repair despite knowing that the problems existed.

During one cyberattack committed against Ring, more than 55,000 U.S. customers had their Ring accounts compromised. Nearly 1,000 of these customer accounts had their stored videos unlawfully accessed, which included viewing, downloading, and sharing of recordings, livestream videos, and customer profiles.

Amazon Settles Ring Consumer Privacy Complaint

The Ring settlement with the DOJ and the FTC requires Amazon to pay $5.8 million. That money will be used to issue refunds to Ring customers who were affected by any privacy violations and data breaches. The settlement also requires Amazon to delete Ring data that had been stored since before Amazon acquired the company. Amazon must also implement new privacy and security measures to ensure that consumer data is not exposed or compromised, including multi-factor authentication before access is granted to customer accounts.

Both the Alexa settlement and the Ring settlement will need to be approved by federal judges before they take effect.

California Laws Protecting Consumers Against Invasion of Privacy: CIPA, CCPA, CLRA, and UCL

California’s consumer protection laws are among the strongest in the country, with the California Invasion of Privacy Act (CIPA), the California Consumer Privacy Act (CCPA), the Consumers Legal Remedies Act (CLRA), and the California Unfair Competition Law (UCL) providing robust protections against invasion of privacy, false advertising, and consumer fraud that go even further than federal laws like the FTC Act and COPPA. For example, companies that do business in California are not allowed to expose or share the sensitive personal information that you disclose when you use their products, services, or websites.

California’s digital privacy and consumer protection laws also explicitly prohibit companies from illegal wiretapping on websites, unauthorized recording of online chats, sharing the personal data of customers, false advertising that misleads consumers, and other deceptive business practices.

Contact the California Consumer Protection Attorneys at Tauler Smith LLP

Did you purchase or use a home security camera, doorbell camera, Alexa device, or any other internet-connected device? If so, your privacy may have been invaded in violation of both federal and California state laws. The experienced Los Angeles consumer protection lawyers at Tauler Smith LLP can help you file a civil suit for invasion of privacy and get financial compensation. Call 310-590-3927 or email us today.

Goodyear Tires Wiretapping Lawsuit

Goodyear Tires Wiretapping Lawsuit to Proceed

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Goodyear Tires Wiretapping Lawsuit

In a highly anticipated ruling, a federal judge in California recently denied Goodyear’s motion to dismiss wiretapping claims based on their use of third-party chat applications hosted on their website. This ruling allows the Goodyear Tires wiretapping lawsuit to proceed. The complaint alleges that when users visit www.goodyear.com/ and use the website chat feature, they share personal data in communications that are unlawfully recorded and transcribed. The plaintiff alleged that Goodyear was allowing a third-party company to intercept, eavesdrop, and store transcripts of the conversations, which is prohibited by the California Invasion of Privacy Act (CIPA).

Do you live in California? Did you use a chat feature on a commercial website? You may be eligible to file a civil suit for invasion of privacy and get financial compensation. Contact us now.

CIPA Claim: Judge Denies Motion to Dismiss Goodyear Wiretapping Lawsuit

The California Central District Court recently issued a ruling in a case involving allegations that Goodyear Tires violated the California Invasion of Privacy Act (CIPA) by wiretapping user chats on the company’s website. The federal court agreed with the plaintiff that the chat feature violated the CIPA, ruling that the plaintiff contends that Goodyear used a third-party service to “intercept in real time” website visitors’ chat conversations. The court added that the allegation that user messages were unlawfully intercepted “is to be taken as true at this stage of the case.”

In her CIPA claim, the plaintiff alleged that visitors to the Goodyear Tires website share “sensitive personal information” when they use the chat conversation. Significantly, the court ruled that the plaintiff pled sufficient facts for a claim under § 631(a) of the CIPA by showing that chat communications were intercepted, and those communications plausibly contained “more than mere record information” such as her name and address.

Wiretapping of Smartphone Communications

The California Central District Court also addressed the fact that the plaintiff accessed the Goodyear Tires website on her smartphone, which is considered a cellular phone with web capabilities. The federal court noted the precedent set by other courts that have applied § 632.7 of the CIPA to internet-based communications, ruling that the plaintiff has sufficiently alleged that users of Goodyear’s chat feature have a reasonable expectation of privacy because they share highly sensitive personal data.

California Has the Strongest Data Privacy Laws in the Country

California’s consumer protection laws include the California Invasion of Privacy Act (CIPA), the California Consumer Privacy Act (CCPA), and the California Privacy Rights Act (CPRA). The CIPA requires companies to get permission before recording any online chats, while the CCPA gives customers the right to prevent companies from sharing their personal data and the CPRA bolsters those digital privacy protections. California’s data privacy laws go even further by placing the onus on companies to make efforts to warn customers if their phone conversations or online chats are being monitored or recorded. In fact, California has some of the strongest such laws in the country. This may be why Goodyear’s terms of use include a forum selection clause requiring claims to be filed in another state: Ohio.

Goodyear Website Terms of Use

The Goodyear Tires website has a “Terms of Use and Privacy Policy” hyperlink at the bottom of the homepage. Site visitors can only see this link by scrolling all the way down on the website. When a user clicks on this link, they are directed to a “Terms, Conditions & Privacy Policy” page that includes another link for Terms of Use. There is no option for the user to click a button acknowledging that they have read the terms of use. Buried deep on this page is a section on “Applicable Laws,” which includes a forum selection clause stating that anyone who uses the Goodyear website automatically consents to litigating any legal disputes in an Ohio courtroom.

Goodyear Forum Selection Clause

In a recent lawsuit filed in California by Los Angeles false advertising attorney Robert Tauler against Goodyear, the tire company attempted to get the case moved to a jurisdiction with less stringent consumer protection laws. Goodyear specifically requested that the venue be changed from the U.S. District Court for the Central District of California to the District Court for the Northern District of Ohio.

Goodyear Tires argued that the plaintiff already agreed to having any legal proceedings handled in Ohio because she used the Goodyear website and automatically consented to the forum selection clause contained in the website’s “Terms of Use.” Robert Tauler responded on behalf of the plaintiff and persuasively argued that it was not possible for the plaintiff to legally consent to the forum selection clause because there was neither actual nor constructive notice of the “Terms of Use.”

The California federal trial court hearing the case ultimately rejected Goodyear’s motion to change venue, which means that the case will be adjudicated in the California Central District Court and decided under California’s very strong invasion of privacy and consumer protection laws. The court gave several reasons for ruling in favor of the consumer-plaintiff and against Goodyear, including contract formation laws which require mutual assent in order for a contract to be binding on both parties.

Are Internet Contracts Legally Enforceable?

The Ninth Circuit Court of Appeals previously identified two categories of internet contracts like the Goodyear terms of use:

  1. Clickwrap Agreements: Site visitors must check a box to confirm that they agree with the website’s terms and conditions of use.
  2. Browsewrap Agreements: Site visitors are able to click on a hyperlink that will take them to a page with the website’s terms and conditions of use.

An important aspect of browsewrap agreements is that it is possible for a site visitor to continue using a website without knowing that the agreement even exists. That’s because browsewrap agreements like the one on the Goodyear Tires website do not require site visitors to take any affirmative action. This creates a legal issue for internet contracts that rely on browsewrap agreements since users might not have an opportunity to assent to the terms of use. Courts have held that such a contract can only be valid if the website user had either actual or constructive notice of the terms and conditions.

Goodyear Browsewrap Agreement

The Goodyear browsewrap agreement does not qualify as a valid, legally binding internet contract because the website terms of use are inconspicuous: the hyperlink can only be seen when the user scrolls to the bottom of the page, and the text does not stand out against the background colors. This does not provide the user with sufficient notice. In Wilson v. Huuuge, Inc., the Ninth Circuit Court of Appeals held that courts should not enforce a similar smartphone app agreement “where the terms are buried at the bottom of the page or tucked away in obscure corners of the website.”

Additionally, there is nothing on the Goodyear Tires website that requires the consumer to click a button, check a box, or take any other action that would unambiguously convey their assent to the terms of use. This also means that site visitors are not provided with constructive notice of the website terms of use which they are supposedly agreeing to abide by.

Class Action Lawsuit Against Goodyear Tires for Violating California’s Wiretapping Law

When you visit a website, you have an expectation that your personal data will be protected and that any conversations you have on the website will remain confidential. The Los Angeles consumer protection attorneys at Tauler Smith LLP help clients file CIPA claims both individually and in class action lawsuits against companies that violate California’s data privacy laws. For example, our attorneys have represented individuals whose data was compromised due to illegal wiretapping and eavesdropping, including chat conversations on company websites.

The CIPA is a criminal statute that subjects companies to criminal penalties, including jail time and substantial fines. Victims can also bring civil lawsuits to recover statutory damages of $5,000 for each illegally recorded conversation. In some cases, it may be possible to recover treble damages, meaning that plaintiffs are eligible for up to three (3) times the total economic damages caused by the invasion of privacy.

Contact the California Consumer Protection Attorneys at Tauler Smith LLP Today

Did you use the chat feature on the Goodyear Tires website? Did you use a chat feature on any other commercial website? If so, your personal data may have been unlawfully recorded without your consent and in violation of both state and federal wiretapping laws. The California consumer protection lawyers at Tauler Smith LLP can help you. Call 310-590-3927 or send an email to learn more and find out if you are eligible to file a CIPA claim.

Shipping Insurance Claims & UCL

Shipping Insurance Claims and the UCL

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Shipping Insurance Claims & UCL

Many companies that offer shipping insurance on e-commerce sites are violating California insurance laws, which have strict requirements about who is allowed to offer insurance and how that insurance can be offered. Moreover, California’s insurance laws can serve as a predicate for civil lawsuits brought under other statutes, including the California Unfair Competition Law (UCL). When it comes to shipping insurance claims and the UCL, there is strong legal precedent in favor of consumers who are charged for insurance by an unlicensed agent. Additionally, the shipping insurance offered by online sellers is often just a surcharge on services already being provided, which is business fraud that can also be the basis for a civil suit.

To learn more about how California consumer protection laws can be used to file a shipping insurance lawsuit against e-commerce sellers, keep reading.

Filing a Shipping Insurance Lawsuit Under California’s Unfair Competition Law (UCL)

Some companies that offer shipping insurance on their e-commerce websites expressly label it as “insurance,” while other companies call it “safe ship” or use another term. In fact, it is common for online sellers to refer to an insurance fee by some other name. For example, the plaintiff in Miller v. Travel Guard Group alleged that the company mislabeled the travel insurance fee on their website in order to get around the state prohibition against unlicensed agents selling insurance. Regardless of what term is used, however, both the California Insurance Code and the Unfair Competition Law (UCL) protect consumers against unlawful offers of insurance.

Section 1631 of the California Insurance Code imposes licensing requirements on any entity that seeks to sell insurance in the state. If a company violates the California Insurance Code by attempting to sell insurance as an unlicensed agent, consumers may be able to bring a UCL claim. Additionally, companies that hide a shipping insurance charge on a purchase could be exposed to lawsuits under the UCL for false, misleading, deceptive, and unlawful marketing and sales practices.

Section 17200 of the UCL

The California Unfair Competition Law (UCL) is set forth in Cal. Bus. & Prof. Code § 17200. The statute defines “unfair competition” as:

  1. Any unlawful, unfair, or fraudulent business act or practice.
  2. Unfair, deceptive, untrue, or misleading advertising.

The UCL is a sweeping law that is meant to protect both consumers and businesses. In fact, the statute has been interpreted broadly by California courts to cover a wide variety of business acts and consumer transactions, including antitrust violations, intellectual property claims, employment claims, misbranded drug products, and disputes over shipping insurance charges.

Both federal and California courts have held that companies may be sued for breach of contract and unfair competition when they violate state insurance laws. In fact, the U.S. Court of Appeals for the Ninth Circuit said that the California Insurance Code can serve as a predicate for a claim brought under the California Unfair Competition Law (UCL) even though the UCL does not explicitly provide for a private right of action for shipping insurance claims. In Miller v. Travel Guard Group, the California Northern District Court went even further by ruling that consumers may bring a claim under the UCL based on both an illegal agent theory and an illegal premium theory when the insurance fee is automatically included in the total price and the customer is not given an opportunity to opt out of paying it.

Only Licensed Agents Can Sell Insurance in California

California has strict laws regulating exactly who can sell insurance. Whether it’s auto insurance, property insurance, health insurance, general liability insurance, or shipping insurance, only licensed agents are allowed to offer insurance to customers. One way that California law protects consumers against insurance fraud is by requiring many types of insurance agents (e.g., home and auto insurance) to file bonds with the state insurance commission.

In order to charge customers for shipping insurance, a company must comply with California’s insurance laws. This means that insurance agents need to be registered with the state. Beyond that, owners, insurance agents, and even non-licensed employees must provide fingerprints that are kept on file with the state. All of this is in addition to standard business certification requirements, such as securing a certificate of good standing if the company is a corporation and a certificate of organization if the company is an LLC.

Friedman v. AARP Established Precedent for Shipping Insurance Claims in California

In Friedman v. AARP, Inc., the Ninth Circuit Court issued an important ruling that set precedent for subsequent cases involving offers of insurance to California consumers. The plaintiff in Friedman was a Medicare recipient who purchased UnitedHealth supplemental health insurance coverage through the AARP (previously known as the American Association of Retired Persons). Since AARP earned a 5% commission on the sale, they were essentially acting as an insurance seller without a license. This would be in direct violation of California Insurance Code § 1631. That statute prohibits anyone from soliciting, negotiating, or effecting an insurance contract unless the person holds a valid license from the California Commissioner of Insurance. California Insurance Code § 1633 goes even further by explicitly prohibiting an unlicensed company from “transacting” insurance regardless of whether the company reports itself as an insurance agent.

Facts of the Case

The plaintiff in the case was Jerald Friedman. He was one of several AARP members who filed a class action against AARP because the organization allegedly charged inflated insurance rates for Medigap coverage. (Medigap policies provide supplemental health insurance for costs that are not already covered by Medicare.) These exaggerated charges allegedly stemmed from a hidden commission that AARP was collecting.

The lower court in Friedman dismissed a class action brought by the plaintiff under the UCL. The Ninth Circuit then reversed that decision because the federal appellate court determined that AARP’s fee arrangement qualified as a commission on every insurance sale. In other words, AARP was acting as an insurance agent by selling insurance.

UCL Violation

Section 17200 of the California Unfair Competition Law (UCL) explicitly prohibits companies from engaging in “any unlawful, unfair, or fraudulent business act or practice.” AARP was accused of violating the UCL by committing the unlawful act of selling insurance without a license.

Since AARP is not licensed to sell insurance in California, it is unlawful for the group to offer insurance to its California members. AARP marketed the Medigap policy to its members in a number of ways, including television ads, websites, and materials sent directly through the mail. A lot of these advertisements included text reading, “This is a solicitation of insurance.” Although AARP later tried to describe its insurance commission as a “royalty,” the federal government determined that it was still a commission being charged on top of the typical monthly premium. This meant that AARP was essentially acting as an insurance agent despite not having a license to do so in California.

Unlawful to Conceal a Shipping Insurance Charge in California

Under California law, there is an expectation that consumers will be able to provide informed consent for purchases they make online. Unfortunately, some businesses trick customers into paying more for shipping insurance with hidden or confusing features on their e-commerce websites, particularly when it comes to placing and finalizing orders. The businesses generate additional revenues by offering a service that they are not legally allowed to offer without a valid, state-issued license.

Companies that do business in California and use deceptive marketing and sales tactics could be subject to civil suits for violating the UCL. That’s because the statute prohibits false, misleading, deceptive, and fraudulent acts or practices, which may include attempts by the business to deceive customers about hidden shipping insurance fees. An experienced Los Angeles insurance claim lawyer can help consumers bring a lawsuit against companies that violate the UCL by making an unlawful offer of shipping insurance.

UCL Claims

When consumers unknowingly purchase shipping insurance on a website due to misleading and/or deceptive information, they suffer an injury. The Unfair Competition Law can be used as the basis for a shipping insurance lawsuit if the defendant violated the “fraudulent” prong of the statute by misleading customers about the additional charge. In these cases, the plaintiff will need to establish two elements to bring a successful claim: (1) that the company deceived the public in some way either in an advertisement or during the checkout process; and (2) that the consumer relied upon the company’s statements or advertisement.

There are several ways that a company could violate the UCL by attempting to charge customers for shipping insurance:

  • Confusing Language: The company might use ambiguous and confusing language to describe the insurance charge, which means that consumers won’t necessarily understand what it is that they are purchasing.
  • Hiding the Insurance Charge: It’s also possible that the company might hide the total purchase price from the consumer by failing to clearly inform them of the total cost when shipping insurance is included, or by failing to allow the consumer to edit their order once a shipping insurance charge has been added.
  • Lack of Consent: In the most egregious cases, the company might not even give the consumer an opportunity to consent to the shipping insurance charge. There have been cases in which a company automatically charges for shipping insurance unless the purchaser clicks on a random and inconspicuous “decline” button before completing the order.

When a company fails to disclose information that consumers need in order to make informed decisions about a purchase, it could be a violation of the UCL. Whether it’s a misleading advertisement or a concealed charge on a company’s website order form, California consumers may be able to bring a shipping insurance claim under the UCL.

CLRA Claims

This type of conduct by a business might also violate the California Consumers Legal Remedies Act (CLRA), which prohibits certain unlawful acts involving consumers. For example, the CLRA explicitly forbids companies from “advertising goods or services with intent not to sell them as advertised.”

The ordering and check-out processes on some e-commerce websites are confusing and possibly even deceptive. As a result, it’s very possible that consumers are unknowingly purchasing shipping insurance as an upcharge or add-on because websites don’t make the additional charge immediately apparent to site visitors. Moreover, it’s possible that some consumers would not have purchased the product at all if they had known about the shipping insurance charge. Worse yet, many consumers might not become aware of the additional charges until much later when their bank account or credit card is debited for the order.

Contact the Los Angeles False Advertising Lawyers at Tauler Smith LLP

Were you charged for shipping insurance while making a purchase on an e-commerce website? The Los Angeles false advertising lawyers at Tauler Smith LLP represent clients in civil lawsuits and class action lawsuits against companies that commit business fraud, including litigation involving shipping insurance claims against companies that illegally offer shipping insurance in online transactions. Call 310-590-3927 or email us to schedule a free initial consultation.