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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.

California Unfair Competition Law

California’s Unfair Competition Law (UCL)

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California Unfair Competition Law

California’s Unfair Competition Law (UCL) is one of the most important consumer protection laws in the country. California courts tend to interpret the UCL broadly so that it applies to a wide range of unethical business practices. The statute explicitly prohibits companies from engaging in unlawful, unfair, or fraudulent business actions. It also prohibits companies from using false advertising. Businesses that violate the UCL may be subject to penalties that include financial compensation, monetary fines, and injunctions to stop committing certain acts. This means that consumers who purchase a product or service from a business that violates the UCL may be able to have an experienced California consumer fraud lawyer file a lawsuit and seek financial restitution.

To learn more about the California Unfair Competition Law, keep reading this blog.

What Is the California Unfair Competition Law?

The California Unfair Competition Law (UCL) is codified in Bus. & Prof. Code section 17200. The UCL protects consumers against business fraud, false advertising, and other deceptive practices by placing limits on companies doing business in California. The statute also protects honest companies and ensures that competition remains fair and strong, with no one company allowed to stifle competition and gain a competitive advantage by breaking the law.

Importantly, the UCL applies to all private companies doing business in California. This means that if a company is based in another state, if they sell to consumers located in the state, or even if they advertise in the state, they can be sued under the UCL.

What Is “Unfair Competition”?

The California Unfair Competition Law defines “unfair competition” as any of the following:

  1. An unlawful business act or practice.
  2. An unfair business act or practice.
  3. A fraudulent business act or practice.
  4. Unfair, deceptive, untrue, or misleading advertising.
  5. Any other act prohibited by the UCL.

Courts have interpreted the UCL broadly so that just about any violation of the law by a business can also constitute a violation, so long as the action or practice injured consumers or gave the business an advantage over its competitors. One of the most common examples of unfair competition in consumer transactions is when a company makes misrepresentations to customers about the type, quality, or cost of a product or service.

Deceptive Advertising

Examples of deceptive advertising that may violate the UCL include robocalling customers, using bait and switch advertising to trick customers, using fake endorsements in ads, exaggerating product descriptions, omitting important information about a product or service in an advertisement, manipulating prices, using false reference pricing in ads, and infringing on another company’s intellectual property.

Unlawful, Unfair, and Fraudulent Business Acts

The UCL defines “unlawful” business acts or practices as any action taken by a company that violates state or federal law. Even if the company committed the unlawful act just once, that can be enough to trigger legal action under the UCL.

An “unfair” business act or practice, as defined by the UCL, is typically committed by either a company or a business competitor. Generally speaking, a company violates the UCL when they attempt to sell goods or services that harm consumers. In the context of a business competitor, it is considered an unfair business act when the company does something that broadly undermines competition in the marketplace.

The UCL also prohibits “fraudulent” business acts or practices, which means any conduct that misleads or deceives consumers. When a consumer relies on false statements made by the company in an advertisement or at the point of sale and subsequently suffers an economic injury, they may be able to bring a UCL claim for restitution.

Private Right of Action Under Section 17200 of the UCL

The California Unfair Competition Law (UCL) allows both private parties and public prosecutors to take legal action against companies that commit fraudulent business acts. In most cases, an individual who has suffered an injury because of unfair competition must have their lawsuit filed by a county or city prosecutor. When the lawsuit is filed as a class action, however, a consumer may bring the action as a private plaintiff.

Standing to sue under the UCL can be established by showing that the plaintiff sustained an economic injury because of the business’ conduct. If the plaintiff bought an item from the business, then this would be enough to meet the UCL standing requirement.

False advertising claims brought under the UCL must establish that the plaintiff sustained economic injury because the defendant company engaged in misleading advertising of goods or services. Basically, this means that the consumer needs to show that they purchased an item or service and that they did so because of a deceptive advertisement.

Strict Liability

Section 17200 of the Unfair Competition Law imposes strict liability on businesses that commit fraud, which means that it does not matter whether they intended to commit fraud. The mere fact that their actions were unlawful, unfair, or fraudulent is enough to violate the statute. Additionally, it is not a defense against a UCL claim that the company’s ad was true or accurate. That’s because the plaintiff in a UCL case merely needs to show that the ad was likely to mislead consumers.

Moreover, it is important for businesses to understand that they can be sued under the UCL even if their actions are not technically unlawful. That’s because the statute explicitly prohibits “unfair” business acts and practices.

Restitution and Damages Available in UCL Claims

There are two remedies available to plaintiffs in an Unfair Competition Law claim:

  1. Actual economic damages, which means the defendant company is ordered to pay back any money received from the consumer.
  2. An injunction ordering the defendant to stop committing the fraud.

There are no punitive damages allowed in UCL cases. This is one reason that individual consumers often join forces to file a UCL claim as a class action, which can make it harder for the defendant to avoid paying a large damages award. A knowledgeable California UCL attorney can help the plaintiffs determine if it would be better to bring a class action lawsuit.

What Is the Statute of Limitations for UCL Claims?

The statute of limitations for a UCL claim is four (4) years, with the clock starting as soon as the business commits the fraudulent act or as soon as the plaintiff discovers the fraud. The standard used in these cases is a reasonable person standard, which means that the court will ask whether a person who exercised reasonable diligence would have discovered the unlawful business act when the statute of limitations period started to run.

Consumer Fraud Defense: Answering UCL Claims

Sometimes, a consumer brings a UCL claim against a company without merit. These claims can be tricky for businesses to answer because the statute is interpreted broadly by courts, and plaintiffs are typically given wide latitude to prove their case. If you have been sued in state court for allegedly violating the Unfair Competition Law, you need to speak with a knowledgeable consumer fraud defense lawyer immediately.

Related Laws: CLRA, ARL, and FTC Act

There are a few other related statutes that California consumers should be aware of when deciding whether to file a UCL claim.

CLRA Claims

Unfair Competition Law claims are often accompanied by claims under the California Consumers Legal Remedies Act (CLRA). The CLRA is more limited than the UCL because the CLRA includes protections for specific actions by businesses, whereas the UCL applies broadly to business fraud. It may be in the best interests of a plaintiff to bring a claim under both statutes because the remedies are cumulative. Beyond that, only the CLRA allows for punitive damages to be imposed against the defendant. Additionally, the CLRA allows plaintiffs to recover attorney’s fees.

ARL Claims

It is also possible for California consumers to use the Unfair Competition Law to bring a private civil action against companies that violate California’s automatic renewal laws. This is significant because the California ARL does not allow for a private right of action, which means that consumers who are deceived into signing up for an auto-renewal subscription may still be able to sue for full restitution under the UCL.

Federal Laws

There are also federal laws, such as the Federal Trade Commission Act (FTC Act), that protect California consumers against business fraud and false advertising. One advantage for plaintiffs filing a UCL claim is that the state statute has broad consumer protections that go beyond the protections provided under federal law.

Keep in mind that defendants may argue that more lenient federal law should apply in a particular case instead of the stringent California state law. That’s why it is important to have a skilled Los Angeles false advertising attorney on your side throughout the case.

Contact the California Consumer Protection Attorneys at Tauler Smith LLP

Tauler Smith LLP is a Los Angeles law firm that represents consumers in civil litigation, including class actions based on UCL violations. Our Los Angeles consumer protection lawyers understand the nuances of the California Unfair Competition Law, and we can help you get financial restitution from a company that used fraudulent business practices. Call us today at 310-590-3927 or email us to discuss your case.

Strikethrough Price Lawsuits

Retailers Settle Strikethrough Pricing Lawsuits

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Strikethrough Price Lawsuits

In California and other states, several major retailers have settled strikethrough pricing lawsuits after being accused of violating false advertising laws. The lawsuits were filed in response to a common retail sales strategy: enticing customers to make purchases by highlighting comparison prices, which can include previous list prices that have since been reduced by the retailer or higher prices on similar items currently sold by competitors. This is especially prevalent among major retailers that advertise and sell products online. But comparison pricing is not without risks for the companies. That’s because there are both state and federal regulations of deceptive sale pricing. When a retailer violates these laws, it can lead to retail discount pricing litigation. Moreover, these lawsuits are often filed as class actions that involve many different consumers who were deceived into purchasing items because of deceptive pricing information.

To find out more about some of the major retailers that have been sued for strikethrough pricing violations, keep reading this blog.

Strikethrough Pricing in Retail Ads Can Violate California & Federal Consumer Protection Laws

Since price is often the deciding factor for consumers when the time comes to make a purchase, many retail companies use something known as compare-at pricing or strikethrough pricing. This is a sales and marketing strategy that emphasizes a product’s lower ticket price by comparing it to a higher list price or Manufacturer Suggested Retail Price (MSRP). Unfortunately, some retailers go too far with strikethrough pricing by offering deceptive discounts that mislead customers. Basically, the company mentions an inflated original price in an ad so that the “for sale” price appears greater by comparison.

What happens when a business misrepresents a sales price? For example, a company might offer a product at a perpetual sale price, meaning that it’s just a regular price that the company is lying about and passing off as a discounted price. Or a retail store might carelessly compare their price to another store’s price without acknowledging that the item offered at the other store is substantially different. It’s also possible that a business will use false reference pricing to compare their current price to a much higher price from many months or even years earlier. These kinds of fraudulent marketing and advertising practices may be unlawful violations of both California state and federal laws governing false advertising, consumer fraud, and unfair competition.

California Law

Under California’s comparison pricing law, retail companies that use reference prices when advertising or marketing their merchandise must follow strict guidelines. Most importantly, the original full price mentioned in the ad must be legitimate. If the item was never offered for sale at the higher price, or if it was only offered at that price for a short period of time, consumers may be able to file a lawsuit against the company for false advertising.

When a company cites a comparison price in an advertisement, they must be prepared to show that it was the prevailing market price within the three-month window preceding the publication of the ad. Absent that, the company must “clearly and conspicuously” indicate the date when the former price was in effect. Companies that fail to do either of these things may face consumer litigation in the form of a false advertising claim filed in California court.

Federal Law

The Federal Trade Commission (FTC) has a mission of enforcing federal consumer protection laws. To this end, the FTC has issued guidelines that strictly regulate former pricing. These promotional pricing guidelines stipulate that companies citing a former price in their ads or promotional materials must use an “actual, bona fide price” that was offered to the general public “on a regular basis for a reasonably substantial period of time.”

Major Retailers Named as Defendants in Comparison Pricing Lawsuits

Comparison pricing is a sales strategy used by retailers in a lot of different consumer categories:

  • Clothing & Department Stores: Dillard’s, JCPenney, Kmart, Kohls, Macy’s, Marshalls, Nordstrom, Ross Stores, Sears, Target, TJ Maxx
  • Auto Parts: Advance Auto Parts, AutoZone, Carquest, NAPA Auto Parts, O’Reilly Auto Parts, Pep Boys
  • Tools & Home Improvement: Ace Hardware, Harbor Freight Tools, The Home Depot, Lowe’s, True Value Hardware
  • Sporting Goods: Bass Pro Shops, Champs Sports, Dick’s Sporting Equipment, REI
  • Home & Kitchen Supplies: Bed Bath & Beyond, Best Buy, The Home Depot
  • Alcohol & Wine: BevMo, Total Wine & More

Calvin Klein, The Children’s Place, Dressbarn, Eddie Bauer, JCPenney, Pier 1 Imports, Shutterfly, and Zales are just some of the major retailers that have been named as defendants in nationwide class action lawsuits alleging false reference pricing. Other major retailers have been ordered to pay large judgments in California comparison pricing cases. For instance, a court ordered Overstock.com to pay almost $7 million when state regulators filed suit against the internet retailer.

Amazon Settles California Deceptive Pricing Lawsuit for $2 Million

California district attorneys also filed a complaint against Amazon for using unlawful comparison prices when advertising products. The case was brought by district attorney’s offices in six California counties: Alameda, Riverside, San Diego, Santa Clara, Santa Cruz, and Yolo.

The complaint, which was filed in San Diego Superior Court, alleged that the reference prices mentioned by Amazon in their ads did not match the prevailing market prices for the items being sold. The Amazon ads distinguished former prices from current prices by stating “Was” or “List” next to the higher price. Many of the online ads also had strikethrough lines across the former price, making it clear to consumers that the newer “sale” prices were lower. But California prosecutors said that these comparison prices were misleading because there was no evidence to suggest that they were real prices.

Shortly after the legal complaint was filed, Amazon agreed to settle the deceptive advertising case for approximately $2 million. This included civil penalties and restitution to the consumers who purchased products because of the misleading price listings. The court also ordered Amazon to make significant changes to its pricing disclosures in online ads. (E.g., including hyperlinks on the website that clearly define key terms such as “Was” and “List” when used with prices.)

Contact the California False Advertising Lawyers at Tauler Smith LLP

Tauler Smith LLP is a California law firm that represents consumers in false advertising cases throughout the United States. Call 310-590-3927 or send an email to find out if you might have a legal claim against a retailer for using deceptive comparison prices in product advertisements.

Deceptive Pricing Class Action

California Deceptive Pricing Class Action Lawsuits

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Deceptive Pricing Class Action

It has become increasingly common for consumers to join California deceptive pricing class action lawsuits against retailers that market and sell products with deceptive pricing information. California’s false advertising law is often used as the basis for consumer class action litigation concerning false reference pricing because the state law is favorable to consumers. In recent years, there have been a number of class action suits filed in state court as consumers sued major retailers because of misleading pricing. Some of these cases settled, with the retail company agreeing to change their sales policies and paying out large settlement amounts to consumers. If you bought an item because of a comparison price in an advertisement, the Los Angeles consumer protection attorneys at Tauler Smith LLP can help you.

Keep reading this blog to learn more about California consumer class action lawsuits alleging deceptive pricing by retailers.

Reference Pricing Is a Tool Used by Retailers to Generate Sales

A comparison price, reference price, or strikethrough price might refer to the full price at which the retailer previously sold the product, the list price at which another seller currently offers the product, or the Manufacturer Suggested Retail Price (MSRP) of the product. Retail companies often rely on reference pricing as a marketing strategy to entice customers to make purchases by emphasizing that the ticket price represents a significant discount over full price. The idea is that the customer will see a sales price next to a higher regular price and be more likely to buy the item because it is on sale. This is commonly known as comparison pricing or strikethrough pricing (because the original price may have a line through it), and it can be an effective tool to increase sales revenues.

The general idea behind comparison pricing laws regulating these advertising strategies is that retailers should be transparent about the pricing of their products, including older prices that have been discounted for current sales. Common examples of unlawful comparison pricing include the following:

  • The retail company includes a former price in an advertisement even though the item was never offered at that price.
  • The company mentions a former price that was used in the distant past and is therefore no longer relevant. (Under the law, this may be allowed if the ad discloses when the former price was used.)
  • The retailer references a former price that was not used in the regular course of business.
  • The company uses a former price that may have been available to some customers but that was not openly offered to the public.
  • The retail company artificially inflates the initial price of an item just so that they can later reduce the price and misleadingly call it a “sale.”

Jurisdiction in Deceptive Pricing Class Action Lawsuits

The jurisdiction matters a great deal when bringing consumer litigation. For example, California’s law is more plaintiff-friendly than other states, with California courts often finding in favor of plaintiffs who file legal claims alleging false reference pricing. There is also a reduced standard for establishing economic injury in California cases, since the plaintiff merely needs to show that the former pricing representations were misleading and that the false information is what prompted the purchase.

It is also possible for consumers to file a federal comparison pricing claim. Federal Trade Commission (FTC) guidelines prohibit retailers from deceptive sale pricing that uses inflated former prices as a point of comparison. For example, companies are not allowed to artificially inflate the price of a product for a short period of time just so that they can later reduce the price and then claim that the product is “on sale.” In false advertising and unfair competition cases, a federal court may look to the intent of the business to determine whether the initial price was set high solely for the purpose of later offering a large discount. Evidence of this unlawful intent could be that the retailer immediately reduced the inflated price and did not maintain it for a reasonable amount of time.

Winning Your California Comparison Pricing Class Action

False advertising claims involving deceptive pricing information are often filed as class action lawsuits in California. That’s because the plaintiffs are typically consumers who made a single purchase of a discounted retail item. The good news is that when you join other consumers in a comparison price class action, you are more likely to get the benefit of experienced legal counsel that can help you and all the other plaintiffs get reimbursed for the difference in value from your purchase, as well as statutory damages.

Certifying the Class

A knowledgeable California consumer fraud lawyer can make sure that you meet the requirements of a class action suit, which include establishing commonality among all plaintiffs through similar questions of fact and law. For example, your attorney may be able to get the class of plaintiffs certified by showing that all class members were victimized by the retailer’s sales price misrepresentations and that the same deceptive advertisement with false former prices was used in all instances.

In a California comparison pricing class action, it might also be easier for additional members of the class to gain standing to sue. That’s because at least one California appellate court held, in Branca v. Nordstrom, Inc., that the class members in retail pricing cases do not necessarily need to have purchased the same retail items as the named plaintiff. Rather, all that is needed for the additional individuals to join the class action suit is proof that they purchased items advertised with a comparison price.

The Discovery Process

One major advantage to filing a class action consumer lawsuit in retail discount pricing litigation is that the defendant will be subject to discovery during the class certification process, and discovery could produce significant evidence of wrongdoing. In order to certify the class, the plaintiffs’ attorney must show that there are common questions of law or fact among the plaintiffs and that those common questions predominate over any individual issues in the case. Since the discovery process allows the plaintiffs’ attorney to request documents from the defendant, this is an opportunity to potentially press the retailer for emails, price reports, and other internal documents that the retailer might not want exposed.

Depending on the type of information that is turned over during discovery, the plaintiffs may have strong evidence that the retailer violated consumer protection laws and intentionally misled consumers with deceptive comparison prices.

Damages & Financial Compensation Available in California Strikethrough Pricing Cases

The damages that might be available to plaintiffs in California strikethrough price cases include both compensatory damages and statutory damages. This gives consumers a lot of leverage against a retail company that violates state or federal promotional pricing guidelines by using fraudulent advertising practices. Moreover, when the retailer engaged in willful violations of the law, they may be subject to treble damages that can triple the compensatory damages available in the case.

Contact the California Consumer Class Action Lawyers at Tauler Smith LLP

Tauler Smith is a Los Angeles law firm that represents plaintiffs in consumer class action litigation in California and across the U.S. If you bought a retail item because the retailer used deceptive advertising, you should contact our legal team today.

Call 310-590-3927 or email us to discuss your eligibility to join a consumer class action lawsuit.

Federal Law on False Reference Pricing

Federal Law on False Reference Pricing

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Federal Law on False Reference Pricing

A lot of major retailers have an online presence these days with company websites and advertisements on social media platforms like Facebook, Twitter, and Instagram. The explosion in online sales has also led to competition between traditional retailers and e-commerce businesses that are all fighting for the same internet-savvy customers. Sometimes, those companies become too aggressive and employ fraudulent marketing practices, such as using deceptive pricing information in ads. This type of advertising violates the federal law on false reference pricing. If you purchased a product because of a comparison price in an advertisement, the experienced consumer protection lawyers at Tauler Smith LLP can help you file a lawsuit against the retailer and get financial compensation.

For more information about federal laws on deceptive pricing by retailers, keep reading.

Why Do Retail Companies Use Comparison Pricing in Advertisements?

It’s a simple fact that retail businesses often rely on sales to get customers to make purchases. That’s because sales and discounts on an item’s full price can be attention-grabbers in promotional materials and advertisements, particularly when the customer believes that they are getting a once-in-a-lifetime bargain or deal. One of the strategies that retailers utilize in their sales ads is to include strikethrough pricing or comparison pricing. This is when the business provides two prices that the customer can compare to each other: a former list price or MSRP and a reduced current price. The original price usually has a line through the text to differentiate it from the new lower price, and the price with the line through it is known as the strikethrough price.

Sometimes, consumers feel pressured to buy an item because they are worried that the sale won’t last. But when the discount wasn’t real to begin with because the “full price” was inflated, the consumer ends up being tricked into making a purchase. A retail company that violates comparison pricing laws by using deceptive advertising is subject to government investigations, retail discount pricing litigation, and significant monetary penalties. They may also be named as the defendant in a consumer class action lawsuit, where consumers could be eligible for both statutory damages and actual monetary damages. In fact, a number of consumer class action lawsuits alleging deceptive sale pricing have been filed against major retail companies in California and other states. Some of these cases concluded with judgments in favor of the plaintiffs, while others concluded with pre-trial settlements totaling tens of millions of dollars.

FTC Guides Against Deceptive Pricing

The federal government has laws against unfair competition, false advertising, and false reference pricing. The Federal Trade Commission (FTC) specifically regulates sales advertisements for retail companies involved in interstate commerce, which applies to most businesses that sell products online. The reason behind the law is that companies have been caught using misleading prices to deceive customers. For example, a retailer might frame their current price as a “sale price” even though it is the same as a regular price. This can be done by including a “compare at” or reference price in the advertisement.

The FTC gets its authority to investigate allegations of consumer fraud from the Federal Trade Commission Act, which includes the FTC Guides Against Deceptive Pricing. These promotional pricing guidelines set limits on when companies can use former price comparisons in advertisements. Generally speaking, any former price mentioned in an advertisement or promotion must have been offered honestly and in good faith. Other, more specific requirements of the FTC guidelines include the following:

  • The original higher price referenced in the ad needs to have been openly and actively offered for sale.
  • The item should have been available at the former price during the regular course of business.
  • The item needs to have been available at the former price recently, not in the distant past.
  • The former price must have been offered for a reasonably substantial period of time before being reduced.

Federal Law vs. California Law on False Reference Pricing

California’s law on false reference pricing is broader in scope than the federal law, which is why Los Angeles consumer protection lawyers often file these lawsuits in state court rather than U.S. district court. For instance, the federal guidelines are less clear than the California false advertising law when it comes to specifying timeframes for establishing the prevailing market price. The FTC guidelines state that companies must maintain a price for a reasonable length of time before reducing it; otherwise, the initial price may be considered a false reference price. Similarly, how long ago can the company go back to reference a former price? What is considered “reasonable” under these circumstances? Federal law is unclear on this, but the California comparison pricing law is explicit: any prices used during the previous 90 days may be allowed.

Although the federal law on comparison pricing isn’t as robust as the California law, it still imposes significant requirements on businesses that make former pricing representations in their advertising.

Winning Your Federal Comparison Pricing Lawsuit

When deciding whether you should take legal action against a company that engaged in sales price misrepresentation, you need to speak with an experienced consumer fraud attorney who understands the nuances of federal consumer protection laws. Depending on the facts of your case, it may be possible for the retailer to argue in court that you did not suffer any economic harm when you made the purchase because you ended up with a product that you wanted at the price that you expected to pay. The retailer’s argument would be that regardless of their false comparison pricing claims in the ad, you should not be entitled to financial compensation or damages.

A knowledgeable consumer protection attorney can help you prove the required elements of your claim, which includes showing that you relied on the false reference pricing and made the purchase because of the retailer’s misleading statements.

Contact the California False Advertising Attorneys at Tauler Smith LLP

The California false advertising attorneys at Tauler Smith LLP represent plaintiffs in consumer litigation throughout the United States. If you purchased a product online or in a retail store because of a comparison price mentioned in an advertisement, you may be able to file a lawsuit and get financial compensation.

Call or email us today to schedule a free consultation.

California Comparison Pricing

Comparison Pricing Litigation in California

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California Comparison Pricing

It has become increasingly common for consumers to bring comparison pricing litigation in California. That’s because the state has some of the strongest consumer protection laws in the country, including laws that regulate unfair competition, false advertising, and deceptive pricing. California’s comparison price law requires retailers to provide accurate pricing information in advertisements, whether the ads appear in print media or online. The law recognizes that consumers should not be tricked into purchasing an item for the regular full price simply because the retailer included a fake sale price in an advertisement or promotion. If this has happened to you, one of the California false advertising lawyers at Tauler Smith LLP can help you.

To learn more about comparison pricing litigation in California, keep reading this blog.

Comparison Pricing Is a Retail Sales Strategy That May Violate California False Advertising Laws

Retailers that do business in California and elsewhere often use comparison pricing, reference pricing, strikethrough pricing, or compare-at pricing to persuade customers to make a purchase. All of these basically mean the same thing: the retail company prominently advertises that the item is “on sale,” and they back up this claim with a visual comparison between the current sale price and the original list price.

Comparison pricing is subject to strict regulations because lawmakers recognize that a lot of retailers go too far with deceptive ads that aren’t entirely honest about the former prices. For example, the reference price mentioned in the advertisement or promotion might be from a very long time ago, or it might be for an item that is not the same as the one currently being sold. Since the California comparison pricing law requires businesses to use actual sales prices that are relevant and timely, these types of former pricing representations with deceptive discounts could expose a retailer to consumer litigation.

California Has Strong Consumer Protection Laws

Under both federal and state consumer protection laws, retailers that do business in California cannot use fictitious price comparisons when advertising products. Consumers should also keep in mind that the comparison pricing laws apply to both in-person sales and online sales.

The jurisdiction where a comparison pricing lawsuit is filed can make all the difference when it comes to the outcome of a case. That’s because certain states have very strong consumer protection laws that hold businesses to extremely high standards for advertising, marketing, and sales practices. California has some of the strongest consumer fraud statutes, including §17501 of California’s Business & Professions Code that directly addresses fraudulent marketing and advertising practices.

Comparison Pricing Lawsuits Filed Against Retail Companies in Los Angeles

Failure to comply with California’s law on comparison pricing could expose retailers to significant liability, including a class action lawsuit filed by consumers who purchased products after viewing the misleading advertisement with deceptive sale pricing. Just some of the major retailers that have been sued under California’s false advertising law in recent years include Amazon, The Gap, Guess, J.Crew, Kate Spade & Company, Neiman Marcus Group, Overstock.com, and Walmart.

In California, the Los Angeles City Attorney’s Office has made a point of going after large retailers that use deceptive pricing in ads to generate sales. The crackdown on false reference pricing prompted the LA City Attorney to bring civil suits against several major department stores that did business in the city, including JCPenney, Kohl’s, Macy’s, and Sears. The retailers were accused of deceptively marketing thousands of items at “sale” prices that did not exist.

California’s False Advertising Law Prohibits Deceptive Prices in Retail Ads

Section 17501 of California’s false advertising law explicitly prohibits advertisements that use a misleading or inaccurate former price.

Actual Prices

The California law stipulates that there must be a legitimate basis for the comparison price cited by the retailer, whether it’s a list price or Manufacturer Suggested Retail Price (MSRP). Businesses are not allowed to create false impressions about discounts by referencing prices that never actually existed just to make the ticket price look like a good deal. The retailer must be prepared to provide proof that the item was previously sold for a higher price. But even that might not be enough for the retailer to avoid retail discount pricing litigation. For example, if the former price was only in effect for a short period of time, the retailer might not be legally allowed to mention this price in an advertisement because there will be serious questions about whether the original compare-at price was legitimate.

Three-Month Time Period

The California law places limits on the comparison prices that retail businesses may mention in an advertisement by explicitly barring them from mentioning an item’s former price unless it was the “prevailing market price” within the three months immediately preceding the ad’s publication.

But what happens when the company’s sale lasts longer than 90 days? In situations like this, California’s promotional pricing guidelines call for the company to revise its advertisement or run the risk of violating the strikethrough pricing statute. That’s because the former price listed in the ad will no longer fall within the 90-day window, which means that it’s no longer valid under the law. In other words, a sales ad that was initially legal will become illegal and could serve as the basis for a consumer to file a lawsuit.

Importantly, California does give retailers an opportunity to revise their ads so that they avoid violating the law. The company can either change the former price in the ad once it becomes outdated or they can “clearly, exactly, and conspicuously” note the date when the former price applied so that the advertisement is not misleading.

Define Relevant Terms

In addition to establishing a three-month timeframe for evaluating the appropriateness of the former price being advertised, the California false advertising statute also attempts to define relevant terms for retailers and consumers. For instance, what does the law mean by “prevailing market price”? This matters because the actual price of the item in question will go a long way toward determining whether the former price was legitimate or false.

Here, there are several factors that must be considered. For instance, what was the actual price of the item at other stores in the same geographical area or region? Also, were any sales made at that price? And, if so, how many units sold? Moreover, were there different prices for the item during the three-month period being evaluated? Since a court can consider any or all of these factors in a strikethrough pricing case, it is important for consumers to speak with a qualified California consumer protection attorney before making any final decisions about how to proceed with their case.

Standing to Sue in California Strikethrough Pricing Claims

It is often easier for plaintiffs to establish that they have standing to sue in a comparison pricing claim brought under California’s false advertising law. Of course, the plaintiffs in a California comparison pricing case must establish that they have standing to sue. In the past, this meant that the plaintiff needed to show that they purchased the item and that they did so at a price higher than they otherwise would have paid. Absent this showing, the door was open for defendants to argue that the plaintiff did not suffer any injury or economic harm because they received exactly what they paid for and therefore got “the benefit of the bargain.”

Things became much easier for plaintiffs when the California Supreme Court ruled in Kwikset Corp. v. Superior Court that plaintiffs in false advertising cases no longer need to prove that the product they purchased was worth less than the amount paid for it. Now, plaintiffs who bring a comparison pricing claim in California courts merely need to show that they purchased the item because of the deceptive pricing information in the ad; the prevailing market price or MSRP of the item no longer matter.

False Reference Pricing Class Action Lawsuits in California

California false advertising laws regulate companies that do business in the state, including broad protections against sales price misrepresentations. This has led to numerous class action lawsuits being filed on behalf of consumers who have fallen victim to false reference pricing.

It is important for consumers to recognize that they can file a civil suit, or join a consumer class action, even when the retail company does not have a physical brick-and-mortar location in California. As long as the consumer is in California and accessed the business’ website to view the ad or to make a purchase, they may be eligible to bring a Section 17501 claim for false reference pricing.

How Much Money Can Consumers Recover in a California Comparison Pricing Claim?

When a retailer is sued for violating California’s false advertising law, the monetary damages may be substantial. That’s because the statute allows for recovery of actual damages by the plaintiff, as well as the imposition of civil penalties against the defendant. These civil penalties can quickly add up because the defendant can be ordered to pay $2,500 for each violation of the law. Moreover, the court may have the option to impose an additional fine of $2,500 for each violation that injured a senior citizen or a disabled person.

Other California False Advertising Statutes: CCPA, and CLRA, and UCL

One strategy that retail companies might use to get around the California false advertising law is to hide their sales in customer loyalty programs. But this tactic may be a violation of the California Consumer Privacy Act (CCPA), which gives consumers another avenue for filing suit against retailers.

Additional legal claims that may be available in comparison pricing cases include violations of the Consumers Legal Remedies Act (CLRA), especially if the defendant’s conduct involved deceptive language in the advertisement.

The California Unfair Competition Law (UCL) is another consumer protection statute that applies broadly to a wide range of conduct by companies, including unlawful, unfair, and fraudulent business practices. Deceptive or false advertising is also prohibited by the statute.

Contact the California False Advertising Lawyers at Tauler Smith LLP

A lot of retailers use comparison prices in advertisements to encourage consumers to make a purchase while the item is “on sale.” If you bought a retail product because the retailer used deceptive pricing in a store ad or an online ad, you should speak with an experienced Los Angeles consumer protection attorney at Tauler Smith LLP.

Call 310-590-3927 or email us to schedule a free initial consultation.

California Consumer Privacy Act

California Consumer Privacy Act (CCPA)

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California Consumer Privacy Act

California has some of the strongest consumer privacy laws in the country, and companies that violate those laws could face serious legal repercussions. For example, state residents have a right to privacy under the California Consumer Privacy Act (CCPA). These privacy rights exist when a prospective customer talks to a salesperson or customer service rep on the phone, communicates via an online chat feature, or fills out a form on a website. Anytime a company monitors, records, or uses the data collected in these communications without permission, it may be considered an unlawful invasion of privacy that subjects the offending company to civil penalties. Moreover, consumers whose personal information is exposed in a data breach may be entitled to recover statutory damages, which can total thousands of dollars.

To learn more about the California Consumer Privacy Act, keep reading this blog.

Digital Privacy Concerns for California Consumers

Digital privacy is a major concern in the internet era. Studies show that many Americans are worried about a lack of control over their personal information, particularly the information they share with companies on the internet. For example, a Pew Research Center survey found that approximately 60% of Americans believe that it is simply not possible to go through their daily lives without companies monitoring them and collecting their data. The same survey also showed that more than 80% of U.S. adults are concerned about how companies use the data that is collected.

State laws like the California Invasion of Privacy Act (CIPA) and the California Consumer Privacy Act (CCPA) recognize the importance of giving consumers some degree of control over their sensitive personal information. That’s why the CIPA requires companies to disclose when they are wiretapping or recording conversations, and the CCPA allows consumers to opt out of having their data shared by companies.

What Is the California Consumer Privacy Act?

In 2018, state legislators passed the California Consumer Privacy Act (CCPA). This was the very first state privacy law, and it has served as a model for other states looking to strengthen protections for consumer data. The CCPA imposes obligations on businesses that collect customer data, as well as specifically allowing consumers to make demands about how their personal information is used by businesses.

What Consumer Rights Are Protected by the CCPA?

Among the most important consumer rights protected by the California Consumer Privacy Act (CCPA) are:

  • The right for consumers to know exactly what type of personal information is collected by a business, including how that information will be used, shared, or sold by the business.
  • The right to request that any personal information collected by a business be deleted.
  • The right for consumers to submit an “opt-out” request and prevent a business from selling their personal information.
  • The right not to be discriminated against by a business simply for exercising consumer rights under the CCPA. This means that businesses cannot deny you the ability to purchase goods or services or otherwise complete a transaction just because you asked about the personal information they collect.

The CPRA Amended the CCPA to Strengthen Consumer Privacy Rights

The California Privacy Rights Act (CPRA) amended the CCPA to enhance consumer privacy protections and brought the state law more in line with the robust protections provided under international law by the European Union General Data Protection Regulation (GDPR).

The CPRA placed severe restrictions on companies doing business in California, and it also created new consumer rights such as the right to correct any personal data that is inaccurate. Additionally, the CPRA broadened the scope of previous CCPA protections in other ways. For example, the CPRA allows consumers to opt out of the sharing of their personal information with third party advertisers. Under the old consumer privacy law, opting out was only an option with respect to the sale of personal information.

Filing a Civil Lawsuit Under the CCPA

In most cases, the California Consumer Protection Act (CCPA) does not create a private right of action that would allow consumers to file civil suits. But the California Attorney General does have the ability to take action against businesses that violate the CCPA. The possible civil penalties that may be imposed against companies include a fine of $7,500 for each violation of the data privacy law.

Additionally, there is at least one situation where a consumer may be able to bring a civil lawsuit: when the consumer’s personal information is exposed in a security breach because the business failed to follow adequate security procedures. Victims of data theft can file a claim under the CCPA to recover statutory damages of up to $750 for each incident.

Call the Los Angeles Consumer Privacy Lawyers at Tauler Smith LLP

Were you a victim of a data breach by a company that exposed your personal information? You need an experienced Los Angeles consumer protection lawyer who is familiar with the nuances of state privacy laws, including the California Consumer Privacy Act. The Los Angeles consumer privacy attorneys at Tauler Smith LLP are prepared to represent you in a civil suit, and we can help you get financial compensation for any harm you suffered when your privacy rights were infringed.

Call 310-590-3927 or send an email to schedule a free initial consultation about your case.

California Invasion of Privacy Act

California Invasion of Privacy Act (CIPA)

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California Invasion of Privacy Act

It is quite common these days for businesses to monitor and record phone calls with customers, whether it’s to ensure that orders are accurate, to review employee interactions, or for some other reason. At the same time, new technologies have made it easier than ever to eavesdrop on private communications. Unfortunately, this has resulted in some companies going too far by invading the privacy of customers. The California Invasion of Privacy Act (CIPA) is a state law that makes it illegal for businesses to wiretap consumer communications and record you without your consent. Businesses that violate the CIPA may be subject to both criminal and civil penalties, including a lawsuit filed by any consumers whose conversations were wiretapped or recorded without permission.

To learn more about the California Invasion of Privacy Act, keep reading this blog.

What Is California’s Invasion of Privacy Law?

California has the nation’s strongest consumer protection laws, including the California Invasion of Privacy Act (CIPA), the California Consumer Privacy Act (CCPA), the California Privacy Rights Act (CPRA), the California Consumers Legal Remedies Act, and the California Unfair Competition Law (UCL). The CCPA was enacted in 2018 to become the nation’s first state privacy law, and it strengthened protections for customer data collected by businesses online. The CIPA has a longer history, having been passed by the California State Legislature in 1967 for the purpose of more broadly protecting the privacy rights of all state residents, including consumers. Under the CIPA, it is illegal for companies to wiretap or record conversations unless all participants have consented to the recording. This applies to telephone conversations and online communications.

Cell Phones

Although the wiretapping law was initially intended to cover calls on landline phones, the use of cellular phones has been addressed by the statute. Cal. Pen. Code sections 632.5 and 632.6 specifically prohibit the use of a recording device when a call involves a cellular phone, whether it’s two cell phones or one cell phone and one landline phone.

Websites & Session Replay Software

In addition to recording phone conversations, a lot of companies also keep records of their interactions and communications with customers who visit a company website. This becomes problematic – and possibly illegal – when the company uses session replay software to capture visitor interactions with their website. That’s because the use of this type of tracking software may constitute an unlawful intercept of the communication, as defined by California’s wiretap law.

Session replay software allows website operators to monitor how a user interacts with the website. The tool then reproduces a video recording that shows the user’s interactions, including what they typed, where they scrolled, whether they highlighted text, and how long they stayed on certain pages. When companies employ this software, the very fact that a machine is being used to intercept customer communications constitutes a violation of the CIPA.

California Penal Code Section 631: Wiretapping

California Penal Code Section 631 forbids anyone from illegally wiretapping a conversation. The law specifically prohibits the following:

  • Using a machine to connect to a phone line.
  • Trying to read a phone message without the consent of all the parties participating in the conversation.
  • Using any information obtained through a wiretapped conversation.
  • Conspiring with another person to commit a wiretapping offense.

Some states allow a call to be recorded when just one participant is aware of the wiretap and consents to it, even if the person recording the call is the one providing consent. But California is a two-party consent state, which means that everyone involved in the call or chat must agree to it being recorded. If just one party does not provide consent, then recording the conversation constitutes a violation of the CIPA and can result in both criminal and civil penalties.

Out-of-State Businesses

Even if the person who called you or chatted with you was not located in California, you can still bring a lawsuit under the Invasion of Privacy Act as long as you were in the state at the time of the call or chat. That’s because out-of-state businesses must still comply with California laws when communicating with someone who is in the state.

California Penal Code Section 632: Eavesdropping

Section 632 of the California Penal Code addresses the crime of eavesdropping. Many times, a wiretapping case also involves eavesdropping offenses where the offending party both taps a phone line and listens in on the conversation. The main difference between the two is that eavesdropping does not necessarily involve the tapping of a phone line.

The statute defines “eavesdropping” as the use of a hidden electronic device to listen to a confidential communication. Significantly, the law is not limited to phone conversations. When someone intentionally eavesdrops on an in-person conversation, they may be subject to criminal charges and a civil suit for damages. The types of electronic devices that are often used to illegally eavesdrop include telephones, video cameras, surveillance cameras, microphones, and computers. If the device was concealed from one of the parties, it may constitute a violation of California’s eavesdropping laws.

Can You Sue for Invasion of Privacy in California?

Although the California Invasion of Privacy Act is technically a criminal statute, Cal. Pen. Code §637.2 gives victims of wiretapping and eavesdropping the ability to bring a civil suit against the person or company that illegally recorded the conversation. If you learn that someone was listening in on your private conversation without permission, you may be able to file a lawsuit to recover statutory damages. Additionally, §638.51 gives consumers the ability to file a lawsuit against companies that use trap & trace devices to illegally monitor website visits without consent.

If you learn that someone was listening in on your private conversation without permission, you may be able to file a lawsuit to recover statutory damages.

How to Prove Invasion of Privacy Under the CIPA

To win your CIPA claim, you will need to prove that the conversation was illegally recorded in the first place. In some cases, this will be obvious because the business will reveal that they are monitoring and recording the call or chat. In other cases, consumers may learn about illegal wiretapping during the discovery process when the defendant is forced to turn over company records.

The other elements of a CIPA claim that you will need to establish at trial include:

  • The defendant intentionally used an electronic device to listen in on and/or record the conversation.
  • You had an expectation that the conversation would not be recorded.
  • You or at least one other person on the call did not consent to having the conversation recorded.
  • You suffered some kind of harm or injury as a result of your privacy rights being violated by the defendant.

The use of a cellular phone can change the burden of proof needed to win a CIPA claim. That’s because courts will typically use a strict liability standard when at least one of the participants on the call was using a cell phone. This means that the context and circumstances of the call won’t matter; the court will automatically presume that there was an expectation of privacy. Additionally, strict liability will apply to the defendant even when they did not realize that the other person on the call was using a cell phone.

What Is the Penalty for Invasion of Privacy?

The criminal penalties for violating the California Invasion of Privacy Act (CIPA) include possible jail time and significant fines. Businesses that violate the CIPA may also be exposed to civil penalties when a consumer files a lawsuit in state court.

Criminal Penalties

The CIPA gives criminal prosecutors wide latitude to charge an offense as either a misdemeanor or a felony, depending on the facts of the case. If a CIPA violation is charged as a misdemeanor, the defendant could be sentenced to one year in jail and ordered to pay up to $2,500 in statutory fines for each violation. If the violation is charged as a felony, the possible jail time could increase to three years. Additionally, anyone convicted of a second wiretapping offense could face more substantial fines.

Civil Penalties

The CIPA lists statutory penalties that may be imposed against companies or individuals who violate the statute. The court can order the defendant to pay $5,000 in statutory damages for each illegally recorded conversation, or three (3) times the actual economic damages you suffered because of the privacy breach. The judge in your case will have the option to choose whichever amount is greater: the statutory damages or the actual damages.

Depending on the circumstances of your case, you might also be able to file a right of publicity lawsuit. That’s because right of publicity claims and invasion of privacy claims often overlap, especially when a business attempts to profit from someone else’s image or likeness without consent.

California Invasion of Privacy Statute of Limitations

It is very important that you take immediate action and speak with a qualified consumer protection attorney as soon as you suspect that a company may have violated your privacy during a communication. That’s because the California Invasion of Privacy Act (CIPA) requires plaintiffs to file a civil suit within one (1) year of the date on which the conversation happened. Failure to bring your case before one year has passed could result in your lawsuit being dismissed.

The statute of limitations period typically begins when the plaintiff knew about the defendant’s illegal wiretapping. But what happens when the plaintiff did not learn about the invasion of privacy violation until later? In these cases, the court usually applies a reasonable person standard, which means that the court will attempt to determine the point at which a reasonable person standing in the shoes of the plaintiff would have known about the unlawful act by the defendant. In other words, should the plaintiff have discovered the privacy violation before the statute of limitations expired?

Contact the Los Angeles Consumer Protection Lawyers at Tauler Smith LLP

If a company invaded your privacy by secretly recording a conversation without your permission, you may be eligible to file a civil suit to recover statutory damages. The first step you should take is to speak with an experienced Los Angeles consumer protection attorney at Tauler Smith LLP. We can help you decide how to best proceed with your case.

Call 310-590-3927 or email us today.

Texas Telephone Solicitation Act

Texas Telephone Solicitation Act

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Texas Telephone Solicitation Act

Telemarketing is an important tool used by many businesses to generate revenues, but it can also expose consumers to misinformation and fraud. That’s why Texas lawmakers passed important consumer protection laws that explicitly prohibit false, misleading, or deceptive practices. One such law is the Texas Telephone Solicitation Act, which regulates attempts by companies to sell or rent property, products, or services to consumers via telephone solicitation. The law is part of the Texas Business and Commerce Code, which protects consumers against a wide range of fraudulent business practices. The section of the statute governing telephone solicitations is meant to protect purchasers against false, misleading, or deceptive practices on sales calls. When a company makes a sales call, they must abide by the guidelines set forth in the statute. This includes filing a registration statement that contains relevant sales information, as well as making required disclosures to purchasers during telephone solicitations about both the company and the items for sale.

To learn more about the Texas Telephone Solicitation Act and the protections it affords consumers, keep reading this blog.

What Is the Texas Telephone Solicitation Act?

The Telephone Solicitation Act is codified in Texas Bus. & Com. Code, Title 10, Subtitle A, Chapter 302. The statute defines a “telephone solicitation” as a telephone call that is initiated to induce someone to buy, rent, claim, or receive an item. Importantly, the Texas law also covers phone calls made by consumers in response to a solicitation that was sent electronically (e.g., an email) or physically (e.g., a letter in the mail). Moreover, the law applies to calls placed manually, calls initiated by an automatic dialing machine, and calls that involve a recorded messaging device.

Telephone Solicitation Registration Requirements in Texas

The requirements of the Texas Telephone Solicitation Act are strictly enforced, with any violation by a telemarketer possibly triggering both civil and criminal penalties. The statute imposes requirements on companies both during the registration process and when the phone solicitation is made.

Seller Disclosures at Registration

Before making a telephone solicitation, sellers must first fill out a Telephone Solicitation Registration Statement and obtain a registration certificate for their business. Moreover, the registration statement must list each telephone number that will be used by the seller, as well as the specific locations from which any phone solicitations will be made. Other sales information that must be disclosed in the statement includes a copy of all telephone solicitation scripts and other material provided to salespersons, a copy of any written material that might be sent to consumers, and the contact information for outside product suppliers.

The registration statement is filed with the Texas Secretary of State, and it must identify each principal of the seller: owners, executive officers, general partners, trustees, etc. The registration certificate is valid for one year, and it must be renewed annually. Additionally, for every three-month period after the certificate was issued, the business must provide information for each salesperson who solicited on behalf of the business.

One of the most important requirements imposed by the Telephone Solicitation Act is the security requirement: sellers must submit a security deposit in the amount of $10,000. The deposit is meant to ensure that the seller complies with the law. When a seller is found to have violated the statute, the deposit may be used as payment for any penalties imposed by the court.

Seller Disclosures on the Call

In addition to requiring disclosures in the registration statement filed with the state, the Texas Telephone Solicitation Act also compels companies to make certain disclosures to consumers before a purchase is made through a phone solicitation. For example, prior to the finalization of any transaction on a sales call, the seller must provide the consumer with the street address of the building or office from which the call is being made. Additionally, if the seller tells the consumer that the item is being offered at a reduced price, the seller must provide the name of the manufacturer. Along those same lines, if the seller represents that one of the items is a gift or prize, then they also need to clearly state the contest rules.

The Telephone Solicitation Act also places a significant limitation on exactly what telemarketers are allowed to say during a sales call: the caller is not allowed to state or otherwise reference their supposed compliance with the statute. The idea behind this restriction is that sellers should not be able to discourage consumers from investigating on their own to determine whether a seller violated the law by making a deceptive sales call.

How to File a Civil Lawsuit Against a Telemarketer in Texas

Consumers who are defrauded, scammed, or otherwise injured by a telemarketer’s violation of the Telephone Solicitation Act can take legal action. Experienced Texas consumer fraud lawyers know just how strong the statute’s protections are, and they also know how to navigate the legal system to hold businesses accountable for violating the law.

One option available to consumers is to file a civil suit against the company or person who made the sales call. Any individual who suffered economic losses due to a seller breaching an agreement that was entered into during a telephone solicitation may be eligible to recover financial compensation against the seller’s security deposit with the state. It might also be possible for consumers to bring a claim under the Deceptive Trade Practices Act (DTPA) because a violation of the Telephone Solicitation Act qualifies as a violation of the DTPA. Additionally, a person bringing a civil action under either statute may be entitled to compensation for reasonable attorney’s fees and related legal expenses.

Burden of Proof

The protections set forth in the Texas Telephone Solicitation Act are far-reaching and tend to be interpreted broadly by judges. In fact, the statute even stipulates that the burden of proof in these cases will be on the defendant accused of violating the law. For example, in civil proceedings where the defendant argues that they are exempt from the law, the burden of proving the exemption will fall on the defendant. Similarly, a company or individual who faces criminal charges for violating the telephone solicitation law is required to produce evidence supporting their defense that they are exempt from the statute.

Which Sellers Are Exempt from the Texas Telephone Solicitation Act?

Some sellers accused of violating the Telephone Solicitation Act may be able to argue that the consumer protection law does not apply to them, but only in certain situations. Those who may be exempt from the statute include agents of publicly traded companies, sellers for banks or other supervised financial institutions, anyone associated with companies regulated by the Public Utility Commission of Texas, individuals who are already subject to regulation by the Federal Communications Commission (FCC), and educational institutions or nonprofit organizations that are exempt from taxation by the IRS. In many instances, exemption from the Telephone Solicitation Act is possible because another law or regulation applies instead and takes precedence.

The Texas Business and Commerce Code also includes explicit exemptions from the phone solicitation law for the following categories of sellers:

  • Anyone selling a subscription to a newspaper, magazine, or cable television service.
  • Anyone selling items to a consumer who has consented in advance to receiving periodic deliveries of those items.
  • Individuals or companies delivering catalogs that are distributed in at least one other state and that have a circulation of at least 250,000 customers.
  • Anyone selling items to a business that plans to resell the items.
  • Persons or companies attempting to sell food products.
  • Persons calling about maintenance or repair of an item that was previously purchased from them.
  • Businesses soliciting a former or current customer.

Criminal and Civil Penalties Imposed by the Texas Telephone Solicitation Act

Every individual violation of a provision in the Texas Telephone Solicitation Act is considered a separate offense, which means that the penalties can add up very quickly even when the offenses stem from a single sales call. Beyond that, there can be both civil and criminal penalties imposed against sellers who violate the statute.

Criminal Penalties

Violations that may be charged as criminal offenses include failing to obtain the necessary registration certificate before making a phone solicitation, failing to make necessary disclosures to the consumer before finalizing a sale, and mentioning compliance with the statute on the sales call. Each of these offenses can be charged as a class A misdemeanor, which carries a possible fine of $4,000 and a sentence of up to one year in jail. Moreover, these criminal penalties can be imposed against both the business owner and the salesperson or telemarketer who made the call. Additionally, the defendant in a criminal action may be ordered to pay the costs of prosecuting the case, including the attorney general’s expenses for the investigation, depositions, witnesses, and related attorney’s fees.

Civil Penalties

Sellers who violate a provision in the Texas Telephone Solicitation Act are also subject to civil penalties. These penalties can be substantial, with the statute calling for a fine of up to $5,000 for each violation. The penalties become even harsher when the seller violates an injunction brought by the secretary of state for a previous offense: a $25,000 fine for each subsequent violation, plus an additional $50,000 fine for all violations after the injunction was issued.

Contact the Texas Consumer Protection Lawyers at Tauler Smith LLP

Did you receive a telemarketing call from a person who failed to identify themselves, their business, or their reason for calling? Did the telemarketer’s attempts to sell you something feel like part of a scam? The Texas Telephone Solicitation Act gives consumers the ability to take legal action by notifying the secretary of state and possibly filing a civil suit, and the Texas consumer protection attorneys at Tauler Smith LLP can help you.

Call 972-920-6040 or email us today to discuss your case.