Online shoe retailer Hey Dude will pay $1.95 million to settle charges it violated the FTC's mail, internet or telephone order merchandise rule multiple times from 2020 to 2022, said the agency in a Monday news release. The e-tailer “misled consumers” by suppressing over 80% of reviews that failed to provide four or more stars out of a five-star rating system, said the FTC. It also didn’t issue shipping delay notices when it couldn’t fill consumers’ orders on time; failed to cancel orders and issue prompt refunds; and issued gift cards instead of sending “prompt refunds of the original payment” for merchandise ordered but not shipped, the agency said. In many instances, the company rejected and didn’t publish negative reviews, in violation of the FTC Act, it said. A proposed court order (docket 2:23-cv-01412) in U.S. District Court for Nevada would prohibit Hey Dude from making misrepresentations about consumer reviews by requiring it to publish all reviews it receives, including those previously withheld from publication, with limited exceptions related to inappropriate content, it said. The FTC expects to use the $1.95 million penalty to provide refunds to consumers harmed by its actions. In another settlement, TruthFinder and Checkmate will pay $5.8 million to settle charges they deceived consumers about whether consumers had criminal records through their background reports services and failed to ensure sufficient accuracy of their consumer reports, said the FTC Monday. The companies make “millions” from monthly subscriptions using push notifications and marketing emails that claimed the subject of a background report had a criminal or arrest record “when the record was merely a traffic ticket,” said the complaint. When a customer flagged an item in a background report as inaccurate, the companies didn’t take steps to investigate, modify or flag information, the FTC said. The companies also violated the Fair Credit Reporting Act (FCRA) by providing background reports to people who didn’t have a permissible purpose to obtain them and failing to limit who could get them. They also tried to bump the number of their positive user reviews by offering a free premium background report in exchange for a positive review on the HighYa review site, the agency said. Under the FTC’s proposed order, the companies would be required to have a monitoring program to ensure compliance with the FCRA, stop misrepresenting the accuracy of their reports, comply with the FCRA when operating as credit reporting agencies and disclose endorsers with “material connections.” Both orders require federal judge approval.
Twitter failed to pay real estate advisory firm Cresa after owner Elon Musk acquired the social media platform in a leveraged buyout in October, said a Monday complaint (docket 3:23-cv-04642) against Twitter and X in U.S. District Court for Northern California in San Francisco. Twitter hired Cresa in 2014 for its advisory services and the companies amended the master services agreement (MSA) in September 2020, the complaint said. During the years Cresa worked with Twitter, the defendant “never disputed an invoice from Cresa,” it said. The complaint alleges that a drop in revenue from advertisers who became alienated by Musk’s “moderation decisions” post-purchase caused “extreme belt-tightening” at the company. Its “instant financial crisis” led Twitter to stop paying several vendors whose services it was using, plus rent on some of its offices, it said. “Twitter also cancelled many contracts and stopped paying people to whom it owes money,” including Cresa, which alleges Twitter didn’t pay 14 invoices totaling $371,621 from August 2022 through March. Twitter didn’t respond to Cresa's requests for payment, though terms of the MSA called for payment within 45 days of invoice, it said. Cresa asserts a breach of contract claim and seeks compensatory damages, pre-and post-judgment interest and legal costs. Twitter didn’t comment.
Plaintiff Sorina Montoya, who sued Activision Blizzard and King in a May fraud complaint involving a video game tournament, fails to state a claim upon which relief can be granted, said King defendants' Monday response (docket 3:23-cv-00314) to Montoya's complaint in U.S. District Court for Eastern Virginia in Richmond. Montoya engages in impermissible group pleading, doesn’t plead a plausible claim for relief and fails to state facts with sufficient particularity to meet the pleading standard for fraud under Federal Rule of Civil Procedure 9(b), the defendants said. Montoya sued the companies in May alleging game developer King and Activision misled contestants about their odds of winning a March-April mobile game tournament to get them to bump up their in-app purchases. Montoya asserts defendants mislead contestants into thinking that they were doing well vis-a-vis their competitors, that few other players were competing against them, and that they had a good chance of making the Finals in London. That kept players spending money on in-app purchases; Montoya spent over $3,000 on the Candy Crush tournament. In their response, King defendants said Montoya’s demand for a jury trial should be denied due to her obligation to resolve claims through alternative dispute resolution, and her claims must be referred to arbitration. The Virginia venue is improper because a substantial part of the events involving claims against the King defendants didn’t occur in Virginia, said the response, saying non-arbitrable claims should be transferred to U.S. District Court for Central California. Some of Montoya’s claims are barred by the statute of limitations or doctrines of laches or waiver, or putative class members’ failure to bring claims within a reasonable time after discovery, they said. Plaintiff lacks standing to seek injunctive relief because the tournament concluded, they said. Montoya's claims are barred by the doctrines of voluntary payment, accord and satisfaction, and ratification, the response said, and class members have not sustained injury, economic harm or damage as a result of alleged actions of King. Montoya’s and class members’ in-game purchases were made pursuant to a contract and so are barred for equitable relief, they said. Her request for injunctive relief should be denied, and King defendants should be awarded legal costs incurred, they said.
The 9th U.S. Circuit Court of Appeals scheduled in-person oral argument Nov. 14 at 9 a.m. PST in San Francisco in Verizon’s appeal of the district court July 1 decision denying its motion to compel the dispute of 27 California consumers to arbitration (see 2303190001), said a text-only notice Friday (docket 22-16020). The case originated from a November 2021 class action challenging Verizon’s alleged “bait-and-switch scheme” in which it was accused of padding consumers’ monthly wireless bills with a secretive “administrative charge” that kept climbing higher and higher above the flat monthly rates it was advertising.
When plaintiff Sergio Rodriguez created a Samsung account in May 2021 and accepted its terms and conditions, he agreed to resolve all disputes through final and binding arbitration, said Samsung’s Friday notice of motion (docket 8:23-cv-01194) to compel arbitration in U.S. District Court for Central California in Santa Ana. While setting up the Smart Hub on his Samsung smart TV, Rodriguez also accepted terms and conditions for that device, including an agreement to arbitrate, it said. When Rodriguez joined the My Best Buy loyalty program in August 2020, he accepted those terms, too, including an agreement that any dispute involving him and Best Buy “must be resolved through individual arbitration,” said the notice. Rodriguez opposes the motion. Defendants Best Buy and Samsung requested motions to compel arbitration for Nov. 6, with any opposition due by Oct. 6 and a reply in support for motions to compel due by Oct. 23, said a stipulation to set a briefing schedule. Rodriguez’s July 3 class action alleges Samsung and Best Buy falsely represented that Samsung’s QLED TVs have qualities, characteristics and functionalities they don’t have, including motion-smoothing and FreeSync, a feature that’s said to render smoother animation and game play.
Plaintiffs Bettye Foster and Deborah Hunter filed a notice of dismissal (docket 3:23-cv-02753) with prejudice Friday in their fraud class action against Fitbit in U.S. District Court for Northern California in San Francisco. The parties announced last month they reached an agreement to resolve a June 2 putative fraud class action in its entirety (see 2308290002). The suit alleged that Fitbit fitness trackers are “incapable” of rendering accurate blood oxygen readings for people of color and that the company conceals that incapability from the buying public.
The FTC’s administrative law judge ruling against Intuit, claiming the company ran deceptive ads, is a “groundless,” predetermined decision that should be reversed by a neutral body, Intuit said in a statement Monday. Chief Administrative Law Judge Michael Chappell ruled Wednesday that the company ran deceptive ads for its “free” tax products (see 2309080054). “No one should be surprised by the FTC’s ruling given it came from an FTC employed judge in a case the FTC brought before itself,” the company said. “You can’t make this stuff up, it’s a flawed system and a groundless ruling. The FTC has ruled in its own favor in nearly every consumer protection case for the last two decades.” Intuit will appeal and is confident it will prevail through neutral review, the company said: “Intuit has always been clear, fair, and transparent with our customers and we remain committed to providing free tax preparation.” A unanimous U.S. Supreme Court ruled in April that district courts have jurisdiction to hear lawsuits challenging the constitutionality of ALJ proceedings at the FTC and other federal agencies (see 2304170062).
Pro se plaintiff Venton Smith reached a settlement in principle with American Express involving the 2019 Capital One data breach, in which an Amazon Web Services employee stole data affecting about 106 million customers, said Smith's notice Wednesday (docket 3:23-cv-02804) in U.S. District Court for Northern California in San Francisco. Smith alleged the breach led to at least 12 of his accounts being fraudulently accessed to secure loans, merchandise and products totaling $92,300. He moved for a default judgment against American Express last month, saying it failed to respond to his June complaint. Smith and American Express are finalizing a settlement, after which the plaintiff will move for dismissal with prejudice as to American Express; the parties submitted a joint request for the court to adjudicate the default judgment. Smith’s complaint listed 14 defendants; he reached settlement agreements with DSRM National Bank, TD Bank, Synchrony Bank and Equifax. Smith objected in a Wednesday filing to Comenity Bank’s answer and affirmative defenses denying his allegations. Best Buy, Citibank and Macy’s moved the court to compel arbitration in the case. A motion hearing will be Oct. 13 for a default judgment against Jared Jeweler.
Intuit violated the FTC Act by running deceptive ads for its “free” tax products, an administrative law judge ruled Wednesday, siding with the agency in docket 9408, the FTC announced Friday. The company’s ads misled consumers that they could file their taxes for free with TurboTax, despite millions of U.S. taxpayers being ineligible, the agency alleged in a March 2022 complaint. Filers receiving 1099 forms for gig work and people who earn farm income were ineligible. The agency said about two-thirds of tax filers couldn’t use TurboTax’s free products in 2020. The decision from Chief Administrative Law Judge Michael Chappell is subject to automatic review by the full commission. His order prohibits Intuit from advertising free services unless they’re free for all consumers, and the company must be clear about limitations. Intuit didn’t comment.
Zuffa denies plaintiff Saul Garcia’s allegations it violated California’s Automatic Renewal Law (ARL) when it sold him a $9.99 recurring monthly streaming subscription to Ultimate Fighting Championship Fight Pass (see 2308030039), and will soon move to dismiss Garcia’s claims, said the sports promotion company in a joint status report Thursday (docket 2:23-cv-01211) in U.S. District Court for Nevada in Las Vegas. Zuffa, which owns 49.9% of UFC, contends Garcia’s claims can’t be “maintained” as a class action, it said. It asserts Garcia contracted to apply Nevada law to claims arising from the Fight Pass services, and his California law claims “are barred for that simple reason,” it said. Even if Garcia’s claims aren’t barred by the application of Nevada law, the disclosures he pleads in his complaint confirm Zuffa’s compliance with the ARL, it said. Zuffa alternatively argues the safe harbor provisions under California law exempt it from liability to Garcia “because the ample disclosures evidence a clear attempt to comply with the ARL in good faith,” it said. Zuffa ultimately contends its UFC Fight Pass practices “are wholly lawful,” it said. No discovery has been conducted in the case, said the joint status report. The parties plan to submit a discovery plan and scheduling order after Zuffa “files its answer or responsive pleading in this action,” it said.