Tag Archives: consumer fraud

Apple Settles Embarrassing False Advertising Case

Rotten apple?

While you were gawking at the new kind-of-better-in-some-ways-I-guess Macbook Pro at this week’s Apple Worldwide Developers Conference, Apple’s law team was quietly paying out a settlement to a Australian government regulators.  Apple shipped their newest 4G-compatible iPhones and -Pads to Australia, where ravenous consumers quickly snatched them up.  There was one catch: the electronics did not actually work with any LTE networks in the country.  Luckily, the Australian Competition and Consumer Commission was ready to slap Apple around with a lawsuit, alleging that Apple knowingly advertised this whole 4G business despite being well aware that the technology wouldn’t work.  Sensing an uphill court battle, Apple quickly settled the case (if I had to guess, I’d say it was a pretty clever tactic to hide the negative press among all the buzz for their WWDC event).  The outcome: Apple must pay a fine of $2.25 million to the Australian government, and will also probably have to pick up the tab for $300,000 worth of legal fees.  Though they aren’t required to, Apple is also offering refunds to customers who felt cheated.  What a nice company.

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Citizens Pays $132.5 Million for Overdraft Practices

Show me the money

Citizens Financial Group, a bank based in Rhode Island, was accused of unfair business practices in its calculation of overdraft fees for its poorer customers.  Instead of processing transactions in the chronological order they were created, the bank elected to process them from largest to smallest.  This increased the likeliness and amount of overdraft fees, which are levied when a customer spends more money than he/she has in the bank.

Read on to find out exactly how these customers were ripped off

A jar of Nutella with a spoon covered in chocolate hazelnut spread rests inside. The lid is off and placed nearby. The background is slightly blurred, showing a mix of red and yellow colors.

Nutella Settles Class Action About Healthiness

Anyone who scoops Nutella with a spoon has no intention of using it as a “spread.”

Nutella, the hazelnut spread considered by some to be the immortality-inducing ambrosia of myth, was alleged in a class action lawsuit to not be as healthy as advertised.  How anyone can believe that a product akin to a peanut-butter-chocolate lovechild is healthy is beyond me, but nevertheless, the company that makes it, Ferrero, now must pay out $4 per container in trust to anyone who bought their product over a four-year period.  If you bought a jar of Nutella between Jan. 1, 2008 and Feb. 3, 2012, you’re entitled to recompense for up to five jars, or $20.  A fund of $2.5 million will be set up by Ferrero to pay out these claims.

In addition to the monetary penalty, Ferrero agreed to change its advertising to remove any suggestions that Nutella is healthy.  What used to say “An example of a tasty yet balanced breakfast” will now say “Turn a balanced breakfast into a tasty one.”  Astute readers will note that these two phrases are not very different at all.  The key distinction, though, is that the former slogan implied that Nutella is both tasty and balanced, while the new one only implies that Nutella adds some taste to an otherwise bland albeit healthy breakfast.  Ignoring the fact that many Nutella aficionados eat it by the spoon as meal in itself, this new advertising will actually make little impact on the perception of Nutella as healthy.  I don’t think Ferrero was actually fooling anybody with their previous slogan for the 100 calorie-per-tablespoon spread.

To find out how to file a claim on your own jar of fraudulently-advertised hazelnut butter, visit the official Nutella class action settlement website.

 

Groupon Settles Coupon Expiration Date Suit for $8.5 Million

Discount!

Groupon, the world’s largest purveyor of coupons, found itself in a bit of trouble recently regarding their products’ expiration dates.  A lawsuit brought by Eli R. Johnson alleged illegal expiration date policies on Groupon’s coupons, putting the company’s very lifeblood in jeopardy.  Johnson bought a coupon that expired after a few months.  He brought suit after learning that Illinois law requires a minimum expiration date of five years for all gift certificates, including coupons.  Apparently, the online giant, which operates across the entire country and Europe, didn’t bother to learn the nuances of consumer protection laws from state to state, leaving them vulnerable to lawsuits.  Not even in Illinois, which is the jurisdiction of this lawsuit and, embarrassingly, Groupon’s own base of operations.  Today’s legal settlement allows customers in certain states to redeem some coupons past their expiration date or, failing that, receive a full refund.  Groupon has $8.5 million in a fund set aside for the latter option.

It’s tough to imagine that a company that deals in, say, cold medicine wouldn’t know about the laws affecting cold medicine across all of the states that it does business in.  So too is it hard to believe that a company solely devoted to coupons wouldn’t know about coupon regulations.  However, this is the same company that has been in the news for having trouble with their refund policy on their SEC filings.  Add that to the current class action lawsuit about employee overtime pay and Groupon appears to be in some hot water as of late.  The Wall Street Cheat Sheet has even described their current financial standing as an “implosion”.  Harsh.

 

Goldline to Pay $4.5 Million to Victims of Gold Bullion Bait-and-Switch

Gold

ABC News reports that Goldline, a dealer of precious metals, is to pay $4.5 million to settle a case with its defrauded customers and avoid criminal prosecution.  The company was accused of a “bait-and-switch”, advertising the sale of gold bullion and instead selling its customers much less valuable “collectible” gold coins.  California consumer protection attorneys alleged predatory business practices and 19 counts of criminal fraud in the company’s practice of convincing its customers that the government could confiscate gold bullion but not gold coins.  The company would then use this misinformation to justify an enormous markup for the coins.  One customer reports that he had lost half of the $5,000 he spent purchasing the coins due to the discrepancy between Goldline’s markup and the market-set value of the gold itself.  Most customers paid a markup 55% higher than the gold’s actual value.

More interesting than the settlement is the company’s attempt to spin the news.  As part of the settlement, the City of Santa Monica agreed to drop all criminal charges against Goldline.  In a press release issued by the company, they stress this fact first and foremost, making no mention of the $4.5 million to be paid to their victims.  Instead, Goldline identifies the suit as an investigation of “dissatisfied customers” and only  mentions they “continue to set [the] standard for customer disclosures”.  Take this as a lesson to read a company’s press releases with a grain of salt, or in this case, a heaping mound.  Also, if you’re in the market for gold bullion, don’t buy it from a company that advertises on conservation radio talk shows.