HONOLULU (Legal Newsline) - Hawaii Attorney General David Louie announced settlements worth $11.3 million on Aug. 4 with four major credit card companies to resolve allegations of deceptive marketing practices for credit card payment protection plans.
The settlements came just days after the U.S. Court of Appeals for the Ninth Circuit ruled that the cases should be heard in state court. The defendants had removed the cases to federal court.
Citibank, Discover Financial Services, JPMorgan Chase and Bank of America allegedly solicited consumers by phone and email with misleading sales pitches that failed to include all relevant information.
The credit card companies allegedly denied plan benefits to eligible consumers, unfairly charged customers for interest and fees, billed for services that were not provided, distorted plan benefits, provided misleading information about free trial periods and enrolled consumers without their consent.
“We filed these cases to protect Hawaii consumers and stop illegal and deceptive practices of marketing credit card protection plans,” Louie said.
"With the resolution of these cases we have taken a strong stance against unfair and deceptive credit card practices. These cases are important because they put the credit card industry on notice that it will be held accountable if it engages in misleading practices."
On Aug. 1, the Ninth Circuit sided with Louie, ruling that his lawsuits were not essentially class actions and subject to removal to federal court under the Class Action Fairness Act of 2005.
Citing a Fifth Circuit ruling from 1976, the court wrote: “Indeed, were we – as the card providers request – to evaluate the ‘substance’ of the pleadings. The result would be the same. ‘To maintain a class action, the existence of the class must be pleaded and the limits of the class must be defined with some specificity. The grant… of class action relief when it is neither requested nor specified, is an obvious error.’”
It continued, “Moreover, a plaintiff who denies having brought a class action surely cannot adequately represent the purported class… and the ‘named plaintiff’s and class counsel’s ability to fairly and adequately represent unnamed [plaintiffs are] critical requirements in federal class actions…”
Hawaii is represented by the private firms Baron & Budd of Dallas; Golomb & Honik of Philadelphia; and Cronin, Fried, Sekiya, Kekina & Fairbanks of Honolulu.
The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency are seeking federal enforcement actions against the credit card companies to obtain restitution for Hawaii consumers. The proceeds from the settlements will go to the Hawaii General Fund.
Editor's note: Bryan Cohen contributed to this story.