Recent Legal Developments

At Consumer Law Group, PLC, we take seriously our position as a leader among Michigan consumer law firms. Our attorneys not only distribute plenty of free information to clients; we also work hard to tell the general public and fellow attorneys what they need to know about consumer law. The better informed we all are, the better we can fight against businesses that try to scam consumers.

We have organized some recent legal developments pertaining to consumer law into the following categories:

Debt Collection Cases

The 4th Circuit Court holds that foreclosure firms are debt collectors subject to the Fair Debt Collection Practices Act (FDCPA) and must comply. Wilson v. Draper.

A 9th Circuit bankruptcy appeals panel rejects statements and other documents evidencing a debt where the witness was not competent to authenticate those records. In re Vinhnee

Todd v. Weltman, Weinberg, & Reiss

Identity Theft Cases

Atlanta Court upholds right of consumer to sue for identity theft. Jordan v. Equifax

Credit Reporting Cases

Judge Pfaelzer denies Choicepoint’s motion to dismiss in nationwide class. On September 20, 2005, Judge Pfaelzer denied Choicepoint’s motion, clearing the way for over a hundred thousand consumers to seek redress under the Fair Credit Reporting Act, for Choicepoint’s release of consumer reports to Nigerian con artists. Harrington et al. v. Choicepoint

In a decision handed down on August 22, 2005, the US Court of Appeals for the Sixth Circuit sustained a consumer’s claim for compensatory damages in the amount of $400,000 based on adverse credit reporting by a bank. The Court sustained the verdict based alternatively on adverse effects on the consumer’s applications for a mortgage and a credit card, as well as upon damages for emotional distress. Bach v. First Union National Bank to read the opinion.

US District Court for New Mexico finds fault with credit bureau’s system for reinvestigating consumer disputes. Apodaca v. Equifax

11th Circuit bars credit reporting agencies from knowingly providing credit reports to past creditors.Levine v. World Financial Networks National Bank

Auto Fraud Cases

The 11th Circuit upholds a consumer’s right to sue for falsified certificate of title. The United States Court of Appeals for the 11th Circuit has sided with consumers and the plain language of the Motor Vehicle Cost Savings and Information Act, and held that a dealer who violates any provision of the act with intent to defraud may be sued for the violation. In so ruling, the 11th Circuit panel disagreed with the 7th Circuit ruling in Ioffe on a nearly identical issue. Owens v. Samkle Automotive

Other Cases

Judge Nancy Edmunds of the Eastern District of Michigan has sustained the right of consumers to bring Consumer Protection Act claims against a mobile phone service provider, and striking an arbitration clause which purports to waive rights to class actions. Wong v. T-Mobile.

A federal bankruptcy judge upbraids congressional greed, corruption, and incompetence behind bankruptcy “reform” in case opinion. Read In Re Sosa (it’s a quick read for lay people and lawyers alike).

Michigan Government

September 2006: The State of Michigan has abandoned car buyers!

The Michigan Office of Financial and Insurance Services has no staff to enforce the finance fraud statute! If you thought that the State of Michigan was exercising any degree of oversight over one of the most notoriously predatory industries in the state, think again and read this. Read our article on the top five reasons to buy your car anywhere but in Michigan.

January 2006: The Michigan legislature acts to permit car dealers to continue negative equity roll-in scams to continue in auto financing. Surprised?

In a now-familiar flurry of end-of-year, anti-consumer legislation, the Michigan legislature has approved a bill allowing car dealers the unfettered ability to roll “negative equity” in car purchases. Negative equity is the deficiency that results when you trade in a car that is still subject to a financing lien. The amount over and above your trade-in that is needed to discharge the financing lien is the “negative equity.”

The reality of this bill is that without taking any steps to protect against any number of well-known frauds that are common to negative equity financing, the legislature and governor have officially sanctioned the policy of “Drive one. Pay for two.”

Consumers who trade in a vehicle with negative equity may expect to find that the dealer 1) doesn’t pay of the vehicle at all with the trade in being repossessed from the car lot 2) doesn’t pay the vehicle off in a timely fashion resulting in damage to the consumer’s credit report 3) the dealer misstates the amount necessary to pay of the trade and pockets the difference as profit.

In effect, this bill now allows car dealers to engage in direct lending to consumers to pay off the “negative equity” without insuring that any of these unfair and deceptive practices can be remedied.

The potential impact of this legislation is far reaching. In spite of the fact that three consumers drove from Detroit to Lansing to testify against the bill, the Senate Committee — chaired by Mike Bishop — refused to take their testimony while finding ample time for testimony for industry advocates.

  • Read the bill as passed by Michigan Legislature and Signed by Jennifer Granholm.

If this example of consumer unfriendly legislation upsets you, please contact your local representative or senator, or one of the following public officials:

October 2006: Michigan Legislature mulls “feel good, do nothing” fix for the Consumer Protection Act. (More info coming soon!)

Federal Government

In what can only be described as an Orwellian attempt to show that consumers are earning more, the Bush administration has promulgated regulations requiring that debt buyers issue 1099’s to consumers whose debts have been dormant for 36 months or been charged off. The 1099s show miscellaneous income arising from a discharged debt.

For years, debt collectors have used the threat to issue this document in order to pressure debtors into paying debts at a discount, rather than face the tax consequences that would arise from receiving a 1099. This threat was effective in many circumstances.

But, faced with a regulation that actually requires the debt collector to take the very action that they had threatened, the entire debt buying industry sued the IRS to reverse the regulation.

The result of the suit is that the debt buyers lost (read the opinion ) and now the debt buyers must issue 1099’s in some, but not all, circumstances.

If you have received a 1099 from a debt collector, contact us immediately. We sue abusive collectors who improperly use these 1099’s to pressure consumers into paying debts.

  • Who is my US representative and where can I find them? Visit
  • Who is my US senator and where can I find them? Visit
  • How do I contact the President? Visit

Contact Us

Consumer Law Group, PLC is ready to help people “Fight back” against companies trying to scam them. Contact us for a free initial telephone consultation.