Consumer Advocate Legal Update

MyCashNow Sued for Unsolicited Text Messages

Rabeh Soofi — Mon, 14 May 2012 09:53:27 -0800

MyCashNow, which provides Americans with pay-day loans, has been sued in a class action for sending unsolicited text messages to cell phone users in the first week of December, 2011. The class action is pending in a Nevada federal court.

The lawsuit was brought pursuant to the Telephone Consumer Protection Act, which prohibits companies from sending unsolicited text messages without the prior consent of recipients. According to the class action lawsuit, MyCashNow’s unwanted texts caused damages to consumers who have “pay per text” SMS plans, and must pay for each and every text they receive. The class action is seeking at least $500 in damages for each unsolicited text message received from MyCashNow, which is the minimum penalty allowed under the TCPA.

If you have been the victim of unwanted text messages from unknown companies, please notify Khorrami, LLP for a confidential evaluation of your rights.

Grandparent Scams: Newest Trend in Consumer Fraud

Narine Khngikyan — Thu, 10 May 2012 15:16:12 -0800

May is “Older American Awareness Month,” which celebrates America’s senior citizens. While there are many advantages to growing old, there are also many reasons for older Americans to be concerned about fraudulent consumer activity specifically directed at seniors. With May being a month to recognize the elderly, it’s also a good time to educate them on the possible scams they may be vulnerable to.

A new wave of elder consumer fraud appropriately titled, “grandparent scams” are on the rise. They take place in early morning, and result in the elder receiving a phone call from an imposter acting as their grandchild who has found themselves in a emergency and needs financial help immediately. The caller usually asks the grandparent not to mention anything to the grandchild’s parents because will worry the parents but more importantly, cover their tracks. These kinds of scams happen all the time and are designed to take advantage of a grandparent’s love and generosity.

In an effort to help avoid consumer frauds such as this, seniors should keep these three things in mind:

1) Think about the Request. If the scammer requires an immediate decision which leaves you feeling pressured, delay the decision until all your questions and concerns have been answered.

2) Be Wary of Requests for Money. Seniors should be cautious of all requests that require wire transfers, especially those over the internet. If you receive a claim or request from an unfamiliar party that leaves you suspicious, trust your instincts.

3) Prizes and Charities. If you get a call notifying you about a prize you’ve won or an offer to make a charitable donation, first check out the business before agreeing to anything. Resources like the Better Business Bureau and Angie’s List for local organizations are great references that will provide more information about an organization or business.

If you feel you have been a victim of consumer fraud, please contact Khorrami, LLP for confidential consultation.

Image courtesy of abcnews.go.com

Plavix lawsuit filed in New York

Alison Wilson — Tue, 08 May 2012 07:35:16 -0800

Another lawsuit has been filed against the manufacturer of Plavix. Plavix is a prescription blood thinner that was initially approved by the Federal Drug Administration in 1997 for the treatment and prevention of heart attack and stroke. The label to Plavix has undergone numerous revisions since its initial approval. Most recently, revisions to the Precautions and Warnings section of the Plavix label were made in December 2011.

On May 3, 2012, three complaints were filed in New York alleging that Plavix caused serious gastrointestinal bleeds. According to the lawsuit, the plaintiffs suffered life-threatening bleeds and the medication caused severe injuries. The injuries are alleged to be permanent and lasting in nature, and include physical pain, mental anguish, diminished enjoyment of life, the need for lifelong medical treatment, monitoring and/or medications, and fear of developing other health consequences.

The lawsuit also alleges that the defendants, Bristol-Myers Squibb and Sanofi-Aventis, falsely touted the safety and efficacy of the drug. The plaintiffs claim that the defendants made negligent and fraudulent representations to the FDA, the public, and the medical and healthcare community regarding the testing, safety and effectiveness of the drug. The lawsuit also alleges that the Defendants had knowledge that Plavix was defective but concealed that information from FDA, the public and the medical and healthcare community.

If you have suffered an injury as a result of taking Plavix, please contact Khorrami, LLP for more information.

Anonymous Posters Held Accountable for Defamation

Jordan Parkhurst — Mon, 07 May 2012 14:55:03 -0800

On April 20, a jury awarded Rhonda and Mark Lesher $13.8 million for defamation stemming from a bevy of comments posted on Topix.com, a website that provides discussion forums for news items.

In 2008, a woman from Clarkesville, Texas accused Rhonda and Mark Lesher of sexual assault, but a jury acquitted the couple in 2009. The Leshers claimed the accusation damaged their reputation, impacted their businesses and effectively forced them out of town. While the legal chapter of the couple’s lives closed with the verdict, the reputational damage apparently continued unabated on the internet. According to an ABC news report at the time of filing in February 2009, Topix’s message boards contained “more than 25,000 comments, on about 70 threads related to the trial.”

The lawsuit named as plaintiffs 178 anonymous posters of allegedly defamatory statements. Through the lawsuit, the couple obtained information from Topix.com that led them to three internet service providers identified by Topix.com as providing the IP addresses for the identified posters. The IP addresses belonged to computers used by employees of an automotive parts store a few hours away; a store owned by the couple’s 2008 accuser. The jury divided the award among the couple’s accuser, her husband and her brother.

While the suit ignited some debate on freedom of speech and privacy protections for anonymous posters in online forums, the award emphasized the avenues available to victims of slander and libel. Defamation laws provide a remedy to those who suffered as a result of someone else’s false statements. In 44 states, including California, certain categories of defamatory statements, such as accusations of criminal wrongdoing, possession of a loathsome disease, unchastity of a woman, and statements that cause reputational harm, are considered defamatory per se and do not require the victim to show that he or she suffered actual damage.

If you believe you have suffered harm as the result of defamatory statements, please contact Khorrami, LLP.

Image courtesy of http://www.rhlaw.com/blog/9th-circuit-unmasks-anonymous-online-speakers/

College Student Files Lawsuit Against DEA after being Left in Jail Cell for Five Days

Paul Mata — Fri, 04 May 2012 07:43:52 -0800

A San Diego college student filed a $20 million dollar lawsuit against the Drug Enforcement Agency (“DEA”) this week after being forgotten in a jail cell for almost five days without any food or water. The victim, Daniel Chong, is a 23 year-old engineering student at the University of California, San Diego.

Chong was taken into custody by the DEA on the morning of April 21, 2012 in San Diego, after a drug raid was conducted on the home Chong was staying in the night before. Chong was subsequently taken to a DEA holding cell, where he was questioned and told charges would not be filed against him. After questioning, he was handcuffed and returned to the holding cell where he was apparently forgotten about for nearly five days.

During his time in the small, windowless holding cell, Chong says he went into “survival mode” after two days had gone by and no one had come for him. Having no food or water, Chong was forced to drink his own urine to survive. Chong says he continuously screamed and yelled to no avail. Still handcuffed, Chong attempted to commit suicide by breaking his eye glasses and attempting to cut himself. Chong says he suffered from hallucinations after he ingested a white powder he found in the cell which later tested positive for methamphetamines. When the DEA finally found Chong’s in the cell nearly five days later, Chong had to spend three days in the intensive care unit at the hospital due to kidney failure.

Since news of Chong’s ordeal broke, a DEA’s San Diego spokesperson, issued a statement saying the DEA was deeply disturbed by the story and extending their “deepest apologies” to Chong. This week, however, Chong filed a $20 million dollar lawsuit against the DEA, saying the DEA’s actions constituted torture. Chong seeks damages for pain and suffering, future medical and psychiatric treatment, and loss of future earnings.

If you have suffered unfair treatment at the hands of law enforcement, please contact Khorrami, LLP for a free and confidential consultation.

Image courtesy of blog.travelpod.com

Better Labels for a Popular YAZ Contraceptive

Angela Oh — Mon, 30 Apr 2012 07:24:55 -0800

The popular contraceptive Yasmin first hit the market in 2001 after the U.S. Food and Drug Administration (FDA) approved the prescription birth control pill in 2001 and its sister pill Yaz in 2006. Both are manufactured and marketed by the pharmaceutical giant Bayer Healthcare Pharmaceuticals and both contain a synthetic hormone called drospirenone (progestin).

Since the contraceptives have been on the market, there have been reports of adverse effects from ingesting the drugs such as deep vein thrombosis and stroke. This triggered a lengthy FDA investigation which conclusively found that women who have taken the fourth generation pills containing drospirenone had a significantly higher risk of developing a blood clot. As a result of these studies, the FDA announced that pills containing drospirenone would be required to label their drugs with detailed information concerning the increased risk of developing a blood clot.

Following the FDA’s labeling demand in 2011, Bayer announced its intention to pay out $110 million dollars in Yaz settlements on April 10, 2012, for claims involving blood clots. Thousands of lawsuits were initiated over the years claiming blood clot-related injuries from plaintiff’s alleging that Bayer did not adequately warn of the risks associated with taking Yasmin and Yaz. The Bayer settlement could mark the first of many more settlements to come for injured plaintiffs.

If you have taken Yaz or Yasmin, there are warning signs of developing a blood clot. Some include severe headaches, swelling or pain in the arms or legs, sharp chest pain, pain or tenderness in one leg, a temperature difference in the legs, shortness of breath, rapid heart rate, sudden cough, and blurred vision. Pulmonary embolism (blood clots in the lung), deep vein thrombosis (blood clots in the legs), heart attack and stroke are all conditions caused by blood clots.

If you have taken Yasmin or Yaz and have experienced any of the above-named symptoms, please contact Khorrami, LLP for a consultation.

Bullying Victim Settles with School District

Jordan Parkhurst — Fri, 27 Apr 2012 07:49:01 -0800

Last week, the Ramsey School District (NJ) agreed to a $4.2 million settlement to compensate a former middle school student left paralyzed after a pattern of bullying. The parents of the attacker reached an undisclosed settlement with the victim in 2010.

Four years prior to the incident at issue in the settlement, New Jersey passed a law directing all school districts to create and enforce policies targeted to reduce bullying during school time and on school property. The lawsuit alleged Ramsey schools failed to record reports of bullying, escalate punishment for repeat bullies, or appoint staff to coordinate enforcement efforts.

In the case, Kenneth Major, a middle school classmate of victim Sawyer Rosenstein at Eric S. Smith Middle School, repeatedly harassed Rosenstein both physically and verbally (and reportedly bullied several other students) throughout the school year. Rosenstein reported the incidents and, in fact, emailed the school district to report an escalation of his bullying, to ask for help and to create a record in case something happened.

At some point during the school year, during a break in classes Major allegedly punched Rosenstein, then 12, in the abdomen. The punch triggered a blot clot that migrated to Rosenstein’s spine, leaving him paralyzed from the waist down two days after the incident. Rosenstein underwent a series of surgeries in the six years that have passed since, including a complete spinal fusion, removal and re-fusion. He remains paralyzed for life.

New Jersey amended its existing law in 2007 to bring harassment through electronic communications within the ambit of the existing law and in 2011 created the Anti-Bullying Bill of Rights Act, which contained stricter reporting, procedural and enforcement requirements to ensure compliance in all school districts.

If you feel that your child may have been the victim of harassment or bullying in school contact Khorrami, LLP for more information.

Photo Courtesy of www.bodiesinmotion.com

Deadly Dog Treats At Issue in New Class Action Lawsuit

Narine Khngikyan — Tue, 24 Apr 2012 10:11:11 -0800

After hearing the endearing phrase “good boy,” a dog can usually count on receiving a treat as a reward for its good behavior. For one Chicago-area man, the dog treats he gave his dog ended up killing his 9-year old Pomeranian, Cleopatra, shortly after consumption. Owner Dennis Adkins alleges that “Waggin’ Train” treats, a product of Nestle-Purina Petcare Co., killed his dog. Adkins purchased the dog treats from Wal-Mart and believes the treats not only sickened his dog, but lead to its passing. According to the complaint, after Adkins fed the treats to Cleopatra, the dog became very sick and died 11 days later due to kidney failure. As a result, Adkins is now suing Nestle-Purina and Wal-Mart for $5 Million in compensatory and punitive damages, and also requesting an injunction preventing any further sale of the product. Adkins is also asking the court to approve the case as a class action lawsuit brought on behalf of anyone who bought Nestle or Waggin’ Train- brand dog treats containing chicken imported from China in the past four years.

In November 2011, the Food and Drug Administration (FDA) issued another warning reminding customers that dogs who consume chicken jerky treats manufactured in China may become ill, experience kidney failure and even die. The cautionary warning was first issue in 2007 and affected products have since been under extensive chemical and microbial testing by the FDA. In response to the suit, Nestle-Purina appears to be standing behind their product and its integrity and quality, t stating, “Waggin’ Train products are safe to feed as directed.” However, it wasn’t until April 16, 2012 that the Waggin Train treats website included a warning about their products and that side effects may occur.

When asked to comment on the lawsuit, Nestle-Purina declined to comment but spokesperson Keith Schopp mentioned on an earlier occasion that the “safety of pets is the company's utmost priority and that production of the treats in China is held to the highest quality and safety standards.” Wal-Mart went on to reassure customers that they’re “committed to providing customers and their pets with safe and affordable food” and have since been in contact with the FDA regarding concerns about dog treats that contain chicken jerky dog like the ones Nestle-Purina manufactures.

If you feel you have purchased a product that has caused you or a loved pet to become ill, please contact Khorrami, LLP for a confidential and no-risk consultation.

photo courtesy of http://www.petnebulamissoula.com/treats

Attorney Spotlight: Elise Sanguinetti

Khorrami, LLP — Mon, 23 Apr 2012 09:09:08 -0800

Elise Sanguinetti, managing attorney at our San Francisco Bay Area office has been selected as a 2012 Northern California Super Lawyer. This is Elise’s fourth time winning the prestigious industry honor. Along with her Super Lawyers recognition, Elise also holds an AV rating with Martindale-Hubbell which exemplifies her high level of professional excellence. Elise’s extensive experience is contributed to her exclusive representation of plaintiffs in civil litigation. Her focus of expertise is serious injury cases, wrongful death cases, civil appeals and legal malpractice.

To view Elise’s profile on the Super Lawyers site, click here. Elise’s professional bio can be found on our site.

Congratulations Elise!

GameStopped: Video Game Retailer Settles Class Action Lawsuit

Rabeh Soofi — Fri, 20 Apr 2012 13:03:51 -0800

The class action against GameStop over misleading and false advertising in connection with the purchase of used video games has been settled, at least on a preliminary basis. On April 10, 2012, a federal court judge approved the preliminary settlement reached between GameStop and the lead plaintiffs of the class action pending in San Francisco’s federal court for the northern district of California.

The allegations arose when GameStop failed to notify customers that certain video game content would require the payment of additional charges that were not “free,” as GameStop had advertised. Another allegation in the lawsuit asserted that GameStop substantially marked-up used games it purchased from customers to maximize its profits to more than $2 billion per year, without paying any royalties to video game publishers or developers.

Under the proposed settlement agreement, GameStop must post signs in its California stores notifying consumers that certain downloadable content may cost them extra, in addition to the amounts they pay to purchase the game itself. Further, GameStop will be offering consumers a $15 reimbursement via a check/coupon combination.

The details on how class members may receive their $15 have not been released yet, but will be forthcoming. The website established for the settlement is located here: http://www.gamestopsettlement.com/.

If you have been deceived or mislead by consumer advertising, contact Khorrami, LLP for a confidential consultation.

Photo Courtesy of slashgear.com

Beetlejuice Banned: Starbucks Drops Crushed-Insect Extracts from Drinks & Pastries

Rabeh Soofi — Fri, 20 Apr 2012 07:27:10 -0800

Java-giant Starbucks has pulled the plug (or rather, bug) on the insect-based dye used for its red drinks and pastries.

For years, Starbucks had been using “cochineal extract,” a deep red dye obtained from the cochineal, a small beetle whose females produce red coloring when crushed, due to a high concentration of carminic acid in their bodies. About 70,000 insects are used to make a pound of dye. The bug-juice made its way into virtually all pink or red-colored Starbucks products - the Strawberries & Cream Frappucino, Strawberry Banana Smoothie, Raspberry Swirl Cake, Birthday Cake Pop, Mini Donut with Pink Icing, and the deep maroon-colored Red Velvet Whoopie Pie.

The change came after a barista notified vegan news sites that Starbucks’ products were not vegan products, because they contained insect-based dyes. An online petition was started on Change.org, and after obtaining 6,000 signatures, Starbucks took notice and eliminated the bug-juice from its ingredient list for red-colored drinks, pastries, and deserts.

Unfortunately, extracts from the cochineal beetle are still in high demand. Apparently, cochineal extract is used in numerous consumer, including Tropicana juices, Minute Maid juices, SoBe Lifewater varieties, and Dole diced fruit, lipsticks, beauty products, and other items. As of April 16, 2012, the U.S. Alcohol and Tobacco Tax and Trade Bureau is revising its regulations to require companies to disclose whether cochineal extract and carmine are used in any alcoholic beverages.

Consumers who purchase products marketed as "vegan" could be deceived by false advertising, if those products are not actually vegan. If you believe you have been the victim of deceptive advertising, please contact Khorrami, LLP for a confidential consultation.

Attorney Spotlight: Scott Sumner

Narine Khngikyan — Thu, 19 Apr 2012 09:57:16 -0800

Scott Sumner, who anchors our San Francisco Bay Area office, has both been selected as a 2012 Northern California Super Lawyer and ranked among the Top 100 Personal Injury Lawyers in Northern California. Scott, who is experienced in multiple areas of law, has consistently received the industry Super Lawyer honor for the past 8 years. Along with his Super Lawyer recognition, Scott has also achieved 10 year marking status on the Martindale AV and Preeminent ratings. A significant rating accom

plishment, the AV Preeminent rating is a testament to Scott’s high level of professionalism. Scott’s practice areas include state and federal plaintiff personal injury cases, wrongful death cases, defective product cases, premises liability cases, insurance coverage cases and a variety of other practice areas

Congratulations Scott!

      To find out more about Scott’s achievements and areas of
      expertise, read his professional biography that's available
      on the firm's site or check out his Super Lawyers profile
      page.

Is Your Food a Fraud?

Alison Wilson — Wed, 18 Apr 2012 13:45:17 -0800

Some of the foods Americans consume everyday may not contain the ingredients they think are included, according to a new Journal of Food Science report. New research that appears in the journal’s April issue analyzes foods that are most likely to contain adulterated ingredients using the first known public database created by the U.S. Pharmacopeial Convention.

Food fraud happens when an ingredient is replaced without the knowledge of the purchaser. The Institute of Food Technologists defines food fraud as “a collective term used to encompass the deliberate and intentional substitution, addition, tampering, or misrepresentation of food, food ingredients, or food packaging; or false or misleading statements made about a product for economic gain.”

The foods that have been identified as the most prone to food fraud are olive oil, milk, honey, saffron, orange juice, coffee, and apple juice. For example, a search for olive oil on the Food Fraud Database reveals that hazelnut, corn, and even peanut oil has been found in what is labeled only as “olive oil” or “extra virgin olive oil.” This is particularly concerning for those who suffer from food allergies.

According to the U.S. Pharmacopeial Convention, some food substitutes are toxic. It was discovered that a common spice, Chinese star anise, was being replaced with the toxic Japanese star anise. Not only do some of the hidden ingredients contain toxic substances, but they are often specifically designed to avoid detection. For example, prior to the discovery of infant formula containing melamine in 2008, testing for melamine was not conducted as part of routine quality control. Records that are now publicly accessible on the database reveal that the use of melamine dates back to 1979. The use and development of this database will lead to increased consumer protection and awareness.

If you have been the victim of food fraud or have been misled as a consumer, contact Khorrami, LLP for more information.

Holy Mackerel! Phony Fish

Robert Drexler — Wed, 18 Apr 2012 11:18:11 -0800

Yesterday, various new sources, including the Los Angeles Times and NBClosangeles.com, reported on an investigation conducted by Oceana, an international organization working to protect the world’s ocean. Oceana collected 119 seafood samples from grocery stores, restaurants and sushi venues in Los Angeles and Orange counties in California and found widespread mislabeling. Among the key findings of the investigation are:

Overall, 55% of the samples collected (65 out of 119) were mislabeled according to federal guidelines.
Every single fish sold with the word “snapper” in the label (34 out of 34), was mislabeled according to federal guidelines and according to California law, only one “Pacific red snapper” was labeled properly.
Nearly nine out of every ten sushi samples were mislabeled.
Eight out of nine sushi samples labeled as “white tuna” were actually escolar, a snake mackerel species that carries a health warning for its ‘purgative effects”.

Oceana concluded that the majority of the mislabeled fish constituted economic fraud because a lower priced species was substituted for the desired species for economic gain. The mislabeling also poses health risks from allergens, contaminants or pathogens in the substituted species. For example, the FDA issued an advisory for methyl mercury in seafood to women of child bearing age to limit consumption of white tuna to six ounces per week. However, white tuna also contains healthy omega fatty acids. Wanting the benefits of white tuna but not the detriments, a woman may choose to consume six ounces of white tuna per week in her sushi. However, the investigation found that escolar, which has been banned in Japan and Italy because it contains a naturally occurring toxin that causes severe gastrointestinal problems, was frequently substituted for white tuna.

These mislabeling, in addition to violating the branding requirements of the FDA and various California regulations, may also be independently actionable under California’s Consumer Legal Remedies Act and the false advertising provisions of California’s Unfair Competition Law.

If you have purchased seafood that you know to be mislabeled, please contact Khorrami, LLP.

Photo courtesy of: http://www.itsokaytobesmart.com/

Nutella: For Hazelnuts, Not Health Nuts

Jordan Parkhurst — Mon, 16 Apr 2012 14:44:48 -0800

A federal district court in New Jersey approved a settlement earlier this year in a nationwide class action brought in connection with allegedly misleading advertisements run by Ferrero U.S.A., Inc., the New Jersey-based maker of the popular Nutella hazelnut spread.

A San Diegan mother filed a similar suit last year on behalf of California consumers, alleging that Ferrero advertised Nutella as “an example of a tasty, yet balanced breakfast,” and depicted healthy-looking families using Nutella among other healthy breakfast options, such as whole wheat bagels, milk and strawberries, despite allegedly high concentrations of sugar, saturated fat and calories.

The company’s website and labeling indicate that two tablespoons of Nutella contain 200 calories, 21 grams of sugar and 3.5 grams of saturated fat. Consumers, as the lawsuits allege, often use Nutella as an alternative to traditional breakfast condiments, such as peanut butter and preservatives. Two tablespoons of the popular Jiff-brand Creamy Peanut Butter contains roughly the same caloric count (190) and a comparable saturated fat content, but a tenth the sugar content (2 grams. An equal serving of Knott’s Berry Farm Raspberry Preserves contains half the calories but similar sugar content. A classic Hershey bar contains approximately the same calories and sugar as a serving of Nutella, though slightly more than twice the saturated fat.

Ferrero denied any wrongdoing, but agreed to settle both cases. Qualifying consumers must submit all claims no later than July 5, 2012 by visiting this site.

If you feel your rights have been violated or you have been misled as a consumer, contact Khorrami, LLP for more information.

Simply Stated: Labels Matter

Robert Drexler — Fri, 13 Apr 2012 13:11:38 -0800

This week a class action settlement was announced in a case involving thirty CytoSport products including Muscle Milk® and Monster Milk®. The lawsuit alleged that the products contain lead, cadmium, and/or arsenic in violation of California’s Proposition 65. The lawsuit further claimed that the product labeling did not adequately inform consumers that the products contained lead, cadmium and/or arsenic and, accordingly, violated California’s Consumer Legal Remedies Act and the false advertising provisions of California’s Unfair Competition Law. However, the lawsuit did not allege that the Cytosport products or labeling violated the Food, Drug and Cosmetic Act or that Plaintiffs were physically harmed by the products. CytoSport vigorously denied all allegations and admitted no liability by reason of the settlement.

The settlement affords Class Members who provide original valid sales receipt(s) showing that the qualifying products were purchased between June 4, 2006 and April 8, 2011 a check for reimbursement of the full retail price up to a total of $20. Other claim options are available for claimants who have no receipt.

These types of lawsuits highlight the scope of California’s consumer protection and deceptive advertising laws. In Kwickset Corporation v Superior Court, (2011)51 Cal 4^th 310, California’s Supreme Court wrote: “Simply stated: labels matter. The marketing industry is based on the premise that labels matter, that consumers will choose one product over another similar product based on its label and various tangible and intangible qualities they may come to associate with a particular source.”Id. at 328. California’s Unfair Competition Laws encompass not only those advertisements which have deceived or misled because they are untrue, but also those which may be accurate on some level, but will nonetheless tend to mislead or deceive. . . . A perfectly true statement couched in such a manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under California law. Day v. AT&T Corp. (1998) 63 Cal.App.4th 325, 332-333.

If you have purchased a product relying on a label that you believe is false, misleading or omits important information, please contact Khorrami, LLP.

"I Can't Answer That: Is Apple's Siri a Fraud?"

Jordan Parkhurst — Fri, 13 Apr 2012 11:18:40 -0800

Following on the heels of a similar filing last month in New York, a California owner of Apple’s newest iPhone product, the 4S, filed suit against the consumer electronics leviathan, alleging false advertising and misrepresentation.

Both complaints spotlight Apple’s massive advertising campaign involving the Siri feature found now exclusively on the 4S, with the New York complaint noting that, at the time of filing, the majority of Apple’s 4S ads focused entirely on the Siri feature.

In theory, Siri receives natural language commands from the user and employs iPhone applications and web services to execute those commands. The plaintiffs allege that Siri’s actual performance dramatically falls short, both in speed and performance, even when given the commands specifically advertised by Apple. Apple’s website includes a small-print disclaimer noting that Siri remains in “beta” testing, meaning Siri exists as a work-in-progress. The company includes no such disclaimer, however, on its widely-circulated television advertisements.

A similar action filed in Canada suggested that despite its beta status, Siri provides the basis for the iPhone’s significantly-increased product price. In the US, Apple currently prices the iPhone 4S at almost exactly double the price of the iPhone 4. The New York, California and Canadian plaintiffs all seek class status, meaning they each hope to represent consumers who feel similarly deceived by Apple’s advertising. When asked for comment, this blogger’s Siri responded: “I’ve never really thought about it.”

If you feel your rights have been violated or you have been misled as a consumer, contact Khorrami, LLP for more information.

The Better Business Bureau Warns Consumers About Fraudulent "E-Books"

Rabeh Soofi — Wed, 11 Apr 2012 09:05:25 -0800

The Better Business Bureau has issued a new warning to consumers about fraudulent “e-books.” With the recent release of the iPad 4, a number of consumers are now purchasing iPads, tablets, and other e-readers like the Nook and Kindle Fire for a variety of entertainment purposes, including reading “e-books.” The BBB warns consumers, however, that scammers have picked up on the popularity of electronic reading material and are preying on innocent purchasers of e-books in order to reap a windfall.

E-book scams come in two forms: farming and infringement. Farming refers to the collection of fake content by scammers, who prepare junk material into e-book format, and then attempt to market it as legitimate reading content. Infringement, on the other hand, involves the theft by scammers of legitimate and copyrighted reading material that either not available in e-book format, or peddled as a “low-cost” option. Scammers create a bevy of false identities and fake “book reviews,” all in an effort to convince consumers to purchase the e-book. This sort of e-book fraud, the functional equivalent to buying a knock-off product, not only infringes on the original authors’ copyright, but it deprives both author and publisher of the revenues of e-book sales.

BBB offers consumers several tips to avoid buying a fraudulent e-book:

Stick with Known Author
Purchase Through Known or Secure Websites
Be Wary of Cheap E-Books with Great Reviews
Avoid Clicking Links in E-Books

If you believe you have been the victim of e-book fraud, please contact Khorrami, LLP for a confidential consultation

Class Action Lawsuit against Groupon Alleging Securities Fraud

Khorrami, LLP — Wed, 04 Apr 2012 11:52:38 -0800

Groupon, the daily-deal website, has been sued by an investor in a class action lawsuit alleging securities fraud and misleading investors. According to the lawsuit papers, Groupon failed to disclose negative trends in [its] business and made false statements as to Groupon’s financial results." The lawsuit alleges that Groupon knew of its financial situation yet continued to conceal the facts to the investing public. The lead plaintiff, Fan Zhang, also alleges that the company did not meet the GAAP Guidelines (Generally Accepted Accounting Principles) and that the company’s “financial results were materially false and misleading” and “revenues were overstated in violation of GAAP.” The lawsuit seeks damages, interest, lawyer fees and other relief to Groupon’s investors.

Since late 2008, Groupon has turned the awkward and unpleasant use of coupons into a modern-day phenomenon that offers people everywhere the chance to get a great deal . Many businesses all throughout the US, Europe, Asia, South American have turned to daily-deal websites like Groupon.com to draw customers into their shops to stay afloat in a down economy. Serving as the middle-man between customers and local businesses, Groupon promotes a city's local restaurants and stores to customers and those interested in trying something different. Since the inception of Groupon in late 2008, the company has been growing at a rapid pace. Ranked as the #1 daily deal site in 2011, Groupon has a growing list of 115 million users.

Even apart from the securities-fraud class action, recently though, things have been looking a little rocky for Groupon. On Monday, the company suffered a 17% drop in stock price. The drop in price was due to the company having to revise their operating income and loss figures for the 4th quarter, since the company did not set aside sufficient funds to cover returns from customers who were dissatisfied with their Groupon purchase. The misrepresentation of accounting figures raised red flags for Zhang, who is alleging that Groupon's dodgy accounting practices tricked investors into buying stocks.

Groupon Agrees to Pays $8.5M Settlement

Angela Oh — Tue, 03 Apr 2012 12:14:43 -0800

Who doesn't love a good bargain? Websites like Groupon and Living Social have become widespread in popularity offering spectacular deals on a multitude of products and services at a fraction of the original cost to cater to the bargain-loving consumer. Many consumers will check what is being offered on these websites before they purchase anything. But as great as the deals are, how many of your coupons go to waste because you didn't redeem it in time? If this has happened to you, you are definitely not alone.

Groupon, the largest online coupon site has agreed to pay $8.5 million dollars to settle a class action lawsuit alleging that the expiration dates on the coupons are illegal. 17 lawsuits were combined into a class action in the United District Court of San Diego, in which Plaintiffs accused the online coupon giant of violating the Credit Card Accountability Responsibility and Disclosure Act ("CARD Act") as well as several state consumer protection laws. Plaintiffs asserted that the CARD Act, which generally applies to gift cards, also applies to daily coupon vouchers and any coupon or voucher that expires in less than five years is in violation of federal law. Plaintiffs further alleged that Groupon's marketing scheme created a sense of urgency to buy its vouchers by offering “daily deals” for a limited time. This, Plaintiffs argued, made consumers feel pressured and rushed into buying the vouchers, causing them to become victims of “onerous sales conditions.”

The Groupon settlement requires approval by San Diego Judge Dana Sabraw. If approved, the settlement will cover consumers who received vouchers between November, 2008 to December 1, 2011. These consumers may redeem the vouchers past the expiration date or recover from the settlement proceeds.