to alert us to possible abuses in the marketplace.
1. Force-placed Insurance - Consumers should be on the lookout for a potentially unfair practice by finance companies, banks and mortgage companies: The forced placement and required reimbursement of collateral protection insurance on property securing a loan to the consumer. In some instances, lenders will buy insurance from an affiliated or captive insurance company to protect the lender from any loss in the event that the property, such as a car or a home, securing the loan is lost, damaged or destroyed. Typically, the loan contract or mortgage gives the lender the authority to purchase the insurance itself and to charge the customer the "cost of the insurance. In some cases, however, the lender passes on more than the actual "cost of the insurance" because it fails to advise its customer that it has received a commission or "kickback" from the insurance company for buying the insurance. Many class actions have successfully challenged such practices as either being unfair or fraudulent.
2. Inflated Extended Warranty Fees - In a recent decision from the mid-level appellate court in Illinois, the Court found that it was a potential violation of the federal Truth-in-Lending Act as well as a deceptive practice for a car dealer to include the price of an extended warranty contract in the "amount paid to others on your behalf" section of a finance contract when, in fact, the car dealer actually kept a substantial portion of the amount charged to the consumer for itself and never paid it over "to others". The court found the plaintiffs' contention that the practice is misleading to be "simple, direct, and logical. The defendants observed that the vast majority of extended warranty contracts are disclosed in the manner challenged by plaintiffs and insisted that the Truth-in Lending Act permitted the misleading disclosure. The Court rejected defendants' arguments. Other class actions challenging such practices are likely in the future or are already pending against retailers of automobiles and other goods and services that are financed by consumers.
SECURITIES LITIGATION MONITORING SERVICES
Donovan Searles, LLC has announced that it will provide Securities Litigation
Monitoring Services to institutional and individual investors.
The new services are an outgrowth of the Securities Litigation
Reform Act of 1995, which was intended in part to encourage
more participation in securities class actions by institutional
investors and large shareholders. Donovan Searles has developed
an informational kit and proposal that details the need for and
the nature of the services it will provide to such investors.
The informational package and proposal are available by mail,
free of charge and without obligation to any investor who sends
an Self-Addressed Stamped Envelope to Donovan Searles.
