Cash Store Cannot Bar Class Action Suits, Says Wisconsin Court

A Wisconsin appeals court has ruled that the Cash Store cannot use language in its loan contracts that bars customers from the right to be able to file or join class action lawsuits, reports the Associated Press. The contracts LTD uses usually has this in the fine print of the contract. The court decided that the act was “unconscionable” and thinks it violates the Wisconsin Consumer Act.

Resource for this article: Cash Store cannot bar class action suits, says Wisconsin court

Class action ban protects consumers

The statement about class action comes according to New Richmond, Wis., consumer rights attorney Eric Crandall. He told the AP that any kind of lender that is like the Cash Store could be "easily annihilated" by the damages awarded in such a class action. The class action ban should cause the Cash Store to change its contract language. Considering the trouble the franchise has had in Georgia and New Hampshire over the past year, it seems unlikely that the Cash Store will resist the ruling.

December, Governor Jim Doyle’s personal loans law will begin

Personal loans in Wisconsin must be limited to $1,50 or 35 percent of a borrower’s income, starting Dec. 1. Only one rollover per existing loan is going to be allowed. Doyle's move also banned post-maturity interest on personal loans of 91 days or longer.

It all started with Darcie Estes

To pay her bills, Darcie Estes borrowed $1,400 from a Hudson Wis., Cash store. Because she defaulted on her loan, she owed more money. Cottonwood Financial LTD, with their right, took her to small claims court in 2007 to collect. Eric Crandall represented her and helped her file a counterclaim regarding the anti-class action clause. They sought damages and attorney's fees. The Pierce County judge at the time ruled that Estes had waived her right to a jury trial in the contract. The subsequent appeal overturned this ruling.

Are class actions great to begin with?

There are different theories on whether or not the class actions actually help the class proponents. Cottonwood Financial LTD and the Cash Store were deemed to be in violation of the Wisconsin Consumer Act, hence there may have been good reason for Darcie Estes and the rest of the class to file against them. However, as the legal blog Class Action Lawsuits: Putting People Together suggests, the claimants are rarely the people who derive the most benefit from a class action. Usually the lawyers end up with most of the money, a fact that has spawned a lifetime of resentful jokes on their behalf.

Additional information at these websites

Associated Press

http://www.businessweek.com/ap/financialnews/D9FU0BB80.htm

"Class Action Lawsuits – Putting People Together" (How they REALLY work)

http://www.web-access.net/~aclark/profit.htm

"Class Action Lawsuits – Putting People Together" (The squeaky wheel gets the grease)

http://www.web-access.net/~aclark/profit.htm

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