Thursday, July 13, 2006

FTC v. (9th Cir. - July 13, 2006)

Okay, okay. I'm going to stop calling the Ninth Circuit lazy. It issued five published opinions yesterday and four today, compared with one each day for the California Court of Appeal. So my new mantra is that the Ninth Circuit is the hardest working court in show business. Great job.

Plus, this is a darn good opinion by Judge O'Scannlain. Admittedly, I don't think it's that tough of a case. But he writes a fairly short (seven page) opinion that quickly and cogently disposes of appellant's arguments. The opinion is also interesting to read if only to learn what did, and also -- thankfully -- how the FTC actually got off its duff and did something about it.

This is another one of those "mail you a check and, when you cash it, you're automatically signed up and billed for some service you don't want, so you better be darn sure to read the fine print" solicitations. If you're at all like me, you get plenty of these in the mail. My own take is that it's sleazy to mail a solicitation in the guise of a check period, if only because we all know that this type of solicitation deliberately deceives the consumer into opening up the envelope in the first place (rather than throwing it away) because she thinks it might contain a real check. But it's even sleazier when, as here, the only substantive reference to the fact that by cashing the check you're signing up for a monthly $19.95 charge is in fine print on the back of the check.

Now, I gotta admit, my instinctive reaction to this case was: "I'd find this mailing deceptive, but I really do think that most of the people who signed the check knew what they were doing. After all, I can't fathom that someone would sign the back of a check and not read what was immediately above their signature, even if it was in somewhat small print." So my gut reaction was that most people knew what they were doing.

But that just shows you that I'm not very bright. (As if that comes as a shock to anyone.) Because I found the following fact both surprising and pretty significant: Of the 225,000 people and businesses who deposited the checks, only one percent actually logged into the internet service that they had (ostensibly) agreed to buy as a result of cashing the check. Leading to an inference that many -- indeed, most -- of the people either had no clue that they were buying anything or that they had to actual desire to purchase anything when they signed and cashed the check.

That's a pretty huge figure. And one that's available only because the underlying service was internet access -- for similarly deceptive check solicitations for "credit protection programs" or a magazines (or the like), we wouldn't be able to obtain such concrete evidence regarding who actually desired the service. It firms up my belief that these check solicitations really are fundamentally deceptive, and that they really do mislead a huge number of people into ordering things that they don't want.

Judge O'Scannlain affirms the trial court's order that refund over $17 million to consumers, as well holding one of the principals at personally liable for this amount. That's correct as a matter law. And it also makes me happy. Exactly what I want to see happen in situations like this. Let's hear it for justice. Yay!