Mon, 03/05/2018 - 05:22
Faced with possible fines in excess of $121 million, JPMorgan Chase agreed to pay $2.25 million to settle a Telephone Consumer Protection Act (TCPA) class-action lawsuit. The financial services firm was accused of autodialing over two hundred thousand cellphones after their customers had already verbally revoked consent.
In their claim, Tomeka Barrow and Anthony Diaz alleged that JPMorgan Chase used an automatic telephone dialing system (ATDS) between November 18, 2009 and May 19, 2015. The plaintiffs accused the financial services firm of continuing to make robocalls to collect on mortgages and home equity lines of credit after individuals had orally revoked consent. The plaintiffs in this case maintained that they orally asked the bank to stop calling them.
According to the motion to settle, Ms. Barrow and Mr. Diaz, along with the proposed settlement class, are entitled under the TCPA to statutory damages of $500 per violation and $1,500 for any "knowing and/or willful" violation of the federal law.
The represented class is estimated to be over 242,000 people.
Ms. Barrow had also alleged that in June 2016 she clearly told a JPMorgan telemarketer that she only wanted to be contacted in writing. After her request, she claims that their ATDS dialed her at least five more times.
The Settlement Decision
Even though they chose to settle, JPMorgan continues to deny that they violated the TCPA. The rational that led to their decision to settle is the same reason used by many businesses faced with similar litigation and limited options.
Ultimately, the decision came down to JPMorgan’s legal counsel evaluating the cost of uncertainty. Had they decided to continue their fight in court, they faced possible payment for damages upwards of $121 million if the class was certified and the plaintiffs prevailed at trial. In making their final decision, the firm had to evaluate their risk by examining the uncertain cost of further litigation against the certain cost of settling for $2.25 million. From a financial standpoint, agreeing to the settlement was the safest and least costly choice.
"Also, the real possibility of losing at trial further makes this settlement an acceptable compromise."
-- JPMorgan Chase’s Legal Counsel
The settlement class includes persons in the United States “to whom JPMorgan Chase Bank N.A., or any affiliate or agent acting on its behalf, made one or more telephone calls to a cellular telephone through the use of an automatic telephone dialing system or a prerecorded or artificial voice on or after April 20, 2012, through the date of preliminary approval, regarding a mortgage or home equity line of credit account and who, prior to being called, orally requested that they not be called by JPMC."
Under the terms of the settlement Ms. Barrow and Mr. Diaz would each receive $5,000. For themselves, the lawyers representing the plaintiff are requesting attorneys’ fees that are up to 30% of the settlement fund which would net them $675,000. The attorneys are also seeking $40,000 in costs.
You may ask, what do the members of the “harmed” class receive? Based on the size of the settlement and an estimated 5% claim rate of the total members of the class, each class members would receive $101. Of course, if the claim rate is higher, the class members could receive a much smaller portion. Final approval from the judge in the case is expected.
This is yet another example of a lawsuit decided not on the rule of law, but by the principles of accounting. The final decision was based on a financial risk assessment of fighting the battle before a judge and the possibility of losing a great deal more money. JPMorgan Chase believes they were in the right, but chose the more financially prudent choice to settle.
While this was the correct business decision, you have to question the point of such TCPA lawsuits and the regulations that are supposedly being enforced. Do similar lawsuits and the resulting settlements make the lives of consumers better or do they simply enrich a few plaintiffs and their attorneys? For the answer to this question, you can draw your own conclusions.
Is there something you can do to protect your business?
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