When it comes to unsuspecting consumers getting hurt by scams, most discussions these days go right to cyber security – computer scams. But even in this technology age, there are still plenty of cases of old-fashioned consumer fraud out there: door-to-door sales, home improvement, auto fraud, illegal repossessions, time shares, mortgage lending, debt collection abuses, and much more.
Madison attorney Mary Fons says, “Let’s face it. Businesses don’t always follow consumer protection laws. There are a lot of powerless people out there. They are marginalized, they get cheated, and they are very vulnerable. Every day, unscrupulous players and businesses add unauthorized charges to home loans, car loans, collection accounts, and credit card accounts. Every day, potential customers are told something that is not true in order to get them to buy a product. Some industries are notorious for falsifying a customer’s income in order to get financing for the product they are selling.”
Entire practices can be built on the prosecution of consumer protection. But it appears that few lawyers focus on this area of practice. Why?
“This area of the law can be very complex. I don’t think most lawyers want to do it,” says Madison attorney David Krekeler. He says that he could count on both hands all the lawyers in the state he knows who do this kind of work.
Fons agrees. “There are many people out there who have been taken advantage of and need legal help. Unfortunately, there are not nearly enough lawyers to help them.”
Fons says the situation actually is better than it used to be. “Many years ago when I started doing this kind of work, I knew of no other lawyers who did this. I took on so many cases, I could have, and frankly probably should have, referred some of the work to other lawyers because my caseload was growing so rapidly. The problem was I didn’t know anyone else who did this type of work. Now, I at least know of some lawyers to whom I can refer some of these cases, but there still aren’t that many out there.”
Fons adds that consumer protection practice is not for the faint of heart. “Detail is very important at every level of consumer protection representation. The lawyer must conduct a thorough investigation of the situation presented by the potential client with interviews, research, and document review before ever agreeing to represent the individual. Details in documents are important because many times there is fraud in the documentation, for example statements contrary to oral promises made, illegal charges, and provisions contrary to Wisconsin consumer protection laws. Discovery from defendants often involves thousands of pages of documentation on standard operating procedures and training manuals. It is important to learn about the operations of the predatory business.”
Consumer education is also part of the issue. Krekeler says many consumers just don’t know they might be able to get help. “The average person doesn’t have a clue that their rights have been violated. A recent study of the future of legal services in the state of Oregon showed that 46 percent of those responding to a survey said they didn’t seek out a lawyer because they didn’t think they needed one. And another 24 percent said they thought it wouldn’t make any difference anyway. While those answers were responses to questions about general legal issues, I think the same mentality exists in consumer fraud cases.”
In addition to general unfamiliarity with consumer protection laws and the relief that may be available, other factors also probably are at play here.
“Nobody knows all the rules and regulations. It’s not easy keeping up with all of them. Only a few lawyers I know of deal with them on a regular basis,” says Krekeler. Years ago, Krekeler was appointed to the Consumer Advisory Panel of the Wisconsin Department of Agriculture, Trade and Consumer Protection. “They used to put out fact sheets to educate consumers. There were 80 pages of them! There are regulations everywhere. A lawyer can’t know all of them to practice effectively. That’s why I caution lawyers to make sure they know what they’re doing if they want to do this kind of work.”
Fons adds, “Taking on cases in a new area of law is a challenge. Anyone beginning to practice consumer law should prepare themselves adequately by steeping themselves in the law of the particular focus area, such as mortgage lending, credit reporting, deceptive sales practices, and so on and contact one or more attorneys who will agree to be there to answer their questions and mentor them. If the attorney new in the area is not a person who is willing or comfortable asking questions when they don’t know something, then that is a problem.”
It’s what I and my colleagues at Wisconsin Lawyers Mutual Insurance Co. (WILMIC) refer to as “dabbling.” Getting into an area of practice with which you are unfamiliar can be a risky proposition.
“Dabbling, or taking on a case in an area of practice with which you lack expertise, can often result in problems for you and your client,” says WILMIC claims attorney Matt Beier. “At worst, it can result in a malpractice claim. Our claims statistics tell us that roughly 40 percent of our claims come in areas of practice in which the lawyer practices less than 10 percent of the time.”
Fons couldn’t agree more. “Not only would I caution against jumping into this area of practice without any preparation or mentoring, I would also caution lawyers who do focus on consumer protection litigation to do their homework.”
“I have been doing this for a long time,” Fons says, “and yet I spend a lot of time investigating a case before I agree to take it. Consumer fraud cases can often be very fact-intensive. I research every case thoroughly before I agree to take it. Sometimes, I have to tell a potential client, ‘I understand your frustration, and yes, you were taken advantage of. But the law provides no remedy for what happened. I really can’t help you.’ Being honest with them is critical. Misleading them into thinking they may get a recovery of some kind when I don’t see that as a possibility is a very bad idea, in my view.
“I also get people who come into the office and tell me what the law is. I won’t take them as a client. Proper case selection is huge.”
Once you take a consumer protection case, managing the client’s expectations is very important. Krekeler says, “Set expectations in a way that you will exceed them and look like the hero! Allowing for unrealistic expectations rarely turns out well.”
Krekeler adds, “People sometimes say to me, ‘I want a real bulldog for my case.’ Well, I explain to them that being nasty won’t get them what they want. I don’t want a reputation as a bulldog. I would rather have a reputation as someone who does their homework, has a good grasp of the law, is well prepared, and will advocate strongly on a client’s behalf. But just being a bulldog won’t get the job done. Most of the time, they understand that.”
Fons says, “I stop runaway expectations right at the start of the case. It is important to discuss the situation with a potential client at length and listen to any expectations they express, to discuss realistic possible results, and make it clear that no result is ever certain.
“A few times individuals have read something on the internet or heard something from a friend indicating a slam-dunk result in their favor and they tell me what the result should be. Before I would consider helping a person like that I would have to talk with them at length to determine if they are willing to believe me as I describe what the possible results are, or if it seems they will continue to believe the other information. I am not willing to accept a client who will continue to tell me he or she expects the results they previously read about or were told to expect. Fortunately, this has been a rare situation for me. I probably turned away a handful of folks for this reason in the 23-plus years I have been operating my consumer law office.”
Madison attorney Zeshan Usman says a lawyer who ignores unrealistic expectations on the part of a client is making a big mistake. “You need to make sure your client’s expectations are in line with reality. From the beginning, clients need to know how much they may recover and how long it will take. But in addition to that, I also make it clear that they will have to put in some of the work to help bolster our case.”
Fons says that often, high expectations are not the problem. “On the contrary, many are surprised to learn that there are even remedies for what happened to them. It’s my job to realistically explain to them what they can expect me and the system to be able to do for them.”
As with all areas of practice, documenting your work is crucial in the area of consumer protection. Krekeler says, “Oh my gosh, the attorneys in my office are constantly hearing me preach about putting everything in writing. I can’t emphasize that enough. With the level of detail involved in consumer litigation, documentation is a must!” It’s especially important, Usman says, when you plan to submit a fee petition.
One of the important aspects of consumer protection litigation that all lawyers should understand is the fee-shifting nature of the practice. Wisconsin’s cornerstone consumer law statute, Wis. Stat. section 100.20, prohibiting unfair trade practices, has contained a fee-shifting provision since its enactment almost 100 years ago. In the early 1970s, the Wisconsin Legislature added fee-shifting provisions to another key consumer protection statute, Wis. Stat. section 100.18, which prohibits false representations. The Wisconsin Consumer Act, Wis. Stat. chapters 421-427, also contains fee-shifting provisions. Today, nearly all consumer statutes, both federal and state, contain fee-shifting provisions.
Echoing Usman’s point about documentation, Fons says, “Time-record documentation is extremely important [because] the lawyer will be asking the court to make an award of reasonable attorney fees and costs if the consumer is successful in proving a violation of one or more consumer protection laws.”
Why is fee-shifting so important in consumer protection litigation? Fons says, “Folks who have been cheated should not have to pay more to get justice. We are already talking about relatively [modest] amounts of money, although some fraud involves consumers’ highest cost products such as homes, home loans, and autos. The philosophy and purpose behind fee-shifting statutes is that the wrongdoer should pay for its illegal conduct. Most consumers could not afford to hire an attorney to help them with the issues consumer protection lawyers deal with.”
Usman agrees. “People should not have to take money out of their own pocket to fight unjust acts by large businesses with deep pockets. It would be a major deterrent to standing up to unscrupulous conduct. Most couldn’t afford it and would allow the abuse to continue. Fee shifting evens the playing field.”
Landlord-tenant disputes have long been near the top of consumer-complaint lists. Long-time Madison attorney David Mandell says both landlords and tenants are often unsure what their rights are. “So many of the ordinances and regulations are unclear. Landlords don’t often know if they’re using the most updated forms, or they’re unfamiliar with all the requirements they have to follow. There are equal opportunity laws, the Americans with Disabilities Act, and many others that they need to stay up to speed on.”
Mandell says he sometimes ran into situations in which tenants were getting inaccurate information. “They were being told they were entitled to certain things, whether from friends and neighbors, or just reading things on the internet that may not apply to their case.”
Mandell says the landlord-tenant laws continue to evolve, so lawyers working in this area of the law must stay current with all the changes. “The law changes often and sometimes quickly in this area. If a lawyer doesn’t keep himself or herself educated on all these changes, they certainly run the risk of getting tripped up.”
Protection for Financial Customers
The Consumer Financial Protection Bureau (CFPB) is a federal watchdog group established after the financial crisis nearly 10 years ago. In a classic example of the slow pace at which the federal government works, what began as a study by the CFPB in 2012 has finally culminated in a rule that becomes effective on Sept. 18, 2017, and applies to agreements entered into six months thereafter (March 19, 2018). The rule is a partial prohibition on arbitration clauses in contracts for certain consumer financial products and services. It will ban many financial institutions, including debt collectors and credit reporting companies, from including any contractual provisions that would bar consumers from banding together to bring a class action. The rule also contains certain reporting requirements regarding arbitrations.
WILMIC claims attorney Matt Beier says, “Consumer advocates will cheer this new rule as a big step toward leveling the playing field for consumers and bringing transparency to the financial industry’s bad actors. On the other hand, financial institutions and debt collectors will not be very happy to see arbitration, viewed as a more efficient means of dispute resolution than class actions, being abolished. Either way, for lawyers representing consumers or businesses in cases involving allegations of financial fraud, this is just another set of rules to know.”
What makes it more interesting is that there are some lawmakers who have vowed to kill the rule, so it could be short lived. “Just another example,” Beier says, “of how rapidly these things can change, making it all the more challenging for lawyers trying to litigate these cases.”
There certainly appears to be a need for lawyers to help consumers who may have been wronged. It’s a burgeoning area of practice, but one that can be ripe for an Office of Lawyer Regulation complaint or a malpractice claim if lawyers are not careful. Consumer protection is an area of practice with plenty of rules and regulations, laws that are evolving and changing, and work that requires great attention to detail, documentation, and careful client selection.
For lawyers who do this work or are thinking of doing it, Usman says, “Tread lightly. I studied this area for a few years before I started taking cases. I had a good mentor in Attorney Fons, who is still an amazing resource. I couldn’t thank her enough. Other consumer lawyers in Wisconsin are always available to help.”
As Beier says, “It is always good practice to do your homework early and often. We see many claims that arise because a lawyer made a mistake that was avoidable with better due diligence. If you are unsure about a case or a client, it is sometimes better to decline the case, or refer them to another lawyer.”