15 Oct NC Supreme Court Ruling Makes It Harder For Consumers to Fight Unfair Practices
In a ruling on a case that began in the 90’s, the North Carolina Supreme Court recently issued a ruling that effectively decided that consumers have it too easy when they try to fight unfair business practices.
The court issued its ruling in Bumpers v. Community Bank of North Carolina on August 28th, concluding a process that began in 1999 when a group of consumers sued Community Bank for, in part, charging excessive fees for second mortgages. The consumers involved in the contested mortgages had to pay thousands of dollars in fees, including high closing costs and thousands in “loan discount fees.” The excessive fees affected an estimated 650 consumers in North Carolina.
Deception, Harm, and Reliance
The heart of the case, and the court’s decision, was based on the question of whether consumers should be able to receive compensation for deceptive or unfair business practices, or whether banks and other businesses should be held liable only for deceptive practices that were a factor in a consumer’s decision.
The court sided with the banks. It said that consumers not only have to show that the banks used unfair or deceptive practices, but that those practices actually influenced the consumer’s decisions. In order to recover compensation, consumers have to show they relied upon the deceptive practices or misrepresentations.
Fees, the Free Market, and Caveat Emptor
The old Latin maxim of caveat emptor—let the buyer beware—summarizes the recent ruling succinctly. According to the court, consumers are free to enter into transactions with banks, and banks are free to charge the consumer with fees, charges, and other expenses as they choose.
The consumer, on the other hand, has the responsibility to scrutinize every part of the deal. If consumers find that banks are taking advantage of them by charging them unfair fees, such as fees for services never provided or services without any benefit to the consumer, showing that the bank was deceptive or caused a harm won’t be enough.