Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Cal.: ING may be liable for falsely representing annuities to senior citizens, (Feb 27, 2014)

By Jody Coultas, J.D.

A senior citizen stated California Unfair Competition Law (UCL) and False Advertising Law (FAL) claims against ING USA Annuity and Life Insurance Company for allegedly falsely representing the benefits of its indexed-annuities, the federal district court in San Diego has held (Abbit v. ING USA Annuity and Life Insurance Company, February 25, 2014, Curiel, G.).

After purchasing an ING indexed-annuity, the senior citizen alleged that ING unlawfully targeted senior citizens by advertising indexed-annuity contracts that purport to protect retirement savings, while hiding an undisclosed complex embedded derivative structure. Indexed-annuities are annuities that “generally earn interest linked-to, or derivative-of the price movements of, an equity index or other index, such as the S&P 500® Index.” ING’s sales materials and standardized annuity contract allegedly deceived and misled the senior citizen as to the ability of the indexed-annuities to protect retirement savings and offer income benefits as compared to alternative investments.

The court found the allegations sufficient to state a claim for violation of the UCL and FAL. ING argued that the claims should be dismissed because the complaint failed to identify non-generalized or specific assertions. Generalized statements constituting “mere puffery” are not actionable because reasonable consumers do not rely on puffery. The senior citizen alleged that ING stated that the annuity returns would provide “protection for principal” and contain “minimum guarantees,” and falsely advertised that the annuities offered “a 5% premium bonus at the inception of your contract” and that “100% of your premium is put into the contract.” These statements were specific and did not constitute puffery.

ING also was denied dismissal of the fraudulent concealment claim by the court. A fraudulent concealment claim requires allegations of intent to defraud. ING argued that its disclosure of the information pertinent to the subject of supposed fraud negated specific intent to defraud. However, the senior citizen sufficiently alleged that ING owed him a fiduciary duty. Fraud may consist of the suppression of a fact by one who is bound to disclose it or who gives information of other facts which are likely to mislead for want of communication of that fact.

The case is No. 13cv2310-GPC-WVG.

Attorneys: Timothy J Tatro (Tatro & Zamoyski, LLP) for Ernest O. Abbit. Christopher T. Wright (Kirby Noonan Lance & Hoge LLP) for ING USA Annuity and Life Insurance Company.

Companies: ING USA Annuity and Life Insurance Company

Cases: Advertising CaliforniaNews