Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D.C. Ct. App: Customers fail to state unfair practices claims over Bank of America’s customer service call center practices, (Jul 12, 2013)

By Tobias J. Gillett, J.D., LL.M.

Bank of America customers failed to state claims that the bank violated the District of Columbia Consumer Protection Procedures Act (CPPA) by providing a domestic-looking customer service telephone number that connected to foreign call centers, thus potentially exposing the customers’ financial information to U.S. government surveillance, without disclosing that the customers would be connected to foreign customer service representatives or that the customers’ financial information could be exposed to surveillance, a District of Columbia appellate court has ruled (Floyd v. Bank of America Corp., July 11, 2013, Thompson, P.).

The bank customers alleged that Bank of America provided its customers with a “ten-digit, U.S.-exchange, domestic telephone number,” but that calling the number actually connected a customer to a call center located outside the United States. As part of this transmission, the foreign customer service representative would receive an electronic transmission of the customer’s financial records and passwords. The customers alleged that this transmission exposed the communication to surveillance by the U.S. government, because the government claimed it had “unhindered authority to gather overseas intelligence,” and because foreign companies could not “invoke the protections of U.S. law.”

The customers further alleged that a customer dialing a U.S. telephone number would have a “reasonable expectation” that the person to which the customer would be connected would be located in the United States, and that his or her “telecommunications, electronic passwords, and financial records will be kept secure from intrusion by the United States government.” Bank of America allegedly never informed its customers that their data would be transferred to a foreign country, or that the transfer would cause “a forfeiture of consumer rights under the laws of the United States.”

Bank of America filed a motion to dismiss. The lower court granted the motion, finding that the customers lacked standing to bring their claims. The customers appealed.

Standing. The appeals court concluded that the customers possessed standing. A plaintiff in a CPPA case “may make a showing of concrete injury in fact by alleging that she is a consumer of the defendant’s service(s) and that the defendant has misrepresented material facts about the service or has failed to inform the plaintiff of material information about the service,” the court explained.

According to the court, “what matters for standing under the CPPA is that appellants alleged that they are Bank consumers and that the Bank made misrepresentations and omissions in providing them information about its services they utilized.” The consumers had alleged “a sufficient personal stake” by alleging that they had engaged in transactions in which Bank of America had not disclosed the information. Therefore, the consumers had standing, the court concluded.

Sections 28-3904 (a), (b), (d). However, the court determined that the customers’ claims under the CPPA failed. The court first addressed the customers’ claims that Bank of America violated Sections 28-3904 (a), (b), and (d) of the CPPA by representing that the foreign call center services had “characteristics” and a “status” that they did not have, and that the call centers operated under the same standards as U.S. call centers. The court observed that the customers did not identify any representations from Bank of America that its call center representatives could “invoke the protection of the United States to exclude the U.S. Government from unfettered access to consumers’ financial records.”

The court noted that the CPPA does not define the terms “characteristics” and “standards,” but that it does define “goods and services” to mean “any and all parts of the economic output of society.” Therefore, the court concluded that its decision regarding whether the complaint stated a claim pertaining to representations about the “characteristics” and “standards” of Bank of America’s services “must focus on whether it alleges misrepresentations about the Bank’s ‘economic output.’” Since the customers alleged a misrepresentation about “the legal environment and the climate of surveillance” rather than about Bank of America’s “economic output,” the customers failed to state a claim under Sections 28-3904 (a), (b), and (d), according to the court.

Section 28-3904(f). The customers also failed to state a claim under Section 28-3904(f), which prohibited “fail[ing] to state a material fact if such a failure tends to mislead.” The court observed that the customers’ contentions regarding the applicability of U.S. legal protections to the transmissions of the customers’ financial information constituted “a legal assessment of the implications of the Bank’s use of overseas call centers, not a fact.”

Moreover, “an omission is material if a significant number of unsophisticated consumers would find that information important in determining a course of action,” according to the court. The court found that “a significant number of unsophisticated consumers” would not find Bank of America’s “non-expert” determination about the risk of exposure of the customers’ information to government surveillance to be important to their decision regarding whether to call the customer service telephone number.

Section 28-3904(s). Finally, the court rejected the customers’ argument that Bank of America violated Section 3904(s) by passing off the services of its foreign call centers “as those of another.” The court was persuaded by Bank of America’s arguments that both its U.S. and foreign call centers “provide[d] Bank of America customer service,” and therefore it could not have passed off its services as those of another, and that, given widespread recognition of corporations’ use of foreign call centers, “no consumer could have an objectively reasonable expectation that calling a toll-free or domestic customer service number provided by the bank necessarily entails speaking with a customer service representative in the United States.” The court also concluded that Bank of America did not use deceptive representations or designations of geographic origin merely by providing its customers with a ten-digit telephone number.

The case is No. 12-CV-591.

Attorneys: Joseph A. Hennessy for Robin Floyd. Michael B. Miller for Bank of America Corp.

Companies: Bank of America Corp.

Cases: StateUnfairTradePractices DistrictofColumbiaNews