PUBLIC JUSTICE WINS SETTLEMENT WITH WFS FINANCIAL OVER ILLEGAL NOTICES FOR REPOSSESSED CARS; OVER $34 MILLION IN CONSUMER DEBT TO BE FORGIVEN

Under the terms of a settlement achieved by Public Justice, WFS Financial will forgive more than $34 million in debts and refund money to people who made payments on repossessed cars on the basis of misleading and incomplete notices.

Public Justice filed a petition for review with the California Supreme Court in De la Cruz v. WFS Financial, after a state appeals court ruled that federal regulations preempted California’s state consumer protection law – the Rees-Levering Act – which requires that notices relating to repossessions be accurate and include certain information. When the state Supreme Court agreed to hear the case, WFS settled the matter.

“We have erased tens of millions of dollars in debts that should never have been held against our clients,” said lead counsel Carol Brewer of Kemnitzer Anderson Ogilvie & Baron in San Francisco. “We have ensured that this negative information will be cleared from our clients’ credit reports.”

“This is a situation where a corporation wanted to wipe away state law and replace it with nothing whatsoever,” said co-counsel F. Paul Bland, Jr. of Public Justice.  “If the California Supreme Court had not vacated the Court of Appeals’ decision, federal savings thrifts would have been be free to make deceptive statements, conduct phony or unreasonable sales of repossessed cars, or engage in other otherwise illegal conduct, unfettered by any legal regime.”

The proposed settlement will shortly be submitted to a California trial court and, assuming that the Court approves the settlement, consumers should receive their compensatory and injunctive relief by year-end.

In addition to Bland and Brewer, counsel in the case also include Andrew Ogilvie of the Kemnitzer firm, and Public Justice’s Brayton-Baron Fellow, Leslie Bailey.