Monday, September 25, 2023
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Internet Scam Claims Fall Short in San Fran

(CN) - An Internet company and a bevy of alleged accomplices persuaded a federal judge to dismiss claims that they fraudulently created digital checks to bilk unsuspecting payday-loan consumers.

Amber Marsh and Stacie Evans say that Zaazoom Solutions LLC, an Arizona-based company, and other defendants, which include a number of banks, "operate an internet scam in which remotely-created checks (RCC's) are created to pay for monthly membership fees for coupon services using Plaintiffs' personal and banking information entered on websites for the purpose of obtaining payday loans," according to a summary of the complaint in the Northern District of California. "Plaintiffs allege that they did not consent to the sharing or use of their personal and banking information to sign up for the coupon memberships, and that the creation of RCC's was done without their knowledge or authorization."

Marsh and Evans claimed unfair business practices under California law, consumer fraud under Arizona law, violation of the Wiretap Act and conversion against all the defendants. The processors and depository banks alone face a negligence claim.

All defendants moved to dismiss, and U.S. District Judge Yvonne Gonzalez Rogers in San Francisco sided with several of them, including Zaazoom employees Moe Tassoudji and Bill Cuevas.

"Individual defendants' roles in marketing of websites at issue, collecting personal information through those websites, and designing the websites are acts that occurred by virtue of their roles with defendant companies," Rogers wrote. "In addition, the volumes of exhibits submitted in support of plaintiffs' opposition show only that the individual defendants either held ownership or member status with defendant companies, signed documents on behalf of the companies or were performing their duties on behalf of the companies."

Marsh and Evans can amend their claims against Tassoudji and Cuevas "if they obtain facts in the future indicating that such an amendment would be warranted," the decision states.

The banks also showed that they did not owe a duty to plaintiffs as nondepositors, and that "there are insufficient facts alleged that show the depository banks aided and abetted conversion by the Zaazoom defendants and specifically that allegations of actual knowledge or substantial assistance in the acts of conversion are absent." Marsh and Evans's claim based on the Wiretap Act fell short, as well, with the court ruling that "no defendant in this action acquired the information by capturing the transmission of information that was otherwise in the process of being communicated to another party."

"The Zaazoom defendants did not stop, seize or interrupt a communication in progress before arrival to its intended destination. Zaazoom defendants were the intended recipients," Rogers said.

Zaazoom failed, however, to dismiss under the Restore Online Shoppers' Confidence Act (ROSCA).

"Moving defendants have provided no concrete argument or persuasive authority supporting the conclusion that ROSCA will be obstructed or that state laws present an obstacle in any way, thus precluding a finding of impossibility," Rogers wrote. "Without articulating even a single example of how compliance with both ROSCA and state law is a 'physical impossibility,' conflict preemption does not exist."

Neither express, field nor conflict pre-emption bar the state claims, the court said.

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