Judge Certifies ZaaZoom Electronic Check Scheme Class Action Lawsuit

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A California federal judge has certified a class action lawsuit that accuses a bank and payment processor of assisting ZaaZoom Solutions LLC in a scheme to enroll payday loan applicants in online coupon membership programs without their consent.

Plaintiff Amber Marsh initially filed the class action lawsuit in 2011, alleging ZaaZoom, Zaza Pay LLC, MultiECom LLC and Online Resource Center LLC (ZaaZoom defendants) “lured” people into applying for payday loans online, then using the applicants’ personal and banking information to enroll them in online coupon membership programs.

According to the class action lawsuit, the online coupon membership programs charge a monthly fee to grant members access to downloadable coupons that can be redeemed with various merchants. Marsh alleges that defendant Jack Henry & Associates Inc. drafted remotely created checks (RCC) which were deposited with First National Bank of Central Texas. An RCC resembles a traditional check but is created by a third party to charge a bank account, under the authorization of the bank account holder. RCCs allow for automatic billing transactions.

When applying for the payday loan, Marsh says she had to enter her checking account number and bank routing number. She claims the ZaaZoom defendants used this information to enroll her in a coupon membership program without her permission.

“Without disclosing that they were doing so and without the applicants’ knowledge or consent, the ZaaZoom defendants created RCCs in the applicants’ names, which drew from the applicants’ bank accounts to pay for the coupon programs,” the class action lawsuit says.

Marsh alleges the ZaaZoom defendants worked together with Jack Henry, Data Processing Systems LLC and Automated Electronic Checking Inc. as payment processors to draft the RCCs. The First National Bank of Central Texas and First Bank of Delaware then deposited and settled the checks, allegedly ignoring “suspicious signs of potential wrongdoing, such as the fact that the ZaaZoom defendants’ checks had a return rate over 100 times the national average.”

U.S. District Judge William H. Orrick certified a class of all individuals who were California residents at the time membership fees were collected by way of RCCs drafted by Jack Henry & Associates Inc. and deposited with First National Bank of Central Texas since May 6, 2007. He denied the defendants’ motion to strike class allegations.

Last month, Judge Orrick granted preliminary approval to a class action settlement which would resolve the allegations against First Bank of Delaware. Under the terms of the ZaaZoom class action settlement, Class Members will be eligible to receive a cash payment of up to $60. A Final Fairness Hearing has been scheduled for June 25, 2014. The class action settlement document and notice can be found here.

Details on how to file a claim for the ZaaZoom class action settlement were not immediately available, but Kurtzman Carson Consultants LLC has been appointed the Settlement Administrator, according to court documents. Keep checking TopClassActions.com or sign up for our free newsletter for the latest updates. You can also mark this article as a “Favorite” using your free Top Class Actions account to receive notifications when this article is updated.

The plaintiffs are represented by Kronenberger Rosenfeld LLP and Arias Ozzello & Gignac LLP.

The ZaaZoom Electronic Check Scheme Class Action Lawsuit is Amber Kristi Marsh, et al. v. First Bank of Delaware, et al., Case No. 3:11-cv-05226-WHO, in the U.S. District Court for the Northern District of California.

UPDATE: On May 19, 2014, a federal judge refused to certify a nationwide class of payday loan customers who allege they were ripped off by ZaaZoom Solutions.

UPDATE 2: A class action settlement has been reached in the ZaaZoom electronic check scheme lawsuit. For more information, click here or visit http://www.FNBCTSettlement.com.