ZaaZoom Class Action Lawsuit Fails National Certification

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A nationwide class of payday loan applicants lost their bid to have their class certified in a class action lawsuit accusing ZaaZoom Solutions of deceptively using their personal information to create and cash electronic checks from their bank accounts.

U.S. District Judge William Orrick certified a California class in the ZaaZoom class action lawsuit in March, but found that a nationwide class “would violate due process to apply California law to non-Californians” and explaining that the Ninth Circuit Court has found plaintiffs may “make a ‘renewed motion for certification only after the plaintiffs created subclasses with proper representatives for each.'”

Lead plaintiff Amber Marsh made a renewed motion for a nationwide class, asking Orrick for certification under California negligence and conversion law, or as another option, certification either under Texas law or under the law of the state of each nationwide plaintiff, but Orrick denied the motion May 19, reiterating that California law cannot be applied to a nationwide class.

Orrick detailed his decision in a May 19 Order stating, “I decline to certify a nationwide class that will have 50 subclasses applying the laws of 50 different jurisdictions. As one court explained, ‘Although plaintiff contends that this hurdle is not a major problem in the instant case since state laws on negligence [ ] are likely to be quite similar, the problems and complexities raised by having to consider so many different state laws—even if they are relatively the same—convince the Court that class certification would be inappropriate in the instant litigation… As a result, the Court would be forced to go through—and to have the jury go through—an individual analysis of each state’s negligence law in order to determine defendant’s liability for negligence with regard to each individual defendant.'”

In 2011, Marsh filed her initial class action lawsuit against ZaaZoom and the companies she alleged were its accomplices in the alleged check-cashing scam. Marsh said ZaaZoom “lured” her and other customers into making an online application for a payday loan. Once she and other customers had applied, she said, ZaaZoom and its co-defendants allegedly used her bank account information to enroll its applicants in membership programs for online coupons, despite never having received permission to do so.

In the ZaaZoom class action lawsuit filing, the online coupon membership programs are described. The programs charge a monthly fee so that members can access downloadable coupons that can be redeemed with various merchants. According to Marsh, co-defendant Jack Henry & Associates Inc. drafted remotely created checks (RCC), which were then deposited with First National Bank of Central Texas. An RCC is much like a traditional check, but is created by a third party, and withdraws funds from a bank account under the authorization of the account holder. RCCs are used by a number of companies, like utilities and other bill collectors, for automatic billing transactions.

Marsh claims in the ZaaZoom class action lawsuit that the defendants, including ZaaZoom, Jack Henry, Data Processing Systems LLC and Automated Electronic Checking Inc., colluded as payment processors to draft the RCCs, and both The First National Bank of Central Texas and First Bank of Delaware were also in on the deception, depositing and settling 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.”

In December Orrick entered default judgment against ZaaZoom Solutions, Zaza Pay, MultiEcom, Online Resource Center, Automated Electronic Checking and Data Processing Systems, and then in January approved a $527,750 settlement of the claims against the First Bank of Delaware, one of the two defendant banks.

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: 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.