May 25, 2001
An 82-year-old Michigan man has filed suit against JC Penney Life Insurance Co., accusing the firm of drafting his bank account for a life insurance policy he did not order. The suit filed by Nathan Davis seeks to be certified as a class action on behalf of all others allegedly swindled.
In May of 2000, Davis noticed that his statement from Comerica Bank included a $7.95 charge that he could not identify. Upon reviewing earlier statements, he found similar charges dating back to April 1999.
Davis eventually determined that the charges were for life insurance which a JCPenney telemarketer claimed Davis' wife had ordered in a 1999 telephone call. But the Davises said they had never signed an authorization for the insurance, had not received a policy and had not provided their bank account information.
The suit charges that JCPenney was working in concert with Comerica and other banks and that it routinely drafted the accounts of consumers without their knowledge or authorization. The charges mirror complaints filed with ConsumersAffairs.Com since December 1991. JCPenney's telemarketers allegedly obtained information, such as birthdates, that enabled them to obtain bank account numbers from cooperating banks.
Davis' suit alleges that JCPenney routinely uses telemarketers to offer life insurance for a 90-day no-cost "trial period." During the first 90 days, consumers receive coverage without paying for it. But at the end of that time, consumers must cancel the coverage or be charged for it.
Davis alleges that he and other consumers never had an opportunity to decide to continue or cancel the program because JCPenney simply began collecting money from their bank accounts at the end of 90 days.
The suit also charges that JCPenney misrepresented the benefits of the insurance to older persons, failing to tell consumers that benefits for persons over a certain age (usually 70 or 75) were half those for younger customers. For example, telemarketers allegedly told consumers that there was a $1 million benefit for death in an accident involving public transportation, when in fact the benefit for older persons was only $500,000.
The suit seeks actual and punitive damages and asks for a permanent injunction preventing JCPenney from collecting life insurance premiums without explicit written instructions signed by the insured.
Davis' suit was filed in Dallas County, Texas District Court by attorneys Stephen Gardner of Dallas and Steven E. Goren of Bingham Farms, MI.