On Friday, May 7, a jury in Hale County returned a verdict against Whirlpool Financial National Bank, now known as Transamerica Bank, in the amount of $580,975,000. The verdict was awarded to Barbara Carlisle and George and Velma Merriweather.
The jury, led by a former schoolteacher, determined that Whirlpool engaged in systematic fraud to cheat thousands of victims in Alabama. They targeted the elderly, the illiterate and the working poor. They sent their agents into people’s homes in a door-to-door sales scam reminiscent of the old “tin man” scam.
They sold satellite dishes to these victims for $1,100 plus 22 percent interest. The same dish could have been bought for $199. The effective interest rate on the deal is in excess of 300 percent. They represented to these victims that they would make payments on the dish for three years. It actually takes much longer to pay for them. These excess charges are a poverty tax.
Whirlpool chose to use credit card financing instead of traditional financial financing in this scheme. Under Federal Law, when a lender uses credit card financing, they are not required to disclose in writing the number of payments. Under traditional financing, they are required to disclose the number of payments.
Since Whirlpool used credit card financing, their agents were allowed to lie to victims regarding the number of payments without ever having to provide a document to the victims which contradicted the lie.
Likewise, Whirlpool violated Federal consumer protection law by using credit cards to begin with. They were not allowed use the type financing since there were not repeat transactions.
A former agent of Whirlpool stated that he had trained other agents to lie about the terms of the financing. He trained agents to tell victims that payments would be for only three years, when many victims will pay up to eight years. When he discovered he had been lying to people, he quit the company. He told Whirlpool of such problems and they did nothing about it. An elderly, blind woman also testified she has been duped by the same scan. Other illiterate victims testified that they too, had been cheated in a similar way.
Whirlpool had been sued by 59 victims in Alabama over this financing program. In some cases their agents were convicted felons. They received thousands of complaints each week regarding this credit card program. Whirlpool made $8 million dollars off the scam in Alabama.
Even though Whirlpool knew that they were selling through convicted felons, had 59 lawsuits against them and knew thousands of victims were being cheated, they turned their head while collecting $8 million dollars in profit.
Methvin stated “Consumer Reports magazine states that Alabama has some of the weakest consumer protection laws in the entire country. One in three adults in Alabama received an 8th grad education. Alabama citizens are sitting ducks for out-of-state corporations that would cheat the vulnerable in our society.”
This very sophisticated jury was trying to draw attention to this problem. The jury was outraged and could not believe that this type of activity still goes on in a modern society. We hope that Whirlpool got the message and will quit preying on the elderly, illiterate and the working poor in Alabama in effort to take their money.
Jury awards like this serve a necessary interest in our society. They draw attention to a problem that needs attention. They system will work. The verdict will be lowered by the Alabama Supreme Court. Therefore, there will be no ‘windfall’ for these victims; however, the message will still be here. That message is, “don’t cheat the most vulnerable in our society in the name of making a profit.”
Other finance companies have gotten the message and have quit preying on the poor in Alabama because of similar lawsuits. In fact, eight other major bands have quit doing business in such a fashion, as a direct result of lawsuits filed by Methvin. Whirlpool refused to quit doing it.
The jury found that they were putting profits over people’s lives.