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Discount savings website must face electronic fund transfer lawsuit

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A federal appeals court has reinstated Electronic Fund Transfer Act charges filed by a man who allegedly signed up for a $10 coupon from an online game provider and later found he was charged $264 by a discount savings website.

When Kevin Park bought a gift certificate for his minor son from Gamestop.com, operated by Grapevine, Texas-based GameStop Corp., he saw a coupon for $10 on the GameStop purchase confirmation page, according to Tuesday’s ruling by the 9th U.S. Circuit Court of Appeals in San Francisco in Kevin Park v. Webloyalty.com Inc.

Thinking he was entering his email address to claim the coupon, he clicked a confirmation button, according to the ruling. Two years later, he discovered he was being charged $264 by Stamford, Connecticut-based Webloyalty.

Mr. Park filed a putative class action lawsuit against Webloyalty on charges including violation of the EFTA. The U.S. District Court in Pasadena, California, dismissed the case, and Mr. Park appealed.

A three-judge appeals court panel reinstated the EFTA charges. Mr. Park’s allegations regarding his reliance on the $10 coupon “and the deceptive nature of the ’data pass’ method of acquiring his billing information, were sufficiently detailed to make an EFTA claim” based on an unauthorized electronic funds transfer, said the ruling.

Another issue here is the EFTA requires a consumer be provided with a copy of the electronic fund transfer authorization, said the ruling. “Park’s allegations regarding his lack of knowledge of the purported authorization, and Webloyalty’s failure to provide a copy of such authorization were sufficient on their face,” said the ruling, in reinstating the charge.

In December 2016, the 2nd U.S. Circuit Court of Appeals in New York reinstated unfair trade practices charges against GameStop.com and Webloyalty in a case where they were charged with leading an unwitting minor to join Webloyalty’s monthly membership program.