California's Unfair Competition Law is not something that should be taken lightly. Accusations raised under this law can cost a company a lot of money in fines and lawsuits, not to mention the costs associated with public perception. Even corporations that operate on a national level are subject to California's version of this law when business reaches into the state's boundaries.
A national title insurance company recently found itself on the receiving end of these types of accusations. According to the San Diego District Attorney's Office, the company provided and operated software that facilitated business referrals that ran contrary to the consumer's interest in fair completion in the real estate market.
Specifically, the district attorneys claim that the software platform was developed in 2002. The software helped real estate brokers prepare transaction documents in the sale of residential homes. The software also provided brokers with the tools for settlement services, including escrow, title insurance and natural hazard-disclosure services.
While software like this is not considered to be a problem, the district attorneys said that the software not only helped connect the brokers with servicers, but allowed them to collect fees of $25 or more for referring homebuyers to certain companies that provided these settlement services without the knowledge of the homebuyers.
The national title insurance company agreed to settle the claims. A settlement agreement was filed with the Ventura Superior Court earlier this month. In the settlement, the company agreed to pay $873,588, some of which would go towards investigative and prosecution costs while a large portion would settle civil penalties as proscribed by the California Unfair Competition Law.
Source: San Diego Gay & Lesbian News, "National title company settles unfair competition lawsuit for $873,000," Jan. 8, 2013
If your company has been accused of unfair competition in California, our law firm is well-versed in both the complex laws involved in these cases and the steps necessary to defend these types of claims in court.
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