The state supreme court’s 5-2 decision in Bumpers v. Community Bank of Northern Virginia, issued Aug. 28, makes it tougher for consumers in North Carolina to prove that they have been victimized by unfair and deceptive business practices. Consumer advocates argue that the decision undermines North Carolina’s strong consumer protection law.
The decision overturned lower-court rulings that awarded two consumers thousands of dollars in damages for fees paid in conjunction with second mortgages. The plaintiffs had argued that they paid a fee for a discounted loan, without ever receiving a lower interest rate, and also complained that they were charged excessive closing costs. The majority opinion determined that consumers must prove that misrepresentations by the bank were involved in their decision to enter into the loans. This was the legal argument put forth by Community Bank, which countered that the borrowers took out the second mortgages based on the total package, including fees and interest rates -- not because they thought they were getting discounted loans. Dissenting Justices Robin Hudson and Cheri Beasley contended that the majority misread state law and legal precedent. According to them, the ruling sets an unreasonably high hurdle for consumers that “opens the door to an array of new fees.” The lawsuit was originally brought in 1999 by consumers Travis T. Bumpers and Troy Elliott but sought certification as a class action.