Credit unions and banks, now grappling with overdraft protection and fees, could soon find themselves in the same boat as the tobacco industry, subject to class action suits from state attorney generals, a leading Charlotte, N.C. lawyer warned Thursday.
"Now is the time for credit unions to get in front of this potential danger curve by engaging their attorney generals in productive discussions," urged Frank E. Emory Jr. a partner in Hunton & Williams, LLP, a national law firm specializing in business litigation.
There are unmistakable signs, said Emory, "that many state attorney generals see the financial services institutions in their jurisdictions as targets for class action cases, much like the tobacco industry in the decade of the 1980s based on the dizzying array of complex structured financial products."
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Those products "coupled with complaints by consumers of inability to get new credit will almost certainly subject all financial institutions, even credit unions, to increased scrutiny" by the AGs, said Emory.
Banks and CUs that operate across multiple state lines can be particularly susceptible to scrutiny "by multiple attorney generals" and hence "this may become the new tobacco."
Emory is head of the firm's Litigation and Intellectual Property Department.
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