Kohl’s Customers Seek OK On $1.8M Credit Monitoring Deal

Kohl’s customers asked a Pennsylvania federal judge Tuesday to approve a $1.8 million deal to end class claims that the retailer and Capital One Financial Corp. charged them for a credit monitoring program that allegedly did not always include all of the advertised services.

The parties reached the deal the same day jury selection was slated to begin in the February trial in Philadelphia. The lawsuit, filed in 2015 by Jennifer Underwood, centers on a credit monitoring program known as PrivacyGuard that was offered to consumers when they signed up for Kohl’s-branded Capital One credit cards.

The complaint alleged that consumers were charged the same $14.99-per-month fee whether or not they activated all of the features advertised as part of the program.

According to Tuesday’s proposed settlement, the class of about 16,587 individuals will receive roughly half of the $3.3 million they collectively paid for PrivacyGuard.

Any money remaining in the settlement fund under $50,000 will be used to create a cy-pres, or charitable, trust, according to the deal, but did not specify what it would benefit.

Patrick Howard of Saltz Mongeluzzi & Bendesky PC, an attorney for the consumers, told Law360 on Wednesday that the settlement will provide an immediate benefit to the class members.

He said they were pleased with the $1.8 million recovery because Kohl’s and Capital One had an argument in their case that the class could only recover what the companies retained, which was about $1.9 million.

So, by recovering the $1.8 million via settlement, we got almost 100 percent of the money the defendants retained, without the risk of appeal.

Patrick Howard of Saltz Mongeluzzi & Bendesky PC

According to court records, consumers were typically enrolled in PrivacyGuard when they called to activate their credit cards, but were required to take a more comprehensive second step, including providing their Social Security numbers, in order to activate the full suite of services.

Regardless of whether the consumers completed that second step, the lawsuit said, they were charged the full monthly price for the service.

According to court records, only 12 percent of the 30,000 consumers who signed up for PrivacyGuard by mid-2012 had completed both steps of the registration process.

The settlement class includes anyone with a Kohl’s Private Label Credit Card who paid $14.99 a month for PrivacyGuard between Feb. 13, 2012, and Oct. 31, 2013, did not complete the second step of the PrivacyGuard enrollment and who opened a Kohl’s Private Label Credit Card account before April 1, 2011.

The motion for preliminary approval of the settlement was unopposed by Kohl’s and Capital One.

Representatives for Kohl’s and Capital One did not immediately respond to requests for comment Wednesday.

The consumers are represented by Lee Shalov of McLaughlin & Stern LLP and Patrick Howard, Simon B. Paris and Charles J. Kocher of Saltz Mongeluzzi & Bendesky PC.

Kohl’s and Capital One are represented by Martin Bryce Jr., Daniel McKenna and Elanor Mulhern of Ballard Spahr LLP.

The case is Jennifer Underwood et al. v. Kohl’s Department Stores Inc. et al., case number 2:15-cv-00730, in the U.S. District Court for the Eastern District of Pennsylvania.

–Additional reporting by Matt Fair. Editing by Bruce Goldman.

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