This is really discomforting that they didn’t inform the exchanges. But can this overshadow everything else. I follow their business closely indeed and I think their Q2 results will be flat or show some improvement YOY inspite of Mr. sunil aggarwal guiding for the soft quarter. Remember, they weren’t offering money back guarantee which is industry norm and which signifies TRUST more than anything else. This will go long way in generating positive long term impact on their business.
To me, we should make some effort towards extracting information from management regarding this class action suit. Let them respond and then take final decision.
This is a consumer case nothing else, Read below para:
"NATURE OF THE ACTION
- This is a consumer class action against The Jewelry Channel, Inc. USA d/b/a
The Liquidation Channel (“LC”) for falsely advertising price discounts for its items. In
its direct marketing to consumers via television, its website, print and other advertising,
LC advertises false former prices, false price discounts, and false retail values for its
items. In one prominent practice, LC misrepresents the nature and amount of item
discounts by purporting to offer specific dollar discounts from expressly referenced
“estimated retail value” (“ERV”); these discounts are false, however, because the
referenced ERVs are fabricated and inflated and do not represent an accurate retail price
or value for the item. As a result of LC’s false price advertising schemes, consumers end
up paying more than they bargained for because they do not receive the actual value of
the merchandise LC promises them. "
If they customer are not getting VALUE then why they Buy again from same site?? As they have very high repeat sales number??
See from below detail, case classified as other fraud, I feel anybody can file a consumer case agaisnt any company which is B2C & this could be prompted by their competitors (JTV or QVC, as they can not match LC’s price) otherwise who will spend their own money to file a case agaisnt a online company, they JUST dont buy from them, is that not simple enough thing to do rather then filing a case in consumer court??
Lianna Kabbash et al v. The Jewelry Channel, Inc. USA
Plaintiff: Angela Hovind and Lianna Kabbash
Defendant: The Jewelry Channel, Inc. USA
Case Number: 2:2015cv04007
Filed: May 28, 2015
Court: California Central District Court
Presiding Judge: Dolly M. Gee
Referring Judge: Michael R. Wilner
Nature of Suit: Other Fraud
I will check more on this case & post here, but with one Consumer case you wants to sell your stock then you can after all its your money, but I feel let them give a benefit of doubt & assume this is handiwork of their competitors, as if you feel their PRICE ARE FLASE then who is asking to buy from them?? But repeat sale date doesn’t make their case very STRONG… I Bought MACBOOK AIR @ 53000, which is worth of 73000 from PAYTM (with their cash back plan) & I am a repeat customer for them, so if somebody says that they are selling at such a LOW rate & their estimated Price are False then do you feel their case will stay in court???
I will read full case paper & post my observation here, if I will not able to make money with this stock, still I will learn a things or few
JTV faced a similar class action lawsuit in 2008, they were claiming to sell a rare natural gemstone, which later turned out to be a chemically treated stone produced in a factory.
In the end they decided to settle out of court, rather than drag on the case in court, some details here:
Note that JTV even back in 2008 was providing refunds.
I am cool with the outcome but not so ok with the lack of disclosure. When the market finds out, this will get hammered by 20-30 %. it may provide a good entry point again.
That said, my confidence is shaken on the ethics and disclosure of sunil. He could have disclosed this, and said we are making efforts to minimize impact.
I hold phoenix lamps where the mgmt came out and said this year will be tough and worse than last year. That’s the sign of someone who can take it on the chin rather than hide.
I am completely by your side they should have disclose it even if it is immaterial. But what I am saying at these valuation stock price have indeed discounted a lot of bad things.
And we should try to find out whether this law suit against them is material or not.
And your contention that it will get hammered as and when markets find about this- if it is known to you and me, I think it is known to market.
Do you think that TATA Motors or even Infosys disclosing all the cases pending agaisnt them?? is Infosys disclosed the case filed by their employee in US for violating US Visa terms before it came to media??
Even Today CAG has made some comments on Power companies in Delhi TATA Power & Reliance Power and their auditors are in doubt for that, so whether ppls will dump TATA Power Stocks ONLY due to this??
These B2C companies will get such Consumer cases in court every now & then…I feel Airtel might be having a million Consumer cases agaisnt them,is that matter at all for Airtel???
At the Most they will dole out few thousand dollars to these 2 “So called complainants” as out of court settlement & keep their EGO HIGH… DO you feel these kinds of charges will hold in COURT?? If you feel their “Effective Retail Price” is HIGH & you are not getting value then Just dont buy from them & buy from JTV & QVC who is charing almost double or triple for the same jewellery…
Vaibhav’s Price are so LOW because of the production in Jaipur & cost of production is really CHEAP in Jaipur & the SCALE of their manufacturing operation & I feel their competitors are getting jealous due to that & as they also announce STRECH PAY around the same time this case is filed in the court, I see a foul play in this case by JTV & I see this is good sign for Vaibhav then BAD thing, as this is acknowledgement of their STRENGTH in US market & I feel their competitors are feeling heat due to their LOW Price & High Numbers repeat purchase…
My 2 cents
Maybe we need to watch for a few days to see what happens. I found the lawyer Facebook page inviting folks to join in the plaint:
Some of the comments from customers might make the case weak and here’s why:
The company isn’t really overcharging (their products are USD10-20). The case is about being deceived about the real value (by being told that a 93% discount is being offered). So folks are complaining that they paid close to the actual price (or a little more) than the real price. So the company will attract a fine for overplaying the discounts but not for downright cheating. But then, most retailers do that. And this makes Vaibhav’s case stronger. Besides, many folks are happy with what they bought. And hence the repeat customers. And folks are not that dumb. They know that nobody is so silly to repeatedly offer you products at 90% off. Maybe an out-of-court for a few thousand USD will settle this one.
But I wonder if that will embolden other customers to do a repeat.
And I still feel that this case should have been disclosed to the exchanges, given its wider ramifications. If the case was that trivial, why would we even be discussing it.
With the Facebook page of the Lawyer its 200% sure that this is JUST a tactics to get some money from the Vaibhav Global which they might be getting from others or it maybe a handy work of their competitors, as I said before…
I read following on the face book page:
Nancy Phillips I just got a gourgeous sterling silver Royal Bali circle ring with all scrolls and designs with a black spinel stone for $20. If you think that’s a ripoff I’ll take a dozen.
Unlike · Reply · 3 · June 2 at 8:42am
Nancy Phillips I also have never received so many compliments on my jewelry and that’s from other jewelry stores. Try a Friday or a Sunday and get sterling silver chain, rings and just beautiful jewelry for $10 that I have seen in other stores for triple the amount. That’s also with a platnium overlay and nickel free. You decide.
So, with above comments, I feel this is POSITIVE for company, they will get FREE Publicity I think its not a serious matter & disclosure wise I feel whether Airtel or idea might be disclosing all the consumer cases they might be fighting in consumer courts… for a B2C company this is not a BIG THING…
QVC is expanding their reach to moms while acquiring Zulily …
thanks. i was searching with some other key words. this looks more of Dhirubhai Ambanis style of functioning. do anything to get the work done. i would only be alarmed if he starts taking minority shareholders for a ride.
has this case just been filed or has this been accepted by the court. like it happens in india. there are so many cases filed but many are not accepted by the court. or is it some other rule in USA
The point is really that the company didn’t disclose the information about the case when it was evident from 28 May that a case had been filed. Why they didnt is a big question mark ?
I wouldn’t give much credence to a facebook post either in favor or against – since that isn’t what is going to be argued in a court of law. Social media can be manipulated either way to write positive or negative reviews.
Is Airtel disclose all the consumer court they might be fighting in consumer court??
in B2C business these things happens & you can not avoid that, this case is not a big thing, as you know this guy has created a facebook page JUST for this case, this shows that how serious is the case…
Now, if they disclose it to BSE, how you take this?? this might create PANIC (As Varadharajan Ragunathan above said that he has sold his holding due to this issue ONLY )& I feel this case in not worth reporting to exchange… I agree if you see he do any hera-feri with Minority shareholders then we should be PANIC…
So, its your choice, after all its your money, but I dont see this as a serious case & NO more reply on this & lets keep our finger crossed till Q2 results…
I agree, typically Indian companies donot notify exchanges when they get sued( big law suits may be notified). However, companies list this in their Annual report as contingent liability.
A consumer court action in India is not the same as a Class Action suit as in the US.
There is a fundamental difference in that a case in a consumer court is only with the respect to the complainant – and not with respect to a general group of people (e.g. all consumers of X service) that a class action may represent. As far as I know the Consumer Protection Act in India is not representative of class action suits. Which is why a consumer case against Airtel in India should not neccessarily worry you as the outcome of the case will not have extended ramifications for all consumers of Airtel.
The class action suit in this case in the US is aiming to build a case representing all allegedly defrauded users of Liquidation channel – effectively a negative outcome for VGL in this case would mean they have to give either refunds or damages to all affected buyers of the product (see here for examples of cases won by the attorneys involved: http://www.classlawgroup.com/consumer-fraud/ ). I would not say its not a big thing – we simply do not know.
Yup - a class action suit is on behalf of all past customers and changes the business model irrevocably, if successful.
Remember that the damage in a class action suit is not capped either way - it can even bankrupt the company if it is proved that the charges are true.
This is not the same as a solitary customer service issue - for the record, class action suits are like those against union carbide for the bhopal gas tragedy, the one that indian government is pursuing against nestle for Rs. 640 Cr. etc. - they are never about chump change.
Remember that in the USA, the law is very pro consumer - otherwise, you won’t get $ 10 mn for spilling hot coffee on your hand on the pretext that the company that served you coffee did not clearly tell you how how hot it was.
In light of this new information - it looks to be serious.
Though the suit was filed on 28 may and had it been so risky, I think malabar fund and nalanda fund would have curtailed their exposure. But these are wild guesses. Your thoughts on this ashish.
If one can get $10 mn compensation for spilling HOT Coffee on your hand on the pretext that the company that served you coffee did not clearly tell you how how hot it was, then I dont know how one can RUN Business in such country & they call themself Developed
If Above is TRUE then anybody can extort money from any company, by just filing a case agaisnt them… I still feel this is a non-issue, as in consumer market you have to face some cases like this (50% time your competitors prompt ppls to file case agaisnt you) and if in US LAW is SUCH a stupid that they give $ 10 mn compensation for spilling hot coffee on your hand then I feel shareholders of Lupin & Sun Pharma should be more worried than VGL’s shareholders as they are exporting Medicine, which can KILL ppls & then they can say that Medicine Killed him/her or I feel that coffee example was too much of exaggeration, varadharajanr, could you pl provide me source of that case
I got that Coffee case reference on wiki, it happened in 1992 & compensation Paid was $2.2 mn Source: https://en.wikipedia.org/wiki/Liebeck_v._McDonald's_Restaurants
This was happened in 1992 almost 25 years from now & still if take example of this case then I feel you should sell VGL tomorrow morning itself even any stock who has business in US, as anybody can file a lawsuit in US & I feel they dont have upper capping for damages… I am fine with this case will continue to hold VGL until unless I see issue with business quality…
I guess the way LC has defined whats Estimated retail value gives them enough scope to defend this case. IMO they maybe able to prove their will be some retailer who will be retailing at this price( it must be a retailer at one of the most expensive state in US and make in US ) . Also, 93%+ savings thats shown in screenshot attached in class suit must be from a $1 raising auction which is a clearance sale.