Troubling new opinion from the 9th circuit court of appeals on fraud. In US v. Milheiser the Court recently reversed the criminal conviction of several toner scammers. For years these companies called offices, told the receptionists that they were their regular supplier of toner for their copier, that the price was going up, but that they would send “more” at the old, cheaper, price. The victim companies had never in fact dealt with these scammers before. A jury convicted them of mail fraud.
The Court reversed the convictions, concluding that victims in fact did receive toner at the price disclosed in the call, thus concluding that the defendant’s lies were not “material” to victims. Needless to say, this decision is bound to cause trouble in future consumer protection cases, and I believe it is wrongly decided. But it reminds us that no matter what the legal standard is, it is important to have a solid theory of consumer injury – to explain why the lies matter to consumers.
