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FIRST DIVISION
August 9, 2004

José Covarrubias filed a class action lawsuit againstBancomer, S.A., alleging that its money transfer service violatedthe Consumer Fraud and Deceptive Business Practices Act (theAct), (815 ILCS 505/2 (West 2002)). Bancomer told customers theycould send money to Mexico for a set fee. José alleged thatBancomer misrepresented the actual amounts collected for theservice. The trial court found that José failed to allege adeceptive act or practice. José appeals. We find that Joséadequately alleged a deceptive act, and therefore we reverse andremand.

On July 8, 2002, José decided to sent $100 to MariselaGarcia Covarrubias in Mexico. He went to a post office inChicago, where the clerk told him the fee for the transactionwould be $12. José signed a transaction slip and gave the clerk$112. That slip showed a "Net Sale Fee *** (Tarifa neta detransaccion)" of $12. The slip specified a "Sure Money ExchgRate *** (Tipo de cambio de Dinero Seguro)" of 9.71 pesos to thedollar, and it showed that Marisela would receive 971 pesos. Theslip also had a line that read:

"Current Interbank Exchg Rate: 0
(Tipo de cambio interbancario vigete)."

In October 2002 José filed a complaint against Bancomer,Bancomer Transfer Services, Inc. (BTS), and Moises Jaimes,president of BTS. José alleged that Bancomer and BTS, whichoperated the "Dinero Seguro" money transmittal services, paidconsiderably less than $100 for the 971 pesos delivered toMarisela, and kept the excess as profit. He claimed thatdefendants deceptively labeled the transaction. He soughtappointment as class representative and recovery of actual andpunitive damages for the deception.

Defendants Bancomer and BTS moved to dismiss the complaintfor failure to state a claim for relief. See 735 ILCS 5/2-615(West 2002). The court said:

"[T]he representation, in fact, is as follows: For $12,we will transfer your $100 at a 9.71 pesos per dollarexchange rate. That's a perfectly truthful statement.

*** [T]he issue here is whether the defendantswere under a duty to disclose that the 9.71 [exchangerate] included a profit.

*** I am simply not persuaded that *** thereshould be imposed on Bancomer by this Court anobligation to disclose profit, which is not imposed onalmost every other provider of goods or services."

The court dismissed the complaint with prejudice. José filed atimely notice of appeal.

Because the court dismissed the complaint pursuant tosection 2-615 of the Code of Civil Procedure (735 ILCS, 5/2-615(West 2002)), we review the judgment de novo. Oliveira v. AmocoOil Co., 201 Ill. 2d 134, 147-48 (2002). We must determinewhether the facts alleged, construed in the light most favorableto plaintiff, adequately state a cause of action. Holloway v.Meyer, 311 Ill. App. 3d 818, 823 (2000).

"[T]o state a cause of action under the Consumer FraudAct, the plaintiff must allege: (1) a deceptive act orpractice; (2) the defendant intended for the plaintiffto rely on the deception; and (3) that the deceptionoccurred in the course of conduct involving trade orcommerce." Bernhauser v. Glen Ellyn Dodge, Inc., 288 Ill. App. 3d 984, 990 (1997).

The parties focused their arguments in the trial court and onappeal only on the first factor.

José contends that he alleged a deceptive act under theprinciples stated in Martin v. Heinold Commodities, Inc., 163Ill. 2d 33 (1994). In that case the plaintiff purchasedcommodity options contracts through the defendant. The defendant's forms showed the price of the option, a commission,and a separate amount labeled as a "foreign service fee." Heinold, 163 Ill. 2d at 38. The defendant retained the foreignservice fee as part of its commission. The trial court held thatthe defendant violated the Act, and our supreme court affirmed,holding:

"By labeling a commission a foreign service fee ratherthan an additional commission, Heinold deceived theplaintiff class into believing the foreign service feewas an additional separate charge Heinold necessarilyincurred and paid to third parties in [foreign options]transactions." Heinold, 163 Ill. 2d at 51.

The appellate court applied similar reasoning in Bernhauser. The plaintiff in that case bought a car and an extended servicecontract. In the itemization of the total price, the defendantlisted the price of the extended service contract as "AmountsPaid to Others for You." Bernhauser, 288 Ill. App. 3d at 986. The plaintiff alleged that the defendant paid only part of theamount shown to a third party, keeping the remainder as profit. The defendant argued there, as here, that the plaintiff allegedno deception because he received exactly what the defendant saidhe would get for the contract price. The defendant sold the plaintiff a car, with an extended service contract, for the pricestated. The trial court dismissed the complaint. The appellatecourt held that the plaintiff had alleged a deceptive act:

"The deceptions that plaintiffs allege stem from theallegation that the dealerships did not, as theyrepresented, pay the entire charge for the extended-service contracts to third parties but, instead,retained substantial portions of the charges. Thedealerships' argument is irrelevant to plaintiffs'allegations, and, accordingly, we ignore it." Bernhauser, 288 Ill. App. 3d at 991.

Here defendants listed the "Net Sale Fee" as $12. Defendantsindicated an exchange rate of 9.71 pesos to the dollar, withoutindicating that they paid much less than $100 for the 971 pesos. Defendants' description of the transaction would lead areasonable consumer to believe that defendants retained only $12as their fee, and they paid $100 to others in exchange for the971 pesos. We find that José has adequately pled a deceptiveact.

Defendants contend that we should follow several federalcases concerning facts very similar to those José alleged here. In re Mexico Money Transfer Litigation, 164 F. Supp. 2d 1002(N.D. Ill. 2000), involved allegations that the defendantsadvertised that the plaintiffs could "[s]end up to $300 to Mexicofor only $15." Mexico Money, 164 F. Supp. 2d at 1007. The defendants charged a $15 fee, and they retained substantialadditional profit by buying the number of pesos delivered formuch less than the amount paid. The parties to that case reacheda settlement, and some members of the class of the plaintiffsobjected to the settlement.

The trial court found the multimillion dollar settlementfair. The court evaluated the strength of the various claims andfound all of them vulnerable. The court reasoned:

"[A]t the time of each of the challengedtransactions, the class members received a receipt thatsets forth the fee paid for the exchange, the exchangerate offered by Defendants, and the number of pesosthat were to be conveyed to the recipient in Mexico.Although they acknowledge that the receipt does notdisclose the fact that Defendants are able to purchasepesos at a more favorable exchange rate, Defendantsargue that no such disclosure is required. As in anyother commercial exchange, Defendants argue, they areentitled to recover a profit on their services withoutdisclosing the amount of that profit.

Absent a legal requirement that information bedisclosed, there is ordinarily no claim for fraud basedon non-disclosure of the information." Mexico Money,164 F. Supp. 2d at 1014-15.

The court of appeals affirmed. In re Mexico Money TransferLitigation, 267 F.3d 743 (7th Cir. 2001). First, the courtestimated the value of the settlement at somewhat more than $40million (Mexico Money, 267 F.3d at 748), and then the court heldthat the claims did not merit any greater settlement. The courtadded:

"But since when is failure to disclose the precisedifference between wholesale and retail prices for anycommodity 'fraud'?

*** Neiman Marcus does not tell customers what itpaid for the clothes they buy, nor need an auto dealerreveal rebates and incentives it receives to sell cars.*** Nothing in this transaction smacks of fraud, sothe settlement cannot be attacked as too low." MexicoMoney, 267 F.3d at 749.

The trial court here apparently relied on this reasoning indeciding to dismiss the complaint.

Federal courts, like Illinois courts, have recognized thatmisleading descriptions of transactions can violate the Act. InAlexander v. Continental Motors Werks, Inc., 933 F. Supp. 715(N.D. Ill. 1996), the plaintiff alleged that an automobile dealerviolated the Act when it failed to disclose that it profited froman "upcharge" on a maintenance service fee. Alexander, 933 F.Supp. at 717. The court denied the motion to dismiss the claim,despite the fact that the plaintiff received the agreed car withthe agreed service contract for the agreed price.

Here, José has alleged a similarly deceptive practice. Defendants advertised that they would send $100 to Mexico for a$12 fee. On the transaction slip they indicated a "Net Sale Fee"of $12. The plaintiffs in Alexander and Bernhauser had reason tobelieve that the amounts indicated for the service contractscorresponded to the cost to the dealers of those contracts, justas the plaintiff in Heinold had reason to believe that the"foreign service fee" represented a cost to that defendant. Joséhere had similar reason to believe that the pesos sent toMarisela cost defendants $100, and the $12 "Net Sale Fee"indicated the portion defendants would retain. The allegationthat defendants paid less than $100 for the pesos suffices toallege a deceptive act here.

In terms of the examples the federal court used in MexicoMoney, imagine a shoe salesman who says, "for a $5 fee, I'll sellyou a $50 pair of shoes." On the transaction slip he shows a"Net Sale Fee" of $5 and shoes for $50, for a total price of $55. If the seller purchased the shoes for $40, he has described thetransaction deceptively. His net is $15, not the $5 represented. While no law requires the seller to disclose his profit, if herepresents a specific amount as his net without disclosing thathe earns further profit on the transaction, he has acteddeceptively.

We find José's similar allegations regarding the transactionhere sufficient to describe a deceptive act. Accordingly, wereverse the judgment entered in favor of the defendants and weremand for further proceedings in accord with this opinion.

Reversed and remanded.

O'MALLEY, P.J. and GORDON, J., concur.