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April 23, 2015Download PDF

"Notice of Class Action Settlement?" Yes, please!

So, here’s the scene: after a long day, you’re standing in the kitchen and sorting through a huge pile of mail. Between bills and catalogues, you spot an ominous, legalistic “NOTICE OF CLASS ACTION SETTLEMENT,” most of its text written in tiny 4-point font. At the top (and perhaps in oh so distinguishable 5-point font), you see that “you are not being sued.”  “Phew! What a relief,” you think as you toss the notice into the trash. You have no clue that you’re actually throwing good money away with yesterday’s dinner scraps.

Though class action notices are sent for various reasons, the most common is to advise of a settlement where a person may be eligible to receive cash or some other kind of payment. The only way to know is to read your notice carefully!  

One of the biggest misconceptions is the feeling that people who send in claims will only get a few dollars while the lawyers are the ones who really get paid.  What people don’t understand, however, is that class action lawyers litigate cases against enormous companies with unlimited resources. These cases take years to handle and we don’t get paid a dime in the process. At the same time, we have to pay the astronomical costs of litigation, including hiring experts, some of whom command upwards of $1,000 per hour.  Yes, litigation is expensive and we do seek to recoup our expenses and get paid our fees when we’re able to negotiate a settlement. If weren’t able to do so, no lawyer would ever litigate a class action.

Though I can’t personally vouch for every class settlement out there, and though I know that certain smaller cases mean small payments, settlement payment amounts vary greatly depending on what the case is about. If the lawsuit involves food labeling on relatively inexpensive products, a typical settlement payment can be $10 or $20, depending on the product involved and the number of times it was purchased. But, for a more expensive product (for example a component on a home heating system), the settlement amount for each class member can be well over a thousand dollars!   I’ve also seen many settlements where the amount each person gets depends on how many claims are filed. In such a case, because claims rates may sometimes be low, class members can see a really nice recovery well above a few dollars. You’d never have known any of this if you’d thrown out that class notice.

Usually, to receive a payment, the notice will say that you have to submit a claim form.  Another misconception surrounds the claims process, which people equate to a form of torture. Not so! In today’s day and age, for some cases, you can file a claim in 5 minutes or less on the internet. Sometimes, all you need to do is tear off a postage prepaid postcard. People don’t realize this (my own friends and family included) and because of that, the great majority of those affected never file claims. Not only does that mean that they don’t receive anything from the settlement, but it also means wrongdoers may not be punished.

When you file a class action claim, you’re not only getting cash for yourself, but you’re actually a part of something much greater.  Class actions give people the power to make companies accountable for their big misdeeds and all of the little frauds perpetrated against us each day.  Did it bother you to hear that those “organic,” “all natural” potato chips that you spent your hard earned cash on were neither “organic” nor “all natural”? How many hours have you spent with customer service arguing over “fees” you don’t understand but magically appear on billing statements? How many times have you gotten annoying solicitation calls at home or on your cell phone? Were you upset when you learned that your fancy “toning” sneakers are no better than their much cheaper generic competitors? What about the advertised “free trial” of skin products you signed up for not knowing that you were agreeing to an auto shipment plan that cost you hundreds of dollars? These things happen to us every day. They are wrong and those responsible should pay.

Though class action defendants who settle are very careful not to admit liability, settlements are forged because there is some acknowledgment of an issue. Class action lawsuits are created so that people can get justice and they’re supposed to stop wrongful practices from occurring in the future. When we don’t file claims, however, we’re telling companies that we don’t care and that they should continue to rip us off. Don’t let your inaction be part of the problem: please read your class action notices and file your claims!