Class Actions: Protecting the Consumer

     A consumer class action is one of the most vital weapons consumers have available to effectively challenge corporate wrongdoing. More often, than not, a consumer class action is the only economical way for an individual consumer to obtain the recovery of petty sums taken from consumers on a grand scale.

     A good example of the class action device is recent litigation involving exorbitant late fees. For years, consumers have been aggrieved by unfair business practices that have resulted in the charging of excessive late fees. Corporations know that the time, effort and expense involved in challenging such fees is often worth more to the consumer than the late fee charged. Moreover, where a consumer actually challenged an individual late fee, a company simply treated the complaint as a cost of doing business while continuing to engage in the same egregious practice with other consumers who failed to complain. As a result, companies have reaped millions of dollars a year by illegally collecting high late fee charges from thousands and thousands of consumers.

    A successful class action leveled the playing field. Whereas the expense of an individual lawsuit to recover a $5 or $10 late fee would make no economic sense to justify the recovery, a class action enabled consumers to aggregate their claims, as well as their economic resources, to challenge this predatory business practice. More importantly, this aggregation of consumer claims quickly turns the nickel and dimes wrongfully collected by the corporation into a substantial multi-million claim by consumers to recover the corporation’s ill-gotten gains. As a result, a company will not only take the threat of a class action more seriously, but other companies employing similar practices are also likely to modify their conduct. This is exactly what happened in late fee litigation where one system in Baltimore, Maryland not only required to return nearly $7.5 million in illegally collected late fees, but was also required to lower its late fee to 10 cents.

     As noted in., Eshaghi v. Hanley Dawson Cadillac Co, 214 Ill. App. 3d 995, 574 N.E.2d 760, 766 (1991):

     In a large and impersonal society, class actions are often the last barricade of consumer protection . . .To consumerists, the consumer class action is an inviting procedural device to cope with frauds causing small damages to large groups. The slight loss to the individual, when aggregated in the coffers of the wrongdoer, results in gains which are both handsome and tempting. The alternatives to the class action – private suits or governmental actions – have been so often wanting in controlling consumer frauds that not even the ardent critics of class actions seriously contend that they are truly effective. The consumer class action, when brought by those who have no other avenue of legal redress, provides restitution to the injured and deterrence to the wrongdoer.

     Unfortunately, class actions can also be abused, and in recent years some suits have been rightfully subjected to considerable criticism. More often than not, however, this criticism has been trumpeted by those very corporations who would benefit the most by ill-considered attempts to change the law to insulate predatory business practices from class suits. As summarized by the National Association of Consumer Advocates, 176 FRD 370, 377 (1998):

     Certain types of businesses, such as financial institutions and insurers, commonly deal with large numbers of consumers in similar ways. Often, such businesses are essentially immune from individual suits for damages since the amounts at issue as to any particular consumer are small. These entities harbor an expectable dislike for the call action procedural device, since it provides an effective tool for consumer redress in such situations. While such entities are entitled to have their voices heard in any public debate, it appears that a concerted effort has been initiated in recent years to undermine the legitimate uses for class actions by overemphasizing the relatively infrequent occasions when abuses of the procedure occur.

     With the resources of ConsumerLawHelp.com and Friedman Law Offices, PLLC, we trust you will make an informed choice on the merits of a class action suit and the importance of challenging corporate wrongdoing through both individual and class claims. Of course, should you wish to have your individual or potential class claim evaluated by one of our attorneys, please contact us directly.