Keeping Class Actions Honest

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I don’t generally support the conservative crusade against class action lawsuits, but there’s not much question that some can be pretty abusive while others are little more than fee generators with no real benefit for consumers. In particular, I really hate class actions that generate nothing for consumers but minuscule coupons that are basically just free marketing gimmicks for the companies that ripped them off in the first place. On this score, Todd Zywicki praises Ted Frank’s Center for Class Action Fairness:

This is an issue that I worked on extensively while I was at the FTC, so I have some familiarity with how outrageous some of these settlements are and how important work like Ted’s is in protecting consumers.  In particular, what I became aware of is how many of these lawsuits are essentially settled in a collusive bargain between class counsel and the defendant.  Usually the defendant pays a couple million dollars to the lawyers and gives coupons or some similar redress to the members of the class.  In one case a judge noted that the coupons — which allowed class members to get discounts on future purchases — essentially amounted to a request for a court-ordered promotional scheme.  An example (in a case well after I left the Commission) was the FTC’s intervention in the Netflix settlement.

The danger here for a liberal, of course, is that there’s no telling how much of the CCAF’s work is genuinely dedicated to preventing consumer ripoffs and how much — either now or later — shades into a more general assault on the civil tort system. I’m in favor of the former, not so much the latter. Worth keeping an eye on, though, if Frank really does stick to consumer protection.  CCAF’s website is here.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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