A class action lawsuit (CAL) is a way for a group of consumers who are in a similar position to sue a company. This allows consumers that wouldn’t be able to ordinarily sue a company to do so. For example, let’s say a bank was charging a monthly fee of $5 when they should only be charging $4. Because this is a difference of only $1 it doesn’t make sense for an individual consumer to sue the bank as the lawyer fees will be much higher than any possible settlement or award the bank is forced to pay.
If there are hundreds of thousands of consumers in the same position it makes sense for them to sue the bank as a collective. A lawyer is also more likely to take this case on as the collective would be able to pay them a portion of whatever they receive as compensation (which is likely to be a lot).
Some class actions don’t require proof of purchase, please don’t file a claim just because you can. This is morally and ethically reprehensible, you’re basically stealing money from a consumer that has already been taken advantage of by a company.
Pros & Cons
Pros:
- No costs involved. When you participate in a class action, there is no requirement for you to pay any money upfront to lawyers. This means it’s risk free in that there is no chance you’ll lose money.
- Low time involvement. When you participate in a CAL all you need to do is find it and then file a claim. If you sued as an individual you’d need to spend a lot of time finding a lawyer and working on your case.
Cons:
- Give up your right to sue. All class action settlements have a section that states you waive your right to sue the company your settling with. You’ll need to make sure you don’t want to sue them before filing a claim.
- Unknown compensation. Your typically given a guide on how much you’ll likely receive, but the actual amount you receive is dependent on how big of a settlement the lawyers can achieve and also
- Lawyers take a healthy cut. Class action lawsuits are big business and there are a number of law firms that specialize in them. It can be extremely profitable for law firms to take this case on, this is because they take a large chunk of the settlement for themselves. Remember that even if you file your own case and use a fee-when-you-win lawyer that this will eat into your settlement if successful.
- Purchase proof is sometimes necessary. A lot of CAL’s (and especially those with higher payouts) require you to present proof of your purchase. This can be difficult when the
How To Find Them
There are a number of websites dedicated to helping you find open class action lawsuits. We’ve listed them below (if you know of any others, please share in the comments).
- Class action settlements. By far my favorite site for looking up open class action settlements, they do a good job of curating class actions that you might actually have a chance of participating in. This means they also don’t list all class actions, which could make some of the below sites also useful.
- Top class actions
- Consumer action
- My settlement claim
Our site
Occasionally we will post about class actions. We will do this when one of two things happens: the class action is about consumer credit or a high number of readers is likely to be eligible for the class action. New posts will automatically appear below when they are added to the site:
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Our Verdict
It’s well worth checking to see if there are any class actions that you can participate in every few months. If the complaint/lawsuit is relatively small, I’d recommend going with a class action as the pros outweigh the cons but if the lawsuit is particularly serious or there is a large amount of compensation at stake it’s well worth seeking independent legal advice to discuss your options.
Have you ever participated in a class action? What was the result? I’d like to hear your stories in the comment sections below.
