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Let Consumers Sue Companies (nytimes.com)
Richard Cordray, the director of the Consumer Financial Protection Bureau, writes: When a data breach at Home Depot in 2014 led to losses for banks nationwide, a group of banks filed a class-action lawsuit seeking compensation. Companies have the choice of taking legal action together. Yet consumers are frequently blocked from exercising the same legal right when they believe that companies have wronged them. That's because many contracts for products like credit cards and bank accounts have mandatory arbitration clauses that prevent consumers from joining group lawsuits, forcing them to go it alone. For example, a group lawsuit against Wells Fargo for secretly opening phony bank accounts was blocked by arbitration clauses that pushed individual consumers into closed-door proceedings. In 2010, the Consumer Financial Protection Bureau was authorized to study mandatory arbitration and write rules consistent with the study. After five years of work, we recently finalized a rule to stop companies from denying groups of consumers the option of going to court when they are treated unfairly. Opponents have unleashed attacks to overturn the rule, and the House just passed legislation to that end. Before the Senate decides whether to protect companies or consumers, it's worth correcting the record. First, opponents claim that plaintiffs are better served by acting individually than by joining a group lawsuit. This claim is not supported by facts or common sense. Our study contained revealing data on the results of group lawsuits and individual actions. We found that group lawsuits get more money back to more people. In five years of group lawsuits, we tallied an average of $220 million paid to 6.8 million consumers per year. Yet in the arbitration cases we studied, on average, 16 people per year recovered less than $100,000 total. It is true that the average payouts are higher in individual suits. But that is because very few people go through arbitration, and they generally do so only when thousands of dollars are at stake, whereas the typical group lawsuit seeks to recover small amounts for many people. Almost nobody spends time or money fighting a small fee on their own. As one judge noted, "only a lunatic or a fanatic sues for $30."
I've been a knowing or unknowing party to many consumer class action lawsuits and I usually get coupons, rebates, and the occasional $5 payout. The only ones making millions off this are the attorneys filing the lawsuits.
In the EU / australia / etc Consumers have rights that we don't get in the usa.
Contracts should never be allowed to waive legal rights.
That sounds great in theory, but if companies face more lawsuits the costs will be passed on as higher prices.
When I write a contract, I always insert an arbitration clause. If I sign an important contract for work or IP licensing and it doesn't have an arbitration clause, I will ask to have one inserted. Going to arbitration is almost always better than going to court.
How can the court hold that these people who never authorized, let alone agreed to the terms, of the credit card or account should have to follow the rest of the contract they never agreed to? That doesn't make any sense, legally or otherwise!
It's not fair to allow consumers to sue merchants for payment card data breaches who, due to market forces, are forced to accept payments via the deeply flawed, archaic payment card processing paradigm we have today. Merchants should never have to possess cardholder data, but in most cases, they are required to. Even merchants who use tokenization are required to pass cardholder data to a payment gateway to get back a token. P2PE is not an end-all solution, either. You can't hide from the future with math. The oligopoly that controls that payment card processing paradigm essentially doesn't have any incentive to make it more secure, so they won't.
That sounds great in theory, but if companies face more lawsuits the costs will be passed on as higher prices.
I'm perfectly OK with that.
Going to arbitration is almost always better than going to court.
That all depends on the arbitrator and how the contract is worded. If the contract says that the results of arbitration cannot be appealed in court, then it's an unacceptable risk -- particularly if you're dealing with a major corporation, where the fairness of the arbitrator is very much in doubt.
In the EU / australia / etc Consumers have rights that we don't get in the usa.
Not only that, but some European countries (some prominent examples: Germany and Switzerland) even have consumer protection groups which can help coordinating and engaging such actions on the behalf of consumers, who regularly scan products for fraud, etc.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
Filing a lawsuit that goes to trial will cost at least $100,000 in legal fees. If there's an appeal, it can top $1,000,000.
In some states, there is a functional small claims court system that eliminates a lot of that, but generally, a company cannot be represented by a lawyer, or an employee whose job is to represent the company in small claims court. In short, someone who may or may not be able to string words together into complete sentences. And while they're at small claims court, they're not doing their actual job, which costs a lot in productivity.
So no, companies do not sue for $30. They might make a few harassing phone calls, they might ding your credit score, they might even turn it over to a collection agency (who will immediately relieve you of any responsibility to pay it by breaking the Fair Debt Collections Practices Act literally every time they contact you, usually more than once per contact), but they won't sue.
Civil litigation also protects consumers from illegal acts. ANY standing to bring suit does. As much as they are maligned, masses of bottom feeding lawyers are much better at keeping companies in line then government regulation.
Government regulation often times is so meagre as to be no deterrent to a company at all.
Civil litigation is much more painful. One also must show actual damages. Despite propaganda to the contrary, jury awards represent real harm done to people.
You have to piss off a jury that's been conditioned to view lawsuits as scams. If you did that, chances are you are guilty of something and need punished.
A Pirate and a Puritan look the same on a balance sheet.
If you wish to claim consumer protection agencies and regulation for consumer protection is a major contributor to higher prices in the EU, you'll need to cite sources for that?
:)
EU has a lot less litigation than the US, this makes it easier to be a business and to be a consumers... Unless you want to claim that litigation is efficient