New article from Rust Consulting on class action claim rates

Just came across this informative article from Rust Consulting on claim rates in class action settlements.

It’s a bit geeky or at least specialized, but the issue is important for lawyers who handle class actions and judges who oversee them. And actually, it’s important to consumers and businesses, too.

The question is: When a class action settles, how many people who are entitled to recover money will actually file claims? The article correctly explains that the rates vary, but there are some factors that allow for a prediction.

The claim process is one of those misunderstood things that leads to a lot of complaints about class actions. When a class action settles, and a consumer gets a claim form that will yield $6.26, it hardly seems worth the effort. It also leads to complaints that the lawyers earned “millions,” but the consumer only got $6.26.

I suppose it’s a predictable response, but it’s simply wrong. That hypothetical $6.26 must be multiplied by the number of consumers to look at the value of the class recovery. In other words, the true measure of damages is how much did wrongdoer have to pay out?

The other thing that consumers often miss is that class settlements frequently leave unclaimed money to the wrongdoer. That’s a problem because the wrongdoer profits for every claim form not returned. That’s a good reason for consumers to make claims, as businesses that act illegally shouldn’t profit from their gains, even if those gains are $6.26 at a time. One way to think about it is that it’s easy to make millions in nickels if you simply illegally collect enough nickels. It’s also important to file claims so that we can all stop illegal shakedowns of the middle class that drag all of us down.

David Sugerman

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