How to avoid class action lawsuits

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How to avoid class action lawsuits

One of the inevitable costs of owning a small business is litigation. Each year, about 36%–53% of small businesses face litigation.

The more your business grows, the more likely you are to face lawsuits. However, there are a number of things you can do to limit your exposure and protect your business.

You probably already understand the value of having written operating agreements for your business to avoid internal disputes. You also probably have contracts with suppliers and clients that make your rights and obligations clear.

But some of the things entrepreneurs are least likely to think about are also the things that are most likely to get them involved in a costly class-action lawsuit.

What Is a Class Action Lawsuit?

A class-action lawsuit is a suit filed by multiple people, who all have the same complaint against the same defendant. Class-action lawsuits have several benefits, such as:

  • Efficiently resolving many similar claims in one action;
  • Reducing litigation costs;
  • Achieving consistent outcomes for similar claims; and
  • Allowing people to sue who might otherwise lack the resources.

However, a class-action lawsuit brought against your small business can be disastrous and spell the end of your entrepreneurial dreams.

Common Class Action Suits Involving Small Businesses

There are several types of class-actions that a business may face. To prevent your business from becoming involved in one, it’s important to understand what they are.

Consumer Suits

As a small business, you are most likely to face a class-action suit stemming from consumer complaints about things like:

  • A product causing injury,
  • A product not working the way it should,
  • False advertising,
  • Discrimination,
  • Breach of contract,
  • Price fixing or price discrimination, and
  • Failure to disclose important information.

Even when your business is small, the number of consumers that can be affected by an error can multiply quickly.

Worker Suits

Lawsuits brought by workers alleging unfair or illegal employment practices are another common type of class-action suit.

If your business is small and you have few employees, it is less likely that a lawsuit over your employment practices will turn into a class action. However, you can still face lawsuits from individual employees, and the risk of a class-action will grow as your business expands.

Environmental Suits

Another common class-action suit involves environmental contamination that causes injury to a large number of people. Even a small business can have a big impact if it fails to comply with environmental regulations.

The Impact of COVID-19 on Class Action Lawsuits

The COVID-19 pandemic has already inspired a number of class action suits and is likely to result in many more. Some of these suits present novel questions of law, and it remains to be seen how they will be resolved.

If you run a gym, do you have to refund customers or extend their memberships based on government-mandated closures? Can you continue to charge cancellation fees if you run an event venue and the government has restricted gatherings? Can you offer vouchers instead of refunds? What if you can’t fulfill certain contractual obligations because you can’t get necessary supplies? If you’re struggling with these and other questions, you should consider seeking advice from a business lawyer.

How to Prevent a Class-Action Lawsuit

The best way to prevent a class-action lawsuit is to be aware of the rules and regulations that apply to businesses and to your industry in particular. You then need to establish policies and procedures to ensure that you comply with those regulations. As your business grows, you may even need one or more employees dedicated to monitoring and maintaining compliance.

Regulatory Laws That Apply to Your Industry

There may be any number of federal, state, and local laws that apply to your industry. For example, environmental regulations apply to numerous industries such as:

  • Construction,
  • Transportation,
  • Automotive services,
  • Agriculture, and
  • Chemical production.

Other industries face regulation because they pose physical risks or may easily take financial advantage of customers, such as:

  • Investment services,
  • Pharmaceuticals,
  • Telemarketing,
  • Food and alcohol,
  • Banking,
  • Healthcare, and
  • Automobile sales.

Careful compliance with industry regulations can help you avoid class-action lawsuits.

Consumer Protection Laws

Regardless of your industry, it’s important to understand the many rules in place to protect consumers from unfair trade practices. These include:

  • Laws restricting false or misleading advertising;
  • Do-not-call laws;
  • Privacy laws;
  • Laws restricting deceptive pricing, price-fixing, or bait-and-switch tactics;
  • Restrictions on selling certain products without FDA approval;
  • Rules about fulfilling warranty obligations;
  • Duties to warn about unsafe products or unsafe uses; and
  • Data security laws.

Marketing restrictions, in particular, come into play in almost every type of business. It’s important to properly train your employees about what they can and can’t say in attempting to sell your products. Deceptive sales or marketing tactics can quickly escalate into a class-action lawsuit.

State and Federal Employment Laws

If you employ anyone other than yourself in your business, you need to understand the myriad regulations that apply to employment. Especially as your business grows, you can become embroiled in litigation if you don’t establish solid policies and procedures to comply with employment laws. Employment laws extend to many aspects of employment, including:

  • Wages and hours,
  • Breaks,
  • Overtime,
  • Work conditions,
  • Leave,
  • Discrimination,
  • Harassment, and
  • Termination.

Many of these things are governed by federal laws, but individual states may grant additional protections. Understanding the rules that apply to you can be crucial in protecting your business from costly lawsuits.

Get Appropriate Insurance

While having insurance won’t prevent you from becoming involved in a lawsuit, it can make a huge difference in your business’s ability to survive a lawsuit.

The type of insurance you need may vary depending on the type of business you operate. For example, if you provide professional services, you should have professional liability insurance. If you manufacture or sell a product, you should have product liability insurance.

Consider consulting an insurance agent or business attorney for advice on the specific types and amount of insurance you need for your business.

Josh Brown is a digital marketing manager at Juris Digital, a respected leader in the legal marketing space. He currently resides in Atlanta with his girlfriend and two cats.

How to avoid class action lawsuits

My family recently returned from a trip to the beautiful Indiana Dunes State Park. One of the attractions is a rugged, self-guided, 1.5-mile trail over three of the largest sand dunes in the park. This trail is referred to as the “Three Dune Challenge”. The start of the trail includes a warning that the Three Dune Challenge is the most difficult in the park. It is intended only for experienced, physically-fit hikers. Hikers are warned to be realistic about their hiking ability and proceed with caution.

Proceed with Caution

These words of wisdom could certainly be applied to the current challenges faced by organizations in regards to their background check programs today. We are just a little more than halfway through the year. Already, there have been at least 27 FCRA class action lawsuits filed against employers. In fact, twelve class action suits were filed in the months of June and July alone. (See Littler Report, August 2014) Employers are currently facing difficulties unheard of in past years. From retailers to trucking companies, no industry appears to be exempt and with fines of up to $1,000 per violation, employers are faced with the potential of having to pay millions of dollars in damages.

Unquestionably, now is the time to take a realistic look at your policies and make sure they are 100% compliant. Thankfully, protecting your company is certainly not an insurmountable task. Stay on the path & don’t fall into the same traps as these other employers.

The FCRA lays out a pretty clear path that employers MUST abide by. Following these five steps will help to protect your organization:

  1. Disclosure – A stand-alone disclosure form stating that you are going to be performing a background check on an applicant must be provided prior to conducting any background checks. Companies have been found in violation of the FCRA because they included “extraneous” language on disclosures. The courts have ruled against employers who include disclosures within job applications or who have included a release of liability verbiage on disclosure forms.
  2. Applicant Authorization – Applicants must complete an authorization form that permits you to conduct a background check on him/her. It is essential to have a valid signature on this form prior to beginning the background check process.
  3. Pre-Adverse Action – If background checks uncover information that is going to negatively impact an applicant’s ability to get a job, you must first follow the required pre-adverse action procedure. Several organizations have been penalized for not providing applicants with a copy of their report, not allowing applicants a chance to dispute their report, and not providing applicants with the required Summary of Rights. It is important to note, the fact that some companies who have opted out of providing Pre-Adverse action despite their background check provider offering an FCRA Compliance service which sends out Pre-Adverse action notices have been shown in court to have “willfully” violated the FCRA.
  4. Allowing a Reasonable Time for Applicant’s to Dispute Information – Another complaint against employers has been that they did not provide a sufficient amount of time for applicants to dispute the findings of their report. The FCRA does not specify the exact amount of time employers should allow for applicant’s to dispute information, but it is generally accepted as five working days.
  5. Adverse Action – Applicants must be provided with an adverse action letter, a completed report, a Summary of Rights, and your CRA’s contact information.

For more detailed information about the FCRA, please download our Guide to Understanding the FCRA.

Protecting your company and remaining compliant with the FCRA can certainly feel like a challenge. This is mainly when class action lawyers are buzzing around you looking for any small details you may have missed.

Fortunately, Justifacts is available to help with a knowledgeable staff and 35 years of industry experience. We provide detailed educational information on FCRA regulations, sample disclosure, and authorization forms. This fully automated adverse action tool that can assist our clients in generating and tracking the entire adverse action process. Our full-time Compliance Team is available to help handle situations as they arise regarding adverse information that is found on an applicant’s report.

It is important to note that Justifacts is providing this information as a service to our clients. None of the information contained herein should be construed as legal advice, nor is Justifacts engaged to provide legal advice. We go to great lengths to make sure our information is accurate and useful. We recommend you consult your attorney or legal department if you want assurance that our information, and your interpretation of it, is appropriate to your particular situation.

How to avoid class action lawsuits

As a business owner, running a business can be both fun and challenging. Although there are challenges along the way, you can still overcome all of them without causing serious damage to your reputation. Unfortunately, this isn’t the scenario when your company is facing a class action lawsuit.

Primarily, a class action lawsuit is a type of litigation wherein several individuals who have been harmed come together to file a suit against a corporate entity. If they believe that they deserve compensation for the damages caused by the defendant, their claims can be consolidated to form a single lawsuit and recover from the at-fault party. That’s why if your company is the defendant, it can mean potential losses whether you agree for a settlement or lose the lawsuit.

To keep you safe from these significant complications, below are ways you can avoid a class action lawsuit against your business.

Get Familiar With The Business Laws.

One of the important things you should do to prevent the possibility of dealing with a class action lawsuit is to have a better understanding of the business laws. Generally, running a business isn’t just about making sales and profits. It’s also about following the legal nuances concerning different aspects of the business. This means that you should get acquainted with the laws involved and make sure that you don’t violate any of them while managing your business.

For example, if you don’t want to face a class action lawsuit anytime soon, refrain from committing various violations of the law, such as false advertising, overcharging customers for a product, and many more.

Therefore, to make sure that your business is free from any class action lawsuits, understand the law by working with a dedicated lawyer. Perhaps, legal professionals, like class action lawsuit lawyers, can give you a better idea on how to avoid these types of legal cases since they specialize in handling class action lawsuits.

Keep Accurate Records Of Business Transactions At All Times.

Another way to protect your business against any potential class action lawsuits is by keeping accurate records of your company transactions. For instance, you should have adequate records of the services you’ve agreed upon with your customers. These records can include the contracts signed by the customers, the products or services involved in the transaction, and many more.

Moreover, don’t forget to document any phone calls, emails, and other related transactions. When your business makes it a habit to keep records at all times, you can prevent your customers from filing a class action lawsuit.

Avoid Making Libelous Or Slanderous Statements.

Of course, managing a business means making statements and taking business actions. However, it doesn’t mean that whatever you do or say will not be used against you and your company. In most cases, you need to be extra careful when making a public announcement or taking action as it might cause a possible class action lawsuit against your businesses. When your company statements are considered libelous or defamatory, there’s a high chance that you’ll face a lawsuit in no time.

Hence, to get rid of these legal troubles, think many times before you say or do anything. Always take into account the significant legal consequences of your words and actions as these can throw your company into a complete mess.

Observe Ethical, Honest, And Moral Business Practices.

Again, dealing with a class action lawsuit can be a frustrating experience for your business. Aside from the damaged reputation, you also have to face a huge financial turmoil when you lose the case.

To help prevent being sued by your customers, be ethical, honest, and moral in your business dealings. Always do business professionally and don’t take advantage of any of your customers just to increase your revenue. That way, you can maintain a good reputation within the industry, plus you can reduce the possibility of facing a class action lawsuit from several customers.

Offer Good Customer Service.

Providing good customer service can also be a perfect way to avoid being sued for a class action lawsuit. In business, you can’t prevent your customers from being upset or mad. But, if you know how to calm down these people and explain that the mistakes are unintended, it can probably make a huge difference. You can do this by giving your managers and employees with proper customer service training.

Takeaway.

Indeed, facing a class action lawsuit against your business can be very problematic. Fortunately, with the tips mentioned above, you can reduce the risk of dealing with such a complicated legal case at any time. Just don’t forget to find and work with an experienced lawyer to help you understand the legal effects of making a rash business decision.

FILE – This photo shows hair on a brush

LOS ANGELES – A nationwide class-action lawsuit was filed against beauty conglomerate Unilever in November claiming that some of its Tresemmé products were allegedly causing hair loss.

“Plaintiff purchased the Products because of Unilever’s uniform false representation that the Products would smooth her hair and coat it with Keratin, a protein found naturally in hair,” the lawsuit read. “The Products contain an ingredient or combination of ingredients that causes significant hair loss and/or scalp irritation upon proper application.”

One ingredient, a formaldehyde-releasing preservative DMDM hydantoin, was found in Tresemmé Keratin Hair Smoothing Shampoo and TRESemme Keratin Smooth Color Shampoo.

According to ChemicalSafetyFacts.org, DMDM hydantoin is a preservative found in cosmetics and personal care products, that works by slowing and preventing spoilage in products such as shampoos and hair conditioners, and in skin care products like moisturizers and makeup foundations.

And according to the website, the product is considered safe.

“DMDM hydantoin is safe as a cosmetic ingredient at current normal levels of use in products, according to scientific experts at the Cosmetics Directive of the European Union as well as an independent Cosmetic Ingredient Review panel,” ChemicalSafetyFacts wrote. “To put formaldehyde exposures from DMDM hydantoin in personal care products into perspective, the tiny amount of formaldehyde released from a formaldehyde donor when shampooing your hair is about equivalent to the amount of formaldehyde naturally occurring in one medium-sized apple or pear.”

But the lawsuit claims that formaldehyde has harmful reactions when absorbed into skin.

“Formaldehyde is a well-known human carcinogen that can cause cancer and other harmful reactions when absorbed into skin. DMDM hydantoin has been used a preservative in Unilever products for more than a decade; however, the use of DMDM hydantoin as a preservative is an entirely unnecessary risk because various safer natural alternatives exist. As such, the Products are rendered dangerous and unsafe for sale as over-the-counter hair smoothing shampoo products,” the lawsuit says.

The lawsuit claims that the defendants failed to properly warn consumers of the risks and dangers to the use of the ingredient on the hair and scalp “even well after Defendants knew or should have known of the Products’ hazards.”

This isn’t the first time the safety of the ingredient DMDM hydantoin has been called into question.

The lawsuit mentioned that Suave, also owned by Unilever, recalled its Keratin Infusion products in 2012 in light of complaints that they caused hair loss and irritation. The line included the ingredient DMDM hydantoin.

“Despite having public knowledge since at least 2012 that DMDM hydantoin, as a formaldehyde donor, can cause or contribute to hair loss and scalp irritation, Unilever continued to proudly include this ingredient as a preservative in its products, and even goes so far as to represent to the public that DMDM hydantoin is safe for use in its hair care products,” the lawsuit says.

The class-action lawsuit gained significant momentum on social media platforms in November and December after several videos were released focusing on the claims.

In addition, last year, several class-action lawsuits were also brought against the company DevaCurl, alleging hair loss and other adverse effects.

Tresemmé released a statement to FOX Television Stations.

“Consumer safety is always our top priority and all TRESemme products are rigorously assessed to meet stringent safety standards. While we do not comment on pending litigation, DMDM hydantoin is widely used in the beauty industry and has been confirmed by health authorities to be a safe and effective preservative,” Tresemmé wrote.

Companies Use Arbitration Clauses to Prevent Class Action Lawsuits, Hurting Consumers

How to avoid class action lawsuitsClass action lawsuits are large, consolidated cases involving plaintiffs who have been hurt by irresponsible business practices or defective products created by a large company. However, a recent survey showed that too many large companies use arbitration clauses to prevent consumers from filing class action lawsuits or seeking other types of relief, which can ultimately harm consumers, especially if they have been injured by a defective product or device.

The investigation was conducted by the Consumer Financial Protection Bureau and released on Wednesday, March 12th. Their survey found that 75% of consumers did not know, in many cases, that they were bound by an arbitration clause if they used a particular product. In fact, many consumers do not even know what an arbitration clause is.

Legally, an arbitration clause requires a consumer to resolve any dispute with a company through arbitration, which is a private process outside of the courtroom, rather than a class action lawsuit, in which other plaintiffs can join and resolve disputes as a group. Arbitration clauses allow businesses to resolve conflicts behind closed doors, so while they many times offer settlement amounts, they are not required to disclose those amounts to the public, which means consumers can receive different awards, or no awards at all, to “resolve” their dispute.

“Tens of millions of consumers are covered by arbitration clauses, but few know about them or understand their impact,” said Richard Cordray, Consumer Financial Protection Bureau (CFPB) director, in a statement. “Our study found that these arbitration clauses restrict consumer relief in disputes with financial companies by limiting class actions that provide millions of dollars in redress each year.”

The American Arbitration Association is the largest administrator of arbitration disputes in the US, and according to data, an average of 600 arbitration disputes were filed per year between 2010 and 2012. These disputes regularly involved credit card companies, loans, and other financial products, but can also involve medical devices, defective toys, or food safety concerns.

In one instance last year, General Mills attempted to update their privacy policy on their website to include an arbitration clause, which would bind consumers to forced arbitration processes if they ever consumed any of the thousands of General Mills products. Fortunately, consumers and the media got wind of the clause and forced the company to return to its original privacy policy.

Although arbitration clauses are too frequently invoked to prevent class action lawsuits, the clauses do not bar individual personal injury lawsuits or wrongful death cases involving defective products, food-borne pathogens, or other consumer harm. If you suffered an injury or financial loss due to a company’s negligence or failure to warn, even if you are bound by an arbitration clause, you still have legal recourse to go to court.

The Strom Law Firm Represents Victims in Class Action Lawsuits

The complex litigation attorneys at the Strom Law Firm understand that personal injury, financial loss, or a loved one’s death can cause you enough suffering, without having to go through an arbitration clause that could leave you without recourse. We offer free, confidential consultations to discuss the consumer harm you have experienced, and decide if a class action lawsuit is the right recourse for you. 803.252.4800

How to avoid class action lawsuits

Whole Foods, Inc. has just become the latest victim of a class action lawsuit filed against them for allegedly violating the Fair Credit Reporting Act (FCRA) in their hiring practices. The lawsuit claims Whole Foods’ online application seeking applicants’ approval for running criminal background checks used incorrect language in that request. In turn, the suit is seeking damages for up to $1000 for each applicant Whole Foods has run a consumer report on since January 2009. The lawsuit states there are thousands of individuals listed in the case.

So where and how did Whole Foods go wrong?

The plaintiff in the case, Esayas Gezahenge claims that while filling out his initial online application in April of 2007, he was presented with a consent form which contained extraneous information. The FCRA specifically states the “Consent” form must be signed, but must contain nothing other than the required authorization and disclosure. In this specific instance, the form contained a liability release for companies providing and receiving information for the background check. After then running a background check, the lawsuit states that the plaintiff was then presented with the proper “Consent” form to sign.

This is not the first case of it’s kind, nor will it be the last. Whether a company fails to obtain written authorization and disclosure prior to a background check, or fails to provide pre-adverse action or adverse action notices, these types of lawsuits are expected by nearly all industry experts to begin piling up. HR departments should take note and act sooner than later in reviewing their screening programs if they hope to avoid FCRA or State related compliance issues.

So how can you protect your company?

Written Disclosure and Authorization Required

The FCRA requires any employer intending to run a consumer report to first disclose to applicants or employees that a consumer report may be obtained for employment purposes. This disclosure cannot be included in an employment application or other document that contains any extraneous information. The employer must also obtain an employee’s or applicant’s written consent before running the report.

Reporting Requirements

Employers also must comply with specific reporting requirements. Before obtaining a consumer report from a consumer reporting agency, the employer must provide certification to the reporting agency that they are requesting the report for employment purposes;have provided the required disclosure to the applicant; have obtained the necessary written consent to obtain the report; will provide the applicant with a copy of the report along with notifying them of their rights before taking any adverse action based in whole or in part on the results; an will not use the results from the report in a manner that violates federal or state equal opportunity laws.

Pre-adverse Action and Adverse Action Notices

If employer plans to take any adverse action based in whole or in part upon results obtained from a consumer report, the FCRA requires the employer to provide specific notifications to the applicant or employee.

An “adverse action” is either a denial of employment or any other decision that adversely affects any current or prospective employee. The FCRA requires employers to provide a copy of the consumer report results to the applicant or employee and additionally provide them with a copy of their rights under the FCRA (the “Summary of Rights Under the FCRA”) before taking adverse action based upon information contained in the consumer report.

When the employer takes adverse action, they must then provide the applicant or employee with the following information:

  1. Name, address, and telephone number of the consumer reporting agency issuing the report
  2. Statement that the consumer reporting agency was not the decision maker and can not explain why the adverse decision was made
  3. Statement regarding the applicant or employee’s right to obtain a free disclosure of the report from the agency if the applicant or employee requests the report within 60 days of notice of the adverse action
  4. Statement regarding the applicant or employee’s right to dispute directly with the consumer reporting agency the accuracy or completeness of any information provided by the agency.

A reliable background screening company will provide you with compliance expertise necessary to meet all demands. They will also keep you informed on the constantly evolving regulations changes. Many, such as active screening have software platforms that will have all the forms and notices canned and ready for you to use, without the worry of designing them yourself. Platforms such as ACTivate will be integrated with, or can integrate with your existing ATS to make the screening process that much easier.

No matter what your approach, you should take the time to review your compliance with FCRA and State mandates before it’s to late.

How to avoid class action lawsuits

Gaining approval for your class action settlement has the potential to be a difficult process. It’s possible the Court may reject sweeping areas of your proposal and send your team back to the drawing board, delaying resolution and driving up costs as parties draft a new plan. But there are a few steps attorneys can take ahead of time to ensure settlement approval.

Consider these steps in avoiding a return to court in the class action settlement process:

Ensure compliance with the most up-to-date requirements and guidelines.

The clearest direction for gaining class action approval comes from the Northern District of California in their November 1, 2018 guidelines. The guidance details extensive requirements for settlement fund allocation plans, the administrator selection process, class notice, opt-outs, attorney fees, incentive awards, cy pres recipients, and data collection. The guidelines are the most comprehensive directives from any court to date, and not only explain what is needed for preliminary approval but also final approval.

The December 1, 2018 Amendments to Rule 23 are another quintessential source of information. The rule details how to allow class members to opt-out, when a class can be certified, what type of notice is required, and what processes must be followed for proper class certification. Class notice is no longer relegated to U.S. mail, but may employ more modern modes of delivery “practicable under the circumstances.” Professional objectors are deterred through a new requirement to openly state whether the objection raised applies to the whole class or is merely self-serving. Meritless objections can be withdrawn at any time, without court approval.

Take the time to define the class accurately.

Defining the class is a critical element of your initial plan. Class definitions can make or break a motion for certification. From a practical standpoint, you’re telling the court what the litigation is all about — who should receive notice and who is expected to participate. The optimal approach is merit-based and applies objective criteria to eligible class members. The class should be broad enough to reach affected claimants, but not so vague that the people receiving notices have no idea what to do with the information given. Expect a granular review of the proposal by the court and be prepared to defend the quality of your class member data.

Make a few inexpensive investments early on.

It only takes a little bit of money and due diligence upfront to prevent a much more expensive headache later down the line. Many of the reasons parties end up back in court are foreseeable and avoidable when working with an experienced class action settlement administrator. A great example of an inexpensive investment is the URL for the settlement website. Purchasing the URL to ensure its availability before drafting it into the settlement agreement is an easy way to avoid a revised agreement.

Another wise precaution is to include formatted notice documents and the structure of the claim form in your motions for preliminary approval. This extra step provides the court with a visual of the potential class members and serves as an inexpensive way to provide yourself a safeguard against being forced to come back again later.

Still have questions about getting your class action settlement proposal granted the first time? We understand your concerns. Heffler Claims Group is a leading class action settlement administrator with more than 50 years of experience in class action settlements of all sizes and practice areas. No one is more prepared to handle the intricacies necessary to gain first-time court approval and avoid coming back to court. Contact us to learn more about our comprehensive, in-house services and get a free quote.

Dear Lifehacker,
I’m hearing about a lot of class action suits lately, and every time I hear about one against a company I’ve bought stuff from, I wonder if I’m eligible and if taking part in a case is worth my time. How do I find out if I have a product or used a service that qualifies?

Signed,
Hoping for Money

Dear HM,
It’s true, it seems like we hear about new class action suits daily, most recently, Ticketmaster , Carrier IQ , and Hewlett-Packard . A class action lawsuit covers consumer products and services, and acts on the benefit of a class of people or businesses affected. Essentially, they’re built so a group of people can work together to sue a company.

For instance, in the Ticketmaster case above, the ticket seller was accused of inflating ticket processing fees, and in turn, was hit with a class action lawsuit to get the money back to anyone who purchased tickets between October 21, 1999 and October 19, 2011. Figuring out if you qualify is the first step, but we’ll walk you through starting your own, the materials you’ll need, and making the decision if a class action lawsuit is worth it.

How to Check if A Class Action Lawsuit Exists and if You Qualify

A class action lawsuit goes through several steps before you can participate. Once a trial is approved, a notice period is set, and potential members of the class are notified through a newspaper posting, mail, or email. The notice will tell you how to proceed, but typically, if you receive a notice, you are already part of the case and have to actively opt-out to get out of it.

You generally have little to lose by being a class member, but if you’re not happy with how the case is being handled, you can participate as a named plaintiff with your own lawyer and have a more active role.

If you don’t receive a notice, it does not mean you don’t qualify to be a member. If you purchased a products, used a service, or were prescribed prescription drugs that were recalled, you might qualify. If you see a class action lawsuit you feel you were affected by, you need to get in touch with the law office handling the lawsuit to add your name to the class registry. This will ensure you get future updates, including the settlement amount. Generally, attorneys create a landing page for the case where you can find all the information you need.

If it’s a suit involving a product, you may need a receipt to prove ownership, but this varies from case to case depending on the reason for the damages. Often, if a credit card statement explicitly states a purchase (especially in the case of services), the statement qualifies you. You’ll find this information in your notice or from the law office.

How to Start Your Own Class Action Lawsuit

If you think you have a case and want to be the lead plaintiff for a class action lawsuit, you will need to locate and speak to an attorney. If you need some help finding a reputable lawyer, we’ve previously covered a few tips . Class action suits require a judge’s approval of an attorney before they can move forward, so most law offices specialize (or have a team who does) in class action action lawsuits. Your attorney will verify if you have a case, file the lawsuit, serve the summons, and eventually, if the judge accepts it as a widespread issue, publish the notice to bring in new members.

How to Find a Reputable Lawyer

At some point, most of us will face some kind of legal threat. Whether it’s a traffic accident or…

Sometimes a class action works in reverse and the law firm will publish an advertisement looking for people affected by an incident or product recall. These are the advertisements you often see on TV asking if you experience negative effects from prescription drugs or treatments. It’s a perfectly valid means to bring on new members and if you see one of these you think you qualify for, you should get in touch with the law office right away.

The Reasons You Might Want to Opt Out of a Class Action Lawsuit

The main reason to consider opting out of a class action suit is if you want to file a personal claim. Since a class action suit is divided among all participants, you may not receive the compensation you feel you deserve. Alternately, you might find the situation of the class action is changed from your own experience and the class has different interests than you. The notice you receive will describe what you need to do to opt out of the case, which usually requires you to make a phone call or fill out a web form.

How You’ll Receive Payment

Different classes produce different results and they vary from case to case. If the case involves defective equipment, you might be entitled to a replacement. In other cases, you get a portion of the settlement in dollars, as it’s divided among all members of the suit. In others, like the Ticketmaster case we started with, you’ll get a discount on future purchases from the service. You’ll be notified of the settlement in the same way as you were the suit. You need to submit a claim form that proves you were affected by the case and you’ll receive your compensation.

While starting your own class action suit can be far more difficult, participating in a preexisting one isn’t hard at all, and unless you plan on suing for more damages, requires almost no effort on your part and has few reasons to opt-out. Have you ever participating in a class action lawsuit? What were the results?

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DISCUSSION

As others have mentioned, class action lawsuits do virtually nothing for the people involved, and only serve to make lots of money for the lawyers.

I think the best settlement I’ve ever received is probably this Ticketmaster one. I get a whopping $1.50 off of 17 ticket purchases, which can only be combined up to two per order. So I can’t even take my $25.50 all at once, I have to spread it out over 9 purchases. Awesome. So I get $3 off of the $10-$20 “convenience” charge. We’ve all known it was a scam, so it’s no surprise they lost that case.

I probably won’t be using much of my $25.50, because you know what? Fuck Ticketmaster. I go to the box offices whenever I can, no matter how inconvenient, to avoid that absurd $10-$20 per ticket “convenience” charge.

Edit: Just to verify the convenience charges are as high as I said, I went to Ticketmaster and picked out some Rammstein tickets. $14.95 (per ticket) convenience charge and a $7.50 order processing fee. That’s $22.45 in Ticketmaster fees. Oh, and a $3.50 “facility charge”, granted, probably charged by the venue. And a $1.50 tax. That’s $27.45 for one ticket before you even look at the cost of the ticket itself. This is I think the first time I’ve ever seen the government’s take pale in comparison to everyone else’s.