Class Action Lawsuit Basics

December 27th, 2012

In our previous posts, we have reported on a number of class action lawsuits involving chocolate, cell phone overcharges and defective video game systems. While the settlements to these lawsuits may involve millions of dollars, many people may not understand how (or why) they are created. Through this post, we will explain why they are important.

Power in numbers

Simply put, there is power in numbers. When a defective product or illegal practice affects one customer, big companies are not likely to notice because the money lost from one customer may be insignificant compared to the millions it will make from other customers. If a small group is inconvenienced, chances are that they will be ignored as well due to the same financial implications. When many customers are cheated, a company will take notice since there is a greater financial penalty to be realized.

To put this into context, think about how many AT&T cell phone subscribers there are in the United States (more than 20 million as a rough estimate). If less than one percent of them are being cheated by unscroupulous vendors, it would largely go unnoticed. If 20 percent were affected, AT&T would have a huge problem on their hands, and would act quickly to resolve it.

This is where class action lawyers come in. They analyze legal issues and determine if different classes of people (with similar difficulties) would be eligible as a matter of law to participate in the class. Certifying a class of consumers is not easy and depends on a number of factors. If you have further questions about class actions, an experienced attorney can advise you.

Source: Class Action World.com, Class Action Basics

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