Hello, AP? The relevant “wanting” here is done by lawyers, not consumers. (“When consumers want to create or join a class-action lawsuit…”) And that’s kind of emblematic of how you miss the point on the Consumer Finance Protection Board’s big announcement of a rule yesterday rescuing many class action lawyers from the arbitration clauses to which their putative clients would otherwise have given legal consent.
More: BNA, James Copland, WSJ:
The industry reaction was swift, with Wall Street and its advocates warning of unintended consequences of the rule within hours of the CFPB proposing it on Thursday.
The change likely will result in higher litigation costs for banks, which they will offset either by raising the costs of consumer-loan products or reducing services, said Nessa Feddis, senior vice president for consumer protection and payments at the American Bankers Association, an industry group.
House Financial Services Committee Chairman Jeb Hensarling (R., Texas) called the proposed rule “a big, wet kiss to trial attorneys.”
And: Omri Ben-Shahar, Forbes:
While the overall effect on consumers depends on the balance between meritorious and frivolous class actions, one prediction can be made with confidence. Firms will now take greater care in drafting even longer fine print agreements, where everything is fully “disclosed.” Since many class actions allege violations that can often be corrected through more comprehensive legal disclosures and warnings, firms will lawyer up and write longer and even less readable boilerplate. The “asterisk” will be the winner — the routine disclaimers that accompany advertisements, as in: “Footlong is an average; reasonable variations may apply.” In the end, the CFPB’s proposed regulation will not improve the value of financial services to consumers. It will instead lavish upon people even longer and more excruciating small print.
5 Comments
Conservatives need to get off this kick that class action lawsuits are bad for business. That is not the case. They are much better for business than having to defend 1,000,000 lawsuits concerning the same issue. So, for example, VW would likely want a class action than all of the owners who bought their cars suing individually. Class actions also are a vehicle for many consumers to get together to vindicate their rights.
Certainly, class actions have been abused by attorneys. But the abuse is not much more than businesses have been abusing consumers. The answer is not to shut down class actions, but to find a way to disgorge ill-gotten gains from bad actors and return those gains to those from who they were taken. In other words, lower the lawyer fees…
“Conservatives need to get off this kick that class action lawsuits are bad for business.”
Maybe that would be the case if 90+% of them are meritless. Any class action that settles for a few dollars worth of coupons for the class members + lawyers fees never should have been allowed to proceed in the first place.
The courts and the government in general do not exist to right every wrong no matter how small. Trying will do orders of magnitude more harm than good.
And so if you wrong 50 million people a little bit each, you should just get away with it?
Punishing the company is not the primary objective of civil suits. The primary objective is making the injured party as whole as possible. How does making the lawyers rich but only giving the class members coupons for more of what they are suing over benefit the class members any more than doing nothing?
These kinds of settlements which are the majority of class actions resulting from small harms to many people are insult on top of injury.
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