Why class actions are necessary
Imagine if a telecom company called, I don’t know, maybe “Horizon,” starts charging people five dollars a month for something that looks like a government tax, but is really just a fee that Horizon pockets. With a hundred million subscribers, that’s $500,000,000 a month.
This puts Horizon’s fierce competitor “Flash” at a competitive disadvantage. Flash is sorely tempted to follow suit. Other competitors throw up their metaphorical hands and do the same. Now we have a whole industry defrauding people as a routine practice.
Very few people will notice the charge. The few who do might call and get automated responses to billing questions (“Press One for ____”) Most people won’t take the trouble. The tiny number who push the issue may get a small refund. The company continues to reap enormous profits from the small charge.
But if there’s a class action, the consumer who has noticed the charge and figured it out can represent everyone. Suddenly a five dollar issue is a $5 billion issue, and the company will pay attention. Even the threat of a class action will make companies think twice before ripping folks off.
But in the end, it’s $5 a month. Who cares? All of us should.
First
If a company succeeds in stealing $5 they will do it over and over again until someone stops them.
Second
We do not want to have an economy where competitive success or failure depends on theft.
Third
In addition to the money that can be recovered through a class action, lawsuits often force companies to change their behavior. And just like profitable bad behavior spreads throughout an industry, higher standards and better practices can too.
It should also be noted that the people most often making the “who cares” argument are those for whom a few hundred dollars are meaningless, rather than a big slice of weekly paychecks.