Class action risks
December 29, 2005 9:58 AM Subscribe
Might a business blacklist customers for participating in a class-action settlement?
I suppose that "legally" they can't, but I know many megacorps don't play by the rules or they wouldn't be in trouble in the first place. Lately I seem to get a settlement announcement almost monthly regarding one company or another. I wouldn't have any bones with participating if it was GM or a toy company, because they don't keep track of customers and will just sell you more of their product. But what if it's a business you have a close relationship with?
For example, the latest settlement came against my merchant bank. I'd get $80, but I rely on them to process a lot of my income. Merchant banks currently operate in a free-wheeling fashion like Visa and Mastercard did in the 1960s and 1970s -- they have considerable license to shaft customers with things like MATCH (formerly TMF). To me, this is more risk than I can swallow. But what happens if I participate against my credit card issuer, my regular bank, my insurance company, and so forth? I can't help wondering if I'd be put in their "high risk" tiers, kind of like what TXU was trying to do with credit scores.
I suppose that "legally" they can't, but I know many megacorps don't play by the rules or they wouldn't be in trouble in the first place. Lately I seem to get a settlement announcement almost monthly regarding one company or another. I wouldn't have any bones with participating if it was GM or a toy company, because they don't keep track of customers and will just sell you more of their product. But what if it's a business you have a close relationship with?
For example, the latest settlement came against my merchant bank. I'd get $80, but I rely on them to process a lot of my income. Merchant banks currently operate in a free-wheeling fashion like Visa and Mastercard did in the 1960s and 1970s -- they have considerable license to shaft customers with things like MATCH (formerly TMF). To me, this is more risk than I can swallow. But what happens if I participate against my credit card issuer, my regular bank, my insurance company, and so forth? I can't help wondering if I'd be put in their "high risk" tiers, kind of like what TXU was trying to do with credit scores.
If you do participate and they choose to be vengeful, what can you do? Sure, you could use legal pressure on them. They might be in their rights with refusing customers at will, or they might be breaking a rule with revenge for exercising legal rights. It doesn't matter what's legal. It matters what will, or even could be done. At best, you'd obtain a hostile and untrusting service that would be tailored to benefit you no more than legally required.
On the other hand, this bank is shafting its customers. Did you personally lose anything from this? Would you be likely to if they continued their shifty ways? If so, take the money and run. Nevermind that existing relationship, they've proved themselves untrustworthy. You don't want a bank that you can't rely on. It will be a monumental hassle, one that's in your best interest for the long run.
They might act "properly" and just let it slide, but $80 is not worth that risk. Take it only if you're switching banks. Banking is an industry built on trust, and there's clearly violations here. Good luck with the situation.
posted by Saydur at 10:28 AM on December 29, 2005
On the other hand, this bank is shafting its customers. Did you personally lose anything from this? Would you be likely to if they continued their shifty ways? If so, take the money and run. Nevermind that existing relationship, they've proved themselves untrustworthy. You don't want a bank that you can't rely on. It will be a monumental hassle, one that's in your best interest for the long run.
They might act "properly" and just let it slide, but $80 is not worth that risk. Take it only if you're switching banks. Banking is an industry built on trust, and there's clearly violations here. Good luck with the situation.
posted by Saydur at 10:28 AM on December 29, 2005
AFAIK, a business can refuse to serve you for any reason except race, and maybe religion or ethnic background. They can certainly refuse to serve you if you've sued them in the past, whether you won or not. (An interesting question: if they refused to serve you because of your race, and you sued them for that and won, could they subsequently refuse to serve you because of the lawsuit?)
I know big-box retailers like Best Buy got caught with a policy of refusing to serve "demon customers," which turned out to mean "customers who watch sales advertisements carefully and only buy things that are a really good deal." But IIRC that was within their rights, even if it made for minor bad press.
Realistically, in a class-action suit, the bank probably isn't going to track all the participants. Class actions are all about getting mondo attorney fees for the lawyers, and maybe a little cash for the named plaintiffs. Class participants usually don't get much at all, and certainly not enough to warrant "revenge." The bank is running a business...it'd cost more to keep track of you and try to jerk you, personally, around than it would to just jerk everybody around. So I wouldn't worry about it. Get your settlement check and continue to do business with the bank, or not, based on whether it provides acceptable service and reasonable rates.
posted by spacewrench at 10:52 AM on December 29, 2005
I know big-box retailers like Best Buy got caught with a policy of refusing to serve "demon customers," which turned out to mean "customers who watch sales advertisements carefully and only buy things that are a really good deal." But IIRC that was within their rights, even if it made for minor bad press.
Realistically, in a class-action suit, the bank probably isn't going to track all the participants. Class actions are all about getting mondo attorney fees for the lawyers, and maybe a little cash for the named plaintiffs. Class participants usually don't get much at all, and certainly not enough to warrant "revenge." The bank is running a business...it'd cost more to keep track of you and try to jerk you, personally, around than it would to just jerk everybody around. So I wouldn't worry about it. Get your settlement check and continue to do business with the bank, or not, based on whether it provides acceptable service and reasonable rates.
posted by spacewrench at 10:52 AM on December 29, 2005
In your case, I'd take the $80.
First, there is a lot of risk, if the bank decides (as a whole) to "punish" its customers, that there will be negative publicity. (Consider this - if you were a bank customer, but NOT eligible for the class action, would you want to be a customer of bank that was so petty?)
Second, I doubt that the names of those that take the payments are shared with operational staff, unless the bank is being petty (see above). And even if names were available, if the organization has branches (as I'd guess your bank does), it's clearly NOT in the interests of your branch manager to reduce his/her volume of business.
posted by WestCoaster at 11:41 AM on December 29, 2005
First, there is a lot of risk, if the bank decides (as a whole) to "punish" its customers, that there will be negative publicity. (Consider this - if you were a bank customer, but NOT eligible for the class action, would you want to be a customer of bank that was so petty?)
Second, I doubt that the names of those that take the payments are shared with operational staff, unless the bank is being petty (see above). And even if names were available, if the organization has branches (as I'd guess your bank does), it's clearly NOT in the interests of your branch manager to reduce his/her volume of business.
posted by WestCoaster at 11:41 AM on December 29, 2005
WestCoaster: Consider this - if you were a bank customer, but NOT eligible for the class action, would you want to be a customer of bank that was so petty?
*I* wouldn't, but I'd think a lot of conservative (wealthy) customers might see it as a bit of righteous come-uppance to all those litigious libruls. Payback's a bitch, har-har, now watch this drive...
posted by LordSludge at 12:02 PM on December 29, 2005
*I* wouldn't, but I'd think a lot of conservative (wealthy) customers might see it as a bit of righteous come-uppance to all those litigious libruls. Payback's a bitch, har-har, now watch this drive...
posted by LordSludge at 12:02 PM on December 29, 2005
Yup, some companies do "blacklist" you for suing them. Happened to our company when we sued UPS for one of their f*ckUPS (and settled out of court in our favour). Our online account with them sorta magically "vanished" and it took a lot of whining with them to get it fixed.
Not that we cared too much, since after that we just defaulted to shipping with a shipper that didn't completely suck, but there was always the odd customer (for whom, during the time, we took the package manually to the local UPS depot).
posted by shepd at 2:33 PM on December 29, 2005
Not that we cared too much, since after that we just defaulted to shipping with a shipper that didn't completely suck, but there was always the odd customer (for whom, during the time, we took the package manually to the local UPS depot).
posted by shepd at 2:33 PM on December 29, 2005
I am a lawyer (not yours - see below), and I have done a decent amount of class action defense work. Almost all settlements are administered by an independent third party (called a "claims administrator"). A settling defendant typically provides the claims administrator with its customer information - from basic names and addresses if the settlement is for a set amount to complex purchase data if the settlement benefit is variable by customer. The claims administrator then sets up a settlement website, prepares benefit and claims forms with the help of the defense lawyers, sends out notice of the settlement, receives and processes claims forms, and then pays out the claims. By that time, the defendant itself is largely uninvolved in the process.
Understand that as a class member you are like hundreds (probably thousands or tens of thousands) of other bank customers. Your $80 claim will mean nothing to them. In fact, it may be a good thing for them. To receive a release from all of the members of a class, the parties to a class action have to receive court approval of the settlement terms. That is, the parties have to prove to the judge that their settlement is fair. The response of customers (the "redemption rate") is often considered in making that determination. So, if only 15 out of 15000 submitted claims, a judge might determine that the redemption rate is too low or that the settlement does not adequately compensate the class. She could then refuse to approve the settlement, and the defendant would be back to square one and would likely face paying a higher ransom to settle the claims.
You are a class member, and that is all. You did not sue the bank. I could theoretically see a business getting upset with named class members (or "class representatives"), who actually bring the suit on behalf of all other similarly situated customers. Those guys are the ones that actually start the trouble.
So I would say take the money and think nothing of it. Have a nice meal and toast the bank. In the alternative, if you decide you don't want/need the $80, do NOT formally opt out of the class. Opt outs are not included in the class and their claims are not released. That means if you opt out you can sue the bank separately for the wrong for which it was sued as a class action. Lots of people opt out thinking that they are doing the defendant a favor, but it hurts the defendant in that (a) the number of opt outs is a factor that courts look at when deciding fairness of a settlement; and (b) the higher the opt outs, the more anxious the defendant will be that individual suits will be filed. [note: sometimes the terms of a settlement require you to opt out if you do not want to participate and receive compensation. In that case, an opt out becomes a more neutral action.]
I realize this is a long answer, but there are enough answers above that suggest that you could be blacklisted for simply participating in a class settlement, and I really do not believe that is true.
Standard disclaimers: this is not a legal opinion and I am not your lawyer.
posted by AgentRocket at 6:37 PM on December 29, 2005
Understand that as a class member you are like hundreds (probably thousands or tens of thousands) of other bank customers. Your $80 claim will mean nothing to them. In fact, it may be a good thing for them. To receive a release from all of the members of a class, the parties to a class action have to receive court approval of the settlement terms. That is, the parties have to prove to the judge that their settlement is fair. The response of customers (the "redemption rate") is often considered in making that determination. So, if only 15 out of 15000 submitted claims, a judge might determine that the redemption rate is too low or that the settlement does not adequately compensate the class. She could then refuse to approve the settlement, and the defendant would be back to square one and would likely face paying a higher ransom to settle the claims.
You are a class member, and that is all. You did not sue the bank. I could theoretically see a business getting upset with named class members (or "class representatives"), who actually bring the suit on behalf of all other similarly situated customers. Those guys are the ones that actually start the trouble.
So I would say take the money and think nothing of it. Have a nice meal and toast the bank. In the alternative, if you decide you don't want/need the $80, do NOT formally opt out of the class. Opt outs are not included in the class and their claims are not released. That means if you opt out you can sue the bank separately for the wrong for which it was sued as a class action. Lots of people opt out thinking that they are doing the defendant a favor, but it hurts the defendant in that (a) the number of opt outs is a factor that courts look at when deciding fairness of a settlement; and (b) the higher the opt outs, the more anxious the defendant will be that individual suits will be filed. [note: sometimes the terms of a settlement require you to opt out if you do not want to participate and receive compensation. In that case, an opt out becomes a more neutral action.]
I realize this is a long answer, but there are enough answers above that suggest that you could be blacklisted for simply participating in a class settlement, and I really do not believe that is true.
Standard disclaimers: this is not a legal opinion and I am not your lawyer.
posted by AgentRocket at 6:37 PM on December 29, 2005
There is an association of medical doctors in Texas that refuses to treat anyone involved in malpractice (individual or class action) suits.
posted by curtm at 6:43 PM on December 29, 2005
posted by curtm at 6:43 PM on December 29, 2005
There is an association of medical doctors in Texas that refuses to treat anyone involved in malpractice (individual or class action) suits.
There is at least one company that compiles lawsuits, and sells that information to landlords and management companies - so filing a lawsuit can even make it more difficult to find a rental apartment. But as AgentRocket pointet out:
You are a class member, and that is all. You did not sue the bank.
In other words, the points made by shepd and curtm are NOT relevant to the issue raised by rolypolyman. In fact, a claims administrator almost certainly does NOT make public the names of those who elected to participate in high-volume class action (because of privacy, junk mail, etc.), so it simply wouldn't be possible to put such names into a database.
(Yes, curtm mentioned class action cases, but in MEDICAL class action cases, individuals are still evaluated separately, by the defendants, so the defendants know the individual names of those who are suing. And there are far fewer of them, typically, and the average settlement is far more expensive.)
posted by WestCoaster at 8:04 PM on December 29, 2005
There is at least one company that compiles lawsuits, and sells that information to landlords and management companies - so filing a lawsuit can even make it more difficult to find a rental apartment. But as AgentRocket pointet out:
You are a class member, and that is all. You did not sue the bank.
In other words, the points made by shepd and curtm are NOT relevant to the issue raised by rolypolyman. In fact, a claims administrator almost certainly does NOT make public the names of those who elected to participate in high-volume class action (because of privacy, junk mail, etc.), so it simply wouldn't be possible to put such names into a database.
(Yes, curtm mentioned class action cases, but in MEDICAL class action cases, individuals are still evaluated separately, by the defendants, so the defendants know the individual names of those who are suing. And there are far fewer of them, typically, and the average settlement is far more expensive.)
posted by WestCoaster at 8:04 PM on December 29, 2005
AgentRocket had a great answer based on actual law and experience. Probably deserves a best mark.
Before I read that, though, here's my logical reason why the bank wouldn't punish you: Chances are, since lawsuits take time to prepare, the event you're being paid for happened awhile ago. So you've been a (presumably good) customer now for several years -- as has the rest of your class. So would your bank be willing to throw away thousands (?) of mostly good, long-term customers just to make a petty point? If so, they're not very good at business, IMHO.
posted by SuperNova at 9:01 PM on December 29, 2005
Before I read that, though, here's my logical reason why the bank wouldn't punish you: Chances are, since lawsuits take time to prepare, the event you're being paid for happened awhile ago. So you've been a (presumably good) customer now for several years -- as has the rest of your class. So would your bank be willing to throw away thousands (?) of mostly good, long-term customers just to make a petty point? If so, they're not very good at business, IMHO.
posted by SuperNova at 9:01 PM on December 29, 2005
This thread is closed to new comments.
posted by wackybrit at 10:09 AM on December 29, 2005