Consumer class actions — cases where plaintiffs purchased a product or service from a defendant and allege some kind of fraud, product defect, or other information failure — have become ubiquitous. Actions are filed against defendants each week, with dozens of cases settling each year. Over the past few years, many large settlements have been reached across a wide variety of industries, with hundreds of millions of dollars earmarked for settlement funds each year.
Led by Vice President Dr. Stephanie Plancich, NERA has used publically available information to create a proprietary database tracking consumer class action settlements from 2010 to 2013. In this paper, the authors utilize this database to report on the characteristics of, and trends in, consumer class action settlements reached during this period. Based on the data they collected, the authors observe an increase in the number of settlement funds established each year. While some settlement funds consisted entirely of monetary payments to plaintiffs, others included non-monetary payments „in-kind,“ such as product replacements, vouchers, or coupons. Still others included contributions to charity. Consumer class action settlements were associated with a wide variety of allegations, including consumer fraud, antitrust-related claims such as price fixing, false advertising, or product liability claims.
The authors also observe that, in recent years, there has been an increasing number of settlements alleging violations of consumer privacy. These allegations were made across a number of defendant industries but these privacy cases typically fall into two categories: cases alleging unlawful collection of personal information, and those relating to unsolicited SPAM, where SPAM is defined as unwanted and unsolicited contact via telephone, text message, mail, or fax.
22 July 2014
By Dr. Stephanie Plancich, Adam Augustson, and Wendy Magoronga