Have you ever gotten an email or a card in the email telling you that you might be entitled to compensation from a particular company as part of a class action settlement? It could be an electronics manufacturer, an internet service provider, a car company, or basically any other business that you may have interacted with. It might look like a scam at first (and sometimes they are, so definitely check it out carefully before you act on it), but this type of outreach is actually pretty common, and usually legitimate.
Class action lawsuits typically start with one complaint—usually around something like misleading business practices or advertising, or data mismanagement—and a law firm gets involved and suspects this affects a lot more than just one person. So they investigate. If they find that it does, in fact, affect thousands of consumers, they might put together what’s called a class action lawsuit.
What is a class action lawsuit?
A class action settlement basically means that a number of people suffered some sort of injury (often financial) from the same organization. Instead of the individual parties having to each hire their own lawyers (which is often more expensive than most people can afford), one law firm—seeing a big payout for themselves—will act as the lawyer for all of these parties, combining all of their claims into one case. The company being sued will usually agree to a settlement, which can be tens or hundreds of thousands of dollars.
Once a settlement is reached, the law firm will attempt to contact everyone who might be affected by the wrongdoing—basically anyone who might have been a customer of the company named in the settlement—during a particular timeframe. That’s why you might get an email or a card in the mail.
What should I do if I’m contacted about a settlement?
When a law firm contacts you to let you know about the settlement, they’ll often ask you to go to a website and fill out a form. It will ask for your basic contact info, and sometimes for a Paypal or Venmo email address for payment, or for confirmation of your mailing address if you prefer a check for your share of the settlement. Do not, under any circumstances, enter any login information or passwords for any of your payment apps or bank accounts. A legitimate class action administrator won’t ask you for that.
Is it worth my time to fill out the settlement form?
The answer to this is: it depends. Every settlement case is different, but in the vast majority of them there are so many participants making claims to the settlement that no one is going to get very much money. In some cases, maybe you’ll get $20-$30. Often, more like $1-2. But it’s not unheard of for claimants to get a few hundred dollars, and in some rare cases maybe thousands. So you have to decide whether it’s worth a few minutes of your time to roll the dice and possibly only get a check that won’t even cover your next Starbucks drink.
How long will it take to get my share of the settlement?
Unfortunately, we don’t have particularly encouraging news here either. The reality is that these types of settlements move slowly. There’s usually a long period of time where the law firm locates and contacts participants, and then a lot of time allowed for them to respond. And then it takes a while for the payouts to be calculated and processed. Ultimately, it can take months or even up to a year for you to get your payout.
Should I participate in a class action settlement?
Overall, there’s no risk in claiming a payout you’re entitled to as part of a class action settlement. The only thing to consider is whether it’s worthwhile for you to fill out the claim information for a likely very small amount of money.
Usually, the only one who makes a lot of money in these types of cases is the law firm who brought the class action. But if you can get a little extra cash, maybe it’s worth a few minutes of your time.
