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  • 4 weeks later...

As those of you who have read my posts know, I am a big advocate of "doing it yourself". However, a bit of perspective is necessary before we trivialize class actions.

Class actions are designed to help consumers where a big defendant cheats lots of people out of small amounts of money. Usually, the amounts are so small that it doesn't make sense for the consumer to sue individually. For the defendant, however, the scheme often results in "big bank". In the Providian case, for example, the entire settlement amounts to $300 million. That's a lot of $13 checks! The settlement also requires Providian to change its sales tactics and lending practices.

Without class actions, there would be very little incentive for some companies to change their deceptive practices.

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Absolutely. Everyone should look out for number one. But the class action remedy is a major tool to vindicate consumer rights. Newspaper headlines about $10 payments to classmembers and millions in fees for the lawyers are very very misleading. Those lawyers usually plunk down several million dollars to prosecute the case and don't get any of it back unless they win. Classmember recoveries look small on an individual basis but, when viewed as a whole, they are often quite impressive.

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