Class Action Lawsuits: The Rules and the Scams

What you need to know about class action lawsuits and related scams: Internet Scambusters #856

What do you do when you receive a notification that you’re involved in a class action lawsuit?

Is it genuine or a scam? And how do you respond if it’s the real deal?

We have the answers to these and other questions in this week’s issue.

Let’s get started…


Class Action Lawsuits: The Rules and the Scams


Sometimes, victims get even with the people and organizations that deceive them, thanks to a class action lawsuit.

At one time or another, you almost certainly will have received a notification of your entitlement to participate in one or more of these lawsuits. But then, you possibly didn’t know what to do next, or the whole business just seemed too complicated to get involved with.

So, now’s your chance to deepen your understanding — and maybe get some compensation for something that went wrong in the past.

However, before we start, it’s important to understand that Scambusters doesn’t provide legal advice and cannot be responsible for any action you take as a result of this report, which is provided for information only.

What Is a Class Action Lawsuit?

Internet legal specialists LawFreeAdvice.com defines a class action as “a civil lawsuit that is brought by one person or a few people on behalf of a larger group of people who have suffered similar harm or have a similar claim.”

They usually result from allegations of injuries, financial loss, frauds (i.e. scams) and other harms the targeted company or individual supposedly caused.

One person, known as the lead plaintiff, starts the action, and others who allegedly are affected are automatically included and notified by mail or in an advertisement.

How do the legal people get your name? Usually through a court order under which the defendant company or individual releases the names and contact details of affected customers.

Often, plaintiffs’ attorneys set up websites to provide information on the claim and how it is progressing. If you want to know whether there’s a class action that might involve something you bought or did, you can check out a useful database of actions.

What to Do if You’re Entitled to Claim

If you’re notified that your name has been included in a class action, or if you believe you’re entitled to participate even though you haven’t been notified, you generally will have to wait to get your money until the case is settled. So, it’s important to monitor progress.

After settlement, you should receive what’s called a class notice (or you’ll see it advertised) and then you have to submit a claim to the legal firm handling the lawsuit.

The class notice will tell you how to go about filing the claim, usually by completing a printed or online form. Sometimes, you may be required to provide a receipt or other proof of your entitlement, which underlines the importance of keeping records of major purchases.

Don’t expect a quick settlement and payout. Most class action lawsuits take years rather than months, with actual payment following several months later.

Nor should you expect a big windfall. By the time the proceeds of a settlement are divided up between all those affected, your share might be just a few dollars — or even less.

In one case, a Scambusters team member received a couple of hundred dollars for an air conditioning fault in his car, which had cost him $3,000 to rectify.

Class Action Lawsuit Scams

There have been several instances in recent years where people have been tricked into participating in a fake lawsuit.

According to Ron Burley, who writes about scams for the seniors’ organization AARP, some Californians who lost their homes to foreclosure handed over thousands of dollars to scammers who pretended they were launching a lawsuit.

Their names, of course, would easily have been available in public records of the foreclosure.

How to Avoid a Lawsuit Scam

You can avoid potential lawsuit scams by following these 5 tips:

  1. Be wary of email notifications. As explained earlier, most lawsuit notifications arrive in the mail. An email usually signals a scam.
  2. Never pay upfront to take part in a claim. Legitimate lawyers get their fees from the settlement, not from plaintiffs. Scammers often try to lure victims by promising thousands of dollars in settlements; that’s a red flag.
  3. Be extra cautious if you’re asked to provide confidential financial information, like bank account details or Social Security numbers. They’re not required for the lawsuit and settlements are usually paid by check.
  4. Check the Internet for information about the lawsuit. Review the case court’s records — the notification documents or advertisements should name the court and include a case number (known as a docket number).
  5. Watch out for fake settlement checks followed by a request for you to wire part of the payment to a scammer disguised as an attorney. It’s an advance fee scam.

You should also keep tabs on the case, as outlined earlier. Read notification documents, checking for mentions of dates. And don’t be afraid to call the law firm handling the case to check on progress.

To learn more about class action lawsuits, visit ClassAction.org.

Alert of the Week

Beware of scam online ads offering homeowners huge tax breaks for installing solar panels. Often, they use photos of your state governor or even of President Trump.

The aim of the ads may be to steal personal information, sell solar panels at inflated prices or even just to take your money.

To learn about genuine tax incentives for solar energy, start at Tax Credits, Rebates & Savings. Or check this list of state incentives at Database of State Incentives for Renewables and Efficiency.

Time to conclude for today — have a great week!