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The basics of a class action lawsuit

Typically, settlements for class action lawsuits do not dominate headlines, but when they do, the numbers can be staggering. Take the class action settlement reached between Toyota Motor Credit Corporation and the U.S. Department Justice regarding discriminatory markups Toyota levied against minority buyers. The $21.9 million settlement was reached to remedy the wrongs stemming from dealer incentives that led to African-American, Asian and other Pacific Islanders paying more to finance vehicles compared to white buyers regardless of their creditworthiness.

Settlements to class action lawsuits may involve millions of dollars, but many consumers may not understand how (or why) class actions exist in the first place. This post, we will explain why class action lawsuits are important for consumers in Missouri and across the United States.

Strength in numbers

There’s something to the old adage “strength in numbers.” Not only is a hallmark of our democracy, large corporations are less likely to notice and take action when a defective product or service adversely affects one customer. This is largely because it may be insignificant compared to the profits it will make from other consumers who enjoy the corporation’s offerings. The same may apply if a defective product affects a small group of similarly situated consumers is harmed. But when a large contingent of customers are cheated, a corporation is more likely to take notice, and swift action, because of the greater financial implications.

To put this into context, think about how many customers bank with Wells Fargo (for example). If the bank allowed customers’ personal information to be stolen because of substandard security and less than one percent were adversely affected, this probably would go uncorrected. But if 15 percent of customers were affected, Wells Fargo would have a huge public relations problem and would take quick action to remedy it.  However, this is not always the case.

This is where class action lawyers can protect consumers’ interests. A team of experienced attorneys can review the legal issues involved and discover whether different groups of similarly situated consumers were affected and whether a class action would be appropriate to obtain a broader legal remedy.

Indeed, the process of certifying an appropriate class action is not easy and depends on a number of factors. If you have further questions about class actions, an experienced attorney can advise you.

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