Related topics: Liz Weston, accident, road safety, home safety, Ford
We owned one of those Ford Explorers with the Firestone tires that had a bad habit of blowing out.
It happened to my husband on a crowded Los Angeles freeway, but, fortunately, he was able to maneuver the vehicle to safety.
Others weren't so lucky.
The dozens of deaths and hundreds of injuries that resulted from tread separations, combined with the Explorer's tendency to roll over, led to a federal investigation, a huge recall, numerous lawsuits and a class action settlement that would have given us a $500 coupon to buy another Explorer.
Yeah, right. Fool me once . . .
In the ensuing years, we've been offered:
- Free credit monitoring from TransUnion to atone for its information-selling sins (we signed up for that but never got it).
- Free software from Hewlett-Packard, as compensation for HP's failure to include it with the computer that we no longer owned.
- Nothing -- zero, nada -- from Costco as part of a settlement over how it measures gas at its pumps. The attorneys in that case got $10 million.
You've probably gotten these "offers" as well, maybe in the form of a $2 coupon or some other token that required you to buy more of the offending company's product -- or that would have taken you more effort to claim than it was worth.
Rarely has a system offered so little benefit to so many (the customers) while so enriching so few (the attorneys). But if you're expecting a tirade about the need for tort reform, I'm about to disappoint you.
Because as wasteful as the class action system is, it's still one of the few ways companies can be brought to heel when they harm their customers.
And it's a big stick we may be about to lose (more on that in a minute).
It's not as if we can count on regulators to step up. Regulatory staffs at most government agencies have been gutted over the years.
The Federal Trade Commission, for instance, has half the staff it did 20 years ago, while its duties have expanded to include fighting identity theft and patrolling the Internet, notes MSNBC Red Tape columnist Bob Sullivan, the author of "Stop Getting Ripped Off."
Liz Weston
If we had a decent regulatory force, you'd have to believe that fewer babies would be killed by their cribs and fewer children would be strangled or have their fingers amputated by their strollers. If we can't protect babies' digits and lives, the chances of regulators preventing less egregious ills are practically nil.
So while businesses may grouse about the cost, the fact is that fear of class action lawsuits may induce corporations to do the right thing when it otherwise would be more profitable to be unfair or deceptive.
As for the payouts being puny for customers, understand that most class action lawsuits are all about the puny. They're meant to provide redress for harms that, on an individual basis, aren't worth enough to bother pursuing in court. Only by banding together in class action lawsuits can those affected make it economically feasible to pursue the claims.
The heirs of the folks who died in Explorer rollovers, for example, had enough at stake to file individual wrongful-death lawsuits. The rest of us merely suffered a drop in the worth of our vehicles because of all the controversy. So the coupons were meant to compensate us for that loss in resale value.
But whether class action lawsuits will continue to be a legal weapon for the little guy is uncertain. The U.S. Supreme Court last week heard a case involving AT & T in which the telecom giant argued that its agreement with customers prohibits them from joining class action lawsuits. If AT & T's side is upheld, as many experts expect, any business could forestall class action suits by slipping wording in its contracts that prohibit customer participation.
Yes, class action settlements can be lousy and annoying. They should be made with actual money, not coupons; give us checks, not discounts. But eliminating our ability to file class action lawsuits altogether isn't the answer.
That would just give companies the green light to keep cheating us out of small amounts, knowing that no one will hold them to account.
Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy." Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Click here to find Weston's most recent articles.
