You open the mail, and there it is: a notice that you’re entitled to join a class action lawsuit. At that point, you might start dreaming about an unexpected windfall. But before you mentally (or worse, literally) spend that anticipated bonanza, take a breath and think about this: even though class action lawsuits can involve millions of dollars, don’t expect to end up with a big payout.
What is a class action?
A class action lawsuit occurs when a large group of people suffer an injury or financial loss due to the same company or product. The actual damage to each person is usually so small it wouldn’t be worth their time or money to sue individually. But when they form a class, the suit often is worth millions of dollars.
If you’re notified of a class action, you probably have no idea anything happened that affected you detrimentally, but you get the notice because you were a customer of the company or product in question. You need to opt into the suit by following the instructions in the paperwork you receive (usually this is as simple as logging onto a website and indicating you want to participate). By opting in, you waive your right to sue individually, but you aren’t required to do anything to help the case move forward.
Once the case works its way through the legal system, you’ll be sent your share of the settlement. Try to contain your excitement as you open the envelope. Most likely it won’t be more than $10, and some class action settlements have resulted only in vouchers for things like free phone minutes.
In one memorable instance, the settlement contained no tangible payout at all—just a policy change to ensure that the offending company would not short-change customers in the future.
It might seem ridiculous that a company did something wrong and only pays you a small amount. But with so many people in the class, even a total settlement worth millions comes out to peanuts when it’s divided up among the entire class. You’re just one person in a sea of many. Be reassured though that the payout may be painful for the company, even if you see only a small bit of it.