What to do when you're in a class action
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The other day, I get this email sent from, quote, noreplyatsfdiscountsettlement.com. The opening line is, your unique voucher code may be applied for up to $5 at shutterfly.com, one of those sites that lets you put photos on mugs and lots of other things. And if I want more information, well, there is a link I can click on. Now, look, at this point in my life, and

NPR has made me take like a dozen cybersecurity trainings that have taught me to A, never connect to public Wi-Fi networks. B, not plug an unknown USB drive into my computer. And C, never, never click on links from emails that promise me money.

So I do not click the link for more information. And instead... Yes, hello. Can you hear me? Yes, I can hear you. Okay. I call up Professor of Law at Georgetown, Maria Glover. It's probably overstating it to say you are a czar of class action knowledge, but... I don't know that I'll declare myself king just yet, but definitely know a lot.

Yes, Maria knows a lot about class action lawsuits because that sketchy email, it claimed to be money from a class action settlement called Rivoli v. Shutterfly. The email didn't say how I was involved or actually what Shutterfly had allegedly done. That's why I called Maria, though. And she tells me she's used to people being weirded out when they get something like this. In fact, she remembers one of her law students coming up to her after class.

Her concern when she got it was that she was actually being sued. And she brought the... Yeah, she asked if she could bring the class notification to me. I said, I'm happy to look at it. I'm almost 100% sure you're part of the class.

But it was so eye-opening for me, right? So I think there's a whole gap of information out there that would be great if not just lawyers and law students knew. Great to know because if you've done basically any commerce over the past 10 years, there's a very good chance you have received an email or a postcard saying that you too are part of a class action settlement.

Hello and welcome to Planet Money. I'm Kenny Malone. And I'm Nick Fountain. More and more class actions are being filed, which means more and more of us may be entitled to...

Yes, yes. And today on the show, what to do when you discover, surprise, you're in a class action. How do you make sure it's not a scam? Yeah, and what happens if you don't claim your money? And we pull back the curtain on the secret tricks of how these settlements get negotiated.

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When a whole bunch of people think they have been harmed by a company in a similar way, you got yourself a possible class action. Instead of each person paying for their own attorney, grinding through the wheels of justice one by one, U.S. courts let lawyers bundle people into one tidy class, which allows for one piece of litigation, the class action.

All right, I'm going to share my screen. Can you see this? Yes, I can. Again, law professor Maria Glover. And we figured the best way to show what to do if slash when you think you've landed in a class action is to just walk you through the one I wound up in. So, you know, I pull up the sketchy looking email for Maria. Yes. So the first thing at your disposal is the case name.

Rivoli against Shutterfly. Sure. Okay. Maria walked us through three things to do if you want to gut check whether your settlement notice is real. First thing to know is that this notice is not sent to me by Shutterfly. It was sent by a claims administrator. And sometimes you'll find a 1-800 number for that claims administrator. We could call that and see if it makes us feel any better about this being real.

Unfortunately, ours only has an email address for the administrator. So we get to step two. We poke around to see if there's any news coverage of this Shutterfly settlement. And there is. Do you see that it's been loaded to...

news sites. So KSBY News, I'm sure that's some local affiliate. Good sign. Good sign. OK, third step. Let's see if we can find the actual class action case listed on a more insidery law websites. And yeah, it was showing up on topclassactions.com and law.com. Law.com, that suggests to me it's legitimate.

So I'm seeing things that make me think it's a real case. All right, great. So then we move on. What am I getting? What is my big chunk of this big class action? You've received a voucher, which suggests to me that you've received some sort of ability to use Shutterfly again, which immediately jumps out to me as not my favorite kind of settlement, to be honest. Yeah, Kenny, so you got a voucher that can only be redeemed after...

Yeah. As opposed to some settlements where a company just gives you cash or a check. Yes, it's true. And by the way, we keep saying settlements here because class actions almost never end up going to trial. They almost always get settled. And that is what my email was saying. Shutterfly had allegedly harmed me and a bunch of other people in some way. Again, it doesn't say how. And a settlement had been reached.

Now I was receiving a voucher for a whopping $5. Maria, we've wasted so much of your actually like hundreds of dollars per hour billable time just to decide whether a $5 voucher is worth it. Yes. Yes. So like, what are we doing? Why would anyone ever claim any of these? Is there some moral obligation to do this? So the reality is for things like consumer protection and

Class action lawsuits, aggregate litigation, that is the regulation. If you think about it, there are these two extreme philosophies for how to protect consumers from the businesses they engage with. And it kind of comes down to who is your main enforcer?

Right. You know, on one end, you've got a top-down model where you've got the government as the watchdog, you know, big agencies constantly policing and bringing legal actions. On the completely opposite side, you've got a bottom-up philosophy. When a business does something wrong, let people hold those companies accountable with lawsuits.

And in the U.S., of course, we do have big agencies like, you know, the FTC, the FDA, the Consumer Financial Protection Bureau. But Maria says Congress and state legislatures and our country generally has decided that we are not a big top down, huge bureaucratic agency.

And so if you think of a class action that way, a class action settlement is part of a system holding companies accountable. And claiming that settlement money is part of the system.

Now, in my case, my notice doesn't actually say what Shutterfly allegedly did, but it is true that if I let their free $5 voucher go to waste, it's like I'm letting them off the hook. I mean, assuming I spend exactly $5 and not a penny more so that they are actually giving me something for free. I don't know what things cost on Shutterfly, but I'm not sure anything costs...

$5 or less. Sometimes you can get a magnet or something. I bet I could take a screen grab of yours, face, and mine on this Zoom call and make one magnet. It would be a memory of us talking about the $5 settlement. That's about what I could afford, I think. $7.99 shipping and handling. So to recap, if, when you get a claims notice, call that 1-800 number. See if there's news coverage of your settlement and look for records of the class action.

Oh, and maybe bonus step, ask your friends if they also got that class action notice. Wait, let me get my email. Here we go. Yeah, turns out at least two other members of the Planet Money team, Willow Rubin and Erica Barris, thought that they might have also gotten the Shutterfly settlement email. Opening up my email. This looks so spammy. Yeah, it looks so spammy I just deleted it. Yeah.

But yeah, not spam, actually. It's a real settlement that we contacted Shutterfly about, which told us, quote, we are pleased this matter was settled and is now closed so that we can focus on delivering exceptional value and service to our customers. So do you have any questions about this? I have been looking into this. I've read the court filings. I am curious. What would you like to know? I mean, it says it's a settlement voucher. I don't know what...

What did they do? What did they do with my photos? Well, allegedly. It's what did they allegedly do? Okay. Because first thing we need to know is that this settlement, it admits no liability on the part of Shutterfly. Now, it's important to know that companies basically never admit fault in a settlement. In this Shutterfly case, the settlement very explicitly says Shutterfly denies any wrongdoing, but everybody's agreeing to settle because litigation can be expensive and drawn out.

What did they allegedly do?

Well, according to the court filings, a Shutterfly customer named Rosemary Rivalli brought this class action on behalf of herself and other people who, quote, have purchased one or more products through Shutterfly.com that was deceptively represented as discounted from a false reference price. Or here's how I sort of understood that when talking to Willa and Erica. What Shutterfly allegedly did was harm us by marking up

of products just so that they can then mark them down so that we get, we get like, I guess, tricked into buying things that otherwise we wouldn't have bought. I can see them doing that. Yeah, yeah. Now,

Now, Shutterfly says they were essentially accused of offering discounts too often. And again, they deny all allegations. I've definitely added another thing to the cart, you know, all the cat mugs for my family members. We actually looked at Willa's order history, and it appears the purchase that likely pulled her into this class action was indeed a cat photo mug plus two heart-shaped cat photo paperweights. Yeah, this one was a discount of...

Forty three dollars, forty cents. Wow. OK, so that's how Willa qualified to be a member of the class. But the next question we had was how someone found her and Erica and me, for that matter, in the first place. And according to court documents online, what happened in this case is Shutterfly was ordered to hand over a list of email addresses for anyone who might qualify for this settlement.

And the way this often works is that information will be handed over to another company that is just a claims administrator. Like, that's what the company does. They set up websites for class actions, send out emails or postcards. And as we learned, apparently those claims administrator companies are quite often sending those things to our colleague Erica. Yes, I get so many of these, like, postcards and emails. I usually just delete them. I don't know. Oh, Erica.

I don't know what I'm doing. What other ones have you gotten, Erica? Well, I was part of the Naked Juice class action lawsuit, of course. Allegedly, their juice was not naked or allegedly at least not as healthy as customers thought. Foul! I've got Zappos. I was part of a Zappos settlement. Allegedly, they had a cybersecurity incident for which Erica would receive...

I was going to get a 10% discount on my next Zappos purchase. And then there was a company called Minted that sells stationery that allegedly had a data breach. So Minted offered me $22.02, and I don't think I claimed it. That is money. I mean, that's money. I just clicked on the link, and it wouldn't take me anywhere. So I think it's too late. The period has probably ended. Yeah. Yeah.

You going through your feelings there on missing out on 22 bucks? I kind of am. Also, I'm realizing there were a few others I could have also claimed some money for. After the break, how to make sure you don't end up sad like Erica. And an inside look at the secret techniques used to dissuade us from claiming our class action settlements.

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Every morning and every night of every single day, attorney Jerry Mattman gets an email alert. From every single court in the United States that will show if a class action is filed, what sort of case it is against what company it was filed. Jerry is a law professor at Northwestern, and he has been collecting and publishing this data for decades.

And he says he's seeing like twice as many class actions now as we were 10 years ago. Now, part of the reason Jerry tracks all this data is because it is useful for his other job. Jerry's a class action attorney at Duane Morris, where he does not

represent you and me, Nick, in these cases. No, he does not. He's defending the companies, the big companies often, which he's aware does not make him the populist figure in this system. I, a long time ago, stopped losing sleep over what I do. Basically, I'm there to make sure everybody gets their due in court.

And we wanted to talk to Jerry because he has an idea about why the rate of class actions is way up. And that idea, it starts with us, the people that make up juries. Kind of what I see and what I teach over at Northwestern in terms of when you pick a

a jury. Juries right now are a bit angry, distrustful of authority. Which Jerry started noticing a few years ago, that people seemed more mad. And Jerry says what this meant was that when lawsuits actually went to trial and went in front of a jury, juries were hammering the companies in their verdicts.

You're seeing verdicts that we call nuclear verdicts. They're a lot higher than before. Nuclear verdicts is the phrase? So you're seeing eight-figure and nine-figure verdicts in a single plaintiff case, like a medical malpractice, a wrongful death case. And those are just in single plaintiff cases, and it drives up the value of litigation, what a plaintiff's lawyer is willing to settle for.

So if those are the awards for one person suing, Jerry says, imagine the stakes of a whole class action going to trial. And he points to a couple of recent examples. Like how a railway company was initially ordered to pay $228 million when a jury found that the company was collecting worker fingerprints without their consent.

Or how a jury awarded $1.8 billion in a class action against the National Association of Realtors and real estate firms because, the jury found, they were conspiring to push buyers towards homes with higher commissions. The point is, Jerry says, if you are a lawyer negotiating on behalf of a class right now,

You have a lot of leverage against the company you're suing. And basically they're saying, okay, go ahead and try it. See what six members of the jury think that's worth. And so very few class actions get tried because of the danger of doing so could bankrupt a company, end a career of a CEO. So more often than not, those class actions are getting settled.

And as the data points show, they're settling at much higher numbers than before. And the end result of these higher and higher settlements, Jerry says, is this kind of gold rush. He's seeing more lawyers get into the class action game. Hence, Jerry's seeing double the number of class actions filed every day.

Now, because Jerry has been on the company side of these class actions, we figured he could let us in on how the sausage gets made a little bit. Maybe give us some juicy details about the tactics he uses when negotiating on behalf of a business that is being sued. And a huge thing that Jerry says he cares about is response rate. Yeah, every class action settlement is different, but in lots of settlements, it's

If we do not actively claim our money, it will go back to the company. So fewer claims means less damage to the company. And so Jerry has very carefully studied the factors that do and do not get people to claim their money, starting with the amount of money that they're being offered.

I have my own internal over the years kind of measure of that. I call it the tank of gas rule. The tank of gas rule? Right. If the amount of money would enable you to buy a tank of gas to fill up your car, it's probably worth your while and trouble to fill out the forms and send it in. Yeah. Yeah.

But anything less than that probably isn't going to change your life. And you've made an internal calculation of, I don't want to be bothered. I'll rather watch TV, read the newspaper, or go out for a walk.

Wait a second. Does that mean that in your position, you are actively thinking about trying to negotiate the settlement down to something below a tank of gas? Because you know I'm not going to. All the time. Really? All the time. Because in some cases, if Jerry can negotiate some of the payouts below a tank of gas, he can be pretty sure a huge chunk of that money is going back to his client. The tank of gas rule.

And another factor that might stop people from claiming their settlement is the way the claim notice is delivered in the first place. Which, you know, this makes sense because think about what started this whole thing for us. My Shutterfly email that was so sketchy I almost deleted it. Are you, as a representative of businesses in these, aware of the fact that if these things come by email, they might look like a scam and people will think that they're a scam?

Not only that, but they get caught in spam folders and never even get read. Do you prefer to have an email notice because you know it could get caught in spam or be viewed as something people shouldn't click on?

Not necessarily. It depends on who the membership of the class are, their age, their occupation, the area of the country. No two cases are alike, but it's a factor. And one of the factors I've been taking into consideration and balancing it against good old-fashioned U.S. mail. So these factors, the amount of money, the method of notification, also how long that notification letter or email should be and how quickly you need to respond –

All of that stuff gets hashed out during the settlement process. Jerry is there pushing for stuff that will be better for his company, his client. The other attorneys are there pushing back, trying to get stuff that's good for the class. But there's always that governor of the court looking at it and saying, is this fair and appropriate? And so they're generally trade-off.

Instead of a 15-page notice that somebody might be intimidated by and not want to read, I might agree to a shorter notice, but in return I'd want a very short response date. To be clear, it's not like Jerry can demand whatever he wants in this negotiation. There are guardrails around this stuff.

Yeah, there's a big old federal rule about class actions, and it says that these notices must, quote, clearly and concisely state in plain, easily understood language a whole bunch of stuff, like when you need to respond by, who counts as a member of the class, and what exactly you're agreeing to if you decide to join the class, and...

You must give people a reasonable amount of time to respond to a settlement notice. In the end, it's hard to know exactly what gets us to respond to these class action notifications or not. But what we do know is that we do not respond to them often. Jerry says the average is like 5 to 15 percent, depending on the type of case.

But he's seen cases where it was as low as 1%. Now, I asked Jerry to take his company defense hat off for a second and tell me what advice he would give someone when they get a claim notice in the mail. And he told me, do not put off the decision. At the very least, read the bold, scripted parts of the notice, make note of the return date, and do not miss the deadline. Yeah.

And so if you were my brother, sister, or son or daughter, and I say you get it in the mail, touch it once, deal with it once, fill it out the day you get it, turn it around, send it in if you're really interested in participating. Because you do not have to participate. Just because someone sued on your behalf does not mean you have to be part of the class. If you take a settlement, you are saying something.

I have no further grievances on this front. I will take my settlement and go away peacefully. Right, but you can also opt out of a settlement. Maybe you're not happy with the settlement. Maybe you want to pursue your own action. Maybe you simply don't agree that you were wrong to the first place. But what you need to know is that if you do not take the settlement and do not opt out, like if you don't do anything because maybe you've missed the deadline or didn't see the notice, right?

Well, the way most class actions work is that you are also waiving your rights and saying that you will go away peacefully. Very likely without any settlement at all in that case. Yet this is why there are those rules about settlement notices. That notice is everything. People need to see it and respond to it. Or else, surprise, your rights have been waived. Which, unfortunately, brings us back to my settlement rule.

With Shutterfly. I called the claims administrator. Wasn't allowed to record. But on that phone call, I learned that the scammy-looking email with the piddly $5 voucher

That was like a consolation settlement prize. Apparently, months earlier, there was another email, which was the original settlement notice, letting me know that the big thing I could have claimed was 25 real United States dollars, not a voucher, cash money. Kenny! I don't know. I must have deleted that email, and now the claim deadline was way gone. Wait, really? Yeah.

Same thing apparently happened to Willa and Erica. I could have gotten 25 bucks out of this. That could have been like a whole Shutterfly product. Now, on one hand, it is frustrating that we all deleted an email worth $25 apparently.

On the other hand, this system can be a little frustrating. Like, unbeknownst to us, there was a team of attorneys fighting for us. Did we agree with the fight? Did we disagree? Were we happy with the settlement, unhappy? You know, theoretically, we do get a chance to weigh in, but that chance came in the form of an email back on November 7th, I am told.

with the subject line legal notice of class action settlement. One email that all three of us apparently missed. And to some degree, that was basically our only chance to claim the money or opt out of the settlement. And honestly, we're lucky we get anything at all. That $5 voucher? I told Erica and Willow, we may as well use that.

So I've mocked up a design that I think we should use for the $5 vouchers. Excellent. Okay, so the text is, I was in a class action and all I got was this lousy mug.

I love it. I love it. And then, Willa, a little cat for you. A little cat. Oh, my gosh. I am honored. Of course, then we looked at how much a mug costs. So this is the thing. They start at $14.99. Oh, no. Oh, $14.99. Okay, okay. Maybe not mug. Oh, yeah. Photomagnets are $7.98. Okay.

I see Post-it notes for $6.98. Interesting. Post-it notes are good, though. We could get Post-it notes. We could do Post-it notes. Yeah. Those class action Post-its are scheduled to arrive in six to nine days. It was the cheapest shipping. And fun twist, in between looking at the Post-it notes and buying them, Shutterfly did offer a $1 off sale. ♪

This episode was produced by James Sneed with help from Sam Yellow Horse Kessler. It was edited by Jess Jang and fact-checked by Ciara Juarez. Engineering by Sina Lofredo. Alex Goldmark is Planet Money's executive producer. I'm Nick Fountain. And I'm Kenny Malone. This is NPR. Thanks for listening.

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