Indiana Consumer Lawyer Rant On Class-Action Lawsuits

I recently received an e-mail notice of the pending resolution of a class-action lawsuit against Experian, one of the big three credit reporting agencies. Experian had been sued “because of the way [they] advertised their credit scores and credit-monitoring products and because of certain information about credit that was contained on [their] websites.” Experian was accused of violating the Credit Repair Organizations Act.

Credit repair organizations sprang up in droves in the ’90’s, particularly with the proliferation of the Internet. They often advertised almost miracle credit cures, and charged the most vulnerable of consumers hefty fees. These companies were almost always a big rip off. The bottom line: anything that a credit repair organization can legally do for you, you can do for yourself for free! Anyway, the Credit Repair Organizations Act was designed to curb some of the most flagrant abuses of the credit repair industry.

I apparently received the Notice of Proposed Class-Action Settlement because I had purchased a credit score from the Experian website during the relevant time period. The notice gave me a website to visit to learn more. I took the time to do that, and frankly, was horrified at what I found. What I found was a gigantic waste of time and money that only accomplished one thing: making lawyers money.

It appears that the Plaintiffs’ lawyers had contended that American consumers were being misled into believing that Experian was acting as a credit repair organization. Having reviewed the supposed offending language, I find this very hard to believe. I don’t even believe the simplest of consumers would be confused. Here are a couple examples of the (agreed upon) changes accomplished by the lawsuit to language on the offending websites:

“First, get on the road to good credit”

changed to:

“First, get on the road to credit knowledge”

“Let Experian Credit Manager help you manage your credit”

changed to:

“Let Experian Credit Manager help you monitor your credit”

Some supposedly offending language was outright deleted. Further, Experian agreed to never “state that the purchase of credit scores and/or credit-monitoring products will improve a consumer’s ‘credit rating,’ ‘credit history,’ or ‘credit record.'”

Are you kidding me? Now don’t get me wrong, not all class-action lawsuits are a waste of resources. Class-actions are designed to allow plaintiff’s attorneys to cure real wrongs that are too small for any one person to bring a lawsuit over. They can be a true force for good, having a real impact on corporate conduct in the United States. But all too often, they don’t seem to accomplish much.

In addition to these prospective website changes, each member of the class, if the settlement is approved, will be able to obtain one Experian credit score or 60 days of Experian CreditCheck Monitoring. Wow. The catch? If you choose the credit monitoring, you will have to provide a valid credit card number at enrollment. Then, if you don’t cancel the service within 60 days, you will begin to be charged $9.95 a month thereafter!

I can’t begin to guess how much this case (and a companion case also resolved in the settlement) cost. I know it was millions of dollars in discovery, millions of dollars in attorney fees for the defendants, and probably hundreds of thousands of dollars in the cost of identifying and notifying all class members of their rights. Thankfully, however, the parties have agreed that Plaintiffs’ attorneys will be paid “no more than (read ‘will be paid exactly’) $2,550,000 in attorneys’ fees and costs for this Litigation.”

In my humble opinion, that’s an awful lot of money spent for what was accomplished. This is the kind of thing that gives lawyers a bad name.

By the way, if you’re interested, the lawsuit is:

Browning v. Yahoo! Inc.;, Inc.;and Experian North America, Inc.;
No. C04-01463 HRL (N.D. Cal.)