We live in a world where scammers hunt us like prey. Relentless emails, text messages and phone calls seek to trick and deceive us. We are permanently under siege, one careless click away from disaster.
So how do we react when we are told that we qualify for free money? That a large legal claim, which we never signed up to, has been brought, fought and won on our behalf, and now we can collect our winnings? Do we rush forward, waving our bank details in the air enthusiastically? Funnily enough, no, we don’t.
So far, only one class action in the Competition Appeal Tribunal has reached the stage of distributing damages – Gutmann v South Western Trains – and take-up by class members was less than 1%. While damages of £25m were awarded, only £200,000 was distributed to class members, with £3.8m awarded to the Access to Justice Foundation. This low take-up is a very helpful stick for opponents to beat the opt-out CAT regime with. Recent noises from the CAT itself make clear that it has started to focus much more intently, at an earlier stage, on how any damages awarded will be paid out to class members, and at what level.
What lessons can we learn from this first distributed case? It was a ‘boundary fares’ case, in which some passengers had been charged twice for sections of their journey. Passengers who wanted to claim a share of the damages had to prove they held a certain type of ticket to qualify for the payout. That made it less straightforward than some of the CAT claims currently in the pipeline. But worryingly for other claims, even where passengers began the claims process and diligently submitted the evidence required for the Gutmann payout, large numbers stopped short – and abandoned the claim – the moment they were asked for bank details.
This lack of trust is understandable from a public constantly targeted by fraudsters. But if it cannot be overcome, the opt-out CAT regime is in a lot of trouble. Unless a decent proportion of the damages won in this hugely expensive litigation – which makes so much cash for lawyers and funders – is successfully passed to the folk in whose name these cases are brought, they will lose their legitimacy. Yes, a large sum might go to charity – but how much is reaching the people actually affected by the wrongdoing?
The conundrum of how to convince class members to actively engage and claim their damages has cropped up at several recent events, with some interesting solutions put forward. At a Collective Redress Lawyers Association event last week, for example, barrister Sarah Abram KC of Brick Court called for a central public register, endorsed by government or the courts, that identifies real claims and says what stage they are at – particularly where they are ready for distribution – with links to the official claims websites.
Meanwhile, at a Bar Council collective redress conference last month, Dr Liza Lovdahl Gormsen, a class representative in proceedings against Meta, called for defendants to be compelled to assist with distribution. This could work well, for example, in technology cases where the defendant has the details of class members, or claims against utility companies where a credit could be added to customer bills.
At the same event, Clare Ducksbury, senior vice president of Epiq Class Action Solutions Europe, explained that it all comes down to trust. Contacting people out of the blue will immediately raise their suspicions: it is better to use an avenue they already know, such as a charity, consumer organisations like Which?, or even a supermarket. And rather than asking for bank details, class members could receive a voucher.
The government will soon be setting up its redress scheme for motor finance, and the lessons from that should prove instructive. How many people will claim, and what will the government do to address the inevitable surge in scams and fraud that will accompany the launch of the scheme?
In the CAT itself, all eyes will be on the forthcoming payout in Merricks v Mastercard; with distribution having been put on hold awaiting the outcome of a judicial review by the litigation funder, which was dismissed earlier this week. A settlement of £200m was approved by the CAT in May last year, with £100m ringfenced for class members – comprising a potential 44 million people, with those who claim likely to receive around £45-£70 each. The question is, how many of these consumers will be persuaded to come forward and claim – or will the free money on offer simply seem too good to be true? The regime’s critics will be watching closely.
Rachel Rothwell is editor of Gazette sister magazine Litigation Funding
No comments yet