I received a very random piece of mail inviting me to join the "Settlement Class" for a class action suit again the now defunct (and part of BOA) MBNA bank due to bad practices involving raising periodic interest rates due to delinquency and default back in 2002 to 2008, without proper notification.

While this DID happen to me in that time frame due to some extremely dirty practices by MBNA (in my opinion of course), I have no desire to partake (and would of course investigate legitimacy before joining). However, it got me thinking, I know next to nothing about class action lawsuits other than they make lawyers lots of money (and I'm a Shakespeare fan, see if anyone gets that). I wouldn't know the first thing about how to protect oneself financially during the process.

So question is:

What are the personal financial implications of joining or not joining a class action lawsuit and how can someone best protect oneself financially during the process?


You should examine the letter more closely. Most letters in this area are ones which inform you of a proposed settlement of a class action (not the initiation of a class action), and that you may be a member of the class. A main point of such a letter is normally that if you take no action, you will be included in the settlement class.

Usually there are no major consequences to not opting out of the class other than you will lose the ability to get a lawyer and sue the defendants for the actions in question.

To obtain benefits from the settlement, you will typically be required to submit documentation of the nature of your membership in the class. This may be easy or hard. The benefits are described in the materials, and could be substantial but usually are close to trivial, such as a coupon for $10 off when purchasing another product from the defendant.

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    This has been my experience -- it benefits the defendant because you're just buying more of their stuff. And for the time it takes to submit documentation, it's not worth the effort. – bstpierre Mar 14 '11 at 1:33

If you participate, you will either get some money or some other renumeration. If you do not participate, you will not get anything. The only risk of participating is that if you have suffered actual damages, the settlement may under-compensate you. By significant, I mean thousands of dollars, since bringing suit yourself would be very expensive.

Unless you can demonstrate that you have suffered from significant damages as a result of MBNA's bad behavior, joining the class to get whatever you are going to get is almost certainly a no-brainer decision.

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