[The legislation to permit consumer class actions] “is only nominally an act ‘to extend protection against fraudulent or deceptive practices.’ It is more accurately an act to line the pockets of ingenious attorneys. If this bill passes, the lawyers will be in high cotton; their client consumers will be still hoeing the short row.
The class-action bill would open a happy hunting preserve to ambitious lawyers with a quick eye for the plump bird. They are not likely to be much concerned with fraud in the ghetto: No money there. But has a major manufacturer gotten a little too exuberant in his advertising? Has he promised a ‘benefit’ that may not be fully deliverable? Well, then, let us find 10 customers ready to say they’ve been damaged, and let us sue in the name of 10,000 more.
Class actions constitute a grave economic hazard to business—and the magnitude of the threat is likely to be in inverse relationship to the size of the business. Indeed, the effects on small businesses would be particularly catastrophic if not fatal.
[L]egal costs alone of defending against class actions will impact disproportionately on small enterprises which rarely have the resources to employ the staff counsel uniformly found among larger companies.
The class action concept is misdirected and does not meet the overriding need of establishing a workable method to prevent frauds and deceptions. At best, class actions are only remedial to the consumer. At worst, they are a deceptive promise of prevention which the consumer is unlikely to see fulfilled. This is especially true of the low-income consumer who is the typical prey of unscrupulous operators, particularly in inner-city areas.
The truly attractive targets would be the overwhelming majority of businesses which are honest, ethical, and legitimate—large companies because of their assets and small merchants because of their vulnerabilities.
