FTC Study Finds Settlement Claims Rate is 9%

The Federal Trade Commission has just released a new staff report which summarizes two studies that the commission recently completed on claim rates of class action settlements.   

The first study analyzes a sample of close to 150 consumer class action cases from settlement administrators. The second one contains an internet-based consumer research study that discusses consumer knowledge of class action notices.

According to the FTC study, the median claims rate was nine percent in the 149 consumer class actions studied by the commission. The weighted claims rate (meaning cases weighted by the number of notice recipients) was an even lower number, at four percent.

“Whether you regard those numbers as a sign that consumer class actions are delivering meaningful relief to class members or as proof that consumers don’t really care about cases purportedly litigated on their behalf probably depends on your role in the class action ecosystem,” a Reuters article states.

The FTC notes that they were only able to locate three previous studies of claims rates: The first was performed in 2013 by the law firm Mayer Brown for the U.S. Chamber of Commerce. In that study, 40 consumer class action cases were analyzed.

In addition, there was a study done by the Consumer Financial Protection Bureau in 2015 which analyzed 105 financial products class actions. Third, again in 2015, a law professor and a plaintiffs’ attorney took a look at 15 class actions against banks.

A blog post issued by the FTC states that the commission “has coordinated with state, federal, and private groups to gather information; looked at the impact of legislative and class action rule changes; and – where appropriate – filed amicus briefs.”

Interestingly, the FTC found that claims rates changed based on how the Class Members are notified and whether or not they receive followup notifications.

The FTC also found that the claims rates were the highest when Class Members received packets in the mail that explained how the Class Member could benefit from the settlement and provided a Claim Form for the consumer to fill out and submit.

In connection with their findings, the FTC has announced that they will be holding a public workshop on Oct. 29, 2019 in Washington, D.C. to talk about improving class action settlement notices for consumers.

The FTC says in a press release that the workshop will talk about current applications that deal with class action notices, claims rates, and other similar issues. In addition, the workshop will include numerous panels of experts from a wide range of disciplines, including consumer groups and class action administrators.

“For more than a decade, the Commission’s Class Action Fairness Project has followed developments in class action cases to ensure that class action settlements in consumer protection and competition matters provide appropriate benefits to consumers,” the FTC states.

What was the last class action settlement you submitted a claim for? Let us know in the comment section below.

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