WASHINGTON, D.C. -- August 29, 2003 -- "Businesses keep dreaming up new ways to overcharge, and it usually takes a class action lawsuit, or the threat of one, to stop them," said Jackson Williams, legislative counsel of Public Citizen and author of a new report on the cost of common transactions (Press Release, August 20, 2003). According to the study, home and auto purchases, long distance calls and wire transfers now cost consumers less because of class action lawsuits.
Class actions reduce prices by combating the use of undisclosed fees and markups that add to the advertised cost of a good, the study explains. These hidden costs prevent consumers from effectively comparing prices and may violate unfair competition laws.
The report cited these costs before and after class action lawsuits:
- Credit Cards. Cost of "no annual fee" credit card before class action: $35. After: $0.
- Telephone Service. Cost of one-minute long distance call before class action: $2.87. After: $0.05.
- Car Purchase. Cost of auto title and registration before class action: $154. After: $104.
- Wire Transfers. Cost of wiring $300 to Mexico before class action lawsuit: $55. After: $20.80.
- Health Insurance. Patient's 20 percent co-payment for surgery before class action: $496.26. After: $222.
- Home Purchase. Fee for preparing closing documents before class action: $750. After: $250.
Bill Restricting Class Actions Would Mean More Overcharges, Group Says
Public Citizen believes that the problems of overcharging consumers would be aggravated by the passage of S.B. 274, which is pending in the Senate. This bill limits class actions by moving many of these lawsuits from state court to federal court, which has more restrictive class certification rules. To find the full text of S.B. 274, see the Thomas Legislative site. (Scroll to Bill Number, and search on S.B. 274).