This $0.54 check from AT&T shows class action settlements are absurd
When Beau Phillips of Virginia received a settlement check from AT&T in the mail this week, he didn’t rush to the bank. Instead Phillips, who runs a small public relations firm, decided to share news of his windfall by posting it on Facebook:
“My share of the settlement against AT&T (T) for fleecing iPhone users out of fees, taxes and services for 5 years. Fifty four whole cents,” wrote Phillips. “Chalk one up for the little guy! 54 cents of pure justice right here!”
Others chimed in on Facebook with news of their own pay-outs, saying they received checks for 23 cents and $3.54 (though a few said they got amounts as high as $60 and $114).
The payouts are meant to compensate AT&T customers over allegations that the phone giant bilked them for bogus taxes and surcharges related to smartphone data. But it’s hard to imagine a less efficient way to go about this or to deter phone carriers from pulling such stunts in the future.
While the settlement, which is being paid out on a state-by-state basis, could reportedly cost AT&T nearly $1 billion, documents show the 92 lawyers tied to the case are due to collect a good part of it (from 10 to 25 percent), and that more of it will go to administrative fees. No doubt these fees will include the cost of sending out paper checks, which can reportedly cost up to $7.19 each to process.
Meanwhile, one of the settlement terms allows AT&T to claim it did nothing wrong. Perhaps that’s why the phone giant keeps getting ensnared in other legal snafus, like that $105 million suit over “cramming” and the $100 million one for “throttling.”
There’s got to be a better way. While these payouts can help compensate consumers and deter phone companies from even worse behavior, it would be nice if the legal process also engaged consumers and forced phone companies to produce clearer bills and better service.
Otherwise, consumers will continue to be stuck with “54 cents of pure justice.”