Friday, December 05, 2003

Class Action

Several months ago, I passed along information on how you could get essentially free money from a class action lawsuit against the music industry, if you had bought at least one CD between 1995 and 2000. No one was sure how much we'd get, but it was going be somewhere between $5 and $20.

Well, the settlement has finally been approved, and it's going to work out to $12.60 apiece, and the checks should be in the mail within a couple of weeks. It's not exactly hitting the lottery, but free money is free money.

What held up the settlement was part of the suit involving members of music clubs (BMG, Columbia House, etc.). I'm glad I'm not part of their deal. Instead of a check, they'll get a voucher good for 75% off on the next CD they buy from the club. So, while we're getting something for nothing, they have to lay out more money and be happy with the discount. Chalk it up as one of the pitfalls of believing you'll come out ahead with that 12-albums-for-a-penny teaser.

That's the kind of class action settlement I hate, because the lawyers get huge lump sum payments -- believe me, they're not being paid in discount vouchers -- but the consumers get screwed. I was involved in one of these about fifteen years ago when someone put together a class action suit against a major airline on behalf of everyone who had flown that airline in the previous decade. My wife and I had, so I filled out a couple of forms (on paper in those days, as opposed to the ease of online filing in the CD suit) and mailed them off.

Two years later -- I had completely forgotten about it -- we received an envelope containing discount vouchers for the airline. For every ticket we bought in the succeeding year for $500 or more, we could take $25 off. Whoopee! A 5% discount!

Problem was, this was long enough ago that airplane tickets were a lot cheaper. The fare for a coast-to-coast flight was only about $250. In order to get an airline ticket that cost over $500, we would have had to fly to Europe or Asia, which we had neither the inclination nor credit limit to do.

The airline was counting on this in their settlement. You see, it's hard to get cash back from a consumer once you send them a check. But send'em a voucher that they might not use, and the company saves money -- not to mention that their expense only comes if and when you do use that voucher. Until then, the millions stay in the bank, earning interest.

That's why I'll be more than happy to take my $12.60 check and immediately use it to not buy a CD.