My wife and I received a mailing recently informing us that we are eligible to receive a portion of a settlement with Bank of America. How much do we stand to receive? Well…
There is a common fund of $9,950,000 to pay all Class Member claims and the costs and fees of the case. If the settlement is approved, and you submit a complete and timely Claim Form in the manner described below, you will be able to receive money from the common fund. The amount you will receive will depend on how many other Class Members submit claims. For example, if 15% of Class Members submit claims, you will get approximately $14. If 10% submit claims, you will get approximately $21. If 2% submit claims, you will get $100. If all Class Members submit claims, you will get at least $2. Eligible Class Members are entitled to one payment per loan transaction during the class period. Eligible Class Members may not receive payment of more than $100 per loan transaction during the class period.
The mailing conveniently left out HOW many class members there are in the suit. After doing some digging (you can too, just visit www.creditscoresettlement.com), I found that the law firm’s take is roughly 24% or $2.38 million of the common fund. So, of the $9.95 million pot, $7.562 million is left over for the “victims” in the case. If 15% of the claimants participate in the suit, each claimant gets $14. Dividing $7.562 million by $14, gives us 540,143 participants, which represents 3.6 million total claimants (divide 540,143 by .15).
If ALL claimants participate in the suit, each claimant gets a whopping $2!
All this leads to me wonder: what’s the point of the class action lawsuit? Here is what the website provides as the reason for this class action lawsuit:
During the class period, when Bank of America received an application for a mortgage loan or home equity transaction, its practice was to obtain the consumer’s credit score from a credit reporting agency. For home equity transactions, Bank of America prepared and then mailed the required credit score disclosures when its computer system indicated that a decision was made on the loan. The average time between application and those decisions during the class period was approximately five days. For home equity transactions that closed, the disclosure was not sent before the closing. For other mortgage loans, Bank of America automatically prepared the credit score disclosure when the score was received, and sent the notices at least four days later.
What the Plaintiffs Alleged:
Plaintiffs claimed that the delays in sending the required credit score disclosures to applicants violated the Fair Credit Reporting Act because they were not sent as soon as reasonably practicable, as required by 15 U.S.C. § 1681g(g). Plaintiffs sought both statutory and punitive damages, in addition to injunctive and declaratory relief.
I think the purpose is to enrich the lawyers. This particular case is small as $2.38 million is mere change to a big law firm. However, the real victims in this case are the bank’s customers who will have to pay more in fees and charges to cover the costs of the lawsuit (afterall, the money has to come from somewhere).
Class action lawsuits are nothing but a wealth transfer mechanism from companies to lawyers and the customers end up footing the bill.