Should You Deposit the Check?

02242010_free-moneyI’m sure you’ve seen this: Every now and then, a big company gets sued, and as part of the class-action settlement, they send all of their customers a check for their portion of the settlement.

Last week I got two of these checks. The first was from Toyota (about $125) and the second was from Amazon (about $3). I deposited the Toyota check right away using my phone–free money! But then I got the $3 check and I started to think about what depositing these checks means.

My understanding is that these types of class-action settlements keep companies accountable for the choices they make that impact consumers. For Toyota and other car companies, peoples’ lives are at stake. This type of accountability is important. So if a million people got those $125 checks but didn’t cash them, we’re not holding Toyota accountable.

At the same time, though, my car wasn’t affected by the problem Toyota was making amends for. I don’t really know why I got the check. But I did, and I cashed it without thinking. Should I have?

The Amazon check is a little different. For starters, it’s much smaller. $3 isn’t much. Also, no one’s life is at stake because of an ebook settlement. It looks like an antitrust settlement between Amazon and a few big book companies. I don’t know much about the case at all, and if I dug deeper, I might find that I don’t even agree with the decision.

Regardless, is it my responsibility to deposit the check? It is my responsibility to dig deeper to find out if I agree with why I got the check in the first place? Should I figure out if I was even impacted by the case at all? Or are all of these questions irrelevant, and I should just deposit any “free money” that shows up in my mailbox? Let me know what you think.

5 thoughts on “Should You Deposit the Check?”

  1. With amazon, take whatever you can. especially you who was selling books at one time. amazon is terrible to book publishers. also this explains why Toyota sent me recall stuff recently.

  2. Maybe the question to ask is “What happens to the money if I don’t cash it?” I’m guessing that the money does not revert to Amazon or Toyota. I think it reverts to “Unclaimed Property” funds at the state or federal levels.

  3. Donate these to a charity. And next time, just opt out. Class action lawsuits exist to protect the defendant, not the plaintiff.

    I am not a fan of class action lawsuits for a number of reasons. The result, whether they are prosecuted or settled out of court, tends to be a token form of justice or a feint in the direction of consumer protection. Either way, when I receive a class action notice, I normally send a letter to the attorneys asking to be removed from the class, and a letter to the Court asking for the case to be dismissed. When a Class Action case is closed, no further suit can come from someone who is in the Settlement Class, whether they knew they were included or not, and whether they suffered more serious harm than the recompense offered.

    Here’s my reasoning against class actions suits. For a payment to be considered justice, it has to remedy a harm. So there have to be couple of things. A harm, a remedy, a retribution and a payment. These are rarely together, and the settlement often comes out to the company who did wrong paying a lot of money to a couple of lawyers, and a little bit of money to a lot of their consumers. To me, this looks less like justice and more like representative bribery – ie, “You overcharged 5 Million people but if you give me $20 million I’ll share it with them and we’ll all go away.”

    In your Toyota instance, this can easily make sense. The harm is an unsafe part, the remedy is replacing the part, the retribution is making Toyota pay to replace the part, the payment is the check. Although in your case I think the part was replaced at Toyota’s expense in a recall, and what you have is the “economic loss” or compensation for worry, going to the dealership, time lost and all that.

    But what if my harm is substantially larger than $125? What if I had to use alternate transportation for three weeks while waiting for an appointment at the only Toyota repair shop for 100 miles? Agreeing to be part of the Class Action means that I can’t pursue more than $125 in recompense – I have to opt out, hire my own attorney, file my own papers, and will probably be told to go include myself in the Settlement Class anyway. Justice denied, or at least watered down.

    But for the most part, this may work out mathematically – the attorney’s time is worth $100,000, the cost of administering and distributing the compensation is 60% of the compensation per person, and the distribution of small harms across thousands of people amounts to a handful of coins for each of us. But the economist in me would rather say “Look, the attorney’s time is just leakage of GDP; it’s taking away value from other cases in the Court docket – how about settling for paying down the national debt or better-subsidizing your employees’ health insurance premiums. Those are collective costs that we’re all ultimately going to bear”. The single greatest enemy to efficiency is transaction costs – if you reduce the number of transactions, a lot more gets done.

    It doesn’t help that, in the Toyota instance, the 85 attorneys received $200 million, or just over $2 million each. This for a year’s work, or two year’s work. What? For getting me a token compensation for an intangible harm, this attorney was given the equivalent of 40 years of my salary? Shut the front door…

    I was part of the settlement class for a price-fixing lawsuit over CDs in the 1990s. New Attorney General was trying to show off her consumer protection credibility and took the music publishers and retailers to court. The settlement alleged that big box stores overcharged consumers by $1.50 to $2.85 or something like that on CDs. In my mind, there’s no such thing as overcharging for a good that is not essential; if I don’t like Best Buy’s price, I go to Circuit City. But because I bought approximately 110 CDs in the years from 1994 to 1997, I was given recompense in the amount of $1.53, after attorney’s fees. The Attorney General is running for her fourth term.

    I was part of the settlement class for an auto I owned that had a car seat attachment system but didn’t include instructions in the manual. No one in the class claimed injury, it was merely a failure to comply with NTSB guidelines. The manufacturer paid something like $10 million to … somewhere. I received an envelope with two pages and a piece of tape to put them in my manual.

    I was part of a settlement class for a car rental agency that was accused of charging prices at the kiosk that deviated from the online price. I’ve only ever used the online price, but still I was included in the $something million settlement. I got two vouchers for 10% off a one-week’s rental that were good for about 6 months.

    Deposit the $3 from Amazon. Go to Left Bank Books.

    • Thanks so much for the thorough response. This is really insightful, and I like your method of opting out of these suits from now on.


Leave a Reply

Discover more from

Subscribe now to keep reading and get access to the full archive.

Continue reading