BOSTON — Millions of Americans receive notices about class action settlements every year, but many people toss them in the trash, unsure whether they’re legitimate. According to the Federal Trade Commission, only a small percentage of eligible consumers ever file claims.
Part of the problem is that scammers have learned to mimic legitimate settlement notices, making it difficult for consumers to distinguish a real payout from costly fraud.
Consumer experts say one of the easiest ways to identify a scam is to ask yourself whether you’re being asked to pay money upfront.
“If at any time you’re asked to pay something in a class action, that’s a scam,” Edmund Normand of Normand PLCC warned.
Legitimate class action settlements do not require claimants to pay administrative fees, purchase gift cards, send cryptocurrency, or provide payment to receive compensation. Experts also caution consumers to be suspicious of messages that create a sense of urgency or claim they will lose everything if they don’t respond immediately.
In reality, consumers typically have plenty of time to file a claim.
“To file a claim, there’s usually 90 to 120 days,” Normand says.
Other red flags include poor grammar, suspicious email addresses, or links that do not match the company, law firm, or court involved in the case. Consumers should also be wary of requests for sensitive personal information.
“It’s also never gonna ask for your Social Security number,” experts note.
So what does a legitimate settlement notice look like?
Consumer advocates say real notices typically include the name of the court handling the case, the judge overseeing it, information about the claim administrator, and an official settlement website where consumers can verify details and submit claims.
Experts say it’s also important to carefully read settlement notices because doing nothing can have consequences.
“If you don’t make a claim and you don’t opt out of the class, you’re in it, and you just lose your claim,” Normand explained.
In some cases, consumers who do not opt out may give up their right to file a separate lawsuit later. People sometimes choose to opt out if they believe they could recover more money by pursuing an individual legal claim.
Consumers looking to verify a settlement can also check reputable class-action tracking websites and official court records before submitting any information.
As settlement notices continue to arrive in mailboxes and inboxes across the country, experts say a little research can help ensure consumers receive the money they’re entitled to — and avoid becoming victims of a scam.
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