I understand the importance of class-action lawsuits.

Even if consumers don’t get large cash settlements, the greater good is supposed to make corporations behave and improve their behavior. That’s the theory.

But in practice, it sure feels like consumers never are made whole.

And let me say this upfront: Having good legal representation is key to a successful outcome in a lawsuit. I’ve worked with some dynamic and extremely capable attorneys who have seen me through some difficult civil matters. I won my cases because I had good lawyers. (One case was an estate battle and the other I was helping my brother fight for disability benefits.)

So I don’t intend to question the skilled expertise of class-action attorneys. Yet it just seems fundamentally unfair that most consumers in such cases get pitiful benefits compared to the payday for the attorneys. Talk about inequitable distribution.


The most recent example is the Equifax settlement. Equifax has agreed to potentially pay up to $700 million as part of a settlement with the Federal Trade Commission, the Consumer Financial Protection Bureau (CFPB) and 50 U.S. states and territories. The settlement is the result of a 2017 breach that exposed the personal data of about 147 million people.

In total, there’s more money going to consumers as a group, according to the settlement, which still needs court approval. The company has agreed to pay $175 million to 48 states, the District and Puerto Rico, as well as $100 million to the CFPB in civil penalties.

Equifax, which did not admit any wrongdoing, has agreed to set up a “Consumer Restitution Fund” of $380.5 million. But with a potential claims group numbering in the millions, the compensation on an individual level pales in comparison to what the attorneys will get, which is the following:


· Up to $77.5 million to be paid from the consumer restitution fund. The money is “to pay reasonable attorneys’ fees for work performed by Class Counsel or other counsel working at their direction in connection with this litigation,” according to the proposed settlement.

· Up to $3 million for the reimbursement of reasonable costs and expenses incurred in connection with the litigation. This money will also come out of the restitution fund. The attorneys took the case on a contingency-fee basis, which means that they covered all of the case expenses and have not been paid any money in relation to their work, according to the settlement.

The settlement lays out what the four attorneys did.


They “investigated the facts relating to the data breach with the assistance of consultants and experts in cybersecurity and identity theft, interviewed witnesses, reviewed congressional testimony, analyzed the evidence adduced during pretrial and confirmatory discovery, including over a half-million pages of documents, spreadsheets, and other native files produced by Equifax, and researched the applicable law with respect to Plaintiffs’ claims against Equifax and the potential defenses thereto,” the settlement says.


That sure sounds like a lot of work. But is it worth $77.5 million?

Here’s what consumers may face in the wake of Equifax’s data breach:


· Criminals can use their stolen personal data to open up credit cards in their names or make fraudulent charges. The FTC said hackers stole names and dates of birth and 145.5 million Social Security numbers. They also were able to get 209,000 payment card numbers and expiration dates.

· Scammers can use the exposed data forever. With the information hackers stole, they can make their cons more believable. For example, there’s a widespread Social Security scam that is snaring a lot of people.

Read the following:


· Con artists can file fake tax returns using a lot of the information that was hacked.

· The scams have become so numerous that people have to screen telephone calls.

Not all scams lead back to the Equifax hack. But the breach was epic.

Part of the Equifax settlement included a choice for consumers. They could opt for free credit monitoring for up to 10 years or get up to $125. For about a week, there was anticipation that many affected consumers who get credit monitoring on their own could receive some decent money from Equifax.


In retrospect, the FTC probably should have better managed consumers’ expectations. To get the full $125 just 248,000 people of the 147 million would have to submit a claim.


“The public response to the settlement has been overwhelming,” the FTC said. “Millions of people have visited this site in just the first week. Because the total amount available for these alternative payments is $31 million, each person who takes the money option is going to get a very small amount. Nowhere near the $125 they could have gotten if there hadn’t been such an enormous number of claims filed.”

There’s a separate pot of money — another $31 million — for people who’ve spent time trying to clear up incidents of fraud or identity theft. But they too will probably be disappointed since their cash amounts could also be substantially reduced depending on the number of claims filed.


There is, of course, the free credit monitoring. But so many people have been affected by so many data breaches that they already have free credit monitoring.


As I pointed out in a recent column, the credit monitoring Equifax is offering may be better than what you have in place because at least for the first four years it covers monitoring at Equifax and the other two major credit bureaus, Experian and TransUnion. A premium three-bureau credit monitoring service can cost as much as $30 a month. Over four years, that’s a potential value of $1,440.

Still, people are angry.

“This proposed settlement is a sham,” wrote Will Singer from Seattle.


As is often the case in a class-action lawsuit settlement, consumers — the folks who bear the brunt of whatever corporate misdeed that is uncovered — get a pittance.

Last week, I asked readers what they thought of the Equifax deal. Overwhelmingly, people said that they hate it.


“The settlement at a minimum should include credit monitoring at all three bureaus for life including the service to fix the problem when your identity is stolen and insurance to back it up,” wrote Jim from Pensacola, Fla.

But you don’t have to just be irate. If you disagree with the terms of this deal, you still have a chance to make your voice heard.

Here’s my objection. On the matter of the attorney fees, I think that Equifax, given the gravity of the breach, should be forced to pay the attorney fees directly and not out of the fund established for consumer restitution. This would send an even stronger message to Equifax and other companies who aren’t doing enough to protect our data.

You have an opportunity to tell the court that you object to the settlement if you don’t think it’s “fair, reasonable, or adequate, and you can give reasons you think the court should not approve it,” according to a FAQ on the settlement’s website.


The FAQ describes the steps you need to take to object. Scroll down to question 25 for details. For your concerns to be considered by the court, your letter must be filed electronically or postmarked no later than Nov. 19.

Read more:

Color of Money Question of the Week

What more do you think Equifax should do? Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line put, “What I would tell the court about the Equifax settlement.”

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Meanwhile, check out the transcript from last week. We had a great discussion about the Equifax settlement.

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