Let Consumers Sue Companies
Class actions can be effective where the class members are relatively large, sophisticated entities. <i>E.g.</i> the data-breach class action brought by banks that is mentioned in the article. But in the consumer-protection space, we should consider alternatives. Where the class members are individual consumers, litigation ends up being lawyer-driven. Cases settle for pennies on the dollar of potential damages, and end up serving neither to compensate consumers nor really to deter illegal conduct.<p>Notably, in the EU, the tendency is to have more &quot;ask for permission before doing something&quot; regulation, and less &quot;ask for forgiveness after doing something wrong&quot; litigation. <i>E.g.</i> unlike in the U.S., there are laws setting forth detailed safety requirements for consumer products, and agencies responsible for enforcing those requirements. I suspect that approach yields the desired level of product safety at lower cost than the American approach. Similar approaches could, of course, be applied to consumer financial products.