LML News & Events

Updates and events about our group action cases, plus general news about group litigation in the UK and related subjects.

13

Jul

VW and MasterCard – who will get justice first?

Two large consumer scandals – and the legal redress that follows – have hit national headlines recently. And the way the stories progress from here will provide a useful commentary on the effectiveness of the UK’s access to justice regime.

The scandals are well known. First we have VW, who admitted in September 2015 that emissions from certain diesel cars were higher than they had been described. Worse than that, they also admitted that they had fitted a cheat into the cars so that test results looked like the emissions were low. No fix has been identified and car re-sale values have taken a dive, so consumers are faced with the likelihood of legal action to protect their rights.

MasterCard charges have been a contentious problem for many years. Retailers have already taken up the fight with cases going through the English Courts and settlements reached in 2015/16. Just last week it was announced that a consumer collective action is being launched by Quinn Emanuel solicitors. The complaints relate to hidden fees which were charged under the surface of every transaction, thus inflating the price paid.

I’ll make a bold prediction: that more MasterCard consumers will receive justice quicker than VW owners.

Why do I say this? Because MasterCard have allegedly breached competition law, which opens up the possibility of one of the UK’s first opt out collective action.

The VW case provides a living example of the difference between opt out and opt in. The emissions scandal is an international problem. Legal claims and negotiations with VW have taken place in countries all over the world. Yet so far only consumers in the US have received justice. The reason is because of the availability of opt out collective actions (or class actions as they are called in the US).

Defendant companies facing group litigation want to know the size of the problem so that they can decide how to deal with it. An opt out collective / class action, where all people affected by a problem are included in the action by default unless they choose to opt out, presents defendants with an opportunity for closure. The cost consequences of defending or settling can be assessed and decisions taken as a result. The economics in opt in actions, where the legal claim can only include people who have been affected by the issue, identified by the lawyer and who have agreed to instruct the lawyer to include them in the case, are far harder to evaluate as the defendant cannot rule out the risk of opening the floodgates to further (unknown) claims.

LML comes across this issue regularly. We have recently seen a case that we are managing go to trial in the UK on behalf of European customers of an organisation that had already settled two US class actions. The defendants made it clear that they were nervous about a settlement that could open the floodgates to other claims.

So where does this leave VW and MasterCard consumers? VW will continue to fight it out for a while yet. Even though they have admitted fault, they do not necessarily accept liability for all the losses that individuals are trying to claim. There is no class coordination at this stage and without a way of persuading VW that the whole problem can be put to bed, it will rumble on.

As for MasterCard consumers, MasterCard denies the claim against them. But assuming that the Competition Appeal Tribunal does certify the collective action, I’d bet that MasterCard settles before VW does. I wonder whether that would persuade the government that consumer protection laws need to extend opt out collective actions beyond just competition law.

 
 
 
 
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