why are there so many ads asking ordinary people to claim money (insurance fraud liability)?

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i’ve seen so many ads asking ordinary to call a number to claim cash due to companies liability or medicare. For example, i will see ads for class action lawsuits against chrysler and how they have faulty head rests. The ad asks for ppl to call the number if they think they qualify. are these scams? why are these ads so ubiquitous?

In: Economics

7 Answers

Anonymous 0 Comments

In order for a class action settlement or judgement to be valid, all members of the class need to be notified of the settlement and given an opportunity to make a claim or opt out. In some cases that’s easy to do. Imagine there is a class action settlement regarding your internet provider – your internet provider has the names, addresses, and phone numbers of anyone affected by the settlement so the attorneys involved can directly contact everyone.

But not all cases are as easy as that. Imagine a class action lawsuit that involves candy sold in stores nationwide – the attorneys involved know how much candy was sold but have no idea who bought it. When class members can’t be contacted directly they are allowed to be “contacted” by publication, which means that information about the settlement is distributed by placing ads where class members are likely to see them. The easiest way to do that is to run ads on major TV networks.

Neither directly contacting the class members nor publishing ads in nationwide media guarantees that all class members will actually receive notice of the lawsuit, but that’s not required. All that matters is that the attorneys involved made a good faith effort and that its likely that most class members will be notified.

So to sum up why you see those ads: because the attorneys involved are legally required to run them for settlement/judgement to be valid.

Anonymous 0 Comments

Because the amount of money involved can be staggering. The law firm or attorney who is heading the class action lawsuit stands to make an enormous payoff if the lawsuit results in a settlement.

Since a class action lawsuit can’t succeed without plaintiffs, the attorney pays for ads on television or radio to start raking in people who *think* they qualify (if you or a loved one has been diagnosed with…) and then screening them out until you’re left with individuals who have suffered qualifying damages or are otherwise eligible for inclusion in the lawsuit. These are the plaintiffs you take to trial.

The ads are just an efficient way to tell the public of the lawsuit, and incentivize them to come forward, in hope that they receive a settlement. In actuality, settlements are usually very small when divided among thousands or even millions of plaintiffs, but the attorney who led the lawsuit normally gets the biggest piece.

Anonymous 0 Comments

Those cases make a ton of money. Companies have insurance for this reason. Win or settle, if it’s a good case it’s potentially an amazing money maker for the attorney involved.

Anonymous 0 Comments

Those cases make a ton of money. Companies have insurance for this reason. Win or settle, if it’s a good case it’s potentially an amazing money maker for the attorney involved.

Anonymous 0 Comments

Those cases make a ton of money. Companies have insurance for this reason. Win or settle, if it’s a good case it’s potentially an amazing money maker for the attorney involved.

Anonymous 0 Comments

In short because they work. There are enough people who do believe the scam that it is worth the scammers time to continue them. Typically these are aimed at older individuals who do t realize the ya re being scammed

Anonymous 0 Comments

The higher the amount of claims in the lawsuit, the higher the payout may be and as a result the more the law firm will make.

For example, let’s say Evil Corp made a paint that turns out gave people cancer. Bob had cancer, and now he wants to sue $100 for his cancer treatment and lost wages. The company may say, “Bob is a small fish, but we could also lose if we go to court. We’ll offer him $20 and he’ll take it because he knows he could also lose in court.

But a Slick Lawyer realizes there’s other people with the cancer. So they go out and find 99 more people that claim to have been affected. Now that $100 is $10,000. Evil Corp’s settlement will be based on that $10,000, so maybe they offer $2,000. Also, if it goes to trial, now the payout could be as high as $10,000, not $100. And here’s the ultimate answer to your question: **Slick Lawyer’s fees are based on “contingency,” which means they gets a percentage of the total payout. So the more claims they’re able to join in, the more money they stand to make.**

People understandably have issues with this, because often the lawyers get mega-payouts while the individual claimants receive a small amount. Also, sometimes the lawsuits are frivolous, as they are based more on probability of winning than demand for justice. I will add that in absence of this system, many of these lawsuits wouldn’t be brought at all, and it does provide a sort of counter balance to corporations that can spend tens of millions of a lawsuit, even if it’s imperfect.