Compensation and Deterrence in Consumer Class Actions in the United States
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Description
One of the ironies of market-based economic systems is that consumers are simultaneously more powerful than ever and also more vulnerable. Consumers are more powerful because systems of trade, production, distribution, and inventory management make available a vast arrays of goods and services displaying an enormous range of quality, functionality and design. Consumers are more vulnerable because these systems cause a separation between consumer and provider and thus limit the available sanctions for poor quality, and because consumers sometimes lack the ability to assess the quality or performance of the products they acquire. A challenge for any modern legal and economic system is to promote the advantages of mass production and distribution while compensating consumers and deterring abusive practices. All developed countries use a mix of regulatory strategies in pursuit of these twin goals of compensation and deterrence. These strategies include; (1) licensing (permitting only qualified firms to do the particular business); (2) disclosure (requiring providers to supply information about their products backed by sanctions for false statements); (3) monitoring (assessments of product quality by the government or by independent evaluators); (4) business-practice regulation (setting minimum standards or directly mandating production or distribution activities); and (5) private legal remedies. This paper examines the availability in the United States and Europe of the last of these strategies, private legal remedies. This chapter considers how the goals of compensation and deterrence come into tension with one another in the class action context. The paper then describes the privately enforceable substantive remedies available to consumers in the United States under federal and state law and examines problems with achieving compensation and deterrence under those theories. The final part of the chapter considers recent class action legislation in Europe and evaluates how these procedures serve the goals of compensation and deterrence.
Source Publication
New Frontiers of Consumer Protection: The Interplay Between Private and Public Enforcement
Source Editors/Authors
Fabrizio Cafaggi, Hans-W. Micklitz
Publication Date
2009
Recommended Citation
Miller, Geoffrey P., "Compensation and Deterrence in Consumer Class Actions in the United States" (2009). Faculty Chapters. 2018.
https://gretchen.law.nyu.edu/fac-chapt/2018
