Dollars & Sense: The paradox of class action lawsuits

ORLANDO, Fla. – What to Know:

• Class action lawsuits allow consumers to combine small claims into one large legal action.
• Recent settlements have returned billions of dollars to consumers – but at the same time, generated massive fees for attorneys.
• Many companies now require arbitration agreements that can prevent consumers from joining future class actions.

No one hires a lawyer over a $10 overcharge, a $25 junk fee, or a hidden charge buried in the fine print. But what happens when that same charge affects 100,000 people? Or 10 million? Now that’s a different story.

And that’s where class action lawsuits come in.

If your email inbox seems to be filling up with notices about data breaches, privacy violations, banking practices, or consumer settlements, you’re not imagining things. Millions of Americans are now routinely included in class action lawsuits, often without realizing it until they get a settlement notice. The size of these settlements – and the attorney fees that often accompany them – helps explain why class actions remain one of the most debated tools in consumer protection.

According to the 2026 Class Action Review, more than 1,700 class action lawsuits were settled in 2025, totaling more than $79 billion – nearly double the roughly $40 billion in settlements in 2024. Some legal observers say the trend may be self-reinforcing: as settlements grow larger, they create greater incentives for attorneys to pursue additional class action cases, particularly in emerging areas such as privacy, cybersecurity, and artificial intelligence.

Experts say the growth is being fueled by data-breach litigation, privacy lawsuits, consumer-finance disputes, antitrust claims, and product liability and AI-related matters, all of which can affect millions of people at once.

Consider some of these examples from the past few years:

• May 2025: Facebook/Cambridge Analytica – $725 million settlement with a typical payout of about $35 for around 17 million claims. Lawyers received about $181 million (25% of the award).
• July 2024: T-Mobile Data Breach – $350 million settlement with a typical  payout of about $25 for around 76.6 million claims. After an appeals court threw out the original fee of over $78 million (22.5% of the award), lawyers settled on a payment of $46 million (13.1% of the award).
• March 2025: Wells Fargo COVID-19 Mortgage Forbearance Settlement – $185 million settlement with a typical payout of a few hundred dollars for each class member and another $83.33 for each co-borrower. Lawyers received $46.25 million (exactly 25% of the award).

Taken together, these three settlements alone totaled more than $1.2 billion, with attorneys receiving more than $273 million in fees. Cases like these fuel a debate that has existed for decades: are class action lawsuits an effective consumer protection tool – or have they become a system that primarily enriches attorneys?

Who Benefits Most?

For most consumers, a class action settlement won’t be life-changing. The typical payout may be tens or hundreds of dollars – not enough to make anyone rich, but enough to compensate consumers for harm they likely would never have pursued in court on their own.

Supporters argue that modest payouts – $10, $25, or even $100 – are better than receiving nothing at all. They contend that without class actions, companies could profit from small-dollar harms that no individual consumer could afford to challenge in court.

Critics, however, see it differently.

They point to cases where consumers receive checks worth only a few dollars while attorneys collect millions in fees. And in their view, class actions too often benefit lawyers more than the people they are intended to help.

The reality may lie somewhere in between.

Class actions have returned billions of dollars to consumers while simultaneously generating some of the largest attorney fee awards in the legal system. Yet while consumers are receiving more class action notices than ever, many companies are moving in the opposite direction – requiring customers to resolve disputes through private arbitration and waive their right to participate in class action lawsuits.

Why? For businesses, the risk is often greater than the settlement itself. Class action lawsuits can expose internal emails, business practices and corporate decision-making to public scrutiny, creating reputational damage that may outlast the litigation.

In other words, consumers are getting a more detailed look behind the scenes than ever before because of class actions, while many companies are working to make sure fewer suits happen in the future.

The tension is difficult to ignore – and that’s the paradox.

At a time when class actions are delivering record settlements and reaching more consumers than ever before, companies are increasingly trying to avoid them, while the attorneys who bring the cases continue to collect some of the largest fee awards in the legal system. Whether that balance represents consumer protection, corporate accountability, or simply the cost of doing business remains a matter of debate.

Emerging Trends and How to Protect Yourself

Class action litigation is expected to remain active as, and as a result, consumers will continue to see settlement notices in their inboxes – some legitimate, and some worth verifying carefully before clicking or submitting personal information.

Among the larger active settlements currently accepting claims are:

• $70 Million: Shoals Technologies Securities Class Action Settlement (file a claim by August 25, 2026).
• $50 Million: Disney YouTube TV and DirecTV Streaming Anti-Trust (file by September 8, 2026).
• $2.5 Million: Fidelity Investments Data Breach Class Action Settlement (claim deadline is July 27, 2026).

As class action settlements become more common, consumer advocates warn that scammers are increasingly attempting to capitalize on the trend.

Fraudulent emails, text messages and websites may claim consumers are entitled to money from a settlement when no such claim exists. Others may attempt to collect personal or financial information under the guise of helping consumers file a claim.

Like any trend, bad actors will attempt to cash in as well.

Some tips to make sure you don’t fall for a scam:

• Consumers who believe they may be eligible for compensation should verify their eligibility directly through settlement websites or court-approved administrators.
• Verify any settlement notice before providing personal information or filing a claim.
• Any request for upfront payment to get a settlement is a scam. Legitimate class action settlements do not charge consumers to participate.
• Requests for sensitive information such as Social Security numbers, bank account numbers or passwords are also a major red flag Legitimate settlements are typically paid through court-approved methods such as checks, prepaid cards, direct deposit, or digital payment platforms designated by the settlement administrator (i.e. PayPal, Venmo, Zelle, or direct deposit).
• If you see an urgent demand to act immediately, walk away.
• Confirm that email addresses or websites match the court-approved settlement administrator.
• If you receive a settlement notice, experts recommend searching for the case name independently or reviewing information on the official settlement website before responding.

Whether consumers view class action lawsuits as an important form of accountability or a system that disproportionately benefits attorneys, one thing appears clear: they are becoming an increasingly visible part of modern life.

From data breaches and privacy violations to banking disputes and emerging AI-related claims, class actions are touching more industries – and more consumers – than ever before. At the same time, the growing use of arbitration agreements means the future of class action litigation remains far from certain.

Americans are seeing more class action settlements in their inboxes while corporations increasingly work to ensure the next class action never happens.