Allstate used applicants’ credit ratings as one piece of information in rate-setting, a baldly rational policy if you accept that credit ratings do on average help predict future consumer behavior. Lawyers sued claiming that the credit ratings were really an improper proxy for race, and a federal judge has now approved a class action settlement in which Allstate will revamp its policies and pay six named plaintiffs $5,000 each, minority policyholders will be free to seek refunds of $50 to $150 if they get around to it and can prove they qualify, and plaintiff’s lawyers will get $11.7 million. (”Judge Approves Settlement in Allstate Class-Action Suit”, AP/WOAI, Feb. 17).
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In Allstate; class actions
“In the settlement, which was preliminarily approved in June, Allstate agreed to change its formula to include strictly financial factors like the number of late bill payments or how often items were purchased on installment plans.”
Uh, isn’t that what credit scoring is? lol
And how could any judge approve this when the ratio of plaintiff recovery to lawyer take is 1/2,340?
What a conmplete joke.
“And how could any judge approve this when the ratio of plaintiff recovery to lawyer take is 1/2,340?”
I don’t know, but it happens routinely.
“What a conmplete joke.”
No, how completely common. I almost said “normal”, but it’s not that - it’s sick.
…and the costs associated with defending and buying off these attorneys get passed on to consumers in the form of higher premiums.
Does class counsel have an ethical obligation to advise their clients that although they may win a few bucks or coupons, in the long run they may pay more for the same goods and services?
“Lawyers sued claiming that the credit ratings were really an improper proxy for race…” Does this mean poor white trash have good credit ratings???
markm,
You’v falln for the classic blunder: trying to apply logic to an accusation involving “give me money to go away”.
Amazing, but not unexpected. Throw in a racial claim, and what would normally be subjected to cooler scrutiny flies through. Would it have mattered that credit ratings for minorities were, in fact, generally lower? Probably not, and that’s the insanity of the whole ‘disparate impact’ argument. This accomplishes nothing more than private-sector wealth-shifting.
‘disparate impact’ is the biggest crock of s— in the whole PC pile of steaming fertilizer, and that’s saying a LOT.