I think you're making a "perfect is the enemy of good" mistake. Yes, the class action mechanism has its flaws and is open to abuse. But you're trying to imply that ALL class actions are like the one in the linked article, which is not the case, and it's not exactly honest to paint all or most class actions as being like the one in your link. Or even that the problems of incentives invalidates any use of class actions.
Not to mention that the article offers data to refute this idea that only the lawyers benfit (from a study the author commissioned in 2010 while at the Consumer Financial Protection Bureau):
>Opponents also claim that the rule benefits lawyers rather than consumers. In reality, lawyers collect a small portion compared with consumers, and only if they succeed. For every $10 that a company pays out for wrongdoing, we found about $8 goes to consumers and $2 goes to pay legal costs. In any event, banks choose to hire lawyers to file class-action lawsuits, and ordinary people deserve to make the same choice.
>Consumers get only a tiny fraction of what they've lost.
But the whole point is that consumers have, individually, lost very little. If you were overcharged $20 and got $10, or $5, the company in aggregate has still been forced to pay out a lot. Any individual consumer isn't going to receive significant compensation even in a 100% win.
The article again offers data to refute this idea that consumers don't get fair compensation through class actions:
>First, opponents claim that plaintiffs are better served by acting individually than by joining a group lawsuit. This claim is not supported by facts or common sense. Our study contained revealing data on the results of group lawsuits and individual actions. We found that group lawsuits get more money back to more people. In five years of group lawsuits, we tallied an average of $220 million paid to 6.8 million consumers per year. Yet in the arbitration cases we studied, on average, 16 people per year recovered less than $100,000 total.
>Companies aren't deterred--they just treat the occasional payout as the cost of doing business.
This is true of any litigation, yet we don't usually see arguments against the very concept. It still at least forces companies to consider one more bar to abuse.
Until we have better regulation, this imperfect tool is something consumers have available to them to fight abuses of a type that normally wouldn't be addressed because of their nature. Without this tool, consumers would have no recourse. As the article says:
>As one judge noted, “only a lunatic or a fanatic sues for $30.”
>When a bank charges illegal fees to millions of customers and then blocks them from suing together, a result is not millions of individual claims, but zero. So the bank gets to pocket millions in ill-gotten gains.
Arguing against class actions makes no sense until we do have legislative or regulatory alternatives.