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You’ve likely heard of the term “class action lawsuit” before, but maybe you don’t know exactly what that means or what this type of lawsuit entails. You might have received a letter letting you know you can be part of a class action lawsuit that could award you some form of a settlement. Many people disregard these letters and calls or believe they’re scams. While some may be scams, and it’s important to learn how to identify those, you can also benefit from being a part of a class action lawsuit. Read on to learn more about it.

How did it start?

The trend of class action lawsuits began in the United States, though has also become more common in other western countries. The idea of a class action lawsuit actually comes from “group litigation,” which initially occurred in England. Much like modern class action lawsuits, this forerunner involved a group of people suing or being sued by another party. In the 1800s, judicial parties in the United States allowed the idea of one person representing a group of people who are seeking legal resolutions. In the 1960s, changes were made to those laws that led to what we consider class action lawsuits today.

What does it entail?

A class action lawsuit is one person, or a few people, who represent a much larger group of people in court. Class action lawsuits usually occur because a large group of people are affected by the same issue. Common occurrences of such an issue are negative reactions to a type of medicine, illness caused by unsafe working conditions, a default in a product that led to injury, or a widespread scam that hurt people financially. Most often, class action lawsuits take place against large organizations, like companies, that have harmed a significant amount of people.

How do you participate?

Once an issue is identified as a class action lawsuit, everyone considered in that “class” or group must be notified by law. These notifications are often done by direct mail, though people may be contacted through other forms, such as an ad on television or online. If you’re part of the class, you won’t be directly involved in any part of the legal proceedings unless you have relevant evidence. You’re automatically considered part of the class action lawsuit unless you choose to opt out.

How is it resolved?

Once a class action lawsuit is settled, any money that is considered “recovery” is used to pay lawyers and cover expenses and is then divided amongst all the members of the class action lawsuit. Unfortunately, class action lawsuits do not yield much to individual members due to the amount of people involved and what goes to cover other costs.