Like most large companies, banks are no strangers to class actions.
The two main types we've seen are:
- Claims on behalf of shareholders (such as the class action National Australia Bank successfully settled in relation to its disclosures to the ASX in 2008 on its Collaterised Debt Obligation (CDO) exposure).
- Claims on behalf of customers (like the bank-fees class action).
The bank-fees class action is an unusual one mainly because of the size of the individual claims. In the past, although each individual claim in a class action might be small, they would still usually be in the thousands of dollars rather than the hundreds. But in the bank-fees case, some customers' claims might have been in relation to one fee charged on one account, which can be as little as $20.
Banks have not been the only companies targeted. Similar claims have been foreshadowed against telcos and energy companies.
Why the sudden flurry of this type of class action?
THE CHANGING LANDSCAPE
Technology certainly has had a role to play. Plaintiff law firms have changed the way they operate. Gone are the days of lawyers traipsing from door to door Erin Brockovich-style, slowly building up the numbers to instigate a class action.
Now, plaintiff law firms use both traditional and social media to communicate with large groups of people about proceedings they intend to initiate and to encourage people to sign up. They are very savvy at generating media interest.
Combining coverage from TV, radio and newspapers, plaintiff law firms are able to communicate with hundreds of thousands of customers (if not millions) to let them know about actions they are planning to run. Plaintiff law firms have also made it easy for customers to sign up. Now you can register online with the click of a button and the provision of a few contact details.
For the bank-fees case, the plaintiff law firm utilised new technologies to ensure the maximum number of people could register at once. Using technology like this, litigation funders can aggregate thousands of small claims quite quickly and with very little cost. The benefit for the funder is clear – the more people who sign up, the greater the profit if the case is successful.
MASS CLASS ACTIONS AGAINST BANKS ON FEES
In 2010, off the back of a broad and highly visible media campaign to attract group members, plaintiff law firm Maurice Blackburn (in conjunction with Australia's largest litigation funder, IMF Bentham Limited) initiated a series of class actions against most Australian banks in relation to bank fees.
The claim against ANZ related to certain fees on transaction accounts and credit cards, broadly:
- Overdraw fees (fees charged following a customer seeking to overdraw their account).
- Late payment fees.
Those fees were alleged to be unlawful because they were either:
- Penalties - fees charged to deter customers from behaving in a certain way.
- Unfair, unconscionable or unjust within the meaning of consumer protection legislation.
The case against ANZ was run as a test case while the claims against the other banks were put on hold.
It has been a long journey (and has already included a trip to the High Court of Australia – although there may be another one to come). In April 2015, the Federal Court of Appeal found in ANZ's favour, confirming overdraw fees and the late payment fees are lawful.