America, Lawsuits and Consumers

 

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Almost all of us hate lawsuits. 

After all, who in their right mind sues McDonald’s because their coffee is too hot

However, grudgingly, I must admit that consumer lawsuits (ignoring the health care industry for now) have an important role to play in the American consumer landscape, at least in terms of causing monetary penalties so large that companies are automatically super cognizant and careful of saying or doing things that would actually hurt consumers (in the absence of such lawsuits). Whew. Long sentence.

So what caused this latest post about lawsuits? Kia and Hyundai.

As some of you may know, Kia and Hyundai (which are, btw, the same company, out of South Korea) were charged by the EPA (interesting Forbes link here) of inflating their gas mileage claims. To their credit, they both promptly apologized, unlike Toyota which dragged its feet (and suffered a $2B+ loss, actually more if you think of their reputation that took a hit and the subsequent sales hit, etc.) when Toyota faced its own legal and life-and-death crisis a couple of years ago. They also agreed to provide cash compensation to drivers of their cars (some models) based on miles driven per year.

But that’s not the end of it. The news today is that they got hit with a $775m lawsuit.

They may settle, in court, or out of court – but my point is that these lawsuits and a legal system that allows such lawsuits actually help consumers because it discourages (not stop though) sellers of consumer goods from (over)selling benefits, (mis)stating facts and otherwise playing fast-and-loose with messaging.

As a result, I think that consumers benefit – because what they see and hear – is real, true (mostly) and credible.  And in a way, that benefits businesses too and creates a level-playing field. Of sorts.

Do you agree? Disagree? Does the threat of lawsuits benefit consumers?

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