Have Class Action Notices Been Tested to See What Increases Consumer Response Rates?

by Jeff Sovern

Sometimes when credit card issuers send out mail solicitations, they experiment with different forms of notice to see which one generates a higher response rate. For example, they may send out one mailing to 10,000 people with one prominent sentence on the outside of the envelope, and another to a similar group with a different sentence. Or they might use a different format for the letter inside.  They use the results to guide later solicitations. 

Such practices address one of the problems with consumer disclosures: disclosures have often been tested by showing focus groups or larger samples of consumers a proposed disclosure and then seeing if those shown the disclosures can understand them.  That tells us how to write understandable disclosures, but not how to get consumers to read them.  Understandable disclosures are better than incomprehensible disclosures, but still do little good if consumers don't read them. 

My understanding, which is incomplete, is that class action notices, like the Federal Judicial Center model forms, have been tested by showing them to focus groups, etc., to produce more readable notices.  That is a valuable contribution.  But have they been tested in the way described in the first paragraph above?  For example, have different class members in a case with many members received slightly different notices to see which are more effective?  If you know of such cases, could you please supply a comment to that effect? Would there be any ethical or other objections to testing notices in such a manner?

 

 

 

Comments

[Richard Simmons]

Jeff -

The best pending study is this one from the FTC...

https://www.ftc.gov/system/files/documents/federal_register_notices/2015/05/150505agencyinfofactorsfrn.pdf

See also:

http://www.antitrustinstitute.org/content/class-action-issues-update-march-2017

and

http://www.electronicretailermag.com/2017/03/ftc-studies-may-impact-class-action-settlements/

[Adam Zimmerman]

Jeff,

I don't know of a particular case where a court has done this. I think such an experimental, bifurcated approach in an actual class action might run afoul of the court's obligation under Rule 23(c)(2)(B) to "direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort."

But I think the Federal Judicial Center, if I understand your question right, may have come close to doing some of what you propose. Here's the link describing the FJC's own study of class action notices (https://www.fjc.gov/content/detailed-discussion-methodology). Among other things, the FJC says:

We explored reactions to notices and asked about changes that might improve comprehension of, and motivation to read, the notices. We tested the outside packaging, inside layout, organizational structure, and language of the notices. We also tested comprehension aids, such as a chart listing claimants' options, a question-and-answer format for the notice text, and color-coded response forms.

Finally, you might remember this, but long ago, I argued that because of the parallels between mass marketing and class actions, judges should review class action notices by taking into account behavioral economics. See Funding Irrationality, 59 Duke L. J. 1105 (2010). At the time, I don't think many people had empirically tested a lot of those intuitions. But Brian Fitzpatrick's An Empirical Look at Compensation in Consumer Class Actions" 11 N.Y.U. J. of Law & Bus. 767 (2015) (with Robert C. Gilbert) comes close and is well worth a read.

All my best.

Adam

[Todd B. Hilsee]

The Federal Judicial Center models are indeed based on well tested design methods. For example there is no dispute amongst advertising research experts that ads without attention-getting headlines will simply be missed altogether by busy readers. Read Ogilvy on Advertising and read Caples "Tested Advertising Methods" to name a few. As to the content, that is based on testing as well, not only the FJC's own studies (read deeply at www.fjc.gov) but know that dozens of cases where focus group testing had been done served as input to the final documents by the drafters - me included for full disclosure here.

I applaud any effort to improve dramatically weakening response rates. I disagree that response is based only on the substance of a matter or on the relief available. In fact the extent of dissemination and the convenience to the recipient are most important. How these are being negotiated away is the gorilla in the room. Courts are left unaware that often today a notice plan purporting to reach a large percentage of a class in fact reaches a tiny fraction. Counsel disincentives, fueled by a "low bid wins" and "don't you dare criticize" culture have propelled it. The narrative that most folks "choose" not to obtain the benefits they deserve is usually false, and if counsel fees were only paid based on actual class member recovery, then many millions more class members would benefit from class actions. If class counsel continue to play along with defendants who want to settle without paying anyone and are willing to sell courts on faux "opportunity" to claim as valuable consideration in and of itself, they will lose the class action device.

[rloeb]

I doubt that response rates would be much impacted by more targeted copy, LOUD type, or most of the other direct mail marketing tactics. The response rate for class action settlement notices is highly correlated with the terms of the settlement, which tend to be complex and onerous with a trivial payout (except for the lawyers). Do you retain you stock transaction records back a decade or more? How about the receipts for household items, large and small appliances, garden tools, various computer gizmos, etc? How about prescription records from long ago> Do you even have access to your investment transactions back more than a couple of years? How about the receipt for the furnace repairs from ten years ago? The hot water heater replacement nine years ago? Itemized receipts for repairs to your automobiles? Dig through a decade or more of receipts, find the right one, and, in year or two, the manufacturer of an item you along ago discarded will send you another whatever it was or an amount of money so trivial that it makes a mockery of the entire process.