In today’s litigation and regulatory climate, class actions alleging statutory violations can pose some of the most persistent and troublesome threats to lenders, mortgage servicers, and financial service businesses. Consumer protection statutes, whether adopted at the federal or state level, frequently go beyond prohibiting certain types of business conduct and impose affirmative obligations on the target businesses, often including highly technical disclosure requirements to consumers. In addition to providing for a private right of action, such statutes often allow for the recovery of statutory damages on behalf of plaintiffs without imposing any explicit statutory requirement of proof of actual damage and injury. Class actions brought under such statutes can represent huge exposure for companies in many cases. The applicability of a uniform federal law for a nationwide statutory damage class action (or a uniform state law for statewide statutory damage class actions brought under state law), combined with judicial constructions loosening or eliminating the necessity of proof of actual injury and causation, make it considerably easier for plaintiffs to obtain class certification and coerce classwide settlement in the statutory context, or alternatively demand disproportionately favorable individualized settlements prior to certification proceedings.
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