India needs an equivalent of class action lawsuit option!

India has crores of people. And India’s legal system is time consuming, effort intensive and could drag for years. For small issues, it makes more sense to absorb the loss and move on, than try the legal route that would take years to get to a closure. So many companies are exploiting this loophole and cheating small amount to thousands and lakhs of customers. 

• Remember Freedom 250 smartphone for which people paid 250 Rs in 2016 and still waiting? If all customers have to file a court case to get their 250 Rs back, auto expense to court would be more than 250 Rs so almost everyone have cut their loss and moved on.
• Thousands of parents around the country are frustrated with EdTech firms like Byju and others who are neither providing quality service promised during sales and nor providing refund of lakhs of rupees collected for multi year course.
• Twitter is full of thousands of Zoomcar customers frustrated with not getting their refund, not getting the car as promised, hosts having their cars damaged and other issues.
• OYO takes money from customers even when hotels don’t exist physically or has stopped working with Oyo. Customer has to go to the location, find no hotel or get rejected from the hotel and then fight with Oyo to get their money back.
• Ola/Uber, Zomato/Swiggy customers have their own set of complaints- high prices, cancellations and more
• A company violating environment norms or doing some illegal work can affect thousands of people in a village/town. All of them won’t have means to fight individually.
• Timeshare companies like Club Mahindra have their set of frustrated customers who are not getting bookings when they want and numerous other issues while having paid lakhs of rupees towards membership and having to pay massive ASF every year.
• So many property developers cheat home buyers collecting money and not completing the project on time or even with delay or not delivering on promised facilities.
• So many individuals who are exempted from toll for being local resident are often charged for crossing the toll. For 50 Rs they can’t afford a legal battle but everyday 1000 people * 50 Rs = 50000 Rs free money to toll company.
• Companies abruptly fire 100s or 1000s of employees without advance notice or severance or any other ethical/legal obligations and get away with it.

If you scan social media you will find so many brands making false promises, getting customers and then not delivering what was promised and not giving refunds. It is very easy for companies to cheat lakhs of customers a few thousand rupees each, pocket crores of rupees and never bother to compensate/resolve customer issues. They can launch some discount scheme and enroll thousands of new customers, than making any effort to keep existing customers happy.

All this is because thousands of individual customers can’t afford a complex legal battle individually against large corporations. A few who manage to make a noise online get some compensation, others eventually resign to their fate and write off the loss, while companies that cheated them laughs all the way to bank and finds more customers to cheat.

If only India had a class action lawsuit like in US…

USA has Class Action lawsuit, which can be filed if 40 plus customers are affected by same company on same issue. Affected individuals can seek legal action as a team, than having to fight individually. This saves cost, effort and adds credibility to the complaint as so many people would have been affected by same issue. We need such a scheme in India. Even if the limit is set to 400, crores of Indians will benefit from such a scheme.

Benefits of class action lawsuit

• Less effort and cost for each affected individual
• Easy to prove their case when hundred of people are affected
• Class action suits get better media attention, putting more pressure on brands, authorities and govt
• Higher number of affected people would make courts take it up earlier and close sooner
• If an effective system is put in place, companies involved in fraudulent practices are punished, other companies will think twice before attempting to mislead public or cheat their customers.

More details on Class Action on Wikipedia

What are your thoughts?