Does Fraud Pay? An Empirical Analysis of Attorney's Fees Provisions in Consumer Fraud Statutes

Consumer fraud (including predatory home loans) is a widespread and serious problem in the United States. To help combat this problem, forty-five states have enacted consumer fraud statutes that provide for attorney's fees to a prevailing plaintiff to address the economic feasibility problem in bringing a typical consumer fraud claim where the attorney's fees to litigate the case can exceed the amount they have been damaged by the fraud. Unfortunately, the attorney's fees provisions in many states' consumer fraud statutes provide for fees at the court's discretion (rather than mandatory to a prevailing plaintiff) and provide for possible attorney's fees to a prevailing defendant. We surveyed consumers and attorneys to see how the wording of the attorney's fees provisions affected their willingness to bring a strong meritorious case, a good faith extension of the law type case, and a bad faith/frivolous case.to determine which version is the best at promoting both the primary legislative goals (encouraging meritorious consumer fraud claims, making the consumer whole, and deterring consumer fraud), and the secondary goal of discouraging plaintiffs from bringing frivolous cases. The article contains the results from our surveys, a fifty-state review of consumer fraud statutes, and a proposal for reform to better encourage and enable consumers and attorneys to bring meritorious consumer fraud cases