Cy Pres Awards – Vital For Consumer Rights

Cy pres awards from consumer class action cases are a source of funding for Consumer Federation of California’s advocacy work. Courts approve cy pres distributions to CFC in recognition of the effectiveness of our work for millions of consumers.

Cy pres awards are residual payments from class action lawsuits when a full distribution of a settlement or court award to members of the class is not achieved or is impractical.  California law instructs courts to distribute cy pres residuals to “nonprofit organizations or foundations to support projects that will benefit the class or similarly situated persons, or that promote the law consistent with the objectives and purposes of the underlying cause of action, most likely to serve and protect the plaintiff class…” California Civil Code Section 384 (emphasis added). This unambiguous public policy favors the distribution of cy pres funds to support legislative advocacy on behalf of consumers, which is CFC’s core mission.

The Consumer Federation of California is an active force at the state capitol and before administrative agencies. The breadth of our work in California is unrivaled. Recent legislative work includes safeguarding our financial and medical privacy, eliminating deceptive marketing scams, cracking down on elder abuse, improving food and drug safety, derailing homeowners insurance rate hikes, auto insurance steering practices and health insurance rescission practices, banning toxics from household products, requiring truth in advertising from for-profit colleges, and safeguarding low-income and limited-English customers from discrimination by utilities. That’s just a short list of the campaigns we take on.

CFC is virtually unique because we use every penny of a cy pres award to advance the rights of consumers. CFC is approved by the IRS as a non-profit organization under a section of the tax code [501(c) 4] that permits unlimited advocacy.

If the parties restrict cy pres distributions to tax-deductible charities under IRS section 501(c) 3, the Consumer Federation of California Education Foundation is an eligible recipient. Our Education Foundation conducts education and research on key consumer issues.

Consumer Federation of California deeply appreciates the support that many courts and plaintiffs’ attorneys have shown in choosing us for cy pres awards. For more information, please contact Richard Holober, CFC Executive Director, at (916) 498-9608, or by email at holober@consumercal.org. Thank you for your consideration.