Virginia Moves Toward State-Court Class Actions: A Major Shift With Significant Business Implications

Virginia is on the verge of making a consequential change to its civil justice system. Legislation now pending before Governor Abigail Spanberger would authorize private class actions in Virginia state courts and make significant amendments to the Virginia Consumer Protection Act (“VCPA”). If signed, Virginia would join virtually every other state in expressly permitting class action procedures in its own courts. Mississippi would then stand alone as the only state without a comparable state-court class action mechanism.

Supporters, in a letter urging Virginia Governor Spanberger to sign the bill, characterize the legislation as opening courthouse doors for consumers allegedly harmed by widespread corporate misconduct. But businesses should view the proposal more realistically: it would likely invite a substantial increase in class action litigation, create new settlement pressure, and enrich the plaintiffs’ class action bar far more than it benefits consumers.

Governor Spanberger is expected to sign the bill which would become effective on January 1, 2027.

Why This Matters

Although federal class actions have long been available nationwide under Rule 23 of the Federal Rules of Civil Procedure, many claims involving Virginia consumers are filed in state court or involve state-law causes of action. Most of those types of cases are not removable to federal court under federal question, diversity of citizenship or the Class Action Fairness Act. By expressly permitting state-court class actions, Virginia would become a more attractive forum for consumer, privacy, fee, subscription, discrimination, and other class claims.

Coupled with amendments to the VCPA, the legislation could significantly expand litigation exposure for companies doing business with Virginia residents.

Key Changes to the Virginia Consumer Protection Act

The bill does more than authorize class actions. It also broadens aspects of the VCPA, potentially increasing both private litigation and enforcement risk.

The letter from the consortium of consumer groups to Governor Spanberger referred to above described these changes to the VCPA as follows:

This bill also modernizes the Virginia Consumer Protection Act (VCPA). The VCPA is Virginia’s key protection for its residents against deceptive business practices. SB229/HB449 makes modest but important amendments clarifying that damages may be recovered for every violation of the statute and that consumers can. stop deceptive practices without having to meet the hurdle of proving in each case that they relied on a misleading representation or omission. The bill brings the VCPA in line with federal and numerous other state consumer laws. The new provisions ensure that Virginians will have better access to enforce the VCPA’s rights and protections.

While described as “modernization,” businesses should recognize that such amendments frequently translate into more lawsuits, more aggressive demand letters, and higher settlement pressure.

The Reality of Consumer Class Actions

Proponents often claim class actions are the only practical remedy for small-dollar harms. That argument sounds compelling in theory, but decades of experience show that many consumers receive little or no meaningful recovery.

In numerous consumer settlements:

• Individual payouts are nominal—sometimes only a few dollars, coupons, or account credits. In a study done by the CFPB of putative class actions filed during a certain period of time in certain courts where information was available, most putative class members recovered nothing. Those members who participated in class action settlements involving a cash payment received an average cash payment of a paltry $32.35 each. Sometimes, it took more than 2 years to recover that amount. Class counsel in these cases, however, recovered a staggering $424,495,451.
• Claims rates are frequently very low, meaning most class members recover nothing at all.
• Attorneys’ fees can reach millions of dollars even when aggregate consumer participation is modest.
• Businesses face intense pressure to settle weak or marginal claims because the cost and risk of defending a certified class action can be enormous.

The primary economic beneficiaries are often plaintiffs’ lawyers, not consumers.

Increased Costs Ultimately Reach Consumers

Class action exposure is not cost-free. Companies facing heightened litigation risk often respond by:

• Raising prices
• Reducing product offerings
• Tightening credit standards
• Increasing compliance and legal costs
• Limiting innovation or new services

Those costs are ultimately borne by the very consumers the legislation purports to help.

Arbitration Clauses and Class Action Waivers: Now More Important Than Ever

If Governor Spanberger signs this bill, companies contracting with Virginia consumers should promptly review whether their customer agreements contain enforceable, state-of-the-art arbitration provisions with class action waivers.

The Supreme Court of the United States has repeatedly upheld properly drafted arbitration agreements under the Federal Arbitration Act, including provisions requiring individual arbitration rather than class proceedings. For many businesses, these provisions remain the most effective tool for managing runaway class action exposure while still providing consumers with an efficient forum for dispute resolution.

Companies should consider:

• Updating consumer-facing contracts and terms of use
• Reviewing assent mechanisms for digital enrollments
• Ensuring arbitration clauses are conspicuous and enforceable
• Including mass-arbitration management provisions, where appropriate
• Reassessing dispute resolution strategies for Virginia-facing operations
• Reviewing advertising, fee, privacy, and disclosure practices for VCPA compliance and compliance with other Virginia laws. 

Bottom Line

Virginia’s proposed legislation may be marketed as a consumer-rights measure, but history suggests that class actions often produce outsized fee awards for plaintiffs’ lawyers and modest relief for consumers. Combined with broader amendments to the VCPA, the bill could materially increase litigation risk for companies operating in Virginia.

Businesses should closely monitor whether Governor Spanberger signs the bill and, if enacted, take immediate steps to evaluate arbitration agreements, compliance controls, and broader litigation-risk mitigation strategies.

Opening the door to more class actions may benefit the plaintiffs’ bar. Whether it benefits consumers is far less certain.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.