CD buyers: $20 is waiting for you, but will you claim it?

Hard to believe, as states throughout the nation are learning.

As the clock ticks toward a March 3 deadline to file a claim, states are promoting terms of a 4-month-old class-action lawsuit settlement with the music industry. The deal enables people who feel they were ripped off when they bought a compact disc recording to receive as much as $20 — no strings attached.

No receipt is required. If a person bought a CD between Jan. 1, 1995, and Dec. 22, 2000, he or she can get money. It's that easy, which is part of the problem.

"The prospect of having money so easily claimed just appeared to be too good to be true," said Chris Jarvis, a spokesman for Washington Attorney General Christine Gregoire. She is one of several state attorneys general spreading the word about the cash settlement through advertising, radio talk shows and e-mails.

The giveaway is a national test of what people will — and will not — do to collect as much as $20 in their slice of the settlement pie.

"I think enormous amounts of money go unclaimed," said Martin Redish, a professor at Northwestern University Law School. "Sometimes you have class actions of hundreds of thousands of dollars for each claimant. But when you start getting under a few hundred dollars, people feel there's no money in it.

"If it's less than $10, it's not worth the effort," Redish added.

In September, the five largest U.S. distributors of compact discs and three large music retailers agreed to pay $143 million in cash and CDs to settle charges of gouging customers through a price-fixing scheme. Forty-one states, including Washington, joined a lawsuit filed in 2000 by New York and Florida alleging the companies' pricing practices violated federal and state antitrust laws.

The settlement prompted New York Attorney General Eliot Spitzer to embrace superlatives. "This is a landmark settlement" that will provide consumers with "substantial refunds," he said last fall.

That remains to be seen. The challenge for the 43 states has been to draw attention to the settlement, typically announced in dull, legalistic terms in newspapers and magazines.

"Unfortunately, a lot of those ads look like legal notices," Jarvis said.

That's what the CD notice looked like in the final few pages of this month's issue of Better Homes and Gardens, between colorful ads for Cool Whip and a new birth-control device. Two other full-page legal notices appeared on nearby pages, one involving a wood-preservative lawsuit and the other involving litigation over magazine subscriptions.

Near the bottom left of the CD ad, under the heading "Cash Distribution," is a reference — the only one — to refunds that "will not exceed $20" but could be as little as $5 for claimants. This is hardly a clarion call to the masses.

"Everyone makes their own cost-benefit analysis, and inertia accounts for a lot of this," Redish said. "There are too many other things to do. You can go for this or you can go watch 'Joe Millionaire.' "

Still, $20 is $20, and the maximum payout for a family of four would be $80.

In the realm of dreary class-action notices, this is "unusual because you're getting money back," said Brad Maione, spokesman for the New York Attorney General's Office.

"It's hard to draw people's attention to this because most people don't pay attention to legal ads in newspapers," he said. "But there's still plenty of time for consumers to learn about this."

About 900,000 people nationwide have submitted applications, Maione said. Requests have surged in response to the recent advertising campaigns, such as a series of radio ads in New York.

Under settlement terms, though, the popularity could doom the program, at least for CD customers. If more than 8.8 million people apply, disbursements would drop below $5. In that case, the customer part of the settlement would be canceled.

The money that had been set aside for customers would be directed to public entities and nonprofit organizations in each state to promote music programs.

The lawsuit charged that from 1995 to 2000, the record companies conspired with retailers to set a minimum price for CDs, which increased the cost to consumers.

Defendants include Universal, Sony, BMG, Time Warner and Capitol Records on the recording side, and Musicland, Trans World Entertainment and Tower Records on the retail side. The companies agreed to the settlement but denied wrongdoing.

Consumers can apply for a refund over the Internet (www.musiccdsettlement.com) or call 877-347-4782.