RICO (Racketeer Influenced and Corrupt Organizations Act)

RICO, the Racketeer Influenced and Corrupt Organizations Act, was passed in 1970 to fight organized crime, but its reach is much broader. It targets people who run or take part in an "enterprise" through a "pattern of racketeering activity." Racketeering activity is a long list of crimes that includes mail fraud, wire fraud, bribery, and extortion. The enterprise can be a company, a group of companies, or an informal association.

Under 18 U.S.C. 1961, a "pattern of racketeering activity" requires at least two acts of racketeering activity, the last within ten years of a prior act. Courts also require that the acts be related and show continuing activity, so a single scheme with one victim often is not enough.

The civil side is what matters for consumers. Under 18 U.S.C. 1964(c), anyone injured in their business or property by a RICO violation can sue in federal court and recover threefold the damages sustained, plus the cost of the suit and a reasonable attorney's fee. Securities fraud generally cannot be the basis of a civil RICO claim.

Civil RICO claims show up in class actions over alleged coordinated fraud, such as schemes involving insurance billing or pricing. They are hard to win: plaintiffs must plead fraud in detail, prove a concrete financial injury, and show the pattern. Personal injuries themselves are not recoverable under RICO. See the guide on types of class action lawsuits.