Advances in technology have made it easier for plaintiff’s lawyers and claims administrators to locate and notify more class members than ever before. Instead of sending out postcards or running ads in local newspapers, the internet and social media have made it possible to alert large numbers of potential class members with a single click.
But this technology comes with its own set of problems. In recent years, an increasing number of class action settlement agreements have been victimized by a new form of fraud, in which scammers use bots to file thousands of claims in hopes of receiving large or multiple settlement payouts.
Bots create significant problems for both parties seeking final approval in a class action settlement. Bot attacks artificially drive up the claims rate and potentially the cost of settlement and have the potential to undermine the legitimacy of the class action settlement process.
A claims rate that is unrealistically high may suggest there are more aggrieved class members than there are and may lead a judge to decline to approve the settlement because the amount paid per claim is too low.
A settlement that is not given final approval because of a misunderstanding of the true number of claims wastes the time of all parties involved, both plaintiffs, defendants, the Court, and unnamed class members. While the issue has so far been seen with “bot attacks,” the use of AI has the potential to affect claims made in class action settlements as well.
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