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Attack of the Bot Filings
Fake settlement claims are on the rise. Finding the balance between keeping them out and encouraging participation is key.
Roma Petkauskas, Partner
As class action litigation resulting in settlements continues to rise, many potential claimants are experiencing the process for the first time.
In class action, claimants are a group of people represented collectively by a member or members of the group (class representative(s)). Neutrals can be charged with issuing notice, developing processes for online and hard copy submission of claims, review of claims and issuance of determinations, and coordination of payments.
One important metric to measure the success of a class action settlement is the number of claims filed from eligible class members. It is frustrating to everyone involved—including the presiding courts—when, after a hard fought and arduous process that leads to a settlement, relatively few claimants partake in the process.
A low claim submission rate can occur for several reasons:
- Complicated notices that are not in plain language.
- Burdensome claim forms or documentation required to prove the claim.
- Notices that appear suspect or do not fully make potential claimants aware of the benefits they are entitled to.
The initial communication from the administrator to the settlement class is issued according to a court-approved notice plan. The plan will typically include a Claim Form that claimants will have to submit either electronically or through hard copy.
No system is foolproof, which means verification of legitimacy is essential.
To promote claim submission, the claim process should be straightforward and eliminate obstacles that may prevent a class member from seeking the negotiated benefits.
In this design, it is paramount to consider—and implement measures to prevent and detect—fraudulent claim filings. The most disruptive practice is the coordinated bot filings of fake claims.
Best Practices to Deploy Against Bot Filers
Using publicly available or stolen data, bad actors orchestrate an automated process where bots file fake claims in a program. These bad actors are not intimidated by detection, and will double down by submitting fake documents as proof when filing or even in response to a deficiency notice.
There are ways to mitigate these bot attacks:
- If feasible, require a Notice QR code when setting up access.
- Consider creating firewalls.
- Implement two-factor authentication.Leverage CAPTCHA tools.Restrict submissions to IPs in a specific geographic region (restrict foreign IP address submissions).
- Track all relevant submission data points for instant and future analysis.
No system is foolproof, which means verification of legitimacy is essential. Best practice often includes multi-factor analytics of claim submissions, designing an algorithmic scores based on the particulars of each program, followed by a human review and validation of outcomes and results.
Regardless of the type of settlement, the basics are important. It’s essential to verify claimant identity information against third-party sources, alongside an analysis of the claim’s IP, domain, time submitted, and payment method choice. A deeper dive will involve analyzing language patterns and repeated phrases, which often leads to the identification of trends that help spot suspect claims.
Ensuring Safeguards Don’t Limit Legitimate Claims
The due process offered to claim filers is an important consideration. What notice to send—and what appeal rights to afford—are targeted and complex considerations in striking the right balance of safeguarding the process and encouraging legitimate claims.
The administrator must work with the parties to ensure that the nature of the claim types and the benefits being offered are weighed against the burden any real claimant faces when encountering a program’s safeguards.
A good fraud detection program works in tandem with well-written, effectively issued notice to encourage the level of participation needed to achieve successful resolution of a class action settlement.
BrownGreer Partner Roma Petkauskas assists counsel, courts and companies with the development and implementation of complex claims settlement programs. Serving in claims administrator and Settlement Master roles, she provides subject-matter guidance on effective and efficient program implementation, internal controls, and fraud prevention and detection.
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