Judge Asks Feds to Probe $400K in Fraudulent Claims in App Privacy Settlement
U.S. District Judge Jon Tigar asked federal prosecutors to investigate nearly 6,000 potentially bogus claims submitted in a $5.3 million settlement with app makers, including Twitter, Instagram and Yelp.
January 17, 2018 at 05:14 PM
3 minute read
A federal judge in San Francisco has flagged fraudulent claims filed in a privacy class action for investigation by the local U.S. Attorney's Office.
U.S. District Judge Jon Tigar of the Northern District of California took the extraordinary move of referring the case to local federal prosecutors after the claims administrator managing the $5.3 million settlement identified nearly 6,000 potentially bogus claims. Plaintiffs counsel in the case said the fraudulent claims could have siphoned away about $400,000 from legitimate class members.
In Tuesday's order, Tigar said he took no position on whether prosecutors should bring charges or not.
The underlying case, Opperman v. Kong Technologies, dates back to 2013. Plaintiffs targeted Apple Inc. and a group of app makers claiming that app makers violated users' privacy by accessing the contact information stored on their Apple devices. Apple beat back the plaintiffs' bid for class certification late last year after the app makers, including Twitter Inc., Instagram LLC and Yelp Inc., previously agreed to settle.
The lead plaintiffs lawyers on the case at Phillips, Erlewine, Given & Carlin and Kerr & Wagstaffe asked Tigar in November how to proceed after the administrator handling the claims process, KCC Class Action Services LLC, identified 5,924 claims that it suspected weren't submitted by class members. None of the identified claims used unique claim numbers provided in email notices that were sent out to potential class members. In addition, numerous claims had different physical addresses but came from identical IP addresses.
Todd Hilsee, a class action consultant with The Hilsee Group LLC who was not involved in the case, said that the case provides “a window into a practice that is more common now with electronic claims.”
“This is one of the undesirable or unintended consequences of electronic claims filing and electronic notice,” Hilsee said.
Tigar asked KCC to email the flagged claimants to ask for proof of identity and asked the administrator to report back after allowing a week for claimants to respond. Tellingly, KCC only received two responses and determined that neither of the underlying claims was actually submitted by a class member.
Kerr & Wagstaffe's Michael von Loewenfeldt, one of the lead attorneys on the case, said that KCC's screening meant that $400,000 in potential claims would be paid out to class members rather than fraudsters.
“Unfortunately, if you have an open claims process people will try to take advantage of it—and not very skillfully it turns out,” von Loewenfeldt said.
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