Hundreds of consumer class actions are filed in the United States every year. A class action in general is a nightmare for any business. And the bigger the company, the higher the chances of being involved in such a class action. For large corporations, these lawsuits have long been a routine, inseparable part of business. Despite the fact not all lawsuits are being won by plaintiffs, there are more than enough cases when companies are ordered by court decisions to shell out sums of money with six zeros or more.
In this article, we want to discuss what actions companies can take to prevent a situation from getting escalated to the courtroom and to avoid consecutive massive financial losses. We are not trying to give recommendations that will help a company avoid liability. Instead, we’re going to tell you how you can identify issues customers had with your company and solve them proactively.
How Class Action Attorneys Find Plaintiffs
Plaintiff’s attorneys need to find people who have the same problem with a particular company. And they have to do it in a rather limited amount of time.
Attorneys use a variety of strategies to identify, contact and convince potential plaintiffs to be engaged in class actions. These methods include advertising through various channels, including television, radio, and social media campaigns. There are also consumer complaint databases and professional networks. Attorneys also regularly monitor and leverage information on review sites such as PissedConsumer, TrustPilot, Sitejabber, and numerous industry-specific review websites.
Negative Reviews is a time bomb
Review sites serve as a mouthpiece for millions of users around the world. Thousands of reviews are posted every day. Class action plaintiff attorneys track and regularly monitor complaints about companies of interest. Below are a few more examples of how they use customer review websites in their work:
Identifying Patterns of Misconduct
When multiple individuals report similar problems, it becomes evident that a systemic problem might exist. Such cases attract the attention of attorneys and cause them to dig deeper into a problem. It could be fuel for a future consumer class action.
Consumer reviews are important evidence in building a case against a company. They provide real-life accounts that help establish a pattern of behavior or harm caused by a business.
Reaching Potential Plaintiffs
Consumer class action attorneys can use review platforms to find plaintiffs with shared experiences and grievances, simplifying the process of putting together a class action lawsuit.
So,why is it important for businesses to know all this? Because you can manage customers' feedback on review platforms. It’s a powerful option in a class action attorney’s arsenal, and you can control it fully.
Our research shows that more than 20% of our users leave reviews and complaints for a company to solve their problems. These are your consumers, your clients who want to be heard. If you don't listen to what they have to say, class action attorneys will.
How Review Management Helps You Decrease Risks of Class Actions
Regular review management and a proactive approach to addressing consumer concerns described in complaints is a comprehensive solution that will reduce the risk of being dragged into litigation.
Addressing Customer Concerns
When you monitor customer reviews and complaints regularly, you can address customer issues and prevent them from escalating into more significant problems. Resolved reviews are unlikely to be interesting for class action attorneys. Moreover, responding to all reviews helps strengthen your brand reputation. Thus, potential clients will see that your company actively communicates with customers and solves their issues.
Responsive Attitude towards Customers
A business showing a desire to help in a lot of cases deters potential plaintiffs from pursuing a legal action. It encourages them to resolve their issues through direct communication with a business. Engage with your customers respectfully and professionally to demonstrate that a bad experience with your business was an unfortunate accident. Many reviewers want a company to hear their voices and solve problems caused by company’s products or services.
Proactive Risk Assessment
Regular reputation management provides a proactive risk assessment to identify potential areas of vulnerability to class actions. Once you determine that several users have already complained about the same issue, you have time to address these vulnerabilities before a legal action occurs and to solve problems with a few customers instead of many.
Transparency and Trust
Businesses perceived as honest and transparent are less likely to be targeted in class actions, as plaintiffs may prefer to go after companies they believe are hiding their wrongdoings. Openly addressing issues on review platforms is one of the keys to achieving transparency and building trust.
When you engage with customers on review platforms, these interactions are usually recorded. Even if your attempt to solve an issue, and it ends up in court later, such records can be valuable proof showing your efforts to resolve the dispute and can serve as evidence.
Successful Settlement Negotiations
When a class action has already been initiated, settlement is often an option for a company. A solid online reputation and constant addressing of customer concerns can be an asset during negotiations, potentially leading to more favorable settlement terms.
Large consumer class actions in 2022
In conclusion, here are some examples of class actions, where companies were ordered to pay.
- Student loan service provider Navient: the settlement is $1.85B, 2022
- Whirlpool: the settlement is $21M, 2021
- TTEC Services Corp. and Health Net: the settlement is $2.5M, 2023
- Afni, the settlement $1.9M, 2023
- Meta Platforms Inc., the settlement is $725M, 2023
If you read this article and asked yourself: "How is our company's online reputation? We may need reputation management, too. Where do we start from?" We recommend starting with an online reputation audit. You can always contact our experts if you need professional help.
1. While every effort has been made to ensure the accuracy of this publication, it is not intended to provide any legal, medical, accounting, investment or any other professional advice as individual cases may vary and should be discussed with a corresponding expert and/or an attorney.
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