Extract from Rhys Dipshan’s article “As Class Action Settlement Fraud Explodes, Legal Tech Sees an Opportunity”
In a class action lawsuit against Altria Group over their Juul e-cigarettes, it likely came as no surprise that the class numbered in the millions. What may have been a shock, though, was that the number of claims received for a proposed settlement exceeded 14.4 million—almost five times more than expected. But, as plaintiff’s attorneys for the class action told the judge, over 80% of those were likely invalid or fraudulent.
Of course, fraud in class action claims is hardly new. But now, the scale of such malicious activity is reaching new heights.
A report published earlier this year by Western Alliance Bank and its wholly owned subsidiary digital payments platform Digital Disbursements found that among 597 class action and mass tort distributions between 2019 and 2023, claims with significant indicia of fraud skyrocketed 400% in 2023, compared to the year prior.
Much of this explosion in fraud comes down to technology—both a consequence of the growing prevalence of digital payments and of fraudsters leveraging AI-powered tools to scale their efforts to once-unimaginable heights.
But settlement administrators, too, have turned to technology to help them manage what can easily become an overwhelming task—and some in the legal tech market are paying close attention.
