November 11, 2019 / 10:41 PM / 3 months ago

Equifax settlement faces objection campaign by class action disruptor

(Reuters) - On Friday, an entrepreneur named Reuben Metcalfe posted a Medium essay entitled “You Have a Right to Object to the Equifax Settlement.” Metcalfe offered a quick summary of the controversial proposed settlement, which would resolve claims by nearly 150 million Americans whose data was compromised in a 2017 breach at Equifax, arguing that for most class members, the deal is a dud. Breach victims who meet the settlement’s requirements for a payout from a much-publicized $32 million cash fund will wind up with less than $5, Metcalfe said. And those who opt for credit monitoring services will receive that service from Experian – which has itself experienced a major data breach. It’s no wonder, Metcalfe said, that Equifax shares are up more than 40% this year.

“The Equifax settlement is an objectively bad deal,” Metcalfe wrote. “It is not fair. It is not adequate. It is entirely unreasonable.”

Metcalfe isn’t just complaining about the settlement, though. As his Medium post explains, he has created a website,, to help members of the Equifax data breach class file objections to the proposed settlement. A chatbot at the site walks class members through the process of registering an objection, opting out of the class or even filing a claim (though the chatbot warns that cash payouts will be small).

Metcalfe’s site went live on Friday morning. After several hours - and without paid advertising - more than 100 Equifax class members had used the chatbot to register their objections to the proposed settlement. By midday Monday, Metcalfe said, the number was up to “several hundred.” Those objections will be formally filed in the Equifax docket within days, Metcalfe said.

To the best of my knowledge, Metcalfe’s objection campaign is the most organized resistance to a proposed class action settlement since a 2005 effort to amass objections to a proposed settlement of a California state court false advertising class action against Netflix. That campaign, in which about 400 class members joined an objection drafted by the class action firm Edelson and posted at a website critical of Netflix, forced Netflix to improve the terms of the deal.

Metcalfe’s Equifax-protesting chatbot is vastly more technologically advanced than the Netflix campaign. But there are also vastly more class members in the Equifax case. It will undoubtedly take thousands of objectors to make a dent in settlement prospects. About a dozen class members have written individual letters of objection to U.S. District Judge Thomas Thrash of Atlanta; objectors and opt-outs have a Nov. 17 deadline to file their protests with the court. The final approval hearing is scheduled for Dec. 19.

Equifax counsel David Balser of King & Spalding did not respond to an email requesting comment on Metcalfe’s objection campaign.

Class counsel Kenneth Canfield of Doffermyre Shields Canfield & Knowles said in an email that Metcalfe is wrong about key settlement facts, including the total amount of cash available for payments to consumers, which will be at least $380.5 million. (Most of that money is earmarked for consumers who can show their data was actually misused as a result of the Equifax breach. They are eligible for up to $20,000 if they can document their time and expenses to correct fraud or identity theft; claimants who can’t show their data was misused are eligible only for a share of the $32 million fund – and only if they’re already signed up for a credit protection service.)

“Millions of Americans have already filed claims for benefits valued at nearly $6 billion, wrote Canfield, speaking for himself and co-counsel Amy Keller of DiCello Levitt Gutzler and Norman Siegel of Stueve Siegel Hanson. “As it stands, we expect that consumers with out of pocket losses will receive 100% reimbursement for their claims.”

Class counsel submitted an Oct. 29 motion for nearly $79 million in fees and costs, which described the requested fees as about 20% of the total cash available to consumers.

In a way, Metcalfe told me Friday, he’s compromising his own business interests by calling for Equifax objections. Metcalfe is the founder of a two-year-old startup called Class Action Inc which is intended to help consumers file class action claims in exchange for 5% of their recovery. The premise of the business is that consumers miss out on billions of dollars a year by failing to file claims in settled class actions. Using online ads, Class Action Inc has signed up more than 100,000 subscribers, according to Metcalfe, with the pitch they can pocket about $500 a year from class action settlements just by answering a few questions online. (Class Action Inc promises its customers that it will not sell their data.)

The company tracks hundreds of class actions, alerting subscribers when a case has settled and they may be eligible to file a claim. After streamlining and automating the claims process, it files claims in a batch for all of its eligible subscribers. In the lithium ion battery class actions for indirect purchasers, Metcalfe told me, Class Action Inc filed 47,000 claims. In a 2018 Telephone Consumer Protection Act case against the mortgage servicer Ocwen, the company filed nearly 4,000 claims.

Filing objections is not part of the business model: Metcalfe’s company only makes money when his subscribers file claims or when they receive recoveries in opt-out cases. Unlike lawyers who represent objectors, Class Action Inc is not a law firm and cannot request a fee award from the court if objections end up prompting improvements to the settlement.

I asked Metcalfe whether skeptics might say his Equifax objection campaign is a way of spreading the word about Class Action Inc and adding subscribers to his base. (I should note that Metcalfe did not pitch me this story. I heard about him from a plaintiffs’ lawyer.) So far, Class Action Inc has not encouraged its current subscribers to object to the Equifax settlement although Metcalfe told me he intends to make that pitch to his base. He said the company is informing Equifax objectors at the site that Class Action Inc exists, but is not running ads for the business in association with the Equifax objector campaign.

In the long run, though, Metcalfe said he’s encouraging objections to the Equifax settlement because he wants to improve accountability for companies that handle consumer data – and to improve the class action system. “This is a long game,” Metcalfe told me.

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