Each year, thousands of business owners are targeted for individual and class action consumer claims. To protect against these actions, businesses can adopt measures that help reduce the risk of being targeted while at the same time developing plans that improve the chances of successfully defending against such claims. Below are five steps to help safeguard against individual and class consumer claims.
1. KNOW THE SOURCES OF CONSUMER CLAIMS.
Most consumer claims originate from a company’s website, marketing and advertising, or products and packaging. Websites can lead to claims related to ADA accessibility and data privacy. Marketing and advertising risks include issues such as consent for text and email marketing, false or misleading advertising, and greenwashing claims. Products and packaging can result in claims under California’s Proposition 65 or based on misleading package design, such as “slack-fill” claims, where the product amount is deceptive relative to the packaging size.
2. UNDERSTAND IF YOUR COMPANY IS A TARGET.
Every company, regardless of its size, is a potential target for consumer claims. Plaintiff’s attorneys in these cases do not discriminate; they target businesses ranging from small “mom and pop” shops to Fortune 500 corporations.
3. HAVE A COMPLIANCE PLAN IN PLACE.
Assessing and understanding your company’s potential vulnerabilities to consumer claims is the first step in mitigating liability. For instance, hospitality groups and restaurants are particularly vulnerable to ADA claims, while producers and sellers of consumer packaged goods face a higher risk of Proposition 65 and misleading packaging claims. Once a company understands its vulnerabilities, it should thoroughly review its current practices to ensure legal compliance and make necessary adjustments. Examples of strong compliance practices include:
• Use an accessibility tool or consult with a web designer to ensure that your website is compliant with the Web Content Accessibility Guidelines.
• Ensure that consent is obtained and documented in accordance with the Telephone Consumer Protection Act (TCPA) and similar state laws for email
and text marketing.
• Understand whether any of the approximately 1,000 Proposition 65 chemicals are present in your products or packaging.
• Carefully review any green marketing statements to ensure that they are factually supported and legally compliant.
• Examine copy on packaging designs to ensure all statements of fact are verifiable.
4. CONDUCT PERIODIC AUDITS FOR CONTINUED COMPLIANCE.
Compliance is not static. Laws evolve, plaintiff tactics shift, product formulations change, and business practices adapt. What was once compliant may no longer be valid. Companies should periodically review and reassess their compliance plans, especially after any significant changes are made to their products, packaging, or website.
5. HAVE A PLAN IF YOU RECEIVE NOTICE OF A CONSUMER CLAIM.
Even companies with a robust compliance plan can still be targeted by consumer claims. Compliance does not guarantee protection against frivolous claims. If you receive notice of a consumer claim, here are the first three steps you should take:
• Stay calm. A blustery demand letter does not mean your company is liable.
• Seek advice of counsel as soon as reasonably possible. Many consumer claims have a formal deadline to respond or you risk losing rights. Any response strategy should be carefully considered with the advice of counsel.
• Conduct an audit and formulate a remediation plan in conjunction with counsel to keep it privileged to the extent possible.
Safeguarding your company against consumer claims boils down to a few manageable steps. First, identify the major risk areas for your business— whether it’s your website, packaging, or advertising—and develop a compliance plan for each. Second, conduct regular audits to ensure ongoing compliance. Finally, have a plan in place to respond promptly to any consumer claims you receive. By following these steps, you can lower your risk of being targeted for consumer claims and streamline the defense process if claims arise.
Sedina L. Banks and Ira M. Steinberg are partners at Greenberg Glusker and members of the firm’s Consumer Claim Defense Group, which defends clients in e-commerce, fashion, food and beverage, consumer packaged goods, and retail from consumer claims including data privacy practices, disability access, false advertising, and consumer packaging. Learn more at GreenbergGlusker.com.
