“Low participation rates essentially make class action lawsuits a get-out of-jail-for-’free’ card for corporate wrongdoing.”
by Teresa B.
A quick look at the news on any given day tells us that privacy violations and data breaches abound as tech companies and corporations become more powerful and hold more data than ever before.
What can we do about it? Class action lawsuits and mass arbitrations are among the few tools consumers have in their arsenal to truly hold corporations accountable. However, according to the FTC a staggering 91%-96% of class action claimants do not file a claim. A startup called ClaimClam wants to change this.
In this Q&A, ClaimClam founder Zim Hang describes the importance of holding corporations accountable, the controversial and nuanced world of class actions, and what ClaimClam’s startup journey has revealed about what works, and what doesn’t, in the consumer rights landscape.
Let’s start with the basics. What does ClaimClam do exactly?
Essentially, we’re a settlements and litigation matching service for consumers and lawyers tackling corporate wrongdoing. We help to locate and educate potential claimants in cases against AT&T, Google, Adobe, Temu, Ticketmaster and more. In the last year, we’ve recovered about $1.3 million for over 40,000 claimants.
When we initially launched in late 2023, we were highly focused on claimant acquisition for settled cases; however, in recent months we have shifted our focus away from the class action space to better serve both consumers and law firms. We see significant gaps in other areas of law, such as mass actions (i.e. individually filed cases en masse) related to privacy and data breaches, where corporations often exploit consumer data and rely on compelled arbitration waivers to minimize accountability. In these cases, consumers face even greater challenges in filing claims, often with fewer resources than in class actions.
Tell us more about the strategy shift. What’s the difference between class actions and what you’re describing? What is a ‘compelled arbitration waiver’ ?
The shift comes down to recognizing the limitations of class actions and the opportunities for impact in other areas of consumer rights. Both class actions and what we’re focusing on—mass actions—serve to hold corporations accountable, but they operate very differently.
Class actions are a procedural mechanism where one or a few representatives sue on behalf of a larger group with similar claims. These lawsuits often result in low participation rates and small payouts for consumers. The process can take years, and many potential claimants either aren’t aware of their rights or don’t think it’s worth the effort to participate. Worse, the low payout rates often leave corporations largely unscathed, which undermines the accountability these lawsuits aim to create.
Mass actions, on the other hand, involve individuals filing their claims separately but in a coordinated manner. For example, with mass arbitration. This approach takes advantage of corporations’ own arbitration clauses, which they typically include in contracts to avoid class actions. These clauses force consumers into private arbitration rather than public court. Historically, this has worked in corporations’ favor because individuals rarely pursue arbitration alone—it’s too costly and complex. However, when thousands of consumers file individual arbitration cases simultaneously, it creates significant financial and logistical pressure on the corporation to resolve the claims.
A compelled arbitration waiver is a legal clause designed to prevent consumers from filing class actions by requiring disputes to be resolved through individual arbitration. While it limits class actions, it doesn’t stop consumers from taking action entirely. By coordinating mass arbitrations, we flip the script and use this clause as a tool for consumer justice rather than corporate protection.
Ultimately, the difference lies in participation and leverage. Class actions often leave consumers as passive participants. Mass arbitrations require active participation, but they can generate real accountability and more meaningful outcomes for those affected (e.g. 2x-50x greater payout for claimants). This is why we’re pivoting—to empower consumers to take more direct and impactful action against corporate wrongdoing.
Let’s talk about monetary compensation. How much are these settlements even worth? It seems like a lot of these cases require a lot of paperwork for maybe $25 that you won’t see for a year or more. What makes it worth it?
For class action settlements, even if it’s only $25, it’s still important to participate because your involvement helps hold corporations accountable. These settlements aren’t just about individual payouts—they’re about creating a deterrent for future misconduct and signaling to companies that consumers are paying attention. Corporations interpret low participation rates as consumer indifference, encouraging these wrongdoing companies to continue harmful practices with little impact on their brand or public image. By participating, you help enforce accountability and demonstrate that corporate reputation matters.
But of course, financial impact is the biggest lever. The difference with mass actions is that the compensation is usually higher. Instead of being part of a class and receiving a pro rata share of the settlement fund—which is typically a fixed amount and decreases as more people file claims—mass action claimants have their claims individually represented. As a result, many claims end up in the hundreds or even thousands of dollars range.
In fact, most Americans are owed at least tens thousands of dollars every year due to their rights being violated. We just aren’t aware.
For instance, if you used Google Incognito between June 2023 and January 2024 you could be eligible for compensation from multiple California Invasion of Privacy Act (CIPA) violations at $5,000 per violation. We’ve heard estimates that some users may receive $20,000 or more.
Wow. Just for opening a Google Incognito window?
There are a few other eligibility requirements, but yes. Users believed that their data was being kept private when using Incognito mode, but it turns out it wasn’t so ‘incognito’ after all and Google was using and selling browsing information. The motion for class certification was denied last year, largely due to issues with commonality among the proposed class members. However, affected users retain the right to file individual claims for damages. That’s where ClaimClam is helpful – we help match individual claims to legal counsel.
Ultimately, these companies make tens of billions of dollars from our data every year – when they promise us privacy, we are owed privacy. And when that’s violated, we should not just sit back and say “oh well.”
Tell us more about that. Is the lack of participation in these lawsuits part of why corporations continue to be negligent in their business practices, or overlook mistakes?
Exactly. Except, often they’re not ‘mistakes.’ Most of these companies have risk management teams that essentially look at a business strategy, marketing or sales tactic, et cetera, and they assess whether or not the risk of a lawsuit is worth the gain of whatever decision they’re planning to implement. More often than not, the profit far outweighs the potential risk.
For instance, imagine you’re a gaming company. You know that by incorporating gamification patterns and incentive loops designed to make your game more addictive, users—including children—will play longer and spend more money. You’re faced with a choice: follow ethical design principles and earn $10 billion per year, or implement addictive design patterns, earn $20 billion annually, and in five years pay a $20 billion settlement. Which would you choose?
Low participation rates encourage corporations to continue this behavior. They effectively turn these settlements into a get-out-of-jail-for-”free” card for corporate misconduct. To hold companies accountable, we need to collectively make these harmful decisions less profitable. Increasing participation and engagement in legal actions is a critical step toward changing the cost-benefit equation for these enterprises.
You’ve come across a bit of controversy and push-back along the way. Can you speak to that a little more?
Yes. So obviously in any industry you aim to ‘disrupt’ you’re going to discover that some people don’t want you there. There are also certainly some nuances that we overlooked. We’ve learned a lot about ways we can be more transparent about our own business model, particularly in our advertising.
Our belief is that these systems can and should work better for consumers, and we are committed to being part of that progress. Our product and performance is already contributing to a change in industry standards. However, it’s always a difficult balance between “move fast, break things” and compliance. We’ve been perhaps too far on the efficiency and effectiveness side of the spectrum, and are learning to slow down and listen to what is needed in the industry, as well as what the industry is ready for.
So what’s next?
We are continuing to build out our tech stack and investing in AI, which will ideally become somewhat of a protected coordination platform for consumers to find each other, share intel, and take action through the justice system.
Looking at the healthcare industry as a particularly relevant example right now: imagine if a subset of patients had a safe and dedicated way – unlike social media – to find each other, mobilize and take legal action against health insurance companies for a specific type of claim denial? That’s the type of solution we’d like to become.
