With the COVID-19 pandemic continuing to storm across the country, it is having a substantial affect in nearly every industry. The fallout from this pandemic will likely result in a wave of class action litigation. The Federal Trade Commission reported that as of April 21, 2020, there had been over 23,500 consumer complaints related to COVID-19 since January. The complaints range from allegations of fraud in the travel and retail industries to robocalls about prescriptions and debts. Consumers that have filed these complaints have alleged nearly $18 million in losses. It is inevitable that many of these complaints will evolve into consumer class actions.
Indeed, the industry has already seen number of those class actions filed over the last few weeks. In the past week, a number of large banking institutions were sued in the Central District of California and other jurisdictions. The class actions alleged unfair and fraudulent business practices in the handling and processing of the Paycheck Protection Program applications. In addition, several sports organizations, entertainment companies, and concert venues have been sued across the country for violation of consumer fraud statutes alleging a failure to refund consumers for tickets to various events that will no longer take place. Countless airlines are being hit with class actions asserting unfair practices and breach of contract claims for failure to provide refunds on cancelled tickets. Insurance companies are defending against class allegations of wrongful denial of claims for lost business due to COVID-19. The list of recently filed class actions goes on, and this is just the tip of the iceberg.
As the economies restart and businesses adjust to a new normal, companies should consider how their operations could create exposure to new claims. For instance, we expect to see an uptick in contract based claims involving companies’ processes of issuing refunds for services not rendered; negligence based claims asserting a failure to protect the health of employees and customers; and biometric claims based on temperature checks or other screening methods put in place to check for COVID-19 symptoms. The impact of COVID-19 on business operations, consumer activity, and economic forecasts has made clear that consumer class actions are on the rise and are creating a significant risk to businesses that will have to respond to these claims. Companies should take preventative measures now to lessen their potential exposure to class action liability and prepare to weather this storm.