Attorney General Schwalb Forces Class Action Claims Company to Stop Exploitative Practices

Attorney General Brian L. Schwalb today announced that Communion, Inc. (operating as ClaimClam), which files claims in class action and other large lawsuits on behalf of customers, will significantly reform its business practices after an investigation by the Office of the Attorney General (OAG) found that it was using predatory marketing tactics to lure District residents into signing up for its services. ClaimClam ran social media advertisements urging District residents to take immediate action regarding large lawsuits where they might be entitled to compensation, including in OAG's ongoing litigation against RealPage, Inc. and District landlords for artificially inflating rent prices. However, ClaimClam failed to disclose that 1) it is unaffiliated with any of the promoted cases; 2) there are standard, free alternative methods for filing class action claims, and 3) many of the cases advertised have not yet reached settlement-and may never reach settlement.

"At a time when too many Washingtonians are struggling to make ends meet, ClaimClam sought to take advantage with false promises of an easy, class action payout," said Attorney General Schwalb. "Fortunately, we were able to put a stop to its deceptive business model before anyone was seriously harmed. We will continue to protect District residents' pocketbooks by holding accountable anyone that unscrupulously tries to financially exploit them."

OAG's investigation found that ClaimClam:

• Misled consumers about its lack of affiliation with the settlements and cases it promoted in its advertising.
  
• Failed to adequately disclose that consumers are charged 15%, and in some cases 40%, of their claim recovery for ClaimClam's services.
  
• Misrepresented the status of cases, leading consumers to believe settlements were guaranteed.
  
• Deceived consumers about the risks and burdens of filing their own class action claim for free, the standard practice.
  
• Utilized predatory contract terms with consumers, requiring they waive all rights to directly collect settlement funds or receive direct communications from a settlement administrator, and agree that ClaimClam reserves the "right to change its price and institute new charges at any time," with an update to ClaimClam's website serving as sufficient notice.
  
• Failed to disclose its financial relationship with Mensch LLP-the primary law firm the company recommends to Consumers for its law firm partnerships, and which ClaimClam characterizes as an independent firm, although it is co-owned by ClaimClam's owner and founder.

Under the terms of the settlement, ClaimClam will:

• Prominently disclose that it is not affiliated with the settlement/case promoted in its advertisements and that it charges a fee for its services (including the amount of each fee and any additional fees) and notify retained customers via email of any change in fees.
  
• Remove from user agreements several identified, potentially violative terms and provisions.
  
• No longer advertise that submitting a claim oneself is riskier or more burdensome than submitting a claim via ClaimClam's services and disclose when a free claims process is available or may become available.
  
• Clearly advertise when a promoted case has not yet reached a settlement.
  
• Release all consumers who signed up for ClaimClam's services for any private case or OAG lawsuit and notify them of the company's lack of affiliation with these cases.
  
• Pay $55,000 to the District in civil penalties.

A copy of the settlement is available here.

This matter was handled by Assistant Attorney General Brittany Nyovanie, under the supervision of Director of the Office of Consumer Protection Adam Teitelbaum and Deputy Director of the Office of Consumer Protection Kevin Vermillion.

How to Report Unfair Business Practices

OAG protects DC residents from fraud, exploitation, and deceptive business practices by investigating and mediating consumer complaints, educating residents about their rights, and taking legal action against businesses and individuals that harm residents and break the law. Since January 2023, OAG has obtained nearly $50 million through enforcement actions and settlements on behalf of DC consumers.

To report scams, fraud, or unfair business practices, contact OAG's Office of Consumer Protection:

• Submit a complaint online at: https://oag.dc.gov/consumer-protection/submit-consumer-complaint
• Call the consumer protection hotline at (202) 442-9828
• Send a complaint via email to [email protected]

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