Why Blocking VPN Users in Class Action Settlements is a Risky and Unfair Strategy

In the ever-evolving world of class action settlements, fraud prevention is a critical concern. However, some administrators have turned to heavy-handed methods like outright blocking Virtual Private Network (VPN) users from submitting claims. While intended to prevent fraudulent activity, this blanket approach could lead to unintended consequences, including the risk of a settlement being rejected by the court. More importantly, it may unfairly prevent legitimate claimants from receiving the compensation they deserve.

 

At Digital Settlement, we understand that fraud prevention must be both effective and fair. That's why we use advanced tools that evaluate multiple factors to reduce fraud without resorting to blunt-force tactics like blocking VPNs outright. Here's why our approach is more balanced, secure, and likely to succeed in today’s class action landscape.

 

The Rise of VPN Blocking in Class Actions
 

Competitors in the settlement administration space are increasingly using VPN blocking as part of their fraud prevention strategies. VPNs are commonly used to protect online privacy by masking a user's IP address. Some individuals, including fraudsters, use VPNs to hide their identities or locations when submitting claims. However, blocking all VPN users assumes that anyone using a VPN is engaged in fraudulent behavior, which is far from the truth.

 

According to Forbes Advisor (2024) ”Virtual private network (VPN) adoption is surging across the globe as more people and businesses choose the technology to protect their internet activity.” They note that “47% use a VPN to enhance the data privacy of their personal information” and “66% use a VPN to help protect personal data.”^[1]

 

Many people use VPNs for legitimate reasons, such as:

• Enhanced online privacy: Some claimants use VPNs to protect their personal data, particularly in cases involving sensitive information like consumer protection or privacy breaches.

• Work-related usage: Individuals using corporate networks often connect through VPNs as a security measure.

Blocking VPN users completely not only inconveniences legitimate claimants but may also result in an invalid or non-compliant settlement process, risking approval by the court.

 

The Dangers of a Blanket VPN Ban
 

Settlement agreements often contain specific terms about how claims should be processed and evaluated, but many do not include any provisions about blocking VPN users. When administrators unilaterally implement this measure without addressing it in the settlement agreement, they risk facing legal challenges. Judges overseeing these settlements expect fair and transparent administration, and blocking VPNs can raise questions about whether the process was adequately designed to reach all class members.

 

Here’s why this approach can backfire:

• Non-compliance with the Settlement Agreement: If a settlement agreement does not explicitly allow for VPN blocking, implementing such a policy could result in a judge rejecting the settlement. Settlement agreements typically outline the claims process in detail, and deviations—especially those that could be perceived as exclusionary—can undermine the entire case

• Hindering legitimate claimants: VPN use should not automatically be equated with fraud. Blocking VPN users could unfairly prevent legitimate claimants from filing, especially in cases involving online privacy, where individuals are more likely to use VPNs to protect themselves. These are often the very people the settlement aims to compensate.

• Perception of bias: Courts and plaintiffs’ counsel demand a fair, unbiased process. By blocking claims from a subset of users—many of whom may have valid claims—administrators risk accusations of discrimination or lack of transparency, which could compromise the credibility of the entire settlement.

 

Why Digital Settlement Doesn’t Rely on VPN Blocking

 

At Digital Settlement, we recognize that VPN usage is just one of many factors that could indicate fraudulent activity. Our advanced fraud prevention system, developed in collaboration with ClaimScore, uses AI-based risk scoring to evaluate multiple data points in real-time, allowing us to accurately assess each claim without unfairly excluding potential claimants.

 

Here’s why our approach is superior:

• Comprehensive fraud detection: We use a combination of machine learning, historical data analysis, and behavioral patterns to assess the risk of fraud. VPN usage may trigger a higher risk score, but it is never the sole determinant for disqualification. This ensures that every claim is treated fairly while still catching suspicious activity.

• Adaptive scoring system: Our system considers various factors, such as IP addresses, submission behavior, geographic inconsistencies, and the frequency of claims from the same source. Instead of outright blocking claims, we use a proprietary, real-world tests scoring system. This ensures that valid claimants using VPNs can still submit claims, while potentially fraudulent submissions are properly scrutinized.

• Transparency and compliance: We adhere to the terms of the settlement agreement, ensuring that any fraud prevention measures we use are compliant and transparent. By avoiding blanket bans, we protect the fairness and integrity of the process, ensuring that courts and claimants can trust our methods.

The Balanced Approach to Fraud Prevention
 

Preventing fraud in class actions is a priority for every settlement administrator, but it must be done in a way that ensures fairness. Digital Settlement’s use of AI-driven claim validation offers a balanced approach that doesn’t sacrifice accuracy or fairness for the sake of brute-force methods like VPN blocking.

 

Why Digital Settlement’s Approach Works:

• Fairness: We don’t punish claimants for trying to protect their privacy. VPN usage is just one factor in a larger fraud detection framework.

• Efficiency: Our AI-based tools allow us to assess claims quickly and accurately, catching fraudulent submissions without delaying legitimate claims.

• Compliance: We ensure that our fraud prevention measures are fully compliant with the settlement agreement, protecting the integrity of the process and reducing the risk of the settlement being rejected by the court.

Conclusion: A Smarter Way to Combat Fraud

 

Class action fraud is a serious issue that needs sophisticated solutions, not knee-jerk reactions. 

 

By relying on brute-force measures like VPN blocking, competitors risk excluding legitimate claimants and running afoul of settlement agreements. At Digital Settlement, we are committed to using advanced, transparent, and fair technology to prevent fraud while ensuring that valid claimants receive their due compensation.

 

For more information on how Digital Settlement has pioneered fair and effective fraud prevention in class action settlements, visit www.digitalsettlement.com.