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Wacky Legal Idea: Using Class-Action Lawsuits To Gather CRM Data

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Attorney Mark D. Rasch is the former head of the U.S. Justice Department's computer crime unit and today serves as Director of Cybersecurity and Privacy Consulting at CSC in Virginia.

Here's your wacky legal strategy idea of the month: Settling a mostly frivolous multimillion-dollar lawsuit can be such a great CRM data generation mechanism that companies might consider filing such class-action suits against themselves. One recent class-action settlement delivered more marketing value to the defendant than it could have ever hoped for.

That defendant is using the litigation to collect consumer information. It is learning the names, addresses, E-mail addresses and some purchasing habits of not only actual consumers but, presumably, about people who never bought the product and yet are interested enough (in either the product or the $20) to lie about having bought the product. There doesn't appear to be any limitation on how that information can later be used for marketing (haven't reviewed the full settlement yet).

Here's what happened: A class-action lawsuit against the makers of Nutella for falsely insinuating that its hazelnut spread is "healthy" was recently settled, and consumers who had bought Nutella within a specified timeframe can log onto a Web page and get a coupon for up to $20 off Nutella—$4 off for as many as five jars of Nutella purchased in the past. The company has set aside $3.05 million for settlement and is reportedly worried that this won't be enough. All consumers have to do to receive the coupon is log into the class-action settlement Web site and provide their name, address, telephone number, where and when they bought the product (don't worry, they don't check and they don't require receipts), and how many jars of the product they purchased (up to five). "I bought five—pinky swear!"

At first glance, this sounds like a public relations nightmare for Ferraro, the maker of Nutella. It seems even worse when you see the "deceptive" ad in question. So if you were Ferraro, would you settle? My answer is absolutely! But not for the reason you may think.

There are always vexatious lawsuits out there. Sure, Ferraro was implying that you could use Nutella (which, after all, is nothing more than a semi-liquid Snickers bar) to get kids to eat "healthy" foods. But the "settlement" and the payout achieve more than just getting rid of pesky litigation. First, brand awareness is increased—and this time not really in a bad way. OK, Nutella isn't "healthy," but—hmmm—it does sound tasty. Second, the class-action plaintiffs' lawyers are reaching out to both Ferraro's customers and non-customers alike and telling them about the product. Newspaper articles are talking about the product, and many of them are praising the company and the product.

Finally, of course, the coupons can be used to purchase more product. Presumably some portion of those who lied about having bought the product will get the $20 coupon, buy a jar of Nutella, put it on some Belgian waffles and decide to become consumers! A marketing wolf in a lawsuit's sheep's clothing.

Now, I am not really saying that companies should arrange for sham class-action lawsuits as a ruse to collect information about customers. That would be wrong. But when deciding what to do if such a lawsuit is filed, remember that you might be able to use it to your advantage. And that would be sweet and healthy for the bottom line.

If you disagree with me, I'll see you in court, buddy. If you agree with me, however, I would love to hear from you.

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