Best Buy, Dick’s Sporting Goods, Other Major Chain’s Software and Analytics Service Provider Invades Consumers’ Privacy and Falsely Labels Them Fraudsters, Class Action Alleges

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TRE Consumer Risk Score Lawsuit Overview: 

• Who: Consumers have filed a class action lawsuit against The Retail Equation, a service provider for retail companies that assesses and scores consumers’ behaviors to impose limits on how frequently they may return or exchange items—potentially labeling them as fraudsters
• Why: Major companies like Best Buy and Dick’s Sporting Goods use The Retail Equation, and consumers have complained about being denied returns or exchanges due to allegedly false risk assessments from these results and breaches in privacy
• Where: The nationwide class action lawsuit was filed in Pennsylvania

The Retail Equation, Inc. (TRE), a company that generates consumer risk scores for retailers, illegally gathers consumers’ personal data and falsely labels them fraudsters, stopping them from returning or exchanging items, a new class action lawsuit alleges.

The nationwide class action lawsuit was filed in Pennsylvania on July 17 by lead Plaintiffs William Hannum, Sean Frederick, Olga Maryamchik, Victoria Caruso-Davis, and Susana Guevara. 

The Retail Equation “works with retailers to warn consumers when their return transactions violate store policies or mimic excessive return behaviors. Sometimes the transaction is stopped,” according to its website.

The group of consumers allege that TRE, and a range of companies that use TRE’s risks reports, invade consumer privacy, violate state competition and consumer protection law, violate the Fair Credit Reporting Act, and are unjustly enriched.

TRE generates its risk scores through analysis of data it has collected on consumers from both retailers and other sources, which is collected and shared without the consent or knowledge of the consumers, according to the consumer risk scores class action lawsuit.

It provides its services to retailers targeted at “identifying and curbing employee dishonesty, consumer fraud and organized crime within retail,” the claim reads. It uses “a wide variety of data collection technologies in conjunction with stored data, including data collected from other merchants,” the claim adds.

TRE then uses the data to generate a consumer report containing a “risk score” for each consumer attempting to return or exchange merchandise. The score is TRE’s assessment of the likelihood the return or exchange consumer is committing fraud, or other organized crime within retail, the class action lawsuit states.

However, consumers in the TRE lawsuit say that TRE illegally shared, received, and used their personal data, and used it to deny valid returns and exchanges. The risk reports “resulted in numerous consumers being falsely labeled fraudsters and for their otherwise permissible returns or exchanges to be denied.”

William Hannum, one of the lead Plaintiffs, says in the class action lawsuit that he was denied a return or exchange at Advance Auto Parts due to a TRE risk report that he was unaware he was being subjected to. The other plaintiffs have similar stories at a range of retail stores including Best Buy and Dick’s Sporting Goods.

According to the claim, consumers do have the ability to request their own risk score, to appeal TRE and the retailer’s decision to refuse a return or exchange, or to review or correct the data that forms the basis for TRE’s risk score.

“Furthermore, TRE and retailers do not disclose to consumers the factors they consider in determining the risk score, or the minimum risk score a consumer must maintain to ensure their returns and exchanges will be accepted.”

The claim says that although the collection and use of this information without notice to or consent from consumers is “shocking and unlawful in itself, it is only the tip of the iceberg.”

“TRE’s filings with the U.S. Patent and Trademark Office are stunning and reveal data collection efforts that are far wider, deeper, and more intrusive than TRE admits.”

The class action lawsuit alleges that TRE uses not just data related to the consumer in question, but also “transaction data collected at points of return from other customers thought to be related to this customer by home address, family name, or other connecting data.”

In other words, the consumers argue, TRE factors into its analysis whatever data it has on people thought to be related to the customer by any “connecting data,” for example, if TRE believes (rightly or wrongly) that one of your Facebook friends is a fraudster, TRE may label you a likely fraudster as well, the claim reads.

“It is hard to imagine a more invasive collection and pernicious use of information in a ‘normal’ retail setting. Yet, there is no advance notice to consumers of TRE’s involvement in retail transactions; consumers are entirely unaware that they are submitting to this surreptitious process of judgment based on TRE’s analysis of all the information that its massive data mining effort has yielded.”

The consumers want to represent anyone in the country who has had their data accessed by TRE. They are suing for invasion of privacy, violation of state competition and consumer protection laws, violation of the Fair Credit Reporting Act, and unjust enrichment.

They are seeking certification of the class, damages, order of enjoinment, interest, legal fees, and a jury trial.

Have you ever been told you don’t qualify for a refund due to a TRE risk report? Let us know your experience in the comments section!

The consumers are represented by Benjamin F. Johns of Chimicles Schwartz Kriner & Donaldson-Smith, LLP; Tina Wolfson, Theodore Maya, Bradley K. King, Christopher Stiner, and Rachel Johnson of Ahdoot & Wolfson, PC; and Cornelius P. Dukelow of Abington Cole + Ellery.

The TRE Invasion of Privacy Class Action Lawsuit is Hannum, et al, v. The Retail Equation, Inc., Case No. 2:21-cv-00997-CB in the U.S. District Court For The Western District Of Pennsylvania.

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