Why Zappos Data Insolvency Resolution Is so Laughably Low

Do you remember how Amazon-owned online shoe store Zappos had a data breach in 2012 that revealed usernames and passwords of 24 million customers? No, you have forgotten it among all the other data breaches since: Equifax, Yahoo, Marriott, etc. Until today, when the class action administrator sent out what appears to be the most disappointing settlement in history. Did you think getting a couple bucks from Equifax is bad? How about 10% off your next purchase at Zappos?

Affected consumers received an email with a one-time code that will be used to receive a 10% discount on future purchases on Zappos.com (excluding shipping and taxes!), Signed by “Your friends at Zappos”.

How did this wretched settlement come about?

The settlement has been tentatively approved and a final approval hearing will take place in December. If you’re wondering if anyone has a better offer than you, they certainly didn’t: Under the agreement, each of the nine representative plaintiffs in the case is paid $ 2,500. The remainder of the $ 1.6 million settlement fund is mainly used to pay for the services of lawyers.

The discount code expires on December 31, 2019. The masses are unhappy and have turned to our digital public platform: Twitter.

Several circumstances made the case tricky, explained Adam Moskowitz , a Miami-based group lawyer. First, there was not much evidence that consumers suffered from a hack other than the hassle of changing their passwords. And since Zappos was not found to be negligent in its security efforts, it was more difficult to hold the company liable.

In addition, the case took seven years. It’s almost two presidential terms, all of you. The class first struggled with an arbitration clause, which Zappos claimed protected it from prosecution for violation. The case went to the Supreme Court, although the court rejected the request to hear it. Moskowitz said the total settlement amount appears to be quite low for the actual amount of time the legal team was likely to have spent on the case.

How to get a better deal

If you’ve been directly affected by the Zappos Hack, you shouldn’t expect to be satisfied with the 10% coupon. You can opt out of participation and hire a lawyer who will fight for you individually. But Moskowitz suspects the dropout rate for the settlement will be very low.

“It’s better than nothing,” Moskowitz said of the discount, explaining that in an amicable settlement, the plaintiff and the defendant agree together on damages (your compensation). Zappos had nothing to offer, arguing that it contributed by strengthening its security, the coupon is a manifestation of goodwill. The discounted offer might give Zappos a couple of days of bad press, but fans of the brand will still buy the shoes. Unlike many other online retailers, Zappos is notorious for not offering coupon codes regularly. The company does offer a 10% discount for students, teachers and military personnel, although one attorney indicated that the current discount does not add up to a checkout coupon.

One interesting detail for anyone who has ever received a coupon in exchange for your pain and suffering: Moskowitz said that settlements offering a class coupon or discount are much less common than before. Settlement judges take a closer look at such offers as they tend to harm consumers who may have abandoned the product or brand after being confronted with it.


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