Tens of thousands of payments sent to potentially fraudulent class-action claimants
A man shops at a Toronto Loblaws store in 2018. In 2024, Loblaw Cos. Ltd. and its parent George Weston Ltd. agreed to a $500-million settlement in two class-action lawsuits over the companies’ role in a scheme to fix bread prices from 2001 to 2015.
Tens of thousands of payments totalling $3.7-million in the recent class-action settlement over bread price-fixing in Canada have been flagged by banks as possible fraud, according to court documents obtained by The Globe and Mail. Administrators in charge of the settlement payments are now seeking to recoup part of the money. Some of the suspect payments have been frozen by banks, while others may be unrecoverable.
A portion of the frozen payments may ultimately be deemed legitimate.was agreed to in 2024 by Canada’s largest grocer, Loblaw Cos. Ltd., and its parent, George Weston Ltd., to settle two class-action lawsuits over the companies’ role in a scheme to fix bread prices from 2001 to 2015. Many Canadians received their part of the settlement in May.
However, shortly after those payments were issued, the company administering the settlement “was notified of possible fraudulent activity,” according to documents filed with the Ontario Superior Court of Justice on June 8. The case, which is likely the largest and most complex class-action settlement in Canadian history, has been a magnet for fraudsters attempting to get their hands on millions of dollars meant to compensate consumers affected by the scheme.
During the application process, the settlement administrator, Verita Global LLC, blocked approximately 40 million requests to the website where claim applications were filed because those requests failed Verita’s security measures – including screening for patterns that indicated bot activity or fake identities. Verita issued a successful take-down request for a website ; and reported fake text messages asking for banking details purportedly related to the settlement to the Canadian Anti-Fraud Centre.
Verita also rejected millions more claims, for example because people with the same postal or e-mail address submitted multiple applications. But even after those initial screening measures, tens of thousands of payments were sent to potentially fraudulent claimants. Overall, nearly 3.6 million payments totalling $174.2-million were made as part of the Ontario class action – which covered all claimants in Canada outside of Quebec.
Approximately 2 per cent of those were identified by Interac, the payment partner for the settlements, as suspicious. Canadian banks, identified only as “smaller” financial institutions in court filings, flagged a high number of settlement payments going into the same accounts. “That means a relatively small number of bank accounts are absorbing a disproportionate share of the settlement payouts, far more than would be expected from legitimate individual claimants,” Ivan Bobanovic, Verita’s vice-president of settlement administration in Canada, stated in an affidavit filed in court. The claims process asked applicants for information such as names, dates of birth, home and e-mail addresses, and phone numbers. It also asked for details of their bread purchases.
While it did not ask for receipts, it did require an attestation under penalty of perjury that the submissions were true. Verita suspects that fraudsters submitted multiple claims by applying under different names and e-mail addresses, and then forwarding the deposit links for the settlement funds to e-mail addresses linked to bank accounts they controlled. Class-action settlements that involve small payouts often don’t require proof of eligibility, to make it easier for valid recipients to apply for money.
However, the shift to digital payments has increased the risks of fraud by making it easier to forge large numbers of bogus claims. In a 2024 analysis of nearly 600 class-action cases in the United States, Arizona-based Western Alliance Bank, which owns a payment service for class actions, said that there had been an explosion in potentially fraudulent claims.
More than 80 million claims with significant indications of fraud were made in 2023, a year-over-year increase of more than 4,000 per cent, the report said. In this case, the banks that brought the issue to Verita have frozen some accounts that processed the suspicious transactions. Bank of Nova Scotia, which is Verita’s banking partner to make the settlement payments, according to court documents, is now working with the other banks to determine whether frozen funds can be returned.
Lawyers for the class-action will go to court on Monday to seek approval to screen the frozen payments to determine if any are legitimate, and if so, to reissue them. Any remaining funds will go into an account administered by Verita, which will indemnify Scotiabank against any claims related to the returned funds. Verita could then create a new settlement fund that would eventually be distributed to Canadians.
Loblaw and George Weston first admitted to participating in the allegedly “industry-wide” bread price-fixing conspiracy in 2015, when the companies reported the scheme to the federal Competition Bureau in exchange for immunity from criminal charges. The admission sparked several class-action lawsuits, which were eventually consolidated into the two cases in Ontario and Quebec.
While the total amount of Loblaw and George Weston’s settlement was $500-million, not all of that money was involved in the recent payouts. Subtracting the amount Loblaw paid out in gift cards, the remaining settlement was $404-million, 22 per cent of which was allocated to the Quebec claimants.
After lawyers’ fees and other costs, as well as a portion to pay businesses who bought bread and were also affected by the scheme, roughly $175-million was available to claimants elsewhere in Canada. The Quebec bread settlement has not been affected by similar fraud suspicions. In an interview, Michael Vathilakis, a lawyer for the Quebec plaintiffs, said all submitted claims were associated with verified e-mail addresses. The Quebec payouts are handled by a different administrator, Montreal-based Concilia.
Please follow us on Google to support us Canada News Breaking News Video Canadian Breaking News Breaking News Globe And Mail Breaking News Globe And Mail Canada News Photos World News Local News National News Us News Foreign News Sports News Arts News Life News Lifestyle Canada Traffic Canada Weather Trudeau Government Federal Government Canada Sports Canada Sports News Politics Politics News Political News Political Opinion Environment Economy Technology Education Travel Canada Alberta Bc British Columbia Manitoba Ontario Quebec Nova Scotia Pei New Brunswick Newfoundland And Labrador Nunavut Northwest Territories Yukon Globe And Mail
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Spotify removed thousands of phony drug sales podcasts, investigation findsSpotify has removed tens of thousands of phony podcasts promoting illegal online pharmacies, a new investigation has found, after reports from CNN and other news outlets exposed the issue last year.
Read more »
Power restored for 17,000 Manitobans, more expected todayManitoba Hydro crews have been toiling to restore power to tens of thousands of Manitobans after a mammoth spring storm toppled power lines and poles across the province.
Read more »
Ontario Place parking garage contract awarded for $200MTORONTO — Ontario taxpayers will spend $200 million on a new parking garage at Ontario Place, but the government says it will quickly generate tens of millions of dollars in annual revenue.
Read more »
Visa deepens AI commerce push with OpenAI payments and stablecoin settlement expansionVisa unveiled new AI-commerce and stablecoin infrastructure products as payment networks race to support autonomous digital transactions.
Read more »