93A Demand Letters: Massachusetts Consumers Could Put Your Business at Risk

If your company sells products or services to Massachusetts consumers, you can face a Massachusetts consumer-protection claim even if your company is based outside Massachusetts.  A 93A demand letter can turn an ordinary customer dispute into a significant legal and financial problem, with potential exposure to double or treble damages and attorneys' fees.

A 93A demand is based on an allegation that a business engaged in an unfair or deceptive practice that harmed a consumer. That alleged conduct can arise from a wide range of consumer-facing business practices, including how a company advertises its products or services, presents prices or mandatory fees, structures subscriptions or cancellation processes, describes its services online, or collects and shares information through its website or app. These types of consumer-facing practices are receiving increasing attention from plaintiffs' lawyers, and a routine business practice can become the subject of a legal claim with potentially significant financial consequences.

For a consumer claim, the demand generally must be sent at least 30 days before a lawsuit is filed and must reasonably describe the conduct and injury alleged. The demand is an allegation, not a court finding. It may overstate the facts, misunderstand what the business actually did, or seek an amount that does not correspond to the consumer's actual injury. But a business should not assume that a questionable demand can simply be ignored. The way the company responds can affect its potential exposure if the dispute proceeds to litigation.

And the first 30 days matter.

The 30-Day Settlement Opportunity Can Limit Your Exposure

The 30-day period following receipt of a 93A demand gives the business an opportunity to evaluate the claim and potentially reduce its exposure if the consumer later sues. 

Under Chapter 93A, the business can make a written settlement offer within those 30 days. If the consumer rejects the offer and later brings a lawsuit, the business may be able to limit the consumer's recovery to the amount offered if a court finds that the offer was reasonable in relation to the consumer's actual injury.  The same offer can protect the business from some attorneys' fees and costs. If the consumer rejects a reasonable written settlement offer, the court must deny recovery of attorneys' fees and costs incurred after the rejection.

But the offer has to be reasonable. A nominal offer will not necessarily provide these protections. The amount should be based on the consumer's actual injury and the circumstances of the claim, and the court may ultimately determine whether the offer was reasonable.

That makes the decision about whether to make an offer, and how much to offer, an important legal judgment. Before making an offer, the company should consult counsel to evaluate the claim, the alleged injury, the potential damages, and what constitutes a reasonable settlement under the circumstances.

The stakes can be significant. Chapter 93A permits double or treble damages in certain circumstances, and a prevailing consumer generally may recover reasonable attorneys' fees and costs. A relatively modest consumer dispute can therefore become substantially more expensive if it proceeds to litigation. A reasonable settlement offer made during the 30-day period can be an important tool for managing that potential exposure.

What Should You Do When a 93A Demand Arrives?

The first step is to understand what actually happened.

• Review the facts.  Review the transaction, communications with the consumer, contracts, invoices, refunds, advertising, website disclosures, pricing, subscription practices, and any vendors involved in the challenged conduct.

• Evaluate the legal claim. A consumer's dissatisfaction does not automatically establish a Chapter 93A violation. Counsel can help determine whether Chapter 93A applies, whether the conduct was unfair or deceptive, whether the consumer suffered a legally cognizable injury, and whether the alleged conduct caused that injury.

• Determine strategy.  Depending on the facts, those may include disputing the demand, negotiating with the consumer, making a reasonable settlement offer, correcting an underlying business practice, or preparing to defend the claim in court.

The important point is to begin this process promptly and make these decisions during the 30-day period, while the statutory settlement opportunity is still available.

What If the Demand Involves Your Website?

For businesses that sell to consumers online, a 93A demand may involve something that happens on the company's website or app, not just the product or service itself.

A consumer might challenge how the business presents prices or subscription terms, handles cancellations, describes its products, collects information, or uses third-party analytics, advertising, chat, or tracking technologies.

If the demand involves a practice that is used across the company's website or customer base, resolving the individual claim may not be enough. The company should determine whether the same practice could affect other customers and whether it should be changed.

That is particularly important where the practice may also raise issues under other privacy or consumer-protection laws. Addressing the underlying practice can help reduce the risk that the same issue leads to additional demands or litigation involving other customers.

Bottom Line

A 93A demand letter deserves prompt attention. The 30-day period is particularly important because a reasonable written settlement offer made during that period may limit the company's exposure to damages and attorneys' fees if the consumer later sues.

Before responding, consult counsel to evaluate the claim, determine the consumer's actual injury, and assess whether making an offer makes sense and, if so, what would constitute a reasonable offer.

The company can continue to negotiate after the 30-day period, and if the dispute is not resolved, counsel can defend the claim through litigation. But the statutory opportunity to make a reasonable offer that may limit damages and post-rejection attorneys' fees is one the company should not overlook.

How ExecutiveGC Can Help

ExecutiveGC represents businesses responding to Massachusetts 93A demands, including negotiating the claim and defending the company in litigation when necessary.

If your business has received a 93A demand letter, we can help you understand the claim and determine the appropriate next step.

About the Author.  Jacqueline Piscitello is a Founding Partner of ExecutiveGC, LLP, where she and her team provide practical, business-focused legal counsel to growing companies. Contact Jacueline to discuss how ExecutiveGC can help protect your business.

This article is for informational purposes only and does not constitute legal advice or create an attorney-client relationship.