‘Sweet deal’ for Tims? Coffee-and-doughnut privacy breach settlement a marketing win, says expert

According to a class-action expert, Tim Hortons is getting off easy with its plan to give out free drinks and doughnuts to customers.

Tim Hortons, owned by Toronto-based Restaurant Brands International Inc., told app users on July 29 that they could soon receive a "free hot beverage and a free baked good" as part of a settlement in a string of class-action lawsuits. A judge will approve the deal next month.

Some academics, judges and lawyers are uneasy about these types of coupon settlements because they end up funnelling customers into stores.

It is what companies would like from a marketing perspective. She said that they wanted people through their door. The compensation is simply a guarantee of more business for the defendants.

The retail value is up to $6.19 for the most expensive beverage and $2.39 for the most expensive baked good. If everyone used their coupons, the retail value would be more than $16 million. The real cost to Tim Hortons for drinks and baked goods isn't as high as you might think. The lawyers representing the class members will get over a million dollars in fees.

It doesn't seem to me that a cup of coffee and a muffin are fair compensation for a blatant disregard for our private information It's a very sweet deal for Tim Hortons and it should raise red flags for the judge.

The challenge in this case would have been proving damages

Joey Zukran, a lawyer with LPC Avocat Inc. in Montreal

When there is no proof that the victims suffered any financial loss, Canadian courts are reluctant to award high penalties for privacy violations. If the lawsuits went to trial, they wouldn't do any better than coffee and doughnuts. One of the class-action lawyers in the case said it wasn't certain a judge would certify the case.

The challenge in this case would have been proving damages. They can write to us if they suffered damages. We will hear.

The case stems from a Financial Post story in 2020 by journalist James McLeod who found the Tim Hortons app had been tracking his movements so closely that it knew where he lived. An analysis of months' worth of data obtained through federal privacy law showed the app was tracking him even when it was not open.

It is clear that companies value that kind of data. She said that she didn't know how the courts would handle her lifestyle and purchases in a litigation setting.

The app was investigated by a group of privacy watchdogs. The watchdogs said in June that Tim Hortons violated federal and provincial privacy laws by using its mobile app.

Tims was accused of committing a mass invasion of privacy by the federal privacy commissioner, Daniel Therrien.

Tim Hortons said in response to the report that it was no longer using the technology. Questions about the settlement deal and how much drinks and pastries would cost the company were not answered by the spokesman.

The parties agree that the settlement is fair. The class actions were not proven in court and the settlement is not an admission of wrongdoing.

When a privacy breech doesn't lead to financial loss, payouts tend to be modest. The settlement avoids third-party administration fees since the coupons will be sent out through the Tim Hortons app.

There is more money that can be given to class members.

Administrative fees can be hundreds of thousands of dollars, according to the lawyer who led one of the class actions. He said the notice was sent to 1.9 million people.

The best option was to give each member a free drink and treat.

Tim Hortons didn't want to pay money because of the state of the law We could have taken the risk of moving forward and getting nothing or we could have taken the risk of agreeing to what we agreed to and having something.

The email address is jedmiston@postmedia.

The Financial Post is part of Postmedia Network Inc.

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