Among the European countries, Spain has the third highest number of flight cancellations and delays, occurrences where passengers are entitled to refunds of between €250 and €600, depending on the flight distance. Lawtech company Reclamador.es was founded in 2012 to defend the consumer rights of these passengers, 90% of whom are unaware of their consumer rights in the first place and, so, do not file any claims.
Pablo Rabanal, CEO and founder of the crowd-complaining consumer claims platform, said: “The idea came to me after I’d been scammed by many telecommunications companies. I thought of giving my case to someone who can take care of everything, but I didn’t manage to find anyone who could help, so I decided to create Reclamador.es.”
But a greater portion, about 60%, of Reclamador.es' revenue stream and successful cases has come from claims against airlines, rather than against mobile phone carriers. Rabanal spotted the opportunity in this segment from the startup's founding. After all, 42% of affected passengers never report the issues they encounter, and unfiled claims against airline companies have been estimated to be worth around €900m, reported Airhelp.
In 2014, the company expanded the scope of its service to include claims against banks and individuals involved in traffic accidents. A year later, it again expanded its scope to include claims against telecommunication companies as well as against employers and government ministries in relation to taxes and labor cases. Reclamador.es currently has a team of over 100 experienced employees, including claims professionals.
“We want to make access to justice as simple and agile a process as possible. For us, it is crucial to have returning customers. A loyal customer attracts new consumers,” Rabanal said.
160,000 claims resolved
In 2018, the company reported a 57% year-on-year increase in revenue, closing with €3.9m that showed a sixfold increase from 2015 to 2018. It resolved a total of 160,000 legal claims to date. Among the successful claims were those against airliners, including Air Europa, Iberia, Ryanair, Vueling, Easyjet and Air Berlin.
In 2015, the startup initiated the first class action suit against Seat Spain, which is part of the Volkswagen Group, claiming damages for 36,000 cases of installing software manipulated to fraudulently reduce vehicles’ emissions. On behalf of its clients, Reclamador.es asked the court to nullify the purchase contract, and award compensation equivalent to the difference between the price the car owners paid and the devalued market price of the vehicles. In December 2016, a court ordered the manufacturer to compensate the owner of a second-hand car; this judgement increased the chances that affected car owners can successfully claim and obtain compensation.
By 2017, the company was managing over 35,000 claims while expanding its services to the banking area and multiplying its earnings before interest, taxes, depreciation, and amortization (EBITDA) sevenfold. That same year, Reclamador.es was named Best Company in the B2C category at the South Summit in Madrid. In 2018, the company reported a 57% year-on-year increase in turnover, closing with €3.9m and having resolved a total of 160,000 claims to date.
More recently, the company expanded its service coverage to include medical negligence, playing a crucial role during a food poisoning outbreak caused by contaminated meatloaf that affected over 150 people in Andalusia from September 2019. Reclamador.es is currently supporting affected consumers through extrajudicial claims, requesting compensation directly from the meatloaf manufacturing company for the damages suffered.
Scalability struggles
As a lawtech company, Reclamador.es differs from traditional law firms in significant ways. To attain operational efficiency and scalability in claims management, the company set up a website so clients can track the progress of their cases. This enables the company to double its client base while reducing the number of phone calls needed to manage each legal action.
“We want our clients to be informed and up-to-date on their cases without having to call us all the time,” explained Rabanal, adding, “Our lawyers are an essential part of our business, but our ultimate focus and business goal is the establishment of our online legal support.”
The company applies a "no win, no fee" model, meaning that the client has to pay a fee only if Reclamador.es wins the case. “We assume the risk and initial costs as we want customers to realize that if they win, we also win,” said Rabanal.
Although 98% of the company's claims have been successful, it has over €15m in uncollected juridical fees due to outstanding cases that threaten its ability to scale. The €1.5m from the company's latest Series A funding round, which was led by Argentinian business tycoon Martin Varsavsky, Faraday Venture Partners, Cabiades & Partners and several angel investors, went mainly toward covering the pending legal fees.
Reclamador.es' international expansion has faced challenges as regulations have been changing significantly in every European country. In 2015, for example, the company launched its operations in Portugal focusing on the airline sector, but its expansion plan stagnated due to multiple legal barriers in relation to compensation policies.
Given the differing compensation policies in each of the European countries, Reclamador.es may have to first consolidate its position nationally before expanding internationally.
