Typically, the class action settlement has procedures in place to determine how this money is distributed. Courts will review the settlement agreement and applicable laws to determine whether the proposed use of the funds is fair and appropriate.
What Happens to Unclaimed Class Action Settlement Funds?
There are multiple potential outcomes for where unclaimed class-action settlement funds will go. Here are some of the most common ways the funds are distributed.
Redistribution to Other Claimants
Sometimes, unclaimed class action payments can be redistributed to other class members who submitted valid claims. This is usually called a second distribution and often, but not always, involves a pro rata distribution.
For example, if a class action were filed alleging underpayment, unclaimed funds could be distributed pro rata to workers who had already submitted valid claims. This approach allows the money to benefit people who have already been identified as harmed.
Distribution to Charities or Organizations
In other situations, leftover funds may be distributed to a charitable organization or a cause related to the lawsuit’s purpose. This is called a cy pres award or cy pres distribution.
This approach is common when it’s not practical to make an additional distribution to class members. For example, if many thousands of consumers were affected by a data breach and have already received a settlement payout, sending a second payout to all of them may be impractical. In this type of situation, the leftover funds might go towards a charitable organization that helps victims of identity theft.
Reversion to the Defendant
In very rare cases, unclaimed settlement funds are sent back to the defendant. This is known as a reversion. Courts generally are cautious about allowing this option because it can both reduce the compensation class members recover and discourage companies from resolving disputes through a settlement.
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Can You Still Claim Unclaimed Settlement Money?
If you missed a class action deadline, you cannot just submit a claim after the deadline has passed and expect to receive payment. Once the claims deadline has passed and final distributions are made, it’s often too late to participate in the class.
There may be some limited exceptions to this, such as if you did not receive proper notice of the settlement or if an administrative error was made. But unless something outside of your control happened, a missed deadline usually means a missed opportunity to access the settlement funds.
Late Claims and Extension Periods
Some settlements include a limited grace period for late claims, especially when technical issues occurred during the claims process.
However, you can’t count on this happening, and the best way to protect your rights is to monitor what is happening in class actions you’re involved in and to submit timely claims.
Tracking Down Old Settlements
In some cases, you may miss out on a class action payout because you’re not aware it exists.
If you don’t get a notice that you’re part of the class when you should, or if you mistake the notice for spam mail or an advertisement and don’t open it, you may be unaware that you were even part of a potential class of plaintiffs.
The good news is that you have options for finding past settlements using government resources and databases. The Consumer Financial Protection Bureau has a database of payments that were made to consumers who were harmed in CFPB enforcement cases, and you can see if any of those cases affected you.
When Companies Take Advantage of Consumers, We Can Help
Class Action U’s accomplished partner attorneys at Milberg PLLC have successfully recovered more than $250 million for wronged consumers through alternative dispute resolution.
How to Avoid Missing Class Action Payouts
You don’t want to leave class-action payouts unclaimed, so make sure you pay careful attention to your mail and inbox for news of potential litigation. When you do, act quickly. For example, if you receive a data breach notification via mail, pay attention to the deadline for participating.
Class Action U also tracks active class action payouts, so you can follow the progress of what cases are settling, and you don’t leave unclaimed settlement funds on the table.
Submitting Claims Correctly and On Time
After someone starts a class action and it is certified, or a settlement is proposed, other class members are typically given notice of their opportunity to participate. When you want to participate in a class action, you should:
- Open and respond to any notices of class action litigation immediately
Read the instructions carefully about your eligibility to join a class or submit a claim for compensation - Provide accurate and correct personal information
Submit any requested documentation through the portal or via other means specified in the instructions - Avoid submitting duplicate claims
- Pay attention to filing deadlines and put them on your calendar
Keeping Contact Information Updated
When you are part of a class action, it’s also very important to keep your contact details up to date. Settlement administrators will rely on this information to provide you with important notices, including details about when it’s time to take action to sign up for the settlement.
You should also make sure your product registrations are submitted and that you keep your contact details updated with companies, banks, and service providers, so if they are named as defendants in a class action lawsuit, those managing the case can reach you if you’re a potential class member.
Frequently Asked Questions (FAQ)
If you aren’t yet ready to make your class action claim and need more information, here are some of the answers to some frequently asked questions you may have.
How Long Do I Have To Claim Class Action Money?
The class action timeline can vary from case to case. Most class action lawsuits specify the claim deadline when providing notice to you. This can range from several weeks to several months.
Are Class Action Settlements Taxable?
Whether class action settlements are taxable depends on the purpose of the funds and the settlement’s structure. Some payments are taxable, while others aren’t, depending on the situation. Talking with a tax professional is usually best.
How Do I Know if I’m Part of a Class Action Settlement?
You should receive notice by mail, email, or online if you are a potential class member in a class action lawsuit. You can also search settlement databases or follow news on class actions to find settlements that you could potentially qualify for.
Don’t Miss Out on Settlement Money You May Be Owed
If you’re owed money, don’t miss out on it and leave unclaimed class action funds. Companies settle class action lawsuits to resolve claims and provide compensation to eligible class members. You deserve to get your part if something went wrong.
Reach out to Class Action U today. We’ll connect you with a class action lawyer who can help you understand your rights and obligations as a class member.
