Where Does Unclaimed Settlement Money Go?

Those who have made claims in class action settlements may wonder what happens to left over settlement funds. There are several ways these funds can be disbursed. They can go back to the defendant, be donated to a charity designated in the settlement agreement, or they can be added to the claims already made by Class Members

Class action lawsuits are filed on behalf of groups of people or entities who have all suffered the same or similar harm because of the actions of the defendants named in the lawsuit. This type of litigation is often expensive and time consuming, so at certain points in a class action lawsuit, the parties may decide to settle the claims, rather than proceed.

The terms of settlement agreements are worked out between the plaintiffs and defendants in a class action lawsuit; however, a court must approve the agreement. A court must find that the proposed settlement agreement is fair and reasonable.

Additionally, because settlement agreements are binding upon Class Members, they must contain provisions to notify Class Members of the settlement definition and allow them to exclude themselves or object to the agreement and initiate a settlement lawsuit.

There is often unclaimed settlement money after the deadline has passed for Class Members to make claims. Claim rates in class action settlements tend to be low. Sometimes Class Members do not know to make a claim in a settlement or they may think the award is too low to bother to file a claim. This is unfortunate because class action lawsuits and settlement agreements are an important way to protect consumers and other individuals, and to keep companies in check with regards to false advertising, product defects, negligence, and other actions that can harm large numbers of people.

Settlement agreements outline what will happen to unclaimed settlement money. Many agreements include provisions to disburse unclaimed funds to charity. This is called a cy-pres award. Usually the goals of the charity are similar to the reasons the class action lawsuit was filed in the first place. In other words, the disbursement should be made to a charity that likely benefits the Class Members in the settlement. In Canada, courts have broad discretion to approve charities named as cy-pres beneficiaries in a class action settlement.

Another option is for unclaimed settlement funds to automatically revert to the defendant or defendants. In this scenario, the court may require the defendant to lower its prices or account for the gain in some other way, so it does not benefit from unclaimed settlement funds.

Some settlements contain a provision allowing Class Members to receive additional compensation in the event that not all settlement funds are disbursed. In this scenario, Class Members who file claims may receive a check for their initial filing, then a second check after it is determined that there is unclaimed money. This second award is often a surprise to Class Members and an important reason to file a claim in all class action settlements for which the Class Member qualifies.

Will You Be Notified if You Win a Settlement?

In Canada, before a class action lawsuit will be certified by a court to proceed, the plaintiff and their lawyers must establish a class of individuals or entities. These Class Members can then benefit from awards made in a settlement agreement reached in the case.

Although class action settlement agreements must contain provisions for notifying Class Members, there is a good chance that not all Class Members will come across these notifications. Whether notification is sent to each and every Class Member depends on the records available in each case.

Sometimes, potential Class Members can be identified by the plaintiff’s lawyer or lawyers and receive information about the class action lawsuit and, ultimately, the settlement agreement.

In some class action lawsuits, the allegations involve interactions that require detailed records, such as vehicle purchases or financial transactions. In these types of scenarios, the defendant or defendants may have records of individuals who become Class Members under the terms of the settlement agreement and can phone, mail, email, or otherwise contact them to notify them of the settlement agreement.

In other situations, records of all Class Members affected by the terms of a settlement agreement may not be readily available. For example, a company who agrees to pay Class Member claims as a part of a settlement agreement in a false advertising class action lawsuit involving consumer goods may not have a record of each individual who purchased those goods. In these cases, settlement agreements outline how Class Members should be notified. These measures can include advertising by television, in publications, online using social media or other outlets, as well as combinations of all of the above.

How to Keep Track of Your Settlement Funds

In addition to the methods above, there are settlement websites, like Top Class Actions, that gather information about settlement agreements. Individuals can monitor these websites to learn about the settlements they may qualify for and even apply though the site.

On some occasions, Class Members will be provided additional information about the status of their settlement claims; however, the settlement agreement approval process can take a long time. Sometimes these notifications are few and far between.

Top Class Actions is committed to educating consumers about all available class action settlement money so that they can claim what they are entitled to claim. Make sure you don’t miss out on any free money to which you’re entitled and sign up for our free newsletter. We’ll let you know about the latest class action settlements and any filing deadlines that are approaching. You can also check out our Open Settlements section to find out which settlements are currently accepting claims.

Have you claimed a settlement award? Tell us what happened in the comment section below!

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