Class action lawsuits are legal proceedings that allow many individuals to collectively bring a claim to court, typically against a corporation or large entity, for similar grievances. These cases can end in significant settlements or judgments, where the defendant agrees to pay compensation. However, not all awarded funds reach the claimants; a portion remains unclaimed. The handling of this unclaimed money varies, but it generally follows a few established paths.
Cy Pres Awards
One common method of dealing with unclaimed class action funds is through cy pres awards. Cy pres, a French term meaning “as close as possible,” involves distributing the leftover settlement funds to third-party charities or nonprofit organizations that indirectly benefit the class members or support issues related to the lawsuit’s nature. For instance, if the case involved privacy violations by a tech company, the unclaimed funds might go to nonprofits focusing on privacy rights or digital literacy.
Escheatment to the State
In some instances, unclaimed settlement funds may escheat, or revert, to the state. Escheatment laws vary by jurisdiction but generally allow states to claim unclaimed property after a certain period. This method is less common for class action settlements, as courts prefer that the funds benefit class members or related causes directly.
Reversion to the Defendant
Sometimes, the settlement agreement specifies that any unclaimed funds revert to the defendant. This scenario is less favorable to plaintiffs and is scrutinized by courts to ensure it doesn’t disincentivize defendants from ensuring claimants receive their due compensation. Reversion clauses typically come with conditions, such as requiring the defendant to match the unclaimed amount with a donation to a related charity or cause.
Reopening Claims Period
In certain instances, courts may order a reopening of the claims period to allow class members another opportunity to claim their portion of the settlement funds. This may happen if it’s determined that the initial claims process was inadequate or if there’s evidence that class members were not properly notified of their rights to participate in the settlement.
Redistribution to Claimants
When feasible, courts may order that unclaimed funds be redistributed to claimants who have already received a portion of the settlement. This method aims to ensure that the settlement benefits those affected by the defendant’s actions as directly as possible. Redistribution is more common in cases with relatively small classes and significant unclaimed funds, making the administrative costs of redistribution justifiable.
Impact and Controversy
The handling of unclaimed class action settlement funds is subject to ongoing debate. Proponents of cy pres awards argue that they fulfill the spirit of the settlement by supporting related causes. Critics, however, contend that such distributions may benefit parties not directly harmed by the defendant’s actions and can create conflicts of interest among class counsel, who may choose charities they are personally affiliated with.
In recent years, legal and legislative efforts have sought to refine the use of unclaimed funds, emphasizing transparency and the direct benefit to class members. The ultimate goal remains to ensure that class action lawsuits effectively deter wrongful conduct and compensate those impacted.
Beyond Class Actions – Ten Other Ways to Find Lost Money
If your idea of a windfall is finding money under couch cushions or a coin in a parking lot, just wait until you start looking through databases for finding lost or unclaimed money. Chances are, you’ll find it more fun — and possibly far more profitable. Banks, insurance companies and the U.S. Department of the Treasury — among other organizations — have websites designed to help people find money that never made it to their bank accounts.
If you think you might have let some money slip through the cracks, here are 10 places to look for it:
- To begin your search for unclaimed funds, start with the treasury or unclaimed property office’s website for your current state of residence or any states where you’ve previously lived. The National Association of Unclaimed Property Administrators (NAUPA) provides a convenient link to each state’s unclaimed property website on its platform, facilitating your hunt for unclaimed money.
- Check for forgotten federal tax refunds at the IRS’s “Where’s My Refund?” site, but remember, there’s a limited window of three years to claim any refunds due.
- Investigate potential unclaimed life insurance benefits via the Department of Veterans Affairs and the National Association of Insurance Commissioners’ database.
- Search for unclaimed funds from pension and retirement accounts linked to previous jobs through the Pension Benefit Guaranty Corporation or PenChecks Trust for unclaimed retirement benefits.
- If you’re owed unpaid back wages, the U.S. Department of Labor’s “workers owed wages” page can help track down what you’re owed.
- Delve into state departments of taxation for unclaimed money like tax refunds or amounts in abandoned bank accounts.
- Utilize databases like com or the National Credit Union Administration for lost bank accounts or credit union deposits.https://ncua.gov/
- For missing U.S. savings bonds, submitting Form 1048 is necessary to claim for lost, stolen, or destroyed bonds.
- Explore the S. Courts Unclaimed Funds Locator for any money due to you from bankruptcy cases.
- There could be funds tied up in bad investments or unclaimed money from bankruptcy proceedings, which can be explored through the SEC’s database or the U.S. Courts Unclaimed Funds Locator.