03 Oct What happens to money not collected in settlements?
Q. I sometimes get mail from a law office saying I’m included to be part of a settlement. It always ends up being table scraps so now I don’t bother. What happens to money that’s not collected from these settlements?
A. We’re guessing most everyone has received one of these settlement notifications.
Consumer class action suits allow a person or small group to sue a company on behalf of a larger group with similar claims, said Altair Gobo, a certified financial planner with U.S. Financial Services in Fairfield.
He said many of these cases allege fraud or product defects and usually end in a settlement instead of going to trial.
“In many cases settlements can be in the tens of millions of dollars, however, the individuals who are part of the class action usually receive pennies on the dollar,” Gobo said.
The court divides the settlement in a class action suit among the many individual recipients. An attempt is made to contact each person so that they can claim the money, and sometimes a recipient cannot be found or doesn’t send in a claim, Gobo said.
“Monies that are not taken by class members may go to the plaintiffs or the other class members, or be donated to a charity that may be chosen by the state,” he said. “A court may also return the class action money to the defendant, or in some cases use the money to set up an organization to protect consumers.”
Email your questions to .
This story was originally published on Oct. 3, 2019.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.