PHOENIX -- When class members and mass tort victims can choose how to receive their settlement compensation from a broad menu of payment options, the payment success rate skyrockets compared to traditional check-only distributions, according to new research by Digital Disbursements, a subsidiary of Western Alliance Bank. According to a 2019 study by the Federal Trade Commission, the average check cashing rate is only 77% in class action cases with a claims process and only 55% in cases without a claims process. The first annual “Digital Payments in Class Actions and Mass Torts” report found that, when a broad pay menu is offered, the success rate for digital payments climbs to 98%.
“We are thrilled to present this research, which demonstrates that the inclusion of a broad pay menu with paper check and popular digital payment options dramatically improves the deliverability of settlement payments to class members and mass tort victims,” said Jeff Richardson, Co-Founder of Digital Disbursements.
The report, which is believed to be the largest study to date on the distribution of settlement payments in the legal industry, also found that digital payments are increasingly preferred by payees. In 2022, 91% of class members and mass tort victims who were presented with a pay menu elected to receive a digital payment. This reflects a significant increase from 72% in 2020 and 83% in 2021. The report also delves into the most popular digital payment methods and which courts and law firms are most actively adopting digital payments.
The data for this retrospective study is drawn primarily from 267 class action and mass tort distributions awarded to Digital Disbursements by 22 different settlement administrators between 2019 and 2022. This large market share allows the Digital Disbursements data to serve as a reasonable proxy for the industry.
Richardson, who successfully handled class actions and mass torts for nearly 30 years, co-founded Digital Disbursements in 2019 with the mission to improve settlement distributions for all stakeholders, including payees, lawyers, courts, and settlement administrators. In 2022, anticipating the continued digitization of settlement payments, Western Alliance Bank acquired Digital Disbursements.
“In acquiring Digital Disbursements, Western Alliance Bank recognized the need for more modern settlement distribution methods--and has used the more than $65 billion in assets of Western Alliance Bancorporation to amplify its mission,” said Francesca Castagnola, Senior Managing Director of the Juris Banking Group at Western Alliance Bank. “We look forward to continuing and expanding this report every year to address the important issues around payments in class actions and mass torts.”