Fraudulent Settlement Claims Decline for the First Time After Years of Explosive Growth

PHOENIX - For the first time, fraudulent claims in class action and mass tort settlements have declined after growing 19,000% between 2021–23, according to the third annual “Digital Payments in Class Actions and Mass Torts” report from Digital Disbursements, part of Western Alliance Bank’s Juris Banking Group. The report found that new technologies deployed by Digital Disbursements, ClaimScore, and individual settlement administrators collectively averted 723 million fraudulent claims in 2024, a decline of more than 40%. ClaimScore is a data-driven fraud prevention software solution for class action settlements.

“This decline in fraudulent claims is welcome news for all stakeholders involved in class action and mass tort settlements,” said Jeff Richardson, CEO and Co-founder of Digital Disbursements. “By deploying leading technology, tirelessly monitoring new threats and bad actors and working together, we have been successfully working to ensure the integrity of the settlement process—and will continue to do so.”

As with the past two reports, Digital Disbursements' large market share allows its data to serve as a reasonable proxy for the industry. The data for this year's report comes from 1,155 class action and mass tort distributions awarded to Digital Disbursements from 28 different settlement administrators between 2019 and 2024. The number of distributions is nearly double that of last year's report and represents the acceleration of the active transition away from check-only distributions to settlements that offer a menu of different payment options.

Along with the findings of the decline in fraudulent claims, the report includes exclusive data about the continued digitization of settlement payments and rankings of the top courts and law firms that are embracing digital payments. For the first time, the report also breaks out payment and fraud details between class action and mass tort settlements, as well as data and analysis from ClaimScore.

Among other key findings: 

• The number of class actions and mass torts with digital payments has increased by more than 3,200% in just four years, from 17 cases in 2020 to 558 in 2024.
• Even with this extraordinary growth, the success rate of digital payments remained steady at 98%, far higher than the paper check cash rate of 77% in cases with a claims process and 55% in cases without a claims process.
• When offered the option, an increasingly large majority of payees prefer digital payments.

“The annual ‘Digital Payments in Class Actions and Mass Torts’ report from Western Alliance Bank and Digital Disbursements has become a critical source of information for the industry, and this year’s report once again offers important insights that can’t be found anywhere else,” said Francesca Castagnola, Senior Managing Director of the Juris Banking Group at Western Alliance Bank. “With the information in this year’s report, the entire industry is in a better position to make the types of decisions that will ensure claimants receive the funds they are entitled to.”

Digital Disbursements’ Anti-Fraud Triangle innovation, developed in partnership with ClaimScore, was recently selected as American Banker’s Innovation of the Year in the Cybersecurity and Fraud category. The prestigious award recognizes 2024's most groundbreaking and influential technology-focused innovations, and the teams that brought them to life at banks, financial institutions and fintechs.

About Digital Disbursements

A subsidiary of Western Alliance Bank, Digital Disbursements addresses the evolving payment needs of those in the legal, financial and other industries through its award-winning technology. The proprietary platform enables all types of payees, including those with claims from class actions, mass torts and bankruptcies, to choose how they would like to receive their payments, with options ranging from direct-to-bank accounts to popular digital wallets and credit cards. The benefits include improved deliverability, reduced cost and mitigated fraud, while also allowing the unbanked to receive their funds without high check-cashing fees. Digital Disbursements is part of Western Alliance Bancorporation, which has more than $80 billion in assets. To learn more, visit Western Alliance Bank’s Digital Disbursements.

About ClaimScore

ClaimScore LLC is a technology company that offers AI-based claim validation software for class action settlements. Designed to provide a transparent and efficient approach to the claims process, ClaimScore's proprietary scoring system and real-time reporting stands as the gold standard in claim validation software.