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The Impact of a Struggling U.S. Post Office on Class Action Settlements

The COVID-19 lockdown has had lasting impact on countless individuals and businesses, including the United States Postal Service, who may need a bailout. The Postal Service is seeing a large decline in revenue as businesses cease mail advertising. According to the Associated Press, mail volume has decreased 30 percent compared to this same time last year.

But what would a drastic change in the U.S. Postal Service mean for class action settlements?

Class Action Notice

In 2018, amendments to Rule 23 of the Federal Rules of Civil Procedure state that notice to class members should be carried out by “any appropriate means,” formally adding electronic notice as a practicable option. But according to a study released by the Federal Trade Commission, claimant response rates to email are still lower than the response rates to mailed notice.

If budget constraints force the postal service to cut back services, it’s possible class action settlement notice may need to rely more heavily on electronic channels such as email and digital advertising to successfully reach class members.

Many class action notice programs use both electronic and physical methods of notice to expand reach and response rate. Electronic notice brings the potential for fraud and bots, so using more that one method to notify a class is often recommended to mitigate fraud and ensure you hit estimated claim rates.

However, some settlements still need to rely heavily on mailed notice, particularly to demographics such as senior citizens who may not be adequately reached through digital efforts. Settlement agreements should take into account potential postal service disruptions when planning notice and distribution timelines.

Electronic Distribution Options

If there are service interruptions for the U.S. Postal Service given the current environment, mailing physical checks to class members in a timely manner may be a concern.

Utilizing direct deposit or digital vendors for settlement fund distribution is not a new concept for class action administrators. Recently, Courts have suggested attorneys consider electronic payments to increase class member participation.

In their November 1, 2018 amendments to procedural guidance, the Northern District of California suggested that counsel “consider direct deposit for payment distribution in class action settlements to potentially make it easier for class members to collect their benefits.”

According to the PYMNTS.com 2019 disbursement satisfaction index, direct deposit was the preferred disbursement method for most consumers, and in 2018 it was the most common method of disbursements for on-demand, merchant and loan disbursements.

Direct payment, commonly referred to as direct deposit, is a payment method that runs on banking networks in the United States. Other potential alternatives to physical checks are digital prepaid gift cards or utilizing third party services such as PayPal or Venmo.

Check out our quick guide to electronic payments.

Class Action Settlement Website

Most class action settlements use physical mail in addition to a settlement website as a tool to house case information such as deadlines, documents, contact information, and often an online claim form. If physically mailing that information to claimants becomes harder to do, the settlement website may become the main source for class members to find out everything they need to file a claim.

Making sure your settlement website is secure and contains all pertinent information is important to include in your settlement agreement. If mailing informational packets is not an option, the settlement website quickly becomes the number one source of information for class members.

Heffler Claims Group has over 50 years of experience in the class action industry. Our leadership team is ready to consult on your class action settlement and answer any questions you may have about postal services, class action notice and distribution, and more. Please contact us for more information.

James Prustman
James (Jim) Prutsman has more than 20 years of experience in the administration of some of the highest profile class action settlements in the United States. He is a recognized expert with extensive experience in the planning, development of systems, process and procedures for the successful administration of hundreds of matters.


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