Senate Bill S7290

                                 
BILL NUMBER: S7290

SPONSOR: BRISPORT
 
TITLE OF BILL:

An act to amend the civil practice law and rules, in relation to payment
to class members for class action settlements

 
SUMMARY OF PROVISIONS:

Section one adds new section 910 to the New York civil practice law and
rules, requiring that, for any class action compromises or settlements
that have a monetary component, there shall be an option for such class
members to be paid by deposit directly into a bank account of such class
member.

 
JUSTIFICATION:

Today, class action settlements are still paid largely in paper checks.
This is inefficient, wasteful, and has the effect of depressing the
claim rates for class members. This legislation would require that class
action settlements, be available through direct electronic deposits, so
              

that class members who are entitled to payment can receive it.

In a world where hairdressers are tipped on Venmo, rent is collected on
Zelle, and "tap to pay" options are available on subways, there is no
reason why legally required payments to class members should be distrib-
uted through paper checks. It is widely acknowledged among attorneys,
and the U.S. Federal Trade Commission ("FTC"), that fewer class members
cash checks as opposed to claiming a digital payment.  In consumer class
action cases, where payments are made by paper checks, claim rates are
typically as low as 1% to 4%, with the median leveling off at 9%,
according to the FTC's 2019 study. However, when payments are available
by direct electronic deposit, the claim rates rise dramatically. To take
one example, a 2021 case against Facebook settled for $650 million and
allowed for direct deposit for payments owed; in that case, the claims
rate amounted to 22%. The use of electronic direct deposits works, and
can be made more widely available so that class members who are entitled
to payment can actually receive it.

 
PRIOR LEGISLATIVE HISTORY:

2021-22: S8520; 2023-24: S5032

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.