The claims administrators that dole out billions of dollars each year in class action settlements to consumers have been under increasing scrutiny for quietly taking rebates from fintechs and banks. Some of the rebate money comes from “breakage,” when consumers’ prepaid-card balances go unused and are eventually depleted by inactivity fees. Now the criticism is getting a lot louder: on August 20, for nearly two hours, a federal judge grilled a major claims-administrator CEO about the murky payments.
The heated questioning took place between U.S. District Judge Stephen Bough and JND CEO Jennifer Keough in a Kansas City courthouse. It was a procedural hearing concerning a $1 billion settlement in a lawsuit accusing the National Association of Realtors and several real estate agencies of conspiring to inflate brokers’ commissions on home sales (the association has denied the allegations).
Keough said that in the 1,000-plus cases that Seattle-based JND has handled over the past five years, fewer than ten have involved debit cards and rebates from fintech card issuers. She also admitted that JND has taken rebates from banks based on interest earned from settlement funds sitting in deposit accounts, though she said those payments have been “minimal” because they “offset the bank fees, which we don’t charge to the fund.”
For the upcoming consumer payouts in the realtors case, Keough promised that her firm won’t take any rebates from vendors, even though it contractually has the right to do so. This past May, Philadelphia claims administrator Angeion agreed not to take rebates in a small Missouri class action (also overseen by Judge Bough), which was one of the first public examples of a claims administrator agreeing to forgo a rebate. Since then, administrators are increasingly saying they’ll skip the behind-the-scenes payments.
Before the spring of 2025, few attorneys or judges were aware that claims administrators were pocketing money from fintech card issuers like Blackhawk and Tremendous. Few understood the breakage that resulted from the digital prepaid debit cards used in payouts. Industry insiders alleged that banks were involved in questionable payments, too: administrators quietly took a cut of the interest income earned on settlement funds while the money sat in an account, waiting to be distributed.
Forbes covered these back-room dealings in an in-depth story in May 2025, estimating the breakage on digital debit cards at $300 to $400 million over the prior five years. Multiple lawsuits followed, targeting four major settlement administrators (including JND), two banks and three fintech payments companies, alleging offenses like fraudulent concealment and conspiracy. They’ve since been consolidated into multi-district litigation in Washington, D.C. Last year, an Angeion spokesperson called the lawsuit “meritless,” and a Blackhawk spokesperson said it was compliant with all applicable laws. Keough called the allegations “baseless” in her recent testimony. In July, all of the defendants filed motions to dismiss the case; the judge has not yet ruled on them.
Most of the big claims administrators, including Angeion and JND, are owned by private equity firms. JND is part of Memphis claims-management company Sedgwick, which is owned by the Carlyle Group and Stone Point Capital.
New information has been dripping out about the rebates across various cases. In the August 20 hearing, Keough said that JND didn’t take any rebates in the $2.7 billion antitrust settlement against Blue Cross Blue Shield, which was initially settled in 2020 but didn’t start consumer payouts until May 2026.
Not all class action payouts are created equal–they often use different disbursement methods and vary widely in effectiveness and ease of use. In a $425 million data breach class action against Equifax, during a second round of distributions in late 2024, consumers weren’t offered a choice of different payment options such as paper checks, Venmo or digital debit cards. Instead, JND sent out emails with digital debit cards (often totaling $7.44 apiece) to everyone eligible, which people found difficult to use.
The emailed cards inevitably carried significant breakage: If someone didn’t use her card for six months, the card issuer Blackhawk clawed back the funds through a $5.95-per-month inactivity fee. (A JND spokesperson says the decision to do the redistribution entirely through digital debit cards was made by the plaintiffs’ and defendants’ attorneys.)
After questions about class action rebates surfaced last year, the plaintiffs’ attorneys in the Equifax case demanded more information. In July 2026, they asked the court to require JND to disclose how much money it raked in through vendor rebates. JND has since fought hard to keep the payment sum secret, filing a 12-page motion this summer explaining why it shouldn’t have to answer the question.
The rebate arrangements remain largely opaque. By the end of the lengthy August 20 hearing, it was still unclear how JND could cancel its rebates for a single class action case while more generally accepting rebates “in connection with the volume of work performed for all of its clients,” according to JND’s own contract with its vendors.
When Judge Bough asked JND’s lawyer David Weiner for more information on how the rebate payments work, the attorney said, “I don’t know the mechanics of how it works.” The judge responded, “You don’t know but … your firm is the lawyer in Equifax, you’re the lawyer in the [Washington, D.C., multi-district litigation], and you’re the lawyer here, and you don’t know how these credits and rebates are paid and not paid.”
Have a story tip? Contact Jeff Kauflin at jkauflin@forbes.com or on Signal at jeff.273.
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