This week, people started receiving payouts from a Verizon administrative fee settlement. This was the result of a $100 million class-action settlement over a monthly administrative charge.
When information about the settlement first came out last year, we heard eligible customers would receive at least $15 and up to $100 from it, depending on how long you were a Verizon customer and how many people joined the settlement. And as the payouts started rolling in this week, it became clear that $100 check was more of a pipe-dream.
"Got my Verizon settlement check today. Thanks, lawyers," one person wrote on the "mildly infuriating" Reddit community, alongside a screenshot of a $7.85 payment. "I got $9.03. Off to buy half a dozen eggs!" another person responded.
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Over here at Kiplinger, staff members who received payouts received them in the $7 to $11 range. So, what happened with the settlement, and what does it mean?
Why were the Verizon administrative settlement payments so low?
As mentioned, the $100 million settlement suggested people would get at least $15, and more depending on how long they'd been customers. People were eligible if they were a Verizon post-paid subscriber charged a monthly administrative fee between January 2016 and November 2023.
Eligible customers could submit a claim online through a settlement site and had to file a claim by April 15, 2024 — so, no, you can no longer submit a claim for this Verizon settlement.
Why were the payments below $15? It's right there on the claim form (emphasis mine):
"Your Settlement Payment may be up to $100.00 for your Verizon account, but the final amount may be lower depending on how long you were a Verizon subscriber and how many Settlement Class Members file valid claims. [...] If the Settlement Fund is not sufficient to pay all the filed valid claims after deducting any Court-approved amounts for the cost of settlement administration, attorneys’ fees and costs, and incentive awards to the class representatives, then the payments made to the Settlement Class Members who filed valid claims will be decreased from the initial allocated amount on a pro-rata basis."
In other words, if a ton of eligible people submitted claims and if things like attorney fees were high enough, payout amounts would be lower than $15. Clearly, some mixture of that is what ended up happening here.
Class-action lawsuits won't make you rich
A key point to remember about class-action lawsuits is that the payout amount to each individual typically relates to how many eligible people submit a claim. So, the more customers a company has or the more widespread word gets about a settlement, the lower the payout amounts you can typically expect.
This Verizon situation serves as a good reminder that class-action lawsuits won't make you rich. You're also probably not going to win the lottery, you shouldn't count on an inheritance for your retirement plan, and that one penny stock a friend suggested won't necessarily go to the moon if you put all your savings into it.
Often, people look for tricks and loopholes that'll suddenly make them a millionaire. Unfortunately, however, for most people, making a fortune is much more boring.
If you want to passively make money, you need patience, but there are tried-and-true ways. You can, for example, invest in the best ETFs to buy now or, if you're more risk-averse, put your money into one of the best high-yield savings accounts. Use good budgeting apps to track your spending and make sure you're making smart choices, like checking out Verizon deals before you upgrade your phone. Or how about this for surprise money: Open a 401(k), invest that in a low-cost index fund, and don't look at it for 15 years?
But if you really believe settlement payouts are the way to go, I hear Apple just proposed a $95 million settlement. Good luck!
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