Secret Fintech Payments Cloud $725 Million Facebook Class Action Settlement

Three years ago, Facebook parent company Meta agreed to pay a whopping $725 million to settle a class action lawsuit accusing it of making users’ data available without their consent (Meta denied wrongdoing). Payments were finally scheduled to start hitting consumers’ wallets this month, but court filings from last week show that the portion of the funds slated to be sent through digital prepaid cards are now under intense legal scrutiny. Forbes estimates those digital payments would total $150 million.

The controversy stems from secret rebates that Blackhawk Network, the fintech that issues the digital cards, agreed to make to Angeion, the claims administration firm in charge of doling out the class action funds to harmed consumers. The plaintiffs’ attorneys in the Meta case that hired Angeion only discovered these rebates over the past few months, after another lawsuit tipped them off about their possible existence. Since then, the lawyers have asked Angeion to forgo the payments from Blackhawk or hand them over to the consumers in the class. So far, Angeion has refused to give up the rebates or to disclose its contract with Blackhawk.

A few months ago, Forbes chronicled the industry practice of such back-room dealings in our investigation into how private equity-owned firms were quietly pocketing class action payouts.

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Class action lawsuits often let consumers choose from different payout options such as a paper check, direct deposit into a bank account, PayPal or a digital prepaid card. Digital cards arrive in emails and have their benefits, such as being cheaper to administer and potentially easier to use for unbanked Americans. But a big chunk of the funds deposited on them goes unspent, just as it does for gift cards, resulting in what industry professionals call “breakage.”

Card issuers like Blackhawk typically claw back the lion’s share of unused funds through monthly fees that pop up after six or twelve months of inactivity on a prepaid card. The breakage total can vary based on factors like when the inactivity fees kick in and how high they are, but even for the most consumer-friendly programs, it can easily add up to millions of dollars for large class action settlements. Yet the breakage amounts are never disclosed in court filings. And until recently, plaintiffs’ attorneys and judges were largely unaware of how the digital prepaid cards work, or who collects the breakage they generate.

Blackhawk, which is owned by private equity firms Silverlake and P2 Capital Partners, has historically offered claims administrators “rebates” in return for them inserting digital prepaid cards as a payout option into a class action. (The rebates were discovered by whistleblower Todd Hilsee years ago, and he published a research paper on them in October 2024.) This past April, a class action suit was filed over the rebates in the Eastern District of Pennsylvania against three big claims administrators, including Angeion. The suit, which accuses them of fraud and various other breaches, asserts that the rebates “are nothing more than kickbacks” and that administrators have kept these agreements secret from attorneys, judges and class members.

Angeion has called the lawsuit “baseless.” Blackhawk has been added as a defendant in the case, with the plaintiffs accusing it of conspiracy, unjust enrichment, and aiding and abetting fraud. A Blackhawk spokesperson didn’t respond to our requests for comment, but the company has previously told us in a statement that its programs “are in full compliance with applicable federal and state laws and regulations.”

So far, in the Meta privacy case, Angeion has agreed to share its Blackhawk contract only with Northern District of California Judge Vince Chhabria for his private review. Judge Chhabria can then decide whether it should be filed in the public record.

A spokesperson for Angeion told Forbes in an emailed statement that the company administers settlements “according to the terms and conditions of the relevant settlement agreement and court orders.” He added, “Although Angeion has not yet received any revenue from Blackhawk with regard to the Meta settlement, its agreement with Blackhawk contemplates financial benefit to Angeion. That benefit does not in any way reduce the funds available to class members or impose an additional cost to the settlement fund.”

One obvious question remains: How much did Blackhawk agree to pay Angeion? Based on a 2020 email obtained by Todd Hilsee combined with our own reporting, a Blackhawk executive offered a “discount” or rebate of up to 3.5% to a claims administrator in exchange for running a class payout through digital debit cards. Using that assumption, a $150 million digital payout would result in a $5 million payment from Blackhawk to Angeion. And if the rebate were higher–say, 7%—the payment would be $10 million.

Last week, the attorneys in the Meta case filed a joint status report proposing changes to make the digital prepaid cards more consumer-friendly. For example, when the cards are emailed out, Blackhawk can require that people click on a link to activate it first before the money leaves the settlement fund. That would help prevent email payouts that go unnoticed by consumers in their inboxes from leaving the settlement fund and eventually getting gobbled up by Blackhawk’s inactivity fees.

The attorneys also proposed sending multiple email reminders to consumers to activate their cards and use their balances, as opposed to the original email-reminder plan, which appeared to consist of just one reminder sent to a digital card recipient after 11 months of inactivity. Another proposal presented the option of completely replacing digital prepaid cards with other payout methods in the settlement distribution.

Scrutiny of the dubious practices of class action payouts continues to grow. Earlier this week, in a big class action case that accuses realtors of colluding to inflate real estate agent commissions, Judge Stephen Bough of the Western District of Missouri filed an order asking the plaintiffs’ attorneys to complete a list of new disclosures. The inquiry asks the attorneys whether they have financial relationships with companies involved in the suit, such as litigation financing firms, banks, private equity funds, hedge funds, settlement administrators, vendors or similar institutions. The order aims to prevent any lawyers from having undisclosed conflicts of interest.