What Is a Coupon Settlement?
A coupon settlement compensates class members with vouchers, credits or discounts toward the defendant's products instead of cash.
A coupon settlement is a class action settlement that pays class members with coupons, vouchers, credits or discounts toward the defendant's products or services, instead of cash. Some settlements offer a choice between a coupon and a smaller cash payment.
Why it matters to you
A coupon only has value if you will actually buy from the company again, often within a set time. If you have switched brands, a coupon may be worth little to you. When a settlement offers a choice, compare the cash amount to how likely you are to use the voucher before it expires.
Common coupon settlement features
- ✓An expiration date for using the coupon
- ✓Limits on combining it with other discounts
- ✓Restrictions to certain products or services
- ✓Sometimes, the ability to transfer the coupon to someone else
- ✓Sometimes, a cash alternative
What federal law says
The Class Action Fairness Act added rules for coupon settlements in federal court. Attorneys' fees tied to coupon relief must be based on the value of coupons actually redeemed, not on the face value of all coupons issued. Judges must also hold a hearing and find the settlement fair, reasonable and adequate. These rules were designed to discourage deals that pay lawyers well while giving class members little real value.
A simple example
A retailer settles claims over a pricing practice. Class members can choose a voucher for a future purchase or a smaller cash payment. Someone who shops there often might pick the voucher; someone who no longer does would likely pick cash.
Courts look at whether a coupon has real value. A coupon that only works on an expensive product, expires quickly or cannot be combined with ordinary sales may be worth far less than its face value. Coupons that are transferable, long-lasting and usable on everyday purchases are viewed more favorably. These factors are often raised in objections to coupon deals.
Related terms
Coupon relief is sometimes paired with injunctive relief. If you think a coupon deal is unfair, you can file an objection.
SettleScout shows what each settlement pays, so you can tell at a glance whether it offers cash, credit or both.
Frequently Asked Questions
Are coupon settlements legal?
Yes, but in federal court the Class Action Fairness Act adds scrutiny and ties attorneys' fees to the coupons actually redeemed.
Can I get cash instead of a coupon?
Only if the settlement offers a cash option. Many coupon settlements do, often at a lower value.
Can I sell or give away a settlement coupon?
Some settlements allow transfers and others do not. The notice or the coupon's terms will say.
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