Participation Rates in Government Regulatory Settlements and other High-Scrutiny Settlements

Participation rates in regulatory settlements that include a remediation component routinely reach 75% to 95%. In a regulatory settlement, the regulator will often insist on a high participation rate. Unless they can demonstrate that affected people have received restitution or remediation, they have understandable concerns about potential criticism from legislators, the judiciary, the press, think tanks and academics. Likewise, in high-scrutiny civil settlements, the court supervising the settlement can have similar concerns about a low participation rate while objectors may delay settlement finality if it cannot be demonstrated that eligible people have benefitted.

Legal Notice Tactics to Reach Affected Persons in Regulatory Remediation Programs

To achieve an acceptable participation rate, a critical first step is enhancing the likelihood that notice reaches eligible participants and is “noticed” by the recipient.

  • Update addresses using the post office’s National Change of Address (NCOA) service for changes of address reported in the last four years.
  • If the address you have is older than four years and the person has moved, NCOA will probably not provide an updated address. Instead, the first class mail piece will most likely be delivered as addressed to the wrong person. For old addresses, conduct public record research prior to mailing.
  • Use first class mail which includes return service for moves within the prior four years.
  • Pay attention to envelope design. Use a larger format such a 6” x 9” or 10” x 13” envelope to increase noticeability. Include a call out on the envelope such as “You may be eligible to receive a payment related to ABC Bank.” A government seal or logo on the envelope can enhance the credibility of the mail piece.
  • Advertisers know that response is driven by both “reach” (or the percent of people who receive the message at least one time) and “frequency” (or the number of times the message is received). It is a good idea to remail packets to non-responders at least once. Even remailing three or four times can be a cost-effective way to increase the participation rate.

Legal Notice Tactics to Increase Response Rates

Once the recipient notices the notice, they need to act.

  • Provide notice and benefits at the individual level. Requiring joint participation (such as co-borrowers on a loan) can deter response in cases of divorce or if one person is now deceased.
  • Keep notice content short. Long documents deter participation.
  • Focus on direct benefits to the recipient. If there is a payment amount, include the amount near the beginning of the first sentence.
  • Use short sentences and plain language. Avoid legalese.
  • Pay attention to design. A professional appearance and color production can help. Employ a font with higher readability and use larger font sizes.
  • Make content available in Spanish and potentially other languages based on the demographics of the target audience.
  • Provide easy ways for the recipient to validate the authenticity of the communication, including a toll-free number staffed with experienced live operators (including evening hours and weekends), a public website and an email address.
  • If response is necessary, such as in the case of a claim form, provide clear instructions. Make every effort to provide a process that is simple and fast. Prepopulate the form with known information such as participant name and address. Provide a variety of response channels: postage prepaid envelope, website form, email and fax.
  • If the initial communication is a check, forgo endorsements such as “for deposit only” which will limit the ability to negotiate the payment.

“Nonresponder” efforts in Regulatory Remediation Programs

Finally, whittling down the nonresponder population is generally an iterative undertaking in which a panoply of approaches may make sense:

  • Send notice via email in addition to first class postal mail (because the email address may be current even if the postal address is stale).
  • If there is more than one name associated with a record, search for contact information for the person listed second.
  • Repeat a public record search periodically. Data maintained by the credit reporting agencies is constantly updated. Repeating a public record search after 90+ days routinely returns a better address.
  • Employ skilled analysts to search for better address information. A manual review of public record sources can often identify a better address. If someone has filed personal bankruptcy, PACER (public access to court electronic records) may provide an updated address for the recipient and his or her counsel. Contact information may also be obtained through vehicle registration records, property titles and tax rolls. Web searches (including social media sites like Facebook and Twitter) may provide contact routes. This can be careful and judgment-based work so it is important to employ experienced analysts along with comprehensive training and operating procedures.
  • Outbound calling can be highly effective, especially when such calls are placed in the evening and weekends by trained and caring agents.
  • Depending on the nature of the settlement, research and outreach via an employer or first degree relative can be effective when these outreach approaches are authorized by the regulator.
  • Use a delivery service such as Federal Express or UPS as an alternative channel to reach nonresponders.
  • To the extent people indicate why they have decided not to participate (e.g., potential income tax (including taxability of social security payments) and qualification for public assistance), capture and provide this information to the regulator or court.
  • For remaining nonresponders, conduct research to determine if the recipient is deceased. While information on executors, heirs and next-of-kin is often inaccessible, the fact that a nonresponder is probably deceased can buttress the overall effectiveness of the outreach effort.

In combination, these tactics routinely result in high participation rates. By ensuring that most eligible people have received settlement benefits, completion of a consent order may be expedited. In a civil settlement context, by achieving a high participation rate some potential obstacles to finality can be avoided. Conversely, in the unlikely event that the participation rate is lower than desired, a narrative description of the activities described above can be used to demonstrate that the distribution effort was sufficient because all reasonable efforts were undertaken.

By Brennen Kelly and Lauran Schultz

Brennen Kelly

Brennen Kelly is a vice president of Epiq’s class action division, chair of its consumer finance practice, and co-chair of Epiq’s regulatory remediation group. He helps clients optimize the claims administration process from notice to disbursement. Mr. Kelly also works closely with financial institutions architecting borrower outreach, remediation and distribution programs. His ability to help solve legal process challenges with IT dimensions coincides with Epiq’s mission of delivering integrated technology solutions to legal professionals.

Lauran Schultz

Lauran Schultz is vice president of Epiq’s Class action division responsible for regulatory and other complex projects.  Mr. Schultz has been with Epiq for more than a decade and previously was a senior vice president at National City Bank in Cleveland, Ohio.  With Epiq, he has provided executive oversight of programs related to CFPB, OCC, DOJ, FDIC, Federal Reserve, HUD, and other regulatory agencies.

Filed under: class action, compliance, government remediation, settlement

The contents of this article are intended to convey general information only and not to provide legal advice or opinions.

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