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........

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