Settlement tiers
Settlement tiers are different payment levels in one settlement, based on things like proof of loss, type of harm or where you live.
Also called: payment tiers, tiered settlement
Settlement tiers are different payment levels in one settlement, based on things like proof of loss, type of harm or where you live.
What it means
Settlement tiers are different payment levels within the same class action settlement. Which tier you fall into depends on facts about you, such as what you lost, what proof you can provide, how long you were a customer or which subgroup of the class you belong to.
A common setup has two tiers. One pays a smaller flat amount to anyone who signs a statement that they are a class member. The other reimburses documented losses, up to a cap, for people who submit receipts or statements. Some settlements add a tier for a subclass, such as residents of a state with a stronger privacy law.
The FTC has noted that settlements often tie compensation to a person's subclass or to whether they can document a loss. Courts also check that the plan treats class members fairly compared with each other, so a tier needs a reason. Many deals also scale payments pro rata within each tier.
What it means for you
Look for the tier that fits you best. If you have receipts, a documented-loss tier may pay far more than the flat payment, but you must meet its proof rules. If you lack proof, the flat tier may still pay something. Some claim forms let you claim more than one tier when you qualify.
Be honest on the form. You may be asked to sign under penalty of perjury. Claims can be audited, and a claim that does not match a tier's rules may be reduced or denied.
Example
Say a data breach settlement has two tiers. Tier one pays a flat $40 to any class member who signs a statement. Tier two reimburses documented costs, such as credit monitoring or fraudulent charges, up to $500. One class member lost nothing and files for tier one. Another paid $120 to freeze and monitor her credit and has the receipts, so she files for tier two with copies attached and may be reimbursed $120.
FAQ
Sometimes. Some settlements let you claim a flat payment and also documented losses, while others make you choose one. The claim form and long-form notice say which rule applies.
Because class members were harmed in different ways. Tiers let a deal pay more to people with larger, provable losses without requiring proof from everyone.
Related terms
- FTC staff report, Consumers and Class Actions: A Retrospective and Analysis of Settlement Campaigns (2019)
- Manual for Complex Litigation, Fourth, section 21.66 (Federal Judicial Center)
- Federal Rule of Civil Procedure 23, class actions (Cornell LII)
Updated Oct 18, 2026. Plain-English definitions for general information — not legal or tax advice.