Edelson Lechtzin LLP is at the forefront of groundbreaking litigation exposing alleged secret “kickbacks” and revenue-sharing payments tied to digital prepaid cards used in class action settlements. In April 2025, the firm filed the first case alleging that settlement administrators secretly augmented their compensation through rebates and “breakage” arrangements with fintech and banking partners, concealing the payments from courts, class counsel, and class members.
The First Case to Allege Secret Digital-Payment Kickbacks
In Baker v. Angeion Group LLC et al., Case No. 2:25-cv-02079, filed in the Eastern District of Pennsylvania, Edelson Lechtzin LLP alleged that settlement administrators received undisclosed revenue-sharing payments from issuers of digital cards (including open- and closed-loop products), funded by “breakage” and related rebates associated with unredeemed or partially redeemed balances. The Class Action Complaint asserts that settlement administrators formed special purpose entities to conceal these payments, depriving classes of funds that should have reduced administration costs or been returned to class members.
Those allegations have resonated with growing public scrutiny of digital prepaid card practices in class actions, including reports of inactivity fees and undisclosed rebates that can divert significant value from class members.
Strategic Leadership: Motion to Transfer and Centralize Related Actions
Building on its early leadership, Edelson Lechtzin LLP co-led a Multidistrict Litigation (“MDL”) motion to transfer and centralize overlapping cases that challenge the same undisclosed compensation scheme across administrators, fintech issuers, and banking partners. Plaintiffs moved to centralize the litigation in the Eastern District of Pennsylvania—where the first-filed Baker case is pending before Judge Kelley Brisbon Hodge—or, alternatively, in the Southern District of New York, to ensure efficiency, consistency, and convenience for parties and witnesses.
That MDL effort now spans nine related federal actions filed from April through mid-November 2025, reflecting substantial overlap of defendants, factual allegations, and legal claims—including antitrust, RICO, fiduciary duty, fraud, negligence, and unjust enrichment theories.
Broad Support for Centralization; E.D. Pa. as the Center of Gravity
Responses to the MDL motion reflect widespread support for consolidation, with numerous defendants endorsing transfer but contesting the choice between the Eastern District of Pennsylvania and the Southern District of New York. The movants emphasized that E.D. Pa. is the site of the first-filed, comprehensive case; is proximate to Defendant Angeion’s headquarters; and offers favorable docket conditions and MDL experience, with Judge Hodge presiding over the Baker action.
In the reply briefing, the movants urged the Panel to reject proposals to bifurcate “breakage”/digital card issues from antitrust and bank-related claims, demonstrating a common factual core among administrators, fintechs, and banks, and underscoring the efficiencies of centralized proceedings.
Why Centralization Matters
- Eliminates duplicative discovery and inconsistent rulings on overlapping nationwide class claims.
- Places common witnesses, documents, and contracting practices before one court for coordinated pretrial management.
- Aligns venue with corporate footprints and accessible transportation, including Angeion’s Philadelphia headquarters and multiple defendants’ East Coast presence.
Growing National Attention
Media and congressional scrutiny have intensified around digital prepaid settlement distributions, including reports of rebates, inactivity fees, and non-disclosure of how much money reaches class members—further highlighting the importance of transparency and judicial oversight that this litigation seeks to advance.
The Path Forward
Edelson Lechtzin’s early filing and sustained leadership have positioned the firm to drive industry-wide reforms through centralized litigation focused on undisclosed compensation and conflicts in settlement administration. By championing transfer and consolidation in the Eastern District of Pennsylvania—or alternatively the Southern District of New York—the firm seeks efficient, consistent adjudication that prioritizes transparency, fiduciary obligations, and recovery for class members.
If you have questions about these developments or potential implications for ongoing or future settlements, please contact Eric Lechtzin of Edelson Lechtzin LLP by calling 844-563-5550 ext. 1, or via e-mail at [email protected].