SquareTrade Settlement: Class, Payouts, and Approval

The SquareTrade settlement is the 2023 resolution of Shuman v. SquareTrade Inc., a federal class action alleging that the Allstate-owned protection-plan company underpaid customers who filed reimbursement claims. Chief Magistrate Judge Joseph C. Spero granted final approval on March 1, 2023, covering more than 705,000 customers who had filed over 884,000 claims between April 20, 2016, and June 27, 2022.¹ The claims window closed in February 2023, so new claims are no longer being accepted.²

What SquareTrade Was Accused Of

SquareTrade sells protection plans through retailers like Amazon, Costco, Sam’s Club, Target, and Staples, covering electronics and appliances against malfunctions and accidental damage. Its plans promise to repair, replace, or reimburse the full purchase price of a covered product. The lawsuit, filed by Michael Shuman in April 2020 and later joined by Tommy Gonzales and Kathleen Abbott, alleged that when customers actually filed claims, internal programs cut payouts well below what they had paid.³

Two mechanisms drove the shortfalls, according to the complaint:

The Fast Cash program, launched around February 2018, reimbursed roughly 85% of a product’s purchase price rather than the full amount, regardless of what replacement would actually cost.⁴
SKU-cap errors imposed undisclosed fixed reimbursement caps on specific products, producing payouts below the purchase price with no explanation to the consumer.⁴

The complaint cited examples: a customer who received $299.99 for a $428 television and another who got $145 for a $230 chair. When customers pushed back, employees were allegedly told to describe the partial payments as “current market value” or the “available resolution.” A former claims specialist estimated the company received more than 1,000 complaints per day about underpayments.⁵ The suit brought claims under the federal Magnuson-Moss Warranty Act, California’s Song-Beverly Consumer Warranty Act, and other consumer protection and common law theories.

Who the Class Covered

The settlement class included 705,575 SquareTrade protection-plan customers who filed claims between April 20, 2016, and June 27, 2022. Together they had submitted more than 884,000 claims during that period.¹ Customers with multiple plans covering different products could receive multiple payments.²

What Class Members Received

The total settlement figure was not publicly disclosed, but the agreement was structured to deliver what the court and class counsel called “full relief.”³ Payment method depended on which subclass a customer fell into.

Customers in the SKU-cap Subclass received the difference between what SquareTrade had reimbursed and the original purchase price of the covered product. No claim form was required; payments went out automatically.¹

Customers in the Fast Cash Subclass had to submit a claim form. Their payment was the difference between the estimated replacement cost they had previously been paid and the actual cost to replace the item, capped at the original purchase price. Claims over $35 required supporting documentation.² By the February 2023 deadline, the settlement administrator had received 49,542 Fast Cash claims covering 71,474 transactions.¹

The agreement also required SquareTrade to improve its consumer disclosures and fix the technical processes behind the SKU-cap errors to prevent future underpayments.¹

Approval, Fees, and Class Response

The settlement was reached through mediation with retired Judge James L. Warren. Only 322 class members opted out, and all nine objections received appeared to have been filed by mistake; four were formally withdrawn, and no class members appeared at the February 24, 2023, fairness hearing.¹

Judge Spero granted final approval on March 1, 2023, finding the settlement fair, reasonable, and adequate.⁶ The court awarded class counsel $958,681.61 in fees and $41,318.39 in costs, roughly $1 million total, plus $5,000 service awards to each of the three named plaintiffs. The case was formally terminated on March 2, 2023.⁷

If You Think You Were Owed a Payment

The claims window closed in February 2023, and the settlement is no longer accepting new submissions. Questions about payment status go to the claims administrator, JND Legal Administration, or the settlement website at stsettlement.com.² SKU-cap Subclass payments were automatic, so members of that group did not need to file a claim to be paid.¹

A Separate SquareTrade Case

The Shuman settlement is sometimes confused with an earlier case, Starke v. SquareTrade Inc., filed in December 2016 in the Eastern District of New York. Starke involved different allegations, focused on deceptive marketing of plans on Amazon for products not actually eligible for coverage. It was terminated on September 30, 2019, and is not connected to the underpayment payouts described here.⁸

1
GovInfo. Final Approval Order, Shuman v. SquareTrade Inc.
2
Top Class Actions. SquareTrade Underpaid Consumer Claims Class Action Settlement
3
Gibbs Law Group. SquareTrade Protection Plan Underpayment Lawsuit
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Gibbs Law Group. Second Amended Class Action Complaint, Shuman v. SquareTrade
5
Handley Farah & Anderson. HFA Sues SquareTrade for Allegedly Failing To Fully Reimburse Consumers as Promised
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Bloomberg Law. SquareTrade Gets Final Nod for Claims Underpayment Settlement
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CourtListener. Shuman v. SquareTrade Inc.
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CourtListener. Starke v. SquareTrade Inc.