A tiered cash payment in a lawsuit is a way of paying out a class action settlement that sorts eligible class members into categories based on the kind or severity of harm they suffered, then pays each category a different amount. Instead of every claimant getting the same flat check, the settlement agreement defines two or more tiers, assigns each person to one, and splits a set pot of money among the people in that tier. Higher tiers get more. The structure shows up most often in data breach cases, where some people had Social Security numbers exposed and others only had an email address leak.
How the Tiers Get Set and Paid
A class action settlement starts with a fixed sum the defendant agrees to pay into a settlement fund. Attorney fees, administrative costs, and service awards to the named plaintiffs come out of that gross amount first. What’s left is the net settlement fund, and that’s the money class members actually divide.
When the settlement is tiered, the agreement itself spells out the categories and the criteria for each one. Common sorting factors include the type of data exposed, the severity of the potential consequences, and the nature of any loss.1Class Action U. What Is the Average Class Action Payout Per Person You don’t pick your tier. The settlement administrator does, based on the defendant’s records of what happened to you.
Payments inside each tier are distributed pro rata, meaning the money allocated to that tier is split proportionally among everyone who filed a valid claim in it. The more people file, the smaller each check. Because the fund is capped, no one can tell claimants in advance what their payment will be — the number depends on turnout.
Tiered Payment or Documented Loss: The Choice You Usually Have to Make
Most settlements that use tiers also offer a second track for people who can prove specific financial harm. The two options work differently:
- A tiered cash payment requires no proof of loss beyond belonging to the class. You get a pro rata share of your tier’s fund, and the amount is unknown until claims are processed.
- A documented loss payment requires receipts, statements, or other paperwork showing out-of-pocket costs traceable to the incident, such as fraudulent charges or identity theft expenses. These payments are capped at a dollar figure set in the agreement.
You generally cannot collect both for the same incident. Which option pays more depends entirely on your situation. If you suffered real, provable losses, the documented loss track may recover more. If you didn’t lose money directly but your data was exposed, the tiered payment is usually the practical choice because it asks nothing of you except that you file a claim.
What Tiers Look Like in Practice: The AT&T Settlement
AT&T agreed to pay $177 million to resolve claims from two 2024 data breaches, and the settlement is a clear example of how tiering is structured. The fund was split into two pools: $149 million for the breach announced on March 30, 2024, and $28 million for the breach announced on July 12, 2024.2CCH Business. AT&T Settlement Agreement Roughly 100 million customers were potentially eligible.3CT Post. AT&T Data Breach Settlement Claims Filed
The agreement created three tiers:
- Tier 1 covers people whose Social Security numbers were exposed in the March breach. Because that data creates the highest risk of identity theft, Tier 1 pays the most. The agreement sets Tier 1 payments at five times the Tier 2 amount.4Telecom Data Settlement. In Re AT&T Inc. Customer Data Security Breach Litigation Settlement
- Tier 2 covers people whose other personal information was exposed in the March breach (names, addresses, phone numbers, email addresses, dates of birth, account passcodes, or billing account numbers) but whose Social Security numbers were not compromised.2CCH Business. AT&T Settlement Agreement
- Tier 3 covers account owners affected by the July breach, which involved call and text metadata — phone numbers, call durations, and interaction counts — downloaded from a third-party cloud platform. Tier 3 draws from the smaller $28 million pool.4Telecom Data Settlement. In Re AT&T Inc. Customer Data Security Breach Litigation Settlement
As the alternative track, claimants in the March breach could seek up to $5,000 in documented losses, and claimants in the July breach could seek up to $2,500. Someone hit by both breaches could potentially recover up to $7,500 by documenting separate losses from each.5Asheville Citizen-Times. How Much Will Each Customer Get From AT&T Settlement
The five-to-one ratio between Tier 1 and Tier 2 is the kind of explicit multiplier that makes a tiered structure legible: it reflects a negotiated judgment that losing a Social Security number is about five times as damaging as losing other contact and account data.
Why You Can’t Be Told Your Payment Amount Upfront
Two moving pieces control what any individual actually receives. First, the gross fund is reduced by fees and costs before anyone is paid. Second, the net amount for each tier is split among everyone who files in that tier, so the per-person figure moves inversely with the claims rate.
The AT&T case shows how much that matters. By the December 18, 2025, filing deadline, about 4.38 million people had submitted claims, a participation rate of roughly 4.8 percent of those eligible, according to a court filing cited in news reports.3CT Post. AT&T Data Breach Settlement Claims Filed At that rate, each valid claimant’s slice is considerably larger than it would be if half of eligible customers had filed. Change the turnout, and the math changes with it.
Timing is the other reason numbers stay uncertain. Payments go out only after the court grants final approval of the settlement and any appeals are resolved, which can take months after the claims deadline passes.
What You Need to Do as a Class Member
A few practical points matter for anyone offered a tiered payment:
- File a claim by the deadline. Tiered payments are not automatic. If you don’t submit a valid claim, you get nothing — and in most settlements you still give up your right to sue the defendant over the same facts.2CCH Business. AT&T Settlement Agreement
- Expect the administrator to assign your tier. The settlement agreement sets the criteria, and the administrator applies them to the defendant’s records of what happened to you. You don’t negotiate placement.
- Choose the right track for your situation. If you have documentation of real financial harm, run the numbers on the documented loss option. If you don’t, the tiered payment is the simpler route and asks for no proof of monetary damage.
- Treat any quoted dollar figure as an estimate. Final per-person amounts depend on claims volume and are not set until processing is complete.4Telecom Data Settlement. In Re AT&T Inc. Customer Data Security Breach Litigation Settlement
A tiered cash payment is, in the end, a trade. You give up the chance to recover a documented loss, and in exchange you get a share of the fund without having to prove anything beyond the fact that the defendant’s conduct reached you.