by John Darer CLU ChFC CSSC
Companies that give you a deeply discounted lump sum of cash in exchange for your structured settlement payments continue to confuse consumers.
Yet another factoring company, Novation Capital, is claiming to be in the structured settlement industry, "a leader" at that. The top positions on a search on both Google and AOL of the key words "structured settlement industry" come up with JG Wentworth , whose "leader in the structured settlement industry" claim was charbroiled in our 1-27-2006 Structured Settlement Advertising Wall of Shame. Novation's listing, though not as lofty as JG Wentworth states:
Novation Capital is a leader in the structured settlement industry, helping people with structured settlements get cash now. ...
On December 21, 2004, Anthony J. Alfieri, J.D., in his capacity as Legal Committee Chair of the Society of Settlement Planners, wrote a letter to Hon. Diane Koken, President of the National Association of Insurance Commissioners ("NAIC") proposing a certain broker disclosure amendment be added to the Producer Licensing Model Act. Alfieri, a Redmond, Washington based structured settlement producer and structured settlement planner with Settlement Professionals Inc., is quoted three times in this letter referring to the "structured settlement industry" or settlement annuity industry. It is clear in his letter that he is referring to the "approximately 500 full-time structured annuity producers licensed as life insurance agents" (letter p2) not a universe that includes the likes of JG Wentworth, Novation Capital, Peachtree Settlement Funding and Stone Street Capital.
The latter mentioned are companies which are, in fact, companies in the "factoring industry", "transfer industry" or "cash flow industry" or "industry du jour" that they as advertisers apparently wish to call themselves. Novation Capital states on its web site that it is a "member in good standing of the National Association of Settlement Purchasers (NASP)" so maybe the proper industry nomenclature for these companies is the "settlement purchasing industry". However the words "structured" settlement purchaser would be misleading for the reason covered in my February 11, 2006 post concerning who purchases structured settlements.
Perhaps Novation Capital itself is confused into thinking it is somehow part of the "structured settlement industry" because its membership application was accepted by the board of directors of the Society of Settlement Planners. This was after Sal Venti, (who I confirmed today is now a former member of that organization) canvassed at least one member of the Society of Settlement Planners at its 2005 annual meeting in Washington DC to go through his/her confidential files to seek candidates to contact to sell their structured settlement payments rights! Wake up Novation, they needed your $10,000!
Mr. Alfieri as legal committee chairman of the Society of Settlement Planners, having gone on record with his (and presumably the SSP's) "structured settlement industry" definition, and the board of directors of the Society of Settlement Planners, should show some real leadership and put an end to this nonsense involving a member of his/its own organization.
Unless members of the "structured settlement industry" and consumer advocates stand up to the likes of JG Wentworth, Novation Capital and others who serve to only confuse consumers with the outlined claims, further encroachment and confusion can be expected. Consumers are inundated with confusing and sometimes incorrect information and may not be able to get the information they need to make life impacting financial decisions in timely fashion.
The "factoring industry", "transfer industry" or "cash flow industry" or "industry du jour" that they as advertisers apparently wish to call themselves, needs to come up with a clearly defined "sexy" industry definition that they can live with that does not confuse consumers.
Fellow blogger S2KM's Patrick Hindert might suggest, with his S2 3.0 vision, that we should all be "under one umbrella". I disagree with "under one umbrella" but I am willing to hear what he, Mark Wahlstrom or others, including factoring companies might suggest as an alternative.
If you are a member of National Structured Settlement Trade Associaton, a producer member of the Society of Settlement Planners, consumer advocate, or an interested party, the time to take a stand on this issue is now.