by Structured Settlement Watchdog®
The purported "generous financial contribution" made by a factoring operative to support the marketing efforts of a structured settlement brokerage highlights a potential danger facing tort victims.
Factoring companies spend hundreds of thousands of dollars or even millions on television and print advertising and expensive $50 plus pay per clicks to attract tort victims to part with their long term financial security. The acquisition costs are much less IF the factoring company can convince a structured settlement broker, settlement planner or other financial adviser (such as a special needs attorney) to part with the names of their clients, or (in some cases) actively participate in the factoring process, in exchange for financial consideration.
The financial consideration may not be as obvious as JG Wentworth's recent sponsorship of Academy of Special Needs Planners. It could be financial consideration that is more subtle and drilled down to the company or individual level.
The questions are:
- How do these financial contributions affect the present and future behavior of those associations, companies and/or individuals receiving them to tort victims? Read It Makes You Just Want To Hurl.
- If an association, company or individual is receiving financial support from a factoring company what are the obligations to do business with that factoring company in exchange for the consideration?
- Do these companies and the members of these companies make an up front disclosure of this financial consideration and how?
- Is there a level of hypocrisy in such entities or individuals in accepting such consideration when they currently make, or have made, rebating accusations of their own, in which the purported payments are deemed to have a negative affect on behavior of their targets towards tort victims?
- Is the danger lessened by the knowledge that the payor was a former structured settlement broker who is now devilishly proud about being on "the dark side"?
- If lawyers for tort victims are concerned about factoring, do they have an ethical obligation to determine whether the settlement planner or settlement broker, individually, AND the firm which they are engaging, is receiving kickbacks or marketing support from a factoring company in any form and whether the settlement planner or structured settlement broker, or other expert such as a special needs attorney is getting paid for factoring referrals?
Factoring companies depend on a steady supply of structured settlements to survive. Those factoring companies that have been acquired by hedge funds and other entities have bloated cash reserves to tempt the wills of settlement brokers and settlement planners, lower their acquisition costs and satisfy their investors. The factoring industry has a huge ally in both major structured settlement industry trade associations in Patrick Hindert of S2KM who has promoted, without supporting evidence when challenged, that factoring is a stimulus of growth for the structured settlement industry.