Factoring of Structured Settlements | Where's "The Bill"?

by John Darer CLU ChFC MSSC RSP CLTC

The American Association of People with Disabilities, with the National Consumers League, will host the first-ever symposium on protection for people with disabilities, both as consumers of new technology and as customers in the financial services industry.  Panel 1 deals with Factoring of Structured Settlements

The program description says:

"Too many people with disabilities fall victim to financial predators who offer immediate cash in exchange for a structured settlement factoring transaction. A panel will explore how factoring - when a structured settlement is sold for cash - robs people with disabilities of deserved money".

Featured panelists:
Shelby Boxenbaum, Legislative Aide to Congressman Matt Cartwright (D-PA)
Mark Perriello, American Association of People with Diabilities.

The program is also featuring special remarks by Congressman Jim Sensenbrenner (R-WI)

My comments

The collective efforts of AAPD, National Consumers League and Congressmen Cartwright and Sensebrenner are appreciated, but they and their colleagues must do more and state legislatures need to do more. It is not simply the matter of educating a few people with disabilities.  Some of these people truly have no other avenues and there's only so much you can do to "fight" free will.  So where's "the bill"?

Bills need to be introduced and new laws passed on a federal and state level to:

• establish protocols and govern how structured settlement annuitants, including those within the AAPD footprint, are approached, through print, online media, mail, telephone and other forms of solicitation, including financial inducements and kickbacks.
  
• assure that only people who are properly licensed can solicit structured settlement annuitants and investors in structured settlement payment rights.
• mandate error and omissions insurance to protect both sellers and investors
• require continuing education in order to maintain authority to solicit.
• charge fees to provide revenue to states to support the regulation and enforcement effort.

A widescale federal and state investigation needs to commence to look into fraudulent business practices centered around bad actors in the structured settlement secondary market who lure annuitants to Florida under false pretences and encourage structured settlement annuitants to participant in fraud. The excise taxes that the IRS could collect for the violation of IRC 5891 could fund the cost of the federal investigation.

Here are some questions:

1. What happens to investors who have been sold recycled structured settlement payments from structured settlement factoring transactions based on the fraud that has been committed?  The other day I was contacted by a man of over 80 years old seeking to invest in structured settlement payment rights.  Who protects him? There is no oversight on these deals to protect investors and I ask Congressmen Cartwright , Sensebrenner and their colleagues, why?
2. What can be done when the website home page of a division of a publicly traded company in the structured settlement secondary market, included a fake testimonial from what proves to be a stock photo? 
3. What can be done when in person hearings are not mandatory and "collateral damage" is when a young father's $2.2 million structure, compensation for a childhood birthing injury, the sole source of income for the 29 year old disabled man with 2 young children, is sold for $577,000 and a Florida judge,who has never met the man, approves the transaction as being in the disabled man's best interest? How about the relationship between the settlement purchaser and the financial adviser who spoke to this young father about making an unsuitable investment of the proceeds derived from decimating his sole source of income ( that was approved by a Florida judge who never met him), in mutual funds?
4. What can be done a year after the CEO of a settlement purchaser admits (and it has been proven) that the CEO promoted his or his company's business interests using multiple fake identities in online social media such as Facebook, LinkedIn, Google Plus, Manta and a Better Business Bureau listing when alot of of the social media presence of the fakes is still active.

John Darer, the author of this blog post,  is a member of the American Association of Persons with Disabilities Power Circle. and prolific author of thousands of blog posts chronicling structured settlement factoring business practices (the good. the bad and the ugly) since 2005.