Cash For Annuity | Value of BBB Rating Questioned

by John Darer®. CLU ChFC MSSC RSP CLTC

Cash for annuity companies like to promote themselves using a rating from the Better Business Bureau because, despite criticism of the Better Business Bureau, many of these settlement purchasers have little else to offer. The reliability of BBB ratings is inconsistent throughout the United States.  The BBB runs on a franchise system where franchisees are in business to make a profit. Franchisees charge members a fee to be accredited but accreditation is not automatic.

For example, the BBB of Connecticut, which does a good job of enforcing BBB standards, in my opinion, clearly states and fully discloses thy following with respect to any accredited business:

"BBB has determined that (name of company) meets BBB accreditation standards, which include a commitment to make a good faith effort to resolve any consumer complaints. BBB Accredited Businesses pay a fee for accreditation review/monitoring and for support of BBB services to the public.

BBB accreditation does not mean that the business' products or services have been evaluated or endorsed by BBB, or that BBB has made a determination as to the business' product quality or competency in performing services."

Accredited businesses affirm that they meet and will abide by the following standards:

Build Trust
Establish and maintain a positive track record in the marketplace. An accredited business or organization agrees to: Have been operational (actively selling products or services) in any BBB service area for at least the most recent 12 months, unless the principal(s) previously operated a similar business with an eligible record (one that qualifies for BBB accreditation). Fulfill all licensing and bonding requirements of applicable jurisdictions; provide all license and bonding information upon application for BBB accreditation; and provide periodic updates upon request of BBB. Be free from government action that demonstrates a significant failure to support BBB ethical principles in marketplace transactions (this requires a determination by BBB as to the nature of any violation, whether it was caused or condoned by management, and actions taken to resolve underlying issues that led to the government action). Be free of an unsatisfactory rating and maintain at least a B rating at the accrediting BBB and the BBB where it is headquartered, if different. In its relationship with BBB: meet all applicable standards within this Code of Business Practices cooperate with BBB's activities and efforts to promote voluntary self-regulation within the business' industry honor any settlements, agreements or decisions reached as an outcome of a BBB dispute resolution process complete the required application and pay all monetary obligations to BBB in a timely manner
Advertise Honestly
Adhere to established standards of advertising and selling. An accredited business or organization agrees to: Follow federal, state/provincial and local advertising laws. Abide by the BBB Code of Advertising. Supply, upon request, substantiation for advertising and selling claims. Correct advertising and selling practices, when recommended by BBB. Adhere to applicable BBB industry codes of advertising. Cooperate with BBB self-regulatory programs for the resolution of advertising disputes. Use the BBB name and logos in accordance with BBB policy. Avoid misleading customers by creating the false impression of sponsorship, endorsement, popularity, trustworthiness, product quality or business size through the misuse of logos, trustmarks, pictures, testimonials, or other means.
Tell the Truth
Honestly represent products and services, including clear and adequate disclosures of all material terms. An accredited business or organization agrees to: Make known all material facts in both written and verbal representations, remembering that misrepresentation may result not only from direct statements but by omitting or obscuring relevant facts. Ensure that any written materials are readily available, clear, accurate and complete.
Be Transparent
Openly identify the nature, location, and ownership of the business, and clearly disclose all policies, guarantees and procedures that bear on a customer's decision to buy. An accredited business or organization agrees to: Upon request, provide BBB with all information required to evaluate compliance with BBB standards. This may include, but is not limited to business name, address and contact information; names and background of principals; business and banking references; licensing and/or professional accreditation; and a complete description of the nature of the business. Clearly disclose to customers: direct and effective means to contact the business terms of any written contract any guarantees or warranties accompanying a product any restrictions or limitations imposed (e.g. limited supply,maximum number available per customer) the business' return/refund policy any recurring commitment into which the customer may be entering, including information on how future billing will occur total cost of the transaction, including tax, shipping and handling, and other related charges If selling products or providing services on Web sites or via other electronic means: provide any required product labeling information disclose the nature and terms of shipping, including any known delays or shortages of stock provide an opportunity to review and confirm the transaction before the sale is completed provide a receipt summarizing the transaction after the purchase
Honor Promises
Abide by all written agreements and verbal representations. An accredited business or organization agrees to: Fulfill contracts signed and agreements reached. Honor representations by correcting mistakes as quickly as possible.
Be Responsive
Address marketplace disputes quickly, professionally, and in good faith. An accredited business or organization agrees to: Promptly respond to all complaints forwarded by BBB by: Resolving the complaint directly with the complainant and notifying BBB, or Providing BBB with a response that BBB determines: is professional, addresses all of the issues raised by the complainant, includes appropriate evidence and documents supporting the business' position, and explains why any relief sought by the complainant cannot or should not be granted. Make a good faith effort to resolve disputes, which includes mediation if requested by BBB. Other dispute resolution options, including arbitration, may be recommended by BBB when other efforts to resolve a dispute have failed. BBB may consider a business' willingness to participate in recommended dispute resolution options in determining compliance with these standards. Comply with any settlements, agreements or decisions reached as an outcome of a BBB dispute resolution process. Cooperate with BBB in efforts to eliminate the underlying cause of patterns of customer complaints that are identified by BBB.
Safeguard Privacy
Protect any data collected against mishandling and fraud, collect personal information only as needed, and respect the preferences of customers regarding the use of their information. An accredited business or organization agrees to: Respect Privacy Businesses conducting e-commerce agree to disclose on their Web site the following: what information they collect, with whom it is shared, how it can be corrected, how it is secured, how policy changes will be communicated, and; how to address concerns over misuse of personal data. Secure Sensitive Data Businesses that collect sensitive data online (credit card, bank account numbers, Social Security number, salary or other personal financial information, medical history or records, etc.) will ensure that it is transmitted via secure means.Businesses will make best efforts to comply with industry standards for the protection and proper disposal of all sensitive data, both online and offline. Honor Customer Preferences Businesses agree to respect customer preferences regarding contact by telephone, fax and e-mail, and agree to remedy the underlying cause of any failure to do so.
Embody Integrity

In its E-Book on selling structured settlements,  Toronto based Strategic Capital says "you might have heard that certain structured settlement buyers have an A+ BBB rating, and you might assume that this means this company has few complaints. Actually, that is not necessarily true. Companies with good BBB ratings have many structured settlements complaints when it comes to buying payments. To earn a good BBB rating a company needs only meet some BBB specific criteria"  (see above).  Stratcap then focuses on the number of complaints associated with some of the bigegr players in the market to support its assertion.   To wit "When considering what a BBB rating means, think about this: if you look at J.G. Wentworth’s listing on the BBB you will find that they have an “A+” rating. This sounds great. But if you look further you will see that they have had 40 complaints filed against them, through the BBB. That is 40 complaints, but still a perfect rating? Stone Street Capital has an “A+” rating as well, though they have had 57 complaints as of this writing. Imperial Structured Settlements, on the other hand, has only an “A” rating (no plus), yet they have only two complaints filed against them. And Strategic Capital doesn’t even appear on the BBB website, presumably because no one has ever complained about them to the BBB"

Comment:  While nobody likes to receive complaints, valid complaints also help a business improve. The number of complaints should be looked at in relation to the number of deals that the company has done. For example if JG Wentworth did 2000 transactions over a 3 year period and had 57 complaints that's 2.85% of their customers.  The real question (and this is where the BBB comes in) is if a company resolved the complaints in timely fashion through the BBB resolution process. If complaints do appear on a BBB listing the BBB posts if there was a resolution or not. 

A classic example of improving from customer complaints is Coca Cola.  New Coke was the reformulation of Coca-Cola introduced in 1985 by The Coca-Cola Company to replace the original formula of its flagship drink, Coca-Cola (also called Coke). New Coke originally had no separate name of its own, but was simply known as "the new taste of Coca-Cola" until 1992 when it was renamed Coca-Cola II. The American public's reaction to the change was negative and the new cola was a major marketing failure. The subsequent reintroduction of Coke's original formula, re-branded as "Coca-Cola Classic", resulted in a significant gain in sales. This led to speculation that the introduction of the New Coke formula was just a marketing ploy; however the company has always claimed it was merely an attempt to replace the original product  [source: Wikipedia]

The BBB of Greater Maryland is unfortunately one example of why the credibility of the BBB is in question.  Despite being put on notice that David Springer, CEO of a now defunct Maryland based structured settlement factoring broker admitted, in a 2013 deposition and in trial testimony, to fabricated information in its BBB and other social media, to include people that did not even exist, BBB continues to give the company an A+ rating. It's a complete joke.  The same BBB office gives another company an A+ rating despite publicly available information from the Maryland Secretary of State that conflicts with the BBB listing for the company.

Strategic Capital suggests that you Google a company name and the words complaints to get a more revealing rating than BBB. 

Comments:

I'm surprised that Strategic Capital would in this instance, subscribe to and promote such refutable rubbish.

Here's a smattering of what I've uncovered over the past 3 years about the structured settlement secondary market.

A. Several structured settlement factoring companies have actually paid for positive reviews from video testimonial websites

B. Several structured settlement  factoring companies have used stock photos which they portray to consumers as real customers in order to drum up more business, such as Imperial Structured Settlements and DRB Capital until they were exposed.

C.  A number of cash now pushers proudly display their topconsumerreviews.com, a paid survey without disclosing the nature of the results  (i.e these were paid reviews). In September 2014 I posted how Topconsumerreviews.com was given a low trust rating by scamadviser.com  Download Scam adviser report for topconsumerreviews.com 9-18-2014.

D.  StructuredSettlement-Quotes(dot)com,  whose controllers are competitors of JG Wentworth and Woodbridge Structured Funding, posted negative reviews of these competitors and then promoted them with hundreds of spam links from all over the world.   Woodbridge is now suing Genex Capital and Genex Strategies, Inc. over what they allege is "a fraudulent and deceptive scheme". The complexity of the litigation is an illustration of sorts over what it would take for a consumer or investor to litigate against Genex, which essentially solicits US consumers from outside the United States. Its US address is merely a mailbox at a UPS store.  Canada does not permit sales of structured settlement payment rights.

E. Genex Capital itself has been promoted with a ridiculous amount of spam comment reviews, some of which are downright comical

F. " Complaints" on commercial complaint sites appeared against witnesses in federal lawsuit against one factoring company.  Those complaint sites hide behind the ironically named Communications Decency Act and charge hundreds and, in one case, thousands of dollars to conduct an investigation. Regardless of the results they will not remove the reports.

Strategic Capital shares Patrick Hindert's opinion that "one criterion to consider when selecting a purchaser is whether that purchaser belongs to the National Association of Settlement Purchasers (NASP), a professional association that promotes best practices among its members and provides industry education about the transfer process.”

Comment:  The NASP Code of Ethics is Pollyanna. Unfortunately I have shown that time and time again that some of the worst behaviors are exhibited by members of NASP.  Allegations in the matter of Lafontant v Imperial Structured Settlements,  portray a nightmare of abuse by a NASP member.  NASP does not speak for and does not control the behavior of the entire industry, let alone its own members.

Conclusion.

I understand where Stratcap is coming from, however a market place, like the structured settlement secondary market that lacks regulation of how consumers and investors are solicited and general marketplace business conduct that includes fines and where serious violations could result in the suspension or loss of license to practice,  is a marketplace that is fraught with dangers for both consumers and investors. Self-regulation is not possible based on a 12 year track record of wildly accelerating abusive behavior that shows that the "honor system" does not work.

Fortunately the muck is beginning to get raked.   Lawsuits have been filed and more are coming against structured settlement factoring companies over their business practices. Mainstream news media have taken an interest as have government agencies.