More Settlement Factoring Reforms Needed To Rein in Deception and Evasion of Obligations

by Structured Settlement Watchdog®

Structured settlement purchasing companies are increasingly submitting transfer petitions using only initials or one initial and a name in an effort to stop competitors from the rampant scraping of court records and provide competing and possibly better quotes for the seller of structured settlement payments rights. Furthermore some cash now pushers purportedly use the practice to get suckers in the door with a low rate and churning them for a higher rate on following transactions "when the coast is clear".

In a recent submission one Florida based company submitted " J. Smith" and then elsewhere in documents used "J.S."  (name initials changed).  Such practice may muddy the waters and/or stop up competing efforts, but it should be against public policy for the following reasons:

• To the extent such business conduct, involving disguised identity, prevents a judge or attorney in one jurisdiction from easily being able to determine if a seller has sold before ANYWHERE else and to be able to identify serial selling activity.  In the Taylor and Lafontant cases, for example, multiple selling transactions were submitted in a very short period of time.
• To the extent such business conduct involving disguised identity, prevents matrimonial obligations from being enforced.  Someone who owes child support should not be allowed to evade the law and his/her obligations to to provide spousal or child support. 
• To the extent such business conduct involving disguised identity, prevents any obligations from being enforced.  Someone who owes child support or other creditors, should not be allowed to evade the law and his/her obligations to to provide spousal or child support. 
• To the extent such business conduct involving disguised identity, prevents any obligations from criminal restitution from being enforced.  Someone who owes criminal restitution, as a matter of public policy, should not be allowed to evade the law and his/her obligations to to provide such restitution.

Public Access to Court records is there for a purpose.  The access in not the issue, it is how the structured settlement annuitants are solicited by cash now pushers using the data that is the problem.

Plethora of Anonymous Websites and Purported Entities

The use of purported entities in online advertising is a cancer that has the potential to destroy the structured settlement secondary market the longer it is allowed to metastasize by the lack of regulation of sales practices and lack of licensing and registration of entities that conduct business in the market segment.  It's a reasonable expectation that consumers know who they are ultimately dealing with and who they can hold responsible if things don't turn out as promised.

Suggestions: 

1. Require licensing consistent with requirements for other financial services.
2. Require that any entity used in solicitation be licensed. 
3. Prohibit discussion or sales contact with annuitants/consumers by unlicensed persons. 
4. Lead generation firms currently holding themselves out as settlement purchasers should be prohibited from doing so.
5. Search engine optimization firms holding themselves out as settlement purchasers should be prohibited from doing so. 
6. Prohibit contact with investors in structured settlement payment rights by unlicensed persons.
7. Require that each licensed entity carry a minimum amount of Errors and Omissions coverage.

Forum Shopping and Prevention of Fraud in Settlement Transfer Petitions

In a recent Lake County Florida case that I reported on the other day, the legal representative of a structured settlement annuity issuer was satisfied with a voter registration card and a lease.  Pending legal cases in Virginia and New York bring  the sufficiency ofthose "proofs" into question.

Suggestions:

1. Six month residency requirement in the state where the petition to transfer is filed. Eliminate the "I'm moving to Florida" bullshit.
2. Acceptable proof of domicile should be focused on drivers license, passport, copy of 5 months of electric bills, cell phone bill and if the seller has children, where the children are attending school.
3. The definition for forum shopping should appear in a list of definitions in transfer paperwork and warnings about fraud should be conspicuously placed on the transfer documents.