by Structured Settlement Watchdog®
The State of Maryland has applied the chastity belt of structured settlement protections including mandatory registration and a surety bond requirement that went into effect October 1, 2016.
Maryland Structured Settlement Protection Act Requirements
To ensure that the type of cases like Access Funding are avoided in the future and companies are discouraged from engaging in deceptive and dishonest practices, the Maryland SSPA includes strict provisions that regulate the transfer of structured settlements.
- A requirement for transferees to provide payees with a disclosure statement
- A requirement for transfers of structured settlement rights to be filed in a court located in the county where the payee lives
- A requirement for transferees to become registered with the Attorney General and prohibiting them from filing a petition for a transfer unless registered
- The Bill also establishes registration requirements, such as a $2,000 registration fee – $1,500 of which are returned if the application for registration is denied.
- A requirement for transferees to file a $100,000 surety bond with the Attorney General
- A right of the Attorney General to suspend or revoke registrations of transferees as well as to impose penalties in certain cases
With a surety bond agreement, if the bonded structured settlement factoring company engages in fraudulent or deceptive practices, payees/obligees have the right to file a claim against the surety bond and receive compensation up to the full sum of the bond – $100,000. In return for extending compensation to payees/obligees, the surety bond company has to be repaid by the bonded company for its financial backing.
In my white paper on the Structured Settlement Secondary Market published in 2015 as well as dozens of blog posts over 11 years, I have espoused the need for a regulator with the power to fine, suspend or revoke the registration of companies engaging in fraudulent of deceptive practices. Now, at least in one state, there is one. A recent meeting in Arizona of the National Association of Attorneys General, a representative of the Maryland AG's office appeared on a panel discussing developments in regulation, along with representatives of the National Association of settlement Purchasers and the National Structured Settlements Trade Association.