by Structured Settlement Watchdog
Structured settlement payment buyers such as Peachtree Financial Solutions, have recently started upping the level of inducements to customers to do business with them, by offering them flat screen TVs in exchange for selling their payments at a steep discounts. Is this ethically and morally sound business practice?
New York Law on Inducements
The Office of General Counsel of the New York Department of Financial Services (then NY Insurance Department) issued an opinion on March 10, 2000 in which it concluded:
1. Yes, an attorney violates the Insurance Law when she waives legal fees for attorney work in exchange for a client’s life insurance business and receives a commission from the sale of such life insurance in lieu of a commission.
2. Yes, a policyholder violates the Insurance Law when he accepts an inducement on the purchase of a life insurance policy that is not specified in the policy.
It is indisputable that the purpose of offering a 40" LED HDTV to a structured settlement annuitant is an inducement to attempt to persuade the annuitant to sell at a discount without knowing in advance if that sale is in the person's best interest, or the interest of any applicable dependents.
If such inducements like the TV were harmless, then there would be no need to address them in corporate policies , rules of financial regulatory organizations and the United States Constitution, such as:
- Companies all over the world have employee policies limiting the amount or value of gifts that employees may accept
- FINRA has limits on the amount that financial advisors or stock brokers may pay clients and a gift log is often required.
- The Emoluments clause in the United States Constitution (a subject in the news over the last 12 months) states "No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State". Article I, Section 9, Clause 8
Peachtree Financial Solutions, a member of the National Association of Settlement Purchasers, was acquired by JG Wentworth in 2011. In November 2017, JG Wentworth filed Chapter 11 bankruptcy for the second time in 8 years, leaving equity investors with nothing after a series of Wall Street analysts touted and continued to tout the stock as it was going down the toilet.
Is there state lawmaker, state trial lawyer association or attorney general who sees the flaws in a system? To be continued.