by Structured Settlement Watchdog®
Are companies that marketed structured settlement receivables under the misleading term "secondary market annuities" responsible for the real financial repercussions on state insurance funds, as investors file complaints with regulators when insurers halt payments due to disputed or competing claims?
The regulators then contact the insurers for a "what's up?", according to our sources.
The involvement of investors in structured settlement receivables contacting state insurance regulators, potentially with guidance from secondary market "annuity" scam labelers, along with the subsequent outreach from regulators to insurers, leads to the conclusion that buyers of structured settlement receivables did not fully comprehend what they were purchasing. They may have believed they were acquiring annuities, which are insurance products, yet could have been misled regarding the nature of their purchase.
As previously reported and documented, promoters of structured settlement receivables heavily marketed their products to investors under the "secondary market annuities" scam label, routinely utilizing this label to promote their offerings.
Some structured settlement factoring originators consolidate acquired payment rights, securitize them, and sell them to institutional investors, taking their commission along the way. Others directly target individual investors, including potentially less sophisticated investors, such as small business owners and retirees. Investors, especially retirees, who relied on the "scam" label believed they had actually purchased annuities, which are terms commonly associated with safety and security—a reputation built by billions spent on ongoing and legacy advertising by licensed, fee-paying life insurance companies, in some cases for over a century.
While falsely promoting structured settlement receivables as an annuity, which is a regulated insurance product, some secondary and tertiary market companies misled buyers by suggesting that state insurance guaranty funds might apply in the event of insolvency. This conduct would be illegal state law for promoting annuities or any life insurance product. Additionally, some principals of these companies possess insurance licenses, but they may not hold licenses in every state where they marketed these secondary market scams labeled as derivatives to investors, including retirees and potentially injury victims.
Promoters of Structured Settlement Receivables Scam Labelled As Annuities Who Advertise State Insurance Guarantee Associations in their Sales Pitch (at time of posting)
- Annuity Straight Talk LLC, Montana [ via (1) SecondaryMarketAnnuities(dot)Net (2) DCF Exchange LLC (3) smasecureassets (dot)com which is listed as the only sponsor at time of posting]. Annuity Straight Talk not only mentions but uses hypothetical examples of how it would apply.
- Factor Financial, Delaware, actually falsely represents that every insurance company "is regulated by a state guaranty fund"
State insurance departments are funded in large part by fees charged to those who use the system:
- Insurance companies who do business in the state
- Licensed insurance agents, brokers and consultants
- License fees
With few exceptions, structured settlement factoring companies that originate structured settlement factoring transactions, that are ultimately sold to investors directly or through intermediaries, are currently not subject to a license or registration requirement by any regulatory agency (state or federal)
As a result, neither structured settlement factoring companies nor anyone discussing (1) structured settlement factoring transactions or (2) investing in structured settlement receivables with the annuitants or investors, pay any license fees to state insurance regulators. Many do not even register to do business in the states they solicit customers or consummate structured settlement factoring deals. Thus those who profit from the system and tax the system's resources do not pay user fees.
The cat is out of the bag. As more annuitants and former annuitants fight back against structured settlement factoring abuse, they contest and seek to invalidate court orders. Then insurers move for and are successful with interpleaders, or plaintiffs move for a constructive trust (since many unregulated originators have no money), which potentially impacts investors when the payments are suspended.
The system is flawed when the consequence to insurers and ultimately to taxpayers, in states where consumers who have been misled by merchants (for the sake of their own profits), is increased unit costs for state and local regulators to devote time and resources to the scammed investors who turn to them for answers when the payments are halted due to a competing claims to the payments.
Payments may be contested if it can be proven that the Court approved transaction did not satisfy the requirements of the structured settlement protection act. These individuals and entities should be taxed up front as a prerequisite to doing business in a state and through ongoing user fees.
The promoters often tout that "each deal is vetted and approved by outside counsel", but even that is no guarantee as investors in what turned out to be Access Funding related derivatives have shown [ Read my recent story about the Florida retirees] New York Life is moving for interpleader in the Terrence Taylor case and a class action in Virginia threatens investors.
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