by Structured Settlement Watchdog
Some "pennies on the dollar" merchants offer bribes just to induce potential customers with structured settlements to seek quotes from them. Are these financial inducements improper? Should they be illegal as a matter of public policy? Are these financial inducements ethical?
What is a Bribe in this Context?
Bribe "something that serves to induce or influence. e.g. offered the kid a bribe to finish his homework"
Source: Aunt Merriam Webster
Here we are not speaking of inducing Fifi the Frenchie to give a high five by rewarding them with a treat. Fifi is being rerwarded for good behavior. Pennies on the dollar is not a treat or reward for an annuitant's good behavior! It's an inducement to sell an asset at a discount, make a certain financial loss from a siginificant asset, possibly their only significant asset.
Consder this example, where Stone Street Capital, a purchaser of structured settlement payment rights and a member of the JG Wentworth family, offers a $100 inducement just to get you to seek a quote from them. Seen recently...
*This offer is subject to you receiving a quote for the sale of qualifying payments, our verification that you are currently receiving those payments and that they are available for purchase. This offer is not for a loan or advance. The $100 for a quote will be fulfilled in the form of an e-gift card that will be emailed to the email address you provide".
The fine print includes a consent to be contacted by automatic dialers and so on. Oh joy! One more robocaller to pile on to the unabating debt elimination calls, cascading cable tv cacodemons, wretched auto warranty wranglers, the vexatious assemblance of amazon spoofers, pinpricking solar panel peddlers, flabbergasting final expense flipperheads, senior benefits jive turkeys, and government agency spoofers who claim to have the dreaded but completely random "notice in your name".
A Glaring Inequity Exists with the Potential to Distract and Harm Consumers
This type of conduct would be deemed illegal under state insurance laws in New York and Florida (scroll down to see below, especially highlighted language).
But for some reason there is a gaping hole in structured settlement protection laws, where there should be protection for consumers (structured settlement recipients) who rely on structured settlement annuity payments, that is long overdue to be addressed. States such as Louisiana, Maine, Maryland and Minnesota which require the registration of structured settlement transferees should continue to lead the way by clamping down and introduce measures to discourage and eliminate this potentially unhealthy business practice.
Equity is an prominent topic in the national discourse these days. But there's no equity between permissible conduct by structured settlement factoring companies (structured settlement transferees) and those who hold insurance licenses to solicit insurance, including structured settlement annuities. Think about it, a licensed insurance agent (such as one who is a structured settlement broker or settlement planner) with few exceptions, cannot offer to pay someone $100 (or provide a gift card worth $100) as an inducement to request a quote.
Opinion of General Counsel No. 04-08-03 (August 3, 2004) states, in relevant part, that:
Inasmuch as the gift certificate or the [gas] card being offered is not a "keepsake" within the meaning of the statute, but is expected to be used shortly after receipt and then be discarded, it would not fall under the "keepsake" exception of N.Y. Ins. Law § 2324 even if the agency name was placed upon it.
Therefore, despite the low value of the gift card as it is not an article of merchandise it is rather more similar to cash and thus it would not qualify for the exemption and it would be an illegal inducement pursuant to N.Y. Ins. Law § 2324(a) (McKinney Supp. 2005).
Referral fees – referral fees are either cash or an item given to the source of a referral provided for the referral of a prospective insurance customer. The fees are lawful provided they are given for every referral, not just those that result in insurance sales. Acceptable fees can be paid in cash, with a gift card, merchandise, lottery tickets, etc. There is NO limit on the amount of a cash referral fee or the value of merchandise. For reference, DFS cites section 626.112(8), Florida Statutes.
Marketing/Advertising Gifts – these are items of merchandise given to prospective or current policyholders or to the public that market or advertise a licensee or agency. Acceptable items include coffee mugs, golf balls, golf towels, mouse pads, calendars, etc., and generally include the name of the agent or agency. Cash, gift cards, lottery tickets, etc., are not acceptable advertising gifts. Effective July 1, 2018, new legislation substantially expanded Section 626.9541(1)(m), Florida Statutes, by allowing insurers and agents to give advertising and promotional gifts having a total value of not more than $100 per insured or prospective insured in any calendar year.
Unlawful Inducements – the definition of an unlawful inducement in its simplest terms is to give a prospective customer, existing customer OR ANY OTHER PERSON a “thing of value” in exchange for something of value to the licensee. An example is giving any person or entity cash, a gift card, merchandise, lottery tickets, tickets to a sporting event, etc. in exchange for the ability to produce an insurance quote or sell insurance. If another agent or agency sells the same product for the same price, the consumer may choose to work with the licensee that offers a gift card. According to DFS, the law was created in part to deter unfair competition among licensees. DFS refers licensees to section 626.9541(1)(h) which is titled "Unfair methods of competition and unfair or deceptive acts or practices defined".
Gaps in Regulation of Structured Settlement Transferees
Why does this longstanding inequity exist?
Given that neither of these states require any sort of licensing or registration of structured settlement transferees, state legislature in these and other states should perhaps address the following two questions:
- What if an employee of a Florida structured settlement factoring company, or a factoring company in another state were to engage in this activity with a structured settlement annuitant?
- What if an employee of a Florida structured settlement factoring company, or a factoring company in another state were to engage in this activity with an individual or individuals with access to non public personal identifiable information concerning structured settlement annuitants?