by Structured Settlement Watchdog
Consumer Advocate is an unreliable source of structured settlement information located at consumeradvocate.org. In a financial "masquerade" of sorts, they try to pass off 10 structured settlement factoring companies, as structured settlements.
Structured settlements are a defined term under the Internal Revenue Code 5891(c)(1) and defined therein, as "an arrangement" to pay for damages or compensation. When you're deriving advertising revenue from an unregulated industry segment as Consumeradvocate.org admits it is, where it has been alleged that there is rampant fraud and illegal activity and consumers are getting really badly shafted financially, where a bounty has been put out to coax informants out from the shadows, it seems that anything goes.
Here Consumer Advocate even admits to be being misleading "Companies that deal in purchasing structured settlements are formally called structured settlement factoring companies, but they are commonly (and somewhat misleadingly) referred to as structured settlement companies, which is what we are calling them here".
Consumeradvocate.org has been sucked into the "awarded a settlement vortex", typical of websites not familiar with structured settlements who are trying to make money on the advice that shows a failure to understand basic fundamentals. They say "A settlement is most often a monetary award a plaintiff receives upon winning a lawsuit. In the case of structured settlements, the full amount of the award is split into periodic payments" Ah, no!
ConsumerAdvocate.org even bombs on basic finance, when attempting and failing to describe the fundamental of structured settlement secondary market
They say "The lump sum you receive from the buyer of your structured settlement will always be smaller than the amount the you would receive if you wait to receive all the periodic payments. This is because the present value of those future payments is smaller than the future value of the payments due to the inflation and interest rates applied to the payments. Companies apply a factoring discount rate to the settlement amount, and the resulting amount is what is paid to you".
- Inflation has nothing to do with a present value calculation.
- Interest rates are not applied to payments in a present value calculation, the discount rate is.
- A discount rate is the rate at which revenues (in this case periodic payments) are discounted in order to calculate the present value. A discount rate is not applied to the settlement amount.
Why "Consumer Review Sites" About Structured Settlements Are Useless to Consumers
- Most of not all are deriving revenue from the companies they review, disclosed or not, directly or indirectly.
- Others are merely shills for a particular company [e.g. structuredsettlement(dot)com and annuity(dot) org shills for CBC Settlement Funding]
- Most consumer review sites are plagued by poor and lazy research.
- It seems that every top 10 listing has a different cast of characters.
Previous Articles on Dubious Structured Settlement Review Sites
Top 10 Reviews Misleads Consumers, Falsely Portrays Cash Now Pushers as Structured Settlement Annuity Companies Oct 9, 2017
'"Best Structured Settlement Company" Review Site Has Low Trust Rating September 18, 2014