by Structured Settlement Watchdog™
Ever go to the House of Mirrors at the amusement park? You know, that place where you walk through and see distorted images of yourself. Read on for a tale of "mass distortion" in the structured settlement secondary market.
JG Wentworth makes this week's Structured Settlement Advertising Wall of Shame for yet another time and in yet another example of shameful advertising that is carelessly inaccurate and confusing to consumers. In the 12-2-2005 Wall of Shame I exposed JG Wentworth's alter ego American Settlement Fund which incorrectly implied that its consultants were Certified Structured Settlement Consultants. As I stated then, a Certified Structured Settlement Consultant is a professional designation of the National Structured Settlement Trade Association and given in conjunction with the University of Notre Dame. This inaccurate portrayal by JG Wentworth through its alter ego brand, American Settlement Fund, is still posted at www.americansettlementfund.com
Since the 12-2-2005 Wall of Shame post, JG Wentworth has blocked the details of its ownership of www.americansettlementfund on the Whois search apparently to hide its shameful careless advertising. Note to Federal and State Regulators: If an advertiser make claims that affect consumers decisions to buy products it should have to state at the very least its company address or means of contact. Right now it's a big problem in the factoring industry (particularly the area involving the purchase of structured settlement payment rights) that advertisers can basically say anything they want and nobody knows who is saying it. This anonymity would never be permitted in the securities industry for example, which requires the listing of a branch office address and phone number. Fortunately we already discovered the American Settlement Fund owner's Whois information in December 2005.
On to this weeks reasons for the Wall of Shame award:
American Settlement Fund (a/k/a JG Wentworth) has a post called Loans for Structured Settlements
American Settlement Fund CLAIM:
"Loans for structured settlements have become a common occurence in the financial world. More clients have come to realize that ar after receiving a structured settlement circumstances change and finances become strained"
FACT: What is being offered is a structured settlement factoring transaction in which the structured settlement payment recipient sells his/her structured settlement payment rights. It is not a loan
According to Wikipedia, a loan is a type of debt. A loan entails the redistribution of financial assets over time, between the lender and the borrower. The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt.
If a structured settlement factoring transaction were actually considered to be considered a loan, it is possible that the deep discounts in structured settlement factoring transactions might come under state usury laws
American Settlement Fund CLAIM
"You've decided to accept a structured settlement and receive multiple payments over an extended period of time. The defendant's insurance company must develop a structured settlement loan to hold those funds in an annuity that pays out over a pre-determined length of time. This loan can be established through a recognized highly rated Life insurance Company and/or US Treasury bills"
FACTS:
There is no such thing as a structured settlement loan. A structured settlement is not developed by the defendant's insurance company. A structured settlement is developed by a structured settlement broker or settlement planner who is licensed to sell insurance in one or more states. The structured settlement broker or settlement planner may be retained by one or more parties to the settlement and it is very common today to see structured settelment brokers on each side of a structured settlement transaction. The structured settlement plan design developed with input from the plaintiff.
Structured Settlements are established through annuities or US Treasury Bonds not Treasury Bills. A Treasury Bill is a negotiable debt obligation issued by the United States government and backed by its full faith and credit, having a maturity of one year or less. On the one hand American Settlement suggests that you've decided to accept a structured settlement with multiple payments over an extended period of time while on the other hand suggesting that these could be funded with Treasury Bills. Should one have faith in an organization that possesses such a basic lack of knowledge and understanding about financial instruments?
American Settlmeent fund CLAIM
At American Settlement Fund you will find a good structured settlement broker
RESPONSE: Doubtful that American Settlement Fund has a structured settlement broker with valid insurance license and appointed with any structured settlement annuity issuer.
American Settlement Fund CLAIM
A settlement company will purchase your loan payments and give you a lump sum cash payout against those loan payments. The advantage to this option is if the loan company folds for some reason you do not have to repay the loan from the settlement company.
FACTS:
A factoring company, not a settlement company can purchase your structured settlement payment rights if you can obtain a "qualified" court order (or a 40% excise tax is levied). There is no such thing as a structured settlement loan
The statement seems to suggest that its a prudent strategy to sell your structured settlement payment rights so that you can avoid the default of the annuity issuer or qualified assignee. If you sell your structured settlement payment rights to a factoring company, the factoring company bears the risk of default (if the structured settlement obligor will not pay), but you, the consumer have to pay them a huge discount (perhaps 20%)for this privilege. The life insurers issuing structured settlement annuities are among the most well capitalized companies in the United States if not the world.
American Settlement Fund CLAIM
A structured settlement loan doesn't require a credit check.
FACT:
There is no such thing as a structured settlement loan
Would you do business with this company? I wouldn't. Too many red flags. How can you feel comfortable making a life impacting decision when taking advice from a company whose adverstising suggests that it doesnt even know the basics.
Postscript 2014
A number of banks now offer structured settlement loans as an alternative to cash now seekers selling structured settlement payment rights.
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