The class action suit** against Time, Inc. and its Billing Center over unfair trade practices, filed by Greenwich, Connecticut’s MIchael Lowitt on August 23, 2006, draws an interesting parallel to advertising by certain factoring companies in the State of Connecticut to the consumers of Connecticut (and other states.)
In Michael Lowitt’s case he had paid his Sports Illustrated subscription in full, but received letters marked " bill", "past due" "invoice" and "amount due" which caused him to unwittingly renew a subsription that he intended to let expire. In Spring 2006 he received more letters expressing concerns about a " problem" with his "bill". Lowitt later learned that this was simply a solicitation to renew his subscription! One of the lawyers representing Lowitt, Samuel Rudman, is quoted by Kim Martineau in the Hartford Courant "The law is pretty clear in Connecticut. When you mail any solicitation, it has to be clearly labeled"
I have blogged extensively and podcasted about the solicitation of consumers in Connecticut and other states via the Internet, by certain factoring companies who use terms that are obviously an unclear labeling of the product being solicited, which is the purchase of payment rights in structured settlement annuities and other cash flows (i.e."cash now").
Some companies have been brazen enough to advertise "structured settlement quote " or "annuity quote", when what they are really soliciting is widely recognized as a deeply discounted amount of "cash now" . A "structured settlement (annuity) quote" generally requires an insurance license as would an "annuity quote" or a quote for any insurance product. Many of the factoring companies making these brazen claims are not licensed with state insurance departments. Many are not even registered with the secretaries of state in all the states in which they solicit.
Without such requirements a consumer seeking to legal redress for wrongdoing must spend thousands of dollars attempting to get jurisdiction over a defendant which may be an out of state company. On the otherhand, the application for state licensing generally includes a provision in which the applicant agrees to let the Supertindent of insurance or Secretary of State accept service on your behalf.
While Connecticut may have a structured settlement protection act in place that protects consumers, at the end of the transaction, there is nothing in place or enforced at the front end governing the form and substance of solicitation.
The State of Connecticut government, and the governments of other states, must recognize the parallel, be consistent across product lines, and draw the inevitable conclusion that further regulation in this area is needed for consumer protection. There must be clearly defined terms. This issue has an even wider application. Licensed insurance agents and life Insurance companies issuing annuities must wake up and recognize that unlicensed and unregistered companies soliciting such products create inappropriate "noise" which may even have a detrimental affect on the perception of your product or what you represent. For example I previously wrote about an experience I had in Queens, NY where a judge I met for the first time negatively associated structured settlements with factoring.
**Lowitt v Time, Inc. et al. United States District Court, District of Connecticut at New Haven (3:06-cv01312-ANC) Download lowitt_complaint_v_time.pdf
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