by John Darer® CLU ChFC MSSC RSP CLTC
Here’s concrete information for consumers about structured settlements, settlement planning and the sales process associated with each, including what valid public tools are available to determine the validity of the credentials of the individual or company that you’re seeking to do structured settlement business with.
Ridiculous online allegations of “structured settlement scams’, “cons” and reports of structured settlement “ripoffs” appear on the Internet through complaint sites, company name sucks sites, Pissed Consumer, RipOff Report, and other purported review websites, created, paid for or sponsored by settlement purchasers.
A lot of these review sites about structured settlements and structured settlement firms contain unsubstantiated information that is fabricated, defamatory and in some cases, downright vile. The subjects of invalid complaints face a large monetary and time investment to offset what amounts to a “guilty until proven innocent…and even then” stance taken by the purveyors of the review sites, some of which don’t even adhere to their own terms of service.
Let’s get right to the questions and answers.
Is a structured settlement a scam?
A structured settlement IS NOT a scam. By its terms a structured settlement cannot be a scam.
A structured settlement is a voluntary agreement between at least two parties in which the paying party promises to make future periodic payments to the receiving party.
The terms of the structured settlement are negotiated and the agreement of the settling parties is set forth in the settlement agreement and release executed by the parties.
Without such an agreement, a structured settlement is impossible. The plaintiff or receiving party is represented by a lawyer. If the receiving party is a minor then court approval of the settlement terms, including the structured settlement, is required.
Insurance Licensing Mandatory
Speaking of the primary market for structured settlements, a legitimate structured settlement is usually funded with an annuity (but may also be funded with United States Treasury obligations-Treasury Funded Structured Settlements which do not require insurance licensing).
To be able to place a legitimate structured settlement annuity, the structured settlement broker must be licensed to do business as a life insurance agent or broker in your state. No ands ifs or buts!
It is easy to verify whether or not the broker is licensed by simply going to the website of the insurance department in your state and doing an agent look up.
The business practices of an insurance agent are regulated by every state insurance department in which he, she or it (in the case of an agency) is licensed
For example such regulations govern how a company may advertise, its use of testimonials, the manner in which seniors may be contacted, prohibited rebating (most states).
In addition to being regulated by the states, the agent (or agency) will be appointed by the life insurance company issuing the annuity and will have to abide by the business guidelines of the life insurance company in order to maintain the appointment
Some structured settlement consultants have brokers licenses, the laws for which don’t require appointment by the annuity company. Nevertheless it’s a license and the broker’s business conduct is overseen by a higher authority.
The United States Treasury Department rules come into play as well. Every life insurance company requires its agents to complete anti-money laundering training to comply with the rules.
You cannot just walk in with a sack of cash, fresh from unloading a key of coke, or a stack of “Andy Jacksons” skimmed from a business cash register, and dump it into an annuity or a life insurance policy without someone taking note. And if a perp tries to do it in some other way, the AML training concerning what is ironically named “structuring“, “layering” and “integrating” helps insurance agents be more vigilant. Each year, LIMRA creates a new AML refresher course that focuses on a specific topic in the initial AML training course. For example, one recent course focused on “willful blindness,” explaining the risks of not recognizing — or turning a blind eye to — suspicious activity that could indicate money-laundering.
Some structured settlement brokers also hold securities licenses, such as a Series 6, 7, 63, 65 or 66 and are affiliated with a broker dealer or Registered Investment Adviser(RIA). These add an entirely new layer of regulation
In order to be registered with a FINRA broker dealer, you must be finger printed and be subject to an extensive background check and monitoring of your business activity. A criminal record, which is what the word “scam” or “con artist” suggests, if taken literally would mean that the individual would not be practicing in the industry. Both FINRA and the SEC, which regulates RIAs, have online look ups that permit a potential customer to review the record of the person they are contemplating doing business with.
You can also verify a person’s credentials by checking with the The American College
The American College offers certification programs and degree programs including CLU ChFC ChHC RHU, CASL, ChHC, ChSNC, MSFS, MSM and PhD in Financial Services.
The National Structured Settlements Trade Association is your source to check the validity of credentials for anyone who has a CSSC (Certified Structured Settlement Consultant) or the more advanced MSSC (Master Structured Settlement Consultant) on their business card. the Certified Financial Planner Board of Standards is the place to go for the CFP. The Society of Financial Service Professionals, is a credential only professional society that is part of the National Association of Insurance and Financial Advisors since January 2024. Credentialed advisors must adhere to its code of professional responsibility. The Registered Settlement Planner designation (RSP) is another respected professional credential for settlement planners. There are other relevant certifying agencies that touch the structured settlement and settlement planning space. Contact me for details if you want to learn more.
Some law journals survey their readers and take a poll of the best vendors in different categories, including structured settlements.
A.M. Best. also publishes its Best’s Recommended Expert Services Providers list. In order to be listed, A.M. Best must validate and independently verify 8 professional references.
What about Scott Rothstein? Wasn’t he involved with Structured Settlements?
Scott Rothstein is an incarerated former lawyer from South Florida who is doing time for his involvement in a Ponzi scheme that involved pre-settlement funding.
Pre-settlement funding is non-recourse financing where you get a cash advance on a case. Pre-settelment funding is nowhere near a structured settlement. Rothstein was found out in 2009.
The abundance of “cash now” pushers in South Florida and saturation advertising and mischaracterizing the term “structured settlement” for search engine optimization, possibly led to confusion among the South Florida press corps and former United States Attorney, Kendall Coffey, to initially mislabel Rothstein’s activity “structured settlements”. The “Coffey klatch” were grossly mistaken because what was described could not have been structured settlements.
Scott Rothstein later testified in his December 12, 2011 deposition that they were not structured settlements
The deposition is posted on Scribd.com. My January 2, 2012 report about Rothstein’s deposition appears here
Can a Structured Settlement Be a Rip-Off?
No. “Rip-off” means to steal. An individual who steals, or has a criminal record would not be able to hold an insurance or securities license. Many of the claims on the website known as Rip Off Report are not actually rip offs.
Someone who receives a structured settlement as part of the settlement of their lawsuit receives a stable ongoing stream of income that they have negotiated, or their lawyer has negotiated. In order for the structured settlement to be created, the parties, including the plaintiff, or the plaintiff’s guardian where the plaintiff is a minor, must sign the release and the settlement documentation.
Why would someone feel a structured settlement is a “Rip-Off”?
Someone who sells their existing structured settlement payment rights to a company for “cash now” is bound to be disappointed with the amount of discounted cash they receive when they compared to the future value. The seller may misplace the blame on the structured settlement, instead of the real “culprit”, the root cause of their situation (e.g. uncontrolled spending, unexpected uninsured medical bill, bad choices or opportunity ). Remember a structured settlement can only be create if there is an agreement between the parties. Furthermore the company that is doing the purchasing has the right to set their own prices. The structured settlement seller may later find that they could have received a better deal elsewhere and again misplaces the blame, when the “culprit” is that they should have shopped around. Although a judge must approve a structure settlement factoring transaction and deem it in your ” best interest”, including opining on the fairness of the effective discount rate, the judge IS NOT your “personal shopper” and IS NOT responsible to see that you get the absolute best deal.
What About Complaints and Company Name Sucks websites?
As someone who has been the victim of online defamation, the research shows that many complaints are fabricated and made by competitors or for retaliatory purposes.
For example, in my case, an independent panel found that the facts of the case support a finding that Disputed Domain Names (which were used to defame me in 2012) were more likely than not controlled by the same person/entity. To wit, in John Darer v. PPC Ltd., Private Protection Co. LTD., Gary Brown, the WIPO Arbitration and Mediation Center panelist incorporated “affidavit evidence that I was the plaintiff in John Darer v. John Does 1-25 d/b/a johndarer.com, johndarer.net and johndarer.org, Case No. 3:12-cv-00383-JCH, (commenced in the US District Court for the District of Connecticut on March 14, 2012 and closed without prejudice to renewal on September 25, 2012), where it was revealed during discovery that the same email address was previously used in connection with the registration and/or operation of each of the Disputed Domain Names. Further, in response to subpoenas in such proceedings, internet service providers and IP anonymization services utilized in connection with the Disputed Domain Names informed the Complainant that the IP addresses used to register and/or operate the Disputed Domain Names previously pointed towards one individual/entity”.
That individual, David Springer, of Mt. Airy Maryland, identified in the motion to stay in the John Does case, was at the time, in the structured settlement factoring business as a broker(and operating under Sovereign Funding Group), is not a current client, and was not a former client or customer of ours.
David Springer was later found liable by a Maryland Federal Judge for defaming Woodbridge Structured Funding and for trademark infringement in March 2015 for which Springer was ordered to pay a monetary judgment.
Springer also had to defend a lawsuit against JG Wentworth which settled March 2012 over similar claims to Woodbridge
Springer filed a claim on his homeowner’s policy to collect his defense costs on the JG Wentworth case. In that case Springer claimed he wasn’t in business the relevant time period, yet David Springer’s timeline and content of David Springer’s own posting of a LinkedIn profile contradicted that. Both the Woodbridge and JG Wentworth suits against Springer were filed in late 2011 after I uncovered the webuypayments.net redirect scheme that a Maryland judge determined was connected to David Springer. The aforementioned online defamation campaign against me began shortly after the two lawsuits against Springer were filed.
Last update February 15, 2018
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