by Structured Settlement Watchdog
How Additional Safeguards Can Empower Young Adults in the Sale of Structured Settlement Payments
- Unfortunately, when they are young and vulnerable, teenagers and young adults with structured settlements are often targeted and manipulated by structured settlement factoring companies.
- According to one of our sources (who was once a sales rep at a company that is a member of NASP), an officer of the NASP member company, reportedly told him that “you can’t have a conscience and work here”.
- Let that sink in for a minute.
Childhood Burn Victim Gets Singed in Multiple Structured Settlement Factoring Deals
The other day I received a call from a 25 year old who suffered a tragic burn injury over the majority of her body as a child.
- The victim was first approached at age 18 and then, systematically eroded a substantial amount of tax free income through improvident structured settlement factoring transactions.
- Not only were the deals all money losers, but some of the decisions that were made would most likely never have been made if the annuitant was required to speak with a Sudden Money advisor.
- Among them, following the sale of future structured settlement payments at terrible loss, was proceeding, without purpose or direction, to dole out the pseudo “windfall” to hangers on.
- The 25-year-old now reflects on her experiences with a heavy heart and expresses her deep wish that her 18-year-old self had had someone like me to confide in. She believes it’s so important that support should have been a requirement during those formative years.
The greedy opportunists preying on these young adults will casually brush off the chaos they leave behind with a smug, “Hey, they were adults.”
Financial cannibalism
The cannibalization of structured settlement payments through repetitive factoring company sales strategies often positions young adults for failure.
- As is commonly done the factoring company started with the advising an 18 years old to sell early payments, which sets up a financially immature young adult for failure.
- Then you have folks like then youngster Cedric Thomas who was financially raped as a young adult by Novation Funding for more than $1.4 million.
- One company refers to unlicensed and uncredentialed employees as “annuity specialists”.
Current Efforts and Strategies to Safeguard Vulnerable Young Adults
Independent Life Insurance Company, the only life insurance company that solely writes structured settlement annuities, published policy statement on factoring, which, among other protections, states that one red flag that will trigger an objection to a structured settlement transfer petition, is where the annuitant is under 25 years old and has not received Independent professional advice. More structured settlement annuity issuers should be doing this. One Florida law firm recognized this and initiated a lawsuit against a structured settlement annuity issuer which did not object to a series of transfers after being put on notice.
Simply relying on annuity issuers is an incomplete solution
While all 50 states have an SSPA, less than 25% require Independent Professional Advice
Simply relying on the structured settlement annuity issuers to object is not the answer however. Laws need to uniformly require independent professional advice for would be sellers. The buyers should be paying for the IPA, in my opinion, similar to what is required under California law.
Mandatory Worksheets should be included with transfer petitions to aid judges in assessing the best interests