CFPB Takes Action Against Structured-Settlement-Factoring Company for Misleading Consumers

The CFPB recently took action against a structured-settlement-factoring company (the Company) and two executives for misleading consumers with structured settlements. The stipulated judgement and order, which stems from a 2016 action against the Company and executives for UDAAP violations, requires the Company to, among other things, disgorge $40,000 and pay a civil money penalty of $10,000.  The Company is also prohibited from referring consumers to specific individuals or for-profit entities for advice concerning any structured-settlement transaction.

In the complaint, the CFPB stated that the Company engaged in deceitful and abusive practices against consumers, many of whom were lead-poisoning victims with cognitive impairments, who received a “steeply discounted lump payment” from the Company in exchange for the future payment streams from their structured settlements.  The CFPB indicated that the Company violated the UDAAP provisions by, in part, steering consumers to receive “independent advice” from an attorney who was actually paid directly by and had personal ties to the Company, and misrepresenting to consumers who took advances from the Company that they were obligated to go forward with the transaction with the Company.  Moreover, the Company allegedly pressured structured settlement holders and conducted aggressive outreach by phone and direct mail.