Litigation

Despite The Ubiquitous Promises of Cash Now, The "Financial Crack Dealers" Get Off Easy When They Can't Do The Deal

By John Darer

"Nosentzen Bentzen's" bellicose expulsion of yesterday exposes yet again the serious need for federal or state regulation of the factoring companies.

The "walk away" clause that appears in these structured settlement transfer agreements ostensibly permits the factoring company to promise one thing and if they can't deliver, even if its 6 months later,  they can simply walk away. Now if one overlays the potential fact that the company has heavily pushed the "financial crack" of "cash now" which the annuitant has relied on, why is there nothing with teeth in it to hold the factoring company's feet to the fire?

Insurance companies, which ARE regulated, must maintain reserves. They are not supposed to write business if there is not a corresponding asset to match the business (liability) they underwrite. They must certify asset/liability matches on an annual basis to every state's insurance commissioner.

If an insurance broker or agent misquotes something they are potentially on the hook, so why not something similar, appropriate and relevant for the factoring industry? A factoring company should be compelled to only make a good faith offer to annuitants which, for the purpose of this exercise, is one that already has financing lined up to correspond to the specific deal being offered. This would be subject to regulatory audit.

It's bad enough that there is no current licensing requirement for factoring companies who are giving advice on the disposition of payment rights from an insurance product. Detrimentally relying on fraudulent "cash now" promises and the low ball offer of the factoring representative, the annuitant has foregone other offers where there might not have been the same funding incapacity.  Those that are about to lose their homes might actually lose their homes because of the detrimental reliance.

Full post as published by Structured Settlements 4Real on July 31, 2009 (boomark / email).