Minnesota Star Tribune Special Report Examines the Practice of Buying and Selling Legal Settlements
November 17, 2021 - If you get as annoyed as I do by those silly, disingenuous commercials where companies offer to pay "Cash NOW" to buy structured settlement benefits, you'll want to read "Unsettled," an expose published last month by the Minnesota Star Tribune which shines a very much needed light on the often-unsavory cottage industry of legal settlement purchasing.

In its provocative opening statement, the investigative journalistic team tees up the results of its comprehensive four-part series by asking "Was Selling Their Payments Worth It?" as it plots data points so readers can visually see the results of the 700+ factoring transactions reviewed.

(NOTE: Although a subscription is required, I was able to access the series as a non-subscriber for limited viewing by providing an email address to the newspaper.
Access may also be available through your local library.)

What Happens Post-Settlement?

Attorneys and insurance claims professionals who regularly negotiate and resolve claims and lawsuits with structured settlements can feel rightfully proud of the good accomplished when they help secure the long-term future of someone who desperately needs it.

Structured settlements have a long and well-established history of providing secure guaranteed, tax-free or tax-deferred future income to those who need it most and remain a popular option when resolving litigation.

But what happens after-the-fact once the structured settlement concludes and those involved move to the next claim or lawsuit?

As the Star Tribune reports, that's when the "wolves" (as one seller of structured settlement benefits described them) arrive, preying on those either desperate or coerced into forfeiting their future security for "pennies on the dollar."

Even though all fifty states and the District of Columbia have enacted versions of the Structured Settlement Protection Act created to curb abuses, many feel the law doesn't go far enough to protect consumers.

Because this is such an important topic, we're dedicating this newsletter to it in two supplemental ways beyond providing links to the Star Tribune article itself which we highly recommend reading.

Our Comic Take
For starters, although there's nothing funny about factoring abuse, we decided a comic book expressing our cynical view of the practice might help readers get a sense of what can happen when individuals sell their structured settlement benefits.

While the TV commercials would have viewers believe the companies advertising to purchase future income benefits are nobly helping clients merely access funds they should be immediately entitled to (they aren't), we wanted to reveal what happens when benefits are purchased.

Who benefits most when clients sell their benefits?

Why did NPR report several years ago that the phrase "structured settlement" was THE most expensive Internet ad word money could buy?

In short, providing relief to the original structured settlement payee is far from the primary reason factoring companies exist and we hope our light satirical take on the subject will help put some things into perspective.

Did you know?

In some situations, factoring can address hardships and thereby provide a benefit. In fact, some life companies will factor their own structured settlement contracts.

A Different Viewpoint

And finally, because we simultaneously hold a far less cynical view of the practice and realize there are indeed situations where the ability to convert future payments to immediate cash are necessary and helpful, we'd like to give equal time to a respected expert in the area.

Side bar:

While cynical about the marketing tactics and predatory pricing some companies employ, we do appreciate the availability of factoring for those truly in need.

It is factoring ABUSE we find so abhorrent.

Not all settlement purchasers should be painted with the same damaging brush as the one used by the Star Tribune journalists. Not all engage in combative marketing strategies and questionable ethical behavior. And not all offer to buy future income streams for "pennies on the dollar."

Although the horror stories are the headline grabbers and must always be condemned, the Star Tribune fairly provides examples of transactions that were considered "a good deal" so we know there are situations where people are treated reasonably.

Factoring, done right, can actually add value to the settlement process by addressing client worries about being locked into something long term should a future hardship arise.
Here to enlighten us on that perspective is an individual I've known for the better part of two decades. W. Campbell "Cam" Mears, CPA, CSSC, out of New York City, is a consultant for Bentzen Financial which was founded in 2002 as a low overhead, referral-based factoring company serving clients nationwide.

Because Cam understands and believes in the value of structured settlements and is committed to treating others fairly, I invited him to join me for a conversation on this sensitive topic to share his insights.

Full disclosure: I've known Cam from his days as a structured settlement coordinator for a major casualty insurance company before he changed careers and from our time serving together on committees as members of the National Structured Settlements Trade Association (NSSTA.). While Finn Financial Group does not encourage factoring, when clients call intent on selling their payment rights, we often urge them to consult with an independent broker like Cam (along with recommending they contact the issuing life company) before finalizing any transaction.

Neither I nor my firm receive any compensation from these referrals.

Click the video link below to view my interview
Thank you for the opportunity to be of service and best wishes to you for continued success in your personal and professional lives.
Dan Finn, CPCU, MSSC™, RICP®
Master's Certified Structured Settlement Consultant
Retirement Income Certified Professional®

"Building lifetime client relationships!"
CA Insurance License: 0A96173