Relief may be on the way for people who borrowed money against their future pension income and those who loaned them money. The Consumer Financial Protection Bureau (CFPB) charged Future Income Payments and its chief executive Scott Kohn with defrauding consumers and making illegal loans. This action is a long time in the making.
The CFPB filed a complaint in Federal District Court in California asking a judge to put Kohn and his affiliated companies out of business.
ConsumerMojo reported extensively about pension advance plans and so-called structured asset schemes that trap people in high interest loans. Typically, marketers targeted retired people in need of cash, usually with military, police or disability pensions. The companies also reached out to older people whom they persuaded to lend a large of chunk of money in return for a steady monthly income.
Under the agreements, the individual who wanted cash assigned monthly pension or disability payments, often in violation of the law, to a company that would pay the investor. These loans against future pension income ranged from $100 to $600, according to the CFPB lawsuit, and interest rates and fees often added up to 183 percent.
We reported cases where the borrower stopped making payments, leaving the “investor” in the lurch without recourse. Courts often ruled against the lender because the advance against the future pension income was considered an illegal loan. Future Income Payments and marketers claimed it was a pension “buyout,” not a loan, and didn’t involve interest payments.
States including New York, Minnesota, Illinois, Minnesota, Massachusetts, Oregon, North Carolina, Maryland, Washington and California took action against Future Income Payments. They concluded the company made illegal loans and in some cases, like New York, banned it from doing business in their states.
The action by the CFPB aims to protect consumers from further financial harm and get restitution for those who lost money and paid usurious interest. It’s also asking the court to award civil penalties against Scott Kohn and his companies.
Companies listed in the complaint include:
Cash Flow Investment Partners LLC; Pension Advance LLC; BuySellAnnuity Inc.; Cash Flow Investment Partners East LLC; Cash Flow Investment Partners MidEast LLC; Lumpsum Pension Advance Atlantic LLC; Lumpsum Pension Advance Southeast LLC; Lumpsum Settlement West LLC; PAS California LLC; PAS Great Lakes LLC; PAS Northeast LLC; PAS Southwest LLC; Pension Advance Carolinas LLC; Pension Advance Midwest LLC; Pension Loans South LLC; and, Does 1-100
