Written by Rhonda Bentzen


I was shocked that we recently got an invitation to join the National Association of Settlement Purchasers (NASP), the factoring industry’s trade group. After all, I’ve been a pretty vocal critic of their members’ shenanigans for years. I admit that the prospect of being given the opportunity to voice my ideas to the group on needed industry ethics reforms was quite enticing. Plus, I support the fact that factoring definitely needs a trade association to deal with industry issues that crop up. I’m also appreciative of the fact that NSSTA actually cooperates with NASP to address many of these issues, particularly when it comes to state statutes. I’d like to work on making that cooperation even greater. I even agree with NASP’s code of ethics and what they’ve been saying lately about the need for transparency and doing right by annuitants.

Now, for reasons, I’m not prepared to join just yet. To start, contrary to all the positive statements in their press releases lately, I believe almost everything NASP says and does these days is just lip service: rhetoric they think the structured settlement and legal communities, investors, the media, and government regulators want to hear. I haven’t seen any evidence to the contrary. Adherence to their code of ethics, along with consequences for its violation, are a complete joke. If they actually enforced their code of ethics, I believe few to none would be left in the organization. Members are currently being sued for alleged forum shopping and coercion. Another was implicated in the recent Baltimore lead paint scandal. Another recently settled a lawsuit involving the claimed falsification of an annuitant’s signature to initiate extra lottery transactions. A different firm was recently sued for allegedly calling an annuitant nearly 50 times in violation of the Telephone Consumer Protection ACT (TCPA). Yet another is now involved in a class action suit for alleged violations of the TCPA. One firm is even involved in a whistleblower suit alleging money laundering and serious breaches of banking laws. Even our survey of past clients found that most complaints related to incessant telemarketing harassment and deceptive sales tactics were directed at NASP members.

My other pause at joining the organization is that it’s not really inclusive, like NSSTA. I was easily able to be a NSSTA member even though I was a small producer in a tertiary market. Not with NASP. The cost to join NASP is prohibitively high, making it more of an exclusive cabal of the big “cash now” operators. This means that the few referral-driven, client-focused firms that actually do a good job of factoring are priced out of the association. As such, we have no say or vote whatsoever in planning and deciding the direction of the industry; however, based on their record, I honestly believe that NASP has no interest in hearing our input on best business practices anyway.
Done right, factoring can be a legitimate option for some annuitants in need of liquidity, and judging by their code of ethics and recent press releases, NASP members actually do know what they should be doing to treat annuitants fairly. Getting their members to actually do it is the hard part. Ultimately, annuitants simply need the facts and options to make informed decisions about their money, even if it means no transaction at all. They don’t need pressure, they don’t need harassment, they don’t need coercion, and they definitely don’t need to be endlessly solicited into repeat transactions…all of which are in the playbook of most NASP members today.

The Pollyanna in me says that I can’t affect change without joining; however, the realist in me says that I’d be naïve to think that I could make the slightest difference at this juncture when I can’t see any sign that NASP members are actually serious about reform and adherence to their code of ethics. I’ve spent 14 years in this business doing things differently; therefore, I concluded that my firm simply cannot be associated with a group that that approves of, or turns a blind eye to, everything I oppose. So, if you’re referring clients to any of these NASP-affiliated firms listed below, maybe it’s time to reach out to them and ask why nothing seems to change within their organization? Better yet, perhaps it’s time to stop supporting members of an organization which apparently refuses to effectively deal with questionable ethics and shady business practices?


123 LUMPSUM, LLC – 3625 Broward Blvd, 2nd Floor, Fort Lauderdale, FL 33312

Annuity Transfers Ltd. – 1800 Preston Park Blvd., Suite 115, Plano, TX 75093

BofI Federal Bank – 4350 La Jolla Village Drive, Suite 140, San Diego, CA 92109

CBC Settlement Funding – 181 Washington Street, suite 375, Conshohocken, PA 19428

Client First Settlement Funding – 301 Yamato Road, Suite 3200, Boca Raton, FL 33496

DRB Capital – 1625 South Congress, Suite 200, Delray Beach, FL 33445

J. G. Wentworth – 201 King of Prussia Rd, Suite 200, Wayne, PA 19087

Liberty Settlement Funding, LLC – 16 NE 4th Street, Suite 210, Fort Lauderdale, FL 33301

MyLumpsum LLC – 1400 Centrepark, Blvd, Suite 960, West Palm Beach, FL 33401

Northeastern Capital – Empire State Building, 59th Floor, New York, NY 10118

Novation Capital – 1641 Worthington Road, Suite 410, West Palm Beach, FL 33409

Patriot Settlement Resources – 2799 NW Boca Raton Blvd, Suite 111, Boca Raton, FL 33431

Peachtree Settlement Funding – 201 King of Prussia Road, Suite 320, Radnor, PA 19087

Seneca One, LLC – 7920 Norfolk Avenue, Suite 300, Bethesda, MD 20814

Settlement Capital Corporation – 14755 Preston Road, Suite 610, Dallas, TX 75254

Singer Asset Finance Company, L.L.C. – 2255 Glades Road, Suite 118E, Boca Raton, FL 33431

Stone Street Capital, LLC – 7316 Wisconsin Avenue, Suite 500, Bethesda, MD 20814

Strategic Capital, LLC – 100 Sheppard Ave East, Suite 720, Toronto, Ontario, Canada


***This list was compiled from the NASP website.

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The structured settlement secondary market is being regulated for, let’s face it, internal industry corruption.  Greed has rendered it utterly toxic, and now Washington wants to get involved.  Can you blame them, though in this post lead paint exposé environment?  The Maryland reforms, many of which are spreading past the state, deal at length with the issue of forum shopping and factoring transparency.  What some may laud as truly tough new regulation isn’t particularly impressive, though.  The reason for this is simple: it fails to address the core problems within the industry: scraping and ruthless aggression in the generation and pursuit of sales leads.

Many were shocked and saddened by the idea that a bunch of Maryland lead paint victims could so strategically be targeted by factoring companies.  The process of going through a factoring transaction was specifically examined by regulators for reform.  That’s a fine start, as noted earlier – but why haven’t regulators bothered to ask the question how certain people are being targeted so exactly, with such efficiency.  Scraping!

We know we sound like broken records, but scraping is the heart and life blood within the dark underbelly of this issue.  How do these companies know who to target?  They get a hold of the records.  How do they get a hold of the records?  By using court scraping or court runner services.  Who provides such services?  West Law, among others.  These venerable lawyer resources are at the forefront of profit-making for the factoring industry.  Using these services for client-lead generation has become the norm, however, and are typically against service terms of use.  If not market leads being generated by court sleuthing by dedicated hires within the factoring companies, leads can instead be purchased either alone or in pre-compiled lists by court runners and other scrapers.

Legislators & Regulators: if you want to protect annuitants, you need to protect their privacy.  Simply adding a few transparency measures into existing regulations won’t cut it.  If you want predatory behavior to stop, you must remove the predators’ teeth and claws.  Strengthen consumer protections and enhance annuitant record privacy.

Brokers & Annuitants:  Don’t be fooled into thinking that this is it.  It’s far from over.  Know the ethical partners worth doing business with.  Bentzen Financial doesn’t scrape or gnash its teeth in preparation for a juicy sales kill.  We are referral based because it’s the right way to do business, and don’t buy our endorsements like some of our competitors.

If you want straight talk, you want Bentzen Financial.

What can someone do when confronted with the realities of court scraping, shady forum shopping, deal poaching, aggressive solicitations, and poor rates on factoring transactions, especially from big factoring firms?

 

  • If you think your clients aren’t factoring, think again.  They are getting hounded by mail, phone calls, and ads on TV.  Most of the time, they don’t feel the need to call their brokers about factoring.
  • If word reaches your ear that an annuitant is being hounded, refer them to www.stopcashcalls.com and www.factoringethics.com.  Information is out there to arm people against factoring predators; give it to them.
  • Let them know what to expect once their case is structured.  When it comes down to factoring, refer only to those you know to have good track records; those who don’t engage in unethical, aggressive, or shady behavior.
  • Know who’s doing more than just talking the talk – know who’s walking the walk.  Bentzen Financial is leading the way to clean up the industry.  We wear the title “irritant” of the big factoring companies with pride.  Click here for more on choosing Bentzen Financial.
  • Know why the factoring giants have notoriously poor rates, in general; it’s simply a matter of cost.  The bigger you are, the more it costs to get and close a deal.  Click here to learn more on this topic.
  • Sign our petition to protect the personal identification information (PII) of structured settlement beneficiaries so that they won’t get scraped by shady factoring companies.

 

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Note: This post references the Washington Post report published on 9/13/2015 at 9:06 PM, written by Terrence McCoy.  You can read the article here.

Such reforms are not extreme or radical reactions to problems being blown out of proportion.  Anyone involved in the secondary market knows about the big issues: court scraping, forum shopping, deal poaching, aggressive solicitation often in violation of TCPA regulations.  Some in the secondary market will cry foul and say that these reforms in Maryland are a result of nothing more than sensationalism; however, the reality is that the reason it all sounds so much like media sensationalism is not because they’re actually being blown out of proportion, it’s because they’re actually, shockingly, true.  The truth is that annuitants have every right to be angry.  They’re being relentlessly targeted and harassed.

These changes are a good first step.  Annuitants should show up to their own hearings.  They should be fully aware of what they’re doing and the possible implications of it.  They should seek real independent professional advice, and they should know if they’re doing the right thing at the right time.  Perhaps buying a new luxury car isn’t appropriate… but avoiding bankruptcy is.  Not getting hammered by overwhelming medical bills is too.  Life happens.  IPAs having to show up at hearings now too will certainly make the apparent quid pro quo of IPAs with factoring companies more difficult too.

The structured settlement industry should be aware of who is doing something unacceptable; which companies are conducting themselves inappropriately.  Factoring has a legitimate purpose for those in need of liquidity and we all want to be the company that you turn to in assisting your clients.  That said, companies with a clean, ethical track record should be chosen to consult with annuitants who have legitimate needs when considering a factoring transaction.  Yes, I do mean Bentzen Financial.  Those of you reading this are aware of our stance and our record.  Referring to us means you’re avoiding the headlines because we keep our brokers and annuitants happy; no one ends up in the news because our business as usual is based on positive results for everyone, not just our bottom line.  How?  We don’t scrape.  We don’t aggressively solicit.  We don’t break any rules.  We treat our brokers and annuitants with honesty and respect; nothing more or less.  We do our jobs properly and ethically.  It’s really not as hard as some companies might lead people to believe.

 

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It’s a sad day when victims of lead paint exposure are targeted for sales.  No matter the justification for giving these victims money, especially when most are cognitively impaired, a person really has to suspend good judgment to think, “Sure, Joe can’t read or write well, and doesn’t have a driver’s license… but hey, he wants a car and he has a structured settlement… who am I to say no?  Big money!”

The average annuitant has a hard enough time making ends meet when faced with the arduous task of dealing with the constant barrage of sales solicitations.  The flagrant violations of the Telephone Consumer Protection Act (TCPA), meant to prevent this sort of thing from happening, add insult to eventual injury when an annuitant finally breaks down and signs on the dotted line.  That is to say, they’ve signed a bad deal that’s probably ill advised to begin with.  Why?  To pad the line of an aggressive factoring company.

Factoring a structured settlement has a time and place.  For some, it’s a genuinely good option, especially if the structured payment stream isn’t the sole income of a person or family.  For others, however, cashing out a structured settlement is not just ill advised – but disastrous.  The Washington Post article exemplifies the latter, and we’re sick to our stomachs having read it.  Nothing like that should ever happen in this industry.

How can business go on when actors like this are effectively defecating on our industry?  Take the reason for why Access Funding allegedly targets lead paint victims, in particular: because they’re easy to find.  Court scraping 101 at its worst: a few easy keystrokes in a court search and you’ve got yourself a potential treasure trove of money.  The best part?  The annuitants are living hard lives, aren’t usually well educated, and are susceptible to a con job.  This shameful strategy for ‘easy’ money should not exist, but with the ease of court scraping software at hand – what is there to do?  At this point it’s worth noting that the perusal of court records for sales purposes is almost universally prohibited – but it happens all the time anyway.  This is the ethical dilemma facing our industry.

There are two solutions, and only one with much chance of success at this point in time:

1.)    Software/databases used for court sleuthing purposes need to locate, track, and punish violators of terms of use (no sleuthing for sales).

2.)    Legally imposed censorship of personal identification information in court documents to prevent sales sleuthing to begin with.

The purpose of being able to search through court records is explicitly for non-commercial research and personal reference.  Under no circumstances are court records permitted to be used for profit-bearing purposes.  Needless to say, few actually follow this rule; there’s just far too much profit in ignoring this rule.

It’s time to face facts: no one cares to follow rules that inconvenience profit making.  The industry clearly has no interest in self-policing; there is only one option left: government intervention and regulation.  It’s a dirty suggestion and no one likes the idea… but if it saves the industry from itself, and annuitants along with it… then it’s worth it.

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Knowingly violating the Telephone Consumer Protection Act is a kind of gambling.  Some annuitants will give in to constant phone solicitation and give the offending company what they want.  The downside for the TCPA offender is that someone may not give in, and worse, will fight back.  On July 21st, 2015, in West Palm Beach, FL, a class action suit was brought against Novation Capital / Novation Ventures for alleged violations of the TCPA, including the use of a “robodialer” to assist in the facilitation of sales calls.  In other words, the party has ended; annuitants have had enough.  Someone is likely to receive a swift slap.

We are not at all surprised that a suit of this kind finally happened.  We’re just surprised it took this long!  It certainly seemed inevitable to us.  If enough annuitants are pushed around, and enough educational material is out there for them to find – it’s just a matter of time before annuitants stand up for themselves.  And really, who can blame them?  How many of us just love speaking with telemarketers?  We don’t.  No one does.  Even Congress, an institution known for its glacial pacing in all things, almost unanimously agreed, with the passing of the TCPA and its subsequent amendments, that frequent phone calls to one’s phone by companies with no prior business relationship and absolutely no consent by the recipient is unwarranted, undesirable, and constitutes a violation of personal privacy.  Therefore, violations of the TCPA are punishable by up to $1,500 per phone call.  The penalty for knowingly defying this law, if caught, can be severe.

We at Bentzen Financial make no effort to hide the message to promote ourselves as the small, referral based company, lone-wolfing the straight-and-narrow in this business.  We pride ourselves in being alone in our unwavering stance for no high pressure sales calls, no big-time advertising, and absolutely no court scraping.  We help annuitants when they want it, not when we’ve called them enough times that they finally cave in.  Not harassing them with high pressure sales calls is a given to us.  Like you, we will follow the progress of this case with great interest.

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Advertising: how businesses spread the word about the products and services they offer in the hopes of gaining customers.  It ranges from cheap word-of-mouth referrals to massive, expensive, mass-media campaigns on TV, radio, the Internet, and more.  For factoring companies, this isn’t as simple as Burger King showing us a juicy new burger from various angles.  It’s a matter of stimulating the need for cash. NOW.

We see it in the most popular advertising online: the brilliantly jingled 877-CASH NOW commercials that ran on TV and radio, featuring opera.  It was catchy, pertinent, and funny to the point of absurd; in other words, you remembered it.  For all factoring needs, JG Wentworth would burst through your skull with dramatic, operatic flair.  For structure brokers, this has been an oft-noted irritant post-structure.  Those brokers willing to provide referrals regarding which factoring companies they’d recommend for quotes are simply thrown out the window in favor of the direct-to-consumer advertising campaigns of Wentworth and other giants; mostly because the brokers themselves aren’t being contacted anymore for their input.  Is this fair?  For big factoring companies, certainly; they have the capital to advertise, so why not take advantage of it?  But what are the downsides for brokers and annuitants?  These are two-fold:

1.)    Advertising is expensive.  But more than this, keeping staff on hand to handle the influx of inquiries as a result of such expensive advertising is also expensive.  This cost cannot be easily absorbed by the corporation and must naturally flow to the consumer; in the case of factoring companies – the annuitants.  This results in annuitants getting lower rates of return on their factoring transactions.

2.)    It cuts out structure brokers.  By appealing directly to potential customers, advertising by Wentworth and other companies has severely impacted the professional and referral importance of structured settlement brokers.  Annuitants no longer have a need to contact their brokers or attorneys, in many cases, since they already know who to call if they’re in need (or tempted by) cash now advertising.  This distances annuitants from those who know best if factoring a transaction is wise or necessary: the brokers themselves.

So, what can be done to address these issues?

1.)    Know who doesn’t conduct mass advertising directly to annuitants.  Those who aren’t playing the expensive advertising game aren’t going to pass on costly inflated rates which ultimately short-change the annuitants.  Annuitants who decide to factor their structures are going to do so if their minds are made up – wouldn’t it be better for them to get the best rates possible?  Annuitants just need to be given the opportunity to speak with someone who knows where to turn beyond what they may see on TV.  They should be speaking to their brokers again; and these brokers should be referring to smaller, specialty factoring companies.

2.)    Direct-to-consumer advertising is a fact of life in every business, but this shouldn’t necessarily be one of them.  Brokers know the ins and outs of this business far better than annuitants, especially given that it was the broker who put together the structure to begin with.  Wouldn’t it be nice to be involved in the process of potentially taking them apart?  It may not even be the best thing for an annuitant to do!  Brokers input is important.  Stay involved beyond the structure.  Let annuitants know to contact you before jumping on the cash now bandwagon they see and hear on TV, and refer them to a trusted business with a record of good rates and ethical practices.

There’s no question that having transparency in government is a good thing.  Access to public records for the purpose of assuring that government is not engaged in immoral, unethical, and illegal activities is a given in this country.  What is not a given, however, is the use of public records for purposes other than the watchdog function.  For an in-depth look into the privacy side of this issue, visit: https://www.privacyrights.org/ar/onlinepubrecs.htm.

When individuals or companies use access to public records for their own gain, particularly when the goal is to profit from personal identification information (PII), it is a moral, ethical, and legal quagmire.  If such information ultimately leads to stalking, it is blatantly illegal.  For purely research?  Perfectly fine.  But what about greed?  A short cut for profits?  This is a shaky ground for legality.  On the one hand, the spirit of the law indicates that court record availability is a matter of government transparency.  This transparency is considered desirable in government to make sure it is not violating anyone’s rights.  On the other hand, transparency is not meant to permit or enable otherwise illicit activities, such as identify theft, or harassment per stipulations of the Telephone Consumer Protection Act (TCPA).  But does it permit PII to be used for sales purposes?  This is a gray area.

One could argue that any research of court records that includes PII naturally leads to the potential of sales; it’s hard to argue the potentiality of this argument.  The primary issue, though, is not whether such information could be used, as it’s quite obvious that it could, but whether it will be used.  This is determined by motive.  In other words, what motivations would a person or company have to obtain records containing the PII?  Given the natural profit motive of free enterprise, the most logical and common response would be because it’ll ultimately result in the company making money.  But is the company making money because it’s using the PII explicitly?  Or is it merely selling or trading this information?  Which is okay?  Are either of those options okay?

If sales are going to be conducted by phone, and a reasonable person could conclude that the person on the receiving end of the phone call does not want to be bothered, then the call itself is a violation of the aforementioned TCPA.  This is not okay, simply on the basis of legality.  Beyond legality, there’s a sniff test akin to the golden rule.  Suppose you were on the receiving end of a solicitation that directly resulted from someone getting your PII from a court record.  How do you react to the solicitation?  Are you hostile?  Are you okay with the idea that you will likely receive countless more phone calls as a new norm, even after demanding to be left alone?  If your answer is “No!” then consider the effects of court scraping beyond legality and ethics.

Is contact as a result of court scraping a nuisance?  Yes.  Even salesmen engaged in the practice must acknowledge this.  Does it always work?  Of course not.  Salesmen using information gathered by scraping know that it comes down to a numbers game: out of a large number of calls, only a small minority of them may be productive.  That’s just the reality of sales.  The difference between this and more traditional methods, however, is that no one signed up to be on a court scraper list.  Receiving solicitations by this method purely results from creative greed; the Information Age has made acquiring PII quick and cost effective.  For pure cost-benefit it is a natural boon for any company.  The downside is that engaging in such activities makes you loathed.

Recall that using PII for stalking is illegal because stalking itself is a criminal activity.  Would one classify relentless solicitations directly resulting from looking up PII from court records as a form of stalking?  Do these solicitors not obtain information and seek contact without invitation?  E-stalking, or stalking using the Internet, is criminal, much as one would stalk someone physically down the street.

Isn’t court scraping merely a more sophisticated method of e-stalking?

Here’s the only, barely valid excuse heard to date to that question: “Well no, because a person isn’t being solicited to do them harm… just to make money off of them!”  Taking harm as the undesirable result of stalking, we arrive at the final point…  Does the potential financial ruin of annuitants that are coerced into factoring a portion or more of their payment streams constitute harm?  Or must harm be physically inflicted?  One might turn this argument around and say, “But no one is forcing the annuitant into factoring his or her structure!”  That’s certainly true, but there is the matter of how the annuitant is approached.  Did the annuitant, in sound mind and of his or her own volition, seek to do so as a result of unique and pressing circumstances that necessitate factoring a transaction?  Or, did a salesman contact the annuitant and use a sales pitch to make such a transaction, regardless of the annuitant’s circumstances?  The first scenario is perfectly fine; the second is not.  Context in this industry matters a great deal, and as has been said now many times before, ‘selling’ factoring isn’t like selling waffle makers.  This is a life changing financial decision that cannot be taken lightly.  As many annuitants have indicated during the harassment investigation, no one should have their PII when it comes to their financial situation unless they reach out first.  We agree.

Not all those who sleuth court records or retrieve legal documents should fall under scrutiny.  We do not advocate for an end to anyone’s ability to search court records; there are many arenas where this is perfectly appropriate and should be left alone.  We do advocate the censorship of PII for recipients of structured settlement annuities.  In short: leave them alone.

Support annuitant privacy by signing the petition.  Click here to sign.

The following is a review and unveiling of each of the two new sites. Both are part of the same movement we’re starting which we call, collectively, the Ethics Initiative. We’ve always believed that business should be conducted in as clean a manner as possible, and have always striven to do so. We are dismayed at the level of prominence that scraping, in particular, has reached in an industry that doesn’t need the bad press; and more importantly, we’re hoping you’ll join us in trying to clean it up.

FactoringEthics.com is dedicated to the collection and dissemination of information directly pertinent to maintaining cleanliness in the factoring industry. Relevant regulations, statutes, etc. are posted and explained in order to arm anyone who wants to prepare themselves for potential harassment by unscrupulous actors in the factoring industry. For example, brokers and annuitants should be aware of and well versed in the existence and application of the Telephone Consumer Protection Act, which is clear regarding the solicitation of potential clientele by phone-using businesses – and really, what business isn’t using a telephone? Violating the TCPA has clear consequences, but like most things in government, the question isn’t the intent or application of relevant regulation, but the enforceability. Simply put: no one can enforce anything if no one’s reporting wrongdoing. As far as the government is concerned, if there’s no squawking, there’s no problem. It’s time to squawk.

Another aspect of FactoringEthics.com that we’re pleased to announce is an oft-overlooked reality of the industry: there are many aliases in use. At first glance one might say, “Wow, what a competitive marketplace!” Well hold on, just because there are a bunch of different names being thrown out there doesn’t mean they’re competitors. This site will collect and expose all factoring companies and their known aliases. We do not seek to rate any of them nor do we seek to dissuade their use, per se – but we do believe that transparency in the secondary market can only help. There’s no reason that legitimate business will be harmed by exposing these aliases. The notion of “Let the buyer beware!” echoes true here; but with this information in hand, brokers and annuitants can both breathe a little easier knowing who’s-who in a seemingly crowded marketplace.

StopCashCalls.com is dedicated specifically to annuitants and brokers who want to have a more active role in standing against anyone who violates the TCPA. We’re working with an attorney to establish a class-action suit against anyone found to be in violation of the TCPA with an annuitant. If you’re an annuitant and you’ve been receiving constant phone calls and you want them to stop – say no more, sign up and provide a testimonial and you’ll be added to the list of people to contact for reference. Only if you’re comfortable taking the next step by joining in the class-action suit will we share your information with any attorney that the Project is working with. You’ll call the shots. We’ll help get you the tools for your freedom from harassment.

If you, a broker, are tired of hearing, both from your clients and through the grapevine, that yet-another annuitant is being harassed non-stop then we implore you to pick up the phone or open your e-mail client and let us know. Only through cooperation can we put a stop to behavior that shouldn’t even be going on in the first place. Scraping can stop. Harassment can stop. Ethics isn’t just jargon to throw around to generate buzz or get web-clicks. Ethical concerns are as serious as anyone’s bottom line – and our stance is that annuitants shouldn’t be taken advantage of to pad a predator’s bottom line.

We look forward to contact and cooperation for the Ethics Initiative as we get the ball rolling.

Sharks, piranhas, vultures, predators. These are just some of the choice words that annuitants have had for some businesses in the industry. Part one of the harassment investigation dealt with the tactics employed by these unscrupulous businessmen and women and part two with the reactions of the annuitants and their families. Taking those into account, how can we, as an industry, not admit that scraping is a dire problem to be dealt with? Are we all to be lumped in with the sharks, piranhas, vultures, and predators? Must we all conduct ourselves and our businesses as these others do in order to stay competitive? Must we simply accept that further victimizing annuitants and their families is the moral price of working in this industry? We cannot agree.

The factoring side, or secondary market, began because of a very real possibility for those with structured settlements and annuities: sometimes life throws you a curve ball. Sometimes those monthly payments aren’t good enough to cut it anymore; unexpected expenses arise that go beyond the means provided by the payment stream available to them. So what’s left? They need to factor either a part or all of their structured settlement or annuity to make ends meet. Sometimes this isn’t the case at all – sometimes someone believes that the money is an opportunity to do more with their lives – and that is entirely their prerogative… provided of course that they can convince a judge. These are very real and legitimate reasons for this side to exist, but one thing must always be remembered: these people deal with us, factoring types, because they feel they must.

All of our companies, beyond providing us a means to support our families, were founded to help those in need, not to harm. Annuitants are not wallets and bank accounts for us to raid, they are people who need their funds for one thing or another; people with stories, from heartbreaking to dumbfounding, that many of us hear every day – it’s the human part of the business equation, and the part that’s being victimized. Our jobs are to help get annuitants through it all, be it following a traumatic event or simply to help pay the bills. It is not our place to prey upon them. So, what can we do about it?

The industry can voluntarily stop scraping and known scrapers in their tracks. If this was so simple, though, this investigation would have been unnecessary. The industry can police itself better; do business with those with clean records and squeeze out those who resort to unethical means. Alternatively, a much harder line can be taken.

The tactics of scraping are illegal, especially when it is deemed harassment. Litigation to punish offenders could be taken, but will this change anything or merely drive offenders to greater secrecy, or perhaps even more unscrupulous means of obtaining business illicitly? Maybe, maybe not. It’s worth looking into, surely, given the willingness of some annuitants to provide records of contact. But what else can be done?

In the words of several annuitants: “the information should be private, and I (or we) should be left alone. If I want to do business with someone, I’ll seek them out – they should just leave me alone.” The industry has had success approaching problems with Congressional input in the past and we can do so again. Legitimate business is maintained and annuitants are saved from endless hassle and harassment. This not only can be done, but should be done.

Consider the image that the annuitants who fall victim to this garner towards the industry. Do we want the industry’s reputation to crumble under the weight of perceptions of crookedness and predatory behavior? Or do we want to maintain a modicum of respect, both for ourselves and for our clientele, by addressing the problem that scraping represents?

Scraping should not be an option left on the table. The means are already illegal, but the means are only available due to lack of privacy protection afforded annuitants who go through the legal process. These protections should not, in actuality, be necessary given the way the legal system works – but due to the rising prevalence of predatory business practices, it seems necessary.

Should government have to get involved to help both businesses and annuitants? No, it should be left to do whatever else needs to be done. The government shouldn’t have to divert any time or attention to a matter of what is essentially internal business ethics. But, if the industry can’t be trusted to conduct itself properly, then someone or something must step in to assist.
Is there another alternative? Of course. The formation of an industry watchdog, like in other industries, could potentially work. However, what enforcement mechanism is there? What could possibly be done? A sharply worded letter? A fine? Companies that violate the TCPA are subject to a $500 – $1,500 fine already, and this does not seem to dissuade the harassing behavior by itself. So, we’ve decided to work with an attorney willing to take on a class-action suit. If you have any clients who are willing to stand against their harassers, we encourage you to make contact with us and we will refer you to the attorney in question.

Ideally, all offenders would “see the light” and conduct themselves appropriately, but that is farce and fantasy. The problem exists and the offenders profit far too much off of continuing, no different than drug smugglers or snake oil merchants of old, despite the risks. We must either make the risks far too great or simply nullify the ability for them to get the information required for scraping to occur.

This is a call to action for all concerned to stand up and do something about the threat to legitimate business and our clients that scraping represents. It cannot and should not be allowed to continue. Combined and coordinated efforts will yield positive results for all of us, not just our company, and not just yours. Free, fair, and ethical business can and should rule the day.