OLYMPIA – The Washington State Department of Financial Institutions (DFI) Consumer Services Division announced today they have reached a settlement with Future Income Payments, LLC (FIP), formerly known as Pensions, Annuities and Settlements LLC, stemming from allegations that the company made unlicensed pension advances to Washington consumers.
FIP marketed its pension advances through its websites as a way for Washington consumers to get cash quickly. Washington consumers signed agreements with FIP to get a one-time lump sum in exchange for monthly payments for periods of 3 to 10 years made to FIP from the consumer’s bank account into which their pension had been deposited The company characterized the transaction as the purchase of an income stream. However, the DFI concluded that such transactions were loans subject to the Consumer Loan Act.
The result of such transactions, however, was that many consumers would eventually pay excessively more than was received. For example, one Washington consumer borrowed $3,700 from FIP and was required to pay the company a total of $18,600 in monthly payments over a period of 60 months. Another consumer had borrowed $4,400 and was expected to pay over $46,500 over a 120 month payment period. In all, FIP loaned a total of $948,000 to at least 83 Washington consumers with projected earnings in excess of $2,813,000 based upon the anticipated receipt of the consumers’ monthly payments.
In addition to agreeing to refrain from unlicensed activity in violation of the Consumer Loan Act, FIP will also make a $25,000 contribution to the Department’s Financial Literacy Fund.
“This agreement will provide much needed relief to affected Washington consumers, including more than $1,865,000 in relief in the form of refunds and elimination of amounts owed exceeding the funds advanced to consumers,” DFI’s Director of Consumer Services Charles Clark noted. “This settlement should serve as warning to lenders targeting pensions as a source of payment that they cannot avoid lending regulations designed to protect consumers by simply calling a loan something else, like the sale of an income stream.”
“This company targeted some of our most vulnerable citizens, including elderly and disabled pensioners,” Acting Director of DFI, Gloria Papiez said. “The resolution reached in this case will help protect those pensioners and future Washington pensioners from this type of predatory lending.”