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CFPB enters proposed final judgment in 2016 structured settlement action

Federal Issues CFPB Enforcement Structured Settlement UDAAP Abusive Consumer Finance

Federal Issues

On December 17, the CFPB filed a proposed stipulated final judgment and order in an action accusing defendants of allegedly employing abusive practices when purchasing structured settlements from consumers in exchange for lump-sum payments. As previously covered by InfoBytes, the CFPB filed a complaint in 2016 claiming the defendants (including the company and executive leadership) violated the Consumer Financial Protection Act (CFPA) by encouraging consumers to take advances on their structured settlements and falsely representing that the consumers were obligated to complete the structured settlement sale, “even if they [later] realized it was not in their best interest.” The Bureau also alleged that the defendants “steered consumers to receive ‘independent advice’” from an outside attorney who was paid by the company and “provided purportedly independent professional advice for almost all Maryland consumers who made structured-settlement transfers with [the defendants].” After a series of motions were filed by the parties, including an amended complaint in 2017, the U.S. District Court for the District of Maryland eventually determined that the Bureau could pursue its enforcement action (covered by InfoBytes here).

Last month, the court entered a stipulated final judgment and order against the attorney, which required that the attorney pay $40,000 in disgorgement and a $10,000 civil money penalty (covered by InfoBytes here). Under the terms of the proposed settlement, the remainder of the defendants would be required to pay $40,000 in disgorgement and a civil penalty of $10,000, and are permanently barred from referring “consumers to a specific individual or for-profit entity for advice concerning any structured-settlement transactions, including for individual professional advice.”

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