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District Court enters consent order in 2016 CFPB structured settlement action

Courts CFPB Enforcement Settlement Structured Settlement CFPA UDAAP Unfair Deceptive Abusive Consumer Finance


On May 18, the U.S. District Court for the District of Maryland approved a consent order against defendants in an action concerning allegedly unfair, abusive, and deceptive structured settlement practices. As previously covered by InfoBytes, in 2016 the Bureau initiated an enforcement action against the defendants alleging that they violated the CFPA by employing abusive practices when purchasing structured settlements from consumers in exchange for lump-sum payments. According to the Bureau, the defendants encouraged consumers to take advances on their structured settlements and falsely represented that the consumers were obligated to complete the structured settlement sale, “even if they [later] realized it was not in their best interest.” In July 2021, the court denied the defendants’ motions to dismiss the Bureau’s amended complaint, which argued that the enforcement action was barred by the U.S. Supreme Court’s decision in Seila Law LLC v. CFPB, which held that the director’s for-cause removal provision was unconstitutional (covered by a Buckley Special Alert). The defendants had also argued that that the ratification of the enforcement action “came too late” because the statute of limitations on the CFPA claims had already expired (covered by InfoBytes here). Under the terms of the May 18 consent order, the individual defendant, who “had an ownership interest in [the company] and served in executive positions at [the defendants] from their inception to their dissolution" is prohibited from, among other things, participating or assisting others in participating in transfer of payment streams from structured-settlement holders and referring consumers to a specific individual or for-profit entity for advice concerning any structured-settlement transaction, including for independent professional advice. The individual defendant must also pay a $5,000 civil money penalty.

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