Lender to Provide More Than $2 Million in Relief to Massachusetts Veterans, Other Consumers for Pension Advance Scheme
Company Also Prohibited from Making Loans in Massachusetts
BOSTON – A company that purchased income streams from veterans and other pensioners has agreed to provide more than $2 million in debt relief to resolve allegations that it made predatory and illegal loans to Massachusetts consumers, Attorney General Maura Healey announced today. The company has also been barred from making these loans in Massachusetts in the future.
Under the terms of the assurance of discontinuance, filed last week in Suffolk Superior Court, Future Income Payments, LLC (FIP), which was formerly known as Pensions, Annuities and Settlements, LLC, has agreed to convert its current contracts with consumers into interest-free loans. Any consumer who has already paid in excess of the principal balance borrowed will receive a refund for any overpayments.
“This is yet another example of predatory lending by a company trying to illegally profit off of vulnerable people, in this case retired veterans and other retirees living on fixed incomes,” said AG Healey. “We will continue to work to ensure that all Massachusetts consumers are treated fairly and not exploited by these practices.”
Through this alleged scheme, the 85 affected Massachusetts consumers who entered into contracts with FIP received upfront payments ranging from $1,800 to more than $40,000. In exchange, FIP accessed the consumers’ bank accounts each month to deduct a portion of their pension payments. Many of the consumers were veterans receiving military pensions.
The AG’s investigation revealed that FIP was charging consumers interest rates that far exceeded the statutory limit, many exceeding 100 percent. State civil and criminal usury laws limit interest on small loans of $6,000 or less to 12 percent and 20 percent for loans above $6,000.
One veteran borrowed $5,000 from FIP and was trapped in a contract that required him to pay the company more than $24,000. Under FIP’s agreement with the veteran, the company was entitled to deduct $415 from the consumer’s bank account each month for 60 months. The settlement requires FIP to repay the veteran for these excessive charges.
This action also prohibits FIP from entering into any transactions with or advertising services to Massachusetts residents in the future.
Massachusetts consumers who are eligible for relief under the settlement will be contacted by the AG’s Office as well as FIP. Anyone with questions about this settlement should contact the AG’s Insurance and Financial Services hotline at 888-830-6277.
AG Healey warns consumers to be wary of loans that originate solely online and of promises of fast cash. The AG’s Office continues to be active in this area and wants to hear from Massachusetts consumers who have information regarding unfair or deceptive lending. Consumers with tips or questions can call the Attorney General’s consumer hotline at 617-727-8400 or file a complaint with the office.
This matter is being handled by Assistant Attorney General Lydia French and Legal Analyst John-Michael Partesotti of AG Healey’s Insurance and Financial Services Division.