The American Association of Retired Persons is warning older Americans to be wary of what the organization is labeling “pension predators.”
“In 2003 he read an ad and arranged to get a cash advance in exchange for signing over almost all of his $1,083 monthly pension for eight years,” the article states. “Henry, who spent 20 years in the Navy, agreed to pay a company associated with Structured Investments Co. of Southern California $1,070 a month in return for money upfront. The repayment cost for the $42,131 advance: $102,720.”
The story went on to relate how Henry served as lead plaintiff in a case brought by a total of 61 retired people who had all fallen victim to the same scam. They won, and a California Superior Court issued an order in 2011 that they should be repaid nearly $3 million.
“The victory was sweet, but brief,” the AARP Bulletin stated. “Within weeks, Structured Investments declared bankruptcy. None of the victims has received any restitution.”
The Walnut Creek, Calif., attorney who filed the suit on Henry’s behalf has vowed to get his client and the others their money, even going so far as to spend $225,000 of his own money in pursuing the case, according to the article.
“Henry is one of an unknown number of people who have signed over their pensions to a growing army of pension predators who go after veterans and other retirees who have a steady income stream,” the story stated. “Smooth talkers encourage them to tap their future income for a cash lump sum now, often at an exorbitant cost.
“The good news is that Congress and some states are beginning to go after those who prey on people with pensions. AARP supports efforts to license lenders and ensure that they comply with federal and state consumer disclosure laws, state small-loan interest rate caps and usury laws. AARP also has urged the federal Consumer Financial Protection Bureau to issue regulations ‘to eliminate unfair, deceptive and abusive practices in the alternative financial services industry.’ For now, though, people with pensions need to be their own first line of defense.”