BY: Rod Johnston | IN: Class Action & Commercial Litigation
NOTE: Sommers Schwartz is no longer interviewing plaintiffs or accepting inquiries regarding this matter. If there is a change in circumstances or our investigation resumes, we will post an update.
In September 2017, Sommers Schwartz reported on a nationwide scam to rob military veterans of their pensions. The scheme involves luring veterans into pension advance loans — falsely marketed as pension “sales”— and tricking them into borrowing against their pensions with jaw-dropping interest rates, ranging from 30 to 100 percent. Veteran pensions make a great target for scammers because they are regular, dependable, and long-term sources of payment. It’s such a huge problem that the U.S. Senate held a hearing on it. Moreover, the U.S. Government Accountability Office conducted a study, identifying at least 38 companies engaged in these transactions, and concluded that at minimum, all are involved in shady business.
One of the biggest culprits is and continues to be FIP, LLC (also known as Future Income Payments, LLC, and formerly known as Pensions, Annuities & Settlements, LLC).
FIP’s business practices broadly violate multiple state and national laws, including consumer protection, consumer finance, elder abuse, and false advertising laws. FIP has been sued successfully many times, in both state and federal courts. Consumer lending regulators from California, New York, Massachusetts, Iowa, Washington, North Carolina, Colorado, Pennsylvania, and Minnesota have all determined that FIP’s pension sales are actually (terrible) loans. In fact, FIP has been shut down in both California and New York for fraudulent and illegal practices. FIP’s loans are exploitative, unfair, and illegal. They take full advantage of vulnerable Americans who are usually a combination of elderly, disabled, low-income, and desperate.
FIP is being sued again in a class action alleging violations of at least seven state and federal laws. The lead plaintiff is John Underwood, a disabled veteran of the U.S. Airforce, who retired in 2010 after 23 years of service. Mr. Underwood lives on a pension of about $2,000 per month. Shortly after retirement, feeling short on cash and options, Mr. Underwood found FIP through a Google search advertisement targeting military personnel searching for cash advances. FIP has a proven history of paying for internet-search traffic to be steered to its websites by targeting consumers who conduct searches for FIP-approved phrases like “personal loans,” “pension loan,” “online loan,” or “military retirement loan.”
In December 2012, Mr. Underwood contacted FIP. It’s alleged that after prying into the smallest details of his life, asking him for financial, pension, marital, health, credit, bankruptcy, employment, and tax information, plus proof of life insurance, FIP determined it could easily skim from Mr. Underwood. FIP informed Mr. Underwood it would give him $10,000, minus a $300 set-up fee, in exchange for Mr. Underwood’s promise to pay FIP $397 per month for five years.
FIP then sent Mr. Underwood a “sale” agreement, which required him to have his bank forward $397 to an FIP account. To date, Mr. Underwood has received $9,700 from FIP, but has paid FIP at least $20,644 in pension payments, which include $520 in monthly management fees. The interest rate on this loan is over 40%, and it would be higher if Mr. Underwood failed to uphold his end of the deal. Mr. Underwood claims to have been deceived by FIP’s lie that the money it gave him wasn’t a “loan,” and by FIP’s failure to tell him that federal law doesn’t allow the assignment of a military pension. FIP intentionally covered up the true nature of its contract with Mr. Underwood, effectively stealing from him.
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Rod Johnston is a member of the Complex Litigation Group, participating in the firm’s direct and class action litigation on behalf of those harmed as a result of wage and overtime violations and consumer fraud.