Federal and State Regulators Sue two Pension Companies for Use of Deceptive Sales, Marketing Tactics
The Consumer Financial Protection Bureau (CFPB) and the New York Department of Financial Services (NYDFS) are suing two companies that allegedly used deceptive tactics to convince consumers to borrow against their pensions.
The agencies claim that the California-based companies, Pension Funding and Pension Income, deceptively marketed the product as a sale instead of a loan and failed to disclose high interest rates and fees. The suit aims to end the illegal practices and obtain refunds for those harmed in the scam.
Between 2011 and 2014 both companies offered consumers lump-sum cash advances for agreeing to redirect all or part of their pension payments over a period of eight years. The complaint claims that the companies falsely represented to consumers that their product was not a loan, but rather a sale of their future pension income.
The companies also failed to disclose or misrepresented the interest rates and fees for the loans. In some cases the companies advised consumers that the product was better than a home equity line of credit or a credit card because of lower rates and fees. The interest, however, was typically greater than 28 percent.
Pension Funding and Pension Income also violated New York State laws by charging interest rates that violate New York usury laws, transmitting money without a license and violating consumer laws against deception.
A copy of the complaint filed today can be found at:https://files.consumerfinance.gov/f/201508_cfpb_complaint-pension-funding-llc-pension-income.pdf
More information about how older consumers can protect their pensions can be found here.