Structured Settlements & Factoring Companies: Last Week Tonight with John Oliver (HBO)

I want to let you in on how we decide what to cover.Sometimes, a story is of urgent interest, like ice detention, or the Supreme Court, or sexual doorbells for Dutch fish.Other times, it can be incredibly boring, like special districts or PACE loans.And sometimes, like with Subway or Mount Everest, the way a story starts is by us noticing something ubiquitous and find ourselves going, hey, what the fuck is the deal with that thing?Well, this is gonna be one of those stories.And the thing that prompted that question this time was seeing this.

♪ I have a structured settlement And I need cash now ♪ ♪ Call J .G.Wentworth 877 -CASH -NOW ♪ Yeah, the J .

G.fucking Wentworth ads.You cannot have missed them because they are everywhere.In fact, they are such a pop culture staple, it became a running joke on Curb Your Enthusiasm that Larry David couldn't get that song out of his head.

♪ I have a structured settlement And I need cash now ♪ ♪ Call J .G.Wentworth 877 -CASH -NOW ♪ 8 -7 -7 Cash!

That song is stuck in everyone's heads.Not only is it infuriatingly catchy, JG Wentworth absolutely blankets TV with their ads, and in all sorts of styles.

I have a structured settlement And I need cash But I need cash 8 -7 -7 Cash!It's not a loan, so there's no debt, no credit card advance regrets.

Call J .

G.Wentworth.

The best job is on the gas now.It's your money.

Use it when you need it.Call J .G.Wentworth.The best job is on the gas now.

Turns out, they've produced that song in almost every genre.At this point, they could release an album, presumably called, Now That's What I Call, The Song I'm Worried Will Be the Last Thing I Think About Before I Die.But interestingly, for commercials you see that much.You probably don't know what JG Wentworth is actually selling there.which is a little weird, isn't it?It is generally a red flag when something has a massive ad budget and you don't know what they actually do, whether it's Shen Yun or fucking cars for kids.

But the good news is, we're going to give you an answer tonight.The bad news is the rest of this story.A structured settlement is actually pretty easy to understand.You're generally eligible for one if you've suffered a physical injury or someone died because of a wrongful action, and you've been awarded a settlement.Maybe you got hit by a car, or suffered an accident at work, or were poisoned by lead paint.That settlement money can then be structured into increments, often monthly with periodic lump sums, instead of you getting it all at once.

And in theory, that's not a bad idea.It's income tax free, and if it's designed well, it means that you're supported for the rest of your life or however long the settlement runs.That is why a lot of personal finance experts are actually fans of structured settlements.In fact, here's Susie Orman giving them a strong endorsement.

If you are ever in an accident, if you are ever in a situation where you get a large settlement, for whatever reason, you are to run.You are to not walk.You are to run to the place that you can get a structured settlement.

Yeah, that is a pretty big cosign.Delivered with that signature Orman energy, really best described as local real estate agent who just snorted Adderall.And I assume it's the kind of support that she'll lay out in her upcoming book, Five Strategies for the Nine Steps Behind the Four Secrets of Life, Love, Tomorrow, Yesterday, and Structured Settlements, Three Easy Steps by Susie Orman.A surprising number of people receive structured settlements.One estimate a few years ago put the number at around 750 ,000 in the U .S.

But some may end up needing or wanting an advance on the money that they are getting.The thing is, that can be a bit of a challenge with structured settlements, because once the structure has been set, recipients can't simply change their minds and cash in the remaining payments.And that is where...Companies like J .G.Wentworth come in, and it is why their commercials are filled with a bunch of Vikings singing, I have a structured settlement, and I need cash now.

Very basically, these companies will buy the rights to future payments from your settlement and exchange, give you a lump of cash.But they can take a massive cut.One analysis of seven states found that on average, these companies are keeping about 60 % of the money, and sometimes far more.So this is a business built around getting people to sell their settlements for pennies on the dollar.It's called the factoring industry, and it is much bigger than you may think.These companies buy an estimated $1 billion worth of payments each year.

But it is important to know that many who do business with these companies end up deeply regretting it.Like this man who was in a car wreck in eighth grade and suffered severe brain injuries.And I'll let him pick up the story from there.

My mom got me a lawyer sometime or another.She set me up a structure settlement totaling up to $99 ,000 and some odd dollars.I pretty much sold half to JG Wentworth.I'm telling you right now, don't you ever listen to none of them people.They'll let you down every time.I regret it so much.

It's one of my biggest regret of my whole life.

That is horrible.A financial transaction should not be one of the biggest regrets of your life.That should be reserved for something like not staying in touch with old friends, or spending too much time at work, or publicly harassing Oscar -nominated actor Adam Driver.for nearly an entire calendar year.You know, the normal things that we all look back on with some regret.The point is, if an industry is this ubiquitous, this heavily advertised, and can trigger that level of regret, tonight, let's take a look at the factoring companies who buy structured settlements.

Let's start with the fact that one of the first big companies to do this was J .G.Wentworth.They were founded back in the 90s, and interestingly, none of the founders were named J .G.Wentworth.

They just named their company after a man who doesn't seem to exist, and not, as it sounds like, a legacy admission at Duke who nearly died in his frat house after butt -chugging Yingling.But since then, J .G.Wentworth has become, in its own words, the largest purchaser of structured settlement payments in the U .S.And they've done that both under the Wentworth name and under a number of subsidiaries that they've owned over the years.

They've been so successful, in fact, they've also inspired a whole bunch of copycats.Many of whom have even tried to imitate the success of their horrendously catchy jingle, but with mixed results.Just take a look at this video from another factoring company, 123 Lump Sum.

123 Lumsum has done a tremendous job with their brand.They're everywhere, especially with that jingle.I mean, how can you not sing their song?1, 2, 3, Lumsum.1, 2, 3, Lumsum.

1, 2, 3, Lumsum.1, 2, 3, Lumsum.

1, 2, 3, Lumsum.OK, I'm confused.When you say, how can you not sing their song, that seems so very easy not to do.To be honest, not even the company's own employees seem to be able to sing it.In general, factoring companies like to present themselves as performing a public service, lending people assistance to get around a system too inflexible for their needs.Here is a non -Jingle based JG Wentworth ad, making that case through a pretty patronizing analogy.

II know you love to draw.Here are some crayons.You get one crayon now, and then you get one crayon a year for the next 25 years.Can't I have the red one, too?Not until this time next year.

But I really need the red.One crayon a year doesn't make sense, does it?And sometimes neither does waiting for my structured settlement payments.

First, it is a little condescending to have an ad whose message is essentially, you are a child and you want more crayons now.But the bigger problem is that that ad doesn't clearly explain that while you might get a second crayon right now, it could end up costing you half the box.And that is something that many who enter into these deals don't fully understand.partly because they are complex transactions, but in many cases because people with structured settlements are likely to have some form of permanent disability from the incident that led to the settlement that affects them physically, and in many cases, cognitively, behaviorally, and emotionally.In fact, some of the first in -depth reporting on this industry came in the wake of the killing of Freddie Gray in Baltimore.Afterward, reporters discovered that he'd been awarded a structured settlement as a result of a lead paint lawsuit, as had his sisters, and they later sold them to a factoring company.

And as reporters kept poking around, they discovered many in Baltimore had a similar story, and some didn't seem to fully understand the contract they were signing.Take Crystal Linton, who was also exposed to lead paint as a child, which, as she will tell you, led to irreversible brain damage.

I was, um, in special education probably for a few years, and trouble reading, writing.I can't remember everything.

A psychologist found she was left functionally illiterate with a fourth grade reading level.Her family sued two landlords, eventually settling for $630 ,000.But then she startedgetting flyers like these in the mail, offering quick cash from companies including Stone Street Capital of Bethesda, Maryland.Over the next year and a half, she sold her payment stream, then valued at $408 ,000 for $66 ,000, most of it to Stone Street Capital.

Do you feel like you understood how it worked?No.

So you don't know how you signed away your money, essentially?No.

Yeah, that company persuaded someone to sign something valuable away despite her not fully understanding the risks involved.That is so obviously terrible, it's literally what the villain does in The Little Mermaid.Except in this case, the contract came from a factoring company instead of a sassy half -octopus whose only friends are two bitchy eels.And Crystal wasn't alone in getting targeted.Another company, Access Funding, allegedly did deals with at least a hundred injured and intellectually impaired Marylanders, most of whom were victims of lead paint poisoning.And they were aggressive in searching for clients.

At one point, they had 22 billboards throughout the city like these, urging victims of lead paint poisoning to get cash now.Meanwhile, its employees apparently worked to identify lead paint virgins, which is to say, finding people who'd received lead paint settlements, but had not sold them yet, as part of what it called its Virgin Research Project.Which is obviously terrible in part because Virgin Research Project sounds like an in -depth study of a college a cappella group.And internal emails later showed just how excited Access Funding was about their potential new client pool.

There's a whole generation in their mid -20s to mid -30s that all have lead paint settlements, one executive wrote to another.All the row houses had paint.We signed two brothers at once.And while there, our rep found two other family members have payments and their friends do too.This is an opportunity.

Wow, that is a lot of excitement for an email about lead poisoning.And that is generally not how I would use the word opportunity.An opportunity would be your roommate giving away her cool jacket, or someone in a coffee shop packing up their things at the only table that has an outlet, or your child ordering an ice cream that they definitely won't finish and it's actually a normal flavor this time instead of something blue.Massive lead poisoning is not that.And it gets worse, because in other emails, the company's head of sales wrote that their clientele can barely form sentences.And its sales manual instructed staffers to bombard potential customers with calls, saying, you are expected to call that lead nine to ten times a day for the next three days.

And you must also be texting them, emailing them, and trying to find them on social media like Facebook.It also specified that the people who either call in or reply very late at night are most likely the best leads, because they are the people who are up at night worrying about money.And if that wasn't bad enough, the last page of that manual said to be careful what you put in writing and assume that every email you write will show up on the cover of the Wall Street Journal, which is clearly a pretty fucking stupid thing to put in writing.Now...Thanks in part to those aggressive tactics, the Maryland AG estimates that over a period of around two years, Access Funding acquired future payments with a total value of $32 .6 million, for which it paid out, at most, $7 .5 million.And the thing is, those kind of aggressive sales tactics can be par for the course in this industry, because while these companies love to present themselves as only helping people with specific, understandable needs for their settlement money, the truth is, they might be the ones creating that need.

Here is one J .G.Wentworth employee on a podcast about sales tactics, talking about cold calling potential prospects.

When you call somebody, they don't need anything.You've got to unlock the wants.You've got to unlock what they want.They don't need anything.They call you when they need something.So know the difference.

So absolutely you can prospect.Absolutely.Just know that you're dealing with a different animal when you start making those outbound calls.They don't need anything.You've got to unlock wants.OK.

Unlocking wants.It clearly shouldn't be a tactic for getting access to someone's structured settlement.At best, it should be a tagline for a YouTube pick -up artist with 30 followers, or the name of a romanticy book about an imprisoned centaur that falls in love with a hot dragon or whatever.I just don't...I don't care about it, okay?Read whatever you want, have fun, jerk off to magic, but I simply...

I simply cannot care.And that process of unlocking wants can start as soon as someone's able to sign a contract.Because some companies reportedly employ an army of researchers to plow through court records on the lookout for cases that end with a large settlement.Some are even said to troll dockets trying to find people who receive settlements as children so they can start calling the second they turn 18.And look, there are obviously lots of good things.about turning 18.

You're eligible to vote.You no longer run the risk of getting texted by Drake.But getting preyed upon by factoring companies is not one of them.And companies can be utterly shameless in their enticement, sending things like checks and prepaid Visa gift cards, urging people to call and activate them.Now, a former employee at a company called Seneca One once said that he's seen sales agents pay people $50 to stay on the line for five minutes.And the company's most desperate for deals can really go all out.

One lawsuit alleges that a factoring salesperson wined and dined a settlement seller at fancy restaurants and clubs, even providing them with marijuana.While another company allegedly flew a potential customer to South Florida and took him to two strip clubs to entice him into selling more of his payments.And look, The factory industry will insist that however aggressively they might market their...there is a safeguard against exploitation because a judge eventually has to sign off on any transaction, which is true.Every state in D .C.

has a Structured Settlement Protection Act that requires court approval of these purchases and specifies that they must be in the best interest of the payee.But it is really worth knowing just how easily that system can be gamed.And don't just take that from me.Those who have studied this industry have said that the requirement of court approval has largely failed.As this legal expert explains, in hindsight, there was always a fundamental flaw with the setup of this process.

It's an odd proceeding because it's not an adversary proceeding.The only parties that are there are the purchaser and the seller who, for good or ill, has been persuaded to sell his or her payment rights.So there's no adversary presentation, and that puts judges in an awkward position.

Yeah, he's absolutely right.Though, speaking of awkward positions, there simply has to be a better way of having that man testify.You are making an expert look like a dental hygienist about to floss me.But the point here is, often, only three people are present for the hearing.The judge, the person selling the payments, and a lawyer for the company buying them.That is the main reason why these transactions often get approved in a short, minutes -long hearing.

An investigation in Minnesota found hearings took an average of seven minutes to finish, with some judges approving transactions after just two or three minutes of testimony, which is clearly not long enough.RuPaul takes longer than that to deliberate.She makes you lip -sync for your life, then sit through an entire commercial break before rendering her judgment.Now, to be fair, some judges will ask about the details of the deal, like what sellers' plans are for spending the money and their other sources of income.But if they don't do that, or if there are major changes to the deal...the deal, the factoring company's lawyer is not incentivized to volunteer that information.

Also, many judges feel it's not their place to prevent a sale, even if they think it's a bad idea.One told a reporter, I'm not surprised that many of these people would have regrets afterwards, but for the court to intervene and say, we know what's better for you, I generally don't take that role in their lives.Meanwhile, other judges seem appalled by the deals that have come before them.

I have never felt good about any of these.I see people who, for the most part, are in financially desperate situations and do not fully understand what they are doing and how much money they are actually losing.

Wow.I've never felt good about any of these.It is not ideal when judges are talking about factoring cases the way I talk about the names of Mountain Dew flavors.Cold Red, Purple Thunder, Liberty Chill, Star Spangled Splash, Sweet Lightning?They all sound like horses who lost the Kentucky Derby, and I've never felt good about any of them.And it's worth knowing, some companies go beyond just emitting information.

and have been accused of actively coaching or pressuring sellers on how to meet the best interest standard.In a case still pending, a woman who suffered lead poisoning as a child is suing a company called Vintage Equity, claiming that it did just that.Apparently, the company claimed one of the reasons she wanted to sell part of her settlement was to purchase a vehicle so that she's not restricted to jobs in her vicinity, which sounds like a good idea, doesn't it?Until you learn that she did not have a driver's license or know how to drive.The company also allegedly coached her in real time whenever she appeared via telephone before the court, with one of his employees even going to her home, sitting next to her on the couch, and using the mute -unmute feature on his phone to secretly instruct her on how to...the court's questions.

Now, the company denies doing that, which I really hope is true, because that is deeply unethical.The mute button should not be used for coaching structured settlement sellers, as we all know.It should be used for one purpose and one purpose only, and that is farting while on a business call.That is it.We live in a society.Meanwhile, other companies engage in forum shopping, where they seek out friendly judges known to approve deals, sometimes even taking cases into courtrooms far from where the sellers live.

One company, Imperial, allegedly suggested a New York resident take his case to a lenient judge in Florida and sign a false lease that was used to obtain a Florida -issued ID card, which is, frankly, a lot more trouble than I thought you'd have to go to to get a Florida ID. I didn't know that you needed a lease.I thought all you had to do was fail a breathalyzer and they'd assume that you're local.And while that company denies any wrongdoing, stories like that are not uncommon.One attorney who worked for a bunch of factoring companies submitted at least 594 cases to the same judge in Virginia in just one year and frequently got them approved in bulk.That courthouse was lately described as operating like an assembly line for the secretive industry of structured settlement purchasing.And if you are beginning to get the sense that this industry is less about helping people than about extracting wealth, you are right.

Especially because this doesn't always end after just one deal.JG Wentworth has reported that their average customer has completed two separate transactions with them, and an investigation found that they've gone to court as many as 13 times to buy payments from one woman.In fact, they've even bragged about how being a repeat customer with them actually makes things easier in videos like this.

According to JG Wentworth, many of their customers have been through the process multiple times.And the good news is, if you do end up going back to sell more of your payments, it can be even easier than the first time.They keep your paperwork on file, which saves you time, and since you'll already be familiar with the process, you'll know what to expect from the beginning.

Okay, but if you have to go back and sell more of your payments, that may not be a sign that you're a happy customer.It could just mean that your financial condition is deteriorating.And while I'm most concerned for anyone who saw that video and decided to give even more of their money to JG Wentworth, let's also spread a thought for the individual who watched that on YouTube and left the one and only comment underneath it that simply says, I love you.It is...Not the most upsetting part of this story, in fact, it's arguably the least, but I am now obsessed with the individual who, out of all the videos on YouTube .

com, saw a marketing video for JG Wentworth and was so moved by it and or uncontrollably horny that they wrote, I love you to the public face of a factory company sales team.What could that mean?Commenter in love with her from looks alone?Is that her estranged father reaching out the only way he knows how?Those three little words are a novel.But the thing is, once you've done one transaction, you can quickly become an easy target for other companies.

Access Funding once wrote that once someone does a deal with JG Wentworth, there's a public record of it, and they then become part of our calling and mailing lists.Basically, you get involved with them once, and the predators will then swarm.It's like giving a pigeon in the park some bread.That is a huge mistake.Now, it knows you're a sucker.That pigeon is gonna bring its friends.

It's gonna move into your house.It's gonna fuck your wife.That is gonna happen.All of this, the aggressive marketing, the creating wants, the swarming around a cellar looking for repeat business can lead to some truly heartbreaking stories.Take Gary Davis, who was hit by a train and suffered a stroke that destroyed at least 25 % of his brain.He received a $2 .5 million settlement, but wound up selling off the vast majority of it to two companies, including J .

G.Wentworth.In fact, when the Minnesota Star Tribune looked into this industry, they found that Gary had sold more payments than anyone else in Minnesota, for which he received roughly 35 cents on the dollar.And when the paper's reporter explained that to Gary, you can watch him figure out in real time just what it meant.

I gave them two -thirds, and they gave me one -third.That's what happened.Mm -hmm.

Because they gave it to you immediately.The whole amount of money was what you were gonna get for the rest of your life.And they said, we'll give you a third today.But that's it.

That's not a good trade.That's not even trade.

You sold about $2 .3 million in payments for about $700 ,000.And that's about a third of what you would have gotten if you'd waited for the money.

That's no good.They should have somebody to keep you from doing stuff like that, don't you think?

Yeah.Yeah, I do.Honestly, he just said in one sentence what I've been trying to say for the last 20 minutes.So what do we do here?Well, when it comes to laws, There are a number of small fixes, from simply requiring hearings take place where the seller actually lives, to curbing how aggressively these companies can solicit sellers.Following some of the reporting that you've seen tonight, these two states recently did both.

We could also require courts appoint what's called a guardian ad litem, or attorney advisor, in cases where a seller may not be able to fully understand the transaction.That advisor can then give the court permissioninformation about the seller's circumstances, and could also say to the seller what you just saw that reporter say to Gary.Specifically, they're going to take two -thirds of your money.Are you sure you want to do this?Judges in Albuquerque, New Mexico, have started using this approach, and one analysis found courts there had signed off on just 42%.

of the deals involving a guardian ad litem.And in many cases, judges never actually had to rule at all because the sellers withdrew their requests after meeting with one.And look, I do understand there are issues for those with disabilities being told they're not capable of making a decision for themselves.But to be very clear here, this will be a limited one -time arrangement just for the purposes of this sale.Now, as for individuals, let me just say this.If you have a structured settlement, and you need cash now, if those fucking Vikings suddenly appear on your TV, before you pick up the phone, there are a couple of key things to know.

First, some insurance companies that manage settlements actually offer a hardship commutation that might, in extenuating circumstances, allow you to get some upfront cash at a better rate.So I would try them first.But also, please know, that this industry is just full of predators.And I know that they can seem benign.They have very slick ads that air constantly with some infuriatingly catchy jingles.But they do not have your best interests at heart.

So, to try and inoculate you, against their charms going forward.We've actually made our own ad to give people a more accurate portrayal of the risks that this entire industry poses.So, the next time that a bunch of Vikings try and sing at you in the future, which they absolutely will, please try and think of this instead.

If you have a structured settlement And you're watching TV You might hear a song like this So please listen to me Please listen to him

They'll read shitty ads all day and when you finally call To a judge and he's signed off on the sale I'm still not sure why these fuckers aren't in jail I'm not in jail!

The deal you talked me into is much worse than it first appeared I want to know what's going on and why is there a viking here?

Why is there a viking here?

Why am I a - Hide your head!

Remember that these businesses will bleed you till you're dead.Bleed you till you're dead.

It's your money.Don't let these parasites get their fucking hands on it.