Pension Advance Company Ordered To Pay Refunds, Slash Interest Rates

Pension Advance Company Ordered To Pay Refunds, Slash Interest Rates

By / State News / الأربعاء, 22 حزيران/يونيو 2016 04:00

RALEIGH, N.C. : June 14th, 2016 - A company that charged retirees up to 137.5 percent interest on cash advances against their pensions will pay refunds to North Carolina consumers and sharply reduce interest rates, Attorney General Roy Cooper said today.
“People who’ve worked hard their whole careers don’t deserve to have their pensions drained by misleading cash advances,” Cooper said. “Outrageous interest rates are illegal in North Carolina, and my office is here to enforce the law on behalf of consumers.”
Under a settlement won by Cooper’s office, Future Income Payments, LLC (FIP) must pay refunds to consumers and penalties to the state and cut the interest rates it charges from as high as 137.5 percent to the legal limit of 16 percent or less. Under North Carolina law, rates on cash loans are capped at 30 percent for licensed lenders and at 16 percent for unlicensed lenders like FIP. The settlement resolves allegations that FIP charged North Carolina consumers illegally high interest rates on cash advances made in exchange for portions of their pensions.
Investigation uncovers illegal lending, unlawfully high interest rates. According to an investigation conducted by the Attorney General’s Office, FIP has formerly operated as Pensions, Annuities and Settlements (PAS) and is based in California. FIP repeatedly issued high-interest cash advances to consumers in North Carolina despite not having a valid lending license. The company reportedly targeted retired military veterans, government workers, and corporate employees who were more likely to have pensions.
At least 195 North Carolina consumers took out pension advances from FIP. Consumer affidavits alleged financial hardship caused by the pension advances and their excessive interest rates:
• A Fayetteville senior sought $5,000 cash from FIP to help her daughter avoid losing her home to foreclosure. In order to get the cash from her pension, the consumer signed an agreement to pay the company a total of $13,260 in monthly payments over five years, an effective interest rate of 52 percent, far more than permitted by North Carolina law.
• A military retiree from Jacksonville sought to borrow $300 to cover expenses. After she researched payday loans online, an FIP representative called her and offered to loan her $3,700 against her federal pension. The consumer signed an agreement requiring her to pay $18,600 in monthly payments over five years, an effective interest rate of 108.8 percent.
• A Gastonia consumer retired from the Air Force became unable to pay rent on his apartment after taking out a pension advance from FIP because of the reduction in his monthly pension income. According to his complaint, an FIP representative offered the consumer three times more cash than he needed and ultimately took out a $3,000 pension advance with a sky-high effective interest rate of 137.5 percent.
Settlement requires FIP to pay refunds and penalties, cap interest rates. Under the terms of the settlement agreement, FIP and its owners must:
• Lower interest rates on all past pension cash advances to 16 percent or less.
• Charge interest rates of 16 percent or less on any future cash advances, in accordance with North Carolina’s usury statute.
• Pay refunds to all North Carolina consumers overcharged by FIP.
• Pay $59,900 in civil penalties to North Carolina public schools and $50,000 to cover the costs of the state’s investigation.
FIP will mail letters to consumers who took out advances from the company to make them aware of the interest rate modifications required under the agreement. The North Carolina Attorney General’s Office will continue to monitor FIP’s compliance with the terms of the settlement.
To file a consumer complaint about a pension advance company or to learn more about the FIP settlement, call 1-877-5-NO-SCAM toll-free within North Carolina or use the complaint form at ncdoj.gov. Tips on pension advance schemes are also available at www.ncdoj.gov
“Consumers desperate for fast cash too often get pressured into bad deals,” Cooper said. “Look for alternatives to pension advances such as loans from legitimate lenders, get the terms in writing, and review the contract carefully before you sign.”
Source: North Carolina Department of Justice.

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