Who Regulates a Structured Settlement Company and Are They Protecting You?

Let’s talk about structured settlement company regulation, or the lack of. Living in the United States we rather expect that someone is always looking out for us, that there is a government organization making sure that we are not being taken advantage of in whatever it is that we are doing. Thus, you might assume that there is a government agency responsible for regulating the factoring companies that purchase structured settlement payments.

But there isn’t.

Two experts shaking hands and one pointing to Dollars

No Overseeing Organization

While IRS code regulates structured settlements and taxes and the structured settlement protection act tells that you do have the right to sell with court approval, no governmental body has any rights or responsibilities in regards to regulating factoring companies. There are no certifying organizations. No licensure. No governmental group that ensures you are being given a fair deal or even accurate information.

In short, there is no structured settlement regulation with regard to sales, other than the requirement to have court approval.

The U.S. Securities and Exchange Commission has published a document which provides some good information for you to know, but it is a far cry from any regulation. You can read this document on the government run website . In short, though, no one regulates this industry, in the traditional sense of the term.

Structured Settlement Company Regulation, of a Sort

The only type of structured settlement regulation that a factoring company is actually subject to is the court approval. In almost all situations the state court in your area will have to approve the sale. Given that other types of sales and transactions do not need such court approval we suggest that this is a type of regulation. But not really regulation, again, in the traditional sense.

However, all of this doesn’t mean that you can’t find good information about whether a structured settlement company you are considering working with is a solid choice.

One thing that you can do is look for endorsements from financial organizations.

For example, the Consumer Attorneys of California (CAOC) does endorse some structured settlement purchasing companies – you can do a search online.

Actually, as of the start of 2014 the CAOC only endorsed one factoring company, Strategic Capital, because only we met their rigorous standards. The same can be said for the National Association of Trial Lawyer Executives (NATLE), the Kentucky Justice Association (KJA), the New Hampshire Association for Justice (NHAJ), and the Maryland Association for Justice (MAJ) – only Strategic Capital has earned recognition and endorsement by these prestigious legal organizations.

A lawyer experienced in helping buyers and sellers of structured settlement payments, Earl Nesbitt, said that choosing the right company to sell your payments to is important, writing that NASP membership can be a benefit. He wrote, “Sometimes, the company offering the most money for a particular transaction is still not the payee’s best option. There are funding companies, unfortunately, that include provisions in the transaction documents (i.e. rights of first refusal, onerous arbitration provisions requiring arbitration in faraway places or the imposition of arbitration fees on the payee, security interests in all of one’s payments, etc.) that should be considered carefully and which might not be beneficial to the payee. I would always recommend doing business with a funding company that is a member of NASP.”

Consumer Ratings can Provide Valuable Insight

Consumer ratings can also help you to choose a factoring company, or even decide if selling your settlement is right for you. Remember that most often people post comments on various ratings websites when they are upset. If you search, for example, “J.G. Wentworth complaints” or “Peachtree complaints” you will be suddenly struck with page after page of unhappy customers.

Take a quick look online and you will see a variety of complaints about J.G. Wentworth using “strong arm” tactics to push people to sell, buying $100,000 worth of payments for just $10,000 and more.

On the other hand, if you are considering working with a company and you search their name with “complaints” and find nothing (as you will with Strategic Capital) then there is a good chance that this company is satisfying its customers so few people are complaining. Do your research, then call Strategic Capital.

Look for endorsements!

The settlement purchasing industry is not regulated like so many other industries are. But one way to find a reputable company to work with is to look for endorsement from professional organizations, such as the CAOC.

A Note of Caution

Endorsements, judge’s rulings and even consumer reports are not enough on their own. You need to create a complete picture before you make a decision. Look at all of these, and blend that with the quote you receive and the treatment of you, as a person, before you decide what company to work with in selling your settlement.