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Future Income Payments Veterans’ Pension and Disability Benefits Class Action

Plaintiff John Underwood served in the US Air Force for twenty-three years and retired disabled on a pension in 2010. Looking for a cash advance, the complaint for this class action says, he found Future Income Payments (FIP), which in 2012 agreed to give him $10,000 in exchange for Underwood’s transfer of some of his pension to FIP for sixty months. At the filing of this complaint, he says he has transferred to FIP $20,644, including $520 in management fees.

He still owes FIP; the complaint alleges that his total repayment will be over $23,000 for the $10,000 he borrowed, which works out to an annual percentage rate of 41.422%, and that any breach of the agreement would result in an even higher interest rate.

The class for this action is

  • All retired enlisted military personnel, or disabled military personnel of any rank,
  • Who have entered into a transaction with the defendants in this case
  • In which defendants paid cash up front in return for the veteran redirecting monthly pension or disability benefits to a defendant.

The first thing the complaint makes clear is that the assignment of a military pension or military disability benefits is expressly forbidden by law. Because of this, the complaint says, the contracts for these transactions are void.

So how does FIP get away with this purportedly illegal arrangement and usurious interest rate? FIP claims that the transaction is not a loan; according to the complaint, FIP calls it a “purchase and sale” of a “future income stream”—a designation that FIP seems to believe allows it to circumvent lending laws and regulations. There’s an additional advantage as well, the complaint claims, because unlike loans, “purchases and sales” can’t be discharged in bankruptcy.

Nevertheless, the complaint claims, the transactions are loans, and regulators in California, New York, Massachusetts, Iowa, Washington, North Carolina, Colorado, Pennsylvania, and Minnesota have all determined this. In fact, the complaint alleges, although FIP has told its employees not to use the word “loan” in connection with the payments, they sometimes do; and one of its websites has the URL http://www.lumpsum-pensionloans.com.

The complaint charges that FIP also uses “illegal and harassing” collection practices to try to get money out of borrowers who are in default, such as making repeated phone calls to them as early as 5:30 in the morning. In addition, the complaint says, FIP solicits investments in the pension loans, falsely claiming that they comply with applicable laws, so that the investors end up bearing the risk of the illegal loans.

The complaint alleges that FIP’s actions violate California’s Unfair Competition Law, Usury Law, and Consumer Legal Remedies Act, the federal Truth in Lending Act, and federal RICO laws.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Future Income Payments Veterans’ Pension and Disability Benefits Complaint

September 11, 2017

Plaintiff John Underwood served in the US Air Force for twenty-three years and retired disabled on a pension in 2010. Looking for a cash advance, the complaint for this class action says, he found Future Income Payments (FIP), which in 2012 agreed to give him $10,000 in exchange for Underwood’s transfer of some of his pension to FIP for sixty months. The complaint says that the assignment of a military pension or military disability benefits is forbidden by law, but FIP tries to get around this as well as its usurious interest rates by claiming that the transaction is not a loan but a “purchase and sale” of a “future income stream.” 

future_income_payments_annuity_complaint.pdf

Case Event History

Future Income Payments Veterans’ Pension and Disability Benefits Complaint

September 11, 2017

Plaintiff John Underwood served in the US Air Force for twenty-three years and retired disabled on a pension in 2010. Looking for a cash advance, the complaint for this class action says, he found Future Income Payments (FIP), which in 2012 agreed to give him $10,000 in exchange for Underwood’s transfer of some of his pension to FIP for sixty months. The complaint says that the assignment of a military pension or military disability benefits is forbidden by law, but FIP tries to get around this as well as its usurious interest rates by claiming that the transaction is not a loan but a “purchase and sale” of a “future income stream.” 

future_income_payments_annuity_complaint.pdf
Tags: Lending Involving Reassignments of Veterans' Pensions or Disability Payments, Predatory Lending, Presenting a Loan as Not a Loan, Truth in Lending