Tuesday, November 29, 2016

Consumer Financial Protection Bureau Sues Access Funding for Scamming Lead Poisoning Victims

A financial counseling company was sued by a federal agency for targeting
cognitively impaired lead-poisoning victims; the victims sold their
structured settlements for significantly lower lump-sum payments.

A Maryland-based financial firm was sued last Monday after the federal Consumer Financial Protection Bureau (CFPB) found evidence of a scheme to take advantage of lead poisoning victims who won court settlements.

The company, Access Funding, came under federal investigation last year for purchasing a large number of lead-paint settlements from awardees primarily in the Baltimore area. In exchange for their structured settlement checks, Access Funding sold them one-time lump-sum payments - often for much less than the value of their settlement. CFPB alleges that Access Funding exploited these individuals, as many awardees suffered from cognitive disabilities that limited their understanding of their settlement deals. The lawsuit further alleges that Access Funding preyed on impoverished communities in the Baltimore area.

"Many of these struggling consumers were victimized first by toxic lead, and second by a company that saw them little more than income streams to be courted and harvested," Richard Cordray, director of the Consumer Financial Protection Bureau, said in a recent press release.

Access Funding denies any wrongdoing. According to Access Funding chief executive Michael Borkowski, his organization provided legal financial counsel to consenting individuals.

"We're trying to bring better value to people," Michael Borkowski, Access Funding chief executive, said in a recent press release.

Still, CFPB counters these claims. Nearly all of the lead poisoning victims that Access Funding targeted were barely literate and had documented cognitive impairments. A multitude of Access Funding clients were also impoverished - often living in the same condemned homes they won settlement money against in the first place. They saw these one-time settlements as a quick way to get out of debt. And although these structured settlements are awarded in monthly payments to prevent financial negligence, awardees frequently opt for the lures of one-time settlements.

"They have no experience in managing money, are brain compromised, and history shows they'll likely run through a large cash settlement in a short time," Saul Kerpelman, lead-paint lawyer, said in a recent article.

In one case, an Access Funding client sold $146,00 in future payments for $18,300 upfront; in another case, a client sold a structured settlement of $663,000 for a one-time payment of $50,000. Altogether, a random sample of Access Funding's deals showed that the company purchased $6.9 million of future payments for around $1.7 million - about 33 cents to the dollar.

The lawsuit seeks to tighten structured settlement laws and encourage more oversight to prevent conflicts in interest.

To read more about CFPB's lawsuit against Access Funding, visit the agency's press release page. To learn more about lead work and become certified, visit Zack Academy's lead renovation FAQs.



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