In a consent order, dated January 21, 2019, the BCFP alleged that an individual broker violated the Consumer Financial Protection Act of 2010 (CFPA) by engaging in deceptive and unfair brokering of high-interest credit contracts to veterans in connection with their future pension or disability payments. Specifically, the BCFP alleges that the broker: (i) misrepresented to consumers that the contracts he facilitated were valid and enforceable, when the contracts actually were void because federal law does not permit assignments of veterans’ pension payments; (ii) misrepresented to consumers that the pension advance products he was offering were purchase of payments and not high-interest loans; (iii) misrepresented to consumers when they would receive funds from the contracts they were entering; and (iv) failed to disclose the applicable interest rates on the loans.
Among the background elements described in the consent order, the broker served as an agent for four unnamed companies and set up contracts between veterans and investors so that the veterans would receive a lump-sum payment and then be required to repay a much larger amount by assigning to investors all or part of their monthly pension or disability payments. Moreover, the BCFP found that the broker operated websites (through which he received consumer lead information) for the sole purpose of ultimately directing consumers to the unnamed companies, through which the broker was the conduit. After the veterans entered into the contracts at issue, the consent order stated that they would redirect their entire pension direct-deposits or their monthly allotments to go directly into a bank account controlled by the unnamed companies or their agents. The broker allegedly received commissions based on the expected final profits from each pension sale, while the company allegedly profited by the larger lump sum paid by the investor at the start in excess of the lump sum paid to the veteran.
Under the terms of the consent order, among other consequences, the broker is permanently barred from directly or indirectly brokering, offering, and arranging agreements between veterans and third parties where a veteran agrees to sell his or her future right to income from his or her pension. The broker also must pay a civil money penalty of $1, an amount based on his sworn financial statements demonstrating his inability to pay more. Additionally, the broker will be subject to reporting, recordkeeping, and compliance monitoring requirements.