U.S. Senator Tina Smith Seeks Probe of Firms that Pressure Vulnerable Minnesotans to Unfairly Give Up Funds From Injury Settlements

Press Release

Congratulations on your recent confirmation. I write today to call your attention to alarming reports of abusive purchases of structured settlements. According to the reports, firms buying structured settlement payments are unfairly depriving many individuals --often those who have suffered significant and debilitating injuries --of thousands of dollars in legal settlements, and in some cases, hundreds of thousands of dollars or more. Buyers appear to be preying on vulnerable Minnesotans with unfair, deceptive, or abusive deals pitched by high-pressure sales staff, with those arrangements often leaving disabled individuals facing poverty after lump sum payments run short.

According to the Minneapolis Star Tribune, approximately 750,000 Americans are entitled to structured settlement payments from insurance companies as compensation after being injured in accidents or suffering from other life-altering incidents.1The settlements are structured as a series of periodic payments over several years --often for the lifetime of the victim. But third parties routinely offer to provide a one-time, lump sum payment to a victim in exchange for some or all of the periodic payments. Unfortunately, according to the Star Tribune's analysis, on average, 60% of the value in these deals ends up accruing to the firms offering lump sums, leaving victims with just a fraction of what they would otherwise be entitled to. According to one former salesperson for these products, to sell them successfully, "you have to not have a conscience."2

While there are currently some limited provisions in federal and state law intended to protect against abusive purchases of structured settlements, those protections do not appear to be adequately deterring bad actors from ripping off Minnesotans--with the bad deals often coming at times when victims are at the most vulnerable and not in a position make life altering financial decisions.

I request that you look into the practices of the structured settlement purchasing industry and take action including, if necessary, a rule making to combat any unfair, deceptive, or abusive acts or practices you identify. Americans receiving payments as compensation for severe injuries and other tragedies should not be losing hundreds of thousands of dollars, or being forcing into destitution as a result of unscrupulous firms taking advantage of vulnerable people.

Thank you for looking into this matter.

Sincerely,

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