Attorney General Eliot Spitzer Sues A Leading Financial Services Company

New York Attorney General Eliot Spitzer is suing Pennsylvania based life settlement company Coventry Financial for allegedly defrauding consumers by paying kickbacks to brokers who were bringing them customers. This type of behavior has been brought to light in many industries of late.  The Settlement Channel has discussed similar cases and the effects they will have on the structured settlement industry.  This should be a wake-up call for settlement factoring companies as well.  Mr. Spitzer is taking aim with a shotgun and he is going after anyone and everyone who is not doing things the right way.  Structured settlement brokers and structured settlement factoring companies need to be aware that such scrutiny may be coming their way too.  Factoring companies should be aware of who is bringing potential customers.  If they are brokers, are they shopping around for their customers to get them the very best price or are they consultants who are shopping to get themselves the best deal?  Or, are they outside sales people dressed up like brokers who really don't shop around, but bring all leads to one funding source only?  All of these scenarios may be perfectly legal as long as they are transparent to the end consumer.  I have blogged about this before in Where are Your Clients Really Going?  Structured settlement brokers need to be sure you know where your clients are really going.  Are you dealing with a direct funding source, a broker, or someone who is a salesperson for a factoring funding company?  If they are a broker, are they getting multiple quotes or are they taking their deals to only one funding company?  A "don't ask, don't tell" policy will probably not be a good excuse if Mr. Spitzer is knocking on your door.  If you are a factoring broker, are you providing your customers with more than one option?  If not, are they made aware of your allegiances to just one funding company?  Are you providing settlement brokers the appropriate information about your funding source(s)?  If you are a direct funding company, you should probably be sure your websites do not infer that you are going to match or shop the customer’s transaction to insure they get with the best funding company if they are ultimately all going to be funded by you anyway.  You can read the article by clicking here to get the specifics on the Spitzer case against Coventry Financial.  Make sure you do not end up on Mr. Spitzer’s list by asking yourself and your funding sources a few questions.