It’s Your Money and We Want It Now: Regulation of the Structured Settlement Factoring Industry in the Era of Dodd-Frank and the Consumer Financial Protection Bureau

32 Pages Posted: 2 Feb 2016 Last revised: 12 Feb 2016

See all articles by Alexander Ash

Alexander Ash

University of Mississippi - School of Law

Date Written: February 1, 2016

Abstract

Calls for reform in the structured settlement factoring industry have recently grown louder across the nation. However, those calls ring hollow and many recipients of structured settlements are suffering abuses at the hands of the structured settlement factoring industry. Structured settlements substitute a lump-sum award with periodic payments, protecting against spendthrift behavior. The purpose of a structured settlement is to provide an income stream for the long term care of an injured party, and by “factoring,” often at a heavily discounted rate, the rights to future payments form the settlement leads to this purpose being completely undermined.

A comprehensive approach enhancing existing protections, and layering in new federal regulation will advance the purpose of the structured settlement. Three solutions to protect the purposes of structured settlements and minimize unwanted outcomes in structured settlement factoring transactions. These include (1) increasing existing standards of review, (2) creating three protected “classes” of structured settlement recipients, and (3) regulating structured settlement factoring on an industry-wide scale with the Consumer Financial Protection Bureau. These proposals do not call for sweeping changes, but instead using existing mechanisms to protect the goals of structured settlements, as well as the recipients of structured settlements.

Keywords: structured, settlements, consumer, financial, protection, bureau, factor

Suggested Citation

Ash, Alexander, It’s Your Money and We Want It Now: Regulation of the Structured Settlement Factoring Industry in the Era of Dodd-Frank and the Consumer Financial Protection Bureau (February 1, 2016). Available at SSRN: https://ssrn.com/abstract=2725908 or http://dx.doi.org/10.2139/ssrn.2725908

Alexander Ash (Contact Author)

University of Mississippi - School of Law ( email )

Lamar Law Center
P.O. Box 1848
University, MS 38677
United States

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