The Consumer Financial Protection Bureau filed a complaint in federal district court against Access Funding, LLC, for deceiving victims of lead-paint poisoning into signing away future settlement payments in exchange for a significantly lower lump-sum payout.
The bureau alleges that Chevy Chase-Md.-based Access Funding violated the Dodd-Frank Act’s prohibition on unfair, deceptive and abusive acts and practices by directing them to consult an attorney paid by Access and by taking advantage of their confusion to push through deals.
The CFPB alleges that Access steered victims of lead-paint poisoning as well as others to consult a single, supposedly independent advisor; the suggested attorney was actually paid directly by the company. Further, Access was aware that many of those who sought its services had significant cognitive impairments from lead poisoning, the bureau said.
Consumers received a steeply discounted lump sum in return for signing away future payment streams. The lump sums Access provided typically represented only about 30 percent of the present value of those future payments, the bureau said.
Access Funding, a structured-settlement-factoring company, conducted approximately 70 percent of its settlement transfers in Maryland; the company sought court approval for approximately 200 transfers in Maryland from 2013 to 2015, of which at least 158 have been approved.
Forty-nine states have enacted structured-settlement-protection laws that, among other things, require court approval for the transfer of a settlement. Many states, including Maryland, require that a consumer have consulted with an independent professional advisor before the court will approve a sale.
The lawsuit names Access Funding and a successor company, Reliance Funding. It also names four individuals: Access CEO Michael Borkowski; Raffi Boghosian, chief operating officer of Access Funding; Lee Jundanian, CEO of Access Funding from February 2013 to May 2014; and Charles Smith, a Maryland-based attorney who purportedly provided advice for almost all Maryland consumers who did business with Access Funding.
“Many of these struggling consumers were victimized first by toxic lead, and second by a company that saw them as little more than income streams to be courted and harvested,” said CFPB Director Richard Cordray. “The Consumer Bureau is fighting to help vulnerable consumers who were swindled out of their settlements, and to prevent future abuses.”