WASHINGTON: The U.S. Consumer Financial Protection Bureau has filed suit against Future Income Payments, a Nevada company that offers cash advances in exchange for future pension benefits, which the regulator said are actually exceptionally high-interest loans.
In the lawsuit, the CFPB alleged that the company and related entities, all led by Scott Kohn, aggressively marketed services to consumers in need of cash, promising an upfront payment at a discount in exchange for upcoming pension payments.
The company told consumers it was a cheaper option to obtain cash than advances through credit card companies, and carried no interest rate. But in reality, the companies were signing consumers up for loans with interest rates of up to 183 percent, the CFPB said.
The regulator said the company "lures in vulnerable consumers, including senior citizens, disabled military veterans, and their spouses, who are in need of immediate cash."
The lawsuit, filed in the U.S. District Court for the Central District of California, claimed the company and related entities misled consumers and failed to disclose certain terms. The regulator is seeking injunctive relief, monetary relief and civil penalties.
Kohn could not immediately be reached for comment. The customer service number listed on Future Income's website was disconnected when called on Thursday.
Future Income has already come under scrutiny from 14 different states, according to the CFPB's lawsuit, with several states filing their own lawsuits against the company. The company is also being sued by investors who claim to have lost more than US$100 million, the Wall Street Journal reported in July.
(Reporting by Pete Schroeder; Editing by Meredith Mazzilli)