A lawsuit against two pension advance companies may bring relief to military retirees and others who borrowed against their pensions and ended up deeply in debt. And we’re happy to see these pension loaners busted.
The Consumer Financial Protection Bureau (CFPB) and the New York Department of Financial Services (NYDFS) filed a lawsuit in federal court against Pension Funding, LLC and Pension Income, LLC, and three of the companies’ individual managers for “deceiving consumers about the costs and risks of their pension advance loans.”
The lawsuit claims that the California-based companies, from 2011 until about December 2014, offered consumers lump-sum cash advances for agreeing to redirect all or part of their pension payments over a period of eight years to repay the loans.
New York State and the CFPB say that Steven Covey, Edwin Lichtig, and Rex Hofelter designed and ran the scheme and:
- Misrepresented the product as a sale and not a loan.
- Failed to disclose or misrepresented the interest rate and fees for the loans. The complaint alleges that sales people claimed the fees were much lower than credit card fees and home equity lines of credit.
- Violated New York State usury laws by charging illegally high rates.
The CFPB and New York State asked the judge in the U.S. District Court in the Central District of California to prevent the companies from doing business and to repay the people who bought into the scheme.
Anthony J. Albanese, Acting New York Superintendent of Financial Services, said in a statement, “We are seeking to deliver relief to the pensioners on whom the defendants preyed.”
ConsumerMojo will keep you updated on what happens in court.