John Oliver took aim at factoring companies on his HBO show Last Week Tonight, criticizing the industry that profits from structured settlements. The host explained that the segment originated from the ubiquitous JG Wentworth ads, which have become a pop culture staple due to their catchy jingle.
The Problem with Structured Settlements
Oliver noted that structured settlements are designed for individuals who have suffered physical injuries or lost loved ones due to wrongful actions. These settlements provide tax-free income in increments, offering long-term financial support. However, some recipients may need a lump sum advance, which is difficult to obtain because the structure is set.
Factoring companies step in to buy the rights to future payments in exchange for a lump sum, but they often take an average of 60% of the money. This has given rise to a factoring industry that purchases an estimated $1 billion in payments annually, leaving many sellers regretting their decision.
Aggressive Sales Tactics
Oliver highlighted that the industry targets vulnerable individuals, many of whom have permanent disabilities, including cognitive impairments. For example, people exposed to lead paint in Baltimore as children may have irreversible brain damage, making them less able to understand complex transactions.
These individuals are bombarded with calls and hunted on social media by agents using aggressive sales tactics. Some companies employ researchers to scour court records for large settlements, then wait for minors to turn 18 before approaching them. Oliver joked that turning 18 should mean freedom from unsolicited texts, but these companies swoop in immediately.
He recounted cases where potential clients were wined and dined, including one person flown to strip clubs in South Florida to persuade them to sign.
Flawed Legal Safeguards
While judges must approve any transaction, Oliver explained that the system is easily gamed. Because no adversary is present, hearings average just seven minutes. Judges are reluctant to block sales even if they seem unwise. Companies often coach clients for court appearances, further undermining the process.
Oliver called the industry predatory, stating that it is less about helping people and more about extracting wealth. He proposed small fixes such as curbing aggressive tactics, requiring hearings in the seller's home jurisdiction, and providing attorney advisers for those who do not fully understand the transaction.
In conclusion, Oliver emphasized that while the ads may seem benign, these companies do not have consumers' best interests at heart. The industry is full of predators, and it is crucial to recognize the harm they cause.
