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January 4, 2017

California-Based Pension Advance Company Banned in Iowa from Illegal High-Interest Lending

Future Income Payments LLC charged exorbitant rates for lump-sum quick cash advances on pensions; the majority of Iowa consumers are military veterans

DES MOINES – A California-based company that charged up to 200 percent interest for cash advances on largely military pensions will cease offering Iowans what Attorney General Tom Miller alleges are illegal and exorbitant high-interest advance loans, and refund overcharged consumers.

Future Income Payments (FIP) LLC this week paid the state $35,000 as part of an agreement called an assurance of voluntary compliance. FIP will refund Iowa consumers who were overcharged and modify existing contracts into interest-free loans.

FIP, formerly doing business as Pensions, Annuities and Settlements (PAS), operates from California, and is incorporated in Delaware. Its owner and president is Scott A. Kohn.

“This company preys upon vulnerable people who are desperate for money, particularly veterans who can sign over a reliable pension,” Miller said. “For a few thousand dollars cash up front, you’re forced to sign over tens of thousands of dollars from your future pension income. That’s what we call predatory lending.”

FIP markets “purchase” and “sale” agreements to consumers who “have an immediate need for a lump sum payment,” which Miller contends are actually illegal consumer loans at illegally high interest rates.

FIP is not licensed to offer consumer loans in Iowa and charges interest rates that far exceed state law. The agreement bans the company from offering unlicensed loans and charging interest rates that violate state law.

According to company records, 64 Iowa consumers paid an average annual percentage rate of 131 percent—and as high as 200 percent—for cash advances of up to $14,000. The majority are military veterans and spouses. The company also markets to those who draw government and corporate pensions.

At least five other states have pursued civil or administrative actions against the company and Kohn.

“If you have a pension and you’re desperate for cash, be very careful about signing that pension away,” Miller said, adding that consumers should first find out exactly how much they’ll owe in costs, fees and interest. “Consider seeking loan advice through a bank, credit union, credit counseling service, or trusted financial or tax adviser” he added.

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