Is Peachtree Settlement Funding Scam?

I’ve been hearing another round of obnoxious commercials on the radio again. This one is for Peachtree Settlement Funding, and they definitely play to the “I want it now” mentality of people.

With lines like:

It’s your money, and you should have it!

Why wait?

Get your money in one lump sum.

Life doesn’t wait, why should you?

It’s a compelling come-on. It’s also quite obnoxious due to the whiney voice of the guy who plays the customer, but such is life in the radio ad world I suppose.

As far as the ad itself goes, it makes many implied emotional pleas. For example, It’s your money, and you should have it! This is an example of sort of implied argument made throughout the ad, namely that someone else is unfairly keeping your money from you, and that Peachtree will right that wrong for you. The remaining 3 quotes all play to the sense of urgency and immediate gratification – you shouldn’t have to wait for your money.

So the ad is annoying and uses the sorts of advertising tools and techniques designed to convince the customer to use their service. That’s fine, no crime there. But are they a scam?

Let’s back up a bit first and look at what it is they offer.

What is structured settlement funding anyway?

A person can acquire a structured settlement when he wins a court case, the lottery or is the beneficiary of an annuity. All that means is that the person is entitled to a set amount of money on a regular basis for a specified amount of time. For example, if you win the lottery you may be entitled to $1,000 per month for the next 20 years.

That’s the concept behind a structured settlement annuity – a sum of money has been invested on the person’s behalf in exchange for regular payments. What a structured settlement purchaser like Peachtree does is to buy that annuity at a discount and provide the person with a one-time, lump sum payment.

So, is it a scam?

To be honest, I don’t know. this guy clearly thinks they are. He claims to be a former employee of Peachtree, but who knows if that’s true. They do have an A+ rating from the Better Business Bureau, and much of what the “former employee” writes about are aggressive sales tactics.

But what about the underlying service? Is settlement funding worth the cost?

I suppose that depends on the cost. some things to consider about settlement funding:

• You will receive a substantially lower amount than what the settlement promised. This is because you are exchanging future value and interest payments for a larger sum (larger than the monthly payments) today. It will also be less due to whatever fees and costs are associated with the settlement company.

• Your monthly payments will be worth less over time. This is simply because the structured settlement is not likely to have a provision for indexing to inflation, so your dollar will be worth less in 15 years than it is today.

It’s a bit of a numbers game and will be different for every case, but for me it comes down to the cost of the settlement funding service. If there was no cost, or a nominal one, then I’d take the lump sum payment today and invest it to keep ahead of inflation. That’s all the insurance company that holds the structured settlement is doing anyway, but they keep the profit.

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