Monday, April 29, 2013

"Pension advances" may amount to legal loan-sharking

People short on cash have been approached online for “rapid pension advances”  (or "lump sum pension advances") which amount to loan-sharking, with interest rates from some companies over 100%.  Jessica Silver-Greenberg reported on this practice in the Sunday New York Times, April 29, front page, here

The “products” are also offered in local circulars.

Here's a typical pitch.  Take it with a grain of salt. 

Companies seem to bypass state usury laws by claiming that these products are “advances” not loans.  And outside of the military, most of these don’t seem to be illegal under federal law.

It is true, that other kinds of instruments can be "advanced" (lottery winnings, annuities).

There is a detailed discussion of the Times article on April 29 by "Pension Pulse", by L. Kolivakis (Canada),, link here.  Approach any financial product from Wall Street, especially if pitched on the Internet on YouTube or email or social media, with healthy skepticism.  Look for those financial lesions before you leap. 
Unemployed people short on cash and in danger of repossessions or foreclosures may be tempted by these products. 

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