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Press Release

Wednesday, August 16, 2017

Attorney General Lori Swanson Sues "Pension Advance" Companies That Required Veterans and Seniors to Sign Over Monthly Pensions

Companies Commonly Charged Interest Rates Of 200% for Loans Borrowed Against Pensions

Attorney General Lori Swanson today filed a lawsuit against two companies that required military veterans and senior citizens to sign over significant portions of their monthly pension payments for up to ten years in exchange for loans of relatively small amounts of money to cover household emergencies and basic living expenses.  The loans commonly charged annual percentage rates (APRs) of 200 percent.  Because borrowers surrendered a significant portion of their future monthly pensions to the companies, the loans often exacerbated peoples’ financial difficulties.

The companies issued the loans to veterans who receive military pensions or disability benefits, plus senior citizens who have pensions from private sector jobs.  Examples cited in the lawsuit include

“These companies had veterans and seniors sign over significant portions of their monthly pensions and benefits for years to come in exchange for much smaller immediate cash payments to cover basic living costs, medical bills, and household emergencies,” said Attorney General Lori Swanson.  She added:  “ A pension is supposed to provide financial security, and people should be very cautious about giving away their future pension benefits to get just pennies on the dollar in immediate cash.  Borrowers’ finances can become even tighter down the road if they relinquish their future monthly pension payments.”

The lawsuit was filed against Future Income Payments, LLC of Delaware and FIP, LLC of Nevada.  The lawsuit alleges that the companies violated State lending laws by issuing loans to Minnesota borrowers without being licensed as a lender.  The lawsuit alleges that the companies sought to evade state lending laws by falsely characterizing the transactions as “purchase agreements” of a pension, not a loan.  In the last two years, Colorado, California, Massachusetts, North Carolina, New York, Washington, Iowa, and Pennsylvania, plus the Los Angeles City Attorney, have taken action against one or both companies for issuing unlawful loans.  FIP holds itself out as “America’s largest pension cash-flow originator, with over 100 million dollars in completed transactions.” 

Most loans issued by the company to Minnesota residents were for less than $5,000, and the most common interest rate charged to borrowers was 200 percent.

The company often solicited borrowers through its own websites or websites of “lead generators” who marketed “pension loans” or “loans that can fit your needs.”  The companies’ training materials encouraged sales agents to instill a “sense of urgency” and “fear of loss” that a loan may no longer be available if the borrower does not sign up immediately. 

Under Minnesota law, lenders must obtain a license from the Minnesota Department of Commerce before issuing loans in the State.  The companies did not obtain such licenses.  Federal law prohibits a company from acquiring the right to receive a veteran’s military benefits or pension, but permits a veteran to use a military pension or benefits to repay a loan, as long as a preauthorized electronic fund transfer is used to make the payment.  In other words, for purposes of federal law, the companies claim their products are “loans,” but claim their products are “purchases” for purposes of evading state lending laws.

So-called “pension advance companies” capitalize on current economic trends.  The debt of Americans ages 65 to 74 has risen faster than that of any other age group, according to the New York Times.  Households headed by a person 60 or older with debt saw their median debt more than double from 2001 to 2013, according to the Federal Reserve Bank.  Approximately 2 million military retirees receive military pensions, according to the U.S. Department of Defense. 

The lawsuit was filed in Hennepin County District Court.

The Attorney General’s Office issued an alert entitled Pension Advance Schemes to warn borrowers about so-called “pension advance scams.”  People may report complaints to the Minnesota Attorney General’s Office by calling (651) 296-3353 (Twin Cities Metro Area) or (800) 657-3787 (Outside the Twin Cities), or by emailing  People may also download a Complaint Form from the Attorney General’s Office website and mail the completed form to the Attorney General’s Office at:  445 Minnesota Street, Suite 1400, Saint Paul, MN 55101-2131.

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Pension Advance Schemes

Some companies attempt to convince people to hand over some of their monthly pension payments in exchange for a short-term loan. Exchanging future pension benefits for quick cash now might seem enticing, but can be a very expensive way to borrow money and result in low monthly pension payments for years to come.

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