By Marcy Gordon, Kswo.com
Federal and New York regulators have sued two companies that make loans against retirees’ pensions, saying they deceived consumers about the high rates of the loans.
Regulators say that the companies, Pension Funding LLC and Pension Income LLC, used deceptive marketing tactics to target the pensions of seniors and military personnel. The U.S. Consumer Financial Protection Bureau and New York state’s Department of Financial Services filed the lawsuit against the companies in federal court in Santa Ana, California.
They say the companies tricked consumers into borrowing against their pensions by portraying the deals as sales instead of loans, and failing to disclose high interest rates and fees.
The business of so-called pension advance loans, which grew during the recession, has been under scrutiny by regulators in recent years. Targeting seniors hit hard during the economic downturn, the schemes can drive retirees deeper into debt, regulators say.
“We are working to put a stop to the illegal practices these companies are using to sell their bogus product to military veterans and other pensioners,” CFPB Director Richard Cordray said in a statement.