Structured settlements offer financial stability and peace of mind, but they can also attract scams and unethical practices. If you have a structured settlement, you’re likely counting on those regular payments to meet your financial needs, whether it’s for medical bills, daily living expenses, or long-term goals. The idea of someone taking advantage of that security is both unsettling and infuriating. But don’t worry—with the right knowledge and precautions, you can protect yourself from scams and make informed decisions.
Let’s dive into how structured settlement scams work, red flags to watch for, and actionable steps you can take to keep your money safe.
Why Are Structured Settlements Targeted?
Before we jump into the specifics of protecting yourself, it’s important to understand why structured settlements are such an appealing target for scammers.
- Guaranteed Income: Structured settlements provide regular payments over a long period. Scammers see this as a steady stream of income they can exploit.
- Lump-Sum Temptation: Many people with structured settlements might be tempted to exchange their future payments for an immediate lump sum, especially during financial hardship. This opens the door for fraudsters to offer unfair deals.
- Lack of Awareness: Not everyone understands the nuances of structured settlements, making it easier for scammers to manipulate or confuse their targets.
Common Structured Settlement Scams
Understanding how these scams operate is your first line of defense. Here are the most common tactics scammers use:
1. Too-Good-To-Be-True Offers
Scammers often promise unrealistically high payouts for your structured settlement. They might say things like, “Get 90% of your total settlement in cash today!” While tempting, these offers are usually misleading.
2. Fake Companies
Fraudsters may pose as legitimate structured settlement buyers, but their only goal is to take your money or personal information. These companies often use high-pressure tactics to get you to act quickly.
3. Unauthorized Access to Payments
Some scams involve tricking you into signing over your payment rights through legal jargon in contracts. Once signed, you’ve essentially handed over control of your settlement.
4. Phishing Scams
Fraudsters might send emails, text messages, or make calls pretending to be from a financial institution or structured settlement company. They’ll ask for sensitive information like your bank account or Social Security number.
5. Bait-and-Switch Tactics
Scammers may initially offer you a reasonable deal but later change the terms in the fine print. For example, you might receive far less money than initially promised.
Red Flags to Watch For
Spotting the signs of a scam can save you from making costly mistakes. Keep an eye out for these warning signs:
- High-Pressure Sales Tactics: If someone is rushing you to sign a contract or make a decision, it’s a major red flag. Legitimate companies will give you time to consider your options.
- Lack of Transparency: Be wary of companies that won’t clearly explain their fees, terms, or the actual amount you’ll receive.
- No Physical Address or Online Presence: Always verify the company’s legitimacy. A lack of a website, physical address, or professional reviews is a huge warning sign.
- Requests for Upfront Fees: Legitimate settlement buyers deduct their fees from the payout, not upfront.
- Unrealistic Offers: If the offer seems too good to be true, it probably is. Compare offers from multiple reputable companies.
- Unsolicited Communication: If someone contacts you out of the blue claiming to know about your settlement, be cautious. This could be a phishing attempt.
How to Protect Yourself
Now that you know the risks, let’s talk about actionable steps you can take to safeguard your settlement.
1. Do Your Homework
Research any company or individual that approaches you about your structured settlement. Check online reviews, look them up on the Better Business Bureau (BBB) website, and verify their registration with state authorities.
2. Consult a Professional
Always consult with a lawyer or financial advisor before making any decisions about your structured settlement. They can help you understand the terms of any agreement and identify potential scams.
3. Read the Fine Print
Contracts can be full of legal jargon designed to confuse you. Take the time to read every word or have a professional review the document for you.
4. Avoid Sharing Personal Information
Never give out sensitive information like your Social Security number, bank details, or settlement information to someone you don’t fully trust.
5. Get Multiple Offers
Don’t settle for the first offer you receive. Compare quotes from multiple reputable companies to ensure you’re getting a fair deal.
6. Be Skeptical of Unsolicited Offers
If someone contacts you about your settlement without you reaching out first, proceed with caution. This is a common tactic used by scammers.
7. Verify Licensing
Structured settlement buyers are required to be licensed in most states. Verify that the company you’re dealing with has the proper credentials.
What to Do If You’ve Been Targeted
If you suspect you’re dealing with a scam, take immediate action:
- Cease Communication: Stop all contact with the suspected scammer.
- Report the Scam: File a complaint with your state attorney general’s office, the Federal Trade Commission (FTC), or the Better Business Bureau (BBB).
- Protect Your Settlement: If you’ve signed any documents, consult a lawyer immediately to see if you can void the agreement.
- Monitor Your Accounts: Keep a close eye on your bank accounts and credit reports for any unauthorized activity.
Legitimate Alternatives to Avoid Scams
If you’re looking to sell your structured settlement or need financial assistance, here are legitimate options to consider:
- Work with Established Companies: Choose buyers with a strong reputation, positive reviews, and transparent practices.
- Seek Financial Counseling: A certified financial planner can help you explore alternatives to selling your settlement.
- Use Pre-Settlement Loans Sparingly: If you need cash immediately, consider a pre-settlement loan but understand the terms thoroughly.
Conclusion
Your structured settlement is a valuable asset that provides financial stability and peace of mind. Protecting it from scams requires vigilance, research, and professional advice. By understanding the tactics scammers use and following the steps outlined in this guide, you can safeguard your settlement and ensure it continues to meet your needs.
Remember, if something feels off, trust your instincts. Take your time, ask questions, and don’t hesitate to seek help from trusted professionals. With the right precautions, you can confidently navigate the world of structured settlements without falling victim to scams.
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