Structured settlement company Future Income Payments behind suit against CFPB

By Dee Thompson | Jan 19, 2018

WASHINGTON (Legal Newsline) – A previously anonymous company that filed suit against the Consumer Financial Protection Bureau (CFPB) last year has now been identified as Future Income Payments LLC (FIP), a company investigated by numerous states for questionable loan practices.

Last year, FIP sued the CFPB arguing that the agency is unconstitutionally structured, as Legal Newsline reported in January 2017. The company might have sought anonymity in order to conceal the fact that the CFPB was investigating it, as reported in the LA Times.

FIP is based in Manila, Philippines. The complaint states that “Plaintiff purchases income streams from individuals who are entitled to receive periodic payments from a pension or similar source and who wish to sell a portion of the income stream derived from those payments.” 

Or to put it another way, FIP gives individuals (usually the elderly) lump sum amounts and in return collects the future payments, with interest added. 

Three years ago in California, FIP was charged with issuing loans without a license. In February 2017, Los Angeles attorney Mike Feuer filed suit against FIP alleging it was charging interest rates as high as 96 percent and threatening those who defaulted with criminal liability, according to a press release issued by Feuer's office.

FIP no longer conducts business in California or New York, but it is active in other states. 

FIP’s lawsuit against the CFPB was filed several months after the CFPB issued a civil investigative demand (CID) and asked FIP for information regarding its products, services, and operations. In response, FIP argued the CID is improper because the structure of the CFPB is unconstitutional. 

Additionally, FIP argued the CID exceeds the CFPB’s jurisdiction. Third, FIP argued the information was not relevant to a legitimate purpose.

Alternatively, FIP asked the CFPB to limit the scope of information requested.

Richard Cordray, then-director of the CFPB, signed an order on Jan. 5, 2017, stating that FIP’s petition to modify or set aside the CID was denied, and noted “FIP offers no convincing explanation why the existence of the ongoing constitutional litigation reduces the importance of the transparency values served by the presumption, announced in the bureau’s regulations, that petitions to modify or set aside CIDs and orders addressing such petitions be ‘part of the public records of the Bureau.’”

On Jan. 10, 2017, FIP filed suit against the CFPB in the Washington, D.C. District Court, but failed to identify itself. After other motions were filed, it was eventually revealed that FIP was the plaintiff. 

On Aug. 2, 2017, FIP filed a motion for leave to supplement an amended complaint, stating the CID was unconstitutional, the jurisdiction was improper, and adding that the CFPB has no authority over the “pension advance” industry.

Two weeks later, the CFPB filed its responsive motion. It addressed FIP’s argument that the U.S. Court of Appeals for the Ninth Circuit's stay of a California CID was relevant to the Washington, D.C. case.

The CFPB noted that “FIP implies that it would be somehow inappropriate for the bureau to gather information about the company from other regulators in light of the 9th Circuit’s stay of the California district court’s order requiring FIP to comply with the CID. ... FIP is mistaken. The 9th Circuit did not 'stay' any action by the bureau. Rather, the 9th Circuit stayed—but did not vacate or otherwise disturb—the district court’s order that FIP produce documents and other information to the bureau.”

It added “And because the district court’s determination that the bureau’s structure is constitutional continues to have issue preclusive effect on the parties, it is passing strange for FIP to allege that the bureau acted deceptively by failing to tell state regulators that the bureau’s structure is unconstitutional.”

On Aug. 23, 2017, FIP filed a response to that response. No ruling has been entered as to whether or not FIP can file an amended complaint.

Attorneys Christopher Jones and Cathy Hinger of Womble Carlyle Sandridge & Rice LLP represent FIP.  Also, Ji-Hyun Jennifer Lee and Eric Epstein of Dorsey and Whitney represent FIP.

Mary McLeod, John R. Coleman, Steven Y. Bressler, Kevin E. Friedl and Christopher Deal represent the CFPB.

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Consumer Financial Protection Bureau U.S. District Court for the District of Columbia

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