A broker allegedly offering high-interest credit to veterans has been permanently banned from (among other things) arranging agreements between veterans and third parties under which the veteran purports to sell a future right to an income stream from the veteran’s pension.
However, the broker will also pay a civil money penalty (CMP) – of $1, the Consumer Financial Protection Bureau (CFPB) said Wednesday.
In a release, the agency said it took the action against Mark Corbett after finding that Corbett did not tell consumers that contracts he facilitated were not void. Veterans’ pension payments, the agency noted, are unassignable under federal law. In addition, the bureau said, Corbett allegedly misrepresented to consumers that the offered product is a purchase of payments and not a high-interest credit offer and when they would receive their funds. He also, the agency said, failed to disclose to consumers the applicable interest rate on the credit offer.
As part of the consent agreement reached with CFPB, Corbett is forever banned from “brokering, offering, or arranging agreements between veterans and third parties under which the veteran purports to sell a future right to an income stream from the veteran’s pension.”
However, he faces virtually no monetary penalty.
CFPB said it assessed a CMP of only $1 against Corbett because of Corbett’s “inability to pay more based on sworn financial statements that he provided to the Bureau and Corbett’s ongoing cooperation with the Bureau’s investigation.”
According to the consent order, Corbett – working as a broker for the “Doe Companies” – set up contracts between veterans and investors where veterans received a lump-sum payment ranging from a few thousand to tens of thousands of dollars. The veterans were then obligated to repay a much larger amount by assigning to investors all or part of their monthly pension or disability payments. The veterans’ obligations typically lasted five to 10 years.
The bureau order stated that the high-interest credit offers Corbett brokered were for veterans who had Department of Veterans Affairs (VA) disability pensions or pensions administered by the Defense Finance and Accounting Service (DFAS, which issues monthly pension payments to military retirees). The VA, CFPB said, establishes a veteran’s level of disability compensation and administers disability pensions.
“From at least 2011 through 2018, the Doe Companies’ contracts required veterans to go into their VA or DFAS online portal and change their entire pension direct-deposits or their monthly allotments to be routed directly into a bank account controlled by the Doe Companies or their agents,” CFPB said. “If veterans contracted to sell only part of their pensions through the Doe Companies, the Doe Companies would receive the veterans’ entire pension direct-deposits or monthly allotments and then remit portions of them to the veterans’ bank accounts.”
The agency said that, under the agreements, veterans could repay the contracts from sources other than the contracted-for income stream, such as a life insurance policy. “In fact, veterans were required to purchase life insurance policies so that, should a veteran die and the income stream stop, the outstanding amount on the contract would still be paid,” the agency said.
Federal law prohibits agreements under which another person acquires the right to receive a veteran’s pension payments, the CFPB stated.
The bureau said in its release that its investigation is being conducted in partnership with the Office of Arkansas Attorney General Leslie Rutledge and the South Carolina Department of Consumer Affairs.