New York’s Department of Financial Services is investigating a number of pension-advance firms it believes are threatening the retirements of older Americans, The New York Times DealBook reports.
The regulating department has already issued subpoenas to 10 companies it believes have “wooed” retirees out of their savings by convincing them to sign over their monthly pension checks in return for a lump-sum cash payment.
Targeting mostly lower-income borrowers, these firms have been drawing scrutiny from the Consumer Financial Protection Bureau (CFPB) and the Senate’s Committee on Health, Education, Labor and Pensions.
As part of its investigation, the Department of Financial Services is examining whether the companies in question have breached state usury laws and whether the loans violate a federal law that restricts how military pensions can be used.
To sidestep such laws, pension advance firms urge veterans to set up a separate bank accounts controlled by the firms. Pension checks are then deposited into these accounts before being sent to the lenders.
The pension advance firms are located in California, Florida, Delaware, Indiana, Michigan and Washington, according to the post.
Written by Jason Oliva