Imperial Funding’s High Interest Rates Criticized by Court

Boynton Beach, FL – In a recent government filing, Imperial Funding disclosed that interest rates charged to its customers average 17% per year, well above the industry averages. These rates put Imperial Funding – formerly marketed as “Washington Square Structured Settlements” – charging at the high end of the structured settlement factoring industry. Imperial Holdings’ SEC filing on August 12, 2010 filing was made with the federal government.

Imperial disclosed that interest rates are even higher than reported, averaging 18 – 20% per year per their Imperial Holdings SEC filing. This places Imperial among the most costly of factoring companies in the industry, offering its customers the least value. Industry speculation is that the new Consumer Financial Protection Bureau will have a dramatic, adverse impact on the structured settlement industry as a whole.

High discount rates, such as those disclose by Imperial, cannot continue. As both sellers and courts become more aware of the financial abuse at the hands of certain factoring companies, they will either go out of business or will be forced to drastically reduce their rates. “Smart customers shop rates. Many judges question customers to ensure that they are getting a fair deal by requiring evidence of competitive shopping,” commented Stewart Feldman, an attorney long active in the industry throughout the U.S. Feldman cited RSL Funding and Henderson Receivables as offering among the best rates in the industry, with Peachtree and Imperial offering among the least value

When questioned in a pending legal proceeding as to how Imperial can offer such little value to its customers, Imperial revealed that the company spends upwards of $5,000,000.00 in marketing costs a year, including almost $4,000,000.00 on television advertising. Current data supports that customers that respond to television ads tend not to competitively shop, resulting in these customers receiving among the lowest prices paid. According to the government filing, each customer, on average, bears $14,000.00 in marketing costs. Based on these statistics, a customer not bearing this cost would receive on the average a full one-third more money up-front.

Imperial’s conduct has not gone unnoticed. In a recent court decision, the New York Supreme Court (case # 15008/09) wrote that Imperial’s interest rates were “neither fair nor reasonable taking into account the actual amount [the customer] would be receiving. [The customer] would be receiving less than 1/3rd of the discounted present value . . . after legal fees and administrative fees”.

Things may be changing. In recent years, structured settlement companies including RSL Funding and Henderson Receivables have offered customers an alternative to unreasonable rates. RSL informs customers that are the victim of particularly egregious charges from Imperial that there is an alternative and RSL makes competitive bids for the purchase of their future payments. “We’ve offered customers as much of $50,000.00 more than competitors for the same future payments,” commented James Kelly, an RSL Funding’s Senior Account Executive. RSL’s Senior Account Executive, Derek Kopacz expressed, “When my customer received our offer of $35,000.00 more than Peachtree for the same future payments, he was ecstatic. When he received our check a few weeks later, I became his best friend. He couldn’t believe how badly he was being taken advantage of by Peachtree Settlement Funding.” Typically, RSL acquires payments free of fees and costs imposed on customers.

Attorneys for Peachtree and Imperial were asked for comments and corrections but offered no reply.

For further information, contact the Structured Settlement Institute (SSI), a not-for-profit organization established to educate sellers of structured settlements regarding fair and equitable practices among providers of structured settlement transfers.