I am a connoisseur of the commercials that law firms (mostly personal injury outfits) run on local TV. Their flair for the dramatic and their production details put them in a league that local car dealers and merchants can only dream of. One of my current favorites is J.G. Wentworth's "It's my money, and I need it now!" campaign, currently in heavy rotation in Rhode Island. There's an article in today's ProJo about how some state judges are refusing to approve the lump sum payment for structured settlement deals that firms like J.G. Wentworth broker. The reasoning behind these decisions is that the companies are preying on the financially desperate by offering them lump sum payouts that can be as low as 40% of the total value of the settlement.
I'm certainly not shocked to find out that companies like J.G. Wentworth charge a fairly large premium for their services. It's hard to say whether or not what they're doing borders on usury, but it's obvious to anyone with a bit of economic sense that you're going to have to pay some sort of a premium if you really need your money right now. I don't really envy companies that provide financial services to the poor. While it's true that there are business built on the idea of fleecing the poor and desperate out of what little they have, there are plenty of legitimate business who have to face down charges of exploiting the poor because they need to account for the additional risk they are taking on in their fee structures. If companies are forced to provide financial services to marginal customers at the same rates as other customers, they will probably choose not to do business with poorer customers, and in the end, that hurts poor consumers more than it helps them.
While it's likely that many of the people who appear before Judge Vogel are not acting in their own financial best interest when they choose to convert a structured settlement into a lump sum payout, I don't think that the government should be in the business of preventing people from making bad financial decisions. I'll ignore the irony of the State of Rhode Island lecturing someone about their finances and point out that the state doesn't seem all that concerned about poor people wasting their money on the state lottery or at the state-sanctioned gaming houses in Newport and Lincoln.