(April 2014) Assemblyman Bill Magee (D-Nelson) announced he is supporting a new bill to provide increased oversight of companies that offer cash advances on pensions for veterans, seniors and other individuals (A.7332-A). These loans often come with outrageously high interest rates, ranging from 27 percent to 106 percent, which trap the recipient in a cycle of long-term debt.
“Seniors and veterans who work their whole lives for a secure retirement should not see their pensions scammed away by predatory lenders,” said Assemblyman Magee. “We have an obligation to protect hard-working families from those unscrupulous companies who would scam them.”
Pension-advance companies became increasingly common following the 2008 financial crisis, when many retirees lost significant portions of their investments and turned to cash advances on their pensions to pay their bills. These companies, which are not subject to state or federal banking regulations, often advertise directly to veterans, seniors or other vulnerable populations, who are encouraged to sign over their pension checks in exchange for lump sums of cash.
The bill supported by Magee would authorize the New York State Department of Financial Services to publicly evaluate pension-advance companies and make any needed recommendations regarding their licensure and the fees and interest rates they charge. It would also direct the department to examine these companies’ disclosure practices.