Structured settlements offer a reliable, tax-free stream of income over time, often awarded after personal injury lawsuits, workers’ compensation claims, or other legal settlements. This steady income provides financial security to many recipients, making structured settlements a valuable asset. Unfortunately, scammers and unscrupulous companies often target settlement recipients to trick them into selling their payments at a huge loss or even steal their money outright.
Understanding the warning signs of structured settlement scams is crucial for protecting your finances. In this article, we highlight 7 key red flags that indicate you might be targeted—and how to safeguard yourself.
Why Are Structured Settlement Recipients Targets for Scams?
Scammers see structured settlement recipients as easy prey because these recipients receive guaranteed future payments that can be sold for lump sums. Some companies pose as friendly financial advisors or quick cash buyers, but their offers often come with hidden fees, unfair contracts, or illegal practices.
7 Warning Signs You’re Being Targeted by a Structured Settlement Scam
1. Unsolicited Phone Calls or Emails Offering to Buy Your Payments
One of the most common scams begins with cold calls, texts, or emails from unknown companies or individuals promising to buy your settlement payments for “fast cash.”
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These calls often use high-pressure sales tactics to rush you into a decision.
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Scammers may use fake names, no physical address, or unofficial websites.
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They might claim to be affiliated with government agencies or law firms—this is false.
How to Protect Yourself:
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Never provide personal or financial information to unsolicited callers.
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Ask for the company’s full legal name, physical address, and licensing information.
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Search for reviews or complaints about the company online.
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Legitimate buyers rarely cold-call; they usually respond to inquiries.
2. Offers That Seem Too Good to Be True
If a company promises you an upfront lump sum that seems unusually high or guarantees “no fees” or “100% cash value,” be very cautious.
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Scammers lure victims by offering more cash than reputable companies.
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These offers are usually bait to get you to sign unfair contracts.
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The fine print might reveal hidden fees, exorbitant discount rates, or ownership transfers that benefit the buyer, not you.
How to Protect Yourself:
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Compare offers from multiple companies.
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Calculate the effective discount rate (how much value you lose).
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Always read the fine print and ask for a clear explanation of fees.
3. Requests for Upfront Fees or Payments
Legitimate structured settlement buyers do not ask you to pay any fees upfront to process your sale.
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Scammers may request “processing fees,” “application fees,” or “notary charges” before the sale is finalized.
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Once you pay these fees, the scammer might disappear or delay payment indefinitely.
How to Protect Yourself:
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Never pay fees before receiving court approval and funds.
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If a company demands money upfront, it’s a red flag.
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Verify all fees with your attorney or financial advisor before paying anything.
4. Pressure to Sign Documents Quickly Without Full Explanation
A high-pressure tactic used by scammers is to rush you into signing contracts or legal documents without giving you time to review or seek advice.
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They might say you must act immediately to secure the deal.
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They often discourage you from consulting a lawyer or family member.
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You might be asked to sign vague or incomplete paperwork.
How to Protect Yourself:
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Always take time to read every document carefully.
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Consult a qualified attorney specializing in structured settlements.
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Never sign anything you don’t fully understand or that’s missing details.
5. Lack of Transparency About the Company or the Deal
If the company is vague about the terms of the sale, the amount you’ll receive, or the timeline, be very suspicious.
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Scammers may dodge questions or give contradictory answers.
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They might not provide written estimates or contracts upfront.
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Their website or office might lack contact information or licensing details.
How to Protect Yourself:
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Ask for a detailed, written offer that includes all terms and fees.
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Check the company’s Better Business Bureau (BBB) rating and state licensing.
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Search for any complaints or lawsuits filed against them.
6. The Buyer Is Not Licensed or Registered
Structured settlement buyers and brokers must comply with state and federal laws and often require licenses to operate legally.
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Scammers frequently operate without proper licenses or registrations.
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They may not disclose their registration status or avoid answering questions.
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Some operate under multiple company names to avoid detection.
How to Protect Yourself:
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Verify licenses through your state’s Department of Insurance or financial regulator.
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Use resources like FINRA’s BrokerCheck or the National Association of Settlement Purchasers.
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Only deal with companies that provide verifiable credentials.
7. Promises of “Guaranteed” Investment Returns or Other Financial Products
Some scammers try to upsell settlement recipients with promises of high-yield investments or financial products, often unrelated to the sale of structured payments.
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They might push you to invest your lump sum in risky or fraudulent schemes.
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These offers often come with high fees, complex terms, or no real chance of profit.
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This tactic diverts your focus from the settlement sale to a new scam.
How to Protect Yourself:
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Never invest your structured settlement money without thorough research.
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Consult a certified financial advisor or fiduciary with no conflicts of interest.
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Avoid any financial product that sounds too good to be true or is overly complicated.
How to Protect Yourself From Structured Settlement Scams
1. Always Consult Professionals
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Hire an experienced structured settlement attorney before selling any payments.
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Work with a certified financial planner (CFP) to understand your options.
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Trusted advisors help you spot red flags and ensure deals are fair.
2. Do Your Own Research
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Search online for reviews, complaints, or news about the company.
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Check regulatory databases and licensing boards.
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Use trusted sources like the Better Business Bureau and FINRA.
3. Take Your Time
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Don’t rush into any agreement.
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Legitimate buyers respect your need to consider options.
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Use the required court approval process as a safeguard.
What to Do If You Think You’ve Been Targeted or Scammed
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Stop all communication immediately with the suspicious party.
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Contact your attorney or financial advisor.
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Report the scam to:
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Your state insurance commissioner
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The Federal Trade Commission (FTC)
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The Better Business Bureau (BBB)
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The Consumer Financial Protection Bureau (CFPB)
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Taking swift action may help prevent further loss and alert regulators to stop scammers.
Final Thoughts
Structured settlement scams are unfortunately common, but with awareness and caution, you can protect your financial future. If you receive unsolicited offers, aggressive sales tactics, or anything that feels suspicious, trust your instincts and seek professional advice.
Remember these 7 warning signs to spot scams early:
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Unsolicited calls or emails
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Offers too good to be true
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Requests for upfront fees
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Pressure to sign quickly
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Lack of transparency
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Unlicensed buyers
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Promises of guaranteed investment returns
By staying informed, researching buyers carefully, and working with trusted professionals, you can safely manage or sell your structured settlement without falling prey to scams.