A British website has posted its list of the “10 Most Unethical Ways to Make Money.” Like all such lists, there are some eyebrow-raising choices, both in what is included and what is not, usually attributable to the political and ideological biases of the list-makers. For example, until we have figured out a way to run civilization without oil, it is more than a bit unreasonable to declare the entire oil industry unethical, climate change or no climate change. Oil is on the list, though, while child porn, drug dealing and gambling are not. The list could be the result of a collaboration among Greenpeace and Ron Paul.
Still, most of the inclusions on the list, like blood diamonds, ivory, and sweat shops are neither surprising nor controversial. Placing one of the businesses on the list, however, qualifies as a public service. Most people have no idea what the industry is, or what is unethical about it.
That business is the viatical settlement industry, which preys on human impulsiveness and irresponsibility to make large profits. Unfortunately, the list’s brief explanation of the industry misses its most unquestionable and sinister incarnation: buying structured settlements.
You’ve seen the TV commercials for one of the viatical settlement giants, who are predictably ratcheting up their advertising as tough financial times figure to force structured settlement owners into their clutches. “I have a structured settlement, and I need cash now!” their actors croon. The structured settlements they are singing about usually involve large damages paid to grievously injured parties or their guardians as the result of medical malpractice or a personal injury. It is well known among lawyers who specialize in representing injured plaintiffs that when people receive large cash settlements in lump sums, the results are often tragic. Though the money is meant to cover living expenses and medical bills for the rest of the plaintiff’s life, individuals who are not used to handling money burn through it at astounding speed. Relatives and friends with hardships, debts and illnesses hound the newly “rich” victim, who often has to choose between protecting his or her money or becoming a pariah in their family and community. In addition to this trap, the temptations presented to a person of modest means who suddenly has millions in the bank are irresistible. Money that is supposed to pay for long-term care and essential needs is frittered away on jewelry, vacations, or cars…or some of those unethical businesses that got left off the list of ten.
Responsible plaintiffs attorneys, recognizing this, try to convince their clients to reject lump sum payouts in favor of a structured settlement, usually funded by an annuity purchased by the defendant’s insurance company. The injured plaintiff gets regular payments that are sufficient to pay the bills, and just as important, protects his damages against greedy relatives and his (or her) own foibles.
Once they are on their own, however, the compensated victims are targeted by viatical settlement companies, bith those with cute opera-singing commercials and those without. They undermine the sound advice of the attorneys with slogans like “It’s your money!” and try to persuade the former plaintiffs to unstructure the structured settlement by selling the annuity’s income stream to the viatical settlement company at a deep discount. Result: the annuity company gets the regular income at bargain rates, and the victims get a new, smaller lump sum to dissipate in exchange. The statistics say that the customer of the viatical settlement company will run out of cash long before he or she runs out of the need for it. But for the company, it’s a sweet deal.
It’s also despicable. The viatical settlement industry like to use lottery winnings, which are usually paid out in annuities like structured settlements, to justify their business. Lottery winning are windfall funds; while the same dissipation hold for those lump sums (most multi-million dollar lottery winners have no money left after five years), the winners are usually no worse of after the money has been blown than they were before their number came up. When the money is a settlement for an injury, however, losing it is calamity. I would consider a viatical settlement company that only bought the income stream from lottery annuities ethical. There is no such company, however. The victims with structured settlements are a much larger and more lucrative market.
It is good to see these soulless predators placed in the same group of ethics violators along with whalers, ivory traffickers and the international arms dealers. They belong there.