Law stiffens penalties on predatory annuity fraud
By DAVID R. CORDER, DAILY SUN
THE VILLAGES -- Some of the stories would break your heart.
That's how watchdogs like Steve Renico, a Village of Hadley resident, describe the impact of fraudulent annuities sales on unsuspecting senior citizens.
Such an impact explains the reason behind a new state law that stiffens criminal and civil penalties on predatory annuities fraud committed against anyone 65 or older.
"Folks in this economy are at a loss as to what to do with their investments," said Renico, who has championed the cause of such victims as a Senior vs. Crime deputy regional director. "I think that opens the door for some of the financial predators out there."
Effective Jan. 1, the law prohibits licensed life insurance agents from selling annuities unless they’re completing continuing education courses. Annuities are life insurance contracts payable in fixed or variable rates at some future date.
"Not everybody who deals with annuities is problematic," Renico noted. "I think there are times when investing in annuities is appropriate. There are times when it's not the best deal for folks."
The annuities legislation enacted in May evolved over the past couple of years at the urging of the state Department of Financial Services and Chief Financial Officer Alex Sink, agency spokesman Kevin Cate said.
"If you heard some of the stories about folks being taken advantage of, all Floridians would agree this is an issue that should be continually addressed," Cate said. "One of (Sink's) top priorities was to strengthen the security of seniors in the state by improving the laws regarding annuities investment."
Under the new law, for instance, the Legislature added the following protections:
- Increases to 14 days from 10 days the amount of time a customer may seek a full refund on annuities sales.
- Requires agents to provide detailed cost comparisons on any annuities sale.
- Creates an administrative fine of up to $30,000 for each instance of willful 'churning' or 'twisting' - the practice of inducing consumers at their expense to cash in an existing security for an annuity.
- Imposes a third-degree felony charge against agents who willfully submit a false signature on behalf of a consumer on an annuities application or policy-related contract.
- Subjects agents to unfair trade penalties for misrepresenting their qualifications.
Anyone who suspects an agent has committed annuities fraud is encouraged to call toll-free a state consumer hot line 877-693-5236, Cate said.
"The CFO is committed to assisting any senior who may feel a product sold them might not be best suited for them," Cate said. "That's why she's been fighting for tougher consequences for those who defraud our seniors."
In one recent case, Renico said, the Ocala office of Senior vs. Crime, a program of the Florida Attorney General's Office, secured a $25,000 refund for one senior citizen on an annuities sale.
The man approached a life insurance agent to purchase insured certificates of deposits, Renico said. Following an intense sales pitch, however, the agent persuaded the man to purchase a 20-year fixed annuity.
"He was of an age where a 20-year fixed annuity wouldn't do him any good," Renico said.
While reflecting on the purchase, Renico said, the senior citizen even asked the agent for a full refund within the allowed grace period.
"But the broker told him, 'A deal is a deal; you signed the paperwork,'" Renico said. "He came to us, and we were able to get his money back. What happens people walk in expecting to buy one product and walk out with another because of a fairly intense sales pitch."
FLORIDA DEPARTMENT OF FINANCIAL SERVICES
The Florida Department of Financial Services has published a free, 26-page consumer guide on annuities and other life insurance products. An online copy is available at the agency’s Web site, fldfs.com, or call toll-free at 877-693-5236 for a free hard copy.
David R. Corder is a reporter with the Daily Sun. He can be reached at 753-1119, ext. 9066, or at david.corder@thevillagesmedia.com.