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Illinois Sues Annuity Salesmen for Using Deceptive Mailers

August 29, 2006

Annuities • Annuities: Fools' Gold or Fiscal Smarts? • AARP Launches Annuity Program for its Members • Worried About Outliving Your Assets? You Should Be • Longevity Insurance: OK If You Live Long Enough --- • California Shuts Down Annuity Sales Scam • Minnesota Sues Another Annuity Insurer • North Carolina Shuts Down Living Trust Scheme • Illinois Sues Annuity Salesmen for Using Deceptive Mailers • Senior Investment Fraud Increases as Population Ages • California Sues "Living Trust Mill" • Merrill Lynch to Pay $10 Million in New Jersey Settlement • Pennsylvania Sues Living Trust Scheme • Consumer Complaints about Annuities

Illinois Attorney General Lisa Madigan has filed two lawsuits against companies that allegedly used deceptive, unsolicited mailers to target senior citizens for annuities and other insurance products.

The companies used the mailers to obtain personal financial information to develop sales leads for insurance agents.

Madigan charges that seniors who respond to these mailings are not told their personal financial information may be used as leads for insurance agents, telemarketers, or others who may later try to persuade them to buy annuities and other insurance products.

The first of the lawsuits, filed against Investors Union, LLC d/b/a Annuity Service Center, its Managing Director, Peter Bonnell, and President of Marketing, Linda Bakalis, targets allegedly deceptive postcards the defendants mailed to Illinois senior citizens.

Investors Union, LLC is an Ohio company that creates, mails and processes direct mail postcards to consumers between the ages of 55 and 84 to obtain "qualified" appointments for independent insurance agents. Investors Union markets these leads to independent insurance agents.

The postcard Investors Union sends to consumers states "Dear Annuity Holder: This notice is to inform you that you may have an annuity that has reached the end of its surrender period. Please contact Bob Walker in the annuity service center to discuss your options."

Madigan's complaint contends Investors Union has no way of knowing whether consumers have an annuity or whether such an annuity has reached the end of its surrender period.

The lawsuit further states that when consumers call the number on the postcard, Investors Union call center agents determine if the consumer is "qualified," or has the amount and type of assets required to schedule an appointment with an independent insurance agent. If the call center agents find a consumer to be "qualified," they allegedly offer the consumer a free review of existing annuities and other investments. In her complaint,

Madigan says that while Investors Union describes the offer to consumers as a free review, it is really offering a sales presentation for annuities and other insurance products by an independent insurance agent.

The second lawsuit is directed at similar alleged deceptive practices by Kansas companies Senior Benefit Services of Kansas, Inc. and American Investors Life Insurance Co., and Mark Heitz, President and CEO of American Investors Life and Director of Senior Benefit Services. "Seniors should be wary of unsolicited offers of free advice, especially if they are asked to divulge personal financial information, such as listing their income and assets," Madigan warned.

Furthermore, Madigan urges seniors to do their homework before purchasing an annuity. "Annuities are investments, and it's important to investigate before investing. It's particularly important for seniors to examine not only the features of the proposed investment, but also his or her financial, health and personal situation and goals to determine whether the proposed investment is suitable," she said.

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