Don’t Be Burned By Misleading Tobacco Settlement Ads

Calendar Icon Updated August 28, 2017
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You may have seen online ads, infomercials, and other promotions saying you’re eligible to receive monthly payouts from tobacco and cigarette companies. And we’ll be honest — the advertised payout amounts of $1,000 or more make this offer very tempting.

But you should know that receiving any money from a federal tobacco settlement, specifically through the Master Settlement Agreement (MSA), isn’t possible. In fact, the only way to get any money from a tobacco company is to join a class-action lawsuit or higher legal representation to help you file your own lawsuit.

What Are These Settlement Scams?

Investment companies, specifically Money Morning, heavily advertise to retirees and seniors that they may be eligible to receive a monthly check, ranging between $800 and $3,000, right from the pocket of “Big Tobacco.” The idea is that money paid out to 46 states from a 1998 lawsuit settlement against tobacco — also called the Master Settlement Agreement — can make its way to your pocket, even if you never smoked.

Because tobacco companies are legally required to make annual payments to these 46 states, amounts that reach into the millions, it seems like there’s tons of money just sitting around waiting to be claimed — at least, that’s what some investment companies would like you to think. And if you’re not familiar with how the MSA works (and most people aren’t), it’s easy to fall into the trap these companies.

But the reality is that the MSA doesn’t work that way at all. The original settlement from 1998 required the U.S.’s four largest tobacco companies to pay states for the financial burden of tobacco-related health care costs. This money can be used in any way a state chooses, and the most common uses are for smoking cessation programs, tobacco and drug prevention programs, and simply being put into the state’s general fund.

Unfortunately, there’s no requirement in the MSA for states to give any of that money to people who have been physically or financially affected by smoking-related diseases or medical costs. And for this reason, states do not give out money to citizens.

This means that the only way it is possible to receive a settlement from a tobacco company is to file your own lawsuit with the help of a lawyer. But companies like Money Morning will advertise that you don’t need a lawyer to access this money. Instead, they share an “opportunity” for you to claim “tax-free money” that comes from the MSA settlement — and that all it takes is a few minutes of time and a small “investment” to begin receiving payments right away.

How Do MSA Settlement Scams Work?

If you’ve been personally affected by tobacco use or know a family member who has, it may seem like you should be entitled to MSA funds. And that’s what predatory investment companies are banking on. These companies target retirees and people with limited income or medical bills who are looking for additional financial help. But you should know that signing up for “settlement payouts” isn’t what you’re getting when you sign on with these companies.

These scams first work by presenting settlement information in a way that suggests you deserve these funds, that many people have received them, and that the government supports this program.

They convince you that obtaining MSA money is easy, and can be put towards almost anything — especially recreational or expensive items.

All it takes to sign up is a few minutes, some personal information, and a small investment to get started. From there, you’ll be on your way to receiving an MSA payout this month.

And most importantly, they’ll pressure you to act quickly, because the number of people eligible to receive funds is limited.

Later, companies like Money Morning will provide a confusing explanation, saying that you’ll actually be investing in projects initiated by individual states, and that your financial investment goes to helping with the cost — only to be repaid with MSA funds in the form of a monthly check. These claims go so far as to say you’ll receive payments directly from the state or local government where you live.

After investigating these kinds of claims, we’ve determined that this isn’t at all the case. Instead, you’ll find that you are being sold a “membership” to an investment company that instead sends regular newsletters and investment information with exciting “opportunities” that can help you make easy cash. And, many who try to cancel these memberships find it difficult to get the credit card charges to stop.

Is This Legal?

Many state attorney general’s offices, including Washington, West Virginia, and Nevada, have all issued warnings against MSA and tobacco settlement scams. Each state has reiterated that it is not possible to receive settlement money, regardless of the tobacco-related medical costs you may have. Instead, these advertisements appear to be a deceptive way to trap you into paying for investment information that you do not need or want.

When it comes to MSA funds, it’s important to know that you cannot receive this money — regardless of what investment companies advertise — and that it’s best to stay away.

Eligibility Team

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