As tobacco buyout begins, AG cautions farmers to watch out for scams
Release date: 3/13/2005
Raleigh: Attorney General Roy Cooper today encouraged farmers participating in the tobacco buyout to keep an eye out for scammers seeking to make an unfair profit as the buyout begins.
“The buyout is a much-needed opportunity for North Carolina families that depend on tobacco,” said Cooper. “Unfortunately, fraud artists will see it as an opportunity to entice farmers into shaky loans, risky investments or payment schemes.”
The sign-up period for the Tobacco Transition Payment Program run by the U.S. Department of Agriculture begins today at local Farm Service Agency offices across North Carolina. Tobacco growers and quota holders have until June 17 of this year to sign up for the buyout program.
The program is structured so that participants will receive annual payments for 10 years. Buyout participants who want to receive the funds in one lump sum can sign over their payments to a financial institution in return for an up-front payment. However, the financial institution will discount that one-time payment by a certain percentage, meaning that farmers who choose a lump-sum payment will receive less than the total amount they would get through ten year’s worth of payments under the buyout program. Growers and quota holders who are interested in getting a lump-sum payment should compare discount rates from several financial institutions to find the best rate.
Other growers and quota owners may choose to take out a loan against their annual payments. As with all loans, consumers should shop around to get the best terms. Interest rates and fees tend to vary widely among lenders. Consumers should be wary of loans offered through door-to-door sales or telemarketers, and they should always read the entire loan application carefully and make sure they understand it before signing. Also, watch out for hidden terms such as prepayment penalties, extra cash if the debt is paid early, and balloon payments, a sudden increase in payments one month.
Tobacco growers and quota owners who have questions about getting a fair loan or steering clear of scams can contact Cooper’s Consumer Protection Division toll-free at 1-877-5-NO-SCAM.
Buyout participants who opt for a lump-sum payment or loan may also attract the interest of those pitching investment offers, Cooper warned. If a deal sounds too-good-to-be-true, it almost certainly is. Don't fall victim to high pressure sales pitches. Make sure the company is registered to sell securities. To check up on an investment opportunity, contact the N.C. Secretary of State’s office at 1-800-688-4507. It is also wise to consult a lawyer, accountant, or financial advisor before making an investment or taking out a loan.
“Tobacco has sustained families and communities across our state for generations,” said Cooper. “I want North Carolinians who are participating in the buyout to get their money’s worth, not get taken by scammers.”