Mich. Commissioner Warns Consumers About Insurance Scam

Michigan Insurance Commissioner Loretta Watters is warning consumers about a new insurance scam that has been uncovered by the Office of Financial and Insurance Services.

The two organizations, Global Healings Society and The Community Financial Bond, encourage people to contribute money. Watters is warning people that both sites should be avoided.

Global Healings Society has set up a website where they direct people to The Community Financial Bond Web site, which encourages people to send money in order to be part of a “Co-op of like-minded men and women coming together, empowered as a collective body to assist one another in time of need, while fulfilling the need for ASSURANCE in the place of INSURANCE.”

The site goes on to say that what they offer is a bond and not insurance, and that when a minimum amount of people are in the bond, they will provide a benefit of up to $1 million.

While this may seem like a good alternative to insurance for consumers, it is a simple pyramid scheme where new money that comes in supposedly covers people already in the system. When pyramid schemes end, though, someone is always out of luck and loses their money according to Watters. In this case, people are contributing and not having claims paid because they are being told that the minimum numbers are not being met. In reality, contributors are being scammed out of their savings.

This product is not licensed as insurance in Michigan. Insurance companies, or alternatives to insurance called “fraternals,” cannot start up without having the money to pay their liabilities. The Community Financial Bond clearly does not have appropriate reserves and, in several Michigan cases, consumers have contributed to the bond but were denied claims reimbursements because they were told that reimbursement cannot be made until the minimum number of consumers contribute to the bond. This is clearly a violation of Michigan law.

Michigan consumers who send in money for this “bond” are being directed to the Secretary of State and to provide the bond as proof of auto insurance when they renew their vehicle registration. They are instructed to tell staff that this bond is an alternative to having insurance and that it satisfies the Michigan requirement for insurance.

Global Healing is also telling consumers that they will provide assistance with the Secretary of State if the bond is refused. These consumers are being turned away by the Secretary of State, though, because this is NOT a legitimate form of insurance and is NOT a bond as authorized by the Secretary of State.

“A consumer that deals with these scammers should be prepared to say goodbye to their hard-earned dollars,” said OFIS Commissioner Linda A. Watters. “This isn’t an alternative to insurance-it’s just scam that preys on unwitting consumers.”

“We notified our branch offices immediately upon becoming aware of this situation,” Secretary of State Terri Lynn Land said. “Our employees are working with customers to help them understand the requirements for insuring a vehicle in Michigan. It is unfortunate that this organization is causing needless confusion among consumers. We will work with the appropriate agencies to see that the public is protected.”

Cease and Desist (C&D) orders have been issued against Global Healings Society and The Community Financial Bond in Washington State, where the company is purported to be located, and Florida. Florida has obtained a large civil judgment against them last year, in excess of $500,000.00. Investigations in these states have turned up information indicating that Michigan is the second-largest state for victims of this scam. OFIS investigators have made this a priority and are working with investigators in other states to acquire a list of Michigan citizens affected.

OFIS investigators are also actively investigating the activities of these companies in Michigan and hope to have evidence for a C&D in Michigan as soon as possible.