But the claim alleges a complex scheme whereby Pension Funding and Pension Income recruited financial advisors to solicit clients to invest in the pension funding process for a promised return of 6 percent.

Those investments resulted in more fees passed on the retirees taking the lump sum loan. Advisors that recruited investors received a 9 percent commission.

On average, the loans carried an annual interest rate of 28.5 percent. No annual interest rate was disclosed to customers, who were often retired military personnel.

Customers received a minimum monthly payment of $500 for eight years. The firms also assisted customers in opening separate checking accounts into which their pensions were deposited, but did so without being licensed to execute the transactions in New York.

Last year, the Government Accountability Office conducted a series of undercover investigations, as agency representatives posed as retirees seeking a cash advance or loan on their pension checks.

Six out of the 19 firms investigated offered interest rates between 27 and 46 percent, which would be two to three times higher than the legal limits states allow on interest rates on personal lines of credit.

The investigation found that at least 38 companies offer lump-sum payments in exchange for part or all of an individual's pension income; 18 of the companies are concentrated in California; 17 offer financial products other than pension advances.

The CFPB was established in 2011 as part of the Dodd-Frank Wall Street Reform Act. It's charged with enforcing the consumer protections in that law, which created new prohibitions against unfair, deceptive or abusive acts and practices.