Lawsuit Lenders on the Prowl During the Holiday Season


A recent press release on Market Watch revealed that consumers looking for extra cash during the holiday season may be lured into taking out a “lawsuit loan.”  The manipulative lawsuit lending industry provides a way for plaintiffs to borrow off their potential settlements, prior to and judgment actually being made – but at a steep cost.


Lawsuit lenders insist that because borrowers are not required to repay if they lose their case, their products are not loans, but rather, investments. In this way, they currently sidestep New York’s consumer protection laws. There are no regulations that govern the rate of interest that lawsuit lenders may charge, which can exceed 100% annually. In New York, an annual rate higher than 16% is considered usury.


Such financing companies essentially engage in payday lending for litigation. They seek out consumers who have filed lawsuits and offer to pay them up-front money in exchange for a percentage of whatever award they may later receive in their lawsuit – a percentage which increases over time. Litigation companies prey on vulnerable consumers – people who are often injured and unable to work, with no financial support, and desperate for cash. These companies force the consumer to agree to unfair terms that ultimately result in the consumers giving up a big piece, if not all, of any award they may receive for their injuries.


LRANY is working to stop this deceptive practice to restore fairness to our judicial system.




0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *