OP-ED: FORMER ATTORNEY GENERAL, LRANY EXECUTIVE DIRECTOR CALL ON NEW YORK LAWMAKERS TO REGULATE LAWSUIT CASH ADVANCES
Lack of protections allowed legal funding firm to take advantage of 9/11 heroes, brain-injured NFL players
Unchecked lawsuit lending is a “stain” on New York’s reputation
ALBANY, NY – An op-ed by former Georgia Attorney General Thurbert Baker and Lawsuit Reform Alliance of New York (LRANY) Executive Director Tom Stebbins published in today’s Times Union highlights the necessity for both houses of the New York State Legislature to pass consumer protection legislation that would cap interest rates on lawsuit cash advances.
Baker and Stebbins say an action filed by New York Attorney General Eric Schneiderman’s office in February against a legal funding group that scammed 9/11 first responders and former NFL players out of lawsuit settlement funds should be a “wake up call” for legislators.
“New York lawmakers cannot let this practice continue,” wrote Baker and Stebbins, “Last year, the New York State Senate unanimously passed a bill subjecting lawsuit loans to existing consumer lending protections, and existing caps on interest rates…The New York State Assembly should follow Attorney General Schneiderman’s lead, regulate lawsuit loans, and ensure that injured New Yorkers are not victimized again.”
Baker and Stebbins are members of the advisory board of Progressive Policy Institute’s Center for Civil Justice.
Read the op-ed in its entirety below and HERE
View the Lawsuit Reform Alliance of New York’s explainer video on the issue HERE
Protect consumers from cash advance companies, too
By Thurbert Baker and Tom Stebbins
New York Attorney General Eric Schneiderman last month filed a complaint against a lawsuit cash advance firm for allegedly engaging in predatory lending practices. RD Legal Funding stands accused of shamefully taking advantage of 9/11 first responders and brain-injured NFL players by offering high interest advances on expected payouts from legal settlements.
Schneiderman’s filing should be wake-up call to lawmakers in Albany. To ensure more New Yorkers do not fall victim, New York desperately needs to pass legislation to apply existing consumer protection laws to these cash advance companies.
The fact is, “crash cash” lawsuit lenders have operated in the shadows, outside the purview of New York’s consumer lending laws, for too long. These lenders skirt consumer protections by calling their products “investments” rather than “loans,” and this allows them to charge annual interest rates that would make a loan shark blush. The lawsuit cash advance industry should play by the same rules as every other company that lends money.
You may have seen the late-night ads promising “quick cash” for your lawsuit. These ads are careful never to say the word “loan,” so the lenders may continue their farce and sidestep New York law. These fast-cash offers take advantage of the most vulnerable consumers — people who have already been injured.
Take the case of Joseph Gill, a Brooklyn resident who borrowed $4,000 for medical bills while his lawsuit arising from alleged police brutality was in court. By the time the case settled five years later, Joseph owed $116,000 on his loan.
Or the situation highlighted in the complaint by the attorney general: a first responder on the ground on 9/11 was advanced $18,000 while she waited for her settlement. After six months, she owed $33,000 — an outrageous 83 percent increase in less than a year.
New York lawmakers cannot let this practice continue. New York is the financial capital of the world, and the unchecked practice of lawsuit lending is a stain on the state’s position as a steward of the world’s finances. It is an industry that thrives on the victims who are most in need of assistance. States across the country have subjected these predatory loans to existing lending laws, and New York should do the same.
Last year, the state Senate unanimously passed a bill subjecting lawsuit loans to existing consumer lending protections, and existing caps on interest rates. In a stunning illustration of rarely seen bipartisanship, senators on both sides of the aisle came together to close the lawsuit lending loophole. Unfortunately, the Assembly failed to pass the bill, and so another year has gone by and New Yorkers continue to be victimized by this practice.
The Assembly should follow Schneiderman’s lead, regulate lawsuit loans, and ensure that injured New Yorkers are not victimized again.
Thurbert Baker and Tom Stebbins serve on the advisory board of the Progressive Policy Institute’s Center for Civil Justice. Baker is a former Georgia attorney general. Stebbins is the executive director of the Lawsuit Reform Alliance of New York.