RD Legal Funding, LLC is seeking to dismiss the lawsuit filed against it, two of its affiliates, and their individual principal in February 2017 by the CFPB and the New York Attorney General in a NY federal district court. It alleges that a litigation settlement advance product offered by the defendants is a disguised usurious loan. Notably, the complaint offered that the transactions violated New York usury laws. They were falsely marketed as assignments rather than loans. Moreover, they could not be assignments because the underlying settlements expressly prohibited assignment of claimant recoveries.
In the complaint, both the CFPB and the NY AG asserted deception and abusiveness claims under Sections 1031 and 1042 of Dodd-Frank. In addition to alleged violations of state civil and criminal usury laws (which were the predicate for one of the CFPB’s deception claims), the NY AG’s state law claims included alleged violations of NY’s UDAP statute.
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Summarized by Natalia Tsar.