The Consumer Financial Protection Bureau and the New York Attorney General filed a complaint against the litigation funding company RD Legal in the Southern District of New York this week.
At issue is RD’s practice of providing cash advances to people awaiting payments under statutory compensation funds and settlement funds. Cash advances are up-front payments which the consumer agrees to repay upon receipt of its settlement award. The CFPB claims in this case consumers were damaged by repaying amounts significantly larger than the advances they received.
The complaint alleges that RD markets the advance as an “assignment” which is really a loan that violates, among other laws, New York state usury laws and the Consumer Financial Protection Act. While there is still a question of the CFPB’s jurisdiction over RD’s cash advances, this case is significant. It suggests CFPB intentions to attempt to regulate the booming litigation finance industry, which has stayed relatively under the radar.
This is one of three cases CFPB has filed against companies providing cash advances to those awaiting settlement funds.
View full post at In.Reuters.com
Summarized by Meghan Hallinan