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.
Read full article at jdsupra.com
Summarized by Natalia Tsar.
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