New York State Senate to Hold Hearing on Consumer Legal Funding Industry
On May 16th, 2018 the New York Senate Standing Committee on Consumer Protection will take up the issue of Consumer Legal Funding or Lawsuit Lending as it is posted in the Committee Calendar. This is an important issue for the consumers of New York in that it could aid in determining how the State of New York will regulate the Consumer Legal Funding industry in the future.
At issue here is the best possible approach.
The Senate has a bill – S3911 – that attempts to regulate Consumer Legal Funding transactions as loans, and subjects the industry to the usury statute. The problem with that approach is that this product is not a loan, it is a purchase of an asset. Courts around the country have stated it is not a loan, including in Georgia and even New York in the RJC Funding case. In fact no state has classified this product as a loan in statute, as was illustrated in our recent brief on the topic in Georgia.
We feel that the best way to regulate this industry is the way the Assembly is with bill A8966. His legislation is similar to legislation that has passed in several states, such as Oklahoma, Nebraska, Ohio, Vermont and Maine, where the consumer knows EXACTLY what the terms and conditions are in the contract. They are given clear notice and disclosure, with nothing hidden. This type of regulation allows the industry to survive and aid consumers in their time of need.
There have been issues within the industry which the media has sensationalized of late, but there is a clear difference in the pieces of legislation now being proposed. The Senates bill will do one thing: eliminate the industry from the State of New York, and harm all of the consumers who rely on it, as illustrated by the consumer comments found here. Whereas the bill in the Assembly will bring stability to the industry, give consumers a clear path to understanding the transaction, allow them to understand the terms and conditions from day one, and allow the industry to function while eliminating the issues brought up by the media.
So the New York Legislature has two choices before it: abolish a product that provides consumers the ability to attain a fair and equitable settlement, or pass legislation that protects consumers and allows this vital product to be there for consumers like Tallulah from St Albans, who said: “I needed the money to pay for prescriptions and transportation fees – additional costs I incurred because of the car accident.”
So the New York Legislature has two choices before it: abolish a product that provides consumers the ability to attain a fair and equitable settlement, or pass legislation that protects consumers and allows this vital product to be there for consumers like Tallulah from St Albans, who said: “I needed the money to pay for prescriptions and transportation fees – additional costs I incurred because of the car accident.”
We hope the New York Legislature makes the right choice for the constituents they represent.
Eric Schuller
President
Alliance for Responsible Consumer Legal Funding