Transaction Fees and Rate Caps

The predetermined amount of the proceeds from the consumer’s legal claim that a CLF company purchases is set forth through a fee schedule. Like most financial services products, the fee schedule is determined by market forces and industry standards. By letting the consumer know, to the penny, the most the CLF Company may be entitled to from the full award amount, the consumer and his/her attorney are better informed and can therefore logically decide if the product is in the consumer’s best interest.

This is accomplished by showing exactly what the purchased amount is in 6 month increments.

CLF transactions present high financial risks for CLF companies because there is no guarantee funds will be repaid. If a claim is not settled or results in a less than positive recovery for the consumer, the CLF Company will not recover its funds.

Providing funding for financially vulnerable consumers is equally as much of a financial risk for CLF companies as it is for automobile insurance companies to insure unsafe drivers. Currently, most states in the U.S. do not place caps on automobile insurance rates, mainly because legislators realize insuring poor drivers is a financial risk for insurance providers and the rates that insurance companies charge should not be mandated.

Currently, Massachusetts is the only state that caps auto insurance rates and their drivers pay the highest rates in the country. Regulating rates on consumer legal funders or the automobile insurance providers impedes businesses from completing legitimate business transactions.