The third party litigation industry - also known as "lawsuit lending" or "lawsuit cash advance" - is not currently subject to New York's consumer protection laws. . Proposed legislation aims to change this and protect consumers from near usurious interest rates.
Right now, lawsuit cash advance firms are able to classify these "loans" as "investments" and avoid being governed by existing consumer protection laws. There are numerous examples of injured parties who were charged sky-high rates and having to turn over the majority of their settlements or jury awards.
The proposed legislation would fix this issue by subjecting these loans to interest rate caps and root out conflicts of interest between lenders and lawyers by prohibiting attorneys from receiving referral fees.
Please contact your state legislators to support this measure, address the issues surrounding these contracts, and make sure more New Yorkers don't become victims of the lawsuit cash advance industry.