Lawsuit loan companies are declared usurious

An important letter in today’s Daily News reinforces stuff I’ve written about companies that prey on plaintiffs engaged in contingency lawsuits:

Shark patrol

Albany: Kudos to the Daily New Editorial Board for rightly identifying payday loans as usury. (“Lowest of the loans,” April 30). However, there is another form of predatory loan that Gov. Cuomo & Co. should address if they want to crack down on usury. That is the practice of lawsuit lending. Lawsuit lenders mischaracterize their loans as investments, allowing them to duck usury laws and charge consumers annualized interest rates in excess of 100%. In addition to hurting consumers, lawsuit loans fund the most speculative lawsuits, leading to more litigation in New York, already the lawsuit capital of the world. We applaud Cuomo and Department of Financial Services Superintendent Benjamin Lawsky for fighting against predatory loans. But as long as lawsuit loans are classified as investments in New York, there is still more work to do.

—Thomas B. Stebbins, Lawsuit Reform Alliance of New York

I should say that having looked at the web site of the Alliance, which I’ve linked above, I do not support all of their goals. But take a look and decide for yourselves.

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