Sunday, December 08, 2013
Ind. Law - "‘Lawsuit loans’ face more scrutiny"
Niki Kelly reports today in the Fort Wayne Journal Gazette:
Indiana lawmakers are eyeing a growing industry that advances money to plaintiffs waiting for a lawsuit settlement, sometimes at a high cost.There is much more to read in this lengthy story.
Indiana currently has no regulations for so-called lawsuit lending. Rep. Matt Lehman, R-Berne, pushed a bill last year to impose some restrictions, but it failed under lobbying pressure by the industry.
He is trying a new tack in 2014, bolstered by the Indiana Chamber of Commerce tapping it as a top legislative priority.
“There is probably a necessity for this industry. People need to pay bills. At the same time, there is desperation here and consumers are making bad choices,” he said. “A 100 percent return is ridiculous. We don’t want to stop free-market enterprise, but when you begin to take advantage, we need to step in.”
He said he considers the practice predatory lending, though some don’t agree with him.
As chair of the House Insurance Committee, the issue came to Lehman’s attention because the cases usually involve insurance settlements. For instance, someone is injured in a car accident and sues. But in the meantime, that person needs need cash to pay rent because he or she can’t work.
So the person goes to a third-party company that reviews the case and agrees to advance money that will be repaid – with additional fees – when a settlement is reached.
Most of these companies are nationwide, and the industry has been around for 10 or 15 years.
Lehman said no states have banned the practice. And he is focused on regulations, starting with having companies register with the state.
Posted by Marcia Oddi on December 8, 2013 09:50 AM
Posted to Indiana Law