Banking and Finance Law Daily CFPB, New York sue settlement advance companies
Tuesday, February 7, 2017

CFPB, New York sue settlement advance companies

By Richard A. Roth, J.D.

RD Legal Funding, LLC, two affiliated companies, and the companies’ owner misled World Trade Center attack first responders and professional football players into expensive advances on benefits to which they were entitled, according to the Consumer Financial Protection Bureau and New York Attorney General Eric Schneiderman. The company mischaracterized extensions of credit as assignments of future payment rights, misled their victims into repaying far more than they received, and collected interest that exceeded New York usury laws, the two agencies allege in their complaint.

The CFPB described RD Legal Funding as "a company that offers advances to consumers entitled to payouts from victim compensation funds or lawsuit settlements." The company is charged with having used false claims to take advantage of police officers, firefighters, paramedics, and other emergency response personnel who now are suffering from cancer, respiratory illnesses, and post-traumatic stress disorder. These individuals were awarded assistance through a congressionally-established fund. Former National Football League players who are suffering from Parkinson’s or Alzheimer’s diseases or chronic traumatic encephalopathy and are entitled to payments from a class action also were targets of the scheme, the bureau said.

Misrepresentations. According to the bureau and New York AG, the companies used "confusing contracts" to prevent the individuals from understanding the terms and costs of the transactions. The companies also lied to the individuals by telling them the companies could secure their payouts more quickly, misrepresented how quickly they would receive payments from the companies, and collected interest at any illegal rate.

These actions violated the Consumer Financial Protection Act ban on unfair, deceptive, or abusive practices, New York usury laws, and other state consumer financial protection laws, the complaint says.

Neither the agencies’ press release nor their complaint state a specific amount the companies are said to have taken from the individuals other than alleging that it was millions of dollars. However, the complaint describes one individual who repaid $33,800 for a six-month, $18,590 loan and another who repaid $63,636 for a three-month, $35,000 loan. The agencies allege that the companies often collected amounts more twice than it lent.

Companies: RD Legal Finance, LLC; RD Legal Funding, LLC; RD Legal Funding Partners, LP

MainStory: TopStory CFPB EnforcementActions NewYorkNews StateBankingLaws UDAAP

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