Imagine an industry that preys on people when they’re most vulnerable – perhaps dealing with medical bills – and lures them into potential huge debts with promises of “quick cash” and “no risk” loans. Sounds like this type of consumer exploitation should be illegal, right?
Unfortunately, this is exactly the way many “lawsuit lending” companies operate. Here’s how a lawsuit loan works: a plaintiff in a personal injury case, who is hoping for a favorable settlement, takes a lawsuit loan to cover immediate expenses such as car repairs and medical bills. But when the plaintiff finally wins his case and has to pay back the loan, he finds an unpleasant surprise: the company has charged him fees comparable to well over 100 percent in interest per year. The plaintiff now owes much more than he borrowed, and possibly even more than his court award or settlement!
To help bring to life the real dangers of lawsuit loans, we’ve created a “Lawsuit Loan Calculator.” Try out the Calculator to see how much YOU might owe if you were the victim of predatory lawsuit lending.
The Lawsuit Loan Calculator
Find out the real cost of lawsuit loans
*The average personal injury case lasts 2-3 years.
**NOTE: The purpose of this calculator is to illustrate generally how lawsuit loans work, and it is not a loan offer. Further, the calculator is not intended to provide legal or financial advice. The calculations shown are based on typical industry fees and do not represent any specific lawsuit lending contracts. If you are considering a lawsuit loan, consult with your attorney and financial advisor.
Clearly, consumers need and deserve protection from these types of predatory lenders. The sad reality, though, is that most states offer little or no oversight over lawsuit loan companies, leaving them free to exploit citizens through deceptive advertisements that obscure the terms and dangers of the loans. By comparison, lawmakers have almost universally agreed on the importance of protections for consumers regarding traditional loans – for instance, most states cap interest rates for even the riskiest traditional loans at 35 percent or less. If a bank were to charge someone 100 percent interest on a loan, it wouldn’t only be outrageous – it would be illegal!
The bottom line is that predatory lawsuit lenders should not be allowed to exploit vulnerable consumers, particularly when basic consumer-protection policies already exist for their traditional loan counterparts. Cracking down on predatory lawsuit lenders isn’t just good policy – it’s common sense.
Spread the word about the dangers of lawsuit lending – share the calculator with your family and friends to educate them about the real cost of lawsuit loans, and join our Facebook community. Together, we can stand up and fight this predatory practice that helps to fuel more lengthy litigation and directly hurts consumers.