If HB 160 sponsored by Rep. Chris Pringle, R-Mobile, becomes law, consumer lawsuit lenders would be required to obtain licensing from the State Banking Department.
Pringle’s bill, which was substituted in committee, goes to the Senate for consideration. The Senate version, SB 68 sponsored by Sen. Cam Ward, R-Alabaster, was on the Senate calendar.
“We applaud the House voting to approve the bill and look forward to a successful conclusion in the Senate,” said BCA President and CEO William J. Canary.
As part of its 2015 State Legislative Agenda’s Judicial and Legal Reform, the BCA supports efforts to provide meaningful regulation in order to protect the interests of consumers and the public.
Canary on April 1 testified at House and Senate public hearings in favor of both bills. He was joined by former Georgia Attorney General Thurbert Baker who appeared on behalf of the U.S. Chamber of Commerce’s Institute for Legal Reform.
Consumer lawsuit lending is the unregulated practice of loaning money at exorbitant interest rates to plaintiffs who could potentially receive large settlements or judgments. The plaintiff must repay the lender if any settlement or judgment is received at an interest rate that can exceed 200 percent.
This practice targets a vulnerable population, introduces a third-party’s interests into the attorney-client relationship, and slows down and increases the cost of litigation for both plaintiffs and defendants.
“Simply put, the practice of consumer lawsuit lending incentivizes the filing of lawsuits and inserts a third-party’s interest into the attorney-client relationship,” Canary said. “Businesses spend an exorbitant amount of money dealing with lawsuits, which at the end of the day hurts the consumer.