Suit claims legal funding firm misled 9/11 responders, retired NFL players about its cash advances
A company that provides advances to people expecting settlement money misrepresented the terms of its deals to Sept. 11 responders and professional football players with Alzheimer’s disease, a lawsuit alleges.
The suit was filed Tuesday by the Consumer Financial Protection Bureau and New York Attorney General Eric Schneiderman, according to a press release. The defendants are RD Legal Funding, two related entities, and company founder and owner Roni Dersovitz. Publications covering the suit include USA Today and the New York Daily News.
According to the complaint (PDF), RD Legal Funding swoops in to offer a deal to consumers awaiting payment of legal settlement money, lawsuit awards and compensation funds. RD has marketed its products to Sept. 11 first responders entitled to compensation established by Congress, and to retired NFL concussion victims with neurodegenerative diseases who are entitled to settlement money.
The company offers an up-front payment and asks the consumer to repay a “considerably larger” amount when they receive the expected settlement money, the suit says. Often the repayment amount is at least double the amount advanced, the suit alleges.
RD characterizes funds advanced as “assignments” of rights, when the company is actually making an offer to extend credit that is governed by federal law, the suit says. Most of its contracts with consumers do not disclose an interest rate, according to the suit.
In addition, the suit says, RD “falsely claims that it can expedite funding and ‘cut through red tape’; misrepresents when consumers will receive funds; and collects on contracts that are void under state laws or, in the alternative, that function as loans with interest rates that exceed state-law usury.”
“RD’s misconduct thus costs consumers millions of dollars,” the suit says.
The suit alleges deceptive acts, fraud and violation of New York usury laws.
ABA Journal: “Cash Up Front”