RD Legal Funding LLC is a prominent name in the lawsuit funding industry. The federal and state authorities have accused it of charging 250 percent interest on loans in the 9/11 Fund. it is alleged that the firm received applications from first responders of the 9/11 incident for lawsuit funding, and they were provided with the loans. In addition, the firm did not accept any wrongdoing and claimed that it had functioned according to the law. Finally, the State and Federal authorities settled the case for just $1.
According to the allegations framed against the firm, the first responders of the 9/11 incident, including paramedics and other first responders, had approached the firm for lawsuit advances. These individuals agreed to pay a specific amount from the fund allocated to them in the Congress-established fund. The claim is that the firm has charged 250 percent interest, violating the New York State Law as New York law criminalizes loans with annual rates above 25%. In view of these allegations, the regulators were demanding damages and penalties, including $5,000 per violation of New York Consumer Protection Law.
In response to the allegations of law violations, the funding company argued that the financial arrangement between the first responders and the firm was not a loan but a different financial arrangement. In this arrangement, the firm provided non-recourse funding, and the responders agreed to pay a specific percentage. Hence, it is not a loan but a sale of legal receivables and the Consumer Finance statutes governing the loans are not applicable.
The funding company also agreed not to collect $600,000, which the plaintiffs owed under the contract as part of its settlement with the New York Attorney General’s Office and the U.S. Consumer Financial Protection Bureau.
Finally, RD is losing $600,000 in investment money given to these plaintiffs, money they don’t have to pay back.