Prominent Construction And Real Estate Groups Support Protecting New Yorkers From Unregulated Lawsuit Lending Industry

Empire State Chapter of the Associated Builders and Contractors (ABC-NYS) and The Real Estate Board of NY (REBNY) Join Consumers for Fair Legal Funding, Citing Concerns of Fraud and Abuse That Drive Up Insurance Costs, Harming Consumers

New York, NY, March 21, 2024 — Consumers for Fair Legal Funding (CFLF), a coalition of community groups, social justice organizations, and business interests across New York State, today announced the addition of two new members: the Empire State Chapter of the Associated Builders and Contractors (ABC-NYS) and The Real Estate Board of NY (REBNY).

Lawsuit lending — also known as third-party litigation funding (TPLF), litigation financing, or car accident loans — has ballooned into a multibillion-dollar industry due to a complete absence of regulation. Unscrupulous lenders charge 100 percent interest or more, leaving those who borrowed against an expected legal settlement owing much or even all their reward. Some end up in debt. 

The impact of TPLF is being felt in the real estate and construction sectors, where New York’s unique-in-the-nation Scaffold Law — which holds contractors and property owners fully liable for injuries sustained by a worker regardless of the worker’s own negligence — has provided fertile ground for fraudulent claims. These claims, and the lawsuit loans issued to those who file them, are contributing to rising insurance premiums, which, in turn, drive up the project costs for much-needed infrastructure and affordable housing projects.

“New York is already one of the most expensive places in the world to build, and Albany’s unwillingness to rein in the unchecked lawsuit lending industry is making a bad situation worse,” said Brian Sampson, president of ABC-NYS. “At a time when critical infrastructure — from roads and bridges to culverts, dams, and sewer systems — are failing across the state and millions of dollars in federal funding have been earmarked to address the crisis, it is far past time for lawmakers to do everything in their power to maximize these investments. That includes reforming the out-of-control lawsuit lending industry to guard against future insurance spikes.” 

“Unchecked lawsuit lending is a significant concern for the real estate industry, as we have seen predatory business practices and frivolous lawsuits result from a lack of regulation,” said Carl Hum, General Counsel and Senior Vice President at REBNY. “Lawmakers need to pass legislation this session that will prevent bad actors from taking advantage of unsuspecting victims. Without reform, insurance costs will continue to rise, making it more difficult than ever to build our way out of the State’s mounting housing supply crisis.”

CFLF was launched in 2022 to push for commonsense regulations that will reform lawsuit lending into an ethical funding stream for people in need of funds. CFLF supports both an interest rate cap on lawsuit loans and the disclosure of loans in the litigation process to increase transparency, exposing potential conflicts of interest and creating a level playing field for all participants. 

The addition of ABC-NYS and REBNY as CFLF members comes on the heels of the coalition’s relaunch at the start of the 2024 legislative session, reinvigorated by the membership of Uber and Lyft. The ride-hailing giants joined CFLF in recognition of data that shows TPLF abuse is contributing to auto insurance costs — something New York drivers, who already pay some of the highest premiums in the nation — can ill afford. 

“Momentum is building in support of reform of an industry that has too long been allowed to operate in the shadows, taking advantage of vulnerable individuals at a time when they’re at their lowest,” said the Rev. Kirsten John Foy, CFLF spokesman and a lawsuit lending victim. “Lawmakers who have made consumer protection a priority in this session need to heed the growing call for lawsuit lending reform to be added to their to-do list before they depart Albany in June.”

To learn more about CFLF and efforts to enact commonsense reforms on lawsuit lending, visit https://fairlegalfunding.org/.

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Consumers for Fair Legal Funding (CFLF):

Consumers for Fair Legal Funding (CFLF) is a statewide coalition working to stop predatory lawsuit lenders, who are targeting of vulnerable New Yorkers, especially people of color. The absence of any regulations or guardrails on the practice has created a burgeoning industry, where large investment firms take advantage of New Yorkers who need financial assistance. CFLF supports commonsense legislation to regulate this industry and create an ethical path forward for lenders and borrowers. To learn more, go to https://fairlegalfunding.org/, like us on Facebook, or follow us on Twitter.