Newspaper article Evansville Courier & Press (2007-Current)

Loan Official Warns against Regulating Cash Advances

Newspaper article Evansville Courier & Press (2007-Current)

Loan Official Warns against Regulating Cash Advances

Article excerpt

INDIANAPOLIS - The director of a group of financing companies warned Wednesday that lawmakers "would eliminate this industry from Indiana" should they approve a measure targeting companies that provide cash advances - sometimes at sky-high rates of return - to people awaiting payoffs in personal injury lawsuits. The bill sponsored by state Rep. Matt Lehman passed the Indiana House last week on a 57-39 vote and is now before the Senate. Its key provision would cap at 38 percent the rate of return companies providing such funding to people could claim in Indiana.

Lehman, R-Berne, said he became concerned about what's often called litigation financing after hearing about cases of companies that obtained returns of up to 200 percent from people who received money for them, typically to help them make home or auto payments or foot living expenses.

He said companies providing this type of financing, usually in cases involving auto accidents, falls or product liability, need some level of regulation to prevent potential abuses.

"It really kind of came down to this, everyone agrees - everyone - that someone needs to monitor them because they've kind of been out there doing their own thing, whenever they want, however they want," Lehman said.

"They have no one to report to because they're not regulated by any entity."

His measure would also create a regulatory mechanism within the state Department of Insurance that would include standardized contracts clearly disclosing the terms of the financing and fees for the financing.

The American Legal Finance Association strongly opposes the bill, particularly its 38 percent cap, said Kelly Gilroy, executive director of the New York-based group that has 38 member companies that provide such funding.

"As it is currently drafted it would eliminate this industry from Indiana," she said Wednesday. …

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