The New York City comptroller said that the growing lawsuit lending industry can lead to more “bogus claims” against the city, reports the New York Post.
City Comptroller Scott Stringer said it is “unacceptable for any company to game the system for an easy buck at the expense of everyday New Yorkers.” A New York University School of Law professor agreed, saying the growing practice will “incentivize people” to sue because lenders think “the city won’t fight lawsuits.”
According to the article, LawCash, one of the companies offering loans to plaintiffs in return for a cut of their settlement, charged interest rates as high as 124 percent. This is almost five times the state’s limit. The company claims their offers are not truly loans, since it is contingent on the plaintiff winning the case.