The Louisiana Senate voted 34-1 yesterday in favor of Senate Bill 166 by Senator Dan Claitor (R-Baton Rouge), which seeks to regulate the lawsuit lending industry by imposing a cap on the fees and interest rates that lawsuit lenders can charge Louisiana consumers.
“This is a billion dollar industry which profits off of individuals who are often in desperate financial straits by offering loans with exorbitant interest rates,” said Senator Claitor. “It is my hope that by capping the rates lawsuit lenders can charge, we can provide some measure of relief to vulnerable people who can least afford to be taken advantage of, as well as prevent unnecessary lawsuits.”
Melissa Landry, executive director of Louisiana Lawsuit Abuse Watch added, “Much like a shark drawn to a feeding frenzy by the smell of blood, lawsuit lenders prey on people when they are at their weakest. Using powerful, aggressive advertising tactics, they promise consumers access to quick cash before their lawsuits are settled with seemingly no commitment. But, as is often the case, the devil is in the details. SB 166 will help protect Louisiana consumers and our courts from these lawsuit loan sharks.”
Currently, lawsuit lending companies located in Louisiana are required to be licensed by the Office of Financial Institutions (OFI) and limited to interest rates specified in our consumer credit law. SB 166 seeks to have the same limits on interest rates apply to out-of-state companies.
Former Georgia Attorney General Thurbert Baker, who testified on behalf of SB 166 last week, applauded the Louisiana Senate for taking quick action on bill. “While the lawsuit lending industry wants us to believe the excessive rates they charge are justified because these are risky investments, one industry representative testified that his company loses money on only 10 percent of its loans. Simply put, there is no justification for the hidden fees and sky-high interest rates they charge. I applaud the Louisiana Senate for seeing through their flawed logic and taking this important step to protect Louisiana consumers.”
“With more than a dozen lending companies already operating in Louisiana, the time has come to regulate this questionable industry,” Landry said. “That’s why SB 166 has garnered broad and diverse support from business and legal organizations, including many in the trial bar.”
In addition to the Louisiana State Bar Association, support for this common-sense measure has included the Louisiana Association of Business and Industry, the Louisiana Chapter of the National Federation of Independent Businesses, the Coalition for Common Sense, the U.S. Chamber Institute for Legal Reform and the American Tort Reform Association.
Outside of Louisiana, legislation to regulate consumer lawsuit lending is being considered this year in Texas, Illinois, Indiana, Missouri, Oklahoma, Rhode Island, Kansas and Tennessee.
Louisiana Lawsuit Abuse Watch (llaw.org) is a non-partisan, non-profit, citizen watchdog group dedicated to improving Louisiana’s legal climate. Through community outreach, voter education and grassroots advocacy, the organization works to fight lawsuit abuse, protect legal consumers and promote jury service.
The Coalition for Common Sense (coalitionforcommonsense.com) was established in 2008 to improve the business climate in Louisiana by fighting lawsuit abuse. CCS is comprised of professional associations, companies, and individuals committed to passing legislation in Louisiana that ensures a fair legal climate for both truly impaired individuals and small and large businesses operating in the state.