Supporters say a new bill in the Texas Legislature would help protect consumers and regulate a quiet but burgeoning industry.
House Bill 1595 from Rep. Doug Miller (R-New Braunfels) would regulate the growing industry of lawsuit lending. Lawsuit lending companies provide loans to plaintiffs who need money while waiting on a settlement. But many of these loans come with high interest rates, some as high as 150 percent.
The bill would place regulations on lawsuit lending companies similar to those that banks and other lenders face. That includes making the lending companies subject to the state finance code, and requiring disclosure to courts during trials.
Miller said his bill would make the industry more transparent and fair to consumers.
“We are not saying that these lenders can’t operate in Texas,” Miller said. “We are saying if they are going to do business, that are going to operate in a manner that is fair to our consumers.”
Lawsuit lending companies are setting up shop in states across the nation. Former Georgia Attorney General Thurbert Baker said the way Texas handles this issue could influence other states.
“Because Texas is such a big state, an important state, you’ll help lead the way around this county as others take a look, other legislative bodies take a look at this issue,” Baker said.
Miller added that an outright ban on these companies is not an option.
“There is a need for people in certain situations that might need money to help them because of the particular case that they are in,” Miller said. “I would say that a total ban would probably be as anti-consumerism as it is now.”