For Immediate Release

          Contact: Elisa Rivera

          (209) 726-5495 Elisa.Rivera@sen.ca.gov

Senator Anna M. Caballero Proposes Stronger Consumer Protections Against Predatory Lawsuit Lending

SB 581, The Predatory Lawsuit Lending Prevention Act would safeguard consumers in lawsuits

SACRAMENTO – Senator Anna Caballero (D-Merced) introduced SB 581, which will protect Californians from predatory lawsuit lenders, while safeguarding borrowers’ access to important financial resources.

Litigation financing, the practice of providing a loan to individuals that expect to receive financial compensation from a lawsuit to cover their damages and injuries has become more common-place. The practice of Litigation financing has become a multibillion-dollar global industry and has attracted private equity and major financiers who profit off the lawsuits of others, but also become hidden parties to court cases in ways that often impact a consumer’s rights, potential settlements, and the length of the case. There are currently no regulations in place to protect consumers.

Lenders make an average 68% profit on loans, while there are victims making next to nothing or at times even ending with debt. These abusive funding practices should be disclosed. Lawsuit lending disproportionately hurts vulnerable individuals who are unbanked, underbanked and without a financial safety net.

“Without regulation and transparency, people who are victims of injustices or mistreatment get victimized again. If Third Party Litigation Financing is to be part of our legal system, its use should be regulated and transparent. SB 581 will provide oversight in the third party litigation financing process to protect consumers from those seeking to profit from the plaintiff’s injuries.” – Senator Anna M. Caballero (D-Merced)

"As a coalition committed to justice and equity for all, we stand in strong support of SB 581. For far too long, both the legal system and the financial services industry have targeted low-income Californians, particularly those from communities of color. SB 581 will cap predatory lending practices and protect vulnerable Californians seeking financial help during legal disputes.” – Linette Lomeli, executive director, Madera Coalition for Community Justice

Specifically, this bill would:

1. Require lenders to register with the state of California.
2. Limit the interest rates lenders can charge for litigation financing.
3. Require an attorney to notify and file with the court any existing agreement with a third-party lender who has a financial interest in the outcome of the case.

For interviews or inquiries, please contact Elisa Rivera (209) 726-5495 

Senator Anna M. Caballero represents the 14^th Senate District, composed of majority portions of Merced, Fresno and Madera Counties.

* Senator Anna M. Caballero serves as the Interim Representative for the Salinas Valley and San Benito County until 2024 when a newly elected Senator will assume the district

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