The Colorado Attorney General has filed a counterclaim lawsuit against a series of Illinois and New York companies, accusing them of engaging in deceptive trade practices and unlicensed lending.
John Suthers said the companies, which offer “settlement advances” for lawsuits, are a “growing issue in Colorado. Despite their labeling and assurances to the contrary, these companies are making loans. As such, Colorado law requires proper disclosures to consumers, as well as full licensure of lenders…”
Oasis Legal Finance and Law Cash are suspected of advancing roughly 2,400 Coloradans sums of money ranging from 4500 to $5,000 in anticipation of legal settlements or judgments as part of a lawsuit. Oasis charged customers fees of $59 to $165 during the loan process. LawCash required consumers to pay 42 percent interest on money they were advanced.
Settlement-advance companies typically expect their customers to pay a multiple of the fronted funds, depending on the length of time between the loan being made and the settlement funds coming through. In the case of Oasis Legal Finance, consumers paid APRs ranging from 60 percent to 125 percent; in the case of LawCash, the APRs ranged from 65 percent to 215 percent.
Colorado law requires licensure when a business is making loans with an APR greater than 12 percent. Neither Oasis Legal Finance nor LawCash are licensed with the state as required by Colorado’s Uniform Consumer Credit Code.
The Office of the Attorney General’s countersuit follows an October lawsuit Oasis Legal Finance and LawCash filed in Denver District Court alleging that the state was improperly trying to regulate them as lenders under the Uniform Consumer Credit Code.