The CFPB joined with the New York Attorney General and filed a lawsuit against RD Legal Funding LLC and two related entities for allegedly scamming 9/11 responders out of money that was supposed to be used to cover medical expenses and other costs. Allegedly, RD Legal lured its victims into costly advances on settlement payouts and then lied about the terms of the deals. They would charge very high interest rates on the advances and profit at the responders’ expense.
This kind of thing could happen to anyone and you should take care that it does not happen to you. The way the scheme works is that companies like RD Legal contact people after they have received some kind of award or settlement but still have not received the balance of the payout. They advance money, telling people that they will not have to repay the money until the balance of their settlement comes in. In the meantime they charge fees and interest on the advance, which is essentially like a high interest short term loan. When the balance of the settlement is paid to the victim, they then have to repay the settlement company that made the advance — and the fees and interest that accumulated in the meantime can be astronomical.
According to the CFPB, one consumer was awarded $65,000 in a settlement. While she waited for her settlement payment, she was advanced $18,000 from RD Legal. Six months later her award came in but she now had to repay $33,000 back to RD Legal. Imagine — almost double in just 6 months. RD Legal would also allegedly lie to consumers and tell them they could speed up the award process, even though in reality they could have no impact on how fast a settlement would be paid out.