BATON ROUGE – A bill that would have put caps on what detractors call the “predatory lending” practices of lawsuit lenders was defeated in a Louisiana House of Representatives’ committee.
After passing the Senate 39-1, SB166 was handily defeated in the House Commerce Committee by a vote of 11-6.
The bill would have brought interest rates on loans provided to plaintiffs who stand to receive settlements for lawsuits in line with that of payday lenders by capping them at 35 percent. In addition, it would have provided regulation for Internet-based lenders, such as Oasis Legal Finance, that would have put interest rates on par with lawsuit lenders based in the state who already have interest rate caps.
Interest rates on loans by Internet-based providers can currently be as high as 150 percent, which the bill’s proponents said leads plaintiffs to refuse reasonable settlements after getting the loans because they find they would have nothing left over or even find themselves in debt after a settlement.
Despite the bill’s overwhelming success in the Senate, bill sponsor Sen. Dan Claitor (R–Baton Rouge) said he was anticipating a fight in the House.
“When you have people invested in a multi-billion dollar industry buying up lobbyists where they can and where it’s available it’s not that easy,” he said. “Billionaires, not millionaires, are going to come and fight it. Their main resource is money, not reason.”
Melissa Landry, executive director of the Louisiana Lawsuit Abuse Watch, said consumers who take out the loans often do not realize they are going to be charged exorbitant interest rates.
“They target people who are in these desperate financial situations and give them loans with contracts that include all kinds of fees and interest rates and that are very difficult to read and understand for people who are even knowledgeable about these type of things,” she said.