BATON ROUGE – State legislators are poised again this year to make another go at regulating lawsuit lending practices.
Two bills have been introduced in the Senate that would place restrictions on the industry that provides loans to plaintiffs with pending litigation.
Interest rates on loans by internet-based providers can currently be as high as 150 percent, which the reform proponents say can lead 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.
Last year similar legislation was sponsored by Sen. Dan Claitor, R-Baton Rouge, which would have placed caps on interest rates at 35 percent for lawsuit lenders who are not physically located in the state. That bill passed the Senate 39-1, but did not make it out of the House Commerce Committee.
This year two bills were pre-filed that would provide regulation for the industry.
SB299, sponsored by Dan “Blade” Morrish, R-Jennings, said the lawsuit lending industry is in dire need or regulation.
“You see it on television all of the time, there is really no regulation whatsoever. They can charge any rate any amount they want. They are unregistered, we don’t know who they are. There is no recourse against them,” he said. “So my bill will make a better effort of at least regulating that industry. It’s a consumer protection bill is what it is.”
While Morrish’s bill would only provide fora regulatory structure and disclosure requirements for the loan, but does not set caps on interest rates. The other bill, SB414, sponsored by Edwin Murray, D-New Orleans, would set a cap on interest rates between 21 and 36 percent per year depending on the amount of the loan.
Morrish said he is hopeful that the two bills can be reconciled and a compromise can be pushed through.
“More than likely we will try to sit down and find something (Sen. Murray) and I can compromise on. Bottom line for me at the end of this session I hope to have some regulation on this industry,” he said. “We have none today.”
Murray did not respond for a request for response on this matter.