Show simple item record

Consumer Litigation Funding

dc.contributor.authorSkiba, Paige Marta
dc.contributor.authorXiao, Jean
dc.identifier.citation80 Law and Contemporary Problems 117 (2017)en_US
dc.descriptionarticle published in a law journalen_US
dc.description.abstractThis article provides a side-by-side comparison of payday lending and consumer litigation funding in order to aid policymakers. Funding has similarities with payday lending because they are both alternative financial services, involve high interest rates, and cater to customers who need money for living expenses. However, they differ in ways that regulators should recognize. Many justify bans on payday lending by pointing to the fact that millions of borrowers every year are getting stuck in an inescapable cycle of interest payments. While legal finance has real costs, funding’s nonrecourse nature prevents consumers from getting stuck in a cyclical repayment of debt. Moreover, prohibitions may not be appropriate at this time because there is little empirical evidence on how funding affects consumer welfare and there is room for interest rates to fall as the industry continues to expand and competition increases among funders. States should take the initiative to partner with financiers to study the effect of this new form of credit on borrowers. Some states have implemented disclosure regulations that mandate that funders itemize the fees, present a repayment schedule, and relay the APR. However, customers do not have the legal expertise or financial sophistication to estimate case duration and to put this information together with funding contract terms to get an accurate sense of where they may end up on a repayment schedule. Thus, financiers should disclose a reasonable approximate repayment amount and date to improve borrowers’ understanding of the costs of nonrecourse advances.en_US
dc.format.extent1 PDF (29 pages)en_US
dc.publisherLaw and Contemporary Problemsen_US
dc.subjectconsumer litigation fundingen_US
dc.subjectconsumer legal financeen_US
dc.subjectalternative litigation fundingen_US
dc.subjectpayday loansen_US
dc.subject.lcshconsumer protectionen_US
dc.subject.lcshlaw and economicsen_US
dc.titleConsumer Litigation Fundingen_US
dc.title.alternativeJust Another Form of Payday Lending?en_US

Files in this item


This item appears in the following Collection(s)

Show simple item record