Newly Enacted Law Nixes Consumer Choice & A Financial Lifeline, Says ARC
Led by Big Insurance, Law Takes Away Key Finance Option from Working-Class Families Injured in Accidents
ROSEMONT, Ill., April 6, 2015 /PRNewswire-USNewswire/ -- Arkansas Senate Bill 882 was enacted into law—marking a devastating loss for Arkansas consumers and families struggling financially to make ends meet. The law, titled "An Act to Regulate Consumer Lawsuit Lending" will prevent the people of Arkansas from accessing a vital financial tool, Consumer Legal Funding. By passing this legislation, lawmakers have hurt the consumers of Arkansas rather than protecting them.
Consumer Legal Funding is a product that helps consumers injured in an accident, who have both a pending legal claim and are represented by an attorney, by providing them debt-free, non-recourse financial assistance to help them make ends meet while they wait for a fair settlement to be reached in their case. It is now certain to be unavailable in Arkansas.
The new law was pushed thru the Arkansas General Assembly by the U.S. Chamber of Commerce along with the Arkansas Chamber at the behest of the insurance lobby by misrepresenting the true facts of the product. Big Insurance has an incentive to eliminate Consumer Legal Funding. Without it, many Arkansans will have no choice but to accept their lowball settlement offers. The bridge to their day in court has been removed.
"This outcome is deeply disappointing," said Eric Schuller, president of Alliance for Responsible Consumer Legal Funding (ARC). "Throughout the legislative process, our industry was willing to work with lawmakers to craft a bill that would protect consumers and allow this important product to be offered. Unfortunately, the bill's sponsor was more interested in serving the interests of Big Insurance and putting our industry out of business, than working together."
The strategy of Big Insurance was to hype the new law as "tort reform." But experts who support tort reform say the law is nothing of the kind. "Make no mistake, there are a lot of problems with our tort system. But Arkansas' latest law is not real tort reform," said Jeremy Kidd, a professor of law at Mercer University School of Law and Ph.D. in economics whose work includes extensive scholarship on Consumer Legal Funding and tort reform. Kidd added: "This legislation distracts from real tort reform efforts, commandeering the good name and noble goals of tort reform for narrow, parochial gain. It halts a practice that simply allows economically disadvantaged victims to pay their bills while they either negotiate or litigate their claims."
Dan Greenberg, president of the free market and tort reform advocacy group Advance Arkansas Institute said: "This law is a case of forcing a square peg into a round hole, and that is very inadvisable when it comes to financial regulation." Pointing to the effects, Greenberg said: "This law is poised to make history, albeit a dangerous and destructive kind."
The Alliance for Responsible Consumer Legal Funding (ARC) represents a coalition of consumer legal funding companies, service providers, academics, and other industry supporters. It works at the state and federal levels to ensure the proper regulation of the legal funding industry in the United States. ARC aims to accomplish this mission by advocating at the state level for rules containing appropriate pricing and a high degree of consumer protection—including adequate licensing and disclosure requirements, and suitable limitations on fees—and at the federal level by working with policymakers to help ensure the alignment of federal and state regulatory efforts affecting the legal funding industry. For more information, visit www.ARCLegalFunding.org.
SOURCE The Alliance for Responsible Consumer Legal Funding (ARC)
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