DENVER (Legal Newsline) - Colorado Attorney General John Suthers announced on Tuesday that he has filed a counterclaim against a number of companies that allegedly took part in deceptive trade practices against Colorado consumers.
The Northbrook, Ill.-based Oasis Legal Finance and its sibling companies and the Brooklyn, N.Y.-based LawCash allegedly advanced approximately 400 Colorado residents money ranging from $500 to $5,000 as they waited for legal settlements of judgments to come through. The companies allegedly charged substantial fees on these loans, ranging from $59 to $165.
LawCash allegedly required customers to pay an interest rate of 42 percent on any money advanced.
Both Oasis Legal Finance and LawCash customer agreements included "case servicing" or "case review" fees.
"Settlement-advance companies are a growing issue in Colorado and across the country," Suthers said.
"Despite their labeling and assurances to the contrary, these companies are making loans. As such, Colorado law requires proper disclosures to consumers as well as full licensure of lenders, so consumers know that the companies they are dealing with are following the rules."
It is customary for settlement-advance companies to require customers to pay a multiple of the fronted funds with factors such as length of time between the loan being made and the settlement funds coming through being considered. Oasis Legal Finance, however, charged its customers APRs ranging from 60 to 125 percent and LawCash allegedly charged 65 to 215 percent, Suthers says.
Under Colorado law, any company that offers loans with an APR higher than 12 percent must be properly licensed. None of the parties named in the suit were, Suthers says.
In October, Oasis Legal Finance and LawCash filed a lawsuit against the state alleging that it was improperly trying to regulate its actions by making them adhere to the Uniform Consumer Credit Code.