A bill geared toward regulating the practice of lawsuit lending in Texas passed the House Judiciary and Civil Jurisprudence Committee on Tuesday.

House Bill 1595, authored by Rep. Doug Miller, R-New Braunfels, in its committee substitute form, would also impose a cap on the fees and interest that such lenders could charge.

The bill is garnering support from a variety of groups, including the Mexican American Chamber of Commerce, Texas Association of Business (TAB), Mexican American Bar Association of Houston, Hispanic Bar Association of Austin, National Federation of Independent Business (NFIB-Texas), Citizens Against Lawsuit Abuse (CALA) and the League of United Latin American Citizens (LULAC).

"Lawsuit lenders prey on consumers when they are at their most vulnerable," TAB President and CEO Bill Hammond, and Baldo Garza, LULAC National Southwest vice president, said in a joint letter. "They offer quick cash to plaintiffs in lawsuits in advance of monetary legal settlements."

By passing the bill, Texas lawmakers would send a clear signal: your business is welcome in Texas but you are going to face the same proper disclosures, regulations and consumer protections as conventional loan makers and banks, the letter states.

“Lawsuit lenders prey on people when they are at their most vulnerable,” said Jennifer Harris, CALA spokesperson. “They offer quick cash but often leave their customers with nothing following lengthy litigation or, worse, in debt to the lawsuit lender.  They claim they are filling a consumer need, but by charging fees and interest that are excessive by any standards, the only clear thing they are filling is their own pocketbooks.”

The industry is growing rapidly in Texas, and is not held to the same standards as other lenders, Harris noted.

“We cannot ignore this growing, and often predatory, industry,” Harris said. “Texas consumers deserve the protections they will receive under HB 1595. Consumers should speak loud and clear on this issue, and urge their lawmaker to support this important bill.”

The measure is now before the Calendars Committee, which will determine when and if the measure will come before the full House of Representatives for a vote.

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