CFPB and NY AG act against companies that cheated 9/11 victims

The CFPB has announced it has joined the New York Attorney General in taking action against RD Legal Funding, two related entities, and the companies’ founder and owner, Roni Dersovitz, to resolve their claims that defendants engaged in deceptive and abusive acts or practices under the Consumer Financial Protection Act (CFPA) in connection with offering cash advances to people on their settlement payouts from victim-compensation funds.

The harmed consumers are entitled to payments from a compensation fund established for injured 9/11 first responders, known as the James Zadroga 9/11 Victims Compensation Fund. If entered by the court, the proposed settlement will provide more than $600,000 in debt relief for consumers, bar the defendants from doing business with any potential recipients of governmentally created 9/11 victim-compensation funds, and impose a $1 civil money penalty.

RD Legal Funding, RD Legal Finance, and RD Legal Funding Partners are non-bank entities headquartered in Cresskill, New Jersey. Together with Roni Dersovitz, they are in the business of, among other things, offering to advance funds to consumers who are entitled to receive compensation under a settlement fund or judgment.

On February 7, 2017, the CFPB and the New York Attorney General filed a complaint against the defendants, and an amended complaint on July 14, 2022, alleging that the defendants made misrepresentations to potential borrowers and engaged in abusive practices in connection with cash advances on settlement payouts from victim-compensation funds. RD Legal provided consumers who were entitled to future payments from victim-compensation funds lump-sum advances in exchange for the consumers’ promises to repay larger amounts later. By doing so, RD Legal made misrepresentations and otherwise interfered with consumers’ ability to understand the transactions. Although RD Legal mischaracterized them as “assignments,” these transactions were not valid assignments, but in fact offers to extend credit or extensions of credit. Specifically, the joint complaint alleges that defendants.