Unintended Consequences Plague Ward’s Well-Intentioned Legislation

February 2, 2016

By Rob Johnson

As Thomas Edison said, “a good intention, with a bad approach, often leads to a poor result.” This week, Sen. Cam Ward is planning to propose legislation that would eliminate his constituents’ ability to access a lifeline when they’ve been injured in an accident —removing consumer choice and curtailing the free market. The industry-destroying price controls he’s proposing would force legal funding providers out of Alabama. As a former state lawmaker, I understand how hard it can be to strike a balance between protecting consumers and fostering sensible regulations that support free market principles. But, as Sen. Ward stated in his op-ed last week, it can be done—we did it in Oklahoma.

Sen. Ward (Time to Lend the Poor a Hand by Shining a Light on Lawsuit Lending) said “…Oklahoma…passed common-sense regulations [of the legal funding industry] over the past few years.” We agree. A few years ago, as a legislator in the Oklahoma State Senate, I helped pass legislation that brought strong regulations to an industry that had operated without regulation for years.

We did it by making sure that consumers were protected, that they were empowered to make informed financial decisions, and that bad actors couldn’t operate. As a result, people have had access to a highly competitive marketplace so that people can find affordable legal funding if they need it. You should not eliminate choice for people that need more options.

Consumer legal funding serves citizens who are suddenly unable to work, usually due to an accident. It gives them access to money for basic living expenses to pay the mortgage, put food on the table, pay utilities, and put gas in the tank. There is no risk to the consumer as there is nothing to pay back if they lose their case. For some people, that can be a huge relief.

People like Wendy and her family from Gadsden, Alabama who desperately needed a help after her car accident. “It helped me pay some bills I needed to pay and had no other way of doing so. Thank you.” Or for Kim, a Prattfiville resident, who had a bad wreck and was in a financial bind when her insurance company delayed payment on her claim.

The legislation proposed by Sen. Ward is well intentioned, but differs greatly from the common-sense regulation implemented in Oklahoma that brings consumer protections, preserves individual choice for hardworking people, and encourages free-market principles.

At the Alliance for Responsible Consumer Legal Funding (ARC), we support legislation that preserves consumer choice and establishes consumer protections at the state and federal levels. Our coalition is urging lawmakers to stand up for consumers and implement bills that will preserve individual choice while imposing proper regulation of the consumer funding industry. We look forward to working with Sen. Ward and all Alabama legislators in the coming weeks.

Rob Johnson is the Executive Director of the Alliance for Responsible Consumer Legal Funding (ARC). He is a former Republican member of the Oklahoma State Legislature who served in the Oklahoma State Senate representing District 22 and the Oklahoma House of Representatives representing District 59.

 

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