CFPB and New York Attorney General Take Action Against Companies that Cheated 9/11 Victims

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) and the New York Attorney General today took 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 the James Zadroga 9/11 Victims Compensation Fund. The fund provides compensation for any individual (or a personal representative of a deceased individual) who suffered physical harm or was killed as a result of the September 11, 2001, terrorist attacks or related construction, clean-up, and debris removal efforts. Compensation is also available for people who lived, worked, or went to school in the exposure zone. 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:

• Misrepresented the terms of the transaction: Defendants misrepresented to consumers that RD Legal’s contracts created valid and enforceable assignments of their payment proceeds when, in fact, the assignments were not valid and enforceable. In doing so, they deceived consumers, interfering with their understanding of the terms, costs, and conditions of the transactions, and preventing them from meaningfully evaluating the cost of RD Legal’s transactions or comparing them to other alternatives.
• Lied about RD Legal’s services: Defendants misrepresented to consumers that RD Legal could “cut through red tape” to obtain their anticipated payments from claims administrators faster than would otherwise be possible. In fact, RD Legal had no authority or ability to affect the administration of payments by claims administrators.
• Deceived consumers as to when they would be paid: Defendants mispresented to consumers when they would receive funds from RD Legal. In many instances, RD Legal told consumers they would receive promised funds from RD Legal shortly after entering into a contract but failed to deliver the funds when promised.
• Collected money not owed: RD Legal collected on contracts that were void, or where no payment was due, because the assignment in RD Legal’s contract was in fact not valid and enforceable, or because RD Legal’s product was in fact a loan with an interest rate that violated state usury law.

Enforcement Action

Under the CFPA, the CFPB has the authority to take action against institutions violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts or practices. The joint complaint alleges that the defendants violated the CFPA’s prohibition on deceptive and abusive conduct.

If entered by the court, the proposed order will require defendants to:

• Provide debt relief to consumers: Defendants must provide over $600,000 in debt relief to harmed consumers.
• Stop doing business with recipients of 9/11 victim compensation funds: Defendants are permanently barred from doing business with the Zadroga Fund recipients or any other potential recipients of governmentally created 9/11 victim compensation funds.
• Pay a $1 penalty: Defendants must pay a penalty to the CFPB, which will be deposited into the CFPB’s victims relief fund. Imposition of the $1 civil money penalty allows consumers in the case to potentially obtain compensation from the victims relief fund. The CFPB will work promptly to provide full redress to eligible harmed consumers from this fund, assuming continued availability of money in the fund.

Read today’s proposed order.

Consumers can submit complaints about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees of companies who they believe their company has violated federal consumer financial laws are encouraged to send information about what they know to whistleblower@cfpb.gov.

The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.