Two of the largest ride-sharing companies in the U.S. are turning up the pressure on state lawmakers to impose stricter regulations on New York's growing lawsuit-lending industry — changes they argue will reduce insurance costs and boost drivers' pay.
Uber and Lyft joined the coalition Consumers for Fair Legal Funding, which relaunched a push Tuesday to rein in unregulated lawsuit lending, or loans to finance litigation paid before reaching a settlement.
The coalition, comprised of businesses and community and social justice groups, wants to establish an interest rate cap on lawsuit loans and mandate more transparency to expose conflicts of interest and improve equity for people who need money while a lawsuit goes through the legal process.
"Without putting in place some commonsense regulations, the lawsuit lending industry will continue to boom, and consumers and hardworking New Yorkers will pay the price," Megan Sirjane-Samples, Lyft's director of public policy, said in a statement.
Lenders frequently target people in low-income and vulnerable communities, and those who do not use banks. As the use of third-party litigation funding increases, it drives up insurance costs, according to a 2022 Insurance Information Institute study.
“Steadily rising insurance costs are the biggest hurdle to keeping rides affordable and paying drivers more,” Sirjane-Samples said. “If we can curb — or better yet, reduce — these costs, the savings are going to go directly back into drivers’ pockets and help lower fares."
Uber is the nation’s largest insurance consumer, according to the coalition, and New York has the second-highest insurance premiums in the nation on average.
“The unchecked lawsuit lending industry is driving insurance costs up, consuming an ever-larger share of fares, and making it harder for drivers to earn a living, Uber's Senior Policy Manager Hayley Prim said. "Lawmakers need to establish some simple rules to reign in lenders and protect hardworking individuals statewide.”