There is a strong connection between third-party litigation funding (TPLF) and excessive litigation instigated by fraudulent digital tactics, according to new joint analysis by the National Insurance Crime Bureau (NICB) and 4WARN.

Outside funders who invested in excessive and opportunistic litigation specifically targeted U.S. insurers at a significant scale, according to their findings.

Research shows that nearly 600 insurers were targeted, with one single funder supporting 13 law firms that unethically targeted 66 different insurers to drive claims litigation and maximize investor returns.

Nearly 75 percent (or 585) of the 783 insurance companies assessed by the non-profit insurance crime fighter and the digital risk intelligence firm from June through August 2025 were directly targeted by opportunistic litigation-related marketing campaigns, many of which were resourced by outside funders.

The assessment details the ways that TPLF can facilitate or encourage fraudulent insurance claims and unethically drive litigation volume.

In some cases, the outside investor may influence case selection, litigation strategy, and settlement posture to maximize return on investment, the NICB said. At its worst, TPLF-facilitated fraud involves outside investors secretly funding litigation that is based entirely on exaggerated, fraudulent, and even fictitious insurance claims.

NICB’s direct assistance in investigating the United States v. Constantine case—a $31 million trip-and-fall insurance fraud scheme facilitated by TPLF that preyed upon the poor and homeless—allowed documentation of the influence of outside funding on driving claims and insurance litigation.

Coordinated networks of unethical lawyers, medical providers, and runners, who coach, recruit, and coordinate plaintiffs, law firms, complicit medical providers, and digital marketing firms, facilitate these fraud schemes. The schemes are frequently exacerbated by digital marketing tactics designed to drive mass litigation.

These tactics include search engine diversion, brand impersonation through cloned portals and misleading domains, and AI-generated content intended to inflate insurance litigation and/or profit from exaggerated claims.

The analysis also found a direct correlation between legitimate law firm advertising and SEO activity, but also identified a separate class of fraudulent digital campaigns that exploit the same channels to drive mass litigation.

“The sheer scope and impact of outside funding in driving insurance claims litigation is even greater than previously suspected,” said NICB President and Chief Executive Officer David J. Glawe. “Excessive litigation and insurance fraud schemes facilitated by third-party litigation funding continue to evolve with more funding pouring in and further aggressive targeting and manipulation of unsuspecting consumers.”

Lawmakers should adopt pro-transparency reforms to help reveal funding sources and combat incentives that attract fraudsters, the joint report stated.

“Once again, we have found evidence of funders targeting insurers and initiating questionable lawsuits within the digital ecosystem,” said 4WARN Chief Executive Officer Todd Kozikowski. “Fraudulent third-party litigation creates a high-risk environment where digital opportunists use sophisticated online tools, automation, and large-scale targeting campaigns to deceive plaintiffs and make their activity appear legitimate.”

While state legislative bodies have begun to adopt reforms to increase TPLF transparency and accountability, more must be done at the state and federal levels to shed light on funders and their impact on the insurance industry and consumers, the NICB and 4WARN added.

“Our initial findings help reveal the threat of TPLF-facilitated fraud on the industry, but that picture will only become clearer as lawmakers adopt TPLF disclosure obligations and insurance carriers continue to diligently flag questionable claims that contain TPLF indicators,” Glawe said. “Reliable intelligence will help us ensure our ecosystem stays ahead of the threat.”

Insurers can monitor the threat of excessive lawsuits and TPLF-facilitated fraud by:

• Expanding their monitoring of digital campaigns, fake sites, and brand impersonations
• Tracking suspicious activity related to mass litigation tactics
• Investigating any known opportunists and tracking suspected opportunistic activity to identify patterns
• Supporting TPLF transparency and reform efforts
• Sharing all insights with NICB