A legal-funding company is being accused of targeting 9/11 first responders and allegedly scamming them out of millions of dollars.

The Consumer Financial Protection Bureau and the New York Attorney General filed a lawsuit against RD Legal Funding on Tuesday, alleging that it used deceptive tactics to get 9/11 responders to enter into costly advances on settlement payouts.

RD Legal Funding offers advances to consumers who are set to get payouts from compensation funds or lawsuits. The CFPB claims the company targeted 9/11 responders, including firefighters, paramedics and police officers who were eligible to get fund payouts to help cover their medical costs and lost income.

RD Legal Funding called the lawsuit and statements from the CFPB and New York Attorney General "outrageous" and "without merit."

The U.S. government created the Zadroga Fund to pay billions of dollars to first responders, many of whom suffer from severe injuries and illnesses during their time working in the toxic rubble following the country's worst terror attack.

There can be a lag period for when someone is approved to receive funds and when the money is awarded. During that delay, the government claimed in its lawsuit that RD Legal Funding would "swoop in with a 'deal,'" and offer customers an up-front payment that would get repaid when they received their awards.

Related: Dodd-Frank author Barney Frank: Killing it could fuel new 'crash'

But for some customers, those up-front payments allegedly ended up being very expensive.

The government watchdog claimed RD Legal Funding lied about the terms of the deal and that some consumers would repay more than twice the amount advanced to them.

According to the government, the company used "convoluted contracts" that hindered consumers from understanding the terms and conditions of the transactions.

"RD Legal used deceptive tactics to charge unlawfully high interest rates for advances on settlement and compensation funds, allowing them to profit off the backs of these unsuspecting individuals," said New York Attorney General Eric Schneiderman in a release Tuesday.

The lawsuit detailed the experience of one first responder: She had been awarded $65,000, from the Zadroga Fund and while she was waiting for payment, she received an $18,590 advancement from RD Legal Funding. She later had to repay $33,800. The suit didn't identify the woman.

Related: Wall Street has a powerful seat at Trump's table

The government argued the RD Legal Fundng payments are loans, and loans made in New York that have interest rates higher than 16% are void. The government claimed that the effective interest rates on some of the re-payments in New York to RD Legal Funding ranged from 18% to more than 250%.

"Our lawsuit seeks to end this illegal scheme and get money back to those entitled to receive it," said CFPB Director Richard Cordray in a release.

But RD Legal Funding insists the arrangements are not loans.

"The claims made today by the CFPB and NYAG misunderstand and falsely characterize clear documents with those parties as 'loans,' and falsely state that RDLF is 'scamming' the affected parties when it did nothing more than provide immediate liquidity -- in the form of an arm's length transaction -- to people who voluntarily sought the benefits of early funding," said David Willingham, counsel for RD Legal in a statement to CNNMoney.

RD Legal Funding sued the CFPB and NY Attorney General last month for "engaging in an inappropriate overreach of their legal authority," according Willingham.

The government's lawsuit also claimed that RD Legal Funding lied to clients by saying it "cuts through red tape" and helps consumers get their award or settlement payments faster. "RD does not assist consumers in completing these steps, nor does it take or have the ability to take any additional steps to obtain payments from the Zadroga Fund more quickly than they would otherwise be made," stated the lawsuit.

The government stated that RD Legal Funding targeted former NFL players who suffer from neurodegenerative diseases who were entitled to payments from a class-action lawsuit.

The CFPB did not detail the exact number of victims, but did estimate the damages are in the millions of dollars.

The lawsuit was filed against two entities related to RD Legal Funding, which is based in New Jersey, and the companies' founder and owner Roni Dersovitz.