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Bill > A03225


NY A03225

NY A03225
Enacts the consumer litigation funding act to promote consumer protections related to consumer litigation funding transactions; provides for contract requirements, including that the contract contain a no penalty provision for the prepayment of the funded amount prior to the settlement of their case; makes related provisions.


summary

Introduced
01/24/2025
In Committee
01/24/2025
Crossed Over
Passed
Dead

Introduced Session

2025-2026 General Assembly

Bill Summary

AN ACT to amend the general business law, in relation to consumer litigation funding

AI Summary

This bill enacts the Consumer Litigation Funding Act to establish comprehensive regulations for third-party litigation financing in New York. The legislation creates robust consumer protections by mandating specific contract requirements, including clear language, a ten-day right of rescission, and detailed disclosures about funding amounts and charges. The bill defines consumer litigation funding as a non-recourse transaction where a company purchases a contingent right to a portion of potential legal settlement proceeds, and limits charges to the maximum annual percentage rate applicable to military consumer credit. Key provisions include prohibiting funding companies from interfering with legal claims, banning referral fees, requiring attorney acknowledgments, and mandating that companies register with the state. The law also establishes that consumers are only obligated to repay funding from legal claim proceeds, protecting them from personal liability if their case is unsuccessful. Companies that violate the law may face significant penalties, including forfeiture of their right to recover funded amounts and charges, and potential civil penalties up to $5,000 per violation. The act aims to create transparency, prevent predatory practices, and protect consumers who seek financial assistance while pursuing legal claims.

Committee Categories

Business and Industry

Sponsors (21)

Last Action

referred to consumer affairs and protection (on 01/24/2025)

bill text


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