Bill > H925

This bill establishes the Consumers in Crisis Protection Act, which creates a comprehensive regulatory framework for consumer legal funding companies in North Carolina. The legislation defines consumer legal funding as a nonrecourse transaction where consumers can sell a contingent future interest in potential legal settlement proceeds to address personal needs, with strict prohibitions on using funds for litigation expenses. The bill requires consumer legal funding companies to register with the Commissioner of Insurance, pay a $1,000 registration fee, and provide detailed financial documentation. The act mandates that consumer legal funding contracts must be written in plain language, include specific disclosures, and provide consumers with a 10-business-day right of rescission. The legislation caps charges at 25% of gross proceeds, limits charge accrual to 36 months, and prohibits companies from influencing legal claims or making decisions about settlements. The bill also establishes significant restrictions on interactions between legal funding companies, attorneys, and consumers, including preventing referral fees, prohibiting attorneys from having financial interests in funding companies, and ensuring that consumers are not responsible for repayment if their legal claim does not result in sufficient proceeds. The Commissioner of Insurance is granted enforcement powers, including the ability to impose civil penalties up to $10,000 for violations, revoke registrations, and order cease-and-desist actions. The act becomes effective on October 1, 2025, and aims to protect consumers by creating transparent and fair regulations for legal funding transactions.

Budget and Finance, Business and Industry

https://www.ncleg.gov/BillLookUp/2025/H925