HB 422 Summary

• Creates the "Delaware Consumer Legal Finance Regulatory Act" to regulate transactions where consumers assign contingent rights to legal claim proceeds in exchange for immediate funds.

• Requires all consumer legal finance contracts to include specific disclosures in 12-point bold type: total amount paid to consumer, itemized one-time fees, payment schedule in six-month intervals for 36 months, and annual percentage rate of return with compounding frequency.

• Grants consumers the right to cancel contracts within five business days of receiving funds without penalty, requiring return of full disbursed funds via uncashed check or certified mail.

• Prohibits Consumer Legal Finance Companies from paying referral fees to attorneys or service providers, entering transactions with class action plaintiffs, or offering credit insurance financed through the transaction.

• Designates violations as unlawful trade practices enforceable by the Attorney General under existing consumer fraud statutes; establishes that attorney liens and healthcare provider liens take priority over Consumer Legal Finance Company claims.