HF4407 - Consumers in Crisis Protection Act Summary

• Establishes new Minnesota Statutes chapter 45B to regulate consumer legal funding companies that provide cash advances on lawsuit settlements or judgments up to $400,000.

• Requires consumer legal funding companies to register with the Commissioner of Commerce, pay a $1,000 nonrefundable fee, and provide proof of financial stability including a $50,000 surety bond or letter of credit.

• Limits charges to 18% upon funding plus 3.5% servicing charge, with the same charges recurring every six months for up to 36 months, plus a $250 document preparation fee.

• Establishes consumer protections including plain-language contracts, 10-day rescission rights, attorney acknowledgment requirements, and nonrecourse obligations (consumers owe nothing if they don't win their case, except in fraud cases).

• Prohibits consumer legal funding companies from paying referral fees, influencing legal claims, providing legal advice, or selling contracts to third parties; prohibits attorneys from having financial interests in funding companies; authorizes civil penalties up to $10,000 per violation.