The proposed Litigation Financing Transparency and Consumer Protection Act establishes a regulatory framework for litigation financing in Iowa, requiring all litigation financers to register with the Secretary of State. This registration process mandates the disclosure of key information, including the legal name and contact details of the financer, and ensures that all related documents are public records. The bill prohibits certain practices by litigation financers, such as paying referral fees and charging excessive interest rates, while also requiring clear disclosures of financing contract terms to consumers.

Additionally, the bill introduces new provisions that hold litigation financers jointly and severally liable for costs or monetary sanctions imposed on consumers, and grants the Secretary of State the authority to create rules for regulatory oversight of litigation financing practices. It stipulates that any violation of the chapter will render the financing contract unenforceable, with potential penalties for usury if interest rates exceed legal limits. The legislation is set to take effect on January 1, 2026, and will apply to civil actions or administrative proceedings involving litigation financers that are pending or commenced on or after that date.