The Litigation Financing Transparency and Consumer Protection Act establishes a regulatory framework for litigation financing contracts in Iowa, requiring individuals or entities involved in such financing to register with the Secretary of State. The bill defines key terms, mandates the disclosure of essential information for registration, and prohibits practices like charging excessive interest rates and offering referral fees. It also requires clear disclosures in litigation financing contracts, including the consumer's right to cancel and the maximum recovery amount for the financer. Certain entities, such as nonprofit organizations and regulated lenders, are exempt from the bill's provisions.

Additionally, the bill introduces joint and several liability for litigation financers concerning costs or monetary sanctions imposed on consumers and grants the Secretary of State the authority to create rules for regulatory oversight. Any violation of the bill's provisions will render the financing contract unenforceable and may result in penalties for usury if interest rates exceed legal limits. The act 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 initiated on or after that date.