The proposed "Litigation Financing Transparency and Consumer Protection Act" establishes a regulatory framework for litigation financing in Iowa, requiring litigation financers to register with the Secretary of State and ensuring that all registration documents are public records. The bill defines key terms such as "consumer," "litigation financer," and "litigation financing," and outlines the necessary information for registration. It also imposes strict limitations on litigation financers, prohibiting practices like paying referral fees, charging excessive interest rates, and influencing civil actions. Additionally, it mandates that litigation financing contracts include clear disclosures about cancellation rights, maximum recoverable amounts, and the rights retained by consumers and their legal representatives.

Furthermore, the bill introduces exemptions for certain organizations, such as nonprofit entities and regulated lenders, under specific conditions. It establishes fiduciary duties for litigation financers in class actions, holds them jointly liable for costs or sanctions against consumers, and empowers the Secretary of State to create oversight rules. Violations of these regulations will render financing contracts unenforceable and may result in penalties for excessive interest rates. The legislation is set to take effect on January 1, 2026, and will apply to all civil actions or administrative proceedings involving litigation financers initiated on or after that date.