BILL NUMBER: S1104
SPONSOR: COONEY
 
TITLE OF BILL:
An act to amend the general business law, in relation to consumer liti-
gation funding
 
PURPOSE OR GENERAL IDEA OF BILL:
The bill establishes provisions to regulate the Consumer Litigation
Funding Industry in New York State. This bill may be cited as the
"Consumer Litigation Funding Act".
 
SUMMARY OF PROVISIONS:
Section 1 relates the short title of the bill.
Section 2 clarifies the legislative intent.
Section 3 amends the general business law by adding a new article, 39-H,
which specifies guidelines of regulation as follows:
899-ccc: provides definitions
899-ddd: provides contract requirements including rights of rescission
899-eee: sets forth prohibitions
899-fff: clarifies payment schedule of contracted amount
899-ggg: sets forth necessary disclosure language in contracts
899-hhh: provides penalties for violations of this bill
899-iii: clarifies assignability of claims
899-jjj: provides confidentiality of communications
899-kkk: sets forth registration and licensing requirements
899-lll: sets forth reporting requirements
899-mmm: severability clause
Section 4 sets the effective date.
 
JUSTIFICATION:
Consumer Litigation Financing emerged as an industry in the US in the
1990s. Currently the industry is not regulated in New York State. As a
result, a number of "bad actors" entered the business, who often acted
in bad faith and charged exorbitant fees for the services provided, and
engaged in other bad practices. The instant legislation provides a set
of robust provisions that, if enacted, would tightly regulate the
services.
The bill sets forth required contract and disclosure requirements to
ensure consumers are fully aware of the proposed transaction and imposes
a cap on charges identical to that imposed by federal law on consumer
credit transactions with members of the military. A ten-day right of
rescission is also included to further protect the consumer. The bill
also provides that litigation finance companies must submit a registra-
tion application containing all the information that the Department of
State needs to evaluate the character, fitness and financial stability
of the applicant. Such application must include a suitable bond and be
approved by the Department prior to a certificate of registration being
issued.
 
FISCAL IMPLICATIONS:
None.
 
LEGISLATIVE HISTORY:
S.41468/A.7655B: of 2023-24: Passed Senate
S.705 of 2021-22
S. 4555/A. 674 of 2019-20: Advanced to Third Reading Calendar
2017-2018: S.9105 passed Senate
 
EFFECTIVE DATE:
This act shall take effect 180 days after it shall have become a law.