Bill Detail: HB23-1162

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Title Consumer Legal Funding Transactions
Status Governor Signed (06/01/2023)
Bill Subjects
  • Business & Economic Development
  • Financial Services & Commerce
House Sponsors S. Woodrow (D)
Senate Sponsors R. Rodriguez (D)
House Committee Business Affairs and Labor
Senate Committee Business, Labor and Technology
Date Introduced 02/01/2023

The bill establishes the Colorado Consumer Legal Funding Act
(act). A consumer legal funding transaction occurs when a consumer legal
funding company (company) purchases, for an amount not to exceed
$500,000, an interest in an individual's (consumer) associated legal claim.
The money provided by the company must be repaid from the proceeds,
if any, resulting from the settlement or judgment of the consumer's
associated legal claim. The company may also receive a funding fee as
part of the contract. The funding fee may not exceed 36% of the funded
amount. The money provided to a consumer is meant to cover living
expenses while the consumer awaits resolution of the associated legal
The bill provides the requirements for a consumer legal funding
contract. A consumer legal funding contract is satisfied when a
consumer's associated legal claim has been resolved or settled. The
consumer must pay the company a predetermined amount, as specified in
the contract, and the amount may not be calculated as a percentage of the
judgment or settlement. The consumer is not required to repay the
company if the consumer does not prevail on or settle the consumer's
associated legal claim. The bill also details disclosures that are required
as part of a consumer legal funding contract.
The bill prohibits certain actions of consumer legal funding
companies and describes how these companies are regulated by the
attorney general's office, including registration requirements and
associated registration fees and surcharges. The registration fees are
credited to a new consumer legal funding cash fund and used to pay the
attorney general's costs to implement and administer the bill. The
surcharges are credited to the Colorado identity theft and financial fraud
cash fund for use in enforcing the Identity Theft and Financial Fraud
Deterrence Act.
The attorney general may fine a company, suspend or revoke a
company's license, or prohibit a company from recovering funding fees
for violating the bill.

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