First Regular Session
Seventy-fourth General Assembly
STATE OF COLORADO
REENGROSSED
This Version Includes All Amendments
Adopted in the House of Introduction
LLS NO. 23-0703.01 Christopher McMichael x4775
HOUSE BILL 23-1162
House Committees Senate Committees
Business Affairs & Labor
Finance
A BILL FOR AN ACT
C
ONCERNING THE REGULATION OF CONSUMER LEGAL FUNDING101
TRANSACTIONS , AND, IN CONNECTION THEREWITH ,102
AUTHORIZING THE ADMINISTRATOR OF THE "UNIFORM103
CONSUMER CREDIT CODE" TO ADOPT RULES REGULATING104
CREDITOR-IMPOSED CHARGES FOR CERTAIN CONSUMER CREDIT105
TRANSACTIONS THAT ARE SECURED BY A CONSUMER 'S106
POTENTIAL PROCEEDS FROM A SETTLEMENT OR JUDGMENT107
OBTAINED IN AN ASSOCIATED LEGAL CLAIM .108
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
HOUSE
3rd Reading Unamended
April 18, 2023
HOUSE
Amended 2nd Reading
April 17, 2023
HOUSE SPONSORSHIP
Woodrow, Boesenecker, Brown, Epps, Jodeh, Lindsay, Parenti, Sharbini, Sirota, Titone,
Valdez
SENATE SPONSORSHIP
Rodriguez,
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law. http://leg.colorado.gov.)
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
claim.
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.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, 5-2-204, add (6) as2
follows:3
5-2-204. Deferral charges - rules. (6) THE ADMINISTRATOR MAY4
ADOPT RULES REGARDING DEFERRAL CHARGES FOR NONRECOURSE5
1162-2- CONSUMER CREDIT TRANSACTIONS THAT HAVE NO PERIODIC PAYMENTS1
AND ARE SECURED BY AN UNVESTED, CONTINGENT FUTURE INTEREST IN2
THE POTENTIAL NET PROCEEDS OF A SETTLEMENT OR J UDGMENT OBTAINED3
FROM THE CONSUMER'S ASSOCIATED LEGAL CLAIM.4
SECTION 2. Act subject to petition - effective date. This act5
takes effect at 12:01 a.m. on the day following the expiration of the6
ninety-day period after final adjournment of the general assembly; except7
that, if a referendum petition is filed pursuant to section 1 (3) of article V8
of the state constitution against this act or an item, section, or part of this9
act within such period, then the act, item, section, or part will not take10
effect unless approved by the people at the general election to be held in11
November 2024 and, in such case, will take effect on the date of the12
official declaration of the vote thereon by the governor.13
1162
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