DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part of
the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute part of
the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Talbot HB No. 925
Abstract: Creates the Consumer Lending Information and Protection Act – Litigation Lending
Act
Present law provides for the La. Consumer Credit Law.
Present law provides for exclusions to and licensing requirements under the La. Consumer Credit
Law.
Proposed law excludes consumer lawsuit loans as defined in proposed law from the La.
Consumer Credit Law and provides that any person who only makes such consumer credit loans
is exempted from licensure under the La. Consumer Credit Law, unless such loans are made by a
FDIC insured institution subject to proposed law.
Proposed law provides for the Consumer Lending Information and Protection Act – Litigation
Lending (act).
Proposed law applies to all consumer lawsuit loans that are entered into with a consumer in
exchange for an interest in proceeds of the consumer's claim or legal action.
Proposed law provides an exemption from proposed law for a FDIC insured institution that is
subject to the La. Consumer Credit Law.
Proposed law provides that nothing in proposed law shall be deemed to regulate an attorney
client relationship or any other matter regulated by the La. Supreme Court.
Proposed law further provides that nothing in the act shall be deemed to affect an attorney lien or
privilege arising under La. law.
Proposed law provides for certain legislative findings and definitions.
Proposed law provides that the maximum loan finance charge for any consumer lawsuit loan
transaction that may be charged, contracted for, or received by a consumer lawsuit loan company
may equal but not exceed:
(1)35% per year for that portion of the unpaid principal amount of the loan not exceeding
$1,400. (2)27% per year for that portion of the unpaid principal amount of the loan exceeding $1,400
and not exceeding $4,000.
(3)24% per year for that portion of the unpaid principal amount of the loan exceeding $4,000
and not exceeding $7,000.
(4)21% per year for that portion of the unpaid principal amount of the loan exceeding
$7,000.
Proposed law provides that a lender may charge an origination fee that does not exceed $50 on a
consumer lawsuit loan. Further provides that the origination fee may be charged only once in
connection with a single consumer lawsuit loan to one borrower over any consecutive 60-day
period. Proposed law provides that, when a consumer lawsuit loan is paid in full, an origination
fee may be charged on any subsequent new consumer lawsuit loan without regard to the prior
loan's consecutive 60-day period.
Proposed law provides that, except for reasonable attorney fees and costs awarded by a court, no
other fees or charges may be assessed or collected on a consumer lawsuit loan.
Proposed law provides that each consumer lawsuit loan contract must be in writing, dated, and
signed by the consumer, and must include:
(1)A statement in bold-typed print of not less than 14-point font, in immediate proximity to
the space reserved for the signature of the consumer, as follows:
"You may cancel this contract at any time before midnight of the fifteenth
day after the date of the transaction. See the attached notice of
cancellation form for an explanation of this right."
(2)The terms and conditions of payment, including the total of all payments to be made by
the consumer, and annualized rate of interest.
(3)The address of the lawsuit lender's principal place of business and the name and address
of its agent in the state authorized to receive service of process.
Proposed law provides that a consumer lawsuit loan contract must have attached two easily
detachable copies of a notice of cancellation. Further provides that the notice must be in
boldfaced type and in the following form: "Notice of Cancellation
You may cancel this contract, without any penalty or obligation, within fifteen days after
the date the contract is signed. To cancel this contract, send by mail, or deliver in person,
a signed dated copy of this cancellation notice, or other written notice to:
(Name of consumer lawsuit loan company) at (address) (place of business) not later than
midnight (date).
I hereby cancel this transaction.
(Date)
(Consumer's Signature)"
Proposed law provides that the consumer lawsuit loan company shall give to the consumer a
copy of the completed contract and all other documents the lender requires the consumer to sign
at the time they are signed.
Proposed law provides that no consumer lawsuit loan contract with a consumer of this state shall
contain any condition, stipulation, or agreement:
(1)Requiring it to be construed according to the laws of any other state or country.
(2)Depriving the courts of this state of the jurisdiction of action against the consumer lawsuit
loan company.
(3)Stipulating to the venue of any particular court of this state.
Proposed law provides that any such condition, stipulation, or agreement in violation of proposed
law shall be void, but such voiding shall not affect the validity of the other provisions of the
contract.
Proposed law provides that all consumer lawsuit loan transactions shall comply with federal
Regulation Z of the Board of Governors of the Federal Reserve System. Failure to comply with
Regulation Z is a violation of the proposed law.
Proposed law provides that all consumer lawsuit loan transactions shall accurately reflect the
actual terms, conditions, applicable amount of fees, and repayment schedule agreed to by the
parties. Further provides that, if a loan is to be repaid on demand, in a lump sum, or at undefined
intervals of time, interest on the loan shall be computed by the actuarial or simple interest
method when allocating payments made on the loan.
Proposed law provides that a consumer lawsuit loan company shall not attempt to cause a
consumer to waive a right under proposed law. Further provides that a waiver by a consumer of
any part of proposed law is void. Proposed law provides that a consumer lawsuit loan company or a salesperson, agent, or a
representative of a consumer lawsuit loan company shall not enter into a consumer lawsuit loan
transaction with a consumer unless the funds extended to the consumer pursuant to the terms of
the consumer lawsuit loan transaction are used for that consumer's personal living expenses.
Proposed law provides that a consumer lawsuit loan company shall not directly or indirectly
instigate or encourage litigation, by engaging in referring consumers that have entered into a
consumer lawsuit loan transaction with that consumer lawsuit loan company, or directly or
indirectly control or participate in the conduct of the legal action that is related to a consumer
lawsuit loan transaction.
Proposed law further provides that a violation of any provision of proposed law shall constitute
an unfair or deceptive act or practice for purposes of the Unfair Trade and Consumer Protection
Law.
Proposed law further provides that the remedies and rights provided under proposed law are in
addition to and do not preclude any remedy otherwise available under law to a consumer
claiming relief under any provision of law.
Proposed law provides that the provisions of proposed law shall not be subject to regulation or
enforcement by the office of financial institutions.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Adds R.S. 9:3512(9), 3560(A)(10), and 3580.1-3580.9)