Consumers in Crisis Protection Act adopted, civil penalties provided, and reports required.
HF2677 would create a new Minnesota chapter, the “Consumers in Crisis Protection Act,” to regulate consumer litigation funding and commercial litigation financing. The bill defines these transactions, sets contract-form and disclosure requirements, gives consumers a 10-business-day rescission right, prohibits prepayment penalties, and requires attorney acknowledgment of key disclosures and ethical restrictions. It also bars certain referral fees and misleading advertising, limits funders from influencing litigation decisions, and restricts how funding can be structured, including prohibiting repayment terms based on a percentage of recovery for consumer litigation funding.
The bill also establishes a registration and reporting framework through the Department of Commerce for consumer litigation funding companies and commercial litigation financiers. Registrants would need to file contract forms, provide ownership and fitness information, potentially post a bond or letter of credit, and submit annual reports on funded lawsuits, amounts, and charges. The department would make aggregated information public while keeping company and consumer names confidential, and it could adopt rules to implement the chapter. Violations could result in loss of the right to recover the funded amount and charges in the specific case, plus civil penalties enforceable by the attorney general.
The bill would add two new statutory chapters, 45B and 48B, creating a comprehensive regulatory scheme for litigation funding in Minnesota. It would affect consumers, attorneys, litigation funders, insurers, and courts by requiring contract disclosures, mandating attorney involvement and acknowledgments, making funding agreements discoverable in civil cases, and setting priority rules for liens and assignments. It also imposes registration, reporting, and enforcement obligations on funding companies and financiers, while placing special restrictions on commercial litigation financing involving foreign entities or persons of concern.
The available record does not include committee testimony or recorded votes, so there is no direct evidence of debate or bipartisan support/opposition in the materials provided. Based on the bill text and caption, the measure appears to be framed as consumer-protection legislation aimed at increasing transparency and limiting abusive practices in litigation funding. The overall tone of the proposal is regulatory and protective rather than permissive.
The main points of contention likely center on whether litigation funding should be tightly regulated as a consumer-protection issue or treated as a legitimate financing tool for plaintiffs and businesses. Provisions that may draw scrutiny include mandatory disclosure of funding agreements, broad discoverability, limits on funder involvement in litigation strategy, restrictions on attorney relationships with funders, and the ban on foreign entities of concern in commercial litigation financing. Funders may also object to the civil penalties, rescission rights, and the prohibition on percentage-based repayment for consumer litigation funding, while supporters would likely emphasize transparency, anti-abuse safeguards, and preserving attorney-client control over claims.