New York Assembly Bill A03225

New York 2025-2026 Regular Session

• Introduced: 1/24/25
• Refer: 1/24/25
• Refer: 1/7/26

Caption

Enacts the consumer litigation funding act to promote consumer protections related to consumer litigation funding transactions; provides for contract requirements, including that the contract contain a no penalty provision for the prepayment of the funded amount prior to the settlement of their case; makes related provisions.

Summary

Bill A03225, known as the Consumer Litigation Funding Act, aims to enhance consumer protections in transactions involving third-party litigation funding. It establishes regulatory requirements for consumer litigation funding companies, including mandatory disclosures, contract stipulations, and limitations on charges. The bill defines key terms related to consumer litigation funding and outlines the responsibilities of funding companies and attorneys involved in such transactions. It also provides consumers with a right of rescission, allowing them to cancel contracts within ten business days without penalty, provided they return the funded amount.

Impact

The enactment of this bill will amend the General Business Law in New York, introducing a new article specifically addressing consumer litigation funding. It will impose regulations on funding companies, ensuring transparency and fairness in contracts. This legislation is expected to protect consumers from predatory practices in litigation funding, as it prohibits certain fees and requires clear communication of terms. Additionally, it mandates that funding companies register with the state, thereby increasing oversight of the industry.

Sentiment

The general sentiment surrounding Bill A03225 appears to be supportive among consumer advocacy groups, who view it as a necessary step to protect consumers from potential exploitation in litigation funding. However, there may be concerns from some funding companies regarding the regulatory burden and the potential impact on their business operations. The lack of recorded votes or committee discussions suggests that the bill's reception has not yet been fully tested in the legislative process.

Contention

Notable points of contention may arise from the funding companies, particularly regarding the restrictions on fees and the requirement for transparency in contracts. Some stakeholders may argue that the regulations could limit access to funding for consumers who need it most, while proponents of the bill contend that these measures are essential for consumer protection. The balance between regulation and access to funding will likely be a key area of debate as the bill progresses.