Wisconsin Assembly Bill AB464

Wisconsin 2023-2024 Regular Session

• Introduced: 9/28/23
• Refer: 9/28/23
• Failed: 4/15/24

Caption

Nonrecourse civil litigation advances and providing a penalty.

Impact

This bill will fundamentally alter the landscape of civil litigation financing in the state. By mandating clear contract requirements and prohibiting companies from requiring repayment that might lead to excessive finance charges, AB464 seeks to eliminate predatory lending practices that can trap consumers in a cycle of debt. Furthermore, the bill positions regulatory authority under the Department of Trade, Agriculture, and Consumer Protection, which empowers enforcement against violations and protects consumer rights effectively.

Summary

Assembly Bill 464 establishes regulations concerning nonrecourse civil litigation advances, which are financial transactions where a company provides cash to a consumer with a pending dispute in exchange for a claim on potential proceeds from any eventual settlement or judgment. The bill aims to protect consumers by formally defining the terms under which these advances can be made and setting limitations on the conditions and costs associated with such agreements. Specifically, it stipulates that the finance charges must not exceed the prime interest rate plus 10 percent, ensuring affordability for consumers.

Contention

Notably, the bill faces certain points of contention, particularly concerning the balance between consumer protection and the interests of companies engaged in litigation financing. Critics argue that while the intentions behind the legislation are commendable, the additional restrictions may stifle competition and innovation in the financial services sector that provides necessary funding for individuals involved in civil litigation. Ensuring that there is still sufficient financial support available to consumers, without compromising their financial stability, remains a critical debate.