SB 542 - This act establishes the Missouri Nonrecourse Consumer Legal Lending Act.
CONSUMER LEGAL LENDING CONTRACTS (Section 436.560) - This act specifies the requirements that each consumer legal lending contract must contain when presented to a consumer, including disclosures, a notice of cancellation, the consumer legal lending company's business address, an acknowledgment by the consumer that they have reviewed the contract, and an acknowledgment by the attorney representing the consumer in the legal claim as set forth in this act. A consumer may cancel a contract with a consumer legal lending company if they return the loan amount to the company within 5 days of the lending date. A full contract must be provided to the consumer at the time that it is signed. All contracts must fully reflect the actual terms, conditions, fees, and repayment schedule. Any party seeking relief from a consumer legal lending contract may bring suit in a court of competent jurisdiction.
LEGAL CLAIM PROCEEDS (Section 426.565) - This act allows a consumer legal lending company the contingent right to receive the potential proceeds of a consumer's legal claim. In assigning proceeds of a legal claim, certain liens attached to the consumer's legal claim shall take priority over any lien of the consumer legal lending company. Once proceeds from a legal claim are available to distribute, if insufficient proceeds remain to pay the consumer legal lending company, the company shall not report the consumer to any credit reporting agency.
FEES ASSESSED BY CONSUMER LEGAL LENDING COMPANIES (Section 436.570) - Consumer legal lending companies may charge an origination or delivery fee for processing a consumer's application, but may not assess any additional fees beyond 1095 days from the original lending date. Fees may compound semi-annually, and shall be computed based on the loan amount actually received by the consumer from the consumer legal lending company.
PROHIBITIONS (Section 436.575) - Practicing attorneys in this state are prohibited from having a direct interest in a consumer legal lending company that engages in nonrecourse consumer legal lending transactions with their own clients or from receiving compensation from consumer legal lending companies. Consumer legal lending companies are also prohibited from engaging in certain practices as set forth in this act.
REGISTRATION (Section 436.580) - Beginning June 1, 2015, all such companies must register annually with the Department of Insurance, Financial Institutions, and Professional Registration. For calendar years 2015 and 2016, the application fee is set at $200. For years thereafter, the application fee may vary depending upon the Department's costs for administering this act. The application shall be made a public record and shall contain information that allows the Department to make an evaluation of the company. The Department may request certain documents from the company during the application process. Beginning January 1, 2017, the Department shall prepare and submit an annual report to the General Assembly on the status of consumer legal lending transactions in the state.
PENALTY (Section 436.590) - Any person or consumer legal lending company who violates this act shall be guilty of a Class B misdemeanor for the first offense, a Class A misdemeanor for the second offense, and a Class D felony for all subsequent offenses.
This act is similar to HB 1569 (2014) and SB 440 (2013).