ARC supports, and advocates for, legislation that enacts robust consumer protections for consumer legal funding, and maintains consumer access, because good legislation does both. Model legislation aligns with ARC’s industry best practices, and contains real consumer protections, does the following:

Requires plain English and transparent contract that clearly shows the consumer’s rights and obligations.

• Requires the contract to reflect all costs and fees, showing how much the consumer will own every six (6) months and the MAX amount the provider may ever own of a recovery.

• Requires that the consumer has the Right of Rescission for five (5) days after receiving funds from the sale.

• Requires consumer to inform attorney of the funding providers contract and requires attorney to acknowledge having been informed.

• Prohibits funds from being used to forward any part the litigation process. Only to be used for household needs.

• Prohibits providers from interference or decision making with respect to the pursuit of the legal claim or settlement.
• Prohibits false and misleading advertising by funding providers.

• Prohibits the payment of commissions, referral fees, rebates, etc., to attorneys, law firms, medical providers, chiropractors, or physical therapist or any of their employees.

• Prohibits attorneys from having any financial interest in a funding provider that transacts with their clients.
• Extends the attorney-client privilege to funding providers to ensure all consumer information is protected.
• Requires funding providers to include registration fees, the posting of bonds to ensure solvency, and the filing of all forms and contracts with the state authorities.

Over the last ten years, several states have enacted this type of comprehensive legislation, which has led to more options being available and a high level of consumer protection for the people of these states.

These states include: Maine (2007), Ohio (2008), Nebraska (2010), Oklahoma (2013), and Vermont (2016).

Indiana (2016) also passed legislation aligned with ARC best practices, though the law limits consumer access to the product.

Although the majority of legislation regarding consumer legal funding has been positive for consumers, a few states have passed laws that have hurt everyday people–Tennessee (2014) and Arkansas (2015). ARC hopes to restore access to consumer legal funding in these states, and bring their statues into alignment with others that benefit working families.