Rep. Norm Thurston — Voting Record

Bill

Number

H.B. 312 Second Substitute (2020GS)

Sponsor

Rep. Dunnigan, J.

Final action

Governor Signed 3/24/2020

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• defines terms;
• requires a maintenance funding provider to register with the Division of Consumer Protection;
• establishes operating requirements for a maintenance funding provider;
• establishes reporting requirements for a maintenance funding provider and the division;
• establishes requirements for maintenance funding agreements;
• requires a maintenance funding provider to make certain disclosures;
• grants rulemaking authority to the Division of Consumer Protection;
• requires the Division of Consumer Protection to administer and enforce the Maintenance Funding Practices Act; and
• addresses enforceability of a maintenance funding agreement.

Every vote on this bill

Bill text

MAINTENANCE FUNDING PRACTICES ACT
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: James A. Dunnigan
Senate Sponsor: 
Curtis S. Bramble
LONG TITLE
General Description:
This bill regulates maintenance funding practices under the Division of Consumer
Protection within the Commerce Department.
Highlighted Provisions:
This bill:
▸ defines terms;
▸ requires a maintenance funding provider to register with the Division of Consumer
Protection;
▸ establishes operating requirements for a maintenance funding provider;
▸ establishes reporting requirements for a maintenance funding provider and the
division;
▸ establishes requirements for maintenance funding agreements;
▸ requires a maintenance funding provider to make certain disclosures;
▸ grants rulemaking authority to the Division of Consumer Protection;
▸ requires the Division of Consumer Protection to administer and enforce the
Maintenance Funding Practices Act; and
▸ addresses enforceability of a maintenance funding agreement.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
13-2-1
, as last amended by Laws of Utah 2019, Chapters 115, 423 and last amended by
Coordination Clause, Laws of Utah 2019, Chapter 115
ENACTS:
13-57-101
, Utah Code Annotated 1953
13-57-102
, Utah Code Annotated 1953
13-57-201
, Utah Code Annotated 1953
13-57-202
, Utah Code Annotated 1953
13-57-203
, Utah Code Annotated 1953
13-57-301
, Utah Code Annotated 1953
13-57-302
, Utah Code Annotated 1953
13-57-401
, Utah Code Annotated 1953
13-57-402
, Utah Code Annotated 1953
13-57-501
, Utah Code Annotated 1953
13-57-502
, Utah Code Annotated 1953
13-57-503
, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
13-2-1
 is amended to read:
13-2-1.
Consumer protection division established -- Functions.
(1) There is established within the Department of Commerce the Division of Consumer
Protection.
(2) The division shall administer and enforce the following:
(a) Chapter 5, Unfair Practices Act;
(b) Chapter 10a, Music Licensing Practices Act;
(c) Chapter 11, Utah Consumer Sales Practices Act;
(d) Chapter 15, Business Opportunity Disclosure Act;
(e) Chapter 20, New Motor Vehicle Warranties Act;
(f) Chapter 21, Credit Services Organizations Act;
(g) Chapter 22, Charitable Solicitations Act;
(h) Chapter 23, Health Spa Services Protection Act;
(i) Chapter 25a, Telephone and Facsimile Solicitation Act;
(j) Chapter 26, Telephone Fraud Prevention Act;
(k) Chapter 28, Prize Notices Regulation Act;
(l) Chapter 32a, Pawnshop and Secondhand Merchandise Transaction Information Act;
(m) Chapter 34, Utah Postsecondary Proprietary School Act;
(n) Chapter 34a, Utah Postsecondary School State Authorization Act;
(o) Chapter 39, Child Protection Registry;
(p) Chapter 41, Price Controls During Emergencies Act;
(q) Chapter 42, Uniform Debt-Management Services Act;
(r) Chapter 49, Immigration Consultants Registration Act;
(s) Chapter 51, Transportation Network Company Registration Act;
(t) Chapter 52, Residential Solar Energy Disclosure Act;
(u) Chapter 53, Residential, Vocational and Life Skills Program Act;
(v) Chapter 54, Ticket Website Sales Act; [
and
]
(w) Chapter 56, Ticket 
Transferability Act[
.
]
; and
(x) Chapter 57, Maintenance Funding Practices Act.
Section 2. Section 
13-57-101
 is enacted to read:
CHAPTER 57. MAINTENANCE FUNDING PRACTICES ACT
Part 1. General Provisions
 13-57-101.
Title.
This chapter is known as the "Maintenance Funding Practices Act."
Section 3. Section 
13-57-102
 is enacted to read:
 13-57-102.
Definitions.
As used in this chapter:
(1) "Business entity" means a sole proprietorship, partnership, limited partnership,
limited liability company, corporation, or other entity or association used to carry on a business
for profit.
(2) "Director" means the director of the Division of Consumer Protection.
(3) "Division" means the Division of Consumer Protection of the Department of
Commerce established in Section 
13-2-1
.
(4) "Health care provider" means the same as that term is defined in Section
78B-3-403
.
(5) "Individual" means a person who:
(a) resides in this state; and
(b) has or may have a pending legal action in this state.
(6) "Legal funding" means a payment of $500,000 or less to an individual in exchange
for the right to receive an amount out of the potential proceeds of any realized settlement,
judgment, award, or verdict the individual may receive in a civil legal action.
(7) "Maintenance funding agreement" means an agreement between an individual and a
maintenance funding provider under which the maintenance funding provider provides legal
funding to the individual.
(8) (a) "Maintenance funding provider" means a business entity that engages in the
business of legal funding.
(b) "Maintenance funding provider" does not include:
(i) an immediate family member of an individual;
(ii) an accountant providing accounting services to an individual; or
(iii) an attorney providing legal services to an individual.
Section 4. Section 
13-57-201
 is enacted to read:
Part 2. Maintenance Funding Providers
 13-57-201.
Maintenance funding provider registration and registration renewal.
(1) Except as provided in Subsection (4), a business entity may not act as a
maintenance funding provider in this state without registering with the division.
(2) To register as a maintenance funding provider, a business entity shall submit to the
division an application for registration:
(a) in the manner the division determines; and
(b) that includes:
(i) an application fee in an amount determined by the division in accordance with
Sections 
13-1-2
 and 
63J-1-504
; and
(ii) anything else the division requires as established in rule made in accordance with
Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
(3) Each year a maintenance funding provider shall renew the maintenance funding
provider's registration by submitting to the division an application for registration renewal:
(a) in the manner the division determines; and
(b) that includes:
(i) an application fee in an amount determined by the division in accordance with
Sections 
13-1-2
 and 
63J-1-504
; and
(ii) anything else the division requires as established in rule made in accordance with
Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
(4) A business entity who acts as a maintenance funding provider in the state between
May 12, 2019, and May 12, 2020, is permitted to continue to act as a maintenance funding
provider:
(a) if the person:
(i) applies for registration in accordance with this section; and
(ii) complies with the requirements of this chapter; and
(b) until the division makes a determination regarding the person's application for
registration under this section.
Section 5. Section 
13-57-202
 is enacted to read:
 13-57-202.
Maintenance funding provider operations.
(1) A maintenance funding provider may only provide legal funding to an individual if
the maintenance funding provider and the individual enter into a maintenance funding
agreement that meets the requirements of Section 
13-57-301
.
(2) Before executing a maintenance funding agreement, a maintenance funding
provider shall file with the division a template of the maintenance funding agreement.
(3) A maintenance funding provider may not:
(a) pay or offer to pay a commission, referral fee, or any other form of consideration to
the following for referring an individual to the maintenance funding provider:
(i) an attorney authorized to practice law;
(ii) a health care provider; or
(iii) an employee, independent contractor, or other person affiliated with a person
described in Subsection (3)(a)(i) or (ii);
(b) accept a commission, referral fee, or any other form of consideration from a person
described in Subsection (3)(a) for referring an individual to the person;
(c) refer an individual or potential individual to a person described in Subsection
(3)(a), unless the referral is to a local or state bar association referral service;
(d) intentionally advertise materially false or misleading information about the
maintenance funding provider's services;
(e) make or attempt to influence a decision relating to the conduct, settlement, or
resolution of a legal action for which the maintenance funding provider provides legal funding;
or
(f) knowingly pay or offer to pay court costs, filing fees, or attorney fees using legal
funding.
(4) A maintenance funding provider shall provide an individual who enters a
maintenance funding agreement a copy of the executed maintenance funding agreement.
Section 6. Section 
13-57-203
 is enacted to read:
 13-57-203.
Annual reports.
(1) On or before April 1 of each year, a maintenance funding provider registered in
accordance with Section 
13-57-201
 shall file a report:
(a) under oath;
(b) with the director; and
(c) in a form the director prescribes.
(2) The report described in Subsection (1) shall include, for the preceding calendar
year:
(a) the number of maintenance funding agreements entered into by the maintenance
funding provider;
(b) the total dollar amount of legal funding the maintenance funding provider provided;
(c) the total dollar amount of charges under each maintenance funding agreement,
itemized and including the annual rate of return;
(d) the total dollar amount and number of maintenance funding transactions in which
the realized profit to the company was as contracted in the maintenance funding agreement;
(e) the total dollar amount and number of maintenance funding transactions in which
the realized profit to the company was less than contracted; and
(f) any other information the director requires concerning the maintenance funding
provider's business or operations in the state.
Section 7. Section 
13-57-301
 is enacted to read:
Part 3. Maintenance Funding Agreements
 13-57-301.
Maintenance funding agreements.
(1) A maintenance funding agreement shall:
(a) be in writing;
(b) contain a right of rescission permitting the individual to cancel the agreement
without penalty or further obligation, if the individual returns to the maintenance funding
provider the full amount of the disbursed funds:
(i) within five business days after the day on which the individual and maintenance
funding provider enter the agreement; and
(ii) (A) in person by delivering the maintenance funding provider's uncashed check to
the maintenance funding provider's office; or
(B) by insured, certified, or registered United States mail to the address specified in the
maintenance funding agreement in the form of the maintenance funding provider's uncashed
check or a registered or certified check or money order;
(c) contain the disclosures described in Section 
13-57-302
;
(d) include the amount of money the maintenance funding provider provides to the
individual;
(e) include an itemization of one-time charges;
(f) include a payment schedule that:
(i) includes the funded amount and all charges; and
(ii) lists the total amount of any realized settlement, judgment, award, or verdict to be
paid to the maintenance funding provider at the end of each six-month period, if the contract is
satisfied during that period; and
(g) include a provision that the maintenance funding agreement includes no charge or
fee other than the charges and fees disclosed in the maintenance funding agreement; and
(h) include a provision that:
(i) if there are no available proceeds from the legal action, the individual will owe the
maintenance funding provider nothing; and
(ii) the maintenance funding provider's total charges will be paid only to the extent
there are available proceeds from the legal action after the settlement of all liens, fees, and
other costs.
(2) A maintenance funding agreement may not require an individual to make a
payment to the maintenance funding provider in an amount determined as a percentage of the
recovery from the legal action.
Section 8. Section 
13-57-302
 is enacted to read:
 13-57-302.
Required disclosures.
A maintenance funding provider shall disclose in a maintenance funding agreement:
(1) that the maintenance funding provider may not participate in deciding whether,
when, or the amount for which a legal action is settled;
(2) that the maintenance funding provider may not interfere with the independent
professional judgment of the attorney handling the legal action or any settlement of the legal
action;
(3) the following statement in substantially the following form, in all capital letters and
at least a 12-point type: "THE FUNDED AMOUNT AND AGREED-TO CHARGES SHALL
BE PAID ONLY FROM THE PROCEEDS OF YOUR LEGAL CLAIM, AND SHALL BE
PAID ONLY TO THE EXTENT THAT THERE ARE AVAILABLE PROCEEDS FROM
YOUR LEGAL CLAIM. YOU WILL NOT OWE (INSERT NAME OF THE
MAINTENANCE FUNDING PROVIDER HERE) ANYTHING IF THERE ARE NO
PROCEEDS FROM YOUR LEGAL CLAIM, UNLESS YOU HAVE VIOLATED A
MATERIAL TERM OF THIS AGREEMENT OR YOU HAVE COMMITTED FRAUD
AGAINST THE MAINTENANCE FUNDING PROVIDER.";
(4) in accordance with Section 
13-57-301
, the following statement in substantially the
following form and at least a 12-point type: "CONSUMER'S RIGHT TO CANCELLATION:
You may cancel this agreement without penalty or further obligation within five business days
after the day on which you enter into this agreement with the maintenance funding provider if
you either: 1. return to the maintenance funding provider the full amount of the disbursed funds
by delivering the maintenance funding provider's uncashed check to the maintenance funding
provider's office in person; or 2. send, by insured, certified, or registered United States mail, to
the maintenance funding provider at the address specified in this agreement, a notice of
cancellation and include in the mailing a return of the full amount of disbursed funds in the
form of the maintenance funding provider's uncashed check or a registered or certified check or
money order"; and
(5) immediately above the line for the individual's signature, the following statement in
at least a 12-point type: "Do not sign this agreement before you read it completely or if it
contains any blank spaces. You are entitled to a completed copy of the agreement. Before you
sign this agreement, you should obtain the advice of an attorney. Depending on your
circumstances, you may want to consult a tax, benefits planning, or financial professional."
Section 9. Section 
13-57-401
 is enacted to read:
Part 4. Division Duties
 13-57-401.
Rulemaking.
The division shall make rules in accordance with Title 63G, Chapter 3, Utah
Administrative Rulemaking Act, to:
(1) establish an application process for a business entity to register with the division as
a maintenance funding provider, in accordance with Section 
13-57-201
;
(2) establish a filing process for a maintenance funding provider to file a maintenance
funding agreement with the division;
(3) establish a filing process for annual reports required under Section 
13-57-203
; and
(4) carry out the provisions of this chapter.
Section 10. Section 
13-57-402
 is enacted to read:
 13-57-402.
Public education regarding legal funding -- Reporting to Legislature.
(1) The director shall help educate the general public regarding legal funding in the
state by:
(a) analyzing and summarizing data maintenance funding providers submit under
Section 
13-57-203
; and
(b) publishing the analysis and summary described in Subsection (1)(a) on the
division's web page.
(2) Before October 1, 2022, the director shall report to the Business and Labor Interim
Committee on the status of legal funding in the state and make any recommendation the
director decides is necessary to improve the regulatory framework of legal funding, including a
recommendation on whether to limit charges a maintenance funding provider may impose
under a maintenance funding agreement.
Section 11. Section 
13-57-501
 is enacted to read:
Part 5. Miscellaneous
 13-57-501.
Enforceability.
If a maintenance funding provider violates a provision of this chapter, a maintenance
funding agreement associated with the violation is unenforceable by the maintenance funding
provider or any successor-in-interest to the maintenance funding agreement.
Section 12. Section 
13-57-502
 is enacted to read:
 13-57-502.
Penalties -- Enforcement.
(1) After notice and an opportunity for an administrative hearing in accordance with
Title 63G, Chapter 4, Administrative Procedures Act, the division may, in addition to
exercising the division's enforcement powers under Section 
13-2-6
, enforce the provisions of
this chapter by:
(a) revoking or suspending a maintenance funding provider's registration;
(b) ordering a maintenance funding provider to cease and desist from further legal
funding;
(c) imposing a penalty of up to:
(i) $1,000 per violation; or
(ii) $10,000 per violation that the division finds willful; or
(d) ordering the maintenance funding provider to make restitution to an individual.
(2) The division's enforcement powers under this section and Section 
13-2-6
 do not
affect an individual's legal claim against a maintenance funding provider.
Section 13. Section 
13-57-503
 is enacted to read:
 13-57-503.
Applicability.
The requirements of this chapter for a maintenance funding provider do not apply to:
(1) a bank while in the course of conducting a banking business as described in Section
7-3-1
;
(2) a deferred deposit lender, as defined in Section 
7-23-102
, while engaged in the
business of deferred deposit lending;
(3) a title lender, as defined in Section 
7-24-102
, while engaged in the business of
extending a title loan; or
(4) a creditor, as defined in Section 
70C-1-302
, subject to the provisions of Title 70C,
Utah Consumer Credit Code.