North Carolina HB 925: Consumers in Crisis Protection Act.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 5
HOUSE BILL 925
Committee Substitute Favorable 6/25/25
Committee Substitute #2 Favorable 6/16/26
Committee Substitute #3 Favorable 6/30/26
Fifth Edition Engrossed 6/30/26

Short Title: Consumers in Crisis Protection Act. (Public)
Sponsors:
Referred to:
April 14, 2025
*H925-v-5*
A BILL TO BE ENTITLED 1
AN ACT TO ENACT THE CONSUMERS IN CRISIS PROTECTION ACT. 2
The General Assembly of North Carolina enacts: 3
SECTION 1. Chapter 66 of the General Statutes is amended by adding a new Article 4
to read: 5
"Article 53. 6
"Consumers in Crisis Protection Act. 7
"§ 66-525. Short title. 8
This Article may be cited as the "Consumers in Crisis Protection Act." 9
"§ 66-526. Definitions. 10
The following definitions apply in this Article: 11
(1) Affiliate. – As defined in G.S. 53-244.030. 12
(2) Charges. – Any fees permitted by this Article to be charged to a consumer by 13
a consumer legal funding company, regardless of how denominated, including 14
fees denominated as interest or rate. 15
(3) Consumer. – An individual residing in this State. 16
(4) Consumer legal funding company. – A person that enters into a consumer 17
legal funding transaction with a consumer, whether or not the person is 18
registered under this Article. 19
(5) Consumer legal funding contract. – A contract for a consumer legal funding 20
transaction. 21
(6) Consumer legal funding transaction. – A nonrecourse transaction in which a 22
consumer sells an unvested, contingent future interest in the potential net 23
proceeds of a settlement or judgment obtained from a legal claim so long as 24
all of the following apply: 25
a. The consumer is required to use the funds to address personal needs or 26
household expenses and family use. 27
b. The consumer is prohibited from using the funds to pay for attorneys' 28
fees, legal filings, legal marketing, legal document preparation or 29
drafting, appeals, expert testimony, or other litigation-related 30
expenses. 31
c. The consumer is not required to use the funds in a particular manner, 32
including to make specific payments or secure specific services. 33

General Assembly Of North Carolina Session 2025
Page 2 House Bill 925-Fifth Edition
(7) Funded amount. – The amount of money provided to, or on behalf of, a 1
consumer pursuant to a consumer legal funding contract. The term excludes 2
charges. 3
(8) Gross proceeds. – The total amount of proceeds recovered by a consumer as 4
a result of a legal claim. 5
(9) Health care provider. – As defined in G.S. 90-21.50. 6
(10) Legal claim. – A civil claim or cause of action filed or may be filed in a court 7
of law in State or federal court, including any claim that triggers obligation 8
arising under G.S. 58-63-15(11) or related regulations. 9
(11) Net proceeds. – The amount recovered by a consumer as a result of a legal 10
claim, less the following associated costs and liens paid by the consumer: 11
a. Attorneys' fees and litigation costs associated with the legal claim. 12
b. Attorney liens and ERISA contractual rights of recovery or 13
subrogation liens. 14
c. Child support, Medicare, tax, or other statutory or governmental liens. 15
"§ 66-527. Relationship with other law. 16
A consumer legal funding transaction that complies with this Article is not a loan and is not 17
subject to any provision of law governing loans or investment contracts. To the extent that this 18
Article conflicts with any other law, this Article supersedes that law for purposes of regulating 19
consumer legal funding transactions in this State. 20
"§ 66-528. Exemptions. 21
All of the following are exempt from this Article's requirements: 22
(1) An immediate family member of the consumer. 23
(2) A bank, lender, financing entity, or other special purpose entity that either 24
provides financing to a consumer legal funding company or receives an 25
interest in a consumer legal funding from a consumer legal funding company. 26
(3) An attorney or accountant who provides services to a consumer except as 27
provided in G.S. 66-534. 28
"§ 66-529. Registration. 29
Prior to operating in the State of North Carolina each consumer legal funding company shall 30
receive a certificate of authority from the Secretary of State to conduct business in this State or 31
other evidence of the applicant's registration or qualification to do business in this State. 32
"§ 66-530. Contents of consumer legal funding contract. 33
(a) All consumer legal funding transactions shall be formalized and presented in a written 34
contract. 35
(b) A consumer legal funding contract shall be written using plain language and 36
understandable to the average consumer who makes a reasonable effort under ordinary 37
circumstances to read and comprehend the terms of the contract without having to obtain the 38
assistance of a professional. 39
(c) All terms of the consumer legal funding contract shall be completed when presented 40
to the consumer for signature. 41
(d) Each consumer le