NAC: CHAPTER 604C - CONSUMER LITIGATION FUNDING

[Rev. 11/21/2024 1:44:35 PM]

CHAPTER 604C - CONSUMER LITIGATION FUNDING

[NAC-604C Revised Date: 10-24]

GENERAL PROVISIONS

604C.080 “Promptly” interpreted.

REGULATION OF BUSINESS PRACTICES

604C.100 Consumer may seek more than one consumer litigation funding contract; requirements.

604C.110 Procedures for filing consumer litigation funding contract; approval by Commissioner.

604C.120 Notice of cancellation of consumer litigation funding contract or outcome of legal claim: Requirements.

604C.130 Limitations on collection of proceeds.

604C.140 Certain materially false, misleading or unethical advertising prohibited.

604C.150 Communication through electronic mail.

604C.160 Translation of consumer litigation funding contract written in language other than English; assessment of fee to verify compliance with requirements.

LICENSING; FEES AND ASSESSMENTS

604C.200 Prerequisites to engaging in business.

604C.205 Issuance and delivery of license; requirement to display.

604C.210 Additional requirements for licensure; grounds for denial.

604C.215 Notice of certain name changes related to license; approval of change.

604C.220 License: Expiration, renewal, suspension, reinstatement, revocation; fee.

604C.225 Fees for licensure; refund for withdrawal or denial.

604C.230 Assessment for costs of legal services provided by Attorney General; failure to pay grounds for revocation of license.

RECORDS, REPORTS AND EXAMINATIONS

604C.300 Duty of licensee to make available certain records.

604C.305 Failure to maintain required records: Submission of audited financial statement.

604C.310 Fees for supervision, examination, audit, investigation or hearing; failure to pay grounds for revocation of license.

604C.315 Assessment for costs related to audits and examinations; late charge.

604C.320 Annual report by licensee; requirements.

604C.330 Confidentiality of certain records and documents.

COMPLAINTS ALLEGING VIOLATION

604C.600 Required notice of right to file written complaint.

604C.605 Receipt of complaint by Commissioner; provision of copy to accused licensee; filing of verified answer; allegations deemed admitted if answer not filed; confidentiality.

GENERAL PROVISIONS

NAC 604C.080 “Promptly” interpreted. (NRS 604C.200) As used in NRS 604C.360 and 604C.380, the Commissioner interprets “promptly” to mean that the delivery of the consumer litigation funding contract or the forwarding of the notice of the cancellation, as applicable, must occur not later than 1 business day after the contract is executed or cancelled, as applicable.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

REGULATION OF BUSINESS PRACTICES

NAC 604C.100 Consumer may seek more than one consumer litigation funding contract; requirements. (NRS 604C.200)

1. A consumer may seek more than one consumer litigation funding contract per legal claim. The total amount of consumer litigation funding provided by a consumer litigation company to a consumer must not exceed $500,000 per legal claim, regardless of the number of consumer litigation funding contracts taken on the legal claim.

2. If the consumer seeks more than one consumer litigation funding contract:

(a) With a different consumer litigation funding company than the company from which he or she obtained the original consumer litigation funding contract, the different consumer litigation funding company must comply with paragraph (e) of subsection 1 of NRS 604C.300; and

(b) The consumer litigation funding company with which the consumer seeks additional consumer litigation funding contracts must make the disclosure pursuant to paragraph (f) of subsection 1 of NRS 604C.350.

3. Pursuant to NRS 604C.110:

(a) A consumer may pay only one document preparation fee per legal claim, regardless of the number of consumer litigation funding contracts taken on the legal claim; and

(b) A consumer litigation funding company shall not charge a document preparation fee if the consumer has previously paid a document preparation fee with regard to the legal claim.

4. Pursuant to NRS 604C.310, the amount to be paid to a company under a consumer litigation funding contract must not exceed the funded amount plus charges not to exceed a rate of 40 percent annually. If, pursuant to subsection 1 of NRS 604C.360, the payment schedule in a consumer litigation funding contract contains multiple 180-day periods in 1 year, the charges for the consumer litigation funding contract for each 180-day period must not exceed a cumulative rate of 40 percent annually.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.110 Procedures for filing consumer litigation funding contract; approval by Commissioner. (NRS 604C.200)

1. To file a consumer litigation funding contract with the Commissioner pursuant to subsection 5 of NRS 604C.300, a consumer litigation funding company must submit the contract to the Commissioner for approval:

(a) When the applicant submits his or her application to obtain a license to engage in the business of a consumer litigation funding company;

(b) When a consumer litigation funding company makes any changes to the consumer litigation funding contract;

(c) If requested by the Commissioner or his or her authorized representative when making an examination pursuant to NRS 604C.610;

(d) If requested by the Commissioner when the licensee submits a report required by NRS 604C.640; and

(e) At the request of the Commissioner or his or her authorized representative.

2. The consumer litigation funding contract filed pursuant to subsection 1 is a template and must comply with NRS 604C.300 to 604C.400, inclusive, except that the provisions concerning the details of individual consumer litigation funding transactions, including, without limitation, signatures, initials and the amount of the consumer litigation funding transaction, may be left blank. Any required details left blank must be filled in when the consumer litigation funding contract is used to establish a consumer litigation funding transaction.

3. A consumer litigation funding contract filed:

(a) Pursuant to paragraph (a) of subsection 1 is deemed approved by the Commissioner when the Commissioner issues and delivers a license to the applicant pursuant to NRS 604C.560;

(b) Pursuant to paragraph (b) of subsection 1 is deemed approved by the Commissioner 30 days after the consumer litigation funding company files the changes to the consumer litigation funding contract with the Commissioner unless the Commissioner notifies the consumer litigation funding company in writing that the changes are not approved or need to be amended; and

(c) Pursuant to paragraph (c), (d) or (e) of subsection 1 is deemed approved by the Commissioner upon the filing of the consumer litigation funding contract with the Commissioner. Such approval may be revoked by the Commissioner not later than 30 days after:

(1) Such filing if the consumer litigation funding contract fails to conform to the requirements of subsection 2; or

(2) An investigation or examination made at the office or place of business of the consumer litigation funding company if the consumer litigation funding company fails to comply with the provisions of this chapter and chapter 604C of NRS.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.120 Notice of cancellation of consumer litigation funding contract or outcome of legal claim: Requirements. (NRS 604C.200) If a consumer mails a notice of cancellation to the consumer litigation funding company pursuant to subparagraph (2) of paragraph (c) of subsection 1 of NRS 604C.350 and subsection 2 of NRS 604C.360 or if a consumer notifies the consumer litigation funding company as described in subsection 3 of NRS 604C.360, the consumer litigation funding company shall forward such notices to the attorney or law firm retained by the consumer in the legal claim of the consumer not later than 1 business day after receipt of the notice.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.130 Limitations on collection of proceeds. (NRS 604C.200) As set forth in a consumer litigation funding contract pursuant to subsection 4 of NRS 604C.360, a consumer litigation funding company shall not collect:

1. Anything if there are no proceeds from the legal claim; and

2. Any amount above the available proceeds from the legal claim if the funded amount and agreed upon charges exceed the proceeds from the legal claim.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.140 Certain materially false, misleading or unethical advertising prohibited. (NRS 604C.200)

1. Intentionally advertising materially false or misleading information pursuant to paragraph (c) of subsection 1 of NRS 604C.300 includes, without limitation, advertising by use of false or deceptive statements, results or testimonials.

2. A consumer litigation funding company shall not advertise in any manner that:

(a) May tend to confuse the identity of the company with any other consumer litigation funding company; or

(b) States or implies that a consumer litigation funding contract of a prospective consumer with another company will be paid off or that the charges or fees for the consumer litigation funding contract will be reduced if the consumer litigation funding contract is transferred to the consumer litigation funding company which is advertising.

3. No unethical advertising by consumer litigation funding companies will be permitted and the Commissioner reserves the right to require all consumer litigation funding companies to submit proposed advertising for approval before its dissemination through the press, or by radio, television or the Internet.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.150 Communication through electronic mail. (NRS 604C.200) Except as otherwise provided in paragraph (c) of subsection 1 of NRS 604C.350 and subsection 2 of NRS 604C.360, once a consumer litigation funding contract is entered into between a consumer and a consumer litigation funding company, the consumer litigation funding company may communicate with the consumer through electronic mail if the consumer consents in writing in the consumer litigation funding contract to such communication through electronic mail.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.160 Translation of consumer litigation funding contract written in language other than English; assessment of fee to verify compliance with requirements. (NRS 604C.200)

1. A licensee that uses a form or a consumer litigation funding contract written in a language other than English shall have the document translated into English and shall maintain a copy of the document with its English translation.

2. A document translated pursuant to this section must be:

(a) Translated by an interpreter who is:

(1) Certified by the Court Administrator in accordance with the provisions of NRS 1.510 and rules adopted pursuant thereto; or

(2) Approved in writing by the Division of Financial Institutions of the Department of Business and Industry.

(b) Accompanied by a certificate issued by the interpreter. The certificate must:

(1) Declare that the translated document is a true and complete translation of the document written in a language other than English;

(2) Identify the document written in a language other than English and its English translation;

(3) Include the date of the translation; and

(4) Include the name, address, telephone number and electronic mail address, if any, of the interpreter.

3. The Commissioner may require a licensee to provide a translation of any nonstandard document that is written in a language other than English.

4. The Commissioner may assess a licensee for all costs incurred by the Commissioner to verify the licensee’s compliance with this section.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

LICENSING; FEES AND ASSESSMENTS

NAC 604C.200 Prerequisites to engaging in business. (NRS 604C.200) A person shall not engage in the business of a consumer litigation funding company unless:

1. The person has been issued a license pursuant to NRS 604C.560; and

2. The location of each office of the business complies with the provisions of any applicable planning and zoning ordinances.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.205 Issuance and delivery of license; requirement to display. (NRS 604C.200) Upon entering an order granting an application pursuant to NRS 604C.560, the Commissioner will issue and deliver a license to the licensee for each location where the licensee proposes to do business pursuant to paragraph (d) of subsection 1 of NRS 604C.500. The licensee shall prominently display the license at each location where the licensee proposes to do business pursuant to paragraph (d) of subsection 1 of NRS 604C.500.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.210 Additional requirements for licensure; grounds for denial. (NRS 604C.200)

1. A partner, officer, director, manager or member who acts in a managerial capacity and registered agent of the business entity, if applicable, must satisfy the requirements of NRS 604C.510 at the time a business entity applies for a license pursuant to paragraph (b) of subsection 1 of NRS 604C.500.

2. If the provisions of subsection 1 are not satisfied, the Commissioner will not issue a license to the business entity pursuant to NRS 604C.560.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.215 Notice of certain name changes related to license; approval of change. (NRS 604C.200)

1. A licensee who wishes to change the name of the licensee or change an officer, director or manager or member who acts in a managerial capacity of the licensee must, not later than 10 days before making the change, give written notice of the proposed change to the Commissioner.

2. Upon receipt of the proposed change pursuant to subsection 1, the Commissioner will provide written approval of the change and the date of the approval.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.220 License: Expiration, renewal, suspension, reinstatement, revocation; fee. (NRS 604C.200, 604C.540)

1. A license issued pursuant to NRS 604C.560 expires January 31 of the year following the date of issuance and expires on January 31 of each year thereafter.

2. On or before January 31 of each year, a licensee may renew his or her license upon the approval of the Commissioner if:

(a) The licensee files an application showing that the licensee conforms with the requirements for an initial application as set forth in this chapter and chapter 604C of NRS; and

(b) The licensee pays a fee of $1,000 for the renewal of the license.

3. If a licensee fails to renew his or her license pursuant to subsection 2 on or before January 31 of each year, the Commissioner will deem the license to be suspended. A licensee shall not engage in the business of a consumer litigation funding company if his or her license is suspended.

4. The Commissioner may reinstate a license that is suspended pursuant to subsection 3 if the licensee whose license is suspended, within 10 business days after his or her license is suspended:

(a) Notifies the Commissioner of his or her intent to reinstate the license;

(b) Submits an application pursuant to paragraph (a) of subsection 2; and

5. If a licensee fails to comply with the requirements for reinstatement of his or her license pursuant to subsection 4, the Commissioner will deem the license to be revoked. A licensee whose license is revoked shall apply for and obtain a new license pursuant to this chapter and chapter 604C of NRS before he or she may engage in the business of a consumer litigation funding company.

6. It is the responsibility of the licensee to renew a license issued pursuant to this chapter and chapter 604C of NRS on or before January 31 of each year. A lack of notice from the Commissioner to any person concerning the expiration of a license or the need to renew a license is not justification or excuse for failure to renew a license on or before January 31 and does not constitute grounds for a waiver of any of the requirements of this chapter or chapter 604C of NRS.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.225 Fees for licensure; refund for withdrawal or denial. (NRS 604C.200, 604C.540)

1. An application submitted to the Commissioner pursuant to NRS 604C.500 must be accompanied by:

(a) A nonrefundable fee of $1,000 for the application and survey;

(b) A nonrefundable investigation fee of $50 for investigating each individual owner, partner, officer, director and manager or member who acts in a managerial capacity of the business entity applying to be a licensee; and

2. If the Commissioner considers an application withdrawn pursuant to subsection 3 of NRS 604C.500 and the initial licensing fee set forth in paragraph (c) of subsection 1 has been submitted to the Commissioner or if the Commissioner does not grant an application pursuant to NRS 604C.560, the Commissioner shall refund the fee paid pursuant to paragraph (c) of subsection 1 to the applicant not later than 30 days after the withdrawal or denial.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.230 Assessment for costs of legal services provided by Attorney General; failure to pay grounds for revocation of license. (NRS 604C.200, 658.098)

1. Each licensee shall pay to the Division of Financial Institutions of the Department of Business and Industry the assessment to cover the costs of legal services provided by the Attorney General to the Commissioner and the Division which is imposed pursuant to NRS 658.098.

2. The Division shall bill each licensee for the assessment described in subsection 1. The licensee shall pay the assessment within 30 days after the date on which the licensee receives the bill.

3. A charge of 10 percent of the assessment described in subsection 1 will be imposed on any licensee if payment for an assessment described in subsection 1 is received by the Division after the date on which the assessment is due.

4. Failure to pay the assessment described in subsection 1 constitutes grounds for the revocation of the license of the licensee.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

RECORDS, REPORTS AND EXAMINATIONS

NAC 604C.300 Duty of licensee to make available certain records. (NRS 604C.200) Each licensee who operates an office or other place of business within this State that is licensed pursuant to chapter 604C of NRS shall make available at the office or place of business within this State the books, accounts, papers, records and files of the office or place of business to the Commissioner or a representative of the Commissioner.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.305 Failure to maintain required records: Submission of audited financial statement. (NRS 604C.200)

1. If the Commissioner finds that records of a licensee are not maintained pursuant to NRS 604C.600 to 604C.640, inclusive, the Commissioner may require the licensee to submit an audited financial statement prepared from his or her records by a certified public accountant who holds a certificate to engage in the practice of public accounting in this State.

2. The statement required pursuant to subsection 1 must be submitted within 60 days after the Commissioner requests the statement. The Commissioner may grant a reasonable extension for the submission if the extension is requested before the statement is due.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.310 Fees for supervision, examination, audit, investigation or hearing; failure to pay grounds for revocation of license. (NRS 604C.200, 604C.610, 604C.630, 658.101)

1. The Commissioner will charge and collect a fee of $75 per hour from each licensee for any supervision, examination, audit, investigation or hearing conducted pursuant to chapter 604C of NRS.

2. The Commissioner will bill each licensee upon completion of the activity for the fee established in subsection 1. The fee must be paid within 30 days after the date on which the bill is received. In addition to any other fee allowed by this chapter or chapter 604C of NRS, and except as otherwise provided in this subsection, any payment received after that date must include a penalty of 10 percent of the fee plus an additional 1 percent of the fee for each month, or portion of a month, that the fee is not paid. The Commissioner may waive the penalty for good cause.

3. Failure of a licensee to pay the fee required in subsection 1, as provided in this section, constitutes grounds for revocation of his or her license.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.315 Assessment for costs related to audits and examinations; late charge. (NRS 604C.200, 604C.620)

1. Except as otherwise provided in NAC 658.030, each licensee shall pay to the Division of Financial Institutions of the Department of Business and Industry an annual assessment of $300 to cover costs related to the employment of a certified public accountant and the performance of audits and examinations conducted by the Division.

2. The Division shall bill each licensee for the assessment, which must be paid within 30 days after the date on which the bill is received.

3. In addition to any other fee allowed by this chapter or chapter 604C of NRS, a charge of 10 percent of the assessment will be imposed on any licensee whose assessment is received by the Division after the date on which the assessment is due.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.320 Annual report by licensee; requirements. (NRS 604C.200) The report due on or before January 31 pursuant to NRS 604C.640 must:

1. Be filed:

(a) With the Commissioner with the application for renewal required pursuant to NAC 604C.220; and

(b) On a form prescribed by the Commissioner; and

2. In addition to the number of consumer litigation funding transactions in which the company engaged in this State for the immediately preceding year pursuant to paragraph (a) of subsection 1 of NRS 604C.640, contain for each consumer litigation funding transaction:

(a) The name of the consumer;

(b) The funded amount for each consumer; and

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.330 Confidentiality of certain records and documents. (NRS 604C.200) Except as otherwise provided in subsection 3 of NRS 604C.640, an application for a license and financial records, if any, submitted by an applicant pursuant to the provisions of this chapter and chapter 604C of NRS, financial records or other documents submitted by a licensee pursuant to an audit, examination or investigation conducted by the Commissioner and any report of examination made by the Commissioner are confidential and may be disclosed only to an authorized employee of the Division of Financial Institutions of the Department of Business and Industry or an agency of this State, any other state or Federal Government that is investigating the activities of an applicant or a licensee or a court upon a court order.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

COMPLAINTS ALLEGING VIOLATION

NAC 604C.600 Required notice of right to file written complaint. (NRS 604C.200)

1. For the purpose of NRS 604C.820, a licensee shall post the notice set forth in subsection 2. The following conditions apply to the notice:

(a) If printed, the notice shall be printed in at least 16-point bold type or font with all upper-case letters being printed in at least 18-point type or font.

(b) If handwritten or displayed digitally or by other electronic means, the notice must be in characters that are equivalent in legibility and size to the type and font required for a printed notice.

(c) If the licensee uses a language other than English for the consumer litigation funding contract, the notice must be posted in English and also in the language other than English.

2. The following notice shall be posted on the Internet website of the licensee, at the physical location where the licensee conducts business and within the body of the consumer litigation funding contract. The notice shall be in substantially the following form:

NOTICE OF RIGHT TO FILE A WRITTEN COMPLAINT TO THE

COMMISSIONER OF FINANCIAL INSTITUTIONS

You may file a written complaint with the Commissioner of Financial Institutions by submitting a signed complaint to the Office of the Commissioner. The form required to file a complaint can be found on the following Internet website for Financial Institutions: www.fid.nv.gov. You can also request the form by calling the following toll-free telephone number: 1 (866) 858-8951.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)

NAC 604C.605 Receipt of complaint by Commissioner; provision of copy to accused licensee; filing of verified answer; allegations deemed admitted if answer not filed; confidentiality. (NRS 604C.200)

1. Upon the receipt of a complaint filed pursuant to NRS 604C.820, the Commissioner shall send a copy of the complaint to the licensee named in the complaint.

2. The Commissioner may require the accused licensee or authorized representative of the licensee to file a verified answer to the complaint within 10 business days after sending the copy of the complaint pursuant to subsection 1. The Commissioner may, for good cause shown, extend the time to file a verified answer for a period not to exceed 60 days.

3. If the licensee, or an authorized representative of the licensee, fails to file a verified answer within the time prescribed by the Commissioner pursuant to subsection 2, the licensee is deemed to have admitted to the allegations contained in the complaint.

4. Subject to the discretion of the Commissioner and except as otherwise provided in NAC 604C.330, a complaint filed with the Commissioner, any documents filed with the complaint and any report or information resulting from an investigation of a complaint are confidential.

(Added to NAC by Comm’r of Financial Institutions by R036-20, eff. 12-29-2020)