NRS: CHAPTER 604C - CONSUMER LITIGATION FUNDING

[Rev. 6/29/2024 4:38:16 PM--2023]

CHAPTER 604C - CONSUMER LITIGATION FUNDING

GENERAL PROVISIONS

NRS 604C.010 Definitions.

NRS 604C.020 “Advertise” defined.

NRS 604C.030 “Applicant” defined.

NRS 604C.040 “Charges” defined.

NRS 604C.050 “Commissioner” defined.

NRS 604C.060 “Consumer” defined.

NRS 604C.070 “Consumer litigation funding” defined.

NRS 604C.080 “Consumer litigation funding company” or “company” defined.

NRS 604C.090 “Consumer litigation funding contract” defined.

NRS 604C.100 “Consumer litigation funding transaction” defined.

NRS 604C.110 “Document preparation fee” defined.

NRS 604C.120 “Funded amount” defined.

NRS 604C.130 “Funding date” defined.

NRS 604C.140 “Immediate family member” defined.

NRS 604C.150 “Legal claim” defined.

NRS 604C.160 “Licensee” defined.

NRS 604C.165 “Nationwide Multistate Licensing System and Registry” or “Registry” defined.

NRS 604C.170 “Resolution date” defined.

NRS 604C.200 Regulations.

NRS 604C.220 Assignment of legal claim; applicability.

NRS 604C.240 Applicability of attorney-client relationship.

REGULATION OF BUSINESS PRACTICES

NRS 604C.300 Certain acts related to the operation of a consumer funding company prohibited.

NRS 604C.310 Limitations on amount to be paid to consumer litigation funding company under consumer litigation funding contract.

NRS 604C.320 License required.

NRS 604C.330 Licensee must conduct business in accordance with license.

NRS 604C.340 Application to persons seeking to evade certain provisions.

NRS 604C.350 Written consumer litigation funding contract required; contents.

NRS 604C.360 Required disclosures which constitute material terms of consumer litigation funding contract.

NRS 604C.370 Additional required disclosures.

NRS 604C.380 Notice of cancellation of consumer litigation funding contract.

NRS 604C.390 Required assets.

NRS 604C.400 Registered agent.

LICENSING

NRS 604C.500 Application for license.

NRS 604C.510 Additional materials to be submitted with application; grounds for denial of license.

NRS 604C.520 Statement concerning obligation for child support required for issuance or renewal of license. [Effective until the date of the repeal of 42 U.S.C. § 666, the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings.]

NRS 604C.530 Suspension of license; reinstatement of license. [Effective until the date of the repeal of 42 U.S.C. § 666, the federal law requiring each state to establish procedures for withholding, suspending and restricting the professional, occupational and recreational licenses for child support arrearages and for noncompliance with certain processes relating to paternity or child support proceedings.]

NRS 604C.540 Application fees; surety bond; regulations concerning application fees and surety bond.

NRS 604C.550 Investigation of applicant; notice; hearing; order; request hearing; regulations.

NRS 604C.560 Issuance of license.

NRS 604C.565 Expiration of license; procedure for renewal; cancellation and reinstatement.

NRS 604C.570 Change of address by licensee: Notice; approval by Commissioner; penalty for failure to provide required notice.

NRS 604C.580 License not transferable or assignable.

NATIONWIDE MULTISTATE LICENSING SYSTEM AND REGISTRY

NRS 604C.583 Commissioner authorized to take action to participate in Registry; charges for use; regulations; provisions do not affect authority of Commissioner regarding licensing.

NRS 604C.586 Submission and processing of fingerprints.

NRS 604C.589 Commissioner to report information to Registry; confidentiality of information provided; Commissioner authorized to enter into certain agreements and arrangements.

NRS 604C.592 Additional materials to be submitted to Registry.

NRS 604C.595 Licensee required to register and maintain unique identifier; Commissioner authorized to issue license through Registry; references to Commissioner deemed references to Registry.

RECORDS, REPORTS AND EXAMINATIONS

NRS 604C.600 Required books and records.

NRS 604C.610 Annual examinations by Commissioner; fees for examination.

NRS 604C.620 Independent audit and examination: Payment of assessment; cooperation.

NRS 604C.630 Fees for audit.

NRS 604C.640 Annual report by licensee; composite reports; Commissioner may require additional reports.

REMEDIES; ENFORCEMENT; PENALTIES

NRS 604C.800 Remedies for certain willful violations.

NRS 604C.810 Commissioner to enforce chapter; penalties.

NRS 604C.820 Person may file complaint alleging violation; requirements; duties of Commissioner when complaint is filed.

NRS 604C.830 Suspension or revocation of license by Commissioner.

NRS 604C.840 Administrative fines.

NRS 604C.850 Contract void if deceptive and abusive violation.

_________

GENERAL PROVISIONS

NRS 604C.010 Definitions. As used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 604C.020 to 604C.170, inclusive, have the meanings ascribed to them in those sections.

(Added to NRS by 2019, 2400; A 2021, 2053)

NRS 604C.020 “Advertise” defined. “Advertise” means the commercial use of any medium, including, without limitation, radio, television, the Internet or a similar medium of communication, by a consumer litigation funding company for the purpose of inducing a consumer to enter into a consumer litigation funding transaction.

(Added to NRS by 2019, 2400)

NRS 604C.030 “Applicant” defined. “Applicant” means a person who applies to the Commissioner to obtain a license to engage in the business of a consumer litigation funding company pursuant to the provisions of this chapter. The term does not include a parent company or affiliate of such a person.

(Added to NRS by 2019, 2400)

NRS 604C.040 “Charges” defined. “Charges” means the amount of money to be paid to a consumer litigation funding company by a consumer above the funded amount provided by the consumer litigation company to the consumer. The term includes, without limitation, administrative fees, origination fees, underwriting fees or other fees, however denominated. The term does not include a document preparation fee.

(Added to NRS by 2019, 2400)

NRS 604C.050 “Commissioner” defined. “Commissioner” means the Commissioner of Financial Institutions.

(Added to NRS by 2019, 2400)

NRS 604C.060 “Consumer” defined. “Consumer” means a natural person who:

1. Resides or is domiciled in this State; and

2. Has a pending legal claim.

(Added to NRS by 2019, 2400)

NRS 604C.070 “Consumer litigation funding” defined. “Consumer litigation funding” means the money provided directly or indirectly to a consumer by a consumer litigation funding company in a consumer litigation funding transaction.

(Added to NRS by 2019, 2400)

NRS 604C.080 “Consumer litigation funding company” or “company” defined.

1. “Consumer litigation funding company” or “company” means a person that enters into a consumer litigation funding transaction with a consumer.

2. The term does not include:

(a) An immediate family member of a consumer;

(b) An attorney or accountant who provides services to a consumer;

(d) A medical factoring company; or

(e) A financial institution or similar entity:

(1) That provides financing to a consumer litigation funding company; or

(2) To which a consumer litigation funding company grants a security interest or transfers any right or interest in a consumer litigation funding transaction.

(Added to NRS by 2019, 2400)

NRS 604C.090 “Consumer litigation funding contract” defined. “Consumer litigation funding contract” means a written agreement between a consumer and a consumer litigation funding company that provides for a consumer litigation funding transaction.

(Added to NRS by 2019, 2401)

NRS 604C.100 “Consumer litigation funding transaction” defined. “Consumer litigation funding transaction” means a nonrecourse transaction in which:

1. A consumer litigation funding company provides consumer litigation funding to a consumer in an amount that does not exceed $500,000; and

2. The consumer assigns to the company a contingent right to receive an amount of the potential proceeds of a settlement, judgment, award or verdict obtained in the legal claim of the consumer.

(Added to NRS by 2019, 2401)

NRS 604C.110 “Document preparation fee” defined. “Document preparation fee” means a one-time fee per legal claim, not to exceed $500, assessed for document preparation services related to the preparation of a consumer litigation funding contract.

(Added to NRS by 2019, 2401)

NRS 604C.120 “Funded amount” defined. “Funded amount” means the amount of consumer litigation funding provided to or on behalf of a consumer in a consumer litigation funding transaction. The term does not include charges.

(Added to NRS by 2019, 2401)

NRS 604C.130 “Funding date” defined. “Funding date” means the date on which a company transfers to a consumer the funded amount of consumer litigation funding.

(Added to NRS by 2019, 2401)

NRS 604C.140 “Immediate family member” defined. “Immediate family member” means a parent, sibling, child by blood, adoption or marriage, spouse, grandparent or grandchild.

(Added to NRS by 2019, 2401)

NRS 604C.150 “Legal claim” defined. “Legal claim” means a bona fide civil claim or cause of action.

(Added to NRS by 2019, 2401)

NRS 604C.160 “Licensee” defined. “Licensee” means a person who has been issued one or more licenses to engage in the business of a consumer litigation funding company.

(Added to NRS by 2019, 2401)

NRS 604C.165 “Nationwide Multistate Licensing System and Registry” or “Registry” defined. “Nationwide Multistate Licensing System and Registry” or “Registry” has the meaning ascribed to it in NRS 604A.083.

(Added to NRS by 2021, 2050)

NRS 604C.170 “Resolution date” defined. “Resolution date” means the date upon which:

1. A consumer, or a person on behalf of a consumer, delivers to a consumer litigation company an amount of money equivalent to the funded amount plus any agreed upon charges; or

2. The legal claim of a consumer is lost or abandoned.

(Added to NRS by 2019, 2401)

NRS 604C.200 Regulations. The Commissioner may adopt regulations for the administration and enforcement of this chapter, in addition to and not inconsistent with this chapter.

(Added to NRS by 2019, 2401)

NRS 604C.220 Assignment of legal claim; applicability.

1. The contingent right to receive an amount of the potential proceeds of a legal claim is assignable by a consumer.

2. Nothing in this chapter shall be construed to cause any consumer litigation funding transaction conforming to this chapter to be deemed a loan or to be subject to any of the provisions of law governing loans. A consumer litigation funding transaction that complies with this chapter is not subject to any other statutory or regulatory provisions governing loans or investment contracts. If there is a conflict between the provisions of this chapter and any other statute, the provisions of this chapter control.

3. Only a lien imposed by an attorney pursuant to NRS 18.015 that is related to the legal claim of the consumer or a lien imposed by Medicare that is related to the legal claim of a consumer takes priority over any lien imposed by a consumer litigation funding company. All other liens take priority by normal operation of law.

(Added to NRS by 2019, 2406)

NRS 604C.240 Applicability of attorney-client relationship. Any communication between the attorney of a consumer in a legal claim and a consumer litigation funding company as it pertains to a consumer litigation funding transaction is subject to the attorney-client privilege, including, without limitation, the work-product doctrine.

(Added to NRS by 2019, 2406)

REGULATION OF BUSINESS PRACTICES

NRS 604C.300 Certain acts related to the operation of a consumer funding company prohibited.

1. A consumer litigation funding company shall not:

(a) Pay or offer to pay a commission, referral fee or other form of consideration to an attorney, law firm, medical provider, chiropractic physician, naprapath or physical therapist, or any employee of such a person, for referring a consumer to the company.

(b) Accept a commission, referral fee or other form of consideration from an attorney, law firm, medical provider, chiropractic physician, naprapath or physical therapist, or any employee of such a person.

(c) Intentionally advertise materially false or misleading information regarding the products or services of the consumer litigation funding company.

(d) Refer a consumer to engage a specific attorney, law firm, medical provider, chiropractic physician, naprapath or physical therapist, or any employee of such a person. A company may refer a consumer in search of legal representation to a lawyer referral service operated, sponsored or approved by the State Bar of Nevada or a local bar association.

(e) Except as otherwise provided in subsection 2, knowingly provide consumer litigation funding to a consumer who has previously assigned or sold a portion of the right of the consumer to proceeds from his or her legal claim to another company without first making payment to or purchasing the entire funded amount and charges of that company, unless a lesser amount is otherwise agreed to in writing by the consumer litigation funding companies.

(f) Receive any right to, or make, any decisions with respect to the conduct, settlement or resolution of the legal claim of a consumer.

(g) Knowingly pay or offer to pay for court costs, filing fees or attorney’s fees during or after the resolution of the legal claim of a consumer using money from a consumer litigation funding transaction.

2. Two or more consumer litigation funding companies may agree to contemporaneously provide consumer litigation funding to a consumer if the consumer and the attorney of the consumer agree to the arrangement in writing.

3. An attorney or law firm retained by the consumer in connection with his or her legal claim shall not have a financial interest in the consumer litigation funding company offering consumer litigation funding to that consumer.

4. An attorney who has referred the consumer to his or her retained attorney or law firm shall not have a financial interest in the consumer litigation funding company offering consumer litigation funding to that consumer.

5. A consumer litigation funding company shall not use any form of consumer litigation funding contract in this State unless the contract has been filed with the Commissioner in accordance with procedures for filing prescribed by the Commissioner.

(Added to NRS by 2019, 2405; A 2023, 1707)

NRS 604C.310 Limitations on amount to be paid to consumer litigation funding company under consumer litigation funding contract.

1. A consumer litigation funding company shall require the amount to be paid to the company under a consumer litigation funding contract to be set as a predetermined amount based upon intervals of time from the funding date though the resolution date. The amount must not exceed the funded amount plus charges not to exceed a rate of 40 percent annually.

2. The amount to be paid to a company under a consumer litigation funding contract must not be determined as a percentage of the recovery of the legal claim of a consumer.

(Added to NRS by 2019, 2405)

NRS 604C.320 License required.

1. A person shall not engage in the business of a consumer litigation funding company in this State without having first obtained a license from the Commissioner pursuant to this chapter.

2. For the purpose of this section, a person is “engaged in the business of a consumer litigation funding company” if the person:

(a) Solicits or engages in consumer litigation funding transactions in this State; or

(b) Is located in this State and solicits or engages in consumer litigation funding transactions outside of this State.

3. Any person and the several members, officers, directors, agents and employees thereof who violate or participate in the violation of this section are guilty of a misdemeanor.

(Added to NRS by 2019, 2406)

NRS 604C.330 Licensee must conduct business in accordance with license. A licensee shall not conduct the business of a consumer litigation funding company under any name or at a place other than stated in the license. Nothing in this section shall be construed to prohibit:

1. Consumer litigation funding transactions by mail; or

2. Accommodations for a consumer when necessitated by hours of employment, sickness or other emergency situations.

(Added to NRS by 2019, 2412)

NRS 604C.340 Application to persons seeking to evade certain provisions. The provisions of NRS 604C.320 shall apply to any person who seeks to evade its application by any device, subterfuge or pretense whatever, including, but not thereby limiting the generality of the foregoing:

1. The loan, forbearance, use or sale of credit (as guarantor, surety, endorser, comaker or otherwise), money, goods, or things in action.

2. The use of collateral or related sales or purchases of goods or services, or agreements to sell or purchase, whether real or pretended.

3. Receiving or charging compensation for goods or services, whether or not sold, delivered or provided.

4. The real or pretended negotiation, arrangement or procurement of a loan through any use or activity of a third person, whether real or fictitious.

(Added to NRS by 2019, 2406)

NRS 604C.350 Written consumer litigation funding contract required; contents.

1. A consumer litigation funding contract must:

(a) Be written in a clear and comprehensible language that is understandable to an ordinary layperson.

(b) Be filled out completely when presented to the consumer for signature.

(c) Contain a provision advising a consumer of the right to cancel the contract. Such a provision must provide that the consumer may cancel the contract without penalty or further obligation if, within 5 business days after the funding date, the consumer:

(1) Delivers in person to the consumer litigation funding company, at the address specified in the contract, the uncashed check issued by the consumer litigation funding company or the full amount of money that was disbursed to the consumer by the consumer litigation funding company; or

(2) Mails, by insured, certified or registered mail, to the address specified in the contract, a notice of cancellation and includes in such mailing the uncashed check issued by the consumer litigation funding company or a return of the full amount of money that was disbursed to the consumer by the consumer litigation funding company.

(d) Contain the initials of the consumer on each page.

(e) Contain a statement that the consumer is not required to pay any other fees or charges other than what is agreed to and disclosed within the contract.

(f) If the consumer seeks more than one consumer litigation funding contract with the same company, contain a disclosure providing the cumulative amount due from the consumer for all consumer litigation funding transactions, including, without limitation, all fees and charges under all consumer litigation funding contracts if repayment is made any time after the contracts are executed.

(g) Contain a statement of the maximum amount the consumer may be obligated to pay under the consumer litigation funding contract other than in the case of material breach, fraud or misrepresentation by the consumer.

(h) Contain clear, conspicuous and accurate details of how charges, including, without limitation, any applicable fees, are incurred or accrued.

(i) Contain a statement that the consumer litigation funding contract is governed by the laws of the State of Nevada.

2. A consumer litigation contract must contain a written acknowledgment by the attorney retained by the consumer in the legal claim of the consumer attesting to the following:

(a) To the best of the knowledge of the attorney, the funded amount and any charges and applicable fees relating to the consumer litigation funding have been disclosed to the consumer.

(b) The attorney is being paid on a contingency basis pursuant to a written fee agreement.

(c) All proceeds of the legal claim will be disbursed via the trust account of the attorney or a settlement fund established to receive the proceeds of the legal claim on behalf of the consumer.

(d) The attorney is following the written irrevocable instructions of the consumer with regard to the consumer litigation funding transaction.

(e) The attorney is obligated to disburse money from the legal claim and take any other steps to ensure that the terms of the consumer litigation funding contract are fulfilled.

(f) The attorney has not received a referral fee or other consideration from the consumer litigation funding company in connection with the consumer litigation funding, nor will the attorney receive such fee or other consideration in the future.

(g) The attorney has not provided advice related to taxes, benefits or any other financial matter regarding this transaction.

3. A consumer litigation funding contract that does not contain the written acknowledgment required by subsection 2 is void. If the acknowledgment is completed, the contract shall remain valid if the consumer terminates the representation of the initial attorney or retains a new attorney with respect to the legal claim of the consumer.

(Added to NRS by 2019, 2401)

NRS 604C.360 Required disclosures which constitute material terms of consumer litigation funding contract. A consumer litigation funding contract must contain the disclosures specified in this section, which shall constitute material terms of the contract. Except as otherwise provided in this section, the disclosure shall be typed in at least 12-point bold type or font and be placed clearly and conspicuously within the contract, as follows:

1. On the front page of the contract under appropriate headings, language specifying:

(a) The funded amount to be paid to the consumer by the consumer litigation funding company;

(b) An itemization of one-time charges and fees;

(c) The maximum total amount to be assigned by the consumer to the company, including, without limitation, the funded amount and all charges and fees; and

(d) A payment schedule to include the funded amount, charges and fees, listing all dates and the amount due at the end of each 180-day period from the funding date, until the date the maximum amount is due to the company by the consumer to satisfy the amount due under the consumer litigation funding contract.

2. Within the body of the contract, substantially the following form:

Consumer’s right to cancellation: You may cancel this contract without penalty or further obligation within five (5) business days after the funding date if you either:

1. Deliver in person to the consumer litigation funding company at the address specified in the contract the uncashed check that was issued by the consumer litigation funding company or the full amount of money that was disbursed to you by the company; or

2. Mail, by insured, certified or registered mail, to the consumer litigation funding company at the address specified in the contract a notice of cancellation and include in such mailing the uncashed check issued by the consumer litigation funding company or a return of the full amount of money that was disbursed to you by the company.

3. Within the body of the contract, in substantially the following form:

The consumer litigation funding company shall not have a role in deciding whether, when and how much the legal claim is settled for. The consumer and the attorney of the consumer shall notify the company of the outcome of the legal claim by settlement or adjudication before the resolution date. The company may seek updated information about the status of the legal claim. The company shall not interfere with the independent professional judgment of the attorney in the handling of the legal claim or any settlement thereof.

4. Within the body of the contract, in all capital letters and in at least a 12-point bold type or font contained within a box:

THE FUNDED AMOUNT AND AGREED UPON 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 CONSUMER LITIGATION FUNDING COMPANY) ANYTHING IF THERE ARE NO PROCEEDS FROM YOUR LEGAL CLAIM, UNLESS YOU HAVE VIOLATED ANY MATERIAL TERM OF THIS CONTRACT OR YOU HAVE KNOWINGLY PROVIDED FALSE INFORMATION OR COMMITTED FRAUD AGAINST (INSERT NAME OF THE CONSUMER LITIGATION FUNDING COMPANY).

5. Located immediately above the place on the contract where the signature of the consumer is required, in 12-point bold type or font:

Do not sign this contract before you read it completely. Do not sign this contract if it contains any blank spaces. You are entitled to a completely filled-in copy of the contract before you sign this contract. You should obtain the advice of an attorney. Depending on the circumstances, you may wish to consult a tax, public or private benefit planning or financial professional. You acknowledge that your attorney in the legal claim has provided no tax, public or private benefit planning or financial advice regarding this transaction. You further acknowledge that your attorney has explained the terms and conditions of the consumer litigation funding contract.

6. Within the body of the contract, in substantially the following form:

A copy of the executed contract must be promptly delivered to the attorney for the consumer.

(Added to NRS by 2019, 2402)

NRS 604C.370 Additional required disclosures.

1. A consumer litigation funding contract must include a written disclosure, signed by the consumer that is typed in at least a 12-point font.

2. The disclosure described in subsection 1 must be separate from the consumer litigation funding contract described in NRS 604C.360.

3. The disclosure described in subsection 1 must include, without limitation:

(a) A summary of all applicable charges and fees;

(b) The full cost of the consumer litigation funding transaction, written in bold font;

(d) A statement that the attorney retained by the consumer in the legal claim of the consumer is being retained on a contingency basis pursuant to a written fee agreement;

(e) A statement that the consumer is fully informed and aware that all proceeds of the legal claim of the consumer will be disbursed via the trust account of the retained attorney or a settlement fund established to receive the proceeds of the legal claim on behalf of the consumer;

(f) A statement that the retained attorney has not received and will not receive a referral fee or other consideration from the consumer litigation funding company in connection with the consumer litigation funding transaction; and

(g) An acknowledgment, signed by the consumer, that the consumer was fully informed and aware of the charges and fees and the full cost of the consumer litigation funding transaction at the time of the execution of the consumer litigation funding contract.

(Added to NRS by 2019, 2404)

NRS 604C.380 Notice of cancellation of consumer litigation funding contract. If a consumer cancels a consumer litigation funding contract pursuant to NRS 604C.350, the consumer litigation funding company shall promptly forward notice of the cancellation to the attorney or law firm retained by the consumer in the legal claim of the consumer.

(Added to NRS by 2019, 2404)

NRS 604C.390 Required assets. Every licensee shall maintain assets of at least $50,000 either used or readily available for use in the conduct of the business of each licensed office.

(Added to NRS by 2019, 2411)

NRS 604C.400 Registered agent. A licensee who has an office or other place of business located outside of this State shall file with the Commissioner the information required pursuant to NRS 77.310 and continuously maintain a registered agent for service of legal process. Such agent must be an attorney who is licensed to practice law in this State and who has an office located in this State.

(Added to NRS by 2019, 2411)

LICENSING

NRS 604C.500 Application for license.

1. A person who wishes to obtain a license from the Commissioner to engage in the business of a consumer litigation funding company shall submit an application to the Commissioner. The application must be made in writing, under oath and on a form prescribed by the Commissioner. The application must include:

(a) If the applicant is a natural person, the name and address of the applicant.

(b) If the applicant is a business entity, the name and address of each:

(1) Partner;

(2) Officer;

(3) Director;

(4) Manager or member who acts in a managerial capacity; and

(5) Registered agent,

Ê of the business entity.

(c) Such other information, as the Commissioner determines necessary, concerning the financial responsibility, background, experience and activities of the applicant and its:

(1) Partners;

(2) Officers;

(3) Directors; and

(4) Managers or members who act in a managerial capacity.

(d) The address of each location at which the applicant proposes to do business under the license.

2. A person may apply for a license for an office or other place of business located outside this State from which the applicant will conduct business in this State if the applicant submits with the application for a license a statement signed by the applicant which states that the applicant agrees to:

(a) Make available at a location within this State the books, accounts, papers, records and files of the office or place of business located outside this State to the Commissioner or a representative of the Commissioner; or

(b) Pay the reasonable expenses for travel, meals and lodging of the Commissioner or a representative of the Commissioner incurred during any investigation or examination made at the office or place of business located outside this State.

Ê The person must be allowed to choose between the provisions of paragraph (a) or (b) in complying with the provisions of this subsection.

3. The Commissioner shall consider an application to be withdrawn if the Commissioner has not received all information and fees required to complete the application within 6 months after the date the application is first submitted to the Commissioner or within such later period as the Commissioner determines in accordance with any existing policies of joint regulatory partners. If an application is deemed to be withdrawn pursuant to this subsection or if an applicant otherwise withdraws an application, the Commissioner shall not issue a license to the applicant unless the applicant submits a new application and pays any required fees.

(Added to NRS by 2019, 2407)

NRS 604C.510 Additional materials to be submitted with application; grounds for denial of license.

1. In addition to any other requirements set forth in this chapter, each applicant must submit proof satisfactory to the Commissioner that the applicant:

(a) Has a good reputation for honesty, trustworthiness and integrity and is competent to transact the business for which the applicant seeks to be licensed in a manner which protects the interests of the general public.

(b) Has not made a false statement of material fact on the application for the license.

(d) Has not had a license issued pursuant to this chapter suspended or revoked within the 10 years immediately preceding the date of the application.

(e) Has not been convicted of, or entered a plea of nolo contendere to, a felony or any crime involving fraud, misrepresentation or moral turpitude.

(f) If the applicant is a natural person:

(1) Is at least 21 years of age; and

(2) Is a citizen of the United States or lawfully entitled to remain and work in the United States.

2. In addition to any other lawful reasons, the Commissioner may refuse to issue a license to an applicant if the applicant:

(a) Has committed or participated in any act for which, if committed or done by a holder of a license, would be grounds for the suspension or revocation of the license.

(b) Has previously been refused a license pursuant to this chapter or has had such a license suspended or revoked.

(d) Has falsified any of the information submitted to the Commissioner in support of the application for a license.

(Added to NRS by 2019, 2407; A 2021, 2053)

1. In addition to any other requirements, a natural person who applies for a license pursuant to this chapter shall:

(a) Include the social security number of the applicant in the application submitted to the Commissioner; and

(b) Submit to the Commissioner the statement prescribed by the Division of Welfare and Supportive Services of the Department of Health and Human Services pursuant to NRS 425.520. The statement must be completed and signed by the applicant.

2. The Commissioner shall include the statement required pursuant to subsection 1 in:

(a) The application or any other forms that must be submitted for the issuance or renewal of the license; or

(b) A separate form prescribed by the Commissioner.

3. A license as a consumer litigation funding company may not be issued or renewed by the Commissioner if the applicant:

(a) Fails to submit the statement required pursuant to subsection 1; or

(b) Indicates on the statement submitted pursuant to subsection 1 that the applicant is subject to a court order for the support of a child and is not in compliance with the order or a plan approved by the district attorney or other public agency enforcing the order for the repayment of the amount owed pursuant to the order.

4. If an applicant indicates on the statement submitted pursuant to subsection 1 that the applicant is subject to a court order for the support of a child and is not in compliance with the order or a plan approved by the district attorney or other public agency enforcing the order for the repayment of the amount owed pursuant to the order, the Commissioner shall advise the applicant to contact the district attorney or other public agency enforcing the order to determine the actions that the applicant may take to satisfy the arrearage.

(Added to NRS by 2019, 2408)

1. If the Commissioner receives a copy of a court order issued pursuant to NRS 425.540 that provides for the suspension of all professional, occupational and recreational licenses, certificates and permits issued to a person who is licensed as a consumer litigation funding company, the Commissioner shall deem the license issued to that person to be suspended at the end of the 30th day after the date on which the court order was issued unless the Commissioner receives a letter issued to the licensee by the district attorney or other public agency pursuant to NRS 425.550 stating that the licensee has complied with the subpoena or warrant or has satisfied the arrearage pursuant to NRS 425.560.

2. The Commissioner shall reinstate the license of a licensee that has been suspended by a district court pursuant to NRS 425.540 if the Commissioner receives a letter issued by the district attorney or other public agency pursuant to NRS 425.550 to the person whose license was suspended stating that the person whose license was suspended has complied with the subpoena or warrant or has satisfied the arrearage pursuant to NRS 425.560.

(Added to NRS by 2019, 2409)

NRS 604C.540 Application fees; surety bond; regulations concerning application fees and surety bond.

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

(a) A nonrefundable fee of not more than $1,000 for the application and survey;

(b) Any additional expenses incurred in the process of investigation as the Commissioner deems necessary; and

2. An applicant shall, at the time of filing an application, file with the Commissioner, a surety bond payable to the State of Nevada and satisfactory to the Commissioner in an amount not to exceed $50,000. The terms of the bond must run concurrent with the period of time during which the license will be in effect. The bond must provide that the applicant will faithfully conform to and abide by the provisions of this chapter and to all regulations lawfully made by the Commissioner under this chapter and to any such person any and all amounts of money that may become due or owing to this State or to such person from the applicant under this chapter during the period for which the bond is given.

3. Each bond must be in a form satisfactory to the Commissioner, issued by a bonding company authorized to do business in this State and must secure the faithful performance of the obligations of the licensee respecting the provision of the services of the consumer litigation funding company.

4. A licensee shall, within 10 days after the commencement of any action or notice of entry of any judgment against the licensee by any creditor or claimant arising out of business regulated by this chapter give notice thereof to the Commissioner by certified mail with details sufficient to identify the action or judgment. The surety shall, within 10 days after it pays any claim or judgment to a creditor or claimant, give notice thereof to the Commissioner by certified mail with details sufficient to identify the creditor or claimant and the claim or judgment so paid.

5. The liability of the surety on a bond is not affected by any misrepresentation, breach of warranty, failure to pay a premium or other act or omission of the licensee, or by any insolvency or bankruptcy of the licensee.

6. The liability of the surety continues as to all transactions entered into in good faith by the creditors and claimants with the agents of the licensee within 30 days after the earlier of:

(a) The death of the licensee or the dissolution or liquidation of his or her business; or

(b) The termination of the bond.

7. A licensee or his or her surety shall not cancel or alter a bond except after notice to the Commissioner by certified mail. The cancellation or alteration is not effective until 10 days after receipt of the notice by the Commissioner. A cancellation or alteration does not affect any liability incurred or accrued on the bond before the expiration of the 30-day period designated in subsection 6.

8. The Commissioner shall adopt regulations establishing the amount of the fees and the bond required pursuant to this section. All money received by the Commissioner pursuant to this section must be placed in the Investigative Account created by NRS 232.545.

(Added to NRS by 2019, 2409)

NRS 604C.550 Investigation of applicant; notice; hearing; order; request hearing; regulations.

1. Upon the filing of the application and the payment of the fees, the Commissioner shall investigate the facts concerning the application and the requirements provided for in this chapter.

2. The Commissioner may hold a hearing on the application at a time not less than 30 days after the application was filed or not more than 60 days after that date. The hearing must be held in the Office of the Commissioner or such other place as the Commissioner may designate. Notice in writing of the hearing must be sent to the applicant and to any licensee to which a notice of the application has been given and to such other person as the Commissioner may see fit, at least 10 days before the date set for the hearing.

3. The Commissioner shall make his or her order granting or denying the application within 10 days after the date of the closing of the hearing, unless the period is extended by written agreement between the applicant and the Commissioner.

4. An applicant is entitled to a hearing on the question of the qualifications of the applicant for licensure upon written request to the Commissioner if:

(a) The Commissioner has notified the applicant in writing that the application has been denied; or

(b) The Commissioner has not issued a license within 60 days after the application for a license was filed.

5. A request for a hearing may not be made more than 15 days after the Commissioner has mailed a written notice to the applicant that the application has been denied and stating in substance the findings of the Commissioner supporting the denial of the application.

6. The Commissioner may adopt regulations to carry out the provisions of this section.

(Added to NRS by 2019, 2410)

NRS 604C.560 Issuance of license. If the Commissioner finds:

1. That the financial responsibility, experience, character and general fitness of the applicant are such as to command the confidence of the public and to warrant belief that the business will be operated lawfully, honestly, fairly and efficiently, within the purposes of this chapter;

2. That the applicant has complied with the provisions of this chapter; and

3. That the applicant has available for the operation of the business liquid assets of at least $50,000,

Ê he or she shall thereupon enter an order granting the application, and file his or her findings of fact together with the transcript of any hearing held under this chapter, and forthwith issue and deliver a license to the applicant.

(Added to NRS by 2019, 2410)

NRS 604C.565 Expiration of license; procedure for renewal; cancellation and reinstatement.

1. A license issued pursuant to the provisions of this chapter expires on December 31 of each year, unless it is renewed. To renew such a license, the licensee must submit to the Commissioner on or after November 1 and on or before December 31 of each year:

(a) An application for renewal; and

(b) The annual license fee.

2. If a licensee fails to submit any item required pursuant to subsection 1 to the Commissioner on or after November 1 and on or before December 31 of any year, the license is cancelled as of December 31 of that year. The Commissioner may reinstate a cancelled license if the licensee submits to the Commissioner on or before February 28 of the following year:

(a) An application for renewal; and

(b) The annual license fee.

(Added to NRS by 2021, 2052)

NRS 604C.570 Change of address by licensee: Notice; approval by Commissioner; penalty for failure to provide required notice.

1. A licensee who wishes to change the address of an office or other place of business for which he or she has a license pursuant to the provisions of this chapter must, at least 10 days before changing the address, give written notice of the proposed change to the Commissioner.

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

3. If a licensee fails to provide notice as required pursuant to subsection 1, the Commissioner may impose a fine in an amount not to exceed $1,000.

(Added to NRS by 2019, 2411)

NRS 604C.580 License not transferable or assignable. A license issued pursuant to this chapter is not transferable or assignable.

(Added to NRS by 2019, 2411)

NATIONWIDE MULTISTATE LICENSING SYSTEM AND REGISTRY

NRS 604C.583 Commissioner authorized to take action to participate in Registry; charges for use; regulations; provisions do not affect authority of Commissioner regarding licensing.

1. The Commissioner may, in furtherance of his or her duties with respect to the issuance and renewal of licenses pursuant to this chapter, participate in the Nationwide Multistate Licensing System and Registry. The Commissioner may take any action with respect to participation in the Registry that the Commissioner deems necessary to carry out his or her duties, including, without limitation:

(a) Facilitating and participating in the establishment and implementation of the Registry;

(b) Establishing relationships or contracts with the Registry or other entities designated by the Registry;

(d) Authorizing the Registry to, on behalf of the Commissioner, collect and process any fees associated with licensure, examinations, fines, assessments and any other similar fees;

(e) Requiring an applicant or licensee to use the Registry to:

(1) Apply for the issuance or renewal of a license;

(2) Amend or surrender a license;

(3) Submit any reports or the results of any examination that the Commissioner may require;

(4) Pay any applicable fees; and

(5) Engage in any other activity that the Commissioner may require; and

(f) Authorizing the Registry to, on behalf of the Commissioner, collect fingerprints in order to receive or conduct a background check on the criminal history of an applicant or licensee.

2. An applicant or licensee shall, in addition to any other fees associated with the license, pay all applicable charges to use the Registry, including, without limitation, any processing charges established by the administrator of the Registry.

3. The Commissioner may adopt any regulations the Commissioner determines to be necessary or appropriate to carry out this section. Such regulations may, without limitation, establish additional procedures and requirements for participation in the Registry.

4. The provisions of this section shall not be construed to replace or affect the authority of the Commissioner to grant, deny, suspend, terminate, revoke or refuse to renew a license.

(Added to NRS by 2021, 2050)

NRS 604C.586 Submission and processing of fingerprints.

1. The Commissioner may require an applicant or licensee to submit a complete set of fingerprints when the Commissioner determines necessary.

2. The Commissioner may use the services of the Registry to process and to submit the fingerprints to the Federal Bureau of Investigation, to the Central Repository for Nevada Records of Criminal History, to any federal or state law enforcement agency or to any other entity authorized to receive such information for the purpose of conducting a background check of the criminal history of an applicant or licensee.

(Added to NRS by 2021, 2051)

NRS 604C.589 Commissioner to report information to Registry; confidentiality of information provided; Commissioner authorized to enter into certain agreements and arrangements.

1. Subject to any limitations or restrictions contained in federal or state law governing the privacy or confidentiality of records, the Commissioner shall report regularly any violations of applicable laws committed by applicants or licensees, enforcement actions and other relevant information to the Registry.

2. The requirements under any federal or state law, including, without limitation, rules of a federal or state court, regarding the privacy and confidentiality of any information or material provided to the Registry and any privilege arising under federal or state law with respect to such information or material, continue to apply to such information or material after it has been disclosed to the Registry. Such information and material may be shared with federal and state regulatory officials with oversight authority over licensees without the loss of privilege or the loss of confidentiality protections provided by federal or state law.

3. The Commissioner may enter into agreements or sharing arrangements with other governmental agencies, the Conference of State Bank Supervisors, the State Regulatory Registry, LLC, or other associations representing governmental agencies.

(Added to NRS by 2021, 2051)

NRS 604C.592 Additional materials to be submitted to Registry.

1. In addition to any other requirements set forth by specific statute, each applicant and each owner, officer, director and responsible person of the applicant, each person in control of the applicant and any other person the Commissioner may require in accordance with guidelines of the Registry or other multistate agreements shall submit to the Registry:

(a) A complete set of fingerprints for submission to the Federal Bureau of Investigation and any other governmental agency or entity authorized to receive such information for a state, national and international background check on the criminal history of the person;

(b) Information concerning the personal history, financial history and experience of the person in a form prescribed by the Registry, including, without limitation, an authorization of the person for the Registry and the Commissioner to obtain:

(1) An independent credit report and credit score from a consumer reporting agency described in section 603(f) of the Fair Credit Reporting Act, 15 U.S.C. § 1681a(f), for the purpose of evaluating the financial responsibility of the person at the time of the submission of the application; and

(2) Additional independent credit reports and credit scores to confirm that the applicant continues to comply with any applicable requirements concerning financial responsibility;

(c) Information related to any administrative, civil or criminal findings made by any governmental jurisdiction concerning the person; and

(d) Any other information concerning the person that the Registry or Commissioner may require.

2. As used in this section:

(a) “Control” has the meaning ascribed to it in NRS 682A.047.

(b) “Responsible person” means a person who is employed by an applicant and who has principal, active managerial authority over the provision of services in this State.

(Added to NRS by 2021, 2051)

NRS 604C.595 Licensee required to register and maintain unique identifier; Commissioner authorized to issue license through Registry; references to Commissioner deemed references to Registry.

1. Each licensee shall register with and maintain a valid unique identifier with the Registry.

2. The Commissioner may issue a license through the Registry.

3. To the extent that the Commissioner has delegated to the Registry any of his or her duties with respect to the issuance and renewal of licenses as authorized by this chapter, any reference to the Commissioner in this chapter shall be deemed to be a reference to the Registry.

4. As used in this section, “unique identifier” means a number or other identifier assigned by the protocols established by the Registry.

(Added to NRS by 2021, 2052)

RECORDS, REPORTS AND EXAMINATIONS

NRS 604C.600 Required books and records.

1. Each licensee shall keep and use in his or her business such books and accounting records as are in accord with sound and accepted accounting practices.

2. Each licensee shall maintain a separate record or ledger card for the account of each borrower and shall set forth separately the amount of cash advance and the total amount of interest and charges, but such a record may set forth precomputed declining balances based on the scheduled payments, without a separation of principal and charges.

3. Each licensee shall preserve all such books and accounting records for at least 2 years after making the final entry therein.

4. Each licensee who operates an office or other place of business outside this State that is licensed pursuant to this chapter shall:

(Added to NRS by 2019, 2411)

NRS 604C.610 Annual examinations by Commissioner; fees for examination.

1. At least once each year, the Commissioner or his or her authorized representative shall make an examination of the place of business of each licensee and of the transactions, books, papers and records of each licensee that pertain to the business licensed under this chapter.

2. For each examination conducted pursuant to subsection 1, the Commissioner shall charge and collect from the licensee a fee for conducting the examination and preparing and typing the report of the examination at the rate established and, if applicable, adjusted pursuant to NRS 658.101.

(Added to NRS by 2019, 2412)

NRS 604C.620 Independent audit and examination: Payment of assessment; cooperation. Each licensee shall pay the assessment levied pursuant to NRS 658.055 and cooperate fully with the audits and examinations performed pursuant thereto.

(Added to NRS by 2019, 2412)

NRS 604C.630 Fees for audit. In addition to any other fee provided by this chapter, the Commissioner shall assess and collect from each licensee the reasonable cost of auditing the books and records of a licensee.

(Added to NRS by 2019, 2412)

NRS 604C.640 Annual report by licensee; composite reports; Commissioner may require additional reports.

1. On or before January 31 of each year, a licensee shall submit a report to the Commissioner and the Registry containing:

(a) The number of consumer litigation funding transactions in which the company engaged in this State for the immediately preceding year;

(b) A summation of the total funded amount of the consumer litigation funding transactions in which the company engaged in this State for the immediately preceding year, expressed in dollars; and

2. If a licensee operated more than one office or provides consumer litigation funding to persons outside of the State, the licensee shall submit a composite report of all consumer litigation funding transactions in which the company engaged for the immediately preceding year.

3. The Commissioner shall make the information contained in the report available to the public upon request in a manner which maintains the confidentiality of the name of each company and consumer.

4. The Commissioner may require a licensee to file more frequent reports as the Commissioner determines necessary.

(Added to NRS by 2019, 2412; A 2021, 2054)

REMEDIES; ENFORCEMENT; PENALTIES

NRS 604C.800 Remedies for certain willful violations.

1. Except as otherwise provided in this section, if a licensee willfully:

(a) Enters into a consumer litigation funding contract for an amount of interest or any other charge or fee that violates the provisions of this chapter or any regulation adopted pursuant thereto;

(b) Demands, collects or receives an amount of interest or any other charge or fee that violates the provisions of this chapter or any regulation adopted pursuant thereto; or

(c) Commits any other act or omission that violates the provisions of this chapter or any regulation adopted pursuant thereto,

Ê the consumer litigation funding contract is void and the licensee is not entitled to collect, receive or retain any principal, interest or other charges or fees with respect to the consumer litigation funding transaction.

2. The provisions of this section do not apply if:

(a) A licensee shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error of computation, notwithstanding the maintenance of procedures reasonably adapted to avoid that error; and

(b) Within 60 days after discovering the error, the licensee notifies the customer of the error and makes whatever adjustments in the account are necessary to correct the error.

(Added to NRS by 2019, 2414)

NRS 604C.810 Commissioner to enforce chapter; penalties.

1. The Commissioner may enforce this chapter and regulations adopted pursuant thereto by taking one or more of the following actions:

(a) Ordering a licensee or a director, employee or other agent of a licensee to cease and desist from any violations;

(b) Ordering a licensee or a director, employee or other agent of a licensee who has caused a violation to correct the violation, including, without limitation, making restitution of money to a person aggrieved by a violation;

(c) Imposing on a licensee or a director, employee or other agent of a licensee who has caused a violation a civil penalty not to exceed $5,000 for each violation; or

(d) Suspending or revoking the license of a licensee in accordance with NRS 604C.830.

2. If a person violates or knowingly authorizes, directs or aids in the violation of a final order issued pursuant to paragraph (a) or (b) of subsection 1, the Commissioner may impose a civil penalty not to exceed $10,000 for each violation.

3. The Commissioner may maintain an action to enforce this chapter in any county in this State.

4. The Commissioner may recover the reasonable costs of enforcing subsections 1, 2 and 3, including, without limitation, attorney’s fees, based on the hours reasonably expended and the hourly rates for attorneys of comparable experience in the community.

5. In determining the amount of a civil penalty imposed pursuant to subsection 1 or 2, the Commissioner shall consider the seriousness of the violation, the good faith of the violator, any previous violations by the violator and any other factor the Commissioner considers relevant to the determination of a civil penalty.

(Added to NRS by 2019, 2412)

NRS 604C.820 Person may file complaint alleging violation; requirements; duties of Commissioner when complaint is filed.

1. A consumer, an attorney for a consumer or any other person who believes that any provision of this chapter has been violated may file a complaint with the Commissioner. Such a complaint must include:

(a) The full name and address of the person filing the complaint;

(b) A clear and concise statement of facts sufficient to establish that the alleged violation occurred, including, without limitation, the date, time and place of the alleged violation and the name of each person involved in the alleged violation; and

(c) A certification by the person filing the complaint that the facts alleged in the complaint are true to the best knowledge and belief of the person.

2. Upon the receipt of a complaint filed pursuant to subsection 1, the Commissioner may investigate and conduct hearings concerning the complaint.

(Added to NRS by 2019, 2414)

NRS 604C.830 Suspension or revocation of license by Commissioner.

1. The Commissioner may suspend or revoke a license if:

(a) The licensee has failed to pay the annual license fee;

(b) The licensee, either knowingly or without any exercise of due care to prevent it, has violated any provision of this chapter or any lawful regulation adopted pursuant thereto;

(d) Any fact or condition exists which would have justified the Commissioner in denying the licensee’s original application for a license pursuant to the provisions of this chapter.

2. If the Commissioner has reason to believe that grounds for revocation or suspension of a license exist, the Commissioner shall give 20 days’ written notice to the licensee stating the contemplated action and, in general, the grounds therefor and set a date for a hearing.

3. At the conclusion of a hearing, the Commissioner shall:

(a) Enter a written order either dismissing the charges, revoking the license or suspending the license for a period of not more than 60 days, which period must include any prior temporary suspension. The Commissioner shall send a copy of the order to the licensee by registered or certified mail.

(b) Impose upon the licensee an administrative fine of not more than $10,000 for each violation by the licensee of any provision of this chapter or any regulation adopted pursuant thereto.

(c) If a fine is imposed pursuant to this section, enter such order as is necessary to recover the costs of the proceeding, including investigative costs and attorney’s fees of the Commissioner.

4. Unless otherwise provided in an order, the order for the revocation or suspension of a license applies only to the license granted to a person for the particular location for which grounds for revocation or suspension exist.

5. A licensee upon whom a fine has been imposed or whose license was suspended or revoked pursuant to this section is entitled to judicial review of the decision in the manner provided by chapter 233B of NRS.

(Added to NRS by 2019, 2413)

NRS 604C.840 Administrative fines.

1. The Commissioner may impose an administrative fine of not more than $50,000 upon a person who, without a license, conducts any business or activity for which a license is required pursuant to the provisions of this chapter.

2. The Commissioner shall afford to any person fined pursuant to subsection 1 reasonable notice and an opportunity for a hearing pursuant to the provisions of NRS 233B.121.

3. A person fined by the Commissioner pursuant to subsection 1 is entitled to judicial review of the decision of the Commissioner in the manner provided by chapter 233B of NRS.

(Added to NRS by 2019, 2413)

NRS 604C.850 Contract void if deceptive and abusive violation.

1. If a court of competent jurisdiction determines that a consumer litigation funding company has willfully committed a deceptive and abusive violation of this chapter with regard to a specific consumer litigation funding transaction, the contract shall be void.

2. Nothing in this chapter shall be construed to restrict the exercise of powers or the performance of the duties of the Attorney General which he or she is authorized to exercise or perform by law.

(Added to NRS by 2019, 2406)