SB261 Alabama 2017 Session

Updated Feb 27, 2026

Notable

Summary

Primary Sponsor: Tom Whatley
Republican
Session: Regular Session 2017
Title: Consumer lawsuit lenders, licensing, certain provisions of Mini Code apply to loans and extension of credit, Alabama Consumer Lawsuit Lending Act
Summary: SB261 would regulate consumer lawsuit lenders by licensing them, applying consumer lending rules, and capping finance charges on these loans.
What This Bill Does
It defines who qualifies as a consumer lawsuit lender and what counts as a consumer lawsuit lending. It requires any such lender to obtain a license from the State Banking Department before making loans after December 31, 2017, regardless of prior activity. It sets a maximum finance charge of $10 per $100 of the loan principal per year, applicable to any loan or extension of credit, regardless of size or term. It also states that certain provisions of the Mini Code apply to these lenders and lending agreements, and that the State Banking Department can create rules and interpretations for enforcement.

Who It Affects
Consumers who may borrow money based on their potential legal recovery; their loans would be regulated, with charges capped and repayment tied to recovery.
Consumer lawsuit lenders (lending companies or individuals); they must obtain a state license, follow applicable lending rules, and comply with the finance charge cap.

Key Provisions
Defines consumer, consumer lawsuit lender, consumer lawsuit lending, and consumer lawsuit lending agreements, with repayment tied to the consumer's recovery and lender recourse limited to recovered amounts.
Requ:ires license from the State Banking Department to make consumer lawsuit loans or extensions of credit after December 31, 2017, regardless of prior loan volume.
Finance charge cap: not more than $10 per $100 of principal per year, applicable to all such loans regardless of amount or term.
Finance charges are defined to include any amount paid above the principal, and are not required to be expressed as a percentage of recovery.
Certain provisions of Chapter 19, Title 5, of the Code (Mini Code) apply to these lenders and their lending agreements.
The Superintendent of Banks may promulgate rules and issue interpretations for enforcement of the act.
The act does not supersede the Alabama Securities Act.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Consumers and Consumer Protection