Sec. 507. Preservation of consumers’ claims and defenses

353 words·~2 min read·/bill/118/s/136/is/section-507·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

Beginning on January 1, 2024, for purposes of applying part 433 of title 16, Code of Federal Regulations (commonly known as the Holder in Due Course Rule or the Holder Rule ), the term consumer credit contract , as defined in section 433.1 of such title, shall include income share agreements that— involve the advancing of funds to, or on behalf of, a consumer in return for the consumer’s agreement to an income share agreement; and are related, in whole or substantial part, to a purchase of goods or services from a seller who— refers the consumer to the provider of the income share agreement; or is affiliated with the provider of the income share agreement by common control, contract, or business arrangement.

In applying section 433.2 of title 16, Code of Federal Regulations, to a consumer credit contract that is an income share agreement described in subsection (a)— in lieu of the disclosure required under section 433.2(a) of title 16, Code of Federal Regulations, the contract shall contain the following disclosure in at least 10 point, bold face type: NOTICE ANY HOLDER OF THIS INCOME SHARE AGREEMENT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE ISA RECIPIENT COULD ASSERT AGAINST THE SELLER OF THE GOODS OR SERVICES OBTAINED UNDER THE INCOME SHARE AGREEMENT OR WITH THE PROCEEDS OF THE INCOME SHARE AGREEMENT.

ANY RECOVERY BY THE ISA RECIPIENT UNDER SUCH A CLAIM OR DEFENSE SHALL NOT EXCEED AMOUNTS PAID BY THE ISA RECIPIENT UNDER THE INCOME SHARE AGREEMENT. ; and in lieu of the disclosure required under section 433.2(b) of title 16, Code of Federal Regulations, the contract shall contain the following disclosure in at least 10 point, bold face type: NOTICE ANY HOLDER OF THIS INCOME SHARE AGREEMENT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE ISA RECIPIENT COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED UNDER THE INCOME SHARE AGREEMENT OR WITH THE PROCEEDS OF THE INCOME SHARE AGREEMENT.

ANY RECOVERY UNDER SUCH A CLAIM OR DEFENSE BY THE ISA RECIPIENT SHALL NOT EXCEED AMOUNTS PAID BY THE ISA RECIPIENT UNDER THE INCOME SHARE AGREEMENT. .