The proposed "Third-Party Litigation Financing Consumer Protection Act" aims to comprehensively regulate the practices of third-party litigation financers in Rhode Island. The act introduces key definitions, including "consumer," "legal representative," and "litigation financer." It mandates that all litigation financers must register with the state, which involves submitting an application and a surety bond of at least $50,000. Each litigation financer is required to file annual reports with the Secretary of State detailing their operations and transactions.

To enhance consumer protection, the act prohibits certain practices by litigation financers, such as paying or offering commissions, referral fees, or other forms of consideration to legal representatives or medical providers, advertising false or misleading information, and interfering in the conduct of a consumer's legal claim. It also requires that all litigation financing contracts include specific disclosures to inform consumers of their rights and obligations, including the right to cancel the contract within five business days without penalty.

The act clarifies that it does not apply to litigation financing provided to commercial enterprises in support of commercial litigation, particularly in cases arising from personal injury claims. The Secretary of State is designated as the regulatory authority responsible for overseeing compliance with the act. Notably, any violation of the act's provisions will render the litigation financing contract unenforceable for all parties involved. The act is set to take effect immediately upon passage.