The proposed "Third-Party Litigation Financing Consumer Protection Act" introduces a new chapter in Title 9 of the General Laws in Rhode Island, aimed at regulating the practices of third-party litigation financers. The bill defines key terms such as "consumer," "legal representative," "litigation financer," "litigation financing," and "litigation financing transaction." It requires litigation financers to register with the state, maintain a surety bond of at least $50,000, and comply with consumer protection measures, which include prohibiting the payment of referral fees to legal representatives or medical providers and mandating clear disclosures in financing contracts.

The act outlines specific protections for consumers, including the right to cancel contracts within five business days and the requirement for litigation financers to provide complete and transparent contracts. It also stipulates that litigation financing contracts must include disclosures regarding fees, the rights of consumers, and the lack of decision-making authority of the financer over the consumer's legal claim.

Additionally, the bill mandates that litigation financers file annual reports with the secretary of state detailing ownership and financing transactions, and it emphasizes the importance of transparency in financing agreements. The secretary of state is designated as the regulatory authority responsible for enforcing compliance with the act, and any violations will render the financing contract unenforceable for all parties involved. The act is set to take effect immediately upon passage, ensuring prompt implementation of these consumer protections in Rhode Island.