The "Third-Party Litigation Financing Consumer Protection Act" is a new bill introduced in Rhode Island that aims to comprehensively regulate the practices of third-party litigation financers. It establishes definitions for key terms such as "consumer," "legal representative," "litigation financer," "litigation financing," "litigation financing transaction," and "medical provider." The bill requires all litigation financers to register with the state before engaging in financing transactions, which includes submitting an application and a surety bond of at least $50,000.

The act includes consumer protections by prohibiting practices such as paying or offering commissions, referral fees, or other forms of consideration to legal representatives or medical providers for referring consumers to litigation financers; advertising false or misleading information; and making decisions regarding a consumer's legal claim. It mandates that litigation financing contracts provide clear disclosures regarding the terms of the agreement, including the consumer's right to cancel and associated fees.

Additionally, litigation financers are required to file annual reports with the secretary of state detailing their transactions and ownership structures, while ensuring the confidentiality of this information. 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. Any violation of the act's provisions will render the financing contract unenforceable. The secretary of state is designated as the regulatory authority to oversee compliance, and the act is set to take effect immediately upon passage.